PAYROLL SERVICE CONVERSION AGREEMENT
PAYROLL SERVICE CONVERSION AGREEMENT dated as of 11/5/98 between
COMPUTER OUTSOURCING SERVICES, INC., whose principal place of business is
located at 000 X 00XX, Xxx Xxxx, Xxx Xxxx 00000 (the "Seller"), and ADP,
INC., whose principal offices are located at Xxx XXX Xxxxxxxxx, Xxxxxxxx,
Xxx Xxxxx 00000, with a branch office at 00 Xxxxxxxxx Xxxx.
Xxxxxxxxxx, Xxx Xxxxx 00000 ("ADP").
In consideration of the Seller's desire to sell, and ADP's desire to
purchase, the exclusive right to convert the entire payroll services
client base of the Seller (the "Client Base"), as described on Exhibit A
which is a part of this Agreement, to ADP's payroll service, the Seller
and ADP agree as follows:
1. SALE AND PURCHASE OF THE SELLER'S CLIENT BASE.
(a) The seller hereby sells, assigns and transfers to ADP the exclusive
right to convert the Client base to ADP's payroll services. Each client
who agrees to convert tp ADP's payroll services by signing ADP's standard
form of Price Quotation prior to December 31, 1998 (the "Final Conversion
Date") is referred to in this Agreement as a "Converted Client".
(b) The purchase price for this exclusive right shall be paid by ADP to
the Seller as follows:
(i) upon the execution and delivery of this Agreement by each
party, an amount equal to $25,000 (the "Down Payment");
(ii) Within fifteen business days February 1 1999, an amount equal
to (x) 100% of the annualized aggregate amount of recurring payroll or
payroll-related processing fees and charges invoiced by ADP to the
Converted Clients for the month of January 1999, for those payroll
services that are the same as those provided by the Seller to such
Converted Clients, minus (y) the Down Payment (provided that if Down
Payment exceeds the actual amount calculated under clause (x) of this
Paragraph 1(b)(ii), the Seller shall reimburse ADP the amount of such
excess within 10 days); and
(iii) In the event any converted Client shall begin processing
after the month of January, 1999 but within 6 months of the final
Conversion Date, ADP shall within 15 days after the completion of the
first full month of processing for such Client pay the Seller in respect
of Client an amount calculated in accordance with Paragraph 1(b)(ii)
above.
For purposes of clarity, the annualized aggregate amount will not include
(i) fees derived from set-up, training, shipping, delivery and
installation, custom programming sale or rental of equipment,
maintenance, or the provision of checks, forms, or other supplies, (ii)
fees for official bank checks, W-2 forms, or tax reports, (iii) state and
local taxes, special one-time report fees and refundable deposits, or
(iv) thrid party pass-through charges. For purposes of Paragraph
1(b)(ii), the Seller understands that the processing fees and charges
invoiced by ADP to the Clients will be equal to the lesser of ADP's
standard rates for such services (as previoulsy disclosed to the Seller)
and the processing fees and charges reflected on Exhibit A.
2. CONVERSION OF THE CLIENT BASE.
(a) ADP shall commence, at its own expense, converting the Client Base
from the Seller's payroll services to ADP's payroll services. Only those
clients included in the Client Base that elect to convert to ADP will be
so converted.
(b) From the date of this Agreement through the Final Conversion Date
the Seller shall take all actions reasonably requested by ADP to maximize
the number of clients that elect to convert to ADP. The Seller shall, at
its own expense, cooperate with and assist ADP in converting the Client
Base to ADP, which shall include (i) accompanying ADP personnel on visits
to each client in order to facilitate the contemplated conversion of such
client to ADP's payroll services, and (ii) transferring to ADP all files
(including billing and pricing information) for each client that elects
to convert to ADP.
(c) From the date of this Agreement through the final Conversion Date
(or such earlier date on which a given client is coverted), the Seller
shall continue to perform all of its payroll services (and
payroll-related tax services, if any ) for each client in a reliable and
dependable manner in the same fashion as such payroll services (and
payroll related tax services, if any) are being performed by the Seller
on the date hereof. Thereafter, neither the Seller nor any entity which
is affiliated with the Seller may provide such clients with such payroll
services.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller and each of the individuals executing this Agreement on his
or her behalf with respect to this Paragraph 3 hereby represents and
warrants to ADP that: (i) Schedule A sets forth a complete list of all
clients in the Client Base; (ii) for each client in the Client Base, the
Seller is the payroll services provider to the client; (iii) the company
name and identifying number, special reports and delivery locations,
frequency of payroll (and related tax services,if any) processings and
the actual price per cycle (or if the actual price is not available, the
Seller's reasonable estimate of the price per cycle) for each client
included in the Client Base, are set forth on Exhibit A; and that all
information set forth on Exhibit A is true, accurate and complete as of
the date of this Agreement; (iv) none of the clients has canceled or
terminated, or made any threat to the Seller to cancel or terminate, its
payroll services (and/or related payroll tax services, if any)
relationship with the Seller; (v) this Agreement is a binding agreement
of the Seller; (vi) to the knowledge of the Seller, Seller is not
prohibited by any law or regulation from entering into this Agreement;
and (vii) the Seller has not used a boker or any other representative who
would be entitled to a broker's commission, finder's fee or similar
compensation in connection with this Agreement.
4. NO ASSUMPTION OF OBLIGATIONS AND LIABILITIES.
The Seller agrees that ADP is only purchasing the right to convert the
Client Base from the Seller's payroll service (and payroll related tax
services, if any) to ADP's payroll services pursuant to the terms and
conditions of this Agreement. ADP is not assuming any obligations or
liabilies whatsover of the Seller (including, without limitation, (i) the
hiring of any of the of the Seller's employees, (ii) any liabilities for
tax filings, if any, with respect to periods prior to the date a client
converts to ADP or (iii) any other obligation under any agreement or
commitment of the Seller with any of its past, present or future
clients), and the Seller agrees to indemnify ADP against al such
obligations and liabilities.
5. CONFIDENTIALITY; NON-COMPETITION
(a) The Seller agrees that Exhibit A and all information contained
therein, and all client lists and other client information relative to
the Client Base, if any , are confidential and that it will use all
reasonable precautions to keep such information confidential and secret,
including without limitation, restricting access to such information to
those employees of the Seller who have a need to know such information
(the "Permitted Persons"). The Seller agrees that it will use all
reasonable efforts (which reasonable efforts shall include, but not be
limited to, taking the same precautions the Seller takes to protect its
own confidential and/or proprietary information) to prohibit any of the
Permitted persons from divulging, using or publishing any of such
information to any person or entity whatsover, except in strict
accordance with the terms of this Agreement. If the Seller, any of the
Permitted Persons, or any of the Seller's other present or former
employees, agents or representatives shall attempt to divulge, use or
publish any of such information in any manner, ADP shall have the right
in addition to such other remedies which may be available to it, to
injunctive relief enjoining such acts or attempts, it being hereby agreed
and acknowledged that legal remedies are inadequate.
(b) (i) Except to the limited extent provided for in Paragraph 2(c)
above or as otherwise agreed in writing between the Seller and ADP,
between the date hereof and the date which is 2 1/2 years after the Final
Conversion Date (the "Non-Competition Period"), the Seller agrees that it
shall not,directly or indirectly, (A) provide payroll services (and /or
related payroll tax service) to any thrid person or entity whatsoever
(whether or not affiliated with the Seller), or (B) provide, sell,
license, or otherwise transfer any software, systems or documentation on,
through, or by which any payroll services (and /or related payroll tax
services) can be performed, to any third person or entity whatsover
(whether or not affiliated with the Seller).
(ii) During the Non-Competition period, the Seller not solicit or
refer any of the Client Base or any clients of the Seller whatsoever to
any other vender of payroll sevices (and/or related payroll tax
services), and/or of any software, systems or documentation on, through,
or by which such payroll services (and/or related payroll tax services)
could be performed, or otherwise intentionally interfere with or
interrupt ADP's payroll services relationships with the Converted Clients
or any other of its clients.
(c) Each of the individuals executing yhis Agreement on his or her own
behalf hereby agrees to be bound individually to the same extent as the
Seller by the provisions of this paragraph 5.
6. MISCELLANEOUS.
(a) This Agreement together with Exhibit A attached hereto, contains
the full understanding of the Seller and ADP with respect to its subject
matter and supersedes all existing agreements and all other oral, written
or other communications between them concerning its subject matter. This
Agreement may not be modified in any way except by a writing signed by
duly authorized representatives of ADP and the Seller. This Agreement may
not be assigned in whole or in part by the Seller without the prior
xxxxxx consent of ADP.
(b) All notices shall be in writing and shall be mailed by xxxxx class
mail or personally delivered to the parties at the addresses set forth on
the first page of this Agreement or to any other address designated by
either party in writing to the other after the date hereof, and such
notices shall be effective three days after mailed or when personally
delivered. Any notice to ADP shall include a copy to ADP, Inc., Xxx XXX
Xxxxxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, Attention: General Counsel.
(c) If any provision of this Agreement (including, without limitation
any provisions of Paragraph 5) shall be deemed unenforceable, the
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and the provision in question shall be
enforced to the fullest extent permitted by law.
(d) The termination or expiration of this Agreement for any reason
shall in no way impair the right or obligations of the parties under
Paragraphs 4 and 5.
IN WITNESS WHEREOF, the Seller and ADP have caused this Agreement to be
executed as of the date first written above.
ADP,INC.
By: /s/
----------------------
Xxx Xxxxxxx
Regional Controller
COMPUTER OUTSOURCING SERVICES
INC.
By: /s/
Name: Xxxx X. Xxxxx
Title: Vice President
Accepted and Agreed as to Paragraphs 3 and 5 only:
/s/
-------------------------
Xxxx X. Xxxxx
-------------------------
Accecpted and Agreed as to Paragraph 5 only:
/s/
-------------------------
Xxxx X. Xxxxx
-------------------------
