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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
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DATE OF EARLIEST EVENT REPORTED: JANUARY 20, 1998
ADMINISTAFF, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 1-13998 76-0479645
(STATE OR OTHER JURISDICTION (COMMISSION FILE NO.) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
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19001 CRESCENT SPRINGS DRIVE
KINGWOOD, TEXAS 77339-3802
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 358-8986
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ITEM 5. OTHER EVENTS
(a) SECURITIES PURCHASE AGREEMENT WITH AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC.
On January 28, 1998, Administaff, Inc. (the "Company") announced that
it has entered into a Securities Purchase Agreement (the "Securities Purchase
Agreement") with American Express Travel Related Services Company, Inc. A copy
of the press release issued in connection with such announcement is filed as
Exhibit 99.1 to this Current Report on Form 8-K, and the contents of such
Exhibit are incorporated herein by reference.
(b) RIGHTS AGREEMENT
On January 20, 1998, the Board of Directors of Administaff, Inc. (the
"Company") declared a dividend distribution of one preferred stock purchase
right (a "Right") for each outstanding share of common stock, par value $0.01
per share ("Common Stock"), of the Company. The distribution is payable on
February 9, 1998 (the "Record Date") to the stockholders of record on that
date. Each Right entitles the registered holder thereof to purchase from the
Company one-hundredth of a share of Series A Junior Participating Preferred
Stock, par value $0.01 per share, of the Company (the "Preferred Stock") at a
price of $125, subject to adjustment. The following is a summary of the
Rights; the full description and terms of the Rights are set forth in a
Stockholder Rights Agreement (the "Rights Agreement") between the Company and
Harris Trust and Savings Bank, as Rights Agent (the "Rights Agent").
Copies of the Rights Agreement and the Certificate of Designation are
available free of charge from the Company. This summary description of the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Rights Agreement and
the Certificate of Designation, including the definitions therein of certain
terms, which Rights Agreement and Certificate of Designation are incorporated
herein by reference.
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock
and the Distribution Date will occur upon the earlier of (i) 10 days following
the date of public announcement that a person or group of persons has become an
Acquiring Person (as hereinafter defined) or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to
the time a person becomes an Acquiring Person) following the commencement of,
or the announcement of an intention to make, a tender offer or exchange offer
upon consummation of which the offeror would, if successful, become an
Acquiring Person (the earlier of such dates being called the "Distribution
Date").
The term "Acquiring Person" means any person who or which, together
with all of its affiliates and associates, shall be the beneficial owner of 15%
or more of the outstanding Common Stock, but shall not include (i) the Company
or any Subsidiary (as such term is hereinafter defined) of the Company or any
employee benefit plan of the Company's, (ii) Paul J. Sarvadi, his spouse,
lineal descendants, heirs, executors or other legal representatives and any
trusts or limited partnerships established for the benefit of the foregoing, or
any other person or entity in which the foregoing persons or entities are at
the time of determination the direct record and beneficial owners of all
outstanding voting securities (collectively, the "Sarvadi Stockholders"),
provided that the Sarvadi Stockholders shall cease to be an Exempt Person if
the Beneficial Ownership of the Sarvadi Stockholders exceeds 17% (the "Sarvadi
Threshold"), or (iii) American Express Travel Related Services Company
("AXTRSC"), its Affiliates and Associates (provided that, for purposes of this
sub-clause (iii) only, the terms Affiliate and Associate as used with respect
to AXTRSC shall not include certain non-employee directors of AXTRSC or its
affiliates to the extent such non-employee directors are acting for their own
account or for the account of, or investing the funds of, their respective
customers or clients or funds advised or distributed by them) (collectively,
the "AMEX Stockholders"), provided that the AMEX Stockholders shall cease to be
an Exempt Person if the shares of which the AMEX Stockholders are the
Beneficial Owner exceed 19.9% of the Common Stock determined on a Fully Diluted
Basis (as defined in the Rights Agreement) (the "AMEX Threshold"); provided,
however, that (A) if during the term of this Agreement the AMEX Stockholders
sell, transfer or otherwise dispose of any shares of Common Stock of which the
AMEX Stockholders are a Beneficial Owner, the AMEX Threshold shall be reduced
to the percentage of the Common Stock of which the AMEX Stockholders are a
Beneficial Owner, determined on a Fully Diluted Basis immediately after giving
effect to such sale, transfer or other disposition,
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such reduced percentage to be subject to the rights of the AMEX Stockholders to
exercise their rights, if any, to purchase or acquire securities of the Company
pursuant to Section 9 of that certain Securities Purchase Agreement, dated as
of January 27, 1998 ("AMEX Investment Agreement"), among the Company, its
subsidiaries and AXTRSC, and (B) if the AMEX Threshold is reduced during the
term of this Agreement to 15% or less and the AMEX Stockholders do not have the
right, pursuant to Section 9 of the AMEX Investment Agreement, to increase the
AMEX Threshold above 15%, then the AMEX Stockholders shall no longer constitute
an Exempt Person.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on February 9, 2008 (the "Expiration Date").
The Purchase Price payable, and the number of one-hundredths of a
share of Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights or warrants to subscribe for or purchase
shares of Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to in (ii) above).
The number of outstanding Rights and the number of one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in the Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
In the event that following a Stock Acquisition Date (the date of
public announcement that an Acquiring Person has become such) the Company is
acquired in a merger or other business combination transaction or more than 50%
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of
the Right (the "Flip-Over Right").
In the event that an Acquiring Person becomes the beneficial owner of
15% or more of the outstanding shares of Common Stock, proper provision shall
be made so that each holder of a Right (other than the Acquiring Person and its
affiliates and associates) will thereafter have the right to receive upon
exercise that number of shares of Common Stock (or, under certain
circumstances, cash, other equity securities or property of the Company) having
a market value equal to two times the Purchase Price of the Rights (the
"Flip-In Right"). Upon the occurrence of the foregoing event giving rise to
the exercisability of the Rights, any Rights that are or were at any time owned
by an Acquiring Person shall become void.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. Upon exercise of the Rights, no fractional shares of
Preferred Stock will be issued other than fractions which are integral
multiples of one-hundredth of a share of Preferred
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Stock; cash will be paid in lieu of fractional shares of Preferred Stock that
are not integral multiples of one-hundredth of a share of Preferred Stock.
At any time prior to the earlier to occur of (i) 5:00 p.m., Houston,
Texas time on the 10th day after the Stock Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in whole, but not
in part, at a price of $0.01 per Right (the "Redemption Price"); provided, that
(i) if the Board of Directors authorizes redemption on or after the time a
person becomes an Acquiring Person, then such authorization must be by Board
Approval (as hereinafter defined) and (ii) the period for redemption may, upon
Board Approval, be extended by amending the Rights Agreement. The term "Board
Approval" means the approval of a majority of the directors of the Company.
Immediately upon any redemption of the Rights described in this paragraph, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights at any time and from time to
time provided that such amendment does not adversely affect the interests of
the holders of the Rights. In addition, during any time that the Rights are
subject to redemption, the terms of the Rights may be amended by Board
Approval, including an amendment that adversely affects the interests of the
holders of the Rights, without the consent of the holders of Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Preferred Stock (or other consideration).
DESCRIPTION OF PREFERRED STOCK
Each one-hundredth of a share of the Preferred Stock ("Preferred Share
Fraction") that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may
be issued by the Company.
Each Preferred Share Fraction will have a minimum preferential
quarterly dividend rate of $0.01 per Preferred Share Fraction but will, in any
event, be entitled to a dividend equal to the per share dividend declared on
the Company Common Stock.
In the event of liquidation, the holder of a Preferred Share Fraction
will receive a preferred liquidation payment equal to the greater of $0.01 per
Preferred Share Fraction or the per share amount paid in respect of a share of
Company Common Stock.
Each Preferred Share Fraction will have one vote, voting together with
the Company Common Stock. The holders of Preferred Share Fractions, voting as
a separate class, shall be entitled to elect two directors if dividends on the
Preferred Stock are in arrears for six fiscal quarters.
In the event of any merger, consolidation or other transaction in
which shares of Company Common Stock are exchanged, each Preferred Share
Fraction will be entitled to receive the per share amount paid in respect of
each share of Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Preferred Share Fraction that may
be acquired upon the exercise of each Right should approximate the economic
value of one share of the Company's Common Stock.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
4.1 Rights Agreement dated as of February 4, 1998 (incorporated by
reference to Form 8-A of Administaff, Inc. filed on February 4, 1998.
99.1 Press Release dated January 28, 1998, with respect to the
Securities Purchase Agreement.
99.3 Press Release dated January 21, 1998, with respect to the
Rights Agreement.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADMINISTAFF, INC.
By: /s/ JOHN H. SPURGIN, II
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John H. Spurgin, II
Executive Vice President, General
Counsel and Secretary
Date: February 4, 1998
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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4.1 Rights Agreement dated as of February 4, 1998 (incorporated by
reference to Form 8-A of Administaff, Inc. filed on February
4, 1998.
99.1 Press Release dated January 28, 1998, with respect to the
Securities Purchase Agreement.
99.3 Press Release dated January 21, 1998, with respect to the
Rights Agreement.
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[NEWS RELEASE]
[AMERICAN EXPRESS LETTERHEAD]
Contact: Emily Porter, American Express
212-640-4761
Richard Rawson, Administaff
281-348-3225
AMERICAN EXPRESS AND ADMINISTAFF FORM MARKETING ALLIANCE
AMERICAN EXPRESS BUYS MINORITY INTEREST IN
LEADING PROFESSIONAL EXPLOYER ORGANIZATION
NEW YORK, January 28, 1998 -- American Express (NYSE: AXP) today announced a
strategic marketing alliance with Administaff (NYSE: ASF), a Houston,
Texas-based firm that provides a variety of personnel management services to
small and medium-sized businesses. The terms of the agreement include the sale
of 693,126 shares (approximately 5%) of Administaff common stock together with
warrants to purchase approximately two million additional shares (up to an
additional 14.9%) at strike prices ranging from $40 to $80 per share to American
Express for $17.7 million. The closing is subject to regulatory approval
(Hart-Scott-Rodino). Other details of the deal are confidential.
"Administaff's expertise in personnel management is a natural strategic
fit with American Express' range of services for small businesses, such as
Corporate Card, Travel, and Tax and Business Services," said Anne Busquet,
President of American Express Relationship Services, who will serve on the
Administaff Board of Directors. "The relationship strategically positions
Administaff and American Express to provide small businesses with smart and
efficient ways to recruit, manage and retain top-notch employees, which is
particularly challenging in today's low-unemployment environment." Busquet also
noted that cross-promotional efforts will include added value for American
Express small business customers.
"American Express is an ideal partner to support our long-term growth
strategy," said Paul J. Sarvadi, Administaff's President and CEO. "By
leveraging American Express' marketing expertise, technology and small business
consultants, we can expand our services and broaden our reach to prospective
customers."
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According to the National Association of Professional Employer
Organizations (NAPE0), PEO industry growth has averaged 30% to 35% per annum
over the last five years. NAPEO also reports that as a percentage of potential
small business clients with fewer then 50 employees, industry penetration
totaled only about one percent in 1996.
"Our industry is a gateway to the small business community," said Jerald L.
Broussard, Administaff's Senior Vice President of Business Development. "Having
American Express as a partner will allow us to greatly enhance the services we
provide to our customers."
Founded in 1986, Administaff offers a comprehensive Personnel Management
System that encompasses a broad range of services, including benefits and
payroll administration, medical and workers' compensation programs, personnel
records management, liability management, recruiting and selection, performance
management, and training and development services. Administaff serves more than
1,900 small and medium-sized business clients with approximately 30,000 worksite
employees.
American Express Relationship Services (AERS) was formed in 1995 to deliver
value-added products and services to consumers and businesses by leveraging
corporate assets in non-traditional areas, such as insurance, telecommunications
and educational funding, and the Internet. AERS is a division of American
Express Travel Related Services Company Inc.
American Express Travel Related Services Company Inc., is a wholly-owned
subsidiary of the American Express Company -- a diversified worldwide travel and
financial services company founded in 1850. It is a leader in charge and credit
cards, Travelers Cheques, travel, financial planning, investment products,
insurance and international banking.
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EXHIBIT 99.3
ADMINISTAFF, For Immediate Release
Investor Relations Contact: Richard G. Rawson
Executive Vice President and
Chief Financial Officer
(281) 348-3225
Media Relations Contact: Alan Dodd
Manager, Corporate
Communications
(281) 348-3105
ADMINISTAFF, INC. ADOPTS
PREFERRED SHARE RIGHTS PLAN
Houston, TX - (January 21, 1998) Administaff, Inc. (NYSE: ASF), a leading
Professional Employer Organization (PEO), announced today that its Board of
Directors, at the January 20, 1998 meeting, authorized the adoption of a
Preferred Share Rights Plan. In connection with the adoption of the Plan, the
Board declared a dividend of one Preferred Share Purchase Right per each share
of the Company's common stock outstanding on February 9, 1998 or issued
thereafter. Each Right will be exercisable for one one-hundredth of a share of a
new series of Administaff's preferred stock for an exercise price of $125,
subject to later adjustment. The Rights Plan is designed to deter coercive
takeover tactics and to prevent an acquiror from attempting to gain control of
the Company without dealing fairly with the stockholders. To date, there have
been no known attempts to acquire control of Administaff.
The Rights will be exercisable only if a person (other then an exempt
person) acquires beneficial ownership of 15 percent or more of the Company or
commences a tender offer which
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Administaff, Inc.
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would result in ownership of 15 percent or more. The Rights will expire ten
years from the issuance date. Additional information concerning the Rights
distribution will be provided to stockholders.
Administaff is one of the nation's leading PEOs, providing a comprehensive
Personnel Management System that encompasses a broad range of services,
including benefits and payroll administration, medical and workers' compensation
programs, personnel records management, liability management, recruiting and
selection, performance management, and training and development services to
small- to medium-sized businesses. The Company serves over 1,900 small business
clients with approximately 30,000 worksite employees.
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