ASSET PURCHASE AGREEMENT
BETWEEN
GEVITY HR, INC.
AND
TEAMSTAFF, INC.
November 14, 2003
TABLE OF CONTENTS
1.0 DEFINITIONS..............................................................................................1
2.0 BASIC TRANSACTION........................................................................................1
2.01 Purchase and Sale of Assets...........................................................................1
2.02 Assumption of Assumed Liabilities.....................................................................1
2.03 Purchase Price and Payment............................................................................1
2.04 The Closing...........................................................................................2
2.05 Deliveries at the Closing.............................................................................2
2.06 Allocation............................................................................................4
2.07 Apportionments........................................................................................4
2.08 Designated Employees..................................................................................4
2.09 Sublease and Lease Assignments........................................................................5
2.10 Marketing and Referral Agreements.....................................................................5
3.0 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SUBSIDIARIES........................................5
3.01 Organization and Capitalization of the Seller and the Subsidiaries....................................6
3.02 Authorization of Transaction..........................................................................6
3.03 Non-contravention.....................................................................................6
3.04 Brokers' Fees.........................................................................................7
3.05 Title to Assets.......................................................................................7
3.06 RESERVED..............................................................................................7
3.07 Financial Statements..................................................................................7
3.08 Events Subsequent to the Balance Sheet Date...........................................................7
3.09 Undisclosed Liabilities...............................................................................7
3.10 Legal Compliance......................................................................................7
3.11 Tax Matters...........................................................................................8
3.12 Powers of Attorney....................................................................................8
3.13 Insurance Contracts...................................................................................8
3.14 Litigation............................................................................................9
3.15 Client Service Agreements.............................................................................9
3.16 Worksite Employees; Designated Employees..............................................................9
3.17 Assumed Employee Plans...............................................................................10
3.18 Environment, Health, and Safety......................................................................12
3.19 Disclosure...........................................................................................13
4.0 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.........................................................13
4.01 Organization of the Purchaser........................................................................13
4.02 Authorization of Transaction.........................................................................13
4.03 Non-contravention....................................................................................13
4.04 Brokers' Fees........................................................................................14
5.0 COVENANTS OF SELLER PRIOR TO CLOSING....................................................................14
5.01 Access and Investigation.............................................................................14
5.02 Operation of the Business of the Seller..............................................................14
5.03 Required Approvals...................................................................................15
5.04 Notification.........................................................................................15
5.05 No Negotiation.......................................................................................15
6.0 COVENANTS OF THE PURCHASER PRIOR TO CLOSING.............................................................15
7.0 CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS TO CLOSE............................................15
7.01 Accuracy of Representations..........................................................................16
7.02 Performance by Seller and Subsidiaries...............................................................16
7.03 No Proceedings.......................................................................................16
7.04 No Material Adverse Effect...........................................................................16
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8.0 CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER AND SUBSIDIARIES TO CLOSE..............................16
8.01 Accuracy of Representations..........................................................................16
8.02 Purchaser's Performance..............................................................................16
9.0 TERMINATION OF AGREEMENT................................................................................16
10.0 POST-CLOSING COVENANTS..................................................................................17
10.01 General..............................................................................................17
10.02 Litigation Support...................................................................................18
10.03 Transition...........................................................................................18
10.04 Confidentiality......................................................................................18
10.05 Covenant Not to Compete..............................................................................18
10.06 Tax Matters..........................................................................................19
11.0 REMEDIES FOR BREACHES OF THIS AGREEMENT.................................................................19
11.01 Survival of Representations, Warranties, Covenants and Agreements....................................19
11.02 Indemnification Provisions for Benefit of the Purchaser..............................................20
11.03 Indemnification Provisions for Benefit of the Seller.................................................21
11.04 Matters Involving Third Parties......................................................................22
11.05 Other Indemnification Provisions.....................................................................23
12.0 MISCELLANEOUS...........................................................................................23
12.01 Employee Matters.....................................................................................23
12.02 Press Releases and Public Announcements..............................................................23
12.03 No Third Party Beneficiaries.........................................................................23
12.04 Entire Agreement.....................................................................................23
12.05 Succession and Assignment............................................................................24
12.06 Counterparts.........................................................................................24
12.07 Headings.............................................................................................24
12.08 Notices..............................................................................................24
12.09 Governing Law........................................................................................25
12.10 Amendments and Waivers...............................................................................25
12.11 Severability.........................................................................................25
12.12 Expenses.............................................................................................25
12.13 Construction.........................................................................................25
12.14 Incorporation of Exhibits and Schedules..............................................................26
12.15 Specific Performance.................................................................................26
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - List of Subsidiaries
Exhibit B - Matters to be Covered by Opinion of Seller's Counsel
Exhibit C - Matters to be Covered by Opinion of Purchaser's Counsel
Exhibit D - Form of Transition Services Agreement
Exhibit E - Form of Escrow Agreement
Exhibit F - Apportionment Schedule
Disclosure Schedule
Initial Schedule of Transferred Clients, List of Clients, Annual
Administrative Fee, Number of Worksite Employees and Other Information
Schedule of Additional Liabilities Not Assumed
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into as of November 14, 2003, by and among Gevity HR, Inc., a Florida
corporation (the "Purchaser"), TeamStaff, Inc., a New Jersey corporation (the
"Seller"), and the subsidiaries of the Seller listed on Exhibit A attached
hereto (individually, a "Subsidiary", and collectively, the "Subsidiaries"). The
Purchaser, the Seller and the Subsidiaries are referred to herein individually
as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, this Agreement contemplates a transaction in which the
Purchaser will purchase and the Seller and the Subsidiaries will sell and assign
certain assets of the professional employer organization services business (the
"PEO Business") of the Seller and the Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the mutual
promises made in this Agreement, and in consideration of the representations,
warranties, and covenants contained in this Agreement, the Parties agree as
follows.
1.0 DEFINITIONS. For purposes of this Agreement and the Acquisition
Documents, the capitalized terms shall have the meanings set forth in the
attached Glossary of Terms.
2.0 BASIC TRANSACTION.
2.01 Purchase and Sale of Assets. Upon and subject to the
terms and conditions of this Agreement, the Purchaser agrees to purchase from
the Seller and the Subsidiaries, and the Seller and the Subsidiaries agree to
sell, transfer, convey, assign, and deliver to the Purchaser, all of the
Acquired Assets, at the Closing, free and clear of all liens, claims, charges,
Security Interests, and encumbrances of any kind or nature.
2.02 Assumption of Assumed Liabilities. Upon and subject
to the terms and conditions of this Agreement, on the Closing Date, the
Purchaser agrees to assume and become responsible for the performance and
satisfaction of the Assumed Liabilities. Under no circumstances will the
Purchaser assume or have any responsibility with respect to any of the Excluded
Liabilities. The Seller will remain responsible for the performance and
satisfaction of the Excluded Liabilities.
2.03 Purchase Price and Payment.
(a) At the Closing, the Purchaser (i) shall pay the
Initial Purchase Price to the Seller by wire transfer or other delivery of
immediately available funds and (ii) shall transfer the Deferred Purchase Price
to the Escrow Agent by wire transfer or other delivery of immediately available
funds to be held and distributed by the Escrow Agent as provided in the Escrow
Agreement and in paragraph (b) of this Section 2.03.
(b) Amounts held by the Escrow Agent shall be
invested and distributed by the Escrow Agent as provided in the Escrow Agreement
and this Section 2.03(b). Within ten Business Days after the Determination Date,
as hereinafter defined, the Purchaser shall prepare and
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deliver to the Seller for the Seller's written approval a written report (the
"Distribution Report") identifying: (i) the Transferred Clients for whom an
Applicable Payroll was processed and the aggregate annualized Administrative
Fees payable by such Transferred Clients and (ii) the New Clients and the
aggregate annual Administration Fees payable by such New Clients. The
Determination Date shall be the first Business Day following the date on which
all of the Applicable Payrolls have been processed by the Purchaser. Upon
approval by the Seller of the Distribution Report, the Seller and the Purchaser
shall execute a notice of release addressed to the Escrow Agent advising the
Escrow Agent of the amount of funds to be released to the Seller and/or the
Purchaser. If (i) the sum of (A) the aggregate annualized Administrative Fees
for the Transferred Clients for which an Applicable Payroll was processed, as
shown on the Distribution Report, plus (B) the aggregate amount (up to a maximum
of $2,500,000) of annualized Administrative Fees for the New Clients, as shown
on the Distribution Report, is less than (ii) the aggregate annualized
Administrative Fees for the Transferred Clients as shown on the Closing Date
Schedule of Transferred Clients, the Escrow Agent shall pay to the Purchaser an
amount equal to such difference, and shall pay to the Seller all amounts, if
any, remaining after such payment to the Purchaser (other than investment
proceeds which will be distributed as provided in the Escrow Agreement). If the
amount computed in subsection (i) of the immediately preceding sentence is equal
to or greater than the amount computed in subsection (ii), the Escrow Agent
shall pay all amounts (other than investment proceeds) held under the Escrow
Agreement to the Seller.
2.04 The Closing. The Closing shall take place at the
offices of the Purchaser, 600 301 Boulevard West, Suite 202, Bradenton, Florida
34205 or such other place as the Parties shall agree, commencing at 8:30 a.m.
(local time) on the Closing Date or in such other manner as the Parties may
agree. The transactions contemplated hereby shall be effective as of 12:01 a.m.
on November 17, 2003.
2.05 Deliveries at the Closing. In addition to any other
documents to be delivered under other provisions of this Agreement, at the
Closing:
(a) the Seller and the Purchaser shall approve the
Initial Schedule of Transferred Clients which shall preliminarily identify as of
the Closing Date (i) each of the Transferred Clients whose Client Service
Agreements are included in the Acquired Assets, (ii) the annualized
Administrative Fees for such Transferred Clients, (iii) the number of Worksite
Employees of such Transferred Clients and (iv) the payroll processing dates for
the Transferred Clients. Within five Business Days following the Closing Date,
the Seller shall prepare a final form of such Schedule which shall be subject to
the approval of the Purchaser and will finalize the information set forth
thereon as of immediately prior to 12:01 a.m. on the Closing Date (the "Closing
Date Schedule of Transferred Clients");
(b) the Seller and the Subsidiaries shall execute,
acknowledge (if appropriate) and deliver to the Purchaser:
(i) assignment agreement(s) in such form as are
reasonably satisfactory to the Purchaser and its counsel and
sufficient to transfer title to the Acquired Assets to the
Purchaser;
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(ii) such other instruments of sale, transfer,
conveyance, and assignment as the Purchaser and its counsel
may reasonably request;
(iii) certificates executed by the Seller and the
Subsidiaries as to the accuracy of their representations and
warranties contained herein as of the date of this Agreement
and as of the Closing Date and as to their compliance and
performance of their covenants and obligations contained
herein to be performed or complied with at or before the
Closing Date;
(iv) a certificate of the Secretary of the Seller
and the Secretaries of each of the Subsidiaries certifying and
attaching all requisite resolutions or actions of the boards
of directors of the Seller and the Subsidiaries approving the
execution and delivery by the Seller and the Subsidiaries, as
the case may be, of the Acquisition Documents to which they
are a party and the consummation of the transactions
contemplated in such Acquisition Documents, and certifying to
the incumbency and signatures of the officers of the Seller
and the Subsidiaries executing the Acquisition Documents and
any other document relating to the transactions contemplated
by this Agreement; and
(v) an opinion or opinions of Goldstein & Digioia,
LLP covering the matters described on Exhibit B; and
(vi) evidence satisfactory to the Purchaser that
Fleet Bank has consented to the consummation of the
transactions contemplated in the Acquisition Documents and has
released its Security Interest in the Acquired Assets.
(c) the Purchaser shall execute, acknowledge (if
appropriate), and deliver to the Seller:
(i) assumption agreement(s) in such form as are
reasonably satisfactory to the Seller and its counsel and
sufficient for the Purchaser to assume the Assumed
Liabilities;
(ii) a certificate executed by the Purchaser as to
the accuracy of its representations and warranties contained
herein as of the date of this Agreement and as of the Closing
Date and as to its compliance and performance of its covenants
and obligations to be performed or complied with at or before
the Closing Date;
(iii) a certificate of the Secretary of the
Purchaser certifying and attaching all requisite resolutions
or actions of the Purchaser's board of directors approving the
execution and delivery of the Acquisition Documents to which
it is a party and the consummation of the transactions
contemplated in such Acquisition Documents, and certifying to
the incumbency and signatures of the officers of the Purchaser
executing the Acquisition Documents to which it is a party and
any other document relating to the transactions contemplated
by this Agreement; and
(iv) an opinion or opinions of Powell, Goldstein,
Frazer & Murphy LLP covering the matters described on Exhibit
C;
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(d) the Purchaser will deliver to the Seller the Initial
Purchase Price as provided in Section 2.03(a);
(e) the Purchaser shall deliver to the Escrow Agent the
Deferred Purchase Price as provided in Section 2.03(b);
(f) the Purchaser, the Seller and the Escrow Agent shall
execute and deliver the Escrow Agreement; and
(g) the Purchaser and the Seller shall execute and
deliver the Transition Services Agreement in the form attached hereto as Exhibit
D.
2.06 Allocation. The Parties agree to cooperate with each
other in connection with the allocation of the Purchase Price among the Acquired
Assets and the preparation of the statements and forms required by Section 1060
of the Code and the Treasury Regulations. The Parties shall finalize the
allocation on or prior to the twentieth day following the Closing Date or such
later date as the Seller and the Purchaser mutually agree upon. The Parties will
make all necessary tax filings related to such allocation.
2.07 Apportionments. At the Closing, the items described
on Exhibit F shall be apportioned between the Seller and the Purchaser in the
manner set forth on Exhibit F. As soon as practicable after the Closing, and in
any event by December 31, 2003, the Purchaser and the Seller shall reconcile the
items described on Exhibit F and to the extent payment to either Party pursuant
to such apportionment was not made on the Closing Date, additional payments
shall be made by the Party owing the other Party. In the event of a dispute
between the Parties as to the proper apportionment, the matter in dispute shall
be referred to a firm of independent auditors mutually satisfactory to the
Parties which is not serving as the independent auditors for either Party, and
the determination of such independent auditors as to such matter shall be
conclusive and binding on the Parties. The fees and expenses of such independent
auditors shall be borne by the Party whose position is not agreed to by such
independent auditors.
2.08 Designated Employees. The Purchaser will offer
employment to each of the Designated Employees on terms with respect to periodic
wages, salary and commission rates which are not less favorable to such
Designated Employees than those in effect on the date of this Agreement with the
Seller. The Designated Employees and their respective periodic wages, salary,
and commission rates, are set forth on the schedule of designated employees
previously agreed to by the Parties (the "Schedule of Designated Employees").
The Purchaser shall not be required to offer any Designated Employee employment
in the same location in which such Designated Employee is currently located.
Subject to Legal Requirements, the Purchaser will have reasonable access to the
facilities of the Seller and the personnel records (including performance
appraisals, disciplinary actions and grievances) of the Seller related to the
Designated Employees for the purpose of preparing for and conducting employment
interviews. It is understood and agreed that the employment offered by the
Purchaser to the Designated Employees will be "at will" and may be terminated by
the Purchaser or the Designated Employee at any time for any reason (subject to
any written commitments to the contrary made between the Purchaser and a
Designated Employee). Nothing in this Agreement shall be deemed to prevent or
restrict in any way the right of the Purchaser to terminate, reassign, promote
or demote any of the Designated Employees after the
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Closing or to change adversely or favorably the title, powers, duties,
responsibilities, functions, locations, salaries, other compensation or terms or
conditions of employment of such Designated Employees. The Seller acknowledges
that the Sales Employees, in seeking to obtain new clients, will be selling
service offerings of the Purchaser on terms that the Purchaser offers to its new
clients, which will differ from the terms of the service offerings previously
offered to clients of the Seller. The Purchaser acknowledges that its normal
training procedures for new sales employees will be delayed to allow the Sales
Employees to be able to pursue obtaining New Clients during the period from the
Closing Date through the Determination Date. The Purchaser agrees to maintain
until the Determination Date the commission structure which is currently
applicable to the Sales Employees and which is described on the Schedule of
Designated Employees for the Sales Employees employed by the Purchaser. Anything
herein to the contrary notwithstanding, the Parties agree that the Purchaser has
not assumed, and shall have no liability or obligation to any Designated
Employee for, any accrued paid time off or any other obligation of the Seller or
any Subsidiary to any Designated Employee, all of which obligations shall remain
obligations of the Seller and the Subsidiaries.
2.09 Sublease and Lease Assignments. The Purchaser will
enter into a sublease with the Seller in such form and substance as are
reasonably satisfactory to the Purchaser and the Seller, for a period of six
months beginning December 1, 2003, for the facility leased by the Seller and
located at 2650 North Military Trail, Suite 300, Boca Raton, Florida, or will
otherwise compensate the Seller for the Purchaser's use of such facility. The
Seller and the Purchaser acknowledge that the Seller intends to assign and the
Purchaser intends to assume the Seller's lease agreement on the facility leased
by the Seller in, Northampton, Massachusetts, and that the Seller and the
Purchaser intend to enter into an agreement which will allow the Purchaser to
utilize the facility currently subleased by the Seller and located at 300 Atrium
Drive, Somerset, New Jersey. The Purchaser and the Seller agree to finalize the
assignment and assumption agreement and the other agreement concerning such
facilities as soon as practicable following the Closing. Such agreements shall
be in such form and substance as are reasonably satisfactory to the Purchaser
and the Seller.
2.10 Marketing and Referral Agreements. The Seller and the
Purchaser agree to cooperate with each other so that as soon as practicable
after the Closing Date the Marketing and Referral Agreements shall be assigned
to the Purchaser with the consent of the other parties to such agreements. The
assignment and assumption agreements executed in connection therewith by the
Purchaser and the Seller shall be in such form and substance as are reasonably
satisfactory to the Purchaser and the Seller.
3.0 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SUBSIDIARIES .
The Seller and each of the Subsidiaries represent and warrant to the Purchaser
that, except as set forth in the disclosure schedule (the "Disclosure Schedule")
attached and initialed by the Parties:
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3.01 Organization and Capitalization of the Seller and
the Subsidiaries.
(a) The Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. The Seller is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required except where the lack of such qualification would not have a material
adverse effect on the business, financial condition, operations or results of
operations of the Seller. The Seller has full corporate power and authority and
all licenses, permits, and authorizations necessary to carry on the businesses
in which it is engaged and in which it presently proposes to engage and to own
and use the properties owned and used by it. The Seller has delivered to the
Purchaser correct and complete copies of the charter and bylaws of the Seller
(as amended to date).
(b) Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. All of the issued and outstanding shares of capital stock of each
of the Subsidiaries are owned by the Seller. Each Subsidiary is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the PEO Business. Each
Subsidiary has full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the PEO Business in which it is engaged and
in which it presently proposes to engage and to own and use the properties owned
and used by it, except where the lack of any such license, permit or
authorization would not have a material adverse effect on the PEO Business. The
Seller has delivered to the Purchaser correct and complete copies of the charter
and bylaws of each Subsidiary (as amended to date). The PEO Business is
conducted entirely by the Subsidiaries.
3.02 Authorization of Transaction. Each of the Seller and
the Subsidiaries has full power and authority (including full corporate power
and authority) to execute and deliver the Acquisition Documents to which it is a
party and to perform its obligations in all respects as required by the
Acquisition Documents. The board of directors of the Seller and the board of
directors of each Subsidiary have duly authorized the execution, delivery, and
performance of the Acquisition Documents to which they are parties. No approval
of the stockholders of the Seller is required in order for the Seller to
consummate the transactions contemplated by this Agreement. The Acquisition
Documents constitute valid and legally binding obligations of the Seller and
each Subsidiary that is a party thereto, enforceable in accordance with their
terms and conditions.
3.03 Non-contravention. Except as disclosed in Section
3.03 of the Disclosure Schedule, neither the execution and the delivery of the
Acquisition Documents, nor the consummation or performance of the transactions
contemplated in the Acquisition Documents, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Seller or any Subsidiary is subject or any provision of the charter or
bylaws of the Seller or any Subsidiary, or (b) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Seller or any Subsidiary is a party or by which the
Seller or any Subsidiary is bound or to which any of the Acquired Assets is
subject (or result in the imposition of any Security Interest upon any of its
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Acquired Assets) except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a material adverse effect on the PEO
Business, the Acquired Assets, or on the ability of the Parties or any
Subsidiary to consummate the transactions contemplated in the Acquisition
Documents. Section 3.03 of the Disclosure Schedule sets forth each Governmental
Authorization, and each notice to, filing with, and authorization, consent, or
approval of any Governmental Body or Third Party, which is required to be
obtained by the Seller or any Subsidiary in order for the Parties and the
Subsidiaries to consummate the transactions contemplated in the Acquisition
Documents. Such notices, filings, authorizations, consents and approvals are
referred to as the "Seller Consents."
3.04 Brokers' Fees. Neither the Seller nor any Subsidiary
has any Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated in the
Acquisition Documents other than fees payable to SunTrust Robinson-Humphrey and
Janney Montgomery Scott, which fees shall be the sole responsibility of the
Seller.
3.05 Title to Assets. The Seller or a Subsidiary has good
title to all of the Acquired Assets, free and clear of all Security Interests or
restrictions on transfer.
3.06 [RESERVED].
3.07 Financial Statements. The financial statements
relating to the PEO Business previously provided by the Seller to the Purchaser,
copies of which are attached as Section 3.07 to the Disclosure Schedule, in the
opinion of Seller's management fairly present the financial condition of the PEO
Business as of the respective dates thereof and the results of operations of the
PEO Business for the periods indicated. The Purchaser acknowledges that such
financial statements have not been audited or reviewed by independent
accountants and do not contain footnote disclosures.
3.08 Events Subsequent to the Balance Sheet Date. Since
September 30, 2003, there has not been any material adverse change, singly or in
the aggregate, in the business, financial condition, operations, results of
operations, liabilities, assets, earnings, or future prospects of the PEO
Business nor has there been any event which has had or may reasonably be
expected to have a material adverse effect on any of the foregoing. Without
limiting the generality of the foregoing, except as set forth in Section 3.08 of
the Disclosure Schedule, since such date there has not been any material
occurrence, event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business which would have a material adverse effect on the
PEO Business or the Acquired Assets;
3.09 Undisclosed Liabilities. Other than as appearing on
the financial statements referred to in Section 3.07 above, neither the Seller
nor the Subsidiaries have any material Liability (and, to the Knowledge of the
Seller, there is no reasonable Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
it giving rise to any Liability) related to the PEO Business or the Acquired
Assets other than the Liabilities listed in Section 3.09 of the Disclosure
Schedule or in the Ordinary Course of Business.
3.10 Legal Compliance. The Seller and the Subsidiaries and
their respective predecessors and Affiliates have each complied in all material
respects with all laws (including
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rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state and local governments (and
all agencies thereof) which are applicable to the PEO Business, and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced or, to the Seller's Knowledge, threatened
against any of them alleging any failure so to comply and there is no reasonable
Basis for any such action that would have a material adverse effect on the PEO
Business.
3.11 Tax Matters.
3.11.1 Each of the Seller and the Subsidiaries has
filed on a timely basis all Tax Returns that it was required to file. Except as
set forth on Section 3.11.1 of the Disclosure Schedule, all such Tax Returns
were correct and complete in all material respects. All Taxes owed by the Seller
or any Subsidiary (whether or not shown on any Tax Return) have been paid.
Neither the Seller nor any Subsidiary is currently the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where neither the Seller nor any
Subsidiary files Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of the Seller
or any Subsidiary that arose in connection with any failure (or alleged failure)
to pay any Tax.
3.11.2 Except as set forth on Section 3.11.2 of
the Disclosure Schedule, the Seller (or a Subsidiary, as applicable) has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any Worksite Employee as of the Closing
Date.
3.11.3 Except as set forth on Section 3.11.3 of
the Disclosure Schedule, the Seller has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
3.11.4 Except as set forth on Section 3.11.4 of
the Disclosure Schedule, no unpaid Taxes of Seller or any Subsidiary do, or
will, create a lien or encumbrance in any of the Acquired Assets.
3.12 Powers of Attorney. There are no outstanding powers
of attorney executed by or on behalf of the Seller or any Subsidiary that would
have a material adverse effect on the PEO Business.
3.13 Insurance Contracts. The Seller has made available
for inspection to the Purchaser a true and complete copy of each Insurance
Contract including all endorsements and schedules thereto, in each case which
are in the Seller's possession. The Seller has requested that the insurance
companies provide to the Seller each Insurance Contract which is not currently
in the Seller's possession, including all endorsements and schedules. Except as
set forth in Section 3.13 of the Disclosure Schedule as to the Seller and to the
Knowledge of the Seller as to any other party: (i) each Insurance Contract is
legal, valid, binding, enforceable, and in full force and effect; (ii) neither
the Seller nor any Subsidiary nor to the Seller's Knowledge any other party to
such Insurance Contract is in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or
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acceleration, under such Insurance Contract; (iii) other than with respect to
the Insurance Contract between the Seller and Aetna, all premiums owed by the
Seller or any Subsidiary under the Insurance Contracts as of the Closing Date
have been paid in full; and (iv) to the Seller's Knowledge, no party to such
Insurance Contract has repudiated any provision thereof.
3.14 Litigation. Section 3.14 of the Disclosure Schedule
sets forth each instance in which the Seller or any Subsidiary (a) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (b) is
a party or, to the Knowledge of the Seller is threatened to be made a party, to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator, in each case relating,
directly or indirectly, to any Transferred Client, any Worksite Employee, any
Designated Employee, the PEO Business or any of the Acquired Assets. Except as
disclosed in Section 3.14 of the Disclosure Schedule, none of the actions,
suits, proceedings, hearings, and investigations set forth in Section 3.14 of
the Disclosure Schedule could have any material adverse effect on the PEO
Business or any of the Acquired Assets. The Seller has no reason to believe that
any such action, suit, proceeding, hearing, or investigation may be brought or
threatened against the Seller or any Subsidiary.
3.15 Client Service Agreements. Except as set forth in
Section 3.15 of the Disclosure Schedule as to the Seller and each Subsidiary and
to the Knowledge of the Seller as to any other party: (i) each Client Service
Agreement is legal, valid, binding, enforceable and in full force and effect;
(ii) neither the Seller nor any Subsidiary nor to the Seller's Knowledge any
other party to any Client Service Agreement is in breach or default (including
with respect to payment of fees and expenses or the giving of notices), and no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination or modification, of any Client
Service Agreement; and (iii) to the Seller's Knowledge no party to any Client
Service Agreement has repudiated any provision thereof or indicated its intent
to cancel such Client Service Agreement.
3.16 Worksite Employees; Designated Employees.
3.16.1 Neither the Seller nor any Subsidiary is
a party to or bound by any collective bargaining agreement related to any
Transferred Client or any Worksite Employees, nor has the Seller or any
Subsidiary experienced any strikes, grievances, claims of unfair labor practices
as against the Seller or any Subsidiary, or other collective bargaining disputes
involving the Seller or any Subsidiary, related to any Transferred Client or
Worksite Employees. Neither the Seller nor any Subsidiary has committed or been
charged or threatened with a charge of any unfair labor practice. The Seller has
no Knowledge of any organizational effort presently being made or threatened by
or on behalf of any labor union with respect to any Transferred Client or any
Worksite Employees.
3.16.2 Except as set forth in Section 3.16.2 of
the Disclosure Schedule, the Seller and each Subsidiary are in material
compliance with all applicable federal, state, local and foreign laws and
regulations concerning the employer-employee relationship and with all
agreements relating to the employment of its Worksite Employees and the
Designated Employees, including applicable wage and hour laws, fair employment
laws, safety laws, workers' compensation statutes, unemployment laws, and social
security laws. Except as described on
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Section 3.16.2 of the Disclosure Schedule, with respect to the Seller and any
Subsidiary, there are no pending or, to the Knowledge of the Seller, threatened
claims, investigations, charges, citations, hearings, consent decrees, or
litigation concerning: wages, compensation, bonuses, commissions, awards, or
payroll deductions, equal employment or human rights violations regarding race,
color, religion, sex, national origin, age, handicap, veteran's status, marital
status, disability, or any other recognized class, status, or attribute under
any federal, state, local or foreign equal employment law prohibiting
discrimination; representation petitions or unfair labor practices; grievances
or arbitrations pursuant to current or expired collective bargaining agreements;
occupational safety and health; workers compensation; wrongful termination,
negligent hiring, invasion of privacy or defamation; immigration or any other
Labor Claims. Except as disclosed in Section 3.16.2 of the Disclosure Schedule,
the Seller is not liable for any unpaid wages, bonuses, or commissions (other
than those not yet due) or any tax, penalty, assessment, or forfeiture for
failure to comply with any of the foregoing. Except as described in Section
3.16.2 of the Disclosure Schedule, there is no outstanding agreement or
arrangement with respect to severance payments with respect to any Designated
Employee or any Worksite Employee.
3.17 Assumed Employee Plans.
3.17.1 Set forth in Section 3.17 of the Disclosure
Schedule is a complete and correct list of the only employee benefit plans, as
defined by Section 3(3) of ERISA or otherwise, that (i) are maintained or
contributed to by the Seller or any other corporation or trade or business
controlled by, controlling or under common control with the Seller (within the
meaning of Section 414 of the Code or Section 4001(a)(14) or 4001(b) of ERISA)
("ERISA Affiliate"); (ii) provide benefits to any current or former director,
officer, employee, Worksite Employee or service provider of the Seller or any
ERISA Affiliate, or the dependents of any thereof; and (iii) are to be assumed
by the Purchaser (collectively the "Assumed Employee Plans").
3.17.2 For each Assumed Employee Plan, the Seller
has delivered, or as soon as practicable following the Closing, will deliver to
the Purchaser true, accurate and complete copies of (i) the documents comprising
each Assumed Employee Plan; (ii) all trust agreements, insurance contracts or
any other funding instruments related to the Assumed Employee Plans; (iii) all
rulings, determination letters, no-action letters or advisory opinions from the
IRS, the U.S. Department of Labor, the PBGC or any other Governmental Body that
pertain to each Assumed Employee Plan and any open requests therefor; (iv) the
most recent actuarial and financial reports (audited and/or unaudited) and the
annual reports filed with any Government Body with respect to the Assumed
Employee Plans during the current year and each of the three preceding years;
(v) all contracts with third-party administrators, actuaries, investment
managers, consultants and other independent contractors that relate to any
Assumed Employee Plan; and (vi) all summary plan descriptions, summaries of
material modifications and memoranda, employee handbooks and other written
communications regarding the Assumed Employee Plans.
3.17.3. Except as disclosed in Section 3.17.3 of the
Disclosure Schedule, full payment has been made of all amounts that are required
under the terms of each Assumed Employee Plan to be paid as contributions with
respect to all periods prior to and including the last day of the most recent
fiscal year of such Assumed Employee Plan ended on or before the date of this
Agreement and all periods thereafter prior to the Closing Date.
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3.17.4 Neither the Seller nor any ERISA Affiliate
sponsors, maintains or otherwise contributes to or has ever sponsored,
maintained or otherwise contributed to any employee benefit plan, as defined in
Section 3(3) of ERISA, that is or was subject to Title IV of ERISA or Section
412 of the Code or that constituted a multiemployer plan as defined in Section
3(37) of ERISA.
3.17.5 The Seller has, at all times, complied, and
currently complies, in all material respects with the applicable continuation
requirements for each Assumed Employee Plan that is an employee welfare benefit
plan, as defined in Section 3(1) of ERISA (each, an "Employee Welfare Benefit
Plan"), including (1) Section 4980B of the Code (as well as its predecessor
provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive,
of ERISA, which provisions are hereinafter referred to collectively as "COBRA"
and (2) any applicable state statutes mandating health insurance continuation
coverage for employees.
3.17.6 The form of all Assumed Employee Plans is in
compliance with the applicable terms of ERISA, the Code, and any other
applicable laws, including the Americans with Disabilities Act of 1990, the
Family Medical Leave Act of 1993 and the Health Insurance Portability and
Accountability Act of 1996, and such plans have been operated in compliance with
such laws and the written Assumed Employee Plan documents. Neither the Seller
nor any fiduciary of an Assumed Employee Plan has violated the requirements of
Section 404 of ERISA. All required reports and descriptions of the Assumed
Employee Plans (including Internal Revenue Service Form 5500 Annual Reports,
Summary Annual Reports and Summary Plan Descriptions and Summaries of Material
Modifications) have been (when required) timely filed with the IRS, the U.S.
Department of Labor or other Governmental Body and distributed as required, and
all notices required by ERISA or the Code or any other Legal Requirement with
respect to the Assumed Employee Plans have been appropriately given.
3.17.7 Each Assumed Employee Plan that is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and the Seller has no Knowledge of any
circumstances that will or could result in revocation of any such favorable
determination letter. Each trust created under any Assumed Employee Plan has
been determined to be exempt from taxation under Section 501(a) of the Code, and
Seller is not aware of any circumstance that will or could result in a
revocation of such exemption.
3.17.8 There is no material pending or threatened
Proceeding relating to any Assumed Employee Plan, nor is there any basis for any
such Proceeding. Neither the Seller nor any fiduciary of an Assumed Employee
Plan has engaged in a transaction with respect to any Assumed Employee Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, could subject Seller or Buyer to a Tax or penalty imposed by either
Section 4975 of the Code or Section 502(l) of ERISA or a violation of Section
406 of ERISA. The Contemplated Transactions will not result in the potential
assessment of a Tax or penalty under Section 4975 of the Code or Section 502(l)
of ERISA nor result in a violation of Section 406 of ERISA. The term
"Proceeding" means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
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3.17.9 Except for the continuation coverage
requirements of COBRA, the Seller has no obligations or potential liability for
benefits to employees, former employees (including Worksite Employees) or their
respective dependents following termination of employment or retirement under
any of the Assumed Employee Plans that are Employee Welfare Benefit Plans.
3.17.10 No written or oral representations have been
made to any Worksite Employee or former Worksite Employee of Seller promising or
guaranteeing any employer payment or funding for the continuation of medical,
dental, life or disability coverage for any period of time beyond the closing
(except to the extent of coverage required under COBRA). No written or oral
representations have been made to any employee or former employee (including
Worksite Employees) of Seller concerning the employee benefits of the Purchaser.
3.17.11 Each Assumed Employee Plan subject to the
provisions of Section 401(k) or 401(m) of the Code, or both, has been tested for
and has satisfied the requirements of Section 401(k)(3) and Section 401(m)(2),
as applicable, for each plan year ending prior to the Closing.
3.17.12 The consummation of the transactions
contemplated by this Agreement will not accelerate or increase any liability
under any Assumed Employee Plan.
3.18 Environment, Health, and Safety.
3.18.1 Each of the Seller and the Subsidiaries and
their respective predecessors and Affiliates, has complied in all material
respects with all Environmental, Health, and Safety Laws with respect to the
Leased Properties, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply. Without limiting the generality
of the preceding sentence, the Seller, the Subsidiaries and their respective
predecessors and Affiliates have each obtained and been in compliance with all
of the terms and conditions of all permits, licenses, and other authorizations
which are required under, and has complied in all material respects with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws with respect to the Leased Properties.
3.18.2 With respect to the Leased Properties, either
the Seller nor any Subsidiary has any Liability (and none of the Seller, the
Subsidiaries and their respective predecessors and Affiliates has unlawfully
handled or disposed of any substance, unlawfully arranged for the disposal of
any substance, unlawfully exposed any employee (including Worksite Employees) or
other individual to any substance or condition, or unlawfully owned or operated
the Leased Properties in any manner that could form the Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against the Seller or any Subsidiary giving rise to any
Liability) for damage to any site, location, or body of water (surface or
subsurface), for any illness of or personal injury to any employee or other
individual, or for any reason under any Environmental, Health, and Safety Law
with respect to the Leased Properties.
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3.19 Disclosure. No representation or warranty of the
Seller in this Agreement or in any Schedule furnished by the Seller, or in
connection with the transactions contemplated herein, contains any untrue
statement of fact or omits to state any fact necessary in order to make the
statements contained therein not materially misleading, and all such
representations, warranties and Schedules are true and complete. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty unless the Disclosure Schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty unless the
representation or warranty has to do with the existence of the document or other
item itself. The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this Article 3.
4.0 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Seller that:
4.01 Organization of the Purchaser. The Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Purchaser is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required except where the lack of such qualification would not
have a material adverse affect on the business, financial condition, operations
or results of operations of the Purchaser. The Purchaser has full corporate
power and authority and all licenses, permits, and authorizations necessary to
carry on the businesses in which it is engaged and in which it presently
proposes to engage and to own and use the properties owned and used by it.
4.02 Authorization of Transaction. The Purchaser has full power and
authority (including full corporate power and authority) to execute and deliver
the Acquisition Documents to which it is a party and to perform its obligations
thereunder. The board of directors of the Purchaser has duly authorized the
execution, delivery, and performance of the Acquisition Documents to which the
Purchaser is a party. No approval of the stockholders of the Purchaser is
required in order for the Purchaser to consummate the transactions contemplated
by this Agreement. The Acquisition Documents constitute the valid and legally
binding obligations of the Purchaser, enforceable in accordance with their terms
and conditions.
4.03 Non-contravention. Neither the execution and the delivery of
the Acquisition Documents to which it is a party, nor the consummation of the
transactions contemplated in the Acquisition Documents, will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Purchaser is subject or any provision of its charter or
bylaws, or (b) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the
Purchaser is a party or by which it is bound or to which any of its assets is
subject. The Purchaser does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by the Acquisition Documents.
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4.04 Brokers' Fees. The Purchaser has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated in the Acquisition Documents other than
fees payable to Croft & Bender LLC, which fees shall be the sole responsibility
of the Purchaser.
5.0 COVENANTS OF SELLER PRIOR TO CLOSING. The Seller agrees with
respect to the period between the date of this Agreement and the Closing Date:
5.01 Access and Investigation. Upon reasonable advance notice
received from the Purchaser, the Seller shall (and shall cause each Subsidiary
to): (i) afford the Purchaser and its Representatives full and free access,
during regular business hours, to the Designated Employees, the property subject
to any of the Leases, the Books and Records, the Insurance Contracts, the
Leases, the Client Service Agreements, the Marketing and Referral Agreements,
and all other documents and data requested by the Purchaser, such rights of
access to be exercised in a manner that does not unreasonably interfere with the
operations of the Seller or any Subsidiary; (ii) furnish the Purchaser with
copies all of the documents and data referred to in this Section 5.01 as the
Purchaser may reasonably request; (iii) furnish to the Purchaser such additional
financial, operating and other relevant data and information concerning the PEO
Business and the Acquired Assets as the Purchaser may reasonably request; and
(iv) otherwise cooperate and assist, to the extent reasonably requested by the
Purchaser, with the Purchaser's investigation of the PEO Business and the
Acquired Assets.
5.02 Operation of the Business of the Seller. The Seller shall (and
shall cause the Subsidiaries to):
(a) conduct the PEO Business only in the Ordinary Course of
Business;
(b) except as otherwise directed by the Purchaser in writing,
use its best efforts to preserve intact its current business organization
related to the PEO Business, keep available the services of its officers,
employees and agents related to the PEO Business and maintain its relationships
and good will with its clients, landlords, employees, agents and others having
business relationships with it related to the PEO Business;
(c) keep in full force and effect, without amendment, all
material rights related to the PEO Business;
(d) comply with all legal requirements and contractual
obligations applicable to the operation of the PEO Business;
(e) continue in full force and effect the insurance coverage
under the Insurance Contracts;
(f) not amend, modify or terminate any Client Service
Agreement, Insurance Contract, Marketing and Referral Agreement, Lease, Assumed
Employee Plan, or any contract or agreement included in the Acquired Assets,
without the express written consent of the Purchaser;
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(g) cooperate with the Purchaser and assist the
Purchaser in identifying the Governmental Authorizations required by the
Purchaser to operate the PEO Business from and after the Closing Date and either
transferring existing Governmental Authorizations of the Seller or its
Subsidiaries to the Purchaser, where permissible, or obtaining new Governmental
Authorizations for the Purchaser; and
(h) maintain all Books and Records and other documents
relating to the PEO Business in the Ordinary Course of Business.
5.03 Required Approvals. As promptly as practicable after the
date of this Agreement, the Seller shall make all filings required by Legal
Requirements to be made by it or any Subsidiary in order to consummate the
transactions contemplated by this Agreement. The Seller shall (and shall cause
each Subsidiary to) cooperate with the Purchaser and its Representatives with
respect to all filings that the Purchaser elects to make or, pursuant to Legal
Requirements, shall be required to make in connection with the transactions
contemplated by this Agreement.
5.04 Notification. The Seller shall promptly notify the
Purchaser in writing if it becomes aware of (i) any fact or condition that
causes or constitutes a breach of any of the Seller's representations and
warranties made as of the date of this Agreement or (i) the occurrence after the
date of this Agreement of any fact or condition that would be reasonably likely
to (except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had that representation or
warranty been made as of the time of the occurrence of, or the Seller's
discovery of, such fact or condition. Should any such fact or condition require
any change to the Disclosure Schedule, the Seller shall promptly deliver to the
Purchaser a supplement to the Disclosure Schedule specifying such change.
5.05 No Negotiation. Until such time as this Agreement
shall be terminated pursuant to Section 9.0, the Seller shall not (and will
cause its Representatives not to) directly or indirectly, solicit, initiate,
encourage or entertain any inquiries or proposals from, discuss or negotiate
with, provide any nonpublic information to or consider the merits of any
inquiries or proposals from, any Person (other than the Purchaser) concerning
the sale, transfer or assignment by the Seller and/or any of the Subsidiaries of
the PEO Business or any of the Acquired Assets by any means (whether by purchase
of the stock of the Subsidiaries, purchase of the assets or license of the
technology or otherwise). The Seller shall notify the Purchaser of any such
inquiry or proposal within 24 hours of receipt or awareness of the same by the
Seller.
6.0 COVENANTS OF THE PURCHASER PRIOR TO CLOSING. The Purchaser shall
cooperate, and cause its Representatives to cooperate, with the Seller with
respect to all filings the Seller shall be required by Legal Requirements to
make in order to consummate the transactions contemplated by this Agreement.
7.0 CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS TO CLOSE. The
Purchaser's obligation to purchase the Acquired Assets and to assume the Assumed
Liabilities and to take the other actions required to be taken by the Purchaser
at the Closing is subject to the satisfaction, at or prior to the Closing Date,
of each of the following conditions (any of which may be waived by the
Purchaser, in whole or in part):
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7.01 Accuracy of Representations. All of the representations and
warranties of the Seller and the Subsidiaries in this Agreement shall have been
accurate as of the date of this Agreement and shall be accurate as of the
Closing Date as if then made.
7.02 Performance by Seller and Subsidiaries. All of the covenants
and obligations that the Seller and the Subsidiaries are required to perform or
to comply with pursuant to this Agreement at or prior to the Closing Date shall
have been duly performed and complied with.
7.03 No Proceedings. Since the date of this Agreement, there shall
not have been commenced or threatened against the Seller or any Subsidiary or
any of the Acquired Assets any legal proceeding involving any challenge to, or
seeking damages or other relief in connection with, any of the transactions
contemplated by this Agreement or that may have the effect of preventing,
delaying, making illegal, imposing limitations or conditions on or otherwise
interfering with any of such transactions.
7.04 No Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred any change, event, violation, inaccuracy,
circumstances or effect that is or could reasonably be expected to be materially
adverse to the Acquired Assets or the financial condition, results of operations
or prospects of the PEO Business.
8.0 CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER AND SUBSIDIARIES
TO CLOSE. The obligation of the Seller and the Subsidiaries to sell the Acquired
Assets and to take the other actions required to be taken by the Seller and the
Subsidiaries at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by the
Seller in whole or in part):
8.01 Accuracy of Representations. All of the Purchaser's
representations and warranties in this Agreement shall have been accurate as of
the date of this Agreement and shall be accurate as of the time of the Closing
as if then made.
8.02 Purchaser's Performance. All of the covenants and obligations
that the Purchaser is required to perform or to comply with pursuant to this
Agreement at or prior to the Closing shall have been performed and complied with
in all material respects.
9.0 TERMINATION OF AGREEMENT.
9.01 Termination Events. By notice given prior to or at the
Closing, subject to Section 9.02, this Agreement may be terminated as follows:
(a) by the Purchaser if a material breach of any provision of
this Agreement has been committed by the Seller or any Subsidiary and such
breach has not been waived by the Purchaser;
(b) by the Seller if a material breach of any provision of
this Agreement has been committed by the Purchaser and such breach has not been
waived by the Seller;
(c) by the Purchaser if any condition in Section 7.0 has not
been satisfied as of the date specified for the Closing in Section 2.04, or if
satisfaction of such condition by such
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date is or becomes impossible (other than through the failure of the Purchaser
to comply with its obligations under this Agreement), and the Purchaser has not
waived such condition on or before such date;
(d) by the Seller if any condition in Section 8.0 has
not been satisfied as of the date specified for the Closing in Section 2.04, or
if satisfaction of such condition by such date is or becomes impossible (other
than through the failure of the Seller to comply with its obligations under this
Agreement), and the Seller has not waived such condition on or before such date;
(e) by mutual consent of the Purchaser and the Seller;
(f) by the Purchaser if the Closing has not occurred on or
before November 17, 2003, or such later date as the Parties may agree upon,
unless the Purchaser is in material breach of this Agreement; or
(g) by the Seller if the Closing has not occurred on or before
November 17, 2003, or such later date as the Parties may agree upon, unless the
Seller is in material breach of this Agreement.
9.02 Effect of Termination. Each Party's right of termination under
Section 9.01 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of such right of termination will not be an
election of remedies. If this Agreement is terminated pursuant to Section 9.01,
all obligations of the Parties under this Agreement will terminate, except that
the obligations of the Parties in this Section 9.02 and Section 11.0 will
survive, provided, however, that, if this Agreement is terminated because of a
breach of this Agreement by a nonterminating Party or because one or more of the
conditions to the terminating Party's obligations under this Agreement are not
satisfied as a result of the Party's failure to comply with its obligations
under this Agreement, the terminating Party's right to pursue all legal remedies
will survive such termination unimpaired.
10.0 POST-CLOSING COVENANTS. The Parties agree with respect to the
period following the Closing:
10.01 General. If at any time after the Closing, any further action
is necessary or desirable to carry out the purposes of the Acquisition
Documents, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party may reasonably request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor). The
Seller shall take all action necessary to obtain from Fleet Bank a termination
statement evidencing the release of its Security Interest in the Acquired Assets
as reflected on Section 3.05 of the Disclosure Schedule and to file and record
the termination statement in the appropriate filing offices in each applicable
jurisdiction to evidence the termination of such Security Interest and to
provide the Purchaser with evidence thereof. The Seller acknowledges and agrees
that from and after the Closing, the Purchaser will be entitled to possession of
all documents, books, records (including Tax records), agreements, and financial
data of any sort related to the PEO Business or the Acquired Assets, except the
Excluded Assets.
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10.02 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under the Acquisition Documents or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction occurring on
or prior to the Closing Date involving the Seller, each of the other Parties
will cooperate with each other and their counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor).
10.03 Transition. Neither the Seller nor any Subsidiary will take
any action that is designed or intended to have the effect of discouraging any
Transferred Client from maintaining the same business relationships with the
Purchaser after the Closing as it maintained with the Seller or a Subsidiary
prior to the Closing. The Seller and each Subsidiary will refer all Transferred
Client inquiries relating to the PEO Business to the Purchaser from and after
the Closing. Each Party shall deliver to the other (within two (2) Business Days
of receipt) any money or document it receives that belongs to the other Party.
The Seller and each Subsidiary shall cooperate with and assist the Purchaser in
obtaining consents of other parties to assignments of any of the Acquired
Assets. The Purchaser shall be entitled to all payments under the Client Service
Agreements attributable to services performed by the Purchaser (or its designee)
under any Client Service Agreement from and after the Closing Date, and the
Seller shall be entitled to all amounts paid by Transferred Clients under the
Client Service Agreements for services performed by the Seller or a Subsidiary
prior to the Closing Date.
10.04 Confidentiality. The terms of the Confidentiality Agreement
between the Purchaser and the Seller dated as of April 29, 2003 (the
"Confidentiality Agreement") shall continue to remain in effect. Neither the
Seller nor the Purchaser will, without the prior written consent of the other,
or as required by law, disclose to any person (other than to Representatives of
the party considering disclosure or the Representatives of the other party who
are actively and directly participating in evaluating the transactions
contemplated by this Agreement) any information about the transactions or the
terms, conditions or other facts relating thereto, including the fact that
discussions are taking place with respect thereto or the status thereof, or the
fact that confidential information has been made available by the Seller to the
Purchaser. The Purchaser and the Seller will each advise its Representatives who
are aware of the proposed transaction of the obligation of confidentiality and
of the fact that federal and state securities laws prohibit any person who has
received from an issuer material, nonpublic information concerning such issuer
from purchasing or selling securities of such issuer or from communicating such
information to any person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
10.05 Covenant Not to Compete.
(a) For a period of five (5) years from and after the Closing
Date, the Seller agrees that it will not (and will cause each Subsidiary to not)
(i) directly or indirectly, perform or provide, directly or indirectly, any PEO
Services in the Territory; (ii) solicit or attempt to solicit, directly or
indirectly, any Transferred Client for the purpose of providing any PEO Service
or any
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other service which would be competitive with the business of the Purchaser; or
(iii) solicit or attempt to solicit or hire away any person who was an employee
of the Seller who becomes an employee of the Purchaser after the Closing. The
foregoing shall not prohibit the Seller from engaging in, among other
businesses, the following businesses: providing general temporary staffing,
medical staffing and permanent placement services and/or payroll processing
services to third parties.
(b) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section is invalid or unenforceable,
the Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified.
10.06 Tax Matters. The following provisions shall govern the
allocation of responsibility as between the Purchaser and the Seller for certain
tax matters following the Closing Date:
(a) The Purchaser and the Seller shall cooperate fully, as and
to the extent reasonably requested by the other, in connection with the filing
of Tax Returns and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other's
reasonable request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided. The Seller and the
Purchaser agree (i) to retain all books and records with respect to Tax matters
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by the
Purchaser or the Seller, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (ii) to give the other reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
party so requests, to allow the other party to take possession of such books and
records.
(b) The Purchaser and the Seller further agree, upon
reasonable request, to use their reasonable best efforts to obtain any
certificate or other document from any governmental authority or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax imposed
(including, but not limited to, with respect to the transactions contemplated
herein).
11.0 REMEDIES FOR BREACHES OF THIS AGREEMENT.
11.01 Survival of Representations, Warranties, Covenants and
Agreements.
(a) All of the representations, warranties, covenants and
agreements of the Seller contained in Section 3.17 shall survive the Closing
(even if the Purchaser knew or had reason to know of any misrepresentation or
breach of warranty at the time of the Closing) and continue in full force and
effect subject only to any applicable statutes of limitations.
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(b) All of the other representations, warranties, covenants
and agreements of the Purchaser and the Seller shall survive the Closing (even
if the damaged Party knew or had reason to know of any misrepresentation or
breach of warranty at the time of the Closing) and continue in full force and
effect, subject to any applicable statutes of limitations, for a period of two
(2) years from the Closing Date except that the provisions of Section 10.5 shall
continue in effect for the period of time specified therein.
11.02 Indemnification Provisions for Benefit of the Purchaser.
(a) In the event that the Seller or any Subsidiary
breaches (or in the event any Third Party alleges facts that, if true, would
mean the Seller or any Subsidiary has breached) any of their representations,
warranties, covenants and agreements contained in this Agreement, and, provided
that the Purchaser makes a written claim for indemnification against the Seller
prior to the expiration of the representations, warranties, covenants and
agreements as set forth in Section 11.01(a) or (b), as applicable, then the
Seller agrees to indemnify the Purchaser from and against:
(i) the entirety of any Adverse Consequences the Purchaser
may suffer resulting from, arising out of or caused by the breach
(or the alleged breach) of any representation, warranty, covenant or
agreement of the Seller referred to in Section 11.01(a); and
(ii) the entirety of any Adverse Consequences the
Purchaser may suffer resulting from, arising out of or caused by the
breach (or the alleged breach) of any representation, warranty,
covenant or agreement referred to in Section 11.01(b), provided,
however, that the maximum amount the Seller shall be required to pay
for all such breaches shall be limited as provided in Section
11.02(c).
(b) The Seller also agrees to indemnify the Purchaser from and
against the following:
(i) the entirety of any Adverse Consequences the Purchaser
may suffer resulting from, arising out of or in connection with any
Assumed Benefit Plan, and related to any condition that existed on
the Closing Date or any action or failure to act on the part of the
Seller or any Subsidiary or any other Person with respect to any
such Assumed Benefit Plan prior to the Closing Date. It is the
intent of the Parties that the Purchaser shall be indemnified for
all Adverse Consequences the Purchaser may suffer in connection with
any Assumed Benefit Plan which results from any condition that
existed on the Closing Date or any action or failure to act by any
Person prior to the Closing Date. The obligations of the Seller
under this Section 11.02(b)(i) shall survive the Closing Date and
continue in full force and effect subject only to any applicable
statutes of limitations; and
(ii) the entirety of any Adverse Consequences the
Purchaser may suffer resulting from, arising out of or caused by:
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(A) any Liability of the Seller
which is not an Assumed Liability (including any
Liability of the Seller that becomes a Liability of
the Purchaser under any bulk sales or transfer law of
any jurisdiction, under any common law doctrine of de
facto merger or successor liability, or otherwise by
operation of law);
(B) any Liability of the Seller for
unpaid Taxes with respect to any Tax year or portion
thereof ending on or before the Closing Date (or for
any Tax year beginning before and ending after the
Closing Date to the extent allocable to the portion
of such period beginning before and ending on the
Closing Date); or
(C) any Excluded Liability, Excluded
Asset, or act, event, occurrence or circumstances in
respect of or relating to the PEO Business prior to
the Closing Date (other than any act, event or
occurrence or circumstance related to an Assumed
Benefit Plan for which indemnity is provided in
Section 11.02(b)(i));
provided, however, that the Purchaser must make a written
claim for any indemnification against the Seller under this
Section 11.02(b)(ii) on or prior to the second anniversary of
the Closing Date and the aggregate amount payable by the
Seller under this Section 11.02(b)(ii) shall be limited as
provided in Section 11.02(c).
(iii) the entirety of any Adverse Consequences the
Purchaser may suffer resulting from, arising out of or in
connection with any tax lien or tax assessment applicable to
the Seller or any Subsidiary and disclosed in the Disclosure
Schedule. The obligations of the Seller under this Section
11.02(b)(iii) shall survive the Closing Date and continue in
full force and effect subject only to the applicable statutes
of limitations.
(c) The aggregate amount payable by the Seller or the
Subsidiaries to the Purchaser for indemnification for any and all claims under
Section 11.02(a)(ii) and (b)(ii) shall be limited to $1,000,000.
11.03 Indemnification Provisions for Benefit of the Seller.
In the event the Purchaser breaches (or in the event any Third Party alleges
facts that, if true, would mean the Purchaser has breached) any of its
representations, warranties, covenants and agreements contained in this
Agreement and provided that the Seller makes a written claim for indemnification
against the Purchaser on or prior to the second anniversary of the Closing Date,
then the Purchaser agrees to indemnify the Seller from and against the entirety
of any Adverse Consequences the Seller may suffer resulting from, arising out
of, or caused by the breach (or the alleged breach); provided, however, that the
aggregate amount payable by the Purchaser to the Seller for any and all claims
under this Section 11.03 shall be limited to $1,000,000.
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11.04 Matters Involving Third Parties.
(a) If any Third Party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") as provided in Section 11.01, 11.02 or 11.03, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within fifteen (15)
days after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations, (iii) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief, (iv) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice adverse to the continuing
business interests of the Indemnified Party, and (v) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim, (i) the Indemnified Party may retain
separate co-counsel at its sole cost and expense and participate in the defense
of the Third Party Claim, (ii) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party (not to
be withheld unreasonably), and (iii) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (not to
be withheld unreasonably).
(d) In the event any of the conditions in Section
11.04(b) is or becomes unsatisfied, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (ii) subject to
any limitations set forth in Section 11.02(c) or 11.03, as applicable, the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for any Adverse Consequences suffered by the indemnified Party in
defending against the Third Party Claim, and (iii) subject to any limitations
set forth in Section 11.02(c) or 11.03, as applicable, the Indemnifying Parties
will remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent.
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11.05 Other Indemnification Provisions. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy any Party may have for breach of
representation, warranty, or covenant.
12.0 MISCELLANEOUS.
12.01 Employee Matters.
(a) The Purchaser shall assume the Seller's
obligation to provide or continue to provide, as the case may be, COBRA health
continuation coverage to existing participants, including COBRA participants,
under the TeamStaff, Inc. Employee Health Benefit Plan (collectively, "Qualified
Beneficiaries") to the extent the Qualified Beneficiaries experience or have
experienced, as the case may be, a "qualifying event", within the meaning of
Section 4980B(f)(3) of the Code, prior to or in connection with the transactions
contemplated by this Agreement. Purchaser shall not be obligated to provide
COBRA health continuation coverage to the Qualified Beneficiaries to an extent
any greater than the obligations imposed upon the Seller and its affiliates by
the provisions of Section 4980B of the Code and applicable Treasury regulations
promulgated thereunder. For purposes of the immediately preceding sentence,
Purchaser shall not take the position that Seller and its affiliates cease to
provide any group health plan solely in the event that health coverage is
provided to the remaining employees of Seller and its affiliates by a
professional employer organization.
(b) Effective as of the Closing, the Purchaser hereby
assumes the Seller's position as primary sponsor of the TeamStaff Retirement
Savings Plan, TeamStaff Flexible Benefits Plan, TeamStaff Dependent Care
Assistance Plan and TeamStaff Medical Expense Reimbursement Plan and Seller
hereby relinquishes its position as the primary sponsor of such plans, including
any and all of the rights, powers and authority attendant thereto. The Purchaser
hereby further amends the Gevity 401(k) Plan, as adopted by the Purchaser as a
participating employer, to provide a special entry date of November 17, 2003 for
those eligible former employees of the Seller hired by Purchaser immediately
after the Closing Date.
12.02 Press Releases and Public Announcements. No Party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement prior to the Closing without the prior written
approval of the other Party; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Party prior to making the disclosure). The Seller and the Purchaser will
mutually agree upon the form and substance of a public announcement announcing
the consummation of the transactions contemplated by this Agreement.
12.03 No Third Party Beneficiaries. This Agreement shall
not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.
12.04 Entire Agreement. This Agreement, and the other
Acquisition Documents (including the documents referred to herein) constitute
the entire agreement between the Parties and
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supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
12.05 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that the Purchaser may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates, and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Purchaser nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
12.06 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
12.07 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.08 Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Seller:
----------------
TeamStaff, Inc.
300 Atrium Drive
Somerset, New Jersey 08873
Attn: Edmund C. Kenealy, Vice President, General Counsel
Telephone: 732-748-1700
Fax: 732-748-3206
Copy to:
-------
Brian Daughney, Esq.
Goldstein & DiGioia, LLP
45 Broadway, 11th Floor
New York, NY 10006
Telephone: 212-599-3322
Fax: 212-557-0295
If to the Purchaser:
-------------------
Gevity HR, Inc.
600 301 Boulevard West
Suite 202
Bradenton, FL 34205
-24-
Attn: Greg M. Nichols, Esq.
Telephone: 941-741-4330
Fax: 941-741-4651
Copy to:
-------
Powell, Goldstein, Frazer & Murphy LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, GA 30303
Attn: G. William Speer, Esq.
Phone: 404-572-6600
Fax: 404-572-6999
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
12.09 Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Florida
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida.
12.10 Amendments and Waivers. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by the Purchaser and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
12.11 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
12.12 Expenses. Each of the Purchaser and the Seller
Shareholder will bear its own costs and expenses (including legal and accounting
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated herein.
12.13 Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the
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provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
References to the singular shall include the plurals and vice versa.
12.14 Incorporation of Exhibits and Schedules. The
Exhibits, Glossary of Terms, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
12.15 Specific Performance. Each of the Parties
acknowledges and agrees that the other Party would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which it may be entitled, at law or in equity.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
GEVITY HR, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
TEAMSTAFF, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
TEAMSTAFF II, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
TEAMSTAFF III, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
TEAMSTAFF IV, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
TEAMSTAFF IX, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
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DSI STAFF CONNXIONS SOUTHWEST, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
DSI STAFF CONNXIONS NORTHEAST, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
HR2, INC.
By:
-----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
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GLOSSARY OF TERMS
1.0 Definitions.
-----------
1.1. "Acquired Assets" means all of the following as of the Closing
Date, but excluding the Excluded Assets: (i) all right, title and interest of
the Seller and each of the Subsidiaries in, under and to (A) each of the Client
Service Agreements for the Transferred Clients; (B) the Benefits Reconciliation
Software Program; (C) the Insurance Contracts; and (D) the Assumed Employee
Plans; (ii) the Books and Records; and (iii) all right, title and interest of
the Seller and each of the Subsidiaries in, under and to each non-solicitation
and non-compete agreement between the Seller or a Subsidiary and a Designated
Employee.
1.2. "Acquisition Documents" means this Agreement and all transfer
documents, assumption agreements or other documents or agreements related to the
consummation of the transactions contemplated in this Agreement.
1.3. "Administrative Fees" means the fees payable by a Transferred
Client or a New Client for PEO Services rendered by the Seller or the Purchaser,
as the case may be, under a Client Service Agreement, but excluding amounts
charged by the Seller or the Purchaser, as the case may be, and amounts paid by
the Transferred Client or the New Client, as the case may be, which are related
to health, welfare and retirement benefits, employment-related taxes and
workers' compensation insurance coverage. The annualized Administrative Fees for
the Distribution Report provided for in Section 2.03(b) will be calculated on a
basis consistent with the annualized Administrative Fees calculated for the
Closing Date Schedule of Transferred Employees provided for in Section 2.05(a).
1.4. "Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses, in each case, net of any insurance proceeds received in respect
thereof.
1.5. "Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
1.6. "Agreement" shall have the meaning set forth in the Preface.
1.7. "Aggregate Purchase Price" means $9,500,000.
1.8. "Applicable Payroll" means with respect to any Transferred
Client, the first payroll run by the Purchaser with respect to such Transferred
Client on or after the 90th day following the Closing Date.
1.9. "Assignment Agreement" shall have the meaning set forth in
Section 2.05(b).
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1.10. "Assumed Employee Plans" means the TeamStaff Retirement
Savings Plan, the TeamStaff Flexible Spending Plan, the TeamStaff Dependent Care
Assistance Plan, and the TeamStaff Medical Expense Reimbursement Plan.
1.11. "Assumed Liabilities" means all of the obligations and
liabilities of the Seller or any Subsidiary arising on or after the Closing Date
and pursuant to (A) the Client Service Agreements, (B) the Insurance Contracts,
and (C) the Assumed Employee Plans, but excluding (i) any obligations or
Liabilities arising from or relating to any breach or violation by the Seller or
any Subsidiary of any provision of any of the Client Service Agreements, Market
and Referral Agreements, Insurance Contracts, Assumed Employee Plans or Leases;
and (ii) any obligations or Liabilities relating to the processing of any
payroll for which the Seller or any Subsidiary receives on or prior to the
Closing Date funds from any Transferred Client (unless the Seller transfers such
funds to the Purchaser prior to the date on which the payroll is required to be
paid), it being understood that the Seller and the Subsidiaries shall remain
obligated to process all such payrolls in accordance with the applicable Client
Service Agreements (unless the Seller transfers such funds to the Purchaser
prior to the date on which the payroll is required to be paid).
1.12. "Balance Sheet Date" has the meaning set forth in Section
3.07.
1.13. "Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
1.14. "Benefits Reconciliation Software Program" means the Seller's
proprietary, web-based AETNA health benefits reconciliation program that, among
other things, provides for the electronic file transfer of the Seller's and the
Subsidiaries' AETNA health and dental information from the Seller's payroll
system to AETNA. The Benefits Reconciliation Software Program is provided to the
Purchaser "as-is" WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
1.15. "Books and Records" means copies of all existing data, data
bases, books, records, correspondence, business plans and projections, records
of sales, client lists, files, papers, and, to the extent permitted under
applicable law or regulation, copies of historical personnel, payroll and
medical records of the Worksite Employees in the possession of the Seller or any
Subsidiary, including, without limitation, employment applications, corrective
action reports, disciplinary reports, other similar documents, and any summaries
of such documents prepared by a Client, the Seller or any Subsidiary and in the
possession of the Seller or any Subsidiary; all reported workers' compensation
or medical claims made for each Worksite Employee; and all manuals and printed
material of the Seller or any Subsidiary relating to the Acquired Assets or to
the operation of any part of the PEO Business.
1.16. "Cash" means cash and cash equivalents (including marketable
Securities and short term investments).
1.17. "Client Service Agreement" (i) means each contract between the
Seller and/or a Subsidiary, on the one hand, and a Transferred Client, on the
other hand, pursuant to which
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the Seller and/or a Subsidiary provide PEO Services, and (ii) with respect to
New Clients means each contract between the Purchase and/or a subsidiary of the
Purchaser, on the one hand, and a New Client, on the other hand, pursuant to
which the Purchaser and/or a subsidiary of the Purchaser provides PEO Services.
1.18. "Closing" means the closing of the transactions contemplated
by this Agreement.
1.19. "Closing Date" means 12:01 a.m. on November 17, 2003, or such
other date as the Parties may mutually determine.
1.20. "Closing Date Schedule of Transferred Clients" shall have the
meaning specified in Section 2.05(a).
1.21. "Code" means the Internal Revenue Code of 1986, as amended.
1.22. "Deferred Purchase Price" means $2.5 million.
1.23. "Designated Employees" means the employees of the Seller
(including the Sales Employees) listed on the Schedule of Designated Employees
referred to in Section 2.08.
1.24. "Determination Date" has the meaning set forth in Section
2.03(b).
1.25. "Disclosure Schedule" has the meaning set forth in Section
3.0.
1.26. "Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
1.27. "Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(1).
1.28. "Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and safety, including
laws relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
1.29. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.30. "Escrow Agent" shall mean Signature Bank.
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1.31. "Escrow Agreement" shall mean the Escrow Agreement in the form
of Exhibit E to be entered into by the Purchaser, the Seller and the Escrow
Agent on or prior to the Closing pursuant to which the Deferred Purchase Price
shall be held, invested and distributed by the Escrow Agent as provided in
Section 2.03(b).
1.32. "Excluded Assets" means all assets of the Seller and the
Subsidiaries not explicitly included in the Acquired Assets, including, without
limitation, all office equipment, fixtures, furniture, supplies, software
licenses, corporate minute books, and corporate trade names, service marks or
patents or any Permits.
1.33. "Excluded Liabilities" means all obligations, commitments, or
Liabilities of the Seller or any Subsidiary, whether known or unknown, absolute,
contingent, or otherwise, and whether or not related to the Acquired Assets or
the PEO Business, except for the Assumed Liabilities. Without limiting the
generality of the preceding sentence, the Purchaser shall not assume or become
liable for any of the following obligations and Liabilities of the Seller or any
Subsidiary:
(a) Any Liability or obligation arising out of any employee
benefit plan (other than the Assumed Employee Plans) maintained by or covering
employees or Worksite Employees of the Seller or any Subsidiary or to which the
Seller or any Subsidiary has made any contribution or to which the Seller or any
Subsidiary could be subject to any Liability;
(b) Any losses, costs, expenses, damages, claims, demands and
judgments of every kind and nature (including the defenses thereof and
reasonable attorneys' and other professional fees) related to or arising out of
or in connection with Seller's failure to comply with the bulk transfer, bulk
sales, or any similar statute as enacted in any jurisdiction, domestic or
foreign;
(c) Any Liability or obligation arising out of any breach by
the Seller or any Subsidiary of any provision of (i) any of the Client Service
Agreements, (ii) any of the Marketing and Referral Agreements, (iii) any of the
Insurance Contracts, (iv) any of the Assumed Employee Plans, and (v) either of
the Leases;
(d) Any Liability of the Seller or any Subsidiary with respect
to any claim or cause of action, regardless of when made or asserted, which
arises (i) out of or in connection with the PEO Business prior to the Closing
Date or (ii) with respect to any service provided by the Seller or any
Subsidiary;
(e) Any Liabilities or obligations of the Seller or any
Subsidiary relating to the Excluded Assets;
(f) Any Liabilities or obligations of the Seller or any
Subsidiary to process any payroll for any Transferred Client for which money has
been deposited by the Seller or a Subsidiary on or prior to the Closing Date;
(g) Any Liabilities or obligations of the Seller or any
Subsidiary to any Designated Employee, including, without limitation,
Liabilities and obligations arising by reason of the Seller's or any
Subsidiary's employment of a Designated Employee; and
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(h) Any other Liability of the Seller or any Subsidiary
existing at the Closing Date.
1.34. "Extremely Hazardous Substance" has the meaning set forth in
Section 302 of the Emergency Planning and Community Right-to-Know Act of 1986,
as amended.
1.35. "GAAP" means United States generally accepted accounting
principles in effect from time to time.
1.36. "Governmental Authorization" means any consent, license,
registration or permit issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
1.37. "Governmental Body" means any federal, state, local,
municipal, foreign or other government or any governmental or quasi-governmental
authority of any nature (including any agency, branch, department, board,
commission, court, tribunal or other entity exercising governmental or
quisi-governmental powers).
1.38. "Indemnified Party" has the meaning set forth in Section
11.04.
1.39. "Indemnifying Party" has the meaning set forth in Section
11.04.
1.40. "Initial Purchase Price" means $7.0 million.
1.41. "Insurance Contracts" means collectively the medical, dental,
disability and life insurance contracts which provide coverage to Worksite
Employees of the Seller and the Subsidiaries.
1.42. "Knowledge" means actual knowledge after reasonable
investigation, and with respect to the Seller, means the Knowledge of Edmund C.
Kenealy.
1.43. "Labor Claims" means any claim based on the employment
relationship or termination of the employment relationship.
1.44. "Leased Properties" means the facilities that are currently
leased or subleased by the Seller, located in Boca Raton, Florida, Northampton,
Massachusetts and Somerset, New Jersey, and referred to in Section 2.09 of this
Agreement.
1.45. "Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational or other constitution, law,
ordinance, principle of law, code, regulation, statute or treaty,.
1.46. "Liability" means any liability (whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due), including any liability for Taxes.
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1.47. "Marketing and Referral Agreements" means the Marketing
Agreement between the Seller and Fleet Insurance Services, LLC dated as of
November 1, 2002 and the Agreement between the Seller and Kirk Paschal dated
November 1, 2002.
1.48. "New Client" and "New Clients" means individually and
collectively the new clients (i) produced for the Purchaser after the Closing
Date by Sales Employees who become employees of the Purchaser as contemplated by
this Agreement, (ii) which had previously been solicited or identified for
solicitation by the Sales Employees on behalf of the Seller, (iii) which have
executed a Client Service Agreement with the Purchaser or a subsidiary of the
Purchaser which has not been terminated as of the Determination Date, and (iv)
for which a payroll has been run by the Purchaser on or prior to the
Determination Date.
1.49. "Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice.
1.50. "Party" has the meaning set forth in the Preface.
1.51. "PBGC" means the Pension Benefit Guaranty Corporation.
1.52. "PEO Business" has the meaning set forth in the Recitals.
1.53. "PEO Services" means the services provided by the Seller
and/or the Subsidiaries to the Transferred Clients under Client Service
Agreements as part of the PEO Business.
1.54. "Permits" means all licenses, permits, certificates, and
governmental authorizations of a Person, franchises, approvals, orders,
registrations, variances or similar rights used or held for use in the conduct
of a Person's business.
1.55. "Person" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, or a governmental entity
(or any department, agency, or political subdivision thereof).
1.56. "Preface" means the first paragraph of this Agreement.
1.57. "Prohibited Transactions" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
1.58. "Purchaser" has the meaning set forth in the Preface.
1.59. "Reportable Event" has the meaning set forth in ERISA Section
4043.
1.60. "Representative" with respect to a particular Person, any
director, officer, manager, employee, agent, consultant, advisor, accountant,
financial advisor, legal counsel or other representative of such Person.
1.61. "Sales Employees" means the employees of the Seller listed
under the heading "Sales Employees" on the Schedule of Designated Employees.
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1.62. "Securities" means any capital stock or ownership interest in
a Person.
1.63. "Securities Act" means the Securities Act of 1933, as amended.
1.64. "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
1.65. "Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest.
1.66. "Seller" has the meaning set forth in the Preface.
1.67. "Seller Consents" has the meaning set forth in Section 3.03.
1.68. "Sublease" has the meaning set forth in Section 2.10.
1.69. "Subsidiary" and "Subsidiaries" means individually and
collectively the corporations identified on Exhibit A.
1.70. "Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
1.71. "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
1.72. "Territory" means the 48 contiguous states in the United
States of America.
1.73. "Third Party" means any Person who is not a Party.
1.74. "Third Party Claim" has the meaning set forth in Section
11.04(a).
1.75. "Transferred Client" and "Transferred Clients" means
individually and collectively (i) for the period from the date of this Agreement
to the Closing Date, the Persons identified on the Initial Schedule of
Transferred Clients and (ii) from and after the Closing Date, the Persons
identified on the Closing Date Schedule of Transferred Clients.
1.76. "Worksite Employees" means the employees of the Transferred
Clients who by reason of the Client Service Agreements are also employed by a
Subsidiary of the Seller.
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EXHIBIT A
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LIST OF SUBSIDIARIES
TeamStaff II, Inc.
TeamStaff III, Inc.
TeamStaff IV, Inc.
TeamStaff IX, Inc.
DSI Staff ConnXions Southwest, Inc.
DSI Staff ConnXions Northeast, Inc.
HR2, Inc.
EXHIBIT B
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MATTERS TO BE COVERED BY OPINION OF SELLER'S COUNSEL
The opinion of Seller's Counsel shall be in a form customarily used in
transactions of this type and otherwise in form and substance reasonably
satisfactory to the Purchaser and its counsel and shall cover the following
matters:
1. The due formation, existence and good standing of the Seller and
each Subsidiary under their respective states of organization.
2. The corporate authority of the Seller and each Subsidiary to enter
into the transactions contemplated by the Acquisition Documents.
3. The due authorization, execution and delivery by the Seller and the
Subsidiaries of the Acquisition Documents to which they are parties.
4. That the Seller is not required to obtain the approval of its
stockholders in order to execute and deliver any of the Acquisition Documents or
to consummate the transactions contemplated by the Acquisition Documents.
EXHIBIT C
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MATTERS TO BE COVERED BY OPINION OF PURCHASER'S COUNSEL
The opinion of Purchaser's Counsel shall be in a form customarily used
in transactions of this type and otherwise in form and substance reasonably
satisfactory to the Seller and its counsel and shall cover the following
matters:
1. The due formation, existence and good standing of the Purchaser
under its state of organization.
2. The corporate authority of the Purchaser to enter into the
transactions contemplated by the Acquisition Documents.
3. The due authorization, execution and delivery by the Purchaser of
the Acquisition Documents to which it is a party.
EXHIBIT D
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FORM OF TRANSITION SERVICES AGREEMENT
EXHIBIT E
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FORM OF ESCROW AGREEMENT
EXHIBIT F
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APPORTIONMENT SCHEDULE
SCHEDULE OF TRANSFERRED CLIENTS
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SCHEDULE OF ADDITIONAL LIABILITIES NOT ASSUMED
----------------------------------------------