EXHIBIT 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
AMONG
GEVITY HR, INC.,
EPIX HOLDINGS CORPORATION
AND
THE SUBSIDIARIES OF EPIX HOLDINGS CORPORATION NAMED HEREIN
March 26, 2004
TABLE OF CONTENTS
LIST OF EXHIBITS AND SCHEDULES
1.0 Definitions 1
2.0 Basic Transaction 1
2.01 Purchase and Sale of Assets...................................................................... 1
2.02 Assumption of Assumed Liabilities................................................................ 1
2.03 Purchase Price and Payment....................................................................... 1
2.04 The Closing...................................................................................... 2
2.05 Deliveries at the Closing........................................................................ 2
2.06 Allocation....................................................................................... 3
2.07 Apportionments................................................................................... 3
2.08 Designated Employees............................................................................. 3
3.0 Representations and Warranties of the Seller and the Subsidiaries 4
3.01 Organization and Capitalization of the Seller and the Subsidiaries............................... 4
3.02 Authorization of Transaction..................................................................... 5
3.03 Non-contravention................................................................................ 5
3.04 Brokers' Fees.................................................................................... 5
3.05 Title to Assets.................................................................................. 6
3.06 Schedule of Transferred Clients 6
3.07 Tax Matters...................................................................................... 6
3.08 Powers of Attorney............................................................................... 6
3.09 Insurance Contracts.............................................................................. 6
3.10 Litigation....................................................................................... 7
3.11 Client Service Agreements........................................................................ 7
3.12 Worksite Employees; Designated Employees......................................................... 7
3.13 Assumed Employee Plans........................................................................... 8
3.14 Intentionally Omitted............................................................................ 10
3.15 Financial Statements............................................................................. 10
3.16 Events Subsequent to the Balance Sheet Date...................................................... 11
3.17 Legal Compliance................................................................................. 11
3.18 Disclosure....................................................................................... 11
3.19 Referral Sources................................................................................. 11
4.0 Representations and Warranties of the Purchaser. 11
4.01 Organization of the Purchaser.................................................................... 11
4.02 Authorization of Transaction..................................................................... 11
4.03 Non-contravention................................................................................ 12
4.04 Brokers' Fees.................................................................................... 12
5.0 Post-Closing Covenants 12
5.01 General; Access.................................................................................. 12
5.02 Litigation Support............................................................................... 13
5.03 Transition....................................................................................... 13
5.04 Confidentiality.................................................................................. 13
5.05 Covenant Not to Compete.......................................................................... 13
5.06 Tax Matters...................................................................................... 14
5.07 WARN Act......................................................................................... 14
5.08 Agreements with Referral Sources................................................................. 14
5.09 Voluntary Correction Program..................................................................... 15
i
6.0 Remedies for Breaches of this Agreement. 15
6.01 Survival of Representations, Warranties, Covenants and Agreements................................ 15
6.02 Indemnification Provisions for Benefit of the Purchaser.......................................... 15
6.03 Indemnification Provisions for Benefit of the Seller............................................. 17
6.04 Matters Involving Third Parties.................................................................. 18
6.05 Exclusive Remedies............................................................................... 19
6.06 Mitigation....................................................................................... 19
7.0 Miscellaneous. 19
7.01 Employee Matters................................................................................. 19
7.02 Press Releases and Public Announcements.......................................................... 19
7.03 No Third Party Beneficiaries..................................................................... 20
7.04 Entire Agreement................................................................................. 20
7.05 Succession and Assignment........................................................................ 20
7.06 Counterparts..................................................................................... 20
7.07 Headings......................................................................................... 20
7.08 Notices.......................................................................................... 20
7.09 Governing Law.................................................................................... 21
7.10 Amendments and Waivers........................................................................... 21
7.11 Severability..................................................................................... 22
7.12 Expenses......................................................................................... 22
7.13 Construction..................................................................................... 22
7.14 Incorporation of Exhibits and Schedules.......................................................... 22
7.15 Specific Performance............................................................................. 22
Exhibit A - List of Subsidiaries
Exhibit B - Form of Transition Services Agreement
Exhibit C - Apportionment Schedule
Exhibit D - Professional Services Agreement
Exhibit E - Assignment and Assumption Agreements
Exhibit F - Escrow Agreement
DISCLOSURE SCHEDULE
Schedule of Transferred Clients: List of Clients, Annual Administrative Fee,
Number of Worksite Employees and Other Information
ii
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into as of March 26, 2004, by and among Gevity HR, Inc., a Florida corporation
(the "Purchaser"), EPIX Holdings Corporation, a Delaware corporation (the
"Seller"), and the subsidiaries of the Seller listed on Exhibit A attached
hereto (individually, a "Subsidiary", and collectively, the "Subsidiaries"). The
Purchaser, the Seller and the Subsidiaries are referred to herein individually
as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, this Agreement contemplates a transaction in which
simultaneously with the execution and delivery of this Agreement the Purchaser
will purchase, and the Seller and the Subsidiaries will sell and assign to
Purchaser, certain assets of the professional employer organization services
business (the "PEO Business") of the Seller and the Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the mutual
promises made in this Agreement, and in consideration of the representations,
warranties, and covenants contained in this Agreement, the Parties agree as
follows.
1.0 DEFINITIONS. For purposes of this Agreement and the Acquisition
Documents, the capitalized terms shall have the meanings set forth in the
attached Glossary of Terms.
2.0 BASIC TRANSACTION.
2.01 Purchase and Sale of Assets. Upon and subject to the
terms and conditions of this Agreement, simultaneously with the execution and
delivery of this Agreement, the Purchaser is purchasing from the Seller and the
Subsidiaries, and the Seller and the Subsidiaries are selling, transferring,
conveying, assigning, and delivering to the Purchaser, all of the Acquired
Assets, 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, simultaneously with the execution
and delivery of this Agreement, the Purchaser is assuming and becoming
responsible for the performance and satisfaction of the Assumed Liabilities.
Under no circumstances will the Purchaser assume or have any responsibility with
respect to any of the Excluded Liabilities. The Seller will remain responsible
for the performance and satisfaction of the Excluded Liabilities.
2.03 Purchase Price and Payment.
(a) The purchase price for the Acquired Assets shall
be $36 million, subject to adjustment as provided in Section 2.03(b) (the
"Purchase Price"). Simultaneously with the execution and delivery of this
Agreement, the Purchaser is delivering $33.5 million of the Purchase Price to
EPIX I, Inc., for its own account as a Subsidiary and as agent for the Seller
and the Subsidiaries, by wire transfer or other delivery of immediately
available funds. On the Closing Date, the Purchaser will deposit $2.5 million of
the Purchase Price with the Escrow
1
Agent, to be held and disbursed in accordance with this Agreement and the
provisions of the Escrow Agreement.
(b) In the event the Seller is required to pay
directly or indirectly to AIG a Short-Rate Penalty as a result of the
termination by the Seller of its workers' compensation insurance program with
AIG, the Purchase Price shall be increased by an amount equal to one-half of the
amount of the Short-Rate Penalty paid by the Seller to AIG up to a maximum
amount of $800,000, and references to the Purchase Price in this Agreement shall
mean the sum of (i) $36 million plus (ii) the amount owed by the Purchaser
pursuant to this Section 2.03(b). The Purchaser shall pay any amount so owed by
wire transfer of immediately available funds to an account specified by the
Seller within three days after receiving notice from the Seller specifying the
amount of such short-rate penalty due, accompanied by written evidence
reasonably satisfactory to the Purchaser establishing that such payment is due.
2.04 The Closing. The Closing is taking place simultaneously
with the execution and delivery of this Agreement at the offices of the
Purchaser, 600 000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxx. The Closing
shall be effective and deemed to occur for all purposes hereunder at 12:01 a.m.
eastern time on March 27, 2004 following the Closing Date (the "Effective
Time").
2.05 Deliveries at the Closing. In addition to any other
documents to be delivered under other provisions of this Agreement, at the
Closing:
(a) the Seller and the Purchaser have approved the
attached schedule of Transferred Clients which identifies as of March 19, 2004
(i) each of the Transferred Clients, (ii) the annualized administrative fees for
such Transferred Clients, (iii) the number of Worksite Employees of such
Transferred Clients and (iv) the payroll processing periods for the Transferred
Clients (the "Schedule of Transferred Clients");
(b) the Seller has executed, acknowledged (if
appropriate) and delivered (or caused the Subsidiaries to execute, acknowledge
and deliver) to the Purchaser:
(i) evidence that the consents listed in
Schedule 2.05 of the Disclosure Schedule have all been
obtained;
(ii) assignment agreement(s) transferring
title to the Acquired Assets to the Purchaser in the form
attached as Exhibit E; and
(iii) a certificate of the Secretary of the
Seller and the Secretaries of each of the Subsidiaries
certifying and attaching all requisite resolutions or actions
of the boards of directors and shareholders of the Seller and
the Subsidiaries approving the execution and delivery by the
Seller and the Subsidiaries, as the case may be, of the
Acquisition Documents to which they are a party and the
consummation of the transactions contemplated in such
Acquisition Documents, and certifying to the incumbency and
signatures of the officers of the Seller and the Subsidiaries
executing the Acquisition Documents and any other document
relating to the transactions contemplated by this Agreement;
2
(c) the Purchaser has executed, acknowledged (if
appropriate), and delivered to the Seller and the Subsidiaries:
(i) assumption agreement(s) pursuant to
which the Purchaser is assuming the Assumed Liabilities in the
form attached as Exhibit E; and
(ii) a certificate of the Secretary of the
Purchaser certifying and attaching all requisite resolutions
or actions of the Purchaser's board of directors approving the
execution and delivery of the Acquisition Documents to which
it is a party and the consummation of the transactions
contemplated in such Acquisition Documents, and certifying to
the incumbency and signatures of the officers of the Purchaser
executing the Acquisition Documents to which it is a party and
any other document relating to the transactions contemplated
by this Agreement;
(d) the Purchaser and the Seller have executed and
delivered the Transition Services Agreement in the form attached hereto as
Exhibit B;
(e) the Purchaser and the Seller have executed and
delivered a Professional Services Agreement in the form attached hereto as
Exhibit D pursuant to which the Seller and one or more of the Subsidiaries will
become a client of the Purchaser; and
(f) the Purchaser, the Seller, the Subsidiaries and
the Escrow Agent have executed and delivered the Escrow Agreement in the form of
Exhibit F.
2.06 Allocation. The Parties agree to cooperate with each
other in connection with the allocation of the Purchase Price among the Acquired
Assets and the preparation of the statements and forms required by Section 1060
of the Code and the Treasury Regulations. The Parties shall finalize the
allocation on or prior to the twentieth day following the Closing Date or such
later date as the Seller and the Purchaser mutually agree upon. The Parties will
make all necessary tax filings related to such allocation.
2.07 Apportionments. At the Closing, the items described on
Exhibit C shall be apportioned between the Seller and the Purchaser in the
manner set forth on Exhibit C. Immediately following the Closing, the Purchaser
and the Seller shall cooperate with each other and work diligently to reconcile
the items described on Exhibit C and to the extent payment to either Party
pursuant to such apportionment was not made on the Closing Date, additional
payments shall be made by the Party owing the other Party. In the event of a
dispute between the Parties as to the proper apportionment, the matter in
dispute shall be referred to a firm of independent auditors mutually
satisfactory to the Parties which is not serving as the independent auditors for
either Party, and the determination of such independent auditors as to such
matter shall be conclusive and binding on the Parties. The fees and expenses of
such independent auditors shall be borne by the Party whose position is not
agreed to by such independent auditors.
2.08 Designated Employees. The Purchaser will offer employment
to each of the employees of the Seller named on the Schedule of Designated
Employees which has been provided by the Purchaser to the Seller (the
"Designated Employees"). The Seller will provide to
3
the Purchaser the respective periodic wages, salary and commission rates for the
Designated Employees. It is understood and agreed that the employment offered by
the Purchaser to each Designated Employee will be "at will" and may be
terminated by the Purchaser or the Designated Employee at any time for any
reason (subject to any written commitments to the contrary made between the
Purchaser and a Designated Employee); provided, however, that if any Designated
Employee is terminated without cause by the Purchaser within the number of days
of his or her hire date set forth on the Schedule of Designated Employees under
the column headed "Applicable Employment Period," Purchaser agrees to pay such
Designated Employee, as severance, the amount set forth on the Schedule of
Designated Employees under the column headed "Applicable Severance Amount." With
respect to Designated Employees for whom the Applicable Employment Period is
listed as "Indefinite" and for whom the "Applicable Severance Amount" is listed
as "Gevity Plan," the Purchaser agrees that, for purposes of determining such
Designated Employees' severance benefits under such plan, such Designated
Employee shall receive credit for all service with the Seller as if such
Designated Employee was employed by the Purchaser for such period of service.
Nothing in this Agreement shall be deemed to prevent or restrict in any way the
right of the Purchaser to terminate, reassign, promote or demote any of the
Designated Employees employed by the Purchaser or to change adversely or
favorably the title, powers, duties, responsibilities, functions, locations,
salaries, other compensation or terms or conditions of employment of such
Designated Employees.
3.0 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SUBSIDIARIES.
The Seller and each of the Subsidiaries represent and warrant to the Purchaser
that, except as set forth in the disclosure schedule (the "Disclosure Schedule")
attached by the Parties (it being understood that the disclosure of any fact
with respect to any section of this Agreement shall be deemed to be disclosure
of that fact with respect to every other section of this Agreement, provided
that it reasonably ascertainable that such disclosure would reasonably apply to
another section or sections of this Agreement):
3.01 Organization and Capitalization of the Seller and the
Subsidiaries.
(a) The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Seller is duly qualified to conduct business as a foreign corporation and is
in good standing under the laws of each jurisdiction where such qualification is
required except where the lack of such qualification would not have a material
adverse effect on the Acquired Assets (a "Seller Material Adverse Effect"). The
Seller has full corporate power and authority to carry on the PEO Businesses in
which it is engaged. The Seller has delivered to the Purchaser correct and
complete copies of the charter and bylaws of the Seller (as amended to date).
For purposes of this Agreement, any event, occurrence, state of facts,
developments, breaches or defaults which, individually or in the aggregate,
adversely affects (i) one or more Transferred Clients which in the aggregate
have more than 3,000 Worksite Employees, or (ii) one or more Transferred Clients
which in the aggregate account for 5% or more of the total annualized
administrative fees for all Transferred Clients as of March 19, 2004, shall be
deemed to be a Seller Material Adverse Effect.
(b) Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. All of the issued and outstanding shares of capital stock of each
of the Subsidiaries are owned directly or indirectly by
4
the Seller. Each Subsidiary is duly qualified to conduct business as a foreign
corporation and is in good standing under the laws of each jurisdiction where
such qualification is required, except where the lack of such qualification
would not have a Seller Material Adverse Effect. Each Subsidiary has full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the PEO Business in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used by
it, except where the lack of any such license, permit or authorization would not
have a Seller Material Adverse Effect on the PEO Business. The Seller has
delivered to the Purchaser correct and complete copies of the charter and bylaws
of each Subsidiary (as amended to date). The PEO Business is conducted entirely
by the Subsidiaries.
3.02 Authorization of Transaction. Each of the Seller and the
Subsidiaries has full 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 and the board of directors and sole stockholder
of each Subsidiary have duly authorized the execution, delivery and performance
of the Acquisition Documents to which Seller or a Subsidiary is a party. The
Acquisition Documents constitute valid and legally binding obligations of the
Seller and each Subsidiary that is a party thereto, enforceable in accordance
with their terms and conditions, 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.
3.03 Non-contravention. Except as disclosed in Section 3.03 of
the Disclosure Schedule, neither the execution and the delivery of the
Acquisition Documents, nor the consummation or performance of the transactions
contemplated in the Acquisition Documents, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, or other
restriction of any government, governmental agency or court to which the Seller
or any Subsidiary is subject or any provision of the charter or bylaws of the
Seller or any Subsidiary, or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Seller or any Subsidiary is a party or by which the Seller or any
Subsidiary is bound or to which any of the Acquired Assets is subject (or result
in the imposition of any Security Interest upon any of its Acquired Assets)
except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a Seller Material Adverse Effect, or a material adverse
effect on the ability of Seller or any Subsidiary to consummate the transactions
contemplated in the Acquisition Documents. Section 3.03 of the Disclosure
Schedule sets forth each Governmental Authorization, and each notice to, filing
with, and authorization, consent, or approval of any Governmental Body or Third
Party, which is required to be obtained by the Seller or any Subsidiary in order
for the Parties and the Subsidiaries to consummate the transactions contemplated
in the Acquisition Documents.
3.04 Brokers' Fees. Neither the Seller nor any Subsidiary has
any Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated in the
Acquisition Documents other than any fees payable to UBS Warburg LLC, which
fees, to the extent payable, shall be the sole responsibility of the Seller.
5
3.05 Title to Assets. Except as set forth on Section 3.05 of
the Disclosure Schedule, the Seller or a Subsidiary has good title to all of the
Acquired Assets, free and clear of all Security Interests or restrictions on
transfer.
3.06 Schedule of Transferred Clients. The Schedule of
Transferred Clients accurately reflects the annualized administrative fees for
each of the Transferred Clients listed thereon, the number of Worksite Employees
of such Transferred Clients and the payroll processing dates for the Transferred
Clients, in each case, as of March 19, 2004.
3.07 Tax Matters.
(a) With respect to all Taxes, the nonpayment of
which would result in a lien or other encumbrance on any of the Acquired Assets,
would materially adversely affect the PEO Business or would result in Purchaser
or its Affiliates becoming liable or responsible therefor, except as set forth
on Section 3.07(a) of the Disclosure Schedule, (i) each of the Seller and the
Subsidiaries has filed on a timely basis all Tax Returns with respect to such
Taxes that it was required to file; (ii) all such Tax Returns were correct and
complete in all material respects; (iii) all Taxes owed by the Seller or any
Subsidiary (whether or not shown on any Tax Return) on or prior to the date
hereof have been paid; (iv) neither the Seller nor any Subsidiary is currently
the beneficiary of any extension of time within which to file any Tax Return
with respect to such Taxes; and (v) there are no Security Interests on any of
the assets of the Seller or any Subsidiary that arose in connection with any
failure (or alleged failure) to pay any such Tax.
(b) Except as set forth on Section 3.07(b) of the
Disclosure Schedule, the Seller (or a Subsidiary, as applicable) has withheld
and paid all Taxes which are due and are required to have been withheld and paid
in connection with amounts paid or owing to any Worksite Employee prior to the
Effective Time.
(c) Except as set forth on Section 3.07(c) of the
Disclosure Schedule, the Seller has not waived any statute of limitations in
respect of, or agreed to any extension of time with respect to an assessment or
deficiency relating to, any Taxes, the nonpayment of which would result in a
lien or other encumbrance on any of the Acquired Assets, would otherwise
adversely affect the PEO Business or would result in Purchaser or its Affiliates
becoming liable or responsible therefor.
(d) Except as set forth on Section 3.07(d) of the
Disclosure Schedule, no unpaid Taxes of Seller or any Subsidiary that are due
have created, or will create a lien or encumbrance on any of the Acquired
Assets.
3.08 Powers of Attorney. There are no outstanding powers of
attorney executed by or on behalf of the Seller or any Subsidiary that could
reasonably be expected to have a Seller Material Adverse Effect.
3.09 Insurance Contracts. The Seller has made available to the
Purchaser for inspection a true and complete copy of the Insurance Contracts,
including all endorsements and schedules thereto, listed in Section 3.09 of the
Disclosure Schedule. Except as set forth in Section 3.09 of the Disclosure
Schedule, as to the Seller and to the Knowledge of the Seller as to
6
any other party: (i) each Insurance Contract 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 Subsidiary nor any other party to such Insurance
Contract is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under such Insurance Contract; (iii)
all premiums due and payable by the Seller or any Subsidiary under the Insurance
Contracts prior to the Effective Time have been paid in full; and (iv) no party
to such Insurance Contract has repudiated to the Seller any provision thereof.
3.10 Litigation. Section 3.10 of the Disclosure Schedule sets
forth each instance in which the Seller or any Subsidiary (a) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (b) is a
party or, to the Knowledge of the Seller is threatened to be made a party, to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator, in each case relating,
directly or indirectly, to any Transferred Client, any Worksite Employee, any
Designated Employee, or any of the Acquired Assets.
3.11 Client Service Agreements. Except as set forth in Section
3.11 of the Disclosure Schedule, as to the Seller and each Subsidiary and to the
Knowledge of the Seller as to any other party: (i) each Client Service Agreement
is legal, valid, binding, enforceable and in full force and effect, 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 Subsidiary 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.
3.12 Worksite Employees; Designated Employees.
(a) Neither the Seller nor any Subsidiary is a party
to or bound by any collective bargaining agreement related to any Transferred
Client or any Worksite Employees. Neither the Seller nor any Subsidiary has,
since January 1, 2002, experienced any strikes, grievances, claims of unfair
labor practices as against the Seller or any Subsidiary, or other collective
bargaining disputes involving the Seller or any Subsidiary, related to any
Transferred Client or Worksite Employees. Since January 1, 2002, neither the
Seller nor any Subsidiary has committed or been charged or threatened with a
charge of any unfair labor practice. The Seller has no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to any Transferred Client or any Worksite Employees.
(b) Except as set forth in Section 3.12(b) of the
Disclosure Schedule, the Seller and each Subsidiary are in material compliance
with all applicable federal, state, local and foreign laws and regulations
concerning the employer-employee relationship and with all
7
agreements relating to the employment of its Worksite Employees and the
Designated Employees, including applicable wage and hour laws, fair employment
laws, safety laws, workers' compensation statutes, unemployment laws, and social
security laws. Except as described in Section 3.12(b) of the Disclosure
Schedule, with respect to the Seller and any Subsidiary and the PEO Business,
there are no pending or, to the Knowledge of the Seller, threatened claims,
investigations, charges, citations, hearings, consent decrees, or litigation
concerning: wages, compensation, bonuses, commissions, awards, or payroll
deductions, equal employment or human rights violations regarding race, color,
religion, sex, national origin, age, handicap, veteran's status, marital status,
disability, or any other recognized class, status, or attribute under any
federal, state, local or foreign equal employment law prohibiting
discrimination; representation petitions or unfair labor practices; grievances
or arbitrations pursuant to current or expired collective bargaining agreements;
occupational safety and health; workers compensation; wrongful termination,
negligent hiring, invasion of privacy or defamation; immigration or any other
Labor Claims. Except as disclosed in Section 3.12(b) of the Disclosure Schedule,
the Seller is not liable for any unpaid wages, bonuses, or commissions (other
than those not yet due) or any tax, penalty, assessment, or forfeiture for
failure to comply with any of the foregoing. Except as described in Section
3.12(b) of the Disclosure Schedule, there is no outstanding agreement or
arrangement to which the Seller or any Subsidiary is a party with respect to
severance payments with respect to any Designated Employee or any Worksite
Employee.
3.13 Assumed Employee Plans.
(a) Set forth in Section 3.13 of the Disclosure
Schedule is a complete and correct list of the only employee benefit plans, as
defined by Section 3(3) of ERISA, that (i) are maintained or contributed to by
either the Seller as an employer or any other corporation or trade or business
as an employer that is controlled by, controlling or under common control with
the Seller (within the meaning of Section 414 of the Code or Section 4001(a)(14)
or 4001(b) of ERISA) ("ERISA Affiliate"); (ii) provide benefits to any current
or former director, officer or employee of Seller, Worksite Employee or service
provider of the Seller or any ERISA Affiliate of the Seller, or the dependents
of any thereof; and (iii) are to be assumed by the Purchaser (individually, an
"Assumed Employee Plan" and, collectively, the "Assumed Employee Plans").
(b) For each Assumed Employee Plan, the Seller has
delivered to the Purchaser true, accurate and complete copies of (i) the
documents comprising each Assumed Employee Plan; (ii) all trust agreements,
insurance contracts or any other funding instruments related to each Assumed
Employee Plan; (iii) all rulings, determination letters, no-action letters or
advisory opinions from the IRS, the U.S. Department of Labor, the PBGC or any
other Governmental Body that pertain to each Assumed Employee Plan and any open
requests therefor; (iv) the most recent actuarial and financial reports (audited
and/or unaudited) and the annual reports filed with any Governmental Body with
respect to each Assumed Employee Plan during the current year and each of the
three preceding years; (v) all contracts with third-party administrators,
actuaries, investment managers, consultants and other independent contractors
that relate to any Assumed Employee Plan; and (vi) all summary plan
descriptions, summaries of material modifications and memoranda, employee
handbooks and other written communications regarding each Assumed Employee Plan.
8
(c) Except as disclosed in Section 3.13(c) of the
Disclosure Schedule, full and timely payment has been or will be made of all
amounts that are required either (i) under the terms of each Assumed Employee
Plan or (ii) pursuant to 29 C.F.R. Section 2510.3-102, to be paid as
contributions to each Assumed Employee Plan prior to the Effective Time.
(d) Neither the Seller nor any ERISA Affiliate
sponsors, maintains or otherwise contributes to or has ever sponsored,
maintained or otherwise contributed to any employee benefit plan, as defined in
Section 3(3) of ERISA, that is or was subject to Title IV of ERISA or Section
412 of the Code or that constituted a multiemployer plan as defined in Section
3(37) of ERISA.
(e) The Seller and its ERISA Affiliates have, at all
times, complied, and currently comply, in all material respects with the
applicable continuation coverage requirements for each Assumed Employee Plan
that is an employee welfare benefit plan, as defined in Section 3(1) of ERISA
(each, an "Employee Welfare Benefit Plan"), including (1) Section 4980B of the
Code (as well as its predecessor provision, Section 162(k) of the Code) and
Sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter
referred to collectively as "COBRA" and (2) any applicable state statutes
mandating health insurance continuation coverage for employees.
(f) Except as disclosed in Section 3.13(f) of the
Disclosure Schedule, the form of each Assumed Employee Plan and its related
trust is in compliance with the applicable terms of ERISA, the Code, and any
other applicable laws, including the Americans with Disabilities Act of 1990,
the Family Medical Leave Act of 1993 and the Health Insurance Portability and
Accountability Act of 1996, and each such plan has been operated in substantial
compliance with such laws and the written Assumed Employee Plan documents. To
Seller's Knowledge, neither the Seller nor any fiduciary of an Assumed Employee
Plan has violated the requirements of Section 404 of ERISA. Except as disclosed
in Section 3.13(f) of the Disclosure Schedule, all required reports and
descriptions of the Assumed Employee Plans (including Internal Revenue Service
Form 5500 Annual Reports, Summary Annual Reports and Summary Plan Descriptions
and Summaries of Material Modifications) have been (when required) timely filed
with the IRS, the U.S. Department of Labor or other Governmental Body and
distributed as required, and all notices required by ERISA or the Code or any
other Legal Requirement with respect to the Assumed Employee Plans have been
appropriately given.
(g) Except as disclosed in Section 3.13(g) of the
Disclosure Schedule, (i) each Assumed Employee Plan that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and the Seller has no Knowledge of any
circumstances that will or could reasonably be expected to result in revocation
of any such favorable determination letter and (ii) each trust created under any
Assumed Employee Plan that is intended to be exempt from taxation under Section
501(a) of the Code has been determined to be exempt from taxation under Section
501(a) of the Code, and Seller is not aware of any circumstance that will or
could reasonably be expected to result in a revocation of such exemption.
(h) Except as disclosed in Section 3.13(h) of the
Disclosure Schedule, there is no pending or threatened Proceeding relating to
any Assumed Employee Plan, nor, to the
9
Knowledge of the Seller, is there any Basis for any such Proceeding. Except as
disclosed in Section 3.13(h) of the Disclosure Schedule, to the Knowledge of the
Seller, neither the Seller nor any fiduciary of an Assumed Employee Plan has
engaged in a transaction with respect to any Assumed Employee Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject the Seller, any Subsidiary or the Purchaser to a material Tax or
penalty imposed by either Section 4975 of the Code or Section 502(l) of ERISA or
is a violation of Section 406 of ERISA. The consummation of the transactions
contemplated by this Agreement will not result in the potential assessment of a
Tax or penalty under Section 4975 of the Code or Section 502(l) of ERISA nor
result in a violation of Section 406 of ERISA. The term "Proceeding" means any
action, arbitration, audit, hearing, investigation, litigation or suit (whether
civil, criminal, administrative, judicial or investigative, whether formal or
informal, whether public or private) commenced, brought, conducted or heard by
or before, or otherwise involving, any Governmental Body or arbitrator.
(i) Except for the continuation coverage requirements
of COBRA, the Seller has no obligations or potential liability for benefits to
employees, former employees (including Worksite Employees) or their respective
dependents following termination of employment or retirement under any of the
Assumed Employee Plans that are Employee Welfare Benefit Plans.
(j) No written or oral representations have been made
by the Seller or any Subsidiary to any Worksite Employee or former Worksite
Employee of Seller promising or guaranteeing any employer payment or funding for
the continuation of medical, dental, life or disability coverage for any period
of time beyond the Closing (except to the extent required under COBRA). No
written or oral representations have been made by the Seller or any Subsidiary
to any employee or former employee (including Worksite Employees) of Seller
concerning the employee benefits of the Purchaser.
(k) Each Assumed Employee Plan subject to the
provisions of Section 401(k) or 401(m) of the Code, or both, has been tested for
and has satisfied the requirements of Section 401(k)(3) and Section 401(m)(2) of
the Code, as applicable, for each plan year ending prior to the Closing.
(l) The consummation of the transactions contemplated
by this Agreement will not accelerate or increase any liability under any
Assumed Employee Plan.
(m) Each Assumed Employee Plan that is a pension
plan, within the meaning of Section 3(2) of ERISA, of the Seller and its ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code
either (i) has been maintained as a multiple employer plan from and after May
13, 2002, or (ii) has been the subject of timely and appropriate remedial action
taken in accordance with Revenue Procedure 2002 - 21.
3.14 Intentionally Omitted.
3.15 Financial Statements. The financial statements relating
to the PEO Business previously provided by the Seller to the Purchaser, copies
of which are attached as Section 3.15 to the Disclosure Schedule, in the opinion
of Seller's management fairly present the financial condition
10
of the PEO Business as of the respective dates thereof and the results of
operations of the PEO Business for the periods indicated, it being understood
that such financial statements have not been audited or reviewed by independent
accountants and do not contain footnote disclosures and reflect assets and
liabilities which are not being acquired by Purchaser.
3.16 Events Subsequent to the Balance Sheet Date. Since
December 31, 2003, there has not been any material adverse change, singly or in
the aggregate, in the financial condition or results of operations of the PEO
Business nor has there been any event which has had or may reasonably be
expected to have a material adverse effect on any of the foregoing.
3.17 Legal Compliance. Except as disclosed in Section 3.17 of
the Disclosure Schedule, the Seller and the Subsidiaries and their respective
predecessors and Affiliates have each complied in all material respects with all
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state and local
governments (and all agencies thereof) which are specifically applicable to the
PEO Business.
3.18 Disclosure. To Seller's knowledge, 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.
3.19 Referral Sources. Section 3.19 of the Disclosure Schedule
identifies (i) each Person that currently provides business referrals to the
Seller or any Subsidiary for a fee or commission paid by the Seller or any
Subsidiary (collectively, the "Referral Sources") and (ii) as to each Referral
Source, whether or not the Seller of any Subsidiary has any marketing agreement,
1099 agreement or other agreement with such Referral Source (collectively the
"Marketing and Referral Agreements").
4.0 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Seller that:
4.01 Organization of the Purchaser. The Purchaser is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Purchaser is duly qualified
to conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required except where the lack of such qualification
would not have a material adverse affect on the business, financial condition,
operations or results of operations of the Purchaser. The Purchaser has full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used by
it.
4.02 Authorization of Transaction. The Purchaser has full
power and authority (including full corporate power and authority) to execute
and deliver the Acquisition Documents to which it is a party and to perform its
obligations thereunder. The board of directors of the Purchaser has duly
authorized the execution, delivery, and performance of the Acquisition Documents
to which the Purchaser is a party. No approval of the stockholders of the
Purchaser is
11
required in order for the Purchaser to consummate the transactions contemplated
by this Agreement. The Acquisition Documents constitute the valid and legally
binding obligations of the Purchaser, enforceable in accordance with their terms
and conditions.
4.03 Non-contravention. Neither the execution and the delivery
of the Acquisition Documents to which it is a party, nor the consummation of the
transactions contemplated in the Acquisition Documents, will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Purchaser is subject or any provision of its charter or
bylaws, or (b) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the
Purchaser is a party or by which it is bound or to which any of its assets is
subject. The Purchaser does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by the Acquisition Documents.
4.04 Brokers' Fees. The Purchaser has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated in the Acquisition Documents other than
fees payable to Croft & Xxxxxx LLC, which fees shall be the sole responsibility
of the Purchaser.
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, the Subsidiaries and their respective representatives shall have
reasonable access to all of the books and records transferred to Purchaser
hereunder to the extent that such access may reasonably be required by the
Seller or any Subsidiary in connection with matters relating to or affected by
the operations of the Acquired Assets prior to the Effective Date. Such access
shall be afforded by the Purchaser 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 Purchaser
shall desire to dispose of any of such books and records prior to the expiration
of such six-year period, the Purchaser 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 Purchaser and its representatives shall have reasonable access to all of the
books and records relating to the Acquired
12
Assets which the Seller or any of the Subsidiaries 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 Purchaser shall be solely
responsible for any costs and expenses incurred by it pursuant to this Section
5.01. If the Seller or any of the Subsidiaries 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 Purchaser a reasonable
opportunity, at the Purchaser's expense, to segregate and remove such books and
records as the Purchaser 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 or any Subsidiary, 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. Neither the Seller nor any Subsidiary will
take any action that is designed or intended to have the effect of discouraging
any Transferred Client from maintaining the same business relationships with the
Purchaser after the Closing as it maintained with the Seller or a Subsidiary
prior to the Closing. Except as provided by the Transition Services Agreement,
the Seller and each Subsidiary will refer all Transferred Client inquiries
relating to the Acquired Assets to the Purchaser from and after the Closing. The
Seller and each Subsidiary shall cooperate with and use commercially reasonable
efforts to assist the Purchaser in obtaining consents of other parties to
assignments of any of the Acquired Assets not obtained prior to the date hereof.
The Purchaser shall be entitled to all payments under the Client Service
Agreements attributable to services performed by the Purchaser (or its designee)
under any Client Service Agreement from and after the 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 or a Subsidiary
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 Confidentiality. The terms of the Confidentiality
Agreement between the Purchaser and the Seller dated as of January 27, 2003 (the
"Confidentiality Agreement") shall continue to remain in effect.
5.05 Covenant Not to Compete.
(a) For a period of five (5) years from and after the
Closing Date, each of the Seller and each Subsidiary agrees that it will not (i)
directly or indirectly, perform or provide, directly or indirectly, any PEO
Services in the Territory; (ii) solicit or attempt to solicit, directly or
indirectly, any Transferred Client for the purpose of providing any PEO Service;
or (iii) solicit or attempt to solicit or hire away any Designated Employee who
becomes an employee of the Purchaser after the Closing.
13
(b) If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified.
5.06 Tax Matters. The following provisions shall govern the
allocation of responsibility as between the Purchaser and the Seller for certain
tax matters following the Closing Date:
(a) The Purchaser and the Seller shall cooperate
fully, as and to the extent reasonably requested by the other, in connection
with the filing of Tax Returns and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the retention and (upon
the other's reasonable request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided. The Seller and the
Purchaser agree (i) to retain all books and records with respect to Tax matters
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by the
Purchaser or the Seller, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (ii) to give the other reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
party so requests, to allow the other party to take possession of such books and
records.
(b) The Purchaser and the Seller further agree, upon
reasonable request, to use their reasonable best efforts to obtain any
certificate or other document from any governmental authority or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax imposed
(including with respect to the transactions contemplated herein).
5.07 WARN Act. The Seller shall retain (and shall be solely
responsible for) any and all obligations and liabilities that may arise with
respect to any employees of the Seller or any Subsidiary other than the
Designated Employees listed under Employment Category 1 or 2 on the Schedule of
Designated Employees (the "Specified Employees"), as a result of the
transactions contemplated by this Agreement, under the Worker Adjustment and
Retraining Notification Act, as amended, 29 U.S.C.A. Sections 2101, et. seq.
(the "WARN Act"). Such liability of the Seller is referred to as the "Seller
WARN Act Liability." The Purchaser shall be solely responsible for any and all
obligations and liabilities that may arise after the Effective Time with respect
to any of the Specified Employees as a result of the transactions contemplated
by this Agreement under the WARN Act (the "Purchaser WARN Act Liability").
5.08 Agreements with Referral Sources. For a period of 90 days
following the Closing Date, the Seller and the Subsidiaries shall cooperate
fully with the Purchaser to assist the Purchaser in effecting new business
referral arrangements and agreements with each of the Referral Sources, to be
effective after the Closing Date.
14
5.09 Voluntary Correction Program. As soon as administratively
practicable after the Closing Date, in connection with the Purchaser's
assumption of up to $200,000 of the Top Heavy Liability pursuant to Section
6.02(c), the Purchaser shall (i) amend, or cause to have amended, the VCP
Submission to provide that the Purchaser shall correct the operational failure
related to contributions required under section 416 of the Code in accordance
with Appendix A, Section .02 of Internal Revenue Service Procedure 2003-44 and
(ii) take any and all necessary and advisable actions in order to obtain, and
meet the terms of, a compliance statement from the IRS in response to the VCP
Submission as so amended.
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 and the Subsidiaries contained in Sections 3.05, 3.07 and 3.13 shall
survive the Closing (even if the Purchaser knew or had reason to know of any
misrepresentation or breach of warranty at the time of the Closing) and continue
in full force and effect subject only to any applicable statutes of limitations.
(b) All of the other representations, warranties and
covenants of the Seller shall survive the Closing (even if the Purchaser knew or
had reason to know of any misrepresentation or breach of warranty at the time of
the Closing) and continue in full force and effect, subject to any applicable
statutes of limitations for a period of one (1) year from the Closing Date
except that the provisions of Sections 5.01 and 5.05 shall continue in effect
for the period of time specified therein. All of the representations, warranties
and covenants of the Purchaser 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, subject to any
applicable statutes of limitations for a period of one (1) year from the Closing
Date except that the provisions of Section 5.01 shall continue in effect for the
period of time specified therein and the provisions of Section 5.09 and the
provisions of the Assignment and Assumption Agreements shall continue in effect
subject only to any applicable statutes of limitations.
6.02 Indemnification Provisions for Benefit of the Purchaser.
(a) In the event that the Seller breaches any of its
representations, warranties, covenants and agreements contained in this
Agreement, and, provided that the Purchaser makes a written claim for
indemnification against the Seller within the time period set forth in Section
6.01(a) or (b), as applicable, the Seller agrees to indemnify the Purchaser from
and against the entirety of any Adverse Consequences the Purchaser may suffer
resulting from, arising out of or caused by the breach, subject to the
limitations provided in Section 6.02(d).
(b) The Seller also agrees to indemnify the Purchaser
from and against the entirety of any Adverse Consequences the Purchaser may
suffer resulting from, arising out of, in connection with, or caused by:
15
(i) (A) any act, event, occurrence or
circumstances in respect of or relating to the Acquired Assets
prior to the Effective Time (other than any Assumed Liability
or the Purchaser WARN Act Liability); or
(B) 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);
provided, however, that the Purchaser must make a written
claim for any indemnification against the Seller under this
Section 6.02(b)(i) on or prior to the first anniversary of the
Closing Date and the aggregate amount payable by the Seller
under this Section 6.02(b)(i) shall be limited as provided in
Section 6.02(d);
(ii) any Assumed Employee Plan, except as
otherwise provided in Sections 6.02(c), 6.03(c) and 7.01(a).
The obligations of the Seller and the Subsidiaries under this
Section 6.02(b)(ii) shall survive the Closing Date and
continue in full force and effect subject only to any
applicable statutes of limitations, subject to the limitations
provided in Section 6.02(d); or
(iii) any Excluded Liability. The
obligations of the Seller and the Subsidiaries under this
Section 6.02(b)(iii) shall survive the Closing Date and
continue in full force and effect subject only to any
applicable statutes of limitations, subject to the limitations
provided in Section 6.02(d);
provided, however, the Adverse Consequences must be a direct result of a
condition that arose prior to the Effective Time and relate to an action or
failure to act on the part of the Seller or a Subsidiary.
(c) The Seller also agrees to indemnify the Purchaser
from and against the Top Heavy Liability but only to the extent that the Top
Heavy Liability exceeds $200,000 (it being understood that the Purchaser is
assuming liability for up to $200,000 of the Top Heavy Liability, as provided in
Section 6.03(c)). The liability of the Seller under this Section 6.02(c) shall
survive the Closing Date and continue in full force and effect subject only to
any applicable statutes of limitations, subject to the limitations provided by
Section 6.02(d).
(d) The Seller shall only be obligated to indemnify
the Purchaser pursuant to Sections 6.02(a) and 6.02(b) to the extent that the
amount of Adverse Consequences suffered by the Purchaser exceeds $100,000 (it
being understood that such $100,000 shall be a deductible for which the
Purchaser shall have no right to be indemnified). In no event will the aggregate
amount payable by the Seller to the Purchaser for indemnification for any and
all claims under Section 6.02(a), 6.02(b) and 6.02(c) exceed $2,500,000.
(d) In order to secure the availability of funds to
satisfy the indemnification obligations of the Seller pursuant to Sections
6.02(a), 6.02(b) and 6.02(c), $2,500,000 of the Purchase Price shall be
deposited into an escrow account (the "Escrow Account") with The Bank of Tampa
as escrow agent (the "Escrow Agent") to be held and disbursed pursuant
16
to the provisions of the escrow agreement (the "Escrow Agreement") in the form
attached hereto as Exhibit F. Any amount payable by the Seller under Sections
6.02(a), 6.02(b) or 6.02(c) shall be satisfied first by funds held in the Escrow
Account.
6.03 Indemnification Provisions for Benefit of the Seller.
(a) In the event the Purchaser 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 Purchaser prior to the first anniversary of the Closing Date, then
the Purchaser agrees to indemnify the Seller from and against the entirety of
any Adverse Consequences the Seller may suffer resulting from, arising out of,
or caused by the breach, subject to the limitations provided in Section 6.03(d).
(b) The Purchaser 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 Acquired Assets after
the Effective Time; or
(ii) any Liability of the Purchaser 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);
provided, however, that the Seller must make a written claim for any
indemnification against the Purchaser under Sections 6.03(b)(i) and 6.03(b)(ii)
on or prior to the first anniversary of the Closing Date; and the aggregate
amount payable by the Purchaser under Sections 6.03(b)(i) and 6.03(b)(ii) shall
be limited as provided in Section 6.03(c); or
(iii) any Assumed Liability. The obligations
of the Purchaser under this Section 6.03(b)(iii) shall survive the
Closing Date and continue in full force and effect subject only to any
applicable statutes of limitations, subject to the limitations provided
in Section 6.03(d);
provided, however, the Adverse Consequences must be a direct result of a
condition that arises after the Closing Date and relates to an action or failure
to act on the part of the Purchaser.
(c) The Purchaser also agrees to indemnify the Seller
from and against the Top Heavy Liability but only to the extent of $200,000 (it
being understood that the Seller is retaining liability for Top Heavy Liability
to the extent such liability exceeds $200,000 and as provided in Section 6.02(c)
and 6.02(d)). The liability of the Seller under this Section 6.03(c) shall
survive the Closing Date and continue in full force and effect subject only to
any applicable statutes of limitations.
(d) The Purchaser shall only be obligated to
indemnify the Seller pursuant to Sections 6.03(a) and 6.03(b) to the extent that
the amount of the Adverse Consequences suffered by the Seller exceeds $100,000
(it being understood that such $100,000
17
shall be a deductible for which the Seller shall have no right to be
indemnified). In no event will the aggregate amount payable by the Purchaser to
the Seller for indemnification for any and all claims under Sections 6.03(a) and
6.03(b) exceed $2,500,000.
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 (other than any deductible provided by Section 6.02(d) or 6.03(d) above),
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,
18
perform obligations or admit liability without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably).
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 7.15 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 Employee Matters.
(a) The Purchaser shall assume the Seller's
obligation to provide or continue to provide, as the case may be, COBRA health
continuation coverage to existing participants, including all existing
"qualified beneficiaries" (within the meaning of section 4980B(g)(i) of the
Code), under the EPIX Employee Health Benefit Plan (collectively, "Qualified
Beneficiaries") to the extent the Qualified Beneficiaries experience or have
experienced, as the case may be, a "qualifying event", within the meaning of
Section 4980B(f)(3) of the Code, prior to or in connection with the transactions
contemplated by this Agreement. Purchaser shall not be obligated to provide
COBRA health continuation coverage to the Qualified Beneficiaries to an extent
any greater than the obligations imposed upon the Seller and its affiliates by
the provisions of Section 4980B of the Code and applicable Treasury regulations
promulgated thereunder. For purposes of the immediately preceding sentence,
Purchaser shall not take the position that Seller and its affiliates cease to
provide any group health plan solely in the event that health coverage is
provided to the remaining employees of Seller and its affiliates by a
professional employer organization.
(b) Effective as of the Effective Time, the Purchaser
shall assume the Seller's position as primary sponsor of the Assumed Employee
Plans and shall make any amendment to any Assumed Employee Plan as required by
the Internal Revenue Service (the "IRS") in connection with any determination
letter application pending with the IRS on the date hereof and Seller shall
relinquish its position as the primary sponsor of such plans, including any and
all of the rights, powers and authority attendant thereto. Purchaser and Seller
shall take any and all necessary and advisable actions in order to cause
sponsorship of the Assumed Employee Plans and their related trusts (or other
funding vehicle) to be transferred, effective as of the Closing Date, from
Seller to Purchaser.
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 law or any listing
19
or trading agreement concerning its publicly-traded securities (in which case
the disclosing Party will use its reasonable best efforts to advise the other
Party prior to making the disclosure, and to allow such other Party the
opportunity to review and comment on such disclosure).
7.03 No Third Party Beneficiaries. Except as provided in
Sections 2.08 and 7.01, 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 Entire Agreement. This Agreement, and the other
Acquisition Documents (including the documents referred to herein) constitute
the entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
7.05 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that the Purchaser may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates, and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Purchaser nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
7.06 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
7.07 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
7.08 Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Seller or any Subsidiary:
EPIX Holdings Corporation
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
20
Copy to:
Sidley Xxxxxx Xxxxx & Xxxx LLP
Bank One Plaza
00 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Purchaser:
Gevity HR, Inc.
600 000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
Copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
Sixteenth Floor
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
Attn: G. Xxxxxxx Xxxxx, Esq.
Phone: 000-000-0000
Fax: 000-000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
7.09 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Florida or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Florida.
7.10 Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Purchaser and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or
21
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.
7.11 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
7.12 Expenses. Each of the Purchaser 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; provided, that any sales Tax, use Tax, documentary stamp Tax or similar
Tax attributable to the sale or transfer of the Acquired Assets shall be paid by
the Purchaser.
7.13 Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the 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.
7.14 Incorporation of Exhibits and Schedules. The Exhibits,
Glossary of Terms, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
7.15 Specific Performance. Each of the Parties acknowledges
and agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
* * * * *
22
IN WITNESS WHEREOF, the Parties hereto have executed this Asset
Purchase Agreement on the date first above written.
GEVITY HR, INC.
By: /s/ Xxxx Xxxx
------------------------------------------------
Name: Xxxx Xxxx
Title: Chairman and Chief Executive Officer
EPIX HOLDINGS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
------------------------------------------
EPIX I, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX II, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX RETAIL, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX WHOLESALE, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX LEGAL, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX VI, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX VII, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX VIII, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX MANAGEMENT SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX IX, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX OPERATIONS SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX RESOURCES, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX XI, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX XII, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX XIII, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EPIX XIV, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
GLOSSARY OF TERMS
1.0 Definitions.
1.1. "Acquired Assets" means all of the following as of the
Closing Date, but excluding the Excluded Assets: (i) all right, title and
interest of the Seller and each of the Subsidiaries in, under and to (A) each of
the Client Service Agreements for the Transferred Clients; (B) the Insurance
Contracts; (C) the Assumed Employee Plans; and (D) the Other Agreements; (ii)
the Books and Records; and (iii) all right, title and interest of the Seller and
each of the Subsidiaries in, under and to each non-solicitation and non-compete
agreement between the Seller or a Subsidiary and any Designated Employee who
accepts the offer of employment given by the Purchaser pursuant to Section 2.08.
1.2. "Acquisition Documents" means this Agreement and all
transfer documents, assumption agreements or other documents or agreements
related to the consummation of the transactions contemplated in this Agreement.
1.3. "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; provided, that, Adverse Consequences shall not
include punitive, special or consequential or opportunity cost damages of any
kind or the loss of anticipated or future business profits.
1.4. "Affiliate" has the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities Exchange Act of 1934, as
amended.
1.5. "Agreement" has the meaning set forth in the Preface.
1.6. "AIG" means AIG Risk Management, Inc.
1.7. "Assumed Employee Plans" has the meaning set forth in
Section 3.13(a).
1.8. "Assumed Liabilities" means all of the obligations and
Liabilities of the Seller or any Subsidiary arising after the Effective Time and
pursuant to (A) the Client Service Agreements; (B) the Insurance Contracts; (C)
the Assumed Employee Plans, including the Liabilities associated with the
Purchaser's assumption of the Seller's obligation to provide COBRA health
continuation coverage as described in Section 7.01(a) and the Top Heavy
Liability up to, but not in excess of, $200,000; and (D) the Other Agreements,
but excluding the Excluded Liabilities.
1.9. "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.
1.10. "Books and Records" means all existing data, data bases,
books, records, correspondence, business plans and projections, records of
sales, client lists, files, papers, and, to the extent permitted under
applicable law or regulation, copies of historical personnel, payroll and
1
medical records of the Worksite Employees in the possession of the Seller or any
Subsidiary, including employment applications, corrective action reports,
disciplinary reports, other similar documents, and any summaries of such
documents prepared by a Transferred Client, the Seller or any Subsidiary and in
the possession of the Seller or any Subsidiary; all reported workers'
compensation or medical claims made for each Worksite Employee; and all manuals
and printed material of the Seller or any Subsidiary relating to the Acquired
Assets.
1.11. "Client Service Agreement" means each contract between
the Seller and/or a Subsidiary, on the one hand, and a client, on the other
hand, pursuant to which the Seller and/or a Subsidiary provide PEO Services to
such client.
1.12. "Closing" means the closing of the transactions
contemplated by this Agreement.
1.13. "Closing Date" means March 26, 2004
1.14. "COBRA" has the meaning set forth in Section 3.13(e).
1.15. "Code" means the Internal Revenue Code of 1986, as
amended.
1.16. "Designated Employees" means the employees of the Seller
listed on the Schedule of Designated Employees referred to in Section 2.08.
1.17. "Disclosure Schedule" has the meaning set forth in
Section 3.0.
1.18. "Effective Time" has the meaning set forth in Section
2.04.
1.19. "Employee Welfare Benefit Plan" has the meaning set
forth in Section 3.13(e).
1.20. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
1.21. "ERISA Affiliate" has the meaning set forth in Section
3.13(a).
1.22. "Escrow Agent" has the meaning set forth in Section
6.02(d).
1.23. "Escrow Agreement" has the meaning set forth in Section
6.02(d).
1.24. "Excluded Assets" means all assets of the Seller or any
of the Subsidiaries not explicitly included in the Acquired Assets, including
the following:
(i) all amounts paid to or deposited with Seller or
any Subsidiary under the Client Service Agreements prior to the Effective Time
and any administrative fees which are payable thereunder, in each case with
respect to services performed by Seller and the Subsidiaries prior to the
Effective Date, except as otherwise provided in the Apportionment Schedule;
2
(ii) all rights of Seller and the Subsidiaries to any
refunds, reimbursements or similar payments under the Insurance Contracts
relating to the period prior to the Closing;
(iii) all refunds (or credits) of any Tax for any Tax
year or portion thereof ending on or before the Closing Date (or for any Tax
year beginning before and ending after the Closing Date to the extent allocable
to the portion of such period beginning before and ending on the Closing Date);
(iv) all leases, office equipment, fixtures,
furniture, supplies, software and software licenses of Seller and the
Subsidiaries;
(v) all of Seller's and the Subsidiaries' rights,
claims or causes of action against Third Parties relating to the Acquired Assets
with respect to the period prior to the Closing;
(vi) the names "EPIX" or any related or similar trade
names, trademarks, service marks or logos to the extent the same incorporate the
name "EPIX"; and
(vii) the Marketing and Referral Agreements.
1.25. "Excluded Liabilities" means all obligations,
commitments, or Liabilities of the Seller or any Subsidiary, whether known or
unknown, absolute, contingent, or otherwise, and whether or not related to the
Acquired Assets or the PEO Business, except for the Assumed Liabilities. Without
limiting the generality of the preceding sentence, the Purchaser shall not
assume or become liable for any of the following obligations and Liabilities of
the Seller or any Subsidiary:
(a) Any Liability or obligation arising out of any
employee benefit plan (other than the Assumed Employee Plans) (i) maintained by
or covering employees or Worksite Employees of the Seller or any Subsidiary or
(ii) to which the Seller or any Subsidiary has made any contribution or to which
the Seller or any Subsidiary could be subject to any Liability;
(b) Any losses, costs, expenses, damages, claims,
demands and judgments of every kind and nature (including the defenses thereof
and reasonable attorneys' and other professional fees) related to or arising out
of or in connection with Seller's failure to comply with the bulk transfer, bulk
sales, or any similar statute as enacted in any jurisdiction, domestic or
foreign;
(c) Any Liability or obligation arising out of any
action or failure to act by the Seller or any Subsidiary prior to the Effective
Time under (i) any of the Client Service Agreements, (ii) any of the Insurance
Contracts, (iii) any of the Assumed Employee Plans; provided, that the Purchaser
shall assume the Top Heavy Liability as and to the extent provided in Section
6.03(c); (iv) any of the Marketing and Referral Agreements, or (v) any of the
Other Agreements;
(d) Any Liability of the Seller or any Subsidiary
with respect to any claim or cause of action, regardless of when made or
asserted, which arises (i) out of or in
3
connection with the PEO Business or the Acquired Assets prior to the Effective
Time or (ii) with respect to any service provided by the Seller or any
Subsidiary prior to the Closing Date;
(e) Any Liabilities or obligations of the Seller or
any Subsidiary relating to the Excluded Assets;
(f) Any Liabilities or obligations of the Seller or
any Subsidiary to process any payroll for any Transferred Client for which money
has been deposited with the Seller or a Subsidiary prior to the Effective Time;
(g) Any Liabilities or obligations of the Seller or
any Subsidiary to any Designated Employee, including Liabilities and obligations
arising by reason of the Seller's or any Subsidiary's employment or termination
of employment of a Designated Employee; and
(h) Any Liabilities or obligations of the Seller or
any Subsidiaries under the Marketing and Referral Agreements.
1.26. "Governmental Authorization" means any consent, license,
registration or permit issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
1.27. "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).
1.28. "Indemnified Party" has the meaning set forth in Section
6.04.
1.29. "Indemnifying Party" has the meaning set forth in
Section 6.04.
1.30. "Initial Schedule of Transferred Clients" shall have the
meaning specified in Section 2.05(a).
1.31. "Insurance Contracts" means collectively the contracts
and agreements listed on Schedule 3.09.
1.32. "IRS" has the meaning set forth in Section 7.01(b).
1.33. "Knowledge" means actual knowledge and with respect to
the Seller, means the Knowledge of Xxxxxx X. Xxxxxx, the President and Chief
Executive Officer of the Seller, Xxx O'Drobinak, the Chief Financial Officer of
the Seller, and Alex Triose, the acting General Counsel of the Seller.
1.34. "Labor Claims" means claims based on an employment
relationship or termination of an employment relationship.
4
1.35. "Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational or other constitution, law,
ordinance, principle of law, code, regulation, statute or treaty.
1.36. "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.
1.37. "Marketing and Referral Agreements" has the meaning set
forth in Section 3.19.
1.38. "Other Agreements" means the contracts and agreements
listed on Schedule 1.1.
1.39. "Party" has the meaning set forth in the Preface.
1.40. "PEO Business" has the meaning set forth in the
Recitals.
1.41. "PEO Services" means the services provided by the Seller
and/or a Subsidiary to the Transferred Clients under Client Service Agreements
as part of the PEO Business.
1.42. "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.
1.43. "Preface" means the first paragraph of this Agreement.
1.44. "Proceeding" has the meaning set forth in Section
3.13(h).
1.45. "Purchase Price" has the meaning set forth in Section
2.03.
1.46. "Purchaser" has the meaning set forth in the Preface.
1.47. "Purchaser WARN Act Liability" has the meaning set forth
in Section 5.07.
1.48. "Referral Source" has the meaning set forth in Section
3.19.
1.49. "Representative" with respect to a particular Person,
any director, officer, manager, employee, agent, consultant, advisor,
accountant, financial advisor, legal counsel or other representative of such
Person.
1.50. "Schedule of Transferred Clients" shall have the meaning
specified in Section 2.05(a).
1.51. "Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest.
1.52. "Seller" has the meaning set forth in the Preface.
5
1.53. "Seller Material Adverse Effect" has the meaning set
forth in Section 3.01(a).
1.54. "Short-Rate Penalty" means the adjusted amount
determined pursuant to the second bullet point on page 3 under the heading
"Insurance Company Expense Annual Adjustment in the EPIX bound proposal dated
August 29, 2003 from AIG, as modified by letter dated March 26, 2004, each as
attached as schedule 1.2, following early termination of the policy.
1.55. "Specified Employees" has the meaning set forth in
Section 5.07.
1.56. "Subsidiary" and "Subsidiaries" means individually and
collectively the corporations identified on Exhibit A.
1.57. "Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
1.58. "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
1.59. "Territory" means the 00 xxxxxxxxxx xxxxxx xx xxx Xxxxxx
Xxxxxx of America.
1.60. "Third Party" means any Person who is not a Party.
1.61. "Third Party Claim" has the meaning set forth in Section
6.04(a).
1.62. "Top Heavy Liability" shall mean an amount equal to that
amount of past due contributions (estimated to be $147,000) and earnings thereon
to be paid to the EPIX 401(k) Retirement Savings Plan and the EPIX 401(k)
Terminating Plan (and the predecessor plans thereto) (the "Plans") in order to
receive a compliance statement from the IRS in response to the VCP Submission,
as amended as described in Section 5.09.
1.63. "Transferred Client" and "Transferred Clients" means
individually and collectively each client who is party to a Client Services
Agreement with Seller and/or a Subsidiary.
1.64. "VCP Submission" means the voluntary correction program
submission dated February 18, 2004 submitted to the Internal Revenue Service on
behalf of EPIX, Inc. by Xxxxx & Xxxxxxx, P.A.
1.65. "WARN Act" has the meaning set forth in Section 5.07.
1.66. "Worksite Employees" means the employees of the
Transferred Clients who by reason of the Client Service Agreements are also
employed by a Subsidiary of the Seller.
6
