Ex 2.1
ASSET PURCHASE AGREEMENT
by and among
TALX Corporation
and
Sheakley-Uniservice, Inc., Sheakley Interactive
Services, LLC and Larry Sheakley
Dated March 22, 2004
|
|
|
|
|
|
|
|
|
|
35
|
|
|
|
|
|
35
|
|
|
|
|
|
35
|
|
|
|
|
|
36
|
|
|
|
|
|
36
|
|
|
|
|
|
36
|
|
|
|
|
|
36
|
|
|
|
|
|
37
|
|
|
|
|
|
37
|
|
|
|
|
|
37
|
|
|
|
|
|
37
|
|
|
|
|
|
37
|
|
|
|
|
|
38
|
|
|
|
|
|
38
|
|
|
|
|
|
38
|
|
|
|
|
|
38
|
|
|
|
|
|
38
|
|
|
|
|
|
38
|
|
|
|
|
|
39
|
|
|
|
|
|
39
|
|
|
|
|
|
39
|
|
|
|
|
|
39
|
|
|
|
|
|
39
|
|
|
|
|
|
39
|
|
|
|
|
|
40
|
|
|
|
|
|
40
|
|
|
|
|
|
40
|
|
|
|
|
|
42
|
|
|
|
|
|
42
|
|
|
|
|
|
44
|
|
|
|
|
|
44
|
|
|
|
|
|
44
|
|
|
|
|
|
44
|
|
|
|
|
|
45
|
|
|
|
|
|
45
|
|
|
|
|
|
45
|
|
|
|
|
|
45
|
|
|
|
|
|
46
|
|
|
|
|
|
46
|
|
|
|
|
|
47
|
|
ii
|
|
|
|
|
|
|
|
|
|
48
|
|
|
|
|
|
48
|
|
|
|
|
|
49
|
|
|
|
|
|
51
|
|
|
|
|
|
51
|
|
|
|
|
|
51
|
|
|
|
|
|
52
|
|
|
|
|
|
53
|
|
|
|
|
|
53
|
|
|
|
|
|
53
|
|
|
|
|
|
53
|
|
|
|
|
|
53
|
|
|
|
|
|
54
|
|
|
|
|
|
55
|
|
|
|
|
|
56
|
|
|
|
|
|
56
|
|
|
|
|
|
57
|
|
|
|
|
|
57
|
|
|
|
|
|
57
|
|
|
|
|
|
57
|
|
|
|
|
|
58
|
|
|
|
|
|
58
|
|
|
|
|
|
58
|
|
iii
ASSET PURCHASE AGREEMENT
This Asset
Purchase Agreement (“Agreement”) is dated
March 22, 2004, by and among TALX Corporation, a Missouri
corporation (“Buyer”), and Sheakley-Uniservice, Inc.,
an Ohio corporation and Sheakley Interactive Services, LLC, an Ohio
limited liability company (“Sheakley-Uniservice, Inc., and
its wholly-owned subsidiary, Sheakley Interactive Services, LLC
being collectively referred to as the “Seller”), and
for purposes of Section 10.3 only, Larry Sheakley
(“LAS”).
RECITALS
Seller desires to
sell, and Buyer desires to purchase, the Assets of Seller related
to the Businesses for the consideration and on the terms set forth
in this Agreement.
The
parties, intending to be legally bound, agree as
follows:
1.
DEFINITIONS AND USAGE
1.1
Definitions
For
purposes of this Agreement, the following terms and variations
thereof have the meanings specified or referred to in this
Section 1.1:
“Accounts
Receivable”–(a) all trade accounts receivable and other
rights to payment from Customers of Seller generated exclusively in
the Businesses and the full benefit of all security for such
accounts or rights to payment, including all trade accounts
receivable representing amounts receivable in respect of services
rendered to Customers of Seller exclusively in connection with the
Businesses, (b) all other accounts or notes receivable of
Seller in connection with the Businesses and the full benefit of
all security for such accounts or notes and (c) any claim,
remedy or other right related to any of the foregoing.
“Active
Employees”–all employees employed on the Closing Date
by Seller in connection with the Businesses, including employees on
temporary leave of absence, including family medical leave,
military leave, temporary disability or sick leave, but excluding
employees on long-term disability leave.
“Administrative
Agreements” – All purchase orders, supplier agreements,
equipment leases and contract rights and agreements (other than
Service Agreements or Real Property Leases) Seller has entered into
solely in connection with the Businesses which are listed on
Exhibit 1.1(a) and any other administrative agreement incurred
in the Ordinary Course of Business, the cost of which is reflected
on the Financial Statements of the Sellers referred to in
Section 3.4.
“Assets”–as
defined in Section 2.1.
1
“Assigned
Contracts” – The Administrative Agreements described in
Section 2.1(c), the Service Agreements described in
Section 2.1(d) and the Real Property Leases described in
Section 2.1(i).
“Assignment
and Assumption Agreement”–as defined in
Section 2.6(a)(ii).
“Assumed
Liabilities”–as defined in
Section 2.4(a).
“Bill
of Sale”–as defined in
Section 2.6(a)(i).
“Breach”–any
breach of, or any inaccuracy in, any representation or warranty or
any breach of, or failure to perform or comply with, any covenant
or obligation, in or of this Agreement or any other Contract, or
any event which with the passing of time or the giving of notice,
or both, would constitute such a breach, inaccuracy or
failure.
“Business
Day”–any day other than (a) Saturday or Sunday or
(b) any other day on which banks in Missouri are permitted or
required to be closed.
“Businesses”—Seller’s
unemployment compensation business, employment verification
business and pre-applicant screening business, including the
business conducted by SIS, but not including the unemployment
compensation services provided to Excluded Customers as listed on
Exhibit 1.1(b).
“Buyer”–as
defined in the first paragraph of this Agreement.
“Buyer
Indemnified Persons”–as defined in
Section 11.2.
“Closing”–as
defined in Section 2.5.
“Closing
Date”–the date on which the Closing actually takes
place.
“COBRA”–as
defined in Section 3.16(f).
“Code”–the
Internal Revenue Code of 1986, as amended.
“Commercially
Reasonable Efforts” – The efforts that a prudent Person
desirous of achieving a result would use in similar circumstances
to achieve that result as expeditiously as possible, provided
however, commercially reasonable efforts will not be deemed to
require a Person to undertake extraordinary or unreasonable
measures, including the payment of amounts in excess of normal and
usual filing fees and processing fees, if any, or other payments
with respect to any Contract that are significant in the context of
such Contract (or significant on an aggregate basis as to all
Contracts).
“Confidential
Information”–as defined in
Section 12.1.
“Consent”–any
approval, consent, ratification, waiver or other
authorization.
“Contemplated
Transactions”–all of the transactions contemplated by
this Agreement.
2
“Contract”–any
agreement, contract, Lease, consensual obligation, promise or
undertaking (whether written or oral and whether express or
implied), whether or not legally binding.
“Copyrights”–as
defined in Section 3.7(a)(iii).
“Customers”
– those entities for whom Seller provides services in the
Businesses as of March 22, 2004, but not including those
Excluded Customers listed on Exhibit 1.1(b) or described in
Section 10.3(d) as Excluded Customers for whom Seller provides
unemployment compensation services. If Seller provides employment
verification services or pre-application screening services for an
Excluded Customer, the Excluded Customer will be deemed a Customer
for the employment verification business and/or pre-application
screening business, but not for the unemployment compensation
business.
“Damages”–as
defined in Section 11.2.
“Disclosure
Letter”–the disclosure letter delivered by Seller to
Buyer concurrently with the execution and delivery of this
Agreement, as further described in Section 13.8.
“Effective
Time”–12:01 a.m. on the day after the Closing
Date.
“Encumbrance”–any
charge, claim, community or other marital property interest,
condition, equitable interest, lien, option, pledge, security
interest, mortgage, right of way, easement, encroachment,
servitude, right of first option, right of first refusal or similar
restriction, including any restriction on use, voting (in the case
of any security or equity interest), transfer, receipt of income or
exercise of any other attribute of ownership.
“Environmental
Law” – any Law relating to the protection of
health or the environment, including without limitation: the Clean
Air Act, the Federal Water Pollution Control Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Toxic Substance
Control Act, any comparable state or foreign law, and the common
law, including the law of nuisance and strict liability.
“Environmental
Permits” – all permits, registrations,
approvals, licenses, filings and submissions to any Government or
other authority required by or made by or on behalf of the
Companies under or pursuant to any Environmental Law.
“ERISA”–the
Employee Retirement Income Security Act of 1974.
“Escrow
Agreement”–as defined in
Section 2.6(a)(vi).
“Exchange
Act”–the Securities Exchange Act of 1934.
“Excluded
Assets”–as defined in Section 2.2.
“Excluded
Customers” – those customers of Seller’s
unemployment compensation services listed on Exhibit 1.1(b) or
described in Section 10.3(d) for whom Seller provides
unemployment compensation services. If Seller provides employment
verification services or pre-
3
application screening services
for an Excluded Customer, the Excluded Customer shall be deemed a
Customer for the employment verification and/or pre-application
screening businesses only.
“Exhibit”–a
part or section of the Disclosure Letter.
“GAAP”–generally
accepted accounting principles for financial reporting in the
United States, applied on a basis consistent with the basis on
which the Financial Statements referred to in Section 3.4 were
prepared.
“Governing
Documents”–with respect to any particular entity,
(a) if a corporation, the articles or certificate of
incorporation and the bylaws; (b) if a general partnership, the
partnership agreement and any statement of partnership; (c) if
a limited partnership, the limited partnership agreement and the
certificate of limited partnership; (d) if a limited liability
company, the articles of organization and operating agreement;
(e) if another type of Person, any other charter or similar
document adopted or filed in connection with the creation,
formation or organization of the Person; (f) all equity
holders’ agreements, voting agreements, voting trust
agreements, joint venture agreements, registration rights
agreements or other agreements or documents relating to the
organization, management or operation of any Person or relating to
the rights, duties and obligations of the equity holders of any
Person; and (g) any amendment or supplement to any of the
foregoing.
“Governmental
Authorization”–any Consent, license, registration or
permit issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any
Legal Requirement.
“Governmental
Body”–any:
(a)
nation, state, county, city, town, borough, village, district or
other jurisdiction;
(b)
federal, state, local, municipal, foreign or other
government;
(c)
governmental or quasi-governmental authority of any nature
(including any agency, branch, department, board, commission,
court, tribunal or other entity exercising governmental or
quasi-governmental powers);
(d)
multinational organization or body;
(e)
body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power; or
(f)
official of any of the foregoing.
“Indemnified
Person”–as defined in Section 11.7.
“Indemnifying
Person”–as defined in Section 11.7.
“Intellectual
Property Assets”–as defined in
Section 3.7(a).
4
“IRCA”–the
Immigration Reform and Control Act of 1986 and the rules and
regulations thereunder.
“IRS”–the
United States Internal Revenue Service and, to the extent relevant,
the United States Department of the Treasury.
“Knowledge”–an
individual will be deemed to have Knowledge of a particular fact or
other matter if that individual is actually aware of that fact or
matter. To the extent related to the representations and warranties
made by Seller herein, Knowledge, or any similar phrase, shall mean
the knowledge of Larry A. Sheakley, Matthew Sheakley, Thomas E.
Pappas, Jr., Thomas J. Wurtz, Jim Hathaway, Eleni Liston and, with
respect to SIS only, Neal Packard.
“Land”–all
parcels and tracts of land in which Seller has an ownership
interest.
“LAS”–Larry
Sheakley, a resident of Cincinnati, Ohio, who is a Related Person
to the owner of all of the issued and outstanding shares of capital
stock of Sheakley-Uniservice, Inc.
“Lease”–any
Real Property Lease or any lease or rental agreement, license,
right to use or installment and conditional sale agreement to which
Seller is a party and any other Seller Contract pertaining to the
leasing or use of any Tangible Personal Property.
“Legal
Requirement”–any federal, state, local, municipal,
foreign, international, multinational or other constitution, law,
ordinance, principle of common law, code, regulation, statute or
treaty.
“Liability”–with
respect to any Person, any liability or obligation of such Person
of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint
or several, due or to become due, vested or unvested, executory,
determined, determinable or otherwise, and whether or not the same
is required to be accrued on the financial statements of such
Person.
“Licensed
Marks”–the Marks to be licensed to Buyer by Seller
pursuant to the Transition Services Agreement and identified in
such Agreement, including but not limited to: Sheakley-Uniservice,
Sheakley, www1.sheakley.com, esp.accufacts.com/sheakley/login.asp,
www2.advancedhr.com, www.advancedhr.com, and
www.Sheakley.com.
“Marks”–as
defined in Section 3.7(a)(i).
“Notice
of Dispute” means a written notice by Seller to Buyer
delivered pursuant to Section 2.7, specifying in reasonable
detail all points of disagreement with the Buyer’s
calculations pursuant to Section 2.7.
“Occupational
Safety and Health Law”–any Legal Requirement designed
to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, including the Occupational
Safety and Health Act, and any program, whether governmental or
private (such as those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe and
healthful working conditions.
5
“Order”–any
order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or
arbitrator.
“Ordinary
Course of Business”–an action taken by a Person will be
deemed to have been taken in the Ordinary Course of Business only
if that action:
(a)
is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the
normal, day-to-day operations of such Person;
(b)
does not require authorization by the board of directors or
shareholders of such Person (or by any Person or group of Persons
exercising similar authority) and does not require any other
separate or special authorization of any nature; and
(c)
is similar in nature, scope and magnitude to actions customarily
taken, without any separate or special authorization, in the
ordinary course of the normal, day-to-day operations of other
Persons that are in the same line of business as such
Person.
“PBGC”–Pension
Benefit Guaranty Corporation
“Patents”–as
defined in Section 3.7(a)(ii).
“Permitted
Encumbrances”–as defined in
Section 3.9.
“Person”–an
individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock
company, trust, unincorporated association, joint venture or other
entity or a Governmental Body.
“Plan”–any
agreement, arrangement, plan, or policy, whether or not legally
binding and whether or not written, that involves (a) any
pension, retirement, profit sharing, deferred compensation, bonus,
stock option, stock purchase, phantom stock, health, welfare, or
incentive plan; or (b) welfare or “fringe”
benefits, including without limitation vacation, severance,
disability, medical, hospitalization, dental, life and other
insurance, tuition, Company car, club dues, sick leave, maternity,
paternity or family leave, or other benefits; or (c) any
employment, consulting, engagement, or retainer agreement or
arrangement.
“Proceeding”–any
action, arbitration, audit, hearing, investigation, litigation or
suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or
private) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Body or
arbitrator.
“Prepayment
Value”–as defined in Section 2.3(a).
“Promissory
Note”–as defined in Section 2.6(b)(ii).
“Purchase
Price”–as defined in Section 2.3.
6
“Real
Property”–the Land, all buildings, structures, fixtures
and improvements located on the Land, and all privileges, rights,
easements, hereditaments and appurtenances belonging to or for the
benefit of the Land, and all property subject to a ground
Lease.
“Real
Property Leases”–the Leases of Real Property listed on
Exhibit 1.1(c).
“Record”–information
that is inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable
form.
“Related
Person”—
With
respect to a particular individual:
(a)
each other member of such individual’s Family;
(b)
any Person that is directly or indirectly controlled by any one or
more members of such individual’s Family;
(c)
any Person in which members of such individual’s Family hold
(individually or in the aggregate) a Material Interest;
and
(d)
any Person with respect to which one or more members of such
individual’s Family serves as a director, officer, partner,
executor or trustee (or in a similar capacity).
With
respect to a specified Person other than an individual:
(a)
any Person that directly or indirectly controls, is directly or
indirectly controlled by or is directly or indirectly under common
control with such specified Person;
(b)
any Person that holds a Material Interest in such specified
Person;
(c)
each Person that serves as a director, officer, partner, executor
or trustee of such specified Person (or in a similar
capacity);
(d)
any Person in which such specified Person holds a Material
Interest; and
(e)
any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition,
(a) “control” (including “controlling,”
“controlled by,” and “under common control
with”) means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used
in the rules promulgated under the Securities Act of 1933, as
amended; (b) the “Family” of an individual
includes (i) the individual, (ii) the individual’s
spouse, (iii) any other natural person who is related to the
individual or the individual’s spouse within the second
degree and (iv) any other natural person who resides with such
individual; and (c) “Material Interest” means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under
the Exchange Act) of voting securities or
7
other voting interests
representing at least ten percent (10%) of the outstanding voting
power of a Person or equity securities or other equity interests
representing at least ten percent (10%) of the outstanding equity
securities or equity interests in a Person.
“Representative”–with
respect to a particular Person, any director, officer, manager,
employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that
Person.
“Retained
Liabilities”–as defined in
Section 2.4(b).
“Revenue
Value”–as used Section 2.7, the calculation of
either the One Quarter SIS Revenue, the Two Quarter SIS Revenue,
the Three Quarter SIS Revenue or the Four Quarter SIS Revenue, as
applicable.
“SEC”–the
United States Securities and Exchange Commission.
“Seller”–as
defined in the first paragraph of this Agreement.
“Seller
Contract”–any Contract (a) under which Seller has
or may acquire any rights or benefits in connection with the
Businesses; (b) under which Seller in connection with the
Businesses has or may become subject to any obligation or
liability; or (c) by which Seller or any of the assets owned
or used by Seller in connection with the Businesses is or may
become bound.
“Service
Agreements”–all of Seller’s agreements to provide
services exclusively related to the Businesses to Customers, which
agreements are listed on Exhibit 1.1(d) or are similar
agreements entered into in the Ordinary Course of Business, but
excluding such agreements with Excluded Customers. Exhibit 1.1(d)
also lists the annual revenue for each customer under its Service
Agreement for the year ended December 31, 2003, adjusted to
delete the billed revenue of customers whose agreements have
terminated prior to December 31, 2003, and adjusted with
respect to customers that were procured after January 1, 2003 to
indicate projected annual billed revenues that would have been
attributed to such customers had they been customers for the full
calendar year.
“Sheakley-Uniservice”–Sheakley-Uniservice,
Inc., an Ohio corporation.
“SIS”–Sheakley
Interactive Services, LLC, an Ohio limited liability
company.
“SIS
Revenue”–the revenue of SIS for the applicable period,
calculated in accordance with GAAP and consistently with past
practices.
“SIS
Shortfall”–as defined in
Section 2.7(e).
“Software”–all
computer software and subsequent versions thereof, including source
code, object, executable or binary code, objects, comments,
screens, user interfaces, report formats, templates, menus, buttons
and icons and all files, data, materials, manuals, design notes and
other items and documentation related thereto or associated
therewith.
8
“Subsidiary”–with
respect to any Person (the “Owner”), any corporation or
other Person of which securities or other interests having the
power to elect a majority of that corporation’s or other
Person’s board of directors or similar governing body, or
otherwise having the power to direct the business and policies of
that corporation or other Person (other than securities or other
interests having such power only upon the happening of a
contingency that has not occurred), are held by the Owner or one or
more of its Subsidiaries.
“Tangible
Personal Property”–all machinery, equipment, tools,
furniture, office equipment, computer hardware, supplies,
materials, vehicles and other items of tangible personal property
(other than inventories) of every kind owned or leased by Seller
(wherever located and whether or not carried on Seller’s
books), together with any express or implied warranty by the
manufacturers or sellers or lessors of any item or component part
thereof and all maintenance records and other documents relating
thereto.
“Tax”–any
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental,
windfall profit, customs, vehicle, airplane, boat, vessel or other
title or registration, capital stock, franchise, employees’
income withholding, foreign or domestic withholding, social
security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on
minimum and other tax, fee, assessment, levy, tariff, charge or
duty of any kind whatsoever and any interest, penalty, addition or
additional amount thereon imposed, assessed or collected by or
under the authority of any Governmental Body, whether or not
disputed and including any obligations to indemnify or otherwise
assume or succeed to the Tax liability of any other
Person.
“Tax
Return”–any return (including any information return),
report, statement, schedule, notice, form, declaration, claim for
refund or other document or information filed with or submitted to,
or required to be filed with or submitted to, any Governmental Body
in connection with the determination, assessment, collection or
payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax, including any schedule or
attachment thereto, and including any amendment or supplement
thereof.
“Third
Party”–a Person that is not a party to this
Agreement.
“Third-Party
Claim”–any claim against any Indemnified Person by a
Third Party, whether or not involving a Proceeding.
“Transition
Services Agreement”–as defined in
Section 2.6(a)(v).
1.2
Usage
|
(a)
|
|
Interpretation. In this Agreement,
unless a clear contrary intention appears:
|
|
(i)
|
|
the
singular number includes the plural number and vice
versa;
|
|
|
|
(ii)
|
|
reference to any Person includes
such Person’s successors and assigns but, if applicable, only
if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a
|
|
|
9
|
|
|
particular capacity excludes such
Person in any other capacity or individually;
|
|
|
|
(iii)
|
|
reference to any gender includes
each other gender;
|
|
|
|
|
|
(iv)
|
|
reference to any agreement, document
or instrument means such agreement, document or instrument as
amended or modified and in effect from time to time in accordance
with the terms thereof;
|
|
|
|
|
|
(v)
|
|
reference to any Legal Requirement
means such Legal Requirement as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time
to time, including rules and regulations promulgated thereunder,
and reference to any section or other provision of any Legal
Requirement means that provision of such Legal Requirement from
time to time in effect and constituting the substantive amendment,
modification, codification, replacement or reenactment of such
section or other provision;
|
|
|
|
|
|
(vi)
|
|
“hereunder,”
“hereof,” “hereto,” and words of similar
import shall be deemed references to this Agreement as a whole and
not to any particular Article, Section or other provision
hereof;
|
|
|
|
|
|
(vii)
|
|
“including” (and with
correlative meaning “include”) means including without
limiting the generality of any description preceding such
term;
|
|
|
|
|
|
(viii)
|
|
“or” is used in the
inclusive sense of “and/or”;
|
|
|
|
|
|
(ix)
|
|
with respect to the determination of
any period of time, “from” means “from and
including” and “to” means “to but
excluding”; and
|
|
|
|
|
|
(x)
|
|
references to documents, instruments
or agreements shall be deemed to refer as well to all addenda,
exhibits, schedules or amendments thereto.
|
|
|
|
(b)
|
|
Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder
shall be made in accordance with GAAP.
|
10
2. SALE AND
TRANSFER OF ASSETS; CLOSING
2.1 Assets To Be
Sold
Upon
the terms and subject to the conditions set forth in this
Agreement, at the Closing, but effective as of the Effective Time,
Seller shall sell, convey, assign, transfer and deliver to Buyer
(or Buyer’s assignee as permitted by Section 13.10), and
Buyer (or Buyer’s assignee) shall purchase and acquire from
Seller, free and clear of any Encumbrances other than Permitted
Encumbrances, all of Seller’s right, title and interest in
and to all of Seller’s property and assets, real, personal or
mixed, tangible and intangible, of every kind and description,
wherever located, belonging to Seller and used exclusively in the
Businesses, including the following (but excluding the Excluded
Assets):
|
(a)
|
|
all
Tangible Personal Property used exclusively in connection with the
Businesses which is listed on Exhibit 2.1(a);
|
|
|
|
(b)
|
|
all
Accounts Receivable which represent amounts owed by Customers for
services to be provided by Buyer subsequent to the Effective
Time;
|
|
|
|
|
|
(c)
|
|
all
of Seller’s Administrative Agreements, including any prepaid
expenses thereunder;
|
|
|
|
|
|
(d)
|
|
all
of Seller’s Service Agreements;
|
|
|
|
|
|
(e)
|
|
all
rights relating to deposits and claims for refunds and rights to
offset in respect thereof in connection with the Businesses,
including but not limited to those listed on
Exhibit 2.1(e);
|
|
|
|
|
|
(f)
|
|
all
Governmental Authorizations used exclusively in connection with the
Businesses and all pending applications therefor or renewals
thereof, in each case to the extent transferable to Buyer, which
are listed on Exhibit 3.15(b);
|
|
|
|
|
|
(g)
|
|
all
Customer lists, Customer and client files and billing records and
invoices, referral sources, production reports, equipment logs,
operating guides and manuals, creative materials, advertising
materials, promotional materials, studies, reports and other
similar documents relating exclusively to the Businesses or the
Assets, copies of all financial and accounting records related
exclusively to the Businesses since January 1, 2003, and,
subject to Legal Requirements, copies of all personnel Records of
those Active Employees of Seller hired by Buyer as a result of this
Agreement;
|
|
|
|
|
|
(h)
|
|
all
of the intangible rights and property of Seller used exclusively in
connection with the Businesses, including Intellectual Property
Assets and Software (including the Results System), technical
documentation related thereto, going concern value, goodwill,
telephone, telecopy, the www.advancedhr.com domain name, and e-mail
addresses and listings and those items listed in
Sections 3.7(a), including the names “Advanced HR
Solutions” and “SIS”, to the extent of
Seller’s rights thereto, but not the
|
|
|
11
|
|
|
name
“Sheakley-Uniservice” or any other name incorporating
“Sheakley” which shall be licensed on a limited basis
pursuant to the Transition Services Agreement;
|
|
|
|
(i)
|
|
all
claims of Seller against third parties relating exclusively to the
Assets, whether choate or inchoate, known or unknown, contingent or
noncontingent;
|
|
|
|
|
|
(j)
|
|
all
of Seller’s right, title and interest to the Real Property
Leases; and
|
|
|
|
|
|
(k)
|
|
all
other properties and assets of every kind, character and
description, tangible or intangible, owned by Seller and used or
held for use exclusively in connection with the
Businesses.
|
|
|
All
of the property and assets to be transferred to Buyer hereunder are
herein referred to collectively as the “Assets.”
Notwithstanding the foregoing, the transfer of the Assets pursuant
to this Agreement shall not include the assumption of any Liability
related to the Assets unless Buyer expressly assumes that Liability
pursuant to Section 2.4(a).
2.2 Excluded
Assets
Notwithstanding
anything to the contrary contained in Section 2.1 or elsewhere
in this Agreement, the following assets of Seller (collectively,
the “Excluded Assets”) are not part of the sale and
purchase contemplated hereunder, are excluded from the Assets and
shall remain the property of Seller after the Closing:
|
(a)
|
|
all
cash, cash equivalents and short-term investments;
|
|
|
|
(b)
|
|
all
Accounts Receivable which represent amounts owed by Customers to
Seller for work performed by Seller prior to the Effective
Time;
|
|
|
|
|
|
(c)
|
|
except as provided in
Paragraph 2.1(f) above, all of Seller’s corporate minute
books, stock books, income tax returns, financial records and other
tax and related records of Seller;
|
|
|
|
|
|
(d)
|
|
all
insurance policies and rights thereunder;
|
|
|
|
|
|
(e)
|
|
all
of Seller’s service agreements with Excluded Customers and
all rights to payments thereunder;
|
|
|
|
|
|
(f)
|
|
all
claims for refund of Taxes and other governmental charges of
whatever nature;
|
|
|
|
|
|
(g)
|
|
all
rights in connection with and assets of the employee benefit
Plans;
|
|
|
|
|
|
(h)
|
|
except to the extent licensed in the
Transition Services Agreement or transferred pursuant to
Section 2.1, the right to the names “Sheakley
Uniservice” and “Sheakley”, and any other mark,
name, logo, domain names
|
|
|
12
|
|
|
and
corporate names incorporating “Sheakley Uniservice” or
“Sheakley”, any derivative thereof by itself or with
other words or phrases, or any confusingly similar trademarks, and
the registrations and applications for registration
thereof;
|
|
|
|
(i)
|
|
all
Leases to Real Property other than the Real Property Leases;
and
|
|
|
|
|
|
(j)
|
|
except to the extent provided
pursuant to Section 2.1(g), all financial Records, minute books,
company records and corporate seals of Sheakley-Uniservice and SIS.
Seller will provide Buyer reasonable access to all Records retained
by Seller in connection with the Businesses, during normal business
hours and on reasonable notice, for any and all reasonable
purposes. Buyer may elect to make copies of such Records, at
Buyer’s expense.
|
|
|
Seller
is a member of an affiliated group of entities, which affiliated
entities (other than Seller and SIS) are not parties to this
Agreement. The Assets include only those Assets used exclusively in
the Businesses of Seller and SIS and not otherwise excluded
hereunder, and shall not include assets used in any manner by any
of their affiliated entities.
It
is the intent of the Buyer and Seller that Seller will receive and
retain all payments from Customers for services rendered by the
Businesses prior to the Closing and that Buyer will receive all
payments from Customers for services rendered by the Businesses
after the Closing. Payments by Customers for services, some of
which are performed prior to the Closing and some of which are to
be performed by Buyer following the Closing, will be allocated
between Buyer and Seller based upon the time period covered by the
invoice for such services and the Closing date as provided herein.
Amounts received on invoices for such services will be prorated,
with Seller receiving and retaining a fractional part of such
invoice amounts, the numerator of such fraction being the number of
months beginning with the first day of the invoice period and
ending with the Closing, and the denominator of which shall be the
total number of months covered by the invoice. Buyer shall receive
all remaining amounts collected from such invoices.
2.3
Consideration
|
(a)
|
|
The
consideration for the Assets (the “Purchase Price”)
will be (i) Thirty-Nine Million Dollars ($39,000,000),
minus (ii) cash in the amount which equals the cash
received by Seller prior to Closing that represents prepayments for
work to be performed by Buyer following the Closing
(“Prepayment Value”), plus (iii) the value
of the prepaid expenses under the LeaseNet agreement and the
deposits set forth on Exhibit 2.1(e); minus (iv) the
SIS Shortfall, if any, plus (v) the assumption of the
Assumed Liabilities.
|
|
|
|
(b)
|
|
In
accordance with Section 2.6(b), at the Closing, the Purchase
Price shall be delivered by Buyer to Seller as follows:
(i) One Million dollars ($1,000,000) (“Escrow
Funds”) shall be paid to the escrow agent pursuant to the
Escrow Agreement, (ii) the cash Purchase Price (as defined in
Section 2.3(a)(i)-(iv)) estimated in accordance with
Section 2.3(c) below less the Escrow Funds
to
|
|
|
13
|
|
|
the
Seller, and (iii) the balance of the Purchase Price by the
execution and delivery of the Assignment and Assumption
Agreement.
|
|
|
|
(c)
|
|
The
Purchase Price shall be estimated as provided in
Section 2.7(a) for purposes of calculating the payments to be
made at closing and shall be subject to post-closing adjustments as
provided in Section 2.7.
|
|
|
2.4
Liabilities
|
(a)
|
|
Assumed Liabilities. On the Closing
Date, but effective as of the Effective Time, Buyer shall assume
and agree to discharge only the following Liabilities of Seller
(the “Assumed Liabilities”):
|
|
(i)
|
|
all
Liabilities and obligations of Seller under the Service Agreements
for work to be performed under the Service Agreements after the
Effective Time; and
|
|
|
|
(ii)
|
|
all
Liabilities and obligations of Seller arising after the Effective
Time under the Administrative Agreements; and
|
|
|
|
|
|
(iii)
|
|
all
Liabilities and obligations of Seller accruing after the Effective
Time under the Real Property Leases; and
|
|
|
|
|
|
(iv)
|
|
all
Liabilities and obligations of Seller accruing after the Effective
Time under that certain Employment Agreement between Seller and
David C. Phelps, dated May 1, 2003; and
|
|
|
|
|
|
(v)
|
|
all
Liabilities and obligations arising after the Effective Time under
any agreements between Buyer and Active Employees of Seller hired
by Buyer hereunder.
|
|
|
|
(b)
|
|
Retained Liabilities. The Retained
Liabilities shall remain the sole responsibility of and shall be
retained, paid, performed and discharged solely by Seller.
“Retained Liabilities” shall mean every Liability of
Seller, other than the Assumed Liabilities, including:
|
|
(i)
|
|
any
Liability arising out of or relating to services of Seller to the
extent provided or sold prior to the Effective Time other than to
the extent assumed under Section 2.4(a);
|
|
|
|
(ii)
|
|
any
Liability under any Service Agreement, Administrative Agreement or
Real Property Leases assumed by Buyer pursuant to
Section 2.4(a) that arises after the Effective Time but that
arises out of or relates to any Breach that occurred prior to the
Effective Time;
|
|
|
|
|
|
(iii)
|
|
any
Liability for Taxes, including (A) any Taxes (or the non-payment
thereof) of Seller, including its Liability, if any (for example by
reason of transferee Liability or application of Treas. Reg.
section
|
|
|
14
|
|
|
1.1502-6) for the Taxes of others,
for all taxable periods ending on or before the Closing Date and
the portion through the Effective Time for any taxable period that
includes (but does not end on) the Closing Date, (B) any Taxes
that will arise as a result of the sale of the Assets pursuant to
this Agreement, (C) any deferred Taxes of any nature, and
(D) any Taxes for any taxable period resulting from a Breach
of any of the representations and warranties or covenants contained
in Sections 3.14 and 10.2(a) hereof;
|
|
|
|
(iv)
|
|
any
Liability under any Contract not assumed by Buyer under
Section 2.4(a);
|
|
|
|
|
|
(v)
|
|
any
cost, damages, expense, liability, obligation or other
responsibility arising from or under any Environmental Law or
Occupational Safety and Health Law arising out of or relating to
the operation of the Businesses prior to the Effective
Time;
|
|
|
|
|
|
(vi)
|
|
any
Liability under Seller’s employee benefit Plans or any other
employee plans or benefits of any kind for Seller’s employees
or former employees or both or any Liability for noncompliance
prior to Closing with Legal Requirements related to employment
practices, immigration, occupational health and safety;
|
|
|
|
|
|
(vii)
|
|
except as provided in Section
2.4(a)(iv), any Liability for employee compensation to, or
Liability under any employment, severance, retention or termination
agreement with, any employee of Seller or any of its Related
Persons arising from his or her employment with Seller or any of
its Related Persons;
|
|
|
|
|
|
(viii)
|
|
any
Liability of Seller to any Related Person of Seller;
|
|
|
|
|
|
(ix)
|
|
any
Liability to indemnify, reimburse or advance amounts to any
officer, director, employee or agent of Seller;
|
|
|
|
|
|
(x)
|
|
any
Liability arising out of or relating to infringement of the
intellectual property rights of any other Person accruing prior to
the Effective Time;
|
|
|
|
|
|
(xi)
|
|
any
Liability to distribute to any of Seller’s shareholders or
otherwise apply all or any part of the consideration received
hereunder;
|
|
|
|
|
|
(xii)
|
|
any
Liability arising out of any Proceeding pending as of the Effective
Time or commenced after the Effective Time and arising out of or
relating to any occurrence or event relating to the Businesses
happening prior to the Effective Time; and
|
|
|
|
|
|
(xiii)
|
|
any
Liability of Seller under this Agreement or any other document
executed in connection with the Contemplated
Transactions.
|
|
|
15
2.5
Closing
The
purchase and sale provided for in this Agreement (the
“Closing”) will take place at the offices of Bryan Cave
LLP, commencing at 10:00 a.m. c.s.t. on March 31, 2004,
unless Buyer and Seller otherwise agree. Subject to the provisions
of Article 9, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the
place determined pursuant to this Section 2.5 will not result
in the termination of this Agreement and will not relieve any party
of any obligation under this Agreement. In such a situation, the
Closing will occur as soon as practicable, subject to
Article 9.
2.6 Closing
Obligations
In
addition to any other documents to be delivered under other
provisions of this Agreement, at the Closing:
|
(a)
|
|
Seller shall deliver to
Buyer:
|
|
(i)
|
|
a
bill of sale for all of the Assets that are Tangible Personal
Property in the form of Exhibit 2.6(a)(i) (the “Bill of
Sale”) executed by Seller;
|
|
|
|
(ii)
|
|
an
assignment of all of the Assets in the form of
Exhibit 2.6(a)(ii), which assignment shall also contain
Buyer’s undertaking and assumption of the Assumed Liabilities
(the “Assignment and Assumption Agreement”) executed by
Seller;
|
|
|
|
|
|
(iii)
|
|
assignments of the Real Property
Leases in the form of Exhibit 2.6(a)(iii) (the “Real
Property Lease Assignments”) executed by Seller;
|
|
|
|
|
|
(iv)
|
|
assignments of all Intellectual
Property Assets and separate assignments of all registered Marks,
Patents and Copyrights in the form of Exhibit 2.6 (a)(iv)
executed by Seller;
|
|
|
|
|
|
(v)
|
|
such other deeds, bills of sale,
assignments, certificates of title, documents and other instruments
of transfer and conveyance as may reasonably be requested by Buyer,
each in form and substance satisfactory to Buyer and its legal
counsel and executed by Seller;
|
|
|
|
|
|
(vi)
|
|
a
transition services agreement in the form of
Exhibit 2.6(a)(vi), executed by Seller (the “Transition
Services Agreement”);
|
|
|
|
|
|
(vii)
|
|
an
escrow agreement in the form of Exhibit 2.6(a)(vii), executed
by Seller and the escrow agent (the “Escrow
Agreement”);
|
|
|
|
|
|
(viii)
|
|
a
certificate executed by Seller as to the accuracy of their
representations and warranties as of the date of this Agreement and
as of the Closing in accordance with Section 7.1 and as to
their
|
|
|
16
|
|
|
compliance with and performance of
their covenants and obligations to be performed or complied with at
or before the Closing in accordance with Section 7.2;
and
|
|
|
|
(ix)
|
|
a
copy of the opinion letter addressed to Seller from Wood, Herron
& Evans.
|
|
|
|
(b)
|
|
Buyer shall deliver to
Seller:
|
|
(i)
|
|
the
amount specified in Section 2.3(b) by wire transfer to an
account specified by Seller in a writing delivered to Buyer at
least three (3) business days prior to the Closing
Date;
|
|
|
|
(ii)
|
|
the
Escrow Agreement, executed by Buyer and the escrow agent, together
with the delivery of One Million dollars ($1,000,000) to the escrow
agent thereunder, by wire transfer to an account specified by the
escrow agent;
|
|
|
|
|
|
(iii)
|
|
the
Assignment and Assumption Agreement executed by Buyer;
|
|
|
|
|
|
(iv)
|
|
the
Real Property Lease Assignments executed by Buyer;
|
|
|
|
|
|
(v)
|
|
the
Transition Services Agreement executed by Buyer; and
|
|
|
|
|
|
(vi)
|
|
a
certificate executed by Buyer as to the accuracy of its
representations and warranties as of the date of this Agreement and
as of the Closing in accordance with Section 8.1 and as to its
compliance with and performance of its covenants and obligations to
be performed or complied with at or before the Closing in
accordance with Section 8.2.
|
|
|
2.7 Purchase Price
Estimate; Adjustments
|
(a)
|
|
At
least three days prior to Closing, Seller shall prepare and provide
to the Buyer a good faith estimate of the Prepayment Value as of
the Effective Time. Such estimated Prepayment Value shall be used
for purposes of calculating the payments to be made at Closing as
provided in Section 2.3.
|
|
|
|
(b)
|
|
As
soon as reasonably practicable following the Closing Date, and in
any event no later than 30 days thereafter, Seller shall cause
to be prepared and delivered to Buyer a statement of the actual
Prepayment Value as of the Effective Time. Seller shall permit
Buyer and/or its designees to review promptly upon request all
records and work papers necessary to allow it to review the
calculation of the Prepayment Value and to take copies such
records.
|
|
|
|
|
|
(c)
|
|
If
Buyer does not dispute the Prepayment Value or does not respond
within 30 days after the date Buyer receives Seller’s
proposal thereof, the
|
|
|
17
|
|
|
Prepayment Value shall be deemed
final; if Buyer does dispute the Prepayment Value, then it shall
follow the procedure set forth in Section 2.7(g). If the
Prepayment Value as finally determined differs from the amount
estimated as provided in Section 2.7(a) and utilized in the
calculation of the payments at Closing, then:
|
|
(i)
|
|
Seller shall pay to Buyer the amount
by which the Prepayment Value as so finally determined exceeds the
amount so estimated, or
|
|
|
|
(ii)
|
|
Buyer shall pay to Seller the amount
by which the Prepayment Value as so finally determined is less than
the amount so estimated.
|
|
|
|
(d)
|
|
Any
payment related to the Prepayment Value so required shall be by
check or wire transfer of immediately available funds, not more
than seven (7) Business Days after final determination
thereof, to an account to be designated by the payee at least two
(2) Business Days prior to the due date. Such payment shall
not affect the escrow funds in the Escrow Agreement, and Buyer may
set off any amount to which it may be entitled under this
Section 2.7 against amounts otherwise payable to Seller under
the Transition Services Agreement.
|
|
(e)
|
|
With respect to SIS
Revenue:
|
|
(i)
|
|
No
later than July 31, 2004, Buyer shall cause to be calculated
and delivered to Seller a statement of the SIS Revenue for the
three (3) months ended June 30, 2004 (the “One
Quarter SIS Revenue”). Buyer shall permit Seller and/or its
designees to review promptly upon request all records and work
papers necessary to allow it to review the calculation of such
value and to take copies such records. If Seller does not dispute
such Revenue Value or does not respond within 30 days after
the date Seller receives Buyer’s proposal thereof, such
Revenue Value shall be deemed final; if Seller does dispute such
Revenue Value, then it shall follow the procedure set forth in
Section 2.7(g). If the One Quarter SIS Revenue as finally
determined is less than $725,000, then Seller shall pay to Buyer an
amount equal to (a) $725,000 less (b) the One Quarter
SIS Revenue (the “One Quarter Payment”). The One
Quarter Payment will be equal to $0 if the One Quarter SIS Revenue
is greater than or equal to $725,000.
|
|
|
|
(ii)
|
|
No
later than October 31, 2004, Buyer shall cause to be
calculated and delivered to Seller a statement of the SIS Revenue
for the six (6) months ended September 30, 2004 (the
“Two Quarter SIS Revenue”). Buyer shall permit Seller
and/or its designees to review promptly upon request all records
and work papers necessary to allow it to review the calculation of
the such value and to take copies such records. If Seller does not
dispute such Revenue Value or does not respond within 30 days
after the date Seller receives Buyer’s proposal
|
|
|
18
|
|
|
thereof, such Revenue Value shall be
deemed final; if Seller does dispute such Revenue Value, then it
shall follow the procedure set forth in Section 2.7(g). If the
Two Quarter SIS Revenue as finally determined is less than
$1,450,000, then Seller shall pay to Buyer an amount equal to (a)
$1,450,000 less (b) the Two Quarter SIS Revenue
less (c) the One Quarter Payment (the “Two
Quarter Payment”). The Two Quarter Payment will be equal to
$0 if the Two Quarter SIS Revenue is greater than or equal to
$1,450,000. If the Two Quarter SIS Revenue does not exceed
$1,450,000, but the SIS Revenue for the period from July 1,
2004 to September 30, 2004 exceeds $725,000, and if Seller has
made a One Quarter Payment to Buyer under (i) above, Seller
shall receive from Buyer a refund of a portion of the One Quarter
Payment in an amount equal to (a) the sum of the Two Quarter
SIS Revenue plus the One Quarter Payment, minus (b) $1,450,000. In
the event the Two Quarter SIS Revenue is equal to or exceeds
$1,450,000 and Seller was required to make a One Quarter Payment,
Seller shall be entitled to a refund of such One Quarter Payment
equal to the amount by which the Two Quarter SIS Revenue exceeds
$1,450,000, provided that in no event shall Seller be entitled to a
refund in excess of the One Quarter Payment.
|
|
|
|
(iii)
|
|
No
later than January 31, 2005, Buyer shall cause to be
calculated and delivered to Seller a statement of the SIS Revenue
for the nine (9) months ended December 31, 2004 (the
“Three Quarter SIS Revenue”). Buyer shall permit Seller
and/or its designees to review promptly upon request all records
and work papers necessary to allow it to review the calculation of
the such value and to take copies such records. If Seller does not
dispute such Revenue Value or does not respond within 30 days
after the date Seller receives Buyer’s proposal thereof, such
Revenue Value shall be deemed final; if Seller does dispute such
Revenue Value, then it shall follow the procedure set forth in
Section 2.7(g). If the Three Quarter SIS Revenue as finally
determined is less than $2,175,000, then Seller shall pay to Buyer
an amount equal to (a) $2,175,000 less (b) the Three
Quarter SIS Revenue less (c) the One Quarter Payment
less (d) the Two Quarter Payment (the “Three
Quarter Payment”). The Three Quarter Payment will be equal to
$0 if the Three Quarter SIS Revenue is greater than or equal to
$2,175,000. If the Three Quarter SIS Revenue does not exceed
$2,175,000, but the SIS Revenue for the period from October 1,
2004 to December 31, 2004 exceeds $725,000, and if Seller has
made a One Quarter Payment to Buyer under (i) above that has
not been refunded to Seller entirely pursuant to the last sentence
of (i) (said non-refunded amount being referred to as the
“Non-Refunded One Quarter Payment”), or Seller has made
a Two Quarter Payment to Buyer under (ii) above, then Seller
shall receive from Buyer a refund of a portion of the Non-Refunded
One Quarter Payment and the Two Quarter Payment in an amount
equal
|
|
|
19
|
|
|
to
(a) the sum of the Three Quarter SIS Revenue plus the
Non-Refunded One Quarter Payment (if any) plus the Two Quarter
Payment (if any) minus (b) $2,175,000. In the event the Three
Quarter SIS Revenue is equal to or exceeds $2,175,000 and Seller
was required to make a One Quarter Payment and/or a Two Quarter
Payment, Seller shall be entitled to a refund of all or a portion
of such One Quarter Payment and/or such Two Quarter Payment (to the
extent not already refunded) up to the amount by which the Three
Quarter SIS Revenue exceeds $2,175,000, provided that in no event
shall Seller be entitled to a refund in the aggregate in excess of
the sum of the One Quarter Payment, if any, and the Two Quarter
Payment, if any
|
|
(iv)
|
|
No
later than April 31, 2005, Buyer shall cause to be calculated
and delivered to Seller a statement of the SIS Revenue for the
twelve (12) months ended March 31, 2004 (the “Four
Quarter SIS Revenue”). Buyer shall permit Seller and/or its
designees to review promptly upon request all records and work
papers necessary to allow it to review the calculation of the such
value and to take copies such records. If Seller does not dispute
such Revenue Value or does not respond within 30 days after
the date Seller receives Buyer’s proposal thereof, such
Revenue Value shall be deemed final; if Seller does dispute such
Revenue Value, then it shall follow the procedure set forth in
Section 2.7(g). If the Four Quarter SIS Revenue as finally
determined is less than $2,900,000, then Seller shall pay to Buyer
an amount equal to (a) $2,900,000 less (b) the Four
Quarter SIS Revenue less (c) the One Quarter Payment
less (d) the Two Quarter Payment less
(e) the Three Quarter Payment (the “Four Quarter
Payment”). The Four Quarter Payment will be equal to $0 if
the Four Quarter SIS Net Operating Income is greater than or equal
to $2,900,000. If the Four Quarter SIS Revenue does not exceed
$2,900,000, but the SIS Revenue for the period from January 1,
2005 to March 31, 2005 exceeds $725,000, and if Seller has
made a Non-Refunded One Quarter Payment, a Two Quarter Payment to
Buyer under (ii) above that has not been refunded to Seller
entirely pursuant to (ii) (said non-refunded amount being referred
to as the “Non-Refunded Two Quarter Payment”) or Seller
has made a Three Quarter Payment to Buyer under (iii) above,
then Seller shall receive from Buyer a refund of a portion of the
Non-Refunded One Quarter Payment, Non-Refunded Two Quarter Payment
and Three Quarter Payment in an amount equal to (a) the sum of
the Four Quarter SIS Revenue plus the Non-Refunded One Quarter
Payment (if any) plus the Non-Refunded Two Quarter Payment (if any)
plus the Three Quarter Payment (if any) minus (b) $2,900,000. In
the event the Four Quarter SIS Revenue is equal to or exceeds
$2,900,000 and Seller was required to make a One Quarter Payment, a
Two Quarter Payment and/or a Three Quarter Payment, Seller shall be
entitled to a
|
20
|
|
|
refund of all or a portion of such
One Quarter Payment, such Two Quarter Payment and/or such Three
Quarter Payment (to the extent not already refunded), up to the
amount by which the Four Quarter SIS Revenue exceeds $2,900,000,
provided that in no event shall Seller be entitled to a refund in
the aggregate in excess of the sum of the One Quarter Payment, if
any, the Two Quarter Payment, if any, and the Three Quarter
Payment, if any.
|
|
(f)
|
|
Any
payment required by Section 2.7(e) (the “SIS
Shortfall”) shall be made by Seller by check or wire transfer
of immediately available funds, not more than seven (7) Business
Days after final determination thereof, to an account to be
designated by Buyer at least two (2) Business Days prior to
the due date. Such payment shall not affect the escrow funds in the
Escrow Agreement, and Buyer may set off any amount to which it may
be entitled under this Section 2.7 against amounts otherwise
payable to Seller under the Transition Services
Agreement.
|
|
(g)
|
|
If
either party disputes the Prepayment Value or the Revenue Value as
proposed by the other party, not more than 30 days after the
date it receives the other party’s proposal thereof, then the
party asserting the error shall deliver to the other party a Notice
of Dispute. Upon receipt of the Notice of Dispute, Seller and Buyer
shall promptly consult with each other with respect to the
specified points of disagreement in an effort to resolve the
dispute. If any such dispute cannot be resolved by Seller and Buyer
within 30 days after Buyer receives the Notice of Dispute,
then Seller and Buyer shall jointly refer the dispute to BKD, LLP,
a national accounting firm that has no material relationship with
any of the parties, as agreed by the parties (the
“Arbiter”), as an arbitrator to finally resolve, as
soon as practicable, and in any event within 45 days after
such reference, all points of disagreement with respect to the
amount of the Prepayment Value or Revenue Value. For purposes of
such arbitration, Seller and Buyer shall each submit a proposed
value for the items in dispute. The Arbiter shall apply the terms
of this Section 2.7, and shall otherwise conduct the arbitration
under such procedures as the parties may agree or, failing such
agreement, under the then prevailing Commercial Rules of the
American Arbitration Association. Each of the parties shall bear
its own expenses in connection with the arbitration, unless the
Arbiter otherwise directs. The fees and expenses of the Arbiter
shall be allocated between Seller and Buyer by the Arbiter in
proportion to the extent either party did not prevail on items in
dispute; provided, that such fees and expenses shall not include,
so long as a party complies with the procedures of this Section,
the other party’s outside counsel or accounting fees. All
determinations by the Arbiter shall be final, conclusive and
binding on Buyer and Seller with respect to the Prepayment Value or
Revenue Value and the allocation of arbitration fees and expenses,
in the absence of fraud or manifest error.
|
21
3.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller
hereby makes the following representations and warranties, each of
which is true and correct on the date hereof and, except for
changes expressly permitted by this Agreement, shall be true and
correct on the Closing Date and each of which shall survive the
Closing Date and the transactions contemplated hereby:
3.1 Organization
and Good Standing
|
(a)
|
|
Sheakley-Uniservice is a corporation
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, with full corporate
power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports
to own or use, and to perform all its obligations under the Seller
Contracts which are related to the Businesses. With respect to the
Businesses, Sheakley-Uniservice is duly qualified to do business as
a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which the failure to do so
would have a material adverse effect on the Businesses.
Exhibit 3.1(a) contains a complete and accurate list of the
jurisdictions in which Sheakley-Uniservice is qualified to do
business as a foreign corporation with respect to the
Businesses.
|
|
|
|
(b)
|
|
SIS
is a limited liability company duly organized and validly existing
under the laws of its jurisdiction of organization, with full power
and authority to conduct its business as is now being conducted, to
own or use the properties and assets that it purports to own or
use, and to perform all of its obligations under the Seller
Contracts which are related to the Businesses. With respect to the
Businesses, SIS is duly qualified to do business as a foreign
limited liability company and is in good standing under the laws of
each state or other jurisdiction in which the failure to do so
would have a material adverse effect on the Businesses. Exhibit
3.1(b) contains a complete and accurate list of the jurisdictions
in which SIS is qualified to do business as a foreign limited
liability company with respect to the Businesses.
|
|
|
|
|
|
(c)
|
|
Except for SIS, Sheakley-Uniservice
has no Subsidiary and does not own any shares of capital stock or
other securities of any other Person.
|
|
|
3.2
Enforceability; Authority; No Conflict
|
(a)
|
|
This Agreement constitutes the
legal, valid and binding obligation of Seller and LAS, enforceable
against them in accordance with its terms. Upon the execution and
delivery by Seller of the Escrow Agreement and each other agreement
to be executed or delivered by Seller at the Closing (collectively,
the “Seller’s Closing Documents”), each of
Seller’s Closing Documents will constitute the legal, valid
and binding obligation of Seller, enforceable against Seller in
accordance with its terms.
|
22
|
(b)
|
|
Seller has the absolute and
unrestricted right, power and authority to execute and deliver this
Agreement and Seller’s Closing Documents to which it is a
party and to perform its obligations under this Agreement and
Seller’s Closing Documents, and such action has been duly
authorized by all necessary action by Seller’s board of
directors. LAS has all necessary legal capacity to enter into this
Agreement to the extent provided herein and to perform his
obligations hereunder.
|
|
|
|
(c)
|
|
Except as set forth in
Exhibit 3.2(c) and subject to the representations and
warranties of Buyer in Section 4, neither the execution and
delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
|
|
|
|
(i)
|
|
Breach (A) any provision of any
of the Governing Documents of Seller or (B) any resolution
adopted by the board of directors or the shareholders of
Seller;
|
|
|
|
(ii)
|
|
Breach or give any Governmental Body
or other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under
any Legal Requirement or any Order to which Seller, or any of the
Assets, may be subject;
|
|
|
|
|
|
(iii)
|
|
contravene, conflict with or result
in a violation or breach of any of the terms or requirements of, or
give any Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate or modify, any Governmental Authorization that is
held by Seller or that otherwise relates to the Assets or to the
Businesses; or
|
|
|
|
|
|
(iv)
|
|
result in the imposition or creation
of any Encumbrance upon or with respect to any of the Assets unless
created by, or as a result of, the actions of Buyer.
|
|
|
|
(d)
|
|
Except as set forth in
Exhibit 3.2(d), Seller is not required to give any notice to
or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
|
3.3 Capitalization
of SIS
|
