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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
the 29th day of October, 1998 by and between THE PROFIT GROUP INTERNATIONAL I,
INC., a Georgia corporation ("PRGI"), THE PROFIT RECOVERY GROUP INTERNATIONAL,
INC., a Georgia corporation ("PRGX"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., an Illinois
resident, d/b/a a sole proprietorship (the "Seller").
W I T N E S S E T H:
WHEREAS, PRGI is in the business of auditing accounts payable,
expenses, capital expenditures, and various other payment arrangements or
obligations between its clients ("Clients") and their suppliers, vendors,
landlords and taxing authorities (the "Client Payees") for the purpose of
identifying and documenting overbilling by and refund, credit or chargeback
claims for overpayment to, the Client Payees (the "Audit Activities") and
rendering management advisory services associated with the Audit Activities
(collectively, the "Business of PRGI");
WHEREAS, Seller is engaged in the business of the examination, review
and audit of various paid bills and expenses of client companies, such as
accounts payable, cooperative advertising, advertising expense, real estate tax,
common area maintenance, legal and professional fees, related and other charges
and expenses for the purpose of discovering and documenting for subsequent
charge back and recovery overbillings, overpayments and/or under-deductions made
by client companies, or for discounts, rebates and allowances of all types,
freight charges, special handling, insurance, and all other overbillings,
overpayments and/or under-deduction incidental or related thereto and collection
with respect to same and the rendering of other related management counseling
service (the "Business");
WHEREAS, Seller wishes to sell to PRGI substantially all of Seller's
assets used or held for use in the Business pursuant to the terms and conditions
of this Agreement;
WHEREAS, concurrently with the execution hereof, PRGI has entered into
acquisition agreements (collectively, the "Other Acquisition Agreements") in
respect of each of the following entities: ▇▇▇▇▇▇ ▇▇▇▇ & Associates, Inc.
("RBA"), RBA Audits, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ & Associates, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇, a
sole proprietorship, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a sole proprietorship, ▇▇▇▇ ▇▇▇▇▇▇▇▇, a
sole proprietorship, Savant Consulting, L.L.C. and ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ &
Associates, Inc. (collectively, the "Other Sellers");
WHEREAS, concurrently with the execution hereof, Seller has entered
into a Representations, Covenants and Indemnification Agreement with PRGI, PRGX
and the parties to the Other Acquisition Agreements (the "RCI Agreement"), the
terms and provisions of which are expressly incorporated herein by reference;
and
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the RCI Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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ARTICLE 1
PURCHASE AND SALE OF PURCHASED ASSETS
1.1 ASSETS TO BE ACQUIRED. Subject to and upon the terms and conditions
set forth herein, PRGI agrees to purchase from Seller, and Seller agrees to sell
to PRGI, except as provided in Section 1.2 hereof, all right, title and interest
of Seller in and to all of the tangible and intangible assets of Seller used or
held for use by Seller in the conduct of the Business as of the Closing Date (as
hereinafter defined), which are described in this Section 1.1 with reference to
capitalized terms which, if not otherwise defined herein, have the meaning
assigned to such capitalized terms in the RCI Agreement, free and clear of all
claims, liens, encumbrances, security interests and similar interests of any
kind or nature whatsoever, including, without limitation, the following
(collectively, the "Purchased Assets"):
(a) all of the Fixed Assets;
(b) all of Seller's interest in and rights and benefits
owing to Seller under those Contracts which PRGI specifically agrees to assume,
which assumption shall be evidenced by inclusion of such Contract by PRGI on a
schedule to the Assignment and Assumption Agreement (as hereinafter defined)
(collectively, the "Assigned Contracts");
(c) all Accounts Receivable outstanding as of the Closing
and all Unbilled Claims and Work in Progress as of the Closing;
(d) all of Seller's interest in and rights and benefits
accruing to Seller as lessee under those Leases which PRGI specifically agrees
to assume, which assumption shall be evidenced by inclusion of such Lease by
PRGI on a schedule to the Assignment and Assumption Agreement (collectively, the
"Assigned Leases");
(e) all Intellectual Property Rights;
(f) all Licenses and Permits;
(g) all Deposits and Other Rights;
(h) all of Seller's customer and supplier lists, all
client files, all files related to Employees and Associates, all computer data
bases and other records, other than Seller's corporate minute books and stock
records;
(i) all of Seller's right, title and interest in and to
its telephone numbers and the directory advertising for such telephone numbers
to the extent assignable; and
(j) all of Seller's right, title and interest in and to
all other tangible personal property relating to the Business.
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary contained
in Section 1.1 hereof, PRGI shall not acquire and Seller shall not transfer to
PRGI any of the documents relating to the organization, maintenance and
existence of Seller, any assets held under any pension, profit
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sharing or other Employee Benefit Plan (as defined herein), all cash and cash
equivalents of Seller in the Business, subject to Section 2.1(b) hereof,
Seller's rights to any tax refunds, any insurance policies of Seller, any
vehicles owned or leased by Seller, all furniture and art work to the extent
listed on Schedule 1.2 attached hereto and any of the rights of Seller under
this Agreement, the RCI Agreement, the other Seller Transaction Documents and
the other PRGI Transaction Documents.
1.3 CONVEYANCE OF ASSETS. The conveyance, transfer and delivery of the
Purchased Assets shall be made by Seller and accepted by PRGI on the Closing
Date, effective as of the Effective Date, as follows:
(a) Seller shall execute and deliver to PRGI a ▇▇▇▇ of \
sale in the form of Exhibit 1.3(a) attached hereto and made a part hereof (the
"▇▇▇▇ of Sale");
(b) Seller and PRGI shall execute and deliver an
Assignment and Assumption Agreement in the form of Exhibit 1.3(b) attached
hereto and made a part hereof (the "Assignment and Assumption Agreement") with
respect to the Assumed Liabilities (as hereinafter defined);
(c) Seller shall execute and deliver such additional
instruments of sale, transfer, conveyance and assignment as of the Closing Date
as counsel to Seller and counsel to PRGI shall mutually deem necessary or
appropriate.
1.4 CLOSING. As soon as practicable after the execution hereof, the
parties hereto shall execute and deliver all documents and instruments for the
consummation of the transactions contemplated herein (other than the
certificates for the PRGX Shares or the Cash Consideration as defined herein)
into escrow with ▇▇▇▇▇▇, Golden & ▇▇▇▇▇▇▇, LLP, as escrow agent in accordance
with that certain closing escrow agreement in substantially the form of Exhibit
1.4 attached hereto (the "Closing Escrow Agreement"), pending execution and
delivery in escrow of all documents contemplated by this Agreement and the Other
Acquisition Agreements by all parties thereto. The closing of the transactions
contemplated herein (the "Closing") shall take place on or before October 29,
1998, at the offices of PRGI's counsel or by the exchange of documents and
instruments by mail, courier, telecopy and wire transfer to the extent mutually
acceptable to the parties hereto, upon compliance with the terms, conditions and
contingencies contained herein or on such other date as is mutually agreed upon
by the parties hereto (the "Closing Date"). The parties hereto intend that PRGI
receive all of the benefits in respect of the operations of the Business on and
after the Effective Date and assume all of the liabilities of the Business
incurred in the ordinary course of business after the Effective Date, except as
otherwise specifically provided herein or in the RCI Agreement.
ARTICLE 2
PURCHASE PRICE; ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE.
(a) Purchase Price Payment. Subject to the terms and
conditions of this Agreement, the purchase price to be paid to Seller for the
Purchased Assets pursuant hereto shall be paid in cash and shares of PRGX Common
Stock, as follows: (i) $240,000, less the Reimbursable Cash (as defined in
Section 2.1(b) below), plus an amount equal to 6.75% of such
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amount calculated on a per annum basis for the period from the Effective Date
through and including the Closing Date, plus an amount equal to $479.45 per day
for each day during the period from and after the Effective Date to and
including the day immediately preceding the Closing Date (the "Cash
Consideration") and (ii) subject to execution and delivery by Seller at the
Closing of the Lock-up Agreements, pursuant to the RCI Agreement, 5,925 shares
of PRGX Common Stock, no par value (the "PRGX Shares") (the Cash Consideration
and the PRGX Shares being collectively referred to herein as the "Purchase
Price"); provided, however, that certain of the PRGX Shares shall be issued in
the name of the Representative, as nominee and attorney-in-fact for the Seller,
to be held in escrow pursuant to Section 2.3 below and in lieu of delivering
fractional shares, PRGI shall deliver to Seller an amount in cash based on
$27.00 per share (the "Closing Price.")
(b) Purchase Price Adjustment. On the business day
immediately preceding the Closing Date, Seller shall prepare and deliver to
PRGI, an estimated cash flow statement of total cash received by Seller in
respect of the Business less total cash disbursements for the period from and
including the Effective Date to and including the day immediately preceding the
Closing Date (the "Interim Period Cash Flow"), detailing all such amounts by
category of payment (the "Cash Flow Statement"). PRGI shall be entitled to
reimbursement, at Closing, of the Interim Period Cash Flow, plus the following
cash payments made in respect of the Business during the period from and
including the Effective Date to and including the day immediately preceding the
Closing Date: (i) the amount, if any, by which disbursements to Seller during
said period (but not including the distribution of any cash or cash equivalents
in the Business as of the close of business on August 31, 1998) exceed the
commissions paid to Seller for audit and related management counseling services
performed by Seller prior to the Effective Date solely in his capacity as an
auditor in connection with claims submitted to suppliers of customers prior to
Closing and (ii) any amounts paid during the period from and including the
Effective Date to and including the Closing Date in respect of the following
liabilities: (A) Seller Transaction Expenses, (B) non-trade payables (meaning
those not directly related to the Business to be acquired by PRGI pursuant
hereto), (C) non-trade accrued expenses (meaning those not directly related to
the Business to be acquired by PRGI pursuant hereto), (D) commissions payable as
of the Effective Date in respect of accounts receivable collected by Seller
prior to the Effective Date; (E) all amounts owed to Seller under the Principal
Agreement or otherwise (except for advances used to pay normal trade payables
directly relating to the Business to be acquired by PRGI incurred on or after
the Effective Date or for commissions owed to Seller for audit and related
management counseling services performed by Seller solely in his capacity as an
auditor in connection with claims submitted to suppliers of Customers prior to
Closing), and (F) all amounts owed to Persons other than Seller (except for
normal trade payables directly relating to the Business to be acquired by PRGI
pursuant hereto incurred in the ordinary course of business) (collectively, the
"Interim Period Reimbursable Liabilities," which, together with Interim Period
Cash Flow, is referred to herein as the "Reimbursable Cash").
(c) Post-Closing Review. Within sixty (60) days following
the Closing Date, PRGI and the Representative shall each have the right to
request that the Accountants review the Reimbursable Cash (including the Cash
Flow Statement), which review shall be a final determination of the Reimbursable
Cash, and in the event that such determination shows that payments are required
by PRGI or by the Seller, any such payment shall be made by the Representative
or PRGI to the other, as the case may be, within 15 days after completion of the
review by the Accountants, together with interest on such payment amount from
the Closing Date
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until the date of such payment at the rate of 6.75% per annum. The fees and
expenses charged by the Accountants in respect of such review shall be borne
equally by PRGI and the Representative.
2.2 ASSUMPTION OF LIABILITIES. PRGI agrees to assume, from and after
the Closing Date, only the following (the "Assumed Liabilities"):
(a) all obligations and liabilities of Seller relating to
the Business arising from and after the Effective Date in the ordinary course of
business under the Contracts with Customers, Associates and Employees and other
Contracts, and equipment and other Leases expressly designated by PRGI as
Assigned Contracts and Assigned Leases;
(b) Seller's normal trade payables relating to the
Business to be acquired by PRGI pursuant hereto incurred in the ordinary course
of business and outstanding at the Effective Date or incurred in the ordinary
course of business thereafter and advances made after August 31, 1998 used to
pay normal trade payables relating to the Business to be acquired by PRGI
pursuant hereto, excluding (i) all Seller Transaction Expenses; (ii) non-trade
payables (meaning those not directly related to the Business to be acquired by
PRGI pursuant hereto), including any Prior Period Payments to RBA; (iii)
non-trade accrued expenses (meaning those not directly related to the Business
to be acquired by PRGI pursuant hereto); (iv) commission amounts for audit
services due to Associates, auditors, or other service providers (including
those to Seller if solely in Seller's capacity as an auditor) on accounts
receivable collected prior to the Effective Date; and (v) all accounts payable,
accrued expenses or other indebtedness due to the Seller as of the Effective
Date under the Principal Agreement, or in connection with any advances to
Associates, or otherwise (except for certain commissions provided for in Section
2.2(c) below and advances by Owners used to pay normal trade payables of Seller
incurred after the Effective Date); and
(c) commission amounts for audit services which will be
owed by Seller to its Associates, auditors or other service providers (including
to Seller, if solely in Seller's capacity as an auditor and in respect of
services performed prior to the Effective Date) upon collection of Accounts
Receivable, Unbilled Claims and Work in Progress outstanding at the Effective
Date.
Except for the Assumed Liabilities, PRGI shall not assume any debts or
liabilities of Seller of any kind or nature whatsoever. Seller agrees to make
full and prompt payment of all of its trade payables not assumed by PRGI as and
when due. Anything to the contrary contained herein notwithstanding, PRGI shall
neither assume nor have any obligations or liabilities whatsoever in respect of
severance, WARN Act, income tax withholding, payroll and/or unemployment tax,
workers' compensation, pension, profit-sharing, health insurance, COBRA or any
other employee or other benefit liabilities in respect of any Business Employees
or in respect of any Employee Benefit Plans, including, without limitation any
contribution, tax, lien, penalty, cost, interest, claim, loss, action, suit,
damage, cost assessment, withdrawal liability, liability to the PBGC, liability
under Section 412 of the Code or Section 302(a)(2) of ERISA, or other similar
liability or expense of Seller or any ERISA Affiliate and PRGI shall not become
a party to any Employee Benefit Plan as a result of any of the transactions
contemplated by this Agreement.
2.3 ESCROW SHARES. At the Closing, approximately 2,962 of the PRGX
Shares issued on the Closing Date pursuant to Section 2.1(a)(ii) hereof (the
"Escrow Shares") shall be issued in the name of the Representative, as nominee
and attorney-in-fact for the Seller, which Escrow
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Shares will be held in escrow together with shares of PRGX deposited in escrow
by the parties to the Other Acquisition Agreements, pursuant to the terms of the
RCI Agreement and the Indemnity Escrow Agreement by and among PRGI, PRGX, Seller
and the other signatories named therein in the form of Exhibit 2.3 attached
hereto (the "Indemnity Escrow Agreement"). The aggregate number of Escrow Shares
deposited hereunder and under the Other Acquisition Agreements shall equal the
product of (a) the aggregate Purchase Prices under this Agreement and the Other
Acquisition Agreements (approximately $43,500,000) multiplied by (b) 20%,
divided by the Closing Price.
ARTICLE 3
ADDITIONAL COVENANTS
3.1 REPRESENTATIONS, COVENANTS AND INDEMNIFICATION AGREEMENT.
Concurrently with the execution and delivery of this Agreement, Seller, together
with the other signatories named therein, shall execute and deliver to PRGX and
PRGI the RCI Agreement substantially in the form attached hereto as Exhibit 3.1,
together with a disclosure schedule relating to Seller, the Purchased Assets and
the Business pursuant to the terms of the RCI Agreement (the "Disclosure
Schedule"). Each of the parties hereto acknowledge that the representations,
warranties, covenants, agreements and indemnification made by them concurrently
herewith in the RCI Agreement are an inducement to the other parties hereto to
enter into this Agreement. Prior to the execution and delivery of the RCI
Agreement, Seller shall have delivered to PRGX and PRGI a draft of the
Disclosure Schedule and true, correct and complete copies of all documents,
together with all amendments thereto through the date of execution hereof,
contemplated by or required to be listed in any exhibit or schedule (including
the Disclosure Schedule) to this Agreement or the RCI Agreement, including,
without limitation, all Material Leases, Material Contracts, insurance policies,
the Historical Statements, the Monthly Statements through the last day of the
month immediately preceding the date hereof and Seller's Tax Returns.
3.2 ALLOCATION OF PURCHASE PRICE AMONG PURCHASED ASSETS. The Purchase
Price shall be allocated for tax purposes as mutually agreed to by PRGI and
Seller within 60 days after the Closing; provided, however, the Purchase Price
shall be allocated solely to (a) goodwill; (b) fixed assets at book value; (c) a
share of the allocation to the Noncompetition and Nonsolicitation Agreements
described in Section 5.4 of the RCI Agreement, as appropriate, and (d) to the
extent they exist, Accounts Receivable net of appropriate reserves and accrued
commissions. Seller and PRGI agree that they will prepare and file any notice or
other filing required pursuant to Section 1060 of the Code, and that any such
notices or filings will be prepared based upon such tax allocation of Seller
Purchase Price. PRGI agrees to send to Seller a completed copy of its Form 8594
("Asset Acquisition Statement under Section 1060") with respect to this
transaction prior to filing such form with the Internal Revenue Service.
3.3 COVENANT RE: TAX MATTERS.
(a) Seller shall be solely responsible for and shall pay,
without any cost to PRGI (i) any and all Taxes for which Seller is or may be
liable, arising from Seller's activities, the Business or use of the Purchased
Assets through the Effective Date (regardless of whether the filing of any Tax
Return with respect thereto or payment of any amount in respect thereof is
filed, paid or due prior to, on or after the Effective Date), (ii) any Taxes
with respect to the acquisition by
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PRGI from Seller of the Purchased Assets, and all other Taxes, if any, imposed
by any Tax Authority assessed in connection with, on account of or resulting
from the consummation of the transfer of the Purchased Assets to PRGI.
(b) Real and personal property ad valorem Taxes, if any,
with respect to the Purchased Assets shall be prorated on a daily basis between
Seller, on the one hand, and PRGI on the other hand, as of the Closing Date.
Should any amount of such Taxes to be prorated not be fully determined as of the
Closing Date, a mutually satisfactory estimate of such amount, made on the basis
of Seller's records, shall be used as the basis for settlement at Closing, and
the amount finally determined will be prorated and appropriate settlement
adjustments made as soon as practicable after such final determination.
(c) Except as otherwise provided in this Agreement, the
parties hereby agree that each of them shall cooperate with the other in
executing or causing to be executed any required document and by making
available to the other all work papers, records and notes of any kind at all
reasonable times for the purpose of allowing the appropriate party to complete
Tax Returns, participate in a proceeding, obtain refunds, make any determination
required under this Agreement or defend or prosecute Tax claims. Notwithstanding
anything to the contrary contained herein, Seller shall have sole and exclusive
authority to prepare and file all Tax Returns concerning Seller related
activities occurring prior to the Closing, including, without limitation, its
operation of the Business and its use of the Purchased Assets and all matters
under agreements not being assumed by PRGI (regardless of when such return is
filed). PRGI shall not directly or indirectly take any action to prepare or file
such Tax Return but shall be given copies of any such return filed by Seller.
(d) At its sole expense, Seller shall promptly pay any
and all Taxes, including but not limited to sales and transfer Taxes, levied,
imposed or assessed by any Tax Authority as a result of the sale, transfer,
assignment and conveyance of the Purchased Assets to PRGI by Seller.
3.4 BULK SALES LAW. PRGI hereby waives compliance by Seller with any
applicable U.C.C. bulk sales law, and Seller agrees to indemnify and hold
harmless PRGI (and any affiliates thereof) from and against any claims or
liabilities not assumed by PRGI pursuant to this Agreement asserted against PRGI
(or any affiliate thereof) by any creditor of Seller by reason of such
noncompliance. Seller will comply with all applicable tax bulk transfer laws
promptly after the public announcement of the transactions contemplated herein,
provided that the parties agree that PRGI will only hold back from the Purchase
Price amounts required under such applicable laws if such required holdback
exceeds $10,000. Seller agrees to indemnify and hold harmless PRGI (and any
affiliates thereof) from and against any claims or liabilities against PRGI for
failure to comply with any such applicable tax bulk transfer laws.
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ARTICLE 4
CONDITIONS TO OBLIGATIONS OF
PRGX AND PRGI TO CLOSE
Each and every obligation of PRGX and PRGI under this Agreement to be
performed on or prior to the Closing shall be subject to the fulfillment, on or
prior to the Closing, of each of the following conditions unless and to the
extent any such condition is expressly waived in writing by PRGX and PRGI:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Seller in or pursuant to this Agreement and to the RCI Agreement or
given on their behalf hereunder or thereunder shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made or given on and effective as
of the Closing Date.
4.2 OBLIGATIONS PERFORMED. Seller shall have performed and complied in
all material respects with all agreements, conditions and obligations required
by this Agreement to be performed or complied with by them prior to or at the
Closing.
4.3 CONSENTS. Seller shall have obtained and delivered to PRGI written
Seller Consents of all persons or entities whose consent is required to
consummate the transactions contemplated herein, if any, and all such Seller
Consents shall remain in full force and effect at and as of the Closing.
4.4 DUE DILIGENCE. PRGI and its Accountants, counsel and other experts
shall have completed their due diligence investigation with respect to the
Business and affairs (including business, legal and financial matters) of Seller
and the Business. Seller shall have resolved, in a manner reasonably
satisfactory to PRGI and its counsel, any and all issues raised as a result of
such investigation which, in PRGI's good faith belief has or is likely to have a
Material Adverse Effect.
4.5 OTHER ACQUISITION AGREEMENTS. Concurrently with the Closing
hereunder, PRGI shall have consummated the transactions contemplated by each of
the Other Acquisition Agreements (as defined in the preambles to this
Agreement).
4.6 CLOSING DELIVERIES Seller shall have delivered to PRGI each of the
following, together with any additional items which PRGI may reasonably request
to effect the transactions contemplated herein:
(a) possession of the Purchased Assets;
(b) intentionally omitted;
(c) intentionally omitted;
(d) the ▇▇▇▇ of Sale, the Assignment and Assumption
Agreement and the other instruments of transfer as shall be reasonably required
by PRGI for the transfer to PRGI of all of
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Seller's right, title and interest to the Purchased Assets free and clear of
all claims, liens, encumbrances, security interests and similar interests of any
kind or nature whatsoever, including, without limitation, releases of any and
all such claims, liens, encumbrances, security interests and similar interests
with respect to the Purchased Assets;
(e) the Indemnity Escrow Agreement, duly executed by the
Seller and the Representative, as nominee and attorney-in-fact of Seller,
together with blank stock powers, duly executed by the Representative with
medallion level signature guarantee;
(f) the Noncompetition and Nonsolicitation Agreements
duly executed by Seller;
(g) written Seller Consents from all parties, whose
consent to the transactions contemplated herein is required;
(h) an opinion of counsel to Seller substantially in the
form of Exhibit 4.6(h) attached hereto;
(i) the offer letter for employment of the Principal,
duly executed by the Principal;
(j) the Nonqualified Stock Option Agreement for the
Principal, duly executed by the Principal;
(k) the Lock-up Agreements, duly executed by Seller and
the Representative;
(l) intentionally omitted;
(m) if applicable, the spousal consents, referred to in the
RCI Agreement, duly executed by the spouse of Seller;
(n) a release of RBA and the Other Sellers in substantially
the form of Exhibit 4.6(o) attached hereto, duly executed by Seller;
(o) if applicable, Forms UCC-3, duly executed by each secured
lender of Seller, releasing all liens on the Purchased Assets;
(p) a Closing Escrow Agreement, duly executed by Seller
and the Representative;
(q) a Closing Statement, duly executed by Seller; and
(r) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the transactions contemplated
hereby.
4.7 NO CHALLENGE. There shall not be pending or threatened any action,
proceeding or investigation before any court or administrative agency by any
government agency or any pending action by any other person, challenging, or
seeking material damages in connection with, the acquisition by PRGI of the
Purchased Assets pursuant to the transactions contemplated herein, or
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the ability of PRGI, PRGX or any of their affiliates to own and operate Seller's
Business or otherwise materially adversely affecting the Business, assets,
prospects, financial condition or results of operations of Seller.
4.8 NO INVESTIGATIONS OF SELLER OR BUSINESS. As of the Closing Date
there shall be no, and Seller shall have no knowledge of or reason to know of
any, pending or threatened, investigation by any municipal, state or federal
government agency or regulatory body with respect to Seller, the Purchased
Assets or Seller's Business.
4.9 NO MATERIAL ADVERSE EFFECT. From the date of this Agreement to the
Closing, there shall not have occurred any Material Adverse Effect (without
giving effect to the consequences of the transaction contemplated by this
Agreement), whether reflected in financial statements, the Schedules attached
hereto or to the RCI Agreement or otherwise. Without limiting the generality of
the foregoing, at the Closing, none of the Primary Customers shall have
terminated, decreased or otherwise adversely altered such Primary Customer
business relationship with Seller or given notice to Seller that it intends to
do so.
4.10 INTENTIONALLY OMITTED.
4.11 LEGALITY. No federal or state statute, rule, regulation, executive
order, decree or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which is in effect and has the
effect of making the transactions contemplated herein illegal or otherwise
prohibiting the consummation of the transactions contemplated herein.
4.12 REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the transactions
contemplated by this Agreement and all actions by or in respect of, or filings
with, any governmental body, agency or official or any other person required to
permit the consummation of the transactions contemplated herein so that PRGI
shall be able to continue to carry on the business of Seller substantially in
the manner now conducted by Seller shall have been taken or made.
ARTICLE 5
CONDITIONS TO SELLER'S
OBLIGATIONS
Each and every obligation of Seller under this Agreement to be
performed on or prior to the Closing, shall be subject to the fulfillment, on or
prior to the Closing, of each of the following conditions unless and to the
extent any such condition is specifically waived in writing by Seller:
5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties made by PRGX and PRGI in or pursuant to this Agreement and to the
RCI Agreement or given on their behalf hereunder or thereunder shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made or given on
and effective as of the Closing Date.
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5.2 OBLIGATIONS PERFORMED. PRGX and PRGI shall have performed and
complied in all material respects with all agreements, conditions and
obligations required by this Agreement to be performed or complied with by it
prior to or at the Closing and the Boards of PRGI and PRGX shall have approved
the transactions contemplated herein.
5.3 CLOSING DELIVERIES. PRGX and/or PRGI, as applicable, shall have
delivered to the Seller each of the following, together with any additional
items which the Seller may reasonably request to effect the transactions
contemplated herein:
(a) certified copies of the corporate resolutions of the Board
of Directors of PRGI and the Board of Directors of PRGX authorizing the
transactions contemplated herein and the execution, delivery and performance of
the RCI Agreement, this Agreement and the other PRGI Transaction Documents by
PRGX and PRGI, as applicable, together with incumbency certificates with respect
to the respective officers of PRGI executing documents or instruments on behalf
of PRGI, and, in respect of PRGX, authorizing the issuance of the PRGX Shares to
Seller;
(b) intentionally omitted;
(c) the Cash Consideration, as adjusted pursuant to
Section 2.1(a) and (b) hereof, and written confirmation from PRGX's transfer
agent that stock certificates representing the PRGX Shares have been issued in
the name of Seller;
(d) the Indemnity Escrow Agreement, duly executed by PRGI
and PRGX;
(e) the documents and instruments described in Section
1.3 hereof;
(f) the offer letter for employment of the Principal,
duly executed by PRGI;
(g) the Nonqualified Stock Option Agreement for the
Principal, duly executed by PRGX;
(h) the Noncompetition and Nonsolicitation Agreements referred
to in Section 3.4 hereof duly executed by PRGI;
(i) the Closing Escrow Agreement, duly executed by PRGI
and PRGX;
(j) a Closing Statement, duly executed by PRGI and PRGX;
and
(k) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the transactions contemplated
hereby.
5.4 NO CHALLENGE. There shall not be pending or threatened any action,
proceeding or investigation before any court or administrative agency by any
government agency or any pending action by any other person, challenging or
seeking material damages in connection with, the acquisition by PRGI of the
Purchased Assets pursuant to the transactions contemplated herein or the ability
of PRGX or PRGI or any of its affiliates to own and operate the Business or
otherwise
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materially adversely affecting the Business, assets, prospects, financial
condition or results of operations of Seller.
5.5 NO INVESTIGATIONS OF PRGX OR PRGI. As of the Closing Date there
shall be no, and neither PRGX nor PRGI shall have any knowledge of or reason to
know of any, pending or threatened investigation by any municipal, state or
federal government agency or regulatory body with respect to PRGX or PRGI,
PRGX's or PRGI's assets or PRGX's or PRGI's business.
5.6 LEGALITY. No federal or state statute, rule, regulation, executive
order, decree or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which is in effect and has the
effect of making the transactions contemplated herein illegal or otherwise
prohibiting the consummation of the transactions contemplated herein.
5.7 CONSENTS. PRGI shall have obtained and delivered to Seller written
consent of Nations Bank N.A., as agent for the banks party to PRGX's bank credit
agreement, to the transactions contemplated herein and such consent(s) shall
remain in full force and effect at and as of the Closing.
5.8 NO MATERIAL ADVERSE EFFECT. From the date hereof until the Closing
there shall have been no effect or change in the business of PRGI and PRGX that
is or will be materially adverse to the business, operations, properties
(including intangible properties), condition (financial or otherwise), assets,
liabilities or regulatory status of PRGI and PRGX, taken as a whole ("PRGI/PRGX
Material Adverse Effect").
5.9 REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the transactions
contemplated by this Agreement and all actions by or in respect of, or filings
with, any governmental body, agency or official or any other person required to
permit the consummation of the transactions contemplated herein so that PRGI
shall be able to continue to carry on the business of Seller substantially in
the manner now conducted by Seller shall have been taken or made.
ARTICLE 6
TERMINATION
6.1 TERMINATION. This Agreement may be terminated at any time before
the Closing Date:
(a) by mutual written consent of PRGX, PRGI and Seller;
(b) by PRGX or PRGI, if there occurs a Material Adverse
Effect as to Seller or its Business, or by Seller, if there occurs a PRGI/PRGX
Material Adverse Effect (as defined in Section 5.8 hereof);
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(c) by any nonbreaching party hereto if there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement or in the RCI Agreement on the part of any nonterminating
party hereto; or
(d) by either PRGI or Seller, if the Closing is not
consummated on or before the Outside Date (as defined below) unless such failure
of consummation is due to the failure of the terminating party to observe or
perform in any material respect the covenants, agreements and conditions hereof
to be performed or observed by it at or before the Closing Date. As used herein
"Outside Date" shall mean November 1, 1998.
(e) by PRGI, if the conditions set forth in Article 4
hereof have not been satisfied by Seller or waived by PRGI and PRGX prior to the
Outside Date; by Seller if the conditions set forth in Article 5 hereof have not
been satisfied by PRGI or PRGX or waived by Seller prior to the Outside Date.
6.2 EFFECTS OF TERMINATION. In the event this Agreement is terminated
pursuant to Section 6.1(a), 6.1(b), 6.1(d) or 6.1(e) above, no party shall have
any obligations to the others hereunder except for those obligations in respect
of confidentiality and the return of confidential information set forth in
Section 5.1(d) of the RCI Agreement and as set forth in the certain
Nondisclosure Agreement between Seller and PRGI and others dated June, 1998 (the
"Nondisclosure Agreement"). If this Agreement is terminated pursuant to Section
6.1(c), the obligations in respect of confidentiality and the return of
confidential information set forth in Section 5.1(d) of the RCI Agreement and
set forth in the Nondisclosure Agreement shall remain in effect and each party
hereto may exercise all remedies available to it under this Agreement, at law or
in equity.
ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 SEVERABILITY. If any provision of this Agreement is prohibited by
the laws of any jurisdiction as those laws apply to this Agreement, that
provision shall be ineffective to the extent of such prohibition and/or shall be
modified to conform with such laws, without invalidating the remaining
provisions hereto.
7.2 MODIFICATION. This Agreement may not be changed or modified except
in writing specifically referring to this Agreement and signed by each of the
parties hereto.
7.3 ASSIGNMENT, SURVIVAL AND BINDING AGREEMENT. This Agreement, the
other Seller Transaction Documents and the other PRGI Transaction Documents (a)
may not be assigned by PRGX or PRGI on or prior to the Closing without the prior
written consent of the Seller (except for an assignment to a wholly owned
subsidiary of PRGI or PRGX, which may be made without the prior consent of, but
with notice to, Seller; provided that, in such event, the assignor shall remain
obligated hereunder in the same manner as if such assignment had not been
effected); (b) may not be assigned by PRGX or PRGI after the Closing without the
prior written consent of Representative, except for an assignment to an
affiliate of PRGX or PRGI, which may be made without the prior consent of, but
with notice to, the Representative; provided that, in such event, the assignor
shall remain obligated hereunder in the same manner as if such assignment had
not
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been effected; and (c) may not be assigned by Seller at any time, without the
prior written consent of PRGI. The terms and conditions hereof shall survive the
Closing as provided herein and shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, personal representatives,
successors and assigns.
7.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a nationally recognized overnight
delivery service which guarantees next day delivery ("Overnight Delivery") or
mailed by registered or certified mail, return receipt requested, postage
prepaid and addressed to the intended recipient as set forth below:
If to Seller: c/o ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLC, Representative
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇. 60606-3913
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
If to PRGX or PRGI: The Profit Recovery Group International I, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
Senior Vice President and General
Counsel
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Arnall Golden & ▇▇▇▇▇▇▇, LLP
2800 One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the
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first business day immediately following the date sent, and (iii) by U.S. mail,
will be deemed received three (3) business days immediately following the date
sent. For purposes of this Agreement, a "business day" is a day on which PRGI is
open for business and shall not include a Saturday or Sunday or legal holiday.
Notwithstanding anything to the contrary in this Agreement, no action shall be
required of the parties hereto except on a business day and in the event an
action is required on a day which is not a business day, such action shall be
required to be performed on the next succeeding day which is a business day.
7.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. Except for the
Nondisclosure Agreement, which remains in full force and effect in accordance
with the terms thereof, this Agreement, the RCI Agreement, the other Seller
Transaction Documents, and the PRGI Transaction Documents together with the
Exhibits and Schedules attached hereto and thereto, constitutes the entire
agreement and supersedes any and all other prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, is not
intended to confer upon any person other than Seller, PRGX and PRGI, any rights
or remedies hereunder.
7.7 FURTHER ASSURANCES. The parties to this Agreement agree to execute
and deliver, both before and after the Closing, any additional information,
documents or agreements contemplated hereby and/or necessary or appropriate to
effect and consummate the transactions contemplated hereby. Seller agrees to
provide to PRGX and PRGI, both before and after the Closing, such information as
PRGX and PRGI may reasonably request in order to consummate the transactions
contemplated hereby and to effect an orderly transition of the Business
following Closing.
7.8 GOVERNING LAW AND SUBMISSION TO JURISDICTION. This Agreement shall
be governed by and construed under the laws of the state of Georgia. Section 6.9
of the RCI Agreement regarding choice of forum, submission to the jurisdiction
of the courts specified therein, service of process and all other provisions of
such Section are hereby incorporated by reference herein and the parties hereby
agree to be governed hereunder by the terms thereof.
7.9 PRONOUNS. All personal pronouns in this Agreement, whether used in
the masculine, feminine or neuter gender shall include all other genders, and
the singular shall include the plural and the plural shall include the singular.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRGX:
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
By:_____________________________________
Name:___________________________________
Its:____________________________________
PRGI:
THE PROFIT RECOVERY GROUP
INTERNATIONAL I, INC.
By:_____________________________________
Name:___________________________________
Its:____________________________________
SELLER:
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
d/b/a a sole proprietorship
________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
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Schedules and Exhibits
Schedule 1.2 Excluded Assets
Exhibit 1.3(a) ▇▇▇▇ of Sale
Exhibit 1.3(b) Assignment and Assumption Agreement
Exhibit 1.4 Closing Escrow Agreement
Exhibit 2.3 Indemnity Escrow Agreement
Exhibit 3.1 RCI Agreement
Exhibit 4.6(h) Opinion of Counsel
Exhibit 4.6(n) Release
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