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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of October
29, 1998 by and among THE PROFIT RECOVERY GROUP INTERNATIONAL, INC., a Georgia
corporation ("PRGX"), THE PROFIT RECOVERY GROUP INTERNATIONAL I, INC., a Georgia
corporation and wholly owned subsidiary of PRGX ("PRGI"), ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ &
ASSOCIATES, INC., a North Carolina corporation ("Seller"), and the undersigned
shareholders of Seller, being all of the shareholders of Seller (collectively,
"Owners" and individually, an "Owner").
W I T N E S S E T H:
WHEREAS, PRGI is in the business of auditing accounts payable,
expenses, capital expenditures, and various other payment arrangements or
obligations between its clients ("Clients") and their suppliers, vendors,
landlords and taxing authorities (the "Client Payees") for the purpose of
identifying and documenting overbilling by and refund, credit or chargeback
claims for overpayments to, the Client Payees (the "Audit Activities") and
rendering management advisory services associated with the Audit Activities
(collectively, the "Business of PRGI")
WHEREAS, Seller is engaged in the business of the examination, review
and audit of various paid bills and expenses of client companies, such as
accounts payable, cooperative advertising, advertising expense, real estate tax,
common area maintenance, legal and professional fees, related and other charges
and expenses for the purpose of discovering and documenting for subsequent
charge back and recovery overbillings, overpayments and/or under-deductions made
by client companies, or for discounts, rebates and allowances of all types,
freight charges, special handling, insurance, and all other overbillings,
overpayments and/or under-deduction incidental or related thereto and collection
with respect to same and the rendering of other related management counseling
services (the "Business");
WHEREAS, PRGI is a wholly-owned subsidiary of PRGX;
WHEREAS, the Owners own in the aggregate all of the issued and
outstanding shares of capital stock of Seller;
WHEREAS, PRGI desires to purchase all of the shares of capital stock of
Seller which are issued and outstanding on the Closing Date (as hereinafter
defined), and each Owner desires to sell to PRGI all of the Purchased Shares (as
hereinafter defined) owned beneficially and of record by such Owner as
hereinafter provided;
WHEREAS, concurrently with the execution hereof, PRGI has entered into
acquisition agreements (collectively, the "Other Acquisition Agreements") in
respect of each of the following entities: ▇▇▇▇▇▇ ▇▇▇▇ & Associates, Inc.
("RBA"), ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., a sole proprietorship, RBA Audits, Inc., ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ & Associates, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇, a sole
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proprietorship, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a sole proprietorship, ▇▇▇▇ ▇▇▇▇▇▇▇▇, a sole
proprietorship, and Savant Consulting, L.L.C. (collectively, the "Other
Sellers");
WHEREAS, concurrently with the execution hereof, Seller and its Owners
have entered into a Representations, Covenants and Indemnification Agreement
with PRGI, PRGX and the parties to the Other Acquisition Agreements (the "RCI
Agreement"), the terms and provisions of which are expressly incorporated herein
by reference; and
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the RCI Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants herein contained or incorporated by
reference herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
1.1 PURCHASE AND SALE. On the terms, provisions and conditions set
forth herein and in reliance upon the warranties and representations contained
herein and in the RCI Agreement, PRGI shall purchase, and each of the Owners
shall sell, transfer and assign to PRGI, at the Closing (as hereinafter
defined), all of the issued and outstanding shares of capital stock of Seller
free and clear of all security interests, pledges, liens, encumbrances, charges
or restrictions on the voting, transfer, receipt of dividends or other
attributes of ownership whatsoever (the "Purchased Shares").
ARTICLE 2
CONSIDERATION FOR STOCK TRANSFER
2.1 DETERMINATION OF PURCHASE PRICE.
(a) The aggregate purchase price for the Purchased Shares
shall be equal to the sum of (i) $2,348,299, less any unfunded Effective Date
Reimbursable Liabilities and Interim Period Reimbursable Liabilities, as
provided in Section 2.3 below, plus an amount equal to 6.75% of such amount
calculated on a per annum basis for the period from and after the Effective Date
through and including the Closing Date, plus an amount equal to $520.55 per day
for each day during the period from and after the Effective Date to and
including the day immediately preceding the Closing ("Cash Consideration") and
(ii) 57,981 shares of PRGX Common Stock (the "PRGX Shares") (the Cash
Consideration and the PRGX Shares being collectively referred to herein as the
"Purchase Price"); provided, however, that certain of the PRGX Shares shall be
issued in the name of the Representative, as nominee and attorney-in-fact
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for the Owners, to be held in escrow pursuant to Section 2.2 below and in lieu
of delivering fractional shares, PRGI shall deliver to Owners an amount in cash
based on $27.00 per share (the "Closing Price").
(b) The number of shares of outstanding capital stock of
Seller held by an Owner immediately before the Closing, as set forth on the
Disclosure Schedule to the RCI Agreement, divided by the total number of shares
of capital stock of Seller outstanding immediately before the Closing Date is
such Owner's "Proportionate Share." At the Closing, each Owner shall receive
that portion of each of the Cash Consideration and the PRGX Shares equal to the
product of the Cash Consideration and the PRGX Shares, respectively, multiplied
by such Owner's Proportionate Share, payable at Closing in PRGX Shares and cash
in immediately available funds.
2.2 ESCROW SHARES. At the Closing, an aggregate of approximately
28,989 of the PRGX Shares issued on the Closing Date pursuant to Section 2.1
hereof (collectively, the "Escrow Shares") shall be issued in the name of the
Representative, as nominee and attorney-in fact for each of the Owners, which
Escrow Shares shall be held in escrow together with shares of PRGX deposited in
escrow by the parties to the other Acquisition Agreements, pursuant to the terms
of the RCI Agreement and the Indemnity Escrow Agreement by and among PRGI, the
Owners and the other signatories named therein in substantially the form of
Exhibit 2.2 attached hereto (the "Indemnity Escrow Agreement"). The aggregate
number of Escrow Shares deposited hereunder and under the Other Acquisition
Agreements shall equal the product of (a) the aggregate Purchase Prices under
this Agreement and the Other Acquisition Agreements (approximately $43,500,000)
multiplied by (b) 20%, divided by the Closing Price.
2.3 DELIVERY OF STATEMENT OF EFFECTIVE DATE REIMBURSABLE
LIABILITIES AND CASH FLOW STATEMENT. (a) At least 5 business days prior to the
Closing Date, PRGI will present to the Representative, as defined in the RCI
Agreement, a detailed list, including the amount and description thereof, of all
of the following accrued but unpaid liabilities and obligations of Seller's
Business outstanding as of the Effective Date: (i) Seller Transaction Expenses,
(ii) non-trade payables (meaning those not directly related to the Business to
be acquired by PRGI pursuant hereto), (iii) non-trade accrued expenses (meaning
those not directly related to the Business to be acquired by PRGI pursuant
hereto), (iv) commissions payable as of the Effective Date in respect of
accounts receivable collected by Seller prior to the Effective Date; (v) all
amounts owed to the Owners under the Principal Agreement or otherwise (except
for advances by Owners used to pay normal trade payables of Seller directly
relating to the Business to be acquired by PRGI incurred on or after the
Effective Date or advances made to Associates or Employees on or after the
Effective Date), and (vi) all amounts owed to Persons other than Owners (except
for normal trade payables directly related to the Business to be acquired by
PRGI pursuant hereto incurred in the ordinary course of business) (collectively,
the "Effective Date Reimbursable Liabilities").
(b) On the last business day immediately preceding the
Closing Date, Seller shall prepare and deliver to PRGI, an estimated cash flow
statement of total cash received by
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Seller in respect of the Business less total cash disbursements for the period
from and including the Effective Date to and including the last business day
immediately preceding the Closing Date (the "Interim Period Cash Flow"),
detailing all such amounts by category of payment (the "Cash Flow Statement").
PRGI shall be entitled to reimbursement, at Closing, of all of the following
cash payments or accruals made in respect of the Business during the period from
and including the Effective Date to and including the day immediately preceding
the Closing Date: any amounts paid or accrued during the period from and
including the Effective Date to and including the day immediately preceding the
Closing Date in respect of liabilities of the type defined as Effective Date
Reimbursable Liabilities above (but not including any Effective Date
Reimbursable Liabilities or any distributions to Owners of cash or cash
equivalents in the Business as of the close of business on August 31, 1998)
(collectively, the "Interim Period Reimbursable Liabilities").
(c) The Cash Consideration set forth in Section 2.1
hereof shall be reduced by the amount of Effective Date Reimbursable Liabilities
and Interim Period Reimbursable Liabilities, determined as provided above.
Within sixty (60) days following the Closing Date, PRGI and the Representative
shall each have the right to request that the Accountants review the statements
of Effective Date Reimbursable Liabilities, Interim Period Reimbursable
Liabilities or the Cash Flow Statement, which review shall be a final
determination of the Interim Period Cash Flow, the Effective Date Reimbursable
Liabilities and the Interim Period Reimbursable Liabilities, and in the event
that such determination shows that payments are required by PRGI or by Seller or
Owners, any such payment shall be made by the Representative or PRGI to the
other, as the case may be, within 15 days after completion of the review by the
Accountants, together with interest on such payment amount from the Closing Date
until the date of such payment at the rate of 6.75% per annum. The fees and
expenses charged by the Accountants in respect of such review shall be borne
equally by PRGI and the Representative.
2.4 CLOSING. As soon as practicable after the execution hereof,
the parties hereto shall execute and deliver all documents and instruments for
the consummation of the transactions contemplated herein (other than the
certificates for the Purchase Price as defined herein) into escrow with Arnall
Golden & ▇▇▇▇▇▇▇, LLP, as escrow agent, in accordance with that certain closing
escrow agreement in substantially the form of Exhibit 2.4, attached hereto,
pending execution and delivery in escrow of all documents contemplated by this
Agreement and the Other Acquisition Agreements by all parties thereto. The
closing of the transactions contemplated herein (the "Closing") shall take place
on or before October 29, 1998, at the offices of PRGI's counsel or by the
exchange of documents and instruments by mail, courier, telecopy and wire
transfer to the extent mutually acceptable to the parties hereto upon compliance
with the terms, conditions and contingencies contained herein or on such other
date as is mutually agreed upon by the parties hereto (such date to be herein
referred to as the "Closing Date"). The parties hereto intend that PRGI receive
all of the benefits in respect of the operations of the Business accruing in the
ordinary course of business on and after the Effective Date and assume all of
the liabilities of the Business incurred in the ordinary course of business
after the Effective Date, except as otherwise specifically provided herein or in
the RCI Agreement.
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ARTICLE 3
ADDITIONAL COVENANTS
3.1 REPRESENTATIONS, COVENANTS AND INDEMNIFICATION AGREEMENT.
Concurrently with the execution and delivery of this Agreement, Seller and
Owners, together with the other signatories named therein, shall execute and
deliver to PRGX and PRGI the RCI Agreement substantially in the form attached
hereto as Exhibit 3.1, together with a disclosure schedule relating to Seller,
Owners, the Applicable Assets and the Business pursuant to the terms of the RCI
Agreement (the "Disclosure Schedule"). Each of the parties hereto acknowledge
that the representations, warranties, covenants, agreements and indemnification
made by them concurrently herewith in the RCI Agreement are an inducement to the
other parties hereto to enter into this Agreement. Prior to the execution and
delivery of the RCI Agreement, Seller shall have delivered to PRGX and PRGI a
draft of the Disclosure Schedule and true, correct and complete copies of all
documents, together with all amendments thereto through the date of execution
hereof, contemplated by or required to be listed in any exhibit or schedule
(including the Disclosure Schedule) to this Agreement or the RCI Agreement,
including, without limitation, all Leases, Contracts, insurance policies, the
Historical Statements, the Monthly Statements through the last day of the month
immediately preceding the date hereof and Seller's Tax Returns.
3.2 COVENANTS RE: TAX MATTERS.
(a) Preparation and Filing of Tax Returns.
(i) Owners' Rights and Responsibilities. Owners
shall have the right and obligation to prepare and file
timely, or cause to be prepared and filed timely, when due,
any Tax Return that is required to include the operations,
ownership, assets or activities of Seller for Tax periods
ending before the Closing Date. Any such Tax Returns for any
period ending before the Closing Date shall be prepared on the
basis of the closing of the books method of allocating income
and in a manner consistent with prior tax returns. Owners
shall permit PRGI to review and comment on each such Tax
Return described in the prior sentence prior to filing. To the
extent permitted by applicable law, Owners shall include any
income, gain, loss, deduction or other Tax items for such
periods on their Tax Returns in a manner consistent with the
Schedule K-1's prepared by Owners for such periods. Owners
shall pay any Taxes required to be paid with respect to all
periods ending prior to the Closing Date (whether due before
or after Closing) and any Taxes required to be paid with
respect to the pre-closing portion of all Straddle Periods.
The Taxes due by Owners for any state or local income Tax
Straddle Period shall be determined by using a closing of the
books method of allocating income based on the federal income
Tax Return of Seller for its taxable year ending on the day
immediately preceding the Closing Date and all other Taxes for
any Straddle Period shall be prorated on a daily basis;
provided, however, any payroll Taxes attributable to employees
hired by Seller after the
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Closing in respect to periods after the Closing and any sales
and use Taxes and transfer Taxes attributable to assets
purchased or sold by Seller after the Closing shall be
attributable to PRGI.
(ii) PRGI's Rights and Responsibilities. PRGI
shall have the right and obligation to prepare and file
timely, or cause to be prepared and filed timely, when due,
all Tax Returns that are required to include the operations,
ownership, assets or activities of Seller for any Tax periods
ending on or after the Closing Date including any state or
local Tax periods beginning before and ending after the
Closing Date ("Straddle Period"). After the Closing, PRGI
shall cause such Tax Returns to be filed.
(b) Preparation of Tax Returns.
(i) Owners shall provide to PRGI upon request
such Tax information as is in the possession of Owners and
reasonably requested by PRGI with respect to the operations,
ownership, assets or activities of Seller for pre-Closing
periods to the extent such information is relevant to any Tax
return which PRGX or PRGI has the right and obligation
hereunder to file.
(ii) Owners shall, on the one hand, or PRGX or
PRGI shall on the other, with respect to any Tax Return which
such party is responsible for preparing and filing, causing to
be prepared and filed, or under its control or custody, make
such Tax Return and related work papers available for review
by the other party if the Tax Return (A) is with respect to
Taxes for which the other party or one of its affiliates may
be liable hereunder or under applicable tax law, or (B) claim
Tax benefits which the other party or one of its Affiliates is
entitled to receive hereunder. The filing party shall use its
reasonable best efforts to make Tax Returns available for
review as required under this paragraph sufficiently in
advance of the due date for filing such Tax Returns to provide
the non-filing party with a meaningful opportunity to analyze
and comment on such Tax Returns and have such Tax Returns
modified before filing, accepting the position of the filing
party unless such position is contrary to the provisions of
paragraph (a)(i) and (ii) hereof.
(iii) Consistency of Accounting Method. Any Tax
Return which includes or is based on the operations,
ownership, assets or activities of Seller for any pre-Closing
period, and any Tax Return which includes or is based on the
operations, ownership, assets or activities of Seller for any
post-Closing period to the extent the items reported on such
Tax Return might reasonably increase any Tax liability of
Seller or Owners for any pre-Closing period or any Straddle
Period or the liability of PRGI or PRGX for any post-Closing
period, shall be prepared in accordance with past Tax
accounting practices used with respect to the Tax Returns in
question (unless such past practices are no longer permissible
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under the applicable tax law), and to the extent any items are
not covered by past practices (or in the event such past
practices are no longer permissible under the applicable tax
law), in accordance with reasonable Tax accounting practices
selected by the filing party with respect to such Tax Return
under this Agreement with the consent (not to be unreasonably
withheld or delayed) of the non-filing party.
(c) Amendment of Tax Returns. If Owners become aware that
any Tax Return of Seller for any period when Seller was an S corporation may be
amended to provide a tax refund to the Owners, PRGX, at the expense of Owners,
shall cause Seller to prepare and file such amendments to the Tax Return as may
be necessary, provided, however, that PRGX shall not be required to cause any
such amendment to be filed that would have an adverse tax effect on Seller for
periods prior to or subsequent to the Closing. Seller has no obligation with
respect to pursuing such refund other than to prepare and file amendments
pursuant to this Section. PRGI shall not amend any Tax Return of Seller for any
period ending prior to the Closing without the express written approval of
Owners. Further, PRGI shall not make any election with respect to the Seller if
such election would have any adverse tax effect on Seller or Owners for periods
prior to the Closing.
(d) Tax Audits. In the event of any audit or threatened
audit by the IRS or other taxing authority of the Tax liability of Seller or the
Owners for the periods during which Seller was an S corporation, PRGI shall
notify Owners immediately of such audit or threatened audit. Owners, at their
expense, shall respond to the audit and shall keep PRGI informed of any issues
raised by the Tax Authority involved. Owners shall have the sole right to settle
or contest any deficiency proposed by the IRS or such other authority; provided,
however, that the Owners shall not settle any deficiency without the consent of
PRGI if such settlement would have any adverse tax effect on Seller for periods
prior to or subsequent to the Closing. PRGI shall provide the Owners with access
to Seller's books and records, and cooperate with the Owners, to enable them to
contest any such deficiency.
(e) Cooperation. PRGI and Owners shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Section, including the preparation
and execution of Tax Returns, and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
Owners (or the Representative of Owners) available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. PRGI, Owners and Seller agree (A) to retain all books and records
with respect to Tax matters pertinent to Seller and relating to any taxable
period beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by PRGI or Seller, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records, and if the other party to
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requests, Seller shall allow the other party to take possession of such books
and records. PRGI and Seller further agree, upon request, to use their best
efforts to obtain any certificate or document from any governmental authority or
any other Person as may be necessary to mitigate, reduce or eliminate any Tax
that could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(f) All transfer, documentary, sales, use, stamp,
registration and other such taxes and fees (including penalties and interest)
incurred in connection with the transactions contemplated by this Agreement
shall be paid by Owners when due, and Owners will, at their own expense, file
all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees,
and, if required by applicable law, PRGI will join in the execution of any such
Tax Returns and documentation.
3.3 OTHER COVENANTS BY OWNERS. (a) Each of the Owners hereby
covenants and agrees that he or she shall transfer to Seller, by appropriate
documents of transfer reasonably satisfactory to PRGI, prior to the Closing, any
and all right he or she has in and to any assets and rights relating to Seller's
Business which Seller uses to conduct its Business, including, without
limitation, and any Intellectual Property Rights used by Seller but owned by
Owners, so that at the Closing of the transactions contemplated herein all such
assets shall be transferred from Seller to PRGI by operation of law.
(b) Retail Management Consultants, LLC ("RMC") is a North
Carolina limited liability company in which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an Owner of
Seller ("▇. ▇▇▇▇▇▇"), and certain Associates of RBA are members. RMC is lessee
under a real property lease for premises in Jackson, Mississippi ("▇▇▇▇▇▇▇
Lease") and certain equipment leases used by Seller in its Business. Promptly
after the Closing, ▇. ▇▇▇▇▇▇ will use his commercially reasonable best efforts
best efforts to cause RMC to assign the ▇▇▇▇▇▇▇ Lease to PRGI and obtain any
necessary consents to assignment thereto. The parties hereto agree that from and
after the Closing, Seller shall, with the assistance of ▇. ▇▇▇▇▇▇, maintain the
current business relationship between Seller and RMC, as described on Section
2.1 of Seller's Disclosure Schedule to the RCI Agreement. Within 180 days after
the date hereof, PRGI intends to offer employment to the members of RMC, which
employment will become effective as of January 1, 1999. After each member of RMC
has either accepted or refused such employment with PRGI, and after December 31,
1998, ▇. ▇▇▇▇▇▇ agrees to cooperate in the dissolution of RMC. After the
Closing, the Owners shall use reasonable efforts to cause RMC to enter into all
reasonable and lawful arrangements under which Seller will obtain the benefits
of, and assume the post-Closing obligations under any contracts, agreements,
leases, understanding or other assets under which RMC currently operates for the
benefit of Seller which PRGI specifically agrees to assume (the "RMC Assets").
In addition to any other indemnification obligations, the Owners hereby agree to
indemnify and hold Seller, PRGI and PRGX harmless pursuant to Section 4.1 of the
RCI Agreement from any and all losses (as defined in the RCI Agreement)
whatsoever which arise from any failure to transfer lawfully any of the RMC
Assets to Seller or PRGI and in respect of any loss, claim, or other liability
asserted by RMC or its members with respect to the termination on or after
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January 1, 1999 of the agreement described in Seller's Disclosure Schedule or
any other relationship between Seller and RMC.
3.4 TERMINATION OF EMPLOYEE BENEFIT PLANS. (a) Prior to the
Closing, the Board of Directors of Seller shall authorize by appropriate Board
action the termination of any and all Employee Benefit Plans (as defined in the
RCI Agreement) currently in effect for its Associates and/or Employees other
than Seller's medical insurance plan and any "Cafeteria" benefit plan as
identified in Seller's Disclosure Schedule and, if required by applicable law,
the amendment and restatement of such Employee Benefit Plans in order to comply
with applicable law. Seller (or after the Closing, Owners) shall timely notify
Associates and Employees of Seller of the termination of the Employee Benefit
Plans, including, without limitation, the cessation of future benefit accruals
under any defined benefit plan. As soon as practical after said notification and
termination, and in any event no later than the time prescribed by law, Seller
(or PRGI if after the Closing) shall, with respect to any tax-qualified
retirement plan sponsored by Seller, submit the termination of such plan to the
Internal Revenue Service for a determination as to the continued qualification
of such plan under Sections 401(a) and 501(a) or other applicable sections of
the Code upon the termination of such plan. The Owners or, to the extent
permitted by law, the Plan shall bear all legal, accounting and tax costs and
expenses incurred by Sellers, Owners or PRGI in terminating the Employee Benefit
Plans and the cost of any fiduciary insurance and all other expenses of the
trustee of the Employee Benefit Plans, and shall indemnify and hold PRGI and
PRGX harmless in respect of any Losses arising out of such Employee Benefit
Plans or the termination thereof pursuant to Section 4.1 of the RCI Agreement.
(b) The parties agree that after the Closing, the trustee
under any such Employee Benefit Plan shall act without compensation, until all
assets comprising the related trust under the Employee Benefit Plan have been
distributed in accordance with applicable laws and regulations. From and after
the Closing, Seller, PRGI and PRGX will provide such information and cooperation
as the trustee may reasonably request in order to effect the termination of such
Retirement Plan in accordance with applicable laws and regulations. In addition
to any other indemnification obligations, the Owners of Seller hereby indemnify
and hold Seller, PRGI and PRGX harmless pursuant to Section 4.1 of the RCI
Agreement from any and all Losses (as defined in the RCI Agreement) whatsoever
which arise from any such trustee's actions or omissions taken or occurring
before or after the Closing in respect of the Employee Benefit Plans and any
related trust. In addition to any other indemnification obligations, Seller,
PRGI and PRGX hereby indemnify and hold the Owners of Seller harmless pursuant
to Section 4.2 of the RCI Agreement from any and all Losses (as defined in the
RCI Agreement) whatsoever which arise solely from Seller's, PRGI's or PRGX's
failure to act from and after the Closing, upon the trustee's reasonable
request, in connection with the termination of the Employee Benefit Plans.
3.5 ACKNOWLEDGEMENT. The parties acknowledge that prior to the
Closing Seller may distribute to its Owners all vehicles used in the Business
and all furniture and art work to the extent set forth on Schedule 3.5 attached
hereto.
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ARTICLE 4
CONDITIONS TO OBLIGATIONS OF
PRGX AND PRGI TO CLOSE
Each and every obligation of PRGX and PRGI under this Agreement to be
performed on or prior to the Closing shall be subject to the fulfillment, on or
prior to the Closing, of each of the following conditions unless and to the
extent any such condition is expressly waived in writing by PRGX and PRGI:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Seller and the Owners in or pursuant to this Agreement or the
RCI Agreement or given on their behalf hereunder or thereunder shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made or given on
and effective as of the Closing Date.
4.2 OBLIGATIONS PERFORMED. Seller and the Owners shall have
performed and complied in all material respects with all agreements, conditions
and obligations required by this Agreement to be performed or complied with by
them prior to or at the Closing.
4.3 CONSENTS. Seller shall have obtained and delivered to PRGI
written Seller Consents of all persons or entities whose consent to the
transactions contemplated herein is required to consummate the transactions
contemplated herein, if any, and all of such Seller Consents shall remain in
full force and effect at and as of the Closing.
4.4 DUE DILIGENCE. PRGI and its Accountants, counsel and other
experts shall have completed their due diligence investigation with respect to
the Business and affairs (including business, legal and financial matters) of
Seller and the Business. Seller shall have resolved, in a manner reasonably
satisfactory to PRGI and its counsel, any and all issues raised as a result of
such investigation which, in PRGI's good faith belief has or is likely to have a
Material Adverse Effect.
4.5 OTHER ACQUISITION AGREEMENTS. Concurrently with the Closing
hereunder, PRGI shall have consummated the transactions contemplated by each of
the Other Acquisition Agreements (as defined in the preambles to this
Agreement).
4.6 CLOSING DELIVERIES. Seller and/or the Owners, as applicable,
shall have delivered to PRGI each of the following, together with any additional
items which PRGI may reasonably request to effect the transactions contemplated
herein:
(a) all stock certificates (with appropriate stock powers
executed in blank) evidencing ownership of all of the Purchased Shares shall be
delivered to PRGI;
(b) a certified copy of the corporate resolutions of the
Board of Directors of Seller and the Owners authorizing the transactions
contemplated herein and the execution,
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delivery and performance of the RCI Agreement, this Agreement and the other
Seller Transaction Documents, together with an incumbency certificate with
respect to officers of Seller executing documents or instruments on behalf of
Seller;
(c) intentionally omitted;
(d) written resignations of all persons from all offices,
directorships, or other management positions with Seller;
(e) the Noncompetition and Nonsolicitation Agreements,
duly executed by each Owner;
(f) written Seller Consents from all parties, whose
consent to the transactions contemplated herein is required;
(g) the Cash Flow Statement and statement of other
Interim Period Reimbursable Liabilities;
(h) a general release in the form of Exhibit 4.6(h)
attached hereto, executed by each Owner on the Closing Date;
(i) the corporate minute books, seals and stock transfer
books of Seller and its predecessors (if any) certified by the corporate
secretary of Seller (in form and substance acceptable to PRGI) as true, correct
and complete;
(j) an opinion of counsel to Seller substantially in the
form of Exhibit 4.6(j) attached hereto;
(k) the offer letter for employment of the Principal,
duly executed by the Principal;
(l) the Nonqualified Stock Option Agreement for the
Principal, duly executed by the Principal;
(m) Closing Escrow Agreement, duly executed by Seller,
Owners and the Representative;
(n) the Lock-up Agreements, duly executed by each Owner
and the Representative;
(o) the Indemnity Escrow Agreement, duly executed by
Owners and the Representative, as nominee and attorney-in-fact of the Owners,
together with blank stock powers, duly executed by the Representative with
medallion level signature guarantee;
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(p) intentionally omitted;
(q) if applicable, the spousal consents referred to in
the RCI Agreement duly executed by the spouses of the Owners, as appropriate;
(r) if applicable, Forms UCC-3, duly executed by each
secured lender of Seller releasing all liens on the assets of Seller;
(s) a Closing Statement duly executed by the Owners; and
(t) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the transactions contemplated
hereby.
4.7 NO CHALLENGE. There shall not be pending or threatened any
action, proceeding or investigation before any court or administrative agency by
any government agency or any pending action by any other person, challenging, or
seeking material damages in connection with, the sale of all of the Purchased
Shares to PRGI pursuant to the transactions contemplated herein or the ability
of PRGX, PRGI or any of their affiliates to own and operate the Business of
Seller or otherwise materially adversely affecting the Business, assets,
prospects, financial condition or results of operations of Seller.
4.8 NO INVESTIGATIONS OF SELLER OR BUSINESS. As of the Closing
Date there shall be no, and neither Seller nor any of the Owners shall have any
knowledge of or reason to know of any, pending or threatened, investigation by
any municipal, state or federal government agency or regulatory body with
respect to Seller, Seller's assets or Seller's Business.
4.9 NO MATERIAL ADVERSE EFFECT. From and after the date of this
Agreement to the Closing, there shall have been no Material Adverse Effect
(without giving effect to the consequences of the transactions contemplated by
this Agreement) whether reflected in financial statements, the Schedules
attached hereto or to the RCI Agreement or otherwise. Without limiting the
generality of the foregoing, at Closing, none of the Primary Customers shall
have terminated, decreased or otherwise adversely altered such Primary
Customer's business relationship with Seller or given notice to Seller or Owners
that it intends to do so.
4.10 INTENTIONALLY OMITTED.
4.11 LEGALITY. No federal or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which is in
effect and has the effect of making the transactions contemplated herein illegal
or otherwise prohibiting the consummation of the transactions contemplated
herein.
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4.12 REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the transactions
contemplated by this Agreement and all actions by or in respect of, or filings
with, any governmental body, agency or official or any other person required to
permit the consummation of the transactions contemplated herein so that PRGI
shall be able to continue to carry on the business of Seller substantially in
the manner now conducted by Seller shall have been taken or made.
ARTICLE 5
CONDITIONS TO SELLER'S
AND THE OWNERS' OBLIGATIONS
Each and every obligation of Seller and the Owners under this Agreement
to be performed on or prior to the Closing, shall be subject to the fulfillment,
on or prior to the Closing, of each of the following conditions unless and to
the extent any such condition is specifically waived in writing by Seller and
the Owners:
5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by PRGX and PRGI in or pursuant to this
Agreement and to the RCI Agreement or given on their behalf hereunder or
thereunder shall be true and correct in all material respects, on and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given on and effective as of the Closing Date.
5.2 OBLIGATIONS PERFORMED. PRGX and PRGI shall have performed and
complied in all material respects with all agreements, conditions and
obligations required by this Agreement to be performed or complied with by it
prior to or at the Closing and the Boards of PRGI and PRGX shall have approved
the transactions contemplated herein.
5.3 CLOSING DELIVERIES. PRGX and/or PRGI, as applicable, shall
have delivered to the Owners each of the following, together with any additional
items which the Owners may reasonably request to effect the transactions
contemplated herein:
(a) the Cash Consideration as adjusted pursuant to
Sections 2.1 and 2.3;
(b) written confirmation from PRGX's transfer agent that
stock certificates evidencing the PRGX Shares have been issued in the names of
the Owners;
(c) the statement of Effective Date Reimbursable
Liabilities;
(d) certified copies of the corporate resolutions of the
Board of Directors of PRGX and of the Board of Directors and sole stockholder of
PRGI authorizing the transactions contemplated herein and the execution,
delivery and performance of the RCI Agreement, this Agreement and the other PRGI
Transaction Documents by PRGX and PRGI, together with
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incumbency certificates with respect to the respective officers of PRGX and PRGI
executing documents or instruments on behalf of PRGX or PRGI;
(e) intentionally omitted;
(f) the Closing Escrow Agreement, duly executed by PRGI
and PRGX;
(g) the offer letter for employment of the Principal,
duly executed by PRGI;
(h) the Nonqualified Stock Option Agreement with the
Principal, duly executed by PRGX;
(i) the Noncompetition and Nonsolicitation Agreements
duly executed by PRGX and PRGI;
(j) the Indemnity Escrow Agreement duly executed by PRGX
and PRGI;
(k) a Closing Statement, duly executed by PRGI and PRGX;
and
(l) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the transactions contemplated
hereby.
5.4 NO CHALLENGE. There shall not be pending or threatened any
action, proceeding or investigation before any court or administrative agency by
any government agency or any pending action by any other person, challenging or
seeking material damages in connection with, the sale of all of the Purchased
Shares of Seller to PRGI pursuant to the transactions contemplated herein or the
ability of PRGX, PRGI or any of their affiliates to own and operate the Business
of Seller or otherwise materially adversely affecting the Business, assets,
prospects, financial condition or results of operations of Seller.
5.5 NO INVESTIGATIONS OF PRGX OR PRGI. As of the Closing Date
there shall be no, and neither PRGX nor PRGI shall have any knowledge of or
reason to know of any, pending or threatened investigation by any municipal,
state or federal government agency or regulatory body with respect to PRGX or
PRGI, PRGX's or PRGI's assets or PRGX's or PRGI's business.
5.6 SECURITIES LAWS. The parties shall have complied with all
federal and state securities laws applicable to the transactions contemplated by
this Agreement.
5.7 LEGALITY. No federal or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which is in
effect and has the effect of making the transactions contemplated herein illegal
or otherwise prohibiting the consummation of the transactions contemplated
herein.
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5.8 CONSENTS. PRGI shall have obtained and delivered to Seller
written consent of NationsBank, N.A., as agent for the banks party to PRGX's
bank credit agreement, to the transactions contemplated herein, and such consent
shall remain in full force and effect at and as of the Closing.
5.9 NO MATERIAL ADVERSE EFFECT. From the date hereof until the
Closing there shall have been no effect or change in the business of PRGI or
PRGX that is or will be materially adverse to the business, operations,
properties (including intangible properties), condition (financial or
otherwise), assets, liabilities or regulatory status of PRGI and PRGX, taken as
a whole ("PRGI/PRGX Material Adverse Effect").
5.10 REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the transactions
contemplated by this Agreement and all actions by or in respect of, or filings
with, any governmental body, agency or official or any other person required to
permit the consummation of the transactions contemplated herein so that PRGI
shall be able to continue to carry on the business of Seller substantially in
the manner now conducted by Seller shall have been taken or made.
ARTICLE 6
TERMINATION
6.1 TERMINATION. This Agreement may be terminated at any time
before the Closing Date:
(a) by mutual written consent of PRGX, PRGI, Seller and
the Owners;
(b) by PRGX or PRGI, if there occurs a Material Adverse
Effect as to Seller or its Business, or by Seller, if there occurs a PRGI/PRGX
Material Adverse Effect (as defined in Section 5.9 hereof);
(c) by any nonbreaching party hereto, if there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement or in the RCI Agreement on the part of any nonterminating
party hereto;
(d) by either PRGI or Seller, if the Closing is not
consummated on or before the Outside Date (as defined below) unless such failure
of consummation is due to the failure of the terminating party to observe or
perform in any material respect the covenants, agreements and conditions hereof
to be performed or observed by it at or before the Closing Date. As used herein
"Outside Date" shall mean November 1, 1998; or
(e) by PRGI, if the conditions set forth in Article 4
hereof have not been satisfied by Seller and Owners or waived by PRGI and PRGX
prior to the Outside Date; by
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Seller if the conditions set forth in Article 5 hereof have not been satisfied
by PRGI or PRGX or waived by Seller and Owners prior to the Outside Date.
6.2 EFFECTS OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 6.1(a), 6.1(b), 6.1(d) or 6.1(e) above, no party
shall have any obligations to the others hereunder except for those obligations
in respect of confidentiality and the return of confidential information set
forth in Section 5.1(d) of the RCI Agreement and as set forth in the certain
Nondisclosure Agreement between Seller and PRGI and others dated June 1998 (the
"Nondisclosure Agreement"). If this Agreement is terminated pursuant to Section
6.1(c), the obligations in respect of confidentiality and the return of
confidential information set forth in Section 5.1(d) of the RCI Agreement hereof
and set forth in that certain Nondisclosure Agreement shall remain in effect and
each party hereto may exercise all remedies available to it under this
Agreement, at law or in equity.
ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 SEVERABILITY. If any provision of this Agreement is prohibited
by the laws of any jurisdiction as those laws apply to this Agreement, that
provision shall be ineffective to the extent of such prohibition and/or shall be
modified to conform with such laws, without invalidating the remaining
provisions hereto.
7.2 MODIFICATION. This Agreement may not be changed or modified
except in writing specifically referring to this Agreement and signed by each of
the parties hereto.
7.3 ASSIGNMENT, SURVIVAL AND BINDING AGREEMENT. This Agreement,
the other Seller Transaction Documents and the other PRGI Transaction Documents
(a) may not be assigned by PRGX or PRGI on or prior to the Closing without the
prior written consent of Seller and the Owners (except for an assignment to a
wholly owned subsidiary of PRGI or PRGX, which may be made without the prior
consent of, but with notice to, Seller; provided that, in such event, the
assignor shall remain obligated hereunder in the same manner as if such
assignment had not been effected); (b) may not be assigned by PRGX or PRGI after
the Closing without the prior written consent of Representative, except for an
assignment to an affiliate of PRGX or PRGI, which may be made without the prior
consent of, but with notice to, the Representative; provided that, in such
event, the assignor shall remain obligated hereunder in the same manner as if
such assignment had not been effected; and (c) may not be assigned by Seller or
any of the Owners at any time, without the prior written consent of PRGI. The
terms and conditions hereof shall survive the Closing as provided herein and
shall inure to the benefit of and be binding upon the parties hereto and their
respective heirs, personal representatives, successors and assigns.
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7.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a nationally recognized overnight
delivery service which guarantees next day delivery ("Overnight Delivery") or
mailed by registered or certified mail, return receipt requested, postage
prepaid and addressed to the intended recipient as set forth below:
If to Seller or the Owners: c/o ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLC,
Representative
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Wildman, Harrold, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
If to PRGX or PRGI: The Profit Recovery Group
International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.,
Senior Vice President
and General Counsel
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Arnall Golden & ▇▇▇▇▇▇▇, LLP
2800 One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by U.S.
mail, will be deemed received three (3) business days immediately following the
date sent. For purposes of this Agreement, a "business day" is a day on which
PRGX is open for business and
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shall not include a Saturday or Sunday or legal holiday. Notwithstanding
anything to the contrary in this Agreement, no action shall be required of the
parties hereto except on a business day and in the event an action is required
on a day which is not a business day, such action shall be required to be
performed on the next succeeding day which is a business day.
7.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement, the RCI Agreement, the other Seller Transaction Documents and the
other PRGI Transaction Documents, together with the Exhibits and Schedules
attached hereto and thereto, and the Nondisclosure Agreement (as defined in
Section 6.2 hereof) constitutes the entire agreement and supersedes any and all
other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and, except
as otherwise expressly provided herein, is not intended to confer upon any
person other than PRGX, Seller, PRGI and, after the Closing Date, the Owners,
any rights or remedies hereunder.
7.7 FURTHER ASSURANCES. The parties to this Agreement agree to
execute and deliver, both before and after the Closing, any additional
information, documents or agreements contemplated hereby and/or necessary or
appropriate to effect and consummate the transactions contemplated hereby. The
Owners and Seller agree to provide to PRGX or PRGI, both before and after the
Closing, such information as PRGX or PRGI may reasonably request in order to
consummate the transactions contemplated hereby and to effect an orderly
transition of the Business following Closing.
7.8 GOVERNING LAW AND SUBMISSION TO JURISDICTION. This Agreement
shall be governed by and construed under the laws of the state of Georgia.
Section 6.9 of the RCI Agreement regarding choice of forum, submission to the
jurisdiction of the courts specified therein, service of process and all other
provisions of such Section are hereby incorporated by reference herein and the
parties hereto hereby agree to be governed hereunder by the terms thereof.
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7.9 PRONOUNS. All personal pronouns in this Agreement, whether
used in the singular shall include the plural and the plural shall include the
singular.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRGX:
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
-----------------------------
By:
---------------------------------
Title:
----------------------------------
PRGI:
THE PROFIT RECOVERY GROUP
INTERNATIONAL I, INC.
-----------------------------
By:
---------------------------------
Title:
----------------------------------
SELLER:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ASSOCIATES, INC.
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
OWNERS:
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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LIST OF SCHEDULES AND EXHIBITS
Schedule 3.5 List of Vehicles, Furniture and Artwork
Exhibit 2.2 Indemnity Escrow Agreement
Exhibit 2.4 Closing Escrow Agreement
Exhibit 3.1 Representatives, Covenants and Indemnification
Agreement
Exhibit 4.6(h) General Release
Exhibit 4.6(j) Opinion of Counsel of Seller and Owners