Exhibit 99.2
ASSET PURCHASE AGREEMENT
AMONG
PEDIATRIC SERVICES OF AMERICA, INC.,
PARAMEDICAL SERVICES OF AMERICA, INC., and
XXXXXX XXXXXX, INC.
Dated as of August 30, 1999
TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF ASSETS....................................................1
1.1 Transfer of the Assets; Excluded Assets........................1
1.2 Aggregate Purchase Price of the Assets.........................3
1.3 Allocation.....................................................5
1.4 Manner of Effecting Sale.......................................5
1.5 Liabilities ...................................................5
1.6 Closing........................................................6
1.7 Guaranty of HH.................................................7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................7
2.1 Organization, Standing and Power...............................7
2.2 Authority......................................................7
2.3 Consents and Approvals; No Violation...........................7
2.4 Actions and Proceedings........................................8
2.5 Brokers........................................................8
2.6 Financing......................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PSA AND PSA SUB..............................8
3.1 Organization, Standing and Power...............................8
3.2 Capital Structure..............................................9
3.3 Authority......................................................9
3.4 Consents and Approvals;No violation............................9
3.5 PSA SUB Financial Statements..................................10
3.6 Absence of Certain Changes or Events..........................11
3.7 Permits and Compliance;Contracts..............................11
3.8 Tax Matters...................................................12
3.9 Actions and Proceedings.......................................12
3.10 Employee Benefits.............................................13
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3.11 Compliance with Certain Laws..................................13
3.12 Liabilities...................................................14
3.13 Labor Matters.................................................14
3.14 Intellectual Property.........................................14
3.15 Brokers.......................................................16
3.16 Property......................................................16
3.17 Independent Contractors.......................................17
3.18 Indebtedness..................................................17
3.19 Employees.....................................................18
3.20 Insurance Policies............................................18
3.21 Certain Contracts and Property Rights.........................18
3.22 Conflicts of Interests........................................19
3.23 Location of Assets............................................19
3.24 Solvency .....................................................20
3.25 Accounts Receivable...........................................20
3.26 Non-Compete ..................................................20
ARTICLE IV
COVENANTS OF PSA AND PSA SUB..................................................20
4.1 Operations of Business of PSA SUB.............................20
4.2 Access to Information.........................................22
4.3 No Solicitation...............................................22
4.4 Notification of Certain Matters...............................23
4.5 Obligations to Maintain Insurance.............................23
4.6 Pre-Closing Financial Statements..............................23
4.7 Tax Returns...................................................24
4.8 Discharge of Business Obligations.............................24
4.9 Employee Benefit Plan Obligations.............................24
4.10 Business Relationships........................................24
4.11 Employment Agreement..........................................24
ARTICLE V
COVENANTS OF PURCHASER........................................................25
5.1 No Purchase of Securities; Other Actions......................25
5.2 Notification of Certain Matters...............................25
5.3 Employee Matters..............................................26
5.4 Retention and Severance Payments..............................26
5.5 Employee Benefits.............................................26
5.6 WARN Act......................................................26
5.7 Business Relationships........................................27
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5.8 Vacation Pay and Sick Pay.....................................27
5.9 Preservation of Records.......................................27
ARTICLE VI
COVENANTS OF PURCHASER, PSA AND PSA SUB.......................................27
6.1 Approvals of Third Parties....................................27
6.2 Confidentiality...............................................28
6.3 Public Announcements..........................................29
6.4 Fees and Expenses.............................................29
6.5 Transfer Taxes................................................29
6.6 Transition Services Agreement.................................30
6.7 Audited Financial Statements Costs............................30
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES..................................30
7.1 Conditions to Each Party's Obligations........................30
7.2 Conditions to Obligation of PSA and PSA SUB...................31
7.3 Conditions to Obligations of Purchaser........................31
ARTICLE VIII
INDEMNIFICATION...............................................................34
8.1 Purchaser's Right to Indemnification..........................34
8.2 PSA's and PSA SUB's Right to Indemnification.................35
8.3 Procedure.....................................................35
8.4 Assumption of Defense.........................................36
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER.............................................36
9.1 Termination...................................................36
9.2 Effect of Termination.........................................38
9.3 Amendment.....................................................38
9.4 Waiver........................................................38
ARTICLE X
GENERAL PROVISIONS............................................................39
10.1 Survival of Representations and Warranties....................39
10.2 Notices.......................................................39
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10.3 Interpretation................................................40
10.4 Counterparts..................................................40
10.5 Entire Agreement; No Third-Party Beneficiaries................40
10.6 Governing Law.................................................40
10.7 Assignment....................................................40
10.8 Severability..................................................40
10.9 Enforcement of this Agreement.................................41
10.10 Return of Information.........................................41
10.11 No Waiver.....................................................41
10.12.Bulk Sales Law................................................41
10.13 No Liens Created..............................................41
10.14 Further Assurances............................................41
10.15 Dispute Resolution/Arbitration................................42
APPENDIX A
DEFINED TERMS..............................................................44
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SCHEDULES
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1.1(a)(i) Campus Drive and Technology Parkway Assets (to be supplemented
with field location Assets prior to Closing)
1.1(a)(ii) Excluded Contracts and Included Contracts
1.1(a)(v) Real Property Leases
1.1(a)(vii) Intellectual Property Rights
1.1(a)(viii) Accounts Receivable
1.1(a)(ix) Lockbox Accounts
1.1(b) Excluded Assets
1.5 Assumed Liabilities
2.5 Purchaser Brokers
3.1(a)(i) Good Standing
3.1(a)(ii) Jurisdictions in which Qualification is Required
3.1(d) Officers and Directors
3.4 Required Consents and Approvals
3.5 Unaudited Financial Statements
3.6 Absence of Certain Changes or Events
3.7(a) Permits and Compliance; Contracts
3.7(b) Material Contracts
3.7(c) Events of Default
3.8(a) Returns Filed and Taxes Paid
3.8(b) Tax Deficiencies, Audits, Statutes of Limitations
3.8(c) Tax Sharing Agreements
3.9 Actions and Proceedings
3.10(a) Employee Benefits
3.11(a) Compliance with Certain Laws
3.12 Liabilities
3.13 Labor Matters
3.14(b) Computer Software and Databases
3.14(c)(i) Intellectual Property Rights
3.14(c)(ii) Intellectual Property Not in PSA SUB's Name
3.15 PSA and PSA SUB Brokers
3.16(a) Description of all Real and Personal Property
3.16(b) Personal Property; Title Encumbrances
3.16(b)(x) Permitted Liens
3.17(a) Independent Contractors
3.17(b) Contract Affiliates
3.17(c) Contract Affiliates who have given Notice of Termination
3.18 Indebtedness
3.19 Business Employees
3.20 Insurance Policies
3.21(a) Contracts Resulting in Revenue of $25,000 or More
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3.21(c) Equipment Leases
3.21(d) Contracts which Cannot be Terminated within 30 Days Notice
3.21(e) Contracts for the Purchase or Receipt of Services, Products,
Inventories or Supplies
3.21(f) Contracts Relating to Promotional Activities
3.21(g) Partnership, Joint Venture, Joint Operating or Similar Contracts
3.21(h) Other Agreements or Arrangements
3.22 Conflicts of Interest
3.23 Location of Assets
4.1 Operations of Business
4.10(b) Escrow Account
5.3 Employee Matters
5.4(a) Retention Payments
5.4(b) Severance Payments
5.8 Vacation Pay and Sick Pay
6.8 Life 2000 Rates
7.3(e) Third Party Consents
7.3(f) Liens
EXHIBITS
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1.6(b) Xxxx of Sale
1.6(c)(i) Assignment and Assumption Agreement
3.4 ChoicePoint, Inc. Waiver
6.6 Transition Services Agreement
7.2(c) Opinion of Counsel to Purchaser
7.3(c) Opinion of Counsel to PSA
7.3(g) Non-Competition Agreement
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, effective as of the 30th day of August, 1999, by and among
Pediatric Services of America, Inc., a Delaware corporation ("PSA"), Paramedical
Services of America, Inc., a California corporation ("PSA SUB"), and Xxxxxx
Xxxxxx, Inc., a New York corporation ("HH"). Capitalized terms used herein but
not otherwise defined shall have the meanings assigned to them in Appendix A.
W I T N E S S E T H:
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WHEREAS, PSA owns, through wholly-owned subsidiaries, all of the issued and
outstanding capital stock of PSA SUB, which is in the business of providing
paramedical examination services for the life and health insurance industries
(the "Business");
WHEREAS, upon and subject to the terms and conditions contained herein, PSA
and PSA SUB desire to sell to HH, directly or to a wholly-owned subsidiary of HH
(HH and such subsidiary are referred to herein collectively as "Purchasers"or
"Purchaser"), and Purchaser desires to purchase from PSA and PSA SUB, certain of
the assets and properties of PSA, PSA SUB and their Affiliates (collectively,
the "PSA Group") which principally relate to the Business;
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants contained herein, and upon and subject to the terms and the
conditions hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Transfer of the Assets; Excluded Assets. (a) Subject to the terms and
conditions set forth in this Agreement, PSA SUB agrees to sell, convey, assign,
and transfer to Purchaser, and Purchaser agrees to purchase, accept and take
from PSA SUB at the Effective Time all of the Assets. For purposes of this
Agreement, "Assets" means all of the assets, properties and rights owned,
whether now existing or hereinafter acquired prior to Closing, used or held for
use principally in connection with the Business of every kind, nature and
description (other than the Excluded Assets), wherever such assets, properties
and rights are located and whether such assets, properties and rights are real,
personal or mixed, tangible or intangible, and whether owned, used or held for
use by PSA SUB or any other member of the PSA Group, and whether or not any of
such assets, properties and rights have any value for accounting purposes or are
carried or reflected on or specifically referred to in the books or financial
statements of PSA SUB, including all those items in the following categories
that conform to the definition of "Assets":
(i) all improvements, fixtures, furniture, equipment, software,
vehicles, materials, office and other usable supplies, and similar other
personal property including those listed on
1.1(a)(i) hereto, which includes those Assets located at the Campus Drive and
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Technology Parkway locations. Prior to the Closing, PSA shall supplement
Schedule 1.1(a)(i) with a list of improvements, fixtures, furniture,
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equipment, software, vehicles, materials, office and other usable supplies, and
similar other personal property located at the PSA SUB field locations;
(ii) except for those referred to on Schedule 1.1(a)(ii) hereto as
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excluded Contracts, all rights of PSA, PSA SUB or any of the PSA Group under all
Contracts, including those Contracts set forth on Schedule 1.1(a)(ii) and
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referred to as included Contracts (the scheduled contracts referred to as
included Contracts collectively, the "Business Contracts"), from and after the
Effective Time;
(iii) goodwill, fictitious names, and non-competitioncovenants
running in favor of PSA SUB;
(iv) sales data, client lists and records, referral lists and
records, advertising matter, price lists, correspondence, mailing lists,
distribution lists, sales and promotional materials and records, personnel
records, and all of the medical and administrative libraries, documents,
catalogs, files, books and records;
(v) all leases and leasehold rights, including all security deposits
and prepaid rents thereunder, and all easements and uses which benefit such
property, including those listed on Schedule 1.1(a)(v) (the scheduled leases
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collectively, the "Real Property Leases");
(vi) inventory wherever located;
(vii) trademarks, servicemarks, trade names, brand names,
logos, copyrights, inventions and trade secrets, and interest thereunder and
applications therefor, including those listed on Schedule 1.1(a)(vii) but
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excluding the rights to the name "PSA" (other than as provided in Section 1.1(c)
herein);
(viii) all Accounts Receivable outstanding at the Effective
Time (whether billed or unbilled), including accounts receivable described in
Schedule 1.1(a)(viii) which shall be updated as of the Effective Time (the
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Assets shall not include proceeds from accounts receivable collected by PSA SUB
prior to the Effective Time); and
(ix) the rights to use and control the PSA SUB lockboxes listed in
Schedule 1.1(a)(ix) (the"PSA SUB Lockboxes") from and after the Effective Time
and all rights to all cash deposited therein except for cash, if any, in the PSA
SUB Lockboxes as of the Effective Time and cash belonging to a member of the PSA
Group other than PSA SUB. PSA SUB and Purchaser shall have the right to access
remittance advices contained in the lockboxes of PSA and the PSA SUB Lockboxes
for one year from the Closing Date. Any non PSA SUB cash receipts deposited
past the Effective Time in the PSA SUB Lockboxes will be remitted by Purchaser
to PSA SUB. Any PSA SUB cash receipts deposited in lockboxes of PSA past the
Effective Time will be remitted by PSA to Purchaser.
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The Assets shall be conveyed free and clear of all liabilities, liens, and
encumbrances, excepting only the Permitted Liens and the Assumed Liabilities.
PSA agrees to take any actions necessary for PSA SUB to be able to sell and
transfer all of the Assets to Purchaser in accordance with the terms of the
Agreement, including, without limitation, transferring or causing the transfer
of any Assets from PSA or any other member of the PSA Group to PSA SUB.
(b) Schedule 1.1(b) contains a list of those assets which are
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included within the definition of Assets, but which PSA or PSA SUB will retain
and not transfer and which Purchaser will not purchase or acquire (the "Excluded
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Assets").
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(c) (i) For a period of one (1) year beginning on the Closing Date,
PSA hereby grants to Purchaser a non-exclusive license to use the name "PSA"
(hereinafter referred to as the "Xxxx") solely in connection with the Business,
subject to the terms and conditions hereof.
(ii) Purchaser hereby acknowledges PSA's right, title and interest in
and to the Xxxx and agrees not to claim any title to the Xxxx or any right to
use the Xxxx except as permitted herein. Purchaser shall include all notices and
legends with respect to PSA's Xxxx as are or may be required by applicable
federal, state and local trademark laws or which may be reasonably requested by
PSA.
1.2 Aggregate Purchase Price of the Assets. (a) In consideration for the
Assets, Purchaser shall pay to PSA SUB Ninety-Five Million Dollars
($95,000,000), subject to adjustment as set forth in this Section 1.2 (the
"Purchase Price") plus the Assumed Liabilities (as defined below).
(b) If the business condition of PSA SUB at Closing (the "Closing
Performance Condition") is not materially better than the business condition as
of the date hereof (the "Current Performance Condition") and not substantially
similar to the business condition presented to Purchaser and forecasted to
Purchaser on or about June 29, 1999 (the "Initial Performance Condition"), the
Purchase Price shall be reduced by Ten Million Dollars ($10,000,000) (the
"Performance Adjustment"). For purposes of the preceding sentence, the Current
Performance Condition shall be determined by the revenues, branch profits,
customers, employees, independent contractors, direct cost stability and gross
margins as of the date hereof and for the three full months ended prior to the
date hereof. The Closing Performance Condition shall be determined by the same
factors as of the Closing Date and for the three full months ended prior to the
Closing Date.
(c) In addition to any reduction that may be required under Section
1.2(b), if PSA SUB's Current Accounts Receivable (as defined below) outstanding
at the Effective Time are less than $16,000,000, the Purchase Price shall be
reduced by an amount equal to the result obtained by subtracting the amount of
the Current Accounts Receivable as of the Effective Time from $16,000,000. For
example, if the Current Accounts Receivable outstanding at the Effective Time
are $15,000,000, the Purchase Price shall be reduced by $1,000,000 ($16,000,000
minus $15,000,000). The term "Current Accounts Receivable"
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shall mean any ofPSA SUB's accounts receivable and any unbilled amounts relating
to services rendered, in each case, for dates of service beginning on the first
day of the second full calendar month ended prior to the Closing Date. For
example, if the Closing Date is October 15, Current Accounts Receivable would
include accounts receivable and any unbilled amounts relating to services
rendered, in each case, for dates of service beginning August 1.
(d) No later than the close of business on the Business Day
immediately preceding the Closing Date, PSA SUB and Purchaser shall make a
mutually acceptable reasonable good faith estimate of the Current Accounts
Receivable that will be outstanding at the Effective Time (the "Estimated
Accounts Receivable") PSA SUB shall afford Purchaser and its representatives the
opportunity to review the work papers and other records and documentation used
by PSA SUB in preparing its estimation of the Estimated Accounts Receivable. If
the Estimated Accounts Receivable equal or exceed $16,000,000, Purchaser shall
pay to PSA SUB the Purchase Price, as adjusted pursuant to Section 1.2(b), at
Closing by wire transfer in same day available funds. If the Estimated Accounts
Receivable are less than $16,000,000, Purchaser shall pay to PSA SUB at Closing
by wire transfer in same day available funds an amount equal to (i)the Purchase
Price as adjusted pursuant to Section 1.2(b) minus (ii) the amount by which
$16,000,000 exceeds the Estimated Accounts Receivable. If the parties are
unable to agree on an Estimated Accounts Receivable, Purchaser shall place into
escrow the amount in dispute.
(e) No later than 15 Business Days after the Closing Date, PSA SUB
shall deliver to Purchaser a schedule reflecting the Current Accounts Receivable
outstanding at the Effective Time (the "Closing AR Schedule"). PSA SUB shall
afford Purchaser and its representatives the opportunity to review the work
papers and other records and documentation used by PSA SUB in preparing the
Closing AR Schedule. On the fifteenth Business Day following delivery of the
Closing AR Schedule (the "Purchase Price Adjustment Date") Purchaser and PSA SUB
shall recalculate the Purchase Price in accordance with Section 1.2(c) and
effect the transfer of any funds as may be necessary to reflect adjustments to
the Purchase Price resulting from any differences between the Estimated Accounts
Receivable and the Current Accounts Receivable reflected in the Closing AR
Schedule. Following are examples of adjustments to the Purchase Price. Example
1: If the Estimated Accounts Receivable and the Current Accounts Receivable
reflected in the Closing AR Schedule equal or exceed $16,000,000, no further
adjustment to the Purchase Price will be made (Purchaser having paid $95,000,000
on the Closing Date). Example 2: If the Estimated Accounts Receivable equal
$15,000,000 but the Current Accounts Receivable reflected in the Closing AR
Schedule are $15,500,000, Purchaser would pay to PSA SUB $94,000,000 on the
Closing Date plus an additional $500,000 on the Purchase Price Adjustment Date
reflecting a total Purchase Price, as adjusted, of $94,500,000. Example 3: If
the Estimated Accounts Receivable equal $15,000,000 but the Current Accounts
Receivable reflected on the Closing AR Schedule equal or exceed $16,000,000,
Purchaser would pay to PSA SUB $94,000,000 on the Closing Date plus an
additional $1,000,000 on the Purchase Price Adjustment Date reflecting a total
Purchase Price, as adjusted, of $95,000,000. Example 4: If the Estimated
Accounts Receivable equal or exceed $16,000,000 but the Current Accounts
Receivable reflected in the Closing AR Schedule equal $15,500,000, Purchaser
would pay to PSA SUB $95,000,000 on the Closing Date and PSA SUB would refund to
Purchaser $500,000 on the Purchase Price Adjustment Date, reflecting a total
Purchase
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Price, as adjusted, of $94,500,000. Example 5: If the Estimated Accounts
Receivable are $15,500,000 but the Current Accounts Receivable reflected in the
Closing AR Schedule are $15,000,000, Purchaser would pay to PSA SUB $94,500,000
on the Closing Date and PSA SUB would refund to purchaser $500,000 on the
Purchase Price Adjustment Date, reflecting a total Purchase Price of
$94,000,000.
(f) For purposes of the examples in Sections 1.2(d) and 1.2(e), it is
assumed that there is no Performance Adjustment pursuant to Section 1.2(b).
(g) All payments under this Section 1.2 shall be by wire transfer in
same day available funds on the Closing Date and the Purchase Price Adjustment
Date, as applicable.
1.3 Allocation. The Purchase Price for the Assets, the Assumed
Liabilities and the non-competition agreement contemplated in Section 7.3(g)
hereof, shall be fairly allocated by PSA, PSA SUB and Purchaser in accordance
with the requirements of U.S. Department of Treasury Regulation (S) 1.1060.1T.
The parties agree to cooperate with each other in good faith to determine their
respective allocation of the Purchase Price.
1.4 Manner of Effecting Sale. (a) The sale, conveyance, transfer,
assignment and delivery of the Assets by PSA SUB to Purchaser shall be effected
by such deeds, bills of sale, endorsements, assignments, transfers and other
instruments of transfer and conveyance in such form, including, without
limitation, warranties of title, as Purchaser or Purchaser's attorney shall
reasonably request.
(b) In connection with the transfer of all intangible assets
included within the Assets, PSA SUB shall provide to Purchaser any and all
written or recorded information concerning any such property, including, without
limitation, documents evidencing PSA SUB's right and title to the trademarks and
trade names, PSA SUB's sales and purchase records, accounts and similar
documentation, PSA SUB's formulae for and know how concerning any aspect of the
Business, as well as PSA SUB's business documents and correspondence. To the
extent the customer information, cost and supply data, or secret or other
formulae or know how are not at the date hereof evidenced by or reflected in
existing corporate documents, records or other sources which are to be
transferred in accordance with this Agreement, PSA SUB shall prepare or cause to
be prepared in such detail as Purchaser may reasonably request, such additional
documentation for delivery at the Closing as shall be necessary to disclose
fully and effectually such information to Purchaser.
1.5 Liabilities. It is understood and agreed that Purchaser shall not
assume or become liable for the payment of any debts, liabilities, losses,
accounts payable, bank indebtedness, mortgages, or other obligations of any
member of the PSA Group or the Business, whether the same are known or unknown,
now existing or hereafter arising, of whatever nature or character, whether
absolute or contingent, liquidated or disputed, except liabilities arising from
and after the Effective Time under the Business Contracts and Real Property
Leases (provided that the parties to such Business Contracts and Real Property
Leases have consented to Purchaser's assumption thereof if required pursuant to
such agreements), liabilities arising from the Purchaser's operation of the
Business from and after the Effective Time and the liabilities expressly set
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forth in Schedule 1.5 (the liabilities and obligations set forth on such
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Schedule, plus those arising from and after the Effective Time under the
Business Contracts and Real Property Leases (provided that the parties to such
Business Contracts and Real Property Leases have consented to Purchaser's
assumption thereof if required pursuant to such agreements) are referred to as
the "Assumed Liabilities"). Except for the Assumed Liabilities, each member of
the PSA Group shall pay all of their respective debts, obligations, and
liabilities which are in any way related to the Assets or the Business in the
Ordinary Course of Business. Notwithstanding the foregoing, in the event that
the parties to a Business Contract or Real Property Lease fail to give any
consent to assignment to Purchaser required under such Business Contract or Real
Property Lease, Purchaser shall be liable for the liabilities under such
Business Contract or Real Property Lease only to the extent Purchaser has
actually obtained the benefits thereunder.
Prior to the Closing Date, Purchaser and PSA SUB shall cooperate to
obtain all requisite landlord consents to the Real Property Leases. In the
event the actual purchaser of the Assets is a subsidiary of HH as permitted by
Section 1.7 hereof, HH agrees to execute and deliver all lease guarantees
necessary to obtain such consents to assignment of the Real Property Leases.
Notwithstanding the foregoing, PSA SUB shall not be obligated under such
circumstances to pay for any increase in Purchaser's rent in the leased office
space.
1.6 Closing. (a) Subject to the satisfaction or waiver of the conditions
set forth herein, the consummation of the purchase and sale of the Assets (the
"Closing") shall take place within five Business Days following expiration or
termination of all waiting periods under the HSR Act and the satisfaction or
waiver of all other conditions to Closing set forth in Article VII, in the
offices of Long Xxxxxxxx & Xxxxxx LLP, Suite 5300, 303 Peachtree Street,
Atlanta, Georgia, or on such other date at such other time and place as the
parties shall agree in writing (the "Closing Date"). Notwithstanding the
Closing Date, the effective time for the transfer of the Assets and the other
transactions described herein shall be at 11:59 p.m. on the Closing Date (the
"Effective Time").
(b) Without limiting the requirements contained in Sections 1.2 and
1.4 hereof, at Closing, PSA or PSA SUB, as the case may be, shall execute and
deliver, or will cause to be executed and delivered, to Purchaser to the extent
reasonably requested by Purchaser:
(i) a xxxx of sale substantially in the form of Exhibit 1.6(b) hereto
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with respect to the Assets constituting personal property;
(ii) assignments or transfers executed by PSA, PSA SUB or any member
of the PSA Group, as appropriate, of the: (1) Intellectual Property Rights
included in the Assets and any agreements with respect thereto, (2) Real
Property Leases, (3) PSA SUB Permits, (4) Business Contracts, and (5) the PSA
SUB Lockboxes; and
(iii) all previously undelivered documents that this
Agreement requires PSA or PSA SUB to deliver at or prior to Closing.
(c) Without limiting the requirements contained in Sections 1.2 and
1.4 hereof, at Closing, Purchaser to the extent reasonably requested by PSA or
PSA SUB shall execute and deliver to PSA and PSA SUB:
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(i) an assignment and assumption agreement in the form of Exhibit
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1.6(c)(i) hereto with respect to the Assumed Liabilities; and
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(ii) all previously undelivered documents that this Agreement
requires Purchaser to deliver at or prior to Closing.
1.7 Guaranty of HH. The parties hereto understand and agree that HH, in
its discretion, may cause a wholly-owned subsidiary of HH to purchase the Assets
and assume the Assumed Liabilities (the "Subsidiary Purchaser") pursuant to this
Agreement. In such event, (a) HH shall not be relieved of any of its duties or
obligations under this Agreement, including the obligation to pay the Purchase
Price and assume the liabilities under the Assumed Liabilities, (b) HH agrees to
guaranty and be liable for all of the liabilities and obligations of the
Subsidiary Purchaser to the same extent as if HH had purchased the Assets and
assumed the Assumed Liabilities hereunder (HH's liabilities and obligations
hereunder shall be joint and several with Subsidiary Purchaser), and (c) HH
shall cause Subsidiary Purchaser to become a party to this Agreement. When used
herein, the term "Purchaser" shall include both HH and the Subsidiary Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchasers, jointly and severally, represent and warrant to PSA and PSA
SUB as follows as of the date hereof and at the Effective Time:
2.1 Organization, Standing and Power. HH is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
Subsidiary Purchaser, if any, is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation. Each
Purchaser has the requisite corporate power and authority to own or lease its
properties and to conduct its business as presently conducted and to effect the
transactions contemplated hereunder.
2.2 Authority. Each Purchaser has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Purchaser
and the consummation by Purchaser of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of Purchaser. This Agreement has been duly and validly executed and delivered
by Purchaser and (assuming the valid authorization, execution and delivery of
this Agreement by PSA and PSA SUB) this Agreement constitutes the legal, valid
and binding obligation of Purchaser enforceable against Purchaser in accordance
with its terms.
2.3 Consents and Approvals; No Violation. The execution and delivery of
this Agreement by Purchaser do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, result
in any violation of, or default (with or without notice or lapse of time, or
both) under any provision of (i) the certificate of incorporation or bylaws of
either Purchaser, (ii) any
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provision of the comparable charter or organizationdocuments of any of either
Purchaser's Subsidiaries, (iii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to eitherPurchaser or (iv) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to either
Purchaser or any of their respective properties or assets, other than, in the
case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not prevent the consummation of any of the transactions
contemplated hereby in accordance with the terms of this Agreement. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Purchaser in connection with the
execution and delivery of this Agreement by either Purchaser or is necessary for
the consummation of the transactions contemplated by this Agreement, except for
a Current Report on Form 8-K which may be required to be filed with the SEC and
except for in connection, or in compliance, with the provisions of the HSR Act.
2.4 Actions and Proceedings. There are no actions, suits, labor disputes
or other litigation, legal or administrative proceedings or governmental
investigations pending or, to the Knowledge of Purchaser, threatened against or
affecting either Purchaser or any of its or their present or former officers,
directors, employees, consultants, agents or stockholders, as such, or any of
its or their properties, assets or business relating to the transactions
contemplated by this Agreement which could reasonably be expected to have the
effect of delaying or prohibiting the consummation of the transactions
contemplated by this Agreement.
2.5 Brokers. Except as disclosed in Schedule 2.5, no broker, investment
------------
banker or other Person engaged by Purchaser is entitled to any broker's,
finder's or other similar fee or commission in connection with the transactions
contemplated by this Agreement.
2.6 Financing. HH or Subsidiary Purchaser, as the case may be, will have
at Closing sufficient funds available to it to purchase the Assets and assume
the Assumed Liabilities in accordance with the provisions of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PSA AND PSA SUB
PSA and PSA SUB hereby jointly and severally represent and warrant to
Purchaser as follows as of the date hereof and at the Effective Time:
3.1 Organization, Standing and Power.
(a) PSA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to own or lease its properties and to conduct its business
as presently conducted. PSA SUB is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and has
the requisite corporate power and authority to own or lease its properties and
to conduct its business as presently conducted. PSA
8
SUB is duly qualified to do business, and is in good standing, in each
jurisdiction identified in Schedule 3.1(a)(i). Schedule 3.1(a)(ii) lists each
------------------ -------------------
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not, individually or in the aggregate, have
a Material Adverse Effect.
(b) PSA SUB does not have any Subsidiaries and the Assets do not
include any equity interests in any other Person.
(c) The copies of the certificate of incorporation and bylaws of PSA
SUB that have been previously delivered to Purchaser are the complete, true and
correct charter documents and bylaws of PSA SUB. The minutes of directors' and
shareholders' meetings and the stock books of PSA SUB that have previously been
delivered to Purchaser are the complete, true and correct records of directors'
and shareholders' meetings and stock issuances through and including the date
hereof and reflect all transactions and other matters required to be reflected
in such records, as well as such other matters customarily contained in records
of such type.
(d) The current officers and directors of PSA SUB are listed on
Schedule 3.1(d).
---------------
3.2 Capital Structure. The authorized capital stock of PSA SUB consists
of 1,000 shares of PSA SUB Common Stock, no par value per share ("PSA SUB Common
Stock"), and no shares of Preferred Stock. One thousand (1,000) shares of PSA
SUB Common Stock are issued and outstanding, all of which were validly issued,
fully paid and nonassessable and free of preemptive rights or rights of first
refusal. PSA, through two wholly-owned subsidiaries, owns all of the issued and
outstanding shares of PSA SUB Common Stock free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on voting rights, charges and other encumbrances of any nature
whatsoever, except (i) those in favor of the holders of the Subordinated Notes
and (ii) the pledge of 100% of the capital stock, equity interests and assets of
certain of PSA's direct and indirect subsidiaries, to the Banks under the Credit
Agreement and Notes. There are no options, warrants, calls, rights or
agreements to which PSA, PSA SUB or any of the PSA Group is a party or by which
any of them is bound obligating PSA SUB to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock of PSA SUB or
obligating PSA SUB to grant, extend or enter into any such option, warrant,
call, right or agreement.
3.3 Authority. PSA and PSA SUB have all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by PSA and
PSA SUB and the consummation by PSA and PSA SUB of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of PSA and PSA SUB. This Agreement has been duly and validly
executed and delivered by PSA and PSA SUB and (assuming the valid authorization,
execution and delivery of this Agreement by Purchaser) constitutes the legal,
valid and binding obligation of PSA and PSA SUB enforceable against PSA and PSA
SUB in accordance with its terms.
3.4 Consents and Approvals; No Violation. Except as set forth in Schedule
--------
3.4 (including the required consents, approvals, authorizations and other
---
actions identified therein), the execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby and
compliance
9
with the provisions hereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any obligation or
the loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the Assets or the Business
under, any provision of (i) the certificate or articles of incorporation or
bylaws of PSA or PSA SUB or under any provision of the comparable charter or
organization documents of any of the PSA Group, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to any of the
PSA Group, or (iii) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to any of the PSA Group, other than, in the case of
clauses (ii) or (iii), any such violations, defaults, rights, liens, security
interests, charges or encumbrances that, individually or in the aggregate, would
not have a Material Adverse Effect, or prevent the consummation of any of the
transactions contemplated hereby in accordance with the terms of this Agreement.
Without limiting the foregoing, prior to the execution and delivery of this
Agreement, all necessary Persons, including the Banks and NationsBank N.A., have
provided, or have agreed to provide at the Closing, all consents, waivers and
releases required under or pursuant to the Subordinated Notes or the Credit
Agreement for the execution and delivery by PSA and PSA SUB of this Agreement
and the consummation by PSA and PSA SUB of the transactions contemplated hereby
in accordance with the terms hereof, and ChoicePoint, Inc. and/or its Affiliates
have provided all written waivers of any provision of the ChoicePoint Non-
Competition Agreement preventing the execution and delivery by PSA and PSA SUB
of this Agreement and/or the consummation by PSA and PSA SUB of the transactions
contemplated hereby in accordance with the terms hereof. A copy of the
ChoicePoint, Inc. waiver is attached hereto as Exhibit 3.4. No filing or
-----------
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to PSA or PSA SUB in connection with the
execution and delivery of this Agreement by PSA or PSA SUB or is necessary for
the consummation of the transactions contemplated by this Agreement, except for
(A) in connection, or in compliance, with the provisions of the HSR Act, (B)
such filings and consents as may be required under any state or foreign laws
pertaining to debt collection under any applicable bulk sales laws, and (C) such
other consents, orders, authorizations, registrations, declarations and filings
the failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect or prevent the consummation of any of
the transactions contemplated hereby in accordance with terms of this Agreement.
3.5 PSA SUB Financial Statements. Schedule 3.5 contains the unaudited
------------
balance sheet of PSA SUB as of September 30, 1998, and the related unaudited
statements of income for the year then ended, along with the interim balance
sheet and the related interim unaudited statements of income for PSA SUB for the
nine months ended June 30, 1999 (the interim and year end financial statements
are referred to herein collectively as the "Unaudited Financial Statements").
Except as disclosed on Schedule 3.5, the Unaudited Financial Statements are
------------
true, correct and complete and present fairly in all material respects the
financial position of PSA SUB as of the dates thereof, and the related results
of the operations of the Business for the periods indicated. All adjustments,
consisting of normal, recurring accruals necessary for a fair presentation, have
been made in the Unaudited Financial Statements. Except as described on
Schedule 3.5, the Unaudited Financial Statements have been prepared from the
------------
books and records of PSA and PSA SUB in accordance with GAAP (applicable to year
end and interim financial statements, as appropriate) applied on a consistent
basis for the periods stated. Except for the Excluded Assets, the Unaudited
Financial Statements do not include any assets not intended to constitute a part
of the Business or the Assets after giving effect to the transactions
contemplated hereby.
10
3.6 Absence of Certain Changes or Events. Except as disclosed in Schedule
--------
3.6 or in the Unaudited Financial Statements, since September 30, 1998, there
---
has not been: (a) any Material Adverse Effect, (b) any material change with
respect to the manner in which PSA SUB conducts the Business; (c) any increase
in salary, wages, bonus, commission, or other compensation to any officers,
employees, or agents of PSA SUB other than in the Ordinary Course of Business;
(d) any pending or threatened material labor dispute or other material labor
problem relating to any Business Employees; (e) any default or termination
(including, without limitation, any event that with the giving of notice or
lapse of time, or both, would cause a default or termination), or threatened
default or termination, under, or amendment to, any Contract, license, permit,
or certificate relating to the Business or any of the Assets which has had a
Material Adverse Effect; (f) any theft, damage, destruction, casualty, loss,
condemnation, or eminent domain proceeding affecting any of the Assets, whether
or not covered by insurance, which has had a Material Adverse Effect; (g) any
sale, assignment, or transfer of assets of the Business except in the Ordinary
Course of Business; (h) any other material transactions, Contracts or
commitments entered into by any member of the PSA Group affecting any of the
Assets, except in the Ordinary Course of Business; (i) any material change or
modification in the manner of PSA SUB's existing collection policies, procedures
and practices with respect to Accounts Receivable, including acceleration of
collections of Accounts Receivable, or any material change in PSA SUB's existing
policies, procedures and practices with respect to the provision of discounts,
rebates or allowances insofar as they relate to the Business; or (j) any
agreement or understanding to do, or resulting in any of the foregoing.
3.7 Permits and Compliance; Contracts. (a) Except as disclosed in
Schedule 3.7(a), PSA SUB is in possession of all franchises, grants,
------------
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for PSA
SUB to own, lease and operate the Assets or to carry on the Business as it is
now being conducted (collectively, the "PSA SUB Permits"), except where the
failure to have any of the PSA SUB Permits would not, individually or in the
aggregate, have a Material Adverse Effect . No suspension or cancellation of
any of the PSA SUB Permits is pending or, to the Knowledge of PSA, threatened,
except where the suspension or cancellation of any of the PSA SUB Permits would
not, individually or in the aggregate, have a Material Adverse Effect.
(b) PSA SUB is not in default or violation of (i) its certificate of
incorporation, bylaws or other organizational documents, (ii) any applicable
law, ordinance, administrative or governmental rule or regulation, or (iii) any
order, decree or judgment of any Governmental Entity having jurisdiction over
PSA SUB, except, in the case of clauses (i), (ii) or (iii) for any violations
that, individually or in the aggregate, would not have a Material Adverse
Effect. Except as disclosed in Schedule 3.7(b), there is no Contract that is
------------
material to the business, financial condition or results of operations of PSA
SUB, taken as a whole that is not included in the Business Contracts.
(c) Except as set forth in Schedule 3.7(c), no event of default or
------------
event that, but for the giving of notice or the lapse of time or both, would
constitute an event of default exists or, upon the consummation by PSA or PSA
SUB of the transactions contemplated by this Agreement, will exist under any
indenture, mortgage, loan agreement, note or other Contract for borrowed money,
any guarantee of any
11
Contract for borrowed money or any lease, contractual license or other Contract
to which PSA or PSA SUB is a party or by which PSA or PSA SUB is bound or to
which any of the Assets or the Business is subject, other than any defaults
that, individually or in the aggregate, would not have a Material Adverse
Effect, or prevent the consummation of any of the transactions contemplated
hereby in accordance with the terms of this Agreement.
3.8 Tax Matters.
(a) Returns Filed and Taxes Paid. Except as otherwise disclosed in
Schedule 3.8(a): (i) all tax reports and returns required to be filed by or on
---------------
behalf of PSA, PSA SUB and each of the PSA Group have been duly filed on a
timely basis and such tax reports and returns are correct, true, and complete in
all material respects; (ii) all Taxes shown to be payable on the tax reports and
returns or on subsequent assessments with respect thereto have been paid in full
on a timely basis, and no other Taxes are payable by PSA or PSA SUB with respect
to items or periods covered by such tax reports and returns or with respect to
any taxable periods ending prior to the date of this Agreement; (iii) PSA and
PSA SUB have withheld and paid over all Taxes required to have been withheld and
paid over, and complied with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any Business Employee, creditor,
independent contractor, or other third party; and (iv) there are no liens on any
of the Assets with respect to Taxes, other than liens for Taxes not yet due and
payable.
(b) Tax Deficiencies; Audits; Statutes of Limitations. Except as
otherwise disclosed in Schedule 3.8(b): (i) neither the tax reports and returns
---------------
of PSA, PSA SUB nor any of the PSA Group have been audited by a Governmental
Entity, nor is any such audit in process; (ii) no deficiencies exist or have
been asserted (either in writing or verbally, formally or informally) or are
expected to be asserted with respect to Taxes of PSA, PSA SUB nor any of the PSA
Group and neither PSA, PSA SUB nor any of the PSA Group has received notice
(either in writing or verbally, formally or informally) that it has not filed a
tax report or return or paid Taxes required to be filed or paid by it; (iii)
neither PSA, PSA SUB nor any of the PSA Group is a party to any action or
proceeding for assessment or collection of Taxes, nor has such event been
asserted or threatened (either in writing or verbally, formally or informally)
against PSA, PSA SUB or any of the PSA Group or any of their respective assets;
(iv) no waiver or extension of any statute of limitations is in effect with
respect to Taxes or tax reports and returns of PSA, PSA SUB or any of the PSA
Group; and (v) PSA, PSA SUB and each of the PSA Group have disclosed on their
federal income tax returns all positions taken therein that could give rise to a
substantial understatement penalty within the meaning of Section 6662 of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) Tax Sharing Agreements. Except as otherwise disclosed in Schedule
--------
3.8(c), neither PSA nor PSA SUB is a party to any tax sharing agreement.
------
3.9 Actions and Proceedings. Except as set forth in Schedule 3.9, there
------------
are no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity (collectively, "Orders") against or involving PSA SUB, or
against or involving any of the present or former directors, officers,
employees, consultants, agents or stockholders of PSA SUB, as such, any of the
Assets or Business or any Employee Benefit Plan (as defined in Section 3.10) or
any fiduciary, agent or consultant of any Employee
12
Benefit Plan that, individually or in the aggregate, would have a Material
Adverse Effect. Except as set forth in Schedule 3.9, there are no Proceedings or
to the Knowledge of PSA or PSA SUB governmental investigations pending or, to
the Knowledge of PSA or PSA SUB, threatened against or affecting PSA SUB, the
Business or any of the Assets or to which any of the Assets is subject, or
against or affecting the present or former officers, directors, employees,
consultants, agents or stockholders of PSA SUB, as such, or any Employee Benefit
Plan or any fiduciary, agent or consultant of any Employee Benefit Plan.
3.10 Employee Benefits. (a) Schedule 3.10(a) lists all pension,
----------------
retirement, profit-sharing, deferred compensation, bonus, stock option and other
incentive plans, and other employee benefit program arrangements, agreements, or
understandings, or medical, dental, vision, or other health plans, and life
insurance or disability plans, and all other employee benefit plans, whether
written or oral, including, without limitation, all "employee benefit plans" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (collectively, "Employee Benefit Plans"), to which PSA or
PSA SUB contributes or is a party or is bound or under which it may have
liability and under which employees or former employees of PSA SUB (or their
beneficiaries) are eligible to participate or derive a benefit. Each Employee
Benefit Plan is, and has been, administered in compliance with its terms, the
presently applicable provisions of ERISA and the Code, and the regulations
thereunder.
(b) Neither PSA nor PSA SUB contributes to or has an obligation to
contribute to any defined benefit plan within the meaning of Section 3(35) of
ERISA or any multi-employer plan within the meaning of Section 3(37) or 4001(3)
of ERISA, on behalf of any of the employees of PSA or PSA SUB. To the Knowledge
of PSA and PSA SUB, PSA and PSA SUB each has been, and is now, in material
compliance with all applicable laws and regulations with respect to the Employee
Benefit Plans listed in Schedule 3.10(a). With respect to any Employee Benefit
----------------
Plans (whether or not terminated) maintained or contributed to by any entity
under common control with PSA or PSA SUB, determined under Section 414(b), (c),
(m) or (o) of the Code, no event has occurred and no condition exists, which
could, on or after the Closing, subject PSA, PSA SUB or Purchaser or any of its
Affiliates, directly or indirectly (through an indemnification agreement or
otherwise), to any liability, including, without limitation, any liability under
sections 412, 4971 or 4980B of the Code or Title IV of ERISA. Furthermore,
neither PSA, PSA SUB nor any of their Affiliates have taken or failed to take
any action that has resulted or would reasonably be expected to result in the
imposition of any lien on the Assets in connection with the Employee Benefit
Plans.
3.11 Compliance with Certain Laws. (a) PSA SUB's operation of the
Business is currently complying in all material respects with and has at all
times complied in all material respects with, and the Assets, their use,
operation, and maintenance thereof, comply in all material respects with and
have at all times complied in all material respects with all applicable
statutes, laws, ordinances, decrees, orders, rules or regulations of any
Governmental Entity, including, without limitation, any applicable tax, health,
fraud, false claims, environmental or employment statute, law, ordinance,
decree, order, rule or regulation and there are no pending claims which have
been filed against PSA SUB alleging a violation of any such statute, law,
ordinance, decree, order, rule or regulation. Except as set forth on Schedule
--------
3.11(a), no notice has been received by PSA, PSA SUB or any of the PSA Group
-------
with respect to a violation or investigation of any possible violation of any
such legal requirement in connection with the Business.
13
(b) No property included in the Assets is, as a result of any
actions, operations, or activities of PSA, PSA SUB or any member of the PSA
Group or any officer, agent, employee, or contractor thereof, on any federal or
state "Superfund" list or, to the Knowledge of PSA or PSA SUB, has ever been the
site of any activity that would violate any Environmental Law, except where the
failure to comply with Environmental Laws would not have a Material Adverse
Effect. Neither PSA, PSA SUB nor any of the PSA Group has permitted or has
Knowledge of the discharge of Hazardous Materials on or about any property used
in the Business. No past or present activity of PSA or PSA SUB has caused or is
likely to cause the violation of any Environmental Law with respect to the
Business or the Assets except where the failure to comply with Environmental
Laws would not have a Material Adverse Effect.
3.12 Liabilities. Except as fully reflected or reserved against in the
Unaudited Financial Statements, or disclosed in Schedule 3.12, PSA SUB had no
-------------
debts or liabilities (including, without limitation, tax liabilities) at the
date of such financial statements, absolute or contingent, other than debts or
liabilities that, individually or in the aggregate, would not have a Material
Adverse Effect. Except as so reflected, reserved or disclosed, PSA SUB has no
commitments or obligations, other than any commitments which, individually or in
the aggregate, would not have a Material Adverse Effect.
3.13 Labor Matters. PSA SUB has, and as to the Business Employees each
member of the PSA Group has, no collective bargaining, union, or similar labor
agreements, or other similar collective bargaining arrangements with any
employees or group of employees, labor union, or employee representatives.
Neither PSA nor PSA SUB has any Knowledge of any organizing effort currently
being made or threatened by or on behalf of any labor union or other group with
respect to the above-referenced employees. PSA SUB has not engaged in any
unfair labor practice with respect to any persons employed by or otherwise
performing services principally for PSA SUB (the "Business Personnel"), and
there is no unfair labor practice complaint or grievance against PSA SUB by the
National Labor Relations Board or any comparable state agency pending or
threatened in writing with respect to Business Personnel, except where such
unfair labor practice, complaint or grievance would not have a Material Adverse
Effect. There is no labor strike, dispute, slowdown or stoppage pending or, to
the Knowledge of PSA or PSA SUB, threatened against or affecting PSA SUB except
those which, individually or in the aggregate, would not have a Material Adverse
Effect. Except as set forth on Schedule 3.13 hereof, there is no Contract with
-------------
any of the Business Employees that cannot be terminated at will and without
liability to the employer. PSA SUB is in compliance with all federal and state
laws respecting employment and employment practices, immigration, terms and
conditions of employment, and wages and hours, except where noncompliance would
not have a Material Adverse Effect. With respect to the employees of PSA SUB,
to the Knowledge of PSA, no event has occurred and there exists no condition or
set of circumstances in connection with which PSA SUB, could be subject to any
liability under any federal or state handicap or disability discrimination law,
any federal, state or local fair employment practices or nondiscrimination act,
or any other applicable law which would have a Material Adverse Effect.
3.14 Intellectual Property.
(a) Generally. Schedule 1.1(a)(vii) sets forth a complete and
--------------------
accurate list and description of (i) all material patents, trademarks, service
marks, trademark and service xxxx registrations, trademark and service xxxx
registration applications, label filings, copyrights, inventions, patents and
patent
14
applications owned by PSA SUB or used principally in the Business (other
than the trademark to "PSA") (collectively, "Intellectual Property Rights") and
all agreements with respect thereto, and the jurisdiction in or by which such
Intellectual Property Rights have been registered, filed or issued; (ii) all
material trade names owned by PSA SUB or used principally in the Business, and,
in the case of each trade name owned by PSA SUB or used principally in the
Business, the jurisdiction in which such trade name has been registered or
filed; and (iii) all Contracts, pursuant to which PSA SUB has authorized any
Person to use or any Person has the right to use, in any business or commercial
activity, any of the Intellectual Property Rights. PSA SUB has not heretofore
infringed upon, and it is not now infringing upon, any patent, service xxxx,
trade name, trademark, copyright, trade secret, or other intellectual property
belonging to any other Person other than any infringements that, individually or
in the aggregate, would not have a Material Adverse Effect. Neither PSA nor PSA
SUB has Knowledge of any Person infringing upon any of the Intellectual Property
Rights. PSA SUB has made available to Purchaser true, correct and complete
copies of each trademark and service xxxx registration or application therefor,
patent or patent application or other item listed in Schedule 1.1(a)(vii) and
--------------------
each assignment or license with respect to any thereof.
(b) Computer Software and Databases. Schedule 3.14(b) identifies, and
----------------
describes the functions of, all material computer software and databases owned,
licensed, leased, internally developed or otherwise used principally in
connection with the Business. Schedule 3.14(b) identifies each Person to whom
----------------
any member of the PSA Group since January 1, 1998 has sold, licensed, leased or
otherwise transferred or granted any interest or rights to any of the computer
software and databases used principally in connection with the Business and the
date of each such sale, license, lease or other transfer or grant. PSA SUB has
previously delivered to Purchaser complete and accurate copies of all documents
relating to each such sale, license, lease or other transfer or grant.
(c) Requirements. Except as set forth in Schedule 3.14(c)(i), the
-------------------
Intellectual Property Rights identified in Schedule 1.1(a)(vii) and Schedule
-------------------- --------
3.14(b) constitute all of the intellectual property rights utilized in or
-------
necessary for the conduct of the Business, as currently conducted. Except as
set forth in Schedule 3.14(c)(ii) all of the registrations and applications of
--------------------
the Intellectual Property Rights are, or prior to the Closing Date will be in
PSA SUB's name, and PSA SUB owns and it or its agents have the right to use the
same in the geographic areas in which they are currently being used in respect
of services with which they are currently being used, and none of such items, or
the use thereof, infringes on the rights of any Person.
(d) Year 2000. The Information Technology (defined below) included
within the Assets is Year 2000 Compliant. "Year 2000 Compliant" means that the
Information Technology included within the Assets and designed to be used prior
to, during and after the calendar Year 2000 A.D., and the Information Technology
included within the Assets and used during each such time period will accurately
receive, provide and process date/time data (including calculating, comparing
and sequencing) from, into and between the 20/th/ and 21/st/ centuries,
including the years 1999 and 2000, and leap-year calculations and will not
malfunction, cease to function or provide invalid or incorrect results as a
result of date/time data, to the extent that other information technology, used
in combination with the information technology being acquired, properly
exchanges date/time data with it and to the extent such Information Technology
is not modified after the Effective Time. For purposes hereof, "Information
Technology" means computer software, computer firmware, computer hardware
(whether general or specific purpose) and other similar or related items of
automated, computerized, or software systems that are used principally or relied
on in the conduct of the Business and included in the Assets but excludes
commercially available software.
15
(e) "Genesis" Software. Notwithstanding any other provision of this
Agreement, neither PSA nor PSA SUB makes any representation or warranty with
respect to the "Genesis" software system utilized in the Business, except that
the representation and warranty set forth in Section 3.14(d) shall apply to the
"Genesis" software during the period in which PSA SUB is providing billing and
collection services to the Purchaser under the Transition Services Agreement.
Such "Genesis" software is sold to Purchaser "as is."
3.15 Brokers. Except as disclosed in Schedule 3.15, no broker, investment
-------------
banker or other Person engaged by PSA or PSA SUB is entitled to any broker's,
finder's or other similar fee or commission in connection with the transactions
contemplated by this Agreement.
3.16 Property.
(a) Except for the leasehold interests set forth in Schedule
--------
1.1(a)(v), PSA SUB does not own, and the Assets do not include, any interest in
real property. Schedule 1.1(a)(v) sets forth a complete and accurate list and
------------------
description of all the real property leased by PSA SUB or leased by any other
member of the PSA Group and used principally in the Business. All Real Property
Leases are valid, binding and enforceable in accordance with their terms, and
are in full force and effect (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, or similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies of specific performance or injunctive relief
is subject to the discretion of the court before which any proceeding might be
brought). Except as set forth in Schedule 3.16(a), there are no existing
----------------
defaults by PSA SUB or any other member of the PSA Group under any Real Property
Lease and no event of default has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a default thereunder by PSA SUB or any other member of the PSA Group
other than defaults resulting from the failure to obtain any required consents
to the assignment of any Real Property Leases pursuant to this Agreement.
Schedule 3.16(a) describes whether the consent of the landlord or sublandlord is
----------------
required for the assignment of the Real Property Leases to Purchaser.
(b) Schedule 3.16(b) sets forth a complete and accurate description of
----------------
all personal property owned or leased by PSA SUB or owned or leased by any other
member of the PSA Group and used principally in the Business, the net book value
of which, as properly reflected in the books and records, on an individual item-
by-item basis, exceeds $5,000. Except as disclosed in Schedule 3.16(b), PSA SUB
----------------
(i) has or prior to Closing will have good and valid title to all the personal
and mixed, tangible and intangible properties and assets which it purports to
own, including all the personal properties and assets reflected, but not shown
as leased or encumbered, in the Unaudited Financial Statements (except for
inventory and assets sold or consumed in the Ordinary Course of Business or
Accounts Receivable collected, in each case, since March 31, 1999); and (ii)
except for Permitted Liens, owns or will own prior to Closing the Assets free
and clear of all title defects or objections, liens, restrictions, claims,
charges, security interests or other encumbrances of any nature whatsoever,
including any mortgages, leases, chattel mortgages, conditional sales contracts,
collateral security arrangements and other title or interest retention
arrangements. "Permitted Liens" shall mean (x) the security interests,
easements or other encumbrances described in Schedule 3.16(b)(x); and (y) liens
-------------------
for taxes not yet due and payable.
16
(c) All properties and assets of PSA SUB included in the Assets are in
the possession or control of PSA SUB. The offices, improvements, fixtures,
furniture, and equipment and other personal property which constitute any of the
Assets are in condition and repair sufficient for the operation of the Business
as currently conducted by PSA SUB. The Assets and the Excluded Assets
constitute all of the assets and properties of PSA, PSA SUB or any of the PSA
Group of every kind and description utilized principally in connection with the
Business.
(d) Except for Permitted Liens and other matters set forth in the Real
Property Leases, no real property leased by PSA SUB is subject to (i) any
governmental decree or order (or to the Knowledge of PSA threatened or proposed
order) that it be sold or taken by public authority; or (ii) any rights of way,
building use restrictions, exceptions, variances, reservations or limitations of
any nature whatsoever, not of record.
3.17 Independent Contractors. (a) Schedule 3.17(a) contains a complete
----------------
and accurate list of the names of all independent contractors that performed
medical testing services for or through PSA SUB during the six months ended June
30, 1999 (the "Independent Contractors"). Schedule 3.17(a) also includes a list
----------------
of payments made to the Independent Contractors by PSA SUB in each month during
such period. Prior to Closing, PSA SUB shall provide Purchaser a complete and
accurate list of the names of all Independent Contractors that performed medical
testing services for or through PSA SUB during the six full calendar months
ended immediately prior to Closing. Such list shall include payments made to
such Independent Contractors by PSA SUB in each month during such period.
Except as set forth on Schedule 3.17(a) (which shall be updated prior to
----------------
Closing), to the Knowledge of PSA and PSA SUB, the Independent Contractors are
willing to provide testing services upon the request of PSA SUB in a manner
consistent with prior practice and except to the extent their failure to provide
testing services would not have a Material Adverse Effect.
(b) Schedule 3.17(b) contains a complete and accurate list of the name
----------------
and location of all contract affiliates that performed medical testing services
for or through PSA SUB during the six months ended June 30, 1999 (the "Contract
Affiliates"). Schedule 3.17(b) also contains a list of the average monthly
----------------
xxxxxxxx of each Contract Affiliate over the six month period ended June 30,
1999. Except as set forth in Schedule 3.17(b), each of the Contract Affiliates
----------------
currently performs medical testing services for or through PSA SUB. The
preceding representation and warranty shall be deemed to be correct if the valid
and accurate billing records for the most recent full calendar month indicate
that the Contract Affiliates other than those listed on Schedule 3.17(b) have
----------------
performed medical testing services for or through PSA SUB during the most recent
full calendar month.
(c) Except as set forth in Schedule 3.17(c), no Contract Affiliate
----------------
has given notice of its intent to terminate its business relationship with PSA
SUB and to the Knowledge of PSA or PSA SUB, no Contract Affiliate intends to
terminate its business relationship with PSA SUB, as a result of this Agreement
or otherwise.
3.18 Indebtedness. Schedule 3.18 sets forth a complete and accurate list
-------------
and description of all instruments or other documents relating to any direct or
indirect indebtedness for borrowed money of PSA SUB, as well as indebtedness by
way of lease-purchase arrangements, guarantees, undertakings on which
17
others rely in extending credit and all conditional sales contracts, chattel
mortgages and other security arrangements with respect to personal property used
or owned by PSA SUB. PSA SUB has made available to Purchaser a true, correct,
and complete copy of each of the items listed on Schedule 3.18.
-------------
3.19 Employees. Schedule 3.19 hereto contains a true, correct and complete
-------------
listing of all of the employees of PSA SUB (the "Business Employees"). Schedule
--------
3.19 also includes each Business Employee's current position, date of hire or
----
contract by PSA or PSA SUB, and current salary including, in a separate column,
the aggregate amount of any bonuses paid for the most recent fiscal year of PSA
SUB. Schedule 3.19 also sets forth which of the Business Employees are enrolled
-------------
in health insurance plans and designates whether such employees are employees of
PSA, PSA SUB or both. Those Business Employees who are currently on disability
or are receiving worker's compensation are identified on Schedule 3.19.
-------------
3.20 Insurance Policies. Schedule 3.20 sets forth a complete and accurate
-------------
list and description of all insurance policies in force naming PSA SUB, or any
Business Employee in their capacity as such, as an insured or beneficiary or as
a loss payable payee, or for which PSA SUB has paid or is obligated to pay all
or part of the premiums. PSA SUB has not received notice of any pending or
threatened termination or premium increase (retroactive or otherwise) with
respect thereto, and PSA SUB is in compliance with all conditions contained
therein. There have been no lapses (whether cured or not) in the coverage
provided under the insurance policies, referenced herein and as set forth on
Schedule 3.20, during the term of such policies, as extended or renewed. PSA
-------------
SUB has made available to Purchaser true, correct, and complete copies of each
of the policies listed on Schedule 3.20
-------------
3.21 Certain Contracts and Property Rights. The schedules identified in
this Section below contain true, correct, and complete lists of the written
Contracts and property rights of the types listed in subsections (a) through (h)
below (and all amendments, supplements, and modifications thereto) to which PSA
SUB is a party or to which PSA or any of the PSA Group is a party principally
relating to the Business or by which any of the Assets is in any way bound and
which are included in the Assets. Prior to the Closing, PSA shall make
available to Purchaser the originals, or correct and complete copies of executed
documents which conform to the originals if the originals thereof are not
available, of all agreements, contracts, leases, instruments, arrangements,
commitments and other Contracts, and all property rights referred to below and
included within the definition of "Assets," but only to the extent PSA SUB is a
party or a beneficiary or the applicable document relates principally to the
Business:
(a) all Contracts for any of the PSA Group to provide any service,
product or supply to clients or customers in connection with the Business which
during the last fiscal year resulted in, or by their terms provide for, an
annualized revenue of $25,000 or more (Schedule 3.21(a));
----------------
(b) all Real Property Leases (Schedule 1.1(a)(v));
------------------
(c) all equipment leases by their terms involving aggregate annualized
payments of $25,000 or more and having a remaining term of six months or more
(Schedule 3.21(c));
-----------------
18
(d) all Contracts with any agent, licensee, franchisee or distributor
of any of the PSA Group which cannot be terminated upon 30 days notice without
cause and without penalty (Schedule 3.21(d));
----------------
(e) all Contracts with respect to the purchase or receipt of any
services, products, inventories or supplies which during the last fiscal year
involved, or by their terms involve (1) payments of $25,000 or more and have a
remaining term of six months or more, or (2) payments to a referral source; or
(3) data processing programs, software or source codes included in the Assets
other than commercially available, off-the-shelf software (Schedule 3.21(e));
----------------
(f) all Contracts relating to promotional activities (Schedule
--------
3.21(f));
--------
(g) all partnership, joint venture; joint operating or similar
Contracts and any Contracts or commitments providing for payments based in any
manner on the revenues or profits of the Business or the Assets (Schedule
--------
3.21(g)); and
-------
(h) all other agreements or arrangements (other than those of the type
described above) that (1) during the last fiscal year involved, or by their
terms involve, payments or receipts of $25,000 or more and have a remaining term
of six months or more, or (2) contain any prohibition or restriction of
competition or solicitation of clients, or (3) otherwise materially affect the
condition (financial or other), assets, business or prospects of the Business
(Schedule 3.21(h)).
------------------
All of the Contracts and property rights referred to in this Section above or in
any of the Schedules pursuant to this Agreement, are, as to each member of the
PSA Group valid, binding and in full force and effect and enforceable in
accordance with their respective terms (except, in each case, as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership or similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance and injunctive relief, is subject to the discretion of the
court before which any proceeding may be brought) and conditions, there is no
existing default thereunder or breach thereof or condition which, with notice,
the lapse of time, or both, might constitute such a default by any member of the
PSA Group or, to the Knowledge of any member of the PSA Group, any other party
thereto. There has been no termination or threatened termination or notice of
default under any Contract or property right included in the Assets and
described in this Section 3.21.
3.2 Conflicts of Interests. Except as set forth on Schedule 3.22, neither
-------------
PSA, PSA SUB, nor any member of the PSA Group owns, directly or indirectly, an
interest in any Person (other than as a stockholder of 1% or less of a publicly
traded company's securities), that is a competitor, customer, supplier, or
landlord with respect to the Business or the Assets or that otherwise has
business dealings with any member of the PSA Group with respect to the Business
or the Assets.
3.2 Location of Assets. Schedule 3.23 sets forth a complete and accurate
-------------
list of all states and jurisdictions in which the Assets are located or where
the Business is conducted.
19
3.2 Solvency. The transactions contemplated by this Agreement will not
render PSA or PSA SUB insolvent or unable to pay their debts when due.
3.2 Accounts Receivable. The Accounts Receivable outstanding at the
Effective Time will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business of PSA SUB and
are not subject to valid defenses.
3.2 Non-Compete. The Employment Agreement dated August 30, 1999, between
PSA and Xx. Xxxxx Xxxxxx (the "Employment Agreement") is valid, binding and in
full force and effect.
ARTTICLE IV
COVENANTS OF PSA AND PSA SUB
4.1 Operations of Business of PSA SUB. Except as expressly permitted by
clauses (a) through (r) of this Section 4.1 or as disclosed in Schedule 4.1, PSA
------------
and PSA SUB agree that during the period from the date of this Agreement
through the Effective Time, PSA SUB shall, in all material respects, carry on,
separately and independently from Purchaser, the Business in the Ordinary Course
of Business and, to the extent consistent therewith, shall use its reasonable
best efforts to preserve intact its current business organizations, keep
available the services of the Business Employees and preserve its relationships
with and goodwill of its clients, suppliers, contractors, Governmental Entities,
and others having business dealings with PSA SUB. Without limiting the
generality of the foregoing, and except as otherwise expressly contemplated by
this Agreement or as disclosed in Schedule 4.1, PSA shall cause PSA SUB to, and
------------
PSA SUB shall, unless Purchaser gives prior written consent to the contrary,
which consent may not be unreasonably withheld or delayed:
(a) maintain all PSA SUB Permits that are required to carry on the
Business in the Ordinary Course of Business;
(b) not make or commit to make any capital expenditures, capital
additions or capital improvements exceeding $25,000;
(c) maintain all books and records of the Business in the Ordinary
Course of Business;
(d) maintain all insurance policies and surety bonds, letters of
credit, guaranties and similar instruments and commitments now in place for the
benefit of PSA SUB;
(e) not (i) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (ii) purchase, redeem
or otherwise acquire any shares of capital stock of PSA SUB or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities;
20
(f) not issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of the capital stock of PSA SUB, any other voting securities or
equity equivalent or any securities convertible into, or any rights, warrants or
options to acquire any such shares, voting securities, equity equivalent or
convertible securities;
(g) not amend the certificate of incorporation or bylaws of PSA SUB;
(h) not acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of or equity in, or by any
other manner, any Person or otherwise acquire or agree to acquire any assets,
except for transactions in the Ordinary Course of Business;
(i) not sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any Assets, other than in the Ordinary Course of
Business;
(j) not incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or other
investments in, any other Person;
(k) not alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or ownership of
PSA SUB;
(l) not increase the salary, wages, bonus, commissions, fees or other
compensation payable or to become payable to any director, officer, employee,
contractor, agent or representative of PSA SUB or any Business Employee, except
for increases in the Ordinary Course of Business; provided that PSA SUB shall
not be prohibited from granting any retention pay to, or entering into any
employment or retention bonus agreement with, any director, officer, employee,
contractor, agent or representative of PSA SUB or any other Business Employee
which provide for payments to be made solely by PSA or PSA SUB;
(m) not knowingly violate or knowingly fail to perform any material
obligation or duty imposed upon it by any applicable material federal, state or
local law, rule, regulation, guideline or ordinance;
(n) not do any act or omit to do any act, which will cause a breach of
any Business Contract or Real Property Lease or any warranty made under any
Business Contract or Real Property Lease;
(o) not take any action, other than reasonable and usual actions in
the Ordinary Course of Business, with respect to accounting policies or
procedures (other than actions required to be taken by Generally Accepted
Accounting Principles ("GAAP");
(p) not extend any Real Property Leases beyond a one year period or
enter into any new Real Property Leases for longer than a two year period;
(q) not change or modify in any material respects any existing credit,
collection or payment policies, procedures and practices with respect to
accounts receivable relating to the Business; or
(r) not authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any Contract to do any of the foregoing.
21
4.2 Access to Information. For the sole purpose of this Agreement and the
transactions contemplated hereby, and subject to currently existing contractual
and legal restrictions applicable to PSA or any of its Subsidiaries, during the
period from the date hereof through the Effective Time, PSA and PSA SUB shall
afford to the accountants, counsel, financial advisors and other representatives
of Purchaser reasonable access during normal business hours to PSA and PSA SUB's
officers, employees, agents, assets, and properties, and shall permit them to
make such inspections as they may reasonably require of, all of PSA SUB's
personnel records, property records, Contracts, books and records, and other
documents and data of or relating to the Business (including, without
limitation, a review of those items referred to in the Schedules to this
Agreement) and, during such period, PSA and PSA SUB shall furnish promptly to
Purchaser (i) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws and (ii) all other information concerning the PSA SUB's
payors, Independent Contractors, Contract Affiliates, intermediaries and
Business, Assets and Business Employees as Purchaser may reasonably request,
including, without limitation, updated monthly information of the type described
in Section 3.17.
4.3 No Solicitation.
(a) PSA agrees that, for a period commencing on the date hereof and
ending at 5:00 p.m. Atlanta, Georgia time on the date of termination of this
Agreement in accordance with Article IX hereof, it shall not, and shall not
cause, authorize or permit its Subsidiaries, directly or indirectly, or any of
its officers, directors, agents, attorneys, accountants, advisors, Affiliates
and other representatives, or those of any of its Subsidiaries to, solicit,
participate in, initiate, discuss or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions or negotiations with, any
Person relating to, any "Acquisition Proposal" (as such term is defined below);
provided, however, that PSA may engage in discussions or negotiations with, or
-------- -------
furnish information concerning PSA's or PSA SUB's business, properties or assets
to, any third party which makes an Acquisition Proposal if the Board of
Directors of PSA concludes in good faith on the basis of the advice of its
outside legal counsel (who may be its regularly engaged outside legal counsel)
that the failure to take such action would violate the fiduciary obligations of
such Board under applicable law. PSA shall promptly (within five Business Days)
advise Purchaser in writing following the receipt by PSA or PSA SUB of any
Acquisition Proposal and the material terms thereof (including the identity of
the Person making such Acquisition Proposal), and advise Purchaser of any
developments with respect to such Acquisition Proposal as soon as reasonably
practicable upon the occurrence thereof.
(b) "Acquisition Proposal" means any tender offer or exchange offer,
proposal for a merger, consolidation or other business combination involving PSA
SUB or any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the Assets or Business other than the
transactions contemplated under this Agreement.
(c) In the event that during the period commencing on the date hereof
and ending at the earlier of (i) 5:00 p.m. Atlanta, Georgia time on the date of
termination of this Agreement in accordance with Article IX hereof, or (ii) the
Closing Date (the "Exclusivity Period"), PSA or PSA SUB enters into any letter
of intent, definitive agreement or any other Contract regarding any Acquisition
Proposal ("PSA SUB
22
Acquisition Agreement") with any third party (other than Purchaser or any
Subsidiary of Purchaser) PSA covenants and agrees to pay immediately to
Purchaser upon entry into such agreement the principal sum of Two Million
Dollars ($2,000,000) as liquidated damages to compensate Purchaser for its
direct and indirect costs and expenses in connection with the transactions
contemplated by this Agreement, including Purchaser's management time devoted to
negotiation and preparation for the transactions contemplated by this Agreement
and Purchaser's loss as a result of the transactions contemplated by this
Agreement not being consummated. Purchaser acknowledges that such payment shall
be the sole and exclusive remedy of Purchaser under this Agreement or otherwise
in the event that such a PSA SUB Acquisition Agreement is entered into in
accordance with this Section 4.3.
4.4 Notification of Certain Matters. PSA shall give prompt written notice
to Purchaser of: (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which it is aware and which would be
reasonably likely to cause (A) any representation or warranty by PSA or PSA SUB
contained in this Agreement to be untrue or inaccurate in any material respect
or (B) any covenant, condition or agreement of PSA or PSA SUB contained in this
Agreement not to be complied with or satisfied in any material respect, (ii) any
failure of PSA or PSA SUB to comply in a timely manner with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder or (iii) any change or event which would be reasonably likely to have
a Material Adverse Effect.
4.5 Obligations to Maintain Insurance. For three (3) years after the
Effective Time, PSA shall maintain or cause PSA SUB to maintain, at the sole
expense of PSA or PSA SUB, as the case may be, professional errors and omissions
insurance or tail insurance, with such coverage of at least $1,000,000 per
occurrence, for acts and omissions of PSA or PSA SUB relating to the operation
of the Business prior to the Effective Time.
4.6 Pre-Closing Financial Statements. Within five (5) Business Days of
availability, and in no event later than five (5) Business Days prior to the
Closing, PSA shall deliver to Purchaser (a) audited financial statements of the
Business, including balance sheets and statements of operations, as at and for
the close of the last three fiscal years ending prior to the Closing Date,
together with a report thereon by PSA's or PSA SUB's independent public
accountants (the "Audited Financial Statements"), (b) unaudited financial
----------------------------
statements for the Business (i) if the Closing Date is after the end of the
first quarter of the fiscal year, for the first quarter of the current fiscal
year and of the fiscal year ended immediately prior to Closing and (ii) if the
Closing Date is after the end of the second quarter of the fiscal year, for the
first two quarters of the current fiscal year and of the fiscal year ended
immediately prior to Closing and (iii) if the Closing Date is after the end of
the third quarter of the fiscal year, for the first three quarters of the
current fiscal year and of the fiscal year ended immediately prior to Closing.
In addition, PSA shall deliver to Purchaser unaudited financial statements for
the last full calendar month preceding the month in which the Closing Date
occurs and for the period commencing September 30, 1998 and ending on the last
Business Day of such calendar month, provided that such month ends at least
twenty (20) days prior to the Closing Date (collectively, with the financial
statements identified in clause (b) in the previous sentence, the "Pre-Closing
-----------
Unaudited Financial Statements"). The Audited Financial Statements shall be
------------------------------
paid for in accordance with Section 6.7. The Audited Financial Statements shall
be complete and correct in all material respects and shall be prepared in
accordance with GAAP consistently applied throughout the periods indicated. The
Pre-Closing Unaudited Financial Statements shall be prepared on a basis
consistent with the Audited Financial Statements, except that the Pre-Closing
Unaudited Financial Statements need not contain notes and may be subject to
normal audit adjustments. The Audited Financial Statements and the Pre-Closing
Unaudited Financial
23
Statements shall not include any assets not intended to constitute a part of the
Business or the Assets after giving effect to the transactions contemplated
hereby, and shall present fairly in all material respects the financial
condition of the Business as at their respective date. The Audited Financial
Statements shall include audited financial statements, including footnotes, with
respect to the Physical Measurement Information division of ChoicePoint, Inc.
for the twelve months ended December 31, 1997, and the three months ended
December 31, 1996, together with a report thereon by independent public
accountants (the "PMI 1997 Financial Statements"); provided, however, that the
PMI 1997 Financial Statements shall not be required to the extent that Purchaser
obtains a waiver of the requirements to submit the PMI 1997 Financial Statements
from the Securities and Exchange Commission or its Staff.
4.7 Tax Returns. PSA SUB shall prepare and file all federal, state, local
and foreign tax returns and amendments required to be prepared and filed by PSA
SUB after the date hereof.
4.8 Discharge of Business Obligations. From and after the Closing Date,
PSA and PSA SUB shall pay and discharge, in the Ordinary Course of Business, all
obligations and liabilities incurred prior to the Closing Date in respect of the
Business, its operations or the assets and properties used therein (except for
those expressly assumed by Purchaser hereunder), including without limitation
any liabilities or obligations to employees, trade creditors and clients of the
Business.
4.9 Employee Benefit Plan Obligations. Except as may result from
Purchaser's breach of Section 5.6 (WARN Act), Purchaser shall not be subject to
any liability resulting from the termination by PSA or PSA SUB of (i) any
employee of PSA or PSA SUB or (ii) any Employee Benefit Plan with respect to any
PSA or PSA SUB employees, whether or not legally binding, and Purchaser shall
not be responsible for any liability whatsoever under any of PSA or PSA SUB's
Employee Benefit Plans, including, without limitation, any obligation under
ERISA Sections 601 et seq. and Code Section 4980B to provide health continuation
coverage (which continuation coverage shall be provided by PSA or PSA SUB) or
retiree health coverage. Without limiting the foregoing, to the extent required
by law and subject to the Employees election and payment of premiums, PSA and
PSA SUB shall provide health continuation coverage to all of the Employees who
are employed on a part-time basis as of the Closing Date.
4.1 Business Relationships. (a) During the Exclusivity Period, each of
PSA and PSA SUB shall use its reasonable best efforts to encourage the Employees
(as defined below), Independent Contractors and Contract Affiliates to retain
its or their business or employment relationship with PSA SUB through the
Effective Time and to enter into a business or employment relationship with
Purchaser as of the Effective Time. During the Exclusivity Period, PSA and PSA
SUB shall provide notice to Purchaser if any employee, Independent Contractor or
Contract Affiliate terminates (or gives PSA or PSA SUB written notice of their
intent to terminate) its business relationship with PSA SUB prior to Closing.
(b) Upon receipt of the Purchase Price, PSA SUB shall place $375,000 into
an escrow account which shall be distributed in accordance with Schedule
--------
4.10(b).
-------
4.1 Employment Agreement. PSA shall not waive its rights under, modify, or
otherwise act to adversely affect its rights under Section 7(b) of the
Employment Agreement. In addition, PSA shall use its reasonable best efforts to
enforce its rights under Section 7(b) of the Employment Agreement.
24
ARTICLE V
COVENANTS OF PURCHASER
5.1 No Purchase of Securities; Other Actions.
(a) Except as provided in this Agreement or with the express written
consent of PSA (which may not be unreasonably withheld), during the Exclusivity
Period, neither Purchaser nor any of its Subsidiaries will, in any manner,
directly or indirectly, (A) acquire, or offer to acquire, any equity securities
of PSA (including options to acquire securities), (B) acquire, or offer to
acquire, any assets of PSA or any of its Subsidiaries, (C) acquire, offer to
acquire, agree to acquire, hire, solicit to hire or contract with any PSA SUB
employee, franchisee, Independent Contractor or Contract Affiliate of PSA SUB as
of the date hereof, or (D) otherwise act, alone or in concert with others, to
seek to control or influence the management, the Board of Directors or the
policies of PSA or PSA SUB.
(b) In the event of the termination of this Agreement, neither
Purchaser nor any of its Subsidiaries, Affiliates, agents or representatives
(collectively, the "HH Entities" and individually an "HH Entity") will, in any
manner, directly or indirectly, for a period of twelve (12) months from the date
of termination of this Agreement, solicit to hire or contract with any PSA or
PSA SUB employee as of the date hereof; provided, however, that neither
Purchaser nor any HH Entity shall be prohibited from employing employees of PSA
or PSA SUB if (i) such employee initiates the contact with the Purchaser or HH
Entity without any solicitation on the part of Purchaser or any HH Entity or
(ii) such employee responds to a general advertisement published in a newspaper,
magazine or similar publication and paid for by HH.
(c) In the event of termination of this Agreement, Purchaser agrees
that for a period of 12 months following the termination of this Agreement,
neither Purchaser nor any HH Entity shall solicit, directly or indirectly, the
business of, hire or otherwise engage, any Independent Contractor or Contract
Affiliate; provided, however, that neither Purchaser nor any HH Entity shall be
prohibited from entering into any relationship (i) with an Independent
Contractor or Contract Affiliate that initiates contact with Purchaser or any HH
Entity without any solicitation on the part of Purchaser or any HH Entity or
(ii) with an Independent Contractor or Contract Affiliate with whom Purchaser
has had material discussions regarding a business affiliation during the six
months prior to the date hereof. In the event of a dispute regarding this
paragraph (c), Purchaser agrees to provide PSA and PSA SUB with correspondence
or other documentation supporting its contention that material discussions had
occurred within such six month period.
5.2 Notification of Certain Matters. Purchaser shall give prompt written
notice to PSA of: (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which it is aware and which would be
reasonably likely to cause (A) any representation or warranty by Purchaser
contained in this Agreement to be untrue or inaccurate in any material respect
or (B) any covenant, condition or agreement of Purchaser contained in this
Agreement not to be complied with or satisfied in any material respect, or (ii)
any failure of Purchaser to comply in a timely manner with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
25
5.3 Employee Matters. At the Closing Date, Purchaser shall hire all
Business Employees other than those set forth on Schedule 5.3 hereto (the
------------
Business Employees to be hired by Purchaser are referred to as the "Employees").
Purchaser shall retain the Employees for a period of not less than 91 days
following the Closing Date. If (i) the Purchaser terminates the employment of
any Employee without "cause" during the 91 day period following the Closing
Date, or (ii) the Purchaser relocates any Employee to an office more than 100
miles from such Employee's office at the Closing Date during the 91 day period
following the Closing Date without the Employee's consent and the Employee
terminates employment as a result of such involuntary relocation, then Purchaser
shall provide such Employee with continued salary and employee benefits at the
rate and/or level provided to such Employee immediately prior to the date of
such termination or relocation for the remainder of the 91 day period following
the Closing Date. For the purposes of this Section 5.3, "cause" shall mean (i)
the conviction of a felony, (ii) the willful failure to perform reasonable job-
related requests, (iii) an act or omission of gross misconduct injurious to
Purchaser, or (iv) a material violation of Purchaser's rules, policies or
procedures. All Employees who work in positions comparable to employees of
Purchaser who are covered by Purchaser's employee benefit plans (such Employees
collectively, the "Covered Employees") shall be entitled, to the extent
permitted by applicable law and the terms of Purchaser's employee benefit plans,
to participate in all employee benefit plans of Purchaser to the same extent as
Purchaser's employees currently employed in comparable positions. To the extent
permitted by applicable law, the period of service with PSA and/or PSA SUB for
all Covered Employees shall be recognized for vesting and eligibility purposes
under Purchaser's employee benefit plans. All Covered Employees, effective as
of 12:00 a.m. midnight on the Closing Date, shall be covered under the medical
and dental benefit plans of Purchaser as new employees of Purchaser with a
waiver of any waiting period and of any pre-existing condition limitations. In
addition, if the Closing Date falls within an annual period of coverage under
any group health plan or group dental plan of Purchaser, each Covered Employee
shall be given credit for covered expenses paid by that Employee under the
comparable employee benefit plans of PSA or PSA SUB during the applicable
coverage period through the Closing Date towards the satisfaction of any
deductible limitation and out-of-pocket maximum that may apply under the group
health plan or group dental plan of Purchaser and its Subsidiaries.
5.4 Retention and Severance Payments. (a) Purchaser shall pay retention
bonuses to the Employees listed on Schedule 5.4(a) (which Schedule shall be
---------------
provided to PSA by Purchaser prior to the Closing Date) in accordance with the
terms and in the amounts listed thereon.
(b) Purchaser shall also pay severance payments to the employees
listed on Schedule 5.4(b) (which Schedule shall be provided to PSA by Purchaser
---------------
prior to the Closing Date) in accordance with the terms and in the amounts
thereon.
5.5 Employee Benefits. The Purchaser shall not adopt, assume or otherwise
become responsible for, either primarily or as a successor employer, any assets
or liabilities of any Employee Benefit Plan of PSA or any of its Affiliates.
5.6 WARN Act. Because the Purchaser intends to continue the employment of
a legally sufficient number of employees working at the business after the
Closing for at least ninety-one (91) days, the parties hereto do not expect that
the Worker Adjustment and Retraining Notification Act 29 USC Sections 2101-2109
(the "WARN Act") shall be applicable to the sale of the Assets hereunder. The
26
Purchaser covenants to comply with the WARN Act with respect to the Employees
whom Purchaser terminates after the Closing Date.
5.7 Business Relationships. During the Exclusivity Period, Purchaser
shall use its reasonable best efforts to encourage the Employees (as defined
below), Independent Contractors and Contract Affiliates to retain its or their
business or employment relationship with PSA SUB through the Effective Time and
to enter into a business or employment relationship with Purchaser as of the
Effective Time.
5.8 Vacation Pay and Sick Pay. Purchaser shall assume the sick pay and
vacation pay obligations to the Employees as specifically identified in Schedule
--------
5.8, plus the sick pay and vacation pay obligations accrued by such Employees
---
between August 14, 1999 and the Effective Time in accordance with PSA SUB's
method of accrual of sick pay and vacation pay as described in Schedule 5.8.
------------
5.9 Preservation of Records. For a period of two (2) years from the
Effective Time, Purchaser will preserve and safekeep any records, files and
documents transferred to Purchaser related to the Assets or the Business as
required by reasonable business practices for the joint benefit of PSA and
Purchaser. Purchaser will permit PSA and its representatives, for reasonable
cause, at reasonable times and upon reasonable notice and at PSA's expense, to
examine, inspect, copy and reproduce files, documents or records relating to the
Business for dates of service on or prior to the Effective Time as PSA may
reasonably request. At the end of the two year period, upon PSA's request,
Purchaser shall return such records, files and documents to PSA. PSA shall pay
for any reasonable direct costs incurred by Purchaser in returning records,
files and documents to PSA pursuant to the preceding sentence.
ARTICLE VI
COVENANTS OF PURCHASER, PSA AND PSA SUB
6.1 Approvals of Third Parties. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including, but not limited to: (i) the
obtaining of all necessary actions or non-actions, waivers, consents, approvals,
authorizations and exemptions from all Governmental Entities and the making of
all necessary registrations, filings (including filings with Governmental
Entities) and document productions and the taking of all reasonable steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (iv)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement. No party to this Agreement
shall consent to any voluntary delay of the consummation
27
of the transactions contemplated by this Agreement at the behest of any
Governmental Entity without the consent of the other parties to this Agreement,
which consent shall not be unreasonably withheld.
(b) In addition to the other requirements of this Section 6.1, PSA and
Purchaser shall each promptly prepare and file a notification with the United
States Department of Justice (the "Justice Department") and the Federal Trade
Commission (the "FTC") as required by the HSR Act and shall promptly respond to
any request by the Justice Department or the FTC for any additional or
supplemental information. PSA and Purchaser shall cooperate with each other in
connection with the preparation of such notification and any such additional or
supplemental information, including sharing information between the parties'
attorneys that may be needed to complete or respond to such notification and any
such request for additional or supplemental information, and providing a copy of
each party's HSR Act notification and attachments to the other party prior to
filing. In the event that the Justice Department or the FTC (or any other
Governmental Entity) seeks an Order (including without limitation any stay or
temporary or permanent restraining order) with respect to, or challenging the
legality of or seeking to enjoin or delay the consummation of any of, the
transactions contemplated by this Agreement under any applicable antitrust laws,
each party agrees to use its reasonable best efforts (provided, however, that
Purchaser shall have primary responsibility) to challenge such action (including
any litigation) and to appeal any and all Orders enjoining such transactions,
including without limitation retaining such economists and other experts as
counsel to Purchaser and PSA mutually and reasonably deem necessary in
connection with such challenges or appeals. Each of Purchaser, PSA and PSA SUB
shall pay its own costs associated with the HSR Act obligations, including legal
and accounting fees related to compliance with any and all requests for
additional or supplemental information or other presentations made to the
Justice Department or the FTC, and any litigation by any Governmental Entity
pursuant to antitrust laws; provided, however that Purchaser shall pay seventy-
five percent (75%) of, and PSA shall pay twenty-five percent (25%) of all costs
and expenses incurred by Purchaser, PSA or PSA SUB which both Purchaser and PSA
have mutually and reasonably approved in advance for: (i) economists,
consultants and other experts (other than attorneys and accountants engaged for
the purpose of providing legal and accounting services) for the purposes of
providing advice, testimony and information, engaging in studies, providing
consultation, and preparing and providing reports which each party deems
reasonably necessary and desirable with respect to the obligations of the
parties under this Section 6.1(b), and (ii) any and all litigation expenses and
costs (other than attorney fees and accountants fees) reasonably incurred with
respect to the obligations of the parties under this Section 6.1(b). Each party
shall cooperate with the other parties in connection with such challenges and
appeals. Each party shall keep confidential all information about the others
obtained in connection with the preparation of HSR Act notification or any
subsequent presentations or productions to any Governmental Entity or in
preparation of any litigation with any Governmental Entity. Purchaser and PSA
shall pay its own filing fees required under the regulations promulgated
pursuant to the HSR Act.
(c) PSA and PSA SUB will use their reasonable best efforts to cause or
obtain the satisfaction of the conditions specified in Sections 7.1 and 7.3.
Purchaser will use its reasonable best efforts to cause or obtain the
satisfaction of the conditions specified in Sections 7.1 and 7.2.
6.2 Confidentiality. In connection with this Agreement, the parties may
have access to information which is nonpublic, confidential or proprietary in
nature. All of such information, in whole or in part, together with any
analyses, compilations, studies or other documents prepared by any party, which
contain or otherwise reflect any such information is hereinafter referred to as
the "Information." Each party hereby agrees that the Information will be kept
confidential and shall not, without the prior mutual written
28
consent of the parties, be disclosed, in any manner whatsoever, in whole or in
part, and shall not be used by any party following the termination of this
Agreement or the consummation of the transactions contemplated hereby except
that upon consummation of the transactions contemplated hereby, the Purchaser
may use any such Information pertaining to the Business in any manner that it
deems appropriate. Each party agrees to transmit the Information only to its
respective employees and representatives (including any sources of financing)
who need to know the Information and who shall agree to be bound by the terms
and conditions of this Agreement. In any event, each party shall be responsible
for any breach of this Agreement by its respective employees or representatives
(including any sources of financing). If the transactions contemplated hereunder
are not consummated, the parties shall return the Information to the other
promptly upon request and no party shall retain any copies thereof. In the event
any party becomes legally compelled to disclose any of the Information, such
party will provide to the other parties prompt written notice so that each other
party may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Agreement. In the event that such
protective order or other remedy is not obtained, or compliance with the
provisions of this Agreement is waived, a party will furnish only that portion
of the Information which is legally required, and to the extent requested by the
other party, will exercise its reasonable best efforts to obtain a protective
order or other reliable assurance that confidential treatment will be accorded
the Information. The term "Information" does not include information which (i)
was known to any party about another party prior to its disclosure, provided
that such information was lawfully obtained or developed, (ii) becomes generally
available to the public other than as a result of a disclosure by a party in
violation of this Agreement, or (iii) becomes available from a source other than
a party to this Agreement, if the source is not bound by a confidentiality
agreement and such source lawfully obtained such information. This Section 6.2
is intended to survive the termination of this Agreement for a period of two
years; provided, however, that with respect to all confidential Information
which would constitute a trade secret under applicable law, this Section is
intended to survive in perpetuity.
6.3 Public Announcements. Neither Purchaser, PSA nor PSA SUB will issue
any press release with respect to this Agreement or the transactions
contemplated by this Agreement or otherwise issue any written public statements
with respect to such transactions other than upon mutual agreement and in
cooperation with the other party, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange or interdealer quotation system on which Purchaser's or PSA's
securities are listed. Purchaser and PSA also agree to reasonably cooperate
regarding any written communications which relate to the transactions
contemplated by this Agreement made to their employees during the period from
the date hereof until the Closing Date.
6.4 Fees and Expenses. Except as otherwise provided in this Agreement,
whether or not the transactions contemplated by this Agreement are consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby including, without limitation, the fees and
disbursements of counsel, financial advisors and accountants, shall be paid by
the party incurring such costs and expenses.
6.5 Transfer Taxes. Purchaser and PSA shall be equally responsible and
liable for the payment of all filing and recording fees and taxes related to the
transactions contemplated by this Agreement; including but not limited to,
document recording fees, real property transfer taxes, and excise taxes, arising
out of or in connection with the consummation of the transactions contemplated
hereby; except that Purchaser shall not be responsible for, or have any
liability with respect to, income or similar taxes imposed upon PSA or PSA SUB
arising out of the transactions contemplated by this Agreement, if any. Except
as
29
otherwise set forth herein, Purchaser shall not be responsible for any tax
liabilities of PSA or PSA SUB arising from the Business on or before the Closing
Date, and neither PSA nor PSA SUB shall be responsible for any tax liabilities
of Purchaser arising from the business or operations of the Business after the
Closing Date. Utility payments, telephone charges, real property taxes,
personal property taxes, rent, salaries, commissions, deposit insurance
premiums, other ordinary operating expenses of the Business and other expenses
and taxes related to the liabilities assumed or Assets purchased hereunder shall
be prorated between the parties as of the Closing Date. To the extent any such
item has been prepaid by PSA SUB for a period extending beyond the Closing Date,
Purchaser shall pay to PSA SUB such amounts as are necessary to effect a
proportionate monetary adjustment in favor of PSA SUB. To the extent any such
item is paid by Purchaser for a period prior to the Closing Date, PSA shall pay
to Purchaser such amounts as are necessary to effect a proportionate monetary
adjustment in favor of Purchaser.
6.6 Transition Services Agreement. On or before the Closing Date,
Purchaser, PSA and PSA SUB shall enter into a Transition Services Agreement
substantially in the form of Exhibit 6.6 hereto.
-----------
6.7 Audited Financial Statements Costs. PSA shall pay all costs and
expenses payable to Ernst & Young in connection with the preparation of the
Audited Financial Statements and the Pre-Closing Unaudited Financial Statements;
provided, however, that (a) on the Closing Date, or (b) on the date this
Agreement is terminated for any reason other than: (i) a willful breach by PSA
or PSA SUB of its representations and warranties hereunder; (ii) the willful
failure of PSA or PSA SUB to comply with its covenants and obligations
hereunder; or (iii) pursuant to Section 9.1(f), Purchaser shall pay to PSA an
amount equal to fifty percent (50%) of the costs and expenses payable to Ernst &
Young for their services performed in connection with the preparation of the
Audited Financial Statements and the Pre-Closing Unaudited Financial Statements.
6.8 ChoicePoint Life 2000. Prior to or on the Closing Date, PSA and/or
PSA SUB, on one hand, and HH, on the other hand, will enter into an agreement
whereby HH will agree to utilize the ChoicePoint Inc./ChoicePoint Services Inc.
Life 2000 system with customers of the Business currently using such service for
a period of 12 months following the Closing Date at the rate specified in
Schedule 6.8 with a minimum fee payable to ChoicePoint Inc. and/or ChoicePoint
------------
Services Inc. of $20,000 per month. Such agreement shall be assigned by PSA
and/or PSA SUB to ChoicePoint Inc. and ChoicePoint Services Inc. as of the
Effective Time (HH shall be deemed to have consented to such assignment by its
execution of this Agreement).
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
7.1 Conditions to Each Party's Obligations. Except as expressly set forth
elsewhere herein, the respective obligations of each party to effect the
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(a) HSR Act and Other Approvals.
(i) The waiting period (and any extension thereof) applicable to
the consummation of the transactions contemplated by this Agreement under the
HSR Act shall have expired or been terminated.
30
(ii) All authorizations, consents, orders, declarations or
approvals of, or filings with, or terminations or expirations of waiting periods
imposed by any Governmental Entity, which the failure to obtain, make or occur
would have the effect of making the transactions contemplated hereby illegal,
shall have been obtained, shall have been made or shall have occurred.
(b) No Order. No court or other Governmental Entity having
jurisdiction over PSA, PSA SUB or Purchaser, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the transactions contemplated by this Agreement illegal.
7.2 Conditions to Obligation of PSA and PSA SUB. The obligation of PSA
and PSA SUB to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) Performance of Obligations; Representations and Warranties.
Purchaser shall have performed in all material respects each of its covenants
and agreements contained in this Agreement required to be performed on or prior
to the Closing Date, each of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date (other than
representations and warranties which address matters only as of a certain date
which shall be true and correct in all material respects as of such certain
date) and, provided, however, that for purposes of determining whether this
condition has been satisfied, (i) if any such representation or warranty is
already qualified by materiality, such representation or warranty as so
qualified shall be true and correct in all respects and (ii) no effect shall be
given to any supplements to the Schedules that were delivered by Purchaser to
PSA or PSA SUB prior to the Closing Date. PSA shall have received a certificate
to the foregoing effect from both the President or any Vice President and the
Chief Financial Officer of the Purchaser.
(b) Litigation. There shall not be any litigation or other proceeding
or threat of litigation or other proceeding in any forum against any party
hereto (i) challenging the validity or legality of this Agreement or (ii)
seeking damages in respect of or seeking to restrain or invalidate the
transactions contemplated by this Agreement which, in the judgment of PSA, based
upon advice of counsel, would have a material adverse effect on PSA or the
consummation of the transactions contemplated by this Agreement.
(c) Opinion of Counsel to Purchaser. PSA shall have received from
counsel to Purchaser an opinion, dated the Closing Date, in form and substance
customary to transactions of the type contemplated hereby and reasonably
satisfactory to PSA.
7.3 Conditions to Obligations of Purchaser. The obligations of Purchaser
to effect the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) Performance of Obligations; Representations and Warranties. PSA
and PSA SUB shall have performed in all material respects each of its covenants
and agreements contained in this Agreement required to be performed on or prior
to the Closing Date, each of the representations and
31
warranties of PSA and PSA SUB contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as if made on and
as of such date (other than representations and warranties which address matters
only as of a certain date which shall be true and correct in all material
respects as of such certain date) and, provided, however, that for purposes of
determining whether this condition has been satisfied, (i) if any such
representation or warranty is already qualified by materiality, such
representation or warranty as so qualified shall be true and correct in all
respects and (ii) no effect shall be given to any supplements to the Schedules
that were delivered by PSA or PSA SUB to Purchaser prior to the Closing Date.
Purchaser shall have received a certificate to the foregoing effect from both
the President or any Vice President and the Chief Financial Officer of PSA and
PSA SUB.
Notwithstanding the foregoing, PSA and PSA SUB shall not be deemed to have
failed to comply with this Section 7.3(a) with respect to the representations
and warranties if any breach by PSA or PSA SUB of the representations and
warranties in this Agreement, individually or in the aggregate, has not had a
Material Adverse Effect. For purposes of this Section, a Material Adverse
Effect shall not be deemed to have occurred to the extent that an adverse change
results from changes occurring after the date hereof in the general economic
conditions in any of the markets served by PSA SUB or from matters affecting the
industry as a whole. In addition, for purposes of this Section, PSA and PSA SUB
shall not be deemed to have breached any of the representations and warranties
in Sections 3.6, 3.13 or 3.17(b) herein as a result of any adverse changes to
the extent that such changes resulted from the loss of any of the Contract
Affiliates so long as the supplements to Schedule 3.17(b) indicate that
----------------
Contract Affiliates representing 60% or more of the total revenues listed on
Schedule 3.17(b) have retained their business relationships with PSA SUB as of
----------------
5:00 p.m., Atlanta, Georgia time, on the Closing Date. The representations and
warranties contained in Section 3.6, 3.13 and 3.17 herein shall be deemed not to
be true and correct in all material respects and a Material Adverse Effect shall
be deemed to have occurred if Contract Affiliates representing less than 60% of
the total revenues listed on Schedule 3.17(b) have retained their business
----------------
relationships with PSA SUB as of 5:00 p.m., Atlanta, Georgia time, on the
Closing Date. For purposes of the preceding two sentences, Contract Affiliates
shall be deemed to have retained their business relationship with PSA SUB as of
5:00 p.m., Atlanta, Georgia time, on the Closing Date if revenues from such
Persons are recorded on the valid and accurate billing records of PSA SUB as of
the end of the last full calendar month preceding the Closing Date, and to the
Knowledge of PSA or PSA SUB, such Persons have not terminated their business
relationships with PSA SUB on or before the Closing Date.
In addition, for purposes of this Section, PSA and PSA SUB shall not
be deemed to have breached any of the representations and warranties in Sections
3.6, 3.13 or 3.17(a) herein to the extent such adverse changes result from the
loss of any of the Independent Contractors so long as (i) the average monthly
revenue from the Independent Contractors for the three full calendar month
period ended prior to the Closing Date (in other words, the total revenues for
the three months divided by three) is 60% or more of the average monthly revenue
from the Independent Contractors for the six calendar month period from January
to June 1999 (in other words, the total revenues for the six months divided by
six) and (ii) the revenue from the Independent contractors for the last full
calendar month prior to Closing is 50% or more of the average monthly revenue
from the Independent Contractors for the six calendar month period from January
to June, 1999. The representations and warranties contained in Sections 3.6,
3.13 and 3.17(a) shall be deemed not to be true and correct in all material
respects and a Material Adverse Effect shall be deemed to have occurred if (i)
the average monthly revenue from the Independent Contractors for the three full
calendar months period ended prior to the Closing Date is less than 60% of the
average monthly revenues from the Independent Contractors for the six calendar
month period from January to June, 1999 or (ii) the revenue
32
from the Independent Contractors for the full calendar month prior to Closing is
less than 50% of the average monthly revenue from the Independent Contractors
for the six calendar month period from January to June, 1999.
(b) Litigation. There shall not be any litigation or other proceeding
or threat of litigation or other proceeding in any forum against any party
hereto (i) challenging the validity or legality of this Agreement or (ii)
seeking damages in respect of or seeking to restrain or invalidate the
transactions contemplated by this Agreement which, in the judgment of Purchaser,
based upon advice of counsel, would have a material adverse effect on Purchaser
or the consummation of the transactions contemplated by this Agreement.
(c) Opinion of Counsel to PSA and PSA SUB. Purchaser shall have
received from counsel to PSA and PSA SUB an opinion, dated the Closing Date, in
form and substance customary to transactions of the type contemplated hereby and
reasonably satisfactory to Purchaser.
(d) Transfer Documents. Purchaser shall have received from PSA or
PSA SUB all of the documents reasonably requested pursuant to Section 1.4.
(e) Third Party Consents. PSA and PSA SUB shall have obtained all
consents and approvals required to transfer the Assets to Purchaser, including
those listed on Schedule 7.3(e); provided, however, that PSA and PSA SUB shall
---------------
not be required to obtain such consents and approvals to the extent that the
failure to obtain such consents and approvals, in the aggregate, would not have
a Material Adverse Effect. With respect to each such consent or approval,
Purchaser shall have received written evidence, reasonably satisfactory to
Purchaser, that such consent or approval has been duly and lawfully filed,
given, obtained or taken and is valid, effective and subsisting.
(f) Liens. Purchaser shall have received evidence, reasonably
satisfactory to Purchaser, that any and all liens, mortgages, claims,
encumbrances, charges on and security interests in the Assets, other than the
Permitted Liens listed in Schedule 7.3(f), shall have been released, terminated
---------------
and discharged.
(g) Non-Competition Agreement. PSA shall have executed and delivered
a non-competition agreement substantially in the form of Exhibit 7.3(g).
--------------
(h) Board Resolution. The Boards of Directors of PSA and PSA SUB
shall have received an opinion from Xxxxxxx Xxxxx Xxxxxx that the aggregate
consideration to be received by PSA SUB pursuant to the transactions described
in this Agreement is fair to PSA SUB and PSA from a financial point of view. The
Board of Directors of PSA, based in part upon the foregoing opinion, as well
as the information and analyses presented by its management and advisors shall
have concluded in a resolution adopted at a Board meeting duly called and held,
that the transactions described in this Agreement, taken as a whole, are in the
best interests of PSA, and a copy of the foregoing opinion and such Board
resolutions, certified by the Secretary of PSA shall have been delivered to
Purchaser. The Board of Directors of PSA SUB, after consultation with its
management and advisors, shall have concluded in resolutions adopted at a Board
meeting duly called and held, that the transactions described in this Agreement
are in the best interests of PSA SUB, and a copy of such resolutions, certified
by the Secretary of PSA SUB shall have been delivered to Purchaser.
33
(i) Audited Financial Statements. Purchaser shall have received from
PSA copies of the Audited Financial Statements and Pre-Closing Unaudited
Financial Statements pursuant to Section 4.6.
ARTICLE VIII
INDEMNIFICATION
8.1 Purchaser's Right to Indemnification. (a) PSA and PSA SUB, jointly
and severally, shall indemnify and hold Purchaser and its Affiliates harmless
from any and all Losses which Purchaser and its Affiliates may suffer or incur
arising out of or relating to:
(i) the breach or inaccuracy of any of the representations,
warranties, covenants, or agreements made by PSA or PSA SUB herein (for purposes
of this Section 8.1 any supplements to the Schedules delivered by PSA or PSA
SUB to Purchaser prior to the Closing Date shall be given no effect unless such
supplements reflect a breach or breaches which, individually or in the
aggregate, reflect a Material Adverse Effect and Purchaser nonetheless agrees to
consummate the transactions contemplated hereby in which case Purchaser shall
not be entitled to indemnification under this Section 8.1(a) to the extent
Losses arise from the matters set forth in the Schedules or supplements);
(ii) any third party Proceeding of any nature relating to the
operation of the Business or the Assets prior to the Effective Time, except to
the extent such Proceedings result from Purchaser's own acts or omissions;
(iii) except for Taxes that Purchaser has agreed to pay in
accordance with Section 6.5, any income or other Taxes assessed against PSA,
PSA SUB or any of the PSA Group arising out of, or resulting from, the sale of
the Assets hereunder or arising out of or resulting from the operations of PSA
or PSA SUB prior to the Effective Time; and
(iv) any liabilities or obligations of PSA, PSA SUB or any of
the PSA Group not expressly assumed by Purchaser pursuant to this Agreement.
(b) PSA and PSA SUB shall not be liable for any matters referred to
in Section 8.1(a)(i) through (a)(ii), inclusive, except to the extent (and only
to the extent) that the aggregate Losses thereunder exceed Five Hundred Thousand
Dollars ($500,000) (the "PSA Deductible"); provided, however that the PSA
Deductible shall not apply to PSA's or PSA SUB's breach of its covenants and
agreements set forth in Section 1.2 (Aggregate Purchase Price of the Assets),
Section 3.1 (Organization, Standing and Power), Section 3.3 (Authority), Section
3.8 (Tax Matters), Section 3.15 (Brokers), Section 3.25 (Accounts Receivable) to
the extent the breach relates to Current Accounts Receivable, Section 4.3 (No
Solicitation), Section 6.1(b) (HSR fees), Section 6.4 (Fees and Expenses),
Section 6.5 (Transfer Taxes), Section 6.7 (Audited Financial Statements Costs)
and Section 10.12 (Bulk Transfer Liability). Purchaser shall (and shall cause
each Person entitled to indemnity under Section 8.1(a) to) in good faith use
commercially reasonable efforts to minimize the amount of such Losses consistent
with Purchaser's practices regarding claims of liability for which Purchaser
would be wholly liable. PSA's and PSA SUB's aggregate liability under Section
8.1(a)(i) through (ii), inclusive, shall not exceed Nineteen Million Dollars
($19,000,000). Provided
34
that PSA and PSA SUB have complied with their obligations under Section 4.10 and
have not breached their representations and warranties under Section 3.17,
neither PSA nor PSA SUB shall be obligated to indemnify Purchaser or its
Affiliates for any Loss to the extent such Loss arises as a result of adverse
changes resulting from the loss of Contract Affiliates or Independent
Contractors as a result of the existence of this Agreement or the transactions
contemplated hereby. In addition, neither PSA nor PSA SUB shall be obligated to
indemnify Purchaser or its Affiliates for any Loss to the extent such Loss
arises from matters disclosed in the supplements to the Schedules that occurred
as a result of general economic conditions in any of the markets served by PSA
SUB or the Business or as a result of matters affecting the industry as a whole.
8.2 PSA's and PSA SUB's Right to Indemnification. (a) Each Purchaser,
jointly and severally, agrees to indemnify and hold PSA and PSA SUB and their
Affiliates harmless from any and all Losses, that PSA or PSA SUB or their
Affiliates may suffer or incur arising out of or relating to:
(i) the breach or inaccuracy of any of the representations,
warranties, covenants, or agreements made by Purchaser herein (for purposes of
this Section 8.2 any supplements to the Schedules delivered by Purchaser to PSA
or PSA SUB prior to the Closing Date shall be given no effect);
(ii) any third party Proceeding of any nature relating to the
operation of the Business or the Assets after the Effective Time, except to the
extent such lawsuits, claims, or proceedings result from PSA or PSA SUB's or
any of the PSA Group's own acts or omissions;
(iii) except for Taxes that PSA or PSA SUB has agreed to pay
in accordance with Section 6.5 any income or other Taxes assessed against
Purchaser arising out of, or resulting from, the purchase of the Assets
hereunder, or arising out of or resulting from the operation of the Business
after the Effective Time; or
(iv) any of the Assumed Liabilities.
(b) Purchaser shall not be liable for any matters referred to in
Section 8.2(a)(i) through (a)(ii), inclusive, except to the extent (and only to
the extent) that the aggregate Losses thereunder exceed Five Hundred Thousand
Dollars ($500,000) (the "Purchaser Deductible"); provided, however that the
Purchaser Deductible shall not apply to Purchaser's breach of its covenants and
agreements set forth in Article I (Purchase and Sale of the Assets), Section 2.1
(Organization, Standing and Power), Section 2.2 (Authority), Section 2.5
(Brokers), Section 5.3 (Employee Matters), Section 5.4 (Retention and Severance
Payments), Section 5.6 (WARN Act), Section 5.8 (Vacation Pay and Sick Pay),
Section 6.1 (Approvals of Third Parties), Section 6.4 (Fees and Expenses),
Section 6.5 (Transfer Taxes), Section 6.6 (Transition Services Agreement),
Section 6.7 (Audited Financial Statements Costs) and Section 6.8 (ChoicePoint
Life 2000). PSA and PSA SUB shall (and shall cause each Person entitled to
indemnity under Section 8.2(a) to) in good faith use commercially reasonable
efforts to minimize the amount of such Losses consistent with PSA's and PSA
SUB's practices regarding claims for liability for which PSA or PSA SUB would be
wholly liable. Purchasers' aggregate liability under Section 8.2(a)(i) through
(a)(ii), inclusive, shall not exceed Nineteen Million Dollars ($19,000,000).
8.3 Procedure. (a) As soon as is practicable after becoming aware of a
claim for indemnification, or the commencement of any suit, action or
proceeding, with respect to which indemnity
35
may be claimed pursuant to the terms of this Agreement (but in any event within
15 days), the Person seeking indemnification pursuant to Section 8.1 or Section
8.2 (the "Indemnitee") shall give written notice to the Person against whom
indemnification is sought (the "Indemnitor") of such claim or the commencement
of any such suit, action or proceeding, and the amount the Indemnitee will be
entitled to receive hereunder from the Indemnitor; provided, that the failure of
the Indemnitee to give notice shall not relieve the Indemnitor of its
obligations under this Article VIII except to the extent (if any) that the
Indemnitor shall have been prejudiced thereby. Indemnitee shall set forth in
each such notice the section of this Agreement under which the indemnification
is claimed, factual support and information regarding the claim, and the amount
of such claim.
(b) Except for a claim made under Section 3.8, Section 8.1(a)(iv) or
Section 8.2(a)(iv), which notice may be given at any time during the statutory
period, the notice of any other claim must be given to the Indemnitor within 18
months from the Effective Time or the indemnities in Section 8.1 and Section 8.2
shall cease.
8.4 Assumption of Defense. If any claim for indemnification by Indemnitee
arises out of a claim for monetary damages by a Person other than Indemnitee,
and provided Indemnitor is not objecting to its obligation to indemnify
Indemnitee, the Indemnitor may, at its own expense (a) participate in the
defense of any claim, suit, action or proceeding and (b) upon notice to the
Indemnitee and the Indemnitor's delivering to the Indemnitee a written agreement
that the Indemnitor is entitled to indemnification pursuant to Section 8.1 or
-----------
8.2 for all Losses arising out of such claim, suit, action or proceeding, at any
---
time during the course of any such claim, suit, action or proceeding, assume the
defense thereof; provided, that (i) the Indemnitor's counsel is reasonably
satisfactory to the Indemnitee and (ii) the Indemnitor shall thereafter consult
with and update the Indemnitee upon the Indemnitee's reasonable request for such
consultation or update from time to time with respect to such claim, suit,
action or proceeding. If the Indemnitor assumes such defense, the Indemnitee
shall have the right (but not the obligation) to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnitor. Whether or not the Indemnitor chooses to defend or
prosecute any such claim, suit, action or proceeding, all of the parties hereto
shall reasonably cooperate in the defense or prosecution thereof. A party may
not compromise or settle a claim, suit, action or proceeding affecting the
liability of any Indemnitor without the written consent of the Indemnitor, which
consent may not be unreasonably withheld. Neither the Indemnitee nor the
Indemnitor shall, without the written consent of the Indemnitor or Indemnitee,
respectively, settle or compromise any claim, suit, action or proceeding or
consent to entry of any judgment in respect thereof unless such settlement,
compromise or consent includes an unconditional release by the claimant or the
plaintiff of the Indemnitee and the Indemnitor from all liability in respect of
such claim, suit, action or proceeding.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent of Purchaser and PSA;
36
(b) by either Purchaser or PSA, in writing, if the other party shall
have failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement (in the case of Purchaser, including any
such failure by PSA SUB) required to be complied with prior to the date of such
termination, which failure to comply has not been cured within ten Business Days
following receipt by such other party of written notice of such failure to
comply; provided, however, that if any such breach is curable by the breaching
party through the exercise of the breaching party's best efforts and for so long
as the breaching party shall be so using its best efforts to cure such breach,
the non-breaching party may not terminate this Agreement pursuant to this
paragraph;
(c) by either Purchaser or PSA, in writing, if there has been a
material breach by the other party (in the case of Purchaser, including any
material breach by PSA SUB) of any representation or warranty which breach has
not been cured within 15 Business Days following receipt by the breaching party
of the non-breaching party's intent to terminate this Agreement pursuant to this
paragraph (c)); provided, however, that if any such breach is curable by the
breaching party through the exercise of the breaching party's best efforts and
for so long as the breaching party shall be so using its best efforts to cure
such breach, the non-breaching party may not terminate this Agreement pursuant
to this paragraph; and further provided that Purchaser shall not be entitled to
terminate this Agreement if the breach of any representation and warranty by PSA
or PSA SUB has not, individually or in the aggregate, had a Material Adverse
Effect unless such breach prevents the consummation of the transactions
contemplated by the Agreement.
(d) by Purchaser or PSA, if:
(i) the Closing has not been effected on or prior to the close
of business on the date three months after the date hereof (the "Termination
Date,") (subject to extension as provided herein); provided, however, that (A)
the right to terminate this Agreement pursuant to this Section 9.1(d)(i) shall
not be available to any party whose willful failure to fulfill any of its
obligations contained in this Agreement has been the cause of, or resulted in,
the failure of the transactions contemplated hereby to have occurred on or prior
to the aforesaid date; (B) the Termination Date may be extended prior to the
termination hereof by written notice of either Purchaser or PSA to the other to
the later of (x) the date that is 50 days following the date on which the
parties fully complied with a request by the applicable federal antitrust
authority for additional information under the HSR Act and (y) if the parties
shall have agreed with the applicable federal antitrust authority to not
consummate the transactions contemplated by this Agreement until a certain date,
the date that is 30 days following such agreed date; and (C) if the applicable
federal antitrust authority shall seek an order with respect to the legality of
the transactions contemplated by this Agreement under applicable antitrust laws,
the Termination Date may be extended prior to the termination hereof by written
notice of either Purchaser or PSA to the other to the date that is 30 days
following the date on which a ruling with respect to such an order is entered by
a trial court or administrative body; provided, further, that, notwithstanding
anything to the contrary in this clause (i), in no event shall the Termination
Date be extended beyond the earlier of (X) the date on which a party gives
written notice to the other that such party has received written notice from the
FTC or DOJ of its intent to file suit, or notice that it has filed suit, to
challenge or block the consummation of the transactions contemplated hereby
(a"Government Challenge") and such party, on the advice of counsel, has
reasonably determined that the parties are not reasonably likely to succeed in
opposing such Government Challenge, provided that the terminating party provides
such notice within fifteen Business Days of receipt of the Government Challenge
or (Y) seven months after the date hereof; or
37
(ii) any court or other Governmental Entity having jurisdiction
over a party hereto shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable;
(e) (i) by Purchaser if any of the conditions in Sections 7.1 and 7.3
have not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Purchaser
to comply with its obligations under this Agreement) and Purchaser has not
waived such condition on or before the Closing Date; or (ii) by PSA if any of
the conditions in Sections 7.1 and 7.2 have not been satisfied as of the Closing
Date or if satisfaction of such a condition is or becomes impossible (other than
through the failure of PSA or PSA SUB to comply with its obligations under this
Agreement) and PSA has not waived such condition on or before the Closing Date;
(f) by either PSA or Purchaser upon entry into a PSA SUB Acquisition
Agreement and payment of the liquidated damages pursuant to and in accordance
with the provisions of Section 4.3 hereof.
The right of either PSA or Purchaser to terminate this Agreement pursuant
to this Section 9.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
9.2 Effect of Termination. In the event of termination of this Agreement
by either Purchaser or PSA, as provided in Section 9.1, this Agreement shall
forthwith become void and there shall be no liability hereunder on the part of
PSA, PSA SUB, Purchaser or their respective officers or directors (except for
the entirety of Section 4.3(c), Section 5.1(b), Section 5.1(c), Section 6.1(b),
Section 6.2, Section 6.3, Section 6.4, Section 6.7, Section 9.2 and Article X,
which shall survive the termination); provided, however, that nothing contained
in this Section 9.2 shall relieve any party hereto from any liability for any
willful breach of a representation or warranty contained in this Agreement or
the breach of any covenant contained in this Agreement.
9.3 Amendment. This Agreement may not be amended except by mutual written
agreement of the parties hereto.
9.4 Waiver. At any time prior to the Closing Date, the parties hereto may
(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained herein
which may legally be waived. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
38
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Representations and Warranties. Except with respect to
claims for which Purchaser, PSA or PSA SUB has provided notice within the time
periods specified in Section 8.3, the representations and warranties set forth
in Section 3.8 shall terminate three years after the Effective Time and all
other representations and warranties in this Agreement or in any Schedule,
Exhibit or instrument delivered pursuant to this Agreement shall terminate 18
months after the Effective Time.
10.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally, one day after being
delivered to an overnight courier or when telecopied (with a confirmatory copy
sent by overnight courier) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Purchaser, to
Xxxxxx Xxxxxx, Inc.
000 Xx. Xxxx Xxxx.
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxx, Senior Vice President,
Chief Financial Officer and Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
Steptoe & Xxxxxxx, LLP
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to PSA or PSA SUB, to
Pediatric Services of America, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, President
and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
39
Pediatric Services of America, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq., General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Long Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
10.3 Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
10.4 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties.
10.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement, which
for all purposes shall be deemed to include all exhibits, schedules and
certificates delivered pursuant to the terms hereof, constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof. This
Agreement, is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
10.6 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
10.7 Assignment. Except as expressly provided herein neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party.
10.8 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or by public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced,
40
the parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
10.9 Enforcement of this Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, such remedy being in addition to any
other remedy to which any party is entitled at law or in equity.
10.10 Return of Information. In the event of termination of this Agreement
prior to the Closing Date, each party shall return to the other, without
retaining copies thereof, all confidential or non-public documents, work papers
and other materials obtained from any other party in connection with the
transactions contemplated in this Agreement and shall keep such information
confidential, not disclose such information to any other Person, and not use
such information in connection with its business.
10.11 No Waiver. No failure, delay or omission of or by any party in
exercising any right, power or remedy upon any breach or default of any other
party shall impair any such rights, powers or remedies of the party not in
breach or default, nor shall it be construed to be a waiver of any such right,
power or remedy, or an acquiescence in any similar breach or default; nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
provisions of this Agreement must be in writing and be executed by the parties
to this Agreement and shall be effective only to the extent specifically set
forth in such writing.
10.12 Bulk Sales Law. The parties hereto waive compliance with the
provisions of any applicable bulk sales law of any jurisdiction in connection
with the transactions contemplated hereby and no representation, warranty or
covenant contained in this Agreement shall be deemed to have been breached as a
result of such non-compliance. PSA and PSA SUB each covenants and agrees to pay
and discharge when due all claims of third parties, including Governmental
Entities, which could be asserted against Purchaser or the Assets by reason of
such non-compliance to the extent such liabilities are not expressly assumed by
Purchaser under this Agreement.
10.13 No Liens Created. This Agreement shall not be construed to
create any lien or encumbrance on any of the Assets, or to create any rights in
any third Persons.
10.14 Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
41
10.15 Dispute Resolution/Arbitration.
(a) The parties shall attempt, in good faith, to resolve any dispute
arising from or relating to this Agreement (a "Dispute") within thirty (30) days
after receipt of a written notice from a party that a Dispute exists. Should
the parties fail to resolve any Dispute within such thirty (30) day period,
however, such Dispute shall be settled by arbitration in Washington, D.C., in
accordance with the provisions of this Section 10.15 and the Commercial
Arbitration Rules of the American Arbitration Association ("AAA"), including to
the extent applicable the Expedited Procedures set forth therein. The
arbitration procedure set forth in the previous sentence shall be the parties'
exclusive remedy for all Disputes, provided, that any party may seek interim
injunctive relief (but not monetary damages) in aid of arbitration or to protect
the rights of any party pending the establishment of the arbitral tribunal, and
provided, further, that any party may seek judicial entry of any arbitral award
and pursue any action authorized by the Federal Arbitration Act, 9 U.S.C. (S)1,
et. seq.
(b) An arbitration shall be initiated by (1) the giving of written
notice by one party (the "Claimant") to the other party ("Respondent"), within
the 30-day period immediately following the conclusion of the 30-day period
referred to in paragraph (a) of this Section 10.15, of its demand to arbitrate
(an "Arbitration Demand"), which Arbitration Demand shall contain a statement
specifying (in reasonable detail) the nature of the Dispute, the dollar amount
involved (if any), and the remedy sought, and (2) the filing of three copies of
such Arbitration Demand and three copies of the arbitration provision set forth
in Section 10.15, together with the appropriate filing fee as provided in the
AAA Rules, at the Washington, D.C. office of the AAA.
(c) There shall be three arbitrators, who shall be selected by the
"list" methods provided by the AAA. Such three arbitrators shall constitute the
arbitration panel and shall conduct the arbitration unless the parties mutually
agree otherwise, and all decisions of such three-member panel shall be taken by
a majority of the arbitrators.
(d) All filing fees payable to the AAA, including any filing fee in
respect of any counterclaim asserted by the Respondent, and all expenses of the
arbitrator(s) constituting the arbitration panel, shall be shared equally by the
Claimant and Respondent.
(e) Any arbitral award shall be in writing and shall be final and
binding on the parties. The award may include (to the extent not inconsistent
with the provisions of paragraph (d) of this Section 10.15), an award of costs,
including reasonable attorneys' fees and disbursements, but may not include an
award of punitive damages.
(f) Nothing in this Section shall prohibit any party from bringing an
action to enforce an arbitral award in any court of competent jurisdiction.
42
IN WITNESS WHEREOF, Purchaser, PSA and PSA SUB have caused this Agreement
to be signed by their respective officers thereunto duly authorized all as of
the date first written above.
"Purchaser:"
XXXXXX XXXXXX, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
"PSA:"
PEDIATRIC SERVICES OF AMERICA, INC.
By:
-----------------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer
"PSA SUB:"
PARAMEDICAL SERVICES OF AMERICA, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
43
APPENDIX A
DEFINED TERMS
"Accounts Receivable" means all of PSA SUB's billed and unbilled accounts
-------------------
receivable and all notes receivable including, without limitation, all Current
Accounts Receivable.
"Affiliate" of any Person shall mean any other Person, directly or indirectly
---------
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, (i) "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract, or otherwise; (ii) the terms "controlling" and
"controlled" have meanings correlative to the foregoing; and (iii) a Person
shall be presumed to be controlled by any other Person which owns more than 50%
of such Person's outstanding common stock or other equity securities or which
has the right, contractually or otherwise, to select more than 50% of the
members of such Person's board of directors.
"Assumed Liabilities" means the liabilities and obligations set forth on
-------------------
Schedule 1.5.
------------
"Banks" means the banks named in PSA's Credit Agreement and Notes.
-----
"Business" means the business of providing paramedical examination services for
--------
the life and health insurance industries, as now being conducted by PSA SUB.
"Business Day" shall mean any day, other than a Saturday, Sunday or a day on
------------
which commercial banks in New York are authorized or required to be closed.
"ChoicePoint Non-Competition Agreement" means the Non-Competition Agreement
-------------------------------------
dated as of December 15, 1997 by and between ChoicePoint, Inc., ChoicePoint
Services, Inc., Pediatric Services of America, Inc. and Insurance Medical
Reporter, Inc.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Contract" means any agreement, contract, obligation, promise, commitment or
--------
undertaking (whether written or oral) that is legally binding upon PSA SUB, the
Business or the Assets.
"Credit Agreement and Notes" means PSA's credit agreement originally dated
--------------------------
August 13, 1997, with NationsBank N.A. as Administrative Agent and a revolving
credit promissory notes granted in connection with such credit agreement.
"Effective Time" means 11:59 p.m. on the Closing Date.
--------------
"Employee Benefit Plans" means, collectively, all pension, retirement, profit-
----------------------
sharing, deferred compensation, bonus, stock option and other incentive plans,
and other employee benefit program arrangements, agreements, or understandings,
or medical, dental, vision, or other health plans, and life
44
insurance or disability plans, and all other employee benefit plans, whether
written or oral, including, without limitation, all "employee benefit plans" as
defined in Section 3(3) of ERISA.
"Environmental Law" means (i) any federal, state, or local law, statute,
-----------------
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, legal doctrine, order, judgment, decree, injunction, requirement or
agreement with any governmental entity, relating to the protection, preservation
or restoration of the environment (including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource), or to
human health or safety, or the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Materials, in each case as now in
effect. The term Environmental Law includes, without limitation, CERCLA, 42
U.S.C. (S)(S) 9601 et seq.; the Solid Waste Disposal Act, 42 U.S.C. (S)(S) 6901
et seq.; the Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et
seq.; the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601 et seq.; the Clean
Air Act, 42 U.S.C. (S)(S) 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C.
(S)(S) 300f et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
(S)(S) 1801 et seq.; the Atomic Energy Act, 42 U.S.C. (S)(S) 2011 et seq.; the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S)(S) 136 et
seq.; the Federal Food, Drug and Cosmetic Act, 21 U.S.C. (S)(S) 301 et seq. and
the Occupational Safety and Health Act, 29 U.S.C. (S)(S) 651 et seq.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
-----
"Excluded Assets" means those assets listed on Schedule 1.1(b).
--------------- ---------------
"FTC" means the Federal Trade Commission.
---
"Governmental Entity" means any domestic (federal and state) or foreign court,
-------------------
commission, governmental body, regulatory agency, authority or tribunal.
"Hazardous Materials" means any substance currently listed, defined, designated
-------------------
or classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type or by quantity.
Hazardous Materials includes, 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, asbestos containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
-------
amended
"Information" means information which is nonpublic, confidential or proprietary
-----------
in nature, in whole or in part, together with any analyses, compilations,
studies or other documents prepared by any party which contain or otherwise
reflect any such information.
"Intellectual Property Rights" means all patents, trademarks, service marks,
----------------------------
trademark and service xxxx registrations, trademark and service xxxx
registration applications, label filings, copyrights, inventions, patents and
patent applications owned or used by PSA SUB or used principally in the
Business.
45
"IRS" means the Internal Revenue Service.
---
"Justice Department" means the United States Department of Justice.
------------------
"Knowledge of PSA" and "Knowledge of PSA SUB" means the actual knowledge of the
----------------- --------------------
Chairman of the Board, President, Chief Executive Officer, Senior Vice
Presidents, General Counsel, Chief Information Officer and Chief Financial
Officer of PSA and PSA SUB, respectively, and such level of knowledge as would
be obtained from appropriate discussions with such personnel of the PSA Group
who may reasonably be believed (due to their positions with PSA and PSA SUB) to
have actual knowledge of the relevant matter.
"Knowledge of Purchaser" means the actual knowledge of the Chairman of the
----------------------
Board, President, Chief Executive Officer, Chief Operating Officer, Senior Vice
Presidents, Chief Financial Officer, Controller or General Counsel of Purchaser,
and such level of knowledge as would be obtained from appropriate discussions
with such personnel of Purchaser who may reasonably be believed (due to their
positions with Purchaser) to have actual knowledge of the relevant matter.
"Losses" means any losses, liabilities, damages (including incidental and
------
consequential damages), deficiencies, costs or expenses suffered, incurred or
paid (including costs of investigation and defense and reasonable attorneys
fees, whether or not involving a third party claim).
"Material Adverse Effect" means any change or effect (or series of related
-----------------------
changes or effects) that is materially adverse to the Business, prospects,
Assets, liabilities, results of operation or financial condition of PSA SUB,
taken as a whole.
"Orders" means, collectively, all outstanding orders, judgments, injunctions,
------
awards or decrees of any Governmental Entity
"Ordinary Course of Business" means an action taken by a Person which is (i)
---------------------------
consistent with the past practices of such Person, (ii) taken in the ordinary
course of normal operations of such Person, and (iii) not required to be
specifically authorized by the board of directors, shareholders, partners or
members (if any) of such Person.
"Person" shall mean an individual, a partnership, a joint venture, a
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corporation, a business trust, a limited liability company, a trust, an
unincorporated organization, a government or any department or agency thereof,
or any other entity.
"Proceedings" means, collectively, all actions, suits, labor disputes or other
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litigation, legal or administrative proceedings or governmental investigations.
"PSA Group" means PSA, PSA SUB and their Affiliates.
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"PSA SUB Common Stock" means the authorized capital stock, no par value per
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share, of PSA SUB common stock.
"SEC" means the Securities and Exchange Commission.
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"Subordinated Notes" means PSA's 10% Senior Subordinated Notes due 2008.
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"Subsidiary" means any Person of which Purchaser, PSA or PSA SUB, as the case
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may be (either alone or through or together with any other Subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such Person.
"Taxes" means all taxes, assessments, duties, levies, fees and other
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governmental charges of any kind whatsoever (including taxes on or with respect
to net or gross income, employment, value added, rent, excise, occupancy,
licensing, sales, use, transfer, ad valorem, intangibles, gross receipts,
personal property, real property, franchise, doing business, withholding,
payroll, stamp and capital) of the United States (federal, state or local), or
any other applicable jurisdiction, together with any interest thereon,
penalties, additions to tax or additional amounts with respect thereto, and any
interest in respect of any such penalties, additions or additional amounts.
"WARN Act" means the Worker Adjustment and Retraining Notification Act 29 U.S.C.
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Sections 2101-2109.
The following terms shall have the meanings ascribed to such terms in the
Section of the Agreement referenced below:
Term Section
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"Acquisition Proposal" 4.3(b)
"Assets" 1.1
"Assumed Liabilities" 1.5
"Audited Financial Statements" 4.6
"Business Contracts" 1.1(a)(ii)
"Business Employees" 3.19
"Business Personnel" 3.14
"Business Employee" 3.19
"Closing" 1.6
"Closing AR Schedule" 1.2(e)
"Closing Date" 1.6
"Closing Performance Condition" 1.2(b)
"Contract Affiliates" 3.17(b)
"Covered Employees" 5.3
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"Current Accounts Receivable" 1.2(c)
"Current Performance condition 1.2(b)
"Effective Time" 1.6
"Employees" 5.3
"Employment Agreement" 3.26
"Estimated Accounts Receivable" 1.2(d)
"Exclusivity Period" 5.1(a)
"GAAP" 4.1(o)
"Government Challenge" 9.1(d)(i)
"HH" Recitals
"HH Entity" or "HH Entities" 5.1(b)
"Independent Contractors" 3.17
"Indemnitee" 8.3
"Indemnitor" 8.3
"Information Technology" 3.14(d)
"Initial Performance Condition" 1.2(b)
"Xxxx" 1.1(c)
"Performance Adjustment" 1.2(b)
"Permitted Liens" 3.16(b)
"PMI 1997 Financial Statements" 4.6
"Pre-Closing Unaudited Financial Statements" 4.6
"PSA" Recitals
"PSA Deductible" 8.1(b)
"PSA SUB" Recitals
"PSA SUB Acquisition Agreement" 4.3(c)
"PSA SUB Lockboxes" 1.1(a)(ix)
"PSA SUB Permits" 3.7
"Purchase Price" 1.2
"Purchase Price Adjustment Date" 1.2(e)
"Purchaser" or "Purchasers" Recitals
"Purchaser Deductible" 8.2(b)
"Real Property Leases" 1.1(a)(v)
"Subsidiary Purchaser" 1.7
"Termination Date" 9.1(d)(i)
"Unaudited Financial Statements" 3.5
"Year 2000 Compliant" 3.14(d)
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