ASSET PURCHASE AGREEMENT DATED JANUARY 29, 2021 BY AND AMONG SNELLING STAFFING, LLC, SNELLING SERVICES, LLC, SNELLING EMPLOYMENT, LLC, SNELLING MEDICAL STAFFING, LLC AND SNELLING INVESTMENTS, INC. (EACH A “SELLER”, AND COLLECTIVELY, THE “SELLERS”),...
DATED JANUARY 29, 2021
BY AND AMONG
▇▇▇▇▇▇▇▇ STAFFING, LLC,
▇▇▇▇▇▇▇▇ SERVICES, LLC,
▇▇▇▇▇▇▇▇ EMPLOYMENT, LLC,
▇▇▇▇▇▇▇▇ MEDICAL STAFFING, LLC
AND
▇▇▇▇▇▇▇▇ INVESTMENTS, INC.
(EACH A “SELLER”, AND COLLECTIVELY, THE
“SELLERS”),
SNELLING HOLDINGS, LLC, AS THE SELLERS’
REPRESENTATIVE,
HQ ▇▇▇▇▇▇▇▇ CORPORATION (“BUYER”)
AND
TABLE OF CONTENTS
EXHIBITS
Exhibit
A – Defined Terms
Exhibit
B – Accounting Methodology
Exhibit
C – ▇▇▇▇ of Sale and Assignment
Exhibit
D – Escrow Agreement
Exhibit
E – Trademark Assignment Agreement
This
Asset Purchase Agreement (this “Agreement”) is
entered into as of January 29, 2021 by and among ▇▇▇▇▇▇▇▇ Staffing,
LLC, a Delaware limited
liability company (“▇▇▇▇▇▇▇▇
Staffing”), ▇▇▇▇▇▇▇▇ Services, LLC, a Delaware limited
liability company (“Snelling
Services”), Snelling Employment, LLC, a Delaware
limited liability company (“▇▇▇▇▇▇▇▇
Employment”), ▇▇▇▇▇▇▇▇ Medical Staffing, LLC, a
Delaware limited liability company (“▇▇▇▇▇▇▇▇ Medical
Staffing”), and ▇▇▇▇▇▇▇▇ Investments, Inc., a Texas
corporation (“Snelling
Investments”) (▇▇▇▇▇▇▇▇ Staffing, ▇▇▇▇▇▇▇▇ Services,
▇▇▇▇▇▇▇▇ Employment, ▇▇▇▇▇▇▇▇ Medical Staffing and Snelling
Investments are also referred to herein individually as a
“Seller” and
collectively as the “Sellers”),
Snelling Holdings, LLC, a Delaware limited liability company, in
its capacity as the Sellers’ Representative (the
“Sellers’
Representative”), HQ ▇▇▇▇▇▇▇▇ Corporation, a Delaware
corporation (“Buyer”), and
solely with respect to Section 11.15, HireQuest, Inc.,
a Delaware corporation (“Parent”).
Sellers, Buyer and Parent are each referred to individually as a
“Party” and are
collectively referred to as the “Parties.”
RECITALS
Sellers
wish to sell to Buyer the Assets on and subject to the terms and
conditions set forth in this Agreement.
Buyer
wishes to purchase from Sellers the Assets and assume the Assumed
Liabilities on and subject to the terms and conditions set forth in
this Agreement.
AGREEMENTS
NOW,
THEREFORE, in consideration of the premises, agreements and
covenants contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and in reliance upon the mutual representations and
warranties set forth in this Agreement, the Parties agree as
follows:
ARTICLE I
Capitalized
terms used in this Agreement but not defined in the body of this
Agreement have the meaning ascribed to them in Exhibit A.
In this
Agreement, unless otherwise expressly provided herein: the
singular includes the plural and vice versa; reference to a
Person includes such Person’s successors and assigns but, in
the case of a Party, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity;
reference to any gender includes the other gender and the
neutral gender; references to any Exhibit, Schedule, Section,
Article, Annex, subsection and other subdivision refer to the
corresponding Exhibits, Schedules, Sections, Articles, Annexes,
subsections and other subdivisions of this Agreement unless
expressly provided otherwise; references in any Section or
Article or definition to any clause means such clause of such
Section, Article or definition; “hereunder,”
“hereof,” “hereto” and words of similar
import are references to this Agreement as a whole and not to any
particular provision of this Agreement; the word
“or” is not exclusive, and the word
“including” (in its various forms) means
“including without limitation;” each accounting
term not otherwise defined in this Agreement has the meaning
commonly applied to it in accordance with GAAP; references to
“days” are to calendar days; and all references
to dollars refer to the lawful currency of the United States. The
Table of Contents and the Article and Section titles and headings
in this Agreement are inserted for convenience of reference only
and are not intended to be a part of, or to affect the meaning or
interpretation of, this Agreement.
ARTICLE II
On the terms
and subject to the conditions of this Agreement, at the Closing,
each Seller will sell, transfer, assign and deliver to Buyer, and
Buyer will purchase, assume and accept from each Seller, all of
such Seller’s right, title and interest in and to the Assets,
free and clear of all Liens other than Permitted Liens, in exchange
for Buyer’s assumption of the Assumed Liabilities and the
consideration specified in Section 2.4. The
“Assets” means
all of the assets, properties, and businesses of every kind, nature
and description, real, personal and mixed, tangible and intangible,
and wherever located, of Sellers (but excluding the Excluded
Assets) as of the Effective Time, including, without limitation,
the following:
(a) subject to
applicable Legal Requirements, all books, records, files, lists
(including, without limitation, customer lists), data, and
documents of any kind whatsoever, whether in hard copy or on
computer tapes or disks, relating to the operations of
Sellers;
(b) all assumable
deposits, prepaid expenses, claims for refunds (other than refunds
in respect of Taxes for Pre-Closing Tax Periods) and other current
assets of the Sellers;
(c) all Contracts of
Seller set forth on Schedule 2.1(c), which
Schedule 2.1(c)
shall be updated only by written agreement of Buyer and Seller
prior to Closing (the Contracts set forth on such Schedule 2.1(c), as it may be
updated as contemplated above, being the “Assigned
Contracts”);
(d) all accounts
receivable other than the Excluded Receivables;
(e) all notes
receivable, including without limitation, from any of
Seller’s franchisees;
(f) all Seller
Intellectual Property and all telephone, telecopy, fax numbers,
email listings and email addresses of Sellers;
(g) all lockbox and
other similar accounts of Sellers;
(h) all real property
interests of any Seller set forth on Schedule 2.1(h) (the
“Leasehold
Interests”)
(i) all Permits of
Seller (other than the Excluded Permits), including all login
rights, user names, passwords, and other internet credentials
associated therewith (the “Assigned
Permits”);
(j) all claims of
Sellers against third parties relating to the Assets other than
Retained Claims; and
(k) the business and
goodwill of Sellers relating to the Assets.
Notwithstanding
Section 2.1 hereof,
the following assets (the “Excluded
Assets”) shall be retained by Sellers and shall not be
conveyed to Buyer:
(a) all rights of
Sellers under the Transaction Documents;
(b) all tangible
personal property, including, but not limited to, all, equipment,
furniture, office equipment and other items of tangible personal
property of every kind owned or leased by Sellers;
(c) all office
supplies;
(d) all refunds in
respect of Taxes for Pre-Closing Tax Periods and other deferred Tax
assets;
(e) all
Cash;
(f) all Contracts of
Sellers other than the Assigned Contracts (the “Excluded
Contracts”);
(g) all Employee
Benefit Plans (and rights related thereto);
(h) all Permits of
Sellers that are not assignable (with or without consent) (the
“Excluded
Permits”);
(i) each Seller’s
qualifications to conduct business as a legal entity and its
federal taxpayer identification numbers, seals, minute books, and
other documents relating to the organization, maintenance, and
existence of each Seller as a legal entity;
(j) all insurance
policies of Sellers;
(k) all confidential
and/or privileged communications between ▇▇▇▇▇▇▇ ▇▇▇▇▇ Boult
▇▇▇▇▇▇▇▇ LLP (“▇▇▇▇▇▇▇”), on
the one hand, and any Seller and/or any of its Affiliates, on the
other hand (including written and electronic communications between
or among ▇▇▇▇▇▇▇, the directors, officers, managers, members,
employees and/or representatives of a Seller or its Affiliates),
relating to this Agreement, any document, certificate or agreement
contemplated to be delivered hereby, and any transactions
contemplated herein or therein;
(l) the Retained
Claims;
(m) all receivables,
royalties, and future settlement recoveries from the Persons
identified on Schedule
2.2(m) or their heirs, representatives, successors or
assigns (the “Excluded
Receivables”);
(n) all Equity
Interests owned or held by a Seller;
(o) all books and
records of the Sellers pertaining to Tax matters;
(p) all claims or
rights arising from or relating to the Excluded Assets or the
Excluded Liabilities;
(q) the WC Collateral;
and
(r) the assets set
forth on Schedule
2.2(r).
(a) On the terms and
subject to the conditions of this Agreement, at the Closing, Buyer
will assume, pay and perform, as and when due, the following
liabilities and obligations of Sellers (but excluding the Excluded
Liabilities) (the “Assumed
Liabilities”):
(i) all Liabilities of
Sellers arising under the Assigned Contracts and the Assigned
Permits, but only to the extent that such Liabilities do not arise
from any failure to perform, improper performance, warranty or
other breach, default or violation by Sellers (other than such a
breach, default or violation caused by Sellers’ entering into
or performing under this Agreement) prior to Closing;
(ii) all
accounts payable and accrued liabilities of Sellers but only to the
extent included in Net Working Capital and other than those
liabilities set forth on Schedule
2.3(a)(ii);
(iii) all
liabilities relating to (A) accrued or earned paid time off with
respect to Transferred Employees and Transferred Temporary
Employees to the extent included in Net Working Capital and other
than those liabilities set forth on Schedule 2.3(a)(iii) and (B)
accrued or earned sick leave with respect to Transferred Employees
and Transferred Temporary Employees (collectively, the
“Assumed
PTO Liability”);
(iv) all
payroll liabilities with respect to Transferred Employees and
Transferred Temporary Employees accrued or documented as of the
Effective Time to the extent included in Net Working Capital other
than those liabilities set forth on Schedule 2.3(a)(iv) (the
“Assumed
Payroll Liability”); and
(v) all Liabilities
related to all unpaid workers’ compensation claims (whether
or not any such claim has been submitted or filed) that relate to
events or circumstances prior to the Effective Time (the
“Assumed
Workers’ Compensation Claims”.
(b) Except for the
Assumed Liabilities, Buyer shall not assume from Sellers, and
Sellers shall retain, any other Liabilities of Sellers (the
“Excluded
Liabilities”), including, without limitation, the
following:
(i) the Transaction
Costs along with any other Liabilities of Sellers arising or
incurred in connection with the negotiation, preparation,
investigation and performance of this Agreement, the Transaction
Documents and the transactions contemplated hereby and thereby,
including, without limitation, fees and expenses of counsel,
accountants, consultants, advisers and others;
(ii) any
Liability for (A) Taxes of Sellers (or any stockholder or Affiliate
of Sellers) or relating to the business, the Assets or the Assumed
Liabilities for any Pre-Closing Tax Period; (B) Taxes that are the
responsibility of Seller pursuant to Section 7.3; (C) Taxes
including penalties of any Seller arising out of or related to the
Patient Protection and Affordable Care Act; or (D) other Taxes of
any Seller (or any stockholder or Affiliate of a Seller) of any
kind or description that becomes a Liability of Buyer under any
common law doctrine of de facto merger or transferee or successor
liability or otherwise by operation of contract or any Legal
Requirement;
(iii) any
Liabilities relating to or arising out of the Excluded
Assets;
(iv) any
Liabilities in respect of any pending, threatened, or
not-yet-threatened Claim arising out of, relating to or otherwise
in respect of the operation of the business of Sellers, or the
Assets to the extent such Claim relates to such operation prior to
the Effective Time including, without limitation all Claims listed
on Schedule
2.3(b)(iv) (but excluding the Assumed Workers’
Compensation Claims);
(v) any Liabilities of
Seller arising under or in connection with any Employee Benefit
Plan providing benefits to any present or former employee of a
Seller except as otherwise expressly provided herein as an
obligation or Liability to be paid or performed by
Buyer;
(vi) any
Liabilities of any Seller for any present or former employees,
officers, directors, retirees, independent contractors or
consultants of a Seller, including, without limitation, any
Liabilities associated with any claim for wages or other benefits,
bonuses, accrued vacation, workers’ compensation, severance,
retention, termination, or other payments other than the Assumed
PTO Liability, the Assumed Payroll Liability and the Assumed
Workers’ Compensation Claims;
(vii) any
Liabilities to indemnify, reimburse or advance amounts to any
present or former officer, director, employee or agent of any
Seller (including with respect to any breach of fiduciary
obligations by same);
(viii) any
Liabilities under (A) the Excluded Contracts, or (B) any other
contracts of any Seller to the extent such Liabilities (with
respect to these other contracts) arise out of or relate to a
breach by Seller of such contracts prior to Closing;
(ix) any
Liabilities associated with debt, loans or credit facilities of any
Seller including, without limitation, those Liabilities listed on
Schedule
2.3(b)(ix);
(x) any trade accounts
payable of any Seller (A) to the extent not accounted for in Net
Working Capital; (B) which constitute intercompany payables owing
to any Affiliate of any Seller; or (C) which constitute debt,
loans, or credit facilities; and
(xi) any
Liabilities arising out of, in respect of, or in connection with
the failure by Seller or any of its Affiliates to comply with any
Legal Requirement, Environmental Law, or the Code.
(a) The aggregate
consideration to be paid by Buyer to Sellers for the Assets will
consist of cash in the aggregate amount of (i) Seventeen
Million Three Hundred Thousand Dollars ($17,300,000) (the
“Base
Purchase Price”), minus (ii) the Transaction Costs,
minus (iii) the
Estimated Seller Working Capital Payment (if any), plus (iv) the Estimated Buyer
Working Capital Escrow Amount (if any), and minus (v) the Estimated WC Collateral
(such net amount, the “Purchase
Price”). The Purchase Price is subject to further
adjustment as set forth in Section 3.2.
(b) At the Closing,
Buyer will pay to Sellers’ Representative (for further
distribution to the Sellers in accordance with the provisions of
Schedule I hereto)
an amount equal to the Purchase Price less the Escrow Amount less
the Estimated Buyer Working Capital Escrow Amount (if any) (the
“Closing
Payment”), by wire transfer of immediately available
funds, in accordance with the wire transfer instructions designated
in writing by Sellers’ Representative (on behalf of Sellers).
At the Closing, Buyer and Sellers’ Representative shall
execute and deliver to each other a settlement statement (the
“Closing
Settlement Statement”) that sets forth the calculation
of the Purchase Price and each of the payments to be made at
Closing pursuant to this Article II. In lieu of
distributing the Sellers’ Representative Fund to the Sellers
at Closing, the Sellers’ Representative shall retain the
Sellers’ Representative Fund in a segregated account which
shall be used to pay expenses of the Sellers’ Representative
in performing its actions under this Agreement and the Transaction
Documents and shall be disbursed following Closing in accordance
with Section
11.14.
At the
Closing, in addition to the payment of the Closing Payment, Buyer
will pay, or cause to be paid, the Transaction Costs, if any, on
behalf of the Sellers to the applicable service providers by wire
transfer of immediately available funds in accordance with the
invoices delivered to Buyer and the wire transfer instructions
delivered to Buyer in writing prior to the Closing Date.
Notwithstanding anything in this Agreement to the contrary, the
Transaction Costs shall remain at all times an Excluded
Liability.
(a) At
the Closing, in addition to the payment of the Closing Payment,
Buyer will pay, or cause to be paid, to the Escrow Agent the Escrow
Amount, consisting of (i) an amount equal to $500,000 (the
“Net
Working Capital Escrow Amount”), to be held in escrow
by the Escrow Agent in a separate account (the “Net Working Capital Escrow
Account”) and disbursed by the Escrow Agent in
accordance with the terms and provisions of the Escrow Agreement
and (ii) an amount equal to $900,000 (the “Indemnity Escrow
Amount”), to be held in escrow in an account (the
“Indemnity Escrow
Account”) and disbursed by the Escrow Agent in
accordance with the terms and provisions of the Escrow
Agreement.
(b) At
the Closing, in addition to the payment of the Closing Payment,
Buyer will pay, or cause to be paid an amount equal to the
Estimated Buyer Working Capital Escrow Amount (if any) to be held
in escrow by the Escrow Agent in a separate account (the
“Estimated Buyer Working
Capital Escrow Account”) and disbursed by the Escrow
Agent in accordance with the terms and provisions of the Escrow
Agreement.
(c) All
fees and expenses of the Escrow Agent under the Escrow Agreement
shall be borne one half by Sellers (as a Transaction Cost) and one
half by Buyer.
Buyer will
be entitled to deduct and withhold from any payments due to Sellers
under this Agreement such amounts as Buyer is required to deduct
and withhold with respect to the making of such payment under the
Code or any other provision of applicable Legal Requirements. To
the extent that amounts are withheld by Buyer and appropriately
remitted to the applicable Governmental Authority, such withheld
amounts will be treated as paid to Sellers for purposes of this
Agreement. Buyer does not expect that any withholding is required
on any payment, and if it determines it is required to withhold, it
shall give prompt notice to Sellers’ Representative prior to
such withholding and cooperate with Sellers in good faith to reduce
or mitigate such withholding.
Subject to
the terms and conditions of this Agreement, the purchase and sale
of the Assets and the other transactions contemplated hereby shall
take place at a closing (the “Closing”) to
be held on February 28, 2021 provided that all of the conditions to
Closing set forth in Article VIII have been
satisfied or waived (other than conditions that, by their nature,
are to be satisfied on the Closing Date, and subject to the
satisfaction or waiver of such conditions); if such conditions have
not been satisfied or waived by that date, the Closing shall take
place two (2) Business Days after the satisfaction or waiver
of such conditions (other than conditions that, by their nature,
are to be satisfied on the Closing Date, and subject to the
satisfaction or waiver of such conditions) unless Sellers’
Representative and Buyer mutually agree in writing upon another
date or time for Closing. The date on which the Closing occurs is
referred to as the “Closing Date.”
By mutual agreement of the Parties, the Closing may take place by
conference call and electronic (i.e., e-mail/PDF) or facsimile
deliveries. The Parties will treat the Closing as being effective
as of 12:01 a.m. Central time on the Closing Date (the
“Effective
Time”).
At the
Closing, (i) the Sellers shall deliver to Buyer the various
certificates, instruments, and documents required to be delivered
by them pursuant to Section 8.2, (ii) Buyer shall
deliver to Sellers the various certificates, instruments, and
documents required to be delivered by it pursuant to Section 8.3, and (iii) Buyer
shall deliver the Closing Payment, the Transaction Costs, the
Escrow Amount and the Estimated Buyer Working Capital Escrow Amount
(if any) in accordance with Sections 2.4(b), 2.5, and 2.6.
ARTICLE III
PURCHASE PRICE
ADJUSTMENT
(a) At least five (5)
Business Days before the Closing, Sellers’ Representative
will prepare and deliver, or cause to be prepared and delivered, to
Buyer a worksheet showing its good faith estimate of Net Working
Capital determined in accordance with the Accounting Methodology
(the “Estimated Net Working
Capital”) and its good faith estimate of the WC
Collateral to be released to Sellers’ Representative pursuant
to Section 6.9(c)
(the “Estimated WC
Collateral”).
(b) If the Estimated
Net Working Capital exceeds the Target Net Working Capital (such
excess, the “Estimated Buyer Working
Capital Escrow Amount”), the Purchase Price will be
increased at Closing by an amount equal to the Estimated Buyer
Working Capital Escrow Amount, and at Closing Buyer will pay, or
cause to be paid, the Estimated Buyer Working Capital Escrow Amount
to the Escrow Agent to be held in escrow (as set forth in
Sections 2.4(a),
and 2.6(b)).
(c) If the Target Net
Working Capital exceeds the Estimated Net Working Capital (such
excess, the “Estimated Seller Working
Capital Payment”), the Purchase Price will be reduced
at Closing by an amount equal to the Estimated Seller Working
Capital Payment (as set forth in Section 2.4(a)).
(d) In accordance with
Section 2.4(a), the
Purchase Price will be reduced at Closing by an amount equal to the
Estimated WC Collateral.
(e) Prior to Closing,
Sellers will deliver to Buyer a statement setting forth the amounts
associated with each invoiced amount sent to UPS and such amount
shall be considered a final closing amount for purposes of Net
Working Capital upon delivery of such statement to Buyer (net of
any cash payments received and applied to such invoices prior to
Closing). Within ten (10) Business Days after Closing,
Sellers will deliver to Buyer the final closing receivable balance
related to UPS, with the final closing receivable balance being
made up of those receivables reported to Buyer prior to Closing
(net of any cash payments received and applied to such invoices)
and amounts invoiced to UPS subsequent to Closing related to
billing incurred during the period prior to and including Closing.
The final receivable amount related to UPS shall not be subject to
adjustments for purposes of the Net Working Capital
calculation. For avoidance of doubt, no out of the ordinary
items, offset, or items resulting from termination or exiting of
the UPS contract shall create a reduction to the amounts billed,
which shall be in Ordinary Course of Business. Notwithstanding the
foregoing, (i) the final closing receivable balance shall exclude
$38,383.71 of receivables which have aged over 180 days, (ii)
$30,000 will be subtracted from the final closing balance, and
(iii) any reserves used to calculate Net Working Capital in any
context shall not include any amount attributable to accounts of
UPS.
(a) No later than
ninety (90) days after the Closing Date, Buyer will prepare, or
cause to be prepared, and deliver to Sellers’ Representative
a worksheet showing Buyer’s calculation of Net Working
Capital, determined in good faith and in accordance with the
Accounting Methodology. If Sellers’ Representative disagrees
with any portion of such worksheet (the disputed items being the
“Disputed
Adjustment Items”), then Sellers’ Representative
will give written notice (an “Adjustment Dispute
Notice”) to Buyer within forty-five (45) days after
the date of the delivery to Sellers’ Representative of such
worksheet, which Adjustment Dispute Notice will: set forth
the Disputed Adjustment Items; specify in reasonable detail
Sellers’ Representative’s basis for disagreement with
such worksheet; and set forth Sellers’
Representative’s proposed resolution of the Disputed
Adjustment Items (including Sellers’ Representative’s
determination of Net Working Capital taking into account such
proposed resolution of the Disputed Adjustment Items). Buyer will
make readily available to Sellers’ Representative and its
Representatives all relevant books and records relating to such
worksheet and its calculation of Net Working Capital and all other
items reasonably requested by Sellers’ Representative or its
Representatives in connection with resolving the Disputed
Adjustment Items. If Sellers’ Representative timely delivers
an Adjustment Dispute Notice, and Buyer and Sellers’
Representative are unable to resolve any disagreement between them
with respect thereto within fifteen (15) days after the delivery of
such Adjustment Dispute Notice by Sellers’ Representative to
Buyer, then the Disputed Adjustment Items may be referred by
Sellers’ Representative or Buyer for determination to ▇▇▇▇
▇▇▇▇▇, LLP (or, if ▇▇▇▇ ▇▇▇▇▇, LLP is unable or unwilling to serve,
another nationally recognized accounting firm not affiliated with
Sellers’ Representative or Buyer that is mutually selected by
Sellers’ Representative and Buyer). ▇▇▇▇ ▇▇▇▇▇, LLP or the
firm mutually selected by Sellers’ Representative and Buyer,
as applicable, is referred to as the “Independent
Accountant”. Each of Sellers’ Representative and
Buyer will provide the Independent Accountant and the other Party
with a statement of its position as to the amount for each Disputed
Adjustment Item within fifteen (15) days from the date of the
referral to the Independent Accountant. The Independent Accountant
will make a written determination as promptly as practicable, but
in any event within thirty (30) days after the date on which the
dispute is referred to the Independent Accountant, resolving only
the specific items under dispute by the Parties. The Independent
Accountant’s decision on each Disputed Adjustment Item must
be within the range of values assigned to each such item by either
Sellers’ Representative (on the one hand) or Buyer (on the
other hand). If at any time Sellers’ Representative and Buyer
resolve their dispute, then notwithstanding the preceding
provisions of this Section 3.2(a), the
Independent Accountant’s involvement promptly will be
discontinued and the Net Working Capital will be revised, if
necessary, to reflect such resolution and thereupon will be final
and binding for all purposes of this Agreement. The Parties will
make readily available to the Independent Accountant all relevant
books and records (subject to exclusion of privileged information)
relating to their calculation of Net Working Capital and all other
items reasonably requested by the Independent Accountant in
connection with resolving the Disputed Adjustment Items. All fees
and expenses of the Independent Accountant shall be paid by
Sellers, on the one hand, and Buyer, on the other hand, based upon
the percentage that the amount actually contested but not awarded
to Sellers or Buyer, respectively, bears to the aggregate amount
actually contested by such Sellers and Buyer. The decision of the
Independent Accountant will be final and binding upon the parties
hereto.
(b) Following the final
determination of Net Working Capital in accordance with
Section 3.2(a),
Buyer or Sellers, as applicable, shall make or cause to be made
such true-up payment to the other Party in accordance with
Section 3.2(c) or
Section 3.2(d), as
applicable, as is required to place Buyer and Sellers in the same
position in which they would have been had the final Net Working
Capital determined pursuant to Section 3.2(a), rather than the
Estimated Net Working Capital, been used to determine the Purchase
Price at the Closing (including (i) substituting such Net Working
Capital for the Estimated Net Working Capital in determining the
amount of the Estimated Seller Working Capital Payment or Estimated
Buyer Working Capital Escrow Amount, as applicable, and (ii) for
purposes of such determination of the relative positions of the
Parties, assuming that any Estimated Buyer Working Capital Escrow
Amount were to be paid to Sellers at Closing rather than placed in
escrow).
(c) Any true-up payment
required to be made by or on behalf of Sellers pursuant to
Section 3.2(b) is
referred to as the “Final Seller
Payment.” If Sellers are required to make a Final
Seller Payment, then, promptly (but in any event within five (5)
Business Days following the date of the final determination of the
Net Working Capital in accordance with Section 3.2(a)), Sellers’
Representative and Buyer shall jointly instruct the Escrow Agent to
(i) release from the Net Working Capital Escrow Account and the
Estimated Buyer Working Capital Escrow Account an aggregate amount
equal to the Final Seller Payment (up to the aggregate amount then
held in the Net Working Capital Escrow Account and the Estimated
Buyer Working Capital Escrow Account) to Buyer by wire transfer of
immediately available funds to an account designated in writing by
Buyer, and (ii) release the balance of the Net Working Capital
Account and the Estimated Buyer Working Capital Escrow Account, if
any, to Sellers’ Representative (for further distribution to
Sellers in accordance with the provisions of Schedule I hereto) by wire
transfer of immediately available funds to an account designated in
writing by Sellers’ Representative. If the Final Seller
Payment is greater than the aggregate amount available to be
released to Buyer from the Net Working Capital Escrow Account and
the Estimated Buyer Working Capital Escrow Account pursuant to (i)
above (such difference the “Working Capital Escrow
Deficiency”), then the Sellers’ Representative
and the Buyer shall jointly instruct the Escrow Agent to release
from the Indemnity Escrow Account an amount equal to the Working
Capital Escrow Deficiency to Buyer by wire transfer of immediately
available funds to an account designated in writing by Buyer. If
the Working Capital Escrow Deficiency is greater than the amount
available to be released to Buyer from the Indemnity Escrow
Account, then Sellers shall pay the amount of such difference to
Buyer by wire transfer of immediately available funds in accordance
with the wire transfer instructions designated in writing by
Buyer.
(d) Any true-up payment
required to be made by Buyer pursuant to Section 3.2(b) is referred
to as the “Final Buyer
Payment.” If Buyer is required to make a Final Buyer
Payment, then promptly (but in any event within five (5) Business
Days following the date of the final determination of the Net
Working Capital in accordance with Section 3.2(a)), (i)
Sellers’ Representative and Buyer shall jointly instruct the
Escrow Agent to release all amounts in the Net Working Capital
Escrow Account and the Estimated Buyer Working Capital Escrow
Account to Sellers’ Representative (for further distribution
to Sellers in accordance with the provisions of Schedule I hereto) by wire
transfer of immediately available funds in accordance with the wire
transfer instructions designated in writing by Sellers’
Representative, and (ii) Buyer shall pay an amount equal to the
Final Buyer Payment to Sellers’ Representative (for further
distribution to Sellers in accordance with the provisions of
Schedule I hereto)
by wire transfer of immediately available funds in accordance with
the wire transfer instructions designated in writing by
Sellers’ Representative. Notwithstanding the foregoing, to
the extent that the Buyer’s calculation of Net Working
Capital delivered to the Sellers’ Representative pursuant to
the first sentence of Section 3.2(a) would result in
a Final Buyer Payment were such Net Working Capital the final Net
Working Capital pursuant to Section 3.2(a) (the amount of
such hypothetical Final Buyer Payment, the “Undisputed Buyer
Payment”), then, notwithstanding any Adjustment
Dispute Notice provided by Sellers’ Representative, within
five (5) Business Days following Buyer’s delivery of its Net
Working Capital calculation to Sellers’ Representative
pursuant to Section
3.2(a), (i) Sellers’ Representative and Buyer shall
jointly instruct the Escrow Agent to release all amounts in the Net
Working Capital Escrow Account and the Estimated Buyer Working
Capital Escrow Account to Sellers’ Representative (for
further distribution to Sellers in accordance with the provisions
of Schedule I
hereto) by wire transfer of immediately available funds in
accordance with the wire transfer instructions designated in
writing by Sellers’ Representative, and (ii) Buyer shall pay
an amount equal to the Undisputed Buyer Payment to Sellers’
Representative (for further distribution to Sellers in accordance
with the provisions of Schedule I hereto) by wire
transfer of immediately available funds in accordance with the wire
transfer instructions designated in writing by Sellers’
Representative. The amount of the Undisputed Buyer Payment, if any,
paid by Buyer to Sellers’ Representative pursuant to the
immediately foregoing sentence shall reduce dollar for dollar the
amount of the Final Buyer Payment to be paid by Buyer to
Sellers’ Representative pursuant to the second sentence of
this Section
3.2(d).
(e) In addition to the
foregoing, promptly (but in any event within five (5) Business Days
of such release) following the release by ACE to Sellers’
Representative (on behalf of Sellers) of the balance of the WC
Collateral, Buyer or Sellers, as applicable, shall make or cause to
be made such true-up payment to the other Party as is required to
place Buyer and Sellers in the same position in which they would
have been had the actual WC Collateral released to Sellers’
Representative (on behalf of Sellers), rather than the Estimated WC
Collateral, been used to determine the Purchase Price at the
Closing.
(f) Contemporaneously
with the payment of the Final Seller Payment or the Final Buyer
Payment, as applicable, and the true-up of the WC Collateral
pursuant to Section
3.2(e), the Buyer and Sellers’ Representative shall
execute and deliver to each other an amended Closing Settlement
Statement that sets forth the Final Seller Payment or the Final
Buyer Payment, as applicable, together with each other adjustment
to the Purchase Price provided for in Section 2.4.
(g) Any payment made
pursuant to this Section 3.2 shall be
treated as an adjustment to the Purchase Price by the Parties for
Tax purposes unless otherwise required by applicable Legal
Requirements.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Except
as set forth in the Disclosure Schedules, the Sellers represent and
warrant to Buyer, as of the date hereof, as follows:
Each Seller
is a limited liability company or corporation (as applicable) duly
organized, validly existing and in good standing under the laws of
the state of its formation or incorporation. Sellers have made
available to Buyer true and complete copies of the Organizational
Documents of the Sellers, each as amended on or prior to the date
of this Agreement and presently in effect.
Each Seller
is duly qualified to do business and in good standing in each
jurisdiction in which the nature of the business as now conducted
or the character of the property owned or leased by it makes such
qualification necessary, except where the failure to so qualify or
be in good standing would not reasonably be expected to materially
impair such Seller’s ability to conduct its business. Each
Seller has all requisite limited liability company or corporate
power and authority to own, operate or lease its properties and
assets and to carry on its business as currently
conducted.
Each Seller
has all requisite limited liability company or corporate power and
authority to execute and deliver this Agreement and each
Transaction Document to which such Seller is a party and to perform
its obligations thereunder. The execution and delivery of this
Agreement and each Transaction Document to which a Seller is a
party and the performance of a Seller’s obligations
contemplated hereby and thereby have been duly and validly approved
by all action necessary on behalf of such Seller. This Agreement
and, when executed by a Seller, the other Transaction Documents to
which such Seller is a party constitute the legal, valid and
binding obligations of such Seller enforceable against such Seller
in accordance with their respective terms, subject to the Remedies
Exception, assuming in each case that such Transaction Document
have been duly executed and delivered by each Person, other than
the Sellers, party to such Transaction Document.
(a) Except as set forth
on Schedule 4.4(a),
the execution, delivery and performance by the Sellers of this
Agreement and the consummation of the transactions contemplated
hereby do not and will not: (i) conflict with or violate the
Organizational Documents of any Seller; (ii) conflict with or
violate any Legal Requirement to which any Seller is subject or by
which any property or asset of any Seller is bound or affected; or
(iii) conflict with, result in any breach of, constitute a
default (or an event that, with notice or lapse of time or both,
would reasonably be expected to become a default) under, or require
any consent of any Person pursuant to, any Material
Contract.
(b) Except as set forth
on Schedule 4.4(b),
no Seller is required to file, seek or obtain any material notice,
authorization, approval, order, permit or consent of or with any
Governmental Authority in connection with the execution, delivery
and performance by such Seller of this Agreement or the
consummation of the transactions contemplated hereby.
(a) Attached hereto as
Schedule 4.6(a) are copies
of (i) the audited consolidated balance sheets of the Sellers
at December 28, 2018 and December 27, 2019 and the related audited
consolidated income statement and statement of cash flows for the
years then ended (collectively, the “Annual Financial
Statements”), and (ii) the unaudited consolidated
balance sheet of the Sellers as of November 30, 2020 (the
“Interim
Balance Sheet”) and the related unaudited consolidated
income statement and statement of cash flows for the 11-month
period then ended (the financial statements described in
clause (ii),
collectively, the “Interim Financial
Statements”). The Annual Financial Statements and the
Interim Financial Statements are referred to collectively as the
“Financial
Statements.” Except as set forth on Schedule 4.6(a), the
Financial Statements (including any related notes thereto)
have been prepared in accordance with GAAP, consistently
applied throughout the periods covered thereby, except as otherwise
noted therein, fairly present, in all material respects, the
financial condition and results of operations of the Sellers as of
the respective dates thereof and for the respective periods covered
thereby, subject, however, to the absence of notes and other
textual disclosure required by GAAP, and in the case of the Interim
Financial Statements, to normal year-end audit adjustments and
accruals (the effect of which will not be materially adverse), and
have been prepared from the financial books and records of
the Sellers.
(b) Except as set forth
on Schedule 4.6(b),
the Sellers have no material liabilities, obligations or
commitments of a type required to be reflected on a balance sheet
prepared in accordance with GAAP, other than liabilities that are
reflected or reserved against in the Interim Balance Sheet,
liabilities that have arisen after the date of the Interim Balance
Sheet in the Ordinary Course of Business of the Sellers,
liabilities pursuant to executory contracts (but not resulting from
a breach or default thereof) or liabilities incurred in connection
with the transactions contemplated hereby and in accordance with
this Agreement.
(c) Neither any Seller
nor any of its Affiliates is a party to, or has any commitment to
become a party to: (i) any joint venture, off balance sheet
partnership, or any similar Contract or arrangement (including any
Contract or arrangement relating to any transaction or relationship
between or among a Seller or any of its Affiliates, on the one
hand, and any other Person, including any structured finance,
special purpose, or limited purpose Person, on the other hand); or
(ii) any “off balance sheet arrangements” (as defined
in Item 303(a) of Regulation S-K under the Securities Exchange Act
of 1934, as amended).
Except as set
forth on Schedule
4.7, no Affiliate of Sellers (each, a “Seller Related
Person”) provides or is in receipt of or has, since
January 1, 2018, provided or received any loans, assets, services
or facilities to or from, as applicable, any Seller or owns any
right, title or interest in, to or under, any property or right,
real, personal or mixed and whether tangible or intangible used by
any Seller, except, in each case, for a Person’s employment
with, or role as a shareholder, officer, manager or director of,
any Seller in the Ordinary Course of Business.
(a) No Seller owns any
real property.
(b) Schedule 4.8(b) lists all
leases of real property pursuant to which any Seller leases real
property (all such leased real property collectively, the
“Real
Property” and, all such listed leases collectively,
the “Scheduled
Leases”). A true and complete copy of each of the
Scheduled Leases, as amended or extended to date, along with all
guarantees of such Scheduled Leases has been made available to
Buyer. Each Scheduled Lease is in full force and effect,
constitutes a binding obligation of the Seller party thereto, no
Seller is in breach or default under any Scheduled Lease, Sellers
have paid all rent due and payable under any Scheduled Lease, no
Seller has subleased, assigned or granted to any Person the right
to use or occupy any Real Property, no Seller has pledged,
mortgaged, or otherwise granted a Lien (other than a Permitted
Lien) on its leasehold interest in any Real Property, and, to the
Knowledge of the Sellers, each of the Scheduled Leases constitutes
a binding obligation of each landlord, lessor or sublessor
thereunder, enforceable against such landlord, lessor or sublessor
in accordance with its terms. Other than the Real Property, there
is no other real property necessary for the conduct of the business
of Sellers as currently conducted.
(c) No Seller has
received any written notice of (i) violations of building codes,
zoning ordinances, or other Legal Requirements affecting any Real
Property, (ii) existing, pending, or threatened condemnation
proceedings affecting any Real Property, or (iii) existing,
pending, or threatened zoning, building code or other moratorium
proceedings, or similar matters which could reasonably be expected
to adversely affect the ability to operate its business as
currently operated at the Real Property. Neither the whole nor any
material portion of any Real Property has been damaged or destroyed
by fire or other casualty.
(d) The Real Property
constitutes all interests in real property used, occupied or held
for use in connection with the business of the Sellers as currently
conducted.
(a) Each Seller owns
good title to, or holds a valid leasehold interest in, all of the
tangible personal property used by such Seller in the conduct of
its business and included in the Assets, free and clear of all
Liens, except for Permitted Liens.
(b) Other than any
tangible personal property not currently used in the Ordinary
Course of Business of a Seller, each item of tangible personal
property used or held for use by such Seller and included in the
Assets is in operable condition, normal ordinary wear and tear
excepted.
Each Seller
possesses all material permits, licenses, certificates,
authorizations and approvals granted by any Governmental Authority
(each, a “Permit”)
required under applicable law to be held by such Seller to permit
such Seller to own, operate, use and maintain its assets in the
manner in which they are now operated and maintained and to conduct
its business in the manner in which it is currently conducted. All
Permits are in full force and effect. All fees and charges with
respect to the Permits have been paid in full. Each Seller has
complied since the Applicable Look-Back Date, and is now complying,
with all Legal Requirements applicable to its business as it is
currently conducted and the ownership and use of the Assets. Except
as set forth in Schedule 4.10, each Permit
held by a Seller and material to its business is valid and in full
force and effect and such Seller is not in default, and, to the
Knowledge of the Sellers, no condition exists that with notice or
lapse of time or both would reasonably be expected to constitute a
default, under any of such Permits, except for any defaults that
would not reasonably be expected to have a Material Adverse
Effect.
(a) Schedule 4.11(a)
identifies each of the following Contracts to which any Seller is a
party or by which any Seller or any Assets are bound (each such
Contract, a “Material
Contract”):
(i) any Contract that
provides for the payment by or to any Seller of more than $50,000
in any 365-day period of the term of the Contract (an
“Annual
Period”) other than a Contract that is terminable by
either party thereto without penalty by giving notice of
termination to the other party thereto not more than ninety (90)
days in advance of the proposed termination date;
(ii) any
Contract that purports to limit the freedom of any Seller to
compete in any line of business or with any Person or to conduct
business in any geographic location;
(iii) any
Contract in respect of Intellectual Property Rights involving a
license granted, title conveyed, or royalty payment to or by any
Seller where the obligations in any Annual Period under such
Contract are more than $50,000 (excluding licenses granted to any
Seller to use off the shelf computer software);
(iv) any
Contract that provides for the purchase or sale of real
property or the lease of any item or items of tangible
personal property with a rental expense under such lease exceeding
$25,000 in any Annual Period;
(v) any Contract
providing for the deferred payment of any purchase price including
any “earn out” or other contingent fee arrangement
which remains outstanding;
(vi) any
Contract creating a Lien, other than a Permitted Lien, on any of
the Assets;
(vii) any
Contract for the employment of any officer or employee of any
Seller with annual compensation (salary and bonus) in excess of
$100,000, which is not cancellable without penalty or without more
than 90 days’ notice, or which contain any change-in-control
or similar bonus of more than $20,000, other than offer letters and
confidentiality and similar types of agreements entered into in the
Ordinary Course of Business;
(viii) any
Contract with any labor union or association or other Person
representing or seeking to represent any employee of a Seller or
any other individual who provides services to a
Seller;
(ix) any
Contract granting to any Person a right of first refusal, first
offer or other right to purchase any of the Assets;
(x) any Contract that
provides for the indemnification of any Person (other than in the
ordinary course of business) or the assumption of any Tax,
environmental, or other Liability of any Person;
(xi) any
Contract that relates to the acquisition or disposition of any
business, a material amount of stock, membership units, or assets
of any Person or any real property (whether by merger, sale of
stock, sale of assets, or otherwise);
(xii) all
franchise agreements;
(xiii) except
for Contracts relating to trade receivables, all Contracts relating
to indebtedness;
(xiv) all
joint venture, partnership, or similar Contracts;
(xv) all
other Contracts that are material to the Assets or operation of the
business of Sellers and not previously disclosed pursuant to this
Section
4.11.
(b) True and complete
copies (including all amendments) of each Material Contract have
been made available to Buyer. Each Material Contract is the legal,
valid, and binding obligation of the Seller party thereto and, to
the Knowledge of the Sellers, any other Person a party thereto, in
accordance with its terms, subject to the Remedies Exception.
Neither the Sellers nor, to the Knowledge of the Sellers, any other
Person party thereto is in material breach or material default
under any Material Contract, and, to the Knowledge of the Sellers,
no event has occurred that with notice or lapse of time, or both,
would reasonably be expected to constitute a material breach or
material default thereunder.
(a) Schedule 4.12(a) contains
a correct, current, and complete list of all patents, patent
applications, registered trademarks, trademark applications,
copyright registrations, copyright applications and internet domain
names owned by any Seller that are material to the conduct of the
business of the Sellers (taken as a whole) (the “Registered Intellectual
Property”). The Registered Intellectual Property,
together with all other Intellectual Property Rights owned or used
by any Seller that are material to the conduct of the business of
the Sellers (taken as a whole) (collectively, the
“Seller
Intellectual Property”), constitute all Intellectual
Property Rights necessary for the continued operation of the
business of the Sellers as being conducted within the geographic
area of the Sellers’ present use thereof. Schedule 4.12(a) contains a
table specifying as to each Seller Intellectual Property, as
applicable: the title, ▇▇▇▇, or design; the jurisdiction by or in
which it has been issued, registered, or filed; the issue,
registration or filing date; and the current status
(b) The Sellers own all
right, title, and interest to, or currently possess valid licenses
to use, as applicable, the Seller Intellectual Property free and
clear of all Liens, except Permitted Liens.
(c) Except
as disclosed on Schedule 4.12(c), no
Seller has been a party to any judicial or administrative
proceeding alleging, nor have the Sellers been notified of any
allegation of, any infringement or misappropriation of any item of
the Seller Intellectual Property. To the Knowledge of the Sellers,
there has been no infringement or misappropriation by any third
party of any Seller Intellectual Property. To the Knowledge of the
Sellers, there has been no infringement or misappropriation by the
Sellers of any Intellectual Property Rights of other Persons or any
infringement or misappropriation by any other Person of any of the
Seller Intellectual Property.
Except as set
forth on Schedule 4.13, no Seller
has any liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
Since the
date of the Interim Balance Sheet, there has not been any
occurrence which has had, or could reasonably be expected to have,
individually or in the aggregate, any Material Adverse Effect.
Except as set forth on Schedule 4.14 or as expressly
contemplated by this Agreement, since the date of the Interim
Balance Sheet through the date hereof, each Seller has operated its
business in the Ordinary Course of Business. Since the date of the
Interim Balance Sheet, except as set forth on Schedule 4.14, there has not
been any: (a) declaration or payment of any dividends or
distributions on or in respect of any of Sellers’ capital
stock or redemption, purchase, or acquisition of Sellers’
capital stock; (b) material change in any method of accounting or
accounting practice of any Seller, except as required by GAAP; (c)
incurrence, assumption or guarantee by any Seller of any
indebtedness for borrowed money in connection with Sellers’
business except unsecured current obligations and Liabilities
incurred in the Ordinary Course of Business; (d) transfer,
assignment, sale, or other disposition of any of the Assets by any
Seller (other than in the ordinary course of business); (e)
cancellation of any material debts or claims of any Seller or
amendment, termination or waiver by any Seller of any material
rights constituting Assets; (f) transfer or assignment of or grant
of any license or sublicense under or with respect to any
Intellectual Property Rights by Seller; (g) abandonment or lapse or
failure to maintain in full force and effect any Intellectual
Property Rights by Seller; (h) material damage, destruction, or
loss, or any material interruption in use of any Asset, whether or
not covered by insurance; (i) material capital expenditures by any
Seller which would constitute an Assumed Liability; (j) imposition
of any Lien (other than Permitted Liens) on any of the Assets; (k)
material change in any of the compensation, severance, bonuses, or
other terms of employment of any of the Transferred Employees
(other than in the Ordinary Course of Business); or (l) any
Contract to do any of the foregoing, or any action or omission that
would result in any of the foregoing.
Except as set
forth on Schedule
4.15, the Sellers are in compliance in all material respects
with all applicable Legal Requirements. No “fair
price,” “moratorium,” “control share
acquisition,” “supermajority,” “affiliate
transactions,” “business combination,” or other
similar anti-takeover statute or regulation enacted under any Legal
Requirement applicable to the Sellers is applicable to this
Agreement, the Transaction Documents, or any of the transactions
contemplated hereby or thereby.
Except as set
forth on Schedule
4.16,
(a) All Tax Returns
required to be filed by or with respect to each Seller for any
Pre-Closing Tax Period have been or will be duly and timely filed
with the appropriate Governmental Authority, and each such Tax
Return is true, correct and complete in all material respects. All
Taxes due and payable by the Sellers on any such Tax Return have
been timely paid in full, whether disputed or not.
(b) All Tax withholding
and deposit requirements and all material information reporting and
backup withholding requirements, including maintenance of required
records with respect thereto, imposed on or with respect to the
Sellers or its employees have been satisfied in full.
(c) There are no Liens
(other than Permitted Liens) on any of the Assets that are
attributable to any Tax liability or payment obligation and, as of
the Closing, there will be no such Liens on the
Assets.
(d) There are no
audits, administrative or judicial proceedings or other Claims
pending against any Seller with respect to Taxes, and no
assessment, deficiency or adjustment has been asserted, proposed
or, to the Knowledge of the Sellers, threatened in writing with
respect to any Tax Returns of any Seller.
(e) No claim has been
made in writing by a Governmental Authority in a jurisdiction where
any Seller does not file Tax Returns that the Seller is or may be
subject to taxation by that jurisdiction with respect to the
Assets.
(f) No power of
attorney or closing agreement with respect to any Tax matter is
currently in force with respect to the Assets, that would, in any
manner, bind, obligate, or restrict Buyer. No Seller has executed
or entered into any agreement with, or obtained any consents or
clearances from, any Governmental Authority, or has been subject to
any ruling guidance specific to the Seller that would be binding on
Buyer for any taxable period (or portion thereof) ending after the
Effective Time.
Except as set
forth on Schedule
4.17, there are no Claims, suits or proceedings pending or,
to the Knowledge of the Sellers, threatened, at law or in equity,
or before or by any Governmental Authority or before any arbitrator
of any kind, against any Seller. None of the Sellers or any of the
Assets is subject to any active order, writ, assessment, decision,
injunction, decree, ruling, or judgment of any Governmental
Authority or arbitrator, whether temporary, preliminary, or
permanent. To Sellers’ Knowledge, there are no governmental
inquiries or investigations, or internal investigations pending or
threatened, in each case regarding any accounting practices of any
Seller.
(a) Except as set forth
on Schedule
4.18(a), the Sellers are and have since the Applicable
Look-Back Date been in compliance in all material respects with all
Legal Requirements relating to the employment of personnel and
labor, including provisions thereof relating to wages and hours,
equal opportunity, immigration, child labor, collective bargaining,
plant closing and mass layoff and health and safety.
(b) Except as set forth
on Schedule 4.18(b)
the Sellers have not been the subject of any protected
concerted activity and have not been accused of any violations of
the National Labor Relations Act; (ii) the Sellers have not agreed
to recognize any labor union, nor has any labor union or other
collective bargaining representative been certified as the
exclusive bargaining representative of any employees of the
Sellers, nor are the Sellers a party to or bound by any collective
bargaining agreement,(iii) since the Applicable Look-Back
Date, the Sellers have not experienced any strike, slowdown,
lockout, unfair labor practice complaint or other material labor
dispute and (iv) to the Knowledge of the Sellers, there is no
organizational effort presently being made or threatened in writing
by or on behalf of any labor union with respect to any employees of
the Sellers.
(a) Attached as
Schedule 4.19(a) is
a list of all the Employee Benefit Plans. The Sellers have made
available to Buyer true and complete copies of all current plan
documents, policies, programs, trust or other funding arrangements,
summary plan descriptions, and the most recent three years’
Form 5500 Annual Reports for the plans for which such reports are
required to be filed.
(b) Except as set forth
on Schedule
4.19(b), neither the Sellers nor any ERISA Affiliate has any
obligation to contribute to (or any other liability, including
current or potential withdrawal liability, with respect to)
(i) any “multiemployer
plan” (as that term is defined in Section 3(37) of
ERISA); (ii) any plan or arrangement, whether or not
terminated, which provides medical, health, life insurance or other
welfare type benefits for current employees or current or future
retired or terminated employees (except for continued medical
benefit coverage required to be provided under Section 4980B of the
Code or as required under applicable state law); or (iii) any
employee plan which is a “defined benefit plan” (as that
term is defined in Section 3(35) of ERISA), whether or not
terminated.
(c) Except as set forth
on Schedule
4.19(c), to the Knowledge of the Sellers, all Employee
Benefit Plans (and related trusts and insurance contracts) comply
in all material respects in form and in operation with their terms
and the applicable requirements of ERISA and the Code, including
the requirements of Section 4980B of the Code.
(d) Except as set forth
on Schedule
4.19(d), since the Applicable Look-Back Date, with respect
to each Employee Benefit Plan, all contributions, premiums, or
payments which are due on or before the date hereof have been paid
to such plan. Except as set forth on Schedule 4.19(d), to the
Knowledge of the Sellers, no “prohibited transaction” (within
the meaning of Section 406 of ERISA and Section 4975 of the Code)
for any Employee Benefit Plans, and no reportable event, as defined
in ERISA, has occurred in connection with the Employee Benefit
Plans. To the Knowledge of the Sellers, no material action, suit,
proceeding, or investigation with respect to the Employee Benefit
Plans (other than routine claims for benefits) is
pending.
(e) Except as set forth
on Schedule 4.19(e), the
execution of, and consummation of the transactions contemplated by,
this Agreement will not (either done alone or in conjunction with
any other action by the Sellers prior to the Closing)
(i) entitle any current or former employee, director, manager,
officer, consultant, independent contractor, contingent worker, or
leased employee (or any dependents, spouses, or beneficiaries
thereof) of any Seller to severance pay or any other similar
payment or (ii) accelerate the time of payment or vesting, or
increase the amount of compensation due to such
individual.
Schedule 4.21 sets forth a
true and complete list of all policies, binders and insurance
contracts under which the Sellers or the Assets are insured (the
“Insurance
Policies”) and a list of all pending submitted claims
and a claims history of submitted claims for the Sellers since
January 1, 2016, other than pending and historical claims subject
to any workers’ compensation policy which have not incurred
and are not reasonably expected to incur more than $25,000 in
total. There are no claims pending under any such Insurance Policy
as to which coverage has been denied or disputed or in respect of
which there is an outstanding reservation of rights by the insurer.
All premiums due and payable under all such Insurance Policies have
been paid and all such Insurance Policies are in full force and
effect in accordance with their terms and have not been subject to
any lapse in coverage. None of the Sellers or any of their
Affiliates are in default under, or have otherwise failed to comply
with, in any material respect, any provision of any Insurance
Policy.
All
notes and accounts receivable of the Sellers are reflected properly
on the Sellers’ books and records, are valid, have arisen
from bona fide transactions in the Ordinary Course of Business, and
to the Knowledge of the Sellers, are not subject to any defense or
offset and constitute only valid, undisputed claims of Sellers. The
reserve for bad debts shown on the Interim Balance Sheet or, with
respect to accounts receivable arising after the Interim Balance
Sheet date, on the books and records of the Sellers have been
determined in accordance with GAAP, consistently applied, subject
to normal year-end adjustments and the absence of disclosures
normally made in footnotes.
The
Sellers have made available to Buyer for review information
regarding all CARES Act stimulus fund programs in which the Sellers
are participating, including the amount of funds received by the
Sellers (the “Stimulus
Funds”). The Sellers have maintained records
associated with the Stimulus Funds in material compliance with the
Relief Fund Payment Terms and Conditions and related guidance
available as of the date hereof. The Sellers have used commercially
reasonable efforts to utilize all such Stimulus Funds in accordance
in all material respects with the applicable Relief Fund Payment
Terms and Conditions.
Schedule 4.25 sets forth with
respect to the Sellers, (i) each of the franchisees of any Seller
along with the name, address, and contact information of each owner
of any franchisee (each, a “Franchisee”);
and (ii) the amount of royalties generated by each Franchisee to
any Seller each year for the past five years. No Seller has
received any written notice that any of the Franchisees has ceased,
or intends to cease after Closing, to be a franchisee of Sellers or
Buyer.
ARTICLE
V
Buyer
represents and warrants to Sellers, as of the date hereof, as
follows:
Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
Except as
would not materially impair Buyer’s ability to perform its
obligations under each Transaction Document to which Buyer is a
party, Buyer is duly qualified to do business as a foreign
corporation and in good standing in each jurisdiction in which the
nature of the business as now conducted or the character of the
property owned or leased by Buyer makes such qualification
necessary. Buyer has all requisite power and authority to own its
properties and assets and to carry on its business as currently
conducted.
Buyer has all
requisite power and authority to execute and deliver each
Transaction Document to which Buyer is a party and to perform
Buyer’s obligations thereunder. The execution and delivery of
each Transaction Document to which Buyer is a party and the
performance of Buyer’s obligations contemplated thereby have
been duly and validly approved by all action necessary on behalf of
Buyer. Each Transaction Document to which Buyer is a party
constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to
the Remedies Exception, assuming in each case that such Transaction
Document has been duly executed and delivered by each Person, other
than Buyer, party to such Transaction Document.
Neither Buyer
nor its Affiliates has any liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Sellers or
any of their Affiliates could become liable or
obligated.
There are no
actions, suits or proceedings pending or, to Buyer’s
Knowledge, threatened at law or in equity, or before or by any
Governmental Authority or before any arbitrator of any kind,
against Buyer or any of its Affiliates that affect or would affect
Buyer’s performance under this Agreement or other Transaction
Documents or the consummation by Buyer of the transactions
contemplated hereby or thereby.
Buyer has
(and will have on the Closing Date) the necessary and immediately
available funding to fund in cash all of the amounts required to be
paid by Buyer for the consummation of the transactions contemplated
hereby and the other Transaction Documents to which it is a party,
including the payment of the amounts payable pursuant to
Article II, and the
payment of all associated costs and expenses of Buyer in connection
with the transactions contemplated by this Agreement and the other
Transaction Documents to which it is a party. Such funding is not
subject to any delay, restriction or required consent. Buyer has
not incurred any obligation, commitment, restriction or liability
of any kind, and is not contemplating or aware of any obligation,
commitment, restriction or liability of any kind, in any case which
would impair or adversely affect such funding. Buyer acknowledges
and agrees that Buyer’s performance of its obligations under
this Agreement is not in any way contingent upon the availability
of financing of any kind to Buyer, whether or not for, or related
to, the transactions contemplated by this Agreement.
At and
immediately after the Closing, and after giving effect to the
transactions contemplated hereby, Buyer will be solvent (in that
both the fair value of its assets will not be less than the sum of
its debts and that the present fair saleable value of its assets
will not be less than the amount required to pay its probable
liability on its debts as they become absolute and matured), will
have adequate capital with which to engage in its business and will
not have incurred and does not immediately plan to incur debts
beyond its ability to pay as they become absolute and matured. No
transfer of property is being made and no obligation is being
incurred in connection with the transactions contemplated by this
Agreement with the intent to hinder, delay or defraud either
present or future creditors of any of Buyer or
Sellers.
(a) Other than the
representations and warranties expressly set forth in Article IV and any certificates
delivered pursuant hereto (in each case, as modified by the
Disclosure Schedules), Buyer acknowledges and agrees that no Person
is making or has made, and specifically disclaims that it is
relying upon or has relied upon, any such other representations or
warranties that may have been made by any Person, and acknowledges
and agrees that Sellers have specifically disclaimed and do hereby
specifically disclaim any such other representations or warranties
made by any Person.
(b) In connection with
the investigation by Buyer of the Assets and the Sellers, Buyer or
its Affiliates or Representatives has received or may receive from
the Sellers certain projections, forward-looking statements and
other forecasts. Buyer specifically acknowledges that there are
uncertainties inherent in attempting to make such projections,
forward-looking statements and other forecasts, and that except as
expressly set forth in this Agreement and subject to Section 5.9(c), Buyer will have
no claim against the Sellers, or any of their respective
Representatives, or any other Person, with respect
thereto.
(c) Nothing in this
Section 5.9 shall
prohibit or otherwise serve as a defense against any claims by
Buyer as a result of Fraud by any of the Sellers.
ARTICLE
VI
COVENANTS
(a) From the date
hereof to the earlier of the date of termination of this Agreement
or the Closing Date, except as otherwise expressly provided in this
Agreement or consented to in writing by Buyer (which consent shall
not be unreasonably withheld, conditioned or delayed), the Sellers
shall (x) conduct their businesses in the Ordinary Course of
Business, and (y) use commercially reasonable efforts to
maintain and preserve intact their current organization and
business and to preserve the rights, goodwill and relationships of
their employees, customers, lenders, suppliers, and others having
business relationships with the Sellers. Without limiting the
foregoing, from the date hereof until the Closing Date, Sellers
shall:
(i) preserve and
maintain all Permits required for the conduct of the business as
currently conducted or the ownership and use of the Assets as
currently used by Sellers;
(ii) pay
the debts, Taxes, and other obligations of the Sellers when
due;
(iii) continue
in full force and effect without modification all Insurance
Policies except as required by applicable Legal
Requirements;
(iv) perform
all of their obligations to be performed from the date hereof until
the Closing Date under the Assigned Contracts;
(v) maintain the Books
and Records in accordance with past practice;
(vi) comply
in all material respects with all Legal Requirements applicable to
the conduct of their business and their ownership and use of the
Assets; and
(vii) not
take or permit any action that would cause any of the changes,
events or conditions described in Section 4.14 to
occur.
(b) From the date
hereof to the earlier of the date of termination of this Agreement
or the Closing Date, except as otherwise expressly required by
applicable Legal Requirement, provided in this Agreement or
consented to in writing by Buyer (which consent shall not be
unreasonably withheld, conditioned or delayed), or as set forth on
Schedule 6.1, no
Seller shall:
(i) adopt a plan or
agreement of complete or partial liquidation, dissolution,
restructuring, consolidation, recapitalization or other
reorganization;
(ii) acquire
all or substantially all of the Equity Interests or assets of any
Person (whether directly or indirectly, and whether by merger,
acquisition of Equity Interests or assets, reorganization,
recapitalization or otherwise);
(iii) other
than in the Ordinary Course of Business, (A) enter into any
Contract that, if in existence on the date hereof, would be a
Material Contract or (B) materially amend, release, waive any
rights under, assign any rights under or terminate any Material
Contract; or
(iv) authorize
or resolve, commit or agree, whether or not in writing, to do any
of the foregoing.
(c) Notwithstanding
anything to the contrary, nothing in this Section 6.1 shall prohibit or
otherwise restrict any Seller from (x) declaring and paying any
dividends or distributions of cash and cash equivalents of such
Seller or (y) repaying any debt of such Seller.
From the date
hereof to the earlier of the date of termination of this Agreement
or the Closing Date, the Sellers shall afford Buyer and its
Representatives reasonable access to and the right to inspect the
real property, assets, premises, Contracts and other documents and
data related to the Sellers during normal business hours upon
reasonable advance notice; furnish Buyer and its
Representatives with such financial, operating and other data and
information related to the Sellers as Buyer or any of its
Representatives may reasonably request; (c) subject to mutual
agreement between the Parties with respect to an approved plan and
protocols for such access, provide Buyer with reasonable access to
all of Sellers’ personnel, franchisees, and systems to aid in
the transition to Buyer’s systems including, without
limitation, Buyer’s proprietary software; and
(d) instruct the Representatives of the Sellers cooperate with
Buyer in its investigation of the Sellers; provided, however, that such access,
copies and inspections shall be at the requesting Party’s
expense. Any investigation pursuant to this Section 6.2 shall be
conducted in such manner as not to interfere unreasonably with the
conduct of the business of the Sellers. Notwithstanding the
foregoing provisions of this Section 6.2, the Sellers shall
not be required to grant access or furnish information to Buyer or
Buyer’s Representatives to the extent that (a) such
information is subject to an attorney/client or attorney work
product privilege or (b) such access or the furnishing of such
information is prohibited by applicable Legal Requirement or an
existing Contract. Notwithstanding the foregoing provisions of this
Section 6.2, Buyer
shall not have access to personnel records of the Sellers relating
to individual performance or evaluation records, medical histories
or other information that in the Sellers’ good faith opinion
the disclosure of which could subject the Sellers or any of their
Affiliates to risk of liability. The terms of this Agreement and
all information provided pursuant to this Agreement shall remain
subject in all respects to the Confidentiality
Agreement.
From the date
hereof to the earlier of the date of termination of this Agreement
or the Closing Date, Sellers shall not, and shall not authorize or
permit any of their Representatives to, directly or indirectly,
encourage, solicit, initiate, facilitate or continue
inquiries regarding an Acquisition Proposal; enter into
discussions or negotiations with, or provide any information to,
any Person concerning a possible Acquisition Proposal; or
enter into any agreements or other instruments (whether or
not binding) regarding an Acquisition Proposal. Sellers shall
immediately cease and cause to be terminated, and shall cause their
Affiliates and Representatives to immediately cease and cause to be
terminated, all existing discussions or negotiations with any
Persons conducted heretofore with respect to an Acquisition
Proposal. Sellers shall promptly (and in any event within two (2)
Business Days after receipt thereof by any Seller or its Affiliate
or Representative) advise Buyer in writing of its receipt of any
Acquisition Proposal including the material terms and conditions of
such Acquisition Proposal, and the identity of the Person making
the same.
Promptly
following the execution of this Agreement, the Parties shall use
commercially reasonably efforts to obtain all consents and
approvals from third parties described in Schedule 8.2(e), and in no
event later than ten (10) Business Days following the date of this
Agreement, the Parties shall make, or caused to be made, all
filings required by Legal Requirements to be made by them in order
to consummate the transactions contemplated by the Transaction
Documents and the documents related thereto.
Each Party
will, at the request of any other Party, take such further actions
as are requested and execute any additional documents, instruments
or conveyances of any kind that may be reasonably necessary to
expeditiously satisfy the closing conditions set forth in
Article VIII and to
further effect the transactions contemplated by this Agreement.
Subject to Section
6.4 which shall govern the subject matter thereof and except
as otherwise expressly set forth herein, no Party shall take any
action after the date of this Agreement to materially delay the
obtaining of, or result in not obtaining, any consent from any
Governmental Authority necessary to be obtained prior to Closing.
Notwithstanding the foregoing, Buyer acknowledges and agrees that
Sellers and their Affiliates have no responsibility for any
financing that Buyer may raise in connection with the transactions
contemplated hereby, and no responsibility for the content of any
rating agency presentations, offering documents, private placement
memoranda, bank information memoranda, prospectuses and similar
documents prepared by or on behalf of Buyer or any of its
Affiliates, or Buyer’s financing sources, in connection with
Buyer’s financing activities in connection with the
transactions contemplated hereby.
Sellers
acknowledge and agree that, except as otherwise provided in this
Agreement, from and after the Closing, Buyer will be entitled to
the originals of all books and records included in the Assets. From
and after the Closing, Buyer shall, and shall cause its Affiliates
to cooperate in all reasonable respects with Sellers and will make
available to Sellers and their Affiliates and Representatives,
during normal business hours, such books and records that relate to
the period preceding the Closing Date and that a Seller determines
are necessary or useful in connection with any Claim,
investigation, allegation, inquiry or proceeding (including the
prosecution or defense thereof) with respect to the assets,
operations or activities of the Sellers or any Taxes imposed on or
with respect to the foregoing preceding the Closing Date;
provided,
however, that the
Buyer will be entitled to destroy books and records in accordance
with a customary document retention policy or industry standards;
but provided,
further, that Buyer
and its Affiliates will use commercially reasonable efforts to
maintain any such books and records pertaining to the period
preceding the Closing Date for at least six (6) years
following the Closing Date. Notwithstanding anything in this
Agreement to the contrary, Buyer and its Affiliates will not be
liable to Sellers or their Affiliates for any unintentional loss of
such books or records during such six (6) year period including,
without limitation, because of cyber-attack, malware, other
computer virus, unintentional destruction, or
otherwise. From
and after the Closing, Buyer shall make available to Sellers and
their Affiliates and Representatives upon reasonable advance
notice, (i) personnel of the Buyer to assist Sellers and their
Affiliates and Representatives in locating and obtaining records
and files maintained by the Buyer, (ii) any of the personnel of the
Buyer whose assistance or participation is reasonably required by
Sellers or their Affiliates or Representatives in anticipation of,
or preparation for, any existing or future third party actions
(including Third Party Claims), Tax or other matters in which
either the Sellers or any of their past, present or future
Affiliates or Representatives is involved and which relate to the
Sellers or the Assets.
For a
period of six (6) months following the Closing, except as required
by a court of competent jurisdiction or applicable Legal
Requirements, including applicable securities Legal Requirements,
and except for disclosures required to be made in the
financial statements of a Party or any of its Affiliates, or
in publicly filed documents necessary to effect the
transactions contemplated by this Agreement and the other
Transaction Documents, none of the Buyer or any of their Affiliates
on the one hand, or Sellers or any of their Affiliates on the other
hand, will, without the prior consent of the other Party (which
will not be unreasonably withheld or delayed), make any statement
or any public announcement or press release with respect to the
transactions contemplated by this Agreement. Notwithstanding
anything in this provision to the contrary, the Parties will
cooperate to prepare an appropriate press release to be issued upon
execution of this Agreement. Thereafter, the Parties will cooperate
to prepare an appropriate press release to be issued upon Closing.
Nothing in this Agreement shall be construed to prevent Buyer from
preparing and publicly filing all reports, schedules, documents and
other filings it determines in its sole and absolute discretion to
be necessary or advisable to comply with the securities Legal
Requirements.
(a) Buyer agrees that
it will offer employment to all employees of the Sellers set forth
on Schedule 6.9 at
the Closing (any such employees of Sellers who are so offered
employment with Buyer and accept such offer are referred to herein
as “Transferred
Employees”). The failure of any one or more employees
of Sellers to accept employment with Buyer shall not be deemed to
be either (i) a breach of this Agreement by any Seller or (ii)
result in a Material Adverse Effect. The Transferred Employees
shall receive credit for all periods of employment and/or service
with the Sellers prior to the Effective Time for purposes of
eligibility, vesting and benefit accrual with respect to the
Buyer’s or its Affiliates’ (as applicable) employee
benefit plans. Notwithstanding the foregoing, nothing in this
Agreement, either expressed or implied, shall confer upon any
Transferred Employee (or Transferred Temporary Employee) any rights
or remedies, including any right to continued employment for any
specified period after the Closing or of any nature or kind
whatsoever, under or by reason of this Agreement or the
transactions contemplated hereby. In addition, Buyer will allow
each temporary employee of Sellers to apply for employment with
Buyer (each such employee who accepts employment with Buyer, a
“Transferred Temporary
Employee”).
(b) After the Closing,
Buyer is and shall remain liable for, and Buyer shall be
responsible for and shall promptly discharge (or cause to be
discharged), all Liabilities, duties, and Claims, to or by the
Transferred Employees only, relating to continuation health
coverage pursuant to Section 4980B of the Code and Title I,
Subtitle B, Part 6 of ERISA, and Buyer shall file any and all
annual reports, filings, or notices that may be required to be
filed with Governmental Entities or provided to participants and
beneficiaries after the Closing with respect solely to the
Transferred Employees.
(c) The Parties shall
use commercially reasonable efforts to cause ACE and the WC
Custodian to release its Lien on the WC Collateral and to release
the WC Collateral to the Sellers’ Representative, on behalf
of Sellers, at Closing. Without limiting the foregoing, Buyer shall
agree to cause its Affiliate Hire Quest, LLC to provide to ACE and
the WC Custodian a letter of credit or other sufficient collateral
as is required by ACE and the WC Custodian to replace the WC
Collateral and to cause ACE and the WC Custodian to release such WC
Collateral to Sellers’ Representative (on behalf of Sellers).
The Parties shall cause any refund or remittance for early
cancellation or termination of the Sellers’ workers’
compensation plan for the current year to be paid to Sellers’
Representative (for the benefit of the Sellers). For the avoidance
of doubt, such refund or remittance shall not be part of the WC
Collateral.
(i) any
fact, circumstance, event or action the existence, occurrence or
taking of which (A) has had, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect,
or (B) has resulted in, or could reasonably be expected to result
in, the failure of any of the conditions set forth in
Section
8.1 or Section 8.2
to be satisfied;
(ii) any
notice or other communication from any Person other than those
Persons identified on Schedule 4.4(a)
or Schedule 4.4(b)
alleging that the consent of such
Person is or may be required in connection with the transactions
contemplated by this Agreement or the Transaction
Documents;
(iii) any
material notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement or the Transaction Documents; and
(iv) any
Claims commenced or, to Sellers’ Knowledge, threatened
against, relating to or involving or otherwise affecting
Sellers’ business, the Assets, or the Assumed Liabilities
that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant on Schedule 4.17
or that relates to the consummation of
the transactions contemplated by this
Agreement.
6.13 UPS
Transition.
ARTICLE VII
TAX
MATTERS
Within
forty-five (45) days following the determination of the final
Purchase Price pursuant to Section 3.2, Buyer shall
provide the Sellers’ Representative with an allocation of the
Purchase Price among the Assets prepared in accordance with
Treasury Regulations Section 1.1060-1 and IRS Form 8594 (the
“Purchase
Price Allocation”). The Sellers’ Representative
shall notify the Buyer within thirty (30) days after the receipt of
the Purchase Price Allocation if the Sellers’ Representative
considers the Purchase Price Allocation to be inconsistent with
Treasury Regulations Section 1.1060-1 (and any similar provisions
of state, local or foreign law, as appropriate), and the Parties
shall use good faith efforts to resolve any such inconsistencies.
To the extent the Buyer and the Sellers’ Representative reach
mutual and final agreement upon the Purchase Price Allocation, then
the Parties and their respective Affiliates shall file, or cause to
be filed, all Tax Returns consistent with the Purchase Price
Allocation, and no such Person shall take any income Tax position
inconsistent with such Purchase Price Allocation; provided,
however, that if the Buyer and the Sellers’ Representative do
not reach mutual and final agreement upon the Purchase Price
Allocation, neither the Buyer nor the Sellers’ Representative
nor any of their respective Affiliates shall be bound by the
Purchase Price Allocation and each such Person may file all Tax
Returns in accordance with its own allocation; provided further,
however, that nothing contained herein shall prevent any Person
from settling any proposed deficiency or adjustment by any
Governmental Authority based upon or arising out of the Purchase
Price Allocation, and no Person shall be required to litigate any
proposed deficiency or adjustment by any Governmental Authority
challenging such Purchase Price Allocation.
All
real property Taxes, personal property Taxes, or ad valorem
obligations and similar recurring Taxes and fees on the Assets for
any taxable period beginning before, and ending after, the Closing
Date, shall be prorated between Buyer, on the one hand, and the
Sellers, on the other hand, as of the Closing Date based on the
number of days in the taxable period up to and including the
Closing Date and the number of days in the taxable period after the
Closing Date, respectively, relative to the total number of days in
such taxable period. With respect to Taxes described in this
Section 7.4, Buyer
shall prepare and timely file all Tax Returns due after the Closing
Date with respect to such Taxes. Buyer shall provide the
Sellers’ Representative with copies of all Tax Returns
relating to any taxable period for which Sellers are responsible
for the payment of Taxes in accordance with this Section 7.4 as soon as
practicable after the preparation, but prior to the filing,
thereof, for the Sellers’ Representative’s review and
comment.
ARTICLE VIII
The
obligations of each Party to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment,
at or prior to the Closing, of the following
conditions:
(a) Governmental Restraints. No
order, decree, judgment, injunction or other legal restraint or
prohibition of any Governmental Authority shall be in effect, and
no Legal Requirement shall have been enacted or adopted that
enjoins, prohibits or makes illegal the consummation of the
transactions contemplated by the Transaction Documents and no Claim
by any Governmental Authority with respect to the transactions
contemplated by the Transaction Documents shall be pending that
seeks to restrain, enjoin, prohibit or delay the transactions
contemplated thereby.
(b) Bankruptcy Court Approval. The
United States Bankruptcy Court for the District of Delaware shall
have entered an order approving the sale of the Assets and the
transactions contemplated by this Agreement, said order to include,
among others, the following findings of fact and conclusions of
law: (i) the Purchase Price and assumption of the Assumed
Liabilities are fair and reasonable and constitute a transfer for
reasonably equivalent value and fair consideration under the
Bankruptcy Code; (ii) effective on Closing, the sale of the Assets
shall constitute a legal, valid, and effective transfer of the
Assets and shall vest Buyer with all right, title, and interest in
and to the Assets free and clear of all liens, claims,
encumbrances, and interests of any kind held by the parties to the
Bankruptcy Order; (iii)
Buyer is granted and is entitled to all of the protections provided
to a good faith buyer under section 363(m) of the Bankruptcy Code;
and (iv) Buyer is not a successor-in-interest to
Sellers.
The
obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or Buyer’s
waiver, at or prior to the Closing, of each of the following
conditions:
(a) The representations
and warranties of Sellers contained in this Agreement and any
certificate delivered pursuant hereto shall be true and correct in
all material respects (in the case of any representation or
warranty not qualified by materiality or Material Adverse Effect)
or in all respects (in the case of any representation or warranty
qualified by materiality or Material Adverse Effect) on and as of
the date hereof and on and as of the Closing Date with the same
effect as though made at and as of such date (except those
representations and warranties that address matters only as of a
specified date, the accuracy of which shall be determined as of
that specified date in all respects). Notwithstanding the
foregoing, the Fundamental Representations shall be true and
correct in all respects on and as of the date hereof and on and as
of the Closing Date with the same effect as though made at an as of
such date (except those representations and warranties that address
matters only as of a specified date, the accuracy of which shall be
determined as of that specified date in all respects).
(b) Sellers shall have
duly performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed
or complied with by them prior to or on the Closing
Date.
(c) Since the date of
this Agreement, there shall have been no Material Adverse
Effect.
(d) The Sellers shall
have delivered or cause to be delivered to Buyer the following
documents:
(i) A certificate of an
authorized officer of the Sellers certifying the satisfaction of
the conditions set forth in Section 8.2(a), Section 8.2(b), and
Section 8.2(c) as
to the Sellers.
(ii) A
certificate of the Secretary of the Sellers, certifying and setting
forth (A) the names, signatures and positions of the Persons
authorized to execute this Agreement and any other Transaction
Documents to which the Sellers are a party on behalf of the
Sellers, and (B) a copy of the resolutions adopted by the board of
managers or board of directors of the Sellers authorizing the
execution, delivery and performance of this Agreement and any other
Transaction Documents to which the Sellers are a
party.
(iii) The
▇▇▇▇ of Sale and Assignment, duly executed by the
Sellers.
(iv) The
Escrow Agreement, duly executed by Sellers’ Representative
and the Escrow Agent.
(v) The Trademark
Assignment Agreement duly executed by the Sellers.
(vi) Releases
of all Liens, other than Permitted Liens, on the
Assets.
(vii) Such
other customary instruments of transfer, assumption, filings, or
documents, in form and substance reasonably satisfactory to Buyer,
as may be required to give effect to this Agreement.
(viii) an
agreement between ▇▇▇▇▇▇▇▇ Staffing, Hire Quest, LLC (an Affiliate
of Buyer) and ACE with respect to the transactions contemplated in
Section 6.9(c)
(including the release of the WC Collateral at Closing as
contemplated by Section
6.9(c)) in form and substance reasonably satisfactory to
Buyer and ▇▇▇▇▇▇▇▇ Staffing, duly executed by ▇▇▇▇▇▇▇▇ Staffing
(the “WC
Transition Agreement”);
(e) Each of the
consents and approvals identified on Schedule 8.2(e) shall have been
obtained and be in full force and effect.
The
obligations of Sellers to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment or
Sellers’ Representative’s waiver, at or prior to the
Closing, of each of the following conditions:
(a) The representations
and warranties of Buyer contained in this Agreement and any
certificate delivered pursuant hereto shall be true and correct in
all respects on and as of the date hereof and on and as of the
Closing Date with the same effect as though made at and as of such
date (except those representations and warranties that address
matters only as of a specified date, the accuracy of which shall be
determined as of that specified date in all respects), except where
the failure of such representations and warranties to be so true
and correct has not had, and would not, individually or in the
aggregate, be reasonably expected to materially adversely affect
the ability of Buyer to timely consummate the transactions
contemplated by this Agreement.
(b) Buyer shall have
duly performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to
be performed or complied with by it prior to or on the Closing
Date.
(c) Buyer shall have
delivered to Sellers’ Representative the following
documents:
(i) A certificate of an
authorized officer of Buyer certifying the satisfaction of the
conditions set forth in Section 8.3(a) and Section 8.3(b).
(ii) A
certificate of the Secretary of Buyer, certifying and setting forth
(A) the names, signatures and positions of the Persons authorized
to execute this Agreement and any other Transaction Documents to
which Buyer is a party on behalf of Buyer and (B) a copy of the
resolutions of the board of directors of Buyer authorizing the
execution, delivery and performance of this Agreement and any other
Transaction Documents to which Buyer is a party.
(iii) The
Escrow Agreement, duly executed by Buyer and the Escrow
Agent.
(iv) The
▇▇▇▇ of Sale and Assignment, duly executed by the
Buyer.
(v) The Trademark
Assignment Agreement, duly executed by the Buyer.
(vi) The
WC Transition Agreement, duly executed by Hire Quest,
LLC.
(e) Buyer shall have made the payments
required by Article
II.
ARTICLE
IX
SURVIVAL;
INDEMNIFICATION
(a) Survival of Representations and
Warranties of Sellers. Subject to Section 9.1(e), the
representations and warranties set forth in Article IV and any certificate
delivered pursuant hereto by any Seller shall survive the Closing
for a period of eighteen (18) months following the Closing Date,
and shall thereafter be of no further force or effect; provided
that the Fundamental Representations and all representations which
constitute Fraud shall survive the Closing for the full period of
all applicable statutes of limitations plus 60 days, and shall
thereafter be of no further force or effect.
(b) Survival of Representations and
Warranties of Buyer. Subject to Section 9.1(e), all
representations and warranties contained in Article V of this Agreement and
any certificate delivered by Buyer pursuant to this Agreement shall
survive the Closing Date until the 18-month anniversary of the
Closing Date, and shall thereafter be of no further force or
effect; provided that all representations which constitute Fraud
shall survive the Closing for the full period of all applicable
statutes of limitations plus 60 days, and shall thereafter be of no
further force or effect.
(c) Survival of Covenants of the
Parties. Subject to Section 9.1(e), the respective
covenants and obligations of the Parties made in this Agreement
shall survive the Closing Date or the Termination Date (if such
covenants expressly survive the Termination Date), as the case may
be, in accordance with their respective terms, or if no term is
specified, then until the date that is the third (3rd) anniversary of the
Closing Date or for the period explicitly specified therein,
whichever is earlier.
(d) Survival of other claims.
Notwithstanding anything to the contrary in this Section 9.1, any claims for
indemnification made pursuant to Section 9.2(c), Section 9.2(d), Section 9.2(e), or Section 9.3(c), shall survive
the Closing for the full period of all applicable statutes of
limitations plus 60 days, and shall thereafter be of no further
force or effect.
(e) Preservation. Notwithstanding
anything to the contrary in this Section 9.1, (i) any claims for
indemnification pursuant to Section 9.2 or Section 9.3 asserted in good
faith with reasonable specificity (to the extent known at such
time) and in writing by notice from the Indemnified Party to the
Indemnifying Party prior to the expiration date of the applicable
survival period specified in this Section 9.1 shall not
thereafter be barred and such claims shall survive until finally
resolved (ii) any claims not timely asserted prior to the
expiration date of the applicable survival period shall, with
respect to such claim, be irrevocably and unconditionally released
and waived by such Party.
(f) Exclusive Remedy. Subject to
Section 9.1(a), and
except with respect to claims arising from Fraud or as set forth in
Article VII (Tax
Matters), Article X
(Termination) or Section
11.9 (Specific Performance), this Article IX sets forth the sole
and exclusive remedies of the Parties for any and all breaches or
alleged breaches of, and any and all inaccuracies or alleged
inaccuracies in, any representation, warranty, covenant, agreement
or other provision of this Agreement or any certificate delivered
pursuant hereto.
From and after the
Closing and for the time periods and subject to the limitations and
conditions set forth in this Article IX, each Seller and
their Affiliates, jointly and severally, agrees to indemnify and
hold harmless and defend the Buyer, its Affiliates, and
Representatives, all of their successors and permitted assigns, and
all of their officers, directors, managers, members, shareholders,
employees and Representatives (individually, a “Buyer Indemnified
Party” and, collectively, the “Buyer Indemnified
Parties”) from and against all Damages that are
sustained or incurred by any of the Buyer Indemnified Parties
arising out of or resulting from any of the following:
(a) any breach of, or
any inaccuracy in, any representation or warranty made by the
Sellers in this Agreement or any certificate delivered by the
Sellers pursuant hereto;
(b) any breach or
default in performance by the Sellers of any of their covenants,
agreements, or obligations contained in this Agreement or any
certificate delivered by the Sellers pursuant to this
Agreement;
(c) any Excluded Assets
or Excluded Liabilities;
(d) any Liabilities
(including without limitation, Liabilities for Taxes), but
excluding Assumed Liabilities, of any Seller or any Seller’s
Affiliate which (i) are not included in the calculation of Net
Working Capital and (ii) arise out of or are related to the
operation of the business of Sellers or their Affiliates for a
period or portions thereof ending prior to the Effective Time;
and
(e) any Claims set
forth on Schedule
9.2(e) (the “Additional Covered
Claims”).
From and after the Closing and for the time
periods and subject to the limitations and conditions set forth in
this Article IX,
Buyer agrees to indemnify and hold harmless and defend Sellers,
their Affiliates and their respective successors and permitted
assigns, and their respective officers, directors, managers,
members, shareholders, employees and Representatives (individually,
a “Seller Indemnified Party”
and, collectively, the “Seller Indemnified Parties”)
from and against any and all Damages that are sustained or incurred
by any of the Seller Indemnified Parties arising out of or
resulting from any of the following:
(a) any breach of, or
any inaccuracy in, any representation or warranty made by the Buyer
in this Agreement or any certificate delivered by Buyer pursuant
hereto;
(b) any breach or
default in performance by the Buyer of any of their respective
covenants, agreements, or obligations contained in this Agreement
or any certificate delivered by the Buyer pursuant to this
Agreement; and
(c) any Assumed
Liability.
Except with respect to Third
Party Claims covered by Section 9.5, any Buyer
Indemnified Party or Seller Indemnified Party who wishes to make a
claim for indemnification for Damages pursuant to this Article IX (an
“Indemnified Party”)
shall give written notice to Sellers or the Buyer, respectively
(“Indemnifying Party”)
promptly, and in any event no later than thirty (30) days after it
first acquires knowledge of the fact, event or circumstance giving
rise to the claim for indemnification for Damages, but the failure
of any Indemnified Party to give notice as provided in this
Section 9.4 shall
not relieve the Indemnifying Party of its obligations under this
Article IX, except
to the extent that such Indemnifying Party is prejudiced by such
failure to give notice. Promptly after written notice of a claim
has been provided as set forth above (and in no event later than
thirty (30) days after the Indemnified Party first acquires
knowledge of the fact, event or circumstance giving rise to a claim
for Damages), the Indemnified Party shall supply the Indemnifying
Party with such information and documents as it has in its
possession regarding such claim, together with all pertinent
information in its possession regarding the amount of Damages that
it asserts it has sustained or incurred, and will permit the
Indemnifying Party to inspect such other records and books in the
possession of the Indemnified Party and relating to the claim and
asserted Damages as the Indemnifying Party shall reasonably
request. The Indemnifying Party shall have a period of thirty (30)
days after receipt by the Indemnifying Party of such notice and all
such evidence to either (i) agree to the payment of Damages to the
Indemnified Party or (ii) contest the payment of the Damages. If
the Indemnifying Party does not agree to or contests the payment of
Damages within such 30-day period, then the Indemnifying Party
shall be deemed not to have accepted the Damages. If the
Indemnifying Party agrees in writing to the payment of Damages
within such 30-day period, then it shall, within ten (10) Business
Days after such agreement, pay to the Indemnified Party the amount
of Damages payable pursuant to, and subject to the limitations set
forth in, this Article
IX.
(a) If any Claim is
instituted by a third party, including without limitation, any
Governmental Authority, against an Indemnified Party (each, a
“Third
Party Claim”) with respect to which an Indemnified
Party intends to claim indemnification for any Damages under this
Article IX then
such Indemnified Party shall give written notice to the
Indemnifying Party promptly, and in any event no later than thirty
(30) days after such Indemnified Party first has knowledge of a
Third Party Claim and shall not make any admissions or acceptances
of liability, but the failure of any Indemnified Party to give
notice as provided in this Section 9.5(a) shall not
relieve the Indemnifying Party of its obligations under this
Article IX, except
to the extent that such Indemnifying Party is prejudiced by such
failure to give notice. The Indemnified Party shall supply the
Indemnifying Party and, at such Indemnifying Party’s
election, its Representatives or assigns, with such information and
documents as it has in its possession regarding such Third Party
Claim, together with all pertinent information in its possession
regarding the amount of Damages that it asserts it has sustained or
incurred, and will permit the Indemnifying Party (as well as such
Indemnifying Party’s Representatives and assigns) to inspect
such other records and books in the possession of the Indemnified
Party and relating to the Third Party Claim and asserted Damages as
the Indemnifying Party shall reasonably request.
(b) The Indemnifying
Party shall have the right to conduct and control, at its own
expense, through counsel of its choosing, the defense of a Third
Party Claim so long as the Indemnifying Party notifies the
Indemnified Party of such election within thirty (30) days of its
receipt of the initial notice of the Third Party Claim pursuant to
Section 9.5(a);
provided
however, that the
Indemnified Party may participate in the defense of any Third Party
Claim assumed by the Indemnifying Party at its own expense, with
counsel of its choosing, in the defense of such Third Party Claim
although such Third Party Claim shall be controlled by the
Indemnifying Party.
(c) The Indemnified
Party and the Indemnifying Party shall in any case reasonably
cooperate with each other in regard to all matters relating to the
Third Party Claim, including corrective actions required by
applicable Legal Requirements, assertion of defenses, the
determination, mitigation, negotiation and settlement of all
amounts, costs, actions, penalties, damages and the like related
thereto, and, if necessary, providing the party controlling the
defense of the Third Party Claim and its counsel with any powers of
attorney or other documents required to permit the party
controlling the defense of the Third Party Claim and its counsel to
act on behalf of the other Party.
(d) Neither the
Indemnified Party nor the Indemnifying Party shall settle any Third
Party Claim without the consent of the other Party, which consent
shall not be unreasonably withheld, conditioned or delayed;
provided,
however, that if
such settlement involves the payment of money only and the release
of the Third Party Claim and the Indemnified Party is completely
indemnified therefor and nonetheless refuses to consent to such
settlement, then the Indemnifying Party shall be obligated for such
Third Party Claim only with respect to the payment of the amount of
such proposed settlement payment and the Indemnified Party shall be
liable for and indemnify the Indemnifying Party against any and all
Damages incurred in respect of such Third Party Claim in excess of
such proposed settlement payment. Any compromise or settlement of
the Third Party Claim under this Section 9.5 shall include as an
unconditional and irrevocable term thereof the giving by the
claimant in question to the Indemnifying Party and the Indemnified
Party a full and final release of all liabilities in respect of
such claims.
Once
Damages are agreed to in writing by the Indemnifying Party or
finally adjudicated to be payable, the Indemnifying Party shall
satisfy its obligations within fifteen (15) days of such final,
non-appealable adjudication by wire transfer of immediately
available funds. The parties hereto agree that should an
Indemnifying Party not make full payment of any such obligations
within such fifteen (15) day period, any amount payable shall
accrue interest from and including the date of the written
agreement of the Indemnifying Party or final non-appealable
adjudication to and including the date such payment has been made
at a rate per annum of 6%. Any Damages payable to a Buyer
Indemnified Party pursuant to this Article IX shall be satisfied:
(i) from the Indemnity Escrow Account; and (ii) to the extent the
amount of Damages exceeds the amounts available to the Buyer
Indemnified Party in the Indemnity Escrow Account, from Sellers,
jointly and severally.
(a) The Buyer
Indemnified Parties may not assert any claim pursuant to
Section 9.2(a)
unless and until the aggregate amount of all Damages resulting from
all claims pursuant to Section 9.2(a) exceeds $50,000
(the “Deductible”),
and thereafter Sellers shall be liable in respect of claims
pursuant to Section
9.2(a) for only those Damages in excess of the Deductible
(and subject to all other applicable requirements and limitations
contained herein). Notwithstanding the foregoing, the limitations
set forth in this Section
9.7(a) shall not apply to Fraud or any breach of a
Fundamental Representation.
(b) The maximum
aggregate amount required to be indemnified or otherwise paid by
Sellers collectively pursuant to Section 9.2(a) (other than with
respect to breach of a Fundamental Representation) (whether paid,
recovered or satisfied from the Indemnity Escrow Account, directly
by Sellers, or by any combination of the foregoing), when combined
with any amounts required to be indemnified or otherwise paid by
Sellers pursuant to Section 9.2(a) (other than with
respect to breach of a Fundamental Representation) shall not exceed
$2,595,000. The maximum aggregate amount required to be indemnified
or otherwise paid by Sellers collectively pursuant to Section 9.2(a) (including with
respect to breach of a Fundamental Representation) (whether paid,
recovered or satisfied from the Indemnity Escrow Account, directly
by Sellers, or by any combination of the foregoing), when combined
with any amounts required to be indemnified or otherwise paid by
Sellers pursuant to Section 9.2(a) shall not exceed
$8,500,000. Notwithstanding the foregoing, the limitations set
forth in this Section
9.6(b) shall not apply to Fraud.
(c) The Party seeking
indemnification under this Article IX shall (x) use
commercially reasonable efforts to mitigate any Damages which form
the basis of an indemnification claim hereunder and (y) use
commercially reasonable efforts to seek recovery from available
insurance policies or other third party indemnitors in respect of
the Damages which form the basis of an indemnification claim
hereunder, and any such recovery actually received by the
Indemnified Party shall be offset against Damages payable by the
Indemnifying Party. Any actual recovery of Damages (or portion of
Damages) by an Indemnified Party from a third party after payment
of the Damages by an Indemnifying Party to the Indemnified Party
shall be repaid promptly by the Indemnified Party to the
Indemnifying Party.
(d) Notwithstanding
anything herein to the contrary, Buyer Indemnified Parties must
first seek recourse against, and fully exhaust, the Indemnity
Escrow Account for any Damages pursuant to Section 9.2 prior to recovering
any Damages directly against any Seller.
(e) For purposes of
this Article IX,
any inaccuracy in or breach of any representation or warranty shall
be determined without regard to any materiality, Material Adverse
Effect, or other similar qualification contained in or otherwise
applicable to such representation or warranty.
The
representations, warranties, and covenants of the Indemnifying
Party, and the Indemnified Party’s right to indemnification
with respect thereto, shall not be affected or deemed waived by
reason of any investigation made by or on behalf of the Indemnified
Party (including by any of its Representatives) or by reason of the
fact that the Indemnified Party or any of its Representatives knew
or should have known that any such representation or warranty is,
was or might be inaccurate or by reason of the Indemnified
Party’s waiver of any condition set forth in Section 8.1 or Section 8.2 as the case may
be.
On the
Interim Indemnity Escrow Release Date, Buyer and Sellers’
Representative shall jointly instruct the Escrow Agent to disburse
to the Sellers’ Representative (for further distribution to
the Sellers in accordance with the provisions of Schedule I hereto) from the
Indemnity Escrow Account the Interim Indemnity Escrow Release
Amount by wire transfer of immediately available funds in
accordance with the wire transfer instructions designated in
writing by Sellers’ Representative. On the Final Indemnity
Escrow Release Date, Buyer and Sellers’ Representative shall
jointly instruct the Escrow Agent to disburse to the Sellers’
Representative (for further distribution to the Sellers in
accordance with the provisions of Schedule I hereto) from the
Indemnity Escrow Account the Final Indemnity Escrow Amount by wire
transfer of immediately available funds in accordance with the wire
transfer instructions designated in writing by Sellers’
Representative.
Notwithstanding
anything herein to the contrary, no Buyer Indemnified Party shall
have any right to indemnification under Article IX with respect to
Damages to the extent the matter forming the basis for such Damages
was included in Transaction Costs paid at or in connection with
Closing or included in the determination of Net Working Capital at
Closing, as further adjusted pursuant to Section 3.1, or Section 3.2.
ARTICLE X
TERMINATION
This Agreement may be terminated at any time prior to the
Closing:
(a) by the mutual
written consent of Sellers’ Representative and
Buyer;
(i) Buyer is not then
in material breach of this Agreement and there has been a breach,
inaccuracy in or failure to perform any representation, warranty,
covenant or agreement made by the Sellers pursuant to this
Agreement that would give rise to the failure of any of the
conditions specified in Article VIII and such breach,
inaccuracy or failure has not been cured by Sellers within thirty
(30) days of Sellers’ Representative’s receipt of
written notice of such breach from Buyer; or
(ii) any
of the conditions set forth in Section 8.1 or
Section 8.2 shall
not have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by March 31, 2021 (the
“Termination
Date”), unless such failure shall be due to the
failure of Buyer to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by
it prior to the Closing;
(i) Sellers are
not then in material breach of this Agreement and there has been a
material breach, inaccuracy in or failure to perform any
representation, warranty, covenant or agreement made by Buyer
pursuant to this Agreement that would give rise to the failure of
any of the conditions specified in Article VIII and such breach,
inaccuracy or failure has not been cured by Buyer within thirty
(30) days of Buyer’s receipt of written notice of such breach
from Sellers’ Representative; or
(ii) any
of the conditions set forth in Section 8.1 or
Section 8.3 shall
not have been fulfilled by the Termination Date, unless such
failure shall be due to the failure of Sellers to perform or comply
with any of the covenants, agreements or conditions hereof to be
performed or complied with by it prior to the Closing;
or
In the event
of the termination of this Agreement in accordance with this
Article X, this
Agreement shall forthwith become void and there shall be no
liability on the part of any Party except Section 6.7 (Publicity), this
Article X, and
Article XI,
that nothing herein shall relieve any Party from liability
for any willful breach of any provision hereof occurring prior to
the termination of this Agreement, and that no termination of this
Agreement shall affect the obligations of the Parties (and any
other Person subject thereto) under the Confidentiality Agreement,
all of which shall survive termination of this Agreement in
accordance with the terms thereof.
Following
termination of this Agreement, Buyer shall return to the Sellers
all agreements, documents, contracts, instruments, books, records,
materials and all other information regarding the Sellers or their
Affiliates provided to Buyer or any Representatives of Buyer or its
Affiliates in connection with the transactions contemplated by this
Agreement or the other Transaction Documents.
ARTICLE XI
This
Agreement and the rights under this Agreement may not be assigned
by any Party hereto without the prior written consent of the other
Parties, which consent shall not be unreasonably withheld or
delayed. Subject to the foregoing, this Agreement will be binding
upon and inure to the benefit of the Parties and their respective
successors and assigns.
Unless
otherwise provided in this Agreement, any notice, request, consent,
instruction or other document to be given under this Agreement by
any Party to another Party will be in writing and delivered
personally, by reputable overnight delivery service or other
courier or by certified mail, postage prepaid, return receipt
requested, and will be deemed given when received if
delivered personally or by overnight delivery service or other
courier or on the date receipt is acknowledged if delivered
by certified mail, postage prepaid, return receipt requested, as
follows:
If to
Sellers’ Representative or Sellers, addressed
to:
▇▇▇▇▇▇▇▇ Holdings,
LLC
c/o FTI
Consulting, Inc.
▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Email:
▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
With
copy to (which shall not constitute notice):
▇▇▇▇▇▇▇ ▇▇▇▇▇ Boult
▇▇▇▇▇▇▇▇ LLP
Roundabout
Plaza
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Email:
▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Attention: ▇▇▇
▇▇▇▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
If to
Buyer, addressed to:
HQ
▇▇▇▇▇▇▇▇ Corporation
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Email:
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq.
or to
such other place and with such other copies as either Seller or
Buyer may designate by written notice to the others in accordance
with this Section 11.2.
The Parties
stipulate that this Agreement has been entered into in the State of
Texas. This Agreement will be construed and interpreted and the
rights of the Parties governed by the internal laws of the State of
Texas, without regard to any conflict of law or choice of law
principles that would apply the substantive law of another
jurisdiction. THE PARTIES CONSENT
TO THE EXERCISE OF JURISDICTION IN PERSONAM BY THE STATE AND
FEDERAL COURTS LOCATED IN DALLAS COUNTY, TEXAS FOR ANY ACTION ARISING OUT OF THIS AGREEMENT,
THE OTHER TRANSACTION DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY. ALL ACTIONS OR PROCEEDINGS WITH RESPECT
TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF,
RELATED TO, OR FROM THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS
OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY SHALL BE
EXCLUSIVELY LITIGATED IN THE STATE OR FEDERAL COURTS LOCATED IN
DALLAS COUNTY, TEXAS. EACH PARTY HERETO WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT HE,
SHE OR IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION,
SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE OTHER TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY.
Except as
otherwise provided in this Agreement, any failure of any of the
Parties to comply with any obligation, covenant, agreement or
condition in this Agreement may be waived by the Person or Persons
entitled to the benefits thereof only by a written instrument
signed by the Person or Persons granting such waiver, but such
waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition will not operate as a
waiver of, or estoppel with respect to, any subsequent or other
failure, whether of a similar or different character, and whether
occurring before or after the waiver.
In the
event that any one or more of the provisions set forth in this
Agreement are, for any reason, held to be invalid, illegal or
unenforceable in any jurisdiction in any respect, such invalidity,
illegality or unenforceability will not affect any other provision
of this Agreement or invalidate or render unenforceable such term
or provision in any other jurisdiction. Upon such determination
that any term or other provision is invalid, illegal, or
unenforceable, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
Parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby and pursuant to the
Transaction Documents be consummated as originally contemplated to
the greatest extent possible.
Except
as expressly provided in this Agreement, this Agreement is solely
for the benefit of the Parties and their successors and assigns
permitted hereunder, and no provisions of this Agreement will be
deemed to confer upon any other Person any remedy, claim,
liability, reimbursement, cause of action or other
right.
Neither this Agreement nor any uncertainty or ambiguity herein will
be construed or resolved against any Party, whether under any rule
of construction or otherwise. On the contrary, this Agreement has
been reviewed by each of the Parties and their respective counsel
and will be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes
and intentions of all Parties.
Each
Party acknowledges and agrees that the other Parties would be
damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms
or otherwise are breached. Accordingly, each Party agrees that the
other Parties will be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any
state thereof having jurisdiction over the Parties and the matter,
in addition to any other remedy to which they may be entitled, at
law or in equity.
This
Agreement may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together will
constitute one and the same instrument.
This
Agreement, together with all Exhibits, Annexes and Schedules
hereto, the other Transaction Documents and the Confidentiality
Agreement, constitute the entire agreement of the Parties with
regard to the subject matter hereof and supersede all prior and
contemporaneous agreements and understandings, whether oral or
written, of the Parties. In the event of any inconsistency between
the statements in the body of this Agreement and those in the
Transaction Documents, the Confidentiality Agreement, or the
Exhibits, Annexes and Schedules hereto (other than an exception
expressly set forth as such in the Disclosure Schedules), the
statements in the body of this Agreement will control. No
amendment, supplement or modification of this Agreement will be
binding unless executed in writing by all Parties.
The inclusion
of any information in the Disclosure Schedules shall not be deemed
an admission or acknowledgment, in and of itself and solely by
virtue of the inclusion of such information in the Disclosure
Schedules, that such information is required to be listed in the
Disclosure Schedules or that such items are material to the
Sellers. The headings, if any, of the individual sections of the
Disclosure Schedules are inserted for convenience only and shall
not be deemed to constitute a part thereof or a part of this
Agreement. The Disclosure Schedules are arranged in sections
corresponding to those contained in Article IV merely for
convenience, and the disclosure of an item in one section of the
Disclosure Schedules as an exception to a particular representation
or warranty shall be deemed adequately disclosed as an exception
with respect to all other representations or warranties to the
extent that the relevance of such item to such representations or
warranties is reasonably apparent on the face of such item,
notwithstanding the presence or absence of an appropriate section
of the Disclosure Schedules with respect to such other
representations or warranties or the presence or absence of a
reference thereto in either the Disclosure Schedules or in the
particular representation or warranty. The specification of any
dollar amount in the representations and warranties or otherwise in
this Agreement or in the Disclosure Schedules is not intended and
shall not be deemed to be an admission or acknowledgment of the
materiality of such amounts or items, nor shall the same be used in
any dispute or controversy between the Parties to determine whether
any obligation, item or matter (whether or not described herein or
included in any schedule) is or is not material for purposes of
this Agreement (other than with respect to any representation,
warranty or provision of this Agreement in which such specification
occurs).
The Parties
hereby agree that, in the event a dispute arises after the Closing
between Buyer or any Seller, Sellers’ Representative or any
of their Affiliates, ▇▇▇▇▇▇▇ may represent such Seller,
Sellers’ Representative or any of their Affiliates in such
dispute even though the interests of such Seller, Sellers’
Representative or any of their Affiliates may be directly adverse
to the Buyer or its Affiliates, and even though ▇▇▇▇▇▇▇ may have
represented Buyer or its Affiliate in a matter substantially
related to such dispute, or may be handling ongoing matters for the
Buyer or its Affiliate. Buyer further agrees, on behalf of itself
and its Affiliates, that, as to all communications between ▇▇▇▇▇▇▇
and any Seller or Sellers’ Representative that relate in any
way to the transactions contemplated by this Agreement, the
attorney-client, work product, business strategy or similar
protection or privilege and the expectation of client confidence
belongs to Sellers’ Representative and may be controlled by
Sellers’ Representative, and shall not transfer, pass to or
be claimed or controlled by Buyer or its Affiliates notwithstanding
the transfer of Assets hereunder; provided that Seller shall not
waive such attorney-client privilege other than to the extent it
deems appropriate in connection with the enforcement or defense of
their respective rights or obligations existing under this
Agreement and the other Transaction Documents. Notwithstanding the
foregoing, in the event a dispute arises between Buyer or its
Affiliate and a Person other than any Seller, Sellers’
Representative or any of their Affiliates after the Closing, Buyer
may assert the attorney-client privilege to prevent disclosure of
confidential communications by ▇▇▇▇▇▇▇ to such Person; provided, however, that Buyer or its
Affiliates may not waive such privilege without the prior written
consent of Sellers’ Representative.
(a) Appointment; Acceptance. Each
of the Sellers shall be deemed to have agreed to irrevocably
constitute and appoint ▇▇▇▇▇▇▇▇ Holdings, LLC, a Delaware limited
liability company, acting as hereinafter provided, as the
Sellers’ Representative, and appoint the Sellers’
Representative as their exclusive attorney-in-fact and agent in
their name, place, and ▇▇▇▇▇ in connection with the transactions
and agreements contemplated by this Agreement and the Transaction
Documents and acknowledge that such appointment and the powers,
immunities and rights to indemnification granted to the
Sellers’ Representative hereunder are coupled with an
interest and are intended to be durable and to survive the
disability or mental incapacity of each Seller and survive the
death, incompetence, bankruptcy, dissolution or liquidation of the
respective Seller and shall be binding on any successor, assign,
heir, or personal representative thereto. By executing and
delivering this Agreement under the heading “Sellers’
Representative,” ▇▇▇▇▇▇▇▇ Holdings, LLC, a Delaware limited
liability company, hereby: (i) accepts its appointment and
authorization to act as the Sellers’ Representative as
attorney-in-fact and agent on behalf of the Sellers in accordance
with the terms of this Agreement, and (b) agrees to perform the
obligations required of the Sellers’ Representative under
this Agreement and any other agreements, documents, certificates,
and instruments delivered to the Buyer in connection with the
transactions contemplated by this Agreement.
(b) Authority. Each Seller fully
and completely, without restriction: authorizes the Sellers’
Representative (i) to prepare, finalize, approve, and authorize all
exhibits, schedules and other attachments to this Agreement and all
other agreements and other documents to be delivered by the Sellers
or the Sellers’ Representative pursuant to this Agreement
(the “Seller Delivered
Agreements”) and such approval and authorization may
be conclusively evidenced, and relied on by Buyer, by the execution
or delivery thereof by the Sellers’ Representative, (ii) to
execute and deliver, and to accept delivery of, on their behalf,
notices under the Seller Delivered Agreements and such amendments
as may be deemed by the Sellers’ Representative in its sole
discretion to be appropriate under the Seller Delivered Agreements,
(iii) to act for the Sellers with respect to all post-Closing
matters, including without limitation, all indemnity claims
pursuant to Article
IX, (iv) to act for the Sellers pursuant to Article II and Article III of this Agreement,
(v) to employ and obtain the advice of legal counsel, accountants
and other professional advisors as Sellers’ Representative on
behalf of the Sellers, in Sellers’ Representative’s
sole discretion, deems necessary or advisable in the performance of
its duties as Sellers’ Representative and to rely on their
advice and counsel, (vi) to terminate, amend, or waive any
provision of this Agreement, and (vii) to do or refrain from doing
any further act or deed on behalf of the Sellers which
Sellers’ Representative deems necessary or appropriate in its
sole discretion relating to the subject matter of this Agreement as
fully and completely as any of the Sellers could do if personally
present and acting.
(c) All out-of-pocket
fees and expenses (including legal, accounting and other
advisors’ fees and expenses, if applicable) reasonably
incurred by the Sellers’ Representative in performing any
actions under this Agreement or the Transaction Documents will be
paid out of the Sellers’ Representative Fund from time to
time, as and when such fees and expenses are incurred. In the event
that the amount of the Sellers’ Representative Fund is
insufficient to satisfy all expense reimbursement and
indemnification payments to which the Sellers’ Representative
is entitled pursuant to this Section 11.14 upon written
notice from the Sellers’ Representative to the Sellers as to
the existence of a deficiency toward the payment of any such
expense reimbursement or indemnification amount, as the case may
be, each Seller will promptly deliver to the Sellers’
Representative full payment of such Seller’s Pro Rata Share
of the amount of such deficiency. The Sellers’ Representative
may establish such terms and procedures for administering,
investing and disbursing any amounts from the Sellers’
Representative Fund as it may determine in its reasonable judgment
to be necessary, advisable or desirable to give effect to the
provisions of this Agreement. If any balance of the Sellers’
Representative Fund remains undisbursed at such time as all
disputes, claims and other matters relating to the transactions
contemplated by this Agreement and all other instruments and
agreements to be delivered pursuant hereto have been finally
resolved, as reasonably determined by the Sellers’
Representative, then the Sellers’ Representative will
distribute to each Seller, by wire transfer of immediately
available funds to an account designated by each Seller, such
Seller’s portion of such remaining balance of the
Sellers’ Representative Fund (determined in accordance with
the provisions set forth on Schedule I
hereto).
(d) Notwithstanding the
obligations of the Sellers’ Representative set forth in this
Section 11.14, the
Sellers’ Representative shall not be responsible to any
Seller for any Damages which such Seller may suffer by the
performance of the Sellers’ Representative's duties under
this Agreement, the Transaction Documents or the Seller Delivered
Agreements (other than Damages arising from willful breach in the
performance of such duties under this Agreement, the Transaction
Documents or the Seller Delivered Agreements). The Sellers’
Representative shall not have any duties or responsibilities except
those expressly set forth in this Agreement, the Transaction
Documents or the Seller Delivered Agreements, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement, the Transaction
Documents or the Seller Delivered Agreements or shall otherwise
exist against the Sellers’ Representative.
(Remainder of page intentionally left blank. Signature pages
follow.)
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first written above.
THE
SELLERS:
▇▇▇▇▇▇▇▇ STAFFING,
LLC
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Authorized Person
▇▇▇▇▇▇▇▇ SERVICES,
LLC
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name:
▇▇▇ ▇▇▇▇▇▇
Title: Authorized
Person
▇▇▇▇▇▇▇▇
EMPLOYMENT, LLC
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name:
▇▇▇ ▇▇▇▇▇▇
Title: Authorized
Person
▇▇▇▇▇▇▇▇ MEDICAL
STAFFING, LLC
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name: ▇▇▇
▇▇▇▇▇▇
Title: Authorized
Person
▇▇▇▇▇▇▇▇
INVESTMENTS, INC.
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name:
▇▇▇ ▇▇▇▇▇▇
Title: Authorized
Person
SELLERS’
REPRESENTATIVE:
▇▇▇▇▇▇▇▇ HOLDINGS,
LLC
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name:
▇▇▇ ▇▇▇▇▇▇
Title: Authorized Person
BUYER:
HQ
▇▇▇▇▇▇▇▇ CORPORATION
By:
/s/ ▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Secretary
PARENT:
By:
/s/ ▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
EXHIBIT A
Defined Terms
“Accounting
Methodology” means the
methodology set forth on Exhibit
B.
“ACE”
means ACE American Insurance Company and its affiliated insurers,
including the affiliated insurers listed on Schedule A to the WC
Pledge and Security Agreement, and its successors and
assigns.
“Acquisition
Proposal” means any
inquiry, proposal or offer from any Person (other than Buyer or any
of its Affiliates) concerning (a) a merger, consolidation,
liquidation, recapitalization or other business combination
transaction involving any Seller; (b) the issuance or
acquisition of Equity Interests in any Seller; or (c) the sale,
lease, exchange or other disposition of all or substantially all of
the assets of the Sellers (taken as a whole).
“Additional
Covered Claims” is
defined in Schedule
9.2(d).
“Adjustment
Dispute Notice” is
defined in Section 3.2(a).
“Affiliate”
means with respect to any Person, any Person that, directly or
indirectly, controls, is controlled by, or is under a common
control with, such Person. The term “control”
(including the terms “controlled by” and “under
common control with”) as used in this definition means the
possession, directly or indirectly, of the power to direct or cause
the direction of management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
“Agreement”
is defined in the preamble.
“Annual
Financial Statements” is
defined in Section 4.6.
“Annual
Period” is defined
in Section
4.11(a)(i).
“Applicable
Look-Back Date” means
three (3) years prior to the date of this
Agreement.
“Assets”
is defined in Section 2.1.
“Assigned
Contracts” is defined
in Section 2.1(c).
“Assigned
Permits” is defined
in Section 2.1(h).
“Assumed
Liabilities” is defined
in Section 2.3(a).
“Assumed PTO
Liability” is defined
in Section
2.3(a)(iii).
“Assumed
Payroll Liability” is
defined in Section
2.3(a)(iv).
“Assumed
Workers’ Compensation Claims” is defined in Section
2.3(a)(v).
“Bankruptcy
Order” means the order
dated May 21, 2018 by the United States Bankruptcy Court for the
District of Delaware in the matter styled In re: Zohar III, et
al., Chapter 11 Case No.
18-10512 (CSS) (Ref Docket 222 & 223), as modified by an
amended order in the same proceeding dated July 2, 2020 (Ref.
Docket 1500).
“Base
Purchase Price” is
defined in Section
2.4(a).
“▇▇▇▇ of
Sale and Assignment”
means a ▇▇▇▇ of Sale and Assignment and Assumption Agreement in
substantially the form of Exhibit C
hereto.
“▇▇▇▇▇▇▇”
is defined in Section 2.2(k).
“Business
Day” means any day other
than a Saturday, Sunday or legal holiday under the laws of the
United States or the State of Texas.
“Buyer”
is defined in the preamble.
“Buyer
Indemnified Parties” is
defined in Section
9.2.
“Buyer’s
Knowledge” means (a) the
actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (CEO), ▇▇▇▇ ▇▇▇▇▇ (CFO), or
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (CLO), and (b) the knowledge of each such Person
that would reasonably be expected to have been obtained after due
inquiry by such Person.
“CARES
Act” means the
Coronavirus Aid, Relief, and Economic Security Act of 2020, Pub. L.
116-136.
“Cash”
means all cash and cash equivalents (including marketable
securities and short-term investments) of the Sellers. For the
avoidance of doubt, Cash shall be increased by all checks, drafts
and wires deposited for the account of any Seller as of the
Effective Time that have not been credited by such Seller’s
financial institution as of the Effective Time, and shall be
decreased by checks, drafts and wires issued by any Seller as of
the Effective Time that have not cleared as of the Effective
Time.
“Claim”
means any claim, action, cause of action, demand, lawsuit,
arbitration, inquiry, audit, notice of violation, proceeding,
litigation, citation, summons, subpoena or investigation of any
nature, civil, criminal, administrative, regulatory or otherwise,
whether at law or in equity.
“Closing”
is defined in Section
2.9.
“Closing
Date” is defined
in Section
2.9.
“Closing
Payment” is defined
in Section 2.4(b).
“Closing
Settlement Statement” is
defined in Section 2.4(b).
“Code”
means the Internal Revenue Code of 1986, as
amended.
“Confidentiality
Agreement” means that
certain Confidentiality Agreement dated November 5, 2020 by and
between the ▇▇▇▇▇▇▇▇ Holdings, LLC, an Affiliate of Sellers, and
HireQuest, Inc., an Affiliate of Buyer.
“Contract”
means any contract, agreement, understanding, undertaking, option,
right to acquire, preferential purchase right, preemptive right,
warrant, indenture, debenture, note, bond, loan, loan agreement,
collective bargaining agreement, lease, mortgage, franchise,
license, purchase order, bid, commitment, letter of credit,
guaranty, surety or any other legally binding arrangement, whether
oral or written.
“Current
Assets” means as of the
Effective Time the current assets of Sellers that are included in
the Assets and included in the line items set forth on
Exhibit
B hereto under the heading
“Current Assets” calculated in a manner consistent with
the Accounting Methodology.
“Current
Liabilities” means as of
the Effective Time the current liabilities of the Sellers that are
included in the Assumed Liabilities and included in the line items
set forth on Exhibit B
hereto under the heading
“Current Liabilities” calculated in a manner consistent
with the Accounting Methodology.
“Damages”
means all debts, liabilities, obligations, losses, damages, cost
and expenses, interest (including prejudgment interest), penalties,
fines, reasonable legal and accounting fees, including reasonable
fees and the cost of enforcing any right to indemnification
hereunder and the cost of pursuing any insurance providers,
disbursements and costs of investigations, deficiencies, levies,
duties and imposts to the extent actually incurred by a Party to
this Agreement, but excluding the Excluded
Damages.
“Deductible” is
defined in Section
9.7(a).
“Disclosure
Schedules” means the
disclosure schedules delivered to Buyer by Sellers on the date of
this Agreement, as updated or amended as provided
herein.
“EBITDA” means,
with respect to any period, the net income before interest,
provision for federal, state and local income Taxes, depreciation,
amortization, non-operating income and non-operating expense, for
such period.
“Effective
Time” is defined
in Section
2.9.
“Employee
Benefit Plans” means any
“employee benefit plan,” as defined in Section 3(3) of
ERISA and any profit sharing, bonus, stock option, stock purchase,
stock ownership, pension, retirement, severance, deferred
compensation, excess benefit, supplemental unemployment,
post-retirement medical or life insurance, welfare or incentive
plan, compensation, benefit, employment, consulting, incentive,
performance award, phantom equity, stock-based change in control,
vacation, paid time off (PTO), vision, dental, welfare, Code
Section 125 Cafeteria, fringe-benefit sick leave, long-term
disability, medical, hospitalization, life insurance, other
insurance plan, or other similar employee benefit plan, maintained,
or contributed to by Sellers, for the benefit of its employees or
former employees with respect to service to the Sellers or under
which any Seller, Buyer, or any of their Affiliates could
reasonably be expected to have any Liability, contingent or
otherwise.
“Environmental
Authorization” means any
license, permit, certificate, approval, registration, or other form
of permission required under or issued pursuant to any
Environmental Law.
“Environmental
Laws” means all Legal
Requirements relating to pollution or protection of the environment
(including ambient air, surface, water, groundwater, land surface
or subsurface strata), natural resources, or endangered or
threatened species, including Legal Requirements relating to
Releases or threatened Releases of Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, transport or handling of Hazardous
Materials.
“Equity
Interest” means, with
respect to any Person: (a) capital stock, membership
interests, partnership interests, other equity interests, rights to
profits or revenue and any other similar interest of such Person;
(b) any security or other interest convertible into or
exchangeable or exercisable for any of the foregoing; and
(c) any right (contingent or otherwise) to acquire any of the
foregoing.
“ERISA”
means the Employee Retirement Income Security Act of
1974.
“ERISA
Affiliate” means, with
respect to any entity, trade or business, any other entity, trade
or business that is a member of a group described in
Section 414(b),(c), (m) or (o) of the Code or
Section 4001(b)(l) of ERISA that includes the first entity,
trade or business, or that is a member of the same
“controlled group” as the first entity, trade or
business pursuant to Section 4001(a)(14) of
ERISA.
“Escrow
Agent” means Wilmington
Trust, National Association, and its successors and
assigns.
“Escrow
Agreement” means an
Escrow Agreement in substantially the form of Exhibit D
hereto.
“Escrow
Amount” means $1,400,000,
which amount consists of (i) the Net Working Capital Escrow Amount
and (ii) the Indemnity Escrow Amount.
“Estimated
Buyer Working Capital Escrow Account” is defined in Section
2.6(b).
“Estimated
Buyer Working Capital Escrow Amount” is defined in Section 3.1(b).
“Estimated
Net Working Capital” is
defined in Section 3.1(a).
“Estimated
Seller Working Capital Payment” is defined in Section 3.1(c).
“Estimated
WC Collateral” is defined
in Section
3.1.
“Excluded
Assets” is defined
in Section 2.2.
“Excluded
Contracts” is defined
in Section 2.2(f).
“Excluded
Damages” means punitive,
special, exemplary, indirect, consequential, remote, speculative
damages or damages for lost profits arising under or in connection
with this Agreement or the transactions contemplated hereby except
to the extent actually awarded to a third party in connection with
a Third Party Claim, to any Governmental Authority, or resulting
from Fraud, which damages (including legal costs and reasonable
attorneys’ fees incurred in connection with such damages)
shall not be excluded by this provision as to recovery hereunder.
Notwithstanding anything to the contrary in this definition
of Excluded
Damages or any provision of
this Agreement, nothing herein shall be construed as limiting any
Party’s ability to recover any direct damages (including lost
profits that are direct damages) as provided under Texas
law.
“Excluded
Liabilities” is defined
in Section 2.3(b).
“Excluded
Permits” is defined
in Section 2.2(h).
“Excluded
Receivables” is defined
in Section 2.2(m).
“Final Buyer
Payment” is defined
in Section 3.2(d).
“Final
Indemnity Escrow Amount”
means, as of the Final Indemnity Escrow Release Date, an amount
equal to the balance of the Indemnity Escrow Amount, together with
any interest thereon in the Indemnity Escrow Account, reduced, but
not below $0, by the amount of any claims made by Buyer Indemnified
Parties against the Indemnity Escrow Account that are pending and
unresolved as of such date in accordance with this Agreement and
the Escrow Agreement.
“Final
Indemnity Escrow Release Date” is the eighteen (18) month anniversary of
the Closing Date.
“Final
Seller Payment” is
defined in Section 3.2(c).
“Financial
Statements” is defined
in Section 4.6.
“Fraud”
means, as determined by a court of competent jurisdiction, the
actual and intentional common law fraud (and not a promissory
fraud, equitable fraud, constructive fraud, negligent
misrepresentation or omission, or any form of fraud based on
recklessness or negligence) by a Party to this Agreement with
respect to the making of a representation or warranty set forth
in Article IV
or Article V
of this Agreement that was a material
inducement to the claiming Party's decision to enter into this
Agreement and upon which the claiming Party
relied.
“Fundamental
Representations” means
the representations and warranties set forth in Sections 4.1
(Organization; Good Standing),
4.2
(Foreign Qualification; Power),
4.3
(Authority; Enforceability),
4.9(a)
(Title to Assets), 4.13
(Brokers’ Fees),
4.16
(Taxes), and 4.19
(Employee Benefit Matters) of this
Agreement.
“GAAP”
means generally accepted accounting principles in the United
States, as in effect from time to time, as applied by the
Sellers.
“Governmental
Authority” means any
governmental, quasi-governmental, state, county, city or other
political subdivision of the United States or any other country, or
any agency, court or instrumentality, foreign or domestic, or
statutory or regulatory body thereof.
“Hazardous
Material” means any
pollutant, chemical, compound, mixture, or toxic or hazardous
material that is listed, classified, defined, or regulated under
any Environmental Law, but excluding, in each case, cleaning and
disinfecting supplies and similar products that are generally
available in the consumer market to the extent used by the Sellers
in the Ordinary Course of Business.
“Indemnified
Party” is defined
in Section 9.4.
“Indemnifying
Party” is defined
in Section 9.4.
“Indemnity
Escrow Account” is
defined in Section
2.6(a).
“Indemnity
Escrow Amount” is defined
in Section
2.6(a).
“Independent
Accountant” is defined
in Section 3.2(a).
“Insurance
Policies” is defined
in Section 4.21.
“Intellectual
Property Rights” means
all United States and foreign: (a) patents, patent
applications, utility models or statutory invention registrations
(whether or not filed), and invention disclosures;
(b) trademarks, service marks, logos, designs, trade names,
trade dress, domain names and corporate names and registrations and
applications for registration thereof (whether or not filed) and
the goodwill associated therewith; (c) copyrights, whether
registered or unregistered, and registrations and applications for
registration thereof (whether or not filed) and other works of
authorship, whether or not published; (d) trade secrets,
proprietary information, confidential information, know-how,
inventions, customer lists and information, supplier lists,
manufacturer lists, manufacturing and production processes and
techniques, blueprints, drawings, schematics, manuals, software,
firmware and databases; (e) domain names and uniform resource
locators and all contractual rights relating to the foregoing;
(f) the right to ▇▇▇ and collect Damages for any past, present
and future infringement, misappropriation or other violation of any
of the foregoing; and (g) moral rights relating to any of the
foregoing.
“Interim
Balance Sheet” is defined
in Section 4.6.
“Interim
Financial Statements” is
defined in Section 4.6.
“Interim
Indemnity Escrow Release Amount” means, as of the Interim Indemnity Escrow
Release Date, an amount equal to Two Hundred Fifty Thousand Dollars
($250,000), reduced, but not below $0, by the amount of any claims
made by Buyer Indemnified Parties against the Indemnity Escrow
Account that are pending and unresolved as of the Interim Indemnity
Escrow Release Date in accordance with this Agreement and the
Escrow Agreement.
“Interim
Indemnity Escrow Release Date” is the one (1) year anniversary of the
Closing Date.
“Knowledge
of the Sellers,”
“Sellers’
Knowledge” and similar
references mean (a) the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Interim
CEO), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (CFO), ▇▇▇▇▇ ▇▇▇▇▇ (General Counsel), ▇▇▇
▇▇▇▇▇▇▇ (Controller), ▇▇▇▇▇▇▇ ▇▇▇▇▇ (SVP) or ▇▇▇▇ ▇▇▇▇▇▇▇ (VP), and
(b) the knowledge of each such Person that would reasonably be
expected to have been obtained after due inquiry by such
Person.
“Leasehold
Interests” is defined
in Section
2.1(h).
“Legal
Requirement” means any
common law, statute, code, ordinance, order, regulation, rule,
judgment, injunction, decree, other requirement, or rule of law of
any Governmental Authority.
“Liability”
or “Liabilities”
means liabilities, obligations, or
commitments of any nature whatsoever, asserted or unasserted, known
or unknown, absolute or contingent, accrued or unaccrued, matured
or unmatured, or otherwise.
“Lien”
means any lien, pledge, condemnation award, claim, restriction,
charge, preferential purchase right, security interest, mortgage or
encumbrance of any nature whatsoever.
“Material
Adverse Effect” means any
event, occurrence, fact, condition, or change that has, or could
reasonably be expected to have individually or in the
aggregate, a material and adverse
effect on (a) the business, assets, liabilities, condition
(financial or otherwise), or business operations of the Sellers,
taken as a whole (b) the value of the Assets or Assumed
Liabilities, taken as a whole, or (c) the ability of the Sellers to
consummate the transactions contemplated herein and in the
Transaction Documents on a timely basis;
provided,
however, that any event,
condition, change, occurrence or development of a state of
circumstances which (i) adversely and generally affects the
industries in which the Sellers operate, (ii) arises out of
general economic or industry conditions, (iii) arises out of
any generally applicable change in applicable Legal Requirements or
GAAP or interpretation of any thereof, (iv) arises out of acts
of terrorism or sabotage, war (whether or not declared), the
commencement, continuation, or escalation of a war, acts of armed
hostility, natural disasters, weather conditions, pandemics,
epidemics or other force majeure events, (v) arises out of
(A) any public announcement prior to the date of this
Agreement of discussions among the Parties hereto regarding the
transactions contemplated hereby; (B) the announcement of this
Agreement, including the identity of Buyer or its corporate parent;
(C) the pendency of the consummation of the transactions
contemplated hereby; or (D) any action taken or omitted to be
taken by or at the request of or with the consent of Buyer;
(vi) arises out of actions
or inactions taken by Sellers or the Sellers’ Representative
in accordance with this Agreement and any adverse effect
proximately caused thereby; or (vii) arises out of the failure
of any Party to obtain any consent arising out of or in connection
with this Agreement or transactions contemplated hereby, in each
case shall not be considered
in determining whether a Material Adverse Effect has
occurred;
provided,
further,
however, that any event,
occurrence, fact, condition, or change referred to in clauses (i)
through (iv) immediately above shall be taken into account in
determining whether a Material Adverse Effect has occurred or could
reasonably be expected to occur to the extent that such event,
occurrence, fact, condition, or change has a disproportionate
effect on the business of the Sellers compared to other
participants in the industries in which the Sellers
operate.
“Material
Contract” is defined
in Section 4.11(a).
“Net Working
Capital” means
(a) total Current Assets included in the Assets
less
(b) total Current Liabilities
included in the Assumed Liabilities, in each case as of the
Effective Time and calculated in a manner consistent with the
Accounting Methodology; provided,
however,
that “Net Working Capital” shall not include any
amounts to the extent reflected in Transaction
Costs.
“Net Working
Capital Escrow Account”
is defined in Section
2.6.
“Net Working
Capital Escrow Amount” is
defined in Section
2.6.
“Ordinary
Course of Business”
means, when used in reference to any Person, the ordinary course of
business of such Person consistent with past customs and practices
of such Person.
“Organizational
Documents” means, with
respect to a particular Person (other than a natural person), the
certificate or articles of formation or incorporation, bylaws,
partnership agreement, limited liability company agreement, trust
agreement or similar organizational document or agreement, as
applicable, of such Person.
“Party”
and “Parties”
are defined in the preamble.
“Parent”
is defined in the preamble.
“Permit”
is defined in Section 4.10.
“Permitted
Liens”
means:
(a) Liens
for current period Taxes not yet due and payable;
(b) inchoate
Liens arising by operation of law, including materialman’s,
mechanic’s, repairman’s, laborer’s, warehousemen,
carrier’s, employee’s, contractor’s and
operator’s Liens arising in the Ordinary Course of Business
for obligations that are not overdue or are being contested in good
faith;
(c) minor
defects, irregularities in title, easements, rights of way, zoning
regulations, restrictive covenants, servitudes and similar rights
(whether affecting fee interests, a landlord’s interest in
leased properties or a tenant’s interest in leased
properties) that individually or in the aggregate have not
had, and are not reasonably expected to have, a materially adverse
effect on the ability of the Sellers to use such property in the
manner previously owned or used by the Sellers, materially
impair the value of such property, or (iii) do not prohibit or
interfere with the current operation of any Real Property or other
Asset;
(d) Liens
affecting a landlord’s interest in real property leased to a
Seller;
(e) public
utility easements of record, in customary form;
(f) pledges
or deposits made in the Ordinary Course of Business in connection
with workers’ compensation, unemployment insurance and other
types of social security;
(g) Liens
that will be terminated at or prior to the Closing;
(h) Liens
that were not incurred in connection with the borrowing of money or
the advance of credit and that do not materially interfere with the
conduct of the business conducted by the Sellers and
(i) the
Liens set forth on Schedule
1.1.
“Person”
means any natural person, firm, limited partnership, general
partnership, association, corporation, limited liability company,
trust, other organization (whether or not a legal entity), public
body or government, including any Governmental
Authority.
“Pre-Closing
Tax Period” means any
taxable period that ends on or before the Closing
Date.
“Pro Rata
Share” means, with
respect to each Seller, the applicable percentage set forth
opposite such Seller’s name on Schedule II
hereto.
“Purchase
Price” is defined
in Section 2.4(a).
“Purchase
Price Allocation” is
defined in Section 7.1.
“Real
Property” is defined
in Section 4.8(b).
“Registered
Intellectual Property” is
defined in Section 4.12(a).
“Release”
means any spilling, leaking, pumping, pouring, emitting,
discharging, injecting, leaching, dumping, or disposing into the
environment.
“Relief Fund
Payment Terms and Conditions” means the terms and conditions established
by the Department of Health and Services for the receipt of any
funds from the Public Health and Social Services Emergency or other
CARES Act programs.
“Remedies
Exception” means, when
used with respect to any Person, performance of such Person’s
obligations except to the extent enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors’ rights
generally or by general principles.
“Representatives”
means, with respect to any Person, any and all directors, managers,
officers, employees, consultants, financial advisors, counsel,
accountants and other agents of such Person.
“Retained
Claims” means any and all
of the claims, actions, suits and proceedings of any Sellers,
whether commenced or filed before, at or after the Closing,
including any counterclaims, third-party claims, and claims for
contribution or indemnification, against any Seller’s
member’s former directors, managers or officers, or current
or former direct or indirect equityholders or controlling persons,
or any of such Persons’ Affiliates, in whatever capacity, or
any of their or their Affiliates’ respective former, current
or future directors, officers, employees, general or limited
partners, managers, members, direct or indirect equityholders,
controlling persons, attorneys, advisors, agents or representatives
or representatives of any of the foregoing, or any former, current
or future estates, heirs, executors, administrators, trustees,
successors or assigns of any of the foregoing, in each case to the
extent based upon, attributable to, or resulting from actions,
omissions, or circumstances occurring or existing prior to the
Closing.
“Schedule
Supplement” is defined
in Section
6.8.
“Scheduled
Leases” is defined
in Section 4.8(b).
“Seller”
and “Sellers”
are defined in the preamble.
“Seller
Delivered Agreements” is
defined in Section 11.14(b).
“Seller
Indemnified Parties” is
defined in Section 9.3.
“Seller
Intellectual Property” is
defined in Section 4.12(a).
“Sellers’
Representative” is
defined in the preamble.
“Sellers’
Representative Fund” means an amount equal to $50,000
(or such other amount as Sellers may mutually agree).
“▇▇▇▇▇▇▇▇
Employment” is defined in the preamble.
“▇▇▇▇▇▇▇▇
Investments” is defined in the preamble.
“▇▇▇▇▇▇▇▇ Medical
Staffing” is defined in the preamble.
“▇▇▇▇▇▇▇▇
Services” is defined in the preamble.
“▇▇▇▇▇▇▇▇
Staffing” is defined in the preamble.
“Stimulus
Funds” is defined
in Section
4.23.
“Subsidiary”
means, with respect to any Person, any other Person of which a
majority of the outstanding share capital, voting securities or
other voting equity interests are owned, directly or indirectly, by
such first Person.
“Target Net
Working Capital” means
$8,500,000.
“Tax” or
“Taxes” means
any taxes, assessments, fees, and other governmental charges
imposed by any Governmental Authority, including income, profits,
gross receipts, net proceeds, alternative or add-on minimum, ad
valorem, real property (including assessments, fees or other
charges imposed by any Governmental Authority that are based on the
use or ownership of real property), personal property (tangible and
intangible), value added, turnover, sales, use, environmental,
stamp, leasing, lease, use, excise, duty, franchise, capital stock,
transfer, registration, license, withholding, social security (or
similar), unemployment, disability, payroll, employment, fuel,
excess or windfall profits, occupational, premium, severance,
estimated, or other similar tax of any kind whatsoever, including
any interest, penalty, or addition thereto, whether disputed or not
and including any transferee or secondary liability in respect of
any of the foregoing and any liability in respect of any tax as a
result of being a member of an affiliated, consolidated, combined,
unitary, or similar group.
“Tax
Return” means any return,
report, election, document, estimated tax filing, declaration,
claim for refund, property tax rendition, information return or
other filing relating to Taxes, including any schedules or
attachments thereto and any amendment thereof.
“Termination
Date” is defined
in Section
10.1(b)(ii).
“Third Party
Claim” is defined
in Section
9.5.
“Trademark
Assignment Agreement”
means an agreement substantially in the form of Exhibit E hereto
transferring all of Sellers’ right, title, and interest in
and to the Sellers’ Intellectual Property comprising
trademarks to Buyer.
“Transaction
Costs” means the
aggregate amount of (i) all fees and expenses payable by the
Sellers to service providers (including any accountants, counsel,
brokers or investment advisory firms) in connection with the
negotiation, preparation and execution of this Agreement and the
consummation of the transactions contemplated hereby that, as of
the Closing Date, remain unpaid, (ii) the payments payable to
employees, officers or members of the board of managers of the
Sellers pursuant to Contracts in place prior to the Closing Date as
a result of the consummation of the transactions contemplated
hereby and (iii) one half of all fees and expenses of the Escrow
Agent under the Escrow Agreement.
“Transaction
Documents” means this
Agreement, the ▇▇▇▇ of Sale and Assignment, the Escrow Agreement
and all other agreements, conveyances, documents, instruments and
certificates delivered at the Closing pursuant to this
Agreement.
“Transfer
Taxes” is defined
in Section 7.3.
“Transferred
Employees” is defined
in Section
6.9.
“Transferred
Temporary Employees” is
defined in Section
6.9.
“Treasury
Regulations” means the
regulations (including temporary regulations) promulgated by the
United States Department of the Treasury pursuant to and in respect
of provisions of the Code. All references in this Agreement to
sections of the Treasury Regulations shall include any
corresponding provision or provisions of succeeding, similar or
substitute, temporary or final Treasury
Regulations.
“WC
Collateral” means all
Collateral, as defined in the WC Pledge and Security
Agreement.
“WC Control
Agreement” means that
certain Control Agreement, dated May 1, 2005, by and among WC
Custodian, ▇▇▇▇▇▇▇▇ Staffing and ACE, as
amended.
“WC
Custodian” means ▇▇▇▇▇
Fargo Bank, N.A. (as successor to INATrust, fsb), and its
successors and assigns.
“WC Pledge
and Security Agreement”
means that certain Pledge and Securities Agreement, dated May 1,
2005, by and among ▇▇▇▇▇▇▇▇ Staffing and ACE, as
amended.
“Working
Capital Escrow Deficiency” is defined in Section
3.2(c).