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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into as of June 8, 2001, by and among Xxxxx Systems Corporation, a Delaware
corporation ("PSC"), PSARS, LLC, a Delaware limited liability company and
wholly-owned subsidiary of PSC ("Acquisition Sub"), Advanced Receivables
Strategy, Inc., a Tennessee corporation ("ARS"), Advanced Receivables
Strategy-Government Accounts Division, Inc., a Tennessee corporation ("GAD"),
Meridian Healthcare Staffing, LLC, a Tennessee limited liability company
("Meridian"), Cash-Net, LLC, a Tennessee limited liability company ("Cash-Net"),
and the owners of ARS, GAD, Meridian and Cash-Net set forth on the signature
pages to this Agreement (individually, an "Owner" and collectively, the
"Owners").
BACKGROUND
ARS, GAD, Meridian and Cash-Net are each referred to as a "Company" and
collectively as the "Companies" and the Companies and the Owners are referred to
collectively as the "Sellers". PSC and Acquisition Sub are each referred to as a
"Buyer" and collectively as the "Buyers."
The Companies desire to sell substantially all of their assets to
Acquisition Sub, and Acquisition Sub desires to purchase such assets from the
Companies, on the terms and subject to the conditions set forth in this
Agreement.
The Owners will receive substantial direct and indirect benefits from
the transactions contemplated by this Agreement, and Buyers have required that
the Owners enter into this Agreement as a condition to PSC's and Acquisition
Sub's execution of this Agreement.
In consideration of the foregoing premises and the mutual covenants and
agreements contained in this Agreement, the parties, intending to be legally
bound, agree as follows:
ARTICLE I
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Purchase of Assets. At the Closing (as defined in Section 1.6), for
the consideration specified in Article I, each Company agrees to sell, transfer,
assign, and deliver to Acquisition Sub the Assets (as defined below) of such
Company, and Acquisition Sub agrees to purchase and take the Assets and to
assume, be responsible for and perform all of the Assumed Liabilities (as
defined in Section 1.3) on the terms and subject to the conditions set forth in
this Agreement. Subject to the provisions of Section 1.2, the term "Assets"
means all assets and properties of each Company, of every kind, nature and
description, whether tangible or intangible, real or personal, contingent or
otherwise, including without limitation, cash, cash equivalents, accounts
receivable, inventory,
* Indicates confidential text omitted and filed separately with the
Securities and Exchange Commission
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materials, equipment, real property, fixtures, furnishings, leasehold rights,
leasehold improvements, vehicles, prepaid assets, contract rights, systems,
licenses, permits, customer, prospect and marketing lists, sales data, records,
computer software and software licenses, proprietary information, intellectual
property, trade secrets, trademarks and trade names (including all rights to the
names "Advanced Receivables Strategy", "Government Accounts Division", "Meridian
Healthcare Staffing" and "Cash-Net"), copyrights, goodwill associated with the
business and assets of each Company, material and manufacturing specifications,
drawings and designs owned by each Company or acquired by each Company after the
date of this Agreement and prior to the Closing, and specifically including:
(a) all assets listed on Schedule 2.4(a) as being owned by a
Company;
(b) all assets reflected on the Latest Balance Sheet (as
defined in Section 2.8(a)) or acquired by a Company after the date of
the Latest Balance Sheet, except those sold for full value to
unaffiliated Persons (as defined in Section 2.12) in the Ordinary
Course of Business (as defined in Section 1.3) after the date of the
Latest Balance Sheet;
(c) the Intellectual Property (as defined in Section 2.21);
and
(d) all rights of any Company under non-competition,
confidentiality, and similar agreements that are included in the
Assets.
1.2 Excluded Assets. Notwithstanding the provisions of Section 1.1, the
Assets will exclude the following (collectively, the "Excluded Assets"):
(a) the Companies' rights under this Agreement and the other
Seller Documents (as defined in Section 2.2), including, without
limitation, the consideration to be paid to the Companies hereunder;
(b) the Material Agreements identified in Schedule 2.19(c);
(c) the minute books, corporate seals, ownership records and
taxpayer and other identification numbers of each Company, and any
other documents relating to the organization, maintenance and existence
of the Companies;
(d) all records prepared in connection with the sale of the
Assets, including bids received from third persons and analyses
relating to the Assets;
(e) consolidated cash of the Companies in excess of $250,000;
(f) all rights, claims and causes of action relating to any of
the Excluded Assets or the Liabilities (as defined in Section 1.3),
other than the Assumed Liabilities, including rights, claims and causes
of action under insurance policies relating thereto and to the Assets;
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(g) all rights to claims available to or being pursued by
Sellers or any affiliates of Sellers for refunds of or credits against
Taxes (as defined in Section 2.11), investment Tax credits, research
credits and credits for prepayment of Taxes attributable to Sellers or
any affiliates of Sellers for pre-Closing Tax periods (determined as if
such taxable period ended as of the close of business on the Closing
Date (as defined in Section 1.6);
(h) any consolidated, combined, unitary or separate company
Tax return relating to income Taxes that include any of the Sellers or
any affiliate of any of the Sellers and records and work papers used in
preparation thereof;
(i) any asset of the Employee Plans or Controlled Group Plans
(each as defined in Section 2.17) including, but not limited to, the
right to receive assets of any such plan upon termination thereof;
(j) personal seat licenses and season tickets to attend games
of the Tennessee Titans National Football League;
(k) the 401(k) Plans of the Companies;
(l) all interests in Belle Xxxxx Travel Agency;
(m) to the extent that transfer to Buyers is prohibited by
applicable law, employee medical records;
(n) the Companies' insurance policies, including any cash
surrender value thereof; and
(o) the computers, cell phones and related equipment listed on
Schedule 1.2(o).
1.3 Assumed Liabilities. Sellers agree and understand that neither
Buyer will assume, or be deemed to assume, any direct or indirect debts,
obligations or liabilities of any nature, whether absolute, accrued, contingent,
liquidated, or otherwise, and whether due or to become due, asserted or
unasserted, known or unknown (collectively, "Liabilities"), of any Seller except
that, at the Closing, Acquisition Sub will assume, effective as of the Closing,
and agrees to be responsible for, pay, perform and discharge when due, the
following Liabilities (collectively, the "Assumed Liabilities"):
(a) trade payables and expenses incurred by a Company since
the date of the Latest Balance Sheet and prior to the Closing only in
the Ordinary Course of Business (as defined below), excluding any
expenses incurred in connection with the transactions contemplated by
this Agreement, salaries and related taxes (except as set forth in
clause (b) below), accrued vacation and bonuses payable to
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any employee or any contribution obligations to any Employee Plan (as
defined in Section 2.17);
(b) salaries accrued by Meridian in the Ordinary Course of
Business for employees paid on a weekly basis;
(c) obligations of a Company incurred in the Ordinary Course
of Business to be performed after the Closing under (i) the Material
Agreements identified in Schedule 2.19(a) that are not also identified
in Schedule 2.19(c), and (ii) other agreements entered into by a
Company in the Ordinary Course of Business that are not included within
the definition of Material Agreements set forth in Section 2.19(a) due
to the immaterial amount or nature of such agreements;
(d) all obligations for property taxes as contemplated by
Section 4.18 and Taxes that are a component of Closing Working Capital
(as defined in Section 1.5(a)); and
(e) all obligations in respect of lawsuits, actions and
proceedings, pending or threatened, and claims arising out of, relating
to or otherwise as a result of the operation or use of the Assets
(including, without limitation, use of any employee personnel records
transferred to Buyers) by Buyers after the Closing.
For purposes of this Agreement, "Ordinary Course of Business" means the
ordinary course of business of a Company, consistent with past
practice, of any amount and type that were ordinarily incurred in past
periods, and fully reflected in the Financial Statements (as defined in
Section 2.8(a)) and does not include (i) the incurrence of any
Liability that results from any breach or default (or event that with
notice or lapse of time would constitute a breach or default) by any
Seller under any agreement binding on them, (ii) the incurrence of any
Liability that results from violations or alleged violations of Law (as
defined in Section 2.13), or (iii) any Liability under any Material
Agreement (including, without limitation, hold harmless and
indemnification provisions) arising from or relating to performance,
conduct or acts or omissions under any such agreements that arise,
accrue or are performable prior to the Closing.
1.4 Consideration. As consideration in full for the acquisition of the
Assets from the Companies, Acquisition Sub will assume the Assumed Liabilities
and pay the Companies the consideration referred to below (collectively, the
"Purchase Price"). The Purchase Price will be payable as follows:
(a) an aggregate of $52,400,000 (the "Cash Payment") will be
paid at the Closing by wire transfer of immediately available funds to
accounts specified in writing by the Companies to Acquisition Sub at
least two days prior to the Closing.
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(b) Acquisition Sub will pay to the Companies, pursuant to an
Allocation Agreement, in form and substance reasonably satisfactory to
the Buyers and containing payment provisions that conform substantially
to those set forth on Exhibit A (the "Allocation Agreement"), the
Interim Contingent Payment (as defined in Exhibit B), if any, in a
single installment by March 31, 2002. Such Interim Contingent Payment
will be payable in cash, except that, solely at the option of PSC, up
to 50% of such payment may be made in the form of certificated shares
of PSC's Class A Common Stock, $.01 par value per share (the "Common
Stock") valued at the Conversion Price. As used in this Agreement,
"Conversion Price" means the average per share closing price of the
Common Stock on the New York Stock Exchange (or on the principal
national exchange on which the Common Stock is then listed) for the 10
trading days immediately preceding the two trading days prior to the
payment date.
(c) Acquisition Sub will pay the Companies, pursuant to the
Allocation Agreement, the First Year Contingent Payment, the Second
Year Contingent Payment, and the Third Year Contingent Payment (each as
defined in Exhibit B), if any. Each Contingent Payment (as defined in
Exhibit B) will be due and payable in a single installment as follows:
(i) the First Contingent Payment by Xxxxx 00, 0000, (xx) the Second
Contingent Payment by March 31, 2004, and (iii) the Third Contingent
Payment by March 31, 2005. Each such Contingent Payment will be payable
in cash, except that, solely at the option of PSC, up to 50% of each
Contingent Payment may be made in the form of certificated shares of
Common Stock valued at the Conversion Price. Notwithstanding the
foregoing, Acquisition Sub will pay the Companies (in cash or in cash
and Common Stock as set forth in this subsection (c)) pursuant to the
Allocation Agreement, the then remaining balance of the Maximum
Aggregate Earnout Amount (as defined in Exhibit B) at any time
beginning after January 1, 2002 and prior to December 31, 2004 that the
aggregate amount of Adjusted Operating Profit during such period
exceeds *.
(d) Subject to Section 1.5(d) the Companies may distribute
proceeds from the Cash Payment to the Owners as set forth on Schedule
1.4(d). Each Owner's pro rata portion of the aggregate amount of such
distribution is referred to as the "Ownership Percentage."
1.5 Working Capital Settlement.
(a) If the Closing Working Capital is less than $11,012,420,
the Cash Payment will be decreased, on a dollar for dollar basis, by an
amount equal to the difference, and if Closing Working Capital is
greater than $11,012,420, the Cash Payment will be increased, on a
dollar for dollar basis, by an amount equal to the difference. As used
in this Agreement, "Closing Working Capital" means an amount equal to
current assets excluding any accounts receivable, or portion thereof,
of the Companies outstanding as of the Closing that remain outstanding
90 days after the Closing Date (the "Uncollected Accounts") less
Assumed
* Indicates confidential text omitted and filed separately with the
Securities and Exchange Commission
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Liabilities, as determined from the final Working Capital Statement (as
defined in subsection (b) below).
(b) The Closing Working Capital and any adjustment to the Cash
Payment resulting therefrom (the "Purchase Price Adjustment Amount")
will be determined from the combined working capital statement of the
Companies as of the Closing (the "Working Capital Statement"). The
Working Capital Statement will be prepared in accordance with generally
accepted accounting principles ("GAAP") and will set forth the combined
balance sheet of the Companies as of the Closing, the calculation of
the Closing Working Capital and the Purchase Price Adjustment Amount,
if any. Within 100 days after the Closing, Buyers will furnish the
Companies with the Working Capital Statement and the calculation of the
Purchase Price Adjustment Amount, each of which will be in reasonable
detail and accompanied by such other financial information and methods
of calculation as may be reasonably necessary for the Companies to
evaluate the accuracy thereof. The Companies will have a period of ten
days after receipt of Buyers' calculation of the Purchase Price
Adjustment Amount to notify Buyers of the Companies' election to accept
or reject (and in the case of a rejection, there will be included in
such notice the reasons for such rejection in reasonable detail) the
calculation of the Purchase Price Adjustment Amount. In the event no
notice is received by Buyers during such ten day period, the
calculation of the Purchase Price Adjustment Amount will be deemed
accepted by the Companies and final and binding on the parties hereto.
(c) In the event the Companies timely reject the calculation
of the Purchase Price Adjustment Amount, Buyers and the Companies will
promptly (and in any event within 20 days following the date upon which
the Companies rejected the calculation of the Purchase Price Adjustment
Amount) attempt to make a joint determination of the Purchase Price
Adjustment Amount. If the parties are able to jointly determine the
Purchase Price Adjustment Amount, any required adjustment to the
Purchase Price resulting therefrom will be made immediately after such
determination and will be final and binding on the parties hereto. In
the event the parties are unable to agree upon the final determination
of the calculation of the Purchase Price Adjustment Amount within such
20 day period, then Buyers and the Companies, will submit the issues in
dispute to an independent certified public accountant from a nationally
recognized firm to be chosen as follows. Each of Buyers, on the one
hand, and the Companies, on the other, will choose an accountant, which
two accountants together will select a third independent accountant
from a nationally recognized firm and the third independent accountant
will act as the sole arbitrator of the dispute (the "Arbitrator"). The
determination of the Arbitrator will be final and binding upon the
parties. The Arbitrator, in the Arbitrator's discretion, will allocate
the fees of the accountants and the Arbitrator to Buyers and the
Companies.
(d) If the Cash Payment calculated from the final Purchase
Price Adjustment Amount is less than $52,400,000, Sellers, jointly and
severally, will
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pay such difference to Acquisition Sub, and if the Cash Payment
calculated from the final Purchase Price Adjustment amount is greater
than $52,400,000, Buyers, jointly and severally, will pay such
difference to the Companies in the same manner as the initial Cash
Payment. At the time of payment of the final Purchase Price Adjustment
Amount, Buyers will assign to Sellers without recourse, and without
representation or warranty of any sort, the Uncollected Accounts. If
any payment is required by this subsection (d), such payment will be
paid by wire transfer of immediately available funds within three days
after resolution of the amount due to such account as is specified by
Buyers. The Companies will retain in immediately available funds at
least $10,700,000 of the Cash Payment until the Purchase Price
Adjustment Amount is final and any payment resulting therefrom made.
1.6 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxxx & Xxxx,
L.L.P., 0000 Xxxx Xx., Xxxxx 0000, Xxxxxx, Xxxxx (or such other place as the
parties may agree) at 10:00 a.m. local time on July 9, 2001, or at such other
date, time, and place as is mutually agreed among the parties or, if all of the
conditions to the obligations of the parties set forth in Article V have not
been satisfied or waived by July 9, 2001 and there is no agreement among the
parties, on the day that is two business days following the date on which all
such conditions have been satisfied or waived (such date and time of closing
being called the "Closing Date"); provided, however, that solely for determining
Closing Working Capital and for reporting business transactions for tax purposes
and financial reporting purposes, the Closing will be deemed to have occurred
and become effective on July 1, 2001.
1.7 Closing Deliveries. At the Closing,
(a) Acquisition Sub will pay the Cash Payment to the Companies
as specified in Section 1.4(a);
(b) each Company will execute and deliver to Acquisition Sub a
Xxxx of Sale conveying such Company's Assets to Acquisition Sub,
substantially in the form of Exhibit C;
(c) each Company will execute and deliver to Acquisition Sub
an Assignment of Intellectual Property conveying all registered
patents, copyrights, trademarks, trade names, and service marks
included within such Company's Assets, substantially in the form of
Exhibit D;
(d) Acquisition Sub and each Company will execute and deliver
to one another an Assumption Agreement, substantially in the form of
Exhibit E;
(e) each Company will execute and deliver to Acquisition Sub
any certificates of title necessary to effect or record the transfer of
any vehicles or other Assets of such Company for which ownership is
evidenced by a certificate of title;
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(f) each Company will deliver to Acquisition Sub or otherwise
make available the originals or copies of all of such Company's books,
records, ledgers, disks, proprietary information, and other data and
all other written or electronic depositories of information relating to
any Assets; and
(g) Sellers and Buyers, as applicable, will execute and
deliver the other Seller Documents (as defined in Section 2.2) and the
other Buyer Documents (as defined in Section 3.2).
1.8 Allocation of Purchase Price. Buyers and Sellers agree that, for
all purposes relevant to the calculation of federal or state taxes, the Purchase
Price will be allocated among the Assets as reasonably and in good faith agreed
by Buyers and the Companies prior to Closing, provided that if the Buyers and
the Companies do not so agree, the purchase price will be allocated as
determined by an independent audit firm reasonably appointed by Buyers with the
consent of the Companies, which will not be unreasonably delayed or withheld.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyers as
follows:
2.1 Organization. Each of ARS and GAD is a corporation duly organized,
validly existing, and in good standing under the laws of the State of its
organization. Each of Meridian and Cash-Net is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
its organization. Each Company has full power to own its properties and to
conduct its business as presently conducted. Except as set forth on Schedule
2.1, each Company is duly authorized or qualified to do business as a foreign
corporation and is in good standing in each State or other jurisdiction in which
its assets are located or in which its business or operations as presently
conducted make such authorization or qualification necessary, except where
failure could not reasonably be expected to have a material adverse effect on
the business, financial condition, results of operations, assets, Liabilities,
or prospects of the Companies, taken as a whole (a "Company Material Adverse
Effect"). To the Company's Knowledge (as defined in Section 7.11), the Companies
are required to be qualified to do business as foreign corporations only in the
jurisdictions set forth on Schedule 2.1. Set forth on Schedule 2.1 is a list of
all assumed names under which each Company operates and all jurisdictions in
which any of the assumed names are registered.
2.2 Authority. Each Seller has all requisite power and authority,
corporate or otherwise, to execute, deliver, and perform under this Agreement
and the other agreements, certificates, and instruments to be executed by it in
connection with or pursuant to this Agreement (together with this Agreement, the
"Seller Documents"). The execution, delivery, and performance by each Seller of
each Seller Document to which it is a party has been duly authorized by all
necessary action, corporate, shareholder, member or otherwise, on the part of
such Seller. This Agreement has been, and at the Closing the
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other Seller Documents will be, duly executed and delivered by each Seller party
thereto. This Agreement is, and each of the other Seller Documents will be, a
legal, valid, and binding agreement of each Seller party thereto, enforceable
against such Seller in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
the enforcement of creditors' rights generally, and except that the availability
of the remedy of specific performance or other equitable relief is subject to
the discretion of the court before which any proceeding therefor may be brought.
2.3 Organic Documents. Each Company has provided Buyers a true,
correct, and complete copy of such Company's articles of incorporation or
organization, as applicable, bylaws or regulations, as applicable, minute books
and ownership records. Such corporate records include minutes or consents
reflecting all actions taken by the directors or managers (including any
committees) and shareholders or members of such Company.
2.4 Title to Assets.
(a) Set forth in Schedule 2.4(a) is a complete list (including
the street address, where applicable) of (i) all real property owned by
any Company and (ii) all real property leased by any Company that is
material to the business, operations, prospects of the Companies taken
as a whole. Each Company has provided Buyers with a list of each other
Asset owned by or used in the business of such Company having a book or
market value in excess of $5,000 (the "Other Assets").
(b) Each Company has good and marketable title to all of such
Company's material Assets and owns all of such material Assets free and
clear of any obligation, lien, claim, pledge, security interest,
liability, charge, contingency, or other encumbrance or claim of any
nature (collectively, "Liens"), other than the Liens described in
Schedule 2.4(b). The execution and delivery of the Seller Documents by
the parties thereto at the Closing will convey to and vest in
Acquisition Sub good and marketable title to the Assets, free and clear
of any Liens except those Liens specifically identified in Schedule
2.4(b) to remain after the Closing. The Companies hold a valid
leasehold interest in all leased assets that are included within the
Assets.
(c) The real property owned or leased by any Company and used
in or associated with the business of any Company (all of such real
property being, the "Real Property") is zoned for a classification that
permits the continued use of the Real Property in the manner currently
used by the Companies, except where failure could not reasonably be
expected to have a Company Material Adverse Effect. To the Company's
Knowledge, except as set forth on Schedule 2.4(c), improvements
included in the Assets were constructed in material compliance with,
and remain in material compliance with, all applicable laws, statutes,
regulations, codes, covenants, conditions, and restrictions affecting
the Real
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Property. Final certificates of occupancy have been issued for the
improvements on the Real Property permitting the existing use of such
improvements, with such exceptions as could not reasonably be expected
to have a Company Material Adverse Effect. There are no actions pending
or, to the Company's Knowledge, threatened that would alter the current
zoning classification of the Real Property or alter any applicable
Laws, codes, covenants, conditions, or restrictions, except as could
not reasonably be expected to have a Company Material Adverse Effect.
Sellers have not received notice from any insurance company or
Governmental Body (as defined in Section 2.7) of any material defects
or inadequacies in the Real Property or the improvements thereon that
would materially and adversely affect the insurability or usability of
the Real Property or such improvements or prevent the issuance of new
insurance policies thereon at rates not materially higher than present
rates. To the Company's Knowledge, no fact or condition exists that
would result in the discontinuation of necessary utilities or services
to the Real Property or the termination of current access to and from
the Real Property. No Owner is a "foreign person" as that term is
defined in Section 1445 of the Internal Revenue Code of 1986, as
amended (the "Code"), and applicable regulations.
2.5 Sufficiency of Assets. The Assets, other than the Excluded Assets,
constitute all assets reasonably necessary to the conduct of the business of
each Company as now conducted. The Assets are in good condition and repair,
ordinary wear and tear excepted, and (where applicable) are in good working
order and have been properly and regularly maintained in all material respects.
The Assets will be sufficient in all material respects to carry on the business
as now conducted of each Company after Closing without interruption or
disruption. The Companies maintain policies of insurance issued by insurers of
recognized responsibility insuring the Companies and their material assets and
business against such losses and risks, and in such amounts, as are customary in
the case of businesses of established reputation engaged in the same or similar
businesses and similarly situated.
2.6 No Violation. Except as described in Schedule 2.6, neither the
execution or delivery of the Seller Documents nor the consummation of the
transactions contemplated by the Seller Documents, including without limitation
the sale of the Assets to Acquisition Sub, will conflict with or result in the
breach of any term or provision of, or violate or constitute a default under (or
an event that with notice or lapse of time or both could constitute a breach or
default), or result in the creation of any Lien on the Assets or any dissenters
or similar rights pursuant to, or relieve any third party of any obligation to
any Company, or give any third party the right to terminate or accelerate any
obligation under, any charter provision, bylaw, regulation, Material Agreement,
Permit (as defined in Section 2.14) or Law to which any Company is a party or by
which any Company or any Asset is in any way bound or obligated, except, in each
case as could not reasonably be expected to have a Company Material Adverse
Effect. No Seller nor any other Person having colorable authority to bind a
Company or to enter into any obligation with respect to the Assets has entered
into any agreement, arrangement or understanding that purports to grant to any
Person any right to approve of, or consent to any transaction contemplated by
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this Agreement or that alters or accelerates any material obligation of any
Company or adversely affects any material Assets upon the consummation of the
transactions contemplated by this Agreement.
2.7 Governmental Consents. Except as set forth in Schedule 2.7, and
except as required in connection with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), no consent, approval,
order, or authorization of, or registration, qualification, designation,
declaration, or filing with, any governmental or quasi-governmental agency,
authority, commission, board, or other body (collectively, a "Governmental
Body") is required on the part of Sellers in connection with the transfer of any
Permits or other Assets to Acquisition Sub or any of the other transactions
contemplated by the Seller Documents.
2.8 Financial Statements.
(a) Attached as Schedule 2.8(a) are true and complete copies
of (i) the unaudited balance sheets of each Company (the "Latest
Balance Sheet") as of March 31, 2001 (the "Latest Balance Sheet Date")
and the related unaudited statements of income for the three months
then ended, (ii) the audited balance sheet of ARS as of December 31,
1999, and (iii) the audited balance sheet of ARS as of December 31,
2000 and the related audited statements of income and cash flows for
the year then ended (clauses (i), (ii) and (iii) collectively, the
"Financial Statements"). The Financial Statements present fairly the
financial condition of ARS and each of the Companies, as applicable, at
the dates specified and the results of their operations for the periods
specified and have been prepared in accordance with GAAP, consistently
applied, subject in the case of the unaudited statements to the absence
of footnote disclosure, vacation accruals and other presentation items
and to changes resulting from normal period-end adjustments for
recurring accruals, which are not material individually or in the
aggregate. The Financial Statements do not contain any items of a
special or nonrecurring nature, except as expressly stated in the
Financial Statements. The Financial Statements have been prepared from
the books and records of the Companies, which accurately and fairly
reflect the transactions of, acquisitions, and dispositions of assets
by, and incurrence of liabilities by the Companies.
(b) No Company has any Liabilities except for (i) Liabilities
reflected on the Latest Balance Sheet, (ii) trade payables and expenses
incurred in the Ordinary Course of Business after the Latest Balance
Sheet Date and expenses incurred in connection with the transactions
contemplated by this Agreement, and (iii) obligations incurred in the
Ordinary Course of Business under the Material Agreements and under
other immaterial agreements entered into by such Company in the
Ordinary Course of Business and that are not required by GAAP to be
reflected in the Latest Balance Sheet.
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2.9 Subsidiaries and Investments. Except as set forth in Schedule 2.9,
no Company owns or holds any direct or indirect equity or debt interest or any
form of proprietary interest in any other Person or option to acquire any such
interest.
2.10 Absence of Material Adverse Change. Since the Latest Balance Sheet
Date, except as specifically contemplated by this Agreement or as set forth on
Schedule 2.10, there has not been (a) any change in the condition (financial or
otherwise), results of operations, business, prospects, assets, or Liabilities
of any Company or with respect to the manner in which any Company conducts its
business or operations that could reasonably be expected to result in a Company
Material Adverse Effect; (b) any declaration, setting aside, or payment of any
dividends or distributions in respect of any securities of any Company or any
redemption, purchase, or other acquisition by any Company of any of its
securities; (c) any payment or transfer of assets (including without limitation
any distribution or any repayment of indebtedness) to or for the benefit of any
security holder of any Company, other than compensation and expense
reimbursements paid in the Ordinary Course of Business; (d) any revaluation by
any Company of any of its assets, including, without limitation, the writing
down or off of notes or accounts receivable, other than in the Ordinary Course
of Business; (e) any entry by any Company into any commitment or transaction
material to any Company including, without limitation, incurring or agreeing to
incur capital expenditures in excess of $50,000, individually or in the
aggregate; (f) any increase in indebtedness for borrowed money; (g) any breach
or default (or event that with notice or lapse of time could constitute a breach
or default), termination, or threatened termination under any Material Agreement
by any Company, or, to the Company's Knowledge, by any third party; (h) any
change by any Company in its accounting methods, principles, or practices; (i)
any increase in the benefits under, or the establishment or amendment of, any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, or other employee benefit plan, or any increase in the compensation
payable or to become payable to directors, managers, officers, employees, or
consultants of any Company; (j) the termination of employment (whether voluntary
or involuntary) of any officer or key employee of any Company or the termination
of employment (whether voluntary of involuntary) of employees of any Company
materially in excess of historical attrition in personnel; (k) any material
theft, condemnation, or eminent domain proceeding or any material damage,
destruction, or casualty loss affecting any asset used in the business of any
Company not adequately covered by insurance; (l) any sale, assignment, or
transfer of any asset used in the business of any Company, except sales of
services in the Ordinary Course of Business; (m) any waiver by any Company or
the shareholders or members of a Company of any material rights related to a
Company's business, operations, or assets; (n) any other transaction, agreement
or commitment entered into or affecting any Company's business, operations, or
assets, except in the Ordinary Course of Business; or (o) any agreement or
understanding to do or resulting in any of the foregoing.
2.11 Taxes.
(a) Except as set forth on Schedule 2.11(a) all required
federal, state, local, and other Tax (as defined in clause (c) below)
returns, notices, and reports
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(including without limitation income, property, sales, use, franchise,
withholding, social security, and unemployment Tax returns) relating to
or involving transactions with any Company have been accurately
prepared and duly and timely filed, and all Taxes required to be paid
with respect to the periods covered by any such returns have been
timely paid, except for amounts subject to good faith dispute that are
being duly and diligently contested in appropriate proceedings. No Tax
deficiency has been proposed or assessed against any Company, and no
Company has executed any waiver of any statute of limitations on the
assessment or collection of any Tax. No Tax audit, action, suit,
proceeding, investigation, or claim is now pending or, to the Company's
Knowledge, threatened against any Company, and no issue or question has
been raised (and is currently pending) by any taxing authority in
connection with a Company's Tax returns or reports. Each Company has
withheld or collected from each payment made to each of its employees
or contractors the full amount of all Taxes required to be withheld or
collected therefrom and has paid the same to the proper Tax receiving
officers or authorized depositaries.
(b) Neither Buyer will be responsible for any income, sales,
use, excise, or other Tax that arises out of or results from the sale
of the Assets under this Agreement, the operation of the Assets by
Sellers prior to the Closing or any other transaction or activity of
any Seller, excluding (in each case) Taxes attributable to the income
of the Acquisition Sub after the Closing and to the ownership and
operation of the Assets by Buyers after the Closing.
(c) As used in this Agreement, "Tax" or "Taxes" means any and
all taxes, charges, fees, levies, assessments, duties, or other amounts
payable to any federal, state, local, or foreign taxing authority or
agency, including, without limitation, (i) income, franchise, profits,
gross receipts, minimum, alternative minimum, estimated, ad valorem,
value added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, disability, employment, social
security, workers compensation, unemployment compensation, utility,
severance, excise, stamp, windfall profits, transfer, gift and gains
taxes; (ii) customs, duties, imposts, charges, levies, or other similar
assessments of any kind; and (iii) interest, penalties, and additions
to Tax imposed with respect thereto.
2.12 Litigation. Except as described in Schedule 2.12, there are no
pending or, to the Company's Knowledge, threatened, lawsuits, administrative
proceedings, arbitrations, reviews, or formal or informal complaints or
investigations by any individual, corporation, partnership, Governmental Body,
or other entity (a "Person") against or relating to any Company or any of its
directors, managers, officers, employees, agents, or affiliates (in their
capacities as such) that, in any such case, could reasonably be expected to have
a Company Material Adverse Effect, or to which any of the Assets are subject or
relating to the transactions contemplated by this Agreement or the consummation
thereof, nor, to the Company's Knowledge, is there any basis therefore. No
Company is subject to or bound by any currently existing judgment, order, writ,
injunction, or decree. Except as set forth on
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Schedule 2.12, there has never been any lawsuit, administrative proceeding,
arbitration, review, or formal or informal complaint or investigation by any
Person against or relating to any Company or any of its directors, managers,
officers, employees, agents or affiliates (in their capacities as such) based on
fair debt collection practices, nor to the Company's Knowledge, is any such
lawsuit, proceeding, review, complaint or investigation pending.
2.13 Compliance with Laws. Each Company is currently complying with and
has at all times complied with each applicable statute, law, ordinance, decree,
order, rule, or regulation of any Governmental Body, including without
limitation all federal, state, and local laws relating to zoning and land use,
occupational health and safety, product quality and safety and employment and
labor matters (collectively, "Laws"), except for failures to comply that could
not reasonably be expected to have a Company Material Adverse Effect or as set
forth on Schedule 2.13.
2.14 Permits. Each Company owns or possesses all right, title and
interest in all permits, licenses, authorizations, approvals, quality
certifications, franchises, or rights issued by any Governmental Body
(collectively, "Permits") necessary to conduct the business of the Companies,
except for failures that could not reasonably be expected to have a Company
Material Adverse Effect. Each of such Permits is described in Schedule 2.14 and,
unless otherwise disclosed in such Schedule 2.14, is included within the Assets.
No loss or expiration of any such Permit is, on account of the transactions
contemplated by this Agreement or otherwise, pending or, to the Company's
Knowledge, threatened, or reasonably foreseeable, other than expiration in
accordance with the terms thereof of Permits that may be renewed in the Ordinary
Course of Business without lapsing and except as could not reasonably be
expected to have a Company Material Adverse Effect.
2.15 Environmental Matters.
(a) Without limiting the generality of the other
representations and warranties set forth in this Article II, except as
could not reasonably be expected to have a Company Material Adverse
Effect and as described in Schedule 2.15, to the Company's Knowledge,
(i) each Company has conducted its business in compliance with all
applicable Environmental Laws, including without limitation by having
all Permits required under any Environmental Laws for the operation of
such Company's business; (ii) none of the Real Property contains any
Hazardous Substance in amounts exceeding the levels permitted by
applicable Environmental Laws; (iii) Sellers have not received any
notices, demand letters, or requests for information from any
Governmental Body or other Person indicating that any Company is or may
be in violation of, or liable under, any Environmental Law or relating
to any of the Assets or former assets of any Company; (iv) no reports
have been filed, or are required to be filed, by (or relating to) any
Company concerning the release or threatened release of any Hazardous
Substance or the threatened or actual violation of any Environmental
Law; (v) no Hazardous Substance has been disposed of, released or
transported in violation of any applicable Environmental Law to or from
any Real Property or as a result of any activity of Sellers; (vi) there
have been no environmental
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investigations, studies, audits, tests, reviews, or other analyses
regarding compliance or noncompliance with any Environmental Law
conducted by or for or which are in the possession of Sellers relating
to the activities of any Company or any of the Real Property that have
not been delivered or disclosed to Buyers; (vii) there are no
underground storage tanks on, in, or under any of the Real Property,
and no underground storage tanks have been closed or removed from any
of the Real Property; (viii) there is no asbestos present in any of the
Real Property, and no asbestos has been removed from any of the Real
Property; (ix) no Company nor any Assets are subject to any Liabilities
or expenditures relating to any suit, settlement, court order,
administrative order, regulatory requirement, judgment, or claim
asserted or arising under any Environmental Law; and (x) to the
Company's Knowledge, no Hazardous Substance is present and there are no
violations of any Environmental Laws involving property adjacent to the
Real Property.
(b) As used in this Agreement, "Environmental Law" means any
federal, state, local or foreign law, statute, ordinance, rule,
regulation, Permit, order, judgment, decree, requirement, or agreement
with any Governmental Body relating to (i) the protection, preservation
or restoration of the environment, (ii) the use, storage, generation,
transportation, processing, production, release, or disposal of
Hazardous Substances, or (iii) the protection or preservation of public
health, in each case as amended and in effect on the date of the
Closing.
(c) As used in this Agreement, "Hazardous Substance" means any
substance presently or hereafter listed, defined, designated, or
classified as hazardous, toxic, radioactive, or dangerous under any
Environmental Law. Hazardous Substance includes any substance to which
exposure is regulated by any Governmental Body or any Environmental
Law, including without limitation any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance, or petroleum or any derivative or
by-product thereof, radon, radioactive material, asbestos, or asbestos
containing material, urea formaldehyde, foam insulation, lead, or
polychlorinated biphenyls.
2.16 Employee Matters.
(a) Set forth on Schedule 2.16(a) is a complete list of all
current regular, full-time and/or permanent employees of the Companies,
including date of employment, current title, and compensation, and date
and amount of last increase in compensation. No Company has collective
bargaining, union, or labor agreements, contracts, or other
arrangements with any group of employees, labor union, or employee
representative and there is no organization effort currently being made
or, to the Company's Knowledge, threatened by or on behalf of any labor
union with respect to employees of any Company. No Company has
experienced in the prior two years, and, to the Company's Knowledge,
there is no basis for any strike, material labor trouble, work
stoppage, slow down, or other
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interference with or impairment of the business of any Company. No
employee of any Company is subject to any agreement or obligation that
restricts or limits his or her ability to compete or to devote his or
her full talents and efforts to Buyers after the Closing.
(b) The Companies engage the services of certain temporary or
contingent workers ("Contingent Workers"). None of the Contingent
Workers is a permanent or regular employee of any Company. The
Contingent Workers will not be eligible to participate in or be
entitled to benefits from any Buyer's employee welfare benefit plans,
pension plans or any other employee benefits extended to Buyers'
regular, full-time and/or permanent employees.
(c) Except as listed in Schedule 2.16(c) and except as could
not reasonably be expected to have a Company Material Adverse Effect,
no Company is subject to any currently pending or to the Company's
Knowledge, threatened claims, charges, demands or suits arising under
or based upon wages, commissions or benefits owed; covenants of fair
dealing and good faith; claims for torts, including but not limited to
defamation, intentional infliction of emotional distress, negligence
and any other wrongful conduct; claims for wrongful discharge or
retaliation, claims under the Americans With Disabilities Act, Title
VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act
of 1991, the Civil Rights Acts of 1866 and 1873, the Family Medical
Leave Act of 1993, the Age Discrimination in Employment Act, the
Employee Retirement Income Security Act ("ERISA"), the Fair Labor
Standards Act of 1938, the Consolidated Omnibus Budget Reconciliation
Act of 1988. No Company is the subject of any currently ongoing or to
the Company's Knowledge, threatened investigations or audits by any
Governmental Body for employment-related violations, including any
investigations or audits by or on behalf of the Equal Employment
Opportunity Commission, the Occupational Safety and Health
Administration, the Internal Revenue Service, Department of Labor or
any analogous Governmental Body. To the Company's Knowledge, there is
no basis for any claims, lawsuits, charges or investigations described
in this subsection (c).
(d) Each Company is currently complying with and has at all
times complied with all applicable employment-related Laws, except
where the failure to comply could not reasonably be expected to have a
Company Material Adverse Effect. The Companies will provide Buyers with
any and all documents required to be kept by any Laws governing
employment, including EEO-1 statements, resumes, applications, employee
handbooks, personnel files, I-9 forms and employee medical records.
(e) To the Company's Knowledge, each Company is currently
complying in all material respects with and has at all times complied
in all material respects with any and all registration, licensing,
disclosure and/or reporting requirements imposed by any applicable Laws
upon companies that
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provide or use the services of Contingent Workers. The Companies will
provide Buyers any and all documents that reflect such compliance, and,
if necessary, assign or grant to Buyers any such unused license or
registration rights.
2.17 Employee Benefit Plans.
(a) Set forth in Schedule 2.17(a)(i) is a complete list of all
"employee benefit plans" (as defined in ERISA), all plans or policies
providing for "fringe benefits" (including but not limited to vacation,
paid holidays, personal leave, employee discount, educational benefit,
or similar programs), and all other bonus, incentive, compensation,
profit-sharing, stock, severance, retirement, health, life, disability,
group insurance, employment, fringe benefit, or any other similar plan,
agreement, policy, or understanding (whether written or oral, qualified
or nonqualified, currently effective or terminated), and any trust,
escrow, or other agreement related thereto, which (i) is maintained or
contributed to by any Company, or with respect to which any Company has
or may have any liability or (ii) provides benefits, or describes
policies or procedures applicable, to any director, former director,
consultant, former consultant, officer, employee, former officer, or
former employee of any Company, or the dependents of any thereof,
regardless of whether funded (collectively, the "Employee Plans").
Except as set forth in the Latest Balance Sheet or as set forth on
Schedule 2.17(a)(ii), no Company has any liability for accrued employee
leave used for vacation, sick leave, urgent business, or other reasons.
Except as disclosed on Schedule 2.17(a)(iii), no written or oral
representations have been made to any employee or former employee of
any Company promising or guaranteeing any employer payment or funding
for the continuation of medical, dental, life, or disability coverage
for any period of time beyond the end of the current plan year (except
to the extent of coverage required under Code section 4980B). Except as
set forth on Schedule 2.17(a)(iv), the consummation of the transactions
contemplated by this Agreement will not accelerate the time of payment
or vesting, or increase the amount of compensation due to any, in each
case, current or former, director, manager, officer, consultant or
employee of any Company.
(b) Except as disclosed on Schedule 2.17(b), with respect to
each "employee benefit plan" (as defined in ERISA) maintained or
contributed to, currently or in the past by any Company or any ERISA
Affiliate (as defined below), or with respect to which any Company or
any ERISA Affiliate has liability (the "Controlled Group Plans"):
(i) there are no unfunded liabilities existing under
any Controlled Group Plan, and each Controlled Group Plan
could be terminated as of the Closing Date with no liability
to either Buyer, any Company, or any ERISA Affiliate;
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(ii) there is no Controlled Group Plan that is a
defined benefit plan (as defined in Section 3(35) of ERISA) or
a multiemployer plan (as defined in Section 3(37) of ERISA);
and
(iii) each such Controlled Group Plan has been
operated in compliance with ERISA, applicable tax
qualification requirements, and all other applicable laws.
As used in this Agreement, "ERISA Affiliate" means each Company and
each Person or other trade or business, whether or not incorporated,
which is or has been treated as a single employer or controlled group
member with the Companies pursuant to section 414 of the Code or
section 4001 of ERISA.
(c) With respect to each Employee Plan, the Companies have
furnished to Buyers a true, correct, and complete copy of (i) the plan
documents and summary plan description; (ii) the most recent
determination letter received from the Internal Revenue Service; (iii)
the annual reports required to be filed for the three most recent plan
years of each such Employee Plan; (iv) all related trust agreements,
insurance contracts, or other funding agreements that implement such
Employee Plan; and (v) all other documents, records, or other materials
related thereto requested by Buyers.
(d) Except as set forth on Schedule 2.17(d), no Company, ERISA
Affiliate nor any plan fiduciary of any Employee Plan has engaged in
any transaction in violation of Section 406(a) or (b) of ERISA or any
"prohibited transaction" (as defined in Code Section 4975(c)(1)) that
would subject any Company or PSC or Acquisition Sub to any taxes,
penalties, or other liabilities resulting from such transaction.
(e) Except as set forth on Schedule 2.17(e), other than
routine claims for benefits, there are no actions, suits, claims,
audits, or investigations pending or to the Company's Knowledge,
threatened against, or with respect to, any of the Employee Plans or
their assets; and all contributions required to be made to the Employee
Plans have been made timely.
2.18 Ownership of the Companies. Schedule 2.18 describes all ownership
interests in each Company and indicates the record and beneficial owner of each
such interest. Except as fully described on Schedule 2.18, no Company has issued
or become obligated in any manner to issue options, warrants, convertible, or
exchangeable securities or other rights, agreements, arrangements, or
commitments obligating any Company, directly or indirectly, to issue, sell,
purchase, acquire or otherwise transfer, or deliver any shares of capital stock,
member interest or other equity interest in any Company, or any agreement,
document, instrument, or obligation convertible or exchangeable therefore that
remain outstanding.
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2.19 Material Agreements.
(a) Schedule 2.19(a) lists each agreement, arrangement and
understanding (whether written or oral and including all amendments
thereto) relating to the business of each Company to which a Company is
a party or a beneficiary or by which any Company or any of the Assets
is bound that is material to any Company, its current or proposed
operations, or the Assets (collectively, the "Material Agreements"),
including without limitation the following: (i) material agreements
pursuant to which any Company sells or distributes any products or
services; (ii) real estate leases; (iii) agreements evidencing,
securing or otherwise relating to any indebtedness for borrowed money
for which a Company is, directly or indirectly, liable; (iv) capital or
operating leases or conditional sales agreements relating to vehicles,
equipment, or other Assets having an aggregate value in excess of
$50,000; (v) agreements pursuant to which a Company is entitled or
obligated to acquire any capital assets from a third party; (vi)
insurance policies; (vii) employment, consulting, non-competition,
separation, collective bargaining, union, or labor agreements or
arrangements; (viii) agreements with or for the benefit of any
shareholder, member, director, manager, officer, employee, or
consultant (or any Person that, to the Company's Knowledge, claims or
has any basis to claim any rights as such) of a Company or any
affiliate or immediate family member of the foregoing; (ix) supply
agreements or arrangements pursuant to which a Company is entitled or
obligated to acquire any assets from a third party having an aggregate
value in excess of $50,000; (x) licenses of computer software; (xi) any
partnership, joint venture, consortium, or other similar arrangements
or agreements; and (xii) any other agreement pursuant to which a
Company could be required to make or entitled to receive aggregate
payments or other aggregate value in excess of $50,000.
(b) Except as set forth in Schedule 2.19(b), the entering of
the Seller Documents and the consummation of the transactions
contemplated by the Seller Documents, without notice to or consent or
approval of any Person, will not constitute a breach of, violation of,
or default under any provision of any Material Agreement, except as
could not reasonably be expected to have a Company Material Effect.
(c) Schedule 2.19(c) identifies any Material Agreements that
will be terminated at or prior to, or retained by a Company following
the Closing.
(d) Sellers have provided to Buyers a copy of each written
Material Agreement and a written summary of each oral Material
Agreement. Except as described in Schedule 2.19(d), (i) each Material
Agreement is valid, binding, and in full force and effect and
enforceable against a Company and, to the Company's Knowledge, the
other parties thereto in accordance with its terms; (ii) the applicable
Company has performed all of its material obligations under each
Material Agreement, and there exists no material breach or default (or
event that with notice or lapse of time would constitute a breach or
default) on the part of any Company
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or, to the Company's Knowledge, on the part of any other party under
any Material Agreement; (iii) there has been no termination or notice
of default or, to the Company's Knowledge, any threatened termination
or basis for any termination under any Material Agreement; (iv) to the
Company's Knowledge, no party to a Material Agreement intends to alter
its relationship with any Company as a result of or in connection with
the acquisition contemplated by the Seller Documents or has been
threatened with bankruptcy or insolvency; and (v) to the Company's
Knowledge, accounts receivable serviced by any Company pursuant to any
Material Agreement are not in default at the time such Company begins
such services.
2.20 Customers. Set forth in Schedule 2.20 is a complete list of each
Company's customers during the year ended December 31, 2000 indicating the
amount of revenues attributable to each customer during such year. No such
customer that accounted for more than $500,000 in revenues for the year ended
December 31, 2000 (each, a "Material Customer") has threatened to, or notified
any Seller of any intention to, terminate prior to a scheduled termination date,
or materially alter its relationship with any Company, and there has been no
material dispute with a Material Customer since January 1, 1999. To the
Company's Knowledge, there is no basis for any termination prior to a scheduled
termination date or alteration of any Company's relationship with any Material
Customer other than in the Ordinary Course of Business.
2.21 Intellectual Property Rights.
(a) Set forth in Schedule 2.21(a) is a complete list of all
registered patents, trademarks, service marks, trade names, and copyrights, and
applications for and licenses (to or from any Company) with respect to any of
the foregoing (collectively, "Registered Intellectual Property"), owned by any
Company or with respect to which any Company has any rights. Except as set forth
in Schedule 2.21(a), there are no Registered Intellectual Property, common law
trademarks, service marks, trade names, trade dress, trade secrets, copyrights
or applications therefore or licenses to or from any Company (collectively, the
"Intellectual Property"), that are material to the Companies taken as a whole
that: (i) are owned by any Company, or with respect to which any Company has any
rights; or (ii) are used, whether directly or indirectly, by any Company. Each
Company has good and marketable title in and to all of the Assets that include
any patents, patent applications, service marks, trade names, trademarks,
trademark applications, copyrights, copyright applications, trade secrets,
confidential know-how, proprietary data or other proprietary or intellectual
property rights (collectively, "Intellectual Property Rights") and such are not
subject to any Lien or other proprietary interest, except as set forth on
Schedule 2.21(a), and no Company licenses any component thereof from any other
Person.
(b) The Companies have the sole right to bring actions for
infringement of any Intellectual Property Rights included in the Assets. The
Assets do not include any inventions of any of any Company's officers, employees
or consultants made or owned prior to their appointment by such Company. All
current or former officers, employees and consultants of the Companies have
assigned in writing all of their rights in the Intellectual Property Rights to
the Companies. Except as set forth on Schedule 2.21(b), no current or former
officer,
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employee or consultant of any Company owns or has claimed an interest in any
Intellectual Property Rights related to the Assets or, to the Company's
Knowledge, any other Intellectual Property Rights directly or indirectly
competitive with those related to the Assets.
(c) Each Company has taken and will take all reasonable
security measures to protect the secrecy, confidentiality and value of all
Intellectual Property Rights transferred in accordance with this Agreement.
Except as set forth on Schedule 2.21(c)(i), no Company has taken any action or,
to the Company's Knowledge, failed to take an action that directly or indirectly
caused the proprietary information contained in the Assets to enter the public
domain or in any way affected its value or the Companies' absolute and
unconditional ownership thereof. To the Company's Knowledge, no source code or
object code of any Intellectual Property Rights is subject to escrow and such
source code has not been disclosed to any third party. With respect to the
transfer of rights in and to the Assets under this Agreement, except as set
forth on Schedule 2.21(c)(ii), Buyers will not be subject to limitations,
obligations or restrictions with regard to the sale, license, distribution or
other transfer or exploitation of the Assets, whether in the form transferred to
Buyers or after modification. All rights to any tangible or intangible property
material to the Assets and used in any Company's business as presently conducted
or currently planned by any Company, or as conducted by any predecessor entity
to any Company or prior owner of any portion of the Assets, have been validly
transferred to such Company free of any adverse claims by any such predecessor
entity, or any partner, limited partner, security holder or creditor of any such
predecessor entity, and no such property rights remain in any such entity.
Except as set forth on Schedule 21.1(c)(iii), no Company is under any obligation
to pay any other Person any royalties or other fixed or contingent amounts based
upon the sale, license, distribution or other use or exploitation of the Assets.
The use of the Assets and the Intellectual Property Rights in the Assets in the
conduct of the Companies business have not and do not infringe or conflict with
the rights of others under any Intellectual Property Rights in any jurisdiction
in the world. No Company has agreed to indemnify any Person for or against any
infringement of any Intellectual Property Rights.
2.22 Competing Interests. Except as set forth on Schedule 2.22 and for
ownership of less than one percent of the capital stock or other securities of
one or more public companies, no Seller nor any director, manager, or officer of
any Company, nor, to the Company's Knowledge, any employee or affiliate or
immediate family member of any of the foregoing (a) owns, directly or
indirectly, an interest in any Person that is a competitor, customer, or
supplier of any Company or that otherwise has material business dealings with a
Company or (b) is a party to, or otherwise has any direct or indirect interest
opposed to any Company under, any Material Agreement or other business
relationship or arrangement.
2.23 Regulated Payments. No Seller nor any director, manager, officer,
agent, or employee of any Company, nor, to the Company's Knowledge, any
affiliate or
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immediate family member of any of the foregoing has (a) used any funds of any
Company for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity, (b) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (c) except as set forth in Schedule 2.23,
which amounts and values are not material individually or in aggregate, made any
other unlawful gift, contribution or payment.
2.24 No Misrepresentations. In connection with the acquisition of the
Assets, no Seller has made any untrue statement of a material fact or omitted to
state any material fact necessary to make any such representation, warranty, or
statement, under the circumstances in which it is made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PSC AND ACQUISITION SUB
PSC and Acquisition Sub, jointly and severally, represent and warrant
to Sellers as follows:
3.1 Organization. PSC is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware. Acquisition Sub is a
limited liability company duly organized, validly existing and in good standing
under the laws of Delaware.
3.2 Authority. Each of PSC and Acquisition Sub has all requisite power
and authority to execute, deliver, and perform under this Agreement and the
other agreements, certificates, and instruments to be executed by Buyers in
connection with or pursuant to this Agreement (together with this Agreement, the
"Buyer Documents"). The execution, delivery, and performance by each of PSC and
Acquisition Sub of each Buyer Document to which it is a party have been duly
authorized by all necessary action, corporate or otherwise, on the part of PSC
and Acquisition Sub. This Agreement has been, and at the Closing the other Buyer
Documents will be, duly executed and delivered by PSC and Acquisition Sub, to
the extent each is a party thereto. This Agreement is, and each of the other
Buyer Documents will be, a legal, valid, and binding agreement of PSC and
Acquisition Sub, as the case may be, enforceable against PSC and Acquisition Sub
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency or other laws affecting the enforcement of
creditors' rights generally, and except that the availability of the remedy of
specific performance or other equitable relief is subject to the discretion of
the court before which any proceeding therefor may be brought.
3.3 Stock Validity. The shares of Common Stock that may be issued, in
PSC's sole discretion, as partial payment for any Contingent Payment (the
"Shares") are duly authorized shares of Class A Common Stock, $.01 par value per
share of PSC, have been duly authorized for issuance under this Agreement, and
when issued as contemplated by this Agreement will be validly issued, fully paid
and non-assessable and free of statutory
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preemptive rights with respect thereto. Upon issuance in accordance with this
Agreement, Sellers will receive good and valid title to the Shares free and
clear of any Liens, except for those referred to in this Agreement. All issued
and outstanding shares of capital stock of Acquisition Sub are owned by PSC.
3.4 No Violation. The execution, delivery, and performance of the Buyer
Documents by PSC and Acquisition Sub will not conflict with or result in the
breach of any term or provision of, or violate, or constitute a default under
any charter provision, bylaw or regulation or under any material agreement,
instrument, order, law, or regulation to which either of them is a party or by
which either of them is in any way bound or obligated.
3.5 Governmental Consents. Except as required in connection with the
HSR Act, the listing of the Shares on the New York Stock Exchange (or other
principal national exchange on which the Common Stock is then listed) and state
securities Laws, no consent, approval, order, or authorization of, or
registration, qualification, designation, declaration, or filing with, any
Governmental Body is required on the part of either Buyer in connection with the
transactions contemplated by the Seller Documents.
3.6 SEC Reports. There is available on the Securities and Exchange
Commission's (the "SEC") XXXXX database a copy of each report, proxy statement
or information statement filed by PSC since January 1, 1999, each in the form
(including exhibits and any amendments thereto and all documents incorporated by
reference therein) (collectively, the "SEC Documents") filed with the SEC under
the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). As of
their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act, and the applicable rules and
regulations of the SEC thereunder, and none of the SEC Documents knowingly and
recklessly contained or contains any untrue statement of a material fact or
knowingly or recklessly omitted or omits to state a material fact required to be
stated therein or necessary to make the statements made therein, under the
circumstances in which they were made, not misleading, except to the extent
corrected by a document subsequently filed with the SEC prior to the date
hereof. PSC is current in its filings with the SEC.
3.7 Litigation. There are no pending or, to the knowledge of Buyers,
threatened, lawsuits, administrative proceedings, arbitrations, reviews, or
formal or informal complaints or investigations by any Person that in any manner
challenges or seeks to prevent, enjoin, alter or materially delay any of the
transactions contemplated by this Agreement. As of the date hereof, there are no
pending, and during the three year period preceding the date hereof there were
no arbitrations relating to the employment by PSC or any Person controlled by
PSC of an individual in an executive position who previously worked for an
entity acquired by PSC or any Person controlled by PSC.
3.8 Available Funds. Acquisition Sub has, and on the Closing Date will
have, sufficient funds to enable it to consummate the transactions contemplated
hereby.
3.9 No Misrepresentations. In connection with the acquisition of the
Assets, no Buyer has made any untrue statement of a material fact or omitted to
state any material
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fact necessary to make any such representation, warranty, or statement, under
the circumstances in which it is made, not misleading.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 Conduct of Business. During the period commencing on the date of
this Agreement and ending on the earlier to occur of the Closing or the
termination of this Agreement in accordance with its terms (the "Interim
Period"), unless Buyers otherwise consent in writing, which consent will not be
unreasonably delayed, and except as otherwise specifically contemplated by this
Agreement, the Companies will (a) operate in the Ordinary Course of Business and
use their best efforts to preserve the goodwill of the Companies and of their
employees, customers, suppliers, Governmental Bodies, Contingent Workers and
others having business dealings with any Company; (b) not engage in any
transaction outside the Ordinary Course of Business, including without
limitation by making any material expenditure, investment, or commitment or
arrangement of any kind; (c) use commercially reasonable efforts to (i)
implement modifications to the operation of their respective businesses that
relate to fair debt collection practices as requested by Buyers, (ii) include in
newly originated service agreements and in renewals to service agreements, only
if such renewal extends the term of any such agreement in excess of four months,
provisions regarding de facto employee status and other fair debt collection
matters as requested by Buyers and (iii) consult with Buyers in good faith with
respect to such matters; (d) not increase the compensation of any employee or
officer or make any bonus payments or other distributions except for amounts
comprising cash amounts in excess of that necessary to result in Closing Working
Capital of not less than $11,012,420 (which amounts may be distributed in the
sole discretion of the Companies); (e) maintain all insurance policies and all
Permits that are required for any Company to carry on its business; (f) maintain
books of account and records in the usual, regular, and ordinary manner and
consistent with past practices; and (g) not take any action that would result
in, or otherwise allow, a breach (as of the Closing) of the representations and
warranties set forth in Section 2.10, 2.13, or 2.14.
4.2 Access and Information. During the Interim Period, the Companies
will permit Buyers and their representatives to have reasonable access to each
Company's directors, managers, officers, employees, agents, assets, and
properties and all relevant books, records, and documents of or relating to the
business and assets of the Companies during normal business hours upon
reasonable advance notice and will furnish to Buyers such information, financial
records, and other documents relating to the Companies and their operations and
businesses as Buyers may reasonably request. The Companies will permit Buyers
and their representatives reasonable access to the Companies' accountants,
auditors, customers, and suppliers for consultation or verification of any
information obtained by Buyers and will use their best efforts to cause such
Persons to cooperate with Buyers and their representatives in such consultations
and in verifying such information. After the Closing, the Companies will
maintain all employee medical records prohibited by Law to be transferred to
Buyers until the fifth anniversary of the Closing Date. The Companies will use
best efforts to assist and cooperate with Buyers in furnishing the
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information set forth in such medical records as may be required by Law, as
necessary to administer or maintain employee benefit plans or in connection with
any litigation, grievance, arbitration or similar proceeding with an employee.
4.3 Supplemental Disclosure. During the Interim Period, Sellers will
promptly supplement or amend each of the Schedules to this Agreement with
respect to any matter of which Sellers become aware that arises or is discovered
after the date of this Agreement that, if existing or known at the date of this
Agreement, would have been required to be set forth or listed in the Schedules
to this Agreement; provided that, for purposes of determining whether a breach
exists with respect to any of the representations and warranties set forth in
this Agreement, any such supplemental or amended disclosure will be deemed not
to have been disclosed to Buyers unless Buyers otherwise expressly consents in
writing.
4.4 Assistance with Permits and Filings. During the Interim Period,
Sellers will furnish Buyers with all information concerning Sellers that is
required for inclusion in any application or filing made by Buyers to any
Governmental Body in connection with the transactions contemplated by this
Agreement. Sellers and Buyers will fully cooperate to file the Notification and
Report Form required by the HSR Act with the Federal Trade Commission and the
Anti-Trust Division of the Department of Justice. Sellers will fully cooperate
with and assist Buyers in obtaining any Permits, or any consents to assignment
related thereto, that Buyers determine in their reasonable judgment will be
required in connection with the operation of the Companies' business by Buyers
immediately after the Closing.
4.5 Fulfillment of Conditions by Sellers. Sellers agree not to take any
action that would cause the conditions on the obligations of the parties to
effect the transactions contemplated by this Agreement and the Seller Documents
not to be fulfilled, including without limitation, by taking or causing to be
taken any action that would cause the representations and warranties made by
Sellers in this Agreement not to be true and correct as of the Closing. Sellers
will take all reasonable steps within their power to cause to be fulfilled the
conditions precedent to Buyers' obligations to consummate the transactions
contemplated by this Agreement that are dependent on the actions of Sellers;
provided, however, that none of the Sellers nor any of their affiliates will be
required to make any material monetary expenditure, commence or be a plaintiff
in any litigation or offer or grant any material accommodation (financial or
otherwise) to any third Person, including, without limitation, the offer for
sale of any part of the Assets or other business or assets to any Person;
provided, however, that with respect to any contractual consent, approval, or
authorization referred to in Section 5.1(c) that is not received prior to the
Closing Date, Buyers may require Sellers to act as the agent for Buyers in
maintaining and performing the agreements, arrangements, and understandings at
issue at no out-of-pocket cost or expense to Sellers and otherwise on terms
reasonably satisfactory to Buyers.
4.6 Fulfillment of Conditions by Buyers. Buyers agree not to take any
action that would cause the conditions on the obligations of the parties to
effect the transactions
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contemplated by this Agreement not to be fulfilled, including without limitation
by taking or causing to be taken any action that would cause the representations
and warranties made by Buyers in this Agreement not to be true and correct as of
the Closing. Buyers will take all reasonable steps within their power to cause
to be fulfilled the conditions precedent to the obligations of Sellers to
consummate the transactions contemplated by this Agreement that are dependent on
the actions of Buyers; provided, however, that neither Buyer nor any of their
affiliates will be required to make any material monetary expenditure, commence
or be a plaintiff in any litigation or offer or grant any material accommodation
(financial or otherwise) to any third Person, including, without limitation, the
offer for sale of any part of the Assets or other business or assets to any
Person.
4.7 Publicity. Prior to the Closing, Sellers and Buyers will maintain
the confidentiality of the transactions contemplated by this Agreement and
neither Buyers nor Sellers will issue or make, or allow to have issued or made,
any press release or public announcement concerning the transactions
contemplated by this Agreement prior to the Closing, except as required by
applicable Law.
4.8 Transaction Costs. Buyers will pay all transaction costs and
expenses (including legal, accounting, and other professional fees) that they
incur in connection with the negotiation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including any
required filing fees under the HSR Act. Sellers will pay all transaction costs
and expenses (including legal, accounting, and other professional fees) incurred
by them in connection with the negotiation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including any
transfer taxes associated with the transfer of the Assets to Acquisition Sub.
4.9 No-Shop Provisions. Each of Sellers hereby covenants and agrees
that during the Interim Period it will not, and will not permit any of its
affiliates to, initiate, solicit, or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal relating to, or that may reasonably be
expected to lead to, any Competing Transaction (as defined below), or enter into
discussions or negotiate with any Person in furtherance of such inquiries or to
obtain a Competing Transaction, or endorse or agree to endorse any Competing
Transaction, or authorize or permit any of the officers, directors, managers or
employees of Sellers or any investment banker, financial advisor, attorney,
accountant, or other representative retained by Sellers, or any of their
affiliates to take any such action; provided, however, that during the Interim
Period, Sellers' broker may accept calls and bids from potential purchasers of
the business of the Companies and, only to the extent reasonably necessary,
communicate to such potential purchasers that Sellers are evaluating bids and
will not be able to respond until after ten business days from the date this
Agreement is signed by all of Messrs. Kirshner, Hassenfeld and X'Xxxxx and Xx.
Xxxxxxx. For purposes of this Agreement, "Competing Transaction" means any of
the following (other than the transactions contemplated by this Agreement)
involving a Company: (a) any merger, consolidation, share exchange, business
combination, or similar transaction (other than a Company merging with and
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into another Company); (b) any sale, lease, exchange, mortgage, pledge,
transfer, or other disposition of 5% or more of the assets used in the business
of any Company; or (c) any offer for 5% or more of the outstanding shares of
capital stock of any Company.
4.10 Nondisclosure. Sellers acknowledge and agree that all customer,
prospect, and marketing lists, sales data, intellectual property, proprietary
information, trade secrets, and other confidential information of the Companies
(collectively, "Confidential Information") are valuable assets constituting part
of the Assets and, following the Closing, will be owned exclusively by
Acquisition Sub. Each Seller agrees to, and agrees to use reasonable efforts to
cause its representatives to, treat the Confidential Information, together with
any other confidential information furnished to it by Buyers, as confidential
and not to make use of such information for its own purposes or for the benefit
of any other Person (other than the Companies prior to the Closing or Buyers
after the Closing). Prior to the Closing, Buyers agree to, and agree to use
reasonable efforts to cause their representatives to, treat the Confidential
Information as confidential and not to make use of such information for their
own purposes or for the benefit of any other Person except in connection with
the transactions contemplated by this Agreement.
4.11 Discharge of Retained Liabilities. Following the Closing, the
Companies will fully pay or otherwise discharge in full, prior to the due date
therefore and otherwise in accordance with the terms thereof, all Liabilities of
the Companies except the Assumed Liabilities.
4.12 Name Change. On the Closing Date, Sellers will file all documents
necessary to change each Company's name to a name bearing no similarity to any
of "Advanced Receivable Strategy", "Government Accounts Division", "Meridian
Healthcare Staffing" or "Cash-Net."
4.13 Filing and Authorizations. As promptly as practicable, Buyers and
Sellers will make, or cause to be made, such filings and submissions under laws,
rules and regulations applicable to it, including the HSR Act, as may be
required by them to consummate the transactions contemplated herein, and will
use commercially reasonable efforts to obtain, or cause to be obtained, all
authorizations, approvals, consents and waivers from all Governmental Bodies
necessary to be obtained by Buyers and Sellers, respectively.
4.14 Registration Statement.
(a) PSC has filed a registration statement on Form S-4 (the
"Registration Statement") with the SEC in connection with the issuance
of shares of its Common Stock in transactions such as those
contemplated by this Agreement. The Shares will be registered pursuant
to the Registration Statement. PSC will use all reasonable efforts to
cause the Registration Statement to remain effective under the
Securities Act to the extent necessary to permit resale of the Shares.
In the event that any Seller is unable to resell any Shares under the
Registration Statement or, is unable to resell all of the Shares
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without limitation on volume under the provisions of Rule 145 of the
Securities Act of 1933, as amended (the "Securities Act"), (without
considering any other shares of Common Stock that any Owner may acquire
other than under this Agreement), then PSC will promptly upon request
by a Seller cause such Shares to be registered under the Securities
Act, and will maintain such registration until such time as such Seller
is able to resell such Shares without limitation on volume under the
Securities Act. PSC also agrees to use all reasonable efforts to obtain
all necessary state securities law or "Blue Sky" permits and approvals
required to issue the Shares. Sellers agree to furnish to PSC all
information concerning Sellers as may be necessary in connection with
the foregoing.
(b) PSC will advise the Companies, promptly after PSC receives
notice thereof, of the time when any supplement or amendment to the
Registration Statement has been filed, of the issuance of any stop
order or the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, of the initiation or threat known to PSC
of any proceeding for any such purpose, or of any request by the SEC
for the amendment or supplement of the Registration Statement or for
additional information.
(c) At or prior to the issuance of the Shares, PSC will cause
the Shares to be listed on the New York Stock Exchange (or on the
principal national stock exchange on which the Common Stock is then
listed).
4.15 Financial Assistance. After the Closing and prior to December 31,
2004, (a) Acquisition Sub will not pay dividends or make other payments or
distributions to PSC in any amounts that would materially impair the working
capital of Acquisition Sub needed to meet its then current liabilities, and (b)
PSC will provide capital to Acquisition Sub as may be necessary to support
increased growth in Acquisition Sub's business. In any 12 month period, such
capital amount will not exceed 2% of Acquisition Sub's current year-to-date
revenues on an annualized basis.
4.16 Headquarters' Lease. Prior to the Closing, ARS will use reasonable
commercial efforts, in cooperation with Buyers, to amend and restate its lease
for its headquarters in Nashville, Tennessee (the "Headquarters' Lease"). The
Headquarters' Lease will have a term of five years, rent and other provisions at
market rates, and will be in form and substance reasonably satisfactory to
Buyers. In the event ARS does not enter into the Headquarters' Lease prior to
the Closing, Buyers may, in their sole discretion, require that the existing
lease for such location be terminated in full and Sellers will bear all
termination fees and related expenses associated with such lease termination.
4.17 Adverse Changes. Notwithstanding anything to the contrary
contained in this Agreement, if during the Interim Period, any Asset is impaired
by reason of physical damage caused by fire, earthquake, accident or other act
of God and such impairment would have a Company Material Adverse Effect, Buyers
may, in their sole discretion, within seven business days after they are
notified by Sellers of such damage, elect
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either to (a) proceed with the Closing, at which time Buyers will have the
option of (i) requiring Sellers to assign to Buyers at the Closing Sellers'
rights under insurance policies to receive any insurance proceeds due Sellers as
a result of such damage or (ii) allowing Sellers to retain the right to receive
such insurance proceeds and reduce the Cash Payment for any amount Sellers are
entitled to receive under insurance policies by reason of such damage (it being
understood and agreed that Buyers will assume responsibility for any required
repairs, and Buyers will receive a credit at Closing for any deductible, or
co-insured amount under said insurance policies), or (b) terminate this
Agreement by giving written notice to Sellers within seven business days of the
date on which Sellers notify Buyers of the damage, in which event Sellers and
Buyers shall have no further obligations or liabilities to each other except as
otherwise provided herein.
4.18 Proration of Certain Charges. The following charges and payments
will be prorated on a per diem basis and apportioned between Sellers, on the one
hand, and Buyers, on the other, as of the Closing Date: property taxes, utility
charges, prepaid items, license and permit fees, and similar charges imposed
with respect to the Assets. Sellers will be liable for (and will reimburse
Buyers to the extent Buyers will have paid) that portion of such charges
relating to, or arising in respect of, periods on or prior to the Closing Date,
and Buyers will be liable for (and will reimburse Sellers to the extent Sellers
will have paid) that portion of the charges relating to, or arising in respect
of, periods after the Closing Date.
4.19 No Additional Representations. Each Buyer acknowledges and agrees
that none of Sellers, Sellers' representatives, Sellers' affiliates or any other
Person has made any representation or warranty, expressed or implied, with
respect to the Assets or Assumed Liabilities or the accuracy or completeness of
any information regarding the Assets or Assumed Liabilities furnished or made
available to each Buyer and its representatives, except as expressly set forth
in this Agreement and the other Seller Documents.
4.20 Accounts Receivable Collection. For the 90 day period following
the Closing Date, Buyers and Sellers will cooperate in good faith to collect the
accounts receivable included in the Assets consistent with the Companies' past
practices. During such 90 day period, Buyers will furnish to Sellers such
information relating to the status of the collection of such accounts receivable
as Sellers may reasonably request. Sellers and Buyers will cooperate in good
faith to collect the Uncollected Accounts consistent with the Companies' past
practices. Sellers will furnish to Buyers such information relating to the
collection of the Uncollected Accounts as Buyers may reasonably request,
including third-party collection efforts or litigation with customers of
Acquisition Sub.
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ARTICLE V
CLOSING CONDITIONS
5.1 Conditions to Obligations of Buyers. The obligations of Buyers
under this Agreement are subject to the satisfaction at or prior to the Closing
of the following conditions, but Buyers may waive compliance with any such
conditions in writing:
(a) All representations and warranties of Sellers contained in
this Agreement will be true and correct in all material respects (if
not qualified by materiality) or in all respects (if qualified by
materiality) at and as of the Closing with the same effect as though
such representations and warranties were made at and as of the Closing,
except for those representations and warranties which address matters
only as a particular date (which will be true and correct only as of
such date) and Buyers will have received a certificate to such effect,
in form and substance satisfactory to Buyers, executed on behalf of
each Company by officers of each Company and by the Owners.
(b) Sellers will have performed and complied in all material
respects with all the covenants and agreements required by this
Agreement to be performed or complied with by them at or prior to the
Closing, including without limitation the delivery of all items
required to be delivered by them pursuant to Section 1.7, and Buyers
will have received a certificate to such effect, in form and substance
satisfactory to Buyers, executed on behalf of each Company by two
executive officers of each Company and by the Owners.
(c) All contractual and governmental consents, approvals,
orders, licenses, bonds or authorizations required for the conduct of
the Companies' business by Buyers immediately after the Closing,
including without limitation, those set forth on Schedule 5.1(c), will
have been obtained and all necessary contractual or governmental
notices, including those set forth on Schedule 5.1(c), will have been
given.
(d) All filings pursuant to the HSR Act will have been made by
Sellers, and their respective affiliates and the required waiting
period under the HSR Act will have expired or been terminated without
any threat or commencement of antitrust proceedings with respect to the
transactions contemplated by this Agreement.
(e) There will be no pending or threatened litigation in any
court or any proceeding before or by any Governmental Body to restrain
or prohibit or obtain damages or other relief with respect to this
Agreement or the other Seller Documents or the consummation of the
transactions contemplated by this Agreement or as a result of which
Buyers could be required to dispose of any assets or operations of
Buyers (including any material assets or operations acquired or to be
acquired from any) or their affiliates or to comply with any material
restriction on the manner in which Buyers or their affiliates conduct
their
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operations (including any operations acquired or to be acquired from
any Company).
(f) Sellers will have delivered to Buyers executed UCC-3
termination statements or other releases satisfactory to Buyers to
evidence the release of any Liens on the Assets, other than Liens
identified in Section 2.4(b) to remain after Closing.
(g) Sellers will have delivered to Buyers Associate Employment
Agreements, substantially in the form of Exhibit F-1, executed by the
executive officers of the Companies set forth on Schedule 5.1(g).
(h) Sellers will have delivered to Buyers Associate Employment
Agreements, substantially in the form of Exhibit F-2, executed by the
officers of the Companies set forth on Schedule 5.1(h).
(i) Sellers will have delivered to Buyers Noncompetition
Agreements, substantially in the form of Exhibit G-1, executed by the
executive officers of the Companies set forth on Schedule 5.1(i).
(j) Sellers will have delivered to Buyers Noncompetition
Agreements, substantially in the form of Exhibit G-2 executed by the
employees of the Companies set forth on Schedule 5.1(j).
(k) Sellers will have delivered to Buyers Retention
Agreements, substantially in the form of Exhibit H, executed by the
Owners set forth on Schedule 5.1(k).
(l) Sellers will have delivered to Buyers a statement setting
forth the cash and cash equivalents of the Companies as of the Closing,
as determined in accordance with GAAP in good faith by the officers of
the Companies designated by Buyers, which amount will not be less than
$250,000.
(m) Each Company will have delivered to Buyers a certificate
of the Secretary of such Company as to the items covered by Section
2.3.
(n) Each Company will have delivered to Buyers a disclosure
letter, in form and substance reasonably satisfactory to Buyers,
attached to which is a complete copy of the articles of incorporation
or organizations, as applicable, bylaws or regulations, as applicable,
minute books, and ownership records of such Company, the list of such
Company's Other Assets, such Company's Employee Plans and Material
Agreements (including written summaries of oral Material Agreements)
and insurance binders and policy endorsements.
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(o) Sellers will have delivered to Buyers a legal opinion of
Sellers' counsel covering such matters as Buyers may reasonably request
and in form and substance reasonably satisfactory to Buyers.
(p) The Persons identified on Schedule 5.1(p) will have
entered into joinder agreements, in form and substance reasonably
satisfactory to Buyers, to become signatories to this Agreement as
"Owners" and will be bound by the terms of this Agreement as if such
Persons were original signatories hereto.
(q) Sellers will have executed and delivered to Buyers the
other Seller Documents.
(r) Within ten business days after the date this Agreement is
signed by all of Messrs. Kirshner, Hassenfeld and X'Xxxxx and Xx.
Xxxxxxx, Buyers will have completed a comprehensive due diligence
review of the business, operations, prospects, financial condition,
assets, Liabilities, Material Customers and employee relations of each
Company, including, without limitation, a due diligence review of the
items disclosed by the Companies on the Schedules hereto, the results
of which are satisfactory to Buyers in their sole and absolute
discretion.
5.2 Conditions to Obligations of Sellers. The obligations of Sellers
under this Agreement are subject to the satisfaction at or prior to the Closing
of the following conditions, but Sellers may waive compliance with any such
conditions in writing:
(a) All representations and warranties of Buyers contained in
this Agreement will be true and correct in all material respects (if
not qualified by materiality) or in all respects (if qualified by
materiality) at and as of the Closing with the same effect as though
such representations and warranties were made at and as of the Closing,
except for the representations and warranties that address matters only
as a particular date (which will be true and correct only as of such
date) and Sellers will have received a certificate to such effect in
form and substance satisfactory to Sellers executed on behalf of each
Buyer by officers of each Buyer reasonably acceptable to Sellers.
(b) Buyers will have performed and complied in all material
respects with all the covenants and agreements required by this
Agreement to be performed or complied with by them at or prior to the
Closing, including without limitation the delivery of all items
required to be delivered by them pursuant to Section 1.7, and Sellers
will have received a certificate to such effect in form and substance
satisfactory to Sellers executed on behalf of each Buyer by officers of
each Buyer reasonably acceptable to Sellers.
(c) All governmental consents, approvals, orders, or
authorizations set forth on Schedule 5.2(c) will have been obtained and
all necessary governmental notices set forth on Schedule 5.2(c) will
have been given.
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(d) All filings pursuant to the HSR Act have been made by
Buyers and their respective affiliates and the required waiting period
under the HSR Act has expired or been terminated without any threat or
commencement of antitrust proceedings with respect to the transactions
contemplated by this Agreement.
(e) Buyers have delivered to Sellers a legal opinion of
Buyers' counsel covering legal matters that Sellers may reasonably
request and in form and substance reasonably acceptable to Sellers.
(f) Buyers will have executed and delivered to Sellers the
other Buyer Documents.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification of Buyers. Subject to the other provisions of this
Article VI, Sellers, severally, and not jointly, will indemnify and hold Buyers,
their affiliates and their respective directors, officers, employees, and agents
(collectively, the "Buyer Parties") harmless from any and all Liabilities,
obligations, claims, losses, contingencies, damages, costs, and expenses,
including all court costs and reasonable attorneys' fees (collectively,
"Losses"), that any Buyer Party actually suffers or incurs as a result of or
relating to:
(a) the breach or inaccuracy of any representation or warranty
made by any Seller in this Agreement or any other Seller Document or
any allegation by a third party that, if true, would constitute such a
breach or inaccuracy;
(b) the breach or inaccuracy of any covenant or agreement made
by any Seller in this Agreement or any other Seller Document or any
allegation by a third party that, if true, would constitute such a
breach; and
(c) any Liability of any Seller, other than the Assumed
Liabilities, or the operation or use of the Assets or the conduct of
the Companies' business prior to the Closing.
For purposes of determining the magnitude of any Loss giving rise to
the Buyer Parties' rights to indemnification pursuant to this Section 6.1 (but
not in determining whether there has been any breach or inaccuracy of any
representation, warranty, covenant or agreement), all materiality and knowledge
qualifiers will be excluded from and given no effect in each representation and
warranty set forth in Article II and each covenant set forth in Article IV.
6.2 Indemnification of Sellers. Subject to the other provisions of this
Article VI, PSC and Acquisition Sub, severally, and not jointly, will indemnify
and hold Sellers, their
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affiliates and their respective directors, managers, officers, employees and
agents (collectively, the "Seller Parties") harmless from any and all Losses
that any Seller Party suffers or incurs as a result of or relating to:
(a) the breach of any representation or warranty made by a
Buyer in this Agreement or any other Buyer Document or any allegation
by a third party that, if true, would constitute such a breach;
(b) the breach or inaccuracy of any covenant or agreement made
by a Buyer in this Agreement or any other Buyer Document or any
allegation by a third party that, if true, would constitute such a
breach; and
(c) the Assumed Liabilities or the operation or the use of the
Assets or the conduct of Buyers' business after the Closing; provided,
however, no Seller Party will be entitled to indemnification for any
Losses for which a Buyer Party is entitled to indemnification under
Section 6.1.
For purposes of determining the magnitude of any Loss giving rise to
Seller Parties' rights to indemnification pursuant to this Section 6.2 (but not
in determining whether there has been any breach or inaccuracy of any
representation, warranty, covenant or agreement), all materiality and knowledge
qualifications will be excluded from and given no effect in each representation
and warranty set forth in Article III and each covenant set forth in Article IV.
6.3 Limitations on Indemnification.
(a) Notwithstanding any contrary provisions of Section 6.1,
with respect to Sections 6.1(a) and 6.1(b), (i) Sellers will not be
liable for any Losses thereunder unless the aggregate amount of Losses
Sellers are liable for thereunder exceeds $500,000, and in such event,
Sellers will be liable for the entire amount of such Losses, (ii) the
total aggregate liability of Sellers for Losses thereunder will not
exceed $10,000,000 and (iii) no Owner will have liability for Losses
thereunder in an aggregate amount in excess of such Owner's Ownership
Percentage multiplied by $10,000,000. Buyers will not be entitled to
indemnification for any Losses to the extent such Losses are reflected
as Assumed Liabilities in the calculation of Closing Working Capital.
(b) Notwithstanding any contrary provisions of Section 6.2,
with respect to Sections 6.2(a) and 6.2(b), (i) Buyers will not be
liable for any Losses thereunder unless the aggregate amount of Losses
Buyers are liable for thereunder exceeds $500,000, and in such event,
Buyers will be liable for the entire amount of such Losses, and (ii)
the total aggregate liability of Buyers for Losses thereunder will not
exceed $10,000,000.
(c) Indemnification under this Article VI will constitute the
sole remedy for Losses incurred that are indemnifiable pursuant to
Section 6.1(a), 6.1(b), 6.2(a) or
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6.2(b), except that the foregoing will in no way limit the rights of an
Indemnified Party (as defined in Section 6.5) for any fraud or
intentional misconduct by a party in connection with this Agreement,
the documents executed in connection herewith or the transaction
contemplated hereby.
6.4 Survival. Notwithstanding any investigation or contrary Knowledge
by Buyers, the representations and warranties of Sellers and Buyers made in or
pursuant to this Agreement and the other documents delivered at the Closing will
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement until the second year anniversary of
the Closing Date, except for the representations and warranties set forth in
Section 2.4(b), which will survive indefinitely. Notwithstanding the foregoing,
any representation or warranty the violation of which is made the basis of a
claim for indemnification pursuant to Section 6.1 or Section 6.2 will survive
until such claim is finally resolved if the Indemnified Party notifies the
Indemnifying Party (as defined in Section 6.5) of such claim in reasonable
detail prior to the date on which such representation or warranty would
otherwise expire under this Agreement.
6.5 Notice. Any party entitled to receive indemnification under this
Article VI (the "Indemnified Party") agrees to give prompt written notice to the
party or parties required to provide such indemnification (the "Indemnifying
Parties") upon the occurrence of any indemnifiable Loss or the assertion of any
claim or the commencement of any action or proceeding in respect of which such a
Loss may reasonably be expected to occur (a "Claim"), but the Indemnified
Party's failure to give such notice will not affect the obligations of the
Indemnifying Party under this Article VI except to the extent that the
Indemnifying Party is prejudiced thereby. Such written notice will include a
reference to the event or events forming the basis of such Loss or Claim and the
amount involved, unless such amount is uncertain or contingent, in which event
the Indemnified Party will give a later written notice when the amount becomes
fixed.
6.6 Defense of Claims. The Indemnifying Party may elect to assume and
control the defense of any Claim, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of expenses related to
such Claim, if (a) the Indemnifying Party acknowledges its obligation to
indemnify the Indemnified Party for any Losses resulting from such Claim and
provides reasonable evidence to the Indemnified Party of its financial ability
to satisfy such obligation; (b) the Claim does not seek to impose any liability
or obligation on the Indemnified Party other than for money damages; and (c) the
Claim does not relate to the Indemnified Party's relationship with its customers
or employees. If such conditions are satisfied and the Indemnifying Party elects
to assume and control the defense of a Claim, then (i) the Indemnifying Party
will not be liable for any settlement of such Claim effected without its
consent, which consent will not be unreasonably withheld; (ii) the Indemnifying
Party may settle such Claim without the consent of the Indemnified Party; and
(iii) the Indemnified Party may employ separate counsel and participate in the
defense of such Claim, but the Indemnified Party will be responsible for the
fees and expenses of such
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counsel unless (A) the Indemnifying Party has failed to adequately assume the
defense of such Claim or to employ counsel with respect thereto or (B) in the
reasonable opinion of the Indemnified Party a conflict of interest exists
between the interests of the Indemnified Party and the Indemnifying Party that
requires representation by separate counsel, in which case the fees and expenses
of such separate counsel will be paid by the Indemnifying Party. If such
conditions are not satisfied, the Indemnified Party may assume and control the
defense of the Claim.
6.7 Losses Net of Insurance. The amount of any Losses for which
indemnification is provided under this Article VI will be net of any amounts
recovered or recoverable by the Indemnified Party under insurance policies with
respect to such Losses.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement and the transactions contemplated by
this Agreement may be terminated and abandoned (a) at any time prior to the
Closing by mutual written consent of Buyers and Sellers; or (b) by either Buyer,
on the one hand, or Sellers, on the other hand, if a condition to performance by
the terminating party under this Agreement has not been satisfied or waived
prior to July 23, 2001; or (c) by Buyers following a notice of termination by
Buyers pursuant to Section 4.17; or (d) by Buyers, on the one hand, or Sellers,
on the other hand, at any time, if there is pending or threatened litigation in
any court or any proceeding before or by any Governmental Body to restrain or
prohibit or obtain damages or other relief with respect to this Agreement or the
consummation of the transactions contemplated by this Agreement or as a result
of which Buyers could be required to dispose of any assets or operations of
Buyers (including any assets or operations acquired or to be acquired from the
Companies) or their affiliates or to comply with any restriction on the manner
in which Buyers or their affiliates conduct their operations (including any
operations acquired or to be acquired from the Companies); provided that (i)
Buyers may not terminate this Agreement if the Closing has not occurred because
of Buyers' failure to perform or observe any of its covenants or agreements set
forth in this Agreement or if Buyers are, at such time, in breach of this
Agreement, and (ii) Sellers may not terminate this Agreement if the Closing has
not occurred because of Sellers' failure to perform or observe any of their
respective covenants or agreements set forth in this Agreement or if any of
Sellers is, at such time, in breach of this Agreement.
7.2 Notices. All notices that are required or may be given pursuant to
this Agreement must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by facsimile or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other address as any
party may provide to the other parties by notice in accordance with this Section
7.2):
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if to Buyers: with copies to:
------------ --------------
Xxxxx Systems Corporation Xxxxxx & Xxxx, L.L.P.
00000 Xxxx Xxxxxxx Xxxxx 0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000 Suite 2800
Attn: Xxxx Xxxxxx Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000 Attn: Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
PSARS, LLC Xxxxxx & Xxxx, L.L.P.
00000 Xxxx Xxxxxxx Xxxxx 0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000 Suite 2800
Attn: Xxxxx Xxxxxxx Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000 Attn: Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
if to Sellers: with copies to:
------------- --------------
Advanced Receivables Strategy, Inc. Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxxx Xxxxxx 000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000-0000 Suite 5200
Attn: Xxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000 Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Any such notice or other communication will be deemed to have been given and
received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
facsimile or, if mailed, when actually received.
7.3 Attorneys' Fees and Costs. If attorneys' fees or other costs are
incurred to secure performance of any obligations under this Agreement, or to
establish damages for the breach thereof or to obtain any other appropriate
relief, whether by way of prosecution or defense, the Prevailing Party (as
defined below) will be entitled to recover reasonable attorneys' fees and costs
incurred in connection therewith. A party will be considered the "Prevailing
Party" if (a) it initiated the litigation and substantially obtained the relief
it sought, either through a judgment or arbitration award or the losing party's
voluntary action before arbitration, trial, or judgment, (b) the other party
withdraws its action without substantially obtaining the relief it sought, or
(c) such party did not initiate the litigation and judgment is entered into for
any party, but without substantially granting the relief sought by the
initiating party or granting more substantial relief to the non-initiating party
with respect to any counterclaim asserted by the non-initiating party in
connection with such litigation.
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7.4 Further Assurances. Each party agrees to execute any and all
documents and to perform such other acts as may be necessary or expedient to
further the purposes of this Agreement and the transactions contemplated by this
Agreement. Without limiting the foregoing, each Company will execute and deliver
to Acquisition Sub such further instruments of conveyance and transfer as
Acquisition Sub may reasonably request in order more effectively to convey and
transfer the Assets to Acquisition Sub and to put Acquisition Sub in operational
control of the business of the Companies, or for aiding, assisting, collecting,
and reducing to possession any of the Assets and exercising rights with respect
to the Assets.
7.5 Brokers. Except for any fees owing to The Xxxxxxxx-Xxxxxxxx
Company, LLC and Kaulkin Xxxxxxxx Company (f/k/a X. Xxxxxxx & Associates Inc.)
(collectively, the "Sellers' Brokers") by the Companies, each party to this
Agreement represents to the other parties that it has not incurred and will not
incur any liability for brokers' or finders' fees or agents' commissions in
connection with this Agreement or the transactions contemplated by this
Agreement. Each party to this Agreement agrees that it will indemnify and hold
harmless the other parties, without regard to the limitations set forth in
Article VI, against any claim for brokerage and finders' fees or agents'
commissions in connection with the negotiation or consummation of the
transactions contemplated by this Agreement, including, the Companies holding
Buyers harmless for the fees owing to the Sellers' Brokers.
7.6 Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties, all of which together will
constitute one and the same instrument.
7.7 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and will not in any way affect the meaning or interpretation of
this Agreement. References in this Agreement to Articles, Sections, Exhibits,
and Schedules are to the Articles, Sections, Exhibits, and Schedules of this
Agreement unless the context requires otherwise.
7.8 Successors and Assigns; Assignment. This Agreement will bind and
inure to the benefit of the parties named in this Agreement and their respective
successors and assigns. Neither this Agreement nor any of the rights, interests,
or obligations under this Agreement may be assigned or delegated by any of
Sellers or Buyers without the prior written consent of the other parties and any
purported assignment or delegation will be null and void; except that Buyers may
assign its rights under this Agreement to any direct or indirect subsidiary of
PSC. This Agreement is not intended to confer any rights or benefits on any
Person other than the parties to this Agreement, and to the extent provided in
Article VI, the Buyer Parties and the Seller Parties.
7.9 Entire Agreement. This Agreement, the Buyer Documents, the Seller
Documents, and the related documents contained as Exhibits and Schedules to this
Agreement or expressly contemplated by this Agreement contain the entire
understanding
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of the parties relating to the subject matter of this Agreement and supersede
all prior written or oral and all contemporaneous oral agreements and
understandings relating to the subject matter of this Agreement. This Agreement
may not be modified or amended except in writing signed by the party against
whom enforcement is sought. All statements of Sellers contained in any schedule,
certificate, or other writing required under this Agreement to be delivered in
connection with the transactions contemplated by this Agreement will constitute
representations and warranties of Sellers under this Agreement. The Exhibits and
Schedules to this Agreement are hereby incorporated by reference into and made a
part of this Agreement for all purposes. Unless otherwise expressly stated in
this Agreement, no right or remedy described or provided in this Agreement is
intended to be exclusive or to preclude a party from pursuing other rights and
remedies to the extent available under this Agreement, at law, or in equity.
7.10 Specific Performance. The parties hereby acknowledge and agree
that the failure of any party to perform its agreements and covenants under this
Agreement, including its failure to take all required actions on its part
necessary to consummate the transactions contemplated by this Agreement, will
cause irreparable injury to the other parties for which damages, even if
available, will not be an adequate remedy. Accordingly, each party hereby
consents to the issuance of injunctive relief by any court of competent
jurisdiction to compel performance of such party's obligations and to the
granting by any court of the remedy of specific performance of its obligations
under this Agreement.
7.11 Knowledge. As used in this Agreement, "Company's Knowledge" means
that the information to be attributed to any Company is information actually or
constructively known to any Owner or any officer or senior management member of
any Company. A person has constructive knowledge of those matters which the
individual involved could be expected to have as a result of undertaking an
investigation of such a scope and extent as a reasonably prudent person would
undertake concerning the particular subject matter.
7.12 Governing Law. This Agreement will be governed by and construed
and interpreted in accordance with the substantive laws of the State of
Delaware, without giving effect to any conflicts of law rule or principle that
might require the application of the laws of another jurisdiction.
7.13 Drafting. Neither this Agreement nor any provision contained in
this Agreement will be interpreted in favor of or against any party hereto
because such party or its legal counsel drafted this Agreement or such
provision.
7.14 Usage. Whenever the plural form of a word is used in this
Agreement, that word will include the singular form of that word. Whenever the
singular form of a word is used in this Agreement, that word will include the
plural form of that word. The term "or" will not be interpreted as excluding any
of the items described. The term "include" or any derivative of such term does
not mean that the items following such term are the only types of such items.
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7.15 Arbitration. Any controversy, dispute, or claim arising under this
Agreement (other than under Sections 1.8 and 5.1 or as provided in Exhibit B)
will be finally settled by arbitration conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in effect
on the date of this Agreement. Notwithstanding any provision of the American
Arbitration Association Commercial Arbitration Rules, any such arbitration will
be conducted before and decided by one arbitrator. The parties to the
arbitration will request that the American Arbitration Association provide the
parties with a list of five potential arbitrators. Each party will then strike
from the list names one after another until one name is left. After the rights
to strike are exercised, the individual remaining on the list will be the
arbitrator. Any such arbitration will take place in the City of Wilmington,
Delaware. The arbitrators in any such arbitration will apply the laws of the
State of
Delaware and the United States of America. In any arbitration under
this Agreement, this Agreement will be deemed to have been made in, and will be
governed by and construed under the laws of, the State of
Delaware and the
United States of America. Any decision rendered by the arbitrator will be final
and binding and judgment thereon may be entered in any court having jurisdiction
or application may be made to such court for an order of enforcement as the case
may require. The parties intend that this agreement to arbitrate be irrevocable
and the exclusive means of settling all disputes under this Agreement, whether
for money damages or equitable relief. If arbitration is invoked in accordance
with the provisions of this Agreement, the Prevailing Party in the arbitration
will be entitled to recover from the other all costs, fees, and expenses
pertaining or attributable to such arbitration, including reasonable attorneys'
fees.
7.16 Partial Invalidity. Wherever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained in this
Agreement will, for any reason, be held to be invalid, illegal, or unenforceable
in any respect, such provision will be ineffective to the extent, but only to
the extent, of such invalidity, illegality, or unenforceability without
invalidating the remainder of such invalid, illegal, or unenforceable provision
or provisions or any other provisions of this Agreement, unless such a
construction would be unreasonable.
7.17 Sellers' Representative. Upon the signing of this Agreement,
Sellers will appoint Xxxxxx Xxxxxxxx, Xxx X'Xxxxx, and Xxxx Xxxxxxxxxx, as the
representatives for the Sellers in connection with the transactions contemplated
by this Agreement (in such capacity, the "Sellers' Representatives"). The
Sellers' Representatives will represent Sellers under this Agreement until all
Sellers' duties under this Agreement and the other Seller Documents are
discharged. The Sellers' Representatives will have full and irrevocable power
and authority to act for and in the name of and as agent for the Sellers under
this Agreement and all Sellers will be bound by the Sellers' Representatives'
agreements and decisions with respect hereto. Buyers may rely on any document
believed by them to have been signed or presented by any Seller Representative.
Buyers will have no obligation to investigate any fact or matter set forth
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in any such document and all Sellers will be bound by any such document
delivered by a Seller Representative to Buyers.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BUYERS:
XXXXX SYSTEMS CORPORATION
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx
Vice President
PSARS, LLC
By: XXXXX SYSTEMS CORPORATION,
its sole member and manager
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx
Vice President
SELLERS:
ADVANCED RECEIVABLES STRATEGY, INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------
Xxxxxx Xxxxxxxx
President
ADVANCE RECEIVABLES STRATEGY - GOVERNMENT
ACCOUNTS DIVISION, INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------
Xxxxxx Xxxxxxxx
President
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MERIDIAN HEALTHCARE STAFFING, LLC
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------
Xxxxxx Xxxxxxxx
Chief Manager
CASH-NET, LLC
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------
Xxxxxx Xxxxxxxx
Chief Manager
/s/ Xxxxxx Xxxxxxxx
---------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxx Xxxxxxxxxx
---------------------------------------
Xxxx Xxxxxxxxxx
/s/ Xxx X'Xxxxx
---------------------------------------
Xxx X'Xxxxx
/s/ Xxxxxx Xxxxxxx
---------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx
---------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxxxx
---------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxxxx Xxxxxx
---------------------------------------
Xxxxxxx Xxxxxx
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EXHIBITS AND SCHEDULES TO THE
ASSET PURCHASE AGREEMENT
Exhibits (forms of):
A - Allocation Agreement
B - Contingent Payment Calculation
C - Xxxx of Sale
D - Assignment of Intellectual Property
E - Assumption Agreement
F-1- Associates Employment Agreement (42) month term)
F-2 Associates Employment Agreement
G-1- 5 1/2-Year Non-Competition Agreement
G-2- 2-Year Non-Competition Agreement
H - Retention Agreement
Schedules:
1.2(o) Personal Property Considered Excluded Assets
1.4(d) Ownership Percentages (as of year end 2000)
2.1 Organization
2.4(a) Real Property
2.4(b) Liens on Material Assets
2.4(c) Real Property Matters
2.6 Violations
2.7 Governmental Consents
2.8(a) Financial Statements
2.9 Subsidiaries and Investments
2.10 Material Adverse Change
2.11(a) Taxes
2.12 Litigation
2.13 Compliance With Laws
2.14 Permits
2.15 Environmental Matters
2.16(a) Employees
2.16(c) Employee Matters
2.17(a)(i) Employee Benefit Plans
2.17(a)(ii) Employee Benefits Representations
2.17(a)(iii) Accelerated Payment or Vesting
2.17(b) Controlled Group Plans Matters
2.17(d) Prohibited Transactions
2.17(e) Employee Benefit Plans Matters
2.18 Ownership of the Companies (as of year end 2000)
2.19(a) Material Agreements
2.19(a)(viii) Form Employment Agreement
2.19(a)(x) Computer Software Licenses
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2.19(b) Material Agreement Violations
2.19(c) Material Agreements Terminated or Retained
Following Closing
2.19(d) Material Agreement Matters
2.20 Customers
2.21(a) Intellectual Property Rights
2.21(b) Intellectual Property Rights Owned by Others
2.21(c)(i) Intellectual Property Rights Actions
2.21(c)(ii) Intellectual Property Restrictions and Obligations
2.21(c)(iii) Royalties and other payments
2.22 Competing Interests
2.23 Regulated Payments
5.1(c) Contractual and Governmental Consents and Notices
Required of Seller
5.1(g) Executive Officers to execute Term Employment
Agreements
5.1(h) Executive Officers to execute Associate Agreements
5.1(i) Executive Officers to execute 5-1/2 Year Non-Compete
Agreements
5.1(j) Employees to execute 2-Year Non-Compete Agreements
5.1(k) Persons to execute Retention Agreements
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EXHIBIT B
TO
ASSET PURCHASE AGREEMENT
1. Defined Terms. Capitalized terms used in this Exhibit B have the meanings
given to such terms in the Agreement, unless otherwise defined herein. In
addition, the following terms have the meanings indicated:
"Adjusted Operating Profit" means the operating profit of
Acquisition Sub for the 12 consecutive months ended December 31, 2002,
2003 and 2004, as applicable, computed in accordance with GAAP and the
consolidated financial statements of PSC, and then adjusted as
follows:*. Adjusted Operating Profit will be determined in accordance
with Section 3 of this Exhibit B.
"Base Amount" means for each consecutive 12 month period
ending on the dates shown below:
December 31, 2002 $ *
December 31, 2003 $ *
December 31, 2004 $ *
"Contingent Payment" means any of the Interim Contingent
Payment, the First Year Contingent Payment, the Second Year Contingent
Payment or the Third Year Contingent Payment.
"Interim Operating Profit" means *. Interim Operating Profit
will be determined in accordance with Section 3 of this Exhibit B.
"Maximum Aggregate Earnout Amount" means $*
"Maximum Earnout Amount" means for each consecutive 12 month
period ending on the dates shown below, the following amount:
December 31, 2002 $ *
December 31, 2003 $ *
December 31, 2004 $ *
"Minimum Earnout Amount" means for each consecutive 12 month
period ending on the dates shown below, the following amount:
December 31, 2002 $ *
December 31, 2003 $ *
December 31, 2004 $ *
* Indicates confidential text omitted and filed separately with the
Securities and Exchange Commission.
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"Pro Rata Amount" means, for any Contingent Payment for which
it is determined, a dollar amount equal to the sum of: *.
"Pull Through Contract" means any contract entered into by PSC
with any Person introduced to PSC by Acquisition Sub or with respect to
which Acquisition Sub had a significant sales role, in each case, to be
documented in advance as specified in Section 4 of this Exhibit B.
"Pull Through Profits" means for any period for which it is
determined, a dollar amount equal to * of the amount of operating
margin (after allocation of the usual and customary corporate
allocation on such contracts) recognized by PSC on each Pull Through
Contract during such period.
"Target Amount" means for each consecutive 12 month period
ending on the dates shown below, the following amounts:
December 31, 2002 $ *
December 31, 2003 $ *
December 31, 2004 $ *
2. Contingent Payment Calculations. Subject to the clauses set forth below:
(a) The "Interim Contingent Payment" will be applicable only
for the six month period ending December 31, 2001 and will be a dollar
amount equal to the difference of: *. Notwithstanding the foregoing, if
Adjusted Operating Profit for the year ended December 31, 2002 exceeds
the Target Amount, the Interim Contingent Payment will be increased
retrospectively by an amount (which will not be less than zero)
computed as follows: *.
(b) The "First Year Contingent Payment" will be applicable for
the 12 month period ending December 31, 2002, and will be a dollar
amount equal to: *.
*
(c) The "Second Year Contingent Payment" will be applicable
for the 12 month period ending December 31, 2003, and will be a dollar
amount equal to: *.
(d) The "Third Year Contingent Payment" will be applicable for
the 12 month period ending December 31, 2004, and will be a dollar
amount equal to: *.
(e) *
(f) *
2
* Indicates confidential text omitted and filed separately with the
Securities and Exchange Commission.
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(g) Notwithstanding the foregoing clauses (a) through (d), the
Maximum Earnout Amount will be reduced, dollar for dollar, by any
Claw-Back Amounts as set forth in the Retention Agreements, dated on or
about the Closing Date, executed by each Owner and PSC.
3. Procedures.
(a) As promptly as reasonably practical for each of the six
month period ending December 31, 2001, and the 12 month periods ending
December 31 2002, 2003 and 2004, as applicable, PSC will cause to be
prepared and delivered to the Companies a statement setting forth the
Interim Operating Profit or Adjusted Operating Profit, as applicable,
for such period, together with a brief summary for the basis of its
determination. Such statements will be final and binding on the parties
unless the Companies deliver a notice of disagreement setting forth in
reasonable detail the specific bases of disagreement to PSC within ten
days of the delivery of the statement. In the event that such notice is
delivered, PSC and the Companies will negotiate in good faith for 20
days to resolve the differences stated in the notice. Any resolution
reached by PSC and the Companies will be final and binding on all other
parties to the Agreement. In the event that no such resolution is
reached, such matter will be finally settled in accordance with Section
1.5(c) of the Agreement.
(b) Any financial statements to be prepared hereunder will (i)
enable the Companies to determine future allocations of Contingent
Payments in such detail as reasonably requested by the Companies, and
(ii) have the same functionality as those produced prior to the Closing
by the Companies.
4. Certain Agreements. PSC and each Seller agree to act reasonably and
in good faith with respect to the designation of which opportunities will
constitute Pull Through Contracts. In particular, and without limiting the
foregoing, (a) PSC will in good faith provide appropriate incentives to
employees of Acquisition Sub to encourage them to pursue opportunities that
could result in Pull Through Contracts, and (b) Sellers agree that if an
opportunity is not reasonably documented in a writing executed by an executive
officer of PSC at or prior to the time a contract is entered into by PSC, such
contract will not constitute a Pull Through Contract.
3
