Exhibit 2.1
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SEPARATION AND DISTRIBUTION AGREEMENT
BY AND BETWEEN
GENESIS HEALTH VENTURES, INC.,
and
GENESIS HEALTHCARE CORPORATION
Dated as of October 27, 2003
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TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS
ARTICLE II.
THE SEPARATION
2.1. Restructuring; Transfer of Assets and Assumption of Liabilities........11
2.2. Termination of Agreements..............................................12
2.3. Documents Relating to Other Transfers of Assets and Assumption
of Liabilities.........................................................13
2.4 Ancillary Agreements...................................................13
2.5. Disclaimer of Representations and Warranties...........................13
2.6. Governmental Approvals and Consents....................................14
2.7. Novation of Eldercare Group Liabilities................................14
2.8. Satisfaction of Intercompany Debt......................................15
2.9. Credit Agreement; Guarantees...........................................15
ARTICLE III.
THE DISTRIBUTION
3.1. The Distribution.......................................................16
3.2. Actions Prior to the Distribution......................................17
3.3. Conditions to Distribution.............................................18
ARTICLE IV.
MUTUAL RELEASES; INDEMNIFICATION
4.1. Release of Pre-Closing Claims..........................................20
4.2. Indemnification by SpinCo..............................................21
4.3. Indemnification by Parent..............................................22
4.4. Indemnification Obligations Net of Insurance Proceeds and
Other Amounts..........................................................23
4.5. Procedures for Indemnification of Third Party Claims...................24
4.6. Additional Matters.....................................................25
4.7. Remedies Cumulative....................................................26
4.8. Survival of Indemnities................................................26
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ARTICLE V.
INSURANCE
5.1. Insurance Matters......................................................26
ARTICLE VI.
EXCHANGE OF INFORMATION; CONFIDENTIALITY
6.1. Provision of Corporate Records; Agreement for Exchange of
Information............................................................28
6.2. Ownership of Information...............................................30
6.3. Compensation for Providing Information.................................30
6.4. Record Retention.......................................................30
6.5. Limitation of Liability................................................30
6.6. Other Agreements Providing for Exchange of Information.................30
6.7. Production of Witnesses; Records; Cooperation..........................31
6.8. Confidentiality........................................................32
6.9. Protective Arrangements................................................32
ARTICLE VII.
FURTHER ASSURANCES AND ADDITIONAL COVENANTS
7.1. Further Assurances.....................................................33
ARTICLE VIII.
TERMINATION
8.1. Termination............................................................34
8.2. Effect of Termination..................................................34
ARTICLE IX.
DISPUTE RESOLUTION AND ARBITRATION
9.1. Agreement to Arbitrate.................................................34
9.2. Efforts to Resolve Disputes; Mediation.................................35
9.3. Demand for Arbitration.................................................35
9.4. Arbitration Panel......................................................35
9.5. Commencement and Place of Arbitration..................................36
9.6. Arbitration Hearings...................................................36
9.7. Arbitration Decision...................................................36
9.8. Discovery and Related Matters..........................................36
9.9. Arbitration Panel's Authority..........................................37
9.10. Confidentiality........................................................37
9.11. Certain Additional Matters.............................................37
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ARTICLE X.
MISCELLANEOUS
9.12. Continuity of Performance and Remaining Obligations....................38
9.13. Law Governing Arbitration Procedures...................................38
10.1. Counterparts; Entire Agreement; Corporate Power........................38
10.2. Governing Law..........................................................39
10.3. Assignability..........................................................39
10.4. Third Party Beneficiaries..............................................39
10.5. Notices................................................................39
10.6. Severability...........................................................40
10.7. Force Majeure..........................................................40
10.8. Expenses...............................................................40
10.9. Late Payments..........................................................40
10.10. Headings...............................................................40
10.11. Survival of Covenants..................................................40
10.12. Waivers of Default.....................................................41
10.13. Specific Performance...................................................41
10.14. Amendments.............................................................41
10.15. Interpretation.........................................................41
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SEPARATION AND DISTRIBUTION AGREEMENT, dated as of October 27,
2003 (this "Agreement"), by and between Genesis Health Ventures, Inc. (which is
expected to be renamed "NeighborCare, Inc." in connection with the Separation
(as defined below)), a Pennsylvania corporation ("Parent"), and Genesis
HealthCare Corporation, a Pennsylvania corporation and wholly owned subsidiary
of Parent ("SpinCo").
WHEREAS, the respective Boards of Directors of Parent and SpinCo
have approved and declared advisable the separation of the Eldercare Business
(as defined below) from Parent (the "Separation") pursuant to the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, to effect the Separation, (i) all the assets and
liabilities of the Eldercare Business not held by the Eldercare Group will be
assigned to and assumed by the Eldercare Group (as defined below), and (ii)
Parent will distribute all of the outstanding SpinCo Common Stock pro rata (the
"Distribution") to holders of shares of Parent Common Stock (as defined below);
WHEREAS, the Boards of Directors of Parent and SpinCo have
determined that the Separation and the Distribution are in furtherance of and
consistent with their respective business strategies and are in the best
interests of Parent and SpinCo, respectively, and of their respective
stockholders and have approved this Agreement and the transactions contemplated
hereby;
WHEREAS, for federal income tax purposes, it is intended that the
Separation and the Distribution qualify as a tax-free reorganization under
Section 355 and 368(a)(1)(D) of the Code (as defined below) and that certain
internal restructurings preceding the Distribution also qualify as tax-free
reorganizations under such Code Sections;
WHEREAS, it is appropriate and desirable to set forth the
principal corporate transactions required to effect the Separation and the
Distribution and certain other agreements that will govern certain matters
relating to the Separation and the Distribution and the relationship of Parent,
SpinCo and their respective Subsidiaries following the Separation and the
Distribution; and
WHEREAS, Parent and SpinCo intend to enter into the Ancillary
Agreements (as defined below).
NOW, THEREFORE, the parties, intending to be legally bound, agree
as follows:
ARTICLE I.
DEFINITIONS
For the purpose of this Agreement the following terms shall have
the following meanings:
1.1. "Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any Governmental
Authority or any arbitration or mediation tribunal.
1.2. "Affiliate" of any Person means a Person that
controls, is controlled by, or is under common control with such Person. As used
herein, "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such entity,
whether through ownership of voting securities or other interests, by contract
or otherwise; provided, however, that for purposes of this Agreement, no member
of either Group shall, by virtue of common ultimate control by Parent prior to
the Distribution, be deemed to be an Affiliate of any member of the other Group
and no employee plan or employee plan trust shall be deemed an Affiliate of any
employer or of any Affiliate of any employer.
1.3. "Agent" means the distribution agent to be appointed by
Parent to distribute the shares of SpinCo Common Stock to holders of shares of
Parent Common Stock in the Distribution.
1.4. "Agreement" means this Separation and Distribution
Agreement, including all of the Schedules and Exhibits hereto.
1.5. "Ancillary Agreements" means the following agreements by and
between Parent and SpinCo, each to be entered into after the date hereof and
prior to the Distribution Date: the Tax Sharing Agreement, the Transition
Services Agreement, the Employee Benefit Agreement, the Tidewater (Group
Purchasing) Agreement, the Pharmacy Services Agreement, the Pharmacy Benefit
Management (CareCard) Agreement, and the Durable Medical Equipment Services
Agreement.
1.6. "Applicable Law" means any applicable federal, state, or
local law, statute, common law, ordinance, directive, rule, regulation,
judgment, order, injunction, decree, arbitration award, agency requirement,
authorization, approval, consent, license, permit or requirement of, or
agreement with, any Governmental Authority.
1.7. "Arbitration Act" means the United States Arbitration Act, 9
U.S.C. Sections 1-14, as the same may be amended from time to time.
1.8. "Arbitration Demand Notice" has the meaning set forth in
Section 9.3.
1.9. "Arbitration Panel" has the meaning set forth in
Section 9.5.
1.10. "Assets" means assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or other
third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person, including the following:
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(a) accounting and other books, records and files whether
in paper, microfilm, microfiche, computer tape or disc, magnetic
tape or any other form;
(b) apparatus, computers and other electronic data
processing equipment, fixtures, machinery, equipment, furniture,
office equipment, automobiles, motor vehicles and other
transportation equipment, tools and other tangible personal
property;
(c) inventories of materials, parts, supplies and
products;
(d) interests in any capital stock or other equity
interests of any Subsidiary or any other Person, all bonds, notes,
debentures or other securities issued by any Subsidiary or any
other Person, all loans, advances or other extensions of credit or
capital contributions to any Subsidiary or any other Person and
all other investments in securities of any Person;
(e) license agreements, leases of personal property, open
purchase orders for supplies or services, unfilled orders for the
manufacture and sale of products and other contracts, agreements
or commitments;
(f) deposits, letters of credit and performance and surety
bonds;
(g) written technical information, data, specifications,
operating and maintenance manuals, and materials and analyses
prepared by consultants and other third parties;
(h) prepaid expenses, trade accounts and other accounts
and notes receivables;
(i) rights under contracts or agreements, all claims or
rights against any Person arising from the ownership of any Asset,
all rights in connection with any bids or offers and all claims,
causes of action or similar rights, whether accrued or contingent;
(j) licenses, permits, approvals and authorizations which
have been issued by any Governmental Authority;
(k) cash or cash equivalents, bank accounts, lock boxes
and other deposit arrangements;
(l) copies of all documentation related to any insurance
policies; and
(m) interest rate, currency, commodity or other swap,
collar, cap or other hedging or similar agreements or
arrangements.
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1.11. "Bankruptcy Plan" means the Genesis Health Ventures Inc. and
Multicare AMC, Inc. Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code, dated as of July 6, 2001.
1.12. "Code" means the Internal Revenue Code of 1986, as amended.
1.13. "Commission" means the Securities and Exchange Commission.
1.14. "Consents" means any consents, waivers or approvals from, or
notification requirements to, any third parties, including the consents, waivers
and approvals set forth on Schedule 1.14.
1.15. "CPR" means the Center for Public Resources.
1.16. "Distribution" has the meaning set forth in the recitals of
this Agreement.
1.17. "Distribution Date" means the date on which the Distribution
occurs.
1.18. "Distribution Ratio" means the number of shares of SpinCo
Common Stock to be distributed in respect of each share of Parent Common Stock
in the Distribution, which ratio shall be determined by the Board of Directors
of Parent at a time prior to the Record Date.
1.19. "Eldercare Business" means the business, as conducted by
Parent and its Subsidiaries at any time prior to the Distribution Date, of
providing nursing care and all ancillary services (including physical,
occupational and speech therapy, respiratory therapy, diagnostic services,
physician services, and hospitality services) other than pharmacy, pharmacy
consulting and medical supply services.
1.20. "Eldercare Group" means SpinCo and each Person that would be
a direct or indirect Subsidiary of SpinCo immediately after giving effect to the
Restructuring.
1.21. "Eldercare Group Assets" means all of the following other
than Excluded Assets or any of the following sold or otherwise disposed of to a
third party prior to the Distribution Date:
(i) all Assets reflected in the Eldercare Group Balance
Sheet, and all Assets of either Group acquired between the date of
the ElderCare Group Balance Sheet and the Distribution Date which
would have been reflected on the Eldercare Group Balance Sheet had
they been acquired on or prior to the date of the ElderCare Group
Balance Sheet;
(ii) all Assets owned, leased, licensed or otherwise held
by any member of either Group that are exclusively dedicated to,
used in or related to the Eldercare Business;
(iii) all outstanding shares of capital stock of, and
partnership, joint venture or similar equity interests in, the
Persons set forth on Schedule 1.21(iii);
(iv) all right, title and interests in the real property
owned, leased, licensed or otherwise held by any member of either
Group that are exclusively dedicated to, used in or related to the
Eldercare Business, and the real property listed on Schedule
1.21(iv), together with all buildings, fixtures and improvements
thereon;
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(v) all IPR set forth on Schedule 1.21(v);
(vi) all Eldercare Policies; and
(vii) all rights under the Eldercare Group Contracts;
(viii) all the assets and properties listed on
Schedule 1.21 (viii).
1.22 "Eldercare Group Balance Sheet" means the unaudited
consolidated balance sheet of the Eldercare Group, including the notes thereto,
as at March 31, 2003 or, if available at least three weeks in advance of the
Distribution Date, as at June 30, 2003, which balance sheet shall be prepared
pro forma to give effect to the Restructuring, Separation and Distribution.
1.23. "Eldercare Group Contracts" means the following contracts
and agreements to which Parent or any of its Affiliates is a party or by which
it or any of its Affiliates or any of their respective Assets is bound, whether
or not in writing, except for any such contract or agreement that is
contemplated to be retained by Parent or any member of the Parent Group pursuant
to any provision of this Agreement or any Ancillary Agreement:
(a) any contract or agreement entered into in the name of,
or expressly on behalf of, any division, business unit or member
of the Eldercare Group, including customer contracts and any open
purchase orders or similar commitments;
(b) any contract or agreement that is otherwise expressly
contemplated pursuant to this Agreement or any of the Ancillary
Agreements to be assigned to any member of the Eldercare Group;
(c) any guarantee, indemnity, representation, warranty or
other Liability of any member of the Eldercare Group or the Parent
Group in respect of any other Eldercare Group Contract, any
Eldercare Group Liability or the Eldercare Group; and
(d) the contracts, agreements and other documents listed
or described on Schedule 1.23(d).
1.24. "Eldercare Group Liabilities" means:
(i) all Liabilities reflected in the Eldercare Group Balance
Sheet, and all Liabilities of either Group incurred or arising
between the date of the ElderCare Group Balance Sheet and the
Distribution Date which would have been included on the Eldercare
Group Balance Sheet had they been incurred or arisen on or prior
to the date of the ElderCare Group Balance Sheet;
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(ii) except as expressly provided in this Agreement or the
Ancillary Agreements, all Liabilities relating to or arising out
of or resulting from any Eldercare Group Assets, Eldercare Group
Contracts, or the operation of the Eldercare Business;
(iii) all Liabilities to the extent relating to, arising out
of or resulting from any of the terminated, divested or
discontinued businesses and operations that were part of the
Eldercare Group immediately prior to such termination, divestiture
or discontinuation or otherwise, including those set forth on
Schedule 1.24(iii);
(iv) all Liabilities assumed by any member of the Eldercare
Group under an express provision of this Agreement or any of the
Ancillary Agreements;
(v) all Liabilities arising under the SpinCo New Credit
Facility and the third party indebtedness listed on Schedule
1.24(v);
(vi) all Liabilities listed on Schedule 1.24(vi), but
excluding those Liabilities (or portions thereof) which have been
satisfied, paid or discharged prior to the Distribution Date;
(vii) all Liabilities relating to, arising out of or
resulting from the causes of action listed on Schedule 1.24(vii),
whether arising after, on or prior to the Distribution Date and
all open or closed insured liability claims, incurred by or
relating to the Eldercare Group or its current, past or future
employees;
(viii) all Liabilities relating to or arising out of or
resulting from any litigation relating to the operation of the
Eldercare Business; and
(ix) except as expressly set forth herein and subject to
Article IV, one-half of all Losses relating to, arising out of, or
resulting from the execution and delivery of this Agreement, the
consummation of the Restructuring, the Separation and the
Distribution and the other actions and transactions contemplated
hereby; provided, however, that with respect to Liabilities or
Losses relating to or arising out of Tax or employee benefits
matters, in the event of any inconsistency between this provision
and any other provision of this Agreement or any Ancillary
Agreement, such other provision shall control.
The foregoing and the paragraph set forth below notwithstanding, the Eldercare
Group Liabilities shall not include the Excluded Liabilities.
"Eldercare Group Liability" shall also mean any and all other
Liabilities owed on the Distribution Date by members of the Parent Group that
are exclusively related to the Eldercare Business and which the parties agree
should have been transferred to the Eldercare Group or an Eldercare Group Asset,
if, had the parties given specific consideration to such Liability as of the
date hereof, such Liability would have been classified as an Eldercare Group
Liability.
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1.25. "Eldercare Indemnitees" has the meaning set forth in Section
4.3(a).
1.26. "Eldercare Policies" means the insurance policies set forth
on Schedule 1.26.
1.27. "Environmental Law" means any Applicable Law (including tort
and environmental nuisance law), now or hereafter in effect relating to health,
safety, pollution or the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or to emissions, discharges,
releases or threatened releases of any substance currently or at any time
hereafter listed, defined, designated or classified as hazardous, toxic, waste,
radioactive or dangerous, or otherwise regulated, under any of the foregoing, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any such substances, including the
Comprehensive Environmental Response, Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act and the Resource Conservation and
Recovery Act and comparable provisions in state or local law.
1.28. "Environmental Liabilities" means all Liabilities relating
to, arising out of or resulting from any Environmental Law or contract or
agreement relating to environmental, health or safety matters (including all
removal, remediation or cleanup costs, investigatory costs, governmental
response costs, natural resources damages, property damages, personal injury
damages, costs of compliance with any settlement, judgment or other
determination of Liability and indemnity, contribution or similar obligations)
and all costs and expenses, interest, fines, penalties or other monetary
sanctions in connection therewith.
1.29. "Escrow Account" means an escrow account to be established
by SpinCo on or before the Distribution Date, which escrow account shall hold
the Unsecured Claimant Shares and any other assets for future delivery to the
Persons who become entitled thereto pursuant to Sections 6.3 and 7.5 of the
Bankruptcy Plan.
1.30. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
1.31. "Excluded Assets" means (i) the Assets listed or described
on Schedule 1.31; (ii) any cash actually held by any member of the Parent Group;
and (iii) any and all Assets that are expressly contemplated by this Agreement
or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be
retained by Parent or any other member of the Parent Group.
1.32. "Excluded Liabilities" means any and all Liabilities (i)
set forth on Schedule 1.32 or (ii) that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as
Liabilities to be retained or assumed by Parent or any other member of the
Parent Group, and all agreements and obligations of any member of the Parent
Group under this Agreement or any of the Ancillary Agreements.
1.33. "Existing Financing Facilities" means the credit agreements,
debt securities or other financing facilities set forth on Schedule 1.33.
1.34. "Governmental Approvals" means any notices, reports or other
filings to be made with, or any consents, registrations, approvals, permits or
authorizations to be obtained from, any Governmental Authority, including the
notices, reports or other filings set forth on Schedule 1.34.
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1.35. "Governmental Authority" shall mean any U.S. federal, state
or local court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.
1.36. "Group" means either of the Parent Group or the Eldercare
Group, as the context requires.
1.37. "Indemnifying Party" has the meaning set forth in Section
4.4(a).
1.38. "Indemnitee" has the meaning set forth in Section 4.4(a).
1.39. "Indemnity Payment" has the meaning set forth in Section
4.4(a).
1.40. "Information" means information, whether or not patentable
or copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, know-how, data, computer data, disks,
diskettes, tapes, computer programs or other software, marketing plans, customer
names, communications by or to attorneys (including attorney-client privileged
communications), memoranda and other materials prepared by attorneys or under
their direction (including attorney work product), and other technical,
financial, employee or business information or data.
1.41. "Information Statement" means the information statement to
be sent to each Parent shareholder of record as of the Record Date in connection
with the Distribution.
1.42. "Insurance Proceeds" means those monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of the insured;
or
(c) received (including by way of set off) from any third
party in the nature of insurance, contribution or indemnification
in respect of any Liability; in any such case net of any
applicable premium adjustments (including reserves and
retrospectively rated premium adjustments) and net of any costs or
expenses incurred in the collection thereof.
1.43. "IPR" means intellectual property rights protectable by
Applicable Law, including patents, copyrights, trade names, trademarks, service
marks and registrations and applications for any of the foregoing, trade
secrets, other proprietary information and licenses from third Persons granting
the right to use any of the foregoing; computer applications, programs and other
software, including operating software, network software, firmware, middleware,
design software, design tools, systems documentation and instructions;
intellectual property license agreements; and written technical information,
data, specifications, operating and maintenance manuals, and materials and
analyses prepared by consultants and other third parties.
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1.44. "Liabilities" means any and all losses, claims, charges,
debts, demands, Actions, damages, obligations, payments, costs and expenses,
sums of money, bonds, indemnities and similar obligations, covenants, contracts,
controversies, agreements, promises, omissions, guarantees, make whole
agreements and similar obligations, and other liabilities, including all
contractual obligations, whether absolute or contingent, inchoate or otherwise,
matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whenever arising, and including those arising under any Applicable Law,
Action, threatened or contemplated Action (including the costs and expenses of
demands, assessments, judgments, settlements and compromises relating thereto
and attorneys' fees and any and all costs and expenses, whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened or contemplated Actions), order or consent decree of any Governmental
Authority or award of any arbitrator or mediator of any kind, and those arising
under any contract, commitment or undertaking, including those arising under
this Agreement or any Ancillary Agreement, in each case, whether or not recorded
or reflected or required to be recorded or reflected on the books and records or
financial statements of any Person.
1.45. "Liberty Health" means Liberty Health Corporation, a Bermuda
corporation.
1.46. "Losses" means any actual loss, liability, claim, damage, or
expense (including reasonable costs of investigation and reasonable attorneys'
fees), other than any consequential damages.
1.47. "Nasdaq NMS" means The National Market System of The NASDAQ
Stock Market, Inc.
1.48. "Parent" has the meaning set forth in the preamble to this
Agreement.
1.49. "Parent Business" means the operation of the business of
Parent and its Subsidiaries, other than the Eldercare Business, as conducted at
any time prior to the Distribution Date.
1.50. "Parent Common Stock" means the Common Stock of Parent, par
value $0.02 per share.
1.51. "Parent Group" means Parent and each Person that would be a
direct or indirect Subsidiary of Parent immediately after giving effect to the
Restructuring and the Distribution.
1.52. "Parent Group Assets" means any Assets of any member of the
Parent Group or the Eldercare Group that are not Eldercare Group Assets,
including the Excluded Assets.
1.53. "Parent Group Liabilities" means any Liabilities of any
member of the Parent Group or Eldercare Group whether arising after, on or prior
to the Distribution Date, that do not constitute Eldercare Group Liabilities,
including the Excluded Liabilities.
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1.54. "Parent Guarantees" means the guarantees, letters of credit
and letters of comfort made or obtained by any member of the Parent Group for
the benefit of any member of the Eldercare Group or any Affiliate thereof,
including those set forth on Schedule 1.54, but excluding any such guarantees,
letters of credit and letters of comfort in respect of any obligations of any
member of the Eldercare Group that are terminated or refinanced prior to the
Distribution Date.
1.55. "Parent Indemnitees" has the meaning set forth in
Section 4.2.
1.56. "Person" means an individual, a general or limited
partnership, a corporation, a trust, a joint venture, an unincorporated
organization, a limited liability entity, any other entity and any Governmental
Authority.
1.57. "Prime Rate" means the rate which Citibank N.A. (or any
successor thereto or other major money center commercial bank agreed to by the
parties hereto) announces from time to time as its prime lending rate, as in
effect from time to time.
1.58. "Record Date" means the close of business on the date to be
determined by the Parent Board of Directors as the record date for determining
shareholders of Parent entitled to receive shares of SpinCo Common Stock in the
Distribution.
1.59. "Registration Statement" means the Registration Statement on
Form 10 to be filed by SpinCo with the Commission to effect the registration of
SpinCo Common Stock pursuant to the Exchange Act in connection with the
Distribution, including any amendment thereto or supplement thereof.
1.60. "Restructuring" has the meaning set forth in Section 2.1(a).
1.61. "Security Interest" means any mortgage, security interest,
pledge, lien, charge, claim, option, right to acquire, voting or other
restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever.
1.62. "Separation" has the meaning set forth in the recitals to
this Agreement.
1.63. "SpinCo" has the meaning set forth in the Preamble to this
Agreement.
1.64. "SpinCo Common Stock" means the Common Stock of SpinCo, par
value $0.01 per share.
1.65. "SpinCo Constituent Documents" has the meaning set forth in
Section 3.2(g).
1.66. "SpinCo New Credit Facility" means the credit facility to be
entered into between SpinCo, as borrower, and an agent or co-agents selected by
Parent and SpinCo pursuant to which SpinCo may borrow funds, in form and
substance reasonably acceptable to the Boards of Directors of each of Parent and
SpinCo.
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1.67. "Subsidiary" of any Person means any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however, that no Person that is not directly or indirectly wholly
owned by any other Person shall be a Subsidiary of such other Person unless such
other Person controls, or has the right, power or ability to control, that
Person.
1.68. "Stock Split" has the meaning set forth in Section 3.2(e).
1.69. "Tax" means any Income Tax or Other Tax (each as defined in
the Tax Sharing Agreement).
1.70. "Tax Liability" means Income Tax Liabilities, Other Tax
Liabilities, Spin-Off Tax Liabilities and Tax-Related Losses (each as defined in
the Tax Sharing Agreement) and any related Liability for which a party is
responsible pursuant to the Tax Sharing Agreement.
1.71. "Third Party Claim" has the meaning set forth in Section
4.5(a).
1.72. "Unsecured Claimant Shares" means the number of newly issued
shares of SpinCo Common Stock equal to the product of (i) the Distribution Ratio
and (ii) the number of shares of Parent Common Stock reserved as of the
Distribution Date for issuance to holders of Claims (as defined in the
Bankruptcy Plan) in ▇▇▇▇▇▇▇ ▇▇, ▇▇, ▇▇ and M5 (as defined in the Bankruptcy
Plan).
ARTICLE II.
THE SEPARATION
2.1. Restructuring; Transfer of Assets and Assumption of
Liabilities. (a) Parent and SpinCo shall, and shall cause their respective
Subsidiaries to, use all reasonable efforts to complete the restructuring steps
described on Schedule 2.1(a) prior to or on the Distribution Date (the
"Restructuring").
(b) On or prior to the Distribution Date, the parties hereto
shall, and shall cause their respective Subsidiaries to, (i) execute instruments
of assignment and transfer and to take such other corporate action as is
necessary to transfer to one or more members of the Eldercare Group all of
the right, title and interest of the Parent Group in and to all Eldercare Group
Assets that are not already owned, leased, licensed or otherwise held by any
member of the Eldercare Group after giving effect to the Restructuring; and (ii)
take all action necessary to cause one or more members of the Eldercare Group to
assume all of the Eldercare Group Liabilities to the extent such Eldercare Group
Liabilities would otherwise remain obligations of any member of the Parent Group
after giving effect to the Restructuring.
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(c) On or prior to the Distribution Date, the parties hereto
shall, and shall cause their respective Subsidiaries to, (i) execute instruments
of assignment and transfer and to take such other corporate action as is
necessary to transfer to one or more members of the Parent Group all of the
right, title and interest of the Eldercare Group in and to all Parent Group
Assets that are not already owned, leased, licensed or otherwise held by any
member of the Parent Group after giving effect to the Restructuring; and (ii)
take all action necessary to cause one or more members of the Parent Group to
assume all of the Parent Group Liabilities to the extent such Parent Group
Liabilities would otherwise remain obligations of any member of the Eldercare
Group after giving effect to the Restructuring.
(d) In the event that at any time or from time to time (whether
prior to or after the Distribution Date), any party hereto (or any member of
such party's respective Group) shall receive or otherwise possess any Asset to
which another Person is entitled, such party shall promptly transfer, or cause
to be transferred, such Asset to the Person entitled thereto. Prior to any such
transfer, the Person receiving or possessing such Asset shall hold such Asset in
trust for such other Person.
(e) It is the intent of the parties that, as of the completion
of the Distribution, after giving effect to the Restructuring, Separation and
Distribution, (i) none of the members of the Parent Group shall own, lease or
have any interest in (other than as a counterparty to any agreement or contract
with any member of the Eldercare Group) or rights to any material assets,
properties or other rights (tangible and intangible) comprising the Eldercare
Group Assets; (ii) none of the members of the Parent Group shall then conduct
any of the Eldercare Business other than as contemplated by any of the Ancillary
Agreements; and (iii) no member of the Parent Group shall be liable for any
Eldercare Group Liability.
2.2. Termination of Agreements. (a) Except as set forth in
Section 2.2(b), each of SpinCo and the members of the Eldercare Group, on the
one hand, and each of Parent and the members of the Parent Group, on the other
hand, hereby terminate, effective as of the Distribution Date, any and all
agreements, arrangements, commitments or understandings, whether or not in
writing, between or among SpinCo and/or any member of the Eldercare Group, on
the one hand, and Parent and/or any member of the Parent Group, on the other
hand. No such terminated agreement, arrangement, commitment or understanding
(including any provision thereof which purports to survive termination) shall be
of any further force or effect after the Distribution Date. Each party shall, at
the reasonable request of any other party, take, or cause to be taken, such
other actions as may be necessary to effect the foregoing.
(b) The provisions of Section 2.2(a) shall not apply to any of
the following agreements, arrangements, commitments or understandings (or to any
of the provisions thereof): (i) this Agreement and the Ancillary Agreements (and
each other agreement or instrument expressly contemplated by this Agreement or
any Ancillary Agreement to be entered into by any of the parties hereto or any
of the members of their respective Groups); (ii) any agreements, arrangements,
commitments or understandings to which any Person other than the parties hereto
or any of their respective wholly owned Subsidiaries is a party; (iii) any
agreements, arrangements, commitments or understandings to which any non-wholly
owned Subsidiary or Affiliate of Parent or SpinCo, as the case may be, is a
party (it being understood that directors' qualifying shares or similar
interests will be disregarded for purposes of determining whether a Subsidiary
is wholly owned); and (iv) any other agreements, arrangements, commitments or
understandings that this Agreement or any Ancillary Agreement expressly
contemplates will survive the Distribution Date.
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2.3. Documents Relating to Transfers of Assets and Assumption of
Liabilities. (a) In furtherance of the assignment, transfer and conveyance of
the Eldercare Group Assets and the Parent Group Assets set forth in Section 2.1,
effective as of the Distribution Date, (i) Parent shall, and shall cause its
Subsidiaries to, execute and deliver such bills of sale, stock powers,
certificates of title, assignments of contracts and other instruments of
transfer, conveyance and assignment as and to the extent necessary to evidence
the transfer, conveyance and assignment of all of Parent's and its respective
Subsidiaries' right, title and interest in and to the Eldercare Group Assets to
SpinCo and (ii) SpinCo shall, and shall cause its Subsidiaries to, execute and
deliver such bills of sale, stock powers, certificates of title, assignments of
contracts and other instruments of transfer, conveyance and assignment as and to
the extent necessary to evidence the transfer, conveyance and assignment of all
of SpinCo's and its respective Subsidiaries' right, title and interest in and to
the Parent Group Assets to Parent.
(b) In furtherance of the transfer and assumption of the
assumption of the Eldercare Group Liabilities and the Parent Group Liabilities
set forth in Section 2.1, effective as of the Distribution Date, (i) Parent
shall, and shall cause its Subsidiaries to, execute and deliver such instruments
of assumption as and to the extent necessary to evidence the valid and effective
assumption of the Parent Group Liabilities by the Parent Group, and (ii) SpinCo
shall, and shall cause its Subsidiaries to, execute and deliver such instruments
of assumption as and to the extent necessary to evidence the valid and effective
assumption of the ElderCare Group Liabilities by the ElderCare Group.
2.4. Ancillary Agreements. On or prior to the Distribution Date,
each of Parent and SpinCo shall execute and deliver each of the Ancillary
Agreements to which it is a party.
2.5. Disclaimer of Representations and Warranties. Each of Parent
(on behalf of itself and each member of the Parent Group) and SpinCo (on behalf
of itself and each member of the Eldercare Group) understands and agrees that,
except as expressly set forth herein or in any Ancillary Agreement, no party to
this Agreement, any Ancillary Agreement or any other agreement or document
contemplated by this Agreement, any Ancillary Agreement or otherwise, makes any
representation or warranty in any way as to the Assets, businesses or
Liabilities transferred or assumed as contemplated hereby or thereby, as to any
consents or approvals required in connection therewith, as to the value or
freedom from any Security Interests of, or any other matter concerning, any
Assets of such party, or as to the absence of any defenses or right of setoff or
freedom from counterclaim with respect to any claim or other Asset, including
any accounts receivable, of any party, or as to the legal sufficiency of any
assignment, document or instrument delivered hereunder to convey title to any
Asset or thing of value upon the execution, delivery and filing hereof or
thereof. Except as may expressly be set forth herein or in any Ancillary
Agreement, all such Assets are being transferred on an "as is," "where is" basis
(and, in the case of any real property, by means of a quitclaim or similar form
deed or conveyance) and the respective transferees shall bear the economic and
legal risks that any conveyance shall prove to be insufficient to vest in the
transferee good and marketable title, free and clear of any Security Interest.
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2.6. Governmental Approvals and Consents. (a) If and to the
extent that the valid, complete and perfected transfer or assignment to the
Eldercare Group of any Eldercare Group Assets (or from the Eldercare Group of
any Parent Group Assets) would be a violation of Applicable Law or require any
Consent or Governmental Approval in connection with the Restructuring, the
Separation or the Distribution, then, unless Parent and SpinCo shall otherwise
determine, the transfer or assignment to or from the Eldercare Group of such
Eldercare Group Assets or Parent Group Assets, respectively, shall be
automatically deemed deferred and any such purported transfer or assignment
shall be null and void until such time as all legal impediments are removed or
such Consents or Governmental Approvals have been obtained. The foregoing
notwithstanding, any such Asset shall be deemed an Eldercare Group Asset or
Parent Group Asset, as the case may be, for purposes of determining whether any
Liability is an Eldercare Group Liability or a Parent Group Liability.
(b) If the transfer or assignment of any Assets intended to be
transferred or assigned hereunder is not consummated prior to or at the
Distribution Date, whether as a result of the provisions of Section 2.6(a) or
for any other reason, then the Person retaining such Asset shall thereafter hold
such Asset for the use and benefit, insofar as reasonably possible, of the
Person entitled thereto (at the expense of the Person entitled thereto). In
addition, to the extent permitted by Applicable Law and to the extent otherwise
permissible in light of any required Consent and/or Governmental Approval, the
Person retaining such Asset shall take such other actions as may be reasonably
requested by the Person to whom such Asset is to be transferred in order to
place such Person, insofar as reasonably possible, in the same position as if
such Asset had been transferred as contemplated hereby and so that all the
benefits and burdens relating to such Eldercare Group Assets or such Parent
Group Assets, as the case may be, including possession, use, risk of loss,
potential for gain, and dominion, control, command, management and maintenance
of such Assets, are to inure from and after the Distribution Date to the
Eldercare Group or the Parent Group, respectively, as the case may be.
(c) If and when the Consents or Governmental Approvals, the
absence of which caused the deferral of transfer of any Asset pursuant to
Section 2.6(a), are obtained, the transfer of the applicable Asset shall be
effected in accordance with the terms of this Agreement or the applicable
Ancillary Agreement.
(d) The Person retaining an Asset due to the deferral of the
transfer of such Asset shall not be obligated, in connection with the foregoing,
to expend any money unless the necessary funds are advanced by the Person
entitled to the Asset, other than reasonable out-of-pocket expenses, attorneys'
fees and recording or similar fees, all of which shall be promptly reimbursed by
the Person entitled to such Asset.
2.7. Novation of Eldercare Group Liabilities. (a) Each of Parent,
on the one hand, and SpinCo, on the other hand, at the request of the other,
shall use all reasonable efforts to obtain the consent, substitution, approval,
amendment or release required to novate or assign all obligations under
agreements, leases, licenses and other obligations or Liabilities of any nature
whatsoever (i) that constitute Eldercare Group Liabilities by which any member
of the Parent Group is bound such that such arrangements shall become solely
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Liabilities of SpinCo; and (ii) that constitute Parent Group Liabilities by
which any member of the Eldercare Group is bound such that such arrangements
shall become Liabilities of Parent; provided, however, that with respect to
clauses (i) and (ii), neither Parent nor SpinCo shall be obligated to pay any
consideration therefor to any Governmental Authority or third party from whom
such consents, approvals, substitutions, amendments and releases are requested.
(b) If Parent and SpinCo are unable to obtain, or to cause to be
obtained, any consent, approval, release, substitution, amendment or release
pursuant to Sections 2.7(a)(i) or (ii), (i) the applicable member of the Parent
Group shall continue to be bound by the agreements, leases, licenses and other
obligations that constitute Eldercare Group Liabilities to the extent required
by the terms thereof and, unless not permitted by Applicable Law, SpinCo shall,
as agent or subcontractor for such member of the Parent Group pay, perform and
discharge fully all the obligations or other Liabilities of such member of the
Parent Group thereunder from and after the Distribution Date, and (ii) the
applicable member of the Eldercare Group shall continue to be bound by such
agreements, leases, licenses and other obligations that constitute Parent Group
Liabilities to the extent required by the terms thereof and, unless not
permitted by Applicable Law, Parent shall, as agent or subcontractor for such
member of the Eldercare Group pay, perform and discharge fully all the
obligations or other Liabilities of such member of the Eldercare Group
thereunder from and after the Distribution Date. Each of Parent and SpinCo
shall, without further consideration, pay and remit, or cause to be paid or
remitted, to each other promptly all money, rights and other consideration
received by it or any member of its respective Group in respect of such
performance. If and when any such consent, approval, release, substitution or
amendment shall be obtained or such agreement, lease, license or other rights or
obligations shall otherwise become assignable or able to be novated, Parent or
SpinCo, as the case may be, shall thereafter assign, or cause to be assigned,
all its rights, obligations and other Liabilities thereunder or any rights or
obligations of any member of its respective Group to the other party without
payment of further consideration and Parent or SpinCo, as the case may be,
shall, without the payment of any further consideration, assume such rights and
obligations.
2.8. Satisfaction of Intercompany Debt. As of the time of the
Distribution, all intercompany indebtedness owing between any member of the
ElderCare Group and any member of the Parent Group shall be extinguished, and
Parent shall be deemed to have made a capital contribution to SpinCo in an
amount equal to the net indebtedness owing from the ElderCare Group to the
Parent Group as of such time.
2.9. Credit Agreements; Guarantees. (a) Each of Parent and SpinCo
agrees that it will use all reasonable efforts to obtain, prior to the
Distribution Date, all necessary consents, waivers or amendments to the Existing
Financing Facilities, or to refinance the Existing Financing Facilities, in each
case on terms satisfactory to Parent and SpinCo and to the extent necessary to
permit the Restructuring, the Separation and the Distribution to be consummated
without any breach of the terms of any Existing Financing Facility.
(b) SpinCo shall use all reasonable efforts to cause itself or
one or more of its Affiliates to be substituted in all respects for Parent or
any of its Affiliates, effective as of the Distribution Date, in respect of all
obligations of Parent or any of its Affiliates under the Parent Guarantees.
Subsequent to the Distribution Date, with respect to any uncancelled Parent
Guarantee for which no substitution is effected, (i) SpinCo shall, pursuant to
Section 4.2, indemnify each of Parent and its Affiliates against any Liabilities
under any such Parent Guarantee; and (ii) none of SpinCo and its Subsidiaries
shall renew or extend, or permit to become automatically renewed or extended, or
fail to exercise a right to terminate (if such termination may be effected
without penalty) any obligation underlying a Parent Guarantee if such renewal or
extension would cause a renewal or extension of the associated Parent Guarantee.
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ARTICLE III.
THE DISTRIBUTION
3.1. The Distribution. (a) Subject to Section 3.3, on or prior to
the Distribution Date, Parent will deliver to the Agent, for the benefit of
holders of record of Parent Common Stock on the Record Date, a single stock
certificate endorsed by Parent in blank, representing (or authorize the related
book-entry transfer of) all of the outstanding shares of SpinCo Common Stock
held by Parent, and shall cause the transfer agent for the shares of Parent
Common Stock to instruct the Agent to distribute on the Distribution Date the
appropriate number of shares (or book-entry transfer authorizations) of SpinCo
Common Stock to each such holder or designated transferee or transferees of such
holder, as provided in Section 3.1(b).
(b) Pursuant to Section 3.1(a), in the Distribution the Agent
shall distribute to each record holder of Parent Common Stock on the Record Date
(or such holder's designated transferee or transferees), for each share of
Parent Common Stock held by such holder on the Record Date, a number of shares
of SpinCo Common Stock equal to the Distribution Ratio; provided, however, that
no fractional shares shall be distributed, but in lieu thereof the Agent shall
make such distributions as are provided for in Section 3.1(d).
(c) SpinCo and Parent, as the case may be, will provide to the
Agent all share certificates and information reasonably required in order to
complete the Distribution on the basis specified above.
(d) As soon as practicable after the Distribution Date, Parent
shall direct the Agent to determine the number of whole shares and fractional
shares of SpinCo Common Stock allocable to each holder of record or beneficial
owner of Parent Common Stock as of the Record Date, to aggregate all such
fractional shares and sell the whole shares obtained thereby at the direction of
Parent, in open market transactions or otherwise, in each case at then
prevailing trading prices, and to cause to be distributed to each such holder or
for the benefit of each such beneficial owner, in lieu of any fractional share,
such holder's or owner's ratable share of the proceeds of such sale, after
making appropriate deductions of the amount required to be withheld for federal
income tax purposes and after deducting an amount equal to all brokerage
charges, commissions and transfer taxes attributed to such sale. Parent and the
Agent shall use all reasonable efforts to aggregate the shares of Parent Common
Stock that may be held by any beneficial owner thereof through more than one
account in determining the fractional share allocable to such beneficial owner.
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(e) In accordance with Section 7(h)(ii) of Part B of the Fifth
Article of the Amended and Restated Articles of Incorporation of Parent, at the
time of the Distribution the conversion price of the Series A Convertible
Preferred Stock of Parent shall be adjusted as provided for in such Section
7(h)(ii).
(f) Immediately after the Distribution, SpinCo shall issue the
Unsecured Claimant Shares to the Escrow Account. Parent and SpinCo acknowledge
that the unsecured claims with respect to which Parent is obligated to issue
shares of Parent Common Stock (and deliver any dividend distributions paid on
such stock between Parent's emergence from bankruptcy and its delivery of Parent
Common Stock to a claimant) pursuant to the Bankruptcy relate in part to the
Eldercare Business and in part to the Parent Business. The issuance by SpinCo of
the Unsecured Claimant Shares to the Escrow Account is intended to constitute
SpinCo's contribution to the satisfaction of such unsecured claims.
3.2. Actions Prior to the Distribution. (a) Parent and SpinCo
shall prepare, and SpinCo shall file with the Commission, the Registration
Statement, which shall include or incorporate by reference the Information
Statement. Each of Parent and SpinCo shall use all reasonable efforts to cause
the Registration Statement to become effective under the Exchange Act as soon as
practicable. After the Registration Statement has become effective, Parent shall
mail the Information Statement as promptly as practicable to the Parent
shareholders of record as of the Record Date.
(b) Parent and SpinCo shall cooperate in preparing, filing with
the Commission and causing to become effective any registration statements or
amendments or supplements thereto that are appropriate to reflect the
establishment of or amendments to any employee benefit and other plans
contemplated by the Ancillary Agreements.
(c) Parent and SpinCo shall take all such action as Parent may
determine necessary or appropriate under the securities or blue sky laws of the
United States in connection with the Distribution.
(d) SpinCo shall prepare, file and pursue an application to
permit the listing of the SpinCo Common Stock on Nasdaq NMS.
(e) SpinCo shall effect a stock split with the effect that the
number of shares of SpinCo Common Stock issued and outstanding on the
Distribution Date shall be equal to the number of shares of Parent Common Stock
issued and outstanding as of the Record Date multiplied by the Distribution
Ratio (the "Stock Split"), and on or before the Distribution Date, SpinCo shall,
pursuant to the Stock Split, deliver to Parent the number of shares of SpinCo
Common Stock that are required to effect the Distribution, as certified by the
Agent.
(f) Subject to the satisfaction or waiver of the conditions set
forth in Section 3.3, the Board of Directors of Parent, or such committee of the
Board as shall be authorized and designated by Parent's Board of Directors,
shall establish the Record Date and the Distribution Date and the appropriate
procedures in connection with the Distribution.
(g) Prior to the Distribution, SpinCo and Parent will take all
action necessary to amend and restate the certificate of incorporation and
by-laws of SpinCo, effective as of a time no later than the Distribution Date,
to be substantially in the forms set forth in Exhibit A hereto (the "SpinCo
Constituent Documents").
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(h) Prior to, or simultaneously with, the Distribution Date,
Parent and SpinCo each shall take such actions as are necessary to cause the
SpinCo Board of Directors to be comprised as of the Distribution Date of the
individuals set forth on Schedule 3.2(h).
(i) Prior to the Distribution, SpinCo shall pay to Parent the
cash proceeds from SpinCo's new financing facilities less such amount, to be
determined in good faith by the parties, as is reasonably required for the
ElderCare Group to meet its short-term working capital needs after the
Distribution Date.
3.3. Conditions to Distribution. The Distribution shall be
conditioned upon the satisfaction, or the waiver in whole or in part by Parent,
of the other conditions set forth below:
(a) the Board of Directors of Parent shall have declared a
distribution payable to the holders of Parent Common Stock of shares of SpinCo
Common Stock and in connection with the declaration of such distribution shall
have determined that the declaration and payment of such distribution is in the
best interests of Parent and the holders of Parent Common Stock;
(b) (i) Parent shall have received the rulings from the Internal
Revenue Service requested in Parent's documents submitted to the Internal
Revenue Service relating to the tax treatment of the Separation and the
Distribution and related transactions, such rulings shall be satisfactory to
Parent in its sole and absolute discretion and no event or circumstance shall
have occurred that could reasonably be expected to have any adverse effect on
such rulings; or (ii) Parent shall otherwise have satisfied itself as to the tax
treatment of the Separation and the Distribution and related transactions;
(c) all material Governmental Approvals and Consents necessary
to consummate the Restructuring, the Separation and the Distribution in the
manner contemplated by this Agreement and the Ancillary Agreements shall have
been obtained and be in full force and effect;
(d) no order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Restructuring, the Separation and the Distribution shall be
in effect and no other event outside the control of Parent shall have occurred
or failed to occur that prevents the consummation of the Distribution;
(e) the SpinCo Constituent Documents shall have been amended and
restated as set forth in Section 3.2(g);
(f) the Registration Statement shall have become effective with
the Commission under the Exchange Act and no stop order with respect thereto
shall be in effect and the Information Statement shall have been mailed to all
Parent stockholders of record as of the Record Date and the requisite waiting
period between such mailing and the Distribution Date shall have expired;
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(g) the SpinCo Common Stock to be delivered in the Distribution
shall have been approved for listing on the Nasdaq NMS, subject to official
notice of issuance;
(h) (i) the Restructuring shall have been completed and (ii) the
transfer of Assets and the assumption of Liabilities contemplated by this
Agreement in connection with the Separation shall have been effected in all
material respects;
(i) the Ancillary Agreements shall have been duly executed and
delivered by the parties thereto;
(j) With respect to each Existing Financing Facility, Parent
shall either (i) have obtained any consent, waiver or amendment necessary to
avoid any default, event of default, penalty or other adverse consequence under
such Existing Financing Facility that would otherwise occur as a result of the
Separation, the Distribution or any other action or event contemplated by this
Agreement or any Ancillary Agreement or (ii) have refinanced such Existing
Financing Facility by terminating and replacing such Existing Financing
Facility, in each case on terms satisfactory to Parent;
(k) Parent shall have been released from its obligations under
each Parent Guarantee on terms satisfactory to Parent;
(l) the SpinCo New Credit Facility shall be in effect and all
conditions to borrowing thereunder (other than any conditions concerning
consummation of the Distribution and the transfer of Assets and Liabilities
described hereunder) shall have been satisfied;
(m) SpinCo shall have effected the Stock Split; and
(n) after giving effect to all Governmental Approvals and
Consents obtained, the consummation of the Separation and the Distribution shall
not violate, conflict with, result in a breach of any provision under,
constitute a default (or an event which, with or without notice or lapse of
time, or both, would constitute a default) under, result in the termination of
or a right of termination or cancellation under, accelerate or result in a right
of acceleration of the performance required by, or require any approval, waiver
or consent under, any contract, indenture or other financing agreement or plan
of Parent, except in each case as would not have a material adverse effect on
the Parent Group or the Eldercare Group.
The foregoing conditions are for the sole benefit of Parent and shall not give
rise to or create any duty on the part of Parent or the Parent Board of
Directors to waive or not waive any such condition.
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ARTICLE IV.
MUTUAL RELEASES; INDEMNIFICATION
4.1. Release of Pre-Closing Claims. (a) Except as provided in
Section 4.1(c), effective as of the Distribution Date, SpinCo does hereby, for
itself and each other member of the ElderCare Group, their respective successors
and assigns, and all Persons who at any time prior to the Distribution Date have
been shareholders, directors, officers, agents or employees of any member of the
ElderCare Group (in each case, in their respective capacities as such), remise,
release and forever discharge each of Parent, the members of the Parent Group,
their respective successors and assigns, and all Persons who at any time prior
to the Distribution Date have been shareholders, directors, officers, agents or
employees of Parent or any member of the Parent Group (in each case, in their
respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any acts or events occurring or failing to occur or
alleged to have occurred or to have failed to occur or any conditions existing
or alleged to have existed on or before the Distribution Date, including in
connection with the transactions and all other activities to implement any of
the Separation and the Distribution.
(b) Except as provided in Section 4.1(c), effective as of the
Distribution Date, Parent does hereby, for itself and each other member of the
Parent Group, their respective successors and assigns, and all Persons who at
any time prior to the Distribution Date have been shareholders, directors,
officers, agents or employees of any member of the Parent Group (in each case,
in their respective capacities as such), remise, release and forever discharge
SpinCo, the members of the ElderCare Group, their successors and assigns, and
all Persons who at any time prior to the Distribution Date have been
shareholders, directors, officers, agents or employees of SpinCo or any member
of the ElderCare Group (in each case, in their respective capacities as such),
and their respective heirs, executors, administrators, successors and assigns,
from any and all Liabilities whatsoever, whether at law or in equity (including
any right of contribution), whether arising under any contract or agreement, by
operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur or alleged to have occurred or to have failed to
occur or any conditions existing or alleged to have existed on or before the
Distribution Date, including in connection with the transactions and all other
activities to implement any of the Separation and the Distribution.
(c) Nothing contained in Section 4.1(a) or (b) shall impair any
right of any Person to enforce this Agreement, any Ancillary Agreement or any
agreements, arrangements, commitments or understandings that are specified in
Section 2.2(b), in each case in accordance with its terms. Nothing contained in
Section 4.1(a) or (b) shall release any Person from:
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(i) any Liability provided in or resulting from any
agreements, arrangements, commitments or understandings among any
members of the Parent Group or the ElderCare Group that is
specified in Section 2.2(b), including the Ancillary Agreements,
and any other Liability specified in such Section 2.2(b) or which
the parties specifically agree with survive the Distribution Date;
(ii) any Liability, contingent or otherwise, assumed, transferred,
assigned or allocated to the Group of which such Person is a
member in accordance with, or any other Liability of any member of
any Group under, this Agreement or any Ancillary Agreement;
(ii) any Liability that the parties may have with respect
to indemnification or contribution pursuant to this Agreement for
claims brought against the parties by third Persons, which
Liability shall be governed by the indemnification provisions of
hereof and, if applicable, the appropriate provisions of the
Ancillary Agreements; or
(iii) any Liability the release of which would result in the
release of any Person other than a Person released pursuant to
this Section 4.1.
(d) SpinCo shall not make, and shall not permit any member of
the ElderCare Group to make, any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or any
indemnification, against Parent or any member of the Parent Group, or any other
Person released pursuant to Section 4.1(a), with respect to any Liabilities
released pursuant to Section 4.1(a). Parent shall not, and shall not permit any
member of the Parent Group, to make any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or any
indemnification, against SpinCo or any member of the ElderCare Group, or any
other Person released pursuant to Section 4.1(b), with respect to any
Liabilities released pursuant to Section 4.1(b).
(e) At any time, at the request of any other party, each party
shall cause each member of its respective Group to execute and deliver releases
reflecting the provisions of this Section 4.1.
4.2. Indemnification by SpinCo. (a) Except as provided in Section
4.3, SpinCo shall indemnify, defend and hold harmless Parent, each member of the
Parent Group and each of their respective directors, officers, authorized agents
and employees, and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "Parent Indemnitees"), from and against any
and all Losses of the Parent Indemnitees relating to, arising out of or
resulting from any of the following items (without duplication):
(i) the Eldercare Group, any Eldercare Group Liability or
any Eldercare Group Asset, including any failure of SpinCo or any
other member of the Eldercare Group or any other Person to pay,
perform or otherwise promptly discharge any Eldercare Group
Liabilities in accordance with their respective terms, whether
prior to, on or after the Distribution Date;
(ii) the operation of the Eldercare Business at any time
prior to the Distribution Date, and the operation of the business
of SpinCo and its Subsidiaries at any time on or after the
Distribution Date, including without limitation relating to
personal injury, products liability, professional liability,
property damage, pricing, Environmental Law violations, health,
safety, sanitation, workers compensation;
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(iii) Medicare, Medicaid or any other governmental or
quasi-governmental reimbursement program and relating to the
Eldercare Business as conducted at any time prior to the
Distribution Date, or the business of SpinCo and its Subsidiaries
on or after the Distribution Date, including in connection with
any purported overpayment of reimbursements for patient costs by
any Governmental Authority;
(iv) the failure by any Person employed in the Eldercare
Business at any time prior to the Distribution Date or employed by
SpinCo or any of its Subsidiaries on or after the Distribution
Date, or any Person acting as a representative or agent of Parent
or any of its Subsidiaries in connection with the Eldercare
Business prior to the Distribution Date or acting as a
representative or agent of SpinCo and its Subsidiaries on or after
the Distribution Date, to comply with any applicable federal or
state statutes, including the applicable rules and regulations in
the Medicare and Medicaid programs; and
(v) any breach by SpinCo or any member of the Eldercare
Group of (x) this Agreement or (y) any of the Ancillary Agreements
that do not by their terms provide for such indemnification.
(b) The foregoing notwithstanding, each of the Eldercare Group,
on the one side, and the Parent Group, on the other side, shall be responsible
for one-half of any (i) Liabilities relating to, arising out of or resulting
from the Bankruptcy Plan and/or the bankruptcies associated therewith (except as
contemplated by Section 3.1(f), and excluding any such bankruptcy-related
liabilities that are specifically allocated to either party under this Agreement
or the Schedules hereto) or (ii) Losses relating to, arising out of or resulting
from any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, in any case
contained in the Registration Statement.
4.3. Indemnification by Parent. (a) Parent shall indemnify,
defend and hold harmless SpinCo, each member of the Eldercare Group and each of
their respective directors, officers and employees, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Eldercare Indemnitees"), from and against any and all Losses of the Eldercare
Indemnitees relating to, arising out of or resulting from any of the following
items (without duplication):
(i) the Parent Group, any Parent Group Liability or any
Parent Group Asset, including any failure of Parent or any other
member of the Parent Group or any other Person to pay, perform or
otherwise promptly discharge any Parent Group Liabilities in
accordance with their respective terms, whether prior to, on or
after the Distribution Date;
(ii) the operation of the Parent Business at any time prior
to the Distribution Date, and the operation of the business of
Parent and its Subsidiaries at any time on or after the
Distribution Date, including without limitation relating to
personal injury, products liability, professional liability,
property damage, pricing, Environmental Law violations, health,
safety, sanitation, workers compensation;
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(iii) Medicare, Medicaid or any other governmental or
quasi-governmental reimbursement program and relating to the
Parent Business as conducted at any time prior to the Distribution
Date, or the business of Parent and its Subsidiaries on or after
the Distribution Date, including in connection with any purported
overpayment of reimbursements for patient costs by any
Governmental Authority;
(iv) the failure by any Person employed in the Parent
Business at any time prior to the Distribution Date or employed by
Parent or any of its Subsidiaries on or after the Distribution
Date, or any Person acting as a representative or agent of Parent
or any of its Subsidiaries in connection with the Parent Business
prior to the Distribution Date or acting as a representative or
agent of Parent and its Subsidiaries on or after the Distribution
Date, to comply with any applicable federal or state statutes,
including the applicable rules and regulations in the Medicare and
Medicaid programs; and
(v) any breach by Parent or any member of the Parent Group
of (x) this Agreement or (y) any of the Ancillary Agreements that
do not by their terms provide for such indemnification.
(c) The foregoing notwithstanding, each of the Eldercare Group,
on the one side, and the Parent Group, on the other side, shall be responsible
for one-half of any (i) Liabilities relating to, arising out of or resulting
from the Bankruptcy Plan and/or the bankruptcies associated therewith (except as
contemplated by Section 3.1(f), and excluding any such bankruptcy-related
liabilities that are specifically allocated to either party under this Agreement
or the Schedules hereto) or (ii) Losses relating to, arising out of or
resulting from any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
any case contained in the Registration Statement.
4.4. Indemnification Obligations Net of Insurance Proceeds and
Other Amounts. (a) The parties intend that any Liability subject to
indemnification pursuant to this Article IV will be net of Insurance Proceeds.
Accordingly, the amount which any party (an "Indemnifying Party") is required to
pay to any Person entitled to indemnification hereunder (an "Indemnitee") will
be reduced by any Insurance Proceeds theretofore actually recovered by or on
behalf of the Indemnitee in reduction of the related Liability. If an Indemnitee
receives a payment (an "Indemnity Payment") required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the Insurance Proceeds had
been received, realized or recovered before the Indemnity Payment was made.
(b) An insurer who would otherwise be obligated to pay any claim
shall not be relieved of the responsibility with respect thereto or, solely by
virtue of the indemnification provisions of this Agreement, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to a "windfall" (i.e., a
benefit it would not be entitled to receive in the absence of the
indemnification provisions) by virtue of the indemnification provisions of this
Agreement.
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(c) The parties agree to act in good faith and to use all
reasonable efforts to preserve and maximize the insurance benefits due to be
provided under all policies of insurance in effect on or prior to the
Distribution Date and to cooperate with one another as necessary to permit each
other to access or obtain the benefits under those policies; provided, however,
that nothing in this Section 4.4(c) shall be construed to prevent any party or
any other Person from asserting claims for insurance benefits or accepting
insurance benefits provided by the policies. The parties agree to exchange
information upon reasonable request of the other party regarding requests that
they have made for insurance benefits, notices of claims, occurrences and
circumstances that they have submitted to the insurance companies or other
entities managing the policies, payments they have received from the insurance
companies, including any agreements to make payments, and any other information
that the parties may need to determine the status of the insurance policies and
the continued availability of benefits thereunder.
(d) (i) Each party agrees to use all reasonable efforts to
collect any Insurance Proceeds that may be applicable to any Third Party Claim
or other claim that could give rise to a right of indemnification hereunder (it
being agreed that any costs of collection shall be indemnifiable hereunder to
the same extent as the underlying Third Party Claim or other claim); (ii)
without limiting the foregoing, the parties agree to cooperate in connection
with the submission of any claims and, to the extent permitted under the
applicable policy or other agreement, to permit the Indemnifying Party to pursue
claims against the applicable insurance company or other Person and (iii) the
provisions of this Section 4.4(d) shall apply to any Insurance Proceeds that may
be applicable to the costs of defense as well as to any ultimate Liability.
(e) Any Insurance Proceeds recovered at any time shall be
applied in the manner set forth in Section 4.4(a).
4.5. Procedures for Indemnification of Third Party Claims.(a) If
an Indemnitee shall receive notice or otherwise learn of the assertion by a
Person (including any Governmental Authority) who is not a member of the Parent
Group or the Eldercare Group of any claim or of the commencement by any such
Person of any Action (collectively, a "Third Party Claim") with respect to which
an Indemnifying Party may be obligated to provide indemnification to such
Indemnitee pursuant to Section 4.2 or 4.3, any other Section of this Agreement
or any Ancillary Agreement, such Indemnitee shall give such Indemnifying Party
and, if Parent is not the Indemnifying Party, Parent prompt written notice
thereof which notice shall describe the Third Party Claim in reasonable detail.
The foregoing notwithstanding, the failure of any Indemnitee or other Person to
give notice as provided in this Section 4.5(a) shall not relieve the related
Indemnifying Party of its obligations under this Article IV, except to the
extent that such Indemnifying Party is actually prejudiced by such failure to
give notice.
(b) An Indemnifying Party may elect to defend (and, subject to
the remainder of this Section 4.5(b) and Section 4.5(e) and unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party's own expense and by such
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Indemnifying Party's own counsel, any Third Party Claim. Within 30 days after
the receipt of notice from an Indemnitee in accordance with Section 4.5(a) (or
sooner, if the nature of such Third Party Claim so requires), the Indemnifying
Party shall notify the Indemnitee of its election whether the Indemnifying Party
will assume responsibility for defending such Third Party Claim, which election
shall specify any reservations or exceptions. After notice from an Indemnifying
Party to an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in the next sentence. The Indemnifying Party
shall not have the right to admit Liability on behalf of the Indemnitee and
shall not compromise or settle a Third Party Claim to the extent the compromise
or settlement could prejudice the interests of the Indemnitee, without the
express prior consent of the Indemnitee. In the event that the Indemnifying
Party has elected to assume the defense of the Third Party Claim but has
specified, and continues to assert, any reservations or exceptions in such
notice, then, in any such case, the reasonable fees and expenses of one separate
counsel for all Indemnitees shall be borne by the Indemnifying Party.
(c) If an Indemnifying Party elects not to assume responsibility
for defending a Third Party Claim, or fails to notify an Indemnitee of its
election as provided in Section 4.5(b), such Indemnitee may defend such Third
Party Claim at the cost and expense of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume the
defense of the Third Party Claim in accordance with the terms of this Agreement,
no Indemnitee may settle or compromise any Third Party Claim without the consent
of the Indemnifying Party.
(e) No Indemnifying Party shall consent to entry of any judgment
or enter into any settlement of the Third Party Claim without the consent of the
Indemnitee (which shall not be unreasonably withheld) if the effect thereof is
to permit any injunction, declaratory judgment, other order or other
non-monetary relief to be entered, directly or indirectly, against any
Indemnitee.
(f) The parties may enter into one or more additional agreements
providing for procedures and other matters relating to the handling of Actions
and related matters which shall be deemed Ancillary Agreements for purposes of
this Agreement.
4.6. Additional Matters. (a) Any claim on account of a Loss that
does not result from a Third Party Claim shall be asserted by written notice
given by the Indemnitee to the related Indemnifying Party. Such Indemnifying
Party shall have a period of 30 days after the receipt of such notice within
which to respond thereto. If such Indemnifying Party does not respond within
such 30-day period, such Indemnifying Party shall be deemed to have accepted
responsibility to make payment. If such Indemnifying Party does not respond
within such 30-day period or rejects such claim in whole or in part, such
Indemnitee shall be free to pursue such remedies as may be available to such
party as contemplated by this Agreement and the Ancillary Agreements.
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(b) In the event of payment by or on behalf of any
Indemnifying Party to any Indemnitee in connection with any Third Party Claim,
such Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right, defense or claim relating to such Third Party
Claim against any claimant or plaintiff asserting such Third Party Claim or
against any other person. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right, defense or claim.
(c) In the event of an Action in which the Indemnifying
Party is not a named defendant, if either the Indemnified Party or Indemnifying
Party shall so request, the parties shall endeavor to substitute the
Indemnifying Party for the named defendant, if at all practicable. If such
substitution or addition cannot be achieved for any reason or is not requested,
the named defendant shall allow the Indemnifying Party to manage the Action as
set forth in this Section.
(d) Each of Parent and SpinCo will use all reasonable
efforts not to take, and to cause its respective Subsidiaries not to take, any
action after the Distribution Date which may reasonably be expected to have the
effect of increasing any Indemnitee's Losses or any party's indemnification
obligation hereunder, and each of Parent and SpinCo will use all reasonable
efforts to take, and to cause its respective Subsidiaries to take, at the other
party's expense, such action as the other party may reasonably request to
mitigate all such Losses and the indemnification obligation hereunder, provided
such actions do not unreasonably interfere with the conduct of Parent's or
SpinCo's, as the case may be, business.
4.7. Remedies Cumulative. The remedies provided in this Article
IV shall be cumulative and shall not preclude assertion by any Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party.
4.8. Tax Liabilities. The above provisions of this Article IV
shall not apply to indemnification of Tax Liabilities, and all Tax Liabilities
of any member of the Parent Group or the Eldercare Group shall be indemnified in
accordance with the provisions of the Tax Sharing Agreement.
4.9. Survival of Indemnities. The rights and obligations of each
of Parent and SpinCo and their respective Indemnitees under this Article IV (and
any rights to indemnification pursuant to the Tax Sharing Agreement) shall
survive the sale or other transfer by any party of any Assets or businesses or
the assignment by it of any Liabilities.
ARTICLE V.
INSURANCE
5.1. Insurance Matters. (a) Except as may otherwise be provided
in any Ancillary Agreement, the parties intend that to the extent permitted
under the terms of any applicable policy of insurance, SpinCo and each other
member of the Eldercare Group shall be successors-in-interest to all rights that
any member of the Eldercare Group may have as of the Distribution Date as a
subsidiary, affiliate, division or department of Parent prior to the
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Distribution Date under any policy of insurance issued to Parent by any
insurance carrier or under any agreements related to such policies executed and
delivered prior to the Distribution Date, including any rights such member of
the Eldercare Group may have, as an insured or additional named insured,
subsidiary, affiliate, division or department, to avail itself of any such
policy of insurance or any such agreements related to such policies as in effect
prior to the Distribution Date. With respect to policies of insurance assigned
from Parent to SpinCo in anticipation of the Separation, except as may otherwise
be provided in any Ancillary Agreement, the parties intend that to the extent
permitted under the terms of any such assigned policies of insurance, Parent and
each other member of the Parent Group shall be successors-in-interest to all
rights that any member of the Parent Group may have as of the Distribution Date
as an affiliate of SpinCo prior to the Distribution Date under any such policies
of insurance or under any agreements related to such policies, including any
rights such member of the Parent Group may have, as an insured or additional
named insured or affiliate to avail itself of any such policy of insurance or
any such agreements related to such policies. The foregoing notwithstanding,
Parent acknowledges that SpinCo intends to amend each such insurance policy as
of the Distribution Date to remove the members of the Parent Group and their
respective employees, officers and directors as insured parties thereunder in
respect of periods from and after the Distribution Date and that none of the
foregoing may be entitled to make any claims for insurance thereunder either to
the extent such claims are based upon conduct or injury or other events
occurring from and after the Distribution Date or to the extent such claims are
precluded by the terms of any "claims made" policies. Except for the limitations
contemplated by the preceding sentence and except as otherwise arise pursuant to
Section 5.1(b), the provisions of this Agreement are not intended to relieve any
insurer of any Liability under any policy. No member of the Parent Group or the
Eldercare Group shall be deemed to have made any representation or warranty as
to the availability of any such insurance policy.
(b) Parent agrees to obtain directors and officers, outside
directors and officers, and fiduciary liability run-off insurance from third
party commercial insurers in dollar amounts equal to those amounts maintained by
Parent for all its insureds (including but not limited to SpinCo) as of the
Distribution Date (it being agreed that insureds of Parent and SpinCo shall also
continue to be able to claim under such policies). Coverage under these policies
shall apply to all insureds of Parent and its Subsidiaries for claims that are
reported subsequent to the Distribution Date and that relate to acts that
occurred until the Distribution Date. Such policies shall remain in force for a
period of six years following the Distribution Date.
(c) Subject to Section 5.1(b) relating to run off policies, in
no event shall Parent or any other member of the Parent Group have any liability
or obligation whatsoever to any member of the Eldercare Group in the event that
any insurance policy or other contract of insurance shall be terminated or
otherwise cease to be in effect for any reason, shall be unavailable or
inadequate to cover any Liability of any member of the Eldercare Group for any
reason whatsoever or shall not be renewed or extended beyond the current
expiration date. In no event shall ElderCare or any other member of the
ElderCare Group have any liability or obligation whatsoever to any member of the
Parent Group in the event that any insurance policy or other contract of
insurance shall be terminated or otherwise cease to be in effect for any reason,
shall be unavailable or inadequate to cover any Liability of any member of the
Parent Group for any reason whatsoever or shall not be renewed or extended
beyond the current expiration date.
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(d) This Agreement shall not be considered as an attempted
assignment of any policy of insurance or as a contract of insurance and shall
not be construed to waive any right or remedy of any member of the Parent Group
or the Eldercare Group against an insurer in respect of any insurance policy or
any other contract of insurance.
(e) Subject to Section 5.1(b) relating to run off policies,
SpinCo does hereby, for itself and each other member of the Eldercare Group,
agree that no member of the Parent Group shall have any Liability whatsoever as
a result of (i) the insurance policies and practices of Parent and its
Affiliates as in effect at any time prior to the Distribution Date, including as
a result of the level or scope of any such insurance, the creditworthiness of
any insurance carrier, the terms and conditions of any policy, the adequacy or
timeliness of any notice to any insurance carrier with respect to any claim or
potential claim or otherwise or (ii) the absence or failure of any such
insurance policies or practices.
(f) Nothing in this Agreement shall be deemed to restrict any
member of the Eldercare Group or the Parent Group from acquiring at its own
expense any other insurance policy in respect of any Liabilities or covering any
period.
ARTICLE VI.
EXCHANGE OF INFORMATION; CONFIDENTIALITY
6.1. Provision of Corporate Records; Agreement for Exchange of
Information. (a) Prior to or as promptly as practicable after the Distribution
Date or from time to time as requested by the Eldercare Group, the Parent Group
shall deliver to the Eldercare Group to the extent in possession of any member
of the Parent Group: (i) all corporate books and records of the Eldercare Group;
(ii) originals or, at Parent's election, copies of all other corporate records
and books of the Parent Group relating to the Eldercare Group, the Eldercare
Group Assets, the Eldercare Group Liabilities, the Eldercare Business as
conducted on or prior to the Distribution Date or the Ancillary Agreements;
including without limitation in each case, all active agreements, active
litigation files and government filings; and (iii) copies of any and all
Eldercare Policies. From and after the Distribution Date, all such books,
records and copies (where copies are delivered in lieu of originals) whether or
not delivered shall be the property of the Eldercare Group; provided, however,
that all Information contained in such books, records or copies that relates to
the Parent Group, the Parent Group Assets, the Parent Group Liabilities or the
Ancillary Agreements shall be subject to the applicable confidentiality and
restricted use provisions, if any, contained in this Agreement or the Ancillary
Agreements and any confidentiality restrictions imposed by Applicable Law.
Parent, if it so elects, may retain copies of any original books and records
delivered to the Eldercare Group along with those original books and records of
the Parent Group authorized herein to be retained; provided, however, that all
such Information contained in such books, records or copies (whether or not
delivered to the Eldercare Group) relating to the Eldercare Group, the Eldercare
Group Assets, the Eldercare Group Liabilities, the Eldercare Business or the
Ancillary Agreements shall be subject to the applicable confidentiality
provisions and restricted use provisions, if any, contained in this Agreement or
the Ancillary Agreements and any confidentiality restrictions imposed by
Applicable Law.
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(b) Prior to or as promptly as practicable after the
Distribution Date or from time to time as requested by the Parent Group, the
Eldercare Group shall deliver to the Parent Group to the extent in possession of
any member of the Eldercare Group: (i) all corporate books and records of the
Parent Group; and (ii) originals or, at Eldercare's election, copies of all
other corporate records and books of the Eldercare Group relating to the Parent
Group, the Parent Group Assets, the Parent Group Liabilities, the Parent
Business as conducted on or prior to the Distribution Date or the Ancillary
Agreements; including without limitation in each case, all active agreements,
active litigation files and government filings. From and after the Distribution
Date, all such books, records and copies (where copies are delivered in lieu of
originals) whether or not delivered shall be the property of the Parent Group;
provided, however, that all Information contained in such books, records or
copies that relates to the Eldercare Group, the Eldercare Group Assets, the
Eldercare Group Liabilities or the Ancillary Agreements shall be subject to the
applicable confidentiality and restricted use provisions, if any, contained in
this Agreement or the Ancillary Agreements and any confidentiality restrictions
imposed by Applicable Law. Eldercare, if it so elects, may retain copies of any
original books and records delivered to the Parent Group along with those
original books and records of the Eldercare Group authorized herein to be
retained; provided, however, that all such Information contained in such books,
records or copies (whether or not delivered to the Parent Group) relating to the
Parent Group, the Parent Group Assets, the Parent Group Liabilities, the Parent
Business or the Ancillary Agreements shall be subject to the applicable
confidentiality provisions and restricted use provisions, if any, contained in
this Agreement or the Ancillary Agreements and any confidentiality restrictions
imposed by Applicable Law.
(c) Each of Parent and SpinCo, on behalf of its respective
Group, agrees to use all reasonable efforts to provide, or cause to be provided,
to the other Group, at any time before or after the Distribution Date, as soon
as reasonably practicable after written request therefor, any Information in the
possession or under the control of such respective Group which the requesting
party reasonably needs (i) to comply with reporting, disclosure, filing or other
requirements imposed on the requesting party (including under applicable
securities laws) by a Governmental Authority having jurisdiction over the
requesting party, (ii) for use in any other judicial, regulatory, administrative
or other proceeding or in order to satisfy audit, accounting, claims,
regulatory, litigation or other similar requirements, (iii) to comply with its
obligations under this Agreement or any Ancillary Agreement, or (iv) for any
other reasonable purpose; provided, however, that in the event that any party
determines that any such provision of Information could be commercially
detrimental, violate any Applicable Law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence. Parent and SpinCo intend that any transfer of Information
that would otherwise be within the attorney-client privilege shall not operate
as a waiver of any potentially applicable privilege.
(d) After the Distribution Date, each of Parent and SpinCo shall
provide, or cause to be provided, to the other party, at no charge to the other
party, all financial and other data and information as the other party
determines necessary or advisable in order to prepare its financial statements
and reports or filings with the Commission.
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(e) The provisions of this Section 6.1 shall not apply to any
Information to the extent it is based on Information created after the
Distribution Date.
(f) The foregoing provisions of this Section 6.1
notwithstanding, Section 8(a) of the Tax Sharing Agreement shall govern the
exchange of Information with respect to Taxes, and the provisions of this
Section 6.1 shall not be applicable thereto.
6.2. Ownership of Information. Any Information owned by one Group
that is provided to a requesting party pursuant to Section 6.1(c) or Section
6.1(d) shall be deemed to remain the property of the providing party. Unless
specifically set forth herein, nothing contained in this Agreement shall be
construed as granting or conferring rights of license or otherwise in any such
Information.
6.3. Compensation for Providing Information. The party requesting
such Information agrees to reimburse the other party for the reasonable costs,
if any, of creating, gathering and copying such Information, to the extent that
such costs are incurred for the benefit of the requesting party. Except as may
be otherwise specifically provided elsewhere in this Agreement, any Ancillary
Agreement or in any other agreement between the parties, such costs shall be
computed in accordance with the providing party's standard methodology and
procedures.
6.4. Record Retention. To facilitate the possible exchange of
Information pursuant to this Article VI and other provisions of this Agreement
after the Distribution Date, the parties agree to use all reasonable efforts to
retain all Information in their respective possession or control on the
Distribution Date to the extent such retention is required by the policies of
Parent as in effect on the Distribution Date. In addition, no party will
destroy, or permit any of its Subsidiaries to destroy, any Information which the
other party may have the right to obtain pursuant to this Agreement prior to the
seventh anniversary of the date hereof without first using all reasonable
efforts to notify the other party of the proposed destruction and giving the
other party the opportunity to take possession of such information prior to such
destruction; provided, however, that (a) in the case of any Information relating
to Environmental Liabilities, such period shall be extended to the expiration of
the applicable statute of limitations (giving effect to any extensions thereof)
and (b) Section 8(b) of the Tax Sharing Agreement shall govern the retention of
Information with respect to Taxes, and the provisions of this Section 6.4 shall
not be applicable thereto.
6.5. Limitation of Liability. No party shall have any liability
to any other party in the event that any Information exchanged or provided
pursuant to this Agreement which is an estimate or forecast, or which is based
on an estimate or forecast, is found to be inaccurate, in the absence of willful
misconduct by the party providing such Information. No party shall have any
liability to any other party if any Information is destroyed after reasonable
efforts by such party to comply with the provisions of Section 6.4.
6.6. Other Agreements Providing for Exchange of Information.
The rights and obligations granted under this Article VI are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of Information set forth in any Ancillary
Agreement.
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6.7. Production of Witnesses; Records; Cooperation (a) After the
Distribution Date, except in the case of an adversarial Action by one party
against the other party (which shall be governed by such discovery rules as may
be applicable thereto), each party hereto shall use all reasonable efforts to
make available to each other party, upon written request, the former, current
and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other
documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
any Action in which the requesting party may from time to time be involved,
regardless of whether such Action is a matter with respect to which
indemnification may be sought hereunder. The requesting party shall bear all
costs and expenses in connection therewith.
(b) If an Indemnifying Party chooses to defend or to seek to
compromise or settle any Third Party Claim, each other party shall use all
reasonable efforts to make available, upon written request, the former, current
and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other
documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
such defense, settlement or compromise, or such prosecution, evaluation or
pursuit, as the case may be, and shall otherwise cooperate in such defense,
settlement or compromise, or such prosecution, evaluation or pursuit, as the
case may be.
(c) Without limiting the foregoing, the parties shall cooperate
and consult to the extent reasonably necessary with respect to any Actions.
(d) Without limiting any provision of this Section 6.7, each of
the parties agrees to cooperate, and to cause each member of its respective
Group to cooperate, with each other in the defense of any infringement or
similar claim with respect to any intellectual property and shall not claim to
acknowledge, or permit any member of its respective Group to claim to
acknowledge, the validity or infringing use of any intellectual property of a
third Person in a manner that would hamper or undermine the defense of such
infringement or similar claim.
(e) The obligation of the parties to provide witnesses pursuant
to this Section 6.7 is intended to be interpreted in a manner so as to
facilitate cooperation and shall include the obligation to provide as witnesses
inventors, directors, officers, employees, other personnel and agents without
regard to whether any such individual could assert a possible business conflict
(subject to the exception set forth in the first sentence of Section 6.7(a)).
(f) In connection with any matter contemplated by this Section
6.7, the parties will enter into a mutually acceptable joint defense agreement
as necessary in specific Actions or with regard to specific claims so as to
maintain to the extent practicable any applicable attorney-client privilege or
work product immunity of any member of any Group.
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6.8. Confidentiality. (a) Subject to Section 6.9, each of Parent
and SpinCo, on behalf of itself and each member of its respective Group, agrees
to hold, and to cause its respective directors, officers, employees, agents,
accountants, counsel and other advisors and representatives to hold, in strict
confidence, with at least the same degree of care that applies to Parent's
confidential and proprietary information pursuant to policies in effect as of
the Distribution Date, all Information concerning each such other Group that is
either in its possession (including Information in its possession prior to any
of the date hereof or the Distribution Date) or furnished by any such other
Group or its respective directors, officers, employees, agents, accountants,
counsel and other advisors and representatives at any time pursuant to this
Agreement, any Ancillary Agreement or otherwise, and shall not use any such
Information other than for such purposes as shall be expressly permitted
hereunder or thereunder, except, in each case, to the extent that such
Information has been (i) in the public domain through no fault of such party or
any member of such Group or any of their respective directors, officers,
employees, agents, accountants, counsel and other advisors and representatives,
(ii) later lawfully acquired from other sources by such party (or any member of
such party's Group) which sources are not themselves bound by a confidentiality
obligation), or (iii) independently generated without reference to any
proprietary or confidential Information of the other party.
(b) Each party agrees not to release or disclose, or permit to
be released or disclosed, any such Information to any other Person, except its
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives who need to know such Information (who shall be advised of
their obligations hereunder with respect to such Information), except in
compliance with Section 6.9. Without limiting the foregoing, when any
Information is no longer needed for the purposes contemplated by this Agreement
or any Ancillary Agreement, each party will promptly after request of the other
party either return to the other party all Information in a tangible form
(including all copies thereof and all notes, extracts or summaries based
thereon) or certify to the other party that it has destroyed such Information
(and such copies thereof and such notes, extracts or summaries based thereon).
(c) Anything in this Agreement or the Ancillary Agreements to the
contrary notwithstanding, Parent and SpinCo agree that each party (and each
employee, representative or other agent of such party) may disclose to any and
all persons, without limitation of any kind, the "tax treatment" and "tax
structure" (as those terms are defined in Treasury Regulation Section 1.6011-4)
of the transactions contemplated by this Agreement and the Ancillary Agreements
and all materials of any kind (including opinions or other tax analyses) that
are provided to such person relating to such tax treatment and tax structure.
6.9. Protective Arrangements. In the event that any party or any
member of its Group either determines on the advice of its counsel that it is
required to disclose any Information pursuant to Applicable Law or receives any
demand under lawful process or from any Governmental Authority to disclose or
provide Information of any other party (or any member of any other party's
Group) that is subject to the confidentiality provisions of this Agreement, such
party shall notify the other party prior to disclosing or providing such
Information and shall cooperate at the expense of the requesting party in
seeking any reasonable protective arrangements requested by such other party.
Subject to the foregoing, the Person that received such request may thereafter
disclose or provide Information to the extent required by such Applicable Law
(as so advised by counsel) or by lawful process or such Governmental Authority.
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ARTICLE VII.
FURTHER ASSURANCES AND ADDITIONAL COVENANTS
7.1. Further Assurances. (a) In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use all reasonable efforts on and after the Distribution Date, to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things, reasonably necessary, proper or advisable under Applicable Law and
applicable agreements to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements. Each party shall
appoint one or more individuals to act as its agent and attorney in fact with
full right and power to execute any instruments necessary to transfer any Asset
to any other Person and shall, on or prior to the Distribution Date, notify the
other parties hereto of the identity of any such individual.
(b) Without limiting the foregoing, prior to, on and after the
Distribution Date, each party hereto shall cooperate with the other party, and
without any further consideration, but at the expense of the requesting party,
to execute and deliver, or use all reasonable efforts to cause to be executed
and delivered, all instruments, including instruments of conveyance, assignment
and transfer, and to make all filings with, and to obtain all consents,
approvals or authorizations of, any Governmental Authority or any other Person
under any permit, license, agreement, indenture or other instrument (including
any Consents or Governmental Approvals), and to take all such other actions as
such party may reasonably be requested to take by any other party hereto from
time to time, consistent with the terms of this Agreement and the Ancillary
Agreements, in order to effectuate the provisions and purposes of this Agreement
and the Ancillary Agreements and the transfer of the Eldercare Group Assets and
the Distribution and the assignment and assumption of the Eldercare Group
Liabilities and the other transactions contemplated hereby and thereby. Without
limiting the foregoing, each party will, at the reasonable request, cost and
expense of any other party, take such other actions as may be reasonably
necessary to vest in such other party good and marketable title, free and clear
of any Security Interest, if and to the extent it is practicable to do so. The
foregoing and anything in this Agreement or any Ancillary Agreement to the
contrary notwithstanding, no member of the Parent Group shall be required to
make any payment, incur or become subject to any Liability, agree to any
restriction, surrender any right or Asset or otherwise enter into any agreement,
or be required to permit to occur any event, that would be adverse to it in
order to obtain any such Consent or Governmental Approval.
(c) On or prior to the Distribution Date, Parent and SpinCo in
their respective capacities as direct and indirect stockholders of their
respective Subsidiaries, shall each ratify any actions which are reasonably
necessary or desirable to be taken by Parent and SpinCo, or any other Subsidiary
of Parent, as the case may be, to effectuate the transactions contemplated by
this Agreement.
(d) Parent and SpinCo, and each of the members of their
respective Groups, waive (and agree not to assert against the other) any claim
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or demand that any of them may have against the other for any Liabilities or
other claims relating to or arising out of: (i) the failure of SpinCo or any
member of the Eldercare Group, on the one hand, or of Parent or any member of
the Parent Group, on the other hand, to provide any notification or disclosure
required under any Applicable Law in connection with the Separation and the
Distribution or the other transactions contemplated by this Agreement, including
the transfer by any member of one Group to any member of the other Group of
ownership or operational control of any Assets not previously owned or operated
by such transferee; or (ii) any inadequate, incorrect or incomplete notification
or disclosure under any such Applicable Law by the applicable transferor. To the
extent any Liability to any Governmental Authority or any third Person arises
out of any action or inaction described in clause (i) or (ii) above, the
transferee of the applicable Asset hereby assumes and agrees to pay any such
Liability.
(e) In addition to any services contemplated to be provided
following the Distribution Date pursuant to any Ancillary Agreement, each party,
upon written request of the other party, shall make available to the other
party, during normal business hours and in a manner that will not unreasonably
interfere with such party's business, its financial, accounting, legal, employee
benefits and similar staff and services whenever and to the extent that they may
be reasonably required in connection with the preparation of audits, claims,
litigation or administration of employee benefit plans, and otherwise to assist
in effecting an orderly transition following the Distribution Date. The
foregoing provisions of this Section 7.1(e) notwithstanding, Article 8 of the
Tax Sharing Agreement shall govern cooperation and the exchange of Information
with respect to matters relating in any respect to Taxes and this Section 7.1(e)
shall not apply thereto.
ARTICLE VIII.
TERMINATION
8.1. Termination. Prior to the Distribution Date, this Agreement
may be terminated at any time prior to the Distribution Date by Parent in its
sole discretion.
8.2. Effect of Termination. In the event of any termination of
this Agreement, no party to this Agreement (or any of its directors or officers)
shall have any Liability or further obligation to any other party as a result of
this Agreement.
ARTICLE IX.
DISPUTE RESOLUTION AND ARBITRATION
9.1. Agreement to Arbitrate. Except as otherwise specifically
provided in this Agreement or in any Ancillary Agreement, the procedures set
forth in this Article IX shall apply to all disputes, controversies or claims
(whether sounding in contract, tort or otherwise) that may arise out of or
relate to, or arise under or in connection with, this Agreement or any Ancillary
Agreement or the transactions contemplated hereby or thereby (including all
actions taken in furtherance of the transactions contemplated hereby or thereby
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on or prior to the date hereof) or the commercial or economic relationship of
the parties relating hereto or thereto, between or among any member of the
Parent Group and any member of the Eldercare Group. Each party agrees on behalf
of itself and each member of its respective Group that the procedures set forth
in this Article IX shall be the sole and exclusive remedy in connection with any
dispute, controversy or claim relating to any of the foregoing matters and
irrevocably waives any right to commence any Action in or before any
Governmental Authority, except as expressly provided in Sections 9.11(c) and
except to the extent provided under the Arbitration Act in the case of judicial
review of arbitration results or awards. Each party on behalf of itself and each
member of its respective Group irrevocably waives any right to any trial by jury
with respect to any claim, controversy or dispute set forth in the first
sentence of this Section 9.1. The parties agree that claims filed pursuant to
this Arbitration provision may seek direct damages but in no event for such
claims shall either party be liable to the other for any incidental, special,
reliance, consequential or any other indirect damages or losses (including lost
profits or revenues).
9.2. Efforts to Resolve Disputes; Mediation. It is the intent of
the parties to use all reasonable efforts to negotiate and resolve expeditiously
any dispute, controversy or claim between or among them that may arise from time
to time on a mutually acceptable negotiated basis. The parties may, by mutual
consent, retain a mediator to aid in any attempt to informally negotiate
resolution of any dispute, although any opinion expressed by a mediator shall be
strictly advisory and shall not be binding on the parties, nor shall any opinion
expressed by the mediator be admissible in any arbitration proceedings. Costs of
a mediation shall be borne equally by the parties involved in the matter, except
that each party shall be responsible for its own expenses. Mediation is not a
prerequisite to a demand for arbitration under Section 9.3.
9.3. Demand for Arbitration. At any time before the Applicable
Deadline (as defined below), any party involved in the dispute, controversy or
claim may make a written demand (the "Arbitration Demand Notice") that the
dispute be resolved by binding arbitration. Except as may be expressly provided
in any Ancillary Agreement, any Arbitration Demand Notice must be asserted
within one year after the later of the occurrence of the act or event giving
rise to the underlying claim or the date on which such act or event was, or
should have been, in the exercise of reasonable due diligence, discovered by the
party asserting the claim (as applicable and as it may in a particular case be
specifically extended by the parties in writing, the "Applicable Deadline"). Any
discussions, negotiations or mediations between the parties pursuant to this
Agreement or otherwise will not toll the Applicable Deadline unless expressly
agreed in writing by the parties. Each of the parties agrees on behalf of itself
and each member of its Group that if an Arbitration Demand Notice with respect
to a dispute, controversy or claim is not given prior to the expiration of the
Applicable Deadline, as between or among the parties and the members of their
Groups, such dispute, controversy or claim will be barred. Subject to Sections
9.11(c), upon delivery of an Arbitration Demand Notice prior to the Applicable
Deadline, the dispute, controversy or claim shall be decided by an Arbitration
Panel in accordance with the rules set forth in this Article IX.
9.4. Arbitration Panel. When an Arbitration Demand Notice is
given, the parties involved in the dispute, controversy or claim shall attempt
to select a sole arbitrator satisfactory to all such parties. In the event the
parties are not able jointly to select a sole arbitrator, such parties shall
each appoint an arbitrator within 30 days after delivery of the Arbitration
Demand Notice. Only one arbitrator may be appointed for the Eldercare Group and
the Parent Group, respectively. In the event that a sole arbitrator is not
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selected, the two chosen arbitrators, within 30 days after the appointment of
the later of them to be appointed, will in turn choose a third arbitrator, and
the three arbitrators thus chosen will constitute the arbitration panel.
9.5. Commencement and Place of Arbitration. The sole arbitrator
or arbitration panel (as applicable, the "Arbitration Panel") will meet within
30 days of the last appointment to commence the arbitration, which period may be
extended upon the agreement of the arbitrators. The Arbitration Panel will set a
time for the hearing of the matter which will commence no later than 90 days
after the date of the last appointment. The place of any arbitration hereunder
will be as agreed upon by the parties, or, if the parties are unable to agree,
as set by the Arbitration Panel.
9.6. Arbitration Hearings. The matter shall be presented to the
arbitrator at a hearing by means of written submissions of memoranda and
verified witness statements, filed simultaneously, and responses, if necessary
in the judgment of the arbitrator or both the parties. If the Arbitration Panel
deems it to be appropriate for a fair resolution of the dispute, live
cross-examination or direct examination may be permitted. The Arbitration Panel
shall actively manage the arbitration with a view to achieving a just, speedy
and cost-effective resolution of the dispute, claim or controversy. The
arbitration hearing will be no longer than 30 full hearing days, unless in the
judgment of the Arbitration Panel the matter is complex and sophisticated and
thereby requires a longer time. The Arbitration Panel may set time and other
limits on the presentation of each party's case, its memoranda or other
submissions, and may refuse to receive any proffered evidence, which the
Arbitration Panel find to be cumulative, unnecessary, irrelevant or of low
probative nature. Except as otherwise set forth herein, any arbitration
hereunder will be conducted in accordance with the CPR Rules for
Non-Administered Arbitration of Business Disputes then prevailing (except that
the arbitration will not be conducted under the auspices of the CPR and the fee
schedule of the CPR will not apply). To the extent that the provisions of this
Agreement and the prevailing rules of the CPR conflict, the provisions of this
Agreement shall govern.
9.7. Arbitration Decision. The final decision of the Arbitration
Panel will be rendered in writing to the parties not later than 60 days after
the last hearing date, unless otherwise agreed by the parties in writing. The
decision of the Arbitration Panel will be final and binding on the parties, and
judgment thereon may be had and will be enforceable in any court having
jurisdiction over the parties. Arbitration awards will bear interest at an
annual rate of the Prime Rate plus 2% per annum.
9.8. Discovery and Related Matters. Any party involved in the
applicable dispute may request limited document production from the other party
or parties of specific and expressly relevant documents. Any such discovery
shall be conducted expeditiously, and it is intended that discovery shall be
limited as compared to the provisions of the Federal Rules of Civil Procedure.
Depositions shall not occur except by consent of the parties or by order of the
Arbitration Panel. Disputes concerning the document production or other
discovery will be determined by written agreement of the parties involved in the
applicable dispute or, failing such agreement, will be referred to the
Arbitration Panel for resolution. All discovery requests will be subject to the
proprietary rights and rights of privilege of the parties, and the Arbitration
Panel will adopt procedures to protect such rights and to maintain the
confidential treatment of the arbitration proceedings (except as may be required
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by Applicable Law). Subject to the foregoing, the Arbitration Panel shall have
the power to issue subpoenas to compel the production of documents relevant to
the dispute, controversy or claim.
9.9. Arbitration Panel's Authority. The Arbitration Panel shall
have full power and authority to determine issues of arbitrability and to
interpret or construe the applicable provisions of this Agreement or any
Ancillary Agreement and to fashion appropriate remedies for breaches of this
Agreement (including interim or permanent injunctive relief); provided, however,
that the Arbitration Panel shall not have any right or authority (i) in excess
of the authority a court having jurisdiction over the parties and the
controversy or dispute would have absent these arbitration provisions; (ii) to
award incidental, special, reliance, consequential, or other indirect damages
(including lost profits or revenues); (iii) to award punitive or treble damages;
or (iv) to modify the terms of this Agreement. It is the intention of the
parties that in rendering a decision the Arbitration Panel give effect to the
applicable provisions of this Agreement and the Ancillary Agreements and follow
Applicable Law (it being understood and agreed that this sentence shall not give
rise to a right of judicial review of the arbitrator's award).
9.10. Confidentiality. Except as required by Applicable Law, the
parties agree that the existence and contents of the entire arbitration,
including the award, shall be deemed a compromise of a dispute under Rule 408 of
the Federal Rules of Evidence, shall not be discoverable in any proceeding,
shall not be admissible in any court (except for the enforcement thereof) or
arbitration and shall not bind or collaterally estop either party with respect
to any claim or defense asserted by any third party. Except as required by
Applicable Law, the parties shall hold, and shall cause their respective
officers, directors, employees, agents and other representatives to hold, the
existence, content and result of the arbitration or any mediation in confidence
in accordance with the provisions of Article VI and except as may be required in
order to enforce any award. Each of the parties shall request that any mediator
or arbitrator comply with such confidentiality requirement.
9.11. Certain Additional Matters. (a) If a party fails or refuses
to appear at and participate in an arbitration hearing after due notice, the
arbitrator may hear and determine the controversy upon evidence produced by the
appearing party.
(b) Arbitration costs will be borne equally by each party
involved in the matter, except that each party will be responsible for its own
attorney's fees and other costs and expenses, including the costs of witnesses
selected by such party.
(c) Prior to the time at which the Arbitration Panel are
appointed, any party may seek one or more temporary restraining orders in a
court of competent jurisdiction if necessary in order to preserve and protect
the status quo. Neither the request for, or grant or denial of, any such
temporary restraining order shall be deemed a waiver of the obligation to
arbitrate as set forth herein and the Arbitration Panel may dissolve, continue
or modify any such order.
(d) In the event that at any time any member of the Arbitration
Panel shall fail to serve as an arbitrator for any reason, the appropriate party
or the two party-selected arbitrators, as the case may be, shall select a new
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arbitrator, in accordance with the procedures set forth in Section 9.4. The
extent, if any, to which testimony previously given shall be repeated or may be
relied upon based on the stenographic record (if there is one), shall be
determined by the replacement arbitrator.
9.12. Continuity of Performance and Remaining Obligations. Unless
otherwise agreed in writing, the parties will continue to provide service and
honor all other commitments under this Agreement and each Ancillary Agreement
during the course of dispute resolution pursuant to the provisions of this
Article IX with respect to all matters not subject to such dispute, controversy
or claim.
9.13. Law Governing Arbitration Procedures. The interpretation of
the provisions of this Article IX, only insofar as they relate to the agreement
to arbitrate and any procedures pursuant thereto, shall be governed by the
Arbitration Act and other applicable federal law. In all other respects, the
interpretation of this Agreement shall be governed as set forth in Section 10.2.
ARTICLE X.
MISCELLANEOUS
10.1. Counterparts; Entire Agreement; Corporate Power. (a) This
Agreement and each Ancillary Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties hereto or thereto and delivered to each other party hereto or
thereto.
(b) This Agreement, and the Ancillary Agreements and the
Exhibits, Schedules and Appendices hereto and thereto contain the entire
agreement between the parties with respect to the subject matter hereof or
thereof, supersede all previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such subject
matter and there are no agreements or understandings between the parties other
than those set forth or referred to herein or therein.
(c) Parent represents on behalf of itself and each other member
of the Parent Group and SpinCo represents on behalf of itself and each other
member of the Eldercare Group as follows:
(i) each such Person has the requisite corporate or other
power and authority and has taken all corporate or other action
necessary in order to execute, deliver and perform each of this
Agreement and each other Ancillary Agreements to which it is a
party and to consummate the transactions contemplated hereby and
thereby; and
(ii) this Agreement and each Ancillary Agreement to which
it is a party has been duly executed and delivered by it and
constitutes a valid and binding agreement of it enforceable in
accordance with the terms thereof.
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(d) Each party hereto acknowledges that it and each other party
hereto is executing certain of the Ancillary Agreements by facsimile, stamp or
mechanical signature. Each party hereto expressly adopts and confirms each such
facsimile, stamp or mechanical signature made in its respective name as if it
were a manual signature, agrees that it will not assert that any such signature
is not adequate to bind such party to the same extent as if it were signed
manually and agrees that at the reasonable request of any other party hereto at
any time it will as promptly as reasonably practicable cause each such Ancillary
Agreement to be manually executed (any such execution to be as of the date of
the initial date thereof).
10.2. Governing Law. This Agreement and, unless expressly provided
therein, each Ancillary Agreement, shall be governed by and construed and
interpreted in accordance with the laws of the State of Pennsylvania
irrespective of the choice of laws principles of such State, as to all matters,
including matters of validity, construction, effect, enforceability, performance
and remedies.
10.3. Assignability. Except as set forth in any Ancillary
Agreement, this Agreement and each Ancillary Agreement shall be binding upon and
inure to the benefit of the parties hereto and thereto, respectively, and their
respective successors and assigns; provided, however, that, except as set forth
in this Agreement or in any Ancillary Agreement, no party hereto or thereto may
assign its respective rights or delegate its respective obligations under this
Agreement or any Ancillary Agreement without the express prior written consent
of each of the other parties hereto or thereto.
10.4. Third Party Beneficiaries. Except for the indemnification
rights under this Agreement or any Ancillary Agreement of any Parent Indemnitee
or any SpinCo Indemnitee in their respective capacities as such, (a) the
provisions of this Agreement and each Ancillary Agreement are solely for the
benefit of the parties hereto and are not intended to confer upon any Person
except the parties any rights or remedies hereunder, and (b) there are no third
party beneficiaries of this Agreement or any Ancillary Agreement and neither
this Agreement nor any Ancillary Agreement shall provide any third person
(including any insurance company) with any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement or any Ancillary Agreement.
10.5. Notices. All notices or other communications under this
Agreement or any Ancillary Agreement shall be in writing and shall be deemed to
be duly given as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) or delivered by a
nationally recognized courier service to the parties at the following address:
If to Parent, to: NeighborCare
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Law Department
-39-
If to SpinCo to: Genesis HealthCare Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Law Department
Any party may, by notice to the other parties, change the address to which such
notices are to be given.
10.6. Severability. If any provision of this Agreement or any
Ancillary Agreement or the application thereof to any Person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof or thereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those
as to which it has been held invalid or unenforceable, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby or thereby, as the case may be, is not affected in any
manner adverse to any party. Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the parties.
10.7. Force Majeure. No party shall be deemed in default of this
Agreement or any Ancillary Agreement to the extent that any delay or failure in
the performance of its obligations under this Agreement or any Ancillary
Agreement results from any cause beyond its reasonable control and without its
fault or negligence, such as acts of God, acts of civil or military authority,
embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes,
floods, unusually severe weather conditions, labor problems or unavailability of
parts, or, in the case of computer systems, any failure in electrical or air
conditioning equipment. In the event of any such excused delay, the time for
performance shall be extended for a period equal to the time lost by reason of
the delay.
10.8. Expenses. Except as expressly set forth in this Agreement or
in any Ancillary Agreement, whether or not the Separation or the Distribution
are consummated, all third party fees, costs and expenses paid or incurred in
connection with the Separation and the Distribution will be paid by Parent.
10.9. Late Payments. Except as expressly provided to the contrary
in this Agreement or in any Ancillary Agreement, any amount not paid when due
pursuant to this Agreement or any Ancillary Agreement (and any amounts billed or
otherwise invoiced or demanded and properly payable that are not paid within 30
days of such ▇▇▇▇, invoice or other demand) shall accrue interest at a rate per
annum equal to the Prime Rate plus 2%.
10.10 Headings. The article, section and paragraph headings
contained in this Agreement and in the Ancillary Agreements are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement or any Ancillary Agreement.
10.11.Survival of Covenants. Except as expressly set forth in any
Ancillary Agreement, the covenants, representations and warranties contained in
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this Agreement and each Ancillary Agreement, and liability for the breach of any
obligations contained herein, shall survive the Distribution in accordance with
their terms.
10.12.Waivers of Default. Waiver by any party of any default by
any other party of any provision of this Agreement or any Ancillary Agreement
shall not be deemed a waiver by the waiving party of any subsequent or other
default, nor shall it prejudice the rights of the other party.
10.13.Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Agreement or any Ancillary Agreement, the party or parties who are or
are to be thereby aggrieved shall have the right to specific performance and
injunctive or other equitable relief of its or their rights under this Agreement
or such Ancillary Agreement, in addition to any and all other rights and
remedies at law or in equity, and all such rights and remedies shall be
cumulative. The parties agree that the remedies at law for any breach or
threatened breach, including monetary damages, are inadequate compensation for
any loss and that any defense in any action for specific performance that a
remedy at law would be adequate is waived. Any requirements for the securing or
posting of any bond with such remedy are waived.
10.14.Amendments. No provisions of this Agreement or any Ancillary
Agreement shall be deemed waived, amended, supplemented or modified by any
party, unless such waiver, amendment, supplement or modification is in writing
and signed by the authorized representative of the party against whom such
waiver, amendment, supplement or modification is sought to be enforced.
10.15.Interpretation. In the event of a conflict between a
provision of this Agreement and any provision of any Ancillary Agreement, any
specific provision of the applicable Ancillary Agreement shall control. In the
event of an inconsistency between this Agreement and the Tax Sharing Agreement
regarding Tax matters, the Tax Sharing Agreement shall control. Words in the
singular shall be held to include the plural and vice versa and words of one
gender shall be held to include the other gender as the context requires. The
terms "hereof," "herein," and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement (or the
applicable Ancillary Agreement) taken as a whole (including all of the
Schedules, Exhibits and Appendices hereto and thereto) and not to any particular
provision of this Agreement (or such Ancillary Agreement). Article, Section,
Exhibit, Schedule and Appendix references are to the Articles, Sections,
Exhibits, Schedules and Appendices to this Agreement (or the applicable
Ancillary Agreement) unless otherwise specified. The word "including" and words
of similar import when used in this Agreement (or the applicable Ancillary
Agreement) shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified. The word "or" shall not be
exclusive. Unless expressly stated to the contrary in this Agreement or in any
Ancillary Agreement, all references to "the date hereof," "the date of this
Agreement," "hereby" and "hereupon" and words of similar import shall all be
references to the Distribution Date, regardless of any amendment or restatement
hereof.
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IN WITNESS WHEREOF, the parties have caused this Separation and
Distribution Agreement to be executed by their duly authorized representatives.
GENESIS HEALTH VENTURES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman of the Board and CEO
GENESIS HEALTHCARE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
[Signature Page to Separation and Distribution Agreement]