EXHIBIT 9.1.2
CUSTOMER ASSIGNMENT AGREEMENT
This Customer Assignment Agreement (this "Agreement") is entered
into on September 2, 2005, by and between O2 HR, LLC (the "Buyer")
and Certified HR Services Company II (the "Seller"). The Buyer and
the Seller are referred to herein individually as a "Party" and
collectively as the "Parties."
RECITALS
WHEREAS, this Agreement contemplates a transaction in which
simultaneously with the execution and delivery of this Agreement the
Buyer will purchase, and the Seller will sell and assign to Buyer,
the customer contracts and specified liabilities of the professional
employer organization services business (the "PEO Business") of the
Seller.
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 Client Service Agreements. Upon and
subject to the terms and conditions of this Agreement, simultaneously
with the execution and delivery of this Agreement, the Buyer is
purchasing from the Seller, and the Seller is selling, transferring,
conveying, assigning, and delivering to the Buyer, the Client
Service Agreements between Seller and the Customers set forth in
Schedule 3.05 (the "Client Service Agreements") and related good
will, 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 and the Assignment and
Assumption Agreement set forth in Exhibit 2.02, simultaneously with
the execution and delivery of this Agreement, the Buyer is assuming
and becoming responsible for the performance and satisfaction of the
liabilities set forth in Schedule 2.02 (the "Assumed Liabilities").
Under no circumstances will the Buyer assume or have any
responsibility with respect to any other liabilities or obligations
of Seller.
2.03 Purchase Price and Payment. The purchase price ("Purchase
Price") for the Client Service Agreements is $9,143,198. $2,300,000
of the Purchase Price shall be paid by assumption of the Assumed
Liabilities. The cash portion of the Purchase Price shall be paid by
delivery of a promissory note in the form of Exhibit 2.03 (the
"Note"), providing for principal only payments for a period of five
years. Buyer shall have the right and option to offset current (i.e.
within 31 days) monetary obligations due Buyer from Seller from
current monetary obligations due from Buyer to Seller under the Note.
2.04 Escrow. The Purchase Price cash proceeds shall be placed
in an escrow account established pursuant to the Escrow Agreement
attached as Exhibit 2.04.
2.05 Guaranty, As a condition to entering into the transactions
contemplated hereby Buyer has required Seller to enter into the
Guaranty attached as Exhibit 2.05.
2.06 The Closing. The consummation of the transactions
contemplated hereby (the "Closing") is taking place simultaneously
with the execution and delivery of this Agreement on September 2,
2005 (the "Closing Date"). The Closing shall be effective and deemed
to occur for all purposes at 12:01 a.m. Monday, August 29, 2005 (the
"Effective Time").
2.07 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 has executed, acknowledged (if appropriate)
and delivered to the Buyer:
(i) the Escrow Agreement;
(ii) the Guaranty; and
(iii) the Assignment and Assumption Agreement
(b) the Buyer has executed, acknowledged (if appropriate),
and delivered to the Seller:
(i) the Assignment and Assumption Agreement;
(ii) the Note; and
(iii) the Escrow Agreement.
3.0 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer that:
3.01 Organization of the Seller. The Seller is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Florida. The Seller has delivered to the Buyer
correct and complete copies of the charter and bylaws of the Seller
(as amended to date).
3.02 Authorization of Transaction. The Seller has 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 and
stockholders of the Seller have duly authorized the execution,
delivery and performance of the Acquisition Documents to which Seller
is a party. The Acquisition Documents constitute valid and legally
binding obligations of the Seller, enforceable in accordance with
their terms and conditions, in each case subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting creditors' rights and to
general equity principles.
2
3.03 Non-contravention. Neither the execution and 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, or other restriction of any
government, governmental agency or court to which the Seller is
subject or any provision of the charter or bylaws of the Seller, 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 is a party or by which the Seller is
bound or to which any of the Client Service Agreements is subject
(or result in the imposition of any Security Interest upon any of
its Client Service Agreements), or a material adverse effect on the
ability of Seller to consummate the transactions contemplated in the
Acquisition Documents.
3.04 Title to Agreements. Seller has good title to all of the
Client Service Agreements, free and clear of all Security Interests
or restrictions on transfer.
3.05 Schedule of Transferred Clients. Schedule 3.05 identifies
the Transferred Clients. The annualized gross revenues derived by
Seller from the Transferred Clients was not less than $228,000,000
during the four week period commencing July 11, 2005 and ending
August 7, 2005.
3.06 Client Service Agreements. As to the Seller 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, in each case subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application
relating to or affecting creditors' rights and to general equity
principles; (ii) neither the Seller nor any other party to any Client
Service Agreement is in material 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) no party to
any Client Service Agreement has repudiated to the Seller any
provision thereof or indicated to the Seller its intent to cancel
such Client Service Agreement.
3.07 Worksite Employees.
(a) The Seller is not a party to or bound by any collective
bargaining agreement related to any Transferred Client or any
Worksite Employees. The Seller has not, since January 1, 2004,
experienced any strikes, grievances, claims of unfair labor
practices as against the Seller, or other collective bargaining
disputes involving the Seller, related to any Transferred Client or
Worksite Employees. Since January 1, 2004, Seller has not 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
(b) The Seller is 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, including applicable wage
and hour laws, fair employment laws, safety laws, workers'
compensation statutes, unemployment laws, and social security laws.
With respect to the Seller and the PEO Business, there are no pending
or, to the Knowledge of the Seller, threatened claims,
investigations, charges, citations, hearings, consent decrees, or
2
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. 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. There is
no outstanding agreement or arrangement to which the Seller is a
party with respect to severance payments with respect to any Worksite
Employee.
3.08 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 material fact or omits to state any material
fact necessary in order to make the statements contained therein not
misleading, and all such representations, warranties and Schedules
are true and complete.
4.0 REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Seller that:
4.01 Authorization of Transaction. The Buyer 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. No approval of the stockholders
of the Buyer is required in order for the Buyer to consummate the
transactions contemplated by this Agreement. The Acquisition
Documents constitute the valid and legally binding obligations of
the Buyer, enforceable in accordance with their terms and conditions.
4.02 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 Buyer 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 Buyer is a party or by which it is bound or
to which any of its assets is subject. The Buyer 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.
4
4.03 Organization and Qualification. Buyer is an Illinois
limited liability company duly organized, validly existing and in
good standing under the laws of the State of Illinois and has full
power and authority to carry on its current business and to own, use
and sell its assets and properties.
5.0 POST-CLOSING COVENANTS. The Parties agree with respect to the
period following the Closing:
5.01 General; Access.
(a) 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).
(b) For a period of six years after the Closing Date the
Seller and its representatives shall have reasonable access to all
of the Books and Records transferred to Buyer hereunder to the extent
that such access may reasonably be required by the Seller in
connection with matters relating to or affected by the operations of
the Seller prior to the Effective Date. Such access shall be
afforded by the Buyer upon receipt of reasonable advance notice and
during normal business hours. The Seller shall be solely responsible
for any costs or expenses incurred by it pursuant to this Section
5.01. If the Buyer shall desire to dispose of any of such Books and
Records prior to the expiration of such six-year period, the Buyer
shall, prior to such disposition, give the Seller a reasonable
opportunity, at the Seller's expense, to segregate and remove such
Books and Records as the Seller may select.
(c) For a period of six years after the Closing Date, the
Buyer and its representatives shall have reasonable access to all of
the Books and records relating to the Client Service Agreements which
the Seller may retain after the Closing Date. Such access shall be
afforded by the Seller upon receipt of reasonable advance notice and
during normal business hours. The Buyer shall be solely responsible
for any costs and expenses incurred by it pursuant to this Section
5
5.01. If the Seller shall desire to dispose of any of such Books
and records prior to the expiration of such six-year period, the
Seller shall, prior to such disposition, give the Buyer a reasonable
opportunity, at the Buyer's expense, to segregate and remove such
Books and records as the Buyer may select.
5.02 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 prior to
the Effective Time 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).
5.03 Transition. The Seller will not 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 Buyer after the Closing as it maintained with the Seller
prior to the Closing. The Seller will refer all Transferred Client
inquiries relating to the Client Service Agreements to the Buyer from
and after the Closing. The Seller shall cooperate with and use
commercially reasonable efforts to assist the Buyer in obtaining any
required consents of other parties to assignments of any of the
Client Service Agreements not obtained prior to the date hereof. The
Buyer shall be entitled to all payments under the Client Service
Agreements attributable to services performed by the Buyer (or its
designee) under any Client Service Agreement from and after the
Effective Time, and the Seller shall be entitled to all amounts paid
by Transferred Clients under the Client Service Agreements for
services performed by the Seller prior to the Effective Time. Each
Party shall promptly deliver to the other any money or document it
receives that belongs to the other Party.
5.04 Tax Matters. The following provisions shall govern the
allocation of responsibility as between the Buyer and the Seller for
certain tax matters following the Closing Date:
(a) The Buyer 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 Buyer 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 Buyer 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.
6
(b) The Buyer 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 with respect to the transactions contemplated
herein).
6.0 REMEDIES FOR BREACHES OF THIS AGREEMENT.
6.01 Survival of Representations, Warranties, Covenants and
Agreements.
(a) All of the representations and warranties of the Seller
shall survive the Closing (even if the Buyer 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 until the fifth
anniversary of the Closing Date.
(b) All of the representations and warranties of the Buyer
shall survive the Closing (even if the Seller 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 until the fifth
anniversary of the Closing Date.
6.02 Indemnification Provisions for Benefit of the Buyer.
(a) In the event that the Seller breaches any of its
representations, warranties, covenants and agreements contained in
this Agreement, and, provided that the Buyer makes a written claim
for indemnification against the Seller within the time period set
forth in Section 6.01(a), the Seller agrees to indemnify the Buyer
from and against the entirety of any Adverse Consequences the Buyer
may suffer resulting from, arising out of or caused by the breach.
The Parties acknowledge that Seller is in breach of numerous
representations and warranties made herein and that, notwithstanding
such acknowledgement and Buyer's prior awareness thereof, Buyer shall
be entitled to indemnification therefore in accordance herewith.
(b) The Seller also agrees to indemnify the Buyer and its
affiliates, officers, employees, agents and representatives (the
"Indemnified Parties") from and against the entirety of any Adverse
Consequences the Indemnified Parties may suffer resulting from,
arising out of, in connection with, or caused by:
(i) any liability, act, event, occurrence or
circumstances in respect of or relating to the Client Service
Agreements and PEO Business of Seller that occurred prior to the
Effective Time (other than any Assumed Liability);
(ii) any Liability of the Seller for unpaid Taxes with
respect to any Tax year or portion thereof ending before the
Effective Time (or for any Tax year beginning before and ending after
the Effective Time to the extent allocable to the portion of such
period beginning before and ending immediately prior to the
Effective Time),
7
(iii) any liability not expressly assumed by Buyer; or
(iv) any Adverse Consequences suffered by an Indemnified
Party in defending or otherwise becoming involved in any proceeding
directly or indirectly relating to the transactions contemplated
hereby, including without limitation actions by Seller's creditors
involving the Indemnified Parties, and specifically including as
Adverse Consequences 150% of the time value of Buyer's employees lost
to involvement in any such proceedings, but excluding actions as to
which Seller enjoys a right to indemnification hereunder and
excluding actions wherein the Indemnified Party is adjudged to have
acted with criminal intent.
Notwithstanding the foregoing, Seller shall receive a credit against
its obligations hereunder to the extent Buyer's out of pocket costs
with respect to the Assumed Insurance Liabilities are less than
$1,300,000.
Any amounts due Buyer or an Indemnified Party from Seller hereunder
may be satisfied by Buyer offsetting its obligations under the Note
or under any other monetary obligation owing to Buyer from Seller.
6.03 Indemnification Provisions for Benefit of the Seller.
(a) In the event the Buyer breaches 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 Buyer prior to the first anniversary of
the Closing Date, then the Buyer 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.
(b) The Buyer also agrees to indemnify the Seller from and
against the entirety of any Adverse Consequences the Seller may
suffer resulting from, arising out of, in connection with, or caused
by:
(i) any act, event, occurrence or circumstances in
respect of or relating to the Client Service Agreements that occurs
after the Effective Time, other than an act, event, occurrence or
circumstance which is subject to indemnification under Section 6.02;
and
(ii) any Liability of the Buyer for unpaid Taxes with
respect to any Tax year or portion thereof ending after the Effective
Time (or for any Tax year beginning before and ending after the
Effective Time to the extent allocable to the portion of such period
beginning after the Effective Time).
8
6.04 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"), 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 assume the
defense of such 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 Indemnifying 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. So long as
the Indemnifying Party is conducting the defense of the Third party
Claim, the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third
party Claim.
(c) In the event any of the conditions in Subparagraph 6.04
(b) is or becomes unsatisfied, (i) the Indemnified Party may assume
the defense of the Third party Claim with counsel of its choice, (ii)
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) 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 provided by this Agreement.
(d) The Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to any Third
party Claim if such settlement would obligate the indemnifying Party
to pay money, perform obligations or admit liability without the
prior written consent of the Indemnified Party (not to be withheld
unreasonably), and the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to
any Third party Claim if such settlement would obligate the
Indemnified Party to pay money, perform obligations or admit
liability without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably).
9
6.05 Exclusive Remedies. Except for remedies that cannot be
waived as a matter of law and injunctive and provisional relief
(including specific performance), this Article 6.0 and Section 7.11
shall be the exclusive remedy for breaches of this Agreement
(including any covenant, obligation, representation or warranty
contained in this Agreement or in any certificate delivered pursuant
to this Agreement).
6.06 Mitigation. Each of the Parties agrees to take all
reasonable steps to mitigate their respective Adverse Consequences
upon and after becoming aware of any event or condition which could
reasonably be expected to give rise to any Adverse Consequences that
are indemnifiable hereunder.
7.0 MISCELLANEOUS.
7.01 Worksite Employee Benefits. The Parties shall cooperate to
ensure an orderly transition of healthcare and other benefits for the
Worksite Employees to plans sponsored by Buyer.
7.02 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 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.
7.03 No Third party Beneficiaries. Except as set forth in Section
6.02, this Agreement shall not confer any rights or remedies upon any
Person other than the Parties and their respective successors and
permitted assigns.
7.04 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 that
Buyer may assign this Agreement in connection with a transfer of all
or substantially all of its assets and business.
7.05 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. Delivery
of facsimile signature pages shall have the same legal and
evidentiary effect as delivery of original signature pages.
7.06 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 Buyer 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.
7.07 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.
10
7.08 Expenses. Each of the Buyer and the Seller 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.
7.09 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 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.
7.10 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.
7.11 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.
7.12 Governing Law, Venue. This Agreement shall be governed by
and construed in accordance with the internal laws of the
Commonwealth of Kentucky. The parties hereby irrevocably submit to
the exclusive jurisdiction and venue of any state court sitting in
Jefferson County, Kentucky in any action or proceeding arising out
of or relating to this Agreement, and the parties hereby irrevocably
agree that all claims in respect of such action or proceeding may
be heard and determined in such State Court. The parties hereby
irrevocably waive, to the fullest extent they may do so, the defense
of an inconvenient forum to the maintenance of such action or
proceeding. The parties hereby consent and agree that the summons
and complaint and any other process which may be served in any such
action or proceeding may be served by mailing (by registered or
certified mail) or delivering a copy of such process to the opposing
11
party at its address set forth below. The parties agree that a
final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
12
IN WITNESS WHEREOF, the Parties hereto have executed this
Customer Assignment Agreement on the date first above written.
O2 HR, LLC
BY: /s/ Xxxxxx Xxxx
-------------------------
Xxxxxx Xxxx, Manager
Address:
00000 Xxxxxxx Xxx.
Xxxxxxxxxx, XX 00000
CERTIFIED HR SERVICES COMPANY II
BY: /s/ Xxxxx Xxxxxx
----------------------------
Xxxxx Xxxxxx, President
Address:
000 Xxxxx Xx.
Xxxxx 000
Xxxx Xxxxxxx, XX 00000
13
GLOSSARY OF TERMS
1.0 Definitions.
"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.
"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,
including without limitation punitive, special or consequential or
opportunity cost damages of any kind or the loss of anticipated or
future business profits.
"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
reasonably form the basis for any specified consequence.
"Books and Records" means all existing data, data bases, books,
records, correspondence, 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,
including employment applications, corrective action reports,
disciplinary reports, other similar documents, and any summaries of
such documents prepared by a Transferred Client or the Seller and in
the possession of the Seller; all reported workers' compensation or
medical claims made for each Worksite Employee; and all manuals and
printed material of the Seller relating to the Worksite Employees
and the Transferred Clients.
"Client Service Agreement" means each contract between the
Seller, on the one hand, and a client, on the other hand, pursuant
to which the Seller provides PEO Services to such client.
"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 quasi-governmental powers).
"Knowledge" means actual knowledge and with respect to the Seller
such knowledge after due inquiry.
"Labor Claims" means claims based on an employment relationship
or termination of an employment relationship.
14
"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.
"PEO Services" means the services provided by the Seller to the
Transferred Clients under Client Service Agreements as part of the
PEO Business.
"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 Body.
"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.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest.
"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.
"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.
"Transferred Client" and "Transferred Clients" means individually
and collectively each client who is party to a Client Service
Agreement with Seller.
"Worksite Employees" means the employees of the Transferred
Clients who by reason of the Client Service Agreements are also
employed by Seller.
15
Schedule 2.02 - Assumed Liabilities
1. Client Service Agreements for the Transferred Clients
2. Surplus, claims collateral and incurred claims liabilities under
insurance policies with Providence Property & Casualty Insurance
Company and Imperial Casualty and Indemnity Company in an amount
not to exceed $1.3 million
3. Additional liabilities in the amount of $1.0 million, to be
mutually agreed upon between Seller and Buyer, giving due
consideration to the possible priority of the claim to which the
liability relates and its status as a secured or unsecured
liability, and provided further such amount shall not be required
to be assumed and paid out at an overall rate in excess of 1/60th
per month.
Schedule 3.05 - Transferred Clients
[INTENTIONALLY DELETED]
Exhibit 2.02 - Assignment and Assumption Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
Certified HR Services Company ("Assignor") hereby assigns to
O2 HR, LLC ("Assignee"), and Assignee hereby assumes, Assignor's
obligations and rights (if applicable) under the agreements and
instruments set forth in Schedule 2.02 and the Client Service
Agreements set forth in Schedule 3.05 of the Customer Assignment
Agreement between them dated the date hereof (the "Agreement"), in
partial consideration of the purchase price paid by Assignee to
Assignor under the Agreement. Assignor hereby also transfers to
Assignee the good will associated with the Client Service Agreements
and the Books and Records, as defined in the Agreement.
Dated: September 2, 2005
O2 HR, LLC
BY: /s/ Xxxxxx Xxxx
-------------------------
Xxxxxx Xxxx, Manager
CERTIFED HR SERVICES COMPANY
BY: /s/ Xxxxx Xxxxxx
-------------------------
Xxxxx Xxxxxx, President
16
Exhibit 2.03 - Promissory Note
PROMISSORY NOTE
$6,843,198 September 2, 2005
FOR VALUE RECEIVED, O2 HR, LLC (the "Maker"), hereby promises to pay
to Certified HR Services Company II ("Payee"), Six Million, Eight
Hundred Forty Three Thousand, One Hundred and Ninety Eight Dollars
payable in 60 consecutive equal monthly payments in the amount of One
Hundred Fourteen Thousand, Fifty Three Dollars and Thirty Cents
($114,053.30) on the 1st day of each month beginning October 2, 2005,
and continuing until the entire indebtedness is fully paid. Except
as provided below, this Note shall bear no interest. Maker shall
have the right to prepay this Note without penalty or charge of any
kind. Maker shall make all payments hereunder to the Escrow Agent
as provided in the Escrow Agreement between Maker and Payee dated
the date hereof.
If any deficiency in the payment of any installment under this
Note is not made good prior to twenty (20) days after same becomes
due and payable, the entire balance shall at once become due and
payable at the option of the holder of this Note upon written notice
to Maker. In the event of default hereunder, the unpaid balance
shall bear interest at ten percent (10%) per annum. Failure to
exercise this option shall not constitute a waiver of the right to
exercise the same in the event of any subsequent default.
Presentment, demand and protest, and notices of protest,
dishonor, and non-payment of this Note and all notices of every kind
are hereby waived. No single or partial exercise of any power
hereunder shall preclude the other or further exercise thereof or the
exercise of any other power. No delay or omission on the part of
Payee in exercising any right hereunder shall operate as a waiver of
such right or of any other right under this Note. Maker shall pay
Payee's reasonable costs of collection in the event of default
hereunder.
This Note shall be deemed to be a contract made under the laws of
the Commonwealth of Kentucky. Section 7.12 of the Customer Assignment
Agreement between Maker and Payee is incorporated herein by
reference.
MAKER:
O2 HR, LLC
BY: /s/ Xxxxxx Xxxx
--------------------------
Xxxxxx Xxxx, Manager
17
Exhibit 2.04 - Escrow Agreement
ESCROW AGREEMENT
This is an Escrow Agreement dated as of September 2, 2005 between
O2 HR, LLC ("Buyer"), Certified HR Services Company II ("Seller")
(Buyer and Seller being, collectively, the "Parties") and Xxxxxx
Xxxxxxxxxxx (the "Escrow Agent").
Recitals
Buyer will be depositing certain funds with Escrow Agent pursuant
to a promissory note of Buyer to Seller dated the date hereof (the
"Escrowed Funds"), and the Parties desire that the Escrowed Funds be
retained and disbursed for the benefit of Seller's creditors who
have or may have a security interest in the Escrowed Funds or in the
property of Seller transferred pursuant to the Customer Assignment
Agreement between them dated the date hereof.
Agreements
1. Agency, Investment. The Escrow Agent shall act as escrow
agent for the parties in accordance with the terms and conditions of
this Agreement. The Escrowed Funds shall be deposited with such
institution(s) and invested in such investments as directed by the
Parties in writing from time-to-time.
2. Release. The Escrow Agent shall from time-to-time release
Escrowed Funds, together with accumulated interest thereon (if any),
upon receipt of a joint instruction from the Parties, or in the event
of a dispute as to disposition of the Escrowed Funds between the
Parties, upon receipt of a direction from the authority resolving
such dispute (i.e. the arbitrator or court).
3. Termination. Escrow Agent's services hereunder shall
terminate upon satisfaction of the Note and disbursement of all the
Escrowed Funds.
4. Provisions Concerning the Escrow Agent.
4.1 Escrow Agent may resign and be discharged from their duties
hereunder at any time by giving notice of such resignation to the
Parties specifying a date when such resignation shall take effect.
The Parties may jointly remove the Escrow Agent as escrow agent by
giving notice of such removal to the Escrow Agent and specifying a
date when such removal shall take effect. Upon such notice, the
Parties shall appoint a successor escrow agent, such successor escrow
agent to become escrow agent hereunder upon the resignation or
removal date specified in the appropriate notice. Escrow Agent
shall continue to serve until the successor accepts the escrow and
receives the funds.
4.2 Escrow Agent undertakes to perform such duties as are
specifically set forth herein and may conclusively rely, and shall be
protected in acting or refraining from acting, on any written notice,
instrument, or signature believed by them to be genuine and to have
been signed or presented by the proper party or parties duly
authorized to do so.
18
4.3 The Escrow Agent shall not be liable for any action taken or
omitted to be taken by it in good faith and believed by it to be
authorized hereby or within the rights or powers conferred upon it
hereunder, nor for any action taken or omitted to be taken by it in
good faith, and in accordance with the advice of counsel (which
counsel may be of Escrow Agent's own choosing), and shall not be
liable for any mistake of fact or error of judgment or for any acts
or omissions of any kind unless caused by willful misconduct or
gross negligence.
4.4 The Parties agree to indemnify the Escrow Agent and hold
them harmless against any and all liabilities incurred by them
hereunder, except in the case where such liabilities result from
their own willful misconduct or gross negligence.
5. Settlement of Disputes. Any dispute that may arise under
this Agreement with respect to the delivery or ownership or right of
possession of the Escrowed Funds, or the duties of the Escrow Agent
hereunder, shall be settled either by mutual agreement of the parties
concerned (evidenced by appropriate instructions in writing to the
Escrow Agent signed by all of the parties) or by binding arbitration,
or by a final order, decree, or judgment of a court of competent
jurisdiction in the United States of America (the time for appeal
having expired and no appeal having been perfected), all costs and
expenses of which (including reasonable attorney's fees) shall be
borne by the parties against which the dispute is settled. Escrow
Agent shall be under no duty whatsoever to institute or defend any
such proceedings. Prior to the settlement of any such dispute,
Escrow Agent is authorized and directed to retain the Escrowed Funds
in its possession without liability to anyone.
6. Miscellaneous. Section 7.12 of the Customer Assignment
Agreement between the Parties dated the date hereof is hereby
incorporated by reference. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous
agreements, representations, and understandings of the parties.
There shall be no third party beneficiaries to this Agreement.
Escrow Agent shall receive no compensation in connection with their
duties hereunder.
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement as of the date first above written.
[intentionally left blank]
19
[signature page to Escrow Agreement]
SELLER:
CERTIFIED SERVICES, INC.
BY: /s/ Xxxxx Xxxxxx
------------------------
Xxxxx Xxxxxx, President
BUYER:
O2 HR, LLC
BY: /s/ Xxxxxx Xxxx
-------------------------
Xxxxxx Xxxx, Manager
ESCROW AGENT:
/s/ Xxxxxx Xxxxxxxxxxx
----------------------------
Xxxxxx Xxxxxxxxxxx
20
Exhibit 2.05 - Guaranty
GUARANTY
In consideration of O2 HR, LLC entering into the Purchase
Agreement with Certified HR Services Company II ("Guarantor"),
Guarantor hereby guarantees to O2 HR, LLC ("O2") the timely and
complete performance by Certified Services, Inc. ("Obligor") of all
of Obligor's obligations to O2 provided in the September 2, 2005
Purchase Agreement between O2 and Obligor dated the date hereof.
Obligor's obligations hereunder shall not exceed $9 million and shall
terminate on the sixth anniversary date hereof. O2 may proceed
forthwith against the Guarantor to obtain performance and payment of
any amount owing O2 from Obligor without first proceeding against the
Obligor or availing itself of any other remedies they may have.
Section 7.12 of the Customer Assignment Agreement between Guarantor
and O2 is hereby incorporated by reference.
CERTIFIED HR SERVICES COMPANY II
BY: /s/ Xxxxx Xxxxxx
-------------------------------
Xxxxx Xxxxxx, President
21
