ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 1st day
of April, 1996 ("Agreement"), by and among OutSource International, Inc., an
Illinois corporation ("Buyer"), and Pay-Ray, Inc., an Illinois corporation
("Pay-Ray"), Tri-Temps, Inc., an Illinois corporation ("Tri-Temps") and
Employees Unlimited, Inc., an Illinois corporation ("EUI") (Pay-Ray, Tri-Temps
and EUI are sometimes individually referred to as a "Seller" and collectively
referred to as the "Sellers" in this Agreement), and Raymond S. Morelli
("Morelli").
RECITALS:
WHEREAS, pursuant to the terms of a Franchise Agreement dated June 1,
1994 between OutSource Franchising, Inc. (as assignee from Labor World of
America, Inc.) ("OutSource Franchising"), an affiliate of Buyer, and EUI, a
Franchise Agreement dated June 1, 1994 between OutSource Franchising and
Tri-Temps, a Franchise Agreement dated February 1, 1995 between OutSource
Franchising and Tri-Temps and a Franchise Agreement dated June 1, 1994 between
OutSource Franchising and EUI (collectively, the "Franchise Agreements"), the
Sellers operate "LABOR WORLD Businesses" (as such term is defined in the
Franchise Agreements) in and around Crystal Lake, Elgin, Loves Park and
Rockford, Illinois, and Kenosha, Milwaukee and Racine, Wisconsin (the
"Business") at the locations listed on SCHEDULE 1 hereto; and
WHEREAS, Morelli is the principal shareholder of each Seller; and
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers, on the terms and conditions set forth herein, substantially all of
the assets of the Sellers, which together constitute substantially all of 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 SELLERS. Subject to the terms and conditions
hereof, Sellers 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 of Sellers' rights, title and interest in and to the following
assets (as hereafter defined and collectively referred to as the "Assets"):
(a) All supplies, equipment, vehicles, machinery, furniture,
fixtures, leasehold improvements and other tangible property owned by Sellers or
used by Sellers in connection with the Business listed on SCHEDULE 1.1;
(b) Except for the Franchise Agreements and related documents,
all of Sellers' 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 listed in EXHIBIT A or SCHEDULE 3.9 hereto;
(c) All of Sellers' right, title and interest in and to the
Intellectual Property (as hereafter defined) owned by Sellers 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 of Sellers' utility, security and other deposits and
prepaid expenses;
(f) The Business as a going concern and its Permits (as hereafter
defined), licenses, telephone numbers, customer lists, vendor lists, advertising
material and data, restrictive covenants, lists of temporary employees, together
with all books, computer software, files, papers, records and other data of
Sellers relating to their respective assets, properties, business and
operations;
(g) All rights of Sellers' in and to their tradenames and
trademarks used in the Business, all variants thereof and all goodwill
associated therewith; and
(h) The employment applications of temporary and permanent staff
(the "Applications").
1.2 ASSETS RETAINED BY SELLERS. Notwithstanding the provisions of
Section 1.1, the Assets shall exclude all assets of the Sellers not specifically
identified in Section 1.1 or the schedules referred to therein (collectively,
the "Excluded Assets"). Without limiting the foregoing, the Excluded Assets
include, but are not limited to:
(a) the corporate charters, 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 Sellers as corporations;
(b) all of Sellers' accounts receivable, cash and cash
equivalents;
(c) any and all prepaid expenses or premiums of Sellers;
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(d) any workers' compensation collateral reserves of Sellers;
(e) any and all credits or refunds due to Sellers;
(f) any and all claims, causes of action, choses in action,
rights of recovery or rights of recoupment of Sellers;
(g) any of the rights of Sellers under this Agreement (or under
any agreement between Sellers on the one hand and Buyer on the other hand
entered into on or after the date of this Agreement); and
(h) the Franchise Agreements which are being terminated by the
parties simultaneous with the Closing.
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 Sellers specifically listed on EXHIBIT A hereto
(the "Assumed Obligations"), including utility and security deposits of Sellers
(the "Deposits"), and, subject to Section 1.4 of this Agreement, the Assumed
Leases (as hereafter defined). Buyer shall not assume or be responsible at any
time for any liability, obligation, debt or commitment of any Seller, whether
absolute or contingent, accrued or unaccrued, asserted or unasserted, or
otherwise, that is not expressly listed on EXHIBIT A 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 Sellers'
creditors listed on EXHIBIT A 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 EXHIBIT A hereto; any liabilities,
obligations, debts or commitments of a 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.
At Closing, Buyer shall reimburse Sellers for the amount of any Deposits
being assumed by Buyer.
Each 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 a Seller had this
Agreement not been consummated.
1.4 LEASES. Notwithstanding any other provision of this Agreement,
Buyer's assumption of any liabilities or obligations of any Seller with respect
to any lease or leasehold interest (the "Assumed Leases") shall be subject to
the terms of the Lease Assignment and Assumption
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Agreements to be delivered pursuant to Sections 2.1(f) and 2.3(e) of this
Agreement. The Assumed Leases are listed on SCHEDULE 1.4 hereto. Buyer and
Morelli shall enter into lease agreements for, and Buyer shall tender a security
deposit in an amount equal to the first month's rent, payable to Morelli, with
respect to, the 425 15th Avenue, Rockford, Illinois, 308 Dundee Avenue, Elgin,
Illinois, and 322 East Bay Street, Milwaukee, Wisconsin locations.
1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for an aggregate
purchase price (the "Purchase Price") of Four Million Eight Hundred Eighty-five
Thousand Four Hundred and Forty-seven Dollars ($4,885,447.00).
1.6 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT B hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code and applicable Treasury regulations. The Buyer, Morelli and each of the
Sellers 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.
1.7 PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase Price as
follows:
(a) Buyer shall pay Eight Hundred Sixty Thousand Five Hundred and
Seventy-nine Dollars ($860,579.00) to Pay-Ray by cashier's check or bank wire
(the "Pay-Ray Cash Payment") within one (1) business day following the Closing
Date; and
(b) Buyer shall pay Five Hundred Forty-six Thousand Two Hundred
and Eighty-six Dollars ($546,286.00) to Tri-Temps by cashier's check or bank
wire (the "Tri-Temps Cash Payment") within one (1) business day following the
Closing Date; and
(c) Buyer shall pay One Thousand Dollars ($1,000.00) to EUI by
cashier's check or bank wire (the "EUI Cash Payment") within one (1) business
day following the Closing Date; and
(d) Buyer shall pay Seventy-seven Thousand Five Hundred and
Eighty-two Dollars ($77,582.00) to the appropriate Seller as set forth in
EXHIBIT B for the tangible assets of Sellers by cashier's check or bank wire
(the "Tangible Assets Cash Payment")(the Pay-Ray Cash Payment, the Tri-Temps
Cash Payment, the EUI Cash Payment and the Tangible Assets Cash Payment are
hereafter collectively referred to as the "Cash Payments") within one (1)
business day following the Closing Date; and
(e) Buyer shall pay an amount equal to the interest on the
aggregate amount of the Cash Payments beginning on April 1, 1996 through the
Closing Date, calculated at the rate of
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ten percent (10%) per annum, by cashier's check or bank wire within one (1)
business day following the Closing Date; and
(f) At Closing, Buyer shall deliver to Pay-Ray a promissory note
in substantially the form attached as EXHIBIT C hereto in the principal amount
of Two Million Seventy-nine Thousand Seven Hundred and Eighty Dollars
($2,079,780.00) and shall deliver to Tri-Temps a promissory note in
substantially the form attached as EXHIBIT C hereto in the principal amount of
One Million Three Hundred Twenty Thousand Two Hundred and Twenty Dollars
($1,320,220.00). The Promissory Notes shall bear interest at the rate of ten
percent (10%) per annum and shall be convertible into shares of Buyer's common
stock in accordance with the terms of the Promissory Notes.
1.8 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 defects, pledges, encroachments and
burdens of every kind or nature whatsoever, except for the matters set forth in
SCHEDULE 3.1 hereto (the "Permitted Liens").
1.9 PRORATION. Sellers 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.
All ad valorem and property taxes, and any similar assessment based upon or
measured by Sellers' ownership interest in the Assets, shall be prorated between
Sellers 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. Sellers shall be charged for all such taxes and assessments based upon or
measured by Sellers' 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 at 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 such time and place as Buyer and
Sellers shall mutually agree (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 11:59 p.m., Eastern Standard Time, on the April 1, 1996
(the "Effective Date").
2.2 DELIVERIES BY SELLERS AND MORELLI. At or prior to the Closing,
Sellers and Morelli 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;
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(b) An Assignment and Assumption Agreement, in substantially the
form attached as EXHIBIT E hereto;
(c) Mutual Termination Agreements for each of the Franchise
Agreements in substantially the form attached as EXHIBIT F hereto;
(d) A Release in substantially the form attached as EXHIBIT G
hereto;
(e) A Noncompetition Agreement in substantially the form attached
as EXHIBIT H hereto executed by Morelli.
(f) Lease Assignment and Assumption Agreements in substantially
the form attached as EXHIBIT J hereto;
(g) An Assignment of Applications, in substantially the form
attached as EXHIBIT K hereto;
(h) Leases in substantially the form attached as EXHIBIT N hereto
for the 425 15th Avenue, Rockford, Illinois, 308 Dundee Avenue, Elgin, Illinois,
and 322 East Bay Street, Milwaukee, Wisconsin locations;
(i) A Certificate executed as of the Closing Date by a duly
authorized officer of Pay-Ray certifying: (i) the resolutions of the Board of
Directors and Shareholders of Pay-Ray approving the transactions contemplated
hereby, and (ii) as to the accuracy of Pay-Ray'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 Pay-Ray at or before Closing;
(j) A Certificate executed as of the Closing Date by a duly
authorized officer of Tri-Temps certifying: (i) the resolutions of the Board of
Directors and Shareholders of Tri-Temps approving the transactions contemplated
hereby, and (ii) as to the accuracy of Tri-Temps' 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 Tri-Temps at or before Closing;
(k) A Certificate executed as of the Closing Date by a duly
authorized officer of EUI certifying: (i) the resolutions of the Board of
Directors and Shareholders of EUI approving the transactions contemplated
hereby, and (ii) as to the accuracy of EUI'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 EUI at or before Closing;
(l) The documents required pursuant to Sections 7.2, 7.3, 7.5,
7.11, 7.12, 7.13 and 7.14 of this Agreement; and
(m) Such other instruments of sale, transfer, conveyance and
assignment as Buyer and its counsel may reasonably request.
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2.3 DELIVERIES BY BUYER. At or prior to Closing, Buyer shall execute and
deliver or cause to be executed and delivered to Sellers the following:
(a) The Promissory Notes;
(b) An Assignment and Assumption Agreement, in substantially the
form attached as EXHIBIT E hereto;
(c) Mutual Termination Agreements for each of the Franchise
Agreements in substantially the form attached as EXHIBIT F hereto;
(d) A Release in substantially the form attached as EXHIBIT I
hereto;
(e) Lease Assignment and Assumption Agreements in substantially
the form attached as EXHIBIT J hereto;
(f) Leases in substantially the form attached as EXHIBIT N hereto
for the 425 15th Avenue, Rockford, Illinois, 308 Dundee Avenue, Elgin, Illinois,
and 322 East Bay Street, Milwaukee, Wisconsin locations;
(g) 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; and
(h) Such other instruments of assumption as Sellers and their
counsel may reasonably request.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS AND MORELLI. Sellers and Morelli,
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. Exceptions to such
representations and warranties are set forth in the disclosure schedule
accompanying this Agreement (the "Disclosure Schedule"). The Disclosure Schedule
shall be effective to modify only those representations and warranties to which
the Disclosure Schedule makes explicit reference. The phrase "to any Seller's
knowledge" or similar language used in this Section 3 shall, in each case, mean
the best knowledge of any Seller, after reasonable investigation.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 3.1 hereto, Sellers
have 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, security interests, liens,
claims, encumbrances, title defects, pledges, charges, assessments, covenants,
encroachments and burdens of any kind or nature whatsoever, and have
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full right and authority to transfer and deliver all the Assets. Except as
described in SCHEDULE 3.1 hereto, upon consummation of the transactions
contemplated hereby, Sellers will have transferred to Buyer 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, 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.
3.2 CORPORATE STATUS OF PAY-RAY. Pay-Ray is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Illinois. Pay-Ray is qualified to do business and in good standing in each
jurisdiction where the operation of its business requires that it be so
qualified. Pay-Ray 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 Pay-Ray, as
presently in effect, are included as an attachment to SCHEDULE 3.2 hereto.
3.3 CORPORATE STATUS OF TRI-TEMPS. Tri-Temps is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Illinois. Tri-Temps is qualified to do business and in good standing in each
jurisdiction where the operation of its business requires that it be so
qualified. Tri-Temps 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 Tri-Temps, as
presently in effect, are included as an attachment to SCHEDULE 3.3 hereto.
3.4 CORPORATE STATUS OF EUI. EUI is a corporation duly organized,
validly existing and in good standing under the laws of the state of Illinois.
EUI is qualified to do business and in good standing in each jurisdiction where
the operation of its business requires that it be so qualified. EUI 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 EUI, as presently in effect, are included as an
attachment to SCHEDULE 3.4 hereto.
3.5 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by Sellers 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 Sellers. This
Agreement is (and, when executed and delivered, each agreement, document or
instrument to be executed and
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delivered in connection with the transactions contemplated hereby will be) valid
and binding upon Sellers, and enforceable against Sellers 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.
3.6 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. All real property
leased by Sellers and used in the operation of the Business is listed and
described in SCHEDULE 1.4 hereto. To the best of Sellers' knowledge, all
buildings and improvements located thereon are in good condition and repair,
subject only to normal wear and tear. All material items of tangible personal
property and assets owned or leased by Sellers 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
zoning or other laws. To the best of Seller's knowledge, 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. Sellers have delivered to Buyer accurate and complete copies of all
leases relating to real or personal property leased by Sellers and used in the
operation of the Business. All such leases are in full force and effect, no
event of default has been declared thereunder and, to any Seller's knowledge, no
basis for any default exists. No such lease of real or personal property is
subject to termination or modification as a result of the transactions
contemplated hereby. Notwithstanding the foregoing, Buyer acknowledges that
Buyer is assuming Assumed Leases and acquiring the Assets listed in SCHEDULE 1.1
in an "as is" condition.
3.7 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as
part of SCHEDULE 3.7 are the Sellers' Financial Statements up through the period
ending December 31, 1995. The Financial Statements (x) present fairly the
financial position and results of operations of the Sellers for the dates or
periods indicated thereon, (y) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
period indicated and (z) accurately reflect the transactions, assets and
liabilities of Sellers as of the dates and for the periods presented. Except as
set forth in the Financial Statements or on SCHEDULE 3.7 hereto, Sellers have 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. No Seller is 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 3.7 hereto.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since February 16, 1996,
Sellers have conducted their business only in the normal and ordinary course in
substantially the same manner as heretofore conducted and have used all
reasonable efforts consistent with normal business practices to preserve and
promote such business and to avoid any act that might have a material adverse
effect upon the value of such business as a going concern or upon the Assets. No
event has occurred to prevent any Seller's business from operating in a normal
and usual manner and
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in substantially the same manner as heretofore operated. Except as expressly set
forth in SCHEDULE 3.8 hereto, since February 16, 1996:
(a) there has not been any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting any Seller's
business or the Assets;
(b) there has not been any (i) increase (other than normal merit
or cost-of-living increases in the ordinary course of business and consistent
with past practices) or material change: (y) in compensation or bonuses payable
to or to become payable by any Seller to its officers, employees or agents, or
(z) in any insurance, pension or other benefit plan, payment or arrangement made
to, for or with any of such officers, employees or agents; or (ii) other
material change in the employment terms of any officer, employee or agent of any
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, Three Hundred Dollars
($300.00) or more, without the prior written consent of Buyer;
(e) there has not been any failure to maintain any 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
any 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 any Seller involving, individually or in the aggregate, more than
$10,000.00;
(h) no Seller has entered into, nor has any 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 3.9 hereto that are
not otherwise disclosed herein;
(i) no Seller has made any capital investment in, any loan to,
or any acquisition of the securities or assets of any person or entity;
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(j) there has been no change made or authorized in the charter
or bylaws of any Seller;
(k) no Seller has 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;
(l) no Seller has declared, set aside or paid any dividend or
made any distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased or otherwise acquired any of its capital stock;
(m) no Seller has made any loan to, or entered into any other
transaction with, any of its directors, officers or employees;
(n) 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 or on the business,
financial condition or operations of any Seller; and
(o) there has not been any commitment to do any of the foregoing.
3.9 CONTRACTS AND COMMITMENTS. EXHIBIT A and SCHEDULES 1.4, 3.1 AND 3.9
hereto together include 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 any
Seller is a party, by which any Seller or their 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 a 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 a 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 a Seller in excess of $10,000.00 per year. True and complete
copies of all of the Material Agreements are included as part of SCHEDULES 1.4,
3.1 AND 3.9 hereto. Each of the Material Agreements listed in EXHIBIT A and
SCHEDULES 1.4, 3.1 AND 3.9 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 any
Seller's rights or benefits under any Material Agreement has been assigned,
transferred, or in any way encumbered. No Seller is in breach of nor has any
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 a Seller under any
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Material Agreement. To any Seller'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 SCHEDULES 1.4, 3.1 OR 3.9 hereto, neither any
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 a Seller or Buyer without penalty or other
obligation being incurred upon such termination.
3.10 ACCOUNTS RECEIVABLE. Except as set forth in SCHEDULE 3.10 hereto,
all of Sellers' accounts receivable have arisen in the ordinary course of
business and, together with the allowance for doubtful accounts, have been
reflected in the Sellers' Financial Statements in accordance with generally
accepted accounting principles. All such accounts receivable are bona fide,
valid and binding receivables representing obligations for the face dollar
amount thereof and will be collected in full (subject to the allowance for
doubtful accounts as set forth on Sellers' Financial Statements) within ninety
(90) days of their due date and are subject to no defenses, counterclaims or
set-offs of any nature whatsoever. The allowance for doubtful accounts set forth
in the Sellers' Financial Statements is fully adequate to cover any losses
anticipated on such receivables.
3.11 INTELLECTUAL PROPERTY. Sellers own or are 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 necessary to conduct the
Business ("Intellectual Property"), free and clear of and without conflict with
the rights of others. Each item of Intellectual Property owned or used by
Sellers immediately prior to the Closing shall be owned or available for use by
Buyer on identical terms and conditions immediately subsequent to the Closing.
Sellers have taken all necessary and desirable action to maintain and protect
each item of Intellectual Property that Sellers own or use and to consummate the
transfer and assignment thereof to Buyer. Sellers have not interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property Rights of third parties, and Sellers have not received any
charge, complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or violation. To the knowledge of Sellers, no
third party has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of Sellers. SCHEDULE
3.11 hereto contains a true and correct description of the following:
(a) All Intellectual Property currently owned, in whole or in
part, by Sellers, and all licenses, royalties, assignments and other similar
agreements relating to the foregoing to which any Seller is a party; and
(b) All agreements relating to Intellectual Property that any
Seller is licensed or authorized to use from others or which any Seller licenses
or authorizes others to use.
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3.12 TAXES. All federal, state, local and foreign tax returns (including
information returns) and reports of any 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. Sellers have
either (i) paid all federal, state, county, local, foreign and other taxes
(hereinafter "Taxes" or individually a "Tax") required to be paid by them
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 any Seller in the Sellers' Financial Statements.
All Taxes and other assessments and levies required to be collected or withheld
by any Seller with respect to the operation of their 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 a Seller and established for that purpose.
No Seller is a party to any pending action or proceeding regarding
assessment or collection of Taxes by any governmental authority. To any Seller's
knowledge, no action or proceeding regarding assessment or collection of Taxes
is threatened against any 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. No Seller has 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.
3.13 LITIGATION. Except as set forth in SCHEDULE 3.7, there is no suit,
proceeding, action, claim or investigation, at law or in equity, pending or, to
any Seller's knowledge, threatened against or affecting in any way the assets,
properties or property interests of any 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. No Seller nor any of their 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.
3.14 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 3.14 hereto lists all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and each other employee benefit arrangement, contract,
agreement or policy, including, without limitation, pension, profit sharing or
thrift plans, medical benefit programs, death benefit and disability programs,
and severance, vacation and sick leave policies applicable to employees of the
Sellers (hereinafter referred to collectively as the "Plans").
(b) All Plans have complied in all material respects with all
applicable requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), and any
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predecessor Federal income tax laws, ERISA, all other applicable laws and any
applicable collective bargaining agreements.
(c) No single employer defined benefit pension plan or defined
benefit plan for a controlled group of corporations included within the Plans
has since 1976: (i) had any accumulated minimum funding deficiency; (ii) been
granted a waiver of the minimum funding standards contribution; (iii) been
terminated by its plan sponsor or the Pension Benefit Guaranty Corporation
("PBGC"); or (iv) incurred or reported a reportable event; and no such Plan has
assets valued at fair market value that are less than the present value of all
accrued liabilities using PBGC actuarial and interest rate assumptions in effect
on the date hereof as applicable to single employer plan terminations or plans
for a controlled group of corporations.
3.15 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution nor
delivery by any 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 any Seller of
the transactions contemplated hereby or thereby, nor compliance by any Seller
with any of the provisions hereof or thereof, will (a) conflict with or result
in a breach of any provision of any 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 (iv)
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 any 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 any 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.
3.16 LICENSES, PERMITS AND AUTHORIZATIONS. Sellers have 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 their 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. Except as set forth in
SCHEDULE 3.16 hereto, all such Permits shall continue in full force and effect
on behalf of Buyer following consummation of the transactions contemplated by
this Agreement. A list of the Permits is included in SCHEDULE 3.16 hereto.
Sellers shall use their best efforts to assign the Permits to Buyer, but Buyer
shall have ultimate obligation to obtain such Permits.
3.17 INSURANCE. SCHEDULE 3.17 hereto contains a complete list of all
insurance policies maintained by any Seller with respect to the Business or the
Assets. Such insurance is in full
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force and effect; will not terminate or lapse by reason of the transaction
contemplated hereby; and is sufficient for compliance with all requirements of
law and any agreements to which any Seller is a party or by which the Assets are
bound.
3.18 GUARANTEES. Except as set forth in SCHEDULE 3.18 attached hereto,
neither the Business nor any of the Assets is or 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.
3.19 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS. Sellers are in
compliance with all federal, state, local and foreign laws, rules and
regulations affecting employment and employment practices of Sellers, including,
without limitation, those relating to terms and conditions of employment, wages,
workers' compensation and unemployment compensation. There are no complaints
pending, or to any Seller's knowledge threatened, against any Seller in
connection with any employment related matters. No Seller is a party to any
collective bargaining agreement. SCHEDULE 3.19 includes a monthly report which
reflects Sellers' current payroll; this report accurately reflects Sellers'
entire current monthly payroll obligations to their employees. SCHEDULE 3.19
also includes a list of the names and compensation levels of any consultants,
independent contractors or temporary employees regularly utilized by any Seller.
3.20 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) Sellers have at all times conducted their 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 any Seller. No Seller has received any formal or informal
notice, advice, claim or complaint alleging that any Seller has violated or may
have violated any law, regulation, ordinance or order and, to any Seller's
knowledge, no such notice, advice, claim or complaint of any type is threatened.
Sellers have at all times complied and presently comply with all applicable
federal, state, local and foreign laws, rules and regulations respecting
occupational safety and health standards and no Seller has 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) all
real property owned or leased by any 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 Sellers (including
without limitation their 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,
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released, deposited or discharged on any of any 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 any Seller
and no complaint has been filed and no penalty has been assessed or threatened
by any governmental authority with respect to (x) any alleged violation by any
Seller of any Environmental Law, (y) any alleged failure by any Seller to have
any environmental permit required in connection with the operation of their
business or (z) 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 any 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 any Seller does
business.)
3.21 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
any 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
Sellers to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of Illinois. 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.
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5. INDEMNIFICATION.
5.1 INDEMNIFICATION OBLIGATION OF SELLERS AND MORELLI. Sellers and
Morelli, 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 (a "Loss"):
(a) as a result of, arising from or in connection with any breach
of any representation, warranty, covenant or agreement of any Seller or Morelli
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 the
Disclosure Schedule or from any certificate, schedule, statement, document or
instrument furnished by any Seller or Morelli to Buyer in connection with the
transactions contemplated by this Agreement.
5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Sellers 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 Sellers (a "Loss"):
(a) 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; or
(b) as a result of, arising from or in connection with the
Assumed Obligations.
5.3 INDEMNITY PROCEDURE. 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. If the Indemnified Party does not approve such counsel, the
Indemnified Party may choose counsel to conduct the defense of such claim, at
its sole cost and expense. 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
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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.
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 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.
6. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE. Sellers' 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
any Seller):
6.1 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.
6.2 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.
6.3 DELIVERIES. Buyer shall have delivered or caused delivery of the
items set forth in Section 2.3 of this Agreement.
6.4 EMPLOYMENT. Buyer shall have offered employment to each member of
Pay-Ray's branch office staff (a "PR Branch Office Staff Member") on terms
comparable to similarly situated employees of Buyer, including eligibility for
benefits and participation in stock option plans, and the compensation to be
paid to the PR Branch Office Staff Members shall remain at the level as of the
Closing Date through December 31, 1996, and then adjusted thereafter.
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Buyer shall designate those PR Branch Office Staff Members who shall retain
their seniority with Buyer. Notwithstanding any other provision of this
Agreement, Buyer shall have no obligation to continue the employment of any PR
Branch Office Staff Member.
7. 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):
7.1 PERFORMANCE OF OBLIGATIONS. Sellers and Morelli 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.
7.2 APPROVALS. Sellers 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, (ii) under any Material
Agreement, (iii) under any insurance policies that Buyer has determined should
continue in force after the Closing, or (iv) under any Permit.
7.3 ESTOPPEL CERTIFICATES. Sellers shall have delivered to Buyer
estoppel certificates from each of the lessors under each of Sellers' real and
personal property leases, in form and substance acceptable to Buyer.
7.4 PROPERTY. All of Sellers' real and personal property shall be in
good operating condition, structurally sound and in good repair. Notwithstanding
the foregoing, Buyer acknowledges that Buyer is assuming Assumed Leases and
acquiring the Assets listed in SCHEDULE 1.1 in an "as is" condition.
7.5 APPROVAL. The board of directors of each of the Sellers shall have
approved such Seller's entering into this Agreement and the consummation of the
transactions contemplated hereby. The board of directors of Buyer shall have
approved Buyer's entering into this Agreement and consummation of the
transactions contemplated hereby.
7.6 LITIGATION. There shall not have been instituted, pending or
threatened against any Seller, 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.
7.7 NONCOMPETITION AGREEMENTS. Sellers shall have assigned all
employment contracts, including noncompetition provisions, with each PR Branch
Office Staff Member. Dave Mehr shall have entered into a noncompetition
agreement with Buyer substantially in the form attached hereto as EXHIBIT M.
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7.8 DISCLOSURE SCHEDULE. Sellers shall have furnished to Buyer and its
representatives true, correct and complete copies of all documents, agreements
and instruments listed in the Disclosure Schedule.
7.9 DELIVERIES. Sellers and Morelli shall have delivered or caused
delivery of the items set forth in Section 2.2 hereof.
7.10 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Sellers and Morelli contained in this Agreement shall be true and correct as of
the Effective Date.
7.11 OPINION OF SELLERS' COUNSEL. Buyer shall have received an opinion
from counsel of Sellers dated as of the Closing Date and in substantially the
form attached as EXHIBIT L hereto.
8. POST-CLOSING COVENANTS.
8.1 UNEMPLOYMENT RATE. Sellers and Morelli shall assist and cooperate
with Buyer to obtain the state unemployment compensation rate of Tri-Temps in
Wisconsin. No Seller shall be liable for costs associated with Buyer's attempt
to acquire the state unemployment compensation rate of any Seller. Sellers shall
not be liable for any underpayment of unemployment contributions which shall
accrue after the effective date of this Agreement but shall be liable for an
underpayment of unemployment contributions which accrued prior to the effective
date of this Agreement. Buyer agrees to defend, indemnify and hold harmless
Sellers from, against and in respect of any loss, cost, damage or expense,
including, but not limited to, legal and accounting fees and expenses, asserted
against, imposed upon or paid, incurred or suffered by Sellers as a result of
Buyer's acquisition of Sellers' unemployment rates.
8.2 TRANSITION SERVICES. Morelli shall assist Buyer, or Sellers shall
cause David Mehr to assist Buyer, on an as needed basis and without
compensation, with the Business for a period of forty-five (45) days following
the Closing Date.
8.3 ACCOUNTS RECEIVABLE OF BUYER. Sellers and Morelli covenant and agree
that if a Seller inadvertently collects an account receivable of the Buyer, such
Seller will deliver the amount received to Buyer within ten (10) days of receipt
by such Seller.
8.4 ACCOUNTS RECEIVABLE OF SELLERS. Buyer covenants and agrees that if
Buyer inadvertently collects an account receivable of a Seller, Buyer will
deliver the amount received to such Seller within ten (10) days of receipt by
Buyer.
8.5 ACCOUNTS RECEIVABLE REPORTS. Sellers and Morelli covenant and agree
that Sellers will deliver a weekly accounts receivable report to Buyer for
ninety (90) days following the Closing Date.
8.6 FURTHER ASSURANCES. Sellers and Morelli covenant and agree with
Buyer, its successors and assigns, that they will do, execute, acknowledge and
deliver, or cause to be done,
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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.
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.
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 Effective 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 for a period of five (5) years.
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.
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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: when
delivered by hand; when delivered by facsimile (if written confirmation of
receipt of the facsimile is obtained from the party to be charged with notice);
five (5) days after being deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid; or on the second
business day after being sent (prepaid for next day delivery), via Federal
Express, Purolator Courier, DHL or other nationally recognized delivery service,
as follows:
If to Sellers
or Morelli: Raymond S. Morelli
c/o Office Ours
1111 Plaza Drive, Suite 320
Schaumberg, Illinois 60173
With a copy to: Louis J. Morelli, Esq.
37 W 570 Route 38
St. Charles, Illinois 60175
If to Buyer: OutSource International, Inc.
8000 North Federal Highway
Boca Raton, Florida 33487
With a copy to: Steven Sonberg, Esq.
Holland & Knight
One East Broward Boulevard
Fort Lauderdale, FL 33301
Phone: 305 468-7819
Fax: 305 463-2030
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
9.10 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
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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. Neither Sellers nor Buyer has retained any
broker with respect to the transactions contemplated pursuant to this Agreement.
Accordingly, each party agrees to indemnify the other with respect to any claims
made by any third part claiming a brokerage fee or commission arising out of the
transactions contemplated by this Agreement from said party.
9.13 EXPENSES. 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.
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.
9.16 CONSENT TO JURISDICTION. The parties to this Agreement agree that
any claim, suit, action or proceeding arising out of or relating to this
Agreement 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
- 23 -
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 court 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.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
BUYER:
Witness:
OutSource International, Inc.
/s/ [ILLEGIBLE]
-----------------------------
By: /s/ LOUIS A. MORELLI
-------------------------------------
Name: LOUIS A. MORELLI
----------------------------- Title: PRESIDENT
SELLERS:
Witness:
Pay-Ray, Inc.
/s/ [ILLEGIBLE]
-----------------------------
By: /s/ RAYMOND S. MORELLI
-------------------------------------
Name: RAYMOND S. MORELLI
----------------------------- Title: PRESIDENT
- 24 -
Witness:
Tri-Temps, Inc.
/s/ [ILLEGIBLE]
-----------------------------
By: /s/ RAYMOND S. MORELLI
-------------------------------------
Name: RAYMOND S. MORELLI
----------------------------- Title: PRESIDENT
Witness:
Employees Unlimited, Inc.
/s/ [ILLEGIBLE]
-----------------------------
By: /s/ RAYMOND S. MORELLI
-------------------------------------
Name: RAYMOND S. MORELLI
----------------------------- Title: PRESIDENT
MORELLI:
/s/ RAYMOND S. MORELLI
-----------------------------------------
Raymond S. Morelli
- 25 -
LIST OF EXHIBITS
Exhibit A List of Assumed Obligations
Exhibit B Allocation of Purchase Price
Exhibit C Promissory Note
Exhibit D Bill of Sale
Exhibit E Assignment and Assumption Agreement
Exhibit F Mutual Termination Agreement
Exhibit G Release by Sellers
Exhibit H Morelli Noncompetition Agreement
Exhibit I Release by Buyer
Exhibit J Lease Assignment and Assumption Agreement
Exhibit K Assignment of Applications
Exhibit L Opinion of Counsel
Exhibit M Mehr Noncompetition Agreement
Exhibit N Leases
LIST OF SCHEDULES
Schedule 1 Locations
Schedule 1.1 Assets
Schedule 1.4 Assumed Leases
Schedule 3.1 Title to Assets
Schedule 3.2 Corporate Status of Pay-Ray
Schedule 3.3 Corporate Status of Tri-Temps
Schedule 3.4 Corporate Status of EUI
Schedule 3.7 Financial Statements; Undisclosed Liabilities
Schedule 3.8 Absence of Certain Changes or Events
Schedule 3.9 Contracts and Commitments
Schedule 3.10 Accounts Receivable
Schedule 3.11 Intellectual Property
Schedule 3.14 Employee Benefit Plans; ERISA
Schedule 3.16 Licenses, Permits and Authorizations
Schedule 3.17 Insurance
Schedule 3.18 Guarantees
Schedule 3.19 Corporate and Personnel Data; Labor Relations
BILL OF SALE
PAY-RAY, INC., an Illinois corporation ("Pay-Ray"), TRI-TEMPS, INC., an
Illinois corporation ("Tri-Temps") and EMPLOYEES UNLIMITED, INC. ("EUI")
(Pay-Ray, Tri-Temps and EUI are sometimes individually referred to as a "Seller"
and collectively referred to as the "Sellers") for good and valuable
consideration, paid by OUTSOURCE INTERNATIONAL, INC., an Illinois corporation
(the "Buyer"), the receipt and sufficiency of which are hereby acknowledged, has
bargained and sold and by these presents does hereby grant, bargain, sell,
assign, transfer and deliver unto Buyer the Assets (as such term is defined in
the Asset Purchase Agreement of even date herewith among Buyer, Sellers and
certain other parties).
TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns,
forever, free, clear and discharged of all former grants, charges, taxes,
judgments, mortgages, liens, encumbrances and claims of whatsoever nature made
by any Seller or any person claiming by, through or under any Seller.
Sellers warrant that the Assets are free and clear of all encumbrances
and claims, that good title to and right to sell the Assets are vested in
Sellers, and that Sellers will defend the title against the lawful claims of all
persons whomsoever. Notwithstanding the foregoing, Buyer is acquiring the Assets
in an "as is" condition.
Sellers agree to indemnify, defend and hold Buyer harmless of, from and
against any losses, damages, costs, charges, encumbrances, expenses or any other
claim relating to any claim or liability by or to any third parties relating to
the Assets, to the extent such losses, damages, costs, charges, encumbrances,
expenses, claim or liability relate to the period prior to the date hereof.
IN WITNESS WHEREOF, this Bill of Sale has been executed by Sellers as
of the 1st day of April, 1996.
SELLERS:
Signed, sealed and delivered
in the presence of:
Pay-Ray, Inc.
/s/ LOUIS J. MORELLI
---------------------------
By: /s/ RAYMOND S. MORELLI
--------------------------------
Name: RAYMOND S. MORELLI
Title: PRESIDENT
/s/ LOUIS J. MORELLI
----------------------------
Tri-Temps, Inc.
/s/ LOUIS J. MORELLI
---------------------------
By: /s/ RAYMOND S. MORELLI
--------------------------------
Name: RAYMOND S. MORELLI
Title: PRESIDENT
/s/ LOUIS J. MORELLI
----------------------------
Employees Unlimited, Inc.
/s/ LOUIS J. MORELLI
---------------------------
By: /s/ RAYMOND S. MORELLI
--------------------------------
Name: RAYMOND S. MORELLI
Title: PRESIDENT
/s/ LOUIS J. MORELLI
----------------------------
2
STATE OF ILLINOIS
COUNTY OF KANE
The foregoing instrument was acknowledged before me this 16th day of
April, 1996, by Raymond S. Morelli, as President of Pay-Ray, Inc., who is
personally known to me (or who has produced DRIVERS LICENSE as
identification) and who did (did not) take an oath.
/s/ ANITA M. DAZZO
-------------------------
Name: ANITA M. DAZZO
Notary Public, State of ILLINOIS
Commission No.:
My commission expires: 9/30/97
"OFFICIAL SEAL"
ANITA M. DAZZO
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES 9/30/97
3
STATE OF ILLINOIS
COUNTY OF KANE
The foregoing instrument was acknowledged before me this 16th day of
April, 1996, by Raymond S. Morelli, as President of Tri-Temps, Inc., who is
personally known to me (or who has produced DRIVERS LICENSE as
identification) and who did (did not) take an oath.
/s/ ANITA M. DAZZO
-------------------------
Name: ANITA M. DAZZO
Notary Public, State of ILL
Commission No.:
My commission expires: 9/30/97
"OFFICIAL SEAL"
ANITA M. DAZZO
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES 9/30/97
4
STATE OF ILLINOIS
COUNTY OF KANE
The foregoing instrument was acknowledged before me this 16th day of
April, 1996, by Raymond S. Morelli, as President of Employees Unlimited, Inc.,
who is personally known to me (or who has produced DRIVERS LICENSE as
identification) and who did (did not) take an oath.
/s/ ANITA M. DAZZO
-------------------------
Name: ANITA M. DAZZO
Notary Public, State of ILLINOIS
Commission No.:
My commission expires: 9/30/97
"OFFICIAL SEAL"
ANITA M. DAZZO
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES 9/30/97
5
AMENDMENT NUMBER 1
TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT dated as of April
1, 1996 by and among OutSource International of America, Inc., a Florida
corporation, ("OSIA") (formerly known as OutSource International, Inc., an
Illinois corporation), Pay-Ray, Inc., an Illinois corporation, ("Pay-Ray"),
Tri-Temps, Inc., an Illinois corporation, ("Tri-Temps"), Employees Unlimited
Inc., an Illinois corporation, ("EUI") and Raymond S. Morelli ("Morelli") (the
"Purchase Agreement") is entered into this 21st day of February, 1997. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Purchase Agreement.
BACKGROUND
Pursuant to the Purchase Agreement OSIA purchased all of the assets of
Pay-Ray, Tri-Temps, and EUI, in exchange for cash and two promissory notes (each
an "Original Note"), copies of which are attached hereto as Exhibit 1. Morelli
is the majority shareholder of Pay-Ray and Tri-Temps, and OutSource
International, Inc., a Florida corporation ("OSI") is the sole shareholder of
OSIA. Pursuant to the terms of the Purchase Agreement and the Original Notes,
payments to be made to Pay-Ray and Tri-Temps were subordinate in certain
respects to certain indebtedness of OSIA. OSIA wishes to refinance certain of
its debt ("New Senior Debt") and to obtain additional financing ("Mezzanine
Financing"). As a condition to obtaining New Senior Debt and the Mezzanine
Financing OSIA is required to amend certain terms of the Purchase Agreement and
the Original Notes. In addition, OSI, OSIA and Morelli wish to amend certain
terms of the Purchase Agreement.
NOW THEREFORE, in consideration of the mutual representations,
warranties and covenants and subject to the conditions herein contained, the
parties agree as follows:
1. PAYMENT OF PURCHASE PRICE. Section 1.7 of the Purchase
Agreement is hereby amended as follows.
(a) The parties hereto acknowledge and agree that the outstanding
principal and interest due on the Original Note payable to Pay-Ray as of
February 21, 1997, is Two Million Two Hundred Seventy-Six Thousand Six Hundred
Thirty-Six and 23/100 Dollars ($2,276,636.23), and that the outstanding
principal and interest due on the Original Note payable to Tri-Temps as of
February 21, 1997 is One Million Five Hundred Forty-Seven Thousand Sixty-Seven
and 00/100 Dollars ($1,547,067.00). Upon execution of this Agreement, OSIA shall
make a cash payment to Pay-Ray in the amount of Seven Hundred Forty-Four
Thousand Two Hundred Fifty and 00/100 Dollars ($744,250.00) and a cash payment
to Tri-Temps in the amount
of Five Hundred Five Thousand Seven Hundred Fifty and 00/100
Dollars ($505,750.00).
(b) Upon execution of this Agreement OSIA shall also execute and
deliver to each of Pay-Ray and Tri-Temps an Amended and Restated Subordinated
Note in the forms attached hereto as Exhibit 2 which shall contain, as
appropriate, the terms and conditions contained in this Amendment, in exchange
for the cancellation of Original Notes previously delivered to Pay-Ray and
Tri-Temps. The Amended and Restated Subordinated Notes shall bear interest at
the rate of fourteen (14%) percent. The Amended and Restated Subordinated Note
issued to Pay-Ray shall be for the aggregate principal amount of One Million
Five Hundred Thirty-Two Thousand Three Hundred Eighty-Six and 23/100 Dollars
($1,532,386.23) and shall be payable in forty-eight (48) monthly installments of
Forty-One Thousand Eight Hundred Seventy-Four and 71/100 Dollars ($41,874.71)
commencing on April 1, 1997. The Amended and Restated Subordinated Note issued
to Tri-Temps shall be for the aggregate principal amount of One Million
Forty-One Thousand Three Hundred Seventeen and 00/100 Dollars ($1,041,317.00)
and shall be payable in forty-eight (48) monthly installments of Twenty-Eight
Thousand Four Hundred Fifty-Five and 52/100 Dollars ($28,455.52) commencing on
April 1, 1997. Upon execution and delivery of the Amended and Restated
Subordinated Notes, the Original Notes shall be returned to OSIA for
cancellation.
2. REACQUISITION RIGHTS UPON DEFAULT.
(a) If OSIA shall fail to make any principal or interest payment to
Pay-Ray or Tri-Temps under the Amended and Restated Subordinated Notes, within
thirty (30) days after their respective due date (a "Delinquent Payment"), and
such failure shall continue thereafter for a period of an additional 120 days,
Morelli shall have the right commencing on such 120th day (the "Election Date")
to reacquire certain of the business operations sold to OSIA pursuant to the
Purchase Agreement (the "Reacquisition Rights") in accordance with the terms
described below. Morelli may exercise his Reacquisition Rights by mailing a
"Reacquisition Notice" by personal service or certified mail, return receipt
requested to OSIA at any time after the Election Date and prior to any Cure Date
(as defined below) to either or both of Pay-Ray and Tri-Temps, as the case may
be. If Delinquent Payments shall be tendered prior to the date of mailing of the
Reacquisition Notice, Morelli's Reacquisition Right with respect to such
Delinquent Payments shall terminate. If any amount due under either Amended and
Restated Note shall thereafter become a Delinquent Payment, Morelli shall again
have the Reacquisition Rights described herein, subject to the exercise thereof
in accordance with the terms hereof prior to the "payment" of such Delinquent
Payment. For purposes of this Section 2, "payment" of a Delinquent Payment shall
take place on the date (the "Cure Date") that cleared funds are received in the
bank account of Pay-Ray or Tri-Temps as the case may be.
2
(b) For purposes hereof the term "Reacquisition Rights" shall mean the
right of Morelli to open and operate a staffing business at the Pay-Ray
Reacquisition Locations or the Tri-Temps Reacquisition Locations (as defined
below), and to acquire from OSIA the following assets of OSIA (the "Reacquired
Assets"): (i) employment contracts for all employees employed by OSIA at such
Reacquisition Location, (ii) customer lists for all customers serviced by OSIA
from such Reacquisition Location, (iii) all furniture, fixtures, leasehold
improvements and equipment (other than proprietary information or materials,
including computer software), and business records regarding the operations of
such Reacquisition Location.
(c) The term "Pay-Ray Reacquisition Locations" shall mean if the
Delinquent Payment shall arise with respect to any amount due to Pay-Ray prior
to February 28, 2000, the operations in Elgin, Illinois. In the event OSIA is
not conducting business operations at a designated Pay-Ray Reacquisition
Location at the time the Delinquent Payment originally became due, Morelli shall
have the right to designate an alternate location in the Northwest Region at
which OSIA is conducting business operations and which is producing gross income
in an amount approximately equal to the gross income of such defunct
Reacquisition Location, determined as of the date of this Amendment.
(d) The term "Tri-Temps Reacquisition Locations" shall mean, (i) if the
Delinquent Payment shall arise with respect to any amount due to Tri-Temps prior
to April 30, 1999, the operations in Kenosha, Wisconsin and Racine, Wisconsin,
(ii) if the Delinquent Payment shall arise with respect to any amount due to
Tri-Temps after April 30, 1999, the operations in Kenosha, Wisconsin. In the
event OSIA is not conducting business operations at a designated Tri-Temps
Reacquisition Location at the time the Delinquent Payment originally became due,
Morelli shall have the right to designate an alternate location in the Northwest
Region at which OSIA is conducting business operations and which is producing
gross income in an amount approximately equal to the gross income of such
defunct Reacquisition Location, determined as of the date of this Amendment.
(e) Morelli may, at his option, following the exercise of any
Reacquisition Rights, operate any or all of the Reacquisition Locations as a
franchisee of OSIA, or independent from OSIA. If Morelli elects to operate as a
franchisee he shall be required to execute and comply with the terms of OSIA's
standard franchise agreement, provided, however, that Morelli shall not be
required to pay any initial franchise fee. Morelli shall not use the trade name
"Labor World" or any other trade or service mark of OSIA for any Reacquisition
Location unless it shall operate as a franchise, and then only to the extent
then permitted in the applicable franchise agreements.
3
(f) The Reacquisition Notice shall specify a date for a closing (the
"Reacquisition Closing"), which shall be not less than ten (10) business days
following the date of the Reacquisition Notice. The Reacquisition Closing shall
be scheduled to effect the orderly transfer of the Reacquired Assets to Morelli
and such other matters as are described below, provided however that OSIA's
failure to cooperate in good faith in attending a Reacquisition Closing or in
delivering such documents as may be required shall not affect Morelli's legal
rights to the Reacquisition Assets or to commence operations at the
Reacquisition Location as of the date of the Reacquisition Closing specified in
the Reacquisition Notice.
(g) Upon the occurrence of an event giving rise to a Reacquisition
Right, the Non-Competition Agreements executed by Morelli, Pay-Ray, Tri-Temps
and David Mehr in connection with the Purchase Agreement shall be terminated and
of no further force or effect. For a period of one year following the
Reacquisition Closing, OSI shall not hire any individual employed directly or
indirectly by Morelli if such individual was employed by OSIA at any of the
Reacquisition Locations prior to the Reacquisition Closing.
(h) Following any Reacquisition Closing OSIA shall execute, acknowledge
and deliver to Morelli such other documents or instruments and take such other
reasonable action as may be requested by Morelli in order to carry out and
effectuate the intent and purposes of the Reacquisition.
(i) In order to enable Morelli to monitor the operations at the
Reacquisition Locations until the Amended and Restated Subordinated Note shall
be paid in full, OSIA shall, upon request by Morelli, deliver to Morelli copies
of all internal monthly operating reports pertaining to the Reacquisition
Locations, and shall, if requested by Morelli, on a quarterly basis meet with
Morelli in order to answer questions or discuss generally the operations of the
Reacquisitions Locations. In the event there are any Delinquent Payments
outstanding, Morelli shall have the right to increase the frequency of such
meetings to monthly. Any information obtained by Morelli shall constitute
confidential information and trade secrets and shall not be disclosed by Morelli
to any third parties other than financial advisors.
(j) Morelli shall be entitled to exercise the Reacquisition Rights
described herein even if OSIA shall be in Default under the terms of the Senior
Indebtedness, as such terms are defined in the Amended and Restated Subordinated
Notes. OSIA hereby waives its right to contest the Reacquisition Rights granted
hereunder on the basis that either Pay-Ray or Tri-Temps have adequate remedies
at law for money damages.
(k) The Reacquisition Rights provided for hereunder shall
apply separately to each of Pay-Ray and Tri-Temps, so that a
4
Delinquent Payment under the Pay-Ray Amended and Restated Subordinated Note will
only result in Reacquisition Rights to the Pay-Ray Reacquisition Locations and
Delinquent Payments under the Tri-Temps Amended and Restated Subordinated Note
will only result in Reacquisition Rights to the Tri-Temps Reacquisition
Locations.
(l) Upon the consummation of the Reacquisition Closing (i) OSIA
acknowledges that it will have no right to receive a return of any portion of
the purchase price paid to Pay-Ray or Tri-Temps, as appropriate, prior to the
Reacquisition Closing, and (ii) Pay-Ray and/or Tri-Temps, as appropriate,
acknowledge that they will have no right to collect any amounts otherwise due
under the respective Amended and Restated Subordinated Note and such note or
notes shall be returned to OSIA for cancellation.
3. MANDATORY ACCELERATION. In the event OSIA or an entity controlling,
controlled by or under common control with OSIA (the "Offering Company") files a
registration statement with the Securities and Exchange Commission for an
initial public offering of its common stock, and such registration statement is
declared effective, upon the closing of the sale of the shares to the public the
entire outstanding principal balance due under the Amended and Restated
Subordinated Notes payable to Pay-Ray and Tri-Temps, together with all accrued
and unpaid interest thereon. For purposes of this section the term "control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of an entity.
4. ASSIGNMENT. The Reacquisition Rights set forth in Section 2 hereof are unique
and special rights granted solely to Morelli and may not be sold, transferred or
assigned by Morelli to any other person or entity. Notwithstanding the
foregoing, however, Morelli may assign the Reacquisition Rights to any trust
established by Morelli solely for the benefit of his Family (a "Morelli Trust")
or to any corporation in which Morelli or a Morelli Trust is the owner of at
least sixty (60%) percent of all outstanding voting stock, provided, however,
that no assignment shall be made to any corporation in which Morelli or a
Morelli Trust owns less than one hundred (100%) percent if any of the remaining
shares are owned, directly or indirectly, by any entity which is a competitor of
OSIA which has consolidated gross revenues in excess of $50 million. The term
"Morelli" as used in this Amendment shall mean Morelli individually or any
assignee of Morelli as permitted under this Section 4.
5. EXPENSES. Upon execution of this Amendment the Company shall
pay all expenses incurred by Morelli in connection with the
negotiations, preparation and delivery of this Amendment and the
continuation of the transactions contemplated hereunder including
all accounting and legal fees.
5
6. CONTINUING EFFECT. Except as provided herein the terms and
conditions set forth in the Purchase Agreement shall remain in full
force and effect. The effective date of this Agreement shall be
the date set forth above.
7. EXECUTION. This Agreement may be executed in counterparts,
which may be by facsimile signature, each of which shall be
considered an original, and when taken together shall constitute
one document.
8. ATTORNEYS' FEES. If OSIA is found by a court of competent
jurisdiction to be in default under the terms of this Amendment,
Morelli shall be entitled to recover reasonable attorneys' fees and
court costs incurred in connection with such default.
9. CONSENT TO JURISDICTION. Section 9.16 of the Asset Purchase Agreement shall
be amended such that the reference to Florida state or federal court sitting in
Broward County, Florida shall be deemed to mean Illinois state or federal court
sitting in or for Kane County, Illinois.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 1
to Asset Purchase Agreement on the date set forth above.
WITNESSES: OUTSOURCE INTERNATIONAL OF
AMERICA, INC., a Florida
corporation
/s/ ILLEGIBLE By: /s/ ROBERT LEFCORT
-------------------------- -------------------------------
Illegible Robert Lefcort
Vice President
PAY-RAY, INC., an Illinois
corporation
/s/ ILLEGIBLE By: /s/ RAYMOND S. MORELLI
-------------------------- -------------------------------
Illegible Raymond S. Morelli
TRI-TEMPS, INC., an Illinois
corporation
/s/ ILLEGIBLE By: /s/ RAYMOND S. MORELLI
-------------------------- -------------------------------
Illegible Raymond S. Morelli
EMPLOYEES UNLIMITED INC., an
Illinois corporation
/s/ ILLEGIBLE By: /s/ RAYMOND S. MORELLI
-------------------------- -------------------------------
Illegible Raymond S. Morelli
6
/s/ RAYMOND S. MORELLI
-------------------------------
Raymond S. Morelli
Bank of Boston Connecticut, as agent ("Lender"), executes this Amendment Number
1 To Asset Purchase Agreement solely for the purpose of consenting to Pay-Ray
and Tri-Temps Reacquisition Rights set forth in Section 2 and covenant to
execute such documents reasonably requested by Pay-Ray or Tri-Temps in order to
release Lender's security interest in such assets in the event of an exercise of
Reacquisition Rights.
BANK OF BOSTON CONNECTICUT
By: /s/ ILLEGIBLE
---------------------------
7
EXHIBIT 1
ORIGINAL NOTES
8
EXHIBIT 2
AMENDED AND RESTATED SUBORDINATED NOTES
9
AFFIDAVIT OF LOST PROMISSORY NOTE
STATE OF ILLINOIS
COUNTY OF KANE
Raymond S. Morelli ("Affiant"), on behalf of and as PRESIDENT of
Pay-Ray, Inc., an Illinois corporation ("Pay-Ray"), being duly sworn, deposes
and says:
1. That OutSource International of America, Inc., a Florida corporation
(formerly known as OutSource International, Inc., an Illinois corporation) (the
"Corporation") has issued a promissory note dated April 1, 1996 in the principal
amount of $2,079,780.00 (the "Original Note") to Pay-Ray.
2. The Original Note has been lost, destroyed, or stolen so that it
cannot be found or produced, and Pay-Ray has not endorsed, assigned, sold,
pledged, hypothecated, negotiated or otherwise transferred the Original Note or
an interest therein.
3. That Pay-Ray has made a diligent effort to find the Original Note.
4. It is understood by Pay-Ray that if the Original Note is found, that
it will surrender said certificate to the Secretary of the Corporation for
cancellation.
5. This Affidavit of Lost Promissory Note is made for the purpose of
inducing the Corporation to issue an Amended and Restated Subordinated Note to
Pay-Ray.
6. Pay-Ray hereby agrees to indemnify and holds harmless the
Corporation and all of its shareholders from and against all costs, expenses,
liabilities, claims and amounts, including attorneys' fees, arising in
connection with claims regarding the Original Note or the issuance of a new
Amended and Restated Subordinated Note.
/s/ RAYMOND S. MORELLI
-----------------------------------
Raymond S. Morelli, as President of
Pay-Ray, Inc.
The foregoing affidavit was sworn to and subscribed before me this 20
day of February, 1997, by Raymond S. Morelli, as President of Pay-Ray, Inc., an
Illinois corporation, who is personally known to me or who has produced Driver's
License as identification and who did take an Oath.
/s/ ANITA M. DAZZO
-------------------------------
(AFFIX NOTARIAL SEAL) Notary Public, State of Florida
(Name) Anita M. Dazzo
Commission Number: _________________ My Commission Expires: 9/30/97
FTL1-231528
OUTSOURCE INTERNATIONAL, INC.
SUBORDINATED CONVERTIBLE NOTE
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
OTHER STATE. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE OFFERED FOR SALE, SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED NOR WILL ANY
ASSIGNEE OR TRANSFEREE HEREOF BE RECOGNIZED BY THE CORPORATION AS
HAVING ANY INTEREST IN SUCH NOTE WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH NOTE UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS.
$2,079,780.00 ------------------------
April 1, 1996
FOR VALUE RECEIVED, OutSource International, Inc., a corporation
organized and existing under the laws of the state of Illinois (the "Company"),
hereby promises to pay Pay-Ray, Inc. (together with any subsequent holder of
this Note, the "Holder") the principal sum of Two Million Seventy-nine Thousand
Seven Hundred and Eighty U.S. Dollars ($2,079,780.00), with interest in arrears
on the unpaid principal balance from time to time outstanding from the date
hereof until due and payable at the rate provided in Section 1(a) hereof. Each
Holder of this Note, by acceptance hereof, agrees to and shall be bound by the
provisions of this Note.
1. TERMS OF NOTE
(a) INTEREST AND PRINCIPAL. This Note shall bear interest on the
outstanding principal balance hereof (i) at the rate of ten percent (10%) per
annum (computed on the basis of a 365- day year) through the Determination Date
(as such term is defined in Section 1(c) hereof) and (ii) at the rate of
fourteen percent (14%) per annum (computed on the basis of a 365-day year) after
the Determination Date. Except as otherwise set forth in this Agreement, all
payments of principal and interest hereunder shall be made by the Company in
lawful money of the United States of America in immediately available funds on
the date such payment is due at the address of the Holder on the books of the
Company or such other place as the holder hereof shall designate to the Company
in writing.
No principal or interest payments shall be required to be paid to
Holder until the Determination Date. Beginning thirty (30) days after the
Determination Date and on the same day of each month thereafter, the Company
shall pay to Holder forty-eight (48) equal monthly payments of principal and
interest in the amount of $58,249.99, on or before the date forty-eight (48)
months after the Determination Date (the "Maturity Date"). If any amount of
principal and
interest hereunder is not paid within five (5) business days of its due date,
such amount shall bear interest at eighteen percent (18%) per annum until paid.
(b) VOLUNTARY PREPAYMENT. Prior to July 1, 1997, the Company may not
prepay this Note in whole or in part (a "Voluntary Prepayment") without the
written consent of Holder. Beginning July 1, 1997, the Company may make one or
more Voluntary Prepayments from time to time without premium or penalty, upon
not less than ten (10) days' prior written notice to the Holder hereof. Each
such notice shall specify the prepayment date (the "Prepayment Date") and the
principal amount hereof to be prepaid. All Voluntary Prepayments shall be
applied first to accrued but unpaid interest and second to the payment of
principal on this Note. Notwithstanding the foregoing, if the Company elects to
make a Voluntary Prepayment prior to the Conversion Date without the written
consent of the Holder, the Company shall deliver to Holder an option to
purchase, at the Conversion Price (as such term is defined in Section 2(c)
below), the number of shares of Common Stock of the Offering Company (as such
term is defined in Section 2(d) hereof) equal to the quotient obtained by
dividing (i) One Million Two Hundred Twenty-seven Thousand Seventy Dollars
($1,227,070.00) by (ii) the Conversion Price.
(c) DETERMINATION DATE. The "Determination Date" means the earlier of
(i) the Conversion Date (as such term is defined in Section 2(b) hereof) or (ii)
July 1, 1996.
(d) PAYMENTS. Principal, interest and charges hereunder are payable in
lawful money of the United States. Payments under this Note shall be made by
direct wire transfer, at the Company's cost, to such banking or savings
institution as Holder shall direct from time to time.
2. CONVERSION.
(a) CONVERSION OF NOTE INTO COMMON STOCK. On the Conversion Date,
subject to and in compliance with the provisions of this Section 2, (i) the
Company shall pay to Holder by cashier's check or bank wire (y) the Cash
Conversion Payment (as such term is defined in Section 2(e) hereof) and (z) all
of the accrued and unpaid interest of this Note, and (ii) all of the outstanding
principal amount of this Note, less the amount of the Cash Conversion Payment,
shall be converted into shares of Common Stock of the Offering Company (as such
term is defined in Section 2(d) hereof). The number of shares of Common Stock to
which the Holder shall be entitled upon conversion shall be the quotient
obtained by dividing the outstanding principal amount of this Note, less the
amount of the Cash Conversion Payment, by the Conversion Price (determined as
provided in Section 2(c) hereof). The Offering Company's delivery to the holder
of the Cash Conversion Payment and the fixed number of shares of Common Stock of
the Offering Company (and any cash in lieu of a fractional share of such Common
Stock) shall be deemed to satisfy the Company's obligation to pay the principal
amount of the Note and all accrued interest that has not previously been paid.
The Cash Conversion Payment and the Common Stock of the Offering Company so
delivered shall be treated as payment of accrued interest and principal. Thus,
accrued interest shall be treated as paid rather than cancelled, extinguished or
forfeited. No fractions of shares or scrip representing fractions of shares will
be issued on conversion, but instead of any fractional interest the Company
shall
2
pay a cash adjustment. Notwithstanding the foregoing, the Company shall have no
obligation to pay the Cash Conversion Payment and the accrued and unpaid
interest and to deliver the shares of Common Stock unless and until the Holder
tenders this Note to the Company marked "PAID IN FULL".
(b) CONVERSION DATE. The "Conversion Date" means the closing date of
the sale of the Offering Company's newly issued Common Stock in a public
offering (the "Public Offering").
(c) CONVERSION PRICE. The Conversion Price per share shall be equal to
the offering price per share of the Common Stock pursuant to the Public
Offering.
(d) OFFERING COMPANY. The "Offering Company" means the Company or an
entity controlling, controlled by or under common control with the Company for
which a registration statement for the initial public offering of its Common
Stock has become effective. For the purposes of this definition, the term
"control" shall mean the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of an entity.
(e) CASH CONVERSION PAYMENT. The "Cash Conversion Payment" means an
amount equal to the lesser of (i) Eight Hundred Fifty-two Thousand Seven Hundred
and Ten Dollars ($852,710.00) (the "Initial Cash Amount") or (ii) the Initial
Cash Amount less the aggregate amount of all payments of principal of this Note
made by the Company through the Conversion Date; provided, however, that if the
aggregate amount of all payments of principal of this Note made by the Company
through the Conversion Date is greater than the Initial Cash Amount, the Cash
Conversion Payment shall be zero.
3. CONVERSION REPRESENTATIONS.
(a) The Holder by its acceptance of this Note acknowledges that it is
aware that this Note and the shares of Common Stock issuable to it by the
Offering Company upon the conversion of this Note have not been registered under
the Securities Act or the securities laws of any state or other jurisdiction.
(b) The Holder warrants and represents to the Company that it has
acquired this Note, and, upon the conversion of this Note, it will be acquiring
Common Stock, for investment and not with a view to or for sale in connection
with any distribution of this Note or such Common Stock or with any intention of
distributing or selling this Note or such Common Stock. As a condition to the
issuance of Common Stock upon conversion, the Holder requesting to convert this
Note shall execute appropriate investment letters and other documents, if any,
as may be reasonably required by the Company and its counsel to assure that such
Common Stock is issued only in compliance with applicable securities laws.
(c) All shares of Common Stock acquired by the Holder upon conversion
shall be evidenced by stock certificate(s) containing a restrictive legend
indicating the shares have not
3
been registered pursuant to the Securities Act or the securities laws of any
state or other jurisdiction and may not be sold or transferred unless pursuant
to the Securities Act and securities laws of any applicable state or other
jurisdiction.
(d) The Holder has no right to demand that the Offering Company
register this Note or the shares of Common Stock issued or issuable under this
Note.
4. SUBORDINATION IN RIGHT OF PAYMENT TO SENIOR INDEBTEDNESS.
(a) SUBORDINATION. The principal and interest on this Note is and shall
be subordinated in right of payment, to the extent and in the manner hereinafter
set forth, to the prior payment in full of all Senior Indebtedness (as defined
below).
(b) SENIOR INDEBTEDNESS. "Senior Indebtedness" means the "Secured
Obligations," as such term is defined in the Loan Agreement (as defined below),
together with (a) all complete or partial refinancings of the Secured
Obligations, (b) any increases, amendments, modifications, renewals or
extensions of any of the foregoing and (c) any interest accruing on the
foregoing after the commencement of a Proceeding (as defined below), without
regard to whether or not such interest is an allowed claim; provided, however,
that in no event shall the principal amount of the Senior Indebtedness exceed
$40,000,000. Senior Indebtedness shall be considered to be outstanding whenever
any loan commitment under the Loan Agreement is outstanding.
(c) LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment or
distribution of assets of the Company of any kind or character (whether in cash,
securities or other property) to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property:
(i) The holders of Senior Indebtedness shall be entitled
to receive payment in full of all Senior Indebtedness
or such payment shall first be duly provided for in
cash or in a manner satisfactory to the holders of
Senior Indebtedness before Holder shall be entitled
to receive any payment on this Note; and
(ii) Until the Senior Indebtedness is paid in full in cash
or in a manner satisfactory to the holders of Senior
Indebtedness, any payment or distribution to which
the Holder would be entitled but for this Section
shall be made to the Agent (as defined below) for
application to the payment of the Senior
Indebtedness, except that the Holder may receive
securities, including interest notes, that are
subordinated to the Senior Indebtedness to at least
the same extent as this Note.
(iii) Notwithstanding the foregoing provisions of this
Section, if the Company shall make any payment or
distribution to the Holder on account of this
4
Note at a time when such payment is prohibited by
this Section, such payment or distribution shall be
held by the Holder, in trust for the ratable benefit
of, and shall be paid forthwith over and delivered
to, the Agent for application to the payment of all
Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in
accordance with its terms, after giving effect any
concurrent payment or distribution to or for the
holders of Senior Indebtedness, and the Holder
irrevocably authorizes, empowers and directs all
receivers, trustees, liquidators, custodians,
conservators and others having authority in the
premises to effect all such payments and
distributions, and the Holder also irrevocably
authorizes, empowers and directs the Agent to demand,
sue for, collect and receive every such payment or
distribution.
(iv) The Holder agrees to execute, verify, deliver and
file any proofs of claim in respect of the
indebtedness evidenced by this Note requested by the
Agent in connection with any such proceeding and
hereby irrevocably authorizes, empowers and appoints
the Agent as its agent and attorney-in- fact to (A)
execute, verify, deliver and file such proofs of
claim upon the failure of the Holder to do so not
less than thirty (30) days before the expiration of
the time to file any such proof and (b) vote such
claim in any such proceeding upon the failure of the
Holder to do so prior to five (5) days before the
expiration of the time to vote any such claim;
provided that the Agent shall have no obligation to
execute, verify, deliver, file and/or vote any such
proof of claim.
(d) DEFAULT ON SENIOR INDEBTEDNESS.
(i) Upon the maturity of the Senior Indebtedness by lapse
of time, acceleration (unless waived in writing by
the holders of Senior Indebtedness) or otherwise, all
of the Senior Indebtedness shall first be paid in
full, or such payment duly provided for, in cash or
in a manner satisfactory to the holders of the Senior
Indebtedness, before any payment is made by the
Company on account of this Note and, until all of the
Senior Indebtedness is paid in full, any payment or
other distribution to which the Holder would be
entitled but for the provisions of this Section shall
(unless otherwise required by this Section 4) be made
to the Agent, for application to the payment of the
Senior Indebtedness, except that the Holder may
receive securities, including interest notes, that
are subordinated to the Senior Indebtedness to at
least the same extent as this Note.
(ii) During the continuance of any default in the payment
of any of the Senior Indebtedness, upon the
occurrence of receipt by the Holder of written notice
from the Agent specifying that such payment default
has occurred
5
and is continuing, the Company may not make any
payment of principal, interest, or other amounts
owing on this Note, and the Holder may not pursue any
Collection Action (as defined below) until such
payment default has been cured by the Company or
waived in writing by the holders of the Senior
Indebtedness.
(iii) During the continuance of any other event of default
with respect to the Senior Indebtedness pursuant to
which the maturity thereof may be accelerated, upon
the occurrence of receipt by the Holder of written
notice from the Agent specifying that it is a payment
blockage notice delivered pursuant to this Section,
the Company may not make any payment of principal,
interest or other amounts owing on this Note, and the
Holder may not pursue any Collection Action, for a
period ("Payment Blockage Period") commencing on the
date of receipt of such notice and ending one hundred
and eighty (180) days thereafter (unless such Payment
Blockage Period shall be terminated by written notice
to the Holder under this clause (iii) from the
Agent). The aggregate duration of all Payment
Blockage Periods shall not exceed one hundred and
eighty (180) days during any period of three hundred
and sixty (360) consecutive days.
(iv) Notwithstanding the foregoing provisions of this
Section, if the Company shall make any payment or
distribution to the Holder on account of this Note at
a time when such payment is prohibited by this
Section, unless otherwise required by this Section,
such payment or distribution shall be held by the
Holder, in trust for the ratable benefit of, and
shall be paid forthwith over and delivered to, the
Agent for application to the payment of all of the
Senior Indebtedness remaining unpaid to the extent
necessary to pay all of the Senior Indebtedness in
full in accordance with its terms, after giving
effect any concurrent payment or distribution to or
for the holders of the Senior Indebtedness.
(e) SUBROGATION. After all Senior Indebtedness is paid in full and
until this Note is paid in full (but not prior to such time), the Holder shall
be subrogated to the rights of the holders of Senior Indebtedness to receive
payments and distributions applicable to the Senior Indebtedness to the extent
that payments and distributions otherwise payable to the Holder have been
applied to the payment of Senior Indebtedness. A payment or distribution made
under this Section to holders of Senior Indebtedness which otherwise would have
been made to the Holder is not, as between the Company and the Holder, a payment
by the Company on Senior Indebtedness.
(f) NO COLLECTION ACTION. Until all of the Senior Indebtedness is paid
in full and all loan commitments under the Loan Agreement have terminated, the
Holder shall not take any Collection Action with respect to the indebtedness
evidenced by this Note until the expiration of thirty (30) days following the
Holder's delivery to the Agent of written notice to the effect
6
that an Event of Default has occurred under this Note and that the Holder
intends to take Collection Action in respect thereof, provided, however, that
the right of the Holder to take Collection Action after the expiration of such
thirty (30) day period shall be subject to the limitations of Section 4(d).
(g) RETURN OF PAYMENTS. The provisions of this Section 4 shall be
reinstated if at any time any payment of any of the Senior Indebtedness is
rescinded or must otherwise be returned by any holder of the Senior Indebtedness
or any representative of such holder.
(h) NO CHALLENGE TO SENIOR INDEBTEDNESS. The Holder agrees not to
initiate or prosecute any claim, action or other proceeding challenging the
enforceability of the Senior Indebtedness or any liens and security interests
securing the Senior Indebtedness.
(i) MODIFICATIONS TO SENIOR INDEBTEDNESS. The holders of the Senior
Indebtedness may at any time and from time to time without the consent of or
notice to the Holder, without incurring liability to the Holder and without
impairing or releasing the obligations of the Holder under this Section 4,
change the manner or place of payment or extend the time of payment of or renew
or alter any Senior Indebtedness, or amend in any manner any agreement, note,
guaranty or other instrument evidencing or securing or otherwise relating to the
Senior Indebtedness; provided that such holders shall not increase the principal
amount of the Senior Indebtedness to an amount in excess of the limit set forth
in the definition of "Senior Indebtedness" herein.
(j) NO SECURITY FOR NOTE. The Holder represents that it does not have,
and agrees that it shall not acquire, any security interest in the assets of the
Company or any other Borrower (as defined in the Loan Agreement) as security for
the indebtedness evidenced hereby.
(k) NO MODIFICATION OF NOTE. Until all of the Senior Indebtedness is
paid in full and all loan commitments under the Loan Agreement have terminated,
without the prior written consent of the Agent, the Holder shall not agree to
any amendment, modification or supplement to this Note or the indebtedness
evidenced by this Note, including without limitation, any amendment,
modification or supplement the effect of which is to (i) increase the principal
amount hereof or the rate of interest hereon, (ii) change the dates upon which
payments of principal or interest hereon are due, (iii) change or add any event
of default, (iv) change the prepayment provisions hereof or (v) alter the
subordination provisions hereof, including, without limitation, subordinating
this Note or the indebtedness evidenced hereby to any other debt.
(l) ASSIGNMENT. Until all of the Senior Indebtedness is paid in full
and all loan commitments under the Loan Agreement have terminated, the Holder
shall not sell, assign, pledge, dispose of or otherwise transfer all or any
portion of this Note or the indebtedness evidenced hereby unless prior to the
consummation of any such action, the transferee thereof shall execute and
deliver to the Agent an agreement providing for the continued subordination of
this Note and the indebtedness evidenced hereby as provided herein.
Notwithstanding the failure to execute or deliver any such agreement, the
subordination effected hereby shall survive
7
any sale, assignment, pledge, disposition or other transfer of all or any
portion of this Note or the indebtedness evidenced hereby, and the subordination
terms of this Note shall be binding upon the successors and assigns of the
Holder.
(m) PAYMENT ON CONVERSION DATE. This Section 4 shall not prohibit the
Company from making the Cash Conversion Payment to the Holder on the Conversion
Date from the proceeds of the Public Offering, provided that the Company also
makes all payments that are due on the Senior Indebtedness on the Conversion
Date.
(n) CERTAIN DEFINED TERMS. As used herein,
(i) "Agent" means The First National Bank of Boston, in
its capacity as agent for the holders of the Senior
Indebtedness, or any successor agent appointed
pursuant to the terms of the Loan Agreement, provided
that the Holder may rely on a certificate from any
such successor agent to the effect that such
successor is acting as a successor agent under the
Loan Agreement.
(ii) "Collection Action" means (A) to demand, sue for,
take or receive from or on behalf of the Company, by
set-off or in any other manner, the whole or any part
of any moneys which may now or hereafter be owing by
the Company under this Note, (B) to initiate or
participate with others in any suit, action or
proceeding against the Company to (1) enforce payment
of or to collect the whole or any part of the
indebtedness evidenced by this Note or (2) commence
judicial enforcement of any of the rights and
remedies under this Note or applicable law with
respect to this Note, or (C) to accelerate any
indebtedness evidenced by this Note.
(iii) "Loan Agreement" means that certain Loan and Security
Agreement dated as of July 20, 1995, among the
Company, certain of its affiliates, the lenders party
thereto from time to time and The First National Bank
of Boston, as agent for said lenders, as heretofore
or hereafter amended, supplemented or restated from
time to time.
(iv) "Proceeding" means any voluntary or involuntary
insolvency, bankruptcy, receivership, custodianship,
liquidation, dissolution, reorganization, assignment
for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with
similar powers or any other proceeding for the
liquidation, dissolution or other winding up of the
Company or any other Borrower (as such term is
defined in the Loan Agreement).
8
5. EVENTS OF DEFAULT AND ACCELERATION.
If any of the following events shall occur and be continuing for any
reason whatsoever (and whether such occurrence shall be voluntary or involuntary
or come about to be effected by operation of law or otherwise):
(a) the Company defaults in the payment of the principal of or any
interest on this Note and such default continues for a period of thirty (30)
business days after the date such payment was due; or
(b) the Company shall:
(i) have commenced a voluntary case under Title 11 of the
United States Code as from time to time in effect, or have authorized, by
appropriate proceedings of its board of directors or other governing body, the
commencement of such a voluntary case;
(ii) have filed an answer or other pleading admitting or
failing to deny the material allegations of a petition filed against it
commencing an involuntary case under said Title 11, or seeking, consenting to or
acquiescing in the relief therein provided, or have failed to controvert timely
the material allegations of any such petition;
(iii) be subject to the entry of an order for relief against
it in any involuntary case commenced under said Title 11 which remains
undischarged or unstayed for more than sixty (60) days;
(iv) have sought relief as a debtor under any applicable law,
other than said Title 11, of any jurisdiction relating to the insolvency,
liquidation or reorganization of debtors or to the modification or alteration of
the rights of creditors, or have consented to or acquiesced in such relief;
(v) be subject the entry of an order by a court of competent
jurisdiction (A) finding it to be bankruptcy or insolvent or (B) ordering or
approving its liquidation, reorganization or any modification or alteration of
the rights of its creditors which remains undischarged or unstayed for more than
sixty (60) days;
(vi) be subject to the entry of an order by a court of
competent jurisdiction assuming custody of, or appointing a receiver or other
custodian for, all or a substantial part of its property which remains
undischarged or unstayed for more than sixty (60) days; or
(vii) have entered into a composition with its creditors or
have appointed or consented to the appointment of a receiver or other custodian
for all or a substantial part of its property;
9
then, subject to the provisions of Section 4, the Holder may, by ten (10) days
written notice to the Company, declare the Company to be in default hereunder
(an "Event of Default") and may exercise any right, power or remedy permitted to
such holder or holders by law, including, without limitation:
(y) the right to declare the entire principal amount of this
Note and accrued interest thereon, if any, due and payable; and
(z) the right to commence any proceeding against the Company
in furtherance of the foregoing.
6. COMPLIANCE WITH USURY LAWS.
All agreements between the Company and the Holder are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the Indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to the Holder for the use,
forbearance or detention of the Indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof; provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Note shall be governed by such new law as of its
effective date. If, from any circumstance whatsoever, fulfillment of any
provision hereof at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then the
obligation to be fulfilled shall automatically be reduced to the limit of such
validity, and if from any circumstances the Holder should ever receive as
interest an amount which would exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the principal
balance evidenced hereby and not to the payment of interest. This provision
shall control every other provision of all agreements between the Company and
the Holder.
7. DEFINED TERMS.
Unless the context otherwise requires, all capitalized words and
phrases used but not defined herein and defined in the Asset Purchase Agreement
shall have the respective meanings attributed thereto in the Asset Purchase
Agreement.
8. NOTICES.
All notices, requests, demands and other communications hereunder shall
be in writing, shall be deemed to have been duly given when received by the
intended recipient and shall be delivered by overnight delivery service or hand
delivered, addressed as follows:
10
If to Holder:
c/o Raymond S. Morelli
Office Ours
1111 Plaza Drive, Suite 320
Schaumberg, Illinois 60173
With a copy to:
Louis J. Morelli, Esq.
37 W 570 Route 38
St. Charles, Illinois 60175
If to Company:
OutSource International, Inc.
8000 North Federal Highway
Boca Raton, Florida 33487
With a copy to:
Holland & Knight
One East Broward Boulevard, Suite 1300
Fort Lauderdale, Florida 33301
Attention: Steven Sonberg, Esquire
9. GOVERNING LAW.
This Note shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of the State
of Illinois. The parties to this Note agree that any claim, suit, action or
proceeding arising out of or relating to this Note shall be submitted for
adjudication exclusively in any Illinois state or federal court sitting in Kane
County, Illinois 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.
11
10. WAIVER OF TRIAL BY JURY.
THE COMPANY AND HOLDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE COMPANY OR HOLDER.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under seal by its duly authorized officer as of the date set forth above.
OUTSOURCE INTERNATIONAL, INC.
By: /s/ LOUIS A. MORELLI
----------------------------
Name: Louis A. Morelli
----------------------------
Title: President
----------------------------
ATTEST:
By: /s/ DAVID H. HINZE
----------------------------
Name: David H. Hinze
----------------------------
Title: Vice President
----------------------------
[Corporate Seal]
ACCEPTED AND AGREED:
PAY-RAY, INC.
By: /s/ RAYMOND S MORELLI
----------------------------
Name: Raymond S. Morelli
----------------------------
Title: President
----------------------------
12
STATE OF ILLINOIS
COUNTY OF KANE
The foregoing instrument was acknowledged before me this 16th day of
April, 1997, by Louis A. Morelli, President of OutSource International, Inc., on
behalf of the company. He who is personally known to me/has produced Driver's
License as identification.
(SEAL)
/s/ ANITA M. DAZZO
--------------------------
Printed/Typed Name: Anita M. Dazzo
Notary Public State of Illinois
Commission Number:
13
OUTSOURCE INTERNATIONAL, INC.
SUBORDINATED CONVERTIBLE NOTE
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
OTHER STATE. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE OFFERED FOR SALE, SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED NOR WILL ANY
ASSIGNEE OR TRANSFEREE HEREOF BE RECOGNIZED BY THE CORPORATION AS
HAVING ANY INTEREST IN SUCH NOTE WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH NOTE UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS.
$1,320,220.00 ------------------------
April 1, 1996
FOR VALUE RECEIVED, OutSource International, Inc., a corporation
organized and existing under the laws of the state of Illinois (the "Company"),
hereby promises to pay Tri-Temps, Inc. (together with any subsequent holder of
this Note, the "Holder") the principal sum of One Million Three Hundred Twenty
Thousand Two Hundred and Twenty U.S. Dollars ($1,320,220.00), with interest in
arrears on the unpaid principal balance from time to time outstanding from the
date hereof until due and payable at the rate provided in Section 1(a) hereof.
Each Holder of this Note, by acceptance hereof, agrees to and shall be bound by
the provisions of this Note.
1. TERMS OF NOTE
(a) INTEREST AND PRINCIPAL. This Note shall bear interest on the
outstanding principal balance hereof (i) at the rate of ten percent (10%) per
annum (computed on the basis of a 365- day year) through the Determination Date
(as such term is defined in Section 1(c) hereof) and (ii) at the rate of
fourteen percent (14%) per annum (computed on the basis of a 365-day year) after
the Determination Date. Except as otherwise set forth in this Agreement, all
payments of principal and interest hereunder shall be made by the Company in
lawful money of the United States of America in immediately available funds on
the date such payment is due at the address of the Holder on the books of the
Company or such other place as the holder hereof shall designate to the Company
in writing.
No principal or interest payments shall be required to be paid to
Holder until the Determination Date. Beginning thirty (30) days after the
Determination Date and on the same day of each month thereafter, the Company
shall pay to Holder forty-eight (48) equal monthly payments of principal and
interest in the amount of $36,976.40, on or before the date forty-eight
(48) months after the Determination Date (the "Maturity Date"). If any amount of
principal and interest hereunder is not paid within five (5) business days of
its due date, such amount shall bear interest at eighteen percent (18%) per
annum until paid.
(b) VOLUNTARY PREPAYMENT. Prior to July 1, 1997, the Company may not
prepay this Note in whole or in part (a "Voluntary Prepayment") without the
written consent of Holder. Beginning July 1, 1997, the Company may make one or
more Voluntary Prepayments from time to time without premium or penalty, upon
not less than ten (10) days' prior written notice to the Holder hereof. Each
such notice shall specify the prepayment date (the "Prepayment Date") and the
principal amount hereof to be prepaid. All Voluntary Prepayments shall be
applied first to accrued but unpaid interest and second to the payment of
principal on this Note. Notwithstanding the foregoing, if the Company elects to
make a Voluntary Prepayment prior to the Conversion Date without the written
consent of the Holder, the Company shall deliver to Holder an option to
purchase, at the Conversion Price (as such term is defined in Section 2(c)
below), the number of shares of Common Stock of the Offering Company (as such
term is defined in Section 2(d) hereof) equal to the quotient obtained by
dividing (i) Seven Hundred Seventy-eight Thousand Nine Hundred and Thirty
($778,930.00) by (ii) the Conversion Price.
(c) DETERMINATION DATE. The "Determination Date" means the earlier of
(i) the Conversion Date (as such term is defined in Section 2(b) hereof) or (ii)
July 1, 1996.
(d) PAYMENTS. Principal, interest and charges hereunder are payable in
lawful money of the United States. Payments under this Note shall be made by
direct wire transfer, at the Company's cost, to such banking or savings
institution as Holder shall direct from time to time.
2. CONVERSION.
(a) CONVERSION OF NOTE INTO COMMON STOCK. On the Conversion Date,
subject to and in compliance with the provisions of this Section 2, (i) the
Company shall pay to Holder by cashier's check or bank wire (y) the Cash
Conversion Payment (as such term is defined in Section 2(e) hereof) and (z) all
of the accrued and unpaid interest of this Note, and (ii) all of the outstanding
principal amount of this Note, less the amount of the Cash Conversion Payment,
shall be converted into shares of Common Stock of the Offering Company (as such
term is defined in Section 2(d) hereof). The number of shares of Common Stock to
which the Holder shall be entitled upon conversion shall be the quotient
obtained by dividing the outstanding principal amount of this Note, less the
amount of the Cash Conversion Payment, by the Conversion Price (determined as
provided in Section 2(c) hereof). The Offering Company's delivery to the holder
of the Cash Conversion Payment and the fixed number of shares of Common Stock of
the Offering Company (and any cash in lieu of a fractional share of such Common
Stock) shall be deemed to satisfy the Company's obligation to pay the principal
amount of the Note and all accrued interest that has not previously been paid.
The Cash Conversion Payment and the Common Stock of the Offering Company so
delivered shall be treated as payment of accrued interest and principal. Thus,
accrued interest shall be treated as paid rather than cancelled, extinguished or
forfeited. No fractions of shares or scrip representing fractions
2
of shares will be issued on conversion, but instead of any fractional interest
the Company shall pay a cash adjustment. Notwithstanding the foregoing, the
Company shall have no obligation to pay the Cash Conversion Payment and the
accrued and unpaid interest and to deliver the shares of Common Stock unless and
until the Holder tenders this Note to the Company marked "PAID IN FULL".
(b) CONVERSION DATE. The "Conversion Date" means the closing date of
the sale of the Offering Company's newly issued Common Stock in a public
offering (the "Public Offering").
(c) CONVERSION PRICE. The Conversion Price per share shall be equal to
the offering price per share of the Common Stock pursuant to the Public
Offering.
(d) OFFERING COMPANY. The "Offering Company" means the Company or an
entity controlling, controlled by or under common control with the Company for
which a registration statement for the initial public offering of its Common
Stock has become effective. For the purposes of this definition, the term
"control" shall mean the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of an entity.
(e) CASH CONVERSION PAYMENT. The "Cash Conversion Payment" means an
amount equal to the lesser of (i) Five Hundred Forty-one Thousand Two Hundred
and Ninety Dollars ($541,290.00) (the "Initial Cash Amount") or (ii) the Initial
Cash Amount less the aggregate amount of all payments of principal of this Note
made by the Company through the Conversion Date; provided, however, that if the
aggregate amount of all payments of principal of this Note made by the Company
through the Conversion Date is greater than the Initial Cash Amount, the Cash
Conversion Payment shall be zero.
3. CONVERSION REPRESENTATIONS.
(a) The Holder by its acceptance of this Note acknowledges that it is
aware that this Note and the shares of Common Stock issuable to it by the
Offering Company upon the conversion of this Note have not been registered under
the Securities Act or the securities laws of any state or other jurisdiction.
(b) The Holder warrants and represents to the Company that it has
acquired this Note, and, upon the conversion of this Note, it will be acquiring
Common Stock, for investment and not with a view to or for sale in connection
with any distribution of this Note or such Common Stock or with any intention of
distributing or selling this Note or such Common Stock. As a condition to the
issuance of Common Stock upon conversion, the Holder requesting to convert this
Note shall execute appropriate investment letters and other documents, if any,
as may be reasonably required by the Company and its counsel to assure that such
Common Stock is issued only in compliance with applicable securities laws.
3
(c) All shares of Common Stock acquired by the Holder upon conversion
shall be evidenced by stock certificate(s) containing a restrictive legend
indicating the shares have not been registered pursuant to the Securities Act or
the securities laws of any state or other jurisdiction and may not be sold or
transferred unless pursuant to the Securities Act and securities laws of any
applicable state or other jurisdiction.
(d) The Holder has no right to demand that the Offering Company
register this Note or the shares of Common Stock issued or issuable under this
Note.
4. SUBORDINATION IN RIGHT OF PAYMENT TO SENIOR INDEBTEDNESS.
(a) SUBORDINATION. The principal and interest on this Note is and shall
be subordinated in right of payment, to the extent and in the manner hereinafter
set forth, to the prior payment in full of all Senior Indebtedness (as defined
below).
(b) SENIOR INDEBTEDNESS. "Senior Indebtedness" means the "Secured
Obligations," as such term is defined in the Loan Agreement (as defined below),
together with (a) all complete or partial refinancings of the Secured
Obligations, (b) any increases, amendments, modifications, renewals or
extensions of any of the foregoing and (c) any interest accruing on the
foregoing after the commencement of a Proceeding (as defined below), without
regard to whether or not such interest is an allowed claim; provided, however,
that in no event shall the principal amount of the Senior Indebtedness exceed
$40,000,000. Senior Indebtedness shall be considered to be outstanding whenever
any loan commitment under the Loan Agreement is outstanding.
(c) LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment or
distribution of assets of the Company of any kind or character (whether in cash,
securities or other property) to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property:
(i) The holders of Senior Indebtedness shall be entitled
to receive payment in full of all Senior Indebtedness
or such payment shall first be duly provided for in
cash or in a manner satisfactory to the holders of
Senior Indebtedness before Holder shall be entitled
to receive any payment on this Note; and
(ii) Until the Senior Indebtedness is paid in full in cash
or in a manner satisfactory to the holders of Senior
Indebtedness, any payment or distribution to which
the Holder would be entitled but for this Section
shall be made to the Agent (as defined below) for
application to the payment of the Senior
Indebtedness, except that the Holder may receive
securities, including interest notes, that are
subordinated to the Senior Indebtedness to at least
the same extent as this Note.
4
(iii) Notwithstanding the foregoing provisions of this
Section, if the Company shall make any payment or
distribution to the Holder on account of this Note at
a time when such payment is prohibited by this
Section, such payment or distribution shall be held
by the Holder, in trust for the ratable benefit of,
and shall be paid forthwith over and delivered to,
the Agent for application to the payment of all
Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in
accordance with its terms, after giving effect any
concurrent payment or distribution to or for the
holders of Senior Indebtedness, and the Holder
irrevocably authorizes, empowers and directs all
receivers, trustees, liquidators, custodians,
conservators and others having authority in the
premises to effect all such payments and
distributions, and the Holder also irrevocably
authorizes, empowers and directs the Agent to demand,
sue for, collect and receive every such payment or
distribution.
(iv) The Holder agrees to execute, verify, deliver and
file any proofs of claim in respect of the
indebtedness evidenced by this Note requested by the
Agent in connection with any such proceeding and
hereby irrevocably authorizes, empowers and appoints
the Agent as its agent and attorney-in- fact to (A)
execute, verify, deliver and file such proofs of
claim upon the failure of the Holder to do so not
less than thirty (30) days before the expiration of
the time to file any such proof and (b) vote such
claim in any such proceeding upon the failure of the
Holder to do so prior to five (5) days before the
expiration of the time to vote any such claim;
provided that the Agent shall have no obligation to
execute, verify, deliver, file and/or vote any such
proof of claim.
(d) DEFAULT ON SENIOR INDEBTEDNESS.
(i) Upon the maturity of the Senior Indebtedness by lapse
of time, acceleration (unless waived in writing by
the holders of Senior Indebtedness) or otherwise, all
of the Senior Indebtedness shall first be paid in
full, or such payment duly provided for, in cash or
in a manner satisfactory to the holders of the Senior
Indebtedness, before any payment is made by the
Company on account of this Note and, until all of the
Senior Indebtedness is paid in full, any payment or
other distribution to which the Holder would be
entitled but for the provisions of this Section shall
(unless otherwise required by this Section 4) be made
to the Agent, for application to the payment of the
Senior Indebtedness, except that the Holder may
receive securities, including interest notes, that
are subordinated to the Senior Indebtedness to at
least the same extent as this Note.
5
(ii) During the continuance of any default in the payment
of any of the Senior Indebtedness, upon the
occurrence of receipt by the Holder of written notice
from the Agent specifying that such payment default
has occurred and is continuing, the Company may not
make any payment of principal, interest, or other
amounts owing on this Note, and the Holder may not
pursue any Collection Action (as defined below) until
such payment default has been cured by the Company or
waived in writing by the holders of the Senior
Indebtedness.
(iii) During the continuance of any other event of default
with respect to the Senior Indebtedness pursuant to
which the maturity thereof may be accelerated, upon
the occurrence of receipt by the Holder of written
notice from the Agent specifying that it is a payment
blockage notice delivered pursuant to this Section,
the Company may not make any payment of principal,
interest or other amounts owing on this Note, and the
Holder may not pursue any Collection Action, for a
period ("Payment Blockage Period") commencing on the
date of receipt of such notice and ending one hundred
and eighty (180) days thereafter (unless such Payment
Blockage Period shall be terminated by written notice
to the Holder under this clause (iii) from the
Agent). The aggregate duration of all Payment
Blockage Periods shall not exceed one hundred and
eighty (180) days during any period of three hundred
and sixty (360) consecutive days.
(iv) Notwithstanding the foregoing provisions of this
Section, if the Company shall make any payment or
distribution to the Holder on account of this Note at
a time when such payment is prohibited by this
Section, unless otherwise required by this Section,
such payment or distribution shall be held by the
Holder, in trust for the ratable benefit of, and
shall be paid forthwith over and delivered to, the
Agent for application to the payment of all of the
Senior Indebtedness remaining unpaid to the extent
necessary to pay all of the Senior Indebtedness in
full in accordance with its terms, after giving
effect any concurrent payment or distribution to or
for the holders of the Senior Indebtedness.
(e) SUBROGATION. After all Senior Indebtedness is paid in full and
until this Note is paid in full (but not prior to such time), the Holder shall
be subrogated to the rights of the holders of Senior Indebtedness to receive
payments and distributions applicable to the Senior Indebtedness to the extent
that payments and distributions otherwise payable to the Holder have been
applied to the payment of Senior Indebtedness. A payment or distribution made
under this Section to holders of Senior Indebtedness which otherwise would have
been made to the Holder is not, as between the Company and the Holder, a payment
by the Company on Senior Indebtedness.
6
(f) NO COLLECTION ACTION. Until all of the Senior Indebtedness is paid
in full and all loan commitments under the Loan Agreement have terminated, the
Holder shall not take any Collection Action with respect to the indebtedness
evidenced by this Note until the expiration of thirty (30) days following the
Holder's delivery to the Agent of written notice to the effect that an Event of
Default has occurred under this Note and that the Holder intends to take
Collection Action in respect thereof, provided, however, that the right of the
Holder to take Collection Action after the expiration of such thirty (30) day
period shall be subject to the limitations of Section 4(d).
(g) RETURN OF PAYMENTS. The provisions of this Section 4 shall be
reinstated if at any time any payment of any of the Senior Indebtedness is
rescinded or must otherwise be returned by any holder of the Senior Indebtedness
or any representative of such holder.
(h) NO CHALLENGE TO SENIOR INDEBTEDNESS. The Holder agrees not to
initiate or prosecute any claim, action or other proceeding challenging the
enforceability of the Senior Indebtedness or any liens and security interests
securing the Senior Indebtedness.
(i) MODIFICATIONS TO SENIOR INDEBTEDNESS. The holders of the Senior
Indebtedness may at any time and from time to time without the consent of or
notice to the Holder, without incurring liability to the Holder and without
impairing or releasing the obligations of the Holder under this Section 4,
change the manner or place of payment or extend the time of payment of or renew
or alter any Senior Indebtedness, or amend in any manner any agreement, note,
guaranty or other instrument evidencing or securing or otherwise relating to the
Senior Indebtedness; provided that such holders shall not increase the principal
amount of the Senior Indebtedness to an amount in excess of the limit set forth
in the definition of "Senior Indebtedness" herein.
(j) NO SECURITY FOR NOTE. The Holder represents that it does not have,
and agrees that it shall not acquire, any security interest in the assets of the
Company or any other Borrower (as defined in the Loan Agreement) as security for
the indebtedness evidenced hereby.
(k) NO MODIFICATION OF NOTE. Until all of the Senior Indebtedness is
paid in full and all loan commitments under the Loan Agreement have terminated,
without the prior written consent of the Agent, the Holder shall not agree to
any amendment, modification or supplement to this Note or the indebtedness
evidenced by this Note, including without limitation, any amendment,
modification or supplement the effect of which is to (i) increase the principal
amount hereof or the rate of interest hereon, (ii) change the dates upon which
payments of principal or interest hereon are due, (iii) change or add any event
of default, (iv) change the prepayment provisions hereof or (v) alter the
subordination provisions hereof, including, without limitation, subordinating
this Note or the indebtedness evidenced hereby to any other debt.
(l) ASSIGNMENT. Until all of the Senior Indebtedness is paid in full
and all loan commitments under the Loan Agreement have terminated, the Holder
shall not sell, assign, pledge, dispose of or otherwise transfer all or any
portion of this Note or the indebtedness
7
evidenced hereby unless prior to the consummation of any such action, the
transferee thereof shall execute and deliver to the Agent an agreement providing
for the continued subordination of this Note and the indebtedness evidenced
hereby as provided herein. Notwithstanding the failure to execute or deliver any
such agreement, the subordination effected hereby shall survive any sale,
assignment, pledge, disposition or other transfer of all or any portion of this
Note or the indebtedness evidenced hereby, and the subordination terms of this
Note shall be binding upon the successors and assigns of the Holder.
(m) PAYMENT ON CONVERSION DATE. This Section 4 shall not prohibit the
Company from making the Cash Conversion Payment to the Holder on the Conversion
Date from the proceeds of the Public Offering, provided that the Company also
makes all payments that are due on the Senior Indebtedness on the Conversion
Date.
(n) CERTAIN DEFINED TERMS. As used herein,
(i) "Agent" means The First National Bank of Boston, in
its capacity as agent for the holders of the Senior
Indebtedness, or any successor agent appointed
pursuant to the terms of the Loan Agreement, provided
that the Holder may rely on a certificate from any
such successor agent to the effect that such
successor is acting as a successor agent under the
Loan Agreement.
(ii) "Collection Action" means (A) to demand, sue
for, take or receive from or on behalf of the
Company, by set-off or in any other manner, the whole
or any part of any moneys which may now or hereafter
be owing by the Company under this Note, (B) to
initiate or participate with others in any suit,
action or proceeding against the Company to (1)
enforce payment of or to collect the whole or any
part of the indebtedness evidenced by this Note or
(2) commence judicial enforcement of any of the
rights and remedies under this Note or applicable law
with respect to this Note, or (C) to accelerate any
indebtedness evidenced by this Note.
(iii) "Loan Agreement" means that certain Loan and Security
Agreement dated as of July 20, 1995, among the
Company, certain of its affiliates, the lenders party
thereto from time to time and The First National Bank
of Boston, as agent for said lenders, as heretofore
or hereafter amended, supplemented or restated from
time to time.
(iv) "Proceeding" means any voluntary or involuntary
insolvency, bankruptcy, receivership, custodianship,
liquidation, dissolution, reorganization, assignment
for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with
similar powers or any other proceeding for the
liquidation, dissolution or other winding up of the
8
Company or any other Borrower (as such term is
defined in the Loan Agreement).
5. EVENTS OF DEFAULT AND ACCELERATION.
If any of the following events shall occur and be continuing for any
reason whatsoever (and whether such occurrence shall be voluntary or involuntary
or come about to be effected by operation of law or otherwise):
(a) the Company defaults in the payment of the principal of or any
interest on this Note and such default continues for a period of thirty (30)
business days after the date such payment was due; or
(b) the Company shall:
(i) have commenced a voluntary case under Title 11 of the
United States Code as from time to time in effect, or have authorized, by
appropriate proceedings of its board of directors or other governing body, the
commencement of such a voluntary case;
(ii) have filed an answer or other pleading admitting or
failing to deny the material allegations of a petition filed against it
commencing an involuntary case under said Title 11, or seeking, consenting to or
acquiescing in the relief therein provided, or have failed to controvert timely
the material allegations of any such petition;
(iii) be subject to the entry of an order for relief against
it in any involuntary case commenced under said Title 11 which remains
undischarged or unstayed for more than sixty (60) days;
(iv) have sought relief as a debtor under any applicable law,
other than said Title 11, of any jurisdiction relating to the insolvency,
liquidation or reorganization of debtors or to the modification or alteration of
the rights of creditors, or have consented to or acquiesced in such relief;
(v) be subject the entry of an order by a court of competent
jurisdiction (A) finding it to be bankruptcy or insolvent or (B) ordering or
approving its liquidation, reorganization or any modification or alteration of
the rights of its creditors which remains undischarged or unstayed for more than
sixty (60) days;
(vi) be subject to the entry of an order by a court of
competent jurisdiction assuming custody of, or appointing a receiver or other
custodian for, all or a substantial part of its property which remains
undischarged or unstayed for more than sixty (60) days; or
9
(vii) have entered into a composition with its creditors or
have appointed or consented to the appointment of a receiver or other custodian
for all or a substantial part of its property;
then, subject to the provisions of Section 4, the Holder may, by ten (10) days
written notice to the Company, declare the Company to be in default hereunder
(an "Event of Default") and may exercise any right, power or remedy permitted to
such holder or holders by law, including, without limitation:
(y) the right to declare the entire principal amount of this
Note and accrued interest thereon, if any, due and payable; and
(z) the right to commence any proceeding against the Company
in furtherance of the foregoing.
6. COMPLIANCE WITH USURY LAWS.
All agreements between the Company and the Holder are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the Indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to the Holder for the use,
forbearance or detention of the Indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof; provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Note shall be governed by such new law as of its
effective date. If, from any circumstance whatsoever, fulfillment of any
provision hereof at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then the
obligation to be fulfilled shall automatically be reduced to the limit of such
validity, and if from any circumstances the Holder should ever receive as
interest an amount which would exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the principal
balance evidenced hereby and not to the payment of interest. This provision
shall control every other provision of all agreements between the Company and
the Holder.
7. DEFINED TERMS.
Unless the context otherwise requires, all capitalized words and
phrases used but not defined herein and defined in the Asset Purchase Agreement
shall have the respective meanings attributed thereto in the Asset Purchase
Agreement.
8. NOTICES.
All notices, requests, demands and other communications hereunder shall
be in writing, shall be deemed to have been duly given when received by the
intended recipient and shall be delivered by overnight delivery service or hand
delivered, addressed as follows:
10
If to Holder:
c/o Raymond S. Morelli
Office Ours
1111 Plaza Drive, Suite 320
Schaumberg, Illinois 60173
With a copy to:
Louis J. Morelli, Esq.
37 W 570 Route 38
St. Charles, Illinois 60175
If to Company:
OutSource International, Inc.
8000 North Federal Highway
Boca Raton, Florida 33487
With a copy to:
Holland & Knight
One East Broward Boulevard, Suite 1300
Fort Lauderdale, Florida 33301
Attention: Steven Sonberg, Esquire
9. GOVERNING LAW.
This Note shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of the State
of Illinois. The parties to this Note agree that any claim, suit, action or
proceeding arising out of or relating to this Note shall be submitted for
adjudication exclusively in any Illinois state or federal court sitting in Kane
County, Illinois 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.
11
10. WAIVER OF TRIAL BY JURY.
THE COMPANY AND HOLDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE COMPANY OR HOLDER.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under seal by its duly authorized officer as of the date set forth above.
OUTSOURCE INTERNATIONAL, INC.
By: /s/ LOUIS A. MORELLI
---------------------------
Name: Louis A. Morelli
-------------------------
Title: President
------------------------
ATTEST:
By: /s/ DAVID H. HINZE
----------------------------
Name: David H. Hinze
----------------------------
Title: Vice President
----------------------------
[Corporate Seal]
ACCEPTED AND AGREED:
TRI-TEMPS, INC.
By: /s/ RAYMOND S. MORELLI
----------------------------
Name: Raymond S. Morelli
----------------------------
Title: President
----------------------------
12
STATE OF ILLINOIS
COUNTY OF KANE
The foregoing instrument was acknowledged before me this 16th day of
April, 1997, by Louis A. Morelli, President of OutSource International, Inc., on
behalf of the company. He who is personally known to me/has produced
Driver's License as identification.
"OFFICIAL SEAL"
ANITA M. DAZZO
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES 9/30/97
[STAMP]
(SEAL)
/s/ ANITA M. DAZZO
-----------------------------
Printed/Typed Name:
Notary Public State of
Commission Number:
13
EXHIBIT 2
AMENDED AND RESTATED SUBORDINATED NOTES
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AMENDED AND RESTATED
SUBORDINATED NOTE
$1,041,317.00 Boston, Massachusetts
February 21, 1997
FOR VALUE RECEIVED, OUTSOURCE INTERNATIONAL OF AMERICA, INC., a
corporation organized and existing under the laws of the state of Florida
(formerly known as OutSource International, Inc., a corporation organized under
the laws of the state of Illinois) (the "Company"), hereby promises to pay
Tri-Temps, Inc., a corporation organized and existing under the laws of the
state of Illinois ("Tri-Temps"), (together with any subsequent holder of this
Note, the "Obligee") the principal sum of One Million Forty-One Thousand Three
Hundred Seventeen and 00/100 Dollars ($1,041,317.00), with interest in arrears
on the unpaid principal balance from time to time outstanding from the date
hereof until due and payable at the rate provided in Section 1(a) hereof. Each
holder of this Note, by acceptance hereof, agrees to and shall be bound by the
provisions of this Note, including without limitation, the subordination
provisions in Section 2 hereof. This Note amends and restates a subordinated
promissory note dated April 1, 1996, from the Company to the Obligee.
1. TERMS OF NOTE.
(a) INTEREST AND PRINCIPAL. This Note shall bear interest on the
outstanding principal balance hereof at the rate of fourteen percent (14%) per
annum (computed on the basis of a 365-day year) provided, however, that if any
installment is not paid within five (5) days of its due date such installment
shall bear interest at the rate of eighteen percent (18%). Principal and
interest shall be due and payable in forty-eight (48) monthly installments of
Twenty-Eight Thousand Four Hundred Fifty-Five and 52/100 Dollars ($28,455.52) on
the first day of each month commencing on April 1, 1997, and, in addition, on
April 1, 1997 accrued interest from February 22-28, 1997 in the amount of Two
Thousand Seven Hundred Ninety-Five and 86/100 Dollars ($2,795.86). Except as
otherwise set forth in this Agreement, all payments of principal and interest
hereunder shall be made by the Company in lawful money of the United States of
America in immediately available funds on the date such payment is due at the
address of the Obligee on the books of the Company or such other place as the
holder hereof shall designate to the Company in writing.
(b) NO PREPAYMENT. This Note shall not be prepaid until the Senior
Indebtedness (as defined below) shall have been paid in full in cash and the
Credit Agreement (as defined below) shall have been irrevocably terminated.
(c) MANDATORY ACCELERATION. In the event the Company or an
entity controlling, controlled by or under common control with the
Company (the "Offering Company") files a registration statement with the
Securities and Exchange Commission for an initial public offering of its common
stock, and such registration statement is declared effective; upon the closing
of the sale of the shares to the public the entire outstanding principal balance
due hereunder together with all accrued interest thereon (the "Payoff Amount")
shall become immediately due and payable.
(d) CERTAIN REPRESENTATIONS.
(i) The Obligee by its acceptance of this Note
acknowledges that it is aware that this Note and
the shares of Common Stock issuable to it by the
Offering Company upon the acceleration of this
Note pursuant to Section 1(c) hereof have not been
registered under the Securities Act of 1933 (the
"Securities Act") or the securities laws of any
state or other jurisdiction.
(ii) The Obligee warrants and represents to the Company
that it has acquired this Note, and, upon the
conversion of this Note, it will be acquiring
Common Stock, for investment and not with a view
to or for sale in connection with any distribution
of this Note or such Common Stock or with any
intention of distributing or selling this Note or
such Common Stock. As a condition to the issuance
of Common Stock, the Obligee shall execute
appropriate investment letters and other
documents, if any, as may be reasonably required
by the Company and its counsel to assure that such
Common Stock is issued only in compliance with
applicable securities laws.
(iii) All shares of Common Stock acquired by the Obligee
pursuant hereto shall be evidenced by stock
certificate(s) containing a restrictive legend
indicating the shares have not been registered
pursuant to the Securities Act or the securities
laws of any state or other jurisdiction and may
not be sold or transferred unless pursuant to the
Securities Act and securities laws of any
applicable state or other jurisdiction.
(iv) The Obligee has no right to demand that the
Offering Company register this Note or the shares
of Common Stock issued or issuable under this Note.
2
2. SUBORDINATION IN RIGHT OF PAYMENT TO SENIOR INDEBTEDNESS.
(a) SUBORDINATION. The Company agrees, and each holder of this Note
agrees, that the principal and interest on this Note is and shall be
subordinated in right of payment, to the extent and in the manner hereinafter
set forth, to the prior payment in full in cash of all Senior Indebtedness and
that the subordination of this Note pursuant to this Section 2 is for the
benefit of all holders of the Senior Indebtedness.
(b) SENIOR INDEBTEDNESS. "Senior Indebtedness" means all obligations
and undertakings of any kind owed by the Company or any Subsidiary of the
Company to the holders of the Senior Indebtedness from time to time under or
pursuant to any of the Senior Lending Agreements including, without limitation,
whether direct or indirect, absolute or contingent, secured or unsecured, now
existing or hereafter arising, all loans, advances, liabilities and debt
balances, all principal and interest (including all interest accruing after
commencement of any case, Proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Company) accruing thereon, all charges,
expenses, fees and other sums chargeable to the Company or any Subsidiary of the
Company by the holders of the Senior Indebtedness, all reimbursement, indemnity
or other obligations due and payable to the holders of the Senior Indebtedness
and all covenants and duties at any time owed by the Company or any Subsidiary
of the Company to the holders of the Senior Indebtedness. Senior Indebtedness
shall include any debt, liability or obligation owing from the Company or any
Subsidiary of the Company to others which the holders of the Senior Indebtedness
may have obtained by assignment, pledge, purchase or otherwise. Senior
Indebtedness shall continue to constitute Senior Indebtedness notwithstanding
the fact that such Senior Indebtedness or any claim for such Senior Indebtedness
is subordinated, avoided or disallowed under the federal Bankruptcy Code or
other applicable law. Senior Indebtedness shall also include any indebtedness of
the Company or any Subsidiary of the Company incurred in connection with a
refinancing of the Senior Indebtedness under the Senior Lending Agreements.
(c) LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment or
distribution of assets of the Company of any kind or character (whether in cash,
securities or other property) to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar Proceeding relating to the Company or its property:
(i) The holders of Senior Indebtedness shall be
entitled to receive payment in full in cash of all
Senior Indebtedness or such payment shall first be
duly provided for in cash or in a manner
satisfactory to the holders of Senior Indebtedness
3
before Obligee shall be entitled to receive any
payment on this Note.
(ii) Until the Senior Indebtedness is paid in full in
cash or provided for in a manner satisfactory to
the holders of Senior Indebtedness, any payment or
distribution to which the Obligee would be entitled
but for this Section shall be made to the Agent (as
defined below) for application to the payment of
the Senior Indebtedness.
(iii) Notwithstanding the foregoing provisions of this
Section, if the Company shall make any payment or
distribution to the Obligee on account of this
Note at a time when such payment is prohibited by
this Section, such payment or distribution shall
be held by the Obligee in trust for the ratable
benefit of, and shall be paid forthwith over and
delivered to, the Agent for application to the
payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior
Indebtedness in full in accordance with its terms,
after giving effect to any concurrent payment or
distribution to or for the holders of Senior
Indebtedness, and the Obligee irrevocably
authorizes, empowers and directs all receivers,
trustees, liquidators, custodians, conservators
and others having authority in the premises to
effect all such payments and distributions, and
the Obligee also irrevocably authorizes, empowers
and directs the Agent to demand, sue for, collect
and receive every such payment or distribution.
(iv) The Obligee agrees to execute, verify, deliver and
file any proofs of claim in respect of the
indebtedness evidenced by this Note requested by
the Agent in connection with any such Proceeding
and hereby irrevocably authorizes, empowers and
appoints the Agent as the Company's agent and
attorney-in-fact to (A) execute, verify, deliver
and file such proofs of claim and (B) vote such
claim in any such Proceeding; provided that the
Agency shall have no obligation to execute,
verify, deliver, file and/or vote any such proof
of claim.
(d) DEFAULT ON SENIOR INDEBTEDNESS.
(i) Upon the maturity of the Senior Indebtedness by
lapse of time, acceleration (unless waived in
writing by the holders of Senior Indebtedness) or
otherwise, all of the Senior Indebtedness shall
4
first be paid in full, or such payment duly
provided for, in cash or in a manner satisfactory
to the holders of the Senior Indebtedness, before
any payment is made by the Company on account of
this Note and, until all of the Senior Indebtedness
is paid in full, any payment or other distribution
to which the Obligee would be entitled but for the
provisions of this Section shall (unless otherwise
required by this Section 2) be made to the Agent,
for application to the payment of the Senior
Indebtedness.
(ii) After notice from the Agent of any default in the
payment of any of the Senior Indebtedness and
during the continuance thereof, the Company shall
not make any payment of interest or other amounts
owing on this Note until such payment default has
been cured by the Company or waived in writing by
the holders of the Senior Indebtedness. Upon any
such cure or waiver, payments may resume, but
interest that accrued on this Note during the
period for which there was a payment default on
the Senior Indebtedness shall not be paid until
after all of the Senior Indebtedness shall have
first been paid in full. Notice from the Agent
hereunder shall be deemed to have been received by
the holder of this Note thirty (30) days prior to
the date of actual receipt of such notice given to
the Obligee in accordance with Section 5 hereof.
(iii) During the continuance of any other event of
default (other than payment defaults) with respect
to the Senior Indebtedness pursuant to which the
maturity thereof may be accelerated, commencing
upon receipt by the Company of written notice from
the Agent specifying that such notice is a payment
blockage notice delivered pursuant to this
Section, the Company may not make any payment of
interest or other amounts owing on this Note for a
period ("Payment Blockage Period") commencing on
the date of receipt of such notice and ending one
hundred and eighty (180) days thereafter (unless
such Payment Blockage Period shall be terminated
by written notice to the Company from the Agent).
The aggregate duration of all Payment Blockage
Periods for such nonpayment defaults shall not
exceed one hundred eighty (180) days during any
period of three hundred sixty (360) consecutive
days. During any Payment Blockage Period,
interest shall continue to accrue as otherwise
provided herein. Upon the termination of any
Payment Blockage Period, payments of interest
5
and/or principal shall resume as provided in
Section 1; provided that the outstanding principal
balance of this Note shall be increased by the
amount of interest that accrued during such Payment
Blockage Period and no interest shall be paid with
respect to said Payment Blockage Period until the
Senior Indebtedness is paid in full in cash and the
Credit Agreement shall have been irrevocably
terminated.
(iv) Notwithstanding the foregoing provisions of this
Section, if the Company shall make any payment or
distribution to the Obligee on account of this
Note at a time when such payment is prohibited by
this Section, unless otherwise required by this
Section, such payment or distribution shall be
held by Obligee in trust for the ratable benefit
of, and shall be paid forthwith over and delivered
to, the Agent for application to the payment of
all of the Senior Indebtedness remaining unpaid to
the extent necessary to pay all of the Senior
Indebtedness in full in accordance with its terms,
after giving effect to any concurrent payment or
distribution to or for the holders of the Senior
Indebtedness.
(e) SUBROGATION. After all Senior Indebtedness is paid in full (but not
prior to such time) and until this Note is paid in full, the Obligee shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments and distributions applicable to the Senior Indebtedness to the extent
that payments and distributions otherwise payable to the Obligee have been
applied to the payment of the Senior Indebtedness. A payment or distribution
made under this Section to holders of Senior Indebtedness which otherwise would
have been made to the Obligee is not, as between the Company and the Obligee, a
payment by the Company on Senior Indebtedness, but until such payment is made to
Obligee it is not a payment by the Company to the Obligee.
(f) NO COLLECTION ACTION. Until all of the Senior Indebtedness is paid
in full in cash and all loan commitments under the Credit Agreement have been
irrevocably terminated, the Obligee shall not take any Collection Action with
respect to the indebtedness evidenced by this Note.
(g) RETURN OF PAYMENTS. After all Senior Indebtedness is paid in full,
the provisions of this Section 2 shall be reinstated if at any time any payment
of any of the Senior Indebtedness is rescinded or must otherwise be returned by
any holder of the Senior Indebtedness or any representative of such holder.
6
(h) NO CHALLENGE TO SENIOR INDEBTEDNESS. The Obligee agrees not to
initiate or prosecute any claim, action or other Proceeding challenging the
enforceability of the Senior Indebtedness or any liens and security interests
securing the Senior Indebtedness, nor will the Obligee file or join in the
filing of an involuntary bankruptcy petition against the Company. The right of
the holders of the Senior Indebtedness to enforce the provisions of this Section
2 shall not be prejudiced or impaired by any act or omitted act of the holders
of the Senior Indebtedness or the Company, including without limitation
forbearance, waiver, compromise, amendment, extension, renewal or taking or
release of security in respect of any Senior Indebtedness or noncompliance by
the Company with such provisions, regardless of the actual or imputed knowledge
of the holders of the Senior Indebtedness. In the event that the Senior
Indebtedness is refinanced in full, Obligee agrees at the request of such
refinancing party to enter into a subordination agreement on terms substantially
similar to this Section 2.
(i) MODIFICATIONS TO SENIOR INDEBTEDNESS. The holders of the Senior
Indebtedness may at any time and from time to time without the consent of or
notice to the Obligee, without incurring liability to the Obligee and without
impairing or releasing the obligations of the Obligee under this Section 2,
change the manner or place of payment or extend the time of payment of or renew
or alter any Senior Indebtedness, or amend in any manner any agreement, note,
guaranty, security agreement or other instrument evidencing or securing or
otherwise relating to the Senior Indebtedness.
(j) NO SECURITY FOR NOTE. The Obligee represents that it does not have,
and agrees that it shall not require or obtain, any security interest in the
assets of the Company or any Subsidiary or parent of the Company as security for
the indebtedness evidenced hereby. The Obligee acknowledges that the holders of
the Senior Indebtedness do have a security interest in the assets of the
Company.
(k) NO MODIFICATIONS OF NOTE. Until all of the Senior Indebtedness is
paid in full and all loan commitments under the Credit Agreement have
terminated, without the prior written consent of the Agent, the Obligee shall
not agree to any amendment, modification or supplement to this Note or the
indebtedness evidenced by this Note, including without limitation, any
amendment, modification or supplement the effect of which is to (i) increase the
principal amount hereof or the rate of interest herein, (ii) change the dates
upon which payments of principal or interest hereon are due, (iii) change or add
any event of default, (iv) change the prepayment provisions hereof or (v) alter
the subordination provisions hereof, including without limitation, subordinating
this Note or the indebtedness evidenced hereby to any other debt.
7
(l) ASSIGNMENT. Until all of the Senior Indebtedness is paid in full
and all loan commitments under the Credit Agreement have terminated, the Obligee
shall not sell, assign, pledge, dispose of or otherwise transfer all or any
portion of this Note or the indebtedness evidenced hereby unless prior to the
consummation of any such action, the transferee thereof shall execute and
deliver to the Agent an agreement providing the continued subordination of this
Note and the indebtedness evidenced hereby as provided herein. Notwithstanding
the failure to execute or deliver any such agreement, the subordination effected
hereby shall survive any sale, assignment, pledge, disposition or other transfer
of all or any portion of this Note or the indebtedness evidenced hereby, and the
subordination terms of this Note shall be binding upon the successors and
assigns of the Obligee.
(m) SCOPE OF SUBORDINATION. The provisions in this Section 2 are solely
to define the relative rights of the Obligee and the holders of the Senior
Indebtedness. Nothing in this Section 2 shall impair, as between the Company and
the Obligee, the unconditional and absolute obligation of the Company to
punctually pay the principal, interest, and any other amounts and obligations
owing to Obligee under the terms of this Note, subject to the rights of the
holders of the Senior Indebtedness under this Note.
(n) CERTAIN DEFINED TERMS. As used herein,
(i) "Agent" means Bank of Boston Connecticut, in its
capacity as agent for the holders of the Senior
Indebtedness, or any successor agent appointed
pursuant to the terms of the Credit Agreement,
provided that the Obligee may rely on a
certificate from any such successor agent to the
effect that such successor is acting as a
successor agent under the Credit Agreement.
(ii) "Collection Action" means (A) to demand, sue for,
take or receive from or on behalf of the Company,
by set-off or in any other manner, the whole or
any part of any moneys which may now or hereafter
be owing by the Company under this Note, (B) to
initiate or participate with others in any
lawsuit, action, or Proceeding against the Company
to (1) enforce payment of or to collect the whole
or any part of the indebtedness evidenced by this
Note, or (2) commence judicial enforcement of any
of the rights and remedies under this Note or
under applicable law with respect to this Note, or
(C) to accelerate any indebtedness evidenced by
this Note.
(iii) "Credit Agreement" means the Credit Agreement
dated as of February 21, 1997, among the Company,
8
the Banks from time to time parties thereto and
Bank of Boston Connecticut, as Agent, as the same
hereafter be amended, modified, supplemented,
restated or extended from time to time.
(iv) "Proceeding" means any voluntary or involuntary
insolvency, bankruptcy, receivership,
custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of
creditors, appointment of a custodian, receiver,
trustee or other officer with similar powers or
any other proceeding for the liquidation,
dissolution or other winding up of the Company.
(v) "Senior Lending Agreements" means collectively the
Credit Agreement, the Senior Subordinated Debt
Agreements, and the other loan documents between
the Company or any Subsidiaries of the Company and
the holders of Senior Indebtedness, including
without limitation all notes, pledge agreements,
security agreements and guarantees, together with
any and all other instruments, documents and
agreements executed and delivered by the Company
or any Subsidiary of the Company from time to time
in connection with the Senior Indebtedness
evidenced by the Credit Agreement and such notes,
as the same may hereafter be amended, modified,
supplemented, restated or extended from time to
time.
(vi) "Senior Subordinated Debt Agreements" shall mean
that certain Securities Purchase Agreement, dated
as of February 21, 1997, by and among the Company,
Triumph - Connecticut Limited Partnership
("Triumph"), Bachow Investment Partners III, L.P.
("Bachow") and the other parties named therein
(the "Purchase Agreement"), and those certain
Senior Subordinated Notes, due February 20, 2002,
in an aggregate principal amount of $25,000,000,
issued to each of Triumph and Bachow pursuant to
the Purchase Agreement, and any "put note" issued
by the Company to either Triumph or Bachow
pursuant to the terms of those certain Common
Stock Warrants to Purchase Common Stock of the
Company, dated as of February 21, 1997 issued to
Triumph and Bachow pursuant to the Purchase
Agreement, as any of the foregoing may hereafter
be amended, modified, supplemented, restated or
extended from time to time.
(vii) "Subsidiary" shall mean, as to any Person, a
corporation, partnership, limited liability
9
company or other entity of which shares of stock or
other ownership interests having ordinary voting
power (other than stock or such other ownership
interests having such power only by reason of the
happening of a contingency) to elect a majority of
the board of directors or other managers of such
corporation, partnership, limited liability company
or other entity are at the time owned, or the
management of which is otherwise controlled,
directly or indirectly through one or more
intermediaries, or both, by such Person.
(o) Notwithstanding the foregoing Subordination provisions of this
Note, in the event the Company fails to pay any monthly installment due
hereunder within one hundred and fifty (150) days of its due date, certain of
the shareholders of Tri-Temps shall have those rights (the "Reacquisition
Rights") to reacquire certain assets which Tri-Temps sold to the Company as more
particularly described in Amendment Number 1 to the Asset Purchase Agreement by
and among the Company, Tri-Temps and certain other persons dated of even date
herewith.
3. EVENTS OF DEFAULTS AND ACCELERATION.
If any of the following events shall occur and be continuing for any
reason whatsoever (and whether such occurrence shall be voluntary or involuntary
or come about to be effected by operation of law or otherwise):
(a) the Company defaults in the payment of the principal of or any
interest on this Note and such default continues for a period of thirty (30)
business days after the date such payment was due; or
(b) the Company shall:
(i) have commenced a voluntary case under Title 11 of
the United States Code as from time to time in
effect, or have authorized, by appropriate
proceedings of its board of directors or other
governing body, the commencement of such a
voluntary case;
(ii) have filed an answer or other pleading admitting or
failing to deny the material allegations of a
petition filed against it commencing an involuntary
case under said Title 11, or seeking, consenting to
or acquiescing in the relief therein provided, or
have failed to controvert timely the material
allegations of any such petition;
10
(iii) be subject to the entry of an order for relief
against it in any involuntary case commenced under
said Title 11 which remains undischarged or
unstayed for more than sixty (60) days;
(iv) have sought relief as a debtor under any applicable
law, other than said Title 11, of any jurisdiction
relating to the insolvency, liquidation or
reorganization of debtors or to the modification or
alteration of the rights of creditors, or have
consented to or acquiesced in such relief;
(v) be subject to the entry of an order by a court of
competent jurisdiction (A) finding it to be
bankruptcy or insolvent or (B) ordering or
approving its liquidation, reorganization or any
modification or alteration of the rights of its
creditors which remains undischarged or unstayed
for more than sixty (60) days;
(vi) be subject to the entry of an order by a court of
competent jurisdiction assuming custody of, or
appointing a receiver or other custodian for, all
or a substantial part of its property which remains
undischarged or unstayed for more than sixty (60)
days; or
(vii) have entered into a composition with its creditors
or have appointed or consented to the appointment
of a receiver of other custodian for all or a
substantial part of its property.
then the Obligee may, subject to the provisions of Section 2, by providing (10)
days written notice to the Company, declare the Company to be in default
hereunder (an "Event of Default") and may exercise any right, power or remedy
permitted to such holder or holders by law, including, without limitation:
(y) the right to declare the entire principal amount
of this Note and accrued interest thereon, if any,
due and payable; and
(z) the right to commence any proceeding against the
Company in furtherance of the foregoing.
4. COMPLIANCE WITH USURY LAWS.
All agreements between the Company and the Obligee are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the Indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to
11
be paid to the Obligee for the use, forbearance or detention of the Indebtedness
evidenced hereby exceed the maximum permissible under the applicable law. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof, provided, however, that in the event there is a change in the law
which results in a higher permissible rate of interest, then this Note shall be
governed by such new law as of its effective date. If, from any circumstances
whatsoever, fulfillment of any provision hereof at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then the obligation to be fulfilled shall automatically be
reduced to the limit of such validity, and if from any circumstances the Obligee
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements
between the Company and the Obligee.
5. NOTICES.
All notices, requests, demands and other communications hereunder shall
be in writing, shall be deemed to have been duly given when delivered at or
telecopied to the address specified below and shall be delivered by overnight
delivery service or hand delivered, addressed or telecopied as follows:
If to Obligee:
TRI-TEMPS, INC.
1807 BELTER COURT
--------------------------
GENEVA, IL 60134
--------------------------
Telecopier No._________________________
If to Company:
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
Attention: CEO
1144 E. NEWPORT CENTER DRIVE
----------------------------
DEERFIELD BEACH, FL 33442
----------------------------
Telecopier No.: (954) 418-3365
6. GOVERNING LAW.
This Note shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of the State
of Illinois. The sole venue for any action arising hereunder shall be Kane
County, Illinois.
12
7. WAIVER OF TRIAL BY JURY.
THE COMPANY AND OBLIGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE COMPANY OR OBLIGEE.
8. ATTORNEY'S FEES AND COSTS.
The Company agrees to pay all reasonable expenses and costs, including,
without limitation, attorney's fees and costs of collection, which may be
incurred by the Obligee in connection with the enforcement of any obligations
hereunder or in connection with representation with respect to bankruptcy or
insolvency Proceedings.
13
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under seal by its duly authorized officer as of the date set forth above.
OUTSOURCE INTERNATIONAL OF
AMERICA, INC.
By: /s/ ILLEGIBLE
----------------------
Name:
Title:
AGREED AND ACCEPTED:
OBLIGEE
TRI-TEMPS, INC.
By: /s/ RAYMOND S. MORELLI
-----------------------
14
STATE OF ________________________
COUNTY OF________________________
I, _________________________________, a Notary Public in and for said
county, in the state aforesaid, do hereby certify that _______________, who is
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that he signed, sealed and delivered the said instrument as his own free and
voluntary act, for the uses and purposes therein set forth.
Given under my hand and notarial seal this ___ day of
----------------.
Notary Public
My Commission Expires:
------------------------------
15
STATE OF ________________________
COUNTY OF________________________
I, _________________________________, a Notary Public in and for said
county, in the state aforesaid, do hereby certify that _______________, who is
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that he signed, sealed and delivered the said instrument as his own free and
voluntary act, for the uses and purposes therein set forth.
Given under my hand and notarial seal this ___ day of
----------------.
Notary Public
My Commission Expires:
------------------------------
FTL1-231409.3
16
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AMENDED AND RESTATED
SUBORDINATED NOTE
$1,532,386.23 Boston, Massachusetts
February 21, 1997
FOR VALUE RECEIVED, OUTSOURCE INTERNATIONAL OF AMERICA, INC., a
corporation organized and existing under the laws of the state of Florida
(formerly known as OutSource International, Inc., a corporation organized under
the laws of the state of Illinois) (the "Company"), hereby promises to pay
Pay-Ray, Inc., a corporation organized and existing under the laws of the state
of Illinois ("Pay-Ray"), (together with any subsequent holder of this Note, the
"Obligee") the principal sum of One Million Five Hundred Thirty-Two Thousand
Three Hundred Eighty-Six and 23/100 Dollars ($1,532,386.23), with interest in
arrears on the unpaid principal balance from time to time outstanding from the
date hereof until due and payable at the rate provided in Section 1(a) hereof.
Each holder of this Note, by acceptance hereof, agrees to and shall be bound by
the provisions of this Note, including without limitation, the subordination
provisions in Section 2 hereof. This Note amends and restates a subordinated
promissory note dated April 1, 1996, from the Company to the Obligee.
1. TERMS OF NOTE.
(a) INTEREST AND PRINCIPAL. This Note shall bear interest on the
outstanding principal balance hereof at the rate of fourteen percent (14%) per
annum (computed on the basis of a 365-day year) provided, however, that if any
installment is not paid within five (5) days of its due date such installment
shall bear interest at the rate of eighteen percent (18%). Principal and
interest shall be due and payable in forty-eight (48) monthly installments of
Forty-One Thousand Eight Hundred Seventy-Four and 71/100 Dollars ($41,874.71) on
the first day of each month commencing on April 1, 1997, and, in addition, on
April 1, 1997 accrued interest from February 22-28, 1997 in the amount of Four
Thousand One Hundred Fourteen and 35/100 Dollars ($4,114.35). Except as
otherwise set forth in this Agreement, all payments of principal and interest
hereunder shall be made by the Company in lawful money of the United States of
America in immediately available funds on the date such payment is due at the
address of the Obligee on the books of the Company or such other place as the
holder hereof shall designate to the Company in writing.
(b) NO PREPAYMENT. This Note shall not be prepaid until the Senior
Indebtedness (as defined below) shall have been paid in full in cash and the
Credit Agreement (as defined below) shall have been irrevocably terminated.
(c) MANDATORY ACCELERATION. In the event the Company or an
entity controlling, controlled by or under common control with the
Company (the "Offering Company") files a registration statement with the
Securities and Exchange Commission for an initial public offering of its common
stock, and such registration statement is declared effective; upon the closing
of the sale of the shares to the public the entire outstanding principal balance
due hereunder together with all accrued interest thereon (the "Payoff Amount")
shall become immediately due and payable.
(d) CERTAIN REPRESENTATIONS.
(i) The Obligee by its acceptance of this Note
acknowledges that it is aware that this Note and
the shares of Common Stock issuable to it by the
Offering Company upon the acceleration of this
Note pursuant to Section 1(c) hereof have not been
registered under the Securities Act of 1933 (the
"Securities Act") or the securities laws of any
state or other jurisdiction.
(ii) The Obligee warrants and represents to the Company
that it has acquired this Note, and, upon the
conversion of this Note, it will be acquiring
Common Stock, for investment and not with a view
to or for sale in connection with any distribution
of this Note or such Common Stock or with any
intention of distributing or selling this Note or
such Common Stock. As a condition to the issuance
of Common Stock, the Obligee shall execute
appropriate investment letters and other
documents, if any, as may be reasonably required
by the Company and its counsel to assure that such
Common Stock is issued only in compliance with
applicable securities laws.
(iii) All shares of Common Stock acquired by the Obligee
pursuant hereto shall be evidenced by stock
certificate(s) containing a restrictive legend
indicating the shares have not been registered
pursuant to the Securities Act or the securities
laws of any state or other jurisdiction and may
not be sold or transferred unless pursuant to the
Securities Act and securities laws of any
applicable state or other jurisdiction.
(iv) The Obligee has no right to demand that the
Offering Company register this Note or the shares
of Common Stock issued or issuable under this Note.
2
2. SUBORDINATION IN RIGHT OF PAYMENT TO SENIOR INDEBTEDNESS.
(a) SUBORDINATION. The Company agrees, and each holder of this Note
agrees, that the principal and interest on this Note is and shall be
subordinated in right of payment, to the extent and in the manner hereinafter
set forth, to the prior payment in full in cash of all Senior Indebtedness and
that the subordination of this Note pursuant to this Section 2 is for the
benefit of all holders of the Senior Indebtedness.
(b) SENIOR INDEBTEDNESS. "Senior Indebtedness" means all obligations
and undertakings of any kind owed by the Company or any Subsidiary of the
Company to the holders of the Senior Indebtedness from time to time under or
pursuant to any of the Senior Lending Agreements including, without limitation,
whether direct or indirect, absolute or contingent, secured or unsecured, now
existing or hereafter arising, all loans, advances, liabilities and debt
balances, all principal and interest (including all interest accruing after
commencement of any case, Proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Company) accruing thereon, all charges,
expenses, fees and other sums chargeable to the Company or any Subsidiary of the
Company by the holders of the Senior Indebtedness, all reimbursement, indemnity
or other obligations due and payable to the holders of the Senior Indebtedness
and all covenants and duties at any time owed by the Company or any Subsidiary
of the Company to the holders of the Senior Indebtedness. Senior Indebtedness
shall include any debt, liability or obligation owing from the Company or any
Subsidiary of the Company to others which the holders of the Senior Indebtedness
may have obtained by assignment, pledge, purchase or otherwise. Senior
Indebtedness shall continue to constitute Senior Indebtedness notwithstanding
the fact that such Senior Indebtedness or any claim for such Senior Indebtedness
is subordinated, avoided or disallowed under the federal Bankruptcy Code or
other applicable law. Senior Indebtedness shall also include any indebtedness of
the Company or any Subsidiary of the Company incurred in connection with a
refinancing of the Senior Indebtedness under the Senior Lending Agreements.
(c) LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment or
distribution of assets of the Company of any kind or character (whether in cash,
securities or other property) to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar Proceeding relating to the Company or its property:
(i) The holders of Senior Indebtedness shall be
entitled to receive payment in full in cash of all
Senior Indebtedness or such payment shall first be
duly provided for in cash or in a manner
satisfactory to the holders of Senior Indebtedness
3
before Obligee shall be entitled to receive any
payment on this Note.
(ii) Until the Senior Indebtedness is paid in full in
cash or provided for in a manner satisfactory to
the holders of Senior Indebtedness, any payment or
distribution to which the Obligee would be entitled
but for this Section shall be made to the Agent (as
defined below) for application to the payment of
the Senior Indebtedness.
(iii) Notwithstanding the foregoing provisions of this
Section, if the Company shall make any payment or
distribution to the Obligee on account of this
Note at a time when such payment is prohibited by
this Section, such payment or distribution shall
be held by the Obligee in trust for the ratable
benefit of, and shall be paid forthwith over and
delivered to, the Agent for application to the
payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior
Indebtedness in full in accordance with its terms,
after giving effect to any concurrent payment or
distribution to or for the holders of Senior
Indebtedness, and the Obligee irrevocably
authorizes, empowers and directs all receivers,
trustees, liquidators, custodians, conservators
and others having authority in the premises to
effect all such payments and distributions, and
the Obligee also irrevocably authorizes, empowers
and directs the Agent to demand, sue for, collect
and receive every such payment or distribution.
(iv) The Obligee agrees to execute, verify, deliver and
file any proofs of claim in respect of the
indebtedness evidenced by this Note requested by
the Agent in connection with any such Proceeding
and hereby irrevocably authorizes, empowers and
appoints the Agent as the Company's agent and
attorney-in-fact to (A) execute, verify, deliver
and file such proofs of claim and (B) vote such
claim in any such Proceeding; provided that the
Agency shall have no obligation to execute,
verify, deliver, file and/or vote any such proof
of claim.
(d) DEFAULT ON SENIOR INDEBTEDNESS.
(i) Upon the maturity of the Senior Indebtedness by
lapse of time, acceleration (unless waived in
writing by the holders of Senior Indebtedness) or
otherwise, all of the Senior Indebtedness shall
4
first be paid in full, or such payment duly
provided for, in cash or in a manner satisfactory
to the holders of the Senior Indebtedness, before
any payment is made by the Company on account of
this Note and, until all of the Senior Indebtedness
is paid in full, any payment or other distribution
to which the Obligee would be entitled but for the
provisions of this Section shall (unless otherwise
required by this Section 2) be made to the Agent,
for application to the payment of the Senior
Indebtedness.
(ii) After notice from the Agent of any default in the
payment of any of the Senior Indebtedness and
during the continuance thereof, the Company shall
not make any payment of interest or other amounts
owing on this Note until such payment default has
been cured by the Company or waived in writing by
the holders of the Senior Indebtedness. Upon any
such cure or waiver, payments may resume, but
interest that accrued on this Note during the
period for which there was a payment default on
the Senior Indebtedness shall not be paid until
after all of the Senior Indebtedness shall have
first been paid in full. Notice from the Agent
hereunder shall be deemed to have been received by
the holder of this Note thirty (30) days prior to
the date of actual receipt of such notice given to
the Obligee in accordance with Section 5 hereof.
(iii) During the continuance of any other event of
default (other than payment defaults) with respect
to the Senior Indebtedness pursuant to which the
maturity thereof may be accelerated, commencing
upon receipt by the Company of written notice from
the Agent specifying that such notice is a payment
blockage notice delivered pursuant to this
Section, the Company may not make any payment of
interest or other amounts owing on this Note for a
period ("Payment Blockage Period") commencing on
the date of receipt of such notice and ending one
hundred and eighty (180) days thereafter (unless
such Payment Blockage Period shall be terminated
by written notice to the Company from the Agent).
The aggregate duration of all Payment Blockage
Periods for such nonpayment defaults shall not
exceed one hundred eighty (180) days during any
period of three hundred sixty (360) consecutive
days. During any Payment Blockage Period,
interest shall continue to accrue as otherwise
provided herein. Upon the termination of any
Payment Blockage Period, payments of interest
5
and/or principal shall resume as provided in
Section 1; provided that the outstanding principal
balance of this Note shall be increased by the
amount of interest that accrued during such Payment
Blockage Period and no interest shall be paid with
respect to said Payment Blockage Period until the
Senior Indebtedness is paid in full in cash and the
Credit Agreement shall have been irrevocably
terminated.
(iv) Notwithstanding the foregoing provisions of this
Section, if the Company shall make any payment or
distribution to the Obligee on account of this
Note at a time when such payment is prohibited by
this Section, unless otherwise required by this
Section, such payment or distribution shall be
held by Obligee in trust for the ratable benefit
of, and shall be paid forthwith over and delivered
to, the Agent for application to the payment of
all of the Senior Indebtedness remaining unpaid to
the extent necessary to pay all of the Senior
Indebtedness in full in accordance with its terms,
after giving effect to any concurrent payment or
distribution to or for the holders of the Senior
Indebtedness.
(e) SUBROGATION. After all Senior Indebtedness is paid in full (but not
prior to such time) and until this Note is paid in full, the Obligee shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments and distributions applicable to the Senior Indebtedness to the extent
that payments and distributions otherwise payable to the Obligee have been
applied to the payment of the Senior Indebtedness. A payment or distribution
made under this Section to holders of Senior Indebtedness which otherwise would
have been made to the Obligee is not, as between the Company and the Obligee, a
payment by the Company on Senior Indebtedness, but until such payment is made to
Obligee it is not a payment by the Company to the Obligee.
(f) NO COLLECTION ACTION. Until all of the Senior Indebtedness is paid
in full in cash and all loan commitments under the Credit Agreement have been
irrevocably terminated, the Obligee shall not take any Collection Action with
respect to the indebtedness evidenced by this Note.
(g) RETURN OF PAYMENTS. After all Senior Indebtedness is paid in full,
the provisions of this Section 2 shall be reinstated if at any time any payment
of any of the Senior Indebtedness is rescinded or must otherwise be returned by
any holder of the Senior Indebtedness or any representative of such holder.
6
(h) NO CHALLENGE TO SENIOR INDEBTEDNESS. The Obligee agrees not to
initiate or prosecute any claim, action or other Proceeding challenging the
enforceability of the Senior Indebtedness or any liens and security interests
securing the Senior Indebtedness, nor will the Obligee file or join in the
filing of an involuntary bankruptcy petition against the Company. The right of
the holders of the Senior Indebtedness to enforce the provisions of this Section
2 shall not be prejudiced or impaired by any act or omitted act of the holders
of the Senior Indebtedness or the Company, including without limitation
forbearance, waiver, compromise, amendment, extension, renewal or taking or
release of security in respect of any Senior Indebtedness or noncompliance by
the Company with such provisions, regardless of the actual or imputed knowledge
of the holders of the Senior Indebtedness. In the event that the Senior
Indebtedness is refinanced in full, Obligee agrees at the request of such
refinancing party to enter into a subordination agreement on terms substantially
similar to this Section 2.
(i) MODIFICATIONS TO SENIOR INDEBTEDNESS. The holders of the Senior
Indebtedness may at any time and from time to time without the consent of or
notice to the Obligee, without incurring liability to the Obligee and without
impairing or releasing the obligations of the Obligee under this Section 2,
change the manner or place of payment or extend the time of payment of or renew
or alter any Senior Indebtedness, or amend in any manner any agreement, note,
guaranty, security agreement or other instrument evidencing or securing or
otherwise relating to the Senior Indebtedness.
(j) NO SECURITY FOR NOTE. The Obligee represents that it does not have,
and agrees that it shall not require or obtain, any security interest in the
assets of the Company or any Subsidiary or parent of the Company as security for
the indebtedness evidenced hereby. The Obligee acknowledges that the holders of
the Senior Indebtedness do have a security interest in the assets of the
Company.
(k) NO MODIFICATIONS OF NOTE. Until all of the Senior Indebtedness is
paid in full and all loan commitments under the Credit Agreement have
terminated, without the prior written consent of the Agent, the Obligee shall
not agree to any amendment, modification or supplement to this Note or the
indebtedness evidenced by this Note, including without limitation, any
amendment, modification or supplement the effect of which is to (i) increase the
principal amount hereof or the rate of interest herein, (ii) change the dates
upon which payments of principal or interest hereon are due, (iii) change or add
any event of default, (iv) change the prepayment provisions hereof or (v) alter
the subordination provisions hereof, including without limitation, subordinating
this Note or the indebtedness evidenced hereby to any other debt.
7
(l) ASSIGNMENT. Until all of the Senior Indebtedness is paid in full
and all loan commitments under the Credit Agreement have terminated, the Obligee
shall not sell, assign, pledge, dispose of or otherwise transfer all or any
portion of this Note or the indebtedness evidenced hereby unless prior to the
consummation of any such action, the transferee thereof shall execute and
deliver to the Agent an agreement providing the continued subordination of this
Note and the indebtedness evidenced hereby as provided herein. Notwithstanding
the failure to execute or deliver any such agreement, the subordination effected
hereby shall survive any sale, assignment, pledge, disposition or other transfer
of all or any portion of this Note or the indebtedness evidenced hereby, and the
subordination terms of this Note shall be binding upon the successors and
assigns of the Obligee.
(m) SCOPE OF SUBORDINATION. The provisions in this Section 2 are solely
to define the relative rights of the Obligee and the holders of the Senior
Indebtedness. Nothing in this Section 2 shall impair, as between the Company and
the Obligee, the unconditional and absolute obligation of the Company to
punctually pay the principal, interest, and any other amounts and obligations
owing to Obligee under the terms of this Note, subject to the rights of the
holders of the Senior Indebtedness under this Note.
(n) CERTAIN DEFINED TERMS. As used herein,
(i) "Agent" means Bank of Boston Connecticut, in its
capacity as agent for the holders of the Senior
Indebtedness, or any successor agent appointed
pursuant to the terms of the Credit Agreement,
provided that the Obligee may rely on a
certificate from any such successor agent to the
effect that such successor is acting as a
successor agent under the Credit Agreement.
(ii) "Collection Action" means (A) to demand, sue for,
take or receive from or on behalf of the Company,
by set-off or in any other manner, the whole or
any part of any moneys which may now or hereafter
be owing by the Company under this Note, (B) to
initiate or participate with others in any
lawsuit, action, or Proceeding against the Company
to (1) enforce payment of or to collect the whole
or any part of the indebtedness evidenced by this
Note, or (2) commence judicial enforcement of any
of the rights and remedies under this Note or
under applicable law with respect to this Note, or
(C) to accelerate any indebtedness evidenced by
this Note.
(iii) "Credit Agreement" means the Credit Agreement
dated as of February 21, 1997, among the Company,
8
the Banks from time to time parties thereto and
Bank of Boston Connecticut, as Agent, as the same
hereafter be amended, modified, supplemented,
restated or extended from time to time.
(iv) "Proceeding" means any voluntary or involuntary
insolvency, bankruptcy, receivership,
custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of
creditors, appointment of a custodian, receiver,
trustee or other officer with similar powers or
any other proceeding for the liquidation,
dissolution or other winding up of the Company.
(v) "Senior Lending Agreements" means collectively the
Credit Agreement, the Senior Subordinated Debt
Agreements, and the other loan documents between
the Company or any Subsidiaries of the Company and
the holders of Senior Indebtedness, including
without limitation all notes, pledge agreements,
security agreements and guarantees, together with
any and all other instruments, documents and
agreements executed and delivered by the Company
or any Subsidiary of the Company from time to time
in connection with the Senior Indebtedness
evidenced by the Credit Agreement and such notes,
as the same may hereafter be amended, modified,
supplemented, restated or extended from time to
time.
(vi) "Senior Subordinated Debt Agreements" shall mean
that certain Securities Purchase Agreement, dated
as of February 21, 1997, by and among the Company,
Triumph - Connecticut Limited Partnership
("Triumph"), Bachow Investment Partners III, L.P.
("Bachow") and the other parties named therein
(the "Purchase Agreement"), and those certain
Senior Subordinated Notes, due February 20, 2002,
in an aggregate principal amount of $25,000,000,
issued to each of Triumph and Bachow pursuant to
the Purchase Agreement, and any "put note" issued
by the Company to either Triumph or Bachow
pursuant to the terms of those certain Common
Stock Warrants to Purchase Common Stock of the
Company, dated as of February 21, 1997 issued to
Triumph and Bachow pursuant to the Purchase
Agreement, as any of the foregoing may hereafter
be amended, modified, supplemented, restated or
extended from time to time.
(vii) "Subsidiary" shall mean, as to any Person, a
corporation, partnership, limited liability
9
company or other entity of which shares of stock or
other ownership interests having ordinary voting
power (other than stock or such other ownership
interests having such power only by reason of the
happening of a contingency) to elect a majority of
the board of directors or other managers of such
corporation, partnership, limited liability company
or other entity are at the time owned, or the
management of which is otherwise controlled,
directly or indirectly through one or more
intermediaries, or both, by such Person.
(o) Notwithstanding the foregoing Subordination provisions of this
Note, in the event the Company fails to pay any monthly installment due
hereunder within one hundred and fifty (150) days of its due date, certain of
the shareholders of Pay-Ray shall have those rights (the "Reacquisition Rights")
to reacquire certain assets which Pay-Ray sold to the Company as more
particularly described in Amendment Number 1 to the Asset Purchase Agreement by
and among the Company, Pay-Ray and certain other persons dated of even date
herewith.
3. EVENTS OF DEFAULTS AND ACCELERATION.
If any of the following events shall occur and be continuing for any
reason whatsoever (and whether such occurrence shall be voluntary or involuntary
or come about to be effected by operation of law or otherwise):
(a) the Company defaults in the payment of the principal of or any
interest on this Note and such default continues for a period of thirty (30)
business days after the date such payment was due; or
(b) the Company shall:
(i) have commenced a voluntary case under Title 11 of
the United States Code as from time to time in
effect, or have authorized, by appropriate
proceedings of its board of directors or other
governing body, the commencement of such a
voluntary case;
(ii) have filed an answer or other pleading admitting or
failing to deny the material allegations of a
petition filed against it commencing an involuntary
case under said Title 11, or seeking, consenting to
or acquiescing in the relief therein provided, or
have failed to controvert timely the material
allegations of any such petition;
10
(iii) be subject to the entry of an order for relief
against it in any involuntary case commenced under
said Title 11 which remains undischarged or
unstayed for more than sixty (60) days;
(iv) have sought relief as a debtor under any applicable
law, other than said Title 11, of any jurisdiction
relating to the insolvency, liquidation or
reorganization of debtors or to the modification or
alteration of the rights of creditors, or have
consented to or acquiesced in such relief;
(v) be subject to the entry of an order by a court of
competent jurisdiction (A) finding it to be
bankruptcy or insolvent or (B) ordering or
approving its liquidation, reorganization or any
modification or alteration of the rights of its
creditors which remains undischarged or unstayed
for more than sixty (60) days;
(vi) be subject to the entry of an order by a court of
competent jurisdiction assuming custody of, or
appointing a receiver or other custodian for, all
or a substantial part of its property which remains
undischarged or unstayed for more than sixty (60)
days; or
(vii) have entered into a composition with its creditors
or have appointed or consented to the appointment
of a receiver of other custodian for all or a
substantial part of its property.
then the Obligee may, subject to the provisions of Section 2, by providing (10)
days written notice to the Company, declare the Company to be in default
hereunder (an "Event of Default") and may exercise any right, power or remedy
permitted to such holder or holders by law, including, without limitation:
(y) the right to declare the entire principal amount
of this Note and accrued interest thereon, if any,
due and payable; and
(z) the right to commence any proceeding against the
Company in furtherance of the foregoing.
4. COMPLIANCE WITH USURY LAWS.
All agreements between the Company and the Obligee are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the Indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to
11
be paid to the Obligee for the use, forbearance or detention of the Indebtedness
evidenced hereby exceed the maximum permissible under the applicable law. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof, provided, however, that in the event there is a change in the law
which results in a higher permissible rate of interest, then this Note shall be
governed by such new law as of its effective date. If, from any circumstances
whatsoever, fulfillment of any provision hereof at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then the obligation to be fulfilled shall automatically be
reduced to the limit of such validity, and if from any circumstances the Obligee
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements
between the Company and the Obligee.
5. NOTICES.
All notices, requests, demands and other communications hereunder shall
be in writing, shall be deemed to have been duly given when delivered at or
telecopied to the address specified below and shall be delivered by overnight
delivery service or hand delivered, addressed or telecopied as follows:
If to Obligee:
PAY-RAY, INC.
1807 BELTER COURT
--------------------------
GENEVA, IL 60134
--------------------------
Telecopier No.: ( ) __________________________
If to Company:
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
Attention: CEO
1144 E NEWPORT CENTER DRIVE
---------------------------
DEERFIELD BEACH, FL 33442
---------------------------
Telecopier No.: (954) 418-3365
12
6. GOVERNING LAW.
This Note shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of the State
of Illinois. The sole venue for any action arising hereunder shall be Kane
County, Illinois.
7. WAIVER OF TRIAL BY JURY.
THE COMPANY AND OBLIGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE COMPANY OR OBLIGEE.
8. ATTORNEY'S FEES AND COSTS.
The Company agrees to pay all reasonable expenses and costs, including,
without limitation, attorney's fees and costs of collection, which may be
incurred by the Obligee in connection with the enforcement of any obligations
hereunder or in connection with representation with respect to bankruptcy or
insolvency Proceedings.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under seal by its duly authorized officer as of the date set forth above.
OUTSOURCE INTERNATIONAL OF
AMERICA, INC.
By: /s/ ILLEGIBLE
-----------------------
Name:
Title:
AGREED AND ACCEPTED:
OBLIGEE
PAY-RAY, INC.
By: /s/ ILLEGIBLE
----------------------
Illegible
13
EXHIBIT 10.6
ASSET PURCHASE AGREEMENT
DATED MAY 6, 1996
BY AND BETWEEN
OUTSOURCE INTERNATIONAL, INC.
AS BUYER
AND
CST SERVICES, INC.,
AS SELLER
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES............................- 1 -
1.1 SALE OF ASSETS OF SELLER....................................- 1 -
1.2 ASSETS RETAINED BY SELLER...................................- 2 -
1.3 ASSUMPTION OF LIABILITIES...................................- 3 -
1.4 PAYMENT FOR ASSETS..........................................- 3 -
1.5 ALLOCATION OF PURCHASE PRICE................................- 3 -
1.6 PAYMENT OF PURCHASE PRICE...................................- 3 -
1.7 ENCUMBRANCES................................................- 4 -
1.8 EARNOUT.....................................................- 4 -
1.9 PAYMENT OF EARNOUT..........................................- 4 -
2. CLOSING DATE.........................................................- 4 -
2.1 TIME AND PLACE OF CLOSING...................................- 4 -
2.2 DELIVERIES BY SELLER........................................- 5 -
2.3 DELIVERIES BY BUYER.........................................- 5 -
3. REPRESENTATIONS AND WARRANTIES OF SELLER.............................- 6 -
3.1 TITLE TO ASSETS.............................................- 6 -
3.2 CORPORATE STATUS OF CST.....................................- 6 -
3.3 AUTHORITY CONCERNING THIS AGREEMENT.........................- 6 -
3.4 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES.............- 7 -
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES...............- 7 -
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS........................- 7 -
3.7 CONTRACTS AND COMMITMENTS...................................- 9 -
3.8 ACCOUNTS RECEIVABLE.........................................- 9 -
3.9 INTELLECTUAL PROPERTY......................................- 10 -
3.10 TAXES......................................................- 10 -
3.11 LITIGATION.................................................- 11 -
3.12 EMPLOYEE BENEFIT PLANS; ERISA..............................- 11 -
3.13 CONSENTS AND APPROVALS; NO VIOLATION.......................- 12 -
3.14 LICENSES, PERMITS AND AUTHORIZATIONS.......................- 12 -
3.15 INSURANCE..................................................- 12 -
3.16 GUARANTEES.................................................- 12 -
3.17 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS..............- 12 -
3.18 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.................- 13 -
3.19 ACCURACY OF INFORMATION FURNISHED..........................- 13 -
4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................- 13 -
4.1 ORGANIZATION...............................................- 13 -
4.2 AUTHORITY CONCERNING THIS AGREEMENT........................- 13 -
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 6th
day of May,1996 ("Agreement"), by and between OutSource International, Inc., an
Illinois corporation ("Buyer"), and CST Services, Inc., a Massachusetts
corporation ("CST" or "Seller").
RECITALS:
WHEREAS, the Seller operates a temporary help service, in and around
Leominster, Massachusetts, from a business known as CST Services which is
located at 42 Main Street, Suite 9, Leominster, Massachusetts 01453 (the
"Business"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms and conditions set forth herein, substantially all of
the assets of the Seller, which together constitute substantially all of 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 the tangible assets listed on SCHEDULE 3.4, and Seller's
interests as lessee in any leases with respect to any of the foregoing or with
respect to any real property;
(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 in EXHIBIT A or SCHEDULE 3.7 hereto;
(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 of Seller's utility, security and other deposits;
(f) The Business as a going concern and its Permits (as hereafter
defined), licenses, telephone numbers, customer lists, vendor lists, advertising
material and data, restrictive covenants, choses in action, rights of recovery,
rights of recoupment, lists of temporary employees, together with all books,
computer software, files, papers, records and other data of Seller relating to
its assets, properties, business and operations;
(g) All rights of Seller's in and to its tradenames and
trademarks used in the Business, all variants thereof and all goodwill
associated therewith; 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 and permanent staff (the "Applications").
1.2 ASSETS RETAINED BY SELLER. There shall be excluded from the Assets
and retained by Seller all of the following (collectively, the "Excluded
Assets"):
(a) the corporate charters, 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;
(b) all of Seller's accounts receivable, cash and cash
equivalents;
(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).
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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 EXHIBIT A hereto
(the "Assumed Obligations"). Buyer shall not assume or 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 EXHIBIT A 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 EXHIBIT A 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 EXHIBIT A 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 had this Agreement
not been consummated.
1.4 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for a maximum
aggregate purchase price (the "Purchase Price") of One Million Seven Hundred
Eighty Thousand Dollars ($1,780,000), calculated in the manner set forth on
EXHIBIT F hereto, including the Earnout (as described in Section 1.8 of this
Agreement).
1.5 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT B hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code and applicable Treasury regulations. The 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.
1.6 PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase Price as
follows:
(a) Buyer shall pay One Million Two Hundred Thousand Dollars
($1,200,000.00) to CST by cashier's check or bank wire (the "Cash Payment") at
Closing; and
(b) At Closing, Buyer shall deliver to CST a promissory note in
substantially the form attached as EXHIBIT C hereto in the principal amount of
Two Hundred Thousand Dollars
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($200,000.00) (the "Promissory Note"). The Promissory Note shall bear interest
at the rate of seven percent (7%) per annum and shall be payable in two (2)
annual installments on December 31, 1996 and December 31, 1997 as set forth in
the Promissory Note.
(c) Buyer shall pay the Earnout as set forth in Section 1.8
of this Agreement.
1.7 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 defects, pledges, encroachments and
burdens of every kind or nature whatsoever, except for the matters set forth in
SCHEDULE 3.1 hereto (the "Permitted Liens").
1.8 EARNOUT. In addition to the Purchase Price, the Buyer shall pay the
Seller an earnout (the "Earnout") for the period beginning June 1, 1996 and
ending May 31, 1997 ("Period 1") and for a second period beginning on June 1,
1997 and ending May 31, 1998 ("Period 2") (Period 1 and Period 2 are hereafter
individually referred to as a "Period" and collectively as the "Periods"). The
amount of the Earnout for Period 1 shall be calculated by computing the Net
Income Before Taxes (as defined in EXHIBIT F) and then multiplying three and
one-half (3.5) times the amount by which the Net Income Before Taxes for Period
1 exceeds Four HundredEighty Four Thousand Dollars ($484,000.00); the resulting
amount shall equal the amount of Earnout for Period 1. The amount of the Earnout
for Period 2 shall be calculated by computing the Net Income Before Taxes and
then multiplying one and one-half (1.5) times the amount by which the Net Income
Before Taxes for Period 2 exceeds Four Hundred-Eighty Four Thousand Dollars
($484,000.00); the resulting amount shall equal the amount of Earnout for Period
2. Notwithstanding the foregoing, the aggregate Earnout for the Periods shall
not exceed an aggregate total of Three Hundred-Eighty Thousand Dollars
($380,000.00). The determination of the Net Income Before Taxes will be
calculated using 1995 Workers' Compensation rates paid by the Seller, 1995
unemployment tax rates paid by the Seller and professional fees of Fifty
Thousand Dollars ($50,000.00). All other operating costs, before corporate
overhead and corporate taxes, will be included accordance with generally
accepted accounting principles. Corporate overhead and corporate taxes shall not
be taken into account in calculating Net Income Before Taxes. Seller and its
advisors shall be entitled to examine and copy all records reasonably necessary
to calculate the amount of any Earnout payment. Until the Periods are completed
and the final Earnout payment has been made, Seller shall receive complete
monthly statements from Buyer regarding the financial condition and operation of
Buyer's Leominster office.
1.9 PAYMENT OF EARNOUT. The calculation of the Earnout amount for each
Period will be made within forty-five (45) days of the end of each such Period,
and payment of the Earnout will be made by Buyer to Seller within fifteen (15)
days following such calculation.
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 corporate offices of Buyer at
8000 North Federal Highway,
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Boca Raton, Florida at 10:00 a.m., Eastern Daylight Time, on May 6, 1996 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 the Closing Date.
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) A Noncompetition Agreement in substantially the form attached
as EXHIBIT G hereto executed by Claire Schmidt ("Schmidt").
(d) An Assignment of Applications, in substantially the form
attached as EXHIBIT H hereto;
(e) A Certificate executed as of the Closing Date by a duly
authorized officer of CST certifying: (i) the resolutions of the Board of
Directors and Shareholders of CST approving the transactions contemplated
hereby, and (ii) as to the accuracy of CST'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 CST at or before Closing; and
(f) The documents required pursuant to Section 7 of this
Agreement.
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 Promissory Note;
(b) An Assignment and Assumption Agreement, in substantially
the form attached as EXHIBIT E hereto;
(c) 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; and
(d) Such other instruments of assumption as Seller and its
counsel may reasonably request.
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3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller, as a material inducement to
Buyer to enter into this Agreement and consummate the transactions contemplated
hereby, makes the following representations and warranties to Buyer. Exceptions
to such representations and warranties are set forth in the disclosure schedule
accompanying this Agreement (the "Disclosure Schedule"). The Disclosure Schedule
shall be effective to modify only those representations and warranties to which
the Disclosure Schedule makes explicit reference. The phrase "to Seller's
knowledge" or similar language used in this Section 3 shall mean the best
knowledge of Seller after reasonable investigation.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 3.1 hereto, Seller
has good, marketable and unencumbered title to the Assets (or, with respect to
any 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, and has full right
and authority to transfer and deliver all the Assets. Except as described in
SCHEDULE 3.1 hereto, upon consummation of the transactions contemplated hereby,
Seller will have transferred to Buyer good, marketable and unencumbered title to
the Assets (or with respect to any 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.
3.2 CORPORATE STATUS OF CST. CST is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts. CST is qualified to do business and in good standing in each
jurisdiction where the operation of its business requires that it be so
qualified. CST 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 CST, 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 enforceable
against Seller 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.
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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. All
buildings and improvements located thereon are in good condition and repair,
subject only to normal wear and tear. 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 3.4 hereto. All machinery and equipment
listed in SCHEDULE 3.4 conforms to all applicable ordinances, regulations, and
zoning or other laws. Except as described in SCHEDULE 3.4, all items listed on
SCHEDULE 3.4 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. Seller has delivered to Buyer accurate and complete copies of all
leases relating to 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. No such lease of
personal property is subject to termination or modification as a result of the
transactions contemplated hereby.
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as
part of SCHEDULE 3.5 are the Seller's Financial Statements up through the period
ending December 31, 1995. The Financial Statements (x) present fairly the
financial position and results of operations of the Seller for the dates or
periods indicated thereon, (y) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
period indicated and (z) 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. Seller is not 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 March 22, 1996, Seller
has conducted its 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 such business and to avoid any act that might have a material adverse
effect upon the value of such business as a going concern or upon the Assets. No
event has occurred to prevent the Seller's 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 March 22, 1996:
(a) there has not been any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting the Seller's
business or the Assets;
(b) there has not been any (I) increase (other than normal merit
or cost-of-living increases in the ordinary course of business and consistent
with past practices) or material
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change: (y) in compensation or bonuses payable to or to become payable by Seller
to its officers, employees or agents, or (z) in any insurance, pension or other
benefit plan, payment or arrangement made to, for or with any of such officers,
employees or agents; or (ii) 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, Three Hundred Dollars
($300.00) or more, without the prior written consent of Buyer;
(e) there has not been any failure to maintain 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
$10,000.00;
(h) 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;
(i) Seller has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of any person or entity;
(j) there has been no change made or authorized in the charter
or bylaws of Seller;
(k) 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;
(l) Seller has not declared, set aside or paid any dividend or
made any distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased or otherwise acquired any of its capital stock;
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(m) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers or employees;
(n) 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 or on the business,
financial condition or operations of Seller; and
(o) there has not been any commitment to do any of the foregoing.
3.7 CONTRACTS AND COMMITMENTS. EXHIBIT A and SCHEDULE 3.7 hereto
together include 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 a 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 EXHIBIT A and 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 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.
3.8 ACCOUNTS RECEIVABLE. Except as set forth in SCHEDULE 3.8 hereto,
all of Seller's accounts receivable have arisen in the ordinary course of
business and, together with the allowance for doubtful accounts, have been
reflected in the Seller's Financial Statements in
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accordance with generally accepted accounting principles. All such accounts
receivable are bona fide, valid and binding receivables representing obligations
for the face dollar amount thereof and will be collected in full (subject to the
allowance for doubtful accounts as set forth on Seller's Financial Statements)
within ninety (90) days of their due date and are subject to no defenses,
counterclaims or set-offs of any nature whatsoever. The allowance for doubtful
accounts set forth in the Seller's Financial Statements is fully adequate to
cover any losses anticipated on such receivables. All accounts receivable for
all work performed or services provided prior to May 6, 1996 shall be the
property of the Seller (regardless of the date when invoices for such work or
services are sent) and any payments forwarded to Buyer for any such accounts
receivable shall be turned over to the Seller pursuant to Section 8.2.
3.9 INTELLECTUAL PROPERTY. Seller owns or is licensed to use all trade
names, service marks and other trade designations, including common law rights,
registrations, applications for registration, technology, know-how or processes
necessary to conduct the Business ("Intellectual Property"), free and clear of
and without conflict with the rights of others. Seller does not own any patents,
trademarks or copyrights. 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 taken all necessary and desirable action to maintain and protect each
item of Intellectual Property that Seller owns or uses and to consummate the
transfer and assignment thereof to Buyer. 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, 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 them
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
- 10 -
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. To Seller's
knowledge, 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.
3.11 LITIGATION. Except as set forth in SCHEDULE 3.5, there is no suit,
proceeding, action, claim or investigation, at law or in equity, pending or, to
Seller's knowledge, 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 of 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 hereto lists all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and each other employee benefit arrangement, contract,
agreement or policy, including, without limitation, pension, profit sharing or
thrift plans, medical benefit programs, death benefit and disability programs,
and severance, vacation and sick leave policies applicable to employees of the
Seller (hereinafter referred to collectively as the "Plans").
(b) All Plans have complied in all material respects with all
applicable requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), and any predecessor Federal income tax laws, ERISA, all other
applicable laws and any applicable collective bargaining agreements.
(c) No single employer defined benefit pension plan or defined
benefit plan for a controlled group of corporations included within the Plans
has since 1976: (i) had any accumulated minimum funding deficiency; (ii) been
granted a waiver of the minimum funding standards contribution; (iii) been
terminated by its plan sponsor or the Pension Benefit Guaranty Corporation
("PBGC"); or (iv) incurred or reported a reportable event; and no such Plan has
assets valued at fair market value that are less than the present value of all
accrued liabilities using PBGC actuarial and interest rate assumptions in effect
on the date hereof as applicable to single employer plan terminations or plans
for a controlled group of corporations.
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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 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 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, with the exception of the Notice to Commissioner of Revenue pursuant
to G.L. c. 62C, ss.51, which notice will be provided by Seller.
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. All such Permits shall
continue in full force and effect on behalf of Buyer following consummation of
the transactions contemplated by this Agreement. 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.
3.16 GUARANTEES. Except as set forth in SCHEDULE 3.16 attached hereto,
neither the Business nor any of the Assets is or 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.
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 knowledge threatened, against Seller in
connection with any employment related matters. Seller is not a party to any
collective
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bargaining agreement. SCHEDULE 3.17 includes a monthly report which reflects
Seller's current payroll; this report 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.
3.18 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS. Except as set forth in
SCHEDULE 3.5, 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, to Seller's knowledge, no such notice,
advice, claim or complaint of any type is threatened. Seller has at all times
complied and presently comply 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.
3.19 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 represents and warrants to Seller as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of Illinois. 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.
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5. INDEMNIFICATION AND SETOFF.
5.1 INDEMNIFICATION OBLIGATION OF SELLER. Seller hereby agrees 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 (a "Loss"):
(a) as a result of, arising from or in connection with any breach
of any representation, warranty, covenant or written agreement of Seller in this
Agreement or in any agreement, document or instrument executed and delivered in
connection with the transactions contemplated hereby; or
(b) as a result of, arising from or in connection with any
misrepresentation or inaccuracy in, or omission from the Disclosure Schedule or
from any certificate, schedule, written statement, document or instrument
furnished by Seller to Buyer in connection with the transactions contemplated by
this Agreement.
5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller 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 Seller (a "Loss"):
(a) as a result of, arising from or in connection with any breach
of any representation, warranty, covenant or written agreement of Buyer in this
Agreement or in any agreement, document or instrument executed and delivered in
connection with the transactions contemplated hereby; or
(b) as a result of, arising from or in connection with the
Assumed Obligations.
5.3 INDEMNITY PROCEDURE. 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, which approval shall not be unreasonably withheld. 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
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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.
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 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.
6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller'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
Seller):
6.1 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.
6.2 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.
6.3 DELIVERIES. Buyer shall have delivered or caused delivery of the
items set forth in Section 2.3 of this Agreement.
6.4 EMPLOYMENT. Buyer shall have offered employment to each member of
CST's office staff (a "CST Office Staff Member") on terms comparable to
similarly situated employees of Buyer, including eligibility for benefits and
participation in stock option plans, and the compensation to be paid to the CST
Office Staff Members shall remain at the level as of the Closing Date through
December 31, 1996, and then adjusted thereafter. Eligible CST Office Staff
Members shall retain their seniority with Buyer. Notwithstanding any other
provision of
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this Agreement, Buyer shall have no obligation to continue the employment of any
CST Office Staff Member.
6.5 SCHMIDT'S EMPLOYMENT. Buyer shall have offered employment to
Schmidt whereby Schmidt will serve as Branch Manager of the Leominster Branch of
Buyer through December 31, 1997 (the "Initial Employment Period") at a salary of
Fifty-Thousand Dollars ($50,000.00) per year, plus a minimum bonus of
Twenty-Five Thousand Dollars ($25,000.00) per year (the bonus to be paid as a
monthly draw). The terms of employment shall be comparable to similarly situated
employees of Buyer, including eligibility for benefits and participation in
stock option plans. Following the Initial Employment Period, Buyer will employ
Schmidt in a regional support role at a minimum salary of Sixty-Thousand Dollars
($60,000.00) plus a bonus of up to thirty percent (30%) of salary (with a
Fifteen-Thousand Dollar ($15,000.00) minimum bonus), and Schmidt will act in a
capacity to support expansion of the Buyer's New England Region.
7. 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):
7.1 PERFORMANCE OF OBLIGATIONS. Seller shall have performed all of the
obligations and complied with all of the covenants required to be performed or
to be complied with by it under this Agreement on or prior to the Closing Date.
7.2 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, (ii) under any Material
Agreement, (iii) under any insurance policies that Buyer has determined should
continue in force after the Closing, or (iv) under any Permit.
7.3 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 from any liability in
connection with its representations and warranties set forth in this Agreement.
7.4 FINANCIAL STATEMENTS. Buyer shall have received a copy of the
Financial Statements. Each of the Financial Statements shall be accompanied by a
certificate of a company officer in form and substance satisfactory to Buyer.
Buyer also shall have received a report of Seller's independent auditors, in
form and substance satisfactory to Buyer, regarding certain matters contained in
the Financial Statements.
7.5 PROPERTY. All of Seller's real and personal property shall be in
good operating condition, structurally sound and in good repair.
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7.6 APPROVAL. The board of directors 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's
entering into this Agreement and consummation of the transactions contemplated
hereby.
7.7 LITIGATION. There shall not have been instituted, pending or
threatened against Seller, 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.
7.8 NONCOMPETITION AGREEMENTS. Buyer and each CST Office Staff Member
shall have entered into a Noncompetition Agreement prohibiting such CST Office
Staff Member from competing with the Business for a period of one (1) year after
such CST Office Staff Member's termination of employment. Buyer and Schmidt
shall have entered into a Noncompetition Agreement in substantially the form
attached hereto as EXHIBIT G.
7.9 DISCLOSURE SCHEDULE. Seller shall have furnished to Buyer and its
representatives true, correct and complete copies of all documents, agreements
and instruments listed in the Disclosure Schedule.
7.10 DELIVERIES. Seller shall have delivered or caused delivery of the
items set forth in Section 2.2 hereof.
7.11 REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Seller 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.
8. POST-CLOSING COVENANTS.
8.1 ACCOUNTS RECEIVABLE OF BUYER. Seller covenants and agrees that if
Seller inadvertently collects an account receivable of the Buyer, Seller will
deliver the amount received to Buyer within ten (10) days of receipt by Seller.
8.2 ACCOUNTS RECEIVABLE OF SELLER. Buyer covenants and agrees that if
Buyer inadvertently collects an account receivable of a Seller as described in
the final sentence of Section 3.8, Buyer will deliver the amount received to
Seller within ten (10) days of receipt by Buyer.
8.3 ACCOUNTS RECEIVABLE REPORTS. Seller covenants and agrees that
Seller will deliver a weekly accounts receivable report to Buyer for ninety (90)
days following the Closing Date.
8.4 BULK SALES. The parties hereby agree to waive compliance with the
bulk sales laws of any state applicable to the transaction contemplated hereby.
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8.5 FURTHER ASSURANCES. Seller and Buyer covenant and agree with each
other and their successors and assigns, that each 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.
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.
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 written representations and written
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.
- 18 -
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: when
delivered by hand; when delivered by facsimile (if written confirmation of
receipt of the facsimile is obtained from the party to be charged with notice);
five (5) days after being deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid; or on the second
business day after being sent (PREPAID for next day delivery), via Federal
Express, Purolator Courier, DHL or other nationally recognized delivery service,
as follows:
If to Seller: CST Services, Inc.
c/o Claire Schmidt
398 Sunset Lane
Lunenburg, Massachusetts 01462
With a copy to: Charles E. Vander Linden
Ciota, Starr & Vander Linden
625 Main Street
Fitchburg, Massachusetts 01420
If to Buyer: OutSource International, Inc.
8000 North Federal Highway
Boca Raton, Florida 33487
With a copy to: Steven Sonberg, Esq.
Holland & Knight
One East Broward Boulevard
Fort Lauderdale, FL 33301
Phone: 305 468-7819
Fax: 305 463-2030
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
9.10 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
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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 has retained a broker with respect to
the transaction contemplated pursuant to this Agreement. Accordingly, Seller
agrees to indemnify the Buyer with respect to any claims made by any third party
claiming a brokerage fee or commission through Seller arising out of the
transactions contemplated by this Agreement. Buyer has not retained a broker
with respect to the transaction contemplated pursuant to this Agreement.
Accordingly, Buyer agrees to indemnify the Seller with respect to any claims
made by any third party claiming a brokerage fee or commission through Buyer
arising out of the transactions contemplated by this Agreement.
9.13 EXPENSES. 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, except that Buyer and Seller shall each pay fifty percent (50%)
of the cost of obtaining audited financial statements of Seller, provided,
however, that Seller's share of the cost of obtaining audited financial
statements of Seller shall not exceed Twenty Thousand Dollars ($20,000.00).
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.
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.
9.16 CONSENT TO JURISDICTION. The parties to this Agreement agree that
any claim, suit, action or proceeding 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
- 20 -
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 court 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. To the extent that the Promissory Note and Employment Agreement
provided that they shall be governed by Massachusetts law and further provide
for venue and jurisdiction in Massachusetts, those provisions shall govern.
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.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
BUYER:
Witness:
OutSource International, Inc.
/s/ BARBARA J. MEALEY
--------------------------
By: /s/ PAUL BURRELL
/s/ PHYLLIS J. HART --------------------------
-------------------------- Name: Paul Burrell
------------------------
Title: Vice President
------------------------
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SELLER:
Witness:
CST Services, Inc.
/s/ BARBARA J. MEALEY
--------------------------
By: /s/ CLAIRE SCHMIDT
/s/ PHYLLIS J. HART --------------------------
-------------------------- Name: Claire Schmidt
------------------------
Title: President
------------------------
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LIST OF EXHIBITS
Exhibit A List of Assumed Obligations
Exhibit B Allocation of Purchase Price
Exhibit C Promissory Note
Exhibit D Bill of Sale
Exhibit E Assignment and Assumption Agreement
Exhibit F Calculation of Purchase Price
Exhibit G Noncompetition Agreement
Exhibit H Assignment of Applications
LIST OF SCHEDULES
Schedule 3.1 Title to Assets
Schedule 3.2 Corporate Status of CST
Schedule 3.4 Condition of Real and Personal Property; Leases
Schedule 3.5 Financial Statements; Undisclosed Liabilities
Schedule 3.6 Absence of Certain Changes or Events
Schedule 3.7 Contracts and Commitments
Schedule 3.8 Accounts Receivable
Schedule 3.9 Intellectual Property
Schedule 3.12 Employee Benefit Plans; ERISA
Schedule 3.14 Licenses, Permits and Authorizations
Schedule 3.15 Insurance
Schedule 3.16 Guarantees
Schedule 3.17 Corporate and Personnel Data; Labor Relations
EXHIBIT 10.7
ASSET PURCHASE AGREEMENT
DATED FEBRUARY 24, 1997
BY AND AMONG
OUTSOURCE INTERNATIONAL, INC.
AS BUYER
AND
STANDBY PERSONNEL OF COLORADO SPRINGS, INC.
AND
ADRIAN WALKER
AS SELLER
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 24th day
of February, 1997 ("Agreement"), by and among OutSource International, Inc., an
Illinois corporation ("Buyer"), and Standby Personnel of Colorado Springs, Inc.,
a Colorado Corporation, doing business as Stand-by Personnel ("SBP"), and Adrian
Walker ("Walker") (sometimes collectively referred to as "Seller").
RECITALS:
WHEREAS, the Seller operates a temporary help business from four (4)
locations in and around Colorado Springs, Colorado (the "Business").
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms and conditions set forth herein, substantially all of
the assets of the Seller, which together constitute substantially all of 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 the tangible assets listed on
SCHEDULE 1.1.
(b) All of Seller' 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 in EXHIBIT A or SCHEDULE 1.4 hereto;
(c) All of Seller' 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) The Business as a going concern and its customer lists, vendor
lists, restrictive covenants, choses in action, rights of recovery, rights of
recoupment, lists of temporary employees, together with all books, computer
software, files, papers, records and other data of Seller relating to their
respective assets, properties, business and operations;
(f) All rights of Seller in and to its trade names and trademarks used
in the Business, and variants thereof and all goodwill associated therewith for
a period of twelve (12) months from the date of Closing at no additional cost of
any kind; and
(g) 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 and permanent staff (the "Applications").
1.2 ASSETS RETAINED BY SELLER. There shall be excluded from the Assets and
retained by Seller all of the following (collectively, the "Excluded Assets"):
(a) the corporate charters, 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;
(b) 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); and
(c) all cash and accounts receivable of the Business and all personal
assets of Walker.
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 EXHIBIT A hereto
(the "Assumed Obligations") and, subject to Section 1.4 of this Agreement, the
Assumed Leases (as hereafter defined). Buyer shall not assume or 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 EXHIBIT A hereto. Without limiting
the generality of the foregoing sentence,
-2-
Buyer shall not assume or be responsible for any of the following: any amounts
due to any of Seller' creditors listed on EXHIBIT A 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
EXHIBIT A 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 had this Agreement
not been consummated.
1.4 LEASES. Notwithstanding any other provision of this Agreement, Buyer's
assumption of any liabilities or obligations of any 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(g) and 2.3(b) of the Agreement.
1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for an aggregate
purchase price (the "Purchase Price") of Three Million One Hundred Thousand
Dollars ($3,100,000.00) calculated in the manner set forth on EXHIBIT F hereto.
1.6 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT B hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code and applicable Treasury regulations. The 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.
1.7 PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase Price as
follows:
(a) Buyer shall pay Two Million Two Hundred and Fifty Thousand Dollars
($2,250,000.00) to SBP by cashier's check or bank wire (the "Cash Payment") on
the Closing Date; and
(b) At Closing, deliver to SBP a subordinated note substantially in the
form attached as EXHIBIT C hereto.
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(i) The note shall be for Eight Hundred and Fifty Thousand Dollars
($850,000.00), it shall bear interest at Four percent (4%) per
annum fixed. It shall be due in two installments of principal
and interest on March 16, 1998 and March 16, 1999. The note is
subject to the performance parameters outlined in 1.7(b) (ii)
below.
(ii) The amount of each principal installment of the note referred
to in 1.7(b)(i) above will be:
(v) increased by fifteen-cents ($.15) for each dollar that
OutSource's gross margin is greater than $1,950,000.00 in
1997 and $1,950,000.00 in 1998;
(w) decreased by fifteen-cents ($.15) for each dollar that
OutSource's gross margin is less than $1,950,000.00 in 1997
and $1,950,000.00 in 1998;
(x) the maximum amount of any such increase or decrease will
not be more than $250,000.00 in any given year;
(y) gross margin shall be defined as net revenues (gross
revenues less credit memos) less temporary help payroll,
all employer paid payroll taxes, workers' compensation,
unrecovered advances, bad debts, transportation costs (van,
gas, etc.) and safety equipment.
(z) the gross margin targets for 1997 and 1998 shall include
all of OutSource's Colorado Springs operations (those
acquired in this transaction plus those opened subsequent
to this transaction). However any acquisitions OutSource
might make after the close of this transaction will not be
included.
1.8 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 defects, pledges, encroachments and
burdens of every kind or nature whatsoever, except for the matters set forth in
SCHEDULE 3.1 hereto (the "Permitted Liens").
1.9 PRORATION. 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
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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 at 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 Flynn, McKenna, Wright
& Karsh in Colorado Springs at 10:00 a.m., Mountain Time, on February 24, 1997
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., Mountain
Standard Time, on the Closing Date. If any extension of time is needed to close
it shall only be by mutual agreement of both parties.
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 G hereto executed by Walker and all branch office employees of SBP (to
the extent that such branch office employees agree to sign such agreement)
pursuant to which they shall agree not to compete in the greater Colorado
Springs area for a period of fifteen (15) years in the case of Walker (if some
of the purchase price is allocated to a non-compete; if it is not then the
non-compete will be for five (5) years) and one (1) year for all branch office
employees.
(d) An Assignment of Applications, in substantially the form attached
as EXHIBIT I hereto;
(e) A Certificate executed as of the Closing Date by a duly authorized
officer of SBP certifying: (i) the resolutions of the Board of Directors and
Shareholders of SBP approving the transactions contemplated hereby, and (ii) as
to the accuracy of SBP'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 SBP at or before Closing;
(f) The documents required pursuant to Sections 7.2, 7.4, 7.9, 7.10,
7.13 and 7.14 of this Agreement;
(g) An Assignment and Assumption of lease(s) substantially in the form
attached as EXHIBIT H hereto; and
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(h) A certification that OutSource has the right to use the "Stand-by
Personnel" name, at no charge, for a period of twelve (12) months from the date
of closing.
(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 Promissory Note.
(b) An Assignment and Assumption Agreement, in substantially the form
attached as EXHIBIT E hereto;
(c) 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; and
(d) OutSource's standard employment agreement stating that Walker shall
be employed by OutSource, as an employee at will, beginning on the date of
closing, at an annual salary of $90,000 per year plus a bonus potential of up to
30% of salary, plus benefits commensurate with other OutSource employees in his
comparable position.
(e) Such other instruments of assumption as Seller and their counsel
may reasonably request.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller, jointly and severally, as a
material inducement to Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, makes the following representations and
warranties to Buyer. Exceptions to such representations and warranties are set
forth in the disclosure schedule accompanying this Agreement (the "Disclosure
Schedule"). The Disclosure Schedule shall be effective to modify only those
representations and warranties to which the Disclosure Schedule makes explicit
reference. The phrase "to any Seller's knowledge" or similar language used in
this Section 3 shall, in each case, mean the best knowledge of any Seller, after
reasonable investigation.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 3.1 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, 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 3.1 hereto, upon
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consummation of the transactions contemplated hereby, Seller will have
transferred to Buyer 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, 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.
3.2 CORPORATE STATUS OF SBP. Standby Personnel of Colorado Springs, Inc. is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado. It is qualified to do business and is in good
standing in each jurisdiction where the operation of its business requires that
it be so qualified. It 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, 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 enforceable
against Seller 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.
3.4 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. All real property
leased by Seller and used in the operation of the Business is listed and
described in SCHEDULE 1.4 hereto. To the best of Seller knowledge, all buildings
and improvements located thereon are in good condition and repair, subject only
to normal wear and tear. 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 zoning or other
laws. Except as described in SCHEDULE 3.4, 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. Seller
has delivered to Buyer accurate and complete copies of all leases relating to
real and personal property leased by Seller and used in the operation of the
Business and, except as described in SCHEDULE 1.4, 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.
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3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as part
of SCHEDULE 3.5 are the Seller's profit & loss statement and balance sheet
(Financial Statements) up through the period ending November 30, 1996. The
Financial Statements (y) present fairly the financial position and results of
operations of the Seller for the dates or periods indicated thereon, (z)
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. Seller is not 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 October 23, 1996, Seller
has conducted its business only in the normal and ordinary course in
substantially the same manner as heretofore conducted and have used all
reasonable efforts consistent with normal business practices to preserve and
promote such business and to avoid any act that might have a material adverse
effect upon the value of such business as a going concern or upon the Assets. No
event has occurred to prevent the Seller's 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 October 23,1996:
(a) there has not been any damage, destruction or loss, whether covered
by insurance or not, materially and adversely affecting the Seller's business or
the Assets;
(b) there has not been any (i) increase (other than normal merit or
cost-of-living increases in the ordinary course of business and consistent with
past practices) or material change: (y) in compensation or bonuses payable to or
to become payable by Seller to its officers, employees or agents, or (z) in any
insurance, pension or other benefit plan, payment or arrangement made to, for or
with any of such officers, employees or agents; or (ii) 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, Three Hundred Dollars ($300.00) or
more, without the prior written consent of Buyer;
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(e) there has not been any failure to maintain any 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 SBP involving, individually or in the aggregate, more than $2,500.00;
(h) Seller has not entered into, nor has any Seller or the Assets
become subject to, any contracts, agreements, commitments, indentures,
mortgages, notes, bonds, licenses, 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;
(i) SBP has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of any person or entity;
(j) there has been no change made or authorized in the charter or
bylaws of SBP;
(k) SBP 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;
(l) Seller has not declared, set aside or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in kind) or
redeemed, purchased or otherwise acquired any of its capital stock;
(m) SBP has not made any loan to, or entered into any other transaction
with, any of its directors, officers or employees;
(n) 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 or on the business, financial
condition or operations of Seller; and
(o) there has not been any commitment to do any of the foregoing.
3.7 CONTRACTS AND COMMITMENTS. EXHIBIT A and SCHEDULE 3.7 hereto together
include 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
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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 a 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 SBP 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 SBP 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 EXHIBIT A and 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 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.
3.8 INTELLECTUAL PROPERTY. To the best of Seller's knowledge, 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 necessary to
conduct the Business ("Intellectual Property"), 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 taken all necessary and desirable action to maintain and
protect each item of Intellectual Property that Seller owns or uses and to
consummate the transfer and assignment thereof to Buyer. To the knowledge of
Seller, 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, no third party has interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of Seller. SCHEDULE 3.8 hereto contains a true and
correct description of the following:
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(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.
3.9 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 them
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 their 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. To Seller's
knowledge, no action or proceeding regarding assessment or collection of Taxes
is threatened against Seller and 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.
3.10 LITIGATION. There is no suit, proceeding, action, claim or
investigation, at law or in equity, pending or, to Seller's knowledge,
threatened against or affecting in any way the assets, properties or property
interests of Seller. To the best of Seller's knowledge, 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.
3.11 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 3.12 hereto lists all employee benefit plans (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) and each other employee benefit arrangement, contract,
agreement or policy, including, without limitation,
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pension, profit sharing or thrift plans, medical benefit programs, death benefit
and disability programs, and severance, vacation and sick leave policies
applicable to employees of the Seller (hereinafter referred to collectively as
the "Plans").
(b) To the best of Seller's knowledge, all Plans have complied in all
material respects with all applicable requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), and any predecessor Federal income tax laws,
ERISA, all other applicable laws and any applicable collective bargaining
agreements.
(c) No single employer defined benefit pension plan or defined benefit
plan for a controlled group of corporations included within the Plans has since
1976: (i) has any accumulated minimum funding deficiency; (ii) been granted a
waiver of the minimum funding standards contribution; (iii) been terminated by
its plan sponsor or the Pension Benefit Guaranty Corporation ("PBGC"); or (iv)
incurred or reported a reportable event; and no such Plan has assets valued at
fair market value that are less than the present value of all accrued
liabilities using PBGC actuarial and interest rate assumptions in effect on the
date hereof as applicable to single employer plan terminations or plans for a
controlled group of corporations.
3.12 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 SBP'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 any 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 any
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.
3.13 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 the 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. All such Permits shall
continue in full force and
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effect on behalf of Buyer following consummation of the transactions
contemplated by this Agreement to the extent allowable under applicable law and
regulation. A list of the Permits is included in SCHEDULE 3.13 hereto.
3.14 GUARANTEES. Except as set forth in SCHEDULE 3.15 attached hereto,
neither the Business nor any of the Assets is or 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.
3.15 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS. To the best of Seller's
knowledge, 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 knowledge threatened,
against Seller in connection with any employment related matters. Seller is not
a party to any collective bargaining agreement. SCHEDULE 3.16 includes a monthly
report which reflects Seller's current payroll; this report accurately reflects
Seller's entire current monthly payroll obligations to its employees. SCHEDULE
3.16 also includes a list of the names and compensation levels of any
consultants, independent contractors or temporary employees regularly utilized
by Seller.
3.16 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) To the best of Seller's knowledge, 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, to Seller's knowledge, 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, to the best of
Seller's knowledge, (i) 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
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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 (x) any alleged
violation by Seller of any Environmental Law, (y) any alleged failure by Seller
to have any environmental permit required in connection with the operation of
its business or (z) 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 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 represents and warrants to Seller as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the state of Illinois. 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
equitable remedies.
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5. INDEMNIFICATION AND SET OFF.
5.1 INDEMNIFICATION OBLIGATION OF SELLER. Seller, jointly and severally,
hereby agrees 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 (a
"Loss"), in an amount not to exceed Three Million One Hundred Thousand Dollars
($3,100,000.00) in the aggregate:
(a) as a result of, arising from or in connection with any breach of
any representation, warranty, covenant or agreement of Seller 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 the
Disclosure Schedule or from any certificate, schedule, statement, document or
instrument furnished by Seller to Buyer in connection with the transactions
contemplated by this Agreement.
5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller 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 Seller (a "Loss"):
(a) 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; or
(b) as a result of, arising from or in connection with the Assumed
Obligations.
5.3 INDEMNITY PROCEDURE. 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
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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.
Neither an Indemnifying Party nor an Indemnified Party shall make any
settlement of any claim without the written consent of the other 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
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 SET OFF. Buyer shall be entitled to Set off against the Cash Payment
and the Promissory Note (i) any amounts to which Buyer may be entitled to
payment pursuant to this Section 5, (ii) any amounts due and owing to Buyer by
Seller and (iii) any amounts due and owing to third parties by Seller that Buyer
has guaranteed on behalf of Seller. Buyer shall deliver written notice to Seller
of its election to and amount of set off within five (5) business days of
Buyer's election.
6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller' 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
Seller):
6.1 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.
6.2 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.
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6.3 DELIVERIES. Buyer shall have delivered or caused delivery of the items
set forth in Section 2.3 of this Agreement.
7. 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):
7.1 PERFORMANCE OF OBLIGATIONS. Seller shall have performed all of the
obligations and complied with all of the covenants required to be performed or
to be complied with by it under this Agreement on or prior to the Closing Date.
7.2 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, (ii) under any Material Agreement,
(iii) under any insurance policies that Buyer has determined should continue in
force after the Closing, or (iv) under any Permit.
7.3 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 from any liability in
connection with its representations and warranties set forth in this Agreement.
7.4 FINANCIAL STATEMENTS. Buyer shall have received a copy of the Financial
Statements. Each of the Financial Statements shall be accompanied by a
certificate of a company officer in form and substance satisfactory to Buyer.
7.5 PROPERTY. All of Seller' real and personal property shall be in good
operating condition, structurally sound and in good repair. Notwithstanding the
foregoing, Buyer acknowledges that Buyer is assuming Assumed Leases and
acquiring the Assets in Schedule 1.1 in an "as is" condition.
THE ASSETS ARE BEING SOLD TO THE BUYER "AS IS" WITH ALL FAULTS AND, EXCEPT AS
SPECIFICALLY SET FORTH HEREIN, SELLER MAKES NO WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR USE.
7.6 APPROVAL. The board of directors 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's
entering into this Agreement and consummation of the transactions contemplated
hereby.
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7.7 LITIGATION. There shall not have been instituted, pending or threatened
against Seller, 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.
7.8 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, provided any such issues have been brought to Seller's attention by
Buyer, in writing.
7.9 NONCOMPETITION AGREEMENTS. Buyer, Walker and all branch office
personnel of Seller, identified by Buyer, shall have entered into a
Noncompetition Agreement prohibiting Walker and all branch office personnel from
competing within the metropolitan Colorado Springs area.
7.10 DISCLOSURE SCHEDULE. Seller shall have furnished to Buyer and its
representatives true, correct and complete copies of all documents, agreements
and instruments listed in the Disclosure Schedule.
7.11 DELIVERIES. Seller shall have delivered or caused delivery of the
items set forth in Section 2.2 hereof.
7.12 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Seller 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.
7.13 OPINION OF SELLER' 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 J hereto.
7.14 RIGHT TO USE NAME. Buyer shall have received a certification of its
right to use the name "Stand-by Personnel" for a period of twelve (12) months
from the date of Closing at no charge.
8. POST-CLOSING COVENANTS.
8.1 ACCOUNTS RECEIVABLE OF BUYER. Seller covenants and agrees that if
Seller inadvertently collects an account receivable of the Buyer, Seller will
deliver the amount received to Buyer within ten (10) days of receipt by Seller.
8.2 ACCOUNTS RECEIVABLE OF SELLER. Buyer covenants and agrees that if Buyer
inadvertently collects an account receivable of a Seller, Buyer will deliver the
amount received to Seller within ten (10) days of receipt by Buyer.
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8.3 ACCOUNTS RECEIVABLE REPORTS. Both Buyer and Seller covenant and agree
that they will deliver a weekly accounts receivable report to each other for
ninety (90) days following the Closing Date.
8.4 FURTHER ASSURANCES. Seller covenants and agrees with Buyer, its
successors and assigns, that it 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.
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.
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,
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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: when delivered
by hand; when delivered by facsimile (if written confirmation of receipt of the
facsimile is obtained from the party to be charged with notice); five (5) days
after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid; or on the second business day
after being sent (PREPAID for next day delivery), via Federal Express, Purolator
Courier, DHL or other nationally recognized delivery service, as follows:
If to Seller: ADRIAN WALKER
17950 Sierra Way
Monument, CO 80312
With a copy to: Brian T. Murphy. Esq.
Flynn, McKenna, Wright & Karsh
111 South Tejon Street - Suite 202
Colorado Springs, CO 80903
719-578-8444
If to Buyer: OutSource International, Inc.
Attention: CEO
1144 East Newport Center Drive
Deerfield Beach, FL 33442
954-418-6200
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With a copy to: Steven Sonberg, Esq.
Holland & Knight
One East Broward Boulevard
Fort Lauderdale, FL 33301
Phone: 305 468-7819
Fax: 305 463-2030
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
9.10 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. OutSource has engaged Equitable Business and
Financial Services ("Equitable") in bringing OutSource and SBP together in this
transaction. SBP has not engaged a broker with respect to this transaction.
OutSource and SBP recognize Equitable as the sole procuring cause for the sale.
Equitable will receive a commission as per its agreement with OutSource, and
OutSource will indemnify and hold SBP harmless in regard to the payments of any
commission due or payable to Equitable as a result of this transaction.
9.13 EXPENSES. 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 (except that OutSource and SBP will each pay 50% of any fees in
the event that an audit must be performed).
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.
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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.
9.16 CONSENT TO JURISDICTION. The parties to this Agreement agree that any
claim, suit, action or proceeding 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 paralegal's fees (for negotiations, trials, appeals
and collection efforts) and court costs incurred in connection therewith in
addition to any other relief to which such party may be entitled.
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 or
permanent injunction, or any other equitable remedy that may then be available
to the aggrieved party.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
BUYER:
Witness:
OutSource International, Inc.
--------------------- By: /s/ DAVID HAYES
--------------------
David Hayes
--------------------- Regional Vice President
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SELLER:
Witness:
Standby Personnel of Colorado Springs, Inc.
--------------------- By: /s/ ADRIAN WALKER
--------------------
Adrian Walker
--------------------- President
SELLER:
Adrian Walker
BY: /s/ ADRIAN WALKER
--------------------
Adrian Walker
LIST OF EXHIBITS
Exhibit A List of Assumed Obligations
Exhibit B Allocation of Purchase Price
Exhibit C Promissory Note
Exhibit D Bill of Sale
Exhibit E Assignment and Assumption Agreement
Exhibit G Noncompetition Agreement
Exhibit H Lease Assignment and Assumption Agreement
Exhibit I Assignment of Applications
Exhibit J Opinion of Counsel
LIST OF SCHEDULES
Schedule 1 Locations
Schedule 1.1 Assets
Schedule 1.4 Assumed Leases
Schedule 3.1 Title to Assets; Permitted Liens
Schedule 3.2 Corporate Status of SBP
Schedule 3.4 Condition of Personal Property
Schedule 3.5 Financial Statements; Undisclosed Liabilities
Schedule 3.6 Absence of Certain Changes or Events
Schedule 3.7 Contracts and Commitments
Schedule 3.8 Intellectual Property
Schedule 3.11 Employee Benefit Plans; ERISA
Schedule 3.13 Licenses, Permits and Authorizations
Schedule 3.16 Corporate and Personnel Data; Labor Relations
EXHIBIT 10.8
ASSET PURCHASE AGREEMENT
DATED MARCH 3, 1997
BY AND BETWEEN
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AS BUYER
AND
STAFF MANAGEMENT SERVICES, INC.
AS SELLER
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 3rd
day of March, 1997 ("Agreement") , by and between OutSource International of
America, Inc., Florida corporation ("Buyer"), and Staff Management Services,
Inc., a New Jersey corporation, doing business as Staff Management Services,
(collectively referred to as "SMSI"), sometimes referred to as "Seller".
RECITALS:
WHEREAS, the Seller operates a temporary help business from six (6)
locations in and around Ocean, Middlesex, Essex and Passaic Counties, New Jersey
(the "Business").
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms and conditions set forth herein, substantially all of
the assets of the Seller, which together constitute substantially all of 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 the tangible assets
listed on SCHEDULE 1.1.
(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 in EXHIBIT A or SCHEDULE 3.8 hereto;
(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) The Business as a going concern and its, customer lists,
vendor lists, restrictive covenants, choses in action, rights of recovery,
rights of recoupment, lists of temporary employees, together with all books,
computer software, files, papers, records and other data of Seller relating to
their respective assets, properties, business and operations;
(f) 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").
(g) All rights of Seller in and to its trade names and trademarks
used in the Business, and variants thereof and all goodwill associated therewith
for a period of twelve (12) months from the date of Closing at no additional
cost of any kind; and
(h) Buyer shall assume all of Sellers equipment and motor vehicle
leases in respect of those items acquired by Buyer, and shall bear full
financial responsibility for those of Sellers real property leases as correspond
to Sellers offices continued by Buyer and partial financial responsibility for
those of Sellers real property leases as correspond to Sellers offices
discontinued by Buyer.
1.2 ASSETS RETAINED BY SELLER. There shall be excluded from the Assets
and retained by Seller all of the following (collectively, the "Excluded
Assets"):
(a) the corporate charters, 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 corporations;
(b) 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);
(c) all cash and accounts receivable of the business as of March
2, 1997, and all personal assets of the owner; and
(d) all tax records or copies thereof.
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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 EXHIBIT A hereto
(the "Assumed Obligations") and, subject to Section 1.4 of this Agreement, the
Assumed Leases (as hereafter defined). Buyer shall not assume or 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 EXHIBIT A 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 EXHIBIT A 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 EXHIBIT A 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 had this Agreement
not been consummated.
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.
1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for an
aggregate purchase price (the "Purchase Price") of Four Million Dollars
($4,000,000.00) calculated in the manner set forth on EXHIBIT F hereto.
1.6 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT B hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code and applicable Treasury regulations. The 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.
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1.7 PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase Price as
follows:
(a) Buyer shall pay Two Million Three Hundred Fifty Thousand
Dollars ($2,350,000.00) to SMSI by cashier's check or bank wire (the "Cash
Payment") on the Closing Date; and
(b) At Closing, deliver to SMSI a negotiable note which will be
secured , on a first priority basis, by the general intangibles, of the Dover,
NJ and Paterson, NJ offices that Seller is selling to Buyer, but which shall
otherwise be subordinated to Buyer's senior indebtedness, in the form attached
as EXHIBIT C hereto.
(i) The note shall be for One Million Six Hundred-Fifty
thousand Dollars ($1,650,000.00), it shall bear interest
at Four percent (4%) per annum compounded. It shall be
due in two annual installments. The first installment is
payable on March 15, 1998 and shall be in the amount of
Nine Hundred and Twenty-Five Thousand dollars
($925,000.00) plus accrued interest; the second
installment is payable on March 15, 1999 and shall be in
the amount of Seven Hundred and Twenty-Five Thousand
dollars ($725,000.00) plus accrued interest.
(ii) The note shall contain a provision to increase the
interest in the event of a default. The increases shall
be (a) from four percent (4%) to eight percent (8%) from
loan inception until such time as the amount in default
is paid in full, and (b) a further increase of the prime
interest rate (as published in the Wall Street Journal
on the date of default, or the next publication date if
default occurs on a non-publication date) plus four
percent 4% from the date of default until such time as
the amount in default is paid in full. All such interest
shall be compounded annually.
(d) OutSource will grant Dennis M. Omahen options for 5,000 shares
of stock at the time of Closing, and will grant additional options of 5,000
shares for each of the following two (2) years provided he meets certain
performance requirements to be agreed upon. All such options will be granted
under the terms of OutSource's standard Incentive Stock Option Plan and all such
options will be shares in the entity that will exist following the roll-up of
OutSource's existing Sub-S Corporation into a C-Corporation.
1.8 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 defects, pledges, encroachments and
burdens of every kind or nature whatsoever, except for the matters set forth in
SCHEDULE 3.1 hereto (the "Permitted Liens").
1.9 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
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of the transfer of the Assets. 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 at 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 Lindabury,
McCormick & Estabrook, PC in Westfield, NJ at 10:00 a.m., Eastern Time, on March
3, 1997 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 standard Time, on the Closing Date. If any extension of time is
needed to close it shall only be by mutual agreement of both parties. In the
event Buyer does not, through its own volition, consummate the transaction
contemplated herein, it shall pay Seller a delay fee of Ten Thousand Dollars
($10,000.00).
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 H hereto executed by Dennis M. Omahen pursuant to which he shall
agree not to compete within a 25 mile radius of any of SMSI's locations until
December 31, 2001. In addition SMSI will use its best efforts to obtain, as of
the Closing, non-competition agreements, in substantially the form attached as
Exhibit H-1 hereto, from branch employees pursuant to which they shall agree not
to compete within a 25 mile radius of any SMSI locations for a period of one (1)
year following cessation of their employment. The non-compete with Dennis M.
Omahen shall be null and void in the event Buyer defaults on its note to Seller.
(d) An Assignment of Applications, in substantially the form
attached as EXHIBIT K hereto;
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(e) A Certificate executed as of the Closing Date by a duly
authorized officer of SMSI certifying: (i) the resolutions of the Board of
Directors and Shareholders of SMSI approving the transactions contemplated
hereby, and (ii) as to the accuracy of SMSI'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 SMSI at or before Closing;
(f) The documents required pursuant to Sections 7.2, 7.3, 7.5,
7.11, 7.12 and 7.13 of this Agreement;
(g) An Assignment and Assumption of lease(s) substantially in the
form attached as EXHIBIT J hereto;
(h) A certification that OutSource has the right to use the "Staff
Management Services" name, for a period of one year, at no charge; 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 Promissory Note.
(b) An Assignment and Assumption Agreement, in substantially the
form attached as EXHIBIT E hereto;
(c) A Security Agreement attached as EXHIBIT M hereto;
(d) A Partial Rescission of Agreements and Transactions attached
as EXHIBIT N hereto;
(e) 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;
(f) OutSource's standard employment agreement stating that Dennis
Omahen shall be employed, as an employee at will, by OutSource, as a Regional
Manager, beginning on the date of closing, at an annual salary of $90,000 per
year plus a bonus potential plus benefits commensurate with other OutSource
employees in his comparable position and salary level (including payment of
OutSource's normal, published auto allowance).
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(g) The full or partial (as the case may be) release of SMSI from
liability on all real property leases involving SMSI;
(h) Such other instruments of assumption as Seller and their
counsel may reasonably request.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller as a material inducement to
Buyer to enter into this Agreement and consummate the transactions contemplated
hereby, makes the following representations and warranties to Buyer. Exceptions
to such representations and warranties are set forth in the disclosure schedule
accompanying this Agreement (the "Disclosure Schedule"). The Disclosure Schedule
shall be effective to modify only those representations and warranties to which
the Disclosure Schedule makes explicit reference. All representations and
warranties are stated to the actual knowledge without investigation of the
President of Seller.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 3.1 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, 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 3.1 hereto, upon consummation of the transactions contemplated hereby,
Seller will have transferred to Buyer 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, 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.
3.2 CORPORATE STATUS OF SMSI. Staff Management Services, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey. It is qualified to do business and is in good
standing in each jurisdiction where the operation of its business requires that
it be so qualified. It 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, 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
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connection with the transactions contemplated hereby will be) valid and binding
upon Seller, and enforceable against Seller 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.
3.4 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. All real property
leased by Seller and used in the operation of the Business is listed and
described in SCHEDULE 1.4 hereto. 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
zoning or other laws. 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. Seller has delivered to Buyer accurate and complete copies of all
leases relating to real and personal property leased by Seller and used in the
operation of the Business and, except as described in SCHEDULE 1.4, 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.
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as
part of SCHEDULE 3.5 are the Seller's Financial Statements for the period ending
December 31, 1996. The Financial Statements (x) present fairly the financial
position and results of operations of the Seller for the dates or periods
indicated thereon, (y) have been prepared in Accordance with generally accepted
accounting principles applied on a consistent basis throughout the period
indicated and (z) 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 and the other schedules 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. Seller is not 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 February 7, 1997,
Seller has conducted its business only in the normal and ordinary course in
substantially the same manner as heretofore conducted and have used all
reasonable efforts consistent with normal business practices to preserve and
promote such business and to avoid any act that might have a material adverse
effect upon the value of such business as a going concern or upon the Assets. No
event has occurred to prevent the Seller's 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 February 7, 1997;
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(a) there has not been any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting the Seller's
business or the Assets;
(b) there has not been any (i) increase (other than normal merit
or cost-of-living increases in the ordinary course of business and consistent
with past practices) or material change: (y) in compensation or bonuses payable
to or to become payable by Seller to its officers, employees or agents, or (z)
in any insurance, pension or other benefit plan, payment or arrangement made to,
for or with any of such officers, employees or agents; or (ii) 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 has not been any failure to maintain any 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;
(e) 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;
(f) there has not been any liability, obligation or commitment
incurred by Seller, outside of the ordinary course of business, involving,
individually or in the aggregate, more than $2,500.00;
(g) 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;
(h) Seller has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of any person or entity;
(i) there has been no change made or authorized in the charter or
bylaws of Seller other than as may be necessary to carry out the purposes and
intents of this Agreement;
(j) 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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(k) Seller has not declared, set aside or paid any dividend or
made any distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased or otherwise acquired any of its capital stock;
(l) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers or employees;
3.7 CONTRACTS AND COMMITMENTS. EXHIBIT A and SCHEDULE 3.7 hereto
together include 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 a 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 EXHIBIT A and 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. 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.
3.8 INTELLECTUAL PROPERTY. Seller owns or is licensed to use
Intellectual Property ("Intellectual Property"), as set forth in SCHEDULE 3.8.
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 received any
charge, complaint, claim, demand or notice alleging any such interference,
infringement,
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misappropriation or violation with any Intellectual Property right of 3rd
parties. 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.
3.9 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 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 them 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 their 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. To Seller's
knowledge, 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.
3.10 LITIGATION. There is no suit, proceeding, action, claim or
investigation, at law or in equity, pending or threatened against Seller
materially affecting 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.
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3.11 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 3.11 hereto lists all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and each other employee benefit arrangement, contract,
agreement or policy, including, without limitation, pension, profit sharing or
thrift plans, medical benefit programs, death benefit and disability programs,
and severance, vacation and sick leave policies applicable to employees of the
Seller (hereinafter referred to collectively as the "Plans").
(b) All Plans have complied in all material respects with all
applicable requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), and any predecessor Federal income tax laws, ERISA, all other
applicable laws and any applicable collective bargaining agreements.
(c) No single employer defined benefit pension plan or defined
benefit plan for a controlled group of corporations included within the Plans
has since 1976: (i) had any accumulated minimum funding deficiency; (ii) been
granted a waiver of the minimum funding standards contribution; (iii) been
terminated by its plan sponsor or the Pension Benefit Guaranty Corporation
("PBGC"); or (iv) incurred or reported a reportable event; and no such Plan has
assets valued at fair market value that are less than the present value of all
accrued liabilities using PBGC actuarial and interest rate assumptions in effect
on the date hereof as applicable to single employer plan terminations or plans
for a controlled group of corporations.
3.12 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 any 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 any
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.
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3.13 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 their 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.
3.14 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 is in full force and effect; will not terminate or lapse
by reason of the transaction contemplated hereby; 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; and will remain in full force and effect until
Closing. SCHEDULE 3.15 specifically excludes worker's compensation insurance.
Worker's compensation insurance for the Business of Seller has been provided by
an affiliate of Buyer effective January 1, 1997, and Buyer acknowledges its
obligations to provide such coverage until Closing and Seller acknowledges its
obligations to reimburse Buyer for such coverage, all of which has heretofore
been agreed upon by Seller and an affiliate of Buyer.
3.15 GUARANTEES. Neither the Business nor any of the Assets is or 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.
3.16 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 against Seller in connection with any employment related
matters. Seller is not a party to any collective bargaining agreement. SCHEDULE
3.16 includes a monthly report which reflects Seller's current payroll; this
report accurately reflects Seller's entire current monthly payroll obligations
to their employees. SCHEDULE 3.16 also includes a list of the names and
compensation levels of any consultants, independent contractors or temporary
employees regularly utilized by Seller.
3.17 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS. 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, the failure to comply
with which would have a material adverse affect on its Business and the Assets.
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 comply
with all applicable federal, state, local and foreign laws, rules and
regulations respecting occupational safety and health standards, the failure to
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comply with which would have a material adverse affect on its Business and the
Assets, 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.
3.18 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 represents and warrants to Seller as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of Illinois. 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
equitable remedies.
4.3 FINANCIAL STATEMENTS. Attached hereto as part of SCHEDULE 4.3 are
the Buyer's unaudited Financial Statements for the period ending December 31,
1996. The Financial Statements (x) present fairly the financial position and
results of operations of the Buyer for the dates or periods indicated thereon,
(y) have been prepared in Accordance with generally accepted accounting
principles applied on a consistent basis throughout the period indicated and (z)
accurately reflect the transactions, assets and liabilities of Buyer as of the
dates and for the periods presented. Except as set forth in the Financial
Statements or on SCHEDULE 4.3 and the other schedules hereto, Buyer has no
debts, liabilities or obligations, whether direct or indirect, accrued,
absolute,
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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 a $70 million debt and
equity facility that Buyer closed on February 21, 1997). Buyer is not 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 4.3 hereto.
4.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996,
Buyer conducted its business only in the normal and ordinary course in
substantially the same manner as heretofore conducted. No event or events have
occurred since such date that have had, or before the Closing will, or may, have
a material adverse affect on the Buyer's assets and its business.
4.5 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution nor
delivery by Buyer 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 Buyer of the
transactions contemplated hereby or thereby, nor compliance by Buyer with any of
the provisions hereof or thereof, will (a) conflict with or result in a breach
of any provision of Buyer'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 the purchase price payable by Buyer to
Seller, 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 Buyer 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 Buyer 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.
4.6 LITIGATION. There is no suit, proceeding, action, claim or
investigation, at law or in equity, pending or threatened against Buyer
materially affecting the assets, properties or property interests of Buyer.
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 Buyer 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.
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4.7 ACCURACY OF INFORMATION FURNISHED. No statement contained in this
Agreement, or any exhibit or schedule attached, and no statement contained in
any certificate or other instrument or document furnished by or on behalf of
Buyer 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.
5. INDEMNIFICATION AND SET OFF.
5.1 INDEMNIFICATION OBLIGATION OF SELLER. Seller hereby agrees 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 (a "Loss"):
(a) as a result of, arising from or in connection with any breach
of any representation, warranty, covenant or agreement of Seller 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 the
Disclosure Schedule or from any certificate, schedule, statement, document or
instrument furnished by Seller to Buyer in connection with the transactions
contemplated by this Agreement.
5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller 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 Seller (a "Loss"):
(a) 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; or
(b) as a result of, arising from or in connection with the Assumed
Obligations;
(c) any misrepresentation or inaccuracy in, or omission from the
Disclosure Schedule or from any certificate, schedule, statement, document or
instrument furnished by Buyer to Seller in connection with the transactions
contemplated by this Agreement.
5.3 INDEMNITY PROCEDURE. 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
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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, which approval will not be unreasonably withheld. The
Indemnified Party shall, at its expense, 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 third party claim that would materially prejudice the Indemnified
Party, 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, at its expense, of such claim or action with counsel of its
choosing.
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 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.
In the event the Indemnified Party shall withhold its consent to a
settlement and resumes the defense of a claim. The liability of the Indemnifying
Party shall be limited to the amount it had agreed to pay in connection with
said settlement. In the event the Indemnified Party reassumes the defense of a
claim, the Indemnifying Party shall be responsible to make payment in respect of
the claim to the Indemnified Party within the limitations hereof only after the
Indemnified Party has concluded a settlement or when a final order of a court of
competent jurisdiction or a final award of an arbitrator having competent
jurisdiction has been entered.
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 a final determination with respect to any indemnifiable
Loss hereunder. A "final determination" means a settlement by the Indemnifying
Party or the Indemnified Party as hereinabove described or when a final order of
the court of competent jurisdiction or a final award of an arbitrator having
competent jurisdiction has been entered. Without limiting the generality of the
foregoing, insurance proceeds received or to be received by the Indemnified
Party in respect of any matter for which indemnity is claimed hereunder by such
party shall reduce dollar-for-dollar the indemnity payable by the Indemnifying
Party hereunder, and in the event the Indemnified Party claims tax deductions,
credits or income offsets in respect of any payment or accrual of an amount
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for which indemnity is claimed hereunder by such Party, the indemnity payable by
the Indemnifying Party hereunder shall be reduced dollar-for-dollar by the taxes
saved by the Indemnified Party as a consequence of such tax deductions, credits
or offsets to income. 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 AS TO AMOUNT. In no event shall indemnification for
Losses by one party to another hereunder exceed the sum of $500,000.00, unless
such Loss is to the any willful misrepresentation or willful breach of warranty
or any willful failure to perform or comply with the provisions of this
Agreement.
6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller'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
Seller):
6.1 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.
6.2 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.
6.3 DELIVERIES. Buyer shall have delivered or caused delivery of the
items set forth in Section 2.3 of this Agreement.
6.4 APPROVALS. Buyer shall have delivered to Seller 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, (ii) under any Material
Agreement, (iii) under any insurance policies that Buyer has determined should
continue in force after the Closing, or (iv) under any Permit.
6.5 ACCESS. Seller shall have had full and complete access during
normal business hours to the properties, assets, books, agreements, files and
records of Buyer for the purpose of verifying the information set forth herein.
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7. 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):
7.1 PERFORMANCE OF OBLIGATIONS. Seller 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.
7.2 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, (ii) under any Material
Agreement, (iii) under any insurance policies that Buyer has determined should
continue in force after the Closing, or (iv) under any Permit.
7.3 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.
7.4 PROPERTY. All of Seller's real and personal property shall be in
good operating condition, structurally sound and in good repair. Notwithstanding
the foregoing, Buyer acknowledges that Buyer is assuming Assumed Leases and
acquiring the Assets in Schedule 1.1 in an "as is" condition.
7.5 APPROVAL.
(a) The board of directors of Seller shall have approved Seller
entering into this Agreement and the consummation of the transactions
contemplated hereby;
(b) The board of directors of Buyer shall have approved Buyer's
entering into this Agreement and consummation of the transactions contemplated
hereby.
7.6 LITIGATION. There shall not have been instituted, pending or
threatened against Seller, 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.
7.7 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.
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7.8 NONCOMPETITION AGREEMENTS. Buyer, Dennis Omahen and all branch
office personnel of Seller who have consented to do so before Closing, shall
have entered into a Noncompetition Agreement prohibiting them from competing
within a 25 mile radius of any of SMSI's locations until December 31, 2001 in
the case of Dennis Omahen and for one (1) year from the date of Closing for all
other employees. The non-compete with Dennis Omahen shall be null and void in
the event Buyer defaults on its note to Seller.
7.9 DISCLOSURE SCHEDULE. Seller shall have furnished to Buyer and its
representatives true, correct and complete copies of all documents, agreements
and instruments listed in the Disclosure Schedule.
7.10 DELIVERIES. Seller shall have delivered or caused delivery of the
items set forth in Section 2.2 hereof.
7.11 REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Seller 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.
7.12 RIGHT TO USE NAME. Buyer shall have received a certification of
its right to use the name "Staff Management Services", for 12 months from date
of close, at no charge.
8. POST-CLOSING COVENANTS.
8.1 ACCOUNTS RECEIVABLE OF BUYER. Seller covenants and agrees that if
Seller inadvertently collects an account receivable of the Buyer, Seller will
deliver the amount received to Buyer within ten (10) days of receipt by Seller.
8.2 ACCOUNTS RECEIVABLE OF SELLER. Buyer covenants and agrees that if
Buyer inadvertently collects an account receivable of a Seller, Buyer will
deliver the amount received to Seller within ten (10) days of receipt by Buyer.
8.3 ACCOUNTS RECEIVABLE REPORTS. Seller covenants and agrees that
Seller will deliver a weekly accounts receivable report to Buyer for ninety (90)
days following the Closing Date.
8.4 FURTHER ASSURANCES. The parties hereto covenant and agree 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.
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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.
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 for a period of one (1) year.
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.
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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: when
delivered by hand; when delivered by facsimile (if written confirmation of
receipt of the facsimile is obtained from the party to be charged with notice);
five (5) days after being deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid; or on the second
business day after being sent (PREPAID for next day delivery), via Federal
Express, Purolator Courier, DHL or other nationally recognized delivery service,
as follows:
If to Seller: DENNIS M. OMAHEN
4 Kevin Drive
Flanders, NJ 07836
With a copy to: Robert S. Schwartz, Esq
Lindabury, McCormick &
Estabrook
53 Cardinal Drive
Westfield, NJ 07091
If to Buyer: OutSource International, Inc.
Attention: CEO
1144 East Newport Center Drive
Deerfield Beach, FL 33442
954-418-6200
With a copy to: Steven Sonberg, Esq.
Holland & Knight
One East Broward Boulevard
Fort Lauderdale, FL 33301
Phone: 305 468-7819
Fax: 305 463-2030
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
9.10 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; provided, however, all of Seller's rights may be assigned
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and its obligations delegated to Dennis M. Omahen without the consent of the
Buyer in the event the Seller shall liquidate and dissolve.
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. Neither OutSource or SMSI have engaged a
broker in regard to this transaction.
9.13 EXPENSES. 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 or (iii) to their respective accountants,
attorneys and financial advisors who agree no to divulge except as provided in
clause (i) and (ii) hereof. 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.
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.
9.16 CONSENT TO JURISDICTION. The parties to this Agreement agree that
any claim, suit, action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby shall be submitted for
adjudication either in any Florida State or Federal court sitting in Broward
County, Florida, or in the State and Federal courts located in New Jersey, 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
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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 paralegal's fees (for negotiations, trials, appeals and
collection efforts) and court 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 in whose favor an award or judgement is entered in its favor.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
BUYER:
Witness:
/s/ ILLEGIBLE OutSource International of
-------------------------- America, Inc.
/s/ DAVID VAN SOEST
By:-------------------------
David Van Soest
-------------------------- Regional Vice President
SELLER:
Witness:
/s/ ILLEGIBLE Staff Management Services, Inc.
--------------------------
/s/ DENNIS M. OMAHEN
By:-------------------------
Dennis M. Omahen
--------------------------- President
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EXHIBIT 10.9
ASSET PURCHASE AGREEMENT
DATED MARCH 3, 1997
BY AND AMONG
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AS BUYER
AND
SUPERIOR TEMPORARIES, INC.
AS SELLER
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 3rd day of
March, 1997 ("Agreement"), by and among OutSource International of America,
Inc., an Florida corporation ("Buyer"), and Superior Temporaries, Inc., a
Florida corporation ("STI"), sometimes referred to as "Seller".
RECITALS:
WHEREAS, the Seller operates a temporary help business, from ten (10)
locations, under the terms of five (5) various Franchise Agreements dated June
1, 1994 for Miami, FL, Ft. Lauderdale, FL and West Palm Beach, FL, May 1, 1994
for Orlando, FL and , 1996 for Sarasota, FL, all with OutSource
Franchising, Inc., an affiliate of Buyer, (the "Business").
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms and conditions set forth herein, all of the designated
assets of the Seller, listed in section 1.1 below, which together constitute
substantially all of 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
designated assets, privileges, rights, interests, business and goodwill owned by
Seller or in which Seller have 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, 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' right, title and interest
in and to the following (except to the extent any of the following constitute
Excluded Assets):
(a) All supplies, equipment, machinery, furniture, fixtures and
leasehold improvements owned by Seller or used by Seller in connection with the
Business, including the tangible assets which will be listed on SCHEDULE 1.1, by
Buyer, within 10 days of Closing.
(b) All of Seller' 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 in EXHIBIT A or SCHEDULE 3.8
hereto, with the exception of rights under Seller's agreements or contracts with
(i) Productivity Partners, Inc., (ii) Productivity Partners II, Inc., (iii)
liability insurance, and (iv) worker's compensation insurance;
(c) All of Seller' 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) The Business as a going concern and its, customer lists, vendor
lists, restrictive covenants, choices in action, rights of recovery, rights of
recoupment, lists of temporary employees, together with all books, computer
software, files, papers, records and other data of Seller relating to their
respective assets, properties, business and operations;
(f) 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"). Buyer agrees that, after
the Closing, Seller shall have unlimited right to access and copy said
Applications during all normal business hours and Buyer shall provide, and not
unreasonably withhold, reasonable assistance to the Seller in obtaining such
information (such as copying and faxing copies to Seller).
(g) All rights of Seller's in and to its trade names and trademarks
used in the Business, and variants thereof and all goodwill associated
therewith; 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 and permanent staff (the "Applications") (Buyer agrees
that, after the Closing, Seller shall have unlimited right to access and copy
said Applications during all normal business hours).
1.2 ASSETS RETAINED BY SELLER. There shall be excluded from the Assets and
retained by Seller all of the following (collectively, the "Excluded Assets"):
(a) the corporate charters, 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 corporations;
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(b) 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);
(c) the Franchise Agreements which are being terminated by the parties
simultaneous with the Closing; and
(d) all cash, accounts receivable, real estate of Seller and all of the
personal assets of the owner.
(e) all personal property of Seller located in the Seller's Orlando, FL
condominium which Seller is permitted to remove at their convenience following
the Closing.
(f) (i) worker's compensation insurance deposits, (ii) deposits with
Productivity Partners, Inc., (iii) Seller's deposit of $5,000.00 on its leased
property in Sarasota, FL, (iv) any tax refunds due Seller, and (iv) the cash
surrender value of any life insurance policies of Seller or its shareholders.
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 EXHIBIT A hereto
(the "Assumed Obligations") and, subject to Section 1.4 of this Agreement, the
Assumed Leases (as hereafter defined). Buyer shall not assume or 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 EXHIBIT A hereto. Without limiting
the generality of the foregoing sentence, Buyer shall not assume or be
responsible for any amounts due any of Seller's creditors listed on EXHIBIT A
hereto, except that Seller shall pay any expenses prior to Closing and Buyer
shall be responsible for all ongoing expenses, that will benefit Buyer,
following the Closing.
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 had this Agreement
not been consummated.
1.4 LEASES. Notwithstanding any other provision of this Agreement, Buyer's
assumption of any liabilities or obligations of the 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) of the Agreement.
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1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for an aggregate
purchase price (the "Purchase Price") of Nine-Million Dollars ($9,000,000.00)
calculated in the manner set forth on EXHIBIT F hereto.
1.6 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT B hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code and applicable Treasury regulations. The 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.
1.7 PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase Price as
follows:
(a) Cash at Closing of Nine-Million Dollars ($9,000,000.00) to be paid
by bank wire on the day of Closing.
1.8 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 defects, pledges, encroachments and
burdens of every kind or nature whatsoever, except for the matters set forth in
SCHEDULE 3.3 hereto (the "Permitted Liens").
1.9 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. All
ad valorem and property taxes, and any similar assessment based upon or measured
by Seller' 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' 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. Seller shall have ten (10) business days to provide
Buyer of all such pro-rations, and Buyer shall have five (5) business days
following receipt of all such prorations to pay Seller; time is of the essence
in respect to the afore mentioned time periods. Either Buyer or Seller can seek
a re-proration based on actual taxes at the end of 1997.
2. CLOSING DATE.
2.1 TIME AND PLACE OF CLOSING/RECISSION PENALTY.
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(a) The closing of the sale and purchase of the Assets (the "Closing")
will take place at the offices of OutSource at 10:00 am, Eastern
Standard Time, on March 3, 1997 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 Standard Time, on the Closing Date.
(b) If, from January 16, 1997 through February 24, 1997, either party
rescinds then the rescinding party shall give notice to the other
and shall pay contemporaneously with such notice a recission fee of
$50,000.00. Notwithstanding the foregoing, if, between January 16,
1997 and February 24, 1997, as a result of OutSource's due
diligence, there is any material change in the business or its
historical financial data, OutSource may cancel the transaction
with no recission fee. If after February 24, 1997 either party
rescinds then the rescinding party shall give notice to the other
and shall pay contemporaneously with such notice a recission fee of
$100,000.00. Notwithstanding the foregoing, if, after February 24,
1997 there is any material change in the current business operation
of STI then OutSource may cancel the transaction with no recission
fee.
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) A Release in substantially the form attached as EXHIBIT G hereto;
(d) Noncompetition Agreements in substantially the form attached as
EXHIBIT H hereto executed by all stockholders of Seller, by which they shall
agree not to compete within a 25 mile radius of any office location being
acquired by OutSource for a period of five years.
(e) An Assignment of Applications, in substantially the form attached
as EXHIBIT K hereto;
(f) A Certificate executed as of the Closing Date by a duly authorized
officer of STI certifying: (i) the resolutions of the Board of Directors and
Shareholders of STI approving the transactions contemplated hereby, and (ii) as
to the accuracy of STI'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 STI at or before Closing;
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(g) The documents required pursuant to Sections 7.2, 7.3, 7.5, 7.11,
and 7.12 of this Agreement;
(h) A mutual termination of all of the Franchise Agreements with
OutSource Franchising, Inc., an affiliate of Buyer, substantially in the form
attached as EXHIBIT M hereto;
(i) An Assignment and Assumption of lease(s) substantially in the form
attached as EXHIBIT J hereto; and
(j) 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) An Assignment and Assumption Agreement, in substantially the form
attached as EXHIBIT E hereto;
(b) A Release in substantially the form attached as EXHIBIT I hereto;
(c) 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
reasonable 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; and
(d) The Master Lease Agreement between Seller and Buyer;
(e) Such other instruments of assumption as Seller and their counsel
may reasonably request.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller, 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. Exceptions
to such representations and warranties are set forth in the disclosure Schedule
accompanying this Agreement (the "Disclosure Schedule"). The Disclosure schedule
shall be effective to modify only those representations and warranties to which
the Disclosure schedule makes explicit reference. The phrase "to any Seller's
knowledge" or similar language used in this Section 3 shall, in each case, mean
the best knowledge of Seller.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 3.3 hereto, Seller has
good, marketable and unencumbered title to the Assets (or, with respect to any
real or personal property
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leases included in the Assets, a valid leasehold interest therein), free and
clear of all mortgages, security interests, liens, claims, encumbrances, title
defects (except for a title defect at Seller's 730 N. Andrews location which
Buyer hereby acknowledges, although the real property is not part of the
designated assets), pledges, charges, assessments, covenants, encroachments and
burdens of any kind or nature whatsoever, and has full right and authority to
transfer and deliver all the Assets. Except as described in SCHEDULE 3.3 hereto,
upon consummation of the transactions contemplated hereby, Seller will have
transferred to Buyer 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, 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 designated assets (except for the
Excluded Assets) that are used in connection with, necessary for, or beneficial
to the operation of the Business.
3.2 CORPORATE STATUS OF STI. STI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. STI is
qualified to do business and in good standing in each jurisdiction where the
operation of its business requires that it be so qualified. STI 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, with the exception of a Certificate of Use for
Seller's property located at 2425 N. Miami Avenue, which Buyer hereby
acknowledges (Seller hereby acknowledges that it represent to Buyer that Buyer
shall be able to obtain such Certificate as a tenant). An accurate and complete
copy of the Articles of Incorporation and Bylaws of STI, 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 enforceable
against Seller 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.
3.4 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. All real property
leased by Seller and used in the operation of the Business is listed and
described in SCHEDULE 1.4 hereto. To the best of Seller knowledge, all buildings
and improvements located thereon are in good, functional operating condition and
repair (as differentiated from aesthetic condition), subject only to normal wear
and tear (age alone is not to be considered a functional defect) and, in
Seller's opinion, are
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adequate to conduct the business as it is now being conducted, except for the
North Miami location which has a roof leak (which Seller will repair at Seller's
expense when Buyer obtains the Certificate of Use referred to in section 3.2
above). 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, which will be listed in
SCHEDULE 1.1 by Buyer within 10 days following the Closing, conforms to all
applicable ordinances, regulations, and zoning or other laws. 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. Seller has
delivered to Buyer accurate and complete copies of all leases relating to real
and personal property leased by Seller and used in the operation of the Business
and, except as described in SCHEDULE 3.6, 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.
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as part
of SCHEDULE 3.7 are the Seller' Financial Statements up through the period
ending December 31, 1996. The Financial Statements (x) present fairly the
financial position and results of operations of the Seller for the dates or
periods indicated thereon, (y) have been prepared in Accordance with generally
accepted accounting principles applied on a consistent basis throughout the
period indicated and (z) 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 3.7 hereto, Seller has no
debts, liabilities or obligations (except ongoing normal operating items such as
pest control, water coolers, etc.), 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 amounts to
be written off due to post period bankruptcy of Waste Magic, Inc.). Seller is
not 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 3.7 hereto.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 16, 1997, Seller
have conducted their business only in the normal and ordinary course in
substantially the same manner as heretofore conducted and have used all
reasonable efforts consistent with normal business practices to preserve and
promote such business and to avoid any act that might have a material adverse
effect upon the value of such business as a going concern or upon the Assets. No
event has occurred to prevent the Seller's 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 3.8 hereto, since January 16, 1997;
(a) there has not been any damage, destruction or loss, in excess of
$5,000.00, whether covered by insurance or not (other than normal worker's
compensation claims), materially and adversely affecting the Seller's business
or the Assets;
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(b) there has not been any (i) increase (other than normal merit or
cost-of-living increases in the ordinary course of business and consistent with
past practices) or material change: (y) in compensation or bonuses payable to or
to become payable by Seller to its officers, employees or agents, or (z) in any
insurance, pension or other benefit plan, payment or arrangement made to, for or
with any of such officers, employees or agents; or (ii) 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, One Thousand Dollars ($1,000.00) or
more, without the prior written consent of Buyer;
(e) there has not been any failure to maintain any 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) Seller has not entered into, nor has any 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 3.9 hereto that are not otherwise
disclosed herein;
(h) there has been no change made or authorized in the charter or bylaws
of Seller;
(i) 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;
(j) Other than those amounts that Seller has withdrawn as personal
remuneration, Seller has not declared, set aside or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased or otherwise acquired any of its capital stock, except
for a $100,000.00 distribution made to shareholders which Buyer hereby
acknowledges;
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(k) 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 or on the business, financial
condition or operations of Seller; and
(l) there has not been any commitment to do any of the foregoing.
3.7 CONTRACTS AND COMMITMENTS. EXHIBIT A and SCHEDULE 3.9 hereto together
include a true, correct and complete list of all material contracts, agreements,
commitments, indentures, notes, bonds, licenses, real and personal property
leases and other obligations to which Seller is a party, by which Seller or
their 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 a 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 agreement entered into
outside of the ordinary course of business; or (e) 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 3.9 hereto. Each of the
Material Agreements listed in EXHIBIT A and SCHEDULE 3.9 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 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 3.9 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.
3.8 ACCOUNTS RECEIVABLE. Except as set forth in SCHEDULE 3.10 hereto, all
of Seller' accounts receivable (as defined in Florida Statute 679.106 of the
Uniform Commercial Code) have arisen in the ordinary course of business and,
together with the allowance for doubtful accounts, have been reflected in the
Seller' Financial Statements in Accordance with generally accepted accounting
principles. All such accounts receivable are bona fide, valid and binding
receivables representing obligations for the face dollar amount thereof and
should be collected in full, except for an allowance for doubtful accounts, as
set forth on Seller' Financial Statements) within ninety (90) days of their due
date and are subject to
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no defenses, counterclaims or set-offs of any nature whatsoever. The allowance
for doubtful accounts set forth in the Seller' Financial Statements is believed
to be fully adequate to cover any losses anticipated on such receivables (except
a doubtful account with Waste Magic Recyclers, Inc for approximately
$225,000.00).
3.9 INTELLECTUAL PROPERTY. Seller own or are 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 necessary to conduct the Business
("Intellectual Property"), 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
taken all necessary and desirable action to maintain and protect each item of
Intellectual Property that Seller owns or uses and to consummate the transfer
and assignment thereof to Buyer. 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, no third party has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of Seller. SCHEDULE 3.11 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 them
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' Financial Statements. All
Taxes and other assessments and levies required to be collected or withheld by
Seller with respect to the operation of their 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.
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Seller is not a party to any pending action or proceeding regarding
assessment or collection of Taxes by any governmental authority. To Seller's
knowledge, 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.
3.11 LITIGATION. There is no suit, proceeding, action, claim or
investigation, at law or in equity, pending or, to Seller's knowledge,
threatened against or affecting in any way the assets, properties or property
interests of Seller, except for the title and environmental problems at Seller's
730 N. Andrews location which Buyer hereby acknowledges) . 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 their 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 except as garnishments against certain employees of Seller.
3.12 EMPLOYEE BENEFIT PLANS; ERISA. Seller does not have any defined
benefit pension plans, defined benefit plans, 401-k plan, simplified employer
plan, or any other pension or thrift plan for its employees except as described
on SCHEDULE 3.12 hereto.
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 any 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 any
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.
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3.14 LICENSES, PERMITS AND AUTHORIZATIONS. Seller has all permits,
licenses, certificates of occupancy (other than the N. Miami Certificate of
Use), approvals or other authorizations from and registrations with federal,
state, municipal and foreign governmental agencies and private associations
necessary to operate their 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. All such Permits shall continue in full force and
effect on behalf of Buyer following consummation of the transactions
contemplated by this Agreement. A list of the Permits is included in SCHEDULE
3.13 hereto.
3.15 GUARANTEES. Neither the Business nor any of the purchased Assets is or
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.
3.16 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 knowledge threatened (except for a single, isolated, sexual harassment
problem brought to the attention of Seller and hereby acknowledged by Buyer),
against Seller in connection with any employment related matters. Seller is not
a party to any collective bargaining agreement. SCHEDULE 3.16 includes a monthly
report which reflects Seller' current payroll; this report accurately reflects
Seller' entire current monthly payroll obligations to their employees. SCHEDULE
3.16 also includes a list of the names and compensation levels of any
consultants, independent contractors or temporary employees regularly utilized
by Seller.
3.17 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) Seller has at all times conducted their 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, to Seller's knowledge, no such notice,
advice, claim or complaint of any type is threatened. Seller have at all times
complied and presently comply 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) all real
property owned or leased by Seller and all buildings, fixtures, equipment and
other improvements located thereon and
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the present use thereof comply in all respects with applicable fire codes,
building codes (except for the North Miami office), health codes, ordinances and
regulations; (ii) the business operations of Seller (including without
limitation their 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, except for the N. Andrews and Sarasota
locations which Buyer hereby acknowledges; (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 (x) any alleged violation by Seller of any
Environmental Law, (y) any alleged failure by Seller to have any environmental
permit required in connection with the operation of their business or (z) 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 ASSISTANCE. Rick Hermanns, Steve Willocks and Walter Escarzaga shall
make themselves available to Buyer, for up to twenty (20) hours per week, for
four (4) weeks from the date of Closing, at a rate of compensation of $500 per
week to assist in the transition of ownership. Such assistance will be at the
request of OutSource. For another sixty (60) days, following the expiration of
the 4 weeks assistance, Hermanns, Willocks and Escarzaga shall be available
without compensation and will not unreasonably withhold normal requests for
their assistance as may be requested by OutSource from time to time..
3.20 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 represents and warrants to Seller as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the state of Illinois. 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.
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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
Bank of Boston, Triumph Capital Group and Bachow and Associates.
4.5 ENCUMBRANCES. No encumbrances, judgements, liens or tax liens exist
against the purchased property of the Buyer except those set forth in EXHIBIT N.
4.6 TAXES. All taxes levied against Buyer have been paid in full and Buyer
has received no notice of assessment, jeopardy assessment, notice of deficiency,
notice of seizure or other similar document by which Seller is notified that any
taxing entity has alleged any tax is overdue or any penalty is due to such
taxing authority.
4.7 BANKRUPTCY. Buyer has not filed nor had filed against it any bankruptcy
petition, receivership, composition of creditors or other legal proceeding based
on the insolvency of the Buyer or on the failure of Buyer to pay any creditor or
group of creditors, nor has Buyer been notified that any such proceeding is
contemplated.
5. INDEMNIFICATION AND SET OFF.
5.1 INDEMNIFICATION OBLIGATION OF SELLER. Seller hereby agrees 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 (a "Loss"):
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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 in this Agreement
or in any agreement, document or instrument executed and delivered in connection
with the transactions contemplated hereby; or
(b) any material misrepresentation or inaccuracy in, or omission from
the Disclosure Schedule or from any certificate, schedule, statement, document
or instrument furnished by Seller to Buyer in connection with the transactions
contemplated by this Agreement.
5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller 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 Seller (a "Loss"):
(a) 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; or
(b) as a result of, arising from or in connection with any unpaid
amounts due vendors relative to the Assumed Obligations prior to the date of
Closing.
5.3 INDEMNITY PROCEDURE. 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). 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.
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
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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.
6. CONDITIONS PRECEDENT TO SELLER' OBLIGATION TO CLOSE. Seller' 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
Seller):
6.1 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.
6.2 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.
6.3 DELIVERIES. Buyer shall have delivered or caused delivery of the items
set forth in Section 2.3 of this Agreement.
7. 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):
7.1 PERFORMANCE OF OBLIGATIONS. Seller 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.
7.2 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, (ii) under any Material Agreement.
7.3 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 from any liability in
connection with its representations and warranties set forth in this Agreement.
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7.4 FINANCIAL STATEMENTS. Buyer shall have received a copy of the Financial
Statements. Buyer also shall have received a report of Seller' independent
auditors (if any), in form and substance satisfactory to Buyer, regarding
certain matters contained in the Financial Statements.
7.5 PROPERTY. All of Seller' real and personal property shall be in good,
functional operating condition and repair (as differentiated from aesthetic
condition), subject only to normal wear and tear (age alone is not to be
considered a functional defect) and, in Seller's opinion, are adequate to
conduct the business as it is now being conducted, except for the North Miami
location which has a roof leak (which Seller will repair at Seller's expense
when Buyer obtains the Certificate of Use referred to in section 3.2 above).
Notwithstanding the foregoing, Buyer acknowledges that Buyer is assuming Assumed
Leases and acquiring the Assets in SCHEDULE 1.1 in an "as is" condition.
7.6 APPROVAL. The board of directors 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's
entering into this Agreement and consummation of the transactions contemplated
hereby.
7.7 LITIGATION. There shall not have been instituted, pending or threatened
against Seller, 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. 7.8 Noncompetition
Agreements. Buyer and all of Seller's shareholders shall have entered into a
Noncompetition Agreement prohibiting such shareholders from competing, for a
period of five (5) years from the closing, within a twenty-five (25) mile radius
of any location that Buyer is purchasing from Seller.
7.9 DISCLOSURE SCHEDULE. Seller shall have furnished to Buyer and its
representatives true, correct and complete copies of all documents, agreements
and instruments listed in the Disclosure schedule.
7.10 DELIVERIES. Seller and shall have delivered or caused delivery of the
items set forth in Section 2.2 hereof.
7.11 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Seller 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.
7.12 OPINION OF SELLER' 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 L hereto.
8. POST-CLOSING COVENANTS.
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8.1 FURTHER ASSURANCES. Seller covenants and agrees 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.
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.
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, for a
period of 365 days, 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.
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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: when delivered
by hand; when delivered by facsimile (if written confirmation of receipt of the
facsimile is obtained from the party to be charged with notice); five (5) days
after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid; or on the second business day
after being sent (PREPAID for next day delivery), via Federal Express, Purolator
Courier, DHL or other nationally recognized delivery service, as follows:
If to Seller Superior Temporaries, Inc.
9000 W. Sample Road
Suite 404
Coral Springs, FL 33065
954-344-8355
With a copy to: Oscar Soto
Fleming, O'Brian, Fleming
500 East Broward Blvd. - 17th Floor
Ft. Lauderdale, FL 33394
If to Buyer: OutSource International of America, Inc.
Attention: CEO
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
954-418-6200
With a copy to: Steven Sonberg, Esq.
Holland & Knight
One East Broward Boulevard
Fort Lauderdale, FL 33301
Phone: 305 468-7819
Fax: 305 463-2030
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or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
9.10 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. Neither Seller nor Buyer has retained any broker
with respect to the transaction contemplated pursuant to this Agreement.
Accordingly, each party agrees to indemnify the other 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 said party.
9.13 EXPENSES. 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.
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.
9.16 CONSENT TO JURISDICTION. The parties to this Agreement agree that any
claim, suit, action or proceeding, brought by either 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.
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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 paralegal's fees (for negotiations, trials, appeals
and collection efforts) and court costs incurred in connection therewith in
addition to any other relief to which such party may be entitled.
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.
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/ ILLEGIBLE
--------------------------
By: /s/ PAUL M. BURRELL
/s/ PHYLLIS J. HART ---------------------------
-------------------------- Paul M. Burrell
President
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SELLER:
Witness:
Superior Temporaries, Inc.
/s/ SCOTT J. REIT
--------------------------
By: /s/ RICHARD HERMANNS
--------------------------
/s/ OSCAR E. SOTO Richard Hermanns
-------------------------- President
Oscar E. Soto
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LIST OF EXHIBITS
Exhibit A List of Assumed Obligations
Exhibit B Allocation of Purchase Price
Exhibit C Intentionally left blank
Exhibit D Bill of Sale
Exhibit E Assignment and Assumption Agreement
Exhibit F Calculation of Purchase Price
Exhibit G Release by Seller
Exhibit H Noncompetition Agreement
Exhibit I Release by Buyers
Exhibit J Lease Assignment and Assumption Agreement
Exhibit K Assignment of Applications
Exhibit L Opinion of Counsel
Exhibit M Termination of Franchise Agreement
Exhibit N Encumbrances, Judgements and Liens of Buyer
LIST OF SCHEDULES
Schedule 1 Locations
Schedule 1.1 Assets
Schedule 1.4 Assumed Leases
Schedule 3.1 Title to Assets
Schedule 3.2 Corporate Status of STI
Schedule 3.3 Permitted Liens
Schedule 3.6 Condition of Personal Property
Schedule 3.7 Financial Statements; Undisclosed Liabilities
Schedule 3.8 Absence of Certain Changes or Events
Schedule 3.9 Contracts and Commitments
Schedule 3.10 Accounts Receivable
Schedule 3.11 Intellectual Property
Schedule 3.12 Employee Benefit Plans; ERISA
Schedule 3.13 Licenses, Permits and Authorizations
Schedule 3.15 Insurance
Schedule 3.16 Corporate and Personnel Data; Labor Relations
EXHIBIT 10.10
ASSET PURCHASE AGREEMENT
DATED MARCH 31, 1997
BY AND AMONG
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AS BUYER
AND
STAND-BY, INC
AND
CARLENE WALKER
AS SELLER
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 31st day
of March, 1997 ("Agreement"), by and among OutSource International of America,
Inc., a Florida corporation ("Buyer" or "OutSource"), and Stand-By, Inc., a
Colorado Corporation, doing business as Stand-By Personnel ("SBPI"), and Carlene
Walker ("Walker") (sometimes collectively referred to as "Seller").
RECITALS:
WHEREAS, the Seller operates a temporary help business from one (1)
seasonal and six (6) year-round locations in and around Denver, Colorado (the
"Business").
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on the terms and conditions set forth herein, substantially all of
the assets of the Seller, which together constitute substantially all of 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, security deposits, (excluding all Liberty Mutual escrow
account held for workers' compensation insurance) and other tangible property
owned by Seller or used by Seller in connection with the Business, including the
tangible assets listed on SCHEDULE 1.1.
(b) All of Seller' 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 in EXHIBIT A or SCHEDULE 3.7 hereto;
(c) 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;
(d) The Business as a going concern and its customer lists, vendor
lists, choses in action, rights of recovery, rights of recoupment, lists of
temporary employees, together with all books, computer software, files, papers,
records and other data of Seller relating to their respective assets,
properties, business and operations. Buyer shall permit Seller access, on
reasonable notice, to inspect, copy or duplicate such records and Buyer shall
keep such records intact for a period of seven (7) years following Closing. At
the end of the seven (7) year period Buyer shall not destroy such records
without Sellers consent;
(e) A non-exclusive right in and to Seller's trade names and
trademarks used in the Business, and variants thereof and all goodwill
associated therewith for a period of twelve (12) months from the date of
Closing; and
(f) 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 and permanent staff (the "Applications").
1.2 ASSETS RETAINED BY SELLER. There shall be excluded from the Assets and
retained by Seller all of the following (collectively, the "Excluded Assets"):
(a) the corporate charters, 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;
(b) 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);
(c) all cash, trade accounts receivable, marketable securities,
intercompany accounts receivable, Liberty Mutual escrow account,
Lincoln Town Car (and the lease thereon) and life insurance
policies of the Business and all personal assets of Walker; and
(d) All of Seller' right, title and interest in and to the
Intellectual Property (as hereafter defined) owned by Seller or used in the
Business.
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
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specifically listed on EXHIBIT A hereto (the "Assumed Obligations") and, subject
to Section 1.4 of this Agreement, the Assumed Leases (as hereafter defined).
Buyer shall not assume or 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 EXHIBIT A 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' creditors listed on EXHIBIT A
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 EXHIBIT A 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
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, except that Buyer shall be
responsible for paying the sales and use tax that will arise from this
transaction.
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 had this Agreement not
been consummated.
1.4 LEASES. Notwithstanding any other provision of this Agreement, Buyer's
assumption of any liabilities or obligations of any 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(g) and 2.3(b) of the Agreement.
1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for an aggregate
purchase price (the "Purchase Price") of Five Million Five Hundred Thousand
Dollars ($5,500,000.00), which shall be allocated as mutually agreed to by the
parties, and set forth on EXHIBIT B hereto.
1.6 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT B hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code and applicable Treasury regulations. The 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.
1.7 PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase Price as
follows:
(a) Buyer shall pay Five Million Dollars ($5,000,000.00), in
accordance with the allocation in Exhibit B, to SBPI, or Carlene A. Walker, by
bank wire (the "Cash Payment") on the Closing Date; and
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(b) At Closing, deliver to SBPI a subordinated note ("Subordinated
Note") substantially in the form attached as EXHIBIT C hereto.
(i) The note shall be for Five Hundred Thousand Dollars
($500,000.00) and it shall bear no interest. It shall be due
in two (2) equal annual installments. The first installment
shall be due thirteen and one-half (13 1/2) months from the
date of Closing and second installment shall be due
twenty-five and one-half (25 1/2) months from the date of
Closing. Both installments shall be subject to adjustment
per Section 1.7(b)(ii) below.
(ii) The amount of each principal installment, and the balance
due under the note referred to in 1.7(b)(i) above will be:
(t) decreased by fifteen-cents ($.15) for each dollar
that OutSource's gross margin from the Denver, CO
operations is less than Four Million Seven Hundred-Fifty
Thousand Dollars ($4,750,000.00) in 1997 and Five
Million Five Hundred Thousand Dollars ($5,500,000.00) in
1998;
(u) the maximum amount of any such decrease will not
exceed Two Hundred and Fifty Thousand Dollars
($250,000.00) in any given year;
(v) increased by fifteen-cents ($.15) for each dollar
that OutSource's gross margin from the Denver, CO
operations is more than Four Million Seven Hundred-Fifty
Thousand Dollars ($4,750,000.00) in 1997 and Five
Million Five Hundred Thousand Dollars ($5,500,000.00) in
1998;
(w) the maximum amount of any such increase will not
exceed Thirty Thousand Dollars ($30,000.00) for the year
1997 and Fifteen Thousand Dollars ($15,000.00) for the
year 1998;
(x) gross margin shall be defined as net revenues less
direct temporary help payroll, all employer paid payroll
taxes on said temporary help payroll, workers'
compensation insurance coverage on said temporary help
payroll, safety equipment (not to exceed the percent
that safety equipment is to temporary help payroll as
experienced on SBPI's financial statements for the 12
months ended 9/30/96) and transportation costs of
picking up and delivering temporary help to job sites
(not to exceed the percent that transportation cost is
to temporary help payroll as experienced on SBPI's
financial statements for the 12 months ended 9/30/96);
net
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revenues is defined as: gross sales, less returns and
allowances and bad debts (bad debts not to exceed the
bad debt as reflected on SBPI's 9/30/96 financial
statements).
(y) Buyer shall allow Seller full access to its work
papers in connection with the adjustments made to the
Subordinated Note. In the event the parties are in
dispute concerning the adjustments that are made to the
Subordinated Note, and cannot resolve such dispute among
themselves, then either party can engage the accounting
firm of Arthur Anderson & Co. to review the adjustments
and the parties agree to abide by the decision of Arthur
Anderson; in the event Arthur Anderson is the accounting
firm for either party then another "Big 6" accounting
firm shall be mutually agreed upon by the parties. If
Arthur Anderson finds for the party who requested Arthur
Anderson's services, and such adjustment that Arthur
Anderson finds is more than three percent (3%) of the
original proposed adjustment, then the other party shall
pay such auditing expenses.
(z) the gross margin targets for 1997 and 1998 shall
include all of OutSource's Denver operations with the
exception of any acquisitons OutSource might make in the
future.
(c) 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 defects, pledges, encroachments and
burdens of every kind or nature whatsoever, except for the matters set forth in
SCHEDULE 3.1 hereto (the "Permitted Liens").
1.8 PRORATION. 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 ten (10) business days of the Closing and
shall be final and binding on the parties.
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 Minor & Brown, P.C.,
650 South Cherry Street, Suite
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1100, Denver, CO 80222 at 10:00 a.m., Mountain Standard Time, on March 31, 1997
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., Mountain
Standard Time, on the Closing Date. If any extension of time is needed to close
it shall only be by mutual agreement of both parties.
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 and Assignment and Assumption Agreement, in
substantially the form attached as EXHIBIT D hereto;
(b) Non-competition Agreement in substantially the form attached as
EXHIBIT G hereto executed by Walker pursuant to which she shall agree not to
compete within the counties of Adams, Arapahoe, Denver, Douglas and Jefferson,
all in the state of Colorado, for a period of five years;
(c) An Assignment of Applications, in substantially the form attached
as EXHIBIT I hereto;
(d) A Certificate executed as of the Closing Date by a duly authorized
officer of SBPI certifying: (i) the resolutions of the Board of Directors and
Shareholders of SBPI approving the transactions contemplated hereby, and (ii) as
to the accuracy of SBPI'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 SBPI at or before Closing;
(e) The documents required pursuant to Sections 7.2 (Approvals),
7.4(Financial Statements), 7.9 (Non-competition Agreements), 7.10 (Disclosure
Schedule), 7.11 (Option to Purchase) 7.14 (Opinion of Seller's Counsel) and 7.15
(Right to Use Name) of this Agreement;
(f) An Assignment and Assumption of lease(s) substantially in the form
attached as EXHIBIT H hereto;
(g) An Assignment, substantially in the form attached as EXHIBIT K
granting OutSource the nonexclusive right to use the "Stand-by Personnel" name
and logo, for One Dollar ($1.00) consideration, for a period of twelve (12)
months from the date of Closing;
(h) An option to purchase, substantially in the form attached as
EXHIBIT L, granting OutSource an option to purchase Printers Personnel, Inc.
(i) Such other instruments of sale, transfer, conveyance and
assignment as Buyer and its counsel may reasonably request.
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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 Subordinated Note in the form attached as EXHIBIT C hereto.
(b) An Assignment and Assumption Agreement, in substantially the form
attached as EXHIBIT E hereto;
(c) 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; and
(d) A non-competition agreement, in substantially the form attached as
Exhibit M, executed by OutSource, pursuant to which OutSource shall agree not to
compete within the counties of Adams, Arapahoe, Denver, Douglas and Jefferson
all in the state of Colorado for a period of fifteen (15) months following
Closing in the printing and graphics arts industries.
(e) Triple net leases, executed as of the Closing Date, for the
facilities listed on SCHEDULE 1.4, for a period of five (5) years at a base
rental rate of seven dollars ($7.00) per square foot. At the Closing OutSource
will advise Seller if it does not desire to retain any particular location
listed on SCHEDULE 1.4. In the event OutSource decides not to retain any
particular location, it will continue to lease said location from Walker (or
assigns) until such time as Walker (or assigns) can either sub-lease, at
substantially the same terms, or sell the location.
(f) Such other instruments of assumption as Seller and their counsel
may reasonably request.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller, jointly and severally, as a
material inducement to Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, makes the following representations and
warranties to Buyer. Exceptions to such representations and warranties are set
forth in the disclosure schedule accompanying this Agreement (the "Disclosure
Schedule"). The Disclosure Schedule shall be effective to modify only those
representations and warranties to which the Disclosure Schedule makes explicit
reference. The phrase "to any Seller's knowledge" or similar language used in
this Section 3 shall, in each case, mean the best knowledge of any Seller.
3.1 TITLE TO ASSETS. Except as described in SCHEDULE 3.1 hereto, Seller has
good, marketable and unencumbered title to the Assets (or, with respect to any
real or personal property
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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, and have full right and authority to transfer and
deliver all the Assets. Except as described in SCHEDULE 3.1 hereto, upon
consummation of the transactions contemplated hereby, Seller will have
transferred to Buyer 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, 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.
3.2 CORPORATE STATUS OF SBPI. Standby, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado. It 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, 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 enforceable
against Seller 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.
3.4 CONDITION OF REAL AND PERSONAL PROPERTY; LEASES. All real property
leased by Seller and used in the operation of the Business is listed and
described in SCHEDULE 1.4 hereto. To the best of Seller knowledge, all buildings
and improvements located thereon are in good condition and repair, subject only
to normal wear and tear. To the best of Seller's knowledge, as of September 30,
1996, 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. To the best of Seller's knowledge, all machinery and
equipment listed in SCHEDULE 1.1 conforms to all applicable ordinances,
regulations, and zoning or other laws. Except as described in SCHEDULE 3.4, to
the best of Seller's knowledge, all items listed on SCHEDULE 1.1 are in good
operating 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
and personal property leased by Seller and used in the
- 8 -
operation of the Business and, except as described in SCHEDULE 1.4, 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.
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as part
of SCHEDULE 3.5 are the Seller's profit & loss statement and balance sheet
("Financial Statements") up through the period ending September 30, 1996, which
have been reviewed but not audited; and attached are the financial statements
for the period ending December 31, 1996 which have not been reviewed or audited.
The Financial Statements for the period ending September 30, 1996 (y) present
fairly the financial position and results of operations of the Seller for the
dates or periods indicated thereon, (z) 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 or known 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. To the best of Seller's
knowledge, Seller is not 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 March 10, 1997, Seller has
conducted its 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 such business
and to avoid any act that might have a material adverse effect upon the value of
such business as a going concern or upon the Assets. To the best of Seller's
knowledge, no event has occurred to prevent the Seller's 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 March 10,
1997:
(a) there has not been any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting the Seller's
business or the Assets;
(b) there has not been any (i) increase (other than normal merit or
cost-of-living increases in the ordinary course of business and consistent with
past practices) or material change: (y) in compensation or bonuses payable to or
to become payable by Seller to its officers, employees or agents, or (z) in any
insurance, pension or other benefit plan, payment or arrangement made to, for or
with any of such officers, employees or agents; or (ii) 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;
- 9 -
(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, One Thousand Dollars ($1,000.00) or
more, without the prior written consent of Buyer;
(e) there has not been any material failure to maintain any 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) to the best of Seller's knowledge there has not been any action
taken or intentionally 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) except for professional fees incurred as a part of this
transaction, there has not been any liability, obligation or commitment incurred
by SBPI involving, individually or in the aggregate, of more than $2,500.00,
outside of the ordinary course of business;
(h) Seller has not entered into, nor has any Seller or the Assets
become subject to, any contracts, agreements, commitments, indentures,
mortgages, notes, bonds, licenses, real or personal property leases or other
obligations, outside of the ordinary course of business, of the type required to
be disclosed in SCHEDULE 3.7 hereto that are not otherwise disclosed herein;
(i) SBPI has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of any person or entity;
(j) there has been no change made or authorized in the charter or
bylaws of SBPI;
(k) SBPI 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;
(l) Seller has not declared, set aside or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased or otherwise acquired any of its capital stock;
(m) SBPI has not made any loan to, or entered into any other
transaction with, any of its directors, officers or employees;
(n) to the best of Seller's knowledge, 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 or on the business, financial condition or operations of Seller; and
- 10 -
(o) there has not been any commitment to do any of the foregoing.
3.7 CONTRACTS AND COMMITMENTS. EXHIBIT A and SCHEDULE 3.7 hereto together
include 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 a 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 SBPI 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 SBPI in
excess of $10,000.00 per year. To the best of Seller's knowledge, true and
complete copies of all of the Material Agreements are included as part of
SCHEDULE 3.7 hereto. To the best of Seller's knowledge, each of the Material
Agreements listed in EXHIBIT A and 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. To the best
of Seller's knowledge, 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
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.
3.8 INTELLECTUAL PROPERTY. To the best of Seller's knowledge, 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 necessary to
conduct the Business ("Intellectual Property"), free and clear of and without
conflict with the rights of others. Except for "over the counter software", 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. To the knowledge of Seller,
Seller has not interfered with, infringed upon,
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misappropriated or otherwise come into conflict with any Intellectual Property
rights of third parties, and, to the best of Seller's knowledge, Seller has not
received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation. To the knowledge of
Seller, no third party has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property rights of Seller.
SCHEDULE 3.8 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.
3.9 TAXES. All federal, state and local tax returns, or extensions,
(including information returns) and reports of Seller required by any applicable
law, rule, regulation or procedure of any federal, state or local authority or
body to be filed have been duly filed by such Seller. Except as described in
SECTION 3.9, Seller has either (i) paid all federal, state, county, local and
other taxes (hereinafter "Taxes" or individually a "Tax") required to be paid by
them 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. To
the best of Seller's knowledge, all Taxes and other assessments and levies
required to be collected or withheld by Seller with respect to the operation of
their 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.
Except as disclosed in SCHEDULE 3.9, Seller is not a party to any pending
action or proceeding regarding assessment or collection of Taxes by any
governmental authority. To Seller's knowledge, no action or proceeding regarding
assessment or collection of Taxes is threatened against Seller and 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.
3.10 LITIGATION. Except as set forth in SCHEDULE 3.10, there is no suit,
proceeding, action, claim or investigation, at law or in equity, pending or, to
Seller's knowledge, threatened against or affecting in any material way the
assets, properties or property interests of Seller. To the best of Seller's
knowledge, 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,
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municipal, foreign or other governmental authority, department, commission,
board, bureau, agency or other instrumentality.
3.11 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 3.11 hereto lists all employee benefit plans (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) and each other employee benefit arrangement, contract,
agreement or policy, including, without limitation, pension, profit sharing or
thrift plans, medical benefit programs, death benefit and disability programs,
and severance, vacation and sick leave policies applicable to employees of the
Seller (hereinafter referred to collectively as the "Plans").
(b) To the best of Seller's knowledge, all Plans have complied in all
material respects with all applicable requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), and any predecessor Federal income tax laws,
ERISA, all other applicable laws and any applicable collective bargaining
agreements.
3.12 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in SCHEDULE
3.12, 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 SBPI'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 any 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 any 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, except as set
forth in SCHEDULE 3.12.
3.13 LICENSES, PERMITS AND AUTHORIZATIONS. To the best of Seller's
knowledge, 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 the Business (collectively the "Permits") and, to the best of
Seller's knowledge, all such Permits are in full force and effect and no
suspension or cancellation of any such Permit is threatened. All such Permits,
except as disclosed on SCHEDULE 3.13, shall
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continue in full force and effect on behalf of Buyer following consummation of
the transactions contemplated by this Agreement to the extent allowable under
applicable law and regulation. A list of the Permits is included in SCHEDULE
3.13 hereto.
3.14 GUARANTEES. Except as set forth in SCHEDULE 3.14 attached hereto,
neither the Business nor any of the Assets is or 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.
3.15 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS. To the best of Seller's
knowledge, Seller is in compliance with all federal, state and local 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 knowledge threatened, against Seller in
connection with any employment related matters. Seller is not a party to any
collective bargaining agreement. SCHEDULE 3.15 includes a monthly report which
reflects Seller's current permanent employee payroll; this report accurately
reflects Seller's entire current monthly payroll obligations to its permanent
employees. SCHEDULE 3.15 also includes a list of the names and compensation
levels of any consultants and independent contractors regularly utilized by
Seller.
3.16 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) To the best of Seller's knowledge, 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, to Seller's knowledge, no such notice, advice, claim or complaint of any
type is threatened. To the best of Seller's knowledge, Seller has at all times
complied and presently complies with all applicable federal, state and local
laws, rules and regulations respecting occupational safety and health standards
and Seller has not received complaints from any employee or any federal, state
or local agency alleging any violation of any federal, state or local laws
respecting occupational safety and health standards.
(b) Without limiting the generality of the foregoing, to the best of
Seller's knowledge, (i) 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
- 14 -
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 (x) any
alleged violation by Seller of any Environmental Law, (y) any alleged failure by
Seller to have any environmental permit required in connection with the
operation of its business or (z) 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 or contaminants containing material which is
regulated by any authority in any jurisdiction in which Seller does business.)
3.17 ACCURACY OF INFORMATION FURNISHED. No statement contained in this
Agreement or any Exhibit or Schedule attached hereto 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.
3.18 DISCLOSURE OBLIGATION. The Seller is not in receipt of any information
which renders any representation or warranty made by Buyer, or any information
contained in any Schedule or Exhibit hereto, inaccurate or incomplete.
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 represents and warrants to Seller as follows:
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,
- 15 -
insolvency or moratorium laws, or other laws affecting the enforcement of
creditors' rights or the principles governing the availability of equitable
remedies.
4.3 AUTHORITY IN COLORADO. Buyer has all requisite authority to conduct
business in the State of Colorado.
4.4 DISCLOSURE OBLIGATION. The Buyer is not in receipt of any information
which renders any representation or warranty made by the Seller, or any
information contained in any Schedule or Exhibit hereto, inaccurate or
incomplete.
4.5 EMPLOYEES OF SELLER. Buyer warrants that it will maintain the tenure of
all of Seller's employees that it retains for the purposes of calculating
vacations, sick leave and the waiting period for being eligible for Buyer's
medical, life, dental and disability insurance programs. Buyer further warrants
that it will maintain all of Seller's employees that it retains at the same
compensation and benefit levels as they had on the date of Closing until
December 31, 1997.
4.6 FINANCIAL STATEMENTS. Buyer has the funds (or has available commitments
from credit worthy financial institutions to provide the funds) required to pay
the Purchase Price hereunder.
5. INDEMNIFICATION AND SET OFF.
5.1 INDEMNIFICATION OBLIGATION OF SELLER. Seller, jointly and severally,
hereby agrees 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 (a
"Loss"), in an amount not to exceed One Million Dollars ($1,000,000.00) in the
aggregate; Buyer may not attempt to collect any such loss until such time as the
amount of all such losses total Seventy-Five Thousand Dollars ($75,000.00) in
the aggregate, and then, only as to the excess.
(a) as a result of, arising from or in connection with any breach of
any representation, warranty, covenant or agreement of Seller 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 the
Disclosure Schedule or from any certificate, schedule, statement, document or
instrument furnished by Seller to Buyer in connection with the transactions
contemplated by this Agreement.
5.2 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller 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 Seller (a "Loss"):
- 16 -
(a) 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; or
(b) as a result of, arising from or in connection with the Assumed
Obligations.
5.3 INDEMNITY PROCEDURE. 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, which
approval shall not be unreasonably withheld. 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.
Neither an Indemnifying Party nor an Indemnified Party shall make any
settlement of any claim without the prior written consent of the other 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 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 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. 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. Buyer and Seller shall seek
full recovery under any insurance policies covering any Loss to the same extent
as they would if such Loss were not subject to indemnification hereunder. In the
event that an insurance recovery is made by Buyer or Seller with respect to any
Loss for which any person has been indemnified hereunder, then a refund equal to
the aggregate amount of the recovery shall be made promptly to the party or
parties who have made a payment under this Section.
5.5 SET OFF. Buyer shall Set off against the Subordinated Note (i) any
amounts to which Buyer may be entitled to payment pursuant to this Section 5,
(ii) any amounts due and owing to Buyer by Seller and (iii) any amounts due and
owing to third parties by Seller that Buyer has
- 17 -
guaranteed on behalf of Seller. Buyer shall deliver written notice to Seller of
its election to and amount of set off within five (5) business days of Buyer's
election.
6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller' 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
Seller):
6.1 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.
6.2 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.
6.3 LEASES. Buyer shall have delivered fully executed triple net leases for
the locations indicated in Schedule 1.4;
6.4 NON-COMPETITION AGREEMENT. Buyer shall have delivered an executed
non-competion agreement whereby Buyer agrees not to compete with Printers
Personnel, Inc in printing and graphics arts industries for a period of fifteen
(15) months from the date of Closing in the Adams, Arapahoe, Denver, Douglas and
Jefferson counties area.
6.5 DELIVERIES. Buyer shall have delivered or caused delivery of the items
set forth in Section 2.3 of this Agreement.
7. 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):
7.1 PERFORMANCE OF OBLIGATIONS. Seller shall have performed all of the
obligations and complied with all of the covenants required to be performed or
to be complied with by it under this Agreement on or prior to the Closing Date.
7.2 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, (ii) under any Material Agreement, or
(iii) under any insurance policies that Buyer has determined should continue in
force after the Closing.
- 18 -
7.3 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.
7.4 FINANCIAL STATEMENTS. Buyer shall have received a copy of the Financial
Statements. Each of the Financial Statements shall be accompanied by a
certificate of a company officer in form and substance satisfactory to Buyer.
7.5 PROPERTY. All of Seller' real and personal property shall be in good
operating condition, structurally sound and in good repair. Notwithstanding the
foregoing, Buyer acknowledges that Buyer is assuming Assumed Leases and
acquiring the Assets in Schedule 1.1 in an "as is" condition.
THE ASSETS ARE BEING SOLD TO THE BUYER "AS IS" WITH ALL FAULTS AND, EXCEPT AS
SPECIFICALLY SET FORTH HEREIN, SELLER MAKES NO WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR USE.
7.6 APPROVAL. The board of directors 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's
entering into this Agreement and consummation of the transactions contemplated
hereby.
7.7 LITIGATION. There shall not have been instituted, pending or threatened
against Seller, 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.
7.8 NONCOMPETITION AGREEMENTS. Buyer and Walker shall have entered into a
Noncompetition Agreement prohibiting Walker from competing within the counties
of Adams, Jefferson, Denver, Arapahoe and Douglas all in the state of Colorado.
7.9 DISCLOSURE SCHEDULE. Seller shall have furnished to Buyer and its
representatives true, correct and complete copies of all documents, agreements
and instruments listed in the Disclosure Schedule.
7.10 OPTION TO PURCHASE. Walker shall have delivered to Buyer at Closing an
option to purchase Printers Personnel, Inc.
7.11 DELIVERIES. Seller shall have delivered or caused delivery of the
items set forth in Section 2.2 hereof.
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7.12 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Seller 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.
7.13 OPINION OF SELLER' 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 J hereto.
7.14 RIGHT TO USE NAME. Buyer shall have received an Assignment giving it
the non-exclusive right to use the name and logo of "Stand-By Personnel" for a
period of twelve (12) months from the date of Closing at a cost of One Dollar
($1.00).
8. POST-CLOSING COVENANTS.
8.1 ACCOUNTS RECEIVABLE OF BUYER. Seller covenants and agrees that if
Seller inadvertently collects an account receivable of the Buyer, Seller will
deliver the amount received to Buyer within ten (10) days of receipt by Seller.
8.2 ACCOUNTS RECEIVABLE OF SELLER. Buyer covenants and agrees that if Buyer
inadvertently collects an account receivable of a Seller, Buyer will deliver the
amount received to Seller within ten (10) days of receipt by Buyer.
8.3 ACCOUNTS RECEIVABLE REPORTS. Both Buyer and Seller covenant and agree
that they will deliver a weekly accounts receivable report to each other for
ninety (90) days following the Closing Date.
8.4 FURTHER ASSURANCES. Seller covenants and agrees with Buyer, its
successors and assigns, that it 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 reasonably necessary to carry
out and effectuate the intent and purposes of this Agreement.
8.5 ASSISTANCE OF WALKER. Walker shall work, during the transition of
ownership, which period is defined as ninety (90) days from Closing, at
OutSource's request, at a pay rate of Fifty Dollars ($50.00) per hour. OutSource
shall provide Walker reasonable notice of the need for her assistance and Walker
shall not unreasonably withhold her assistance.
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
- 20 -
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.
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. 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
for a period of one (1) year following the Date of Closing.
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: when delivered
by hand; when delivered by facsimile (if written confirmation of receipt of the
facsimile
- 21 -
(if written confirmation of receipt of the facsimile is obtained from the party
to be charged with notice); five (5) days after being deposited in the United
States mail, by registered or certified mail, return receipt requested, postage
prepaid; or on the second business day after being sent (PREPAID for next day
delivery), via Federal Express, Purolator Courier, DHL or other nationally
recognized delivery service, as follows:
If to Seller: Carlene Walker
11425 W. Atlantic Avenue
Lakewood, CO
303-986-4546
With a copy to: Ned Minor
Minor & Brown, P.C.
650 S. Cherry Street
Suite 1100
Denver, CO 80222
Phone: 303-320-1053 Fax: 303-320-6330
If to Buyer: OutSource International of America, Inc.
Attention: CEO
1144 East Newport Center Drive
Deerfield Beach, FL 33442
Phone: 954-418-6200 Fax: 954-418-3365
With a copy to: Steven Sonberg, Esq.
Holland & Knight
One East Broward Boulevard
Fort Lauderdale, FL 33301
Phone: 305 468-7819
Fax: 305 463-2030
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
9.10 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
Colorado.
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9.12 BROKERS AND AGENTS. OutSource has engaged Equitable Business and
Financial Services ("Equitable") in bringing OutSource and SBPI together in this
transaction. SBPI has not engaged a broker with respect to this transaction.
OutSource represents that Equitable is the sole procuring cause for the sale.
Equitable will receive a commission as per its agreement with OutSource, and
OutSource will indemnify and hold SBPI harmless in regard to the payments of any
commission due or payable to Equitable as a result of this transaction.
9.13 EXPENSES. 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. Prior to the date of Closing, 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. Following the date of Closing neither party shall disclose the
purchase price or terms paid by Buyer to Seller.
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.
9.16 CONSENT TO JURISDICTION. The parties to this Agreement agree that any
claim, suit, action or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby shall be submitted for adjudication
exclusively in any Colorado state or federal court sitting in Denver County,
Colorado 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
- 23 -
paralegal's fees (for negotiations, trials, appeals and collection efforts) and
court costs incurred in connection therewith in addition to any other relief to
which such party may be entitled.
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 or
permanent injunction, or any other equitable remedy that may then be available
to the aggrieved party.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
BUYER:
OutSource International of America, Inc.
By: /s/ DAVID HAYES
----------------------------
David Hayes
Regional Vice President
SELLER:
Stand-By, Inc.
By: /s/ CARLENE A. WALKER
----------------------------
Carlene Walker
President
SELLER:
Carlene Walker
By: /s/ CARLENE A. WALKER
----------------------------
Carlene Walker
STAND-BY, INC.,
A COLORADO CORPORATION
SALE OF ASSETS TO
OUTSOURCE INTERNATIONAL OF AMERICA, INC.,
A FLORIDA CORPORATION
MARCH 31, 1997
INDEX TO CLOSING DOCUMENTS
BOOK 1 OF 2
1. Asset Purchase Agreement
2. EXHIBIT A List of Assumed Obligations
3. EXHIBIT B Allocation of Purchase Price
4. EXHIBIT C Surordinated Note
5. EXHIBIT D Bill of Sale/Assignment and Assumption Agreement
6. EXHIBIT G Noncompetition Agreement (Walker)
7. EXHIBIT H Lease Assignment and Assumption Agreements
8. EXHIBIT I Assignment of Applications
9. EXHIBIT J Opinion of Counsel
10. EXHIBIT K Non-Exclusive License Agreement
11. EXHIBIT L Deposit on Purchase Agreement/Printers
Personnel, Inc.
12. EXHIBIT M Noncompetition Agreement (OutSource)
13. Disclosure Schedule
14. Schedules
/bullet/ Schedule 1 - Locations
/bullet/ Schedule 1.1 Assets
/bullet/ Schedule 1.4 Real Estate and Personal Property Leases
/bullet/ Schedule 3.1 Title to Assets; Permitted Liens
/bullet/ Schedule 3.2 Corporate Status of SBPI
/bullet/ Schedule 3.4 Condition of Real and Personal Property; Leases
/bullet/ Schedule 3.5 Financial Statements; Undisclosed Liabilities
/bullet/ Schedule 3.6 Absence of Certain Changes or Events
/bullet/ Schedule 3.7 Contracts and Commitments
/bullet/ Schedule 3.8 Intellectual Property
/bullet/ Schedule 3.9 Taxes
/bullet/ Schedule 3.10 Litigation
/bullet/ Schedule 3.11 Employee Benefit Plans
/bullet/ Schedule 3.12 Consents and Approvals
/bullet/ Schedule 3.13 Licenses, Permits and Authorizations
/bullet/ Schedule 3.14 Guarantees
/bullet/ Schedule 3.15 Corporate and Personnel Data; Labor Relations
BOOK 2 OF 2
15. Real Property Leases
/bullet/ 665 Kalamath St.
Denver, CO
/bullet/ 1555 Dayton St.
Aurora, CO
/bullet/ 7117 Federal
Westminster, CO
/bullet/ 7739 E. Colfax
Denver, CO
/bullet/ 2901 S. Broadway
Englewood, CO
/bullet/ 325 E. Costilla
Colorado Springs, CO
16. Agreement With Respect to Advertising Contract
17. Agreement With Respect to Shared Costs and Expenses
18. Agreement Regarding Proprietary Knowledge
19. Side Agreement Regarding Shared Employee Compensation
20. Agreement With Respect to the Assumption of Van Loans and Computer Loan
21. UCC-1 Financing Statement
22. Payoff letters from Norwest Bank
-2-
23. OutSource Assumption of Norwest Financing Lease (1)
24. UCC-3 Termination
25. Combined Memorandum of Action of the Board of Directors and Sole
Shareholder of Stand-By, Inc.
26. Officer's Closing Certificate of Stand-By, Inc.
27. Memorandum of Action of the Board of Directors and Shareholders of Printers
Personnel, Inc.
28. Form 8594 Asset Acquisition Statement
29. Consents & approvals
30. Unanimous Written Consent in Lieu of Annual Meeting of the Board of
Directors of OutSource International of America, Inc.
31. Officers Certificate of OutSource International of America, Inc.
-3-
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of February 21, 1997 by and between OutSource International, Inc., a Florida
corporation ("Company~), and Paul M. Burrell ("Employee").
WHEREAS, the Company, through its Board of Directors, desires to retain
the services of Employee, and Employee desires to be retained by the Company, on
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, as President and Chief Executive Officer of the Company upon
the terms of and subject to this Agreement.
2. TERM. The term ("Term") of this Agreement shall commence and this
Agreement shall become effective on February 21, 1997 (the "Effective Date") and
shall continue, for successive periods of one year each, until otherwise
terminated by either party: (i) at any time in accordance with the terms hereof;
or (ii) upon written notice delivered to the other party not less than ninety
days prior to any annual anniversary of the Effective Date, which termination
shall be effective as of such anniversary.
3. DUTIES. During his employment hereunder, Employee will serve as the
President and Chief Executive Officer of the Company. Employee shall have
general and active charge of the business and affairs of the Company and, in
such capacity, shall have responsibility for the day-to-day operations of the
Company, subject to the authority and control of the Board of Directors of the
Company. Employee shall report directly to the Board of Directors of the
Company. Employee shall diligently perform such duties and shall devote his
entire business skill, time and effort to his employment and his duties
hereunder and shall not during the Term, directly or indirectly, alone or as a
member of a partnership, or as an officer, director, employee or agent of any
other person, firm or business organization engage in any other business
activities or pursuits requiring his personal service that materially conflict
with his duties hereunder or the diligent performance of such duties. This shall
not, however, preclude Employee from serving on boards of directors of other
corporations.
4. COMPENSATION.
a. SALARY. During his employment hereunder, Employee shall be paid
an initial base salary of $250,000 per year, payable in equal
installments not less than monthly. The Employee's salary shall be
reviewed at least annually by the Board of
Directors or any Committee of the Board delegated the authority to
review executive compensation.
b. BONUS. In addition to salary, Employee shall be entitled to
participate in the Company's Stock Incentive Plan as adopted by the
Board of Directors of the Company and effective December 22, 1995 (the
"Stock Incentive Plan") and, in addition, to participate in a
Management Bonus Program anticipated to be established by the Company
with an initial targeted bonus for calendar year 1997 of $125,000 for
Employee in a manner consistent with memoranda dated December 29, 1995
and November 21, 1996 from Paul M. Burrell to the Company's Board of
Directors (hereafter the "Management Bonus Program").
c. INSURANCE. During his employment hereunder, Employee shall be
entitled to participate in such health, life, disability and other
insurance programs, if any, that the Company may offer to other key
executive employees of the Company from time to time.
d. OTHER BENEFITS. During his employment hereunder, Employee shall
be entitled to such other benefits, if any, that the Company may offer
to other key executive employees of the Company from time to time.
e. VACATION. Employee shall be entitled to four weeks vacation
leave (in addition to Company holidays) in each calendar year during
the Term, or such additional amount as may be set forth in the vacation
policy that the Company shall establish from time to time. Except with
respect to vacation time unused as the result of a request by the
Company to postpone a vacation, any unused vacation from one calendar
year shall not carry-over to any subsequent calendar year.
f. EXPENSE REIMBURSEMENT. Employee shall, upon submission of
appropriate supporting documentation, be entitled to reimbursement of
reasonable out-of-pocket expenses incurred in the performance of his
duties hereunder in accordance with policies established by the
Company. Such expenses shall include, without limitation, reasonable
entertainment expenses, gasoline and toll expenses and cellular phone
use charges, if such charges are directly related to the business of
the Company.
5. GROUNDS FOR TERMINATION.
The Board of Directors of the Company may terminate this Agreement for
Cause. As used herein, "Cause" shall mean any of the following: (i) failure on
the part of Employee to disclose to Company in writing on or before the date
hereof Employee's breach of or default under any employment, non-compete,
confidentiality or other agreement between Employee and any prior employer of
Employee (including without limitation any breach or default that might result
from Employee's entering into or performing his duties and obligations under
this Agreement); (ii) an act of willful misconduct or gross negligence by
Employee in the performance of his material duties or obligations to the
Company;(iii) indictment of Employee for a felony involving moral turpitude,
2
whether relating to his employment or otherwise; (iv) an act of dishonesty or
breach of trust on the part of Employee resulting or intended to result directly
or indirectly in personal gain or enrichment at the expense of the Company; (v)
conduct on the part of Employee intended to injure the business of the Company;
(vi) Employee's addiction to any drug or chemical; (vii) Employee's
insubordination unless resulting from Employee's refusal to do an illegal act;
or (viii) a material failure of Employee to perform or observe the provisions of
this Agreement (other than by reason of disability as defined herein). The
existence of any of the foregoing events or conditions, except under clause
(iii), shall be determined by the Board of Directors (excluding the Employee) in
the exercise of its reasonable judgment provided that if such occurrence relates
to section (i), (vi) or (viii) above, it must persist more than (a) five (5)
days after notice is given to Employee by personal delivery or (b) ten (10) days
after a notice is given to Employee by any other means, each notice which
details the occurrence. Notwithstanding the foregoing, if occurrence under
sections (ii), (v), (vii) or (viii) cannot reasonably be remedied within the
time periods set forth, the Board of Directors shall not exercise its right to
terminate under this section if Employee begins to remedy the occurrence within
the time period and continues actively and diligently in good faith to complete
remedy such occurrence. As used herein "insubordination" means Employee failing
to use his best efforts to comply with a written directive made by the Company's
Board of Directors for any action or inaction not inconsistent with the duties
set forth herein.
In addition, Employee's employment shall be terminated upon a sale of
all or substantially all of the assets of the Company, where the consideration
consists of at least 80% payable in cash or marketable securities at closing. As
used herein "marketable securities" shall mean any debt or equity security which
is free from legal restrictions in transferability (including contractual
restrictions and volume limitations under Rule 144 under the Securities Act of
1933, as amended) and which security is listed on a national securities
exchange, quoted on the NASDAQ Stock Market, Inc. or traded in the
over-the-counter-market.
6. TERMINATION BY EMPLOYEE.
Employee may terminate this Agreement with Good Reason. "Good
Reason" means:
a. Without Employee's express written consent, the assignment to
Employee of duties inconsistent with Employee's positions with the
Company as set forth in this Agreement (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Paragraph 3; or
b. The Company causes a material change in the nature or scope of
the authorities, powers, functions, duties or responsibilities attached
to the Employee's positions as described in Section 3;
c. At any time the Employee is required, without his written
consent, to relocate his office more than seventy-five miles from the
location of the Company's current corporate headquarters;
3
d. The Company decreases the Employee's compensation below the
levels provided for by the terms of Section 4a (taking into account
increases in base compensation made from time to time in accordance
with Section 4a) or the amounts available pursuant to the terms of the
Management Bonus Program;
e. A material breach of the provisions of this Agreement by the
Company (except those set forth in Paragraph 4.a) and Employee provides
at least 15 days' prior written notice to at least two members of the
Company's Board of Directors (other than Employee) of the existence of
such breach and his intention to terminate this Agreement (no such
termination shall be effective if such breach is cured during such
period);
f. The failure of the Company to comply with the provisions of
Paragraph 4.a for an uninterrupted 10-day period;
g. The Company materially reduces the Employee's benefits under
any employee benefit plan, program or arrangement of the Company (other
than a change that affects all employees similarly situated) from the
level in effect upon the Employee's commencement or participation; or
7. PAYMENT AND OTHER PROVISIONS UPON TERMINATION.
a. In the event Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for Cause as provided in
Paragraph 5 then, on or before Employee's last day of employment with
the Company, the provisions of this Paragraph 7.a shall apply. These
same provisions shall apply if Employee terminates his employment
without Good Reason as described in Paragraph 6.
i. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS: The Company
shall pay in a lump sum to Employee such amount of compensation
due Employee for services rendered to the Company, as well as
compensation for unused vacation time, as has accrued but remains
unpaid. Such payment shall include ninety percent of the
estimated, prorata portion of Employee's targeted bonus through
the date of termination. The final calculation of Employee's bonus
shall be made, and any remaining bonus amount due to Employee
paid, within thirty days of the delivery to the Company of the
audited financial statements for the fiscal year in which the
termination occurs. Any and all other rights granted to Employee
under this Agreement shall terminate as of the date of
termination.
ii. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraph 14 shall continue to apply with respect to Employee for
a period of six months following the date of termination. Upon
Employee's resignation or termination of employment for any reason
whatsoever, Employer shall have the right, at its sole discretion,
to extend the period during which Employee shall be subject to the
provisions of Section 14 of this Agreement for not longer than two
4
years after the date which is six months after the date of such
resignation or termination. If Employer elects to so extend
Employee's obligations under such Sections, Employer shall so
notify Employee within 30 days after Employee's resignation or
termination of employment specifying the term of the extension
period. In consideration of Employee's agreement to continue to be
subject to such provisions, Employer shall continue to pay
Employee during the six month period commencing on the date
Employee's employment terminates and during the extension period,
if any, selected by Employer as provided for herein (collectively,
the "Post-Employment Period"), one hundred percent (100%) of his
normal periodic base salary payments in a manner consistent with
the manner such payments were made immediately prior to such
resignation or termination plus an amount equal to the prorata
portion of Employee's estimated target bonus under the Management
Bonus Program as in effect immediately prior to his date of
termination.
b. In the event Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for any reason other
than for Cause as provided in Paragraph 5 and other than as a
consequence of Employee's death, disability, or normal retirement under
the Company's retirement plans and practices, then the following
provisions apply. These same provisions shall apply if Employee
terminates his employment with Good Reason as described in Paragraph 6.
i. SALARY AND BONUS PAYMENTS: On or before Employee's last day of
employment with the Company, the Company shall pay to Employee as
compensation for services rendered to the Company a cash amount
equal to the sum of (x) twice the amount of Employee's annual base
salary and (y) ninety percent of twice the estimated targeted
bonus under the Management Bonus Program as in effect immediately
prior to his date of termination. The final calculation of
Employee's target bonus shall be made, and any remaining bonus
amount due to Employee paid, in the manner set forth in Section
7.a.i. At the election of the Company, the cash amount referred to
in this Paragraph 7.b.i may be paid to Employee in periodic
installments in accordance with the regular salary payment
practices of the Company, with the first such installment to be
paid on or before Employee's last day of employment with the
Company, and no interest shall be paid with respect to any amount
not paid on the Employee's date of termination.
ii. VESTING OF OPTIONS AND RIGHTS: Notwithstanding the vesting
period provided for in the Stock Incentive Plan and any related
stock option agreements between the Company and Employee for stock
options ("options") and stock appreciation rights ("rights")
granted Employee by the Company, all options and stock
appreciation rights shall be immediately vested and exercisable
upon termination of employment. In addition, Employee will have
the right to exercise all options and rights for the shorter of
(a) one year following his termination of
5
employment or (b) with respect to each option, the remainder of
the period of exercisability under the terms of the appropriate
documents that grant such options.
iii. BENEFIT PLAN COVERAGE: The Company shall maintain in full
force and effect for Employee and his dependents for one year
after the date of termination, all life, health, accident, and
disability benefit plans and other similar employee benefit plans,
programs and arrangements in which Employee or his dependents were
entitled to participate immediately prior to the date of
termination, in such amounts as were in effect immediately prior
to the date of termination, provided that such continued
participation is possible under the general terms and provisions
of such benefit plans, programs and arrangements. In the event
that participation in any benefit plan, program or arrangement
described above is barred, or any such benefit plan, program or
arrangement is discontinued or the benefits thereunder materially
reduced, the Company shall arrange to provide Employee and his
dependents for two years after the date of termination with
benefits substantially similar to those that they were entitled to
receive under such benefit plans, programs and arrangements
immediately prior to the date of termination. If immediately prior
to the date of termination the Company provided Employee with any
club memberships, Employee will be entitled to continue such
memberships at his sole expense. Notwithstanding any time period
for continued benefits stated in this Paragraph 7.b.iii, all
benefits in this Paragraph 7.b.iii will terminate on the date that
Employee becomes an employee of another employer and eligible to
participate in the employee benefit plans of such other employer.
To the extent that Employee was required to contribute amounts for
the benefits described in this Paragraph 7.b.iii prior to his
termination, he shall continue to contribute such amounts for such
time as these benefits continue in effect after termination.
iv. [INTENTIONALLY OMITTED]
v. SAVINGS AND OTHER PLANS: Except as otherwise more specifically
provided herein or under the terms of the respective plans
relating to termination of employment, Employee's active
participation in any applicable savings, retirement, profit
sharing or supplemental employee retirement plans or any deferred
compensation or similar plan of the Company or any of its
subsidiaries shall continue only through the last day of his
employment. All other provisions, including any distribution
and/or vested rights under such plans, shall be governed by the
terms of those respective plans.
vi. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraphs 14 and 15 shall continue, beyond the time periods set
forth in such paragraphs, to apply with respect to Employee for
the shorter of (x) six months following the date of termination
subject to extension as set forth in Paragraph 7.a.ii. or (y)
until such time as the Company has failed to comply with the
provisions of Paragraph 7.b.i for an uninterrupted 10-day period
and such failure
6
is not cured within 5 days after written notice of such failure is
delivered to at least two directors of the Company (other than
Employee).
c. The provisions of this Paragraph 7 shall apply if Employee's
employment is terminated prior to or more than three years after the
occurrence of a Change of Control (as defined in Paragraph 8.c). From
the occurrence of any Change of Control until the third anniversary of
such Change of Control, the provisions of Paragraph 8 shall apply in
place of this Paragraph 7, EXCEPT THAT in the event that Employee's
employment is terminated by Employee after a Change of Control without
Good Reason or by the Company for Cause, then the provisions of
Paragraph 7 shall not apply and the provisions of Paragraph 7.a shall
apply. Termination upon death, disability and retirement are covered by
Paragraphs 9, 10, and 11, respectively.
8. PAYMENT AND OTHER PROVISIONS AFTER CHANGE OF CONTROL.
a. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS: In the event
Employee's employment with the Company is terminated within three years
following the occurrence of a Change of Control (other than as a
consequence of his death or disability, or of his normal retirement
under the Company's retirement plans and practices) either (x) by the
Company without "Cause" or (y) by Employee with Good Reason as provided
in Paragraph 6, then Employee shall be entitled to receive from the
Company, the following:
i. BASE SALARY. Employee's annual base salary as in effect at the
date of termination, multiplied by two, shall be paid on the date
of termination;
ii. TARGET BONUS. Ninety percent of the amount of the Employee's
target bonus under the Management Bonus Program for the fiscal
year in which the date of termination occurs, multiplied by two,
shall be paid on the date of a termination; the final calculation
of Employee's target bonus shall be made, and any remaining bonus
amount due to Employee paid, in the manner set forth in Section
7.a.i.; and
iii. [INTENTIONALLY OMITTED]
iv. OTHER BENEFITS. All benefits under Paragraphs 7.b.ii, 7.b.iii,
and 7.b.v shall be extended to Employee as described in such
paragraphs, except that the period for exercise of options and
rights described in the last sentence of Paragraph 7.b.ii shall be
three years.
b. NONCOMPETITION/NONSOLICITATION PERIOD. In the event of a
termination under Paragraph 8.a within one year after a Change of
Control the provisions of Paragraphs 14 shall continue to apply as
stated in paragraph 7.b.vi.
For purposes of this Agreement, the term "Change of Control" shall
mean:
7
i. The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of _ 13(d)(3) or _
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) (any of the
foregoing described in this Paragraph 8.c.i hereafter a "Person")
of 15% or more of either (a) the then outstanding shares of
Capital Stock of the Company (the "Outstanding Capital Stock") or
(b) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Voting Securities"), PROVIDED.
HOWEVER, that any acquisition by (x) the Company or any of its
subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries
or (y) any Person that is eligible, pursuant to Rule 13a-l(b)
under the Exchange Act, to file a statement on Schedule 13G with
respect to its beneficial ownership of Voting Securities, whether
or not such Person shall have filed a statement on Schedule 13G,
unless such Person shall have filed a statement on Schedule 13D
with respect to beneficial ownership of 15% or more of the Voting
Securities or (z) any corporation with respect to which, following
such acquisition, more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Capital
Stock and Voting Securities immediately prior to such acquisition
in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Capital
Stock and Voting Securities, as the case may be, shall not
constitute a Change of Control; or
ii. Following a public offering individuals who, as of the date
hereof, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided
that (a) the Board uses best efforts to fill any vacancies; (b)
any individual becoming a director subsequent to the date hereof
whose election or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the
Company (as such terms are used in Rule 14a-11 of Regulation 14A,
or any successor section, promulgated under the Exchange Act) and
(c) no effect shall be given to any changes in the Board
composition due to the rights granted to Triumph Capital Group,
Inc. and Bachow & Associates, Inc. (or their affiliates or
transferees) in connection with their investments in Company; or
8
iii. Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business
Combination"), in each case, with respect to which all or
substantially all holders of the Outstanding Capital Stock and
Voting Securities immediately prior to such Business Combination
do not, following such Business Combination, beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from Business Combination; or
iv. (a) a complete liquidation or dissolution of the Company or
(b) a sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to
which, following such sale or disposition, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors is then
owned beneficially, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Capital Stock
and Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their
ownership of the Outstanding Capital Stock and Voting Securities,
as the case may be, immediately prior to such sale or disposition.
9. TERMINATION BY REASON OF DEATH. If Employee shall die while employed
by the Company both prior to termination of employment and during the effective
term of this Agreement, all Employee's rights under this Agreement shall
terminate with the payment of such amounts of annual base salary as have accrued
but remain unpaid and a prorated amount of the targeted bonus under the
Company's Management Bonus Program through the month in which his death occurs.
The calculation of Employee's target bonus shall be made, and any bonus amount
due to Employee paid, in the manner set forth in Section 7.a.i. All benefits
under Paragraphs 7.b.ii, 7.b.iii and 7.b.v shall be extended to Employee's
estate as described in such paragraphs. In addition, Employee's eligible
dependents shall receive continued benefit plan coverage under Paragraph 7.b.iii
for six months from the date of Employee's death.
10. TERMINATION BY DISABILITY. Employee's employment hereunder may be
terminated by the Company for disability. In such event, all Employee's rights
under this Agreement shall terminate with the payment of such amounts of annual
base salary as have accrued but remain unpaid as of thirtieth (30th) day after
such notice is given EXCEPT that all benefits under Paragraphs 7.b.ii, 7.b.iii,
and 7.b.v shall be extended to Employee as described in such paragraphs,
PROVIDED, HOWEVER, that, with respect to Paragraph 7.b.iii, the period for
continued benefit plan coverage shall be limited to six months from the date of
termination. In addition, the noncompetition and nonsolicitation provisions of
Paragraphs 14 and 15 shall continue to apply to Employee for a period of six
months from the date of termination. For purposes of this Agreement,
"disability" is defined to mean that either:
9
a. As a result of Employee's incapacity due to physical or mental
illness (1) Employee shall have been absent from his duties as an
officer of the Company on a substantially full-time basis for three
consecutive months or 120 days in any 180 day period and (2) Within
thirty days after the Company notifies Employee in writing that it
intends to replace him, Employee shall not have returned to the
performance of his duties as an officer of the Company on a full-time
basis; or
b. Employee is deemed disabled for purposes of any disability
policy, group or individual, paid for by Company and at the time in
effect, or if no such policy is then in effect, by Company's Board of
Directors in the exercise of its reasonable judgment.
11. RETIREMENT. It is expected that the Compensation Committee of the
Company's Board of Directors will develop a benefit plan for retirement. It is
expected that Employee's rights upon retirement will be specifically described
in such retirement benefit plan. If retirement benefits for Employee are not
specifically described in such plan, the Company shall provide Employee upon
retirement benefits no lesser than the highest level of benefits accorded any
other retiring executive officer during the five-year period immediately
preceding Employee's retirement.
12. INDEMNIFICATION. If litigation shall be brought to enforce or
interpret any provision contained herein, the non-prevailing party shall
indemnify the prevailing party for reasonable attorney's fees (including those
for negotiations, trial and appeals) and disbursements incurred by the
prevailing party in such litigation, and hereby agrees to pay prejudgment
interest on any money judgment obtained by the prevailing party calculated at
the generally prevailing NationsBank of Florida, N.A. base rate of interest
charged to its commercial customers in effect from time to time from the date
that payment(s) to him should have been made under this Agreement.
13. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to pay
Employee the compensation and to make the arrangements provided herein shall not
be affected by any duty to mitigate. The amount shall not be reduced by reason
of Employee's securing other employment or for any other reason. All amounts
payable by the Company hereunder shall be paid without notice or demand, and in
no event later than seven business days after such payments become due. Except
as expressly provided herein, the Company waives all rights that it may now have
or may hereafter have conferred upon it, by statute or otherwise, to terminate,
cancel or rescind this Agreement in whole or in part. Each and every payment
made hereunder by the Company shall be final and the Company will not seek to
recover all or any part of such payment from Employee or from whomsoever may be
entitled thereto, for any reason whatsoever. The Company may withhold for income
tax purposes any amounts required to be withheld under applicable tax statutes
and regulations.
10
14. NONCOMPETITION AND NONSOLICITATION.
a. The nature of the system and methods employed in the Company's
business is such that Employee will be placed in a close business and
personal relationship with the customers of the Company and be privy to
confidential customer usage and rate information. Accordingly, at all
times during the term of this Agreement and for a period of one (1)
year immediately following the termination of Employee's employment
hereunder for any reason whatsoever, and for such additional periods as
may otherwise be set forth in this Agreement in reference to this
Paragraph 14, so long as the Company continues to carry on the same
business, Employee shall not, for any reason whatsoever, directly or
indirectly, for himself or on behalf of, or in conjunction with, any
other person, persons, company, partnership, corporation or business
entity:
i. Call upon, divert, influence or solicit or attempt to call
upon, divert, influence or solicit any customer or customers of
the Company;
ii. Divulge the names and addresses or any information concerning
any customer of the Company;
iii. Disclose any information or knowledge relating to the
Company, including but not limited to, the Company's system or
method of conducting business to any person, persons, f~rms,
corporations or other entities unaffiliated with the Company, for
any reason or purpose whatsoever;
iv. Own, manage, operate, control, be employed by, participate in
or be connected in any manner with the ownership, management,
operation or control of the same, similar or related line of
business as that carried on by the Company within the United
States.
b. The time period covered by the covenants contained in this
Paragraph 14 shall not include any period(s) of violation of any
covenant or any period(s) of time required for litigation to enforce
any covenant.
c. The covenants set forth in this Paragraph 14 shall be construed
as an agreement independent of any other provision in this Agreement
and existence of any potential or alleged claim or cause of action of
Employee against the Company, whether predicted on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the
Company of the covenants contained herein. An alleged or actual breach
of the Agreement by the Company shall not be a defense to enforcement
of the provisions of this Paragraph 14.
d. Employee acknowledges that he has read the foregoing and agrees
that the nature of the geographical restrictions are reasonable given
the international nature of the Company's business. In the event that
these geographical or temporal restrictions are
11
judicially determined to be unreasonable, the parties agree that
these restrictions shall be judicially reformed to the maximum
restrictions which are reasonable.
15. CONFIDENTIALITY:
a. NONDISCLOSURE. Employee acknowledges and agrees that the
Confidential Information (as defined below) is a valuable, special and
unique asset of the Company's business. Accordingly, except in
connection with the performance of his duties hereunder, Employee shall
not at any time during or subsequent to the term of his employment
hereunder disclose, directly or indirectly, to any person, firm,
corporation, partnership, association or other entity any proprietary
or confidential information relating to the Company or any information
concerning the Company's financial condition or prospects, the
Company's customers, the design, development, manufacture, marketing or
sale of the Company's products or the Company's methods of operating
its business (collectively "Confidential Information"). Confidential
Information shall not include information which, at the time of
disclosure, is known or available to the general public by publication
or otherwise through no act or failure to act on the part of Employee.
b. RETURN OF CONFIDENTIAL INFORMATION. Upon termination of
Employee's employment, for whatever reason and whether voluntary or
involuntary, or at any time at the request of the Company, Employee
shall promptly return all Confidential Information in the possession or
under the control of Employee to the Company and shall not retain any
copies or other reproductions or extracts thereof. Employee shall at
any time at the request of the Company destroy or have destroyed all
memoranda, notes, reports, and documents, whether in "hard copy" form
or as stored on magnetic or other media, and all copies and other
reproductions and extracts thereof, prepared by Employee and shall
provide the Company with a certificate that the foregoing materials
have in fact been returned or destroyed.
c. BOOKS AND RECORDS. All books, records and accounts whether
prepared by Employee or otherwise coming into Employee's possession,
shall be the exclusive property of the Company and shall be returned
immediately to the Company upon termination of Employee's employment
hereunder or upon the Company's request at any time.
16. INJUNCTION/SPECIFIC PERFORMANCE SETOFF. Employee acknowledges that
a breach of any of the provisions of Paragraphs 14, 15 or 16 hereof would result
in immediate and irreparable injury to the Company which cannot be adequately or
reasonably compensated at law. Therefore, Employee agrees that the Company shall
be entitled, if any such breach shall occur or be threatened or attempted, to a
decree of specific performance and to a temporary and permanent injunction,
without the posting of a bond, enjoining and restraining such breach by Employee
or his agents, either directly or indirectly, and that such right to injunction
shall be cumulative to whatever other remedies for actual damages to which the
Company is entitled. Employee further agrees that, except as otherwise provided
in Paragraph 13 hereof, the Company may set off
12
against or recoup from any amounts due under this Agreement to the extent of any
losses incurred by the Company as a result of any breach by Employee of the
provisions of Paragraphs 14, 15 or 16 hereof.
17. SEVERABILITY: Any provision in this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. SUCCESSORS: This Agreement shall be binding upon Employee and inure
to his and his estate's benefit, and shall be binding upon and inure to the
benefit of the Company and any permitted successor of the Company. Neither this
Agreement nor any rights arising hereunder may be assigned or pledged by:
Employee or anyone claiming through Employee; or by the Company, except to any
corporation which is the successor in interest to the Company by reason of a
merger, consolidation or sale of substantially all of the assets of the
Company.
19. CONTROLLING LAW: This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Florida.
20. NOTICES. Any notice required or permitted to be given hereunder
shall be written and sent by registered or certified mail, telecommunicated or
hand delivered at the address set forth herein or to any other address of which
notice is given:
To the Company: OutSource International, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: _______________________
To Employee: Paul M. Burrell
5200 Godfrey Road
Coral Springs, Florida 33067
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter hereof and may not be modified
without the written agreement of both parties hereto.
22. WAIVER. A waiver by any party of any of the terms and conditions
hereof shall not be construed as a general waiver by such party.
13
23. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and both of which together shall constitute
a single agreement.
24. INTERPRETATION. In the event of a conflict between the provisions
of this Agreement and any other agreement or document defining rights and duties
of Employee or the Company upon Employee's termination, the rights and duties
set forth in this Agreement shall control.
25. CERTAIN LIMITATIONS ON REMEDIES. Paragraph 7.b provides that
certain payments and other benefits shall be received by Employee upon the
termination of Employee by the Company other than for Cause and states that
these same provisions shall apply if Employee terminates his employment for Good
Reason. It is the intention of this Agreement that if the Company terminates
Employee other than for Cause (and other than as a consequence of Employee's
death, disability or normal retirement) or if Employee terminates his employment
with Good Reason, then the payments and other benefits set forth in Paragraph
7.b shall constitute the sole and exclusive remedies of Employee. This Paragraph
26 shall have no effect upon the provisions of Paragraph 8 of this Agreement.
14
IN WITNESS WHEREOF, this Employment Agreement has been executed by the
parties as of the date first above written.
COMPANY:
OUTSOURCE INTERNATIONAL, INC.
By: /s/ ROBERT A. LEFCORT
--------------------------------
Robert a. Lefcort
Executive Vice President
EMPLOYEE:
/s/ PAUL M. BURRELL
------------------------------------
Paul M. Burrell
15
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
March 3, 1997, by and between OutSource International, Inc., a Florida
corporation (the "Company"), and Robert A. Lefcort, Executive Vice President
("Employee").
WHEREAS, the Company, through its Board of Directors, desires to retain the
services of Employee, and Employee desires to be retained by the Company, on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, as Executive Vice President of the Company upon the terms
subject to this Agreement.
2. TERM. The term ("Term") of this Agreement shall commence on March 3,
1997 and shall continue until terminated in accordance with the terms hereof.
3. DUTIES. During his employment hereunder, Employee will serve as the
Executive Vice President of the Company. Employee shall report directly to the
President of the Company and shall serve at his direction. Employee shall
perform services as assigned by the President of the Company consistent with the
title of Executive Vice President. Employee shall diligently perform such duties
and shall devote his entire business skill, time and effort to his employment
and his duties hereunder and shall not during the Term, directly or indirectly,
alone or as a member of a partnership, or as an officer, director, employee or
agent of any other person, firm or business organization engage in any other
business activities or pursuits requiring his personal service that materially
conflict with his duties hereunder or the diligent performance of such duties.
This shall not, however, preclude Employee from serving on boards of directors
of other corporations; provided that such service does not conflict with the
duties of Employee hereunder or result in a conflict of interest.
4. COMPENSATION.
a. SALARY. During his employment hereunder, Employee shall be paid an
initial salary of $145,000 per year, payable in equal installments not less
than monthly ("Base Salary"). The Employee's Base Salary shall be reviewed
at least annually by the Board of Directors or any Committee of the Board
delegated the authority to review executive compensation.
b. BONUS. In addition to Base Salary, Employee shall be entitled to
participate in the Company's Stock Option Plan, as amended and restated
(the "Stock Option Plan") and, in addition, to participate in a Management
Bonus Program to be established by the Company with an initial targeted
bonus for calendar year 1997 of $58,000 for Employee, based upon the
achievement of mutually agreed upon goals and objectives (hereafter the
"Management Bonus Program").
c. INSURANCE. During his employment hereunder, Employee shall be
entitled to participate in such health, life, disability and other
insurance programs, if any, that the Company may offer to other key
executive employees of the Company from time to time.
d. OTHER BENEFITS. During his employment hereunder, Employee shall
be entitled to such other benefits, if any, that the Company may offer to
other key executive employees of the Company from time to time.
e. VACATION. Employee shall be entitled to four weeks' vacation leave
(in addition to holidays) in each calendar year during the Term, or such
additional amount as may be set forth in the vacation policy that the
Company shall establish from time to time. Except with respect to vacation
time unused as the result of a written request by the Company to postpone a
vacation, any unused vacation from one calendar year shall not carry-over
to any subsequent calendar year.
f. EXPENSE REIMBURSEMENT. Employee shall, upon submission of
appropriate supporting documentation, be entitled to reimbursement of
reasonable out-of-pocket expenses incurred in the performance of his duties
hereunder in accordance with policies established by the Company. Such
expenses shall include, without limitation, reasonable travel and
entertainment expenses, gasoline and toll expenses and cellular phone use
charges, if such charges are directly related to the business of the
Company.
5. GROUNDS FOR TERMINATION.
The Board of Directors of the Company may terminate this Agreement for
any reason at any time including, without limitation, for "Cause." As used
herein, "Cause" shall mean any of the following: (i) failure on the part of
Employee to disclose to Company in writing on or before the date hereof
Employee's breach of or default under any employment, non-compete,
confidentiality or other agreement between Employee and any prior employer
of Employee (including without limitation any breach or default that might
result from Employee's entering into or performing his duties and
obligations under this Agreement); (ii) an act of willful misconduct or
gross negligence by Employee in the performance of his material duties or
obligations to the Company; (iii) indictment of Employee for a felony
involving moral turpitude, whether relating to his employment or otherwise;
(iv) an act of dishonesty or breach of trust on the part of Employee
resulting or intended to result directly or indirectly in personal gain or
enrichment at the expense of the Company; (v) conduct on the part of
Employee intended to injure the business of the Company; (vi) Employee's
2
addiction to any drug or chemical; (vii) Employee's insubordination unless
resulting from Employee's refusal to do an illegal act; (viii) a material
failure of Employee to perform or observe the provisions of this Agreement
(other than by reason of disability as defined herein). The existence of
any of the foregoing events or conditions, except under clause (iii), shall
be determined by the Board of Directors (excluding the Employee) in the
exercise of its reasonable judgment provided that if such occurrence
relates to section (i), (vi) or (viii) above, it must persist more than (a)
five (5) days after notice is given to Employee by personal delivery or (b)
ten (10) days after a notice is given to Employee by any other means, each
notice which details the occurrence. Notwithstanding the foregoing, if
occurrence under sections (ii), (v), (vii) or (viii) cannot reasonably be
remedied within the time periods set forth, the Board of Directors shall
not exercise its right to terminate under this section if Employee begins
to remedy the occurrence within the time period and continues actively and
diligently in good faith to completely remedy such occurrence. As used
herein "insubordination" means Employee failing to use his best efforts to
comply with a written directive made by the Company's Board of Directors
for any action or inaction not inconsistent with the duties set forth here.
6. TERMINATION BY EMPLOYEE.
Employee may terminate this Agreement with Good Reason. "Good Reason"
means:
a. At any time the Employee is required, without his written consent,
to relocate his office more than seventy-five miles from the location of
the Company's current corporate headquarters;
b. The Company decreases the Employee's compensation below the levels
provided for by the terms of Section 4 (taking into account increases made
from time to time in accordance with Section 4);
c. A material breach of the provisions of this Agreement by the Company
(except those set forth in Paragraph ) and Employee provides at least 15
days prior written notice to at least two members of the Company's Board of
Directors (other than Employee) of the existence of such breach and his
intention to terminate this Agreement (no such termination shall be
effective if such breach is cured during such period or if the Company is
in good faith attempting to cure such breach);
d. The failure of the Company to comply with the provisions of
Paragraph for an uninterrupted 10 day period; or
e. The Company materially reduces the Employee's benefits under any
employee benefit plan, program or arrangement of the Company (other than a
change that affects all employees similarly situated) from the level in
effect upon the Employee's commencement or participation.
3
7. PAYMENT AND OTHER PROVISIONS UPON TERMINATION.
a. In the event that: Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for Cause as provided in
Paragraph ; or Employee terminates his employment without Good Reason as
described in Paragraph ; then, on or before Employee's last day of
employment with the Company:
i. SALARY AND BONUS PAYMENTS: The Company shall pay in a lump sum
to Employee such amount of compensation due to Employee hereunder for
services rendered to the Company, as well as compensation for unused
vacation time, as has accrued but remains unpaid. Any and all other
rights granted to Employee under this Agreement shall terminate as of
the date of termination.
ii. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraph shall continue to apply with respect to Employee for a period
of one year following the date of termination.
b. In the event that: Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for any reason other than
for Cause as provided in Paragraph and other than as a consequence of
Employee's death, disability, or normal retirement under the Company's
retirement plans and practices; or Employee terminates his employment with
Good Reason as described in Paragraph ; then:
i. SALARY AND BONUS PAYMENTS: On or before Employee's last day of
employment with the Company, the Company shall pay to Employee, as
compensation for services rendered to the Company, a cash amount equal
to the sum of (x) the amount of Employee's Base Salary and (y) ninety
percent of the amount of the estimated target bonus under the
Management Bonus Program as in effect immediately prior to his date of
termination (the "Cash Amount"). The final calculation of Employee's
target bonus shall be made, and any remaining bonus amount due to
Employee paid, in the manner set forth in Section 7.a.i. At the
election of the Company, the Cash Amount may be paid to Employee in
periodic installments in accordance with the regular salary payment
practices of the Company, with the first such installment to be paid on
or before Employee's last day of employment with the Company.
Notwithstanding the foregoing sentence, the entire Cash Amount shall be
paid to Employee during the period not to exceed one year following
Employee's last day of employment with the Company. No interest shall
be paid with respect to any of the Cash Amount not paid on the
Employee's date of termination.
ii. BENEFIT PLAN COVERAGE: The Company shall maintain in full
force and effect for Employee and his dependents for one year after the
date of termination, all life, health, accident, and disability benefit
plans and other similar employee benefit plans, programs and
arrangements in which Employee or his dependents were entitled to
participate immediately prior to the date of termination, in such
amounts as were in effect
4
immediately prior to the date of termination, provided that such
continued participation is possible under the general terms and
provisions of such benefit plans, programs and arrangements. In the
event that participation in any benefit plan, program or arrangement
described above is barred, or any such benefit plan, program or
arrangement is discontinued or the benefits thereunder materially
reduced, the Company shall arrange to provide Employee and his
dependents for one year after the date of termination with benefits
substantially similar to those that they were entitled to receive under
such benefit plans, programs and arrangements immediately prior to the
date of termination, or, at the Company's option, a lump sum payment to
Employee equal to the Company's cost immediately prior to termination
to provide such benefits. If immediately prior to the date of
termination the Company provided Employee with any club memberships,
Employee will be entitled to continue such memberships at his sole
expense. Notwithstanding any time period for continued benefits stated
in this Paragraph 7.b.ii, all benefits in this Paragraph 7.b.ii will
terminate on the date that Employee becomes an employee of another
employer and eligible to participate in the employee benefit plans of
such other employer. To the extent that Employee was required to
contribute amounts for the benefits described in this Paragraph 7.b.ii
prior to his termination, he shall continue to contribute such amounts
for such time as these benefits continue in effect after termination.
iii.[INTENTIONALLY OMITTED]
iv. SAVINGS AND OTHER PLANS: Except as otherwise more specifically
provided herein or under the terms of the respective plans relating to
termination of employment, Employee's active participation in any
applicable savings, retirement, profit sharing or supplemental employee
retirement plans or any deferred compensation or similar plan of the
Company or any of its subsidiaries shall continue only through the last
day of his employment. All other provisions, including any distribution
and/or vested rights under such plans, shall be governed by the terms
of those respective plans.
v. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraph shall continue, beyond the time periods set forth in such
paragraph, to apply with respect to Employee for the shorter of (x)
twelve months following the date of termination or (y) until such time
as the Company has failed to comply with the provisions of Paragraph
for a an uninterrupted 10-day period and such failure is not cured
within 5 days after written notice of such failure is delivered to at
least two directors of the Company (other than Employee).
c. In the event that Employee terminates his employment with Good
Reason as described in Paragraph , the following provisions shall also
apply.
i. EXERCISABILITY OF STOCK OPTIONS. Notwithstanding the vesting
period provided for in the Stock Option Plan and any related stock
option agreements between the Company and Employee for stock options
("options") and stock appreciation rights ("rights")
5
granted Employee by the Company, all options and stock appreciation
rights shall be immediately exercisable upon termination of employment.
In addition, Employee will have the right to exercise all options and
rights for the shorter of (x) one year following his termination of
employment or (y) with respect to each option, the remainder of the
period of exercisability under the terms of the appropriate documents
that grant such options.
d. The provisions of this Paragraph shall apply if Employee's
employment is terminated prior to or more than two years after the
occurrence of a Change of Control (as defined in Paragraph ). From the
occurrence of any Change of Control until the second anniversary of such
Change of Control, the provisions of Paragraph shall apply in place of this
Paragraph , EXCEPT THAT in the event that after a Change of Control
Employee's employment is terminated by Employee without Good Reason or
Company terminates Employee for Cause, then the provisions of Paragraph
shall not apply and the provisions of Paragraph shall apply. Termination
upon death, disability and retirement are covered by Paragraphs , , and ,
respectively.
8. PAYMENT AND OTHER PROVISIONS AFTER CHANGE OF CONTROL.
a. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS: In the event
Employee's employment with the Company is terminated within two years
following the occurrence of a Change of Control (other than as a
consequence of his death or disability, or of his normal retirement under
the Company's retirement plans and practices) either (x) by the Company for
any reason other than for Cause or (z) by Employee with Good Reason as
provided in Paragraph , then Employee shall be entitled to receive from the
Company, the following:
i. BASE SALARY. Employee's Base Salary as in effect at the date
of termination, multiplied by two, shall be paid on the date of
termination;
ii. TARGET BONUS. Ninety percent of the amount of the Employee's
estimated target bonus under the Management Bonus Program for the
fiscal year in which the date of termination occurs, multiplied by two,
shall be paid on the date of termination; the final calculation of
Employee's target bonus shall be made, and any remaining bonus amount
due to Employee paid, in the manner set forth in Section 7.a.i.; and
iii.[OMITTED INTENTIONALLY]
iv. OTHER BENEFITS. All benefits under Paragraphs 7.b.ii, and
7.c.i shall be extended to Employee as described in such paragraphs.
b. NONCOMPETITION/NONSOLICITATION PERIOD. In the event of a termination
under Paragraph 8.a within one year after a Change of Control the
provisions of Paragraph 14 shall continue to apply as stated in paragraph
7.b.v.
6
c. For purposes of this Agreement, the term "Change of Control" shall
mean:
i. The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of ss. 13(d)(3) or ss.
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) (any of the foregoing
described in this Paragraph hereafter a "Person") of 33% or more of
either (a) the then outstanding shares of Capital Stock of the Company
(the "Outstanding Capital Stock") or (b) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Voting Securities"),
PROVIDED, HOWEVER, that any acquisition by (x) the Company or any of
its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or
(y) any Person that is eligible, pursuant to Rule 13d-1(b) under the
Exchange Act, to file a statement on Schedule 13G with respect to its
beneficial ownership of Voting Securities, whether or not such Person
shall have filed a statement on Schedule 13G, unless such Person shall
have filed a statement on Schedule 13D with respect to beneficial
ownership of 33% or more of the Voting Securities or (z) any
corporation with respect to which, following such acquisition, more
than 60% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Capital Stock and Voting Securities immediately prior to
such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the Outstanding
Capital Stock and Voting Securities, as the case may be, shall not
constitute a Change of Control; or
ii. Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election or nomination for election
by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors
of the Company (as such terms are used in Rule 14a-11 of Regulation
14A, or any successor section, promulgated under the Exchange Act); or
iii. Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in
each case, with respect to which all or substantially all holders of
the Outstanding Capital Stock and Voting Securities immediately prior
to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then
7
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from Business Combination; or
iv. (a) a complete liquidation or dissolution of the Company or
(b) a sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to
which, following such sale or disposition, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Capital Stock and Voting Securities
immediately prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Capital Stock and
Voting Securities, as the case may be, immediately prior to such sale
or disposition.
9. TERMINATION BY REASON OF DEATH. If Employee shall die while employed by
the Company both prior to termination of employment and during the effective
term of this Agreement, all Employee's rights under this Agreement shall
terminate with the payment of that portion of Base Salary as has accrued but
remains unpaid and a prorated amount of targeted bonus under the Company's
Management Bonus Program through the month in which his death occurs, plus three
additional months of the fixed salary and targeted bonus. The calculation of
Employee's target bonus shall be made, and any bonus amount due to Employee
paid, in the manner set forth in Section 7.a.i. All benefits under Paragraphs
7.b.ii, 7.b.iv and 7.c.i shall be extended to Employee's estate as described in
such paragraphs. In addition, Employee's eligible dependents shall receive
continued benefit plan coverage under Paragraph 7.b.ii for three months from the
date of Employee's death.
10. TERMINATION BY DISABILITY. Employee's employment hereunder may be
terminated by the Company for disability. In such event, all Employee's rights
under this Agreement shall terminate with the payment of that portion of Base
Salary as has accrued but remains unpaid as of the thirtieth (30th) day after
such notice is given EXCEPT that all benefits under Paragraphs , and 7.c.i shall
be extended to Employee as described in such paragraphs, PROVIDED, HOWEVER,
that, with respect to Paragraph , the period for continued benefit plan coverage
shall be limited to six months from the date of termination. In addition, the
noncompetition and nonsolicitation provisions of Paragraph shall continue to
apply to Employee for a period of six months from the date of termination. For
purposes of this Agreement, "disability" is defined to mean that, as a result of
Employee's incapacity due to physical or mental illness:
a. Employee shall have been absent from his duties as an officer of the
Company on a substantially full-time basis for six (6) consecutive months;
and
b. Within thirty (30) days after the Company notifies Employee in
writing that it intends to replace him, Employee shall not have returned to
the performance of his duties as an officer of the Company on a full-time
basis.
8
11. RETIREMENT. It is expected that the Compensation Committee of the
Company's Board of Directors will develop a benefit plan for retirement. It is
expected that Employee's rights upon retirement will be specifically described
in such retirement benefit plan. If retirement benefits for Employee are not
specifically described in such plan, the Company shall provide Employee upon
retirement benefits no lesser than the highest level of benefits accorded any
other retiring executive officer during the five year period immediately
preceding Employee's retirement.
12. INDEMNIFICATION. If litigation shall be brought to enforce or interpret
any provision contained herein, the non-prevailing party shall indemnify the
prevailing party for reasonable attorney's fees (including those for
negotiations, trial and appeals) and disbursements incurred by the prevailing
party in such litigation, and hereby agrees to pay prejudgment interest on any
money judgment obtained by the prevailing party calculated at the generally
prevailing NationsBank of Florida, N.A. base rate of interest charged to its
commercial customers in effect from time to time from the date that payment(s)
to him should have been made under this Agreement.
13. [INTENTIONALLY OMITTED]
14. NONCOMPETITION AND NONSOLICITATION.
a. The nature of the system and methods employed in the Company's
business is such that Employee will be placed in a close business and
personal relationship with the customers of the Company and be privy to
confidential customer usage and rate information. Accordingly, at all times
during the term of this Agreement and for a period of one (1) year
immediately following the termination of Employee's employment hereunder
(the "Noncompetition and Nonsolicitation Period") for any reason
whatsoever, and for such additional periods as may otherwise be set forth
in this Agreement in reference to this Paragraph 14, so long as the Company
continues to carry on the same business, Employee shall not, for any reason
whatsoever, directly or indirectly, for himself or on behalf of, or in
conjunction with, any other person, persons, company, partnership,
corporation or business entity:
i. Call upon, divert, influence or solicit or attempt to call
upon, divert, influence or solicit any customer or customers of
the Company nationwide;
ii. Divulge the names and addresses or any information concerning
any customer of the Company;
iii. Disclose any information or knowledge relating to the
Company, including but not limited to, the Company's system or
method of conducting business to any person, persons, firms,
corporations or other entities unaffiliated with the Company, for
any reason or purpose whatsoever;
9
iv. Own, manage, operate, control, be employed by, participate in
or be connected in any manner with the ownership, management,
operation or control of the same, similar or related line of
business as that carried on by the Company ("Competition") within
a radius of fifty (50) miles from Employee's principal office.
b. The time period covered by the covenants contained in this Paragraph
14 shall not include any period(s) of violation of any covenant or any period(s)
of time required for litigation to enforce any covenant.
c. The covenants set forth in this Paragraph 14 shall be construed as
an agreement independent of any other provision in this Agreement and existence
of any potential or alleged claim or cause of action of Employee against the
Company, whether predicted on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants contained herein.
An alleged or actual breach of the Agreement by the Company shall not be a
defense to enforcement of the provisions of this Paragraph 14.
d. Employee acknowledges that he has read the foregoing and agrees that
the nature of the geographical restrictions are reasonable given the
international nature of the Company's business. In the event that these
geographical or temporal restrictions are judicially determined to be
unreasonable, the parties agree that these restrictions shall be judicially
reformed to the maximum restrictions which are reasonable.
e. Notwithstanding anything to the contrary contained herein, in the
event that Employee engages in Competition, or any conduct expressly prohibited
by this Paragraph 14 at any time during the Noncompetition and Nonsolicitation
Period for any reason whatsoever, Employee shall not receive any of the
termination benefits he otherwise would be entitled to receive pursuant to
Paragraphs 7.b., 7.c., 8.a. and 10 hereof.
15. CONFIDENTIALITY.
a. NONDISCLOSURE. Employee acknowledges and agrees that the
Confidential Information (as defined below) is a valuable, special and
unique asset of the Company's business. Accordingly, except in connection
with the performance of his duties hereunder, Employee shall not at any
time during or subsequent to the term of his employment hereunder disclose,
directly or indirectly, to any person, firm, corporation, partnership,
association or other entity any proprietary or confidential information
relating to the Company or any information concerning the Company's
financial condition or prospects, the Company's customers, the design,
development, manufacture, marketing or sale of the Company's products or
the Company's methods of operating its business (collectively "Confidential
Information"). Confidential Information shall not include information
which, at the time of disclosure, is known or available to the general
public by publication or otherwise through no act or failure to act on the
part of Employee.
10
b. RETURN OF CONFIDENTIAL INFORMATION. Upon termination of Employee's
employment, for whatever reason and whether voluntary or involuntary, or at
any time at the request of the Company, Employee shall promptly return all
Confidential Information in the possession or under the control of Employee
to the Company and shall not retain any copies or other reproductions or
extracts thereof. Employee shall at any time at the request of the Company
destroy or have destroyed all memoranda, notes, reports, and documents,
whether in "hard copy" form or as stored on magnetic or other media, and
all copies and other reproductions and extracts thereof, prepared by
Employee and shall provide the Company with a certificate that the
foregoing materials have in fact been returned or destroyed.
c. BOOKS AND RECORDS. All books, records and accounts whether prepared
by Employee or otherwise coming into Employee's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company upon termination of Employee's employment hereunder or upon the
Company's request at any time.
16. INJUNCTION/SPECIFIC PERFORMANCE SETOFF. Employee acknowledges that a
breach of any of the provisions of Paragraphs or hereof would result in
immediate and irreparable injury to the Company which cannot be adequately or
reasonably compensated at law. Therefore, Employee agrees that the Company shall
be entitled, if any such breach shall occur or be threatened or attempted, to a
decree of specific performance and to a temporary and permanent injunction,
without the posting of a bond, enjoining and restraining such breach by Employee
or his agents, either directly or indirectly, and that such right to injunction
shall be cumulative to whatever other remedies for actual damages to which the
Company is entitled. Employee further agrees that, except as otherwise provided
in Paragraph hereof, the Company may set off against or recoup from any amounts
due under this Agreement to the extent of any losses incurred by the Company as
a result of any breach by Employee of the provisions of Paragraphs
or hereof.
17. SEVERABILITY: Any provision in this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. SUCCESSORS: This Agreement shall be binding upon Employee and inure to
his and his estate's benefit, and shall be binding upon and inure to the benefit
of the Company and any permitted successor of the Company. Neither this
Agreement nor any rights arising hereunder may be assigned or pledged by:
Employee or anyone claiming through Employee; or by the Company, except to any
corporation which is the successor in interest to the Company by reason of a
merger, consolidation or sale of substantially all of the assets of the Company.
The foregoing sentence shall not be deemed to have any effect upon the rights of
Employee upon a Change of Control.
11
19. CONTROLLING LAW: This Agreement shall in all respects be governed by,
and construed in accordance with, the laws of the State of Florida.
20. NOTICES. Any notice required or permitted to be given hereunder shall
be written and sent by registered or certified mail, telecommunicated or hand
delivered at the address set forth herein or to any other address of which
notice is given:
To the Company: OutSource International, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: General Counsel
To Employee: Robert A. Lefcort
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter hereof and may not be modified
without the written agreement of both parties hereto.
22. WAIVER. A waiver by any party of any of the terms and conditions hereof
shall not be construed as a general waiver by such party.
23. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and both of which together shall constitute a
single agreement.
24. INTERPRETATION. In the event of a conflict between the provisions of
this Agreement and any other agreement or document defining rights and duties of
Employee or the Company upon Employee's termination, the rights and duties set
forth in this Agreement shall control.
25. CERTAIN LIMITATIONS ON REMEDIES. Paragraph provides that certain
payments and other benefits shall be received by Employee upon the termination
of Employee by the Company other than for Cause and states that these same
provisions shall apply if Employee terminates his employment for Good Reason. It
is the intention of this Agreement that if the Company terminates Employee other
than for Cause (and other than as a consequence of Employee's death, disability
or normal retirement) or if Employee terminates his employment with Good Reason,
then the payments and other benefits set forth in Paragraph shall constitute the
sole and exclusive remedies of Employee. This Paragraph 25 shall have no effect
upon the provisions of Paragraph of this Agreement.
12
IN WITNESS WHEREOF, this Employment Agreement has been executed by the
parties as of the date first above written.
COMPANY:
OUTSOURCE INTERNATIONAL, INC.
By:
Its:
EMPLOYEE:
Name: Robert A. Lefcort
13
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
March 3, 1997, by and between OutSource International, Inc., a Florida
corporation (the "Company"), and Robert E. Tomlinson, Chief Financial Officer
("Employee").
WHEREAS, the Company, through its Board of Directors, desires to retain the
services of Employee, and Employee desires to be retained by the Company, on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, as Chief Financial Officer of the Company upon the terms
subject to this Agreement.
2. TERM. The term ("Term") of this Agreement shall commence on March 3,
1997, and shall continue until terminated in accordance with the terms hereof.
3. DUTIES. During his employment hereunder, Employee will serve as the
Chief Financial Officer of the Company. Employee shall report directly to the
President of the Company and shall serve at his direction. Employee shall
perform services as assigned by the President of the Company consistent with the
title of Chief Financial Officer. Employee shall diligently perform such duties
and shall devote his entire business skill, time and effort to his employment
and his duties hereunder and shall not during the Term, directly or indirectly,
alone or as a member of a partnership, or as an officer, director, employee or
agent of any other person, firm or business organization engage in any other
business activities or pursuits requiring his personal service that materially
conflict with his duties hereunder or the diligent performance of such duties.
This shall not, however, preclude Employee from serving on boards of directors
of other corporations; provided that such service does not conflict with the
duties of Employee hereunder or result in a conflict of interest.
4. COMPENSATION.
a. SALARY. During his employment hereunder, Employee shall be paid an
initial salary of $145,000 per year, payable in equal installments not less
than monthly ("Base Salary"). The Employee's Base Salary shall be reviewed
at least annually by the Board of Directors or any Committee of the Board
delegated the authority to review executive compensation.
b. BONUS. In addition to Base Salary, Employee shall be entitled to
participate in the Company's Stock Option Plan, as amended and restated
(the "Stock Option Plan") and, in addition, to participate in a Management
Bonus Program to be established by the Company with an initial targeted
bonus for calendar year 1997 of $58,000 for Employee, based upon the
achievement of mutually agreed upon goals and objectives (hereafter the
"Management Bonus Program").
c. INSURANCE. During his employment hereunder, Employee shall be
entitled to participate in such health, life, disability and other
insurance programs, if any, that the Company may offer to other key
executive employees of the Company from time to time.
d. OTHER BENEFITS. During his employment hereunder, Employee shall be
entitled to such other benefits, if any, that the Company may offer to
other key executive employees of the Company from time to time.
e. VACATION. Employee shall be entitled to four weeks' vacation leave
(in addition to holidays) in each calendar year during the Term, or such
additional amount as may be set forth in the vacation policy that the
Company shall establish from time to time. Except with respect to vacation
time unused as the result of a written request by the Company to postpone a
vacation, any unused vacation from one calendar year shall not carry-over
to any subsequent calendar year.
f. EXPENSE REIMBURSEMENT. Employee shall, upon submission of
appropriate supporting documentation, be entitled to reimbursement of
reasonable out-of-pocket expenses incurred in the performance of his duties
hereunder in accordance with policies established by the Company. Such
expenses shall include, without limitation, reasonable travel and
entertainment expenses, gasoline and toll expenses and cellular phone use
charges, if such charges are directly related to the business of the
Company.
5. GROUNDS FOR TERMINATION.
The Board of Directors of the Company may terminate this Agreement for
any reason at any time including, without limitation, for "Cause." As used
herein, "Cause" shall mean any of the following: (i) failure on the part of
Employee to disclose to Company in writing on or before the date hereof
Employee's breach of or default under any employment, non-compete,
confidentiality or other agreement between Employee and any prior employer
of Employee (including without limitation any breach or default that might
result from Employee's entering into or performing his duties and
obligations under this Agreement); (ii) an act of willful misconduct or
gross negligence by Employee in the performance of his material duties or
obligations to the Company; (iii) indictment of Employee for a felony
involving moral turpitude, whether relating to his employment or otherwise;
(iv) an act of dishonesty or breach of trust on the part of Employee
resulting or intended to result directly or indirectly in personal gain or
enrichment at the expense of the Company; (v) conduct on the part of
Employee intended to injure the business of the Company; (vi) Employee's
2
addiction to any drug or chemical; (vii) Employee's insubordination unless
resulting from Employee's refusal to do an illegal act; (viii) a material
failure of Employee to perform or observe the provisions of this Agreement
(other than by reason of disability as defined herein). The existence of
any of the foregoing events or conditions, except under clause (iii), shall
be determined by the Board of Directors (excluding the Employee) in the
exercise of its reasonable judgment provided that if such occurrence
relates to section (i), (vi) or (viii) above, it must persist more than (a)
five (5) days after notice is given to Employee by personal delivery or (b)
ten (10) days after a notice is given to Employee by any other means, each
notice which details the occurrence. Notwithstanding the foregoing, if
occurrence under sections (ii), (v), (vii) or (viii) cannot reasonably be
remedied within the time periods set forth, the Board of Directors shall
not exercise its right to terminate under this section if Employee begins
to remedy the occurrence within the time period and continues actively and
diligently in good faith to completely remedy such occurrence. As used
herein "insubordination" means Employee failing to use his best efforts to
comply with a written directive made by the Company's Board of Directors
for any action or inaction not inconsistent with the duties set forth here.
6. TERMINATION BY EMPLOYEE.
Employee may terminate this Agreement with Good Reason. "Good Reason"
means:
a. At any time the Employee is required, without his written consent,
to relocate his office more than seventy-five miles from the location of
the Company's current corporate headquarters;
b. The Company decreases the Employee's compensation below the levels
provided for by the terms of Section 4 (taking into account increases made
from time to time in accordance with Section 4);
c. A material breach of the provisions of this Agreement by the Company
(except those set forth in Paragraph ) and Employee provides at least 15
days prior written notice to at least two members of the Company's Board of
Directors (other than Employee) of the existence of such breach and his
intention to terminate this Agreement (no such termination shall be
effective if such breach is cured during such period or if the Company is
in good faith attempting to cure such breach);
d. The failure of the Company to comply with the provisions of
Paragraph for an uninterrupted 10 day period; or
e. The Company materially reduces the Employee's benefits under any
employee benefit plan, program or arrangement of the Company (other than a
change that affects all
3
employees similarly situated) from the level in effect upon the Employee's
commencement or participation.
7. PAYMENT AND OTHER PROVISIONS UPON TERMINATION.
a. In the event that: Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for Cause as provided in
Paragraph ; or Employee terminates his employment without Good Reason as
described in Paragraph ; then, on or before Employee's last day of
employment with the Company:
i. SALARY AND BONUS PAYMENTS: The Company shall pay in a lump sum
to Employee such amount of compensation due to Employee hereunder for
services rendered to the Company, as well as compensation for unused
vacation time, as has accrued but remains unpaid. Any and all other
rights granted to Employee under this Agreement shall terminate as of
the date of termination.
ii. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraph shall continue to apply with respect to Employee for a period
of one year following the date of termination.
b. In the event that: Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for any reason other than
for Cause as provided in Paragraph and other than as a consequence of
Employee's death, disability, or normal retirement under the Company's
retirement plans and practices; or Employee terminates his employment with
Good Reason as described in Paragraph ; then:
i. SALARY AND BONUS PAYMENTS: On or before Employee's last day of
employment with the Company, the Company shall pay to Employee, as
compensation for services rendered to the Company, a cash amount equal
to the sum of (x) the amount of Employee's Base Salary and (y) ninety
percent of the amount of the estimated target bonus under the
Management Bonus Program as in effect immediately prior to his date of
termination (the "Cash Amount"). The final calculation of Employee's
target bonus shall be made, and any remaining bonus amount due to
Employee paid, in the manner set forth in Section 7.a.i. At the
election of the Company, the Cash Amount may be paid to Employee in
periodic installments in accordance with the regular salary payment
practices of the Company, with the first such installment to be paid on
or before Employee's last day of employment with the Company.
Notwithstanding the foregoing sentence, the entire Cash Amount shall be
paid to Employee during the period not to exceed one year following
Employee's last day of employment with the Company. No interest shall
be paid with respect to any of the Cash Amount not paid on the
Employee's date of termination.
ii. BENEFIT PLAN COVERAGE: The Company shall maintain in full
force and effect for Employee and his dependents for one year after the
date of termination, all life, health,
4
accident, and disability benefit plans and other similar employee
benefit plans, programs and arrangements in which Employee or his
dependents were entitled to participate immediately prior to the
date of termination, in such amounts as were in effect immediately
prior to the date of termination, provided that such continued
participation is possible under the general terms and provisions
of such benefit plans, programs and arrangements. In the event
that participation in any benefit plan, program or arrangement
described above is barred, or any such benefit plan, program or
arrangement is discontinued or the benefits thereunder materially
reduced, the Company shall arrange to provide Employee and his
dependents for one year after the date of termination with
benefits substantially similar to those that they were entitled to
receive under such benefit plans, programs and arrangements
immediately prior to the date of termination, or, at the Company's
option, a lump sum payment to Employee equal to the Company's cost
immediately prior to termination to provide such benefits. If
immediately prior to the date of termination the Company provided
Employee with any club memberships, Employee will be entitled to
continue such memberships at his sole expense. Notwithstanding any
time period for continued benefits stated in this Paragraph
7.b.ii, all benefits in this Paragraph 7.b.ii will terminate on
the date that Employee becomes an employee of another employer and
eligible to participate in the employee benefit plans of such
other employer. To the extent that Employee was required to
contribute amounts for the benefits described in this Paragraph
7.b.ii prior to his termination, he shall continue to contribute
such amounts for such time as these benefits continue in effect
after termination.
iii.[INTENTIONALLY OMITTED]
iv. SAVINGS AND OTHER PLANS: Except as otherwise more specifically
provided herein or under the terms of the respective plans relating to
termination of employment, Employee's active participation in any
applicable savings, retirement, profit sharing or supplemental employee
retirement plans or any deferred compensation or similar plan of the
Company or any of its subsidiaries shall continue only through the last
day of his employment. All other provisions, including any distribution
and/or vested rights under such plans, shall be governed by the terms
of those respective plans.
v. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraph shall continue, beyond the time periods set forth in such
paragraph, to apply with respect to Employee for the shorter of (x)
twelve months following the date of termination or (y) until such time
as the Company has failed to comply with the provisions of Paragraph
for a an uninterrupted 10-day period and such failure is not cured
within 5 days after written notice of such failure is delivered to at
least two directors of the Company (other than Employee).
c. In the event that Employee terminates his employment with Good
Reason as described in Paragraph , the following provisions shall also
apply.
5
i. EXERCISABILITY OF STOCK OPTIONS. Notwithstanding the vesting
period provided for in the Stock Option Plan and any related stock
option agreements between the Company and Employee for stock options
("options") and stock appreciation rights ("rights") granted Employee
by the Company, all options and stock appreciation rights shall be
immediately exercisable upon termination of employment. In addition,
Employee will have the right to exercise all options and rights for the
shorter of (x) one year following his termination of employment or (y)
with respect to each option, the remainder of the period of
exercisability under the terms of the appropriate documents that grant
such options.
d. The provisions of this Paragraph shall apply if Employee's
employment is terminated prior to or more than two years after the
occurrence of a Change of Control (as defined in Paragraph ). From the
occurrence of any Change of Control until the second anniversary of such
Change of Control, the provisions of Paragraph shall apply in place of this
Paragraph , EXCEPT THAT in the event that after a Change of Control
Employee's employment is terminated by Employee without Good Reason or
Company terminates Employee for Cause, then the provisions of Paragraph
shall not apply and the provisions of Paragraph shall apply. Termination
upon death, disability and retirement are covered by Paragraphs , , and ,
respectively.
8. PAYMENT AND OTHER PROVISIONS AFTER CHANGE OF CONTROL.
a. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS: In the event
Employee's employment with the Company is terminated within two years
following the occurrence of a Change of Control (other than as a
consequence of his death or disability, or of his normal retirement under
the Company's retirement plans and practices) either (x) by the Company for
any reason other than for Cause or (z) by Employee with Good Reason as
provided in Paragraph , then Employee shall be entitled to receive from the
Company, the following:
i. BASE SALARY. Employee's Base Salary as in effect at the date
of termination, multiplied by two, shall be paid on the date of
termination;
ii. TARGET BONUS. Ninety percent of the amount of the Employee's
estimated target bonus under the Management Bonus Program for the
fiscal year in which the date of termination occurs, multiplied by two,
shall be paid on the date of termination; the final calculation of
Employee's target bonus shall be made, and any remaining bonus amount
due to Employee paid, in the manner set forth in Section 7.a.i.; and
iii. [OMITTED INTENTIONALLY]
iv. OTHER BENEFITS. All benefits under Paragraphs 7.b.ii, and
7.c.i shall be extended to Employee as described in such paragraphs.
6
b. NONCOMPETITION/NONSOLICITATION PERIOD. In the event of a termination
under Paragraph 8.a within one year after a Change of Control the
provisions of Paragraph 14 shall continue to apply as stated in paragraph
7.b.v.
c. For purposes of this Agreement, the term "Change of Control" shall
mean:
i. The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of ss. 13(d)(3) or ss.
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) (any of the foregoing
described in this Paragraph hereafter a "Person") of 33% or more of
either (a) the then outstanding shares of Capital Stock of the Company
(the "Outstanding Capital Stock") or (b) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Voting Securities"),
PROVIDED, HOWEVER, that any acquisition by (x) the Company or any of
its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or
(y) any Person that is eligible, pursuant to Rule 13d-1(b) under the
Exchange Act, to file a statement on Schedule 13G with respect to its
beneficial ownership of Voting Securities, whether or not such Person
shall have filed a statement on Schedule 13G, unless such Person shall
have filed a statement on Schedule 13D with respect to beneficial
ownership of 33% or more of the Voting Securities or (z) any
corporation with respect to which, following such acquisition, more
than 60% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Capital Stock and Voting Securities immediately prior to
such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the Outstanding
Capital Stock and Voting Securities, as the case may be, shall not
constitute a Change of Control; or
ii. Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election or nomination for election
by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors
of the Company (as such terms are used in Rule 14a-11 of Regulation
14A, or any successor section, promulgated under the Exchange Act); or
iii. Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in
each case, with respect to which all or
7
substantially all holders of the Outstanding Capital Stock and Voting
Securities immediately prior to such Business Combination do not,
following such Business Combination, beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares
of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
Business Combination; or
iv. (a) a complete liquidation or dissolution of the Company or
(b) a sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to
which, following such sale or disposition, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Capital Stock and Voting Securities
immediately prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Capital Stock and
Voting Securities, as the case may be, immediately prior to such sale
or disposition.
9. TERMINATION BY REASON OF DEATH. If Employee shall die while employed by
the Company both prior to termination of employment and during the effective
term of this Agreement, all Employee's rights under this Agreement shall
terminate with the payment of that portion of Base Salary as has accrued but
remains unpaid and a prorated amount of targeted bonus under the Company's
Management Bonus Program through the month in which his death occurs, plus three
additional months of the fixed salary and targeted bonus. The calculation of
Employee's target bonus shall be made, and any bonus amount due to Employee
paid, in the manner set forth in Section 7.a.i. All benefits under Paragraphs
7.b.ii, 7.b.iv and 7.c.i shall be extended to Employee's estate as described in
such paragraphs. In addition, Employee's eligible dependents shall receive
continued benefit plan coverage under Paragraph 7.b.ii for three months from the
date of Employee's death.
10. TERMINATION BY DISABILITY. Employee's employment hereunder may be
terminated by the Company for disability. In such event, all Employee's rights
under this Agreement shall terminate with the payment of that portion of Base
Salary as has accrued but remains unpaid as of the thirtieth (30th) day after
such notice is given EXCEPT that all benefits under Paragraphs , and 7.c.i shall
be extended to Employee as described in such paragraphs, PROVIDED, HOWEVER,
that, with respect to Paragraph , the period for continued benefit plan coverage
shall be limited to six months from the date of termination. In addition, the
noncompetition and nonsolicitation provisions of Paragraph shall continue to
apply to Employee for a period of six months from the date of termination. For
purposes of this Agreement, "disability" is defined to mean that, as a result of
Employee's incapacity due to physical or mental illness:
a. Employee shall have been absent from his duties as an officer of
the Company on a substantially full-time basis for six (6) consecutive
months; and
8
b. Within thirty (30) days after the Company notifies Employee in
writing that it intends to replace him, Employee shall not have returned to
the performance of his duties as an officer of the Company on a full-time
basis.
11. RETIREMENT. It is expected that the Compensation Committee of the
Company's Board of Directors will develop a benefit plan for retirement. It is
expected that Employee's rights upon retirement will be specifically described
in such retirement benefit plan. If retirement benefits for Employee are not
specifically described in such plan, the Company shall provide Employee upon
retirement benefits no lesser than the highest level of benefits accorded any
other retiring executive officer during the five year period immediately
preceding Employee's retirement.
12. INDEMNIFICATION. If litigation shall be brought to enforce or interpret
any provision contained herein, the non-prevailing party shall indemnify the
prevailing party for reasonable attorney's fees (including those for
negotiations, trial and appeals) and disbursements incurred by the prevailing
party in such litigation, and hereby agrees to pay prejudgment interest on any
money judgment obtained by the prevailing party calculated at the generally
prevailing NationsBank of Florida, N.A. base rate of interest charged to its
commercial customers in effect from time to time from the date that payment(s)
to him should have been made under this Agreement.
13. [INTENTIONALLY OMITTED]
14. NONCOMPETITION AND NONSOLICITATION.
a. The nature of the system and methods employed in the Company's
business is such that Employee will be placed in a close business and
personal relationship with the customers of the Company and be privy to
confidential customer usage and rate information. Accordingly, at all times
during the term of this Agreement and for a period of one (1) year
immediately following the termination of Employee's employment hereunder
(the "Noncompetition and Nonsolicitation Period") for any reason
whatsoever, and for such additional periods as may otherwise be set forth
in this Agreement in reference to this Paragraph 14, so long as the Company
continues to carry on the same business, Employee shall not, for any reason
whatsoever, directly or indirectly, for himself or on behalf of, or in
conjunction with, any other person, persons, company, partnership,
corporation or business entity:
i. Call upon, divert, influence or solicit or attempt to call
upon, divert, influence or solicit any customer or customers of
the Company nationwide;
ii. Divulge the names and addresses or any information concerning
any customer of the Company;
9
iii. Disclose any information or knowledge relating to the
Company, including but not limited to, the Company's system or
method of conducting business to any person, persons, firms,
corporations or other entities unaffiliated with the Company, for
any reason or purpose whatsoever;
iv. Own, manage, operate, control, be employed by, participate in
or be connected in any manner with the ownership, management,
operation or control of the same, similar or related line of
business as that carried on by the Company ("Competition") within
a radius of fifty (50) miles from Employee's principal office.
b. The time period covered by the covenants contained in this Paragraph
14 shall not include any period(s) of violation of any covenant or any period(s)
of time required for litigation to enforce any covenant.
c. The covenants set forth in this Paragraph 14 shall be construed as
an agreement independent of any other provision in this Agreement and existence
of any potential or alleged claim or cause of action of Employee against the
Company, whether predicted on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants contained herein.
An alleged or actual breach of the Agreement by the Company shall not be a
defense to enforcement of the provisions of this Paragraph 14.
d. Employee acknowledges that he has read the foregoing and agrees that
the nature of the geographical restrictions are reasonable given the
international nature of the Company's business. In the event that these
geographical or temporal restrictions are judicially determined to be
unreasonable, the parties agree that these restrictions shall be judicially
reformed to the maximum restrictions which are reasonable.
e. Notwithstanding anything to the contrary contained herein, in the
event that Employee engages in Competition, or any conduct expressly prohibited
by this Paragraph 14 at any time during the Noncompetition and Nonsolicitation
Period for any reason whatsoever, Employee shall not receive any of the
termination benefits he otherwise would be entitled to receive pursuant to
Paragraphs 7.b., 7.c., 8.a. and 10 hereof.
15. CONFIDENTIALITY
a. NONDISCLOSURE. Employee acknowledges and agrees that the
Confidential Information (as defined below) is a valuable, special and
unique asset of the Company's business. Accordingly, except in connection
with the performance of his duties hereunder, Employee shall not at any
time during or subsequent to the term of his employment hereunder disclose,
directly or indirectly, to any person, firm, corporation, partnership,
association or other entity any proprietary or confidential information
relating to the Company or any information concerning the Company's
financial condition or prospects, the Company's customers, the design,
development, manufacture, marketing or sale of the Company's products or
the Company's methods of operating its business (collectively "Confidential
Information").
10
Confidential Information shall not include information which, at the time
of disclosure, is known or available to the general public by publication
or otherwise through no act or failure to act on the part of Employee.
b. RETURN OF CONFIDENTIAL INFORMATION. Upon termination of Employee's
employment, for whatever reason and whether voluntary or involuntary, or at
any time at the request of the Company, Employee shall promptly return all
Confidential Information in the possession or under the control of Employee
to the Company and shall not retain any copies or other reproductions or
extracts thereof. Employee shall at any time at the request of the Company
destroy or have destroyed all memoranda, notes, reports, and documents,
whether in "hard copy" form or as stored on magnetic or other media, and
all copies and other reproductions and extracts thereof, prepared by
Employee and shall provide the Company with a certificate that the
foregoing materials have in fact been returned or destroyed.
c. BOOKS AND RECORDS. All books, records and accounts whether prepared
by Employee or otherwise coming into Employee's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company upon termination of Employee's employment hereunder or upon the
Company's request at any time.
16. INJUNCTION/SPECIFIC PERFORMANCE SETOFF. Employee acknowledges that a
breach of any of the provisions of Paragraphs or 15 hereof would result in
immediate and irreparable injury to the Company which cannot be adequately or
reasonably compensated at law. Therefore, Employee agrees that the Company shall
be entitled, if any such breach shall occur or be threatened or attempted, to a
decree of specific performance and to a temporary and permanent injunction,
without the posting of a bond, enjoining and restraining such breach by Employee
or his agents, either directly or indirectly, and that such right to injunction
shall be cumulative to whatever other remedies for actual damages to which the
Company is entitled. Employee further agrees that, except as otherwise provided
in Paragraph hereof, the Company may set off against or recoup from any amounts
due under this Agreement to the extent of any losses incurred by the Company as
a result of any breach by Employee of the provisions of Paragraphs
or hereof.
17. SEVERABILITY. Any provision in this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. SUCCESSORS. This Agreement shall be binding upon Employee and inure to
his and his estate's benefit, and shall be binding upon and inure to the benefit
of the Company and any permitted successor of the Company. Neither this
Agreement nor any rights arising hereunder may be assigned or pledged by:
Employee or anyone claiming through Employee; or by the Company, except to any
corporation which is the successor in interest to the Company by reason of a
merger, consolidation or sale of substantially all of the assets of the Company.
The
11
foregoing sentence shall not be deemed to have any effect upon the rights of
Employee upon a Change of Control.
19. CONTROLLING LAW. This Agreement shall in all respects be governed by,
and construed in accordance with, the laws of the State of Florida.
20. NOTICES. Any notice required or permitted to be given hereunder shall
be written and sent by registered or certified mail, telecommunicated or hand
delivered at the address set forth herein or to any other address of which
notice is given:
To the Company: OutSource International, Inc.
1444 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: General Counsel
To Employee: Robert E. Tomlinson
------------------------------
------------------------------
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter hereof and may not be modified
without the written agreement of both parties hereto.
22. WAIVER. A waiver by any party of any of the terms and conditions hereof
shall not be construed as a general waiver by such party.
23. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and both of which together shall constitute a
single agreement.
24. INTERPRETATION. In the event of a conflict between the provisions of
this Agreement and any other agreement or document defining rights and duties of
Employee or the Company upon Employee's termination, the rights and duties set
forth in this Agreement shall control.
25. CERTAIN LIMITATIONS ON REMEDIES. Paragraph provides that certain
payments and other benefits shall be received by Employee upon the termination
of Employee by the Company other than for Cause and states that these same
provisions shall apply if Employee terminates his employment for Good Reason. It
is the intention of this Agreement that if the Company terminates Employee other
than for Cause (and other than as a consequence of Employee's death, disability
or normal retirement) or if Employee terminates his employment with Good Reason,
then the payments and other benefits set forth in Paragraph shall constitute the
sole and exclusive remedies of Employee. This Paragraph 25 shall have no effect
upon the provisions of Paragraph of this Agreement.
12
IN WITNESS WHEREOF, this Employment Agreement has been executed by the
parties as of the date first above written.
COMPANY:
OUTSOURCE INTERNATIONAL, INC.
By:
Its:
EMPLOYEE:
Name: Robert E. Tomlinson
13
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
March 3, 1997 by and between OutSource International, Inc., a Florida
corporation (the "Company"), and James E. Money, President, Labor World Division
("Employee").
WHEREAS, the Company, through its Board of Directors, desires to retain the
services of Employee, and Employee desires to be retained by the Company, on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, as President of the Labor World Division of the Company upon
the terms subject to this Agreement.
2. TERM. The term ("Term") of this Agreement shall commence on March 3,
1997 and shall continue until terminated in accordance with the terms hereof.
3. DUTIES. During his employment hereunder, Employee will serve as the
President of the Labor World Division. Employee shall report directly to the
President of the Company and shall serve at his direction. Employee shall
perform services as assigned by the President of the Company consistent with the
title of President, Labor World Division. Employee shall diligently perform such
duties and shall devote his entire business skill, time and effort to his
employment and his duties hereunder and shall not during the Term, directly or
indirectly, alone or as a member of a partnership, or as an officer, director,
employee or agent of any other person, firm or business organization engage in
any other business activities or pursuits requiring his personal service that
materially conflict with his duties hereunder or the diligent performance of
such duties. This shall not, however, preclude Employee from serving on boards
of directors of other corporations; provided that such service does not conflict
with the duties of Employee hereunder or result in a conflict of interest.
4. COMPENSATION.
a. SALARY. During his employment hereunder, Employee shall be paid an
initial salary of $185,000 per year, payable in equal installments not less
than monthly ("Base Salary"). The Employee's Base Salary shall be reviewed
at least annually by the Board of Directors or any Committee of the Board
delegated the authority to review executive compensation.
b. BONUS. In addition to Base Salary, Employee shall be entitled to
participate in the Company's Stock Option Plan as amended and restated (the
"Stock Option Plan") and, in addition, to participate in a Management Bonus
Program to be established by the Company with an initial targeted bonus for
calendar year 1997 of $92,500 for Employee, based upon the achievement of
mutually agreed upon goals and objectives (hereafter the "Management Bonus
Program").
c. INSURANCE. During his employment hereunder, Employee shall be
entitled to participate in such health, life, disability and other
insurance programs, if any, that the Company may offer to other key
executive employees of the Company from time to time.
d. OTHER BENEFITS. During his employment hereunder, Employee shall be
entitled to such other benefits, if any, that the Company may offer to
other key executive employees of the Company from time to time.
e. VACATION. Employee shall be entitled to four weeks' vacation leave
(in addition to holidays) in each calendar year during the Term, or such
additional amount as may be set forth in the vacation policy that the
Company shall establish from time to time. Except with respect to vacation
time unused as the result of a written request by the Company to postpone a
vacation, any unused vacation from one calendar year shall not carry-over
to any subsequent calendar year.
f. EXPENSE REIMBURSEMENT. Employee shall, upon submission of
appropriate supporting documentation, be entitled to reimbursement of
reasonable out-of-pocket expenses incurred in the performance of his duties
hereunder in accordance with policies established by the Company. Such
expenses shall include, without limitation, reasonable travel and
entertainment expenses, gasoline and toll expenses and cellular phone use
charges, if such charges are directly related to the business of the
Company.
5. GROUNDS FOR TERMINATION.
The Board of Directors of the Company may terminate this Agreement for
any reason at any time including, without limitation, for "Cause." As used
herein, "Cause" shall mean any of the following: (i) failure on the part of
Employee to disclose to Company in writing on or before the date hereof
Employee's breach of or default under any employment, non-compete,
confidentiality or other agreement between Employee and any prior employer
of Employee (including without limitation any breach or default that might
result from Employee's entering into or performing his duties and
obligations under this Agreement); (ii) an act of willful misconduct or
gross negligence by Employee in the performance of his material duties or
obligations to the Company; (iii) indictment of Employee for a felony
involving moral turpitude, whether relating to his employment or otherwise;
(iv) an act of dishonesty or breach of trust on the part of Employee
resulting or intended to result directly or indirectly in personal gain or
enrichment at the expense of the Company; (v) conduct on the part of
Employee intended to injure the business of the Company; (vi) Employee's
2
addiction to any drug or chemical; (vii) Employee's insubordination unless
resulting from Employee's refusal to do an illegal act; (viii) a material
failure of Employee to perform or observe the provisions of this Agreement
(other than by reason of disability as defined herein). The existence of
any of the foregoing events or conditions, except under clause (iii), shall
be determined by the Board of Directors (excluding the Employee) in the
exercise of its reasonable judgment provided that if such occurrence
relates to section (i), (vi) or (viii) above, it must persist more than (a)
five (5) days after notice is given to Employee by personal delivery or (b)
ten (10) days after a notice is given to Employee by any other means, each
notice which details the occurrence. Notwithstanding the foregoing, if
occurrence under sections (ii), (v), (vii) or (viii) cannot reasonably be
remedied within the time periods set forth, the Board of Directors shall
not exercise its right to terminate under this section if Employee begins
to remedy the occurrence within the time period and continues actively and
diligently in good faith to completely remedy such occurrence. As used
herein "insubordination" means Employee failing to use his best efforts to
comply with a written directive made by the Company's Board of Directors
for any action or inaction not inconsistent with the duties set forth here.
6. TERMINATION BY EMPLOYEE.
Employee may terminate this Agreement with Good Reason. "Good Reason"
means:
a. At any time the Employee is required, without his written consent,
to relocate his office more than seventy-five miles from the principal
location of his employment on the date hereof;
b. The Company decreases the Employee's compensation below the levels
provided for by the terms of Section 4 (taking into account increases made
from time to time in accordance with Section 4);
c. A material breach of the provisions of this Agreement by the Company
(except those set forth in Paragraph ) and Employee provides at least 15
days prior written notice to at least two members of the Company's Board of
Directors (other than Employee) of the existence of such breach and his
intention to terminate this Agreement (no such termination shall be
effective if such breach is cured during such period or if the Company is
in good faith attempting to cure such breach);
d. The failure of the Company to comply with the provisions of
Paragraph for an uninterrupted 10 day period; or
e. The Company materially reduces the Employee's benefits under any
employee benefit plan, program or arrangement of the Company (other than a
change that affects all employees similarly situated) from the level in
effect upon the Employee's commencement or participation.
3
7. PAYMENT AND OTHER PROVISIONS UPON TERMINATION.
a. In the event that: Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for Cause as provided in
Paragraph ; or Employee terminates his employment without Good Reason as
described in Paragraph ; then, on or before Employee's last day of
employment with the Company:
i. SALARY AND BONUS PAYMENTS: The Company shall pay in a lump sum
to Employee such amount of compensation due to Employee hereunder for
services rendered to the Company, as well as compensation for unused
vacation time, as has accrued but remains unpaid. Any and all other
rights granted to Employee under this Agreement shall terminate as of
the date of termination.
ii. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraph shall continue to apply with respect to Employee for a period
of one year following the date of termination.
b. In the event that: Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for any reason other than
for Cause as provided in Paragraph and other than as a consequence of
Employee's death, disability, or normal retirement under the Company's
retirement plans and practices; or Employee terminates his employment with
Good Reason as described in Paragraph ; then:
i. SALARY AND BONUS PAYMENTS: On or before Employee's last day of
employment with the Company, the Company shall pay to Employee, as
compensation for services rendered to the Company, a cash amount equal
to the sum of (x) one-half (1/2) of the amount of Employee's Base
Salary and (y) ninety percent of one-half (1/2) of the amount of the
estimated target bonus under the Management Bonus Program as in effect
immediately prior to his date of termination (the "Cash Amount"). The
final calculation of Employee's target bonus shall be made, and any
remaining bonus amount due to Employee paid, in the manner set forth in
Section 7.a.i. At the election of the Company, the Cash Amount may be
paid to Employee in periodic installments in accordance with the
regular salary payment practices of the Company, with the first such
installment to be paid on or before Employee's last day of employment
with the Company. Notwithstanding the foregoing sentence, the entire
Cash Amount shall be paid to Employee during the period not to exceed
one year following Employee's last day of employment with the Company.
No interest shall be paid with respect to any of the Cash Amount not
paid on the Employee's date of termination.
ii. BENEFIT PLAN COVERAGE: The Company shall maintain in full
force and effect for Employee and his dependents for one year after the
date of termination, all life, health, accident, and disability benefit
plans and other similar employee benefit plans, programs and
arrangements in which Employee or his dependents were entitled to
participate immediately prior to the date of termination, in such
amounts as were in effect
4
immediately prior to the date of termination, provided that such
continued participation is possible under the general terms and
provisions of such benefit plans, programs and arrangements. In the
event that participation in any benefit plan, program or arrangement
described above is barred, or any such benefit plan, program or
arrangement is discontinued or the benefits thereunder materially
reduced, the Company shall arrange to provide Employee and his
dependents for one year after the date of termination with benefits
substantially similar to those that they were entitled to receive under
such benefit plans, programs and arrangements immediately prior to the
date of termination, or, at the Company's option, a lump sum payment to
Employee equal to the Company's cost immediately prior to termination
to provide such benefits. If immediately prior to the date of
termination the Company provided Employee with any club memberships,
Employee will be entitled to continue such memberships at his sole
expense. Notwithstanding any time period for continued benefits stated
in this Paragraph 7.b.ii, all benefits in this Paragraph 7.b.ii will
terminate on the date that Employee becomes an employee of another
employer and eligible to participate in the employee benefit plans of
such other employer. To the extent that Employee was required to
contribute amounts for the benefits described in this Paragraph 7.b.ii
prior to his termination, he shall continue to contribute such amounts
for such time as these benefits continue in effect after termination.
iii.[INTENTIONALLY OMITTED]
iv. SAVINGS AND OTHER PLANS: Except as otherwise more specifically
provided herein or under the terms of the respective plans relating to
termination of employment, Employee's active participation in any
applicable savings, retirement, profit sharing or supplemental employee
retirement plans or any deferred compensation or similar plan of the
Company or any of its subsidiaries shall continue only through the last
day of his employment. All other provisions, including any distribution
and/or vested rights under such plans, shall be governed by the terms
of those respective plans.
v. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraph shall continue, beyond the time periods set forth in such
paragraph, to apply with respect to Employee for the shorter of (x)
twelve months following the date of termination or (y) until such time
as the Company has failed to comply with the provisions of Paragraph
for a an uninterrupted 10-day period and such failure is not cured
within 5 days after written notice of such failure is delivered to at
least two directors of the Company (other than Employee).
c. In the event that Employee terminates his employment with Good
Reason as described in Paragraph , the following provisions shall also
apply.
i. EXERCISABILITY OF STOCK OPTIONS. Notwithstanding the vesting
period provided for in the Stock Option Plan and any related stock
option agreements between the Company and Employee for stock options
("options") and stock appreciation rights ("rights") granted Employee
by the Company, all options and stock appreciation rights shall be
5
immediately exercisable upon termination of employment. In addition,
Employee will have the right to exercise all options and rights for the
shorter of (x) one year following his termination of employment or (y)
with respect to each option, the remainder of the period of
exercisability under the terms of the appropriate documents that grant
such options.
d. The provisions of this Paragraph shall apply if Employee's
employment is terminated prior to or more than two years after the
occurrence of a Change of Control (as defined in Paragraph ). From the
occurrence of any Change of Control until the second anniversary of such
Change of Control, the provisions of Paragraph shall apply in place of this
Paragraph , EXCEPT THAT in the event that after a Change of Control
Employee's employment is terminated by Employee without Good Reason or
Company terminates Employee for Cause, then the provisions of Paragraph
shall not apply and the provisions of Paragraph shall apply. Termination
upon death, disability and retirement are covered by Paragraphs , , and ,
respectively.
8. PAYMENT AND OTHER PROVISIONS AFTER CHANGE OF CONTROL.
a. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS: In the event
Employee's employment with the Company is terminated within two years
following the occurrence of a Change of Control (other than as a
consequence of his death or disability, or of his normal retirement under
the Company's retirement plans and practices) either (x) by the Company for
any reason whatsoever or (z) by Employee with Good Reason as provided in
Paragraph , then Employee shall be entitled to receive from the Company,
the following:
i. BASE SALARY. Employee's Base Salary as in effect at the date of
termination shall be paid on the date of termination;
ii. TARGET BONUS. Ninety percent of the amount of the Employee's
estimated target bonus under the Management Bonus Program for the
fiscal year in which the date of termination occurs shall be paid on
the date of termination; the final calculation of Employee's target
bonus shall be made, and any remaining bonus amount due to Employee
paid, in the manner set forth in Section 7.a.i.; and
iii. [OMITTED INTENTIONALLY]
iv. OTHER BENEFITS. All benefits under Paragraphs 7.b.ii, and
7.c.i shall be extended to Employee as described in such paragraphs.
b. NONCOMPETITION/NONSOLICITATION PERIOD. In the event of a termination
under Paragraph 8.a within one year after a Change of Control the
provisions of Paragraph 14 shall continue to apply as stated in paragraph
7.b.v.
c. For purposes of this Agreement, the term "Change of Control" shall
mean:
6
i. The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of ss. 13(d)(3) or ss.
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) (any of the foregoing
described in this Paragraph hereafter a "Person") of 33% or more of
either (a) the then outstanding shares of Capital Stock of the Company
(the "Outstanding Capital Stock") or (b) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Voting Securities"),
PROVIDED, HOWEVER, that any acquisition by (x) the Company or any of
its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or
(y) any Person that is eligible, pursuant to Rule 13d-1(b) under the
Exchange Act, to file a statement on Schedule 13G with respect to its
beneficial ownership of Voting Securities, whether or not such Person
shall have filed a statement on Schedule 13G, unless such Person shall
have filed a statement on Schedule 13D with respect to beneficial
ownership of 33% or more of the Voting Securities or (z) any
corporation with respect to which, following such acquisition, more
than 60% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Capital Stock and Voting Securities immediately prior to
such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the Outstanding
Capital Stock and Voting Securities, as the case may be, shall not
constitute a Change of Control; or
ii. Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election or nomination for election
by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors
of the Company (as such terms are used in Rule 14a-11 of Regulation
14A, or any successor section, promulgated under the Exchange Act); or
iii. Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in
each case, with respect to which all or substantially all holders of
the Outstanding Capital Stock and Voting Securities immediately prior
to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from Business Combination; or
7
iv. (a) a complete liquidation or dissolution of the Company or
(b) a sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to
which, following such sale or disposition, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Capital Stock and Voting Securities
immediately prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Capital Stock and
Voting Securities, as the case may be, immediately prior to such sale
or disposition.
9. TERMINATION BY REASON OF DEATH. If Employee shall die while employed by
the Company both prior to termination of employment and during the effective
term of this Agreement, all Employee's rights under this Agreement shall
terminate with the payment of that portion of Base Salary as has accrued but
remains unpaid and a prorated amount of targeted bonus under the Company's
Management Bonus Program through the month in which his death occurs, plus three
additional months of the fixed salary and targeted bonus. The calculation of
Employee's target bonus shall be made, and any bonus amount due to Employee
paid, in the manner set forth in Section 7.a.i. All benefits under Paragraphs
7.b.ii, 7.b.iv and 7.c.i shall be extended to Employee's estate as described in
such paragraphs. In addition, Employee's eligible dependents shall receive
continued benefit plan coverage under Paragraph 7.b.ii for three months from the
date of Employee's death.
10. TERMINATION BY DISABILITY. Employee's employment hereunder may be
terminated by the Company for disability. In such event, all Employee's rights
under this Agreement shall terminate with the payment of that portion of Base
Salary as has accrued but remains unpaid as of the thirtieth (30th) day after
such notice is given EXCEPT that all benefits under Paragraphs , and 7.c.i shall
be extended to Employee as described in such paragraphs, PROVIDED, HOWEVER,
that, with respect to Paragraph , the period for continued benefit plan coverage
shall be limited to six months from the date of termination. In addition, the
noncompetition and nonsolicitation provisions of Paragraph shall continue to
apply to Employee for a period of six months from the date of termination. For
purposes of this Agreement, "disability" is defined to mean that, as a result of
Employee's incapacity due to physical or mental illness:
a. Employee shall have been absent from his duties as an officer of the
Company on a substantially full-time basis for six (6) consecutive months;
and
b. Within thirty (30) days after the Company notifies Employee in
writing that it intends to replace him, Employee shall not have returned to
the performance of his duties as an officer of the Company on a full-time
basis.
11. RETIREMENT. It is expected that the Compensation Committee of the
Company's Board of Directors will develop a benefit plan for retirement. It is
expected that Employee's rights
8
upon retirement will be specifically described in such retirement benefit plan.
If retirement benefits for Employee are not specifically described in such plan,
the Company shall provide Employee upon retirement benefits no lesser than the
highest level of benefits accorded any other retiring executive officer during
the five year period immediately preceding Employee's retirement.
12. INDEMNIFICATION. If litigation shall be brought to enforce or interpret
any provision contained herein, the non-prevailing party shall indemnify the
prevailing party for reasonable attorney's fees (including those for
negotiations, trial and appeals) and disbursements incurred by the prevailing
party in such litigation, and hereby agrees to pay prejudgment interest on any
money judgment obtained by the prevailing party calculated at the generally
prevailing NationsBank of Florida, N.A. base rate of interest charged to its
commercial customers in effect from time to time from the date that payment(s)
to him should have been made under this Agreement.
13. [INTENTIONALLY OMITTED]
14. NONCOMPETITION AND NONSOLICITATION.
a. The nature of the system and methods employed in the Company's
business is such that Employee will be placed in a close business and
personal relationship with the customers of the Company and be privy to
confidential customer usage and rate information. Accordingly, at all times
during the term of this Agreement and for a period of one (1) year
immediately following the termination of Employee's employment hereunder
(the "Noncompetition and Nonsolicitation Period") for any reason
whatsoever, and for such additional periods as may otherwise be set forth
in this Agreement in reference to this Paragraph 14, so long as the Company
continues to carry on the same business, Employee shall not, for any reason
whatsoever, directly or indirectly, for himself or on behalf of, or in
conjunction with, any other person, persons, company, partnership,
corporation or business entity:
i. Call upon, divert, influence or solicit or attempt to call
upon, divert, influence or solicit any customer or customers of
the Company nationwide;
ii. Divulge the names and addresses or any information concerning
any customer of the Company;
iii. Disclose any information or knowledge relating to the
Company, including but not limited to, the Company's system or
method of conducting business to any person, persons, firms,
corporations or other entities unaffiliated with the Company, for
any reason or purpose whatsoever;
iv. Own, manage, operate, control, be employed by, participate in
or be connected in any manner with the ownership, management,
operation or control of the same,
9
similar or related line of business as that carried on by the
Company ("Competition") within a radius of fifty (50) miles
from Employee's principal office.
b. The time period covered by the covenants contained in this Paragraph
14 shall not include any period(s) of violation of any covenant or any
period(s) of time required for litigation to enforce any covenant.
c. The covenants set forth in this Paragraph 14 shall be construed as
an agreement independent of any other provision in this Agreement and
existence of any potential or alleged claim or cause of action of Employee
against the Company, whether predicted on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the
covenants contained herein. An alleged or actual breach of the Agreement by
the Company shall not be a defense to enforcement of the provisions of this
Paragraph 14.
d. Employee acknowledges that he has read the foregoing and agrees that
the nature of the geographical restrictions are reasonable given the
international nature of the Company's business. In the event that these
geographical or temporal restrictions are judicially determined to be
unreasonable, the parties agree that these restrictions shall be judicially
reformed to the maximum restrictions which are reasonable.
e. Notwithstanding anything to the contrary contained herein, in the
event that Employee engages in Competition, or any conduct expressly
prohibited by this Paragraph 14 at any time during the Noncompetition and
Nonsolicitation Period for any reason whatsoever, Employee shall not
receive any of the termination benefits he otherwise would be entitled to
receive pursuant to Paragraphs 7.b., 7.c., 8.a. and 10 hereof.
15. CONFIDENTIALITY.
a. NONDISCLOSURE. Employee acknowledges and agrees that the
Confidential Information (as defined below) is a valuable, special and
unique asset of the Company's business. Accordingly, except in connection
with the performance of his duties hereunder, Employee shall not at any
time during or subsequent to the term of his employment hereunder disclose,
directly or indirectly, to any person, firm, corporation, partnership,
association or other entity any proprietary or confidential information
relating to the Company or any information concerning the Company's
financial condition or prospects, the Company's customers, the design,
development, manufacture, marketing or sale of the Company's products or
the Company's methods of operating its business (collectively "Confidential
Information"). Confidential Information shall not include information
which, at the time of disclosure, is known or available to the general
public by publication or otherwise through no act or failure to act on the
part of Employee.
b. RETURN OF CONFIDENTIAL INFORMATION. Upon termination of Employee's
employment, for whatever reason and whether voluntary or involuntary, or at
any time at the request of the Company, Employee shall promptly return all
Confidential Information in the possession
10
or under the control of Employee to the Company and shall not retain any
copies or other reproductions or extracts thereof. Employee shall at any
time at the request of the Company destroy or have destroyed all memoranda,
notes, reports, and documents, whether in "hard copy" form or as stored on
magnetic or other media, and all copies and other reproductions and
extracts thereof, prepared by Employee and shall provide the Company with a
certificate that the foregoing materials have in fact been returned or
destroyed.
c. BOOKS AND RECORDS. All books, records and accounts whether prepared
by Employee or otherwise coming into Employee's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company upon termination of Employee's employment hereunder or upon the
Company's request at any time.
16. INJUNCTION/SPECIFIC PERFORMANCE SETOFF. Employee acknowledges that a
breach of any of the provisions of Paragraphs or 15 hereof would result in
immediate and irreparable injury to the Company which cannot be adequately or
reasonably compensated at law. Therefore, Employee agrees that the Company shall
be entitled, if any such breach shall occur or be threatened or attempted, to a
decree of specific performance and to a temporary and permanent injunction,
without the posting of a bond, enjoining and restraining such breach by Employee
or his agents, either directly or indirectly, and that such right to injunction
shall be cumulative to whatever other remedies for actual damages to which the
Company is entitled. Employee further agrees that, except as otherwise provided
in Paragraph hereof, the Company may set off against or recoup from any amounts
due under this Agreement to the extent of any losses incurred by the Company as
a result of any breach by Employee of the provisions of Paragraphs
or hereof.
17. SEVERABILITY: Any provision in this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. SUCCESSORS: This Agreement shall be binding upon Employee and inure to
his and his estate's benefit, and shall be binding upon and inure to the benefit
of the Company and any permitted successor of the Company. Neither this
Agreement nor any rights arising hereunder may be assigned or pledged by:
Employee or anyone claiming through Employee; or by the Company, except to any
corporation which is the successor in interest to the Company by reason of a
merger, consolidation or sale of substantially all of the assets of the Company.
The foregoing sentence shall not be deemed to have any effect upon the rights of
Employee upon a Change of Control.
19. CONTROLLING LAW: This Agreement shall in all respects be governed by,
and construed in accordance with, the laws of the State of Florida.
11
20. NOTICES. Any notice required or permitted to be given hereunder shall
be written and sent by registered or certified mail, telecommunicated or hand
delivered at the address set forth herein or to any other address of which
notice is given:
To the Company: OutSource International, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: General Counsel
To Employee: James E. Money
--------------------------------
--------------------------------
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter hereof and may not be modified
without the written agreement of both parties hereto.
22. WAIVER. A waiver by any party of any of the terms and conditions hereof
shall not be construed as a general waiver by such party.
23. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and both of which together shall constitute a
single agreement.
24. INTERPRETATION. In the event of a conflict between the provisions of
this Agreement and any other agreement or document defining rights and duties of
Employee or the Company upon Employee's termination, the rights and duties set
forth in this Agreement shall control.
25. CERTAIN LIMITATIONS ON REMEDIES. Paragraph provides that certain
payments and other benefits shall be received by Employee upon the termination
of Employee by the Company other than for Cause and states that these same
provisions shall apply if Employee terminates his employment for Good Reason. It
is the intention of this Agreement that if the Company terminates Employee other
than for Cause (and other than as a consequence of Employee's death, disability
or normal retirement) or if Employee terminates his employment with Good Reason,
then the payments and other benefits set forth in Paragraph shall constitute the
sole and exclusive remedies of Employee. This Paragraph 25 shall have no effect
upon the provisions of Paragraph of this Agreement.
12
IN WITNESS WHEREOF, this Employment Agreement has been executed by the
parties as of the date first above written.
COMPANY:
OUTSOURCE INTERNATIONAL, INC.
By:
Its:
EMPLOYEE:
Name: James E. Money
13
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
March 3, 1997 by and between OutSource International, Inc., a Florida
corporation (the "Company"), and Robert Mitchell, President, Office Ours
Division ("Employee").
WHEREAS, the Company, through its Board of Directors, desires to retain the
services of Employee, and Employee desires to be retained by the Company, on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
accepts employment, as President of the Office Ours Division of the Company upon
the terms subject to this Agreement.
2. TERM. The term ("Term") of this Agreement shall commence on March 3,
1997, and shall continue until terminated in accordance with the terms hereof.
3. DUTIES. During his employment hereunder, Employee will serve as the
President of the Office Ours Division. Employee shall report directly to the
President of the Company and shall serve at his direction. Employee shall
perform services as assigned by the President of the Company consistent with the
title of President, Office Ours Division. Employee shall diligently perform such
duties and shall devote his entire business skill, time and effort to his
employment and his duties hereunder and shall not during the Term, directly or
indirectly, alone or as a member of a partnership, or as an officer, director,
employee or agent of any other person, firm or business organization engage in
any other business activities or pursuits requiring his personal service that
materially conflict with his duties hereunder or the diligent performance of
such duties. This shall not, however, preclude Employee from serving on boards
of directors of other corporations; provided that such service does not conflict
with the duties of Employee hereunder or result in a conflict of interest.
4. COMPENSATION.
a. SALARY. During his employment hereunder, Employee shall be paid an
initial salary of $90,000 per year, payable in equal installments not less
than monthly ("Base Salary"). The Employee's Base Salary shall be reviewed
at least annually by the Board of Directors or any Committee of the Board
delegated the authority to review executive compensation.
b. BONUS. In addition to Base Salary, Employee shall be entitled to
participate in the Company's Stock Option Plan as amended and restated (the
"Stock Option Plan") and, in addition, to participate in a Management Bonus
Program to be established by the Company with an initial targeted bonus for
calendar year 1997 of $45,000 for Employee, based upon the achievement of
mutually agreed upon goals and objectives (hereafter the "Management Bonus
Program").
c. INSURANCE. During his employment hereunder, Employee shall be
entitled to participate in such health, life, disability and other
insurance programs, if any, that the Company may offer to other key
executive employees of the Company from time to time.
d. OTHER BENEFITS. During his employment hereunder, Employee shall
be entitled to such other benefits, if any, that the Company may offer to
other key executive employees of the Company from time to time.
e. VACATION. Employee shall be entitled to four weeks' vacation leave
(in addition to holidays) in each calendar year during the Term, or such
additional amount as may be set forth in the vacation policy that the
Company shall establish from time to time. Except with respect to vacation
time unused as the result of a written request by the Company to postpone a
vacation, any unused vacation from one calendar year shall not carry-over
to any subsequent calendar year.
f. EXPENSE REIMBURSEMENT. Employee shall, upon submission of
appropriate supporting documentation, be entitled to reimbursement of
reasonable out-of-pocket expenses incurred in the performance of his duties
hereunder in accordance with policies established by the Company. Such
expenses shall include, without limitation, reasonable travel and
entertainment expenses, gasoline and toll expenses and cellular phone use
charges, if such charges are directly related to the business of the
Company.
5. GROUNDS FOR TERMINATION.
The Board of Directors of the Company may terminate this Agreement for
any reason at any time including, without limitation, for "Cause." As used
herein, "Cause" shall mean any of the following: (i) failure on the part of
Employee to disclose to Company in writing on or before the date hereof
Employee's breach of or default under any employment, non-compete,
confidentiality or other agreement between Employee and any prior employer
of Employee (including without limitation any breach or default that might
result from Employee's entering into or performing his duties and
obligations under this Agreement); (ii) an act of willful misconduct or
gross negligence by Employee in the performance of his material duties or
obligations to the Company; (iii) indictment of Employee for a felony
involving moral turpitude, whether relating to his employment or otherwise;
(iv) an act of dishonesty or breach of trust on the part of Employee
resulting or intended to result directly or indirectly in personal gain or
enrichment at the expense of the Company; (v) conduct on the part of
Employee intended to injure the business of the Company; (vi) Employee's
2
addiction to any drug or chemical; (vii) Employee's insubordination unless
resulting from Employee's refusal to do an illegal act; (viii) a material
failure of Employee to perform or observe the provisions of this Agreement
(other than by reason of disability as defined herein). The existence of
any of the foregoing events or conditions, except under clause (iii), shall
be determined by the Board of Directors (excluding the Employee) in the
exercise of its reasonable judgment provided that if such occurrence
relates to section (i), (vi) or (viii) above, it must persist more than (a)
five (5) days after notice is given to Employee by personal delivery or (b)
ten (10) days after a notice is given to Employee by any other means, each
notice which details the occurrence. Notwithstanding the foregoing, if
occurrence under sections (ii), (v), (vii) or (viii) cannot reasonably be
remedied within the time periods set forth, the Board of Directors shall
not exercise its right to terminate under this section if Employee begins
to remedy the occurrence within the time period and continues actively and
diligently in good faith to completely remedy such occurrence. As used
herein "insubordination" means Employee failing to use his best efforts to
comply with a written directive made by the Company's Board of Directors
for any action or inaction not inconsistent with the duties set forth here.
6. TERMINATION BY EMPLOYEE.
Employee may terminate this Agreement with Good Reason. "Good Reason"
means:
a. At any time the Employee is required, without his written consent,
to relocate his office more than seventy-five miles from the principal location
of his employment on the date hereof;
b. The Company decreases the Employee's compensation below the levels
provided for by the terms of Section 4 (taking into account increases made from
time to time in accordance with Section 4);
c. A material breach of the provisions of this Agreement by the Company
(except those set forth in Paragraph ) and Employee provides at least 15 days
prior written notice to at least two members of the Company's Board of Directors
(other than Employee) of the existence of such breach and his intention to
terminate this Agreement (no such termination shall be effective if such breach
is cured during such period or if the Company is in good faith attempting to
cure such breach);
d. The failure of the Company to comply with the provisions of
Paragraph for an uninterrupted 10 day period; or
e. The Company materially reduces the Employee's benefits under any
employee benefit plan, program or arrangement of the Company (other than a
change that affects all employees similarly situated) from the level in effect
upon the Employee's commencement or participation.
3
7. PAYMENT AND OTHER PROVISIONS UPON TERMINATION.
a. In the event that: Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for Cause as provided in
Paragraph ; or Employee terminates his employment without Good Reason as
described in Paragraph ; then, on or before Employee's last day of
employment with the Company:
i. SALARY AND BONUS PAYMENTS: The Company shall pay in a lump sum
to Employee such amount of compensation due to Employee hereunder for
services rendered to the Company, as well as compensation for unused
vacation time, as has accrued but remains unpaid. Any and all other
rights granted to Employee under this Agreement shall terminate as of
the date of termination.
ii. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraph shall continue to apply with respect to Employee for a period
of one year following the date of termination.
b. In the event that: Employee's employment with the Company (including
its subsidiaries) is terminated by the Company for any reason other than
for Cause as provided in Paragraph and other than as a consequence of
Employee's death, disability, or normal retirement under the Company's
retirement plans and practices; or Employee terminates his employment with
Good Reason as described in Paragraph ; then:
i. SALARY AND BONUS PAYMENTS: On or before Employee's last day of
employment with the Company, the Company shall pay to Employee, as
compensation for services rendered to the Company, a cash amount equal
to the sum of (x) one-fourth (1/4) of the amount of Employee's Base
Salary and (y) ninety percent of one-fourth (1/4) of the amount of the
estimated target bonus under the Management Bonus Program as in effect
immediately prior to his date of termination (the "Cash Amount"). The
final calculation of Employee's target bonus shall be made, and any
remaining bonus amount due to Employee paid, in the manner set forth in
Section 7.a.i. At the election of the Company, the Cash Amount may be
paid to Employee in periodic installments in accordance with the
regular salary payment practices of the Company, with the first such
installment to be paid on or before Employee's last day of employment
with the Company. Notwithstanding the foregoing sentence, the entire
Cash Amount shall be paid to Employee during the period not to exceed
one year following Employee's last day of employment with the Company.
No interest shall be paid with respect to any of the Cash Amount not
paid on the Employee's date of termination.
ii. BENEFIT PLAN COVERAGE: The Company shall maintain in full
force and effect for Employee and his dependents for one year after the
date of termination, all life, health, accident, and disability benefit
plans and other similar employee benefit plans, programs and
arrangements in which Employee or his dependents were entitled to
participate immediately prior to the date of termination, in such
amounts as were in effect
4
immediately prior to the date of termination, provided that such
continued participation is possible under the general terms and
provisions of such benefit plans, programs and arrangements. In the
event that participation in any benefit plan, program or arrangement
described above is barred, or any such benefit plan, program or
arrangement is discontinued or the benefits thereunder materially
reduced, the Company shall arrange to provide Employee and his
dependents for one year after the date of termination with benefits
substantially similar to those that they were entitled to receive under
such benefit plans, programs and arrangements immediately prior to the
date of termination, or, at the Company's option, a lump sum payment to
Employee equal to the Company's cost immediately prior to termination
to provide such benefits. If immediately prior to the date of
termination the Company provided Employee with any club memberships,
Employee will be entitled to continue such memberships at his sole
expense. Notwithstanding any time period for continued benefits stated
in this Paragraph 7.b.ii, all benefits in this Paragraph 7.b.ii will
terminate on the date that Employee becomes an employee of another
employer and eligible to participate in the employee benefit plans of
such other employer. To the extent that Employee was required to
contribute amounts for the benefits described in this Paragraph 7.b.ii
prior to his termination, he shall continue to contribute such amounts
for such time as these benefits continue in effect after termination.
iii.[INTENTIONALLY OMITTED]
iv. SAVINGS AND OTHER PLANS: Except as otherwise more specifically
provided herein or under the terms of the respective plans relating to
termination of employment, Employee's active participation in any
applicable savings, retirement, profit sharing or supplemental employee
retirement plans or any deferred compensation or similar plan of the
Company or any of its subsidiaries shall continue only through the last
day of his employment. All other provisions, including any distribution
and/or vested rights under such plans, shall be governed by the terms
of those respective plans.
v. NONCOMPETITION/NONSOLICITATION PERIOD. The provisions of
Paragraph shall continue, beyond the time periods set forth in such
paragraph, to apply with respect to Employee for the shorter of (x)
twelve months following the date of termination or (y) until such time
as the Company has failed to comply with the provisions of Paragraph
for a an uninterrupted 10-day period and such failure is not cured
within 5 days after written notice of such failure is delivered to at
least two directors of the Company (other than Employee).
c. In the event that Employee terminates his employment with Good
Reason as described in Paragraph , the following provisions shall also
apply.
i. EXERCISABILITY OF STOCK OPTIONS. Notwithstanding the vesting
period provided for in the Stock Option Plan and any related stock
option agreements between the Company and Employee for stock options
("options") and stock appreciation rights ("rights")
5
granted Employee by the Company, all options and stock appreciation
rights shall be immediately exercisable upon termination of employment.
In addition, Employee will have the right to exercise all options and
rights for the shorter of (x) one year following his termination of
employment or (y) with respect to each option, the remainder of the
period of exercisability under the terms of the appropriate documents
that grant such options.
d. The provisions of this Paragraph shall apply if Employee's
employment is terminated prior to or more than two years after the
occurrence of a Change of Control (as defined in Paragraph ). From the
occurrence of any Change of Control until the second anniversary of such
Change of Control, the provisions of Paragraph shall apply in place of this
Paragraph , EXCEPT THAT in the event that after a Change of Control
Employee's employment is terminated by Employee without Good Reason or
Company terminates Employee for Cause, then the provisions of Paragraph
shall not apply and the provisions of Paragraph shall apply. Termination
upon death, disability and retirement are covered by Paragraphs , , and ,
respectively.
8. PAYMENT AND OTHER PROVISIONS AFTER CHANGE OF CONTROL.
a. SALARY, PERFORMANCE AWARD, AND BONUS PAYMENTS: In the event
Employee's employment with the Company is terminated within two years
following the occurrence of a Change of Control (other than as a
consequence of his death or disability, or of his normal retirement under
the Company's retirement plans and practices) either (x) by the Company for
any reason other than for Cause or (z) by Employee with Good Reason as
provided in Paragraph , then Employee shall be entitled to receive from the
Company, the following:
i. BASE SALARY. Employee's Base Salary as in effect at the date
of termination shall be paid on the date of termination;
ii. TARGET BONUS. Ninety percent of the amount of the Employee's
estimated target bonus under the Management Bonus Program for the
fiscal year in which the date of termination occurs shall be paid on
the date of termination; the final calculation of Employee's target
bonus shall be made, and any remaining bonus amount due to Employee
paid, in the manner set forth in Section 7.a.i.; and
iii. [OMITTED INTENTIONALLY]
iv. OTHER BENEFITS. All benefits under Paragraphs 7.b.ii, and
7.c.i shall be extended to Employee as described in such paragraphs.
b. NONCOMPETITION/NONSOLICITATION PERIOD. In the event of a termination
under Paragraph 8.a within one year after a Change of Control the
provisions of Paragraph 14 shall continue to apply as stated in paragraph
7.b.v.
6
c. For purposes of this Agreement, the term "Change of Control" shall
mean:
i. The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of ss. 13(d)(3) or ss.
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) (any of the foregoing
described in this Paragraph hereafter a "Person") of 33% or more of
either (a) the then outstanding shares of Capital Stock of the Company
(the "Outstanding Capital Stock") or (b) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Voting Securities"),
PROVIDED, HOWEVER, that any acquisition by (x) the Company or any of
its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or
(y) any Person that is eligible, pursuant to Rule 13d-1(b) under the
Exchange Act, to file a statement on Schedule 13G with respect to its
beneficial ownership of Voting Securities, whether or not such Person
shall have filed a statement on Schedule 13G, unless such Person shall
have filed a statement on Schedule 13D with respect to beneficial
ownership of 33% or more of the Voting Securities or (z) any
corporation with respect to which, following such acquisition, more
than 60% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Capital Stock and Voting Securities immediately prior to
such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the Outstanding
Capital Stock and Voting Securities, as the case may be, shall not
constitute a Change of Control; or
ii. Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the date hereof whose election or nomination for election
by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors
of the Company (as such terms are used in Rule 14a-11 of Regulation
14A, or any successor section, promulgated under the Exchange Act); or
iii. Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in
each case, with respect to which all or substantially all holders of
the Outstanding Capital Stock and Voting Securities immediately prior
to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then
7
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from Business Combination; or
iv. (a) a complete liquidation or dissolution of the Company or
(b) a sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to
which, following such sale or disposition, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Capital Stock and Voting Securities
immediately prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Capital Stock and
Voting Securities, as the case may be, immediately prior to such sale
or disposition.
9. TERMINATION BY REASON OF DEATH. If Employee shall die while employed by
the Company both prior to termination of employment and during the effective
term of this Agreement, all Employee's rights under this Agreement shall
terminate with the payment of that portion of Base Salary as has accrued but
remains unpaid and a prorated amount of targeted bonus under the Company's
Management Bonus Program through the month in which his death occurs, plus three
additional months of the fixed salary and targeted bonus. The calculation of
Employee's target bonus shall be made, and any bonus amount due to Employee
paid, in the manner set forth in Section 7.a.i. All benefits under Paragraphs
7.b.ii, 7.b.iv and 7.c.i shall be extended to Employee's estate as described in
such paragraphs. In addition, Employee's eligible dependents shall receive
continued benefit plan coverage under Paragraph 7.b.ii for three months from the
date of Employee's death.
10. TERMINATION BY DISABILITY. Employee's employment hereunder may be
terminated by the Company for disability. In such event, all Employee's rights
under this Agreement shall terminate with the payment of that portion of Base
Salary as has accrued but remains unpaid as of the thirtieth (30th) day after
such notice is given EXCEPT that all benefits under Paragraphs , and 7.c.i shall
be extended to Employee as described in such paragraphs, PROVIDED, HOWEVER,
that, with respect to Paragraph , the period for continued benefit plan coverage
shall be limited to six months from the date of termination. In addition, the
noncompetition and nonsolicitation provisions of Paragraph shall continue to
apply to Employee for a period of six months from the date of termination. For
purposes of this Agreement, "disability" is defined to mean that, as a result of
Employee's incapacity due to physical or mental illness:
a. Employee shall have been absent from his duties as an officer of
the Company on a substantially full-time basis for six (6) consecutive
months; and
b. Within thirty (30) days after the Company notifies Employee in
writing that it intends to replace him, Employee shall not have returned to
the performance of his duties as an officer of the Company on a full-time
basis.
8
11. RETIREMENT. It is expected that the Compensation Committee of the
Company's Board of Directors will develop a benefit plan for retirement. It is
expected that Employee's rights upon retirement will be specifically described
in such retirement benefit plan. If retirement benefits for Employee are not
specifically described in such plan, the Company shall provide Employee upon
retirement benefits no lesser than the highest level of benefits accorded any
other retiring executive officer during the five year period immediately
preceding Employee's retirement.
12. INDEMNIFICATION. If litigation shall be brought to enforce or interpret
any provision contained herein, the non-prevailing party shall indemnify the
prevailing party for reasonable attorney's fees (including those for
negotiations, trial and appeals) and disbursements incurred by the prevailing
party in such litigation, and hereby agrees to pay prejudgment interest on any
money judgment obtained by the prevailing party calculated at the generally
prevailing NationsBank of Florida, N.A. base rate of interest charged to its
commercial customers in effect from time to time from the date that payment(s)
to him should have been made under this Agreement.
13. [Intentionally Omitted]
14. NONCOMPETITION AND NONSOLICITATION.
a. The nature of the system and methods employed in the Company's
business is such that Employee will be placed in a close business and
personal relationship with the customers of the Company and be privy to
confidential customer usage and rate information. Accordingly, at all times
during the term of this Agreement and for a period of one (1) year
immediately following the termination of Employee's employment hereunder
(the "Noncompetition and Nonsolicitation Period") for any reason
whatsoever, and for such additional periods as may otherwise be set forth
in this Agreement in reference to this Paragraph 14, so long as the Company
continues to carry on the same business, Employee shall not, for any reason
whatsoever, directly or indirectly, for himself or on behalf of, or in
conjunction with, any other person, persons, company, partnership,
corporation or business entity:
i. Call upon, divert, influence or solicit or attempt to call
upon, divert, influence or solicit any customer or customers of
the Company nationwide;
ii. Divulge the names and addresses or any information concerning
any customer of the Company;
iii. Disclose any information or knowledge relating to the
Company, including but not limited to, the Company's system or
method of conducting business to any person, persons, firms,
corporations or other entities unaffiliated with the Company, for
any reason or purpose whatsoever;
9
iv. Own, manage, operate, control, be employed by, participate in
or be connected in any manner with the ownership, management,
operation or control of the same, similar or related line of
business as that carried on by the Company ("Competition") within
a radius of fifty (50) miles from Employee's principal office.
b. The time period covered by the covenants contained in this Paragraph
14 shall not include any period(s) of violation of any covenant or any period(s)
of time required for litigation to enforce any covenant.
c. The covenants set forth in this Paragraph 14 shall be construed as
an agreement independent of any other provision in this Agreement and existence
of any potential or alleged claim or cause of action of Employee against the
Company, whether predicted on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of the covenants contained herein.
An alleged or actual breach of the Agreement by the Company shall not be a
defense to enforcement of the provisions of this Paragraph 14.
d. Employee acknowledges that he has read the foregoing and agrees that
the nature of the geographical restrictions are reasonable given the
international nature of the Company's business. In the event that these
geographical or temporal restrictions are judicially determined to be
unreasonable, the parties agree that these restrictions shall be judicially
reformed to the maximum restrictions which are reasonable.
e. Notwithstanding anything to the contrary contained herein, in the
event that Employee engages in Competition, or any conduct expressly prohibited
by this Paragraph 14 at any time during the Noncompetition and Nonsolicitation
Period for any reason whatsoever, Employee shall not receive any of the
termination benefits he otherwise would be entitled to receive pursuant to
Paragraphs 7.b., 7.c., 8.a. and 10 hereof.
15. CONFIDENTIALITY.
a. NONDISCLOSURE. Employee acknowledges and agrees that the
Confidential Information (as defined below) is a valuable, special and
unique asset of the Company's business. Accordingly, except in connection
with the performance of his duties hereunder, Employee shall not at any
time during or subsequent to the term of his employment hereunder disclose,
directly or indirectly, to any person, firm, corporation, partnership,
association or other entity any proprietary or confidential information
relating to the Company or any information concerning the Company's
financial condition or prospects, the Company's customers, the design,
development, manufacture, marketing or sale of the Company's products or
the Company's methods of operating its business (collectively "Confidential
Information"). Confidential Information shall not include information
which, at the time of disclosure, is known or available to the general
public by publication or otherwise through no act or failure to act on the
part of Employee.
10
b. RETURN OF CONFIDENTIAL INFORMATION. Upon termination of Employee's
employment, for whatever reason and whether voluntary or involuntary, or at
any time at the request of the Company, Employee shall promptly return all
Confidential Information in the possession or under the control of Employee
to the Company and shall not retain any copies or other reproductions or
extracts thereof. Employee shall at any time at the request of the Company
destroy or have destroyed all memoranda, notes, reports, and documents,
whether in "hard copy" form or as stored on magnetic or other media, and
all copies and other reproductions and extracts thereof, prepared by
Employee and shall provide the Company with a certificate that the
foregoing materials have in fact been returned or destroyed.
c. BOOKS AND RECORDS. All books, records and accounts whether prepared
by Employee or otherwise coming into Employee's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company upon termination of Employee's employment hereunder or upon the
Company's request at any time.
16. INJUNCTION/SPECIFIC PERFORMANCE SETOFF. Employee acknowledges that a
breach of any of the provisions of Paragraphs or 15 hereof would result in
immediate and irreparable injury to the Company which cannot be adequately or
reasonably compensated at law. Therefore, Employee agrees that the Company shall
be entitled, if any such breach shall occur or be threatened or attempted, to a
decree of specific performance and to a temporary and permanent injunction,
without the posting of a bond, enjoining and restraining such breach by Employee
or his agents, either directly or indirectly, and that such right to injunction
shall be cumulative to whatever other remedies for actual damages to which the
Company is entitled. Employee further agrees that, except as otherwise provided
in Paragraph hereof, the Company may set off against or recoup from any amounts
due under this Agreement to the extent of any losses incurred by the Company as
a result of any breach by Employee of the provisions of Paragraphs
or hereof.
17. SEVERABILITY. Any provision in this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. SUCCESSORS. This Agreement shall be binding upon Employee and inure to
his and his estate's benefit, and shall be binding upon and inure to the benefit
of the Company and any permitted successor of the Company. Neither this
Agreement nor any rights arising hereunder may be assigned or pledged by:
Employee or anyone claiming through Employee; or by the Company, except to any
corporation which is the successor in interest to the Company by reason of a
merger, consolidation or sale of substantially all of the assets of the Company.
The foregoing sentence shall not be deemed to have any effect upon the rights of
Employee upon a Change of Control.
11
19. CONTROLLING LAW. This Agreement shall in all respects be governed by,
and construed in accordance with, the laws of the State of Florida.
20. NOTICES. Any notice required or permitted to be given hereunder shall
be written and sent by registered or certified mail, telecommunicated or hand
delivered at the address set forth herein or to any other address of which
notice is given:
To the Company: OutSource International, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attention: General Counsel
To Employee: Robert J. Mitchell
--------------------------------
--------------------------------
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter hereof and may not be modified
without the written agreement of both parties hereto.
22. WAIVER. A waiver by any party of any of the terms and conditions hereof
shall not be construed as a general waiver by such party.
23. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and both of which together shall constitute a
single agreement.
24. INTERPRETATION. In the event of a conflict between the provisions of
this Agreement and any other agreement or document defining rights and duties of
Employee or the Company upon Employee's termination, the rights and duties set
forth in this Agreement shall control.
25. CERTAIN LIMITATIONS ON REMEDIES. Paragraph provides that certain
payments and other benefits shall be received by Employee upon the termination
of Employee by the Company other than for Cause and states that these same
provisions shall apply if Employee terminates his employment for Good Reason. It
is the intention of this Agreement that if the Company terminates Employee other
than for Cause (and other than as a consequence of Employee's death, disability
or normal retirement) or if Employee terminates his employment with Good Reason,
then the payments and other benefits set forth in Paragraph shall constitute the
sole and exclusive remedies of Employee. This Paragraph 25 shall have no effect
upon the provisions of Paragraph of this Agreement.
12
IN WITNESS WHEREOF, this Employment Agreement has been executed by the
parties as of the date first above written.
COMPANY:
OUTSOURCE INTERNATIONAL, INC.
By:
Its:
EMPLOYEE:
Name: Robert Mitchell
13
EXHIBIT 10.16
OUTSOURCE INTERNATIONAL, INC.
STOCK OPTION PLAN
AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 1997
1. PURPOSE. The purpose of this Plan is to further the interests of
OutSource International, Inc., a Florida corporation, its subsidiaries and its
shareholders by providing incentives in the form of grants of stock options to
key employees and other persons who contribute materially to the success and
profitability of the Company. The grants will recognize and reward outstanding
individual performances and contributions and will give such persons a
proprietary interest in the Company, thus enhancing their personal interest in
the Company's continued success and progress. This program will also assist the
Company and its subsidiaries in attracting and retaining key persons. This Plan
is a continuation, in the form of an amendment and restatement, of an existing
plan previously known as the OutSource International, Inc. Incentive Stock
Option Plan.
2. DEFINITIONS. The following definitions shall apply to this Plan:
(A) "BOARD" means the board of directors of the Company.
(B) "CHANGE OF CONTROL" occurs when (i) any person, including
a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, becomes the beneficial owner of thirty percent or more of the total
number of shares entitled to vote in the election of directors of the Board,
(ii) the Company is merged into any other company or substantially all of its
assets are acquired by any other company, or (iii) three or more directors
nominated by the Board to serve as a director, each having agreed to serve in
such capacity, fail to be elected in a contested election of directors;
provided, however, that a Change of Control shall not occur as a result of the
financing provided by Triumph - Connecticut Limited Partnership and Bachow
Investment Partners III, L.P.
(C) "CODE" means the Internal Revenue Code of 1986, as
amended.
(D) "COMMITTEE" means the Stock Option Committee consisting
solely of two or more nonemployee directors appointed by the Board. In the event
that the Board does not appoint a Stock Option Committee, "Committee" means the
Board.
(E) "COMMON STOCK" means the Common Stock of the Company, or
such other class of shares or securities as to which the Plan may be applicable
pursuant to Section 9 herein.
(F) "COMPANY" means OutSource International, Inc., and any
wholly-owned subsidiary of OutSource International, Inc.
(G) "DATE OF GRANT" means the date specified in the resolution
of the Committee authorizing the grant of the Option.
(H) "ELIGIBLE PERSON" means any person who performs or has in
the past performed services for the Company or any direct or indirect partially
or wholly owned subsidiary thereof, whether as a director, officer, Employee,
consultant or other independent contractor, and any person who performs services
relating to the Company in his or her capacity as an employee or independent
contractor of a corporation or other entity that provides services for the
Company.
(I) "EMPLOYEE" means any person employed as a core employee of
the Company, excluding (i) any fee-for-service employee of the Company and (ii)
any leased or temporary employee of the Company who would be cost of sales for
financial reporting purposes.
(J) "FAIR MARKET VALUE" means the fair market value of the
Common Stock. If the Common Stock is not publicly traded on the date as of which
fair market value is being determined, the Board shall determine the fair market
value of the Shares, using such factors as the Board considers relevant, such as
the price at which recent sales have been made, the book value of the Common
Stock, and the Company's current and projected earnings. If the Common Stock is
publicly traded on the date as of which fair market value is being determined,
the fair market value is the mean between the high and low sales prices of the
Common Stock as reported by The NASDAQ Stock Market on that date or, if the
Common Stock is listed on a stock exchange, the mean between the high and low
sales prices of the stock on that date, as reported in THE WALL STREET JOURNAL.
If trading in the stock or a price quotation does not occur on the date as of
which fair market value is being determined, the next preceding date on which
the stock was traded or a price was quoted will determine the fair market value.
(K) "INCENTIVE STOCK OPTION" means a stock option granted
pursuant to either this Plan or any other plan of the Company that satisfies the
requirements of Section 422 of the Code and that entitles the Recipient to
purchase stock of the Company or in a corporation that at the time of grant of
the option was a parent or subsidiary of the Company or a predecessor
corporation of any such corporation.
(L) "NONQUALIFIED STOCK OPTION" means a stock option granted
pursuant to the Plan that is not an Incentive Stock Option and that entitles the
Recipient to purchase stock of the Company or in a corporation that at the time
of grant of the option was a parent or subsidiary of the Company or a
predecessor corporation of any such corporation.
(M) "OPTION" means an Incentive Stock Option or a Nonqualified
Stock Option granted pursuant to the Plan.
(N) "OPTION AGREEMENT" means a written agreement entered into
between the Company and a Recipient which sets out the terms and restrictions of
an Option granted to the Recipient.
2
(O) "OPTION SHAREHOLDER" shall mean an Employee who has
exercised his or her Option.
(P) "OPTION SHARES" means Shares issued upon exercise of an
Option.
(Q) "PLAN" means this OutSource International, Inc. Stock
Incentive Plan, as amended and restated.
(R) "RECIPIENT" means an individual who receives an Option.
(S) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(T) "SUBSIDIARY" means any corporation 50 percent or more of
the voting securities of which are owned directly or indirectly by the Company
at any time during the existence of this Plan.
3. ADMINISTRATION. This Plan will be administered by the Committee. The
Committee has the exclusive power to select the Recipients of Options pursuant
to this Plan, to establish the terms of the Options granted to each Recipient,
and to make all other determinations necessary or advisable under the Plan. The
Committee has the sole and absolute discretion to determine whether the
performance of an Eligible Person warrants an Option under this Plan, and to
determine the size and type of the Option. The Committee has full and exclusive
power to construe and interpret this Plan, to prescribe, amend, and rescind
rules and regulations relating to this Plan, and to take all actions necessary
or advisable for the Plan's administration. The Committee, in the exercise of
its powers, may correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, or in any Agreement, in the manner and to the extent
it shall deem necessary or expedient to make the Plan fully effective. In
exercising this power, the Committee may retain counsel at the expense of the
Company. The Committee shall also have the power to determine the duration and
purposes of leaves of absence which may be granted to a Recipient without
constituting a termination of the Recipient's employment for purposes of the
Plan. Any determinations made by the Committee will be final and binding on all
persons. A member of the Committee will not be liable for performing any act or
making any determination in good faith.
4. SHARES SUBJECT TO PLAN. Subject to the provisions of Section 9 of
the Plan, the maximum aggregate number of Shares that may be subject to Options
under the Plan shall be 1,543,858. If an Option should expire or become
unexercisable for any reason without having been exercised, the unpurchased
Shares that were subject to such Option shall, unless the Plan has then
terminated, be available for other Options under the Plan.
5. ELIGIBILITY. Any Eligible Person that the Committee in its sole
discretion designates is eligible to receive an Option under this Plan. The
Committee's grant of an Option to a Recipient in any year does not require the
Committee to grant an Option such Recipient in
3
any other year. Furthermore, the Committee may grant different Options to
different Recipients and has full discretion to choose whether to grant Options
to any Eligible Person. The Committee may consider such factors as it deems
pertinent in selecting Recipients and in determining the types and sizes of
their Options, including, without limitation, (i) the financial condition of the
Company or its Subsidiaries; (ii) expected profits for the current or future
years; (iii) the contributions of a prospective Recipient to the profitability
and success of the Company or its Subsidiaries; and (iv) the adequacy of the
prospective Recipient's other compensation. Recipients may include persons to
whom stock, stock options, stock appreciation rights, or other benefits
previously were granted under this or another plan of the Company or any
Subsidiary, whether or not the previously granted benefits have been fully
exercised or vested. A Recipient's right, if any, to continue to serve the
Company and its Subsidiaries as an officer, Employee, or otherwise will not be
enlarged or otherwise affected by his designation as a Recipient under this
Plan, and such designation will not in any way restrict the right of the Company
or any Subsidiary, as the case may be, to terminate at any time the employment
or affiliation of any participant.
6. OPTIONS. Each Option granted to a Recipient under the Plan shall
contain such provisions as the Committee at the Date of Grant shall deem
appropriate. Each Option granted to a Recipient will satisfy the following
requirements:
(A) WRITTEN AGREEMENT. Each Option granted to a Recipient will
be evidenced by an Option Agreement. The terms of the Option Agreement need not
be identical for different Recipients. The Option Agreement shall include a
description of the substance of each of the requirements in this Section 6 with
respect to that particular Option.
(B) NUMBER OF SHARES. Each Option Agreement shall specify the
number of Shares that may be purchased by exercise of the Option.
(C) EXERCISE PRICE. Except as provided in Section 6(l), the
exercise price of each Share subject to an Incentive Stock Option shall equal
the exercise price designated by the Committee on the Date of Grant, but shall
not be less than the Fair Market Value of the Share on the Incentive Stock
Option's Date of Grant. The exercise price of each Share subject to a
Nonqualified Stock Option shall equal the exercise price designated by the
Committee on the Date of Grant.
(D) DURATION OF OPTION. Except as provided in Section 6(l), an
Incentive Stock Option granted to an Employee shall expire on the tenth
anniversary of its Date of Grant or, at such earlier date as is set by the
Committee in establishing the terms of the Incentive Stock Option at grant.
Except as provided in Section 6(l), a Nonqualified Stock Option granted to an
Employee shall expire on the tenth anniversary of its Date of Grant or, at such
earlier or later date as is set by the Committee in establishing the terms of
the Nonqualified Stock Option at grant. If the Recipient's employment with the
Company terminates before the expiration date of an Option granted to the
Recipient, the Option shall expire on the earlier of the date stated
4
in this subsection or the date stated in following subsections of this Section.
Furthermore, expiration of an Option may be accelerated under subsection (j)
below.
(E) VESTING OF OPTION. Each Option Agreement shall specify the
vesting schedule applicable to the Option. The Committee, in its sole and
absolute discretion, may accelerate the vesting of any Option at any time.
(F) DEATH. Subject to the provisions of Section 7 of the Plan,
in the case of the death of a Recipient, an Incentive Stock Option granted to
the Recipient shall expire on the one-year anniversary of the Recipient's death,
or if earlier, the date specified in subsection (d) above. During the one-year
period following the Recipient's death, the Incentive Stock Option may be
exercised to the extent it could have been exercised at the time the Recipient
died, subject to any adjustment under Section 9 herein. Subject to the
provisions of Section 7 of the Plan, in the case of the death of a Recipient, a
Nonqualified Stock Option granted to the Recipient shall expire on the one-year
anniversary of the Recipient's death, or if earlier, the date specified in
subsection (d) above, unless the Committee sets an earlier or later expiration
date in establishing the terms of the Nonqualified Stock Option at grant or a
later expiration date subsequent to the Date of Grant but prior to the one-year
anniversary of the Recipient's death. During the period beginning on the date of
the Recipient's death and ending on the date the Nonqualified Stock Option
expires, the Nonqualified Stock Option may be exercised to the extent it could
have been exercised at the time the Recipient died, subject to any adjustment
under Section 9 herein.
(G) DISABILITY. Subject to the provisions of Section 7 of the
Plan, in the case of the total and permanent disability of a Recipient and a
resulting termination of employment or affiliation with the Company, an
Incentive Stock Option granted to the Recipient shall expire on the one-year
anniversary of the Recipient's last day of employment, or, if earlier, the date
specified in subsection (d) above. During the one-year period following the
Recipient's termination of employment or affiliation by reason of disability,
the Incentive Stock Option may be exercised as to the number of Shares for which
it could have been exercised at the time the Recipient became disabled, subject
to any adjustments under Section 9 herein. Subject to the provisions of Section
7 of the Plan, in the case of the total and permanent disability of a Recipient
and a resulting termination of employment or affiliation with the Company, a
Nonqualified Stock Option granted to the Recipient shall expire on the one-year
anniversary of the Recipient's last day of employment, or, if earlier, the date
specified in subsection (d) above, unless the Committee sets an earlier or later
expiration date in establishing the terms of the Nonqualified Stock Option at
grant or a later expiration date subsequent to the Date of Grant but prior to
the one-year anniversary of the Recipient's last day of employment or
affiliation with the Company. During the period beginning on the date of the
Recipient's termination of employment or affiliation by reason of disability and
ending on the date the Nonqualified Stock Option expires, the Nonqualified Stock
Option may be exercised as to the number of Shares for which it could have been
exercised at the time the Recipient became disabled, subject to any adjustments
under Section 9 herein.
5
(H) RETIREMENT. Subject to the provisions of Section 7 of the
Plan, if the Recipient's employment with the Company terminates by reason of
normal retirement under the Company's normal retirement policies, an Incentive
Stock Option granted to the Recipient shall expire 90 days after the last day of
employment, or, if earlier, on the date specified in subsection (d) above.
During the 90-day period following the Recipient's normal retirement, the
Incentive Stock Option may be exercised as to the number of Shares for which it
could have been exercised on the retirement date, subject to any adjustment
under Section 9 herein. Subject to the provisions of Section 7 of the Plan, if
the Recipient's employment with the Company terminates by reason of normal
retirement under the Company's normal retirement policies, a Nonqualified Stock
Option granted to the Recipient shall expire 90 days after the last day of
employment, or, if earlier, on the date specified in subsection (d) above,
unless the Committee sets an earlier or later expiration date in establishing
the terms of the Nonqualified Stock Option at grant or a later expiration date
subsequent to the Date of Grant but prior to the end of the 90- day period
following the Recipient's normal retirement. During the period beginning on the
date of the Recipient's normal retirement and ending on the date the
Nonqualified Stock Option expires, the Nonqualified Stock Option may be
exercised as to the number of Shares for which it could have been exercised on
the retirement date, subject to any adjustment under Section 9 herein.
(I) TERMINATION OF SERVICE. Subject to the provisions of
Section 7 of the Plan, if the Recipient ceases employment or affiliation with
the Company for any reason other than death, disability, or retirement (as
described above), an Incentive Stock Option granted to the Recipient shall
expire 90 days after the Recipient's last day of employment or affiliation with
the Company, or, if earlier, on the date specified in subsection (d) above,
unless the Committee sets an earlier expiration date in establishing the terms
of the Incentive Stock Option at grant. During the 90-day period following the
termination of the Recipient's employment or affiliation with the Company, the
Incentive Stock Option may be exercised as to the number of Shares for which it
could have been exercised on the date of termination, subject to any adjustment
under Section 9 herein. Subject to the provisions of Section 7 of the Plan, if
the Recipient ceases employment or affiliation with the Company for any reason
other than death, disability, or retirement (as described above), a Nonqualified
Stock Option granted to the Recipient shall expire 90 days after the Recipient's
last day of employment or affiliation with the Company, or, if earlier, on the
date specified in subsection (d) above, unless the Committee sets an earlier or
later expiration date in establishing the terms of the Nonqualified Stock Option
at grant or a later expiration date subsequent to the Date of Grant but prior to
the end of the 90-day period following the Recipient's last day of employment or
affiliation with the Company. During the period following the termination of the
Recipient's employment or affiliation with the Company, the Nonqualified Stock
Option may be exercised as to the number of Shares for which it could have been
exercised on the date of termination, subject to any adjustment under Section 9
herein. Notwithstanding any provisions set forth herein or in the Plan, if the
Recipient shall (i) commit any act of malfeasance or wrongdoing affecting the
Company or any parent or subsidiary, (ii) breach any covenant not to compete or
employment agreement with the Company or any parent or Subsidiary, or (iii)
engage in conduct that would warrant the Recipient's discharge for cause,
6
any unexercised part of the Option shall lapse immediately upon the earlier of
the occurrence of such event or the last day the Recipient is employed by the
Company.
(J) CHANGE OF CONTROL. If a Change of Control occurs, the
Board may vote to immediately terminate all Options outstanding under the Plan
as of the date of the Change of Control or may vote to accelerate the expiration
of the Options to the tenth day after the effective date of the Change of
Control. If the Board votes to immediately terminate the Options, it shall make
a cash payment to the Recipient equal to the difference between the Exercise
Price and the Fair Market Value of the Shares that would have been subject to
the terminated Option on the date of the Change of Control.
(K) CONDITIONS REQUIRED FOR EXERCISE. Options granted to
Recipients under the Plan shall be exercisable only to the extent they are
vested according to the terms of the Option Agreement. Furthermore, Options
granted to Employees under the Plan shall be exercisable only if the issuance of
Shares pursuant to the exercise would be in compliance with applicable
securities laws, as contemplated by Section 8 of the Plan. Each Agreement shall
specify any additional conditions required for the exercise of the Option.
(L) TEN PERCENT SHAREHOLDERS. An Incentive Stock Option
granted to an individual who, on the Date of Grant, owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
either the Company or any parent or Subsidiary, shall be granted at an exercise
price of 110 percent of Fair Market Value on the Date of Grant and shall be
exercisable only during the five-year period immediately following the Date of
Grant. In calculating stock ownership of any person, the attribution rules of
Code Section 424(d) will apply. Furthermore, in calculating stock ownership, any
stock that the individual may purchase under outstanding options will not be
considered.
(M) MAXIMUM OPTION GRANTS. The aggregate Fair Market Value,
determined on the Date of Grant, of stock in the Company with respect to which
any Incentive Stock Options under the Plan and all other plans of the Company or
its Subsidiaries (within the meaning of Section 422(b) of the Code) may become
exercisable by any individual for the first time in any calendar year shall not
exceed $100,000.
(N) METHOD OF EXERCISE. An Option granted under this Plan
shall be deemed exercised when the person entitled to exercise the Option (i)
delivers written notice to the President of the Company (or his delegate, in his
absence) of the decision to exercise, (ii) concurrently tenders to the Company
full payment for the Shares to be purchased pursuant to the exercise, and (iii)
complies with such other reasonable requirements as the Committee establishes
pursuant to Section 8 of the Plan. Payment for Shares with respect to which an
Option is exercised may be made in cash, or by certified check, or wholly or
partially in the form of Common Stock having a Fair Market Value equal to the
exercise price, or by delivery of a notice instructing the Company to deliver
the shares being purchased to a broker subject to the broker's delivery of cash
to the Company equal to the purchase price. No person will have the rights of a
shareholder with respect to Shares subject to an Option granted under this Plan
7
until a certificate or certificates for the Shares have been delivered to him. A
partial exercise of an Option will not affect the holder's right to exercise the
Option from time to time in accordance with this Plan as to the remaining Shares
subject to the Option.
(O) LOAN FROM COMPANY TO EXERCISE OPTION. The Committee may,
in its discretion and subject to the requirements of applicable law, recommend
to the Company that it lend the Recipient the funds needed by the Recipient to
exercise an Option. The Recipient shall make application to the Company for the
loan, completing the forms and providing the information required by the
Company. The loan shall be secured by such collateral and be subject to such
repayment terms and interest rate as the Company may require, subject to its
underwriting requirements and the requirements of applicable law. The Recipient
shall execute a Promissory Note and any other documents deemed necessary by the
Committee.
(P) DESIGNATION OF BENEFICIARY. Each Recipient shall
designate, in the Option Agreement he executes, a beneficiary to receive Options
awarded hereunder in the event of his death prior to full exercise of such
Options; provided, that if no such beneficiary is designated or if the
beneficiary so designated does not survive the Recipient, the estate of such
Recipient shall be deemed to be his beneficiary. Recipients may, by written
notice to the Committee, change the beneficiary designated in any outstanding
Option Agreements.
(Q) TRANSFERABILITY OF OPTION.
(1) To the extent permitted by tax, securities or
other applicable laws to which the Company, the Plan, Recipients or Eligible
Persons are subject, a Recipient of a Nonqualified Stock Option may transfer
such Option to (i) the Recipient's spouse, child, grandchild or parent, (ii) a
trust for the benefit of the Recipient's spouse, child, grandchild or parent, or
(iii) a partnership whose partners consist solely of the Recipient's spouse,
child, grandchild or parent, unless provided otherwise by the Committee in
establishing the terms of such Option at the Date of Grant.
(2) An Incentive Stock Option granted under this
Plan is not transferable except by will or the laws of descent and distribution.
During the lifetime of the Recipient, all rights of the Incentive Stock Option
are exercisable only by the Recipient. This Section 6(q)(2) shall apply to an
Incentive Stock Option granted under the Plan only so long as Code Section 422
(or a successor Code provision) requires application of this restriction on
transferability. In the event that this Section 6(q)(2) no longer applies to an
Incentive Stock Option granted under this Plan, such Option shall be subject to
Section 6(q)(1) of the Plan.
7. DEFERRED COMPENSATION.
(A) In the event that an Option becomes unexercisable or
expires in accordance with Section 6(f), Section 6(g), Section 6(h) Section 6(i)
or Section 11(b) of the Plan prior to a successful completion of an initial
public offering, the Recipient, or if applicable, the Recipient's legal
representative, heirs or beneficiary, shall be entitled to receive, subject to
all
8
applicable payroll taxes and in lieu of exercising the Option, an amount equal
to fifty percent of the increase, if any, of the Fair Market Value of the
Recipient's Vested Option Shares from the Date of Grant to the last day of the
Company's taxable year immediately preceding or coincident with the date on
which the Option becomes unexercisable or expires. Such Deferred Compensation
shall be payable in twelve equal monthly installments, without interest,
commencing three (3) months following the date on which the Option becomes
unexercisable or expires.
(B) For purposes of this Agreement, a successful completion of
an initial public offering by the Company shall mean the closing of an
underwritten public offering by the Company pursuant to a registration statement
filed and declared effective under the Securities Act of 1933, as amended,
covering the offer and sale of the Company's common stock for the account of the
Company.
(C) Upon commencement of payments to a Recipient, or if
applicable, a Recipient's legal representative, heirs or beneficiary, pursuant
to this Section 7, all Options granted to such Recipient shall be deemed
terminated.
8. TAXES; COMPLIANCE WITH LAW; APPROVAL OF REGULATORY BODIES; LEGENDS.
The Company shall have the right to withhold from payments otherwise due and
owing to the Recipient (or his beneficiary) or to require the Recipient (or his
beneficiary) to remit to the Company in cash upon demand an amount sufficient to
satisfy any federal (including FICA and FUTA amounts), state, and/or local
withholding tax requirements at the time the Recipient (or his beneficiary)
recognizes income for federal, state, and/or local tax purposes with respect to
any Option under this Plan.
Options can be granted, and Shares can be delivered under this Plan,
only in compliance with all applicable federal and state laws and regulations
and the rules of all stock exchanges on which the Company's stock is listed at
any time. An Option is exercisable only if either (a) a registration statement
pertaining to the Shares to be issued upon exercise of the Option has been filed
with and declared effective by the Securities and Exchange Commission and
remains effective on the date of exercise, or (b) an exemption from the
registration requirements of applicable securities laws is available. This Plan
does not require the Company, however, to file such a registration statement or
to assure the availability of such exemptions. Any certificate issued to
evidence Shares issued under the Plan may bear such legends and statements, and
shall be subject to such transfer restrictions, as the Committee deems advisable
to assure compliance with federal and state laws and regulations and with the
requirements of this Section. No Option may be exercised, and Shares may not be
issued under this Plan, until the Company has obtained the consent or approval
of every regulatory body, federal or state, having jurisdiction over such
matters as the Committee deems advisable.
Each person who acquires the right to exercise an Option may be
required by the Committee to furnish reasonable evidence of ownership of the
Option as a condition to his
9
exercise of the Option. In addition, the Committee may require such consents and
releases of taxing authorities as the Committee deems advisable.
With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934 ("1934 Act"), transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 under the 1934 Act, as such
Rule may be amended from time to time, or its successor under the 1934 Act. To
the extent any provision of the Plan or action by the Plan administrators fails
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Plan administrators.
9. ADJUSTMENT UPON CHANGE OF SHARES. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
shares, stock split, stock dividend, rights offering, or other expansion or
contraction of the Common Stock of the Company occurs, the number and class of
Shares for which Options are authorized to be granted under this Plan, the
number and class of Shares then subject to Options previously granted to
Employees under this Plan, and the price per Share payable upon exercise of each
Option outstanding under this Plan shall be equitably adjusted by the Committee
to reflect such changes. To the extent deemed equitable and appropriate by the
Board, subject to any required action by shareholders, in any merger,
consolidation, reorganization, liquidation or dissolution, any Option granted
under the Plan shall pertain to the securities and other property to which a
holder of the number of Shares of stock covered by the Option would have been
entitled to receive in connection with such event.
10. LIABILITY OF THE COMPANY. The Company, its parent and any
Subsidiary that is in existence or hereafter comes into existence shall not be
liable to any person for any tax consequences incurred by a Recipient or other
person with respect to an Option.
11. AMENDMENT AND TERMINATION OF PLAN.
(A) The Board may alter, amend, or terminate this Plan from
time to time without approval of the shareholders of the Company. The Board may,
however, condition any amendment on the approval of the shareholders of the
Company if such approval is necessary or advisable with respect to tax,
securities or other applicable laws to which the Company, the Plan, Recipients
or Eligible Persons are subject. Any amendment, whether with or without the
approval of shareholders of the Company, that alters the terms or provisions of
an Option granted before the amendment (unless the alteration is expressly
permitted under this Plan) will be effective only with the consent of the
Recipient to whom the Option was granted or the holder currently entitled to
exercise it.
(B) Subject to the provisions of Section 7 of the Plan, if the
Company fails to successfully complete an initial public offering by January 1,
1999, all Options granted under the Plan shall expire immediately on January 1,
1999.
10
12. EXPENSES OF PLAN. The Company shall bear the expenses of
administering the Plan.
13. DURATION OF PLAN. Options may be granted under this Plan only
during the 10 years immediately following the effective date of this Plan.
14. APPLICABLE LAW. The validity, interpretation, and enforcement of
this Plan are governed in all respects by the laws of Florida and the United
States of America.
15. EFFECTIVE DATE. The effective date of this Plan, as amended and
restated, shall be the earlier of (i) the date on which the Board adopts the
Plan or (ii) the date on which the Shareholders approve the Plan.
Adopted by the Board of Directors on
February 18, 1997 (original Plan
adopted by the Board of Directors
on December 22, 1995).
Approved by the Shareholders on
April 15, 1997 (original Plan
approved by the Shareholders
on December 22, 1995).
11
EXHIBIT 10.17
BUSINESS LEASE
THIS LEASE, made the 19th day of October, 1995, between DANIEL S. CATALFUMO, as
Trustee under F.S. 689.071, having an office at West Palm Beach, Florida,
(hereinafter referred to as "Landlord"), and OUTSOURCE INTERNATIONAL, INC. an
Illinois corporation (hereinafter referred to as "Tenant").
WITNESSETH, That Landlord does this day lease unto Tenant Approximately 40,000
Square Feet in that certain two (2) story Office project to be known as
Outsource International Corporate Headquarters building (sometimes referred to
herein as the "Building") to be located on portions of Lots 11, 12, 13, 14 and
15 of Newport Center, comprised of approximately 4.5 acres (net of submerged
lands) in Deerfield Beach, Florida (sometimes referred to herein as the "Site").
The Site and Building shall be developed and constructed substantially in
accordance with the Site Plan dated September 26, 1995 prepared by Avirom/Hall &
Associates, Inc. and the Workletter Estimates and Specifications for Site Work
and Building shell for Outsource International as modified by Revised Building
Questionnaire dated September 11, 1995, letter dated September 15, 1995 and
Typical Material Specifications all as attached hereto as composite Exhibit "A".
The Premises shall be used and occupied by the Tenant as office space and
ancillary office uses such as a kitchen and dining area for limited food service
for employee and guests, video conference facilities, meeting rooms and for no
other purposes or uses whatsoever. The Premises occupied by Tenant shall be
measured upon completion of construction in accordance with Paragraph 1 of the
Addendum to this Lease. Tenant shall lease 15,000 +/- square feet on the first
floor (which shall include the lobby and core areas) and 25,000 +/- square feet
on the second floor (which shall include the lobby and core areas). Tenant shall
be entitled to use the two (2) story atrium lobby as its reception area,
provided that other tenant's who lease space in the 10,000 square foot balance
of the Building shall be entitled to use the lobby to access their offices. The
atrium lobby shall be comprised of no more than 1,000 square feet on each of the
first and second floors for a total of 2,000 square feet.
TERM: The period commencing on the date hereof, and ending at midnight of the
last day of month in which the fifteenth anniversary of the Rent Commencement
Date occurs.
COMMENCEMENT DATE: Rent payments will commence on the first to occur of (i) the
date on which Landlord releases the demised Premises to Tenant and a Certificate
of Occupancy and/or a Building Final has been issued, and keys delivered to
Tenant, and all common uses, parking facilities and landscaping improvements
have been completed, minor punchlist items excepted or, (ii) in the event that
the issuance of a Certificate of Occupancy and/or a Building Final for Tenant's
space is delayed by the unavailability of any of Tenant's equipment or specially
ordered interior finishes, or the failure by Tenant to provide any required
consent, approval, selection or payment, rent payments due hereunder shall
commence when Landlord's contractor has otherwise completed said Tenant's
interior improvements, building exterior, common areas, parking facilities and
landscaping to the extent possible without the unavailable equipment, Tenant
finish materials or the required consent, approval, selection or payment.
Landlord shall give Tenant ninety (90) days prior written notice of the expected
date of rent commencement.
$ SEE ADDENDUM _________________($___________) MONTHLY BASE RENT
$ SEE ADDENDUM _________________($___________) MONTHLY BASE C.A.E.
$ SEE ADDENDUM _________________($___________) MONTHLY SALES TAX
Total monthly rent, (Base Rent and additional rent) shall be paid in equal
installments of $ SEE ADDENDUM, on the first day of each month during the term
hereof. Rent for partial months shall be prorated. Rent shall be paid promptly
when due without setoff, deduction, abatement or counterclaim.
Landlord hereby acknowledges receipt of $73,000.00, of which $36,500.00 is to be
applied to the SECURITY DEPOSIT and $36,500.00 of which is to be applied to
FIRST MONTH'S RENT when it becomes due, and $-0- to be applied to LAST MONTH'S
RENT at the end of the Lease Term. The $36,500.00 to be applied to the first
month's rent shall be credited with interest at BankAtlantic's prevailing money
market rates from the date of deposit with Landlord to the date said sum is
applied to the first month's rent hereunder with Tenant to receive a credit
against the Additional Rent due from any such interest credited to Tenant.
ALL payments to be made to Landlord on the first day of each and every month in
advance without demand at the office of CATALFUMO MANAGEMENT AND INVESTMENT,
INC., 1540 Latham Road, West Palm Beach, Florida 33409, or at such other place
and to such other person, as the Landlord may from time to time designate in
writing. Checks should be made PAYABLE TO:
Daniel S. Catalfumo, as Trustee under F.S. 689.071
The following express stipulations and conditions are made a part of this Lease
and are hereby assented to by the Tenant:
1
FIRST: The Tenant shall not assign this Lease, nor sub-let the
Premises, or any part thereof nor use the same, or any part thereof, nor permit
the same, or any part thereof, to be used for any other purpose than as above
stipulated, nor make any alterations therein, and all additions thereto, without
the written consent of the landlord, which consent shall not be unreasonably
withheld, provided that notwithstanding any approval of Landlord to any proposed
assignment or subletting, Tenant and all guarantors shall remain primarily
liable under this Lease and any guaranty hereof. Landlord agrees that Tenant
shall grant its consent to any assignment to a parent, subsidiary or affiliate
of Tenant provided that Tenant and the Guarantors of this Lease remain liable as
set forth above. All additions, fixtures or improvements which may be made by
Tenant, except movable office furniture, equipment and trade fixtures shall
become the property of the Landlord and remain upon the Premises as a part
thereof, and be surrendered with the Premises at the termination of this Lease.
Tenant shall be entitled to remove its moveable office furniture, equipment and
any trade fixtures it installs in the Premises provided that Tenant shall be
responsible for any damages to the Premises caused by Tenant's removal of such
furniture, equipment and fixtures.
SECOND: All personal property placed or moved in the Premises above
described shall be at the risk of Tenant or owner thereof, and Landlord shall
not be liable for any damage to said personal property, or to the Tenant arising
from the bursting or leaking of water pipes, unless caused by the faulty
construction, materials or design by Landlord's contractor, architects or
engineers or from any act of negligence of any co-tenant or occupants of the
Building or of any other person whomsoever, other than Landlord or his agent(s)
or assigns.
THIRD: That the Tenant(s) shall promptly execute and comply with all
statutes, ordinances, rules, regulations, orders and requirements of the
Federal, State and City Government and of any and all of their Departments and
Bureaus applicable to said Premises, for the correction, prevention, and
abatement of nuisances or other grievances, in, upon, or connected with said
Premises during said term; and shall also promptly comply with and execute all
rules, orders and regulations for the prevention of fires, at its own cost and
expense. Landlord shall comply with all of such statutes, ordinances, rules,
regulations, orders and requests as to the portion of the Building not occupied
by Tenant and the common areas surrounding the Building.
FOURTH: In the event the Premises shall be destroyed or so damaged or
injured by fire or other casualty during the life of this agreement, whereby the
same shall be rendered untenable, then the Landlord shall have the right to
render said Premises tenantable by repairs within one hundred eighty (180) days
therefrom. if said Premises are not rendered tenantable within said time, it
shall be optional with either party hereto to cancel this Lease, and in the
event of such cancellation the rent shall be paid only to the date of such fire
or casualty. The cancellation herein mentioned shall be evidenced in writing. In
the event of such fire or casualty to the Premises or the Building, the Landlord
shall give notice thereof to the Tenant within sixty (60) days of the occurrence
of the same. Said notice shall contain Landlord's agreement to either restore
the Premises and the Building to a similar condition as it was prior to such
casualty, or, in the event the casualty renders the Premises and/or the Building
untenable for Tenant's business, the Landlord may elect to terminate the Lease
as of the date of the casualty and return all unapplied rents and deposits to
Tenant as of the casualty date. In the event the Landlord elects to restore,
such restoration shall be completed within one hundred eighty (180) days from
the date of such casualty, and during the period of such restoration, the rent
to be paid by the Tenant to Landlord shall abate proportionately as to the
untenable space, to the same extent as Tenant has been deprived use of the
Premises and or the Building during the period of such restoration.
Notwithstanding the foregoing, in the event the casualty should occur through
the negligence of Tenant or its agents, or invitees, and the result of such
casualty renders the Premises untenable for Tenant's business operation and
Landlord elects to restore said Premises, then in such event, Landlord shall
proceed to restore the Premises as provided for herein, however, there shall be
no abatement of rent during such restoration period.
FIFTH: The prompt payment of the rent for said Premises upon the dates
named, and the faithful observance of the Rules and Regulations printed upon
this lease, and which are hereby made a part of this covenant, and of such other
and further Rules or Regulations as may be hereafter made by the Landlord, and
all other provisions of this Lease are the conditions upon which the Lease is
made and accepted and any failure on the part of the Tenant to comply with the
terms of said Lease, or any of said Rules and Regulations now in existence, or
which may be hereafter prescribed by the Landlord, shall at the option of the
Landlord, operate as a default by Tenant, and Landlord shall be entitled to
pursue any and all remedies available to Landlord under the laws of the State of
Florida. Landlord shall not make any modifications to the Rules and Regulations
which would have a material adverse effect on Tenant's operations without
Tenant's prior written consent.
SIXTH: If the Tenant shall abandon or vacate said Premises before the
end of the term of this Lease, or shall suffer the rent to be in arrears beyond
any grace period provided for herein, the Landlord may, at his option, forthwith
cancel this Lease or he may enter said Premises as the agent of the Tenant,
without being liable in any way therefor, and relet the Premises with or without
any furniture that may be therein, as the agent of the Tenant, at such price and
upon such terms and for such duration of time as the Landlord may determine, and
receive the rent therefor, applying the same to the payment of the rent
2
due by these presents, and if the full rental herein provided shall not be
realized by Landlord over and above the expenses to Landlord in such re-letting,
the said Tenant shall pay any deficiency.
SEVENTH: Landlord and Tenant acknowledge and agree that the prevailing
party in any litigation arisen hereunder shall be entitled to recover its
reasonable attorneys' fees and costs from the non-prevailing party, including
those incurred upon appeal.
EIGHTH: The Tenant agrees that he will pay all charges for rent
(including Base Rent and additional rent), gas, electricity or other utilities
and for all water used on said Premises, and should said rent remain due and
unpaid for five (5) days after the same shall come due or should any of said
other charges herein provided for at any time remain due and unpaid for fifteen
(15) days after the same shall have become due, Tenant will be deemed in default
of the terms and conditions of this Lease and the Landlord may at its option
pursue any and all remedies provided for under the laws of the State of Florida.
Tenant shall be entitled to establish an escrow with Landlord and contest any
utility charges which Tenant is actively disputing.
NINTH: INTENTIONALLY OMITTED.
TENTH: The Landlord, or any of his agents, shall have the right to
enter said Premises during all reasonable hours, to examine the same to make
such repairs, additions or alterations as may be deemed necessary for the
safety, comfort, or preservation thereof, or of said Building, or to exhibit
said Premises, and to put or keep upon the doors or windows thereof a notice
"FOR LEASE" at any time within one hundred eighty (180) days before the
expiration of this Lease. The right of entry shall likewise exist during all
reasonable hours for the purpose of removing placards, signs, fixtures,
alterations or additions, which do not conform to this agreement, or to the
Rules and Regulations and sign criteria for the Building.
ELEVENTH: Upon completion of construction of the Premises in accordance
with this Lease and the Addendum hereto, Tenant shall accept the Premises in the
condition they are in at the time of completion and agrees to maintain said
Premises in the same condition, order and repair as they are at the commencement
of said term, excepting only reasonable wear and tear arising from the use
thereof under this agreement, and to make good to said Landlord immediately upon
demand, any damage to water apparatus, or electric lights or any fixture,
appliances or appurtenances of said Premises, or of the Building, beyond
ordinary wear and tear caused by any act or negligence of Tenant, his employees,
agents or assigns or invitees.
TWELFTH: It is expressly agreed and understood by and between the
parties to this agreement, that the Landlord shall not be liable for any damage
or injury by water, which may be sustained by Tenant or other person or for any
other damage or injury resulting from the carelessness, negligence, or improper
conduct on the part of any other tenant or its agents, or employees or by reason
of the breakage, leakage, or obstruction of the water, sewer or soil pipes, or
other leakage in or about the Building unless the damage is caused by the faulty
workmanship, materials or designs of Landlord's contractor, architect or
engineer.
THIRTEENTH: If the Tenant shall become insolvent or if bankruptcy
proceedings shall be begun by or against the Tenant, before the end of said term
the Landlord is hereby irrevocably authorized at its option, to forthwith cancel
this Lease, as for a default. Landlord may elect to accept rent from such
receiver, trustee, or other judicial officer during the term of their occupancy
in their fiduciary capacity without affecting Landlord's rights as contained in
this contract, but no receiver, trustee or other judicial officer shall ever
have any right, title or interest in or to the above described property by
virtue of this contract.
FOURTEENTH: This contract shall bind the Landlord and its assigns or
successors, and the permitted assigns, or successors as the case may be, of the
Tenant.
FIFTEENTH: It is understood and agreed between the parties hereto that
time is of the essence of this contract and this applies to all terms and
conditions contained herein.
SIXTEENTH: It is understood and agreed between the parties that written
notice hand delivered, delivered by nationally recognized overnight courier or
delivered certified mail to the Premises leased hereunder shall constitute
sufficient notice to the Tenant and written notice hand delivered, delivered by
nationally recognized overnight courier or certified mail delivered to the
office of the Landlord shall constitute sufficient notice to the Landlord, to
comply with the terms of this Lease.
SEVENTEENTH: The rights of the Landlord under the foregoing shall be
cumulative, and failure on the part of the Landlord to exercise promptly any
rights given hereunder shall not operate to forfeit any of the said rights.
EIGHTEENTH: INTENTIONALLY OMITTED.
NINETEENTH: It is hereby understood and agreed that any signs or
advertising to be used, including awnings, in connection with the Premises
leased hereunder shall be first submitted to the
3
Landlord the Architectural Review Board and the City of Deerfield Beach for
approval before installation of same. Landlord agrees not to unreasonably
withhold its consent to any such signs or advertising, provided that they meet
ARB and City requirements and Codes.
TWENTIETH: INTENTIONALLY OMITTED.
TWENTY-FIRST: Tenant shall not do anything in or on the Premises or
bring or keep anything therein which will in any way increase risk of fire or
rate of fire insurance, or which shall conflict with regulations of Broward
County or with any insurance policy on the Building or any part thereof or with
any rules or ordinances established by the Board of Health.
TWENTY-SECOND: Any and all deliveries to the leased Premises shall be
permitted only at the rear of the Building or, if in front of the Building,
should be made in such a way as not to block traffic.
TWENTY-THIRD: Landlord reserves the right to designate parking areas
for Tenant and Tenant's employees. Under no condition is Tenant or its employees
to park in any other tenant's parking spaces. Parking of vehicles blocking
ingress and egress areas is prohibited. Parked vehicles are not to be of any
type to create a nuisance to the Landlord or other Tenants. Parking parallel and
adjacent to the Building is prohibited. Improperly parked cars may be towed by
Landlord at owner's expense. Landlord agrees that the parking areas surrounding
the Building shall be assigned to Tenant and the other tenant's in the Building
in an equitable prorate basis substantially as set forth on Exhibit "B" attached
with the tenant(s) other than Tenant to be entitled to fifty-four 54 parking
spaces located substantially as set forth on Exhibit "B"
TWENTY-FOURTH: There will be a LATE CHARGE for any rent not received in
our office by THE 5TH DAY OF THE MONTH. The LATE CHARGE will be 5% of the
monthly rent. in addition, payments overdue for more than fifteen (15) days
shall accrue interest at the rate of 12% per annum.
TWENTY-FIFTH: Maintenance and repairs of the ventilation,
air-conditioning and heat serving the Premises including the lobby and other
"core areas" located within the Premises, shall be the responsibility of the
Tenant. An annual contract, paid for by Tenant, and entered into by Tenant with
a company fully licensed in the State of Florida, shall provide for regular
monthly service for changing belts, filters, other required parts, emergency
service and the making of extraordinary repairs, and a copy of the contract
shall be furnished to the Landlord promptly upon occupancy of the demised
Premises and a copy of the maintenance log shall be furnished to the Landlord at
the end of each calendar year. Landlord shall assign to Tenant or enforce on
Tenant's behalf any and all warranties with respect to the HVAC system from both
the HVAC subcontractor and Landlord's contractor.
TWENTY-SIXTH: INTENTIONALLY OMITTED.
TWENTY-SEVENTH: Tenant shall pay, in addition to the Base Rents
reserved herein, "Additional Rent" which includes the following: (a) any and all
sales taxes imposed on the Base Rent and Additional Rent provided for herein;
(b) its proportionate share of the reasonable expenses for the maintenance,
operation and management of the Building and the common areas located in and
around the Building in which the Premises are located including, without
limitation, the parking areas, sidewalks, landscaping, and electrical, lighting
and mechanical systems serving the Premises. Tenant's proportionate share shall
be 80% (adjusted for changes in the numerator or denominator which arise from
any casualty loss or condemnation loss to the Building and/or Premises) based
upon the gross leasable area in the Premises divided by the gross leasable area
located in the entire Building of which the Premises is a part; (c) its
proportionate share as set forth above of the real estate taxes, intangible
taxes, or any similar tax levied in place thereof, for the property of which the
Premises forms a part; (d) its proportionate share of the cost of any insurance
carried by Landlord on the Building in which the Premises are located and the
common areas used in connection therewith; and the its proportionate share of
any property owner's association dues. Tenant hereby covenants and agrees that
it shall pay the Base Rent and Additional Rent in equal monthly installments in
advance on the first day of each month. Landlord covenants and agrees that the
"controllable" expenses included in the Additional Rent (i.e. expenses other
than taxes, insurance premiums, association dues and other expenses beyond
Landlord's reasonable control) shall not increase by more than 5% from one
calendar year to the next.
Landlord shall prepare a budget at the close of each calendar year estimating
the sums required for the succeeding year for the foregoing items. Tenant's
share of same shall be computed by multiplying the sums so obtained by Tenant's
percentage. Tenant shall pay one-twelfth of its share each month as Additional
Rent. In the event that any month of the Term shall be less than a full month,
then Additional Rent shall be apportioned on the basis of the number of days in
said month.
Tenant shall also pay to Landlord within thirty (30) days of receipt of notice
from Landlord from time to time the amount which, together with said monthly
installments, will be sufficient to pay Tenant's proportionate share of any such
Real Estate Taxes by November 1st of each year, not collected in the estimate
above.
4
In the event that Landlord is delayed in supplying to Tenant the amount due of
its share of Additional Rent for the upcoming year, Tenant shall continue to pay
its Additional Rent in the amount of the preceding year until noted otherwise by
Landlord.
After the end of each calendar year, and after the end of the Term, Landlord
shall submit to Tenant a statement in reasonable detail stating Tenant's
proportionate share of the actual Additional Rent for such calendar year or
partial calendar year; and stating whether or not the actual Additional Rent for
the period in question is more or less than the amount paid for such period.
Tenant shall pay to Landlord any deficiency within thirty (30) days after
submission of such statement. Landlord shall apply any excess to the next
Additional Rent payment(s) payable by Tenant, or, if the Term has expired,
Landlord shall refund to Tenant any excess within thirty (30) days after
submission of such statement of Tenant's proportionate share. Tenant's initial
share of Additional Rent shall be $14,521.33 per month, and shall be adjusted
each January 1, in accordance with the paragraphs above.
TWENTY-EIGHTH: INTENTIONALLY OMITTED.
TWENTY-NINTH: Commencing with the fourth lease year commencing on the
third anniversary of the Rent Commencement Date, the Annual Base Rent shall be
increased on January 1st of each year based upon the increase in the Consumer
Price Index (United States Average for all Urban Wage Earners and Clerical
Workers, U.S. City Average 1982 - 1984 = 100 or such other comparable index as
Landlord may choose ("CPI"). The increased rent shall be calculated by
multiplying the then current Annual Base Rent by a fraction, the numerator of
which is the CPI for the month of December immediately preceding the increase
and denominator of which is the CPI for the month of December in the preceding
year. Notwithstanding the foregoing, once this provision comes into effect, the
Annual Base Rent shall not increase by more than 5% from one year to the next.
Landlord shall give Tenant prompt notice of any increase in Annual Base Rent and
the monthly rental payments shall be adjusted accordingly.
THIRTIETH: Tenant shall pay to Landlord the sum of $36,500.00 as
security for Tenant's performance hereunder. Landlord shall deposit said sums in
the escrow account of Catalfumo Management and Investment, Inc. until such time
as construction of the Premises has been completed hereunder. Upon completion of
the Premises the security deposit shall be transferred to Landlord's account to
be held in accordance herewith. Upon receipt of the security deposit, Landlord
may, at its option, apply the security deposit to cure any default by Tenant
hereunder in which event Tenant shall immediately replenish the security
deposit, the failure to do so shall be a default hereunder. Landlord may
commingle the security deposit with other funds of Landlords and may assign the
same to any successor of Landlord. If Tenant exercises its option to purchase
the Building as provided for in the Addendum, the security deposit shall form a
portion of the deposit due in connection with the exercise of the option. If
Tenant has not exercised its option and is not in default or has not been in
default and failed to cure said default within the applicable grace period, if
any, for a period of two (2) years from the rent commencement date, the security
deposit shall be returned to Tenant.
THIRTY-FIRST: Tenant shall not allow any lien to be filed against the
Premises for any mechanics or materialman liens for any work performed by or on
behalf of Tenant and shall indemnify and hold Landlord harmless from loss or
damage incurred by Landlord as a result of any such lien. Landlord shall ensure
that no such lien is filed against the Premises or Building for any work
performed by or on behalf of Landlord and shall indemnify and hold Tenant
harmless from any damage incurred by Tenant as a result of any such lien.
THIRTY-SECOND: Tenant shall maintain general liability insurance
against claims for bodily injury and/or death or property damage occurring
within the leases Premises with limited of coverage of not less than $500,000
for death or injury to one person, $1,000,000.00 for death or injury to more
than one person in a common accident or occurrence and $100,000 for damage or
injury to property including fire legal liability in the minimum amount of
$50,000. Tenant shall maintain insurance covering the Premises for fire and
extended coverage insurance with respect to the improvements, storefront glass,
furniture, fixtures and equipment located on or about the Premises. The
insurance company must be licensed to do business in the State of Florida and
shall be with companies reasonably acceptable to Landlord and shall name
Landlord and Landlord's lender as additional insureds. Tenant shall provide
Landlord with certificates for said insurance form time to time as required by
Landlord. Tenant hereby indemnifies and holds harmless Landlord from and against
any and all claims, losses, damages or actions arising from, related to or in
connection with Tenant's occupation of the Premises except for matters arising
from the acts or negligence of Landlord, its employees, agent or assigns.
THIRTY-THIRD: This Lease and the rights of Tenant hereunder are and
shall at all times be subject and subordinate to each and every mortgage that
now or hereafter may be a lien on the property of which the Premises are a part
and to all renewals, extensions, modifications and future advances thereto. This
provision shall be self operative and no further instrument or subordination
shall be required by Landlord, provided however that Tenant agrees to execute
any instrument reasonably requested by Landlord or its lenders to evidence such
subordination with five (5) days of receipt. Tenant agrees to attorn to any
transferee of Landlord or any successor of Landlord who obtains title as a
result of a foreclosure of deed, in lieu of foreclosure, as if such transferee
or successor was the original Landlord hereunder.
5
Tenant's obligations hereunder are conditioned upon the holder of each and every
mortgage to which this Lease is to be subordinate agreeing that Tenant shall not
be disturbed in its occupancy of the Premises so long as Tenant is not in
default of its obligations hereunder and on the mortgagee and Tenant entering
into a non-disturbance agreement in form reasonably acceptable to Tenant to such
effect.
THIRTY-FOURTH: Tenant shall not store or dispose of any hazardous
material or waste in or about the Premises. Tenant shall indemnify and hold
Landlord harmless from and against any claims, damages, costs, expenses or
actions which arise out of any breach of this provision and such indemnity shall
survive the termination of the Lease.
THIRTY-FIFTH: INTENTIONALLY OMITTED.
THIRTY-SIXTH: LANDLORD AND TENANT SHALL AND THEY HEREBY DO WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE
PARTIES HERETO AGAINST THE OTHER OR ANY MATTERS ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT USE OR
OCCUPANCY OF THE DEMISED PREMISES, AND EMERGENCY OR OTHER STATUTORY REMEDY.
THIRTY-SEVENTH: Landlord and Tenant shall, at any time and from time to
time, within ten (10) business days following notice execute, acknowledge and
deliver to the party which gave such notice a statement in writing certifying
that this Lease is unmodified and in full force and effect, or if there shall
have been any modification(s) that the same is in full force and effect as
modified and stating the modification(s), and the date to which the Rent and
Additional Rents have been paid in advance.
THIRTY-EIGHTH: Tenant shall comply and observe all reasonable Rules and
Regulations which Landlord shall from time to time promulgate for the management
and use of the Premises. Landlord shall have the right from time to time to
amend or supplement any such Rules and Regulations, provided that Landlord
agrees that such rules and regulations shall not unreasonably inhibit Tenant's
operations. In all cases where Rules and Regulations are referred to in the
Lease, Landlord agrees that Tenant will have the right to review and approve any
rule or regulation changes prior to them going into effect. Tenant agrees to not
unreasonably withhold its approval of said changes.
THIRTY-NINTH: INTENTIONALLY OMITTED.
FORTIETH: SEE ADDENDUM.
FORTY-FIRST: INTENTIONALLY OMITTED.
FORTY-SECOND: In the event that the whole or any part of said Premises
shall be taken by any public authority under the power of eminent domain or like
power, then the term hereof shall terminate as to the part of the Premises so
taken, effective as of the date possession thereof shall be required to be
delivered pursuant to the final order, judgment, or decree entered in the
proceedings in the exercise of such power and the Rent and Additional Rent shall
abate as to the portion of the Premises taken from the date possession is
required to be delivered to the condemning authority. All damages awarded for
the taking of the underlying Premises, or any part thereof, shall be payable in
full amount hereof to and the same shall be the property of Landlord, including
but not limited to, any sum paid or payable as compensation for loss of value of
the leasehold or loss of the fee or any part of the Premises, and Tenant shall
be entitled only to that portion of any award expressly stated to have been made
to Tenant for loss of business and the loss of value and cost of removal of
stock, equipment, furniture and fixtures owned by Tenant.
FORTY-THIRD: INTENTIONALLY OMITTED.
FORTY-FOURTH: INTENTIONALLY OMITTED.
FORTY-FIFTH: In the event Tenant should fail to perform any
non-monetary obligation required to be performed by Tenant hereunder, such shall
not constitute an event of default until Landlord has provided Tenant with
written notice, specifying the alleged non-performance, and indicating Tenant's
right to cure same within thirty (30) days of the Tenant's receipt of said
notice (certified mail, return receipt requested), or, in the event such
non-performance is of such a nature that same cannot be cured with reasonable
diligence within such thirty (30) day period, commence to cure same within such
thirty (30) day period and thereafter prosecute the curing of same to completion
with all due diligence.
FORTY-SIXTH: INTENTIONALLY OMITTED.
FORTY-SEVENTH: INTENTIONALLY OMITTED.
FORTY-EIGHTH: HAZARDOUS SUBSTANCES
6
Lessee warrants and represents that it will, during the period of its occupancy
of the Premises under this Lease, comply with all federal, state and local laws,
regulations and ordinances with respect to the use, storage, treatment, disposal
or transportation of Hazardous Substances. Lessee shall indemnify and hold
Lessor harmless from and against any claims, damages, fines, judgments,
penalties, costs, liabilities or losses (including, without limitation,
reasonable attorney's' fees and costs) arising from the breach of the preceding
warranty and representation.
For the purposes of this Section, the term "Hazardous Substances" shall be
interpreted broadly to include but not be limited to substances designated as
hazardous under the Resource Conservation and Recover Act, 42 U.S.C. S9601, et
seq., the Federal Water Pollution Control Act, 33 U.S.C. S1257, et seq., the
Clean Air Act, 42 U.S.C S2001, et seq, or the Comprehensive Environmental
Response Compensation and Liability Act of 1980, 42 U.S.C. S9601, et seq., any
applicable State Law or regulation. The term shall also be interpreted to
include but not be limited to any substance which after release into the
environment and upon exposure, ingestion, inhalation or assimilation, either
directly from the environment or directly by ingestion through food chains, will
or may reasonably be anticipated to cause death, disease, behavior
abnormalities, cancer and/or genetic abnormalities, and oil and petroleum based
derivatives.
The provisions of this Section shall be in addition to any other obligations or
liabilities Lessee may have to Lessor at law and equity and shall survive
termination of this Lease.
FORTY-NINTH: RADON GAS
Radon is a naturally occurring radioactive gas that, when it has accumulated in
a building in sufficient quantities, may present health risks to persons who are
exposed to it over time. Levels of radon that exceed federal and state
guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county public health
unit.
FIFTIETH: QUIET ENJOYMENT
Upon paying the Base Rent and Additional Rent and all other sums due hereunder,
and upon Tenant's observance and keeping of all the covenants, agreements and
conditions of this Lease, Tenant shall quietly have and enjoy the Premises
during the term of this Lease without hindrance or molestation by anyone
claiming by or through Landlord; subject, however, to the terms, exceptions,
reservations and conditions of this Lease.
IN WITNESS WHEREOF, the parties have executed this instrument for the
purposes herein expressed, the day and year above written.
Signed, sealed and delivered in the presence of:
WITNESSES (Names MUST be typed
under signatures)
LANDLORD:
/s/ [ILLEGIBLE] /s/ DANIEL S. CATALFUMO
-------------------------------- --------------------------------
DANIEL S. CATALFUMO, as Trustee
under F.S. 689.071
/s/ [ILLEGIBLE]
-------------------------------
TENANT:
OUTSOURCE INTERNATIONAL, INC.
/s/ BARBARA T. MEALEY By: /s/ ROBERT LEFCORT
------------------------------- -----------------------------
Executive Vice President
/s/ PHYLLIS J. HART
-------------------------------
7
GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement of
DANIEL S. CATALFUMO AS TRUSTEE UNDER F.S. 689.071 ("Landlord") making that
certain Lease with OUTSOURCE INTERNATIONAL, INC. ("Tenant") dated October 19,
1995 (the "Lease"), the undersigned, on behalf of himself, his legal
representatives, heirs, successors and assigns, guarantees to Landlord,
Landlord's successors and assigns, the full performance and observance of all
the provisions therein provided to be performed and observed by Tenant,
including the Rules and Regulations, without requiring any notice of
non-payment, non-performance, or non-observance, or proof, or notice, or demand,
whereby to charge the undersigned therefor, all of which the undersigned hereby
expressly waives and expressly agrees that the validity of this agreement and
the obligations of the guarantor hereunder shall not be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant or any of the
rights or remedies reserved to Landlord pursuant to the provisions of the Lease.
The undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification, extension,
assignment or sublease of the Lease. In the event Landlord incurs any expenses
in the enforcement of this guaranty whether legal action be instituted or not,
the undersigned agrees to be liable for same (including reasonable attorney's
fees) and to pay same promptly on demand by Landlord. The undersigned
acknowledges that various corporations affiliated with the undersigned and also
executing Guarantees of the Lease and the undersigned agrees that the
obligations guaranteed by the undersigned and its affiliates shall be the joint
and several obligations of the undersigned, Tenant and the other guarantors. AS
A FURTHER INDUCEMENT TO LANDLORD TO MAKE THIS LEASE AND IN CONSIDERATION
THEREOF, LANDLORD AND THE UNDERSIGNED AGREE THAT IN ANY ACTION OR PROCEEDING
BROUGHT BY EITHER LANDLORD OR THE UNDERSIGNED AGAINST THE OTHER ON ANY MATTERS
WHATSOEVER ARISING OUT OF, UNDER, OR BY VIRTUE OF THE TERMS OF THIS LEASE OR OF
THIS GUARANTY, THAT LANDLORD AND THE UNDERSIGNED SHALL AND DO HEREBY WAIVE TRIAL
BY JURY.
WITNESSES: LABOR WORLD USA, INC.
(Name MUST be typed under signatures)
/s/ [ILLEGIBLE] /s/ ROBERT LEFCORT
------------------------------ ----------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
8
GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement of
DANIEL S. CATALFUMO AS TRUSTEE UNDER F.S. 689.071 ("Landlord") making that
certain Lease with OUTSOURCE INTERNATIONAL, INC. ("Tenant") dated October 19,
1995 (the "Lease"), the undersigned, on behalf of himself, his legal
representatives, heirs, successors and assigns, guarantees to Landlord,
Landlord's successors and assigns, the full performance and observance of all
the provisions therein provided to be performed and observed by Tenant,
including the Rules and Regulations, without requiring any notice of
non-payment, non-performance, or non-observance, or proof, or notice, or demand,
whereby to charge the undersigned therefor, all of which the undersigned hereby
expressly waives and expressly agrees that the validity of this agreement and
the obligations of the guarantor hereunder shall not be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant or any of the
rights or remedies reserved to Landlord pursuant to the provisions of the Lease.
The undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification, extension,
assignment or sublease of the Lease. In the event Landlord incurs any expenses
in the enforcement of this guaranty whether legal action be instituted or not,
the undersigned agrees to be liable for same (including reasonable attorney's
fees) and to pay same promptly on demand by Landlord. The undersigned
acknowledges that various corporations affiliated with the undersigned and also
executing Guarantees of the Lease and the undersigned agrees that the
obligations guaranteed by the undersigned and its affiliates shall be the joint
and several obligations of the undersigned, Tenant and the other guarantors. AS
A FURTHER INDUCEMENT TO LANDLORD TO MAKE THIS LEASE AND IN CONSIDERATION
THEREOF, LANDLORD AND THE UNDERSIGNED AGREE THAT IN ANY ACTION OR PROCEEDING
BROUGHT BY EITHER LANDLORD OR THE UNDERSIGNED AGAINST THE OTHER ON ANY MATTERS
WHATSOEVER ARISING OUT OF, UNDER, OR BY VIRTUE OF THE TERMS OF THIS LEASE OR OF
THIS GUARANTY, THAT LANDLORD AND THE UNDERSIGNED SHALL AND DO HEREBY WAIVE TRIAL
BY JURY.
WITNESSES:
(Name MUST be typed under signatures)
/s/ BARBARA T. MEALEY /s/ ROBERT LEFCORT
------------------------------ ----------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
8
GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement of
DANIEL S. CATALFUMO AS TRUSTEE UNDER F.S. 689.071 ("Landlord") making that
certain Lease with OUTSOURCE INTERNATIONAL, INC. ("Tenant") dated October 19,
1995 (the "Lease"), the undersigned, on behalf of himself, his legal
representatives, heirs, successors and assigns, guarantees to Landlord,
Landlord's successors and assigns, the full performance and observance of all
the provisions therein provided to be performed and observed by Tenant,
including the Rules and Regulations, without requiring any notice of
non-payment, non-performance, or non-observance, or proof, or notice, or demand,
whereby to charge the undersigned therefor, all of which the undersigned hereby
expressly waives and expressly agrees that the validity of this agreement and
the obligations of the guarantor hereunder shall not be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant or any of the
rights or remedies reserved to Landlord pursuant to the provisions of the Lease.
The undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification, extension,
assignment or sublease of the Lease. In the event Landlord incurs any expenses
in the enforcement of this guaranty whether legal action be instituted or not,
the undersigned agrees to be liable for same (including reasonable attorney's
fees) and to pay same promptly on demand by Landlord. The undersigned
acknowledges that various corporations affiliated with the undersigned and also
executing Guarantees of the Lease and the undersigned agrees that the
obligations guaranteed by the undersigned and its affiliates shall be the joint
and several obligations of the undersigned, Tenant and the other guarantors. AS
A FURTHER INDUCEMENT TO LANDLORD TO MAKE THIS LEASE AND IN CONSIDERATION
THEREOF, LANDLORD AND THE UNDERSIGNED AGREE THAT IN ANY ACTION OR PROCEEDING
BROUGHT BY EITHER LANDLORD OR THE UNDERSIGNED AGAINST THE OTHER ON ANY MATTERS
WHATSOEVER ARISING OUT OF, UNDER, OR BY VIRTUE OF THE TERMS OF THIS LEASE OR OF
THIS GUARANTY, THAT LANDLORD AND THE UNDERSIGNED SHALL AND DO HEREBY WAIVE TRIAL
BY JURY.
WITNESSES: OUTSOURCE FRANCHISING, INC.
(Name MUST be typed under signatures)
/s/ BARBARA T. MEALEY /s/ ROBERT LEFCORT
------------------------------ ----------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
9
GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement of
DANIEL S. CATALFUMO AS TRUSTEE UNDER F.S. 689.071 ("Landlord") making that
certain Lease with OUTSOURCE INTERNATIONAL, INC. ("Tenant") dated October 19,
1995 (the"Lease"), the undersigned, on behalf of himself, his legal
representatives, heirs, successors and assigns, guarantees to Landlord,
Landlord's successors and assigns, the full performance and observance of all
the provisions therein provided to be performed and observed by Tenant,
including the Rules and Regulations, without requiring any notice of
non-payment, non-performance, or non-observance, or proof, or notice, or demand,
whereby to charge the undersigned therefor, all of which the undersigned hereby
expressly waives and expressly agrees that the validity of this agreement and
the obligations of the guarantor hereunder shall not be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant or any of the
rights or remedies reserved to Landlord pursuant to the provisions of the Lease.
The undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification, extension,
assignment or sublease of the Lease. In the event Landlord incurs any expenses
in the enforcement of this guaranty whether legal action be instituted or not,
the undersigned agrees to be liable for same (including reasonable attorney's
fees) and to pay same promptly on demand by Landlord. The undersigned
acknowledges that various corporations affiliated with the undersigned and also
executing Guarantees of the Lease and the undersigned agrees that the
obligations guaranteed by the undersigned and its affiliates shall be the joint
and several obligations of the undersigned, Tenant and the other guarantors. AS
A FURTHER INDUCEMENT TO LANDLORD TO MAKE THIS LEASE AND IN CONSIDERATION
THEREOF, LANDLORD AND THE UNDERSIGNED AGREE THAT IN ANY ACTION OR PROCEEDING
BROUGHT BY EITHER LANDLORD OR THE UNDERSIGNED AGAINST THE OTHER ON ANY MATTERS
WHATSOEVER ARISING OUT OF, UNDER, OR BY VIRTUE OF THE TERMS OF THIS LEASE OR OF
THIS GUARANTY, THAT LANDLORD AND THE UNDERSIGNED SHALL AND DO HEREBY WAIVE TRIAL
BY JURY.
WITNESSES: SYNADYNE III, INC., f/k/a LABOR
(Name MUST be typed under signatures) WORLD OF AMERICA ,INC.
/s/ BARBARA T. MEALEY /s/ ROBERT LEFCORT
------------------------------ ----------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
10
GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement of
DANIEL S. CATALFUMO AS TRUSTEE UNDER F.S. 689.071 ("Landlord") making that
certain Lease with OUTSOURCE INTERNATIONAL, INC. ("Tenant") dated October 19,
1995 (the "Lease"), the undersigned, on behalf of himself, his legal
representatives, heirs, successors and assigns, guarantees to Landlord,
Landlord's successors and assigns, the full performance and observance of all
the provisions therein provided to be performed and observed by Tenant,
including the Rules and Regulations, without requiring any notice of
non-payment, non-performance, or non-observance, or proof, or notice, or demand,
whereby to charge the undersigned therefor, all of which the undersigned hereby
expressly waives and expressly agrees that the validity of this agreement and
the obligations of the guarantor hereunder shall not be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant or any of the
rights or remedies reserved to Landlord pursuant to the provisions of the Lease.
The undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification, extension,
assignment or sublease of the Lease. In the event Landlord incurs any expenses
in the enforcement of this guaranty whether legal action be instituted or not,
the undersigned agrees to be liable for same (including reasonable attorney's
fees) and to pay same promptly on demand by Landlord. The undersigned
acknowledges that various corporations affiliated with the undersigned and also
executing Guarantees of the Lease and the undersigned agrees that the
obligations guaranteed by the undersigned and its affiliates shall be the joint
and several obligations of the undersigned, Tenant and the other guarantors. AS
A FURTHER INDUCEMENT TO LANDLORD TO MAKE THIS LEASE AND IN CONSIDERATION
THEREOF, LANDLORD AND THE UNDERSIGNED AGREE THAT IN ANY ACTION OR PROCEEDING
BROUGHT BY EITHER LANDLORD OR THE UNDERSIGNED AGAINST THE OTHER ON ANY MATTERS
WHATSOEVER ARISING OUT OF, UNDER, OR BY VIRTUE OF THE TERMS OF THIS LEASE OR OF
THIS GUARANTY, THAT LANDLORD AND THE UNDERSIGNED SHALL AND DO HEREBY WAIVE TRIAL
BY JURY.
WITNESSES: SYNADYNE I, INC.
(Name MUST be typed under signatures)
/s/ BARBARA T. MEALEY /s/ ROBERT LEFCORT
------------------------------ ----------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
11
GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement of DANIEL
S. CATALFUMO AS TRUSTEE UNDER F.S. 689.071 ("Landlord") making that certain
Lease with OUTSOURCE INTERNATIONAL, INC. ("Tenant") dated October 19, 1995 (the
"Lease"), the undersigned, on behalf of himself, his legal representatives,
heirs, successors and assigns, guarantees to Landlord, Landlord's successors and
assigns, the full performance and observance of all the provisions therein
provided to be performed and observed by Tenant, including the Rules and
Regulations, without requiring any notice of non-payment, non-performance, or
non observance, or proof, or notice, or demand, whereby to charge the
undersigned therefor, all of which the undersigned hereby expressly waives and
expressly agrees that the validity of this agreement and the obligations of the
guarantor hereunder shall not be terminated, affected or impaired by reason of
the assertion by Landlord against Tenant or any of the rights or remedies
reserved to Landlord pursuant to the provisions of the Lease. The undersigned
further covenants and agrees that this guaranty shall remain and continue in
full force and effect as to any renewal, modification, extension, assignment or
sublease of the Lease. In the event Landlord incurs any expenses in the
enforcement of this guaranty whether legal action be instituted or not, the
undersigned agrees to be liable for same (including reasonable attorney's fees)
and to pay same promptly on demand by Landlord. The undersigned acknowledges
that various corporations affiliated with the undersigned and also executing
Guarantees of the Lease and the undersigned agrees that the obligations
guaranteed by the undersigned and its affiliates shall be the Joint and several
obligations of the undersigned, Tenant and the other guarantors. AS A FURTHER
INDUCEMENT TO LANDLORD TO MAKE THIS LEASE AND IN CONSIDERATION THEREOF, LANDLORD
AND THE UNDERSIGNED AGREE THAT IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER
LANDLORD OR THE UNDERSIGNED AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING
OUT OF, UNDER, OR BY VIRTUE OF THE TERMS OF THIS LEASE OR OF THIS GUARANTY, THAT
LANDLORD AND THE UNDERSIGNED SHALL AND DO HEREBY WAIVE TRIAL BY JURY.
WITNESSES: SYNADYNE II, INC.
(Name MUST be typed under signatures)
/s/ BARBARA T. MEALEY /s/ ROBERT LEFCORT
------------------------------ ----------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
12
GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement of
DANIEL S. CATALFUMO AS TRUSTEE UNDER F.S. 689.071 ("Landlord") making that
certain Lease with OUTSOURCE INTERNATIONAL, INC. ("Tenant") dated October 19,
1995 (the "Lease"), the undersigned, on behalf of himself, his legal
representatives, heirs, successors and assigns, guarantees to Landlord,
Landlord's successors and assigns, the full performance and observance of all
the provisions therein provided to be performed and observed by Tenant,
including the Rules and Regulations, without requiring any notice of
non-payment, non-performance, or non-observance, or proof, or notice, or demand,
whereby to charge the undersigned therefor, all of which the undersigned hereby
expressly waives and expressly agrees that the validity of this agreement and
the obligations of the guarantor hereunder shall not be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant or any of the
rights or remedies reserved to Landlord pursuant to the provisions of the Lease.
The undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification, extension,
assignment or sublease of the Lease. In the event Landlord incurs any expenses
in the enforcement of this guaranty whether legal action be instituted or not,
the undersigned agrees to be liable for same (including reasonable attorney's
fees) and to pay same promptly on demand by Landlord. The undersigned
acknowledges that various corporations affiliated with the undersigned and also
executing Guarantees of the Lease and the undersigned agrees that the
obligations guaranteed by the undersigned and its affiliates shall be the joint
and several obligations of the undersigned, Tenant and the other guarantors. AS
A FURTHER INDUCEMENT TO LANDLORD TO MAKE THIS LEASE AND IN CONSIDERATION
THEREOF, LANDLORD AND THE UNDERSIGNED AGREE THAT IN ANY ACTION OR PROCEEDING
BROUGHT BY EITHER LANDLORD OR THE UNDERSIGNED AGAINST THE OTHER ON ANY MATTERS
WHATSOEVER ARISING OUT OF, UNDER, OR BY VIRTUE OF THE TERMS OF THIS LEASE OR OF
THIS GUARANTY, THAT LANDLORD AND THE UNDERSIGNED SHALL AND DO HEREBY WAIVE TRIAL
BY JURY.
WITNESSES: SYNADYNE IV, INC.
(Name MUST be typed under signatures)
/s/ BARBARA T. MEALEY /s/ ROBERT LEFCORT
------------------------------ ----------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
13
GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement of
DANIEL S. CATALFUMO AS TRUSTEE UNDER F.S. 689.071 ("Landlord") making that
certain Lease with OUTSOURCE INTERNATIONAL, INC. ("Tenant") dated October 19,
1995 (the "Lease"), the undersigned, on behalf of himself, his legal
representatives, heirs, successors and assigns, guarantees to Landlord,
Landlord's successors and assigns, the full performance and observance of all
the provisions therein provided to be performed and observed by Tenant,
including the Rules and Regulations, without requiring any notice of
non-payment, non-performance, or non-observance, or proof, or notice, or demand,
whereby to charge the undersigned therefor, all of which the undersigned hereby
expressly waives and expressly agrees that the validity of this agreement and
the obligations of the guarantor hereunder shall not be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant or any of the
rights or remedies reserved to Landlord pursuant to the provisions of the Lease.
The undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification, extension,
assignment or sublease of the Lease. In the event Landlord incurs any expenses
in the enforcement of this guaranty whether legal action be instituted or not,
the undersigned agrees to be liable for same (including reasonable attorney's
fees) and to pay same promptly on demand by Landlord. The undersigned
acknowledges that various corporations affiliated with the undersigned and also
executing Guarantees of the Lease and the undersigned agrees that the
obligations guaranteed by the undersigned and its affiliates shall be the joint
and several obligations of the undersigned, Tenant and the other guarantors. AS
A FURTHER INDUCEMENT TO LANDLORD TO MAKE THIS LEASE AND IN CONSIDERATION
THEREOF, LANDLORD AND THE UNDERSIGNED AGREE THAT IN ANY ACTION OR PROCEEDING
BROUGHT BY EITHER LANDLORD OR THE UNDERSIGNED AGAINST THE OTHER ON ANY MATTERS
WHATSOEVER ARISING OUT OF, UNDER, OR BY VIRTUE OF THE TERMS OF THIS LEASE OR OF
THIS GUARANTY, THAT LANDLORD AND THE UNDERSIGNED SHALL AND DO HEREBY WAIVE TRIAL
BY JURY.
WITNESSES: SYNADYNE V, INC.
(Name MUST be typed under signatures)
/s/ BARBARA T. MEALEY /s/ ROBERT LEFCORT
------------------------------ ----------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
14
GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement of
DANIEL S. CATALFUMO AS TRUSTEE UNDER F.S. 689.071 ("Landlord") making that
certain Lease with OUTSOURCE INTERNATIONAL, INC. ("Tenant") dated October 19,
1995 (the "Lease"), the undersigned, on behalf of himself, his legal
representatives, heirs, successors and assigns, guarantees to Landlord,
Landlord's successors and assigns, the full performance and observance of all
the provisions therein provided to be performed and observed by Tenant,
including the Rules and Regulations, without requiring any notice of
non-payment, non-performance, or non-observance, or proof, or notice, or demand,
whereby to charge the undersigned therefor, all of which the undersigned hereby
expressly waives and expressly agrees that the validity of this agreement and
the obligations of the guarantor hereunder shall not be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant or any of the
rights or remedies reserved to Landlord pursuant to the provisions of the Lease.
The undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification, extension,
assignment or sublease of the Lease. In the event Landlord incurs any expenses
in the enforcement of this guaranty whether legal action be instituted or not,
the undersigned agrees to be liable for same (including reasonable attorney's
fees) and to pay same promptly on demand by Landlord. The undersigned
acknowledges that various corporations affiliated with the undersigned and also
executing Guarantees of the Lease and the undersigned agrees that the
obligations guaranteed by the undersigned and its affiliates shall be the pint
and several obligations of the undersigned, Tenant and the other guarantors. AS
A FURTHER INDUCEMENT TO LANDLORD TO MAKE THIS LEASE AND IN CONSIDERATION
THEREOF, LANDLORD AND THE UNDERSIGNED AGREE THAT IN ANY ACTION OR PROCEEDING
BROUGHT BY EITHER LANDLORD OR THE UNDERSIGNED AGAINST THE OTHER ON ANY MATTERS
WHATSOEVER ARISING OUT OF, UNDER, OR BY VIRTUE OF THE TERMS OF THIS LEASE OR OF
THIS GUARANTY, THAT LANDLORD AND THE UNDERSIGNED SHALL AND DO HEREBY WAIVE TRIAL
BY JURY.
WITNESSES: CAPITAL STAFFING FUND, INC.
(Name MUST be typed under signatures)
/s/ BARBARA T. MEALEY /s/ ROBERT LEFCORT
------------------------------ ----------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
15
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, corridors and halls shall
not be obstructed or used for any purpose other than ingress or egress
without the prior written consent of Landlord.
2. No tenant shall mark, paint, drill into, or in any way deface any part
of the Premises or the Building; provided, however, that alterations,
the construction of Tenant improvements, and decorating shall be
permitted subject to the terms of the Lease with Tenant. No boring,
cutting or stringing of wires, installation of telephones and call
boxes, or laying of linoleum tile or other floor coverings shall be
permitted without the prior written consent of Landlord which shall not
be unreasonably withheld (and then subject to such restrictions as
Landlord shall impose as a condition to such consent).
3. No bicycles, vehicles of animals or any kind (except for guide dogs for
the blind) shall be brought into or kept in or about the Premises. No
cooking shall be done or permitted by any Tenant on the Premises
without prior written consent of Landlord (and then subject to such
restrictions as Landlord shall impose as a condition to such consent)
for Tenant, its employees and invitees. No Tenant shall cause or permit
any unusual or objectionable odors to escape from the Premises. Tenant
shall be entitled to install a microwave and food vending machines for
its employees and guests.
4. No Tenant shall make, or permit to be made any unseemly or disturbing
noises, sounds or vibrations, or otherwise disturb or interfere with
occupants of this or neighboring buildings or Premises or those having
business with them, whether by the use of musical instrument, radio,
phonograph, unusual noise, or in any other way. Tenant shall be
entitled to hold parties in the parking lot periodically provided said
parties do not unreasonable disturb other tenants or obstruct access
to, visibility of any other tenant's premises.
5. No Tenant shall throw anything out of doors or down the public
corridors, stairwells, or other public areas of the Building.
6. The requirements of Tenants will be attended to only upon application
to the Manager's Office or to such other place as Landlord may from
time to time direct.
7. Canvassing, soliciting and peddling in the Building are prohibited and
each Tenant shall cooperate to prevent the same.
8. Tenant shall not obstruct, alter or in any way impair the efficient
operation of Landlord's heating, ventilating and air conditioning
system
9. (a) The parking areas shall be used for the parking of personal
transportation vehicles (cars, pickups, motorcycles, etc.) only. The
parking areas shall not be used for any other use including, without
limitation, washing or repairing vehicles, overnight parking or other
storage of vehicles, or loading and unloading (except in such zones as
Landlord may from time to time designate for such purpose). Landlord
agrees to designate a car washing zone in the parking areas provided
that said zone shall not disturb any other tenants.
(b) Landlord shall have no obligation to maintain any attendant at or
for the parking areas. Landlord shall have no obligation or liability
to Tenant, its agents, employees, or invitees, for any loss or damage
suffered to property or persons on account of the use or misuse of the
parking areas by persons other than Landlord.
(c) Landlord reserves the right to use the parking areas for such other
purposes as it may from time to time designate, provided any such other
purpose does not unreasonably interfere with the use of the parking
areas by Tenant for purposes of conducting Tenant's business on the
Premises.
(d) Landlord reserves the right to tow, or cause to be towed, any
vehicle on account of any violation of these Rules and Regulations, and
the costs thereof shall be borne by the owner or driver of the vehicle,
provided Landlord complies with all required laws and regulations
regarding towing.
10. Tenant shall familiarize each of its employees with the portions of
this Exhibit pertinent to them.
11. Landlord reserves the right to modify these Rules and Regulations and
to institute other reasonable Rules and Regulations from time to time,
which substituted Rules and Regulations shall not unreasonably inhibit
Tenant's operations in the Premises.
12. Tenants shall not store or dispose of any hazardous material or waste
in or about the Premises. Tenant shall indemnify and hold Landlord
harmless from and against any claims, damages, costs, expenses or
actions which arise out of any breach of this provision and such
indemnity shall survive the termination of this Lease.
16
13. Tenant shall use dumpster in a conscientious manner. Dumpster shall be
used for OFFICE TRASH ONLY generated from the business located on the
Premises. NO off-site debris, construction trash metal, wood or toxic
waste may be disposed of in the dumpster. Any violations will
necessitate action by way of (1 ) charges for extra pick-up, or (2) a
separate dumpster for habitual offender with that Tenant paying for the
extra dumpster charge IN FULL.
WITNESSES (Names MUST be typed under
SIGNATURES) LANDLORD:
/s/ [ILLEGIBLE] By: /s/ DANIEL S. CATALFUMO
------------------------------ ------------------------------
DANIEL S. CATALFUMO, as
Trustee under F.S. 689.071
/s/ [ILLEGIBLE]
------------------------------ TENANT:
OUTSOURCE INTERNATIONAL, INC.
/s/ BARBARA T. MEALEY By: /s/ ROBERT LEFCORT
------------------------------ ------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
17
EXHIBIT "A"
SKETCH OF DESCRIPTION
LAND DESCRIPTION:
Lots 12, 13, and 14 and a portion of Lots 11 and 15, NEWPORT CENTER, according
to the Plot thereof are recorded in Plot Book 115, Page 13 of the Public Records
of Broward County, Florida, being more particularly described as follows:
COMMENCING at the Southwest corner of Lot 16, as shown on said plot of NEWPORT
CENTER; thence S 74"09'07" E, along the south boundary of said Lot 15 and 16,
for a distance of 201.89 feet to the POINT OF BEGINNING; thence N 15"09'53" E,
481.57 feet to a point on the North boundary of said Lot 11, said point also
being on the arc of a non-tangent curve, concave to the Southwest (radial line
to said point bears N 01"32'49" E); thence Southeasterly along the North
boundaries of said Lots 11, 12 and 13 and the arc of said curve, having a radius
of 2,600.00 feet, a central angle of 11"51'56" and an arc distance of 538.44
feet to a point on the East boundary of said Lot 13; thence S 14"16'46" W. along
the East boundaries of said Lots 13 and 14, for a distance of 560.00 feet to a
point on the South boundary of said Lot 14; thence N 74"09'07" W, along the
South boundaries of said Lots 14 and 15, for a distance of 547.08 feet to the
POINT OF BEGINNING.
Said lands lying and situate in the City of Deerfield Beach, Broward County,
Florida, containing 286,157 square feet, 6.57 acres, more or less.
* Together with an easement for ingress and egress over the "private roadway
easement" shown on the Plat and on the attached sketch for access to East
Newport Center Dr.
NOTES:
1. Reproductions of this Sketch are not valid unless sealed with an embossed
Surveyor's seal.
2. No Title Opinion or Abstract to the subject properly has been provided. It is
possible that there are Deeds, Easements, or other instruments (recorded or
unrecorded) which may affect the subject property. No search of the Public
Records has been made by the Surveyor.
3. The land description shown hereon was prepared by the Surveyor.
4. Bearings shown hereon are based on the plat with the South line of Lot 16,
having a bearing of S 74"09'07" E.
5. Data shown hereon was compiled from instrument(s) of record and does not
constitute a boundary survey.
6. Abbreviation Legend: A = Arc Length; pyramid = Central Angle; CL =
Centerline; F.P.L. = Florida Power & Light Company; L.B. = Licensed Business;
P.L.S. = Professional Land Surveyor; P.O.C. = Point of Beginning; P.O.C. =
Point of Commencement; R/W = Right-of-Way; R = Radius.
CERTIFICATION:
I HEREBY CERTIFY that the attached Sketch and Description of the hereon
described property is true and correct to the best of my knowledge and belief as
prepared under my direction on September 26, 1995. I FURTHER CERTIFY that this
Sketch and Description meets the Minimum Technical Standards set forth in
Chapter 61G17, Florida Administrative Code, pursuant to Section 472.027, Florida
Statutes.
/s/ MICHAEL D. AVIROM
--------------------------------
Michael D. Avirom, P.L.S.
Florida Registration No. 3268
AVIROM - HALL & ASSOCIATES, INC.
L.B. No. 3300
[LETTERHEAD] JOB / 5495-1
DATE: 9-26-95
SHEET 1 OF 3
SKETCH OF DESCRIPTION EXHIBIT "A" (CONTINUED)
[GRAPHIC OF MAP]
[LETTERHEAD] JOB / 5495-1
DATE: 9-26-95
SHEET 2 OF 3
SKETCH OF DESCRIPTION EXHIBIT "A" (CONTINUED)
[GRAPHIC OF MAP]
[LETTERHEAD] JOB / 5495-1
DATE: 9-26-95
SHEET 3 OF 3
WORKLETTER ESTIMATE FOR DAN PRINTED 08/18/95 PAGE 1 EXHIBIT "A" (CONTINUED)
LESSOR: THE CATALFUMO COMPANIES CONTRACTOR: CATALFUMO COMPANIES
1540 Latham Road 1540 Latham Road
West Palm Beach, Fl. 33409 West Palm Beach, Florida 33409
TEBABT LEASE AREA - Sq. Ft. SLAB HGT: 12.00
SPACE: OUTSOURCE INTERNATIONAL, USABLE CEILING
INC. AREA 40,800 Sq. Ft. HGT: 10.00
===============================================================================================================
BASIC LESSEE IMPROVEMENT ALLOWANCES & STANDARDS
---------------------------------------------------------------------------------------------------------------
ITEM DESCRIPTION ALLOWANCE UNIT OF STANDARD COST BY COST PER
QUANTITY MEASURE UNIT COSTS LESSOR SQ. FT.
---------------------------------------------------------------------------------------------------------------
GENERAL
CONDITIONS:
DEMISING WALLS; Demising partitions at multiple
CORRIDOR WALLS: Tenant floor corridors will be
provided as outlined herein.
3-5/8" metal stud with 5/8" Type
"I" drywall to slab above with
3-1/2" fiberglass sound insulation
installed within the partition.
2.5 linear foot per each 100 sq.
ft. of usable area 1,000 LP $22.90 $22,900.00 $0.57
INTERIOR WALLS: 3-5/8" metal studs with 5/8"
(Tenant Partit.) gypsum wall board installed to
10'0" in height. ALLOWANCE: 1
linear foot of partition per 12
sq.ft. of usable area. 3,333 LP $24.61 $82,025.13 $2.05
EXTERIOR WALLS: 1/2" Regular drywall installed
(To Window Sill) on metal furring below window
unit. Drywall sill & header.
Allowance: 1 linear foot per
each 30 sq.ft. of usable area. 1,333 LP $16.39 $21,847.87 $0.55
PAINTING: Two coats of latex palot or One
coat of oil base primer per
Building Standard partition
allowance. 87,991 SF $0.40 $35,196.20 $0.88
ENTRY DOOR: 3'0"-7'0" solid core stain
grade Birch door; in a painted
hollow metal frame; Hardware to
be Schlage "A" Series cylindrical
lock, 2 pair of hinges, door stop
and a surface mounted closer. All
hardware to have brushed chrome
finish (626) ALLOWANCE: 1 door
assembly per 5,000 8 EA $973.40 $7,787.20 $0.19
INTERIOR DOORS: 3' - 0" X 6' - 8" solid core
(Tenant Doors) stained Birch door; in a paint
grade wood frame; Hardware to be
Schlage "S" Series cylindrical
latch set with lever type handel,
1-1/2 pair of hinges and a door
stop. All hardware to be brushed
chrome finish (626). ALLOWANCE: 1
door assembly per 350 sq.ft. of
usable area. 114 EA $275.00 $31,350.00 $0.78
ACOUSTIC Complete ceiling area at finished
CEILING: height of 9'-10'; 2' x 2' x 5/8"
Class "A" regular, lay-in white
acoustic tile ceiling with exposed
white grid 40,000 SF $1.15 $46,000.00 $1.15
BASE: Building Standard 4" vinyl base;
in accordance with Building
Standard partition allowance 7,199 LF $0.90 $6,479.10 $0.16
Upgrade base to wood in 8,000 s.f. 1,800 LF $3.50 $6,299.30 $0.16
WORKLETTER ESTIMATE FOR DAN PRINTED 08/18/95 PAGE 2 EXHIBIT "A" (CONTINUED)
CARPET: Building Standard glue-down
commercial carpet: 3,911 SY $13.50 $52,798.50 $1.32
Upgrade carpet allowance in
8,000 s.f. 908 SY $16.00 $15,644.80 $0.39
COMMON AREA Common Area restroom facilities
RESTROOMS: equiped with Building Standard
fixtures, toilet partitions,
bath accessories, ceramic tile
floors & vainscot, etc. . . .
All restroom facilities are
constructed to meet handicap and
local building codes as follows:
Allowance: 2 men's and 2 women's
restrooms with five (5) toilets
and (4) sinks to each women's
restroom, three (3) toilets,
three urinals and four (4) sinks
in each men's restroom. Allowance
also includes six (6) drinking
fountains (3 per floor) and two
janitor's closets with top sink. 4 EA $33,730.00 $134,920.00 $3.37
PRIVATE/EXECUTIVE Private/Executive restroom
RESTROOMS: facilities equiped with Building
Standard plumbing fixtures,
ceramic tile floors & vainscot,
bath accessories, etc. . . .
Allowance: 4 restrooms complete 4 EA $2,684.00 $10,736.00 $0.27
FIRE SPRINKLERS: Relocation of shell building fire
sprinkler heads for interior lay-
out. Allowance 1 semi-recessed
fire sprinkler head per 100 square
feet. 400 EA $75.00 $30,000.00 $0.75
AIR CONDITIONING: One (or at the Landlord's option,
several) split system, air to air
A/C unit(s) will be provided for
cooling, ventilating and where
necessary, heating the demised
premises. Units will be complete
with air distribution ductwork,
air outlets, automatic controls
and electric wiring. System will
be capable of maintaining comfort
conditions in the leased space(s)
under normal office occupancy
heating / cooling loads.
Allowance: 1 ton per 325 square
foot of usable area. 123 TONS $950.00 $116,850.00 $2.92
ELECTRICAL Extension of existing building
DISTRIBUTION: electrical service (277/480 volt)
into Tenant Space for
distribution to electrical
devises. Each Tenant will be
provided with an adequate
electrical service to accomodate
normal office occupancy
electrical requirements.
Additional electrical
requirements above and beyond
that provided by the Landlord
will be at Tenant's sole cost
and expense. 40,000 SF $1.00 $40,000.00 $1.00
LIGHT FIXTURES: Lighting will be Building
Standard recessed flourescent
2' X 4' 3-tube fixtures with
acrylic lenses. One light
fixture will be provided for
every 80 square feet of Tenant
usuable area. 400 EA $95.00 $38,000.00 $0.95
Upgrade light fixtures to
parabolic in 8,000 s.f. 100 EA $140.00 $14,000.00 $0.35
SWITCHES: Building standard toggle
switch, single pole w/cover
plate. 1 switch per 225 square
feet of useable area. 178 EA $36.00 $6,408.00 $0.16
DUPLEX OUTLETS: Building standard duplex outlet,
wall mount, 120 volt 1 outlet
for every 70 square feet of
usable area. 571 EA $36.00 $20,556.00 $0.51
TELEPHONE OUTLETS: Building standard telephone
outlet (Unwired): 1 outlet per
150 square feet of useable area. 267 EA $25.00 $6,675.00 $0.17
WORKLETTER ESTIMATE FOR DAN PRINTED 08/18/95 PAGE 3 EXHIBIT "A" (CONTINUED)
EXIT LIGHTS: Building standard exit light
w/ battery pack: 1 sign for
each 1500 sq.ft. of usable area. 26 EA $250.00 $6,500.00 $0.16
EMERGENCY LIGHTS: Building standard emergency
light with battery pack: 1
light per 1 500 sq.ft. of usable
area. 26 EA $250.00 $6,500.00 $0.16
LIFE SAFETY Building standard life safety
SPEAKERS: speaker: 1 speaker for every
3000 sq.ft. 13 EA $250.00 $3,250.00 $0.08
SPECIALITIES: Additional Interior Build-Out
Allowance for window treatments,
upgraded lighting, cabinets,
security systems, work out room
upgrades, etc. 40,000 SF $2.00 $80,000.00 $2.00
ENTRY LOBBY: Building entry lobby complete
with granet flooring and base,
wallcoverings, upgraded ceilings,
drywall soffits and light cove.
Allowance 2,000 square feet. 2,000 SF $35.00 $70,000.00 $1.75
ARCHITECTURAL & Professional Fees for
ENGINEERING FEES: Architectural and Engineering
Services to complete Interior
Working Drawings 40,000.00 SF $1.75 $70,000.00 $1.75
PERMIT: Building and Trade Permits
for Interior Build-Out: 40,000 SF $0.34 $13,600.00 $0.34
---------------------------------------------------------------------------------------------------------------
TOTAL ALLOWANCES: 40,000 SF $24.91 $996,323.10 $24.91
---------------------------------------------------------------------------------------------------------------
CONTRACTOR'S OVERHEAD: 101 $99,632.31 $2.49
---------------------------------------------------------------------------------------------------------------
TOTAL WORK LETTER ALLOWANCE: $1,095,955.41 $27.40
---------------------------------------------------------------------------------------------------------------
EXHIBIT "A" (CONTINUED)
September 13, 1995
SPECIFICATIONS
for
SITE WORK AND BUILDING SHELL
for
OUTSOURCE INTERNATIONAL
I. ASSUMPTIONS
A. Site size approximately 4.52 acres.
B. Two story building of 50,000 square feet total.
C. All construction will conform to State and Local building codes and
meet ADA 1990 compliance requirements.
II. LIFE SAFETY
A. Building shall comply with all local and state codes.
III. GENERAL
A. Architectural
B. Structural Engineering
C. Civil Engineering
D. Mechanical Engineering
E. Electrical Engineering
F. Landscaping Architect
G. Traffic Engineering
H. Soils and Environmental Engineering
I. Surveys
J. Site Plan Approval
K. Traffic Impact Fees
L. Developer's Agreement Fees regarding Water and Sewer
M. Building Permit Fees
Page 1
EXHIBIT "A" (CONTINUED)
N. Testing
1. Concrete Compression Tests
2. Soil Compaction Tests
O. Structural inspections.
P. Temporary utilities, telephone and water for construction.
Q. Temporary services, trailer rental and portable toilets.
R. Trash removal during construction.
S. Final clean of entire building, windows, floors, etc.
IV. SITE WORK
A. Clearing and grading of site.
B. Clean fill spread and compacted to sub-grade for building pad,
parking lot and landscape areas.
C. Storm water and retention systems are required to comply with
requirements of all governmental agencies.
D. Water and sewer services from property line to building.
E. Fire hydrant(s) as required to meet local Fire Marshall's
requirements.
F. Conduit for telephone and power service from property line to
building.
G. Paving layout in accordance with site plan.
1. 271 parking spaces.
2. Parking area to be 6" compacted limestone rock base or crushed
concrete with 1" of asphalt.
3. Stripes, bumpers, handicapped signage as required.
H. Concrete walks at building entries and extruded curbs at parking lot
end islands.
I. Concrete slab, six foot high concrete block dumpster enclosure with
gates.
J. Landscape and irrigation of site to meet city and park criteria.
K. Irrigation to include all timers, pumps, heads and piping to achieve
required coverage.
V. SITE LIGHTING
A. Site lighting to consist of concrete light poles with lighting
sufficient to illuminate all parking areas to local code
requirements.
VI. BASE BUILDING STRUCTURE
A. Two-story 50,000 square foot building shell to be constructed to meet
South Florida Building Code and Hurricane Code.
B. 3,000 PSI concrete slab, 4" thick.
C. Second floor PSI 60 lb live load and 20 lb dead load for total of 80
lb load.
Page 2
EXHIBIT "A" (CONTINUED)
D. 8" concrete block exterior walls with lightly textured stucco finish
(similar to stucco finish at new Motorola building in Quantum)
painted with two (2) coats of high quality paint.
E. Floor to deck height:
1. First floor 12'
2. Second floor 12'
F. Roof construction shall be structural steel and bar joists.
G. Exterior bronze glass windows. Entry doors and windows to have
anodized aluminum frames.
H. One(1) 3,000 lb. elevator with fireman's return. (See attached
specifications)
I. Stairway(s) to code.
VII. ROOFING
A. Roofing to meet or exceed all hurricane and wind requirements of
South Florida Building Codes.
B. Internal sound insulated roof drains at exterior wall on two sides of
building.
C. Roofing system to be built up three-ply. Roof to be pitched for
adequate drainage toward roof scuppers and internal drains.
D. Manufacturer's bond for proposed system is 10 years minimum.
E. Minimum R value of R-19.
F. Ladder and roof hatch for access to the roof.
VIII. ELECTRONIC/PHONE ROOM
A. Electrical room 1000 amp switch. Service to be 227/480 volt if
available or 220.
IX. FIRE SPRINKLERS
A. Building to be fully fire sprinkleres according to the NFPA
Standards.
X. GLASS AND GLAZING
A. Front entry area shall be 1/4" thick bronze store front glass. Frames
to be anodized aluminum. Color to be selected from standard colors.
B. Entry doors - double swinging glass store front narrow stile doors at
lobby entry area.
EXCLUSIONS - NOT IN PROPOSAL
In addition to any other items not included in this proposal, the following
items are excluded:
1. Building signage or site signage.
Page 3
EXHIBIT "A" (CONTINUED)
2. Appliances.
3. Security system or card access system.
4. Utility deposits of any kind.
NOTE: The aforementioned qualifications are meant to serve strictly for
guideline purposes. It is expressly understood that any final agreement
shall be based upon a detailed set of plans and specifications to be
approved by both Landlord and Tenant.
Page 4
EXHIBIT "A" (CONTINUED)
[OLSON GROUP INTERNATIONAL, INC. LETTERHEAD]
SEPTEMBER 11, 1995
Revised 9/15/95 W/ response from Catalfumo
Revised 9/19/95
OUTSOURCE INTERNATIONAL
8000 N. FEDERAL HIGHWAY
BOCA RATON, FLORIDA 33487
REVISED BUILDING QUESTIONNAIRE
50,000 SQ.FT. 2 STORY OFFICE BUILDING
NEWPORT CENTER
DEERFIELD BEACH, FLORIDA
This memo shows the response from Catalfumo regarding the September 11th memo.
Response is in bold type. We have also included items that may result in
additional costs to OutSource International. Please review these items and
give me a call so we can finalize the numbers and procedures.
INTERIORS AND BASE BUILDING:
1. Catalfumo gave permission for OutSource International to shift quantities/
dollar values for each selected trade and or professional fees.
R: AGREES EXCEPT FOR BASE BUILDING DOLLARS.
2. Cabling is NIC to Catalfumo.
R: ALSO INCLUDES VOICE AND DATA NIC.
3. Interior Design services are NIC. OutSource will be required to provide
there own Interior Design finishes and details. These finishes can be
presented by Outsource's Designer and Catalfumo's Architect will
coordinate these documents. OGI will recommend designers to Outsource
International. The projected fee for interior design services with
limited scope is in the range of .30 - .40 cents per square foot.
R: AGREES BUT THE SELECTED DESIGNER MUST HAVE AUTOCADD TO BE COMPATIBLE WITH
CATALFUMO'S ARCHITECT.
4. Programming will be completed by OutSource International. The estimated
value is .15 cents per sq.ft. and is not included in the Architects base
fee of $1.75.
R: AGREES:
EXHIBIT "A" (CONTINUED)
Page Two:
5. Catalfumo acknowledged that there would be three competitive bids for each
trade. OutSource International can recommend a subcontractor for any trade
on the interior construction. These subcontractors must be approved by
Catalfumo first.
R: THESE BIDS WILL BE ACCEPTED FOR INTERIOR ONLY. NOT BASE BUILDING. THE
RECOMMENDED SUBS FROM OUTSOURCE MUST CONFORM TO THE SCHEDULE PREPARED BY
CATALFUMO AND THEIR RULES OF CONSTRUCTION.
6. All telephone jacks will have ( 2 ) 1/2" conduits for both voice and data
at each pull.
R: AGREES.
7. Catalfumo will supply prices for 7'0" and 8'0" doors in lieu of 6'8" doors
specified.
R: STILL AWAITING PRICES FROM JAN WOLFE.
8. Port "A" Couchero is NIC. Catalfumo estimated the cost was $14-$15 per
square foot of roofed area.
R: THIS NUMBER IS AN ESTIMATE AT THIS TIME. IT ALSO WILL BE REQUIRED TO
CONFORM TO LOCAL ZONING APPROVALS AND PERMIT PROCESS.
9. One hydraulic elevator of 3000 lbs is included.
R: AGREES, BUT WE NEED TO KNOW THE SIZE L X W X H
10. Supplemental designs for AC for special areas are not included in the base
fee of $1.75 per sq.ft. The add for this work is about .06 - .08 cents per
foot.
R: AGREES.
11. Overall watts per square foot for the entire space is 17 watts. Specific
needs for distribution will be determined by OutSource International.
R: AGREES.
12. Solar Cool glass is an additional $2.50 per sq.ft. of glazed area. Tim
Page will advise of payback for savings time period.
R: THIS ESTIMATE WILL BE ABOUT $3.00 PER SQ.FT.
13. Hurricane shutters are included in base price of building. OutSource
International was informed that they must store these shutters on site.
R: THIS VALUE IS AROUND $3.00 PER SQ.FT. THE EXACT DESIGN WILL BE CONFIRMED,
BUT THE BUILDING WILL MEET THE REQUIRED CODES.
EXHIBIT "A" (CONTINUED)
Page Three:
BASE BUILDING SPECIFICATIONS:
We have reviewed the base building specifications supplied by Catalfumo and
please note the following budget conclusions.
1. The base building core can be built for about $36.00 per square foot or
$1,800,000.00
2. The interior fit up number for $29.00 per sq. ft. we feel is adequate to
accommodate OutSource's needs. This number is $1,450,000.00
3. Therefore that gives us an approximate land value, permit fees,
commissions, profit etc of $2,050,000.00
4. Catalfumo will allow a review of finishes and related costs associated with
design changes to the exterior of the building. If these revisions do save
money on the base building, money can be reallocated. This will not be
written in the lease, but will be a verbal agreement between Can Catalfumo
and OutSource.
5. We have received from Catalfumo interior specifications for items that we
requested information on:
Toilets: American Standard or equal
Bathroom Accessories: Bobrick or equal
Ceramic Tile: American Olean 2"x2" floor
41/4"x41/4" wall
Base: Mercer or equal
Carpet: Dimension, 100% nylon different grades
Light Fixtures: 2'x4', 3 lamp 18 cell parabolid with
electronic ballasts and F40CWWN watt
misers. Lithonia or equal.
Acoustical Ceilings: Building standard 2'x2', class A regular
with 15/16" exposed white grid.
Armstrong 704A or equal.
I have included a typical list of items that we feel will require additional
funding other than what is listed on the workletter form. Please note that this
is only a list for reference and will need to be clarified. OutSource's input is
critical to finalizing any budget numbers relating to these items.
EXHIBIT "A" (CONTINUED)
[CATALFUMO LETTERHEAD]
September 15, 1995
Mr. Glenn Olson
President
OLSON GROUP INTERNATIONAL, INC.
10242 N.W. 47th Street, Suite 39
Sunrise, FL 33351
Mr. Joseph Perillo
President
PERILLO CONSTRUCTION, INC.
1304 S.W. 160th Avenue
Suite 104
Ft. Lauderdale, FL 33326
RE: OUTSOURCE INTERNATIONAL BUILD-TO-SUIT
Gentlemen:
Regarding your memo dated September 11, 1995, our response is as follows:
1. Agreed.
2. Neither data or phone cabling is the responsibility of Catalfumo.
3. Interior design services are NIC. Catalfumo's architect will insert
designers specification, if any, within his plans. Please select a designer who
uses compatible software with our architect so date transfer is simplified.
Catalfumo makes no representation as to what your interiors design costs should
be.
4. Your statement is correct.
5. Agreed. Subcontractors must perform according to Catalfumo scheduling
and standards.
6. Your statement is correct.
7. Door 6'8" are in our budget. Catalfumo will supply price for 7'0" and
8'0" doors as an upgrade.
EXHIBIT "A" (CONTINUED)
OUTSOURCE INTERNATIONAL, INC.
BASIC LESSEE IMPROVEMENT ALLOWANCES & STANDARDS
TYPICAL MATERIAL SPECIFICATIONS
ACOUSTICAL CEILINGS: Building standard ceiling system shall be 2'-0" x 2'-0" x
5/8" Class "A" regular, lay-in white acoustical tile ceiling with 15/16" exposed
white grid. Armstrong 704A or equal.
BASE: Building standard vinyl base shall be 4" vinyl cove base. Mercer or equal.
CARPET: Building standard carpet shall be 30 oz. cut pile 100% nylon,
commercial grade carpet or 26 oz. level loop, 100% nylon commercial grade carpet
installed using direct glue method. Dimension carpet "Flavors 30". Dimension
carpet "670 Reunion"
UPGRADE CARPET: Building standard upgrade carpet shall be 36 oz. cut pile, 100%
nylon commercial grade carpet. Dimension carpet "Flavors 36".
RESTROOM FACILITIES: Building standard restroom facilities shall include the
following:
/bullet/ CERAMIC FLOOR TILE: Shall be 2" x 2" unglazed mosaic floor tile,
standard grade. American Olean or equal in groups 1 and 2 only. Ceramic
WALL tile shall be 4 1/4 x 4 1/4 glazed wall tile, solid color straight
pattern. American Olean or equal bright or matt glazed.
/bullet/ PLUMBING FIXTURES: Shall be American Standard or equal white in color.
/bullet/ BATH ACCESSORIES: Shall be Bobrick or equal.
ELECTRICAL LIGHT FIXTURES: Standard fixtures shall be 2' x 4'; 3-tube
flourescent fixture with acrylic lens. Fixture shall be equipped with energy
saving ballasts and F40CWWN watt miser bulbs. Lithonia or equal.
UPGRADE LIGHT FIXTURES: Shall be 2' x 4', 3-tube flourescent fixture with 18
cell parabollo lens. Fixture shall be equipped with energy saving ballasts and
F40CWWM watt miser bulbs. Lithonia or equal.
EXHIBIT "A" (CONTINUED)
Mr. Glenn Olson
President
OLSON GROUP INTERNATIONAL, INC.
and
Mr. Joseph Perillo
President
PERILLO CONSTRUCTION, INC.
September 15, 1995
Page Two
8. Porto-co-chere is NIC. Estimated cost is $14 - $15 per square foot of
roof area, but is subject to construction plan. The availability of a porte-co-
chere is subject to site plan approval.
9. Agree.
10. Agree.
11. Your statement is correct.
12. Glass in budget has shade coefficient of .69. High performance glass
has shade coefficient of .44. The additional cost is $2.50 - $3.00 psf of
surface area of glass. The payback estimate by our HVAC consultant cannot be
calculated without knowing the base electric bill. He did say the energy savings
would be on the order of 10% of your monthly energy bill depending on the
ultimate design.
13. The building will meet the hurricane code requirements for Broward
County.
Jan will contact Joe Perillo directly about additional specifications.
Sincerely,
/s/ TIMOTHY J. PAGE
-----------------------
Timothy J. Page
Director of Development
dls
EXHIBIT "B"
[GRAPHIC OF MAP]
SIGN SPECIFICATIONS
All signs shall be subject to the approval of Landlord, the City of
Deerfield Beach and the Architectural Review Board of Newport Center. Prior to
fabrication Tenant shall obtain all required approvals and provide evidence of
same to Landlord. Landlord's consent shall be determined by whether or not the
signs meet the requirements of the Declaration of Covenants, Restrictions and
Easements for Newport Center.
18
LEASING SITE PLAN
To Lease dated the 19th day of October, 1995 between Daniel S. Catalfumo as
"Landlord", and OutSource International, Inc., as "Tenant".
TO BE PREPARED FOR PER ADDENDUM
19
EXHIBIT C
OUTSOURCE INTERNATIONAL
ESTIMATED
PRICE
TOTAL SQ. FT. 50,000 PER
BUDGET SQ. FT.
CATEGORY
INSURANCE $ 11,000 $0.22
ASSOCIATION DUES $ 13,217 $0.26
MANAGEMENT FEES $ 27,500 $0.55
REPAIR AND MAINTENANCE $ 10,000 $0.20
IRRIGATION SYSTEM $ 1,000 $0.02
LANDSCAPE MAINTENANCE $ 15,000 $0.30
LANDSCAPE REPLACEMENT $ 500 $0.01
JANITORIAL (By Tenant) $ 0 $0.00
MISCELLANEOUS $ 1,000 $0.02
R.E. TAX EXPENSE $ 77,500 $1.55
RESERVES (parking lot/lighting/roof) $ 1,500 $0.03
TAXES AND LICENSES $ 1,000 $0.02
TELEPHONE (ELEVATOR) $ 1,000 $0.02
ELECTRIC EXPENSE $ 6,000 $0.12
WATER/SEWER $ 4,000 $0.08
WASTE EXPENSE $ 4,500 $0.09
-------- -----
TOTAL EXPENSES $174,717 $3.49
======== =====
NOTES:
ADDENDUM
THIS ADDENDUM is executed this___day of October, 1995, by and between
DANIEL S. CATALFUMO, as Trustee under F.S. 689.071, ("Landlord") and OUTSOURCE
INTERNATIONAL, INC. ("Tenant").
B A C K G R O U N D:
A. Landlord and Tenant have entered into that certain Lease of even
date herewith to which this Addendum is attached.
B. Landlord and Tenant desire to amend the Lease as set forth below.
NOW THEREFORE, in consideration of the sum of $10.00 and other good and
valuable consideration, the parties agree as follows:
1. BASE RENT AND ADDITIONAL RENT. The Base Rent under the Lease for the
first two lease years commencing on the Rent Commencement Date shall be
$438,000.00 annually, payable in monthly installments of $36,500.00. Commencing
with the third lease year, the Base Rent shall be $510,000.00 annually, payable
in monthly installments of $42,500.00. Thereafter, Base Rent shall escalate in
accordance with the provisions of paragraph twenty-ninth of the Lease. The
Additional Rent (common area expenses and sales taxes under paragraph
Twenty-Seventh) is initially estimated to be $174,256.00 annually, payable in
monthly installments of $14,521.33 based upon the estimate of common area
expenses as set forth on Exhibit "C". The Base Rent, Additional Rent and
Purchase Option Price pursuant to paragraph 2 below are all based on Tenant
leasing 40,000 gross square feet in a 50,000 gross square foot building. Upon
completion of the construction of the Building and Premises, Landlord shall
cause the Building and Premises to be measured to determine the actual as built
square footage of the Building and the Premises. The square footage of the
Premises shall be determined by measuring from the outside of the exterior walls
to the middle of any interior demising walls. The square footage of the Building
shall be measured from the outside of the exterior walls to the outside of
exterior walls. If the square footage of the Premises is more than 40,000 square
feet, the Base Rent for the first lease year shall be increased based on $10.95
per gross square foot per year. In no event shall Tenant design the premises to
contain less than 40,000 square feet. If the square footage of the Building is
more or less than 50,000 square feet, the Purchase Option Price shall be
adjusted up or down based on a purchase price of $106.00 per square foot.
Landlord's architect shall measure the Building and Premises and provide the
measurement to Landlord and Tenant. If Tenant desires to confirm the
measurement, Tenant may retain an independent, licensed architect or engineer to
measure the Building and Premises at Tenant's expense. If the measurements
differ, Landlord's architect and Tenant's retained architect/engineer shall
confer and agree on the measurement and the agreed measurement shall be binding
on Landlord and Tenant.
2. OPTION TO PURCHASE. Tenant shall have the Option to Purchase the
50,000 square foot Building in which the Premises are located for a period
commencing on the date of execution hereof and ending two (2) years from the
date of issuance of the Certificate of Occupancy for the Building. The terms of
the Option shall be in accordance with the Option Agreement attached hereto as
Exhibit "B".
3. BALANCE OF SPACE IN BUILDING. Landlord agrees that it shall not
actively market the remaining 10,000 square feet in the Building until February
1, 1996, and when commencing such marketing shall give highest priority to
tenants seeking lease terms of five (5) years or less to allow for possible
expansion by Tenant. Prior to February 1, 1996, Landlord agrees that it will
agree to lease the remaining 10,000 square feet to Tenant on the same terms and
conditions as set forth herein, except that the Improvement Allowance shall be
$27.50 per square foot and the General Conditions and Supervision changes of
Landlord's contractor shall be deducted from the Improvement Allowance.
1
C. All work on the Tenant Improvements shall be performed, and all
materials shall be obtained, by Contractor. Tenant shall be entitled
to, at its own expense, have an architect or engineer to monitor the
progress of construction of the Building and Tenant Improvements.
Landlord shall grant Tenant's representatives free access to the
Building and Premises during construction provided that all such
accesses are in accordance with good construction safety procedures,
Tenant indemnifies Landlord and holds Landlord harmless from any claim
or damage arising out of Tenant's representative having access to the
Premises and Building, and provided that neither Tenant's
representative nor Tenant shall interfere with the construction of the
Building and Tenant Improvements. Contractor shall warrant the quality
and workmanship of the Building and Site Improvements and Tenant
Improvements for a period of one (1) year after completion of the
Building and Tenant Improvements.
D. Landlord shall provide Tenant with an improvement allowance (the
"Improvement Allowance") which shall be applied to the cost of (i) the
Architect preparing the Plans and Specifications for the Tenant
Improvements (but not for interior design and programming services),
(ii) obtaining the required permits, and (iii) completing the
construction of the Tenant Improvements in accordance with the terms of
this Lease. The Improvement Allowance shall be in an amount equal to
$29.00 per square foot multiplied times the gross square footage as
shown in the Plans and Specifications approved by Tenant and Landlord.
Based on a gross square footage of 40,000 square feet, including core
areas, the Tenant Improvement Allowance will be $1,160,000.00. If the
square footage of the Premises is increased or decreased pursuant to
paragraph 1 of this Addendum, the Tenant Improvement Allowance shall be
adjusted accordingly. The costs to be applied against the Improvement
Allowance shall include, without limitation, the cost of preparing the
Plans and Specifications, the cost of obtaining all required permits,
and the amount of Landlord's contract with Landlord's Contractor for
the construction of the Tenant Improvements. Landlord's Contractor's
price to construct the Tenant Improvements shall include 10% to the
Contractor for overhead and profit. The General Conditions and
Supervision line item which was deleted from Exhibit "A" shall not be
deducted from the Improvement Allowance, but rather shall be borne by
Landlord. The Improvement Allowance shall not contain any limit on any
particular line item, but rather only the overall $29.00 per square
foot limitation which may be shared between line items as Tenant may
elect. Tenant shall be responsible for all costs to the extent that
said costs exceed the $29.00 per square foot Improvement Allowance. If
the costs are less than $29.00 per square foot, any balance shall be
paid to Tenant at the time of occupancy of the Premises. The
Improvement Allowance shall not be applied to the cost of the "Site
Improvements" as described in the Proposal, the items under the heading
"General" in the Proposal as they apply to the construction of the
Building and the Site Improvements or the cost of constructing the
Building in accordance with the heading "Building" in the Proposal, the
cost of all of which shall be borne by Landlord. Tenant shall be
entitled to designate subcontractors to be included in the bidding by
Landlord's Contractor of the construction of the Tenant Improvements
(including the construction trash removal service) and Landlord's
Contractor shall include such subcontractors in the bid process and
Landlord shall award the subcontracts to the subcontractors designated
by Tenant provided the subcontractors are licensed, insured and bonded
as may be required by Landlord's Contractor and/or lender.
E. If the estimated cost of the Tenant Improvements exceeds the
Improvement Allowance or if Tenant requests Landlord to have any
additional work performed on the Premises during the term of the Lease
subsequent to the
3
completion of the Tenant Improvements, Tenant shall deposit within five
(5) business days of written notice from Landlord an amount equal to
Landlord's reasonable estimate of the overage or the cost of such
additional work prior to commencement of the work. If any work
requested by Tenant is of a nature that may require a specialty trade,
then Landlord's Contractor shall solicit a minimum of three
subcontractor bids per trade prior to approval of the cost of such
additional work by Tenant. If Tenant fails to deposit with Landlord the
sums required pursuant to this Paragraph, Landlord shall be entitled to
treat said failure as an event of default or Landlord may elect to
borrow the funds not deposited from whatever source is available at
market rates and Tenant shall immediately upon demand pay to Landlord
the sums borrowed by Landlord hereunder together with all accrued
interest. The sums paid to Landlord shall be applied first to accrued
interest and then to the principal sum borrowed. If the cost of the
additional work exceeds or is less than the estimate of Landlord,
Tenant shall pay such excess to Landlord upon demand or Landlord shall
promptly refund such overage as the case may be.
F. If Tenant fails to furnish any required plan, information (including,
without limitation, any material, furnishing, equipment, color, or
other selection), approval or consent within five (5) days after
written request from Landlord and Tenant's failure to do so delays or
would delay the issuance of a Certificate of Occupancy for the
Premises, Landlord shall be entitled to provide such plan, information,
approval or consent and/or make such selection on behalf of Tenant
using Landlord's reasonable judgment to enable Landlord to complete
construction of the Premises and obtain the Certificate of Occupancy.
If Tenant thereafter requests any modification, deletion or addition
constituting a Change Order to the Premises, said work shall be
performed by Contractor at Tenant's expense in accordance with
Paragraph E above.
5. CONSTRUCTION FINANCING. TIMING OF CONSTRUCTION. Landlord warrants
and represents to Tenant that Landlord, by means of its construction line of
credit or other financing to be selected by Landlord, has available construction
loan financing for the development of the Building and premises. Upon the
execution of the Lease and provided Tenant meets the time tables for delivery of
floor plans and other construction items pursuant to paragraph 4 of this
Addendum, Landlord shall commence development of the Site and construction of
the Building within four (4) months of execution of the Lease. Further, Landlord
agrees to diligently prosecute the completion of development of the Site and
construction of the Building and premises such that Landlord shall complete
construction of the Building and Premises within ten (10) months of the date of
execution of the Lease. If Landlord fails to complete construction of the
Building and premises within said time frame, and provided that said failure is
not as a result of (a) the failure of Tenant to provide the required floor plans
selections or construction approvals; (b) the unavailability of any of Tenant's
equipment or specially ordered interior finishes; or (c) the failure of Tenant
to give any required consent, approval, selection or payment, Landlord shall
grant Tenant a free rent credit equal to one (1) day of free base rent for each
day completion of construction is delayed beyond the ten (10) month period from
execution of the Lease.
6. LANDSCAPING, PORTE-CO-CHERE. Landlord agrees to install landscaping
and irrigation on the Site with a cost of not less than $50,000.00. In addition,
Landlord agrees to add a porte-co-chere to the Building at Landlord's expense
not to exceed $7.50 per square foot up to 1,000 square feet with Tenant to pay
the balance of the cost of the porte-co-chere of $7.50 per square foot up to
1,000 square feet. Landlord agrees to obtain three subcontractor bids per trade
for the construction of the porte-co-chere.
7. PERMANENT FINANCING. Landlord shall furnish to Tenant permanent
financing on terms no less favorable than those set forth in paragraph 3 of the
Option Agreement attached to this Lease. If necessary, Landlord shall be
entitled to provide such financing through purchase money wrap around financing
to be provided by Landlord. If Landlord is not able to provide the
4
required financing to Tenant for any reason other than Tenant's refusal to
provide necessary information to proposed lenders or Tenant's failure to execute
loan documentation in form and substance customary to such financing in the then
current permanent financing market, Tenant shall, upon ninety (90) days prior
written notice to Landlord, be entitled to terminate this Lease, in which event,
Landlord and Tenant shall have no further obligation hereunder. In addition
Landlord shall be entitled at any time during the period prior to the exercise
of the Option by Tenant to notify Tenant of Landlord's inability to provide the
required financing, in which event, Tenant shall have thirty (30) days to
terminate this Lease. If Tenant fails to exercise its rights to terminate the
Lease within said thirty (30) day period, Tenant's right to terminate the Lease
shall be deemed waived and of no further force and effect.
IN WITNESS WHEREOF, the parties have executed this Addendum as of the
date set forth above.
WITNESSES (Names MUST be typed under
signatures) LANDLORD:
By: /s/ DANIEL S. CATALFUMO
------------------------------
/s/ [ILLEGIBLE] Daniel S. Catalfumo, as
--------------------------------- Trustee under F.S. 689.071
/s/ [ILLEGIBLE]
---------------------------------
TENANT:
OUTSOURCE INTERNATIONAL, INC.
/s/ BARBARA T. MEALEY By: /s/ ROBERT LEFCORT
------------------------------ ------------------------------
Executive Vice President
/s/ PHYLLIS J. HART
------------------------------
5
EXHIBIT 10.18
STATE OF FLORIDA
COUNTY OF BROWARD
OPTION AGREEMENT
STATEMENT OF BACKGROUND INFORMATION
Seller is the owner of all that tract or parcel of land described in
Exhibit "A" attached hereto and incorporated herein by reference (the
"Property").
The Property will be improved by the construction thereon of a
professional office building (the "Building"), as contemplated and described in
that certain lease (the "Lease") entered between Purchaser and Seller to which
thiseOption Agreement is attached as an Exhibit by reference, and will have
located thereon or affixed thereto, or located in or affixed to the Building,
certain equipment, machinery and fixtures (the "Equipment"), and certain items
of personalty (the "Personal Property"). Purchaser desires to purchase from
Seller the Property, the Building, the Equipment and the Personal Property
(hereinafter referred to collectively as the "Contract Property"), and to obtain
an option for such purpose. Seller is willing to sell the Contract Property upon
the terms and conditions herein stated, and to grant an option for such purpose.
In consideration of the premises, the mutual covenants and agreements
herein contained, and the sum of Ten Dollars ($10) in hand paid by Purchaser,
the receipt of which is hereby acknowledged, the parties agree as follows:
1. GRANT OF OPTION: Seller does hereby give, grant, and convey unto
Purchaser, the sole and exclusive right, privilege and option of purchasing, for
the price and upon the terms and conditions hereinafter set forth, the Contract
Property, which includes, without limitation, all easements and rights
appurtenant to the Property, all of Seller's right, title, and interest in and
to all public and private ways adjoining the Property, and all improvements
thereon of any nature or kind.
2. TERM AND EXERCISE OF OPTION: The option herein granted shall remain
open and in full force and effect until 2 o'clock P.M. on the date that exactly
follows two years after the issuance of a final unconditional Certificate of
Occupancy for the Building. This Option may be exercised at any time prior to
the expiration of its term by written notice from Purchaser to Seller either
mailed or delivered to Seller as hereinafter provided.
3. PURCHASE PRICE AND METHOD OF PAYMENT: The purchase price shall be
Five Million Three Hundred Thousand Dollars ($5,300,000.00) subject to the
adjustments provided in subparagraph (c) below The Purchase Price shall be paid
by Purchaser to Seller, as follows:
(a) Purchaser shall take title to the Property subject to a mortgage
(the "Mortgage") securing a debt with a principal amount at the time of
commencement of the Lease of not less than Three Million Nine Hundred
Seventy-Five Thousand Dollars ($3,975,000.00). The debt will bear interest at a
rate not greater than eight and two-tenths per cent (8.2%) per annum and payable
in equal installments over a term of ten (10) years, based on a twenty (20) year
amortization. The Mortgage shall allow sale of the Building to Purchaser without
violation of any due on sale clause.
(b) The remaining balance of the purchase price, after crediting the
principal balance of the indebtedness assumed, shall be paid in cash on the
Closing Date.
(c) The Purchase Price shall be increased by $106.00 per square foot of
space (as defined in the Lease) in the Building in excess of 50,000 square feet;
the Purchase Price shall be decreased by $106.00 per square foot of space in the
Building less than 50,000 square feet. If the interest rate on the debt referred
to in subparagraph(a) above exceeds eight and two- tenths percent (8.2%) per
annum, the purchase price shall be decreased by $27,000.00 for each one tenth of
one percent (.1%) by which the interest rate exceeds eight and two-tenths
percent (8.2%) per annum; the purchase price shall likewise be increased by
$13,500.00
-2-
for each one tenth of one percent (.1%) by which the interest rate is less than
seven and eight-tenths percent (7.8%).
(d) If Purchaser exercises this option before improvements are made to
finish the approximately 10,000 square feet of space in the Building to be
leased by other tenants, Purchaser will receive a credit for tenant improvements
related to such space in the amount of $27.50 per square foot. Seller warrants
that tenant improvements consistent with those described on Exhibit "A" to the
Lease will be accomplished by Seller for no more than $32.50 per square foot.
(e) If Purchaser exercises this Option after a Certificate of Occupancy
is issued for the Building and the approximately 10,000 additional square feet
in the Building have not been occupied by tenant paying rent to Seller for any
period of time after issuance of the Certificate of Occupancy and prior to the
Closing Date, the purchase price will be increased for each month (prorated for
partial month) when the additional space has been without a tenant in occupancy
paying rent between the date on which the Certificate of Occupancy is issued and
the Closing Date, in accordance with the following: (i) for the first three (3)
months add $7,000.00 per month; (ii) for the next three (3) months add
$10,000.00 per month; and (iii) for any remaining months add $13,000.00 per
month. The increased purchase price shall be calculated on a cumulative basis
through the Closing Date. For example, if the Closing Date occurs in the tenth
month following the date of the Certificate of Occupancy and the additional
space has been without a tenant in occupancy paying rent for five months after
the issuance of the Certificate of Occupancy, the purchase price shall be
increased by $41,000.00 ($7,000.00 for three (3) months and $10,000.00 for the
fourth and fifth month).
4. WARRANTIES OF SELLER: Seller represents and warrants to Purchaser:
(a) That Seller has good and marketable fee simple title to the
Contract Property, as hereinabove described;
-3-
(b) That Seller has the right, power and authority to enter into this
Option and to sell the Contract Property in accordance with the terms and
conditions hereof;
(c) That the Contract Property is subject to the use restrictions set
forth in the Development Order for the DRI, in the Declaration of Covenants,
Restrictions and Easements encumbering the Property and in the other documents
reflected in the Title Policy, but is free from any other use or occupancy
restriction except those imposed by applicable zoning laws and regulations;
(d) That the Property is free from special taxes or assessments,
except those generally applicable to other properties in the tax district in
which the Property is located;
(e) That the Contract Property is free of any liens, security
interests, easements and other encumbrances, whether existing of record or
otherwise, except easements or rights of way for public roads and highways
adjoining the Property, easements for the erection and maintenance of public
utilities serving the Property, the Mortgage described in paragraph 3.(a)
hereof, and the matters set forth in Exhibit "B" attached hereto and
incorporated herein by reference, none of which adversely affect the use of the
Property for a commercial office building;
(f) That no options have been granted to, or agreements entered into
with others to purchase or rent any interest in the Contract Property, or any
part thereof, except that twenty percent (20%) of the Building to be erected on
the Property may be rented to third parties in accordance with the Lease;
(g) That subject to the Lease and any additional leases contemplated
herein, Seller has the exclusive right of possession of the Contract Property;
(h) That there is available to the Property water, gas, sewerage and
electricity, all of which are now being or will be utilized by Seller;
(i) That the Property is zoned commercial to allow the use of the
Property for a commercial office building;
-4-
(j) That Seller, as Landlord, will perform its maintenance obligations
with respect to the Building and Property in accordance with the Lease during
the period from the exercise of this Option through Closing Date. Purchaser will
perform its maintenance obligations in accordance with the Lease during this
time period.
(k) That Seller will not cause or permit any action to be taken which
will cause any of the foregoing representations or warranties to be untrue on
the Closing Date;
(1) That Seller will on the Closing Date, have available the financing
referred to in paragraph 3(a) above, or that Seller will provide such financing
through a purchase money note and mortgage or from a third party lender with
costs of such financing allocated as specified in paragraph 8(c) below.
(m) That Seller will, on the Closing Date, convey the Contract
Property to Purchaser by general warranty deed, and
(m) That Seller will, on the Closing Date, do, make, execute and
deliver all such additional and further acts, things, deeds, instruments and
documents as counsel for Purchaser may reasonably request to completely vest in
and assure to Purchaser full rights in or to the Contract Property.
5. SELLER'S OBLIGATION TO DELIVER: Within ten (10) days of Purchaser's
exercise of this Option, Seller will deliver to Purchaser true, accurate and
complete copies of the following:
(a) an itemized inventory of the Personal Property;
(b) all site plans prepared in connection with the development of the
Real Property;
(c) current as-built architect's sepia plans and specifications, which
will include parking stripes if required by Seller's lender or the appropriate
governmental authorities in connection with the Certificate of Occupancy for the
Property;
(d) current as-built engineering-mechanical plans and
specifications;
(e) all soils, termite, water and other testing reports
pertaining to the Property;
-5-
(f) all market studies and appraisals made by or for Seller pertaining
to the Contract Property, including engineer component appraisals;
(g) all aerial photographs of the Real Property in the Seller's
custody;
(h) all architect's certificates of completion or substantial
completion, building permits, certificates of occupancy, and other governmental
authorizations, licenses and permits pertaining to the Real Property;
(i) independent proof of the zoning of the Real Property permitting
all uses currently made of the Real Property, including copies of all applicable
zoning codes and ordinances currently in effect with respect to the Real
Property;
(j) independent proof that the Real Property is within Flood Zone X as
of the date of this Option Agreement;
(k) all agreements, letters, memoranda, and other writings pertaining
to the provision of utilities for the Real Property;
(1) all vendor/service agreements affecting or pertaining to the
Contract Property;
(m) all insurance policies, including without limitation casualty and
liability insurance policies, pertaining to the Contract Property;
(n) the most recent ad valorem real property tangible personal
property and intangible personal property tax bills pertaining to the Contract
Property;
(o) all existing surveys of the Real Property in the Seller's
possession;
(p) all previously issued owner's and mortgagee title insurance
policies in the Seller's possession pertaining to the Contract Property;
(q) all guarantees, warranties and other agreements pertaining to the
Building or Personal Property, and a warranty of materials, construction and
design of the Building and all improvements on the Property from Seller and
Seller's general contractor on the Building effective from a period beginning on
the
-6-
issuance of the Certificate of Occupancy referred to in paragraph 1 above and
continuing for one(1) year thereafter;
(r) all current leases (reflecting execution by the tenants)
pertaining to the Contract Property, together with a rent roll specifying the
rentals (exclusive of rent taxes) paid by each tenant and the amount of any
security deposits posted by each tenant;
(s) all operating statements and other financial records pertaining
to the ownership, use and operation of the Contract Property during the
preceding five (5) years;
(t) all correspondence, agreements and other writings pertaining
to existing or contemplated financing of the Contract Property; and
(u) such other documents, instruments and records pertaining to the
Contract Property or the ownership use and operation of the Contract Property
reasonably requested by the Purchaser.
The closing of the purchase pursuant to the exercise of this Option is
strictly contingent upon the Purchaser's receipt, review and approval of all of
the foregoing instruments, documents and records, which approval shall be wholly
at the discretion of Purchaser.
6. CONDITIONS OF PURCHASER'S OBLIGATION: Purchaser's obligation to
purchase the Contract Property shall be subject to the satisfaction or
performance of the following terms and conditions on or as of the Closing Date:
(a) The representations and warranties of Seller shall be true and
correct on and as of the Closing Date in the same manner and with the same
effect as though such representations and warranties had been made on and as of
the Closing Date; Seller shall deliver to Purchaser a warranty deed satisfactory
in form and substance to counsel for Purchaser, conveying good and marketable,
fee simple title to the Contract Property, subject only to the Mortgage referred
to in paragraph 3.(a) hereof and subject to the Permitted Exceptions to be
approved and attached to the Option Agreement as Exhibit "B."
-7-
(b) The Seller shall deliver to Purchaser an affidavit in form and
substance satisfactory to counsel for Purchaser concerning the absence of
boundary line disputes, the possession of the Contract Property, improvements or
repairs made within three months of the Closing Date and proceedings against
Seller.
(c) The Seller shall deliver to Purchaser a bill of sale, satisfactory
in form and substance to counsel for Purchaser, conveying title to the Contract
Property free and clear of all liens, encumbrances and security interests of
every nature and description, except for the Mortgage described in paragraph
3.(a) hereof.
(d) The Seller shall deliver to Purchaser any and all governmental
approvals, licenses and permits issued to or owned by Seller and pertaining to
the Contract Property.
(e) The Seller shall deliver to Purchaser from Seller's attorneys an
opinion of counsel dated the Closing date stating that Seller is a duly
organized and validly existing Trust, that the signatory to this agreement is a
valid trustee of the Seller and is authorized to sign this Option on behalf of
the Seller, that Seller is in good standing and authorized to do business in the
state of Florida, that Seller is legally bound by the general Warranty Deed and
Bill of Sale and Assignment and that Purchaser has a right or recourse against
Seller, or its trustee, for any breach of any covenant or warranty of title set
forth in these instruments; that all requisite actions have been duly taken so
as to fully authorize Seller to sell and transfer the Contract Property to
Purchaser in accordance with the terms and provisions of this Option; and that
this Option and each document described herein to be executed and delivered by
Seller at Closing has been duly executed and delivered by Seller and that each
constitutes the valid and legally binding obligation of the signing party or
parties enforceable against the signing party or parties in accordance with its
terms.
(f) The Seller shall deliver possession of the Contract Property to
Purchaser; subject to the rights of tenants previously disclosed to Purchaser,
and deliver to Purchaser all keys to all
-8-
locks for the Contract Property, excepting those duly issued to tenants then in
possession.
(g) The Seller shall properly and duly execute, acknowledge and
deliver to Purchaser such other documents and instruments as Purchaser's counsel
deems necessary to the consummation of the purchase of the Contract Property
pursuant to an exercise of this Option.
(h) The Seller shall pay any and all brokerage fees due in connection
with this Option or the sale of the Contract Property, which arise from dealings
with Seller. Purchaser shall indemnify and hold Seller harmless from any and all
brokerage fees arising from dealing solely with Purchaser.
(i) The Seller shall deliver to each tenant of the Contract Property a
written notice, signed by Seller, in form and content acceptable to Purchaser,
advising of the sale of the Contract Property and directing that all future
rents be paid to Purchaser.
In the event the foregoing terms and conditions are not satisfied, or
there has been no performance with respect to them by the Closing Date, then
Purchaser may cancel its exercise of this Option and thereafter this Option and
any purchase agreement entered into pursuant to this Option shall be null and
void, or Purchaser may waive such satisfaction and performance and elect to
close, or Purchaser may exercise such rights or such additional remedies as may
be provided for or allowed by law or equity.
7. TITLE EXAMINATION AND OBJECTIONS: Once Purchaser has exercised
this Option, Purchaser shall have until five (5) days prior to the Closing Date
in which to examine title to the Contract Property and in which to furnish
Seller a written statement of objections affecting the marketability of such
title. Seller shall have until the Closing Date to satisfy such objections, and
if Seller fails to satisfy all valid objections (other than those referred to on
Exhibit "B" attached hereto) on or prior to the Closing Date, then Purchaser may
either (i) waive the objections, (ii) satisfy the objections, after deducting
from the purchase price the cost of satisfying objections which can be satisfied
by
-9-
the payment of money, or (iii) extend the Closing Date for a period of not more
than sixty (60) days until such objections are satisfied by giving written
notice of such extension to Seller, in which case the Closing Date shall be
extended to the date specified by Purchaser, or (iv) terminate its exercise of
this Option and any agreement to purchase entered into pursuant to this Option
by giving written notice of such termination to Seller, in which case
Purchaser's earnest money shall be refunded promptly, all rights and obligations
of the parties shall expire and this Option and any exercise of this Option
shall become null and void. In the event of an extension of the Closing Date
under subparagraph (iii) above and the subsequent failure or refusal of Seller
to satisfy the objections, then Purchaser may elect between the options set
forth in subparagraphs (i) and (ii) above, or Purchaser may elect to exercise
such rights or remedies as may be provided for or allowed by law or in equity. A
list of Permitted Exceptions will be attached to the Option Agreement as Exhibit
"B" and Purchaser will agree to take title subject to those Exceptions and any
other exceptions that are acceptable to Purchaser.
8. CLOSING DATE, PRORATIONS, CHARGES AND ADJUSTMENTS:
(a) The sale shall be consummated at the offices of Seller or Seller's
closing agent in Palm Beach County, Florida, within 30 days after the exercise
of this Option.
(b) All ad valorem taxes applicable to the Contract Property,
interest on the indebtedness assumed by Purchaser as provided for in paragraph
3.(a) herein, rents from the Contract Property for the month in which the
Closing Date occurs, insurance and utility charges, the property owner's
assessments, and other items of customary income and expense, shall be prorated
between the Purchaser and Seller as of the Closing Date.
(c) Seller shall pay all closing costs of any nature or sort
whatsoever, including, without limitation, all documentary and intangibles tax,
transfer, assumption, and recording costs, all costs of obtaining the financing
referred to in paragraph 3(a) above, including interest rate differentials,
buy-downs, discount
-10-
points, fees, and charges, excepting only Purchaser's attorney's fees, which
shall be paid by Purchaser.
9. RISK OF LOSS AND INSURANCE: Between the date hereof and until the
transaction is consummated on the Closing Date, the risks of ownership and loss
of the Contract Property and the correlative rights against insurance carriers
and third parties shall belong to Seller. In the event of damage to or
destruction of all or any of the Contract Property by fire or other casualty
prior to the Closing Date, Purchaser may elect either to receive the insurance
proceeds payable as a result of the event and consummate the transaction, or to
terminate its exercise of this Option by giving written notice of such
termination to Seller, in which case Purchaser's earnest money shall be refunded
promptly, all rights and obligations of the parties shall expire and any
exercise of this Option shall become null and void.
10. CONDEMNATION: In the event of the taking of all or any part of the
Contract Property by eminent domain proceedings or the commencement of any such
proceedings prior to Closing, Purchaser shall have the right, at its option, to
terminate its exercise of this Option by giving written notice thereof to Seller
on or before the Closing Date hereunder. If Purchaser does not so terminate its
exercise of this Option, then, at the Purchaser's option, (i) the purchase price
for the Contract Property shall be reduced by the total of any awards or other
proceeds received by Seller at or prior to the Closing Date with respect to any
taking, or (ii) at the Closing Date Seller shall assign to Purchaser all rights
of Seller in and to any awards or other proceeds payable by reason of any
taking. Seller agrees to notify Purchaser of eminent domain proceedings within
five days after Seller learns thereof. Notwithstanding the fact that neither
Purchaser nor Seller knows of the taking of all or any part of the Contract
Property by eminent domain proceedings at the time of Closing, Seller shall
execute, acknowledge and deliver at the Closing, an assignment of all the rights
of Seller in and to any awards or other proceeds payable by reason of any such
taking, whether known or unknown.
-11-
11. ACCESS AND INSPECTION: Between the date hereof and until the
transaction is consummated on the Closing Date, Purchaser and Purchaser's agents
and employees, shall have the right to enter the Contract Property for the
purpose of inspecting the same, and making soil tests, engineering studies and
surveys; provided, however, that such activities shall not materially damage the
Contract Property. Purchaser shall indemnify Seller against any damages caused
by any such inspections and provide Seller with evidence of appropriate
insurance to cover this liability.
12. ASSIGNMENT: This Option may only be assigned by Purchaser to its
controlled affiliates, subsidiaries, its successors by merger or other related
parties of that sort. Seller shall be entitled to assign the Option to any
successor in title to the Property and Building. This Option shall be binding
upon and enforceable against the parties and their respective heirs, legal
representatives, successors and assigns.
13. OPTION MONEY: The security deposit under the Lease shall be held
by Seller upon the exercise of this Option in an interest bearing account and
which, together with any interest or earnings thereon, shall be applied to the
purchase price upon closing. If the sale is not consummated in accordance with
the terms and conditions of this Option because of Seller's inability, failure
or refusal to perform any of Seller's covenants and agreements herein, then the
option money, together with any interest or earnings thereon, shall be paid to
Purchaser; otherwise it will thereafter be held by Seller as a security deposit
under the Lease. If, as a result of Buyer's default hereunder, Seller incurs
out-of-pocket expenses, Seller may pay such expenses from the deposit and Buyer
shall be required to reimburse Seller the amount of such expenses paid from the
deposit, with such funds, together with any remainder of the deposit, to be held
as a security deposit under the Lease.
14. SURVEY: Seller agrees that it will prior to the Closing Date
promptly upon the exercise of this Option procure a survey of the Property by a
competent, registered Florida land surveyor, and that Seller will cause said
surveyor to show on said survey all
-12-
improvements "as built." The parties agree that the legal description and the
exact acreage of the Property shall be determined by said survey.
15. SURVIVAL: This Option shall survive the consummation of the
transaction and the delivery of the warranty deed from Seller to Purchaser on
the Closing Date, and all of the terms and conditions hereof, including but not
limited to the warranties and representations of paragraph four hereof shall be
and remain in full force and effect between the parties. The warranties, other
than the warranties of title in the deed, shall survive for a period of one year
from the date of closing under the Option.
16. MODIFICATIONS: This Option supersedes all prior discussions and
agreements between the Seller and Purchaser with respect to the purchase of the
Contract Property and other matters contained herein, and this option contains
the sole and entire understanding between the parties hereto with respect to the
transactions contemplated herein. This Option shall not be modified or amended
except by an instrument in writing signed by or on behalf of the parties hereto.
17. APPLICABLE LAW: This Option shall be governed by and construed
and enforced in accordance with the laws of the State of Florida.
18. COUNTERPARTS: This Option may be executed in several counterparts,
each of which shall be deemed an original, and all of such counterparts together
shall constitute one and the same instrument.
19. EFFECTIVE DATE: As used herein, the terms "Date of this Option",
"date hereof", or "effective date of this Option", shall mean the date on which
the last of the parties hereto signs this Option.
20. TIME: Time is and shall be of the essence of this option.
21. NOTICES: All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to
-13-
have been duly given if delivered or mailed, first class, postage prepaid, as
follows:
(a) To Purchaser:
Paul M. Burrell
OutSource International, Inc.
8000 N. Federal Highway
Boca Raton, FL 33487
(b) To Seller
Daniel S. Catalfumo
Catalfumo Builders
1540 Latham Road
West Palm Beach, FL 33409
Either party may by written notice to the other designate a different address
for receiving notices hereunder.
IN WITNESS WHEREOF, the Purchaser has caused this Option to be executed
by its duly authorized corporate officer and the trustee of the Seller has
signed and sealed the agreement, as of the day and year first above written.
Signed by Seller this 24 day
of OCT, 1995.
------------------------------------- /s/ [ILLEGIBLE]
/s/ [ILLEGIBLE] ----------------------------------
DANIEL S. CATALFINO, TRUSTEE
(CORPORATE SEAL)
Signed by Purchaser this 19th
day of October, 1995.
OUTSOURCE INTERNATIONAL, INC.
/s/ Barbara J. Mealey
------------------------------------- By: /s/ ROBERT LEFCORT
------------------------------
/s/ [ILLEGIBLE] Executive Vice President
-------------------------------------
-14-
EXHIBIT 10.19
AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
OUTSOURCE INTERNATIONAL, INC.
THE BANKS
FROM TIME TO TIME PARTIES HERETO
AND
BANK OF BOSTON CONNECTICUT,
AS AGENT
REVOLVING CREDIT FACILITY
DATED AS OF FEBRUARY 21, 1997
AND
AMENDED AND RESTATED AS OF MARCH 18, 1997
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS..........................................................................1
1.1 Defined Terms..................................................................1
1.2 Other Definitional Provisions.................................................18
1.3 Change in Accounting Principles...............................................18
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.....................................................18
2.1 Revolving Credit Commitments..................................................18
2.1A. Swingline Loans...............................................................19
2.2 Designation of Interest Rates; Eurodollar Interest Periods....................21
2.3 Interest Rates and Payment Dates..............................................22
2.4 Procedure for Borrowing.......................................................23
2.5 Conversion and Continuation Options...........................................23
2.6 Minimum Amounts and Maximum Number of Tranches................................24
2.7 Revolving Credit Notes........................................................24
2.8 Fees..........................................................................24
2.9 Termination or Reduction of Revolving Credit Commitments......................25
2.10 Optional Prepayments..........................................................26
2.11 Computation of Interest and Fees..............................................26
2.12 Inability to Determine Interest Rate..........................................26
2.13 Pro Rata Treatment and Payments...............................................27
2.14 Illegality....................................................................28
2.15 Requirements of Law...........................................................28
2.16 Taxes.........................................................................29
2.17 Indemnity.....................................................................31
SECTION 3. LETTERS OF CREDIT...................................................................31
3.1 L/C Commitment................................................................31
3.2 Procedure for Issuance of Letters of Credit...................................32
3.3 Fees, Commissions and Other Charges...........................................32
3.4 Reimbursement Obligation of the Borrower......................................33
3.5 L/C Draws and Reimbursements..................................................33
3.6 Obligations Absolute..........................................................34
3.7 Letter of Credit Payments.....................................................35
3.8 Application...................................................................35
SECTION 4. REPRESENTATIONS AND WARRANTIES......................................................35
4.1 Financial Condition...........................................................35
4.2 No Change.....................................................................36
4.3 Corporate Existence; Compliance with Law......................................37
- ii -
4.4 Corporate Power, Authorization; Enforceable Obligations.......................37
4.5 No Legal Bar..................................................................37
4.6 No Material Litigation........................................................38
4.7 No Default....................................................................38
4.8 Ownership of Property; Liens..................................................38
4.9 Intellectual Property.........................................................38
4.10 No Burdensome Restrictions....................................................38
4.11 Taxes.........................................................................38
4.12 Federal Regulations...........................................................39
4.13 ERISA.........................................................................39
4.14 Investment Company Act; Other Regulations.....................................39
4.15 Subsidiaries..................................................................40
4.16 Purpose of Loans..............................................................40
4.17 Environmental Matters.........................................................40
4.18 Security Documents............................................................41
4.19 Designated Senior Debt........................................................42
4.20 Solvency......................................................................42
4.21 Certain Stockholders..........................................................42
SECTION 5. CONDITIONS PRECEDENT................................................................42
5.1 Amendment Effective Date......................................................42
5.2 Conditions to Each Extension of Credit........................................43
SECTION 6. AFFIRMATIVE COVENANTS...............................................................44
6.1 Financial Statements..........................................................44
6.2 Certificates; Other Information...............................................45
6.3 Payment of Obligations........................................................46
6.4 Conduct of Business and Maintenance of Existence..............................46
6.5 Maintenance of Property; Insurance............................................46
6.6 Inspection of Property; Books and Records; Discussions........................47
6.7 Notices.......................................................................47
6.8 Environmental Laws............................................................48
6.9 Use of Proceeds...............................................................49
6.10 Further Assurances............................................................49
SECTION 7. NEGATIVE COVENANTS..................................................................49
7.1 Financial Condition Covenants.................................................49
7.2 Limitation on Indebtedness....................................................50
7.3 Limitation on Liens...........................................................51
7.4 Limitation on Guarantee Obligations...........................................52
7.5 Limitations on Fundamental Changes............................................52
7.6 Limitation on Sale of Assets..................................................53
- iii -
7.7 Limitation on Restricted Payments.............................................53
7.8 Limitation on Investments, Loans and Advances.................................53
7.9 Limitation on Optional Payments and Modifications of Debt Instruments.........55
7.10 Transactions with Affiliates..................................................55
7.11 Sale and Leaseback............................................................55
7.12 Corporate Documents; Name/Location of Assets..................................55
7.13 Fiscal Year...................................................................56
7.14 Limitation on Negative Pledge Clauses.........................................56
7.15 No Limit on Upstream Payments by Subsidiaries.................................56
7.16 AASI and Voting Trust Agreement...............................................56
SECTION 8. EVENTS OF DEFAULT...................................................................56
SECTION 9. THE AGENT...........................................................................60
9.1 Appointment...................................................................60
9.2 Delegation of Duties..........................................................60
9.3 Exculpatory Provisions........................................................60
9.4 Reliance by Agent.............................................................61
9.5 Notice of Default.............................................................61
9.6 Non-Reliance on Agent and Other Banks.........................................61
9.7 Indemnification...............................................................62
9.8 Agent in Its Individual Capacity..............................................62
9.9 Successor Agent...............................................................62
SECTION 10. MISCELLANEOUS......................................................................63
10.1 Amendments and Waivers........................................................63
10.2 Notices.......................................................................63
10.3 No Waiver; Cumulative Remedies................................................64
10.4 Survival of Representations and Warranties....................................65
10.5 Payment of Expenses and Taxes.................................................65
10.6 Successors and Assigns; Participations; Purchasing Banks......................66
10.7 Adjustments; Set-off..........................................................69
10.8 Counterparts..................................................................69
10.9 Severability..................................................................69
10.10 Integration...................................................................70
10.11 Governing Law.................................................................70
10.12 Submission To Jurisdiction; Waivers...........................................70
10.13 Acknowledgments...............................................................70
10.14 WAIVERS OF JURY TRIAL; COMMERCIAL TRANSACTIONS................................72
- iv -
SCHEDULES
Schedule A Commitments; Addresses
Schedule 4.1(b) Long-Term Commitments
Schedule 4.1(c) Recent Dispositions
Schedule 4.2 Changes/Recent Distributions
Schedule 4.6 Litigation
Schedule 4.11 Tax Returns
Schedule 4.13 ERISA Matters
Schedule 4.15 Subsidiaries
Schedule 4.17 Environmental Matters
Schedule 4.18 UCC Filing Locations
Schedule 4.21 Relationships of Certain Stockholders to the Borrower
Schedule 7.2 Indebtedness Outstanding After the Execution Date
Schedule 7.3 Liens
Schedule 7.8 Management Loans and Advances
EXHIBITS
EXHIBIT A-1 Form of Borrowing Notice
EXHIBIT A-2 Form of Revolving Credit Note
EXHIBIT A-3 Form of Swingline Note
EXHIBIT B Form of Subsidiary Guarantee
EXHIBIT C Form of OI Pledge Agreement
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Opinion of Counsel to the Borrower and its
Subsidiaries
EXHIBIT F Form of OI Security Agreement
EXHIBIT G Form of Subsidiary Security Agreement
EXHIBIT H Form of Trademark Security Agreement
- v -
CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of February 21, 1997,
amended and restated as of March 18, 1997, by and among OUTSOURCE INTERNATIONAL,
INC., a Florida corporation ("the Borrower" or "OI"), the banks and other
financial institutions listed on SCHEDULE A to this Agreement (collectively,
together with any banks or financial institutions from time to time parties to
this Agreement, the "Banks") and BANK OF BOSTON CONNECTICUT, a bank organized
under the laws of the State of Connecticut , as agent for the Banks hereunder
(in such capacity, the "Agent").
The Borrower, Bank of Boston Connecticut (the "Existing Bank") and the
Agent are party to the Credit Agreement dated as of February 21, 1997 (as in
effect immediately prior to the Amendment Effective Date defined below, the
"Existing Credit Agreement").
The Borrower has requested that the Existing Bank and the Agent, and
the Banks and the Agent are willing to, amend and restate the Existing Credit
Agreement to provide, among other things, for the addition of two banks as
parties to this Agreement and to provide for Swingline Loans (as defined below),
on the terms and conditions hereof.
Accordingly, the parties hereto agree to amend and restate the Existing
Credit Agreement so that, as amended and restated, it provides in its entirety
as herein provided.
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS: As used in this Agreement, the following terms shall
have the following meanings:
"AASI": the Agreement among Shareholders and Investors, dated as of
February 21, 1997, among the Borrower, certain shareholders of the Borrower,
Triumph/Bachow, the trustees of the Voting Trust Agreement (as defined herein)
and an escrow agent, as amended, supplemented or otherwise modified from time to
time with the prior written consent of the Banks.
"ACQUISITION LINE": as defined in Section 2.1.
"AFFILIATE": of a Person (the "Primary Person"), (a) any other Person
(other than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, the Primary Person or (b) any
Person who is a director or officer (i) of the Primary Person, (ii) of any
Subsidiary of the Primary Person or (iii) of any Person described in clause (a)
above. For purposes of this definition, control of a Person shall mean the
power, directly or indirectly, (i) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"AGGREGATE OUTSTANDING EXTENSIONS OF CREDIT": as to any Bank at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Credit Loans made by such Bank then outstanding and (b) the product of
such Bank's Commitment Percentage times the L/C Obligations then outstanding.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"ALTERNATE BASE RATE": the higher of (i) the rate of interest per annum
publicly announced from time to time by the Agent as its "base rate" in effect
at its principal office (the Alternate Base Rate not being intended to be the
best or lowest rate of interest charged by the Agent in connection with
extensions of credit to debtors) or (ii) the Federal Funds Effective Rate plus
1/2 of 1% per annum (rounded upwards, if necessary, to the next 1/100 of 1%).
Any change in the Alternate Base Rate shall be effective as of the opening of
business on the effective day of such change in the Alternate Base Rate.
"ALTERNATE BASE RATE LOANS": Loans for which the applicable rate of
interest is based upon the Alternate Base Rate.
"AMENDMENT EFFECTIVE DATE": the date on which all of the conditions set
forth in Section 5.1 shall have been satisfied or waived by the Banks and the
Agent.
"APPLICABLE MARGIN": at any time, for Alternate Base Rate Loans or
Eurodollar Loans, and for the Working Capital Line, Acquisition Line or CSF
Line, as the case may be, a rate per annum equal to the rate set forth below
opposite the applicable ratio of Consolidated Indebtedness to Consolidated
EBITDA for the period of four (4) consecutive fiscal quarters ending on the FQED
immediately preceding such time:
- 2 -
RATIO OF
CONSOLIDATED
INDEBTEDNESS TO APPLICABLE MARGIN APPLICABLE MARGIN
CONSOLIDATED FOR ALTERNATE FOR
LEVEL EBITDA BASE RATE LOANS EURODOLLAR LOANS
---------------------------------------------------------------------------------------------------------------------
WORKING CSF LINE/ WORKING CSF LINE/
CAPITAL ACQUISITION CAPITAL ACQUISITION
LINE LINE LINE LINE
=====================================================================================================================
I Less than 1.50 to
1.00 0.00% 0.00% 1.25% 1.50%
---------------------------------------------------------------------------------------------------------------------
II 1.50-2.49 to 1.00 0.00% 0.25% 1.50% 1.75%
---------------------------------------------------------------------------------------------------------------------
III 2.50-3.49 to 1.00 0.25% 0.50% 1.75% 2.00%
---------------------------------------------------------------------------------------------------------------------
IV 3.50-3.99 to 1.00 0.50% 0.75% 2.00% 2.25%
---------------------------------------------------------------------------------------------------------------------
V 4.00-4.49 to 1.00 1.25% 1.50% 2.75% 3.00%
---------------------------------------------------------------------------------------------------------------------
VI Greater than 4.50 1.50% 1.75% 3.00% 3.25%
to 1.00
=====================================================================================================================
PROVIDED, HOWEVER, that notwithstanding the foregoing, during the six (6) month
period following the Closing Date, the Applicable Margin shall not be less than
that set at Level V, irrespective of the Borrower's actual Consolidated
Indebtedness to Consolidated EBITDA Ratio.
"APPLICATION": an application in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to issue a Letter of
Credit.
"ASSIGNMENT AND ACCEPTANCE": an Assignment and Acceptance,
substantially in the form of Exhibit D.
"AVAILABLE REVOLVING CREDIT COMMITMENT": as to any Bank at any time, an
amount equal to the excess, if any, of (a) the amount of such Bank's Revolving
Credit Commitment over (b) such Bank's Aggregate Outstanding Extensions of
Credit.
"BORROWING DATE": any Business Day specified in a notice pursuant to
subsection 2.4 as a date on which the Borrower requests the Banks to make Loans
hereunder.
"BUSINESS DAY": a day other than Saturday, Sunday or other day on which
commercial banks in Hartford, Connecticut are authorized or required by law to
close and, in the case of Eurodollar Loans, also a day on which commercial banks
are open for international business (including dealings
- 3 -
in Dollar deposits) in London or such other eurodollar interbank market as may
be selected by the Agent in its sole discretion acting in good faith.
"CAPITAL EXPENDITURES": any payment made directly or indirectly for the
purpose of acquiring, constructing or improving fixed assets, real property or
equipment which in accordance with GAAP would be added as a net debit (after
giving effect to any credits) to the fixed asset account of the Person making
such expenditure, including, without limitation, amounts paid or payable under
any conditional sale or other title retention agreement.
"CAPITAL LEASE": any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, (b) certificates of deposit and Eurodollar time
deposits with maturities of six (6) months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six (6) months and overnight
bank deposits, in each case, with any Bank or with any domestic commercial bank
having capital and surplus in excess of $100,000,000, (c) repurchase obligations
with a term of not more than seven (7) days for underlying securities of the
types described in clauses (a) and (b) entered into with any financial
institution meeting the qualifications specified in clause (b) above, and (d)
commercial paper issued by any Bank or the parent corporation of any Bank and
commercial paper of any other issuer rated at least A-1 or the equivalent
thereof by Standard & Poor's Corporation or at least P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case maturing within six
(6) months after the date of acquisition.
"CASH COLLATERAL ACCOUNT": as defined in Section 8.
"CHANGE OF CONTROL": except as contemplated by the AASI, the Voting
Trust Agreement or the Securities Purchase Agreement, the occurrence of any of
the following events: (i) any "person" or "group" (as such terms are used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, and
the rules promulgated thereunder) is or becomes the beneficial owner, directly
or indirectly, of more than 50% of the total voting power of the Voting Stock of
the Borrower; (ii) during any period of two (2) consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Borrower (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Borrower
was approved by the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for director was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Borrower then in
- 4 -
office; (iii) the direct or indirect, sale, lease, exchange or other transfer of
all or substantially all of the assets of the Borrower to any "person" or
"group" (as such terms are used in Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended, and the rules promulgated thereunder);
provided that the foregoing shall not include the granting of Liens permitted by
this Agreement; or (iv) the Borrower consolidates with or merges into another
corporation or any Person consolidates with or merges into the Borrower, in
either event pursuant to a transaction in which either (A) the outstanding
Voting Stock of the Borrower is changed into or exchanged for cash, securities
or other property (other than any such transaction where the outstanding Voting
Stock of the Borrower is changed into or exchanged for Voting Stock of the
surviving corporation) or (B) the holders of a majority of the voting power of
the Voting Stock of the Borrower immediately prior to such transaction own,
directly or indirectly, less than a majority of voting power of the Voting Stock
of the surviving corporation immediately after such transaction.
"CLOSING DATE": February 21, 1997.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": the collective reference to the Collateral, as such term
is defined in each of the OI Security Agreement, the OI Pledge Agreement, the
Subsidiary Security Agreement and the Trademark Security Agreement.
"COMMITMENT PERCENTAGE": as to any Bank at any time, the percentage set
forth opposite such Bank's name on SCHEDULE A of this Agreement with respect to
such Bank.
"COMMITMENT PERIOD": the period from and including the date hereof to
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"COMMITMENTS": the collective reference to the Revolving Credit
Commitments and the L/C Commitments.
"COMMONLY CONTROLLED ENTITY": an entity, whether incorporated or not,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"CONSOLIDATED CURRENT ASSETS": the amount of the current assets of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"CONSOLIDATED CURRENT LIABILITIES": the amount of the current
liabilities of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; PROVIDED, HOWEVER, there shall be excluded
therefrom the amount of any principal obligation due on Indebtedness of the
Borrower or its Subsidiaries after the Termination Date.
- 5 -
"CONSOLIDATED EBIT": for any period, Consolidated Net Income for such
period, plus the aggregate amounts deducted in determining such Consolidated Net
Income in respect of (a) income taxes and (b) Consolidated Interest Expense.
"CONSOLIDATED EBIT TO CONSOLIDATED INTEREST EXPENSE RATIO": at the end
of any FQED, the ratio of (A) Consolidated EBIT for the immediately preceding
four (4) fiscal quarters (ending on such date) to (B) Consolidated Interest
Expense for the immediately preceding four (4) fiscal quarters (ending on such
date).
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income for such
period plus the aggregate amounts deducted in determining such Consolidated Net
Income in respect of (a) income taxes, (b) Consolidated Interest Expense, (c)
depreciation expense and (d) the expense associated with amortization of
intangible and other assets.
"CONSOLIDATED INDEBTEDNESS": at any particular date, with respect to
the Borrower and its Subsidiaries, all liabilities less trade accounts payable
and accrued liabilities, determined on a consolidated basis in accordance with
GAAP, except that, irrespective of its treatment under GAAP, all Subordinated
Indebtedness of the Borrower to Triumph shall be deemed to be a liability in its
face amount; e.g. $25,000,000 with respect to the Senior Subordinated Notes
issued on the Closing Date.
"CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA RATIO": at the end of
any FQED, the ratio of (A) Consolidated Indebtedness on such date to (B)
Consolidated EBITDA for the immediately preceding four (4) fiscal quarters
(ending on such date). For purposes of testing the financial condition covenants
in subsections 7.1(a) and 7.1(b) only (i.e. not for other financial covenants or
pricing), the Borrower may add Consolidated EBITDA of any acquired entity for
such four fiscal quarters plus any verifiable non-recurring expenses.
"CONSOLIDATED INTEREST EXPENSE" for any period, the interest expense,
including the interest portion of rental payments under Capital Leases but
excluding non-cash interest, for the Borrower and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME": for any period, the net income (or loss) of
the Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; PROVIDED that there shall be excluded from the
calculation thereof (i) distributions and compensation not exceeding $2,200,000
in the aggregate paid by OutSource International, Inc. and its Affiliates to
Lawrence H. Schubert, Alan E. Schubert and Louis A. Morelli with respect to the
year ended December 31, 1996, (ii) expenses not exceeding $2,000,000 in the
aggregate associated with the investigation of inappropriate payments to a
customer made by an employee of an Affiliate of the Borrower out of its Chicago
location and with the Borrower's discontinued initial public offering, and (iii)
any non-operating gains or losses (including without limitation, extraordinary
or unusual gains or losses, gains or losses from discontinuance of operations,
gains or losses arising from the
- 6 -
sale or disposition by the Borrower or any Subsidiary of any asset, or the
issuance of any debt or equity securities, and other non-recurring gains or
losses).
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CSF": Capital Staffing Fund, Inc., a Florida corporation.
"CSF LINE": as defined in Section 2.1.
"CURRENT RATIO": at the end of any FQED, the ratio of Consolidated
Current Assets to Consolidated Current Liabilities.
"DATE HEREOF": February 21, 1997.
"DEFAULT": any of the events specified in Section 8, regardless of
whether any requirement for the giving of notice, the lapse of time, or both, or
any other conditions, has been satisfied.
"DOLLARS" AND "$": dollars in lawful currency of the United States of
America.
"ENVIRONMENTAL LAWS": any and all Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements of any Governmental Authority regulating, relating to or imposing
liability or standards of conduct concerning environmental protection matters,
including without limitation, Hazardous Materials, as now or may at any time
hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EURODOLLAR BASE RATE": with respect to each day during each Eurodollar
Interest Period, the rate per annum equal to the rate at which the Agent is
offered Dollar deposits at or about 10:00 A.M., Eastern time, two (2) Business
Days prior to the beginning of such Eurodollar Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Eurodollar Interest Period for the number of
days comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Eurodollar Interest Period.
"EURODOLLAR INTEREST PERIOD": any one (1), two (2) or three(3) month
period selected by the Borrower in respect to any Eurodollar Loan pursuant to
subsections 2.2, 2.4 or 2.5 of this Agreement.
- 7 -
"EURODOLLAR LOANS": Loans for which the applicable rate of interest is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Eurodollar
Interest Period, a rate per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
1.00 - Eurodollar Reserve Requirements
"EURODOLLAR RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding maintained by a member
bank of such System.
"EVENT OF DEFAULT": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"EXISTING BANK": as defined in the recitals.
"EXISTING CREDIT AGREEMENT": as defined in the recitals.
"EXISTING LOANS": the loans outstanding under the Existing Credit
Agreement on the Amendment Effective Date.
"FEDERAL FUNDS EFFECTIVE RATE": at any time shall mean a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal Funds transactions with members of the Federal Reserve System arranged
by Federal Funds Brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three (3) Federal Funds brokers of recognized
standing selected by the Agent.
"FQED": the end date of any fiscal quarter in any fiscal year of the
Borrower.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
- 8 -
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GUARANTEE OBLIGATION": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing Person or (b) another Person (including,
without limitation, any bank under any letter of credit), to induce the creation
of which obligation the guaranteeing person has issued a reimbursement, counter
indemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether contingent or not, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (A) for the purchase
or payment of any such primary obligation or (B) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligations of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner of any
such primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that
the term "Guarantee Obligation" shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (x) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (y) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"HAZARDOUS MATERIALS": any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such in
or under any Environmental Law.
"INDEBTEDNESS": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under Capital Leases, (c) all
obligations of such person in respect of acceptances issued or created for the
account of such Person, (d) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (e) the face amount of any outstanding letters
of credit issued for the account of such Person, (f) obligations in respect of
interest rate hedge agreements entered
- 9 -
into in the ordinary course of business, and (g) all Guarantee Obligations of
such Person in respect of obligations referred to in clauses (a) through (f)
above.
"INITIAL PERMITTED ACQUISITION": the acquisition by the Borrower or any
Subsidiary of all or a portion of the assets of any or all of the following
entities having an aggregate purchase price for all such acquisitions not
exceeding $25,000,000 and consummated within the following time periods: (A) on
or before sixty (60) days after the Closing Date: Labor World of Atlanta, Apex
in Andover, Stand-by in Colorado Springs and Staff Management in New Jersey and
(B) on or before ninety (90) days after the Closing Date, Stand-by in Denver,
Labor Force of Phoenix and Labor World of South Florida.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST PAYMENT DATE": (a) as to any Alternate Base Rate Loan, the
last day of each month to occur while such Loan is outstanding, (b) as to any
Eurodollar Loan having a Eurodollar Interest Period of one (1) month, the last
day of such Eurodollar Interest Period, (c) as to any Eurodollar Loan having a
Eurodollar Interest Period longer than one (1) month, each day which is one (1)
month, after the first day of such Eurodollar Interest Period and the last day
of such Eurodollar Interest Period and (d) as to any Swingline Loan, the
Swingline Maturity Date.
"ISSUING BANK": Bank of Boston Connecticut, in its capacity as issuer
of any Letter of Credit.
"LABOR WORLD": a trademark of OutSource Franchising, Inc. registered
with the United States Patent and Trademark Office and used by OutSource
Franchising, Inc. and its franchisees in marketing temporary industrial
personnel.
"L/C COMMITMENT": the lesser of (a) $10,000,000, minus the sum of (i)
the aggregate then undrawn and unexpired amount of the then outstanding letters
of credit issued by The First National Bank of Boston for the account of the
Borrower or any Subsidiary and (ii) the aggregate amount of unreimbursed
drawings under such letters of credit and (b) the Revolving Credit Commitment
then in effect.
"L/C FEE": as defined in subsection 3.3(a).
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to subsection 3.5.
- 10 -
"L/C PARTICIPANTS": the collective reference to all the Banks other
than the Issuing Bank.
"LETTER OF CREDIT RATe": for each Letter of Credit, at any time, a rate
per annum equal to the rate set forth below opposite the applicable ratio of
Consolidated Indebtedness to Consolidated EBITDA:
-------------------------------------------------------------------------
CONSOLIDATED INDEBTEDNESS TO LETTER OF
LEVEL CONSOLIDATED EBITDA RATIO CREDIT RATE
-------------------------------------------------------------------------
I Less than 1.50 to 1.00 1.00%
-------------------------------------------------------------------------
II 1.50-2.49 to 1.00 1.00%
-------------------------------------------------------------------------
III 2.50-3.49 to 1.00 1.25%
-------------------------------------------------------------------------
IV 3.50-3.99 to 1.00 1.25%
-------------------------------------------------------------------------
V 4.00-4.49 to 1.00 1.75%
-------------------------------------------------------------------------
VI Greater than 4.50 to 1.00 1.75%
-------------------------------------------------------------------------
PROVIDED, HOWEVER, that notwithstanding the foregoing, during the six (6) month
period following the Closing Date, the Letter of Credit Rate shall not be less
than that set forth in Level V above irrespective of the actual Consolidated
Indebtedness to Consolidated EBITDA Ratio.
"LETTERS OF CREDIT": as defined in subsection 3.1(a).
"LIEN": any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any Capital Lease having substantially
the same economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"LOAN": any loan made by any Bank pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Notes, the Applications, the OI
Pledge Agreement, the OI Security Agreement, the Subsidiary Guarantee, the
Subsidiary Security Agreement, the Trademark Security Agreement and the
Subordination Agreements, together with any and all other instruments, documents
and agreements executed and delivered by the Borrower or the Subsidiaries from
time to time in connection with the indebtedness evidenced by this Agreement and
the Notes, as the same may hereafter be amended, restated or modified, from time
to time.
- 11 -
"MARKET CLEARING LETTER": the letter referred to in Section 5.1(u).
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower or any Subsidiary to perform its obligations under the Loan Documents
to which it is a party or (c) the validity or enforceability of this Agreement,
the Notes or any of the other Loan Documents or the rights or remedies of the
Agent or the Banks hereunder or thereunder.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NOTES": the collective reference to the Revolving Credit Notes and the
Swingline Note.
"OBLIGATIONS": means all Indebtedness, obligations and liabilities of
the Borrower and its Subsidiaries, to the Agent and the Banks under this
Agreement, the Revolving Credit Notes, the Swingline Note or any other Loan
Document.
"OI PLEDGE AGREEMENT": the OI Pledge Agreement, substantially in the
form of Exhibit C, made by the Borrower in favor of the Agent for the benefit of
the Agent and the ratable benefit of the Banks, as the same may be amended,
supplemented or otherwise modified from time to time.
"OI SECURITY AGREEMENT": the OI Security Agreement, substantially in
the form of Exhibit F, to be executed and delivered by the Borrower to the Agent
for the benefit of the Agent and the ratable benefit of the Banks, as the same
may be amended, supplemented or otherwise modified from time to time.
"OUTSOURCE FRANCHISING, INC.": a Florida corporation and a wholly-owned
Subsidiary of the Borrower.
"OPERATING CASH FLOW": for any period, an amount equal to (i)
Consolidated EBITDA for such period, minus (ii) income taxes paid in cash by the
Borrower on a consolidated basis during such period, minus (iii) all dividends,
distributions and other payments by the Borrower to its shareholders during such
period (excluding payments in respect of Indebtedness to such shareholders to
the extent permitted hereunder), minus (iv) Capital Expenditures paid out of
cash flow during such period.
"OPERATING CASH FLOW RATIO": at the end of any FQED, the ratio of (A)
Operating Cash Flow for the immediately preceding four (4) fiscal quarters
(ending on such date) to (B) Total Debt Service for the immediately preceding
four (4) fiscal quarters (ending on such date).
"PARTICIPANTS": as defined in subsection 10.6(b).
- 12 -
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLEDGE AGREEMENT-DEPOSIT ACCOUNT": the Pledge and Security
Agreement-Deposit Account, dated as of the Amendment Effective Date, made by the
Borrower in favor of the Agent for the benefit of the Agent and the ratable
benefit of the Banks, as the same may be amended, supplemented or otherwise
modified from time to time.
"PURCHASING BANKS": as defined in subsection 10.6(c).
"REGISTER": as defined in subsection 10.6(d).
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to reimburse
the Issuing Bank pursuant to subsection 3.4 for amounts drawn under Letters of
Credit.
"REIMBURSING BANK": as defined in subsection 2.13(a).
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived in accordance with subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. ss. 2615.
"REQUIRED BANKS": at any time, Banks having Commitment Percentages
representing at least 66 2/3% of the aggregate Commitments, or if the
Commitments are terminated, Banks representing at least 66 2/3% of the aggregate
principal amount of all loans outstanding.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organization or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
- 13 -
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer or the president or
other executive officer of the Borrower or, with respect to financing matters,
the chief financial officer or other executive officer of the Borrower.
"REVOLVING CREDIT COMMITMENT": as to any Bank, the obligation of such
Bank to make Revolving Credit Loans to the Borrower hereunder in an aggregate
principal amount at any one time outstanding not to exceed the amount set forth
opposite such Bank's name on SCHEDULE A under the caption, "Commitment Amount".
"REVOLVING CREDIT LOANS": any loans, advances or other disbursements by
Agent, or any or all of the Banks to or for the account of the Borrower under
the Revolving Credit Commitments (including without limitation, amounts paid in
respect of any draft under any Letter of Credit) or in respect of any amounts
due and not paid by the Borrower in accordance with subsection 10.5.
"REVOLVING CREDIT NOTE": as defined in subsection 2.7.
"SALE/LEASEBACK TRANSACTION": as defined in subsection 7.11.
"SECURITIES PURCHASE AGREEMENT": the Securities Purchase Agreement
between the Borrower and Triumph/Bachow, pursuant to which the Borrower issued
its Senior Subordinated Notes -- as such Securities Purchase Agreement may, with
the prior written consent of the Agent and the Banks, be amended, supplemented
or otherwise modified from time to time.
"SECURITY DOCUMENTS": the OI Security Agreement, OI Pledge Agreement,
Subsidiary Security Agreement, the Trademark Security Agreement and the Pledge
Agreement-Deposit Account.
"SENIOR CONSOLIDATED INDEBTEDNESS": at any particular date, with
respect to the Borrower and its Subsidiaries, Consolidated Indebtedness less the
face amount of all Subordinated Indebtedness.
"SENIOR CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA RATIO": at the
end of any FQED, the ratio of (A) Senior Consolidated Indebtedness on such date
to (B) Consolidated EBITDA for the immediately preceding four (4) fiscal
quarters (ending of such date).
"SENIOR SUBORDINATED NOTES": the $25,000,000 Senior Subordinated Notes
due February 20, 2002 issued pursuant to the Securities Purchase Agreement -- as
such Notes may, with the prior written consent of the Banks, be amended,
modified, supplemented, renewed or extended from time to time.
- 14 -
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"SOLVENT": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"SUBORDINATED INDEBTEDNESS": means Indebtedness under the Securities
Purchase Agreement, the Senior Subordinated Notes, Indebtedness of the Borrower
or its Subsidiaries identified as subordinated on Schedule 7.2, and other
unsecured Indebtedness which does not permit any payment or prepayment of the
principal amount thereof prior to the payment in full of the Obligations and
contains in the instrument evidencing such Indebtedness or in the agreement
under which it is issued (which agreement shall be binding on all holders of
such Indebtedness) subordination provisions acceptable to the Agent and the
Banks in their sole discretion, which unsecured Indebtedness must be approved in
writing by the Agent and the Banks prior to incurring such Indebtedness.
"SUBORDINATION AGREEMENTS": the subordination agreements and notes
executed and delivered to the Borrower or any Subsidiary prior to or on the
Closing Date by the holders of the Subordinated Indebtedness identified on
Schedule 7.2.
"SUBSEQUENT PERMITTED ACQUISITION": the acquisition by the Borrower or
any Subsidiary of the assets of any Person (other than an Initial Permitted
Acquisition) PROVIDED that (i) such Person conducts the same general type of
business as currently conducted by the Borrower and its Subsidiaries, (ii) such
Person conducts all of its business in the United States of America, (iii) none
of the shareholders of the Borrower or its Affiliates have or will have any
direct or indirect beneficial ownership of any stock or other interest in the
acquired company, (iv) the purchase price for any single acquisition does not
exceed $750,000, and (v) after giving effect to such transaction, no Default or
Event of Default would exist.
- 15 -
"SUBSEQUENTLY ACQUIRED SUBSIDIARY": any Subsidiary acquired by the
Borrower or any Subsidiary pursuant to subsection 7.8(g).
"SUBSIDIARY": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company or other entity are at the
time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTEE": the Guarantee, substantially in the form of
Exhibit B, made by each Subsidiary in favor of the Agent for the benefit of the
Agent and the ratable benefit of the Banks, as the same may be amended,
supplemented or otherwise modified from time to time.
"SUBSIDIARY SECURITY AGREEMENT": a Subsidiary Security Agreement,
substantially in the form of Exhibit G, to be executed and delivered by each
Subsidiary to the Agent for the benefit of the Agent and the ratable benefit of
the Banks, as the same may be amended, supplemented or otherwise modified from
time to time.
"SUCCESSOR AGENT": any Bank or any bank, depository or financial
institution, trust company, bank and trust company having capital and surplus in
excess of $100,000,000 and acceptable to the remaining Bank or Banks and to the
Borrower, the Borrower's consent not to be unreasonably withheld or delayed.
"SWINGLINE BANK": Bank of Boston Connecticut acting in such capacity
under subsection 2.1A, or any successor in such capacity.
"SWINGLINE COMMITMENT": the obligation of the Swingline Bank to make
Swingline Loans in an aggregate amount not to exceed at any one time outstanding
the lesser of (i) $3,000,000 and (ii) the aggregate amount of the Commitments.
"SWINGLINE LOANS": the loans provided for by subsection 2.1A.
"SWINGLINE MATURITY DATE": as defined in subsection 2.1A.
"SWINGLINE NOTE": the promissory note provided for by subsection 2.1A
and any promissory note delivered in substitution or exchange therefor, in each
case as the same shall be modified and supplemented and in effect from time to
time.
- 16 -
"SWINGLINE RATE": for any day, a rate per annum equal to the rate for
Alternate Base Rate Loans plus the Applicable Margin for the Working Capital
Line. A change in the Swingline Rate shall take effect at the time of each
change in the Alternate Base Rate or the Applicable Margin for the Working
Capital Line, as the case may be.
"TERMINATION DATE": February 21, 2001.
"TOTAL DEBT SERVICE": at any particular date, the sum of (i)
Consolidated Indebtedness, including the principal portion of Capital Leases,
scheduled and permitted to be paid during the applicable period (reduced by
increases during such period in Subordinated Indebtedness in an amount not
exceeding, and incurred to replace, such scheduled payments and excluding (A) a
one time payment of $1,325,000 made by the Borrower in connection with the
Borrower's purchase of the Borrower's headquarters building and (B) not
exceeding in any year $1,500,000 principal amount of Subordinated Indebtedness
incurred by the Borrower or any Subsidiary to finance Subsequent Permitted
Acquisitions PROVIDED that such Subordinated Indebtedness matures at least one
(1) year after the date of its incurrence and bears interest not exceeding ten
percent (10%) per annum), plus (ii) Consolidated Interest Expense, it being
understood that principal payments with respect to any Indebtedness that has
been refinanced shall be determined on and after the refinancing on the basis of
the payment schedule in such refinancing.
"TRADEMARK SECURITY AGREEMENT": the Trademark Security Agreement,
substantially in the form of Exhibit H, executed and delivered by the Borrower
and OutSource Franchising, Inc. in favor of the Agent for the benefit of the
Agent and the ratable benefit of the Banks, as the same may be amended,
supplemented or otherwise modified from time to time.
"TRANCHE": the collective reference to Eurodollar Loans having
Eurodollar Interest Periods which begin on the same date and end on the same
later date (whether such Loans shall originally have been made on the same day
or not).
"TRANSFEREE": as defined in subsection 10.6(f).
"TRIUMPH/BACHOW": Triumph-Connecticut Limited Partnership and Bachow
Investment Partners III, L.P. or an entity controlled by them which is a party
to the Securities Purchase Agreement.
"TYPE": as to any Loan, its nature as an Alternate Base Rate Loan or a
Eurodollar Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
- 17 -
"VOTING STOCK": with respect to a corporation, all classes of Capital
Stock then outstanding of such corporation normally entitled to vote in
elections of directors.
"VOTING TRUST AGREEMENT": the Voting Trust Agreement, dated as of
February 21, 1997, among the Borrower, Paul M. Burrell and Richard J. Williams,
as trustees, and certain shareholders of the Borrower, as the same may, with the
prior written consent of the Banks, be amended, supplemented or otherwise
modified from time to time.
"WORKING CAPITAL LINE": as defined in Section 2.1.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
SCHEDULE and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
1.3 CHANGE IN ACCOUNTING PRINCIPLES. Except as otherwise provided
herein, any changes in GAAP which are hereafter made and adopted by the Borrower
with the agreement of its independent certified public accountants shall not
affect the method of calculation of any of the financial covenants, standards or
terms found in subsection 1.1 or Section 7.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 REVOLVING CREDIT COMMITMENTS. Subject to the terms and conditions
hereof, and provided that no Default or Event of Default shall have occurred and
be continuing, each Bank severally agrees to make Revolving Credit Loans to the
Borrower from time to time on or after the Amendment Effective Date and
continuing throughout the Commitment Period in an aggregate principal amount at
any one time outstanding not to exceed the amount of such Bank's Available
Revolving Credit Commitment; PROVIDED, HOWEVER, that (i) the aggregate
borrowings hereunder at
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any one time (giving effect to all Revolving Credit Loans, Swingline Loans and
Letters of Credit outstanding at such time) to the Borrower shall not exceed
$45,000,000; (ii) the aggregate amount of all borrowings available to the
Borrower for working capital and general corporate purposes of the Borrower and
its Subsidiaries (other than CSF) and to finance the cost of Initial Permitted
Acquisitions shall not exceed $40,000,000 (the "Working Capital Line"); (iii)
the aggregate amount of all borrowings available to the Borrower to finance the
cost of Subsequent Permitted Acquisitions shall not exceed $10,000,000, shall
not be used for working capital and shall not be reborrowed (the "Acquisition
Line"); and (iv) the aggregate amount of all borrowings available to the
Borrower to be advanced to CSF shall not exceed $5,000,000 (the "CSF Line").
From and after the Amendment Effective Date and continuing throughout the
Commitment Period, the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans or Swingline Loans, in whole or
in part, and reborrowing (except for the Acquisition Line) in accordance with
the terms and conditions hereof.
2.1A. SWINGLINE LOANS.
(a) Subject to the terms and conditions hereinafter set forth, upon
notice by the Borrower made to the Swingline Bank in accordance with paragraph
(b) of this subsection 2.1A , the Swingline Bank agrees to make Swingline Loans
to the Borrower on any Business Day during the Commitment Period in an aggregate
principal amount not to exceed the Swingline Commitment. Unless the Borrower has
entered into an arrangement with the Swingline Bank for automated borrowings as
described in subsection 2.1A(b) below, each Swingline Loan shall be in the
minimum amount of $250,000 or a multiple of $100,000 in excess thereof.
Notwithstanding any other provisions of this Agreement and in addition to the
limit set forth above, at no time shall the aggregate principal amount of all
outstanding Swingline Loans exceed the total Commitments of the Banks then in
effect MINUS the Aggregate Outstanding Extensions of Credit. Each Swingline Loan
shall mature on the earlier of (i) the date on which a Default or Event of
Default has occurred or (ii) the first Wednesday after the Borrowing Date
thereof (the "Swingline Maturity Date"). Subject to the terms of this Agreement,
the Borrower may borrow, repay and reborrow up to the amount of the Swingline
Commitment, except that the Borrower shall not use the proceeds of a Swingline
Loan to repay any other Swingline Loan.
(b) When the Borrower desires the Swingline Bank to make a Swingline
Loan (except in the case of automated borrowings as described below), it shall
send to the Agent (which shall promptly notify the Swingline Bank) a Swingline
Loan request, which shall set forth the principal amount of the proposed
Swingline Loan and the proposed Borrowing Date. Each such Loan request must be
received by the Swingline Bank not later than 12:00 p.m. (Eastern time) on the
date of the proposed borrowing. Each Swingline Loan request shall be irrevocable
and binding on the Borrower and shall obligate the Borrower to borrow the
Swingline Loan on the Borrowing Date thereof. Upon satisfaction of the
applicable conditions set forth in this Agreement, on the proposed Borrowing
Date the Swingline Bank shall make the Swingline Loan available to the Agent, at
an account designated by the Agent, in Dollars and immediately available funds,
for the account of the
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Borrower. The amount so received by the Agent, shall, subject to the terms and
conditions of this Agreement, be made available by the Agent to the Borrower by
depositing the same, in immediately available funds, in an account of the
Borrower designated by the Borrower by 5:00 p.m. (Eastern time) on the proposed
Borrowing Date by crediting the amount of the Swingline Loan to the Borrower's
account maintained with the Agent; PROVIDED that the Swingline Bank shall not
advance any Swingline Loans after it has received notice from the Borrower, the
Agent or any Bank that a Default or Event of Default has occurred and is
continuing. No new Swingline Loan shall be made until such Default or Event of
Default has been cured or waived in accordance with the provisions of this
Agreement.
It is understood that the Borrower and the Swingline Bank may
administer Swingline Loans on an automated basis pursuant to which Swingline
Loans will be made (up to the Swingline Commitment) or repaid automatically on a
daily basis in an amount equal to the net of the Borrower's receipts and
disbursements at the Swingline Bank. If such an automated system is used, the
provisions dealing with notice and minimum borrowing amount set forth in
subsection 2.1A(b) above shall not be applicable.
(c) The Borrower shall repay each outstanding Swingline Loan on or
prior to the Swingline Loan Maturity Date. Upon notice by 11:00 a.m. (Eastern
time) on any Business Day by the Swingline Bank to the Agent, which notice is
hereby authorized by the Borrower, the Borrower shall be deemed irrevocably to
have requested, and each of the Banks hereby agrees to make, a Revolving Credit
Loan to the Borrower by 2:00 p.m. (Eastern time) on such Business Day, in an
amount equal to such Bank's Commitment Percentage of the aggregate amount of the
outstanding Swingline Loans. Such Revolving Credit Loan shall bear interest at
the Alternate Base Rate plus the Applicable Margin for the Working Capital Line.
The proceeds thereof shall be applied by the Agent directly to repay the
Swingline Bank for such outstanding Swingline Loans. In the event that it is
impracticable for such Revolving Credit Loan to be made for any reason on the
date otherwise required above, then each Bank hereby agrees that it shall
forthwith purchase (as of the date such Revolving Credit Loan would have been
made, but adjusted for any payments received from the Borrower on or after such
date and prior to such purchase) from the Swingline Bank, and the Swingline Bank
shall sell to each Bank, such participations in the Swingline Loans (including
all accrued and unpaid interest thereon) outstanding as shall be necessary to
cause the Banks to share in such Swingline Loans PRO RATA based on their
respective Commitment Percentages by making available to the Swingline Bank an
amount equal to such Bank's participation in the Swingline Loans; PROVIDED that
all interest payable on the Swingline Loans shall be for the account of the
Swingline Bank as a funding and administrative fee until the date as of which
the respective participation is purchased. The obligation of each Bank to make
such Revolving Credit Loan, or as the case may be to purchase such participation
in a Swingline Loan, upon notice as set forth above, is absolute, unconditional
and irrevocable under any and all circumstances whatsoever and shall not be
subject to set-off, counterclaim or defense to payment that such Bank may have
or may have had against the Borrower, the Agent, the Swingline Bank or any other
Bank and, without limiting any of the foregoing, shall be unconditional
notwithstanding (i) that the amount of such
- 20 -
Loan may not comply with the applicable minimum set forth in subsection 2.1
hereof, (ii) the failure of the Borrower to meet the conditions set forth in
Section 5 hereof, (iii) the occurrence or continuance of a Default or an Event
of Default hereunder, (iv) the date of such Revolving Credit Loan or
participation or (v) the financial condition of the Borrower or any Subsidiary;
PROVIDED, HOWEVER, a Bank shall not be obligated to make any such Revolving
Credit Loan (or to purchase such participation) if before the making of such
Swingline Loan, such Bank had notified the Swingline Bank that a Default or
Event of Default had occurred and was continuing and that such Bank would not
refinance such Swingline Loan.
(d) The obligation of the Borrower to repay the Swingline Loans made
pursuant to this Agreement and to pay interest thereon as set forth in this
Agreement shall be evidenced by a promissory note of the Borrower with
appropriate insertions substantially in the form of Exhibit A-3 (the "Swingline
Note"), payable to the order of the Swingline Bank. The Borrower irrevocably
authorizes the Swingline Bank to make or cause to be made, at or about the time
of the Borrowing Date of any Swingline Loan or at the time of receipt of any
payment of principal on the Swingline Note, an appropriate notation on the books
of the Swingline Bank reflecting the making of such Swingline Loan or (as the
case may be) the receipt of such payment. The outstanding amount of the
Swingline Loans set forth on such books shall be PRIMA FACIE evidence of the
principal amount thereof owing and unpaid to the Swingline Bank, but the failure
to record, or any error in so recording, any such amount on such books shall not
limit or otherwise affect the actual amount of the obligations of the Borrower
hereunder or under the Swingline Note to make payments of principal of or
interest on the Swingline Note when due.
2.2 DESIGNATION OF INTEREST RATES; EURODOLLAR INTEREST PERIODS.
(a) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as the
Borrower may determine and notify to the Agent in accordance with subsections
2.4 and 2.5. In the event the Borrower fails to designate the Type of all or any
portion of a Loan (whether initially or upon expiration of a Eurodollar Interest
Period), the per annum rate of interest applicable thereto shall be or become
the rate of interest applicable to Alternate Base Rate Loans.
(b) The Borrower may not select a Eurodollar Interest Period pursuant
to subsections 2.2(a), 2.5 or otherwise, if (i) an Event of Default has occurred
and is continuing, or (ii) such Eurodollar Interest Period would expire on a day
after the Termination Date. If any Eurodollar Interest Period would otherwise
end on a day that is not a Business Day, such Eurodollar Interest Period shall
be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Eurodollar Interest Period into another
calendar month in which event such Eurodollar Interest Period shall end on the
immediately preceding Business Day. If any Eurodollar Interest Period begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Eurodollar Interest Period), such Eurodollar Interest Period shall end on the
last Business Day of a calendar month.
- 21 -
2.3 INTEREST RATES AND PAYMENT DATES.
(a) Each Eurodollar Loan shall bear interest, during the applicable
Eurodollar Interest Period, at a rate per annum equal to the applicable
Eurodollar Rate plus the Applicable Margin. The Applicable Margin for each
Eurodollar Loan shall be determined based upon the calculations submitted to the
Banks pursuant to subsection 6.1(b) and shall be effective as of the first day
of the fiscal quarter next following the date such calculations are submitted to
the Banks. Any change in such Applicable Margin as a consequence of the Bank's
review of the aforesaid calculation after the effective date of such Applicable
Margin shall be retroactively applied to the first day such Applicable Margin
became effective. In the event the Applicable Margin for a Eurodollar Loan can
not be determined at any time because the Borrower's financial statements for
the immediately preceding fiscal quarter are not available at such time, the
Applicable Margin for each Eurodollar Loan shall be presumed to be the same as
the Applicable Margin for such Eurodollar Loans as of the last FQED for which
the Borrower's financial statements were available.
(b) Each Alternate Base Rate Loan shall bear interest for so long as it
is outstanding and unpaid at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin.
(c) Each Swingline Loan shall bear interest for so long as it is
outstanding and unpaid at a rate per annum equal to the Swingline Rate.
(d) If all or a portion of the principal amount of any Loan or any
interest payable thereon shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum (the "Default Rate") which is equal to the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus two percent (2%) from the date of such non-payment until such
amount is paid in full (after, as well as before, judgment).
(e) Interest shall be payable in arrears on each Interest Payment Date
and be identified for each Type of Loan; PROVIDED, THAT interest accruing at the
Default Rate pursuant to subsection 2.3(d) shall be payable on receipt of
written demand. In the event the rate of interest applicable to any Eurodollar
Loan decreases as a consequence of a decrease in the Applicable Margin with
respect thereto, the Borrower shall be entitled to apply the difference between
the amount of interest paid and the amount of interest due (after giving effect
to such reduction) as a credit against the next installment of interest due
hereunder. In the event the rate of interest applicable to any Eurodollar Loan
increases as a consequence of an increase in the Applicable Margin with respect
thereto, the Borrower shall pay the difference between the amount of interest
paid and the amount of interest due (after giving effect to such increase) on
the next Interest Payment Date.
(f) In the event the total amount of any payment of principal or
interest or amounts due in respect of any Reimbursement Obligation or of any fee
required to be paid under this Agreement is not received by the Agent or the
Issuing Bank, as the case may be, within ten (10) days following
- 22 -
the due date of such payment, the Borrower shall, in addition to and together
with such payment, pay to the Agent or the Issuing Bank, as the case may be, a
late charge equal to five percent (5%) of the total amount of such payment or
amount due; PROVIDED, such late charge shall not be payable in respect of any
overdue payment in the event the Borrower was entitled to an advance in the
amount of such payment under the provisions of subsection 2.1 at the time such
payment became due, the Borrower duly requested such advance in compliance with
the requirements of this Agreement, and the Banks failed to provide such advance
without cause. The Borrower authorizes the Agent to debit any of the accounts of
the Borrower or its Subsidiaries at or assigned to the Agent on or after the due
date of any such payment and a late charge shall not be payable to the extent
the balances in such accounts are sufficient on the due date to meet such
payment.
2.4 PROCEDURE FOR BORROWING. The Borrower may borrow under the
Revolving Credit Commitments on or after the Amendment Effective Date during the
Commitment Period on any Business Day by giving the Agent irrevocable notice in
the form of Exhibit A-1 (which notice must be received by the Agent prior to (x)
12:00 p.m., Eastern time, at least three (3) Business Days prior to the
requested Borrowing Date, if all or any part of the requested Revolving Credit
Loans are to be initially Eurodollar Loans, or (y) 12:00 p.m., Eastern time, on
the requested Borrowing Date, otherwise), specifying (i) the amount to be
borrowed, (ii) the requested Borrowing Date, (iii) the Type of the requested
borrowing, (iv) if the borrowing is to be entirely or partly of Eurodollar
Loans, the amounts and Eurodollar Interest Periods thereof and (v) the purpose
of such borrowing: e.g. whether the proceeds are to be used for working capital,
to make an Initial Permitted Acquisition or a Subsequent Permitted Acquisition,
to make advances to CSF, etc. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (A) in the case of Alternate Base
Rate Loans, $250,000 or a whole multiple of $100,000 in excess thereof (or, if
the then Available Revolving Credit Commitments are less than $250,000, such
lesser amount) or (B) in the case of Eurodollar Loans, $250,000 or a whole
multiple of $100,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Agent shall promptly notify each Bank thereof. Each Bank will make
the amount of its pro rata share (based on its Commitment Percentage) of each
borrowing available to the Agent for the account of the Borrower at the office
of the Agent specified in subsection 10.2 prior to 2:00 p.m., Eastern time, on
the Borrowing Date requested by the Borrower in funds immediately available to
the Agent. Such borrowing will then be made available to the Borrower by the
Agent crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by the Banks and in like
funds as received by the Agent.
2.5 CONVERSION AND CONTINUATION OPTIONS.
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to Alternate Base Rate Loans by giving the Agent at least two (2) Business
Days' prior irrevocable notice of such election; PROVIDED that any such
conversion of Eurodollar Loans may only be made as of the last day of a
Eurodollar Interest Period with respect thereto. The Borrower may elect from
time to time to convert Alternate Base Rate Loans to Eurodollar Loans by giving
the Agent at least three (3)
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Business Days' prior irrevocable notice of such election, which notice shall
specify the length of the initial Eurodollar Interest Period or Eurodollar
Interest Periods therefor. Upon receipt of any such notice the Agent shall
promptly notify each Bank thereof. All or any part of outstanding Eurodollar
Loans and Alternate Base Rate Loans may be converted as provided herein,
provided that no Loan may be converted into a Eurodollar Loan when any Event of
Default has occurred and is continuing or the Agent has or the Required Banks
have determined pursuant to subsection 2.12 that such a conversion is not
appropriate.
(b) The Borrower may elect to continue all or any portion of any
Eurodollar Loan upon the expiration of the designated Eurodollar Interest Period
in respect of such Eurodollar Loan by giving the Agent at least three (3)
Business Days' prior irrevocable notice of such election; PROVIDED that no
Eurodollar Loan may be continued as such when any Event of Default has occurred
and is continuing or the Agent has or the Required Banks have determined
pursuant to subsection 2.12 that such a continuation as a Eurodollar Loan is not
appropriate. The Borrower shall specify in the aforesaid notice the amount to be
continued as a Eurodollar Loan and the Eurodollar Interest Period with respect
thereto in accordance with subsection 2.2.
2.6 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. All borrowings,
conversions and continuations of Loans hereunder and all selections of
Eurodollar Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, after giving effect thereto, the aggregate
principal amount of the Eurodollar Loans comprising each Tranche shall be equal
to $250,000 or a whole multiple of $100,000 in excess thereof and so that there
shall not be more than seven (7) Tranches at any one time outstanding.
2.7 REVOLVING CREDIT NOTES. The Revolving Credit Loans made by each
Bank shall be evidenced by a promissory note of the Borrower, substantially in
the form of Exhibit A-2 with appropriate insertions as to payee, date and
principal amount (a "Revolving Credit Note"), payable to the order of such Bank
and in a principal amount equal to the amount of the initial Revolving Credit
Commitment of such Bank. Each Bank is hereby authorized to record the date, Type
and amount of each Revolving Credit Loan made by such Bank, each continuation
thereof, each conversion of all or a portion thereof to another Type, the date
and amount of each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Eurodollar Interest Period and
Eurodollar Rate with respect thereof, on the SCHEDULE annexed to and
constituting a part of its Revolving Credit Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded.
Each Revolving Credit Note shall (x) be dated the Closing Date, (y) be stated to
mature on the Termination Date and (z) provide for the payment of interest in
accordance with subsection 2.3.
2.8 FEES.
(a) The Borrower agrees to pay to the Banks a commitment fee on the
unborrowed portion of the Commitment, as in effect from time to time, for each
day from the Closing Date
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through the Termination Date, at the percentage rate per annum set forth below
opposite the Consolidated Indebtedness to Consolidated EBITDA Ratio applicable
from time to time:
-------------------------------------------------------------------------
CONSOLIDATED INDEBTEDNESS COMMITMENT FEE
LEVEL TO CONSOLIDATED EBITDA RATIO (PERCENTAGE %)
-------------------------------------------------------------------------
I Less than 1.50 to 1.00 .250%
-------------------------------------------------------------------------
II 1.50- 2.49 to 1.00 .250%
-------------------------------------------------------------------------
III 2.50-3.49 to 1.00 .375%
-------------------------------------------------------------------------
IV 3.50- 3.99 to 1.00 .375%
-------------------------------------------------------------------------
V 4.00- 4.49 to 1.00 .500%
-------------------------------------------------------------------------
VI Greater than 4.50 to 1.00 .500%
-------------------------------------------------------------------------
Such commitment fee shall be computed on the basis of a 360-day year
for the actual number of days elapsed, shall be payable in arrears on the last
day of each quarter during the term of this Agreement, commencing March 31,
1997, and on the Termination Date, and shall be fully earned when due and
non-refundable when paid, PROVIDED that notwithstanding the foregoing, during
the six (6) month period following the Closing Date, the commitment fee will not
be less than that set forth at Level V above irrespective of the Borrower's
actual Consolidated Indebtedness to Consolidated EBITDA Ratio.
(b) On the Closing Date and semiannually thereafter, the Borrower shall
pay to the Agent agency fees in the amounts set forth in a letter agreement
between the Agent and the Borrower (taking into account that such fees will be
paid semiannually rather than annually as provided for in such letter). These
agency fees are fully earned as of the date when due, are solely for the account
of Agent and are non-refundable.
(c) On the Closing Date, the Borrower shall pay to the Agent a
non-refundable closing fee in the amount set forth in a letter agreement between
the Agent and the Borrower.
2.9 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The
Borrower shall have the right, upon not less than three (3) Business Days'
notice to the Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Revolving Credit Commitments PROVIDED that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Credit Loans made on the effective date
thereof, the aggregate principal amount of the Revolving Credit Loans and
Swingline Loans then outstanding, when added to such Bank's Commitment
Percentage of the L/C Obligations, would exceed the Revolving Credit Commitments
then in effect and PROVIDED FURTHER that, if the termination or reduction occurs
prior to the second anniversary of the Closing Date, the Borrower shall pay
concurrently to the Banks ratably a premium, based on the amount of the
reduction of the Commitment, equal to three percent
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(3%) if the termination or reduction occurs before the first anniversary and two
percent (2%) if it occurs before the second anniversary. Any such reduction
shall be in an amount not less than $1,000,000 or integral multiples of $250,000
in excess thereof, and shall reduce permanently the Revolving Credit Commitments
then in effect.
2.10 OPTIONAL PREPAYMENTS. The Borrower may at any time and from time
to time, prepay the Revolving Credit Loans, in whole or in part, subject to
payment of any premium required by Section 2.9, upon at least three (3) Business
Days' irrevocable notice, in the case of prepayment of any Revolving Credit
Loans which are Eurodollar Loans, or upon irrevocable notice (which notice must
be received by 1:00 P.M., Eastern time, on or before the proposed date of
prepayment), in the case of prepayments of any Revolving Credit Loans which are
Alternate Base Rate Loans, to the Agent, specifying the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans, Alternate Base
Rate Loans or a combination thereof, and, in each case if a combination thereof,
the amount allocable to each; PROVIDED that, if a Eurodollar Loan is prepaid
other than at the end of the Eurodollar Interest Period applicable thereto, the
Borrower shall also pay any amounts required to be paid pursuant to subsection
2.17. Upon receipt of any such notice the Agent shall promptly give notice
thereof to each Bank. If any such notice is given by the Borrower, the amount
specified in such notice shall be due and payable on the date specified therein.
Partial prepayments of the Revolving Credit Loans shall be in an aggregate
principal amount of $250,000 or a whole $100,000 multiple in excess thereof.
2.11 COMPUTATION OF INTEREST AND FEES. Interest on the Loans, Letter of
Credit commissions and commitment fees shall be calculated on the basis of a
360-day year for the actual days elapsed. The Agent shall as soon as practicable
notify the Borrower and the Banks of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the
Alternate Base Rate or the Eurodollar Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Agent shall as soon as practicable notify the Borrower and the
Banks of the effective date and the amount of each such change in interest rate.
Each determination of an interest rate by the Agent pursuant to any provision of
this Agreement shall be conclusive and binding on the Borrower and the Banks in
the absence of manifest error.
2.12 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day of
any Eurodollar Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Eurodollar Interest Period, or
(b) the Agent shall have received notice from the Required Banks that
the Eurodollar Rate determined or to be determined for such Eurodollar Interest
Period will not adequately and fairly reflect the cost to such Banks (as
conclusively certified by such Banks) of making or maintaining their affected
Loans during such Eurodollar Interest Period,
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the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Banks as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Eurodollar
Interest Period shall be made as Alternate Base Rate Loans, (y) any Loans that
were to have been converted on the first day of such Eurodollar Interest Period
to Eurodollar Loans shall be converted to or continued as Alternate Base Rate
Loans, and (z) any outstanding Eurodollar Loans shall be converted, on the first
day of such Eurodollar Interest Period, to Alternate Base Rate Loans. Until such
notice has been withdrawn by the Agent, no further Eurodollar Loans shall be
made or continued as such, nor shall the Borrower have the right to convert
Loans to Eurodollar Loans.
2.13 PRO RATA TREATMENT AND PAYMENTS.
(a) Unless the Agent shall have been notified in writing by any Bank
prior to a Borrowing Date that such Bank will not make the amount that would
constitute its Commitment Percentage of the borrowing on such date available to
the Agent, the Agent may assume that such Bank (a "Reimbursing Bank") has made
such amount available to the Agent on such Borrowing Date, and the Agent or any
Bank may (but shall not be obligated), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is made
available to the Agent on a date after such Borrowing Date, the Reimbursing Bank
shall pay to the Agent on demand an amount equal to the product of (i) the daily
average Federal Funds Effective Rate during such period as quoted by the Agent,
times (ii) the amount of such Reimbursing Bank's Commitment Percentage of such
borrowing, times (iii) a fraction the numerator of which is the number of days
that elapse from and including such Borrowing Date to the date on which such
Reimbursing Bank's Commitment Percentage of such borrowing shall have become
immediately available to the Agent and the denominator of which is 365. A
certificate of the Agent submitted to any Reimbursing Bank with respect to any
amounts owing under this subsection shall be conclusive in the absence of
manifest error. If a Reimbursing Bank's Commitment Percentage of such borrowing
is not in fact made available to the Agent by such Reimbursing Bank within three
(3) Business Days of such Borrowing Date, the Agent shall be entitled to recover
such amount, with interest thereon at the rate per annum applicable to Alternate
Base Rate Loans hereunder, on demand, from such Reimbursing Bank or the Borrower
in such order and manner as Agent may determine in its discretion.
(b) Each borrowing of Revolving Credit Loans by the Borrower from the
Banks hereunder shall be made by the Banks pro rata in accordance with the
respective Commitment Percentage of such Banks. Each payment by the Borrower on
account of the principal of and interest on the Revolving Credit Loans, and any
reduction of the Commitments of the Banks shall be payable to the Banks pro rata
in accordance with the respective Commitment Percentages of the Banks; PROVIDED
that in the event the Agent or any Bank pursuant to subsection 2.13(a) makes
available to the Borrower a Reimbursing Bank's Commitment Percentage of a
requested borrowing, the Agent or such Bank providing such funding shall be
entitled to receive all payments that would otherwise be payable to such
Reimbursing Bank until such time as the Agent or such Bank, as the
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case may be, shall have received an amount equal to the amount so funded on
behalf of such Reimbursing Bank, together with interest thereon as provided in
subsection 2.13(a). All payments (including prepayments) to be made by the
Borrower hereunder and under the Notes, whether on account of principal,
interest, fees or otherwise, shall be made without set off or counterclaim and
shall be made prior to 1:00 p.m., Eastern time, on the due date thereof to the
Agent, for the account of the Banks, at the Agent's office specified in
subsection 10.2, in Dollars and in immediately available funds. The Agent shall
distribute such payments to the Banks promptly upon receipt in like funds as
received. If such payment is not made available by the Agent to any Bank within
three (3) Business Days of the Agent's receipt of payment from the Borrower,
such Bank shall be entitled to recover such amount from the Agent with interest
thereon at a rate per annum equal to the Alternate Base Rate. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
2.14 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Bank hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Alternate Base Rate Loans to Eurodollar Loans shall forthwith be
canceled and (b) such Bank's Loans then outstanding as Eurodollar Loans, if any,
shall be converted automatically to Alternate Base Rate Loans on the respective
last days of the then current Eurodollar Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Eurodollar Interest Period with respect thereto, the Borrower shall pay
to such Bank such amounts, if any, as may be required pursuant to subsection
2.17.
2.15 REQUIREMENTS OF LAW.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Bank with any
request or directive (whether having the force of law or not) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Bank to any tax of any kind whatsoever
with respect to this Agreement, any Note or any Eurodollar Loan made by
it, or change the basis of taxation of payments to such Bank in respect
thereof (except for Non-Excluded Taxes covered by subsection 2.16 and
changes in the rate of tax on the overall net income of such Bank);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
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acquisition of funds by, any office of such Bank which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Bank, upon its demand, any additional amounts necessary to
compensate such Bank for such increased cost or reduced amount receivable. If
any Bank becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify the Borrower through the Agent, of the
event by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection submitted by such Bank,
through the Agent, to the Borrower shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(b) If any Bank shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Bank or any
corporation controlling such Bank with any request or directive regarding
capital adequacy (whether having the force of law or not) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect or
reducing the rate of return on such Bank's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Bank
or such corporation could have achieved but for such change or compliance
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, after submission by such Bank to the Borrower (with a
copy to the Agent) of a written request therefore, the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank for
such reduction.
2.16 TAXES.
(a) All payments made by the Borrower under this Agreement and the
Notes shall be made free and clear of, and without deduction or withholding for
or on account of any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on the Agent or any Bank as a result of a present or former
connection between the Agent or such Bank and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Agent or such Bank having executed, delivered or performed its obligations
or received a payment under, or enforced, this Agreement or the Notes). If any
such non-excluded
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taxes, levies, imposts, duties, charges, fees deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Agent or any Bank hereunder or under the Notes, the amounts so payable to
the Agent or such Bank shall be increased to the extent necessary to yield to
the Agent or such Bank (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the Notes, PROVIDED, HOWEVER, that the Borrower shall not be
required to increase any such amounts payable to any Bank that is not organized
under the laws of the United States of America or a state thereof if such Bank
fails to comply with the requirements of paragraph (b) of this subsection.
Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as
possible thereafter the Borrower shall send to the Agent for its own account or
for the account of such Bank, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agent and the
Banks for any incremental taxes, interest or penalties that may become payable
by the Agent or any Bank as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
(b) Each Bank that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two (2) duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an
Internal Revenue Service Form W-8 or W-9, or successor applicable form,
as the case may be;
(ii) deliver to the Borrower and the Agent two (2) further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent.
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank so advises the Borrower and the Agent.
Such Bank shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Bank or a Participant
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pursuant to subsection 10.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Bank
from which the related participation shall have been purchased.
2.17 INDEMNITY. The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from any loss or expense which such Bank may sustain or incur
as a consequence of (a) failure by the Borrower to borrow, convert into or
continue Eurodollar Loans after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (b) failure by the
Borrower to make any prepayment after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an
Eurodollar Interest Period with respect thereto. Such indemnification may
include, without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds obtained to fund or
maintain a Eurodollar Loan during any Eurodollar Interest Period, which any Bank
may incur as a consequence of such failure to borrow, convert or continue, as
the case may be. A certificate by Agent as to the amount of such loss, expense
or increased costs shall, when submitted to the Borrower, be conclusive, in the
absence of manifest error, unless the Borrower shall have provided the Agent
with written notice of the Borrower's objection to all or any portion of such
certificate not later than ten (10) days after the date on which such
certificate is submitted to the Borrower. Any such Eurodollar Loan shall not be
deemed paid or satisfied until all such additional amounts are paid. Agent
agrees to provide the Borrower with such information as the Borrower may
reasonably request with respect to the calculation of any such losses or
expenses. The covenant contained in this subsection 2.17 shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT.
(a) Subject to the terms and conditions hereof, the Issuing Bank, in
reliance on the agreements of the other Banks set forth in subsection 3.5(a),
agrees to issue irrevocable standby letters of credit for the account of the
Borrower on any Business Day on or after the Amendment Effective Date until the
date which is five (5) Business Days prior to the end of the Commitment Period
in such form as may be approved from time to time by the Issuing Bank (all such
letters of credit outstanding on the date hereof and all letters of credit to be
issued hereunder, together with all extensions, renewals and replacements
thereof, are herein collectively referred to as the "Letters of Credit");
PROVIDED that the Issuing Bank shall have no obligation to issue any Letter of
Credit if at the time of such issuance a Default exists or an Event of Default
has occurred and is continuing or if, after giving effect to such issuance, (i)
the L/C Obligations would exceed the L/C Commitment or (ii) the Available
Revolving Credit Commitment would be less than zero. Each Letter of Credit shall
(i) be denominated in Dollars, (ii) expire no later than the Termination Date
and (iii) expire
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no later than a date one (1) year after its issuance, PROVIDED that any Letter
of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (ii) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of the Issuing
Bank's principal place of business.
(c) The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The Borrower may from
time to time request that the Issuing Bank issue a Letter of Credit by
delivering to the Issuing Bank at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Bank, and
such other certificates, documents and other papers and information as the
Issuing Bank may request. Upon receipt of any Application, the Issuing Bank will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Bank be required to issue any Letter
of Credit earlier than three (3) Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereof) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing
Bank and the Borrower. The Issuing Bank shall furnish a copy of such Letter of
Credit to the Borrower and the other Banks promptly following the issuance
thereof.
3.3 FEES, COMMISSIONS AND OTHER CHARGES.
(a) The Borrower shall pay to the Agent a letter of credit facility fee
(the "L/C Fee"), at the end of each quarter after issuance of a Letter of
Credit, in an amount equal to the product of (i) the face amount of such Letter
of Credit, times (ii) the applicable Letter of Credit Rate, times (iii) the term
of such Letter of Credit, expressed as a fraction equal to the number of days of
such term divided by three hundred sixty (360). In addition, as long as any
letter of credit issued by The First National Bank of Boston (the "FNBB Letters
of Credit") for the account of the Borrower or any Subsidiary is outstanding,
the Borrower shall pay to the Issuing Bank an additional fee, based on the face
amount of all such letters of credit, equal to the difference between the Letter
of Credit Rate that would have applied had such letters of credit been issued
hereunder and the letter of credit fee payable on the FNBB Letters of Credit.
The applicable Letter of Credit Rate shall be determined based upon the
calculations submitted to the Banks pursuant to subsection 6.1(b) and shall be
effective as of the first day of the fiscal quarter next following the date such
calculations are submitted to the Banks. Any change in the applicable Letter of
Credit Rate as a consequence of the Banks' review of the aforesaid calculation
after the effective date of such Letter of Credit Rate shall be retroactively
applied to the first day such Letter of Credit Rate became effective. In the
event
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that the Letter of Credit Rate can not be determined at any time because the
Borrower's financial statements for the immediately preceding fiscal quarter are
not available at such time, the Letter of Credit Rate shall be presumed to be
the same as the Letter of Credit Rate as of the last FQED for which the
Borrower's financial statements were available. Any change in the L/C Fee as a
consequence of a change in the Letter of Credit Rate shall be effective as of
the date of such change in the Letter of Credit Rate. Any increase or reduction
in the L/C Fee as a consequence of an increase or reduction in the Letter of
Credit Rate, as the case may be, shall be added to or deducted from the next L/C
Fee, as the case may be. In the event any Letter of Credit is terminated or the
available credit thereunder is permanently reduced prior to the stated expiry
date thereof, the Borrower shall be entitled to a rebate of that portion of the
L/C Fee paid with respect to such Letter of Credit which is allocable pro rata
to the portion of the Letter of Credit that has been terminated or reduced, as
the case may be, as determined by the Issuing Bank. Of each L/C Fee payable
under this subsection 3.3, twenty-five basis points shall be paid directly to
and for the account of the Issuing Bank and the remainder shall be shared
ratably among the Banks in accordance with their respective Commitment
Percentages.
(b) The Agent shall, promptly following its receipt thereof, distribute
to the Issuing Bank and the L/C Participants all fees and commissions received
by the Agent for their respective accounts pursuant to this subsection.
3.4 REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower agrees to
reimburse the Issuing Bank on each date on which the Issuing Bank notifies the
Borrower in writing of the date and amount of a draft presented under any Letter
of Credit and paid by the Issuing Bank for the amount of (a) such draft so paid
and (b) any taxes (other than income taxes), fees, charges or other costs or
expenses incurred by the Issuing Bank in connection with such payment. Each such
payment shall be made to the Issuing Bank at its address for notices specified
herein in Dollars and in immediately available funds. Interest shall be payable
on any and all amounts remaining unpaid by the Borrower under this subsection
from the date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate which would be
payable on any outstanding Loans which were then overdue under subsection 2.3.
Each drawing under any Letter of Credit shall constitute a request by the
Borrower to the Agent for the borrowing pursuant to subsection 2.1 of Revolving
Credit Loans in the amount of such drawing and any reimbursement made by an L/C
Participant pursuant to subsection 3.5 shall constitute a Revolving Credit Loan
pursuant to subsection 2.3.
3.5 L/C DRAWS AND REIMBURSEMENTS.
(a) Each L/C Participant unconditionally and irrevocably agrees with
the Issuing Bank that, if a draft is paid under any Letter of Credit for which
the Issuing Bank is not reimbursed in full by the Borrower in accordance with
the terms of this Agreement, such L/C Participant shall pay to the Issuing Bank
upon demand at the Issuing Bank's address for notices specified herein an amount
equal to such L/C Participant's Commitment Percentage of the amount of such
draft, or any part
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thereof, which is not so reimbursed through participation or otherwise. In
furtherance of the foregoing, the Issuing Bank irrevocably agrees to grant and
hereby grants to each L/C Participant, and, to induce the Issuing Bank to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept
and purchase and hereby accepts and purchases from the Issuing Bank, on the
terms and conditions hereinafter stated, for such L/C Participant's own account
and risk an undivided interest equal to such L/C Participant's Commitment
Percentage in the Issuing Bank's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the Issuing Bank
thereunder.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to subsection 3.5(a) in respect of any unreimbursed
portion of any payment made by the Issuing Bank under any Letter of Credit is
paid to the Issuing Bank within three (3) Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Bank on demand an
amount equal to the product of (1) such amount, times (2) the daily average
Federal Funds Effective Rate, as quoted by the Issuing Bank, during the period
from and including the date such payment is required to the date on which such
payment is immediately available to the Issuing Bank, times (3) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 365. If any such amount required to be paid by any L/C
Participant pursuant to subsection 3.5(a) is not in fact made available to the
Issuing Bank by such L/C Participant within three (3) Business Days after the
date such payment is due, the Issuing Bank shall be entitled to recover from
such L/C Participant, on demand, such amount with interest thereon calculated
from such due date at the rate per annum equal to the Alternate Base Rate. A
certificate of the Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment under
any Letter of Credit and has received from any L/C Participant its share of such
payment in accordance with subsection 3.5(a), the Issuing Bank receives any
payment related to such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of collateral applied thereto by the Issuing
Bank), or any payment of interest on account thereof, the Issuing Bank will
distribute to such L/C Participant its share thereof; PROVIDED, HOWEVER, that in
the event that any such payment received by the Issuing Bank shall be required
to be returned by the Issuing Bank, such L/C Participant shall return to the
Issuing Bank the portion thereof previously distributed by the Issuing Bank to
it.
3.6 OBLIGATIONS ABSOLUTE. The Borrower's obligations under this Section
3 shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Bank or any beneficiary of a
Letter of Credit. The Borrower also agrees with the Issuing Bank that, subject
to its responsibilities under the Uniform Customs, the Issuing Bank shall not be
responsible for, and the Borrower's Reimbursement Obligations under Subsection
3.4 shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even
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though such documents shall in fact prove to be invalid, fraudulent or forged,
or any dispute between or among the Borrower and any beneficiary of any Letter
of Credit or any other party to which such Letter of Credit may be transferred
or any claims whatsoever of the Borrower against any beneficiary of such Letter
of Credit or any such transferee. The Issuing Bank shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing Bank's gross
negligence or willful misconduct. The Borrower agrees that any action taken or
omitted by the Issuing Bank under or in connection with any Letter of Credit or
the related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in the
Uniform Commercial Code of the State of Connecticut, shall be binding on the
Borrower and shall not result in any liability of the Issuing Bank to the
Borrower.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Bank shall promptly notify the
Borrower and the Banks of the date and amount thereof. The responsibility of the
Issuing Bank to the Borrower in connection with any draft presented for payment
under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
3.8 APPLICATION. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make the Loans
and issue or participate in the Letters of Credit the Borrower hereby represents
and warrants to the Agent and each Bank that:
4.1 FINANCIAL CONDITION.
(a) The combined balance sheet of the Borrower and its Affiliates as at
December 31, 1995 and December 31, 1994 and the related combined statements of
income and retained earnings and of cash flows for the fiscal years ended on
such dates, reported on by Deloitte & Touche LLP, copies of which have
heretofore been furnished to each Bank, are complete and correct and present
fairly the consolidated financial condition of The Borrower and its Affiliates
as at such dates, and the results of their operations and their cash flows for
the fiscal years then ended. The unaudited combined balance sheet of the
Borrower and its Affiliates as at November 30, 1996 and the related unaudited
statement of income and retained earnings for the eleven-month period ended on
such date, certified by a Responsible Officer, copies of which have heretofore
been furnished to each
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Bank, are complete and correct and present fairly the financial condition of the
Borrower and its Affiliates as at such date, and the results of their operations
for the eleven-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein).
(b) Except as set forth on SCHEDULE 4.1(b), neither the Borrower nor
any of its combined Affiliates had, at the date of the most recent balance sheet
referred to in subsection 4.1(a), any material Guarantee Obligation, contingent
liability or liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
financial statements referred to in subsection 4.1(a) or in the notes thereto.
(c) Except as set forth on SCHEDULE 4.1(c), during the period from
December 31, 1995 to and including the date hereof there has been no sale,
transfer or other disposition by the Borrower or any of its combined Affiliates
of any material part of its business or property and no purchase or other
acquisition of any business or property (including any capital stock of any
other Person) material in relation to the financial condition of the Borrower
and its combined Affiliates at December 31, 1995.
(d) The unaudited PRO FORMA consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at November 30, 1996 and the related
consolidated statements of income and retained earnings for the eleven-month
period ended on such date (the "PRO FORMA FINANCIAL STATEMENTS"), copies of
which have heretofore been furnished to the Banks, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the reorganization of the Borrower and its Subsidiaries into a holding company
structure, (ii) the Loans to be made and the Subordinated Indebtedness to be
issued on the Closing Date and the use of proceeds thereof and (iii) the payment
of fees and expenses in connection with the foregoing. The Pro Forma Financial
Statements have been prepared based on the best information available to the
Borrower as of the date of delivery thereof, and present fairly on a PRO FORMA
basis the estimated financial position of the Borrower and its consolidated
Subsidiaries as at the Closing Date, assuming that the events specified in the
preceding sentence had actually occurred at such date.
(e) All of the books and records of the Borrower and its Subsidiaries
are located at the Borrower's headquarters at 1144 East Newport Center Drive,
Deerfield Beach, Florida except certain information with respect to certain
accounts of OutSource International of America, Inc., as successor by merger to
OutSource International, Inc., an Illinois corporation, are maintained for a
period not exceeding one (1) day in the ordinary course of its business in Elk
Grove Village, Illinois.
4.2 NO CHANGE. Since December 31, 1995, (a) except as set forth on
SCHEDULE 4.2, there has been no development or event nor, to the best of our
knowledge, any prospective
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development or event which has had or could have a Material Adverse Effect and
(b) except as set forth on SCHEDULE 4.2 or as permitted by this Agreement, no
dividends or other distributions have been declared, paid or made upon the
Capital Stock of the Borrower or any of its combined Affiliates nor has any of
the Capital Stock of the Borrower been redeemed, retired, purchased or otherwise
acquired for value by the Borrower or any of its combined Affiliates.
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Borrower and each
Subsidiary (a) is duly organized as a "C corporation", as defined in Section
1361(a)(2) the Code, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged in each
jurisdiction where the failure to have such power, authority or right would have
a Material Adverse Effect, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except where the failure so to qualify could not have a Material Adverse Effect
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, have a Material
Adverse Effect.
4.4 CORPORATE POWER, AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
Borrower and each Subsidiary has the corporate power and authority, and the
legal right, to make, deliver and perform this Agreement, the Notes, each
Application and the other Loan Documents to which it is a party, to borrow
hereunder and to grant the Liens pursuant to the Security Documents to which it
is a party and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and the Notes, the
grant of the Liens pursuant to the Security Documents to which it is a party and
the execution, delivery and performance of this Agreement, the Notes, each
Application and each other Loan Document to which it is a party. No consent or
authorization of, filing with or other action by or in respect of, any
Governmental Authority or any other Person is required in connection with the
borrowings hereunder, the grant of the Liens pursuant to the Security Documents
or the execution, delivery, performance, validity or enforceability of this
Agreement, the Notes, each Application or any other Loan Document. This
Agreement and each other Loan Document to which the Borrower or a Subsidiary is
a party (except the Notes) has been, and each Note will be, duly executed and
delivered on behalf of the Borrower. This Agreement and each other Loan Document
to which the Borrower or a Subsidiary is a party (except the Notes) constitutes,
and each Note when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower or such Subsidiary, as the case may be,
enforceable against such Borrower or such Subsidiary in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 NO LEGAL BAR. The execution, delivery and performance of this
Agreement, the Notes, each Application and each other Loan Document, the grant
of the Liens pursuant to the
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Security Documents, the borrowings hereunder and the use of the proceeds thereof
will not violate any Requirement of Law or Contractual Obligation of the
Borrower or of any Subsidiary and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation.
4.6 NO MATERIAL LITIGATION. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or against any of its or their respective properties or revenues (a)
with respect to this Agreement, the Notes, any Application or any other Loan
Document or any of the transactions contemplated hereby or thereby or (b) which
could have a Material Adverse Effect, except with respect to matters described
on SCHEDULE 4.6.
4.7 NO DEFAULT. Neither the Borrower nor any Subsidiary is in default
under or with respect to any of its Contractual Obligations or Capital Stock in
any respect which could have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and each
Subsidiary has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to all its other
property except for any defect in title thereto or leasehold interest therein
which could not in the aggregate have a Material Adverse Effect, and none of the
property owned or leased by the Borrower or any Subsidiary is subject to any
Lien except as permitted by subsection 7.3 or which could not in the aggregate
have a Material Adverse Effect.
4.9 INTELLECTUAL PROPERTY. The Borrower and each Subsidiary owns, or is
licensed to use, all trademarks, trade names, copyrights, technology, know-how
and processes necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not have a Material
Adverse Effect (the "Intellectual Property"). No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Borrower know of any valid basis for any such claim which
could or might have a Material Adverse Effect. To the best of the Borrower's
knowledge, the use of such Intellectual Property by the Borrower and each
Subsidiary does not infringe on the rights of any Person, except for such claims
and infringements that, in the aggregate, could not have a Material Adverse
Effect.
4.10 NO BURDENSOME RESTRICTIONS. The Borrower nor any Subsidiary is a
party to any Contractual Obligation or Requirement of Law, compliance with the
terms of which could have a Material Adverse Effect.
4.11 TAXES. Each of the Borrower and its Subsidiaries has filed or
caused to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed (the "Tax Returns") and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
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property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be) where the failure
to so file such Tax Returns or to pay such taxes could or might have a Material
Adverse Effect; no tax Lien has been filed, and, to the knowledge of the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge. SCHEDULE 4.11 sets forth a complete and correct list of all audits
concerning any Tax Return that are being conducted by any Governmental Authority
or are otherwise in progress on the Closing Date.
4.12 FEDERAL REGULATIONS. No part of the proceeds of any Loans will be
used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect or for any purpose which violates the provisions of the Regulations of
such Board of Governors. If requested by any Bank or the Agent, the Borrower
will furnish to the Agent and each Bank a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U.
4.13 ERISA. Neither the Borrower nor any Commonly Controlled Entity
participates currently or has during the five-year period prior to the date on
which this representation is made participated in or is required currently or
has during the five-year period ending on the date on which this representation
is made been required to contribute to or otherwise participate in any plan,
program or arrangement subject to Title IV of ERISA. Except as set forth in
SCHEDULE 4.13, each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. The present value of all accrued
benefits under each Single Employer Plan maintained by the Borrower or any
Commonly Controlled Entity (based on those assumptions used to fund the Plans)
did not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits. Neither the Borrower nor any Commonly
Controlled Entity participates currently or has during the five-year period
prior to the date on which this representation is made participated in or is
required currently or has during the five-year period ending on the date on
which this representation is made been required to contribute to or otherwise
participate in any Multiemployer Plan. Neither the Borrower nor any Commonly
Controlled Entity participates currently or has during the five-year period
prior to the date on which this representation is made participated in or is
required currently or has during the five-year period ending on the date on
which this representation is made been required to contribute to or otherwise
participate in any welfare benefit plans (as defined in Section 3(1) of ERISA)
that provide post-retirement benefits to their current or former employees.
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. Neither the Borrower
nor any Subsidiary is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act"). Neither
- 39 -
the Borrower nor any Subsidiary is subject to regulation under the 1940 Act or
any Federal or State statute or regulation which limits its ability to incur
Indebtedness.
4.15 SUBSIDIARIES. All the Subsidiaries of the Borrower are listed on
SCHEDULE 4.15. Neither Labor World, Inc. nor Labor World USA, Inc., which are
not Subsidiaries but are corporations whose shares are owned by certain
shareholders of the Borrower, has assets exceeding $10,000 or has or will have
any business activity of any kind.
4.16 PURPOSE OF LOANS. The Borrower shall use the Loans in the
following manner: (i) the Borrower shall use the Working Capital Line for the
working capital needs and for the general corporate purposes of itself and its
Subsidiaries (other than CSF), including for the Initial Permitted Acquisitions;
(ii) the Borrower shall use the Acquisition Line to make Subsequent Permitted
Acquisitions; (iii) the Borrower shall use the CSF Line to make advances to CSF
to fund the working capital needs of Labor World franchisees and (iv) the
Borrower shall use the proceeds of Swingline Loans for the working capital needs
of the Borrower and its Subsidiaries (other than CSF).
4.17 ENVIRONMENTAL MATTERS. To the best knowledge of any Responsible
Officer of the Borrower, each of the representations and warranties set forth in
paragraphs (a) through (e) of this subsection is true and correct with respect
to each parcel of real property heretofore or now owned or operated by the
Borrower or any Subsidiary (the "Properties"), except as set forth on SCHEDULE
4.17 and except to the extent that the facts and circumstances giving rise to
any such failure to be so true and correct could not have a Material Adverse
Effect:
(a) The Properties do not contain, and have not previously contained,
in, on, or under, including, without limitation, the soil and groundwater
thereunder, any Hazardous Materials.
(b) The Properties and all operations and facilities at the Properties
are in compliance with all Environmental Laws, and there is no Hazardous
Materials contamination or violation of any Environmental Law which could
interfere with the continued operation of any of the Properties or impair the
fair saleable value of any thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any
complaint, notice of violation, alleged violation, investigation or advisory
action or of potential liability or of potential responsibility regarding
environmental protection matters or permit compliance with regard to the
Properties, nor is the Borrower aware that any Governmental Authority is
contemplating delivering to the Borrower or any of its Subsidiaries any such
notice.
(d) Hazardous Materials have not been generated, treated, stored,
disposed of, at, on or under any of the Properties, nor have any Hazardous
Materials been transferred from the Properties to any other location.
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(e) There are no governmental, administrative or judicial proceedings
pending or contemplated under any Environmental Laws to which the Borrower or
any of its Subsidiaries is or will be named as a party with respect to the
Properties, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to any of the
Properties.
4.18 SECURITY DOCUMENTS.
(a) The provisions of the OI Pledge Agreement are effective to create
in favor of the Agent for the ratable benefit of the Banks a legal, valid and
enforceable security interest in all right, title and interest of the pledgor in
the Collateral as described therein. The OI Pledge Agreement constitutes a fully
perfected first lien on, and security interest in, all right, title and interest
of the pledgor in the Collateral described therein.
(b) The provisions of the OI Security Agreement are effective to create
in favor of the Agent for the ratable benefit of the Banks a legal, valid and
enforceable security interest in all right, title and interest of the Borrower
in the Collateral as described therein. Except where failure to file would not
have a material effect on Agent's ability to realize effectively on the
Collateral, as a whole, OI Security Agreement constitutes a fully perfected
first lien on, and security interest in, all right, title and interest of the
Borrower in the Collateral described therein, and no Uniform Commercial Code
financing statements have been filed by any other Person with respect to such
Collateral other than as may be filed in connection with this Agreement and
except as described on SCHEDULE 4.18 hereto.
(c) The provisions of the Subsidiary Security Agreement are effective
to create in favor of the Agent for the ratable benefit of the Banks a legal,
valid and enforceable security interest in all right, title and interest of such
Subsidiary in the Collateral as described therein. Except where failure to file
would not have a material effect on the Agent's ability to effectively realize
on the Collateral, as a whole, the Subsidiary Security Agreement constitutes a
fully perfected first lien on, and security interest in, all right, title and
interest of such Subsidiary in the Collateral described therein, and no Uniform
Commercial Code financing statements have been filed by any other Person with
respect to such Collateral other than as may be filed in connection with this
Agreement and except as described on SCHEDULE 4.18 hereto.
(d) The provisions of the Trademark Security Agreement are effective to
create in favor of the Agent for the ratable benefit of the Banks a legal, valid
and enforceable security interest in all right, title and interest of the
Borrower and its Subsidiaries in the Collateral as described therein. Except
where failure to file would not have a material effect on the Agent's ability to
effectively realize on the Collateral, as a whole, the Trademark Security
Agreement constitutes a fully perfected first lien on, and security interest in,
all right, title and interest of such Subsidiary in the Collateral described
therein, and no Uniform Commercial Code financing statements or filings with the
United States Patent and Trademark Office have been filed by any other Person
with respect to such
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Collateral other than as may be filed in connection with this Agreement and
except as described on SCHEDULE 4.18 hereto.
4.19 DESIGNATED SENIOR DEBT. The extensions of credit under this
Agreement, the Notes and each Application will be, and are hereby designated as,
Designated Senior Debt under and as defined in the Securities Purchase
Agreement.
4.20 SOLVENCY. The Borrower and each Subsidiary is, and after giving
effect to the incurrence of all Indebtedness, including Subordinated
Indebtedness, and obligations being incurred in connection herewith will be and
will continue to be, Solvent.
4.21 CERTAIN STOCKHOLDERS. None of Lawrence H. Schubert, Alan E.
Schubert or Louis A. Morelli is a beneficial owner, directly or indirectly,
including without limitation through a family member or trust, of any Voting
Stock of the Borrower or its Subsidiaries except such Voting Stock as is subject
to the provisions of the Voting Trust Agreement. As of the Closing Date, none of
said individuals or any of his family members has any direct or indirect
affiliation with or business relationship with the Borrower or its Subsidiaries
except as is described in detail on SCHEDULE 4.21.
SECTION 5. CONDITIONS PRECEDENT
5.1 AMENDMENT EFFECTIVE DATE. The effectiveness of the amendment and
restatement of the Existing Credit Agreement provided for hereby is subject to
the receipt by the Agent of the following documents, each of which shall be
satisfactory to the Agent and each Bank in form and substance:
(a) REVOLVING CREDIT NOTES. The Revolving Credit Notes, duly completed
and executed in exchange (in the case of the Existing Bank) for the promissory
note issued under the Existing Credit Agreement.
(b) SWINGLINE NOTE. The Swingline Note, duly completed and executed.
(c) SATISFACTION OF EXISTING LOANS. Evidence that the Existing Bank has
been paid all principal of and interest on the Existing Loans and all commitment
fees, and all other amounts owing, under the Existing Credit Agreement accrued
to the Amendment Effective Date.
(d) PLEDGE AGREEMENT. The Agent shall have received a pledge agreement,
in form and substance satisfactory to the Agent and each Bank, relating to the
deposit account of the Borrower maintained with the Agent.
- 42 -
(e) LEGAL OPINION. The Agent and each Bank shall have received the
executed legal opinion of Holland & Knight, counsel to the Borrower and its
Subsidiaries, covering such matters incident to the transactions contemplated by
this Agreement as the Agent may reasonably request.
(f) OTHER DOCUMENTS. Such other documents as the Agent or any Bank or
special counsel to the Agent may reasonably request.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each Bank
to make any extension of credit requested to be made by it on any date is
subject to the satisfaction on such borrowing date of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Borrower and each Subsidiary in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as of such
date as if made on and as of such date; PROVIDED that, with respect to
extensions of credit made after the Closing Date, Guarantee Obligations incurred
after the Closing Date and in accordance with the terms of this Agreement shall
not be deemed a breach of the representation and warranty set forth in
subsection 4.1(b) to the extent that such Guarantee Obligations are not
described in the financial statements described in subsection 4.1(a).
(b) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
(c) ADDITIONAL DOCUMENTS. The Agent shall have received each additional
document, instrument, legal opinion or item of information reasonably requested
by it, including, without limitation, a copy of any debt instrument, security
agreement or other material contract to which the Borrower or any Subsidiary may
be a party.
(d) ADDITIONAL MATTERS. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be satisfactory in form and substance to the Agent, and the Agent shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.
Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such Loan or Letter of Credit that the conditions contained in this
subsection 5.2 have been satisfied.
5.3 CONDITIONS TO EACH EXTENSION OF CREDIT FOR AN INITIAL PERMITTED
ACQUISITION. The agreement of each Bank to make any extension of credit to
enable the Borrower to make an Initial Permitted Acquisition is subject to
receipt by the Agent, and satisfaction by the Agent and the Banks with the
contents, of (i) the financial statements of the Person whose assets are being
acquired covering the most recent three (3) fiscal years of said Person and the
unaudited financial statements
- 43 -
for such Person covering the most recent available interim period and (ii) a
certificate of a Responsible Officer of the Borrower certifying as to the
identity of the shareholders or owners of the selling Person and certifying that
none of Lawrence H. Schubert, Alan E. Schubert or Louis A. Morelli is or has
been a beneficial owner, directly or indirectly, including without limitation
through a family member or trust, of the selling Person.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid or any
other amount is owing to any Bank or the Agent hereunder, the Borrower shall and
(except in the case of delivery of financial information, reports and notices)
shall cause each of its Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to each Bank:
(a) as soon as available, but in any event within ninety (90) days
after the end of each fiscal year of the Borrower, a copy of the consolidated
and consolidating balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related consolidated and
consolidating statements of income and retained earnings and of cash flows for
such year, setting forth in each case in comparative form the figures for the
previous year, and, with respect to the consolidated financial statements,
reported on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit by Deloitte & Touche LLP or
other independent certified public accountants of nationally recognized standing
not unacceptable to the Required Banks;
(b) as soon as available, but in any event not later than forty-five
(45) days after the end of each of the first three (3) fiscal quarters of each
fiscal year of the Borrower, the unaudited consolidated and consolidating
balance sheets of the Borrower and its consolidated Subsidiaries as at the end
of such quarter, (i) the related unaudited consolidated and consolidating
statements of income and retained earnings of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through the end
of such quarter, and the related unaudited consolidated and consolidating
statements of cash flows of the Borrower and its consolidated Subsidiaries for
the portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects when
considered in relation to the consolidated and consolidating financial
statements of the Borrower and its consolidated Subsidiaries(subject to normal
year-end audit adjustments) and (ii) a statement setting forth the aggregate
amount of Capital Expenditures made by the Borrower and its consolidated
Subsidiaries during such fiscal period (which aggregate amount shall separately
specify the total amount of Capital Expenditures consisting of cash and the
total amount of Capital Expenditures consisting of Capital Leases and other
non-cash financings), in each case, certified by a Responsible Officer as being
fairly stated in all material respects when, in the case of the financial
statements delivered pursuant to clause (i) above, considered in relation
- 44 -
to the consolidated and consolidating financial statements of the Borrower and
its consolidated Subsidiaries(subject to normal year-end audit adjustments);
and
(c) as soon as available, but in any event not later than thirty (30)
days after the last day of each month of each fiscal year of the Borrower, the
unaudited consolidated and consolidating balance sheets of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal period and the related
unaudited consolidated and consolidating statements of income and retained
earnings of the Borrower and its consolidated Subsidiaries for such fiscal
period and the portion of the fiscal year of the Borrower through the end of
such fiscal period, setting forth in each case in comparative form the figures
for the previous year;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Bank:
(a) concurrently with the delivery of the financial statements referred
to in subsection 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of each of the financial statements
referred to in subsections 6.1(a) and 6.1(b), a certificate of a Responsible
Officer (which certificate shall set forth, in detail, all interim and
preparatory figures and calculations used in determining the Borrower's
satisfaction of its covenants and agreements contained in subsection 7.1)
stating that, to the best of such Officer's knowledge, each of the Borrower and
its Subsidiaries during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in this
Agreement, the Notes and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate;
(c) if delivered, as soon thereafter as practicable but in no event
later than fifteen (15) days after receipt, a copy of the letter, if any,
addressed to the Borrower, of the certified public accountants who prepared the
financial statements referred to in subsection 6.1(a) for such fiscal year and
otherwise referred to as a "management letter";
(d) as soon as available, but in any event within thirty (30) days
after the end of each fiscal year of the Borrower a copy of (i) the projections
by the Borrower of the operating budget and cash flow budget of the Borrower and
its Subsidiaries for the succeeding three (3) fiscal years and (ii) the
projected consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at
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the last day of each of such three (3) succeeding fiscal years. Such projections
and projected balance sheet to be accompanied by a certificate of a Responsible
Officer to the effect that such projections and projected balance sheet have
been prepared on the basis of sound financial planning practice and that such
Officer has no reason to believe they are incorrect or misleading in any
material respect;
(e) within five (5) days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its stockholders,
including Triumph, and within five (5) days after the same are filed, copies of
all applications, financial statements and reports which the Borrower may make
to, or file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(f) promptly following the release by the Borrower or any of its
Subsidiaries to the press of any material statement or other written
communication, a copy thereof; and
(g) promptly, such additional financial and other information as any
Bank may from time to time reasonably request.
6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, including without limitation all payroll and
other tax obligations, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of the
Borrower or its Subsidiaries, as the case may be or except where the failure to
pay, discharge or otherwise satisfy could not have a Material Adverse Effect.
6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to subsection 7.5 and comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, have a Material Adverse Effect.
6.5 MAINTENANCE OF PROPERTY; INSURANCE.
(a) Keep all property useful and necessary in its business in good
working order and condition except where the failure to do so could not have a
Material Adverse Effect; and
(b) maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks (but including in any event public liability and business interruption) as
are usually insured against in the same general area by
- 46 -
companies engaged in the same or a similar business and furnish to each Bank
upon written request, full information as to the insurance carried.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Bank, upon reasonable notice to the Borrower, to visit
and inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries with officers and employees
of the Borrower and its Subsidiaries and with its independent certified public
accountants.
6.7 NOTICES. Promptly give notice to the Agent and each Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries, or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority; which in either case, if
not cured or if adversely determined, as the case may be, would have a Material
Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $250,000 or more and not covered by
insurance or in which injunctive or similar relief is sought which individually
or in the aggregate could or might have a Material Adverse Effect; PROVIDED that
the Borrower shall not be required to give notice of any such litigation or
proceeding if the Borrower has reasonably determined, after consultation with
counsel, that the possibility is remote that such litigation or proceeding will
result in a judgment of $250,000 or more or in injunctive or similar relief
against the Borrower or its Subsidiaries;
(d) the following events, as soon as possible and in any event within
thirty (30) days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Plan, or any withdrawal from, or the termination, Reorganization or Insolvency
of any Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or the Borrower or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan;
(e) as soon as the Borrower knows or has reason to know that it or any
Subsidiary has become liable for remediation and/or environmental compliance
expenses and/or fines, penalties or other charges which, in the aggregate, are
in excess of $250,000 at any one time outstanding (net
- 47 -
of all reimbursements in respect of such amounts from any state trust funds
which have been or are reasonably expected to be made to the Borrower or its
Subsidiaries and have been recognized as a receivable or may properly be set off
as a credit against such liabilities in accordance with GAAP); and
(f) a material adverse change in the business, operations, property,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
6.8 ENVIRONMENTAL LAWS.
(a) Comply with, and insure compliance by all tenants and subtenants,
if any, with, all Environmental Laws and obtain and comply with and maintain,
and ensure that all tenants and subtenants obtain and comply with and maintain,
any and all licenses, approvals, registrations or permits required by
Environmental Laws, except to the extent that failure to do so could not have a
Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities respecting Environmental Laws, except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not have a Material Adverse Effect;
(c) Defend, indemnify and hold harmless the Agent and the Banks, and
their respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of or noncompliance with
any Environmental Laws by the Borrower or any of its Subsidiaries, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorneys' and consultants' fees,
investigation and laboratory fees, court costs and litigation expenses, except
to the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor.
(d) Prepare and deliver to the Agent and to each other Bank, at least
as frequently as once each fiscal quarter after any accrual (as described below)
exists, a report setting forth a summary, as of the end of such fiscal quarter,
of (i) the gross amount of all sums accrued in respect of any remediation
required by applicable Environmental Laws, (ii) all reimbursements in respect of
such amounts from any state trust funds which have been or are reasonably
expected to be made to the Borrower or its Subsidiaries and have been recognized
as a receivable or may properly be set off
- 48 -
as a credit against the cost of such remediation under GAAP and (iii) the net
amount of all sums accrued in respect of such remediation costs.
6.9 USE OF PROCEEDS. Use the proceeds of the Loans only for the
purposes described in Section 4.16.
6.10 FURTHER ASSURANCES. Execute and deliver such additional financing
statements, continuations of financing statements and other documents as Agent
shall reasonably request to perfect and maintain perfected the Agent's security
interest in the Collateral.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note or any Letter of Credit remains outstanding and unpaid or any
other amount is owing to any Bank or the Agent hereunder, the Borrower shall
not, and (except with respect to subsection 7.1) shall not permit any of its
Subsidiaries to, directly or indirectly:
7.1 FINANCIAL CONDITION COVENANTS.
(a) MAXIMUM CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA. Permit as
of the end of any FQED of the Borrower, during each of the periods set forth
below, the Consolidated Indebtedness to Consolidated EBITDA Ratio to be greater
than the amount set forth below opposite such period:
CONSOLIDATED INDEBTEDNESS TO
PERIOD CONSOLIDATED EBITDA RATIO
During 1997 4.75 to 1.00, except as of June 30, 1997
and September 30, 1997, 5.00 to 1.00
----------------------------------------------------------------------------
During 1998 4.00 to 1.00
----------------------------------------------------------------------------
During 1999 and after 3.50 to 1.00
----------------------------------------------------------------------------
(b) MAXIMUM SENIOR CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA.
Permit as of the end of any FQED of the Borrower, during each of the periods set
forth below, the Senior Consolidated Indebtedness to Consolidated EBITDA Ratio
to be greater than the amount set forth below opposite such period:
- 49 -
----------------------------------------------------------------------------
CONSOLIDATED SENIOR INDEBTEDNESS TO
PERIOD CONSOLIDATED EBITDA RATIO
----------------------------------------------------------------------------
During 1997 3.50 to 1.00
----------------------------------------------------------------------------
During 1998 2.50 to 1.00
----------------------------------------------------------------------------
During 1999 and after 2.25 to 1.00
----------------------------------------------------------------------------
(c) MINIMUM CONSOLIDATED EBIT TO CONSOLIDATED INTEREST EXPENSE RATIO.
Permit as of the end of any FQED of the Borrower, the Consolidated EBIT to
Consolidated Interest Expense Ratio to be less than 2.00 to 1.00.
(d) MINIMUM OPERATING CASH FLOW RATIO. Permit as of the end of any FQED
of the Borrower, the Operating Cash Flow Ratio to be less than 1.35 to 1.00 as
of the fiscal quarters ended September 30, 1997 and March 31, 1998 and 1.50 to
1.00 as of the end of all other fiscal quarters.
(e) MINIMUM CURRENT RATIO. Permit as of the end of any FQED of the
Borrower, the Current Ratio to be less than 1.50 to 1.00.
NOTE: For testing the above financial covenants as of the end of each of the
first three fiscal quarters after the Closing Date, the results of OutSource
International, Inc. and its Affiliates for the second, third and fourth quarters
of 1996 shall be included as necessary to produce a rolling four quarter test
period.
7.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes and the Letters of
Credit and other obligations of the Borrower and its Subsidiaries under the Loan
Documents;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;
(c) Indebtedness outstanding on the Closing Date and listed on Schedule
7.2 and any refinancings, refundings, renewals or extensions thereof (without
any increase in principal amount thereof);
(d) Subordinated Indebtedness of the Borrower and its Subsidiaries;
(e) Indebtedness secured by Liens permitted by Section 7.3(h) and under
Capital Leases incurred in an aggregate principal amount not exceeding (i)
$4,000,000 in each of 1997 and 1998,
- 50 -
$4,750,000 in 1999 and $5,500,000 in each year thereafter or (ii) $20,000,000
during the term of this Agreement; and
(f) Other unsecured (except as described in Section 7.3(h))
Indebtedness of the Borrower and its Subsidiaries not exceeding $250,000 in the
aggregate outstanding at any time.
7.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings; PROVIDED that adequate reserves with respect
thereto are maintained on the books of the Borrower or its Subsidiaries, as the
case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are not
overdue for a period of more than sixty (60) days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or such Subsidiary;
and
(f) Liens in existence on the Closing Date listed on SCHEDULE 7.2,
securing Indebtedness permitted by subsection 7.2(c); PROVIDED that no such Lien
is expanded to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;
(g) Liens created under the Security Documents;
(h) Liens securing Indebtedness of the Borrower or any Subsidiary
permitted by subsection 7.2(e); PROVIDED that (i) such Liens shall be created
promptly upon the acquisition, improvement or completion of the construction of
such fixed or capital asset (and in any event no later than the earlier of (A)
twelve (12) months from the date of which the construction of such fixed or
capital asset is completed, and (B) twenty-four (24) months from the date on
which the real estate
- 51 -
on which such fixed or capital asset is located, was purchased by the Borrower,
(ii) such Liens do not at any time encumber any property other than the property
financed by the such Indebtedness, (iii) the amount of Indebtedness secured by
thereby is not increased, and (iv) the principal amount of Indebtedness secured
by any such Lien shall at no time exceed 100% of the purchase price of such
property;
(i) a first mortgage Lien on the headquarters of the Borrower at 1144
East Newport Center Drive, Deerfield Beach, Florida securing Indebtedness of the
Borrower incurred to purchase such headquarters pursuant to the exercise of its
option under the lease of such headquarters, and
(j) any interest or title of a lessor under any lease entered into by
the Borrower or any Subsidiary in the ordinary course of its business and
covering only the assets so leased.
7.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) the Subsidiary Guarantee;
(b) Guarantee Obligations not exceeding $2,000,000 in the aggregate
with respect to the mortgage of the Borrower's old headquarters at 8000 North
Federal Highway, Boca Raton, Florida; and
(c) Guarantee Obligations arising as a result of guarantees by the
Borrower of any Indebtedness of a consolidated Subsidiary that would appear as a
liability on a consolidated balance sheet of the Borrower and its consolidated
Subsidiaries.
7.5 LIMITATIONS ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned Subsidiaries
of the Borrower (provided that the wholly-owned Subsidiary or Subsidiaries shall
be the continuing or surviving corporation and shall be a member of the
Borrower's consolidated group for financial reporting and tax purposes); and
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
the Borrower or any other wholly-owned Subsidiary of the Borrower.
- 52 -
7.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, except as permitted by subsection 7.5.
7.7 LIMITATION ON RESTRICTED PAYMENTS. (i) Declare or pay any dividend
or make any distribution in respect of the Borrower's or any Subsidiary's
Capital Stock (except (A) dividends or distributions payable solely in the
Borrower's or a Subsidiary's Capital Stock, (B) options, warrants or other
rights to purchase the Capital Stock of the Borrower or a Subsidiary, (C) stock
dividends or distributions payable from a Subsidiary to the Borrower so long as
any such stock dividend is pledged by the Borrower pursuant to the Pledge
Agreement to which the Borrower is a party, and (D) non-stock dividends or
distributions payable solely to the Borrower which has executed and delivered to
the Agent a Subsidiary Guarantee), or (ii) purchase, redeem or otherwise acquire
or retire for value, or set apart assets for a sinking or other analogous fund
for the benefit of, any Capital Stock of the Borrower or any Subsidiary, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any Subsidiary (collectively, a "Restricted Payment") except that as
long as no Default exists or would result therefrom, the Borrower may (A)
declare and pay dividends on its Capital Stock (x) after February 21, 1999 if
the Consolidated Indebtedness to Consolidated EBITDA Ratio at the time of
declaration and payment is less than 3.50 to 1.00 or (y) after the Borrower has
received aggregate net proceeds of not less that $45,000,000 as a result of its
issuance of its Capital Stock in one or more public offerings and (B) repurchase
warrants issued pursuant to the Securities Purchase Agreement in accordance with
the terms thereof but only if such repurchase is paid for with Put Notes (as
defined in said Agreement) which notes are subordinated pursuant to the
Securities Purchase Agreement.
7.8 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in (each, an "Investment"), any
Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower or its Subsidiaries
in the ordinary course of business in an aggregate amount for the Borrower and
its Subsidiaries not to exceed $250,000 in the aggregate or $100,000 for any one
employee, at any one time outstanding (including the principal amount of the
loans listed on SCHEDULE 7.8);
(d) Investments by the Borrower in its Subsidiaries and investments by
a Subsidiary in the Borrower and in other Subsidiaries; PROVIDED that any
Subsidiary making an investment or
- 53 -
receiving the proceeds thereof is a member of the Borrower consolidated group
for financial reporting and tax purposes;
(e) Investments of amounts held in depositary accounts (other than
accounts assigned to the Agent) in financial institutions geographically
proximate to the location of the Borrower's or a Subsidiary's operations;
PROVIDED, that such amounts do not exceed $20,000 at any single institution or
$150,000 in the aggregate;
(f) Loans by CSF to Labor World franchisees; PROVIDED that with respect
to all such loans after the Closing Date such franchisees shall have issued a
negotiable promissory note to CSF evidencing each loan which note has been
endorsed and delivered to the Agent for the ratable benefit of the Banks;
(g) Investments by the Borrower or any Subsidiary in any Person not a
Subsidiary on the Closing Date; PROVIDED that (i) any such Investment (whether
made in one transaction or a series of transactions) does not exceed $10,000,000
(inclusive of commissions, fees and other transaction costs, but not including
any portion of the Investments with respect to which the consideration is the
Capital Stock of the Borrower), (ii) all such Investments made after the Closing
Date do not exceed $10,000,000 in the aggregate (inclusive of commissions, fees
and other transaction costs, but not including any portion of the Investments
with respect to which the consideration is the Capital Stock of the Borrower),
(iii) any such acquired Person that is a Subsequently Acquired Subsidiary
executes and delivers to the Agent, with a counterpart for each Bank, a
supplement to the Subsidiary Guarantee, satisfactory in form and substance to
the Agent, whereby such Subsequently Acquired Subsidiary guarantees the
Obligations (as defined in the Subsidiary Guarantee subject to the Maximum
Guaranteed Amount, as defined therein, with respect to such Subsequently
Acquired Subsidiary) and agrees to be bound by the terms and conditions of the
Subsidiary Guarantee, (iv) the Capital Stock of any such acquired Person is
pledged and delivered by the holder thereof pursuant to a supplement to the OI
Pledge Agreement to which such holder is a party, duly authorized, executed and
delivered by such holder and otherwise in form and substance satisfactory to the
Agent, (v) any such acquired Person executes a Subsidiary Security Agreement, in
form and substance satisfactory to the Agent, (vi) in connection with the
matters contemplated by the foregoing clauses (iii), (iv) and (v) the Person
executing such supplement contemporaneously therewith causes to be delivered an
opinion of counsel to such Person so executing such supplement and such pledgor,
addressed to the Agent and the Banks and covering such matters as the Agent may
request and (vii) the prior written consent of the Banks has been obtained.
Notwithstanding the foregoing, the Borrower or any Subsidiary shall not make any
Investment in any Person which exceeds one percent (1%) of the voting power
represented by the Capital Stock then outstanding of such Person if the Board of
Directors or other governing body of such Person has disapproved or recommended
against any such Investment or refused to negotiate or terminated negotiations
with the Borrower or such Subsidiary or which is not a Permitted Acquisition.
- 54 -
7.9 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS. (a) Make any optional payment or prepayment on or redemption of any
Indebtedness other than Indebtedness under this Agreement, including without
limitation the Senior Subordinated Notes and other Subordinated Indebtedness (it
being understood that regularly scheduled payments of certain Indebtedness set
forth on SCHEDULE 7.2 may be made so long as no Default or Event of Default
exists); (b) amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms of the Senior Subordinated Notes, the
Securities Purchase Agreement, the Subordinated Agreements or the other
Subordinated Indebtedness, including, without limitation, any amendment to the
subordination provisions thereof; (c) amend, modify or change, or consent or
agree to any amendment, modification or change to, any of the terms relating to
the payment or prepayment of principal of or interest on any Indebtedness (other
than Indebtedness pursuant to this Agreement or the Senior Subordinated Notes),
other than, with respect to the Indebtedness described in the foregoing clauses
(b) and (c), any such amendment, modification or change the primary effect of
which would extend the maturity or reduce the amount of any payment of principal
thereof or the primary effect of which would reduce the rate or extend the date
for payment of interest thereon; or (d) designate any Indebtedness (other than
Indebtedness hereunder) as "Designated Senior Debt" for purposes of the
Securities Purchase Agreement.
7.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
not otherwise prohibited under this Agreement, is in the ordinary course of the
Borrower's or such Subsidiary's business (including in connection with the
Borrower's on-going franchise program) and is upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary, as the case may be, than it
would obtain in a comparable arm's length transaction with a Person not an
Affiliate.
7.11 SALE AND LEASEBACK. Enter into any arrangement with any Person
providing for the leasing by the Borrower or any Subsidiary of real or personal
property which has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary (a "Sale/Leaseback Transaction")
unless the proceeds received therefrom are applied to reduce the Commitment.
7.12 CORPORATE DOCUMENTS; NAME/LOCATION OF ASSETS. (a) Amend its
Certificate of Incorporation (except to increase the number of authorized shares
of common stock) or (b) do any of the following, unless, in each case, it shall
provide the Agent with at least thirty (30) days prior written notice of such
action: (i) change its corporate name; (ii) change the location of its
equipment; (iii) change the location of the office where it maintains its
records pertaining to its accounts; (iv) change the location of its existing
places of business or open any new places of business; or (v) change the
location of its chief executive office; PROVIDED, HOWEVER, that anything herein
to the contrary notwithstanding no notice need be provided pursuant to this
subsection so long as either (i) the Borrower or a Subsidiary, as the case may
be, executes and delivers to the
- 55 -
Agent a Uniform Commercial Code financing statement appropriate for filing to
perfect the Agent's security interest in the Collateral in its new location, or
(ii) the Agent has previously filed a Uniform Commercial Code financing
statement which perfects the Agent's security interest in the Collateral in its
new location. As used herein, "equipment" and "accounts" have the respective
meanings ascribed to them in Title 42a of the Connecticut General Statutes.
7.13 FISCAL YEAR. Permit the fiscal year of the Borrower to end on a
day other than on December 31 of each calendar year.
7.14 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into any agreement,
other than (i) as permitted by this Agreement and (ii) any purchase money or
other mortgages, the Securities Purchase Agreement or Capital Leases (in which
cases, any prohibition or limitation shall only be effective against the assets
financed thereby), with any Person other than the Banks pursuant hereto which
prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
7.15 NO LIMIT ON UPSTREAM PAYMENTS BY SUBSIDIARIES. Permit any of its
Subsidiaries to enter into or agree, or otherwise become subject, to any
agreement, contract or other arrangements with any Person pursuant to the terms
of which (a) such Subsidiary is or would be prohibited from declaring or paying
any cash dividends, or distributions or making any other payment to the
Borrower, or (b) such dividends, distributions or other payments are, or would
be limited or restricted on an annual or cumulative basis or otherwise. The
Borrower shall cause its Subsidiaries, to the extent permitted by applicable
law, to make such distributions of funds, including dividends, as may be
necessary to meet in a timely manner all of the Borrower's obligations under
this Agreement.
7.16 AASI AND VOTING TRUST AGREEMENT. Terminate, modify, amend,
supplement, or deviate from the terms of, or agree to terminate, modify, amend,
or deviate from the terms of , the AASI or the Voting Trust Agreement.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Note or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Note or any
Reimbursement Obligation, or any other amount payable hereunder, within five (5)
days after any such interest or other amount becomes due in accordance with the
terms thereof or hereof; or
- 56 -
(b) Any representation or warranty made or deemed made by the Borrower
or any Subsidiary in any Loan Document to which the Borrower or such Subsidiary
is a party or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this Agreement
or any other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of any
agreement contained in subsections 6.3, 6.4, 6.5, 6.6, 6.7, or 6.9 or Section 7
of this Agreement or in the Market Clearing Letter; or
(d) The Borrower shall default in the observance or performance of any
other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this subsection), and such default shall continue
unremedied for a period of thirty (30) days after the earlier of (i) a
Responsible Officer of the Borrower becomes aware of such default or (ii) notice
of such default to the Borrower by Agent or any Bank; or
(e) Any Subsidiary shall default in the observance or performance of
any agreement contained in any Loan Document to which it is a party, and such
default shall continue unremedied for a period of thirty (30) days after the
earlier of (i) a Responsible Officer of any such Subsidiary becomes aware of
such default or (ii) notice of such default to such Subsidiary by Agent or any
Bank; or
(f) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the Notes)
which has an aggregate principal amount in excess of 100,000, individually or in
the aggregate, or in the payment of any Guarantee Obligation under which the
maximum liability of the Borrower or such Subsidiary exceeds $500,000,
individually or in the aggregate, beyond the period of grace (not to exceed
thirty (30) days), if any, provided in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Guarantee Obligation to become payable; or
(g) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief' of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other
- 57 -
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its Subsidiaries shall
make a general assignment for the benefit of its creditors; or (ii) there shall
be commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
sixty (60) days; or (iii) there shall be commenced against the Borrower or any
of its Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the
Borrower or any of its Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i),(ii), or (iii) above, or (v) the Borrower or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether waived or not, shall exist with respect to any Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Required Banks, likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or
in the reasonable opinion of the Required Banks is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist, with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could subject the Borrower or any of its Subsidiaries to
any tax, penalty or other liabilities in the aggregate material in relation to
the business, operations, property or financial or other condition of the
Borrower and its Subsidiaries taken as a whole; or
(i) One or more judgments or decrees shall be entered against the
Borrower any of its Subsidiaries involving in the aggregate a liability (to the
extent not paid or covered by insurance) of $250,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or
(j) If at any time the Borrower or all or any of its Subsidiaries shall
become liable for remediation and/or environmental compliance expenses and/or
fines, penalties or other charges which, in the aggregate, are in excess of
$250,000 at any one time outstanding (net of all reimbursements in respect of
such amounts from any state trust funds which have been or are
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reasonably expected to be made to the Borrower or its Subsidiaries and have been
recognized as a receivable or may properly be set off as a credit against such
liabilities under GAAP); or
(k) A Change of Control shall have occurred; or
(l) The Subsidiary Guarantee or any other Guarantee Obligation in
respect of the Borrower's Indebtedness hereunder shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect, or any Person having a Guarantee Obligation in respect of
the Borrower's Indebtedness hereunder, including without limitation each
Subsidiary (or any Person acting on behalf of any such Person) shall deny or
disaffirm such Guarantee Obligation; or
(m) Lawrence H. Schubert, Alan E. Schubert or Louis A. Morelli becomes
the beneficial owner, directly or indirectly, including through a family member
or trust, of any Voting Stock of the Borrower or its Subsidiaries except for the
limited purpose of making transfers in accordance with the terms of the AASI.
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
regardless of whether the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and the Notes
shall immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken: (i) with
the consent of the Required Banks, the Agent may, or upon the request of the
Required Banks, the Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Banks, the
Agent may, or upon the request of the Required Banks, the Agent shall, by notice
of default to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement (including, without
limitation, all amounts of L/C Obligations, regardless of whether the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) and the Notes to be due and payable forthwith,
whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account to be opened by the Agent (the "Cash Collateral Account") an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit. The Borrower hereby grants to the Agent, for the benefit of the
Issuing Bank and the L/C Participants, a security interest in the Cash
Collateral Account and all amounts from time to time on deposit therein to
secure all obligations of the Borrower in respect of such Letters of Credit
under this Agreement and the other Loan Documents. The Borrower shall execute
and deliver to
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the Agent, for the account of the Issuing Bank and the L/C Participants, such
further documents and instruments as the Agent may request to evidence the
creation and perfection of such security interest in the Cash Collateral
Account. Amounts held in the Cash Collateral Account shall be applied by the
Agent to the payment of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall have expired or
been fully drawn upon, if any, shall be applied to repay other obligations of
the Borrower hereunder and under the Notes. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations shall
have been satisfied and all other obligations of the Borrower hereunder and
under the Notes shall have been paid in full, the balance, if any, in the Cash
Collateral Account shall be returned to the Borrower.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENT
9.1 APPOINTMENT. Each Bank hereby irrevocably designates and appoints
Bank of Boston Connecticut as the Agent of such Bank under this Agreement and
the other Loan Documents, to take such action on its behalf under the provisions
of this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto.
9.2 DELEGATION OF DUTIES. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof
contained in this Agreement or any other Loan Document or any certificate,
report, statement or other document referred to or provided for in, or received
by the Agent under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or the Notes or any other Loan Document or for
any failure of the Borrower to perform its obligations hereunder or thereunder.
The Agent shall not be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements contained
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in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of the Borrower.
9.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
or it shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
Notes and the other Loan Documents in accordance with a request of the Required
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks and all future holders of the Notes.
9.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Bank or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Banks. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; PROVIDED that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Banks.
9.6 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and credit worthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Bank also represents that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this
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Agreement and the other Loan Documents, and to make such investigation as it
deems necessary to inform itself, and keep itself informed, as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
9.7 INDEMNIFICATION. The Banks agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to the
respective amounts of their original Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; PROVIDED that no Bank shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Notes and all
other amounts payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower as though the Agent were not the Agent hereunder and under the
other Loan Documents. With respect to its Loans made or renewed by it and any
Note issued to it and with respect to any Letter of Credit issued or
participated in by it, the Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" and "Banks" shall
include the Agent in its individual capacity.
9.9 SUCCESSOR AGENT. The Agent may resign as Agent upon ten (10) days'
notice to the Banks. If the Agent shall resign as Agent under this Agreement and
the other Loan Documents, then the Required Banks shall appoint a Successor
Agent, whereupon such Successor Agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean such Successor Agent
effective upon its appointment, and the former Agent's rights, powers and duties
as Agent shall be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement or any holders
of the Notes. After any retiring Agent's resignation as Agent, the provisions of
this subsection shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement and the other Loan
Documents.
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SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any Note, any
other Loan Document nor any terms hereof or thereof may be amended, supplemented
or modified except in accordance with the provisions of this subsection. With
the written consent of the Agent and the Required Banks, the Agent and the
Borrower may, from time to time, enter into written amendments, supplements or
modifications hereto and to the Notes and the other Loan Documents for the
purpose of adding any provisions to this Agreement, the Notes or the other Loan
Documents or changing in any manner the rights of the Banks or of the Borrower
hereunder or thereunder or waiving, on such terms and conditions as the Agent
may specify in such instrument, any of the requirements of this Agreement, the
Notes or the other Loan Documents or any Default or Event of Default and its
consequences; PROVIDED, HOWEVER, that no such waiver and no such amendment,
supplement or modification shall (a) reduce the amount or extend the maturity of
any Note or any installment thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any fee payable to any Bank hereunder, or
change the amount of any Bank's Commitment, in each case without the consent of
the Bank affected thereby, or (b) amend, modify or waive any provision of this
subsection or reduce the percentage specified in the definition of Required
Banks, or consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan Documents or
release any Guarantee or any of the Collateral, in each case without the written
consent of the Agent and all the Banks, or (c) amend, modify or waive any
provision of Section 9 without the written consent of the then Agent. Any such
waiver and any such amendment, supplement or modification shall apply equally to
each of the Banks and shall be binding upon the Borrower, the Banks, the Agent
and all future holders of the Notes. In the case of any waiver, the Borrower,
the Banks and the Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes and any other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy, telegraph or telex), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or three
(3) days after being deposited in the mail, postage prepaid, or, in the case of
telecopy notice, when confirmed received, or, in the case of telegraphic notice,
when delivered to the telegraph company, or, in the case of telex notice, when
sent, answer back received, addressed as follows in the case of the Borrower and
the Agent, and as set forth in SCHEDULE A in the case of the other parties
hereto, or to such other address as may be hereafter notified by the respective
parties hereto and any future holders of the Notes:
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The Borrower: OutSource International, Inc.
1144 East Newport Center Drive
Deerfield Beach, Florida 33442
Attn: Paul M. Burrell
President and Chief Executive Officer
Telephone: (954) 418-6428
Telecopy: (954) 418-3365
With a copy to: Holland & Knight
One East Broward Boulevard
Suite 1300
Fort Lauderdale, Florida 33301
Attn: Donn Beloff, Esq.
Telephone: (954) 468-7823
Telecopy: (954) 468-7875
The Agent: Bank of Boston Connecticut
100 Pearl Street
Hartford, Connecticut 06103
Attn: Scott S. Barnett
Telephone: (860) 727-6557
Telecopy: (860) 727-6575
With a copy to: Day, Berry & Howard
CityPlace I
Hartford, Connecticut 06103-3499
Attn: Richard C. MacKenzie, Esq.
Telephone: (860) 275-0100
Telecopy: (860) 275-0343
provided that any notice, request or demand to or upon the Agent or the Banks
pursuant to subsections 2.1A, 2.4, 2.5, 2.9 or 2.13 shall not be effective until
received.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
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10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes.
10.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees, on demand, (a)
to pay or reimburse the Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement, the Notes and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the fees and disbursements of counsel to
the Agent, (b) to pay or reimburse each Bank and the Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes, the other Loan Documents and any such
other documents, including, without limitation, fees and disbursements of
counsel to the Agent and to the several Banks, (c) to pay, indemnify, and hold
each Bank and the Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the Notes, the other Loan Documents and any such other documents, (d)
to pay, indemnify and hold each Bank harmless from any and all fees, costs and
expenses incurred by any such Bank after the occurrence and throughout the
continuance of an Event of Default in connection with any inspection or
examination pursuant to subsection 6.6, and (e) to pay, indemnify, and hold each
Bank and the Agent (and their respective directors, officers, employees and
agents) harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
Notes, the other Loan Documents and any such other documents (all the foregoing,
collectively, the "indemnified liabilities"); PROVIDED that the Borrower shall
have no obligation hereunder to the Agent or any Bank with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Agent or any such Bank (or any of their respective directors,
officers, employees or agents), (ii) legal proceedings commenced against the
Agent or any such Bank by any security holder or creditor thereof arising out of
and based upon rights afforded any such security holder or creditor solely in
its capacity as such, or (iii) legal proceedings commenced against the Agent or
any such Bank by any other Bank or by any Transferee. As long as no Default or
Event of Default exists, the Agent agrees to give the Borrower periodic reports
of the costs and expenses subject to payment or reimbursement under this
subsection. The agreement in this subsection shall survive repayment of the
Notes and all other amounts payable hereunder.
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10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING BANKS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Banks, the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Bank.
(b) Without the consent of the Borrower, any Bank may, in the ordinary
course of its commercial banking business and in accordance with applicable law,
at any time sell to one or more banks or other entities (other than any entity
which, to the knowledge of such Bank, is a competitor of the Borrower or an
Affiliate of such a competitor ("Participants")) participating interests in any
Loan owing to such Bank, any Note held by such Bank, any Commitment of such Bank
or any other interest of such Bank hereunder and under the other Loan Documents.
In the event of any such sale by a Bank of participating interests to a
Participant, such Bank's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
any such Note for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement and the other Loan Documents. The Borrower agrees that if
amounts outstanding under this Agreement and the Notes are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement
or any Note; PROVIDED that such Participant shall only be entitled to such right
of set-off if it shall have agreed in the agreement pursuant to which it shall
have acquired its participating interest to share with the Banks the proceeds
thereof as provided in subsection 10.7. The Borrower also agrees that each
Participant shall be entitled to the benefits of subsections 2.14, 2.15, 2.16
and 10.5 with respect to its participation in the Commitments and the Loans
outstanding from time to time; PROVIDED, THAT no Participant shall be entitled
to receive any greater amount pursuant to such subsections than the transferor
Bank would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Bank to such Participant had no
such transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to any Bank or
any affiliate thereof and, with the consent of the Agent and (so long as no
Event of Default has occurred and is continuing) the Borrower if a Purchasing
Bank (as hereinafter defined) is not then a Bank party to this Agreement (which
shall not be unreasonably withheld), to one (1) or more additional banks or
financial institutions ("Purchasing Banks") all or any part of its rights and
obligations under this Agreement and the Notes in the minimum principal amount
of $5,000,000 and integral multiples of $1,000,000 in excess thereof, pursuant
to an Assignment and Acceptance executed by such Purchasing Bank, such
transferor Bank (and, in the case of a Purchasing Bank that is not then a Bank
or an affiliate
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thereof, by the Borrower and the Agent) and delivered to the Agent for its
acceptance and recording in the Register. Upon such execution, delivery,
acceptance and recording, from and after the effective date of such Assignment
and Acceptance, (x) the Purchasing Bank thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder with a Commitment as set forth therein, and (y)
the transferor Bank thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of a transferor Bank's rights and obligations under this Agreement, such
transferor Bank shall cease to be a party hereto). Such Assignment and
Acceptance shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Bank and the
resulting adjustment of the appropriate Commitment Percentages arising from the
purchase by such Purchasing Bank of all or a portion of the rights and
obligations of such transferor Bank under this Agreement and the Notes. On or
prior to the effective date of such Assignment and Acceptance, the Borrower
shall execute and deliver to the Agent in exchange for the Revolving Credit Note
a new Revolving Credit Note to the order of such Purchasing Bank in an amount
equal to the Commitment assumed by it pursuant to such Assignment and Acceptance
and, if the transferor Bank has retained a Commitment hereunder, new Notes to
the order of the transferor Bank in an amount equal to the Commitment retained
by it hereunder. Such new Notes shall be dated the Closing Date, and shall
otherwise be in the form of the Notes replaced thereby. The Notes surrendered by
the transferor Bank shall be returned by the Agent to the Borrower marked
"canceled".
(d) The Agent shall maintain at its address referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Banks and
the Commitment of, and principal amount of the Loans owing to, each Bank from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Banks may treat each Person
whose name is recorded in the Register as the owner of the Loan recorded therein
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by a
transferor Bank and Purchasing Bank (and, in the case of a Purchasing Bank that
is not then a Bank or an affiliate thereof, by the Borrower and the Agent)
together with, if such Purchasing Bank is not then a Bank hereunder, payment by
the transferor Bank and/or the Purchasing Bank of a registration and processing
fee of $2,500, the Agent shall (i) promptly accept such Assignment and
Acceptance, and (ii) on the effective date of such Assignment and Acceptance,
record the information contained therein in the Register and give notice of such
acceptance and recordation to the Banks and the Borrower.
(f) The Borrower authorizes each Bank to disclose to any Participant or
Purchasing Bank (each, a "Transferee") and any prospective Transferee any and
all financial information in such
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Bank's possession concerning the Borrower and its Affiliates which has been
delivered to such Bank by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Bank by or on behalf of the
Borrower in connection with such Bank's credit evaluation of the Borrower and
its affiliates prior to becoming a party to this Agreement; PROVIDED that prior
to receiving such information, such Transferee shall agree to hold in confidence
all confidential material or proprietary information obtained by such Transferee
with respect to the Borrower's business operations that is plainly marked by the
provider of such material or information as confidential or proprietary except
(a) to the extent that the production of such information is required pursuant
to any statute, ordinance, regulation, rule or order or any subpoena or any
governmental authority or by reason of any bank regulation in connection with
any bank examination, (b) to the extent already publicly disclosed and (c) that
any Bank shall not be prohibited from disclosing any such information to any of
their agents, attorneys, accountants, consultants, participants, assignees, or
prospective participants, who are aware of such Bank's covenant in this
subsection and who have agreed with such Bank, for the benefit of the Borrower,
to comply with such covenant. The Borrower acknowledges that Bank of Boston
Connecticut intends to make assignments of its interests hereunder, and agrees
to cooperate with the reasonable requests of Bank of Boston Connecticut for the
purpose of providing relevant financial information to prospective Transferees,
including making officers and employees of the Borrower available to discuss
such financial information with prospective Transferees during normal business
hours.
(g) If, pursuant to this subsection, any interest in this Agreement or
any Note is transferred to any Transferee which is organized under the laws of
any jurisdiction other than the United States or any state thereof, the
transferor Bank shall cause such Transferee, concurrently with the effectiveness
of such transfer, (i) to represent to the transferor Bank (for the benefit of
the transferor Bank, the Agent and the Borrower) that under applicable law and
treaties no taxes will be required to be withheld by the Agent, the Borrower or
the transferor Bank with respect to any payments to be made to such Transferee
in respect of the Loans, (ii) to furnish to the transferor Bank (and, in the
case of any Purchasing Bank registered in the Register, the Agent and the
Borrower) either (A) United States Internal Revenue Service Form 4224 or United
States Internal Revenue Service Form 1001 or (B) United States Internal Revenue
Service Form W-8 or W-9, as applicable (wherein such Transferee claims
entitlement to complete exemption from United States federal withholding tax on
all interest payments hereunder), and (iii) to agree (for the benefit of the
transferor Bank, the Agent and the Borrower) to provide the transferor Bank
(and, in the case of any Purchasing Bank registered in the Register, the Agent
and the Borrower) a new Form 4224 or Form 1001 or Form W-8 or W-9, as
applicable, upon the expiration or obsolescence of any previously delivered form
and comparable statements in accordance with applicable United States laws and
regulations and amendments duly executed and completed by such Transferee, and
to comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption.
(h) Nothing herein shall prohibit any Bank from pledging or assigning
any Note to any Federal Reserve Bank in accordance with applicable law.
- 68 -
10.7 ADJUSTMENTS; SET-OFF.
(a) Subject to the provisions of subsection 2.13(b), if any Bank (a
"benefitted Bank") shall at any time receive any payment of all or part of its
Loans or the Reimbursement Obligations owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
subsection 8(g), or otherwise), in a greater proportion than any such payment to
or collateral received by any other Bank, if any, in respect of Loans or
Reimbursement Obligations owing to it, or interest thereon, then such benefitted
Bank shall purchase for cash from the other Bank such portion of such other
Bank's Loans or the Reimbursement Obligations owing to it, or shall provide such
other Bank with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Bank to share the excess payment or
benefits of such collateral or proceeds ratably with each of the other Banks;
PROVIDED, HOWEVER, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Bank, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Bank so purchasing
a portion of another Bank's Loan or the Reimbursement Obligations owing to it
may exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Bank were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Banks provided by
law, each Bank shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder or under the Notes (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Bank to or for the credit or the
account of the Borrower. Each Bank agrees promptly to notify the Borrower and
the Agent after any such set-off and application made by such Bank; provided
that the failure to give such notice shall not affect the validity of such
set-off and application.
10.8 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Agent.
10.9 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
- 69 -
10.10 INTEGRATION. This Agreement represents the agreement of the
Borrower, the Agent and the Banks with respect to the subject matter hereof,
and, other than the fee letter and commitment letter, each dated February 5,
1997, between the Borrower and the Agent, there are no promises, undertakings,
representations or warranties by the Agent or any Bank relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
10.11 GOVERNING LAW. This Agreement and the Notes and the rights and
obligations of the parties under this Agreement and the Notes shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
Connecticut.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
Connecticut, the courts of the United States of America for the District of
Connecticut, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in subsection 10.2 or at such other address of which the Agent
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.
10.13 ACKNOWLEDGMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, the Notes and the other Loan Documents;
- 70 -
(b) neither the Agent nor any Bank has any fiduciary relationship to
the Borrower, and the relationship between Agent and Banks, on one hand, and the
Borrower, on the other hand, is solely that of debtor and creditor;
(c) no joint venture exists among the Banks or among the Borrower and
the Banks; and
(d) each reference in the other Loan Documents to the Credit Agreement
shall mean the Existing Credit Agreement as amended and restated hereby, and as
the same shall be further amended, modified, supplemented or restated from time
to time, and each reference therein to "Bank" shall include the Swingline Bank
and to "Loan" shall include the Swingline Loans.
- 71 -
10.14 WAIVERS OF JURY TRIAL; COMMERCIAL TRANSACTIONS. (A) THE BORROWER,
THE AGENT AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR
ANY OTHER LOAN DOCUMENTS AND FOR ANY COUNTERCLAIM THEREIN.
(B) THE BORROWER ACKNOWLEDGES THAT THE LOANS EVIDENCED HEREBY ARE
COMMERCIAL TRANSACTIONS WITHIN THE MEANING OF CHAPTER 903A OF THE CONNECTICUT
GENERAL STATUTES.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first written above.
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-------------------------------
Name: Paul M. Burrell
Title: President
BANK OF BOSTON CONNECTICUT,
As a Bank and as the Agent
By: /s/ SCOTT S. BARNETT
-------------------------------
Name: Scott S. Barnett
Title: Vice President
COMERICA BANK
By: /s/ DAVID KUZIEKMKO
-------------------------------
Name: David Kuziekmo
Title: First Vice President
- 72 -
LASALLE NATIONAL BANK
By: /s/ JOHN J. MCGUIRE
-------------------------------
Name: John J. McGuire
Title: Vice President
- 73 -
SCHEDULE A
COMMITMENTS; ADDRESSES
COMMITMENT
BANK $ AMOUNT
-----------------------------------------------------------------------------
Bank of Boston Connecticut $17,000,000
100 Pearl Street, 5th Floor
Hartford Corporate Banking
Hartford, Connecticut 06103
Attention: Scott S. Barnett, Vice President
Telecopy No.: 860-727-6575
Comerica Bank $14,000,000
100 NE Third Avenue
Ft. Lauderdale, Florida 33301
Attention: Gina Zamarelli, Vice President
Telecopy No.: 954-832-8341
LaSalle National Bank $14,000,000
135 S. LaSalle, Suite 218
Chicago, Illinois 60603
Attention: John J. McGuire, Vice President
Telecopy No. 312-904-4660
------------
TOTALS: $45,000,000
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.1 (b)
LONG TERM COMMITMENTS
Guarantees - See Schedule 7.2
Long term leases - See Schedule 7.2. In addition, the Company has entered into
approximately 55 operating leases for Labor World dispatch centers at various
locations throughout the United States - these leases are generally 2 to 3
years in length, but in no case have longer than a five year term.
The warrants issued to Triumph/Bachow, as well as the warrants placed in escrow,
should they be eventually issued to Triumph/Bachow, all contain a contingent put
obligation, whereby OutSource would be required to purchase the warrants for the
"publicly traded" fair value of those warrants should OutSource not cause an
Initial Public Offering to happen by February 2001. This put right expires
February 2003. OutSource may satisfy the put obligation by the issuance of a 3
year subordinated obligation payable in equal quarterly installments with the
first payment due 6 months from the issuance of the put note and payments due
every six months thereafter - interest would be payable quarterly at the rate of
13% per annum.
The company has committed to employment terms in connection with past
acquisitions as follows:
Claire Schmidt - CST - potential of $75,000 per year through 1997 and
participation in the ISO plan, with no stated minimum employment term.
The company offers the following employee benefit plans which may include some
future obligation:
Annual and Quarterly Incentive Bonus Plans 401 (k) plan and employee
contribution match
The following acquisitions contain contingent "earnout" provisions which could
allow additional payments based on achieving certain levels of gross margins,
sales or net income:
All-Temps, Inc. - 2.1875% of gross margin of the Southern California Industrial
Division operations through 1999, with a minimum annual amount payable of
$40,000 and an aggregate three year (1997-1999) minimum of $150,000.
CST, Inc. - 3.5 times the excess of Boston Industrial net income (as defined)
over $484,000 for the twelve month period ended May 31,1997 and 1.5 times the
excess of net income (as defined) over $484,000 for the twelve month period
ended May 31,1998, the sum of both items not to exceed $380,000.
Komco, Inc. - 1% of Phoenix sales until September, 1997.
Payments to Matthew Schubert and Louis J. Morelli for the purchase of the
Hammond, Indiana Labor World office - See Schedule 4.21
Kenneth E. Southeard, Inc. - 1% of Chattanooga sales through September 1998,
with minimum payment of $10,000 and maximum payment of $30,000.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.1 (c)
RECENT DISPOSITIONS
Certain acquisitions consummated in 1996 and 1997 as follows: PayRay/TriTemps,
CST, Kenneth E. Southeard, Komco, Demark, and LaPorte Enterprises.
Capitalized 15 year lease for new headquarters in Deerfield Beach, FL
Lease/purchase of approximately $1.2 million in furniture and equipment related
to above facility.
Lease/purchase of approximately $2 million in software (Masterpack, Davison,
Unidata) and related hardware.
OutSource International, Inc.
Credit -Agreement
Schedule 4.2
Recent Distributions/No Change
{a) Writeoff in 1996 of approximately $1.8 million related to aborted IPO,
investigation of certain matters by Schiff Hardin Waite, and settlement of
lawsuit by Robert Feinstein.
(b) Distributions of equity since December 31, 1995 made as follows:
1) 87.5% of All-Temps earnout payments through October 1, 1996, in the
amount of $168,372 was classified as a shareholder distribution in 1996.
2) $377,687 of payments made for shareholder tax obligations was initially
classified as a shareholder distribution but then reclassified as
shareholder salary and advances in [December 1996.
3) During the week prior to the closing of this transaction, the
distribution of all equity in the subsidiaries of the Borrower was
declared and related notes were given to the shareholders, which will be
satisfied by payments to be made shortly after the closing of this
transaction. This distribution is calculated on a tax basis, which may be
greater than the book basis.
4) Immediately prior to the closing of this transaction, the Borrower
reacquired 517,584 shares of its common stock for a gross sales price of
$7,617,160.
EXHIBIT 4.6
OUTSOURCE INTERNATIONAL
LITIGATION 1990 TO 1997
2.19.97
YEAR CURRENT
INITIATED PLAINTIFF DESCRIPTION RESOLUTION STATUS
1997 Gail Green ADA & Wrongful Open In Progress;
Discharge Expect to be
dismissed.
1997 Geoffrey Haycock WI Fair Emp. Law Open In progress;
Expect to be
dismissed
1996 Carl Nurick EEOC - Title VII Open EEOC ruled "no
cause"; Plaintiff has
90 day right to sue.
1996 Len Briskman EEOC - Title VII Settled Settled
1996 Robert Feinstein Wrongful Discharge Settled Settled
1995 Rosalba Lopez EEOC - Title VII Open Plaintiff failed to show
for arbitration hearing;
should be dismissed.
1995 Patricia Ruiz EEOC - Title VII Open In Progress; we
expect it to be
dismissed.
1995 Greta Richardson EEOC - Title VII Open EEOC ruled "no
cause"; Plaintiff has
90 day right to sue.
1993 None
1992 None
1991 None
1990 None
Carrier: Credit General Coverage: Employer's Liability
THE EMPLOYEE RECEIVED SECOND DEGREE BURNS TO HIS RIGHT HAND AND FOREARM FROM A
HOT GLUE MACHINE WHILE WORKING AT RHOPAC INC.
Status: We will maintain our lien of $82,611.00 should a settlement be reached.
A trial date has not been set.
Action: Keep legal costs to a minimum while monitoring the third party claim.
JOHN CATALANO 8/4/92 $ 5,000.00/ $
Carrier: National Union Fire Coverage: General Liability
MR CATALANO, A REGULAR EMPLOYEE OF CHICAGO CARDBOARD WAS WORKING ON A PRESS
WHEN HIS LEG WAS AMPUTATED.
Status: Depositions of Dynment, Chicago Cardboard, employees were taken,
however, the employee's attorney no longer wishes to take the depositions of
Labor World employees at this time.
Action: Our defense attorney will pursue a dismissal upon completion of
discovery.
THIS EMPLOYEE WAS WORKING AT OLMARC AND HAD HIS HAND INSIDE A MIXING MACHINE
WHEN ANOTHER TEMPORARY EMPLOYEE TURNED THE MACHINE ON.
Status: The employee settled his third party suit with the machine
manufacturer for $20,000.00. We have requested $6,000.00 of that to satisfy
our workers compensation lien.
The trial of 9/6/96 resulted in the employee's Motion to file a Second
Complaint against Olmarc and the Motion to file a Reconsideration on the
Dismissals to be set for hearing on 1/15/97.
Action: Determine amount of lien recovery and obtain results of the
hearing on 1/15/97.
ANTICIPATED CLAIM COST
CLAIMANT DOL CARRIER/LABOR WORLD
GEORGIA BROWN 2/21/91 $50,000.00/ $
Carrier: Home Insurance Co. Coverage: General Liability
AN EMPLOYEE OF A SUBCONTRACTOR WORKING ON THE PREMISES OF LEEDMARK (A LABOR
WORLD CUSTOMER) ALLEGES AN UNKNOWN INDIVIDUAL DROPPED A METAL SHELF ON HER HAND,
CAUSING AN AMPUTATION OF HER FINGER.
STATUS: The employee's deposition was obtained revealing that she was assigned a
helper by Leedmark when she arrived to the job site. She trained this individual
and the two worked together for approximately three hours before the incident
took place. None can identify the individual who worked with Ms. Brown thus, we
should be able to obtain a dismissal from this suit.
Action plan: Continue attempts to secure a dismissal from this claim.
2
FLORIDA
ANTICIPATED CLAIM COST
CLAIMANT DOL CARRIER/LABOR WORLD
RANDALL GREEN 5/26/94 $ 2,500.00/ $
Carrier: Redland Insurance Co. Coverage: General Liability
THIS PERSON HAS NAMED OUR CORPORATE COMPANY IN A SUIT FOR INJURIES HE
SUSTAINED WHILE WORKING AT A JOB SITE IN POMPANO BEACH FLORIDA. HE ALLEGES
THAT A TEMPORARY EMPLOYEE OF LABOR WORLD, AT THE SAME JOB SITE, CAUSE HIS
INJURIES.
Status: The Labor World franchise that is believed to be the proper defendant
in this claim has been added to the complaint.
The deposition of the franchise owner is to be scheduled and once obtained,
verifying that his company is the one involved in this incident, the
corporate Labor World will be dismissed.
ACTION PLAN: Obtain franchise owners deposition date and pursue dismissal.
CARRIERS: Redland Insurance Co. COVERAGES: General Liability
A CLIENT, CARGHILL, ALLEGES THAT BRANCH MANAGER, LARRY FAIRALL, LABOR WORLD OF
CINCINNATI, OUTSOURCE, LABOR WORLD USA & EMPLOYERS UNLIMITED BREACHED THE
SERVICING AGREEMENT BY FAILING TO PROVIDE LONGSHOREMANS COVERAGE FOR EMPLOYEE,
DAVID FULLER.
STATUS: The defense counsel is collecting supporting evidence to pursue a
dismissal for OutSource and Labor World USA who were wrongly named as defendants
in this suit.
ACTION PLAN: Determine what additional information is needed for a dismissal to
be granted.
4
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.11
TAX RETURNS
There is currently an Internal Revenue Service audit in progress of OutSource
International, Inc. (Illinois corporation). The audit, which commenced
approximately November 1996, was initially for the 1994 tax year although the
agent has indicated that certain aspects of other tax years may be examined. We
have not received any notice of proposed adjustments as a result of this
examination to date.
To the best of Company's knowledge the Company knows of nothing to indicate that
this represents anything other than a routine audit.
Another Internal Revenue Service agent contacted the company in February 1997 to
start an audit of Synadyne II, Inc. for 1994 and/or 1995. Although the agent
wanted to start immediately, she was persuaded to wait until late April 1997 due
to the major financing and other activity the company is currently engaged in.
To the best of Company's knowledge the Company knows of nothing to indicate that
this represents anything other than a routine audit.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.13
ERISA MATTERS
Pursuant to the terms of the Labor World Profit Sharing and Retirement Plan and
Trust ("LW Plan"), highly compensated employees are not eligible to participate
in the LW Plan. However, as a result of administrative errors, some highly
compensated employees have been permitted to make elective salary deferral
contributions. The Company is reviewing all records and compiling information
regarding this operational defect in order to make the appropriate correction.
The Company intends to seek IRS approval regarding the proposed correction under
the Voluntary Closing Agreement Program ("VCAP"). There will be a penalty,
payable by the Company, associated with a correction under the VCAP.
SCHEDULE 4.15
SUBSIDIARIES
NAME STATE OF INCORPORATION TAX STATUS
---- ---------------------- ----------
OutSource International of America, Inc. Florida C Corporation
OutSource Franchising, Inc. Florida C Corporation
Capital Staffing Fund, Inc. Florida C Corporation
Emp}oyees Insurance Services, Inc. Florida C Corporation
Synadyne I, Inc. Florida C Corporation
Synadyne II, Inc. Florida C Corporation
Synadyne III, Inc. Florida C Corporation
Synadyne IV, Inc. Florida C Corporation
Synadyne V, Inc. Florida C Corporation
OutSource International,Inc (1) Illnois S Corporation
Note (1) To be merged into OutSource International of America, Inc. on the
closing date.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.18
UCC FILING LOCATIONS
None.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.17
ENVIRONMENTAL MATTERS
None.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 4.21
RELATIONSHIP OF CERTAIN STOCKHOLDERS TO THE BORROWER
Louis J. Morelli - attorney - routine collection work in Illinois at hourly rate
established subject to OutSource's routine bid process.
Group health insurance provided to Larry Schubert, Alan Schubert, and Louis A.
Morelli for monthly reimbursement to OutSource of actual costs of approximately
$1,610 per month.
Month to month leasing of records storage space in warehouse owned by SMSB, a
partnership owned by Larry Schubert, Alan Schubert, Louis A. Morelli and Paul
Burrell, in the approximate amount of $2,055 per month.
Leasing of Boca condominium, Chicago dispatch facility, and Waukegan dispatch
facility from SMSB, a partnership owned by Larry Schubert, Alan Schubert, Louis
A. Morelli and Paul Burrell, in the approximate amount of $11,694 per month
pending the purchase of those assets for approximately $810,000.
Payments to Matthew Schubert and Louis J. Morelli for the purchase of the
Hammond, Indiana Labor World office - 50% of normal sales commission for year
ended June 10,1997 and 25% of normal sales commission for year ended June
10,1998, based on business in place at that office at time of acquisition.
Matthew Schubert, Louis J.Morelli and Ray Morelli have ownership interest in the
following entities that have Labor World and Office Ours franchise agreements
with OutSource Franchising, Inc. The Labor World franchise agreements are on the
same terms as Labor World Franchise agreements with other unrelated third
parties. The Office Ours franchise agreement with Ray Morelli is the only such
Office Ours franchise agreement in existence at this time.
DIVISION FRANCHISEE AND RELATED PARTY STOCKHOLDERS 1996 ROYALTIES LOCATION
Labor World LM Investors, Inc. - Matt Schubert $183,857 Aurora, IL
- Louis J Morelli
Labor World LM Investors, Inc. - Matt Schubert 110,228 Joliet, IL
- Louis J Morelli
Labor World Temp Aid, Inc. - Matt Schubert 148,757 Elkhart, IN
- Louis J Moreili
Labor World Temp Aid, Inc. - Matt Schubert 103,857 Grand Rapids, MI
- Louis J Morelli
Off'ce Ours All Staff Temps, Inc. - Ray Morelli 17,908 Schaumburg, IL
---------
$564,607
=========
The Company currently leases from Ray Morelli certain dispatch and office
facilities used by its Labor World division in the Chicago region, under the
following terms:
LOCATION CURRENT EXPIRATION OF LEASE
MONTHLY RENT
Elgin, Illinois - dispatch facility $1,050 September 30, 2003
Elgin, Illinois - offices 1,050 September 30, 2003
Milwaukee South - dispatch facility 850 September 30, 2003
--------
$3,050
========
Nadya I. Schubert, wife of Lawrence H. Schubert, is a co-trustee together with
Robert A. Lefcort of the Robert A. Lefcort Irrevocable Trust which owns 89,003
voting shares of the Borrower.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.2
INDEBTEDNESS Page 1 of 4
OUTSTANDING
LENDER PRINCIPAL REPAYMENT TERMS
AT CLOSING
SUBORDINATED INDEBTEDNESS:
CAPITAL STAFFING FUND
Paul M. Burrell $500,000 Principal due February 2001, interest
paid monthly at 21% per annum
Richard E. Burrell 125,000 Principal due February 2001, interest
paid monthly at 21% per annum
Scott T. Burrell 50,000 Principal due February 2001, interest
paid monthly at 21% per annum
Louis J. Morelli 100,000 Principal due February 2001, interest
paid monthly at 21% per annum
Rachele Spadoni 125,000 Principal due February 2001, interest
paid monthly at 21% per annum
Raymond s. Morelli 100,000 Principal due February 2001, interest
paid monthly at 21% per annum
Robert E. Tomlinson 200,000 Principal due February 2001, interest
paid monthly at 21% per annum
SHAREHOLDERS:
Larry Schubert trust 407,000 Principal due in five quarterly installments
Starting February 1999, interest
paid quarterly at 10% per annum
Nadya Schubert trust 408,000 Principal due in five quarterly installments
Starting February 1999, interest
paid quarterly at 10% per annum
Alan Schubert 605,000 Principal due in five quarterly installments
Starting February 1999, interest
paid quarterly at 10% per annum
Paul Burrell 325,000 Principal and interest at 10% per annum paid in
twelve (12) equal quarterly installments starting
May 1999. Accrued interest for first two years
paid May 1999.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.2
INDEBTEDNESS Page 2 of 4
OUTSTANDING
LENDER PRINCIPAL REPAYMENT TERMS
AT CLOSING
ACQUISITIONS:
WAD, Inc.
(Beneficiaries - Paul Burrell, Robert Lefcort) 400,000 Principal and interest at 10% per annum paid in eight
(8) equal quarterly installments starting May 1997.
All-Temps, Inc. 158,325 $8,325 due immediately - the balance is payable in
(Beneficiary - Chuck Brewer) minimum annual installments of $40,000 in 1997 and
1998, with any remainder due at the end of 1999.
Non interest bearing.
PayRay, Inc. 1,526,290 Principal and interest at 14% per annum
(Beneficiary - Ray Morelli and partners) paid over five years in equa1 monthly
installments starting March 1997.
TriTemps, Inc. 1,037,180 Principal and interest at 14% per annum
(Beneficiary - Ray Morelli and partners) paid over five years in equal monthly
installments starting March 1997.
CST, Inc 100,123 Principal plus one year interest at 7%
per annum due Deccember 1997.
Kenneth E. Southeard, Inc. 100,566 50% of principal plus six months' interest at
6% per annum due June and December 1997.
Komco, Inc. 9,780 Earn out balance due on demand.
Demark, Inc. 27,996 Earn out balance due on demand.
LaPorte Enterprises, Inc. 400,000 Due in June 1997 with six months'
interest at 10% per annum.
LaPorte Enterprises, Inc. 250,000 18 monthly installments of principal and
interest starting March 1997 at 7% per annum.
(1 ) StaffNet, Inc. 160,000 Four quarterly payments starting June 1997 - non
interest bearing.
(1) Stand-by Personnel - Denver 500,000 Principal plus interest at 6% due April
1998 (one year after transaction date).
(1) Stand-by Personnel - Denver 500,000 50% of principal plus interest at 6% due
July 1998 (15 months after transaction date).
50% of principal plus interest at 6% due
July 1999 (27 months after transaction date).
Subject to earnout - See Schedule 4.1(b)
(1) Stand-by Personnel - Colorado Springs 850,000 50% of principal plus one year interest at
4% per annum due March 1998 and March
1999. Subject to earnout - See Schedule 4.1(b)
(1) Staff Management Services, Inc. 1,650,000 Principal of $925,000 plus interest at
4% per annum due March 1998 and
$725,000 plus interest due March 1999.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.2
INDEBTEDNESS Page 3 of 4
OUTSTANDING
LENDER PRINCIPAL REPAYMENT TERMS
AT CLOSING
SUBORDINATED DEBT WITH WARRANTS
Triumph Capital 14,000,000 Interest payable monthly at 11% per annum
for the first two years and 12.5% per annum
Bachow and Associates, Inc. 11,000,000 for the next three years. Principal of
$9.2 million due in FebnJary 20.01 and balance
due in Febnuary 2002.
NOTE: THE WARRANTS ASSOCIATED WITH THE ABOVE DEBT CONTAIN A CONTINGENT PUT OBLIGATION - SEE SCHEDULE 4.1(b)
NON~SUBORDINATED INDEBTEDNESS:
CAPITALIZED LEASES:
(3) Hewlett Packard Leasing 1,527,988 Equal monthly installments over 5 years at 8.2% per annum
interest.
Catalfumo Construction 5,300,000 Base rental payments of $45,854 per month, not including
operating expenses, through December 1999, after which
base rental is $53,393 for thirteen years. Purchase option
and right to convert to 75% financing at 8.2% per annum
with 20 year amortization/10 year maturity expires
December 1999.
Bankers Direct Leasing - Lease #1 539,078 Lease #1 incurred 10/18/96 for furniture and equipment,
base payments of $11,232.22 through October 2001 -
imputed interest rate is 7.2%. Payment period is 60 months.
Bankers Direct Leasing - Lease #2 389,394 Lease #2 is yet to be implemented, but represents furniture
and equipment ordered and shipped by 12/31/96. At
present, the lease finance factor will be consistent with Lease
#1. A one month deposit of $7,828.04 was made in 1996.
Payment period is 60 months upon execution of the lease.
AT&T 4,556 Baltimore - Base payments are $119.78 for sixty months,
ending September 2001.
The lease rate is 19.820%.
AT&T 6,777 Alexandria - Base payments are $354.73 for 36 months,
ending November 1998
The lease rate is 19.265%.
Finova 4,859 Manchester - Base payments of $496.09, rate 16.309%,
ending 8/7/97.
Finova 1,860 Chattanooga - Represents acquisition lease buyout. Base
payment is $265.65. Final payment is due June 1997. No
interest is imputed due to inavailability of asset fair market
value and immateriality.
OUTSTANDING
LENDER PRINCIPAL REPAYMENT TERMS
AT CLOSING
MORTGAGES:
(1) Califomia Federal 73,408 Base payments of $863.00 due with final payment on
(Condo - Boca Raton) September 2008. Interest rate is 8.50%. In March 1996,
$228.64 used for impound payment began to be applied
towards payment of loan.
(1) Devon 239,636 Base payment is $1,152.00 plus accrued interest (prime +
(Dispatch center - Chicago, IL) 2%), through April 1999.
(1) Palaske 209,639 Payments $2,001.09 through February 2013. Interest rate is 8.50%.
(Dispatch center -
Waukegan, IL)
OTHER:
TKO Software 86,230 $100,000 due November 1997, which includes imputed interest at 10% per annum.
NBD Bank 6,915 CHN - Base payment $515.55, interest rate of 6.919%, final payment
Feb 1998.
NBD Bank 5,725 CHS - Base payment $538.79, interest rate of 6.995%, final payment
Nov 1997.
NBD Bank 5,759 CHHP - Base payment $495.35, interest rate of 5.90%, final payment
Dec 1997.
Chrysler Credit 9,915 WK - Base payment $425.35, interest rate of 9.930%, final payment Feb 1999.
Chrysler Credit 11,604 MAN - Base payment $345.56, interest rate of 13.033%, final payment June 2000.
GUARANTEES:
(2) Nations Bank 1,112,533 Represents 1st mortgage on 8000 N. Federal, Boca Raton, FL.
Payment is $7,466.67 plus accrued interest. Rate is prime + 1%.
Final payment due is approximately $814,000 in May 2000.
(2) Colson 637,593 Represents 2nd mortgage on 8000 N. Federal, Boca Raton, FL.
Payment is $7,321.10 through August 2000. Payment from Sept.
2000 through August 2005 is $7,258.28. Payment from Sept. 2005
through August 2010 is $7,152.08. Interest rate is 9.531%. Payments
include fees for CDC and CSA, which are approx 5% of monthly
payment.
-----------
Subtotal - term debt 45,788,729
Line of Credit -
Bank of Boston,
as agent 45,000,000 Matures February 2001. Interest payable monthly - variable
----------- rate based on ratio of Funded Indebtedness to EBITDA.
Total - all debt $90,788,729
===========
(1) Note: The debt indicated is not actually outstanding as of closing, but is
expected to be incurred shortly thereafter, at the time the related asset
is purchased.
(2) Note: This debt relates to OutSource's previous headquarters building in
Boca Raton, Florida and represents guarantees by certain OutSource
subsidiaries. The building is currently for sale and once sold, these
guarantees will be released. Also, SMSB partnership, the lessor and owner
of the building has agreed to limit OutSource's liability for rent to 18
months (approximately 30,000 per month) starting in December 1996.
(3) Note: Full amount of authorized borrowings of $S2,151.000 under this
credit facility are expected to be incurred over next twelve months.
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.3
LIENS
The following lenders have liens on the assets noted:
1) Hewlett Packard Lease Financing:
Masterpack software
Unidata software
Davison software
American Business Communications telephone system
Hewlett Packard computers
2) TKO Financing
OutSmart software
3) Bankers Direct Leasing
Workstations in Deerfield Beach headquarters
Office furniture in Deerfeld Beach headquarters
4) Catalfumo Construction
Deerfield Beach headquarters building
5) Bank of Boston, as agent
All assets, particularly cash and accounts receivable
6) AT&T
Finova
Office equipment
7) NBD Bank
Chrysler Credit
Vans
FOLLOWING LIENS RELATE TO ASSETS ANTICIPATED TO BE PURCHASED SHORTLY AFFER
CLOSING:
8) California Federal
Condominium - Boca Raton, FL
9) Devon
Dispatch center- Chicago, IL
10) Palaske
Dispatch center - Waukegan, IL
11) Staff Management, Inc.
Rights to repossess certain intangible assets upon a default in
payment of deferred purchase price
FOLLOWING LIENS RELATE TO ASSETS OWNED BY OTHER ENTITIES BUT GUARANTEED BY
OUTSOURCE SUBSIDIARIES
12) Nations Bank
Colson
Office building - 8000 North Federal Highway
Boca Raton, FL
EXHIBIT A-1
NOTICE OF BORROWING
[Date] 1
Bank of Boston Connecticut, as Agent
for the Banks Party to the Credit
Agreement referred to below,
100 Pearl Street
Hartford, Connecticut 06103
Attention: Scott S. Barnett
Ladies and Gentlemen:
OutSource International, Inc. (the "Borrower") refers to the Credit
Agreement, dated as of February , 1997 (the "Credit Agreement"), among OutSource
International, Inc., the Banks parties thereto and Bank of Boston Connecticut,
as Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement. The
undersigned hereby gives you notice pursuant to Section 2.4 of the Credit
Agreement that it requests a borrowing under the Credit Agreement, and in that
connection sets forth below the terms on which such borrowing is requested to be
made:
(A) Date of proposed borrowing
(which is a Business Day)
(B) Principal amount of borrowing 2 $
1The Notice of Borrowing must be received by the Agent (i) in the case
of a proposed Eurodollar Loan, by telecopier or telex not later than 12:00 p.m.
(Eastern time), three Business Days prior to a proposed borrowing and (ii) in
the case of a proposed Alternate Base Rate Loan, by telecopier or telex not
later than 12:00 p.m. (Eastern time), on the day of a proposed borrowing.
2Not less than $250,000 and in whole multiples of $100,000.
-2-
(C) Type of Loan 3
(D-1) Interest Period 4
(D-2) Pricing Level
(I, II, III, IV, V or VI):
(E) Purpose of Loan (check applicable boxes):
1. INITIAL PERMITTED ACQUISITION 5 |_|
If checked, name of selling
Person:
2. WORKING CAPITAL AND GENERAL
CORPORATE PURPOSES of Borrower and its Subsidiaries (OTHER
THAN CSF) |_| If checked, state purpose:
3. CSF LINE 6 |_|
4. SUBSEQUENT PERMITTED ACQUISITION |_|
If checked, name of selling Person
and identity of its shareholders
and owners:
5. LETTER OF CREDIT 7 |_|
3Eurodollar Loan or Alternative Base Rate.
4If a Eurodollar Loan, 1, 2 or 3 months but which shall end not later
than the Termination Date.
5Attach to Notice of Borrowing financial statements required by Section
5.3 of the Credit Agreement.
6If funds being advanced to Labor World franchisee, note must be issued
by franchisee and endorsed to Agent.
7Application for Letter of Credit must accompany Notice of Borrowing.
-3-
(F) Aggregate amount of Loans and Letters of Credit outstanding:
OUTSTANDING
AFTER LOAN
OUTSTANDING ON REQUESTED BY
MAXIMUM THE DATE OF THIS THIS NOTICE IS
PURPOSE AUTHORIZED NOTICE MADE
1. Initial Permitted Acquisition $25,000,000 in $ 8 $
--------------------
aggregate
2. Working Capital and General $40,000,000 less $ $
---------------------
Corporate Purposes of amounts of F(1),
Borrower and Subsidiaries F(4) and F(5)
(other than CSF)
3. CSF Line $ 5,000,000 $ $
---------------------
4. Subsequent Permitted $10,000,000 $ $
---------------------
Acquisition
(MAY NOT BE REBORROWED FOR
SUBSEQUENT PERMITTED
ACQUISITION)
5. Letters of Credit $10,000,000 $ $
----------------------
Sum of (1) through (5) $ $
----------------------
If the box in (E)1 above has been checked, the undersigned hereby
certifies that none of Lawrence H. Schubert, Alan E. Schubert or Louis A.
Morelli is or has been a beneficial owner, directly or indirectly, including
without limitation through a family member or trust, of the selling Person
identified in (E)1.
8)Amount used for Initial Permitted Acquisitions to date.
-4-
If the box in (E)4 above has been checked, the undersigned hereby
certifies that, with respect to the Subsequent Permitted Acquisition identified
in (E)4, all of the requirements of a Subsequent Permitted Acquisition set forth
in the definition thereof in the Credit Agreement have been met.
As required by Section 5 of the Credit Agreement, the undersigned
officer on behalf of the Borrower hereby further certifies that:
(a) the representations and warranties contained in Section 4 of the
Credit Agreement are true and correct in all material respects on and as of the
date hereof (or if such representation or warranty is expressly stated to have
been made as of a specific date, as of the such specific date);
(b) the Borrower has performed and complied with and is in compliance
with all of the terms, covenants and conditions of the Credit Agreement;
(c) there does not exist any Default or Event of Default under the
Credit Agreement; and
(d) each of the other conditions precedent set forth in Section 5 of
the Credit Agreement have been satisfied and complied with.
Very truly yours,
OUTSOURCE INTERNATIONAL, INC.
By
Title:
EXHIBIT A-2
REVOLVING CREDIT NOTE
Hartford, Connecticut
________ ____, 1997
FOR VALUE RECEIVED, the undersigned, OUTSOURCE INTERNATIONAL, INC. (the
"Company"), promises to pay to the order of (the "Bank"), at the office of Bank
of Boston Connecticut, located at 100 Pearl Street, Hartford, Connecticut 06103,
the principal sum of
MILLION AND NO/100 DOLLARS ( )
or the aggregate unpaid principal amount of all Loans made by the Bank to the
undersigned pursuant to the Credit Agreement, as hereinafter defined, whichever
is less, in lawful money of the United States of America. As used herein,
"Credit Agreement" means the Amended and Restated Credit Agreement, dated as of
February 21, 1997 and amended and restated as of March 18, 1997, as the same may
hereafter be amended, modified, supplemented or restated from time to time,
among the Company, the Banks from time to time parties thereto and Bank of
Boston Connecticut, as Agent. Capitalized terms used herein but not defined
herein shall have the meanings ascribed to them in the Credit Agreement.
The undersigned also promises to pay interest on the unpaid principal
amount of each Loan from time to time outstanding, from the date of such Loan
until the payment in full thereof, at the rates per annum which shall be
determined in accordance with the provisions of the Credit Agreement.
The Bank is authorized to record the date and amount of each Loan made
by the Bank pursuant to the Credit Agreement and the date and amount of each
payment or prepayment of principal hereof on the reverse side hereof, or reflect
such information on the records of the Bank by such other methods as the Bank
may generally employ; PROVIDED, HOWEVER, that the failure to make any such entry
shall in no way detract from the Company's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, from the date due until
paid, at a rate per annum which shall be two percent (2%) in excess of the rate
of interest which would otherwise be applicable thereto. All payments of
principal of and interest on this Note shall be made in immediately available
funds. In the event that the total amount of any payment required to be paid
under this Note is not paid within ten (10) days of the date when the same
-1-
becomes due, the Bank may collect and the undersigned agrees to pay a late
charge equal to five percent (5%) of the total amount then due.
This Note is the Revolving Credit Note referred to in the Credit
Agreement. Reference is made to the Credit Agreement for a description of the
right of the undersigned to anticipate payments hereof, the right of the holder
hereof to declare this Note due prior to its stated maturity, and other terms
and conditions upon which this Note is issued.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CONNECTICUT.
Witness: OUTSOURCE INTERNATIONAL, INC.
_________________________ By:___________________________________
Name: Name:
Title:
-2-
EXHIBIT A-3
SWINGLINE NOTE
Hartford, Connecticut
________ ____, 1997
FOR VALUE RECEIVED, the undersigned, OUTSOURCE INTERNATIONAL, INC. (the
"Company"), promises to pay to the order of (the "Bank"), at the office of the
Bank of Boston Connecticut, located at 100 Pearl Street, Hartford, Connecticut
06103, the principal sum of
MILLION AND NO/100 DOLLARS ( )
or the aggregate unpaid principal amount of all Swingline Loans made by the Bank
to the undersigned pursuant to the Credit Agreement, as hereinafter defined,
whichever is less, in lawful money of the United States of America. As used
herein, "Credit Agreement" means the Amended and Restated Credit Agreement,
dated as of February 21, 1997 and amended and restated as of March 18, 1997, as
the same may hereafter be amended, modified, supplemented or restated from time
to time, among the Company, the Banks from time to time parties thereto and Bank
of Boston Connecticut, as Agent. Capitalized terms used herein but not defined
herein shall have the meanings ascribed to them in the Credit Agreement.
The undersigned also promises to pay interest on the unpaid principal
amount of each Swingline Loan from time to time outstanding, from the date of
such Swingline Loan until the payment in full thereof, at the rates per annum
which shall be determined in accordance with the provisions of the Credit
Agreement.
The Bank is authorized to record the date and amount of each Swingline
Loan made by the Bank pursuant to the Credit Agreement and the date and amount
of each payment or prepayment of principal hereof on the reverse side hereof, or
reflect such information on the records of the Bank by such other methods as the
Bank may generally employ; PROVIDED, HOWEVER, that the failure to make any such
entry shall in no way detract from the Company's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity
occurs by reason of lapse of time or by operation of any provision for
acceleration of maturity contained in the Credit Agreement, the principal hereof
and the unpaid interest thereon shall bear interest, from the date due until
paid, at a rate per annum which shall be two percent (2%) in excess of the rate
of interest which would otherwise be applicable thereto. All payments of
principal of and interest on this Note shall be made in immediately available
funds. In the event that the total amount of any payment required to be paid
under this Note is not paid within ten (10) days of the date when the same
becomes due, the Bank may collect and the undersigned agrees to pay a late
charge equal to five percent (5%) of the total amount then due.
This Note is the Swingline Note referred to in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the right of the
undersigned to anticipate payments hereof,
-1-
the right of the holder hereof to declare this Note due prior to its stated
maturity, and other terms and conditions upon which this Note is issued.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CONNECTICUT.
Witness: OUTSOURCE INTERNATIONAL, INC.
_________________________ By:______________________________
Name: Name:
Title:
-2-
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of February __,
1997 (as may be amended, supplemented, restated or otherwise modified from time
to time, the "Credit Agreement"), among OUTSOURCE INTERNATIONAL, INC., a Florida
corporation (the "Company"), the Banks named therein and BANK OF BOSTON
CONNECTICUT, as agent for the Banks (in such capacity, the "Agent"). Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meaning given to them in the Credit Agreement.
______________________ (the "Assignor") and _____________________ (the
"Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a ____% interest (the "Assigned Interest") in
and to the Assignor's rights and obligations under the Credit Agreement with
respect to the Assignor's Commitment thereunder in a principal amount as set
forth on Annex 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document or
in connection with the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Loan
Document or any other instrument or document furnished pursuant thereto, or any
collateral security granted in connection therewith, if any, other than that it
has not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company, any of its Subsidiaries or
any other obligor or the performance or the observance by the Company, any of
its Subsidiaries or any other obligor of any of their respective obligations
under the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches the Note held by
it evidencing the Assignor's Commitment and requests that the Agent exchange
such Note for new Notes payable to the Assignee and the Assignor in amounts
which reflect the assignment being made hereby (and after giving effect to any
other assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement and any amendments thereto, together
with copies of the financial statements delivered pursuant to subsection 6.1
thereof and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees
-1-
that it will, independently and without reliance upon the Assignor, the Agent or
any other Bank, based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (d) appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Credit Agreement, the other Loan
Documents or other instrument or document furnished pursuant hereto or thereto
as are delegated to the Agent by the terms thereof, together with such powers as
are incidental thereto; and (e) agrees that it will be bound by the provisions
of the Credit Agreement and will perform all the obligations required, by the
terms of the Credit Agreement, to be performed by it as a Bank, including, if it
is organized under the laws of a jurisdiction outside the United States, its
obligations pursuant to paragraph 2.16(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
_____________, _____ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance and
recording by the Agent pursuant to subsection 10.6 of the Credit Agreement,
effective as of the Effective Date.
5. From and after the date of receipt of this Assignment and
Acceptance, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignee, whether such amounts have accrued prior to the Effective Date or
accrue subsequent to the Effective Date. The Assignor and the Assignee shall
make all appropriate adjustments in payments by the Agent for periods prior to
the Effective Date or with respect to the making of this assignment directly
between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Bank thereunder and under the
other Loan Documents and shall be bound by the provisions thereof, and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. The Assignee advises the Agent that the address listed on Annex 1 is
its address for notices under the Credit Agreement.
8. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the state of Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the _____ day of ________, 199_, by their
respective duly authorized officers on Annex 1 hereto.
-2-
ANNEX 1 TO THE
ASSIGNMENT AND ACCEPTANCE
NAME OF ASSIGNOR:
NAME OF ASSIGNEE:
EFFECTIVE DATE OF ASSIGNMENT:
COMMITMENT COMMITMENT
PERCENTAGE AFTER ASSIGNMENT DOLLAR AMOUNT AFTER ASSIGNMENT
-------------------------------------------------------------------------------
ASSIGNEE
ASSIGNOR
ASSIGNEE: ASSIGNOR:
By:_________________________________ By:_____________________________
Title: Title:
Accepted: Consented To:
BANK OF BOSTON OUTSOURCE INTERNATIONAL, INC.
CONNECTICUT, as
Agent
By:_________________________________ By:_____________________________
Title: Title:
-3-
OUTSOURCE INTERNATIONAL, INC.
CREDIT AGREEMENT
SCHEDULE 7.8
MANAGEMENT LOANS AND ADVANCES
None.
OI PLEDGE AGREEMENT
This OI Pledge Agreement, dated as of February 21, 1997 (as amended,
supplemented or otherwise modified from time to time, this "Pledge Agreement")
made by OUTSOURCE INTERNATIONAL, INC., a Florida corporation (the "Pledgor"), in
favor of BANK OF BOSTON CONNECTICUT, as agent (in such capacity, the "Agent")
for the benefit of the Agent and the ratable benefit of the Banks which are from
time to time parties to the Credit Agreement dated of even date herewith (as
amended, supplemented, restated or otherwise modified from time to time, the
"Credit Agreement") among the Pledgor, the Agent and the Banks;
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Banks have severally
agreed to extend credit to the Pledgor upon the terms and subject to the
conditions set forth therein;
WHEREAS, the Pledgor is the legal and beneficial owner of the shares of
Pledged Stock (as hereinafter defined) issued by each of the Pledgor's
Subsidiaries listed on Schedule A hereto (individually, an "Issuer";
collectively the "Issuers"); and
WHEREAS, it is a condition precedent to the obligation of the Banks to
make their respective extensions of credit to the Pledgor under the Credit
Agreement that the Pledgor shall have executed and delivered this Pledge
Agreement to the Agent for the benefit of the Agent and the ratable benefit of
the Banks;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Banks to enter into the Credit Agreement and to induce the Agent
and the Banks to make their respective extensions of credit and the Issuing Bank
to issue certain Letters of Credit under the Credit Agreement, the Pledgor
hereby agrees with the Agent, for the benefit of the Agent and the ratable
benefit of the Banks, as follows:
Section 1. INTERPRETATION OF THIS AGREEMENT.
(a) CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the respective meanings set forth below or set forth in the
Section hereof following such term:
"AGENT" as defined in the introductory paragraph hereof.
"BANKS" as defined in the Credit Agreement.
"CODE" means the Uniform Commercial Code from time to time in
effect in the State of Connecticut.
"COLLATERAL" means the Pledged Stock and all Proceeds.
"CREDIT AGREEMENT" as defined in the introductory paragraph
hereof.
"ISSUER(S)" as defined in the second recital paragraph.
"OBLIGATIONS" means, at any time, all obligations and
undertakings of the Pledgor under and in respect of the Credit Agreement,
including, without limitation, the Pledgor's obligations and undertakings with
respect to the payment of the principal of, and interest on, each Revolving
Credit Note, all of the Pledgor's Reimbursement Obligations, any and all Related
Expenses incurred by the Agent and all other amounts payable, and all other
indebtedness owed, by the Pledgor under each of the Loan Documents.
"OI SECURITY AGREEMENT" means the OI Security Agreement dated
of even date herewith made by Pledgor in favor of Bank of Boston Connecticut, as
the Agent for the benefit of the Agent and the ratable benefit of the Banks that
from time to time are parties to the Credit Agreement, as the same may hereafter
be amended, modified, supplemented or restated from time to time.
"PLEDGE AGREEMENT" as defined in the introductory paragraph
hereof.
"PLEDGED STOCK" means the shares of capital stock of each
Issuer listed on Schedule A hereto, together with all shares, stock
certificates, options, warrants, offers or rights of any nature whatsoever that
may be issued or granted by each Issuer to the Pledgor while this Pledge
Agreement is in effect.
"PROCEEDS" means all proceeds as such term is defined in
Section 9-306 of the Code on the date hereof and, in any event, shall include,
without limitation, all dividends or other income from the Pledged Stock,
collections thereon or distributions with respect thereto.
"RELATED EXPENSES" as defined in the OI Security Agreement.
(b) RULES FOR INTERPRETING UNDEFINED TERMS. All capitalized
terms used in this Pledge Agreement and not otherwise defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement. All
capitalized terms used in this Pledge Agreement and not defined herein or in the
Credit Agreement but that are defined in the Code shall have the respective
meanings assigned to such terms in the Code.
2
(c) HEADINGS, ETC. The titles of the Sections appear as a
matter of convenience only, do not constitute an operative part of this Pledge
Agreement and shall not affect the construction hereof. Each covenant contained
herein shall be construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with one or more other covenants.
(d) DIRECTLY OR INDIRECTLY. Where any provision in this Pledge
Agreement requires or prohibits certain actions by Persons, such provision shall
be applicable regardless of whether such action is taken directly or indirectly
by such Person.
(e) RULES OF CONSTRUCTION. The words "herein," "hereof,"
"hereto" and "hereunder" and other words of similar import refer to this Pledge
Agreement as a whole and not to any particular section, subsection or clause
contained in this Pledge Agreement unless the context requires otherwise.
Whenever from the context it appears appropriate, each term stated in either the
singular or the plural includes the singular and the plural, and pronouns stated
in the masculine, feminine or neuter gender include the masculine, feminine and
the neuter. The word "including" shall mean "including, without limitation."
Unless otherwise specified herein, any reference in this Pledge Agreement to an
existing document, agreement or instrument means such document, agreement or
instrument as it may have been amended, modified, supplemented or restated from
time to time.
(F) GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL CONNECTICUT
LAW.
Section 2. PLEDGE; GRANT OF SECURITY INTEREST. The Pledgor hereby
unconditionally and irrevocably pledges, assigns and delivers to the Agent, for
the benefit of the Agent and the ratable benefit of the Banks, all the Pledged
Stock issued and outstanding on the date hereof and hereby unconditionally and
irrevocably grants to Agent, for the benefit of the Agent and the ratable
benefit of the Banks, a first security interest in and Lien upon the Collateral,
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations,
Section 3. STOCK POWERS. Concurrently with the delivery to the Agent of
each certificate representing one or more shares of Pledged Stock, the Pledgor
shall deliver an undated stock power covering such certificate, duly executed in
blank by the Pledgor with, if the Agent so requests, signature guaranteed.
Section 4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants to the Agent and the Banks that:
3
(a) the shares of Pledged Stock listed on Schedule A
constitute all the issued and outstanding shares of all classes of the capital
stock of each Issuer;
(b) all the shares of the Pledged Stock have been duly and
validly authorized and issued and are fully paid and nonassessable and the
certificates evidencing such shares are in proper form;
(c) the Pledgor is the record and beneficial owner of, and has
good and marketable title to, the Pledged Stock, free of any and all liens or
options in favor of, or claims of, any other Person, except the Lien created by
this Pledge Agreement;
(d) there are no restrictions upon the voting rights or
transferability of the Pledged Stock and the Pledgor has all requisite power and
authority to execute and deliver this Agreement and to grant the Liens granted
hereby; and
(e) upon delivery to the Agent of the Pledged Stock, the Lien
granted pursuant to this Pledge Agreement will constitute a valid, perfected
first-priority Lien on the Collateral, enforceable as such against all present
and future creditors of the Pledgor and any Persons purporting to purchase any
Collateral (or any interest therein) from the Pledgor.
The Pledgor agrees that the foregoing representations and warranties shall be
deemed to have been made by the Pledgor in a true and correct manner in all
material respects on each date of each extension of credit to the Pledgor.
Section 5. COVENANTS. The Pledgor covenants and agrees with the Agent
and the Banks that, from and after the date of this Pledge Agreement until the
Obligations are paid in full and the Commitments are terminated:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization or
recapitalization of any Issuer), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any of the Pledged
Stock, or otherwise in respect thereof, the Pledgor shall accept the same as the
agent of the Agent and the Banks, hold the same in trust for the Agent and the
Banks and deliver the same forthwith to the Agent in the exact form received,
duly indorsed by the Pledgor to the Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by the Pledgor and
with, if the Agent so requests in writing, signature guaranteed, to be held by
the Agent, subject to the terms hereof, as additional collateral security for
the Obligations. Any sums paid upon or in respect of the Pledged Stock upon the
liquidation or dissolution of any Issuer shall be paid over to the Agent to be
held by it hereunder as additional collateral security for the Obligations, and
in case any distribution of capital shall be
4
made on or in respect of the Collateral or any property shall be distributed
upon or with respect to the Collateral pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, the property so distributed shall be delivered to the Agent to be held
by it hereunder as additional collateral security for the Obligations. If any
sums of money or property so paid or distributed in respect of the Pledged Stock
shall be received by the Pledgor, the Pledgor shall, until such money or
property is paid or delivered to the Agent, hold such money or property in trust
for the Banks, segregated from other funds of the Pledgor, as additional
collateral security for the Obligations. Notwithstanding the foregoing, the
merger of OutSource International, Inc., an Illinois corporation and a wholly
owned Subsidiary of the Pledgor, into OutSource International of America, Inc.,
a Florida corporation and a wholly owned Subsidiary of the Pledgor, contemplated
to occur on or before the Closing Date, shall not trigger the application of
this Section 5.1(a), insofar as this Section 5.1(a) requires that any sums paid
upon or in respect of the Pledged Stock upon the liquidation or dissolution of
any Issuer shall be paid over to the Agent to be held by it hereunder as
additional collateral security for the Obligations.
(b) Without the prior written consent of the Agent, the
Pledgor will not (i) vote to enable, or take any other action to permit, any
Issuer to issue any stock or other equity securities of any nature or to issue
any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of such Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Collateral, or (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Collateral, or any interest therein, except for the Lien provided
by this Pledge Agreement. The Pledgor will defend the right, title and interest
of the Agent and the Banks in and to the Collateral against the claims and
demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Agent may reasonably request for the purposes
of obtaining or preserving the full benefits of this Pledge Agreement and of the
rights and powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel paper (in
each case, as defined in the Code) shall be immediately delivered to the Agent,
duly endorsed in a manner satisfactory to the Agent, to be held as Collateral
pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Agent and the
Banks harmless from, any and all liabilities with respect to, or resulting from
any delay in paying, any and all stamp, excise, sales or other taxes which may
be payable or determined to be payable with respect to any of the Collateral or
in connection with any of the transactions contemplated by this Pledge
Agreement.
5
Section 6. CASH DIVIDENDS; VOTING RIGHTS. Unless an Event of Default
shall have occurred and be continuing and the Agent shall have given notice to
the Pledgor of the Agent's intent to exercise its corresponding rights pursuant
to Section 7 below, the Pledgor shall be permitted to receive all cash dividends
paid in the normal course of business of each Issuer and consistent with past
practice to the extent permitted in the Credit Agreement in respect of the
Pledged Stock and to exercise all voting and corporate rights with respect to
the Pledged Stock, PROVIDED, HOWEVER, that no vote shall be cast or corporate
right exercised or other action taken which, in the Agent's reasonable judgment,
would impair the Collateral in any material respect or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, this Pledge Agreement, any Revolving Credit Note or any other Loan
Document or any other document executed and delivered in connection therewith or
herewith.
Section 7. RIGHTS OF THE BANK AND THE AGENT. (a) If an Event of Default
shall occur and be continuing and the Agent shall give notice of its intent to
exercise any of the following rights to the Pledgor, (i) the Agent shall have
the right to receive any and all cash dividends paid in respect of the Pledged
Stock and make application thereof to the Obligations in such order as the Agent
may determine, and (ii) all shares of the Pledged Stock shall be registered in
the name of the Agent or its nominee, and the Agent or its nominee may
thereafter exercise (A) all voting, corporate and other rights pertaining to
such shares of the Pledged Stock at any meeting of shareholders of each Issuer
or otherwise, and (B) any and all rights of conversion, exchange, subscription
and any other rights, privileges or options pertaining to such shares of the
Pledged Stock as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Stock upon the merger, consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of such Issuer, or upon the
exercise by the Pledgor or the Agent of any right, privilege or option
pertaining to such shares of the Pledged Stock, and in connection therewith, the
right to deposit and deliver any and all of the Pledged Stock with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine), all without liability except to
account for property actually received by it, but the Agent shall have no duty
to the Pledgor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(b) The rights of the Agent and the Banks hereunder shall not
be conditioned or contingent upon the pursuit by the Agent or any Bank of any
right or remedy against the Pledgor or against any other Person which may be or
become liable in respect of all or any portion of the Obligations or against any
collateral security therefor, guarantee thereof or right of offset with respect
thereto. Neither the Agent nor any Bank shall be liable for any failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so, nor shall the Agent be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Pledgor or any other
Person or to take any other action whatsoever with regard to the Collateral or
any party thereof.
6
Section 8. REMEDIES. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Banks, may exercise, in addition to all
other rights and remedies granted in this Pledge Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Pledgor, each Issuer or
any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived) may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, grant options to purchase or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange, broker's board or office of the Agent
or any Bank or elsewhere upon such terms and conditions as the Agent may deem
advisable and at such prices as the Agent may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Agent or any
Bank shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption of
the Pledgor, which right or equity of redemption is hereby waived and released.
The Agent shall apply any Proceeds from time to time held by it and the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred in respect thereof or incidental to the care or safekeeping of any of
the Collateral or in any way relating to the Collateral or the rights of the
Agent and the Banks hereunder, including, without limitation, reasonable
attorneys' fees and disbursements of counsel to the Agent and the Banks, to the
payment in whole or in part of the Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Agent account for the surplus, if any,
to the Pledgor. To the extent permitted by applicable law, the Pledgor waives
all claims, damages and demands it may acquire against the Agent or any Bank
arising out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least ten (10) days
before such sale or other disposition. The Pledgor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of Collateral are
insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Agent or any Bank to collect such deficiency.
Section 9. PRIVATE SALES. (a) The Pledgor recognizes that the Agent may
be unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale
7
and, notwithstanding such circumstances, agrees that any such private sale shall
be deemed to have been made in a commercially reasonable manner. The Agent shall
be under no obligation to delay a sale of any of the Pledged Stock for the
period of time necessary to permit any Issuer to register such securities for
public sale under the Securities Act or under applicable state securities laws,
even if such Issuer would agree to do so.
(b) The Pledgor further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Stock pursuant to this Section 9
valid and binding and in compliance with any and all other applicable
Requirements of Law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section 9 will cause irreparable injury to the Agent
and the Banks, that the Agent and the Banks have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 9 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.
Section 10. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUERS. The
Pledgor hereby authorizes and instructs each Issuer to comply with any
instruction received by such Issuer from the Agent in writing that (a) states
that an Event of Default has occurred and (b) is otherwise in accordance with
the terms of this Pledge Agreement, without any other or further instructions
from the Pledgor, and the Pledgor agrees that each Issuer shall be fully
protected in so complying.
Section 11. AGENT APPOINTED AS PLEDGOR'S ATTORNEY-IN-FACT. The Pledgor
hereby appoints the Agent as Pledgor's attorney-in-fact with full power in
Pledgor's place and stead, in Pledgor's name or its own name and at Pledgor's
expense, to execute, endorse and deliver any and all agreements, assignments,
pledges, instruments and any other writings, and to take any and all other
actions, which the Agent may deem necessary or desirable to carry out the terms
and effect the purposes of this Agreement and to exercise fully its rights and
remedies hereunder. The Agent may delegate any or all of such power to any of
its officers, directors, employees, agents, nominees, stockholders and other
representatives (hereinafter collectively called "Representatives") and have any
such Representative(s) exercise any such delegated power as substitute(s) for
Agent. Pledgor hereby ratifies that the Agent and all such Representatives shall
lawfully and properly do or cause to be done under this power of attorney, which
power is coupled with an interest and shall be irrevocable until all Obligations
have been satisfied and this Pledge Agreement has been terminated. So long as no
Default or Event of Default has occurred, the Agent agrees to give Pledgor five
(5) business days prior notice of its intention to exercise the power of
attorney granted hereby.
Section 12. AUTHORITY OF AGENT. The Pledgor acknowledges that the
rights and responsibilities of the Agent under this Pledge Agreement with
respect to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Pledge Agreement
8
shall, as between the Agent and the Banks, be governed by the Credit Agreement
and by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Agent and the Pledgor, the Agent shall be
conclusively presumed to be acting as agent for the Banks with full and valid
authority so to act or refrain from acting, and neither the Pledgor nor any
Issuer shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
Section 13. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. The
Pledgor and the Pledged Stock shall remain subject to the Lien granted hereby,
notwithstanding that, without any reservation of rights against the Pledgor, and
without notice to or further assent by the Pledgor, (i) any demand for payment
of any of the Obligations made by the Agent or any Bank may be rescinded by the
Agent or such Bank, and any of the Obligations continued, and the Obligations,
or the liability of any Issuer or any other Person upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered, or released by
the Agent or any Bank, (ii) the Credit Agreement, any Revolving Credit Note, any
other Loan Document and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or
part, as the Agent or the Banks (or the Required Banks, as the case may be) may
deem advisable from time to time, and (iii) any guarantee, right of offset or
other collateral security at any time held by the Agent or any Bank for the
payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Agent nor any Bank shall have any obligation to protect,
secure, perfect or insure any other lien at any time held by it as security for
the Obligations or any property subject thereto. The Pledgor waives any and all
notice of the creation, renewal, extension or accrual of any of the obligations
and notice of or proof of reliance by the Agent or any Bank upon this Pledge
Agreement. The Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred in reliance upon this Pledge
Agreement, and all dealings between any Issuer and the Pledgor on the one hand,
and the Agent and the Banks, on the other, shall likewise be conclusively
presumed to have been had or consummated in reliance upon this Pledge Agreement.
The Pledgor waives presentment, protest, demand for payment and notice of
default or nonpayment to or upon any Issuer with respect to the Obligations.
Section 14. LIMITATION ON DUTIES REGARDING COLLATERAL. The Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Agent deals with similar
securities and property for its own account. Neither the Agent, any Bank nor any
of their respective directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Pledgor or otherwise.
9
Section 15. NOTICES. Notices by the Agent to the Pledgor or any Issuer
may be given to the Pledgor, or in the case of any Issuer, in care of the
Pledgor, in accordance with the terms of the Credit Agreement.
Section 16. NO WAIVER; CUMULATIVE REMEDIES. Neither the Agent nor any
Bank shall by any act (except by a written instrument pursuant to Section 17
hereof) be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Agent or any Bank, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right or remedy hereunder, nor
shall the exercise of any right or remedy on any one occasion be construed as a
bar to any right or remedy which the Agent or such Bank would otherwise have on
any future occasion. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
Section 17. WAIVERS AND AMENDMENTS: SUCCESSORS AND ASSIGNS. None of the
terms or provisions of this Pledge Agreement may be amended, supplemented or
otherwise modified except by a written instrument executed by the Pledgor and
the Agent, PROVIDED that any provision of this Pledge Agreement may be waived by
the Agent in a letter or agreement executed by the Agent or by telex or
facsimile transmission from the Agent. This Pledge Agreement shall be binding
upon the successors and assigns of the Pledgor and shall inure to the benefit of
the Agent and the Banks and their respective successors and assigns.
Section 18. MISCELLANEOUS PROVISIONS.
(a) POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and are
powers coupled with an interest.
(b) SEVERABILITY. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction where such
provision is valid and enforceable.
(c) INTEGRATION. This Pledge Agreement represents the
agreement of the Pledgor with respect to the subject matter hereof, and there
are no promises, undertakings, representations or warranties by the Agent or any
Bank relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
(d) COUNTERPARTS. This Pledge Agreement may be executed and
delivered by the parties hereto through the use of two or more original
identical counterparts hereof, each of which
10
shall be deemed to be an original instrument and all of which shall be deemed to
represent but one Pledge Agreement, fully binding upon and enforceable against
the parties hereto.
Section 19. SUBMISSION TO JURISDICTION; WAIVERS. The Pledgor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Pledge Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the nonexclusive general jurisdiction of the Courts of the
State of Connecticut, the courts of the United States of America for the
District of Connecticut, and appellate courts from any thereof; and
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same.
11
IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement to
be duly executed and delivered in Hartford, Connecticut as of the date first
above written.
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL BURRELL
-------------------------
Name: Paul Burrell
Title: President
Accepted:
BANK OF BOSTON CONNECTICUT, as Agent
By: /s/ ROGER J. ROCHE, JR.
--------------------------------
Name: Roger J. Roche, Jr.
Title: Director
12
ISSUER ACKNOWLEDGMENT AND CONSENT
Each of the undersigned Issuers referred to in the foregoing Pledge
Agreement hereby acknowledges receipt of a copy thereof and agrees to be bound
thereby and to comply with the terms thereof insofar as such terms are
applicable to such Issuer. Each of the undersigned Issuers agrees to notify the
Agent promptly in writing of the occurrence of any of the events described in
Section 5(a) of the Pledge Agreement with respect to such Issuer. Each of the
undersigned Issuers further agrees that the terms of Section 9(c) of the Pledge
Agreement shall apply to such Issuer, MUTATIS MUTANDIS, with respect to all
actions that may be required of it under or pursuant to or arising out of
Section 9 of the Pledge Agreement.
CAPITAL STAFFING FUND, INC.
By: /s/ PAUL BURRELL
-------------------------------------
Name: Paul Burrell
Title: President
OUTSOURCE FRANCHISING, INC.
By: /s/ PAUL BURRELL
-------------------------------------
Name: Paul Burrell
Title: Assistans Secretary
SYNADYNE I, INC., F/K/A LABOR WORLD OF
HOUSTON, INC.
By: /s/ PAUL BURRELL
-------------------------------------
Name: Paul Burrell
Title: Vice President
13
SYNADYNE II, INC.
By: /s/ PAUL BURRELL
-------------------------------------
Name: Paul Burrell
Title: Vice President
SYNADYNE III, INC., F/K/A LABOR WORLD OF
AMERICA, INC.
By: /s/ PAUL BURRELL
-------------------------------------
Name: Paul Burrell
Title: Vice President
SYNADYNE IV, INC.
By: /s/ PAUL BURRELL
-------------------------------------
Name: Paul Burrell
Title: Vice President
SYNADYNE V, INC.
By: /s/ PAUL BURRELL
-------------------------------------
Name: Paul Burrell
Title: Vice President
EMPLOYEES INSURANCE SERVICES, INC.
By: /s/ PAUL BURRELL
-------------------------------------
Name: Paul Burrell
Title: President
14
OUTSOURCE INTERNATIONAL OF AMERICA,
INC.
By: /s/ PAUL BURRELL
-------------------------------------
Name: Paul Burrell
Title: President
15
SCHEDULE A
TO OI PLEDGE
AGREEMENT
DESCRIPTION OF PLEDGED STOCK
STOCK
PLEDGOR ISSUER CLASS OF STOCK CERTIFICATE NO. NO. OF SHARES
------- ------ -------------- --------------- -------------
OutSource Capital Staffing Common Stock 28 100
International, Inc. Fund, Inc.
OutSource Common Stock 34 100
Franchising, Inc.
Synadyne I, Inc. Common Stock 23 100
Inc., f/k/a Labor
World of Houston,
Inc.
Synadyne II, Inc. Common Stock 41 100
Synadyne III, Inc., Common Stock 22 100
f/k/a Labor World
of America, Inc.
Synadyne IV, Inc. Common Stock 41 100
Synadyne V, Inc. Common Stock 41 100
Employees Common Stock 18 100
Insurance Services,
Inc.
OutSource Common Stock 28 100
International of
America, Inc.
16
SEE RESTRICTIVE LEGEND ON REVERSE
NUMBER INCORPORATED UNDER THE LAWS SHARES
OF THE STATE OF FLORIDA
28 ****100****
CAPITAL STAFFING FUND, INC.
TOTAL AUTHORIZED ISSUE
10,000 SHARES PAR VALUE $1.00 EACH
THIS CERTIFIES THAT OUTSOURCE INTERNATIONAL, INC. is the registered holder of
****ONE HUNDRED (100)**** Shares
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 21 day of February A.D. 1997
/s/ ROBERT LEFERT /s/ PAUL BURRELL
---------------------------------- ------------------------------------
Secretary President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ENCUMBERED IN ANY MANNER ABSENT
EITHER REGISTRATION UNDER THE ACT AND UNDER EVERY APPLICABLE STATE SECURITIES
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________________ 19____
In presence of _______________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
STOCK POWER
FOR VALUE RECEIVED, OutSource International, Inc., hereby sells,
assigns and transfers unto _____________________, One Hundred (100) shares of
the Common Stock, par value $1.00 per share, of CAPITAL STAFFING FUND, INC., a
Florida corporation (the "Corporation"), standing in the name of the undersigned
on the books of the Corporation, represented by Certificate No. 28, and does
hereby irrevocably constitute and appoint __________________ attorney to
transfer said stock on the books of the Corporation with full power of
substitution in the premises.
Dated: _______________________________
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-----------------------------------
Paul M. Burrell, President
SEE RESTRICTIVE LEGEND ON REVERSE
NUMBER ORGANIZED UNDER THE LAWS SHARES
OF THE STATE OF FLORIDA
34 ****100****
OUTSOURCE FRANCHISING, INC.
TOTAL AUTHORIZED ISSUED
10,000 SHARES WITHOUT PAR VALUE
THIS CERTIFIES THAT OUTSOURCE INTERNATIONAL, INC. is the registered holder of
****ONE HUNDRED (100)**** Shares
of the Common Stock of the Corporation, fully-paid and nonassessable and
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 21 day of February A.D. 1997
/s/ [ILLEGIBLE] /s/ ROBERT LEFERT
---------------------------------- ------------------------------------
Assistant Secretary President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ENCUMBERED IN ANY MANNER ABSENT
EITHER REGISTRATION UNDER THE ACT AND UNDER EVERY APPLICABLE STATE SECURITIES
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________________ 19____
In presence of _______________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
STOCK POWER
FOR VALUE RECEIVED, OutSource International, Inc., hereby sells,
assigns and transfers unto _______________________, One Hundred (100) shares of
the Common Stock, no par value per share, of OUTSOURCE FRANCHISING, INC., a
Florida corporation (the "Corporation"), standing in the name of the undersigned
on the books of the Corporation, represented by Certificate No. 34, and does
hereby irrevocably constitute and appoint __________________ attorney to
transfer said stock on the books of the Corporation with full power of
substitution in the premises.
Dated: _______________________________
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-----------------------------------
Paul M. Burrell, President
SEE RESTRICTIVE LEGEND ON REVERSE
NUMBER INCORPORATED UNDER THE LAWS SHARES
OF THE STATE OF FLORIDA
23 ****100****
SYNADYNE I, INC.
TOTAL AUTHORIZED ISSUE
7,500 SHARES PAR VALUE $1.00 EACH
THIS CERTIFIES THAT OUTSOURCE INTERNATIONAL, INC. is the registered holder of
****ONE HUNDRED (100)**** Shares
of the Common Stock of the Corporation, fully-paid and nonassessable and
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 21 day of February A.D. 1997
/s/ ROBERT LEFERT /s/ PAUL BURRELL
---------------------------------- ------------------------------------
Assistant Secretary Vice President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ENCUMBERED IN ANY MANNER ABSENT
EITHER REGISTRATION UNDER THE ACT AND UNDER EVERY APPLICABLE STATE SECURITIES
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________________ 19____
In presence of _______________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
STOCK POWER
FOR VALUE RECEIVED, OutSource International, Inc., hereby sells,
assigns and transfers unto _____________________, One Hundred (100) shares of
the Common Stock, par value $1.00 per share, of SYNADYNE I, INC., a Florida
corporation (the "Corporation"), standing in the name of the undersigned on the
books of the Corporation, represented by Certificate No. 23, and does hereby
irrevocably constitute and appoint __________________ attorney to transfer said
stock on the books of the Corporation with full power of substitution in the
premises.
Dated: _______________________________
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-----------------------------------
Paul M. Burrell, President
SEE RESTRICTIVE LEGEND ON REVERSE
NUMBER INCORPORATED UNDER THE LAWS SHARES
OF THE STATE OF FLORIDA
41 ****100****
SYNADYNE II, INC.
TOTAL AUTHORIZED ISSUE
10,000 SHARES WITHOUT PAR VALUE
THIS CERTIFIES THAT OUTSOURCE INTERNATIONAL, INC. is the registered holder of
****ONE HUNDRED (100)**** Shares
of the Common Stock of the Corporation, fully-paid and nonassessable and
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 21 day of February A.D. 1997
/s/ ROBERT LEFERT /s/ PAUL BURRELL
---------------------------------- ------------------------------------
Assistant Secretary Vice President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ENCUMBERED IN ANY MANNER ABSENT
EITHER REGISTRATION UNDER THE ACT AND UNDER EVERY APPLICABLE STATE SECURITIES
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________________ 19____
In presence of _______________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
STOCK POWER
FOR VALUE RECEIVED, OutSource International, Inc., hereby sells,
assigns and transfers unto _____________________, One Hundred (100) shares of
the Common Stock, no par value per share, of SYNADYNE II, INC., a Florida
corporation (the "Corporation"), standing in the name of the undersigned on the
books of the Corporation, represented by Certificate No. 41, and does hereby
irrevocably constitute and appoint __________________ attorney to transfer said
stock on the books of the Corporation with full power of substitution in the
premises.
Dated: _______________________________
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-----------------------------------
Paul M. Burrell, President
SEE RESTRICTIVE LEGEND ON REVERSE
NUMBER INCORPORATED UNDER THE LAWS SHARES
OF THE STATE OF FLORIDA
22 ****100****
SYNADYNE III, INC.
TOTAL AUTHORIZED ISSUE
10,000 SHARES PAR VALUE $1.00 EACH
THIS CERTIFIES THAT OUTSOURCE INTERNATIONAL, INC. is the registered holder of
****ONE HUNDRED (100)**** Shares
of the Common Stock of the Corporation, fully-paid and nonassessable and
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 21 day of February A.D. 1997
/s/ ROBERT LEFERT /s/ PAUL BURRELL
---------------------------------- ------------------------------------
Assistant Secretary Vice President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ENCUMBERED IN ANY MANNER ABSENT
EITHER REGISTRATION UNDER THE ACT AND UNDER EVERY APPLICABLE STATE SECURITIES
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________________ 19____
In presence of _______________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
STOCK POWER
FOR VALUE RECEIVED, OutSource International, Inc., hereby sells,
assigns and transfers unto _____________________, One Hundred (100) shares of
the Common Stock, par value $1.00 per share, of SYNADYNE III, INC., a Florida
corporation (the "Corporation"), standing in the name of the undersigned on the
books of the Corporation, represented by Certificate No. 22, and does hereby
irrevocably constitute and appoint __________________ attorney to transfer said
stock on the books of the Corporation with full power of substitution in the
premises.
Dated: _______________________________
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-----------------------------------
Paul M. Burrell, President
SEE RESTRICTIVE LEGEND ON REVERSE
NUMBER INCORPORATED UNDER THE LAWS SHARES
OF THE STATE OF FLORIDA
41 ****100****
SYNADYNE IV, INC.
TOTAL AUTHORIZED ISSUE
10,000 SHARES WITHOUT PAR VALUE
THIS CERTIFIES THAT OUTSOURCE INTERNATIONAL, INC. is the registered holder of
****ONE HUNDRED (100)**** Shares
of the Common Stock of the Corporation, fully-paid and nonassessable and
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 21 day of February A.D. 1997
/s/ ROBERT LEFERT /s/ PAUL BURRELL
---------------------------------- ------------------------------------
Assistant Secretary Vice President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ENCUMBERED IN ANY MANNER ABSENT
EITHER REGISTRATION UNDER THE ACT AND UNDER EVERY APPLICABLE STATE SECURITIES
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________________ 19____
In presence of _______________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
STOCK POWER
FOR VALUE RECEIVED, OutSource International, Inc., hereby sells,
assigns and transfers unto _____________________, One Hundred (100) shares of
the Common Stock, no par value per share, of SYNADYNE V, INC., a Florida
corporation (the "Corporation"), standing in the name of the undersigned on the
books of the Corporation, represented by Certificate No. 41, and does hereby
irrevocably constitute and appoint __________________ attorney to transfer said
stock on the books of the Corporation with full power of substitution in the
premises.
Dated: _______________________________
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-----------------------------------
Paul M. Burrell, President
SEE RESTRICTIVE LEGEND ON REVERSE
NUMBER INCORPORATED UNDER THE LAWS SHARES
OF THE STATE OF FLORIDA
18 ****100****
EMPLOYEES INSURANCE SERVICES, INC.
10,000 SHARES OF COMMON STOCK, WITHOUT NOMINAL OR PAR VALUE
THIS CERTIFIES THAT OUTSOURCE INTERNATIONAL, INC. is the registered holder of
****ONE HUNDRED (100)**** Shares
OF THE COMMON STOCK, FULLY-PAID AND NONASSESSABLE
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 21 day of February A.D. 1997
/s/ ROBERT LEFERT /s/ PAUL BURRELL
---------------------------------- ------------------------------------
Secretary President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ENCUMBERED IN ANY MANNER ABSENT
EITHER REGISTRATION UNDER THE ACT AND UNDER EVERY APPLICABLE STATE SECURITIES
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________________ 19____
In presence of _______________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
STOCK POWER
FOR VALUE RECEIVED, OutSource International, Inc., hereby sells,
assigns and transfers unto _____________________, One Hundred (100) shares of
the Common Stock, no par value per share, of EMPLOYEES INSURANCE SERVICES, INC.,
a Florida corporation (the "Corporation"), standing in the name of the
undersigned on the books of the Corporation, represented by Certificate No. 18,
and does hereby irrevocably constitute and appoint __________________ attorney
to transfer said stock on the books of the Corporation with full power of
substitution in the premises.
Dated: _______________________________
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-----------------------------------
Paul M. Burrell, President
SEE RESTRICTIVE LEGEND ON REVERSE
NUMBER INCORPORATED UNDER THE LAWS SHARES
OF THE STATE OF FLORIDA
41 ****100****
SYNADYNE V, INC.
TOTAL AUTHORIZED ISSUE
10,000 SHARES WITHOUT PAR VALUE
THIS CERTIFIES THAT OUTSOURCE INTERNATIONAL, INC. is the registered holder of
****ONE HUNDRED (100)**** Shares
of the Common Stock of the Corporation, fully-paid and nonassessable and
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 21 day of February A.D. 1997
/s/ /s/ ROBERT LEFERT /s/ PAUL BURRELL
---------------------------------- ------------------------------------
Assistant Secretary Vice President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ENCUMBERED IN ANY MANNER ABSENT
EITHER REGISTRATION UNDER THE ACT AND UNDER EVERY APPLICABLE STATE SECURITIES
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________________ 19____
In presence of _______________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
STOCK POWER
FOR VALUE RECEIVED, OutSource International, Inc., hereby sells,
assigns and transfers unto _____________________, One Hundred (100) shares of
the Common Stock, no par value per share, of SYNADYNE IV, INC., a Florida
corporation (the "Corporation"), standing in the name of the undersigned on the
books of the Corporation, represented by Certificate No. 41, and does hereby
irrevocably constitute and appoint __________________ attorney to transfer said
stock on the books of the Corporation with full power of substitution in the
premises.
Dated: _______________________________
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-----------------------------------
Paul M. Burrell, President
SEE RESTRICTIVE LEGEND ON REVERSE
NUMBER INCORPORATED UNDER THE LAWS SHARES
OF THE STATE OF FLORIDA
17 **100.00**
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AUTHORIZED CAPITAL STOCK
10,000 SHARES OF COMMON STOCK, PAR VALUE $.01
THIS CERTIFIES THAT OUTSOURCE INTERNATIONAL, INC. is the registered holder of
****ONE HUNDRED (100)**** Shares
of the common stock, fully-paid and nonassessable
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 21 day of February A.D. 1997
/s/ ROBERT LEFERT /s/ PAUL BURRELL
---------------------------------- ------------------------------------
Secretary President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ENCUMBERED IN ANY MANNER ABSENT
EITHER REGISTRATION UNDER THE ACT AND UNDER EVERY APPLICABLE STATE SECURITIES
LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
REGISTRATION UNDER THOSE LAWS IS NOT REQUIRED.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated ______________________ 19____
In presence of _______________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
STOCK POWER
FOR VALUE RECEIVED, OutSource International, Inc., hereby sells,
assigns and transfers unto _____________________, One Hundred (100) shares of
the Common Stock, par value $.01 per share, of OUTSOURCE INTERNATIONAL OF
AMERICA, INC., a Florida corporation (the "Corporation"), standing in the name
of the undersigned on the books of the Corporation, represented by Certificate
No. 17, and does hereby irrevocably constitute and appoint __________________
attorney to transfer said stock on the books of the Corporation with full power
of substitution in the premises.
Dated: _______________________________
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
-----------------------------------
Paul M. Burrell, President
EXHIBIT 10.21
OI SECURITY AGREEMENT
THIS OI SECURITY AGREEMENT, dated as of February 21, 1997, made by
OUTSOURCE INTERNATIONAL, INC., a Florida corporation ("OI"), in favor of BANK OF
BOSTON CONNECTICUT, a bank organized under the laws of the state of Connecticut,
as agent (the "Agent") for the benefit of the Agent and the ratable benefit of
the banks and financial institutions (the "Banks") that from time to time are
parties to the Credit Agreement (as hereinafter defined).
1. DEFINITIONS
"ACCOUNT DEBTOR" means a Person who is obligated on a Receivable.
"ACCOUNTS RECEIVABLE COLLECTION ACCOUNT" means a commercial Deposit
Account maintained by OI with the Agent, without liability by the Agent to pay
interest thereon, from which account the Agent shall have the exclusive right to
withdraw funds until all Obligations are paid, performed, and observed in full.
"AFFILIATE"shall have the meaning ascribed to it in the Credit
Agreement.
"AGENT" shall have the meaning ascribed to it in the Credit Agreement.
"AGREEMENT" means this Agreement, including all Schedules hereto, and
all amendments, modifications and supplements hereto and thereto and
restatements hereof and thereof.
"AGREEMENT DATE" means the date on which this Agreement is dated.
"BENEFIT PLAN" means an employee benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which a Person or
any Commonly Controlled Entity is, or within the immediately preceding 6 years
was, an "employer" as defined in Section 3(5) of ERISA, including such plans as
may be established after the Agreement Date.
"CASH SECURITY" means all cash, Instruments, Deposit Accounts, and
other cash equivalents, whether matured or unmatured, whether collected or in
the process of collection, upon which OI presently has or may hereafter have any
claim (other than items which are held in trust by OI for a third party), that
are presently or may hereafter be existing or maintained with, issued by, drawn
upon, or in the possession of the Agent and/or the Banks, or which the Agent
and/or any Bank is entitled to retain or otherwise possess as collateral
pursuant to the provisions of this Agreement or any of the Loan Documents.
"CHATTEL PAPER" shall mean, with respect to the Collateral, (a) any
chattel paper, and (b) any writing or writings which evidence both a monetary
obligation and a security interest in or a lease of specific Goods. If a
transaction relating to the Collateral is evidenced both by such an
agreement for security or a lease and by an Instrument or a series of
Instruments, the group of writings taken together constitutes Chattel Paper.
"CODE" shall have the meaning ascribed to it in the Credit Agreement.
"COLLATERAL" means and includes all of OI's right, title and interest
in and to each of the following, wherever located and whether now or hereafter
existing or now owned or hereafter acquired or arising:
(a) all Receivables,
(b) all Inventory,
(c) all Equipment,
(d) all Contract Rights,
(e) all General Intangibles,
(f) all Deposit Accounts,
(g) all Cash Security,
(h) all mortgages, deeds to secure debt and deeds of trust on real or
personal property, guaranties, leases, security agreements and
other agreements and property which secure or relate to any
Receivable or other Collateral or are acquired for the purpose of
securing and enforcing any item thereof,
(i) all documents of title, policies and certificates of insurance,
securities, Chattel Paper and other Documents and Instruments
evidencing or pertaining to any and all items of Collateral,
(j) all files, correspondence, computer programs, tapes, disks and
related data processing software which contain information
identifying or pertaining to any of the Collateral or any Account
Debtor or showing the amounts thereof or payments thereon or
otherwise necessary or helpful in the realization thereon or the
collection thereof,
(k) any and all products and cash and non-cash Proceeds of the
foregoing (including, but not limited to, any claims to any items
referred to in this definition and any claims against third parties
for loss of, damage to or destruction of any or all of the
Collateral or for Proceeds payable under or unearned premiums with
respect to policies of insurance) in whatever form, including, but
not limited to, cash,
2
negotiable instruments and other instruments for the payment of
money, Chattel Paper, security agreements and other documents.
"COMMONLY CONTROLLED ENTITY" shall have the meaning ascribed to it in
the Credit Agreement.
"CONTRACT RIGHTS" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising rights under
contracts not yet earned by performance and not evidenced by an instrument or
chattel paper, to the extent that the same may lawfully be assigned.
"CREDIT AGREEMENT" means the Credit Agreement dated of even date
herewith executed by and among OI, the Agent and the Banks, as the same may
hereafter be amended, modified, supplemented or restated from time to time
"DEFAULT" shall have the meaning ascribed to it in the Credit
Agreement.
"DEPOSIT ACCOUNT" means (a) any deposit account, (b) any demand, time,
savings, passbook, or a similar account maintained with a bank, savings and loan
association, credit union, or similar organization, other than an account
evidenced by a certificate of deposit that is an instrument under the UCC.
"DOCUMENT" shall mean, with respect to the Collateral, (a) any
document, (b) any document of title, including a bill of lading, dock warrant,
dock receipt, warehouse receipt, or order for the delivery of Goods, and any
other document which in the regular course of business or financing is treated
as adequately evidencing that the Person in possession of it is entitled to
receive, hold, and dispose of the document and the Goods it covers, and (c) any
receipt covering Goods stored under a statute requiring a bond against
withdrawal or requiring a license for the issuance of receipts in the nature of
warehouse receipts even though issued by a Person who is the owner of the Goods
and is not a warehouseman.
"ERISA" shall have the meaning ascribed to it in the Credit Agreement.
"EQUIPMENT" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising machinery, apparatus,
equipment, motor vehicles, tractors, trailers, rolling stock, fittings, fixtures
and other tangible personal property (other than Inventory) of every kind and
description used in such Person's business operations or owned by such Person or
in which such Person has an interest and all parts, accessories and special
tools and all increases and accessions thereto and substitutions and
replacements therefor.
"EVENT OF DEFAULT" shall have the meaning ascribed to it in the Credit
Agreement.
"FINANCING STATEMENTS" means the Uniform Commercial Code financing
statements executed and delivered by OI to the Agent, naming the Agent (for the
benefit of the Agent and the
3
ratable benefit of the Banks that from time to time are parties to the Credit
Agreement) as secured party and OI as debtor, in connection with this Agreement.
"FRANCHISEE" means a Person providing temporary personnel and related
services under a LABOR WORLD(R) or OFFICE OURS(R) franchise from OutSource
Franchising, Inc.
"FRANCHISEE FUNDING RECEIVABLES" means and includes, as to OI, all of
OI's now owned or existing and future acquired or arising rights to payment from
Franchisees arising from OI's providing financing of Franchisees' payroll,
payroll tax and other obligations (whether classified under the UCC as accounts,
contract rights, chattel paper, general intangibles or otherwise), and all cash
and non-cash Proceeds thereof.
"GENERAL INTANGIBLES" means, as to any Person, all of such Person's
then owned or existing and future acquired or arising general intangibles,
choses in action and causes of action and all other intangible personal property
of such Person of every kind and nature (other than Receivables), including,
without limitation, Intellectual Property, corporate or other business records,
inventions, designs, blueprints, plans, specifications, trade secrets, goodwill,
computer software, customer lists, registrations, licenses, franchises, tax
refund claims, reversions or any rights thereto and any other amounts payable to
such Person from any Benefit Plan, Multiemployer Plan or other employee benefit
plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and Proceeds thereof, property,
casualty or any similar type of insurance, including errors and omissions
insurance, and any Proceeds thereof, Proceeds of insurance covering the lives of
key employees on which said Person is beneficiary and any letter of credit,
guarantee, claims, security interest or other security held by or granted to
such Person to secure payment by an Account Debtor of any of the Receivables.
"GOODS" means (a) any goods, and (b) all things which are movable at
the time the security interest granted under this Agreement attaches or which
are fixtures but does not include money, Instruments, Documents, Receivables,
Chattel Paper and Contract Rights.
"INSTRUMENT" means:
(a) any instrument relating to or evidencing the Collateral,
(b) any negotiable or nonnegotiable instrument (including, without
limitation, drafts, checks, acceptances, certificates of deposit,
and notes) relating to or evidencing the Collateral, and
(c) any other writing relating to or evidencing the Collateral which:
(1) evidences a right to the payment of money,
(2) is not itself a security agreement or lease, and
4
is of a type which in the ordinary course of business is
transferred by delivery with any necessary endorsement or
assignment.
"INTELLECTUAL PROPERTY" means, as to any Person, all of such Person's
then owned existing and future acquired or arising patents, patent rights,
copyrights, works which are the subject of copyrights, trademarks, service
marks, trade names, trade styles, patent, trademark and service mark
applications, and all licenses and rights related to any of the foregoing and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations and continuations-in-part of any of the foregoing and
all rights to sue for past, present and future infringements of any of the
foregoing.
"INVENTORY" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising (a) Goods intended for
sale or lease or for display or demonstration or furnished or to be furnished
under contracts of service, (b) all Goods that are work in process, (c) all
Goods that are raw materials and other materials and supplies of every nature
and description used or which might be used in connection with the manufacture,
packing, shipping, advertising, selling, leasing or furnishing of goods or
otherwise used or consumed in the conduct of business, (d) documents evidencing
and general intangibles relating to any of the foregoing and (e) all substitutes
and replacements for, and parts, accessories, additions, attachments, or
accessions to (a) through (d) above.
"LIEN"shall have the meaning ascribed to it in the Credit Agreement.
"LOAN DOCUMENTS" shall have the meaning ascribed to it in the Credit
Agreement.
"LOCATION" means the location of:
(a) OI's place of business, if there is only one such place of
business, or
(b) if there is more than one place of business, the place (1) from
which OI manages the main part of its business operations, and (2)
where Persons dealing with OI would normally look for credit
information.
"MATERIAL ADVERSE EFFECT" shall have the meaning ascribed to it in the
Credit Agreement.
"MULTIEMPLOYER PLAN" shall have the meaning ascribed to it in the
Credit Agreement.
"OBLIGATIONS" means, at any time, all obligations and undertakings of
OI under and in respect of the Credit Agreement, including, without limitation,
OI's obligations and undertakings with respect to the payment of the principal
of, and interest on, each Revolving Credit Note, all of OI's Reimbursement
Obligations, any and all Related Expenses incurred by the Agent and all other
amounts payable, and all other indebtedness owed, by OI under each of the Loan
Documents.
"OI" shall have the meaning ascribed to it in the Credit Agreement.
5
"PBGC" shall have the meaning ascribed to it in the Credit Agreement.
"PERSON" shall have the meaning ascribed to it in the Credit Agreement.
"PROCEEDS" means, with respect to the Collateral, (a) any proceeds of
the Collateral, and (b) whatever is received upon the sale, exchange,
collection, or other disposition of Collateral or proceeds, whether cash or
non-cash. Cash Proceeds include, without limitation, moneys, checks, and Deposit
Accounts. Proceeds includes, without limitation, any insurance payable by reason
of loss or damage to the Collateral, and any return or unearned premium upon any
cancellation of insurance. Except as expressly authorized in this Agreement, the
Agent's and the Banks' right to Proceeds specifically set forth herein or
indicated in any financing statement shall never constitute an express or
implied authorization on the part of the Agent or the Banks to OI's sale,
exchange, collection, or other disposition of any or all of the Collateral.
"RECEIVABLES" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising (a) rights to the
payment of money or other forms of consideration of any kind (whether classified
under the UCC as accounts, contract rights, chattel paper, general intangibles
or otherwise) including, but not limited to, accounts receivable, Royalty
Receivables, Franchisee Funding Receivables, letters of credit and the right to
receive payment thereunder, chattel paper, tax refunds, insurance proceeds,
Contract Rights, notes, drafts, instruments, documents, acceptances and all
other debts, obligations and liabilities in whatever form from any Person and
guaranties, security and Liens securing payment thereof, (b) Goods and other
property, whether now owned or hereafter acquired, and whether sold, delivered,
undelivered, in transit or returned, which may be represented by, or the sale or
lease of which may have given rise to, any such right to payment or other debt,
obligation or liability, and (c) cash and non-cash Proceeds of any of the
foregoing.
"RELATED EXPENSES" means any and all costs, liabilities, and expenses
(including, without limitation, losses, damages, penalties, claims, actions,
reasonable attorneys' fees, legal expenses, judgments, suits, and disbursements)
incurred by, imposed upon, or asserted against the Agent (other than costs,
liabilities and expenses incurred by the Agent as a result of gross negligence
or willful misconduct by the Agent) in any attempt by the Agent:
(a) to obtain, preserve, perfect, or enforce the security interest
evidenced by (i) this Agreement, or (ii) any other pledge
agreement, mortgage deed, hypothecation agreement, guaranty,
security agreement, assignment, or security instrument executed or
given by OI to or in favor of the Agent and the Banks,
(b) to obtain payment, performance, and observance of any and all of
the Obligations,
(c) to maintain, insure, collect, preserve, or upon any Event of
Default, repossess and dispose of any of the Collateral, or
6
(d) incidental or related to (a) through (c) above, including, without
limitation, interest thereupon from the date incurred, imposed, or
asserted until paid at the rate payable upon each Revolving Credit
Note, but in no event greater than the highest rate permitted by
law.
"REVOLVING CREDIT NOTE" means the Revolving Credit Note as defined in
the Credit Agreement, including any partial or total amendment, renewal,
restatement, extension, or substitution of or for such Revolving Credit Note.
"ROYALTY RECEIVABLES" means and includes, as to OI, any indebtedness
owed to OI and any right of OI to payment or performance from any other Person
(whether such indebtedness or right is now existing or hereafter created and
whether or not yet earned by any performance by OI and regardless of how such
indebtedness or right might be evidenced or documented), for or in connection
with the granting or authorizing by OI of any right, permission or license to
use or continue using any franchise or any tradename, trademark, servicemark,
copyrighted or otherwise protected material, or other similar rights held wholly
or partly by OI, including, without limitation, any right, permission or license
to use or continue using goods marked with any such name or mark or embodying
any such copyrighted or otherwise protected material, and including all
"accounts," "general intangibles," "instruments," "security," "promissory
notes," "documents," and "chattel paper" (as such terms are defined in the
Connecticut Uniform Commercial Code) evidencing, embodying, or derived from any
of the foregoing, and all cash or non-cash Proceeds thereof.
"SUBSIDIARY" shall have the meaning ascribed to it in the Credit
Agreement.
"TRADEMARK ASSIGNMENT" means the Trademark Security Agreement dated of
even date herewith among OI, OutSource Franchising, Inc., and the Agent, with
respect to certain trademarks, trademark applications and related property owned
by OI and OutSource Franchising, Inc., as the same may hereafter be amended,
modified, supplemented or restated from time to time.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Connecticut. The terms "accounts," "chattel paper," "documents,"
"equipment," "instruments," "general intangibles" and "inventory," as and when
used (without being capitalized) in this Agreement shall have the meanings given
those terms in the UCC.
2. SECURITY INTEREST IN COLLATERAL
In consideration of and as security for the full and complete payment,
performance, and observance of all Obligations, OI hereby pledges and assigns
all of the Collateral to the Agent (for the ratable benefit of the Agent and the
Banks) and grants to the Agent (for the ratable benefit of the Agent and the
Banks) a continuing security interest in, and a continuing Lien upon, all of the
Collateral, and any and all property of OI now or hereafter in the possession of
or pledged or assigned to the Agent, and all products, replacements and Proceeds
of, and accessions and additions to, any of the foregoing.
7
3. WARRANTIES
OI represents and warrants to the Agent and the Banks (which
representations and warranties shall survive the execution of the Credit
Agreement, the delivery of each Revolving Credit Note, and the extension of
credit) that:
(a) OI is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
has the power and authority to own it properties and to carry on
its business as now being and hereafter proposed to be conducted
and is duly qualified and authorized to do business in each
jurisdiction in which failure to be so qualified and authorized
would have a Material Adverse Effect and is subject to taxation as
a C Corporation under the Code;
(b) the execution, delivery, and performance hereof are within OI's
corporate powers, have been duly authorized, and are not in
contravention of law or the terms of OI's articles or certificate
of incorporation, by-laws, or regulations, or of any indenture,
agreement, or undertaking to which OI is party or by which it is or
may be bound;
(c) except for any security interest granted to or in favor of the
Agent and the Banks and except for any security interest permitted
by the terms of the Credit Agreement, OI is, and as to Collateral
to be acquired after the date hereof will be, the owner of the
Collateral free from any claim, lien, encumbrance, or security
interest of any type, and OI agrees that it will defend, at its
sole expense, the Collateral against all other claims and demands
of all Persons at any time claiming the same or any interest
therein;
(d) the office where OI keeps all of its records pertaining to its
Receivables is located at 1144 East Newport Center Drive, Deerfield
Beach, Florida 33442;
(e) subject to any limitation stated herein or in connection herewith,
all information furnished to the Agent concerning OI or the
Collateral, is or will be at the time such information is
furnished, accurate and correct in all material respects and
complete insofar as is necessary to give the Agent true and
accurate knowledge of the subject matter;
(f) OI is the lawful owner of and has full and unqualified right to
transfer a security interest in all of the Collateral to the Agent.
Such Collateral is not, and will not, so long as OI has any
Obligations to the Agent, be subject to any financing statement,
encumbrance, claim, lien, or security interest of any type except
any granted to or in favor of the Agent and except as permitted by
the terms of the Credit Agreement;
(g) Each Benefit Plan is in substantial compliance with ERISA, and
neither OI nor any Commonly Controlled Entity has received any
notice asserting that a Benefit Plan is not in compliance with
ERISA. No material liability to the PBGC or to a
8
Multiemployer Plan has been, or is expected by OI to be, incurred
by OI or any Commonly Controlled Entity;
(h) OI is solvent, having assets of a fair value which exceed the
amount required to pay its debts (including contingent,
subordinated, unmatured and unliquidated liabilities) as they
become absolute and matured, and OI is able to and anticipates that
it will be able to meet its debts as they mature and has adequate
capital to conduct the business in which it is or proposes to be
engaged;
(i) During the one-year period preceding the Agreement Date, OI has not
been known as or used any corporate or fictitious name other than
the corporate name of OI on the Agreement Date, except for those
listed in Schedule 3.1, attached hereto. All trade names or styles
under which OI creates Receivables, or to which instruments in
payment of Receivables are made payable, are listed in Schedule
3.2, attached hereto;
(j) OI's principal place of business, chief executive office and other
places of business are located at the addresses set forth on
Schedule 3.3, attached hereto. The location of OI's Equipment is
also indicated on Schedule 3.3. OI's chief executive office, its
other places of business, and the location of its Inventory and
Equipment will be and remain located only at the foregoing
location(s) unless relocated in compliance with Section 4(c) below;
(k) OI has duly executed and delivered the Trademark Assignment to the
Agent;
(l) OI at the present time maintains no inventory at any Location; and
(m) Except for OutSource Franchising, Inc., neither OI nor any
Subsidiary of OI grant franchises or have done so in the past. In
the case of OutSource Franchising, Inc., LABOR WORLD(R) and OFFICE
OURS(R) are the only trademarks that are or have been licensed for
use by franchisees.
4. COVENANTS
OI undertakes, covenants, and agrees that, until the full and complete
payment, performance, and observance of all Obligations, OI:
(a) shall provide the Agent with at least thirty (30) days prior
written notification of:
(1) any change in any location where OI's Inventory or Equipment is
maintained, and any new locations where OI's Inventory or
Equipment is to be maintained,
(2) any change in the location of the office where OI's records
pertaining to its Receivables are kept,
9
(3) the location of any new places of business and the changing or
closing of any of its existing places of business,
(4) any change in the location of OI's chief executive office,
(5) any change in OI's name, and
(6) any change in OI's Location;
PROVIDED, HOWEVER, that anything herein to the contrary
notwithstanding, (A) with respect to location openings and
closings, OI may satisfy the requirement of this subsection with
respect to such locations, by submitting to the Agent, on a
quarterly basis, a list of all locations opened and closed, and (B)
with respect to moving either Collateral or Equipment from location
to location, no notice need be provided pursuant to this subsection
so long as either (i) OI, or a Subsidiary, as the case may be,
executes and delivers to the Agent a UCC financing statement
appropriate for filing to perfect the Agent's security interest in
the Collateral in its new location, or (ii) the Agent has
previously filed a UCC financing statement which perfects the
Agent's security interest in the Collateral in its new location.
(b) shall promptly pay and discharge before they become delinquent, all
taxes, assessments, and governmental charges of every kind and
nature that have been lawfully levied, assessed, or imposed upon OI
or its properties including the use thereof, or any of the
Obligations, which, if unpaid, would become Liens against its
assets, including, without limitation, all sums due and owing any
taxing authority for income and other taxes withheld from the wages
and salaries of its employees, except to the extent OI is
reasonably contesting in good faith any such tax, assessment, or
charge with an adequate reserve provided therefor;
(c) shall at all reasonable times allow the Agent by or through any of
its officers, agents, employees, attorneys, or accountants to:
(1) examine, inspect, and make extracts from OI's books and other
records,
(2) examine and inspect OI's Collateral wherever located, and
(3) arrange for verification of OI's Receivables, under reasonable
procedures;
(d) shall promptly deliver to the Agent upon reasonable request:
(1) additional information and statements with respect to the
Collateral,
(2) OI's Instruments, Chattel Paper, Documents, and any other
writings relating to or evidencing any of OI's Receivables
(including, without limitation, computer printouts or
typewritten reports listing the current mailing address of all
present Account Debtors), and
(3) any other writings and information the Agent may reasonably
request;
(e) shall upon request of the Agent promptly take such action and
promptly make, execute, and deliver all such additional and further
items, deeds, assurances, and
10
instruments as the Agent may reasonably require, including, without
limitation, Financing Statements, so as to completely vest in,
perfect and ensure to the Agent its rights hereunder and in and to
the Collateral, including, without limitation, such actions or
items that may be appropriate due to changes in applicable laws
after the date hereof, to evidence or to perfect the security
interests granted to the Agent hereunder;
(f) hereby authorizes the Agent or the Agent's designated agent (but
without obligation by the Agent to do so) to incur Related Expenses
(whether prior to, upon, or subsequent to any Event of Default),
and OI shall promptly repay, reimburse, and indemnify the Agent for
any and all Related Expenses. As long as no Default or Event of
Default exists, the Agent agrees to give OI periodic reports of the
Related Expenses subject to reimbursement under this subsection;
(g) shall not, without the prior written consent of the Agent, pledge,
grant a security interest, or otherwise voluntarily place any Lien
upon any Collateral except any security interest granted to or in
favor of the Agent and the Banks and except as permitted by the
terms of the Credit Agreement; and
(h) shall not use any Collateral in violation of any applicable
statute, ordinance, or regulation.
5. COLLECTION AND RECEIPT OF PROCEEDS
(a) Upon the occurrence and continuance of any Event of Default and
after written notification thereof to OI, the Agent or the Agent's
designated agent shall have the right and power (as OI's hereby
constituted and appointed attorney-in-fact), which, being coupled
with an interest, shall remain irrevocable until all Obligations
are fully and completely paid, performed, and observed, at any time
to:
(1) notify the Account Debtors on any or all of OI's Receivables of
the Agent's security interest in and assignment of those
Receivables upon which the respective Account Debtors are
liable, and to request from such Account Debtors, in the
Agent's name or in OI's name, information concerning the
Receivables and amounts owing thereon,
(2) notify and require the Account Debtors on any or all of OI's
Receivables to make payment upon such Receivables directly to
the Agent,
(3) receive, retain, acquire, take, endorse, assign, deliver,
accept, and deposit, in the Agent's name or OI's name, any and
all of OI's cash, Instruments, Chattel Paper, Documents, cash
and non-cash Proceeds, collections of Receivables, and any
other such writings relating to any of the Collateral
11
theretofore collected, received or retained by OI pursuant to
Subsection 5(b) below or thereafter collected, received, or
retained by OI,
(4) exercise any and all of the rights granted the Agent in
Subsections 5(c) and 5(d) below, and
(5) take such other action with respect to any or all of the
Collateral, in such manner and at such times, as the Agent may
deem advisable, including, without limitation, the following:
collection, legal proceedings, compromises, settlements,
adjustments, extensions, postponements, exchanges, releases,
and sales.
(b) Except as otherwise provided in Subsections 5(a), 5(c), or 5(d),
upon the occurrence and continuance of an Event of Default, OI is
authorized (1) to collect and enforce, by all lawful means, all of
OI's Receivables, and (2) to receive and retain, by all lawful
means, any and all Proceeds. OI shall hold, as trustee upon an
express trust for the Agent as beneficiary thereof, all such lawful
collections of Receivables and all such Proceeds received by OI.
Any costs, liabilities, or expenses incurred by OI in the
collection or enforcement of such Receivables, and in the receipt
of Proceeds shall be borne solely by OI. OI as trustee shall not
commingle such collections of Receivables and such Proceeds with
any other property not held in trust for the Agent; any property
held or commingled with such collections of Receivables such
Proceeds is hereby conclusively established between OI and the
Agent to be collections of Receivables and Proceeds.
(c) With respect to OI's Instruments, Documents, and Chattel Paper:
(1) Upon the Agent's written request, OI shall immediately deliver
or cause to be delivered to the Agent all of OI's Instruments,
Chattel Paper, and Documents, appropriately endorsed either, at
the Agent's option, (i) to the Agent's order, without
limitation or qualification, or (ii) for deposit in the
Accounts Receivable Collection Account. The Agent, or the
Agent's designated agent, is hereby constituted and appointed
OI's attorney-in-fact with authority and power to so endorse
any and all Instruments, Documents, and Chattel Paper upon OI's
failure to do so. Such authority and power, being coupled with
an interest, shall be (i) irrevocable until all Obligations are
paid, performed, and observed in full, (ii) exercisable by the
Agent at any time and without any request upon OI by the Agent
to so endorse, and (iii) exercisable in the Agent's name or
OI's name;
(2) OI hereby waives presentment, demand, notice of dishonor,
protest, notice of protest, and any and all other similar
notices with respect thereto, regardless of the form of any
endorsement thereof;
12
(3) The Agent shall not be bound or obligated to take any action to
preserve any rights therein against any prior parties thereto.
(d) Upon the occurrence and continuance of any Event of Default and
after the Agent's written notification thereof to OI: (i) the
lawful collection and enforcement of all of OI's Receivables and
the lawful receipt and retention by OI of all Proceeds shall be as
agent for the Agent and the Banks; (ii) all such collections and
Proceeds shall be remitted daily by OI to the Agent in the form in
which they are received by OI, either by mailing or by delivering
such collections and Proceeds to the Agent, appropriately endorsed
for deposit in the Accounts Receivable Collections Account. The
Agent may, in its sole discretion, at any time and from time to
time, apply all or any portion of the collected balance in the
Accounts Receivable Collections Account allowing three (3) days for
collection and clearance of remittances as a credit against OI's
outstanding Obligations. If any remittance shall be dishonored, or
if, upon final payment, any claim with respect thereto shall be
made against the Agent on its warranties of collection, the Agent
may charge the amount of such item against the Accounts Receivable
Collections Account or any other Deposit Account maintained by OI
with the Agent, and, in any event, retain same and OI's interest
therein as additional security for the Obligations. The Agent may,
in its sole discretion, at any time and from time to time, release
funds from the Accounts Receivable Collections Account to OI for
use in OI's business. The balance in the Accounts Receivable
Collections Account may be withdrawn by OI upon termination of this
Agreement in accordance with Subsection 9(d). Upon the occurrence
and continuance of any Event of Default and after the Agent's
written request, OI will cause all remittances representing all
collections and all Proceeds to be mailed to a lock box in
Hartford, Connecticut (or such other location designated by the
Agent) to which the Agent shall have access for the processing of
such items in accordance with the provisions, terms, and conditions
of the Agent's customary lock box agreement.
6. INSURANCE
OI shall at all times maintain insurance upon its Collateral through
insurance policies in such form, written by such companies, in such amounts, for
such period, and against such risks as may be acceptable to the Agent, with
provisions satisfactory to the Agent for payment of all losses thereunder to the
Agent and OI as their interests may appear (including a loss payable endorsement
in favor of the Agent), and, if required by the Agent, OI will deposit the
policies with the Agent. Any such policies of insurance shall provide for no
less than ten (10) days prior written cancellation notice to the Agent. Any sums
exceeding $100,000.00 received by the Agent in payment of insurance losses,
returns, or unearned premiums under the policies, and, during the existence of a
Default or Event of Default, all sums, may, at the option of the Agent, be
applied upon any Obligation whether or not the same is then due and payable, or
may be delivered to OI for the purpose of replacing, repairing, or restoring its
Inventory. OI hereby assigns to the Agent any return
13
of unearned premiums which may be due upon cancellation of any such policies for
any reason and directs the insurers to pay Agent any amount so due. The Agent,
or the Agent's designated agent, is hereby constituted and appointed OI's
attorney-in-fact (either in the name of OI or in the name of the Agent) to make
adjustments of all insurance losses, sign all applications, receipts, releases,
and other papers necessary for the collection of any such loss, and any return
of unearned premium, execute proof of loss, make settlements, and endorse and
collect all Instruments payable to OI or issued in connection therewith.
Notwithstanding any action by the Agent hereunder, any and all risk of loss or
damage to OI's Collateral to the extent of any and all deficiencies in the
effective insurance coverage thereof is hereby expressly assumed by OI.
7. EVENT OF DEFAULT
Upon the occurrence of any Event of Default as such term is defined in
the Credit Agreement, any and all Obligations shall, at the option of the Agent
and notwithstanding any period of time permitted or allowed by any writing
evidencing an Obligation, become immediately due and payable without notice,
demand, protest, or presentment, all of which are hereby expressly waived by OI.
8. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT
Upon the occurrence of any Event of Default and at all times
thereafter, the Agent shall have the rights and remedies of a secured party
under the Connecticut Uniform Commercial Code in addition to the rights and
remedies provided elsewhere within this Agreement or in any other writing
executed by OI. The Agent may require OI to assemble the Collateral and make it
available to the Agent at a reasonably convenient place to be designated by the
Agent. Unless the Collateral is perishable, threatens to decline speedily in
value, or is of a type customarily sold on a recognized market, the Agent will
give OI reasonable notice of the time and place of any public sale of the
Collateral or of the time after which any private sale or other intended
disposition thereof is to be made. The requirement of reasonable notice shall be
met if such notice is mailed (deposited for delivery, postage prepaid, by U.S.
mail) to either, at the Agent's option, (1) OI's Location (as modified by any
change therein which OI has supplied in writing to the Agent) or (2) OI's
address at which the Agent customarily communicates with OI, at least ten (10)
days before the time of the public sale or the time after which any private sale
or other intended disposition thereof is to be made. At any such public or
private sale, the Agent may purchase the Collateral. After deduction for the
Agent's Related Expenses, the residue of any such sale shall be applied in
satisfaction of the Obligations in such order of preference as the Agent may
determine. Any excess, to the extent permitted by law, shall be paid to OI, and
OI shall remain liable for any deficiency.
9. GENERAL
(a) If any provision, term, or portion, of this Agreement, (including,
without limitation, (1) any indebtedness, obligation, liability,
contract, agreement, indenture, warranty, covenant, guaranty,
representation, or condition of this Agreement made, assumed, or
entered into, (2) any act or action taken under this Agreement, or
(3) any
14
application of this Agreement) is for any reason held to be illegal
or invalid, such illegality or invalidity shall not affect any
other such provision, term, or portion of this Agreement, each of
which shall be construed and enforced as if such illegal or invalid
provision, term, or portion were not contained in this Agreement.
Any illegality or invalidity of any application of this Agreement
shall not affect any legal and valid application of this Agreement,
and each provision, term, and portion of this Agreement shall be
deemed to be effective, operative, made, entered into, or taken in
the manner and to the full extent permitted by law.
(b) The Agent shall not be deemed to have waived any of the Agent's
rights hereunder or under any other writing executed by OI unless
such waiver be in writing and signed by the Agent. No delay or
omission on the part of the Agent in exercising any right shall
operate as a waiver of such right or any other right. A waiver on
any one occasion shall not be construed as a bar to or waiver of
any right or remedy on any future occasion. All of the Agent's
rights and remedies, whether evidenced hereby or by any other
writing shall be cumulative and may be exercised singularly or
concurrently. Any written demands, written requests, or written
notices to OI that the Agent may elect to give shall be effective
when deposited for delivery, postage prepaid, by U.S. mail, and
addressed either, at the Agent's option, to (l) OI's Location (as
modified by any change therein which OI has supplied in writing to
the Agent) or (2) OI's address at which the Agent customarily
communicates with OI. If at any time or times, by assignment or
otherwise, the Agent transfers any of the Obligations or any part
of the Collateral to another Person, such transfer shall carry with
it the Agent's powers and rights under this Agreement with respect
to the Obligation or Collateral so transferred and the transferee
shall have said powers and rights, whether or not they are
specifically referred to in the transfer. To the extent that the
Agent retains any of the Obligations or any part of the Collateral,
the Agent will continue to have the rights and powers herein set
forth with respect thereto.
(c) The laws of the State of Connecticut, without regard to principles
of conflict of laws, shall govern the construction of this
Agreement and the rights and duties of the parties hereto. This
Agreement contains the entire agreement between the parties hereto
and no oral agreement shall be binding. OI agrees that the Agent
may make a photocopy of this Agreement in the ordinary course of
business and such photocopy may be used in place of the original of
this Agreement. A carbon, photographic or other reproduction of
this Agreement may be used as a financing statement. This Agreement
shall be binding upon and inure to the benefit of OI and the Agent
and their respective successors and assigns. The rights and powers
herein given to the Agent are in addition to those otherwise
created or existing in the same Collateral by virtue of other
agreements or writings.
(d) OI hereby releases the Agent from and agrees to indemnify and hold
harmless the Agent, and its officers, agents, and employees from
any and all claims of OI or any other Person for damage or loss
caused by any act or acts hereunder or in furtherance
15
hereof whether by omission or commission, and whether based
upon any error of judgment or mistake of law or fact (except
gross negligence or willful misconduct) on the part of the
Agent, or its officers, agents, and employees.
(e) The Agent has the right, in addition to all other rights and
remedies available to it, to set off at any time the unpaid balance
of each Revolving Credit Note and any other Obligations against any
indebtedness owing to OI by the Agent, including, without
limitation, all Cash Security.
(f) OI will cooperate with the Agent in order to fill in all blank
spaces herein, to correct patent errors herein, to complete or
correct the description of the Collateral, and to fill in any
missing date on this Agreement.
10. SUBMISSION TO JURISDICTION; WAIVERS. OI hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Security Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the nonexclusive general jurisdiction of the Courts of the
State of Connecticut, the courts of the United States of America for the
District of Connecticut, and appellate courts from any thereof; and
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead the
same.
OI, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE AGENT AND OI ARISING OUT OF, IN CONNECTION WITH, RELATING
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS AGREEMENT OR ANY NOTE, GUARANTEE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS
RELATED THERETO.
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
OI: OUTSOURCE INTERNATIONAL, INC.,
By: /s/ PAUL BURRELL
---------------------------------
Name: Paul Burrell
Title: President
AGENT: BANK OF BOSTON CONNECTICUT
By: /s/ ROGER J. RODE, JR.
-----------------------------------
Name: Roger J. Rode, Jr.
Title: Director
17
SCHEDULE 3.1
TRADE NAMES
Labor World
Office Ours
Payroll Partners
18
SCHEDULE 3.2
ALL TRADE NAMES OR STYLES UNDER WHICH OI CREATES RECEIVABLES,
OR TO WHICH INSTRUMENTS IN PAYMENT OF RECEIVABLES ARE MADE PAYABLE
Labor World
Office Ours
Payroll Partners
SCHEDULE 3.3
PRINCIPAL PLACE OF BUSINESS OF OI:
1144 East Newport Center Drive
Deerfield Beach, FL 33487
LOCATION OF OI'S CHIEF EXECUTIVE OFFICE:
1144 East Newport Center Drive
Deerfield Beach, FL 33487
LOCATIONS OF OI'S OTHER PLACES OF BUSINESS:
See attached summary of leased locations on Attachment "A".
LOCATION(S) OF OI'S INVENTORY: NONE
LOCATION(S) OF OI'S EQUIPMENT:
Miscellaneous owned equipment, approximately 250,000, at leased
locations in Attachment "A".
EXHIBIT 10.22
SUBSIDIARY SECURITY AGREEMENT
THIS SUBSIDIARY SECURITY AGREEMENT, dated as of February 21, 1997, made
by each of the corporations that are signatories hereto (individually, a
"Subsidiary" and collectively, the "Subsidiaries") in favor of BANK OF BOSTON
CONNECTICUT, a bank organized under the laws of the State of Connecticut, as
agent (the "Agent") for the benefit of the Agent and the ratable benefit of the
banks and financial institutions (the "Banks") that from time to time are
parties to the Credit Agreement (as hereinafter defined).
1. DEFINITIONS
"ACCOUNT DEBTOR" means a Person who is obligated on a Receivable.
"ACCOUNTS RECEIVABLE COLLECTION ACCOUNT" means a commercial Deposit
Account maintained by any Subsidiary with the Agent, without liability by the
Agent to pay interest thereon, from which account the Agent shall have the
exclusive right to withdraw funds until all Obligations are paid, performed, and
observed in full.
"AFFILIATE" shall have the meaning ascribed to it in the Credit
Agreement.
"AGENT" shall have the meaning ascribed to it in the Credit Agreement.
"AGREEMENT" means this Agreement, including all Schedules hereto, and
all amendments, modifications and supplements hereto and thereto and
restatements hereof and thereof.
"AGREEMENT DATE" means the date on which this Agreement is dated.
"BENEFIT PLAN" means an employee benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which a Person or
any Commonly Controlled Entity is, or within the immediately preceding 6 years
was, an "employer" as defined in Section 3(5) of ERISA, including such plans as
may be established after the Agreement Date.
"CASH SECURITY" means all cash, Instruments, Deposit Accounts, and
other cash equivalents, whether matured or unmatured, whether collected or in
the process of collection, upon which each Subsidiary presently has or may
hereafter have any claim (other than items which are held in trust by each
Subsidiary for a third party), that are presently or may hereafter be existing
or maintained with, issued by, drawn upon, or in the possession of the Agent
and/or the Banks, or which the Agent and/or any Bank is entitled to retain or
otherwise possess as collateral pursuant to the provisions of this Agreement or
any of the Loan Documents.
"CHATTEL PAPER" shall mean, with respect to the Collateral, (a) any
chattel paper, and (b) any writing or writings which evidence both a monetary
obligation and a security interest in or a lease of specific Goods. If a
transaction relating to the Collateral is evidenced both by such an agreement
for security or a lease and by an Instrument or a series of Instruments, the
group of writings taken together constitutes Chattel Paper.
"CODE" shall have the meaning ascribed to it in the Credit Agreement.
"COLLATERAL" means and includes all of each Subsidiary's right, title
and interest in and to each of the following, wherever located and whether now
or hereafter existing or now owned or hereafter acquired or arising:
(a) all Receivables,
(b) all Inventory,
(c) all Equipment,
(d) all Contract Rights,
(e) all General Intangibles,
(f) all Deposit Accounts,
(g) all Cash Security,
(h) all mortgages, deeds to secure debt and deeds of trust on real or
personal property, guaranties, leases, security agreements and
other agreements and property which secure or relate to any
Receivable or other Collateral or are acquired for the purpose of
securing and enforcing any item thereof,
(i) all documents of title, policies and certificates of insurance,
securities, Chattel Paper and other Documents and Instruments
evidencing or pertaining to any and all items of Collateral,
(j) all files, correspondence, computer programs, tapes, disks and
related data processing software which contain information
identifying or pertaining to any of the Collateral or any Account
Debtor or showing the amounts thereof or payments thereon or
otherwise necessary or helpful in the realization thereon or the
collection thereof,
2
(k) any and all products and cash and non-cash Proceeds of the
foregoing (including, but not limited to, any claims to any items
referred to in this definition and any claims against third parties
for loss of, damage to or destruction of any or all of the
Collateral or for Proceeds payable under or unearned premiums with
respect to policies of insurance) in whatever form, including, but
not limited to, cash, negotiable instruments and other Instruments
for the payment of money, Chattel Paper, security agreements and
other Documents.
"COMMONLY CONTROLLED ENTITY" shall have the meaning ascribed to it in
the Credit Agreement.
"CONTRACT RIGHTS" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising rights under
contracts not yet earned by performance and not evidenced by an instrument or
chattel paper, to the extent that the same may lawfully be assigned.
"CREDIT AGREEMENT" means the Credit Agreement dated of even date
herewith executed by and among OI, the Agent and the Banks, as the same may
hereafter be amended, modified, supplemented or restated from time to time.
"CSF" shall have the meaning ascribed to it in the Credit Agreement.
"DEFAULT" shall have the meaning ascribed to it in the Credit
Agreement.
"DEPOSIT ACCOUNT" means (a) any deposit account, (b) any demand, time,
savings, passbook, or a similar account maintained with a bank, savings and loan
association, credit union, or similar organization, other than an account
evidenced by a certificate of deposit that is an instrument under the UCC.
"DOCUMENT" shall mean, with respect to the Collateral, (a) any
document, (b) any document of title, including a bill of lading, dock warrant,
dock receipt, warehouse receipt, or order for the delivery of Goods, and any
other document which in the regular course of business or financing is treated
as adequately evidencing that the Person in possession of it is entitled to
receive, hold, and dispose of the document and the Goods it covers, and (c) any
receipt covering Goods stored under a statute requiring a bond against
withdrawal or requiring a license for the issuance of receipts in the nature of
warehouse receipts even though issued by a Person who is the owner of the Goods
and is not a warehouseman.
"ERISA" shall have the meaning ascribed to it in the Credit Agreement.
"EQUIPMENT" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising machinery, apparatus,
equipment, motor vehicles, tractors,
3
trailers, rolling stock, fittings, fixtures and other tangible personal property
(other than Inventory) of every kind and description used in such Person's
business operations or owned by such Person or in which such Person has an
interest and all parts, accessories and special tools and all increases and
accessions thereto and substitutions and replacements therefor.
"EVENT OF DEFAULT" shall have the meaning ascribed to it in the Credit
Agreement.
"FINANCING STATEMENTS" means the Uniform Commercial Code financing
statements executed and delivered by the Subsidiaries to the Agent, naming the
Agent (for the benefit of the Agent and the ratable benefit of the Banks that
from time to time are parties to the Credit Agreement) as secured party and the
Subsidiaries as debtor, in connection with this Agreement.
"FRANCHISEE" means a Person providing temporary personnel and related
services under a LABOR WORLD(R) or OFFICE OURS(C) franchise from OutSource
Franchising, Inc.
"FRANCHISEE FUNDING RECEIVABLES" means and includes, as to any
Subsidiary, all of such Subsidiary's now owned or existing and future acquired
or arising rights to payment from Franchisees arising from such Subsidiary's
providing financing of Franchisees' payroll, payroll tax and other obligations
(whether classified under the UCC as accounts, contract rights, chattel paper,
general intangibles or otherwise), and all cash and non-cash Proceeds thereof.
"GENERAL INTANGIBLES" means, as to any Person, all of such Person's
then owned or existing and future acquired or arising general intangibles,
choses in action and causes of action and all other intangible personal property
of such Person of every kind and nature (other than Receivables), including,
without limitation, Intellectual Property, corporate or other business records,
inventions, designs, blueprints, plans, specifications, trade secrets, goodwill,
computer software, customer lists, registrations, licenses, franchises, tax
refund claims, reversions or any rights thereto and any other amounts payable to
such Person from any Benefit Plan, Multiemployer Plan or other employee benefit
plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and Proceeds thereof, property,
casualty or any similar type of insurance, including errors and omissions
insurance, and any Proceeds thereof, Proceeds of insurance covering the lives of
key employees on which said Person is beneficiary and any letter of credit,
guarantee, claims, security interest or other security held by or granted to
such Person to secure payment by an Account Debtor of any of the Receivables.
"GOODS" means (a) any goods, and (b) all things which are movable at
the time the security interest granted under this Agreement attaches or which
are fixtures but does not include money, Instruments, Documents, Receivables,
Chattel Paper and Contract Rights.
"INSTRUMENT" means:
(a) any instrument relating to or evidencing the Collateral,
4
(b) any negotiable or nonnegotiable instrument (including, without
limitation, drafts, checks, acceptances, certificates of deposit,
and notes) relating to or evidencing the Collateral, and
(c) any other writing relating to or evidencing the Collateral which:
(1) evidences a right to the payment of money,
(2) is not itself a security agreement or lease, and
(3) is of a type which in the ordinary course of business is
transferred by delivery with any necessary endorsement or
assignment.
"INTELLECTUAL PROPERTY" means, as to any Person, all of such Person's
then owned existing and future acquired or arising patents, patent rights,
copyrights, works which are the subject of copyrights, trademarks, service
marks, trade names, trade styles, patent, trademark and service mark
applications, and all licenses and rights related to any of the foregoing and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations and continuations-in-part of any of the foregoing and
all rights to sue for past, present and future infringements of any of the
foregoing.
"INVENTORY" means and includes, as to any Person, all of such Person's
then owned or existing and future acquired or arising (a) Goods intended for
sale or lease or for display or demonstration or furnished or to be furnished
under contracts of service, (b) all Goods that are work in process, (c) all
Goods that are raw materials and other materials and supplies of every nature
and description used or which might be used in connection with the manufacture,
packing, shipping, advertising, selling, leasing or furnishing of goods or
otherwise used or consumed in the conduct of business, (d) documents evidencing
and general intangibles relating to any of the foregoing and (e) all substitutes
and replacements for, and parts, accessories, additions, attachments, or
accessions to (a) through (d) above.
"LIEN"shall have the meaning ascribed to it in the Credit Agreement.
"LOAN DOCUMENTS" shall have the meaning ascribed to it in the Credit
Agreement.
"LOCATION" means, for each Subsidiary, the location of:
(a) the Subsidiary's place of business, if there is only one such
place of business, or
(b) if there is more than one place of business, the place (1) from
which the Subsidiary manages the main part of its business
operations, and (2) where
5
Persons dealing with the Subsidiary would normally
look for credit information.
"MATERIAL ADVERSE EFFECT" shall have the meaning ascribed to it in the
Credit Agreement.
"MULTIEMPLOYER PLAN" shall have the meaning ascribed to it in the
Credit Agreement.
"OBLIGATIONS" means, at any time, all obligations and undertakings of
each Subsidiary under and in respect of the Credit Agreement and the Subsidiary
Guarantee, including, without limitation, each Subsidiary's obligations and
undertakings with respect to the payment of the principal of, and interest on,
each Revolving Credit Note, all of each Subsidiary's Reimbursement Obligations,
all of each Subsidiary's payment obligations pursuant to the Subsidiary
Guarantee, any and all Related Expenses incurred by the Agent and all other
amounts payable, and all other indebtedness owed, by each Subsidiary under each
of the Loan Documents.
"OI" shall have the meaning ascribed to it in the Credit Agreement.
"PBGC" shall have the meaning ascribed to it in the Credit Agreement.
"PERSON" shall have the meaning ascribed to it in the Credit Agreement.
"PROCEEDS" means, with respect to the Collateral, (a) any proceeds of
the Collateral, and (b) whatever is received upon the sale, exchange,
collection, or other disposition of Collateral or Proceeds, whether cash or
non-cash. Cash Proceeds include, without limitation, moneys, checks, and Deposit
Accounts. Proceeds includes, without limitation, any insurance payable by reason
of loss or damage to the Collateral, and any return or unearned premium upon any
cancellation of insurance. Except as expressly authorized in this Agreement, the
Agent's and the Banks' right to Proceeds specifically set forth herein or
indicated in any financing statement shall never constitute an express or
implied authorization on the part of the Agent or the Banks to any Subsidiaries'
sale, exchange, collection, or other disposition of any or all of the
Collateral.
"RECEIVABLES" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising (a) rights to the
payment of money or other forms of consideration of any kind (whether classified
under the UCC as accounts, contract rights, chattel paper, general intangibles
or otherwise) including, but not limited to, accounts receivable, Royalty
Receivables, Franchisee Funding Receivables, letters of credit and the right to
receive payment thereunder, chattel paper, tax refunds, insurance Proceeds,
Contract Rights, notes, drafts, instruments, documents, acceptances and all
other debts, obligations and liabilities in whatever form from any Person and
guaranties, security and Liens securing payment thereof, (b) Goods and other
property, whether now owned or hereafter acquired, and whether sold, delivered,
undelivered, in transit or returned, which may be represented by, or the sale or
lease of which may have given rise
6
to, any such right to payment or other debt, obligation or liability, and (c)
cash and non-cash Proceeds of any of the foregoing.
"RELATED EXPENSES" means any and all costs, liabilities, and expenses
(including, without limitation, losses, damages, penalties, claims, actions,
reasonable attorneys' fees, legal expenses, judgments, suits, and disbursements)
incurred by, imposed upon, or asserted against the Agent (other than costs,
liabilities and expenses incurred by the Agent as a result of gross negligence
or willful misconduct by the Agent) in any attempt by the Agent:
(a) to obtain, preserve, perfect, or enforce the security interest
evidenced by (i) this Agreement, or (ii) any other pledge
agreement, mortgage deed, hypothecation agreement, guaranty,
security agreement, assignment, or security instrument executed or
given by any Subsidiary to or in favor of the Agent and the Banks,
(b) to obtain payment, performance, and observance of any and all of
the Obligations,
(c) to maintain, insure, collect, preserve, or upon any Event of
Default, repossess and dispose of any of the Collateral, or
(d) incidental or related to (a) through (c) above, including, without
limitation, interest thereupon from the date incurred, imposed, or
asserted until paid at the rate payable upon each Revolving Credit
Note, but in no event greater than the highest rate permitted by
law.
"REVOLVING CREDIT NOTE" means the Revolving Credit Note as defined in
the Credit Agreement, including any partial or total amendment, renewal,
restatement, extension, or substitution of or for such Revolving Credit Note.
"ROYALTY RECEIVABLES" means and includes, as to any Subsidiary, any
indebtedness owed to such Subsidiary and any right of such Subsidiary to payment
or performance from any other Person (whether such indebtedness or right is now
existing or hereafter created and whether or not yet earned by any performance
by such Subsidiary and regardless of how such indebtedness or right might be
evidenced or documented), for or in connection with the granting or authorizing
by such Subsidiary of any right, permission or license to use or continue using
any franchise or any tradename, trademark, servicemark, copyrighted or otherwise
protected material, or other similar rights held wholly or partly by such
Subsidiary, including, without limitation, any right, permission or license to
use or continue using goods marked with any such name or mark or embodying any
such copyrighted or otherwise protected material, and including all "accounts,"
"general intangibles," "instruments," "security," "promissory notes,"
"documents," and "chattel paper" (as such terms are defined in the Connecticut
Uniform Commercial Code) evidencing, embodying, or derived from any of the
foregoing, and all cash or non-cash Proceeds thereof.
7
"SUBSIDIARY GUARANTEE" shall mean the Subsidiary Guarantee dated of
even date herewith made by each of the corporations signatory thereto in favor
of Bank of Boston Connecticut, as Agent under the Credit Agreement for the
benefit of the Agent and the ratable benefit of the Banks that from time to time
are parties to the Credit Agreement, as the same may hereafter be amended,
modified, supplemented or restated from time to time.
"TRADEMARK ASSIGNMENT" means the Trademark Security Agreement dated of
even date herewith among OI, OutSource Franchising, Inc., and the Agent, with
respect to certain trademarks, trademark applications and related property owned
by OI and OutSource Franchising, Inc., as the same may hereafter be amended,
modified, supplemented or restated from time to time.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Connecticut. The terms "accounts," "chattel paper," "documents,"
"equipment," "instruments," "general intangibles" and "inventory," as and when
used (without being capitalized) in this Agreement shall have the meanings given
those terms in the UCC.
2. SECURITY INTEREST IN COLLATERAL
In consideration of and as security for the full and complete payment,
performance, and observance of all Obligations, each Subsidiary hereby pledges
and assigns all of the collateral to the Agent (for the ratable benefit of the
Agent and the Banks) and grants to the Agent (for the ratable benefit of the
Agent and the Banks) a continuing security interest in, and continuing Lien
upon, all of the Collateral, and any and all property of the Subsidiary now or
hereafter in the possession of or pledged or assigned to the Agent, and all
products, replacements and Proceeds of, and accessions and additions to, any of
the foregoing.
3. WARRANTIES
Each Subsidiary represents and warrants to the Agent and the Banks
(which representations and warranties shall survive the execution of the Credit
Agreement, the delivery of each Revolving Credit Note, and the extension of
credit) that:
(a) Each Subsidiary is a corporation, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, has the power and authority to own it properties and
to carry on its business as now being and hereafter proposed to be
conducted and is duly qualified and authorized to do business in
each jurisdiction in which failure to be so qualified and
authorized would have a Material Adverse Effect and is subject to
taxation as a C Corporation under the Code;
(b) The execution, delivery, and performance hereof are within each
Subsidiary's corporate powers, have been duly authorized, and are
not in contravention of law or the terms of such Subsidiary's
articles or certificate of incorporation, by-laws, or
8
regulations, or of any indenture, agreement, or undertaking to
which such Subsidiary is party or by which it is or may be bound;
(c) Except for any security interest granted to or in favor of the
Agent and the Banks and except for any security interest permitted
by the terms of the Credit Agreement, each Subsidiary is, and as to
Collateral to be acquired after the date hereof will be, the owner
of the Collateral free from any claim, lien, encumbrance, or
security interest of any type, and each Subsidiary agrees that it
will defend, at its sole expense, the Collateral against all other
claims and demands of all Persons at any time claiming the same or
any interest therein;
(d) The office where each Subsidiary keeps all of its records
pertaining to its Receivables is located at 1144 East Newport
Center Drive, Deerfield Beach, Florida 33442;
(e) Subject to any limitation stated herein or in connection herewith,
all information furnished to the Agent concerning the Subsidiaries
or the Collateral, is or will be at the time such information is
furnished, accurate and correct in all material respects and
complete insofar as is necessary to give the Agent true and
accurate knowledge of the subject matter;
(f) Each Subsidiary is the lawful owner of and has full and unqualified
right to transfer a security interest in all of the Collateral to
the Agent. Such Collateral is not, and will not, so long as each
Subsidiary has any Obligations to the Agent, be subject to any
financing statement, encumbrance, claim, lien, or security interest
of any type except any granted to or in favor of the Agent and
except as permitted by the terms of the Credit Agreement;
(g) Each Benefit Plan is in substantial compliance with ERISA, and
neither any Subsidiary nor any Commonly Controlled Entity has
received any notice asserting that a Benefit Plan is not in
compliance with ERISA. No material liability to the PBGC or to a
Multiemployer Plan has been, or is expected by any Subsidiary to
be, incurred by any Subsidiary or any Commonly Controlled Entity;
(h) Each Subsidiary is solvent, having assets of a fair value which
exceed the amount required to pay its debts (including contingent,
subordinated, unmatured and unliquidated liabilities) as they
become absolute and matured, and each Subsidiary is able to and
anticipates that it will be able to meet its debts as they mature
and has adequate capital to conduct the business in which it is or
proposes to be engaged;
(i) During the one-year period preceding the Agreement Date, no
Subsidiary has been known as or used any corporate or fictitious
name other than the corporate name of
9
such Subsidiary on the Agreement Date, except for those listed
in Schedule 3.1, attached hereto. All trade names or styles
under which the Subsidiaries create Receivables, or to which
instruments in payment of Receivables are made payable, are
listed in Schedule 3.2, attached hereto;
(j) Each Subsidiary's principal place of business, chief executive
office and other places of business are located at the addresses
set forth on Schedule 3.3, attached hereto. The location of each
Subsidiary's Equipment is also indicated on Schedule 3.3. The
Subsidiaries' chief executive offices, their other places of
business, and the location of their Inventory and Equipment will be
and remain located only at the foregoing location(s) unless
relocated in compliance with Section 4(c) below;
(k) At the present time, each Subsidiary maintains no Inventory at any
location;
(l) CSF has duly assigned of record to the Agent (for the benefit of
the Agent and the ratable benefit of the Banks that from time to
time are parties to the Credit Agreement), all financing statements
now or hereafter executed by any Franchisee in favor of CSF;
(m) OI and OutSource Franchising, Inc. have duly executed and delivered
the Trademark Assignment to the Agent; and
(n) Except for OutSource Franchising, Inc., no Subsidiary grants
franchises or has done so in the past. In the case of OutSource
Franchising, Inc., LABOR WORLD(R) and OFFICE OURS(C) are the only
trademarks that are or have been licensed for use by franchisees.
4. COVENANTS
Each Subsidiary undertakes, covenants, and agrees that, until the full
and complete payment, performance, and observance of all Obligations, each
Subsidiary:
(a) shall provide the Agent with at least thirty (30) days prior
written notification of:
(1) any change in any location where such Subsidiary's Inventory
and Equipment is maintained, and any new locations where such
Subsidiary's Inventory and Equipment is to be maintained,
(2) any change in the location of the office where such
Subsidiary's records pertaining to its Receivables are kept,
(3) the location of any new places of business and the changing or
closing of any of its existing places of business,
(4) any change in the location of such Subsidiary's chief executive
office,
10
(5) any change in such Subsidiary's name, and
(6) any change in such Subsidiary's Location;
PROVIDED, HOWEVER, that anything herein to the contrary
notwithstanding, (A) with respect to location openings and
closings, such Subsidiary may satisfy the requirement of this
subsection with respect to such locations, by submitting to the
Agent, on a quarterly basis, a list of all locations opened and
closed, and (B) with respect to moving either Collateral or
Equipment from location to location, no notice need be provided
pursuant to this subsection so long as either (i) such Subsidiary
executes and delivers to the Agent a UCC financing statement
appropriate for filing to perfect the Agent's security interest in
the Collateral in its new location, or (ii) the Agent has
previously filed a UCC financing statement which perfects the
Agent's security interest in the Collateral in its new location.
(b) shall promptly pay and discharge before they become delinquent, all
taxes, assessments, and governmental charges of every kind and
nature that have been lawfully levied, assessed, or imposed upon
such Subsidiary or its properties including the use thereof, or any
of the Obligations, which, if unpaid, would become Liens against
its assets, including, without limitation, all sums due and owing
any taxing authority for income and other taxes withheld from the
wages and salaries of its employees, except to the extent such
Subsidiary is reasonably contesting in good faith any such tax,
assessment, or charge with an adequate reserve provided therefor;
(c) shall at all reasonable times allow the Agent by or through any of
its officers, agents, employees, attorneys, or accountants to:
(1) examine, inspect, and make extracts from such Subsidiary's
books and other records,
(2) examine and inspect such Subsidiary's Collateral wherever
located, and
(3) arrange for verification of such Subsidiary's Receivables,
under reasonable procedures;
(d) shall promptly deliver to the Agent upon reasonable request:
(1) additional information and statements with respect to the
Collateral,
(2) such Subsidiary's Instruments, Chattel Paper, Documents, and
any other writings relating to or evidencing any of such
Subsidiary's Receivables (including, without limitation,
computer printouts or typewritten reports listing the current
mailing address of all present Account Debtors), and
(3) any other writings and information the Agent may reasonably
request;
11
(e) shall upon request of the Agent promptly take such action and
promptly make, execute, and deliver all such additional and further
items, deeds, assurances, and instruments as the Agent may
reasonably require, including, without limitation, Financing
Statements, so as to completely vest in, perfect and ensure to the
Agent its rights hereunder and in and to the Collateral, including,
without limitation, such actions or items that may be appropriate
due to changes in applicable laws after the date hereof, to
evidence or to perfect the security interests granted to the Agent
hereunder;
(f) hereby authorizes the Agent or the Agent's designated agent (but
without obligation by the Agent to do so) to incur Related Expenses
(whether prior to, upon, or subsequent to any Event of Default),
and such Subsidiary shall promptly repay, reimburse, and indemnify
the Agent for any and all Related Expenses. As long as no Default
or Event of Default exists, the Agent agrees to give OI periodic
reports of the Related Expenses subject to reimbursement under this
subsection;
(g) shall not, without the prior written consent of the Agent, pledge,
grant a security interest, or otherwise voluntarily place any Lien
upon any Collateral except any security interest granted to or in
favor of the Agent and the Banks and except as permitted by the
terms of the Credit Agreement; and
(h) shall not use any Collateral in violation of any applicable
statute, ordinance, or regulation.
5. COLLECTION AND RECEIPT OF PROCEEDS
(a) Upon the occurrence and continuance of any Event of Default and
after written notification thereof to any Subsidiary, the Agent or
the Agent's designated agent shall have the right and power (as
such Subsidiary's hereby constituted and appointed
attorney-in-fact), which, being coupled with an interest, shall
remain irrevocable until all Obligations are fully and completely
paid, performed, and observed, at any time to:
(1) notify the Account Debtors on any or all of such Subsidiary's
Receivables of the Agent's security interest in and assignment
of those Receivables upon which the respective Account Debtors
are liable, and to request from such Account Debtors, in the
Agent's name or in such Subsidiary's name, information
concerning the Receivables and amounts owing thereon,
(2) notify and require the Account Debtors on any or all of such
Subsidiary's Receivables to make payment upon such Receivables
directly to the Agent,
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(3) receive, retain, acquire, take, endorse, assign, deliver,
accept, and deposit, in the Agent's name or such Subsidiary's
name, any and all of such Subsidiary's cash, Instruments,
Chattel Paper, Documents, Proceeds, collections of Receivables,
and any other such writings relating to any of the Collateral
theretofore collected, received or retained by such Subsidiary
pursuant to Subsection 5(b) below or thereafter collected,
received, or retained by such Subsidiary,
(4) exercise any and all of the rights granted the Agent in
Subsections 5(c) and 5(d) below, and
(5) take such other action with respect to any or all of the
Collateral, in such manner and at such times, as the Agent may
deem advisable, including, without limitation, the following:
collection, legal proceedings, compromises, settlements,
adjustments, extensions, postponements, exchanges, releases,
and sales.
(b) Except as otherwise provided in Subsections 5(a), 5(c), or 5(d),
upon the occurrence and continuance of an Event of Default, each
Subsidiary is authorized (1) to collect and enforce, by all lawful
means, all of such Subsidiary's Receivables, and (2) to receive and
retain, by all lawful means, any and all Proceeds. Such Subsidiary
shall hold, as trustee upon an express trust for the Agent as
beneficiary thereof, all such lawful collections of Receivables and
Proceeds received by such Subsidiary. Any costs, liabilities, or
expenses incurred by such Subsidiary in the collection or
enforcement of such Receivables and in the receipt of Proceeds
shall be borne solely by such Subsidiary. Such Subsidiary as
trustee shall not commingle such collections of Receivables and
such Proceeds with any other property not held in trust for the
Agent; any property held or commingled with such collections of
Receivables such Proceeds is hereby conclusively established
between such Subsidiary and the Agent to be collections of
Receivables and Proceeds.
(c) With respect to each Subsidiary's Instruments, Documents, and
Chattel Paper:
(1) Upon the Agent's written request, such Subsidiary shall
immediately deliver or cause to be delivered to the Agent all
of such Subsidiary's Instruments, Chattel Paper, and Documents,
appropriately endorsed either, at the Agent's option, (i) to
the Agent's order, without limitation or qualification, or (ii)
for deposit in the Accounts Receivable Collection Account. The
Agent, or the Agent's designated agent, is hereby constituted
and appointed such Subsidiary's attorney-in-fact with authority
and power to so endorse any and all Instruments, Documents, and
Chattel Paper upon such Subsidiary's failure to do so. Such
authority and power, being coupled with an interest, shall be
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(i) irrevocable until all Obligations are paid, performed, and
observed in full, (ii) exercisable by the Agent at any time and
without any request upon such Subsidiary by the Agent to so
endorse, and (iii) exercisable in the Agent's name or such
Subsidiary's name;
(2) Each Subsidiary hereby waives presentment, demand, notice of
dishonor, protest, notice of protest, and any and all other
similar notices with respect thereto, regardless of the form of
any endorsement thereof;
(3) The Agent shall not be bound or obligated to take any action to
preserve any rights therein against any prior parties thereto.
(d) Upon the occurrence and continuance of any Event of Default and
after the Agent's written notification thereof to any Subsidiary:
(i) the lawful collection and enforcement of all of such
Subsidiary's Receivables and the lawful receipt and retention by
such Subsidiary of all Proceeds shall be as agent for the Agent and
the Banks; (ii) all such collections and Proceeds shall be remitted
daily by such Subsidiary to the Agent in the form in which they are
received by such Subsidiary, either by mailing or by delivering
such collections and Proceeds to the Agent, appropriately endorsed
for deposit in the Accounts Receivable Collections Account. The
Agent may, in its sole discretion, at any time and from time to
time, apply all or any portion of the collected balance in the
Accounts Receivable Collections Account allowing three (3) days for
collection and clearance of remittances as a credit against such
Subsidiary's outstanding Obligations. If any remittance shall be
dishonored, or if, upon final payment, any claim with respect
thereto shall be made against the Agent on its warranties of
collection, the Agent may charge the amount of such item against
the Accounts Receivable Collections Account or any other Deposit
Account maintained by such Subsidiary with the Agent, and, in any
event, retain same and such Subsidiary's interest therein as
additional security for the Obligations. The Agent may, in its sole
discretion, at any time and from time to time, release funds from
the Accounts Receivable Collections Account to such Subsidiary for
use in such Subsidiary's business. The balance in the Accounts
Receivable Collections Account may be withdrawn by such Subsidiary
upon termination of this Agreement in accordance with Subsection
9(d). Upon the occurrence and continuance of any Event of Default
and after the Agent's written request, such Subsidiary will cause
all remittances representing all collections and all Proceeds to be
mailed to a lock box in Hartford, Connecticut (or other locations
designated by the Agent) to which the Agent shall have access for
the processing of such items in accordance with the provisions,
terms, and conditions of the Agent's customary lock box agreement.
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6. INSURANCE
Each Subsidiary shall at all times maintain insurance upon its
Collateral through insurance policies in such form, written by such
companies, in such amounts, for such period, and against such risks as
may be acceptable to the Agent, with provisions satisfactory to the
Agent for payment of all losses thereunder to the Agent and such
Subsidiary as their interests may appear (including a loss payable
endorsement in favor of the Agent), and, if required by the Agent, such
Subsidiary will deposit the policies with the Agent. Any such policies
of insurance shall provide for no less than ten (10) days prior written
cancellation notice to the Agent. Any sums exceeding $100,000.00
received by the Agent, and, during the existence of a Default or Event
of Default, all sums, in payment of insurance losses, returns, or
unearned premiums under the policies may, at the option of the Agent,
be applied upon any Obligation whether or not the same is then due and
payable, or may be delivered to such Subsidiary for the purpose of
replacing, repairing, or restoring its Inventory. Such Subsidiary
hereby assigns to the Agent any return of unearned premiums which may
be due upon cancellation of any such policies for any reason and
directs the insurers to pay the Agent any amount so due. The Agent, or
the Agent's designated agent, is hereby constituted and appointed such
Subsidiary's attorney-in-fact (either in the name of such Subsidiary or
in the name of the Agent) to make adjustments of all insurance losses,
sign all applications, receipts, releases, and other papers necessary
for the collection of any such loss, and any return of unearned
premium, execute proof of loss, make settlements, and endorse and
collect all Instruments payable to such Subsidiary or issued in
connection therewith. Notwithstanding any action by the Agent
hereunder, any and all risk of loss or damage to such Subsidiary's
Collateral to the extent of any and all deficiencies in the effective
insurance coverage thereof is hereby expressly assumed by such
Subsidiary.
7. EVENT OF DEFAULT
Upon the occurrence of any Event of Default as such term is defined in
the Credit Agreement, any and all Obligations shall, at the option of the Agent
and notwithstanding any period of time permitted or allowed by any writing
evidencing an Obligation, become immediately due and payable without notice,
demand, protest, or presentment, all of which are hereby expressly waived by
each Subsidiary.
8. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT
Upon the occurrence of any Event of Default and at all times
thereafter, the Agent shall have the rights and remedies of a secured party
under the Connecticut Uniform Commercial Code in addition to the rights and
remedies provided elsewhere within this Agreement or in any other writing
executed by each Subsidiary. The Agent may require any Subsidiary to assemble
the Collateral and make it available to the Agent at a reasonably convenient
place to be designated by the Agent. Unless the Collateral is perishable,
threatens to decline speedily in value, or is of a type customarily
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sold on a recognized market, the Agent will give such Subsidiary reasonable
notice of the time and place of any publi
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