EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
DATED JANUARY 12, 1998
BY AND AMONG
OUTSOURCE INTERNATIONAL OF AMERICA, INC.
AS BUYER,
TEMPUS, INC.
AS SELLER
AND
▇▇▇▇ ▇▇▇▇▇▇▇
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into this 12th day of
January, 1998 ("Agreement"), by and among OutSource International of America,
Inc., a Florida corporation ("Buyer"), Tempus, Inc., a Tennessee corporation
("Seller") and ▇▇▇▇ ▇▇▇▇▇▇▇("▇▇▇▇▇▇▇").
RECITALS:
WHEREAS, Seller operates temporary and permanent staffing businesses in
the States of Tennessee, Arkansas and Mississippi, with one corporate
headquarters office (the "Corporate Office") and sixteen (16) branch offices
("Branch Offices") at the locations set forth on SCHEDULE 1 hereto
(collectively, the "Business").
WHEREAS, ▇▇▇▇▇▇▇ is the principal shareholder of Seller;
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 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; and
WHEREAS, it is the intention of Buyer to offer employment to the sales
and servicing employees of Seller in the Branch Offices, subject to completion
of all standard pre-employment screening and other pre-employment procedures of
Buyer;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
1.1 SALE OF ASSETS OF SELLER. Subject to the terms and conditions
hereof, Seller will sell, convey, assign, transfer and deliver to Buyer at the
Closing (as hereafter defined), and Buyer will purchase and accept at the
Closing, all assets, properties, privileges, rights, interests, business and
goodwill owned by Seller or in which Seller has an interest (except the Excluded
Assets, as hereinafter defined), and used or held for use in connection with the
operation of the Business, of every kind and description, real, personal and
mixed, tangible and intangible and wherever located (such assets, properties,
privileges, rights, interests, business and goodwill being transferred hereunder
are hereinafter referred to collectively as the "Assets"). Without limiting the
generality of the foregoing, the Assets shall include all of Seller's right,
title and interest in and to the following (except to the extent any of the
following constitute Excluded Assets):
(a) All supplies, equipment, vehicles, machinery, furniture,
fixtures, leasehold improvements and other tangible property owned by Seller or
used by Seller in
connection with the Business, including, without limitation, the tangible assets
listed on SCHEDULE 1.1 hereto.
(b) All of Seller's right, title and interest under all
agreements or contracts to which it is a party or by which it or the Assets are
bound or which otherwise relate to the Business, including, without limitation,
the documents listed on SCHEDULE 3.7 hereto;
(c) All of Seller's right, title and interest in and to the
Intellectual Property (as hereafter defined) owned by Seller or used in the
Business;
(d) All proprietary knowledge, trade secrets, technical
information, quality control data, processes (whether secret or not), methods,
and other similar know-how or rights used in the Business;
(e) All rights of Seller in and to its corporate name, trade
names and trademarks used in the Business, and variants thereof and all goodwill
associated therewith;
(f) The Business as a going concern and its Permits (as
hereinafter defined), licenses, telephone numbers, customer lists, vendor lists,
advertising material and data, restrictive covenants, lists of temporary
employees, choses in action, rights of recovery, rights of recoupment, together
with all books, computer software, files, papers, records and other data of
Seller relating to its respective assets, properties, business and operations;
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 staff (the "Applications"), and all
non-competition, confidentiality and non-solicitation agreements executed by
employees of Seller.
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) All of Seller's cash, cash equivalents, accounts
receivable and any prepaid charges or expenses including, without limitation,
security deposits and any workers' compensation insurance payments or
adjustments, relating to Seller's business activities prior to the Closing Date;
(b) The corporate charter, qualifications to conduct business
as a foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers, seals, minute
books, stock transfer books, blank stock certificates, and other documents
relating to the organization, maintenance, and existence of Seller as a
corporation; and
(c) Any of the rights of Seller under this Agreement (or under
any agreement between Seller on the one hand and Buyer on the other hand entered
into on or after the date of this Agreement).
(d) Any employment agreements entered into by Seller.
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1.3 ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume, and
shall agree to satisfy and discharge as the same become due only those
liabilities and obligations of Seller specifically listed on SCHEDULE 1.3 hereto
(the "Assumed Obligations") and, subject to Section 1.4 of this Agreement, the
Assumed Leases (as hereafter defined). True, correct and complete copies of all
agreements with respect to the Assumed Obligations are attached to SCHEDULE 1.3
hereto. Buyer shall not assume, agree to perform or discharge, indemnify the
Seller against, otherwise be responsible at any time for any liability,
obligation, debt or commitment of Seller, whether absolute or contingent,
accrued or unaccrued, asserted or unasserted, or otherwise, that is not
expressly listed on SCHEDULE 1.3 hereto. Without limiting the generality of the
foregoing sentence, Buyer shall not assume or be responsible for any of the
following: any amounts due to any of Seller's creditors listed on SCHEDULE 1.3
hereto in excess of the amounts expressly listed thereon; any matured
obligations under leases, licenses, contracts or agreements in excess of the
amounts expressly listed on SCHEDULE 1.3 hereto; any liabilities, obligations,
debts or commitments of Seller incident to, arising out of, or incurred with
respect to, this Agreement and the transactions contemplated hereby; any and all
sales, use, franchise, income, gross receipts, excise, payroll, personal
property (tangible or intangible), real property, ad-valorem, value added,
leasing, leasing use, or other taxes, levies, imposts, duties, charges or
withholdings of any nature arising out of the transactions contemplated hereby.
Seller further agrees to satisfy and discharge as the same shall become due all
of its obligations and liabilities not specifically assumed by Buyer hereunder.
Buyer's assumption of the Assumed Obligations shall in no way expand the rights
and remedies of third parties against Buyer as compared to the rights and
remedies which such parties would have had against Seller had this Agreement not
been consummated. Effective as of the Closing Date, at the option of Buyer, all
of Seller's employees shall be terminated by Seller. Buyer shall permit any
terminated employee of Seller to apply for employment at another location of
Buyer.
1.4 LEASES. Notwithstanding any other provision of this Agreement,
Buyer's assumption of any liabilities or obligations of Seller with respect to
any real property lease or leasehold interest (the "Assumed Leases") shall be
subject to the terms of Assignment of Leases to be delivered pursuant to
Sections 2.2(h) of the Agreement. SCHEDULE 1.4 hereto contains a complete list
of all Assumed Leases. True, correct and complete copies of all of the Assumed
Leases are attached to SCHEDULE 1.4 hereto. Seller shall cause the landlords of
each of the properties listed on SCHEDULE 1.4 to execute the Estoppel
Certificate and Consent to Assignment of Lease attached hereto as EXHIBIT A.
1.5 PAYMENT FOR ASSETS. Buyer shall purchase the Assets for a maximum
aggregate purchase price (the "Purchase Price") of Four Million Seven Hundred
Fifty Thousand Dollars ($4,750,000.00), payable in accordance with Section 1.6
hereto, subject to post-closing adjustment in accordance with Section 1.7
hereto.
1.6 PAYMENT OF PURCHASE PRICE. At Closing, Buyer shall pay the
Purchase Price as follows:
(a) Cash in the amount of Three Million Two Hundred Fifty
Thousand Dollars ($3,250,000) via bank wire transfer;
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(b) The issuance and delivery of a junior subordinated
promissory note in the principal amount of One Million Five Hundred Thousand
Dollars ($1,500,000), bearing interest at the rate of six and one-half percent
(6 1/2%) per annum (the "Subordinated Note"), substantially in the form attached
hereto as EXHIBIT B.
1.7 POST-CLOSING ADJUSTMENT TO PURCHASE PRICE. If the adjusted gross
profit of the Business for calendar year 1997, as calculated in accordance with
EXHIBIT C-1 hereto (the "1997 Adjusted GP") on or before April 30, 1998 (the
"1997 Adjusted GP Determination Date"), is less than $3,939,000.00 (the "Minimum
1997 Adjusted GP"), the Purchase Price shall be reduced by the product of (i)
1.31 and (ii) the difference between the Minimum 1997 Adjusted GP and the 1997
Adjusted GP (such product hereinafter referred to as the "1997 Adjusted GP
Difference"). The reduction in the Purchase Price pursuant to this Section 1.7
shall be effectuated by a reduction in the outstanding principal amount of the
Subordinated Note as of the 1997 Adjusted GP Determination Date equal to the
1997 Adjusted GP Difference; provided, however, that the reduction in the
Purchase Price pursuant to this Section 1.7 shall in no event exceed Three
Hundred Thousand Dollars ($300,000.00). In the event of a reduction in the
Purchase Price as a result of this Section 1.7, Seller shall surrender the
Subordinated Note and Buyer shall issue and deliver to Seller a new junior
subordinated promissory note reflecting the revised outstanding principal
amount.
1.8 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on EXHIBIT C-2 hereto (the "Allocation"). The
Allocation shall be made in accordance with Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code") and applicable Treasury regulations. Buyer
and Seller shall: (i) be bound by the Allocation for purposes of determining any
Taxes (as hereafter defined); (ii) prepare and file tax returns on a basis
consistent with the Allocation; and (iii) take no position inconsistent with the
Allocation in any proceeding before any taxing authority or otherwise. In the
event that the Allocation is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other parties hereto
of the receipt of such notice. Seller and Buyer each shall timely after the
Closing file form 8594 with the Internal Revenue Service (the "Service")
detailing this allocation. In the event that Buyer determines that any
adjustments to such allocation are necessary, and Seller consents to such
adjustments, Seller shall make such modifications as are necessary in Seller's
form 8594 or any tax report or return filed or to be filed by Seller in order to
conform to Buyer's allocation as adjusted.
1.9 ENCUMBRANCES. The Assets shall be sold and conveyed to Buyer free
and clear of all mortgages, security interests, charges, encumbrances, liens,
assessments, covenants, claims, title 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").
1.10 PRORATION. Seller shall pay at Closing all applicable transfer,
sales, use, bulk sales and other taxes, and all documentary, filing, recording
and vehicle registration fees payable as a result of the transfer of the Assets.
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
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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 ▇▇▇▇▇▇ ▇▇▇▇▇
Attorneys, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ at 12:00 p.m.,
Central Standard Time, on January 19, 1998 or at such other time and place as
the parties may establish (the date of the Closing being hereinafter referred to
as the "Closing Date"). The transactions contemplated hereby shall be deemed to
be effective as of 12:01 a.m., Central 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 ▇▇▇▇ of Sale, in substantially the form attached as
EXHIBIT D hereto;
(b) An Assignment, in substantially the form attached as
EXHIBIT E hereto;
(c) An Employment Agreement in substantially the form attached
as EXHIBIT F hereto;
(d) A Confidentiality, Non-Solicitation and Noncompetition
Agreement in substantially the form attached as EXHIBIT G hereto executed by
▇▇▇▇▇▇▇, pursuant to which he shall agree not to compete with Buyer for a period
of five years after termination of his employment with Buyer;
(e) An Assignment of Applications, in substantially the form
attached as EXHIBIT H hereto;
(f) An Estoppel Certificate and Consent to Assignment of Lease
for each of the Assumed Leases substantially in the form attached as EXHIBIT A
hereto;
(g) An Assignment of Trademarks substantially in the form
attached hereto as EXHIBIT I;
(h) Assignment of Leases for each of the Assumed Leases,
substantially in the form attached hereto as EXHIBIT J;
(i) A Certificate executed as of the Closing Date by a duly
authorized officer of Seller certifying: (i) the resolutions of the Board of
Directors and Shareholders of Seller approving the transactions contemplated
hereby, and (ii) as to the accuracy of Seller's representations and warranties
and as to the performance and compliance of all of the terms, provisions and
conditions to be performed or complied with by Seller at or before Closing;
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(j) Copies of originally executed UCC-3 Termination Statements
in a form satisfactory for filing with the State of Tennessee, the Registrar of
Deeds, Shelby County, Tennessee and all other governmental agencies, relating to
any and all financing statements previously filed by First Tennessee Bank
listing Seller as debtor and First Tennessee Bank as secured party;
(k) The documents required pursuant to Sections 6 of this
Agreement; and
(l) 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 Employment Agreement in substantially the form
attached as EXHIBIT F hereto;
(b) A Confidentiality, Non-Solicitation and Noncompetition
Agreement in substantially the form attached as EXHIBIT G hereto executed by
▇▇▇▇▇▇▇;
(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.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND ▇▇▇▇▇▇▇. Seller and ▇▇▇▇▇▇▇,
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. The term "knowledge" or
similar language used in this Section 3 shall, in each case, mean the best
knowledge of Seller or ▇▇▇▇▇▇▇, as the case may be, 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 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
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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 SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Tennessee.
Seller is qualified to do business and in good standing in each jurisdiction
where the operation of its business requires that it be so qualified. Seller has
all requisite corporate power and authority to own, operate and lease its
properties and assets, to conduct its business as it is now being conducted, to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. An accurate and complete copy
of the Articles of Incorporation and Bylaws of Seller, as presently in effect,
are included as an attachment to SCHEDULE 3.2 hereto.
3.3 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by Seller of this Agreement and of each agreement, document or
instrument executed and delivered or to be executed and delivered in connection
with the transactions contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized and approved by all necessary corporate action of Seller. This
Agreement is (and, when executed and delivered, each agreement, document or
instrument to be executed and delivered in connection with the transactions
contemplated hereby will be) valid and binding upon Seller, and 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. 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. 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 3.4, 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. All material items of tangible personal property and assets
owned or leased by Seller and used in the operation of the Business are
described in SCHEDULE 1.1 hereto. All machinery and equipment listed in SCHEDULE
1.1 conforms to all applicable ordinances, regulations, and other laws. Except
as described in SCHEDULE 1.1, all items listed on SCHEDULE 1.1 are in good
operating condition and repair, subject only to normal wear and tear, and are
adequate to conduct the Business as it is now being conducted.
3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Attached hereto as
part of SCHEDULE 3.5 are: (i) Seller's audited financial statements for the
years ended December 31, 1994 and 1995 and December 29, 1996; and (ii) Seller's
interim unaudited financial statements for the period ended November 23, 1997
(the "Financial Statements"). The Financial Statements: (a) present fairly the
financial position and results of operations of the Seller for the dates or
periods indicated thereon; (b) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
period indicated; and (c) accurately reflect the transactions, assets and
liabilities of Seller as of the dates and for the periods presented. Except as
set forth in the Financial Statements or on SCHEDULE 3.5 hereto, Seller has no
debts,
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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. Neither Seller nor ▇▇▇▇▇▇▇ 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 3.5 hereto.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996,
Seller has conducted the Business only in the normal and ordinary course in
substantially the same manner as heretofore conducted and has used all
reasonable efforts consistent with normal business practices to preserve and
promote the Business and to avoid any act that might have a material adverse
effect upon the value of the Business as a going concern or upon the Assets. No
event has occurred to prevent the Business from operating in a normal and usual
manner and in substantially the same manner as heretofore operated. Except as
expressly set forth in SCHEDULE 3.6 hereto, since December 31, 1996:
(a) there has not been any damage, destruction or loss,
whether covered by insurance or not, materially and adversely affecting the
Business or the Assets;
(b) there has not been any increase (other than normal merit
or cost-of-living increases in the ordinary course of business and consistent
with past practices) or material change: (i) in compensation or bonuses payable
to or to become payable by Seller to its officers, employees or agents; (ii) in
any insurance, pension or other benefit plan, payment or arrangement made to,
for or with any of such officers, employees or agents; or (iii) other material
change in the employment terms of any officer, employee or agent of Seller;
(c) there has not been any sale, transfer or other disposition
of any tangible or intangible asset, or real or personal property or interest
therein, or any mortgage, lien or encumbrance placed thereon except in the
ordinary course of business and consistent with past practice;
(d) there have not been any capital expenditures, capital
additions, capital improvements or charitable contributions made, or committed
to be made, involving, individually or in the aggregate, Two Thousand Five
Hundred Dollars ($2,500.00) or more;
(e) there has not been any failure to maintain any of Seller's
books, accounts and records in the usual, regular and ordinary manner and in
accordance with good business practices and consistent with past practice;
(f) there has not been any action taken or omitted to be taken
by Seller which could cause (with or without the giving of notice or the passage
of time, or both) the breach, default, acceleration, amendment, termination or
waiver of or under any Material Agreement (as hereinafter defined) or the
imposition of any lien, encumbrance, mortgage or other claim or charge against
the Assets including, without limitation, the termination or request for refund
of any of Seller's utility, security and other deposits and prepaid expenses;
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(g) there has not been any liability, obligation or commitment
incurred by Seller not in the ordinary course of business involving,
individually more than $5,000.00 or in the aggregate, more than $30,000.00;
(h) there are no pending claims for worker's compensation
submitted by any employee of Seller with respect to services performed on behalf
of Seller, or facts or state of facts existing which could give rise to claims
for workers' compensation by any employee of Seller with respect to services
performed on behalf of Seller which exceed individually Five Thousand Dollars
($5,000.00).
(i) Seller has not entered into, nor has Seller or the Assets
become subject to, any contracts, agreements, commitments, indentures,
mortgages, notes, bonds, license, real or personal property leases or other
obligations of the type required to be disclosed in SCHEDULE 3.7 hereto that are
not otherwise disclosed herein;
(j) Seller has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of any person or entity;
(k) there has been no change made or authorized in the
charter or bylaws of Seller;
(l) Seller has not issued, sold or otherwise disposed of any
of its capital stock or granted any options, warrants or other rights to
purchase or obtain any of its capital stock;
(m) Seller has not declared, set aside or paid any dividend
nor made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased or otherwise acquired any of its capital stock;
(n) Seller has not made any loan to, or entered into any other
transaction with, any of its directors, officers or employees;
(o) there has not been, to the knowledge of Seller or ▇▇▇▇▇▇▇,
any other event or condition of any character which, individually or in the
aggregate, has had or could reasonably be expected to have a material adverse
effect on the Assets, the Business, or on the financial condition or operations
of Seller; and
(p) there has not been any commitment to do any of the
foregoing.
3.7 CONTRACTS AND COMMITMENTS. SCHEDULE 3.7 hereto includes a true,
correct and complete list of all material contracts, agreements, commitments,
indentures, mortgages, notes, bonds, licenses, real and personal property leases
and other obligations to which Seller is a party, by which Seller or its assets
or properties are bound or may be affected or which otherwise relate to the
Business (the "Material Agreements"). Without limiting the generality of the
foregoing, the term Material Agreement includes: (a) any lease or license with
respect to any Assets, whether Seller is tenant, landlord, licensor or licensee
thereunder; (b) any agreement, contract, indenture or other instrument relating
to the borrowing of money or the
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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 have been delivered by Seller to Buyer. Each of the Material
Agreements listed in SCHEDULE 3.7 are valid, binding and enforceable in
accordance with their respective terms and are in full force and effect and were
entered into in the ordinary course of business on an "arms length" basis. No
part of Seller's rights or benefits under any Material Agreement has been
assigned, transferred, or in any way encumbered. Seller is not in breach of nor
has Seller defaulted under any of the Material Agreements and no occurrence or
circumstance exists which constitutes (with or without the giving of notice or
the passage of time or both) a breach or default by Seller under any Material
Agreement. To Seller's 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, and except for contracts relating to
Assumed Obligations set forth on SCHEDULE 1.3 hereto and the Assumed Leases
listed on SCHEDULE 1.4 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 [INTENTIONALLY OMITTED]
3.9 INTELLECTUAL PROPERTY. Seller does not own and is not licensed to
use any patents, trademarks, or copyrights. To the knowledge of Seller and
▇▇▇▇▇▇▇, 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 (the
"Intellectual Property") necessary to conduct the Business, free and clear of
and without conflict with the rights of others. Each item of Intellectual
Property owned or used by Seller immediately prior to the Closing shall be owned
or available for use by Buyer on identical terms and conditions immediately
subsequent to the Closing. Seller has taken all necessary and desirable action
to consummate the transfer and assignment thereof to Buyer. Except as set forth
on SCHEDULE 3.9 hereto, to the knowledge of Seller and ▇▇▇▇▇▇▇, Seller has not
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of third parties. Except as set forth on
SCHEDULE 3.9 hereto, Seller has not received any charge, complaint, claim,
demand or notice alleging any such interference, infringement, misappropriation
or violation. To the knowledge of Seller and ▇▇▇▇▇▇▇, 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:
10
(a) All Intellectual Property currently owned, in whole or in
part, by Seller, and all licenses, royalties, assignments and other similar
agreements relating to the foregoing to which Seller is a party; and
(b) All agreements relating to Intellectual Property that
Seller is licensed or authorized to use from others or which Seller licenses or
authorizes others to use.
3.10 TAXES. All federal, state, local and foreign tax returns
(including information returns) and reports of Seller required by any applicable
law, rule, regulation or procedure of any federal, state, local or foreign
agency, authority or body to be filed have been duly filed by such Seller.
Seller has either: (i) paid all federal, state, county, local, foreign and other
taxes (hereinafter "Taxes" or individually a "Tax") required to be paid by it
through the Closing Date and all deficiencies or other additions to Tax,
including interest or penalties owed in connection with any such Taxes; or (ii)
included adequate provision for all such Taxes and deficiencies or other
additions to Tax applicable to Seller in the Seller's Financial Statements. All
Taxes and other assessments and levies required to be collected or withheld by
Seller with respect to the operation of its business from customers with respect
to sales of products or from employees for income taxes, social security taxes
and unemployment insurance taxes have been collected or withheld, and either
paid to the respective governmental agencies, or set aside in an account owned
by Seller and established for that purpose.
Seller is not a party to any pending action or proceeding
regarding assessment or collection of Taxes by any governmental authority. 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 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 or ▇▇▇▇▇▇▇'▇
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 or notice or the passage of time or both) could form
the basis for any such suit, proceeding, action, claim or investigation. Neither
Seller nor any of its assets, property or property interests is subject to any
judgement, order, writ, injunction or decree of any court or any federal, state,
municipal, foreign or other governmental authority, department, commission,
board, bureau, agency or other instrumentality.
3.12 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 3.12 contains a true and complete list of each
pension, retirement, profit sharing, deferred compensation, stock option, stock
purchase, bonus, medical, welfare, disability, severance or termination pay,
insurance or incentive plan, and each other employee benefit plan, program,
agreement or arrangement, whether funded or unfunded, sponsored, maintained or
contributed to or required to be contributed to by Seller, including without
limitation, Seller's 401(k) plan (the "401(k) Plan"), or by any trade or
business, whether or not incorporated, that together with Seller would be deemed
a "single employer" within the meaning
11
of Section 4001 of ERISA (a "Company ERISA Affiliate"), for the benefit of any
employee or terminated employee of Seller or any Seller ERISA Affiliate (the
"Plans"). SCHEDULE 3.12 identifies each Plan that is an "employee benefit plan,"
within the meaning of Section 3(3) of ERISA (the "ERISA Plans").
(b) Seller does not now have, nor has it ever had, any
unionized employees. Consequently, Seller does not participate currently and has
never participated in and is not required currently and has never been required
to contribute to or otherwise participate in any "multi-employer plan," as
defined in Sections 3(37)(A) and 4001(a)(3) of ERISA and Section 414(f) of the
Code.
(c) True and complete copies of each of the Plans and the
trusts included in the 401(k) Plan have been furnished to Buyer. With respect to
the 401(k) Plan, Seller has delivered to Buyer the most recent Summary Plan
Description.
(d) All contributions required by the 401(k) Plan or by law
with respect to all periods through the Closing Date shall have been made by
such date (or provided for by Seller by adequate reserves on its financial
statements) and no excise or other taxes have been incurred or are due and owing
with respect to the 401(k) Plan because of any failure to comply with the
minimum funding standards of ERISA and the Code.
(e) Seller does not currently maintain, and has never
maintained, any defined benefit pension plan within the meaning of ERISA. There
are no violations of ERISA or the Code with respect to the filing of applicable
reports, documents, and notices regarding any Plan with the Secretary of Labor,
Secretary of the Treasury, or the Pension Benefit Guaranty Corporation (the
"PBGC") or furnishing such documents to participants or beneficiaries, as the
case may be. No Plan is under audit by the Service or the Department of Labor.
(f) No "prohibited transaction," as such term is defined in
Section 4975 of the Code and Section 406 of ERISA, has occurred with respect to
any Plan (and the transactions contemplated by this Agreement will not
constitute or directly or indirectly result in such a "prohibited transaction")
which could subject Seller, Buyer, or any officer, director or employee of any
of the foregoing, or any trustee, administrator or other fiduciary, to a tax or
penalty on prohibited transactions imposed by either Section 502 of ERISA or
Section 4975 of the Code.
(g) The present value, determined on a termination basis, of
all accrued benefits, vested and unvested, under each Plan, determined using the
actuarial valuation assumptions and methods (including interest rates) contained
in the most recent actuarial report for such Plan, does not exceed the assets
thereof allocable to such benefits.
(h) No welfare benefit plan (within the meaning of Section
3(1) of ERISA) provides for continuing benefits or coverage for any participant
or beneficiary of a participant after such participant's termination of
employment, except as may be required by COBRA at the expense of the participant
or the beneficiary of the participant.
(i) Seller has complied with all of the requirements of Code
Section 4980B and Part 6 of Title I of ERISA ("COBRA").
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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 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.
3.14 LICENSES, PERMITS AND AUTHORIZATIONS. Seller has all permits,
licenses, certificates of occupancy, approvals or other authorizations from and
registrations with federal, state, municipal and foreign governmental agencies
and private associations necessary to operate its business (collectively the
"Permits") and all such Permits are in full force and effect and no suspension
or cancellation of any such Permit is threatened. A list of the Permits is
included in SCHEDULE 3.14 hereto.
3.15 INSURANCE. SCHEDULE 3.15 hereto contains a complete list of all
insurance policies maintained by Seller with respect to the Business or the
Assets. Such insurance: (i) is in full force and effect; (ii) will not terminate
or lapse by reason of the transaction contemplated hereby; and (iii) is
sufficient for compliance with all requirements of law and any agreements to
which Seller is a party or by which the Assets are bound.
3.16 GUARANTEES. Neither the Business nor any of the Assets is nor will
be at the Closing, directly or indirectly: (i) liable, by guarantee or
otherwise, upon or with respect to, (ii) obligated, by discount or repurchase
agreement or in any other way, to provide funds in respect of; or (iii)
obligated to guarantee or assume, any debt, dividend or other obligation of, any
person, corporation, association, partnership or other entity including, without
limitation, Seller or any of its affiliates.
3.17 CORPORATE AND PERSONNEL DATA; LABOR RELATIONS. Seller is in
compliance with all federal, state, local and foreign laws, rules and
regulations affecting employment and employment practices of Seller, including
those relating to terms and conditions of employment and wages. There are no
complaints pending, or to Seller's or ▇▇▇▇▇▇▇'▇ knowledge threatened, against
Seller in connection with any employment related matters. SCHEDULE 3.17 hereto
contains a list of the names, office locations, compensation, and years of
credited service for vacation and pension plan purposes of all full- and
part-time employees of Seller as of December 31,
13
1997 (excluding temporary employees placed on assignment by Seller) and a
description of all employee "perks" or other benefit practices. No strike or
labor dispute involving Seller has occurred or, to the knowledge of Seller or
▇▇▇▇▇▇▇, is threatened. None of Seller's employees are covered by any union or
collective bargaining agreement. No key employee of Seller has indicated to
Seller that he or she is considering terminating his or her employment except as
noted on SCHEDULE 3.17. Except as set forth on SCHEDULE 3.17 hereto, and as
provided in Seller's leave policy attached to SCHEDULE 3.12 hereto, the
consummation of the transactions contemplated by this Agreement will not give
rise to any liability of Seller for severance pay, termination pay or any other
employee benefits of any kind. SCHEDULE 3.17 includes a monthly report which
accurately reflects Seller's entire current monthly payroll obligations to its
employees on an office-by-office basis. From the date of this Agreement until
the Closing Date, the aggregate number of employees of Seller shall not decrease
twenty percent (20%) or more (excluding employees terminated by Seller at the
Corporate Office). SCHEDULE 3.17 also includes a list of the names and
compensation levels of any consultants, independent contractors or temporary
employees regularly utilized by Seller in core functions of the Business
(excluding employees supplied to clients for revenue generation purposes). No
accrued vacation pay is due and owing to any of Seller's employees as of the
Closing Date.
3.18 COMPLIANCE WITH LAWS/ENVIRONMENTAL MATTERS.
(a) Seller has at all times conducted its business and the
Assets have been held in compliance with all applicable laws, regulations,
ordinances, orders and other requirements of governmental authorities having
jurisdiction over Seller. Seller has not received any formal or informal notice,
advice, claim or complaint alleging that Seller has violated or may have
violated any law, regulation, ordinance or order and, to Seller's and ▇▇▇▇▇▇▇'▇
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.
(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 the present use thereof comply in all
respects with applicable fire codes, building codes, health codes, ordinances
and regulations; (ii) the business operations of Seller (including without
limitation its leased and owned real property) are in compliance with all
applicable statutes, regulations, ordinances, decrees or orders of governmental
authorities relating to the environment (collectively the "Environmental Laws")
including without limitation those relating to Hazardous Materials (as
hereinafter defined); (iii) no Hazardous Material has been spilled, released,
deposited or discharged on any of Seller's owned or leased real property, no
such real property has been used as a landfill or waste disposal site, and such
real property is free from pollution; (iv) no notice, information, request,
citation, summons or order has been received by Seller and no complaint has been
filed and no penalty has been assessed or threatened by any governmental
authority with respect to (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,
14
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 [INTENTIONALLY OMITTED]
3.20 WORKER'S COMPENSATION CLAIMS. SCHEDULE 3.20 contains a true,
correct and complete list of all claims or pending claims for workers'
compensation submitted or expected to be submitted by any employee of Seller
with respect to services performed on behalf of Seller (the "Worker's
Compensation Claims"). Each claim listed shall include the total reserve amount
established for such claim by the Seller's workers' compensation carrier (the
"Carrier"). Except as set forth on SCHEDULE 3.20, to the knowledge of Seller and
▇▇▇▇▇▇▇, there are no facts or state of facts existing which could give rise to
Workers' Compensation Claims by any employee of Seller with respect to services
performed on behalf of Seller.
3.21 [INTENTIONALLY OMITTED]
3.22 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 Florida. Buyer has
all requisite corporate power and authority to own and operate its properties,
to carry on its business as now being conducted and to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.
4.2 AUTHORITY CONCERNING THIS AGREEMENT. The execution, delivery and
performance by Buyer of this Agreement and of each agreement, document or
instrument executed and delivered or to be executed and delivered in connection
with the transactions contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all necessary corporate action of Buyer. This
Agreement is (and, when executed and delivered, each agreement, document or
instrument to be executed and delivered in connection with the transactions
contemplated hereby will be) valid and binding upon Buyer, and enforceable
against Buyer in accordance with their respective terms except to the extent
that enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting the
enforcement of creditors' rights or the principles governing the availability of
equity remedies.
15
4.3 LITIGATION. To the knowledge of Buyer, there is no action, suit,
proceeding or investigation pending or threatened against Buyer which places or
may place in question the validity or enforceability 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 which has
had or reasonably could be expected to have a material adverse effect on the
business, financial condition or operations of Buyer.
4.4 NONCONTRAVENTION. 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 executed by Buyer; (c) result in the creation of a lien, security
interest, charge or encumbrance upon any of the assets of Buyer; 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.
4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since November 17, 1997,
there has not been, to the knowledge of Buyer, any 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 business, financial
condition or operations of Buyer.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION OBLIGATION OF SELLER AND ▇▇▇▇▇▇▇. Seller and
▇▇▇▇▇▇▇, 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
material breach of any representation, warranty, covenant or agreement of Seller
or ▇▇▇▇▇▇▇ in this Agreement or in any agreement, document or instrument
executed and delivered in connection with the transactions contemplated hereby;
and
(b) Any material misrepresentation or inaccuracy in, or
omission from any certificate, schedule, exhibit, statement, document or
instrument furnished by Seller or ▇▇▇▇▇▇▇ to Buyer in connection with the
transactions contemplated by this Agreement.
5.2 ERISA INDEMNIFICATION. In addition to any indemnification
obligation of Seller and ▇▇▇▇▇▇▇ pursuant to Section 5.1 hereof, Seller and
▇▇▇▇▇▇▇, jointly and severally, agree to defend, indemnify and hold harmless
Buyer from, against and in respect of any Loss with
16
respect to any failure: (i) of the 401(k) Plan to conform to the applicable
provisions of ERISA and the Code; (ii) of the 401(k) Plan to be tax qualified
under Sections 401(a) and 501 of the Code; (iii) of the 401(k) Plan to be
qualified within the meaning of Section 401(a) of the Code; (iv) of the trusts
maintained under the 401(k) Plan to be exempt from taxation under section 501(a)
of the Code; (v) of Seller to obtain and maintain in full force and effect any
bonding required with respect to any ERISA Plan in accordance with applicable
provisions of ERISA; and (vi) of Seller to operate and administer the 401(k)
Plan in accordance with its terms and the terms and the provisions of ERISA and
the Code (including rules and regulations thereunder) applicable thereto.
5.3 INDEMNIFICATION OBLIGATION OF BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller from, against and in respect of any Loss as a
result of, arising from or in connection with any breach of any representation,
warranty, covenant or agreement of Buyer in this Agreement or in any agreement,
document or instrument executed and delivered in connection with the
transactions contemplated hereby.
5.4 INDEMNITY PROCEDURE.
(a) A party hereto agreeing to be responsible for or to
indemnify against any matter pursuant to this Agreement is referred to herein as
the "Indemnifying Party" and the other party claiming indemnity is referred to
as the "Indemnified Party." The Indemnified Party under this Agreement shall
give prompt written notice to the Indemnifying Party of any liability which
might give rise to a claim of indemnity under this Agreement; provided, however,
that any failure to give such notice will not waive any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party are
actually prejudiced. As to any claim, action, suit or proceeding by a third
party, the Indemnifying Party shall be entitled to assume defense thereof (at
its expense) provided that counsel for the Indemnifying Party who shall conduct
the defense of such claim shall be approved by the Indemnified Party. The
Indemnified Party shall provide such cooperation and such access to its books,
records and properties as the Indemnifying Party shall reasonably request with
respect to such matter; and the parties hereto agree to cooperate with each
other in order to ensure the proper and adequate defense thereof. If, in the
Indemnified Party's reasonable judgment, a conflict of interest between the
Indemnified Party and the Indemnifying Party exists in respect of a claim, or,
if the Indemnifying Party, after written notice from the Indemnified Party,
fails to take timely action to defend a claim, the Indemnified Party may assume
defense of such claim or action with counsel of its choosing at the Indemnifying
Party's cost.
(b) An Indemnifying Party shall not make any settlement of any
claim without the written consent of the Indemnified Party, which consent shall
not be unreasonably withheld. Without limiting the generality of the foregoing,
it shall not be deemed unreasonable to withhold consent to a 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.
5.5 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
17
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.
5.6 BUYER'S RIGHT OF SETOFF. In the event any claim of a right to
indemnification is made by Buyer, Buyer may, at its sole option, satisfy all or
a portion of a Loss by way of setoff against the Subordinated Note. Buyer's
right of setoff shall not constitute a limitation on Buyer's rights hereunder or
a measure of liquidated damages and Buyer may seek full indemnification for all
damages suffered and may pursue all rights and remedies available to it, at law
or in equity, against any party hereto, jointly or severally, without seeking
recourse against any other party and without exercising any right of setoff.
Solely for purposes of this Section 5.5, the term "Loss" shall not include any
Loss asserted against, but not actually imposed upon, paid, incurred or suffered
by Buyer as a result of the matters described in Section 5.1(a) and Section
5.1(b) hereof.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's obligation to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to Closing, of each of the following conditions
precedent (any or all of which may be waived in writing, in whole or in part, by
Buyer):
6.1 PERFORMANCE OF OBLIGATIONS. Seller and ▇▇▇▇▇▇▇ shall have performed
all of the obligations and complied with all of the covenants required to be
performed or to be complied with by them under this Agreement on or prior to the
Closing Date.
6.2 APPROVALS. Seller shall have delivered to Buyer any and all
approvals, consents or assignments necessary for the consummation of the
transactions contemplated hereby, including, without limitation, any consents
required: (i) by any governmental or administrative body; (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.
6.3 DUE DILIGENCE. Buyer's due diligence investigation shall not
relieve Seller from any liability in connection with its representations and
warranties set forth in this Agreement.
6.4 FINANCIAL STATEMENTS. Buyer shall have received a copy of the
Financial Statements and the Seller's most recent unaudited financial statements
(the "Unaudited Statements"). Each of the Financial Statements and the Unaudited
Statements shall be accompanied by a certificate of an officer of Seller in form
and substance satisfactory to Buyer.
6.5 PROPERTY. As of the Closing Date, all of Seller's real and personal
property shall be in good operating condition, structurally sound and in good
repair.
6.6 APPROVAL. The board of directors of Seller shall have approved
Seller entering into this Agreement and the consummation of the transactions
contemplated hereby. The board
18
of directors of Buyer shall have approved Buyer entering into this Agreement and
consummation of the transactions contemplated hereby.
6.7 LITIGATION. There shall not have been instituted, pending or
threatened against Seller, any suit, action or other proceeding by any private
party or governmental agency, commission, bureau or body seeking to restrain or
prohibit any of the transactions contemplated by this Agreement.
6.8 ACCRUED EXPENSES AND CONTINGENT LIABILITIES. Seller shall have
resolved, in a manner reasonably satisfactory to Buyer, any issues relating to
the accrued expenses and contingent liabilities of Seller.
6.9 CONFIDENTIALITY, NON-SOLICITATION AND NONCOMPETITION AGREEMENT.
Buyer and ▇▇▇▇▇▇▇ shall have entered into a Confidentiality, Non-Solicitation
and Noncompetition Agreement, prohibiting ▇▇▇▇▇▇▇ from competing with Buyer for
a period of five (5) years from the Closing.
6.10 FIRST TENNESSEE BANK. Seller shall cause First Tennessee Bank to
terminate any and all security interests it has with respect to Buyer or its
assets, and to execute UCC-3 Termination Statements in a form satisfactory for
filing with the Secretary of State of Tennessee, the Registrar of Deeds, Shelby
County, Tennessee and all other governmental agencies, relating to any and all
financing statements previously filed by First Tennessee Bank listing Seller as
debtor and First Tennessee Bank as secured party.
6.11 DELIVERIES. Seller and ▇▇▇▇▇▇▇ shall have delivered or caused
delivery of the items set forth in Section 2.2 hereof.
6.12 REPRESENTATIONS AND WARRANTIES. Each representation and warranty
of Seller and ▇▇▇▇▇▇▇ contained in this Agreement shall be true and correct both
at the date on which this Agreement is signed and at and as of the Closing Date
as if made anew at and as of such time.
6.13 OPINION OF SELLER'S COUNSEL. Buyer shall have received an opinion
from counsel of Seller dated as of the Closing Date and in substantially the
form attached as EXHIBIT K hereto.
7. 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):
7.1 PERFORMANCE OF OBLIGATIONS. Buyer shall have performed all of its
obligations and complied with all of its covenants required to be performed or
to be complied with by it under this Agreement on or prior to the Closing Date.
7.2 REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Buyer contained in this Agreement shall be true and correct both at the date on
which this Agreement is signed and at and as of the Closing Date as if made at
and as of such time.
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7.3 DELIVERIES. Buyer shall have delivered or caused delivery of the
items set forth in Section 2.3 of this Agreement.
7.4 LITIGATION. There shall not have been instituted, pending or
threatened against Buyer, 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.
7.5 OPINION OF BUYER'S COUNSEL. Seller shall have received an opinion
from counsel of Buyer dated as of the Closing Date and in substantially the form
attached as EXHIBIT L hereto.
8. CERTAIN ADDITIONAL COVENANTS OF SELLER. Seller and ▇▇▇▇▇▇▇ covenant and agree
with Buyer as follows:
8.1 CONDUCT AND TRANSACTIONS PRIOR TO CLOSING. From and after the date
of this Agreement until the Closing Date, except to the extent contemplated by
this Agreement or otherwise consented to in writing by Buyer:
(a) Seller shall operate its business in the same manner as
presently conducted and only in the ordinary and usual course and consistent
with past practice, and will use all reasonable efforts to preserve intact its
present business organization and to keep available the services of all
employees, representatives and agents. Seller shall use all reasonable efforts,
consistent with its past practices, to promote its business and shall not take
or omit to take any action which causes, or which is likely to cause, any
deterioration of their present business or relationships with suppliers or
customers.
(b) Seller will maintain all of its properties and assets,
tangible or intangible, in substantially the same condition and repair as such
properties and assets are maintained as of the date hereof, ordinary wear and
tear excepted, and shall take all reasonable steps necessary to maintain and
protect its intangible assets. Seller shall not sell, lease or otherwise dispose
of any of its assets except in the ordinary course of business consistent with
past practice.
(c) Without the prior written consent of Buyer, Seller shall
not grant any salary increase to any employee, or enter into any new or amend or
alter any existing employment agreement or bonus, incentive compensation,
medical reimbursement, life insurance, deferred compensation, profit sharing,
retirement, pension, stock option, group insurance, death benefit or other
fringe benefit plans or other arrangements for its employees.
(d) Seller shall keep its properties and business insured to
the same extent as insured on the date hereof.
(e) Seller shall not take any action or omit to take any
action that could cause (with or without the giving of notice or the passage of
time or both) the breach, default, acceleration, amendment, termination or
waiver of or under any Material Agreement or the imposition of any lien,
encumbrance, mortgage or other claim or charge against the Assets.
20
(f) Seller will maintain its books, accounts and records in
accordance with good business practice and generally accepted accounting
principles consistently applied.
(g) Seller shall not take any action that would cause its
representations and warranties set forth herein not to be true and correct at
and as of the Closing Date as if made at and as of such time.
(h) Seller shall not declare, set aside or pay any dividend or
make any distribution with respect its capital stock or redeem, purchase, or
otherwise acquire any of its capital stock.
(i) Seller will use its best efforts to obtain the approvals
referred to in Section 6.2 hereto.
(j) At least five (5) days prior to the Closing, Buyer may
notify Seller of those insurance policies referred to in Section 3.15 that Buyer
wants Seller to assign to Buyer, if any, and, upon such notice, Seller shall
arrange for such insurance policies to be assigned to Buyer as of the Closing
Date and for Buyer to be named as the insured thereunder.
(k) Seller shall assume responsibility for the payment of all
Federal and State income tax liabilities incurred through the Closing Date.
(l) In the event that Buyer desires to use and retain the
benefit of Seller's unemployment insurance rating with respect to any employees
of Seller whom Buyer desires to employ, Seller shall cooperate with Buyer with
respect to the taking of any actions which may reasonably be necessary to
effectuate or facilitate the transfer of such rating and to allow Buyer to
retain the full benefit thereof.
(m) Seller shall not otherwise engage in any practice, take
any action or enter into any transaction of the sort described in Section 3.6 of
this Agreement.
8.2 POST-CLOSING COVENANTS.
(a) Seller and ▇▇▇▇▇▇▇ covenant and agree, at their sole cost
and expense, to cause Seller's independent auditors, on or before March 31,
1998, to prepare audited financial statements of Seller for the fiscal year
ended December 28, 1997 and to deliver such audited statements to Buyer,
together with a written consent of such auditors with respect to the use of
those statements, and an agreement to provide signed opinions and consents with
respect thereto, at any time and from time-to-time, at no cost to Buyer, in any
required filings with the Securities and Exchange Commission by OutSource
International, Inc., Buyer's parent, for a period of seventeen (17) months after
the Closing.
(b) Seller and ▇▇▇▇▇▇▇ covenant and agree, at their sole cost
and expense, to notify Buyer, for a period of twelve (12) months after the
Closing Date, of any Workers' Compensation Claims reported to Seller or Carrier.
21
(c) Seller and ▇▇▇▇▇▇▇ covenant and agree with Buyer, its
successors and assigns, that they will do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, any and all such further
acts, instruments, papers and documents as may be necessary to carry out and
effectuate the intent and purposes of this Agreement.
(d) Buyer, Seller and ▇▇▇▇▇▇▇ acknowledge that Seller shall be
entitled to any amounts due and payable pursuant to retrospective adjustments
with respect to, or rights of subrogation under, Seller's workers' compensation
insurance policies covering employees of Seller with respect to services
performed on behalf of Seller prior to the Closing Date. Any claims pursuant to
such rights shall be at the sole cost and expense of Seller.
(e) Seller shall be responsible for compliance with the
requirements of COBRA for all of Seller's employees who are not hired by Buyer.
Seller shall indemnify and hold Buyer harmless for any liability Buyer incurs at
any time on or after the Closing Date with respect to: (i) any of Seller's
employees who are not hired by Buyer under the provisions of COBRA; or (ii) with
respect to any severance obligations of any employees of Seller.
(f) Within ten (10) days following the Closing Date, Seller
shall file an amendment to its articles of incorporation changing its corporate
name to a name agreed to by Buyer and shall file or cause to be filed such
certificates, documents or other instruments as may be necessary to effect such
change in each state or other jurisdiction in which it is qualified to do
business, including the withdrawal of all fictitious name filings made by
Seller.
(g) Buyer agrees that any sums of money received by Buyer for
services rendered by Seller prior to the Closing Date will be promptly delivered
to Seller and that Buyer will mail past due statements to former customers of
Seller with respect to outstanding accounts receivables of Seller until March
31, 1998 in accordance with Buyer's normal billing practices.
(h) Within thirty (30) days after the Closing Date, Seller
shall terminate the 401(k) Plan, effective as of a date prior to the Closing
Date. Within one year after the Closing Date, Seller shall deliver to Buyer the
final financial statement, the final Service determination letter and the final
Annual Report with respect to the 401(k) Plan.
(i) Seller and ▇▇▇▇▇▇▇ shall use their best efforts to assist
Buyer in transferring to Buyer the Permits, to the extent such Permits are
transferable.
9. LIQUIDATED DAMAGES. Notwithstanding anything to the contrary contained
herein, in the event that all of the conditions precedent set forth in Section 6
hereof are fulfilled, and the Closing does not occur on or prior to February 10,
1998 (the "Extended Closing Date"), solely as a result of the actions or the
failure to act by Buyer, Seller shall receive, as liquidated damages, Five
Hundred Thousand Dollars ($500,000.00) in cash. Liquidated damages paid to
Seller in accordance with this Section 9 shall constitute the sole and exclusive
remedy of Seller and ▇▇▇▇▇▇▇ hereunder.
22
10. MISCELLANEOUS.
10.1 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.
10.2 AMENDMENT. This Agreement may not be amended or modified in any
respect, except by the mutual written agreement of the parties hereto.
10.3 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.
10.4 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.
10.5 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.
10.6 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.
10.7 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.
10.8 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.
23
10.9 NOTICES. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be in writing and shall be deemed to have been duly given: (i) when
delivered by hand; (ii) when delivered by facsimile (if written confirmation of
receipt of the facsimile is obtained from the party to be charged with notice);
(iii) five (5) days after being deposited in the United States mail by
registered or certified mail, return receipt requested, postage prepaid; or (iv)
on the second business day after being sent (prepaid for next day delivery), via
Federal Express, United Parcel Service, DHL or other nationally recognized
delivery service, as follows:
If to Seller or ▇▇▇▇▇▇▇:
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇ Attorneys
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Buyer:
OutSource International of America, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
24
With copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Vice President and General Counsel
OutSource International, Inc.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Holland & Knight LLP
One East Broward Boulevard, Suite 1300
Ft. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as any party hereto may from time to
time designate in writing delivered in a like manner.
10.10 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.
10.11 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.
10.12 BROKERS AND AGENTS. Seller acknowledges and agrees that it has
retained ▇▇▇ ▇▇▇▇▇ as its sole broker with respect to the transactions
contemplated by this Agreement and is solely responsible for the payment of all
the fees and expense of said broker. Buyer has not retained any broker with
respect to the transaction contemplated pursuant to this Agreement. Seller
agrees to indemnify Buyer with respect to any claims made by any third party
claiming a brokerage fee or commission from Seller arising out of the
transaction contemplated by this Agreement.
10.13 EXPENSES. Except as otherwise provided herein, each of the
parties hereto agrees to pay all of the respective expenses incurred by it in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including accountants' and attorneys' fees.
10.14 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
25
to such party against the breach or threatened breach of such covenants, in
addition to any other legal remedies which may be available.
10.15 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.
10.16 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. Each party: (i) waives any objection which it may have that
such court is not a convenient forum for any such adjudication; (ii) agrees and
consents to the personal jurisdiction of such court with respect to any claim or
dispute arising out of or relating to this Agreement or the transactions
contemplated hereby; and (iii) agrees that process issued out of such court or
in accordance with the rules of practice of such court shall be properly served
if served personally or served by certified mail or other form of substituted
service, as provided under the rules of practice of such court. In the event of
any suit, action or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby the prevailing party thereunder shall be
entitled to recover reasonable attorneys' and paralegals' fees (for
negotiations, trials, appeals and collection efforts) and 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.
10.17 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.
26
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.
------------------------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------ Title: President
SELLER:
Witness:
Tempus, Inc.
------------------------------
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ Title: President
▇▇▇▇▇▇▇:
------------------------------ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
27
LIST OF EXHIBITS
Exhibit A Estoppel Certificate and Consent to Assignment of Lease
Exhibit B Subordinated Note
Exhibit C-1 1997 Adjusted GP
Exhibit C-2 Allocation of Purchase Price
Exhibit D ▇▇▇▇ of Sale
Exhibit E Assignment
Exhibit F Employment Agreement
Exhibit G Noncompetition Agreement
Exhibit H Assignment of Applications
Exhibit I Assignment of Trademarks
Exhibit J Assignment of Lease
Exhibit K Opinion of Seller's Counsel
Exhibit L Opinion of Buyer's Counsel
LIST OF SCHEDULES
Schedule 1 Locations
Schedule 1.1 Assets
Schedule 1.3 Assumed Liabilities
Schedule 1.4 Assumed Leases
Schedule 3.1 Permitted Liens
Schedule 3.2 Corporate Status of Buyer
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 3.9 Intellectual Property
Schedule 3.12 Employee Benefit Plans; ERISA
Schedule 3.14 Licenses, Permits and Authorizations
Schedule 3.15 Insurance
Schedule 3.17 Corporate and Personnel Data; Labor Relations
Schedule 3.20 Workers' Compensation Claims