Exhibit 2.3
AMENDMENT #2
TO AGREEMENT FOR PURCHASE
AND SALE OF ASSETS
This Amendment #2 (the "Amendment") to the Agreement for Purchase and
Sale of Assets (the "Purchase Agreement") entered into as of March 9, 2000 and
amended on March 29, 2000, by and among Tier Technologies, Inc., a California
corporation ("Tier"), The SCA Group, Inc., an Illinois corporation ("SCA") and
Xxxxxx X. Xxxxx, is entered into as of March 30, 2000 (the "Amendment Date").
Recitals
Whereas, pursuant to the terms of the Purchase Agreement, Tier has
agreed to purchase certain assets from SCA;
Whereas, subsequent to the execution of the Purchase Agreement, the
parties have negotiated an allocation of the responsibility of providing
continuation coverage under the Consolidated Omnibus Budget Reconciliation Act
of 1985 ("COBRA"), resulting from the Acquisition;
Whereas, Tier desires to accept responsibility for providing COBRA
continuation coverage to certain employees and the parties have agreed to reduce
the Closing Payment by $25,000 in exchange for the assumption by Tier of this
liability;
Whereas, SCA desires to accept responsibility for providing COBRA
continuation coverage to certain other individuals; provided however, that in
the event that Tier, as the successor to the business of SCA, is deemed to be
responsible for providing COBRA continuation coverage to such individuals and
such individuals do not waive their right to COBRA continuation coverage, the
parties desire to have the Post-Closing Payment reduced;
Whereas, the parties desire to reduce the Post-Closing Payment by any
shortfall in the March 2000 Projections and any shortfall in aggregate EBT
(excluding the corporate overhead allocation) for the months of April and May;
Whereas, the parties desire to clarify their respective obligations
with respect to the rollover of Seller's employees' 401(k) accounts.
Agreement
Now, Therefore, in consideration of the benefits described in the
Recitals hereto and the mutual promises hereinafter set forth, the parties
hereto agree as follows:
1. Except as otherwise defined herein, capitalized terms used but not defined
herein shall have the respective meanings given to them in the Purchase
Agreement.
2. Section 2.4(a) of the Purchase Agreement is hereby amended and restated in
its entirety as follows:
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"(a) Four Million Five Hundred Eighty-One Thousand Dollars
($4,581,000), subject to adjustment for each of the
following that apply: (i) in the event that the Business
does not have a Fixed Asset Value of at least Two Hundred
Fifty Thousand Dollars ($250,000) as of the Closing Date,
then the amount payable to Seller shall be reduced by an
amount equal to Two Hundred Fifty Thousand Dollars
($250,000) less the Fixed Asset Value; and (ii) the amount
payable to Seller shall be adjusted by the Receivables
Adjustment (as defined below) and any Vacation Adjustment
(such adjusted amount referred to herein as the "Closing
Payment"). On the Closing Date, Purchaser shall pay the
Closing Payment in Immediately Available Funds (i) first, to
deposit with the Escrow Agent One Hundred Thirty Five
Thousand Dollars ($135,000) of the Closing Payment, and (ii)
second, to pay the remainder of the Closing Payment.
(i) Prior to the Closing Date, Seller and
Purchaser shall review the Work in Progress and Deferred
Revenue for each Client Contract as of the Effective Date
and shall negotiate in good faith a mutually acceptable
adjustment to the payment set forth above based on GAAP (the
"Receivables Adjustment"). In addition, Seller and Purchaser
shall agree upon the requirements for completion of Work in
Progress as of the Effective Date for each Client Contract.
(ii) Prior to the Closing Date, Seller and
Purchaser shall agree upon an allocation of accrued vacation
as of the Effective Date for Transferring Employees between
Seller and Purchaser. To the extent that Purchaser assumes
accrued vacation for Transferring Employees, there shall be
a reduction to the amount payable to Seller above by such
assumed amount (the "Vacation Adjustment")."
3. Section 2.4(b) of the Purchase Agreement is hereby amended and restated in
its entirety as follows:
"(a) Four Million Nine Hundred Fifty Thousand Dollars
($4,950,000), subject to adjustment for each of the
following that apply: (i) in the event that the pro forma
projections for March 2000, as set forth on Schedule 3.4(b),
are not met, then the amount payable to Seller shall be
reduced by an amount equal to Two Hundred Twenty Four
Thousand Five Hundred Twenty Dollars ($224,520) less the
actual operating income for March 2000; (ii) in the event
that the actual aggregate EBT excluding the corporate
overhead allocation for the months of April and May is less
than Six Hundred Seventy Two Thousand Dollars ($672,000)
then the amount payable to Seller shall be reduced by that
shortfall; and
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(iii) in the event that Purchaser incurs any obligation
under COBRA (as defined in Section 10.11) to provide
continuation coverage to any Seller Cobra Individual (as
defined in Section 10.11), the amount payable to Seller
shall be reduced by the COBRA Adjustment, as set forth in
Section 10.11 (such adjusted amount referred to herein as
the "Post-Closing Payment"), payable on the date that is one
hundred twenty (120) days following the Closing. On the date
that is one hundred twenty (120) days following the Closing
Date, Purchaser shall pay the Post-Closing Payment in
Immediately Available Funds (i) first to deposit with the
Escrow Agent One Hundred Thirty Five Thousand Dollars
($135,000) of the Post-Closing Payment (this $135,000
deposit, together with the cash deposited with the Escrow
Agent at the time of Closing is referred to herein as the
"Escrow Cash"), and (ii) to pay the remainder of the Post-
Closing Payment to the Seller. Escrow Agent shall hold the
Escrow Cash in an interest-bearing escrow account and shall
disburse funds therefrom in accordance with the Escrow
Agreement. Seller acknowledges that its legal and beneficial
interests in the Escrow Cash are subject to the terms of
this Agreement and the Escrow Agreement.
4. Section 6.4 of the Purchase Agreement is hereby amended and restated in its
entirety as follows:
"6.4 Rollover Employees' 401(k) Accounts. Purchaser shall
coordinate with Seller and use its best efforts to rollover
the 401(k) accounts of the Transferring Employees to a plan
of Purchaser as soon as reasonably practicable after Seller
obtains a determination letter from the Internal Revenue
Service that states that, upon plan termination, the
Seller's 401(k) plan is a qualified plan under Code Section
401 and the trust is qualified under Code Section 501."
5. A new section 10.11 is hereby added to the Purchase Agreement as follows:
"10.11 COBRA Responsibility. Purchaser agrees to provide
continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and as described in
Code Section 4980B for the individuals listed on Schedule
10.11(a) hereto and for any qualified beneficiaries (as
defined in Code Section 4980B(g)(1)) and any M&A qualified
beneficiaries (as defined in Proposed Treasury Regulation
Section 54.4980B-9, Q&A - 4) with respect to the individuals
listed on Schedule 10.11(a). Seller agrees to provide COBRA
continuation coverage for any employees of Seller that are
not transferring Employees and are not listed on Schedule
10.11(a) and for any qualified beneficiaries (as defined
above) and any M&A qualified beneficiaries (as defined
above) with respect to such individuals
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(the "Seller Cobra Individuals"); provided, however, that if
and to the extent that Seller is unable to provide COBRA
continuation coverage for any of the Seller Cobra
Individuals and any such Seller Cobra Individual does not
waive of COBRA continuation coverage within the COBRA
election period, as defined in Code Section 4980B(f)(5),
then the Post-Closing Payment shall be reduced by fifteen
thousand dollars ($15,000) for each such Seller Cobra
Individual (with the exception of Xxxxxxxx Xxxxxx, for whom
the reduction to the Post-Closing Payment, if applicable,
shall be fifty thousand dollars ($50,000)). (The aggregate
reduction amount shall be referred to as the "COBRA
Adjustment"). For these purposes, the revocation of a waiver
shall be treated as if the individual did not waive COBRA
continuation coverage. In the event that the COBRA election
period expires beyond the date on which the Post-Closing
Payment is due and payable, Purchaser shall have the right
to collect the COBRA Adjustment directly from Seller or
offset such amount against any future payment payable to
Seller."
6. A new section 10.12 is hereby added to the Purchase Agreement as follows:
"10.12 Preparation of Financial Statements. Within thirty-
five (35) days following the Closing Date, Seller shall
prepare at its own expense and deliver to Purchaser reviewed
financial statements, which shall include a balance sheet of
Seller as of December 31, 1999 and the related statements of
income and cash flows for the year then ended, including any
supporting schedules and working papers. Within twenty-one
(21) days following the Closing Date, Seller shall prepare
and deliver to Purchaser quarterly pro forma financial
information for the quarter ended March 31, 1999 and within
sixty (60) days following such date, Seller shall prepare
and deliver to Purchaser quarterly pro forma financial
information for the remaining quarters of 1999. Purchaser
will pay up to $5,000 per quarter for the costs incurred in
connection with the preparation of such quarterly pro forma
financial information and Seller will pay any costs incurred
in excess of $5,000 per quarter. Purchaser and Seller will
coordinate to prepare and have audited financial statements
of Seller for the periods required pursuant to Form 8-K and
Regulation S-X. The costs incurred in connection with the
preparation and audit of such financial statements
(including the costs of services performed and expenses
incurred by Purchaser's independent auditors and by any
other certified public accountant needed to prepare and
audit such financial statements) shall be paid as follows:
(i) Purchaser shall pay the first twenty-five thousand
dollars ($25,000) incurred; (ii) Seller shall pay the next
twenty-five thousand dollars ($25,000) incurred; and (iii)
any costs incurred in excess of $50,000 shall be
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paid on a 50/50 basis by Purchaser and Seller. Seller shall
pay to Purchaser all amounts owing under this Section 10.12
within ten (10) days of receiving from Purchaser written
notice of the amounts due."
7. Except as set forth in Sections 2, 3, 4, 5 and 6 above, all terms and
conditions of the Purchase Agreement shall remain in full force and effect.
8. This Amendment shall be governed by and construed in accordance with the
laws of the State of California.
9. This Amendment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
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In Witness Whereof, the parties have executed this Amendment on the day and
year first written above.
Tier Technologies, Inc.
By:
______________________________
The SCA Group, Inc.
By:
______________________________
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Xxxxxx X. Xxxxx
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SCHEDULE 10.11(A)
J. Michael Fairfax
Xxx Xxxxxxx
Xxxx Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxxxxxxx Xxxxxx
Xxxxxx Xxxxxxx
Xxxx Xxxx
Xxxxx Xxxx
Xxxxx Xxxxxxx
Xxxxx Xxxx
Xxxxxx Xxxxxxxxx
Xxxx Xxxxxx
Xxxxx Xxxxxxx
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