EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of this 16th
day of January, 2004 by and between PRG-Schultz USA, Inc., a Georgia corporation
("PRGUSA"), PRGRS, Inc., a Delaware corporation ("PRGRS"), PRG-Schultz
International Inc., a Georgia corporation ("Parent"), and TSL (DE) Corp., a
Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, the parties hereto desire that PRGUSA sell to Purchaser and
that Purchaser purchase substantially all of the assets of PRGUSA used or held
for use in PRGUSA's TSL division ("TSL") for providing the following services
(collectively, the "Business"):
(i) Telecommunications and information technology cost control
services;
(ii) Telecommunications consulting services and professional
services for telecommunications-related services;
(iii) Telecommunications billing verification services and
optimization;
(iv) Call accounting and IT/telecommunications chargeback services;
(v) Telecommunications software and software services (e.g., ASP
Service Provider; Internet Hosting Services, Development,
etc.);
(vi) Managed telecommunications invoice processing services;
(vii) Other telecommunications-related managed services (e.g.,
moves, adds and changes and billing help desk); and
(viii) Professional technical temporary staffing for
telecommunications-related services.
WHEREAS, notwithstanding the foregoing, PRGUSA has advised Purchaser
that the assets of the former Invoice & Tariff Management Group, LLC, The Right
Call, Inc. and The Right Answer, Inc. are not part of the Business and they are
not now primarily related to or primarily used in the Business; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the transactions contemplated herein and
certain additional agreements related thereto.
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF PURCHASED ASSETS
1.1 ASSETS TO BE ACQUIRED. Subject to and upon the terms and
conditions set forth herein, Purchaser agrees to purchase from PRGUSA, and
PRGUSA agrees to sell, transfer, convey and assign to Purchaser, free and clear
of all claims, liens, encumbrances, security interests and similar interests of
any kind or nature whatsoever, except for Permitted Encumbrances (as defined in
Section 4.4), the Purchased Assets, the Business and the goodwill related
thereto for the Purchase Price specified in Section 2.1. For purposes of this
Agreement, "Purchased Assets" shall mean all of PRGUSA's properties, assets,
goodwill and rights of every kind, nature and description existing on the
Closing Date (as hereinafter defined), primarily related to or primarily used in
the conduct of the Business as a going concern, wherever such assets are located
and whether real, personal or mixed, tangible or intangible, and whether or not
any of such assets have any value for accounting purposes or are carried or
reflected on or specifically referred to in its books or financial statements,
except for the Excluded Assets (as defined in Section 1.2), including, without
limitation, all of PRGUSA's right, title and interest in and to the following,
as the same may exist on the Closing Date, to the extent primarily related to or
primarily used in the Business:
(a) all of the assets and properties reflected in the
Interim Statement of Net Assets (as defined in Section 4.7 herein) under the
heading "Assets" and all of the assets and properties of TSL (other than
Excluded Assets, as defined herein) acquired in the ordinary course of business
after December 31, 2003 by PRGUSA, primarily related to or primarily used in the
conduct of the Business, except for those disposed of after such date in the
ordinary course of business and not in violation of this Agreement;
(b) all machinery, appliances, equipment, including
computer hardware, tools, supplies, leasehold improvements, construction in
progress, furniture and fixtures and assets subject to outstanding purchase
orders ("Fixed Assets");
(c) all right, title and interest under all contracts
with clients or customers ("Client Contracts"), agreements with auditors,
independent contractor agreements, software development agreements,
arrangements, licenses, purchase orders, invoices and all other agreements and
contracts, whether oral or written, except for contracts and agreements which
are Excluded Assets (collectively, "Contracts");
(d) all trade and accounts receivables (including,
without limitation custodial receivables for amounts advanced by PRGUSA on
behalf of one client of TSL as described in Section 3.10 hereof), notes
receivable, employee advances of PRGUSA (collectively, "Accounts Receivable")
and all work in progress (collectively, the "Work in Progress");
(e) all of PRGUSA's right, title and interest in, and
benefits accruing to PRGUSA as lessee under all written and oral leases of
personal property (collectively, the "Personal Property Leases");
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(f) all of PRGUSA's right, title and interest in, and
benefits accruing to PRGUSA under all leaseholds and subleaseholds relating to
real property (collectively, the "Real Property Leases");
(g) all rights in Intellectual Property (as defined in
Section 4.11(k)) used or held for use in TSL's business, including without
limitation all Intellectual Property set forth on Schedule 4.11 hereto;
(h) all franchises, licenses, consents, permits,
variances, certifications and approvals, orders and registrations of
governmental agencies or quasi-governmental or non-governmental third persons;
(i) all claims, security and other deposits, refunds,
prepaid expenses, causes of action, choses in action, judgments, rights of
recovery, warranty rights, rights of set off, credits, guarantees, indemnities
and similar rights (collectively, the "Deposits and Other Rights");
(j) client and supplier lists, client files, files
related to employees and auditors, computer data bases, books, records, manuals,
documents, pricing and cost information, books of account, correspondence, sales
and credit reports, subscription lists, mailing lists, literature, brochures,
marketing or promotional material and the like, including, without limitation,
all discs, tapes and other media storing data and other information and all of
the software and information management systems, and other business records;
(k) all right, title and interest in and to the telephone
numbers and the white and yellow page directory listings for such telephone
numbers used in the conduct of the Business;
(l) that certain bank account ("Custodial Account") used
exclusively for services provided by TSL to The McGraw-Hill Companies
("McGraw-Hill") pursuant to an agreement described on Schedule 4.9 attached
hereto and all bank deposits held by TSL in connection with its services on
behalf of McGraw-Hill (collectively, "Custodial Funds") including the Custodial
Account set forth Schedule 1.1(l);
(m) all prepaid items and expenses, advance payments,
security or similar deposits, investments, deferred charges and claims for
refund;
(n) all goodwill associated with TSL; and
(o) all other tangible personal property.
Provided, however, that if any affiliate of PRGUSA (including PRGRS) owns or
leases any of the Purchased Assets, PRGUSA shall cause such affiliate to convey
all of such affiliate's right, title and interest in such Purchased Assets to
Purchaser pursuant to the terms of this Agreement.
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1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained in Section 1.1 hereof, Purchaser shall not acquire and PRGUSA shall
not transfer to Purchaser the following (collectively, "Excluded Assets"):
(a) cash, bank deposits and cash equivalents (except for
the items referred to in Sections 1.1(l) and 1.1(m), which shall be Purchased
Assets);
(b) the name "PRG-Schultz," "Profit Recovery Group" or
any related or similar trade names, trademarks, service marks or logos to the
extent the same incorporate the name(s) "PRG-Schultz," "Profit Recovery Group"
or any variation thereof;
(c) rights, claims or causes of action against third
parties to the extent relating to the Excluded Assets or Excluded Liabilities;
(d) those contracts or agreements entered into as a part
of any business acquisition transaction to which PRGUSA or any of its affiliates
is a party or a beneficiary and which are listed in Schedule 1.2 attached
hereto;
(e) all contracts of insurance and any prepaid premiums
with respect to such insurance;
(f) all corporate minute books and stock transfer books
and the corporate seal of PRGUSA;
(g) all employment, retention, bonus, severance and other
compensation contracts and arrangements with employees of TSL including, without
limitation, the Employee Agreements entered into by TSL employees in favor of
PRGUSA;
(h) all rights to claims for refunds of any income taxes
for which PRGUSA is or was entitled;
(i) except as provided in Section 3.9(b), all assets
under or relating to any Employee Benefit Plan (as defined below);
(j) those assets listed on Schedule 1.2 attached hereto.
For the avoidance of doubt, PRGUSA has advised Purchaser that the assets of the
former Invoice & Tariff Management Group, llc, The Right Call, Inc. and The
Right Answer, Inc. are not a part of the Business and they are not now primarily
related or primarily used in the Business, and do not constitute a portion of
the Purchased Assets.
1.3 CONVEYANCE OF ASSETS. The conveyance, transfer and delivery of
the Purchased Assets shall be made by PRGUSA and accepted by Purchaser as of the
Closing Date as follows:
(a) PRGUSA shall execute and deliver to Purchaser a bill
of sale in the form of Exhibit 1.3(a) attached hereto and made a part hereof
(the "Bill of Sale");
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(b) PRGUSA and Purchaser shall execute and deliver an
Assignment and Assumption Agreement in the form of Exhibit 1.3(b) attached
hereto and made a part hereof (the "Assignment and Assumption Agreement") with
respect to the Assumed Liabilities (as hereinafter defined);
(c) PRGRS shall execute and deliver to Purchaser an
assignment to Purchaser of the Intellectual Property owned by it in the form of
Exhibit 1.3(c) attached hereto and made a part hereof ("Intellectual Property
Assignment");
(d) PRGUSA shall deliver to Purchaser evidence reasonably
satisfactory to Purchaser that the liens against the Purchased Assets under the
Credit Agreement dated as of December 31, 2001 among Parent and certain of its
affiliates, the lenders party thereto and Bank of America, N.A., as
administrative agent, have been or at the Closing will be released;
(e) Counsel to PRGUSA shall deliver to Purchaser an
opinion of counsel to PRGUSA, dated the Closing Date, in the form of Exhibit
1.3(e) attached hereto;
(f) PRGUSA shall deliver to Purchaser the notices to, and
consents and approvals of third parties listed on Schedule 1.3(f), to the extent
obtained prior to the Closing Date;
(g) PRGRUSA shall execute and deliver to Purchaser a
certificate stating that PRGUSA is not a foreign person in accordance with
Sections 897 and 1445 of the Code;
(h) PRGUSA and Purchaser shall execute and deliver a
Transition Services Agreement in the form of Exhibit 1.3(h) attached hereto;
(i) PRGUSA and Purchaser shall execute and deliver the
Subcontractor Agreements in the form of Exhibit 1.3(i) attached hereto;
(j) PRGUSA, Parent and Purchaser shall execute and
deliver a Noncompetition and Nonsolicitation Agreement in the form of Exhibit
1.3(j) attached hereto;
(k) PRGUSA shall deliver to Purchaser a certificate of
good standing issued by the Secretary of State of the State of Georgia dated not
more than five days before the Closing Date, certifying that PRGUSA is a
corporation in good standing in such state;
(l) PRGUSA shall deliver to Purchaser a certificate,
dated as of the Closing Date, in form and substance reasonably satisfactory to
Purchaser, of the Secretary or an Assistant Secretary of Purchaser certifying
(i) that attached thereto is a complete and correct copy of the articles of
incorporation of PRGUSA, as amended to date, (ii) that attached thereto is a
complete and correct copy of the Bylaws of PRGUSA, as amended to date, (iii)
that attached thereto is a complete and correct copy of resolutions adopted by
the board of directors of PRGUSA, authorizing the execution, delivery and
performance of this Agreement and all other agreements executed in connection
herewith by PRGUSA and the transfer of the Purchased Assets to
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Purchaser hereunder, and that such resolutions, approvals and consents have not
been amended or modified in any respect and remain in full force and effect as
of the date thereof, and (iv) that the persons named therein are duly elected,
qualified and acting officers of PRGUSA and that set forth therein is a genuine
signature or true facsimile thereof for each such officer;
(m) PRGUSA shall execute and deliver such additional
instruments of sale, transfer, conveyance and assignment as of the Closing Date
as shall, in the reasonable opinion of Purchaser and its counsel, be necessary
or appropriate to vest in Purchaser good, valid and marketable title to the
Purchased Assets in accordance with Section 1.1;
(n) [Intentionally omitted];
(o) Purchaser shall deliver to PRGUSA a certificate,
dated as of the Closing Date, in form and substance reasonably satisfactory to
PRGUSA, of the secretary or an assistant secretary of Purchaser certifying that
(i) attached thereto is a complete and correct copy of the Certificate of
Incorporation of Purchaser, as amended to date, (ii) attached thereto is a
complete and correct copy of the Bylaws of Purchaser, as amended to date, (ii)
attached thereto is a complete and correct copy of resolutions adopted by the
Board of Directors of Purchaser, authorizing the execution, delivery and
performance of this Agreement and all other agreements executed in connection
herewith by Purchaser and the purchase of the Purchased Assets by Purchaser
hereunder, and that such resolutions, approvals and consents have not been
amended or modified in any respect and remain in full force and effect as of the
date thereof, and (iv) that the persons named therein are duly elected,
qualified and acting officers of Purchaser and that set forth therein is a
genuine signature or true facsimile thereof for each such officer;
(p) Purchaser shall wire transfer the cash payment to or
for the account of PRGUSA in accordance with instructions delivered to Purchaser
prior to Closing; and
(q) Purchaser shall execute and deliver such additional
documents as of the Closing Date as shall, in the reasonable opinion of Seller
and its counsel, be necessary or appropriate to consummate the transactions
contemplated by this Agreement.
In addition, at the Closing PRGUSA will notify Bank of America that the bank
account at Bank of America named "PRG-Schultz TSL Lockbox" shall come under the
control of Purchaser from and after the Closing Date; provided that all deposits
in such account at the close of business on the Closing Date shall be retained
by PRGUSA. After the Closing, Purchaser may change signatures on such account to
those persons selected by Purchaser.
1.4 CLOSING. The closing of the transactions contemplated herein
(the "Closing") shall take place on January 16, 2004 by the exchange of
documents and instruments by mail, courier, telecopy and wire transfer to the
extent mutually acceptable to the parties hereto upon compliance with the terms,
conditions and contingencies contained herein or on such other date as is
mutually agreed upon by the parties hereto (such date to be herein referred to
as the "Closing Date"). All computations, adjustments, and transfers for the
purposes hereof shall be effective as of the close of business on the Closing
Date.
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1.5 CERTAIN CONSENTS. Nothing in this Agreement shall be construed
as an attempt to assign any contract, agreement, permit, franchise, or claim
included in the Purchased Assets which is by its terms or in law nonassignable
without the consent of the other party or parties thereto, unless such consent
shall have been given, or as to which all the remedies for the enforcement
thereof enjoyed by PRGUSA would not, as a matter of law, pass to Purchaser as an
incident of the assignments provided for by this Agreement. In order, however,
to provide Purchaser the full realization and value of every contract,
agreement, permit, franchise and claim of the character described in the
immediately preceding sentence, each of PRGUSA and Purchaser agrees that on and
after the Closing, subject to the other terms and conditions of this Agreement
and the Subcontractor Agreement, it will take all commercially reasonable action
as shall be necessary or proper (a) to assure that the rights of PRGUSA under
such contracts, agreements, permits, franchises, and claims shall be preserved
for the benefit of Purchaser and (b) to facilitate receipt of the consideration
to be received by PRGUSA in and under every such contract, agreement, permit,
franchise, and claim, which consideration shall be held for the benefit of, and
shall be delivered to, Purchaser. Nothing in this Section shall in any way
diminish or increase PRGUSA's obligations hereunder to obtain all consents and
approvals as elsewhere set forth in this Agreement. Nothing contained in this
Section shall require PRGUSA to pay money or incur additional liabilities.
ARTICLE II
PURCHASE PRICE; ASSUMPTION OF LIABILITIES
2.1 PURCHASE PRICE; PAYMENTS AT CLOSING.
(a) Subject to adjustment pursuant to Section 2.3, the
purchase price for the Purchased Assets will be an amount equal to Nineteen
Million One Hundred Thousand Dollars ($19,100,000) (the "Cash Purchase Price"),
payable at Closing by wire transfer to PRGUSA, plus the assumption of certain
liabilities of PRGUSA in accordance with Section 2.2 (collectively, the
"Purchase Price").
(b) The Cash Purchase Price shall be payable as follows:
on the Closing Date, Purchaser shall pay to PRGUSA by wire transfer (w)
$19,100,000 plus (x) the amount, if any, by which Estimated Net Working Capital
is greater than $1,700,000, less (y) the amount, if any, by which Estimated Net
Working Capital is less than $1,700,000 (collectively, the "Cash Payment").
2.2 ASSUMPTION OF LIABILITIES.
(a) Assumed Liabilities. At the Closing, Purchaser shall
assume and agree to discharge and perform when due only the following
liabilities and obligations of PRGUSA, Parent or PRGRS relating to TSL as the
same shall exist on the Closing Date (collectively, the "Assumed Liabilities"):
(i) any liabilities and obligations reflected on
the Closing Statement of Net Assets (as defined in Section 2.3), each to the
extent such liability or obligation is reflected on such statement;
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(ii) PRGUSA's obligations and liabilities under
the Contracts, Real Property Leases and Personal Property Leases arising from
and after the Closing (excluding any liabilities or obligations for any breach
or default which occurred prior to the Closing);
(iii) all liabilities and obligations of PRGUSA
(including the obligations to make payments) resulting
from facts or circumstances first arising from and after the Closing under all
governmental licenses, permits, approvals, certificates of occupancy and
operating rights held in connection with the Purchased Assets to the extent such
licenses, permits, approvals, certificates of occupancy and operating rights are
included in the Purchased Assets (excluding any liabilities or obligations for
any breach or default which occurred prior to the Closing); and
(iv) any other liabilities of PRGUSA set forth on
Schedule 2.2(a).
To the extent that any of the Assumed Liabilities are paid by PRGUSA, Purchaser
shall reimburse PRGUSA for the amount of such payment by PRGUSA promptly after
receiving evidence of the payment by PRGUSA. Except for the Assumed Liabilities,
Purchaser shall not assume any debts or liabilities of PRGUSA, Parent or PRGRS
of any kind or nature whatsoever (the "Excluded Liabilities").
(b) Excluded Liabilities. Notwithstanding anything herein
to the contrary, PRGUSA shall retain and Purchaser shall not assume or be liable
for the following liabilities and obligations of PRGUSA, Parent or PRGRS:
(i) all federal, state, local, foreign and other
income taxes imposed on PRGUSA or Parent;
(ii) any liabilities or obligations of PRGUSA,
contingent or otherwise, for any borrowed money or any capital leases;
(iii) any Environmental Liabilities (as defined in
Section 6.1);
(iv) any liabilities or obligations existing
immediately prior to Closing of TSL or the Business to PRGUSA, Parent, PRGRS or
any of their Affiliates; and
(v) any other liability or obligation of PRGUSA,
Parent, PRGRS or any of their Affiliates (as defined below) arising prior to
Closing including any liability or obligation directly or indirectly arising out
of or relating to the operation of the Business or ownership of the Purchased
Assets prior to the Closing, whether contingent or otherwise, fixed or absolute,
known or unknown, matured or unmatured, present, future or otherwise, except for
the Assumed Liabilities.
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2.3 WORKING CAPITAL ADJUSTMENT.
(a) As used herein, "Working Capital" means all Current
Assets included in the Purchased Assets as of the Closing Date (and excluding
the value of any Excluded Assets), less all Current Liabilities of the Business
as of the Closing Date (and excluding the value of any Excluded Liabilities)
determined in accordance with generally accepted accounting principles applied
on a basis consistent with PRGUSA's past practice (the "Accounting Principles");
"Current Assets" means assets of the character that would be reflected as
current assets on a balance sheet prepared on a basis consistent with the
Accounting Principles; and "Current Liabilities" means liabilities of the
character that would be reflected as current liabilities on a balance sheet
prepared on a basis consistent with the Accounting Principles. Purchaser and
PRGUSA agree that employer contributions to the PRGUSA 401(k) Plan (as defined
below) shall not be included as a Current Liability reducing Working Capital,
and shall accordingly not be an Assumed Liability.
(b) The "Baseline Working Capital" shall be $1,700,000.
(c) The "Closing Working Capital" shall be the Working
Capital as of the close of business on the Closing Date, as set forth in a
closing statement of Working Capital (the "Closing Statement of Net Assets").
The Closing Statement of Net Assets shall be prepared consistent with the
Accounting Principles in accordance with the procedure set forth in Sections
2.3(d) and, if applicable, 2.3(e).
(d) A preliminary and nonbinding estimate of Closing
Working Capital ("Estimated Closing Working Capital") shall be prepared by
PRGUSA in good faith and delivered to Purchaser before the Closing and, subject
to the approval of the Estimated Closing Working Capital by Purchaser, the cash
paid at Closing shall be increased by the amount that the Estimated Closing
Working Capital exceeds the Baseline Working Capital and decreased by the amount
that the Estimated Closing Working Capital is less than the Baseline Working
Capital. The Estimated Closing Working Capital shall be calculated by PRGUSA in
accordance with the Accounting Principles. Within 90 days following the Closing
Date, Purchaser shall revise the Estimated Closing Working Capital amount
prepared by PRGUSA, and shall prepare a statement (the "Purchaser Revised
Statement") of the actual Closing Working Capital and shall deliver to PRGUSA
the Purchaser Revised Statement. Purchaser shall also deliver or promptly make
available to PRGUSA reasonably detailed schedules supporting the Purchaser
Revised Statement and access to personnel and materials appropriate to verify
the Purchaser Revised Statement. The Purchaser Revised Statement shall be
prepared in accordance with the Accounting Principles. PRGUSA and Purchaser
shall reasonably cooperate in good faith with each other in connection with
calculating the Closing Working Capital which shall include, without limitation,
the prompt sharing of any reasonably requested books and records and related
information. If, within forty-five (45) days after the delivery of the Purchaser
Revised Statement and supporting schedules, PRGUSA determines in good faith that
the Purchaser Revised Statement has not been prepared in accordance with the
Accounting Principles, is not mathematically accurate or has not been calculated
or prepared in accordance with this Section 2.3, PRGUSA shall deliver to
Purchaser within such period written notice (the "Dispute Notice") specifying in
reasonable detail all disputed items and the basis therefor (collectively, the
"Disputed Items"). The failure by
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PRGUSA to provide a Dispute Notice within such forty-five (45) day period to
Purchaser will constitute PRGUSA's acceptance of the Purchaser Revised
Statement, except that such forty-five (45) day period shall be tolled for the
duration of any delay in Purchaser's delivery to PRGUSA of any information
reasonably requested by PRGUSA to calculate the Closing Working Capital. PRGUSA
shall be deemed to have agreed with all items and amounts included in the
Purchaser Revised Statement except if such items are specifically disputed in
the Dispute Notice. If PRGUSA provides Purchaser with a timely Dispute Notice,
Purchaser and PRGUSA shall, within forty-five (45) days (or such longer period
as mutually agreed upon by Purchaser and PRGUSA) following the delivery of such
Dispute Notice to Purchaser (the "Resolution Period"), negotiate in good faith
to resolve the Disputed Items to their mutual satisfaction. At the conclusion of
the Resolution Period, Purchaser and PRGUSA shall refer all unresolved Disputed
Items to the Neutral Accountant in accordance with Section 2.3(e) below. If
during the Resolution Period, Purchaser and PRGUSA agree in writing as to the
final Closing Working Capital amount then such Closing Working Capital amount
shall be final and binding upon the parties hereto.
(e) If a dispute arises under Section 2.3(d) above as to
determination of the Closing Working Capital and such dispute is not resolved
within the time period set forth therein, then each issue in dispute shall be
submitted to arbitration before the offices of Deloitte & Touche, LLP, located
in Atlanta, Georgia or such other accounting firm as may be acceptable to the
parties (the "Neutral Accountant"). The parties agree to cooperate with one
another in the engagement of the Neutral Accountant for such purposes. The
Neutral Accountant shall follow the terms and provisions of this Agreement in
resolving any issues in dispute and making its determination, which
determination shall be made on the sole basis of whether the Purchaser Revised
Statement has been prepared in accordance with the Accounting Principles and the
principles set forth in this Section 2.3. The Neutral Accountant shall
determine, based solely on presentations by the Purchaser and PRGUSA and their
respective representatives, and not by independent review, only those issues in
dispute and shall prepare a revised calculation of Closing Working Capital and
render a written report as to the dispute and the resulting calculation of
Closing Working Capital which shall be conclusive and binding upon the parties.
In resolving any disputed item, the Neutral Accountant shall not assign a value
to any item greater than the greatest value for such item claimed by either
party or less than the smallest value for such item claimed by either party. All
costs of the Neutral Accountant shall be shared equally between Purchaser and
PRGUSA. The decision of the Neutral Accountant shall be made not later 30 days
following the submission of all relevant materials to the Neutral Accountant and
shall be binding and conclusive on the parties hereto.
(f) Upon determination of the Closing Working Capital:
(i) In the event that Closing Working Capital is
greater than the Estimated Closing Working Capital, Purchaser shall pay PRGUSA
an aggregate amount equal to such excess in cash within five (5) business days
of the determination of Closing Working Capital pursuant to this Section 2.3.
(ii) In the event that Closing Working Capital is
less than the Estimated Closing Working Capital, PRGUSA and Parent shall pay
Purchaser an aggregate
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amount equal to such deficiency in cash within five (5) business days of the
determination of Closing Working Capital pursuant to this Section 2.3.
(iii) In the event of a payment pursuant to either
2.3(f)(i) or (ii), such payment shall include interest thereon from the Closing
Date to the date of actual payment at a variable rate equal to the prime rate
(as reported in the Wall Street Journal "Money Rates") from and including the
Closing Date to, but not including, the date of payment. PRGUSA and Parent shall
not be required to indemnify the Purchaser Indemnitees pursuant to Article 6 of
this Agreement to the extent and in the dollar amount such matter is recorded as
a specific reserve or as a current liability in the final Closing Statement of
Net Assets.
ARTICLE III
ADDITIONAL COVENANTS
3.1 EMPLOYMENT MATTERS. Concurrently with or as soon as
practicable after the Closing, Purchaser will offer employment to all employees
of TSL identified on Schedule 3.1 attached hereto (collectively, the "TSL
Employees"); provided, that, with respect to those TSL Employees identified on
Schedule 3.1 as being on leave, Purchaser will offer employment to such
employees concurrently with or as soon as practicable after the time PRGUSA
notifies Purchaser that such employees have returned from leave. Such offer of
employment shall initially include employee benefits which, in the aggregate,
are substantially comparable to the employee benefits provided to the TSL
Employees by PRGUSA immediately prior to the Closing. Purchaser acknowledges
that all or substantially all TSL Employees have covenanted in favor of PRGUSA
not to, without limitation, engage in certain activities competitive with the
business of PRGUSA or disclose or use confidential information of PRGUSA. PRGUSA
hereby waives the covenants made by the TSL Employees in favor of PRGUSA (or any
of its Affiliates) not to engage in competition with PRGUSA or any of its
Affiliates (including any non-competition, non-solicitation of customers and
non-solicitation of employees covenant), but PRGUSA does not hereby waive any
other covenants made by any of the TSL Employees in favor of PRGUSA including,
without limitation, covenants for the protection of confidential information and
covenants to protect the ownership by PRGUSA of all ideas, discoveries,
inventions, contributions and improvements which relate to the business of
PRGUSA. Except for the TSL Employees, between the date hereof and the first
anniversary of the date of this Agreement, Purchaser shall not directly or
indirectly solicit (except through general solicitations and advertising not
directed to employees of PRGUSA), employ, retain as a consultant, attempt to
entice away or hire any persons who are then currently employees of PRGUSA or
who have been within the preceding twelve months employees of PRGUSA. This
Section shall survive the expiration or termination of this Agreement and the
Closing.
3.2 CONSENTS. Promptly after execution of this Agreement and until
the Closing Date, PRGUSA will apply for or otherwise seek, and use its
reasonable efforts (which shall not require PRGUSA to pay money or incur
obligations) to obtain, all consents, releases and approvals required to enable
PRGUSA or its affiliates, as the case may be, to effect the transactions
contemplated hereby and required for the assignment of the rights of PRGUSA or
any of its applicable affiliates under any of the Purchased Assets. To the
extent that any of the consents identified on Schedule 1.3(f) hereto shall have
not been obtained prior to the Closing
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Date, PRGUSA will continue to use its reasonable efforts (which, except as set
forth in the proviso below, shall not require PRGUSA to pay money or incur
obligations) to obtain such consents (the "Omitted Consents") to the extent
reasonably requested by Purchaser and to the extent PRGUSA reasonably has the
ability to facilitate obtaining such consents; provided, that, PRGUSA shall
reimburse Purchaser upon request for Purchaser's reasonable out-of-pocket costs
actually incurred upon obtaining any such Omitted Consents up to $3,000 for each
such Omitted Consent obtained after Closing.
3.3 NONCOMPETITION AND NONSOLICITATION AGREEMENT. Concurrently
with the Closing, in consideration of the acquisition of Purchased Assets as
contemplated herein, PRGUSA and Parent shall enter into a noncompetition and
nonsolicitation agreement with Purchaser, in the form of Exhibit 1.3(j),
attached hereto and made a part hereof (the "Noncompetition and Nonsolicitation
Agreement").
3.4 TAX INFORMATION. Within 30 days following the final
determination of Closing Working Capital, Purchaser shall declare to PRGUSA a
proposed allocation of the consideration for the Purchased Assets. Within 30
days thereafter, PRGUSA shall provide Purchaser with any proposed changes to
such allocation. Purchaser and PRGUSA shall attempt, in good faith, to resolve
any disputes with respect to the proposed allocation within 15 days after
PRGUSA's delivery of any disputed items. PRGUSA and Purchaser agree that they
will each prepare and file an IRS Form 8594 reflecting their respective
allocation of the consideration to be paid by Purchaser to PRGUSA hereunder
(including the assumption of the Assumed Liabilities) to the Purchased Assets,
and that a portion of the consideration shall be allocated to the Intellectual
Property Purchased Assets acquired from PRGRS. The parties shall provide each
other a completed copy of their respective IRS Form 8594 with respect to this
transaction prior to filing such form with the Internal Revenue Service.
3.5 PUBLIC ANNOUNCEMENTS.
(a) PRGUSA may issue a press release reasonably
acceptable to Purchaser announcing the transactions contemplated hereby.
(b) Except for any public announcement relating to the
transactions contemplated herein as may be required by law or stock exchange
rules or as provided in this Section, PRGUSA and Purchaser agree that until the
press release contemplated in Section 3.5(a) hereof is issued, each of such
parties have not, and have directed its directors, officers, employees,
representatives and agents who have knowledge of the transactions not to,
disclose to any person who is not a participant in discussions concerning the
transactions (other than persons whose consent is required to be obtained
hereunder), any of the terms, conditions or other facts with respect to the
transactions contemplated herein, including, without limitation, the fact that
negotiations are taking place.
3.6 COVENANT REGARDING TAX MATTERS.
(a) As used in this Agreement, the following terms have
the specified meanings:
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(i) "Tax Authority" shall mean any United States
federal, foreign, national, state, county or municipal or other local
government, any subdivision, agency, commission or authority thereof, or any
quasi-governmental body exercising any taxing authority or any other authority
exercising tax regulatory authority.
(ii) "Tax Return" shall mean any return, amended
return, estimated return, information return and statement (including any
related or supporting information) filed or to be filed with any Tax Authority
in connection with the determination, assessment, collection or administration
of any Tax.
(iii) "Tax" or "Taxes" shall mean all taxes,
charges, fees, interest, fines, penalties, additions to tax or other assessments
of any kind whatsoever, including without limitation, income, excise,
environmental, property, sales, gross receipts, gains, transfer, occupation,
privilege, employment (including social security and unemployment), use, value
added, capital stock or surplus, franchise taxes, advance corporate tax and
customs duties imposed by any Tax Authority, payable by PRGUSA and relating to
or chargeable against TSL.
(b) Subject to Section 3.6(c) hereof, and except to the
extent included in the Assumed Liabilities, PRGUSA shall be solely responsible
for and shall pay, without any cost to Purchaser, any and all Taxes assessed
against and payable by PRGUSA, arising from the operations of TSL or use of the
Purchased Assets prior to Closing (regardless of whether the filing of any Tax
Return with respect thereto or payment of any amount in respect thereof is
filed, paid or due prior to, on or after the Closing Date).
(c) Except as otherwise provided in this Agreement, the
parties hereby agree that each of them shall cooperate with the other in
executing or causing to be executed any required document and by making
available to the other, as promptly as practicable, all work papers, records and
notes of any kind at all reasonable times for the purpose of allowing the
appropriate party to complete Tax Returns, participate in a proceeding, obtain
refunds, make any determination required under this Agreement or defend or
prosecute Tax claims. For purposes of clarification and without limiting the
preceding sentence, Purchaser shall provide PRGUSA, as promptly as practical,
with such information requested by PRGUSA regarding TSL that may be necessary or
desirable with respect to any Pre-Closing Tax Return, including, without
limitation, personnel and other records necessary or desirable in connection
with any federal or state tax credit (including, without limitation, the
research and development tax credit under Section 41 of the Code).
Notwithstanding anything to the contrary contained herein, PRGUSA shall have
sole and exclusive authority to prepare and file all Tax Returns concerning
PRGUSA related to activities occurring prior to the Closing, including, without
limitation, its operation of the business of TSL and its use of the Purchased
Assets and all matters under agreements not being assumed by Purchaser
(regardless of when such return is filed) (the "Pre-Closing Tax Returns").
Purchaser will not take a tax reporting position inconsistent with or contrary
to a position taken on any such PRGUSA return.
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(d) At its sole expense, PRGUSA shall promptly pay any
and all sales and transfer taxes, levied, imposed or assessed by any Tax
Authority as a result of the sale, transfer, assignment and conveyance of the
Purchased Assets to Purchaser by PRGUSA.
(e) Purchaser and PRGUSA agree that they will follow the
standard procedure of Rev. Proc. 96-60, 1996-2 C.B. 399, whereby each shall be
solely responsible for employment tax reporting for employees who may be
employed by each of them in the calendar year that includes the Closing Date.
PRGUSA shall provide Purchaser with such employment tax information as Purchaser
shall reasonably request in connection with Purchaser's employment tax reporting
obligations for the portion of the calendar year following the Closing.
3.7 TRANSACTION EXPENSES. All of the expenses incurred by
Purchaser in connection with the authorization, negotiation, preparation,
execution and performance of this Agreement and other agreements referred to
herein and the consummation of the transactions contemplated hereby, including,
without limitation, all fees and expenses of agents, representatives, brokers,
counsel and accountants for Purchaser, shall be paid by Purchaser ("Purchaser
Transaction Expenses"). All expenses incurred by PRGUSA in connection with the
authorization, negotiation, preparation, execution and performance of this
Agreement and the other agreements referred to herein and the consummation of
the transactions contemplated hereby, including without limitation, all fees and
expenses of agents, representatives, brokers, counsel and accountants, shall be
paid by PRGUSA ("PRGUSA Transaction Expenses").
3.8 ACCESS TO BOOKS AND RECORDS. After the Closing, PRGUSA and
Purchaser shall each preserve all of the records and books, client records, and
any other records to the extent relevant to the operations of TSL prior to the
Closing until the fifth anniversary of the Closing Date, and, until such time,
make them available, during normal business hours, to the other party and its
designees, counsel, accountants, and others authorized by them for inspection
and the making of copies thereof to the extent either party reasonably requires
the foregoing for purposes of any tax, audit, accounting, litigation,
governmental investigation, or governmental enforcement matter or for any other
purpose arising under this Agreement including, without limitation, enforcement
of this Agreement. The inspecting party shall bear all reasonable cost of
photocopying and other out of pocket expenses of the other party hereto.
3.9 EMPLOYEE BENEFITS.
(a) Health Care Coverage. Any coverage provided by
Purchaser under its group health and dental plan to any TSL Employee and their
dependents shall be applied without any waiting periods or preexisting condition
or other limitations.
(b) 401(k) Plan. As contemplated by the Transition
Services Agreement (i) PRGUSA shall cause the PRGUSA 401(k) Plan to transfer, in
a plan-to-plan transfer in accordance with Section 414(l) of the Code, the
assets and liabilities of such plan attributable to the transferred TSL
Employees to a 401(k) plan maintained by and designated by Purchaser, and (ii)
Purchaser shall cause its 401(k) plan to accept a plan-to-plan transfer of the
assets and liabilities of the PRGUSA 401(k) Plan attributable to TSL Employees
as soon as reasonably practicable following the Closing Date. Until such
plan-to-plan transfer is made, if requested by
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PRGUSA, Purchaser shall take such reasonable actions as are necessary to
maintain any plan loan that any TSL Employee may have outstanding from the
PRGUSA 401(k) Plan ("PRGUSA Plan Loan") in good standing with repayment terms
comparable to the repayment terms of such PRGUSA Plan Loan in effect prior to
the Closing Date including, without limitation, facilitating repayment of such
PRGUSA Plan Loans by means of payroll deduction from salary paid by Purchaser.
As of the Closing Date, PRGUSA shall vest any unvested account balance of TSL
Employees in the PRGUSA 401(k) Plan. On or before the earlier of (i) March 15,
2004 and (ii) the date of the plan-to-plan transfer contemplated by this
Section, PRGUSA shall make or cause to be made the employer contribution to the
PRGUSA 401(k) Plan for the transferred TSL Employees with respect to the plan
year ending December 31, 2003.
(c) Credit for Service with PRGUSA. All TSL Employees
shall be given credit, under and in accordance with the applicable employee
benefit plans of Purchaser, towards eligibility and vesting for the period of
time prior to the Closing Date during which such TSL Employees were employees of
PRGUSA if such period of time would otherwise qualify for eligibility and
vesting, respectively, under Purchaser's benefit plans that provide the same or
similar types of benefits.
3.10 AGENT FOR MCGRAW-HILL.
(a) Purchaser agrees to expend the Custodial Funds
delivered to Purchaser at Closing in accordance with and to the extent permitted
by that certain OOB/ISDN Billing Support Services Schedule between TSL, a
division of PRG-Schultz and The McGraw-Hill Companies, Inc., dated August 6,
2003. Effective as of the Closing, PRGUSA shall transfer to Purchaser the
Custodial Account and shall cooperate with Purchaser to (i) add those
representatives of Purchaser as Purchaser shall designate as the exclusive
signatories to such Custodial Account (the "Designated Signatories"), (ii)
remove any employee of PRGUSA who is not a Designated Signatory as a signatory
to such Custodial Account and (iii) otherwise transfer control of such Custodial
Account to Purchaser. Immediately upon the addition of such Designated
Signatories to such Custodial Account, Purchaser shall have the sole authority
to accept funds and disburse all funds from such accounts on behalf of
McGraw-Hill.
(b) From and after the Closing, PRGUSA will promptly
remit to Purchaser any and all checks or other funds it receives on behalf of
McGraw-Hill for payment of TSL bills. From and after the Closing, PRGUSA will
provide Purchaser with copies of any and all bank statements for periods both
before and after the Closing in respect of any Custodial Account. PRGUSA agrees
to execute and deliver, both before and after the Closing, any additional
documents, agreements, authorization or instruments contemplated hereby and/or
necessary or appropriate to effect and consummate the transactions described
herein and to effect an orderly transition of the Custodial Account to Purchaser
following the Closing.
3.11 CERTAIN CLIENT CONTRACTS. PRGUSA agrees to engage Purchaser as
a subcontractor under the agreements referenced in Schedule 3.11 to perform
Business services pursuant to written agreements ("Subcontractor Agreement") in
the forms of Exhibit 1.3(i) attached hereto for government clients and
commercial clients, respectively. The Management
15
Fee (as defined in the Subcontractor Agreement) for each of such agreements
shall be at the rate set forth in Schedule 3.11.
3.12 ACCOUNTS RECEIVABLE TRANSITION. To the extent PRGUSA or any of
its affiliates receives payment of amounts (including Accounts Receivable or
Custodial Funds) or receives assets included in the Purchased Assets after
Closing, PRGUSA shall promptly transfer such payments or assets to Purchaser and
Purchaser may deposit any funds so transferred into Purchaser's accounts. To the
extent Purchaser receives checks made payable to PRGUSA or any of its Affiliates
which such checks are part of the Purchased Assets, PRGUSA hereby grants to
Purchaser a power of attorney to endorse such checks.
3.13 LIMITED LICENSE TO USE PRGUSA'S MARKS. PRGUSA hereby grants
Purchaser a nonexclusive limited, royalty free license to continue to use any
and all trademarks, service marks, trade names and associated goodwill, slogans
and other like property owned by PRGUSA that are not included in the Purchased
Assets ("PRGUSA's Marks") until six months after Closing, but only to the extent
that such PRGUSA's Marks are incorporated in or printed on any products,
supplies (not including letterhead), printed materials, training materials or
other assets included in the Purchased Assets and without any right to create
any new products, supplies, printed materials, training materials or other
assets depicting any PRGUSA's Mark, or any variations thereof or any confusingly
similar name or mark, except to the extent that such creation cannot be
terminated without undue expense or delay. Purchaser shall cease use of PRGUSA's
Marks not later than the six month anniversary of the Closing Date.
3.14 TRANSITION SERVICES. Purchaser and PRGUSA shall enter into a
transition services agreement in the form attached hereto as Exhibit 1.3(h)
("Transition Services Agreement").
3.15 BULK TRANSFERS. The parties hereto waive compliance with the
requirements of the Bulk Sales law of any jurisdiction in connection with the
sale of the Purchased Assets to Purchaser, and PRGUSA and Parent agree to
indemnify Purchaser against and to hold Purchaser harmless from any consequences
of such non-compliance.
3.16 INTERCOMPANY ACCOUNTS. PRGUSA shall cause the cancellation
and/or settlement in full of all intercompany and intracompany accounts existing
immediately prior to Closing involving TSL, on the one hand, and PRGUSA or any
of its affiliates (other than TSL), on the other hand.
3.17 RESTRICTION ON REAL PROPERTY LEASE RENEWALS OR EXPANSIONS.
Purchaser covenants and agrees in favor of PRGUSA and Parent that it will not
extend the term of either of the Real Property Leases or expand the premises
leased under either of the Real Property Leases without first causing PRGUSA
and, if applicable, Parent to be released from any direct or indirect liability
with respect to such extended term or expanded premises. Purchaser agrees to
cause any of its assignees with respect to either of the Real Property Leases to
enter into the foregoing covenant in favor of PRGUSA and Parent.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PRGUSA
In order to induce Purchaser to enter into this Agreement and consummate the
transactions contemplated hereby, PRGUSA represents and warrants to Purchaser:
4.1 ORGANIZATION AND AUTHORITY OF PRGUSA. PRGUSA is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia. PRGUSA is duly qualified as a foreign corporation in all
jurisdictions in which the conduct of its business or the ownership of its
properties requires such qualification (except where the failure to do so would
not have a Material Adverse Effect (as defined in Section 4.4 hereof) on
PRGUSA). PRGUSA has all necessary corporate power and authority to own, lease
and operate Purchased Assets and conduct operations of TSL as they are currently
being conducted.
4.2 CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. Each of
PRGUSA and PRGRS has full corporate power and authority to execute and deliver
this Agreement and each of the PRGUSA Transaction Documents to which PRGUSA or
PRGRS is or will be a party and to consummate the transactions contemplated
hereby. "PRGUSA Transaction Documents" means each of the agreements, documents
and instruments referenced in this Agreement to be executed and delivered by
PRGUSA. The execution, delivery and performance of this Agreement and the PRGUSA
Transaction Documents has been duly authorized by all necessary action of the
part of PRGUSA. This Agreement and the PRGUSA Transaction Documents have been
duly executed and delivered by PRGUSA and this Agreement and the PRGUSA
Transaction Documents constitutes a valid and binding agreement of PRGUSA or
PRGRS, as applicable, in each case enforceable in accordance with its terms,
subject to laws of general application in effect affecting creditors' rights and
subject to the exercise of judicial discretion in accordance with general
equitable principles.
4.3 TITLE TO ASSETS; SUFFICIENCY OF ASSETS.
(a) Except as set forth on Schedule 4.3 attached hereto
(the "Permitted Encumbrances"), PRGUSA or PRGRS, as applicable, has good, valid
and marketable title to all of the Purchased Assets (and a valid and enforceable
leasehold interest in all of its assets subject to Leases), free and clear of
any mortgages, liens, pledges, security interests, encumbrances, claims or
similar rights of every kind and nature (collectively, the "Encumbrances"). None
of the Purchased Assets is owned jointly with any other person, including any
affiliates of PRGUSA. At the Closing, Purchaser will obtain good and marketable
title to the Purchased Assets free and clear of all Encumbrances other than the
Permitted Encumbrances and such Encumbrances, if any, as have been created by
Purchaser.
(b) Except for the services to be provided pursuant to
the Transition Services Agreement and as set forth on Schedule 4.3 attached
hereto, the Purchased Assets (i) constitute in all material respects all of the
assets and rights of any nature which PRGUSA currently uses to conduct the
Business, and (ii) are sufficient to enable Purchaser to conduct the Business in
all material respects in the same manner after the Closing as the Business was
conducted by PRGUSA prior to the Closing.
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4.4 NO CONFLICT; REQUIRED CONSENTS. Except as identified on
Schedule 4.4, the execution and delivery by PRGUSA, Parent or PRGRS, as
applicable, of this Agreement and the PRGUSA Transaction Documents, and the
consummation by PRGUSA, Parent or PRGRS, as applicable, of the transactions
contemplated hereby and thereby do not and will not (a) require the consent,
approval or action of, or any filing with or notice to, any public, governmental
or judicial authority; (b) violate the terms of any Material Contract (as
defined in Section 4.9) or Material Lease (as defined in Section 4.10) or be in
conflict with, or result in a breach of or constitute (upon the giving of notice
or lapse of time or both) a default under such Material Contract or Material
Lease, in each case except where such violation, conflict, breach or default
will not have a Material Adverse Effect (as defined below); (c) result in the
creation of any lien upon any of the Purchased Assets; (d) violate PRGUSA's,
PRGRS's or Parent's, as applicable, Articles of Incorporation or Bylaws; or (e)
violate any order, writ, injunction, decree, judgment, ruling, law, rule or
regulation of any federal, state, county, municipal, or foreign court or
governmental authority applicable to PRGUSA, PRGRS, Parent or the Business. The
term "Material Adverse Effect" means any change or effect or combination of
changes and effects, that individually or in the aggregate with all other
changes and effects, has or could reasonably be likely to have a material
adverse change or effect upon the financial condition, assets, liabilities,
results of operations, business, or the operations of TSL, the Business or the
use of the Purchased Assets, taken as a whole; provided, however, that Material
Adverse Effect shall exclude any effect resulting from or related to changes or
developments involving conditions generally applicable to the United States
economy, including changes in interest rates; and provided, further, that for
purposes of determining whether a breach of a representation or warranty under
this Agreement has a Material Adverse Effect, the effect of such a breach shall
be considered cumulatively with the effect of all other breaches (or
circumstances which, but for materiality or Material Adverse Effect qualifiers,
would be breaches) of other representations and warranties, in each case,
determined without regard to any materiality or Material Adverse Effect
qualifiers.
4.5 COMPLIANCE WITH LAWS. Except as may be set forth on Schedule
4.5, (a) PRGUSA is in compliance in all material respects with all laws, orders,
rules and regulations of all governmental bodies and agencies applicable to TSL,
the Purchased Assets or the Business; and (b) since December 31, 2002, PRGUSA
has not received written notice of any noncompliance with the foregoing.
4.6 LICENSES AND PERMITS. PRGUSA holds and is in compliance in all
material respects with all of the licenses, permits, approvals and
authorizations necessary or required for the operation of TSL (collectively, the
"Licenses and Permits"). Since December 31, 2002, PRGUSA has not received
written notice of any material violations in respect of any such Licenses and
Permits or with respect to an alleged failure to hold any license, permit,
approval or authorization. No proceeding is pending or, to the knowledge of
PRGUSA, is threatened, which seeks revocation or limitation of any Licenses and
Permits.
4.7 FINANCIAL INFORMATION. The books of account and related
records of PRGUSA for the Business are correct and complete in all material
respects and fairly reflect in reasonable detail its assets, liabilities and
transactions relating to the Business in accordance with GAAP.
18
Attached hereto as Schedule 4.7 are copies of unaudited statements of assets and
liabilities of the Business as of December 31, 2003 and December 31, 2002 (the
"Interim Statements of Net Assets") and the related unaudited statements of
income for the twelve months then ended ("Interim Statements of Income")
(collectively, the "Interim Statements"). The Interim Statements of Net Assets
and the Interim Statements of Income have been compiled from and are in
accordance with PRGUSA's books and records, fairly present in all material
respects the financial condition, assets and liabilities of the Business as of
their respective dates and the results of operations of the Business for the
respective periods then ended, in each case, except as set forth on Schedule
4.7, as if the Business had been conducted as an independent entity and were not
affiliated with any other entity or business, and have been prepared in
accordance with the Accounting Principles, consistently applied, except for the
absence of notes.
4.8 TAX LIENS. There are no liens for Taxes on business of TSL or
the Purchased Assets, except liens for current Taxes not yet due or payable, nor
are there any such liens which are pending or, to the best knowledge of PRGUSA,
threatened.
4.9 MATERIAL CONTRACTS. Schedule 4.9 attached hereto is a true,
correct and complete list of all "Material Contracts" with respect to TSL which,
for purposes hereof, means, collectively, (i) any Contracts (other than Client
Contracts) with respect to TSL, the Business or the Purchased Assets which
involves an aggregate annual expenditure by PRGUSA or payments to PRGUSA of
$50,000 or more, (ii) any Contract with clients from which TSL received revenues
in excess of $190,000 for the year ending December 31, 2003, (iii) any Contract
relating to indebtedness for borrowed money, (iv) any Contract relating to
investments, loans or advances by TSL or the Business (excluding ordinary course
advances of business expenses to employees and independent contractors), (v) any
Contract that creates or obligates the Business to participate in any joint
venture, limited liability company, partnership agreements, shareholders
arrangement or other similar arrangement, (vi) any Contract between TSL or the
Business, on the one hand, and PRGUSA or any Related Party of PRGUSA, on the
other hand, and (vii) agreements not to compete which materially restrict the
operation of the Business after the Closing, the last of which are separately
identified in Schedule 4.9. As used herein, "Material Contract" means each of
the Material Contracts, individually. PRGUSA has provided or made available to
Purchaser true, correct and complete copies of all written Material Contracts,
including any and all amendments and waivers thereto. Each Material Contract is
valid, legally binding and enforceable against PRGUSA, and to the knowledge of
PRGUSA, the other parties thereto, in accordance with its terms (subject to laws
of general application in effect affecting creditors' rights and subject to the
exercise of judicial discretion in accordance with general equitable principles)
and is in full force and effect. PRGUSA has performed in all material respects
all obligations required to be performed by it under, and is not in default in
any material respect under, any Material Contract, and no other event has
occurred which, with notice or lapse of time, or both, would constitute such a
default. To the knowledge of PRGUSA, each of the other parties to each Material
Contract has performed in all material respects all obligations required to be
performed by it under, and is not in default in any material respect under, such
Material Contract, and no other event has occurred which, with notice or lapse
of time, or both, would constitute such a default. PRGUSA has not received any
written claim from any other party to any Material Contract that it has breached
any obligations to be performed by it thereunder, or is otherwise in default or
delinquent in performance thereunder.
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4.10 MATERIAL LEASES. Schedule 4.10 attached hereto is a list,
true, correct and complete in all material respects, of all "Material Leases,"
which means, for purposes hereof, all Personal Property Leases with respect to
TSL which involve an aggregate annual expenditure by PRGUSA of $50,000 or more
and all Real Property Leases. PRGUSA has delivered to Purchaser true, correct
and complete copies of all of the Material Leases, together with all amendments,
addenda and supplements thereto. Except as specifically set forth on Schedule
4.10, with respect to each Material Lease:
(a) the Material Lease is legal, valid, binding and
enforceable against PRGUSA and, to the knowledge of PRGUSA, the other parties
thereto, in accordance with its terms (subject to laws of general application in
effect affecting creditors' rights and subject to the exercise of judicial
discretion in accordance with general equitable principles) and in full force
and effect;
(b) PRGUSA has performed in all material respects all
obligations required to be performed by it under, and is not in default in any
material respect under, any Material Lease, and no other event has occurred
which, with the giving of notice or lapse of time, would constitute such a
default or permit termination, modification or acceleration thereunder by any
other party thereto; and, to the knowledge of PRGUSA, each of the other parties
to each Material Lease has performed in all material respects all obligations
required to be performed by it under, and is not in default in any material
respect under, such Material Lease, and no other event has occurred which, with
notice or lapse of time, or both, would constitute such a default;
(c) neither PRGUSA nor, to PRGUSA's knowledge, any other
party to the Material Lease repudiated in writing any provision thereof; and
(d) PRGUSA has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold of the
Material Lease.
4.11 INTELLECTUAL PROPERTY.
(a) Schedule 4.11, attached hereto, sets forth a true and
correct list of all of the Intellectual Property relating to TSL owned by PRGUSA
or PRGRS (the "Owned Intellectual Property"), specifying as to each such item,
as applicable: (i) the owner of the item, (ii) the jurisdictions in which the
item is issued or registered or in which any application for issuance or
registration has been filed, (iii) the respective issuance, registration, or
application number of the item, and (iv) the date of application or issuance or
registration of the item. Except as described in Schedule 4.11 or Schedule 4.3,
PRGUSA or PRGRS exclusively owns the Owned Intellectual Property free and clear
of any liens or encumbrances. Any patents and registered copyrights, trade
marks, service marks, trade dress, and domain names set forth on Schedule 4.11
are in full force and effect, are held of record in the name of PRGUSA or PRGRS,
and are not the subject of any cancellation or reexamination proceeding or any
other proceeding challenging their extent or validity.
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(b) Schedule 4.11 sets forth all licenses, sublicenses,
consents and other agreements (whether written or otherwise) (i) pertaining to
any Intellectual Property (as defined in Section 4.11(k)) (other than standard,
commercially available off-the-shelf software) used or held for use by TSL, or
(ii) by which any third party is licensed or otherwise authorized to use
Intellectual Property relating to TSL. Except as set forth on Schedule 4.11,
PRGUSA and, to the knowledge of PRGUSA, each other party thereto have performed
in all material respect all obligations required to be performed by them under,
and are not in default in any material respect under any such license or other
agreement, and each such license or other agreement is now in full force and
effect.
(c) Except for the services to be provided pursuant to
the Transition Services Agreement and as set forth on Schedule 4.3, the
Intellectual Property (i) constitutes in all material respects all of the
Intellectual Property which PRGUSA currently uses to conduct the Business, and
(ii) is sufficient to enable Purchaser to conduct the Business in all material
respects in the same manner after Closing as the Business was conducted by
PRGUSA prior to Closing.
(d) PRGUSA does not know of any material royalties,
honorariums or fees payable by PRGUSA or PRGRS to other persons by reason of
PRGUSA's or PRGRS's ownership or use of Intellectual Property, except as
otherwise noted on Schedule 4.11.
(e) To the knowledge of PRGUSA, the business operations
of TSL as they are currently conducted or proposed to be conducted do not and
will not immediately following the Closing infringe, dilute, misappropriate or
otherwise violate the Intellectual Property of any third party, constitute
unfair competition or trade practices under the laws of any jurisdiction, or
violate any right of privacy. There is no pending or, to the knowledge of
PRGUSA, threatened claim or litigation against PRGUSA or PRGRS contesting the
validity of or right to use any Intellectual Property used or held for use by
TSL, nor has PRGUSA or PRGRS received any written notice that any Intellectual
Property used or held for use by TSL, or the operation or proposed operation of
TSL, conflicts, or will conflict, in any material respect, with the asserted
rights of others. The representations and warranties set forth in Sections
4.11(e) and (f) are the only representations and warranties made by PRGUSA or
PRGRS (either in this Agreement or in any document executed or delivered by
PRGUSA or PRGRS in connection herewith) with respect to non-infringement of
Intellectual Property and nothing contained elsewhere in this Agreement or in
any document executed or delivered in connection herewith shall be construed as
a representation or warranty with respect thereto.
(f) To the knowledge of PRGUSA, no third party is
infringing, misappropriating, or otherwise violating any Intellectual Property
used or held for use in the conduct of the TSL's business.
(g) Neither PRGUSA nor PRGRS owns any patents, patent
rights, or inventions, and neither has made any applications for patent
protection, with respect to TSL.
(h) Schedule 4.11 contains a complete and accurate list
of all Software (as defined in Section 4.11(k)) that relates to TSL and that is
owned or licensed to third parties by PRGUSA or PRGRS including, without
limitation the programs marketed under the names
21
Technology On-Line Management System ("TOMS"), Internet Reporting Tool ("IRT"),
and eTranslate (collectively, "TSL Software"). Except as set forth on Schedule
4.11 or Schedule 4.3, PRGUSA or PRGRS owns all right, title and interest in and
to the TSL Software, free and clear of any liens or encumbrances, including
without limitation claims or rights of joint owners and employees, agents,
consultants or other parties involved in the development, creation, marketing,
maintenance or enhancement of such computer software. The TSL Software consists
entirely of material (i) which was created as a work for hire (as defined under
U.S. copyright law) by a person or persons who were at the time of creation the
regular, full-time, salaried employees of PRGUSA or PRGRS, the copyright in
which is now owned by PRGUSA or PRGRS, or (ii) the copyright ownership of which
was fully and irrevocably transferred to PRGUSA or PRGRS pursuant to a written
agreement executed by the author or authors.
(i) Schedule 4.11 sets forth a complete and accurate list
of all escrow agreements by which the source code for any TSL Software may be
delivered or otherwise transferred to a third party.
(j) To the knowledge of PRGUSA and subject to repairs,
replacements and upgrades of the type and at an aggregate expense generally
consistent with that experienced or undertaken by TSL in prior periods: (i) the
information technology systems owned, licensed, leased, operated on behalf of,
or otherwise held for use in the Business (including all computer hardware,
software, firmware and telecommunications systems), perform reliably and in
material conformance with the appropriate specifications or documentation for
such systems, and (ii) the information technology systems used by TSL are fully
available for use by TSL and, as applicable, the customers and clients of TSL on
a continuous basis. TSL has not experienced any service outages related to its
information technology systems, except for such outages which would not
reasonably be expected to have a Material Adverse Effect.
(k) As used herein, "Intellectual Property" means,
collectively, any and all of the following in any jurisdiction throughout the
world: (i) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, re-examination,
utility, model and design patents, patent applications, patent registrations and
applications for patent registrations, (ii) copyrights and registrations and
applications for registration of copyrights, (iii) computer software and
databases (including without limitation source code and object code, firmware,
middleware, programs, utilities, subroutines or routines), documentation,
programmers' logs, flowcharts, descriptions and other work product that is used
to plan, organize, develop and modify the foregoing (collectively, "Software"),
(iv) trade secrets and legal rights therein, (v) trademarks, service marks,
trade dress, logos, slogans, trade names, business names, and corporate names
(whether or not registered), including all variations, derivations,
combinations, registrations and applications for registration of the foregoing
and all goodwill associated therewith, (vi) Internet domain names and
registrations and applications for registration thereof, (vii) all proprietary
rights similar to those described in the preceding clauses of this subsection,
and (viii) all remedies against past, present and future infringement or other
violation of any of the foregoing rights and rights of protection of interest
therein under the laws of all jurisdictions.
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4.12 BENEFIT PLANS AND ERISA.
(a) Schedule 4.12 is a true and complete list of each
"employee benefit plan," as defined in Section 3(3) of Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), bonus, incentive, deferred
compensation, excess benefit, employment contract, stock purchase, stock
ownership, stock option, supplemental unemployment, vacation, sick-day, legal
services arrangement, training arrangement, health care account, automobile
purchase program, severance or other material employee benefit plan, program,
policy or arrangement (other than those required to be maintained by law),
whether written or unwritten, qualified or nonqualified, funded or unfunded,
foreign or domestic, (i) maintained by, or contributed to by PRGUSA or any of
its ERISA Affiliates, in respect of any current or former TSL Employees (or
their beneficiaries), or (ii) with respect to which PRGUSA or any of its ERISA
Affiliates has any liability in respect of any current or former TSL Employee
(or their beneficiaries) (each such plan is hereinafter referred to as an
"Employee Benefit Plan", and collectively, the "Employee Benefit Plans"). "ERISA
Affiliate" is hereby defined to mean any trade or business, whether or not
incorporated, other than PRGUSA, which has employees who are treated pursuant to
Section 4001(a)(14) of ERISA and/or Section 414 of the Code as employees of a
single employer which includes PRGUSA.
(b) A true and complete copy of each Employee Benefit
Plan and related trust agreements, (to the extent applicable) a copy of each
Employee Benefit Plan's current summary plan description, and, in the case of an
unwritten Employee Benefit Plan, a written description thereof, has been
provided or made available to Purchaser. In addition, to the extent applicable,
PRGUSA has made available to Purchaser a copy of the most recent Internal
Revenue Service ("IRS") determination letter issued to each Employee Benefit
Plan and a copy of the most recent IRS Form 5500 filed on behalf of each
Employee Benefit Plan.
(c) Except for payment of premiums for medical and dental
employee benefits as provided in the Transition Services Agreement, Purchaser
shall not: (i) become liable for any material contribution, tax, lien, penalty,
cost, interest, claim, loss, damage, cost assessment or other type of liability
or expense with regard to any Employee Benefit Plan, or (ii) be or become a
party to any Employee Benefit Plan.
(d) The 401(k) plan sponsored by PRGUSA in which current
and former TSL Employees participate (the "PRGUSA 401(k) Plan") is in material
compliance with all applicable law, including ERISA and the Code. The PRGUSA
401(k) Plan has received a valid, current determination letter from the IRS to
the effect that the form of the PRGUSA 401(k) Plan qualifies under Section 401
of the Code and that the form of any trust maintained pursuant thereto qualifies
for the exemption from federal income tax under Section 501 of the Code. All
amendments required to bring the PRGUSA 401(k) Plan into conformity with
applicable law have been timely adopted or the applicable deadlines for making
such amendments have not expired.
(e) No Employee Benefit Plan is now or at any time has
been subject to Part 3, Subtitle B of Title I of ERISA or Title IV of ERISA.
Neither PRGUSA nor any ERISA Affiliate has ever contributed to, or been required
to contribute to any "multiemployer plan"
23
(within the meaning of Section 3(37) of ERISA) and neither PRGUSA nor any ERISA
Affiliate has any liability (contingent or otherwise) relating to the withdrawal
or partial withdrawal from a multiemployer plan. Neither PRGUSA nor any ERISA
Affiliate has incurred any liability which could subject Purchaser or any asset
to be acquired by Purchaser pursuant to this Agreement to liability under
Section 4062, 4063, 4064 or 4069 of ERISA.
(f) No asset of PRGUSA which is to be acquired by
Purchaser pursuant to this Agreement, is subject to any lien under Code sections
401(a)(20) or 412(n), or ERISA sections 302(f), 4068 or 4301(b).
4.13 LITIGATION; JUDGMENTS. There is no action, proceeding or
investigation pending or, to PRGUSA's knowledge, threatened against or involving
the Business, the Purchased Assets or PRGUSA relating to the Purchased Assets or
the operation of TSL, nor is there any action, claim, suit or proceeding pending
or, to the knowledge of PRGUSA, threatened before any court, tribunal or
governmental body seeking to restrain or prohibit or to obtain damages or other
relief in connection with the consummation of the transactions contemplated by
this Agreement, or PRGUSA's ability to consummate the transactions contemplated
by this Agreement and the PRGUSA Transaction Documents. There are presently no
outstanding judgments, orders or decrees entered in any lawsuit or proceeding
relating to the Business, the Purchased Assets or the operation of TSL.
4.14 BROKER'S FEES. Except for Avondale Partners, LLC ("Avondale")
(whose fee will be paid by PRGUSA) and amounts which may be payable by PRGUSA to
employees of PRGUSA, PRGUSA has not retained or engaged the services of any
broker, finder or intermediary, or paid or agreed to pay any fee or commission
to any other person or entity for or on account of the transactions contemplated
hereby.
4.15 ABSENCE OF MATERIAL CHANGES. Except as set forth in Schedule
4.15 attached hereto, from November 30, 2003, to the date of this Agreement,
with respect to TSL and the Business:
(a) there has not been any Material Adverse Effect (as
defined in Section 4.4 hereof);
(b) PRGUSA has in all material respects operated TSL and
the Business in the ordinary course and has not sold, assigned, or transferred
any of the material assets used in operations of TSL or the Business;
(c) there has been no amendment, cancellation,
termination, or waiver of any right of PRGUSA, TSL or the Business under any
contract, governmental license or permit that is material to the Purchased
Assets or operations of TSL;
(d) PRGUSA has not made any material changes in the
customary methods of operation of TSL;
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(e) (except in respect of ordinary trade payables)
neither PRGUSA nor TSL incurred any indebtedness or guaranteed any indebtedness,
except for borrowings under existing loans or lines of credit in the ordinary
course of business consistent with past practice;
(f) PRGUSA has not taken any action other than in the
ordinary course of business and in a manner consistent with past practices with
respect to increasing the compensation of any auditor or employee of PRGUSA with
respect to TSL;
(g) to the knowledge of PRGUSA, there has not been any
material change or any threat of any change in any of its relations with, or any
loss or threat of loss of, any of the suppliers, distributors, clients or
customers of the Business;
(h) there have not been any write-offs as uncollectible
of any notes or accounts receivable of PRGUSA with respect to the Business or
write-downs of the value of any assets by any PRGUSA with respect to the
Business other than in immaterial amounts or in the ordinary course of business
consistent with past practice;
(i) with respect to the Business, there has not been any
material change by PRGUSA in any method of accounting or keeping its books of
account or accounting practices, or any material change in existing credit,
collection and payment policies and practices with respect to the Business;
(j) there has not been any material disposition of or
material failure to keep in effect any rights in, to or for the use of any
patent, trademark, service mark, trade name or copyright of the Business; or
(k) agreed, whether in writing or otherwise, to take any
of the actions specified in this Section 4.15.
4.16 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 4.16
attached hereto: (a) there is no action, suit, inquiry, proceeding or
investigation under any common law or law, rule, regulation of any United
States, federal, state, local or foreign government or agency thereof relating
to environmental matters (including the handling, treatment, management,
storage, Release of any hazardous, toxic or polluting substances, materials,
contaminants or waste ("Hazardous Materials")) (collectively, "Environmental
Laws") by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the knowledge of PRGUSA or
PRGRS, threatened against or involving PRGUSA or any of its directors, officers
or employees which, if determined or resolved adversely to the PRGUSA or such
party, could reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect; (b) PRGUSA is not subject to any agreement, judgment,
order or decree under or relating to Environmental Laws which could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; (c) to the knowledge of PRGUSA, there is no reasonable basis for
any such action, suit, inquiry, proceeding or investigation that would impose
any liability or obligation that could, individually or in the aggregate, have
or could reasonably be expected to have a Material Adverse Effect; (d) during
or, to the knowledge of PRGUSA, prior to the period of its ownership, operation
or participation of the management of any of their
25
(or their predecessors) respective current or former facilities or properties,
there was no Release or threatened Release of Hazardous Materials in, on, under,
from or affecting any such property or any off-site location which could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and (e) PRGUSA is not subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any material liability or obligations
pursuant to or under any Environmental Law which affects the Business. PRGUSA
has provided Purchaser copies of, or access to, all environmental reports,
studies, audits, tests, correspondence, permits and all other materials in its
possession or control (or which they could reasonably be expected to obtain)
regarding any environmental matter or any property currently or formerly owned,
leased, operated or uses by PRGUSA or any of its predecessors which affects the
Business.
4.17 EMPLOYEES. Except as disclosed in Schedule 4.17: (i) no TSL
Employee is represented by any union, collective bargaining or similar labor
agreement, (ii) there is no unfair labor practice charge pending or to the
knowledge of PRGUSA threatened or reasonably anticipated against PRGUSA relating
to any of the TSL Employees; (iii) there is no labor strike or stoppage relating
to any of the TSL Employees actually pending, or to the knowledge of PRGUSA
threatened against or involving PRGUSA; (iv) no labor grievance relating to any
of the TSL Employees is pending or, to the knowledge of PRGUSA, threatened; (v)
PRGUSA has not in the past three years experienced any work stoppage relating to
any of the TSL Employees; (vi) PRGUSA does not have labor negotiations in
process with any labor union or other labor organization relating to the
Business; and (vii) to PRGUSA's knowledge, there are no efforts in process by
unions to organize any TSL Employees who are not now represented by recognized
collective bargaining agents.
4.18 RELATED-PARTY TRANSACTIONS. Except as set forth in Schedule
4.18 attached hereto, no Related Party (as defined below), as of the date
hereof: (i) has any contractual or other claim, express or implied, or of any
kind whatsoever against the Business, TSL or any of the Purchased Assets; (ii)
has any interest in the Business, TSL or any of the Purchased Assets; or (iii)
is engaged in any other transaction with the Business, TSL or any of the
Purchased Assets. As used herein, "Related Party" means any subsidiary or
division of Parent (other than the TSL), any officer or director of Parent or of
any subsidiary of Parent, any immediate family member of any such officers or
directors, or any Affiliate of the foregoing. As used herein, "Affiliate" of a
party means any party controlling, controlled by or under common control with
such party.
4.19 INSURANCE. Attached hereto as Schedule 4.19 is a complete and
correct list of all policies of insurance covering any of the Purchased Assets
or the Business (excluding any Employee Benefit Plans), indicating for each
policy the carrier, the insured, type of coverage, the amounts of coverage,
deductible, and expiration date. All such policies are in full force and effect
and will remain so until the Closing. Except as set forth on Schedule 4.19, all
commercial general liability policies maintained by or for the benefit of the
PRGUSA or any of its affiliates with respect to the Business during the last
five years have been "occurrence" policies and not "claims made" policies.
4.20 ACCOUNTS RECEIVABLE. All of the trade accounts and notes
receivable of the Business included in the Purchased Assets represent amounts
receivable for merchandise
26
actually delivered or services actually provided (or, in the case of non-trade
accounts or notes, represent amounts receivable in respect of other bona-fide
business transactions), have arisen in the ordinary course of business, are to
the knowledge of PRGUSA not subject to any counterclaims or offsets in excess of
any allowance recorded in respect thereof and have been billed. To the knowledge
of PRGUSA, the allowance for doubtful accounts recorded on the Interim Statement
of Net Assets of the Business as of December 31, 2003 is adequate to reflect the
net realizable value of the accounts receivable recorded on such Interim
Statement of Net Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
In order to induce PRGUSA to enter into this Agreement and consummate the
transactions contemplated hereby, Purchaser represents and warrants to PRGUSA as
follows:
5.1 ORGANIZATION OF PURCHASER. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to own its property and to
carry on its business as now being conducted by it.
5.2 CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. Purchaser
has full corporate power and authority to execute and deliver this Agreement and
each of the other agreements, documents and instruments referenced in this
Agreement to which Purchaser is or will be a party (the "Purchaser Transaction
Documents") and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and the Purchaser
Transaction Documents has been duly authorized by all necessary action on the
part of Purchaser. This Agreement and the Purchaser Transaction Documents have
been duly executed and delivered by Purchaser and each of this Agreement and the
Purchaser Transaction Documents constitutes a valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with its terms, subject
to laws of general application in effect affecting creditors' rights and subject
to the exercise of judicial discretion in accordance with general equitable
principles.
5.3 NO CONFLICT; CONSENTS. The execution and delivery by Purchaser
of this Agreement, the Purchaser Transaction Documents and the consummation by
Purchaser of the transactions contemplated hereby and thereby do not and will
not (a) require the consent, approval or action of, or any filing or notice to,
any corporation, firm, person or other entity or any public, governmental or
judicial authority; (b) violate the terms of any instrument, document or
agreement to which Purchaser is a party, or by which Purchaser or the property
of Purchaser is bound, or be in conflict with, result in a breach of or
constitute (upon the giving of notice or lapse of time, or both) a default under
any such instrument, document or agreement; (c) violate Purchaser's Articles of
Incorporation or Bylaws; or (d) violate any order, writ, injunction, decree,
judgment, ruling, law or regulation of any federal, state, county, municipal, or
foreign court or governmental authority applicable to Purchaser, or the business
or assets of Purchaser.
27
5.4 BROKERS FEES AND EXPENSES. Except for Mooreland Partners
(whose fee will be paid by Purchaser), Purchaser has not retained or engaged the
services of any broker, finder, or intermediary, or paid or agreed to pay any
fee or commission to any other person or entity for or on account of the
transactions contemplated hereby.
5.5 RELIANCE ON CERTAIN MATTERS. In connection with Purchaser's
decision to enter into this Agreement and except as expressly provided or
specified in this Agreement, Purchaser has not relied upon any verbal or written
representation as to financial projections or other forward-looking statements
(including, without limitation, any such information, financial or otherwise,
contained in any offering memorandum or similar document prepared by PRGUSA or
Avondale) made by PRGUSA or any of its subsidiaries or affiliates, or any of
their respective directors, officers, employees, agents or representatives
(including Avondale).
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY PRGUSA AND PARENT. In addition to any other
indemnification obligation of PRGUSA and Parent under any other provision
hereof, each of PRGUSA and Parent, jointly and severally, indemnifies and holds
Purchaser, and its affiliates, directors, officers, shareholders and employees
(collectively, the "Purchaser Indemnitees") harmless from and against any and
all claims, liabilities, lawsuits, costs, penalties, fines, interest, damages or
expenses (including, without limitation, reasonable attorneys' and other
professional fees and expenses incurred in litigation or otherwise)
(collectively, "Damages") arising out of and sustained by any of them due to or
relating to:
(a) any misrepresentation or breach of any representation
or warranty contained in this Agreement or any PRGUSA Transaction Document (it
being understood and agreed that under this Article VI, for purposes of
determining whether there has been any such misrepresentation or breach of
warranty and for purposes of calculating the amount of Damages arising
therefrom, the representations and warranties of PRGUSA shall be deemed not to
be qualified by any concept of "material", "materiality", "Material Adverse
Effect" or similar qualification);
(b) any breach, nonfulfillment of, or failure to perform,
any covenant, obligation or agreement of PRGUSA contained in this Agreement or
any PRGUSA Transaction Document;
(c) any "Environmental Liabilities," which shall mean any
and all claims, liabilities, lawsuits, costs, damages or expenses actually
incurred (including, without limitation, reasonable attorneys' fees and expenses
incurred in litigation or otherwise), whether known or unknown, foreseen or
unforeseen, contingent or otherwise, or fixed or absolute to the extent they
arise out of or relate to any of the following events, activities or conditions
first arising or occurring on or before the Closing: (i) environmental
contamination caused by PRGUSA in connection with the operation of the Business
or any Purchased Asset or Excluded Asset (including on-site or off-site, or in
connection with the Purchased Assets or Excluded Assets ); (ii) any violation by
PRGUSA of any Environmental Law; or (iii) the release, spill, leak,
28
discharge, disposal, emission, injection, leaching, migration, dumping or
allowed to escape of any Hazardous Materials ("Release" or "Released") or threat
of Release of Hazardous Materials in each instance due to the acts of PRGUSA;
(d) any and all Excluded Liabilities; and
(e) any enforcement of this Section by any Purchaser
Indemnitees.
6.2 INDEMNIFICATION BY PURCHASER. In addition to any other
indemnification obligation of Purchaser hereunder, Purchaser hereby indemnifies
and holds PRGUSA, Parent, and each of PRGUSA's and Parent's affiliates,
directors, officers and employees (collectively, "PRGUSA Indemnitees") harmless
from and against all Damages arising out of and sustained by any of them due to
or relating to:
(a) any misrepresentation or breach of any representation
or warranty contained in this Agreement or any of the Purchaser Transaction
Documents;
(b) any breach, nonfulfillment of or failure to perform
any covenant, obligation or agreement of Purchaser contained in this Agreement
or any Purchaser Transaction Document;
(c) any Assumed Liabilities;
(d) any liability or obligation incurred by PRGUSA
relating to the operation of TSL by Purchaser, or the ownership or use of the
Purchased Assets by Purchaser, from or after the Closing Date, other than the
Excluded Liabilities; and
(e) any enforcement of this Section by any PRGUSA
Indemnitees.
6.3 PROVISIONS REGARDING INDEMNIFICATION.
(a) In the event that any party incurs or suffers any
Damages with respect to which indemnification may be sought by such party
pursuant to this Article VI or in the event of any claim, demand, action or
proceeding for which indemnification will or may be sought under this Article
VI, the indemnified party (or parties) shall promptly notify the indemnifying
party (or parties) of the foregoing in reasonable detail based upon information
available to the indemnified party, and shall provide all pleading and other
documentation relating to such claim, demand, action or proceeding. The failure
of the indemnified party to give such notice shall not relieve the indemnifying
party of any liability for indemnification under this Article VI, except to the
extent that the indemnifying party is actually prejudiced thereby. If such
claim, demand, action or proceeding is a third party claim, demand, action or
proceeding (a "Third Party Claim"), subject to the terms of Section 6.3(b), the
indemnifying party will have the right, at its expense, to assume and control
the defense thereof. At its own expense, the indemnified party shall have the
right to participate in, but not control, the defense of any Third Party Claim.
In connection with any Third Party Claim, Purchaser and PRGUSA shall cooperate
with each other.
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No Third Party Claim shall be settled without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed
by the indemnified party.
(b) As a condition to the indemnifying party assuming and
controlling the defense of any Third Party Claim, the following conditions must
be satisfied (except to the extent waived by the indemnified party): (i) the
principal relief sought by such Third Party Claim shall be monetary in nature;
(ii) the indemnifying party shall agree in writing that, solely as between the
indemnifying party and the indemnified party, the indemnifying party shall be
solely obligated to satisfy and discharge such Third Party Claim; and (iii) if
reasonably requested to do so by the indemnified party, the indemnifying party
shall have made reasonably adequate provision to ensure the indemnified party of
the financial ability of the indemnifying party to satisfy the full amount of
any adverse monetary judgment that may reasonably result from such Third Party
Claim. In the event that the foregoing conditions to the assumption and control
of the defense of a Third Party Claim are not satisfied, except as provided in
the following sentence, the indemnified party will assume and control the
defense of such Third Party Claim at the expense of the indemnifying party;
provided, that, the indemnified party shall not settle such Third Party Claim
without the prior written consent of the indemnifying party, which consent shall
not unreasonably withheld or delayed by the indemnifying party. In the event
that the foregoing conditions to the assumption and control of the defense of a
Third Party Claim by the indemnifying party are not satisfied, then, at the
option of the indemnifying party, the indemnifying and indemnified parties shall
jointly undertake, conduct and control the defense and settlement of the Third
Party Claim and each party shall cooperate with the other in good faith in
connection therewith and shall use reasonable best efforts to agree on joint
counsel at the expense of the indemnifying party; provided that if the parties
cannot agree on joint counsel or, in the reasonable opinion of counsel to either
party, a conflict or potential conflict exists under the applicable rules of
professional responsibility for attorneys between the indemnifying party and the
indemnified party that would make separate representation required under such
rules, then each party shall be entitled to be represented by separate counsel
at the expense of the indemnifying party, provided that the parties shall
jointly undertake, conduct and control, through such separate counsel, such
defense to the greatest extent practicable and to the extent no conflict or
potential conflict exists between the indemnifying party and the indemnified
party.
6.4 SURVIVAL AND TERMINATION OF INDEMNIFICATION. The obligations
to indemnify and hold harmless an indemnified party pursuant to Sections 6.1(a)
and 6.2(a) shall terminate when the representation or warranty that is the
subject of the indemnification claim terminates. The representations and
warranties contained in this Agreement shall terminate on the first (1st)
anniversary of the Closing Date and shall thereafter cease to be of any force
and effect, except (a) representations and warranties contained in Sections 4.1,
4.2, 4.3(a) and 4.14, which shall survive without expiration, (b)
representations and warranties contained in Sections 4.8 and 4.12, which shall
survive until 60 days following the expiration of the applicable statute of
limitations and (c) any representation or warranty as to which the indemnified
party shall have, before the expiration of the applicable period, previously
made a claim and provided a reasonably detailed notice in accordance with
Section 6.3 hereof. The obligations to indemnify and hold harmless an
indemnified party pursuant to the other clauses of Sections 6.1 and 6.2 shall
not terminate. The rights under Section 6.1 shall not be assignable without the
consent of PRGUSA (which may be granted or withheld in the sole discretion of
PRGUSA); provided, however, that Purchaser may,
30
without the consent of PRGUSA, but with notice to PRGUSA, assign all or a part
of its rights and obligations under this Agreement (including Section 6.1
hereof) to any of its Affiliates or any successor to all or substantially all of
the Business and may collaterally assign this Agreement (including Section 6.1
hereof) to any of its lenders.
6.5 LIMITATIONS.
(a) Notwithstanding anything to the contrary contained
herein except Section 6.5(c), Purchaser will not assert a claim against PRGUSA
or Parent under Section 6.1(a) with respect to an individual matter or series of
reasonably related matters until the total of all Damages under Section 6.1(a)
with respect to such individual matter or series of reasonably related matters
exceeds in the aggregate $20,000 (the "Mini-Basket Amount"), at which time, (i)
all Damages under Section 6.1(a) for such individual matter or series of
reasonably related matters may be claimed in full (without regard to the
Mini-Basket Amount) and, if indemnifiable under this Article 6, shall be
indemnified in full and shall count towards, or be included in, the Base Amount.
(b) Notwithstanding anything to the contrary contained
herein except Section 6.5(c), (i) Purchaser Indemnitees will not assert a claim
against PRGUSA or Parent under Section 6.1(a) until the total of all Damages
under Section 6.1(a) exceeds in the aggregate $191,000 (the "Base Amount"), at
which time, all Damages under Section 6.1(a) in excess of such Base Amount may
be claimed in full and, if indemnifiable under this Article 6, shall be
indemnified in full and (ii) PRGUSA Indemnitees will not assert a claim against
Purchaser under Section 6.2(a) until the total of all Damages under Section
6.2(a) exceeds in the Base Amount, at which time, all Damages under Section
6.2(a) in excess of such Base Amount may be claimed in full and, if
indemnifiable under this Article 6, shall be indemnified in full.
(c) In no event will PRGUSA and Parent be liable for
aggregate Damages under Section 6.1(a) exceeding $3,820,000 (the "Cap Amount")
and in no event will Purchaser be liable for aggregate Damages under Section
6.2(a) exceeding the Cap Amount. Notwithstanding the foregoing (i) the
limitations of liability set forth in Sections 6.4, 6.5(a), 6.5(b) and 6.5(c)
shall not apply (A) to any fraudulent, intentional or willful breach or failure
of any representation or warranty of PRGUSA, Parent or Purchaser or (B) to any
misrepresentation or breach of any representation or warranty contained in
Sections 4.1, 4.2, 4.3(a), 4.14, 4.18, 5.1, 5.2 and 5.4 hereof, and (ii) if
aggregate Damages under Section 6.1(a) with respect to a claim for a
misrepresentation or breach of Section 4.11 of this Agreement remain unrecovered
(the "Unrecovered Damages") after the Cap Amount has been reached, then the Cap
Amount on such Unrecovered Damages (and only such Unrecovered Damages) shall be
increased by $5,730,000.
(d) The provisions of this Article 6 shall be the sole
and exclusive remedy at law and in equity of PRGUSA and Purchaser from and after
the Closing Date for any claims, liabilities, lawsuits, costs, damages or
expenses resulting from any breach of this Agreement or any of the PRGUSA
Transaction Documents (other than the Noncompetition and Nonsolicitation
Agreement); provided, that nothing stated in this Section shall in any way limit
or foreclose the availability to the parties of specific performance or other
equitable remedies.
31
(e) In no event shall any party hereto be liable to the
other for punitive damages arising out of any breach of the provisions of this
Agreement, except for such damages which are recoverable or have been recovered
in a third party claim subject to indemnification hereunder.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 SURVIVAL. Subject to the terms and conditions hereof, all
representations, warranties, covenants and agreements of Purchaser and PRGUSA
contained in this Agreement or any exhibit or schedule hereto or any certificate
or other document delivered pursuant to this Agreement shall survive the Closing
and shall remain in full force and effect, regardless of any investigation made
or information or knowledge obtained by or on behalf of Purchaser and PRGUSA, as
applicable, at any time.
7.2 SEVERABILITY. If any provision of this Agreement is prohibited
by the laws of any jurisdiction as those laws apply to this Agreement, that
provision shall be ineffective to the extent of such prohibition and/or shall be
modified to conform with such laws, without invalidating the remaining
provisions hereto.
7.3 MODIFICATION. This Agreement may not be changed or modified
except in writing specifically referring to this Agreement and signed by each of
the parties hereto.
7.4 ASSIGNMENT. This Agreement may not be assigned without the
prior written consent of the other party hereto; provided, however, that
Purchaser may, without the consent of PRGUSA, but with notice to PRGUSA, assign
all or a part of its rights and obligations under this Agreement (including
Section 6.1 hereof) to any of its Affiliates or any successor to all or
substantially all of the Business and may collaterally assign this Agreement
(including Section 6.1 hereof) to any of its lenders.
7.5 BINDING AGREEMENT. The terms and conditions hereof shall inure
to the benefit of and be binding upon the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns.
7.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.7 NOTICES. All notices, requests, demands, claims or other
communications (collectively, "Notices") hereunder will be in writing and shall
be deemed duly given if personally delivered, sent by telefax, sent by a
recognized overnight delivery service which guarantees next-day delivery
("Overnight Delivery") or mailed by certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient, as set forth below:
32
If to Purchaser: TSL (DE) Corp.
500 Lanidex Plaza
Parsippany, New Jersey 07054
Attention: Robert Svec
Telefax: (973) 952-5515
with a copy to: Dechert LLP
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention: Carmen J. Romano, Esq.
Telefax: (215) 655-2971
If to PRGUSA: PRG-Schultz USA, Inc.
600 Galleria Parkway, Suite 100
Atlanta, GA 30339
Attention: Clinton McKellar, Jr.
Senior Vice President &
General Counsel
Telefax: (770) 779-3034
with a copy to: Arnall Golden Gregory LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3400
Attention: Jonathan Golden, Esq.
Telefax: (404) 873-8701
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by U.S.
Mail, will be deemed received three (3) business days immediately following the
date sent. For purposes of this Agreement, a "business day" is a day on which
U.S. national banks are open for business and shall not include a Saturday or
Sunday or legal holiday. Notwithstanding anything to the contrary in this
Agreement, no Notices shall be required of the parties hereto except on a
business day and in the event a Notice is required to be given on a day which is
not a business day, such Notice shall be required to be given on the next
succeeding day which is a business day.
7.8 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement, together with the Exhibits and Schedules attached hereto, constitutes
the entire agreement and supersedes any and all other prior agreements,
representations and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. All such other prior
agreements, representations and undertakings are hereby terminated and shall be
of no force or effect. Except as otherwise expressly provided herein, this
Agreement is not intended to confer
33
upon any person other than PRGUSA and Purchaser and their respective successors
or permitted assigns any rights or remedies hereunder.
7.9 FURTHER ASSURANCES. The parties to this Agreement agree to
execute and deliver, both before and after the Closing, any additional
information or documents or agreements contemplated hereby and/or necessary or
appropriate to effect and consummate the transactions contemplated hereby.
PRGUSA agrees to provide to Purchaser, both before and after the Closing, such
information as Purchaser may reasonably request in order to consummate the
transactions contemplated hereby and to effect an orderly transition of TSL
following Closing.
7.10 GOVERNING LAW. This Agreement, any PRGUSA Transaction Document
and any Purchaser Transaction Document shall be governed by and construed under
the laws of the State of Georgia, without reference to principles of conflict of
laws.
7.11 ARBITRATION. Except for disputes, controversies or claims
which involve a consolidation, cross-claim or like proceeding in connection with
any third party claim, demand, action or proceeding, and except for disputes,
controversies or claims where a party is seeking specific performance or other
equitable relief, following the Closing, any controversy, claim or question of
interpretation or dispute between PRGUSA and Purchaser (each being referred to
as "Party") arising out of or relating to this Agreement or the breach thereof
shall be finally settled by arbitration in Washington, D.C. by one arbitrator
under the then-effective Commercial Arbitration Rules (the "Rules") of the
American Arbitration Association ("AAA") with pre-hearing discovery rights in
accordance with the Federal Rules of Civil Procedure, and otherwise as modified
by this Agreement, and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction. The award rendered by the arbitrator
shall be final and binding on the Parties and not subject to further appeal.
Such arbitration can be initiated by written notice by either Party to the other
party. The arbitrator shall be selected by the Parties in accordance with the
Rules and shall be a practicing attorney or a retired judge having at least
twenty (20) years of experience in matters relating to business and commercial
transactions. Each party agrees to pay an equal part of the deposit fixed by the
AAA or the arbitrator. The arbitrator shall award to the prevailing party, if
any, as determined by the arbitrator, all costs of the proceeding, including the
fees and expenses of the arbitrator and the reasonable attorneys fees and
expenses of the prevailing party. If the arbitrator determines that there is not
a prevailing party, each party shall bear its own costs and pay one-half of the
fees and expenses of the arbitrator.
7.12 KNOWLEDGE. As used herein, the term "knowledge" means the
actual knowledge of the executive officers of the party in question and, with
respect to PRGUSA, shall also include (a) John Cook, Donald E. Ellis, Allison
Aden, Robert J. Svec and Veronica Moschella with respect to this entire
Agreement and (b) Lou Takacs and Samuel Walters with respect to Section 4.11 of
this Agreement. For purposes of the foregoing, "actual knowledge" shall be
deemed to include knowledge which such party would acquire assuming due inquiry
and knowledge of matters of which such party has received written notification
as evidenced by the books and records of such party.
34
7.13 PRONOUNS. All personal pronouns in this Agreement, whether
used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular.
7.14 AMENDMENT AND WAIVER. The parties may by mutual agreement
amend this Agreement in any respect, and any party, as to such party, may (a)
extend the time for the performance of any of the obligations of any other
party, (b) waive any inaccuracies in representations by any other party, (c)
waive compliance by any other party with any of the agreements contained herein
and performance of any obligations by such other party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the party against whom
enforcement of the same is sought.
35
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRGUSA:
PRG-SCHULTZ USA, INC.
By: /s/ Donald E. Ellis, Jr.
---------------------------------------
Name: Donald E. Ellis, Jr.
Its: Executive Vice President-Finance,
Chief Financial Officer and Treasurer
PRGRS, INC.
By: /s/ Clinton McKellar, Jr.
---------------------------------------
Name: Clinton McKellar, Jr.
Its: Senior Vice President and Secretary
PRG-SCHULTZ INTERNATIONAL, INC.
By: /s/ Donald E. Ellis, Jr.
---------------------------------------
Name: Donald E. Ellis, Jr.
Its: Executive Vice President-Finance,
Chief Financial Officer and Treasurer
PURCHASER:
TSL (DE) CORP.
By: /s/ Ethan D. Ayer
---------------------------------------
Name: Ethan D. Ayer
Its: Vice President
36
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.1(1)* Bank Information About the Custodial Account
Schedule 1.2* Excluded Assets
Schedule 1.3(f)* Required Consents
Schedule 2.2(a) Other Assumed Liabilities
Schedule 3.1* TSL Employees
Schedule 3.11 Certain Client Contracts
Schedule 4.3* Title to Assets; Sufficiency of Assets
Schedule 4.4 Consents
Schedule 4.5* Compliance with Law
Schedule 4.7 Interim Statements
Schedule 4.9* Material Contracts
Schedule 4.10* Material Leases
Schedule 4.11* Intellectual Property
Schedule 4.12* Benefit Plans
Schedule 4.15 Material Changes
Schedule 4.16* Environmental Matters
Schedule 4.17* Employees
Schedule 4.18* Related-Party Transactions
Schedule 4.19* Insurance
Exhibit 1.3(a)* Form of Bill of Sale
Exhibit 1.3(b)* Form of Assignment and Assumption Agreement
Exhibit 1.3(c)* Form of Intellectual Property Assignment
Exhibit 1.3(e)* Form of Opinion of Counsel to PRGUSA
Exhibit 1.3(h) Form of Transition Services Agreement
Exhibit 1.3(i) Form of Subcontractor Agreement
Exhibit 1.3(j) Form on Noncompetition and Nonsolicitation Agreement
* This schedule is omitted in accordance with Item 601(b)(2) of Regulation S-K.
PRG-Schultz International, Inc. agrees to furnish a copy of any omitted
schedule, on a supplemental basis, to the Commission upon request.
37
Capitalized terms used in the disclosure schedules which are defined in
the Asset Purchase Agreement between PRG-Schultz USA, Inc., PRGRS, Inc.,
PRG-Schultz International, Inc., and TSL (DE) Corp., dated January 16, 2004
("Agreement") shall have the meanings assigned to such terms in the Agreement
unless otherwise defined in the disclosure schedule. The inclusion of any
description or document in a disclosure schedule is not intended, nor shall it
be deemed to imply necessarily, that the matters referred to or contained in
such disclosure schedule are (i) material or not in the ordinary course of
business, or (ii) required to be disclosed in such disclosure schedule. Nothing
in the disclosure schedules constitutes an admission of any liability of PRGUSA
to any party or an admission against interest. Any matter, event or condition
specifically disclosed in any section or portion of this disclosure schedule
shall be deemed a disclosure on any other disclosure schedule(s) where the
relevance of a disclosure on such other disclosure schedule is reasonably
apparent on the face of such disclosure that such disclosure would be applicable
to such other section or portion of the disclosure schedule or provision(s) of
the Agreement. Where any representation or warranty contained herein is limited
or qualified by the materiality of the matters as to which the representation or
warranty is given, the inclusion of any matter in a disclosure schedule does not
constitute a determination by PRGUSA that such matter is material or would
necessarily have a Material Adverse Effect.
1
SCHEDULE 2.2(a)
OTHER ASSUMED LIABILITIES
1. Any Damages related to the failure to obtain the consent or approval to
the assignment of any Contracts, Personal Property Leases or Real
Property Leases from PRGUSA to Purchaser; provided however, that this
sentence shall not reduce or otherwise affect the liability of PRGUSA
or Parent for breach of any representation contained in Article IV of
the Agreement.
2. Any Damages related to failure, prior to Closing, of PRGUSA to file
state sales tax returns and/or to make sales tax payments related to
ASP software sales.
3. The costs, fees and expenses associated with obtaining software
licenses for the Enterprise Software (as defined on Schedule 4.11
hereof).
2
SCHEDULE 3.11
CERTAIN CLIENT CONTRACTS
1. Professional Services Agreement, dated November 5, 2002, between
PRG-Schultz USA, Inc. and Cooper-Standard Automotive, Inc. (Management
Fee = 5%).
2. Professional Services Agreement, dated September 3, 2002, between
PRG-Schultz (Commercial Division) and Steelcase, Inc. (Management Fee =
5%).
3. Professional Services Agreement, dated April 25, 2002, between The
Profit Recovery Group USA, Inc. and Cargill, Incorporated. (Management
Fee = 5%).
4. Professional Services Agreement, dated November 26, 2001, between The
Profit Recovery Group USA, Inc. and PGA Tour, Inc. (Management Fee =
5%).
5. Profit Recovery Group International Incorporated contract with the
General Services Administration (Federal Supply Schedule Contract
Number GS-23F-814OH). (Management Fee = 5%).
6. Profit Recovery Group International, Inc. contract with the Bureau of
the Public Department (Department of Treasury) (FedSource Contract #
TPD-99-C-0015 - requesting government agency is the DISA). (Management
Fee = 5%).
7. General Services Agreement between Bank of America and PRG-Schultz USA,
Inc., dated as of September 1, 2001 (agreement number 23676-001-001),
and an addendum to same dated December 23, 2002 (effective December 12,
2002). (Management Fee = 5%).
8. Professional Services Agreement between PRG-Schultz USA, Inc. and
Metavante Corporation dated July 26, 2001 (effective July 17, 2001),
and an addendum to same dated August 20, 2002. (Management Fee = 5%).
3
SCHEDULE 4.4
CONSENTS
1. PRGUSA's lenders, a bank syndicate led by Bank of America, have a
security interest in all of the Purchased Assets. Lien releases will be
provided by Bank of America with respect to the Purchased Assets at the
Closing; provided, however, that partial termination statements will
not be filed. The consent of the bank syndicate is required for PRGUSA
to consummate the transactions contemplated by the Agreement and has
been obtained pursuant to that certain Fourth Amendment to Credit
Agreement and Waiver, dated as of November 12, 2003, by and among
PRGUSA, Parent, each of the domestic subsidiaries of the Parent, the
lenders party thereto and Bank of America, N.A., as Administrative
Agent.
2. Master Services Agreement between AT&T Solutions, Inc., a wholly owned
subsidiary of AT&T Corp., and TSL, a division of PRG-Schultz, Inc.,
dated June 19, 2002.
3. Office Lease between Transwestern Lanidex, L.L.C. and PRG-Schultz USA,
Inc., dated May 30, 2002 (500 Lanidex Plaza, Parsippany, NJ).
4. Lease Agreement between The Profit Recovery Group USA, Inc. and 2201
Broadway Investments, LLC, dated December 22, 2000 (2201 Broadway
Office Building, Oakland, CA).
5. Subordination, Non Disturbance and Attornment Agreement between Morgan
Guaranty Trust Company of New York and The Profit Recovery Group USA,
Inc., dated November 6, 2001 (in connection with the Oakland, CA
lease).
6. Letter of Agreement between TSL and SG&W, Integrated Marketing
Communications, dated February 22, 2003.
7. CSR Logic Services Agreement between CSR Logic, LLC and TSL, a division
of PRG-Schultz, dated July 24, 2003.
- Mutual Nondisclosure and Non-Solicitation Agreement between
CSR Logic, LLC and TSL, a division of PRG-Schultz, dated March
31, 2003.
8. Agreement between Maltz Associates, LP and TSL, a division of
PRG-Schultz International, Inc., dated September 2, 2003.
9. Products & Services Agreement between Broadwing
Telecommunications, Inc. and PRG dated November 28, 2001 and
the following associated addendums and attachments:
- Business Markets Responsible Organization 8XX Letter of
Agency;
- Internet Services Supplement;
4
- Broadwing Voice and Data Service Supplement;
- Service Level Agreement, Dedicated IP Services;
- Customer Premise Equipment Services Supplement;
- Voice Quality Addendum;
- Preferred PLUS Long Distance Program; and
- Letter of Agency.
10. e-business Hosting Agreement between International Business Machines
Corporation and TSL, a division of PRG-Schultz, dated February 8, 2002.
11. Agreements with Perimeterwatch Technologies, Inc.
- Enterprise Support Agreement for "TSL Networks", dated April
8, 2002
- Enterprise Support Agreement for "TSL - a division of
PRG-Schultz, Inc.", dated November 4, 2003
- Enterprise Management Agreement for "TSL - a division of
PRG-Schultz, Inc.", dated October 29, 2003
- Service Level Agreement Definition
12. The licenses for the software listed on Schedule 4.11 under the heading
"Software used, including operating systems and utilities" and the
contracts listed on Schedule 4.11 under the heading "Other Intellectual
Property Used that is Owned by Others."
Consultant and Subcontractor Agreements
13. Letter Agreement with Technology Titans, Inc. (on TSL letterhead, only
signed by Technology Titans), dated May 31, 2001 (contract is silent
regarding assignment).
14. Consulting Agreement between PRG Communications Division and Barry
Melvin (undated) (contract is silent regarding assignment).
15. Letter Agreement with Odyssey Media Incorporated (on TSL letterhead,
only signed by Odyssey), dated August 21, 2000 (contract is silent
regarding assignment).
16. Independent Subcontractor Agreement between TSL, a division of
PRG-Schultz and Mr. William Donaldson (Black Diamond Software), dated
October 1, 2002 (contract is silent regarding assignment).
5
17. Consulting Agreement between Maltz Associates, L.P. and TSL, a division
of PRG-Schultz International, Inc., dated April 22, 2003 (contract is
silent regarding assignment).
18. Independent Contractor Agreement between TSL, a division of PRG-Schultz
and Alan Maltz, dated June 7, 2002 (contract is silent regarding
assignment).
19. Master Subcontractor Agreement between TSL, a division of PRG-Schultz
and Digital Reliance, dated May 16, 2002 (effective May 14, 2002).
20. Independent Subcontractor Agreement between TSL, a division of
PRG-Schultz and MaryAnn Carfaro, dated October 1, 2002 (contract is
silent regarding assignment).
21. Independent Contractor Agreement between TSL, a division of PRG-Schultz
and On Pointe, dated September 5, 2002 (contract is silent regarding
assignment).
22. Master Subcontractor Agreement between TSL, a division of PRG-Schultz
and DJM Networking Services, dated September 2, 2003 (effective August
14, 2003).
23. Agreement for Telecom Bill Auditing Services between Faircloth &
Blackwelder and TSL, dated May 27, 1998.
24. Master Subcontractor Agreement dated April 3, 2003 (effective March 19,
2003) between TSL, a division of PRG-Schultz and Telecom Solutions
Group, LLC (agreement is inactive but has certain restrictive covenants
contained in Section 7 of the agreement that survive termination).
25. Master Subcontractor Agreement dated May 7, 2003 (effective March 19,
2003) between TSL, a division of PRG-Schultz and The Long Valley Group,
LLC (agreement is inactive but has certain restrictive covenants
contained in Section 7 of the agreement that survive termination).
Client Contracts
26. JP Morgan Chase
- Agreement for Professional Services between Morgan Guaranty
Trust Company of New York and TSL, a division of Brite Voice
Systems, Inc., dated, November 1, 1995.
a. Memo of Understanding (JPMC Agreement No. 62608)
regarding MAC billing rates terms and conditions,
dated January __, 2003 between TSL, a division of
PRG-Schultz International and JPMorgan Chase Bank.
- Memo of Understanding regarding TSL Services, Billing Rates
and Terms, dated May 24, 2002 between TSL, a division of
PRG-Schultz International and JPMorgan Chase (silent with
respect to assignment).
6
- Letter Agreement dated July 30, 1996 between Telecom Services
Limited, a division of Brite and Chase Manhattan Bank (silent
with respect to assignment).
a. Letter agreement dated May 21, 2003 between TSL and
J.P. Morgan Chase & Co. amending July 30, 1996 Letter
Agreement (silent with respect to assignment).
- Statement of Work (JPMChase-UK), undated, between JPMChase and
TSL (silent with respect to assignment).
27. IBM
- Master Agreement (Agreement # 4900T20002), dated as of
January 31, 2000 between International Business Machines
Corporation and PRGUSA, assignee of TSL Services, Inc., an
EPS Solutions Company, and related statements of work.
28. Wells Fargo/Norwest
- Master Services Agreement dated October 1, 2001 between Wells
Fargo Services Company and The Profit Recovery Group.
a. Amendment 1 - Pricing, dated effective May 1, 2003
between Wells Fargo Services Company and
PRG-Schultz, Inc.
b. Statement of Work - 1 (Telecommunications Invoice
Auditing Project), dated effective January 1, 2003.
c. Statement of Work - 2 (Charge Back Support), dated
effective January 1, 2003.
d. Statement of Work - 3 (MCI/WorldCom Billing
Analysis), dated effective January 1, 2003.
e. Statement of Work - 4 (Qwest Billing Analysis), dated
effective April 15, 2003.
- Master Services Agreement dated March 20, 2000, between Wells
Fargo Services Company and The Profit Recover Group USA, Inc.
(as assigned by TSL, Inc. via Amendment 01 dated June 30,
2000).
a. Amendment 02, dated June 25, 2002, between Wells
Fargo Services Company and Profit Recovery Group USA,
Inc. - relates solely to work performed by TSL under
an exhibit with the heading "Proposal to Review Wells
Fargo Service Company's (WFSC) MCI Billing During
Contract Conversion".
7
b. All work by TSL under this Master Services Agreement
has been completed.
29. Charles Schwab
- Consulting Services Agreement dated March 19, 2002 between
TSL, a division of PRG-Schultz USA, Inc. and Charles Schwab &
Co., Inc. (silent with respect to assignment)
30. Bank of New York - each of the below Bank of New York contracts is
silent with respect to assignment
- Memo of Understanding regarding Confirmation of Professional
Services, dated September 6, 2002, between TSL, a division of
PRG-Schultz International and Bank of New York.
- Memo of Understanding regarding TSL Services, Billing Rates
and Terms, dated May 28, 2002, between TSL, a division of
PRG-Schultz International and Bank of New York.
31. Chase Bank of Texas - the below Chase Bank contract is silent with
respect to assignment
- Proposal to Chase for SMDR Polling and Delivery Services dated
June 25, 1999 between Chase Bank and TSL Services, Inc.
32. Guardian Life
- Memo of Understanding regarding TOMS ASP billing rates, terms
and conditions, dated July 8, 2002 between TSL, a division of
PRG-Schultz International and Guardian Life Insurance (this
Memo of Understanding is silent with respect to assignment).
- Services Agreement dated as of January 9, 2002 between Profit
Recovery Group USA, Inc. and The Guardian Life Insurance
Company of America. Agreement has expired and TSL is in the
process of obtaining a month to month agreement until a full
renewal is negotiated.
- Service Bureau (Call Accounting) Agreement dated September 16,
2002 between TSL Software Services, Inc. and The Guardian Life
Insurance Company.
33. State of CA
- Standard Agreement (Contract # 96E1115) dated May 1, 1997
between the State of California (acting through the Director
of the Stephen P. Teale Data Center) and Telecom Services
Limited (including MSA 5-96-70-26).
8
- Letter dated June 27, 2002 between State of California, 9-1-1
and TSL, a division of PRG-Schultz, regarding contract
5-96-70-26 and continued pursuit by TSL of open claims
thereunder despite expiration of the contract. This letter is
silent with respect to consent.
No further work for the State of California or any of its departments
is currently under contract to be conducted other than the pursuit of
open claims to the client that were identified prior to expiration of
the contract.
34. Citicorp - the below Citicorp agreement is silent with respect to
assignment
- Letter Agreement dated April 10, 1996 between Telecom Services
Limited, a division of Brite, and Citibank, N.A.
35. Consolidated Edison
- Agreement for Telecommunications Invoice Processing Management
Services between Brite Voice Systems, Inc., TSL Division, and
the Consolidated Edison Company of New York, Inc., dated
January 12, 1998, as modified January 8, 2003 to extend for
two years (Purchase Order Modification Copy is not signed by
Consolidated Edison).
36. City of NY
- Agreement dated October 25, 2002 between City of New York
acting by and through the Department of Information Technology
and Telecommunications and The Profit Recovery Group, Inc.
This contract is currently expired.
37. AT&T & AMS
- Agreement No. 12642 between TSL Services, Inc. and AT&T Corp.
dated December 23, 1998 (not signed by TSL).
a. Amendments 1-3 each extended the agreement by one
year.
b. Agreement Amendment (No.4) between TSL, a division of
PRG-Schultz, Inc. and AT&T Corp., dated January 13,
2003 (changes agreement end date to December 31, 2003
and modifies a provision of the agreement).
a. Agreement Amendment (No. 5) between TSL, a division
of PRG-Schultz, Inc. and AT&T Corp, dated December
30, 2003 (changes agreement end date to December 31,
2004).
38. Intel
- Intel Corporation Purchase Agreement - Services (agreement #
10194), dated effective as of March 1, 2000, between Intel
Corporation and PRGUSA, assignee of TSL Services, as amended.
9
39. Bear Stearns & Company
- General Terms and Conditions, dated as of January 27, 2003
between Bear, Stearns & Co., Inc. and TSL, a division of
PRGUSA, and related statements of work.
40. Lexmark (AT&T Solutions)
- Master Services Agreement between AT&T Solutions, Inc., a
wholly owned subsidiary of AT&T Corp., and TSL, a division of
PRG-Schultz, Inc., dated June 19, 2002.
41. Independence Blue Cross
- Services Agreement effective April 17, 2003 between
TSL, a division of PRG-Schultz and Independence Blue Cross.
42. Pepsi - the below Pepsi agreement is silent with respect to assignment
- Letter Agreement dated May 28, 1996 between Telecom Services
Limited, a division of Brite, and Pepsico, Inc.
43. Fidelity Investments
- Services Agreement No. 70002109 dated as of June 24, 2002
between Fidelity Investments Institutional Services Company
acting through its Fidelity Investments Systems Company
Division, and TSL, a division of PRG-Schultz International,
Inc.
44. McGraw Hill
- Master Services Agreement, dated effective as of July 1, 2002,
between The McGraw Hill Companies, Inc. and TSL, a division of
PRGUSA.
- OOB/ISDN Billing Support Services Schedule between TSL, a
division of PRG-Schultz and The McGraw-Hill Companies, Inc.,
dated August 6, 2003 (silent with respect to assignment).
Consents/notices required in connection with the Overlap
Client Contracts:
1. Professional Services Agreement, dated November 5, 2002, between
PRG-Schultz USA, Inc. and Cooper-Standard Automotive, Inc.
2. Professional Services Agreement, dated September 3, 2002, between
PRG-Schultz (Commercial Division) and Steelcase, Inc. (agreement is
silent regarding assignment/subcontracting).
10
3. Professional Services Agreement, dated April 25, 2002, between The
Profit Recovery Group USA, Inc. and Cargill, Incorporated. (agreement
is silent regarding assignment/subcontracting).
4. Professional Services Agreement, dated November 26, 2001, between The
Profit Recovery Group USA, Inc. and PGA Tour, Inc. (agreement is silent
regarding assignment/subcontracting).
5. Profit Recovery Group International Incorporated contract with the
General Services Administration (Federal Supply Schedule Contract
Number GS-23F-814OH).
6. Profit Recovery Group International, Inc. contract with the Bureau of
the Public Department (Department of Treasury) (FedSource Contract #
TPD-99-C-0015 - requesting government agency is the DISA).
7. General Services Agreement between Bank of America and PRG-Schultz USA,
Inc., dated as of September 1, 2001 (agreement number 23676-001-001),
and an addendum to same dated December 23, 2002 (effective December 12,
2002).
8. Professional Services Agreement between PRG-Schultz USA, Inc. and
Metavante Corporation dated July 26, 2001 (effective July 17, 2001),
and an addendum to same dated August 20, 2002. (agreement is silent
regarding assignment/subcontracting).
11
SCHEDULE 4.7
FINANCIAL INFORMATION
TSL Statement of Net Assets and Liabilities
DECEMBER 31, DECEMBER 31,
2002 2003
----------- -----------
ASSETS
CURRENT ASSETS
A/R Trade .............................. $ 2,763,931 $ 3,150,931
Allowance for Doubtful Accounts ........ (206,078) (62,180)
Prepaid Expenses ....................... 51,032 90,975
----------- -----------
TOTAL CURRENT ASSETS ......................... 2,608,885 3,179,726
PROPERTY PLANT AND EQUIPMENT
Property Plant and Equipment at Cost ... 3,008,744 3,969,933
Less: Accumulated Depreciation ......... (1,570,725) (2,259,998)
----------- -----------
TOTAL PROPERTY PLANT AND EQUIPMENT ........... 1,438,019 1,709,935
Other Long-term Assets - Security
Deposits ............................... 83,377 53,006
Other Long-term Assets - Non-Competes .. 48,327 28,327
----------- -----------
TOTAL ASSETS ................................. $ 4,178,608 $ 4,970,994
=========== ===========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses .. $ 131,372 $ 328,139
Sales Taxes Payable .................... 4,294 7,248
Accrued Payroll and Related Expenses ... 1,443,045 602,751
Deferred Revenue ....................... 174,988 138,815
----------- -----------
TOTAL CURRENT LIABILITIES .................... 1,753,699 1,076,953
LONG-TERM LIABILITIES
Other Long-term Liabilities ............ 148,404 249,274
----------- -----------
TOTAL LIABILITIES ............................ 1,902,103 1,326,227
----------- -----------
----------- -----------
NET BOOK VALUE ............................... $ 2,276,505 $ 3,644,767
----------- -----------
12
TSL Profit and Loss
YEAR TO DATE YEAR TO DATE
ACTUAL ACTUAL
DECEMBER 31, DECEMBER 31,
2002 2003
------------ -----------
REVENUE ..................................... $ 16,406,926 $ 16,967,096
EXPENSES
FIELD OPERATIONS
Payroll Expenses ................... 6,876,489 7,228,945
Other Employee Costs ............... 56,437 36,248
Marketing and Advertising .......... 9,280 8,323
Taxes .............................. 413,669 484,852
Utilities and Maintenance .......... 103,077 165,748
Supplies ........................... 178,550 107,815
Purchased Services ................. 1,879,240 1,668,963
Other Expenses ..................... 180,977 203,159
Travel & Entertainment ............. 116,607 116,336
Communications ..................... 219,177 161,812
Insurance .......................... 405,636 472,653
Depreciation ....................... 720,122 689,273
Equipment Rentals .................. 52,652 47,018
Real Property Rentals .............. 424,105 498,849
------------ ------------
TOTAL FIELD OPERATIONS ................ 11,636,018 11,889,994
------------ ------------
GROSS PROFIT ....................... 4,770,908 5,077,102
------------ ------------
SELLING, GENERAL, AND ADMINISTRATIVE
Payroll Expenses ................... 1,988,015 1,527,207
Other Employee Costs ............... 129,099 63,892
Marketing and Advertising .......... 187,075 308,740
Taxes .............................. 131,353 118,719
Utilities and Maintenance .......... 19,842 21,709
Supplies ........................... 16,269 17,887
Purchased Services ................. 106,461 103,145
Other Expenses ..................... 14,425 23,286
Travel & Entertainment ............. 121,987 126,604
Communications ..................... 41,927 47,288
Insurance .......................... 117,343 108,378
Depreciation ....................... -- --
Amortization ....................... 20,000 20,000
Professional Services .............. (6,279) --
Donations .......................... 1,900 9,490
Bad Debts .......................... (415,534) (9,448
Equipment Rentals .................. 21,808 24,828
Real Property Rentals .............. 233,078 134,051
------------ ------------
TOTAL SG&A ............................ 2,728,769 2,645,776
------------ ------------
TOTAL EXPENSES .............................. 14,364,787 14,535,770
------------ ------------
------------ ------------
OPERATING INCOME ...................... $ 2,042,139 $ 2,431,326
============ ============
13
Items not contained in the interim statements disclosed on this Schedule 4.7
because the Business is not conducted as an independent entity
- The costs related to certain services, including employee
benefits, liability insurance, human resources and payroll
processing, are charged or allocated to the Business by PRGUSA
pro-rata based upon the total of such costs incurred by
PRGUSA. PRGUSA makes no assurances that such services may be
procured by Purchaser for the Business at the same or similar
costs.
- The Business, as a division of PRGUSA, has access to other
PRGUSA corporate resources for which the Business pays little
or no costs. These corporate resources include, legal
services, tax services and advice, marketing services, and
accounting/finance/CFO services. After Closing the Business
may need to procure such services from a third party that will
charge the Business amounts that are materially different from
those charged by PRGUSA to the Business.
- With respect to the Enterprise Software (defined on Schedule
4.11 hereof), after Closing, the Business will need to obtain
its own software licenses from the applicable vendors and
PRGUSA makes no assurances that such licenses may be procured
by Purchaser for the Business at the same or similar costs as
charged to PRGUSA.
14
SCHEDULE 4.15
MATERIAL CHANGES
1. Intel has recently consolidated and brought "in house" the personal
services billing service that was provided by TSL (approximately $9,000 of
revenue per month) and may bring all processing "in house".
2. JPMChase has recently entered into an outsourcing agreement with IBM and
the impact upon TSL's business with JPMChase or IBM is unknown.
3. The STI processing services provided for Warner Lambert may be brought in
house by Pfizer (Pfizer recently acquired Warner Lambert).
4. Key Bank has recently indicated that it may no longer be requiring the
FraudChek services (approximately $7,000 of revenue per month).
5. The Business, from time to time in the ordinary course of its business (STI
service), will directly purchase Pollcats (the SMDR collection devices used
to obtain CDR information) and sell them back to the client.
2
EXHIBIT 1.3(h)
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT, dated as of January 16, 2004 (this
"Agreement"), between PRG-SCHULTZ USA, INC., a Georgia corporation ("PRGUSA"),
and TSL (DE) CORP. a Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain Asset
Purchase Agreement of even date herewith (the "Asset Purchase Agreement")
pursuant to which Purchaser is purchasing from PRGUSA substantially all of the
assets of TSL (as defined in the Asset Purchase Agreement) as a going concern;
and
WHEREAS, in connection with the transactions contemplated by the Asset
Purchase Agreement, the parties wish to enter into this Agreement, Purchaser
desires to cause PRGUSA to provide the Services set forth on Schedule A to
Purchaser, and PRGUSA is willing to provide such Services; and
NOW, THEREFORE, the parties hereto, in consideration of the premises
and the mutual covenants contained herein, agree as follows:
1. Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below:
"Applicable Rate" shall mean the rate of interest per annum announced
from time to time by Citibank, N.A. as its prime lending rate plus 1% per annum.
"Bankruptcy Event" with respect to a party shall mean the filing of an
involuntary petition in bankruptcy or similar proceeding against such party
seeking its reorganization, liquidation or the appointment of a receiver,
trustee or liquidator for it or for all or substantially all of its assets,
whereupon such petition shall not be dismissed within sixty (60) days after the
filing thereof, or if such party shall (i) apply for or consent in writing to
the appointment of a receiver, trustee or liquidator of all or substantially all
of its assets, (ii) file a voluntary petition or admit in writing its inability
to pay its debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or an answer seeking reorganization
or an arrangement with its creditors or take advantage of any insolvency law
with respect to itself as debtor, or (v) file an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency proceedings or any similar proceedings.
"Business" means the services performed prior to the date hereof by the
TSL division of PRGUSA, which are described in the first recital of the Asset
Purchase Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banks in New York, New York are authorized or obligated by law or
executive order to close.
"Loss" shall mean any damage, claim, loss, charge, action, suit,
proceeding, deficiency, tax, interest, penalty and reasonable costs and expenses
(including reasonable attorneys' fees).
"Person" shall mean any natural person, corporation, business trust,
limited liability company, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Services" shall mean those transitional services to be provided by
PRGUSA to Purchaser set forth on Schedule A hereto to temporarily assist
Purchaser in operating the Business.
Capitalized terms used herein but not defined herein shall have the
meaning ascribed to them in the Asset Purchase Agreement.
2. Services. PRGUSA shall provide to Purchaser each of the Services for the term
set forth opposite the description of such Services in Schedule A. In performing
the Services, PRGUSA shall provide substantially the same level of service and
use substantially the same degree of care, skill and diligence as it provided
and used in providing such Services to the Business prior to the date hereof,
subject in each case to any provisions set forth on Schedule A with respect to
each Service. PRGUSA agrees that (i) the Services will be performed in a
professional, timely and workmanlike manner, (ii) the Services will be of the
same quality and in the same manner of performance as such Services were
performed immediately prior to the Closing to the Business and (iii) the level
and scope of resources, including personnel, utilized by PRGUSA to provide the
Services shall be no less than those that were utilized immediately prior to the
Closing. It will be at PRGUSA's discretion as to whether enhancements or
modifications to PRGUSA's systems will be made available to Purchaser, provided,
however, the foregoing will not reduce or relieve Purchaser's obligations under
this Section 2. Purchaser will reasonably cooperate with PRGUSA to facilitate
PRGUSA's performance hereunder. EXCEPT AS SPECIFIED IN THIS AGREEMENT, ALL
SERVICES PROVIDED UNDER THIS AGREEMENT ARE PROVIDED ON AN "AS IS" BASIS. EXCEPT
AS SPECIFIED IN THIS AGREEMENT, NEITHER PRGUSA NOR ANY OF ITS AFFILIATES,
EMPLOYEES, OFFICERS, DIRECTORS, AGENTS OR LICENSORS WARRANTS THAT THE SERVICES
PROVIDED PURSUANT TO THIS AGREEMENT WILL BE UNINTERRUPTED OR ERROR FREE. EXCEPT
AS SPECIFIED IN THIS AGREEMENT, PRGUSA AND ITS AFFILIATES, EMPLOYEES, OFFICERS,
DIRECTORS, AGENTS AND LICENSORS MAKE NO WARRANTY, GUARANTEE OR REPRESENTATION
EITHER EXPRESS OR IMPLIED REGARDING THE MERCHANTABILITY, TITLE, OR FITNESS FOR A
PARTICULAR PURPOSE OF ANY SERVICES PROVIDED UNDER THIS AGREEMENT.
3. Payment. Purchaser shall pay to PRGUSA the fees set forth on Schedule A in
consideration for the provision of the Services. Purchaser shall reimburse
PRGUSA for all reasonable and necessary out-of-pocket costs and expenses (except
for postage and other delivery costs, telephone, telecopy and duplicating
expenses, employee salary and benefit allocations for PRGUSA personnel and
similar internal administrative or overhead costs, expenses and allocations)
incurred by PRGUSA with respect to third parties in connection with the
provision of the Services to Purchaser pursuant to the terms of this Agreement
or paid by PRGUSA on behalf of Purchaser. PRGUSA will invoice Purchaser in U.S.
dollars as set forth below for any (i) fees payable by Purchaser for Services
listed on Schedule A provided pursuant to the terms of this Agreement during
such month (prorated on a daily basis for any partial month); (ii) amounts
payable by Purchaser for any out-of-pocket costs and expenses incurred during
the immediately preceding month to the extent PRGUSA has received an invoice
from such third party; and (iii) taxes (excluding income taxes) or other
out-of-pocket expenses (such as, without limitation, payments to cover payroll
and premiums for medical and dental benefits) payable in connection with the
provision of Services for Purchaser during such month. PRGUSA shall deliver or
cause to be delivered to Purchaser each such invoice within thirty (30) days
following the last day of the calendar month to which such invoice relates.
Purchaser shall pay each such invoice received by electronic funds transfer as
follows: in the case of clauses (i) and (ii), within twenty (20) Business Days
of the date on which such invoice was received, and in the case of clause (iii),
provided that PRGUSA delivers such invoice five (5) or more Business Days
(except in the case of payroll expenses and premiums for medical and dental
benefits, in which case such invoice shall be delivered two (2) or more Business
Days) prior to the due date for such out-of-pocket payments, not later than one
(1) Business Day prior to such due date (and if PRGUSA does not timely receive
the necessary funds, PRGUSA shall not be obligated to make the
2
corresponding payment). Any amount not paid when due shall be subject to a late
payment fee computed daily at a rate equal to the Applicable Rate. Purchaser
agrees to pay PRGUSA's reasonable attorneys' fees and other costs incurred in
collection of any amounts owed to PRGUSA hereunder and not paid when due.
Notwithstanding anything to the contrary contained herein, in the event
Purchaser fails to make a payment when due hereunder, and such failure continues
for a period of five (5) Business Days following delivery of written notice to
Purchaser of such failure, PRGUSA shall have the right to cease provision of
Services to Purchaser until such overdue payment (and any applicable late
payment fee accrued with respect thereto) is paid in full. Such right of PRGUSA
shall not in any manner limit or prejudice any of PRGUSA's other rights or
remedies in the event of Purchaser's failure to make payments when due
hereunder. In the event of a termination of Services pursuant to this Section,
with respect to the calendar month in which such services cease to be provided,
Purchaser shall be obligated to pay a pro rata share of the fee for such Service
set forth on Schedule A equal to the product of (x) the fee set forth on
Schedule A multiplied by (y) a fraction, the numerator of which is the number of
days in the calendar month in which such services cease to be provided preceding
and including the last date on which such Services are provided, and the
denominator of which is thirty (30).
4. Limitation of Liability. IN NO EVENT SHALL PRGUSA OR PURCHASER HAVE ANY
LIABILITY FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES EXCEPT
IN THE CASE OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PARTY.
5. Indemnification.
(a) Purchaser shall indemnify PRGUSA, and shall hold PRGUSA harmless
against, any Loss which PRGUSA may sustain or incur arising out of PRGUSA's
performance of the Services or PRGUSA's acts or omissions in connection with its
performance of such Services unless such Loss arises out of a breach by PRGUSA
of this Agreement. This Section shall survive the termination of this Agreement.
(b) PRGUSA shall indemnify Purchaser, and shall hold Purchaser harmless
against, any Loss which Purchaser may sustain or incur arising out of a breach
by PRGUSA of this Agreement. This Section shall survive the termination of this
Agreement.
6. Confidentiality. The parties acknowledge that in the course of performance of
their respective obligations pursuant to this Agreement, each may obtain certain
confidential and/or proprietary information of the other or its affiliates or
customers, including the terms and conditions of this Agreement. Each party
hereby agrees that all information communicated to it by the other, its
affiliates or customers, whether before or after the date hereof, was received
in strict confidence and shall be kept in strict confidence and shall be used
only in accordance with this Agreement, and shall not be disclosed by the other
party, its agents or employees without the prior written consent of the first
party. In the event that either party either determines on the advice of its
counsel that it is required to disclose any information pursuant to applicable
law, or receives any demand under lawful process to disclose or provide
information of the other party that is subject to the confidentiality provisions
hereof, such party shall notify the other party prior to disclosing and
providing such information and shall cooperate at the expense of the requesting
party in seeking any reasonable protective arrangements requested by such other
party. Subject to the foregoing, the party that receives such request may
thereafter disclose or provide information to the extent required by such law
(as so advised by counsel) by lawful process. Furthermore, the parties shall
take reasonable steps necessary to ensure that all information and records
relating to the business of PRGUSA and the Purchaser are kept strictly
confidential. Notwithstanding the above, this Agreement imposes no obligation on
either party with respect to information that is already in such party's
possession without a duty to the other party to maintain the confidentiality of
such
3
information, is or becomes a matter of public knowledge through no fault of that
party, is rightfully obtained by either party from a third party not in
violation of any duty of confidentiality, or is independently developed by
either party without reference to any proprietary or confidential information of
the other party. Notwithstanding anything herein to the contrary, any party to
this Agreement (and any employee, representative or other agent of any party to
this Agreement) may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the transactions contemplated by
this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure; provided, however, that such disclosure may not be made to the extent
required to be kept confidential to comply with any applicable federal or state
securities laws; and provided further that (to the extent not inconsistent with
the foregoing) such disclosure shall be made without disclosing the names or
other identifying information of any party.
7. Term and Termination.
(a) This Agreement shall commence on the date hereof and shall continue
with respect to the Services until the expiration of the period the Services are
being provided as set forth on Schedule A or until terminated in accordance with
this Section 7.
(b) Termination of Services by Purchaser. Each party acknowledges that
the purpose of this Agreement is for PRGUSA to provide Services to Purchaser on
an interim basis to facilitate Purchaser's transition to operating the Business
as a going concern without substantial interruption in connection with the
change of ownership pursuant to the Asset Purchase Agreement and the agreements
contemplated thereby. Purchaser may notify PRGUSA that Purchaser does not wish
to receive one or more Services, in which event such Service(s) shall be deleted
from Schedule A effective as of the termination date contained in such notice
and any payment obligations for such Services pursuant to Section 3 shall
terminate.
(c) Early Termination by PRGUSA. PRGUSA may terminate this Agreement by
giving written notice to Purchaser under the following circumstances: (a) if
Purchaser shall materially default in the performance of any of its material
obligations under, or materially breach any of its material warranties set forth
in, this Agreement, and such default or breach shall continue and not be
remedied for a period of five (5) Business Days with respect to any payment
obligations hereunder (including without limitation any payment obligations
pursuant to Section 3) or a period of thirty (30) days with respect to any other
obligations hereunder, after PRGUSA has given written notice to Purchaser
specifying such default or breach and requiring it to be remedied; (b) if a
Bankruptcy Event has occurred with respect to Purchaser; or (c) if Purchaser
should assign or subcontract, or attempt to assign or subcontract, any interest
in all or any part of this Agreement without the prior written consent of
PRGUSA, except as set forth in Section 11.
(d) Suspension Due to Force Majeure. In the event PRGUSA's performance
hereunder is interrupted or interfered with by reason of any cause beyond its
reasonable control including, but not limited to, fire, storm, flood,
earthquake, explosion, war, strike or labor disruption, rebellion, insurrection,
quarantine, act of God, boycott, embargo, shortage or unavailability of
supplies, riot, or governmental law, regulation or edict (collectively, the
"Force Majeure Events"), PRGUSA shall not be deemed to be in default of this
Agreement by reason of its nonperformance due to such Force Majeure Event, but
shall give notice to Purchaser of the Force Majeure Event. PRGUSA will be
excused from performance of its obligations only to the extent and for such time
as the cause which prevents performance continues.
(e) Consequences of Termination. In the event this Agreement expires or
is terminated in accordance with this Section 7, then (a) all Services to be
provided will promptly cease, (b) each of
4
PRGUSA and Purchaser shall promptly return all confidential information received
from the other party in connection with this Agreement (including the return of
all information received with respect to the Services or products of PRGUSA or
Purchaser, as the case may be) and (c) each of PRGUSA and Purchaser shall honor
all credits and make any accrued and unpaid payment to the other party as
required pursuant to the terms of this Agreement, and no rights already accrued
hereunder shall be affected.
8. Records. Each of the parties shall provide reasonable access to the books
maintained in connection with the provision of the Services, and all other
records relevant to this Agreement, and upon reasonable notice from the other
party shall make available for inspection and copy by such other party's agents
such records during reasonable business hours.
9. Severability. If any provision of this Agreement is prohibited by the laws of
any jurisdiction, as those laws apply to this Agreement, that provision shall be
ineffective to the extent of such prohibition and/or shall be modified to
conform with such laws, without invalidating the remaining provisions hereto.
10. Modification. This Agreement may not be changed or modified except in
writing specifically referring to this Agreement and signed by each of the
parties hereto.
11. Assignment. Neither PRGUSA nor Purchaser may assign or subcontract, or
attempt to assign or subcontract, any of its rights or obligations hereunder, in
whole or in part, by operation of law or otherwise, except with the prior
written consent of the other party; it being understood that such consent shall
not be unreasonably withheld; provided, that Purchaser may, without the consent
of PRGUSA, assign its rights under this Agreement to any of its affiliates and
may assign its rights under this Agreement as collateral security to any lender.
Any attempted assignment or delegation not in compliance with the forgoing shall
be null and void and of no effect.
12. Notices. All notices, requests, demands, claims or other communications
hereunder will be in writing and shall be deemed duly given if personally
delivered, sent by telefax, sent by a recognized overnight delivery service
which guarantees next-day delivery ("Overnight Delivery") or mailed by certified
mail, return receipt requested, postage prepaid and addressed to the intended
recipient, as set forth below:
If to Purchaser: TSL (DE) Corp.
500 Lanidex Plaza
Parsippany, New Jersey 07054
Attention: Robert Svec
Telefax: (973) 952-5515
with a copy to: Dechert LLP
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention: Carmen J. Romano, Esq.
Telefax: (215) 655-2971
If to PRGUSA: PRG-Schultz USA, Inc.
600 Galleria Parkway, Suite 100
Atlanta, GA 30339
Attention: Clinton McKellar, Jr.
Senior Vice President & General Counsel
Telefax: (770) 779-3034
5
with a copy to: Arnall Golden & Gregory, LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3400
Attention: Jonathan Golden, Esq.
Telefax: (404) 873-8701
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first Business Day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by U.S.
Mail, will be deemed received three (3) Business Days immediately following the
date sent.
13. Entire Agreement; Binding Effect; No Third Party Beneficiaries. This
Agreement, together with the Schedule attached hereto, constitutes the entire
agreement and supersedes any and all other prior agreements, representations and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. All such other prior agreements,
representations and undertakings are hereby terminated and shall be of no force
or effect. This Agreement shall be binding upon the parties hereto and their
respective successors and permitted assigns, if any, and except as provided
herein, shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns, if any. Except as otherwise expressly provided
herein, this Agreement is not intended to confer upon any Person other than
PRGUSA and Purchaser any rights or remedies hereunder.
14. Governing Law. This Agreement shall be governed by and construed under the
laws of the State of Georgia, without reference to principles of conflict of
laws.
15. Arbitration. All disputes, controversies or claims arising out of or
relating to this Agreement shall be resolved by agreement among the parties or,
if notice is given by any of the parties as provided herein and the matter is
not otherwise resolved, by resort to arbitration in accordance with the
arbitration provisions contained in the Asset Purchase Agreement.
16. No Agency or Partnership. Nothing in this Agreement will create, or will be
deemed to create, a partnership or the relationship of principal and agent or of
employer and employee between the parties.
17. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
18. Warranties. PRGUSA hereby represents and warrants that it has full legal
right and authority to provide each Service to be provided hereunder and that it
has and will continue to have or cause to be provided the necessary skills,
facilities and resources to fulfill its obligations hereunder on the same basis
as provided prior to Closing.
6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRGUSA:
PRG-SCHULTZ USA, INC.
By: /s/ Donald E. Ellis, Jr.
----------------------------------------------
Name: Donald E. Ellis, Jr.
--------------------------------------------
Its: Executive Vice President-Finance, Chief
Financial Officer and Treasurer
PURCHASER:
TSL (DE) CORP.
By: /s/ Ethan D. Ayer
----------------------------------------------
Name: Ethan D. Ayer
--------------------------------------------
Its: Vice President
7
SCHEDULE A
TRANSITION SERVICES AGREEMENT ("AGREEMENT") - SCHEDULE A
- -----------------------------------------------------------------------------------------------------------------------------------
Service Service Description Term Comments
- -----------------------------------------------------------------------------------------------------------------------------------
Medical and Dental Provide Medical and Dental Benefits 1-3 months Benefits conditioned upon completion of appropriate
Benefits for former TSL employees hired by TSL elections. Purchaser will coordinate and manage
(DE) Corp. via COBRA paid by TSL (DE) completion of elections by employees and shall pay
Corp. premiums for these benefits in accordance with the
Agreement. Purchaser expects to have a replacement plan
in place within one month.
- -----------------------------------------------------------------------------------------------------------------------------------
Payroll Services Continue to pay former TSL personnel 2 payroll PRGUSA will consider in good faith the extension of
and process payroll taxes cycles payroll services for one additional payroll cycle under
extraordinary circumstances if requested by Purchaser.
PRGUSA will not deduct benefits against employee
compensation. Direct deposits will cease and checks will
be sent to employees. Purchaser will advance to PRGUSA
the amount necessary for all payrolls in accordance with
the Agreement.
- -----------------------------------------------------------------------------------------------------------------------------------
401K Plan Continue to maintain 401K plan until a Not more Purchaser will have in place its 401K plan within three
new plan can be established. than 3 months to receive plan-to-plan transfer or 401K
months accounts under $5,000 may get cashed out. The plan-to-
plan transfer will be made after PRGUSA makes the
employer matching contribution with respect to the plan
year ending December 31, 2003, which will be made by
PRGUSA on or before March 15, 2004.
- -----------------------------------------------------------------------------------------------------------------------------------
PRG Facilities Desk, workspace, phone, internet 2 months
in Atlanta access for TSL FET employees.
- -----------------------------------------------------------------------------------------------------------------------------------
E-mail forwarding Legacy e-mail addresses route through 3 months
PRG's e-mail server
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Fees for PRG Services - Payable to PRG monthly
- -------------------------------------------------------------------------------
Month Amount
- -------------------------------------------------------------------------------
January $5,000
- -------------------------------------------------------------------------------
February $3,000
- -------------------------------------------------------------------------------
March $1,000
- -------------------------------------------------------------------------------
Notes:
Fees are for PRG services only. All out-of-pocket direct costs including rents,
payroll expenses (including ADP processing fees and the COBRA 2% administrative
fee) will be passed through to TSL (DE) Corp. without markup and will be paid
directly by TSL (DE) Corp.
Monthly fees will be paid January 31st, February 29th, and March 31st
EXHIBIT 1.3(i)
COMMERCIAL SUBCONTRACT
SUBCONTRACT
THIS SUBCONTRACT (this "Subcontract") is made as of the ____ day of
January, 2004 between PRG-SCHULTZ USA, INC., a Georgia corporation ("PRG"), and
TSL (DE) Corp., a Delaware corporation ("Subcontractor").
RECITALS
A. In accordance with ____________ (the "Client Contract"), PRG
has contracted to provide certain services to the party (the "Client")
identified in the Client Contract. As used herein, the term "Client Contract"
shall mean and include (a) the Client Contract identified in this Recital
together with all task orders, modifications, amendments, extensions and waivers
issued under the Client Contract prior to the date hereof and (b) all future
task orders, modifications, amendments, extensions and waivers of the Client
Contract made with Subcontractor's written approval. A complete copy of the
Client Contract as it exists on the date of this Subcontract is attached hereto
at Exhibit A for reference.
B. The following services ("Services") under the Client Contract
have historically been performed by PRG's TSL division ("Division"):
(1) Telecommunications and information technology cost
control services;
(2) Telecommunications consulting services and
professional services for telecommunications-related
services;
(3) Telecommunications billing verification services and
optimization;
(4) Call accounting and IT/telecommunications chargeback
services;
(5) Telecommunications software and software services
(e.g., ASP Service Provider; Internet Hosting
Services, Development, etc.);
(6) Managed telecommunications invoice processing
services;
(7) Other telecommunications-related managed services
(e.g., moves, adds and changes and billing help
desk); and
(8) Professional technical temporary staffing for
telecommunications-related services.
C. In accordance with that certain Asset Purchase Agreement (the
"Purchase Agreement") dated as of ______________, 2004, between PRG and
Subcontractor, PRG has sold to Subcontractor substantially all of the assets of
PRG used in the Division.
D. To provide for uninterrupted services to the Client under the
Client Contract, PRG and Subcontractor desire to enter into this Subcontract for
the performance of that portion of the work under the Client Contract which has
historically been performed by the Division.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, PRG and the Subcontractor agree as follows:
1. Scope of Services. Subcontractor agrees to provide the
Services to the extent that they were historically provided by the Division
under the Client Contract and all additional services related to
telecommunications recovery auditing of Client payments that may be added to the
Client Contract in accordance with Section 3 hereof (the "Subcontractor
Services"). "Subcontractor Services" will include exercising the rights and
performing obligations under the Client Contract related to the Subcontractor
Services.
2. Representations and Warranties. Except for the notices and
consents set forth on Exhibit B attached hereto, PRG represents and warrants to
Subcontractor that nothing contained herein shall (a) conflict in any way with,
(b) require any consent, authorization or approval under or (c) result in any
breach of, any agreement to which PRG is a party or of which PRG has knowledge,
relating to the Client Contract.
3. Contract Administration. Except as expressly set forth in this
Subcontract, as between PRG and Subcontractor, PRG shall be solely responsible
for issuing invoices (with copies of such invoices sent concurrently to
Subcontractor upon their issuance to Client) on behalf of Subcontractor in the
amount provided to PRG from Subcontractor in connection with the Client Contract
and collecting payments included in such invoices from the Client. During the
term of this Subcontract, Subcontractor will not seek to effect its own billings
or collect payments in connection with the Client Contract without the prior
written approval of PRG except as expressly provided in this Subcontract. PRG
shall not approve any amendment, modification, extension or waiver of the Client
Contract which affects the Subcontractor Services without the prior approval of
the Subcontractor. PRG shall keep Subcontractor apprised of any material
developments concerning the Client Contract which affect the Subcontractor
Services and shall promptly provide to Subcontractor copies of any written
documentation affecting the Subcontractor or the Subcontractor Services,
including, without limitation, any amendment or modification of the Client
Contract which affects the Subcontractor Services. PRG and Subcontractor shall
cooperate with each other in good faith so as to facilitate the performance of
their respective portion of the services to be provided under the Client
Contract.
4. Standard of Care. Subcontractor acknowledges that it has
received a copy of the Client Contract and is familiar with the terms and
provisions of the Client Contract. To the extent required by the terms and
provisions of the Client Contract, Subcontractor shall provide a comparable
level of service and exercise comparable care in the performance of the
Subcontractor Services as the TSL division of PRG exercised with respect to the
Subcontractor Services prior to the date of this Subcontract. PRG agrees to
comply with the terms and provisions of the Client Contract. Subcontractor
agrees to comply with the terms and provisions of the Client Contract to the
extent that it relates to the provision of Subcontractor Services.
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5. Term and Termination.
(a) Term. This Subcontract shall continue for so long as
the Client Contract continues with respect to the Subcontractor Services,
including any extensions of the Client Contract which may come into effect at
the option of the Client. It being understood that PRG shall neither extend nor
amend the Client Contract without the prior written consent of Subcontractor as
such extension or amendment relates to the Subcontractor Services. PRG and the
Subcontractor may agree in the exercise of their respective sole discretion to
extend the term of this Subcontract for any other extension of the duration of
the Subcontractor Services under the Client Contract. The parties currently
intend that Subcontractor will seek to obtain a separate contract to provide
Subcontractor Services to Client upon completion of the Subcontractor Services
under the Client Contract, provided that during the term of the Subcontract,
Subcontractor will take no action which interferes with the Client Contract
including, without limitation, seeking to reduce the scope of services under the
Client Contract.
(b) Termination for Convenience. PRG reserves the right
to terminate this Subcontract for its convenience if the Client has terminated
the Client Contract (other than a termination of the Client Contract with the
consent or waiver of PRG) insofar as it relates to the Subcontractor Services.
In the event of such termination, (i) the Subcontractor shall immediately stop
all work hereunder and shall immediately cause any and all of its subcontractors
to cease work and (ii) to the extent the Client Contract allows for damages or
costs to be received in connection with such termination, PRG will use its
commercially reasonable efforts to collect such amounts from the Client on
Subcontractor's behalf and promptly remit the portion of such amounts relating
to the Subcontractor Services, less the Management Fee, of any amounts received
by PRG to Subcontractor.
(c) PRG Termination for Cause. PRG may terminate this
Subcontract for cause in the event of any material breach by the Subcontractor
of the terms and conditions of this Subcontract and such breach has not been
cured within thirty (30) days of the date Subcontractor received written notice
from PRG describing the breach with reasonable specificity.
(d) Subcontractor Termination for Cause. Subcontractor
may terminate this Subcontract for cause in the event of the occurrence of
either of the following:
(i) if PRG fails to pay Subcontractor in full
within five (5) days of the date payments due to Subcontractor are received by
PRG pursuant to Section 7 hereof and such failure has not been cured within five
(5) days of the date PRG received written notice from Subcontractor describing
the breach with reasonable specificity; or
(ii) if (A) PRG makes an assignment for the
benefit of creditors, (B) PRG files a petition of bankruptcy, (C) a petition is
filed against PRG under any bankruptcy, reorganization or insolvency law and
such involuntary petition is not dismissed within sixty (60) days after filing,
or (D) all or substantially all of PRG's property is levied upon or sold in a
judicial proceeding.
(e) Continuing Obligations. Except for the continuing
provision of the Subcontractor Services by Subcontractor following termination,
no termination of this
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Subcontract shall release either party from its other obligations arising under
or in connection with this Subcontract.
6. Restrictive Covenants. PRG agrees that, during the term of
this Subcontract and for a period of one year after expiration or termination of
this Subcontract, PRG will neither directly nor indirectly provide to the Client
any Subcontractor Services nor refer a third party to the Client to provide any
Subcontractor Services unless this Subcontract shall have been validly
terminated by PRG under Section 4(c) of this Subcontract. In the event of any
valid termination of this Subcontract under Section 4(c) of this Subcontract,
PRG may either provide Subcontractor Services to the Client directly or
indirectly through the services of a third party or refer a third party to
Client to provide Subcontractor Services for the duration of the term of the
Client Contract. Notwithstanding the first sentence of this Section, in
connection with accounts payable audits performed by PRG or its affiliates which
are not limited to services related to telecommunications bills, but rather
audits of accounts payable in general, PRG and its affiliates may conduct
incidental telecommunications bill auditing on a post-payment basis only, which
is limited to auditing for duplicate payments, data entry mistakes, and other
disbursement errors including missed discounts, and other services which have
been historically provided by, and are customary in connection with, PRG's
accounts payable audit business.
7. Fees.
(a) PRG shall collect all fees and other charges
(collectively, the "Client Payments") payable by the Client under the Client
Contract for the Subcontractor Services performed from and after the date of
this Subcontract. In the event that any Client Payment remains unpaid by the
Client longer than ten (10) days after the invoice due date, then PRG shall
submit a written inquiry to the Client regarding such failure to make the Client
Payment ("First Follow-up Inquiry"). In the event that Client Payment remains
still unpaid after an additional twenty (20) days, then PRG and Subcontractor
shall cooperate jointly to follow up with Client to obtain payment ("Second
Follow-up Inquiry"). In the event the any Client Payment remains unpaid by the
Client longer than the sixty (60) day period following the Second Follow-up
Inquiry, Subcontractor shall have the right to pursue such Client Payment
directly from the Client. PRG shall have no obligation to bring suit, terminate
services or take any other action to collect Client Payments other than those
actions which are normal, customary and commercially reasonable under the
circumstances.
(b) PRG shall promptly (and in any event within five (5)
days after receipt of any Client Payment) report to Subcontractor the Client
Payment and remit to Subcontractor the Client Payment less 5% of such Client
Payment (the "Management Fee") which shall be retained by PRG as its fees for
administering the Client Contract under this Subcontract. Except for the
obligation of PRG to remit to Subcontractor the Client Payment less the
Management Fee (the "Subcontractor Amount") out of sums actually collected from
the Client for Subcontractor Services, PRG shall have no liability or obligation
to make payments to Subcontractor for Subcontractor Services.
(c) In the event that an invoice ("Bundled Invoice")
delivered to the Client includes both a Client Payment and other amounts due and
owing PRG and the payment received by PRG ("Partial Payment") with respect to
such invoice is for less than the full amount of such invoice, (i) if the Client
provided written notice to PRG setting forth which services caused the
4
reduction in the amount due pursuant to the Bundled Invoice, PRG shall pay
Subcontractor the Client Payment less any disputed amount specifically and
solely relating to the Subcontractor Services provided in such notice and (ii)
if the Client does not provide such a notice, PRG shall pay Subcontractor (x)
the Client Payment multiplied by (y) the quotient of (A) the Partial Payment
divided by (B) full amount set forth in the Bundled Invoice.
(d) Subcontractor Amounts not received by Subcontractor
within five (5) business days of the due date provided in Section 7(b) hereof
shall be subject to a late charge equal to the greater of (i) $100.00 or (ii) an
amount calculated at a rate of 25% per annum on a daily basis on the unpaid
Subcontractor Amount for the number of days elapsed from the fifth day after the
due date until paid.
8. Indemnification.
(a) PRG shall indemnify the Subcontractor from and
against any damage, claim, loss, charge, action, suit, proceeding, costs and
expenses (including, without limitation, reasonable attorneys' fees) incurred by
the Subcontractor by reason of any breach by PRG of its duties under this
Subcontract.
(b) Subcontractor shall indemnify PRG from and against
any damage, claim, loss, charge, action, suit, proceeding, costs and expenses
(including, without limitation, reasonable attorneys' fees) arising out of or
related to any damages payable to the Client with respect to the Subcontractor
Services and any out-of-pocket costs related thereto that are incurred by PRG by
reason of any breach by Subcontractor of its duties under this Subcontract with
respect to the Subcontractor Services.
(c) The indemnified party shall promptly notify the
indemnifying party of any matter concerning which the indemnified party may seek
indemnification hereunder, provided that the failure to notify the indemnifying
party shall not release the indemnifying party from its obligations hereunder
except to the extent that the failure to so notify has materially prejudiced the
indemnifying party in its ability to resolve and defend the indemnification
claim. To the extent that any matter subject to indemnification involves a third
party claim, the indemnifying party shall have the right to appoint legal
counsel and control the defense and settlement of any such claim provided any
such settlement includes a complete release of the indemnified party and does
not adversely affect the indemnified party. In the event that the indemnified
party controls the defense and settlement of any such claim, the indemnified
party shall not settle such claim without the written consent of the
indemnifying party (which consent shall not be unreasonably withheld or
delayed). Each of the indemnified party and indemnifying party shall cooperate
with the other in connection with any indemnification claims.
9. Limitation of Liability. In no event shall either party have
any liability to the other party for any special, indirect, incidental or
consequential damages.
10. Records. Each of the parties shall create and maintain until
the fifth anniversary of the termination of this Subcontract (or such longer
period as may be reasonably required by a party in connection with the purposes
set forth below provided that prior to the fifth anniversary of the termination
of this Subcontract such party has requested in writing that the other party
maintain such records beyond such fifth anniversary) full and accurate books in
connection with
5
the provision of the services under this Subcontract, and all other records
relevant to this Subcontract, and upon reasonable notice from the other party
shall make available for inspection and copy by such other party's agents such
records during reasonable business hours to the extent such records are
necessary in the performance of such party under this Subcontract or either
party reasonably requires the foregoing for purposes of any tax audit,
accounting, litigation, governmental inquiry or investigation or governmental
enforcement action or for any other purpose arising under this Subcontract or
the Client Contract, including, without limitation, enforcement of this
Subcontract or the Client Contract.
11. Severability. If any provision of this Subcontract is
prohibited by the laws of any jurisdiction, as those laws apply to this
Subcontract, that provision shall be ineffective to the extent of such
prohibition and/or shall be modified to conform with such laws, without
invalidating the remaining provisions hereto.
12. Modification. This Subcontract may not be changed or modified
except in writing specifically referring to this Subcontract and signed by each
of the parties hereto.
13. Assignment. Except as otherwise prohibited or limited by the
Client Contract, this Subcontract may not be assigned without the prior written
consent of the other party hereto, which consent shall not be unreasonably
withheld; provided, however, that, except as otherwise prohibited or limited by
the Client Contract, either party may, without the consent of the other party,
but with notice to the other party, assign all or a part of its rights and
obligations under this Subcontract to any of its Affiliates or any successor to
all or substantially all of its assets or business and may collaterally assign
this Subcontract to any of its lenders. As used herein, an "Affiliate" of a
party means any party controlling, controlled by or under common control with
such party. Any attempted assignment or delegation not in compliance with the
forgoing shall be null and void and of no effect.
14. Notices. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a recognized overnight delivery
service which guarantees next-day delivery ("Overnight Delivery") or mailed by
certified mail, return receipt requested, postage prepaid and addressed to the
intended recipient, as set forth below:
If to Subcontractor: TSL (DE) Corp.
500 Lanidex Plaza
Parsippany, NJ 07054
Attention: Robert Svec
Telefax: (973) 952-5515
If to PRG: PRG-Schultz USA, Inc.
600 Galleria Parkway, Suite 100
Atlanta, GA 30339
Attention: Clinton McKellar, Jr.
Senior Vice President & General Counsel
Telefax: (770) 779-3034
6
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first Business Day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by U.S.
Mail, will be deemed received three (3) Business Days immediately following the
date sent.
15. Entire Agreement; Binding Effect; No Third Party
Beneficiaries. This Subcontract, together with the Exhibits attached hereto,
constitutes the entire agreement and supersedes any and all other prior
agreements, representations and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof. All such
other prior agreements, representations and undertakings are hereby terminated
and shall be of no force or effect. This Subcontract shall be binding upon the
parties hereto and their respective successors and permitted assigns, if any,
and except as provided herein, shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns, if any. Except as
otherwise expressly provided herein, this Subcontract is not intended to confer
upon any person other than PRG and Subcontractor any rights or remedies
hereunder.
16. Governing Law. This Subcontract shall be governed by and
construed under the laws of the State of Georgia, without reference to
principles of conflicts of law.
17. Arbitration. All disputes, controversies or claims arising out
of or relating to this Subcontract shall be resolved by agreement among the
parties or, if notice is given by any of the parties as provided below and the
matter is not otherwise resolved, by resort to arbitration in accordance with
the arbitration provisions contained in the Purchase Agreement. Pending
resolution of any such dispute, controversy or claim by arbitration or
otherwise, the parties shall proceed diligently with performance.
18. No Agency or Partnership. Nothing in this Subcontract will
create, or will be deemed to create, a partnership or the relationship of
principal and agent or of employer and employee between the parties.
19. Counterparts. This Subcontract may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Service Coordinators. PRG and Subcontractor will each
designate a representative to act as the primary contact person with respect to
the accomplishment of the services and transactions contemplated by this
Subcontract (the "Service Coordinators"). The initial Service Coordinators shall
be Jeff Meaux of PRG and Robert J. Effenberger for Subcontractor.
7
IN WITNESS WHEREOF, the parties have executed this Subcontract as of
the date herein first above written.
PRG:
PRG-SCHULTZ USA, INC.
By:
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
SUBCONTRACTOR:
TSL (DE) CORP.
By:
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
EXHIBIT A
Client Contract
EXHIBIT B
Notices and Consents
EXHIBIT 1.3(j)
NONCOMPETITION AND NONSOLICITATION AGREEMENT
This NONCOMPETITION AND NONSOLICITATION AGREEMENT ("Agreement"),
entered into as of the 16th day of January, 2004 (the "Effective Date"), is made
by and among TSL (DE) CORP., a Delaware corporation ("Purchaser"), PRG-SCHULTZ
USA, INC., a Georgia corporation ("PRGUSA") and PRG-SCHULTZ INTERNATIONAL, INC.,
a Georgia corporation ("PRGX").
WITNESSETH:
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
even date herewith, by and between PRGUSA and Purchaser (the "Purchase
Agreement"), Purchaser acquired substantially all of the assets of PRGUSA with
respect to the Business;
WHEREAS, PRGX is the sole shareholder of PRGUSA; and
WHEREAS, in order to induce Purchaser to enter into and consummate the
Purchase Agreement, which PRGUSA hereby acknowledges will benefit it, PRGUSA and
PRGX have agreed to accept certain restrictions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. The following definitions shall apply to this
Agreement:
(a) "Affiliate" of a party shall mean (i) an entity
controlling, controlled by, or under common control with such party, and (ii) to
the extent involved in day-to-day management of a party, entities which control,
are controlled by, or under common control with any entity described in the
foregoing clause (i).
(b) "Business" shall mean the following services as such
services have been conducted by TSL (as defined in the Purchase Agreement) prior
to the date hereof:
(i) Telecommunications and information
technology cost control services;
(ii) Telecommunications consulting services and
professional services for
telecommunications-related services;
(iii) Telecommunications billing verification
services and optimization;
(iv) Call accounting and IT/telecommunications
chargeback services;
(v) Telecommunications software and software
services (e.g., ASP Service Provider;
Internet Hosting Services, Development,
etc.);
(vi) Managed telecommunications invoice
processing services;
(vii) Other telecommunications-related managed
services (e.g., moves, adds and changes and
billing help desk); and
(viii) Professional technical temporary staffing
for telecommunications-related services.
(c) "Competing Business" means any Person, concern, or
entity that is engaged in or conducts or competes in any portion of the
Business, excluding the following:
(i) in connection with accounts payable audits
performed by PRGUSA, PRGX or either of their
Affiliates which are not limited to services
relating to telecommunications bills, but
rather audits of any client's accounts
payable in general, PRGUSA, PRGX and their
Affiliates may conduct incidental
telecommunications bill auditing on a post
payment basis only which is limited to
auditing for duplicate payments, data entry
mistakes, and other disbursement errors
including missed discounts, and other
services which have been historically
provided by, and are customary in connection
with PRGUSA's accounts payable audit
business;
(ii) any business acquired by PRGUSA, PRGX or
either of their Affiliates (an "Acquired
Business") which would otherwise constitute
a Competing Business if the competing
portion of the Acquired Business is not more
than an Incidental Portion of the Acquired
Business' revenues, provided that this
exclusion from the definition of a Competing
Business shall remain in effect only for
twelve months from the date of completion of
the acquisition of the Acquired Business;
and
(iii) perform the duties and exercise the rights
of PRGUSA explicitly expressed or authorized
in the Subcontractor Agreement (as defined
in the Purchase Agreement), as it may be
modified from time to time.
(d) "Confidential Information" means information relating
to the Business which is confidential or proprietary. Confidential Information
may include (i) the identity of customers and prospects, their specific
requirements, and the names, addresses and telephone numbers of individual
contacts at customers and prospects; (ii) prices, renewal dates and other
detailed terms of customer and supplier contracts and proposals; (iii) pricing
policies, marketing and sales strategies, methods of delivering products and
services, and product and service development projects and strategies; (iv)
source code, object code, formats, user manuals, technical manuals and other
documentation for software products; (vi) employment and payroll records; (vii)
forecasts, budgets and financial information; and (viii) expansion plans,
management policies, information about possible acquisitions or divestitures and
other business and acquisition strategies and policies. Confidential Information
shall not include information which (A) is public or otherwise becomes part of
the public domain through no fault of PRGUSA or PRGX, (B) is received by PRGUSA
or PRGX from a third person who had a lawful right to disclose such information,
(C) is required to be disclosed by any governmental body having jurisdiction or
in connection with the enforcement of any legal rights, or (D) primarily relates
to any of the businesses of PRGUSA or PRGX other than the Business.
(e) "Incidental Portion" means that, with respect to any
Acquired Business, no more than 10% of the consolidated revenues of such
Acquired Business and no more than $5,000,000 in annual revenues for its most
recently completed fiscal year prior to the acquisition were derived from a
Competing Business.
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(f) "Person" means and includes any individual,
partnership, association, corporation, limited liability company, trust,
unincorporated organization, or any other business entity or enterprise.
(g) "Protected Employee" means any current or former
employee of the Business or Purchaser during the period in which the covenants
set forth in Section 2(c) are in effect, but excluding persons who have not been
employed by the Purchaser or the Business during the twelve month period
preceding the date on which a determination is made regarding whether a person
is a Protected Employee.
(h) "Territory" means the continental United States,
which the parties acknowledge to be the geographic area in which PRGUSA conducts
the Business on the date hereof.
2. COVENANTS OF PRGUSA AND PRGX. The parties hereto acknowledge
that the Business is of a limited and unusual nature and the scope of the
Business is sufficiently broad so that these restrictions shall apply throughout
the Territory, and PRGUSA and PRGX agree that the Territory is reasonable under
the circumstances. PRGUSA acknowledges that Purchaser is purchasing the good
will of the Business and the covenants contained in this Agreement are essential
to the protection of Purchaser's investment in the Purchased Assets and the
Business and that Purchaser would not purchase the Purchased Assets but for such
covenants. Therefore, PRGUSA and PRGX agree to the following covenants and
agreements:
(a) Neither PRGUSA, PRGX nor any of their respective
Affiliates shall, for a period of three (3) years from and after the Effective
Date, directly or indirectly, within the Territory (i) provide or perform
services for the benefit of, own, manage, operate, control, join or participate
in, a Competing Business, either on its own behalf or on behalf of any other
Person, whether as a shareholder, owner, partner, proprietor, agent, consultant,
independent contractor, lender or otherwise, or (ii) have a financial interest
in or be in any way connected with or affiliated with any Competing Business,
whether as a shareholder, owner, partner, proprietor, agent, consultant,
independent contractor, lender or operator or otherwise. Nothing contained
herein shall preclude PRGUSA or PRGX from having a passive investment in less
than two percent (2%) of the outstanding capital stock of any publicly traded
company. The foregoing notwithstanding, this Section 2(a) shall not apply to the
following or their respective Affiliates (collectively, a "Successor Business"):
(i) PRGUSA or the successor to PRGUSA resulting from a merger, consolidation or
similar business combination transaction (a "Business Combination") if (A)
PRGUSA is a party to a Business Combination, (B) another party (other than
PRGUSA or its Affiliates) to such Business Combination was engaged in a
Competing Business prior to such transaction, and (C) immediately after such
Business Combination, PRGX no longer directly or indirectly owns 50% or more of
the outstanding shares of voting stock of PRGUSA measured by voting power, and
(ii) PRGX or the successor to PRGX resulting from a Business Combination if (x)
PRGX is a party to a Business Combination and (y) another party (other than PRGX
or its Affiliates) to such Business Combination was engaged in a Competing
Business prior to such transaction.
(b) For a period of three (3) years from and after the
Effective Date, each of PRGUSA and PRGX covenants and agrees that it will not,
and each will cause their respective Affiliates not to, except with the prior
written consent of Purchaser, directly or indirectly, contact, solicit or call
upon any person, firm, corporation or entity to which services of the Business
are being provided or have been provided within the twelve (12) month period
prior to the date hereof for purposes of carrying on a Competing Business. The
foregoing notwithstanding, this Section 2(b) shall not apply to a Successor
Business.
(c) For a period of one (1) year from and after the
Effective Date, each of PRGUSA and PRGX covenants and agrees that it will not,
and will cause their respective Affiliates not to, solicit
3
(except through general solicitations and advertising not directed to Protected
Employees), employ, retain as a consultant, attempt to entice away or hire from
Purchaser or its Affiliates or the Business, any Protected Employee.
(d) From and after the Closing Date, except with
Purchaser's prior written consent, each of PRGUSA and PRGX shall not, directly
or indirectly, in any capacity communicate, publish or otherwise disclose, or
use, any Confidential Information. The foregoing notwithstanding, PRGUSA and
PRGX may use Confidential Information to the extent reasonably necessary to
perform its obligations under Sections 3.6 and 3.9 of the Purchase Agreement or
Sections 3 and 7 of the Subcontractor Agreements (as defined in the Purchase
Agreement).
3. TOLLING. The length of time for which the covenants contained
in Sections 2(a) and 2(b) of this Agreement shall be enforced and shall not
include (a) any period of time during which any material violation of such
covenants continues or (b) any period of time during which Purchaser has
commenced and there remains pending litigation which seeks to enforce such
covenants and during which any material violation of such covenants is
continuing.
4. SEVERABILITY. In the event that one or more of the words,
phrases, sentences, clauses, sections, subdivisions or subparagraphs contained
herein shall be held invalid, this Agreement shall be construed as if such
invalid portion had not been inserted, and if such invalidity shall be caused by
the length of any period of time, the number or location of clients, the size of
any area, or the scope of the Business set forth in any part hereof, such period
of time, number or location of clients, area, or scope, or any combination
thereof, shall be considered to be reduced to a period, number, location, area
or scope which would cure such invalidity and which will be effective, binding
and enforceable against PRGUSA and PRGX.
5. REMEDIES. Each of PRGUSA and PRGX agree that if it breaches
any provision of this Agreement, the damage to Purchaser would be difficult to
ascertain and that irreparable harm would be caused to Purchaser, and money
damages alone would not afford Purchaser an adequate remedy for any such breach.
Therefore, if PRGUSA or PRGX is in breach of this Agreement, the parties hereto
agree that Purchaser is entitled to specific performance, injunctive, and other
equitable relief to prevent or restrain a breach of this Agreement or otherwise
to specifically enforce the provisions of Section 2 of this Agreement. The
rights of Purchaser to enforce the covenants in this Agreement are in addition
to, and not in lieu of, any and all rights Purchaser may have at law and in
equity to protect its business interests.
6. RIGHTS ARE CUMULATIVE AND EFFECT OF WAIVER. The rights and
remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure nor any delay by any party in exercising any right, power or
privilege under this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement.
7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Purchase
Agreement constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersede all prior written and oral
agreements and understandings between Purchaser, on the one hand, and PRGUSA and
PRGX, on the other, with respect to the subject matter of this Agreement. No
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amendment or modification of this Agreement shall be valid or binding upon the
parties hereto unless made in writing and signed by a duly authorized officer of
each party, unless made in writing and signed by such each party, as
appropriate.
8. ASSIGNMENT. This Agreement may not be assigned without the
prior written consent of the other party hereto; provided, that Purchaser
without the consent of PRGUSA and PRGX may assign its rights under the Agreement
to any of its Affiliates and may collaterally assign its rights under the
Agreement to any lender. The terms and conditions hereof shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
personal representatives, successors and permitted assigns.
9. NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, sent by a recognized overnight delivery
service which guarantees next-day delivery ("Overnight Delivery") or mailed by
certified mail, return receipt requested, postage prepaid and addressed to the
intended recipient as set forth below:
If to Purchaser: TSL (DE) Corp.
500 Lanidex Plaza
Parsippany, New Jersey 07054
Attention: Robert Svec
Telefax: (973) 952-5515
With a copy to: Dechert LLP
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention: Carmen J. Romano, Esq.
Telefax: (215) 655-2971
If to PRGUSA or PRGX: PRG-SCHULTZ USA, Inc.
600 Galleria Parkway, Suite 100
Atlanta, Georgia 30339
Attention: Clinton McKellar, Jr.
Senior Vice President and General Counsel
Telefax: (770) 779-3034
with a copy to: Arnall Golden Gregory, LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3450
Attention: Jonathan Golden, Esq.
Telefax: (404) 873-8701
or at such other address as any party hereto notifies the other parties hereof
in writing. The parties hereto agree that notices or other communications that
are sent in accordance herewith (i) by personal delivery or telefax, will be
deemed received on the day sent or on the first business day thereafter if not
sent on a business day, (ii) by Overnight Delivery, will be deemed received on
the first business day immediately following the date sent, and (iii) by
certified U.S. Mail, will be deemed received three (3) business days immediately
following the date sent. For purposes of this Agreement, a "business day" is a
day on which U.S. national banks are open for business and shall not include a
Saturday or Sunday or legal holiday.
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Notwithstanding anything to the contrary in this Agreement, no action shall be
required of the parties hereto except on a business day and in the event an
action is required on a day which is not a business day, such action shall be
required to be performed on the next succeeding day which is a business day.
10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11. GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Georgia, exclusive of the conflict of
laws provisions thereof.
12. CONSTRUCTION. All personal pronouns in this Agreement, whether
used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and the plural shall include
the singular, as the circumstances require. Unless otherwise expressly provided,
the word "including" does not limit the preceding words or terms.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed and delivered this Agreement as of the day and year first above
written.
PRGUSA:
PRG-SCHULTZ USA, INC.
By: /s/ Donald E. Ellis, Jr.
-----------------------------------------
Name: Donald E. Ellis, Jr.
---------------------------------------
Its: Executive Vice President-Finance, Chief
Financial Officer and Treasurer
PRGX:
PRG-SCHULTZ INTERNATIONAL, INC.
By: /s/ Donald E. Ellis, Jr.
-----------------------------------------
Name: Donald E. Ellis, Jr.
---------------------------------------
Its: Executive Vice President-Finance, Chief
Financial Officer and Treasurer
PURCHASER:
TSL (DE) CORP.
By: /s/ Ethan D. Ayer
-----------------------------------------
Name: Ethan D. Ayer
---------------------------------------
Its: Vice President
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed and delivered this Agreement as of the day and year first above
written.
PRGUSA:
PRG-SCHULTZ USA, INC.
By: /s/ Donald E. Ellis, Jr.
---------------------------------------
Name: Donald E. Ellis, Jr.
------------------------------------
Its: Executive Vice President-Finance,
Chief Financial Officer and
Treasurer
PRGX:
PRG-SCHULTZ INTERNATIONAL, INC.
By: /s/ Donald E. Ellis, Jr.
---------------------------------------
Name: Donald E. Ellis, Jr.
-------------------------------------
Its: Executive Vice President-Finance,
Chief Financial Officer and
Treasurer
PURCHASER:
TSL (DE) CORP.
By: /s/ Ethan D. Ayer
---------------------------------------
Name: Ethan D. Ayer
------------------------------------
Its: Vice President
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