AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
Execution Copy
EXHIBIT 10.6
EXHIBIT 10.6
AMENDMENT NO. 1
TO
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT, dated as of August 3, 2005 (this
“Amendment”), by and among Regions Financial Corporation, a Delaware corporation
(“RFC”), Regions Bank, a bank chartered under the laws of the State of Alabama and
successor to Union Planters Bank, National Association (“Regions” and together with RFC,
collectively, “Seller”), Strategic Outsourcing, Inc., a Delaware corporation (the
“Company”), and SOI Investors LLC, a Delaware limited liability company (“Buyer”).
W I T N E S S E T H:
WHEREAS, on June 29, 2005, the Buyer, the Seller and the Company entered into a Stock Purchase
Agreement (the “Stock Purchase Agreement”); and
WHEREAS, the parties hereto wish to amend the Stock Purchase Agreement in certain respects
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged and confessed, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined have the same meanings attributed
to them in the Stock Purchase Agreement.
2. Amendment to Section 1.3(b) of the Stock Purchase Agreement. Section 1.3(b) of the Stock Purchase Agreement is hereby amended by adding the following
sentence at the end thereof: “The Estimated Cash Purchase Price shall be paid by Buyer at the
Closing as follows: (i) prior to the consummation of the Formation Transactions the Company shall
declare a dividend to Seller in the amount of $39,306,599, which dividend shall be paid by the
issuance of a demand promissory note in a form agreed to by the parties (the “Note”), (ii) at the
Closing a portion of the funds borrowed by the Company from the Lenders immediately after the
completion of the Formation Transactions on the Closing Date will be used by the Company to repay
the Note in full, and the amount of the Note so repaid will be deemed to be a payment by Buyer of a
portion of the Estimated Cash Purchase Price, and (iii) the remaining $20,000,000 portion of the
Estimated Cash Purchase Price shall be paid by Buyer to UPB pursuant to the first sentence of this
Section 1.3(b).”
3. Amendment to Section 1.4(a) of the Stock Purchase Agreement. Section 1.4(a) of the Stock Purchase Agreement is hereby
amended by deleting the definitions of “Earn-Out Common Stock
Base” and “Earn-Out Preferred Stock Base” in their entirety and
replacing them with the following:
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“Earn-Out Common Stock Base” means the sum of (A) 300,000
(as such amount may be equitably adjusted for any stock split, stock dividend, combination, recapitalization or
similar transaction) and (B) the shares of Holdco Common Stock
included in the Earn-Out Shares.
“Earn-Out Preferred Stock Base” means the sum of (A)
300,000 (as such amount may be equitably adjusted for any stock
split, stock dividend, combination, recapitalization or similar
transaction) and (B) the shares of Holdco Preferred Stock included
in the Earn-Out Shares.
“EBITDA” means, with respect to Holdco and its
Subsidiaries on a consolidated basis, calculated in accordance
with the Earn-Out Accounting Policies consistently applied, for
any Fiscal Year, (1) net income plus (2) to the extent such
amounts were deducted in determining net income, interest expense,
Taxes based on income, depreciation expense and amortization
expense, minus (3) interest income; provided, that “EBITDA” shall
exclude (i) any management fees paid to Clarion Capital Partners,
LLC or any of its Affiliates and any other amounts, except amounts
paid for bona fide services or goods obtained on an arms-length
basis, paid to Clarion Capital Partners LLC or any of its
Affiliates (ii) any extraordinary gains or losses, the “write
down” or “write up” of assets or properties, or non recurring
items; provided, that the May 2005 accrual for $1,182,000 related
to a claims settlement agreement with Specialty Risk Service LLC
shall not be subtracted from such net earnings, (iii) any change
in control, severance or other similar payments required to be
paid pursuant to Section 6.10(b) and (iv) any effects of purchase
accounting adjustments resulting from the consummation of the
transactions contemplated by this Agreement or the Ancillary
Agreement.”
4. Amendment to Section 1.4(b) of the Stock Purchase Agreement. Section 1.4(b) of the Stock Purchase Agreement is hereby amended by deleting the current
Section 1.4(b) in its entirety and replacing it with the following:
“(b) As additional consideration for the Purchased Shares,
subject to the provisions of this Section 1.4, Holdco shall, and
Buyer shall cause Holdco to, on the Payment Date, issue to Seller
the number of shares (rounded down to the nearest whole number)
of Holdco
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Common Stock and Holdco Preferred Stock, up to 37,500 shares
of Holdco Common Stock and 37,500 shares of Holdco Preferred
Stock, that represent (the “Earn-Out Shares”):
(i) 2.777% of the Earn-Out Common Stock Base and 2.777% of
the Earn-Out Preferred Stock Base, if the positive amount, if any,
of (A) the quotient obtained by dividing (1) the sum of (x) EBITDA
for Fiscal Year 2005 and (y) EBITDA for Fiscal Year 2006 by (2)
two minus (B) $11 million, exceeds $1 million but is less than $2
million; provided, that the number of shares of Holdco Common
Stock and Holdco Preferred Stock issued hereunder shall be
increased (up to the number of shares that represent 5.554% of the
Earn-Out Common Stock Base and 5.554% of the Earn-Out Preferred
Stock Base, respectively) in increments of shares of Holdco Common
Stock and Holdco Preferred Stock representing 0.01% of the
Earn-Out Common Stock Base and 0.01% of the Earn-Out Preferred
Stock Base, respectively, for each $3,601 in excess of $1 million
and up to $2 million; or
(ii) 5.555% of the Earn-Out Common Stock Base and 5.555% of
the Earn-Out Preferred Stock Base, if the positive amount, if any,
of (A) the quotient obtained by dividing (1) the sum of (x) EBITDA
for Fiscal Year 2005 and (y) EBITDA for Fiscal Year 2006 by (2)
two, minus (B) $11 million, exceeds $2 million but is less than $3
million; provided, that the number of shares of Holdco Common
Stock and Holdco Preferred Stock issued hereunder shall be
increased (up to the number of shares that represent 8.332% of the
Earn-Out Common Stock Base and 8.332% of the Earn-Out Preferred
Stock Base, respectively) in increments of shares of Holdco Common
Stock and Holdco Preferred Stock representing 0.1% of the Earn-Out
Common Stock Base and 0.01% of the Earn-Out Preferred Stock Base,
respectively, for each $3,601 in excess of $2 million and up to $3
million; or
(iii) 8.333% of the Earn-Out Common Stock Base and 8.333% of
the Earn-Out Preferred Stock Base, if the positive amount, if
any, of (A) the quotient obtained by dividing (1) the sum of (x)
EBITDA for Fiscal Year 2005 and (y) EBITDA for Fiscal Year 2006
by (2) two minus (B) $11 million, exceeds $3 million but is less
than $4 million; provided, that the number of shares of
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Holdco Common Stock and Holdco Preferred Stock issued
hereunder shall be increased (up to the number of shares that
represent 11.110% of the Earn-Out Common Stock Base and 11.110%
of the Earn-Out Preferred Stock Base, respectively) in increments
of shares of Holdco Common Stock and Holdco Preferred Stock
representing 0.01% of the Earn-Out Common Stock Base and 0.01% of
the Earn-Out Preferred Stock Base, respectively, for each $3,601
in excess of $3 million and up to $4 million; or
(iv) 11.111 % of the Earn-Out Common Stock Base and 11.111 %
of the Earn-Out Preferred Stock Base, if the positive amount, if
any, of (A) the quotient obtained by dividing (1) the sum of (x)
EBITDA for Fiscal Year 2005 and (y) EBITDA for Fiscal Year 2006
by (2) two minus (B) $11 million, exceeds $4 million.”
5. Amendment to Section 1.5(a) of the Stock Purchase Agreement. Section 1.5(a) of the Stock Purchase Agreement is hereby amended by deleting all references
to “Deloitte & Touche LLP” and replacing all such references with “PricewaterhouseCoopers LLP”.
6. Amendment to Section 1.5(b) of the Stock Purchase Agreement. Section 1.5(b) of the Stock Purchase Agreement is hereby amended by inserting the following
after the last sentence thereof: “Notwithstanding anything to the contrary contained herein, any
costs and expenses that are assessed against Buyer in accordance with this Section 1.5(b) shall be
paid by the Holdco.”
7. Amendment to Section 1.5(d) of the Stock Purchase Agreement. Section 1.5(d) of the Stock Purchase Agreement is hereby amended by deleting the current
Section 1.5(d) in its entirety and replacing it with the following:
“(d) Upon final determination of the Adjustment Amount in accordance with Section
1.5(c), the Adjustment Amount shall be remitted as follows:
(i) if the Adjustment Amount is a positive number, then, promptly following the
Determination Date, and in any event within 12 Business Days of the Determination Date,
Holdco shall pay to UPB the Adjustment Amount, as finally determined, together with
interest thereon from the Closing Date to the date of payment at the “Prime Rate” of
interest published in the “Money Rates” column of The Wall Street Journal (or the average
of such rates
if more than one rate is indicated) on the Closing Date (the “Applicable Rate”)
by wire transfer of immediately available funds to an account designated by
Seller to Holdco; or
(ii) if the Adjustment Amount is a negative number, then, promptly following the
Determination Date, and in any event within 12 Business
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Days of the Determination Date,
Seller shall pay to Holdco the Adjustment Amount, as finally determined, together with
interest thereon from the Closing Date to the date of payment at the Applicable Rate by
wire transfer of immediately available funds to an account designated by Holdco to Seller.”
8. Amendment to Section 6.9(b) of the Stock Purchase Agreement. Section 6.9(b) of the Stock Purchase Agreement is hereby amended by adding the following
after the last sentence thereof: “The parties agree that monthly loss-run reports in the form of
Exhibit A to the Amendment to the Stock Purchase Agreement shall be deemed to satisfy the
requirement for the monthly loss-run reports to be provided to Seller pursuant to the immediately
preceding sentence.”
9. Amendment to Section 9.3 of the Stock Purchase Agreement.
(a) Section 9.3(a) of the Stock Purchase Agreement is hereby amended by:
(i) adding immediately after the words “(i) Basket Exclusion Claim” the
following: “(based upon the failure of the representations and warranties set forth
in Section 5.5(b) or the failure of the certification of such representations and
warranties in the certificate delivered pursuant to Section 2.3(b) to be true and
correct)”;
(ii) adding the immediately after the words “(ii) Non-Tax Covenant Claim” the
following: “(with respect to a covenant or agreement of Buyer to be performed at or
prior to the Closing and the covenants and agreements of Buyer set forth in
Sections 6.6(b), 6.7 and 11.1)”; and
(iii) adding the following after the last sentence thereof: “Holdco shall
indemnify and defend the Seller Indemnified Persons against, and shall hold each
Seller Indemnified Person harmless from, and shall reimburse each Seller
Indemnified Person for, any and all Damages asserted against, imposed upon,
incurred by or caused to, directly or indirectly, any Seller Indemnified Person by
reason of, based on, arising out of, resulting from, relating to or otherwise in
respect of, in whole or in part, any (i) Basket Exclusion Claim (based upon the
failure of the representations and warranties set forth in Section 5.5(a) or the
failure of the certification of such representations and warranties in the
certificate delivered pursuant to Section 2.3(b) to be true and correct) or (ii)
Non-Tax Covenant Claim (with respect to a covenant or agreement of Buyer, Holdco or
the Company to be performed after the Closing).”
(b) Section 9.3(b) of the Stock Purchase Agreement is hereby amended by
deleting the word “Buyer,” in the first sentence thereof.
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10. Amendment to Section 9.5 of the Stock Purchase Agreement. Section 9.5 of the Stock Purchase Agreement is hereby amended by deleting all references to
Section 2.3(c) in the definitions of “Basket Exclusion Claim” and “General Claim” and replacing all
such references with “Section 2.3(b)”.
11. Amendment to Section 9.6(a) of the Stock Purchase Agreement. The first sentence of Section 9.6(a) of the Stock Purchase Agreement is hereby amended by
deleting the words “against Buyer or Seller, as the case may be” and inserting in lieu thereof the
following: “against Buyer, Holdco or Seller, as the case may be”.
12. Amendment to Section 9.10 of the Stock Purchase Agreement. The first sentence of Section 9.10 of the Stock Purchase Agreement is hereby amended by
deleting the words “for recovery against Buyer, the Company (after the Closing) or Seller, as the
case may be” and inserting in lieu thereof the following: “for recovery against Buyer, Holdco
(after the Closing) or Seller, as the case may be.”
13. Amendment to Section 10.2 of the Stock Purchase Agreement.
(a) Section 10.2(a) of the Stock Purchase Agreement is hereby amended by
deleting the words “Buyer and the Company and any of its Subsidiaries” and
inserting in lieu thereof the following: “Buyer and Holdco and any of its
Subsidiaries.”
(b) Section 10.2(b) and Section 10.2(d) of the Stock Purchase Agreement each
is hereby amended by deleting the word “Buyer” and inserting in lieu thereof the
word “Holdco”.
(c) Section 10.2(e) of the Stock Purchase Agreement is hereby amended by
deleting the words “by Buyer to Seller, or by Seller to Buyer” and inserting in
lieu thereof “by Buyer or Holdco to a Seller Indemnified Party, or by Seller to a
Buyer Indemnified Party”.
14. Continuing Effect of Stock Purchase Agreement. This Amendment shall not constitute a waiver, amendment or modification of any other
provision of the Stock Purchase Agreement not expressly referred to herein. Except as expressly
amended or modified herein, the provisions of the Stock Purchase Agreement are and shall remain in
full force and effect.
15. GOVERNING LAW. THIS AMENDMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
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16. Valid and Binding. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto
and their respective successors and assigns.
17. Counterparts. For the convenience of the Parties hereto, this Amendment may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their
officers duly authorized as of the date first written above.
| REGIONS BANK, as successor to UNION PLANTERS BANK, NATIONAL ASSOCIATION |
||||
| By: | /s/ Xxxxxx Xxx | |||
| Name: | Xxxxxx Xxx | |||
| Title: | Senior Vice President | |||
| REGIONS FINANCIAL CORPORATION |
||||
| By: | /s/ Xxxxxx Xxx | |||
| Name: | Xxxxxx Xxx | |||
| Title: | Senior Vice President | |||
| STRATEGIC OUTSOURCING, INC. |
||||
| By: | /s/ Xxxxxxx Xxxxxxx | |||
| Name: | Xxxxxxx Xxxxxxx | |||
| Title: | CFO, V.P. of Finance | |||
| SOI INVESTORS LLC |
||||
| By: | /s/ Xxxxxxx Xxxxxxx | |||
| Name: | Xxxxxxx Xxxxxxx | |||
| Title: | CFO, V.P. of Finance | |||
