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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
AMONG
NURSEFINDERS ACQUISITION CORP.,
as the Purchaser,
NURSEFINDERS, INC.,
as the Company,
AND
PFI CORP.,
as the Seller.
Dated as of November 15, 1997
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TABLE OF CONTENTS
Page
SECTION 1. PURCHASE AND SALE OF SHARES 1
1.1. Transfer of Shares. 1
1.2. Purchase Price and Closing Payment, NY Purchase Price. 1
1.3. Delivery of Shares and NY Shares. 2
1.4. Further Assurances. 2
SECTION 2. THE CLOSING 3
SECTION 3. ADJUSTMENT OF PURCHASE PRICE 3
3.1. Delivery of Estimated Working Capital Statement and
Closing Statements. 3
3.2. Closing Payment Adjustments. 5
SECTION 4. REPRESENTATIONS AND WARRANTIES ABOUT THE SELLER. 5
4.1. Title to the Shares. 5
4.2. Authority; Noncontravention; Consents. 5
SECTION 5. REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY. 6
5.1. Organization, Power, Authority and Good Standing. 6
5.2. Authorization, Execution and Enforceability. 7
5.3. Consents. 7
5.4. Capitalization. 7
5.5. Subsidiaries; Investments. 8
5.6. Financial Information. 8
5.7. Absence of Undisclosed Liabilities. 9
5.8. Absence of Changes. 9
5.9. Tax Matters. 10
5.10. Title to Assets, Properties and Rights and Related Matters. 13
5.11. Real Property--Owned or Leased. 13
5.12. Intellectual Property. 14
5.13. Agreements, No Defaults, Etc. 15
5.14. Litigation, Etc. 16
5.15. Compliance with Laws. 16
5.16. Insurance. 17
5.17. Labor Management Relations: Employees. 17
5.18. ERISA Compliance. 18
5.19. Certain Additional Regulatory Matters. 20
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5.20. Medicare/Medicaid Participation. 21
5.21. Environmental Matters. 21
5.22. Brokers. 22
5.23. Related Transactions. 23
5.24. Accounts and Notes Receivable. 23
5.25. [Omitted]. 24
5.26. Bank Accounts; Powers of Attorney. 24
5.27. Suppliers and Vendors; Franchisees and Licensees. 24
5.28. Customers. 24
5.29. Disclosure. 24
5.30. Conflicts of Interest. 24
5.31. Reimbursement Accounting 25
5.32. Medicare and Medicaid Participation. 25
5.33. Physician Relationships. 26
5.34. Other Relationships. 26
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. 26
6.1. Organization; Corporate Authority. 26
6.2. Corporate Action; Authority; No Conflict. 26
6.3. Brokers. 27
6.4. Consents. 27
6.5. Financing. 27
6.6. Investment Intent. 27
6.7. Xxxx-Xxxxx Xxxxxx Representations. 27
SECTION 7. COVENANTS AND AGREEMENTS. 28
7.1. Access to Records and Properties of the Company and the
NY Subsidiary. 28
7.2. Conduct of the Company and the NY Subsidiary. 28
7.3. Efforts to Consummate. 29
7.4. Negotiation with Others. 29
7.5. Notice of Prospective Breach. 30
7.6. Public Announcements. 30
7.7. Cooperation Regarding Tax Filings; Section 338(h)(10) Election. 30
7.8. [Omitted]. 31
7.9. Non-Compete; Non-Solicitation. 31
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7.10. Employee Plans. 32
7.11. Change of Control Agreements. 33
7.12. Filings. 33
SECTION 8. CLOSING CONDITIONS. 33
8.1. Conditions to Each Party's Obligations. 33
8.2. Conditions to Obligations of the Purchaser. 34
8.3. Conditions to Obligations of the Seller. 36
SECTION 9. INDEMNIFICATION. 38
9.1. Indemnification Generally; Etc. 38
9.2. Assertion of Claims. 38
9.3. Notice and Defense of Third Party Claims. 39
9.4. Survival of Representations and Warranties. 40
9.5. Limitations on Indemnification. 40
9.6. Indemnity for Breach of Reimbursement Accounting
Representations and Warranties. 41
9.7. Responsibility for Taxes and Returns 42
9.8. Amended Returns; Certain Tax Refunds 43
9.9. Tax Proceedings 44
9.10. Miscellaneous Tax Matters 45
SECTION 10. TERMINATION; EFFECT OF TERMINATION. 45
10.1. Termination. 45
10.2. Effect of Termination. 46
SECTION 11. MISCELLANEOUS PROVISIONS. 46
11.1. Amendment. 46
11.2. Entire Agreement. 47
11.3. Severability. 47
11.4. Benefits of Agreement. 47
11.5. Expenses. 47
11.6. Headings. 47
11.7. Notices. 48
11.8. Counterparts. 50
11.9. Governing Law. 50
11.10. Incorporation of Exhibits and Schedules. 50
11.11. Independence of Covenants and Representations and Warranties. 50
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11.12. Interpretation; Construction. 51
11.13. Remedies. 51
11.14. Waiver of Jury Trial. 52
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STOCK PURCHASE AGREEMENT dated as of November 15, 1997, by and among
NURSEFINDERS ACQUISITION CORP., a Delaware corporation (the "Purchaser"),
NURSEFINDERS, INC., a Texas corporation (the "Company"), and PFI CORP., a
Delaware corporation (the "Seller").
The Company is engaged in the business of providing health care
staffing services, including without limitation home care services to
individuals and health care personnel for supplemental staffing to hospitals,
nursing homes and other health care institutions, through Company-operated,
franchised and licensed locations (the "Business"). The Seller is the sole
shareholder of the Company, owning 1,000 shares of common stock, par value $1.00
per share (the "Shares"), of the Company. The Company is the sole shareholder of
NF Services, Inc., a New York corporation (the "NY Subsidiary"), owning 1,000
shares, par value $1.00 per share (the "NY Shares"). The Seller desires to sell
to the Purchaser, and the Purchaser desires to purchase from the Seller, all of
the Shares and the NY Shares, on the terms and subject to the conditions
contained in this Agreement. Certain capitalized terms used herein are defined
on Annex I hereto.
NOW, THEREFORE, in consideration of the premises and the mutual
representations hereinafter set forth, the parties hereto hereby agree as
follows:
SECTION 1. PURCHASE AND SALE OF SHARES
1.1. TRANSFER OF SHARES.
On the terms and subject to the conditions of this Agreement, (i) at
the Closing, the Seller shall sell, transfer, convey and assign to the
Purchaser, and the Purchaser shall purchase and acquire from the Seller, all of
the Shares, free and clear of all Encumbrances and (ii) at the Closing or, if
later, on the first business day after approval by The New York Public Health
Council of the acquisition of the NY Shares by the Purchaser (the "Second
Closing Date"), which shall be no later than one year from the date hereof
(unless Purchaser and Seller shall mutually agree to extend such period), the
Seller shall sell, transfer, convey and assign to the Purchaser, and the
Purchaser shall purchase and acquire from the Seller, all of the NY Shares, free
and clear of all Encumbrances.
1.2. PURCHASE PRICE AND CLOSING PAYMENT, NY PURCHASE PRICE.
(a) The aggregate purchase price (the "Purchase Price") to be paid by
the Purchaser to the Seller for the Shares shall be (i) $64,394,492, (ii) minus
Outstanding Debt, and (iii) plus the amount by which the Closing Working Capital
(as set forth in the Final Closing
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Statement) exceeds $15,072,200 or minus the amount by which the Closing Working
Capital (as set forth in the Final Closing Statement) is less than $14,972,200.
(b) The aggregate purchase price (the "NY Purchase Price") to be paid
by the Purchaser to the Seller for the NY Shares shall be $855,508.
(c) On the Closing Date, the Purchaser shall make payment of the
following amount (the "Closing Payment") by wire transfer of immediately
available funds to the account of Seller specified by it at least two business
days prior to Closing: (i) $64,394,492, (ii) minus Outstanding Debt, and (iii)
plus the amount by which the Estimated Working Capital exceeds $15,072,200 or
minus the amount by which the Estimated Working Capital is less than
$14,972,200. At such time, the Purchaser shall deposit in escrow with First
Union National Bank, or another Escrow Agent reasonably satisfactory to the
Purchaser and the Seller (the "Escrow Agent") the NY Purchase Price to be held
subject to the Second Closing Date pursuant to an escrow agreement in form and
substance reasonably satisfactory to the Purchaser and the Seller. At the same
time, the Seller shall deposit in escrow with the Escrow Agent the NY Shares.
(d) On the Second Closing Date, the Purchaser and the Seller shall
instruct the Escrow Agent to release the NY Purchase Price to the Seller and the
NY Shares to the Purchaser.
1.3. DELIVERY OF SHARES AND NY SHARES.
(a) At the Closing, in consideration of the Purchaser's delivery of the
Closing Payment pursuant to Section 1.2(c) hereof, (a) the Seller shall deliver
to the Company a certificate or certificates representing the Shares, duly
endorsed in blank for transfer or accompanied by stock powers duly executed in
blank, sufficient in form and substance to convey to the Purchaser good title to
all of the Shares, free and clear of all Encumbrances and (b) the Company shall
deliver to the Purchaser a certificate or certificates registered in the name of
the Purchaser, representing all of the Shares.
(b) On the Second Closing Date, in consideration of the Purchaser's
delivery of the NY Purchase Price (via the Escrow Agent) pursuant to
Section 1.2(d) hereof, (a) the Seller shall deliver to the Company a certificate
or certificates representing the NY Shares, duly endorsed in blank for transfer
or accompanied by stock powers duly executed in blank, sufficient in form and
substance to convey to the Purchaser good title to all of the NY Shares, free
and clear of all Encumbrances and (b) the NY Subsidiary shall deliver to the
Purchaser a certificate or certificates registered in the name of the Purchaser,
representing all of the NY Shares.
1.4. FURTHER ASSURANCES.
The Seller shall, at any time after the Closing, upon the request of
the Purchaser, do, execute, acknowledge and deliver, and cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of
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attorney or assurances as may be reasonably required to transfer, convey, grant
and confirm to and vest in the Purchaser good title to all of the Shares, free
and clear of all Encumbrances.
SECTION 2. THE CLOSING
Except with respect to the Second Closing Date and the actions
contemplated in connection therewith, the parties shall use their best efforts
to ensure that the closing (the "Closing") of the transactions contemplated by
this Agreement shall take place at the offices of X'Xxxxxxxx Graev & Karabell,
LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 on or before December 22,
1997 or such other date as shall be mutually agreeable to the parties hereto
(the "Closing Date"), provided that all of the conditions set forth in Section 8
have been satisfied or waived (other than those conditions which by their terms
are intended to be satisfied at the Closing). The transaction closed on the
Closing Date is to be effective as of 11:59 p.m., New York City time, on the
Closing Date (the "Effective Time").
SECTION 3. ADJUSTMENT OF PURCHASE PRICE
3.1. DELIVERY OF ESTIMATED WORKING CAPITAL STATEMENT AND CLOSING
STATEMENTS.
(a) The Company, in consultation with the Purchaser, shall prepare and
deliver as soon as practicable and in no case less than two business days prior
to the Closing Date to Purchaser and Seller the Estimated Working Capital
Statement.
(b) Immediately after the Closing the Company shall review those assets
and liabilities of the Company constituting items of working capital, for the
purpose of preparing a statement setting forth the Company's calculation of the
Closing Working Capital and the Purchase Price (the "Proposed Closing
Statement"). For purposes of this Agreement, the Proposed Closing Statement and
the Final Closing Statement shall be prepared in a manner consistent with
Schedule 2.4 and with past practices and in accordance with United States
generally accepted accounting principles ("GAAP") except where GAAP would be
inconsistent with the accounting principles and methodologies used in preparing
the Latest Balance Sheet (in which case such accounting principles and
methodologies used in preparing the Latest Balance Sheet shall be used), except
that (i) no effect shall be given to the transaction contemplated in this
Agreement or resulting from the consummation of the transactions contemplated
herein, and (ii) the only Taxes to be included shall be those prorated as set
forth in Section 9.7(b). The Seller shall have the right to audit the
preparation of the Proposed Closing Statement, and shall have reasonable access
to the workpapers of the accountants (subject to its execution of an appropriate
indemnification agreement with such accountants) and other personnel preparing
the Proposed Closing Statement. As promptly as practicable, but no later than 60
days after the Closing, the Company shall deliver the Proposed Closing Statement
to the Seller.
(c) During the 30 days immediately following receipt of the Proposed
Closing Statement by the Seller, the Seller and its accountants shall be
entitled to review the
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Proposed Closing Statement and any working papers, trial balances and similar
materials relating to the Proposed Closing Statement prepared by the Company or
its accountants, and the Company shall provide the Seller and its accountants
with timely access at the Company's principal offices, during normal business
hours, to the Company's personnel, properties, books and records for the purpose
of reviewing the Proposed Closing Statement and the preparation thereof. The
Proposed Closing Statement prepared by the Company shall become the "Final
Closing Statement" on the thirty-first day following receipt thereof by the
Seller, unless the Seller gives written notice to the Company and the Purchaser
of its objection to the Proposed Closing Statement (a "Notice of Objection")
prior to such date. Any Notice of Objection shall specify in reasonable detail
the nature of any objection so asserted. If a timely Notice of Objection is
given by the Seller with respect to the Proposed Closing Statement, then the
Proposed Closing Statement (as revised in accordance with clause (x) or (y)
below), shall become final and binding upon the parties as the Final Closing
Statement on the earlier of (x) the date the parties hereto resolve in writing
any differences they have with respect to any matter specified in a Notice of
Objection or (y) the date any matters in dispute are finally resolved in writing
by the Accounting Firm (as defined below) (the date on which the Proposed
Closing Statement so become final and binding being hereinafter referred to as
the "Final Determination Date"). During the 30 days immediately following the
delivery of any Notice of Objection, the Purchaser and the Seller shall seek in
good faith to resolve in writing any differences which they may have with
respect to any matter specified in such Notice of Objection. During such period,
the Purchaser (including the Company) and the Seller shall each have access to
the other party's working papers, trial balances and similar materials prepared
in connection with the preparation of the Proposed Closing Statement and the
Notice of Objection, as the case may be. At the end of such 30-day period, the
Purchaser and the Seller shall submit to an independent "Big 5" public
accounting firm (the "Accounting Firm") (which is not presently and has not in
the past five years performed services for or on the behalf of the Company, the
Seller or the Purchaser) for review and resolution any and all matters which
remain in dispute and which were included in any Notice of Objection, and the
Accounting Firm shall reach a final, binding resolution of all matters which
remain in dispute, which final resolution shall be (A) in writing, (B) furnished
to the Purchaser and the Seller as soon as practicable after the items in
dispute have been referred to the Accounting Firm, (C) made in accordance with
this Agreement and (D) conclusive and binding upon the Purchaser and the Seller
and not subject to collateral attack for any reason. The procedure outlined in
the immediately preceding sentence of this Section 3.1(c) is called the "Dispute
Resolution Procedure" in this Agreement. The Proposed Closing Statement with any
adjustments necessary to reflect the Accounting Firm's resolution of the matters
in dispute, shall become final and binding on the Purchaser and the Seller on
the date the Accounting Firm delivers its final resolution to the parties. In
the event of a Dispute Resolution Procedure, the resolution thereof shall become
the Final Closing Statement. The Accounting Firm shall be such independent Big 5
public accounting firm as shall be agreed upon the parties hereto in writing or,
if the Purchaser and the Seller cannot so agree within the 30-calendar day
period referred to above, by lot from among the remaining independent Big 5
public accounting firms willing to act. Each party shall pay its own costs and
expenses incurred in connection with such arbitration, provided that the fees
and expenses of the Accounting Firm shall be borne 50% by the Purchaser and 50%
by the Seller.
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3.2. CLOSING PAYMENT ADJUSTMENTS.
(a) Promptly upon the determination of the Final Closing Statement in
accordance with Section 3.1 hereof, the following payments shall be made:
(i) if the Purchase Price is greater than the Closing Payment,
the Purchaser shall pay to the Seller the amount by which the Purchase
Price exceeds the Closing Payment; and
(ii) if the Purchase Price is less than the Closing Payment,
the Seller shall pay to the Purchaser the amount by which the Closing
Payment exceeds the Purchase Price.
SECTION 4. REPRESENTATIONS AND WARRANTIES ABOUT THE SELLER.
Seller represents and warrants as follows:
4.1. TITLE TO THE SHARES.
Seller is the lawful owner, of record and beneficially, of the Shares
and, as of the Closing, will be the lawful owner, of record and beneficially, of
the NY Shares, and has good and marketable title to such Shares, and, as of the
Closing, will have good and marketable title to the NY Shares, in each case free
and clear of any Encumbrances whatsoever and with no restriction on the voting
rights and other incidents of record and beneficial ownership pertaining
thereto. Seller is not the subject of any bankruptcy, reorganization or similar
proceeding. Except for this Agreement and any agreements entered into pursuant
hereto and except as set forth on Schedule 4.1, there are no agreements or
understandings between Seller and any other Person with respect to the
acquisition, disposition, transfer, registration or voting of or any other
matters in any way pertaining or relating to any of the capital stock of the
Company or the NY Subsidiary. Seller does not have any right whatsoever to
receive or acquire any additional capital stock of the Company or the NY
Subsidiary.
4.2. AUTHORITY; NONCONTRAVENTION; CONSENTS.
(a) Seller has the full and absolute corporate right, capacity, power
and authority to enter into this Agreement and each Related Document to which
Seller is or will be a party; this Agreement and each Related Document to which
Seller is or will be a party has been, or upon the execution and delivery
thereof will be, duly and validly executed and delivered by Seller; and this
Agreement and each Related Document is, or upon the execution and delivery
thereof will be, the valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, except as enforceability may be limited by
equitable principles of bankruptcy, fraudulent conveyance or insolvency laws
affecting creditors' rights generally.
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(b) Neither the execution, delivery or performance by Seller of this
Agreement or the Related Documents to which Seller is or will be a party nor the
consummation of the transactions contemplated hereby or thereby nor compliance
by Seller with any of the provisions hereof or thereof will (i) conflict with,
or result in any violation of, or cause a default (with or without notice or
lapse of time, or both) under, or give rise to any right of termination,
amendment, cancellation or acceleration of any obligations contained in or the
loss of any benefit under, any term, condition or provision of any Contract to
which Seller is a party, or by which Seller or its assets may be bound, except
for any conflict, violation, default, termination, amendment, cancellation or
acceleration that is not material, or (ii) violate any Law applicable to Seller,
which conflict or violation could prevent the consummation of the transactions
contemplated by this Agreement or any of the Related Documents to which Seller
is or will be a party or result in an Encumbrance on or against any assets,
rights or properties of Seller, or on or against any capital stock of the
Company, or give rise to any claim against the Company or the Purchaser.
(c) Except as set forth on Schedule 5.3 or otherwise contemplated by
this Agreement, no Permit, authorization, consent or approval of or by, or any
notification of or filing with, any Person (governmental or private) is required
in connection with the execution, delivery and performance by Seller of this
Agreement or the Related Documents to which Seller is or will be a party or the
consummation by Seller of the transactions contemplated hereby or thereby.
SECTION 5. REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY.
Seller represents and warrants as follows:
5.1. ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING.
Each of the Company and the NY Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority
(corporate and otherwise) to own, lease and operate its assets and properties
and to carry on its business as presently conducted. Each of the Company and the
NY Subsidiary is duly qualified and in good standing to transact business as a
foreign corporation in those jurisdictions set forth on Schedule 5.1, which
constitute all the jurisdictions in which the character of the property owned,
leased or operated by such entity or the nature of the business or activities
conducted by such entity makes such qualification necessary. The Purchaser has
been furnished with true, correct and complete copies of the articles of
incorporation of the Company (the "Company's Charter") and the by-laws of the
Company (the "Company's By-laws"), in each case as amended and in effect on the
date hereof. The Purchaser has received the same documents in respect of the NY
Subsidiary. Except as set forth on Schedule 5.1, each of the Company and the NY
Subsidiary has (i) not, within the last three years, engaged in any business
other than the Business and (ii) not used within the last three years any other
trade name or assumed names.
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5.2. AUTHORIZATION, EXECUTION AND ENFORCEABILITY.
Each of the Company and the NY Subsidiary has all requisite power and
authority (corporate and otherwise) to execute, deliver and perform its
obligations under this Agreement and each Related Document to which it is or
will be a party and to consummate the transactions contemplated hereby and
thereby. Each of the Company's and the NY Subsidiary's execution and delivery of
this Agreement and each Related Document to which it is or will be a party, and
performance by the Company or the NY Subsidiary of its obligations hereunder and
thereunder have been duly and validly authorized by all requisite action on the
part of the Company and its shareholder and the NY Subsidiary and its
shareholder, and this Agreement and each Related Document to which the Company
or the NY Subsidiary is or will be a party has been, or upon the execution and
delivery thereof will be, duly and validly executed and delivered by the Company
and the NY Subsidiary and constitutes, or upon its execution and delivery will
constitute, a valid and binding obligation of the Company and the NY Subsidiary,
enforceable against the Company and the NY Subsidiary, as the case may be, in
accordance with its terms, except as enforceability may be limited by equitable
principles of bankruptcy, fraudulent conveyance or insolvency laws affecting
creditors' rights generally. Except as set forth on Schedule 5.2 or as otherwise
contemplated by this Agreement, neither the Company's or the NY Subsidiary's
execution and delivery of, and/or performance of its obligations under, this
Agreement or the Related Documents to which it is or will be a party, nor the
consummation of the transactions contemplated hereby or thereby will (a)
violate, or result in the creation of an Encumbrance upon any of the Company's
or the NY Subsidiary's assets as a result of, any Laws applicable to the Company
or the NY Subsidiary's or any of their properties or assets or (b) conflict
with, or result in any violation or breach of, any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default or give rise to any right of contingent payment, termination,
cancellation or acceleration, or result in the creation of any Encumbrance upon
any of the properties or assets of the Company or the NY Subsidiary, under, any
provision of the Company's Charter or the Company's By-laws or any similar
document in respect of the NY Subsidiary or any Contract set forth on Schedule
5.13 to which either is a party or by which either or any of either's assets or
properties is or may be bound.
5.3. CONSENTS.
Except as set forth on Schedule 5.3, no consent, approval, Order or
authorization of, registration, declaration or filing with, or notification to
any Governmental Entity is required in connection with the execution, delivery
and performance by the Company or the NY Subsidiary of this Agreement or the
Related Documents to which it is or will be a party or the consummation of the
transactions contemplated hereby or thereby.
5.4. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 100,000
duly authorized shares of Common Stock, of which 1,000 shares of Common Stock
are duly and validly issued and outstanding, fully paid and nonassessable, all
of which are held of record and beneficially by the Seller. The authorized
capital stock of the NY Subsidiary consists of 20,000
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shares of Common Stock, of which 1,000 shares of Common Stock are duly and
validly issued and outstanding, fully paid and nonassessable, all of which will
be, as of the Closing, held of record and beneficially by the Seller.
(b) There are no securities presently outstanding, and on the Closing
Date or, with respect to the NY Subsidiary only, the Second Closing Date, there
will not be any outstanding securities, which are convertible into, exchangeable
for, or carrying the right to acquire, equity securities of the Company or the
NY Subsidiary, or subscriptions, warrants, options, calls, puts, convertible
securities, registration or other rights, arrangements or commitments obligating
the Company or the NY Subsidiary to issue, sell, register, purchase or redeem
any of its equity securities or any ownership interest or rights therein. There
are no voting trusts or other agreements or understandings to which the Company
or the NY Subsidiary is bound with respect to the voting of the Company's or the
NY Subsidiary's capital stock. There are no stock appreciation rights, phantom
stock rights or similar rights or arrangements outstanding. Except as set forth
on Schedule 5.4 or as otherwise contemplated by this Agreement, there are no
Contracts, commitments, arrangements, understandings or restrictions to which
the Company or the NY Subsidiary, the Seller or any other Person is bound
relating in any way to any shares of capital stock or other securities of the
Company or the NY Subsidiary.
(c) All securities issued by the Company and the NY Subsidiary have
been issued in transactions exempt from registration under the Securities Act
and the rules and regulations promulgated thereunder and all applicable state
securities or "blue sky" laws, and neither the Company nor the NY Subsidiary has
violated the Securities Act or any applicable state securities or "blue sky"
laws in connection with the issuance of any such securities.
5.5. SUBSIDIARIES; INVESTMENTS.
Except as set forth on Schedule 5.5, the Company does not own or hold,
directly or indirectly, any equity interest in any Person and the Seller does
not own or hold, directly or indirectly, any equity, partnership or other
ownership or financial interest in any Person (other than the Company) which is
engaged in any business that is substantially the same as the Business.
5.6. FINANCIAL INFORMATION.
(a) Schedule 5.6 attached hereto contains true, correct and complete
copies of the following:
(i) the audited balance sheets of the Company and its
Subsidiaries as of December 31, 1994, 1995 and 1996 (each an "Audited
Balance Sheet Date"), and the related audited statements of operations,
shareholders' equity and cash flows of the Company and its Subsidiaries
for the fiscal years then ended, including the footnotes thereto, as
audited by (and together with the report of their audit) Price,
Waterhouse, LLP (for 1994) and Xxxxxx Xxxxxxxx LLP (for 1995 and 1996)
(all of foregoing being hereinafter collectively called the "Audited
Financial Statements"); and
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(ii) the unaudited balance sheet of the Company and its
Subsidiaries as of September 28, 1997 (the "Latest Balance Sheet"; and
such date being the "Latest Balance Sheet Date"), and the unaudited
statements of operations and shareholders' equity of the Company and
its Subsidiaries for the period then ended, including any footnotes
thereto (all of the foregoing, including the Latest Balance Sheet,
being hereinafter collectively referred to as the "Unaudited Financial
Statements"; and the Audited Financial Statements and the Unaudited
Financial Statements, collectively, the "Financial Statements").
(b) The Financial Statements (x) fairly present in all material
respects the financial position of the Company and its Subsidiaries as of the
dates indicated and the results of operations of the Company and its
subsidiaries for the periods indicated, (y) have been prepared in accordance
with GAAP consistently applied throughout the periods covered thereby (subject,
in the case of the Unaudited Financial Statements, to normal, recurring year-end
adjustments, the "GAAP" adjustments on Schedule 2.4, and the absence of any or
all footnote disclosures) and (z) are in accordance with the books and records
of the Company which have been maintained in a manner consistent with historical
practice.
5.7. ABSENCE OF UNDISCLOSED LIABILITIES.
Neither the Company nor the NY Subsidiary has any Liabilities except
(x) those reflected or reserved against on the Latest Balance Sheet, (y)
Liabilities under the Contracts to which it is party (excluding Liabilities
resulting from any breach thereof) and (z) Liabilities incurred in the ordinary
course of business consistent with past practice since the Latest Balance Sheet
Date (other than any such Liability arising from breach of contract, breach of
warranty, tort, infringement, or violation of any Law or any Proceeding). There
are no loss contingencies (as such term is used in Statement of Financial
Accounting Standards No. 5 issued by the Financial Accounting Standards Board in
March 1975) of or affecting the Company or the NY Subsidiary which are not
adequately provided for or disclosed on the Latest Balance Sheet or in the notes
thereto, in each case, to the extent required by GAAP. Except as set forth on
Schedule 5.7, neither the Company nor the NY Subsidiary has, either expressly or
by operation of Law, assumed or undertaken any Liability of any other Person,
including without limitation any obligation for corrective or remedial action
relating to Environmental, Health and Safety Laws.
5.8. ABSENCE OF CHANGES.
Since the Latest Balance Sheet Date, except as set forth on Schedule
5.8, the Company and the NY Subsidiary have been operated in the ordinary
course, consistent with past practice, and there has not been:
(a) any material adverse change in the business, operations, assets,
condition (financial or otherwise), operating results, liabilities, general
relations with employees, customers or suppliers of the Company or the NY
Subsidiary (taken as a whole) or any material casualty loss or damage to the
assets of the Company or the NY Subsidiary (taken as a whole), whether or not
covered by insurance (a "Material Adverse Change");
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(b) except for intercompany payments in the ordinary course of
business, any declaration, setting aside or payment of any distribution with
respect to any shares of capital stock of the Company or the NY Subsidiary, or
any direct or indirect redemption, purchase or other acquisition of any thereof,
or any other payments of any nature outside the ordinary course of business to
any Affiliate of the Company or the NY Subsidiary whether or not on or with
respect to any shares of capital stock of the Company or the NY Subsidiary owned
by such Affiliate (excluding salaries and benefits in ordinary course consistent
with past practices at rates equal to those in effect on the Latest Balance
Sheet Date);
(c) any general uniform increase in the compensation of employees
(including, without limitation, any increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) of the Company or the NY Subsidiary,
or any increase in any such compensation payable to any officer, director or key
management employee;
(d) any change in the tax or other accounting methods or practices
followed by the Company or the NY Subsidiary, any change in depreciation or
amortization policies or rates previously adopted or any write-up of inventory
or other assets;
(e) any material change in the manner in which products or services of
the Company or the NY Subsidiary are marketed (including, without limitation,
any change in prices), any material change in the manner in which the Company or
the NY Subsidiary extends discounts or credit to customers or any material
change in the manner or terms by which the Company or the NY Subsidiary collects
its accounts receivable or otherwise deals with customers;
(f) any failure by the Company or the NY Subsidiary to make scheduled
capital expenditures or investments or any failure to pay trade accounts payable
or any other Liability of the Company or the NY Subsidiary in the ordinary
course consistent with past practices;
(g) any agreement, whether in writing or otherwise, to take any of the
actions specified in the foregoing clauses (a) through (f).
5.9. TAX MATTERS.
(a) Except as set forth on Schedule 5.9(a): (1) the Company (for
purposes of Section 5.9, the term "Company" shall include both Nursefinders,
Inc. and the NY Subsidiary; and (2) to the Best Knowledge of the Seller, each
other Person included in any consolidated or combined Tax Return and part of an
affiliated group, within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "Code"), of which the Company is or has been a
member ("Tax Affiliate"), for the years that it was a Tax Affiliate of the
Company:
(i) has timely paid or caused to be paid all Taxes required to
be paid by it through the date hereof and as of the Closing Date
(including any Taxes shown due on any Tax Return);
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(ii) has filed or caused to be filed in a timely and proper
manner (within any applicable extension periods) all Tax Returns
required to be filed by it with the appropriate Governmental Entities
in all jurisdictions in which such Tax Returns are required to be
filed; and all Tax Returns filed on behalf of the Company and each Tax
Affiliate were complete and correct in all material respects;
(ii) has not requested or caused to be requested any extension
of time within which to file any Tax Return, which Tax Return has not
since been filed.
(b) The Seller has previously delivered true, correct and complete
copies of all Federal Tax Returns filed by or on behalf of the Company through
the date hereof for the periods ending after September, 1995.
(c) Except as set forth in Schedule 5.9(c):
(i) since September 1995, neither the Company nor to the Best
Knowledge of the Seller any Tax Affiliate (for the years that it was a
Tax Affiliate of the Company) has been notified by the Internal Revenue
Service or any other taxing authority since December 31, 1995 that any
issues have been raised (and no such issues are currently pending) by
the Internal Revenue Service or to the Best Knowledge of the Seller any
other taxing authority in connection with any Tax Return filed by or on
behalf of the Company or to the Best Knowledge of the Seller any Tax
Affiliate; there are no pending Tax audits and no waivers of statutes
of limitations have been given or requested with respect to the Company
or to the Best Knowledge of the Seller any Tax Affiliate (for the years
that it was a Tax Affiliate of the Company); no Tax liens have been
filed against the Company or any Tax Affiliate (for the years that it
was a Tax Affiliate of the Company); no unresolved deficiencies or
additions to Taxes have been proposed, asserted, or assessed against
the Company or to the Best Knowledge of the Seller any Tax Affiliate
(for the years that it was a Tax Affiliate of the Company);
(ii) full and adequate provision (at assumed tax rates) has
been made (A) on the Latest Balance Sheet, and the books and records of
the Company for all deferred Taxes not yet due and payable by the
Company as if it were a stand-alone Company for all periods on or prior
to the Latest Balance Sheet Date, and (B) on the books and records of
the Company for all deferred Taxes payable by the Company as if it were
a stand-alone Company for all periods beginning on or after the Latest
Balance Sheet Date;
(iii) the Company has not incurred any Liability for Taxes
from and after the Latest Balance Sheet Date other than Taxes incurred
in the ordinary course of business and consistent with past practices;
(iv) the Company has not (A) made an election (or had an
election made on its behalf by another person) to be treated as a
"consenting corporation"
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under Section 341(f) of the Code or (B) been a "personal holding
company" within the meaning of Section 542 of the Code;
(v) the Company has complied in all material respects with all
applicable Laws relating to the collection or withholding of Taxes
(such as sales Taxes or withholding of Taxes from the wages of
employees);
(vi) since October 1, 1995, the Company has not been a party
to any Tax sharing agreement with any Person;
(vii) the Company has not incurred any Liability to make or
possibly make any payments either alone or in conjunction with any
other payments that:
(A) shall be non-deductible under, or would otherwise
constitute a "parachute payment" within the meaning of Section
280G of the Code (or any corresponding provision of state,
local or foreign income Tax Law); or
(B) are or may be subject to the imposition of an
excise Tax under Section 4999 of the Code;
(viii) the Company has not agreed to (nor has any other person
agreed to on its behalf) and is not required to make any adjustments or
changes either on, before or after the Closing Date, to its accounting
methods pursuant to Section 481 of the Code, and the Internal Revenue
Service has not proposed any such adjustments or changes in the
accounting methods of the Company;
(ix) no claim has been made within the last three years by any
taxing authority in a jurisdiction in which the Company does not file
Tax Returns that the Company is or may be subject to taxation by that
jurisdiction;
(x) the consummation of the transactions hereunder will not
trigger the realization or recognition of intercompany gain or income
to the Company under the Federal consolidated return regulations with
respect to Federal, state, or local taxes;
(xi) and the Seller is not a foreign Person within the meaning
of ss. 1.1445-2(b) of the rules and regulations promulgated under
Section 1445 of the Code, and the Purchaser has been furnished with a
true and accurate certificate of the Company so stating which complies
in all respects with ss. 1.1445-2(b)(1) of such rules and regulations.
(xii) with respect to that certain Income Tax Sharing
Agreement ("Tax-Sharing Agreement"), dated as of September 29, 1995, by
and among, Adia Services Inc., a Delaware corporation, Adia Services,
Inc., a California corporation
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(these corporations are referred to both individually and collectively
as the "Adia Group"), and Personnel Group of America, Inc., a Delaware
corporation ("PGA"):
(A) no claim for indemnification pursuant to the
terms of the Tax-Sharing Agreement has been made by either the
Adia Group or PGA;
(B) no request for information has been made by
either the Adia Group or PGA from each other or from the
Company pursuant to the terms of the Tax Sharing Agreement or
with respect to any matters in connection therewith; and
(C) the Company does not currently have and will not
hereafter incur any liability under the terms of the Tax
Sharing Agreement; and
(xiii) on the Closing Date, the Company shall be a member of
the consolidated group of which the Seller is a member for purposes of
Section 338(h)(10)(A)(i) of the Code.
5.10. TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
The Company and the NY Subsidiary have good and marketable title to all
of the assets, properties and interests in properties, real, personal or mixed,
reflected on the Latest Balance Sheet or acquired after the Latest Balance Sheet
Date (except inventory or other property sold or otherwise disposed of since the
Latest Balance Sheet Date in the ordinary course of business and accounts
receivable and notes receivable to the extent collected subsequent to the Latest
Balance Sheet Date), free and clear of all Encumbrances, of any kind or
character, except for those Encumbrances set forth on Schedule 5.10 and
Permitted Encumbrances. Such assets comprise all of the assets necessary or
required for the conduct of the Business as currently conducted to date. Such
assets are in good operating condition and repair (normal wear and tear
excepted), and are not subject to any condition which materially interferes with
the economic value or use thereof. With respect to any leased assets, such
assets are in such condition as to permit the surrender thereof by the Company
or the NY Subsidiary to the lessors thereunder on the date hereof without any
cost or expense for repair or restoration if the terms of the related leases
expired on the date hereof in the ordinary course of business.
5.11. REAL PROPERTY--OWNED OR LEASED.
(a) Neither the Company nor the NY Subsidiary owns any real property.
Schedule 5.11(a) contains a list by address of all of the real property leased
by the Company or the NY Subsidiary subject to one or more leases (the "Leased
Property"), including the names of the lessor and the lessee. The Leased
Property constitutes all real property used or occupied by the Company or the NY
Subsidiary in connection with the Business.
(b) With respect to the Leased Property, except as set forth on
Schedule 5.11(b): (i) to the Best Knowledge of the Seller, no portion thereof is
subject to any
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pending condemnation Proceeding or Proceeding by any Governmental Entity and
there is no threatened condemnation or Proceeding with respect thereto; (ii) the
physical condition of the Leased Property is sufficient to permit the continued
conduct of the Business as presently conducted subject to the provision of usual
and customary maintenance and repair performed in the ordinary course; (iii) the
Company or the NY Subsidiary is the owner and holder of all the leasehold
estates purported to be granted by such leases; (iv) there are no Contracts,
written or oral, to which the Company or the NY Subsidiary or any Affiliate
thereof is a party, granting to any party or parties the right of use or
occupancy of any portion of the parcels of the Leased Property; (v) there are no
parties (other than the Company or their lessees disclosed pursuant to clause
(iv) above) in possession of the Leased Property; and (vi) no notice of any
increase in the assessed valuation of the Leased Property and no notice of any
contemplated special assessment has been received by the Company and to the Best
Knowledge of the Seller, there is no threatened increase in assessed valuation
or threatened special assessment pertaining to any of the Leased Property.
5.12. INTELLECTUAL PROPERTY.
(a) Except in each case as set forth on Schedule 5.12(a):
(i) the Company owns, has the right to use, sell, license and
dispose of, and has the right to bring actions for the infringement of
(excluding readily available off-the-shelf software), all Intellectual
Property Rights (including the name "Nursefinders") purported to be
owned by the Company and necessary or required for the conduct of the
Business (collectively, the "Owned Requisite Rights"). The Company has
the right to use all other Intellectual Property Rights used by it, for
which the Company has a valid license, all of which (other than
readily-available off-the-shelf software) are listed on Schedule
5.12(a) (collectively, the "Licensed Requisite Rights"; and, together
with the Owned Requisite Rights, the "Requisite Rights"). The Company's
rights to use, sell, license, dispose of and bring actions are
exclusive with respect to the Owned Requisite Rights;
(ii) the Company has taken reasonable and practicable steps
designed to safeguard and maintain (i) the secrecy and confidentiality
of confidential or proprietary information and (ii) the proprietary
rights of the Company in all of its Owned Requisite Rights;
(iii) the Company has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual
Property Rights of any Person or committed any acts of unfair
competition, and the Company has not received from any Person in the
past three years any notice, charge, complaint, claim or assertion
thereof; and
(iv) the Company has not sent to any Person or otherwise
communicated to any Person, in the past three years, any notice,
charge, complaint, claim or other assertion of any present, impending
or threatened infringement by or
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misappropriation of, or other conflict with, any Intellectual Property
Rights of the Company by such other Person or any acts of unfair
competition by such other Person, nor to the Best Knowledge of the
Seller, is any such infringement, misappropriation, conflict or act of
unfair competition occurring or threatened.
(b) Schedule 5.12(b) contains a true and complete list of all
applications, filings and other formal actions made or taken pursuant to any
Laws by the Company to perfect or protect its interest in its Intellectual
Property Rights, including, without limitation, all patents, patent
applications, trademarks, trademark applications, servicemarks and servicemark
applications, copyrights and copyright applications.
5.13. AGREEMENTS, NO DEFAULTS, ETC.
(a) Schedule 5.13 contains a true and complete list of all written or
oral Contracts to which the Company or the NY Subsidiary is a party
(incorporating by reference all Contracts disclosed on Schedule 5.4, the leases
set forth on Schedule 5.11(a), the insurance policies set forth on Schedule
5.16, and the Employee Plans and Contracts set forth on Schedule 5.21) and (x)
which were entered into or made outside the ordinary course of business, or (y)
which were entered into or made in the ordinary course of business and are
described in clauses (i) through (xiii) of this Section 5.13. Except as set
forth on Schedule 5.13, neither the Company nor the NY Subsidiary is a party to
any of the following, whether written or oral: (i) distributorship, dealer,
sales, advertising, agency, manufacturer's representative or other Contract
providing for the payment of a commission; (ii) Contract for the employment of
any officer, employee or consultant or any other type of Contract or
understanding with any officer, employee or consultant, including any agreement
or understanding relating to severance payments; (iii) indenture, mortgage,
promissory note, loan agreement, pledge agreement, conditional sale, guarantee
or other Contract for the borrowing of money, for a line of credit or for a
Capital Lease; (iv) Contract for charitable contributions in excess of $10,000
individually or $50,000 in the aggregate; (v) Contract for capital expenditures
in excess of $50,000 individually or $100,000 in the aggregate; (vi) agreement
or arrangement for the sale of any assets, properties or rights other than the
sale of services or products in the ordinary course of business at normal profit
margins; (vii) lease or other agreement pursuant to which it is a lessee of or
holds or operates any machinery, equipment, motor vehicles, office furniture,
fixtures, products, merchandise or other personal property owned by any other
Person on an annual basis in excess of $50,000 individually or $250,000 in the
aggregate; (viii) Contract with respect to the lending or investing of funds;
(ix) Contract with respect to any form of intangible property, including any
Intellectual Property Rights or Confidential or Proprietary Information, other
than licenses for off-the-shelf software; (x) Contract which restricts the
Company or the NY Subsidiary from engaging in any aspect of the Business or any
other business anywhere in the world; (xi) Contract or group of related
Contracts with the same Person (excluding purchase orders entered into in the
ordinary course of business which are to be completed within three months of
entering into such purchase orders) for the purchase or sale of products or
services under which the undelivered balance thereof (including the aggregate
undelivered balance under any such Contracts between the same Person and the
Company or the NY Subsidiary) has a selling price in excess of $100,000; (xii)
agreement for the acquisition or disposition of a Person or a division of a
Person made within the preceding
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three years (whether or not such acquisition or disposition was consummated);
and (xiii) any other Contract material to the Business, including all Franchise
Agreements and License Agreements and all financing agreements related thereto.
(b) All Contracts listed or items referred to on Schedule 5.13 are in
full force and effect, and, to the Best Knowledge of the Seller, constitute
legal, valid and binding obligations of the respective parties thereto, and are
enforceable in accordance with their respective terms. The Company or the NY
Subsidiary, as the case may be, has in all material respects performed all of
the obligations required under the Contracts to be performed by it to date, and
there exists no default, or any event which upon the giving of notice or the
passage of time, or both, would give rise to a claim of a default in the
performance by the Company or the NY Subsidiary, as the case may be, or to the
Best Knowledge of the Seller, any other party to any of the foregoing of their
respective obligations thereunder. The Purchaser has been provided access to
true, complete and correct copies of all written items listed on Schedule 5.13
and Schedule 5.13 contains complete descriptions of all oral items listed on
Schedule 5.13.
(c) Except as disclosed on Schedule 5.13, there are no existing
Franchise Agreements or License Agreements.
5.14. LITIGATION, ETC.
(a) Except as disclosed on Schedule 5.14(a), there are no (i)
Proceedings pending or, to the Best Knowledge of the Seller, threatened against
the Company or the NY Subsidiary, whether at law or in equity, whether civil or
criminal in nature, or (ii) Orders of any Governmental Entity or arbitrator with
respect to, involving or against the Company.
(b) Schedule 5.14(b) lists each matter described in Section 5.14(a)
that was in existence within the last three years that resulted in any criminal
sanctions or payments in excess of $500,000 by the Company or the NY Subsidiary
(whether as a result of a judgment, civil fine, settlement or otherwise).
5.15. COMPLIANCE WITH LAWS.
Each of the Company and the NY Subsidiary (a) except as set forth on
Schedule 5.15, has complied in all material respects with, and is in compliance
in all material respects with, all Laws, Orders and Permits applicable to it and
the Business and (b) has all Permits (other than local business Permits or
licenses containing no change of control provision) used or necessary in the
conduct of its Business. All of such Permits are listed on Schedule 5.15, are in
full force and effect, no violations with respect to any thereof have occurred
or are or have been recorded, no Proceeding is pending or, to the Best Knowledge
of the Seller, threatened to revoke or limit any thereof. Other than routine
investigations or surveys related to compliance with Medicare regulations the
results of which would not have a material adverse effect on the Business, no
investigation or review by any Governmental Entity with respect to the Company
or the NY Subsidiary is pending or, to the Best Knowledge of the Seller,
threatened, nor has any Governmental Entity notified the Company or the NY
Subsidiary of its intention to conduct the same. Each such Medicare survey or
investigation pending as of the date hereof is set forth on
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Schedule 5.15. To the Best Knowledge of the Seller, there is no proposed change
in any applicable Law which would require the Company or the NY Subsidiary to
obtain any Permits not set forth on Schedule 5.15 in order to conduct the
Business as presently conducted. To the Best Knowledge of the Seller, neither
the Company nor the NY Subsidiary has received any opinion or memorandum or
legal advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any Liability or disadvantage which may be material to its
business, financial condition, operations, property or affairs.
5.16. INSURANCE.
(a) Schedule 5.16(a) contains a true and complete list of all policies
of liability, theft, fidelity, life, fire, product liability, workmen's
compensation, health and other forms of insurance held by the Company or the NY
Subsidiary and/or the Seller or PGA for the benefit of the Company or the NY
Subsidiary (specifying the insurer, amount of coverage, type of insurance and
policy number). The Company, PGA and/or the Seller have maintained such
insurance coverage at all times since October 1, 1997, and, except as set forth
on Schedule 5.16(a), such insurance coverage has been maintained on an
occurrence (as opposed to a claims made) basis.
(b) Except as set forth on Schedule 5.16(b), with respect to each
policy of insurance listed on Schedule 5.16(a): (i) all premiums with respect
thereto are currently paid and are not subject to adjustment, and neither the
Seller nor the Company nor the NY Subsidiary is in default in any respect with
respect to its obligations under such policy, and no basis exists that would
give any insurer under any such policy the right to cancel or unilaterally
reduce or limit the stated coverages contained in such policy; and (ii) neither
the Company nor the NY Subsidiary has received any notice that such policy has
been or shall be canceled or terminated or will not be renewed on substantially
the same terms as are now in effect or the premium on such policy shall be
materially increased on the renewal thereof.
5.17. LABOR MANAGEMENT RELATIONS: EMPLOYEES.
(a) Schedule 5.17 sets forth a list of all directors, officers and key
management employees of the Company and the NY Subsidiary as of the date hereof,
together with their respective titles (if any), their current compensation
(including salary, wages, current bonus plans and commissions) and the
respective dates on which they commenced employment. To the extent any such
employee is on a leave of absence, Schedule 5.17 indicates the nature of such
leave of absence and such employee's anticipated date of return to active
employment. To the Best Knowledge of the Seller, none of the key management
employees listed on Schedule 5.17 has any plans or intends to terminate his or
her employment or engagement with the Company or the NY Subsidiary and no former
key management employee has left the service of the Company or the NY Subsidiary
within the last 6 months. Schedule 5.17 does not set forth information regarding
present directors and officers of the Company or the NY Subsidiary who will not
be directors and/or officers of the Company or the NY Subsidiary immediately
after the Closing.
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(b)(i) There is no labor strike, dispute or grievance, slowdown or
stoppage actually pending or, to the Best Knowledge of the Seller, threatened
against or involving the Company or the NY Subsidiary; and (ii) neither the
Company nor the NY Subsidiary is a party to or bound by any collective
bargaining agreement, union contract or singular agreement and no such agreement
is currently being negotiated by the Company or the NY Subsidiary and no labor
union has taken any action with respect to organizing employees of the Company
or the NY Subsidiary and no representation question exists with respect to any
such employees.
5.18. ERISA COMPLIANCE.
(a) Schedule 5.18(a) contains a true, complete and correct list of all
Employee Benefit Plans (as hereinafter defined) (collectively, the "Company
Employee Plans") (i) that cover any employees, contract employees or former
employees of the Company or the NY Subsidiary or any spouses, family members or
beneficiaries thereof (A) that are maintained, sponsored or contributed to by
the Company or the NY Subsidiary or (B) with respect to which the Company or the
NY Subsidiary is obligated to contribute or has any actual or potential
Liability, or (ii) with respect to which the Company or the NY Subsidiary has
any actual or potential liability or obligation on account of the maintenance or
sponsorship thereof or contribution thereto by any present or former ERISA
Affiliate (as defined below) of the Company or the NY Subsidiary.
(b) Administration and Compliance. Except as set forth on Schedule
5.18(b), with respect to each Company Employee Plan (references to the Company
in this clause (b) are intended to include the NY Subsidiary where applicable):
(i) such Company Employee Plan has been established,
maintained, operated and administered in accordance with its terms and
in compliance in all material respects with ERISA, the Code, and other
applicable Laws (including with respect to reporting and disclosure);
(ii) all required, declared or discretionary (in accordance
with historical practices) payments, premiums, contributions,
reimbursements or accruals for all periods ending prior to or as of the
date hereof have been made or properly accrued on the Latest Balance
Sheet, or with respect to accruals properly made after the Latest
Balance Sheet Date, on the books and records of the Company and all
amounts withheld from employees have been timely deposited into the
appropriate trust or account;
(iii) there is no unfunded actual Liability relating to such
Company Employee Plan which is not reflected on the Latest Balance
Sheet, or with respect to accruals properly made after the Latest
Balance Sheet Date, on the books and records of the Company;
(iv) neither the Company nor any of its ERISA Affiliates, nor
any other "disqualified person" or "party in interest" (as such terms
are defined in
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Section 4975 of the Code and Section 3(14) of ERISA, respectively) with
respect to such Company Employee Plan, has breached the fiduciary rules
of ERISA or engaged in a prohibited transaction that could subject the
Company or its Subsidiaries to any tax or penalty imposed under Section
4975 of the Code of Section 502(i), (j) or (l) of ERISA;
(v) no Proceedings (other than routine claims for benefits)
are pending or, to the Best Knowledge of the Seller, threatened against
or relating to any Company Employee Plan or any fiduciary thereof, and
there is, to the Best Knowledge of the Seller, no basis for any such
Proceeding against any Company Employee Plan;
(vi) such Company Employee Plan, if intended to be
"qualified", within the meaning of Section 401(a) of the Code, has been
determined by the Internal Revenue Service to be so qualified and the
related trusts are exempt from Tax under Section 501(a) of the Code,
and nothing has occurred that has or could reasonably be expected to
adversely affect such qualification or exemption;
(vii) except as may be required under Laws of general
application, such Company Employee Plan does not obligate the Company
to provide any employee or former employee, or their spouses, family
members or beneficiaries, any post-employment or post-retirement health
or life insurance, accident or other "welfare-type" benefits;
(viii) if such Company Employee Plan is a "group health plan"
within the meaning of Section 5000 of the Code, such Company Employee
Plan has been maintained in all material respects in compliance with
Section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA and
no tax payable on account of Section 4980B of the Code has been or is
expected to be incurred; and
(ix) neither the Company nor any ERISA Affiliate thereof is or
has ever maintained or been obligated to contribute to a Multiemployer
Plan (as defined in Section 3(37) of ERISA), a Multiple Employer Plan
(as defined in Section 413 of the Code) or a Defined Benefit Pension
Plan (as defined in Section 3(35) of ERISA);
(c) The Purchaser has been provided with true and complete copies, to
the extent applicable, of all documents pursuant to which such Company Employee
Plan is maintained and administered, the two most recent annual reports (Form
5500 and attachments) and financial statements therefor, all governmental
rulings, determinations, and opinions (and pending requests therefor), and, if
such Company Employee Plan provides post-employment or post-retirement health
and life insurance, accident or other "welfare-type" benefits, the most recent
valuation of the present and future obligations under such Company Employee
Plan; and the foregoing documents accurately reflect all of the terms of such
Company Employee Plan (including, without limitation, any agreement or provision
which would limit the ability of the Company to make any prospective amendments
or terminate such Company Employee Plan).
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5.19. CERTAIN ADDITIONAL REGULATORY MATTERS.
None of the Company, any Affiliate of the Company, or the officers,
directors, or employees or agents of any of the Company or any Affiliate, and,
to the Best Knowledge of the Seller, none of the Persons who provide
professional services under agreements with any of the Company or any Affiliate
as agents of such entities have engaged in any activities on behalf of the
Company or its Affiliates which constitute violations of, or are cause for
imposition of civil penalties upon the Company or the NY Subsidiary or mandatory
or permissive exclusion of the Company from Medicare or Medicaid, under xx.xx.
1320a-7, 1320a-7a, 1320a-7b, or 1395nn of Title 42 of the United States Code,
the federal Civilian Health and Medical Plan of the Uniformed Services statute
("CHAMPUS"), or the regulations promulgated pursuant to such statutes or
regulations or related state or local statutes or which constitute material
violations of or material deficiencies under the standards of any private
accrediting organization from which the Company or the NY Subsidiary seeks
accreditation, including the following activities:
(a) knowingly and willfully making or causing to be made a false
statement or representation of a material fact in any application for any
benefit or payment;
(b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment;
(c) presenting or causing to be presented a claim for reimbursement
under CHAMPUS, Medicare, Medicaid or any other State Health Care Program or
Federal Health Care Program that is (i) for an item or service that the Person
presenting or causing to be presented knows or should know was not provided as
claimed, or (ii) for an item or service and the Person presenting knows or
should know that the claim is false or fraudulent;
(d) knowingly and willfully offering, paying, soliciting or receiving
any remuneration (including any kickback, bribe or rebate), directly or
indirectly, overtly or covertly, in cash or in kind (i) in return for referring,
or to induce the referral of, an individual to a Person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part by CHAMPUS, Medicare or Medicaid, or any other State
Health Care Program or any Federal Health Care Program, or (iii) in return for,
or to induce, the purchase, lease, or order, or the arranging for or
recommending of the purchase, lease, or order, of any good, facility, service,
or item for which payment may be made in whole or in part by CHAMPUS, Medicare
or Medicaid or any other State Health Care Program or any Federal Health Care
Program; or
(e) knowingly and willfully making or causing to be made or inducing or
seeking to induce the making of any false statement or representation (or
omitting to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading) of a material fact with
respect to (i) the conditions or operations of a facility in order that the
facility may qualify for CHAMPUS, Medicare, Medicaid or any other State Health
Care Program certification or any Federal Health Care Program certification, or
(ii) information
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required to be provided under (S) 1124(A) of the Social Security Act ("SSA") (42
U.S.C. (S) 1320a-3).
5.20. MEDICARE/MEDICAID PARTICIPATION.
Neither the Company nor the NY Subsidiary nor any existing officers or
directors (as defined in 42 C.F.R. (s) 1001.1001(a)(2)) of the Company or the NY
Subsidiary or managing employee (as defined in SSA (S) 1126(b) or any
regulations promulgated thereunder) of the Company or the NY Subsidiary: (1) has
had a civil monetary penalty assessed against it under (S) 1128A of the SSA or
any regulations promulgated thereunder; (2) has been excluded from participation
under the Medicare program or a state health care program as defined in SSA (S)
1128(h) or any regulations promulgated thereunder ("State Health Care Program")
or a federal health care program as defined in SSA (S) 0000X(x) ("Xxxxxxx Health
Care Program"); or (3) has been convicted (as that term is defined in 42 C.F.R.
(S) 1001.2) of any of the following categories of offenses as described in SSA
(S) 1128(a) and (b)(1), (2), (3) or any regulations promulgated thereunder:
(a) criminal offenses relating to the delivery of an item or service
under Medicare or any State Health Care Program or any Federal Health Care
Program;
(b) criminal offenses under federal or state law relating to patient
neglect or abuse in connection with the delivery of a health care item or
service;
(c) criminal offenses under federal or state law relating to fraud,
theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct in connection with the delivery of a health care item or service or
with respect to any act or omission in a program operated by or financed in
whole or in part by any federal, state or local governmental agency;
(d) federal or state laws relating to the interference with or
obstruction of any investigation into any criminal offense described in (a)
through (c) above; or
(e) criminal offenses under federal or state law relating to the
unlawful manufacture, distribution, prescription or dispensing of a controlled
substance.
5.21. ENVIRONMENTAL MATTERS.
(a) Neither the Company nor the NY Subsidiary has received any written
or oral notice, report or other information (i) regarding any actual or alleged
violation of any Environmental, Health and Safety Laws, or any Liabilities or
potential Liabilities, including any investigatory, remedial or corrective
obligations, relating to the Business or any of its past owned or leased
properties or operations or (ii) that the Company or the NY Subsidiary is
potentially responsible under any Environmental, Health and Safety Laws for
response costs, corrective action or natural resource damages, as those terms
are defined under the Environmental, Health and Safety Laws, at any location.
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(b) Schedule 5.21(b) sets forth a complete and accurate list of all
properties and facilities previously owned by the Company or the NY Subsidiary
or any predecessor of the Company or the NY Subsidiary at any time during the
last three years (the "Previously Owned Properties", and together with the
Leased Properties, the "Covered Properties"). To the Best Knowledge of the
Seller, except as set forth on Schedule 5.21(b), there are no hazardous waste
treatment, storage or disposal facilities, as those terms are defined under the
Environmental, Health and Safety Laws, located at any of the Leased Properties.
During the period in which the Company or the NY Subsidiary owned the Previously
Owned Properties, there were no hazardous waste treatment, storage or disposal
facilities located at the Previously Owned Properties. To the Best Knowledge of
the Seller, neither is there now, nor has there ever been, any
asbestos-containing material in any form or condition, underground storage
tanks, above-ground storage tanks, landfill, waste pile, surface impoundment, or
article or equipment containing polychemical biphenyls on or at any of the
Leased Properties. During the period of the Company's or the NY Subsidiary's
ownership of the Previously Owned Properties there was no asbestos-containing
material in any form or condition, underground storage tanks, above-ground
storage tanks, landfill, waste pile, surface impoundment, or article or
equipment containing polychemical biphenyls on or at any of the Previously Owned
Properties.
(c) Neither the Company nor the NY Subsidiary has treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled or
released any substance, or owned or operated any property (and no such property
is contaminated by any such substance) in a manner that has given or could
reasonably be expected to give rise to Liabilities pursuant to any
Environmental, Health and Safety Laws, including any Liability for response
costs, corrective action costs, personal injury, property damage, natural
resources damage or attorney fees, or any investigative, corrective or remedial
obligations pursuant to any Environmental, Health and Safety Laws.
(d) No facts, events or conditions relating to the past or present
operations of the Company or the NY Subsidiary on the Covered Properties will
prevent continued compliance by the Business with any Environmental, Health and
Safety Laws, or give rise to any investigatory, remedial or corrective
obligations pursuant to any Environmental, Health and Safety Laws, including,
without limitation, any relating to on-site or off-site releases or threatened
releases of materials, substances or wastes, personal injury, property damage or
natural resources damage.
(e) To the Best Knowledge of the Seller, the Company and the NY
Subsidiary has provided the Purchaser with correct and complete copies of all
reports and studies within the possession or control of the Company or the NY
Subsidiary with respect to past or present environmental conditions or events at
any of the Covered Properties and, to the Best Knowledge of the Seller, there
are no other environmental reports or studies with respect thereto.
5.22. BROKERS.
Except for Xxxxxxxxx, Agio, Xxxxx and Company, whose fees and expenses
will be paid by the Seller, neither the Seller nor the Company or the NY
Subsidiary has
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employed any broker or finder or incurred any Liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated
hereby.
5.23. RELATED TRANSACTIONS.
Except as set forth on Schedule 5.23 or 5.13, and except for
compensation to bona-fide directors and employees of the Company or the NY
Subsidiary for services rendered in the ordinary course of business, no current
or former Affiliate of the Company or the NY Subsidiary or any "associate" (as
defined in the rules promulgated under the Securities Exchange Act of 1934, as
amended) thereof, is now (i) party to any transaction or Contract with the
Company or the NY Subsidiary (including, but not limited to, any contract,
agreement or other arrangement providing for the furnishing of services by, or
rental of real or personal property from, or otherwise requiring payments to,
any such Affiliate or Associate), or (ii) to the Best Knowledge of Seller, the
direct or indirect owner of an interest in any Person which is a present or
potential competitor, supplier or customer of the Company or the NY Subsidiary
(other than non-affiliated holdings in publicly held companies). Except as set
forth on Schedule 5.23, neither the Company nor the NY Subsidiary is a guarantor
or otherwise liable for any actual or potential Liability of its Affiliates and
their associates. Except as set forth on Schedule 5.23, neither the Company nor
the NY Subsidiary (x) owns or operates any vehicles, boats, aircrafts,
apartments or other residential or recreational properties or facilities for
executive, administrative or sales purposes or (y) owns or pays for any social
club memberships, whether or not for the benefit of the Company or the NY
Subsidiary and/or their executives.
5.24. ACCOUNTS AND NOTES RECEIVABLE.
Except as set forth on Schedule 5.24, all the accounts receivable and
notes receivable owing to the Company or the NY Subsidiary as of the date hereof
constitute, and as of the Closing shall constitute, valid and enforceable claims
arising from bona fide transactions in the ordinary course of business, and,
except to the extent reflected in reserves on the consolidated books of the
Company, there are no known or asserted claims, refusals to pay or other rights
of set-off against any thereof. Except as set forth on Schedule 5.24, there is
(i) no account debtor or note debtor that is delinquent for a period in excess
of 120 days for payments in excess of $50,000 in the aggregate, and all such
delinquencies (for a period in excess of 120 days) for all account and note
debtors do not exceed $4,500,000) in the aggregate (ii) no account debtor or
note debtor that has refused or, to the Best Knowledge of the Seller, threatened
to refuse to pay its obligations to the Company or the NY Subsidiary for any
reason, or has otherwise made a claim of set-off or similar claim (other than in
amounts not in excess of $50,000 per account debtor or $100,000 in the
aggregate), and (iii) to the Best Knowledge of the Seller, no account debtor or
note debtor that owes the Company or the NY Subsidiary amounts in excess of
$50,000 in the aggregate that is insolvent or bankrupt.
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5.25. [OMITTED].
5.26. BANK ACCOUNTS; POWERS OF ATTORNEY.
Schedule 5.26 sets forth a true and complete list of (i) all bank
accounts and safe deposit boxes of the Company and all persons who are
signatories thereunder or who have access thereto and (ii) the names of all
persons, firms, associations, corporations or business organizations holding
general or special powers of attorney from the Company or the NY Subsidiary and
a summary of the terms thereof (excluding ministerial powers of attorney granted
to representatives of the Company or the NY Subsidiary which are terminable at
will).
5.27. SUPPLIERS AND VENDORS; FRANCHISEES AND LICENSEES.
Except in the ordinary course of business, no material supplier or
vendor of the Company or the NY Subsidiary, nor any franchisee or licensee of
the Company or the NY Subsidiary, has (i) canceled or otherwise terminated, or,
to the Best Knowledge of the Seller, threatened to cancel or otherwise
terminate, its relationship with the Company or the NY Subsidiary or has
decreased, limited or otherwise adversely modified, or (ii) threatened to
decrease, limit or otherwise adversely modify, the services, supplies or
materials it provides to the Company, and the transactions proposed to be
consummated pursuant to this Agreement and the Related Documents, to the Best
Knowledge of the Seller, shall not affect the relationship of the Company or the
NY Subsidiary to any supplier, vendor, franchisee or licensee.
5.28. CUSTOMERS.
No customers to which more than $5,000,000 in the aggregate of the
Company's annual sales for the year ending September 28, 1997 are attributable
have notified the Company that they intend to, or, to the Best Knowledge of the
Seller, have threatened to, terminate or materially curtail their relationship
and dealings with the Company, whether as a result of the transactions
contemplated by this Agreement or otherwise.
5.29. DISCLOSURE.
This Agreement, including the schedules, attachments or exhibits
hereto, does not contain any untrue statement of a material fact.
5.30. CONFLICTS OF INTEREST.
None of the Seller, the Company, the NY Subsidiary nor any officer,
employee, agent or other Person acting on behalf of the Company or the NY
Subsidiary has, directly or indirectly, given or agreed to give any money, gift
or similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any Governmental Entity or
other Person who was, is, or may be in a position to help or hinder the business
of the Company or the NY Subsidiary (or assist in connection with any actual or
proposed transaction)
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that (i) might subject the Company or the NY Subsidiary to any damage or penalty
in any Proceeding, (ii) if not given in the past, would have resulted in a
Material Adverse Change to the Company and NY Subsidiary (taken as a whole) or
(iii) if not continued in the future, could reasonably be expected to result in
a Material Adverse Change. There is not now, and there has never been, any
employment by the Company or the NY Subsidiary of, or, to the Best Knowledge of
the Seller, beneficial ownership in the Company or the NY Subsidiary by, any
governmental or political official in any jurisdiction in which the Company or
the NY Subsidiary has conducted or proposes to conduct business.
5.31. REIMBURSEMENT ACCOUNTING
(a) The Company is entitled to be and has been treated as a "chain"
organization for Medicare reimbursement purposes, and has been treated
consistently on that basis for the last five fiscal years.
(b) Except as set forth on Schedule 5.31(b), neither the Company's home
office cost report nor the cost reports for any of its individual branches for
the last five fiscal years includes any costs which are not allowable in
accordance with the SSA, regulations thereunder, Provider Reimbursement Manual,
and other program instructions.
(c) For each of the last five fiscal years, the Company has directly
allocated certain home office costs to chain components and allocated certain
other costs to chain components on a functional basis within the meaning of
Provider Reimbursement Manual Section 2150.3B. and C. Such allocations comply
with the SSA, regulations thereunder, Provider Reimbursement Manual and other
program instructions. For each of the last five fiscal years, the Company has
accurately created and maintained records sufficient to support such
allocations, as required by the SSA, 42 C.F.R. ss. 413.20 and .24, and Provider
Reimbursement manual xx.xx. 2304 and 2304.1.
(d) Prior to its cost report for fiscal year 1995, the Company's home
office and individual branch office Medicare intermediaries accepted the
Company's direct and functional allocations of costs except to the extent
disclosed by adjustments shown on the notice of program reimbursement statements
for each provider office and the home office.
(e) To the Best Knowledge of the Seller, except as disclosed on
Schedule 5.31(e), no Medicare intermediary has reopened or plans to reopen any
cost report in respect of which a final notice of program reimbursement has
already been received.
5.32. MEDICARE AND MEDICAID PARTICIPATION.
(a) The Company and each Subsidiary that bills the Medicare program
with respect to a billing location is a "home health agency" within the meaning
of SSA sec. 1861(o) for such location and is in compliance with the conditions
of participation imposed by the SSA and the Secretary of Health and Human
Services. Each of the Company (or Subsidiary, as the case may be) has a Medicare
provider agreement and a Medicare provider number in force covering each agency
at which the Company (or Subsidiary, as the case may be) accepts Medicare
patients.
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(b) Each of the Company and the NY Subsidiary or a Subsidiary thereof
has a Medicaid provider agreement and Medicaid provider number in force in each
state in which the Company (or Subsidiary, as the case may be) bills the
Medicaid program.
5.33. PHYSICIAN RELATIONSHIPS.
Except as disclosed on Schedule 5.33, neither the Company nor any
Subsidiary has any "financial relationship" with any "referring physician" or an
immediate family member of such physician, within those terms' meanings under 42
U.S.C sec. 1395nn.
5.34. OTHER RELATIONSHIPS.
Neither the Company nor any Subsidiary has any lease, services
agreement or other arrangement with any hospital, physician or any other entity
that violates SSA sec. 1128B(b).
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants as of the date hereof and as of
the Closing Date as follows:
6.1. ORGANIZATION; CORPORATE AUTHORITY.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
all requisite power and authority (corporate or otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted and as presently proposed to be conducted. The Seller has been
furnished with true, correct and complete copies of the certificate of
incorporation (the "Purchaser's Charter") and by-laws (the "Purchaser's
By-laws"), of Purchaser in each case as amended and in effect on the date
hereof.
6.2. CORPORATE ACTION; AUTHORITY; NO CONFLICT.
Purchaser has all requisite power and authority (corporate and
otherwise) to execute, deliver and perform its obligations under this Agreement
and each Related Document to which it is or will be a party and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Related Document to which it
is or will be a party, and performance of its obligations hereunder and
thereunder have been duly and validly authorized by all necessary corporate
action on the part of Purchaser and its shareholders. This Agreement and each
Related Document to which it is or will be a party has been or upon the
execution thereof will be, duly and validly executed and delivered by Purchaser,
and constitutes, or upon its execution and delivery will constitute, a valid and
binding obligation of Purchaser, enforceable against it in accordance with its
terms. Neither
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Purchaser's execution and delivery of, and/or performance of its obligations
under, this Agreement and each Related Document to which it is or will be a
party, nor the consummation of the transactions contemplated hereby and thereby
shall (i) conflict with or result in any violation or breach of, any of the
terms, conditions or provisions of, or constitute (with due notice or lapse of
time, or both) a default under, or give rise to any right of termination,
cancellation or acceleration or result in the creation of any Encumbrance upon
any of the assets or properties of Purchaser under provision of Purchaser's
Charter or Purchaser's By-laws or any Contract to which Purchaser is a party or
by which it or any of its assets or properties is or may be bound or (ii)
violate, or result in the creation of an Encumbrance upon any of Purchaser's
assets as a result of, any Law's applicable to Purchaser or any of its
properties or assets.
6.3. BROKERS.
Purchaser has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby.
6.4. CONSENTS.
No consent, approval, Order or authorization of, or registration,
declaration or filing with or notification to, any Governmental Entity or any
third party is required in connection with the execution, delivery and
performance by Purchaser of this Agreement or the Related Documents to which
Purchaser is or will be a party or the consummation of the transactions
contemplated hereby or thereby.
6.5. FINANCING.
The Purchaser is seeking approximately $50 million of debt financing
(the "Financing") necessary to finance the transactions contemplated hereby
through the assistance of CIBC, Inc. and CIBC Xxxxx Xxxxx Securities Corp.
(collectively, the "Underwriters"). As of the date hereof, the Purchaser has not
been notified by the Underwriters that such debt financing cannot be raised.
6.6. INVESTMENT INTENT.
The Purchaser is acquiring the Shares for its account and not with a
view to their distribution within the meaning of Section 2(11) of the Securities
Act.
6.7. XXXX-XXXXX XXXXXX REPRESENTATIONS.
(a) At Closing, Purchaser shall be an "ultimate parent entity," as
defined by 16 C.F.R. ss. 801.1.
(b) Purchaser does not have a regularly prepared balance sheet.
Purchaser does not as of the date hereof, and will not as of the Closing Date,
have assets (other than assets
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used as consideration for the Shares or to pay expenses associated
with the transactions contemplated hereby or cash) with a value greater than
$10,000,000.
SECTION 7. COVENANTS AND AGREEMENTS.
7.1. ACCESS TO RECORDS AND PROPERTIES OF THE COMPANY AND THE NY
SUBSIDIARY.
(a) From and after the date hereof until the Closing (or the Second
Closing Date with respect to the NY Subsidiary), provided that there is no
unreasonable disruption to the Business in connection therewith, the Seller
shall cause the Company and the NY Subsidiary to afford, (i) to the Purchaser,
its potential lenders and other financing sources and their respective
authorized representatives, including accountants, free and full access at all
reasonable times during normal business hours and after reasonable prior notice
to the assets, business, facilities, properties, books, records (including tax
returns filed and in preparation), customers, consultants, and key employees of
or relating to the Company and the NY Subsidiary in order that the Purchaser has
full opportunity to make such investigation as it shall reasonably desire to
make of the affairs of the Company and the NY Subsidiary, and the Company and
the NY Subsidiary and the Seller shall cooperate fully in connection therewith,
and (ii) to the respective independent certified public accountants of the
Purchaser, free and full access at all reasonable times during normal business
hours and after reasonable prior notice to the records of the independent
certified public accountants of the Company or the NY Subsidiary relating to the
Company. The investigation contemplated by this Section 7.1 shall not affect or
otherwise diminish or obviate in any respect any of the representations and
warranties or the indemnification obligations of the Seller contained in this
Agreement.
(b) The Purchaser further agrees not to contact or attempt to contact
any clients of the Seller, the Company or any of the Company's subsidiaries, any
of their franchisees or licensees, or any of their employees or affiliates,
without first notifying the Seller and permitting the Seller to participate in
such contacts.
7.2. CONDUCT OF THE COMPANY AND THE NY SUBSIDIARY.
Except as set forth on Schedule 7.2 and except as may be provided for
pursuant to the Management Agreement, from and after the date hereof until the
earlier of the Closing, or the Second Closing Date in respect of the NY
Subsidiary, or the termination of this Agreement pursuant to Section 10, the
Seller shall cause each of the Company and the NY Subsidiary to:
(a) conduct its business substantially as presently operated and only
in the ordinary course consistent with past practice;
(b) not enter into any transaction other than in the ordinary course of
business, or any transaction which is not at arms-length with unaffiliated third
Persons;
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(c) not dispose of any material assets, except sales of inventories or
other assets in the ordinary course of business;
(d) use commercially reasonable efforts to (i) maintain its business,
assets, relations with present employees, customers and suppliers, licenses and
operations as an ongoing business and preserve its goodwill, in accordance with
past custom and practice and (ii) to satisfy each of the applicable closing
conditions set forth in Section 8 hereof;
(e) not issue or sell any shares of any capital stock or issue or sell
any securities convertible into, exercisable or exchangeable for or options or
warrants to purchase or rights to subscribe for, any shares of any of its
capital stock, or enter into any agreement, contract or other commitment to do
any of the foregoing;
(f) except for intercompany payments in the ordinary course of
business, not declare or pay a distribution on its capital stock (other than
payable in cash prior to Closing or in connection with a dividend of the NY
Shares from the Company to the Seller so that the Seller may sell and deliver
the NY Shares to the Purchaser in accordance with the terms of this Agreement),
not change the number of authorized shares of its capital stock or reclassify,
combine, split, subdivide or redeem or otherwise repurchase any of its capital
stock, or issue, deliver, pledge or encumber any additional capital stock or
other securities equivalent to or exchangeable for capital stock or enter into
any Contract to do any of the foregoing;
(g) not take any action or omit to take any commercially reasonable
action which would result in the representations and warranties contained in
this Agreement and the Related Documents being untrue on the Closing Date other
than such action as shall have been previously agreed to in writing by the
parties hereto; and
(h) delay or postpone the payment of accounts payable and other
obligations and liabilities or accelerate the collection of accounts receivable,
other than in the ordinary course of business consistent with past custom and
practice.
7.3. EFFORTS TO CONSUMMATE.
Subject to the terms and conditions of this Agreement, each party shall
use commercially reasonable efforts to take or cause to be taken all actions and
do or cause to be done all things required under all applicable Laws, in order
to consummate the transactions contemplated hereby. The Purchaser shall use
commercially reasonable efforts to cause the Financing to be obtained on or
prior to Closing.
7.4. NEGOTIATION WITH OTHERS.
From and after the date hereof until the earlier of the Closing or the
Second Closing Date, as applicable, or the termination of this Agreement
pursuant to Section 10, the Seller and the Company and the NY Subsidiary shall
not, and each shall cause its officers, directors, Affiliates, representatives
and agents not to, directly or indirectly, (i) take any action to solicit or
initiate any Acquisition Proposal, (ii) continue, initiate or engage in
negotiations or
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discussions relating to an Acquisition Proposal with, or disclose or provide any
non-public information or Confidential or Proprietary Information (other than in
the ordinary course of business or otherwise required by Law, Order or similar
compulsion) relating to the Company or the NY Subsidiary or any Person other
than the parties hereto and their respective representatives or (iii) enter into
any written or oral agreement or understanding with any Person (other than the
Purchaser) regarding an Acquisition Proposal. If the Seller or the Company or
the NY Subsidiary receives any bona fide unsolicited offer or proposal to enter
into negotiations relating to any Acquisition Proposal, such party shall
promptly notify the Purchaser of such offer or proposal and the general economic
terms of such offer or proposal and shall furnish a copy of any written offer or
proposal thereto.
7.5. NOTICE OF PROSPECTIVE BREACH.
Each party shall immediately notify the other parties in writing upon
the occurrence, or failure to occur, of any event, which occurrence or failure
to occur would be reasonably likely to cause any representation or warranty of
such party that is contained in this Agreement or any Related Document to be
untrue or inaccurate in any material respect at any time from the date of this
Agreement to the Closing as if such representation and warranty were made at
such time.
7.6. PUBLIC ANNOUNCEMENTS.
Each party agrees that, except (i) as otherwise required by Law and
(ii) for disclosure to its respective directors, officers, employees, financial
advisors, potential financing sources, legal counsel, independent certified
public accountants or other agents, advisors or representatives on a
need-to-know basis and with whom such party has a confidential relationship, it
will not issue any reports, statements or releases, in each case pertaining to
this Agreement or any Related Document to which it is a party or the
transactions contemplated hereby or thereby, without the prior written consent
of the Seller and the Purchaser, which consent shall not unreasonably be
withheld or delayed; provided, however, that after reasonable prior notice to
the Purchaser, Seller or Seller's parent may make a public announcement
concerning the execution and delivery by each party of this Agreement.
7.7. COOPERATION REGARDING TAX FILINGS; SECTION 338(h)(10) ELECTION.
The Seller and the Purchaser shall join in making a timely election
under Section 338(h)(10) of the Code (the "Section 338(h)(10) Elections") with
respect to the purchase of both the Shares and the NY Shares pursuant to this
Agreement and shall make similar elections under state and local law to the
fullest extent possible. The Purchaser will be responsible for preparing and
filing all documents and materials necessary in connection with making the
Section 338(h)(10) Elections and any similar elections under state and local
law. The Seller and the Purchaser agree to cooperate with each other in
connection therewith (including, without limitation, signing and returning any
appropriate documents sent to such party for its signature in connection
therewith within 15 days of its receipt of such documents). The Purchaser and
the Seller agree that for purposes of the Section 338(h)(10) Elections, the
assets of the Company, the
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NY Subsidiary and their Subsidiaries will be valued as mutually agreed by the
Purchaser and the Seller prior to the Closing and that the aggregate deemed sale
price will be determined in accordance with the regulations promulgated under
Code ss. 338. The Purchaser and the Seller will file all Tax Returns in a manner
consistent with the Section 338(h)(10) Elections and the valuation of the assets
determined as provided above. The parties hereto agree that all Taxes
attributable to the Section 338(h)(10) Elections are Covered Taxes.
7.8. [Omitted].
7.9. NON-COMPETE; NON-SOLICITATION.
(a) During the Non-Compete Period, the Seller shall and shall cause its
Affiliates not to, directly or indirectly, own, manage, control, participate in,
consult with, render services for, or in any manner engage in or represent any
business within any Restricted Territory that is competitive with the Business
or any product of the Business as such Business is conducted immediately prior
to the Closing Date; provided, however, that the Seller or any of its Affiliates
may own up to 5% of any class of securities of any enterprise if such securities
are listed on any national securities exchange in the United States or the
NASDAQ system.
(b) During the Non-Compete Period, neither the Seller nor the Purchaser
shall not directly or indirectly through another Person (i) induce or attempt to
induce any employee of the other or any Affiliate of the other to leave the
employ of the other or such Affiliate or in any way interfere with the
relationship between the other or any such Affiliate, on the one hand, and any
employee thereof, on the other hand, (ii) hire any person who was an employee of
the other until six months after such individual's employment relationship with
the other or any Affiliate of the other has been terminated or (iii) induce or
attempt to induce any customer, supplier, licensee or other business relation of
the other or any Affiliate to cease doing business with the other or such
Affiliate or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation, on the one hand, and the
other or any Affiliate, on the other hand.
(c) If, at the time of enforcement of this Section 7.9, a court holds
that the restriction stated herein are unreasonable under the circumstances then
existing, the parties agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area. The parties hereto acknowledge that money damages would be an
inadequate remedy for any breach of this Section 7.9. Therefore, in the event of
a breach or threatened breach of this Section 7.9, each of the Purchaser or the
Seller or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions of this Section 7.9 (without
posting a bond or other security).
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7.10. EMPLOYEE PLANS.
The Purchaser and the Seller agree as follows with respect to the
Company Employee Plans:
(a) 401(k) Plan
(i) PGA sponsors the Personnel Group of America, Inc. 401(k)
Plan (the "PGA 401(k) Plan"). The Company and its subsidiaries are
affiliated companies that participate in the PGA 401(k) Plan. The
Seller will cause PGA to provide for the withdrawal of the Company and
its subsidiaries from the PGA 401(k) Plan immediately prior to Closing,
except for the NY Subsidiary as to which the Seller will cause such
withdrawal upon the Second Closing Date. Such withdrawal will provide
that benefits will not accrue under the PGA 401(k) Plan to the eligible
employees of the Company, the NY Subsidiary and their Subsidiaries
after such withdrawal
(ii) The Purchaser agrees that it will adopt or cause the
Company and its Subsidiaries to adopt a 401(k) plan (the "Company
401(k) Plan") as soon as reasonably practicable following the Closing
and that the employees of the Company and its subsidiaries will be
entitled to credit for service with the Company or its subsidiaries
prior to Closing for the purpose of satisfying any eligibility service
requirement and any vesting service requirement under the Company
401(k) Plan.
(iii) The Seller will cause PGA to amend the PGA 401(k) Plan
to allow for the distribution of the account balances of all current
employees of the Company who are participants in the PGA 401(k) Plan in
accordance with the provisions of Code Section 401(k)(10)(A)(iii). Such
distribution from the PGA 401K Plan will occur as soon as reasonably
practicable after the Closing. The Seller will cause PGA to do the same
with respect to the NY Subsidiary following the Second Closing Date.
(b) Non-Qualified Profit Sharing Plan
(i) PGA maintains the Personnel Group of America, Inc.
Non-Qualified Profit Sharing Plan (the "PGA Non-Qualified Plan"). The
Company and its subsidiaries are affiliated companies that participate
in the PGA Non-Qualified Plan. The Seller will cause PGA to provide for
the withdrawal of the Company and its subsidiaries from the PGA
Non-Qualified Plan immediately prior to Closing. Such withdrawal will
provide that benefits will not accrue under the PGA Non-Qualified Plan
to the eligible employees of the Company and its subsidiaries after
such withdrawal.
(ii) The Purchaser agrees that it will adopt or cause the
Company and its subsidiaries to adopt a non-qualified profit sharing
plan that is not less favorable in its entirety to the employees of the
Company and its subsidiaries than the
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PGA Non-Qualified Plan as soon as reasonably practicable following the
Closing and that the eligible employees of the Company and its
Subsidiaries will be entitled to credit for service with the Company
and its subsidiaries prior to the Closing for the purpose of satisfying
any eligibility service requirement and any vesting service requirement
under such plan. The non-qualified profit sharing plan established by
the Purchaser pursuant to this Section 7.11(b)(ii) will assume all of
the PGA Non-Qualified Plan's liability to pay benefits to eligible
employees of the Company and its subsidiaries. The Seller represents
that as of September 28, 1997, the liability to be assumed by the
Purchaser, which has been accrued on the Company's books, is $217,745.
(c) Company Plans. For a period of one year after the
Effective Time, the Purchaser shall, or shall cause each of the Company
and its Subsidiaries to, provide its employees with benefits that in
the aggregate are substantially equivalent to, or no less favorable
than, those provided under the Company Employee Plans (other than any
stock option plans) as in effect on the date hereof.
7.11. CHANGE OF CONTROL AGREEMENTS.
On the Closing Date, the Seller shall assign its rights in the Change
of Control Agreements to the Purchaser and, except as provided below, the
Purchaser shall assume the Liabilities and obligations of the Seller thereunder
that arise by virtue of events occurring subsequent to the Closing Date. The
Seller shall remain liable for the payments under the Change of Control
Agreements that are payable upon the date of, and 90 days after, a "Change of
Control" as defined in such Agreements. The Purchaser and Seller hereby
acknowledges that upon the consummation of the transactions contemplated hereby
that a "Change of Control" shall be deemed to have occurred under each of the
Change of Control Agreements.
7.12. FILINGS.
The Purchaser and the Seller will make or cause to be made all such
filings and submissions under applicable law and regulations as may be required
for the consummation of the transactions contemplated hereunder, including
without limitation any filings required under the Xxxx-Xxxxx-Xxxxxx Act. The
Purchaser and the Seller will cooperate and coordinate with one another in
connection with any such filings or submissions.
SECTION 8. CLOSING CONDITIONS.
8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS.
The respective obligation of each party to consummate the transactions
contemplated hereby is subject to the satisfaction prior to the Closing Date
(and with respect to the NY Subsidiary, the Second Closing Date) of the
following conditions unless waived (to the
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extent such conditions can be waived) by the Company, the Seller, the NY
Subsidiary or Purchaser, as applicable:
(a) Approvals. The authorizations, consents, Orders or approvals of, or
declarations or filings with, or expiration of waiting periods of any
Governmental Entity required to consummate the transaction contemplated hereby
shall have been obtained or made.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other Order issued by any court or
Governmental Entity of competent jurisdiction nor other legal restraint or
prohibition preventing the consummation of the transactions contemplated hereby
shall be in effect.
(c) Actions and Statutes. No action, suit or proceeding shall have been
taken or threatened, and no statute, rule, regulation or Order shall have been
enacted, promulgated or issued with respect to the transactions contemplated by
this Agreement or the Related Documents by any Governmental Entity that would
(i) make the consummation of the transactions contemplated hereby or thereby
illegal or substantially delay the consummation of any material aspect of the
transactions contemplated hereby or thereby or (ii) render any party unable to
consummate the transactions contemplated hereby or thereby.
8.2. CONDITIONS TO OBLIGATIONS OF THE PURCHASER.
The obligations of the Purchaser under this Agreement are subject to
the satisfaction of the following conditions unless waived (to the extent such
conditions can be waived) by the Purchaser:
(a) Accuracy of Representations and Warranties. All representations and
warranties made by the Seller in this Agreement and the Related Documents shall
be true and correct in all material respects as of the date hereof and as of the
Closing Date with the same effect as if such representations and warranties had
been made at and as of the Closing Date and the Purchaser shall have received a
certificate to that effect signed by the Seller.
(b) Performance of Obligations of the Company and the Seller. The
Company, the NY Subsidiary and the Seller shall have performed in all material
respects all obligations and covenants required to be performed by it under this
Agreement and the Related Documents as of the Closing Date (except for the
covenants set forth in Section 1.3, which shall have been performed in their
entirety), and the Purchaser shall have received a certificate to that effect
signed by the Seller.
(c) Authorization. All action necessary to authorize the execution,
delivery and performance of this Agreement and the Related Documents by the
Company and the Seller and the consummation of the transactions contemplated
hereby and thereby, including, without limitation, the requisite shareholder
approvals, shall have been duly and validly taken by the Company and the Seller,
and the Company and the Seller shall have the full power and right to consummate
the transactions contemplated hereby and thereby on the terms provided herein
and therein.
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(d) Opinion of the Seller's Counsel. The Purchaser shall have received
opinions of counsel for the Seller (including an opinion from State of Texas
counsel), dated the Closing Date (and with respect to the NY Subsidiary, the
Second Closing Date), in form and substance reasonably satisfactory to the
Purchaser.
(e) Consents and Approvals. The Purchaser shall have received duly
executed copies of all consents and approvals required for or in connection with
the execution and delivery by the Company and the Seller of this Agreement and
each of the Related Documents to which any of them may be parties, the
consummation of the transactions contemplated hereby and thereby, and the
continued conduct of the Business as previously conducted (including any
material consent identified on Schedule 5.3), in form and substance reasonably
satisfactory to the Purchaser and its counsel.
(f) Franchisee/Licensee Permits. Seller shall have delivered evidence
reasonably satisfactory to the Purchaser that each of the Company's Franchisees
and Licensees has all Permits necessary for the operation of its "Nursefinders"
business.
(g) Financing. The Purchaser shall have obtained, on terms and
conditions reasonably satisfactory to the Purchaser, debt financing of not less
than $50,000,000 to consummate the transactions contemplated hereby.
(h) Absence of Material Adverse Change. Since the Latest Balance Sheet
Date, there shall have been no Material Adverse Change in the Business.
(i) Related Documents. Each of the following documents (each, a
"Related Document," and collectively, the "Related Documents") shall have been
executed and delivered by the parties thereto other than the Purchaser and the
transactions contemplated thereby to be completed at or prior to the Closing
substantially consummated or effected, as the case may be, in accordance with
the terms thereof:
(1) Employment Agreements. Each of Xxxxxxx X. Xxxxxxxx and
Xxxx Xxxxxx shall have executed and delivered to the Purchaser
employment agreements with the Company substantially in the forms of
Exhibit A hereto (the "Employment Agreements");
(2) Subscription Agreement. Each member of the Key Management
Personnel and Purchaser shall have executed and delivered a
subscription agreement substantially in the form attached as Exhibit B
hereto (the "Subscription Agreement") pursuant to which the Key
Management Personnel shall invest in the aggregate not less than
$250,000 in cash in the Purchaser at the same per share price as
Atlantic Medical Capital, L.P. and CIBC Wood Gundy Ventures, Inc.
pursuant to such Subscription Agreement; and
(j) Seller Certificates. Each of the following certificates shall have
been executed and/or delivered, as the case may be, by the Person who or which
is the subject thereof:
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(i) a certificate of the Secretary of the Seller, dated as of
the Closing Date, certifying (x) that true and complete copies of the
Company's Charter and the Company's By-laws as in effect on the Closing
Date are attached thereto, (y) as to the incumbency and genuineness of
the signatures of each officer of such Person executing this Agreement
and the Related Documents on behalf of such Person; and (z) the
genuineness of the resolutions (attached thereto) of the board of
directors or similar governing body of the Company authorizing the
execution, delivery and performance of this Agreement and the Related
Documents to which the Company is a party and the consummation of the
transactions contemplated hereby and thereby (same shall be provided
with respect to the NY Subsidiary in connection with the Second Closing
Date);
(ii) certificates dated within 15 days of the Closing Date of
the secretaries of state of the states in which the Company is
organized and qualified to do business dated as of the Closing Date,
certifying as to the good standing of the Company (same shall be
provided with respect to the NY Subsidiary in connection with the
Second Closing Date); and
(iii) a certificate signed by the Seller, dated as of the
Closing Date, and certifying as of such date to (A) the accuracy in all
material respects of the representations and warranties of the Seller
contained herein, as contemplated by Section 8.2(a) hereof, and (B) the
performance in all material respects of the covenants of the Company
and the Seller contained herein, as contemplated in Section 8.2(b)
hereof (same shall be provided with respect to the NY Subsidiary in
connection with the Second Closing Date).
(k) NY Subsidiary Management Agreement. The NY Subsidiary and the
Company shall have entered a management agreement (the "Management Agreement")
in form and substance reasonably acceptable to the parties and in accordance
with applicable rules and regulations of the State of New York.
(l) NY Subsidiary. The Purchaser shall not be obligated to purchase the
NY Shares if the Second Closing Date does not occur on or before one year from
the date hereof (as such date may be extended pursuant to Section 1.1). If the
Second Closing Date does not occur on or before such time, the Purchaser shall
be entitled to the return of the NY Purchase Price from the Escrow Agent and the
Seller shall be entitled to the return of the NY Shares from the Escrow Agent
and neither the Purchaser nor the Seller shall have any further obligations
hereunder with respect to the NY Subsidiary (except with respect to any breach
of this Agreement).
8.3. CONDITIONS TO OBLIGATIONS OF THE SELLER.
The obligations of the Seller under this Agreement are subject to the
satisfaction of the following conditions unless waived (to the extent such
conditions can be waived) by the Seller:
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(a) Accuracy of Representations and Warranties. All representations and
warranties made by the Purchaser in this Agreement and the Related Documents
shall be true and correct in all material respects as of the date hereof and at
and as of the Closing Date with the same effect as if such warranties and
representations had been made as of the Closing Date, and the Company and the
Seller shall have received a certificate to that effect signed by the Purchaser
and by a principal executive officer of the Purchaser.
(b) Performance of Obligations of the Purchaser. The Purchaser shall
have performed in all material respects all obligations and covenants required
to be performed by it under this Agreement and the Related Documents prior to or
as of the Closing Date and the Company and the Seller shall have received a
certificate to that effect signed by the Purchaser and by a principal executive
officer of the Purchaser.
(c) Authorization. All action necessary to authorize the execution,
delivery and performance of this Agreement and the Related Documents by the
Purchaser and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the requisite shareholder approvals,
shall have been duly and validly taken and the Purchaser shall have full power
and right to consummate the transactions contemplated hereby and thereby on the
terms provided herein and therein.
(d) Related Documents. Each of the Related Documents shall have been
executed and/or delivered by the parties thereto other than the Seller and the
transactions contemplated thereby to be completed at or prior to the Closing
shall have been substantially consummated or effected, as the case may be, in
accordance with the terms thereof.
(e) Purchaser Certificates. Each of the following certificates shall
have been executed and/or delivered, as the case may be, by the Person who or
which is the subject thereof:
(i) a certificate of the secretary of Purchaser, dated as of
the Closing Date, certifying (i) that true and complete copies of
Purchaser's Charter and Purchaser's By-laws as in effect on the Closing
Date are attached thereto, (ii) as to the incumbency and genuineness of
the signatures of each officer of such Person executing this Agreement
and the Related Documents on behalf of Purchaser; and (iii) the
genuineness of the resolutions (attached thereto) of the board of
directors or similar governing body of Purchaser authorizing the
execution, delivery and performance of this Agreement and the Related
Documents to which Purchaser is a party and the consummation of the
transactions contemplated hereby and thereby;
(ii) certificates dated within fifteen days of the Closing
Date of the secretaries of state of the states in which Purchaser is
organized or qualified to do business dated as of the Closing Date,
certifying as to the good standing of Purchaser; and
(iii) a certificate signed by a principal executive officer of
Purchaser dated as of the Closing Date, and certifying as to (A) the
accuracy of the
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representations and warranties of the Purchaser contained herein, as
contemplated by Section 8.3(a) hereof and (B) the performance of the
covenants of the Purchaser contained herein, as contemplated in Section
8.3(b) hereof.
(f) Opinion of the Purchaser's Counsel. The receipt by Seller of an
opinion of counsel to the Purchaser, dated the Closing Date, in form and
substance reasonably satisfactory to the Seller.
SECTION 9. INDEMNIFICATION.
9.1. INDEMNIFICATION GENERALLY; ETC.
(a) Subject to the further terms of this Section 9, the Seller agrees
to indemnify the Purchaser Indemnified Persons for, and hold them harmless from
and against, any and all Purchaser Losses arising from or in connection with any
of the following:
(i) the inaccuracy or breach of any representation or warranty
of the Seller contained herein or in any certificate delivered by the
Seller relating thereto delivered in connection herewith; and
(ii) the breach of any agreement or covenant of the Seller or
Company contained in this Agreement.
(b) Subject to the further terms of this Section 9, the Purchaser
agrees to indemnify the Seller Indemnified Persons for, and hold them harmless
from and against, any and all Seller Losses arising from or in connection with
any of the following:
(i) the inaccuracy or breach of any representation or warranty
of Purchaser contained herein or any certificate delivered by the
Purchaser in connection herewith at or before the Closing (or any facts
or circumstances constituting any such untruth, inaccuracy or breach);
(ii) the breach of any agreement or covenant of the Purchaser
contained in this Agreement; and
(iii) Liabilities of the Company (except for any such
Liabilities for which the Purchaser is entitled to indemnification
hereunder).
9.2. ASSERTION OF CLAIMS.
No claim shall be brought for a breach of a representation or warranty
under Section 9.1 hereof unless the Indemnified Persons, or any of them, at any
time prior to the applicable Survival Date, give the Indemnifying Persons (a)
written notice of the existence of any such claim, specifying the nature and
basis of such claim and the amount thereof, to the extent
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known or (b) written notice pursuant to Section 9.3 of any Third Party Claim (as
hereinafter defined), the existence of which might give rise to such a claim.
Upon the giving of such written notice as aforesaid, the Indemnified Persons, or
any of them, shall have the right to commence legal proceedings subsequent to
the Survival Date for the enforcement of their rights under Section 9.1.
9.3. NOTICE AND DEFENSE OF THIRD PARTY CLAIMS.
The obligations and liabilities of an Indemnifying Person with respect
to Losses resulting from the assertion of liability by third parties (each, a
"Third Party Claim") shall be subject to the following terms and conditions:
(a) The Indemnified Persons shall promptly give written notice to the
Indemnifying Persons of any Third Party Claim which might give rise to any Loss
by the Indemnified Persons, stating the nature and basis of such Third Party
Claim, and the amount thereof to the extent known; provided, however, that no
delay on the part of the Indemnified Persons in notifying any Indemnifying
Persons shall relieve the Indemnifying Persons from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Person thereby
is prejudiced by the delay. Such notice shall be accompanied by copies of all
relevant documentation with respect to such Third Party Claim, including,
without limitation, any summons, complaint or other pleading which may have been
served, any written demand or any other document or instrument.
(b) If the Indemnifying Persons shall acknowledge in a writing
delivered to the Indemnified Persons that such Third Party Claim is properly
subject to their indemnification obligations hereunder, then the Indemnifying
Persons shall have the right to assume the defense of any Third Party Claim at
their own expense and by their own counsel, which counsel shall be reasonably
satisfactory to the Indemnified Persons; provided, however, that the
Indemnifying Persons shall not have the right to assume the defense of any Third
Party Claim, notwithstanding the giving of such written acknowledgment, if (i)
the Indemnified Persons shall have been advised by counsel that there are one or
more legal or equitable defenses available to them which are different from or
in addition to those available to the Indemnifying Persons, and, in the
reasonable opinion of the Indemnified Persons, counsel for the Indemnifying
Persons could not adequately represent the interests of the Indemnified Persons
because such interests could be in conflict with those of the Indemnifying
Persons, (ii) such action or proceeding involves, or could have a material
effect on, any material matter beyond the scope of the indemnification
obligation of the Indemnifying Persons or (iii) the Indemnifying Persons shall
not have assumed the defense of the Third Party Claim in a timely fashion.
(c) If the Indemnifying Persons shall assume the defense of a Third
Party Claim (under circumstances in which the proviso to the first sentence of
Section 9.3(b) is not applicable), the Indemnifying Persons shall not be
responsible for any legal or other defense costs subsequently incurred by the
Indemnified Persons in connection with the defense thereof. If the Indemnifying
Persons do not exercise their right to assume the defense of a Third Party Claim
by giving the written acknowledgment referred to in Section 9.3(b), or are
otherwise restricted from so assuming by the proviso to the first sentence of
Section 9.3(b), the Indemnifying Persons shall
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nevertheless be entitled to participate in such defense with their own counsel
and at their own expense. If the defense of a Third Party Claim is assumed by
the Indemnified Persons pursuant to clause (i) or (ii) of the proviso of Section
9.3(b), the Indemnified Persons shall not be entitled to settle such Third Party
Claim without the prior written consent of the Indemnifying Persons, which
consent shall not be unreasonably withheld or delayed.
(d) If the Indemnifying Persons exercise their right to assume the
defense of a Third Party Claim, (i) the Indemnified Persons shall be entitled to
participate in such defense with their own counsel at their own expense and (ii)
the Indemnifying Persons shall not make any settlement of any claims without the
written consent of the Indemnified Persons, which consent shall not be
unreasonably withheld or delayed.
9.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Subject to the further provisions of this Section 9.4, the
representations and warranties contained in this Agreement or in any certificate
or other writing delivered in connection with this Agreement shall survive the
Closing until the date 18 months after the Closing Date; provided, however, that
(i) the representations and warranties contained in Sections 4.1, 4.2(a) and
(b), the first sentence of Section 5.1, the first two sentences in Section 5.2,
5.4, 6.1, 6.2 and 6.3 shall survive indefinitely; (ii) the representations and
warranties contained in Sections 5.9 and 5.18 shall survive the Closing Date
until the expiration of the respective statutes of limitations for Third Party
Claims applicable to the matters covered thereby; (iii) the representations and
warranties contained in Section 5.21 shall survive the Closing Date until the
third anniversary of the Closing Date; and (iv) the representations and
warranties contained in Sections 5.19, 5.20, 5.31 and 5.32 shall survive the
Closing Date until the fifth anniversary thereof. The covenants and other
agreements of the parties contained in this Agreement shall survive the Closing
Date until they are otherwise terminated by their terms. For convenience of
reference, the date upon which any representation or warranty and covenants
contained herein shall terminate, if any, is referred to herein as the "Survival
Date".
(b) From and after the Closing, the Seller shall have no recourse
against the Company for any breach of any representation, warranty, covenant or
agreement of the Company set forth in this Agreement or in any certificate or
other writing delivered in connection with this Agreement.
9.5. LIMITATIONS ON INDEMNIFICATION.
(a) Indemnity Baskets for the Seller. The Purchaser Indemnified Persons
shall not have the right to be indemnified for breaches of representations and
warranties pursuant to Section 9.1(a)(i) unless and until the Purchaser
Indemnified Persons shall have incurred on a cumulative basis aggregate Losses
in an amount exceeding $850,000, in which event the right to be indemnified
shall apply only to the extent such Losses exceed $850,000; provided, however,
that in no event shall the limitations set forth in this Section 9.5(a) apply
with respect to the representations and warranties set forth in Sections 4.1,
4.2(a) and (b), the first sentence of Section 5.1, the first two sentences in
Section 5.2, 5.4, 5.9, 5.31, and any claim arising under the
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Fraud and Abuse Laws that is the type of claim that would be reasonably likely
to affect the enterprise value of the Business.
(b) Indemnity Limitations for the Seller. Except as provided herein,
the sum of all Losses pursuant to which indemnification is payable by the Seller
pursuant to Section 9.1(a)(i) shall not exceed $13,050,000; provided, however,
(i) Losses pursuant to which indemnification is payable by the Seller pursuant
to Section 9.1(a)(i) in connection with any breach of Sections 5.19, 5.20, 5.31
and 5.32 shall not exceed the sum of such amount plus an additional $9,450,000,
and (ii) that in no event shall the limitations set forth in this Section 9.5(b)
apply with respect to the representations and warranties set forth in Sections
4.1, 4.2(a) and (b), the first sentence of Section 5.1, the first two sentences
of Sections 5.2, 5.4 and 5.9 or with respect to any claim arising out of any
alleged or actual breach of the Fraud and Abuse Laws that is the type of claim
that would be reasonably likely to affect the enterprise value of the Business.
9.6. INDEMNITY FOR BREACH OF REIMBURSEMENT ACCOUNTING REPRESENTATIONS
AND WARRANTIES.
(a) As of September 28, 1997, the Company's balance sheet reflected net
Medicare reimbursement receivables for the listed fiscal years (the "Medicare
Receivables") as follows: 1995 - $519,869.61; 1996 - $856,787.00; 1997 -
$1,100,000. The Seller agrees to indemnify and hold harmless the Purchaser
Indemnified Persons for any amount that is paid in respect of fiscal year 1995,
1996 or 1997 (a "Medicare Repayment") by the Company to Medicare in respect of
any final notice of program reimbursement from Medicare that is in excess of the
amounts listed above for each such fiscal year, giving the Seller credit for any
Medicare Receivables collected by the Company or offset by Medicare in respect
of any such fiscal year between September 28, 1997 and the date of such Medicare
Repayment.
(i) Example: If after September 28, 1997 and prior to the
final notice of program reimbursement with respect to 1995, the Company
collects $300,000 of the 1995 Medicare Receivable, and in the final
notice of program reimbursement, Medicare offsets against the remaining
$220,000 Medicare Receivable and the Company must reimburse Medicare
$250,000, the Seller would not be required to reimburse the Company any
amount. If, however, after offsetting such remaining $220,000 Medicare
Receivable, the Company is required to reimburse Medicare $400,000, the
Seller would reimburse the Company the $100,000 that is in excess of
the $300,000 prior collections on the 1995 Medicare Receivable.
(b) Upon receipt by a Purchaser Indemnified Person of a notice of
program reimbursement giving rise to a claim for indemnification by Purchaser
Indemnified Persons and the Seller shall comply with the following:
(i) Any claim for indemnity in accordance with this section
shall be made within 60 days from the receipt of the applicable notice
of program reimbursement.
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(ii) Upon payment in full by the Seller of the amount of
indemnity sought under this Section 9.6, the Seller shall have the
right, at its option and at its expense, to require the Purchaser
Indemnified Persons to file and prosecute a request for hearing with
the Provider Reimbursement Review board (or such other body as has
jurisdiction) and thereafter to the Health Care Financing Administrator
and to Federal court with respect to the cost report which gave rise to
the notice of program reimbursement which in turn gave rise to the
claim for indemnity. The Seller shall have the right to choose counsel
and a consultant in each case reasonably acceptable to the Purchaser
Indemnified Persons for the prosecution of such claim except that if
the Purchaser Indemnified Persons are pursuing an appeal for the same
cost report but in respect of issues for which no indemnity was sought,
then the Purchaser Indemnified Person shall have the exclusive right to
engage counsel and manage the prosecution of the reimbursement appeal.
In that event, the Seller, if it has honored the claim for indemnity,
shall have the right to instruct the Purchaser Indemnified Person to
include in such appeal the issues that gave rise to the claim for
indemnity, and the Seller shall then be obligated to pay a share of the
legal fees and other expenses associated with the costs of such appeal,
reflective of the proportionate effort required to pursue the issues
directed by the Seller. To the extent that the appeal is ultimately
successful on the issues directed by the Seller, the Seller shall be
entitled to recover amounts previously paid to the Purchaser
Indemnified Persons as indemnity in respect of such issues.
(c) The Seller's obligations under this Section 9.6 shall survive until
the fifth anniversary of the Closing Date.
9.7. RESPONSIBILITY FOR TAXES AND RETURNS
(a) Covered Taxes shall be the sole responsibility of Seller. For
purposes of Section 9.7, (i) the term "Company" shall include both Nursefinders,
Inc. and the NY Subsidiary, and (ii) the term "Closing Date," in addition to its
normal meaning under this Agreement, shall mean, with respect to the NY
Subsidiary, the Second Closing Date as defined in Section 1.1. If any tax
authority seeks to collect a Covered Tax from the Company or Purchaser, Seller
shall indemnify and hold harmless such Person from which such Covered Tax is
sought to be collected from any liability in respect of such Covered Tax
incurred in connection therewith, including in connection with any Tax
Proceeding (as defined in Section 9.9(a)) relating to such Covered Tax.
(b) The extent to which Taxes of the Company for a taxable period that
includes but does not end on the close of business on the Closing Date are
treated as Taxes for the period ending on the close of business on the Closing
Date shall be determined as follows: (i) Taxes measured in whole or in part by
net or gross income and Taxes relating to specific transactions shall be
apportioned on the basis of a closing of the books of the entity liable for such
Tax at the close of business on the Closing Date; and (ii) all other Taxes shall
be prorated according to the ratio of the number of days in such taxable period
prior to and including the Closing Date to the number of days in such taxable
period. If Seller and Purchaser are unable to
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resolve any dispute regarding the application of the principles of this Section
9.7(b) or 9.7(e), the matter shall be referred for determination as promptly as
possible to an accounting firm, which shall meet the requirements for the
Accounting Firm as set forth in Section 3.1(c), whose determination shall be
binding on the parties in the absence of fraud.
(c) For purposes of Federal income taxes, the Company shall close its
books as of the close of business on the Closing Date. All items of income,
deduction or credit for the period ending on the Closing Date (including the
items resulting from the deemed sale referred to in Section 7.7) shall be
reported by Seller on its consolidated Federal income tax return for its taxable
year ended December 28, 1997. All such items for the period beginning on the day
after the Closing Date shall be reported on the consolidated Federal income tax
return of the affiliated group that includes the Purchaser.
(d) For purposes of any state or local income tax with respect to which
it is required or permitted to do so, the Company shall close its books in a
manner comparable to that described in Section 9.7(c) above.
(e) With respect to a return of the Company that is due after the
Closing Date that includes a Covered Tax, not less than thirty (30) days before
the due date of such return, Purchaser shall furnish Seller a copy of the return
and a statement of the amount of such Covered Tax. Such returns shall be
prepared consistently with the prior returns of the Company to the extent
permitted by law. If Seller agrees with Purchaser's statement, Seller shall pay
such amount to Purchaser not later than five (5) days before the due date of the
return. If Seller does not agree with Purchaser's statement, Seller shall give
(i) notice to Purchaser not later than ten (10) days before the due date of the
return of the specific reason or reasons Seller does not so agree and (ii) a
statement of the amount of Tax that in Seller's opinion is a Covered Tax. In
such case, Seller and Purchaser promptly shall confer and attempt to resolve the
disagreement, and, not later than five (5) days before the due date of the
return, Seller shall pay to Purchaser any portion of the amount set forth in
Purchaser's statement with which Seller agrees. Nothing in this Section 9.7(e)
shall relieve Seller of responsibility for a Covered Tax because Seller has
disagreed with Purchaser's statement, and any amount that ultimately is
determined to be a Covered Tax pursuant to the preceding provisions of Section
9.7(b) and/or (e) but initially was paid by Purchaser or Company shall bear
interest at the rates in effect from time to time under Section 6621(a)(1) of
the Code from the date the amount actually was paid by Purchaser or the Company
until the date that Seller pays Purchaser for such Covered Tax.
9.8. AMENDED RETURNS; CERTAIN TAX REFUNDS
(a) For purposes of Section 9.8, (i) the term "Company" shall include
both Nursefinders, Inc. and the NY Subsidiary, and (ii) the term "Closing Date,"
in addition to its normal meaning under this Agreement, shall mean, with respect
to the NY Subsidiary, the Second Closing Date as defined in Section 1.1. After
the Closing, except as provided in the following sentence, Seller shall not file
any claim for refund or credit, or an amended return claiming a refund or
credit, of Tax paid by the Company. The preceding sentence shall not restrict
Seller from (i) filing a claim for refund or credit, or filing an amended return
claiming a refund or credit, of an income tax paid with respect to a
consolidated, combined or unitary tax return of Seller,
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notwithstanding the fact that the Company is included in such a return, or (ii)
filing with any state or local taxing authority a report required by law or
federal changes.
(b) If Seller has complied with the provisions of Section 9.8(a) and,
as a result of an audit of a Tax return of the Company for a taxable period
ending on or prior to the close of business on the Closing Date or a filing of a
report of federal changes for such period, the Company receives a refund of Tax
paid by it for such period, Purchaser shall pay to Seller, as an increase of the
Purchase Price, an amount equal to the amount of such refund (including any
interest received with respect to such refund) minus all Taxes payable by the
Company or any consolidated, combined or unitary group that includes the Company
as a result of such refund. If the amount of such refund subsequently is
adjusted by a taxing authority, Seller shall pay to Purchaser, or Purchaser
shall return to Seller, as an adjustment of the Purchase Price, an amount
necessary to reflect such adjustment.
(c) If the Company recognizes a loss or becomes entitled to a credit
with respect to a period beginning after the Closing Date that is carried back
to a taxable year during which such Company was included in a consolidated,
combined or unitary tax return of Seller or one or more affiliates of Seller,
Seller will pay to Purchaser, as a reduction of the Purchase Price, an amount
equal to the amount of Tax refund or reduction of Tax otherwise payable obtained
by Seller or such affiliate as a result of such carryback, minus all Taxes
payable by Seller or such affiliate as a result of such refund or reduction. If
the amount of such refund or reduction subsequently is adjusted by a taxing
authority, Seller shall pay to Purchaser, or Purchaser shall return to Seller,
as an adjustment of the Purchase Price, an amount necessary to reflect such
adjustment.
(d) Seller shall not be required to indemnify Purchaser with respect to
any Tax shown due on an amended return filed after the Closing Date by Purchaser
or Company unless such amended return is required by law.
9.9. TAX PROCEEDINGS
(a) For purposes of Section 9.9, (i) the term "Company" shall include
both Nursefinders, Inc. and the NY Subsidiary, and (ii) the term "Closing Date,"
in addition to its normal meaning under this Agreement, shall mean, with respect
to the NY Subsidiary, the Second Closing Date as defined in Section 1.1. In the
case of any audit, examination or other Proceeding ("Tax Proceeding") with
respect to Taxes for which the Seller, on the one hand, or the Purchaser, on the
other hand, is responsible under the terms of this Agreement, the Purchaser or
the Seller, as the case may be, shall promptly inform the other party in writing
of such Tax Proceeding. The Seller shall have the rights to control any such Tax
Proceedings with respect to Covered Taxes, and to initiate any claim for refund,
file any amended return or take any other action which it deems appropriate with
respect to Covered Taxes, provided, however, that the Seller shall consult with
the Purchaser with respect to any such claims, filings, amended returns or Tax
Proceedings that may affect the Purchaser for the taxable periods ending after
the Closing Date; provided, further, that the Seller shall not file any such
claims, amended returns or enter into any final settlement or closing agreement
that may materially increase Taxes of the Purchaser for which it is responsible
under the terms of this Agreement without the consent of the Purchaser, which
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consent shall not be unreasonably withheld. Except as provided in the preceding
sentence with respect to Covered Taxes, the Purchaser shall have the right to
control any Tax Proceedings, and to initiate any claim for a refund, file any
amended return or take any other action which it deems appropriate with respect
to Taxes for taxable periods ending after the Closing Date, provided, however,
that the Purchaser shall consult with the Seller with respect to any Tax
Proceeding that may affect the Seller's liability for Covered Taxes; provided,
further, that the Purchaser shall not enter into any final settlement or closing
agreement that may materially increase Taxes of the Seller without the consent
of the Seller, which consent shall not be unreasonably withheld.
(b) Each of Purchaser and Seller will afford the other and its
attorneys and agents reasonable access to all documents and other materials
pertaining to such claim the defense thereof. Neither Purchaser nor Seller shall
be required to disclose to the other a consolidated, combined or unitary tax
return including a corporation other than the Company, but if information with
respect to the Company contained in such a return is relevant to a Tax
Proceeding, such information shall be furnished as a pro forma separate return
of the Company.
9.10. MISCELLANEOUS TAX MATTERS
(a) For purposes of Section 9.10, (i) the term "Company" shall include
both Nursefinders, Inc. and the NY Subsidiary, and (ii) the term "Closing Date,"
in addition to its normal meaning under this Agreement, shall mean, with respect
to the NY Subsidiary, the Second Closing Date as defined in Section 1.1. The
affiliated group of which Seller is a member has not elected or applied for
permission, and shall not elect or apply for permission, to discontinue filing
consolidated federal income tax returns effective on or prior to the Closing
Date.
(b) After the Closing Date, Purchaser shall cause the Company to elect,
where permitted by law, to carry forward any net operating loss or other item
arising after the Closing Date that would, absent such election, be carried back
to a taxable period of the Company ending on or before the Closing Date in which
the Company was included in a consolidated, combined or unitary tax return of
Seller or an affiliate of Seller.
SECTION 10. TERMINATION; EFFECT OF TERMINATION.
10.1. TERMINATION.
This Agreement may be terminated at any time prior to the Closing by:
(a) the mutual written consent of the Purchaser and the Seller; or
(b) the Purchaser, if there has been a material breach by the Seller of
any representation, warranty, covenant or agreement set forth in this Agreement
which is not cured by the Seller within 10 days after notice thereof; or
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(c) the Seller, if there has been material breach by the Purchaser of
any representation, warranty, covenant or agreement set forth in this Agreement
which is not cured by the Purchaser within 10 days after notice thereof; or
(d) the Purchaser, if the conditions set forth in Sections 8.1 or 8.2
shall not have been satisfied or waived by December 28, 1997; or
(e) the Seller, if the conditions set forth in Sections 8.1 or 8.3
shall not have been satisfied or waived by December 28, 1997; or
(f) the Purchaser, or the Seller, if any permanent injunction or other
Order of a court or other competent authority preventing the Closing shall have
become final and nonappealable;
provided, however, that neither the Seller nor the Purchaser shall be entitled
to terminate this Agreement if such party's breach of this Agreement has
prevented the satisfaction of a condition. Any termination pursuant to this
Section 10.1 (other than a termination pursuant to Section 10.1(a)) shall be
effected by written notice from the party or parties so terminating to the other
parties hereto, which notice shall specify the Section of this Agreement
pursuant to which this Agreement is being terminated.
10.2. EFFECT OF TERMINATION.
In the event of the termination of this Agreement as provided in
Section 10.1, this Agreement shall be of no further force or effect, except for
Section 7.7, this Section 10.2 and Section 11, each of which shall survive the
termination of this Agreement; provided, however, that the Liability of any
party for any intentional, willful or knowing breach by such party of the
representations, warranties, covenants or agreements of such party set forth in
this Agreement occurring prior to the termination of this Agreement shall
survive the termination of this Agreement and, in addition, in the event of any
action for breach of contract in the event of a termination of this Agreement,
the prevailing party shall be reimbursed by the other party to the action for
reasonable attorneys' fees and expenses relating to such action.
SECTION 11. MISCELLANEOUS PROVISIONS.
11.1. AMENDMENT.
This Agreement shall not be altered or otherwise amended except
pursuant to an instrument in writing signed by each party, except that any party
may waive any obligation owed to it by another party under this Agreement. No
waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
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11.2. ENTIRE AGREEMENT.
This Agreement and the other agreements and documents referenced herein
(including, but not limited to, the schedules and the exhibits (in their
executed form) attached hereto) and any other document or agreement
contemporaneously entered into this Agreement contain all of the agreements
among the parties hereto with respect to the transactions contemplated hereby
and supersede all prior agreements or understandings among the parties with
respect thereto (including, but not limited to the letter, dated as of August
30, 1997, among the Seller, PGA and Atlantic Medical Management, L.L.C. (as
amended from time to time, the "Exclusivity Letter").
11.3. SEVERABILITY.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
11.4. BENEFITS OF AGREEMENT.
All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly provided herein, this Agreement shall not
confer any rights or remedies upon any Person other than the foregoing.
11.5. EXPENSES.
Except as otherwise provided in this Agreement or the Exclusivity
Letter, the Purchaser, the Seller and the Company shall each bear their own
expenses (with the Seller bearing the expenses of the Company), incurred in
connection with this Agreement and the Related Documents.
11.6. HEADINGS.
Descriptive headings are for convenience only and shall not control or
affect in any way the meaning or construction of any provision of this
Agreement.
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11.7. NOTICES.
All notices or other communications pursuant to this Agreement shall be
in writing and shall be deemed to be sufficient if delivered personally,
telecopied, sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a part as shall
be specified by like notice):
if to the Company, to:
Nursefinders, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Personnel Group of America, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. XxXxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to the Seller, to:
PFI Corp.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:
Telephone No.:
Facsimile No.:
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with a copy to:
Personnel Group of America, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. XxXxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(c) if to the Purchaser, to:
Atlantic Medical Management, L.L.C.
Attention: J. Xxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (212)
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000.
All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by telecopy, on the date of such delivery, (iii) in
the case of delivery by nationally-recognized, overnight courier, on the
Business Day following dispatch, and (iv) in the case of mailing, on the third
Business Day following such mailing.
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11.8. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
11.9. GOVERNING LAW.
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF
THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF
LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
RELATED DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATES OF NEW YORK,
DELAWARE OR NORTH CAROLINA OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
NEW YORK, ANY DISTRICT IN DELAWARE OR THE WESTERN DISTRICT OF NORTH CAROLINA,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF OR HIMSELF AND IN RESPECT OF ITS OR HIS PROPERTY
AND ASSETS, GENERALLY AND UNCONDITIONALLY THE JURISDICTION OF THE AFORESAID
COURTS.
11.10. INCORPORATION OF EXHIBITS AND SCHEDULES.
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
11.11 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.
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11.12 INTERPRETATION; CONSTRUCTION.
The term "Agreement" means this agreement together with all schedules
and exhibits hereto, as the same may from time to time be amended, modified,
supplemented or restated in accordance with the terms hereof. In this Agreement,
the term "Best Knowledge" of any Person means (i) the actual knowledge of such
Person and (ii) that knowledge which should have been acquired by such Person
after making such due inquiry and exercising such due diligence as a prudent
businessperson would have made or exercised in the management of his or her
business affairs, including due inquiry of those officers, directors, key
employees and professional advisers (including attorneys, accountants and
consultants) of the Person who could reasonably be expected to have actual
knowledge of the matters in question. When used in the case of the Seller, the
term "Best Knowledge" shall include the Best Knowledge of Xxxxxx Xxxxxx, Xxxxx
Xxxx, Xxx Xxxxxxxx, Xxxxxxx Xxxxxxxx or Xxxx Xxxxxx. The use in this Agreement
of the term "including" means "including, without limitation." The words
"herein", "hereof", "hereunder", "hereby", "hereto", "hereinafter", and other
words of similar import refer to this Agreement as a whole, including the
schedules and exhibits, as the same may from time to time be amended, modified,
supplemented or restated, and not to any particular article, section,
subsection, paragraph, subparagraph or clause contained in this Agreement. All
references to articles, sections, subsections, clauses, paragraphs, schedules
and exhibits mean such provisions of this Agreement and the schedules and
exhibits attached to this Agreement, except where otherwise stated. The title of
and the article, section and paragraph headings in this Agreement are for
convenience of reference only and shall not govern or affect the interpretation
of any of the terms or provisions of this Agreement. The use herein of the
masculine, feminine or neuter forms shall also denote the other forms, as in
each case the context may require. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement has
been chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Accounting terms used but not
otherwise defined herein shall have the meanings given to them under GAAP.
Unless expressly provided otherwise, the measure of a period of one month or
year for purposes of this Agreement shall be that date of the following month or
year corresponding to the starting date, provided that if no corresponding date
exists, the measure shall be that date of the following month or year
corresponding to the next day following the starting date. For example, one
month following February 18 is March 18, and one month following March 31 is May
1.
11.13. REMEDIES.
The parties shall each have and retain all rights and remedies existing
in their favor under this Agreement, at law or equity, including rights to bring
actions for specific performance and injunctive and other equitable relief
(including, without limitation, the remedy of rescission) to enforce or prevent
a breach or any violation of this Agreement. All such rights and remedies shall,
to the extent permitted by applicable Law, be cumulative.
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11.14. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY RELATED DOCUMENT.
* * *
58
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the date first written above.
The Purchaser:
NURSEFINDERS ACQUISITION CORP.
By: /s/ J. Xxxxxx Xxxxxxx
----------------------------------
Name: J. Xxxxxx Xxxxxxx
Title: President
The Company:
NURSEFINDERS, INC.
By: /s/ Xxx X. Xxxxxxxx, Xx.
----------------------------------
Name: Xxx X. Xxxxxxxx, Xx.
Title: Vice President
The Seller:
PFI CORP.
By: /s/ Xxx X. Xxxxxxxx, Xx.
----------------------------------
Name: Xxx X. Xxxxxxxx, Xx.
Title: Vice President
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By signing below, Personnel Group of America, Inc., a Delaware corporation,
guarantees the performance by PFI Corp. of its obligations under this Stock
Purchase Agreement.
PERSONNEL GROUP OF AMERICA, INC.
By: /s/ Xxx X. Xxxxxxxx, Xx.
----------------------------------
Name: Xxx X. Xxxxxxxx, Xx.
Title: Senior Vice President
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ANNEX I
DEFINITIONS
"Accounting Firm" has the meaning set forth in Section 3.1.(c).
"Acquisition Proposal" means any offer, proposal or indication of
interest in (i) the direct or indirect acquisition of all or any material part
of the Company, (ii) a merger, consolidation or other business combination
directly or indirectly involving the Company or (iii) the direct or indirect
acquisition of any capital stock of the Company.
"Agreement" has the meaning set forth in Section 11.12.
"Affiliate" means, with respect to any Person, (i) a director, officer
or shareholder of such Person, (ii) a spouse of such Person, and (iii) any other
Person that, directly or indirectly through one or more intermediaries,
Controls, or is Controlled by, or is under common Control with, such Person.
"Audited Balance Sheet Date" has the meaning set forth in Section
5.6.(a)(i).
"Audited Financial Statements" has the meaning set forth in Section
5.6.(a)(i).
"Best Knowledge" has the meaning set forth in Section 11.12.(1)(ii).
"Business Day" means any day that is not a Saturday, Sunday or a day on
which banking institutions in New York, New York are not required to be open.
"Business" has the meaning set forth in the introductory paragraph.
"Capital Lease" means any obligation to pay rent or other amounts under
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
as of such date computed in accordance with GAAP.
"CERCLIS" means the Comprehensive Environmental Response, Compensation,
and Liability Information System.
"CHAMPUS" has the meaning set forth in Section 5.19.
"Change of Control Agreements" shall mean, collectively, (i) the
Employment Agreement, dated April 1, 1994, between Adia Services, Inc., the
Seller and Xxxxxxx Xxxxxxxx, as amended by Amendments No. 1 and No. 2, dated
November 21, 1996 and May 22, 1997, respectively, between the Seller and Xxxxxxx
Xxxxxxxx; (ii) the Change of Control Agreement, dated
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November 21, 1996, between the Seller and Xxxx Xxxxxx, as amended by Amendment
No. 1 thereto dated May 22, 1997; (iii) the Change of Control Agreement, dated
November 21, 1996, between the Seller and Xxxxxxx Xxxxxx, as amended by
Amendment No. 1 thereto dated May 22, 1997; (iv) the Change of Control
Agreement, dated November 21, 1996, between the Seller and Xx XxXxxxxxx, as
amended by Amendment No. 1 thereto dated May 22, 1997; (v) the Change of Control
Agreement, dated November 21, 1996, between the Seller and Xxx Xxxxx, as amended
by Amendment No. 1 thereto dated May 22, 1997.
"Closing" has the meaning set forth in Section 2.
"Closing Date" has the meaning set forth in Section 2.
"Closing Payment" has the meaning set forth in Section 1.2.(b).
"Closing Working Capital" shall mean, with respect to the Company and
its Subsidiaries on a consolidated basis, the difference between (i) current
assets and (ii) current liabilities as of the Closing Date, determined in
accordance with GAAP, as adjusted in accordance with Schedule 2.4 and calculated
in a manner consistent with the example Working Capital computation as of July
27, 1997 attached to Schedule 2.4.
"Code" has the meaning set forth in Section 5.9(a).
"Company" has the meaning set forth in the caption.
"Company 401(k) Plan" has the meaning set forth in Section
7.11.(a)(ii).
"Company's By-Laws" has the meaning set forth in Section 5.1.
"Company's Charter" has the meaning set forth in Section 5.1.
"Company Employee Plans" has the meaning set forth in Section 5.18.(a).
"Confidential or Proprietary Information" means all information
disclosed (i) by or on behalf of the Company or the Seller to the Purchaser, or
to employees, consultants or others in a confidential relationship with any of
them, or (ii) by or on behalf of the Purchaser to the Company, the Seller or to
employees, consultants or others in a confidential relationship with any of
them, in each case other than such information which (A) becomes generally
available to the public (other than as a result of a breach of Section 7.6), (B)
was known to the party to whom such information was disclosed prior to its
disclosure to such party, (C) is hereafter available to the party to whom such
information was disclosed on a non-confidential basis from a source (other than
the party disclosing or on whose behalf such information was disclosed) which
was, to the knowledge of the receiving party after due inquiry, entitled to
disclose the same or (D) is required by law, governmental order or decree to be
disclosed by the party to whom such information was disclosed.
"Contract" means any loan or credit agreement, note, bond, mortgage,
indenture, lease, sublease, purchase order or other agreement, commitment,
instrument, permit, concession, franchise or license.
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"Control" means, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Covered Properties" has the meaning set forth in Section 5.21.(b).
"Covered Taxes" means all Taxes of the Company and each Tax Affiliate
(except as provided below with respect to the NY Subsidiary) for periods ending
on or prior to the close of business on the Closing Date and all Taxes of the NY
Subsidiary for periods ending on or prior to the close of business on the Second
Closing Date in excess of the aggregate reserve for Taxes stated on the Final
Closing Statement (as such reserve may be adjusted pursuant to the provisions of
Section 3.1 whether by agreement of the parties or by the decision of the
Accounting Firm).
"Customer Contract" shall mean any Contract between the Company and
another Person regarding the provision of home care services and health care
personnel for supplemental staffing of health care facilities.
"Dispute Resolution Procedure" has he meaning set forth in Section
3.1.(c).
"Effective Time" has the meaning set forth in Section 2.
"Employee Benefit Plan" means (i) any qualified or non-qualified
Employee Pension Benefit Plan (as defined in Section 3(2) of ERISA), including
any Multiemployer Plan or Multiple Employer Plan, (ii) any Employee Welfare
Benefit Plan (as defined in Section 3(1) of ERISA), or (iii) any employee
benefit, fringe benefit, compensation, severance, incentive, bonus,
profit-sharing, stock option, stock purchase or other plan, program or
arrangement, whether or not subject to ERISA and whether or not funded.
"Employment Agreements" has the meaning set forth in Section
8.2.(h)(1).
"Encumbrances" shall mean and include security interests, mortgages,
liens, pledges, charges, easements, reservations, restrictions, rights of way,
servitudes, options, rights of first refusal, community property interests,
equitable interests, restrictions of any kind and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money.
"Environmental, Health and Safety Laws" means all Laws, Permits, Orders
and Contracts and all common law relating to or addressing pollution or
protection of the environment, including, but not limited to, all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation.
"ERISA Affiliate" means, with respect to any Person, any other Person
that is a member of a "controlled group of corporations" with, or is under
"common control" with, or is a member of the same "affiliated service group"
with such Person as defined in Section 414(b), 414(c), or 414(m) or 414(o) of
the Code.
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"Estimated Working Capital Statement" means a statement containing the
Company's reasonable, good faith estimate of the Closing Working Capital.
"Exchange Proceeds" has the meaning set forth in Section 7.9.
"Exclusivity Letter" has the meaning set forth in Section 7.5 and 11.2.
"Expense Losses" means any and all Losses sustained, suffered or
incurred by any Purchaser arising from or in connection with the Company's or
Seller's breach of Section 9.6.
"Federal Health Care Program" has the meaning set forth in Section
5.20.
"Final Closing Statement" has the meaning set forth in Section 3.1.(c).
"Final Determination Date" has the meaning set forth in Section
3.1.(c).
"Financial Statements" has the meaning set forth in Section
5.6.(a)(ii).
"Franchisee" means the Company's counterparty under a Franchise
Agreement.
"Franchise Agreements" means those agreements of the Company pursuant
to which, among other things, the Company franchises the use of the
"Nursefinder" name and business systems for an up-front payment and royalty.
"Fraud and Abuse Laws" means: False Claims Act, 31 U.S.C. ss. 3729; 18
U.S.C. ss. 287 (criminal provisions); Social Security Act, 42 U.S.C. ss. ss.
1320a-7, 1320a-7a, 1320a-7b, 1395nn; 18 U.S.C. xx.xx. 1347, 699, 1036, 1001,
1341, 1343, 1956, 1957, 371, 286, 1961, 641, 1345, 981, and all applicable
similar state laws and regulations.
"GAAP" has the meaning set forth in Section 3.1.(b).
"Governmental Entity" means federal, state, local or foreign government
and any court, tribunal, administrative agency, commission or other governmental
or regulatory authority or agency, domestic, foreign or supranational.
"Group Health Plan" has the meaning set forth in Section
5.18.(b)(viii).
"Income Taxes" shall mean all Taxes based upon income, including
without limitation income Taxes, franchise Taxes based upon income and any Taxes
paid in lieu of (or because they are greater than) any of the foregoing.
"Indemnified Persons" means and includes the Seller Indemnifying
Persons or the Purchaser Indemnified Persons, as the case may be.
"Indemnifying Persons" means and includes the Seller Indemnifying
Persons or the Purchaser Indemnifying Persons, as the case may be.
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"Intellectual Property Rights" means all intellectual property rights,
including, without limitation, patents, patent applications, trademarks,
trademark applications, tradenames, servicemarks, servicemark applications,
trade dress, logos and designs and the goodwill connected with the foregoing,
copyrights and copyright applications, know-how, trade secrets, proprietary
processes and formulae, confidential information, franchises, licenses,
inventions, including, without limitation, manuals, memoranda and records.
"Key Management Personnel" means Xxxxxxx X. Xxxxxxxx, Xxxx Xxxxxx,
Xxxxxxx Xxxxxx, Xxxxxx XxXxxxxxx and Xxxxxx Xxxxx.
"Latest Balance Sheet" has the meaning set forth in Section
5.6.(a)(ii).
"Latest Balance Sheet Date" has the meaning set forth in Section
5.6.(a)(ii).
"Law" means any applicable foreign, federal, state or local law,
statute, treaty, rule, directive, regulation, ordinances and similar provisions
having the force or effect of law or an Order of any Governmental Entity
(including all Environmental, Health and Safety Laws).
"Leased Property" has the meaning set forth in Section 5.11.(a).
"Liability" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.
"License Agreements" means those agreements of the Company pursuant to
which, among other things, the Company licenses the use of the "Nursefinder"
name and business systems for an up-front payment and fee schedule.
"Licensee" means the Company's counterparty under a License Agreement.
"Licensed Requisite Rights" has the meaning set forth in Section
5.12.(a)(i).
"Litigation Expense" means any out-of-pocket expenses incurred in
connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder including, without limitation, court filing fees, court costs,
arbitration fees or costs, witness fees and fees and disbursements of outside
legal counsel, investigators, expert witnesses, accountants and other
professionals.
"Losses" means any and all losses, claims, shortages, damages,
Liabilities, expenses (including reasonable attorneys' and accountants' and
other professionals' fees and Litigation Expenses), assessments, Taxes
(including interest or penalties thereon) and insurance premium increases
arising from or in connection with any such matter that is the subject of
indemnification under Section 9, as reduced by (i) the amount actually recovered
under insurance policies (net of deductibles and incidental expenses resulting
therefrom) and (ii) tax benefits actually realized under Tax Laws in respect of
such Losses, in each case net of all costs and expenses of recovering any such
amount. For purposes of determining tax benefits actually realized, there shall
be included tax
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benefits actually realized before the taxable year in which a payment for a
Loss is received and tax benefits realized in the taxable year in which a
payment for a Loss is received.
"Material Adverse Change" has the meaning set forth in Section 5.8.(a).
"Non-Compete Period" means the period ending on the third anniversary
of the Closing Date.
"Notice of Objection" has the meaning set forth in Section 3.1.(c).
"Outstanding Debt" means the Promissory Note dated January 8, 1996
payable to Xxxxxxx X. Xxxxxx Charitable Remainder Unitrust and all other
indebtedness of the Company for borrowed money (not including trade payables and
other such liabilities incurred in the ordinary course of business).
"Orders" means judgments, writs, decrees, compliance agreements,
injunctions or judicial or administrative orders and determinations of any
Governmental Entity or arbitrator.
"Owned Requisite Rights" has the meaning set forth in Section
5.12.(a)(i).
"Permits" means all permits, licenses, authorizations, registrations,
franchises, approvals, certificates, variances and similar rights obtained, or
required to be obtained, from Governmental Entities.
"Permitted Encumbrances" means (i) Encumbrances for Taxes that are not
yet delinquent or are being contested in good faith by appropriate proceedings
and for which there are adequate reserves on the books, (ii) workers or
unemployment compensation liens arising in the ordinary course of business;
(iii) mechanic's, materialman's, supplier's, vendor's or similar liens arising
in the ordinary course of business securing amounts that are not delinquent (iv)
laws, ordinances and governmental regulations regulating the use of occupancy of
the Leased Property or the character, dimensions or locations of the
improvements thereon, provided that none of the same are or would be violated by
the continued use of any portion of the Leased Property for the purposes for
which it has been customarily used by or in the Business; and (v) exceptions
discovered by an inspection or survey or other imperfections of title that do
not make title unmarketable and are not so substantial as to impair the value of
or interfere with the continued or contemplated use of any portion of the Leased
Property for the purposes for which they have been used by or in the Business.
"Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).
"PGA" shall mean Personnel Group of America, Inc.
"PGA Non-Qualified Plan" has the meaning set forth in Section
7.11.(b)(i).
"Previously Owned Properties" has the meaning set forth in Section
5.21.(b).
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"Proceeding" means any action, suit, investigation or proceedings
before any Governmental Entity or arbitrator.
"Proposed Closing Statement" has the meaning set forth in Section
3.1.(b).
"Purchase Price" has the meaning set forth in Section 1.2.(a).
"Purchaser" has the meaning set forth in the caption.
"Purchaser's By-Laws" has the meaning set forth in Section 6.1.
"Purchaser Indemnified Persons" means and includes the Purchaser, its
Affiliates, its and their successors and assigns, and the respective officers,
directors, employees and agents of each of the foregoing; provided, however,
that any such person or entity who was, prior to the Closing Date, an officer,
director, employee, Affiliate, successor or assign of the Company or the Seller
shall not in such capacity, be a Purchaser Indemnified Person with respect to a
breach of this Agreement or any Related Document based on facts or circumstances
occurring, or actions taken by such person or entity, at or prior to the
Closing.
"Purchaser Indemnifying Persons" means the Purchaser and its successors
and assigns.
"Purchaser Losses" means any and all Losses sustained, suffered or
incurred by any Purchaser Indemnified Person arising from or in connection with
any such matter which is the subject of indemnification under Section 9.
"Purchaser's Charter" has the meaning set forth in Section 6.1.
"Related Documents" has the meaning set forth in Section 8.2.(i).
"Restricted Territory" means any portion of the United States in which
any service has heretofore been offered or promoted for sale by the Company or
the Business during the three years preceding the Closing Date or with respect
to which the Company or the Business has devoted substantial expense in
anticipation of launching into such geographic area a portion of the Business at
any time prior to the Closing Date.
"Requisite Rights" has the meaning set forth in Section 5.12.(a)(i).
"Section 338(h)(10) Election" has the meaning set forth in Section 7.8.
"Securities" means "securities" as defined in Section 2(1) of the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in the caption.
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"Seller Indemnified Persons" means and includes the Seller and its
successors and assigns.
"Seller Indemnifying Persons" means and includes the Seller and its
successors and assigns.
"Seller Losses" means any and all Losses sustained, suffered or
incurred by any Seller Indemnified Person arising from or in connection with any
matter which is the subject of indemnification under Section 9.
"Shares" has the meaning set forth in the introductory paragraph.
"SSA" has the meaning set forth in Section 5.19.(e).
"Standard Forms" has the meaning set forth in Section 5.13(c).
"State Health Care Program" has the meaning set forth in Section 5.20.
"Subscription Agreement" has the meaning set forth in Section
8.2.(h)(2).
"Subsidiary" means any Person of which more than 50% of the total
voting power is owned directly or indirectly by any other Person.
"Survival Date" has the meaning set forth in Section 9.4.(a)(iv).
"Tax Losses" means any and all Losses sustained, suffered or incurred
by any Purchaser Indemnified Person arising from or in connection with the
untruth, inaccuracy or breach of the representations and warranties of the
Company and the Seller contained in Section 5.9.
"Tax Proceeding" has the meaning set forth in Section 7.14.(c).
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" means, with respect to any Person, (i) all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, alternative or add-on minimum
taxes, customs duties and other taxes, fees, assessments or charges of any kind
whatsoever, together with all interest and penalties, additions to tax and other
additional amounts imposed by any taxing authority (domestic or foreign) on such
Person (if any) and (ii) any liability for the payment of any amount of the type
described in clause (i) above as a result of (A) being a "transferee" (within
the meaning of Section 6901 of the Code or any other applicable Law) of another
Person, (B) being a member of an affiliated, combined or consolidated group or
(C) a contractual arrangement or otherwise.
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"Third Party Claim" has the meaning set forth in Section 9.3.
"Unaudited Financial Statements" has the meaning set forth in Section
5.6.(a)(ii).
"Underwriters" has the meaning set forth in Section 6.5.
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