Exhibit 10.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
PREFERRED HEALTHCARE STAFFING, INC. ("BUYER")
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
(COLLECTIVELY "SELLERS")
DATED AS OF JULY 10, 1998
TABLE OF CONTENTS
PAGE
ARTICLE I SALE AND PURCHASE; CLOSING . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.1 Purchase and Sale of Purchased Shares . . . . . . . . .1
SECTION 1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . .1
SECTION 1.3 Escrow. . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 1.4 Closing . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 1.5 Delivery of Schedules . . . . . . . . . . . . . . . . .3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . .4
SECTION 2.1 Capitalization. . . . . . . . . . . . . . . . . . . . .4
SECTION 2.2 Title to the Shares . . . . . . . . . . . . . . . . . .4
SECTION 2.3 Authority Relative to this Agreement. . . . . . . . . .4
SECTION 2.4 No Conflicts; Consents. . . . . . . . . . . . . . . . .5
SECTION 2.5 Corporate Existence and Power . . . . . . . . . . . . .5
SECTION 2.6 Charter Documents and Corporate Records . . . . . . . .6
SECTION 2.7 Financial Information . . . . . . . . . . . . . . . . .6
SECTION 2.8 Liabilities . . . . . . . . . . . . . . . . . . . . . .7
SECTION 2.9 Company Receivables . . . . . . . . . . . . . . . . . .7
SECTION 2.10 Absence of Certain Changes. . . . . . . . . . . . . . .7
SECTION 2.11 Leased Real Property . . . . . . . . . . . . . . . . .8
SECTION 2.12 Personal Property; Assets. . . . . . . . . . . . . . .9
SECTION 2.13 Contracts. . . . . . . . . . . . . . . . . . . . . . .9
SECTION 2.14 Intangible Property. . . . . . . . . . . . . . . . . 10
SECTION 2.15 Claims and Proceedings . . . . . . . . . . . . . . . 10
SECTION 2.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.17 Employee Benefits Plans. . . . . . . . . . . . . . . 13
SECTION 2.18 Employee-Related Matters . . . . . . . . . . . . . . 15
SECTION 2.19 Insurance. . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.20 Compliance with Laws . . . . . . . . . . . . . . . . 16
SECTION 2.21 Permits. . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.22 Environmental Matters. . . . . . . . . . . . . . . . 17
SECTION 2.23 Finders Fees . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.24 Depositaries; Powers of Attorney, etc. . . . . . . . 18
SECTION 2.25 Related Party Transactions . . . . . . . . . . . . . 18
SECTION 2.26 Restrictions on Business Activities. . . . . . . . . 19
SECTION 2.27 Customers. . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.28 Absence of Certain Business Practices. . . . . . . . 19
SECTION 2.29 Disclosure . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.30 Transaction Shares . . . . . . . . . . . . . . . . . 20
SECTION 2.31 Ability to Conduct Business. . . . . . . . . . . . . 20
SECTION 2.32 Potential Conflicts of Interest. . . . . . . . . . . 20
i
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER AND
PARENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.1 Authority Relative to this Agreement. . . . . . . . . 21
SECTION 3.2 No Conflicts; Consents. . . . . . . . . . . . . . . . 21
SECTION 3.3 Corporate Existence and Power . . . . . . . . . . . . 22
SECTION 3.4 Finders Fees. . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.5 Parent Reports. . . . . . . . . . . . . . . . . . . . 22
SECTION 3.6 Transaction Shares. . . . . . . . . . . . . . . . . . 22
ARTICLE IV COVENANTS AND AGREEMENTS. . . . . . . . . . . . . . . . . . . 22
SECTION 4.1 Conduct of Business of the Company. . . . . . . . . . 22
SECTION 4.2 Corporate Examinations and Investigations . . . . . . 24
SECTION 4.3 Additional Financial Statements . . . . . . . . . . . 24
SECTION 4.4 Filings and Authorizations. . . . . . . . . . . . . . 24
SECTION 4.5 Efforts to Consummate . . . . . . . . . . . . . . . . 25
SECTION 4.6 Negotiations With Others. . . . . . . . . . . . . . . 25
SECTION 4.7 Notices of Certain Events . . . . . . . . . . . . . . 25
SECTION 4.8 Public Announcements. . . . . . . . . . . . . . . . . 26
SECTION 4.9 Confidentiality . . . . . . . . . . . . . . . . . . . 26
SECTION 4.10 Expenses. . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.11 Tax Matters . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.12 Covenant Not-to-Compete. . . . . . . . . . . . . . . 27
SECTION 4.13 Employee Matters . . . . . . . . . . . . . . . . . . 29
SECTION 4.14 Further Assurances . . . . . . . . . . . . . . . . . 29
SECTION 4.15 Registration Rights. . . . . . . . . . . . . . . . . 30
SECTION 4.16 Insurance. . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.17 Pooling of Interests . . . . . . . . . . . . . . . . 30
SECTION 4.18 Self-Insurance . . . . . . . . . . . . . . . . . . . 30
SECTION 4.19 Joint Venture Agreement. . . . . . . . . . . . . . . 30
SECTION 4.20 Offers of Employment . . . . . . . . . . . . . . . . 31
ARTICLE V CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.1 Conditions to the Obligations of the Parties. . . . . 31
SECTION 5.2 Conditions to the Obligations of Sellers. . . . . . . 31
SECTION 5.3 Conditions to the Obligations of Buyer. . . . . . . . 32
ARTICLE VI INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.1 Survival of Representations and Warranties. . . . . . 35
SECTION 6.2 Obligation of Sellers to Indemnify. . . . . . . . . . 35
SECTION 6.3 Obligation of Buyer to Indemnify. . . . . . . . . . . 36
SECTION 6.4 Notice and Opportunity to Defend Third Party
Claims . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.5 Limits on Indemnification . . . . . . . . . . . . . . 37
SECTION 6.6 Exclusive Remedy. . . . . . . . . . . . . . . . . . . 37
ii
ARTICLE VII SPECIFIC PERFORMANCE; TERMINATION . . . . . . . . . . . . . . 37
SECTION 7.1 Specific Performance. . . . . . . . . . . . . . . . . 37
SECTION 7.2 Termination . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.3 Effect of Termination; Right to Proceed . . . . . . . 39
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.2 Entire Agreement. . . . . . . . . . . . . . . . . . . 40
SECTION 8.3 Waivers and Amendments; Non-Contractual
Remedies; Preservation of Remedies. . . . . . . . . . 41
SECTION 8.4 Governing Law . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.5 Consent to Jurisdiction . . . . . . . . . . . . . . . 41
SECTION 8.6 Binding Effect; No Assignment . . . . . . . . . . . . 41
SECTION 8.7 Exhibits. . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.8 Severability. . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.9 Counterparts. . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.10 Third Parties. . . . . . . . . . . . . . . . . . . . 42
ARTICLE IX DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.1 Definitions . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.2 Interpretation. . . . . . . . . . . . . . . . . . . . 48
iii
SCHEDULES
Schedule 2.1 -- List of Shareholders
Schedule 2.4 -- Sellers Required Consents
Schedule 2.5 -- Investments
Schedule 2.7A -- Financial Statements
Schedule 2.7B -- Unusual or Nonrecurring Expense/Income
Schedule 2.8 -- Liabilities
Schedule 2.9 -- Company Receivables
Schedule 2.10 -- Absence of Certain Changes
Schedule 2.11 -- Leased Real Property
Schedule 2.12 -- Personal Property; Assets
Schedule 2.13 -- Contracts
Schedule 2.14 -- Intangible Property
Schedule 2.15 -- Claims and Proceedings
Schedule 2.16 -- Taxes
Schedule 2.17 -- Employee Benefits Plans
Schedule 2.18 -- Employer-Related Matters
Schedule 2.19 -- Insurance
Schedule 2.21 -- Permits
Schedule 2.24 -- Depositaries
Schedule 2.25 -- Related Party Transactions
Schedule 2.27 -- Suppliers and Customers
Schedule 3.2 -- Buyer Required Consents
Schedule 5.3B - Amounts Owed
EXHIBITS
Exhibit 1.3A - NET Escrow Agreement
Exhibit 1.3B -- Escrow Agreement
Exhibit 4.15 -- Registration Rights Agreement
Exhibit 4.21 -- Employment Agreements
Exhibit 5.2A -- Form of Legal Opinion of Buyer's Counsel
Exhibit 5.3A -- Form of Legal Opinion of Sellers' Counsel
Exhibit 5.3B -- Non-Compete Agreement with ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of July 10, 1998, by and among
Preferred Healthcare Staffing, Inc., a Delaware corporation ("BUYER"), ▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (each a
"SELLER", and collectively, "SELLERS").
W I T N E S S E T H:
WHEREAS, each Seller desires to sell to Buyer, and Buyer desires to
purchase from each Seller, all of the shares of common stock, no par value per
share (the "COMMON STOCK"), of National Explorers and Travelers Healthcare,
Inc., a Florida corporation (the "COMPANY"), set forth opposite such Seller's
name on SCHEDULE 2.1 (collectively, the "PURCHASED SHARES");
WHEREAS, each of the parties hereto hereby confirms its desire and
intent that the purchase and sale of the Purchased Shares and the consummation
of the Contemplated Transactions be treated as a "pooling of interests" and a
tax-free reorganization in accordance with GAAP and all applicable Tax Laws; and
WHEREAS, all defined terms used herein and not otherwise defined
within the body of this Agreement shall have the meaning attributed to them in
Article IX hereof.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
SALE AND PURCHASE; CLOSING
SECTION 1.1 PURCHASE AND SALE OF PURCHASED SHARES. Subject to the
terms and conditions set forth herein, at the Closing each Seller shall sell,
transfer and deliver to Buyer, and Buyer shall purchase and accept from each
Seller, all of the Purchased Shares.
SECTION 1.2 PURCHASE PRICE. The aggregate purchase price (the
"PURCHASE PRICE") for the Purchased Shares shall be equal to the following:
(A) 10.25 times the sum of (i) the Company's audited net operating
income for the three months ended March 31, 1998 (the "FIRST QUARTER") as
determined by Coopers & ▇▇▇▇▇▇▇ LLP, LESS the income tax expense of the Company
for the First Quarter assuming it was
a "C corporation" (the "INCOME TAX EXPENSE") as determined by Coopers & ▇▇▇▇▇▇▇
LLP, LESS the interest expense of the Company (the "INTEREST EXPENSE") for the
First Quarter; PLUS (ii) the Company's reviewed net operating income for the
month ended April 30, 1998 (the "APRIL 1998 PERIOD") as determined by Coopers &
▇▇▇▇▇▇▇ LLP, LESS the Company's Income Tax Expense for the April 1998 Period as
determined by Coopers & ▇▇▇▇▇▇▇ LLP, LESS the amount of Interest Expense for the
April 1998 Period, multiplied by three (3); PLUS (iii) the Company's audited net
operating income for the First Quarter as determined by Coopers & ▇▇▇▇▇▇▇ LLP,
LESS the Income Tax Expense for the First Quarter (without the benefit of any
interest expense of the Company for the First Quarter) as determined by Coopers
& ▇▇▇▇▇▇▇ LLP, multiplied by 2, LESS
(B) (i) the aggregate amount of outstanding principal and accrued
interest owed by the Company to First Capital Services, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇ and
any other holders of indebtedness of the Company, whether secured or unsecured,
as of the Closing Date (collectively, the "DEBT"), and (ii) the aggregate amount
of (a) all Sellers' legal fees and expenses in connection with the Contemplated
Transactions (in form and substance reasonably acceptable to Buyer)
(collectively, the "COUNSEL EXPENSES"), PLUS (b) all costs and expenses of the
Company to obtain and maintain Insurance Policies for medical malpractice on an
occurrence basis and to obtain and maintain "tail coverage" for its "claims
made" Insurance Policies for two (2) years after the date of the Claim
(collectively, the "INSURANCE EXPENSE"), PLUS (c) all expenses of the Company
incurred prior to Closing, to pay all "run-out" fees and liabilities which may
be owed to Great-West Life and Annuity Insurance Company or any other person in
connection with the Company's Self Insurance Programs (collectively, the
"SELF-INSURANCE EXPENSE"). In no event shall the sum of the Purchase Price, the
Debt (with accrued interest thereon), the Counsel Expenses, the Insurance
Expense and the Self-Insurance Expense, exceed $10,000,000. The Purchase Price
shall be payable to Sellers in shares (the "TRANSACTION SHARES") of common
stock, par value $.01 per share, of the Parent, which shares when issued will
not be registered under Section 5 of the Securities Act (as defined herein) (the
"PARENT STOCK"), in proportion to each Seller's ownership interest in the
Company, as set forth on SCHEDULE 2.1. The number of Transaction Shares payable
by Buyer to Sellers shall be determined by averaging the closing sales price of
the Parent Stock (or, in case no reported sales take place on such day, the
average of the closing bid and ask prices on such day) on the Nasdaq SmallCap
Market for the five (5) consecutive trading days prior to the Closing Date. On
the Closing Date, the Purchase Price shall be payable as follows: (i) Buyer
shall deliver to Sellers 33 1/3% of the Purchase Price in Transaction Shares,
registered in the name of each respective Seller in proportion to such Seller's
ownership interest in the Company as set forth on SCHEDULE 2.1, (ii) Buyer shall
deliver 10% of the Purchase Price to the Escrow Agent in Transaction Shares
("INDEMNIFICATION SHARES") for the purpose of complying with Section 1.4 and
Article VI hereof, pursuant to the terms of the Escrow Agreement and (iii) Buyer
shall deliver the remaining 56 2/3% of the Purchase Price to the Escrow Agent in
Transaction Shares, registered in the name of each respective Seller in
proportion to such Seller's ownership interest in the Company as set forth on
SCHEDULE 2.1 ("ESCROW SHARES") to be delivered to Sellers on December 31, 1998
pursuant to the terms of the Escrow Agreement.
SECTION 1.3 ESCROW.
(a) On the date hereof, Buyer, each Seller and an escrow
agent selected by Buyer and Sellers ("NET ESCROW AGENT") shall execute and
deliver an escrow agreement ("NET ESCROW AGREEMENT") in the form of EXHIBIT 1.3A
hereto pursuant to which Sellers shall, on the date hereof, deliver to the NET
Escrow Agent the Purchased Shares. The Purchased Shares shall be held in escrow
until the Closing Date at which time they will be delivered to Buyer, pursuant
to the terms of the NET Escrow Agreement.
(b) On the Closing Date, Buyer, each Seller and an escrow
agent selected by Buyer and Sellers ("ESCROW AGENT") shall execute and deliver
an escrow agreement ("ESCROW AGREEMENT") substantially in the form of EXHIBIT
1.3B hereto pursuant to which Buyer shall deliver to Escrow Agent the number of
Transaction Shares determined in accordance with Section 1.2. The Escrow Shares
shall be held in escrow until December 31, 1998 (subject to the terms of the
Escrow Agreement). The Indemnification Shares shall be held for a period of
twelve (12) months following the Closing Date, unless disbursed earlier to Buyer
for Claims pursuant to this Agreement. Other than for Claims of fraud, the
Indemnification Shares or, in the event such shares are sold, the value thereof
as determined in accordance with this Section 1.3(b), shall be Buyer's sole
remedy for the payment of any Losses for which Buyer may be entitled to
indemnification as and to the extent provided in Article VI hereof. The value
of any Indemnification Shares paid to Buyer pursuant to the terms of the Escrow
Agreement shall be determined by averaging the closing sales price of the Parent
Stock (or, in case no reported sales take place on such day, the average of the
closing bid and ask prices on such day) on the Nasdaq SmallCap Market for the
five (5) consecutive trading days prior to the Closing Date.
SECTION 1.4 CLOSING. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Purchased Shares and the consummation of
the other transactions contemplated hereby (the "CLOSING") shall take place at
10:00 a.m., local time, at the offices of Buyer, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ no later than the fifth business day following the
satisfaction of all of the conditions specified in Article V hereof (other than
the conditions requiring the delivery of the Purchase Price, certificates
representing the Purchased Shares, the Transaction Shares or closing
certificates and other instruments and documents referred to in
Sections 5.2(e)(i) through (iv) or 5.3(e)(i) through (iv)) (the "CLOSING DATE").
It is understood that the purchase of the Purchased Shares shall be deemed to
take place effective as of the time at which the Closing actually occurs on the
Closing Date.
SECTION 1.5 DELIVERY OF SCHEDULES. Sellers shall deliver to Buyer
within ten (10) Business Days of the date of this Agreement true and complete
Schedules. The Schedules shall be in a form reasonably acceptable to Buyer and
shall conform in all material respects to the information provided to Buyer
prior to the date hereof. If the delivered Schedules are not in a form
reasonably acceptable to Buyer or do not conform in all respects with the
information provided to Buyer prior to the date hereof, Buyer shall have the
option to terminate this
Agreement without further liability of any party thereunder except to the extent
that such party shall have materially breached any covenant or agreement of such
party hereunder prior to such termination or shall have made a material
misrepresentation under the Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent, warrant and covenant to
Buyer as follows and acknowledge that Buyer is relying upon such representations
and warranties in connection with the Contemplated Transactions:
SECTION 2.1 CAPITALIZATION. The authorized capital stock of the
Company consists of 15,000 shares of Common Stock, of which 10,000 shares are
issued and outstanding. The Company has no shares of Common Stock in its
treasury. SCHEDULE 2.1 sets forth the name of each record and beneficial
shareholder of the Company and the number of Purchased Shares held by each such
person. Except as set forth on SCHEDULE 2.1, the Company does not and, at the
Closing, the Company will not, have outstanding any capital stock or other
securities or any rights, warrants or options to acquire securities of the
Company or any convertible or exchangeable securities and, other than pursuant
to this Agreement, no person has or, at Closing will have, any right to purchase
or otherwise acquire any securities of the Company. There are, and at Closing
will be, no outstanding obligations of the Company to repurchase, redeem or
otherwise acquire any securities of the Company. All of the Purchased Shares
are, and at Closing will be, duly authorized, duly and validly issued, fully
paid and non-assessable, and none were issued in violation of any preemptive
rights, rights of first refusal or any other contractual or legal restrictions
of any kind.
SECTION 2.2 TITLE TO THE SHARES. Each Seller is the sole record and
beneficial owner and holds good and valid title to its Purchased Shares free and
clear of any Lien of any kind. Upon consummation of the Contemplated
Transactions (as hereinafter defined), Buyer will own all of the issued and
outstanding shares of capital stock of the Company, free and clear of any Lien.
At the Closing, Sellers will deliver the Purchased Shares to Buyer free and
clear of any Lien, other than restrictions imposed by the Securities Act of
1933, as amended, and applicable state securities Laws.
SECTION 2.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Each Seller has
full power, capacity and authority to execute and deliver each Transaction
Document to which such Seller is or, at Closing, will be, a party and to
consummate the transactions contemplated hereby and thereby (the "CONTEMPLATED
TRANSACTIONS"). The execution, delivery and performance of each Transaction
Document and the consummation of the Contemplated Transactions to which any
Seller is or, at Closing, will be, a party have been duly and validly authorized
by such Seller, and no other acts on the part of any Seller (or any other
person) are necessary or required to authorize the execution, delivery and
performance by such Seller of each Transaction Document
or the consummation of the Contemplated Transactions to which such Seller is or,
at Closing, will be, a party. This Agreement has been and, at Closing, the
other Transaction Documents to which any Seller is a party will have been, duly
and validly executed and delivered by such Seller, and (assuming the valid
execution and delivery thereof by the other parties thereto) constitutes, or
will at Closing, constitute, as the case may be, the legal, valid and binding
agreements of such Seller, enforceable against such Seller in accordance with
their respective terms, except as such obligations and their enforceability may
be limited by applicable bankruptcy and other similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies is subject to the discretion of the court before which any
proceeding therefor may be brought (whether at law or in equity).
SECTION 2.4 NO CONFLICTS; CONSENTS. The execution, delivery and
performance by each Seller of each Transaction Document to which such Seller is
or, at Closing, will be, a party and the consummation of the Contemplated
Transactions to which any Seller is or, at Closing, will be, a party, do not and
will not (i) violate any provision of the Articles of Incorporation or By-Laws
of the Company; (ii) require any Seller or the Company to obtain any consent,
approval or action of or waiver from, or make any filing with, or give any
notice to, any Governmental Body or any other person, except as set forth on
SCHEDULE 2.4 (the "SELLERS REQUIRED CONSENTS"); (iii) if Sellers Required
Consents are obtained prior to Closing, violate, conflict with or result in a
breach or default under (with or without the giving of notice or the passage of
time or both), or permit the suspension or termination of, any Contract
(including any Real Property Lease) to which any Seller or the Company is a
party or by which any of them or any of their assets may be bound or subject, or
result in the creation of any Lien upon any of the Purchased Shares or upon any
of the Assets of the Company; (iv) if Sellers Required Consents are obtained
prior to Closing, violate any Law or Order of any Governmental Body against, or
binding upon, any Seller or the Company or upon any of their respective assets
or the Business; or (v) if Sellers Required Consents are obtained prior to
Closing, violate or result in the revocation or suspension of any Permit.
SECTION 2.5 CORPORATE EXISTENCE AND POWER. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, and has all requisite powers, authority and all
Permits required to own and/or operate its Assets and to carry on the Business
as now conducted, including all qualifications under any "nurse staffing"
statutes in effect in any state in which the Company operates its Business or
provides employees under any "employee leasing" or "employee staffing"
arrangement. The Company is duly qualified to do business and is in good
standing in each state of the United States and in each other jurisdiction where
the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary. Except as set forth on
SCHEDULE 2.5, the Company has no Subsidiaries and does not directly or
indirectly own any equity or other interest or investment in any other person.
SECTION 2.6 CHARTER DOCUMENTS AND CORPORATE RECORDS. Sellers have
heretofore delivered to Buyer true and complete copies of the Articles of
Incorporation, By-Laws and minute books, or comparable instruments, of the
Company as in effect on the date hereof. The stock transfer books of the
Company have been made available to Buyer for its inspection and are true and
complete in all material respects.
SECTION 2.7 FINANCIAL INFORMATION. (a) SCHEDULE 2.7A sets forth
true, complete and correct copies of (i) the Company's audited financial
statements at and for the years ended December 31, 1997 and 1996 (the "ANNUAL
STATEMENTS"), (ii) the Company's unaudited financial statements at and for the
quarter ended March 31, 1998 and at and for the month ended April 30, 1998 (the
"INTERIM STATEMENTS"), (iii) when delivered, the Company's audited financial
statements for the First Quarter and the reviewed financial statements for the
April 1998 Period (collectively, the "AUDITED INTERIM STATEMENTS"), and (iv) all
management letters, management representation letters and attorney audit
response letters issued in connection with the Annual Statements and the Audited
Interim Statements. Each of the Annual Statements, Interim Statements and
Audited Interim Statements has been prepared, or when provided will have been
prepared, in accordance with GAAP consistently applied (except for the absence
of footnotes, in the case of the Company's unaudited financial statements). To
the extent of any conflict between GAAP and the consistency of application of
accounting principles with respect to any financial statements or other
information concerning the Company provided hereby, GAAP has been applied and
will govern any conflict. SCHEDULE 2.7B reflects all contingencies that,
whether or not required to be disclosed or booked in accordance with GAAP, in
all reasonable likelihood may have a financial impact on the financial
statements referred to in SCHEDULE 2.7A. The Annual Statements were audited,
and the Audited Interim Statements when provided, will have been audited or
reviewed, as the case may be, by Coopers & ▇▇▇▇▇▇▇ LLP (without qualification or
exceptions). Each of the Annual Statements and the Interim Statements present
fairly and accurately, and the Audited Interim Statements when provided will
present fairly and accurately, the financial position of the Company as of its
date, and the earnings, changes in stockholders' equity and cash flows thereof
for the periods then ended. Each balance sheet contained therein or delivered
pursuant hereto fully sets forth all consolidated Assets and Liabilities of the
Company existing as of its date which, under GAAP, should be set forth therein,
and each statement of earnings contained therein or delivered pursuant hereto
sets forth the items of income and expense of the Company which should be set
forth therein in accordance with GAAP.
(b) All financial, business and accounting books, ledgers,
accounts and official and other records relating to the Company have been
properly and accurately kept and completed, and there are no inaccuracies or
discrepancies contained or reflected therein. There are no records, systems,
Contracts, data or information of the Company, recorded, stored, maintained,
operated or otherwise wholly or partly dependent upon or held by any means
(including any electronic, mechanical or photographic process, whether
computerized or not) which are not under the Company's exclusive ownership and
direct control.
(c) Any items of income or expense which are unusual or of
a non-recurring nature, except as provided in SCHEDULE 2.7B, are separately
disclosed in the financial statements.
SECTION 2.8 LIABILITIES. Except to the extent reflected in the
Interim Statements of the Company at April 30, 1998 (referred to in Section
2.7(a)) (the "LATEST BALANCE SHEET DATE"), the Company did not have any
Liabilities, and except as described in SCHEDULE 2.8 hereto, the Company has not
incurred any Liabilities since the Latest Balance Sheet Date except (i) current
Liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of the Business and
consistent with past practice, (ii) Liabilities reflected on any balance sheet
included in the Interim Statements referred to in Section 2.7(a), and
(iii) Liabilities or obligations of continued performance under Contracts
entered into in the ordinary course of the Business not required to be reflected
in financial statements under GAAP.
SECTION 2.9 COMPANY RECEIVABLES. Except to the extent of the amount
of the allowance for doubtful accounts reflected in the Interim Statements or as
set forth in SCHEDULE 2.9, all the Receivables of the Company reflected therein,
and all Receivables that have arisen since the Latest Balance Sheet Date (except
Receivables that have been collected since such date) are valid and enforceable
Claims, and constitute bona fide Receivables resulting from the sale of goods
and services in the ordinary course of the Business. The Receivables are not
subject to any defenses, offsets, returns, allowances or credits of any kind.
SECTION 2.10 ABSENCE OF CERTAIN CHANGES. (a) Since the Latest Balance
Sheet Date, except as disclosed in SCHEDULE 2.10, the Company has conducted the
Business in the ordinary course consistent with past practice and there has not
been:
(i) Any material adverse change in the Condition of the
Business or any event, occurrence or circumstance that could reasonably be
expected to cause such a material adverse change;
(ii) Any transaction or Contract with respect to the
purchase, acquisition, lease, disposition or transfer of any Assets or any
capital expenditure by the Company (in each case, other than in the ordinary
course of the Business consistent with past practice);
(iii) Any declaration, setting aside or payment of any
dividend or other distribution with respect to the Common Stock or any other
capital stock of the Company or any loan or advance to any officer, director or
stockholder of the Company (except for reasonable travel and business expense
payments, or guaranteed or pledged collateral to support any loan or advance
made to an officer, director or stockholder of the Company);
(iv) Any damage, destruction or other casualty loss (whether
or not covered by insurance), condemnation or other taking affecting the
Business or the Assets of the Company;
(v) Any change in any method of accounting or accounting
practice by the Company;
(vi) Any increase in the compensation, commission, bonus or
other direct or indirect remuneration paid, payable or to become payable to any
officer, stockholder, director, consultant, agent or employee of the Company, or
any alteration in the benefits payable or provided to any thereof;
(vii) Any adverse change in the relationship of the
Company with its customers, suppliers or vendors;
(viii) Except for any changes made in the ordinary course
of Business, any change in any of the Company's business policies, including
advertising, marketing, selling, pricing, purchasing, personnel, returns or
budget policies;
(ix) Except in the ordinary course of the Business,
consistent with past practice, or as disclosed in SCHEDULE 2.10, any payment,
directly or indirectly, of any Liability of the Company before the same became
due in accordance with its terms; or
(x) Any agreement or arrangement whether written or oral to
do any of the foregoing.
(b) Except as set forth on SCHEDULE 2.10, the Company has
no Liability that is past due.
SECTION 2.11 LEASED REAL PROPERTY. (a) The Company has no fee
interest, purchase options or rights of first refusal in any real property and
the Company has no leasehold or other interest in any real property, except as
set forth on SCHEDULE 2.11 (the "LEASED REAL PROPERTY"), and all leases
including all amendments, modifications, extensions, renewals and/or supplements
thereto (collectively, "REAL PROPERTY LEASES") are described on SCHEDULE 2.11.
Sellers have delivered to Buyer a true and complete copy of Real Property
Leases. The Company is the sole tenant under, and has a valid and existing
leasehold interest in, each parcel of Leased Real Property pursuant to the
respective Real Property Lease, which interest is free and clear of all Liens
except Permitted Liens.
(b) To Sellers' knowledge, there are no facts,
circumstances, events or conditions which would now, or with the giving of
notice or passage of time may, in any way materially and adversely affect the
Leased Real Property and/or the Company's use or operations thereat.
(c) Each Real Property Lease is valid, binding and in full
force and effect and enforceable in accordance with its respective terms.
(d) There are no existing defenses or offsets which any
landlord under any Real Property Lease (individually, a "LANDLORD";
collectively, the "LANDLORDS") has now, or with the giving of notice or passage
of time may have, against the enforcement by the Company of any Real Property
Lease, and neither the Company nor, to Sellers' knowledge, any Landlord, is in
default under any applicable Real Property Lease, nor have any events,
conditions, facts or circumstances occurred which, with the giving of notice or
passage of time or both, would constitute a default under such applicable Real
Property Lease by the Company, nor, to Sellers' knowledge, any Landlord party
thereto.
SECTION 2.12 PERSONAL PROPERTY; ASSETS. The Company has good and
valid title to (or valid leasehold interest in) all of its personal property and
Assets, free and clear of all Liens, except Permitted Liens and as indicated on
SCHEDULE 2.12. The machinery, equipment, computer software and other tangible
personal property constituting part of the Assets and all other Assets (whether
owned or leased) have been well-maintained in accordance with industry
standards, are in good condition and repair (subject to normal wear and tear)
and are reasonably sufficient and adequate in quantity and quality for the
operation of the Business as previously and presently conducted. SCHEDULE 2.12
contains a list and description of all tangible personal property owned or
leased by the Company with a book value (before depreciation) of $1,000 or more.
The Assets constitute all of the assets which are necessary to operate the
Business of the Company.
SECTION 2.13 CONTRACTS. (a) SCHEDULE 2.13 sets forth an accurate and
complete list of all Contracts to which the Company is a party or by which it or
its Assets are bound or subject. All Contracts with persons who are Affiliates
of the Company or any Seller are listed on SCHEDULE 2.13, with an asterisk
indicating such contracts. True and complete copies of all written Contracts
(including all amendments thereto and waivers in respect thereof) listed on such
Schedule and summaries of the material provisions of all oral Contracts so
listed have been made available to Buyer.
(b) All Contracts listed on SCHEDULE 2.13 are valid,
subsisting, in full force and effect and binding upon the Company and, to
Sellers' knowledge, the other parties thereto, in accordance with their terms.
Except as set forth in SCHEDULE 2.13, the Company is not in default (or alleged
default) under any such Contract, nor, to Sellers' knowledge, is any other party
thereto in default thereunder, nor does any condition exist that with notice or
the lapse of time or both would constitute a default by the Company (or give
rise to a termination right) thereunder, nor, to Sellers' knowledge, does any
condition exist that with notice or the lapse of time or both would constitute a
default by any other party thereto (or give rise to a termination right)
thereunder. To Sellers' knowledge, none of the other parties to any such
Contract intends to terminate or materially alter the provisions thereof by
reason of the Contemplated Transactions or otherwise. Since the Latest Balance
Sheet Date, the Company has not waived any material right under any such
Contract, materially amended or extended beyond
June 30, 1998 any such Contract or terminated or failed to renew (or received
notice of termination or failure to renew with respect to) any such Contract.
Except as set forth on SCHEDULE 2.13, no approval or consent of any person is
required in order for the Contracts required to be disclosed on SCHEDULE 2.13 to
continue in full force and effect after the Closing.
SECTION 2.14 INTANGIBLE PROPERTY. SCHEDULE 2.14 sets forth all
patents, patent applications, trademarks, copyrights, service marks and trade
names owned or used by the Company, all applications for any of the foregoing,
and all permits, grants and licenses or other rights running to or from the
Company relating to any of the foregoing (the "INTELLECTUAL PROPERTY RIGHTS"),
and there are no other patents, patent applications, trademarks, copyrights,
service marks and trade names that are material to the Business. The
Contemplated Transactions will not adversely affect the right, title and
interest of the Company in and to the Intellectual Property Rights. To Sellers'
knowledge, the Intellectual Property Rights do not infringe on or conflict with
the rights or intellectual property of third parties.
SECTION 2.15 CLAIMS AND PROCEEDINGS. Except as set forth on
SCHEDULE 2.15, there are no outstanding Orders of any Governmental Body against
or involving the Company, its Assets, the Business, the Purchased Shares or any
Seller with respect to the Purchased Shares. Except as set forth on SCHEDULE
2.15, there are no actions, suits, claims or counterclaims, examinations, audits
or legal, administrative, governmental or arbitral proceedings or investigations
(collectively, "CLAIMS") (whether or not the defense thereof or Liabilities in
respect thereof are covered by insurance), pending or, to Sellers' knowledge,
threatened on the date hereof, against or involving the Company, its Assets, the
Business, the Purchased Shares or any Seller with respect to the Purchased
Shares. SCHEDULE 2.15 also indicates those Claims the defense thereof or
Liabilities in respect thereof are covered by insurance. Except as set forth on
SCHEDULE 2.15, to Sellers' knowledge, on the date hereof, there is no fact,
event or circumstance that is reasonably likely to give rise to any Claim. All
notices required to have been given to any insurance company listed as insuring
against any Claim have been timely and duly given and, except as set forth on
SCHEDULE 2.15, no insurance company has asserted that any Claim is not covered
by the applicable policy relating to such Claim. There are no Claims pending
or, to Sellers' knowledge, threatened that would give rise to any right of
indemnification on the part of any director or officer of the Company or the
heirs, executors or administrators of such director or officer, or against the
Company.
SECTION 2.16 TAXES. (a) Except as set forth in SCHEDULE 2.16:
(i) the Company and its stockholders have timely filed or,
if not yet due, will timely file all Tax Returns required to be filed by it for
all taxable periods ending on or before the Closing Date and all such Tax
Returns are or, if not yet filed, will be, upon filing, true, correct and
complete;
(ii) the Company and its stockholders have paid, or if
payment is not yet due, will promptly pay when due to each appropriate Tax
Authority, all Taxes of the Company for all taxable periods ending on or before
the Closing Date;
(iii) the accruals for Taxes currently payable as well as for
deferred Taxes shown on the financial statements of the Company as of the Latest
Balance Sheet Date or the date of any financial statements delivered hereunder
(A) adequately provide for all contingent Tax Liabilities of the Company as of
the date thereof, and (B) accurately reflect, as of the date thereof, all unpaid
Taxes of the Company whether or not disputed;
(iv) no extension of time has been requested or granted for
the Company to file any Tax Return that has not yet been filed or to pay any Tax
that has not yet been paid and the Company has not granted a power of attorney
that remains outstanding with regard to any Tax matter;
(v) the Company has not received notice of a determination
by a Tax Authority that Taxes are owed by the Company (such determination to be
referred to as a "TAX DEFICIENCY") and, to Sellers' knowledge, no Tax Deficiency
is proposed or threatened;
(vi) all Tax Deficiencies have been paid or finally settled
and all amounts determined by settlement to be owed have been paid;
(vii) there are no Tax Liens on or pending against the
Company or any of the Assets;
(viii) there are no presently outstanding waivers or
extensions or requests for waiver or extension of the time within which a Tax
Deficiency may be asserted or assessed;
(ix) no issue has been raised in any examination,
investigation, audit, suit, action, claim or proceeding relating to Taxes (a
"TAX AUDIT") which, by application of similar principles to any past, present or
future period, would result in a Tax Deficiency for such period;
(x) there are no pending or, to Sellers' knowledge,
threatened Tax Audits of the Company;
(xi) the Company has not ever been required to include in
income any adjustment pursuant to section 481 of the Code or pursuant to a
closing agreement as defined in section 7121 of the Code and no Tax Authority
has ever made or proposed any such adjustment;
(xii) the Company does not own any property that is
tax-exempt use property within the meaning of section 168(b) of the Code or that
is described in section 168(f)(8) of the Internal Revenue Code as in effect
prior to its amendment by the Tax Reform Act of 1986;
(xiii) the Company has not filed a consent pursuant to section
341(f) of the Code;
(xiv) the Company is not now nor has ever been (a) an
includable member of an "affiliated group" within the meaning of section 1504(a)
of the Code, (b) a member of any consolidated, combined or unitary Tax Return
filing group, (c) a party to an agreement that obligates it to make any payment
computed by reference to the Taxes, taxable income or tax losses of any other
individual or entity, (d) a personal holding company as defined in section 542
of the Code, (e) the owner of an interest in an entity that is or is treated as
a partnership, trust, regulated investment company as defined in section 851 of
the Code, real estate investment trust as defined in section 856 of the Code or
foreign personal holding company as defined in section 552(a) of the Code, (f) a
United States shareholder as defined in section 951(b) of the Code of a
controlled foreign corporation as defined in section 957 of the Code or (g) a
United States real property holding company within the meaning of section
897(c)(2) of the Code;
(xv) the Company has no deferred intercompany gains or
losses that have not been fully taken into income for income Tax purposes;
(xvi) there are no transfer or other taxes (other than income
taxes) imposed by any state on any Seller, the Company or Buyer by virtue of the
Contemplated Transactions;
(xvii) no claim has been made by any Tax Authority that the
Company is subject to Tax in a jurisdiction in which the Company is not then
paying Tax of the type asserted; and
(xviii) the Company has been, at all times since its
inception, an "S corporation" having elected that status pursuant to section
1362 of the Code.
Each reference to a provision of the Code in this Section 2.16 shall be treated
for state and local Tax purposes as a reference to analogous or similar
provisions of state and local law.
(b) SCHEDULE 2.16 contains (i) a schedule of the filing
dates of all Tax Returns required to be filed by the Company, (ii) a description
of all past Tax Audits involving the Company, (iii) a list of all elections made
by the Company relating to Taxes, and (iv) a description of accounting methods
employed by the Company and any changes in such accounting methods that occurred
during a year for which the statute of limitations remains open. Except as set
forth in SCHEDULE 2.16, the Company has retained all supporting and backup
papers, receipts, spreadsheets and other information necessary for (i) the
preparation of all Tax Returns that have not yet been filed and (ii) the defense
of all Tax Audits involving taxable periods from the date of inception of the
Company to the Closing Date or from which there are unutilized net operating
loss, capital loss or investment tax credit carryovers.
(c) Except as set forth in SCHEDULE 2.16, the Company has
collected and remitted to the appropriate Tax Authority all sales and use or
similar Taxes required to be collected on or prior to the Closing Date and has
been furnished properly completed exemption certificates for all exempt
transactions. The Company has maintained and has in its possession all records,
supporting documents and exemption certificates required by applicable sales and
use Tax statutes and regulations to be retained in connection with the
collection and remittance of sales and use Taxes for all periods up to and
including the Closing Date. With respect to sales made by the Company prior to
the Closing Date for which sales and use Taxes are not yet due as of the Closing
Date, all applicable sales and use Taxes payable with respect to such sales will
have been collected or billed by the Company and will be included in the Assets
of the Company as of the Closing Date.
SECTION 2.17 EMPLOYEE BENEFITS PLANS. (a) Except as set forth on
SCHEDULE 2.17, neither Sellers, the Company nor any Affiliate of Sellers, the
Company, nor the Business, nor any portion of the Business (all of the above
hereinafter individually and collectively called the "ENTITY"), nor any other
company or entity which together with the Entity constitutes a member of the
Entity's "controlled group" or "affiliated service group" (within the meaning of
Sections 4001(a)(14) and/or (b) of ERISA and/or Sections 414(b), (c), (m) or (o)
of the Code (such group or groups and each member thereof hereinafter referred
to individually and collectively as the "GROUP")), has at any time adopted or
maintained, has any Liability or is a fiduciary with respect to or has any
present or future obligation to contribute to or make payment under (i) any
employee benefit plan (as defined in Section 3(3) of ERISA), or (ii) any other
benefit plan, program, contract or arrangement of any kind whatsoever (whether
for the benefit of present, former, retired or future employees, officers,
directors or consultants of the Entity or the Group, or for the benefit of any
other person or persons) including, without limitation, arrangements providing
for contributions, benefits or payments in the event of a change of ownership or
control in whole or in part of the Entity or the Group, or with respect to
disability, relocation, child care, educational assistance, deferred
compensation, pension, retirement, profit sharing, thrift, savings, stock
ownership, stock bonus, restricted stock, health, dental, medical, life,
hospitalization, stock purchase, stock option, incentive, bonus, sabbatical
leave, vacation, severance or other contribution, benefit or payment of any
kind, or (iii) any employment, consulting, service or other contract or
agreement of any kind whatsoever (all such employee benefit plans and other
benefit plans, programs, contracts or arrangements and such employment,
consulting, service or other contracts or agreements whether written or oral
hereinafter individually and collectively called the "EMPLOYEE BENEFIT
PLAN(S)"). No Employee Benefit Plan is subject to Title IV of ERISA. No Entity
and no Group has completely or partially withdrawn within the meaning of Title
IV of ERISA from any "multiemployer plan" within the meaning of Section 3(37) of
ERISA.
(b) In addition, except as set forth in SCHEDULE 2.17
hereof, (i) there have been no "prohibited transactions" within the meaning of
Section 406 of ERISA or Section 4975 of the Code with respect to the Employee
Benefit Plans; (ii) no Liability has been or is expected to be incurred by the
Entity or the Group under Title IV of ERISA with respect to the Employee Benefit
Plans; (iii) any and all amounts which the Entity or the Group are required
to pay as contributions or otherwise, or with respect to the Employee Benefit
Plans have been timely paid; (iv) no Employee Benefit Plan has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, and no Entity or Group has provided, or
is required to provide, security to any Employee Benefit Plan; (v) the current
value of all "benefit liabilities" within the meaning of Section 4001(a)(16) of
ERISA under each Employee Benefit Plan which is subject to Title IV of ERISA or
otherwise, does not exceed the current value of the assets of such Employee
Benefit Plan allocable to such benefit liabilities; (vi) each of the Employee
Benefit Plans has been established, maintained, operated and administered in
accordance with its terms and all applicable Laws; (vii) each of the Employee
Benefit Plans which is intended to be "qualified" within the meaning of Sections
401(a) and 501(a) of the Code has been determined by the IRS to be so qualified
and continues to be so qualified; (viii) there are no pending, threatened or
anticipated Claims involving any of the Employee Benefit Plans other than
routine claims for benefits pursuant to the terms thereof; (ix) the Entity and
the Group have not incurred and will not incur any withdrawal liability with
respect to a multiemployer plan under Title IV of ERISA; (x) no notice of a
"reportable event" within the meaning of Section 4043 of ERISA has been or is
required to be filed with respect to any Employee Benefit Plan; (xi) neither the
Entity nor the Group is a party to, or participates in, or has any Liability or
contingent Liability with respect to any multiemployer plan within the meaning
of Section 3(37) of ERISA; (xii) neither the execution and delivery of this
Agreement nor the consummation of the Contemplated Transactions will (either
alone or upon the occurrence of additional events or acts) accelerate vesting or
any benefits or any payments or increase the amount or value of any benefit or
payment under any Employee Benefit Plan; and (xiii) neither the Entity nor the
Group has any obligation or commitment to establish, maintain, operate or
administer any Employee Benefit Plan not set forth on SCHEDULE 2.17 or to amend
any Employee Benefit Plan so as to increase benefits thereunder or otherwise.
(c) A true and correct copy of each of the Employee Benefit
Plans (and all amendments thereto, whether currently effective or to become
effective at a later date) and all contracts and agreements relating thereto, or
to the funding thereof (including, without limitation, all trust agreements,
insurance Contracts, investment management agreements, subscription and
participation agreements, administration and recordkeeping agreements) have been
provided to Buyer. Each Employee Benefit Plan sponsored or maintained by the
Company, and all contracts and agreements relating thereto or to the funding
thereof, can be unilaterally terminated without penalty by the Company on no
more than thirty (30) days' notice, and all obligations of the Company with
respect to all other Employee Benefit Plans can be unilaterally terminated
without penalty by the Company on no more than thirty (30) days' notice. In the
case of any Employee Benefit Plan which is not in written form, an accurate and
complete description of such Employee Benefit Plan has been provided to Buyer.
With respect to each Employee Benefit Plan, Buyer has been provided with a true
and complete copy of each of (i) the three most recent annual reports (IRS Form
5500 series), Pension Benefit Guaranty Corporation filings and actuarial
reports, and (ii) the most recent summary plan description (including summaries
of material modification), IRS determination letter and/or ruling, and, in the
case of any funded Employee Benefit Plan, a current schedule of Assets (and the
fair market
value thereof assuming liquidation of any asset which is not readily tradeable)
held with respect thereto, and there have been no material changes in the
financial condition in the respective Employee Benefit Plans (or other
information provided hereunder) from that stated in such annual report,
actuarial reports and schedule of assets.
SECTION 2.18 EMPLOYEE-RELATED MATTERS. (a) SCHEDULE 2.18 contains a
true and correct list, by category, of all directors, full-time employees,
part-time and other employees and consultants of the Company, including any
understandings or any oral or written agreements relating thereto, and a
description of the rate and nature of all compensation payable or accrued by the
Company to, and the amount of vacation, sick days, personal days and other leave
accrued by, each such person or entity. SCHEDULE 2.18 also contains a
description of all existing severance, accrued vacation or other leave policies
or retiree benefits of any current or former director, officer, employee or
consultant. Except as set forth on SCHEDULE 2.18, the employment or consulting
arrangement of all such persons is, subject to applicable laws involving the
wrongful termination of employees, terminable at will (without the imposition of
damages) by the Company. Buyer has been provided with true and complete (i)
copies of all manuals and handbooks applicable to any current or former
director, officer, employee or consultant of the Company, (ii) copies of all
standard forms of employee trade secret, non-compete, non-disclosure and
invention assignment agreements, together with a list of all agreements that
deviate therefrom and a description of such deviation, and (iii) descriptions of
all existing severance, accrued vacation or other leave policies or retiree
benefits of any such director, officer, employee or consultant.
(b) Except as set forth on SCHEDULE 2.18, (i) the Company
is not a party to any Contract with any labor organization or other
representative of their employees; (ii) there is no unfair labor practice charge
or complaint pending or, to Sellers' knowledge, threatened against the Company;
(iii) the Company has not experienced any labor strike, slowdown, work stoppage
or similar labor controversy within the past five years and, to Sellers'
knowledge, no such labor strike, slow down, work stoppage or similar labor
controversy is threatened; (iv) no representation question has been raised
respecting any of the Company's employees working within the past five years,
nor, to Sellers' knowledge, are there any organizing activities or campaigns
being conducted to solicit authorization from the Company's employees to be
represented by any labor organization and no such activity or campaign is
threatened; (v) no Claim before any Governmental Body brought by or on behalf of
any employee, prospective employee, former employee, retiree, labor organization
or other representative of employees is pending or, to Sellers' knowledge,
threatened against the Company; (vi) the Company is not a party to, or otherwise
bound by, any Order relating to its employees or employment practices;
(vii) except with respect to ongoing disputes of a routine nature involving
immaterial amounts, the Company has paid in full to all of its employees all
wages, salaries, commissions, bonuses, benefits and other compensation due and
payable to such employees; and (viii) the Company is in compliance with all
applicable Laws affecting employment and employment practices.
(c) No current employee of the Company is (i) absent on a
military leave of absence and eligible for rehire under the terms of the
Uniformed Services Employment and Reemployment Rights Act, or (ii) absent on a
leave of absence under the Family and Medical Leave Act. SCHEDULE 2.18 contains
a true and correct list of (1) each qualified beneficiary (within the meaning of
Section 4980B(g)(1) of the Code) of any group health plan (within the meaning of
Section 4980B(g)(2) of the Code) which is an Employee Benefit Plan who as of the
date hereof, is eligible for continuation of group health plan coverage under
any Employee Benefit Plan on account of a qualifying event (within the meaning
of Section 4980B(f)(3) of the Code) occurring on or prior to the Closing Date,
and (2) with respect to each such qualified beneficiary, the date and nature of
such qualifying event.
SECTION 2.19 INSURANCE. SCHEDULE 2.19 sets forth a list of all
insurance policies, fidelity and surety bonds and fiduciary liability policies
(the "INSURANCE POLICIES"), as well as all self-insurance programs, covering the
Assets, the Business, operations, employees, officers and directors of the
Company and true and complete copies of all such Insurance Policies and
self-insurance programs ("SELF-INSURANCE PROGRAMS") have been delivered to
Buyer. SCHEDULE 2.19 also sets forth (a) with respect to each Insurance Policy
the applicable deductible amounts and any material limitations on coverage, (b)
any letter of credit relating to any such Insurance Policy and all inspections
and reports delivered to the Company by any insurer with respect to such
Insurance Policies, copies of which have been delivered to Buyer and (c) a true
and complete list of Claims made in respect of each Insurance Policy or
Self-Insurance Program during the two (2) years prior to the date hereof. True
and correct copies of all loss runs with respect to such period have been
delivered to Buyer. There is no Claim by the Company pending under any of such
Insurance Policies as to which coverage has been questioned, denied or disputed
by the underwriters of such Insurance Policies or requirement by any insurer to
perform work which has not been satisfied. No premiums payable under such
Insurance Policies are overdue and the Company is in compliance in all respects
with the terms and conditions of all such Insurance Policies. All Insurance
Policies are in full force and effect. Each Insurance Policy is of the type and
in amounts customarily carried by persons conducting a business similar to that
of the Company. The insurance in effect with respect to any Leased Real
Property is in an amount of the full replacement value of such Leased Real
Property, including the buildings and improvements thereon. No Seller knows of
any threatened termination of, premium increase with respect to, or uncompleted
requirements under any Insurance Policy. No premiums are or will be payable
under Insurance Policies after the Closing in respect of insurance provided for
periods prior to the Closing Date. Claims under all such Insurance Policies are
payable on an "claims made basis."
SECTION 2.20 COMPLIANCE WITH LAWS. Neither the Company nor any
Seller is in violation of any order, judgment, injunction, award, citation,
decree, consent decree or writ (collectively, "ORDERS"), or any law, statute,
code, ordinance, rule, regulation or other requirement (collectively, "LAWS"),
of any government, municipality or political subdivision thereof, whether
federal, state, local or foreign, or any governmental or quasi-governmental
agency, authority, board, bureau, commission, department, instrumentality or
public body, or any court, arbitrator, administrative tribunal or public utility
(collectively, "GOVERNMENTAL
BODIES") affecting the Company, the Purchased Shares or the Business. No Seller
is aware of any proposed Orders, Laws or other proceedings which would be
applicable to the Business, operations or properties of the Company.
SECTION 2.21 PERMITS. The Company has obtained all licenses,
permits, certificates, certificates of occupancy, orders, authorizations and
approvals (collectively, "PERMITS"), and has made all required registrations and
filings with any Governmental Body that are necessary to the ownership of the
Assets, the use and occupancy of the Leased Real Property, as presently used and
operated, and the conduct of the Business or otherwise required to be obtained
by the Company, including, without limitation, all registrations and filings
required to be made with the Commissioner of Commerce and/or the Department of
Labor of any state and any nursing pool agency licenses. All Permits required
to be obtained or maintained by the Company are listed on SCHEDULE 2.21 and are
in full force and effect; no violations are or have been recorded, nor have any
notices or violations thereof been received, in respect of any Permit; and no
proceeding is pending or, to Sellers' knowledge, threatened to revoke or limit
any Permit; and the consummation of the Contemplated Transactions will not (or
with the giving of notice or the passage of time or both will not) cause any
Permit to be revoked or limited.
SECTION 2.22 ENVIRONMENTAL MATTERS. (a) With respect to
environmental matters, the following are true and correct:
(i) No part of the Leased Real Property has ever been used
by the Company or any Seller or, to Sellers' knowledge, by any previous owners
and/or operators of the Leased Real Property (i) for generating, manufacturing,
refining, treating, storing, processing, releasing or disposing of any Hazardous
Substances, (ii) as a landfill, dump or Hazardous Substances disposal or storage
facility, (iii) as a facility for industrial, military or manufacturing
purposes, or (iv) as a gasoline service station, automobile repair shop or for
the handling or storage of petroleum or petroleum products.
(ii) No Hazardous Substances have been Released by the
Company or any Seller, or, to Sellers' knowledge, by any third party, on, at or
under any part of the Leased Real Property and, to Sellers' knowledge, no
Environmental Condition exists on the Leased Real Property or with respect to
any activities conducted at the Leased Real Property or with respect to premises
adjacent to the Leased Real Property, which threatens to contaminate the Leased
Real Property or which may give rise to any Regulatory Action or Environmental
Liability.
(iii) The Leased Real Property is not included or, to
Sellers' knowledge, proposed to be included on the United States Environmental
Protection Agency's National Priorities List issued pursuant to CERCLA or any
other list maintained by any Governmental Body concerning sites on or from which
there is or has been any Contamination or a Release or threatened Release of any
Hazardous Substances.
(iv) The Leased Real Property and all structures and
operations on the Leased Real Property are presently, and, to Sellers'
knowledge, have been at all times in the past, in full compliance with all
applicable Environmental Laws. All Permits required by any Environmental Laws
in connection with the Company or any Seller, the Leased Real Property and the
Business have been obtained, are in full force and effect and have not been
violated.
(v) There is no pending or, to Sellers' knowledge,
threatened Claim, including without limitation Regulatory Actions, or
Environmental Liability, or, to Sellers' knowledge, any existing condition or
basis which may give rise to any such Claim or Environmental Liability, or
which, to Sellers' knowledge, may otherwise result in the imposition of a Lien
or forfeiture of the Leased Real Property, or otherwise prohibit, restrict or
materially interfere with its use as presently conducted.
(vi) No Environmental Law requires any environmental
testing, cleanup, removal or work, repairs, construction or expenditures with
respect to any part of the Leased Real Property or activities conducted at the
Leased Real Property and neither the Company nor any Seller has received any
notice of any such requirement.
(vii) No underground storage tanks presently exist or, to
Sellers' knowledge, have ever existed at the Leased Real Property.
(viii) No part of the Leased Real Property (and neither the
Company nor any Seller has received written documentation stating or indicating
that any part of the Leased Real Property) is wetlands or in a flood plain.
(b) Each Seller's representations and warranties in this
Section 2.22 are based upon its respective investigations of the Leased Real
Property, and Buyer is entitled to rely thereon notwithstanding any independent
investigations by Buyer or its Representatives.
SECTION 2.23 FINDERS FEES. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of any Seller or the Company who might be entitled to any fee or
commission from any Seller or the Company in connection with the consummation of
the Contemplated Transactions.
SECTION 2.24 DEPOSITARIES; POWERS OF ATTORNEY, ETC. SCHEDULE 2.24
sets forth (i) the name of each bank, financial institution or similar entity in
which the Company has an account, lock box or safe deposit box and the names of
all persons authorized to draw thereon or to have access thereto; and (ii) the
name of each person holding a general or special power of attorney from the
Company and a description of the terms thereof.
SECTION 2.25 RELATED PARTY TRANSACTIONS. SCHEDULE 2.25 sets forth
all Contracts or other agreements or arrangements (whether or not in writing) of
any nature between the Company, on the one hand, and any Affiliate of the
Company or any officer, director or
stockholder of the Company or any Affiliate of the Company (each a "RELATED
PARTY") on the other hand ("RELATED PARTY CONTRACTS"), including but not limited
to any Contract for money owed by or to any of them. Except as set forth on
SCHEDULE 2.25 hereto, no Related Party has any Claim against or Liability to the
Company and the Company has no Claim against or Liability to any Related Party
and, to Sellers' knowledge, no fact or circumstance exists which is reasonably
likely to give rise to any such Claim against or by or Liability to or from any
Related Party under any Related Party Contract or otherwise.
SECTION 2.26 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no Law,
Order or Contract binding upon the Company which has had or could reasonably be
expected to have the effect of prohibiting or adversely affecting
(i) competition by the Company, (ii) any existing business practice of the
Company, (iii) any acquisition of property by the Company, or (iv) the Condition
of the Business.
SECTION 2.27 CUSTOMERS. SCHEDULE 2.27 lists for the year ended
December 31, 1997 and for the four months ended April 30, 1998, the twenty-five
largest customers (by dollar amount) of the Company. There has not occurred any
material adverse change in the relationship of the Company with any of its
customers since December 31, 1997 and, except as and to the extent set forth on
SCHEDULE 2.27, to Sellers' knowledge, there are no facts or circumstances
(including, without limitation, the Contemplated Transactions) that could
reasonably be expected to have a material adverse effect on the Company's
relationship with any of its customers. Since December 31, 1997, (i) no
customer has cancelled or terminated, or threatened to cancel, or otherwise
terminate, its relationship with the Company or (ii) no customer has threatened
to decrease or limit materially its relationship with the Company.
SECTION 2.28 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the
Company nor any officer, employee or agent of the Company, nor any other person
acting on its own behalf, has, directly or indirectly, within the two (2) years
prior to the date hereof given or agreed to give any gift or similar benefit to
any customer, supplier, governmental employee or other person who is or may be
in a position to help or hinder the Business (or assist any Seller in connection
with any actual or proposed transaction) which (a) might subject Buyer to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (b) if not given in the past, might have had a material adverse
effect on the Assets, Business or operations of the Company or (c) if not
continued in the future, might adversely affect any Assets, Business, operations
or prospects or which might subject Buyer to suit or penalty in any private or
governmental litigation or proceeding.
SECTION 2.29 DISCLOSURE. Neither this Agreement, the Schedules
hereto, nor any audited or unaudited financial statements, documents or
certificates furnished or to be furnished to Buyer by or on behalf of the
Company or any Seller pursuant to this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. No Seller has knowledge of any events, transactions or other facts
which, either individually or in the aggregate, may give rise to circumstances
or conditions which would have a material adverse effect on the general affairs
or Condition of the Business.
SECTION 2.30 TRANSACTION SHARES. Each Seller represents and warrants
to Buyer that the Transaction Shares are being acquired by such Seller for its
own account and not with a view to the distribution, resale or other transfer
thereof, except in compliance with the Securities Act and applicable state
securities laws. Each Seller has (i) reviewed carefully the Parent Reports,
(ii) such knowledge and experience in financial, tax and business matters so as
to enable it to make an informed investment decision with respect to the
Transaction Shares and (iii) overall commitments to investments which are not
readily marketable as are reasonable in relation to such Seller's net worth.
SECTION 2.31 ABILITY TO CONDUCT BUSINESS. The Assets are sufficient
and adequate to permit the continued operation of the Business as it has been
conducted since the inception of the Company and, assuming all Sellers Required
Consents are obtained, the consummation of the Contemplated Transactions hereby
will enable Buyer to conduct the Business as it has been conducted since the
Company's inception.
SECTION 2.32 POTENTIAL CONFLICTS OF INTEREST. No Seller, or any
spouse of a Seller, and no entity controlled by one or more of the foregoing:
(a) owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of, any person which is, or is engaged
in business as, a direct or indirect competitor, lessor, lessee, supplier,
distributor, sales agent or customer of the Company, except for ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇'▇ interest in FX Media, Inc. which provides internet website hosting
services to the Company at a cost of less than $250 per month;
(b) owns, directly or indirectly, in whole or in part, any
material property that the Company uses in the conduct of the Business; or
(c) has any material cause of action or other claim
whatsoever against, or owes any amount to, the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent represent and warrant to Sellers that:
SECTION 3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Buyer and
Parent has full power and authority to execute and deliver each Transaction
Document to which it is or, at Closing, will be, a party and to consummate the
Contemplated Transactions. The execution, delivery and performance of each
Transaction Document and the consummation of the Contemplated Transactions to
which each of Buyer and/or Parent is or, at Closing, will be, a party have been
duly and validly authorized and approved by the board of directors thereof, as
the case may be, and no other corporate proceedings on the part of Buyer and/or
Parent are necessary to authorize the execution, delivery and performance by
Buyer and/or Parent of each Transaction Document or the consummation of the
Contemplated Transactions to which Buyer and/or Parent is or, at Closing, will
be a party. This Agreement has been and, at Closing, the other Transaction
Documents to which Buyer and/or Parent is a party will have been, duly and
validly executed and delivered by Buyer and/or Parent and (assuming the valid
execution and delivery thereof by the other parties thereto) constitutes, or
will, at the Closing, constitute, as the case may be, the legal, valid and
binding agreements of Buyer and/or Parent, enforceable against Buyer and/or
Parent in accordance with their respective terms, except as such obligations and
their enforceability may be limited by applicable bankruptcy and other similar
Laws affecting the enforcement of creditors' rights generally and except that
the availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought (whether at law or in
equity).
SECTION 3.2 NO CONFLICTS; CONSENTS. The execution, delivery and
performance by Buyer and/or Parent of each Transaction Document to which Buyer
and/or Parent is or, at Closing, will be, a party and the consummation of the
Contemplated Transactions to which Buyer and/or Parent is or, at Closing, will
be, a party do not and will not (i) violate any provision of the certificate of
incorporation or by-laws of Buyer and/or Parent; (ii) require Buyer and/or
Parent to obtain any consent, approval or action of or waiver from, or make any
filing with, or give any notice to, any Governmental Body or any other person,
except as set forth on SCHEDULE 3.2 (the "BUYER REQUIRED CONSENTS"); (iii) if
Buyer Required Consents are obtained prior to the Closing, violate, conflict
with or result in the breach or default under (with or without the giving of
notice or the passage of time), or permit the suspension or termination of, any
material Contract to which Buyer or Parent is a party or by which either of them
or their assets may be bound or subject; or (iv) if Buyer Required Consents are
obtained prior to the Closing, violate any Law or Order of any Governmental Body
against, or binding upon, Buyer or Parent or upon any of their respective assets
or business.
SECTION 3.3 CORPORATE EXISTENCE AND POWER. Each of Buyer and Parent
is a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, and has all requisite corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
SECTION 3.4 FINDERS FEES. Other than Strategica Group, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of Buyer or Parent who might be entitled to
any fee or commission from Buyer or Parent in connection with the consummation
of the Contemplated Transactions.
SECTION 3.5 PARENT REPORTS. Buyer and Parent have delivered to
Sellers true and correct copies of (a) Parent's Annual Report on Form 10-KSB for
the year ended December 31, 1997, as amended, and (b) Parent's Quarterly Report
on Form 10-QSB for the quarter ended March 31, 1998 (collectively, the "PARENT
REPORTS"). The Parent Reports, taken as a whole, did not at the time they were
filed contain an untrue statement of material fact, nor omit to state a material
fact necessary to make the statements made therein not misleading.
SECTION 3.6 TRANSACTION SHARES. The Transaction Shares have been
duly authorized by Parent and, when issued to Sellers, will be duly issued,
fully paid and non-assessable shares of Parent Stock. The Transaction Shares
will not be issued in violation of any preemptive rights, rights of first
refusal or, other than as set forth in this Agreement, contractual restrictions
of any kind, and Sellers will receive good title to the Transaction Shares free
and clear of all Liens.
ARTICLE IV
COVENANTS AND AGREEMENTS
Sellers, jointly and severally, covenant to Buyer and Buyer covenants
to Sellers that:
SECTION 4.1 CONDUCT OF BUSINESS OF THE COMPANY. From the date hereof
through the Closing Date, Sellers, jointly and severally, agree to cause the
Company:
(i) To conduct its operations according to the ordinary and
usual course of the Business consistent with past practice, to preserve intact
its present business organization and structure, to keep available the services
of its present officers, agents and employees, to preserve and maintain its
Assets and the good will of the Business and to preserve its relationships with
customers and others having business dealings with the Company.
(ii) To maintain in the ordinary course of the Business,
consistent with past practice and in accordance with all Contracts, the Leased
Real Property, all its material structures, equipment, the Assets and other
tangible property in their present repair, order and condition, subject to
ordinary wear and tear.
(iii) Not to incur any Liability (other than Liabilities
incurred in the ordinary course of the Business, consistent with past practice,
which are not in the aggregate material thereto), nor enter into any Contract of
a type required to be disclosed on any Schedule hereto.
(iv) Not to undertake (nor permit to be undertaken) any of
the actions specified in Section 2.10.
(v) Not to pay, discharge or satisfy any material Claim or
Liability, other than the payment, discharge or satisfaction in the ordinary
course of the Business of Claims or Liabilities incurred in the ordinary course
of Business, consistent with past practice.
(vi) Not to enter into, amend, modify, terminate, renew,
extend, or waive any material right under, any leases, licenses, occupancy
agreements or other Contracts concerning the Leased Real Property or any other
real property or permit any person to occupy the Leased Real Property, nor enter
into any mortgage, pledge or other encumbrance, or other Contract affecting
title to, or the use, possession, occupancy, operation and/or maintenance of the
Leased Real Property.
(vii) To pay all Taxes and other charges required with
respect to the Assets and comply with all Laws, including all Environmental
Laws.
(viii) To maintain insurance coverage in the amounts and
types as are currently in existence and more specifically described on SCHEDULE
2.19 annexed hereto and made a part hereof.
(ix) Not to withdraw, settle or otherwise compromise any
pending Tax reduction proceeding without the prior written consent of Buyer.
(x) Not to make any request of any Governmental Body
without the prior written consent of Buyer and to keep Buyer informed of all
notices received from, or any correspondence with, respect to any such
Governmental Body.
(xi) To comply with its obligations under the Contracts,
including, but not limited to the Real Property Leases and any Permitted Liens,
to which it is a party, and send to Buyer copies of all notices of default
delivered pursuant to any of the Contracts, promptly upon receipt thereof.
(xii) On or prior to the Closing Date, the Company
shall, at its sole cost and expense, cause all Liens, other than Permitted
Liens, to be discharged, removed and/or released of record. As of the Closing,
there shall be no outstanding Contracts made by the Company or any Seller for
the construction or repair of any improvements to the Leased Real Property that
have not been fully paid for, and the Company shall cause to be discharged all
mechanics, materialmen's and other Liens arising from any labor or materials
furnished to the Leased Real Property on or prior to the Closing Date.
SECTION 4.2 CORPORATE EXAMINATIONS AND INVESTIGATIONS. (a) Prior
to the Closing Date, Sellers, jointly and severally, agree that Buyer shall be
entitled, through its directors, officers, Affiliates, employees, attorneys,
accountants, representatives, lenders, consultants and other agents
(collectively, "REPRESENTATIVES") to make such investigation of the Assets, the
Business and operations of the Company and the Purchased Shares, and such
examination of the books, records and financial condition of the Company, as
Buyer reasonably deems necessary for the purpose of effecting and considering
the Contemplated Transactions. Any such investigation and examination shall be
conducted at reasonable times, under reasonable circumstances and upon
reasonable notice, and Sellers shall cooperate fully therein. In that
connection, Sellers shall make available to the Representatives of Buyer during
such period, all such information and copies of such documents and records
concerning the affairs of the Company and the Purchased Shares as such
Representatives may reasonably request, shall permit the Representatives of
Buyer access to the Assets of the Company and all parts thereof and to its
employees, customers, suppliers, contractors and others, and shall cause the
Company's Representatives to cooperate fully in connection with such review and
examination. No investigation by Buyer shall diminish or obviate any of the
representations, warranties, covenants or agreements of Sellers contained in
this Agreement.
SECTION 4.3 ADDITIONAL FINANCIAL STATEMENTS. (a) On or prior to July
31, 1998, Sellers shall furnish Buyer with the Company's audited financial
statements at and for the quarter ended March 31, 1998, together with a review
letter from Coopers & ▇▇▇▇▇▇▇ LLP with respect to the Company's unaudited
financial statements for the month ended April 30, 1998.
(b) Prior to the Closing Date, as soon as available and in
any event within fifteen (15) calendar days after the end of each monthly
accounting period of the Company ending after April 30, 1998, Sellers shall
furnish Buyer with an unaudited financial statement of the Company for such
month in form and substance comparable to the Interim Statements and with such
other financial or other information routinely prepared by the Company.
SECTION 4.4 FILINGS AND AUTHORIZATIONS. Sellers will pay when due
all Taxes imposed upon the Company and/or Sellers, as the case may be, by Law
arising out of the Contemplated Transactions. The parties hereto shall
cooperate and use their respective best efforts to make, or cause to be made,
all registrations, filings, applications and submissions, to give all notices
and to obtain all governmental or other third party consents, transfers,
approvals, Orders and waivers necessary or desirable for the consummation of
the Contemplated
Transactions in accordance with the terms of this Agreement and shall furnish
copies thereof to each other party prior to such filing and shall not make
any such registration, filing, application or submission to which Buyer or
Sellers, as the case may be, reasonably objects in writing. All such filings
shall comply in form and content in all material respects with applicable
Law. The parties hereto also agree to furnish each other with copies of such
filings and any correspondence received from any Governmental Body in
connection therewith.
SECTION 4.5 EFFORTS TO CONSUMMATE. Subject to the terms and
conditions herein, each party hereto, without payment or further consideration,
shall use its good faith efforts to take or cause to be taken all action and to
do or cause to be done all things necessary, proper or advisable to consummate
and make effective, as soon as reasonably practicable, the Contemplated
Transactions, including, but not limited to, the obtaining of all Sellers
Required Consents and Buyer Required Consents, respectively, and Permits or
consents of any third party, whether private or governmental, which are
necessary for the consummation of the Contemplated Transactions, to effect all
necessary registrations and filings, and each party hereto shall cooperate fully
with the others in all of the foregoing.
SECTION 4.6 NEGOTIATIONS WITH OTHERS. From and after the date hereof
unless and until this Agreement shall have terminated in accordance with its
terms, Sellers, jointly and severally, agree that neither Sellers, the Company,
any Affiliate of any of them, nor any Representative of any of them, will
directly or indirectly (i) solicit, engage in discussions or engage in
negotiations with any person (other than Buyer or any of its Affiliates) with
respect to an Acquisition Proposal; (ii) provide information to any person
(other than Buyer, any of its Representatives or the Company's Representatives)
in connection with an Acquisition Proposal; (iii) enter into any transaction
with any person (other than Buyer or any of its Affiliates) with respect to an
Acquisition Proposal; or (iv) agree to do any of the foregoing. If any Seller,
the Company, any Affiliate or Representative thereof receives any offer or
proposal to enter into discussions or negotiations relating to any of the above,
Sellers will immediately notify Buyer in writing as to the identity of the
offeror or the party making any such proposal and the specific terms of such
offer or proposal.
SECTION 4.7 NOTICES OF CERTAIN EVENTS. Prior to the Closing Date,
each Seller, on the one hand, and Buyer, on the other, shall promptly notify the
other of:
(a) any notice or other communication from any person
alleging that the consent, approval, authorization or waiver of such person is
or may be required in connection with the Contemplated Transactions;
(b) any material adverse change in the Condition of the
Business;
(c) any notice or other communication from any Governmental
Body in connection with the Contemplated Transactions; and
(d) any event, condition or circumstance occurring from the
date hereof through the Closing Date that would constitute a material violation
or breach of any representation or warranty of such party, whether made as of
the date hereof or as of the Closing Date, or that would constitute a material
violation or breach of any covenant of any such party contained in this
Agreement.
SECTION 4.8 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, each
Seller, on the one hand, and Buyer, on the other, will consult with each other
before issuing any press release or otherwise making any public statement with
respect to the Contemplated Transactions, and will not issue any such press
release or make any such public statement without the prior approval of Buyer or
Sellers, as the case may be, except as may be required by applicable Law in
which event the other party shall have the right to review and comment upon (but
not approve) any such press release or public statement prior to its issuance.
SECTION 4.9 CONFIDENTIALITY. (a) Each party hereto shall hold in
strict confidence, and shall use its best efforts to cause all of its
Representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process, or by other requirements of Law, all
information concerning any other party which it has obtained from such party
prior to, on, or after the date hereof in connection with the Contemplated
Transactions, and each party shall not use or disclose to others, or permit the
use of or disclosure of, any such information so obtained, and will not release
or disclose such information to any other person, except its Representatives who
need to know such information in connection with this Agreement and who shall be
advised of the provisions of this Section 4.9. The foregoing provision shall
not apply to any such information to the extent (i) known by any party prior to
the date such information was provided to such party in connection with the
Contemplated Transactions, (ii) made known to any party from a third party not
in breach of any confidentiality requirement or (iii) made public through no
fault of such party or any of its Representatives.
(b) If the Contemplated Transactions are not consummated
and if requested, each party hereto shall return to the appropriate party all
tangible evidence of such information.
SECTION 4.10 EXPENSES. Except as otherwise specifically provided in
this Agreement, Buyer and Sellers shall bear their respective expenses, in each
case, incurred in connection with the preparation, execution and performance of
the Transaction Documents and the Contemplated Transactions, including, without
limitation, all fees and expenses of their respective Representatives, and the
Company shall not bear any of the fees and expenses of any Seller's
Representatives. Notwithstanding the foregoing, Sellers shall prior to Closing
pay all expenses associated with switching the Company's Insurance Policies from
a "claims made basis" to an "occurrence basis." On the Closing Date, Buyer
shall pay all fees and expenses, if any, owed to Strategica Group in connection
with the Contemplated Transactions.
SECTION 4.11 TAX MATTERS. (a) TAX PERIODS ENDING ON OR BEFORE THE
CLOSING DATE. Sellers shall prepare or cause to be prepared and file or cause
to be filed all Tax Returns for the Company for all periods ending on or prior
to the Closing Date. Sellers shall permit Buyer to review and comment on each
such Tax Return described in the preceding sentence prior to filing and shall
make such revisions to such Tax Returns as are reasonably requested by Buyer.
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE
CLOSING DATE. Buyer shall prepare or cause to be prepared and file or cause to
be filed any Tax Returns of the Company for periods which begin before the
Closing Date and end after the Closing Date.
(c) Refunds or credits of Taxes that were paid by the
Company with respect to any periods shall be for the account of the Company.
(d) Sellers, the Company and Buyer shall reasonably
cooperate, and shall cause their respective Representatives reasonably to
cooperate, in preparing and filing all Tax Returns, including maintaining and
making available to each other all records necessary in connection with the
preparation and filing of Tax Returns, the payment of Taxes and the resolution
of Tax Audits and Tax Deficiencies with respect to all taxable periods. Buyer
recognizes that Sellers and their Affiliates will need access, from time to
time, after the Closing Date, to certain accounting and Tax records and
information held by the Company that pertain to events occurring prior to the
Closing Date. Buyer therefore agrees to cause the Company to allow Sellers and
their Representatives, at times and dates reasonably acceptable to the Company,
to inspect, review and make copies of such records as Sellers and the Company
deem necessary or appropriate, PROVIDED such activities are conducted during
normal business hours on reasonable advance notice.
(e) Buyer and Sellers further agree, upon request, to use
their reasonable efforts to obtain any certificate or other document from any
Tax Authority or any other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the Contemplated Transactions).
(f) the Company and Sellers will not revoke the Company's
election to be taxed as an "S corporation" within the meaning of Code Sections
1361 and 1362 and will not take or allow any action other than the sale of the
Company's stock pursuant to this Agreement that would result in the termination
of the Company's status as a validly electing "S corporation" within the meaning
of Code Sections 1361 and 1362.
SECTION 4.12 COVENANT NOT-TO-COMPETE. (a) During the period
commencing from the Closing Date and ending on the later of (i) three (3) years
thereafter or (ii) two (2) years after the termination of such Seller's
employment with the Company, pursuant to the terms of any employment agreement
between Buyer and Seller or otherwise (the "TERM"):
(i) In order to preserve the Business and the value of the
Assets, each Seller agrees that it will not, directly or indirectly, as a
partner, officer, employee, director, stockholder, investor, lender, proprietor,
other equity owner, consultant, representative, agent or otherwise become or be
interested in, or associate with or render assistance to, any person (other than
Buyer) engaged in the business of placing or recruiting travel nurses or
staffing hospitals with medical personnel in the United States, Canada, Bermuda
or the Philippines. The foregoing provisions shall not, however, prohibit any
Seller from acquiring, solely as an investment, securities of any person which
are registered under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and which are publicly traded, so long as
such Seller is not part of any group required to make any filing under Section
13(d) of the Exchange Act (or any successor rule) in respect of such person and
such securities do not constitute 2% or more of any class of outstanding
securities of such person.
(ii) Each Seller agrees that it will not, directly or
indirectly, during the Term, for its own benefit or for the benefit of any other
person (A) influence or attempt to influence any person to either terminate or
modify his employment or other professional relationship with the Company, Buyer
or any Affiliate of Buyer or (B) employ, consult or otherwise retain, directly
or indirectly, any person who is (or during the twelve months prior thereto was)
employed, consulting to, or otherwise retained by the Company, Buyer or any
Affiliate of Buyer.
(b) Sellers will not, directly or indirectly, use, disclose
or make available to any person (other than Buyer) any confidential information
concerning the ownership and/or operation of the Business (the "CONFIDENTIAL
INFORMATION"). The term Confidential Information includes, without limitation,
the business practices, financial information, customer, prospective customer,
travel nurse and prospective travel nurse names and information, suppliers and
prospective suppliers names, leads and account information, mailing lists,
computer programs, advertising campaigns (including, without limitation,
displays, drawings, memoranda, designs, styles or devices), marketing,
promotional and pricing information, employee names, compensation and benefit
information, Contracts, Permits, and Real Property Leases of the Company
pertaining to the Business. The term Confidential Information excludes only
information which is publicly available through no fault of Sellers or any of
their Representatives.
(c) The parties agree that a violation of the foregoing
agreements not to compete or disclose, or any provision thereof, will cause
irreparable damage to Buyer, and Buyer shall be entitled (without any
requirement of posting a bond or other security), in addition to any other
rights and remedies which it may have, at law or in equity, to an injunction
enjoining and restraining Sellers from doing or continuing to do any such act or
any other violations or threatened violations of this Section 4.12.
(d) The parties hereto agree that the covenant set forth in
this Section 4.12 is reasonable with respect to its duration, geographical area
and scope and in all other respects. If the final judgment of a court of
competent jurisdiction declares that any term or
provision of this Section 4.12 is invalid or unenforceable, the parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
SECTION 4.13 EMPLOYEE MATTERS. From the date hereof through the
Closing Date, Sellers, jointly and severally, agree to cause the Company:
(a) Not to (1) adopt, enter into, terminate or amend any
Employee Benefit Plan, (2) completely or partially withdraw (within the meaning
of Section 4201 of ERISA) from any multiemployer plan (within the meaning of
Section 3(37) of ERISA, (3) increase in any manner the compensation or fringe
benefit of any director, officer, employee or consultant of the Company, (4) pay
any benefit not required under the terms of any Employee Benefit Plan, (5) grant
any discretionary awards under any Employee Benefit Plan or other bonus,
incentive, performance or other compensation plan or arrangement, (6) take any
action to fund or in any other way secure the payment of compensation or
benefits to any director, officer, employee or consultant of the Company or
under any Employee Benefit Plan, except to the extent required under applicable
Laws, (7) adopt, enter into or amend any contract, agreement, commitment or
arrangement to do any of the foregoing.
(b) To fully satisfy all obligations, on a timely basis,
under each Employee Benefit Plan, including, without limitation, all
contribution obligations, and to administer, operate and maintain each Employee
Benefit Plan in accordance with its terms and all applicable Laws.
(c) Not to incur a "plant closing" or "mass layoff", within
the meaning of the Worker Adjustment and Retraining Notification Act.
(d) Not to take any action that interferes with Buyer's
relationship with the Company's employees and not to be a direct or indirect
party to any action or activity which would deprive Buyer of the services of
such employees.
SECTION 4.14 FURTHER ASSURANCES. At any time and from time to time
after the Closing Date, upon the request of Buyer, each Seller, jointly and
severally, shall do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged or delivered, all such further documents, instruments or
assurances, as may be necessary, desirable or proper to carry out the intent and
accomplish the purposes of this Agreement. Sellers and Buyer will each,
respectively, bear their or its own costs and expenses incurred in compliance
with the first sentence of this Section 4.14.
SECTION 4.15 REGISTRATION RIGHTS. The parties acknowledge and agree
that the Transaction Shares are being issued pursuant to the exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT") provided in Section 4(2) thereof and constitute "restricted
securities" within the meaning of the Securities Act. Sellers may not transfer
the Transaction Shares absent compliance with the provisions of the Securities
Act, applicable state securities laws and Section 4.16 herein, and all stock
certificates evidencing the Transaction Shares shall bear a legend to such
effect and to the effect that such shares are subject to the terms and
provisions of this Agreement. At the Closing, Buyer and Sellers shall enter
into a registration rights agreement (the "REGISTRATION RIGHTS AGREEMENT")
substantially in the form of EXHIBIT 4.15 hereto. The Registration Rights
Agreement will provide that Buyer will file a registration statement with the
Securities and Exchange Commission on Form SB-2 or other such form (the
"REGISTRATION STATEMENT") to register the sale by Sellers of the Transaction
Shares no later than seventy-five (75) Business Days following the Closing Date,
will pay all costs in respect thereto (other than fees and expenses of counsel
to Sellers and discounts, fees or commissions upon resale of the Transaction
Shares) and will use reasonable efforts to have the Registration Statement
declared effective by the Securities and Exchange Commission as soon as
practicable following the filing thereof.
SECTION 4.16 INSURANCE. Prior to Closing, the Sellers shall cause
the Company to obtain, and as of the Closing Date, Sellers shall cause the
Company to maintain Insurance Policies on an occurrence basis and shall obtain
"tail coverage" for its "claims made" Insurance Policies for two (2) years after
the date of the Claim, and all such amounts shall be deducted from the Purchase
Price.
SECTION 4.17 POOLING OF INTERESTS. The parties hereto acknowledge
and agree that the Contemplated Transactions shall be treated for accounting
purposes as a "pooling of interests." Each of Sellers and Buyer further
covenant not to take any action or cause any event to occur, either prior to or
after the Closing, that may jeopardize, compromise or adversely affect the
pooling of interests accounting treatment with respect to the Contemplated
Transactions.
SECTION 4.18 SELF-INSURANCE. Prior to Closing, the Sellers shall
cause the Company to pay all "run-out" fees and liabilities which may be owed to
Great-West Life and Annuity Insurance Company or any other person in connection
with the Company's Self Insurance Programs, and all such amounts shall be
deducted from the Purchase Price.
SECTION 4.19 JOINT VENTURE AGREEMENT. At Closing, each Seller shall
cause the Joint Venture Agreement to be terminated and such Agreement shall have
no further force or effect.
SECTION 4.20 OFFERS OF EMPLOYMENT. Buyer shall make an offer of
employment to each of ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
substantially in the form of EXHIBIT 4.21 hereto.
ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. The
obligations of Sellers and Buyer to consummate the Contemplated Transactions
are subject to the satisfaction of the following conditions:
(a) NO INJUNCTION. No provision of any applicable Law and
no Order shall prohibit the consummation of the Contemplated Transactions.
(b) NO PROCEEDINGS OR LITIGATION. No Claim instituted by
any person (other than Buyer, the Company, Sellers or their respective
Affiliates) shall have been commenced or pending against any Seller, the
Company, Buyer or any of their respective Affiliates, officers or directors,
which Claim seeks to restrain, prevent, change or delay in any respect the
Contemplated Transactions or seeks to challenge any of the terms or provisions
of this Agreement or seeks damages in connection with any of such transactions.
SECTION 5.2 CONDITIONS TO THE OBLIGATIONS OF SELLERS. The
obligations of Sellers hereunder to consummate the Contemplated Transactions are
subject, at the option of Sellers, to the fulfillment prior to or at the Closing
of each of the following further conditions:
(a) PERFORMANCE. Buyer shall have performed and complied
in all material respects with all agreements, obligations and covenants required
by this Agreement to be performed or complied with by it at or prior to the
Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer contained in this Agreement and in any certificate or
other writing delivered by Buyer pursuant hereto shall be true in all material
respects at and as of the Closing Date as if made at and as of such time (except
for those representations and warranties made as of a specific date which shall
be true in all material respects as of the date made).
(c) PURCHASE PRICE. Buyer shall have delivered that
portion of the Purchase Price in accordance with Section 1.2(a) hereof.
(d) BUYER REQUIRED CONSENTS. All Buyer Required Consents
shall have been obtained; and
(e) DOCUMENTATION. There shall have been delivered to
Sellers the following:
(i) A certificate, dated the Closing Date, of the Chairman
of the Board, the President or Chief Financial Officer of Buyer confirming the
matters set forth in Section 5.2(a) and (b) hereof;
(ii) Stock certificates, registered in the name of each
Seller (with the appropriate restrictive legends), evidencing satisfaction of
that portion of the Purchase Price in accordance with Section 1.2(a);
(iii) A certificate, dated the Closing Date, of the Secretary
or Assistant Secretary of Buyer certifying, among other things, that attached or
appended to such certificate (i) is a true and correct copy of its certificate
of incorporation and all amendments thereto, if any, as of the date thereof
certified by the Secretary of the State of Delaware; (ii) is a true and correct
copy of its by-laws as of the date thereof; (iii) is a true copy of all
resolutions of its board of directors authorizing the execution, delivery and
performance of the Transaction Documents and the Contemplated Transactions; and
(iv) are the names and signatures of its duly elected or appointed officers who
are authorized to execute and deliver the Transaction Documents and any
certificate, document or other instrument in connection herewith;
(iv) Evidence of the good standing and corporate existence
of Buyer and Parent issued by the Secretary of State of the State of Delaware;
(v) A signed opinion of Buyer's counsel, dated the Closing
Date and addressed to Sellers, substantially in the form annexed as EXHIBIT 5.2A
hereto;
(vi) Copies of all Buyer Required Consents;
(vii) An executed copy of the Escrow Agreement; and
(viii) An executed copy of the Registration Rights Agreement.
SECTION 5.3 CONDITIONS TO THE OBLIGATIONS OF BUYER. All obligations
of Buyer to consummate the Contemplated Transactions hereunder are subject, at
the option of Buyer, to the fulfillment prior to or at the Closing of each of
the following further conditions:
(a) PERFORMANCE. Each Seller shall have performed and
complied in all material respects with all agreements, obligations and covenants
required by this Agreement to be performed or complied with by them at or prior
to the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Sellers contained in this Agreement and in any certificate or
other writing delivered by any Seller pursuant hereto shall be true in all
material respects at and as of the Closing Date as if made at and as of such
time (except for those representations and warranties made as of a specific date
which shall be true in all material respects as of the date made).
(c) SELLERS REQUIRED CONSENTS. All Sellers Required
Consents shall have been obtained in form and substance reasonably satisfactory
to Buyer, and shall be in full force and effect.
(d) CLAIMS. Subsequent to the date of this Agreement, there
shall not have arisen any Claims (other than Claims the substance of which are
disclosed on a Schedule to this Agreement) (whether or not the defense thereof
or Liabilities in respect thereof are covered by insurance), asserted or
threatened against or involving the Company, any Seller, any of the Assets, the
Business or the Purchased Shares, other than Claims that, individually or in the
aggregate, together with all other Claims existing or threatened on the Closing
Date, could not reasonably be expected to have a material adverse effect on the
Condition of the Business or the Purchased Shares. There shall exist no fact,
event or circumstance on the Closing Date known to any Seller that could give
rise to any Claim (other than Claims the substance of which is disclosed on a
Schedule to this Agreement) that, if pending or threatened on the Closing Date,
could, individually or in the aggregate, together with all other Claims existing
or threatened on such date, reasonably be expected to have a material adverse
effect on the Condition of the Business or the Purchased Shares.
(e) DOCUMENTATION. There shall have been delivered to
Buyer the following:
(i) A certificate dated the Closing Date, executed by each
Seller, confirming the matters set forth in Sections 5.3(a) and (b);
(ii) A certificate, dated the Closing Date, of the Secretary
or Assistant Secretary of the Company certifying, among other things, that
attached or appended to such certificate (i) is a true and correct copy of the
Company's Articles of Incorporation and all amendments thereto, if any, as of
the date thereof certified by the Secretary of State of its state of
incorporation; and (ii) is a true and correct copy of the Company's by-laws as
of the date thereof;
(iii) Evidence of the good standing and corporate existence
of the Company issued by the Secretary of State of its state of incorporation
and evidence that the Company is qualified to transact business as a foreign
corporation and is in good standing in each state of the United States and in
each other jurisdiction where the character of the property owned or leased by
it or the nature of its activities makes such qualification necessary;
(iv) A signed opinion of Sellers' counsel, Akerman,
Senterfitt & ▇▇▇▇▇▇, P.A., dated the Closing Date and addressed to Buyer,
substantially in the form annexed hereto as EXHIBIT 5.3A;
(v) Copies of all Sellers Required Consents;
(vi) A copy of the Escrow Agreement executed by all parties
thereto;
(vii) An executed copy of the Registration Rights
Agreement;
(viii) Stock Certificates of each Seller representing the
number of Purchased Shares set forth opposite such Seller's name on SCHEDULE
2.1, duly endorsed in blank or accompanied by stock powers duly endorsed in
blank and in suitable form for transfer to Buyer by delivery;
(ix) Possession and control of the Assets of the Company
(including all corporate books, seals, bank accounts, records and documents);
(x) The resignations, dated the Closing Date, of such
directors and officers of the Company and each fiduciary of any plan of the
Company, as previously may have been requested by Buyer;
(xi) A release of the Company, without any liability to
Company and in form and substance reasonably acceptable to Buyer, of ▇▇▇▇
▇▇▇▇▇▇▇▇▇ as to all sums owed to him in connection with his employment by the
Company;
(xii) Evidence of termination, without any liability to
Company and in form and substance reasonably acceptable to Buyer, of all written
and oral employment agreements and arrangements with all directors, officers and
consultants of the Company, including those listed on SCHEDULE 2.18;
(xiii) A termination agreement executed by each Seller
terminating the Joint Venture Agreement;
(xiv) An executed non-compete agreement with ▇▇▇▇
▇▇▇▇▇▇▇▇, in the form attached hereto as EXHIBIT 5.3B; and
(xv) A schedule attached hereto as SCHEDULE 5.3B, listing
the amounts owed to each of First Capital Services, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇ as of
the Closing Date.
(f) ACCOUNTING TREATMENT. The Buyer shall have received
from KPMG Peat Marwick LLP, in form and substance satisfactory to Buyer, and
addressed to Buyer and Parent, a letter to the effect that the Contemplated
Transactions qualify for "pooling of interests" accounting treatment.
(g) DUE DILIGENCE. Buyer, in its absolute discretion,
shall be satisfied with the results of its due diligence findings concerning the
Audited Interim Statements.
(h) FINANCIAL STATEMENTS. There shall have been delivered
to Buyer the Audited Interim Statements.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Notwithstanding any right of Buyer fully to investigate the affairs of the
Company and notwithstanding any knowledge of facts determined or determinable by
Buyer pursuant to such investigation or right of investigation, Buyer has the
right to rely fully upon the representations, warranties, covenants and
agreements of Sellers contained in this Agreement, or listed or disclosed on any
Schedule hereto or in any instrument delivered in connection with or pursuant to
any of the foregoing. All such representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement and the
Closing hereunder. Notwithstanding the foregoing, all representations and
warranties of Sellers contained in this Agreement, on any Schedule hereto or in
any instrument delivered in connection with or pursuant to this Agreement shall
terminate and expire twelve (12) months after the Closing Date; PROVIDED,
HOWEVER, that the liability of Sellers shall not terminate as to any specific
claim or claims of the type referred to in Section 6.2 hereof, whether or not
fixed as to Liability or liquidated as to amount, with respect to which Sellers
have been given specific notice on or prior to the date on which such
Liabilities would otherwise terminate pursuant to the terms of this
Section 6.1(a) or which arise or result from or are related to a Claim for
fraud;
(b) All representations and warranties of Buyer shall
terminate and expire twelve (12) months after the Closing Date; PROVIDED,
HOWEVER, that the liability of Buyer shall not terminate as to any specific
claim or claims of the type referred to in Section 6.3 hereof, whether or not
fixed as to Liability or liquidated as to amount, with respect to which Buyer
has been given specific notice on or prior to the date on which such Liability
would otherwise terminate pursuant to the terms of this Section 6.1(b).
SECTION 6.2 OBLIGATION OF SELLERS TO INDEMNIFY. Each Seller, jointly
and severally, agrees to indemnify, defend and hold harmless Buyer (and its
directors, officers, employees, Affiliates, successors and assigns) from and
against all Claims, losses, Liabilities, Regulatory Actions, damages,
deficiencies, judgments, settlements, costs of investigation or other expenses
(including Taxes, interest, penalties and reasonable attorneys' fees and fees of
other experts and disbursements and expenses incurred in enforcing this
indemnification) (collectively, the "LOSSES") suffered or incurred by Buyer, the
Company, or any of the foregoing persons in any action or proceeding between
Buyer (or any other indemnified person) and any Seller, or between Buyer (or any
other indemnified person) and any third party or otherwise, arising out of
(i) any breach of the representations and warranties of any Seller contained in
this Agreement or in the Schedules or any other Transaction Document, (ii) any
breach of the
covenants and agreements of any Seller contained in this Agreement or in the
Schedules or any other Transaction Document, (iii) any Claim pending or
threatened prior to the Closing Date as set forth on SCHEDULE 2.15.
SECTION 6.3 OBLIGATION OF BUYER TO INDEMNIFY. Buyer agrees to
indemnify, defend and hold harmless each Seller (and any successor or assignee
thereof) from and against any Losses suffered or incurred by such Seller or any
of the foregoing persons arising out of any breach of the representations and
warranties of Buyer or of the covenants and agreements of Buyer contained in
this Agreement or in the Schedules or any other Transaction Document.
SECTION 6.4 NOTICE AND OPPORTUNITY TO DEFEND THIRD PARTY CLAIMS.
(a) Promptly after receipt by any party hereto (the "INDEMNITEE") of notice of
any demand, claim, circumstance or Tax Audit which would or might give rise to a
claim by, or the commencement (or threatened commencement) of any action,
proceeding or investigation that may result in a Loss (an "ASSERTED LIABILITY"),
the Indemnitee shall give notice thereof (the "CLAIMS NOTICE") to the party or
parties obligated to provide indemnification pursuant to Sections 6.2 or 6.3
(collectively, the "INDEMNIFYING PARTY"). The Claims Notice shall describe the
Asserted Liability in reasonable detail and shall indicate the amount
(estimated, if necessary, and to the extent feasible) of the Loss that has been
or may be suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend, at its own
expense and with its own counsel, any Asserted Liability unless (i) the Asserted
Liability seeks an Order, injunction or other equitable or declaratory relief
against the Indemnitee or (ii) the Indemnitee shall have reasonably concluded
that (x) there is a conflict of interest between the Indemnitee and the
Indemnifying Party in the conduct of such defense or (y) the Indemnitee shall
have one or more defenses not available to the Indemnifying Party. If the
Indemnifying Party elects to defend such Asserted Liability, it shall within ten
days (or sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the
expense of the Indemnifying Party, in the defense of such Asserted Liability.
If the Indemnifying Party elects not to defend the Asserted Liability, is not
permitted to defend the Asserted Liability by reason of the first sentence of
this Section 6.4(b), fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this Agreement with
respect to such Asserted Liability, the Indemnitee may pay, compromise or defend
such Asserted Liability at the sole cost and expense of the Indemnifying Party.
Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee
may settle or compromise any claim over the reasonable written objection of the
other, PROVIDED that the Indemnitee may settle or compromise any claim as to
which the Indemnifying Party has failed to notify the Indemnitee of its election
under this Section 6.4(b) or as to which the Indemnifying Party is contesting
its indemnification obligations hereunder. In the event the Indemnifying Party
elects to defend any Asserted Liability, the Indemnitee may participate, at its
own expense, in the defense of such Asserted Liability. If the Indemnifying
Party chooses to defend any Asserted Liability, the Indemnitee shall make
available to the Indemnifying Party any books,
records or other documents within its control that are necessary or appropriate
for such defense. Any Losses of any Indemnitee for which an Indemnifying Party
is liable for indemnification hereunder shall be paid upon written demand
therefor.
SECTION 6.5 LIMITS ON INDEMNIFICATION. (a) Buyer's remedies with
respect to Losses specified in Section 6.2 shall be limited to the return of the
Indemnification Shares or, in the event such shares are sold the value thereof
as determined in accordance with Section 1.3(b), in accordance with the terms
hereof; PROVIDED, HOWEVER, that if such Losses arise out of any fraud related
matter on the part of any Seller or the Company, then each Seller, jointly and
severally, shall be obligated to indemnify Buyer in respect of all such Losses,
including those not otherwise satisfied by delivery to Buyer of the
Indemnification Shares or the value thereof (as determined in accordance with
Section 1.3(b)), in accordance with the provisions of this Article VI.
(b) Sellers shall not be liable to indemnify Buyer pursuant
to Section 6.2 above, and Buyer shall not be liable to indemnify Sellers
pursuant to Section 6.3 above, in respect of any individual Loss of less than
$5,000. In addition, the parties hereto agree to indemnify the other pursuant
to Sections 6.2 or 6.3, as the case may be, in the event that the aggregate of
all such individual Losses of less than $5,000 suffered by either Buyer or
Sellers, as the case may be, exceeds $50,000. When a party's Losses total
$50,000 or more, such party shall be entitled to indemnification for all amounts
for which indemnification is available, including but not limited to the first
$50,000 of any such claim. Notwithstanding the foregoing, Seller shall be
liable for any and all Losses arising out of the matters referred to in
Section 6.2(iii) without regard to a minimum dollar amount.
SECTION 6.6 EXCLUSIVE REMEDY. Except as provided in Article VII and
any Claims for fraud (for which such indemnification provisions of this Article
VI shall not constitute the sole or exclusive remedy of any party hereto in
respect of this Agreement and the Contemplated Transactions and that each party
hereto shall be entitled to seek any other remedy to which such party is
entitled, whether at law or in equity), the parties agree that the
indemnification provisions of this Article VI shall constitute the sole and
exclusive remedy of any party hereto in respect of this Agreement and the
Contemplated Transactions.
ARTICLE VII
SPECIFIC PERFORMANCE; TERMINATION
SECTION 7.1 SPECIFIC PERFORMANCE. Sellers acknowledge and agree
that, if Sellers fail to proceed with the Closing in any circumstance other than
those described in clauses (a), (b), (d) or (e) of Section 7.2 below, Buyer will
not have adequate remedies at law with respect to such breach. In such event,
and in addition to Buyer's right to terminate this Agreement, Buyer shall be
entitled, without the necessity or obligation of posting a bond or other
security, to seek injunctive relief, to commence a suit in equity to obtain
specific
performance of each Seller's obligations under this Agreement or to ▇▇▇ ▇▇▇▇▇▇▇
for damages, in each case, without first terminating this Agreement. Sellers
specifically affirm the appropriateness of such injunctive, other equitable
relief or damages in any such action.
SECTION 7.2 TERMINATION. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) By mutual written consent of Sellers and Buyer;
(b) By Sellers if (i) there has been a misrepresentation or
breach of warranty on the part of Buyer in the representations and warranties
contained herein and such misrepresentation or breach of warranty, if curable,
is not cured within thirty days after written notice thereof from Sellers;
(ii) Buyer has committed a breach of any covenant imposed upon it hereunder and
fails to cure such breach within thirty days after written notice thereof from
Sellers; or (iii) any condition to Sellers' obligations under Section 5.2
becomes incapable of fulfillment through no fault of Sellers or the Company and
is not waived by Sellers, PROVIDED that, on the date of termination, all
conditions to Buyer's obligations specified in Section 5.3 (other than
clause (e) thereof) shall have been satisfied and Sellers shall then be
otherwise ready, willing and able to proceed with the Closing hereunder;
(c) By Buyer, if (i) there has been a misrepresentation or
breach of warranty on the part of Sellers in the representations and warranties
contained herein and such misrepresentation or breach of warranty, if curable,
is not cured within thirty days after written notice thereof from Buyer;
(ii) any Seller has committed a breach of any covenant imposed upon it hereunder
and fails to cure such breach within thirty days after written notice thereof
from Buyer; (iii) any condition to Buyer's obligations under Section 5.3 becomes
incapable of fulfillment through no fault of Buyer and is not waived by Buyer,
PROVIDED that, on the date of termination, all conditions to Sellers'
obligations hereunder specified in Sections 5.2 (other than clauses (c) and (e)
thereof) shall have been satisfied and Buyer shall then be otherwise ready,
willing and able to proceed with the Closing hereunder; (iii) Sellers fail to
deliver the Schedules in accordance with Section 1.6 hereof; (iv) upon receipt
of the Schedules by Buyer, Buyer is not satisfied in full with the form and
substance of all such Schedules; and (v) Sellers take any action or cause any
event to occur that would adversely effect the accounting treatment of the
Contemplated Transactions as a "pooling of interests;"
(d) By Sellers or by Buyer, if any condition under
Section 5.1 becomes incapable of fulfillment through no fault of the party
seeking termination and is not waived by the party seeking termination; and
(e) By either Sellers or Buyer if the Closing shall not
have occurred on or prior to December 31, 1998, PROVIDED that (i) if so
terminated by Sellers, the conditions specified in the proviso of Section 7.2(b)
shall have been satisfied on the date of termination and Sellers shall be then
otherwise ready, willing and able to proceed with the Closing, or (ii) if so
terminated by Buyer, the conditions specified in the proviso of Section 7.2(c)
shall have been satisfied on the date of termination and Buyer shall be then
otherwise ready, willing and able to proceed with the Closing.
SECTION 7.3 EFFECT OF TERMINATION; RIGHT TO PROCEED. Subject to the
provisions of Section 7.1 hereof, in the event that this Agreement shall be
terminated pursuant to Section 7.2, all further obligations of the parties under
this Agreement shall terminate without further liability of any party hereunder
except that (i) the agreements contained in Sections 4.8, 4.9 and 4.10 shall
survive the termination hereof and (ii) termination shall not preclude any party
from seeking relief against any other party for breach of this Agreement. In
the event that a condition precedent to its obligation is not met, nothing
contained herein shall be deemed to require any party to terminate this
Agreement, rather than to waive such condition precedent and proceed with the
Contemplated Transactions.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 NOTICES. (a) Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered personally by
hand or by recognized overnight courier, or mailed (by registered or certified
mail, postage prepaid return receipt requested) as follows:
(i) If to Buyer, one copy to:
Preferred Healthcare Staffing, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇ ▇▇▇▇▇▇
with a copy to:
Preferred Employers Holdings, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇ Marks & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(ii) If to a Seller, one copy to such Seller as follows:
(A) If to ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ to:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(B) If to ▇▇▇▇▇▇ ▇▇▇▇▇:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(C) If to ▇▇▇▇▇▇ ▇▇▇▇▇:
Mr. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(D) If to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(E) with a copy in each case to:
Akerman, Senterfitt & ▇▇▇▇▇▇, P.A.
SunTrust International Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) Each such notice or other communication shall be
effective when delivered at the address specified in Section 8.1(a). Any party
by notice given in accordance with this Section 8.1 to the other parties may
designate another address or person for receipt of notices hereunder. Notices
by a party may be given by counsel to such party.
SECTION 8.2 ENTIRE AGREEMENT. This Agreement (including the
Schedules and Exhibits hereto) and the collateral agreements executed in
connection with the consummation of the Contemplated Transactions contain the
entire agreement among the parties with respect to the subject matter hereof and
related transactions and supersede all prior agreements, written or oral, with
respect thereto.
SECTION 8.3 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES;
PRESERVATION OF REMEDIES. This Agreement may be amended, superseded, cancelled,
renewed or extended only by a written instrument signed by Sellers and Buyer.
The provisions hereof may be waived in writing by Sellers or Buyer, as the case
may be. Any such waiver shall be effective only to the extent specifically set
forth in such writing. No failure or delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof. Nor shall any waiver on the part of any party of any such right, power
or privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any other or further exercise thereof or the exercise of any
other such right, power or privilege. Except as otherwise provided herein, the
rights and remedies herein provided are cumulative and are not exclusive of any
rights or remedies that any party may otherwise have at law or in equity.
SECTION 8.4 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State, without regard
to the conflict of laws rules thereof.
SECTION 8.5 CONSENT TO JURISDICTION. Each of the parties hereto
irrevocably and voluntarily submits to personal jurisdiction in the State of
Florida and in the Federal and state courts in such state located in Dade County
in any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of such action or proceeding may be heard and
determined in any such court. Each of the parties further consents and agrees
that such party may be served with process in the same manner as a notice may be
given under Section 8.1. The parties hereto agree that any action or proceeding
instituted by any of them against any other party with respect to this Agreement
will be instituted exclusively in the state courts located in, and in the United
States District Court for Dade County, Florida. Sellers and Buyer irrevocably
and unconditionally waive and agree not to plead, to the fullest extent
permitted by law, any objection that they may now or hereafter have to the
laying of venue or the convenience of the forum of any action or proceeding with
respect to this Agreement in any such courts.
SECTION 8.6 BINDING EFFECT; NO ASSIGNMENT. This Agreement and all of
its provisions, rights and obligations shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors, heirs and
legal representatives. This Agreement may not be assigned (including by
operation of Law) by any party hereto without the express written consent of
Buyer (in the case of assignment by the Company or any Seller) or Sellers (in
the case of assignment by Buyer) and any purported assignment, unless so
consented to, shall be void and without effect.
SECTION 8.7 EXHIBITS. All Exhibits and Schedules attached hereto are
hereby incorporated by reference into, and made a part of, this Agreement.
SECTION 8.8 SEVERABILITY. If any provision of this Agreement for any
reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Agreement, this Agreement shall be
amended so as to enforce the illegal,
invalid or unenforceable provision to the maximum extent permitted by applicable
law, and the parties shall cooperate in good faith to further modify this
Agreement so as to preserve to the maximum extent possible the intended benefits
to be received by the parties.
SECTION 8.9 COUNTERPARTS. The Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
SECTION 8.10 THIRD PARTIES. Except as specifically set forth or
referred to herein, nothing herein express or implied is intended or shall be
construed to confer upon or give to any person other than the parties hereto and
their permitted successors or assigns, any rights or remedies under or by reason
of this Agreement or the Contemplated Transactions.
ARTICLE IX
DEFINITIONS
SECTION 9.1 DEFINITIONS. (a) The following terms, as used herein,
have the following meanings:
"ACQUISITION PROPOSAL" shall mean any proposal involving, directly or
indirectly, (i) the acquisition of, or merger or other business combination
involving the Company, (ii) the sale or other transfer of any capital stock of
the Company, (iii) the sale, lease, transfer or management of the Business, (iv)
the sale or other transfer of any Assets (except in the ordinary course) and
(v) any other transaction inconsistent with the Contemplated Transactions or
which would render any of them impossible or impracticable to consummate.
"ADDITIONAL FINANCIAL STATEMENTS" shall mean each of the financial
statements and any review letters or other documents required to be delivered
pursuant to Section 4.3.
"AFFILIATE" of any person means any other person directly or
indirectly through one or more intermediary persons, controlling, controlled by
or under common control with such person.
"AGREEMENT" or "THIS AGREEMENT" shall mean, and the words "HEREIN",
"HEREOF" and "HEREUNDER" and words of similar import shall refer to, this
agreement as it from time to time may be amended.
"ASSETS" shall mean all cash, instruments, properties, rights,
interests and assets of every kind, real, personal or mixed, tangible and
intangible, used or usable in the Business.
The term "AUDIT" or "AUDITED" when used in regard to financial
statements shall mean an examination of the financial statements by a firm of
independent certified public accountants in accordance with generally accepted
auditing standards for the purpose of expressing an opinion thereon.
"BUSINESS" shall mean the ownership and operation of the business of
the Company.
"BUSINESS DAY" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the City of New York) on which commercial
banks and securities exchanges are open for business in the City of New York.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONDITION OF THE BUSINESS" shall mean the condition (financial or
otherwise), prospects or the results of operations of the Business, the Assets
or the Company.
"CONTAMINATION" shall mean any Release or presence of a Hazardous
Substance; the presence of radon gas above the United States Environmental
Protection Agency action level; and the presence of out of service, abandoned or
leaking underground storage tanks.
"CONTRACT" shall mean any contract, agreement, indenture, note, bond,
lease, conditional sale contract, mortgage, license, franchise, instrument,
commitment or other binding arrangement, whether written or oral.
The term "CONTROL", with respect to any person, shall mean the power
to direct the management and policies of such person, directly or indirectly, by
or through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other persons by or through stock ownership, agency or otherwise; and the
terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative to the
foregoing.
"ENVIRONMENTAL CONDITION" shall mean (1) any past or present Release
of or Contamination with Hazardous Substances at, in, on, under or above the
Leased Real Property air, soils, surface water, or groundwater, (2) any injury
to health, public safety or the environment relating to the Leased Real Property
or activities conducted at the Leased Real Property, or (3) any violation or
alleged violation of any Environmental Law relating to the Leased Real Property
or activities conducted at the Leased Real Property.
"ENVIRONMENTAL LAWS" shall mean any and all Laws (including common
law), Permits, agreements or any other requirement or restriction promulgated,
imposed, enacted or issued by any Governmental Body relating to human health or
the environment, including the emission, discharge or Release of pollutants,
contaminants, Hazardous Substances or wastes into the environment (which
includes, without limitation, ambient air, surface water, ground water,
or land), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, Hazardous Substances or wastes or the clean-up or other
remediation thereof, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") 42 U.S.C.
Section 9601 ET SEQ.; the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 ET SEQ.; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the
Water Pollution Control Act, 33 U.S.C. Section 1251 ET SEQ.; the Toxic
Substances Control Act, 15 U.S.C. Section 2610 ET SEQ.; and the Federal
Technical Standards and Corrective Action Requirements for Owners and Operators
of Underground Storage Tanks, and any applicable corresponding state laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"GAAP" shall mean generally accepted accounting principles in effect
on the date hereof as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States.
"HAZARDOUS SUBSTANCES" shall mean any and all dangerous, toxic,
radioactive, caustic or otherwise hazardous material, pollutant, contaminant,
chemical, waste or substance defined, listed or described as any of such in or
governed by any Environmental Law, including but not limited to
urea-formaldehyde, polychlorinated biphenyls, asbestos or asbestos-containing
materials, radon, explosives, known carcinogens, petroleum and its derivatives,
petroleum products, or any substance which might cause any injury to human
health or safety or to the environment or might subject the owner or operator of
the Leased Real Property to any Regulatory Actions or Claims. "HAZARDOUS
SUBSTANCES" shall include, without limitation, asbestos, airborne asbestos,
polychlorinated biphenyls (PCBs), petroleum products, lead-based paint and
urea-formaldehyde.
"IRS" shall mean the Internal Revenue Service.
"JOINT VENTURE AGREEMENT" shall mean the agreement dated October 20,
1995, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇.
"KNOWLEDGE" with respect to (a) any individual shall mean actual
knowledge and (b) any corporation shall mean the actual knowledge of the
directors and the executive officers of such corporation; and "KNOWS" has a
correlative meaning. The terms "any Seller's knowledge," and "Sellers'
knowledge," including any correlative meanings, shall mean the knowledge of any
Seller.
"LIABILITY" shall mean any direct or indirect indebtedness, liability,
assessment, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, actual or potential, contingent or otherwise
(including any liability under any guaranties, letters of credit, performance
credits or with respect to insurance loss accruals).
"LIEN" shall mean any mortgage, lien (including mechanics,
warehousemen, laborers and landlords liens), claim, pledge, charge, security
interest, preemptive right, right of first refusal, option, judgment, title
defect, covenant, restriction, easement or encumbrance of any kind.
"PARENT" shall mean Preferred Employers Holdings, Inc., a Delaware
corporation.
"PERMITTED LIENS" shall mean (i) Liens for Taxes not yet due and
payable for which adequate liability accruals have been set aside on the books
of the Company and which are reasonably satisfactory to Buyer and (ii) statutory
Liens, such as mechanic's, materialman's, warehouseman's, carrier's or other
like Liens, incurred in good faith in the ordinary course of business, provided
that the underlying obligations relating to such Liens are paid in the ordinary
course of business, or are being contested diligently and in good faith by
appropriate proceedings and as to which the Company has set aside liability
accruals on its books reasonably satisfactory to Buyer, or the payment of which
obligations are otherwise secured in a manner reasonably satisfactory to Buyer.
"PERSON" shall mean an individual, corporation, partnership, joint
venture, limited liability company, association, trust, unincorporated
organization or other entity, including a government or political subdivision or
an agency or instrumentality thereof.
"RECEIVABLES" shall mean as of any date any trade accounts receivable,
notes receivable, sales representative advances and other miscellaneous
receivables of the Company.
"REGULATORY ACTIONS" shall mean any Claim, demand, action, suit,
summons, citation, directive, investigation, litigation, inquiry, enforcement
action, Lien, encumbrance, restriction, settlement, remediation, response,
clean-up or closure arrangement or other remedial obligation or proceeding
brought or instigated by any Governmental Body in connection with any
Environmental Law, including, without limitation, the listing of the Leased Real
Property on any list of contaminated or potentially contaminated sites or
potential or verified Hazardous Waste sites under any Environmental Law, or any
civil, criminal and/or administrative proceedings, whether or not seeking costs,
damages, penalties or expenses.
"RELEASE" shall mean the intentional or unintentional, spilling,
leaking, pumping, pouring, discharging or disturbance of, or emitting,
depositing, injecting, leaching, dumping, disposing, emitting or escaping, or
any other release or threatened release to or from, however defined, any
Hazardous Substance in violation of any Environmental Law.
"SUBSIDIARY" shall mean any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are owned
directly or indirectly through one or more intermediaries, or both, by any other
entity.
"TAX" (including, with correlative meaning, the terms "TAXES" and
"TAXABLE") shall mean (i)(A) any net income, gross income, gross receipts,
sales, use, ad valorem, transfer, transfer gains, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, rent, recording,
occupation, premium, real or personal property, intangibles, environmental or
windfall profits tax, alternative or add-on minimum tax, customs duty or other
tax, fee, duty, levy, impost, assessment or charge of any kind whatsoever
(including but not limited to taxes assessed to real property and water and
sewer rents relating thereto), together with (B) any interest and any penalty,
addition to tax or additional amount imposed by any Governmental Body (domestic
or foreign) (a "TAX AUTHORITY") responsible for the imposition of any such tax
and interest on such penalties, additions to tax, fines or additional amounts,
in each case, with respect to the Company, the Business or the Assets (or the
transfer thereof); (ii) any liability for the payment of any amount of the type
described in the immediately preceding clause (i) as a result of the Company
being a member of an affiliated or combined group with any other person at any
time on or prior to the Closing Date and (iii) any liability of the Company for
the payment of any amounts of the type described in the immediately preceding
clause (i) as a result of a contractual obligation to indemnify any other
person.
"TAX RETURN" shall mean any return or report (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to any Tax Authority.
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, and
each of the other agreements and instruments to be executed and delivered by all
or some of the parties hereto in connection with the consummation of the
transactions contemplated hereby.
(b) The following terms are defined in the following
sections of this Agreement:
TERM SECTION
Annual Statements 2.7(a)
April 1998 Period 1.2
Asserted Liability 6.4(a)
Audited Interim Statements 2.7(a)
Buyer Recital
Buyer Required Consents 3.2
Claims 2.15
Claims Notice 6.4(a)
Closing 1.5
Closing Date 1.5
Common Stock Recital
Company Recital
Confidential Information 4.12(b)
Contemplated Transactions 2.3
Counsel Expenses 1.2
Debt 1.2
Employee Benefit Plan 2.17(a)
Entity 2.17(a)
Escrow Agent 1.4
Escrow Agreement 1.4(b)
Escrow Shares 1.2
Exchange Act 4.12(a)(i)
First Quarter 1.2
Governmental Bodies 2.20
Group 2.17(a)
Income Tax Expense 1.2
Indemnification Shares 1.2
Indemnifying Party 6.4(a)
Indemnitee 6.4(a)
Insurance Expense 1.2
Insurance Policies 2.19
Intellectual Property Rights 2.14
Interest Expense 1.2
Interim Statements 2.7(a)
Landlord 2.12(d)
Latest Balance Sheet Date 2.8
Laws 2.20
Leased Real Property 2.11(a)
Losses 6.2
NET Escrow Agent 1.4(a)
NET Escrow Agreement 1.4(a)
Notice 1.6
Orders 2.20
Parent Reports 3.5
Parent Stock 1.2
Permits 2.21
Purchase Price 1.2
Purchased Shares Recital
Real Property Leases 2.11(a)
Registration Rights Agreement 4.15
Registration Statement 4.15
Related Party 2.25
Related Party Contracts 2.25
Representatives 4.2
Securities Act 4.15
Self-Insurance Expense 1.2
Self-Insurance Programs 2.19
Sellers Recital
Sellers Required Consents 2.4
Tax Audit 2.16(a)(ix)
Tax Deficiency 2.16(a)(v)
Term 4.12(a)
Transaction Shares 1.2
SECTION 9.2 INTERPRETATION. Unless the context otherwise requires,
the terms defined in Section 9.1 shall be applicable to both the singular and
plural forms of any of the terms defined herein. All accounting terms defined
in Section 9.1, and those accounting terms used in this Agreement not defined in
Section 9.1 except as otherwise expressly provided herein, shall have the
meanings customarily given thereto in accordance with GAAP. When a reference is
made in this Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The use of the neuter gender herein shall be
deemed to include the masculine and feminine genders wherever necessary or
appropriate, the use of the masculine gender shall be deemed to include the
neuter and feminine genders and the use of the feminine gender shall be deemed
to include the neuter and masculine genders wherever necessary or appropriate.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement as of the date set forth above.
BUYER:
PREFERRED HEALTHCARE STAFFING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
SELLERS:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
The undersigned is signing this
Agreement solely with respect to
the provisions of Section 1.2 and
Article III hereof:
PREFERRED EMPLOYERS HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President