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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
the 29th day of October, 1998 by and between THE PROFIT GROUP INTERNATIONAL I,
INC., a Georgia corporation ("PRGI"), THE PROFIT RECOVERY GROUP INTERNATIONAL,
INC., a Georgia corporation ("PRGX"), and RBA AUDITS, INC., a Utah corporation
(the "Seller"), and XXXXXXX X. XXXX, being the sole owner of all outstanding
equity of Seller ("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 overpayment to, the Client Payees (the "Audit Activities") and
rendering management advisory services associated with the Audit Activities
(collectively, the "Business of PRGI");
WHEREAS, Seller is engaged in the business of the examination, review
and audit of various paid bills and expenses of client companies, such as
accounts payable, cooperative advertising, advertising expense, real estate
tax, common area maintenance, legal and professional fees, related and other
charges and expenses for the purpose of discovering and documenting for
subsequent charge back and recovery overbillings, overpayments and/or
under-deductions made by client companies, or for discounts, rebates and
allowances of all types, freight charges, special handling, insurance, and all
other overbillings, overpayments and/or under-deduction incidental or related
thereto and collection with respect to same and the rendering of other related
management counseling service (the "Business");
WHEREAS, Seller wishes to sell to PRGI substantially all of Seller's
assets used or held for use in the Business pursuant to the terms and
conditions of this Agreement;
WHEREAS, concurrently with the execution hereof, PRGI has entered into
acquisition agreements (collectively, the "Other Acquisition Agreements") in
respect of each of the following entities: Xxxxxx Xxxx & Associates, Inc.
("RBA"), Xxxxxx X. Xxxx, Xx., a sole proprietorship, Xxxx X. Xxxxxxx &
Associates, Inc., Xxxx X. Xxxxxx, a sole proprietorship, Xxxxxxx Xxxxxxx, a
sole proprietorship, Xxxx Xxxxxxxx, a sole proprietorship, Savant Consulting,
L.L.C. and Xxxxxx, Xxxxxxxxx & Associates, Inc. (collectively, the "Other
Sellers");
WHEREAS, concurrently with the execution hereof, Seller and its Owner
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 contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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ARTICLE 1
PURCHASE AND SALE OF PURCHASED ASSETS
1.1 ASSETS TO BE ACQUIRED. Subject to and upon the terms and
conditions set forth herein, PRGI agrees to purchase from Seller, and Seller
agrees to sell to PRGI, except as provided in Section 1.2 hereof, all right,
title and interest of Seller in and to all of the tangible and intangible
assets of Seller used or held for use by Seller in the conduct of the Business
as of the Closing Date (as hereinafter defined), which are described in this
Section 1.1 with reference to capitalized terms which, if not otherwise defined
herein, have the meaning assigned to such capitalized terms in the RCI
Agreement, free and clear of all claims, liens, encumbrances, security
interests and similar interests of any kind or nature whatsoever, including,
without limitation, the following (collectively, the "Purchased Assets"):
(a) all of the Fixed Assets;
(b) all of Seller's interest in and rights and benefits
owing to Seller under those Contracts which PRGI specifically agrees to assume,
which assumption shall be evidenced by inclusion of such Contract by PRGI on a
schedule to the Assignment and Assumption Agreement (as hereinafter defined)
(collectively, the "Assigned Contracts");
(c) all Accounts Receivable outstanding as of the Closing
and all Unbilled Claims and Work in Progress as of the Closing;
(d) all of Seller's interest in and rights and benefits
accruing to Seller as lessee under those Leases which PRGI specifically agrees
to assume, which assumption shall be evidenced by inclusion of such Lease by
PRGI on a schedule to the Assignment and Assumption Agreement (collectively,
the "Assigned Leases");
(e) all Intellectual Property Rights;
(f) all Licenses and Permits;
(g) all Deposits and Other Rights;
(h) all of Seller's customer and supplier lists, all
client files, all files related to Employees and Associates, all computer data
bases and other records, other than Seller's corporate minute books and stock
records;
(i) all of Seller's right, title and interest in and to
its telephone numbers and the directory advertising for such telephone numbers
to the extent assignable; and
(j) all of Seller's right, title and interest in and to
all other tangible personal property relating to the Business.
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in Section 1.1 hereof, PRGI shall not acquire and Seller shall not
transfer to PRGI Seller's corporate minute and stock books and any other
documents relating to the organization, maintenance and existence of
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Seller, the corporate charter, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, blank
certificates, any assets held under any pension, profit sharing or other
Employee Benefit Plan (as defined herein), all cash and cash equivalents of
Seller in the Business, subject to Section 2.1(b) hereof, Seller's rights to
any tax refunds, any insurance policies of Seller, any vehicles owned or leased
by Seller, all furniture and art work to the extent listed on Schedule 1.2
attached hereto and any of the rights of Seller under this Agreement, the RCI
Agreement, the other Seller Transaction Documents and the other PRGI
Transaction Documents.
1.3 CONVEYANCE OF ASSETS. The conveyance, transfer and delivery of
the Purchased Assets shall be made by Seller and accepted by PRGI on the
Closing Date, effective as of the Effective Date, as follows:
(a) Seller shall execute and deliver to PRGI a xxxx of
sale in the form of Exhibit 1.3(a) attached hereto and made a part hereof (the
"Xxxx of Sale");
(b) Seller and PRGI shall execute and deliver an
Assignment and Assumption Agreement in the form of Exhibit 1.3(b) attached
hereto and made a part hereof (the "Assignment and Assumption Agreement") with
respect to the Assumed Liabilities (as hereinafter defined);
(c) Seller shall execute and deliver such additional
instruments of sale, transfer, conveyance and assignment as of the Closing Date
as counsel to Seller and counsel to PRGI shall mutually deem necessary or
appropriate.
1.4 CLOSING. As soon as practicable after the execution hereof,
the parties hereto shall execute and deliver all documents and instruments for
the consummation of the transactions contemplated herein (other than the
certificates for the PRGX Shares or the Cash Consideration as defined herein)
into escrow with Xxxxxx, Golden & Xxxxxxx, LLP, as escrow agent in accordance
with that certain closing escrow agreement in substantially the form of Exhibit
1.4 attached hereto (the "Closing Escrow Agreement"), pending execution and
delivery in escrow of all documents contemplated by this Agreement and the
Other Acquisition Agreements by all parties thereto. The closing of the
transactions contemplated herein (the "Closing") shall take place on or before
October 29, 1998, at the offices of PRGI's counsel or by the exchange of
documents and instruments by mail, courier, telecopy and wire transfer to the
extent mutually acceptable to the parties hereto, upon compliance with the
terms, conditions and contingencies contained herein or on such other date as
is mutually agreed upon by the parties hereto (the "Closing Date"). The parties
hereto intend that PRGI receive all of the benefits in respect of the
operations of the Business on and after the Effective Date and assume all of
the liabilities of the Business incurred in the ordinary course of business
after the Effective Date, except as otherwise specifically provided herein or
in the RCI Agreement.
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ARTICLE 2
PURCHASE PRICE; ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE.
(a) Purchase Price Payment. Subject to the terms and
conditions of this Agreement, the purchase price to be paid to Seller for the
Purchased Assets pursuant hereto shall be paid in cash and shares of PRGX
Common Stock, as follows: (i) $1,772,823, less the Reimbursable Cash (as
defined in Section 2.1(b) below), plus an amount equal to 6.75% of such amount
calculated on a per annum basis for the period from the Effective Date through
and including the Closing Date, plus an amount equal to $589.04 per day for
each day during the period from and after the Effective Date to and including
the day immediately preceding the Closing Date (the "Cash Consideration") and
(ii) subject to execution and delivery by Seller and Owner at the Closing of
the Lock-up Agreements, pursuant to the RCI Agreement, 43,773 shares of PRGX
Common Stock, no par value (the "PRGX Shares") (the Cash Consideration and the
PRGX Shares being collectively referred to herein as the "Purchase Price");
provided, however, that certain of the PRGX Shares shall be issued in the name
of the Representative, as nominee and attorney-in-fact for the Seller, to be
held in escrow pursuant to Section 2.3 below and in lieu of delivering
fractional shares, PRGI shall deliver to Seller an amount in cash based on
$27.00 per share (the "Closing Price.")
(b) Purchase Price Adjustment. On the business day
immediately preceding the Closing Date, Seller shall prepare and deliver to
PRGI, an estimated cash flow statement of total cash received by Seller in
respect of the Business less total cash disbursements for the period from and
including the Effective Date to and including the day immediately preceding the
Closing Date (the "Interim Period Cash Flow"), detailing all such amounts by
category of payment (the "Cash Flow Statement"). PRGI shall be entitled to
reimbursement, at Closing, of the Interim Period Cash Flow, plus the following
cash payments made in respect of the Business during the period from and
including the Effective Date to and including the day immediately preceding the
Closing Date: (i) the amount, if any, by which disbursements to Owner during
said period exceed the amount of any cash or cash equivalents in the Business
as of the close of business on August 31, 1998 and (ii) any amounts paid during
the period from and including the Effective Date to and including the Closing
Date in respect of the following liabilities: (A) Seller Transaction Expenses,
(B) non-trade payables (meaning those not directly related to the Business to
be acquired by PRGI pursuant hereto), (C) non-trade accrued expenses (meaning
those not directly related to the Business to be acquired by PRGI pursuant
hereto), (D) commissions payable as of the Effective Date in respect of
accounts receivable collected by Seller prior to the Effective Date; (E) all
amounts owed to Owner under the Principal Agreement or otherwise (except for
advances by Owner 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 (F) all amounts owed to Persons other than Owner (except for normal trade
payables directly relating to the Business to be acquired by PRGI pursuant
hereto incurred in the ordinary course of business) (collectively, the "Interim
Period Reimbursable Liabilities", which, together with the Interim Period Cash
Flow, is referred to herein as the "Reimbursable Cash").
(c) Post-Closing Review. Within sixty (60) days following
the Closing Date, PRGI and the Representative shall each have the right to
request that the Accountants review the
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Reimbursable Cash (including the Cash Flow Statement), which review shall be a
final determination of the Reimbursable Cash, and in the event that such
determination shows that payments are required by PRGI or by the Sellers or
Owner, 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.
2.2 Assumption of Liabilities. PRGI agrees to assume, from and
after the Closing Date, only the following (the "Assumed Liabilities"):
(a) all obligations and liabilities of Seller relating to
the Business arising from and after the Effective Date in the ordinary course
of business under the Contracts with Customers, Associates and Employees and
other Contracts, and equipment and other Leases expressly designated by PRGI as
Assigned Contracts and Assigned Leases;
(b) Seller's normal trade payables relating to the
Business to be acquired by PRGI pursuant hereto incurred in the ordinary course
of business and outstanding at the Effective Date or incurred in the ordinary
course of business thereafter and advances made by Owner to Seller after August
31, 1998 used to pay normal trade payables relating to the Business to be
acquired by PRGI pursuant hereto, excluding (i) all Seller Transaction
Expenses; (ii) non-trade payables (meaning those not directly related to the
Business to be acquired by PRGI pursuant hereto), including any Prior Period
Payments to RBA; (iii) non-trade accrued expenses (meaning those not directly
related to the Business to be acquired by PRGI pursuant hereto); (iv)
commission amounts for audit services due to Associates, auditors, or other
service providers on accounts receivable collected prior to the Effective Date;
and (v) all accounts payable, accrued expenses or other indebtedness due to
Owner as of the Effective Date under the Principal Agreement, or in connection
with any advances to Associates or otherwise; and
(c) commission amounts for audit services which will be
owed by Seller to its Associates, auditors or other service providers upon
collection of Accounts Receivable, Unbilled Claims and Work in Progress
outstanding at the Effective Date.
Except for the Assumed Liabilities, PRGI shall not assume any debts or
liabilities of Seller of any kind or nature whatsoever. Seller agrees to make
full and prompt payment of all of its trade payables not assumed by PRGI as and
when due. Anything to the contrary contained herein notwithstanding, PRGI shall
neither assume nor have any obligations or liabilities whatsoever in respect of
severance, WARN Act, income tax withholding, payroll and/or unemployment tax,
workers' compensation, pension, profit-sharing, health insurance, COBRA or any
other employee or other benefit liabilities in respect of any Business Employees
or in respect of any Employee Benefit Plans, including, without limitation any
contribution, tax, lien, penalty, cost, interest, claim, loss, action, suit,
damage, cost assessment, withdrawal liability, liability to the PBGC, liability
under Section 412 of the Code or Section 302(a)(2) of ERISA, or other similar
liability or expense of Seller or any ERISA Affiliate and PRGI shall not become
a party to any Employee Benefit Plan as a result of any of the transactions
contemplated by this Agreement.
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2.3 ESCROW SHARES. At the Closing, approximately 21,886 of the
PRGX Shares issued on the Closing Date pursuant to Section 2.1(a)(ii) hereof
(the "Escrow Shares") shall be issued in the name of the Representative, as
nominee and attorney-in-fact for the Seller, which Escrow Shares will be held
in escrow together with shares of PRGX deposited in escrow by the parties to
the Other Acquisition Agreements, pursuant to the terms of the RCI Agreement
and the Indemnity Escrow Agreement by and among PRGI, PRGX, Seller, Owner and
the other signatories named therein in the form of Exhibit 2.3 attached hereto
(the "Indemnity Escrow Agreement"). The aggregate number of Escrow Shares
deposited hereunder and under the Other Acquisition Agreements shall equal the
product of (a) the aggregate Purchase Prices under this Agreement and the Other
Acquisition Agreements (approximately $43,500,000) multiplied by (b) 20%,
divided by the Closing Price.
ARTICLE 3
ADDITIONAL COVENANTS
3.1 REPRESENTATIONS, COVENANTS AND INDEMNIFICATION AGREEMENT.
Concurrently with the execution and delivery of this Agreement, Seller and
Owner, 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,
Owner, the Purchased Assets and the Business pursuant to the terms of the RCI
Agreement (the "Disclosure Schedule"). Each of the parties hereto acknowledge
that the representations, warranties, covenants, agreements and indemnification
made by them concurrently herewith in the RCI Agreement are an inducement to
the other parties hereto to enter into this Agreement. Prior to the execution
and delivery of the RCI Agreement, Seller shall have delivered to PRGX and PRGI
a draft of the Disclosure Schedule and true, correct and complete copies of all
documents, together with all amendments thereto through the date of execution
hereof, contemplated by or required to be listed in any exhibit or schedule
(including the Disclosure Schedule) to this Agreement or the RCI Agreement,
including, without limitation, all Material Leases, Material Contracts,
insurance policies, the Historical Statements, the Monthly Statements through
the last day of the month immediately preceding the date hereof and Seller's
Tax Returns.
3.2 ALLOCATION OF PURCHASE PRICE AMONG PURCHASED ASSETS. The
Purchase Price shall be allocated for tax purposes as mutually agreed to by
PRGI and Seller within 60 days after the Closing; provided, however, the
Purchase Price shall be allocated solely to (a) goodwill; (b) fixed assets at
book value; (c) a share of the allocation to the Noncompetition and
Nonsolicitation Agreements described in Section 5.4 of the RCI Agreement, as
appropriate, and (d) to the extent they exist, Accounts Receivable net of
appropriate reserves and accrued commissions. Seller and PRGI agree that they
will prepare and file any notice or other filing required pursuant to Section
1060 of the Code, and that any such notices or filings will be prepared based
upon such tax allocation of Seller Purchase Price. PRGI agrees to send to
Seller a completed copy of its Form 8594 ("Asset Acquisition Statement under
Section 1060") with respect to this transaction prior to filing such form with
the Internal Revenue Service.
3.3 COVENANT RE: TAX MATTERS.
(a) Seller and Owner shall be solely responsible for and
shall pay, without any cost to PRGI (i) any and all Taxes for which Seller or
Owner are or may be liable, arising from
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Seller's activities, the Business or use of the Purchased Assets through the
Effective Date (regardless of whether the filing of any Tax Return with respect
thereto or payment of any amount in respect thereof is filed, paid or due prior
to, on or after the Effective Date), (ii) any Taxes with respect to the
acquisition by PRGI from Seller of the Purchased Assets, and all other Taxes,
if any, imposed by any Tax Authority assessed in connection with, on account of
or resulting from the consummation of the transfer of the Purchased Assets to
PRGI.
(b) Real and personal property ad valorem Taxes, if any,
with respect to the Purchased Assets shall be prorated on a daily basis between
Seller and Owner, on the one hand, and PRGI on the other hand, as of the
Closing Date. Should any amount of such Taxes to be prorated not be fully
determined as of the Closing Date, a mutually satisfactory estimate of such
amount, made on the basis of Seller's records, shall be used as the basis for
settlement at Closing, and the amount finally determined will be prorated and
appropriate settlement adjustments made as soon as practicable after such final
determination.
(c) Except as otherwise provided in this Agreement, the
parties hereby agree that each of them shall cooperate with the other in
executing or causing to be executed any required document and by making
available to the other all work papers, records and notes of any kind at all
reasonable times for the purpose of allowing the appropriate party to complete
Tax Returns, participate in a proceeding, obtain refunds, make any
determination required under this Agreement or defend or prosecute Tax claims.
Notwithstanding anything to the contrary contained herein, Seller and Owner
shall have sole and exclusive authority to prepare and file all Tax Returns
concerning Seller related activities occurring prior to the Closing, including,
without limitation, its operation of the Business and its use of the Purchased
Assets and all matters under agreements not being assumed by PRGI (regardless
of when such return is filed). PRGI shall not directly or indirectly take any
action to prepare or file such Tax Return but shall be given copies of any such
return filed by Seller.
(d) At its sole expense, Seller shall promptly pay any
and all Taxes, including but not limited to sales and transfer Taxes, levied,
imposed or assessed by any Tax Authority as a result of the sale, transfer,
assignment and conveyance of the Purchased Assets to PRGI by Seller.
3.4 CORPORATE AND FICTITIOUS NAMES. As soon as practicable
following the Closing, Seller shall change its corporate name and Seller and
Owner shall cooperate with PRGI in any efforts undertaken by PRGI to secure and
protect its rights in any name used by Seller in the conduct of its Business
prior to the Closing.
3.5 BULK SALES LAW. PRGI hereby waives compliance by Seller with
any applicable U.C.C. bulk sales law, and Seller and its Owner agree, jointly
and severally, to indemnify and hold harmless PRGI (and any affiliates thereof)
from and against any claims or liabilities not assumed by PRGI pursuant to this
Agreement asserted against PRGI (or any affiliate thereof) by any creditor of
Seller by reason of such noncompliance. Seller will comply with all applicable
tax bulk transfer laws promptly after the public announcement of the
transactions contemplated herein, provided that the parties agree that PRGI
will only hold back from the Purchase Price amounts required under such
applicable laws if such required holdback exceeds $10,000. Seller and its Owner
agree, jointly and severally, to indemnify and hold harmless PRGI (and any
affiliates thereof) from and
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against any claims or liabilities against PRGI for failure to comply with any
such applicable tax bulk transfer laws.
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 Owner in or pursuant to this Agreement and to the
RCI Agreement or given on their behalf hereunder or thereunder shall be true
and correct in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties had been made or
given on and effective as of the Closing Date.
4.2 OBLIGATIONS PERFORMED. Seller and Owner shall have performed
and complied in all material respects with all agreements, conditions and
obligations required by this Agreement to be performed or complied with by them
prior to or at the Closing.
4.3 CONSENTS. Seller shall have obtained and delivered to PRGI
written Seller Consents of all persons or entities whose consent is required to
consummate the transactions contemplated herein, if any, and all such Seller
Consents shall remain in full force and effect at and as of the Closing.
4.4 DUE DILIGENCE. PRGI and its Accountants, counsel and other
experts shall have completed their due diligence investigation with respect to
the Business and affairs (including business, legal and financial matters) of
Seller and the Business. Seller shall have resolved, in a manner reasonably
satisfactory to PRGI and its counsel, any and all issues raised as a result of
such investigation which, in PRGI's good faith belief has or is likely to have
a Material Adverse Effect.
4.5 OTHER ACQUISITION AGREEMENTS. Concurrently with the Closing
hereunder, PRGI shall have consummated the transactions contemplated by each of
the Other Acquisition Agreements (as defined in the preambles to this
Agreement).
4.6 CLOSING DELIVERIES. Seller and/or Owner, 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) possession of the Purchased Assets;
(b) a certified copy of the corporate resolutions of the
directors of Seller and of Owner authorizing the transactions contemplated
herein and the execution, delivery and
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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) the Xxxx of Sale, the Assignment and Assumption
Agreement and the other instruments of transfer as shall be reasonably required
by PRGI for the transfer to PRGI of all of Seller's right, title and interest
to the Purchased Assets free and clear of all claims, liens, encumbrances,
security interests and similar interests of any kind or nature whatsoever,
including, without limitation, releases of any and all such claims, liens,
encumbrances, security interests and similar interests with respect to the
Purchased Assets;
(e) the Indemnity Escrow Agreement, duly executed by the
Seller, Owner and the Representative, as nominee and attorney-in-fact of Seller
and Owner, together with blank stock powers, duly executed by the
Representative with medallion level signature guarantee;
(f) the Noncompetition and Nonsolicitation Agreements
duly executed by Seller and Owner;
(g) written Seller Consents from all parties, whose
consent to the transactions contemplated herein is required;
(h) an opinion of counsel to Seller and Owner
substantially in the form of Exhibit 4.6(h) attached hereto;
(i) the offer letter for employment of the Principal,
duly executed by the Principal;
(j) the Nonqualified Stock Option Agreement for the
Principal, duly executed by the Principal:
(k) the Lock-up Agreements, duly executed by Seller,
Owner and the Representative;
(l) intentionally omitted;
(m) if applicable, the spousal consents, referred to in
the RCI Agreement, duly executed by the spouses of Owner;
(n) if applicable, Forms UCC-3, duly executed by each
secured lender of Seller, releasing all liens on the Purchased Assets;
(o) a release of RBA and the Other Sellers in
substantially the form of Exhibit 4.6(o) attached hereto, duly executed by
Seller and Owner;
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(p) a Closing Escrow Agreement, duly executed by Seller,
Owner and the Representative;
(q) a Closing Statement, duly executed by Seller and
Owner; and
(r) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the transactions contemplated
hereby.
4.7 NO CHALLENGE. There shall not be pending or threatened any
action, proceeding or investigation before any court or administrative agency
by any government agency or any pending action by any other person,
challenging, or seeking material damages in connection with, the acquisition by
PRGI of the Purchased Assets pursuant to the transactions contemplated herein,
or the ability of PRGI, PRGX or any of their affiliates to own and operate
Seller's Business or otherwise materially adversely affecting the Business,
assets, prospects, financial condition or results of operations of Seller.
4.8 NO INVESTIGATIONS OF SELLER OR BUSINESS. As of the Closing
Date there shall be no, and neither Seller nor Owner 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, the Purchased Assets or Seller's Business.
4.9 NO MATERIAL ADVERSE EFFECT. From the date of this Agreement to
the Closing, there shall not have occurred any Material Adverse Effect (without
giving effect to the consequences of the transaction contemplated by this
Agreement), whether reflected in financial statements, the Schedules attached
hereto or to the RCI Agreement or otherwise. Without limiting the generality of
the foregoing, at the Closing, none of the Primary Customers shall have
terminated, decreased or otherwise adversely altered such Primary Customer
business relationship with Seller or given notice to Seller or Owner that it
intends to do so.
4.10 INTENTIONALLY OMITTED.
4.11 LEGALITY. No federal or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which is in
effect and has the effect of making the transactions contemplated herein
illegal or otherwise prohibiting the consummation of the transactions
contemplated herein.
4.12 REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the transactions
contemplated by this Agreement and all actions by or in respect of, or filings
with, any governmental body, agency or official or any other person required to
permit the consummation of the transactions contemplated herein so that PRGI
shall be able to continue to carry on the business of Seller substantially in
the manner now conducted by Seller shall have been taken or made.
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ARTICLE 5
CONDITIONS TO SELLER'S
AND OWNER'S OBLIGATIONS
Each and every obligation of Seller and Owner 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
Owner:
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 Seller and Owner each of the following, together with any
additional items which Seller or Owner may reasonably request to effect the
transactions contemplated herein:
(a) certified copies of the corporate resolutions of the
Board of Directors of PRGI and the Board of Directors of PRGX authorizing the
transactions contemplated herein and the execution, delivery and performance of
the RCI Agreement, this Agreement and the other PRGI Transaction Documents by
PRGX and PRGI, as applicable, together with incumbency certificates with
respect to the respective officers of PRGI executing documents or instruments
on behalf of PRGI, and, in respect of PRGX, authorizing the issuance of the
PRGX Shares to Seller;
(b) intentionally omitted;
(c) the Cash Consideration, as adjusted pursuant to
Section 2.1(a) and (b) hereof, and written confirmation from PRGX's transfer
agent that stock certificates representing the PRGX Shares have been issued in
the name of Seller;
(d) the Indemnity Escrow Agreement, duly executed by PRGI
and PRGX;
(e) the documents and instruments described in Section
1.3 hereof;
(f) the offer letter for employment of the Principal,
duly executed by PRGI;
(g) the Nonqualified Stock Option Agreement for the
Principal, duly executed by PRGX;
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(h) the Noncompetition and Nonsolicitation Agreements
referred to in Section 3.4 hereof duly executed by PRGI;
(i) the Closing Escrow Agreement, duly executed by PRGI
and PRGX;
(j) a Closing Statement, duly executed by PRGI and PRGX;
and
(k) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the transactions contemplated
hereby.
5.4 NO CHALLENGE. There shall not be pending or threatened any
action, proceeding or investigation before any court or administrative agency
by any government agency or any pending action by any other person, challenging
or seeking material damages in connection with, the acquisition by PRGI of the
Purchased Assets pursuant to the transactions contemplated herein or the
ability of PRGX or PRGI or any of its affiliates to own and operate the
Business or otherwise materially adversely affecting the Business, assets,
prospects, financial condition or results of operations of Seller.
5.5 NO INVESTIGATIONS OF PRGX OR PRGI. As of the Closing Date
there shall be no, and neither PRGX nor PRGI shall have any knowledge of or
reason to know of any, pending or threatened investigation by any municipal,
state or federal government agency or regulatory body with respect to PRGX or
PRGI, PRGX's or PRGI's assets or PRGX's or PRGI's business.
5.6 LEGALITY. No federal or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which is in
effect and has the effect of making the transactions contemplated herein
illegal or otherwise prohibiting the consummation of the transactions
contemplated herein.
5.7 CONSENTS. PRGI shall have obtained and delivered to Seller
written consent of Nations Bank N.A., as agent for the banks party to PRGX's
bank credit agreement, to the transactions contemplated herein and such
consent(s) shall remain in full force and effect at and as of the Closing.
5.8 NO MATERIAL ADVERSE EFFECT. From the date hereof until the
Closing there shall have been no effect or change in the business of PRGI 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").
5.9 REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the transactions
contemplated by this Agreement and all actions by or in respect of, or filings
with, any governmental body, agency or official or any other person required to
permit the consummation of the transactions contemplated herein so that PRGI
shall be able to continue to carry on the business of Seller substantially in
the manner now conducted by Seller shall have been taken or made.
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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
Owner;
(b) by PRGX or PRGI, if there occurs a Material Adverse
Effect as to Seller or its Business, or by Seller, if there occurs a PRGI/PRGX
material Adverse Effect (as defined in Section 5.8 hereof);
(c) by any nonbreaching party hereto if there has been a
material breach of any representation, warranty, covenant or agreement
contained in this Agreement or in the RCI Agreement on the part of any
nonterminating party hereto; or
(d) by either PRGI or Seller, if the Closing is not
consummated on or before the Outside Date (as defined below) unless such
failure of consummation is due to the failure of the terminating party to
observe or perform in any material respect the covenants, agreements and
conditions hereof to be performed or observed by it at or before the Closing
Date. As used herein "Outside Date" shall mean November 1, 1998.
(e) by PRGI, if the conditions set forth in Article 4
hereof have not been satisfied by Seller and Owner or waived by PRGI and PRGX
prior to the Outside Date; by Seller if the conditions set forth in Article 5
hereof have not been satisfied by PRGI or PRGX or waived by Seller and Owner
prior to the Outside Date.
6.2 EFFECTS OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 6.1(a), 6.1(b), 6.1(d) or 6.1(e) above, no party
shall have any obligations to the others hereunder except for those obligations
in respect of confidentiality and the return of confidential information set
forth in Section 5.1(d) of the RCI Agreement and as set forth in the certain
Nondisclosure Agreement between Seller and PRGI and others dated June, 1998
(the "Nondisclosure Agreement"). If this Agreement is terminated pursuant to
Section 6.1(c), the obligations in respect of confidentiality and the return of
confidential information set forth in Section 5.1(d) of the RCI Agreement and
set forth in the Nondisclosure Agreement shall remain in effect and each party
hereto may exercise all remedies available to it under this Agreement, at law
or in equity.
ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 SEVERABILITY. If any provision of this Agreement is
prohibited by the laws of any jurisdiction as those laws apply to this
Agreement, that provision shall be ineffective to the extent of such
prohibition and/or shall be modified to conform with such laws, without
invalidating the remaining provisions hereto.
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7.2 MODIFICATION. This Agreement may not be changed or modified
except in writing specifically referring to this Agreement and signed by each
of the parties hereto.
7.3 ASSIGNMENT, SURVIVAL AND BINDING AGREEMENT. This Agreement,
the other Seller Transaction Documents and the other PRGI Transaction Documents
(a) may not be assigned by PRGX or PRGI on or prior to the Closing without the
prior written consent of the Seller and Owner (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 Owner at any time, without the prior written consent of PRGI. The
terms and conditions hereof shall survive the Closing as provided herein and
shall inure to the benefit of and be binding upon the parties hereto and their
respective heirs, personal representatives, successors and assigns.
7.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a nationally recognized
overnight delivery service which guarantees next day delivery ("Overnight
Delivery") or mailed by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below:
If to Seller or Owner: c/o Xxxxxxxx Xxxxxxxx LLC, Representative
000 Xxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attention: Xxx Xxxxxxxx
Telefax: (000) 000-0000
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with a copy to: Xxxxx Xxxxxxxx, Esq.
Xxxxxxxx & Xxxx
000 Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX. 60606-3913
Telefax: (000) 000-0000
If to PRGX or PRGI: The Profit Recovery Group International I, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx XxXxxxxx, Xx.,
Senior Vice President and General
Counsel
Telefax: (000) 000-0000
with a copy to: Arnall Golden & Xxxxxxx, LLP
2800 One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxxx Xxxxxx, Esq.
Telefax: (000) 000-0000
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
PRGI is open for business and shall not include a Saturday or Sunday or legal
holiday. Notwithstanding anything to the contrary in this Agreement, no action
shall be required of the parties hereto except on a business day and in the
event an action is required on a day which is not a business day, such action
shall be required to be performed on the next succeeding day which is a
business day.
7.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. Except for the
Nondisclosure Agreement, which remains in full force and effect in accordance
with the terms thereof, this Agreement, the RCI Agreement, the other Seller
Transaction Documents, and the PRGI Transaction Documents together with the
Exhibits and Schedules attached hereto and thereto, constitutes the entire
agreement and supersedes any and all other prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, is
not intended to confer upon any person other than Seller, PRGX, PRGI and Owner,
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.
Owner and Seller agree to provide to PRGX and PRGI, both before and after
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the Closing, such information as PRGX and PRGI may reasonably request in order
to consummate the transactions contemplated hereby and to effect an orderly
transition of the Business following Closing.
7.8 GOVERNING LAW AND SUBMISSION TO JURISDICTION. This Agreement
shall be governed by and construed under the laws of the state of Georgia.
Section 6.9 of the RCI Agreement regarding choice of forum, submission to the
jurisdiction of the courts specified therein, service of process and all other
provisions of such Section are hereby incorporated by reference herein and the
parties hereto hereby agree to be governed hereunder by the terms thereof.
7.9 PRONOUNS. All personal pronouns in this Agreement, whether
used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRGX:
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
By:
------------------------------
Name:
----------------------------
Its:
-----------------------------
PRGI:
THE PROFIT RECOVERY GROUP
INTERNATIONAL I, INC.
By:
------------------------------
Name:
----------------------------
Its:
-----------------------------
SELLER:
RBA AUDITS, INC.
By:
------------------------------
Name: XXXXXXX X. XXXX
Its: President
OWNER:
----------------------------------
XXXXXXX X. XXXX
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Schedules and Exhibits
Schedule 1.2 Excluded Assets
Exhibit 1.3(a) Xxxx of Sale
Exhibit 1.3(b) Assignment and Assumption Agreement
Exhibit 1.4 Closing Escrow Agreement
Exhibit 2.3 Indemnity Escrow Agreement
Exhibit 3.1 RCI Agreement
Exhibit 4.6(h) Opinion of Counsel
Exhibit 4.6(n) Release
