EXHIBIT 10.14
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
by and between
MEDICAL RESOURCES, INC.,
as Seller,
and
REHABCARE GROUP, INC.,
and
HEALTHCARE STAFFING SOLUTIONS, INC.,
as Buyer
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Dated as of
July 8, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS
1.1. Definitions............................................................ 1
ARTICLE II. SALE OF SHARES
2.1. Purchase and Sale of the Shares........................................ 5
2.2. Closing................................................................ 6
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER
3.1. Corporate Organization, Etc............................................ 7
3.2. Capitalization of Companies............................................ 8
3.3. Company Subsidiaries................................................... 8
3.4. Authority Relative to this Agreement................................... 8
3.5. Consents and Approvals; No Violations.................................. 9
3.6. Financial Statements................................................... 9
3.7. Absence of Certain Changes............................................. 10
3.8. Compliance with Law.................................................... 10
3.9. Contracts and Commitments.............................................. 10
3.10. No Undisclosed Liabilities............................................ 11
3.11. No Default............................................................ 11
3.12. Litigation............................................................ 11
3.13. Taxes................................................................. 12
3.14. Employee Benefit Plans; ERISA......................................... 12
3.15. Title to Properties................................................... 14
3.16. Patents, Trademarks, Etc.............................................. 14
3.17. Insurance............................................................. 15
3.18. Environmental Matters................................................. 15
3.19. Employee and Labor Matters............................................ 16
3.20. Brokers and Finders................................................... 16
3.21. Year 2000 Compliance.................................................. 16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1. Corporate Organization; Etc............................................ 17
4.2. Authority Relative to this Agreement................................... 17
4.3. Consents and Approvals; No Violations.................................. 17
4.4. Available Funds........................................................ 18
4.5. Brokers and Finders.................................................... 18
ARTICLE V. COVENANTS
5.1. Conduct of the Business Pending the Closing............................ 18
5.2. Access to Information.................................................. 20
5.3. Disclosure Supplements................................................. 21
5.4. Consents and Approvals................................................. 22
5.5. Filings................................................................ 22
5.6. Covenant to Satisfy Conditions......................................... 22
5.7. Further Assurances..................................................... 23
5.8. Employee Benefit Matters............................................... 23
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5.9. Elimination of Indebtedness............................................ 23
5.10. Assumption of Certain Liabilities..................................... 23
5.11. Section 338(h)(10) Election........................................... 24
5.12. Insurance............................................................. 24
ARTICLE VI. CONDITIONS TO SELLER'S OBLIGATIONS
6.1. Representations and Warranties True.................................... 24
6.2. Performance............................................................ 25
6.3. Certificates........................................................... 25
6.4. No Injunction or Proceeding............................................ 25
6.5. HSR Act................................................................ 25
6.6. Lender Consent......................................................... 25
ARTICLE VII. CONDITIONS TO BUYER'S AND PARENT'S OBLIGATIONS
7.1. Representations and Warranties of Seller True.......................... 25
7.2. Performance by Seller.................................................. 25
7.3. Certificates........................................................... 25
7.4. No Injunction or Proceeding............................................ 26
7.5. HSR Act................................................................ 26
7.6. Receipt of 1996 Audit.................................................. 26
ARTICLE VIII. TERMINATION AND ABANDONMENT; INDEMNIFICATION
8.1. Termination............................................................ 26
8.2. Procedure and Effect of Termination.................................... 27
8.3. Survival of Representations, Warranties and Covenants.................. 27
8.4. Indemnification........................................................ 28
8.5. Tax Matters............................................................ 31
ARTICLE IX. MISCELLANEOUS
9.1. Amendment and Modifications............................................ 33
9.2. Extension; Waiver...................................................... 33
9.3. Representations and Warranties; Etc.................................... 33
9.4. Entire Agreement; Assignment........................................... 34
9.5. Validity............................................................... 34
9.6. Notices................................................................ 34
9.7. Governing Law.......................................................... 35
9.8. Specific Performance................................................... 35
9.9. Publicity.............................................................. 36
9.10. Arbitration........................................................... 36
9.11. Descriptive Headings.................................................. 37
9.12. Counterparts.......................................................... 37
9.13. Expenses.............................................................. 37
9.14. Parties in Interest................................................... 37
9.15. Interpretation........................................................ 38
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of July 8,
1998, is by and between Medical Resources, Inc., a Delaware corporation
("Seller"), and Healthcare Staffing Solutions, Inc., a Massachusets corporation
("Buyer") and RehabCare Group, Inc., a Delaware corporation ("Parent").
WHEREAS, Seller owns all of the issued and outstanding shares of
common stock, par value $.01 per share of StarMed Staffing, Inc. ("StarMed"), a
Delaware corporation, and all of the issued and outstanding shares of common
stock, no par value, of ▇▇▇▇▇▇ Medical Resources, Inc. ("▇▇▇▇▇▇"), a California
corporation (collectively, the "Shares"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, the Shares, all in accordance with and subject to the terms and
conditions of this Agreement; and
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements herein contained,
Buyer and Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. The terms defined in this Article I, whenever used
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herein, shall have the following meanings for all purposes of this Agreement.
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
"Agreement" shall have the meaning set forth in the preamble hereto.
"Audited Financial Statements" shall have the meaning set forth in
Section 3.6 hereof.
"Buyer" shall have the meaning set forth in the preamble hereto.
"Buyer Disclosure Schedule" shall have the meaning set forth in
Article IV hereof.
"Buyer Indemnified Parties" shall have the meaning set forth in
Section 8.4(a) hereof.
"Buyer Material Adverse Effect" shall have the meaning set forth in
Section 4.1 hereof.
"Closing" shall have the meaning set forth in Section 2.2(a) hereof.
"Closing Date" shall have the meaning set forth in Section 2.2(a)
hereof.
"Code" shall have the meaning set forth in Section 3.14(a) hereof.
"Companies" shall mean StarMed and ▇▇▇▇▇▇.
"Company Financial Statements" shall have the meaning set forth in
Section 3.6 hereof.
"Company Subsidiaries" shall mean the Subsidiaries of StarMed and
▇▇▇▇▇▇.
"Confidentiality Agreement" shall have the meaning set forth in
Section 5.2 hereof.
"Contracts" shall have the meaning set forth in Section 3.9 hereof.
"Credit Facility" shall have the meaning set forth in Section 5.1(e).
"Damages" shall have the meaning set forth in Section 8.4(a) hereof.
"Deductible Amount" shall have the meaning set forth in Section 8.4(c)
hereof.
"Dispute" shall have the meaning set forth in Section 9.10(a) hereof.
"DOJ" shall have the meaning set forth in Section 3.5 hereof.
"Encumbrance" shall mean any lien, encumbrance, security interest,
charge, mortgage, option, pledge or restriction on transfer of any nature
whatsoever (except, in the case of the Shares, for restrictions relating to
applicable securities laws).
"Environmental Claim" means any claim, action, demand, order, or
written notice by or on behalf of, any Governmental Entity or Person alleging
potential liability arising out of, based on or resulting from the violation of
any Environmental Law or permit.
"Environmental Laws" shall mean all Federal, state, and local laws and
regulations relating to Releases or threatened Releases of Hazardous Materials
or otherwise relating to the
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generation, treatment, storage, transport or handling of Hazardous Materials.
"Escrow Agent" shall mean IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company or another
bank or trust company mutually agreed between Buyer and Seller prior to the
Closing Date.
"Escrow Agreement" shall mean the escrow agreement among Buyer, Seller
and the Escrow Agent substantially in the form of Exhibit A hereto.
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"Escrow Deposit" shall mean the Letter of Credit.
"ERISA" shall have the meaning set forth in Section 3.14(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FTC" shall have the meaning set forth in Section 3.5 hereof.
"Final Determination" shall have the meaning set forth in Section
9.10(e) hereof.
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date or for the period with respect to which such
principles are applied.
"Governmental Entity" shall have the meaning set forth in Section 3.5
hereof.
"Hazardous Materials" means all substances defined as hazardous
substances in the Comprehensive Environmental Response, Compensation and
Liability Act.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Indemnified Party" shall have the meaning set forth in Section 8.4(g)
hereof.
"Indemnifying Party" shall have the meaning set forth in Section
8.4(g) hereof.
"Insurance Policies" shall have the meaning set forth in Section 3.17
hereof.
"Intellectual Property Rights" shall have the meaning set forth in
Section 3.16(b) hereof.
"L/C Procedures Agreement" shall mean the L/C procedures agreement
between Seller and Parent substantially in the form of Exhibit B hereto.
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"Letter of Credit" shall mean the Letter of Credit (as defined in the
L/C Procedures Agreement).
"Material Adverse Effect" shall have the meaning set forth in Section
3.1 hereof.
"Multiemployer Plan" has the meaning set forth in Section 3(37) of
ERISA.
"Multiple Employer Plan" means a plan with two or more contributing
sponsors, at least two of which are not under common control, within the meaning
of Section 4063 of ERISA.
"Notice of Arbitration" shall have the meaning set forth in Section
9.10(b) hereof.
"Parent" has the meaning set forth in the Preamble hereto.
"Permits" shall have the meaning set forth in Section 3.11 hereof.
"Person" shall mean any individual, corporation, partnership, trust or
other entity.
"Plans" shall have the meaning set forth in Section 3.14(a) hereof.
"Purchase Price" shall have the meaning set forth in Section 2.1
hereof.
"Release" shall have the meaning set forth in the Comprehensive
Environmental Response, Compensation and Liability Act.
"Representative" shall mean, with respect to any Person, each of such
Person's directors, officers, employees, representatives and agents, and each of
the heirs, executors and assigns of any of the foregoing.
"Selling Indemnified Parties" shall have the meaning set forth in
Section 8.4(b) hereof.
"Single Employer Plan" means a defined benefit pension plan which is
subject to Title IV of ERISA and which is not a Multiemployer Plan.
"Seller" shall have the meaning set forth in the preamble hereto.
"Seller Disclosure Schedule" shall have the meaning set forth in
Article III hereof.
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"Senior Notes" shall mean the Senior Notes of Seller issued pursuant
to the Note Purchase Agreements dated as of February 20, 1997 and June 26, 1997
among Seller and the purchasers listed on Exhibit A thereto.
"Shares" shall have the meaning set forth in the preamble hereto.
"StarMed" shall have the meaning set forth in the preamble hereto.
"Straddle Period" shall have the meaning set forth in Section 8.5(a)
hereof.
"Subsidiary" of a Person shall mean a corporation, partnership, joint
venture, association, limited liability company or other entity of which such
Person owns, directly or indirectly, more than 50% of the outstanding voting
stock or other ownership interest.
"Taxes" shall have the meaning set forth in Section 3.13(c) hereof.
"Tax Claim" shall have the meaning set forth in Section 8.5(c) hereof.
"Tax Return" shall have the meaning set forth in Section 3.13(c)
hereof.
"Termination Date" shall have the meaning set forth in Section 8.1(b).
"338(h)(10) Election" shall have the meaning set forth in Section 5.11
hereof.
"Unaudited Financial Statements" shall have the meaning set forth in
Section 3.6 hereof.
"▇▇▇▇▇▇" shall have the meaning set forth in the preamble hereto.
ARTICLE II.
SALE OF SHARES
2.1. Purchase and Sale of the Shares. Buyer and Seller hereby agree
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that upon the terms and subject to the satisfaction or waiver, if permissible,
of the conditions hereof, Seller shall sell, transfer and deliver to Buyer, and
Buyer shall purchase from Seller, free and clear of all Encumbrances, the Shares
for a purchase price equal to Thirty Three Million Dollars ($33,000,000) (the
"Purchase Price").
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2.2. Closing. (a) Subject to the satisfaction or waiver of the
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conditions set forth in Articles VI and VII hereof, the closing of the purchase
and sale of the Shares and the other transactions contemplated hereby (the
"Closing") shall be held at 10:00 a.m. on the third business day following the
satisfaction of such conditions (or such other place as the parties may mutually
agree). The date on which the Closing actually occurs is hereinafter referred to
as the "Closing Date."
(b) At the Closing, Seller shall deliver the following to Buyer:
(i) Stock certificate(s) with appropriate transfer stamps, if
any, affixed thereto, representing the Shares with appropriate stock powers
duly endorsed in blank or accompanied by other duly executed instruments of
transfer;
(ii) All other documents required to be delivered by Seller on
or prior to the Closing Date pursuant to this Agreement or otherwise
required from Seller in connection herewith;
(iii) The resignations of such members of the boards of
directors of each of the Companies as Buyer shall have requested in writing
no less than two business days prior to the Closing Date;
(iv) The stock books, stock ledgers, minute books and corporate
seals of each of the Companies; provided, that any of the foregoing items
shall be deemed to have been delivered pursuant to this Section 2.2(b)(iv)
if such item has been delivered to or is otherwise located at any offices
of the Companies;
(v) The Escrow Agreement;
(vi) The L/C Procedures Agreement;
(vii) The certificates contemplated by Section 7.3 hereof as
Buyer shall have requested in writing no less than two business days prior
to the Closing Date; and
(viii) All other documents required to be delivered by Seller on
or prior to the Closing Date pursuant to this Agreement or otherwise
reasonably required by Buyer in connection herewith as Buyer shall have
requested in writing no less than two business days prior to the Closing
Date.
(c) At the Closing, Buyer and Parent shall deliver to Seller or such
other person as provided below:
(i) The Purchase Price less $2,000,000;
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(ii) The Letter of Credit to the Escrow Agent in accordance with
the Escrow Agreement;
(iii) The Escrow Agreement;
(iv) The L/C Procedures Agreement;
(v) The certificates contemplated by Section 6.3 hereof as
Seller shall have requested in writing no less than two business days prior
to the Closing Date; and
(vi) All other documents required to be delivered by Buyer on or
prior to the Closing Date pursuant to this Agreement or otherwise
reasonably required by Seller in connection herewith as Seller shall have
requested in writing no less than two business days prior to the Closing
Date.
(d) All payments to be made by Buyer or Parent pursuant to this
Section 2.2 shall be made by wire transfer of immediately available funds to
such bank account or bank accounts designated at least two business days prior
to the Closing Date by Seller.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedule delivered by Seller to
Buyer concurrently with the execution and delivery by Seller of this Agreement
(the "Seller Disclosure Schedule"), Seller hereby represents and warrants to
Buyer and Parent as follows:
3.1. Corporate Organization, Etc. Each of Seller, the Companies
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and each of the Company Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to conduct its
business as it is now being conducted and to own, lease and operate its property
and assets, except where the failure to be so organized, existing and in good
standing or to have such power or authority will not, in the aggregate, either
(i) have a material adverse effect on the business, operations, assets or
financial condition or results of operations of the Companies and the Company
Subsidiaries taken as a whole or (ii) materially impair the ability of Seller to
perform any of its obligations under this Agreement (either of such effects, a
"Material Adverse Effect"). Each of Seller, the Companies and each of the
Company Subsidiaries is qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which ownership of
property or the conduct of its business requires such qualification or license,
except where the failure to be so qualified or licensed will not have a Material
Adverse Effect.
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True and complete copies of the Articles of Incorporation and By-Laws of the
Companies, as presently in effect, have been heretofore delivered to Buyer.
3.2. Capitalization of Companies . The authorized capital stock
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of each of the Companies and the Company Subsidiaries is as set forth in Section
3.2 of Seller Disclosure Schedule. All the Shares are issued and outstanding as
of the date of this Agreement. All of the Shares are duly authorized, validly
issued, fully paid and non-assessable and free of any preemptive rights in
respect thereto. There are no outstanding (a) securities convertible into or
exchangeable for the capital stock of the Companies or the Company Subsidiaries,
(b) options, warrants or other rights to purchase or subscribe for capital stock
of the Companies or the Company Subsidiaries, or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
of any capital stock of the Companies or the Company Subsidiaries, any such
convertible or exchangeable securities or any such options, warrants or rights,
pursuant to which, in any of the foregoing cases, either of the Companies or the
Company Subsidiaries is subject or bound. There are no voting trusts,
stockholders' agreements or other similar instruments restricting or relating to
the rights of the holders of Shares to vote, transfer or receive dividends with
respect to the Shares.
3.3. Company Subsidiaries. Section 3.3 of Seller Disclosure
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Schedule lists each of the Company Subsidiaries. All issued and outstanding
shares of capital stock of each of the Company Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable, and are owned, directly or
indirectly, by one of the Companies, free and clear of all Encumbrances and any
preemptive rights in respect thereto. True and complete copies of the
Certificate of Incorporation and By-Laws of each of the Company Subsidiaries
have been heretofore delivered to Buyer.
3.4. Authority Relative to this Agreement. Seller has all
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requisite corporate authority and power to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all required corporate action on
the part of Seller and no other corporate proceedings on the part of Seller are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Seller and, assuming this Agreement has been duly authorized,
executed and delivered by Buyer, this Agreement constitutes a valid and binding
agreement of Seller, enforceable against Seller in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally, including the effect of statutory and
other laws regarding fraudulent conveyances and preferential
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transfers and subject to the limitations imposed by general equitable principles
(regardless whether such enforceability is considered in a proceeding at law or
in equity).
3.5. Consents and Approvals; No Violations. Neither the
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execution and delivery of this Agreement by Seller nor the consummation of the
transactions contemplated hereby by Seller will (a) violate any provision of the
certificate of incorporation or by-laws (or other comparable governing
documents) of Seller, the Companies or the Company Subsidiaries, (b) require any
consent, waiver, approval, license, authorization or permit of, or filing with
or notification to, any Federal, state, local or foreign government, executive
official thereof, governmental or regulatory authority, agency or commission,
including courts of competent jurisdiction, domestic or foreign (a "Governmental
Entity"), except for (i) filings with the Federal Trade Commission (the "FTC")
and with the Antitrust Division of the United States Department of Justice (the
"DOJ") pursuant to the HSR Act, and the rules and regulations promulgated
thereunder and (ii) such consents, waivers, approvals, authorizations, permits,
filings or notifications which, if not obtained or made, will not, in the
aggregate, have a Material Adverse Effect, (c) result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration or any
obligation to repay) under, any of the terms, conditions or provisions of any
indenture, mortgage, note, bond, encumbrance, license, government registration,
contract, lease, franchise, permit, agreement or other instrument or obligation
to which any of Seller, the Companies or the Company Subsidiaries is a party or
by which Seller, the Companies or the Company Subsidiaries or any of their
respective properties or assets may be bound, except such violations, breaches
and defaults which, in the aggregate, will not have a Material Adverse Effect or
(d) violate any order, writ, judgment, injunction, decree, statute, ordinance,
rule or regulation of any Governmental Entity applicable to Seller, the
Companies or the Company Subsidiaries or by which any of their respective
properties or assets may be bound, except such violations which, in the
aggregate, will not have a Material Adverse Effect.
3.6. Financial Statements. Seller has previously furnished to
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Buyer the (i) unaudited combined balance sheets of the Companies, the related
combined statements of earnings, changes in stockholders equity and cash flows
of the Companies for the three months ended March 31, 1998 (the "Unaudited
Financial Statements") and (ii) the audited combined balance sheet of the
Companies and the related audited combined statements of earnings, changes in
stockholders equity and cash flows of the Companies (including any related
notes) for the fiscal year ended December 31, 1997, together with the report
thereon of the independent public accountants of the Companies (the "Audited
Financial Statements" and, together with the
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Unaudited Financial Statements, the "Company Financial Statements"). Each of the
balance sheets included in the Company Financial Statements, in all material
respects, fairly presents the combined financial position of the Companies as of
its date, and the other related statements included in the Company Financial
Statements, in all material respects, fairly present the combined results of
operations and changes in combined financial position of the Companies for the
periods presented therein, all in conformity with GAAP, applied on a consistent
basis during the periods involved, except as otherwise noted therein, and
except, in the case of the Unaudited Financial Statements, for the absence of
notes thereto and for customary year-end adjustments which are not material to
the financial position or results of operations of the Companies taken as a
whole.
3.7. Absence of Certain Changes. Since March 31, 1998, the
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Companies and the Company Subsidiaries taken as a whole have not (a) suffered
any change in its business, operations or financial position, except such
changes which, in the aggregate, are not reasonably likely to have a Material
Adverse Effect, (b) conducted their respective businesses in any material
respect not in the ordinary and usual course consistent with past practice or
(c) except in the ordinary course of business and consistent with past practice,
(i) incurred any long-term indebtedness or issued any debt securities or
assumed, guaranteed or endorsed the obligations of any other Person, (ii)
declared, set aside for payment or paid any dividend or other distribution
(whether in cash, stock, property or any combination thereof) in respect of the
capital stock of the Companies, or redeemed or otherwise acquired any shares of
capital stock of the Companies or the Company Subsidiaries, (iii) sold,
transferred or otherwise disposed of, any of their material property or assets,
(iv) created any material Encumbrance on any of their material property or
assets, (v) increased in any manner the rate or terms of compensation of any of
their directors, officers or other employees, (vi) paid or agreed to pay any
pension, retirement allowance or other employee benefit not required by any
existing Plan or other agreement or arrangement to any such director, officer or
employee, whether past or present, or (vii) entered into or amended any
employment, bonus, severance or retirement contract.
3.8. Compliance with Law. The business of the Companies and the
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Company Subsidiaries is not being conducted in violation of any applicable
order, writ, judgment, injunction, decree, statute, ordinance, rule or
regulation of any Governmental Entity, except such violations which, in the
aggregate, will not have a Material Adverse Effect.
3.9. Contracts and Commitments. Section 3.9 of Seller Disclosure
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Schedule sets forth, as of the date of this Agreement, a list of all written
Insurance Policies, collective bargaining agreements, employment, consulting or
similar agreements, real
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and personal property leases involving annual payments in excess of $25,000
other agreements, including any oral agreements, requiring annual payments in
excess of $25,000 guarantees, indentures, mortgages and notes or other debt
instruments evidencing indebtedness and agreements containing covenants not to
compete (collectively, the "Contracts") to which the Companies or the Company
Subsidiaries is a party. Neither the Companies nor the Company Subsidiaries is
in breach or default and, to the knowledge of Seller, no other party to any of
the Contracts is as of the date of this Agreement in breach or default (and no
event has occurred which with notice or the lapse of time or both would
constitute a default or violation) under any of the Contracts, except such
defaults which, in the aggregate, will not have a Material Adverse Effect.
3.10. No Undisclosed Liabilities. None of the Companies and the
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Company Subsidiaries has any liabilities (whether absolute, accrued, contingent
or otherwise), except (i) as and to the extent set forth in the Company
Financial Statements (including the notes thereto), (ii) such immaterial
contractual liabilities as are not required to be disclosed pursuant to Section
3.9 hereof to which any of the Companies or the Company Subsidiaries is a party,
and (iii) such liabilities which were incurred in the ordinary course of
business or which, in the aggregate, are not material to the Companies and the
Company Subsidiaries taken as a whole.
3.11. No Default. Neither the Companies nor any of the Company
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Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (i) its Articles of Incorporation or By-Laws
(or other comparable governing documents) or (ii) any order, writ, judgment,
injunction, decree, statute, ordinance, rule or regulation of any Governmental
Entity applicable to the Companies and the Company Subsidiaries, except such
defaults and violations which, in the aggregate, will not have a Material
Adverse Effect. The Companies and the Company Subsidiaries have all
governmental permits, licenses and authorizations necessary for the conduct of
their businesses in all material respects as presently conducted (the "Permits")
and are in compliance with the terms of the Permits, except for such Permits the
absence of which would not have a Material Adverse Effect or any non-compliance
which will not have a Material Adverse Effect.
3.12. Litigation. As of the date of this Agreement, there is no
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action, suit or proceeding pending, or, to the knowledge of Seller, action, suit
or proceeding threatened, against the Companies or the Company Subsidiaries or
any properties or rights of the Companies or the Company Subsidiaries, before
any Governmental Entity which (a) involves a claim in excess of $50,000 or (b)
seeks material injunctive relief. As of the date of this Agreement, neither of
the Companies nor any of the Company Subsidiaries has received notice
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that it is subject to any outstanding injunction, writ, judgment, order or
decree of any Governmental Entity which will have a Material Adverse Effect.
3.13. Taxes. (a) The Companies and the Company Subsidiaries
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have, within the time and manner prescribed by law, (i) filed with the
appropriate taxing authorities (or joined in the filing of) all Tax Returns
required to be filed by it in respect of any Taxes other than those Tax Returns
the failure of which to file would not have a Material Adverse Effect, and each
such Tax Return was complete and accurate in all material respects and (ii) paid
in full all Taxes shown to be due and payable thereon.
(b) (i) No deficiencies for any Taxes have been asserted in writing
or, to the knowledge of Seller, verbally proposed or assessed against either of
the Companies or any of the Company Subsidiaries which remain unpaid and which
in the aggregate are material to the business or financial condition of the
Companies and the Company Subsidiaries taken as a whole, or which are not being
contested in good faith by appropriate proceedings; (ii) the Companies have
adequately reserved for all material Taxes payable by the Companies or any of
the Company Subsidiaries for which no Tax Return has yet been filed; (iii)
neither the Companies nor any of the Company Subsidiaries is a "foreign person"
for purposes of Section 1445 of the Internal Revenue Code of 1986, as amended
(the "Code"); and (iv) neither of the Companies is a party to any tax sharing
agreement with Seller or any corporate subsidiary of Seller relating to federal
income taxes of the "affiliated group," as defined under Section 1504(a) of the
Code, that includes Seller.
(c) For purposes of this Agreement, (i) "Taxes" shall mean all U.S.
Federal, state, local or foreign and other taxes, assessments, duties and
similar charges of any kind imposed by any taxing authority, including interest,
penalties and additions thereto, and (ii) "Tax Return" shall mean any return,
report, information return or other document (including any related or
supporting information) with respect to Taxes.
3.14. Employee Benefit Plans; ERISA. (a) Section 3.14(a) of
-----------------------------
Seller Disclosure Schedule sets forth a complete and correct list of all
"employee benefit plans", as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained by the Companies
or any of the Company Subsidiaries or to which the Companies or any of the
Company Subsidiaries has any obligation or liability, contingent or otherwise;
and all bonus or other incentive compensation, deferred compensation, salary
continuation, disability, stock award, stock option, stock purchase, severance,
parachute or other material employee benefit policies or arrangements which the
Companies or any of the Company Subsidiaries maintains or to which the Companies
or any of the Company Subsidiaries has any
-12-
obligation or liability (contingent or otherwise) (collectively referred to as
the "Plans").
(b) None of the Plans is a Multiemployer Plan or a Multiple Employer
Plan. None of the Companies or any of the Company Subsidiaries has any present
liability due to a complete or partial withdrawal from a Multiemployer Plan or
Multiple Employer Plan or due to the termination or reorganization of a
Multiemployer Plan, and no events have occurred and no circumstances exist that
could reasonably be expected to result in any such liability to the Companies or
any of the Company Subsidiaries.
(c) None of the Plans is a Single Employer Plan and none of the
Companies or any of the Company Subsidiaries has any outstanding liability under
Section 4062 of ERISA to the Pension Benefit Guaranty Corporation ("PBGC") or to
a trustee appointed under Section 4042 of ERISA, and no events have occurred and
no circumstances exist that could reasonably be expected to result in any such
liability to the Companies or any of the Company Subsidiaries.
(d) Each Plan that is intended to qualify under Section 401(a) of the
Code, and the trust maintained pursuant thereto, has been determined to be so
qualified and exempt from taxation under Section 501(a) of the Code, and nothing
has occurred with respect to the operation of any such Plan that could
reasonably be expected to adversely affect such qualification or tax-exempt
status.
(e) All contributions (including all employer contributions and
employee contributions) required to have been made by the Companies and the
Company Subsidiaries under the Plans or by law to any funds or trusts
established thereunder or in connection therewith have been made by the due date
thereof (including any valid extension), and all contributions for any period
ending on or before the Closing Date which become due (including any valid
extension) will have been paid by the Closing Date.
(f) There has been no violation of ERISA or the Code with respect to
the filing of applicable reports, documents or notices regarding the Plans with
any governmental authority or the furnishing of required reports, documents or
notices to the participants or beneficiaries of the Plans, except for such
violations as would not result in a Material Adverse Effect.
(g) True, correct and complete copies of the following documents,
with respect to each of the Plans, have been made available to Buyer by the
Companies, if applicable: (i) all plans and related trust documents, and
amendments thereto; (ii) the most recent Forms 5500; (iii) summary plan
descriptions; and (iv) and any written agreements, policies or practices.
-13-
(h) The Plans have been maintained and administered in all respects
in accordance with their terms and applicable laws, which include but are not
limited to all the provisions of ERISA and the Code, except for such violations
as would not result in a Material Adverse Effect.
(i) There are no pending or, to the knowledge of the Companies and
the Company Subsidiaries, threatened actions, claims or proceedings against or
relating to any Plan, the assets of any of the trusts under such plans or the
plan sponsor or the plan administrator, or against any fiduciary of the Plans
with respect to the operation of such plans (other than routine benefit claims).
(j) To the knowledge of the Companies or the Company Subsidiaries,
none of the Companies or the Company Subsidiaries or any "party in interest" or
"disqualified person" with respect to the Plans has engaged in a "prohibited
transaction", as defined in Section 4975 of the Code or Section 406 of ERISA, or
taken any action, or failed to take any action, which could reasonably result in
any material liability under ERISA or the Code.
3.15. Title to Properties. The Companies and the Company
-------------------
Subsidiaries have good and valid title to all of the material assets and
properties (real and personal) which they own, and such assets and properties
are owned free and clear of all Encumbrances, except for (i) Encumbrances to
secure indebtedness reflected on the Company Financial Statements or
indebtedness incurred in the ordinary course of business and consistent with
past practice after the date thereof, (ii) mechanics', materialmens' and other
Encumbrances which have arisen in the ordinary course of business and (iii)
Encumbrances which, in the aggregate, are not reasonably likely to impair, in
any material respect, the continued use of such asset or property.
3.16. Patents, Trademarks, Etc. (a) Seller has previously
------------------------
delivered to Buyer a true and complete list of all Intellectual Property Rights
filed by, or issued or registered to, the Companies or the Company Subsidiaries
and all material intellectual property license agreements to which the Companies
or the Company Subsidiaries are a party. With respect to registered trademarks,
such list sets forth a list of all jurisdictions in which such trademarks are
registered or applied for and all registration and application numbers.
(b) (i) The Companies or the Company Subsidiaries own or possess
adequate licenses or other valid rights to use all United States and foreign
patents, trademarks (registered or unregistered), trade names, service marks,
copyrights and applications and registrations therefor, trade secrets and other
intellectual property and proprietary rights, whether or not subject to
statutory registration or protection, which are
-14-
material to the conduct of the business of the Companies and the Company
Subsidiaries taken as a whole (the "Intellectual Property Rights"), (ii) as of
the date of this Agreement, the validity of the Intellectual Property Rights and
the title or rights to use thereof of the Companies or the Company Subsidiaries
are not being questioned in any litigation to which the Companies or the Company
Subsidiaries is a party, nor to the knowledge of Seller, is any such litigation
threatened, (iii) as of the date of this Agreement, none of the Companies or the
Company Subsidiaries has received notice that is a party to any litigation in
connection with which a Person has alleged that the conduct of the business of
the Companies or the Company Subsidiaries infringed or infringes with any valid
patents, trademarks, trade name, service marks or copyrights of others, nor, to
the knowledge of Seller, is any such litigation threatened, and (iv) to the
knowledge of Seller, (A) no Person is materially infringing upon or violating
any of the Intellectual Property Rights and (B) no material claim is pending or
threatened to that effect.
3.17. Insurance. The Companies and the Company Subsidiaries
---------
maintain policies of fire and casualty, liability and other forms of insurance
in such amounts, with such deductibles and against such risks and losses as are
reasonable for their business, assets and properties. All material insurance
policies (the "Insurance Policies") with respect to the property, assets,
operations and business of the Companies and the Company Subsidiaries are in
full force and effect and all premiums due and payable thereon have been paid in
full, and no notice of cancellation or termination has been received with
respect to any such policy which has not been replaced on substantially similar
terms prior to the date of such cancellation. As of the date of this Agreement,
there are no pending material claims under the Insurance Policies by the
Companies as to which the insurers have denied liability. Seller makes no
representation or warranty that such insurance will be continued or is
continuable after the Closing.
3.18. Environmental Matters. To Seller's knowledge (a) the
---------------------
Companies and the Company Subsidiaries are in compliance with all applicable
Environmental Laws, except where failure to be in compliance would not have a
Material Adverse Effect; (b) there is no Environmental Claim pending or
threatened against the Companies or any of the Company Subsidiaries which would
have a Material Adverse Effect; and (c) no person or party has any reasonable
basis for any action or proceeding against the Companies or any of the Company
Subsidiaries relating to the violation by the Company or any of the Company
Subsidiaries of any Environmental Law which could have a Material Adverse Effect
and none of the Companies and the Company Subsidiaries has received oral or
written notice of, nor does Seller have any reason to believe there is, any
existing or pending violation, citation, claim or complaint relating to the
violation of any Environmental Law by the Companies or the Company Subsidiaries,
-15-
which violation is reasonably likely to have a Material Adverse Effect.
3.19. Employee and Labor Matters. Neither the Companies nor any
--------------------------
of the Company Subsidiaries is a party to any collective bargaining or other
labor union contract applicable to persons employed by them, no collective
bargaining agreement is being negotiated by the Companies or any of the Company
Subsidiaries, and none of Seller, the Companies or the Company Subsidiaries
knows of any activities or proceedings of any labor union to organize any of the
employees of the Companies and the Company Subsidiaries. As of the date hereof,
(i) the Companies and the Company Subsidiaries are in compliance in all material
respects with all applicable laws relating to employment and employment
practices, wages, hours, and terms and conditions of employment, (ii) there are
no material charges with respect to or relating to the Companies or any of the
Company Subsidiaries pending before the Equal Employment Opportunity Commission
or any state, local or foreign agency responsible for the prevention of unlawful
employment practices, and (iii) there is no labor dispute, strike or work
stoppage against the Companies or the Company Subsidiaries, pending or, to
Seller's knowledge, threatened which may interfere with the business activities
of the Companies and the Company Subsidiaries taken as a whole, except where
such non-compliance, charge, dispute, strike or work stoppage would not have a
Material Adverse Effect. As of the date hereof, to the knowledge of Seller,
neither the Companies and the Company Subsidiaries nor their respective
representatives or employees has committed any unfair labor practices in
connection with the operation of the business of the Companies and the Company
Subsidiaries, and there is no charge or complaint against the Companies or the
Company Subsidiaries, by the National Labor Relations Board or any comparable
state agency pending or threatened in writing, except where such unfair labor
practice, charge or complaint would not have a Material Adverse Effect.
3.20. Brokers and Finders. None of Seller, the Companies or the
-------------------
Company Subsidiaries or any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability for any investment
banking fees, brokerage fees, commissions or finders' fees in connection with
the transactions contemplated by this Agreement, except for fees and expenses
payable to SBC Warburg Dillon Read Inc. for investment banking and other
advisory services which fees and expenses will be paid by Seller.
3.21. Year 2000 Compliance. To Seller's knowledge, the software
--------------------
package that the Companies are contemplating acquiring from HealthNet Systems,
Inc. for the Companies' per diem business pursuant to the proposal attached as
Section 3.21 of Seller Disclosure Schedule will be year 2000 compliant, which,
for purposes of this Agreement, shall mean that the data outside the range 1900-
1999 will be correctly processed, except where the
-16-
failure to correctly process such data would not have a Material Adverse Effect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the Disclosure Schedule delivered by Buyer and
Parent to Seller concurrently with the execution and delivery by Buyer of this
Agreement (the "Buyer Disclosure Schedule"), each of Buyer and Parent jointly
and severally represents and warrants to Seller as follows:
4.1. Corporate Organization; Etc. Each of Buyer and Parent is a
---------------------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to conduct its business as it is now being conducted and to own,
lease and operate its property and assets except where the failure to be so
organized, existing and in good standing or to have such power or authority
would not, in the aggregate, either (i) have a material adverse effect on the
business, operations, assets or financial condition of Buyer or (ii) impair,
hinder or adversely affect the ability of Buyer to perform any of its
obligations under this Agreement or to consummate the transactions contemplated
hereby (either of such effects, a "Buyer Material Adverse Effect").
4.2. Authority Relative to this Agreement. Each of Buyer and
------------------------------------
Parent has all requisite corporate authority and power to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
required corporate action on the part of Buyer and Parent and no other corporate
proceedings on the part of Buyer or Parent are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Buyer and Parent and,
assuming this Agreement has been duly authorized, executed and delivered by each
of the other parties hereto, this Agreement constitutes a valid and binding
agreement of Buyer and Parent, enforceable against each of Buyer and Parent in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and subject to the limitations imposed by general
equitable principles (regardless whether such enforceability is considered in a
proceeding at law or in equity).
4.3. Consents and Approvals; No Violations. Neither the
-------------------------------------
execution and delivery of this Agreement by Buyer or Parent
-17-
nor the consummation of the transactions contemplated hereby by Buyer or Parent
will (a) violate any provision of the articles of incorporation or by-laws of
Buyer or Parent, (b) require any consent, waiver, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity, except
for (i) filings with the FTC and the DOJ pursuant to the HSR Act and (ii) such
consents, waivers, approvals, authorizations, permits, filings or notifications
which, if not obtained or made, will not, in the aggregate, have a Buyer
Material Adverse Effect or (c) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or any obligation to repay)
under, any of the terms, conditions or provisions of any indenture, mortgage,
note, bond, encumbrance, license, government registration, contract, lease,
franchise, permit, agreement or other instrument or obligation to which Buyer or
Parent is a party or by which Buyer or Parent or any of its properties or assets
may be bound, except such violations, breaches and defaults which, in the
aggregate, will not have a Buyer Material Adverse Effect or (d) violate any
order, writ, judgment, injunction, decree, statute, ordinance, rule or
regulation of any Governmental Entity applicable to Buyer or Parent or by which
any of its properties or assets may be bound, except such violations which, in
the aggregate, will not have a Buyer Material Adverse Effect.
4.4. Available Funds. As of the date of this Agreement, and as
---------------
of the Closing, Buyer or Parent will have sufficient funds available to satisfy
the obligation of Buyer to pay the Purchase Price and to pay all fees and
expenses of Buyer related to the transaction contemplated hereby.
4.5. Brokers and Finders. None of Buyer, Parent or any of their
-------------------
respective officers, directors or employees has employed any investment banker,
broker or finder or incurred any liability for any investment banking fees,
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement for which Seller, or in the event the Closing
does not occur, the Companies or Seller, has or could have any liability.
ARTICLE V.
COVENANTS
5.1. Conduct of the Business Pending the Closing. Except as
-------------------------------------------
contemplated by this Agreement, as set forth in Section 5.1 of Seller Disclosure
Schedule or with the prior written consent of Buyer or Parent, during the period
from the date of this Agreement to the Closing, Seller will cause the Companies
to, conduct their respective businesses and operations (including but not
limited to, the management of the payment and receipt of the Companies' and the
Company Subsidiaries' accounts payable and accounts receivable, respectively),
according to their ordinary
-18-
and usual course of business consistent with past practice and will use all
reasonable efforts consistent therewith to preserve intact the Companies'
properties, assets and business organizations, to keep available the services of
the Companies' officers and employees and to maintain satisfactory relationships
with customers, suppliers, distributors and others having commercially
beneficial business relationships with the Companies, in each case in the
ordinary course of business consistent with past practice. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Closing, Seller shall use its reasonable best efforts to manage the
business of the Companies so as to avoid a material adverse change in March 31
Working Capital, and to have a combined cash balance on the Closing Date at the
Companies and the Company Subsidiaries of approximately $500,000. For purposes
of the previous sentence, March 31 Working Capital shall mean the combined
current assets (including for purposes of this definition only, cash of
$500,000), less the combined current liabilities (excluding (a) any amounts due
from the Companies or the Company Subsidiaries to Seller or any subsidiary of
Seller, (b) any short-term indebtedness for notes payable or borrowed money and
(c) any accrued income taxes for the 1998 tax year) of the Companies and the
Company Subsidiaries taken as a whole as of March 31, 1998, which the parties
acknowledge was approximately $13 million as of March 31, 1998 (which amount
reflects adjusted cash of $500,000). Buyer acknowledges that the foregoing does
not constitute a guarantee by Seller of any minimum combined working capital for
the Companies and the Company Subsidiaries. Seller will not, and will not permit
the Companies to, take any action with the purpose of causing any of the
conditions to Buyer's obligations set forth in Article VII hereof to not be
satisfied. Except as set forth in Section 5.1 of Seller Disclosure Schedule,
without limiting the generality of the foregoing, and except as otherwise
provided in this Agreement, Seller will not permit the Companies, prior to the
Closing, without the prior written consent of Buyer or Parent, to:
(a) issue, sell or pledge, or authorize or propose the issuance, sale
or pledge of (i) additional shares of capital stock of any class (including
Shares), or securities convertible into or exchangeable for any such shares, or
any rights, warrants or options to acquire any such shares or other convertible
securities or (ii) any other securities in respect of, in lieu of, or in
substitution for, Shares outstanding on the date hereof;
(b) declare or pay any dividend or distribution on any shares of the
capital stock of the Companies;
(c) redeem, purchase or otherwise acquire any outstanding shares of
the capital stock of the Companies;
(d) propose or adopt any amendment to the Certificate of
Incorporation or By-Laws of the Companies;
-19-
(e) except in the ordinary course of business consistent with past
practice or pursuant to the terms of StarMed's existing credit facility (the
"Credit Facility"), incur any long-term indebtedness or issue any debt
securities or assume, guarantee or endorse the obligations of any other Person;
(f) (i) increase in any manner the rate or terms of compensation or
benefits of any of its directors, officers or other employees, except as may be
allowed under existing employment agreements or such increases as are granted in
the ordinary course of business consistent with past practice, or (ii) pay or
agree to pay any pension, retirement allowance or other employee benefit not
required or permitted by any existing Plan or other agreement or arrangement to
any such director, officer or employee, whether past or present, or (iii) enter
into or amend any employment, bonus, severance or retirement contract or adopt
any employee benefit plan;
(g) (i) except in the ordinary course of business consistent with
past practice, sell, lease, transfer or otherwise dispose of, any of its
material property or assets or (ii) except for Encumbrances securing amounts
outstanding under the Credit Facility, create any Encumbrance on any of its
material property or assets;
(h) make any loans, advances or capital contributions, except
advances for travel and other normal business expenses to officers and employees
in an aggregate amount outstanding at any one time not to exceed $10,000;
(i) enter into other material agreements, commitments or contracts,
except agreements, commitments or contracts made in the ordinary course of
business consistent with past practice; or
(j) fail to maintain all its assets in good repair and condition,
except to the extent of wear or use in the ordinary course of business and
consistent with past practice or damage by fire or other unavoidable casualty;
(k) institute, settle or dismiss any action, claim, demand, lawsuit,
proceeding, arbitration or grievance by or before any Governmental Entity
threatened against, relating to or involving the Companies or the Company
Subsidiaries in connection with any business, asset or property of the Company
or the Company Subsidiaries other than in the ordinary course of business
consistent with past practices but not, in any individual case, in excess of
$50,000; or
(l) agree in writing to take any of the foregoing actions.
5.2. Access to Information. From the date of this Agreement to
---------------------
the Closing, Seller will, and will cause the Companies to (i) give Buyer and its
authorized Representatives
-20-
reasonable access to all personnel, books, records, offices and other facilities
and properties of the Companies and the Company Subsidiaries, (ii) permit Buyer
to make such inspections thereof as Buyer may reasonably request and (iii) cause
its officers to furnish Buyer with such financial and operating data and other
information (other than detailed information with respect the identity, address
and social security number of nurses and nurse-practitioner personnel of the
Companies and the Company Subsidiaries) with respect to the business and
properties of the Companies and the Company Subsidiaries as Buyer may from time
to time reasonably request; provided, however, that any such access shall be
-------- -------
conducted at a reasonable time and in such a manner as not to interfere
unreasonably with the operation of the business of the Companies; provided
further that Buyer and its authorized Representatives shall not contact or hold
discussions with customers, suppliers or non-management employees of the
Companies of the Company Subsidiaries without the prior written consent of
Seller, such consent not to be unreasonably withheld. All such information and
access shall be subject to the terms and conditions of the letter agreement
dated April 7, 1998, between Parent and Seller (the "Confidentiality
Agreement"). Notwithstanding anything to the contrary in this Agreement, neither
the Companies nor the Company Subsidiaries shall be required to disclose any
information to Buyer, Parent or their authorized Representatives if doing so
could violate any agreement or federal, state, local or foreign law, rule or
regulation to which any of the Companies or the Company Subsidiaries is a party
or to which any of them is subject. Following the Closing, neither Buyer, nor
Parent will, nor will either of Buyer or Parent permit the Companies or any of
the Company Subsidiaries to, engage in any discussions or provide any oral or
written information to any of the plaintiffs or any other persons (or their
counsel or representatives) in any of the matters referred to in Section 5.10 of
Seller Disclosure Schedule, unless Buyer and Parent have received the prior
written consent of Seller or unless Buyer or Parent is compelled to do so as a
matter of law.
5.3. Disclosure Supplements. From time to time prior to the
----------------------
Closing, Seller will supplement or amend Seller Disclosure Schedule with respect
to any matter hereafter arising which, if existing or occurring at or prior to
the date of this Agreement, would have been required to be set forth or
described in Seller Disclosure Schedule or which is necessary to complete or
correct any information in Seller Disclosure Schedule or in any representation
or warranty of Seller which has been rendered inaccurate thereby. No such
supplement or amendment shall be given effect for purposes of determining (a)
the satisfaction of the conditions set forth in Article VII hereof, except as
explicitly set forth herein including as set forth in Article VII hereof and (b)
Buyer's right to indemnification pursuant to Section 8.4(a) hereof, except as
specifically set forth in Section 8.4(e) hereof.
-21-
5.4. Consents and Approvals. (a) Each of the parties hereto
----------------------
shall use its reasonable best efforts to (i) obtain as promptly as practicable
all consents, authorizations, approvals and waivers required in connection with
the consummation of the transactions contemplated by this Agreement under any
federal, state, local or foreign law or regulation, (ii) lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties hereto to consummate the transactions contemplated hereby and
(iii) effect all necessary registrations and filings including, but not limited
to, filings under the HSR Act and submissions of information requested by any
Governmental Entity. The parties hereto further covenant and agree, with
respect to any threatened or pending preliminary or permanent injunction or
other order, decree or ruling or statute, rule, regulation or executive order
that would adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby, to respectively use their reasonable best
efforts to prevent the entry, enactment or promulgation thereof, as the case may
be.
(b) Each party hereto shall promptly inform the other of any material
communication from the FTC, the DOJ or any other Governmental Entity regarding
any of the transactions contemplated hereby. If any party hereto or any
Affiliate thereof receives a request for additional information or documentary
material from any such Governmental Entity with respect to the transactions
contemplated hereby, then such party shall endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after consultation with
the other party, an appropriate response in compliance with such request. Buyer
or Parent shall advise Seller promptly in respect of any understandings,
undertakings or agreements (oral or written) that Buyer or Parent proposes to
make or enter into with the FTC, the DOJ or any other Governmental Entity in
connection with the transactions contemplated hereby.
5.5. Filings. Promptly after the execution of this Agreement,
-------
each of the parties hereto shall prepare and make or cause to be made any
required filings, submissions and notifications under the laws of any domestic
or foreign jurisdiction to the extent that such filings are necessary to
consummate the transactions contemplated hereby and will use its reasonable best
efforts to take all other actions necessary to consummate the transactions
contemplated hereby in a manner consistent with applicable law. Each of the
parties hereto will furnish to the other parties such necessary information and
reasonable assistance as such other parties may reasonably request in connection
with the foregoing.
5.6. Covenant to Satisfy Conditions. Seller will use its
------------------------------
reasonable best efforts to ensure that the conditions set forth in Articles VI
and VII hereof are satisfied, insofar as such matters are within the control of
Seller, and each of Buyer and Parent will use its reasonable best efforts to
ensure that
-22-
the conditions set forth in Articles VI and VII hereof are satisfied, insofar as
such matters are within the control of Buyer or Parent.
5.7. Further Assurances. Upon the terms and subject to the
------------------
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take or cause to be taken all action, to do or cause
to be done, and to assist and cooperate with the other party hereto in doing,
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective, in the most expeditious manner practicable,
the transactions contemplated by this Agreement, including, but not limited to,
(i) the satisfaction of the conditions precedent to the obligations of any of
the parties hereto; (ii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the performance of the obligations hereunder or thereunder; and (iii) the
execution and delivery of such instruments, and the taking of such other actions
as the other party hereto may reasonably require in order to carry out the
intent of this Agreement.
5.8. Employee Benefit Matters. From and after the Closing, Buyer
------------------------
and its Affiliates shall continue the Plans as Plans of the Companies and the
Company Subsidiaries until such time as the employees of the Companies and the
Company Subsidiaries are integrated into the employee benefit plans that are
available to other employees of Buyer or its Affiliates, subject to the terms
and conditions specified in such plans and to such changes therein as may be
necessary to reflect the consummation of the transactions contemplated hereby.
5.9. Elimination of Indebtedness. At or prior to the Closing,
---------------------------
Seller will take all necessary steps to cause the Companies and the Company
Subsidiaries to eliminate all indebtedness for borrowed money of the Companies
and the Company Subsidiaries (including all intercompany obligations).
5.10. Assumption of Certain Liabilities. At the Closing, Seller
---------------------------------
hereby acknowledges and agrees that Seller shall remain liable for and,
following the Closing, shall pay, discharge or perform, as applicable, any and
all liabilities, obligations, claims and commitments of or against Seller, the
Companies or the Company Subsidiaries in respect of any of the matters set forth
in Section 5.10 of Seller Disclosure Schedule (the "Assumed Liabilities").
Buyer shall cause the Companies to furnish any information concerning the
Companies or the Company Subsidiaries reasonably requested by Seller in order to
enable Seller to satisfy its obligations hereunder, and shall not settle or
otherwise resolve any Assumed Liability without Seller's consent.
-23-
5.11. Section 338(h)(10) Election. Buyer and Seller shall in a
---------------------------
timely manner take any and all actions necessary to make an election with
respect to the Companies under Section 338(h)(10) of the Internal Revenue Code
of 1986, as amended (the "Code"), the Treasury Regulations promulgated
thereunder and any comparable provision of state, local or foreign tax law (the
"338(h)(10) Election"). The allocation of the "modified adjusted deemed sale
price" (within the meaning of Income Tax Regulation section 1.338(h)(10)-1(f))
among the assets of the Companies, shall be made in accordance with the fair
market value of such assets as shall be agreed to by Buyer and Seller no later
than 30 days following the Closing Date in a manner consistent with Section 338
of the Code. Buyer and Seller acknowledge that such allocation has been arrived
at by arm's length negotiation. Neither Buyer nor Seller shall take a position
in any return or examination or other administrative or judicial proceeding
(including any ruling request) relating to any tax that is inconsistent with
such allocation. Buyer shall be responsible for and control the preparation and
filing of the 338(h)(10) Election. Seller shall prepare, execute and deliver to
Buyer such documents or forms (including Section 338 Forms as defined below) as
Buyer shall request or as are required by applicable law for an effective
338(h)(10) Election. "Section 338 Forms" shall mean all returns, documents,
statements, schedules and other forms that are required to be submitted in
connection with a 338(h)(10) Election, including, without limitation, U.S.
Treasury Department Form 8023-A (together with any schedules or attachments
thereto).
5.12. Insurance. Seller shall cause the Companies to keep, or
---------
cause to be kept, all material insurance policies for the Companies and the
Company Subsidiaries existing on the date of this Agreement, or suitable
replacements therefor, in full force and effect through the close of business on
the Closing. Seller shall use its reasonable best efforts to cooperate with
Buyer and/or Parent in obtaining satisfactory "tail" coverage from Seller's
professional liability insurance carriers.
ARTICLE VI.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to effect the transactions contemplated
hereby shall be subject to the fulfillment, or written waiver by Seller, at or
prior to the Closing, of each of the following conditions:
6.1. Representations and Warranties True. The representations
-----------------------------------
and warranties of Buyer and Parent contained herein qualified as to materiality
shall be true and correct and those not so qualified shall be true and correct
in all material respects as of the date hereof and at and as of the Closing Date
as though such representations and warranties were made at and as of such date
unless limited by their terms to a prior date.
-24-
6.2. Performance. Buyer and Parent shall have performed and
-----------
complied in all material respects with all agreements, obligations, covenants
and conditions required by this Agreement to be performed or complied with by it
on or prior to the Closing.
6.3. Certificates . Buyer or Parent shall have furnished Seller
------------
with such certificates to evidence its compliance with the conditions set forth
in Sections 6.1 and 6.2 hereof as Seller may reasonably request.
6.4. No Injunction or Proceeding. No statute, rule, regulation,
---------------------------
executive order, decree, preliminary or permanent injunction or restraining
order shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or restricts the consummation of the
transactions contemplated hereby.
6.5. HSR Act. All required waiting periods applicable to this
-------
Agreement and the transactions contemplated hereby under the HSR Act shall have
expired or been terminated.
6.6. Lender Consent. Seller shall have received consent of the
--------------
holders of its Senior Notes on terms reasonably satisfactory to Seller.
ARTICLE VII.
CONDITIONS TO BUYER'S AND PARENT'S OBLIGATIONS
The obligation of Buyer and Parent to effect the transactions
contemplated hereby shall be subject to the fulfillment, or written waiver by
Buyer, at or prior to the Closing of each of the following conditions:
7.1. Representations and Warranties of Seller True. The
---------------------------------------------
representations and warranties of Seller contained herein qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects as of the date hereof and at and as of the
Closing Date as though such representations and warranties were made at and as
of such date unless limited by their terms to a prior date.
7.2. Performance by Seller. Seller shall have performed and
---------------------
complied in all material respects with all agreements, obligations, covenants
and conditions required by this Agreement to be performed or complied with by
Seller on or prior to the Closing.
7.3. Certificates. Seller shall have furnished Buyer or Parent
------------
with such certificates to evidence its compliance with the conditions set forth
in Sections 7.1 and 7.2 hereof as Buyer may reasonably request. Nothing herein
shall restrict the ability of Seller to provide a certificate pursuant to this
Section 7.3
-25-
that sets forth therein exceptions, and the existence of any exceptions in the
certificate delivered pursuant to this Section 7.3 hereof shall not be deemed a
failure to meet the condition set forth in this Section 7.3; provided, however,
-------- -------
that the existence of the events described therein may result in the failure to
satisfy the conditions set forth in Section 7.1 or 7.2 hereof.
7.4. No Injunction or Proceeding. No statute, rule, regulation,
---------------------------
executive order, decree, preliminary or permanent injunction or restraining
order shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or restricts the consummation of the
transactions contemplated hereby.
7.5. HSR Act. All required waiting periods applicable to this
-------
Agreement and the transactions contemplated hereby under the HSR Act shall have
expired or been terminated.
7.6. Receipt of 1996 Audit. Buyer shall have received the
---------------------
audited financial statements for the Companies for fiscal year 1996, together
with the report thereon of the Companies' independent public accountants, and
such financial statements shall not result in any Material Adverse Effect which
would have to be reflected on the Audited Financial Statements.
ARTICLE VIII.
TERMINATION AND ABANDONMENT; INDEMNIFICATION
8.1. Termination. This Agreement may be terminated at any time
-----------
prior to the Closing:
(a) by the consent of all the parties hereto;
(b) by Buyer, Parent or Seller if the Closing shall not have occurred
on or before August 20, 1998 (the "Termination Date"), except that Buyer, Parent
or Seller shall have the right, in their mutual discretion, to extend the time
period in this Section 8.1(b) for such time period (which shall in no event
exceed 45 days), and only for such time period, as shall be needed for such
parties to satisfy their respective obligations under the HSR Act, the
satisfaction of which shall at all times remain subject to each party's
obligations pursuant to Section 5.6 hereof; provided that the right to terminate
this Agreement pursuant to this Section 8.1(b) shall not be available to any
party whose failure to perform any of its obligations under this Agreement
results in the failure of the Closing to be consummated by such date;
(c) by Buyer, Parent or Seller, if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting any of the transactions contemplated hereby
and such order, decree,
-26-
ruling or other action shall have become final and nonappealable; or
(d) by Buyer, Parent or Seller in the event of a material volitional
breach by the other party to this Agreement of any representation, warranty,
covenant or agreement contained herein, which breach is not cured within the
earlier of the Termination Date or thirty (30) days after written notice thereof
is given to the breaching party by the non-breaching party or is not waived by
the non-breaching party during such period.
8.2. Procedure and Effect of Termination. In the event of
-----------------------------------
termination of this Agreement pursuant to Section 8.1 hereof, by one party,
written notice thereof shall forthwith be given to the other party, and, except
as set forth below, this Agreement shall terminate and be void and have no
effect and the transactions contemplated hereby shall be abandoned. If this
Agreement is terminated as provided herein:
(a) Buyer and Parent will redeliver, and will cause its agents
(including, without limitation, attorneys and accountants) to redeliver, all
documents, work papers and other material of Seller or the Companies relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof;
(b) all information received by Buyer and Parent with respect to the
business, operations, assets or financial condition of the Companies or the
Company Subsidiaries shall remain subject to the Confidentiality Agreement; and
(c) except as otherwise expressly set forth herein, no party to this
Agreement shall have any liability hereunder to any other party, except (i) for
any breach by such party of the terms and provisions of this Agreement, (ii) as
stated in paragraphs (a) and (b) of this Section 8.2 and (iii) as provided in
the Confidentiality Agreement.
8.3. Survival of Representations, Warranties and Covenants. (a)
-----------------------------------------------------
The representations and warranties contained in Section 3.18 (Environmental
Matters) hereof shall survive the Closing and remain in full force and effect
until the fourth anniversary of the Closing Date, at which time they shall
terminate. The representations and warranties contained in Section 3.13 (Taxes)
hereof shall survive the Closing and remain in full force and effect until the
expiration of the applicable statute of limitations (including any extensions
thereof), at which time they shall terminate. All other representations and
warranties contained herein shall survive the Closing and remain in full force
and effect until December 31, 1999, at which time they shall terminate.
(b) All covenants and agreements contained herein shall survive the
Closing and remain in full force and effect
-27-
until the first anniversary of the Closing Date, at which time they shall
terminate except that those covenants and agreements that by their terms are to
be performed in whole or in part subsequent to the Closing (including without
limitation Section 5.10), shall survive the Closing.
(c) The sole and exclusive remedy for any breach of any
representation, warranty, covenant or agreement shall be pursuant to Section 8.4
hereof contained herein, except in the case of actual fraud. Under no
circumstances, except in the case of actual fraud, shall Seller be liable to
Buyer for consequential, incidental or punitive damages.
8.4. Indemnification. (a) From and after the Closing, Seller
---------------
shall indemnify and hold harmless Buyer, Parent and the Companies and their
respective officers and directors (collectively, the "Buyer Indemnified
Parties") from and against any liabilities, costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages and
amounts paid in settlement (collectively, "Damages") arising from or in
connection with (i) any inaccuracy in any representation or the breach of any
warranty of Seller under this Agreement, (ii) the failure of Seller to duly
perform or observe any term, provision, covenant or agreement to be performed or
observed by Seller pursuant to this Agreement or (iii) any liability of the
Companies under Treasury Regulations (S) 1.1502-6 for federal income taxes of
the Seller or any other member of the "affiliated group" that includes Seller.
(b) From and after the Closing, each of Buyer and Parent jointly and
severally shall indemnify and hold harmless Seller and its Affiliates and
Representatives (collectively, the "Selling Indemnified Parties") from and
against any Damages to the extent they are the result of (i) any inaccuracy in
any representation or the breach of any warranty of Buyer or Parent under this
Agreement, (ii) the failure of Buyer or Parent to duly perform or observe any
term, provision, covenant or agreement to be performed or observed by Buyer or
Parent pursuant to this Agreement or (iii) any claim arising after the Closing
Date for which Seller is not obligated to indemnify Buyer or Parent or any
matter arising from the conduct of the business of the Companies after the
Closing Date.
(c) Notwithstanding anything herein to the contrary, except for
Damages incurred by the Buyer Indemnified Parties in connection with the
inaccuracy of any representation or the breach of any warranty of Seller
relating to Taxes or actual fraud by the Seller or Damages incurred by the
Seller Indemnified Parties relating to fraud by Buyer or Parent, no
indemnification shall be available to Buyer Indemnified Parties under Section
8.4(a)(i) hereof or to Seller Indemnified Parties under Section 8.4(b)(i) hereof
unless and until the aggregate amount of Damages that would otherwise be subject
to indemnification, exceeds $500,000 (in each case, the "Deductible Amount"), in
which case
-28-
the party entitled to such indemnification shall be entitled to receive only the
amounts in excess of the Deductible Amount.
(d) Notwithstanding anything herein to the contrary, the maximum
aggregate liability of Seller to Buyer Indemnified Parties or of Buyer and
Parent to Seller Indemnified Parties under this Section 8.4 hereof shall not
exceed Ten Million Dollars ($10,000,000).
(e) Notwithstanding anything herein to the contrary, none of the
Buyer Indemnified Parties shall be entitled to indemnification by Seller for any
Damages arising from any matter of which Buyer or Parent had knowledge at or
prior to Closing by reason of Seller having delivered written notice thereto,
either in a supplemented disclosure schedule or an officer's certificate, at or
prior to Closing, if the conditions to Buyer's or Parent's obligation set forth
in Article VII fail to be satisfied at Closing by reason of the matters
disclosed in such supplemented disclosure schedule or officer's certificate and
Buyer or Parent waives its right not to Close unless Seller made a knowing
misrepresentation with respect to such matter on the date of this Agreement.
(f) Any calculation of Damages for purposes of this Section 8.4 shall
be (i) net of any insurance recovery made by the Indemnified Party (whether paid
directly to such Indemnified Party or assigned by the Indemnifying Party to such
Indemnified Party) and (ii) reduced to take account of any net Tax benefit
realized by the Indemnified Party arising from the deductibility of any such
Damages or Tax. Any indemnification payment hereunder shall initially be made
without regard to this paragraph and shall be reduced to reflect any such net
Tax benefit only after the Indemnified Party has actually realized such benefit.
For purposes of this Agreement, an Indemnified Party shall be deemed to have
"actually realized" a net Tax benefit to the extent that, and at such time as,
the amount of Taxes payable by such Indemnified Party is reduced below the
amount of Taxes that such Indemnified Party would have been required to pay but
for deductibility of such Damages. The amount of any reduction hereunder shall
be adjusted to reflect any final determination (which shall include the
execution of Form 870-AD or successor form) with respect to the Indemnified
Party's liability for Taxes and, if necessary, either Seller or Buyer or Parent,
as the case may be, shall make payments to the other to reflect such adjustment.
Any indemnity payment under this Agreement shall be treated as an adjustment to
the Purchase Price for Tax purposes, unless a final determination (which shall
include the execution of a Form 870-AD or successor form) with respect to the
Indemnified Party or any of its Affiliates causes any such payment not to be
treated as an adjustment to the Purchase Price for U.S. Federal income Tax
purposes.
(g) No action, claim or setoff for Damages subject to indemnification
under this Section 8.4 shall be brought or made:
-29-
(i) with respect to claims for Damages resulting from a breach of any
covenant contained in this Agreement, or in any instrument of transfer or
assumption related hereto, after the date on which such covenant or instrument
shall terminate pursuant to Section 8.3 hereof; and
(ii) with respect to claims for Damages resulting from a breach of
any representation or warranty, after the date on which such representation or
warranty shall terminate pursuant to Section 8.3 hereof;
provided, however, that any claim notified in writing with reasonable
-------- -------
specificity by the party seeking indemnification (the "Indemnified Party") to
the party from which indemnification is sought (the "Indemnifying Party") within
the time periods set forth above shall survive (and be subject to
indemnification) until it is finally and fully resolved.
(h) Upon receipt by the Indemnified Party of notice of any action,
suit, proceedings, claim, demand or assessment against such Indemnified Party
which might give rise to a claim for Damages, the Indemnified Party shall give
written notice thereof to the Indemnifying Party indicating the nature of such
claim and the basis therefor; provided, however, that failure to give such
notice shall not affect the indemnification provided hereunder except to the
extent the Indemnifying Party shall have been actually prejudiced as a result of
such failure. A claim to indemnity hereunder may, at the option of the
Indemnified Party, be asserted as soon as Damages have been threatened by a
third party orally or in writing, regardless of whether actual harm has been
suffered or out-of-pocket expenses incurred, provided the Indemnified Party
shall reasonably determine that it may be liable or otherwise incur such
Damages. However, payments for Damages for third party claims shall not be
required except to the extent that the Indemnified Party has expended out-of-
pocket sums. The Indemnifying Party shall have the right, at its option, to
assume the defense of, at its own expense and by its own counsel, any such
matter involving the asserted liability of the Indemnified Party as to which the
Indemnifying Party shall have acknowledged its obligation to indemnify the
Indemnified Party. If any Indemnifying Party shall undertake to compromise or
defend any such asserted liability, it shall promptly notify the Indemnified
Party of its intention to do so, and the Indemnified Party agrees to cooperate
fully with the Indemnifying Party and its counsel in the compromise of, or
defense against, any such asserted liability; provided, however, that the
Indemnifying Party shall not settle any such asserted liability without the
written consent of the Indemnified Party (which consent will not be unreasonably
withheld); provided, further, however that the immediately preceding clause
shall not apply in the case of relief consisting solely of money damages at
least 80% of which shall be borne by the Indemnifying Party after taking into
account any limitation thereon. Notwithstanding an election to assume the
defense of such action or proceeding, such
-30-
Indemnified Party shall have the right to employ separate counsel and to
participate in the defense of such action or proceeding, and the Indemnifying
Party shall bear the reasonable fees, costs and expenses of such separate
counsel (and shall pay such fees, costs and expenses at least quarterly), if (A)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to such Indemnified Party to represent such Indemnified Party within a
reasonable time after notice of the institution of such action or proceeding, or
(B) the Indemnifying Party shall authorize such Indemnified Party to employ
separate counsel at the Indemnifying Party's expense. In any event, the
Indemnified Party and its counsel shall cooperate with the Indemnifying Party
and its counsel and shall not assert any position in any proceeding inconsistent
with that asserted by the Indemnifying Party. All costs and expenses incurred in
connection with an Indemnified Party's cooperation shall be borne by the
Indemnifying Party. In any event, the Indemnified Party shall have the right at
its own expense to participate in the defense of such asserted liability.
8.5. Tax Matters. (a) Seller shall prepare and file all Tax
-----------
Returns with the appropriate federal, state, local and foreign governmental
agencies relating to the Companies for periods ending on or before the Closing
Date and shall pay all Taxes due with respect to such Tax Returns. Buyer shall
prepare and file, or cause to be prepared and filed, all Tax Returns required to
be filed by the Companies covering a Tax year commencing prior to the Closing
Date and ending after the Closing Date (a "Straddle Period") and shall cause the
Companies to pay the Taxes shown to be due thereon. Seller will furnish to
Buyer all information and records reasonably requested by Buyer for use in
preparation of any Tax Returns relating to a Straddle Period. Buyer shall allow
Seller to review, comment upon and reasonably approve without undue delay any
such Tax Returns at any time during the 45-day period immediately preceding the
filing of such Tax Return. Buyer and Seller agree to cause the Companies to
file all Tax Returns for any Straddle Period on the basis that the relevant
taxable period ended as of the close of business on the Closing Date, unless the
relevant taxing authority will not accept a Tax Return filed on that basis.
(b) Tax Cooperation. Seller shall reasonably cooperate, and shall
---------------
cause its respective Affiliates (including the Companies), officers, employees,
agents, auditors and Representatives reasonably to cooperate (including by
maintaining and making available to each other all relevant records), in
preparing and filing all Tax Returns and in resolving all disputes and audits
with respect to Taxes of the Companies for any Pre-Closing Tax Period and for
any Straddle Period.
(c) Procedures Relating to Indemnification of Tax Claims. (i) If a
----------------------------------------------------
claim shall be made by any Tax authority which, if successful, might result in
an indemnity payment to the Indemnified Parties pursuant to Section 8.5(a) or
(b) hereof, the Indemnified Parties shall notify the Indemnifying Parties
-31-
promptly of such claim (a "Tax Claim"); provided, however, that the failure to
give such notice shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Parties have actually been prejudiced as a result
of such failure.
(ii) (A) With respect to any Tax Claim relating to a taxable period
ending on or before the Closing Date, Seller shall have the right, at its own
expense, to control all proceedings and may make all decisions taken in
connection with such Tax Claim; provided that Buyer, and counsel of its own
choosing, shall have the right, at its own expense, to participate fully in all
aspects of the prosecution or defense of such Tax Claim; and provided further
that Seller shall not settle any such Tax Claim without the prior written
consent of Buyer, which consent shall not be unreasonably withheld; and provided
further that, notwithstanding anything in this Section 8.5(c)(ii)(A) to the
contrary, Seller shall have the exclusive right to make all decisions to grant
or deny any waiver or extension of the applicable statute of limitation. Buyer
shall deliver its consent, or any objections, within 15 business days of receipt
of any settlement proposal. Buyer and the Companies shall cooperate with Seller
in contesting any Tax Claim under this Section 8.5(c)(ii)(A), which cooperation
shall include the retention and, upon request of Seller, the provision of
records and information which are reasonably relevant to such Tax Claim and
making employees available to provide additional information or explanation of
any material provided hereunder. (B) Seller and Buyer shall jointly control all
proceedings with respect to any Tax Claim relating to any Straddle Period.
(iii) The party bearing the liability or obligation to indemnify for
any Taxes described under Section 8.5 shall be entitled to any refunds or
credits of such Taxes. Buyer shall cause the Companies to promptly forward to
Seller, or after Buyer's receipt reimburse Seller, for any refunds or credits
due Seller (pursuant to the terms of this Section 8.5(c)(iii) and Seller shall
promptly forward to the Companies or after Seller's receipt reimburse the
Companies, for any refunds or credits due Buyer (pursuant to the terms of this
Section 8.5(c)(iii)).
(d) Tax Sharing Agreements. Seller will cause any tax sharing
----------------------
agreement or similar arrangement with respect to Taxes involving the Companies
to be terminated as of the Closing Date, to the extent any such agreement or
arrangement relates to the Companies.
(e) Transfer Taxes. All transfer, documentary, sales, use,
--------------
registration and similar Taxes (including all applicable real estate transfer or
gains Taxes and stock transfer Taxes) and related fees (including any penalties,
interest and additions to Tax) incurred in connection with the sale of the
Shares or otherwise in connection with this Agreement, and the transactions
contemplated hereby shall be shared be borne by Buyer, and Seller
-32-
and Buyer shall cooperate in timely preparing and filing all Tax Returns as may
be required to comply with the provisions of such Tax laws.
(f) Coordination With Section 8.4. In the event the provisions of
-----------------------------
this Section 8.5 and the provisions of Section 8.4 hereof conflict or otherwise
each apply by their terms, this Section 8.5 shall exclusively govern all matters
concerning Taxes; provided that paragraphs (c), (d) and (e) of this Section 8.5
shall apply in any event.
ARTICLE IX.
MISCELLANEOUS
9.1. Amendment and Modifications. This Agreement may be
---------------------------
amended, modified or supplemented at any time by the parties hereto. This
Agreement may be amended only by an instrument in writing signed on behalf of
all parties.
9.2. Extension; Waiver. At any time prior to the Closing, the
-----------------
parties hereto entitled to the benefits of the respective term or provision may
(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance with any obligation,
covenant, agreement or condition contained herein. Any agreement on the part of
any party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of the parties entitled to the benefits
of such extended or waived term or provision.
9.3. Representations and Warranties; Etc. (a) Each of Buyer
-----------------------------------
and Parent hereby acknowledges and agrees that Seller is not making any
representation or warranty whatsoever, express or implied, including, without
limitation, in respect of the Companies or their respective assets, liabilities
and businesses, except those representations and warranties of Seller explicitly
set forth in this Agreement or in the Seller Disclosure Schedule or in any
certificate contemplated hereby and delivered by Seller in connection herewith.
(b) Except as set forth in the indemnification provisions of Section
8.4 hereof, Buyer, Parent and Seller agree that on and after the Closing Date
neither Seller, nor any of the respective officers, directors, partners,
employees, Affiliates, Representatives or agents, as the case may be, of Seller
(collectively, the "Selling Group"), shall have any liability or responsibility
to any Person, including, without limitation, Buyer, Parent or the Companies,
for (and each of them unconditionally releases the Selling Group from) any
liability or obligation of, or arising out of, or relating to, the Companies,
-33-
Parent or Buyer of whatever kind or nature, whether contingent or absolute,
whether arising prior to, on or after, and whether determined or indeterminable
on, the Closing Date, and whether or not specifically referred to in this
Agreement, including, without limitation, liabilities and obligations (i)
relating to this Agreement and the transactions contemplated hereby, (ii)
arising out of or due to any inaccuracy of any representation or warranty or the
breach of any covenant, undertaking or other agreement of Seller contained in
this Agreement, Seller Disclosure Schedule or in any certificate contemplated
hereby and delivered by Seller in connection herewith and (iii) relating to any
information (whether written or oral), documents or materials furnished by
Seller or any of its Affiliates or any of their respective Representatives,
including the Confidential Information Memorandum prepared by SBC Warburg Dillon
Read Inc. and any information, documents or material made available to Buyer in
certain "data rooms", management presentations or any other form in expectation
of the transactions contemplated by this Agreement.
9.4. Entire Agreement; Assignment. This Agreement (a)
----------------------------
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof (other than the Confidentiality Agreement) and (b) shall not be
assigned by operation of law or otherwise; provided, however, that Buyer may
assign its rights and obligations to any wholly owned subsidiary of Buyer
(unless to do so would restrict or delay the consummation of the transactions
contemplated by this Agreement), but no such assignment shall relieve Buyer of
its obligations hereunder.
9.5. Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
9.6. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, telecopied (which is confirmed) or sent by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses:
If to Buyer, to:
Healthcare Staffing Solutions, Inc.
Cross Point Tower II
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
-34-
If to Parent, to:
RehabCare Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller, to:
Medical Resources, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
9.7. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
9.8. Specific Performance. The parties hereto agree that if any
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of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
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9.9. Publicity. Except as otherwise required by law, for so
---------
long as this Agreement is in effect, none of Seller, Buyer, Parent or the
Companies shall issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
Agreement without the express prior written approval of the other parties. Each
of Seller (on behalf of itself and the Companies), Buyer and Parent agree to
afford each other party a reasonable period of time to review and comment upon
any such press release or public announcement, subject at all times to any
requirement of law or rule or regulation of any stock exchange or automated
interdealer quotation system governing the timing of any such press release or
public announcement.
9.10. Arbitration (a) The parties hereto agree to submit any
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dispute or controversy arising out of or in connection with or relating to this
Agreement or the breach or alleged breach thereof (a "Dispute"), including any
Dispute relating to any claim for Damages subject to indemnification pursuant to
Section 8.4 hereof, to final and binding arbitration pursuant to the provisions
set forth below. Nothing in this Section 9.10 shall prohibit Buyer, Parent or
Seller from instituting litigation to enforce any Final Determination (as
defined below). The parties hereby acknowledge and agree that, except as set
forth in this Section 9.10 or in the arbitration rules of the American
Arbitration Association as in effect from time to time, the arbitration
procedure and any Final Determination hereunder shall be governed by, and shall
be enforced pursuant to applicable New York law.
(b) In the event that either Buyer, Parent or Seller asserts that
there exists a Dispute, such party shall deliver a written notice to the other
party specifying the nature of the asserted Dispute and requesting a meeting to
attempt to resolve the same. If no such resolution is reached within twenty
days after the delivery of such notice, the party delivering such notice of
Dispute may, within 45 days after delivery of such notice, commence arbitration
hereunder by delivering to each other party involved therein a notice of
arbitration (a "Notice of Arbitration"). Such Notice of Arbitration shall
specify the matters as to which arbitration is sought, the nature of any
Dispute, the claims of each party to the arbitration and shall specify the
amount and nature of any Damages, if any, sought to be recovered as a result of
any alleged claim, and any other matters required by the arbitration rules of
the American Arbitration Association in effect from time to time to be included
therein, if any.
(c) Arbitration shall be conducted in the City of New York, New York
before a single arbitrator agreeable to both parties. In the event that the
parties fail to agree on a designee within 20 days from the delivery of a Notice
of Arbitration, then the arbitration shall proceed in the same
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location before a single arbitrator appointed by the American Arbitration
Association at the request of either party thereto.
(d) The costs and expenses of arbitration shall be borne equally by
each party.
(e) The arbitrator shall so conduct the arbitration that a final
result, determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable, but in no event
later than 90 days after the delivery of the Notice of Arbitration nor later
than 10 days following completion of the arbitration.
(f) The Buyer and the Seller may enforce any Final Determination in
any state or federal court located in New York, New York. For the purpose of
any action or proceeding instituted with respect to any Final Determination,
each party hereto hereby irrevocably submits to the jurisdiction of such courts,
irrevocably consents to the service of process by registered mail or personal
service and hereby irrevocably waives, to the fullest extent permitted by law,
any objection which it may have or hereafter have as to personal jurisdiction,
the laying of the venue of any such action or proceeding brought in any such
court and any claim that any such action or proceeding brought in any court has
been brought in an inconvenient forum.
9.11. Descriptive Headings. The descriptive headings herein
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are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
9.12. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
9.13. Expenses. Whether or not the transactions contemplated
--------
by this Agreement are consummated, and except as otherwise expressly set forth
herein, all legal and other costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
9.14. Parties in Interest. This Agreement shall be binding
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upon and inure solely to the benefit of each party hereto and, except as set
forth in Sections 5.9 and 8.4 hereof, nothing in this Agreement, express or
implied, is intended by or shall confer upon any other Person or Persons any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement. Any Person who is a beneficiary of any of the aforementioned
provisions shall be entitled to enforce his rights thereunder; provided,
however, that, prior to the Closing, no action to enforce such rights may be
commenced by any such Person without the prior written consent of Seller.
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9.15. Interpretation. No reference in this Agreement to
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"reasonable best efforts" or "all reasonable efforts" shall require a Person
obligated to use such efforts to incur out-of-pocket expenses or indebtedness
or, except as expressly provided herein, to institute litigation or to consent
generally to service of process in any jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MEDICAL RESOURCES, INC.
By:
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Name:
Title:
REHABCARE GROUP, INC.
By:
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Name:
Title:
HEALTHCARE STAFFING SOLUTIONS, INC.
By:
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Name:
Title: