<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(AMENDMENT NO. 1)*
ADMINISTAFF, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
00 7094105
----------
(CUSIP Number)
LOUISE M. PARENT, ESQ.
AMERICAN EXPRESS COMPANY
AMERICAN EXPRESS TOWER
WORLD FINANCIAL CENTER
200 VESEY STREET
NEW YORK, NEW YORK 10285
(212) 640-5789
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 10, 1998
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
Page 1 of 14
<PAGE> 2
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 2 of 14
<PAGE> 3
SCHEDULE 13D
CUSIP No. -
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
I.R.S. IDENTIFICATION NO. 13-3133497
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
N/A (b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
N/A [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF NEW YORK
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 2,758,641
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON
WITH 9 SOLE DISPOSITIVE POWER
2,758,641
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,758,641
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%
14 TYPE OF REPORTING PERSON
CO
Page 3 of 14
<PAGE> 4
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is amended and supplemented by adding to the information
previously filed under this item the following:
Page 4 of 14
<PAGE> 5
The aggregate amount of funds used to purchase the Purchased Stock and
the Warrants was $17,733,150. American Express and TRS used funds
obtained from the working capital of TRS to make the purchase.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is amended and supplemented by adding to the information
previously filed under this item the following:
On March 9, 1998, TRS and the issuer entered into a Letter Agreement
concerning certain matters addressed in the Purchase Agreement. A copy
of the Letter Agreement is filed as an exhibit hereto and the
discussion of the Letter Agreement is qualified in its entirety by the
complete text of the exhibit.
On March 10, 1998, TRS consummated the acquisition of the beneficial
ownership of the Purchased Stock and the Warrants, pursuant to the
Purchase Agreement.
In connection with the consummation of the purchase and sale of the
Purchased Stock and Warrants, the Issuer, TRS and certain other parties
entered into a Warrant Agreement, a Registration Rights Agreement and a
Marketing Agreement. Copies of each of these agreements are filed as
exhibits hereto and the discussion of each of these agreements is
qualified in its entirety by the complete text of such exhibits.
Pursuant to the Purchase Agreement, TRS has designated Anne M. Busquet,
President of American Express Relationship Services, a division of TRS
to be the Purchaser Nominee to the Board of Directors of the Issuer. On
March 10, 1998, the Issuer, elected Anne M. Busquet to be a member of
Class II of its Board of Directors.
Page 5 of 14
<PAGE> 6
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5 is amended and supplemented by adding to the information
previously filed under this item the following:
(a) As a result of the consummation of the transactions
contemplated by the Purchase Agreement, TRS may be deemed to
be the beneficial owner of approximately 2,758,641 shares of
Common Stock, which constitute approximately 16.6% of the
16,631,449 shares of Common Stock reported as outstanding by
the Issuer as of
Page 6 of 14
<PAGE> 7
January 20, 1998, as disclosed in the Issuer's representations
set forth in the Purchase Agreement(adjusted to include the
Purchased Stock issued to TRS pursuant to the Purchase
Agreement and the shares of Common Stock for which the
Warrants may be issued).
(b) As a result of the consummation of the transactions
contemplated by the Purchase Agreement, TRS has the sole
voting and dispositive power with respect to all of the
Purchased Stock issued to it in accordance with the Purchase
Agreement and upon exercise of the Warrants will have the sole
voting and dispositive power with respect to all shares of
Common Stock for which the Warrants may be exercised.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Item 6 is amended and supplemented by adding to the information
previously filed under this item the following:
On March 10, 1998, in connection with the transactions contemplated by
the Purchase Agreement, TRS and the Issuer executed the Registration
Rights Agreement pursuant to which TRS received demand and piggyback
registration rights with respect to the Purchased Stock, the Common
Stock for which the Warrants may be exercised and Common Stock issued
to or purchased by TRS under certain other circumstances.
On March 10, 1998, in connection with the transactions contemplated by
the Purchase Agreement, TRS and the Issuer entered into the Warrant
Agreement which restricts the transfer of the Warrants except in
connection with the exercise thereof and the exercise of the right to
put the Warrants to the Issuer in the event of a change of control of
the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following exhibits are filed herewith:
Page 7 of 14
<PAGE> 8
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1 Letter Agreement between TRS and Administaff, dated as
of March 9, 1998.
2 Marketing Agreement among the Issuer, TRS, Administaff
Companies, Inc. and Administaff of Texas, Inc. dated as
of March 10, 1998.
3 Registration Rights Agreement between the Issuer and TRS,
dated as of March 10, 1998.
4 Warrant Agreement between the Issuer and TRS, dated as of
March 10, 1998.
</TABLE>
Page 8 of 14
<PAGE> 9
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AMERICAN EXPRESS TRAVEL RELATED SERVICES
COMPANY, INC.
By: /s/ Stephen P. Norman
-------------------------------------
Name: Stephen P. Norman
Title: Secretary
Date: March 18, 1998
Page 9 of 14
<PAGE> 10
APPENDIX A
AMERICAN EXPRESS COMPANY
LIST OF DIRECTORS AND OFFICERS
The following individuals are executive officers or directors
of American Express. Unless otherwise noted, each individual is a citizen of the
United States, and the business address of each executive officer of American
Express is American Express Tower, World Financial Center, 200 Vesey Street, New
York, New York 10285.
<TABLE>
<CAPTION>
Principal Occupation
and Address and Business
Name Title of Employer
---- ----- ------------------------
<S> <C> <C>
Daniel F. Akerson Director Chairman and Chief
Executive Officer
Nextel Communications Inc.
1505 Farm Credit Drive
McLean, Virginia 22102
Steven W. Alesio President, Consumer Travel,
Small Business Services and
Government Card, TRS
Anne L. Armstrong Director Chairman of the Board of
Trustees
Center for Strategic and
International Studies
P.O. Box 1358
Kingsville, Texas 78364
Edwin L. Artzt Director Chairman of the Executive
Committee
The Proctor & Gamble
Company
One Proctor & Gamble Plaza
Cincinnati, Ohio 45202-3315
William G. Bowen Director President
The Andrew W. Mellon
Foundation
140 East 62nd Street
New York, New York 10021
Anne M. Busquet President, American Express
Relationship Services, TRS
Kenneth I. Chenault President, Chief Operating
Officer and Director
Charles W. Duncan, Jr. Director Chairman
Duncan Interests
600 Travis
Suite 6100
Houston, Texas 77002-3007
Ursula F. Fairbairn Executive Vice President
George L. Farr Vice Chairman
Edward P. Gilligan President, Corporate Services, TRS
Richard K. Goeltz Vice Chairman and Chief
Financial Officer
Harvey Golub Chairman, Chief Executive Officer
and Director
</TABLE>
Page 10 of 14
<PAGE> 11
<TABLE>
<CAPTION>
Principal Occupation
and Address and Business
Name Title of Employer
---- ----- ------------------------
<S> <C> <C>
Beverly Sills Greenough Director Chairman
Lincoln Center for the
Performing Arts
165 West 65th Street
9th Floor
New York, New York 10023
John D. Hayes Executive Vice President
David C. House President, Establishment
Services Worldwide, TRS
David R. Hubers President and Chief American Express Financial
Executive Officer, American Corporation
Express Financial Corporation IDS Tower 10
Minneapolis, Minnesota
55440
F. Ross Johnson Director Chairman and Chief
Executive Officer
RJM Group
200 Galleria Parkway, N.W.
Suite 970
Atlanta, Georgia 30339
Vernon E. Jordan, Jr. Director Senior Partner
Akin, Gump, Strauss, Hauer
& Feld, L.L.P.
1333 New Hampshire
Avenue, N.W.
Suite 400
Washington, D.C. 20036
Jan Leschly Director Chief Executive
SmithKline Beecham
1 Franklin Plaza
P.O. Box 7929
Philadelphia, Pennsylvania 19101
Drew Lewis Director 737 Camp Wawa Road
Schwenksville, Pennsylvania 19473
Jonathan S. Linen Vice Chairman
Allan Z. Loren Executive Vice President and
Chief Information Officer
Aldo Papone Director and Senior Advisor
</TABLE>
Page 11 of 14
<PAGE> 12
<TABLE>
<CAPTION>
Principal Occupation
and Address and Business
Name Title of Employer
---- ----- ------------------------
<S> <C> <C>
Louise M. Parent Executive Vice President and
General Counsel
Frank P. Popoff Director Chairman of the Board
The Dow Chemical
Company
2030 Dow Center
Midland, Michigan 48674
Phillip J. Riese Chairman of the Board, American American Express Centurian
Express Centurian Bank Bank
American Express Tower
World Financial Center
New York, New York 10288
Thomas O. Ryder President, TRS International
Thomas Schick Executive Vice President
John A. Ward, III Chairman and Chief American Express Bank Ltd.
Executive Officer, American American Express Tower
Express Bank Ltd. World Financial Center
New York, New York 10288
</TABLE>
Page 12 of 14
<PAGE> 13
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
LIST OF DIRECTORS AND OFFICERS
The following individuals are executive officers or
directors of TRS. Unless otherwise noted, each individual is a citizen of the
United States, and the business address of each executive officer of TRS is
American Express Tower, World Financial Center, 200 Vesey Street, New York, New
York 10285.
<TABLE>
<CAPTION>
Principal Occupation
and Address and Business
Name Title of Employer
---- ----- ------------------------
<S> <C> <C>
Steven W. Alesio President
Consumer Travel, Small
Business Services and
Government Card
Anne M. Busquet President
American Express
Relationship Services
Kenneth I. Chenault President, Chief Executive
Officer and Director
George L. Farr Vice Chairman
Edward P. Gilligan President
Corporate Services
Harvey Golub Chairman and Director
David C. House President
Establishment Services
Worldwide, TRS
John McDonnell Executive Vice President and
Chief Financial Officer
Louise M. Parent General Counsel and Director
Phillip J. Riese President
Consumer Card Services
Group
Thomas O. Ryder President
TRS International, Inc.
</TABLE>
Page 13 of 14
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
1 Letter Agreement between TRS and Administaff, dated as
of March 9, 1998.
2 Marketing Agreement among the Issuer, TRS, Administaff
Companies, Inc. and Administaff of Texas, Inc. dated as
of March 10, 1998.
3 Registration Rights Agreement between the Issuer and TRS,
dated as of March 10, 1998.
4 Warrant Agreement between the Issuer and TRS, dated as of
March 10, 1998.
</TABLE>
Page 14 of 14
<PAGE> 1
Exhibit 1
March 9, 1998
Administaff, Inc.
19001 Crescent Springs Drive
Kingswood, Texas 77339-3802
Attention: General Counsel
Re: Securities Purchase Agreement dated January 27, 1998 between
Administaff, Inc. and American Express Travel Related Services
Company, Inc.
Ladies and Gentlemen:
Reference is hereby made to the Securities Purchase Agreement (the
"Purchase Agreement") dated January 27, 1998 between Administaff, Inc. (the
"Company") and American Express Travel Related Services Company, Inc. (the
"Purchaser"). Capitalized terms used herein, but not defined, will have the
meanings assigned to such terms in the Purchase Agreement.
This letter sets forth the understandings of the parties with respect
to the matters set forth below:
1. Prior to the Closing, the Board of Directors of the Company
will approve, pursuant to Section 203(a)(1) of the Delaware General Corporation
Law, purchases by the Purchaser made at any time prior to a Termination Event of
Common Stock of the Company which may result in the Purchaser's being deemed an
"interested stockholder" (as defined in the Delaware General Corporation Code)
as long as such purchases are made at a time when the Purchaser's Interest is
equal to or greater than the "Minimum Percentage" (as defined herein). For
purposes hereof, the term "Minimum Percentage" means the greater of (i) 11.9%
and (ii) the sum of (A) 11.9% plus (B) the product of X times 4.9/19.9, where
"X" equals the amount, if any, by which the Purchaser's Interest (as determined
at any time after the Closing Date) exceeds 15.8%, but in no event will the
Minimum Percentage exceed 15%. The obligations of the Purchaser to effect the
transactions contemplated by the Purchase Agreement will be subject to such
approval.
2. Section 5(f) is amended to delete the second sentence thereof
and insert in lieu thereof the following:
"The Company has taken and will take all action necessary to
assure that the Purchaser is an "exempted holder" pursuant to any
shareholder rights plan or "poison pill" plan of the Company (a "Rights
Plan") so long as the Purchaser's Interest does not exceed
<PAGE> 2
Administaff, Inc.
March 9, 1998
Page 2
19.9%; provided, that if the Purchaser's Interest is reduced below
15.8% due to dispositions of Unit Stock by the Purchaser (and not
through the issuance of equity by, or any other action of, the
Company), the ownership threshold up to which the Purchaser will be an
"exempted holder" under a Rights Plan will be reduced to the greater of
15% and what the Purchaser's Interest would have been following such
dispositions assuming that the Purchaser's Interest immediately
following the Closing (and prior to any such dispositions) had been
19.9% and giving effect to such dispositions."
3. Notwithstanding anything to the contrary in Section 9(a) of
the Purchase Agreement (except that Purchaser's rights under Section 9(a) shall
continue for so long as (and during any period in which) the restrictions set
forth in Section 7(a) and (b) apply to the Purchaser), the number of shares of
New Securities which the Purchaser shall be entitled to purchase under such
Section 9(a) shall be the number required to cause the Purchaser's Interest
immediately after such issuance of New Securities to equal up to that which the
Purchaser's Interest would have been immediately prior to such issuance assuming
that immediately following the Closing the Purchaser's Interest had been 19.9%
and giving effect to any and all dispositions and acquisitions by the Purchaser
of securities of the Company before such issuance.
4. Notwithstanding anything to the contrary in Section 9(b) of
the Purchase Agreement (except that Purchaser's rights under Section 9(b) shall
continue for so long as (and during any period in which) the restrictions set
forth in Section 7(a) and (b) apply to the Purchaser), the amount of securities
that the Purchaser shall be entitled to acquire under such Section 9(b) through
open market purchases or otherwise shall be an amount up to that amount
necessary to increase the Purchaser's Interest to that which it would have been
immediately prior to such issuances assuming that immediately following the
Closing the Purchaser's Interest had been 19.9% and giving effect to any and all
acquisitions by the Purchaser of securities of the Company before the issuances
and any and all dispositions by the Purchaser of securities of the Company
before or after the issuances, but prior to the exercise by the Purchaser of its
rights under Section 9(b).
<PAGE> 3
Administaff, Inc.
March 9, 1998
Page 3
5. For so long as the Purchaser has the right to elect a
Purchaser Nominee, the Company shall permit an observer, selected by he
Purchaser Nominee, to attend any and all meetings of the Board of Directors of
Administaff which the Purchaser Nominee attends; provided that if a majority of
the Board determines to go into executive session at any time it may dismiss
such observer from such session.
Sincerely,
American Express Travel Related Services
Company, Inc.
By: /s/ Anne Busquet
-----------------------------
Name: Anne Busquet
------------------------
Title: President, AERS
-----------------------
Accepted and agreed to:
Administaff, Inc.
By: /s/ Paul Sarvadi
----------------------------
Name: Paul Sarvadi
-----------------------
Title: President
----------------------
<PAGE> 1
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 2
MARKETING AGREEMENT
BETWEEN
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,
ADMINISTAFF, INC.,
ADMINISTAFF COMPANIES, INC.
AND
ADMINISTAFF OF TEXAS, INC.
DATED
MARCH 10, 1998
<PAGE> 2
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------- ----
<S> <C> <C>
A Client Service Agreement....................................25
B Quality Standards...........................................26
C Description of Services.....................................28
D AMEX Audit Rights...........................................30
E AMEX Data Access Document...................................31
F Confidentiality/Data Security...............................34
G Customer Data and Data-Related Rights.......................36
H Security....................................................37
I Confidentiality Agreement...................................39
J Non-Disclosure..............................................40
K Insurance...................................................42
</TABLE>
<PAGE> 3
MARKETING AGREEMENT
This Marketing Agreement (this "Agreement") is entered into this 10th day of
March 1998, by ADMINISTAFF, INC., a Delaware corporation, ADMINISTAFF COMPANIES,
INC., a Delaware corporation, ADMINISTAFF OF TEXAS, INC., a Texas corporation
and AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC., a New York
corporation.
RECITALS:
A. This Agreement is entered into in connection with the Securities
Purchase Agreement between AMEX and ASF DE dated January 27, 1998.
B. ASF is engaged in the business of providing professional employer
services.
C. ASF and AMEX wish to cooperate in the marketing of the Services.
D. AMEX intends to utilize its resources, including access to AMEX
Customers, to generate AMEX Leads and/or Appointments.
E. ASF and AMEX intend to contact the AMEX Leads, in order to generate
Appointments.
F. ASF and AMEX intend to solicit AMEX Leads to subscribe to the Services
and become AMEX Clients.
G. AMEX and ASF intend to market and promote Embedded Products.
H. ASF desires to utilize its resources and current and future client base
to provide ASF Referrals for services furnished by AMEX's business units
including AEFA and TBS.
I. The Parties wish to set forth in this Agreement the terms and
conditions under which they will undertake the marketing activities described
above.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
in this Agreement, the Parties hereto agree as follows:
1. DEFINITIONS:
AEFA: American Express Financial Advisors.
Agents: ASF or its officers, directors, employees, contractors or
agents.
Agreement: this Marketing Agreement.
-1-
<PAGE> 4
AMEX: AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,
a New York corporation.
AMEX Client: means any AMEX Customer that is a party to an AMEX PEO CSA
and is not a party to an ASF PEO CSA.
AMEX Customer: means any Business Entity that utilizes an AMEX product
or service (e.g., an American Express Corporate Card).
AMEX Indemnitee: AMEX, its parent, subsidiaries, affiliates, successors
and assignees, and their respective directors, officers, agents and
employees.
AMEX Lead: means: (a) any AMEX PEO Prospect that expresses to AMEX an
interest in the AMEX Product either in person, in writing, via
telephone or via the Internet (including, without limitation, accessing
any Web Site used by AMEX to describe, or solicit interest in, PEO
services); (b) any AMEX PEO Prospect that contacts ASF and indicates to
ASF that (1) such AMEX PEO Prospect is interested in purchasing, or
obtaining additional information regarding, the AMEX Product or (2)
such AMEX PEO Prospect is responding to an AMEX Product solicitation;
or (c) any Business Entity attending or participating in a joint
marketing activity as contemplated in Section 5(b).
AMEX Marketed PEO Prospect: means any AMEX PEO Prospect that: (a) AMEX
has specifically targeted regarding the Services or the AMEX Product
and with which AMEX has communicated by mail, telemarketing,
interactive media, direct sales force, seminars or otherwise; or (b)
has been referred by an AMEX business unit to ASF as being interested
in the AMEX Product; provided however, the status of AMEX Marketed PEO
Prospect shall cease when six months have lapsed from the later of the
Contact Date or the referral date.
AMEX PEO Prospect: means any AMEX Customer that is not a party to
either an ASF PEO CSA or an AMEX PEO CSA.
AMEX PEO CSA: means the agreement by which an AMEX Client engages ASF
to provide the AMEX Product to such AMEX Client.
***
Appointment: means the meeting of an AMEX Lead with an ASF salesperson
to discuss the Services.
-2-
*** Confidential Treatment Requested
<PAGE> 5
ASF: ASF DE, ASF COMP and ASF TX.
ASF Client: means any ASF Customer that is a party to an ASF PEO CSA
and is not a party to an AMEX PEO CSA.
ASF COMP: ADMINISTAFF COMPANIES, INC., a Delaware corporation.
ASF Customer: any Business Entity that engages ASF to provide PEO
services to such Business Entity in accordance with the terms of a
current and enforceable ASF PEO CSA.
ASF DE: ADMINISTAFF, INC., a Delaware corporation.
ASF Derivative Proprietary Work: proprietary interests in technology,
products or services that AMEX and ASF jointly develop that is an
improvement, enhancement, extension or derivative of ASF's preexisting
proprietary rights. The ASF Derivative Proprietary Work consists solely
of the improvement, enhancement, extension or derivative and will not
include the preexisting or underlying work.
ASF Indemnitee: ASF, its parent, subsidiaries, affiliates, successors
and assignees, and their respective directors, officers, agents and
employees.
ASF PEO CSA: the agreement by which ASF provides PEO services to ASF
Customers.
ASF TX: ADMINISTAFF OF TEXAS, INC., a Texas corporation.
ASF Referral: referral to AMEX for AEFA and TBS Services from past,
current and future customers of ASF.
Business Entity: any corporation, subchapter S corporation,
partnership, joint venture, trust, association, limited liability
company, sole proprietorship or un-incorporated organization engaged in
a commercial enterprise.
Business Records: business and financial records maintained by ASF that
detail the completeness and accuracy of the commissions paid to AMEX
and revenue related to embedded AMEX Products.
Change of Control: the occurrence of any of the following: ***
-3-
*** Confidential Treatment Requested.
<PAGE> 6
***
Claim: any loss, damage, cost, expense, liability, and settlement,
including without limitation, any reasonable attorney fees and court
costs.
Client: includes AMEX Clients and ASF Clients.
Commission Report: A report which includes: (a) total number of AMEX
Clients; (b) AMEX Clients' names; (c) AMEX Clients' dates of
enrollment; (d) total number of worksite employees for each AMEX
Client; and (e) the related commissions due to AMEX.
Commissionable Client: Any AMEX Lead or AMEX Marketed PEO Prospect that
enters into an AMEX PEO CSA or ASF PEO CSA.
Competitor: ***
Contact Date: date of specific solicitation of the AMEX Product or
Services, including mail, telemarketing, direct or indirect sales
force, seminar and interactive e-mail.
CPR: the Center for Public Resources.
CSA: Client Service Agreement, as attached in Exhibit A.
Dedicated Staff: ASF sales personnel who: (a) are full-time salaried
employees of ASF; (b) have completed at least 30 days of sales training
in professional employer services; (c) and have at least 60 days
continuous sales experience of professional employer services with ASF;
and (d) only sell professional employer services.
Effective Date: March 10, 1998.
Embedded Products: certain AMEX products and services that are offered
to ASF clients and prospects in a seamless integrated manner embedded
in ASF's offering of Services.
Expiration Date: March 10, 2005 (including any renewal period as
provided).
Fifteen Month Period: first 15 months from the date of this Agreement.
Joint Work: any proprietary interests in technology, products or
services that is jointly developed by AMEX and ASF and is not an ASF
Derivative Proprietary Work. If the
-4-
*** Confidential Treatment Requested
<PAGE> 7
Joint Work consists of an improvement, enhancement, extension or
derivative of AMEX's preexisting proprietary rights, the Joint Work
shall consist solely of the improvement, enhancement, extension or
derivative and will not include the preexisting or underlying work.
Notice: all notices, consents, requests, instructions, approvals, and
other communications made, required or permitted.
Paid Worksite Employee: An employee with a unique Social Security
number or taxpayer identification number paid by ASF during a calendar
month.
Parties: AMEX and ASF.
PEO: Professional Employer Organization.
Purchase Agreement: Securities Purchase Agreement between AMEX and ASF
dated January 27, 1998.
Reenrolled Client: any of the Clients that cancel the Services and have
reenrolled in the Services.
Required Embedding: AEFA and TBS services as specified by AMEX.
Services: the business of providing professional employer services, as
more particularly described on Exhibit C.
TBS: Tax and Business Services.
Ten Year Term: a ten year period from the date an AMEX Lead becomes a
Client.
2. PROMOTION OF THE SERVICES:
AMEX and ASF will cooperate in the joint marketing and promotion of the
Services including utilizing AMEX's technology, marketing and personnel
resources in order to generate AMEX Clients.
3. AMEX PRODUCT:
ASF will offer, at the expense of ASF, the AMEX Product to: (1) AMEX
Leads; (2) AMEX Marketed PEO Prospects; and (3) AMEX Customers. ASF and
AMEX agree to mutually develop value-added components to be integrated
into the AMEX Product, at ASF's expense, to differentiate the AMEX
Product (e.g. unique specialized training on
-5-
<PAGE> 8
small business topics, including planning and hiring) from the Services
offered to ASF Customers. The AMEX Product will be marketed exclusively
to AMEX Leads and AMEX Customers and will be marketed under the name
and brand of ASF, but at AMEX's discretion, will be identified as being
co-marketed by AMEX. ASF shall not market the AMEX Product other than
to AMEX Leads and AMEX Marketed PEO Prospects. At AMEX's discretion,
ASF will include in the AMEX Product, and make available to AMEX
Clients, any new products or services that ASF markets to ASF
Customers.
If the facts from the date of this Agreement regarding the IRS's audit
of ASF's single employer 401(k) plan change which may require ASF to
change its delivery of the 401(k) service, ASF covenants to: (1)
disclose, to AMEX's reasonable satisfaction, the proposed changes in
ASF's delivery of the 401(k) service; and (2) use commercially
reasonable efforts to make the transition seamless. ASF covenants to
use commercially reasonable efforts to ensure that the value of the
products and services offered to Clients shall not decrease due to a
change in the embedded benefits plan, provided that except as provided
in the CSA ASF shall have no obligation to hold Clients harmless from
any such decrease in value.
4. AMEX LEAD GENERATION ACTIVITIES:
a. AMEX Marketing Activities: AMEX will use commercially reasonable
efforts to generate AMEX Leads to ASF.
(1) Costs: All marketing and promotional costs incurred by AMEX in
connection with generating the AMEX Leads for ASF shall be
borne by AMEX. Once an AMEX PEO Prospect is generated to ASF
as an AMEX Lead, any costs incurred in converting the AMEX
Lead to an Appointment or an AMEX Client shall be borne by the
Party converting the AMEX Lead. ASF agrees that it will assist
AMEX in its ability to convert AMEX Leads to Appointments; if
any tools are needed by AMEX to convert AMEX Leads to
Appointments, such as meeting schedule software, ASF shall
provide the tools at ASF's expense.
(2) Activities: AMEX agrees to use commercially reasonable efforts
to target its marketing activities to AMEX PEO Prospects that
meet ASF's reasonable guidelines including size, location and
SIC code of prospects. AMEX may use any marketing channel to
generate leads including mail, telemarketing, newsletter,
direct or indirect sales force and interactive media. AMEX
will establish a yearly budget for supporting its activities
under this Agreement including generating leads. AMEX will
form a dedicated team of full-time employees to fulfill AMEX's
activities under this Agreement.
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(3) Quality Standards: ASF covenants that when marketing the
Services to AMEX Leads, ASF will comply with the Quality
Standards listed in Exhibit B.
(4) Planning: ***
b. Joint Marketing Activities: AMEX and ASF agree to conduct joint
marketing activities (such as customized seminars) in order to generate
AMEX Leads, whereby ASF provides experts and marketing materials at
ASF's expense and AMEX generates attendees at AMEX's expense. ASF
covenants that when conducting joint marketing activities, ASF will
comply with the Quality Standards listed in Exhibit B. AMEX is
responsible for meeting expenses associated with the customized
seminars.
c. Training: In order to enable AMEX employees and/or customer service
representatives to generate leads successfully, ASF and AMEX will
arrange for education and training of the AMEX employees whose job
responsibilities include generating AMEX Leads, including TBS, AEFA,
Small Business Services, Corporate Services and Establishment Services
employees. ASF shall provide the education and training as AMEX
reasonably requests, and without any costs to AMEX, other than the
costs of facilities and general meeting expenses. The location of the
education and training will be determined based upon business
necessities. Each Party will be responsible for the out of pocket
expenses incurred by that Party in connection with the education and
training, including housing, lodging and travel associated with such
Party's employees. Neither Party will compensate the other Party for
lost employee time.
d. Toll-Free Number: ASF will support dedicated toll-free numbers to
receive inquiries from prospective AMEX Leads and AMEX Clients which
toll-free numbers shall be wholly-owned by AMEX. ASF shall pay all
costs associated with such toll-free numbers, including monthly
maintenance fees and usage charges. The toll-free number(s) for this
service shall not be used for any other service or any other
client/program without express written consent of AMEX. AMEX shall have
all rights in and to the toll-free number(s) upon termination of this
Agreement and at that time shall assume any and all costs associated
with these toll-free numbers after any deposits on them, paid by ASF
are refunded to ASF. AMEX shall have the right to retain and reuse the
toll-free number(s). AMEX shall have the right to approve ASF's
telecommunications requirements for marketing response to maximize best
efforts and professionalism. At AMEX's discretion, ASF will provide, at
its sole cost and expense, a dedicated toll-free dial transfer number
with priority handling to AMEX. For a period of one year from the
termination of this Agreement for any reason, ASF shall continue to
provide AMEX the dedicated toll-free dial transfer number. After one
year from the termination of this Agreement, AMEX
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shall be responsible for the cost and expense of such toll-free number,
and AMEX may use such number in its own discretion.
5. ASF ACTIVITIES:
a. Embedded Activities:
(1) Embedded Product: At AMEX's discretion, AMEX may require ASF
to embed the Required Embedding in the Services provided to
AMEX Clients or other existing or potential ASF Clients, and
ASF shall use all reasonable commercial efforts to integrate
the Required Embedding into a seamless offering of the
Services. After mutually agreeable terms to both Parties are
reached, ASF may embed in the Services other AMEX products,
including Small Business Services, Corporate Card, Business
Travel and Purchasing Card services. Any AMEX Embedded
Products will, at AMEX's discretion, be clearly identified
under the name and brand that AMEX designates. AMEX will use
reasonable efforts to customize the AMEX products, at AMEX's
expense, that will be embedded in the Services. As mutually
agreed by the Parties, ASF may collect payment on any and all
Embedded Products as part of the fee structure established
with a Client and shall remit any payments so collected to
AMEX within 25 days following the end of the month.
(2) Referral Activities: ***
(3) Review and Audit: If both Parties agree to embed other AMEX
products in addition to the Required Embedding with respect to
which ASF is due commissions, ASF shall have the audit rights
as agreed by the Parties with respect to any commissions owed
to ASF by AMEX.
b. Sales Force Commitment: ASF acknowledges that an adequate and properly
trained sales force is essential to the successful marketing of the
Services and agrees that ASF's undertaking to maintain such a sales
force is a prime consideration of AMEX for entering into and continuing
this Agreement. *** Both Parties agree to discuss in good faith any
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reasonable requests by the other Party to modify the guidelines. ***
6. CUSTOMER PROTECTION:
a. AMEX Customer Protection: ASF acknowledges that unnecessary risk would
be caused to AMEX if ASF solicited AMEX Customers outside this
Agreement or otherwise intentionally diluted AMEX's ability to provide
AMEX Leads to ASF. ASF's agreement, as detailed in this Section, to
protect AMEX from this risk is a prime consideration of AMEX for
entering into and continuing this Agreement. ASF will not knowingly
market any products or services to AMEX Customers other than under the
terms of this Agreement. ASF covenants:
***
b. ASF Customer Protection: AMEX acknowledges that unnecessary risk would
be caused to ASF if AMEX solicited ASF Clients outside this Agreement.
AMEX understands that
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to protect ASF from this risk is a prime consideration of ASF for
entering into and continuing this Agreement. AMEX will not knowingly
market another PEO's products or services to ASF Customers other than
under the terms of this Agreement. AMEX covenants:
***
7. FINANCIAL ARRANGEMENT:
a. Commission Revenues:
(1) ASF agrees to pay AMEX a commission based on ***
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***
(3) Payments shall be due and payable by ASF to AMEX ***
(the "due date") for *** commission.
(4) ASF shall pay interest at the rate of *** per annum on all
commissions paid after the due date.
(5) ASF shall deliver to AMEX the *** for each month together with
the payments required hereunder for such month.
(6) ***
b. ASF Referrals: ASF will provide AMEX with ASF Referrals. ***
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***
c. Billing and Records: ASF shall be responsible for billing and
processing any fees associated with providing the Services. ASF shall
maintain the Business Records which shall contain sufficient
information to verify the completeness and accuracy of the commissions
paid to AMEX. The Business Records shall be kept for a period of at
least three years beyond the end of the fiscal year to which they
relate.
d. Review and Audit: AMEX shall have those review and audit rights
contained in Exhibit D.
e. Survival: The terms of this Section 7 shall survive the termination of
this Agreement.
8. MOST FAVORED NATION:
a. ASF agrees that AMEX shall have "most favored nation" status with
respect to investment and marketing and other terms at least equal to
or better than any other terms ASF has in existence or may negotiate in
the future when taken as a whole with respect to any other marketing
agreement and purchase agreement or similar agreement that also
involves an investment or financing arrangement in ASF.
b. ASF shall provide written notice to AMEX of all agreements and
arrangements it enters into that may impact AMEX's rights under this
Section 8, within 10 days prior to entering into such agreements and
arrangements, unless such agreement or arrangement is: (1) presented
during an ASF's Board of Directors meeting; and (2) at the time of
presentation the AMEX designated board member serves on the Board.
***
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***
10. INDEMNIFICATION AND HOLD HARMLESS:
a. ASF DE, ASF COMP and ASF TX shall jointly and severally indemnify and
hold harmless AMEX and each AMEX Indemnitee from and against any
material Claim incurred by any AMEX Indemnitee which Claim arises out
of or in connection with: (1) the intentional or negligent act or
omission of ASF or its Agents in the course of the performance of ASF's
duties and obligations under this Agreement; (2) the failure of ASF or
its Agents, as the case may be, to comply with the terms of this
Agreement; (3) the failure of ASF (including without limitation its
Agents who perform on behalf of ASF hereunder) to comply with its
obligations under any and all laws, rules, or regulations applicable to
ASF, its Agents or the Services, as the case may be; (4) the marketing,
promotion, sale or provision of any services offered by ASF (other than
the Embedded Products provided by AMEX), including without limitation
any federal, state or local taxes, penalties or interest, and
liabilities to employees of ASF (including liabilities based upon joint
employer or other theories); or (5) any state or local taxing authority
which relates to ASF Services excluding any embedded AMEX products.
Each AMEX Indemnitee seeking indemnification under this Agreement shall
give prompt notice to ASF along with such AMEX Indemnitee's request for
indemnification, of any Claim for which it is seeking indemnification.
The Parties understand and further agree that no settlement of an
indemnified Claim shall be made by an AMEX Indemnitee without the
concurrence of ASF. ASF shall control the settlement or defense of any
Claim; provided, however, that the AMEX Indemnitee may, at its cost,
engage its own attorneys. The AMEX Indemnitee will fully cooperate with
ASF to enable it to fulfill its obligations with respect to such Claim.
All of the provisions in this Section 10(a) shall survive the
termination of this Agreement.
b. AMEX shall indemnify and hold harmless ASF and each ASF Indemnitee from
and against any material Claim reasonably incurred by any ASF
Indemnitee which Claim arises out of or in connection with the
intentional or negligent act or omission of AMEX in the course of the
performance of AMEX's duties and obligations under this Agreement.
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Each ASF Indemnitee seeking indemnification under this Agreement shall
give prompt notice to AMEX along with such ASF Indemnitee's request for
indemnification, of any Claim for which it is seeking indemnification.
The Parties understand and further agree that no settlement of an
indemnified Claim shall be made by an ASF Indemnitee without the
concurrence of AMEX. AMEX shall control the settlement or defense of
any Claim; provided, however, that the ASF Indemnitee may, at its cost,
engage its own attorneys. The ASF Indemnitee will fully cooperate with
AMEX to enable it to fulfill its obligations with respect to such
Claim. All of the provisions in this Section 10(b) shall survive the
termination of this Agreement.
11. CUSTOMER SERVICES:
ASF agrees to provide customer services to Clients in accordance with
the Quality Standards set forth in Exhibit B.
12. REPORTS:
a. ASF shall provide AMEX with the following reports, at the time and in
the form and substance mutually agreed upon by the Parties hereto:
(1) AMEX Lead Report including: (a) detail list of all AMEX Leads;
(b) dates of contact on a per AMEX Lead basis; (c) number of
business days for AMEX Leads to be contacted by an ASF
salesperson; (d) status of all AMEX Leads; (e) date of
Appointment for each AMEX Lead; (f) results from Appointment
for each AMEX Lead; and (g) any other relevant information
gained on each AMEX Lead;
(2) Commission Report;
(3) Quality Standards Report including: (a) number of inbound
marketing calls; (b) number of mail and e-mail responses; and
(c) response time to customer complaints transferred by AMEX
to ASF; when ASF implements the tracking technology, this
report will include average time taken to answer inbound calls
and percentage of calls that are abandoned;
(4) Attrition Report including total number and names of the
Clients that: (a) cancel their enrollment in the Services; (b)
reasons disclosed to ASF for such Clients' discontinuing their
respective enrollment in the Services; and (c) date of
cancellation by such Clients or the last date such Client used
the Services. Further, this Attrition report shall track
previous Clients to determine the Reenrolled Client.
(5) Embedded Product Report including: (a) number of contacts with
Clients regarding sales of Embedded Products; and (b) status
of each contact.
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ASF covenants to make reasonable efforts throughout the term of this
Agreement to: (a) improve the quality and timing of information made
available to AMEX as required in this Section; and (b) provide any
additional information or reports that AMEX reasonably requests.
b. AMEX shall provide ASF with reports on marketing activities with
respect to generating AMEX Leads at the time and in the form and
substance mutually agreed upon by the Parties. AMEX covenants to make
reasonable efforts throughout the term of this Agreement to: (1)
improve the quality and timing of information made available to ASF as
required in this Section; and (2) provide any additional information or
reports that ASF reasonably requests.
c. The reports required above will be provided to AMEX and ASF
respectively on a monthly basis or as otherwise mutually agreed by AMEX
and ASF.
13. PUBLICITY:
Neither ASF nor AMEX shall issue advertising, promotional activity or
publicity release relating to the Services without securing the prior
written consent of the other Party. Further, neither ASF nor AMEX may
use any of the other Party's registered or unregistered trademarks,
tradenames or service marks in the marketing and promotional materials
or otherwise in connection with the promotion of the Services, except
with the prior written consent of the other Party and then, only in
accordance with such guidelines as the other Party may from
time-to-time reasonably establish concerning such use.
14. CONFIDENTIALITY:
a. ASF and AMEX acknowledge that as a result of the performance of their
responsibilities under this Agreement, both ASF and AMEX will obtain
access to confidential and proprietary information of the other Party.
ASF acknowledges that AMEX's confidential information includes the
names of AMEX Customers and that AMEX has the sole ownership rights in
these names and that ASF has no rights to these names outside of this
Agreement. AMEX acknowledges that ASF's confidential information
includes the names of ASF Referrals and that ASF has the sole ownership
rights in these names and that AMEX has no rights to use these names
outside this Agreement. All such information shall be deemed to be
confidential unless it is clearly intended by the first Party for
public distribution in the public domain, information known to the
second Party prior to the receipt of such information from the first
Party, or information lawfully obtained from a third party by the other
Party. Except for marketing activities that mutually benefit both
Parties, this Agreement, along with all exhibits hereto, is hereby
designated as confidential within the meaning of this Section 14 and
shall not be
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disclosed to a third party unless required by law. ASF and AMEX shall
each take the same measures to protect the confidentiality of such
information received by them as they take with respect to their own
confidential information, including, but not limited to, instructing
their employees, vendors, agents, and independent contractors
(excluding only those retained to provide the Services) of the
foregoing and requiring them to be bound by appropriate confidentiality
agreements. ASF and AMEX shall not use any such information for any
purpose other than to perform their responsibilities under this
Agreement.
b. Each Party acknowledges that irreparable injury would be caused to the
other Party in the event of unauthorized use of the other Party's
confidential information, and agrees that preliminary and permanent
injunctive relief would be appropriate in the event of breach of
Section 14. Upon termination or expiration of this Agreement, each
Party agrees to promptly return the confidential information of the
other Party or to acknowledge in writing that all confidential
information of the other Party has been destroyed at the request and
option of the requesting Party.
c. It is understood and agreed by the Parties hereto that all lists of
AMEX Leads are and always have been the exclusive property of AMEX, and
will be turned over to AMEX, at no cost to AMEX, upon termination of
this Agreement.
d. Section 14, in its entirety, shall survive the termination of this
Agreement.
15. DATA AND RECORDS:
Acknowledging the confidentiality of Client data, ASF hereby agrees to
the terms of the AMEX Data Access Document attached hereto as Exhibit
E, the Confidentiality/Data Security schedule attached hereto as
Exhibit F and the Customer Data and Data-Related Rights schedule
attached hereto as Exhibit G the terms of which are hereby incorporated
herein and made a part hereof. ASF will limit the information it
obtains from Clients to information required by ASF to fulfill the
Services, and in any event only such information as approved by AMEX.
In addition, ASF will comply with the exhibits entitled Security
attached hereto as Exhibit H and AMEX Audit Rights attached hereto as
Exhibit D, the terms of both are incorporated herein by reference and
made a part hereof. In the event ASF uses the services of third party
vendors, representatives or subcontractors, ASF shall be responsible
for ensuring their compliance with the terms of this Agreement, and
shall ensure that all such vendors, representatives or subcontractors
execute the Confidentiality Agreement attached hereto as Exhibit I.
ASF's employees and agents shall execute the Non-Disclosure Agreement
attached hereto as Exhibit J, prior to gaining access to AMEX data.
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16. REPRESENTATIONS, WARRANTIES & COVENANTS:
a. Each of ASF and AMEX represents and warrants that it has full power and
authority to execute this Agreement and to take all actions required
by, and to perform the agreements contained in, this Agreement, and
that each Party's obligations under this Agreement do not conflict with
their obligations under any other agreement to which it may be a party.
b. Each of ASF and AMEX represents, warrants and covenants that the
performance of their obligations under this Agreement in connection
with the Services complies and will comply with all applicable federal,
state, local and foreign laws and regulations.
c. Each of ASF and AMEX represents, warrants and covenants that each of
its respective employees assigned to perform services with respect to
the Services under this Agreement has and will have the skill and
background to perform such assigned services in a competent and
professional manner, and to act in compliance with all applicable laws
and regulations.
d. ASF covenants to stay current with the law and to inform AMEX
immediately of any material changes in such laws or regulations which
may require a change in the Services.
17. INSURANCE:
During the term of this Agreement: (a) ASF shall continue to maintain,
at its own expense, insurance equal to or better than the insurance
policies listed on Exhibit K from insurers that maintain a rating of
B++ or higher from A.M. Best; and (b) ASF shall continue to require its
Clients to maintain insurance policies equal to or better than the
insurance policies as currently required of Clients as listed on
Exhibit K.
ASF shall, prior to the Effective Date and upon the renewal of each
coverage required pursuant to this Section, furnish certificates of
insurance or adequate proof of the foregoing insurance to AMEX. All
insurance policies required of ASF (except policies procured from
government sources which do not allow this provision) shall contain a
provision stating the name and address of AMEX and that AMEX is to be
notified in writing by the insurer at least 30 days prior to
cancellation of, or any material change in, the policy.
18. INTELLECTUAL PROPERTY OWNERSHIP:
AMEX acknowledges that as between ASF and AMEX, ASF shall have
exclusive and unlimited ownership rights of all proprietary interest in
technology, products or services that ASF owned before this Agreement
or that was developed independently by ASF during this Agreement. ASF
acknowledges that as between ASF and AMEX, AMEX shall have exclusive
and unlimited ownership rights of all proprietary interests in
technology, products or services that AMEX owned before this Agreement
or that was developed independently by AMEX during this Agreement.
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ASF acknowledges that any Joint Work shall belong exclusively to AMEX
without any duty of accounting, with AMEX having the sole right to
obtain, hold and renew, in its own name and/or for its own benefit,
patents, copyrights, registrations and/or appropriate protection. AMEX
shall grant to ASF a license to use in perpetuity the Joint Work,
without any costs to ASF. ASF covenants that during the term of this
Agreement, the Joint Work will not be used by ASF except in soliciting
AMEX Leads. After the termination of this Agreement, ASF shall be free
to use the Joint Work without any costs to ASF and without any duty of
accounting. All ASF Derivative Proprietary Work belongs exclusively to
ASF without any duty of accounting to AMEX. ASF has the sole right to
obtain, hold and renew, in its own name and/or for its own benefit, the
ASF Derivative Proprietary Work. ASF shall grant to AMEX a license to
use in perpetuity the ASF Derivative Proprietary Work, without any
costs to AMEX. AMEX covenants that during the term of this Agreement,
the ASF Derivative Proprietary Work will not be used by AMEX except in
soliciting AMEX Leads. After the termination of this Agreement, AMEX
shall be free to use the ASF Derivative Proprietary Work without any
costs to AMEX and without any duty of accounting.
19. NOTICES:
a. All Notices shall be given in writing and delivered to the receiving
Party to its respective address set forth below (1) by personal
delivery to a responsible officer of such Party, (2) by certified or
registered mail (return receipt requested), (3) by a nationally
recognized courier service or (4) by facsimile transmission (such to be
confirmed by mail). The effective date of such Notice shall be deemed
to be the date upon which any such Notice is personally delivered or,
if it is given by mail, courier service or facsimile transmission, the
date upon which it is received by the addressee. Any Party hereto may
change its address set forth below by written notice to the other Party
hereto in accordance with the terms of this Section:
b. If to AMEX:
American Express Travel Related Services Company, Inc.
3 World Financial Center
AMEX Tower
New York, NY 10285
Attn.: American Express Relationship Services
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Copy to:
American Express Travel Related Services Company, Inc.
3 World Financial Center
AMEX Tower
New York, NY 10285
Attn.: General Counsel's Office
AERS Counsel
c. If to ASF:
Administaff, Inc.
19001 Crescent Springs Drive
Kingwood, Texas 77339-3802
Attn.: Paul J. Sarvadi
Copy to:
Administaff, Inc.
19001 Crescent Springs Drive
Kingwood, Texas 77339-3802
Attn.: John H. Spurgin, II
20. TERM AND TERMINATION:
This Agreement shall take effect upon the Effective Date, and continue
until the Expiration Date unless earlier terminated in accordance with
this Section. Both Parties may agree in writing at least 90 days before
the Expiration Date to renew this Agreement for successive one year
periods. If both Parties elect to renew this Agreement, this Agreement
shall renew in accordance with the then current terms and conditions.
a. Early Termination: In accordance with the following, this Agreement may
be terminated by either Party prior to the Expiration Date as follows:
(1) Except as provided in Section 20(d) and (e), in the event that
the other Party commits a material breach or default under
this Agreement which breach is not cured by the breaching
Party 30 days from the receipt of notice to cure the breach
from the non-breaching Party, then the non-breaching Party may
terminate this Agreement in its discretion at any time after
such 30 day period.
(2) Either Party may terminate this Agreement with immediate
effect: (a) upon the institution by the other Party of
proceedings to be adjudicated a bankrupt or insolvent, or the
consent by the other Party to institution of bankruptcy or
insolvency proceedings against it or the filing by the other
Party of a petition or
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answer or consent seeking reorganization or release under the
Federal Bankruptcy Act, or any other applicable Federal or
state law, or the consent by the other Party to the filing of
any such petition or the appointment of a receiver,
liquidator, assignee, trustee, or other similar official of
the other Party or of any substantial part of its property, or
the making by the other Party of an assignment for the benefit
of creditors, or the admission in writing by the other Party
of an assignment for the benefit of creditors, or the
admission in writing by the other Party of its inability to
pay its debts generally as they become due or the taking of
corporate action by the other Party in furtherance of any such
actions; or (b) if, within 60 days after the commencement of
an action against the other Party seeking any bankruptcy,
insolvency, reorganization, liquidation, dissolution or
similar relief under any present or future law or regulation,
such action shall not have been dismissed or all orders or
proceedings thereunder affecting the operations or the
business of the other Party stayed, or if the stay of any such
order or proceeding shall thereafter be set aside; or if,
within 60 days after the appointment without the consent or
acquiescence of the other Party of any trustee, receiver or
liquidator or similar official of the other Party, or of all
or any substantial part of the property of the other Party,
such appointment shall not have been vacated.
b. ***
c. ***
21. MISCELLANEOUS:
a. Headings: Headings stated in this Agreement are for convenience of
reference only and are not intended as a summary of such sections and
do not affect, limit, modify, or construe the contents thereof.
b. 21st Century: No later than September, 1998, ASF shall: (1) manage and
manipulate data in connection with the Services involving all dates
from the 20th and 21st centuries without functional or data abnormality
related to such dates; (2) manage and manipulate data in connection
with the Services involving all dates from the 20th and 21st centuries
without inaccurate results related to such dates; (3) have user
interfaces and data fields in connection with the Services formatted to
distinguish between dates from the 20th and 21st centuries; and (4)
represent all data in connection with the Services to include
indications of the millennium, century, and decade as well as the
actual year.
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c. Alternative Dispute Resolution:
(1) Negotiation: The Parties shall attempt in good faith to
resolve any dispute arising out of or relating to this
Agreement (other than disputes regarding material breaches)
promptly by negotiations between executives who have authority
to settle the controversy. Any Party may give the other Party
written notice of any dispute not resolved in the normal
course of business. Within 20 days after delivery of said
notice, executives of both Parties shall meet at a mutually
acceptable time and place, and thereafter as often as they
reasonably deem necessary, to exchange relevant information
and to attempt to resolve the dispute. If the matter has not
been resolved within 60 days of the disputing Party's notice,
or if the Parties fail to meet within 20 days, either Party
may initiate mediation of the controversy or claim as provided
hereinafter.
If a negotiator intends to be accompanied at a meeting by an
attorney, the other negotiator shall be given advance notice
of such intention and may also be accompanied by an attorney.
All negotiations pursuant to this clause are confidential and
shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and state rules of
evidence.
(2) Mediation: If the above referenced dispute has not been
resolved by negotiation as provided above, the Parties shall
endeavor to settle the dispute by mediation under the then
current CPR Model Procedure for Mediation of Business
Disputes. One neutral third party will be selected from the
CPR Panels of Neutrals to mediate the dispute. If the Parties
encounter difficulty in agreeing on a neutral, they will seek
the assistance of CPR in the selection process.
(3) Other Remedies: In the event of a dispute arising out of or
relating to this contract or the breach, termination or
validity thereof, which has not been resolved by non-binding
means as provided in subsection (1) and (2) above within 60
days of the initiation of such procedure, either party may
seek any remedy available at law or equity, including recourse
to the courts.
d. ASF's Independent Contractor Status and Authority:
(1) ASF agrees and acknowledges that in its performance of its
obligations under this Agreement: (a) ASF is an independent
contractor of AMEX; and (b) AMEX is neither a joint employer
nor a co-employer of ASF's employees. ASF is solely
responsible for its own activities. ASF has no authority to
make commitments or enter into contracts on behalf of, bind or
otherwise obligate AMEX in any manner whatsoever except as
expressly stated in this Agreement.
(2) Since ASF is an independent contractor and not an agent of
AMEX, ASF represents, warrants and agrees that it shall be
liable for all taxes, withholdings,
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and imposts of any nature applicable to the payment of
compensation, whether current or deferred, for the work
performed on ASF's behalf in accordance with ASF's obligations
hereunder. Furthermore, ASF will indemnify and hold AMEX
harmless for any such taxes, withholding or imposts for which
AMEX may be determined to be liable.
e. AMEX's Independent Contractor Status and Authority:
(1) AMEX agrees and acknowledges that in its performance of its
obligations under this Agreement AMEX is an independent
contractor of ASF. AMEX is solely responsible for its own
activities. AMEX has no authority to make commitments or enter
into contracts on behalf of, bind or otherwise obligate ASF in
any manner whatsoever except as expressly stated in this
Agreement.
(2) Since AMEX is an independent contractor and not an agent of
ASF, AMEX represents, warrants and agrees that it shall be
liable for all taxes, withholdings, and imposts of any nature
applicable to the payment of compensation, whether current or
deferred, for the work performed on AMEX's behalf in
accordance with AMEX's obligations hereunder. Furthermore,
AMEX will indemnify and hold ASF harmless for any such taxes,
withholding or imposts for which ASF may be determined to be
liable.
f. Costs and Expenses: Each Party shall pay the fees and expenses incurred
by it in connection with the negotiation, preparation, execution, and
delivery of this Agreement and the related agreements and other
documents.
g. Survival of Representations: All representations, warranties, covenants
and agreements made by the Parties in this Agreement and pursuant to
the terms hereof shall survive the consummation of the transactions
contemplated hereby, notwithstanding any investigation heretofore or
hereafter made by any of them or on behalf of any of them.
h. Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but all of
which together shall constitute one instrument notwithstanding that all
Parties are not signatories to the same counterparts.
i. Amendments; Waiver: No provision of this Agreement may be amended or
waived except by an instrument in writing signed by the Party sought to
be bound. No failure or delay by any Party in exercising any right or
remedy hereunder shall operate as a waiver thereof, nor shall a waiver
of a particular right or remedy on one occasion be deemed a waiver of
any other right or remedy or a waiver of the same right or remedy on
any subsequent occasion.
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j. New York Law: This Agreement shall be governed by and in accordance
with the laws of the State of New York, without reference to its
conflict of laws principles.
k. Non-Waiver; Cumulative Rights: No failure or delay (in whole or in
part) on the part of any Party to exercise any right or remedy, or
operate as a waiver thereof, nor effect any other right or remedy. All
rights and remedies hereunder are cumulative and are not exclusive of
any other rights or remedies provided hereunder or by law.
l. Severability: If any provision contained in this Agreement is or
becomes invalid, illegal, or unenforceable in whole or in part, such
invalidity, legality, or unenforceability shall not affect the
remaining provisions and portions of this Agreement.
m. Assignment: This Agreement may not be assigned by either Party without
the prior written consent of the other Party except that AMEX may
assign this Agreement to its parent, a subsidiary or an affiliate
without ASF's prior written consent.
n. Entire Agreement: This Agreement constitutes the entire Agreement
between the Parties with respect to the subject matter hereof and
supersedes all prior contemporaneous oral or written understandings or
Agreements among the Parties which relate to the subject matter hereof.
No modification or amendment of this Agreement or any of its provisions
shall be binding upon any Party unless made in writing and duly
executed by authorized representatives of all Parties.
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IN WITNESS WHEREOF, AMEX and ASF, intending to be legally bound by the terms of
this Agreement, have caused this Agreement to be executed by their duly
authorized representatives as of the date and year first above written.
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC.
By: /s/ Anne Busquet
--------------------------------------
Name: Anne Busquet
--------------------------------------
Title: President, AERS
--------------------------------------
ADMINISTAFF, INC.
By: /s/ Paul Sarvadi
--------------------------------------
Name: Paul Sarvadi
--------------------------------------
Title: President
--------------------------------------
ADMINISTAFF COMPANIES, INC.
By: /s/ Paul Sarvadi
--------------------------------------
Name: Paul Sarvadi
--------------------------------------
Title: President
--------------------------------------
ADMINISTAFF OF TEXAS, INC.
By: /s/ Paul Sarvadi
--------------------------------------
Name: Paul Sarvadi
--------------------------------------
Title: President
--------------------------------------
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<PAGE> 27
EXHIBIT A
CLIENT SERVICE AGREEMENT
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<PAGE> 28
EXHIBIT B
QUALITY STANDARDS
CUSTOMER SERVICE
Customer service shall be provided to Clients for the term of their respective
enrollment in the Services.
To ensure the continuous attainment of quality customer service, ASF agrees to
do the following:
- - Strive for 100% accuracy and timely handling on all Client calls,
correspondence, and service requests.
- - Train and have available sufficient staff to provide adequate customer
service to Clients.
- - Dedicate to continuously improve upon its existing customer service
standards and measuring techniques, and develop additional standards as
reasonably requested by AMEX.
- - Inform AMEX of any material customer service issues.
- - Assist AMEX in conducting Client satisfaction research (for both AMEX
and ASF Clients) via surveys and other forms of client monitoring.
MARKETING
To ensure the continuous attainment of quality and marketing standards
described, ASF agrees to do the following:
- - Strive for 100% accuracy and timely handling on all calls and
correspondence from prospective Clients.
- - Train and have available sufficient staff to provide adequate response
to prospective Clients.
- - Inform AMEX of any material marketing issues.
- - Designate a quality assurance individual to regularly measure and
report directly to AMEX results against quality standards in accordance
with the requirements of Exhibit B and any reporting requested by AMEX
and mutually agreed upon at a later date.
SALES FORCE
Comply with the Sales Force Commitment as outlined in the Marketing Agreement.
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<PAGE> 29
Quality standards defined below will be aggregated through weighted measurement
to determine overall aggregate quality performance levels attained during each
quarter.
***
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*** Confidential Treatment Requested
<PAGE> 30
EXHIBIT C
DESCRIPTION OF SERVICES*
<TABLE>
Service Category Services Offered
---------------- ----------------
<S> <C> <C> <C>
1. Recruiting and Selection - Job descriptions
- Advertising
- Resume review
- Background checks
- Interviewing
- Pre-employment testing
- Profiling
- Drug testing
- Salary information
2. Performance Management - Organization structure
- Job design
- Performance measurement plans
- Compensation, incentive and review
- Employee relations
- Dispute resolution
- Supervisor training
3. Training and Development - Training programs (over 100 to date)
- Certified provider (IACET) for
continuing education credit
- CPE Providers for CPAs
- Needs analysis for performance
improvement
- Curriculum development for employee,
supervisory, and executive professional
growth
4. Benefit Management - Comprehensive health and benefit plans
- Employee assistance plans
- 401(k) plan
- Credit Union
- Disability plans
- Educational assistance
- Supplemental life insurance
</TABLE>
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<PAGE> 31
<TABLE>
Service Category Services Offered
---------------- ----------------
<S> <C> <C> <C>
5. Liability Management - Worker's compensation coverage and
claim service
- Safety inspection and policy development
- Employment claims
- Termination
- Conflict resolution
- Outplacement
- Employee handbooks
- Personnel guide
- Sample forms and policies
6. Owner Support - Business continuation planning
- Key man coverage
- Personnel consulting
- 401(k) planning and participation
- Employee communications
7. Government Compliance - Government reporting and agency
interface
- Unemployment claims management
- Employment records management
- Claims and audits
- EEOC, DOL, FMLA, DFWP, FLSA
Title VII, CRA '91, COBRA
8. Employment Administration - Payroll
- Payroll taxes
- Garnishments
- Insurance procurement
- Quarterly reports
- Employee files
- W2s and W4s
- Employment verification
- Human resource management reports
- Direct deposit
</TABLE>
* The Services will be updated throughout the term of the Agreement.
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<PAGE> 32
EXHIBIT D
AMEX AUDIT RIGHTS
ASF shall prepare and submit to AMEX periodic reports from the service data
collected relating to any or all of the Services described in this Agreement as
AMEX may reasonably request.
ASF shall keep all documents (excluding credit and monitoring reports and
information pertaining to the employer/employee relationship) relating to
Services provided under this Agreement for a period in conformance with ASF's
record retention policy. At AMEX's request, ASF shall promptly deliver a copy of
all such documents to AMEX upon the termination of this Agreement
AMEX shall have the right to monitor as outlined in the Marketing Agreement as
well as the right to inspect the business records required to confirm the
accounting of commissions payable to AMEX.
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EXHIBIT E
AMEX DATA ACCESS DOCUMENT
GENERAL
Each ASF employee, subcontractor, agent or representative with direct access to
AMEX data shall sign a Confidentiality Agreement or Non-Disclosure Agreement, as
applicable, and abide by all terms contained therein.
For purposes of review of security and data access issues, ASF shall allow site
audit visit by AMEX assigned staff during all periods of the relationship,
including unscheduled visits and reviews with 24 hours notice. AMEX reserves the
express right to make unscheduled visits to any and all ASF sites when there is
a suspicion of a security breach. ASF agrees to comply with any reasonable
recommendations from said audit and reviews.
ASF shall continue to maintain an adequate level of physical security controls
over ASF Service Location including, but not limited to: appropriate alarm
systems, access controls, fire suppression and video surveillance.
ASF shall maintain an adequate level of data security controls including, but
not limited to: proper safeguarding of AMEX data, logical access controls (e.g.
password protection of AMEX applications, data files and libraries, if any),
computer security software and a secure tape library. ASF will maintain controls
over AMEX data consistent with ASF standard controls on data.
ASF shall maintain an adequately secured computer room facility, with access
restricted to only approved personnel.
Upon request, ASF shall provide to AMEX Information Security management a copy
of the most recent third party data processing audit or review, conducted by
ASF's external auditors as well as management copies of any related data
processing audits from their internal audit team.
ASF agrees to abide by the Privacy Principles as described below:
1. COLLECT ONLY CUSTOMER INFORMATION THAT IS NEEDED.
Limit the collection of information about customers to what is needed
to be known to administer their accounts, to provide customer
services, to offer new products and services, and to fulfill any legal
and regulatory requirements.
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<PAGE> 34
2. ENSURE INFORMATION QUALITY.
Use advanced technology and well-defined employee practices to help
ensure that customer data are processed promptly, accurately and
completely.
3. USE INFORMATION SECURITY SAFEGUARDS.
Access to customer data is limited to those who specifically need it
to conduct their business responsibilities. Use security techniques
designed to protect customer data --especially when certain data are
used by employees and business partners to fulfill customer services.
4. LIMIT THE RELEASE OF CUSTOMER INFORMATION.
In addition to providing customers with the opportunity to "opt-out"
of marketing offers, information is released only with the customers'
consent or request, or when required to do so by law or other
regulatory authority.
5. HOLD EMPLOYEES RESPONSIBLE FOR THESE PRIVACY PRINCIPLES.
Each employee is personally responsible for maintaining consumer
confidence in ASF. Provide training and communications programs
designed to educate employees about the meaning and requirements of
these Privacy Principles.
ASF shall have an appropriate sensitive-trash disposal program at each
operations center.
ASF shall return all magnetic media to the appropriate AMEX location
within seven business days of receipt of such magnetic media.
ASF shall ensure at each site that no shared environments exist with
other businesses for all WANs, LANs, Network connections, dial-up
connections, DASD, distributed systems, and that appropriate data
controls are implemented.
ASF shall follow standard industry practices in configuring and
operating voice systems to control fraudulent use of 800 numbers, PBX
switches and other voice networks.
EMPLOYEE RESPONSIBILITIES
ASF employees are encouraged to report suspected violations of any Privacy
Rules, or violations of Information Security Standards to their management for
investigation and action.
ASF policy will prohibit employees sharing their USERID/PASSWORD with any other
person.
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<PAGE> 35
ASF employees must sign-off or envoke a password protected time-out feature when
leaving their workstation for any reason if such employee is working on AMEX
programs or accessing any AMEX data.
ASF shall execute background checks on all employees working on AMEX programs
including employment and criminal checks as permitted by all local, state and
federal laws.
In the event that AMEX commences an investigation of possible fraudulent
activity, or otherwise upon AMEX's reasonable request, ASF will cooperate with
the investigation.
SYSTEM SECURITY
ASF shall ensure all system connected terminals are equipped with access control
(password protection), time-out for non-use if such terminals have access to
AMEX programs or can access AMEX data..
If data is to reside on any ASF system, then standards and security practices
must be inserted, including host access control, personal computer access
control, virus protection and LAN access controls.
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<PAGE> 36
EXHIBIT F
CONFIDENTIALITY/DATA SECURITY
1. Confidentiality: Definition "Confidential Data and Information" shall include
any information, data, or materials obtained by one party to this Agreement (the
"Receiving Party") from, or disclosed to such party by the other party (or, in
the case of AMEX, disclosed to or by AMEX, or any parent, subsidiary, or
affiliate to AMEX) (the "Disclosing Party"), or customer or service
establishment, which information, data, or materials relate to the Marketing
Agreement and their design and processes, or to the past, present, or future
business activities of the Disclosing Party or any of its subsidiaries,
affiliates, or clients, including methods, processes, telephone conversations,
financial data, systems, customer names, account numbers, and other customer
data, lists, apparatus, statistics, programs, and research and development
related information of such entities, except such information as:
(a) is already known to the Receiving Party prior to receipt from
Disclosing Party or any of its subsidiaries, affiliates or
clients, free of any confidentiality obligation at the time it
is obtained;
(b) is or becomes publicly known through no wrongful act of the
Receiving Party;
(c) is rightfully received by Receiving Party from a third party
without restriction and without breach of this Agreement; or
(d) is independently developed by the Receiving Party.
With respect to each party's access to customer files and related customer data
("Files"), each party specifically acknowledges the importance of maintaining
the security and confidentiality of the Files, and agrees to take whatever
reasonable steps are necessary to prevent the unauthorized transfer, disclosure
to, or use of the Files by any person or entity not a party to this Agreement.
2. Standard of Care: Neither party shall disclose, publish, release, transfer,
or otherwise make available Confidential Data and Information of the other party
in any form to, or for the use or benefit of, any person or entity without such
party's prior written consent. Each party, however, shall be permitted to
disclose relevant aspects of the other party's Confidential Data and Information
only to its officers and its employees on a need to know basis to the extent
that such disclosure is reasonably necessary for the performance of their duties
and obligations under the Agreement; provided, that such party shall take all
reasonable measures to ensure that Confidential Data and information of the
other party is not disclosed or duplicated in contravention of the provisions of
this Agreement by such officers and employees. Each party agrees to ensure that
the terms and conditions of this Agreement are strictly adhered to by all of its
employees and any third party representative. The obligations shall not restrict
any disclosure by either party mandated by any applicable law, or by order of
any court or government agency
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<PAGE> 37
(provided that the disclosing party shall give prompt notice to the non-
disclosing party of such order).
3. Notice of Violations: Each party or its employees shall: (a) notify the other
party promptly of any material unauthorized possession, use or knowledge, or
attempt thereof, of the other party's Confidential Data and Information by any
person or entity which may become known to such party and encourage its
employees to do the same, (b) promptly furnish to the other party full details
of the unauthorized possession, use or knowledge, or attempt thereof, and use
reasonable efforts to investigate any unauthorized possession, use or knowledge,
or attempt thereof, of Confidential Data and Information, (c) use reasonable
efforts to cooperate with the other party in any litigation and investigation
against third parties deemed necessary by the other party to protect its
proprietary rights, and (d) promptly use all reasonable efforts to prevent a
recurrence of any such unauthorized possession, use or knowledge of Confidential
Data and Information. Each party shall bear the cost it incurs as a result of
compliance with the requirements set forth in these paragraphs.
4. Monitoring: AMEX reserves the right to monitor access to Confidential Data
and Information to prevent the improper or unauthorized use of such Confidential
Data and Information such monitoring may include, but is not limited to, on-site
inspection of ASF's locations providing Services for AMEX at any time, and
inserting decoy names and addresses in any lists provided to ASF. In addition,
AMEX reserves the right to visit, unannounced, any of the locations used by ASF
that provides the Services for AMEX and verify security procedures.
5. Remedy for Confidential Data and Information Loss: Each party agrees that if
there is any disclosure of the Confidential Data and Information by its
employees or the employees of any third party contacted by it, it will enforce
for the other party's benefit through litigation, if necessary, all rights
provided under law to compensate the former party for any reasonable damages
arising out of such disclosure and to protect the former party from additional
disclosure.
6. Remedy for Breach: Each party agrees that if a party, its officers, employees
or anyone obtaining access to the proprietary information of the other party by,
through or under them, breached any provision of this Exhibit, such other party
would suffer irreparable harm and the total amount of monetary damages for any
injury to such other party from any violation of this Exhibit would be
impossible to calculate and would therefore be an inadequate remedy.
Accordingly, each party agrees that the other party shall be entitled to
temporary and permanent injunctive relief against the breaching party, its
officers or employees, and such other rights and remedies to which such other
party may be entitled to at law, in equity and under this Agreement for any
violation of this Exhibit.
7. Survival: The provisions of this Exhibit shall survive the termination or
expiration of this Agreement.
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<PAGE> 38
EXHIBIT G
CUSTOMER DATA AND DATA-RELATED RIGHTS
1. Limited Access to Client Data. ASF shall have limited access to certain data
of AMEX's clients and other relevant information solely for the purposes
consistent with meeting ASF's obligations under this Agreement.
2. Data and Reports
Ownership of Service Data. All data and information submitted to one party by
the other party in connection with the Services (the "Service Data") is and
shall remain the property of the originator of the data and information. The
Service Data shall: (a) not be used by either party other than in connection
with providing or analyzing the Services; (b) not be disclosed, sold, assigned,
leased or otherwise provided to third parties by either party; and (c) not be
commercially exploited by or on behalf of either party, its employees or agents
except as provided in this Agreement. Each party shall take all appropriate
actions to safeguard the Service Data. The database of Enrolled Clients shall
remain the sole property of AMEX save and except employer data which shall not
be disclosed to AMEX.
Return of Data. Upon request by the other party upon the termination or
expiration of this Agreement, each party shall (a) promptly return to the other
party, in a format agreed upon by the parties hereto and on the media reasonably
requested by, all Service Data belonging to that party and/or (b) erase or
destroy under the supervision of the owner of the Service Data, all such Service
Data.
Database Maintenance. ASF agrees to transmit information each month within
thirty (30) days of the end of the month on use of the Service by Clients/Client
(including, Client account number), to the AMEX location designated by AMEX. The
mechanism for this transmission to be agreed to by the parties.
Each party shall use best efforts for the accuracy and completeness of the data
and information submitted to the other party and shall promptly correct any
errors or inaccuracies in the data or information submitted.
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EXHIBIT H
SECURITY
1. Safety and Security Procedures: General - ASF shall have limited access to
certain Confidential Data and Information solely for the purposes consistent
with meeting ASF's obligations under this Agreement: (a) ASF shall require all
visitors to be identified at the front entrance of all operating centers and to
sign a visitor's log which includes the date, time in/out, firm represented and
signature. All visitors shall be issued badges; (b) ASF shall maintain a secure
environment for all Confidential Data and Information for such ASF service
location to prevent unauthorized access, damage, or destruction of Confidential
Data and Information, including, but not limited to: appropriate alarm systems,
access controls, fire suppression, video surveillance, plan material disposal
(e.g. sensitive trash disposal program); (c) All Confidential Data and
Information shall be securely stored for a mutually agreed to retention period,
either at ASF's service location or at an off-site location. Said off-site
storage location shall be subject to AMEX's approval. No party shall, without
the prior written consent of the Disclosing Party, use any of the Confidential
Data and Information supplied by the Disclosing Party for any purpose other than
to fulfill the terms of this Agreement; (d) ASF shall maintain an adequately
secured computer room facility and tape library, with access restricted to only
approved personnel; (e) Upon request by AMEX, ASF shall provide to AMEX
Information Security management copies of all internal security policies and
standards for review prior to commencing administration of the Service; and (f)
ASF shall return all magnetic media to the appropriate AMEX location within
seven (7) business days of receipt of such magnetic media.
2. Logical Security Controls: ASF shall maintain a secure environment for all
Confidential Data and Information which includes a level of logical security
controls at such ASF service location to prevent unauthorized access, damage, or
destruction of Confidential Data and Information, including, but not limited to:
individual user identifications, password protection of data files and
libraries, computer security software, and a secure tape library. In addition:
(a) ASF shall ensure at each site that to the extent shared environments exist
with other businesses for all WANS, LANS, Network connections, dial-up
connections, DASD and distributed systems, that all access to AMEX Confidential
Data and Information is restricted by employee function and position to only
those ASF employees who are involved in the administration of the Program; (b)
ASF shall ensure that all system connected terminals are equipped with access
control (password protection), time-out for non-use if such terminals have
access to AMEX programs or can access AMEX data; (c) if AMEX Confidential Data
and Information is to reside on any ASF system, then standards and security
practices must be resident, including host access control, personal computer
access control and virus protection, and LAN access controls; and (d) ASF shall
make every reasonable effort to ensure computer terminals displaying AMEX data
face away from common areas.
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<PAGE> 40
3. Disaster Recovery: ASF shall provide to AMEX upon request a disaster recovery
plan with a maximum of 24 hour recovery for each operation center performing
services hereunder. ASF shall also provide information on hot site and cold
sites as requested. ASF shall provide AMEX written notification should there be
a material change or modification with respect to ASF's hot and cold sites. All
critical supporting applications at each ASF site performing services hereunder
shall have had a valid and documented test of the disaster recovery plan, and
ASF shall provide copies of such to AMEX.
4. Assignment and Successions: No party shall transfer or assign this Agreement,
or any right or obligation under it, by operation of law or otherwise, to any
person or entity without the prior written consent of the other party and any
such attempted assignment shall be void; provided, however, that each party may
assign this Agreement and any of its rights and obligations under it to its
parent, subsidiaries and affiliates without such written consent.
This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of each party, unless terminated as provided herein.
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EXHIBIT I
PERSONAL CONFIDENTIALITY AGREEMENT
The nature of your work at Administaff of Texas, Inc. ("ASF") for American
Express Travel Related Services, Inc., and its affiliates (collectively "AMEX")
involves your access to trade secrets, confidential information, files, records
and forms of AMEX and/or ASF (collectively "Confidential Information").
Confidential Information includes, but is not limited to, any information
relating to AMEX or ASF organizational structure, marketing philosophy and
objectives, project plans, data models, strategy and vision statements, business
initiatives, business requirements, systems design, methodologies, processes,
competitive advantages and disadvantages, financial results, product features,
systems, operations, technology, customer lists, customer account information,
products development, advertising or sales programs and any other information
which would give AMEX or ASF an opportunity to obtain an advantage over its
competitors or which AMEX or ASF is ethically obligated to protect from
unauthorized sources. None of such information shall be deemed to be in the
public domain.
Both AMEX and ASF desire to protect this Confidential Information and therefore
requires that you agree, as a condition of your performing services on the AMEX
project pursuant to AMEX's agreement with ASF, to safeguard all Confidential
Information and not to reveal Confidential Information to any third party
(including, without limitation, at conferences, seminars, meetings or
professional organizations or by publications in journals or granting of
interviews to journalists and other members of the news media) or use
Confidential Information for your own benefit or the benefit of any third party,
except to the extent necessarily required for the performance of your services
for the AMEX project.
You agree not to discuss Confidential Information of AMEX or ASF in public
places.
You agree that any work product produced or developed by you in the performance
of your services for AMEX and ASF shall be Confidential Information subject to
this Agreement and such work product is, and shall remain, the property of AMEX
and/or ASF.
You also agree to help safeguard AMEX's and ASF's customers' expectations of
privacy by exercising diligence and care in the handling of Confidential
Information relating to them, as more fully explained in the AMEX Data Access
Document.
By signing below, you indicate that you understand the above terms and that, as
a condition of performing Services for the AMEX project, you agree to adhere to
them.
- --------------------------------------
Your Signature
- -------------------------------------- ------------------------------
Print Your Name Date
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EXHIBIT J
NON-DISCLOSURE
[Subcontractor/Agent/Representative Name] ("Receiving Party") agrees that
Receiving Party is aware that American Express Travel Related Services, Inc.
("AMEX") and Administaff of Texas, Inc. ("ASF") have entered into a Marketing
Agreement ("Agreement") that imposes certain obligations on ASF, some of which
are specifically set forth below. Receiving Party understands that as part of
ASF's obligations under the Agreement, ASF is required to obtain this written
agreement from Receiving Party to further ensure understanding and compliance
with these obligations.
In consideration of Receiving Party's future assignment and/or responsibilities
in connection with ASF's performance under the Agreement, Receiving Party hereby
acknowledges, represents and confirms to ASF and AMEX as follows: (a) Receiving
Party has read the provisions of this Non-Disclosure Agreement, understands each
of them, agrees to them, and knows of no agreements, obligations or restrictions
which prevent or prohibit Receiving Party from complying with them; (b)
Receiving Party shall receive and maintain all AMEX information and perform
services in a manner consistent with these obligations; and (c) Receiving Party
agrees not to, directly or indirectly, engage in or assist others to engage in,
any activity or conduct which violates the provisions of this Non-Disclosure
Agreement.
1. General Obligations. All confidential or proprietary information and
documentation ("Confidential Information" (including the terms of this
Agreement, the AMEX data, AMEX software, ASF data, ASF software, processes,
modeling, pricing, etc.) relating to AMEX or ASF shall be held in confidence by
Receiving Party to the same extent and in at least the same manner as AMEX and
ASF protects its own confidential or proprietary information and as recommended
as a result of any facility audits or reviews. Receiving Party shall not
disclose, publish, release, transfer or otherwise make available Confidential
Information in any form to, or for the use or benefit of, any person or entity
without AMEX's or ASF's consent. Receiving Party shall, however, be permitted to
disclose relevant aspects of Confidential Information to its officers, agents,
subcontractors and employees and to the officers, agents, subcontractors and
employees of its corporate affiliates or subsidiaries to the extent that such
disclosure is reasonably necessary for the performance of its duties and
obligations under this Agreement; provided, that Receiving Party shall take all
reasonable measures to ensure that Confidential Information is not disclosed or
duplicated in contravention of the provisions of this Agreement by such
officers, agents, subcontractors and employees. The obligations in this Section
1 shall not restrict any disclosure by Receiving Party pursuant to any
applicable law, or by order of any court or government agency (provided that
Receiving Party shall give prompt notice to AMEX and ASF of such order) and
shall not apply with respect to information which (a) is developed by Receiving
Party without violating AMEX's or ASF's proprietary rights, (b) is or becomes
publicly known (other than through unauthorized disclosure), (c) is disclosed by
AMEX or ASF to a third-party free of any obligation of confidentiality, is
already known by Receiving Party without an obligation of confidentiality other
than pursuant to this Agreement or any confidentiality agreements entered into
before the Effective Date between AMEX and ASF, or (d) is rightfully received by
Receiving Party free of any obligation of confidentiality.
2. Unauthorized Acts. Receiving Party shall: (a) notify AMEX and ASF promptly at
the respective addresses below of any material unauthorized possession, use or
knowledge, or attempt thereof, of the Confidential Information by any person or
entity which may become known to Receiving Party, (b) promptly furnish to AMEX
and ASF full details of the unauthorized possession, use or knowledge, or
attempt thereof, and use reasonable efforts to investigate and prevent the
recurrence of any unauthorized possession, use or knowledge, or
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<PAGE> 43
attempt thereof, of Confidential Information, (c) use reasonable efforts to
cooperate with AMEX and ASF in any litigation and investigation against third
parties deemed necessary by AMEX or ASF to protect its proprietary rights and
(d) promptly use all reasonable efforts to prevent a recurrence of any such
unauthorized possession, use or knowledge of Confidential Information.
Receiving Party agrees that if Receiving Party threatens to or actually breaches
or fails to observe any of the obligations set forth in this Non-Disclosure
Agreement, AMEX and ASF shall be subject to irreparable harm which shall not be
adequately satisfied by damages. Receiving Party therefore agrees that ASF
and/or AMEX shall be entitled to an injunction and/or any other remedies
permitted, to ensure and enforce Receiving Party's compliance with these
obligations; provided, however, that no specification herein of any particularly
legal or equitable remedy shall be construed as a waiver, prohibition or
limitation of any legal or equitable remedies.
By:
----------------------------------------
(Receiving Party's Name)
Name:
--------------------------------------
(Type, Stamp or Print)
Title:
-------------------------------------
Date:
--------------------------------------
Witness:
-----------------------------------
-41-
<PAGE> 44
EXHIBIT K
INSURANCE
TYPES AND AMOUNTS REQUIRED OF ASF:
1. workers' compensation, as prescribed by the law of any state in which
the Services are to be performed;
2. employer's liability insurance with limits of at least $1,000,000 per
occurrence, covering bodily injury by acciden t or disease, includin g
death;
3. employment practices liability insurance with limits of $5,000,000 per
insured event, with a $5,000,000 aggregate and a deductible amount of
$250,000. Employment practices liability insurance must cover, at a
minimum, claims of discrimination, sexual harassment or wrongful
termination, and must also cover, at a minimum, related allegations of
defamation, negligent infliction of emotional distress, and invasion of
privacy;
4. commercial general liability insurance, including contractual
liability, products liability and complete operations coverage and, if
the use of motor vehicles is required, comprehensive motor vehicle
liability insurance, each with limits of at least $1,000,000 for bodily
injury, including death to any one person, and $1,000,000 on account of
any one occurrence and $1,000,000 for each occurrence of property
damage;
5. errors and omissions liability insurance and other professional
liability insurance covering the acts, errors and omissions of ASF in
an amount combined with employment practices liability insurance of not
less than $25,000,000 per claim and a three year aggregate of
$50,000,000;
6. fire and casualty insurance including business interruption; and
7. excess liability insurance in excess of the insurance required in 2.
and 4. above in amounts of no less than $50,000,000 for each accident
or occurrence and $50,000,000 annual aggregate.
TYPES AND AMOUNTS REQUIRED OF CUSTOMERS OF ASF:
1. general liability insurance of $1,000,000;
2. comprehensive automobile liability insurance of $1,000,000; and
3. exceptions to, or required coverages in addition to, 1. and 2. above
may be made according to ASF's usual business practice and/or
judgement.
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<PAGE> 1
EXHIBIT 3
_______________________________________________________________________________
REGISTRATION RIGHTS AGREEMENT
BETWEEN
ADMINISTAFF, INC.
AND
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
Dated as of March 10, 1998
_______________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS................................................................................................1
SECTION 1. Definitions............................................................................1
(a) Defined Terms.................................................................1
(b) Terms Defined in Purchase Agreement...........................................5
(c) Cross-References..............................................................5
SECTION 2. Registration Under the Securities Act for the Benefit of the Holders...................5
(a) Filing of Registration Statement. ............................................5
(b) Number of Registrations.......................................................5
(c) Inclusion in Registration Statement. ........................................6
(d) Plan of Distribution. ........................................................6
(e) Company Delay Rights..........................................................6
(f) Selection of Underwriters. ..................................................7
(g) Priority......................................................................7
SECTION 3. Registration Procedures................................................................8
SECTION 4. Right to Piggyback....................................................................12
(a) Piggyback Registration.......................................................12
(b) Priority on Primary Offerings................................................12
(c) Priority on Secondary Offerings..............................................12
SECTION 5. Holdback Agreements...................................................................13
SECTION 6. Registration Expenses.................................................................13
SECTION 7. Indemnification.......................................................................14
(a) Indemnification by the Company...............................................14
(b) Indemnification by Holders of Registrable Stock. ...........................15
(c) Procedure....................................................................15
(d) Contribution.................................................................16
(e) Other Indemnifications.......................................................17
SECTION 8. Withdrawals...........................................................................17
SECTION 9. Exchange Act Registration; Rule 144 Reporting.........................................17
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 10. Limitation on Registration Rights of Others...........................................18
SECTION 11. Termination. ........................................................................18
SECTION 12. Notices. .............................................................................18
SECTION 13. Successors............................................................................19
SECTION 14. Governing Law. .......................................................................19
SECTION 15. Benefits of this Agreement. .........................................................19
SECTION 16. Counterparts..........................................................................19
SECTION 17. Amendments; Waivers...................................................................19
SECTION 18. Jurisdiction. .......................................................................20
SECTION 19. Specific Performance..................................................................20
SECTION 20. Entire Agreement. ...................................................................20
SECTION 21. Severability..........................................................................20
</TABLE>
- ii -
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of
March 10, 1998, by and between ADMINISTAFF, INC., a Delaware corporation (the
"Company"), and AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC., a New
York corporation (the "Purchaser").
RECITALS:
A. The Purchaser and the Company have entered into a Securities
Purchase Agreement, dated as of January 27, 1998 (the "Purchase Agreement"),
pursuant to which the Purchaser has agreed to purchase Units from the Company,
each of which shall consist of one share of Common Stock and 2.98 Warrants;
B. As a condition of the willingness of the Purchaser to purchase
the Common Stock and the Warrants pursuant to the Purchase Agreement, the
Company has agreed to enter into this Agreement; and
NOW, THEREFORE, in consideration of the premises and the agreements
herein set forth and to induce the Purchaser and the Company to proceed with the
transactions contemplated by the Purchase Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION 1. Definitions.
(a) Defined Terms. For purposes of this Agreement, the
following terms have the meanings set forth below:
"Agreement" means this Registration Rights Agreement as in effect on
the date hereof and as hereafter amended, supplemented, restated or otherwise
modified.
"Business Day" means any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York, New York or Houston, Texas.
"Common Stock" means shares now or hereafter authorized of any class of
common stock of the Company and any other capital stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets upon
voluntary or involuntary liquidation, dissolution or winding up of the Company
or in the earnings of the Company without limit as to per share amount, and
shall include, without limitation, the presently authorized 60,000,000 shares of
Common Stock, par value $.01 per share.
"Company" is defined in the Preamble.
<PAGE> 5
"Current Market Price" of each share of Common Stock means (i) the
average of the closing prices of the Common Stock for the five-day period
immediately preceding the day in question as reported by The Wall Street Journal
under the New York Stock Exchange Composite Transactions quotation system (or
under any successor quotation system) or, if the Common Stock is no longer
traded on the New York Stock Exchange under the quotation system under which
closing prices are reported or, if The Wall Street Journal no longer reports
such closing prices, such closing prices as reported by a newspaper or trade
journal selected by the Company, or, if no such closing prices are available on
such dates, (ii) the proposed public offering price estimated in good faith by
the requesting Holders.
"Demand Prospectus" means the prospectus included in the Demand
Registration Statement, including any preliminary prospectus and any amendment
or supplement thereto, including any supplement relating to the terms of the
offering of any portion of the Registrable Stock covered by the Demand
Registration Statement, and in each case including all material incorporated by
reference therein.
"Demand Registration" shall mean a registration effected by means of a
Demand Registration Statement.
"Demand Registration Request" is defined in Section 2(a).
"Demand Registration Statement" shall mean a registration statement of
the Company (and any other entity required to be a registrant with respect to
such registration statement pursuant to the requirements of the Securities Act)
that covers all of the Registrable Stock to be offered and sold, and all
amendments (including post-effective amendments) to such registration statement,
and all exhibits thereto and materials incorporated by reference therein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means the Purchaser or any subsequent holder of Registrable
Stock or Warrants.
"Indemnified Person" is defined in Section 7(a).
"Indemnifying Person" is defined in Section 7(c).
"Listed Underwriters" shall initially mean Morgan Stanley & Co.
Incorporated; Donaldson, Lufkin & Jenrette Securities Corporation; Solomon Smith
Barney; Lehman Brothers; Goldman, Sachs & Co.; Bear, Stearns & Co. Inc.; and
Merrill Lynch & Co.
"Maximum Number" is defined in Section 4(b).
"Named Underwriters" shall initially mean Morgan Stanley & Co.
Incorporated; Donaldson, Lufkin & Jenrette Securities Corporation; Raymond James
& Associates, Inc.; The Robinson-
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<PAGE> 6
Humphrey Company LLC.; Robert W. Baird & Co.; BancAmerica Robertson Stephenson;
Solomon Smith Barney; and BT Alex. Brown Incorporated.
"NASD" means the National Association of Securities Dealers, Inc.
"Piggyback Registration" is defined in Section 4(a).
"Piggyback Registration Request" is defined in Section 4(a).
"Prospectus" means a Demand Prospectus or a Shelf Prospectus.
"Purchase Agreement" is defined in the Recitals.
"Purchaser" is defined in the Preamble.
"PVI Agreement" means the Registration Rights Agreement among the
Company, Pyramid Ventures, Inc. and the Board of Trustees of the Texas Growth
Fund, as trustee for the Texas Growth Fund -- 1991 Trust, dated as of May 13,
1994.
"Registrable Stock" means (i) the Common Stock issued to the Purchaser
pursuant to the Purchase Agreement, (ii) the Common Stock issued or issuable
upon exercise of a Warrant, and (iii) any Common Stock issued or purchased upon
exercise of the preemptive or other purchase rights set forth in Section 9 of
the Purchase Agreement, (iv) any Common Stock acquired by the Purchaser after
the date hereof (other than pursuant to clauses (i), (ii) and (iii) above) and
(v) any Common Stock that may be issued or distributed in respect of the Common
Stock referred to in clauses (i) through (iv), or any stock split, stock
dividend, merger, share exchange, recapitalization or other distribution or
similar event; provided, however, that any Registrable Stock shall cease to be
Registrable Stock when (i) a registration statement covering such Registrable
Stock has been declared effective and such Registrable Stock has been disposed
of pursuant to such effective registration statement, or (ii) such Registrable
Stock is sold by a person in a transaction in which the rights under the
provisions of this Agreement are not assigned; provided, however, that any
Registrable Stock referred to in clause (iv) shall cease to be Registrable Stock
when the Purchaser is no longer an Affiliate of the Company.
"Registration Expenses" is defined in Section 6.
"Registration Request" is defined in Section 2(a).
"Registration Statement" means a Demand Registration Statement or a
Shelf Registration Statement.
"Requesting Holders" is defined in Section 2(a).
- 3 -
<PAGE> 7
"SEC" means the Securities and Exchange Commission.
"Secondary Requests" is defined in Section 2(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" is defined in Section 6.
"Shelf Prospectus" means the prospectus included in the Shelf
Registration Statement, including any preliminary prospectus, and any amendment
or supplement thereto, including any supplement relating to the terms of the
offering of any portion of the Registrable Stock covered by the Shelf
Registration Statement, and in each case including all material incorporated by
reference therein.
"Shelf Registration" shall mean a registration effected by means of a
Shelf Registration Statement.
"Shelf Registration Request" is defined in Section 2(a).
"Shelf Registration Statement" shall mean a registration statement of
the Company (and any other entity required to be a registrant with respect to
such registration statement pursuant to the requirements of the Securities Act)
that covers all of the Registrable Stock to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act, or any similar
rule that may be adopted by the SEC, and all amendments (including
post-effective amendments) to such registration statement, and all exhibits
thereto and materials incorporated by reference therein.
"Termination Event" is defined in Section 7(c) of the Purchase
Agreement.
"Underwritten Distribution" is defined in Section 2(b).
"Underwritten Distribution Request" is defined in Section 2(f).
"Underwritten Transactions" is defined in Section 6.
"Units" means investment units of the Company, each of which consists
of one share of Common Stock and 2.98 Warrants.
"Warrant Agreement" means the Warrant Agreement, dated the date hereof,
between the Company and the Purchaser.
"Warrants" means the warrants to purchase one share of Common Stock of
the Company, issued to the Purchaser pursuant to the Purchase Agreement.
- 4 -
<PAGE> 8
(b) Terms Defined in Purchase Agreement. Unless otherwise
defined herein, capitalized terms used in this Agreement shall have the meanings
ascribed to such terms in the Purchase Agreement.
(c) Cross-References. Unless otherwise specified, references in
this Agreement to any Section, Recital or Preamble are references to such
Section, Recital or Preamble of this Agreement, and unless otherwise specified,
references in any Section, or definition to any clause or subsection are
references to such clause or subsection of such Section or definition.
SECTION 2. Registration Under the Securities Act for the Benefit of
the Holders.
(a) Filing of Registration Statement. One or more Holders (the
"Requesting Holders") of Registrable Stock may notify the Company in writing at
any time and from time to time after the earlier of (i) the second anniversary
of the Closing Date and (ii) the occurrence of a Termination Event that such
Requesting Holders desire that the Company either (A) file a Shelf Registration
Statement with respect to the Registrable Stock (a "Shelf Registration Request")
or (B) file a Demand Registration Statement with respect to the Registrable
Stock (a "Demand Registration Request", and together with a "Shelf Registration
Request", a "Registration Request"). The Company agrees to use its reasonable
efforts to keep (i) any Shelf Registration Request continuously effective for a
period of two years after the effective date and (ii) any Demand Registration
Statement filed pursuant to a Demand Registration Request continuously effective
for a period of six months following the effective date. Promptly (and in any
case within five Business Days) following a Registration Request, the Requesting
Holders shall give written notice of such requested registration to all other
Holders and thereupon the Company will expeditiously prepare and file a
registration statement with respect to, and use its reasonable best efforts to
effect the registration under the Securities Act, of:
(1) the Registrable Stock which the Company has been so
requested to register by the Holders delivering the
Registration Request, for disposition in accordance with the
intended method of disposition stated in such request, and
(2) all other Registrable Stock which the Company has been
requested to register by the other Holders by written request
(a "Secondary Requests") delivered to the Company within five
Business Days after the giving of such notice by the
Requesting Holders.
Any Shelf Registration Request shall contain an undertaking by the Requesting
Holders that the numbers of shares requested to be registered pursuant to a
Shelf Registration Statement represent the number of shares that the Requesting
Holders in good faith believe will be sold or disposed of in the two year period
after the effective date of such Shelf Registration Request. Any Secondary
Request with respect to a Shelf Registration Statement shall contain a similar
undertaking. Notwithstanding anything to the contrary contained herein, the
Company shall not be required to file a Demand Registration Statement pursuant
to this Section 2(a) or to participate in an Underwritten
- 5 -
<PAGE> 9
Distribution off of a Shelf Registration Statement if the Current Market Price
of all Registrable Stock which the Requesting Holders request be registered on
such Demand Registration Statement or sold in such Underwritten Distribution
does not equal $2,500,000 or more.
(b) Number of Registrations. In addition to the Company's
obligations under Section 2(a) to file registration statements, and to use its
reasonable best efforts to cause such registration statements to become
effective, the Company agrees to participate in underwritten distributions off
of a Shelf Distribution Statement (an "Underwritten Distribution"). The Company
shall be obligated to cause a Demand Registration Statement to be filed pursuant
to the provisions of Section 2(a) and to participate in Underwritten
Distributions a total of ten times; provided, however, that a request for a
Demand Registration Statement or an Underwritten Distribution shall not be
deemed to be effected for purposes of this Section 2(b) unless (i) the Demand
Registration Statement or Shelf Registration Statement (as the case may be) has
been declared effective by the SEC, and (ii) such registration statement has
remained continuously effective until the earlier of (A) the termination of the
period set forth in Section 2(a), (B) the disposition of the Registrable Stock
covered by such Registration Statement and (C) the withdrawal of such
Registration Statement at the request of the Requesting Holders. The Company
shall be obligated to cause a Shelf Registration Statement to be filed pursuant
the provisions of Section 2(a) an unlimited number of times. The Company shall
not be obligated to cause a Demand Registration Statement or Shelf Registration
Statement to be filed pursuant to the provisions of Section 2(a) at any time an
earlier Registration Statement is still effective, unless such later filing is
intended to add securities to be distributed in connection with the prior filing
pursuant to Rule 429 or 462 under the Securities Act (or any successor rules) or
otherwise.
(c) Inclusion in Registration Statement. Any Holder who does
not provide the information requested by the Company and required by the rules
and regulations of the SEC to be included in a Registration Statement as
promptly as practicable after receipt of such request, but in no event later
than ten days thereafter, shall not be entitled to have its Registrable Stock
included in a Registration Statement.
(d) Plan of Distribution. A Registration Statement shall
provide for and permit distributions of the Registerable Stock through
underwritten distributions, secondary distributions, exchange distributions,
block trades, ordinary brokerage transactions, any other method of distribution
requested by a Holder or a combination of such methods of sale. Registerable
Stock may be sold from time to time to purchasers directly by any Holder, or any
such Holder may from time to time offer the Registerable Stock through
underwriters, dealers or agents, who may receive compensation in the form of
discounts or commissions from such Holder and/or the purchasers of Registerable
Stock.
(e) Company Delay Rights. Notwithstanding anything to the
contrary contained herein, the Company shall not be required to take any of the
actions described in Section 3(a), Section 3(b), or Section 3(i) with respect to
each Holder who holds Registerable Stock to the extent that the Company is in
possession of material non-public information that it has a bona fide business
- 6 -
<PAGE> 10
purpose for preserving as confidential and that is not then otherwise required
to be disclosed and it delivers written notice (i) in the case of a Demand
Registration, to each Holder that it intends to defer the actions so required
for a period not to exceed 60 days from the date of such notice, and (ii) in the
case of a Shelf Registration, to each Holder that it intends to defer the
actions so required, and that such Holder may not make offers or sales under a
Shelf Registration Statement, for a period not to exceed 60 days from the date
of such notice; provided, however, that the Company may deliver only two such
notices in the aggregate within any twelve-month period.
(f) Selection of Underwriters. Upon receipt of a Demand
Registration Request which contemplates an underwritten offering or a request
(an "Underwritten Distribution Request") to participate in an Underwritten
Distribution, the Company shall choose three of the Named Underwriters (two of
which must be Listed Underwriters) and promptly (but in any event within five
Business Days) notify the Requesting Holders of its selections. The Holders of a
majority of the Registerable Stock to be sold in the Demand Registration or
Underwritten Distribution then may designate one of the three designated Named
Underwriters to serve as the managing underwriter in such offering. The Company
and the Purchaser agree to annually review the list of Named Underwriters and to
mutually agree on any deletions or additions to the list of Named Underwriters,
provided that the list of Named Underwriters shall at all times include at least
seven Named Underwriters and at least two Listed Underwriters. The Company and
the Purchaser agree to annually review the list of Listed Underwriters and to
mutually agree on any deletions or additions to the list of Listed Underwriters.
(g) Priority. Notwithstanding any other provision of this
Section 2, if, in the case of a Demand Registration involving an underwritten
offering, the managing underwriter advises the Company and the Requesting
Holders in writing that in its opinion the aggregate number of shares of Common
Stock requested to be included in such offering (including Registrable Stock and
any shares of Common Stock to be offered for the account of the Company or any
other securityholder of the Company) would materially adversely affect the
success of such offering or the offering price of the shares of Common Stock to
be offered, the managing underwriter may limit the Registrable Stock that may be
included in such registration. The Company shall so advise each Requesting
Holder of such limitation, and the number of shares of Registrable Stock that
may be included in such registration and underwriting shall be allocated in the
following order of priority: (i) first, the number of shares of Registrable
Stock specified in the Demand Request (and in any Secondary Requests) in
proportion, as nearly as practicable, to the respective number of Registrable
Stock requested to be included in such registration by each such Holder, (ii)
second, any or all shares of Common Stock to be sold by the Company pursuant to
such registration, and (iii) third, among any other securityholders requesting
that shares of Common Stock held by such securityholders be included in such
registration in proportion, as nearly as practicable, to the respective number
of shares of Common Stock requested to be included in such registration by each
such securityholder. No Registrable Stock or other securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
- 7 -
<PAGE> 11
SECTION 3. Registration Procedures.
In connection with the obligations of the Company with respect to a
Shelf Registration Statement or Demand Registration Statement contemplated by
Section 2 hereof, the Company shall as expeditiously as possible:
(a) subject to Section 2(e) hereof, prepare and file with the
SEC a Shelf Registration Statement or Demand Registration Statement for the sale
of the Registrable Stock in accordance with the requested methods of
distribution described in Section 2(d) hereof, which Registration Statement
shall comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and use its reasonable best efforts to cause such Registration
Statement to become and remain effective for the periods contemplated in this
Agreement;
(b) subject to Section 2(e) and Section 3(i) hereof, (i)
prepare and file with the SEC such amendments to each Registration Statement as
may be necessary to keep such Registration Statement effective for the
applicable period; (ii) cause the Prospectus to be amended or supplemented as
required and to be filed as required by Rule 424 or any similar rule that may be
adopted under the Securities Act; (iii) respond as promptly as practicable to
any comments received from the SEC with respect to a Registration Statement or
any amendment thereto; and (iv) comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the requested methods
of distribution;
(c) furnish to each Holder, without charge, as many copies of
each Shelf Prospectus or Demand Prospectus forming a part of a Registration
Statement and any amendment or supplement thereto in order to facilitate the
public sale or other disposition of the Registrable Stock; subject to Section
2(e) hereof, the Company consents to the use of the Shelf Prospectus or Demand
Prospectus and any amendment or supplement thereto by each such Holder of
Registrable Stock in connection with the offering and sale of the Registrable
Stock covered by the Shelf Prospectus or Demand Prospectus or amendment or
supplement thereto;
(d) use its reasonable efforts to register or qualify the
Registrable Stock by the time a Shelf Registration Statement or Demand
Registration Statement (as the case may be) is declared effective by the SEC
under all applicable state securities or blue sky laws of such jurisdictions in
the United States and its territories and possessions as any Holder who holds
Registrable Stock covered by such Shelf Registration Statement or Demand
Registration Statement shall reasonably request in writing, keep each such
registration or qualification effective during the period such Shelf
Registration Statement or Demand Registration Statement is required to be kept
effective; provided, however, that in connection therewith, the Company shall
not be required to (i) qualify as a foreign corporation to do business or to
register as a broker or dealer in any such jurisdiction where it would not
otherwise be required to qualify or register but for this Section 3(d),
- 8 -
<PAGE> 12
(ii) subject itself to taxation in any such jurisdiction, or (iii) file a
general consent to service of process in any such jurisdiction;
(e) notify each Holder promptly (i) when a Shelf Registration
Statement or Demand Registration Statement (as the case may be) and any
post-effective amendments thereto have become effective, (ii) when any amendment
or supplement to a Shelf Prospectus or Demand Prospectus forming a part of a
Registration Statement has been filed with the SEC, (iii) of the issuance by the
SEC or any state securities authority of any stop order suspending the
effectiveness of a Shelf Registration Statement or Demand Registration Statement
or any part thereof or the initiation of any proceedings for that purpose, (iv)
if the Company receives any notification with respect to the suspension of the
qualification of the Registrable Stock for offer or sale in any jurisdiction or
the initiation of any proceeding for such purpose, and (v) of the happening of
any event during the period a Shelf Registration Statement or Demand
Registration Statement is effective as a result of which (A) such Shelf
Registration Statement or Demand Registration Statement contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or (B)
the Shelf Prospectus or Demand Prospectus forming a part of the registration
statement as then amended or supplemented contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Shelf Registration Statement or
Demand Registration Statement or any part thereof as promptly as possible;
(g) furnish to each Holder, without charge, at least one
conformed copy of each Shelf Registration Statement and Demand Registration
Statement and any post-effective amendment thereto (without documents
incorporated therein by reference or exhibits thereto, unless requested);
(h) cooperate with the selling Holders to facilitate the
timely preparation and delivery of certificates representing Registrable Stock
to be sold and not bearing any Securities Act legend; and enable certificates
for such Registrable Stock to be issued for such numbers of shares and
registered in such names as the selling Holders may reasonably request at least
two business days prior to any sale of Registrable Stock;
(i) subject to Section 2(e) hereof, upon the occurrence of any
event contemplated by Section 2(e) or clause (v) of Section 3(e) hereof, use its
reasonable efforts promptly to prepare and file an amendment or a supplement to
the Shelf Prospectus or Demand Prospectus or any document incorporated therein
by reference or prepare, file and obtain effectiveness of a post-effective
amendment to the Shelf Registration Statement or Demand Registration Statement,
or file any other required document, in any such case to the extent necessary so
that, such Shelf Prospectus or Demand Prospectus and Shelf Registration
Statement or Demand Registration Statement as then amended or supplemented will
not contain any untrue statement of a material fact or omit to state
- 9 -
<PAGE> 13
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading;
(j) make available for inspection by the Holders and any
counsel, accountants, underwriters, dealers or agents or other representatives
retained by such Holders all financial and other records, pertinent corporate
documents and properties of the Company and cause the officers, directors and
employees of the Company to supply all such records, documents or information
reasonably requested by such Holders, counsel, accountants or representatives in
connection with any Registration Statement; provided, however, that such
records, documents or information which the Company determines in good faith to
be confidential and notifies such Holders, counsel, accountants or
representatives in writing that such records, documents or information are
confidential shall not be disclosed by such Holders, counsel, accountants or
representatives unless (i) such disclosure is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, or (ii) such records,
documents or information become generally available to the public other than
through a breach of this Agreement;
(k) furnish, at the request of any selling Holder, on the date
that shares of Registrable Stock are delivered to the underwriters for sale
pursuant to a Demand Registration or an Underwritten Distribution: (i) an
opinion dated such date of counsel representing the Company for the purposes of
such registration, addressed to the underwriters, stating that the Shelf
Registration Statement or Demand Registration Statement (as the case may be) has
become effective under the Securities Act and that (A) to the knowledge of such
counsel, no stop order suspending the effectiveness thereof has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the Registration Statement and
Prospectus, and each amendment or supplement thereto, comply as to form in all
material respects with the requirements of the Securities Act and the applicable
rules and regulations of the SEC thereunder and that such counsel does not
believe that any such Registration Statement, Prospectus, amendment or
supplement contains a misstatement of a material fact or an omission to state a
material fact required to be stated therein or necessary to make the statements
made therein not misleading (except that such counsel need express no opinion as
to financial statements or financial or statistical data contained therein) and
(C) to such other effects as may reasonably be requested by counsel for the
underwriters or by such selling Holder or its counsel, and (ii) a letter dated
such date from the independent public accountants retained by the Company,
addressed to the underwriters, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
Registration Statement and the Prospectus, or any amendment or supplement
thereto, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such letter)
with respect to the registration in respect of which such letter is being given
as such underwriters may reasonably request;
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<PAGE> 14
(l) a reasonable time prior to the filing of the Shelf
Registration Statement or Demand Registration Statement or any amendment
thereto, or any Shelf Prospectus or Demand Prospectus forming a part of the
registration statement or any amendment or supplement thereto, provide copies of
such document (not including any documents incorporated by reference therein,
unless requested) to the Holders;
(m) use its reasonable efforts to cause all Registrable Stock
to be listed on any securities exchange on which similar securities issued by
the Company are then listed; and
(n) use its reasonable efforts to make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering at least 12 months which shall satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder.
In connection with and as a condition to the Company's obligations with
respect to any Shelf Registration Statement or Demand Registration Statement
pursuant to Section 2 hereof and this Section 3, each Holder covenants and
agrees that upon receipt of any notice from the Company contemplated by Section
2(e) or Section 3(e) (in respect of the occurrence of an event contemplated by
clause (v) of Section 3(e)), such Holder shall not offer or sell any Registrable
Stock pursuant to a Shelf Registration Statement or Demand Registration
Statement until such Holder receives copies of the supplemented or amended Shelf
Prospectus or Demand Prospectus contemplated by Section 3(i) hereof and receives
notice that any post-effective amendment has become effective, and, if so
directed by the Company, such Holder will deliver to the Company (at the expense
of the Company) all copies in its possession, other than permanent file copies
then in such Holder's possession, of the Shelf Prospectus or Demand Prospectus
as amended or supplemented at the time of receipt of such notice.
In connection with each Demand Registration Statement or Underwritten
Distribution pursuant to this Section 3 and Section 2 hereof, the Company agrees
(i) to cooperate fully in such distribution, and (ii) to participate in meetings
with potential investors and in the preparation of presentations for such
meetings and to cause its executive officers to participate in a "roadshow" if
the managing underwriter so requests; provided, that the Company shall be
obligated to participate in meetings and "roadshows" pursuant to (ii) above on
only seven occasions. In connection with each Demand Registration Statement or
Underwritten Distribution pursuant to this Section 3 and Section 2 hereof, the
Company further agrees, to enter into a written agreement with the managing
underwriter selected in the manner herein provided in such form and containing
such provisions as are customary in the securities business for such an
arrangement between major underwriters and companies of the Company's size and
investment stature, including, without limitation, customary indemnification
provisions substantially consistent with Section 7 hereof and customary lockup
provisions; provided that such agreement shall not contain any such provision
applicable to the Company which is inconsistent with the provisions hereof;
provided, further that the time and place of the closing under said agreement
shall be as mutually agreed upon between the Company and such managing
underwriter. In connection with any other distribution that is not a
underwritten
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<PAGE> 15
distribution, the Company agrees to enter into a written agreement with any
broker or dealer who participates in such distribution containing such
provisions as are customary in the securities business for such an arrangement,
including, without limitation, customary indemnity provisions substantially
consistent with Section 7.
SECTION 4. Right to Piggyback.
(a) Piggyback Registration. If the Company at any time
proposes to register any of its Common Stock or other securities under the
Securities Act for sale to the public, whether for its own account or for the
account of other shareholders or both (except with respect to registration
statements on Form S-4, Form S-8 or another form not available for registering
the Registrable Stock for sale to the public) (a "Piggyback Registration"), the
Company will promptly (but in any event within 20 Business Days) give written
notice to all Holders of its intention to effect such registration and will
include in such registration all Registrable Stock with respect to which the
Company has received written requests for inclusion within 10 Business Days
after the giving of the Company's notice (a "Piggyback Registration Request");
provided, however, that the Company shall not be required to include Registrable
Stock in the securities to be registered pursuant to a registration statement on
any form which limits the amount of securities which may be registered by the
issuer and/or selling security holders if, and to the extent that, such
inclusion would make the use of such form unavailable, so long as no other
shares are to be included in the securities to be registered pursuant to the
registration statement for the account of any person other than the Company. In
the event that any Piggyback Registration shall be, in whole or in part, an
underwritten public offering of Common Stock, any Piggyback Registration Request
by a Holder shall include an agreement of such Holder that such Registrable
Stock is to be included in the underwriting on the same terms and conditions as
the shares of Common Stock otherwise being sold through underwriters under such
registration.
(b) Priority on Primary Offerings. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of shares requested to be included in such registration exceeds the
maximum number which can be included in such offering without adversely
affecting the marketability of the offering (the "Maximum Number"), the Company
will limit the number of shares included in such registration to the Maximum
Number, and the shares registered shall be selected in the following order of
priority: (i) first, securities the Company proposes to sell, (ii) second,
subject to the rights set forth in the PVI Agreement as in effect on the date
hereof, Registrable Stock covered by Piggyback Registration Requests, which
shall be pro rata among the Holders thereof on the basis of the number of shares
requested to be registered by each such Holder, and (iii) third, other
securities requested to be included in such registration.
(c) Priority on Secondary Offerings. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the Maximum Number, the Company will
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<PAGE> 16
include in such registration the shares requested to be included therein by the
holders requesting such registration and the Registrable Stock covered by
Piggyback Registration Requests and any other securities requested to be
included in such registration, pro rata among the holders thereof on the basis
of the number of shares requested to be included in such registration; provided,
however, that if the holders requesting registration are doing so pursuant to
demand registration rights of such holders, such holders' shares shall take
priority over any Registrable Stock.
SECTION 5. Holdback Agreements. If any registration in which any Holder
is participating shall be in connection with an underwritten public offering,
each such Holder agrees (and shall enter into an agreement which shall so
state), if requested by the managing underwriter or underwriters, not to effect
any public sale or distribution, including any sale pursuant to Rule 144 under
the Securities Act, of any Registrable Stock (other than as part of such
underwritten public offering) during the 90 day period beginning on the
effective date of any underwritten offering of securities by the Company;
provided, however, that the provisions of this Section 5 shall be applicable to
Holders only if each officer and director of the Company, and all other
stockholders of the Company so requested by the underwriters, shall, prior to
such effective date, have entered into written agreements with the Company
and/or the managing underwriter or underwriters imposing on such officer and
director and other stockholders similar restrictions as those set forth in this
Section 5 with respect to the Holders.
SECTION 6. Registration Expenses. Except as otherwise provided herein,
all expenses incident to the Company's performance of or compliance with its
obligations under this Agreement will be paid by the Company, regardless of
whether Registrable Stock is sold pursuant to any registration statement,
including, without limitation, all registration, filing and listing fees, fees
and expenses of compliance with securities or blue sky laws, printing,
messenger, telephone and delivery expenses, fees and disbursements of counsel
for the Company, fees and disbursements of all independent certified public
accountants of the Company (including, without limitation, in connection with
any special audit or "cold comfort" letters), and fees and expenses associated
with any NASD filing required to be made in connection with the registration
statement, including, if applicable, the fees and expenses of any "qualified
independent underwriter" (and its counsel) that is required to be retained in
accordance with the rules and regulations of the NASD (collectively, the
"Registration Expenses"); provided, however, that any incremental expenses
incurred by the Company in connection with the registration and disposition of
Registrable Stock referred to in clause (iv) of the definition of Registrable
Stock in Section 1 hereof shall not be Registration Expenses for purpose hereof
and will be paid in all cases by the Purchaser. Registration Expenses shall not
include the fees and disbursements of counsel for any Holder or any fees,
discounts or commissions to any underwriter or any fees or disbursements of
counsel for any underwriter in respect of the Registrable Stock sold by such
Holders (collectively, the "Selling Expenses"). Notwithstanding the first
sentence of this Section 6, with respect to Demand Registration Statements and
Underwritten Distributions (collectively, the "Underwritten Transactions"), the
Registration Expenses shall be payable as follows: the Company shall pay the
Registration Expenses for the first three Underwritten Transactions; the Holders
shall pay the Registration Expenses for the fourth Underwritten Transaction; the
Company shall pay the Registration Expenses for the fifth
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<PAGE> 17
Underwritten Transaction; the Holders shall pay the Registration Expenses for
the sixth Underwritten Transaction; the Company shall pay the Registration
Expenses for the seventh Underwritten Distribution; and the Holders shall pay
the Registration Expenses for the eighth Underwritten Distribution. The Company
will, in any event, pay its internal expenses, the expense of any annual audit,
and the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which securities of
the same class are then listed or the qualification for trading of the
securities to be registered in each inter-dealer quotation system in which
securities of the same class are then traded.
SECTION 7. Indemnification.
(a) Indemnification by the Company. In the event of the
registration of any Registrable Stock under the Securities Act pursuant to the
provisions hereof, the Company will indemnify and hold harmless each and every
seller of Registrable Stock, its directors, officers, employees and agents, and
each other Person, if any, who controls such seller within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each such
Person being hereinafter sometimes referred to as an "Indemnified Person"
provided that for purposes of subsections (b), (c) and (d) of this Section 7
"Indemnified Person" also shall include the Company, its directors, officers,
employees and agents, and each other Person, if any who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) from and against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Indemnified Person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained or incorporated by reference in any registration
statement under which Registrable Stock was registered under the Securities Act
or any prospectus or preliminary prospectus included therein (in each case, as
amended or supplemented), or any document incorporated by reference therein, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each such Indemnified
Person for any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made or incorporated by reference in
such registration statement or prospectus or any amendment or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company by such Indemnified Person stated to be specifically for use in
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Person
and shall survive the transfer of such Registrable Stock.
(b) Indemnification by Holders of Registrable Stock. In the
event of the registration of any Registrable Stock under the Securities Act
pursuant to the provisions hereof, each Holder on whose behalf such Registrable
Stock shall have been registered will indemnify and hold
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<PAGE> 18
harmless each and every Indemnified Person, against any losses, claims, damages
or liabilities, joint or several, to which such Indemnified Person may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained or incorporated by reference in any registration
statement under which Registrable Stock was registered under the Securities Act
or any prospectus or preliminary prospectus included therein (in each case, as
amended or supplemented), or any document incorporated by reference therein, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, which untrue statement or alleged untrue
statement or omission or alleged omission has been made or incorporated therein
in reliance upon and in conformity with written information furnished to the
Company by such Holder specifically stating that it is for use in preparation
thereof, and will reimburse each such Indemnified Person for any legal and other
expenses reasonably incurred by such Indemnified Person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the liability of each Holder hereunder shall be limited
to the proceeds received by such Holder from the sale of Registrable Stock
covered by such registration statement.
(c) Procedure. Promptly after receipt by an Indemnified Person
of notice of the commencement of any action (including any governmental
investigation or inquiry), such Indemnified Person will, if such Indemnified
Person intends to make a claim in respect thereof against the party agreeing to
indemnify such Indemnified Person pursuant to subsections (a) or (b) of this
Section 7 (any such Person being hereinafter referred to as an "Indemnifying
Person"), give written notice to such Indemnifying Person of the commencement
thereof, but the omission so to notify the Indemnifying Person shall not relieve
the Indemnifying Person from any of its obligations pursuant to the provisions
of this Section 7 except to the extent that the Indemnifying Person is actually
prejudiced by such failure to give notice. In case any such action is brought
against any Indemnified Person and it notifies an Indemnifying Person of the
commencement thereof, the Indemnifying Person shall be entitled to participate
in, and to the extent that it may wish, jointly with any other Indemnifying
Person similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Person, and after notice from the
Indemnifying Person to such Indemnified Person, the Indemnifying Person shall
not, except as hereinafter provided, be responsible for any legal or other
expenses subsequently incurred by such Indemnified Person in connection with the
defense thereof. No Indemnifying Person will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Person of a
release from all liability in respect of such claim or litigation. Such
Indemnified Person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be the expense of such Indemnified Person unless (i) the
Indemnifying Person has agreed to pay such fees and expenses, (ii) the
Indemnifying Person shall have failed to assume the defense of such action or
proceeding or has failed to employ counsel reasonably satisfactory to such
Indemnified Person in any such action or proceeding or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
such Indemnified Person and the Indemnifying
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<PAGE> 19
Person and such Indemnified Person shall have been advised by counsel that
representation of both parties by the same counsel would be inappropriate due to
actual or potential material differing interests between them (in which case, if
such Indemnified Person notifies the Indemnifying Person in writing that it
elects to employ separate counsel at the expense of the Indemnifying Person, the
Indemnifying Person shall not have the right to assume the defense of such
action or proceeding on behalf of such Indemnified Person). The Indemnifying
Person shall not be liable for any settlement of any such action or proceeding
effected without its written consent, which consent shall not unreasonably be
withheld, delayed or conditioned, but if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or proceeding,
subject to no further appeal, the Indemnifying Person shall indemnify and hold
harmless such Indemnified Persons from and against any loss or liability by
reason of such settlement or judgment.
(d) Contribution. If the indemnification provided for in this
Section 7 is unavailable to a party that would have been an Indemnified Person
under this Section 7 in respect of any losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to herein, then each party
that would have been an Indemnifying Person thereunder shall, in lieu of
indemnifying such Indemnified Person, contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person on the one
hand and the Indemnified Person on the other in connection with the statement or
omission which resulted in such losses, claims, damages, liabilities or expenses
(or actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission of a material fact relates to information
supplied by the Indemnifying Person or the Indemnified Person and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7(c), any legal or other fees or expenses reasonably incurred by such
party in connection with the investigation or defense of any action or claim.
The Company and each Holder of Registrable Stock agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 7. Notwithstanding
the provisions of this Section 7(d), no Holder of Registrable Stock shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Stock sold by it exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(e) Other Indemnifications. Indemnification or, if
appropriate, contribution, similar to that specified in the preceding provisions
of this Section 7 (with appropriate modifications) shall be given by the Company
and each seller of Registrable Stock with respect to any required
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<PAGE> 20
registration or other qualification of such Registrable Stock under any federal
or state law or regulation or governmental authority other than the Securities
Act.
SECTION 8. Withdrawals. Any Holder or Holders may at any time withdraw
any request made pursuant to Section 4 hereof for inclusion of its Registrable
Stock in a Piggyback Registration or Section 2 hereof for registration of its
Registrable Stock.
SECTION 9. Exchange Act Registration; Rule 144 Reporting. The Company
covenants and agrees that until such time as the Holders no longer hold any
Registrable Stock it will:
(a) if required by law, maintain an effective registration
statement (containing such information and documents as the SEC shall specify)
with respect to the Common Stock of the Company under Section 12(g) of the
Exchange Act;
(b) use its reasonable best efforts to make and keep public
information available, as those terms are understood and defined in Rule 144
under the Securities Act, even if the Company subsequently ceases to be subject
to the reporting requirements of the Securities Act or the Exchange Act;
(c) use its reasonable best efforts to file with the SEC in a
timely manner all reports and documents required of the Company under the
Securities Act and the Exchange Act; and
(d) furnish to any Holder promptly upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 under the Securities Act and of the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of the Company,
and (iii) such other reports and documents of the Company and other information
in the possession of or reasonably attainable by the Company as such Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing such Holder to sell any such Registrable Stock without registration.
The Company represents and warrants that such registration statement or any
information, document or report filed with the SEC in connection therewith or
any information so made public shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein not misleading. The
Company agrees to indemnify and hold harmless (or to the extent the same is not
enforceable, make contribution to) the Holders, their officers, directors,
employees and agents, or any Person controlling (within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act) such Holder
from and against any and all losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arising out of or resulting from any breach of
the foregoing representation or warranty, all on terms and conditions comparable
to those set forth in Section 7.
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<PAGE> 21
SECTION 10. Limitation on Registration Rights of Others. Except as set
forth on Exhibit A hereto, the Company represents and warrants that it has not
granted to any Person the right to request or require the Company to register
any securities issued by the Company. The Company covenants and agrees that, so
long as Holders hold Registrable Stock with a Current Market Price equal to or
greater than $2,500,000, the Company will not, directly or indirectly, grant to
any Person or agree to or otherwise become obligated in respect of any
registration rights of securities of the Company upon the demand of any Person
without the prior written consent of the Required Holders. The Company may grant
"piggyback" registration rights after the date hereof, provided such rights are
expressly subject and subordinated to the rights of registration of the Holders
pursuant to Section 4(b) on terms reasonably satisfactory to the Required
Holders.
SECTION 11. Termination. The rights of any Holder under Sections 2, 3
and 4 of this Agreement shall terminate as to any Registrable Stock when such
Registrable Stock has been effectively registered under the Securities Act and
sold pursuant to a registration statement covering such Registrable Stock. The
expense provisions of Section 6 and the indemnification and contribution
provisions of Section 7 shall survive any termination of this Agreement.
SECTION 12. Notices. All notices, consents, approvals, agreements and
other communications provided hereunder shall be in writing and delivered
personally, by mail or by telecopy and shall be sufficiently given to the
Purchaser and the Company if addressed or delivered to them at the following
addresses:
If to Company: Administaff, Inc.
19001 Crescent Springs Drive
Kingswood, Texas 77339-3802
Attention: General Counsel
Telephone No.: (281)348-3251
Telecopier No.: (281)348-2859
with a copy to: Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
600 Travis Street
Houston, Texas 77002
Attention: G. Michael O'Leary
Telephone No.: (713)220-4360
Telecopier No.: (713)220-4593
If to the Purchaser: American Express Company
American Express Tower
World Financial Center
200 Vesey Street
New York, New York 10285
Attention: General Counsel
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<PAGE> 22
Telephone No.: (212) 640-5789
Telecopier No.: (212) 267-9061
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30301-1763
Attention: John J. Kelley III
Telephone No.: (404)572-3401
Telecopier No.: (404)572-5146
or at such other address as any party or any other Holder may designate to any
other party by written notice. All such notices and communications shall be
deemed to have been duly given: (i) at the time delivered by hand, if personally
delivered, (ii) when received, if deposited in the mail, postage prepaid and
(iii) when transmission is verified, if telecopied.
SECTION 13. Successors. All covenants and agreements of this Agreement
by or on behalf of any of the parties hereto shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns, including, without limitation, any Holders from time to time of the
Registrable Stock or the Warrants and successors and assigns by operation of
law, merger or consolidation; provided, that without the consent of the Company
the Purchaser may not assign its rights under this Agreement to any Person,
except for an assignment to an Affiliate of the Purchaser, an Associate of the
Purchaser, a Subsidiary of the Purchaser or any entity of which Purchaser is,
directly or indirectly, a Subsidiary.
SECTION 14. Governing Law. This Agreement shall be governed by laws of
the State of New York and for all purposes shall be construed in accordance with
the internal laws of said state.
SECTION 15. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Purchaser and the
other Holders any legal or equitable right, remedy or claim under this
Agreement; this Agreement shall be for the sole and exclusive benefit of the
Company, the Purchaser and the other Holders.
SECTION 16. Counterparts. This Agreement may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.
SECTION 17. Amendments; Waivers. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended or waived and the
Company may take any action herein prohibited, or fail to take any action herein
required to be performed by it if, but only if, the Company has obtained the
written consent of the Holders of a majority of the total number of shares of
outstanding Registrable Stock at the time such amendment or waiver becomes
effective and any such waiver or action so given or taken shall be binding on
all Holders. No failure or delay by any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, and a waiver of
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<PAGE> 23
a particular right or remedy on one occasion shall not be deemed a waiver of any
other right or remedy or a waiver of the same right or remedy on any subsequent
occasion.
SECTION 18. Jurisdiction. Each of the parties hereto hereby agrees that
any legal action or proceeding against such party with respect to this Agreement
may be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York as the other party may elect, and,
by execution and delivery hereof, such party accepts and consents for itself and
in respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts and agrees that such jurisdiction shall be exclusive,
unless waived by the other party in writing, with respect to any action or
proceeding brought by such party against the other party. Each of the parties
hereto irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of the
copies thereof by certified mail, return receipt requested, postage prepaid, to
it at its address set forth herein, such service to become effective upon the
earlier of (i) the date ten calendar days after such mailing and (ii) any
earlier date permitted by applicable law.
SECTION 19. Specific Performance. The Company recognizes that the
rights of the Holders under this Agreement are unique and, accordingly, the
Holders shall, in addition to such other remedies as may be available to any of
them at law or in equity, have the right to enforce their rights hereunder by
actions for injunctive relief and specific performance to the extent permitted
by law. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate. This Agreement is
not intended to limit or abridge any rights of the Holders which may exist apart
from this Agreement.
SECTION 20. Entire Agreement. The parties hereto agree that this
Agreement, the Purchase Agreement and the other Transaction Documents constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings between them as to such
subject matter; and there are no restrictions, agreements, arrangements, oral or
written, between any or all of the parties relating to the subject matter hereof
which are not fully expressed or referred to herein or therein.
SECTION 21. Severability. If any provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable
as applied to any particular case in any jurisdiction or jurisdictions, or in
all jurisdictions or in all cases, because of the conflict of any provision with
any constitution, statute, rule or public policy, or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question, invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute, rule or public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.
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<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
ADMINISTAFF, INC.
By: /s/ Paul Sarvadi
------------------------------
Name: Paul Sarvadi
Title: President
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC.
By: /s/ Anne Busquet
------------------------------
Name: Anne Busquet
Title: President, AERS
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<PAGE> 25
EXHIBIT A
That certain Registration Rights Agreement, dated as of May 13, 1994,
among the Company's Pyramid Ventures, Inc., a Delaware corporation, and the
Board of Trustees of the Texas Growth Fund, as trustee for the Texas Growth Fund
- -- 1991 Trust, as amended.
<PAGE> 1
EXHIBIT 4
_______________________________________________________________________________
WARRANT AGREEMENT
BETWEEN
ADMINISTAFF, INC.
AND
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
Dated as of March 10, 1998
_______________________________________________________________________________
<PAGE> 2
WARRANT AGREEMENT
THIS WARRANT AGREEMENT is made as of March 10, 1998, by and between
ADMINISTAFF, INC., a Delaware corporation (the "Company"), and AMERICAN EXPRESS
TRAVEL RELATED SERVICES COMPANY, INC., a New York corporation (the "Purchaser").
RECITALS:
A. The Company and the Purchaser have entered into a Securities
Purchase Agreement dated as of January 27, 1998 (the "Purchase Agreement"),
pursuant to which the Purchaser has agreed to purchase from the Company 693,126
Units (as hereinafter defined), each of which shall consist of one share of
Common Stock (as hereinafter defined) and 2.98 Warrants (as hereinafter
defined).
B. The Company and the Purchaser have agreed to enter into this
Agreement to supplement the terms and conditions set forth in the Purchase
Agreement which relate to the Warrants purchased thereunder.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions.
(a) Certain Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Affiliate" has the same meaning as in Rule 12b-2 promulgated under
the Exchange Act.
"Business Day" means any day which is neither a Saturday or Sunday
nor a legal holiday on which banks are authorized or required to be closed in
New York, New York or Houston, Texas.
"Change of Control" means the occurrence of any of the following:
(a) any third party shall have acquired beneficial ownership of more than 30% of
the outstanding voting stock of the Company (within the meaning of Section 13(d)
or 14(d) of the Exchange Act); or (b) individuals who on the Closing Date were
directors of the Company (together with any replacement or additional directors
who were nominated or elected by a majority of directors then in office) cease
to constitute a majority of the Board of Directors of the Company.
"Closing Date" means March 10, 1998 the date of the Closing of the
purchase by the Purchaser of the Units in accordance with the Purchase
Agreement.
<PAGE> 3
"Common Stock" means shares now or hereafter authorized of any class
of common stock of the Company and any other class of capital stock of the
Company, however designated, that has the right (subject to any prior rights of
any class or series of preferred stock) to participate in any distribution of
the assets upon voluntary or involuntary liquidation, dissolution or winding up
of the Company or in the earnings of the Company without limit as to per share
amount, and shall include, without limitation, the presently authorized
60,000,000 shares of Common Stock, par value $0.01 per share.
"Company" is defined in the Preamble.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" is defined in the Warrant Certificates.
"Exercise Price" means the exercise price per Warrant as set forth in
the Warrant Certificate evidencing such Warrant and as adjusted from time to
time in accordance with this Agreement.
"Fair Market Value per Share" means the arithmetic mean of the
closing sales price of a share of Common Stock of the Company as reported by the
New York Stock Exchange Composite Transactions over the five trading days
immediately preceding the date of determination or, if not so trading, the fair
value as determined in good faith by the Board of Directors of the Company.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Holder" means the Purchaser or any subsequent holder of Warrants or
Warrant Stock, to which the Warrants or Warrant Stock are transferred in
accordance with the provisions of this Agreement and the Purchase Agreement.
"Marketing Agreement" means the Marketing Agreement, dated as of the
date hereof, by and between the Company and the Purchaser in substantially the
form of Exhibit A attached to the Purchase Agreement.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association or any other entity, whether acting in an
individual, fiduciary or other capacity.
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<PAGE> 4
"Purchase Agreement" is defined in the Recitals.
"Put Closing" is defined in Section 5(a).
"Put Exercise Notice" is defined in Section 5(a).
"Put Price" is defined in Section 5(a).
"Put Right" is defined in Section 5(a).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, between the Company and the Purchaser,
in substantially the form of Exhibit B attached to the Purchase Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Unit" means an investment unit consisting of one share of
Common Stock and 2.98 Warrants.
"Warrant Certificates" means collectively, the certificates
evidencing (i) the Warrants with an Expiration Date of the third anniversary of
the Closing Date in the form of Exhibit A-1 attached hereto, (ii) the Warrants
with an Expiration Date of the fourth anniversary of the Closing Date in the
form of Exhibit A-2 attached hereto, (iii) the Warrants with an Expiration Date
of the fifth anniversary of the Closing Date in the form of Exhibit A-3 attached
hereto, (iv) the Warrants with an Expiration Date of the sixth anniversary of
the Closing Date in the form of Exhibit A-4 attached hereto, (v) the Warrants
with an Expiration Date of the seventh anniversary of the Closing Date in the
form of Exhibit A-5 attached hereto.
"Warrant Stock" means the securities which a Holder may
acquire upon exercise of a Warrant, together with any other securities which
such Holder may be issued in respect of any such securities, including, without
limitation, by way of any dividend or other distribution on such securities, any
split-up of such securities or a recapitalization, merger, consolidation, share
exchange, reorganization or other transaction or series of related transactions
in which shares of such securities are changed into or exchanged for securities
of another corporation.
"Warrants" means the 2,065,515 warrants each of which entitles
the holder thereof to purchase one share of Common Stock of the Company issued
to the Purchaser on the Closing Date pursuant to this Agreement and the Purchase
Agreement, which warrants shall be subject to adjustment and shall have the
rights, privileges and limitations set forth in this Agreement and in each
Warrant.
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<PAGE> 5
(b) Terms Defined in Purchase Agreement. Unless otherwise
defined herein, capitalized terms used in this Agreement shall have the meanings
ascribed to such terms in the Purchase Agreement.
SECTION 2. Exercise of Warrants.
(a) A Warrant may be exercised by the Purchaser or any Holder
only in accordance with the terms and conditions of this Agreement and at any
time during the period beginning on the date hereof and ending on the Expiration
Date for such Warrant as set forth in the Warrant Certificate evidencing such
Warrant. The Warrant Certificates evidencing the Warrants issued to the
Purchaser on the Closing Date shall be identical except for the Expiration Date
and the Exercise Price. The Expiration Date for the Warrants shall be as
follows: the third anniversary of the Closing Date for 400,000 Warrants; the
fourth anniversary of the Closing Date for 400,000 Warrants; the fifth
anniversary of the Closing Date for 400,000 Warrants; the sixth anniversary of
the Closing Date for 400,000 Warrants; and the seventh anniversary of the
Closing Date for 465,515 Warrants. The Exercise Price for the Warrants shall be
as follows: $40 for the Warrants expiring on the third anniversary of the
Closing Date; $50 for the Warrants expiring on the fourth anniversary of the
Closing Date; $60 for the Warrants expiring on the fifth anniversary of the
Closing Date; $70 for the Warrants expiring on the sixth anniversary of the
Closing Date; and $80 for the Warrants expiring on the seventh anniversary of
the Closing Date.
(b) Subject to the terms and conditions hereof, Warrants may
be exercised pursuant to this Section 2 upon surrender to the Company at its
office designated for such purpose (the address of which is set forth in Section
13) of the certificate or certificates evidencing the Warrant(s) to be exercised
and upon payment to the Company of the aggregate Exercise Price for the number
of Warrants which are then exercised, provided that a Warrant may not be
exercised in part. Upon such surrender of Warrant Certificates and payment of
the Exercise Price in cash or by check payable to the Company, the Company shall
issue and cause to be delivered with all reasonable dispatch (and in any event
within three Business Days after such surrender) to or upon the written order of
the Holder, and in the name of the Holder or the Holder's nominee, a certificate
or certificates for the number of full shares of Warrant Stock issuable upon the
exercise of such Warrants, together with such other property (including cash)
and securities as may then be deliverable upon such exercise, including cash for
fractional Warrant Stock as provided in Section 11, provided that all such
Warrant Stock held by the Purchaser shall be subject to the restrictions set
forth in Sections 7 and 8 of the Purchase Agreement. Such certificate or
certificates shall be deemed to have been issued and the Person so named therein
shall be deemed to have become a holder of record of such Warrant Stock as of
the date of the surrender of such Warrant Certificates.
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<PAGE> 6
(c) Subject to the terms and conditions hereof, the Warrants
shall be exercisable at the election of the Holders thereof, either in full or
from time to time in part (but in no event shall a Warrant be exercisable in
part), and in the event that a Warrant Certificate is exercised in respect of
fewer than all of the Warrants evidenced by such Warrant Certificate at any time
prior to the Expiration Date of such Warrant, a new Warrant Certificate
evidencing the remaining Warrant or Warrants will be issued and delivered
pursuant to the provisions of this Section 2(c). All Warrant Certificates
surrendered upon exercise of Warrants shall be canceled. The Company shall keep
copies of this Agreement and any notices received hereunder available for
inspection during normal business hours at its office. The Company will furnish,
at its expense, copies of this Agreement and all such notices, upon request, to
any Holder of any Warrant Certificates.
SECTION 3. Adjustment of Exercise Price and Number of Shares
of Warrant Stock Issuable. The Exercise Price and the number of shares of
Warrant Stock issuable upon the exercise of each Warrant are subject to
adjustment from time to time upon the occurrence of any of the events enumerated
in this Section 3.
(a) Adjustment for Change in Capital Stock of the Company. If
the Company (i) pays a dividend or makes a distribution on its Common Stock in
shares of any class of its capital stock, (ii) subdivides its outstanding shares
of Common Stock into a greater number of shares, (iii) combines its outstanding
shares of Common Stock into a smaller number of shares, (iv) makes a
distribution on its Common Stock in shares of its capital stock other than
Common Stock, or (v) issues to holders of its Common Stock by reclassification
of its Common Stock any shares of its capital stock, then the Exercise Price and
number of shares for which any Warrant may be exercised in effect immediately
prior to such action shall be proportionately adjusted so that the Holder of the
Warrant thereafter exercised may receive the aggregate number and kind of shares
of capital stock of the Company which it would have owned immediately following
such action if such Warrant had been exercised immediately prior to such action.
Such adjustment shall be made successively whenever any event listed above shall
occur, and shall become effective immediately after the record date in the case
of a dividend or distribution and immediately after the effective date in the
case of a subdivision, combination or reclassification. If after an adjustment
made pursuant to the second preceding sentence a Holder of a Warrant upon
exercise of such Warrant may receive shares of two or more classes of capital
stock of the Company, the Board of Directors of the Company shall determine in
the good faith exercise of its reasonable business judgment the allocation of
the adjusted Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the Exercise Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those in this Section 3.
(b) Reorganization of the Company. In the event of any
capital reorganization, recapitalization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
entity, in which the Company does not continue as the surviving corporation or,
if it does so continue, its Common Stock does not remain outstanding, any
acquisition of capital stock of the Company by means of a share exchange, or the
sale, lease, transfer,
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<PAGE> 7
conveyance or other disposition of all or substantially all of its assets to
another entity, then, as a condition of and concurrently with such
reorganization, recapitalization, reclassification, consolidation, merger, share
exchange or sale, lease, transfer, conveyance or other disposition, lawful and
adequate provision shall be made whereby the Holders of the Warrant Certificates
shall thereafter have the right to purchase and receive, on the basis and upon
the terms and conditions specified in this Agreement and in lieu of the Warrant
Stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented by the Warrants, such shares of stock, securities, cash
or property as would have been issued or payable with respect to or in exchange
for the number of shares of Warrant Stock purchasable and receivable immediately
prior to such transaction upon the exercise of the rights represented by the
Warrant Certificates if such Warrants had been exercised immediately prior to
such transaction. If such consolidation, merger, share exchange, sale, lease,
transfer, conveyance or other disposition is with any Person or group of Persons
(within the meaning of Section 13(d) or 14(d) of the Exchange Act) who shall
have made a purchase, tender or exchange offer pursuant to which a majority of
the outstanding shares of Common Stock of the Company were validly tendered and
accepted, promptly after the consummation of such transaction, the Holders of
the Warrants shall be given a reasonable opportunity (and, in no event, less
than 30 days) to elect to receive the stock, securities, cash or property issued
or paid (or to be issued or paid) to holders of the Common Stock in accordance
with such offer. In any such case appropriate provision shall be made with
respect to the rights and interests of the Holders of the Warrants to the end
that the provisions of this Agreement (including, without limitation, provisions
for adjustment of the Exercise Price and of the number and type of securities
purchasable upon the exercise of the Warrants) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities, cash or
property thereafter deliverable upon the exercise of the Warrants. The Company
shall not effect any such consolidation, merger, share exchange or sale, lease,
transfer, conveyance or other disposition unless prior to or simultaneously with
the consummation thereof the successor entity (if other than the Company)
resulting from such consolidation, merger or share exchange or the entity
purchasing or otherwise acquiring such assets or shares (i) shall assume by a
supplemental Warrant Agreement, reasonably satisfactory in form, scope and
substance to the Holders (which shall be mailed or delivered to the Holders of
the Warrants at the last address of such Holders appearing on the books of the
Company) the obligation to deliver to such Holders such shares of stock,
securities, cash or property as, in accordance with the foregoing provisions,
such Holders may be entitled to purchase (the "Substitute Securities") and (ii)
shall assume all of the other obligations of the Company set forth in this
Agreement, the Purchase Agreement and the Registration Rights Agreement.
Following such assumption such obligations shall apply to the Substitute
Securities rather than to the Warrant Stock. If the issuer of securities
deliverable upon exercise of Warrants under the supplemental Warrant Agreement
is an Affiliate of the formed, surviving, transferee or lessee entity, such
issuer shall join the supplemental Warrant Agreement. The foregoing provisions
of this paragraph shall similarly apply to successive reorganizations,
recapitalizations, reclassifications, consolidations, mergers, share exchanges,
sales, leases, transfers, conveyances or other dispositions.
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<PAGE> 8
SECTION 4. Covenants.
(a) Private Company Information. If the Company shall cease to
be subject to the periodic reporting obligations of the Exchange Act and for so
long as the Purchaser's Interest is at least five percent, the Company will
furnish, or will cause to be furnished, to each Holder copies of the following
financial statements, reports and information:
(i) promptly when available and in any event within 90
days after the close of each Fiscal Year, a consolidated
balance sheet at the close of such Fiscal Year, and related
consolidated statements of operations, stockholders' equity
and cash flows for such Fiscal Year, of the Company and the
Company Subsidiaries (with comparable information at the close
of and for the prior Fiscal Year), certified (in the case of
consolidated statements) without qualification by Ernst &
Young or other nationally recognized independent public
accountants; and
(ii) promptly when available and in any event within
45 days after the close of each Fiscal Quarter, consolidated
balance sheets at the close of such Fiscal Quarter, and
consolidated statements of operations, stockholders' equity
and cash flows for such Fiscal Quarter and for the period
commencing at the close of the previous Fiscal Year and ending
with the close of such Fiscal Quarter, of the Company and the
Company Subsidiaries (with comparable information at the close
of and for the corresponding Fiscal Quarter of the prior
Fiscal Year and for the corresponding portion of such prior
Fiscal Year), certified by the chief financial or executive
officer of the Company.
(b) Public Company Information. So long as the Company is
subject to the periodic reporting requirements of the Exchange Act and for so
long as the Purchaser's Interest is at least five percent, the Company will:
(i) file with the SEC on or before the required date all
regular or periodic reports required pursuant to the Exchange
Act; and
(ii) use its reasonable commercial efforts to make
publicly available information concerning the Company
sufficient to allow a Holder to dispose in accordance with
this Agreement and the Warrant Agreement of all or a portion
of the Warrant Stock pursuant to Rule 144 (or any successor
provision) promulgated by the SEC under the Securities Act.
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<PAGE> 9
(c) Inconsistent Agreements. The Company will not, and will
not permit any Company Subsidiary to, take any action which would (i) impair or
adversely affect the right of a Holder to exercise the Warrants or (ii) breach
any of the covenants or agreements in this document.
(d) Governmental Approvals. The Company will use its
reasonable commercial efforts, and will cooperate with the Holders to, secure
all necessary consents, approvals, authorizations and exemptions from all
Governmental Authorities in connection with the transactions contemplated hereby
and the exercise of the Warrants and the issuance of shares of Common Stock upon
exercise of the Warrants.
(e) Termination of Rights upon Sale to the Public.
Notwithstanding anything to the contrary set forth herein, the obligations of
the Company set forth in this Section 4 shall terminate with respect to any
Holder (including an underwriter) acquiring any Warrants or Warrant Stock
pursuant to a registration statement declared effective by the SEC under the
Securities Act or in a sale effected pursuant to Rule 144 promulgated under the
Securities Act.
SECTION 5. Restrictions on Transfers.
(a) Transfers of Warrants.
(i) Without the prior written consent of the Company,
the Purchaser may not dispose of or transfer any Warrants now
or hereafter owned, whether by sale, assignment, gift, pledge,
encumbrance or otherwise, except (A) to a Subsidiary of the
Purchaser or to any entity of which the Purchaser is, directly
or indirectly, a Subsidiary (provided that such transferee
agrees to be bound by the transfer restrictions contained
herein), (B) in connection with the exercise of a Warrant in
accordance with the provisions of the Agreement and (C) in
connection with the exercise in accordance with Section
5(a)(ii) of a put of a Warrant to the Company after the
occurrence of a Change of Control.
(ii) Upon a Change of Control, each of the Purchaser
and any other Holders to which the Warrants were transferred
in accordance with Section 5(a) hereof shall individually have
the right (the "Put Right") to require the Company to purchase
all (but not less than all) of the Warrants owned by the
Purchaser and each such Holder. The Company shall notify each
Holder in writing, as promptly as practicable, but in any
event within three Business Days, after a Change in Control.
The Put Right may be exercised by the Purchaser and any Holder
by delivering a written notice, which notice shall be
irrevocable (the "Put Exercise Notice"), to the Company within
90 days after any Change of Control. The purchase price for
each Warrant purchased by the Company upon exercise of the Put
Right shall equal the Fair Market Value per Share as of the
date of the Change of Control minus the Exercise Price of such
Warrant (the "Put Price"). The purchase and sale of the
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<PAGE> 10
Warrants upon exercise of the Put Rights shall be consummated
at a closing (the "Put Closing") that shall occur not later
than 15 days following the Put Exercise Notice. At the Put
Closing, the Purchaser and the Holders seeking to exercise the
Put Rights set forth herein shall surrender to the Company the
Warrant Certificates evidencing their Warrants. In exchange
therefor, (A) if the Put Price for the Warrants evidenced by a
Warrant Certificate is greater than zero, the Company shall
issue to the Holder of such Warrants Common Stock in an
amount, calculated based on the Fair Market Value per Share of
such Common Stock at the time of Change of Control, equal to
the Put Price for such Warrants multiplied by the number of
Warrants evidenced by such Warrant Certificate and (B) if the
Put Price for the Warrants evidenced by a Warrant Certificate
is not greater than zero, the Company shall not be obligated
to make any payment or issue any Common Stock to the Holder of
such Warrants. Prior to the delivery of a Put Exercise Notice,
the Put Right shall not restrict or limit or have any affect
on a Holder's right to exercise a Warrant pursuant to Section
2 hereof. If as a result of a Change in Control the Company is
not the surviving entity or shares of Common Stock are no
longer outstanding after a Change in Control, then the Put
Price shall be payable in such shares of stock, securities,
cash or property as would have been issued or payable as a
result of such Change of Control with respect to or in
exchange for the number of shares of Common Stock a Holder
would have received upon exercise of the Put immediately prior
to such Change in Control.
(b) Restricted Securities. Warrants are transferable only in
accordance with Section 5(a).
(c) Transfers of Warrant Stock. The Purchaser may not dispose
of or transfer any Warrant Stock now or hereafter owned, whether by sale,
assignment, gift, pledge, encumbrance or otherwise, except in accordance with
Section 8 of the Purchase Agreement.
SECTION 6. Termination.
This Agreement shall terminate on the earlier of (a) the seventh
anniversary of the Closing Date and (b) the exercise or expiration of all
Warrants issued pursuant to this Agreement. Each Warrant shall expire upon the
Expiration Date set forth in the Warrant Certificate by which it is evidenced.
SECTION 7. Registration of Transfers and Exchanges.
(a) The Company shall from time to time register the transfer
of any outstanding Warrant Certificates made in accordance with Section 5 hereof
in a Warrant register to be maintained by the Company upon surrender of such
Warrant Certificates accompanied by a written instrument or instruments of
transfer in form reasonably satisfactory to the Company, duly executed by the
Holder or Holders thereof or by the duly appointed legal representative thereof
or by a duly
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<PAGE> 11
authorized attorney; provided, however, that prior to effecting such transfer,
the transferee shall agree (in a form reasonably satisfactory to the Company) to
be bound by the terms of this Agreement. Upon any such registration of transfer,
a new Warrant Certificate shall be issued to the transferee(s) and the
surrendered Warrant Certificate shall be canceled. Until the Warrant Certificate
is transferred on the Warrant register of the Company, the Company may treat the
Holder as shown in the Warrant register as the absolute owner of the Warrant
Certificate for all purposes, and notwithstanding any notice to the contrary.
The Company agrees that it will make the Warrant register available for
inspection by the Holders for a proper purpose during normal business hours at
its office.
(b) The Holders agree that each Warrant Certificate and each
certificate representing Warrant Stock will bear the following legend (the
"Securities Legend"):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID SECURITIES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION
PROVISIONS OF SAID ACT OR LAWS. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
SECURITIES PURCHASE AGREEMENT, DATED AS OF JANUARY __,
1998, BETWEEN ADMINISTAFF, INC. (THE "COMPANY") AND
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
(THE "PURCHASER"), A WARRANT AGREEMENT DATED AS OF
FEBRUARY __ 1998, BETWEEN THE COMPANY AND THE PURCHASER,
AND A REGISTRATION RIGHTS AGREEMENT, DATED AS OF FEBRUARY
__ 1998, BETWEEN THE COMPANY AND THE PURCHASER, COPIES OF
EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED
BY THIS CERTIFICATE IS SUBJECT TO THE TERMS OF THOSE
AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH SECURITIES IN
VIOLATION OF SAID AGREEMENTS SHALL BE INVALID."
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<PAGE> 12
(c) If the holder of the Warrants or Warrant Stock delivers,
in accordance with Section 8(e) of the Purchase Agreement, to the Company an
opinion of King & Spalding or such other counsel that no subsequent transfer of
such Warrants or Warrant Stock shall require registration under the Securities
Act, the Company shall promptly upon such contemplated transfer deliver new
certificates for such Warrants or Warrant Stock which do not bear the Securities
Legend; provided, however, that if at such time, any such Warrants or Warrant
Stock remain subject to certain provisions of this Agreement or the Purchase
Agreement, the Company shall not remove the Securities Legend, but shall modify
it to delete all references to restrictions or conditions on sale of Warrants or
Warrant Stock except those references to restrictions or conditions which are
specified in this Agreement or the Purchase Agreement. If the Company is not
required to deliver new certificates for such Warrants or Warrant Stock not
bearing such legend, the holder thereof shall not transfer the same until the
prospective transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained in Section 5(b) hereof with respect to
Warrants and Section 8(b) of the Purchase Agreement with respect to Warrant
Stock.
(d) If any Warrants or Warrant Stock are or become eligible
for sale pursuant to Rule 144(k), the Company, upon the request of holders of
any such Warrants or Warrant Stock, shall remove the Securities Legend from the
certificates for such Warrants or Warrant Stock; provided, however, that if at
such time, any such Warrants or Warrant Stock remain subject to certain
provisions of this Agreement or the Purchase Agreement, the Company shall not
remove the Securities Legend, but shall modify it to delete all references to
restrictions or conditions on sale of the Warrants or Warrant Stock except those
references to restrictions or conditions which are still applicable and
specified in this Agreement or the Purchase Agreement.
(e) Warrant Certificates may be exchanged at the option of the
Holder(s) thereof when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants, including, without limitation, upon
an adjustment in the Exercise Price or in the number of Warrant Shares
purchasable upon exercise of the Warrants. Warrant Certificates surrendered for
exchange shall be canceled.
SECTION 8. Payment of Taxes. The Company will pay all stamp,
transfer and similar taxes in connection with the issuance, sale and delivery of
the Warrants hereunder, as well as all such taxes attributable to the initial
issuance of Warrant Stock upon the exercise of Warrants and payment of the
appropriate Exercise Price. The Company will not, however, be required to pay
any such taxes imposed in connection with any transfer of any Warrants or
Warrant Stock or any federal or state income taxes payable in respect of any
Holder's purchase, ownership, sale, transfer, exercise or other disposition of
Warrants or Warrant Stock.
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<PAGE> 13
SECTION 9. Mutilated or Missing Warrant Certificates. Upon
receipt by the Company of evidence reasonably satisfactory to the Company (which
shall include an affidavit of the Holder) that any Warrant Certificate shall
have been mutilated, lost, stolen or destroyed and, in the case of loss, theft
or destruction, a customary indemnity agreement from the Holder of such Warrant
Certificate, the Company shall issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants.
SECTION 10. Reservation of Warrant Stock. The Company will at
all times that any Warrant is exercisable reserve and keep available, free from
preemptive or similar rights, out of the aggregate of its authorized but
unissued capital stock or its authorized and issued capital stock held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Warrant Stock upon exercise of Warrants, the maximum number of shares of each
class of capital stock constituting a part of the Warrant Stock which may then
be deliverable upon the exercise of all outstanding Warrants. The Company or, if
appointed, the transfer agent for shares of each class of capital stock of the
Company (the "Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of the Warrants
will be irrevocably authorized and directed at all times to reserve such number
of authorized shares as shall be required for such purpose. The Company will
keep a copy of this Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the exercise of the rights of purchase represented by the Warrants. The
Company will furnish such Transfer Agent a copy of all notices of adjustments,
and certificates related thereto, transmitted to Holders pursuant to Section 12.
Before taking any action which would cause an adjustment pursuant to Section 3
to the maximum number of shares of Warrant Stock deliverable upon the exercise
of all outstanding Warrants pursuant to Section 2(a), the Company shall cause to
be authorized additional shares of Common Stock such that the sum of such
maximum number of shares of Common Stock deliverable upon exercise of all
outstanding Warrants and the number of shares of Common Stock outstanding or
issuable pursuant to outstanding rights, options or warrants as of such date
does not exceed the number of shares of Common Stock authorized pursuant to the
Company's Certificate.
SECTION 11. Fractional Interests. The Company shall not be
required to issue fractional shares of Warrant Stock on the exercise of
Warrants. If more than one Warrant shall be presented for exercise in full at
the same time by the same Holder, the number of full shares of Warrant Stock
which shall be issuable upon exercise thereof shall be computed on the basis of
the aggregate number of shares of Warrant Stock purchasable on exercise of the
Warrants so presented. If any fraction of a share of the Warrant Stock would,
except for the provisions of this Section 11, be issuable on the exercise of any
Warrants (or specified portion thereof), the Company shall pay an amount in cash
equal to the Fair Market Value per Share calculated as of the day immediately
preceding the date the Warrant is presented for exercise, multiplied by such
fraction.
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SECTION 12. Notice to Warrant Holders. Upon any adjustment of
the Exercise Price or number or type of securities purchasable upon exercise of
the Warrants pursuant to Section 3, the Company shall promptly thereafter (i)
cause to be filed with the Company a certificate of the chief financial officer
of the Company setting forth the Exercise Price and the number and type of
securities or other property constituting Warrant Stock after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and, in the case of an adjustment
pursuant to Section 3(b), setting forth the number and type of securities or
other property constituting Warrant Stock (or portion thereof) issuable, after
such adjustment in the Exercise Price or number of Warrant Stock, upon exercise
of a Warrant and payment of the adjusted Exercise Price, and (ii) cause to be
given to each of the Holders of the Warrant Certificates written notice of such
adjustments, together with a copy of such certificate. Where appropriate, such
notice may be given in advance and included as a part of the notice required to
be given under the other provisions of this Section 11. In the event:
(a) the Company shall authorize the payment of any dividend
or distribution to holders of shares of Common Stock of capital stock of the
Company; or
(b) of any capital reorganization, reclassification,
recapitalization, consolidation, or share exchange, or sale, lease, conveyance,
transfer or other disposition to which the adjustment provisions of Section 3(b)
apply, or a purchase, tender or exchange offer for shares of Common Stock or
other securities constituting part of the Warrant Stock (whether by the Company
or some other party); or
(c) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(d) the Company proposes to take any action that would require
an adjustment of the Exercise Price or number of shares of Warrant Stock for
which the Warrants are exercisable;
then the Company shall cause to be given to each of the Holders, at least 20
days prior to the applicable record date hereinafter specified (or promptly in
the case of events for which there is no record date), a written notice stating
(as applicable) (i) the date as of which the holders of record of shares of
Common Stock entitled to receive any such dividends or distribution are to be
determined, (ii) the date on which any such reclassification, recapitalization
or reorganization, consolidation, merger, share exchange, sale, lease,
conveyance, transfer or disposition to which the adjustment provisions of
Section 3(b) apply or any such dissolution, liquidation or winding up is
expected to become effective or be consummated, or (iii) the initial expiration
date set forth in any purchase, tender or exchange offer for shares of capital
stock, and the date as of which it is expected that holders of record of shares
of capital stock or other securities constituting a part of the Warrant Stock
(or securities into which the Warrant Stock may be converted) shall be entitled
to exchange such shares or securities for securities or other property, if any,
deliverable upon such reclassification,
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<PAGE> 15
recapitalization, reorganization, consolidation, merger, share exchange, sale,
lease, conveyance, transfer, disposition, dissolution, liquidation or winding
up.
SECTION 13. Notices. All notices, consents, approvals,
agreements and other communications provided hereunder shall be in writing and
delivered personally, by mail, by overnight courier (providing proof of
delivery) or by telecopy and shall be sufficiently given to the Purchaser and
the Company if addressed or delivered to them at the following addresses:
If to Company: Administaff, Inc.
19001 Crescent Springs Drive
Kingswood, Texas 77339-3802
Attention: General Counsel
Telephone No.: (281) 348-3251
Facsimile No.: (281) 348-2859
with a copy to: Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: G. Michael O'Leary
Telephone No.: (713) 220-4360
Facsimile No.: (723) 220-4593
If to the Purchaser: American Express Company
American Express Tower
World Financial Center
200 Vesey Street
New York, New York 10285
Attention: General Counsel
Telephone No.: (212) 640-5789
Facsimile No.: (212) 267-9061
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: John J. Kelley III
Telephone No.: (404) 572-3401
Facsimile No.: (404) 572-5146
or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have been
duly given: (i) at the time delivered by hand, if personally delivered, (ii)
when received, if deposited in the mail, postage prepaid, (iii) when
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<PAGE> 16
transmission is verified, if telecopied, and (iv) on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.
SECTION 14. Successors. Except as otherwise expressly provided
herein or in the Warrants, all covenants and agreements of this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns, including those by operation of law,
merger or consolidation. In addition, except as otherwise expressly provided in
the Warrants, and whether or not any express assignment has been made, the
provisions of this Agreement which are for Purchaser's benefit as a purchaser or
Holder of a Warrant or Warrant Stock are also for the benefit of, and
enforceable by, any subsequent Holder of such a Warrant or Warrant Stock.
SECTION 15. Governing Law. This Agreement, the Warrants and
the Warrant Stock shall be governed by those provisions of the General
Corporation Law of the State of Delaware and Article 8 of the Delaware Uniform
Commercial Code which are necessarily applicable to securities issued by a
Delaware corporation and otherwise shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the internal laws of said state.
SECTION 16. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company and
the Holders any legal or equitable right, remedy or claim under this Agreement;
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holders.
SECTION 17. Counterparts. This Agreement may be executed in
any number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.
SECTION 18. Amendment; Waivers. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended or waived and
the Company may take any action herein prohibited, or fail to take any action
herein required to be performed by it if, but only if, the Company has obtained
the written consent of the Holders of a majority of the Warrants in existence at
the time such amendment or waiver becomes effective. No failure or delay by any
party in exercising any right or remedy hereunder shall operate as a waiver
thereof, nor shall a waiver of a particular right or remedy on one occasion be
deemed a waiver of any other right or remedy or a waiver of the same right or
remedy on any subsequent occasion.
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<PAGE> 17
SECTION 19. Jurisdiction. Each of the parties hereto hereby
agrees that any legal action or proceeding against such party with respect to
this Agreement, the Warrants or the Warrant Stock may be brought in the courts
of the State of New York or of the United States of America for the Southern
District of New York as the other party may elect, and, by execution and
delivery hereof, such party accepts and consents for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts and agrees that such jurisdiction shall be exclusive, unless waived by
the other party in writing, with respect to any action or proceeding brought by
such party against the other party. Each of the parties hereto irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of the copies thereof by certified
mail, return receipt requested, postage prepaid, to it at its address set forth
herein, such service to become effective upon the earlier of (i) the date ten
calendar days after such mailing and (ii) any earlier date permitted by
applicable law.
SECTION 20. Specific Performance. The Company and the Holders
recognize that the rights of the Holder(s) and the Company under this Agreement
are unique and, accordingly, the Holder(s) and the Company shall, in addition to
such other remedies as may be available to any of them at law or in equity, have
the right to enforce their rights hereunder and thereunder by actions for
injunctive relief and specific performance to the extent permitted by law. The
Company and the Holders agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by them of the
provisions of this Agreement and the Company and each of the Holders hereby
agrees to waive in any action for specific performance the defense that a remedy
at law would be adequate. This Agreement is not intended to limit or abridge any
rights of the Holder(s) or the Company which may exist apart from this
Agreement.
SECTION 21. Entire Agreement. The parties hereto agree that
this Agreement, the Purchase Agreement, the Confidentiality Agreement and the
other Transaction Documents constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings between them as to such subject matter; and there are no
restrictions, agreements, arrangements, oral or written, between any or all of
the parties relating to the subject matter hereof which are not fully expressed
or referred to herein or therein.
SECTION 22. Severability. If any provision of this Agreement
shall be held or deemed to be, or shall in fact be, invalid, inoperative or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the conflict
of any provision with any constitution, statute, rule or public policy, or for
any other reason, such circumstances shall not have the effect of rendering the
provision or provisions in question, invalid, inoperative or unenforceable in
any other jurisdiction or in any other case or circumstance or of rendering any
other provision or provisions herein contained invalid, inoperative or
unenforceable to the extent that such other provisions are not themselves
actually in conflict with such constitution, statute, rule or public policy, but
this Agreement shall be reformed and construed in any such jurisdiction or case
as if such invalid, inoperative or unenforceable provision had never been
contained herein and such provision reformed so that it would be valid,
operative and enforceable to the maximum extent permitted in such jurisdiction
or in such case.
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
ADMINISTAFF, INC.
By:
----------------------------------
Name: Paul Sarvadi
Title: President
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC.
By: /s/ Anne Busquet
----------------------------------
Name: Anne Busquet
Title: President, AERS
