EXHIBIT 10.17
PURCHASE AND SALE AGREEMENT
By and Between
GENTIVA HEALTH SERVICES, INC.,
as Seller,
and
GS ACQUISITION CO.,
as Buyer
TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Purchase and Sale of Assets...............................1
Section 1.2 Excluded Assets...........................................3
Section 1.3 Terms Related to the Purchase and Sale of Assets..........4
Section 1.4 Limitation of Warranty....................................4
Section 1.5 Transfer of Know-How......................................5
Section 1.6 Instruments of Conveyance and Transfer, Etc...............5
ARTICLE II
ASSIGNMENT AND ASSUMPTION OF LIABILITIES
Section 2.1 Assumption of Liabilities by Buyer........................5
Section 2.2 Retained Liabilities......................................7
ARTICLE III
PURCHASE PRICE
Section 3.1 Purchase Price............................................8
Section 3.2 Purchase Price Adjustment.................................8
Section 3.3 Reimbursement for Uncollectable Receivables..............10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Seller.............12
Section 4.2 Representations and Warranties of Buyer..................22
ARTICLE V
COVENANTS OF THE SELLER
Section 5.1 Pre-Closing Activities...................................23
Section 5.2 Compliance with Laws.....................................25
Section 5.3 Approvals and Consents...................................25
Section 5.4 Further Assurances.......................................25
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Section 5.5 Confidentiality Agreements...............................25
Section 5.6 Protection of Confidential Information...................25
Section 5.7 Solicitation of Employees................................26
Section 5.8 Non-Competition..........................................26
Section 5.9 Access to Information....................................28
Section 5.10 Notification of Certain Events...........................28
Section 5.11 Exclusivity..............................................29
ARTICLE VI
COVENANTS OF BUYER
Section 6.1 Pre-Closing Activities...................................29
Section 6.2 Compliance with Laws.....................................29
Section 6.3 Approvals and Consents...................................29
Section 6.4 Further Assurances.......................................29
Section 6.5 Preservation of Books and Records; Post-Closing Access...29
Section 6.6 Protection of Confidential Information...................30
Section 6.7 Solicitation of Employees................................30
Section 6.8 Insurance................................................30
Section 6.9 Name Change..............................................30
Section 6.10 Workers' Compensation....................................31
Section 6.11 Financing................................................31
ARTICLE VII
FURTHER COVENANTS OF THE PARTIES
Section 7.1 Nonassignable Contracts and Permits......................31
Section 7.2 Conduct of Litigation....................................32
Section 7.3 Sales and Transfer Taxes.................................32
Section 7.4 Transition Services Agreement............................32
Section 7.5 Efforts to Consummate....................................33
Section 7.6 Contract/Administrative Employees........................33
Section 7.7 Co-Located Properties....................................33
ARTICLE VIII
EMPLOYEE MATTERS
Section 8.1 Employees................................................34
Section 8.2 Employee Benefit Plans for Continuing Employees..........34
Section 8.3 Pension Plans............................................34
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Section 8.4 Welfare and Fringe Benefits Generally....................35
Section 8.5 Options..................................................36
Section 8.6 Miscellaneous............................................36
ARTICLE IX
TAX MATTERS
Section 9.1 Obligations and Taxes....................................37
Section 9.2 Cooperation..............................................37
Section 9.3 Access to and Destruction of Books and Records...........38
Section 9.4 Confidentiality..........................................38
Section 9.5 Allocation of Purchase Price.............................38
Section 9.6 Section 338 Election.....................................38
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
Section 10.1 Compliance by Buyer......................................39
Section 10.2 Certificates, etc. from Buyer............................39
Section 10.3 No Legal Action..........................................39
Section 10.4 Instruments of Assumption................................40
Section 10.5 Purchase Price...........................................40
Section 10.6 HSR Act..................................................40
Section 10.7 Legal Opinion............................................40
Section 10.8 Escrow Agreement.........................................40
Section 10.9 General..................................................40
ARTICLE XI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Section 11.1 Compliance by the Seller.................................40
Section 11.2 Certificates from the Seller.............................41
Section 11.3 No Legal Action..........................................41
Section 11.4 Instruments of Conveyance................................41
Section 11.5 HSR Act..................................................41
Section 11.6 Stock Certificates.......................................41
Section 11.7 Legal Opinion............................................42
Section 11.8 Ancillary Agreements.....................................42
Section 11.9 Resignation of Officers and Directors....................42
Section 11.10 FIRPTA Certificate.......................................42
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Section 11.11 General..................................................42
Section 11.12 No Material Adverse Effect...............................42
Section 11.13 Debt Financing...........................................42
ARTICLE XII
CLOSING
Section 12.1 The Closing..............................................42
ARTICLE XIII
INDEMNIFICATION
Section 13.1 Seller's Indemnity.......................................43
Section 13.2 Buyer's Indemnity........................................43
Section 13.3 Indemnity Procedure......................................44
Section 13.4 Limitations of Indemnities...............................45
Section 13.5 Remedies.................................................46
ARTICLE XIV
TERMINATION OF THIS AGREEMENT
Section 14.1 Termination..............................................46
Section 14.2 Termination Fee..........................................46
Section 14.3 Effect of Termination....................................47
ARTICLE XV
MISCELLANEOUS
Section 15.1 Amendments...............................................47
Section 15.2 Waivers..................................................47
Section 15.3 Public Announcements.....................................47
Section 15.4 Notices..................................................47
Section 15.5 Entire Agreement.........................................48
Section 15.6 Assignability; Third-Party Rights........................48
Section 15.7 Governing Law............................................49
Section 15.8 Headings.................................................49
Section 15.9 Counterparts.............................................49
Section 15.10 Waiver of Bulk Transfer Requirements.....................49
Section 15.11 Expenses.................................................49
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Section 15.12 Severability.............................................49
ARTICLE XVI
DEFINITIONS
Section 16.1 Definitions..............................................50
Section 16.2 Other Defined Terms......................................53
Section 16.3 Gender; Numbers..........................................55
Disclosure Schedule
1.1(b) Subsidiaries Exclusively in the Business
1.1(e) Real Property
1.1(f) Personal Property
1.1(h) Operating Permits
1.1(m) Intellectual Property
1.2(b) Intellectual Property Rights
2.1(b) Warranty Policies and Agreements
4.1(b) Ownership of Transferred Subsidiaries
4.1(c) Violations or Defaults
4.1(d) Governmental Consents and Approvals
4.1(f) Financial Statements
4.1(g) No Undisclosed Liabilities
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4.1(h) Certain Changes
4.1(i) Litigation
4.1(j) Compliance with Laws
4.1(k) Material Agreements
4.1(l)(A) Collective Bargaining Agreements
4.1(l)(B) Labor Disputes
4.1(l)(C) Labor Practices
4.1(m) Employee Benefit Plans
4.1(n) Taxes
4.1(p) Insurance Policies
4.1(q) Title to Assets as of the Closing Date
4.1(r) Licenses
4.1(t) Leased Real Property
4.1(u) Intellectual Property
4.1(v) Customers and Suppliers
4.1(w) Affiliate Transactions
4.1(x) Environmental Matters
4.2(e) Brokers
5.8 Seller Covered Business Locations
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6.3 Approvals and Consents
6.7 Solicitation of Employees
7.6 Contract/Administrative Employees
8.1(a) Transferred Subsidiary Employees
8.1(b) Other Administrative Employees of the Business
9.5 Allocations
11.9 Resignation of Officers and Directors
16.1 Knowledge of Seller
Exhibits
A Escrow Agreement
B Transition Services Agreement
C Assumption Agreement
D Opinion of Latham & Watkins
E Bill of Sale and Assignment
F Opinion of Cahill Gordon & Reindel
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT made as of this 25th day of August, 2000
(the "Agreement") by and between GENTIVA HEALTH SERVICES, INC., a Delaware
corporation (the "Seller"), and GS ACQUISITION CO., a Delaware corporation (the
"Buyer"):
W I T N E S S E T H :
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WHEREAS, the Seller desires to transfer the Business (as hereinafter
defined) to Buyer, and Buyer desires to acquire the Business in exchange for the
Purchase Price (as hereinafter defined) and the assumption by Buyer of the
Assumed Liabilities (as hereinafter defined), as set forth herein.
NOW, THEREFORE, in consideration of the representations, warranties, mutual
covenants and agreements hereinafter set forth, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Seller and Buyer hereby covenant and agree as follows.
Capitalized terms have the meaning assigned thereto in Article XVI of this
Agreement.
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Purchase and Sale of Assets. At the Closing, (i) the Seller
shall sell and transfer the capital stock and equity interests of the
Transferred Subsidiaries (as defined herein) as provided in Section 1.1(b) and
(ii) the Seller shall, and shall cause its Subsidiaries (other than the
Transferred Subsidiaries) to, sell, assign, convey and transfer to Buyer, and
Buyer shall acquire from the Seller and its Subsidiaries, all of the Seller's
and its Subsidiaries' (other than the Transferred Subsidiaries') right, title
and interest in and to all of the tangible and intangible assets primarily used
or held for use by the Business, as they exist as of the Closing, together with
all accrued benefits and rights pertaining thereto (together, the "Assets"),
other than the Excluded Assets, including, without limitation:
(a) Receivables. All Receivables arising exclusively out of the
Business and outstanding at the Closing;
(b) Capital Stock of Seller's Subsidiaries. All of the shares of
capital stock (the "Transferred Shares") and any equity interest in the
direct or indirect Subsidiaries of the Seller that are listed in Section
1.1(b) of the Disclosure Schedule (the "Transferred Subsidiaries");
(c) Claims. All claims, demands, Actions, judgments and decrees in
favor of the Seller or its Subsidiaries arising primarily out of the
Business;
(d) Inventories. All supplies and other inventories intended for use
primarily by the Business;
(e) Real Property. Those interests in certain parcels of land leased
by the Seller or its Subsidiaries and used primarily in the conduct of the
Business as listed in Item 1 of Section 1.1(e) of the Disclosure Schedule
("Real Property") together with any and all buildings, plants and other
structures and improvements thereon, any and all of Seller's rights and
privileges pertaining thereto, including, without limitation, ownership
interests, leasehold interests, easements, transferable permits, licenses,
rights of way, leases, and purchase and option agreements with respect to
any such Real Property, and any and all fixtures, equipment and other
property appurtenant thereto;
(f) Personal Property. Any and all equipment, furniture, automobiles,
trucks and other vehicles, office and computer equipment and other personal
property ("Fixed Assets") used primarily in the Business including without
limitation, all of the Fixed Assets listed in Section 1.1(f) of the
Disclosure Schedule;
(g) Contracts. Subject to Section 7.1, all contracts, agreements,
leases and offers open for acceptance of any nature, whether written or
oral, primarily relating to the Business, including, without limitation,
all leases of personal property, customer contracts, purchase orders,
license agreements, employment agreements, noncompetition agreements and
confidentiality agreements (the "Assigned Contracts");
(h) Operating Permits. Subject to Section 7.1, all licenses, permits,
approvals, registrations, consents and authorizations (the "Licenses")
necessary for the operation of the Business as currently conducted by the
Seller, including, without limitation, the Licenses listed in Section
1.1(h) of the Disclosure Schedule;
(i) Computer Databases. All interests of the Seller and its
Subsidiaries in the databases used primarily in the Business, including
flow charts, diagrams, descriptive texts and programs, computer print-outs,
underlying tapes and similar items;
(j) Books and Records. Copies of all books and records of the Seller
and its Subsidiaries primarily relating to the Business, including, without
limitation, all customer, payor, supplier and personnel lists, accounts and
records; financial entry and internal accounting documents and records for
the Transferred Subsidiaries and forms and office supplies; advertising and
promotional literature and price lists; all manuals and reports,
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testing manuals, notes and reports, drawings and models and treatises and
other publications primarily relating to the Business;
(k) Supplier Lists. All supplier lists related primarily to the
Business;
(l) Clients. All client lists, copies of files and data relating to
existing clients (including clients not currently receiving services which
are expected or could resume services in the foreseeable future), any
credit policies and credit information with respect, in each such case, to
clients primarily of the Business; and
(m) Intellectual Property. All Intellectual Property Rights used or
held for use primarily in the operation of the Business including those
listed in Section 1.1(m) of the Disclosure Schedule (the "Transferred
Intellectual Property").
Section 1.2 Excluded Assets. Notwithstanding anything contained herein to
the contrary, the Assets shall not include, and the Seller shall not, and shall
not cause any Subsidiary of the Seller or any Affiliate to transfer to Buyer and
Buyer shall not accept, any of the following (collectively, the "Excluded
Assets"):
(a) Cash or cash equivalents;
(b) Any Intellectual Property Rights of the Seller to the names, trade
names, trademarks, service marks or designs and applications for trademark
registrations set forth in Section 1.2(b) of the Disclosure Schedule
together with any goodwill therewith or any variant thereof, or any rights
to use the same either alone or in combination with other words (the
"Excluded Marks"), except that subject to Section 7.1 hereof, (i) Buyer
shall be permitted to use supplies and sales literature transferred
pursuant to this Agreement carrying the Excluded Marks until the earlier of
the depletion of such supplies and literature or three (3) months after the
Closing Date; and provided that Buyer shall place on such finished goods,
supplies and literature a sticker or other device which the Seller has
approved not less than ten (10) business days prior to the Closing Date
indicating that the name is a name of the Seller being used under a
temporary limited license from the Seller, and (ii) Buyer shall be
permitted to perform services in any name used by the Business prior to the
Closing (whether or not such name uses any Excluded Mark) to the extent
reasonably necessary in connection with any Assigned Contract not permitted
to be assigned and for which Buyer and the Seller make prior alternative
arrangements for such use of the Intellectual Property Rights in connection
with Section 7.1 in order to deliver the economic benefit thereof to Buyer;
(c) Books of original financial entry and internal accounting
documents and records relating to the Business and any other books and
records relating to the Business that the Seller or any of its Subsidiaries
(other than the Transferred Subsidiaries) is required to retain pursuant to
statute, rule or regulation; provided, however, the Seller shall make
copies of such books and records available to Buyer after the Closing Date
for any reasonable business purpose;
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(d) Except as otherwise set forth in Section 8.3, any assets or
reserves of Employee Benefit Plans other than the Transferred Employee
Benefit Plan;
(e) All rights to refunds of all federal, state, local, foreign and
provincial income, capital gains, gross receipts, franchise, profits,
property, transfer, sales, use, mercantile, value added, payroll, capital
stock, franchise, withholding or other taxes, including estimated taxes
relating thereto and any interest and penalties imposed thereon
(collectively, "Taxes") relating to the Assets or the Business (including,
without limitation, any refunds to be received by the Transferred
Subsidiaries), to the extent such Taxes relate to a tax period or portion
thereof ending on or prior to the Closing Date (based on an interim closing
of the books as of the end of the Closing Date, except for property or
other ad valorem Taxes, which shall be prorated on a daily basis);
(f) Policies of insurance and fidelity, surety or similar bonds and
the coverages afforded thereby, and any and all claims or rights
thereunder;
(g) Any prepaid expenses or other prepaid assets of the Seller or its
Subsidiaries (other than the Transferred Subsidiaries) which are related to
any business of the Seller or its Subsidiaries other than the Business;
(h) All assets of the Seller and its Subsidiaries and their Affiliates
that are owned or used by the Seller and its Subsidiaries in the Business
but that are used primarily in any other business of the Seller and its
Subsidiaries immediately prior to the Closing;
(i) All rights, causes of action and claims that may be asserted
against third parties, other than those arising primarily out of the
Business, including, without limitation, any rights to reimbursement for
damages, fees or expenses; and
(j) All intercompany accounts receivable payable by the Seller or any
of its Subsidiaries to the Transferred Subsidiaries or the Business.
Section 1.3 Terms Related to the Purchase and Sale of Assets. Title to and
risk of loss or damage to the Assets shall pass to Buyer at the Closing. Except
with respect to claims arising or events occurring prior to the Closing which
may be covered by insurance prior to Closing, the Seller's and its Subsidiaries'
insurance coverage for the Assets and the Business shall cease as of the
Closing.
Section 1.4 Limitation of Warranty. Except for such representations and
warranties as are set forth herein or in any agreement, certificate or
instrument delivered by the Seller or its Subsidiaries at the Closing, all of
the Assets sold hereunder are sold to Buyer "as is" and "where is" without any
warranty of merchantability or fitness for intended use; provided, however, that
the Seller agrees to assign to Buyer such rights as the Seller and its
Subsidiaries may have the right to assign under any warranty made by any vendor,
manufacturer or contractor with respect to any of the Assets.
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Section 1.5 Transfer of Know-How. The communication of transferred Know-How
from the Seller and its Subsidiaries to Buyer shall occur primarily through
Buyer's acquisition of property and any engagement of the Seller's and its
Subsidiaries' personnel, provided that the Seller and its Subsidiaries shall
have no responsibility to ensure that any of their personnel become or remain
the personnel of Buyer. In addition, in order to facilitate the transfer of such
Know-How, the Seller shall use and shall cause its Subsidiaries to use
reasonable efforts, for a period of twelve (12) months from the Closing Date, to
provide to Buyer, upon Buyer's written request, copies of any documents or other
information in the Seller's or its Subsidiaries' possession defining or
specifying the subject matter, nature and extent of the Know-How and take such
other action as the parties mutually agree is reasonably necessary or
appropriate to effectuate the transfer of such Know-How.
Section 1.6 Instruments of Conveyance and Transfer, Etc. At the Closing,
the Seller shall execute and deliver (or cause to be executed and delivered) to
Buyer, such deeds, bills of sale, endorsements, conveyances, powers of attorney,
assignments and other good and sufficient instruments of sale, transfer,
conveyance and assignment as are necessary to sell, transfer, convey and assign
to Buyer, in accordance with the terms hereof, the Business and the Assets. At
the Closing, the Seller shall relinquish to Buyer possession and operating
control of the Business and the Assets and shall take all other steps that may
be required or desirable to pass title to the Assets to Buyer.
ARTICLE II
ASSIGNMENT AND ASSUMPTION OF LIABILITIES
Section 2.1 Assumption of Liabilities by Buyer. From and after the Closing,
(i) the Transferred Subsidiaries shall remain liable for all liabilities and
obligations of the Transferred Subsidiaries other than the Retained Liabilities,
whether known, unknown, matured or contingent, and (ii) the Transferred
Subsidiaries shall, jointly and severally, assume and be liable and responsible
for each of the liabilities and obligations of the Seller and its Subsidiaries
to the extent arising out of the ownership, use or possession of the Assets or
the conduct or operation of the Business whether known, unknown, matured or
contingent, other than Retained Liabilities, in each case, without any further
responsibility or liability of or recourse to the Seller or its Subsidiaries or
any of their Affiliates or their respective directors, shareholders, officers,
employees, agents, consultants, personnel, representatives, successors,
transferees or assignees, including, without limitation, the following (the
"Assumed Liabilities"):
(a) all liabilities and obligations of the Seller and its Subsidiaries
under all Assigned Contracts and Licenses assigned or transferred to Buyer
pursuant to Section 1.1 hereof;
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(b) all liabilities and obligations with respect to products sold or
services rendered by the Business including under any of the warranty
policies and agreements of the Seller or its Subsidiaries described in
Section 2.1(b) of the Disclosure Schedule;
(c) all trade accounts payable, accrued expenses and all current
liabilities or obligations of the Seller and its Subsidiaries related
primarily to the Business, in each case, to the extent accrued on the
Closing Balance Sheet and reflected in the calculation of the Closing Date
Net Working Capital;
(d) (i) all Tax liabilities of the Transferred Subsidiaries (other
than (A) Tax liabilities attributable to other members of the Seller's
affiliated income tax group that are imposed on the Transferred
Subsidiaries under U.S. Treasury Regulation ss. 1.1502-6 or a comparable
provision of state, local or foreign law or (B) income Taxes that are
imposed on Olsten Flying Nurses Corp. or any other member of the "selling
consolidated group" (as such quoted term is defined in Section
338(h)(10)(B) of the Code) with respect to the deemed asset sale gain of
Olsten Flying Nurses Corp. resulting from the Election, (ii) all other Tax
liabilities that are accrued or reserved on the Closing Balance Sheet and
reflected in the calculation of the Closing Date Net Working Capital, (iii)
all other Tax liabilities relating to the operation of the Business or the
ownership of the Assets after the Closing and (iv) all Taxes payable by
Buyer under Section 7.3 hereof;
(e) except as otherwise expressly provided in Section 8.6(b) hereof,
all liabilities of the Seller or its Subsidiaries to or in respect of the
employees, independent contractors, agents and other personnel employed by
the Transferred Subsidiaries as of the Closing Date, including, without
limitation, liability for salary, bonus, vacation, severance, other
benefits and all other compensation;
(f) any liability or obligation arising out of or resulting from acts,
omissions, events, occurrences or transactions of whatsoever type or nature
to the extent arising primarily out of or resulting primarily from (i) the
ownership, use or possession of the Assets or (ii) the conduct of the
Business;
(g) except as otherwise expressly provided in Section 8.6(b) hereof,
all liabilities of the Seller or its Subsidiaries to or in respect of the
employees set forth in Section 8.1(b) of the Disclosure Schedule for (i)
liabilities to the extent accrued on the Closing Balance Sheet and
reflected in the calculation of the Closing Date Net Working Capital and
(ii) all liabilities accruing or otherwise attributable to events occurring
after the Closing Date; and
(h) all liabilities of the Seller or its Subsidiaries to or in respect
of the employees set forth in Section 8.1(b) of the Disclosure Schedule for
severance benefits pursuant to Seller's severance plans in effect as of the
Closing Date as set forth in Schedule 4.1(m), except to the extent such
employee is terminated by the Seller or its Subsidiaries prior to the
Closing Date for reasons other than as contemplated by this Agreement.
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The assumption by Buyer of the Assumed Liabilities and the transfer thereof
by the Seller and its Subsidiaries shall in no way expand the rights or remedies
of any third party against the Seller and its Subsidiaries or Buyer as compared
to the rights and remedies which such third party would otherwise have had.
Section 2.2 Retained Liabilities. The Seller agrees that (i) neither Buyer
nor the Transferred Subsidiaries is assuming any of the following liabilities,
and (ii) the Seller and its Subsidiaries (other than the Transferred
Subsidiaries) are assuming from the Transferred Subsidiaries or retaining, as
the case may be, each of the following liabilities, in each case, whether known,
unknown, matured or contingent (collectively, the "Retained Liabilities"):
(a) (i) any Tax liability of the Seller or its Subsidiaries other than
the Transferred Subsidiaries that is not accrued or reserved on the Closing
Balance Sheet and reflected in the calculation of the Closing Date Net
Working Capital and any Tax liability attributable to members of the
Seller's affiliated income tax group other than the Transferred
Subsidiaries that is imposed on the Transferred Subsidiaries under U.S.
Treasury Regulations ss. 1.1502-6 or a comparable provision of state, local
or foreign law, (ii) all income Taxes that are imposed on Olsten Flying
Nurses Corp., or any other member of the "selling consolidated group" (as
such quoted term is defined in Section 338(h)(10)(B) of the Code) with
respect to the deemed asset sale gain of Olsten Flying Nurses Corp.
resulting from the Election and (iii) all Taxes payable by Seller under
Section 7.3 hereof;
(b) except as specifically agreed herein, any fees, costs or expenses
of the Seller or its Subsidiaries (including the Transferred Subsidiaries)
incurred in connection with the purchase and sale contemplated by this
Agreement;
(c) any liability or obligation of the Seller and its Subsidiaries
(including the Transferred Subsidiaries) to the extent related to the
operation by the Seller and its Subsidiaries of their respective businesses
other than the Business (including, without limitation, any liability or
obligation to any Governmental Authority and including any indebtedness of
the Seller or its Subsidiaries (including the Transferred Subsidiaries) for
borrowed money);
(d) except as otherwise set forth in Section 8.3, any liability or
obligation (other than the liabilities or obligations described in Section
2.1(g)(i) and Section 2.1(h)), to or in respect of the employees listed in
Section 8.1(b) of the Disclosure Schedule and to or in respect of other
personnel of the Business who are natural persons providing services as
independent contractors or other personnel, which services are similar to
the services provided by employees of the Business, in each case accruing
or otherwise attributable to events occurring on or prior to the Closing
Date;
(e) any liability of the Seller or its Subsidiaries (including the
Transferred Subsidiaries) relating to actual or alleged professional
negligence or other actions or omissions which constitute professional
misfeasance or malfeasance by any present or former officer, employee,
contractor, agent or representative of the Business (including any
Con-
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tinuing Employee) arising from acts or omissions which occurred on or prior
to the Closing Date;
(f) all liabilities and obligations related to workers' compensation
claims asserted or benefits relating to any occupational illness or injury
arising or occurring prior to the Closing Date, in respect of any employee,
independent contractor, agent and other personnel of the Business
(including any employee, independent contractor, agent and other personnel
of the Transferred Subsidiaries);
(g) all liabilities with respect to the former employees of the
Transferred Subsidiaries including, without limitation, liability for
salary, bonus, vacation, severance, other benefits and all other
compensation; and
(h) all liabilities expressly retained by Seller pursuant to Article
VIII.
ARTICLE III
PURCHASE PRICE
Section 3.1 Purchase Price. On the Closing Date, Buyer shall assume the
Assumed Liabilities and shall deliver an amount (the "Closing Cash
Consideration") equal to (i) the Purchase Price minus (ii) the Escrow Amount, by
wire transfer in immediately available funds to the Seller as consideration for
the Seller's and its Subsidiaries' giving, granting, bargaining, selling,
conveying, assigning, transferring and delivering all of their right, title and
interest in and to the Assets and Business to Buyer. Notwithstanding any
provision of this Section 3.1 to the contrary, the Purchase Price shall be
adjusted following the Closing as provided in Section 3.2 and the Escrow Amount
shall be paid as provided in Section 3.3. At the Closing, Buyer shall pay to an
escrow agent to be mutually agreed upon by the parties (the "Escrow Agent") by
wire transfer of immediately available funds $1,000,000 (the "Escrow Amount") to
be held in escrow pursuant to an Escrow Agreement (the "Escrow Agreement") in
the form of Exhibit A hereto until released as provided in Section 3.3 and the
Escrow Agreement.
Section 3.2 Purchase Price Adjustment. (a) As soon as reasonably
practicable following the Closing Date, and in any event within sixty (60)
calendar days thereafter, Buyer shall prepare and deliver to the Seller (i) a
consolidated unaudited balance sheet of the Business as of the Closing Date (the
"Closing Balance Sheet") and (ii) a calculation of the Net Working Capital of
the Business as of the Closing Date as set forth on the Closing Balance Sheet
(the "Closing Date Net Working Capital"). The Closing Balance Sheet shall be
prepared in accordance with GAAP (except to the extent described in Item 2 of
Section 4.1(f) of the Disclosure Schedule with respect to income Taxes) and on a
basis consistent with that of the Interim Balance Sheet (to the extent
consistent with GAAP or for matters described in Item 2 of Section 4.1(f) of the
Disclosure Schedule with respect to income Taxes, then, to the extent consistent
with such schedule) and shall fairly present the con-
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solidated financial position of the Business as of the Closing Date. "Net
Working Capital" of the Business shall mean the current assets of the Business
(excluding the Excluded Assets) minus the current liabilities of the Business
(excluding the Retained Liabilities) as presented on the Closing Balance Sheet;
provided, however, notwithstanding the foregoing, in calculating the Net Working
Capital, the current liabilities of the Business shall include an accrual for
any portion of the liabilities and obligations of the Business with respect to
(i) workers' compensation claims not covered by third party insurance (including
any self-insured amount, deductible or retention amount) and otherwise retained
by the Seller as a Retained Liability described in Section 2.2(f), which accrual
shall be calculated consistent with past practice and the amount of which shall
hereafter be referred to as the "Workers' Compensation Accrual Amount" and (ii)
professional negligence claims in the amount of $240,000 which are retained by
Seller as a Retained Liability described in Section 2.2(e).
(b) Upon delivery of the Closing Balance Sheet, Buyer will provide the
Seller with reasonable access to the financial records of the Business and the
employees of Buyer who assisted in preparation of the Closing Balance Sheet to
the extent related to the Seller's review of the Closing Balance Sheet and the
calculation of the Closing Date Net Working Capital. The Seller may dispute the
calculation of the Closing Date Net Working Capital or any element of the
Closing Balance Sheet relevant thereto by notifying Buyer of such disagreement
in writing, setting forth in detail the particulars of such disagreement, within
thirty (30) calendar days after its receipt of the Closing Balance Sheet;
provided that the basis of any disagreement shall be limited to the Seller's
belief that the Closing Balance Sheet or the calculation of the Net Working
Capital was not prepared or calculated in accordance with Section 3.2(a). In the
event that the Seller does not provide such a notice of disagreement within such
thirty (30) calendar day period, the Seller shall be deemed to have accepted the
Closing Balance Sheet and the calculation of the Closing Date Net Working
Capital delivered by Buyer, which shall be final, binding and conclusive for all
purposes hereunder. In the event any such notice of disagreement is timely
provided, Buyer and the Seller shall use their reasonable best efforts for a
period of thirty (30) calendar days (or such longer period as they may mutually
agree) to resolve any disagreements with respect to the Closing Balance Sheet
and the calculation of the Closing Date Net Working Capital. If, at the end of
such period, they are unable to resolve such disagreements, then
PricewaterhouseCoopers or such other independent accounting firm of recognized
national standing as may be mutually selected by Buyer and the Seller (the
"Auditor") shall resolve any remaining disagreements. The Auditor shall make a
determination as promptly as practicable, but in any event within thirty (30)
calendar days of the date on which such dispute is referred to the Auditor, with
respect to the disagreements submitted to the Auditor and based solely on the
written submissions forwarded by Buyer and the Seller or oral submissions of the
parties with both parties present whether, and to what extent, any adjustment is
required to the Closing Balance Sheet or Closing Date Net Working Capital. The
fees and expenses of the Auditor shall be paid one-half by Buyer and one-half by
the Seller. The determination of the Auditor shall be final, conclusive and
binding on the parties. The date on which the Closing Date Net Working Capital
is finally determined in accordance with this Section 3.2(b) is hereinafter
referred to as the "Determination Date."
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(c) The "Adjustment Amount," which may be positive or negative, shall mean
the excess of (i) the Closing Date Net Working Capital, minus (ii) $14,877,456.
(d) If the Adjustment Amount is a positive number (such amount, the
"Increase Amount"), then within ten (10) days after the Determination Date, (i)
Buyer shall pay to the Seller, in immediately available funds, an amount in cash
equal to the Increase Amount, together with interest thereon from the Closing
Date to the date of payment calculated at the rate of 6% per annum. If the
Adjustment Amount is a negative number (such amount, the "Deficit Amount"), then
within ten (10) days after the Determination Date, the Seller shall pay to
Buyer, in immediately available funds, an amount in cash equal to the Deficit
Amount together with any interest thereon from the Closing Date to the date of
payment calculated at a rate of 6% per annum. In the event there is a Deficit
Amount, Buyer may, at its option elect to be paid the Deficit Amount, in whole
or in part, out of the Escrow Account. If such election is made, within two (2)
business days of the calculation of the Adjustment Amount, Buyer and Seller
shall deliver written instructions to the Escrow Agent instructing the Escrow
Agent to pay to Buyer the lesser of (x) all or such portion of the Escrow Amount
equal to the Deficit Amount or (y) the portion of the Escrow Amount, then in
escrow, if any. The remaining Deficit Amount, if any, will be paid in accordance
with this Section 3.2(d). The remaining Escrow Amount, if any, shall not be
disbursed, except as provided in Section 3.3. The Purchase Price shall be deemed
to be increased by all payments made to the Seller pursuant to this Section 3.2,
and the Purchase Price shall be deemed to be decreased by the amount of payments
made to Buyer pursuant to this Section 3.2.
Section 3.3 Reimbursement for Uncollectable Receivables. (a) Buyer shall,
both during and after the period ending 180 days after the Closing Date (the
"Collection Period"), use commercially reasonable efforts (which efforts shall
be substantially comparable with the efforts which would be used by InteliStaf,
Inc. with respect to its creditors generally pursuant to its existing credit
policies as of the date hereof as disclosed to the Seller) to collect all
accounts receivable conveyed to Buyer at the Closing and reflected on the
Closing Balance Sheet (each an "Outstanding A/R"). At any time following the
conclusion of the Collection Period and prior to the date 45 days after the end
of the Collection Period, Buyer shall deliver to the Seller a statement (as it
may be amended pursuant to this Section 3.3, the "Reconciliation Statement")
setting forth in reasonable detail each Outstanding A/R which has not been
collected as of the end of the Collection Period (including the identity of the
customer owing each such uncollected Outstanding A/R and the amount of each such
uncollected Outstanding A/R). Buyer shall also provide the Seller, at its
request, with reasonable access to Buyer's and InteliStaf, Inc.'s personnel and
books and records with respect to collection efforts taken in connection with
Outstanding A/Rs. In the event that at any time after the conclusion of the
Collection Period and prior to the Payment Date, Buyer receives payment on an
Outstanding A/R on the Reconciliation Statement Buyer shall promptly notify the
Seller of all the information related to the payment with respect to such
Outstanding A/R and amend and remove such Outstanding A/R from the
Reconciliation Statement. The Reconciliation Statement shall be reviewed by
Buyer's independent auditor, who shall confirm in writing that such
Reconciliation Statement accurately reflects the aggregate amount of all
Outstanding A/Rs that are uncollected as of the date that is 180 days after the
Closing Date. The Seller shall have 25 days to review the Reconciliation
Statement and Buyer's books and records
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supporting it and take such other reasonable measures to confirm the
Reconciliation Statement. On or prior to the 25th day after the Seller receives
the Reconciliation Statement, the Seller may notify Buyer of any objection to
any of the items contained therein. If the Seller does not deliver such a
notice, the Reconciliation Statement shall be final, conclusive and binding. If
the Seller does deliver such a notice, Buyer and the Seller shall attempt in
good faith to resolve any such dispute. If such dispute is not resolved within
10 business days after such notice, then such dispute shall be submitted to the
Auditor by the parties. Within 30 calendar days after such dispute is referred
to the Auditor, the Auditor shall determine based solely upon the written
submissions of the parties and oral submissions of the parties (with both
parties present) whether the Reconciliation Statement is correct and whether the
aggregate amount of Outstanding A/Rs requires adjustment. The determination of
the Auditor shall be final, conclusive and binding.
(b) Within five (5) business days of the date (the "A/R Determination
Date") on which the Outstanding A/Rs are finally determined in accordance with
subsection (a), Buyer and the Seller shall deliver joint written instructions to
the Escrow Agent to (i) disburse to Buyer the lesser of (x) all or such portion
of the Escrow Amount that equals the amount of the uncollected Outstanding A/Rs
and (y) the portion of the Escrow Amount then in escrow, if any, together with
all interest accrued thereon, and (ii) disburse to the Seller the remainder of
the Escrow Amount, if any, together with all interest accrued thereon.
Notwithstanding the foregoing, in the event that the Closing Date Net Working
Capital has not been finally determined, all or such portion of the Escrow
Amount as would otherwise be distributed to the Seller pursuant to the preceding
sentence (including the interest earned thereon) shall remain in escrow until
such time as the Adjustment Amount has been finally determined and all or such
remaining portion is distributed in accordance with Section 3.2(d) and the
Escrow Agreement. In the event that any portion of the Escrow Amount is
distributed to Buyer pursuant to Section 3.2(d) prior to the A/R Determination
Date (the amount distributed, the "Working Capital Adjustment Distribution
Amount") and the aggregate amount of the Outstanding A/Rs exceeds the remaining
portion of the Escrow Amount, the Seller shall pay to Buyer an amount equal to
the lesser of (A) such excess amount and (B) the Working Capital Adjustment
Distribution Amount; provided that in no event shall the Seller be required to
reimburse Buyer with respect to Outstanding A/Rs in excess of $1,000,000 (plus
interest earned thereon), including the amounts disbursed from the Escrow
Account. In the event that at any time after the A/R Determination Date, Buyer
receives any amount reflected as an uncollected Outstanding A/R on the
Reconciliation Statement, Buyer shall promptly, and in any event within 5
business days thereafter, pay cash in such amount to the Seller.
(c) The parties agree that, for all income tax purposes, the Escrow shall
be treated as a "grantor trust" of the Buyer (as provided in the Escrow
Agreement) and that any amounts that are ultimately paid to the Seller pursuant
to the Escrow Agreement shall be treated as purchase price adjustments as of the
time such amounts are paid to the Seller (except to the extent such amounts are
recharacterized as interest under Sections 483 or 1274 of the Code).
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Seller. The Seller
represents and warrants that as of the date hereof and as of the Closing Date:
(a) Organization and Standing. The Seller is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. The Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities make such qualification necessary, except where the failure to
be so qualified or in good standing would not have a Material Adverse
Effect. The Seller has full corporate power and authority to own or lease
the Assets, to carry on the Business as it is currently conducted, to
execute and deliver this Agreement, and to perform all of its obligations
hereunder.
(b) Ownership of Transferred Subsidiaries. Section 4.1(b) of the
Disclosure Schedule is a correct and complete list of all of the
Transferred Subsidiaries, each of which is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has the requisite corporate power and authority to
conduct its business as it is presently being conducted and to own or lease
its properties and assets. Section 4.1(b) of the Disclosure Schedule
contains a true, correct and complete list of all jurisdictions in which
each Transferred Subsidiary is qualified to do business as a foreign
corporation. Each of the Transferred Subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction where the nature of its activities make such qualification
necessary, except in each case, where the failure to be so qualified or in
good standing would not have a Material Adverse Effect. Copies of the
Certificate or Articles of Incorporation and Bylaws or other governing
documents of each Transferred Subsidiary have been made available to Buyer
and are accurate and complete as of the date hereof. Section 4.1(b) of the
Disclosure Schedule sets forth for each Transferred Subsidiary, a correct
and complete listing of the number of shares of each class of capital stock
authorized and the number of shares of each class of capital stock that are
issued and outstanding. All of the outstanding shares of capital stock of,
or other ownership interests in, the Transferred Subsidiaries have been
duly and validly authorized and issued and are fully paid and
nonassessable, and are owned of record and beneficially by the Seller or
one of its Subsidiaries, free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any nature, except for the pledge
by the Seller of the Transferred Shares and the pledge by the Transferred
Subsidiaries of their assets as security for the Seller's obligations under
the Seller's senior credit facility, which pledge shall be released at or
prior to the Closing Date. Except for the Transferred Shares, there are no
(i) subscriptions, calls, warrants, options or commitments of any kind or
character relating to, or entitling any Person to purchase or other-
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wise acquire, any capital stock or other equity securities of the
Transferred Subsidiaries, (ii) securities convertible into or exercisable
or exchangeable for shares of capital stock or other equity securities of
the Transferred Subsidiaries, or (iii) equity equivalents, interests in the
ownership or earnings of, or equity appreciation, phantom stock or other
similar rights of, or with respect to, the Transferred Subsidiaries. None
of the shares of capital stock of the Transferred Subsidiaries was issued
in violation of the Securities Act or any other applicable Law and all such
shares are free of any preemptive or other similar rights. There are no
stockholder agreements, voting trusts, proxies or other agreements or
understandings with respect to or concerning the purchase, sale or voting
of the capital stock of the Transferred Subsidiaries to which the Seller or
any of its Subsidiaries is a party or by which the Seller or any of its
Subsidiaries is bound.
(c) Authority; No Conflicts. The execution, delivery and performance
of this Agreement and the agreements and transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action by
the Seller and each of its Subsidiaries and do not result in, and the
consummation of the transactions contemplated hereby shall not result in,
(i) a violation of any provision of the Seller's or any of its
Subsidiaries' Certificate of Incorporation or By-laws, (ii) a default (or
event which with notice or lapse of time or both would constitute a
default) under, or the acceleration of any obligation under, any indenture,
trust deed, loan agreement or other instrument relating to or evidencing
indebtedness for monies borrowed by or credit available to the Seller or
any of its Subsidiaries, (iii) a violation of any provision of any lease,
agreement, instrument, court order, arbitration award, judgment or decree
to which the Seller or any of its Subsidiaries is a party or by which it or
its property is bound, (iv) a default (or event which with notice or lapse
of time or both would constitute a default) under, or the acceleration of
any obligation under, any contract, agreement, instrument or obligation to
which the Seller or its Subsidiaries is a party or by which the Assets are
bound, or (v) a violation of any other restriction of any kind or character
to which the Seller or any of its Subsidiaries or any of their property is
subject, except, in each case, any such violations or defaults which would
not have a Material Adverse Effect or materially impair the ability to
perform under this Agreement and to consummate the transactions
contemplated hereby and except, in each case, for any such violations or
defaults listed in Section 4.1(c) of the Disclosure Schedule.
(d) Governmental Consents. The Seller has obtained all governmental
consents and approvals required to be obtained by it and has filed all
notices, declarations or registrations required to be filed by it with any
Governmental Authority, in each case, necessary to enter into this
Agreement and to consummate the transactions contemplated hereby, and all
notice periods with respect thereto have expired or been terminated, except
for such notifications, consents and approvals listed in Section 4.1(d) of
the Disclosure Schedule and except for those notifications, consents and
approvals related to the Licenses listed in Section 4.1(r) of the
Disclosure Schedule.
(e) Valid Agreement. This Agreement has been duly and validly executed
and delivered by the Seller and is, and each of the documents contemplated
hereby, when
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executed and delivered in accordance with its terms, will be, a legal,
valid and binding obligation of the Seller, enforceable against it in
accordance with the terms thereof, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws now or hereafter in
effect relating to creditors' rights generally and subject to limitations
on the remedy of specific performance and injunctive and other forms of
equitable relief.
(f) Financial Statements. Copies of (i) the unaudited balance sheet of
the Business as of January 2, 2000 (the "Year-End Balance Sheet"), (ii) the
unaudited balance sheet of the Business as of July 2, 2000 (the "Interim
Balance Sheet"), (iii) the unaudited statement of operations of the
Business for the year ended January 2, 2000, together with all related
notes thereto (the "Year-End Statement of Operations") and (iv) the
unaudited statement of operations of the Business as of July 2, 2000 (the
"Interim Statement of Operations" and, together with the Year-End Balance
Sheet, the Interim Balance Sheet and the Year-End Statement of Operations,
constitute the "Financial Statements") are set forth as Section 4.1(f) of
the Disclosure Schedule. Each of the Financial Statements is accurate and
complete and presents fairly, in all material respects, the financial
position and results of operations of the Business as of and for the period
ended January 2, 2000 or July 2, 2000, as the case may be, in conformity
with United States generally accepted accounting principles ("GAAP"),
consistently applied, except as otherwise set forth in Section 4.1(f) of
the Disclosure Schedule.
(g) No Undisclosed Liabilities. There are no Liabilities of the
Business, other than Liabilities (i) disclosed or provided for on the
Interim Balance Sheet, (ii) disclosed in this Agreement or on Section
4.1(g) of the Disclosure Schedule, (iii) incurred since the date of the
Interim Balance Sheet in the ordinary course of Business consistent with
past practice, (iv) incurred under this Agreement and (v) that would not be
required to be disclosed in or provided for in the Interim Balance Sheet in
accordance with GAAP if incurred as of July 2, 2000.
(h) Absence of Certain Changes. Except as set forth in Section 4.1(h)
of the Disclosure Schedule, since July 2, 2000, the Business has been
conducted in the ordinary course consistent with the past practice, and
there has not been: (i) any event, occurrence, development or change in the
Business that has had or is reasonably likely to result in a Material
Adverse Effect, other than those resulting from changes, whether actual or
prospective, in general conditions applicable to the industries in which
the Business is involved or in general economic conditions; (ii) any
material damage, destruction or other casualty loss affecting the Business
or any of the Assets; (iii) any material change in the manner the Business
keeps its books and records; (iv) any written notification by any material
supplier, customer or payor of the Business expressly stating its intent to
discontinue doing business with the Business or to substantially reduce its
purchases from or use of products or services of the Business; (v) any
material changes to the employee welfare, pension, retirement,
profit-sharing or other similar benefit plans covering any employees of the
Business other than the extension of coverage to employees of the Business
who became eligible to participate in such benefit arrangements after
December 31, 1999; (vi) any cancellation of any indebtedness owed to the
Seller or its Subsidiaries with re-
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spect to the Business or waiver of any rights of substantial value to the
Business, other than in the ordinary course of business; (vii) any capital
expenditure or any incurrence of liability therefor by the Seller or any of
its Subsidiaries with respect to the Business, other than capital
expenditures involving payments that do not, individually or in the
aggregate, exceed $100,000; (viii) any revaluation by the Seller or any of
its Subsidiaries of any of their respective assets or properties related to
the Business, including without limitation, writing off notes or accounts
receivable, other than revaluations that do not, individually or in the
aggregate, exceed $100,000; (ix) any indebtedness incurred by the Seller or
its Subsidiaries for borrowed money or any commitment to incur indebtedness
entered into by the Seller, or any loans made or agreed to be made by the
Seller, in each case with respect to the Business, other than indebtedness
incurred under the Seller's existing revolving line of credit with its
senior lender in the ordinary course of business; (x) declaration, setting
aside for payment or payment of dividends or distributions in respect of
any capital stock of the Transferred Subsidiaries or any redemption,
purchase or other acquisition by the Seller or any of its Subsidiaries of
any of the Transferred Subsidiaries' capital stock; (xi) any cancellation
or amendment of any Material Agreement, other than which would not have a
Material Adverse Effect; (xii) any adverse changes in employee relations
with the employees of the Business generally, including but not limited to
any organizational activities, other than which would not have a Material
Adverse Effect; (xiii) any new material tax elections made with respect to
the Transferred Subsidiaries or the Assets; (xiv) any sale of any material
assets of the Business; or (xv) any written agreement by the Seller or any
of its Subsidiaries to do any of the foregoing.
(i) Litigation. Except as set forth in Section 4.1(i) of the
Disclosure Schedule, there are no Actions, or, to the Knowledge of Seller,
threatened Actions, by or against the Business or the Transferred
Subsidiaries or arising out of the ownership, use or possession of the
Assets or the conduct or operation of the Business or the Transferred
Subsidiaries, pending before any Governmental Authority (or, to the
Knowledge of Seller, threatened in writing to be brought by or before any
Governmental Authority). Except as set forth in Section 4.1(i) of the
Disclosure Schedule, neither the Business, the Transferred Subsidiaries nor
any of the Assets is subject to any material Governmental Order (nor, to
the Knowledge of Seller, are there any such material Governmental Orders
threatened in writing to be imposed by any Governmental Authority).
(j) Compliance with Laws. Except as set forth in Section 4.1(j) of the
Disclosure Schedule, the Business is and each of the Seller and its
Subsidiaries is, and for the past three (3) years has been, in compliance
in all material respects with all material Laws and material Governmental
Orders applicable to the Business or any of the Assets.
(k) Material Contracts. All of the written agreements or
understandings set forth in Section 4.1(k) of the Disclosure Schedule are
in full force and effect, and no breach or default by the Seller or any of
its Subsidiaries or, to the Knowledge of Seller, by any other party has
occurred with respect thereto. Except as set forth in Section 4.1(k) of the
Disclosure Schedule, each written Material Agreement is enforceable against
the Seller and its Subsidiaries and, to the Knowledge of Seller, each other
party thereto, in accordance
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with its terms, except where enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and
except where enforceability is subject to the application of equitable
principles or remedies. Except as identified in Section 4.1(k) of the
Disclosure Schedule, no approval or consent of any Person is needed in
order to assign any of such Material Agreements to Buyer pursuant to this
Agreement or as a result of the transactions contemplated hereby. Section
4.1(k) of the Disclosure Schedule sets forth a true and correct list of
each agreement, contract, license or understanding (in each case, whether
written or oral) (the "Material Agreements") to which any Transferred
Subsidiary is a party or the Seller or any of its Subsidiaries is a party
with respect to the Business or by which any of the Assets are bound that
(i) was not made in the ordinary course of business, (ii) involves an
aggregate commitment or potential aggregate commitment on the part of any
party of more than $500,000, (iii) involves sale, distribution, commission,
marketing or similar arrangements of the Seller or its Subsidiaries of the
products or services of the Business having a value (or reasonably likely
to have a value with respect to future sales) of more than $500,000, (iv)
involves the lease of real property for the Business, (v) is an employment
contract not terminable on less than thirty days' notice or that will
result in any obligation (absolute or contingent) of Buyer or the
Transferred Subsidiaries to make any payment to any Continuing Employee
following termination of employment or upon a change of control of the
Business (other than pursuant to the Seller's severance policy, a copy of
which has been provided to Buyer prior to the date hereof), (vi) includes a
license to any Transferred Intellectual Property, (vii) is a personal
property lease involving annual payments in excess of $500,000, (viii) is a
joint venture agreement, partnership agreement or otherwise involves the
sharing of profits by the Business with any third party, (ix) involves the
provision of goods or services to any business of the Seller or its
Affiliates (other than the Business) involving an amount in excess of
$500,000, (x) involves indebtedness for borrowed money (including any
guarantees thereof) for which the Business is obligated, other than the
senior credit facility, (xi) includes any written warranty, guaranty or
other similar undertaking with respect to contractual performance extended
by the Business other than in the ordinary course of business, (xii)
contains covenants materially limiting the freedom of the Business or the
Transferred Subsidiaries to engage in any line of business or compete with
any Person, or (xiii) involving the sale or disposition of material
properties or assets of the Business (other than the sale of inventory in
the ordinary course of business). The Seller has delivered or made
available to Buyer true, correct and complete copies of all Material
Agreements listed in Section 4.1(k) of the Disclosure Schedule, including
all amendments and supplements thereto. Each of the oral Material
Agreements (the "Oral Agreements") are customer contracts that are
terminable within 60 days of giving notice to the other party thereto
without payment or penalty. The Business has no material liability with
respect to the Oral Agreements other than ordinary course liabilities
associated with the performance thereof.
(l) Labor Matters. Except as set forth in Section 4.1(l)(A) of the
Disclosure Schedule, there are no collective bargaining or other labor
union agreements applicable to any Continuing Employees. Except as set
forth in Section 4.1(l)(B) of the Disclosure Schedule, as of the date
hereof, no material work stoppage or material labor dispute
-16-
(including representation questions, arbitration proceedings, labor
strikes, slowdowns or stoppages, grievances or other labor disputes)
against the Business is pending or, to the Knowledge of Seller, threatened,
and, to the Knowledge of Seller, there is no organizational activity
currently underway with respect to the Business. The Seller and its
Subsidiaries are in compliance in all material respects with all applicable
Laws respecting employment practices, employee documentation, terms and
conditions of employment and wages and hours, equal employment opportunity,
nondiscrimination, immigration, benefits, collective bargaining
occupational safety, and health and plant closings, in each case as they
relate to the Continuing Employees or the Business, except where the
failure to be in compliance would not have a Material Adverse Effect.
Except as set forth in Section 4.1(l)(C) of the Disclosure Schedule, as of
the date hereof, neither the Seller nor any of its Subsidiaries is engaged
in, and neither the Seller nor any of its Subsidiaries has received any
written notice of, any unfair labor practice related to the Business and no
such complaints are pending before the National Labor Relations Board or
any other Governmental Authority.
(m) Employee Benefits. Section 4.1(m) of the Disclosure Schedule lists
each written or material unwritten pension, retirement, profit-sharing,
deferred compensation, bonus, incentive, performance, stock option, stock
appreciation, phantom stock, stock purchase, restricted stock, medical,
hospitalization, vision, dental or other health, life, disability,
severance, termination or other employee benefit plan, program,
arrangement, agreement or policy to which as of the date hereof the Seller
or its Subsidiaries or any of their ERISA Affiliates contributes or is
obligated to contribute or under which the Seller or its Subsidiaries or
any of their ERISA Affiliates may have any liability and, in each case,
under which any Continuing Employee (or their respective beneficiaries or
dependents) is eligible to participate or to accrue a benefit (each, an
"Employee Benefit Plan"). Section 4.1(m) of the Disclosure Schedule
separately lists (A) each Employee Benefit Plan that is maintained or
contributed to solely by the Transferred Subsidiaries (each, a "Transferred
Employee Benefit Plan") and (B) each Employee Benefit Plan which is
intended to be qualified under the provisions of Sections 401(a) and 501(a)
of the Code (each, a "Seller Savings Plan"). Except for the Transferred
Employee Benefit Plans, the Transferred Subsidiaries do not sponsor any
Employee Benefit Plans. True and complete copies of each Employee Benefit
Plan have been made available to Buyer or Buyer's representative prior to
the date hereof. Except as set forth in Section 4.1(m) of the Disclosure
Schedule on the date hereof, (i) each Employee Benefit Plan complies in all
material respects, and has been operated and administered in all material
respects, in accordance with its terms and all applicable requirements of
all applicable laws and regulations of any Governmental Authority,
including ERISA and the Code, (ii) no non-exempt "prohibited transaction"
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
plan termination has occurred with respect to any Employee Benefit Plan
which could result in a material liability to Buyer, the Seller or any of
the Seller's Subsidiaries, (iii) since January 2, 2000, there has not been
any increase in the base compensation payable to, or to become payable to,
any employees of the Business, except (A) increases granted in the ordinary
course of business consistent with past practice or (B) as indicated in
Section 4.1(m) of the Disclosure Schedule, (iv) neither the Seller nor
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any Subsidiary nor any ERISA Affiliate maintains or contributes to or is
required to contribute to or has in the previous 6 years maintained or
contributed to or has been required to contribute to any ERISA Plan, (v)
each Employee Benefit Plan which is a "group health plan," as defined in
Section 607(1) of ERISA, has been operated in compliance in all material
respects with provisions of Part 6 of Title I, Subtitle B of ERISA and
Section 4980(B) of the Code ("COBRA") at all times and (vi) no Employee
Benefit Plan is a Multi-Employer Welfare Arrangement as defined in Section
3(40)(A) of ERISA. Except as set forth in Section 4.1(m) of the Disclosure
Schedule, no Transferred Employee Benefit Plan (A) provides for medical or
welfare benefits or coverage for any participant or any dependent or
beneficiary of any participant after such participant's retirement or other
termination of employment except as may be required by COBRA, (B) is a
"multiemployer plan" as defined in Section 3(37) of ERISA, or (C) is funded
through a trust intended to be exempt from tax pursuant to Section 501 of
the Code. With respect to each Seller Savings Plan, the Seller will apply
for a determination letter from the Internal Revenue Service that the Plan
is qualified under Section 401(a) of the Code prior to the end of the
applicable remedial amendment period and, to the Knowledge of Seller, no
event has occurred and no condition exists which could reasonably be
expected to result in a failure to issue any such determination. Each of
the field care givers and other per diem employees of the Business
(including, without limitation, the traveling nurses) are as of the date
hereof employed by one of the Transferred Subsidiaries.
(n) Taxes. Except as set forth in Section 4.1(n) of the Disclosure
Schedule, (a) the Transferred Subsidiaries (the "Taxpayers") have filed, or
been included in, all Tax Returns required to be filed through the date
hereof, in each case subject to any applicable extensions and all such Tax
Returns (or, in the case of Tax Returns that include a Taxpayer, the
portion of such Tax Returns relating to such Taxpayer) are true and correct
in all material respects; (b) all Taxes of the Taxpayers in respect of
taxable periods or portions thereof that end on or prior to the Closing
Date have been or will be timely paid at or prior to Closing, or will be
accrued on the Closing Balance Sheet, other than (1) Taxes contested in
good faith by appropriate proceedings and for which a reserve for the
amount of such Taxes has been established on the Closing Balance Sheet, (2)
Taxes described in Section 2.2(a)(ii) hereof or Section 7.3 hereof and (3)
Taxes attributable to the Closing Date that result from any action taken by
Buyer (or its Affiliates) or the Taxpayers after the Closing that is not in
the ordinary course of business; (c) no deficiencies for any Taxes of the
Taxpayers have been asserted or proposed or threatened in writing; (d) no
waivers of statutes of limitation have been given or requested regarding
any Taxes of the Taxpayers; (e) neither Taxpayer (x) has made or is
obligated to make any payment or (y) is a party to any agreement that could
obligate it to make any payment, that will not be deductible under Section
280G of the Code (the foregoing representation shall be construed to refer
both to payments actually made and payments deemed made for Tax purposes);
and (f) the Seller is and will be eligible as of the Closing Date to make
an election under Section 338(h)(10) of the Code with respect to the
purchase of the stock of Olsten Flying Nurses Corp. Except as set forth in
Section 4.1(n) of the Disclosure Schedule, (a) no claim has even been made
in writing by an authority in a jurisdiction where a Taxpayer does not file
Tax Returns that such Taxpayer is or may be subject to taxation by
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that jurisdiction; (b) none of the Taxpayers (i) has filed a consent under
Code Section 341(f) concerning collapsible corporations or (ii) is a United
States real property holding corporation within the meaning of Code Section
897(c)(2); (c) none of the Taxpayers has agreed to or is required to make
any adjustment pursuant to Code Section 481(a) by reason of a change in
accounting method initiated by such Taxpayer and none of the Taxpayers has
knowledge that the Internal Revenue Service has proposed any such
adjustment or change in accounting method; and (d) none of the Taxpayers
(1) has been a member of any affiliated group of corporations that files a
consolidated federal income Tax Return, other than a group of which it is
currently a member or a group of which Olsten Corporation was the common
parent or (2) has any liability for the Taxes of any person (other than the
Taxpayers or other members of a group of which it is currently a member or
a group of which Olsten Corporation was the common parent) under Treas.
Reg. Section 1.1502-6 (or any similar provisions of state, local or foreign
law), as a transferee, successor, by contract or otherwise. Except as set
forth in Section 4.1(n) of the Disclosure Schedule, the Taxpayers are not a
party to or bound by any tax sharing or similar contract (including
indemnity arrangements). All material amounts required to be withheld by
the Taxpayers from employees for income tax, social security contributions,
unemployment tax and workers' compensation have been withheld and timely
paid to the appropriate governmental agencies. Except as set forth in
Section 4.1(n) of the Disclosure Schedule: (a) none of the assets of the
Taxpayers and none of the Assets (i) is required to be treated as being
owned by any other person pursuant to the so-called safe harbor lease
provisions of former Section 168(f)(8) of the Code, (ii) secures any debt
the interest on which is tax-exempt under Code Section 103(a), (iii) is
tax-exempt use property within the meaning of Code Section 168(h) or (iv)
is subject to a "section 467 rental agreement" within the meaning of Code
Section 467 and (b) there are no liens for Taxes on any of the Assets,
other than liens for property Taxes not yet due and payable.
Notwithstanding anything in this Section 4.1(n) to the contrary, the Seller
makes no representations regarding the net operating losses of the
Taxpayers or the tax basis of the assets of Olsten Health Services
(Staffing), Inc.
(o) Brokers. Other than UBS Warburg LLC, the fees and expenses of
which shall be paid by the Seller, no broker, finder, investment banker or
other third party is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Seller or its
Subsidiaries.
(p) Insurance Policies. Section 4.1(p) of the Disclosure Schedule
contains an accurate and complete description of all policies of property,
fire and casualty, product liability, workers' compensation, and other
forms of insurance held by the Seller or any of its Subsidiaries with
respect to the Business. True, correct and complete copies of such
insurance policies have been made available to Buyer. All material
insurance policies owned or held by the Seller or its Subsidiaries on the
date hereof which cover the Business or the Assets are in full force and
effect and will remain in effect with respect to all events occurring, and
all claims arising, prior to the Closing Date and all premiums with respect
thereto have been paid to the extent due, no notice of cancellation or
termination
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has been received with respect to any such policy (other than policies
which the Seller or its Subsidiaries have replaced or intend to replace
prior to the expiration thereof by policies providing substantially the
same types and amounts of coverage).
(q) Title to Assets. The Seller and its Subsidiaries have, and will
have on the Closing Date, good and marketable title to or a valid leasehold
interest in all of the Assets being transferred hereby, free and clear of
any and all mortgages, liens, pledges, security interests, privileges,
charges, claims or encumbrances of every kind, nature and description
except for Permitted Liens and except, as of the date hereof, the Assets
have the mortgages, liens, pledges, security interests, privileges,
charges, claims or encumbrances listed in Section 4.1(q) of the Disclosure
Schedule.
(r) Licenses. Section 4.1(r) of the Disclosure Schedule lists all of
the Licenses which are material to the conduct of the Business. Such
Licenses constitute all of the material Licenses required for the conduct
of the business of the Company as presently conducted. Each such License is
valid, binding and in full force and effect; and there are no proceedings
pending, nor to the Knowledge of Seller, threatened that seek the
revocation, cancellation, suspension or adverse modification of any such
License. Except as set forth in Section 4.1(r) of the Disclosure Schedule,
each of the Seller and its Subsidiaries has fulfilled and performed all of
its material obligations with respect to such Licenses required to have
been fulfilled and performed prior to the date hereof and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or result in any other material
impairment of the rights of the holder of any such License.
(s) Assets Complete. The Assets, together with the Excluded Assets,
constitute all material assets required for the operation of the Business
in a manner substantially consistent with the operation of the Business as
currently conducted by the Seller and its Subsidiaries. The Fixed Assets
which are part of the Assets are taken as a whole in good operating
condition and repair (normal wear and tear excepted) and are suitable for
the purposes for which they are presently or have historically been used,
other than in each such case which would not have a Material Adverse
Effect.
(t) Real Property. Section 4.1(t) of the Disclosure Schedule contains
a complete and accurate list of all real property leased by the Seller or
its Subsidiaries ("Leased Real Property") and, in each case, used
exclusively in the operation of the Business. Except as set forth in
Section 4.1(t) of the Disclosure Schedule, the Seller or one of its
Subsidiaries has a valid leasehold interest in, and enjoys peaceful and
undisturbed possession (consistent with historical use) of, all Leased Real
Property, in each case free and clear of all encumbrances except for
Permitted Liens. The Seller and its Subsidiaries have in all material
respects performed all the material obligations required to be performed by
any of them through the date hereof with respect to the Leased Real
Property. Except for the leases with respect to the Leased Real Property
listed in Section 4.1(t) of the Disclosure Schedule, there are no material
leases, subleases, licenses, occupancy agreements, options, rights,
concessions or other agreements or arrangements written or oral granting to
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any person the right to use or occupy any Leased Real Property. Neither the
Seller nor any of its Subsidiaries owns any real property that is used
exclusively in the Business.
(u) Intellectual Property. Section 4.1(u) of the Disclosure Schedule
sets forth all material patents, trademarks, service marks, trade names and
copyrights (whether registered or unregistered and including pending
applications by the Seller or any of its Subsidiaries for any of the
foregoing) used primarily in the Business. The Seller or one of its
Subsidiaries owns and/or has the rights to use each of the Transferred
Intellectual Property. The Transferred Intellectual Property and the
Excluded Marks constitute all of the material intellectual property
necessary to conduct the Business in the manner presently conducted. To the
Knowledge of Seller, except as set forth in Section 4.1(u) of the
Disclosure Schedule, no other person (i) has the right to use any of such
Transferred Intellectual Property or (ii) is infringing upon any such
Transferred Intellectual Property. Neither the Seller's nor any of its
Subsidiaries' use of such Transferred Intellectual Property is infringing
upon or otherwise violating the rights of any third party. No proceedings
have been instituted against or written notices received by the Seller that
are presently outstanding alleging that the Seller's or any Subsidiary's
use of the Transferred Intellectual Property infringes upon or otherwise
violates any rights of a third party in or to such Intellectual Property
Rights.
(v) Customers and Suppliers. Section 4.1(v) of the Disclosure Schedule
sets forth a complete and accurate list of the names of the (i) ten (10)
largest customers of the Business (including any group of affiliated
customers for which services are provided by one or more branch offices of
the Business) for the most recent fiscal year and the six months ended July
2, 2000 showing the approximate total sales in dollars to each customer
during such period; and (ii) ten (10) largest suppliers of the Business for
the most recent fiscal year and the six months ended July 2, 2000 showing
the approximate aggregate total purchases in dollars by the Business from
each supplier during such period. Except as disclosed in Section 4.1(v) of
the Disclosure Schedule, neither the Seller nor any of its Subsidiaries has
received any written communications, or to the Knowledge of Seller, any
other communication from any customer or supplier listed in Section 4.1(v)
of the Disclosure Schedule expressly stating its intention to discontinue
doing business with the Business or to substantially reduce purchases from
or use of products or services of the Business.
(w) Affiliate Transactions. Except as set forth in Section 4.1(w) of
the Disclosure Schedule, (i) no officer, director or Affiliate of the
Seller or any of its Subsidiaries (other than Transferred Subsidiaries),
(ii) no individual related by blood, marriage or adoption to any person
described in clause (i), and (iii) no entity in which any of the foregoing
persons described in clause (i) or clause (ii) owns individually or in the
aggregate a greater than 10% beneficial interest, (x) is a party to any
agreement, contract or commitment related to staffing services of or to the
Business or (y) has a material interest in any material property used by
the Business, which agreements, contracts, commitments or interests, in the
case of (x) and (y), in the aggregate, involve commitments on the part of
any party in excess of $1,000,000 per fiscal year. As of the Closing Date,
there will be no obligation
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on the part of either the Seller or its Subsidiaries or the Business to
provide any corporate or administrative services to the other, except as
set forth in the Transition Services Agreement.
(x) Environmental Matters. Except as set forth in Section 4.1(x) of
the Disclosure Schedule: (i) the Seller and its Subsidiaries are in
substantial compliance with all laws relating to pollution or the
environment ("Environmental Laws") in connection with the conduct of the
Business or the use of the Real Property; (ii) the Seller and its
Subsidiaries have no material liability under any Environmental Law with
respect to the Business or the Real Property; (iii) to the Knowledge of
Seller, no written notices of any material violation or alleged material
violation of, or any material liability under, any Environmental Law
relating to the Business or the Real Property have been received by the
Seller or its Subsidiaries during the proceeding three (3) years; (iv)
there are no writs, injunctions, decrees, orders or judgments outstanding,
or any actions, suits, claims, proceedings or investigations pending or, to
the Seller's knowledge, threatened, relating to compliance with or
liability under any Environmental Law relating to the Business or the Real
Property; and (v) there are no Phase I or Phase II reports or other
environmental audits in the possession of the Seller or its Subsidiaries
relating to the Real Property.
Section 4.2 Representations and Warranties of Buyer. Buyer represents and
warrants as of the date hereof and as of the Closing Date that:
(a) Organization and Standing. Buyer is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has full power and authority to own, lease and operate its
assets and properties and to carry on its business as it is currently being
conducted and to perform all of its obligations under this Agreement.
(b) Authority; No Conflicts. The execution, delivery and performance
of this Agreement and the agreements and transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action and
do not result in, and the consummation of the transactions contemplated
hereby shall not result in, (i) a violation of any provision of Buyer's
Certificate of Incorporation or By-laws or similar organizational document,
(ii) a default (or event which with notice or lapse of time or both would
constitute a default) under, or the acceleration of any obligation under,
any material indenture, trust deed, loan agreement or other instrument
relating to or evidencing indebtedness for monies borrowed by or credit
available to it, (iii) a violation of any provision of any material lease,
agreement, instrument, court order, arbitration award, judgment or decree
to which Buyer is a party or by which it or its property is bound, (iv) a
default (or event which with notice or lapse of time or both would
constitute a default) under, or the acceleration of any obligation under
any material contract, agreement, instrument or obligation to which Buyer
is a party or (v) a violation of any other material restriction of any kind
or character to which Buyer or its property is subject, except, in each
case, any such violations or defaults which would not materially impair
Buyer's ability to perform under this Agreement and to consummate the
transactions contemplated hereby.
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(c) Governmental Consents. Buyer has obtained all governmental
consents, permits, authorization and approvals required to be obtained by
it to enter into and perform under this Agreement and to consummate the
transactions contemplated hereby, except for such consents, authorizations
and approvals which may be required under the HSR Act.
(d) Valid Agreement. This Agreement has been duly and validly executed
and delivered by Buyer and is, and each of the documents contemplated
hereby and thereby to which Buyer is or will be a party, when executed and
delivered in accordance with its terms, will be, the valid and binding
obligation of Buyer enforceable against it in accordance with the terms
thereof, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws now or hereafter in effect relating to creditors'
rights generally and subject to limitations on the remedy of specific
performance and injunctive and other forms of equitable relief.
(e) Brokers. Except as set forth in Section 4.2(e) of the Disclosure
Schedule, the fees and expenses of which shall be paid by Buyer, no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Buyer.
(f) Financing. Buyer has sufficient capital on hand and/or debt and
equity financing commitments (and has provided the Seller with evidence
thereof (such evidence of the debt commitments, the "Commitment Letter"))
to, upon consummation of the financing transactions contemplated thereby,
enable Buyer to pay and deliver on the Closing Date the entire Purchase
Price in cash.
ARTICLE V
COVENANTS OF THE SELLER
Section 5.1 Pre-Closing Activities. From and after the date of this
Agreement until the Closing, the Seller shall, and shall cause its Subsidiaries
to:
(a) not take any action that would prohibit or materially impair its
and their ability to consummate the transactions contemplated by this
Agreement;
(b) operate the Business in the ordinary course of business and
consistent with past practice, including by maintaining current
relationships with the Business customers and suppliers in the ordinary
course of business;
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(c) not lease, license or otherwise dispose of or mortgage, pledge or
otherwise encumber any material Asset except in the ordinary course of
business and consistent with past practice;
(d) not enter into any agreement which would have been, if entered
into prior to the date hereof, a Material Agreement in accordance with
Section 4.1(h), or terminate, materially and adversely modify or amend any
Material Agreement; provided, however, notwithstanding the foregoing, the
Seller may enter into customer contracts in the ordinary course of business
provided such contracts may be terminated by the Business without payment
or penalty upon no more than 30 days prior written notice;
(e) not make or adopt any change to the certificate of incorporation
or bylaws (or similar organizational documents) of any Transferred
Subsidiary as in force and effect on the date hereof without the consent of
Buyer;
(f) not enter into any employment or severance agreement with any
officer of the Transferred Subsidiaries or any other employee of the
Business or establish or increase the benefits payable under any new bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing or other employee benefit plan for employees of the Business, or
otherwise increase the compensation payable or to become payable to any
officer of the Transferred Subsidiaries or other employees of the Business,
except in the ordinary course of business consistent with past practice or
as may be required by Law;
(g) not permit any Transferred Subsidiary to acquire by merger,
consolidation or otherwise, all or substantially all of the assets of any
other Person, or otherwise acquire any material assets or business of, any
corporation, partnership, association or other business organization or
division thereof engaged in the Business;
(h) except in the ordinary course of business where used to finance
the Business's working capital needs, not incur any indebtedness related to
the Business;
(i) not make or change any material Tax election, amend any material
Tax Return, or settle or compromise any material Tax audit affecting the
Assets, the Business or any of the Transferred Subsidiaries;
(j) maintain the Assets in substantially their current state of
repair, normal wear and tear accepted, and make capital expenditures
related to the Business in the ordinary course of business consistent with
past practice;
(k) not revalue any of the Assets, including, without limitation,
writing off receivables or reserves, other than in the ordinary course of
business;
(l) not permit any Transferred Subsidiary to make any dividend or
distribution with respect to the capital stock of such Transferred
Subsidiary or redeem or repurchase any of the capital stock of such
Transferred Subsidiary;
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(m) not permit the Business or the Transferred Subsidiaries to make
any material loans or advances to any Person, except for expenses incurred
in the ordinary course of business, or to any employee of the Business;
(n) collect accounts receivable and pay accounts payable related to
the Business in the ordinary course of business;
(o) use commercially reasonable efforts to maintain the Business's
current relationships with employees of the Business; provided, such
commercially reasonable efforts with respect to such employees shall not,
in any event, include the Seller increasing compensation or in any manner
increasing its costs or liabilities associated with such employees; or
(p) not enter into any agreement, or otherwise become obligated, to do
any action prohibited hereunder.
Section 5.2 Compliance with Laws. The Seller shall comply with all
applicable laws, including, without limitation, the HSR Act, required to be
complied with by it to consummate the transactions contemplated hereby.
Section 5.3 Approvals and Consents. The Seller shall use all commercially
reasonable efforts to obtain all governmental, regulatory or third-party
approvals or consents and make or cause to be made (or use its commercially
reasonable efforts to assist Buyer in making) any declarations, filings and
registrations with Governmental Authorities or other third parties which are
necessary for the Seller to consummate the transactions contemplated herein.
Section 5.4 Further Assurances. After the Closing, the Seller shall, and
shall cause its Subsidiaries to, at Buyer's reasonable request and without
further consideration, except for reimbursement of out-of-pocket expenses,
execute such additional instruments of conveyance and transfer and provide to
Buyer such additional documents as Buyer may require to convey and transfer the
Assets to Buyer.
Section 5.5 Confidentiality Agreements. The Seller shall not amend, modify
or supplement or grant any consent or waiver under or with respect to, any
confidentiality agreements entered into by the Seller (or its representatives or
Affiliates) and each party to whom confidential information with respect to the
Business was provided in connection with the sale of the Business or otherwise
(collectively, the "Sale Confidentiality Agreements") without Buyer's prior
written consent.
Section 5.6 Protection of Confidential Information. The Seller hereby
agrees after the Closing Date, to safeguard against disclosure to third parties
all Trade Secrets transferred to Buyer hereunder, by using reasonable secrecy
measures and in any event not less than the same
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degree of care as for its own similar proprietary information; provided,
however, that the Seller may disclose such Trade Secrets as required by any Law
or legal process.
Section 5.7 Solicitation of Employees. For a period of two (2) years after
the Closing Date, the Seller shall not, without Buyer's prior written consent,
solicit or hire any person who is a Continuing Employee to become an employee of
the Seller or any of its Subsidiaries. Notwithstanding the foregoing, the Seller
may solicit or hire employees, including the Continuing Employees, by or
resulting from any general advertising method not specifically or primarily
targeted at Continuing Employees, including open recruitment fliers mailed to
such Continuing Employees and other potential employees and may hire such
employee who responds to such solicitation, other than the employees listed in
Section 8.1 of the Disclosure Schedule. If, at the time of enforcement of this
section, a court holds that the restrictions 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.
Section 5.8 Non-Competition. (a) Except as provided in clause (b), for a
period of four (4) years from the Closing Date, except as permitted in this
Section 5.8, the Seller and its Affiliates shall not engage, directly or
indirectly, in (i) any business that provides (v) licensed or non-licensed
personnel, (w) medical testing and laboratory personnel, (x) therapy or
rehabilitative personnel, (y) mental health providers or (z) administrative
personnel, including, without limitation, billers, coders and personnel who
supervise, coordinate or facilitate the provision of healthcare providers by
other persons as supplemental staff or on a direct placement basis to third
party entities (the "Seller Covered Business") or (ii) any business that owns,
manages, operates, controls or participates in the ownership, management,
operation or control of any business or enterprise that engages in a Seller
Covered Business. Notwithstanding the foregoing, "Seller Covered Business" shall
not include the provision of licensed or non-licensed personnel (A) to or on
behalf of individuals at the request of such individuals or on their behalf, (B)
in connection with the conduct of clinical trials, research projects,
educational programs and the promotion and launching of drugs and devices, or
(C) to individual or group practitioners in connection with the home care
business or (D) to other home care entities.
(b) The restrictions set forth in Section 5.8(a) shall not be construed to
prohibit or restrict:
(i) the Seller or any of its Affiliates from engaging in any business
related to any activity which does not constitute the Seller Covered
Business or any activity described in clause 5.8(a)(ii);
(ii) any equity investment by the Seller or any of its Affiliates in
any Person in which the Seller or such Affiliate does not have the right to
designate a controlling number of members of the board of directors (or
similar governing body) of such entity and in which the Seller or such
Affiliate together with its Affiliates collectively hold not more than 10%
of the outstanding voting securities;
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(iii) any business activity that would otherwise violate Section
5.8(a) that is carried on by any Person that is acquired by, combined with,
or otherwise becomes a Subsidiary or Affiliate, of the Seller after the
Closing Date (a "Seller Acquired Company"), but only if, at the time of
such acquisition, the revenues derived from the Seller Covered Business by
the Seller Acquired Company constitute less than 20% of the annual revenues
of the Seller Acquired Company; provided, that within nine (9) months of
the consummation of such acquisition the Seller or its Affiliate disposes
of the portion of the Seller Acquired Company that is engaged in the Seller
Covered Business unless the ownership of all or a portion of such Seller
Covered Business would otherwise be permitted by this Section 5.8; or
(iv) the Seller or any of its Affiliates from engaging in a business
which constitutes the Seller Covered Business, so long as (i) the aggregate
revenues of the Seller for each fiscal year derived from all such Seller
Covered Business under this Section 5.8(b)(iv) do not exceed $12.5 million
and (ii) the aggregate revenues of the Seller for each fiscal year derived
from such Seller Covered Business under this Section 5.8(b)(iv) in the
cities listed in Section 5.8 to the Disclosure Schedule or the 25 mile
radius surrounding the city limits of such cities (as named on such
Schedule) (the "Restricted Markets") do not exceed $2.0 million.
Notwithstanding the foregoing, the Seller shall not (A) conduct the Seller
Covered Business from any business location of which substantially all of the
business of such location is the Seller Covered Business, (B) engage in the
Seller Covered Business within the Restricted Markets pursuant to clause (iv) of
this Section 5.8(b) with any customer or client that is not a customer or client
of the Seller or its Subsidiaries on the date of this Agreement or (C) engage in
the Seller Covered Business pursuant to clause (iv) of this Section 5.8(b) in
the Restricted Markets with any customer or client that is a customer of the
Business.
(c) For a period of four (4) years from the Closing Date, the Seller shall
provide to Buyer on the sixtieth (60th) day after each fiscal year of the Seller
and on the sixtieth (60th) day after each second fiscal quarter of the Seller, a
report (the "Seller Covered Business Report") specifying the Seller's aggregate
revenues for such period derived from its business in the Seller Covered
Business and the Seller's aggregate revenues derived from its business in the
Seller Covered Business in the Restricted Markets and, in each case, as
indicated by accounting record coding, consistent with past practice. In the
event the Seller Covered Business Report indicates that the revenues of the
Seller's business that is engaged in the Seller Covered Business are for any
fiscal year period within 95% of the maximum revenue limits, as provided in
Section 5.8(a) or Buyer has good faith reason to believe the Seller has breached
the covenant provided in this Section 5.8, Buyer shall, upon its request within
thirty (30) days of receipt of the Seller Covered Business Report, have
reasonable access to the supporting data used to prepare the Seller Covered
Business Report, to the extent necessary to review such report. Any
out-of-pocket costs or expenses incurred in connection with such review shall be
borne solely by Buyer.
(d) The Seller shall take all commercially reasonable efforts to cause its
employees to comply with Section 5.8.
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(e) The Seller shall not actively market or advertise any business it
engages in which is within the Seller Covered Business; provided, however, the
Seller may market and advertise its business within the Seller Covered Business
together with any marketing or advertising for its Home Care Nursing Services
business or Specialty Pharmaceutical Services business in the manner the Seller,
prior to the date hereof, engaged in such advertising or marketing with respect
to its businesses, which was not solely engaged in the Business. Notwithstanding
the foregoing, the Seller may describe its business without regard to this
provision for purposes of any filings or disclosure to any Governmental
Authority.
(f) If, at the time of enforcement of this Section 5.8, a court holds that
the restrictions stated herein are unreasonable under the circumstances then
existing, the parties agree that the maximum period, scope or geographical area
reasonable under the circumstances shall be substituted for the stated period,
scope or area. It is recognized and acknowledged by the Seller that a breach of
the covenant contained in this Section 5.8 will cause irreparable damage to
Buyer, the exact amount of which will be difficult or impossible to ascertain,
and that the remedies at law for any such breach will be inadequate.
Accordingly, the Seller agrees that in the event of a breach of any of the
covenants contained in this Section 5.8, in addition to any other remedy which
may be available at law or in equity, Buyer will be entitled to specific
performance and injunctive relief. Notwithstanding the foregoing, prior to
taking any action to enforce this Section 5.8, each of the President of Buyer
and the President of the Seller shall negotiate in good faith for a period of
thirty (30) days to resolve any dispute arising under this Section 5.8.
Section 5.9 Access to Information. From the date of this Agreement until
the Closing, upon reasonable advance notice, the Seller shall, and shall cause
the officers, employees, auditors and agents of the Seller and its Subsidiaries
to, (i) afford the officers, employees and authorized agents and representatives
of Buyer reasonable access, during normal business hours, to the offices,
properties, books and records of the Business and (ii) furnish to the officers,
employees and authorized agents and representatives of Buyer such additional
financial and operating data and other information regarding the Assets and the
Business as Buyer may from time to time reasonably request in order to assist
Buyer in fulfilling its obligations under this Agreement and to facilitate the
consummation of the transactions contemplated hereby; provided, however, that
Buyer shall not unreasonably interfere with any of the businesses or operations
of the Seller or its Subsidiaries.
Section 5.10 Notification of Certain Events. From the date hereof through
the Closing, the Seller shall give prompt notice to Buyer and Buyer shall give
prompt notice to the Seller of (a) the occurrence, or failure to occur, of any
event which occurrence or failure would be likely to cause any of the Seller's
or Buyer's respective representations or warranties contained in this Agreement
to be untrue or inaccurate in any material respect and (b) any material failure
of the Seller or Buyer to comply with or satisfy any of its respective
covenants, conditions or agreements to be complied with or satisfied by it under
this Agreement; provided, however, that such disclosure shall not be deemed to
cure any breach of a representation, warranty, covenant or agreement, or to
satisfy any condition. The Seller shall provide Buyer with an unaudited
consolidated balance sheet and the
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related statements of income and cash flow for the Business for each month from
the date hereof through the Closing Date within 30 calendar days after the end
of each such month.
Section 5.11 Exclusivity. From the date hereof through the Closing Date or
earlier termination of this Agreement, neither the Seller nor its Subsidiaries
shall, nor shall any of them knowingly permit its respective Affiliates,
officers, directors, employees, representatives and agents to, directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any Person or group of Persons
(other than Buyer or any of its Affiliates) in furtherance of any merger, sale
of assets, sale of shares of capital stock or similar transactions involving the
Business or any of the Transferred Subsidiaries, other than the transactions
contemplated by this Agreement.
ARTICLE VI
COVENANTS OF BUYER
Section 6.1 Pre-Closing Activities. From and after the date of this
Agreement until the Closing, Buyer shall not take any action that would prohibit
or impair its ability to consummate the transactions contemplated by this
Agreement.
Section 6.2 Compliance with Laws. Buyer shall duly comply with all
applicable laws, including, without limitation, the HSR Act, required to be
complied with by it to consummate the transactions contemplated hereby.
Section 6.3 Approvals and Consents. It shall be Buyer's responsibility to
obtain all governmental, regulatory or other third-party approvals and consents
and make or cause to be made any declarations, filings and registrations with
governmental or regulatory authorities or other third parties which are
necessary for Buyer to consummate the transactions contemplated herein,
including, without limitation, those approvals, consents, filings and notices
required in connection with the Licenses listed in Section 4.1(r) of the
Disclosure Schedule.
Section 6.4 Further Assurances. After the Closing, Buyer shall, at the
Seller's reasonable request, and without further consideration, execute such
additional instruments of assumption and provide to the Seller such additional
documents as the Seller may require to ensure the proper assignment and
assumption of the Assumed Liabilities by Buyer.
Section 6.5 Preservation of Books and Records; Post-Closing Access. From
and after the Closing Date, with respect to all matters, except for tax matters
as covered in Article IX, Buyer agrees that it shall preserve and keep the books
and records of the Business delivered to it
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hereunder for such period of time as may be required by any government agency or
ongoing investigation, litigation or proceeding, and shall make its books and
records and employees available to the Seller as may be reasonably required in
connection with any legal proceedings against or governmental investigations of
the Seller or its Subsidiaries or for any other reasonable business purpose
arising from or relating to the Excluded Assets or the Retained Liabilities. In
the event Buyer wishes to destroy any such books or records at any time after
two years from the Closing, Buyer shall first give thirty (30) days prior
written notice to the Seller and the Seller shall have the right at its option
and expense, upon prior written notice given to Buyer within said thirty (30)
day period, to take possession of said records within ninety (90) days after the
date of Buyer's notice hereunder.
Section 6.6 Protection of Confidential Information. Buyer hereby agrees,
after the Closing Date, to safeguard against disclosure to third parties all
Trade Secrets of the Seller and its Subsidiaries not transferred to Buyer
hereunder but learned in connection with its investigation of the Business, by
using reasonable secrecy measures and in any event not less than the same degree
of care as for its own similar proprietary information; provided, however, that
Buyer may disclosure such Trade Secrets as required by any Law or legal process.
Section 6.7 Solicitation of Employees. For a period of two (2) years after
the Closing Date, except for the Contract/Administrative Employees, Buyer shall
not without the Seller's prior written consent solicit any person who is not a
Continuing Employee on the Closing Date to become an employee of Buyer or any of
its Subsidiaries. With respect to the Contract/Administrative Employees, in the
event that Buyer notifies the Seller of its intent to make an offer of
employment to such individuals, the Seller and its Subsidiaries will not take
any action to induce such employees not to take such offer, including agreeing
to increase the compensation payable to such employees. Notwithstanding the
foregoing, the Seller may solicit employees of the Seller or its Subsidiaries,
by any general advertising method not specifically or primarily targeted at the
Seller's or its Subsidiaries' employees, including open recruitment fliers
mailed to such employees and may hire any nurse, nurse assistant, medical
testing and laboratory personnel, therapy or rehabilitative personnel, mental
health providers or administrative personnel of the Seller or its Subsidiaries
who responds to such solicitation. If, at the time of enforcement of this
section, a court holds that the restrictions 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.
Section 6.8 Insurance. From and after the Closing Date, Buyer shall
maintain in full force and effect insurance policies and insurance contracts,
including, without limitation, primary, excess and umbrella, comprehensive
general and professional liability and workers' compensation policies as in
Buyer's reasonable judgment are reasonable and adequate for its business,
including the Business.
Section 6.9 Name Change. Following the Closing Date, Buyer shall and shall
cause the Transferred Subsidiaries to take all ac-
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tion reasonably necessary to cease using, and change, as soon as practicable but
in any event, within thirty (30) days from the Closing Date (including by
amending charter documents) any corporate or other names which are the same as,
confusingly similar to, or include, the name "Olsten" or "Gentiva".
Notwithstanding the foregoing, Buyer shall be permitted to use such names to the
extent permitted by Section 1.2(b).
Section 6.10 Workers' Compensation and Professional Negligence. Following
the Closing Date, Buyer shall reimburse the Seller (i) for the Workers'
Compensation Accrual Amount and (ii) $240,000, equal to the liabilities
described in Section 2.2(e) that will be accrued on the Closing Balance Sheet.
Such reimbursement shall be payable in cash, during the course of two (2) years
from the Closing Date, in eight equal quarterly installments.
Section 6.11 Financing. Buyer shall use its commercially reasonable efforts
to obtain financing on or prior to the Closing Date for the transactions
contemplated by this Agreement on the terms set forth in the Commitment Letter
for the transactions contemplated by this Agreement.
ARTICLE VII
FURTHER COVENANTS OF THE PARTIES
Section 7.1 Nonassignable Contracts and Permits. (a) Nothing in this
Agreement shall be construed as an attempt to assign to Buyer any contract,
commitment, or other agreement or permit, license or authorization which is by
law or its terms nonassignable or the assignment of which would constitute a
violation of statute, rule, regulation, contract, commitment or other agreement.
(b) If, as of the Closing, an attempted assignment of any contract,
commitment or other agreement would be ineffective or would affect the Seller's
rights thereunder so that Buyer would not in fact receive all such rights, the
Seller shall cooperate with Buyer in a mutually acceptable arrangement, use
their commercially reasonable efforts to provide for Buyer the benefit
(including the economic benefit) of such contract, commitment, or other
agreement (other than legal title). If and so long after the Closing as such
assignment shall not have been made, the Seller shall (i) to the extent that
such action shall not result in violation of such contract, commitment or other
agreement, transfer to Buyer all assets and rights, including all monies,
received in respect of such contract and hold such contract, commitment or other
agreement in trust for Buyer and (ii) to the extent that the provisions of
clause (i) above are not sufficient to transfer all of the benefits (including
the economic benefit) of such contract, commitment or other agreement (other
than legal title), or any of such contract, commitment or other agreement has
been cancelled as a result of the attempted assignment, take such actions
(which, without limitation, may include entering into subcontracting
arrangements with Buyer) as are commercially reasonable to
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provide all of the benefits (or the equivalent thereof, including the economic
benefit) of such contract, commitment or other agreement (other than legal
title) to Buyer.
(c) Buyer shall obtain, at its own expense, as of the Closing or as soon
thereafter as practicable, all business permits, business licenses or business
authorizations required by any governmental agency to conduct the Business of
the type disclosed in Section 4.1(r) of the Disclosure Schedule, without any
guaranty or liability of the Seller with respect thereto, except for those
permits, licenses or authorizations which can be assigned by the Seller at
Closing with or without the consent of any third party. Subsequent to Closing,
the Seller shall have the right to cancel any such permits, licenses or
authorizations and bonds or guarantees related thereto which are applicable to
the Assets or the Business (other than such permits, licenses or authorizations
that are issued to the Transferred Subsidiaries) but are unable to be assigned
within 180 days from the Closing and shall have the right at any time to permit
the Licenses listed in Section 4.1(r) of the Disclosure Schedule to expire in
accordance with their terms.
(d) Buyer shall reimburse the Seller for one-half of any reasonable
out-of-pocket costs incurred by the Seller or its Subsidiaries as a result of
the arrangements mutually agreed to by each of Buyer and the Seller pursuant to
Section 7.1(a) with respect to any nonassignable contract, commitment or other
agreement (other than costs of performance of such contracts, commitment or
agreements the payment of which shall be allocated as part of the mutually
agreed upon arrangements). The Seller shall not be required to incur any costs
or take any action in order to maintain the effectiveness of any permits,
licenses or authorizations except as provided in the last sentence of Section
7.1(c) and, in such case, only to the extent any costs or expenses are
reimbursed by Buyer in full.
Section 7.2 Conduct of Litigation. Buyer, on the one hand, and the Seller,
on the other hand, shall cooperate fully in the prosecution or defense of any
action, proceeding or claim involving the Business arising out of or relating to
the Retained Liabilities, on the one hand, and the Assumed Liabilities, on the
other hand, and shall consult and confer with one another with respect thereto,
at no cost to Buyer, on the one hand, or the Seller, on the other hand, other
than reimbursement for out-of-pocket expenses.
Section 7.3 Sales and Transfer Taxes. Any transfer, documentary, sales,
use, real estate transfer or other similar Taxes assessed upon or with respect
to the transfer of the Assets (including the Transferred Shares) to Buyer and
any recording or filing fees with respect thereto shall be paid one-half by
Buyer and one-half by the Seller.
Section 7.4 Transition Services Agreement. At the Closing, the Seller and
Buyer shall enter into a Transition Services Agreement substantially in the form
of Exhibit B under which the Seller shall provide certain transitional services
to Buyer on the terms set forth therein.
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Section 7.5 Efforts to Consummate. Subject to the terms and conditions of
this Agreement, each party shall use its reasonable best efforts to take or
cause to be taken all actions and do or cause to be done all things necessary or
desirable in order to consummate the transactions contemplated in this Agreement
in the time period contemplated by this Agreement.
Section 7.6 Contract/Administrative Employees. At such time as the
Transition Services Agreement is terminated or the provision of services by the
Contract/Administrative Employees is terminated in accordance with or as a
result of the reduction of services under or termination of the Transitional
Services Agreement unless Buyer notifies the Seller that it desires to make an
offer of employment to the Contract/Administrative Employees, the Seller shall
use commercially reasonable efforts to retain such employees for other useful
purposes of the Seller's or its Subsidiaries' businesses. Notwithstanding the
foregoing, the Seller shall not be required to create a new position for such
employees or incur any cost (other than nominal costs) or liabilities to
reassign such employees. If the Seller is unable to reassign such employees in
accordance with the foregoing arrangements, Buyer shall promptly reimburse the
Seller for any severance payment owed to such employees. Such reimbursement by
Buyer shall be paid to the Seller within 5 days of the severance payment. If the
Seller is able to make alternative employment arrangements that are accepted by
any of the Contract/Administrative Employees, Buyer shall have no further
obligation with respect to such Contract/Administrative Employees.
Section 7.7 Co-Located Properties. For a period of eighteen (18) months
following the Closing Date or such shorter term with respect to the co-located
properties listed in Item 2 of Section 1.1(e) of the Disclosure Schedule (the
"Co-Located Properties") with a lease term of shorter than eighteen (18) months
(the "Initial Term"), Seller or its Subsidiaries will provide Buyer and its
Subsidiaries with use of those areas of each of the Co-Located Properties which
the Business had use of and access to as of the date hereof to the extent the
Business had use of and access to such Co-Located Properties as of the date
hereof. On or before the date that is thirty (30) days before the end of the
Initial Term, with respect to each Co-Located Property Buyer will notify Seller
whether Buyer will either (i) continue to use the respective Co-Located
Property, on a month-to-month basis and providing thirty (30) days notice prior
to vacating such Co-Located Property or (ii) vacate the respective Co-Located
Property no later than the end of the Initial Term. Buyer shall reimburse the
Seller for Buyer's and its Subsidiaries' (including the Transferred
Subsidiaries) use of the Co-Located Properties in the amount set forth in
Section 7.7 of the Disclosure Schedule, unless otherwise mutually agreed to by
the parties. Such reimbursement shall be payable by Buyer in cash on or prior to
the first day of each month after the Closing Date.
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ARTICLE VIII
Employee matters
Section 8.1 Employees. Section 8.1(a) of the Disclosure Schedule sets forth
a true and correct list of each employee, whether full time or part-time,
employed by the Transferred Subsidiaries as of the date hereof (other than field
caregivers and other employees employed on a per diem basis, each of whom is an
employee of the Business) and Section 8.1(b) of the Disclosure Schedule sets
forth a true and correct list of each employee of the Seller or its Subsidiaries
(other than the Transferred Subsidiaries) who is employed as a full-time
administrative employee by the Seller or its Subsidiaries exclusively in
connection with the Business, in either case together with each such employee's
title or position. Effective as of and conditioned upon the occurrence of the
Closing, Buyer shall make an offer of employment to each employee listed in
Section 8.1(b) of the Disclosure Schedule, except for Contract/Administrative
Employees, to the extent such employee is a full-time administrative employee of
the Seller or its Subsidiaries on the Closing Date and shall cause the
Transferred Subsidiaries to continue to employ each employee on the Closing Date
set forth in Section 8.1(a) to the Disclosure Schedule, in each case for the
same salary as provided to such employees immediately prior to the Closing Date
and upon such other terms as are described herein which are provided to other
similarly situated employees of Buyer as of the date hereof. Each employee as of
the Closing Date and as set forth on Section 8.1(b) to the Disclosure Schedule
who accepts the offer of employment from Buyer and each employee employed by the
Transferred Subsidiaries on the Closing Date shall be referred to herein as a
"Continuing Employee." Nothing in this Section 8.1 shall create any obligation
on the part of Buyer to continue the employment of any such Continuing Employee
for any definite period following the Closing.
Section 8.2 Employee Benefit Plans for Continuing Employees. Buyer will
provide employee benefit plans and arrangements (the "Buyer Plans") for
Continuing Employees that are provided to other similarly situated employees of
Buyer as of the date hereof (or continue to cover Continuing Employees who
participate in a Transferred Subsidiary Benefit Plan under such Transferred
Subsidiary Benefit Plan) except for such changes as may be (i) required by law
including without limitation any applicable qualification requirements of
Section 401(a) of the Code or (ii) necessary as a technical matter to reflect
the transactions contemplated hereby in this Article VIII. Except as provided
hereinafter in this Article VIII with respect to specific types of benefits,
Buyer shall, and shall cause its Affiliates to, take into account and credit
each Continuing Employee's period of service with the Seller or its Subsidiaries
or their Affiliates prior to the Closing under the Buyer Plans. Buyer (and its
Affiliates) reserves the right to amend or terminate any of the Buyer Plans as
it (and they) may deem appropriate at any time and from time to time.
Section 8.3 Pension Plans. Buyer shall take all action necessary to extend
participation and coverage under the InteliStaf, Inc. 401(k) Profit Sharing Plan
and Trust ("Buyer's Savings Plan") as soon as practicable after the
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Closing Date to Continuing Employees who were eligible to participate in a
Seller Savings Plan. Under Buyer's Savings Plan, all Continuing Employees shall
be credited with eligibility and vesting service credited under any Seller
Savings Plan. As of the Closing Date, the employees of the Transferred
Subsidiaries shall cease to participate in the Seller Savings Plan.
(i) As soon as practicable after the Closing Date, the Seller shall
cause each Seller Savings Plan and the Trust(s) pursuant thereto (each, a
"Seller Savings Trust") to transfer to the Buyer's Savings Plan and the
trust established pursuant thereto (the "Buyer Savings Trust") the accounts
under each Seller Savings Plan and the Seller Savings Trust (and the assets
and liabilities therein) attributable to each Continuing Employee. The
Seller shall cause all of such accounts to be fully vested upon such
transfer. Such transfer shall be made in the form of cash or promissory
notes representing plan loans and shall satisfy the requirements of Code
Sections 401(a)(12) and 414(1) and the regulations pursuant thereto. Prior
to such transfer, Buyer and Seller will provide each other with such
documents and other information as each shall reasonably request to assure
itself that the Buyer Savings Plan and Buyer Savings Trust, or the Seller
Savings Plan and Seller Savings Trusts, as the case may be, are qualified
and tax-exempt under the provisions of Code Section 401(a) and 501(a)
respectively as of the date of such transfer. The Buyer Savings Plan shall
preserve for the Continuing Employees all benefits, rights and features
applicable to such transferred accounts which are protected under Section
411(d)(6) of the Code and other applicable law. The Seller shall provide to
Buyer copies of such account records and other documentation of the Seller
Savings Plan pertaining to the Continuing Employees as Buyer may reasonably
request in order to administer and manage the accounts and assets
transferred to the Buyer Savings Plan and Buyer Savings Trust. Buyer and
the Seller shall cooperate in the filing of documents required by the
transfer of assets and liabilities described herein.
(ii) The Buyer Savings Plan shall provide to the Continuing Employees
all of their benefits accrued under each Seller Savings Plan as of the date
of transfer, and neither the Seller nor the Seller's Savings Plan will have
thereafter any liability therefor. The Buyer Savings Plan shall also
provide that a Continuing Employee's period of employment with the Seller
or the Transferred Subsidiaries or any predecessor thereof (as applicable)
for which credit was given under a Seller Savings Plan shall be given
equivalent credit under the Buyer Savings Plan to the effect that if any
Continuing Employee becomes an employee of Buyer as of the Closing Date, no
interruption in participation, benefit accrual or vesting service shall be
deemed to have occurred for such Continuing Employee under the Buyer
Savings Plan by reason of the change in employment contemplated by this
Agreement.
Section 8.4 Welfare and Fringe Benefits Generally. Buyer agrees that
Continuing Employees and their spouses and dependents eligible to participate in
the Seller's current medical and dental benefit plans and vision, disability,
life and accident and other health and welfare plans (the "Seller Welfare
Plans") as of the Closing Date shall be eligible to participate in the medical
and dental benefit plans and vision, disability, life and accident, and other
health and
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welfare plans (the "Buyer's Welfare Plans") as provided by Buyer to its
similarly situated employees except to the extent such Continuing Employees are
otherwise covered under a Transferred Subsidiary Benefit Plan. Any and all
waiting periods and pre-existing condition clauses shall be waived under the
Buyer's Welfare Plans with respect to such Continuing Employees and their
eligible spouses and dependents to the extent such requirements have been
satisfied under an applicable Seller Welfare Plan as of the Closing Date. In
addition, Buyer shall cause the Buyer's Welfare Plans to recognize any
out-of-pocket medical, dental and vision expenses incurred by such Continuing
Employees and their eligible spouses and dependents prior to the Closing Date
under the Seller Welfare Plans for purposes of determining their deductibles and
out-of-pocket maximums during the calendar year in which such Closing Date
occurs under the Buyer's Welfare Plans during the calendar year in which such
Closing Date occurs.
Section 8.5 Options. As of the Closing Date, each option to purchase shares
of the Seller's common stock outstanding immediately prior to the Closing Date
of any Continuing Employee will be exercisable or terminate in accordance with
the Seller's option plans and its Employee Stock Purchase Plan in effect on the
Closing Date as if such person voluntarily resigned.
Section 8.6 Miscellaneous. (a) The Seller and Buyer shall cooperate with
each other in all respects relating to any actions to be taken pursuant to this
Article VIII, including by notifying Seller of the termination of employment of
any Continuing Employees who participates in Seller's supplemental savings plan.
(b) From and after the Closing Date, the Seller shall remain responsible
for any and all liabilities with respect to the Continuing Employees or their
beneficiaries or dependents that are incurred by such individuals prior to the
Closing Date under the applicable Seller Welfare Plans for health, life,
accidental death and dismemberment, accident, sickness and disability benefits.
For purposes of this Agreement, (i) a claim for health benefits (including,
without limitation, claims for medical, prescription drug, dental, and vision
care expenses) will be deemed to have been incurred on the date on which the
related medical service was rendered to the claimant; (ii) a claim for sickness
or disability benefits will be deemed to have been incurred on the date such
sickness or disability occurs; and (iii) in the case of any claim for benefits
other than health benefits (e.g., life insurance benefits), a claim will be
deemed to have been incurred upon the occurrence of the event giving rise to
such claims. Buyer shall be responsible for all claims that are incurred by
Continuing Employees on or after the Closing Date under the applicable Buyer
Welfare Plans. Any liability to any Continuing Employee who is on disability as
of the Closing Date shall be paid by the Seller unless and until such Continuing
Employee returns to work for Buyer or the Transferred Subsidiaries.
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ARTICLE IX
TAX MATTERS
Section 9.1 Obligations and Taxes. To the extent permitted by law, the
Seller shall cause the taxable year of the Taxpayers to close on the Closing
Date for all applicable tax purposes. The Seller shall cause to be prepared in a
manner consistent with past practices all Tax Returns of each Taxpayer for
taxable years or periods ending on or before the Closing Date but which are due
to be filed after the Closing Date (taking into account all applicable
extensions of time for filing), and shall cause such Tax Returns (or, in the
case of any consolidated or combined Tax Returns including a Taxpayer, the
portion of such Tax Return relating to the Taxpayer) to be delivered to Buyer
for comment and approval, which approval shall not be unreasonably withheld, no
later than thirty (30) days prior to the due date for filing any such Tax Return
(taking into account any applicable extensions of time to file). The Seller
shall file all such Tax Returns and shall cause to be timely paid all Taxes
required to be paid for the periods covered by such Tax Returns. Any such Taxes
that are the responsibility of Buyer pursuant to Section 2.1(d) and are either
(1) accrued or reserved on the Closing Balance Sheet or (2) payable by Buyer
under Section 7.3 hereof shall be reimbursed by Buyer within five (5) business
days after a request for reimbursement is made by the Seller.
Buyer shall cause to be prepared in a manner consistent with past practices
all Tax Returns for the Taxpayers for tax periods beginning on or prior to and
ending after the Closing Date and shall cause such Tax Returns to be delivered
to the Seller for comment and approval, which approval shall not be unreasonably
withheld, no later than thirty (30) days prior to the due date for filing any
such Tax Return (taking into account any applicable extensions of time to file).
Buyer shall timely file all such Tax Returns and shall cause to be timely paid
all Taxes required to be paid for the periods covered by such Tax Returns;
provided that the Seller shall pay or cause to be paid over to Buyer prior to
the due date for such Tax Returns (taking into account any applicable
extensions) any Taxes owed in respect of such Tax Returns that are Pre-Closing
Tax Liabilities.
Section 9.2 Cooperation. Buyer and the Seller and their respective
Affiliates shall cooperate in the preparation of all Tax Returns, the filing of
any Tax claims and in any audit, litigation or other proceeding with respect to
Taxes relating in whole or in part to taxable periods ending on or before or
including the Closing Date that are required to be filed after the Closing Date.
Such cooperation shall include, but is not limited to, furnishing prior years'
returns or return preparation packages illustrating previous reporting practices
or containing historical information relevant to the preparation of such returns
and furnishing such other information within such party's possession requested
by the party filing such returns as is relevant to their preparation. In the
case of any state, local or foreign joint, consolidated, combined, unitary or
group relief system returns, such cooperation shall also relate to any other
taxable periods in which one party could reasonably require the assistance of
the
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other party in obtaining any necessary information. Buyer and its Affiliates
shall cooperate with the Seller and its Affiliates in obtaining any refunds
described in Section 1.2(e).
Section 9.3 Access to and Destruction of Books and Records. (a) For a
period of six (6) years after the Closing, each of the Seller and Buyer shall
provide the other with reasonable access during normal business hours to its
books and records to the extent they relate to the Transferred Subsidiaries or
the condition or operation of the Business prior to the Closing and are
requested to prepare Tax Returns, to respond to third party claims or for any
other legitimate purpose specified in writing. Each of the Seller and Buyer
shall have the right, at its own expense, to make copies of any such books and
records.
(b) Neither of the Seller nor Buyer shall destroy any books or records to
the extent that they relate to the Transferred Subsidiaries or the condition or
operation of the Business prior to the Closing without first offering to turn
over possession to the other by written notice at least ninety (90) days prior
to the proposed date of destruction.
Section 9.4 Confidentiality. Each of the Seller and Buyer may take such
action as it reasonably deems appropriate to separate or redact information
unrelated to the Business from documents and other materials requested and made
available pursuant to this Article IX and to condition access to materials that
it deems confidential to the execution and delivery of an agreement by the other
party not to disclose or misuse such information.
Section 9.5 Allocation of Purchase Price. The Closing Cash Consideration
and any other amounts to be received by the Seller after the Closing Date
(pursuant to Sections 3.2 and 3.3) and the Assumed Liabilities shall be
allocated to the Assets and the covenant not to compete as set forth in Section
5.8 for all purposes (including tax and financial accounting purposes) as
provided in Section 9.5 of the Disclosure Schedule (the "Allocation"). Buyer and
the Seller shall, and shall cause their respective Affiliates to, file all Tax
Returns in a manner consistent with the Allocation. Buyer shall prepare and
deliver to the Seller within ninety (90) days after the Closing Date, any Form
8594 required to be filed under Section 1060 of the Code.
Section 9.6 Section 338 Election. The Buyer and the "selling consolidated
group" or the "selling affiliate" (as such quoted terms are defined in Temp.
Treas. Reg. Section 1.338(h)(10)-1T(b)), as the case may be, shall jointly make
the election provided for by Section 338(h)(10) of the Code and any
corresponding elections under state, local or foreign tax law (the "Election")
with respect to the purchase and sale of shares of Olsten Flying Nurses Corp.
The Seller and Buyer shall provide to the other all necessary information to
permit the Election to be made. The Seller and Buyer shall, as promptly as
practicable following the Closing Date, take all actions necessary and
appropriate (including filing IRS Form 8023 and other such forms, returns,
elections, schedules, attachments and other documents as may be required (the
"Forms")) to effect and preserve a timely Election. The Seller and Buyer agree
to mutually determine, in a manner consistent with the Allocation, (a) the
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amount of the aggregate deemed sales price ("ADSP") (within the meaning of
Treasury Regulation Section 1.338-4T) and the amount of the adjusted grossed-up
basis ("AGUB") (within the meaning of Treasury Regulation Section 1.338-5T) of
the Transferred Subsidiaries and (b) the proper allocation of the ADSP and AGUB
among the assets of the Transferred Subsidiaries in accordance with Treasury
Regulation Section 1.338-6T. Buyer shall prepare Internal Revenue Service Form
8023 (and any other corresponding state or local forms) based on the Allocation
and shall, no later than sixty (60) days prior to the latest date for the filing
of each form, deliver such form to the Seller for approval, which approval shall
not be unreasonably withheld. No election pursuant to Section 338 of the Code or
any corresponding elections under state, local or foreign law shall be made with
respect to the stock of Olsten Health Services (Staffing), Inc.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF the SELLER
The obligations of the Seller to consummate the transactions contemplated
by this Agreement are subject to satisfaction of the following conditions as of
the Closing (unless expressly waived in writing by the Seller, in its
discretion, at or prior to the Closing).
Section 10.1 Compliance by Buyer. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by Buyer at or
prior to the Closing shall have been complied with and performed in all material
respects, and the representations and warranties made by Buyer in this Agreement
shall be correct in all material respects at and as of the Closing, with the
same force and effect as though such representations and warranties had been
made at the Closing, except for changes contemplated by this Agreement.
Section 10.2 Certificates, etc. from Buyer. Buyer shall deliver to the
Seller:
(a) A certificate, dated as of the Closing Date, signed by an officer
of Buyer, certifying to the fulfillment of the conditions set forth in this
Article X.
(b) An incumbency certificate for the officers signing documents on
behalf of Buyer pursuant to this Agreement.
(c) A certificate of the secretary of Buyer containing true and
correct copies of the certificate of incorporation and bylaws of Buyer and
resolutions of the board of directors of Buyer approving the transactions
contemplated hereby.
(d) Certified copies of a Certificate of Good Standing with respect to
Buyer issued by the Secretary of State of the jurisdiction of organization
of Buyer.
Section 10.3 No Legal Action. No action, suit, investigation or other
proceeding relating to the transactions contemplated
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hereby shall have been instituted or threatened before any court or by any
governmental body which presents a substantial risk of the restraint or
prohibition of the transactions contemplated hereby or the obtaining of material
damages or other material relief in connection therewith.
Section 10.4 Instruments of Assumption. Buyer shall have delivered to the
Seller an executed Assumption Agreement substantially in the form of Exhibit C
and such other instruments, certificates or documents as shall be reasonably
requested by the Seller for the assignment and assumption of the Assumed
Liabilities.
Section 10.5 Purchase Price. Buyer shall have delivered to the Seller the
Closing Cash Consideration Price in cash in United States dollars by wire
transfer of immediately available funds in accordance with written instructions
provided to Buyer by the Seller and shall have paid to the Escrow Agent the
Escrow Amount.
Section 10.6 HSR Act. The filing and waiting period requirements of the HSR
Act relating to the sale of the Assets shall have been complied with.
Section 10.7 Legal Opinion. Buyer shall have delivered the legal opinion of
Latham & Watkins substantially in the form of Exhibit D to this Agreement.
Section 10.8 Escrow Agreement. Buyer shall have executed a copy of the
Escrow Agreement.
Section 10.9 General. The form and substance of all instruments and
documents executed and delivered in connection with the Closing shall be
reasonably acceptable to the Seller and its counsel.
ARTICLE XI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to satisfaction of the following conditions as of the
Closing (unless expressly waived in writing by Buyer, in its discretion, at or
prior to the Closing).
Section 11.1 Compliance by the Seller. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by the Seller at
or prior to the Closing shall have been complied with and performed in all
material respects, and the representations and warranties made by the Seller in
this Agreement shall be correct in all material respects at and as of the
Closing, with the same
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force and effect as though such representations and warranties had been made at
and as of the Closing, except for changes contemplated by this Agreement, the
Transition Services Agreement and the Escrow Agreement.
Section 11.2 Certificates, etc. from the Seller. The Seller shall deliver
to Buyer:
(a) A certificate, dated as of the Closing Date, signed by an officer
of the Seller, certifying to the fulfillment of the conditions set forth in
this Article XI.
(b) An incumbency certificate for the officer signing documents on
behalf of the Seller pursuant to this Agreement.
(c) A receipt with respect to the Purchase Price.
(d) A certificate signed by the Secretary of the Seller and each of
the Transferred Subsidiaries containing certified copies of the certificate
of incorporation and bylaws of each of the Seller and the Transferred
Subsidiaries and a copy of the resolutions of the Board of Directors of the
Seller approving the transactions contemplated hereby.
(e) Certified copies of a Certificate of Good Standing with respect to
the Seller and each of the Transferred Subsidiaries issued by the Secretary
of State of the jurisdiction of organization of each of the Seller and the
Transferred Subsidiaries.
Section 11.3 No Legal Action. No action, suit, investigation or other
proceeding relating to the transactions contemplated hereby shall have been
instituted or threatened before any court or by any governmental body which
presents a substantial risk of the restraint or prohibition of the transactions
contemplated hereby or the obtaining of material damages or other material
relief in connection therewith.
Section 11.4 Instruments of Conveyance. The Seller shall have delivered to
Buyer a duly executed Bill of Sale and Assignment substantially in the form of
Exhibit E and such other instruments of transfer and conveyance, each duly
executed, as shall be reasonably requested by Buyer for the transfer of all of
the Seller's and its Subsidiaries' right, title and interest to and in the
Assets.
Section 11.5 HSR Act. The filing and waiting period requirements of the HSR
Act relating to the purchase of the Assets shall have been complied with.
Section 11.6 Stock Certificates. The Seller shall have delivered stock
certificates representing all of the issued and outstanding capital stock of the
Transferred Subsidiaries, together with stock powers duly endorsed in blank.
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Section 11.7 Legal Opinion. The Seller shall have delivered the opinion of
Cahill Gordon & Reindel, counsel to the Seller, in substantially the form of
Exhibit F to this Agreement.
Section 11.8 Ancillary Agreements. The Seller shall have executed and
delivered to Buyer a copy of the Transition Services Agreement.
Section 11.9 Resignation of Officers and Directors. Except as set forth on
Section 11.10 of the Disclosure Schedule, each member of the Board of Directors
and each officer of the Transferred Subsidiaries shall have resigned as elected
or appointed directors and officers of the Transferred Subsidiaries, effective
as of the Closing Date.
Section 11.10 FIRPTA Certificate. The Seller shall deliver to Buyer an
executed affidavit, dated not more than thirty (30) days prior to the Closing
Date, in accordance with Code Section 1445(b)(2) and Treasury Regulation section
1.1445-2(b), which statement certifies that the Seller is not a foreign person
and sets forth the Seller's name, identifying number and address.
Section 11.11 General. The form and substance of all instruments and
documents executed and delivered in connection with the Closing shall be
reasonably acceptable to Buyer and its counsel.
Section 11.12 No Material Adverse Effect. After the date hereof, no events
shall have occurred or facts or circumstances exist that have a Material Adverse
Effect.
Section 11.13 Debt Financing. Buyer shall have obtained debt financing for
the transaction contemplated by this Agreement in aggregate principal amount of
not less than $54 million.
ARTICLE XII
CLOSING
Section 12.1 The Closing. The consummation of the transactions (the
"Closing") contemplated by this Agreement shall take place at 10:00 a.m.,
Eastern Standard Time, on such date which is the third business day after the
date on which the conditions set forth in Articles X and XI have been satisfied
or waived (except for such conditions as are to be satisfied at the Closing), at
the offices of Cahill Gordon & Reindel, 80 Pine Street, New York, New York, or
at such other place, date and time as the parties shall mutually agree (the
"Closing Date").
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The delivery of all documents and the performance of all acts at the
Closing shall be deemed to have occurred or to have been taken simultaneously.
ARTICLE XIII
INDEMNIFICATION
Section 13.1 Seller's Indemnity. The Seller shall indemnify, defend and
hold Buyer, its stockholders, officers, directors, employees, Subsidiaries
(including the Transferred Subsidiaries) and Affiliates (each, a "Buyer
Indemnified Party") harmless from, against and in respect of any and all claims,
expenses, liabilities, damages, losses, costs, government proceedings, causes of
action, demands, judgments (including, without limitation, reasonable attorneys'
fees) (collectively, the "Claims") to the extent suffered or incurred by Buyer
Indemnified Parties by reason of any of the following:
(a) the Seller's failure to pay, discharge or perform any of its
liabilities or obligations under this Agreement other than the Assumed
Liabilities;
(b) any breach by the Seller of its representations or warranties or
covenants set forth in this Agreement or any Schedule or Exhibit hereto;
(c) the Retained Liabilities; and
(d) all Pre-Closing Tax Liabilities that are not Retained Liabilities.
Section 13.2 Buyer's Indemnity. Buyer shall indemnify, defend and hold the
Seller, its Subsidiaries, its stockholders, officers, directors, employees,
Subsidiaries and Affiliates (each, a "Seller Indemnified Party") harmless from,
against and in respect of any and all Claims to the extent suffered or incurred
by the Seller Indemnified Parties by reason of any of the following:
(a) any Claims by any party with respect to any obligation or
liability relating to the Assumed Liabilities;
(b) Buyer's failure to pay, discharge or perform any of its
liabilities or obligations under this Agreement;
(c) Buyer's operation of the Business and use of the Assets after the
Closing;
(d) any breach by Buyer of its representations or warranties or
covenants set forth in this Agreement or any Schedule or Exhibit hereto;
and
(e) the Assumed Liabilities.
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Section 13.3 Indemnity Procedure. Subject to the time limitations and
amounts set forth in Section 13.4 below, Buyer and the Seller shall each follow
the following procedures, as the case may be:
(a) If by Seller. In the event that Buyer becomes aware of facts or
events giving rise to obligations of the Seller to indemnify any Buyer
Indemnified Party under Section 13.1, Buyer shall notify the Seller of such
fact or event in writing, setting forth specifically the obligation with
respect to which the Claim is made, the facts giving rise to and the
alleged basis for such Claim and, if known or reasonably ascertainable, the
amount of the liability asserted or which may be asserted by reason
thereof. Such notice shall be given promptly following the discovery by
such Buyer Indemnified Party of facts which constitute the basis for a
Claim against such Buyer Indemnified Party which may give rise to a right
of indemnity or promptly following receipt of notice of the assertion of a
Claim against such Buyer Indemnified Party which may give rise to a right
of indemnity, whichever shall occur first; provided that failure to so
notify the Seller of any such Claim shall discharge the Seller of its
liabilities and obligations hereunder only if and to the extent that the
Seller is prejudiced thereby. The Seller shall notify Buyer within ten (10)
business days following receipt of notice of a Claim from Buyer as to
whether the Seller will defend and indemnify such Buyer Indemnified Party.
In the event of the assertion of a Claim against any Buyer Indemnified
Party which may give rise to a right of indemnity, Buyer shall allow the
Seller to, and the Seller shall, at its expense, defend against, compromise
or settle such Claim with counsel of the Seller's selection. As a condition
of the Seller's obligation under Section 13.1, Buyer shall, at its own
expense, provide such documents, records and other evidence in its
possession, and access to such employees, as the Seller may reasonably
request, shall cooperate with the Seller in defending such claim, and shall
take no other action with regard to an indemnified Claim or any
investigation, proceeding or action relating thereto, which is in
derogation of the Seller's right of control or which has not been
specifically requested or approved in advance by the Seller.
(b) If by Buyer. In the event that the Seller or any of its
Subsidiaries becomes aware of facts or events giving rise to obligations of
Buyer to indemnify any Seller Indemnified Party under Section 13.2, the
Seller shall notify Buyer of such fact or event in writing, setting forth
specifically the obligation with respect to which the Claim is made, the
facts giving rise to and the alleged basis for such Claim and, if known or
reasonably ascertainable, the amount of the liability asserted or which may
be asserted by reason thereof. Such notice shall be given promptly
following the discovery by such Seller Indemnified Party of facts which
constitute the basis for a Claim against such Seller Indemnified Party
which may give rise to a right of indemnity or promptly following receipt
of notice of the assertion of a Claim against such Seller Indemnified Party
which may give rise to a right of indemnity, whichever shall occur first;
provided, that failure to so notify Buyer of any such Claim shall discharge
Buyer of its liabilities and obligations hereunder only if and to the
extent that Buyer is prejudiced thereby. Buyer shall notify the Seller
within ten (10) business days following receipt of notice of a Claim from
the Seller as to whether Buyer will defend and indemnify such Seller
Indemnified Party. In the event of the assertion of a Claim against any
Seller Indemnified Party which may give rise to a
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right of indemnity, the Seller or any of its Subsidiary shall allow Buyer
to, and Buyer shall, at its expense, defend against, compromise or settle
such Claim with counsel of Buyer's selection. As a condition of Buyer's
obligation under Section 13.2, the Seller or such Subsidiary, at its own
expense, shall provide such documents, records and other evidence in their
possession, and access to such employees, as Buyer may reasonably request,
shall cooperate with Buyer in defending such Claim, and shall take no other
action with regard to any indemnified Claim or any investigation,
proceeding or action relating thereto, which is in derogation of Buyer's
right of control or which has not been specifically requested or approved
in advance by Buyer.
Section 13.4 Limitations of Indemnities. Notwithstanding the provisions of
Sections 13.1, 13.2 and 13.3 hereof, no payment shall be made by an indemnifying
party to an indemnified party based upon any claim of an indemnified party for
any breach of representation or warranty under Section 13.1(b) or 13.2(d) until
the amount of all such claims (after deducting insurance proceeds and third
party recoveries paid to or for the benefit of the indemnified party) shall
total, in the aggregate, five hundred thousand dollars ($500,000) for any
liabilities (the "Minimum Damages"), in which event only the amount of such
claims of the indemnified party in excess of the Minimum Damages (after
deducting any insurance proceeds and third party recoveries paid to or for the
benefit of the indemnified party) shall be subject to indemnification in
accordance with the terms of Sections 13.1, 13.2 and 13.3 hereof.
Notwithstanding the provisions of Sections 13.1, 13.2 and 13.3 hereof, the
maximum liability of the Seller (in the aggregate) or of Buyer (in the
aggregate) under this Article XIII with respect to claims under Section 13.1(d)
and for breaches of representations and warranties under Sections 13.1(b) and
13.2(d) shall be limited to the Purchase Price.
(a) The parties' respective obligations to indemnify each other for
breaches of representations and warranties under Sections 13.1(b) or
13.2(c) hereof shall expire with respect to any Claims first asserted by
Buyer or the Seller after the second (2nd) anniversary of the Closing Date
(except for the representations and warranties contained in Sections 4.1(b)
(Ownership of Transferred Subsidiaries), 4.1(m) (Employee Benefits) and
4.1(n) (Taxes) which shall expire with respect to any Claims first asserted
after the date 90 days following the expiration of the applicable statute
of limitations). Notwithstanding the foregoing, each party's obligations
under this Article XIII shall not expire with respect to indemnity for (i)
breaches of any covenant contained herein to be performed after such
expiration date, (ii) any Claim for breach of representation or warranty
first asserted on or prior to the applicable expiration date or (iii) any
other matter for which any Seller Indemnified Party or any Buyer
Indemnified Party is entitled to indemnification, including Assumed
Liabilities, in the case of Buyer, and Retained Liabilities, in the case of
the Seller, and this subsection 13.4(b) shall in no way affect the
agreement of the parties with respect to the retention or allocation of
liabilities as set forth in this Agreement.
(b) Any calculation of damages for purposes of this Article XIII shall
be (i) net of any insurance recovery actually received by the indemnified
party (whether paid directly to such indemnified party or assigned by the
indemnifying party to such indemnified
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party) and (ii) reduced by any net Tax benefit actually realized by the
indemnified party arising from the deductibility of any such damages or Tax
(it being understood that any net tax benefit not actually realized until
after an indemnification payment is made must be reimbursed to the
indemnifying party). Any dispute between the parties concerning the amount
of any such Tax benefit actually realized by the indemnified party shall be
reasonably determined by the Auditor; provided that nothing in this clause
(ii) shall give an indemnifying party or its representatives the right to
review the Tax Returns of the indemnified party or its Affiliates. Any
indemnity payment under this Agreement shall be treated as an adjustment to
the Purchase Price for Tax purposes, unless otherwise required by law.
Section 13.5 Remedies. Following the Closing, the indemnification
provisions set forth in this Article XIII shall be the Seller's and Buyer's sole
and exclusive remedy against each other for any breach or misrepresentation of
any covenant or representation made herein.
ARTICLE XIV
TERMINATION OF THIS AGREEMENT
Section 14.1 Termination. This Agreement and the transactions contemplated
hereby (A) may be terminated at any time prior to the Closing (i) by consent of
the Seller and Buyer; (ii) by the Seller if any of the conditions provided in
Article X of this Agreement have not been fulfilled or have not been waived by
the Seller prior to the Closing, or upon any material breach or default by Buyer
under this Agreement which material breach or default has not been cured within
30 days following the date of written notice thereof from Seller; or (iii) by
Buyer if any of the conditions provided in Article XI of this Agreement have not
been fulfilled or have not been waived by Buyer prior to the Closing, or upon
any material breach or default by the Seller under this Agreement which material
breach or default has not been cured within 30 days following the date of
written notice thereof from Buyer; or (B) may be terminated by the Seller or
Buyer if (i) due to no fault or delay of the terminating party, the Closing
shall not have occurred on or prior to October 31, 2000; (ii) the purchase and
sale of the Assets shall violate any non-appealable final order, decree or
judgment of any Governmental Authority having competent jurisdiction; or (iii)
there shall be a statute, rule or regulation which makes the purchase and sale
of the Assets and the assumption of the Assumed Liabilities illegal or otherwise
prohibited.
Section 14.2 Termination Fee. In order to reimburse the Seller for its
costs and expenses related to entering into this Agreement and to further induce
the Seller to consummate the transactions contemplated hereby, in the event this
Agreement is terminated or otherwise is not consummated due to the material
default of Buyer which default was not cured on or before the later of (i)
October 31, 2000 and (ii) the date that is 30 days after receipt of written
notice thereof from the Seller, Buyer shall pay to the
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Seller an amount equal to $3,000,000 in cash as liquidated damages, as Seller's
sole and exclusive remedy in full settlement of any damages of any nature or
kind that Seller may suffer or allege to suffer as the result of any default or
breach by Buyer. In the event of such termination, the parties agree that this
sum shall be in lieu of any and all other relief to which the Seller might
otherwise be entitled due to Buyer's breach of, or default under, this
Agreement. In order to reimburse Buyer for its costs and expenses related to
entering into this Agreement and to further induce Buyer to consummate the
transactions contemplated hereby, in the event this Agreement is terminated or
otherwise is not consummated due to the material default of the Seller which
material default was not cured on or before the later of (i) October 31, 2000
and (ii) the date that is 30 days after receipt of written notice thereof from
Buyer, the Seller shall pay to Buyer an amount equal to $3,000,000 in cash as
liquidated damages, as Buyer's sole and exclusive remedy in full settlement of
any damages of any nature or kind that Buyer may suffer or allege to suffer as
the result of any default or breach by the Seller. In the event of such
termination, the parties agree that this sum shall be in lieu of any and all
other relief to which Buyer might otherwise be entitled due to the Seller's
breach of, or default under, this Agreement.
Section 14.3 Effect of Termination In the event of termination of this
Agreement as provided in Section 14.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except as
provided in Section 14.2.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Amendments. Buyer and the Seller may only amend, modify or
supplement this Agreement in such manner as may be agreed upon by them in
writing signed by an authorized officer of each party.
Section 15.2 Waivers. Buyer and the Seller may only extend the time for, or
waive the performance of, any of the obligations of the other or waive
compliance by the other with any of the covenants or conditions contained in
this Agreement in writing signed by an officer of such party.
Section 15.3 Public Announcements. None of the parties shall make, issue or
release any oral or written public announcement or statement concerning, or
acknowledge the existence of, or reveal the terms, conditions and status of, the
transactions contemplated by this Agreement, without the other parties' prior
written approval of, and concurrence in, the contents of such announcement,
acknowledgment or statement, except as may be required by law or pursuant to any
order of any court or governmental agency, tribunal or regulatory authority.
Section 15.4 Notices. Any notice, request, instruction or other document to
be given hereunder shall be in writing and delivered
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personally or sent by telecopy or prepaid overnight courier, if to Buyer,
addressed to the attention of W. Robert Dahl, GS Acquisition Co., c/o TC Group,
L.L.C., 520 Madison Avenue, 41st Floor, New York, NY 10022, Telecopier Number
(212) 381-4901 with a copy to the attention of Daniel T. Lennon, Latham &
Watkins, 1001 Pennsylvania Avenue, N.W., Washington, D.C. 20004, Telecopier:
(202) 637-2201; and if to the Seller, addressed to the attention of General
Counsel, Gentiva Health Services, Inc., 175 Broad Hollow Road, Melville, NY
11747, Telecopier Number (631) 844-7414 with a copy to Helene Banks, Cahill
Gordon & Reindel, 80 Pine Street, New York, NY 10005, Telecopier Number (212)
269-5420. Any notice or other communication transmitted in accordance with this
Section 15.4 shall for all purposes of this Agreement be treated as given or
effective, if personally delivered, upon receipt, or, if sent by courier, upon
the earlier of receipt or the end of the business day following the date of
delivery to such courier, or, if telecopied, upon transmission and confirmation
of receipt.
Section 15.5 Entire Agreement. The Disclosure Schedule and Exhibits are
incorporated into this Agreement by reference. This Agreement and the Disclosure
Schedule and Exhibits hereto embody the entire agreement between and among the
parties and any and all prior oral or written agreements, representations or
warranties, contracts, understandings, correspondence, conversations, and
memoranda, whether written or oral, between or among Buyer and the Seller or
between or among any agents, representatives, parents, Subsidiaries, affiliates,
predecessors in interest or successors in interest, with respect to the subject
matter hereof, are void and replaced hereby. If there is any discrepancy or
inconsistency between the terms of this Agreement and any other agreement
executed by or on behalf of the Seller to transfer any of the Assets or assign
any of the Assumed Liabilities, the terms of this Agreement shall supersede and
replace the terms of any such other agreement with respect to any such
discrepancy or inconsistency.
Section 15.6 Assignability; Third-Party Rights. Neither this Agreement nor
any of the parties' rights hereunder shall be assignable by any party hereto
without the prior written consent of the other party; provided, however, that
Buyer may, without the prior written consent of the Seller, assign its rights
and obligations hereunder in whole or in part (i) to an Affiliate of Buyer, (ii)
to any Person providing financing to Buyer in connection with the transactions
contemplated hereby as security for Buyer's obligations to such Person or (iii)
to any Person who acquires all or a portion of the capital stock of the
Transferred Subsidiaries from Buyer following the Closing (by merger,
recapitalization, sale of stock or otherwise) or all or substantially all of the
Assets of the Business, provided, in each case, that Buyer remains bound by the
terms and conditions of this Agreement; provided, further, that the Seller may,
without the prior written consent of the other party, assign its rights and
obligations hereunder, in whole or in part, at any time after the Closing in
connection with any sale of all or substantially all of the assets of Seller and
its Subsidiaries or to a Person who acquires all of the Capital Stock of the
Seller following the Closing (by merger, recapitalization or otherwise). In the
event that any assignment is made, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Except as set forth in this Section 15.6, nothing in this
Agreement, express or implied, shall be deemed to confer upon any other Person,
including, without limitation, employees of the Business, any rights or remedies
under, or by reason of, this Agreement; provided, that such other
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Persons shall not be deemed to include corporate Affiliates, licensed
Affiliates, successors or permitted assigns of any party, or permitted
transferees of the Licenses.
Section 15.7 Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York without giving effect to principles of
conflict of laws. All parties consent to the jurisdiction of all state and
federal courts of record situated in the State of New York. Service of process
upon any party shall be deemed, in every respect, effective upon such party if
made by prepaid registered or certified mail, return receipt requested, or if
personally delivered against receipt to the address set forth in Section 15.4 or
to such other address as a party may designate in writing to the others.
Section 15.8 Headings. The Section and other headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 15.9 Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
Section 15.10 Waiver of Bulk Transfer Requirements. Buyer hereby waives
compliance with all provisions of the Bulk Sales Laws, if applicable to the
transactions herein contemplated, and in consideration of such waiver the Seller
agrees to indemnify Buyer against and hold it harmless from any and all loss,
cost, damage, liability, deficiency or expense resulting from or arising out of
such noncompliance to the extent not involving an Assumed Liability, provided
that the provisions of Article XIII hereof shall apply to this indemnity as if
it were set forth therein, except for the limitations established by Section
13.4, which shall not apply.
Section 15.11 Expenses. Except as otherwise specifically provided herein,
each of the parties shall bear its own costs and expenses (including legal fees
and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby other than fees related to compliance with the HSR Act which
shall be paid one-half by Buyer and one-half by the Seller.
Section 15.12 Severability. If any term or other provision of this
Agreement is held to be invalid, illegal or incapable of being enforced by any
court having jurisdiction, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect.
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ARTICLE XVI
DEFINITIONS
Section 16.1 Definitions.
"Action" means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any Person, any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person (including without limitation its respective officers,
directors and employees); provided that in no event shall Buyer or the Business
be treated as an Affiliate of the Seller, nor shall any person directly or
indirectly controlled by Buyer or the Business (including, without limitation,
its officers, directors and employees) as a result of such person's relationship
with Buyer or the Business be treated as an Affiliate of the Seller. For this
purpose, "control" means the power to direct the management and policies of a
person through the ownership of securities, by contract or otherwise and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Books and Records" means (a) all records and lists of the Seller and its
Subsidiaries to the extent pertaining to the Business, (b) all product, business
and marketing plans of the Seller and its Subsidiaries to the extent pertaining
to the Business and (c) all books, ledgers, files, reports, plans and operating
plans to the extent pertaining to the Business.
"Bulk Sales Laws" means Article 6 of the Uniform Commercial Code (Bulk
Transfers) as in effect in any jurisdiction and all other applicable bulk sales
laws.
"Business" means the Seller's business at the locations identified in
Section 1.1(e) of the Disclosure Schedule, that is engaged in the business of
providing (v) licensed and non-licensed healthcare personnel, (w) medical
testing and laboratory personnel, (x) therapy or rehabilitative personnel, (y)
mental health providers or (z) administrative personnel, including, without
limitation, billers, coders and personnel who supervise, coordinate or
facilitate the provision of healthcare providers by other persons as
supplemental staff or on a direct placement basis to third party entities;
provided that the term "Business" shall not include (i) any of the Seller's or
its Subsidiaries' other businesses that are not described in this definition
(whether or not provided at the locations listed in Section 1.1(e) of the
Disclosure Schedule), (ii) the Seller's staffing services provided from
locations not identified in Section 1.1(e) of the Disclosure Schedule or (iii)
the provision of nurses, nursing assistants, home health aids or sales personnel
(a) to or on behalf of individuals at the request of such individuals or on
their behalf, (b) in connection with the conduct of clinical trials, research
projects, educational programs and the promotion and launching of drugs and
devices, (c) to individual or group practitioners in connection with the
Seller's and its Subsidiaries' home care business or (d) to other home
healthcare entities.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Contract/Administrative Employees" means the employees listed in Section
7.6 to the Disclosure Schedule and those other employees who replace the
employees listed on such Schedule prior to the termination of the Transition
Services Agreement.
"Disclosure Schedule" means the Disclosure Schedule, dated as of the date
hereof, and forming a part of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any corporation or trade or business that is a
member of any group of organizations described in Section 414(b), (c), (m) or
(o) of the Code of which the Seller is a member.
"ERISA Plan" means an employee benefit plan (including any multiemployer
plan as defined in 4001(a)(3) of ERISA) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code or
Section 302 of ERISA and is or within the past 6 years has been maintained or
contributed to or required to be contributed to by the Seller or any ERISA
Affiliate of the Seller.
"Governmental Authority" means any United States federal, state or local or
any foreign government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Intellectual Property Rights" means (i) any rights to patents, trademarks,
service marks, trade names, copyrights (whether registered or unregistered and
including pending applications by the Seller or any of its Subsidiaries for any
of the foregoing), technical documentation logos, corporate names, protected
models, data, created works, trade secrets, designs, plans, specifications,
technology, know-how, methods, concepts and other proprietary rights, and (ii)
rights under any licenses to use any of the foregoing, in each case, that are
owned or possessed by the Seller or its Subsidiaries.
"Knowledge of Seller" means, with respect to any representation or
warranty, that no Person named in Exhibit H has any actual knowledge that any
such representation or warranty is not true and correct to the same extent as
provided therein.
"Know-How" means the informational and experiential expertise related to
practical applications of the Intellectual Property Rights.
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"Law" means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order or other requirement or rule of law.
"Leased Real Property" means all property leased by the Seller or any of
its Subsidiaries and used in the Business as of the date hereof.
"Liabilities" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including, without limitation, those arising under any Law, Action
or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Material Adverse Effect" means any change in, or effect on the Business
that, individually or in the aggregate, is, or could reasonably be expected to
be, materially adverse to the assets, liabilities, business, operations, or
condition (financial or otherwise) of the Business.
"Permitted Liens" means (a) liens for taxes that are not yet due and
payable or that are being contested in good faith by appropriate proceedings,
(b) worker's, repairmen's and similar liens imposed by Law that have been
incurred in the ordinary course of business, (c) minor imperfections of title
and encumbrances which, individually or in the aggregate, are not substantial in
amount and do not materially detract form the value of or impair the use of the
affected properties or assets to which they relate, (d) retention of title
agreements with suppliers entered into in the ordinary course of business or (e)
liens described in Section 16.1 of the Disclosure Schedule.
"Person" means any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, as well as any syndicate or
group that would be deemed to be a person under Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended.
"Pre-Closing Tax Liabilities" means all Taxes of the Seller and its
Subsidiaries (including the Transferred Subsidiaries) to the extent that such
Taxes (1) are attributable to a taxable period (or portion thereof) ending on or
prior to the Closing Date (based on an interim closing of the books as of the
end of the Closing Date, except for property or other ad valorem Taxes, which
shall be pro rated on a daily basis), (2) are not accrued or reserved on the
Closing Balance Sheet, (3) are not attributable to any action taken by Buyer (or
its affiliates) or the Taxpayers after the Closing that is not in the ordinary
course of business and (4) are not payable by Buyer under Section 7.3 hereof.
"Purchase Price" means $67,500,000.
"Receivables" means any and all accounts receivable, notes and other
amounts receivable by the Business from third parties, including, without
limitation, payors and customers, arising from the conduct of the Business
before the Closing Date, whether or not in the ordinary course, together with
all unpaid financing charges accrued thereon.
"Securities Act" means the Securities Act of 1933, as amended.
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"Subsidiary" or "Subsidiaries" means, with respect to any Person, any other
Person more than 50% of the voting securities of which are owned directly or
indirectly by such Person or one or more of the Subsidiaries of such Person or
which is otherwise controlled by such Person and its Subsidiaries by contract or
otherwise.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
amendment thereto, and including any amendment thereof.
"Trade Secrets" means that information possessed by a party that derives
independent economic value from not being generally known and not being readily
ascertainable by persons who can obtain economic value from its disclosure or
use and that reasonable efforts have been and are being made by the party to
keep such information secret.
Section 16.2 Other Defined Terms.
Section in
Defined Term Which Defined
------------ -------------
A/R Determination Date 3.3(b)
----------------------
Adjustment Amount 3.2(c)
-----------------
ADSP 9.6
----
Agreement Preamble
---------
AGUB 9.6
----
Allocation 9.5
----------
Assets 1.1
------
Assigned Contracts 1.1(g)
------------------
Assumed Liabilities 2.1
-------------------
Auditor 3.2(b)
-------
Buyer Preamble
-----
Buyer Indemnified Party 13.1
-----------------------
Buyer's Health Plans 8.4
--------------------
Buyer's Savings Plan 8.3
--------------------
Buyer's Savings Trust 8.3(i)
---------------------
Buyer's Welfare Plans 8.4
---------------------
Claims 13.1
------
Closing 12.1
-------
Closing Balance Sheet 3.2(a)
---------------------
Closing Cash Consideration 3.1
--------------------------
Closing Date 12.1
------------
Closing Date Net Working Capital 3.2(a)
--------------------------------
COBRA 4.1(m)
-----
Co-Located Properties 7.7
---------------------
Collection Period 3.3
-----------------
commercially reasonable 7.1(b)
-----------------------
Continuing Employee 8.1
-------------------
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Section in
Defined Term Which Defined
------------ -------------
Deficit Amount 3.2(d)
--------------
Determination Date 3.2(b)
------------------
Difference 3.3(b)
----------
Election 9.6
--------
employee 8.1
--------
Employee Benefit Plans 4.1(m)
----------------------
Environmental Laws 4.1(x)
------------------
Escrow Agent 3.1
------------
Escrow Agreement 3.1
----------------
Escrow Amount 3.1
-------------
Excluded Assets 1.2
---------------
Excluded Marks 1.2(b)
--------------
Financial Statements 4.1(f)
--------------------
Fixed Assets 1.1(f)
------------
Forms 9.6
-----
GAAP 4.1(f)
----
Increase Amount 3.2(d)
---------------
Initial Term 7.7
------------
Interim Balance Sheet 4.1(f)
---------------------
Interim Statement of Operations 4.1(f)
-------------------------------
Leased Real Property 4.1(t)
--------------------
Licenses 1.1(h)
--------
Material Agreements 4.1(k)
-------------------
Minimum Damages 13.4
---------------
Net Working Capital 3.2(a)
-------------------
Oral Agreements 4.1(k)
---------------
Outstanding A/R 3.3(a)
---------------
Real Property 1.1(e)
-------------
Reconciliation Statement 3.3(a)
------------------------
Restricted Markets 5.8
------------------
Retained Liabilities 2.2
--------------------
Sale Confidentiality Agreements 5.5
-------------------------------
Seller Preamble
------
Seller Acquired Company 5.8
-----------------------
Seller Covered Business 5.8
-----------------------
Seller Covered Business Report 5.8
------------------------------
Seller Indemnified Party 13.2
------------------------
Seller Savings Plan 4.1(m)
-------------------
Seller Welfare Plans 8.4
--------------------
Seller's Savings Trust 8.3(i)
----------------------
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Section in
Defined Term Which Defined
------------ -------------
Taxes 1.2(e)
-----
Taxpayers 4.1(n)
---------
Transferred Employee Benefit Plan 4.1(m)
---------------------------------
Transferred Intellectual Property 1.1(m)
---------------------------------
Transferred Shares 1.1(b)
------------------
Transferred Subsidiaries 1.1(b)
------------------------
Workers' Compensation Accrual Amount 3.2(a)
------------------------------------
Working Capital Adjustment Distribution Amount 3.3(b)
----------------------------------------------
Year-End Balance Sheet 4.1(f)
----------------------
Year-End Statement of Operations 4.1(f)
--------------------------------
Section 16.3 Gender; Numbers. All references in this Agreement to the
masculine, feminine or neuter gender shall, where appropriate, be deemed to
include all other genders. All plurals used in this Agreement shall, where
appropriate, be deemed to be singular and vice versa.
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PURCHASE AND SALE AGREEMENT
IN WITNESS WHEREOF, Buyer and the Seller have each caused this Agreement to
be executed as of the day, month and year first above written.
GENTIVA HEALTH SERVICES, INC.
By: /s/ John J. Collura
-------------------------------------------
Name: John J. Collura
Title: Executive Vice President, Chief
Financial Officer and Treasurer
GS ACQUISITION CO.
By: /s/ Ralph J. Friedmann
-------------------------------------------
Name: Ralph J. Friedmann
Title: President