Exhibit 10.1
DOCUMENT BOOK
ACQUISITION OF
ROSSAR HR, LLC
BY
THE RESOURCING SOLUTIONS GROUP, INC.
September 21, 2004
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TABLE OF CONTENTS
Document Title
Tab No.
--------------------------------------------------------------------------------
Asset Purchase
Agreement.....................................................
1
Exhibits to Asset Purchase Agreement:
-------------------------------------
Exhibit 1.4 Management
Agreement............................................. 2
Exhibit 3.2 Promissory
Note.................................................. 3
Exhibit 4.3(b) Bill of Sale and
Assignment................................... 4
Exhibit 4.3(c) Unemployment
Certificate...................................... 5
Exhibit 4.4(c) Assumption
Agreement.......................................... 6
Exhibit 4.4(d) Employment
Agreement.......................................... 7
Certificate of Resolutions of Rossar HR,
LLC................................. 8
Unanimous Consent of Rossar
HR,LLC........................................... 9
Certificate of Resolutions of The
Resourcing Solutions Group, Inc............ 10
Unanimous Consent of The Resourcing
Solutions Group, Inc..................... 11
Schedules to Asset Purchase
Agreement........................................ 12
-------------------------------------
1.1(b)
Furniture, fixtures and equipment
1.1(c)
Real Property Leases
1.1(d)
Computer Hardware and Software
1.1(e)
Licenses, Including Software
1.1(g)
Trade Names and Trademarks
1.1(h)
Non-workers Compensation Deposits
1.1(j)
Cash and Cash Equivalent Exceptions
3.3
Purchase Price Allocation
5.3
Noncontravention Exceptions
5.4
Encumbrances and Liens
5.5
Personal Property
5.6
Customer Agreements
5.7
Customer List
5.10
Sellers' Jurisdictions
5.11
Governmental Approvals and Filings Exceptions
5.13
Material Changes, Events and Developments
7.6(g)(iii) Bank
Accounts
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ASSET PURCHASE AGREEMENT
between
ROSSAR HR,
LLC
Seller,
Marcia J. Sartori and William R. Sartori II
and
THE RESOURCING SOLUTIONS GROUP, INC.
Buyer
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This ASSET PURCHASE AGREEMENT is entered into as of September 21,
2004
(the "Purchase Agreement") by and between
THE RESOURCING SOLUTIONS GROUP, INC.,
a Nevada corporation ("Buyer"), and ROSSAR
HR, LLC, a Pennsylvania limited
liability company ("Seller"), and Marcia J.
Sartori and William R. Sartori II
("Owners").
WITNESSETH:
WHEREAS, Seller operates a professional employer services business
in
Coraopolis, Pennsylvania (the business
referred to as the "Purchased Business");
and
WHEREAS, the parties desire that Seller transfers, conveys and
assigns
to Buyer those certain assets, properties
and rights of the Purchased Business
as a going concern; and that Buyer purchase
and acquire the same, upon the terms
set forth below;
WHEREAS, the Owners collectively own one hundred percent (100%) of
the
membership interests of Seller, and have
agreed as part of the sale of the
Purchased Business to certain restrictive
covenants in Article VII;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and
agreements set forth below, the
parties agree as follows:
ARTICLE I
TRANSFER OF PURCHASED ASSETS AND RELATED MATTERS
1.1 PURCHASED
ASSETS. On the terms and subject to the conditions
of this Agreement, Seller shall transfer,
convey and assign to Buyer, and Buyer
shall purchase and acquire from Seller the
following assets, properties and
rights of Seller, effective as of the date
provided in the Bill of Sale and
Assignment attached hereto as Exhibit
4.3(b):
(a) all
customers of the Purchased Business as named and
described in Schedule 5.7 attached hereto;
(b) all
furniture, fixtures, and equipment used in the
Purchased Business as set forth in Schedule 1.1(b);
(c) all real
property leases as set forth in Schedule
1.1(c) attached hereto;
(d) all
computer hardware and software used in the
business, including, but not limited to Accountix PEO Pro as
described
in Schedule 1.1(d) attached hereto;
(e) all
licenses used in the Purchased Business,
including, but not limited to, software licenses, as described,
in
Schedule 1.1(e) attached hereto;
(f) all
customer contracts of Seller as of the Closing
Date as described in Schedule 5.6 attached hereto;
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(g) the Trade
Names and Trademarks (including Service
Marks) of Seller used in the Purchased Business as described on
Schedule 1.1(g) attached hereto; and
(h) all
non-workers compensation deposits relating to the
Purchased Business as described in Schedule 1.1(h) attached
hereto
(i) all
records and files, including, but not limited to,
property records, purchasing and sales records, correspondence
with
suppliers and customers (both actual and prospective),
personnel
records, mailing lists, customer and vendor lists and records
used
exclusively in the Purchased Business.
(j) Unless
specifically described in Schedule 1.1(j), all
cash and cash equivalents generated from the operation of the
Purchased
Business (i.e. amounts invoiced to customers).
For convenience of reference, the assets,
properties and rights to be
transferred, conveyed and assigned to Buyer
hereunder, exclusive of the Excluded
Assets, are herein collectively called
"Purchased Assets".
The parties agree and acknowledge that
Buyer is purchasing substantially all of
the assets of Seller by way of this
Purchase Agreement.
1.2 EXCLUDED
ASSETS. Anything contained in Section 1.1 hereof to
the contrary notwithstanding, there are
expressly excluded from the assets,
properties and rights to be transferred,
conveyed and assigned to Buyer all
assets of Seller except those specifically
conveyed to the Buyer as provided in
Section 1.1 including, but not limited to
the following:
(a) all notes
receivable; and
(b) all
corporate records, including, but not limited to,
corporate minute books, accounting records, payroll records and
tax
returns, provided, however, Buyer shall have reasonable access to
all
such corporate records of Seller prior to and after the closing
Date;
all amounts received by Seller after the Closing in respect to
services
provided by Seller prior to Closing; and
(c) all assets
not specifically included as a Purchased
Asset, including, but not limited to, leases for personal property
and
contracts for insurance and contracts for services not described
in
Schedules 5.6 and 1.1(c)
For convenience of reference, the assets,
properties and rights which are not to
be transferred, conveyed and assigned to
Buyer hereunder are herein collectively
called "Excluded Assets".
1.3 PASSAGE OF
TITLE AND RISK OF LOSS. Legal and equitable title
and risk of loss with respect to the
Purchased Assets will not pass to Buyer, as
a result of this Agreement, until such
assets are transferred on the Effective
Date.
1.4 MANAGEMENT
AGREEMENT. The Parties shall execute a Management
Agreement effective as of the Closing Date
substantially in the form as in
Exhibit 1.4 attached hereto.
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ARTICLE II
ASSUMPTION OF CERTAIN LIABILITIES
2.1 ASSUMED
OBLIGATIONS. At the closing, Buyer will assume the
following liabilities and obligations, and
only the following liabilities and
obligations, of Seller:
The liabilities and obligations arising after the Effective Date
under
those contracts, licenses, leases, and other written agreements
set
forth on Schedules 1.1(c) and (e) and Schedule 5.6.
For convenience of reference, the
liabilities and obligations being assumed by
Buyer as stated above are herein
collectively called the "Assumed Obligations".
Buyer shall also have an option to assume
any personal property leases relating
to the Purchased Business at any time prior
to December 31, 2004. To exercise
such an option, Buyer shall notify Seller
in writing of its intent to assume a
lease and describe the lease.
2.2 EXCLUDED
OBLIGATIONS. Any other provision of this Agreement to
the contrary notwithstanding, Buyer does
not assume any liability or obligation
of Seller not included in the Assumed
Obligations, and Schedules 1.1(c) and (e)
and Schedule 5.6, including, but not
limited to, the following:
(a) any
liabilities and obligations of Seller for
Federal, state or local taxes, fines, interest or penalties
(including,
without limitation, franchise, income, personal, real property,
sales,
use, unemployment, gross receipts, excise, payroll, withholding
or
other taxes);
(b) any
claims, demands, liabilities or obligations of
any nature whatsoever which arose or were incurred at or before
the
Effective Date, or which are based on any event that occurred
or
existed at or before the Effective Date, or which are based on
services
performed by Seller at or before the Effective Date, irrespective
of
when a claim or demand is made (including if the claim is made
after
Effective Date) irrespective of whether the liability or
obligation
becomes manifest, after the Effective Date, and regardless of
whether
or not set forth or otherwise disclosed on any Schedule attached
hereto
(whether or not required to be so set forth or disclosed),
including,
but not limited to, that certain claim by Envirotrol;
(c) any
actions, suits, claims, investigations or legal,
administrative or arbitration proceedings pending or threatened
against
Seller;
(d) any
liabilities and obligations of Seller for amounts
owed to any person affiliated with Seller, in his or her capacity
as an
owner of Seller;
(e) any
liabilities and obligations of Seller existing at
the Closing under an employment agreement, written or verbal,
or
relating to in any way wages, commissions, bonuses, fees,
expenses,
accrued holiday, vacation and severance pay;
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(f) any
liabilities or obligations for payments due or
required to be made under any health, dental, vision, pension,
retirement, savings or other compensation or employee benefit
plan
maintained by Seller or any other entity;
(g)
any liabilities and
obligations of Seller under any
contract, license, lease or other agreement which is not listed
on
Schedules 1.1(b)-(e) or Schedule 6.6 attached hereto;
(h) any
liabilities relating in any way to an injury to
an employee of Seller;
(i) any
liability to pay any amounts under a contract or
policy of insurance; and
(j) any other
liabilities and obligations of Seller not
being specifically assumed by Buyer pursuant to Section 2.1
above.
For convenience of reference, the
liabilities and obligations of Seller not
being assumed by Buyer as aforesaid are
collectively called the "Excluded
Obligations". Seller shall take any and all
commercially reasonable actions
which may be necessary to prevent any
person, firm or governmental authority
from having recourse against the Purchased
Business, any of the Purchased Assets
or against Buyer with respect to any
Excluded Obligations.
ARTICLE III
PURCHASE PRICE
3.1 PURCHASE
PRICE. The aggregate consideration (the "Purchase
Price") to be paid to Seller for the
Purchased Assets is valued at $272,000, to
be paid in accordance with Section 3.2
below.
3.2 PAYMENT OF
PURCHASE PRICE. Unless otherwise stated below,
Buyer shall provide the following
consideration to Seller for the Purchased
Assets on the Closing Date:
Buyer will deliver to Marcia J. Sartori the following
Promissory Note in the principal amount of $272,000 in the form
as
in Exhibit 3.2 attached hereto; and
3.3
ALLOCATION. The Purchase Price will be allocated as set forth
on Schedule 3.3. The parties will use such
allocation in reporting the
transaction for Federal and state tax
purposes.
ARTICLE IV CLOSING
4.1 CLOSING
DATE. The closing for the consummation of the
transaction contemplated by this Agreement
(the "Closing") will take place at
Pittsburgh, PA on September 2004, or on
such other date and at such other time
or place as Buyer and Seller may mutually
agree, but the
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purchase, sale, and assignment of assets
shall be effective as of 12:01 a.m. on
January 1, 2005 (the "Effective Date").
4.2
SIMULTANEOUS ACTIONS. All actions to be taken and all
documents to be executed and delivered by
the parties at the Closing will be
deemed to have been taken and executed
simultaneously and no actions will be
deemed taken or any documents executed or
delivered until all have been taken,
executed and delivered.
4.3 DELIVERIES
BY SELLER ON CLOSING DATE. On or before the Closing
Date, Seller will deliver to Buyer the
following:
(a) Closinq
Certificate. An accurate certificate, dated
the Closing Date, of Seller, satisfactory in form and substance
to
Buyer, certifying that:
(1) the
representations and warranties of Seller
contained in this Agreement are true and accurate on and as of
the Closing Date with the same force and effect as if made on
the Closing Date;
(2) Seller has
performed and complied with all
covenants, obligations and agreements to be performed or
complied with by them on or before the Closing Date pursuant
to this Agreement;
(3) attached
hereto are true and complete copies
of resolutions adopted by Seller' board of directors or
members, as applicable, approving this Agreement and the
transactions contemplated hereby; and
(4) the
incumbency and specimen signature of
each officer of Seller executing this Agreement and any other
document to be executed by Seller are as set forth in such
certificate; and
(b)
Instruments of Transfer. A duly executed bill of sale
and general instrument of assignment, which bill of sale and
assignment
shall be in substantially the form of Exhibit 4.3(b) attached
hereto.
(c)
Unemployment Certificate. Executed Certificate from
Seller as required under Pennsylvania law stating that all
unemployment
contributions and obligations of Seller have been paid in full as
of
the Closing Date in substantially the form of Exhibit 4.3(c)
attached
hereto;
(d) Employment
Aqreement. A duly executed Employment
Agreement by Marcia J. Sartori in the form of Exhibit 3.2
attached
hereto; and
(e) Management
Agreement. A duly executed Management
Agreement between Seller and Buyer in the form of Exhibit 1.4
attached
hereto.
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4.4 DELIVERIES
BY BUYER ON CLOSING DATE. On or before the Closing
Date, Buyer will have delivered to Seller
the following:
(a) Closing
Certificate. An accurate certificate, dated
the Closing Date, of a
duly authorized officer of Buyer, satisfactory
in form and substance to Seller, certifying that:
(1) the
representations and warranties of Buyer
contained in this Agreement are true and accurate on and as of
the Closing Date with the same force and effect as if made on
the Closing Date;
(2) Buyer has
performed and complied with all
covenants, obligations and agreements to be performed or
complied with by it on or before the Closing Date pursuant to
this Agreement;
(3) attached
hereto are true and complete copies
of resolutions adopted by Buyer's board of directors approving
this Agreement and the transactions contemplated hereby; and
(4) the
incumbency and specimen signature of
each officer of Buyer executing this Agreement and any other
document to be executed by Buyer are as set forth in such
certificate.
(b) Delivery
of Consideration. Buyer shall provide an
executed Promissory Note as required by Section 3.2.
(c) Assumption
Agreement. A duly executed instrument of
assumption whereby Buyer shall assume the Assumed Obligations
as
provided herein, which instrument of assumption shall be in
substantially the form of Exhibit 4.4(c) attached hereto.
(d) Employment
Agreement. An Employment Agreement between
Buyer and Marcia J. Sartori substantially in the form as set forth
in
Exhibit 4.4(d) attached hereto.
(e) Life
Insurance Policy. If Marcia J. Sartori is
insurable with reasonable efforts, Buyer will purchase a level
ten-year, term life insurance policy in the name of Marcia J.
Sartori
that will include a
death benefit in an amount equal to $1,000,000 to a
beneficiary of her choice. The Company will pay the annual premium
for
this policy in years 1-5. Marcia Sartori may elect to continue
the
policy beyond year five, but she will be solely responsible for
paying
the annual premium for years 6-10.
4.5
POST-CLOSING DELIVERIES OF BUYER
Reaffirmation of Representations and Warranties. Buyer shall
provide representations and warranties as
provided in Article VI herein that
shall be effective as of December 31,
2004.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Seller represents and warrants to Buyer as follows:
5.1
ORGANIZATIONAL MATTERS. Seller is a limited liability company
duly organized, validly existing and in
good standing under the laws of the
Commonwealth of Pennsylvania.
5.2
AUTHORITY.
Seller has all requisite power and authority to:
own, lease and operate its respective
properties; carry on the Purchased
Business as now being conducted; enter into
this Agreement; perform its
respective obligations hereunder; and
consummate the transactions contemplated
hereby. The execution, delivery and
performance of this Agreement by Seller, and
the consummation of the transactions
contemplated hereby, have been duly and
validly authorized by all necessary
corporate action on the part of each of the
Seller. This Agreement has been duly and
validly executed by each Seller, and is
a valid and binding obligation of each
Seller, enforceable in accordance with
its terms.
5.3
NON-CONTRAVENTION. Except as stated in Schedule 5.3, neither
the execution, delivery and performance of
this Agreement by Seller, nor the
consummation by Seller of the transactions
contemplated hereby nor compliance by
Seller with any of the provisions hereof
will:
(a) conflict
with or result in a breach of any provision
of, as applicable, the Articles of Organization or Operating
Agreement
of Seller;
(b) as of the
Closing Date, cause a default (or give rise
to any right of termination, cancellation, or acceleration) under
any
of the terms of any note, bond, lease, mortgage, indenture,
license,
warranty or other instrument or agreement to which Seller is a
party,
or by which Seller or any of its assets are or may be bound or
benefited; or
(c) violate
any law, statute, rule or regulation or
order, writ, judgment, injunction or decree applicable to Seller or
any
of its respective assets.
No consent or approval by, or any
notification or filing with, and no permit, or
authorization of, any public body or
authority is required in connection with
the execution, delivery, and performance by
Seller or the consummation by Seller
of the transactions contemplated by this
Agreement.
5.4 TITLE TO
ASSETS.
(a) Seller has
good and marketable title to (or a valid
leasehold interest in) all of the Purchased Business and each of
the
Purchased Assets, free and clear of all mortgages, liens,
pledges,
charges, security interests, rights of way, options, rights of
first
refusal, conditions, restrictions or encumbrances of any kind
or
character, whether or not relating to the extension of credit or
the
borrowing of money (collectively, "Encumbrances"), except for
the
Encumbrances set forth on Schedule 5.4, and liens for taxes and
governmental charges incurred in the ordinary course of business
for
Seller's services not yet due and payable.
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(b) The
Purchased Assets include all assets and
properties and all rights that Seller believes are necessary to
carry
on the Purchased Business as presently conducted by Seller. Seller
has
complete and unrestricted power and the unqualified right to
sell,
convey, assign, transfer and deliver the Purchased Assets (subject
to
obtaining any consents or waivers of third parties disclosed on
Schedule 5.4 and required in connection with such sale,
conveyance,
assignment, transfer and delivery of the Purchased Assets or any
part
thereof). The instruments of transfer, conveyance and
assignment
executed and delivered by Seller to Buyer at the Closing will be
valid
and binding obligations of Seller, enforceable in accordance with
their
respective terms, except in each case to the extent limited by
application of general principles of equity and by bankruptcy,
insolvency, debtor relief, and similar laws of general
application
affecting the enforcement of creditors' rights and debtors'
obligations, and sufficient to transfer, convey and assign to Buyer
all
of Seller's interest in and to the Purchased Assets, and sufficient
to
vest in Buyer the full right, power and authority to conduct
the
Purchased Business as presently conducted.
5.5 PERSONAL
PROPERTY. Schedule 5.5 attached hereto contains a
summary and brief description of all
material tangible personal properties and
assets of the Purchased Business. All such
personal property is in good
operating condition and repair (excepting
normal wear and tear), is adequate and
suitable for the uses for which intended by
Seller in the ordinary course of the
Purchased Business, and there does not
exist any condition which interferes in
any material way with the use or economic
value thereof.
5.6
AGREEMENTS. Schedule 5.6 attached hereto sets forth a true,
complete and correct list of all Customer
Agreements to which and of the Seller
were a party as of the Closing Date.
5.7 CUSTOMERS.
Schedule 5.7 attached hereto contains a true and
complete list of the customers of the
Purchased Business as of the Closing Date.
5.8 BROKERS.
Neither Seller, nor any of its officers, directors,
employees or members, has employed any
broker or finder in connection with the
transactions contemplated by this
Agreement. Seller shall indemnify, defend and
hold Buyer harmless from any and all claims
or losses relating to brokerage
fees, commissions or finder's fees owed or
claimed to be owed to any broker or
finder engaged or claimed to be engaged by
Seller.
5.9 BENEFIT
PLANS/ERISA. Seller is not a party to, and is not a
sponsor, administrator or fiduciary of any
employee benefit plan, including, but
not limited to, an employee benefit plan
defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA") which is maintained
or contributed to by the Company or any
organization which is a member of a
controlled group of organizations within
the meaning of Code Sections 414(b),
(c), (m) or (o) of which any of the Sellers
is a member (the "Controlled Group")
or under which any of the Sellers or any
member of the Controlled Group has any
liability or contingent liability ("Benefit
Plans"), and which cover any
employee of the Seller.
5.10
JURISDICTIONS. Seller are duly authorized, qualified, and if
required by state law, licensed to transact
the Purchased Business in the states
listed on Schedule 5.10 attached
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hereto. Seller is current on all reports,
fees, and licensing required by the
states listed on Schedule 5.10.
5.11
GOVERNMENTAL APPROVALS AND FILINGS. Except as set forth in
Schedule 5.11, Seller has no Knowledge of
any required consent, approval or
action of, filing with or notice to any
Governmental or Regulatory Authority on
the part of the Seller is required in
connection with the execution, delivery
and performance of this Agreement or any of
the Related Agreements or the
consummation of the transactions
contemplated hereby or thereby.
5.12
ABSENCE OF CHANGES. Except for the execution and delivery of
this Agreement and the transactions to take
place pursuant hereto on or prior to
the Closing Date, since August 30, 2004,
and except as set forth in Schedule
5.13 and particular to the business that
the Company is in (i.e. not involving
the general economy), there has not been
any change, event or development which,
individually or together with other such
events, could reasonably be expected to
have a Material Adverse Effect on the
Seller or the Purchased Business. Without
limiting the foregoing, except as set forth
in Schedule 5.13, there has not
occurred between August 30, 2004 and the
Closing Date:
(a) any
physical damage, destruction or other casualty
loss (not covered by insurance) affecting the Purchased Business in
an
amount exceeding $10,000 individually or $20,000 in the
aggregate;
(b) any
write-off or write-down, or any determination to
write off or write down in an amount exceeding $10,000 individually
or
$20,000 in the aggregate;
(c) any
re-negotiation of a service agreement between the
Seller and a major customer or any monetary condition contained
therein
that would exceed $10,000;
(d) any
incurrence of a Lien (other than a Permitted
Lien) in excess of $10,000 on any of the Company's property;
(e) any (i)
amendment of the organizational documents of
the Seller, (ii) re-capitalization, reorganization, liquidation
or
dissolution of the Seller or (iii) merger or other business
combination
involving the Seller;
(f) any
entering into, or material amendment,
modification, termination (partial or complete) or granting of a
waiver
under or giving any consent with respect to any Contract or any
License
that in the aggregate exceed $10,000;
(g) any
commencement or termination by the Seller of any
line of business;
(h) any other
material transaction involving or
development affecting the Purchased Business outside the
ordinary
course of business, consistent with past practice;
(i) any
entering into a Contract or committing to do or
engage in any of the foregoing after the date hereof;
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(j) any
termination of a material service agreement
between the Company and a client of the Seller;
(k) a
termination of an insurance contract or policy of
the Seller that the Seller is unable to replace within a
reasonable
time; or
(l) any
distributions to equity holders of the Seller or
any payments to employees in excess of such employees base
compensation
or to any other persons other than in the ordinary course of
business.
5.13
TAXES.
(a) All Tax
Returns required to be filed by or on behalf
of the Seller have been duly filed on a timely basis and such
Tax
Returns are true, complete and correct. All Taxes owed by the,
Seller
have been paid in full (whether or not shown on or reportable on
such
Tax Returns).
(b) All
payroll taxes of the Seller have been paid and/or
held in trust awaiting payment for all payroll processed by the
Seller
through the date of Closing.
(c) None of
the Purchased Assets is subject to any Lien
arising in connection with any failure or alleged failure to pay
any
Tax.
5.14
COMPLIANCE WITH LAWS AND ORDERS. Seller has not at any time
within the last five (5) years, received
any notice of a violation of or in
default under any Law, assigned License or
Order.
In the event that Seller fails to comply
with any of the requirements of Article
V, Buyer, in its sole discretion, shall be
entitled to terminate the Purchase
Agreement and all other agreements relating
thereto, and/or offset any losses,
costs, expenses, and liabilities caused by
such non-compliance from the
Promissory Note.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
6.1
ORGANIZATIONAL MATTERS. Buyer is a corporation duly organized,
validly existing and in good standing under
the laws of the State of Nevada.
6.2 AUTHORITY.
Buyer has all requisite corporate power and
authority to enter into this Agreement, to
perform its obligations hereunder and
to consummate the transactions contemplated
hereby. The execution, delivery and
performance of this Agreement and the
consummation of the transactions
contemplated hereby, have been duly and
validly authorized by all necessary
corporate action on the part of Buyer. This
Agreement has been duly and validly
executed and delivered by Buyer, and is a
valid and binding obligation of Buyer,
enforceable in accordance with its
terms.
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6.3
NON-CONTRAVENTION. Neither the execution, delivery and
performance of this Agreement by Buyer, nor
the consummation by Buyer of the
transactions contemplated hereby, nor
compliance by Buyer with any of the
provisions hereof will:
(a) conflict
with or result in a breach of any provision
of the Articles of Incorporation or Bylaws of Buyer;
(b) cause a
default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms
of
any agreement, instrument or obligation to which Buyer is a party,
or
by which any of its properties or assets may be bound, in each
case
excluding the Purchased Assets as to which no representation or
warranty is made by Buyer; or
(c) violate
any statute, rule or regulation or judgment,
order, writ, injunction or decree of any court, administrative
agency
or governmental body, in each case applicable to Buyer or any of
its
assets.
No consent or approval by, or any
notification or filing with, and no permit, or
authorization of, any public body or
authority is required in connection with
the execution, delivery, and performance by
Buyer or the consummation by Buyer
of the transactions contemplated by this
Agreement.
6.4 BROKERS.
Buyer has engaged Sugarhill Financial Services, LLP
("Sugarhill"), and agreed to pay a fee to
Sugarhill upon the completion of the
transaction that is the subject of this
Agreement. Neither Buyer nor its
officers, directors, employees or members,
has employed any other broker or
finder in connection with the transactions
contemplated by this Agreement. Buyer
shall indemnify, defend and hold Seller
harmless from any and all claims or
losses relating to brokerage fees,
commissions or finder's fees owed or claimed
to be owed to any broker or finder engaged
or claimed to be engaged by Buyer.
ARTICLE VII
COVENANTS OF SELLERS
Seller hereby covenants and agrees with Buyer as follows:
7.1 ACCESS TO
PROPERTIES AND RECORDS. Seller will give to Buyer
and to its counsel, accountants, and other
representatives reasonable access
during normal business hours to its
properties, personnel, books, tax returns,
contracts, commitments and records and the
right to make copies thereof. Seller
will furnish to Buyer and such
representatives all such additional documents and
financial and other information concerning
the Purchased Business as Buyer or
its representatives may from time to time
reasonably request and permit Buyer
and such representatives to examine all
records and working papers relating to
the preparation, review and audits of the
financial statements and tax returns
relating to the Purchased Business.
7.2 APPROVALS.
Seller will use all reasonable effort to obtain in
writing prior to the Closing Date all
approvals, consents and waivers required
to be obtained by Seller in order to
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effectuate the transactions contemplated
hereby, and Seller shall obtain all
such approvals, consents, and waivers prior
to the Effective Date.
7.3 FURTHER
ASSURANCES. Seller will at any time and from time to
time after the Closing, upon the request of
Buyer, do, execute, acknowledge and
deliver, and cause to be done, executed,
acknowledged or delivered, all such
further acts, deeds, assignments,
transfers, conveyances, powers of attorney or
assurances as may be required for the
better transferring, assigning, conveying,
granting, assuring and confirming to Buyer,
or for aiding and assisting in the
collection of or reducing to possession by
Buyer, of the Purchased Assets, or to
vest in Buyer good, valid and marketable
title to the Purchased Assets and
otherwise to consummate the transactions
contemplated by this Agreement.
7.4
RESTRICTIVE COVENANTS.
(a) COVENANT
NOT TO COMPETE. Seller, and its respective
successors, assigns,
affiliates, and subsidiaries, and Marcia J.
Sartori, individually, and William R. Sartori II, individually,
shall
not, for a period of two years from the Closing Date, for any
reason,
directly or indirectly, engage in any business or venture that
is
similar to, or competes with, the business of Buyer within the
Commonwealth of Pennsylvania, and the states of Maryland, Ohio,
West
Virginia, and any other state in which Seller conducted business
prior
to the Closing Date.
(b) COVENANT
NOT TO SOLICIT OR SELL TO CUSTOMERS. In
addition to the restrictions described in paragraph 7.4(a), Seller
and
its successors, assigns, subsidiaries or affiliates, Marcia J.
Sartori,
individually, and William R. Sartori II, individually, shall not,
for a
period of two years from the Closing Date, for any reason, directly
or
indirectly, sell, offer or solicit Competitive Services, (as
defined in
paragraph 7.4 (d)), to any current or former customer, or
prospective
customer of the Seller, its subsidiaries, affiliates or
franchisees,
without the prior written consent of the Buyer.
(c)
COVENANT NOT TO
INTERFERE. Seller and its successors,
assigns, subsidiaries or affiliates, and Marcia J. Sartori,
individually, and William R. Sartori II, individually, shall
not,
during the two year period immediately following the Closing Date,
for
any reason, employ or attempt to employ any employee of Buyer (as
of
the Closing Date) or any former employee of Seller, or
otherwise
encourage or attempt to encourage any such person to leave
their
respective
employment.
(d)
DEFINITIONS. References to "former" customers shall
mean a person that was a customer of the Seller during the twelve
(12)
month period prior to the Closing Date and references to
"prospective"
customers shall mean a person to whom the Seller has made a
presentation within the twelve (12) month period prior to the
Closing
Date. The Term "Competitive Services" shall include employee
leasing
services, payroll outsourcing, human resources advice and
outsourcing,
temporary staffing services, "temp to hire" assignments, or what
is
commonly referred to as payrolling.
(e)
Divisibility OF COVENANT PERIOD. If any portion of
the restrictive covenants contained herein is held to be
unreasonable,
arbitrary or against public policy, each covenant shall be
considered
divisible as to time, customer base and personnel,
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such that each month within the specified period shall be deemed
a
separate period of time, each customer shall be deemed a
separate
customer, resulting in an intended requirement that the duration
of
time and lesser time and largest lesser customer base and
personnel
base determined not to be unreasonable, arbitrary or against
public
policy shall remain effective and be specifically enforceable
against
the Seller.
(f)
COVENANT
INDEPENDENT. Each restrictive covenant set
forth in this Agreement shall be construed as a covenant
independent of
any other covenant or provision of this Agreement or any other
agreement which the Seller or the Sartoris may have, whether
fully
performed or executory, and the existence of any claim or cause
of
action by the Seller against the Buyer, whether predicated upon
another
covenant or provision of this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Buyer of such
restrictive covenant.
(g)
ASSIGNABILITY; SURVIVAL OF COVENANTS. All restrictive
covenants contained in this Agreement shall be fully assignable to
any
successor or transferee of the Buyer with the written consent of
the
Seller, which consent shall not be unreasonably withheld.
Notwithstanding this restriction on assignment, Buyer may assign
the
restrictive covenants contained herein to an affiliate of Buyer
without
the prior, written consent of any party to this Agreement. In the
event
of such an assignment, the parties agree and understand that
the
restrictive covenants shall be enforceable only to the extent as
they
would apply prior to any assignment.
In the event that Seller violates a
restrictive covenant described in Section
7.4, Buyer must provide Seller with notice
of such violation and give Seller a
10 day cure period which if not resolved
after such cure period to the
satisfaction of Buyer, Buyer, in its sole
discretion, shall be entitled to
terminate the Purchase Agreement and all
other agreements relating thereto
and/or offset any losses, costs, expenses,
and liabilities caused by such
non-compliance from the Promissory
Note.
7.5 CONDUCT
AND TRANSACTIONS PRIOR TO THE EFFECTIVE DATE. From and
after the Closing Date until the Effective
Date, except to the extent stated in
this Agreement or otherwise consented to in
writing by Buyer:
(a) In
accordance with the terms and conditions of the
Management Agreement, Seller will not manage the Purchased
Business
after the Closing Date. Seller also agrees not take any actions
regarding the Purchased Business that would be contrary to the
manner
that Seller presently conducts the Purchased Business, or
otherwise
damaging to the Purchase Business. Seller agrees that it will not
take
or cause
any action that would be harmful to the Purchased Business,
including, but not limited to, any actions directed towards its
employees, representatives and agents of the Purchased Business.
Seller
shall not take or omit to take any action which causes, or which
is
likely to cause, any deterioration of its present business or
relationships with suppliers or customers.
(b) Subject to
the terms and conditions of the Management
Agreement, Seller will maintain the Purchased Assets in
substantially
the same condition and repair as such properties and assets are
maintained as of the date hereof, ordinary wear and
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tear excepted, and shall take all reasonable steps necessary to
maintain and protect the Purchased Business.
(c) Seller
shall cooperate fully with Buyer to keep the
Purchased Assets insured to the same extent as insured on the
date
hereof.
(d) 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 the Purchase Agreement or the
imposition of any lien, encumbrance, mortgage or other claim or
charge
against the Purchased Assets.
(e) Seller
will maintain its books, accounts and records
in accordance with good business practice and generally
accepted
accounting principles consistently applied.
(f) 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.
(g) Seller
shall not do any of the following without the
prior
written, consent of the President of TRSG:
(1) other than
as approved by Buyer pursuant to
the Management Agreement, and for amounts due to Worksite
Employees by contract, make any distributions or payments to
any person of funds from the operations of the Purchased
Business;
(2) Open or
close any bank accounts relating to
the Purchased Business;
(3) Withdraw
any funds from any bank account
listed on Schedule 7.6(g)(iii) attached hereto;
(4) Enter into
a contract relating in any way to
the Purchased Business;
(5) Hire any
employee without the prior, written
approval of Gary Musselman, President of Buyer;
(6) Other than
as required to process and
deliver payroll to Worksite employees pursuant to a client
invoice for which the client has provided funds for such
payroll, transfer any funds from a bank account of the
Purchased Business, or Seller in any manner whatsoever,
including, but not limited to, via check, draft, money order,
wire, or ACH;
(h) Seller
shall continue to employ all employees who
work at a client location who are subject to a written
agreement
between Seller and a client ("Worksite Employee"). Although Seller
will
outsource operational tasks to Buyer pursuant to the Management
Agreement, Seller shall continue to be responsible to process
the
payroll of
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all Worksite Employees, collect and remit payroll taxes of the
Worksite
Employees, and comply with all terms and conditions of all
client
contracts, all subject to the terms and conditions of the
Management
Agreement; or
(i) Cause or
allow any of the Purchased Assets to become
encumbered or subject to any lien or security interest of any
kind.
In the event that Seller fails to comply
with any of the requirements of Section
7.5, Buyer must provide Seller with notice
of such violation and give Seller a
10 day cure period which if not resolved
after such cure period, Buyer, in its
sole discretion, shall be entitled to
terminate the Purchase Agreement and all
other agreements relating thereto and/or
offset any losses, costs, expenses, and
liabilities caused by such non-compliance
from the Promissory Note.
ARTICLE VIII
COVENANTS OF BUYER
8.1
CONFIDENTIALITY; RETURN OF DOCUMENTS. Unless and until the
transactions contemplated by this Agreement
are consummated on the Closing Date
(or other date mutually agreed upon by the
parties hereto), Buyer will keep in
confidence all proprietary and financial
information of Seller including
information concerning its customers, and
will not, except to the extent
required by law, financing and securities
disclosure requirement or to the
extent any such information is otherwise
publicly available or received from a
third party not affiliated with Seller,
without the prior written consent of
Seller, reveal any such financial or
proprietary information to any third party
other than affiliates or representatives of
Buyer and potential lenders,
investors and other providers of funds each
of whom shall agree to be bound by
the same restrictions with respect to
confidentiality imposed on Buyer
hereunder. If the transactions contemplated
by this Agreement are not
consummated, Buyer will return to Seller,
at Seller' request, all documents
supplied to Buyer by Seller and notes
derived therefrom, pursuant to the
provisions of this Agreement.
8.2 FUNDING
ADVANCES TO SELLER PRIOR TO EFFECTIVE DATE. In the
event that, based on the performance of the
Purchased Business between the
Closing Date and the Effective Date, Seller
experiences a net loss from
revenues, Buyer agrees to provide funds,
the amount to be in the sole discretion
of Buyer, to cover any such losses.
ARTICLE IX
INDEMNIFICATION
9.1
INDEMNIFICATION.
(a) Seller
Indemnity. Seller will indemnify, defend and
save Buyer harmless from, against, for and in respect of the
following:
(1) any and
all liabilities and obligations of
Seller (whether absolute, accrued, contingent or otherwise and
whether a contractual, tax or any other type
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of liability, obligation or claim) not specifically assumed by
Buyer pursuant to this Agreement and the Assumption Agreement;
(2) any damages,
losses, obligations,
liabilities, claims, actions or causes of action sustained or
suffered by Buyer and arising from a breach of any material
representation or warranty of Seller contained in or made
pursuant to this Agreement (including the Schedules and
Exhibits attached hereto), or in any certificate, instrument
or agreement delivered by Seller pursuant hereto or in
connection with the transactions contemplated hereby;
(3) any
damages, losses, obligations,
liabilities, claims, actions or causes of action sustained or
suffered by Buyer and arising from a breach of any material
covenant or agreement of Seller contained in or made pursuant
to this Agreement; and
(4) all
reasonable costs and expenses
(including, without limitation, reasonable attorneys',
accountants', and other professional fees and expenses)
incurred by Buyer in connection with any action, suit,
proceeding, demand, investigation, assessment or judgment
incident to any of the matters indemnified against under this
Section 9.2(a).
(b) Buyer's
Indemnity. Buyer will indemnify, defend and
save Seller harmless from, against, for and in respect of the
following:
(1) any
liabilities or obligations of Seller
assumed by Buyer pursuant to this Agreement and the Assumption
Agreement;
(2) any
damages, losses, obligations,
liabilities, claims, actions or causes of action sustained or
suffered by Seller and arising from a breach of any
representation or warranty of Buyer contained in or made
pursuant to this Agreement or in any certificate, instrument
or agreement delivered by it pursuant hereto or in connection
with the transactions contemplated hereby;
(3) any
damages, losses, obligations,
liabilities, claims, actions or causes of action sustained or
suffered by Seller and arising from a breach of any covenant
or agreement of Buyer contained in or made pursuant to this
Agreement; and
(4) all
reasonable costs and expenses
(including, without limitation, reasonable attorneys',
accountants', and other professional fees and expenses)
incurred by Seller in connection with any action, suit,
proceeding, demand, investigation assessment or judgment
incident to any of the matters indemnified against under this
Section 9.2(b).
9.2 THIRD
PARTY Claims. With respect to claims resulting from
assertion of liability by third parties,
the obligations and liabilities of the
party responsible for indemnification (the
"Indemnifying Party") hereunder with
respect to indemnification claims by the
party entitled to indemnification (the
"Indemnified Party") will be subject to the
following terms and conditions:
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(a) The
Indemnified Party will give prompt written notice
to the Indemnifying Party of any assertion of liability by a
third
party which might give rise to a claim by the Indemnified Party
against
the Indemnifying Party based on the indemnity agreements contained
in
Section 9.2 hereof, stating the nature and basis of said assertion
and
the amount thereof, to the extent known.
(b) If any
action, suit or proceeding is brought against
the Indemnified Party, with respect to which the Indemnifying Party
may
have liability under the indemnity agreement contained in Section
9.2
hereof, the action, suit or proceeding will, upon the written
agreement
of the Indemnifying Party that it is obligated to indemnify under
the
indemnity agreement contained in Section 9.2 hereof, be
defended
(including all proceedings on appeal or for review which counsel
for
the defendant shall deem appropriate) by the Indemnifying Party at
the
expense of the Indemnifying Party. The Indemnified Party will have
the
right to select legal counsel in any such case, and the fees
and
expenses of such counsel will be at the expense of the
Indemnifying
Counsel. If the Indemnifying Party does not agree, promptly after
the
notice to it provided in subsection (a) above, that it is obligated
to
indemnify under the indemnity agreement contained in Section
9.2
hereof, that such Indemnified Party reasonably concludes that
such
action, suit or proceeding involves to a significant extent
matters
beyond the scope of the indemnity agreement contained in Section
9.2
hereof, or that there may be defenses available to it which are
different from or additional to those available to the
Indemnifying
Party, the Indemnifying Party will not have the right to direct
the
defense of such action, suit or proceeding on behalf of the
Indemnified
Party and that portion
of such fees and expenses reasonably related to
matters covered by the indemnity agreement contained in Section
9.2
hereof will be borne by the Indemnifying Party. The Indemnified
Party
will be kept fully informed of such action, suit or proceeding at
all
stages thereof whether or not it is so represented. The
Indemnifying
Party will make available to the Indemnified Party and its
attorneys
and accountants all books and records of the Indemnifying Party
relating to such proceedings or litigation and the parties hereto
agree
to render to each other such assistance as they may reasonably
require
of each other in order to ensure the proper and adequate defense of
any
such action, suit or proceeding.
(c) The
Indemnifying Party will not make any settlement
of any claims without the written consent of the Indemnified
Party,
provided, that if the Indemnified Party fails to consent to a
settlement of any claim, demand, suit or cause of action described
in
this Section 9.3, the Indemnifying Party's obligation to indemnify
an
award of damages shall in no event exceed the amount that the
Indemnifying Party would have been required to indemnify for had
such
settlement offer been accepted by the Indemnified Party.
ARTICLE X
MISCELLANEOUS
10.1
EXPENSES; TRANSFER
TAXES. All fees, costs and expenses
incurred by Seller in connection with,
relating to or arising out of the
execution, delivery and performance of this
Agreement and the consummation of
the transactions contemplated hereby,
including, without limitation, legal and
accounting fees and expenses, will be borne
by Seller. All fees and expenses
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incurred by Buyer in connection with this
Agreement will be borne by Buyer. All
registration, recording or transfer taxes
which may be payable in connection
with the transactions contemplated by this
Agreement will be paid by Buyer.
10.2
PARTIES IN INTEREST. This Agreement is not assignable by
either Buyer or Seller without the prior
written consent of the other, except
that without relieving Buyer of any of its
obligations under this Agreement,
Buyer may assign this Agreement to any
subsidiary or affiliate of Buyer. Subject
to the foregoing, this Agreement will be
binding upon, inure to the benefit of,
and be enforceable by, the respective
successors, heirs, legal representatives,
and assigns of the parties hereto. This
Agreement constitutes an agreement among
the parties hereto and none of the
agreements, covenants, representations or
warranties contained herein is for the
benefit of any third party not a party to
this Agreement.
10.3
ENTIRE AGREEMENT; AMENDMENTS. This Agreement (including the
Schedules and Exhibits attached hereto)
contains the entire understanding of the
parties with respect to its subject matter.
This Agreement supersedes all prior
agreements and understandings between the
parties with respect to the subject
matter hereof. This Agreement may be
amended only by a written instrument duly
executed by the parties, and any condition
to a party's obligations hereunder
may only be waived in writing by such
party.
10.4
HEADINQS. The article and section headings contained in this
Agreement are for reference purposes only
and will not affect in any way the
meaning or interpretation of this
Agreement.
10.5
NOTICES. All notices, claims, certificates, requests, demands
and other communications hereunder will be
in writing and shall be deemed given
if delivered personally, if mailed (by
registered or certified mail, return
receipt requested and postage prepaid), if
sent by reputable overnight courier
service for next business day delivery, or
if sent by facsimile transmission, as
follows:
IF TO SELLER:
WITH A COPY TO:
Marcia J. Sartori
Joseph F. Weis, Esq.
YourStaff SolutionsTM 615 Fifth Avenue
Lynch Weis, LLC
Suite 200
101 Smith Drive
Coraopolis, PA 15108
Cranberry Twp., PA 16066
IF TO BUYER:
WITH COPY TO:
Gary Musselman
Brian Nugent, Esq.
Asmara Services II, In