EXHIBIT 10.1
PURCHASE AGREEMENT
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PURCHASE AGREEMENT, dated as of August 8, 1996 (this "Agreement"),
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between Payroll Transfers, Inc., a Florida corporation (the "Company"), and
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AccuStaff Incorporated, a Florida corporation (the "Purchaser, and together with
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the Company, the "Parties").
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WHEREAS, the Company proposes to sell to the Purchaser and the Purchaser
wishes to acquire, for an aggregate purchase price of $10,438,402, (i) the Note
(as defined below), and (ii) the Option (as defined below); and
WHEREAS, the Parties wish to set forth their agreements with respect to
such purchase and sale and certain other matters specified herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 Definitions. As used in this Agreement, and unless the context
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requires a different meaning, the following terms have the meanings indicated:
"Affiliate" means, with respect to any person, any other person
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controlling, controlled by or under common control with such person.
"Asserted Liability" has the meaning set forth in Section 6.3 of this
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Agreement.
"Business Day" means any day other than a Saturday, Sunday or other day
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on which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"Buyout Notice" has the meaning set forth in Section 5.4 of this
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Agreement.
"Claims Notice" has the meaning set forth in Section 6.3 of this
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Agreement.
"Closing" has the meaning set forth in Section 2.2 of this Agreement.
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"Closing Date" means the date specified in Section 2.2 of this Agreement.
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"Common Stock" means the Common Stock, par value $1.00 per share, of the
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Company.
"Condition of the Company" means the assets, business, properties,
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operations or financial condition of the Company and its Subsidiaries, taken as
a whole.
"Contractual Obligations" means as to any Person, any provision of any
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security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
"Governmental Authority" means the government of the United States, any
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state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Indemnified Parties" has the meaning set forth in Section 5.6 of this
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Agreement.
"Indemnifying Party" has the meaning set forth in Section 6.3 of this
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Agreement.
"Indemnitee" has the meaning set forth in Section 6.3 of this Agreement.
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"Last-Chance Notice" has the meaning set forth in Section 5.4 of this
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Agreement.
"Losses" has the meaning set forth in Section 6.1 of this Agreement.
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"Non-Participating Stockholder" has the meaning set forth in Section 5.4
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of this Agreement.
"Note" has the meaning set forth in Section 2.1 of this Agreement.
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"Notice Period" has the meaning set forth in Section 5.4 of this
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Agreement.
"Offer Price" has the meaning set forth in Section 5.4 of this Agreement.
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"Offered Securities" has the meaning set forth in Section 5.4 of this
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Agreement.
"Offeree Securities" has the meaning set forth in Section 5.4 of this
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Agreement.
"Offering Notice" has the meaning set forth in Section 5.4 of this
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Agreement.
"Option" has the meaning set forth in Section 2.1 of this Agreement.
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"Option Agreement" has the meaning set forth in Section 2.1 of this
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Agreement.
"Participating Stockholder" has the meaning set forth in Section 5.4 of
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this Agreement.
"Permitted Transferee" shall mean (i) with respect to any Person, any
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Affiliate of such Person and (ii) with regard to the owners of interests in the
Stockholder only, any other such owner of the Stockholder on the date hereof.
"Person" means any individual, firm, corporation, limited liability
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company, partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other entity of any
kind, and shall include any successor (by merger or otherwise) of such entity.
"Purchase Price" has the meaning set forth in Section 2.1 of this
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Agreement.
"Remaining Offered Securities" has the meaning set forth in Section 5.4
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of this Agreement.
"Requirements of Law" means as to any Person, any law, treaty, rule,
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regulation, right, privilege, qualification, license or franchise or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable or binding upon such Person or any of its property or to
which such Person or any of its property is subject or pertaining to any or all
of the transactions contemplated or referred to herein.
"Selling Stockholder" has the meaning set forth in Section 5.4 of this
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Agreement.
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"Stockholder" has the meaning set forth in Section 5.4 of this Agreement.
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"Subject Securities" has the meaning set forth in Section 5.4 of this
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Agreement.
"Subsidiaries" means Payroll Transfers Florida, Inc., Payroll Transfers
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International, Inc., Payroll Transfers Management, Inc., Payroll Benefits, Inc.
and Payroll Transfers Interstate, Inc., each, a Florida corporation, and Payroll
Transfers of Georgia, Inc., a Georgia corporation and Payroll Transfers, Inc., a
California corporation.
"Tag-Along Offer" has the meaning set forth in Section 5.4 of this
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Agreement.
"Third Party Purchaser" has the meaning set forth in Section 5.4 of this
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Agreement.
"Transaction Documents" means collectively, this Agreement and the other
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documents prepared in connection with the transaction contemplated by this
Agreement.
1.2 Knowledge of the Company. All references to the "knowledge of the
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Company" shall mean the actual knowledge of any senior officer of the Company or
any materials in files in their personal custody.
ARTICLE 2
PURCHASE AND SALE OF NOTE AND GRANT OF OPTION
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2.1 Purchase and Sale of Note and Grant of Option. Simultaneously with
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the execution and delivery of this Agreement, the Purchaser agrees to pay the
Company, in cash, an aggregate amount equal to $10,438,402 (the "Purchase
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Price") payable in accordance with Section 2.2, in consideration for which the
Company agrees to issue to the Purchaser (i) a Subordinated Convertible Note,
having the terms and conditions in the form of Exhibit A hereto (the "Note") and
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(ii) a currently exercisable option to purchase an additional 176 shares of
Common Stock for an aggregate exercise price of $18,728,909 (the "Option"),
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pursuant to an option agreement in the form of Exhibit B hereto (the "Option
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Agreement").
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2.2 Closing. The closing of the sale and purchase of the Note and the
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grant of the Option contemplated hereby (the "Closing") shall take place on the
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date hereof at the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. local time. At
the Closing, (i) the Purchaser shall pay by wire transfer of immediately
available funds in an aggregate amount equal to the Purchase Price to an account
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designated in writing by the Company, (ii) the Company shall deliver to the
Purchaser the Note and shall deliver to the Purchaser the executed Option
Agreement and (iii) the Company and the Purchaser shall execute and deliver the
Strategic Relationship Agreement in the form of Exhibit C hereto and the
Registration Rights Agreement in the form of Exhibit D hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
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The Company represents and warrants to the Purchaser, as follows:
3.1 Corporate Existence and Power. The Company (a) is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Florida; (b) has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being and
heretofore conducted; and (c) is duly qualified as a foreign corporation,
licensed and in good standing under the laws of each jurisdiction in which its
ownership or the conduct of its business requires such qualification, except to
the extent that the failure to do so or be so would not have a material adverse
effect on the Condition of the Company. The Company has the requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Transaction Documents to which it is a party.
3.2 Corporate Authorization; No Contravention. The execution, delivery
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and performance by the Company of this Agreement and each of the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby, including, without limitation, the sale, issuance and
delivery of the Note (a) have been duly authorized by all necessary corporate
action of the Company; (b) do not contravene the terms of the Articles of
Incorporation or Bylaws, or any amendment of either thereof, and (c) do not
violate, conflict with or result in any breach or contravention of or the
creation of any lien or other encumbrance under, any Contractual Obligation of
the Company, or any Requirement of Law applicable to the Company, except for
such violation, conflict, breach, contravention or lien or other encumbrance
which would not have a material adverse effect on the Condition of the Company.
3.3 Binding Effect. This Agreement and each of the other Transaction
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Documents to which the Company is a party have been duly executed and delivered
by the Company and constitute the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with their terms, except
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as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforce ment of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
3.4 Capitalization. After giving effect to the transactions
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contemplated hereby, the authorized capital stock of the Company consists of
7,500 shares of Common Stock, of which 1,273 shares are issued and outstanding
and 316 shares are reserved for issuance upon conversion of the Note and
exercise of the Option and 211 shares are reserved for issuance pursuant to
incentive stock agreements with management and a consultant/former stockholder
of the Company. All of the outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and nonassessable. Except as set forth
in this Section 3.4, to the knowledge of the Company, there are no options,
warrants, conversion privileges or other rights presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of Common Stock
and the Company is under no obligation (whether contingent or otherwise) to
issue, call, repurchase, redeem or transfer any securities of the Company. The
Note issued to the Purchaser hereunder, and the shares of Common Stock, when
issued upon conversion of the Note or exercise of the Option will be duly
authorized, validly issued, fully paid and nonassessable.
3.5 Authority to Execute and Perform Agreement; No Breach. The execution
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and delivery by the Company of this Agreement and each Transaction Agreement to
which the Company is or will be a party, the consummation of the transactions
contemplated hereby and thereby will not (a) require the Company to obtain any
consent, approval, authorization or action of any Governmental Authority or any
other person; (b) violate, conflict with or result in the breach of any of the
terms and conditions of, result in a material modification of the effect of,
otherwise cause the termination of or give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time or both would
constitute) a default under any contracts to which the Company and its
Subsidiaries or any of their respective properties is or may be bound or
subject; (c) violate any law or order of any Governmental Authority applicable
to the Company and its Subsidiaries or any of their respective properties; (d)
violate any provision of the Certificate of Incorporation or By-laws (or
comparable instruments) of the Company and its Subsidiaries, except in the case
of clauses (a), (b) and (c), as would not have a material adverse effect on the
Condition of the Company.
3.6 Certain Documents. The Company has delivered to the Purchaser true
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and correct copies of the (i) the Combined Balance Sheets of the Company and its
Subsidiaries as of December 31, 1995 and 1994 and the related Combined
Statements of Operations, Stockholders' Equity and Cash Flows for the years then
ended, including the footnotes thereto, with the accompanying, unqualified
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report of KPMG Peat Marwick LLP, independent certified accountants, and (ii) the
Company's Articles of Incorporation and By-laws, in each case amended to the
date hereof.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER
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The Purchaser hereby represents and warrants to the Company as follows:
4.1 Existence and Power. The Purchaser is a corporation duly organized
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and validly existing under the laws of the State of Florida and has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement and each of the other Transaction Documents to which it is
a party.
4.2 Authorization; No Contravention. The execution, delivery and
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performance by the Purchaser of this Agreement and each of the other Transaction
Documents to which it is a party and the transactions contemplated hereby and
thereby, including, without limitation, the purchase of the Note, (a) has been
duly authorized by all necessary action, (b) does not contravene the terms of
the Purchaser's organizational documents, or any amendment thereof, and (c) does
not violate, conflict with or result in any breach or contravention of or the
creation of any lien or other encumbrance under, any Contractual Obligation of
the Purchaser, or any Requirement of Law applicable to the Purchaser.
4.3 Governmental Authorization; Third Party Consents. No approval,
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consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirement of Law, is necessary or required in connection with the execution,
deliv ery or performance (including, without limitation, the purchase of the
Note) by the Purchaser of the Transaction Documents to which the Purchaser is a
party or the transactions contemplated hereby.
4.4 Binding Effect. This Agreement and each of the other Transaction
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Documents to which the Purchaser is a party have been duly executed and
delivered by the Purchaser and constitute the legal, valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforce ment of creditors' rights generally or by
equitable principles relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
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4.5 Purchase Entirely for Own Account. The Note to be purchased by the
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Purchaser hereunder (and the shares of Common Stock issuable upon the exercise
of the Note and the Option) will be acquired for investment for the Purchaser's
own account, not as nominee or agent, and not with a view to or for sale in
connection with any distribution of any part thereof, and the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. The Purchaser does not have any contract, undertaking,
agreement or arrangement with any Person to sell, transfer or grant
participations to any Person, with respect to the Note and the Option.
4.6 Restricted Securities. The Purchaser understands that the Note and
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the shares of Common Stock issuable upon the exercise of the Note and the Option
are characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. In this connection the Purchaser represents
that it is familiar with the Commission's Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
4.7 Financial Risk. The Purchaser has the financial ability to bear the
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substantial economic risks of an investment in the Company for an indefinite
period of time and can afford a complete loss of such investment. The Purchaser
has such knowledge and experience in financial, investment and business matters
to utilize the information made available to the Purchaser in connection with
the transactions contemplated in this Agreement (the "Transactions"), to
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evaluate the merits and risks associated with the Transactions and to make an
informed investment decision with respect thereto.
4.8 Legends. To the extent applicable, the Note issued hereunder shall
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be endorsed with the legend set forth below, and the Purchaser covenants that,
except to the extent such restrictions are waived by the Company, the Purchaser
shall not transfer the securities without complying with the restrictions on
transfer described in the legend endorsed thereon:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER APPLICABLE STATE OR FEDERAL
SECURITIES LAWS AND MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS REGISTERED
PURSUANT TO SUCH LAWS OR UNLESS IN THE OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THIS
NOTE IS SUBORDINATED AS PROVIDED IN SECTION 6 HEREOF AND THE TRANSFER OF THIS
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NOTE IS RESTRICTED BY THE PURCHASE AGREEMENT, DATED AUGUST 8, 1996, BETWEEN
PAYROLL TRANSFERS, INC. AND ACCUSTAFF INCORPORATED, A COPY OF WHICH IS ON FILE
AT THE OFFICE OF THE ISSUER OF THIS NOTE."
The Company shall not be required (i) to transfer on its books the Note,
if such Note has been transferred in violation of any of the provisions set
forth in this Agreement, or (ii) to treat as owner of such Note or to pay
interest to any transferee to whom such Note shall have been so transferred.
ARTICLE 5
COVENANTS AND AGREEMENTS
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5.1 Use of Cash Proceeds. The Company shall reinvest in its business
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and operations or invest in short-term securities or other investments for (i)
at least one year from the Closing Date, the Purchase Price and (ii) for at
least one year from the date of exercise of the Option, the proceeds received
upon exercise of the Option.
5.2 Open Market Purchases. The Company and/or its designees will
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purchase a number of shares of the Purchaser's common stock, par value $.01 per
share, representing an aggregate of $3 million dollars in value, in the open
market over a reasonable period of time (but in any event no later than 60 days
following the Closing Date), subject to applicable securities laws and
disclosure requirements. The Company and the Purchaser hereby agree that such
shares will not be subject to any lock-up agreement or other agreement
restricting transferability or sale.
5.3 Board Positions. The Company and the Purchaser hereby agree that
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(i) at least one representative of one of the stockholders of the Company,
designated in writing by the Company, shall be appointed by the Board of
Directors of the Purchaser to serve as a director of the Purchaser, if the
Purchaser so elects within 60 days of the Closing and (ii) that the Purchaser
shall be entitled to designate, within 60 days of the Closing, one
representative to the Company's Board of Directors (who shall be Xxxxx X. Xxxxx,
President and Chief Executive Officer of the Purchaser, as long as Xx. Xxxxx is
employed by the Purchaser); provided, that such right shall terminate at the
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earliest to occur of (a) an initial public offering of the Company's Common
Stock, (b) ten (10) years from the date hereof or (c) if at any time from and
after July 29, 1997 the Purchaser does not own at least 15% of the outstanding
Common Stock.
5.4 Right of First Offer, Tag-Along Right and Bring-Along Right.
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(a) Right of First Offer.
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(i) Offering Notice. In the event that either PTI Investor Co.,
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L.L.C. or any of the owners of such limited liability company (the
"Stockholder") or the Purchaser (each a "Selling Stockholder") shall desire to
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sell the Note, in the case of the Purchaser, or any shares of Common Stock now
owned or hereinafter acquired, including, without limitation, any shares of
Common Stock received upon conversion of the Note or exercise of the Option
(collectively, the "Subject Securities") to any Person other than a Permitted
Transferee thereof (a "Third Party Purchaser"), then such Selling
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Stockholder(s) shall first offer the other Selling Stockholders (the "Offeree
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Stockholders") the right to purchase such Subject Securities (the "Offered
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Securities") by sending written notice (the "Offering Notice") to the Company
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and the Offeree Stockholders, which notice shall (A) state the number of Offered
Securities, (B) state the proposed purchase price for such Offered Securities
(the "Offer Price") and all other material terms and conditions of such sale and
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(C) if applicable, be accompanied by any written offer from the Third Party
Purchaser; provided, however, that the Selling Stockholder(s) shall not be
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obligated to make such offer to the other Selling Stockholders if they elect to
deliver a Buyout Notice (as defined below) pursuant to Section 5.4(c) hereof.
Upon delivery of the Offering Notice, the offer made therein to the Offeree
Stockholders shall be irrevocable unless and until the first offer rights
provided for therein shall have been waived or shall have expired in accordance
with this Agreement.
(ii) Purchase Option. Subject to Section 5.4(a)(iv), each Offeree
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Stockholder shall have the right, but not the obligation, to purchase at the
Offer Price (and otherwise upon the same terms and conditions as those set forth
in the Offering Notice) its pro rata portion of the Offered Securities, in the
proportion that the number of shares of Common Stock owned by such Offeree
Stockholder bears to the total number of shares of Common Stock owned by all
Offeree Stockholders. Such right of each Offeree Stockholder shall be
exercisable by written notice to the Selling Stockholder(s) with copies to the
Company given within 15 days after receipt of the Offering Notice (the "Notice
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Period"). Failure by an Offeree Stockholder to respond within the Notice Period
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shall be regarded as a rejection of the offer made pursuant to the Offering
Notice. Each Offeree Stockholder that elects to purchase its full pro rata
portion of the Offered Securities is referred to as a "Participating
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Stockholder" and each Offeree Stockholder that does not elect to purchase its
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full pro rata portion of the Offered Securities is referred to as a "Non-
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Participating Stockholder."
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(iii) Purchase of Remaining Offered Securities. The Selling
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Stockholder(s) shall, promptly after the end of the Notice Period, notify (the
"Last-Chance Notice") all Participating Stockholders whether the Offered
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Securities have been fully subscribed for, and, if not, the number of Offered
Securities not subscribed for (the "Remaining Offered Securities"). Subject to
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Section 5.4(a)(iv), each Participating Stockholder shall have the right to
purchase all, but not less than all, of the Remaining Offered Securities. The
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right of each Participating Stockholder to purchase the Remaining Offered
Securities shall be exercisable by written notice delivered to the Selling
Stockholder, with a copy to the Company, given within ten days after receipt of
the Last-Chance Notice. If more than one Participating Stockholder timely elects
to exercise its right to purchase the Remaining Offered Securities, the right to
purchase the Remaining Offered Securities shall (unless the Participating
Stockholders shall otherwise agree) be allocated pro rata among those
Participating Stockholders electing to purchase the Remaining Offered
Securities, in a proportion that the number of shares of Common Stock owned by
such Participating Stockholder bears to the total number of shares of Common
Stock owned by all Participating Stockholders that elect to purchase the
Remaining Offered Securities. A failure of any Participating Stockholder to
exercise such right within such 10-day period shall be regarded as a waiver of
its right to purchase the Remaining Offered Securities as provided herein.
(iv) Failure to Purchase All Offered Securities. Notwithstanding
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anything in this Section 5.4 to the contrary, the right of the Offeree
Stockholders to purchase the Offered Securities pursuant to this Section 5.4
shall be exercisable only if the Offeree Stockholders collectively agree to
purchase all, but not less than all, of the Offered Securities.
(v) Closing of the Sale to Participating Stockholders. The closing of
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the purchase of Offered Securities by the Offeree Stockholders herein shall be
held at the principal office of the Company at 11:00 a.m., local time, on the
20th day after the giving of the Last-Chance Notice (or, if each of the Offeree
Stockholders agrees to purchase its pro rata portion of the Offered Securities,
then on the 30th day following the date of the Offering Notice), or at such
other time and place as the parties to the transaction may agree. The sale of
the Offered Securities to the Offeree Stockholders hereunder shall otherwise be
on customary terms and conditions (but in any event in accordance with the terms
of the Offering Notice).
(vi) Sale to Third Party Purchaser. Unless the Offeree Stockholders
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elect to purchase all of the Offered Securities pursuant to Section 5.4(a)(ii)
and Section 5.4(a)(iii), the Selling Stockholder(s) may, subject to Sections
5.4(b) hereof, sell all but not less than all, of the Offered Securities at a
price per share equal to the Offer Price and otherwise on terms and conditions
that, in the good-faith determination of the Selling Stockholder(s), are in the
aggregate not materially more or less favorable to the Third Party Purchaser
than the terms and conditions set forth in the Offering Notice and the written
offer, if any, delivered therewith pursuant to Section 5.4(a)(i) (after giving
effect to customary negotiations between the Selling Stockholders and the Third
Party Purchaser). Any such sale shall be bona fide and made within 90 days of
the date of the Last-Chance Notice (or, if each of the Offeree Stockholders
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agrees to purchase its pro rata portion of the Offered Securities, then within
90 days of the Offering Notice). In the event that such sale is not consummated
within such 90-day period for any reason, then the restrictions pro vided for
herein shall again become effective, and no transfer of such Offered Securities
may be made thereafter by the Selling Stockholder(s) without again offering the
same to the Offeree Stockholders in accordance with this Section 5.4(a).
(b) Tag-Along Right. In the event that the sale by one or more
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Selling Stockholders of Offered Securities pursuant to Section 5.4(a) hereof
(other than sales to Permitted Transferees) would, when aggregated with all
prior sales pursuant to Section 5.4(a) by such Selling Stockholder(s) and their
Affiliates, result in the sale of 20% or more of the Subject Securities held by
such Selling Stockholder(s) on the date hereof (for purposes of this
determination, all Subject Securities sold or transferred pursuant to this
Section 5.4 shall be deemed to be held by the stockholder who holds such Subject
Securities on the date hereof), then such Selling Stockholder(s) shall, unless
such sale is subject to a Bring-Along Notice pursuant to Section 5.4(c) hereof,
include an offer (a "Tag-Along Offer") to each Offeree Stockholder to
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participate pro rata in such sale by including a portion of such Offeree
Stockholder's shares of Common Stock (the exact number of which shall be
determined based on multiplying the number of Offered Securities by a fraction,
(i) the numerator of which is the total number of shares of Common Stock
(assuming conversion of the Note) then owned by such Offeree Stockholder and
(ii) the denominator of which is the total number of shares of Common Stock
(assuming conversion of the Note) owned by all Offeree Stockholders plus the
number of shares owned by other stockholders having tag-along rights with
respect to such sale) in the sale, at the Offer Price and otherwise upon the
same terms and conditions of such sale. Upon delivery of the Tag-Along Offer
pursuant to this Section 5.4(b), the offer made therein to the Offeree
Stockholders shall be irrevocable unless and until the rights provided for
therein shall have been waived or shall have expired in accordance with this
Agreement. The right of each Offeree Stockholder to purchase its pro rata
portion of the Offered Securities under this Section 5.4(b) shall be exercisable
by delivering written notice thereof, prior to the expiration of the Notice
Period, to the Selling Stockholder(s), with a copy to the Company. The failure
of such Offeree Stockholder to respond within the Notice Period shall be
regarded as a rejection of the offer to participate in such sale as contemplated
by the Tag-Along Offer and shall be deemed to be a waiver of its rights under
Section 5.4(b). To the extent that such Offeree Stockholder exercises its right
to sell shares of Common Stock pursuant to this Section 5.4(b), the number of
shares of Common Stock proposed to be sold to the Third Party Purchaser by the
Selling Stockholder shall be reduced proportionately.
(c) Bring-Along Right. In the event that the Stockholder (or any
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owner of the Stockholder) receives a bona fide offer from a Third-Party
Purchaser to purchase (including a purchase by merger) at least 51% of the
number of outstanding shares of Common Stock, the Stockholder may send written
notice to the Purchaser notifying it that it will be required to sell all (but
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not less than all) of the Subject Securities in such sale (the "Buyout Notice").
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Upon receipt of a Buyout Notice, the Purchaser shall be obligated to (i) sell
all of the Subject Securities in the transaction (including a sale or merger)
contemplated by the Buyout Notice on the same terms and conditions as the
Stockholders (including payment of its pro rata share of all costs associated
with such transaction) and (ii) otherwise take all necessary action to cause the
consummation of such transaction, including voting the Subject Securities in
favor of such transaction and not exercising any appraisal rights in connection
therewith. The Purchaser further agrees to (A) take all actions (including
executing documents) in connection with the consummation of the proposed
transaction as may reasonably be requested of it by the Stockholders and (B)
appoint the Stockholders as its attorney-in-fact to do the same on its behalf.
In the event a contract with respect to the transaction contemplated by the
Buyout Notice has not been entered into within 90 days of the receipt of the
Buyout Notice, the obligations of the Purchaser hereunder shall terminate.
(d) General. The provisions of this Section 5.4 shall terminate upon
-------
the earlier to occur of (i) the closing of the initial public offering of the
Common Stock or (ii) August 8, 2004.
5.5 Certain Indemnification Rights. The Stockholder agrees that to the
------------------------------
extent the Stockholder recovers any amounts (other than its attorneys fees and
expenses incurred in pursuing any claim) from any of the Sellers, as defined in
and pursuant to that certain Stock Purchase Agreement dated as of May 23, 1996
(the "Stock Purchase Agreement"), by and among the Stockholder, Xxxxxx
------------------------
Klinghoffer and other persons listed on Schedule 1.1 thereto, whether by way of
indemnification pursuant to Section 8.1 thereof or otherwise, the Stockholder
shall contribute such amounts (net of any taxes payable on such amounts) to the
Company as a capital contribution.
5.6 Directors' and Officers' Indemnification and Insurance. When and
------------------------------------------------------
for so long as the Purchaser has a right to designate a member of the Company's
Board of Directors pursuant to Section 5.3 hereof (but in any event within 90
days of the date hereof), the Company shall acquire and maintain directors' and
officers' liability insurance for the Purchaser's representative in the same
form and with the same terms and conditions as such insurance is maintained for
those members of the Board of Directors designated by the Stockholder. The
Company's Articles of Incorporation and By-laws shall indemnify and hold
harmless all directors of the Company (the "Indemnified Parties") against any
-------------------
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the date hereof, whether asserted or
claimed prior to, at or after the date hereof (and the Company shall advance
expenses as incurred to the fullest extent permitted under applicable law
provided the person to whom expenses are advanced provides an undertaking to
13
repay such advances if it is ultimately determined that such person is not
entitled to indemnification). In addition, the Purchaser's representative shall
be treated in all respects in the same manner as the other members of the
Company's Board of Directors including but not limited to, with respect to
indemnification of directors, availability of information, directors'
compensation and reimbursement of expenses.
5.7 Xxxx-Xxxxx-Xxxxxx Filing. As soon as practicable following notice
------------------------
from the Purchaser, the Company shall make all necessary filings required under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder in connection with the
transactions contemplated hereby.
5.8 Articles and By-laws The Company agrees to cause the amendment of
--------------------
its Articles of Incorporation and By-laws as promptly as practicable after the
date hereof (but in any event within 10 days) to, among other things, delete
Sections 7 and 9 of the Articles of Association and Article XVIII of the By-
laws, to add customary indemnification provisions for officers and directors and
to otherwise provide for the transactions contemplated hereby.
ARTICLE 6
INDEMNIFICATION
---------------
6.1 Obligation of the Company to Indemnify. Subject to the
--------------------------------------
limitations contained in Section 6.4, the Company agrees to indemnify, defend
and hold harmless the Purchaser (and its directors, officers, employees,
affiliates, successors and assigns) from and against all Claims, losses,
liabilities, damages, deficiencies, judgments, assessments, fines, settlements,
costs or expenses (including interest, penalties and fees, expenses and
disbursements of attorneys, experts and consultants) ("Losses") incurred by the
------
indemnified party in any action or proceeding between the indemnifying party and
the indemnified party or between the indemnified party and any third party, or
otherwise based upon, arising out of or otherwise in respect of any inaccuracy
in or any breach of any representation, warranty, covenant or agreement of the
Company contained in this Agreement.
6.2 Obligation of the Purchaser to Indemnify. Subject to the
----------------------------------------
limitations contained in Section 6.4, the Purchaser agrees to indemnify, defend
and hold harmless the Company from and against all Losses based upon, arising
out of or otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of the Purchaser contained in
this Agreement or in any Documents delivered by the Purchaser pursuant to this
Agreement.
14
6.3 Notice and Opportunity to Defend.
--------------------------------
(a) Notice of Asserted Liability. The party making a claim under this
----------------------------
Article 6 is referred to as the "Indemnitee," and the party against whom such
----------
claims are asserted under this Article 6 is referred to as the "Indemnifying
------------
Party." All claims by any Indemnitee under this Article 6 shall be asserted and
-----
resolved as follows: Promptly after receipt by the Indemnitee of notice of any
Claim or circumstances which, with the lapse of time, would or might give rise
to a Claim or the commencement (or threatened commencement) of a Claim including
any action, proceeding or investigation (an "Asserted Liability") that may
------------------
result in a Loss, the Indemnitee shall give written notice thereof (the "Claims
------
Notice") to the Indemnifying Party. The Claims Notice shall describe the
------
Asserted Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary and to the extent feasible) of the Loss that has been
or may be suffered by the Indemnitee.
(b) Opportunity to Defend. Except with respect to actions or
---------------------
proceedings between the Indemnifying Party and the Indemnitee, the Indemnifying
Party may elect to compromise or defend, at its own expense and by its own
counsel, any Asserted Liability. If the Indemnifying Party elects to compromise
or defend such Asserted Liability, it shall within 30 days (or sooner, if the
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against, such Asserted
Liability. If the Indemnifying Party elects not to compromise or defend the
Asserted Liability, fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this Agreement, the
Indemnitee may pay, compromise or defend such Asserted Liability. If the
Indemnifying Party chooses to defend any Asserted Liability, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
6.4 Limitations on Indemnification. Neither the Company nor the
------------------------------
Purchaser shall be obligated to pay any amounts for indemnification under this
Article 6 in excess of the Purchase Price.
ARTICLE 7
MISCELLANEOUS
-------------
7.1 Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties made herein shall, for a period of one year
following the Closing Date, survive the execution and delivery of this
Agreement, acceptance of the Note or termination of this Agreement.
15
7.2 Notices. All notices, demands and other communications provided
-------
for, required or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, courier
service, overnight mail, in each case postage prepaid, personal delivery or
facsimile transmission:
if to the Company, to:
Payroll Transfers, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: President
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
if to the Purchaser:
AccuStaff Incorporated
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx, President
with a copy to:
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
16
if to PTI Investor Co. LLC or to its owners to:
c/o Oak Hill Partners, Inc.
Park Avenue Tower
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
received when delivered by hand, if personally delivered; when delivered by
facsimile, if receipt is confirmed by telephone the same day; when delivered by
courier or overnight mail, if delivered by a commercial courier service or
overnight mail; and 5 Business Days after being deposited in the mail, if
mailed; provided, that in all cases, confirmation by telephone or facsimile of
--------
receipt thereof has been obtained.
7.3 Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and permitted assigns of the parties
hereto. Except in connection with all or substantially all of its assets, the
Company may not assign any of its rights under this Agreement; provided,
--------
however, that subject to applicable securities laws, the Company, upon prior
-------
written consent of the Purchaser may assign any of its rights under this
Agreement to any of its Stockholders or Affiliates. The Purchaser may not
assign any of its rights under this Agreement, except to a successor-in-interest
to the Purchaser or an Affiliate, without the prior written consent of the
Company.
7.4 Amendment and Waiver.
--------------------
(a) No failure or delay on the part of the Company or the Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Purchaser at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any provision
of this Agreement, any waiver of any provision of this Agreement, and any
consent to any departure by the Company or the Purchaser from the terms of any
17
provision of this Agreement, shall be effective only if it is made or given in
writing and signed by the Company and the Purchaser.
7.5 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
7.6 Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
7.8 Severability. If any one or more of the provisions contained
------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
7.9 Entire Agreement. This Agreement, together with the exhibits and
----------------
schedules hereto and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits
hereto, and the other Transaction Documents supersede all prior agreements and
understandings between the parties with respect to such subject matter.
7.10 Publicity. Except as otherwise required by applicable law or the
---------
rules or regulations of any national exchange on which the securities of a party
or any Affiliate of such party are listed or traded, neither party shall issue
or cause the publication of any press release or other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party and in any event each party agrees that it will give the
other party reasonable opportunity to review and comment upon any such release
or announcement prior to publication of the same.
18
7.11 Further Assurances. Each of the parties shall execute such
------------------
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized on
the date first above written.
PAYROLL TRANSFERS, INC.
By:
-------------------------------------
Name:
Title:
ACCUSTAFF INCORPORATED
By:
-------------------------------------
Name:
Title:
Accepted and Agreed for purposes
of Sections 5.4 and Section 5.5 only:
PTI Investor Co. LLC
By:
----------------------------------
Name:
Title:
20
