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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 14, 1998
REHABCARE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19294 51-0265872
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
organization) Number)
7733 Forsyth Boulevard
17th Floor
St. Louis, Missouri 63105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 863-7422
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Item 2. Acquisition or Disposition of Assets.
On August 14, 1998, RehabCare Group, Inc., a Delaware corporation (the
"Company"), through its wholly-owned subsidiary, Healthcare Staffing Solutions,
Inc., a Massachusetts corporation ("HSSI"), acquired all of the outstanding
capital stock of StarMed Staffing, Inc., a Delaware corporation ("StarMed") and
wholly-owned subsidiary of Medical Resources, Inc. ("MRI"), and related
entities. The acquisition was consummated pursuant to the terms and conditions
of a Stock Purchase Agreement, dated as of July 8, 1998 (the "Agreement"), by
and among MRI, HSSI and the Company.
Pursuant to the Agreement, HSSI paid an aggregate of $33 million as
consideration for the capital stock of StarMed and related entities. Two million
of the $33 million purchase price has been placed in escrow to be available, for
a specified period of time, to offset indemnification obligations that may be
incurred by MRI. The purchase price paid in connection with the acquisition was
determined through arms'-length negotiations among the parties to the Agreement.
The funds utilized for the acquisition were obtained from borrowings under the
Company's senior credit facility with NationsBank, N.A., Mercantile Bank
National Association, U.S. Trust, Bank of America NTSA and Credit Lyonnais New
York Branch.
StarMed provides temporary staffing of nurses and nurse assistants to
hospitals and nursing homes on a short-term and extended-term basis, and is one
of the largest providers of temporary registered nurses in the United States.
StarMed reported revenues of approximately $58 million for the twelve months
ended December 31, 1997 and approximately $19.8 million for the three months
ended March 31, 1998.
The foregoing description is qualified in its entirety by reference to
a copy of the Agreement, the related Escrow Agreement and L/C Procedures
Agreement and the press release which are attached as exhibits hereto and
incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired. Pursuant to Item
7(a)(4) of Form 8-K, the Company will file the required financial statements of
StarMed and related entities and pro forma financial information as soon as is
practicable, but not later than 60 days after the date that this report is
required to be filed.
(b) Pro forma financial information. See Item 7(a) above.
(c) Exhibits. See Exhibit Index.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 26, 1998
REHABCARE GROUP, INC.
By:/s/ John R. Finkenkeller
-----------------------------------
John R. Finkenkeller
Senior Vice President
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description Page
- ------ ----------- ----
2.1 Stock Purchase Agreement, dated as of July 8, 1998, by and among
Medical Resources, Inc., Healthcare Staffing Solutions, Inc. and
RehabCare Group, Inc. 5
2.2 Escrow Agreement, dated as of August 14, 1998, by and among
Medical Resources, Inc., RehabCare Group, Inc. and IBJ Schroder
Bank &Trust Company. 36
2.3 L/C Procedures Agreement, dated as of July 8, 1998, by and
between Medical Resources, Inc. and RehabCare Group, Inc. 45
99.1 Text of press release, dated August 17, 1998, issued by RehabCare
Group, Inc. 54
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
by and between
MEDICAL RESOURCES, INC.,
as Seller,
and
REHABCARE GROUP, INC.,
and
HEALTHCARE STAFFING SOLUTIONS, INC.,
as Buyer
Dated as of
July 8, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS
1.1. Definitions ..........................................................1
ARTICLE II. SALE OF SHARES
2.1. Purchase and Sale of the Shares..........................................3
2.2. Closing ..........................................................3
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER
3.1. Corporate Organization, Etc..............................................4
3.2. Capitalization of Companies..............................................5
3.3. Company Subsidiaries.....................................................5
3.4. Authority Relative to this Agreement.....................................5
3.5. Consents and Approvals; No Violations....................................5
3.6. Financial Statements.....................................................6
3.7. Absence of Certain Changes...............................................6
3.8. Compliance with Law......................................................7
3.9. Contracts and Commitments................................................7
3.10. No Undisclosed Liabilities..............................................7
3.11. No Default ..........................................................7
3.12. Litigation ..........................................................7
3.13. Taxes ..........................................................7
3.14. Employee Benefit Plans; ERISA...........................................8
3.15. Title to Properties.....................................................9
3.16. Patents, Trademarks, Etc................................................9
3.17. Insurance .........................................................10
3.18. Environmental Matters..................................................10
3.19. Employee and Labor Matters.............................................10
3.20. Brokers and Finders....................................................11
3.21. Year 2000 Compliance...................................................11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1. Corporate Organization; Etc.............................................11
4.2. Authority Relative to this Agreement....................................11
4.3. Consents and Approvals; No Violations...................................12
4.4. Available Funds.........................................................12
4.5. Brokers and Finders.....................................................12
ARTICLE V. COVENANTS
5.1. Conduct of the Business Pending the Closing.............................12
5.2. Access to Information...................................................14
5.3. Disclosure Supplements..................................................15
5.4. Consents and Approvals..................................................15
5.5. Filings .........................................................15
5.6. Covenant to Satisfy Conditions..........................................15
5.7. Further Assurances......................................................16
5.8. Employee Benefit Matters................................................16
5.9. Elimination of Indebtedness.............................................16
5.10. Assumption of Certain Liabilities......................................16
5.11. Section 338(h)(10) Election............................................16
5.12. Insurance .........................................................17
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ARTICLE VI. CONDITIONS TO SELLER'S OBLIGATIONS
6.1. Representations and Warranties True....................................17
6.2. Performance .........................................................17
6.3. Certificates .........................................................17
6.4. No Injunction or Proceeding............................................17
6.5. HSR Act .........................................................17
6.6. Lender Consent.........................................................17
ARTICLE VII. CONDITIONS TO BUYER'S AND PARENT'S OBLIGATIONS
7.1. Representations and Warranties of Seller True..........................17
7.2. Performance by Seller..................................................18
7.3. Certificates .........................................................18
7.4. No Injunction or Proceeding............................................18
7.5. HSR Act .........................................................18
7.6. Receipt of 1996 Audit..................................................18
ARTICLE VIII. TERMINATION AND ABANDONMENT; INDEMNIFICATION
8.1. Termination .........................................................18
8.2. Procedure and Effect of Termination....................................19
8.3. Survival of Representations, Warranties and Covenants..................19
8.4. Indemnification........................................................19
8.5. Tax Matters .........................................................22
ARTICLE IX. MISCELLANEOUS
9.1. Amendment and Modifications............................................23
9.2. Extension; Waiver......................................................23
9.3. Representations and Warranties; Etc....................................23
9.4. Entire Agreement; Assignment...........................................24
9.5. Validity .........................................................24
9.6. Notices .........................................................24
9.7. Governing Law .........................................................25
9.8. Specific Performance...................................................25
9.9. Publicity .........................................................25
9.10. Arbitration .........................................................25
9.11. Descriptive Headings..................................................26
9.12. Counterparts .........................................................26
9.13. Expenses .........................................................26
9.14. Parties in Interest...................................................27
9.15. Interpretation........................................................27
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of July 8,
1998, is by and between Medical Resources, Inc., a Delaware corporation
("Seller"), and Healthcare Staffing Solutions, Inc., a Massachusets corporation
("Buyer") and RehabCare Group, Inc., a Delaware corporation ("Parent").
WHEREAS, Seller owns all of the issued and outstanding shares of
common stock, par value $.01 per share of StarMed Staffing, Inc. ("StarMed"), a
Delaware corporation, and all of the issued and outstanding shares of common
stock, no par value, of Wesley Medical Resources, Inc. ("Wesley"), a California
corporation (collectively, the "Shares"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, the Shares, all in accordance with and subject to the terms and
conditions of this Agreement; and
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements herein contained,
Buyer and Seller hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions. The terms defined in this Article I, whenever used herein,
shall have the following meanings for all purposes of this Agreement.
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
"Agreement" shall have the meaning set forth in the preamble hereto.
"Audited Financial Statements" shall have the meaning set forth in
Section 3.6 hereof.
"Buyer" shall have the meaning set forth in the preamble hereto.
"Buyer Disclosure Schedule" shall have the meaning set forth in
Article IV hereof.
"Buyer Indemnified Parties" shall have the meaning set forth in
Section 8.4(a) hereof.
"Buyer Material Adverse Effect" shall have the meaning set forth in
Section 4.1 hereof.
"Closing" shall have the meaning set forth in Section 2.2(a) hereof.
"Closing Date" shall have the meaning set forth in Section 2.2(a)
hereof.
"Code" shall have the meaning set forth in Section 3.14(a) hereof.
"Companies" shall mean StarMed and Wesley.
"Company Financial Statements" shall have the meaning set forth in
Section 3.6 hereof.
"Company Subsidiaries" shall mean the Subsidiaries of StarMed and
Wesley.
"Confidentiality Agreement" shall have the meaning set forth in
Section 5.2 hereof.
"Contracts" shall have the meaning set forth in Section 3.9 hereof.
"Credit Facility" shall have the meaning set forth in Section 5.1(e).
"Damages" shall have the meaning set forth in Section 8.4(a) hereof.
"Deductible Amount" shall have the meaning set forth in Section 8.4(c)
hereof.
"Dispute" shall have the meaning set forth in Section 9.10(a) hereof.
"DOJ" shall have the meaning set forth in Section 3.5 hereof.
"Encumbrance" shall mean any lien, encumbrance, security interest,
charge, mortgage, option, pledge or restriction on transfer of any nature
whatsoever (except, in the case of the Shares, for restrictions relating to
applicable securities laws). "Environmental Claim" means any claim, action,
demand, order, or written notice by or on behalf of, any Governmental Entity or
Person alleging potential liability arising out of, based on or resulting from
the violation of any Environmental Law or permit.
"Environmental Laws" shall mean all Federal, state, and local laws and
regulations relating to Releases or threatened Releases of Hazardous Materials
or otherwise relating to the generation, treatment, storage, transport or
handling of Hazardous Materials.
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"Escrow Agent" shall mean IBJ Schroder Bank & Trust Company or another
bank or trust company mutually agreed between Buyer and Seller prior to the
Closing Date.
"Escrow Agreement" shall mean the escrow agreement among Buyer, Seller
and the Escrow Agent substantially in the form of Exhibit A hereto.
"Escrow Deposit" shall mean the Letter of Credit.
"ERISA" shall have the meaning set forth in Section 3.14(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FTC" shall have the meaning set forth in Section 3.5 hereof.
"Final Determination" shall have the meaning set forth in Section
9.10(e) hereof.
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date or for the period with respect to which such
principles are applied.
"Governmental Entity" shall have the meaning set forth in Section 3.5
hereof.
"Hazardous Materials" means all substances defined as hazardous
substances in the Comprehensive Environmental Response, Compensation and
Liability Act.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Indemnified Party" shall have the meaning set forth in Section 8.4(g)
hereof.
"Indemnifying Party" shall have the meaning set forth in Section
8.4(g) hereof.
"Insurance Policies" shall have the meaning set forth in Section 3.17
hereof.
"Intellectual Property Rights" shall have the meaning set forth in
Section 3.16(b) hereof.
"L/C Procedures Agreement" shall mean the L/C procedures agreement
between Seller and Parent substantially in the form of Exhibit B hereto.
"Letter of Credit" shall mean the Letter of Credit (as defined in the
L/C Procedures Agreement).
"Material Adverse Effect" shall have the meaning set forth in Section
3.1 hereof.
"Multiemployer Plan" has the meaning set forth in Section 3(37) of
ERISA.
"Multiple Employer Plan" means a plan with two or more contributing
sponsors, at least two of which are not under common control, within the meaning
of Section 4063 of ERISA.
"Notice of Arbitration" shall have the meaning set forth in Section
9.10(b) hereof.
"Parent" has the meaning set forth in the Preamble hereto.
"Permits" shall have the meaning set forth in Section 3.11 hereof.
"Person" shall mean any individual, corporation, partnership, trust or
other entity.
"Plans" shall have the meaning set forth in Section 3.14(a) hereof.
"Purchase Price" shall have the meaning set forth in Section 2.1
hereof.
"Release" shall have the meaning set forth in the Comprehensive
Environmental Response, Compensation and Liability Act.
"Representative" shall mean, with respect to any Person, each of such
Person's directors, officers, employees, representatives and agents, and each of
the heirs, executors and assigns of any of the foregoing.
"Selling Indemnified Parties" shall have the meaning set forth in
Section 8.4(b) hereof.
"Single Employer Plan" means a defined benefit pension plan which is
subject to Title IV of ERISA and which is not a Multiemployer Plan.
"Seller" shall have the meaning set forth in the preamble hereto.
"Seller Disclosure Schedule" shall have the meaning set forth in
Article III hereof.
"Senior Notes" shall mean the Senior Notes of Seller issued pursuant
to the Note Purchase Agreements dated as of February 20, 1997 and June 26, 1997
among Seller and the purchasers listed on Exhibit A thereto.
"Shares" shall have the meaning set forth in the preamble hereto.
"StarMed" shall have the meaning set forth in the preamble hereto.
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"Straddle Period" shall have the meaning set forth in Section 8.5(a)
hereof.
"Subsidiary" of a Person shall mean a corporation, partnership, joint
venture, association, limited liability company or other entity of which such
Person owns, directly or indirectly, more than 50% of the outstanding voting
stock or other ownership interest.
"Taxes" shall have the meaning set forth in Section 3.13(c) hereof.
"Tax Claim" shall have the meaning set forth in Section 8.5(c) hereof.
"Tax Return" shall have the meaning set forth in Section 3.13(c)
hereof.
"Termination Date" shall have the meaning set forth in Section 8.1(b).
"338(h)(10) Election" shall have the meaning set forth in Section 5.11
hereof.
"Unaudited Financial Statements" shall have the meaning set forth in
Section 3.6 hereof.
"Wesley" shall have the meaning set forth in the preamble hereto.
ARTICLE II.
SALE OF SHARES
2.1. Purchase and Sale of the Shares. Buyer and Seller hereby agree that upon
the terms and subject to the satisfaction or waiver, if permissible, of the
conditions hereof, Seller shall sell, transfer and deliver to Buyer, and Buyer
shall purchase from Seller, free and clear of all Encumbrances, the Shares for a
purchase price equal to Thirty Three Million Dollars ($33,000,000) (the
"Purchase Price").
2.2. Closing. (a) Subject to the satisfaction or waiver of the conditions set
forth in Articles VI and VII hereof, the closing of the purchase and sale of the
Shares and the other transactions contemplated hereby (the "Closing") shall be
held at 10:00 a.m. on the third business day following the satisfaction of such
conditions (or such other place as the parties may mutually agree). The date on
which the Closing actually occurs is hereinafter referred to as the "Closing
Date."
(b) At the Closing, Seller shall deliver the following to Buyer:
(i) Stock certificate(s) with appropriate transfer stamps, if
any, affixed thereto, representing the Shares with
appropriate stock powers duly endorsed in blank or
accompanied by other duly executed instruments of transfer;
(ii) All other documents required to be delivered by Seller on
or prior to the Closing Date pursuant to this Agreement or
otherwise required from Seller in connection herewith;
(iii) The resignations of such members of the boards of directors
of each of the Companies as Buyer shall have requested in
writing no less than two business days prior to the Closing
Date;
(iv) The stock books, stock ledgers, minute books and corporate
seals of each of the Companies; provided, that any of the
foregoing items shall be deemed to have been delivered
pursuant to this Section 2.2(b)
(iv) if such item has been delivered to or is otherwise located
at any offices of the Companies;
(v) The Escrow Agreement;
(vi) The L/C Procedures Agreement;
(vii) The certificates contemplated by Section 7.3 hereof as
Buyer shall have requested in writing no less than two
business days prior to the Closing Date; and
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(viii) All other documents required to be delivered by Seller on
or prior to the Closing Date pursuant to this Agreement or
otherwise reasonably required by Buyer in connection
herewith as Buyer shall have requested in writing no less
than two business days prior to the Closing Date.
(c) At the Closing, Buyer and Parent shall deliver to Seller or such
other person as provided below:
(i) The Purchase Price less $2,000,000;
(ii) The Letter of Credit to the Escrow Agent in accordance with
the Escrow Agreement;
(iii) The Escrow Agreement;
(iv) The L/C Procedures Agreement;
(v) The certificates contemplated by Section 6.3 hereof as
Seller shall have requested in writing no less than two
business days prior to the Closing Date; and
(vi) All other documents required to be delivered by Buyer on or
prior to the Closing Date pursuant to this Agreement or
otherwise reasonably required by Seller in connection
herewith as Seller shall have requested in writing no less
than two business days prior to the Closing Date.
(d) All payments to be made by Buyer or Parent pursuant to this
Section 2.2 shall be made by wire transfer of immediately available funds to
such bank account or bank accounts designated at least two business days prior
to the Closing Date by Seller.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedule delivered by
Seller to Buyer concurrently with the execution and delivery by Seller of this
Agreement (the "Seller Disclosure Schedule"), Seller hereby represents and
warrants to Buyer and Parent as follows:
3.1. Corporate Organization, Etc. Each of Seller, the Companies and each of the
Company Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to conduct its business as it is now
being conducted and to own, lease and operate its property and assets, except
where the failure to be so organized, existing and in good standing or to have
such power or authority will not, in the aggregate, either (i) have a material
adverse effect on the business, operations, assets or financial condition or
results of operations of the Companies and the Company Subsidiaries taken as a
whole or (ii) materially impair the ability of Seller to perform any of its
obligations under this Agreement (either of such effects, a "Material Adverse
Effect"). Each of Seller, the Companies and each of the Company Subsidiaries is
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which ownership of property or the conduct of
its business requires such qualification or license, except where the failure to
be so qualified or licensed will not have a Material Adverse Effect. True and
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complete copies of the Articles of Incorporation and By-Laws of the Companies,
as presently in effect, have been heretofore delivered to Buyer.
3.2. Capitalization of Companies . The authorized capital stock of each of the
Companies and the Company Subsidiaries is as set forth in Section 3.2 of Seller
Disclosure Schedule. All the Shares are issued and outstanding as of the date of
this Agreement. All of the Shares are duly authorized, validly issued, fully
paid and non-assessable and free of any preemptive rights in respect thereto.
There are no outstanding (a) securities convertible into or exchangeable for the
capital stock of the Companies or the Company Subsidiaries, (b) options,
warrants or other rights to purchase or subscribe for capital stock of the
Companies or the Company Subsidiaries, or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
of any capital stock of the Companies or the Company Subsidiaries, any such
convertible or exchangeable securities or any such options, warrants or rights,
pursuant to which, in any of the foregoing cases, either of the Companies or the
Company Subsidiaries is subject or bound. There are no voting trusts,
stockholders' agreements or other similar instruments restricting or relating to
the rights of the holders of Shares to vote, transfer or receive dividends with
respect to the Shares.
3.3. Company Subsidiaries. Section 3.3 of Seller Disclosure Schedule lists each
of the Company Subsidiaries. All issued and outstanding shares of capital stock
of each of the Company Subsidiaries are duly authorized, validly issued, fully
paid and nonassessable, and are owned, directly or indirectly, by one of the
Companies, free and clear of all Encumbrances and any preemptive rights in
respect thereto. True and complete copies of the Certificate of Incorporation
and By-Laws of each of the Company Subsidiaries have been heretofore delivered
to Buyer.
3.4. Authority Relative to this Agreement. Seller has all requisite corporate
authority and power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all required corporate action on the part of Seller and no
other corporate proceedings on the part of Seller are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Seller and,
assuming this Agreement has been duly authorized, executed and delivered by
Buyer, this Agreement constitutes a valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally, including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and subject to the limitations imposed by
general equitable principles (regardless whether such enforceability is
considered in a proceeding at law or in equity).
3.5. Consents and Approvals; No Violations. Neither the execution and delivery
of this Agreement by Seller nor the consummation of the transactions
contemplated hereby by Seller will (a) violate any provision of the certificate
of incorporation or by-laws (or other comparable governing documents) of Seller,
the Companies or the Company Subsidiaries, (b) require any consent, waiver,
approval, license, authorization or permit of, or filing with or notification
to, any Federal, state, local or foreign government, executive official thereof,
governmental or regulatory authority, agency or commission, including courts of
competent jurisdiction, domestic or foreign (a "Governmental Entity"), except
for (i) filings with the Federal Trade Commission (the "FTC") and with the
Antitrust Division of the United States Department of Justice (the "DOJ")
pursuant to the HSR Act, and the rules and regulations promulgated thereunder
and (ii) such consents, waivers, approvals, authorizations, permits, filings or
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notifications which, if not obtained or made, will not, in the aggregate, have a
Material Adverse Effect, (c) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or any obligation to repay)
under, any of the terms, conditions or provisions of any indenture, mortgage,
note, bond, encumbrance, license, government registration, contract, lease,
franchise, permit, agreement or other instrument or obligation to which any of
Seller, the Companies or the Company Subsidiaries is a party or by which Seller,
the Companies or the Company Subsidiaries or any of their respective properties
or assets may be bound, except such violations, breaches and defaults which, in
the aggregate, will not have a Material Adverse Effect or (d) violate any order,
writ, judgment, injunction, decree, statute, ordinance, rule or regulation of
any Governmental Entity applicable to Seller, the Companies or the Company
Subsidiaries or by which any of their respective properties or assets may be
bound, except such violations which, in the aggregate, will not have a Material
Adverse Effect.
3.6. Financial Statements. Seller has previously furnished to Buyer the (i)
unaudited combined balance sheets of the Companies, the related combined
statements of earnings, changes in stockholders equity and cash flows of the
Companies for the three months ended March 31, 1998 (the "Unaudited Financial
Statements") and (ii) the audited combined balance sheet of the Companies and
the related audited combined statements of earnings, changes in stockholders
equity and cash flows of the Companies (including any related notes) for the
fiscal year ended December 31, 1997, together with the report thereon of the
independent public accountants of the Companies (the "Audited Financial
Statements" and, together with the Unaudited Financial Statements, the "Company
Financial Statements"). Each of the balance sheets included in the Company
Financial Statements, in all material respects, fairly presents the combined
financial position of the Companies as of its date, and the other related
statements included in the Company Financial Statements, in all material
respects, fairly present the combined results of operations and changes in
combined financial position of the Companies for the periods presented therein,
all in conformity with GAAP, applied on a consistent basis during the periods
involved, except as otherwise noted therein, and except, in the case of the
Unaudited Financial Statements, for the absence of notes thereto and for
customary year-end adjustments which are not material to the financial position
or results of operations of the Companies taken as a whole.
3.7. Absence of Certain Changes. Since March 31, 1998, the Companies and the
Company Subsidiaries taken as a whole have not (a) suffered any change in its
business, operations or financial position, except such changes which, in the
aggregate, are not reasonably likely to have a Material Adverse Effect, (b)
conducted their respective businesses in any material respect not in the
ordinary and usual course consistent with past practice or (c) except in the
ordinary course of business and consistent with past practice, (i) incurred any
long-term indebtedness or issued any debt securities or assumed, guaranteed or
endorsed the obligations of any other Person, (ii) declared, set aside for
payment or paid any dividend or other distribution (whether in cash, stock,
property or any combination thereof) in respect of the capital stock of the
Companies, or redeemed or otherwise acquired any shares of capital stock of the
Companies or the Company Subsidiaries, (iii) sold, transferred or otherwise
disposed of, any of their material property or assets, (iv) created any material
Encumbrance on any of their material property or assets, (v) increased in any
manner the rate or terms of compensation of any of their directors, officers or
other employees, (vi) paid or agreed to pay any pension, retirement allowance or
other employee benefit not required by any existing Plan or other agreement or
arrangement to any such director, officer or employee, whether past or present,
or (vii) entered into or amended any employment, bonus, severance or retirement
contract.
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3.8. Compliance with Law. The business of the Companies and the Company
Subsidiaries is not being conducted in violation of any applicable order, writ,
judgment, injunction, decree, statute, ordinance, rule or regulation of any
Governmental Entity, except such violations which, in the aggregate, will not
have a Material Adverse Effect.
3.9. Contracts and Commitments. Section 3.9 of Seller Disclosure Schedule sets
forth, as of the date of this Agreement, a list of all written Insurance
Policies, collective bargaining agreements, employment, consulting or similar
agreements, real and personal property leases involving annual payments in
excess of $25,000 other agreements, including any oral agreements, requiring
annual payments in excess of $25,000 guarantees, indentures, mortgages and notes
or other debt instruments evidencing indebtedness and agreements containing
covenants not to compete (collectively, the "Contracts") to which the Companies
or the Company Subsidiaries is a party. Neither the Companies nor the Company
Subsidiaries is in breach or default and, to the knowledge of Seller, no other
party to any of the Contracts is as of the date of this Agreement in breach or
default (and no event has occurred which with notice or the lapse of time or
both would constitute a default or violation) under any of the Contracts, except
such defaults which, in the aggregate, will not have a Material Adverse Effect.
3.10. No Undisclosed Liabilities. None of the Companies and the Company
Subsidiaries has any liabilities (whether absolute, accrued, contingent or
otherwise), except (i) as and to the extent set forth in the Company Financial
Statements (including the notes thereto), (ii) such immaterial contractual
liabilities as are not required to be disclosed pursuant to Section 3.9 hereof
to which any of the Companies or the Company Subsidiaries is a party, and (iii)
such liabilities which were incurred in the ordinary course of business or
which, in the aggregate, are not material to the Companies and the Company
Subsidiaries taken as a whole.
3.11. No Default. Neither the Companies nor any of the Company Subsidiaries is
in default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of (i) its Articles of Incorporation or By-Laws (or other
comparable governing documents) or (ii) any order, writ, judgment, injunction,
decree, statute, ordinance, rule or regulation of any Governmental Entity
applicable to the Companies and the Company Subsidiaries, except such defaults
and violations which, in the aggregate, will not have a Material Adverse Effect.
The Companies and the Company Subsidiaries have all governmental permits,
licenses and authorizations necessary for the conduct of their businesses in all
material respects as presently conducted (the "Permits") and are in compliance
with the terms of the Permits, except for such Permits the absence of which
would not have a Material Adverse Effect or any non-compliance which will not
have a Material Adverse Effect.
3.12. Litigation. As of the date of this Agreement, there is no action, suit or
proceeding pending, or, to the knowledge of Seller, action, suit or proceeding
threatened, against the Companies or the Company Subsidiaries or any properties
or rights of the Companies or the Company Subsidiaries, before any Governmental
Entity which (a) involves a claim in excess of $50,000 or (b) seeks material
injunctive relief. As of the date of this Agreement, neither of the Companies
nor any of the Company Subsidiaries has received notice that it is subject to
any outstanding injunction, writ, judgment, order or decree of any Governmental
Entity which will have a Material Adverse Effect.
3.13. Taxes. (a) The Companies and the Company Subsidiaries have, within
the time and manner prescribed by law, (i) filed with the appropriate
taxing authorities (or joined in the filing of) all Tax Returns required to be
filed by it in respect of any Taxes other than those Tax Returns the failure of
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which to file would not have a Material Adverse Effect, and each such Tax Return
was complete and accurate in all material respects and (ii) paid in full all
Taxes shown to be due and payable thereon.
(b) (i) No deficiencies for any Taxes have been asserted in writing
or, to the knowledge of Seller, verbally proposed or assessed against either of
the Companies or any of the Company Subsidiaries which remain unpaid and which
in the aggregate are material to the business or financial condition of the
Companies and the Company Subsidiaries taken as a whole, or which are not being
contested in good faith by appropriate proceedings; (ii) the Companies have
adequately reserved for all material Taxes payable by the Companies or any of
the Company Subsidiaries for which no Tax Return has yet been filed; (iii)
neither the Companies nor any of the Company Subsidiaries is a "foreign person"
for purposes of Section 1445 of the Internal Revenue Code of 1986, as amended
(the "Code"); and (iv) neither of the Companies is a party to any tax sharing
agreement with Seller or any corporate subsidiary of Seller relating to federal
income taxes of the "affiliated group," as defined under Section 1504(a) of the
Code, that includes Seller.
(c) For purposes of this Agreement, (i) "Taxes" shall mean all U.S.
Federal, state, local or foreign and other taxes, assessments, duties and
similar charges of any kind imposed by any taxing authority, including interest,
penalties and additions thereto, and (ii) "Tax Return" shall mean any return,
report, information return or other document (including any related or
supporting information) with respect to Taxes.
3.14. Employee Benefit Plans; ERISA. (a) Section 3.14(a) of Seller Disclosure
Schedule sets forth a complete and correct list of all "employee benefit plans",
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), maintained by the Companies or any of the Company
Subsidiaries or to which the Companies or any of the Company Subsidiaries has
any obligation or liability, contingent or otherwise; and all bonus or other
incentive compensation, deferred compensation, salary continuation, disability,
stock award, stock option, stock purchase, severance, parachute or other
material employee benefit policies or arrangements which the Companies or any of
the Company Subsidiaries maintains or to which the Companies or any of the
Company Subsidiaries has any obligation or liability (contingent or otherwise)
(collectively referred to as the "Plans").
(b) None of the Plans is a Multiemployer Plan or a Multiple Employer
Plan. None of the Companies or any of the Company Subsidiaries has any present
liability due to a complete or partial withdrawal from a Multiemployer Plan or
Multiple Employer Plan or due to the termination or reorganization of a
Multiemployer Plan, and no events have occurred and no circumstances exist that
could reasonably be expected to result in any such liability to the Companies or
any of the Company Subsidiaries.
(c) None of the Plans is a Single Employer Plan and none of the
Companies or any of the Company Subsidiaries has any outstanding liability under
Section 4062 of ERISA to the Pension Benefit Guaranty Corporation ("PBGC") or to
a trustee appointed under Section 4042 of ERISA, and no events have occurred and
no circumstances exist that could reasonably be expected to result in any such
liability to the Companies or any of the Company Subsidiaries.
(d) Each Plan that is intended to qualify under Section 401(a) of the
Code, and the trust maintained pursuant thereto, has been determined to be so
qualified and exempt from taxation under Section 501(a) of the Code, and nothing
has occurred with respect to the operation of any such Plan that could
reasonably be expected to adversely affect such qualification or tax-exempt
status.
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<PAGE> 16
(e) All contributions (including all employer contributions and
employee contributions) required to have been made by the Companies and the
Company Subsidiaries under the Plans or by law to any funds or trusts
established thereunder or in connection therewith have been made by the due date
thereof (including any valid extension), and all contributions for any period
ending on or before the Closing Date which become due (including any valid
extension) will have been paid by the Closing Date.
(f) There has been no violation of ERISA or the Code with respect to
the filing of applicable reports, documents or notices regarding the Plans with
any governmental authority or the furnishing of required reports, documents or
notices to the participants or beneficiaries of the Plans, except for such
violations as would not result in a Material Adverse Effect.
(g) True, correct and complete copies of the following documents, with
respect to each of the Plans, have been made available to Buyer by the
Companies, if applicable: (i) all plans and related trust documents, and
amendments thereto; (ii) the most recent Forms 5500; (iii) summary plan
descriptions; and (iv) and any written agreements, policies or practices.
(h) The Plans have been maintained and administered in all respects in
accordance with their terms and applicable laws, which include but are not
limited to all the provisions of ERISA and the Code, except for such violations
as would not result in a Material Adverse Effect.
(i) There are no pending or, to the knowledge of the Companies and the
Company Subsidiaries, threatened actions, claims or proceedings against or
relating to any Plan, the assets of any of the trusts under such plans or the
plan sponsor or the plan administrator, or against any fiduciary of the Plans
with respect to the operation of such plans (other than routine benefit claims).
(j) To the knowledge of the Companies or the Company Subsidiaries,
none of the Companies or the Company Subsidiaries or any "party in interest" or
"disqualified person" with respect to the Plans has engaged in a "prohibited
transaction", as defined in Section 4975 of the Code or Section 406 of ERISA, or
taken any action, or failed to take any action, which could reasonably result in
any material liability under ERISA or the Code.
3.15. Title to Properties. The Companies and the Company Subsidiaries have good
and valid title to all of the material assets and properties (real and personal)
which they own, and such assets and properties are owned free and clear of all
Encumbrances, except for (i) Encumbrances to secure indebtedness reflected on
the Company Financial Statements or indebtedness incurred in the ordinary course
of business and consistent with past practice after the date thereof, (ii)
mechanics', materialmens' and other Encumbrances which have arisen in the
ordinary course of business and (iii) Encumbrances which, in the aggregate, are
not reasonably likely to impair, in any material respect, the continued use of
such asset or property.
3.16. Patents, Trademarks, Etc. (a) Seller has previously delivered to Buyer a
true and complete list of all Intellectual Property Rights filed by, or issued
or registered to, the Companies or the Company Subsidiaries and all material
intellectual property license agreements to which the Companies or the Company
Subsidiaries are a party. With respect to registered trademarks, such list sets
forth a list of all jurisdictions in which such trademarks are registered or
applied for and all registration and application numbers.
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<PAGE> 17
(b) (i) The Companies or the Company Subsidiaries own or possess
adequate licenses or other valid rights to use all United States and foreign
patents, trademarks (registered or unregistered), trade names, service marks,
copyrights and applications and registrations therefor, trade secrets and other
intellectual property and proprietary rights, whether or not subject to
statutory registration or protection, which are material to the conduct of the
business of the Companies and the Company Subsidiaries taken as a whole (the
"Intellectual Property Rights"), (ii) as of the date of this Agreement, the
validity of the Intellectual Property Rights and the title or rights to use
thereof of the Companies or the Company Subsidiaries are not being questioned in
any litigation to which the Companies or the Company Subsidiaries is a party,
nor to the knowledge of Seller, is any such litigation threatened, (iii) as of
the date of this Agreement, none of the Companies or the Company Subsidiaries
has received notice that is a party to any litigation in connection with which a
Person has alleged that the conduct of the business of the Companies or the
Company Subsidiaries infringed or infringes with any valid patents, trademarks,
trade name, service marks or copyrights of others, nor, to the knowledge of
Seller, is any such litigation threatened, and (iv) to the knowledge of Seller,
(A) no Person is materially infringing upon or violating any of the Intellectual
Property Rights and (B) no material claim is pending or threatened to that
effect.
3.17. Insurance. The Companies and the Company Subsidiaries maintain policies of
fire and casualty, liability and other forms of insurance in such amounts, with
such deductibles and against such risks and losses as are reasonable for their
business, assets and properties. All material insurance policies (the "Insurance
Policies") with respect to the property, assets, operations and business of the
Companies and the Company Subsidiaries are in full force and effect and all
premiums due and payable thereon have been paid in full, and no notice of
cancellation or termination has been received with respect to any such policy
which has not been replaced on substantially similar terms prior to the date of
such cancellation. As of the date of this Agreement, there are no pending
material claims under the Insurance Policies by the Companies as to which the
insurers have denied liability. Seller makes no representation or warranty that
such insurance will be continued or is continuable after the Closing.
3.18. Environmental Matters. To Seller's knowledge (a) the Companies and the
Company Subsidiaries are in compliance with all applicable Environmental Laws,
except where failure to be in compliance would not have a Material Adverse
Effect; (b) there is no Environmental Claim pending or threatened against the
Companies or any of the Company Subsidiaries which would have a Material Adverse
Effect; and (c) no person or party has any reasonable basis for any action or
proceeding against the Companies or any of the Company Subsidiaries relating to
the violation by the Company or any of the Company Subsidiaries of any
Environmental Law which could have a Material Adverse Effect and none of the
Companies and the Company Subsidiaries has received oral or written notice of,
nor does Seller have any reason to believe there is, any existing or pending
violation, citation, claim or complaint relating to the violation of any
Environmental Law by the Companies or the Company Subsidiaries, which violation
is reasonably likely to have a Material Adverse Effect.
3.19. Employee and Labor Matters. Neither the Companies nor any of the Company
Subsidiaries is a party to any collective bargaining or other labor union
contract applicable to persons employed by them, no collective bargaining
agreement is being negotiated by the Companies or any of the Company
Subsidiaries, and none of Seller, the Companies or the Company Subsidiaries
knows of any activities or proceedings of any labor union to organize any of the
employees of the Companies and the Company Subsidiaries. As of the date hereof,
(i) the Companies and the Company Subsidiaries are in compliance in all
material respects with all applicable laws relating to employment and
employment practices, wages, hours, and terms and conditions of employment,
(ii) there are no material charges with respect to or relating to the Companies
or any of the Company Subsidiaries pending before the Equal Employment
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Opportunity Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices, and (iii) there is no labor
dispute, strike or work stoppage against the Companies or the Company
Subsidiaries, pending or, to Seller's knowledge, threatened which may interfere
with the business activities of the Companies and the Company Subsidiaries taken
as a whole, except where such non-compliance, charge, dispute, strike or work
stoppage would not have a Material Adverse Effect. As of the date hereof, to the
knowledge of Seller, neither the Companies and the Company Subsidiaries nor
their respective representatives or employees has committed any unfair labor
practices in connection with the operation of the business of the Companies and
the Company Subsidiaries, and there is no charge or complaint against the
Companies or the Company Subsidiaries, by the National Labor Relations Board or
any comparable state agency pending or threatened in writing, except where such
unfair labor practice, charge or complaint would not have a Material Adverse
Effect.
3.20. Brokers and Finders. None of Seller, the Companies or the Company
Subsidiaries or any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any investment
banking fees, brokerage fees, commissions or finders' fees in connection with
the transactions contemplated by this Agreement, except for fees and expenses
payable to SBC Warburg Dillon Read Inc. for investment banking and other
advisory services which fees and expenses will be paid by Seller.
3.21. Year 2000 Compliance. To Seller's knowledge, the software package that the
Companies are contemplating acquiring from HealthNet Systems, Inc. for the
Companies' per diem business pursuant to the proposal attached as Section 3.21
of Seller Disclosure Schedule will be year 2000 compliant, which, for purposes
of this Agreement, shall mean that the data outside the range 1900-1999 will be
correctly processed, except where the failure to correctly process such data
would not have a Material Adverse Effect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the Disclosure Schedule delivered by
Buyer and Parent to Seller concurrently with the execution and delivery by Buyer
of this Agreement (the "Buyer Disclosure Schedule"), each of Buyer and Parent
jointly and severally represents and warrants to Seller as follows:
4.1. Corporate Organization; Etc. Each of Buyer and Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to conduct its business as it is now being conducted and to own, lease
and operate its property and assets except where the failure to be so organized,
existing and in good standing or to have such power or authority would not, in
the aggregate, either (i) have a material adverse effect on the business,
operations, assets or financial condition of Buyer or (ii) impair, hinder or
adversely affect the ability of Buyer to perform any of its obligations under
this Agreement or to consummate the transactions contemplated hereby (either of
such effects, a "Buyer Material Adverse Effect").
4.2. Authority Relative to this Agreement. Each of Buyer and Parent has all
requisite corporate authority and power to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all required corporate action on
the part of Buyer and Parent and no other corporate proceedings on the part of
Buyer or Parent are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Buyer and Parent and, assuming this
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Agreement has been duly authorized, executed and delivered by each of the other
parties hereto, this Agreement constitutes a valid and binding agreement of
Buyer and Parent, enforceable against each of Buyer and Parent in accordance
with its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers and subject to the limitations imposed by general equitable principles
(regardless whether such enforceability is considered in a proceeding at law or
in equity).
4.3. Consents and Approvals; No Violations. Neither the execution and delivery
of this Agreement by Buyer or Parent nor the consummation of the transactions
contemplated hereby by Buyer or Parent will (a) violate any provision of the
articles of incorporation or by-laws of Buyer or Parent, (b) require any
consent, waiver, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except for (i) filings with the FTC
and the DOJ pursuant to the HSR Act and (ii) such consents, waivers, approvals,
authorizations, permits, filings or notifications which, if not obtained or
made, will not, in the aggregate, have a Buyer Material Adverse Effect or (c)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or any obligation to repay) under, any of the
terms, conditions or provisions of any indenture, mortgage, note, bond,
encumbrance, license, government registration, contract, lease, franchise,
permit, agreement or other instrument or obligation to which Buyer or Parent is
a party or by which Buyer or Parent or any of its properties or assets may be
bound, except such violations, breaches and defaults which, in the aggregate,
will not have a Buyer Material Adverse Effect or (d) violate any order, writ,
judgment, injunction, decree, statute, ordinance, rule or regulation of any
Governmental Entity applicable to Buyer or Parent or by which any of its
properties or assets may be bound, except such violations which, in the
aggregate, will not have a Buyer Material Adverse Effect.
4.4. Available Funds. As of the date of this Agreement, and as of the Closing,
Buyer or Parent will have sufficient funds available to satisfy the obligation
of Buyer to pay the Purchase Price and to pay all fees and expenses of Buyer
related to the transaction contemplated hereby.
4.5. Brokers and Finders. None of Buyer, Parent or any of their respective
officers, directors or employees has employed any investment banker, broker or
finder or incurred any liability for any investment banking fees, brokerage
fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement for which Seller, or in the event the Closing
does not occur, the Companies or Seller, has or could have any liability.
ARTICLE V.
COVENANTS
5.1. Conduct of the Business Pending the Closing. Except as contemplated by this
Agreement, as set forth in Section 5.1 of Seller Disclosure Schedule or with the
prior written consent of Buyer or Parent, during the period from the date of
this Agreement to the Closing, Seller will cause the Companies to, conduct their
respective businesses and operations (including but not limited to,
the management of the payment and receipt of the Companies' and the
Company Subsidiaries' accounts payable and accounts receivable, respectively),
according to their ordinary and usual course of business consistent
with past practice and will use all reasonable efforts consistent therewith
to preserve intact the Companies' properties, assets and business organizations,
to keep available the services of the Companies' officers and employees
and to maintain satisfactory relationships with customers, suppliers,
distributors and others having commercially beneficial business relationships
with the Companies, in each case in the ordinary course of business
consistent with past practice. Without limiting the generality of the
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foregoing, during the period from the date of this Agreement to the Closing,
Seller shall use its reasonable best efforts to manage the business of the
Companies so as to avoid a material adverse change in March 31 Working Capital,
and to have a combined cash balance on the Closing Date at the Companies and the
Company Subsidiaries of approximately $500,000. For purposes of the previous
sentence, March 31 Working Capital shall mean the combined current assets
(including for purposes of this definition only, cash of $500,000), less the
combined current liabilities (excluding (a) any amounts due from the Companies
or the Company Subsidiaries to Seller or any subsidiary of Seller, (b) any
short-term indebtedness for notes payable or borrowed money and (c) any accrued
income taxes for the 1998 tax year) of the Companies and the Company
Subsidiaries taken as a whole as of March 31, 1998, which the parties
acknowledge was approximately $13 million as of March 31, 1998 (which amount
reflects adjusted cash of $500,000). Buyer acknowledges that the foregoing does
not constitute a guarantee by Seller of any minimum combined working capital for
the Companies and the Company Subsidiaries. Seller will not, and will not permit
the Companies to, take any action with the purpose of causing any of the
conditions to Buyer's obligations set forth in Article VII hereof to not be
satisfied. Except as set forth in Section 5.1 of Seller Disclosure Schedule,
without limiting the generality of the foregoing, and except as otherwise
provided in this Agreement, Seller will not permit the Companies, prior to the
Closing, without the prior written consent of Buyer or Parent, to:
(a) issue, sell or pledge, or authorize or propose the issuance, sale
or pledge of (i) additional shares of capital stock of any class (including
Shares), or securities convertible into or exchangeable for any such shares, or
any rights, warrants or options to acquire any such shares or other convertible
securities or (ii) any other securities in respect of, in lieu of, or in
substitution for, Shares outstanding on the date hereof;
(b) declare or pay any dividend or distribution on any shares of the
capital stock of the Companies;
(c) redeem, purchase or otherwise acquire any outstanding shares of
the capital stock of the Companies;
(d) propose or adopt any amendment to the Certificate of Incorporation
or By-Laws of the Companies;
(e) except in the ordinary course of business consistent with past
practice or pursuant to the terms of StarMed's existing credit facility (the
"Credit Facility"), incur any long-term indebtedness or issue any debt
securities or assume, guarantee or endorse the obligations of any other Person;
(f) (i) increase in any manner the rate or terms of compensation or
benefits of any of its directors, officers or other employees, except as may be
allowed under existing employment agreements or such increases as are granted in
the ordinary course of business consistent with past practice, or (ii) pay or
agree to pay any pension, retirement allowance or other employee benefit not
required or permitted by any existing Plan or other agreement or arrangement to
any such director, officer or employee, whether past or present, or (iii) enter
into or amend any employment, bonus, severance or retirement contract or adopt
any employee benefit plan;
(g) (i) except in the ordinary course of business consistent with past
practice, sell, lease, transfer or otherwise dispose of, any of its material
property or assets or (ii) except for Encumbrances securing amounts outstanding
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under the Credit Facility, create any Encumbrance on any of its material
property or assets;
(h) make any loans, advances or capital contributions, except advances
for travel and other normal business expenses to officers and employees in an
aggregate amount outstanding at any one time not to exceed $10,000;
(i) enter into other material agreements, commitments or contracts,
except agreements, commitments or contracts made in the ordinary course of
business consistent with past practice; or
(j) fail to maintain all its assets in good repair and condition,
except to the extent of wear or use in the ordinary course of business and
consistent with past practice or damage by fire or other unavoidable casualty;
(k) institute, settle or dismiss any action, claim, demand, lawsuit,
proceeding, arbitration or grievance by or before any Governmental Entity
threatened against, relating to or involving the Companies or the Company
Subsidiaries in connection with any business, asset or property of the Company
or the Company Subsidiaries other than in the ordinary course of business
consistent with past practices but not, in any individual case, in excess of
$50,000; or
(l) agree in writing to take any of the foregoing actions.
5.2. Access to Information. From the date of this Agreement to the Closing,
Seller will, and will cause the Companies to (i) give Buyer and its authorized
Representatives reasonable access to all personnel, books, records, offices and
other facilities and properties of the Companies and the Company Subsidiaries,
(ii) permit Buyer to make such inspections thereof as Buyer may reasonably
request and (iii) cause its officers to furnish Buyer with such financial and
operating data and other information (other than detailed information with
respect the identity, address and social security number of nurses and
nurse-practitioner personnel of the Companies and the Company Subsidiaries) with
respect to the business and properties of the Companies and the Company
Subsidiaries as Buyer may from time to time reasonably request; provided,
however, that any such access shall be conducted at a reasonable time and in
such a manner as not to interfere unreasonably with the operation of the
business of the Companies; provided further that Buyer and its authorized
Representatives shall not contact or hold discussions with customers, suppliers
or non-management employees of the Companies of the Company Subsidiaries without
the prior written consent of Seller, such consent not to be unreasonably
withheld. All such information and access shall be subject to the terms and
conditions of the letter agreement dated April 7, 1998, between Parent and
Seller (the "Confidentiality Agreement"). Notwithstanding anything to the
contrary in this Agreement, neither the Companies nor the Company Subsidiaries
shall be required to disclose any information to Buyer, Parent or their
authorized Representatives if doing so could violate any agreement or federal,
state, local or foreign law, rule or regulation to which any of the Companies or
the Company Subsidiaries is a party or to which any of them is subject.
Following the Closing, neither Buyer, nor Parent will, nor will either of Buyer
or Parent permit the Companies or any of the Company Subsidiaries to, engage in
any discussions or provide any oral or written information to any of the
plaintiffs or any other persons (or their counsel or representatives) in any of
the matters referred to in Section 5.10 of Seller Disclosure Schedule, unless
Buyer and Parent have received the prior written consent of Seller or unless
Buyer or Parent is compelled to do so as a matter of law.
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5.3. Disclosure Supplements. From time to time prior to the Closing, Seller will
supplement or amend Seller Disclosure Schedule with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in Seller
Disclosure Schedule or which is necessary to complete or correct any information
in Seller Disclosure Schedule or in any representation or warranty of Seller
which has been rendered inaccurate thereby. No such supplement or amendment
shall be given effect for purposes of determining (a) the satisfaction of the
conditions set forth in Article VII hereof, except as explicitly set forth
herein including as set forth in Article VII hereof and (b) Buyer's right to
indemnification pursuant to Section 8.4(a) hereof, except as specifically set
forth in Section 8.4(e) hereof.
5.4. Consents and Approvals. (a) Each of the parties hereto shall use its
reasonable best efforts to (i) obtain as promptly as practicable all consents,
authorizations, approvals and waivers required in connection with the
consummation of the transactions contemplated by this Agreement under any
federal, state, local or foreign law or regulation, (ii) lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties hereto to consummate the transactions contemplated hereby and
(iii) effect all necessary registrations and filings including, but not limited
to, filings under the HSR Act and submissions of information requested by any
Governmental Entity. The parties hereto further covenant and agree, with respect
to any threatened or pending preliminary or permanent injunction or other order,
decree or ruling or statute, rule, regulation or executive order that would
adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby, to respectively use their reasonable best
efforts to prevent the entry, enactment or promulgation thereof, as the case may
be.
(b) Each party hereto shall promptly inform the other of any material
communication from the FTC, the DOJ or any other Governmental Entity regarding
any of the transactions contemplated hereby. If any party hereto or any
Affiliate thereof receives a request for additional information or documentary
material from any such Governmental Entity with respect to the transactions
contemplated hereby, then such party shall endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after consultation with
the other party, an appropriate response in compliance with such request. Buyer
or Parent shall advise Seller promptly in respect of any understandings,
undertakings or agreements (oral or written) that Buyer or Parent proposes to
make or enter into with the FTC, the DOJ or any other Governmental Entity in
connection with the transactions contemplated hereby.
5.5. Filings. Promptly after the execution of this Agreement, each of the
parties hereto shall prepare and make or cause to be made any required filings,
submissions and notifications under the laws of any domestic or foreign
jurisdiction to the extent that such filings are necessary to consummate the
transactions contemplated hereby and will use its reasonable best efforts to
take all other actions necessary to consummate the transactions contemplated
hereby in a manner consistent with applicable law. Each of the parties hereto
will furnish to the other parties such necessary information and reasonable
assistance as such other parties may reasonably request in connection with the
foregoing.
5.6. Covenant to Satisfy Conditions. Seller will use its reasonable best efforts
to ensure that the conditions set forth in Articles VI and VII hereof are
satisfied, insofar as such matters are within the control of Seller, and each of
Buyer and Parent will use its reasonable best efforts to ensure that the
conditions set forth in Articles VI and VII hereof are satisfied, insofar as
such matters are within the control of Buyer or Parent.
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5.7. Further Assurances. Upon the terms and subject to the conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take or cause to be taken all action, to do or cause to be done, and to
assist and cooperate with the other party hereto in doing, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including, but not limited to, (i) the
satisfaction of the conditions precedent to the obligations of any of the
parties hereto; (ii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
performance of the obligations hereunder or thereunder; and (iii) the execution
and delivery of such instruments, and the taking of such other actions as the
other party hereto may reasonably require in order to carry out the intent of
this Agreement.
5.8. Employee Benefit Matters. From and after the Closing, Buyer and its
Affiliates shall continue the Plans as Plans of the Companies and the Company
Subsidiaries until such time as the employees of the Companies and the Company
Subsidiaries are integrated into the employee benefit plans that are available
to other employees of Buyer or its Affiliates, subject to the terms and
conditions specified in such plans and to such changes therein as may be
necessary to reflect the consummation of the transactions contemplated hereby.
5.9. Elimination of Indebtedness. At or prior to the Closing, Seller will take
all necessary steps to cause the Companies and the Company Subsidiaries to
eliminate all indebtedness for borrowed money of the Companies and the Company
Subsidiaries (including all intercompany obligations).
5.10. Assumption of Certain Liabilities. At the Closing, Seller hereby
acknowledges and agrees that Seller shall remain liable for and, following the
Closing, shall pay, discharge or perform, as applicable, any and all
liabilities, obligations, claims and commitments of or against Seller, the
Companies or the Company Subsidiaries in respect of any of the matters set forth
in Section 5.10 of Seller Disclosure Schedule (the "Assumed Liabilities"). Buyer
shall cause the Companies to furnish any information concerning the Companies or
the Company Subsidiaries reasonably requested by Seller in order to enable
Seller to satisfy its obligations hereunder, and shall not settle or otherwise
resolve any Assumed Liability without Seller's consent.
5.11. Section 338(h)(10) Election. Buyer and Seller shall in a timely manner
take any and all actions necessary to make an election with respect to the
Companies under Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury Regulations promulgated thereunder and any
comparable provision of state, local or foreign tax law (the "338(h)(10)
Election"). The allocation of the "modified adjusted deemed sale price" (within
the meaning of Income Tax Regulation section 1.338(h)(10)-1(f)) among the assets
of the Companies, shall be made in accordance with the fair market value of such
assets as shall be agreed to by Buyer and Seller no later than 30 days following
the Closing Date in a manner consistent with Section 338 of the Code. Buyer and
Seller acknowledge that such allocation has been arrived at by arm's length
negotiation. Neither Buyer nor Seller shall take a position in any return or
examination or other administrative or judicial proceeding (including any ruling
request) relating to any tax that is inconsistent with such allocation. Buyer
shall be responsible for and control the preparation and filing of the
338(h)(10) Election. Seller shall prepare, execute and deliver to Buyer such
documents or forms (including Section 338 Forms as defined below) as Buyer shall
request or as are required by applicable law for an effective 338(h)(10)
Election. "Section 338 Forms" shall mean all returns, documents, statements,
schedules and other forms that are required to be submitted in connection with a
338(h)(10) Election, including, without limitation, U.S. Treasury Department
Form 8023-A (together with any schedules or attachments thereto).
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<PAGE> 24
5.12. Insurance. Seller shall cause the Companies to keep, or cause to be kept,
all material insurance policies for the Companies and the Company Subsidiaries
existing on the date of this Agreement, or suitable replacements therefor, in
full force and effect through the close of business on the Closing. Seller shall
use its reasonable best efforts to cooperate with Buyer and/or Parent in
obtaining satisfactory "tail" coverage from Seller's professional liability
insurance carriers.
ARTICLE VI.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to effect the transactions
contemplated hereby shall be subject to the fulfillment, or written waiver by
Seller, at or prior to the Closing, of each of the following conditions:
6.1. Representations and Warranties True. The representations and warranties of
Buyer and Parent contained herein qualified as to materiality shall be true and
correct and those not so qualified shall be true and correct in all material
respects as of the date hereof and at and as of the Closing Date as though such
representations and warranties were made at and as of such date unless limited
by their terms to a prior date.
6.2. Performance. Buyer and Parent shall have performed and complied in all
material respects with all agreements, obligations, covenants and conditions
required by this Agreement to be performed or complied with by it on or prior to
the Closing.
6.3. Certificates. Buyer or Parent shall have furnished Seller with such
certificates to evidence its compliance with the conditions set forth in
Sections 6.1 and 6.2 hereof as Seller may reasonably request.
6.4. No Injunction or Proceeding. No statute, rule, regulation, executive order,
decree, preliminary or permanent injunction or restraining order shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits or restricts the consummation of the transactions contemplated hereby.
6.5. HSR Act. All required waiting periods applicable to this Agreement and the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated.
6.6. Lender Consent. Seller shall have received consent of the holders of its
Senior Notes on terms reasonably satisfactory to Seller.
ARTICLE VII.
CONDITIONS TO BUYER'S AND PARENT'S OBLIGATIONS
The obligation of Buyer and Parent to effect the transactions
contemplated hereby shall be subject to the fulfillment, or written waiver by
Buyer, at or prior to the Closing of each of the following conditions:
7.1. Representations and Warranties of Seller True. The representations and
warranties of Seller contained herein qualified as to materiality shall be true
and correct and those not so qualified shall be true and correct in all material
respects as of the date hereof and at and as of the Closing Date as though such
representations and warranties were made at and as of such date unless limited
by their terms to a prior date.
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<PAGE> 25
7.2. Performance by Seller. Seller shall have performed and complied in all
material respects with all agreements, obligations, covenants and conditions
required by this Agreement to be performed or complied with by Seller on or
prior to the Closing.
7.3. Certificates. Seller shall have furnished Buyer or Parent with such
certificates to evidence its compliance with the conditions set forth in
Sections 7.1 and 7.2 hereof as Buyer may reasonably request. Nothing herein
shall restrict the ability of Seller to provide a certificate pursuant to this
Section 7.3 that sets forth therein exceptions, and the existence of any
exceptions in the certificate delivered pursuant to this Section 7.3 hereof
shall not be deemed a failure to meet the condition set forth in this Section
7.3; provided, however, that the existence of the events described therein may
result in the failure to satisfy the conditions set forth in Section 7.1 or 7.2
hereof.
7.4. No Injunction or Proceeding. No statute, rule, regulation, executive order,
decree, preliminary or permanent injunction or restraining order shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits or restricts the consummation of the transactions contemplated hereby.
7.5. HSR Act. All required waiting periods applicable to this Agreement and the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated.
7.6. Receipt of 1996 Audit. Buyer shall have received the audited financial
statements for the Companies for fiscal year 1996, together with the report
thereon of the Companies' independent public accountants, and such financial
statements shall not result in any Material Adverse Effect which would have to
be reflected on the Audited Financial Statements.
ARTICLE VIII.
TERMINATION AND ABANDONMENT; INDEMNIFICATION
8.1. Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by the consent of all the parties hereto;
(b) by Buyer, Parent or Seller if the Closing shall not have occurred
on or before August 20, 1998 (the "Termination Date"), except that Buyer, Parent
or Seller shall have the right, in their mutual discretion, to extend the time
period in this Section 8.1(b) for such time period (which shall in no event
exceed 45 days), and only for such time period, as shall be needed for such
parties to satisfy their respective obligations under the HSR Act, the
satisfaction of which shall at all times remain subject to each party's
obligations pursuant to Section 5.6 hereof; provided that the right to terminate
this Agreement pursuant to this Section 8.1(b) shall not be available to any
party whose failure to perform any of its obligations under this Agreement
results in the failure of the Closing to be consummated by such date;
(c) by Buyer, Parent or Seller, if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting any of the transactions contemplated hereby
and such order, decree, ruling or other action shall have become final and
nonappealable; or
(d) by Buyer, Parent or Seller in the event of a material volitional
breach by the other party to this Agreement of any representation, warranty,
covenant or agreement contained herein, which breach is not cured within the
earlier of the Termination Date or thirty (30) days after written notice thereof
is given to the breaching party by the non-breaching party or is not waived by
the non-breaching party during such period.
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<PAGE> 26
8.2. Procedure and Effect of Termination. In the event of termination of this
Agreement pursuant to Section 8.1 hereof, by one party, written notice thereof
shall forthwith be given to the other party, and, except as set forth below,
this Agreement shall terminate and be void and have no effect and the
transactions contemplated hereby shall be abandoned. If this Agreement is
terminated as provided herein:
(a) Buyer and Parent will redeliver, and will cause its agents
(including, without limitation, attorneys and accountants) to redeliver, all
documents, work papers and other material of Seller or the Companies relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof;
(b) all information received by Buyer and Parent with respect to the
business, operations, assets or financial condition of the Companies or the
Company Subsidiaries shall remain subject to the Confidentiality Agreement; and
(c) except as otherwise expressly set forth herein, no party to this
Agreement shall have any liability hereunder to any other party, except (i) for
any breach by such party of the terms and provisions of this Agreement, (ii) as
stated in paragraphs (a) and (b) of this Section 8.2 and (iii) as provided in
the Confidentiality Agreement.
8.3. Survival of Representations, Warranties and Covenants. (a) The
representations and warranties contained in Section 3.18 (Environmental Matters)
hereof shall survive the Closing and remain in full force and effect until the
fourth anniversary of the Closing Date, at which time they shall terminate. The
representations and warranties contained in Section 3.13 (Taxes) hereof shall
survive the Closing and remain in full force and effect until the expiration of
the applicable statute of limitations (including any extensions thereof), at
which time they shall terminate. All other representations and warranties
contained herein shall survive the Closing and remain in full force and effect
until December 31, 1999, at which time they shall terminate.
(b) All covenants and agreements contained herein shall survive the
Closing and remain in full force and effect until the first anniversary of the
Closing Date, at which time they shall terminate except that those covenants and
agreements that by their terms are to be performed in whole or in part
subsequent to the Closing (including without limitation Section 5.10), shall
survive the Closing.
(c) The sole and exclusive remedy for any breach of any
representation, warranty, covenant or agreement shall be pursuant to Section 8.4
hereof contained herein, except in the case of actual fraud. Under no
circumstances, except in the case of actual fraud, shall Seller be liable to
Buyer for consequential, incidental or punitive damages.
8.4. Indemnification. (a) From and after the Closing, Seller shall indemnify and
hold harmless Buyer, Parent and the Companies and their respective officers and
directors (collectively, the "Buyer Indemnified Parties") from and against any
liabilities, costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages and amounts paid in settlement
(collectively, "Damages") arising from or in connection with (i) any inaccuracy
in any representation or the breach of any warranty of Seller under this
Agreement, (ii) the failure of Seller to duly perform or observe any term,
provision, covenant or agreement to be performed or observed by Seller pursuant
to this Agreement or (iii) any liability of the Companies under Treasury
Regulations ss. 1.1502-6 for federal income taxes of the Seller or any other
member of the "affiliated group" that includes Seller.
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<PAGE> 27
(b) From and after the Closing, each of Buyer and Parent jointly and
severally shall indemnify and hold harmless Seller and its Affiliates and
Representatives (collectively, the "Selling Indemnified Parties") from and
against any Damages to the extent they are the result of (i) any inaccuracy in
any representation or the breach of any warranty of Buyer or Parent under this
Agreement, (ii) the failure of Buyer or Parent to duly perform or observe any
term, provision, covenant or agreement to be performed or observed by Buyer or
Parent pursuant to this Agreement or (iii) any claim arising after the Closing
Date for which Seller is not obligated to indemnify Buyer or Parent or any
matter arising from the conduct of the business of the Companies after the
Closing Date.
(c) Notwithstanding anything herein to the contrary, except for
Damages incurred by the Buyer Indemnified Parties in connection with the
inaccuracy of any representation or the breach of any warranty of Seller
relating to Taxes or actual fraud by the Seller or Damages incurred by the
Seller Indemnified Parties relating to fraud by Buyer or Parent, no
indemnification shall be available to Buyer Indemnified Parties under Section
8.4(a)(i) hereof or to Seller Indemnified Parties under Section 8.4(b)(i) hereof
unless and until the aggregate amount of Damages that would otherwise be subject
to indemnification, exceeds $500,000 (in each case, the "Deductible Amount"), in
which case the party entitled to such indemnification shall be entitled to
receive only the amounts in excess of the Deductible Amount.
(d) Notwithstanding anything herein to the contrary, the maximum
aggregate liability of Seller to Buyer Indemnified Parties or of Buyer and
Parent to Seller Indemnified Parties under this Section 8.4 hereof shall not
exceed Ten Million Dollars ($10,000,000).
(e) Notwithstanding anything herein to the contrary, none of the Buyer
Indemnified Parties shall be entitled to indemnification by Seller for any
Damages arising from any matter of which Buyer or Parent had knowledge at or
prior to Closing by reason of Seller having delivered written notice thereto,
either in a supplemented disclosure schedule or an officer's certificate, at or
prior to Closing, if the conditions to Buyer's or Parent's obligation set forth
in Article VII fail to be satisfied at Closing by reason of the matters
disclosed in such supplemented disclosure schedule or officer's certificate and
Buyer or Parent waives its right not to Close unless Seller made a knowing
misrepresentation with respect to such matter on the date of this Agreement.
(f) Any calculation of Damages for purposes of this Section 8.4 shall
be (i) net of any insurance recovery made by the Indemnified Party (whether paid
directly to such Indemnified Party or assigned by the Indemnifying Party to such
Indemnified Party) and (ii) reduced to take account of any net Tax benefit
realized by the Indemnified Party arising from the deductibility of any such
Damages or Tax. Any indemnification payment hereunder shall initially be made
without regard to this paragraph and shall be reduced to reflect any such net
Tax benefit only after the Indemnified Party has actually realized such benefit.
For purposes of this Agreement, an Indemnified Party shall be deemed to have
"actually realized" a net Tax benefit to the extent that, and at such time as,
the amount of Taxes payable by such Indemnified Party is reduced below the
amount of Taxes that such Indemnified Party would have been required to pay but
for deductibility of such Damages. The amount of any reduction hereunder shall
be adjusted to reflect any final determination (which shall include the
execution of Form 870-AD or successor form) with respect to the Indemnified
Party's liability for Taxes and, if necessary, either Seller or Buyer or Parent,
as the case may be, shall make payments to the other to reflect such adjustment.
Any indemnity payment under this Agreement shall be treated as an adjustment to
the Purchase Price for Tax purposes, unless a final determination (which shall
include the execution of a Form 870-AD or successor form) with respect to the
Indemnified Party or any of its Affiliates causes any such payment not to be
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treated as an adjustment to the Purchase Price for U.S. Federal income Tax
purposes.
(g) No action, claim or setoff for Damages subject to indemnification
under this Section 8.4 shall be brought or made:
(i) with respect to claims for Damages resulting from a breach of any
covenant contained in this Agreement, or in any instrument of transfer or
assumption related hereto, after the date on which such covenant or instrument
shall terminate pursuant to Section 8.3 hereof; and
(ii) with respect to claims for Damages resulting from a breach of any
representation or warranty, after the date on which such representation or
warranty shall terminate pursuant to Section 8.3 hereof;
provided, however, that any claim notified in writing with reasonable
specificity by the party seeking indemnification (the "Indemnified Party") to
the party from which indemnification is sought (the "Indemnifying Party") within
the time periods set forth above shall survive (and be subject to
indemnification) until it is finally and fully resolved.
(h) Upon receipt by the Indemnified Party of notice of any action,
suit, proceedings, claim, demand or assessment against such Indemnified Party
which might give rise to a claim for Damages, the Indemnified Party shall give
written notice thereof to the Indemnifying Party indicating the nature of such
claim and the basis therefor; provided, however, that failure to give such
notice shall not affect the indemnification provided hereunder except to the
extent the Indemnifying Party shall have been actually prejudiced as a result of
such failure. A claim to indemnity hereunder may, at the option of the
Indemnified Party, be asserted as soon as Damages have been threatened by a
third party orally or in writing, regardless of whether actual harm has been
suffered or out-of-pocket expenses incurred, provided the Indemnified Party
shall reasonably determine that it may be liable or otherwise incur such
Damages. However, payments for Damages for third party claims shall not be
required except to the extent that the Indemnified Party has expended
out-of-pocket sums. The Indemnifying Party shall have the right, at its option,
to assume the defense of, at its own expense and by its own counsel, any such
matter involving the asserted liability of the Indemnified Party as to which the
Indemnifying Party shall have acknowledged its obligation to indemnify the
Indemnified Party. If any Indemnifying Party shall undertake to compromise or
defend any such asserted liability, it shall promptly notify the Indemnified
Party of its intention to do so, and the Indemnified Party agrees to cooperate
fully with the Indemnifying Party and its counsel in the compromise of, or
defense against, any such asserted liability; provided, however, that the
Indemnifying Party shall not settle any such asserted liability without the
written consent of the Indemnified Party (which consent will not be unreasonably
withheld); provided, further, however that the immediately preceding clause
shall not apply in the case of relief consisting solely of money damages at
least 80% of which shall be borne by the Indemnifying Party after taking into
account any limitation thereon. Notwithstanding an election to assume the
defense of such action or proceeding, such Indemnified Party shall have the
right to employ separate counsel and to participate in the defense of such
action or proceeding, and the Indemnifying Party shall bear the reasonable fees,
costs and expenses of such separate counsel (and shall pay such fees, costs and
expenses at least quarterly), if (A) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to such Indemnified Party to represent
such Indemnified Party within a reasonable time after notice of the institution
of such action or proceeding, or (B) the Indemnifying Party shall authorize such
Indemnified Party to employ separate counsel at the Indemnifying Party's
expense. In any event, the Indemnified Party and its counsel shall cooperate
with the Indemnifying Party and its counsel and shall not assert any position in
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any proceeding inconsistent with that asserted by the Indemnifying Party. All
costs and expenses incurred in connection with an Indemnified Party's
cooperation shall be borne by the Indemnifying Party. In any event, the
Indemnified Party shall have the right at its own expense to participate in the
defense of such asserted liability.
8.5. Tax Matters. (a) Seller shall prepare and file all Tax Returns
with the appropriate federal, state, local and foreign governmental agencies
relating to the Companies for periods ending on or before the Closing Date and
shall pay all Taxes due with respect to such Tax Returns. Buyer shall prepare
and file, or cause to be prepared and filed, all Tax Returns required to be
filed by the Companies covering a Tax year commencing prior to the Closing Date
and ending after the Closing Date (a "Straddle Period") and shall cause the
Companies to pay the Taxes shown to be due thereon. Seller will furnish to Buyer
all information and records reasonably requested by Buyer for use in preparation
of any Tax Returns relating to a Straddle Period. Buyer shall allow Seller to
review, comment upon and reasonably approve without undue delay any such Tax
Returns at any time during the 45-day period immediately preceding the filing of
such Tax Return. Buyer and Seller agree to cause the Companies to file all Tax
Returns for any Straddle Period on the basis that the relevant taxable period
ended as of the close of business on the Closing Date, unless the relevant
taxing authority will not accept a Tax Return filed on that basis.
(b) Tax Cooperation. Seller shall reasonably cooperate, and shall
cause its respective Affiliates (including the Companies), officers, employees,
agents, auditors and Representatives reasonably to cooperate (including by
maintaining and making available to each other all relevant records), in
preparing and filing all Tax Returns and in resolving all disputes and audits
with respect to Taxes of the Companies for any Pre-Closing Tax Period and for
any Straddle Period.
(c) Procedures Relating to Indemnification of Tax Claims. (i) If a
claim shall be made by any Tax authority which, if successful, might result in
an indemnity payment to the Indemnified Parties pursuant to Section 8.5(a) or
(b) hereof, the Indemnified Parties shall notify the Indemnifying Parties
promptly of such claim (a "Tax Claim"); provided, however, that the failure to
give such notice shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Parties have actually been prejudiced as a result
of such failure.
(ii) (A) With respect to any Tax Claim relating to a taxable period
ending on or before the Closing Date, Seller shall have the right, at its own
expense, to control all proceedings and may make all decisions taken in
connection with such Tax Claim; provided that Buyer, and counsel of its own
choosing, shall have the right, at its own expense, to participate fully in all
aspects of the prosecution or defense of such Tax Claim; and provided further
that Seller shall not settle any such Tax Claim without the prior written
consent of Buyer, which consent shall not be unreasonably withheld; and provided
further that, notwithstanding anything in this Section 8.5(c)(ii)(A) to the
contrary, Seller shall have the exclusive right to make all decisions to grant
or deny any waiver or extension of the applicable statute of limitation. Buyer
shall deliver its consent, or any objections, within 15 business days of receipt
of any settlement proposal. Buyer and the Companies shall cooperate with Seller
in contesting any Tax Claim under this Section 8.5(c)(ii)(A), which cooperation
shall include the retention and, upon request of Seller, the provision of
records and information which are reasonably relevant to such Tax Claim and
making employees available to provide additional information or explanation of
any material provided hereunder. (B) Seller and Buyer shall jointly control all
proceedings with respect to any Tax Claim relating to any Straddle Period.
(iii) The party bearing the liability or obligation to indemnify for
any Taxes described under Section 8.5 shall be entitled to any refunds or
credits of such Taxes. Buyer shall cause the Companies to promptly forward to
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Seller, or after Buyer's receipt reimburse Seller, for any refunds or credits
due Seller (pursuant to the terms of this Section 8.5(c)(iii) and Seller shall
promptly forward to the Companies or after Seller's receipt reimburse the
Companies, for any refunds or credits due Buyer (pursuant to the terms of this
Section 8.5(c)(iii)).
(d) Tax Sharing Agreements. Seller will cause any tax sharing
agreement or similar arrangement with respect to Taxes involving the Companies
to be terminated as of the Closing Date, to the extent any such agreement or
arrangement relates to the Companies.
(e) Transfer Taxes. All transfer, documentary, sales, use,
registration and similar Taxes (including all applicable real estate transfer or
gains Taxes and stock transfer Taxes) and related fees (including any penalties,
interest and additions to Tax) incurred in connection with the sale of the
Shares or otherwise in connection with this Agreement, and the transactions
contemplated hereby shall be shared be borne by Buyer, and Seller and Buyer
shall cooperate in timely preparing and filing all Tax Returns as may be
required to comply with the provisions of such Tax laws.
(f) Coordination With Section 8.4. In the event the provisions of this
Section 8.5 and the provisions of Section 8.4 hereof conflict or otherwise each
apply by their terms, this Section 8.5 shall exclusively govern all matters
concerning Taxes; provided that paragraphs (c), (d) and (e) of this Section 8.5
shall apply in any event.
ARTICLE IX.
MISCELLANEOUS
9.1. Amendment and Modifications. This Agreement may be amended, modified or
supplemented at any time by the parties hereto. This Agreement may be amended
only by an instrument in writing signed on behalf of all parties.
9.2. Extension; Waiver. At any time prior to the Closing, the parties hereto
entitled to the benefits of the respective term or provision may (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document, certificate or writing delivered
pursuant hereto or (iii) waive compliance with any obligation, covenant,
agreement or condition contained herein. Any agreement on the part of any party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of the parties entitled to the benefits
of such extended or waived term or provision.
9.3. Representations and Warranties; Etc. (a) Each of Buyer and Parent hereby
acknowledges and agrees that Seller is not making any representation or warranty
whatsoever, express or implied, including, without limitation, in respect of the
Companies or their respective assets, liabilities and businesses, except those
representations and warranties of Seller explicitly set forth in this Agreement
or in the Seller Disclosure Schedule or in any certificate contemplated hereby
and delivered by Seller in connection herewith.
(b) Except as set forth in the indemnification provisions of Section
8.4 hereof, Buyer, Parent and Seller agree that on and after the Closing Date
neither Seller, nor any of the respective officers, directors, partners,
employees, Affiliates, Representatives or agents, as the case may be, of Seller
(collectively, the "Selling Group"), shall have any liability or responsibility
to any Person, including, without limitation, Buyer, Parent or the Companies,
for (and each of them unconditionally releases the Selling Group from) any
liability or obligation of, or arising out of, or relating to, the Companies,
Parent or Buyer of whatever kind or nature, whether contingent or absolute,
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whether arising prior to, on or after, and whether determined or indeterminable
on, the Closing Date, and whether or not specifically referred to in this
Agreement, including, without limitation, liabilities and obligations (i)
relating to this Agreement and the transactions contemplated hereby, (ii)
arising out of or due to any inaccuracy of any representation or warranty or the
breach of any covenant, undertaking or other agreement of Seller contained in
this Agreement, Seller Disclosure Schedule or in any certificate contemplated
hereby and delivered by Seller in connection herewith and (iii) relating to any
information (whether written or oral), documents or materials furnished by
Seller or any of its Affiliates or any of their respective Representatives,
including the Confidential Information Memorandum prepared by SBC Warburg Dillon
Read Inc. and any information, documents or material made available to Buyer in
certain "data rooms", management presentations or any other form in expectation
of the transactions contemplated by this Agreement.
9.4. Entire Agreement; Assignment. This Agreement (a) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof
(other than the Confidentiality Agreement) and (b) shall not be assigned by
operation of law or otherwise; provided, however, that Buyer may assign its
rights and obligations to any wholly owned subsidiary of Buyer (unless to do so
would restrict or delay the consummation of the transactions contemplated by
this Agreement), but no such assignment shall relieve Buyer of its obligations
hereunder.
9.5. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, each of which shall remain in full force and effect.
9.6. Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, telecopied (which is confirmed) or sent by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses:
If to Buyer, to:
Healthcare Staffing Solutions, Inc.
Cross Point Tower II
900 Chelmsford Street
Lowell, Massachusetts 08152
Attention: Richard C. Stoddard
Telecopy: (978) 551-4037
If to Parent, to:
RehabCare Group, Inc.
7733 Forsyth Boulevard
Suite 1700
St. Louis, Missouri 63105
Attention: Gregory J. Eisenhauer
Telecopy: (314) 863-5244
With a copy to:
Thompson Coburn
One Mercantile Center
St. Louis, Missouri 63101-1693
Attention: Robert M. LaRose, Esq.
Telecopy: (314) 552-7000
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<PAGE> 32
If to Seller, to:
Medical Resources, Inc.
155 State Street
Hackensack, NJ 07601
Attention: Christopher J. Joyce, Esq.
Telecopy: (201) 488-8230
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Steven J. Gartner, Esq.
Telecopy: (212) 728-8111
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
9.7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
9.8. Specific Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
9.9. Publicity. Except as otherwise required by law, for so long as this
Agreement is in effect, none of Seller, Buyer, Parent or the Companies shall
issue or cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement without the
express prior written approval of the other parties. Each of Seller (on behalf
of itself and the Companies), Buyer and Parent agree to afford each other party
a reasonable period of time to review and comment upon any such press release or
public announcement, subject at all times to any requirement of law or rule or
regulation of any stock exchange or automated interdealer quotation system
governing the timing of any such press release or public announcement.
9.10. Arbitration (a) The parties hereto agree to submit any dispute or
controversy arising out of or in connection with or relating to this Agreement
or the breach or alleged breach thereof (a "Dispute"), including any Dispute
relating to any claim for Damages subject to indemnification pursuant to Section
8.4 hereof, to final and binding arbitration pursuant to the provisions set
forth below. Nothing in this Section 9.10 shall prohibit Buyer, Parent or Seller
from instituting litigation to enforce any Final Determination (as defined
below). The parties hereby acknowledge and agree that, except as set forth in
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<PAGE> 33
this Section 9.10 or in the arbitration rules of the American Arbitration
Association as in effect from time to time, the arbitration procedure and any
Final Determination hereunder shall be governed by, and shall be enforced
pursuant to applicable New York law.
(b) In the event that either Buyer, Parent or Seller asserts that
there exists a Dispute, such party shall deliver a written notice to the other
party specifying the nature of the asserted Dispute and requesting a meeting to
attempt to resolve the same. If no such resolution is reached within twenty days
after the delivery of such notice, the party delivering such notice of Dispute
may, within 45 days after delivery of such notice, commence arbitration
hereunder by delivering to each other party involved therein a notice of
arbitration (a "Notice of Arbitration"). Such Notice of Arbitration shall
specify the matters as to which arbitration is sought, the nature of any
Dispute, the claims of each party to the arbitration and shall specify the
amount and nature of any Damages, if any, sought to be recovered as a result of
any alleged claim, and any other matters required by the arbitration rules of
the American Arbitration Association in effect from time to time to be included
therein, if any.
(c) Arbitration shall be conducted in the City of New York, New York
before a single arbitrator agreeable to both parties. In the event that the
parties fail to agree on a designee within 20 days from the delivery of a Notice
of Arbitration, then the arbitration shall proceed in the same location before a
single arbitrator appointed by the American Arbitration Association at the
request of either party thereto.
(d) The costs and expenses of arbitration shall be borne equally by
each party.
(e) The arbitrator shall so conduct the arbitration that a final
result, determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable, but in no event
later than 90 days after the delivery of the Notice of Arbitration nor later
than 10 days following completion of the arbitration.
(f) The Buyer and the Seller may enforce any Final Determination in
any state or federal court located in New York, New York. For the purpose of any
action or proceeding instituted with respect to any Final Determination, each
party hereto hereby irrevocably submits to the jurisdiction of such courts,
irrevocably consents to the service of process by registered mail or personal
service and hereby irrevocably waives, to the fullest extent permitted by law,
any objection which it may have or hereafter have as to personal jurisdiction,
the laying of the venue of any such action or proceeding brought in any such
court and any claim that any such action or proceeding brought in any court has
been brought in an inconvenient forum. 9.11. Descriptive Headings. The
descriptive headings herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
9.12. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
9.13. Expenses. Whether or not the transactions contemplated by this Agreement
are consummated, and except as otherwise expressly set forth herein, all legal
and other costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
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<PAGE> 34
9.14. Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and, except as set forth in Sections
5.9 and 8.4 hereof, nothing in this Agreement, express or implied, is intended
by or shall confer upon any other Person or Persons any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement. Any
Person who is a beneficiary of any of the aforementioned provisions shall be
entitled to enforce his rights thereunder; provided, however, that, prior to the
Closing, no action to enforce such rights may be commenced by any such Person
without the prior written consent of Seller.
9.15. Interpretation. No reference in this Agreement to "reasonable best
efforts" or "all reasonable efforts" shall require a Person obligated to use
such efforts to incur out-of-pocket expenses or indebtedness or, except as
expressly provided herein, to institute litigation or to consent generally to
service of process in any jurisdiction.
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<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MEDICAL RESOURCES, INC.
_
By: /s/ Duane C. Montopoli
-----------------------------------
Name: Duane C. Montopoli
Title: President & CEO
REHABCARE GROUP, INC.
By: /s/ Gregory Eisenhauer
-----------------------------------
Name: Gregory Eisenhauer
Title: Senior Vice President,
Acquisitions
HEALTHCARE STAFFING SOLUTIONS, INC.
By: /s/ R.C. Stoddard
-----------------------------------
Name: R.C. Stoddard
Title: President
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<PAGE> 36
EXHIBIT 2.2
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of August 14, 1998, by and between Medical
Resources, Inc., a Delaware corporation ("Seller"), RehabCare Group, Inc., a
Delaware corporation ("Parent") and IBJ Schroder Bank & Trust Company, as Escrow
Agent (the "Escrow Agent").
R E C I T A L S
WHEREAS, Seller, Healthcare Staffing Solutions, Inc., a Massachusetts
corporation ("Buyer"), and Parent are parties to a Stock Purchase Agreement (the
"Purchase Agreement"), pursuant to which Buyer will purchase from Seller, and
Seller will sell to Buyer, StarMed Staffing, Inc. and Wesley Medical Resources,
Inc. (collectively, the "Companies") on the terms and conditions set forth
therein; and
WHEREAS, pursuant to the Purchase Agreement, Buyer and Parent have
agreed to deposit a letter of credit in the amount of $2,000,000 into escrow
pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Appointment of Escrow Agent; Fee. (a) Seller and Parent hereby
appoint the Escrow Agent as the escrow agent under this Agreement, and the
Escrow Agent accepts such appointment according to the terms and conditions set
forth herein.
(b) In consideration for its services hereunder, the Escrow Agent
shall be paid a fee as set forth in Schedule I.
2. Delivery of Letter of Credit. On the date hereof, Parent has
deposited with the Escrow Agent, and the Escrow Agent hereby acknowledges
receipt of, a letter of credit (the "Letter of Credit"), a copy of which is
attached hereto as Exhibit A, issued by NationsBank, N.A. (the "Bank").
3. Release of Letter of Credit. The Escrow Agent shall hold the Letter
of Credit in escrow in accordance with this Agreement. If the Escrow Agent
receives a written notice (a "Draw Notice") (a) in the case of a Draw Notice
delivered on or before December 31, 1999, from Seller and Buyer requesting that
the Escrow Agent make a draw on the Letter of Credit, and (b) in the case of a
Draw Notice delivered after December 31, 1999, from Seller (i) requesting that
the Escrow Agent make a draw on the Letter of Credit, (ii) certifying that the
Seller is entitled to make such request in accordance with the L/C Procedures
Agreement (as defined in the Purchase Agreement) and (iii) in the case of a
partial draw on the Letter of Credit, certifying that the requested amount of
such draw does not exceed the amount permitted to be drawn under the Letter of
Credit in accordance with the terms thereof, the Escrow Agent shall, within five
business days of the date on which it receives the Draw Notice, present the
Letter of Credit to the Bank, demand payment of the amount indicated in the Draw
Notice (which shall not exceed the amount of the Letter of Credit then
outstanding), and deposit the proceeds thereof to be held by the Escrow Agent in
escrow pursuant to the terms hereof ("Escrow Proceeds").
<PAGE> 37
4. Investment of Escrow Proceeds. Until the termination of this
Agreement, the Escrow Proceeds, together with any interest earned thereon, shall
be invested (as directed in written instructions to the Escrow Agent from time
to time by Seller) solely in one or more of the investments referred to below:
(a) interest bearing time deposits with maturity dates of 30 days or
less of any bank located within the United States of America, including one or
more accounts maintained in the commercial banking department (if any) of the
Escrow Agent; provided that any amount held on deposit in any bank not having
unsecured, non-subordinated indebtedness outstanding that is rated as
"investment grade" by a nationally recognized rating agency shall be so invested
only if such amount is fully insured by the Federal Deposit Insurance
Corporation ("FDIC");
(b) certificates of deposit with maturity dates of 30 days or less
issued by the commercial banking department (if any) of the Escrow Agent, or of
any bank located in the United States of America, provided that any amount held
on deposit in any bank not having unsecured, non-subordinated indebtedness
outstanding that is rated as "investment grade" by a nationally recognized
rating agency shall be so invested only if such amount is fully insured by the
FDIC;
(c) direct obligations of, or obligations guaranteed as to all
principal and interest by, the United States of America, in each case with
maturity dates of 30 days or less;
(d) repurchase agreements with maturity dates of 30 days or less that
are fully secured as to payment of principal and interest by collateral
consisting of obligations described in Sections 4(a) through (c) above;
(e) commercial paper with maturity dates of 30 days or less that is
rated A-1 by Standard & Poor's Corporation or Prime-1 by Moody's Investors
Service, Inc., or better; or
(f) investments in institutional money market funds investing
principally in obligations permitted by Sections 4(a) through (e) above,
including money market funds managed by the Escrow Agent or any of its
affiliates.
In the absence of any written instructions from Seller to the
contrary, the Escrow Agent is hereby authorized and directed to invest and
reinvest the Escrow Proceeds in money market funds referred to in clause (f)
above.
The parties acknowledge that the Escrow Agent shall not be responsible for any
diminution in the Escrow Proceeds due to losses resulting from investments made
pursuant to this Agreement.
5. Payments From Escrow. The Escrow Agent shall hold the Escrow
Proceeds in escrow in accordance with this Agreement and shall make payments
from the Escrow Proceeds only as follows:
(a) Parent shall be paid such amounts as are authorized to be paid to
it pursuant to Section 6 below.
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<PAGE> 38
(b) On the later to occur of (i) April 1, 1999 or (ii) the date upon
which Seller shall certify to Parent and the Escrow Agent in writing that the
following events have occurred (the "First Release Date Conditions"): (A)(I)
Seller shall have received from the requisite holders of its Senior Notes a
waiver of all defaults in existence as of June 30, 1998 or (II) Seller shall
have repaid in full all amounts due to the holders of such Senior Notes and
(B)(I) the Companies shall have been released from the litigation entitled Ash
v. Medical Resources, Inc. et. al. (U.S.D.C. Northern District California, Case
No. C-98-02251) or, in the event of any transfer of such case to another
jurisdiction or forum, any such transferred case (the "Ash Litigation") or (II)
there shall have been rendered a final, non-appealable order in the Ash
Litigation, and any judgment against the Companies shall have been satisfied in
full by Seller (the later to occur of the dates set forth in (i) and (ii) above,
the "First Release Date"), Seller shall be paid an amount equal to $1,000,000
less the aggregate of the then existing Claim Reserves (as defined below) for
Open Claims (as defined below) and the amount of any unresolved claim for
indemnification pursuant to the Purchase Agreement not constituting an Open
Claim which is described in a written notice of a claim from Parent in
accordance with Section 6(a) (a "Notified Claim") and actually received by the
Escrow Agent at any time prior to the First Release Date. Buyer hereby
acknowledges that such $1,000,000 payment shall only be reduced by the aggregate
amount of such Claim Reserves for Open Claims and Notified Claim amounts to the
extent such aggregate amount exceeds the amount remaining under the Deductible
Amount (as defined in the Purchase Agreement) as of the First Release Date. The
Escrow Agent shall bear no responsibility for determining whether the aggregate
amount of such Claim Reserves for Open Claims and Notified Claim amounts exceeds
the amount remaining under the Deductible Amount as of the First Release Date.
(c) On January 2, 2000 (the "Final Release Date"), notwithstanding the
occurrence or non-occurrence as of such date of the First Release Date, Seller
shall be paid an amount equal to the entire balance of the Escrow Proceeds then
remaining less the aggregate of the then existing Claim Reserves for Open Claims
and the amount of any Notified Claim actually received by the Escrow Agent at
any time on or prior to December 31, 1999, excluding the amount of any Claim
Reserve established in respect of the Ash Litigation (the "Ash Claim Reserve");
provided, however, that such payment shall only be reduced by the aggregate
amount of such Claim Reserves for Open Claims and Notified Claim amounts to the
extent such aggregate amount exceeds the amount remaining under the Deductible
Amount as of the Final Release Date. The amount of the Ash Claim Reserve shall
be established in good faith by Parent and shall be furnished to the Escrow
Agent in a written instrument executed by Parent, which instrument shall
reference this Section 5(c) and shall be furnished to the Escrow Agent prior to
December 31, 1999. In the event Parent fails to deliver such written instrument
to the Escrow Agent prior to December 31, 1999, the Escrow Agent shall be
entitled to assume that the amount of the Ash Claim Reserve is zero.
(d) Notwithstanding anything herein to the contrary, in the event that
the First Release Date condition set forth in Section 5(b)(ii)(B) hereof (the
"Ash Condition") shall not have been fulfilled as of the Final Release Date, any
amounts owed under Section 5(c) above shall be reduced by $1,000,000 (the "Ash
Holdback"), provided, however, that the Ash Holdback shall be paid to Seller
within three business days of the date Seller certifies in writing to Parent
that the Ash Condition has been fulfilled.
(e) Within two banking days of the Escrow Agent's having been given a
copy of a Final Determination (as defined below) for an Open Claim, (i) Parent
shall be paid an amount equal to the aggregate amount payable to Parent under
the Final Determination for such Open Claim and (ii) to the extent authorized in
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<PAGE> 39
Section 6 below, Seller shall be paid an amount equal to the balance of the
Claim Reserve established in respect of such Open Claim.
(f) Seller and Parent hereby covenant and agree to take all action
necessary to commence the arbitration procedures set forth in Section 9.10 of
the Purchase Agreement promptly after each of the First Release Date and the
Final Release Date in respect of all Open Claims and Notified Claims in
existence as of each such date, respectively.
(g) Any payment required to be made hereunder by the Escrow Agent from
the Escrow Proceeds shall be delivered in accordance with written instructions
given to the Escrow Agent by the party entitled under this Agreement to receive
such payment, which written instructions shall be reasonably satisfactory to the
Escrow Agent and shall be furnished to the Escrow Agent at least two (2)
business days prior to any date on which any payment required to be made
hereunder by the Escrow Agent from the Escrow Proceeds is made.
(h) In the event the expiration of the Letter of Credit occurs before
the resolution of the Ash Litigation, the Escrow Agent shall make a draw on the
Letter of Credit in the amount of the Ash Claim Reserve and invest the proceeds
accordingly.
6. Parent Claims. The procedure for payments from the Escrow Proceeds
to Parent or, in the case of Section 6(d) hereof, to Parent or Seller, shall be
as follows:
(a) From time to time prior to the Final Release Date, if Parent shall
have determined that it is entitled to an indemnification payment under Section
8.4 of the Purchase Agreement, Parent may request payment from the Escrow
Proceeds by giving written notice of Parent's claim to the Escrow Agent and to
Seller, certifying in such notice the nature of the claim, the amount thereof if
then ascertainable and, if not then ascertainable, a good faith estimate of the
estimated amount thereof (provided, however, that Parent shall provide the
Escrow Agent and Seller with a specific amount), and the provision(s) in the
Purchase Agreement on which the claim is based and the method by and date on
which such notice was given to the Escrow Agent and to Seller.
(b) If, within twenty (20) days after actual receipt by the Escrow
Agent of the written notice of a claim from Parent in accordance with Section
6(a), the Escrow Agent has not actually received written objection to such claim
from Seller, the claim stated in such notice shall be conclusively deemed to be
approved by Seller and the Escrow Agent shall promptly thereafter pay to Parent
from the Escrow Proceeds an amount equal to the amount of such claim to the
extent of the funds in the Escrow Proceeds. If there has been no draw on the
Letter of Credit at the time of such payment, the Escrow Agent shall make
payment as promptly as practicable after such time, if any, as the Letter of
Credit is drawn, to the extent funds are available.
(c) If within said twenty (20) days the Escrow Agent shall have
actually received from Seller a written objection to the claim by Parent,
certifying the nature of and grounds for such objection (a copy of which
objection shall be sent to Parent by Seller in accordance with the provisions of
Section 11 below), then such claim shall be deemed to be an "Open Claim" and the
Escrow Agent shall reserve an amount equal to the amount of the Open Claim
(which amount for each Open Claim is referred to herein as the "Claim Reserve").
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<PAGE> 40
(d) The amount constituting the Claim Reserve for each Open Claim
shall be paid by the Escrow Agent from the Escrow Proceeds to Parent or Seller
only either (i) in accordance with a written instruction jointly issued and
signed by both Parent and Seller or (ii) if and to the extent consistent with a
copy of a written decision of an arbitrator made pursuant to the terms of the
Purchase Agreement or a final judgment by or order of a court of competent
jurisdiction with respect to which any period of time to appeal such judgment or
order shall have lapsed pertaining to the Open Claim, sent to the Escrow Agent
by Parent or Seller, and accompanied by, in the case of an order or judgment, a
certification that any period of time to file an appeal has lapsed and no such
appeal has been filed or is otherwise pending (a "Final Determination"), and any
portion of the Claim Reserve for such Open Claim not so required to be paid to
Parent shall be paid by the Escrow Agent to Seller in accordance with Sections
5(b) or 5(c) above and such Claim Reserve shall be reduced to zero, but if it is
then prior to the Final Release Date, such portion of the Claim Reserve shall
cease to be a reserved portion of the Escrow Proceeds.
(e) Buyer hereby acknowledges that it shall not make any Open Claim or
Notified Claim until the aggregate amount of Claim Reserves for Open Claims and
Notified Claim amounts exceeds the amount remaining under the Deductible Amount.
The Escrow Agent shall bear no responsibility for determining whether the
aggregate amount of such Claim Reserves for Open Claims and Notified Claim
amounts exceeds the amount remaining under the Deductible Amount.
7. Conditions to Escrow. The Escrow Agent agrees to hold the Letter of
Credit and the Escrow Proceeds and to perform in accordance with the terms and
provisions of this Agreement. Seller and Parent agree that the Escrow Agent does
not assume any responsibility for the failure of Seller or Parent to perform in
accordance with the Purchase Agreement or this Agreement. The acceptance by the
Escrow Agent of its responsibilities hereunder is subject to the following terms
and conditions, which the parties hereto agree shall govern and control with
respect to the Escrow Agent's rights, duties, liabilities and immunities:
(a) The Escrow Agent may conclusively rely, and shall be protected in
acting or refraining from acting upon, any written notice, certification,
request, waiver, consent, receipt or other paper or document furnished to it,
not only as to its due execution and validity and effectiveness of its
provisions but also as to the truth and accuracy of any information therein
contained and its signature and presentation by the proper party or parties. It
is understood that any references herein to joint instructions or joint written
instructions or words of similar import include any instructions signed in
counterpart.
(b) The Escrow Agent shall not be liable for any error of judgment or
for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing in
connection herewith, except for its own gross negligence or willful misconduct.
(c) The Escrow Agent may consult with, and obtain advice from, legal
counsel in the event of any question as to any of the provisions hereof or the
duties hereunder, and it shall incur no liability and shall be fully protected
in acting in good faith in accordance with the opinion and instructions of such
counsel. The reasonable costs of such counsel's services shall be paid to the
Escrow Agent in accordance with Section 10 below.
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<PAGE> 41
(d) The Escrow Agent shall have no duties except those which are
expressly set forth herein and it shall not be bound by (i) the Purchase
Agreement or any agreement of the other parties hereto (whether or not it has
any knowledge thereof) or by any notice of a claim, or demand with respect
thereto, or (ii) any waiver, modification, amendment, termination or rescission
of this Agreement unless the Escrow Agent agrees thereto in writing.
(e) The Escrow Agent may resign and be discharged from its duties and
obligations hereunder by giving notice in writing of such resignation specifying
a date (no earlier than thirty (30) days following the date of such notice) when
such resignation will take effect, provided, however, that until a successor
escrow agent is appointed by Parent and Seller and such successor accepts such
appointment, the Escrow Agent shall continue to hold the Letter of Credit and
the Escrow Proceeds and otherwise comply with the terms of this Agreement;
provided further that the parties to this Escrow Agreement agree to use their
best efforts to mutually agree on a successor escrow agent within thirty (30)
days after the giving of Escrow Agent's notice and if no such successor escrow
agent shall be appointed within thirty (30) days of the Escrow Agent providing
its notice, the Escrow Agent may, at the expense of Parent and Seller, (i)
appoint a successor escrow agent which shall be a national or stat chartered
banking, trust or savings association, (ii) petition any court of competent
jurisdiction for the appointment of a successor escrow agent or (iii) may
deposit the Letter of Credit or the Escrow Proceeds with the office of the clerk
of registry of any state or federal court in the State of New York, at which
time the Escrow Agent's duties hereunder shall terminate. Any successor escrow
agent shall execute and deliver an instrument accepting such appointment and it
shall, without further acts, be vested with all the estates, properties, rights,
powers and duties of the predecessor escrow agent as if originally named as
escrow agent. The resigning Escrow Agent shall thereupon be discharged from any
further obligations under this Escrow Agreement.
(f) Upon delivery of all of the Letter of Credit or the entire Escrow
Proceeds pursuant to the terms hereof or to a successor escrow agent, the Escrow
Agent shall thereafter be discharged from any further obligations hereunder. The
Escrow Agent is hereby authorized, in any and all events, to comply with and
obey any and all final judgments, orders and decrees (not subject to appeal) of
any court of competent jurisdiction which may be filed, entered or issued, and,
if it shall so comply or obey, it shall not be liable to any other person by
reason of such compliance or obedience.
(g) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Letter of Credit or the Escrow Proceeds which, in its sole opinion, are in
conflict with either other instructions received by it or any provision of this
Agreement, it shall without liability of any kind, be entitled to hold the
Letter of Credit or the Escrow Proceeds pending the resolution of such
uncertainty to the Escrow Agent's sole satisfaction, by final judgment of a
court or courts of competent jurisdiction or otherwise, or the Escrow Agent, at
its option, may, in final satisfaction of its duties hereunder, deposit the
Letter of Credit or the Escrow Proceeds with the office of the clerk of registry
of any state or federal court in the State of New York. The Escrow Agent shall
not be bound by, or obligated to consider any instructions received from Parent
that are inconsistent with any Draw Notice given by Seller.
8. Indemnification. Parent and Seller, jointly and severally, hereby
agree to indemnify the Escrow Agent, its directors, officers, agents and
employees and any person who "controls" the Escrow Agent within the meaning of
Section 15 of the Securities Act of 1933 (collectively, the "Indemnified
Parties") for and to hold them harmless against any loss, liability or expense
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<PAGE> 42
(including, without limitation, all expenses reasonably incurred in its
investigation and defense and costs and expenses reasonably incurred in
enforcing this right of indemnification) incurred without gross negligence or
willful misconduct on the part of the Indemnified Parties arising out of or in
connection with this Agreement. The provisions of this Section 8 shall survive
the termination of this Agreement. The Escrow Agent shall have and does have a
first lien against the Escrow Proceeds to satisfy any claims for indemnification
made hereunder.
9. Banking Days. If any date on which the Escrow Agent is required to
make an investment or a delivery pursuant to the provisions hereof is not a
banking day, then the Escrow Agent shall make such investment or delivery on the
next succeeding banking day.
10. Escrow Costs; No Right of Set-off. The Escrow Agent shall be
entitled to be paid a fee for its services pursuant to the attached Fee Schedule
and to be reimbursed for its reasonable costs and expenses hereunder (including
reasonable counsel fees), which fees, costs and expenses shall be paid 50% by
Parent and 50% by Seller.
The Escrow Agent acknowledges and agrees that it is holding the Escrow
Proceeds in its capacity as escrow agent and that it has no right to apply
amounts in the Escrow Proceeds against any obligations of the other parties to
this Agreement that do not arise under this Agreement.
11. Notices.
(a) All communications under this Agreement shall be in writing and
shall be delivered by hand or by facsimile, or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
(i) if to Seller, at 155 State Street, Hackensack, New Jersey
07601 or at such other address as Seller may have furnished the other parties
hereto in writing, with a copy to Willkie Farr & Gallagher, at 787 Seventh
Avenue, New York, New York 10019, marked for the attention of Steven J. Gartner,
Esq. (Facsimile No.: 212-728-8111),
(ii) if to Parent, at RehabCare Group, Inc., 7733 Forsyth
Boulevard, Suite 1700, St. Louis, Missouri 63105 or at such other address as
Parent may have furnished the other parties hereto in writing, with copies to
Thompson Coburn, at One Mercantile Center, St. Louis, Missouri 63101-1693,
marked for the attention of Robert M. LaRose, Esq. (Facsimile No.:
314-552-7000), or
(iii) if to the Escrow Agent, at One State Street, New York, New
York 10004, marked to the attention of Kevin Fox (Facsimile No.: 212-858-2952).
(b) Any notice so addressed shall be deemed to be given: if delivered
by hand or by facsimile, on the date of such delivery; if mailed by courier, on
the first business day following the date of such mailing; and if mailed by
registered or certified mail, on the fifth business day after the date of such
mailing.
12. Entire Agreement. This Agreement, together with the Purchase
Agreement and the L/C Procedures Agreement and related exhibits and schedules,
contains the entire understanding of the parties hereto with respect to the
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<PAGE> 43
transactions contemplated hereby and may be amended, modified, supplemented or
altered only by a writing duly executed by the Escrow Agent, Parent and Seller,
and any prior agreements or understandings, whether oral or written, are
entirely superseded hereby.
13. Assigns and Assignment. This Agreement shall extend to, shall
inure to the benefit of and shall be binding upon all of the parties hereto and
upon all of their respective successors and permitted assigns.
14. Payment and Taxation of Interest Earned on Investments of Escrow
Proceeds. Any and all interest or other income accrued or earned on the Escrow
Proceeds shall be paid to Seller on or as promptly as practicable following
September 30, December 31, March 31 and June 30 of each year in which all or any
portion of the Escrow Proceeds remains undistributed pursuant to the terms of
this Agreement. Seller hereby acknowledges that, for federal and state income
tax purposes, interest earned on the investment of the Escrow Proceeds shall be
treated as income of Seller. The Escrow Agent shall be responsible for reporting
any interest earned to Seller.
15. No Other Third Party Beneficiaries. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any person other than the parties hereto,
any rights or remedies under or by reason of this Agreement.
16. No Waiver. No failure or delay by an party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, and
no single or partial exercise thereof shall preclude any right of further
exercise or the exercise of any other right, power or privilege.
17. Severability. If any covenant, agreement, provision or term of
this Agreement is held to be invalid for any reason whatsoever, then such
covenant, agreement, provision or term will be deemed severable from the
remaining covenants, agreements, provisions and terms of this Agreement and will
in no way affect the validity or enforceability of any other provision of this
Agreement.
18. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
19. Counterparts. This Agreement may be executed by the parties hereto
individually or in any combination, in one or more counterparts, each of which
shall be an original and all of which shall together constitute one and the same
agreement.
* * * * * *
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<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
SELLER:
MEDICAL RESOURCES, INC.
By: /s/ Chris Joyce
------------------------------
Name: Chris Joyce
Title:
PARENT:
REHABCARE GROUP, INC.
By: /s/ Gregory J. Eisenhauer
------------------------------
Name:Gregory J. Eisenhauer,CFA
Title: Senior Vice President,
Acquisitions
IBJ SCHRODER BANK & TRUST
COMPANY, as Escrow Agent
By: /s/ Stephen J. Giurlando
------------------------------
Name:Stephen J. Giurlando
Title:Assistant Vice President
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<PAGE> 45
EXHIBIT 2.3
Execution Copy
L/C PROCEDURES AGREEMENT
THIS L/C PROCEDURES AGREEMENT, dated as of July 8, 1998 (the
"Agreement"), by and between MEDICAL RESOURCES, INC., a Delaware corporation
("Seller"), and REHABCARE GROUP, INC., a Delaware corporation ("Parent").
W I T N E S S E T H:
WHEREAS, Parent, Healthcare Staffing Solutions, Inc., a Massachusetts
corporation ("Buyer"), and Seller have entered into a Stock Purchase Agreement,
dated as of the date hereof (the "Purchase Agreement"), pursuant to which Buyer
has agreed to purchase and Seller has agreed to sell StarMed Staffing, Inc. and
Wesley Medical Resources, Inc. (collectively, the "Companies"); and
WHEREAS, pursuant to the terms of the Purchase Agreement, Buyer has
agreed to provide the Letter of Credit (as defined below) as an inducement to
Seller to consummate the transactions contemplated by the Purchase Agreement and
to maintain the Letter of Credit on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized terms used in this Agreement without
definition have the respective meanings ascribed to such terms in the Purchase
Agreement. The terms defined in this Article I, whenever used herein, shall have
the following meanings for all purposes of this Agreement.
"Ash Condition" shall have the meaning set forth in Section 2.2(c)
hereof.
"Ash Holdback" shall have the meaning set forth in Section 2.2(c)
hereof.
"Ash Litigation" shall have the meaning set forth in the Escrow
Agreement.
"Buyer" shall have the meaning set forth in the recitals hereto.
"Claim Reserves" shall have the meaning set forth in the Escrow
Agreement.
"Claim Reserve Amount" shall mean the lesser of (i) the December 31
Claim Reserve and (ii) the difference between (x) the Letter of Credit Amount
and (y) all amounts previously drawn on the Letter of Credit or, in the event
Parent made any payments pursuant to Sections 2.2(b) or 2.2(c), the amount of
such payments.
<PAGE> 46
"December 31 Claim Reserve" shall mean the aggregate amount of the
Claim Reserve and Notified Claim amounts as of December 31, 1999.
"Final Release Date" shall mean December 31, 1999.
"First Release Date" shall have the meaning set forth in the Escrow
Agreement.
"First Release Date Conditions" shall have the meaning set forth in
the Escrow Agreement.
"Letter of Credit" shall mean the Letter of Credit to be deposited
with the Escrow Agent on the Closing Date pursuant to Section 2.2 of the
Purchase Agreement and otherwise meeting the requirements of Section 2.1 hereof.
"Letter of Credit Amount" shall have the meaning set forth in Section
2.1 hereof.
"Letter of Credit Termination Date" shall have the meaning set forth
in Section 2.1 hereof.
"Notified Claim" shall have the meaning set forth in the Escrow
Agreement.
"Open Claim" shall have the meaning set forth in the Escrow Agreement.
"Parent" shall have the meaning set forth in the preamble hereto.
"Purchase Agreement" shall have the meaning set forth in the recitals
hereto.
"Seller" shall have the meaning set forth in the preamble hereto.
ARTICLE II
LETTER OF CREDIT PROCEDURES
2.1 Letter of Credit.
(a) On the Closing Date, Parent shall deliver or shall cause Buyer to
deliver the Letter of Credit to the Escrow Agent pursuant to the Purchase
Agreement. The Letter of Credit (i) shall be issued by a bank or trust company
reasonably acceptable to Seller, other than the Escrow Agent, in the amount of
$2,000,000 (the "Letter of Credit Amount"), (ii) shall have a term expiring
January 31, 2000 (the "Letter of Credit Termination Date"), (iii) shall permit
partial draws and (iv) shall be accompanied by a site draft and certificate of
drawing, which shall be substantially in the form of Exhibit A hereto.
(b) Parent shall take all action necessary to keep in full force and
effect the Letter of Credit.
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<PAGE> 47
2.2 Requirements for Drawing Against the Letter of Credit.
(a) In the event Parent fails to make the payments required by
Sections 2.2(b) or 2.2(c) when due, Seller shall have the sole and absolute
right to instruct the Escrow Agent to draw on the Letter of Credit in the amount
of such payment.
(b) On the First Release Date, Parent shall pay or cause Buyer to pay
Seller an amount equal to $1,000,000 less the aggregate of the then existing
Claim Reserves for Open Claims and the amount of any unresolved Notified Claim
actually received by the Escrow Agent at any time on or prior to the First
Release Date; provided, however, that such $1,000,000 payment shall only be
reduced by the aggregate amount of such Claim Reserves for Open Claims and
Notified Claim amounts to the extent such aggregate amount exceeds the amount
remaining under the Deductible Amount as of the First Release Date.
(c) On the Final Release Date, notwithstanding the occurrence or
non-occurrence as of such date of the First Release Date, Parent shall, subject
to Section 2.2(d), pay or cause Buyer to pay Seller an amount equal to the
entire balance of the Letter of Credit Amount then remaining less the aggregate
of the then existing Claim Reserves for Open Claims and the amount of any
Notified Claim actually received by the Escrow Agent at any time on or prior to
December 31, 1999 (excluding the amount of any Claim Reserves established in
respect of the Ash Litigation); provided, however, that such payment amount
shall only be reduced by the aggregate amount of such Claim Reserves for Open
Claims and Notified Claim amounts to the extent such aggregate amount exceeds
the amount remaining under the Deductible Amount as of the Final Release Date.
(d) Notwithstanding anything herein to the contrary, in the event that
the First Release Date Condition set forth in Section 5(b)(ii)(B) of the Escrow
Agreement (the "Ash Condition") shall not have been fulfilled as of the Final
Release Date, any amounts owed under Section 2.2(c) above shall be reduced by
$1,000,000 (the "Ash Holdback"); provided, however, that the Ash Holdback shall
be paid to Seller within three business of the date Seller certifies in writing
to Parent that the Ash Condition has been fulfilled.
(e) All payments to Seller hereunder shall be made by wire transfer of
immediately available funds to such account as Seller may designate in writing.
(f) At any time after the Final Release Date and prior to the Letter
of Credit Termination Date, unless Parent shall have paid to Seller the entire
Letter of Credit Amount or previously deposited with the Escrow Agent an amount,
in cash, equal to the Claim Reserve Amount, Seller shall have the sole and
absolute right to instruct the Escrow Agent to draw on the Letter of Credit in
the amount of the Claim Reserve Amount (including the Ash Holdback).
(g) Parent shall not take any action to prevent Seller from exercising
its rights pursuant to this Section 2.2, including without limitation, giving
the Escrow Agent inconsistent instructions. Except as specifically set forth in
the Escrow Agreement, in no event shall any drawing on the Letter of Credit
require the consent of Parent or Buyer.
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<PAGE> 48
(h) Any amounts deposited by Parent with the Escrow Agent pursuant to
this Agreement and the proceeds of any draw on the Letter of Credit shall be
held in escrow by the Escrow Agent and disbursed in accordance with the Escrow
Agreement.
(i) In the event Parent makes any payments to Seller pursuant to this
Section 2.2 or deposits any amounts with the Escrow Agent pursuant to this
Agreement, Seller shall take all actions reasonably requested by Parent to amend
the Escrow Agreement to reduce the Letter of Credit by the amount of such
payment or to permit Parent to substitute a new letter of credit for such
reduced amount, provided such substitute letter of credit is substantially
similar in all other respects to the Letter of Credit.
(j) Parent shall be solely responsible for the payment of all fees and
expenses, including, without limitation, all commitment, facility and
maintenance fees and fees and disbursements of counsel for the issuing bank,
incurred in connection with the establishment and maintenance of the Letter of
Credit (or any substitute letter of credit permitted hereby). Parent shall be
solely responsible for any reimbursement obligations associated with the Letter
of Credit.
ARTICLE III
MISCELLANEOUS
3.1 Amendment and Modifications. This Agreement may be amended,
modified or supplemented at any time by the parties hereto. This Agreement may
be amended only by an instrument in writing signed on behalf of all parties.
3.2 Entire Agreement; Assignment. This Agreement, the Purchase
Agreement and the Escrow Agreement (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof (other than the
Confidentiality Agreement) and (b) shall not be assigned by operation of law or
otherwise.
3.3 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
3.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, telecopied (which is confirmed) or sent by
registered or certified mail (postage prepaid, return receipt requested) to the
parties as provided in the Purchase Agreement.
3.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
3.6 Specific Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
- 4 -
<PAGE> 49
3.7 Arbitration. The parties hereto agree to submit any dispute or
controversy arising out of or in connection with or relating to this Agreement
to final and binding arbitration pursuant to the provisions of Section 9.10 of
the Purchase Agreement. The parties hereby acknowledge and agree that, except as
set forth in Section 9.10 of the Purchase Agreement or in the arbitration rules
of the American Arbitration Association as in effect from time to time, the
arbitration procedure and any Final Determination (as defined in the Purchase
Agreement) hereunder shall be governed by, and shall be enforced pursuant to
applicable New York law.
3.8 Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
3.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
3.10 Parties in Interest.. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and nothing in this Agreement,
express or implied, is intended by or shall confer upon any other Person or
Persons any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MEDICAL RESOURCES, INC.
By:/s/ Duane C. Montopoli
------------------------------
Name: Duane C. Montopoli
Title: President & CEO
REHABCARE GROUP, INC.
By:/s/ Gregory Eisenhauer
------------------------------
Name: Gregory Eisenhauer
Title: Senior Vice President,
Acquisitions
- 6 -
<PAGE> 51
Exhibit A
Form of Sight Draft and Certificate of Drawing Language
Sight Draft
[Date]
[Bank]
[Address]
Re: Irrevocable Standby Letter of Credit No. _________
Pay to the Order of [Escrow Agent] the amount of $______________ drawn under
Irrevocable Standby Letter of Credit No. _________, in favor of [Escrow Agent].
---------------------------------------------
Name:
Title:
<PAGE> 52
Certificate of Drawing on
Letter of Credit No. _________
[Bank]
[Address]
Re: Irrevocable Standby Letter of Credit No. _________
Ladies and Gentlemen:
The undersigned, the authorized representative of [Escrow Agent] (the "Escrow
Agent"), hereby certifies to [Bank] under Irrevocable Standby Letter of Credit
No. _______ (the "Letter of Credit"), that:
1. The undersigned is [president/vice president] of the Escrow
Agent and the authorized representative of the Escrow
Agent.
2. All conditions precedent to the making of a drawing under
the above-referenced Letter of Credit pursuant to the sight
draft accompanying this certificate have been satisfied.
3. The amount of the sight draft accompanying this certificate
does not exceed the amount permitted to be drawn under the
Letter of Credit in accordance with the Letter of Credit.
<PAGE> 53
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate in good faith as of the ___ day of _____, __________.
----------------------------------------
Name:
Title:
<PAGE> 54
EXHIBIT 99.1
REHABCARE GROUP COMPLETES ACQUISITION OF STARMED STAFFING, INC.
FROM MEDICAL RESOURCES
ST. LOUIS, MO, August 17, 1998--RehabCare Group, Inc. (Nasdaq:RHBC)
announced the consummation of its acquisition, through RehabCare's wholly-owned
subsidiary, Healthcare Staffing Solutions, Inc., (HSSI), of all the outstanding
shares of StarMed Staffing, Inc. and related entities.
StarMed is a provider of temporary staffing of nurses and nurse
assistants to hospitals and nursing homes on a short-term and extended-term
basis. StarMed is one of the largest providers of temporary registered nurses in
the U.S. In 1997 the company reported approximately $58 million in revenues and
for the first quarter ended March 31, 1998, they reported approximately $19.8
million in revenues.
Alan C. Henderson, President and Chief Executive Officer of RehabCare,
said: "We are excited about this opportunity as it allows us to meet our two
strategic goals of growing our temporary nursing and per diem therapy components
of our staffing business. Combined with HSSI, RehabCare's staffing business now
has a revenue run rate of approximately $115-120 million."
Richard C. Stoddard, President of HSSI, remarked: "We see tremendous
cross selling opportunities between HSSI and StarMed. This acquisition
accelerates the growth of our existing temporary nurse staffing business."
RehabCare Group, Inc., headquartered in St. Louis, is a leading
provider of acute rehabilitation, subacute, outpatient, temporary and permanent
therapist and nurse staffing services on a contract basis in conjunction with
over 750 hospitals, nursing homes and contract therapy companies in all 50 of
the United States.
Except for historical information contained herein, the statements in
this release are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
which may cause the Company's actual results in future periods to differ
materially from forecasted results.
CONTACT: RehabCare Group, Inc.
Alan C. Henderson, President and Chief Executive Officer
John R. Finkenkeller, Senior Vice President and
Chief Financial Officer
Betty Cammarata, Manager-Investor Relations
314/863-7422
or
Morgen-Walke Associates:
June Filingeri/Jennifer Angell
Press: Darren Brandt
212/850-5600
