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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20552
--------------------------------------------
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): September 26, 1997
INTERIM SERVICES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-23198 36-3536544
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification no.)
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FLORIDA 33309-3008
(954) 938-7600
(Address, including zip code, and telephone number
of principal executive offices)
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 26, 1997 (the "Closing"), Interim Services Inc. (the
"Company" or "Interim") completed the sale of its healthcare business (except
for the New York branch operations operated by its wholly owned subsidiary,
Interim Healthcare New York Inc. ("IHNY") to Catamaran Acquisition Corp., a
Delaware corporation (the "Purchaser") pursuant to the Restated Stock
Purchase Agreement, dated September 26, 1997, among the Company, the
Purchaser and Cornerstone Equity Investors IV, L.P., a Delaware limited
partnership and the majority owner of the Purchaser.
The consummation of the sale of IHNY, which is subject to the
regulatory approval of the State of New York, has been postponed until all such
regulatory approvals have been obtained. Until such time, IHNY will be operated
by the Company pursuant to certain consulting and/or management agreements with
the Purchaser's wholly owned subsidiary, Interim Healthcare Inc. ("IHI").
The Company received $118,590,000 in cash at the Closing, with the
remainder of the $134,000,000 purchase price for the healthcare business to be
paid in connection with the closing of the sale of IHNY. A subordinated
promissory note for $15,410,000, representing the IHNY portion of the purchase
price, was issued to the Company at the Closing by IHI, and guaranteed by the
Purchaser.
The Company will use the net after-tax proceeds received at the Closing
(as well as remainder of the purchase price to be received in connection with
the closing of the sale of IHNY) to reduce the Company's outstanding debt under
its existing credit facilities.
This report and the Exhibits hereto contain certain forward-looking statements
regarding the prospects of Interim Services Inc. which involve risks and
uncertainties. The Company's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of certain
factors set forth in the Registrant's reports on Forms 10-K, 10-Q and 8-K made
under the Securities Exchange Act of 1934 (the "Exchange Act"). In addition,
changes in market, business or economic conditions, fluctuations in currency
exchange rates or significant acquisitions or other transactions could create
material differences in the results anticipated in these forward-looking
statements.
2
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION.
The combined pro forma condensed consolidated financial statements
of the Company, reflecting the divestiture of its wholly owned subsidiaries,
IHI and IHNY (the "Healthcare Business"), certain acquisitions consummated in
1997, including Michael Page Group PLC ("Michael Page"), and Aim Executive
Holdings, Inc., Interim Healthcare of Broward, Inc., Interim Healthcare
Hollywood, Inc., Interim Healthcare Dade, Inc., Interim Healthcare Miami,
Inc., We Care Home Care d/b/a Interim Home Solutions, Interim Accounting
Professionals of San Diego, Interim Personnel of Yakima, Inc., Thompson and
Thompson, Inc., Centex Personnel Pool, Inc., and Mainstream Access, Inc.
("Other Acquisitions") are attached hereto as Exhibit 99.1 and incorporated
into this Current Report on Form 8-K.
(c) EXHIBITS.
The following exhibits are filed with this report:
Number Description
2.1 Restated Stock Purchase Agreement, dated September 26, 1997
among Interim Services Inc., Catamaran Acquisition Corp. and
Cornerstone Equity Investors IV, L.P. The Company
undertakes to supplementally furnish to the Commission upon
request a copy of the schedules to Exhibit 2.1 omitted
pursuant to Item 601(b)(2) of Regulation S-K of the Exchange
Act.
99.1 Interim Services Inc. Pro Forma Condensed Consolidated
Financial Information of the Company as of December 27, 1996
and June 27, 1997.
99.2 Press release dated September 29, 1997.
3
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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, thereunto duly authorized.
INTERIM SERVICES INC.
DATE: October 10, 1997 By: /s/ John B. Smith
----------------------------
John B. Smith, Esq.
Senior Vice President and
General Counsel
4
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EXHIBIT INDEX
2.1 Restated Stock Purchase Agreement, dated September 26, 1997 among
Interim Services Inc., Catamaran Acquisition Corp. and Cornerstone
Equity Investors IV, L.P. The Company undertakes to supplementally
furnish to the Commission upon request a copy of the schedules to
Exhibit 2.1 omitted pursuant to Item 601(b)(2) of Regulation S-K of
the Exchange Act.
99.1 Interim Services Inc. Pro Forma Condensed Consolidated Financial
Information of the Company as of December 27, 1996 and June 27, 1997.
99.2 Press release dated September 29, 1997.
<PAGE>
RESTATED
STOCK PURCHASE AGREEMENT
BY AND AMONG
INTERIM SERVICES INC.,
CATAMARAN ACQUISITION CORP.
AND
CORNERSTONE EQUITY INVESTORS IV, L.P.
DATED AS OF SEPTEMBER 26, 1997
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TABLE OF CONTENTS
Page
----
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2. SALE AND PURCHASE OF COMMON STOCK. . . . . . . . . . . . . . . . . . 10
2.1 Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Suspended Transfer . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Payment of the Cash Purchase Price . . . . . . . . . . . . . . 12
2.5 Scheduled Closing Date . . . . . . . . . . . . . . . . . . . . 12
2.6 Time and Place of Closing, Simultaneity. . . . . . . . . . . . 12
2.7 Seller's Obligations at Closing. . . . . . . . . . . . . . . . 12
2.8 Buyer's Obligations at Closing . . . . . . . . . . . . . . . . 13
2.9 Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . 14
2.10 Further Assurances of Seller . . . . . . . . . . . . . . . . . 15
2.11 Further Assurances of the Buyer Group. . . . . . . . . . . . . 15
2.12 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . 15
3.1 Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Organization, Standing and Qualification; Subsidiaries . . . . 16
3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.5 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.6 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . 18
3.8 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.9 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.10 Leased Property. . . . . . . . . . . . . . . . . . . . . . . . 19
3.11 Intellectual Property. . . . . . . . . . . . . . . . . . . . . 20
3.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.13 Licensure. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.14 Certificates of Need . . . . . . . . . . . . . . . . . . . . . 22
3.15 Medicare and Medicaid. . . . . . . . . . . . . . . . . . . . . 22
3.16 Medicare/Medicaid Notices. . . . . . . . . . . . . . . . . . . 22
3.17 Governmental Filings . . . . . . . . . . . . . . . . . . . . . 23
3.18 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.19 Certain Changes or Events. . . . . . . . . . . . . . . . . . . 24
3.20 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.21 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . 25
3.22 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . 26
3.23 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.24 Books and Records. . . . . . . . . . . . . . . . . . . . . . . 26
3.25 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . 26
3.26 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.27 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 26
3.28 Franchisees. . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.29 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . 27
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3.30 Sufficiency of Healthcare Assets . . . . . . . . . . . . . . . 27
4. REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . . . 27
4.1 Organization and Standing. . . . . . . . . . . . . . . . . . . 27
4.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.4 Investment Intent. . . . . . . . . . . . . . . . . . . . . . . 28
4.5 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.6 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5. BUYER'S DUE DILIGENCE. . . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Investigation. . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2 Franchise Matters. . . . . . . . . . . . . . . . . . . . . . . 28
5.3 No Additional Representations. . . . . . . . . . . . . . . . . 29
6. COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.1 Cause Conditions to be Satisfied . . . . . . . . . . . . . . . 29
6.2 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 29
6.4 HSR Act Filing . . . . . . . . . . . . . . . . . . . . . . . . 29
6.5 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . 30
6.6 Employment Agreements. . . . . . . . . . . . . . . . . . . . . 30
6.7 Notices to Third Parties . . . . . . . . . . . . . . . . . . . 30
6.8 Access to Books and Records. . . . . . . . . . . . . . . . . . 30
6.9 Franchisee Options . . . . . . . . . . . . . . . . . . . . . . 30
7. COVENANTS OF SELLER. . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . 31
7.2 Cause Conditions to Be Satisfied . . . . . . . . . . . . . . . 31
7.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.4 Access to Information. . . . . . . . . . . . . . . . . . . . . 32
7.5 HSR Act Filing . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . 32
7.7 Notices to Third Parties . . . . . . . . . . . . . . . . . . . 32
7.8 Shared Facilities and Assets . . . . . . . . . . . . . . . . . 32
7.9 Management Employment Agreements . . . . . . . . . . . . . . . 33
8. CONDITIONS TO BUYER'S OBLIGATIONS. . . . . . . . . . . . . . . . . . 33
8.1 Representations, Warranties and Covenants. . . . . . . . . . . 33
8.2 Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . 33
8.4 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . 33
8.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . 33
8.6 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.7 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.8 Material Consents. . . . . . . . . . . . . . . . . . . . . . . 34
8.9 Documents with Lenders . . . . . . . . . . . . . . . . . . . . 34
ii
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8.10 Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . 34
9. CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . . 34
9.1 Representations, Warranties and Covenants. . . . . . . . . . . 34
9.2 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . 34
9.3 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . 34
9.4 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.5 Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . 35
10. INDEMNIFICATION AND SURVIVAL . . . . . . . . . . . . . . . . . . . . 35
10.1 Indemnification by Seller. . . . . . . . . . . . . . . . . . . 35
10.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . 35
10.3 Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.4 Special Indemnity. . . . . . . . . . . . . . . . . . . . . . . 36
10.5 Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . 38
10.6 Defense of Third Party Claims. . . . . . . . . . . . . . . . . 38
10.7 No Consequential or Lost Profit Damages. . . . . . . . . . . . 39
11. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2 Procedure Upon Termination . . . . . . . . . . . . . . . . . . 40
11.3 Effect of Termination. . . . . . . . . . . . . . . . . . . . . 40
11.4 Effect of Suspended Transfer . . . . . . . . . . . . . . . . . 40
11.5 Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . 40
12. COVENANTS NOT TO COMPETE . . . . . . . . . . . . . . . . . . . . . . 41
12.1 Seller's Covenants . . . . . . . . . . . . . . . . . . . . . . 41
12.2 Buyer Group's Covenants. . . . . . . . . . . . . . . . . . . . 42
12.3 Reasonableness of Restrictions . . . . . . . . . . . . . . . . 43
13. EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.1 Current and Continued Employees. . . . . . . . . . . . . . . . 43
13.2 Positions Offered to Current Employees . . . . . . . . . . . . 44
13.3 Terms of Employment. . . . . . . . . . . . . . . . . . . . . . 44
13.4 Recognition of Seniority . . . . . . . . . . . . . . . . . . . 44
13.5 Employee Information Sharing . . . . . . . . . . . . . . . . . 45
14. POST-CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 45
14.1 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.2 Renewal of Guaranteed Items. . . . . . . . . . . . . . . . . . 45
14.3 Financial and Accounting Records . . . . . . . . . . . . . . . 45
14.4 INTENTIONALLY OMITTED. . . . . . . . . . . . . . . . . . . . . 45
14.5 Intercompany Agreements. . . . . . . . . . . . . . . . . . . . 45
14.6 Tax Election . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.7 National Advertising Contracts . . . . . . . . . . . . . . . . 46
14.8 Interim Healthcare System. . . . . . . . . . . . . . . . . . . 46
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14.9 Regulatory Changes . . . . . . . . . . . . . . . . . . . . . . 46
15. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15.1 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 49
15.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 49
15.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 49
15.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 49
15.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 49
15.9 Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . 49
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EXHIBITS
Number Title
- ------ -----
2.3(b) IHNY Note
2.9(a) Employee Procedures Agreement
2.9(b) Tax Procedures Agreement
2.9(c) Insurance Procedures Agreement
2.9(e) Transitional Services Agreement
2.9(g) IHNY Management Agreement
2.9(h) IHNY Transitional Consultative Agreement
14.7 Assignment and Assumption of Healthcare National
Advertising
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SCHEDULES
Number Title
- ------ -----
1.38 Healthcare Assets and Excluded Assets
1.39 Interim Healthcare System
1.44 Healthcare Liabilities and Excluded Liabilities
2.9(d) Intellectual Property License
3.1 Ownership
3.2(b) Incorporation and Foreign Qualification
3.2(c) Investments/Dividends
3.3(a) Capitalization
3.3(b) Obligations of Transferred Entities
3.5 Conflicts
3.6 Liens
3.7 Financial Statements
3.8(a) Contracts
3.8(b) Contract Status
3.9 Healthcare Permits
3.10 Leased Property
3.11(a)(i) Owned Healthcare Intellectual Property
3.11(a)(ii) Licensed Healthcare Intellectual Property
3.11(a)(iii) Shared Healthcare Intellectual Property
3.11(b) Healthcare Intellectual Property Proceedings
3.11(c) Healthcare Intellectual Property Licenses to Third
Parties
3.11(d) Healthcare Intellectual Property Assets Status
3.11(e) Healthcare Intellectual Property Issues
3.11(g) Healthcare Intellectual Property Third Party Issues
3.12 Taxes
3.13 Healthcare Licensure Exceptions
3.14 Certificates of Need States
3.15(a) Provider Numbers
3.15(b) Medicaid Offices
3.16(a) Medicare and Medicaid Matters
3.16(b) Medicare and Medicaid Issues
3.16(c) Franchise Operations - Investigations
3.17 Governmental Filings - Healthcare
3.18 Compliance
3.19 Certain Changes or Events
3.20 Litigation
3.21(a) Employee Benefit Plans
3.21(a)(i) ERISA Matters
3.21(a)(ii) Termination Benefits
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3.21(b) Management Employment Agreements
3.22 Labor Matters
3.23 Insurance
3.25 Bank Accounts
3.27(a) Environmental Matters
3.27(b) Environmental Proceedings
3.28 Franchisee Matters
8.7 Resigning Officers and Directors
10.4 Therapy Student Receivable Reserves
13.1 Current Employees
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RESTATED
STOCK PURCHASE AGREEMENT
THIS RESTATED STOCK PURCHASE AGREEMENT ("Agreement"), made and entered
into as of September 26, 1997 by and among Interim Services Inc., a Delaware
corporation ("Seller") and Catamaran Acquisition Corp., a Delaware corporation
("Buyer"), and Cornerstone Equity Investors IV, L.P. ("Cornerstone"), a Delaware
limited partnership, restates that certain agreement ("Original Agreement")
entered into by and among the foregoing parties as of June 29, 1997, as amended
by the First Amendment thereto, dated as of September 26, 1997.
RECITALS
(i) The Healthcare Business (as herein defined) is currently
conducted by Seller, directly and through certain of its wholly-owned
subsidiaries, including IHI, IHNY and the Transferred Subsidiaries (as herein
defined).
(ii) Seller desires to sell the Healthcare Business to Buyer and
Buyer desires to purchase the Healthcare Business from Seller.
(iii) Prior to the Closing, Seller will have completed the transfer
of all of the assets of the Healthcare Business held directly by it to the
Transferred Companies, including all of the outstanding common stock of the
Transferred Subsidiaries, and the sale of the Healthcare Business to Buyer will
be effected by means of a sale by Seller and purchase by Buyer of all of the
outstanding capital stock of the Transferred Companies pursuant to the terms and
conditions of this Agreement (all capitalized terms as defined herein).
(iv) Cornerstone is a party to this Agreement solely for purposes
of the obligations set forth in Section 11.5.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
1
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AGREEMENT
1. DEFINITIONS. For purposes of this Agreement, including the
Exhibits and Schedules hereto, the defined terms set forth in this Section 1
shall have the meanings set forth herein. All Section numbers, and Exhibit and
Schedule references, used in this Agreement refer to Sections of this Agreement,
and Exhibits and Schedules attached hereto or delivered simultaneously herewith,
unless otherwise specifically described.
1.1 "AFFILIATED GROUP" means any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined under a
similar provision of Law.
1.2 "Agreement" means this Agreement, including the Exhibits
and Schedules hereto, and all amendments hereto and thereto, all of which
are hereby incorporated herein by reference.
1.3 "Ancillary Agreements" means the agreements described in
Section 2.9.
1.4 "Business Day" means a day that is not a Saturday, Sunday
nor a day on which banks are permitted to be closed in New York City.
1.5 "Business Employees" means the employees of the
Transferred Entities but excludes such employees whose principal function
is that of a provider of healthcare services.
1.6 "Buyer" means Catamaran Acquisition Corp., a Delaware
corporation.
1.7 "Buyer Group" means, collectively, Buyer and its direct
and indirect subsidiaries and, at any time after the respective Closings,
the Transferred Entities.
1.8 "Buyer Indemnitees" means Buyer, the other members of the
Buyer Group and their respective officers, directors, employees and agents.
1.9 "Buyer's Claim" has the meaning set forth in Section 10.3.
1.10 "Closing" means the actions described in Sections 2.4
through 2.9 to be taken by Buyer and Seller and their respective affiliates
in connection with the acquisition of the Healthcare Business by Buyer
pursuant to this Agreement.
1.11 "Closing Date" means the date on which the Closing occurs.
1.12 "Code" means the Internal Revenue Code of 1986, as
amended.
2
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1.13 "Confidentiality Agreement" means that confidentiality
agreement entered into by Buyer and Alex. Brown & Sons Incorporated, as
agent for Seller, dated April 10, 1997, which is hereby incorporated into
this Agreement.
1.14 "Continued Employees" has the meaning specified in
Section 13.1(b).
1.15 "Contracts" means the contracts related to the Healthcare
Business as described in Section 3.8.
1.16 "Conveyance" means the transfer and assignment of the
Parent Healthcare Assets and the Parent Healthcare Liabilities from the
Seller Group to IHI and IHI's assumption thereof to occur prior to the
Closing, as set forth in Section 8.2.
1.17 "Cornerstone" means Cornerstone Equity Investors IV, L.P.,
a Delaware limited partnership.
1.18 "Current Employees" has the meaning specified in
Section 13.1(a).
1.19 "Damages" means claims, losses, penalties, fines, damages,
liabilities and expenses, including without limitation, Specified Damages,
settlement costs and any Litigation Expenses. When used in Section 10 of
this Agreement, "Damages" excludes incidental, indirect or consequential
damages, and damages for lost profits.
1.20 "DOJ" means the U.S. Department of Justice.
1.21 "EBITDA" means the net income of IHNY before income taxes,
depreciation and amortization, all as determined in accordance with GAAP
consistently applied.
1.22 "Effective Time" means 11:59 p.m. on the Closing Date.
1.23 "Employee Procedures Agreement" means the Ancillary
Agreement referred to in Section 2.9(a).
1.24 "Environmental Laws" means any and all Laws and
governmental standards relating to health, safety, pollution or the
environment (including without limitation the handling of substances)
applicable to the Healthcare Business and the Transferred Entities that are
in effect on or prior to the Closing Date.
1.25 "Environmental Property" has the meaning set forth in
Section 3.27.
1.26 "Ending EBITDA" has the meaning set forth in
Section 2.3(g).
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1.27 "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
1.28 "INHY" Note has the meaning set forth in Section 2.3(b).
1.29 "Excluded Assets" has the meaning set forth in
Schedule 1.38.
1.30 "Excluded Liabilities" has the meaning set forth in
Schedule 1.44.
1.31 "Franchise Agreements" means the various franchise and
license agreements, and all amendments or modifications thereto, by and
between Seller and the Franchisees with respect to the Healthcare Business,
as listed in Schedule 3.8(a).
1.32 "Franchisees" means the franchisees and licensees that are
parties to the Franchise Agreements.
1.33 "FTC" means the U.S. Federal Trade Commission.
1.34 "GAAP" means generally accepted accounting principles.
1.35 "Governmental Entity" means any court, tribunal,
administrative agency or commission, or other governmental or regulatory
authority, domestic or foreign, of competent jurisdiction, including but
not limited to agencies, departments, boards, commissions or other
instrumentalities of any country or any political subdivisions thereof.
1.36 "Hazardous Materials" means any pollutants, contaminants,
hazardous substances, hazardous chemicals, toxic substances, hazardous
wastes, infectious wastes, radioactive materials, petroleum including crude
oil or any fraction thereof, asbestos fibers, or industrial wastes or other
hazardous materials, including, without limitation, those defined in any
Environmental Law.
1.37 "HCFA" means the Health Care Financing Administration of
the U.S. Department of Health and Human Services.
1.38 "Healthcare Assets" means all those assets owned by the
Transferred Entities that are used in the Healthcare Business and the
Parent Healthcare Assets (other than Excluded Assets), as described in
Schedule 1.38, and as reflected in the Healthcare Financial Statements.
1.39 "Interim Healthcare System" means the software system as
developed as of the Closing Date for use in the Healthcare Business and
which is included in the Healthcare Assets, as set forth on Schedule 1.39.
1.40 "Healthcare Business" means the business conducted by
Seller and the Transferred Entities of providing (a) home healthcare
services; (b) staffing with physicians; professional and paraprofessional
nurses; speech, physical and occupational
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therapists; medical social workers; nursing aides, assistants and
companions; personal care attendants; home health aides; and similar or
related health care service workers; (c) home intravenous therapy and
related goods and services; (d) durable medical equipment and related goods
and services; (e) private duty services of nurses and other skilled and
unskilled workers to assist the sick, infirm or aged in facilities and
homes; (f) certain other similar services in the healthcare industry; and
(g) the franchising or licensing of third parties to provide any of the
foregoing. The "Healthcare Business" does not include any other business
conducted by Seller or any other business conducted by its subsidiaries
that are not Transferred Entities.
1.41 "Healthcare Executives" means James H. Booth, Kathleen A.
Gilmartin, Paul H. Haggard and Raphael D. Umansky.
1.42 "Healthcare Financial Statements" has the meaning set
forth in Section 3.7.
1.43 "Healthcare Intellectual Property Assets" means that
subset of the Intellectual Property Assets that Seller uses exclusively in
the Healthcare Business, as described in Section 3.11(a).
1.44 "Healthcare Liabilities" means liabilities of the
Healthcare Business, as described in Schedule 1.44.
1.45 "Healthcare National Advertising Contracts" means those
agreements contained (a) in certain Franchise Agreements or (b) in separate
contracts entered into between Seller and certain Franchisees with respect
to such Franchisees' existing franchises, pursuant to which such
Franchisees participate in, and contribute to, Seller's national
advertising program.
1.46 "Healthcare Permits" means the permits, licenses and
governmental authorizations used in the Healthcare Business, as currently
operated by Seller and the Transferred Entities.
1.47 "Hertz Matters" means any claims, penalties, litigation,
proceedings or judgments asserted against any member of the Buyer Group and
that arise under, or relate to, the provision of services under the
Medicare or Medicaid programs in Broward, Dade and Monroe Counties, Florida
by the Franchisee who operated in such counties for periods ending on
February 28, 1997.
1.48 "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder.
1.49 "IHI" means Interim Healthcare Inc., a Florida corporation
and wholly-owned subsidiary of Seller.
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1.50 "IHI Shares" means the outstanding shares of capital stock
of IHI, all of which are owned by Seller.
1.51 "IHNY" means Interim Healthcare of New York Inc., a New
York corporation and wholly-owned subsidiary of Seller.
1.52 "IHNY Management Agreement" means the Ancillary Agreement
referred to in Section 2.9(g).
1.53 "IHNY Purchase Price" means an amount equal to $15,410,000
which represents that portion of the Purchase Price allocable to the IHNY
Shares.
1.54 "IHNY Shares" means the outstanding shares of capital
stock of IHNY, all of which are owned by Seller.
1.55 "IHNY Transitional Consultative Agreement" means the
Ancillary Agreement referred to in Section 2.9(h).
1.56 "Indemnified Party" means a party seeking indemnification
pursuant to Section 10.
1.57 "Indemnifying Party" means a party obligated to provide
indemnification pursuant to Section 10.
1.58 "Insurance Procedures Agreement" means the Ancillary
Agreement referred to in Section 2.9(c).
1.59 "Intellectual Property Assets" means all patents, patent
applications, trademarks, service marks, trade names, corporate names,
logos, slogans, goodwill, copyrights, trade secrets, confidential
information, inventions, ideas, know-how, customer and supplier lists,
designs, proposals, computer data, documentation and software, financial
and accounting data, business and marketing plans and all other of the
intellectual property assets used in the Healthcare Business, including but
not limited to those described in Section 3.11(a).
1.60 "Intellectual Property License Agreement" means the
Ancillary Agreement referred to in Section 2.9(d).
1.61 "Knowledge of the Seller Executives" means the actual
knowledge of such individuals on the date of this Agreement or on the
Closing Date, as applicable.
1.62 "Laws" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, permit, order, judgment or decree.
1.63 "Leases" has the meaning set forth in Section 3.10.
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1.64 "Liens" means all liens, claims, charges, pledges,
security interests, pre-emptive rights, rights of first refusal,
encumbrances and restrictions.
1.65 "Litigation Expenses" means reasonable attorneys' fees and
other costs and expenses incident to proceedings or investigations with
respect to, or the prosecution or defense of, any Buyer's Claim or Seller's
Claim.
1.66 "Management Employment Agreements" means those employment
agreements designated as "Management Employment Agreements" in
Schedule 3.21(b).
1.67 "Material Adverse Change" or "Material Adverse Effect"
means any change or effect that, individually or in aggregate, is
materially adverse to the financial condition, business or results of
operations of the Healthcare Business taken as a whole.
1.68 "Medicaid" means Title XIX of the Social Security Act.
1.69 "Medicare" means Title XVIII of the Social Security Act.
1.70 "Medicare/Medicaid Obligations" means any current or
future claims by HCFA, the fiscal intermediary of Seller or any Transferred
Entity, or by any Medicare or Medicaid program applicable to the Healthcare
Business, against any of the Transferred Entities or Seller with respect to
the Healthcare Business for amounts due to such Medicare or Medicaid
programs in connection with goods or services provided for any periods
ending on or prior to the Closing Date.
1.71 "Multiemployer Plan" has the meaning set forth in
Section 3(37) of ERISA.
1.72 "PBGC" means the Pension Benefit Guaranty Corporation.
1.73 "Notice of Claim" has the meaning set forth in
Section 10.5.
1.74 "ordinary course of business" or any phrase of similar
import or other limitation means an action that is recurring in nature, and
taken in the ordinary course of the normal day-to-day operations of such
entity to the extent and only to the extent such action is consistent with
the past practices of an entity.
1.75 "Parent Healthcare Assets" means all those assets owned by
the Seller Group, other than the Transferred Entities, and used exclusively
and directly in the Healthcare Business, to be assigned to the Transferred
Companies prior to the Closing pursuant to the Conveyance.
1.76 "Parent Healthcare Liabilities" means those certain
liabilities of Seller related to the Healthcare Business to be assigned to
and assumed by the Transferred Companies prior to the Closing pursuant to
the Conveyance.
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1.77 "Personal Property Leases" has the meaning set forth in
Section 3.10.
1.78 "Plan" has the meaning set forth in Section 3.21(a).
1.79 "Purchase Price" means the cash purchase price to be paid
for the Transferred Shares pursuant to Section 2.2.
1.80 "Real Property Leases" has the meaning set forth in
Section 3.10.
1.81 "Scheduled Closing Date" means the date scheduled for the
Closing.
1.82 "Securities Act" means The Securities Act of 1933, as
amended.
1.83 "Seller" means Interim Services Inc., a Delaware
corporation.
1.84 "Seller Executives" means Roy G. Krause, Robert E.
Livonius, Raymond Marcy and John B. Smith.
1.85 "Seller Group" means Seller, its wholly-owned subsidiaries
other than the Transferred Entities and, prior to the respective Closings,
the Transferred Entities.
1.86 "Seller Indemnitees" means Seller, the other members of
the Seller Group and their respective officers, directors, employees and
agents.
1.87 "Seller's Continuing Business" has the meaning set forth
in Section 12.2.
1.88 "Separate Covenant" means the individual covenants against
competition, as described in Sections 12.1 and 12.2.
1.89 "Specified Damages" has the meaning set forth in
Section 10.4.
1.90 "Suspended Transfer" has the meaning set forth in
Section 2.3(a).
1.91 "Tax" or "Taxes" means any federal, state, local or
foreign income tax (including any alternative or add-on minimum tax) or
franchise tax based on net income, any sales, use, excise, gross receipts
or value added tax, any intangibles tax, or any tax on real or personal
property, any profits, capital, premium, occupational, production,
severance, ad valorem, occupancy, stamp, transfer, unemployment insurance,
social security, disability, workers' compensation, customs, withholding or
other tax, duty or similar governmental charge or any deposit required to
be made thereof or with respect thereto, including all interest and
penalties thereon and additions thereto.
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1.92 "Tax Procedures Agreement" means the Ancillary Agreement
referred to in Section 2.9(b).
1.93 "Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
1.94 "Taxing Authority" means any Governmental Entity
responsible for the imposition of Taxes.
1.95 "Termination/IHNY" has the meaning set forth in
Section 2.3(e).
1.96 "Therapy Students" means those individuals who have signed
an agreement with any of the Transferred Entities whereby they receive
loans and partial advances of tuition from such Transferred Entity for
their education in physical therapy in exchange for their agreement to
remain employed by such Transferred Entity for a specified time period
following licensure in the United States.
1.97 "Third Party Claims" means any and all claims, demands,
suits, actions or proceedings by any person or entity, other than members
of the Buyer Group or the Seller Group, that could give rise to a right of
indemnification under Section 10.
1.98 "Transaction Documents" means this Agreement, the
Ancillary Agreements and all other documents executed at the Closing.
1.99 "Transactions" means the transactions contemplated by this
Agreement and the other Transaction Documents, but excluding the
Conveyance.
1.100 "Transferred Companies" means IHI and IHNY.
1.101 "Transferred Entities" means the Transferred Companies and
the Transferred Subsidiaries.
1.102 "Transferred Shares" means the IHI Shares and the IHNY
Shares.
1.103 "Transferred Subsidiaries" means Interim Occupational
Health, Inc., Interim Assisted Care, Inc., Interim Physicians, Inc., and
Interim Assisted Care (Hawaii), Inc., each a wholly-owned, direct or
indirect, subsidiary of Seller.
1.104 "Transitional Services Agreement" means the Ancillary
Agreement referred to in Section 2.9(e).
1.105 "Base EBITDA" has the meaning set forth in Section 2.3(g).
1.106 "Section 3.16 Damages" means Damages resulting from any
inaccuracy of the representations or breach of the warranties set forth in
Section 3.16 but does not include any Identified Section 3.16 Damages.
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1.107 "Hertz Matters Damages" has the meaning set forth in
Section 10.4(b).
1.108 "Identified Section 3.16 Damages" means Damages incurred
by Buyer or any other Buyer Indemnitee in connection with the matters set
forth on Schedule 3.16(b).
1.109 "Litigation Expenses" means reasonable attorneys' fees of
outside counsel and other costs and expenses payable to third parties
incident to proceedings or investigations with respect to, or the
prosecution or defense of, any Buyer's Claim, Seller's Claim or any other
matter with respect to which a party is entitled to receive indemnification
pursuant to Section 10.
1.110 "National Advertising Program" means Seller's national
advertising program in which certain Franchisees participate.
1.111 "Optionees" shall have the meaning set forth in Section
6.9.
1.112 "Option Agreement" shall have the meaning set forth in
Section 6.9.
1.113 "Teske Damages" shall have the meaning set forth in
Section 10.4(e).
2. SALE AND PURCHASE OF COMMON STOCK.
2.1 PURCHASE OF SHARES. At the Closing, on the terms and
subject to the conditions of this Agreement, Seller shall sell, assign,
transfer and deliver to Buyer, and Buyer shall purchase and accept from
Seller, all of the IHI Shares and the IHNY Shares. The Transferred Shares
shall be conveyed free and clear of all Liens (except as described herein).
2.2 PURCHASE PRICE. In consideration of Seller's sale,
assignment, transfer and delivery of the Transferred Shares to Buyer, Buyer
shall pay to Seller aggregate consideration in the amount equal to
$134,000,000 as follows: $118,590,000 in cash and $15,410,000 in the form
of the IHNY Note.
2.3 SUSPENDED TRANSFER. If all of the conditions to the
obligations of Buyer set forth in Section 8 have been fulfilled, but Buyer
is unable to complete the purchase of the IHNY Shares because it has not
obtained all the necessary consents or approvals of the appropriate
Governmental Entities, the Closing with respect to the purchase of the IHNY
Shares shall be suspended, as described below and the Closing with respect
to the purchase of the IHI Shares shall proceed on the Scheduled Closing
Date.
(a) At the Closing, Seller shall complete the sale of
the IHI Shares to Buyer but shall not convey the IHNY Shares to Buyer,
which transfer and
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assignment shall be suspended (a "Suspended Transfer"). The existence
of a Suspended Transfer shall not otherwise affect any of the actions of
the parties to be taken at the Closing or their respective obligations
under this Agreement, except as specifically provided in this Section 2.3.
(b) At the Closing, (i) Buyer shall pay to Seller the
full amount of the Purchase Price, less the amount of the IHNY Purchase
Price; (ii) Buyer shall assign all of its rights and obligations to
purchase the IHNY Shares to IHI; and (iii) IHI shall deliver to Seller a
promissory note in the amount of the IHNY Purchase Price, substantially in
the form of Exhibit 2.3(b) (the "IHNY Note") and otherwise in form and
substance reasonably satisfactory to Buyer and Seller, which shall be
guaranteed by Buyer.
(c) In the event of a Suspended Transfer, Seller shall
continue to operate that portion of the Healthcare Business operated by
IHNY and shall retain the licenses necessary to use all Intellectual
Property Assets previously used by IHNY, all in accordance with the terms
and conditions set forth in the IHNY Transitional Consultative Agreement
and the IHNY Management Agreement.
(d) Buyer shall continue, and shall cause IHI to
continue, to use all reasonable efforts to obtain the consents and
approvals required for the purchase by IHI of the IHNY Shares. If Buyer
obtains all such consents and approvals within 18 months of the Closing
Date, Seller shall convey the IHNY Shares to IHI.
(e) In the event IHI fails to obtain the necessary
consents and approvals to acquire the IHNY Shares within 18 months of the
Closing Date ("Termination/IHNY"), Seller shall cancel and return the IHNY
Note to IHI and Buyer's guaranty to Buyer, and all obligations of Seller to
convey the IHNY Shares to IHI shall terminate. Upon such termination Buyer
and Seller shall, and Buyer shall cause IHI to, cooperate and use their
respective reasonable best efforts to sell the IHNY Shares and/or assets to
a third party purchaser at the best achievable price.
(f) During the period of the Suspended Transfer, but
prior to a Termination/IHNY, Seller shall not cause IHNY to declare or pay
any dividend or other distribution in respect of the capital stock of IHNY
or otherwise transfer or convey any assets of IHNY (including cash), enter
into any transaction with IHNY, except on an arm's length basis, permit
IHNY to incur any indebtedness (other than trade payables) or permit IHNY
to operate other than in the ordinary course of business consistent with
its past practices; provided, however, that Seller may (i) cause IHNY to
declare and pay dividends or otherwise transfer cash to Seller in an amount
equal to the income Taxes payable with respect to the income of IHNY for
the period of the Suspended Transfer and (ii) receive an amount of not more
than $102,733 per month from IHNY.
(g) In the event of a Termination/IHNY, and in the
event that the EBITDA for the twelve-month period ending on the date of the
Termination/IHNY ("Ending EBITDA") is less than the EBITDA for the month of
May, 1997 times 12
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("Base EBITDA"), Buyer shall pay, or shall cause IHI to pay, to Seller an
amount equal to five (5) times the difference between the Base EBITDA and
the Ending EBITDA as liquidated damages, not later than 45 days after
receipt of written notice from Seller showing the calculation of the
amounts due as liquidated damages. In the event that the purchase price
received by the Seller in connection with any such third party sale of the
IHNY Shares plus the amount paid as liquidated damages hereunder exceeds
$15,410,000, Seller shall pay the amount of such excess (up to a maximum
amount equal to the amount of liquidated damages) to Buyer, or its assign,
within 45 days after completion of any such third party sale.
(h) During the period of the Suspended Transfer,
certain provisions of this Agreement including but not limited to the
provisions of Section 12.1, with respect to noncompetition, shall be waived
to the extent necessary to permit Seller to continue operation of the
Healthcare Business operated by IHNY until the earlier of (i) the purchase
of the IHNY Shares by IHI, (ii) the sale by Seller of the IHNY Shares or
the assets of IHNY to a third party, or (iii) the third anniversary of the
Closing Date.
(i) In the event of the ultimate purchase of the IHNY
Shares by IHI, a second Closing shall be held at which such closing
documents and opinions of counsel for Buyer and Seller shall be delivered
as necessary to effectuate the assignment and purchase of the IHNY Shares.
Such second closing shall occur within fifteen (15) Business Days of the
receipt of all such consents and approvals.
2.4 PAYMENT OF THE CASH PURCHASE PRICE. At the Closing, Buyer
shall pay to Seller an amount in cash equal to $134,000,000, or, in the
event of a Suspended Transfer, such reduced amount as set forth in Section
2.3(b). Such amount shall be paid by wire transfer of immediately
available funds to such accounts as shall be specified by Seller in writing
and delivered to Buyer at least five days prior to the Closing.
2.5 SCHEDULED CLOSING DATE. The Scheduled Closing Date shall
be the first Friday that is a Business Day occurring at least five (5)
Business Days following the fulfillment or waiver of the conditions set
forth in Sections 8 and 9, unless Seller and Buyer agree to some other date
in an amendment to this Agreement executed and delivered in accordance with
Section 15.4.
2.6 TIME AND PLACE OF CLOSING, SIMULTANEITY. The Closing
shall take place on the Scheduled Closing Date at 10:00 a.m. U.S. Eastern
Time at the offices of Seller, 2050 Spectrum Boulevard, Fort Lauderdale,
Florida, U.S.A., or at such other time or location as Seller and Buyer
mutually agree. All of the actions to be taken and documents to be
executed and delivered at the Closing shall be deemed to be taken, executed
and delivered simultaneously, and no such action, execution or delivery
shall be effective until all actions to be taken and executions and
deliveries to be effected at the Closing are complete, except as otherwise
specifically provided for herein.
2.7 SELLER'S OBLIGATIONS AT CLOSING. At the Closing, Seller
shall deliver the following to Buyer:
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(a) all original certificates evidencing the
Transferred Shares duly executed in blank or accompanied by stock powers
duly executed in blank, provided that, in the event of a Suspended
Transfer, the IHNY Shares shall be retained by Seller until such time as
the IHNY Purchase Price is paid by Buyer to Seller;
(b) a duly-executed closing certificate of Seller
dated as of the Closing Date, with respect to the matters set forth in
Sections 8.1, 8.2, 8.4 and 8.5;
(c) good standing certificates of Seller and the
Transferred Entities certifying that Seller and each Transferred Entity are
in good standing under the Laws of their respective jurisdictions of
incorporation, and, with respect to the Transferred Entities, in each
jurisdiction in which they are qualified to do business;
(d) duly-executed resignations of such directors and
officers of the Transferred Entities as directed in writing by Buyer;
(e) an opinion of Bryan Cave LLP, counsel to Seller,
in form and substance customary for transactions of the type contemplated
by this Agreement and reasonably acceptable to Buyer;
(f) all Ancillary Agreements duly executed by Seller
or any other appropriate member of the Seller Group, as more fully
described in Section 2.9;
(g) executed consents required to be delivered as a
condition to Closing;
(h) the minute books, stock records and corporate
seals of the Transferred Entities; and
(i) such other documents and instruments as shall be
reasonably requested by Buyer to consummate the Transactions.
2.8 BUYER'S OBLIGATIONS AT CLOSING. At the Closing, Buyer
shall deliver the following to Seller:
(a) payment of the Purchase Price in accordance with
Sections 2.2 and 2.3;
(b) a duly-executed closing certificate of Buyer,
dated as of the Closing Date, with respect to the matters set forth in
Sections 9.1 and 9.3;
(c) a good standing certificate of Buyer certifying
that Buyer is in good standing in the jurisdiction of its incorporation;
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(d) an opinion of Kirkland & Ellis, counsel to Buyer,
in form and substance customary for transactions of the type contemplated
by this Agreement and reasonably acceptable to Seller;
(e) all Ancillary Agreements duly executed by Buyer or
any other appropriate member of the Buyer Group, as more fully described in
Section 2.9;
(f) an acknowledgment of Buyer of its obligations with
respect to the Management Employment Agreements pursuant to Section 6.6;
and
(g) such other documents and instruments as shall be
reasonably requested by Seller to consummate the Transactions.
2.9 ANCILLARY AGREEMENTS. Each of the following Ancillary
Agreements shall be executed and delivered at the Closing or, if such
agreements are being executed and delivered simultaneously with this
Agreement, such agreements shall become effective at the Closing:
(a) Employee Procedures Agreement between Seller and
Buyer, substantially in the form of Exhibit 2.9(a);
(b) Tax Procedures Agreement between Seller and Buyer,
substantially in the form of Exhibit 2.9(b);
(c) Insurance Procedures Agreement between Seller and
Buyer, substantially in the form of Exhibit 2.9(c);
(d) Intellectual Property License Agreement between
Seller, the Transferred Companies and Buyer, substantially in the form of
Schedule 2.9(d);
(e) Transitional Services Agreement between Seller and
Buyer, substantially in the form of Exhibit 2.9(e);
(f) the IHNY Note, in the event of a Suspended
Transfer;
(g) IHNY Management Agreement between Seller and Buyer
in the event of a Suspended Transfer, substantially in the form of
Exhibit 2.9(g); and
(h) IHNY Transitional Consultative Agreement between
Seller and Buyer in the event of a Suspended Transfer, substantially in the
form of Exhibit 2.9(h).
Notwithstanding anything herein to the contrary, the parties
acknowledge that the forms of Ancillary Agreements are still subject to
negotiation. Accordingly, the parties shall negotiate modifications to the
forms of the Ancillary Agreements in good faith, including such
modifications required by, or responsive to the comments of, appropriate
Governmental Entities. In addition, in the event of any
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inconsistency between the terms set forth in any of the attached forms of
Ancillary Agreements and the terms of this Agreement, the terms of this
Agreement shall govern.
2.10 FURTHER ASSURANCES OF SELLER. At any time and from time
to time after the Closing, at the request and expense of Buyer, Seller
shall, and shall cause the other members of the Seller Group to, execute
and deliver all such deeds, assignments, and other documents, and take or
cause to be taken all such other actions, as Buyer reasonably deems
necessary or desirable to put Buyer in actual possession or operating
control of the Transferred Entities, or to more fully and effectively vest
in the Transferred Entities, or to confirm their title to and possession
of, all of the Healthcare Assets, the Healthcare Liabilities, the
Healthcare Business and the Transferred Shares.
2.11 FURTHER ASSURANCES OF THE BUYER GROUP. At any time and
from time to time after the Closing, at the request and expense of Seller,
Buyer shall, and shall cause the other members of the Buyer Group to,
execute and deliver, all such documents, and take or cause to be taken all
such other actions, as Seller reasonably deems necessary or desirable to
more fully and effectively divest Seller of responsibility for the
Healthcare Liabilities and incidents of ownership of all of the Healthcare
Assets, the Healthcare Liabilities, the Healthcare Business and the
Transferred Shares and to vest in the Seller the Excluded Assets and the
Excluded Liabilities.
2.12 SCHEDULES. Buyer and Seller agree that during the period
between the date hereof and the Closing Date, the Schedules may be amended
to complete certain Schedules, correct any inconsistencies or omissions
thereon, and bring down the disclosures thereon to the Closing Date.
Notwithstanding the foregoing, no Schedule shall be so amended without the
review by and approval of Buyer, which review and approval shall not be
arbitrarily withheld.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
3.1 OWNERSHIP. Except as set forth in Schedule 3.1, Seller
owns all right, title and interest in and to the Transferred Shares and the
issued and outstanding shares of capital stock of the Transferred
Subsidiaries beneficially and of record, free and clear of any Liens and is
not a party to or bound by any voting trusts, voting agreements, other
agreements, rights, options, warrants or restrictions of any kind, nature
or description relating to any issued or unissued capital stock or any
other security issued or to be issued by the Transferred Entities; and on
the Closing Date all right, title and interest in and to the issued and
outstanding shares of capital stock of the Transferred Subsidiaries will be
owned by IHI, beneficially and of record, free and clear of any Liens and
IHI is not a party to or bound by any voting trusts, voting agreements,
other agreements, rights, options, warrants or restrictions of any kind,
nature or description relating to any issued or unissued capital stock or
any other security issued or to be issued by the Transferred Subsidiaries.
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3.2 ORGANIZATION, STANDING AND QUALIFICATION; SUBSIDIARIES.
(a) Each of Seller and the Transferred Entities is a
corporation duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation, has all requisite corporate
power and authority to own, lease and operate its properties and to carry
on its business as it is now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of
the business conducted by it or the ownership or leasing of its properties
makes such qualification necessary, other than where the failure to be duly
qualified and in good standing would not have a Material Adverse Effect.
(b) Schedule 3.2(b) sets forth a complete and correct
list of all of the Transferred Entities, together with the jurisdiction of
incorporation and foreign qualifications of each. Seller owns, directly or
indirectly, all of the issued and outstanding capital stock of each such
corporation.
(c) Except as set forth in Schedule 3.2(c), no
Transferred Entity owns or controls, directly or indirectly, any capital
stock, or other securities of, or has any ownership interest in, any
corporation, partnership or other entity. Schedule 3.2(c) sets forth a
list of all dividends declared or paid by any Transferred Entity with
respect to the capital stock of such entity since December 27, 1996.
(d) Seller has made available to Buyer complete and
accurate copies of the organizational documents and bylaws, in each case as
amended or restated to the date of this Agreement, of each of the
Transferred Entities.
3.3 CAPITALIZATION.
(a) Schedule 3.3(a) sets forth the authorized, issued
and outstanding capital stock of each of the Transferred Entities. No such
shares of stock are held in treasury or reserved for issuance. All of the
outstanding shares of capital stock of each of the Transferred Entities are
duly authorized and validly issued, fully paid and nonassessable. The
capital stock of each of the Transferred Entities has been issued in
compliance with all applicable securities Laws.
(b) Except as set forth in Schedule 3.3(b): (i) there
are no options, warrants or other rights (including registration rights),
agreements or commitments of any character to which any of the Transferred
Entities is a party relating to their respective issued or unissued capital
stock or obligating any of them to grant, issue or sell any shares of their
capital stock or other securities; (ii) there are no obligations,
contingent or otherwise, of any of the Transferred Entities to
(A) repurchase, redeem or otherwise reacquire any shares of their
respective capital stock or other securities, or (B) provide material funds
to, or make any material investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect to the
obligations of, any person or entity; (iii) none of the Transferred
Entities directly or indirectly owns, or has agreed to purchase or
otherwise acquire, the capital stock or other
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securities of, or any interests convertible into or exchangeable or
exercisable for, the capital stock or other securities of any corporation,
partnership, joint venture or other business association or entity; and
(iv) there are no voting trusts, proxies or other material agreements or
understandings to which Seller or any of the Transferred Entities is a
party or by which any of them is bound with respect to the voting of any
shares of capital stock of any of the Transferred Entities.
3.4 AUTHORITY. Seller has all requisite right, power and
authority to execute and deliver this Agreement, and will have as of the
Closing Date all requisite right, power and authority to execute and
deliver each other Transaction Document to which it will be a party, to
perform its obligations hereunder and thereunder and to consummate the
Transactions. The execution and delivery by Seller of each Transaction
Document to which it is or will be a party and the consummation by it of
the Transactions have been duly authorized by all necessary action. Seller
has, or will have at the Closing, duly and validly executed and delivered
each Transaction Document to which it is or will be a party and, assuming
the due authorization, execution and delivery by the other parties thereto,
each Transaction Document constitutes the legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, or similar Laws affecting the enforcement of
creditors' rights generally and subject to general principles of equity.
3.5 NO CONFLICT. Except as set forth in Schedule 3.5, the
execution and delivery of each Transaction Document by Seller and Seller's
performance of its obligations thereunder do not and will not (i) conflict
with or violate any provision of its organizational documents or bylaws,
(ii) conflict with or violate any Laws applicable to Seller or the
Healthcare Business or by which any of its properties are bound, or
(iii) result in any material breach of or constitute a material default (or
an event that with notice or lapse of time or both would become such a
default) under any material note, bond, mortgage, indenture, contract,
agreement, lease, permit or other instrument or obligation to which the
Seller or any Transferred Entity is a party or by which they or any of
their respective properties are bound.
3.6 TITLE. Except as set forth in Schedule 3.6, Seller and/or
the Transferred Entities have, and on the Closing Date the Transferred
Entities will have, good and marketable title to the Healthcare Assets
including those reflected on the balance sheets contained in the Healthcare
Financial Statements (except for assets and properties sold, consumed or
otherwise disposed of by them in the ordinary course of business since the
date thereof), and such Healthcare Assets are owned free and clear of all
Liens, except for (a) Liens for Taxes and assessments not yet due and
payable or for Taxes the validity of which are being contested in good
faith and that are fully reserved against on the balance sheets contained
in the Healthcare Financial Statements, (b) Liens to secure indebtedness
reflected on the balance sheet contained in the Healthcare Financial
Statements for the period ended December 27, 1996 or indebtedness incurred
in the ordinary course of business after the date thereof, (c) mechanic's,
materialmen's and
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other similar Liens that have arisen in the ordinary course of business,
and (d) imperfections of title and Liens on any Healthcare Assets which are
not material to the Healthcare Business. Following the Conveyance, the
Transferred Entities will have good and marketable title to the Parent
Healthcare Assets.
3.7 FINANCIAL STATEMENTS. Schedule 3.7 sets forth: (i) the
audited consolidated financial statements for the fiscal years of the
Healthcare Business ended on December 30, 1994, December 29, 1995 and
December 27, 1996 and (ii) the unaudited consolidated balance sheet, income
statement and statement of cash flows, as of and for the period ended
March 28, 1997 (collectively, the "Healthcare Financial Statements"). The
Healthcare Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby and
present fairly in all material respects the consolidated financial position
and results of operations of the Healthcare Business operated by the Seller
Group as of and for the periods indicated (subject, in the case of
unaudited statements, to normal year end audit adjustments, matters that
would be disclosed in the notes thereto and to any other adjustments
described therein) and are consistent with the books and records of the
Healthcare Business for such periods. The Healthcare Financial Statements
have been prepared from the separate records maintained by the Healthcare
Business and may not necessarily be indicative of the conditions that would
have existed or the results of operations if the Healthcare Business had
been operated as an unaffiliated company. Portions of certain income and
expenses represent allocations made from corporate headquarters items
applicable to the Healthcare Business as a whole.
3.8 CONTRACTS.
(a) Schedule 3.8(a) lists the following contracts and
agreements included in the Healthcare Business ("Contracts"): (i) all
written consultant, sales agency and distribution agreements; (ii) all
written agreements providing for the services of an independent contractor
who is currently retained by the Seller Group in connection with the
Healthcare Business and was paid more than $100,000 for services in the
year ended December 26, 1996 by the Seller Group; (iii) each written
contract, agreement or arrangement under which it is reasonably expected
that the Healthcare Business will make expenditures or obtain receipts for
the year ending December 31, 1997 in excess of $100,000 (in either case
excluding employment agreements); (iv) any agreement for the sale of any
asset included in the Healthcare Assets having a net book value in excess
of $25,000; (v) Franchise Agreements; and (vi) any written agreement not
otherwise included in Schedule 3.8(a) that, to the Knowledge of the Seller
Executives, after consultation with the Healthcare Executives, would be
material to the Healthcare Business.
(b) Except as set forth in Schedule 3.8(b), the
Contracts are valid and binding obligations of the Healthcare Business and
are in full force and effect; and no event has occurred that (whether with
or without the giving of notice or lapse of time or both) would constitute
a breach or default by any Transferred Entity that is a party
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thereto other than any such breach or default that would not have a
Material Adverse Effect.
3.9 PERMITS. Except as to Healthcare Permits with respect to
Medicare or Medicaid and except as set forth in Schedule 3.9, (a) the
Transferred Entities have obtained all Healthcare Permits, except with
respect to any such Healthcare Permits the absence of which would not have
a Material Adverse Effect; and (b) to the Knowledge of the Seller
Executives, after consultation with the Healthcare Executives, since
December 31, 1996 neither Seller nor any Transferred Entity has received
any written warning notice, notice of violation or probable violation,
notice of revocation, or other written communication from or on behalf of
any Governmental Entity, alleging (i) any violation of any such Healthcare
Permit which violation has not been corrected or otherwise settled, or
(ii) that the Transferred Entities require any Healthcare Permit for the
Healthcare Business not currently held by them. Schedule 3.9 sets forth a
list of all home health agency licenses, franchise registrations, or
exemptions therefrom, or any other material Healthcare Permits held by the
Seller Group.
3.10 LEASED PROPERTY. Schedule 3.10 sets forth a list of all
leases of the Transferred Entities included in the Healthcare Assets with
respect to both real property ("Real Property Leases") and material
personal property ("Personal Property Leases", and collectively with the
Real Property Leases, the "Leases"). For purposes of this Section 3.10
with respect to Personal Property Leases, the term "material" means a lease
pursuant to which a member of the Seller Group made expenditures in excess
of $50,000 during the year ended December 27, 1996 or is reasonably
expected to make such expenditures in the current fiscal year. Except as
otherwise set forth in Schedule 3.10, after consultation with the
Healthcare Executives: (i) the respective members of the Transferred
Entities have a valid leasehold interest in the real property and the
personal property subject to the Leases, free and clear of all encumbrances
that would materially interfere with the continued use or operation of such
property in the manner heretofore used or operated by the Transferred
Entities in the conduct of the Healthcare Business; and (ii) there are no
existing defaults relating to any of the Leases, nor any events that have
occurred that would constitute (whether with or without notice, lapse of
time or the occurrence of any other event or combination of events) such a
default, other than any such defaults or events that would not have a
Material Adverse Effect.
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3.11 INTELLECTUAL PROPERTY.
(a) Schedule 3.11(a)(i) sets forth a list of all
invention disclosures, patents and patent applications, trade name,
trademark and service mark registrations and applications, copyright
registrations and applications, material unregistered trademarks, service
marks and copyrights and software systems that are owned by Seller and used
directly and exclusively in the Healthcare Business. Schedule 3.11(a)(ii)
sets forth a list of agreements under which any member of the Seller Group
has a license from an unaffiliated person to use a trademark, trade name,
service mark, patent or software system that is used by them directly and
exclusively in connection with the Healthcare Business.
Schedule 3.11(a)(iii) sets forth a list of all invention disclosures,
patents, patent applications, trade names, trademark and service mark
registrations, and applications, copyright registrations and applications,
material unregistered trademarks, service marks and copyrights, and
software systems that are owned by or licensed to Seller and used in both
the Healthcare Business and in one or more of Seller's other businesses.
(b) Except as set forth in Schedule 3.11(b), none of
the owned Intellectual Property Assets listed in Schedules 3.11 (a)(i) or
3.11(a)(iii) is the subject of any pending action, suit or proceeding and,
to the Knowledge of the Seller Executives, after reasonable inquiry, no
such action, suit or proceeding is threatened.
(c) Except as set forth in Schedule 3.11(c), no
unaffiliated person has been granted any license to use, or any covenant
not to sue with respect to, any of the Healthcare Intellectual Property
Assets by any member of the Seller Group or made any assignment of any
Healthcare Intellectual Property Assets.
(d) Seller has good title to, or has a valid and
enforceable license to use, the Healthcare Intellectual Property Assets
free and clear of any Liens. Except as set forth in Schedule 3.11(d), the
consummation of the Transactions will not alter or impair any Healthcare
Intellectual Property Assets, nor accelerate or increase any obligation of
Seller or any Transferred Entity with respect to them. With respect to
owned Healthcare Intellectual Property Assets, all annuity, maintenance,
renewal and other fees relating thereto are current and such registrations,
filings and issuances remain in full force and effect.
(e) Except as set forth on Schedule 3.11(e), neither
Seller nor the Transferred Entities have, in connection with the Healthcare
Business, infringed or misappropriated any third party intellectual
property rights, nor, to the Knowledge of the Seller Executives, will any
infringement or misappropriation occur as a result of the continued
operation of the Healthcare Business as currently conducted, nor has Seller
or any of the Transferred Entities received any notices regarding any of
the foregoing.
(f) The Healthcare Intellectual Property Assets
constitute all intellectual property rights necessary for the conduct of
the Healthcare Business as currently conducted by the Seller Group.
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(g) Except as set forth on Schedule 3.11(g), none of
the members of the Seller Group have received any notices of, nor to the
Knowledge of the Seller Executives, after reasonable inquiry, are there any
facts which indicate a likelihood of, any infringement or misappropriation
by any third party with respect to the Intellectual Property Assets.
3.12 TAXES. Except as set forth on Schedule 3.12:
(a) Each Transferred Entity has filed all Tax reports
and returns that it was required to file with any Taxing Authority and has
paid all Taxes that are due, regardless of whether or not shown, on such
returns.
(b) Any liability of any Transferred Entity for Taxes
not yet due and payable is reflected on the Healthcare Financial Statements
in conformity with GAAP and the customary practices of the Transferred
Entities, except to the extent such Taxes are the responsibility of the
Seller Group under the Tax Procedures Agreement.
(c) Each Transferred Entity has withheld and paid all
Taxes required to have been withheld and paid by it in connection with
amounts paid or owing to any employee, creditor or other third party.
(d) No Transferred Entity has any claim pending
against it by any Taxing Authority or is involved in any dispute with any
Taxing Authority concerning any liability of such Transferred Entity for
Taxes, nor has any Transferred Entity received written notice from any
Taxing Authority that any such claim is threatened or contemplated.
(e) Seller will prior to the Closing Date make
available to Buyer accurate copies of the schedules to Seller's federal
consolidated Tax Returns for each of the Transferred Entities for the years
1994 through 1996 (except for returns not yet prepared and filed) and, to
the extent requested by Buyer in writing, of all assessment reports,
examination reports and statements of deficiencies assessed against or
agreed to by any of the Transferred Entities for such period.
(f) None of the Transferred Entities has made any
payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments
that will not be deductible under Code Section 280G, other than with
respect to the Management Employment Agreements.
(g) None of the Transferred Entities (i) has been a
member of an Affiliated Group filing a consolidated federal income Tax
Return (other than a group the common parent of which was the Seller) or
(ii) has any Liability for the Taxes of any Person (other than any of the
members of the Seller Group) under Reg. Section 1.1502-6 (or any similar
provision of an applicable Law), as a transferee or successor, by contract,
or otherwise.
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(h) None of the Transferred Entities has an election
in effect under Code Section 341(f).
(i) None of the Transferred Entities is currently the
beneficiary of an extension of time in which to file any Tax Return.
(j) There are no Tax Liens on the assets of the
Transferred Entities, other than Liens for Taxes and assessments not yet
due and payable or for Taxes the validity of which are being contested in
good faith and that are fully reserved against on the balance sheets
contained in the Healthcare Financial Statements.
(k) Since January 27, 1994, no claim has been made in
writing by an authority in a jurisdiction where any of the Transferred
Entities does not file Tax Returns that any of them is or may be subject to
taxation in that jurisdiction, other than claims that have been resolved.
(l) None of the Transferred Entities has waived any
statute of limitations in respect of Taxes.
3.13 LICENSURE. Except as set forth on Schedule 3.13, all
offices of the Transferred Entities that provide home health services are,
where so required, properly licensed and authorized by the appropriate
state Governmental Entities to provide home health services, pursuant to
applicable Law and are otherwise authorized to operate the Healthcare
Business in the manner in which such business is currently operated. Except
as set forth on Schedule 3.13, all such licenses are in full force and
effect.
3.14 CERTIFICATES OF NEED. The appropriate Transferred
Entities have obtained (or are duly exempt from obtaining) Certificates of
Need from the appropriate Governmental Entities for the establishment and
operation of the Healthcare Business as presently conducted by the
Transferred Entities and as required by applicable Law. Schedule 3.14 sets
forth a listing of those States in which the Transferred Entities operate
pursuant to Certificates of Need.
3.15 MEDICARE AND MEDICAID. Certain offices of the Transferred
Entities are participating providers of services under Medicare and are
eligible for reimbursement under Medicare. Such offices currently maintain
certification by HCFA as Medicare certified "Home Health Agencies" for the
provider numbers listed in Schedule 3.15(a), which provider numbers are in
full force and effect. Certain offices of the Transferred Entities are
duly authorized to provide services under Medicaid as listed in
Schedule 3.15(b) and are eligible for reimbursement thereunder. Palmetto
Government Benefits Administrators is Seller's current fiscal intermediary.
Prior to May 27, 1997, Aetna Life Insurance Company had been Seller's
Medicare intermediary.
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3.16 MEDICARE/MEDICAID NOTICES.
(a) Except as set forth in Schedule 3.16(a), (i) none
of the Transferred Entities is appealing any notices of program
reimbursement, and no notices have been issued regarding any disputes
related to any of the Transferred Entities' cost reports from Governmental
Entities responsible for administering the Medicare program for Seller's
three (3) most recent fiscal years; and (ii) there is no actual or, to the
Knowledge of the Seller Executives, after consultation with the Healthcare
Executives, threatened proceeding or investigation related to the Medicare
or Medicaid programs, other than routine audits by HCFA or the applicable
state agency.
(b) Except as set forth on Schedule 3.16(b), with
respect to the Healthcare Business, no member of the Seller Group, current
or former employees of any member of the Seller Group, or entities or
individuals (other than Franchisees) with whom a member of the Seller Group
has contracted to provide services have intentionally filed a false claim,
or filed a claim without a reasonable basis therefor, with HCFA, its fiscal
intermediaries or any state agency, or any other third party payor, or
violated the so-called "Medicare fraud and abuse" Laws contained in
Section 1128(B) of the Social Security Act or any similar Laws addressing
fraud and abuse in government funded health care programs.
(c) Except as set forth on Schedule 3.16(c), to the
Knowledge of the Seller Executives after consultation with the Healthcare
Executives, there are no pending investigations by a Governmental Entity
with respect to the operations of any Franchisee.
3.17 GOVERNMENTAL FILINGS. Any and all cost reports, budgets,
and other filings required to be filed pursuant to any Law issued by or
relating to the Medicare program and any other governmental health care
program due as of or before the Closing Date and which may be due as a
result of the Closing has or will be timely filed by the Seller Group
except where a failure to file would not have a Material Adverse Effect.
Except as stated in Schedule 3.17, such cost reports and other filings are
complete and in compliance in all material respects with applicable Laws.
Except as set forth in Schedule 3.17, to the Knowledge of the Seller
Executives, after consultation with the Healthcare Executives, there are no
existing overpayments due and owing to HCFA or any existing material
overpayments due and owing to any other third party payor from any member
of the Seller Group.
3.18 COMPLIANCE. Except as set forth on Schedules 3.9,
3.11(e), 3.13, 3.15, 3.16, 3.17, 3.18 and 3.20, neither Seller nor any
Transferred Entity (a) is in default or violation of (i) any Law applicable
to the Healthcare Business or by which any of the Healthcare Assets are
bound, including applicable franchise Laws, or (ii) any of the Healthcare
Permits, except for any such defaults or violations that would not have a
Material Adverse Effect, or (b) has received from any Governmental Entity
any written notification since December 27, 1996 with respect to possible
defaults or violations of Laws by either Seller or any Transferred Entity
with respect to the Healthcare Business, except for any such written
notices since December 27, 1996 relating to possible defaults
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or violations that would not have a Material Adverse Effect or relating to
matters that have been resolved.
3.19 CERTAIN CHANGES OR EVENTS. Except as contemplated by the
Transactions, the Conveyance or as set forth in Schedule 3.19, since
December 27, 1996 none of the Transferred Entities have: (a) incurred any
destruction or loss (whether or not covered by insurance) with respect to
any Healthcare Assets which causes a financial loss to the Healthcare
Business of $25,000 or more; (b) undertaken any material change in
accounting methods, principles or practices except as required by GAAP;
(c) redeemed, repurchased or otherwise reacquired any of their equity
securities; (d) made any increase in the benefits under, or established any
material bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option, stock purchase or other employee
benefit plan, or effected any increase in the compensation payable or to
become payable to directors, officers or employees of the Healthcare
Business, except for any of the foregoing that are within the ordinary
course of business, and except with respect to the Management Employment
Agreements; (e) entered into any contract other than in the ordinary course
of business; (f) abandoned or permitted to lapse any of the Healthcare
Intellectual Property Assets that are material to the Healthcare Business;
(g) permitted, allowed or suffered any of their assets to be subject to any
Lien other than any such Liens incurred in the ordinary course of business
or Liens related to credit agreements in existence on the date hereof;
(h) other than with respect to the acquisition of Franchisees' businesses,
acquired or made any investment in (by merger, exchange, consolidation,
purchase or otherwise) any corporation or partnership or interest in any
business organization or entity, outside of the ordinary course of
business; (i) forgiven any material indebtedness; (j) made any expenditure
for a capital asset involving more than $50,000; (k) made any loan or
advance to, or guarantee for the benefit of, any other person or entity,
other than in the ordinary course of business; (l) incurred or assumed any
liabilities, obligations or indebtedness for borrowed money or guaranteed
any such liabilities or indebtedness other than trade accounts payable
incurred in the ordinary course of business; (m) sold any assets other than
in the ordinary course of business or (n) agreed, whether in writing or
otherwise, to do any of the foregoing.
3.20 LITIGATION. Except as set forth in Schedule 3.20, there
is no claim, action, suit, litigation, proceeding, or arbitration, at Law
or in equity (collectively, "Actions"), pending or, to the Knowledge of the
Seller Executives, after consultation with the Healthcare Executives,
threatened against Seller related to the Healthcare Business, any of the
Transferred Entities or arising from any actions by current or former
employees of any member of the Seller Group directly related to the matters
described in Section 3.16(b) regarding Medicare and Medicaid fraud or abuse
that would have a Material Adverse Effect, and to the Knowledge of the
Seller Executives, after consultation with the Healthcare Executives, there
are no facts presently existing that would lead to any such Action.
Neither Seller nor any of the Transferred Entities is subject to any
continuing order of, consent decree, settlement agreement or other similar
agreement with, any Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator,
including, without limitation,
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cease-and-desist or other orders, except for any such matters that would
not have a Material Adverse Effect. Except as set forth in Schedule 3.20,
there are no pending or, to the Knowledge of the Seller Executives, after
consultation with the Healthcare Executives, threatened investigations by a
Governmental Entity of the Healthcare Business, any of the Healthcare
Assets or any of the Transferred Entities, and, to the Knowledge of the
Seller Executives, after consultation with the Healthcare Executives, there
are no facts presently existing that would lead to any such investigation.
3.21 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.21(a) sets forth a list of each written
employee welfare benefit plan and employee pension benefit plan (as defined
in Section 3(1) or 3(2) of ERISA) covering Business Employees and/or
Current Employees and each other material benefit plan or contract covering
such employees and each other employee benefit plan with respect to which
the Transferred Entities have any liability or reasonable expectation of
liability (whether or not any such plan has terminated, is subject to
ERISA, is a Multiemployer Plan or covers non-U.S. employees, including any
employee benefit plan currently or formerly maintained by any member of the
controlled group of companies, within the meaning of Code Section 414, of
which any Transferred Entity is or was a member) (collectively the "Plans"
and individually a "Plan").
(i) Except as set forth in Schedule 3.21(a)(i), none
of the Plans is (A) a Multiemployer Plan, (B) an employee benefit plan
of the type described in Sections 4063 and 4064 of ERISA or in
Section 413(c) of the Code (and regulations promulgated thereunder),
(C) an employee pension benefit plan that is subject to Title IV of
ERISA or the minimum funding requirements of Section 302 of ERISA or
Section 412 of the Code, or (D) a plan which provides health, life
insurance, accident or other "welfare-type" benefits to current or
future retirees or current or future former employees, their spouses
or dependents, other than in accordance with Section 4980B of the Code
or applicable state continuation coverage Law.
(ii) Except as set forth in Schedule 3.21(a)(ii), none
of the Plans obligates the Transferred Entities to pay separation,
severance, termination or similar-type benefits solely as a result of
any of the Transactions or the Conveyance or solely as a result of a
"change in control," within the meaning of Section 280G of the Code,
other than with respect to the Management Employment Agreements.
Seller has made available to Buyer complete copies of the most recent
version of either the summary descriptions of each such plan or the plan
document. To the Knowledge of the Seller Executives, after reasonable
inquiry, unless otherwise set forth thereon, all of the Plans listed on
Schedule 3.21(a) have been maintained, funded and administered in
compliance with ERISA and the Code (insofar as applicable).
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(b) Schedule 3.21(b) lists each individual written
employment agreement of each employee who is a member of senior management
or an executive of the Healthcare Business, which agreement provides for
(i) total individual base annual compensation in excess of $100,000, or
(ii) a term in excess of one (1) year.
3.22 LABOR MATTERS. Schedule 3.22 lists each collective
bargaining or other agreement with a labor union, works council or similar
organization applicable to employees of the Healthcare Business to which
Seller or any Transferred Entity is a party. Except as set forth in
Schedule 3.22, there are no current or, to the Knowledge of the Seller
Executives, after consultation with the Healthcare Executives, threatened
strikes or work stoppages that pertain to the Healthcare Business. There
have been no strikes, threatened strikes or work stoppages by employees of
the Healthcare Business in the prior three (3) years.
3.23 INSURANCE. Schedule 3.23 sets forth a list of all
insurance policies with respect to the property, assets and operations of
the Healthcare Business. All such insurance policies are in full force and
effect in all material respects. Except as set forth in Schedule 3.23,
there are no pending claims by Seller or the Transferred Entities relating
to the Healthcare Business under such insurance policies as to which the
insurers listed thereon have denied liability. All of the Healthcare
Assets of an insurable nature are adequately insured under the listed
policies to the extent properties and assets of a similar character are
customarily insured by corporations engaged in similar industries as
Seller.
3.24 BOOKS AND RECORDS. The minute books and stock transfer
records of the Transferred Entities, all of which have been made available
to Buyer, are complete and correct in all material respects.
3.25 BANK ACCOUNTS. Schedule 3.25 sets forth a list of all
bank accounts, lock box accounts and certain other special purpose bank
accounts maintained by the Transferred Entities, together with the names of
all persons who are authorized signatories or have access thereto or
control thereover.
3.26 BROKERS. Other than Alex. Brown & Sons Incorporated, the
fees and expenses of which will be paid by Seller, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made
by or on behalf of the Seller Group.
3.27 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 3.27(a), all
assets and property leased, operated, or used by the Transferred Entities
or Seller directly in the Healthcare Business ("Environmental Property"),
all conditions on and uses by them of the Environmental Property as well as
the operation of the Healthcare Business comply in all material respects
with, and have complied with, all Environmental Laws and do not
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cause or have not caused any material liability, contingent or otherwise,
to be incurred by the Transferred Entities under any Environmental Law.
(b) Except as set forth in Schedule 3.27(b), there is
not pending, or to the Knowledge of the Seller Executives, after
consultation with the Healthcare Executives, threatened, against the
Healthcare Business or any of the Transferred Entities any civil, criminal,
administrative, or private party action, suit, summons, citation,
complaint, claim, notice, demand, judgment, order, proceeding, or hearing
based on an Environmental Law.
3.28 FRANCHISEES. Except as set forth on Schedule 3.28, there
are no material disputes, or claims, by the Franchisees with, or against,
Seller or the Transferred Entities. The Franchise Agreements do not
require the consent of the Franchisees with respect to the Transactions or
the Conveyance.
3.29 UNDISCLOSED LIABILITIES. The Transferred Entities do not
have any liability (whether accrued, absolute, contingent or otherwise)
that would have a Material Adverse Effect, other than liabilities
(a) reflected or reserved against in the Healthcare Financial Statements
(or in the notes thereto), (b) disclosed in this Agreement, including the
Schedules, (c) that are fully covered by enforceable insurance,
indemnification, contribution or comparable arrangements, (d) under this
Agreement or any other Transaction Document, or (e) liabilities incurred or
arising in the ordinary course of business of the Transferred Entities
since December 27, 1996. As of the Effective Time, none of the Transferred
Entities will have any indebtedness for borrowed money.
3.30 SUFFICIENCY OF HEALTHCARE ASSETS. As of the Effective
Time, the Transferred Entities will own or, pursuant to the Ancillary
Agreements, have the right to use, all assets (whether tangible or
intangible) necessary to conduct the Healthcare Business as it is currently
conducted by the Seller Group, including, but not limited to, all assets
necessary to generate the revenues set forth in the Healthcare Financial
Statements and all assets relating to acquisitions of businesses with
respect to the Healthcare Business since March 28, 1997.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller as follows:
4.1 ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of Delaware
and has full corporate power to carry on its business as it is now being
conducted and to own or hold under lease the properties and assets it now
owns or holds under lease.
4.2 AUTHORITY. Buyer has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Transactions to be consummated by Buyer.
The execution and delivery of this Agreement by Buyer and the consummation
by Buyer of the Transactions have
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been duly authorized by all necessary corporate action. This Agreement has
been validly executed and delivered by Buyer and, assuming the due
authorization, execution and delivery thereof by the other parties hereto,
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or
similar Laws affecting the enforcement of creditors' rights generally and
subject to general principles of equity.
4.3 NO CONFLICT. The execution and delivery of this Agreement
by Buyer and the consummation of the Transactions and compliance by Buyer
with any of the provisions hereof will not (i) conflict with or violate any
provision of its organizational documents or bylaws, (ii) require any
consent, approval, authorization or permit of, or filing or registration
with, or notification to, any Governmental Entity other than those required
under the HSR Act, except as set forth in Schedule 3.5, or (iii) violate
any Law applicable to Buyer or by which any of its properties or assets are
bound.
4.4 INVESTMENT INTENT. It is understood that the Transferred
Shares are not being registered, for purposes of the Transactions, under
the Securities Act, and the Transferred Shares are being delivered without
registration in reliance upon an exemption from the registration
requirements of the Securities Act and that Seller's reliance upon such
exemptions is predicated upon Buyer's representations set forth in this
Agreement. Buyer is acquiring the Transferred Shares hereunder only for
Buyer's own account for investment and not with any intention of making, or
with a view to, or for sale in connection with, any distribution thereof
within the meaning of the Securities Act.
4.5 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on
behalf of Buyer.
4.6 FINANCING. Buyer has on the date hereof commitments for,
and on the Closing Date will have, all funds necessary to pay the Purchase
Price.
5. BUYER'S DUE DILIGENCE. Buyer hereby acknowledges the following:
5.1 INVESTIGATION. Buyer has conducted its own investigation
and made its own evaluation of the Healthcare Business and the Transferred
Entities. The scope of such investigation has been determined by Buyer.
Buyer, through certain of its representatives, is familiar with the
Healthcare Business.
5.2 FRANCHISE MATTERS. Buyer has reviewed the Franchise
Agreements and acknowledges and agrees that, except as may be set forth in
this Agreement, Seller has not made any representation, warranty or
covenant with respect to the Franchise Agreements or the Franchisees.
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5.3 NO ADDITIONAL REPRESENTATIONS. The members of the Seller
Group are not making any representations or warranties, express or implied,
of any nature whatsoever with respect to the Healthcare Business, the
Transferred Entities, the Transferred Shares, the Healthcare Assets, or the
Healthcare Liabilities, except for the specific representations and
warranties in Section 3 and Schedules responsive thereto, and the Ancillary
Agreements (in each instance, subject to the stated conditions and
limitations thereof).
6. COVENANTS OF BUYER.
Buyer covenants to Seller that, except as otherwise consented to in
writing by Seller after the date of this Agreement:
6.1 CAUSE CONDITIONS TO BE SATISFIED. Buyer will use its
reasonable best efforts to cause all of the conditions described in
Section 9 of this Agreement to be satisfied.
6.2 CONSENTS. Buyer shall use its reasonable best efforts to
take or cause to be taken all actions and do or cause to be done all things
necessary, proper or advisable to consummate and make effective the
Transactions, including without limitation cooperating with Seller in
discussions with Franchisees, using reasonable efforts to obtain all
material consents of any person or entity, whether private or governmental,
and secure all necessary governmental licenses and permits applicable to
Buyer in connection with the consummation of the Transactions. Buyer and
Seller shall cooperate in creating a list of such consents. As soon as
practicable after the date hereof, Buyer shall prepare and file, or cause
to be prepared and filed, with the appropriate licensing and permitting
authorities applications for the issuance to the Buyer Group of all
governmental licenses and permits necessary for the operation of the
Healthcare Business after the Closing.
6.3 CONFIDENTIALITY. Any confidential information provided to
Buyer or its representatives pursuant to this Agreement shall be held by
Buyer and its representatives in accordance with, and shall be subject to
the terms of, the Confidentiality Agreement.
6.4 HSR ACT FILING. Buyer will timely and promptly make all
filings required under the HSR Act. Buyer will furnish to Seller such
information and reasonable assistance as Seller may reasonably request in
connection with its preparation of necessary filings or submissions to any
Governmental Entity, including, without limitation, any filings necessary
under the HSR Act. Buyer will supply Seller with a copy of any
correspondence, filing or communication (or memorandum setting forth the
substance thereof) between Buyer or their respective representatives, on
the one hand, and the FTC or the Antitrust Division of the DOJ or any other
Governmental Entity or authority or members of their respective staffs, on
the other hand, with respect to this Agreement or the Transactions to the
extent that any such correspondence, filing,
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communication or memorandum is required by Seller to meet its obligations
under the HSR Act.
6.5 EMPLOYEE MATTERS. Buyer shall be responsible for
determining whether the Worker Adjustment and Retraining Notification Act
of 1988, as amended, applies to the Transactions and for providing any
notice of "layoffs" or "plant closings" that might be required pursuant
thereto.
6.6 EMPLOYMENT AGREEMENTS. Buyer shall cause IHI to perform,
or shall perform on IHI's behalf, all obligations under the Management
Employment Agreements. Notwithstanding the foregoing, it is agreed that
Seller shall pay (a) all "Restructuring Bonuses" and (b) all "Prepaid
Bonus" amounts, all as, when, and to the extent, any such bonuses become
due and payable pursuant to the terms of the respective Management
Employment Agreements. Capitalized terms used in the preceding sentence
shall have the same meaning set forth in the Management Employment
Agreements. It is agreed that the Current Employees who are parties to
such agreements shall be third party beneficiaries with respect to the
foregoing covenant of Buyer.
6.7 NOTICES TO THIRD PARTIES. In conjunction with the Seller
Group, Buyer shall use reasonable efforts to make all other filings and to
give notice to all third parties that may reasonably be required to
consummate the Transactions.
6.8 ACCESS TO BOOKS AND RECORDS. Buyer agrees to (i) hold all
of the material books and records of the Transferred Entities existing on
the Closing Date and not to destroy or dispose of any thereof for a period
of six (6) years from such Closing Date or such longer time as may be
required by Law, and thereafter, if it desires to destroy or dispose of
such books and records, to offer first in writing at least 60 days prior to
such destruction or disposition to transfer them to Seller and
(ii) following the Closing Date to afford Seller, its accountants and
counsel, during normal business hours, upon reasonable request, at any
time, reasonable access to such books, records and other data to the extent
that such access may be requested in connection with any matter relating to
the Healthcare Business or any of the Transferred Entities at no cost to
Seller (other than for actual out-of-pocket expenses by the Buyer Group);
provided, however, that nothing herein shall limit any of Seller's rights
of discovery.
6.9 FRANCHISEE OPTIONS. Upon receipt from Seller of a
complete listing of those Franchisees who are parties to stock option
agreements with Seller (the "Optionees") and a copy of the form of stock
option agreement, as amended (the "Option Agreement"), Buyer shall cause
IHI to monitor the compliance of the Optionees with the requirements of
Section 3(b) of the Option Agreement and to report to Buyer as to the
eligibility of the Optionees, on a quarterly basis, or in response to a
request from Seller in connection with the exercise of an option by a given
Optionee. Buyer will cause IHI to supply to Seller supporting
documentation with respect to any report of noncompliance by an Optionee.
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7. COVENANTS OF SELLER.
Seller covenants to Buyer that, except as otherwise consented to in writing
by Buyer after the date of this Agreement or with respect to the Transactions:
7.1 CONDUCT OF BUSINESS. For the period from the date of this
Agreement up to and including the Closing Date and except as otherwise
contemplated by this Agreement (a) the Healthcare Business will be
conducted by Seller and the Transferred Entities only in the ordinary
course of business, (b) the Transferred Entities will not enter into, adopt
or amend any employee benefit plan, agreement or arrangement, enter into or
amend any employment or consulting contracts, or increase the salaries,
compensation or benefits of its officers, employees or consultants outside
the ordinary course of business, (c) the Transferred Entities shall not
incur any liability for borrowed money or encumber any of their assets,
except in the ordinary course of business, and except with respect to
ongoing obligations under credit agreements outstanding on the date hereof,
(d) the Transferred Entities will use reasonable efforts to preserve their
business organization intact, to keep available the service of their
officers and employees and to preserve the goodwill of suppliers, customers
and others doing business with them, (e) no change shall be made in the
number of shares or terms of the Transferred Entities authorized, issued or
outstanding capital stock, nor shall any of them enter into or grant any
options, calls, contracts or commitments of any character relating to any
issued or unissued capital stock, (f) no dividend or other distribution
shall be declared or paid in respect of the capital stock of the
Transferred Entities, except any such dividend or distribution in an amount
not exceeding the amount of cash in the respective accounts of the
Transferred Entities on the Closing Date, in accordance with the terms of
this Agreement, (g) neither the Seller nor the Transferred Entities will
accelerate any payment of accounts receivable or delay payment of accounts
payable or Taxes (including payroll Taxes), in a manner inconsistent with
prior practices, and (h) Seller will not perform any act, or attempt to do
any act, or permit any act or omission to act, which will cause a breach by
Seller of any contract directly and exclusively related to the Healthcare
Business to which it is a party, which breach would have a Material Adverse
Effect.
7.2 CAUSE CONDITIONS TO BE SATISFIED. Seller will use its
reasonable efforts to cause all of the conditions described in Section 8 of
this Agreement to be satisfied.
7.3 CONSENTS. Each of Seller and the Transferred Entities
shall use reasonable efforts to take or cause to be taken all actions and
do or cause to be done all things necessary, proper or advisable to
consummate and make effective the Transactions, including without
limitation cooperating with Buyer in discussions with Franchisees and using
reasonable efforts to obtain all material consents of any person or entity,
whether private or governmental, required in connection with the
consummation of the Transactions. Buyer and Seller shall cooperate in
creating a list of such consents.
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7.4 ACCESS TO INFORMATION. For the period from the date of
this Agreement up to and including the Closing Date, Seller will give to
Buyer and to Buyer's officers, accountants, counsel and other
representatives or advisors upon reasonable advance notice full access,
during normal business hours, (a) to all the Transferred Entities' books,
contracts, commitments, reports, studies, and other records and to the
officers and employees of the Transferred Entities and (b) to all of
Seller's books, contracts, commitments, reports, studies, and other records
related to the Healthcare Business and to the officers of Seller and
Seller's employees who are involved in the Healthcare Business (all of
which shall become the property of the Buyer Group at the Effective Time,
except as otherwise set forth in Section 14.3). Seller will furnish to
Buyer during such period all such information concerning the Transferred
Entities and the Healthcare Business and Healthcare Assets as Buyer may
reasonably request. If requested by Buyer during such period, Seller will
make available to Buyer and its accountants the work papers and other
information utilized by Seller's accountants in the preparation of the
Healthcare Financial Statements and make such accountants reasonably
available to Buyer and its accountants.
7.5 HSR ACT FILING. Seller will timely and promptly make all
filings required under the HSR Act. Seller will furnish to Buyer such
reasonably necessary information and reasonable assistance as Buyer may
reasonably request in connection with its preparation of necessary filings
or submissions to any Governmental Entity, including, without limitation,
any filings necessary under the HSR Act. Seller will supply Buyer with a
copy (cleansed of confidential or proprietary sensitive information) of any
correspondence, filing or communication (or memorandum setting forth the
substance thereof) between the Seller or its representatives, on the one
hand, and the FTC or the DOJ or any other Governmental Entity or authority
or members of their respective staffs, on the other hand, with respect to
this Agreement or the Transactions to the extent that any such
correspondence, filing, communication or memorandum is required by Buyer to
meet its obligations under the HSR Act.
7.6 LICENSES AND PERMITS. Seller shall use reasonable efforts
to assist Buyer in the preparation of the applications for all licenses and
permits necessary for the post-Closing operation of the Healthcare
Business, and in the securing of such licenses and permits.
7.7 NOTICES TO THIRD PARTIES. In conjunction with Buyer,
Seller shall use reasonable efforts to make all other filings and to give
notice to all third parties that may reasonably be required to consummate
the Transactions.
7.8 SHARED FACILITIES AND ASSETS. Seller and the other
members of the Seller Group will retain those facilities and assets used in
the operation and management of the Healthcare Business as are shared with
Seller's other businesses. For a transitional period following the
Closing, such shared facilities and assets will be made available to the
Buyer Group, subject to the terms and conditions set forth in the
Transitional Services Agreement.
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7.9 MANAGEMENT EMPLOYMENT AGREEMENTS. Seller shall pay
(a) all "Restructuring Bonuses" and (b) all "Prepaid Bonus" amounts, all
as, when, and to the extent, any such bonuses become due and payable
pursuant to the terms of the respective Management Employment Agreements.
Capitalized terms used in the preceding sentence shall have the same
meaning set forth in the Management Employment Agreements.
8. CONDITIONS TO BUYER'S OBLIGATIONS.
Unless waived by Buyer in writing, all obligations of Buyer under this
Agreement are subject to the fulfillment, prior to or at the Closing, of each of
the following conditions:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Seller contained in Section 3 shall be
true and correct in all material respects on the date hereof and at and as
of the Closing Date with the same effect as though such representations and
warranties had been made at and as of such date, except to the extent that
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and correct in
all material respects on and as of such earlier date); and except for
changes expressly permitted or contemplated herein or in the other
Transaction Documents. Seller shall have performed in all material
respects all obligations and complied in all material respects with all
covenants and satisfied all of the conditions required by this Agreement to
be performed, complied with or satisfied by it on or prior to the Closing;
and Buyer shall have received from Seller a certificate signed by an
officer of Seller and dated the Closing Date, with respect to all of the
foregoing.
8.2 CONVEYANCE. The Conveyance of the Parent Healthcare
Assets and Parent Healthcare Liabilities shall have occurred.
8.3 CLOSING DELIVERIES. Seller shall have delivered the
documents required pursuant to Section 2.7.
8.4 NO INJUNCTION. No preliminary or permanent injunction or
other order of any court restraining or prohibiting consummation of the
Transactions shall be in effect.
8.5 NO MATERIAL ADVERSE CHANGE. From the date of this
Agreement to the Closing Date, there shall not have occurred a Material
Adverse Change in the Healthcare Business.
8.6 HSR ACT. Buyer and Seller shall have filed with the FTC
and the DOJ complete and accurate notification and report forms with
respect to the Transactions pursuant to the HSR Act and the waiting period
required under the HSR Act shall have expired (or received notice of
earlier termination) prior to the Closing Date.
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8.7 RESIGNATIONS. Buyer shall have received the written
resignations of the officers and directors of the Transferred Entities as
listed in Schedule 8.7.
8.8 MATERIAL CONSENTS. All consents necessary for the
consummation of the Transactions shall have been obtained other than any
such consents the absence of which would not have a Material Adverse
Effect.
8.9 DOCUMENTS WITH LENDERS. The members of the Buyer Group
shall have entered into definitive documents with the parties who have
provided the financing commitments described in Section 4.6.
8.10 ANCILLARY AGREEMENTS. The parties shall have negotiated
final forms of and entered into the Ancillary Agreements.
9. CONDITIONS TO SELLER'S OBLIGATIONS.
Unless waived by Seller in writing, all obligations of Seller under this
Agreement are subject to the fulfillment, prior to or at the Closing, of each of
the following conditions:
9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Buyer contained in Section 4 of this
Agreement shall be true and correct in all material respects on the date
hereof and at and as of the Closing Date with the same effect as though
such representations and warranties had been made again at and as of such
date, except to the extent that such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct on and as of such earlier date); and
except for changes permitted or contemplated herein or in the other
Transaction Documents Buyer shall have performed in all material respects
all obligations and complied in all material respects with all covenants
and satisfied all of the conditions required by this Agreement to be
performed, complied with or satisfied by it on or prior to the Closing; and
Seller shall have received from Buyer a certificate signed by an officer of
Buyer and dated the Closing Date with respect to all of the foregoing.
9.2 CLOSING DELIVERIES. Buyer shall have delivered the
documents and paid the Purchase Price required pursuant to Section 2.8.
9.3 NO INJUNCTION. No preliminary or permanent injunction or
other order of any court restraining or prohibiting consummation of the
Transactions shall be in effect.
9.4 HSR ACT. Buyer and Seller shall have filed with the FTC
and the DOJ complete and accurate notification and report forms with
respect to the Transactions pursuant to the HSR Act and the waiting period
required under the HSR Act, including any extension thereof, shall have
expired (or received notice of earlier termination) prior to the Closing
Date.
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9.5 ANCILLARY AGREEMENTS. The parties shall have negotiated
final forms of and entered into the Ancillary Agreements.
10. INDEMNIFICATION AND SURVIVAL.
10.1 INDEMNIFICATION BY SELLER.
(a) Subject to the terms and limitations of this
Section 10, Seller shall indemnify Buyer Indemnitees against any Damages
that are caused by or arise out of (i) any breach by Seller of any of its
covenants or agreements under this Agreement or any of the other
Transaction Documents, (ii) any inaccuracy in any representation or breach
of any warranty of Seller set forth in Section 3, except to the extent
provided in Section 10.3(c), or (iii) any of the Excluded Liabilities.
(b) The representations and warranties of Seller set
forth in Section 3 shall survive the Closing. The representations and
warranties set forth in Sections 3.3, 3.4, 3.5, 3.7 and subsequent Sections
of Section 3 shall expire and be of no further force and effect eighteen
months after the Closing Date, except with respect to (i) claims of Buyer
with respect to Section 3.12 which shall expire and be of no further force
and effect upon termination of the statute of limitations applicable to
Taxes that are the subject of the claims and (ii) claims that Buyer has
previously asserted against Seller in writing, setting forth with
reasonable specificity the nature of such claims.
10.2 INDEMNIFICATION BY BUYER.
(a) Subject to the terms and limitations of this
Section, Buyer shall indemnify Seller Indemnitees against any Damages that
are caused by or arise out of (i) any breach by Buyer, or subsequent to the
Closing, any Transferred Entity, of any of its covenants or agreements
under this Agreement or any of the other Transaction Documents, (ii) any
inaccuracy in any representation or breach of any warranty of Buyer set
forth in Section 4, (iii) the failure of any Transferred Entity subsequent
to the Closing to perform or fulfill its obligations under any contract,
agreement or obligation for which any member of the Seller Group is or may
be liable, as a guarantor or otherwise, (iv) any of the Healthcare
Liabilities, including but not limited to the Medicare/Medicaid
Obligations, except for such amounts as the Seller is required to indemnify
the Buyer for such Healthcare Liabilities (including Medicare/Medicaid
obligations), (v) Buyer's hiring practices and decisions with respect to
employees in the Healthcare Business, (vi) except as set forth in
Section 7.9, any claim concerning any aspect of the employment or
termination of employment at or after the Closing of any Continued
Employee, (vii) except as set forth in Section 7.9, any claim with respect
to Buyer's failure to meet its obligations with respect to the Management
Employment Agreements, and (viii) any claims arising out of the operations
of the Healthcare Business conducted subsequent to the Closing Date.
(b) The representations and warranties of Buyer set
forth in Section 4 shall survive the Closing.
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10.3 LIMITATIONS.
(a) Buyer Indemnitees may not assert any claim for
indemnification under Section 10.1(a)(ii) or 10.1(a)(iii) (a "Buyer's
Claim") unless and until: (i) such Buyer's Claim (or a series of related
Buyer's Claims) gives rise to Damages (excluding Litigation Expenses for
purposes of this threshold only) in excess of $10,000 and (ii) the
aggregate amount of such Buyer's Claims shall exceed $2,000,000 and then
only with respect to the excess of such aggregate Buyer's Claims over
$2,000,000. Notwithstanding the foregoing, in no event shall Seller's
liability under and with respect to this Agreement, the other Transaction
Documents, the Transactions or any claims associated herewith arising under
Section 10.1(a)(ii) or 10.1(a)(iii) (whether in contract, tort or
otherwise, but not including any claim for willful misconduct or willful
fraud) exceed an aggregate amount equal to $25,000,000. The limitations
set forth in this Section 10.3(a) shall not apply to the representations
contained in Section 3.26 or to any Section 3.16 Damages or Hertz Matters
Damages, which shall be governed by Section 10.4 below. Any Gap Amounts
(as defined in the Insurance Procedures Agreement) paid by any member of
the Buyer Group shall be included for purposes of determining whether Buyer
has met the two million dollar ($2,000,000) threshold set forth in this
Section 10.3(a).
(b) The dollar thresholds set forth in this Section 10
have been negotiated for the special purpose of the provision to which they
relate, and are not to be taken as evidence of the level of "materiality"
for purposes of any statutory or common Law which may be applicable to the
Transactions under which a level of materiality might be an issue.
(c) The effect of any nonperformance of any provision
of Section 7.1 shall be limited to nonfulfillment of the conditions set
forth in Section 8, and no member of the Seller Group shall have any
liability therefor or in connection therewith in the event Buyer
consummates the Transactions.
10.4 SPECIAL INDEMNITY. The limitations and thresholds set
forth in Section 10.3 shall not apply to the following Special Indemnity
matters:
(a) Seller shall indemnify Buyer Group with respect to
Damages resulting from (i) the failure to collect on notes receivable from
the Therapy Students, to the extent that such failure to collect exceeds
the amount specifically reserved therefore as of the Closing Date on the
books and records of the Healthcare Business, as set forth on
Schedule 10.4(a); (ii) claims by Therapy Students against the Seller Group
with respect to obligations of Seller or the Transferred Entities under
those certain contracts concerning the education of the Therapy Students;
and (iii) claims by HOZN, Eindhoven, the Netherlands, the Hogeschool van
Amsterdam, Amsterdam, the Netherlands, and The Hanzehogeschool van
Groningen, Groningen, the Netherlands with respect to certain contracts
between such schools and Seller or one of the Transferred Entities
(collectively, the "Specified Damages"). Seller and Buyer shall each pay
50% of all Specified Damages; provided, however (I) Buyer shall pay the
first $100,000 of
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Specified Damages and (II) Seller's liability for Specified Damages shall
not exceed $2,000,000. Any payments made by Buyer pursuant to this
Section 10.4(a) shall be included for purposes of determining the threshold
set forth in Section 10.3(a)(ii). Any payments made by Seller pursuant to
this Section 10.4(a) shall be included for purposes of calculating the
$25,000,000 maximum set forth in Section 10.3(a).
(b) Notwithstanding any provision contained herein to
the contrary, Seller shall indemnify Buyer Group with respect to
Section 3.16 Damages and, subject to Section 10.4(c), with respect to
Damages incurred as a result of the Hertz Matters ("Hertz Matters
Damages"); provided, however, that Buyer shall pay 50% of any such
Section 3.16 Damages or Hertz Matters Damages up to an aggregate maximum of
$500,000, and, provided further that Buyer shall not be liable for
Section 3.16 Damages or Hertz Matters Damages in excess of $250,000. Any
payments made by Buyer pursuant to this Section 10.4(b) shall be included
for purposes of determining the thresholds set forth in Section 10.3(a)(i)
and (ii). Any payments made by Seller pursuant to this Section 10.4(b)
shall not be included for purposes of calculating the $25,000,000 maximum
set forth in Section 10.3(a) and such $25,000,000 maximum shall not be
applicable to any Section 3.16 Damages or Hertz Matters Damages.
(c) Notwithstanding the foregoing, the indemnity set
forth in Section 10.4(b) with respect to Hertz Matters Damages shall cover
Damages only to the extent such Damages are not recovered by Buyer or any
other member of the Buyer Group pursuant to the indemnity provisions set
forth in the Contracts listed on Schedule 3.8(a)(i), items 6 through 10,
and Buyer agrees to use reasonable efforts to effect such recovery.
(d) Notwithstanding any provision contained herein to
the contrary, Seller shall indemnify Buyer Group with respect to any
Identified Section 3.16 Damages. It is expressly understood and agreed
that Seller shall indemnify the Buyer Group from the first dollar of
Identified Section 3.16 Damages incurred by any member of the Buyer Group
and, accordingly, the deductible and maximum amounts payable set forth in
Section 10.3(a) shall be inapplicable to Seller's indemnification
obligation set forth in this Section 10.4(d).
(e) With respect to any Damages resulting from the
Greg Teske matter set forth on Schedule 3.20 under the caption "Threatened
Litigation" ("Teske Damages"), Seller shall indemnify the Buyer Group from
the first dollar of Teske Damages incurred by the Buyer Group up to a
maximum amount of one hundred thousand dollars ($100,000). In no event
shall Seller be liable for any Teske Damages incurred by the Buyer Group in
excess of such one hundred thousand dollar ($100,000) amount; however, any
Teske Damages paid by any member of the Buyer Group in excess of such
amount shall be included for purposes of determining whether Buyer has met
the two million dollar ($2,000,000) threshold set forth in Section 10.3(a).
(f) The parties agree that the special indemnities set
forth in this Section 10.4 shall be subject to the 18-month survival period
set forth in Section 10.1
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and shall be the Buyer Group's sole remedy against Seller, the Seller Group
or any of their affiliates, with respect to the Specified Damages, the
Section 3.16 Damages, Hertz Matters Damages, the Identified Section 3.16
Damages and/or any of the other subject matters set forth in this
Section 10.4.
10.5 NOTICE OF CLAIMS. Any Indemnified Party that seeks
indemnification with respect to a Third Party Claim from the other party
(or, in the case of Buyer, to have Damages taken into account for purposes
of the dollar thresholds in Section 10.3) must provide written notice to
the Indemnifying Party setting forth reasonable detail as to such Third
Party Claim (a "Notice of Claim"). It shall be a condition to
indemnification hereunder that the Notice of Claim be delivered promptly
and be received by the Indemnifying Party prior to the time the
Indemnifying Party's ability to contest the Third Party Claim would be
materially impaired by such lack of notice or delay. If the Indemnified
Party fails to meet the foregoing condition then it shall have waived all
rights to indemnification with respect to such Third Party Claim.
10.6 DEFENSE OF THIRD PARTY CLAIMS.
(a) Except as otherwise provided in Section 10.5(d),
the Indemnifying Party may undertake the defense of a Third Party Claim by
notice to the Indemnified Party not later than 60 calendar days after
receipt by the Indemnifying Party of the Notice of Claim. Failure on the
part of the Indemnifying Party to so notify the Indemnified Party that it
will undertake such defense shall be deemed to be a waiver of the
Indemnifying Party's right to undertake such defense.
(b) If the Indemnifying Party undertakes the defense
of any Third Party Claim, it shall control the investigation and defense
thereof, except that the Indemnifying Party shall not require the
Indemnified Party without the Indemnified Party's prior written consent, to
take or refrain from taking any action in connection with such Third Party
Claim, or make any public statement that it reasonably considers to be
against its interest, nor shall the Indemnifying Party, without the prior
written consent of the Indemnified Party, consent to any settlement that
requires the Indemnified Party to make any payment that is not fully
indemnified under this Agreement (or taken into account under
Section 10.3); and subject to the Indemnifying Party's control rights, the
Indemnified Party may participate in such investigation and defense, at its
own expense.
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(c) If the Indemnifying Party does not undertake the
defense of a Third Party Claim, then except as otherwise provided in
Section 10.5(d), the Indemnified Party shall control such investigation and
defense, except that the Indemnified Party shall not require the
Indemnifying Party, without its prior written consent, to take or refrain
from taking any action in connection with such Third Party Claim, or make
any public statement, which such party reasonably considers to be against
its interest, nor shall the Indemnified Party, without the prior written
consent of the Indemnifying Party, consent to any settlement; and subject
to the Indemnified Party's control rights, the Indemnifying Party may
participate in such investigation and defense, at its own expense.
(d) If there is a material conflict of interest
between Seller and Buyer with respect to a Third Party Claim, then neither
party shall be entitled to assume the defense thereof. In such event Buyer
and Seller shall each be entitled to conduct its own investigation and
defense, but the parties shall cooperate to conduct such investigation and
defense as efficiently as possible. If Seller is required to indemnify
Buyer with respect to such Third Party Claim, it shall pay the reasonable
attorneys' fees and expenses of one individual or firm representing Buyer
with respect thereto. If Buyer is required to indemnify Seller with
respect to such Third Party Claim, it shall pay the reasonable attorneys'
fees and expenses of one individual or firm representing Seller with
respect thereto.
(e) Buyer and Seller shall make available to each
other, their counsel and other representatives, all information and
documents reasonably available to them which relate to any Third Party
Claim, and otherwise cooperate as may reasonably be required in connection
with the investigation and defense thereof.
10.7 NO CONSEQUENTIAL OR LOST PROFIT DAMAGES. No party to this
Agreement shall seek or be entitled to indirect or consequential Damages or
Damages for lost profits in any claim for indemnification under this
Section 10, nor, in connection with any Direct Claim, shall it accept
payment of any award or judgment for such indemnification to the extent
that such award or judgment includes such party's indirect or consequential
Damages or Damages for lost profits.
11. TERMINATION.
11.1 GENERAL. This Agreement may be terminated and the
Transactions may be abandoned at any time, but not later than the Closing
Date, as set forth below:
(A) MUTUAL CONSENT. This Agreement may be terminated
by the mutual consent of Seller and Buyer.
(B) FAILURE OF CONDITIONS. This Agreement may be
terminated by Seller upon five (5) days written notice to Buyer in the
event that any of the conditions precedent to Seller's obligations set
forth in Section 9 with respect to Buyer are not
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satisfied by December 21, 1997 (other than by reason of the breach by such
terminating party of any of its representations, warranties, covenants, or
agreements set forth herein) and are not waived by Seller at or prior to
such date. This Agreement may be terminated by Buyer upon five (5) days
written notice to Seller in the event that any of the conditions precedent
to Buyer's obligations set forth in Section 8 with respect to Seller or the
Transferred Entities are not satisfied by December 21, 1997 (other than by
reason of the material breach by such terminating party of any of its
representations, warranties, covenants, or agreements set forth herein) and
are not waived by Buyer at or prior to such date.
11.2 PROCEDURE UPON TERMINATION. In the event of the
termination and abandonment of this Agreement, written notice thereof shall
promptly be given to the other parties hereto and except as provided in
Section 11.3 this Agreement shall terminate, all further obligations of the
parties hereunder to satisfy the conditions precedent to the Closing shall
terminate, and the Transactions shall be abandoned without further action
by any of the parties hereto, except that Section 6.3 (Confidentiality)
shall survive such termination or abandonment.
11.3 EFFECT OF TERMINATION. Any such termination shall be
without liability to Seller, the Transferred Entities and Buyer, except to
the extent that there shall have occurred any willful or intentional breach
of this Agreement or any intentional misrepresentation or breach of
warranty, as to each of which all legal remedies of the party adversely
affected shall survive and be enforceable. Each party will pay its own
expenses as incurred up to and including the date of termination.
11.4 EFFECT OF SUSPENDED TRANSFER. In no event shall the
occurrence of a Suspended Transfer be grounds for termination of this
Agreement by either Buyer or Seller.
11.5 LIQUIDATED DAMAGES. Notwithstanding any provision herein
to the contrary, in the event that Buyer fails to have all funds necessary
to pay the Purchase Price on the Closing Date and all of the conditions
precedent to Buyer's obligations, other than the condition set forth in
Section 8.9, have been satisfied, either party may terminate this Agreement
and Buyer shall pay to Seller liquidated damages in the amount of
$3,000,000 in immediately available funds to an account designated in
writing by Seller, within thirty (30) days of such termination. Such
liquidated damages shall be Seller's sole and exclusive remedy against
Buyer, Cornerstone, or any of their respective affiliates with respect to
this Agreement, the Transactions and such termination. Cornerstone agrees
that in the event that Buyer is liable to pay Seller such liquidated
damages it shall provide sufficient capital to Buyer for purposes of paying
such liquidated damages.
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12. COVENANTS NOT TO COMPETE.
12.1 SELLER'S COVENANTS. In consideration of the consummation
of the Transactions, for a period of ten (10) consecutive years from the
Closing Date, Seller shall not:
(a) Directly or indirectly through any affiliate or
other entity, as a principal, partner, agent or otherwise, compete, assist
in or provide financial resources to any activity that competes with the
Healthcare Business, as such business is currently conducted within the
United States and Canada; provided that the running of such time period
shall be tolled during any period of time during which it has been
successfully established by judicial or otherwise binding determination
that Seller has violated this Section 12.1;
(b) Use or disclose to anyone except Buyer, whether or
not for its benefit or otherwise, any confidential matters used directly
and exclusively in the Healthcare Business;
(c) Directly or indirectly solicit, encourage to leave
employment, or hire any employee of the Healthcare Business or any person
who at the time of hire had been an employee of the Healthcare Business
within the previous 12 months; and
(d) Notwithstanding anything to the contrary set forth
in this Section 12.1, (i) Seller and any other member of the Seller Group
may enter into a business that is competitive with the Healthcare Business
in the event that (A) such business comprises less than 25% of the ongoing
operations of an entity that a member of the Seller Group acquires and the
net revenues of such competitive business for the fiscal year preceding the
closing of any such transaction is less than $5,000,000; (B) if such net
revenues equal or exceed $5,000,000, at the time of such closing, the
acquiring member of the Seller Group shall divest itself of such business
as soon as practicable after the closing of the acquisition of such entity,
but in no event later than 24 months from the date of such closing; or
(C) if subsequently such net revenues equal or exceed $5,000,000 in any
fiscal year, the acquiring member of the Seller Group shall divest itself
of such business as soon as practicable, but in no event later than
24 months from the end of such fiscal year, and (ii) Seller and any other
member of the Seller Group may engage in the provision of permanent
placement and outplacement services on an executive, managerial and
professional level to hospitals and other healthcare related entities and
the staffing of non-healthcare providers to hospitals and other healthcare
related entities.
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12.2 BUYER GROUP'S COVENANTS. In consideration of the
consummation of the Transactions, for a period of ten (10) consecutive
years from the Closing Date, no member of Buyer Group shall:
(a) Directly or indirectly through any affiliate or
other entity, as a principal, partner, agent or otherwise, compete, assist
in or provide financial resources to any activity that competes with the
non-Healthcare Business of Seller ("Seller's Continuing Business"), as such
business is currently conducted within the United States and Canada;
provided that the running of such time period shall be tolled during any
period of time during which it has been successfully established by
judicial or otherwise binding determination that any member of the Buyer
Group has violated this Section 12.2;
(b) Use or disclose to anyone except Seller whether or
not for its benefit or otherwise, any confidential matters used directly
and exclusively in Seller's Continuing Business;
(c) Directly or indirectly solicit, encourage to leave
employment, or hire any employee of Seller's Continuing Business or any
person who at the time of hire had been an employee of Seller's Continuing
Business within the previous 12 months;
(d) Notwithstanding anything to the contrary set forth
in this Section 12.2 (i) Buyer and any other member of the Buyer Group may
enter into a business that is competitive with Seller's Continuing Business
in the event that (A) such business comprises less than 25% of the ongoing
operations of an entity that a member of the Buyer Group acquires and the
net revenues of such competitive business for the fiscal year preceding the
closing of any such transaction is less than $5,000,000, (B) if such net
revenues equal or exceed $5,000,000, the acquiring member of the Buyer
Group shall divest itself of such business as soon as practicable after the
closing of the acquisition of such entity, but in no event later than
24 months from the date of such closing, or (C) if subsequently such net
revenues equal or exceed $5,000,000 in any fiscal year, the acquiring
member of the Buyer Group shall divest itself of such business as soon as
practicable, but in no event later than 24 months from the end of such
fiscal year; and (ii) Buyer and any other member of the Buyer Group may
engage in the provision of healthcare support personnel to hospitals and
other patient care facilities, provided such personnel have medical
training, education, and expertise, and the position to be filled requires
medical training, education and expertise; and
(e) Notwithstanding anything to the contrary contained
in this Section 12.2, none of the foregoing restrictions shall in any way
limit the activities of Cornerstone or any of its affiliates, other than
the Buyer Group.
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12.3 REASONABLENESS OF RESTRICTIONS. Each of Buyer and Seller
acknowledges that the foregoing restrictions are reasonable and necessary
to protect the value to the other of the Transactions, and agrees that in
the event of any breach thereof the harm to the non-breaching party will be
irreparable and without adequate remedy at Law, and therefore that
injunctive relief with respect thereto will be appropriate. Such
injunctive relief shall not be the non-breaching party's exclusive remedy,
and shall be in addition to any other remedies to which it may be entitled,
whether in Law or in equity. Buyer, on behalf of itself and the other
members of the Buyer Group, and Seller each waives any requirement for the
posting of any bond or security as a condition to the granting of any
injunction or other equitable relief. The covenants contained in
Sections 12.1 and 12.2 shall be deemed to be a series of separate
covenants, one for each business line in each city of every state or
jurisdiction in which the respective businesses are currently conducted.
Each such separate covenant is referred to herein as a "Separate Covenant."
If any court or tribunal of competent jurisdiction shall refuse to enforce
one or more of the Separate Covenants because the time limit applicable
thereto is deemed unreasonable, it is expressly understood and agreed that
such Separate Covenant or Separate Covenants shall not be void but that for
the purpose of such proceedings such time limitation shall be deemed to be
reduced to the extent necessary to permit the enforcement of such Separate
Covenant or Separate Covenants. If any court or tribunal of competent
jurisdiction shall refuse to enforce any or all of the Separate Covenants
because, taken together, they are more extensive (whether as to geographic
area, scope of business or otherwise) than is deemed to be reasonable, it
is expressly understood and agreed between the parties hereto that such
Separate Covenant or Separate Covenants shall not be void but that for the
purpose of such proceedings the restrictions contained therein (whether as
to geographic area, scope of business or otherwise) shall be deemed to be
reduced to the extent necessary to permit the enforcement of such Separate
Covenant or Separate Covenants. In the event that a court or tribunal of
competent jurisdiction otherwise determines that any of the foregoing
provisions are unenforceable as stated, the parties intend that such
restrictions be modified to permit the maximum enforceable restriction on
the respective party's competition with the other party's business.
13. EMPLOYEE MATTERS.
13.1 CURRENT AND CONTINUED EMPLOYEES.
(a) On the Closing Date, the following individuals
shall cease to be employees of the Seller Group: (i) each employee of
Seller who is employed exclusively in the Healthcare Business, (ii) each
employee of Seller who performs substantial services for the Healthcare
Business and is designated by Seller, and (iii) each employee who replaces
any employee described in clauses (i) and (ii). All employees described in
clauses (i) and (ii), as of the date hereof are listed in Schedule 13.1.
Schedule 13.1 identifies each Current Employee who is absent from active
employment and indicates the nature of such absence and the anticipated
date of return, if any, of such employee's return to active employment.
All employees described in clauses (i), (ii) and (iii) are referred to as
"Current Employees".
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(b) Each Current Employee who accepts an offer of
employment made by a member of the Buyer Group in accordance with
Section 13.2 shall become an employee of such member of the Buyer Group
effective on the Closing Date; and all such Current Employees and all
Business Employees shall be referred to as "Continued Employees".
13.2 POSITIONS OFFERED TO CURRENT EMPLOYEES.
(a) Subject to the provisions of this Section 13, as
of the Closing Date, Buyer, or another member of the Buyer Group, shall
offer employment to all Current Employees; PROVIDED, HOWEVER, that Buyer
shall not be obligated to offer employment to any Current Employee who, as
of the Closing Date, is absent from active employment due to a long term
disability, as identified on Schedule 13.1.
(b) With respect to each Current Employee, the
position offered by Buyer, or another member of the Buyer Group: (i) shall
be for a job that is equivalent (including with respect to his or her level
of responsibility and authority) to the Current Employee's job with the
Healthcare Business as of the Closing, (ii) shall be at no reduction in
base salary, wages, or commission or sales incentive award levels effective
as of the Closing, and (iii) shall provide employee benefit plan coverages
substantially comparable to those coverages provided to the Current
Employee prior to the Closing, in accordance with the provisions of the
Employee Procedures Agreement.
(c) Seller has not made any representation regarding
which, if any, (i) Current Employees will accept offers of employment with
the Buyer Group, or (ii) Continued Employees will continue such employment
after the Closing. Nothing in this Article 13 or the Employee Procedures
Agreement shall be construed to amend or in any way modify any at-will
employment policy of Buyer.
13.3 TERMS OF EMPLOYMENT. As to terms and conditions of
employment not specified in this Section 13, and subject to the Employee
Procedures Agreement, from and after the Closing the Continued Employees:
(i) shall be treated in a similar manner as the other employees of the
Buyer Group who are similarly situated, (ii) shall be entitled to
participate on the same basis as such other employees in all job training,
career development and educational programs of the Buyer Group, and
(iii) shall be entitled to fair and equitable consideration together with
such other employees in connection with any management or executive job
opportunities or any other promotional opportunities with the Buyer Group.
13.4 RECOGNITION OF SENIORITY. Buyer shall recognize
continuous service with Seller or the Transferred Entities (including
predecessor employers to the extent such service has been recognized by
Seller) for the purpose of determining seniority as this may be used for
the determination of service awards, severance benefits, vacations, sick
leave and other terms and conditions of employment related to seniority.
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13.5 EMPLOYEE INFORMATION SHARING. After the Closing, Buyer
shall, and shall cause the Transferred Entities to, provide to Seller and
Seller shall provide to Buyer, on a continuing basis at no cost to the
recipient, such information regarding persons who were employees of the
Healthcare Business under the Seller's ownership, as may be reasonably
requested.
14. POST-CLOSING MATTERS.
14.1 REPORTS. Buyer shall, and shall cause the Transferred
Entities and their respective employees to, prepare on a timely basis, in
accordance with the reasonable instructions of Seller, such financial, Tax
and other reports and statements relating to the Healthcare Business or the
Transferred Entities for periods prior to the Closing as may be requested
by Seller.
14.2 RENEWAL OF GUARANTEED ITEMS. Without the prior written
consent of the Treasurer of any Assistant Treasurer of Seller, Buyer shall
not, and shall not permit the Transferred Entities or any other member of
the Buyer Group to, renew or extend the term of, increase its obligations
under, or transfer to a third party, any lease, loan, contract or other
obligation for which Seller or any other member of the Seller Group is or
may be liable, as guarantor, original tenant, primary obligor, or
otherwise, unless all obligations of the Seller Group with respect thereto
are thereupon terminated by documentation satisfactory in form and
substance to Seller.
14.3 FINANCIAL AND ACCOUNTING RECORDS. Seller shall maintain
all original financial and accounting records relating to the Healthcare
Business for a period of six (6) years and shall permit Buyer to have
access to and to copy, at Buyer's sole cost and expense, such records
during normal business hours for the purpose of preparing financial
statements, Tax returns, litigation papers and for other legitimate
corporate purposes. Seller shall reasonably cooperate in furnishing or
providing access to all such records, provided that it shall be during
normal business hours and so as not to cause undue disruption to the
business of Seller.
14.4 INTENTIONALLY OMITTED.
14.5 INTERCOMPANY AGREEMENTS. Except for the Ancillary
Agreements, the other Transaction Documents and any agreements executed in
connection with the Conveyance, (a) all contracts, licenses, agreements,
commitments or other arrangements between Seller or any other member of the
Seller Group and any Transferred Entity, whether written or oral, and
whether express or implied, pursuant to which Seller (or any other member
of the Seller Group) provides management, administrative, legal, financial,
accounting, data processing, insurance, technical support, or other
services to the Healthcare Business or such Transferred Entity, or the use
of any assets of any member of the Seller Group, or pursuant to which
rights, privileges or benefits are accorded to the Healthcare Business or
any Transferred Entity as a unit of the Seller Group, shall
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terminate as of the Closing, and (b) after the Closing, neither Buyer nor
the Transferred Entities shall have any rights under any similar contract,
license, agreement, commitment or arrangement with Seller (or any other
member of the Seller Group).
14.6 TAX ELECTION. Buyer and Seller covenant and agree that
following the Closing they shall make a joint election pursuant to
Section 338(h)(10) of the Code with respect to the Transferred Shares and
the outstanding shares of stock of the Transferred Subsidiaries held as of
the Closing Date by IHI and file such forms as necessary to effectuate such
an election in accordance with this Section 14.6. The Purchase Price shall
be allocated among the Healthcare Assets by Buyer, in accordance with the
regulations promulgated under Section 338 of the Code, except as may
otherwise be set forth in the Tax Procedures Agreement.
14.7 NATIONAL ADVERTISING CONTRACTS.
(a) All the Healthcare National Advertising Contracts
shall be assigned by Seller to IHI and IHI shall assume all such contracts,
subject to the terms and conditions to be set forth in an assignment and
assumption agreement to be executed between Seller and IHI, substantially
in the form of Exhibit 14.7, providing, among other things, that they shall
each continue to meet the obligations to their respective Franchisees set
forth in the National Advertising Contracts.
14.8 INTERIM HEALTHCARE SYSTEM. Seller has completed
development of the Interim Healthcare System through the initial phase of
Release 2.0 as described in Schedule 1.39 and shall further enhance the
functionality of Release 2.0 to meet the specifications of IHI set forth in
Appendix A to Schedule 1.39 by no later than December 31, 1997. In
addition, by no later than December 31, 1997, Seller shall develop a
Medicare Front Office Module, as described on Schedule 1.39, to be included
in the Interim Healthcare System. Any further development of the Interim
Healthcare System shall be performed by Buyer or another member of the
Buyer Group.
14.9 REGULATORY CHANGES. In the event that between the date
hereof and the Closing Date, it becomes apparent to the parties that the
terms set forth in Section 2.3 of this Agreement or in the IHNY Management
Agreement cannot be carried out in the manner contemplated herein or
therein as a result of any governmental action pursuant to Laws applicable
to the Healthcare Business and/or the Transactions, then the parties shall
use their reasonable best efforts to renegotiate any such terms so as to
preserve as closely as possible the agreements previously reached between
the parties as set forth herein.
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15. MISCELLANEOUS.
15.1 PUBLICITY. Seller, Buyer, and the other members of the
Seller Group and the Buyer Group agree not to issue any statement or
communication to the public or the press regarding the Transactions without
the prior written consent of the other party, which consent shall not be
unreasonably withheld or denied; provided, however, that upon notice to the
other party, each party shall be permitted, upon notice to the other, to
make such disclosures to the public or such Governmental Entities as its
counsel reasonably deems necessary to maintain compliance with applicable
Laws.
15.2 EXPENSES. Seller shall pay all of its expenses relating
to this Agreement, including all of the fees and expenses of Bryan Cave LLP
in its capacity as counsel to Seller and the Seller Group and the fees of
Alex. Brown & Sons Incorporated. Buyer shall pay all of its expenses
relating to this Agreement including fees and disbursements of its
respective counsel, accountants and financial advisors, whether or not the
Transactions are consummated. Any filing fees related to the Conveyance
and any fees related to the sale of the Transferred Shares shall be the
responsibility of the Seller. Buyer and Seller shall each pay 50% of any
filing fee in connection with the HSR Act and any other filing fees related
to the Transactions.
15.3 NOTICES. Except as otherwise provided herein, all
notices, requests, demands and other communications under or in connection
with this Agreement shall be in writing, and, shall be sent, delivered or
telecopied to:
(a) Seller:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, FL 33309
Attention: Raymond Marcy
Phone: (954) 938-7600
Fax: (954) 351-8117
with a copy to:
Bryan Cave LLP
1200 Main, Suite 3500
Kansas City, MO 64105
Attention: Lorna Wright Haberkern, Esq.
Phone: (816) 374-3209
Fax: (816) 374-3300
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(b) Buyer:
Catamaran Acquisition Corp.
717 Fifth Avenue, Suite 1100
New York, New York 10022
Attention: Dana O'Brien
Phone: (212) 753-0901
Fax: (212) 828-6798
with a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne
Phone: (212) 446-4800
Fax: (212) 446-4900
(c) Cornerstone:
Cornerstone Equity Investors IV, L.P.
717 Fifth Avenue, Suite 1100
New York, New York 10022
Attention: Dana O'Brien
Phone: (212) 753-0901
Fax: (212) 828-6798
with a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne
Phone: (212) 446-4800
Fax: (212) 446-4900
All such notices, requests, demands or communications shall be
sufficient and effective upon personal delivery, or upon confirmation of
the receipt of the applicable telecopy or one Business Day after delivery
to a reputable overnight carrier for next Business Day delivery, or
three (3) days after the date on which the notice is deposited in the
United States mail, registered or certified with return receipt requested
and proper postage prepaid.
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15.4 ENTIRE AGREEMENT. This Agreement and the other
Transaction Documents are intended by the parties to and do constitute the
entire agreement of the parties with respect to the Transactions. Except
for the Confidentiality Agreement which shall survive the execution and
delivery of this Agreement, this Agreement supersedes any and all prior
understandings, written or oral, between the parties, and this Agreement
may be amended, modified, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of the
amendment, modification, waiver, discharge or termination is sought. Any
provision of this Agreement may be waived by the party entitled to the
benefit thereof only in the manner set forth in the preceding sentence, but
such waiver or failure to insist upon strict compliance with such provision
shall not operate as a waiver of or estoppel with respect to, any
subsequent or other failure.
15.5 INTERPRETATION. The Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever required by the
context of this Agreement, the singular shall include the plural and the
masculine shall include the feminine, and vice versa.
15.6 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
15.7 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns, but nothing herein, express or implied, is intended
to or shall confer any rights, remedies or benefits upon any person other
than the parties hereto, except as specifically set forth in Section 6.6
with respect to the Management Employment Agreements. This Agreement may
not be assigned by any party hereto, except that Buyer may assign this
Agreement to one of its wholly-owned subsidiaries or to any of its
financing sources, provided that Buyer shall remain primarily liable on
this Agreement, notwithstanding any such assignment.
15.8 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the Laws of the State of Delaware.
15.9 EXCLUSIVITY. Seller shall not, and shall not cause or
permit any other member of the Seller Group to, (a) solicit, initiate or
encourage the submission of any proposal or offer from any person relating
to the acquisition of the Healthcare Business, the Transferred Entities or
any substantial portion of the assets of the Healthcare Business (including
any such acquisition structured as a merger, consolidation, sale of stock
or sale of assets), or (b) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate
in, or facilitate in any other manner any effort or attempt by any person
to do or seek to do
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any of the foregoing. The Seller agrees to notify the Buyer immediately if
any person makes any proposal, offer, inquiry, or contact with respect to
any of the foregoing.
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IN WITNESS WHEREOF, Seller and Buyer have executed or caused this
Agreement to be duly executed as of the date first above written.
INTERIM SERVICES INC.
By: /s/ Roy G. Krause
-----------------------------------
Roy G. Krause
Executive Vice President
CATAMARAN ACQUISITION CORP.
By: /s/ Robert H. Getz
-----------------------------------
Robert H. Getz
Vice President and Secretary
The undersigned is executing this Agreement solely for purposes of the
obligations set forth in Section 11.5, and by such execution hereby represents
that Cornerstone has all requisite right, power and authority to execute and
deliver this Agreement and to perform its obligations under Section 11.5.
CORNERSTONE EQUITY INVESTORS IV, L.P.
By: Cornerstone IV, L.L.C.,
Its General Partner
By: /s/ Robert H. Getz
-----------------------------------
Robert H. Getz
Managing Director
<PAGE>
EXHIBIT 2.3(b)
THIS SUBORDINATED NON-NEGOTIABLE PROMISSORY NOTE IS SUBJECT TO A SEPARATE
SUBORDINATION AGREEMENT BY AND AMONG THE HOLDER, THE MAKER, CATAMARAN AND
NATIONSBANK (AS EACH SUCH TERM IS HEREIN DEFINED)
SUBORDINATED NON-NEGOTIABLE PROMISSORY NOTE
$15,410,000.00 New York, New York
September 26, 1997
FOR VALUE RECEIVED, the undersigned, Interim Healthcare Inc., a
Florida corporation (the "MAKER"), hereby promises to pay to Interim Services
Inc., a Delaware corporation (the "HOLDER"), in lawful money of the United
States, at 2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309 or such other
place as may be designated in writing by the Holder, the principal sum of
Fifteen Million Four Hundred Ten Thousand Dollars ($15,410,000.00) (the
"PRINCIPAL AMOUNT"), plus all accrued interest thereon, if any, at the interest
rate set forth herein. Reference is hereby made to (i) the Stock Purchase
Agreement, dated as of June 29, 1997, as amended (the "STOCK PURCHASE
AGREEMENT") among the Holder, Catamaran Acquisition Corp., a Delaware
corporation ("CATAMARAN") and Cornerstone Equity Investors IV, L.P.; and (ii)
the Credit Agreement, dated as of the date hereof, as amended, modified,
restated or supplemented from time to time (the "CREDIT AGREEMENT") among Maker,
Catamaran, NationsBank, N.A. ("NATIONSBANK"), as agent and issuing lender, and
the lenders named therein.
Any payment by the Maker of any portion of the Principal Amount to the
Holder shall be referred to herein as a "PRINCIPAL PAYMENT". The "PRINCIPAL
PAYMENT AMOUNT" at any time shall be equal to (a) the amount which Maker can pay
to the Holder without causing an Event of Default (as such term is defined in
the Credit Agreement) MINUS (b) $350,000, such amount rounded down to the
nearest hundred thousand; PROVIDED, that (i) if the Principal Payment Amount at
any time is equal to less than $300,000 (except if the remaining unpaid
Principal Amount at such time is less than $300,000), then the Maker shall have
no obligation to make a Principal Payment at such time or (ii) if the Principal
Payment Amount at any time is greater than the remaining unpaid Principal Amount
at such time, then the Principal Payment Amount at such time shall be equal to
such remaining unpaid Principal Amount. Notwithstanding the foregoing, if after
giving effect to the payment of any Principal Payment Amount, the remaining
unpaid Principal Amount would be less than or equal to $350,000, then the Maker
shall pay to the Holder such remaining unpaid Principal Amount at the same time
as the Maker pays such Principal Payment Amount to the Holder.
On the date the Holder transfers the IHNY Shares (as such term is
defined in the Stock Purchase Agreement) to the Maker (the "IHNY CLOSING"),
provided there is no Event of Default (as such term is defined in the Credit
Agreement)under the Credit Agreement, the Maker shall make a Principal
Payment to the Holder in an amount equal to the Principal Payment Amount
as of the IHNY Closing. By the forty-fifth (45th) day after each fiscal
quarter of the Maker which ends after the IHNY Closing, provided there is
no Event of Default (as such term is
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defined in the Credit Agreement) under the Credit Agreement, the Maker
shall make a Principal Payment to the Holder in an amount equal to the
Principal Payment Amount as of the end of such fiscal quarter.
Notwithstanding the foregoing, on the date that is 30 days after the
earlier of (i) the final maturity of the indebtedness outstanding under the
Credit Agreement or (ii) the payment in full by the Borrower of the Senior
Indebtedness (as herein defined) and the termination of the Credit Agreement,
the Maker shall make a Principal Payment to the Holder in an amount equal to the
then remaining unpaid Principal Amount plus accrued interest thereon, if any.
Upon the payment in full of the Principal Amount plus accrued interest
thereon, if any, Maker shall have no further obligations or liabilities to
Holder with respect to this Note and the Holder hereby agrees to cancel and
return this Note to Maker.
Notwithstanding anything contained herein to the contrary, if Maker
has not obtained all consents and approvals required for the purchase by Maker
of the IHNY Shares by the date that is eighteen (18) months after the date
hereof, then Maker shall have no further obligations or liabilities to Holder
with respect to this Note and the Holder hereby agrees to cancel and return this
Note to Maker.
No interest will accrue on the unpaid Principal Amount between the
date hereof and the date of the IHNY Closing (the "IHNY CLOSING DATE"). After
the IHNY Closing Date, interest will accrue on the then unpaid Principal Amount
at a per annum rate equal to the rate of interest established from time to time
by NationsBank at its head office in Charlotte, North Carolina as its "prime
rate", which rate shall be adjusted daily to reflect any adjustments in such
"prime rate". Such accrued interest will be paid to the Holder monthly on the
first business day of the month, commencing the first month following the IHNY
Closing Date.
Unless prohibited by the terms of the Subordination Agreement, the
Maker has the right to prepay the entire Principal Amount or such lesser amount
as may then be outstanding, in whole or, from time to time, in part without
penalty.
For purposes of this Note, (i) "SUBORDINATED INDEBTEDNESS" means the
obligations of the Maker to the Holder to pay the Principal Amount (but not
interest at the prime rate payable in accordance with the sixth paragraph of
this Note) under this Note; and (ii) "SENIOR INDEBTEDNESS" means any and all
indebtedness (principal, interest, fees and other amounts) of Maker outstanding
under the Credit Agreement.
This Note is subject to the terms and conditions of a Subordination
Agreement between Holder, Catamaran and NationsBank (the "SUBORDINATION
AGREEMENT") pursuant to which the Subordinated Indebtedness is subordinate and
junior in right of payment and all other respects to all Senior Indebtedness.
The dissolution of the undersigned will not affect the continuing, irrevocable
and binding nature of the Subordination Agreement on the Holder.
Unless prohibited by the terms of the Subordination Agreement, upon
the occurrence of an Event of Default (as hereinafter defined), the Holder, at
any time during the
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continuance of any such Event of Default, may declare to be immediately due and
payable the then unpaid Principal Amount plus all accrued and unpaid interest
thereon, and will have the right to institute any proceeding with respect to
this Note for the enforcement of the payment of the principal of or interest on
this Note. As used herein, the term "EVENT OF DEFAULT" means (i) the default by
the Maker in the payment of principal hereof when the same becomes due and
payable pursuant to the terms hereof or upon acceleration of this Note; (ii) the
default by the Maker in the payment of any interest hereon when the same becomes
due and payable, and such default continues for a period of 30 days; (iii) the
Maker, pursuant to or within the meaning of any Bankruptcy Law (as hereinafter
defined) (a) commences a voluntary case, (b) consents to the entry of an order
for relief against it in any involuntary case, (c) makes a general assignment
for the benefit of its creditors, or (d) consents to the appointment of a
custodian of it or for all or substantially all of its property; or (iv) a court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that (a) is for the relief against the Maker in an involuntary case, or (b)
orders the dissolution or liquidation of the Maker, and, in any such case under
this clause (iv), the order remains unstayed and in effect for 60 consecutive
days. As used herein, the term "BANKRUPTCY LAW" means Title 11, U.S. Code, or
any similar Federal or State law for the relief of debtors.
Nothing set forth herein regarding the subordination of the
Subordinated Indebtedness to the Senior Indebtedness will impair, as between the
Holder and the Maker, the obligation of the Maker to pay to the Holder hereof
the principal of this Note and any and all accrued interest thereon in
accordance with terms hereof, nor will anything herein prevent the Holder as
between the Holder and the Maker from exercising all remedies provided by this
Note or provided by applicable law upon default hereunder.
In the event payment required hereunder is due on a Saturday, Sunday
or public holiday, such payment will be due on the next succeeding day which is
not a Saturday, Sunday or public holiday.
If the Subordinated Indebtedness is not paid when due and payable and
this Note is placed in the hands of an attorney or attorneys for collection or
foreclosure, the fees, costs and expenses incurred by Holder in any manner or
way with respect thereto will be part of the Subordinated Indebtedness
hereunder, payable to Holder on demand.
The Maker hereby agrees that it will not agree to an amendment to the
Credit Agreement that would impose financial covenants with respect to
borrowings under the New York Acquisition Sublimit (as defined in the Credit
Agreement) that differ from those with respect to any other borrowings under the
Credit Agreement. The Maker hereby agrees to deliver to the Holder a copy of
each Officer's Compliance Certificate which the Maker delivers to NationsBank
pursuant to Section 6.1(c) of the Credit Agreement at or about the same time as
Maker delivers any such Certificate to NationsBank.
This Note is made and delivered in New York, New York and shall be
construed and enforced in all respects in accordance with the laws of the State
of New York.
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IN WITNESS WHEREOF, this Note has been duly executed and delivered by
an authorized representative of the Maker on the date first above written.
INTERIM HEALTHCARE INC.,
a Florida corporation
By:
-------------------------------------------------
Name:
Title:
Accepted and Agreed To:
INTERIM SERVICES INC.,
A Delaware corporation
By:
-------------------------
Name:
Title:
Catamaran Acquisition Corp., a Delaware
corporation, hereby guarantees the payment
of all of Maker's payment obligations to the
Holder pursuant to the terms of this Note.
CATAMARAN ACQUISITION CORP.,
a Delaware corporation
By:
-------------------------
Name:
Title:
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EXHIBIT 2.9(a)
EMPLOYEE PROCEDURES AGREEMENT
AGREEMENT dated September 26, 1997 by and between Interim Services
Inc., a Delaware corporation ("Seller"), and Catamaran Acquisition Corp., a
Delaware corporation, ("Buyer").
WHEREAS, Seller and Buyer have entered into a Stock Purchase Agreement
dated June 29, 1997, (the "Stock Purchase Agreement") providing for, among other
things, the acquisition by Buyer of all the stock in the Transferred Companies,
which operate the Healthcare Business;
WHEREAS, the Continued Employees in the Healthcare Business who are
(i) directly employed in the United States by the Transferred Entities ("U.S.
Continued Employees"), or (ii) directly employed outside the United States by
the Transferred Entities ("non-U.S. Employees"), shall become employees of Buyer
or a subsidiary of Buyer pursuant to the Stock Purchase Agreement;
WHEREAS, the parties hereto wish to set forth their agreement as to
certain matters regarding the treatment of, and the employee benefits provided
to, those employees and former employees of the Healthcare Business; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties agree as follows:
1. DEFINITIONS.
(a)Except as otherwise expressly provided herein, all capitalized terms
used herein have the respective meanings assigned to them in the Stock Purchase
Agreement.
(b)The following terms have the meanings set forth below:
(i)"Affected U.S. Continued Employees" means the subset of U.S.
Continued Employees who cease to be affiliated with the Seller Group as a result
of either the Closing or the IHNY Closing, whichever is applicable.
(ii)"Applicable Effective Time" means either the Effective Time or the
IHNY Effective Time, as the context dictates.
(iii)"Effective Time" means the Effective Time with respect to the
Closing Date.
(iv)"IHNY Closing" means the actions taken to complete the purchase of
the IHNY Shares.
(v)"IHNY Closing Date" means the date on which the IHNY Closing occurs.
(vi)"IHNY Effective Time" means the Effective Time with respect to the
IHNY Closing Date.
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2. 401(K) PLAN FOR CONTINUED EMPLOYEES.
(a) As of the Effective Time, Buyer shall cause IHI (as plan sponsor) and
the other Transferred Entities to adopt a new 401(k) plan that is intended to be
qualified under Code Sections 401(a) and 401(k) and a corresponding trust that
is intended to be tax-exempt under Code Section 501(a) (the "Buyer 401(k)
Plan"). The Buyer 401(k) Plan shall have similar terms as the Seller's 401(k)
Benefit Plan as it exists on the Closing Date (the "Seller 401(k) Plan"), except
that it shall not provide for the investment in Seller's stock, nor shall it
provide for distributions in any annuity form. As soon as practicable after the
Closing Date (but in any event no later than November 30, 1997), Buyer shall
cause the Buyer 401(k) Plan and an application for determination on IRS Form
5300 to be filed with the IRS.
(b) As of the Applicable Effective Time, all Affected U.S. Continued
Employees who are participants in the Seller 401(k) Plan on the day immediately
preceding the Applicable Effective Time shall cease their active participation
therein and shall become participants in the Buyer 401(k) Plan. The Buyer
401(k) Plan shall receive and hold all contributions made on and after the
Applicable Effective Time on behalf of the Affected U.S. Continued Employees.
(c) As soon as practicable after the Applicable Effective Time, Seller
shall cause the trustee of the Seller 401(k) Plan to transfer to the trustee of
the Buyer 401(k) Plan assets equal in value to the total value of those account
balances of both (i) all Affected U.S. Continued Employees under the Seller
401(k) Plan, and (ii) all individuals employed by Seller or any of the
Transferred Entities prior to but not as of the Applicable Effective Time who
have provided services primarily for the Healthcare Business, as determined by
Seller, (the "Prior Healthcare Employees") and the Buyer shall cause the trustee
of the Buyer 401(k) Plan to accept such assets. The trustee of the Seller
401(k) Plan shall transfer such assets in cash or in kind, as such trustee and
Buyer shall mutually determine and agree, valued as of the date of transfer and
all participant loans outstanding under the Seller 4.01(k) Plan shall be
transferred to the Buyer 4.01(k) Plan in kind (along with all records necessary
for the administration of such loans). Except as may otherwise be provided in
the Stock Purchase Agreement, following such transfer, Seller shall have no
further liability whatsoever (either under this Agreement or otherwise) with
respect to participants in the Buyer 401(k) Plan. Seller and the Buyer shall
each use reasonable efforts to effect the account transfers contemplated in this
Section 2(c) as soon as practicable after each Applicable Effective Time;
provided that such transfer shall be effected in a manner that complies with
Code Section 414(l).
3. U.S. WELFARE BENEFIT PLANS.
(a) Subject to the terms of this Section 3, commencing as of the Applicable
Effective Time and continuing for a period of at least twelve (12) months
thereafter, the Buyer Group shall provide the Affected U.S. Continued Employees
with coverage under welfare benefit plans, as defined in Section 3(1) of ERISA
(the "Buyer Welfare Plans"), with similar terms, benefits, benefit levels and
employee contributions, as is provided to such employees immediately before the
Applicable Effective Time under the welfare benefit plans listed on
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Schedule 3.21 to the Stock Purchase Agreement and maintained by the Seller Group
for the benefit of its U.S. employees (the "Seller Welfare Plans"). The term
"Buyer Welfare Plans" as used herein shall include the portion of the Seller
Welfare Plans covering the U.S. Continued Employees during the Transition Period
(all as described in subsection (b) hereof), and the term "Seller Welfare Plans"
as used herein shall exclude such portion of such plans.
(b) Buyer desires to have the Transferred Entities continue as
participating employers in those commercially-insured Seller Welfare Plans set
forth on Exhibit A attached hereto and made a part hereof ("Transition Plans")
for the period commencing at the Effective Time and continuing through December
31, 1997 (the "Transition Period"), such that such Seller Welfare Plans shall
provide benefits for the U.S. Continued Employees during the Transition Period.
As an accommodation to Buyer, Seller shall notify the insurance carrier of all
Transition Plans of the sale by Seller of the Healthcare Business to Buyer and
of Buyer's desire to retain coverage for a Transition Period in this manner.
Seller shall permit the Transferred Entities to continue to participate in the
Transition Plans for the Transition Period; provided, however, that the
Transferred Entities continued participation in the Transition Plans shall be
contingent upon the insurance carriers permitting such participation and,
provided further, that such arrangements shall not result in any liability
whatsoever to any member of the Seller Group for the payment of benefits under
any Transition Plan. Buyer shall remain fully responsible for providing all
welfare benefits required hereunder (whether or not through the Transition
Plans) and Seller's efforts and cooperation in establishing or attempting to
establish this arrangement as described herein shall not shift any of such
responsibility to Seller or any member of the Seller Group. Buyer shall be
responsible for all costs and expenses (including but not limited to premiums
and administrative costs) associated with participation of the Transferred
Entities in the Transition Plans during the Transition Period and any period
during which unreported expenses incurred by Buyer Group's employees are
processed under the Seller Welfare Plans.
(c) The parties acknowledge that Interim Assisted Care (Hawaii), Inc.
("IAC"), one of the Transferred Entities, currently is the sponsor of the group
health plan maintained for its employees in Hawaii ("Hawaii Plan"). Buyer
agrees and acknowledges that, after the Closing, IAC shall remain the sponsor of
the Hawaii Plan and all assets, liabilities, responsibilities and authority
relating thereto shall remain with IAC. As of the Effective Time, the Seller
Group shall cease to have any direct or indirect liability or responsibility
for, or any other connection whatsoever with, the Hawaii Plan.
(d) Effective as of the Effective Time, Buyer shall take such actions as
may be necessary to adopt, maintain and operate a health care spending account
plan, dependent care spending account plan and Code Section 125 flexible
benefits (cafeteria) plan, each of which shall be similar to such plans
maintained by Seller immediately before the Effective Time. Effective as of the
Applicable Effective Time, Buyer shall recognize the Affected U.S. Continued
Employees' and the Prior Healthcare Employees' contribution elections, account
balances and reimbursement experience from Seller's health care spending account
and dependent care spending account plans for the calendar year in which the
Applicable Effective Time occurs. Seller shall provide Buyer with all
documentation, records and information Buyer may request in order to recognize
such experience; and Seller shall transfer to Buyer an amount, in cash,
representing the Affected U.S. Continued Employees' contributions to the health
care spending
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account and dependent care spending account plans, net of reimbursements, for
the calendar year in which the Applicable Effective Time occurs.
(e) With respect to coverage of the U.S. Continued Employees under the
Buyer Welfare Plans, (i) each U.S. Continued Employee's credited service with
the Seller Group shall be credited against any waiting period applicable to
eligibility for enrollment of new employees under the Buyer's group health
plans; (ii) limitations on benefits due to pre-existing conditions shall be
waived for any Affected U.S. Continued Employee enrolled in any Seller group
health plan as of the Applicable Effective Time (or at any later time that his
employment changes from the Seller to the Buyer) to the extent such U.S.
Continued Employee is not subject to any such limitation on benefits under the
relevant Seller plan; and (iii) any out-of-pocket annual maximums and
deductibles paid by any Affected U.S. Continued Employee in the calendar year
during which the Applicable Effective Time occurs under the Seller's group
health plans shall be credited under the Buyer's health plans for such calendar
year. In the case of any Affected U.S. Continued Employee who remains subject
to any pre-existing condition limitation under the Seller's group health plans
as of the day before the Applicable Effective Time (or at any later time his
employment changes from the Seller to the Buyer, if later), benefits under the
Buyer's group health plan shall be reduced or limited to the same extent that
any such reduction or limitation would have occurred under the Seller's group
health plans if such U.S. Continued Employee had continued coverage under the
Seller's group health plan.
(f) The Seller Welfare Plans shall not be liable for payments of benefits
with respect to Affected U.S. Continued Employees, except as otherwise provided
by this Section 3(f). The Seller Welfare Plans shall be liable for the payment
of benefits to eligible Affected U.S. Continued Employees and their eligible
dependents for claims related to services performed or supplies furnished or
deaths occurring prior to the Applicable Effective Time, regardless of whether
any such claim had actually been filed prior to the Applicable Effective Time,
in accordance with the terms of the applicable Seller Welfare Plan.
(g) The Buyer Welfare Plans shall be liable for the payment of benefits to
eligible Affected U.S. Continued Employees and their eligible dependents for
claims related to services performed, supplies furnished or deaths occurring on
or after the Applicable Effective Time, notwithstanding the fact that any such
claim may be related to a claim that was paid or is eligible for payment under
the terms of any Seller Welfare Plan in accordance with Section 3(b) above. In
addition, with respect to Affected U.S. Continued Employees, Buyer shall offer
and be liable for any continuation health coverage (including any penalties,
excise taxes or interest resulting from the failure to provide COBRA
continuation coverage) required by section 4980B of the Internal Revenue Code
due to qualifying events which occur on or before the Applicable Effective Time.
(h) The parties acknowledge and agree that all U.S. Continued Employees and
their covered dependents shall incur no termination of coverage, and Seller
shall have no obligation to take any action (including but not limited to
providing any certificate of creditable coverage) under the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA") as a result of this
Transaction. The Seller shall cause its records as to the length and dates of
each U.S. Continued Employee's (and covered dependents') creditable coverage
(within the meaning of HIPAA) to be transferred to the Buyer. The Buyer shall
be fully responsible for providing a
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timely certificate of creditable coverage (within the meaning of HIPPA) to each
U.S. Continued Employee (and covered dependents), with such certificate to
include and aggregate each such employee's (and covered dependents') period of
creditable coverage under both the Seller's and the Buyer's group health plans.
4. NO ASSUMPTION OF SELLER GROUP U.S. EMPLOYEE BENEFIT PLANS.
(a) Except as otherwise provided in this Agreement, Buyer shall not assume
the sponsorship of, or the responsibility for contributions to, or any liability
in connection with, any employee benefit plan (as defined by section 3(3) of
ERISA) maintained by the Seller Group for U.S. employees, former employees,
retirees or their beneficiaries.
(b) Effective as of the Effective Time, IHI, the current sponsor of the
CHHP Pension Plan ("CHHP Plan"), shall transfer sponsorship of the CHHP Plan to
Seller, and Seller shall assume sponsorship thereof; and Buyer shall cause IHI
to deliver to Seller all correspondence, notices and other documents received in
connection with said plan to be transferred immediately to Seller.
5. SELLER GROUP DEFERRED COMPENSATION PROGRAM. Pursuant to the terms of
Seller's Deferred Compensation Plan, upon the Applicable Effective Time,
participating Affected Continued U.S. Employees shall cease their participation
therein, and Seller shall pay or commence payment to all Affected U.S. Continued
Employees of any vested compensation that was deferred prior to the Applicable
Effective Time and that was not paid on or before the Applicable Effective Time,
in accordance with the terms and conditions of the plan.
6. VACATION. With respect to Affected U.S. Continued Employees, Buyer shall
continue to apply the vacation, sick leave and leave of absence policies of the
Healthcare Businesses that are in effect the day before the Applicable Effective
Time for at least the remainder of the calendar year in which the Applicable
Effective Time occurs; so that each U.S. Continued Employee shall be entitled to
use any vacation time, sick leave days or leave of absence, or receive any
vacation pay, to which he or she would otherwise be entitled for that calendar
year under the vacation, sick leave and leave policies applicable the day before
the Applicable Effective Time.
7. SEPARATION PAY. The Buyer Group shall defend, indemnify and hold all
members of the Seller Group harmless from and against any claims or liability
(including, but not limited to, COBRA, severance benefits, separation pay or
similar entitlements under applicable law or otherwise) arising from the
discharge or constructive discharge of any employee of any Transferred Entity
which occurs in connection with or after the Applicable Effective Time.
8. NOTICES. All notices, requests, demands and other communications required
or permitted to be given hereunder shall be deemed to have been duly given if in
writing and delivered personally or mailed first-class, postage prepaid,
registered or certified mail, addressed as follows:
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If to Seller or any member of the Seller Group:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, FL 33309
Attention: John B. Smith
Phone (954) 938-7600
Fax (954) 938-7780
With a copy to:
Bryan Cave LLP
1200 Main, Suite 3500
Kansas City, MO 64105
Attn: Lorna Wright Haberkern, Esq.
Phone: (816) 374-3209
Fax: (816) 374-3300
If to Buyer:
Catamaran Acquisition Corp.
717 Fifth Avenue, Suite 1100
New York, New York 10022
Attention: Dana O'Brien
Phone: (212) 753-0901
Fax: (212) 828-6798
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne
Phone: (212) 446-4800
Fax: (212) 446-4900
Seller or any member of the Seller Group may change the address to which such
communications are to be directed to it by giving written notice to Buyer in the
manner provided in this Section. Buyer or any member of the Buyer Group may
change the address to which such communications are to be directed to it by
giving written notice to Seller in the manner provided in this Section.
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9. PROVISIONS APPLICABLE TO NON-U.S. CONTINUED EMPLOYEES.
(a) As of the Effective Time, each Non-U.S. Continued Employee who is
provided with coverage as an active employee under any pension, retirement,
medical, dental, disability, severance, life insurance, accident insurance or
other retirement or welfare benefit plan, program or policy which is maintained
by any member of the Seller Group or which is required by applicable law or
regulation in the jurisdictions(s) in which the employee works or resides (i)
shall cease to be provided with those coverages, and (ii) shall be provided by
the Buyer with employee benefit plan coverages which are, in the reasonable
judgment of the Buyer, substantially equivalent to the plan program or policy
which is being replaced.
(b) The Seller Group shall not be liable for medical, dental, disability,
life insurance or accident insurance benefits with respect to Non-U.S. Continued
Employees, except as provided by the next sentence or as required by applicable
law. The Seller Group shall be liable for the payment of such benefits with
respect to eligible Non-U.S. Continued Employees, for claims related to services
performed, supplies furnished or deaths or disabilities occurring prior to the
Effective Time, regardless of whether any such claim had actually then been
filed by the Effective Time, in accordance with the terms of the applicable
plan, program or policy.
(c) With respect to each Non-U.S. Continued Employee, Buyer shall continue
to apply the vacation, sick leave and leave of absence policies, which are
applicable as of the Effective Time, for at least the remainder of the calendar
year in which the Closing occurs; so that each Non-U.S. Continued Employee,
shall be entitled to use any vacation time, sick leave days or leave of absence,
or receive any vacation pay, to which he or she would otherwise be entitled for
that calendar year under the vacation, sick leave and leave policies applicable
the day before the Effective Time.
(d) The Buyer Group shall defend, indemnify and hold all members of the
Seller Group harmless from and against any claims or liability (including, but
not limited to, severance benefits, separation pay or similar entitlements under
applicable law or otherwise) arising from the discharge or constructive
discharge of any employee of any Transferred Entity which occurs after the
Applicable Effective Time.
9. MISCELLANEOUS.
(a) At the request of either party hereto made any time after Applicable
Effective Time, the other party shall provide, or cause to be provided, to the
requesting party information in their possession that the requesting party deems
necessary for it to complete any governmental filing (including, but not limited
to, any Internal Revenue Service ("IRS") filing, including IRS W-2 Forms), with
respect to each individual who was employed by both parties during the year that
includes the Applicable Effective Time.
(b) This Agreement shall not be assignable by any party hereto without the
consent of the other, except that IHI may assign its rights hereunder, in whole
or in part, as collateral security to any person providing financing to IHI.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns. The obligations
under this Agreement are conditional upon each respective Closing, the
occurrence
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of which is subject to various conditions set forth in the Stock Purchase
Agreement. This Agreement shall become operative if and when each such Closing
occurs and shall be null and void with respect to the obligations relating to
the Closing and/or the IHNY Closing if the Closing and/or the IHNY Closing,
respectively, does not occur for any reason. Nothing contained in this
Agreement shall constitute a representation or promise that either party hereto
or any related person, will proceed with either Closing, or obligate any party
hereto or any related person, to do so.
(c) This Agreement may be amended, superseded or canceled, and any of the
terms hereof may be waived only by a written instrument specifically referring
to this Agreement and specifically stating that it amends, supersedes or cancels
this Agreement or waives any of its terms, executed by both parties (or, in the
case of a waiver, by the party waiving compliance). The failure of either party
at any time or times to require performance of any provision of this Agreement
shall in no manner affect the right at a later time to enforce such provision.
No waiver by either party of any breach of any term contained in this Agreement,
in any one or more instances, shall be deemed to be or construed as a further or
continuing waiver of such breach, or waiver of any breach of any other term.
(d) Nothing in this Agreement shall be deemed to constitute a contract
between either of the parties hereto and their respective employees or to be
consideration or inducement for the employment of any employee with either of
the parties, nor do the parties intend that there shall be any other third-party
beneficiary of this Agreement. .
(e) Nothing in this Agreement shall give any employee the right to be
retained in the service of any of the parties hereto or to interfere with the
parties' rights to discharge or terminate the service of any employee without
regard to the effect such discharge or termination may have on any rights under
any employee benefit plan.
(f) Except as otherwise expressly provided in this Agreement, no provision
of this Agreement shall be interpreted or construed in a manner that would
prevent either party hereto, in its sole discretion, from discontinuing,
suspending or amending any employee benefit plan, severance pay plan or any
other plan or program covering employees, in accordance with applicable law.
(g) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, excluding the conflict of
laws provisions thereof that would otherwise require the application of the law
of any other jurisdiction.
(h) This Agreement sets forth the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, arrangements and understandings relating to the subject matter
hereof. No representation, promise, inducement or statement of intention
relating to the transactions contemplated by this Agreement has been made by any
party hereto or any related person that is not set forth in this Agreement, the
Stock Purchase Agreement or the other Transaction Documents.
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(i) This Agreement may be executed in two or more counterparts, each of
which shall be an original, but all of which shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
INTERIM SERVICES INC.
By:
--------------------
Roy G. Krause
Executive Vice President
CATAMARAN ACQUISITION CORP.
By:
--------------------
Dana J. O'Brien
Vice President
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EXHIBIT 2.9(b)
INTERIM SERVICES, INC.
TAX PROCEDURES AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of September
26, 1997 by and among Interim Services, Inc., a Delaware corporation ("Seller"),
on its own behalf and on behalf of the other members of the Seller Group (as
defined in Section 1), and Catamaran Acquisition Corp., a Delaware corporation
("Buyer"), on its own behalf and on behalf of the other members of the Buyer
Group (as defined in Section 1).
WITNESSETH:
WHEREAS, Seller and Buyer have entered into the Stock Purchase
Agreement dated June 29, 1997 (the "Stock Purchase Agreement") providing for the
sale to Buyer of the Healthcare Business; and
WHEREAS, Section 2.9 of the Stock Purchase Agreement requires the
execution and delivery of this Agreement at the Closing; and
WHEREAS, Seller and Buyer intend that this Agreement shall govern the
Tax matters relevant and necessary for the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein contained, the parties agree as follows:
Section 1. DEFINITIONS
As used in this Agreement, the following terms have the meanings set
forth in this Agreement. Any capitalized terms not defined herein shall have
the meanings ascribed to such terms in the Stock Purchase Agreement. All
Article and section numbers used in this Agreement refer to Articles and
sections of this Agreement, unless otherwise specifically indicated.
"BUYER GROUP" means, collectively, Buyer and its direct and indirect
subsidiaries and, at any time after the respective Closings, the Transferred
Entities.
"CLOSING DATE" means the date that includes the Effective Time.
"DAMAGES" has the meaning specified in the Stock Purchase Agreement
with respect to Section 10 thereof.
"CONSOLIDATED STATE TAX" means, with respect to each State, any income
or franchise Tax payable to any State in which any of the Transferred Entities
is or may be liable for such Tax on a consolidated, combined or unitary basis
with Seller or any member of the Seller Group.
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"FEDERAL TAX" means any United States Federal net income,
environmental, excise, alternative or add-on minimum Tax.
"IHNY CLOSING DATE" means the date on which the IHNY shares are
acquired by Buyer in the event of a Suspended Transfer.
"INCOME TAXES" means any Tax imposed on or measured by income.
"OTHER TAXES" means any Tax other than an Income Tax.
"PARTY" means each of Seller, each member of Seller Group, Buyer and
each member of Buyer Group and "Parties" means such entities collectively.
"POST-CLOSING TAX PERIOD" means any Tax period beginning after the
Closing Date.
"PRE-CLOSING TAX PERIOD" means any Tax period ending on or before the
Closing Date.
"PRE-CLOSING INCOME TAX LIABILITY" means any liability arising or
resulting from Income Taxes imposed on Seller, the Transferred Entities, the
Healthcare Business (including, without limitation, the Healthcare Assets and
Healthcare Liabilities) and each corporation included in the Seller Consolidated
Group (or any consolidated group of which the Transferred Entities were members)
for any Pre-Closing Tax Period or Stub Period.
"SELLER CONSOLIDATED GROUP" means, with respect to any Taxable Period,
the corporations which are members of the affiliated group of corporations of
which Seller is the common Parent (within the meaning of Section 1504 of the
Code).
"SELLER GROUP" means Seller, its wholly-owned subsidiaries other than
the Transferred Entities and, prior to the respective Closings, the Transferred
Entities.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated as
of June 29, 1997, entered into by and among Seller, Buyer and Cornerstone Equity
Investors IV, L.P. providing for the sale to Buyer of the Healthcare Business.
"STUB PERIOD" means the period from December 28, 1996 through and
including the Closing Date.
"STRADDLE PERIOD" means any Tax period that begins on or prior to and
ends after the Closing Date.
"SUBSIDIARY" shall mean any corporation, partnership, joint venture or
other entity in which an entity or person (a) owns, directly or indirectly, 50%
or more of the outstanding voting securities or equity interests or (b) is a
general partner.
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"SUSPENSE PERIOD" means, in the event of a Suspended Transfer, the
period commencing the day after the Closing Date and ending on the IHNY Closing
Date.
"TAX" OR "TAXES" means any federal, state, local, or foreign income
tax (including any alternative or add-on minimum tax) or franchise tax, any
sales, use, excise, gross receipts or value added tax, any intangibles tax, any
tax resulting from membership in a Tax Group or departure from a Tax Group, any
tax on real or personal property, any profits, capital, premium occupational,
production, severance, ad valorem, occupancy, stamp, transfer, unemployment
insurance, social security, disability, workers' compensation, customs,
withholding, or other tax, duty or similar governmental charge or any deposit
required to be made with respect thereto, including all interest and penalties
thereon and additions thereto.
"TAX ARBITRATOR" means Deloitte & Touche.
"TAX GROUP" means any group of entities that pays, or is required to
pay, Tax on a consolidated, combined, unitary or similar basis.
"TAX RETURN" means any return, declaration, report, claim for refund
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TAX SHARING AGREEMENT" shall mean any written agreement or
arrangement for the allocation or payment of Tax liabilities or payment for Tax
benefits, including any agreement with respect to a consolidated, combined or
unitary Tax Return which Tax Return includes any of the Transferred Entities.
"TRANSFERRED COMPANIES" means IHI and IHNY.
"TRANSFERRED ENTITIES" means the Transferred Companies and the
Transferred Subsidiaries.
"TRANSFERRED SUBSIDIARIES" means Interim Occupational Health, Inc.,
Interim Assisted Care, Inc., Interim Physicians, Inc., and Interim Assisted Care
(Hawaii), Inc., each a wholly-owned subsidiary of Seller.
Section 2. SELLER GROUP TAX LIABILITY
(a) INCOME TAX LIABILITY. Except as provided in Section 5(c),
Seller and each member of the Seller Group jointly and severally indemnify Buyer
and each member of the Buyer Group (each a "Buyer Indemnitee") against and hold
them harmless from (i) any Pre-Closing Income Tax Liability and (ii) all
liability for fees, costs and expenses (including reasonable attorneys' fees)
arising out of or incident to any proceeding before any Taxing Authority or any
judicial authority with respect to any amount indemnifiable under this
Section 2(a).
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(b) OTHER TAXES. Except as set forth in Section 5(b), Seller
shall be responsible for all Other Taxes of the Transferred Entities and the
Healthcare Business attributable to any Pre-Closing Tax Period and any Stub
Period, but only to the extent that such Other Taxes exceed the Tax reserves and
current Tax provisions set forth as current liabilities in respect of such Other
Taxes on the March 28, 1997 balance sheet of the Healthcare Business (the "March
'97 Balance Sheet").
(c) RETURN PREPARATION. Except as provided in Section 5(c),
Seller shall prepare, or cause to be prepared, and file, or cause to be filed,
on a timely basis and in accordance with Seller Group's past custom and practice
(i) all Tax Returns with respect to the Transferred Entities and the Healthcare
Business for all Pre-Closing Tax Periods and (ii) all Tax Returns with respect
to periods for which a consolidated, unitary or combined income Tax Return of
Seller is prepared which includes the operations of the Transferred Entities;
PROVIDED that, with respect to any Tax Returns described in clause (ii) of this
Section 2(c), Seller shall permit Buyer Group to review and comment on the
portions of each such Tax Return relating to the Transferred Entities. Seller
shall pay all Taxes shown on such Tax Returns.
(d) Seller shall pay to Buyer its liability for any Stub Period
Taxes, determined in accordance with sections 2(a) and 2(b), shown on any
Straddle Period Tax Return prepared by Buyer in accordance with Section 3 not
later than ten (10) days before such Tax Return is due; provided in accordance
with section 3(c), Buyer has delivered to Seller a copy of such Tax Return and
calculation of Seller's liability for any Stub Period Taxes at least thirty (30)
days before such Tax Return is due.
(e) Seller shall pay to Buyer an amount equal to the incremental
Income Taxes paid by the Buyer or any of the Transferred Entities as a result of
the disallowance of any deduction under Section 280G of the Code of any payments
that any of them is required to make under any contract, plan or arrangement
entered into by any of the Transferred Entities before the Effective Time.
Section 3. BUYER GROUP TAX LIABILITY
(a) INCOME TAX LIABILITY. Except as provided in Section 5(c), Buyer
and each member of the Buyer Group jointly and severally indemnify Seller and
each member of the Seller Group (each a "Seller Indemnitee") against and hold
them harmless from, any liability resulting from (i) Income Taxes imposed on the
Transferred Entities and the Healthcare Business (including, without limitation,
the Healthcare Assets and Healthcare Liabilities) for any Post-Closing Tax
Period and (ii) all liability for fees, costs and expenses (including reasonable
attorneys' fees) arising out of or incident to any proceeding before any Taxing
Authority or any judicial authority with respect to any amount indemnifiable
under this Section 3(a).
(b) OTHER TAXES. Except as set forth in Section 5(b), the Buyer
Group shall be responsible for all Other Taxes of the Transferred Entities and
the Healthcare Business attributable to (i) any Post-Closing Tax Period or (ii)
any other tax period to the extent Seller is not responsible for such Taxes
pursuant to section 2(b) of this Agreement.
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(c) RETURN PREPARATION. Except as provided in Section 5(c), the
Buyer Group shall prepare, or cause to be prepared, and file, or cause to be
filed, on a timely basis all Tax Returns with respect to the Transferred
Entities and the Healthcare Business (including, without limitation, the
Healthcare Assets and Healthcare Liabilities) for any Post-Closing Tax Period
and any Straddle Period; PROVIDED that Buyer Group shall not prepare any Tax
Returns with respect to periods for which a consolidated, unitary or combined
Income Tax Return of Seller Group which include the operations of the
Transferred Entities as provided in Section 2(c) above. In the case of any Tax
Return which includes a Straddle Period and for which Seller is responsible for
a portion of such Tax, pursuant to Section 2 of this Agreement, Buyer shall
provide Seller with a copy of such Tax Return and the basis for the calculation
of Seller's portion of any such Tax due thereon at least thirty (30) days before
such Tax Return is due. If Seller objects to Buyer's calculation of Seller's
portion of such Tax, Seller shall within ten (10) days of receipt of such Tax
Return notify Buyer of such objection. The parties shall attempt to resolve
such dispute prior to the due date of such Tax Return and if unable to resolve
such dispute prior to the due date of such Tax Return, the dispute shall be
referred to the Tax Arbitrator, who shall determine Seller's portion of such
Tax. Notwithstanding the foregoing, the Tax Return shall be filed by such Tax
Return's due date.
Section 4. BUYER'S COVENANTS
(a) With respect to any Pre-Closing Tax Period or Stub Period, Buyer
Group covenants that it will not, nor will it permit any of the Transferred
Entities to, make or change any Tax election, amend any Tax Return, take any Tax
position on any Tax Return or take any new action (including a change in the
pricing of related party sales, services, royalties or other payments or
allocations subject to Section 482 of the Code) that results in an increased Tax
liability (including any increase resulting from a reduction of any Tax credits)
in respect of any Pre-Closing Tax Period or Stub Period for which the Seller
Group retains liability under Section 2 of this Agreement, except as
contemplated by this Agreement or with the express written consent of Seller.
(b) Buyer agrees that no member of the Seller Group shall be liable
for any Damages resulting from any action referred to in Section 4(a) and each
member of the Buyer Group, jointly and severally, agrees to indemnify and hold
the Seller Indemnitees harmless against any such Damages. Notwithstanding
anything contained herein to the contrary, Seller and Buyer hereby agree that
the monetary remedy provided by this Section 4(b) shall be the exclusive remedy
of the Seller Indemnitees in the event of any breach by any member of the Buyer
Group of Section 4(a). Any claim of any member of the Seller Group (other than
Seller) under this Section 4 may be made and enforced by Seller on behalf of
such member of the Seller Group.
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Section 5. STRADDLE PERIODS/TRANSFER TAXES/IHNY TAXES
(a) STRADDLE PERIODS. To the extent permitted by applicable law or
administrative practice, the taxable period of each Transferred Entity shall end
on and include the Closing Date, and Seller and Buyer shall take any and all
actions required under applicable law and administrative practice to effectuate
such a result. For purposes of determining liability for Taxes, such Straddle
Period shall be treated as two taxable periods, one of which ends on and
includes the Closing Date (the Stub Period), and one of which begins on the date
following the Closing Date. For purposes of this Agreement, in the case of any
Taxes imposed on a periodic basis and payable with respect to a Straddle Period,
the portion of such Tax relating to the Stub Period (x) in the case of any Taxes
not based upon or related to income or receipts, shall equal an amount which
bears the same proportion to the Tax for the entire Taxable Period as the Stub
Period bears to the entire Taxable Period and (y) in the case of any Tax based
upon or related to income or receipts, be deemed to be the amount which would be
payable if the books of the Transferred Entities were closed as of the end of
the Closing Date. Any credits relating to a Straddle Period shall be taken into
account as though the relevant Taxable Period ended on the Closing Date. All
determinations necessary to give effect to the foregoing allocations shall be
made in a manner consistent with prior practice of the Transferred Entities.
(b) TRANSFER TAXES. As set forth in the Stock Purchase Agreement,
Seller and Buyer shall each pay fifty percent (50%) of any excise, sales, use,
stamp, stock transfer, documentary, filling, recordation and other similar Taxes
imposed directly or indirectly on the Transactions and Seller shall file any Tax
Returns required to be filed in connection with such Taxes.
(c) IHNY TAXES. Notwithstanding any other provision of this
Agreement, until such time as Buyer acquires the IHNY Shares pursuant to Section
2.3 of the Stock Purchase Agreement, Buyer Group shall not be liable for any
Taxes of IHNY or the filing of any Tax Returns of IHNY and Seller shall, or
shall cause IHNY, to timely file all Tax Returns of IHNY and to pay all Taxes of
IHNY. If, subsequent to a Suspended Transfer, the IHNY Shares are acquired by
Buyer pursuant to Section 2.3 of the Stock Purchase Agreement, the terms of this
Agreement shall control with respect to the Taxes of IHNY; provided, however, in
respect of the allocation of any IHNY Taxes between the parties, the Closing
Date shall be the IHNY Closing Date. If the IHNY Shares are acquired by a third
party pursuant to Section 2.4 of the Stock Purchase Agreement, unless otherwise
agreed by Buyer and Seller at the time of such transfer, Buyer Group shall not
be liable for any Taxes of IHNY.
Section 6. SELLER'S COVENANTS
(a) With respect to any Post-Closing Period or Straddle Period,
Seller covenants that it will not, nor will it permit any member of Seller Group
to, make or change any Tax election, amend any Tax Return, take any Tax position
on any Tax Return or take any new action (including a change in the pricing of
related party sales, services, royalties, or other payments or allocations
subject to Section 482 of the Code) that results in an increased Tax liability
(including any increase resulting from a reduction of any Tax credits) in
respect of any
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Post-Closing Tax Period or Straddle Period for which the Buyer Group has
liability under Section 3 of this Agreement, except as contemplated by this
Agreement or with the express written consent of Buyer.
(b) Seller agrees that no member of the Buyer Group shall be liable
for any Damages resulting from any action referred to in Section 6(a) and each
member of the Seller Group, jointly and severally, agrees to indemnify and hold
the Buyer Indemnitees harmless against any such Damages. Notwithstanding
anything contained herein to the contrary, Seller and Buyer hereby agree that
the monetary remedy provided by this Section 6(b) shall be the exclusive remedy
of the Buyer Indemnitees in the event of any breach by any member of the Seller
Group of Section 6(a). Any claim of any member of the Buyer Group (other than
Buyer) under this Section 6 may be made and enforced by Buyer on behalf of such
member of the Buyer Group.
Section 7. COOPERATION ON TAX MATTERS; 338(h)(10) ELECTION
(a) Seller and Buyer shall furnish or cause to be furnished to the
other, upon request, as promptly as practicable, such information (including
access to books and records) and assistance relating to the Transferred Entities
and the Healthcare Business as is reasonably necessary for the filing of any Tax
Return, the preparation for any Tax audit, the prosecution or defense of any
claim, suit or proceeding relating to any proposed Tax adjustment for which
Seller or Buyer retains liability under this Agreement and for the performance
by Seller and Buyer of their respective obligations under this Agreement.
Seller and Buyer shall keep all such information and documents received by them
confidential unless otherwise required by law.
(b) Seller and Buyer agree to retain or cause to be retained all
books and records pertinent to the Transferred Entities and the Healthcare
Business until the applicable period for assessment of Taxes under applicable
law (giving effect to any and all extensions or waivers) had expired, and to
abide by and cause the Transferred Entities and each member of the Seller Group
and each member of the Buyer Group to abide by all record retention agreements
entered into with any Taxing Authority. Seller and Buyer agree to give the
other reasonable notice prior to transferring, discarding or destroying any such
books and records relating to Tax matters and, if so requested, Seller and Buyer
shall allow the requesting party to take possession of such books and records.
(c) Buyer and Seller shall cooperate with each other in the conduct
of any audit or other proceedings for any Tax purposes and each of Buyer and
Seller shall execute and deliver such powers of attorney and other documents as
are necessary to carry out the intent of this Agreement.
(d) Buyer and Seller shall (and cause their respective affiliates to)
timely sign and deliver such certificates or forms as may be necessary or
appropriate to (i) establish an exemption from (or otherwise reduce) value-added
Taxes, Taxes described in Section 5(b) of this Agreement or similar Taxes and
(ii) claim a Tax refund.
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(e) Seller and Buyer shall jointly make an election under Section
338(h)(10) of the Code, and any corresponding elections permitted or required
under state, local or foreign law (collectively, the Section "338(h)(10)
Election") with respect to the Transferred Entities.
(f) Within sixty (60) days after the Closing Date, Buyer shall
determine the "modified aggregate deemed sales price" as defined in Treas. Reg.
Section 1.338(h)(10)-1 (the "MADSAP") and prepare the allocation of the MADSAP
in accordance with the requirements of Section 338 of the Code and the Treasury
Regulations thereunder. Seller agrees to be bound by the Buyer's determination
and allocation provided it is reasonable. Seller shall notify Buyer within
thirty (30) days of receiving Buyer's proposed determination and allocation of
any objection thereto. The parties shall attempt to resolve the matter for a
period of thirty (30) days. If the parties are unable to reach an agreement,
the dispute shall be referred to the Tax Arbitrator, who shall determine whether
and to what extent Buyer's determination and allocation was unreasonable.
(g) Seller shall pay all Taxes (including any liability of the
Transferred Entities for Tax resulting from the application to it of Treas. Reg.
Section 1.338(h)(10)-1(f)(5)) attributable to the making of the 338(h)(10)
Election.
Section 8. INDEMNIFICATION PROCEDURES
(a) All amounts paid under this Agreement shall be characterized for
Tax purposes as an adjustment to the purchase price.
(b) Any claim for indemnification for Damages as a result of a breach
of this Agreement shall be made pursuant to and in accordance with the
procedures and provisions of Section 10 of the Stock Purchase Agreement, which
provisions shall apply thereto; provided, however, the limitations contained in
Section 10.3 of the Stock Purchase Agreement shall not apply with respect to the
Parties' claims for indemnification for any Tax liability contained in this
Agreement.
(c) No Party hereto shall have any liability for the payment of any
Damages attributable to or resulting from any action taken by the other party,
or its affiliates, in contravention of such party's covenants hereunder.
(d) Additional Tax Procedures. The following provisions are in
addition to and supplement the indemnification procedures of Sections 10.5 and
10.6 of the Stock Purchase Agreement with respect to Tax matters. These
provisions are not intended to broaden the scope of the indemnification
contained in this Agreement or the Stock Purchase Agreement.
(i) NOTICE OF CLAIMS. If any Tax authority or other third party
shall notify any Party (the "Indemnified Party") with respect to any matter
which may give rise to a claim for indemnification (a "Third Party Claim")
against the other Party (the "Indemnifying Party") under Sections 2 and 3 of
this Agreement, then the Indemnified Party shall promptly provide written notice
to the Indemnifying Party setting forth reasonable detail as to such Third
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Party Claim (a "Notice of Claim"). It shall be a condition to indemnification
hereunder that the Notice of Claim be delivered promptly and be received by the
Indemnifying Party prior to the time the Indemnifying Party's ability to contest
the Third Party Claim would be materially impaired by such lack of notice or
delay. If the Indemnified Party fails to meet the foregoing condition then it
shall have waived all rights to indemnification with respect to such Third Party
Claim.
(ii) DEFENSE OF THIRD PARTY CLAIMS.
(A) Except as otherwise provided in Section 8(d)(ii)(D),
the Indemnifying Party may undertake the defense of a Third Party Claim by
notice to the Indemnified Party not later than the earlier of (i) 60 calendar
days after receipt by the Indemnifying Party of the Notice of Claim or (ii)
10 calendar days prior to the first required date of response to a Third
Party Claim. Failure on the part of the Indemnifying Party to so notify the
Indemnified Party that it will undertake such defense shall be deemed to be a
waiver of the Indemnifying Party's right to undertake such defense.
(B) If the Indemnifying Party undertakes the defense of
any Third Party Claim, it shall control the investigation and defense
thereof, except that the Indemnifying Party shall not require the Indemnified
Party without the Indemnified Party's prior written consent, to take or
refrain from taking any action in connection with such Third Party Claim, or
make any public statement that it reasonably considers to be against its
interest, nor shall the Indemnifying Party, without the prior written consent
of the Indemnified Party, consent to any settlement that requires the
Indemnified Party to make any payment that is not fully indemnified under
this Agreement; and subject to the Indemnifying Party's control rights, the
Indemnified Party may participate in such investigation and defense, at its
own expense, including, but not limited to, the right to attend (with
counsel) all proceedings connected with such Third Party Claim and receive
copies of any correspondence received or sent in connection with such Third
Party Claim.
(C) If the Indemnifying Party does not undertake the
defense of a Third Party Claim, then except as otherwise provided in Section
8(d)(ii)(D), the Indemnified Party shall control such investigation and
defense and may consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim in any manner it may deem
reasonably appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, the Indemnifying Party in connection therewith),
except that the Indemnified Party shall not require the Indemnifying Party
without the Indemnifying Party's prior written consent, to take or refrain
from taking any action in connection with such Third Party Claim, or make any
public statement that it reasonably considers to be against its interest; and
subject to the Indemnified Party's control rights, the Indemnifying Party may
participate in such investigation and defense, at its own expense.
(D) If there is a material conflict of interest between
Seller and Buyer with respect to a Third Party Claim, then neither party
shall be entitled to assume the entire defense thereof. In such event Buyer
and Seller shall each be entitled to conduct its own investigation and
defense, but the parties shall cooperate to conduct such investigation and
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defense as efficiently as possible. If Seller is required to indemnify Buyer
with respect to such Third Party Claim, it shall pay the reasonable
attorneys' fees and expenses of one individual or firm representing Buyer
with respect thereto. If Buyer is required to indemnify Seller with respect
to such Third Party Claim, it shall pay the reasonable attorneys' fees and
expenses of one individual or firm representing Seller with respect thereto.
(E) Buyer and Seller shall make available to each other,
their counsel and other representatives, all information and documents
reasonably available to them which relate to any Third Party Claim, and
otherwise cooperate as may reasonably be required in connection with the
investigation and defense thereof.
Section 9. REFUNDS
(a) SELLER GROUP. To the extent requested by Seller and at the sole
expense of Seller, Buyer shall as promptly as practicable claim any refunds
relating to Taxes for which the Seller Group is responsible under Section 2.
If, after the Effective Time, any member of the Buyer Group receives any refund
relating to Taxes for which the Seller Group is responsible under Section 2,
Buyer shall promptly transfer, or cause to be transferred, the amount of such
refund (net of any reasonable expenses incurred by any member of the Buyer Group
in obtaining such refund, including Income Tax liability directly arising from
the receipt of such refund, if any) to Seller.
(b) BUYER GROUP. Subject to Section 5(c), the Buyer Group shall be
entitled to receive and retain any refunds of Tax relating to the Transferred
Entities and the Healthcare Business with respect to any Post-Closing Tax
Period.
Section 10. REPRESENTATIONS AND OBLIGATIONS; SURVIVAL.
(a) Notwithstanding anything to the contrary in this Agreement, and
notwithstanding anything to the contrary in the Stock Purchase Agreement, the
representations, covenants and obligations of the parties set forth in this
Agreement shall be unconditional and absolute and shall remain in effect until
the expiration of the applicable statute of limitations.
(b) TERMINATION OF TAX SHARING AGREEMENTS. Neither Buyer Group nor
any Transferred Entity shall have any liability with respect to any agreement or
arrangement with respect to the allocation or sharing of Taxes that may have
been entered into by Seller or any of its affiliates with any of the Transferred
Entities. Seller shall indemnify and hold Buyer Group and any of the
Transferred Entities harmless with respect to any obligation under any such
agreements.
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Section 11. GENERAL
(a) AMENDMENT. This Agreement may be amended, modified, superseded
or canceled, and any of the terms hereof may be waived, only by a written
instrument specifically referring to this Agreement and specifically stating
that it amends, modifies, supersedes or cancels this Agreement or waives any of
its terms, executed by all parties (or, in the cause of a waiver, by the party
waiving compliance). The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect such
parties' right at a later time to enforce the same. No waiver by any part of
any breach of any term contained in this Agreement in any one or more instances
shall be deemed to be or construed as a further or continuing waiver of such
breach, or a waiver of any breach of any other term.
(b) INTERPRETATION. The Section headings contained in this Agreement
are for convenient reference only, and shall not in any way affect the meaning
or interpretation of this Agreement.
(c) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, excluding the conflict of
laws provisions thereof that would otherwise require the application of the law
of any other jurisdiction.
(d) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.
(e) ASSIGNMENT. This Agreement shall not be assignable by any party
hereto without the consent of both Buyer (or its designated agent) and Seller,
except as set forth in this Subsection (e). Each party may, at its sole option,
assign its rights and delegate its duties under this Agreement to any Subsidiary
of such party, whether or not in existence on the date hereof. Buyer may assign
this Agreement to any lender as required by any collateral or security agreement
of Buyer or Buyer Group, whether or not in existence on the date hereof. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns (including the Transferred
Entities), but no assignment by any part of any of its obligations under this
Agreement shall operate to discharge that party from its obligations.
(f) MERGER. This Agreement shall be construed as if all provisions
of the Stock Purchase Agreement not explicitly excluded are included in the
Agreement, and the Stock Purchase Agreement shall be construed as if all
provisions of the Agreement are included in the Stock Purchase Agreement.
Consistent with the foregoing, the provisions of the Agreement and the Stock
Purchase Agreement shall be interpreted to constitute a single integrated
agreement without duplicative provisions, and, in the event that any provision
of the Stock Purchase Agreement conflicts with any provision of this Agreement
with respect to Taxes, this Agreement shall be controlling.
11
<PAGE>
(g) NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be deemed to have been duly
given if in writing and sent, delivered, or telecopied to:
Seller:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, FL 33309
Attention: Raymond Marcy
Phone: (954) 938-7600
Fax: (954) 351-8117
with a copy to:
Bryan Cave LLP
1200 Main, Suite 3500
Kansas City, MO 64105
Attention: Lorna Wright Haberkern, Esq.
Phone: (816) 374-3209
Fax: (816) 374-3300
Buyer:
Catamaran Acquisition Corp.
717 Fifth Avenue, Suite 1100
New York, New York 1100
Attention: Dana O'Brien
Phone: (212) 753-0901
Fax: (212) 828-6798
with a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
Attention: Fredrick Tanne
Phone: (212) 446-4800
Fax: (212) 446-4900
All such notices, requests, demands or communications shall be
sufficient and effective upon personal delivery, or upon confirmation of the
receipt of the applicable telecopy or one Business Day after delivery to a
reputable overnight carrier for next Business Day delivery, or three (3) days
after the date on which the notice is deposited in the United States mail,
registered or certified with return receipt requested and proper postage
prepaid.
12
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have executed or caused this
Agreement to be duly executed as of the date first above written.
INTERIM SERVICES, INC.
By:
-----------------------------------
Roy G. Krause
Executive Vice President
CATAMARAN ACQUISITION CORP.
By:
-----------------------------------
Dana J. O'Brien
Vice President
13
<PAGE>
EXHIBIT 2.9(c)
INSURANCE PROCEDURES AGREEMENT
INSURANCE PROCEDURES AGREEMENT dated September 26, 1997 by and between Interim
Services Inc. ("Seller") and Catamaran Acquisition Corp. ("Buyer"). All
capitalized terms used in this Agreement and not otherwise defined have the
respective meanings given such terms in the Stock Purchase Agreement dated June
29, 1997 between Seller and Buyer (the "Purchase Agreement").
WITNESSETH:
WHEREAS, pursuant to the Purchase Agreement, Buyer has agreed to acquire the
Healthcare Business from Seller;
WHEREAS, the Healthcare Business has heretofore been covered under those
insurance programs maintained by Seller set forth on Schedule A to this
Agreement; and
WHEREAS, the parties hereto wish to set forth the terms and conditions under
which the Healthcare Business will continue to be covered under such insurance
programs for periods ending on or prior to Effective Time;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained, the parties hereto agree as follows:
1. DEFINITIONS
(a) "Deductibles" means amounts paid by any member of the Seller Group
under deductibles, self-insured retention, retrospectively rated insurance plans
and/or reinsurance programs, including but not limited to adjustments to
workers' compensation allocations or any other similar arrangement.
(b) "Seller Insurance Programs" means insurance policies and programs
maintained prior to the Effective Time for the Healthcare Business by Seller,
excluding Stand-Alone Programs.
(c) "Stand-Alone Programs" means the insurance policies and programs so
designated on Schedule A and any corresponding coverage for prior periods.
2. TERMINATION OF COVERAGE AS OF THE EFFECTIVE TIME.
(a) All insurance coverage for the Healthcare Business under Seller
Insurance Programs shall terminate as of the Effective Time with respect to
insurable events that occur following the Effective Time.
(b) Business interruption, blanket crime, director and officer, employment
practices, fiduciary liability insurance coverages, and any other policies
issued on a "claims made" basis,
<PAGE>
for the Healthcare Business under Seller Insurance Programs shall terminate at
the Effective Time with respect to claims made after the Effective Time. Any
insurance proceeds under such coverage for claims made prior to the Effective
Time shall be retained by the Seller Group. Notwithstanding the foregoing, in
the event that employment practices claims made after the Effective Time in
connection with events that occurred prior to the Effective Time exceed
$450,000, then the amount of any such excess up to a maximum of $700,000 (the
"Gap Amount") paid by any member of the Buyer Group will be included for
purposes of determining whether Buyer has met the $2,000,000 threshold set forth
in Section 10.3(a).
(c ) Notwithstanding anything to the contrary set forth herein, Seller
shall purchase, if available, "prior acts" coverage for such of the officers of
the Seller Group who are employed by the Transferred Entities immediately
following the Effective Time. Such coverage shall have the same deductible and
limits as in effect under the primary policy covering such persons on the
Effective Time, and shall remain in effect for a period of three (3) years
following the Effective Time
(d) Seller shall, on behalf of the Transferred Entities, cancel all
insurance policies and self insurance arrangements under Seller Insurance
Programs covering such Transferred Entities, effective as of the Effective Time
with respect to insurable events or occurrences following the Effective Time,
except as to any jurisdictions where applicable local law may prohibit such
cancellation. In the event that applicable law prevents cancellation of such
policies (i) Buyer shall pay any premiums due for periods following the
Effective Time, shall be solely responsible for any Deductibles and shall
receive the benefits thereunder, and (ii) such coverage shall be canceled as
soon as permissible by local law.
(e) Buyer may continue coverage under the Stand-Alone Programs with respect
to insurable events following the Effective Time on such terms as may be agreed
upon between Buyer or the Transferred Entities and any third-party insurer, but
no member of the Seller Group shall have any liability or obligation with
respect thereto. At the request of Buyer, Seller shall cooperate with Buyer in
making arrangements with such third-party insurers under the Stand-Alone
Programs to continue coverage following the Effective Time at Buyer's expense.
3. HEALTHCARE BUSINESS COVERAGE PRIOR TO THE EFFECTIVE TIME.
(a) Except as otherwise provided in this Agreement, the Healthcare Business
shall be covered under the Seller Insurance Programs and the Stand-Alone
Programs, subject to the terms, conditions and limits thereof and the provisions
of applicable law, for insurable events that have occurred prior to the
Effective Time, and, with respect to "claims made" policies or programs, claims
that are properly made prior to the Effective Time.
(b) Seller shall be responsible for the payment of all Deductibles and
shall be solely entitled to all insurance proceeds with respect to insurable
events arising out of or relating to the Healthcare Business and which occur
prior to the Effective Time, except for Deductibles or policy proceeds for
claims which are covered under "claims made" policies and for which "claims" are
not "made" prior to the Effective Time, as finally determined by the respective
<PAGE>
insurers, and as to which all such Deductibles or policy proceeds, if any, shall
be paid by or be for the benefit of the Buyer.
4. NOTICE OF CLAIMS.
(a) Buyer shall, and shall cause the other members of the Buyer Group to,
give prompt notice to Seller of all claims made by or against the Healthcare
Business that are covered by the Seller Insurance Programs pursuant to Section 3
of this Agreement. Upon notice of any such claim, Seller shall notify the
appropriate insurance carrier and, in conjunction with such insurance carrier,
shall have the right to direct the investigation, negotiation and, if
applicable, defense of such claim and, with the consent of Buyer (not to be
unreasonably withheld) to settle or otherwise dispose of such claim without the
consent or approval of Buyer or any other member of the Buyer Group. The
parties shall cooperate with each other with respect to the exchange of records
and other information necessary for the reporting, investigation, negotiation
and, if applicable, defense of each such claim. Buyer shall, and shall cause
each other member of the Buyer Group to, at its or their expense, make its
employees available as may be necessary in connection with the investigation or
defense of each such claim.
(b) Seller shall, and shall cause the other members of the Seller Group to,
give prompt notice to Buyer of all claims which come to the attention of the
Seller Group made by or against the Healthcare Business that relate to events
occurring after the Effective Time.
5. THIRD PARTY CLAIMS.
If the Healthcare Business suffers any loss or damage that is covered by Seller
Insurance Programs and that is caused by or arises out of any acts or omissions
of a third party and for which Buyer or a member of the Buyer Group receives
from Seller's insurers any insurance proceeds (as described in Section 3), then
Buyer Group shall pay, or shall cause the Transferred Entities to pay over to
Seller any and all such insurance proceeds, and Seller and its insurers shall
retain, and Buyer or such member of the Buyer Group shall assign to Seller and
its insurers, all rights of recovery against such third party with respect to
such claim to the extent such rights of recovery arising from such claim relate
to periods covered by such Seller Insurance Programs.
6. FRANCHISEE INSURANCE.
Buyer acknowledges that (a) Seller has provided insurance coverage under the
Seller Insurance Programs to Franchisees at rates comparable to those at which
Seller has provided insurance coverage to members of the Seller Group
("Franchisee Insurance"); and (b) Franchisee Insurance shall terminate at the
Effective Time and all Franchisees have been so notified. In connection with
the Franchisee Insurance, a final audit of any premiums and/or deductibles due
to Seller with respect to Franchisee Insurance for periods prior to the
Effective Time shall be conducted by Seller. Buyer shall cause IHI to use its
reasonable best efforts to assist Seller to collect any premiums and or
deductibles that may be due to Seller from Franchisees as indicated by such
final audit (it being understood that IHI shall not incur any expenses in
connection therewith).
<PAGE>
7. BUYER AS AGENT.
Buyer shall be the sole agent for the Buyer Group and the Transferred Entities
in all matters relating to this Agreement, including the resolution of any
disputes relating to this Agreement between any member of the Buyer Group or the
Transferred Entities and Seller, any other member of the Seller Group or the
appropriate insurance carrier. No member of the Buyer Group or the Transferred
Entities shall have any authority to represent itself in any such matter or to
terminate such agency without the prior written consent of Seller and Buyer.
8. PREMIUM ADJUSTMENTS.
(a) Except as otherwise provided in this Agreement, neither Buyer nor any
other member of the Buyer Group shall be liable to Seller or any other member of
the Seller Group for any premium, charge or assessment with respect to coverage
under the Seller Insurance Programs for periods prior to and ending on the
Effective Time, nor shall Buyer or any other member of the Buyer Group be
entitled to any credit or refund with respect to such coverage. Any liability
for any premium, charge or assessment owed by a Transferred Entity directly to
any insurance carrier or any right of a Transferred Entity to any credit or
refund with respect thereto from an insurance carrier for periods prior to and
ending on the Effective Time shall survive the Closing and shall be settled
between the Seller and such insurance carrier. Any such premiums, credits or
referrals received by the Buyer Group shall be immediately paid over to the
Seller.
(b) Except as otherwise provided in this Agreement, neither Seller nor any
other member of the Seller Group shall be liable to Buyer or any other member of
the Buyer's Group for any premium, charge or assessment with respect to coverage
of the Healthcare Business for periods after the Effective Time, nor shall
Seller or any other member of the Seller Group be entitled to any credit or
refund with respect to such coverage. Any liability for any premium, charge or
assessment owed by a Transferred Entity directly to any insurance carrier or any
right of a Transferred Entity to any credit or refund with respect thereto from
an insurance carrier shall survive the Closing and shall be settled between the
Transferred Entity and such insurance carrier.
(c) Buyer shall, or shall cause other members of the Buyer Group to, pay
all premiums, charges and assessments payable to any insurer or other third
party with respect to coverage under the Stand-Alone Programs and Buyer and/or
other members of the Buyer Group shall be entitled to any credit or refund from
any such insurer or third party. Neither Seller nor any other member of the
Seller Group shall be liable to Buyer or any other member of the Buyer Group for
any premium, charge or assessment for which the Healthcare Business might
otherwise be liable after the Effective Time with respect to coverage under the
Stand-Alone Programs, nor shall Seller or any other member of the Seller Group
be entitled to any credit or refund from Buyer or any other member of the Buyer
Group with respect to such coverage.
<PAGE>
9. SURETY BONDS.
The parties hereto acknowledge that Seller or other members of the Seller Group
are obligated to indemnify the sureties under certain performance bonds and
other surety instruments ("Bonds") that secure obligations of the Healthcare
Business. As promptly as practicable after the Closing, Seller shall cancel all
Bonds that are cancelable. Within three months following the Closing, Buyer
shall use its commercially reasonable best efforts to obtain, or cause other
members of the Buyer Group to obtain, replacements for those Bonds which are not
cancelable. Upon obtaining each such replacement Bond, Buyer shall promptly
notify Seller and arrange for Seller and all other members of the Seller Group
to be released from the Bonds that have been replaced. During the period
between the Closing and the date Buyer or any member of the Buyer Group obtains
a replacement Bond and release, Buyer shall, or shall cause any member of the
Buyer Group to, pay Seller all premiums and other fees charged by the surety to
Seller or other members of the Seller Group with respect to the prior Bond for
such period. In addition, Buyer shall, and shall cause any member of the Buyer
Group to, jointly and severally, indemnify Seller and other members of the
Seller Group, and hold each of them harmless, against any and all liabilities,
costs, losses or damages (including reasonable attorneys' fees) suffered by
Seller and any other member of the Seller Group as a result of any act or
omission by Buyer or any member of the Buyer Group after the Closing which
requires the surety under a Bond to perform according to its terms.
10. EFFECTIVENESS.
The obligations of the parties hereto under this Agreement are conditional upon
the Closing, the occurrence of which is subject to various conditions set forth
in the Purchase Agreement. This Agreement shall become operative if and when
the Closing occurs and shall be null and void if the Closing does not occur for
any reason. Nothing contained in this Agreement shall constitute a
representation or promise that any such party hereto or any related person will
proceed with the Closing, or obligate any party or any related person to do so.
11. NOTICES.
All notices, requests, demands and other communications required or permitted to
be given hereunder shall be deemed to have been duly given if in writing and
delivered personally or mailed first-class, postage prepaid, registered or
certified mail, addressed as follows:
If to Seller or any member of the Seller Group:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, FL 33309
Attention: John B. Smith
Phone (954) 938-7600
Fax (954) 938-7780
<PAGE>
With a copy to: Bryan Cave LLP
1200 Main, Suite 3500
Kansas City, MO 64105
Attn: Lorna Wright Haberkern, Esq.
Phone: (816) 374-3209
Fax: (816) 374-3300
If to Buyer: Catamaran Acquisition Corp.
717 Fifth Avenue, Suite 1100
New York, New York 10022
Attention: Dana O'Brien
Phone: (212) 753-0901
Fax: (212) 828-6798
With a copy to: Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne
Phone: (212) 446-4800
Fax: (212) 446-4900
Seller or any member of the Seller Group may change the address to which such
communications are to be directed to it by giving written notice to Buyer in the
manner provided in this Section. Buyer or any member of the Buyer Group may
change the address to which such communications are to be directed to it by
giving written notice to Seller in the manner provided in this Section.
12. GENERAL.
(a) This Agreement sets forth the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, arrangements and understandings relating to the subject matter
hereof. No representation, promise, inducement or statement of intention
relating to the transactions contemplated by this Agreement has been made by any
party hereto or any related person that is not set forth in this Agreement, the
Purchase Agreement or the other Transaction Documents.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, excluding any conflict-of-laws provisions
thereof that would otherwise require the application of the law of any other
jurisdiction.
(c) This Agreement shall not be assignable by any party hereto without the
consent of the other. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.
<PAGE>
(d) This Agreement may be amended, superseded or canceled, and any of the
provisions hereof may be waived, only by a written instrument specifically
stating that it amends, supersedes or cancels this Agreement or waives a
provision hereof, executed by or on behalf of all parties (or, in the case of a
waiver, by or on behalf of the party waiving compliance). Failure of any party
to insist upon strict compliance with any of the terms of this Agreement in one
or more instances shall not be deemed to be a waiver of its rights to insist
upon such compliance in the future, or upon compliance with other terms hereof.
(e) This Agreement may be executed in two or more counterparts, each of
which shall be an original, but all of which shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this instrument on the date
first written above.
INTERIM SERVICES INC.
By:
-------------------------
Roy G. Krause
Executive Vice President
CATAMARAN ACQUISITION CORP.
By:
-------------------------
Dana J. O'Brien
Chairman
<PAGE>
EXHIBIT 2.9(e)
TRANSITIONAL SERVICES AGREEMENT
TRANSITIONAL SERVICES AGREEMENT dated September 26, 1997 by and between
Interim Services Inc., a Delaware corporation ("Seller") and Interim Healthcare
Inc., a Florida corporation ("IHI").
WITNESSETH:
WHEREAS, Seller and Catamaran Acquisition Corp., a Delaware Corporation,
("Buyer") have entered into the Stock Purchase Agreement dated June 29, 1997
(the "Purchase Agreement") providing for the sale of the Healthcare Business (as
defined in the Purchase Agreement) to Buyer, including, among other things, the
sale of all of the issued and outstanding common stock of IHI, a wholly owned
subsidiary of Seller (the "Transaction");
WHEREAS, in connection with the Transaction, Buyer and Seller wish to enter
into an arrangement whereby Seller will provide certain services to IHI for a
transitional period after the closing of the Transaction in accordance with the
terms and conditions of this Transitional Services Agreement ("Services
Agreement");
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, and for good and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS. As used in this Services Agreement, the following terms
have the meanings set forth in this Section 1. Any capitalized terms not
otherwise defined herein shall have the respective meanings given to them in the
Purchase Agreement. All Article and Section numbers used herein refer to
Articles and Sections of this Services Agreement, unless otherwise specified.
"Atrium Building" means the building located at 2000 Commercial Boulevard,
Fort Lauderdale, Florida 33309.
(b) "Computer Systems" means those computer systems and telecommunications
resources, including the use of designated hardware and software, to be provided
to IHI pursuant to this Services Agreement, as described on the Schedule of
Services.
(c) "Service Charge" means the amount per month to be charged to IHI
for each of the Services provided pursuant to this Services Agreement as set
forth on the Schedule of Services.
(d) "Corporate Service Center" means Seller's corporate headquarters
located at 2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309.
<PAGE>
(e)"Schedule of Services" means the Schedule of Services attached hereto
and made a part hereof as Exhibit A that sets forth each of the transitional
services to be provided to IHI pursuant to this Services Agreement.
2. PROVISION OF SERVICES.
(a) In connection with the operation of the Healthcare Business as
continued by IHI after the Closing (the "Continued Business"), IHI shall engage
Seller to perform and provide, and Seller shall perform and provide to IHI, the
services described on the Schedule of Services (the "Services"). The Services
shall be of substantially the same type and quality and at substantially the
same relative levels of effort and response time as those that Seller has
provided to the Healthcare Business at comparable times and periods during the
twelve months immediately preceding the Closing Date. Seller shall make
available to IHI the same protection and back-up systems as are available to
Seller's own businesses.
(b) In any instance in which provision of a Service to IHI requires consent
of a third party, Seller shall provide such Service only upon receipt of such
third party consent. Seller and IHI agree to cooperate in obtaining, and to use
reasonable best efforts to obtain, any such consents. Seller shall have no
liability whatsoever to IHI in the event that a Service is not provided or is
discontinued during the Term due to the absence of any such third party consent.
(c) By no later than ninety (90) days prior to each anniversary of the
Closing Date during the Term (as defined in Section 3), representatives of IHI
and Seller shall meet to develop a written forecast of the Services that IHI
will request of Seller during the upcoming year.
(d) Notwithstanding the foregoing, (i) Seller shall not be required to
incur any capital expenses in providing Services to IHI, other than expenses
related to routine maintenance of systems necessary for the provision of
comparable services to Seller for its own businesses, and (ii) nothing herein
shall be construed as a representation or warranty by Seller that the Services
will be suitable or adequate for the conduct of the Continued Business by IHI.
3. TERM OF AGREEMENT.
The term of this Services Agreement (the "Term") shall commence as of
the Effective Time and, unless terminated earlier pursuant to Section 7, shall
expire twenty-four months thereafter. Buyer may submit a written request to
extend the Term with respect to any or all of the Services for an additional one
(1) year period, provided that IHI also requests such an extension for its use
of the Allocated Space and Allocated Equipment (as defined in Section 4 below).
Any such request must be submitted in writing to Seller by no later than six (6)
months prior to the end of the Term and shall be subject to Seller's consent,
which consent shall not be unreasonably withheld; provided, however, that no
such consent shall be granted if the requested extension interferes in any
material way with the growth or expansion needs of Seller (as determined in
Seller's sole discretion). Seller shall respond to Buyer's request by no later
than forty-five (45) days after receipt thereof.
2
<PAGE>
(b) Notwithstanding the foregoing, IHI may request an additional one year
period with respect to access to the information systems referenced as Items IA
(1), (2), (7), (10), IB and IC in the Schedule of Services, regardless of
whether IHI remains in the Allocated Space during such one year period. Seller
shall use reasonable best efforts to approve such extension, provided; however,
that in no event shall such approval be granted if: (a) the requested access
interferes in any material way with any system or program enhancement of Seller,
or (b) necessary consents of any third party regarding such access have not been
received by Seller. The Service Charge for such extension shall be as mutually
agreed to by IHI and Seller upon such request, provided that in no event shall
such Service Charge exceed 1/10 of 1% of the revenues of the Healthcare Business
for the applicable month.
(c) In the event that IHI wishes to terminate this Services Agreement
after eighteen (18) months, written notice must be provided to Seller at least
one hundred and twenty (120) days prior to such termination and IHI shall pay to
Seller fifty percent (50%) of the Allocated Space Charge due for the balance of
the Term. In the event of a termination by IHI of this Services Agreement prior
to eighteen months after the date hereof, IHI shall pay to Seller one hundred
percent of the Allocated Space Charge due for the balance of the Term.
4. USE OF FACILITY.
(a) During the Term, IHI shall have the use of approximately 29,043
square feet of office space (inclusive of common areas) located at the Corporate
Service Center as set forth in Schedule 2, which space shall be dedicated to the
Healthcare Business (the "Allocated Space"). The Allocated Space shall include a
lobby area, conference room and the use of all office furnishings and office
equipment customarily used by the Healthcare Business Continued Employees on the
Closing Date (the "Allocated Equipment")
(b) All costs incurred by Seller in configuring and separating the
Allocated Space from the balance of the square footage at the Corporate Service
Center shall be reimbursed to Seller by IHI on a dollar-for-dollar basis,
provided that Seller shall bear the cost of (i) relocating all employees of IHI
from their current workplace at the Corporate Service Center to their new
workplace within the Allocated Space, and (ii) furnishing all such workplaces
with the appropriate Allocated Equipment.
(c) IHI shall have the right to approve all final plans for any such
areas within the Allocated Space site configuration and separation prior to
commencement of any construction; provided that any such approval is not
unreasonably withheld or delayed. IHI and Seller shall cooperate and use their
respective reasonable best efforts to see that the site configuration and
separation is achieved as efficiently and cost effectively as possible.
(d) IHI shall take good care of the Allocated Space and the Allocated
Equipment and shall return same to Seller at the end of the Term in
substantially the same condition as when received by IHI, ordinary wear and tear
excepted.
3
<PAGE>
(e) Buyer shall pay to Seller $17.25 per square foot, aggregating
approximately $41,749.31 per month, plus sales tax, if applicable, (the
"Allocated Space Charge") during the first year of the Term. With respect to
the second year of the Term and any additional year of the Term pursuant to
Section 3(b), the Allocated Space Charge shall increase by an amount equal to
the increase over the prior year in the Consumer Price Index for All Urban
Consumers (CPI-U), U.S. City Average. The Allocated Space Charge shall be
payable monthly in advance on the first day of each month. In the event that
the Term commences on a day other than the first day of the month, the Allocated
Space Charge shall be prorated on a per diem basis for the first and last months
of the Term.
(f) Seller shall have the right to enter the Allocated Space at
reasonable times during normal business hours for the purpose of inspecting,
maintaining or making repairs so long as such entry shall occur during
reasonable times and with reasonable advance notice to IHI. Notwithstanding the
foregoing, IHI and Seller acknowledge and agree that employees of both parties
may from time to time pass through their respective areas at the Corporate
Service Center in the ordinary course of business.
(g) IHI shall not make any alterations or additions or improvements
(collectively, "Improvements") to the Allocated Space without the prior written
consent of Seller, which consent shall not be unreasonably withheld or delayed.
All Improvements shall be made at the sole cost and expense of IHI.
Notwithstanding the foregoing, Seller's consent to Improvements may be
conditioned, in Seller's sole discretion, upon the written agreement of IHI to
remove the Improvements at the end of the Term (or any earlier termination
thereof) and to restore the Allocated Space to its original condition at IHI's
sole cost and expense. Seller shall provide any such conditioned consent to IHI
in writing.
(h) IHI may not assign or sublet all or any portion of the Allocated
Space without the prior written consent of Seller, which consent may be withheld
in Seller's sole discretion.
(i) IHI may affix and maintain signage on the exterior and interior of
the Allocated Space, subject to the prior consent and approval of Seller (not to
be unreasonably withheld), applicable Governmental Entities and any applicable
rules of the office park in which the Corporate Service Center is located.
(j) If all or any portion of the Allocated Space should become
untenantable due to fire or other casualty, Allocated Space Charges shall abate
for the period and to the extent that IHI is unable to occupy the Allocated
Space and Seller may, at its sole option restore the Allocated Space to its
prior condition within a reasonable amount of time thereafter or terminate this
Services Agreement, in which case Buyer shall have no further rights or
obligations with respect to the Allocated Space.
4
<PAGE>
5. USE OF COMPUTER SYSTEMS/HOPS PURCHASE OPTION.
(a) During the Term, IHI shall have access to and use of the Computer
Systems in the ordinary course of business and for legitimate business purposes
only, subject to the following limitations:
(i)the Computer Systems may only be used by employees of IHI or
other individuals authorized by IHI and approved in advance by Seller
(collectively, "Authorized Users");
(ii)IHI and Authorized Users must comply with all software
licenses, copyrights and state and federal laws pertaining to the Computer
Systems. IHI shall be responsible for any violations of such licenses,
copyrights or laws by an Authorized User;
(iii)Authorized Users may not install software onto their
individual computer or onto the network without the prior written consent
of Seller; and
(iv)without the prior written consent of Seller, the Computer
Systems may not be used for the transmission or storage of commercial or
personal advertisements, solicitations, promotions, destructive programs
(virus and/or self-replicating code) or political use.
(v)IHI shall be provided with reasonable access to the hard copy
files and computer drives of the Seller's legal department in order to
obtain and copy such documents for use in connection with the Healthcare
Business. After expiration or termination of this Agreement, IHI shall
have the right to maintain copies of such documents (both in print and
computer format) in the form that they existed as of the date of such
expiration or termination, and shall have the right to use or adapt such
documents without restriction for use in the Healthcare Business.
(b) Upon expiration of the Term or any extension thereof, IHI may elect
to purchase from Seller the Healthcare On-Premise System ("HOPS"),
inclusive of the source code, as such system exists in its then current
stage of development, for a purchase price of fifty thousand dollars
($50,000). Seller makes no representation or warranty with respect to any
enhancements of HOPS or with respect to the stage of development HOPS will
have reached at the time of any such purchase.
6. UNEMPLOYMENT CLAIMS PROCESSING. Seller shall provide processing
services with respect to unemployment claims by IHI employees up to and
including January 31, 1998 through the third party vendor currently providing
such services to Seller. IHI will be solely responsible for the payment of any
Taxes and the filing of any Tax returns or other documents required in
connection with any such unemployment claims.
7. CONTINUED BENEFIT COVERAGE. Employees of IHI shall continue to be
covered under those welfare benefit plans of Seller listed on Exhibit B through
January 1, 1998 ("Continued
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Benefits Coverage"); provided, however, that such Continued Benefits Coverage
shall be available only if Seller's insurance providers agree to such
continuation. IHI shall pay the actual cost of the premiums charged for the
Continued Benefits Coverage.
8. CHARGES FOR SERVICES. The Service Charge for each of the Services is
set forth on the Schedule of Services. In the event that IHI requests any
special information systems development projects or other additional services,
charges for such projects or services shall be separately negotiated and, once
determined, shall be set forth on an amendment to the Schedule of Services.
9. BILLING AND PAYMENT OF SERVICE CHARGES. Seller shall provide invoices
to IHI on or before the fifteenth (15th) day of every calendar month with
respect to Services provided during the previous month, which shall be payable
to Seller within thirty (30) days after the date of such
invoice. Such invoices shall itemize in sufficient detail the Service Charges
billed. A per diem adjustment shall be made for any Service rendered for less
than a full month on the basis of the actual number of calendar days during
which such Service was provided. Payments made after thirty (30) days from the
date of an invoice shall bear interest at the rate of 10% per annum.
10.PARTIAL AND COMPLETE TERMINATION OF SERVICES.
(a)IHI may terminate any or all Services set forth on the Schedule of
Services by written notice delivered to Seller specifying which Service or
Services are to be terminated and the requested date of termination
("Termination Date"); such Termination Date shall be at least sixty (60) days
after the date of receipt by Seller of such notice of termination.
(b) This Services Agreement may be terminated in its entirety at any
time as follows:
(i) by mutual written agreement of Seller and IHI;
(ii) by IHI pursuant to Section 3(c);
(iii)at the written election of Seller in the event of a material
default by IHI of its obligations hereunder, which material default shall
not have been cured within thirty (30) days after receipt of written notice
thereof to IHI, or in the event of a breach of a payment obligation, which
default shall not have been cured within five (5) business days after
written notice thereof has been received by IHI; or
(iv) at the written election of IHI, in the event of a material
default by Seller of its obligations hereunder, which material default
shall not have been cured within thirty (30) days after written notice
thereof has been given to Seller.
(c) No termination of this Services Agreement, in whole or in part,
shall discharge, affect or otherwise modify in any manner the rights and
obligations of Seller and IHI that have accrued or have been incurred prior
to such termination, including, without
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limitation, the obligation of IHI to pay Seller any and all amounts
payable hereunder in respect of Services theretofore provided.
11.FORCE MAJUERE.
(a) Seller shall not be liable for any failure or delay to perform its
obligations hereunder to the extent that such failure or delay is due to
circumstances beyond its control, including without limitation acts of God, acts
of a public enemy, fires, floods and other natural disasters, wars, civil
disturbances, sabotage, accidents, insurrections, blockades, embargoes, storms,
hurricanes, explosions, damage to its facilities, labor disputes, acts of any
governmental body, (whether civil or military, foreign or domestic), including
without limitation eminent domain and condemnation proceedings, all perils
of the seas and other waters, failure or delay of third parties or governmental
bodies from whom a party is obtaining or must obtain rights of way, easements,
franchises, permits, utilities, machinery, materials, equipment, transportation,
independent contracting, or supplies to grant or deliver the same, or inability
to obtain labor, materials, equipment or transportation (each a "Force Majeure
Event").
(b) Seller shall promptly notify IHI of any Force Majeure Event as soon
as practicable. If Seller's performance is prevented, delayed or restricted by
reason of a Force Majeure Event, then it shall be excused from performance for
the period and to the extent of such Force Majeure Event, and IHI's payment
obligations in connection therewith shall be suspended during such time period.
During the period of such Force Majeure Event, Seller shall not be deemed to be
in default under this Services Agreement and IHI shall be permitted to obtain
Services from third parties, if available, on a temporary basis for the duration
of the period for which Services hereunder are suspended. The Term shall not be
extended by the period of any Force Majeure Event.
(c) Seller (i) shall take all actions reasonable under the circumstances
to mitigate the effect of any Force Majeure Event (including the hiring of
temporary personnel and/or equipment, if such persons and/or equipment are
available upon commercially reasonable rates and terms); however, Seller shall
not be required to settle any strikes or other labor disputes, and (ii) any
diminution in Services resulting from a Force Majeure Event shall be borne
proportionately by IHI and Seller based upon their respective levels of use of
Services prior to the Force Majeure Event.
12.PERMITTED DELAYS. Seller shall not be liable for failure to perform any
of its obligations hereunder if any such failure is the result of IHI's failure
to promptly provide information or responses to inquiries reasonably necessary
for Seller to perform the Services.
13.INSURANCE; INDEMNIFICATION
(a)During the Term, IHI shall, at its sole cost and expense, effect and
maintain comprehensive general liability insurance on the Healthcare Business in
an amount not less than ten million dollars ($10,000,000) combined aggregate
limit for bodily injury and property damage, including but not limited to
premises liability, fire and water damage liability, blanket
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contractual liability, and personal injury liability. All such insurance
policies shall provide for waiver of subrogation against Seller. Seller shall be
designated as an additional insured under all insurance required under this
Services Agreement and no such insurance shall be canceled or materially
modified upon less than thirty (30) days prior written notice to Seller.
Certificates of Insurance evidencing all such insurance shall be provided to
Seller.
(b) IHI shall defend, indemnify and hold Seller, its directors,
officers, employees and agents harmless from and against any liability, loss,
cost, expense, penalty, fine or damage of any nature whatsoever, including, but
not limited to reasonable attorneys' fees, costs and expenses incurred by Seller
incident to the preparation for or defense of any claim, investigation or
proceeding for injury to persons (including employees, agents and invitees of
IHI and Seller) or damage to property, (i) arising out of, resulting from or
related to the performance by Seller of any of the Services hereunder, (ii)
arising from or relating to IHI's possession, use or the occupancy of the
Allocated Space, or (iii) any other matters related to this Services Agreement,
except to the extent such liability, loss, cost or damage arises from the
willful misconduct or gross negligence of Seller.
(c) IHI hereby releases Seller, its directors, officers, employees and
agents from any liability to IHI (or any person claiming by or through IHI, by
way of subrogation or otherwise) for any loss or damage of any nature whatsoever
incurred or suffered by IHI arising out of Seller's performance or
non-performance of Services, except to the extent any such loss or damage
results from the willful misconduct or gross negligence of Seller. In no event
shall Seller be liable to IHI or any third party for any special, incidental or
consequential damages including, without limitation, lost profits or injury to
the goodwill of IHI in connection with this Services Agreement.
14.STATUS. Seller shall perform all of the Services hereunder as an
independent contractor and nothing contained herein shall be construed as
constituting Seller as an agent or legal representative of IHI.
15.NOTICES. Except as otherwise provided herein, any notice or other
communication required or given under this Services Agreement shall be given in
the same manner as provided in the Purchase Agreement.
16.ASSIGNMENT. This Services Agreement shall be binding upon and inure to
the benefit of the successors of each party hereto, but shall not be assignable
by either party without the prior written consent of the
other party, except that IHI may assign its rights hereunder, in whole or
in part, as collateral security to any person providing financing to IHI.
17.THIRD PERSONS. This Services Agreement is not intended to, and shall
not, create any rights in or confer any rights upon person other than the
parties hereto.
18.GOVERNING LAW. This Services Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, excluding any
provisions thereof, which would otherwise require the application of the law of
any other jurisdiction.
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19.AMENDMENT. Neither this Services Agreement nor any term hereof shall be
amended or modified in any manner except by an instrument in writing which
refers to this Services Agreement and is executed by each of the parties hereto.
20.COUNTERPARTS. This Services Agreement may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
21.COMPLETE AGREEMENT. This Services Agreement, the Purchase Agreement and
the other agreements referred to in the Purchase Agreement set forth the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior agreements, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party relating thereto.
22.EFFECTIVENESS. The obligations of Seller and IHI under this Services
Agreement are conditional upon the Closing, the occurrence of which is subject
to various conditions set forth in the Purchase Agreement. This Services
Agreement shall become operative if and when the Closing occurs and shall be
null and voice if the Closing does not occur for any reason. Nothing in this
Services Agreement shall constitute a representation or promise that any party
hereto shall proceed with the Closing or obligate any part to do so.
IN WITNESS WHEREOF, the parties hereto have caused this Services Agreement
to be executed by their respective authorized officers as of the date first
above written.
Interim Services Inc.
By:
--------------------------------
Name: Roy G. Krause
Title: Executive Vice President
Interim Healthcare Inc.
By:
--------------------------------
Name: James H. Booth
Title: President
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EXHIBIT 2.9(g)
IHNY MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT (the "Agreement") is effective as of the
26th day of September, 1997 (the "Effective Date"), by and among Interim
Healthcare of New York Inc. ("IHNY"), Interim Healthcare Inc. ("IHI") and
Interim Services Inc. ("Services").
WITNESSETH:
WHEREAS, Catamaran Acquisition Corp. ("Catamaran") and Services have
entered into a Stock Purchase Agreement (the "Purchase Agreement"), pursuant to
which Catamaran will purchase the stock of IHI and IHNY; and
WHEREAS, Catamaran intends to assign its right to purchase the stock
of IHNY to IHI; and
WHEREAS, IHNY, a wholly owned subsidiary of Services, has several
licenses in New York to operate home care services agencies and operates at the
locations described in SCHEDULE A to this Agreement; and
WHEREAS, pursuant to N.Y. Comp. Codes R. & Regs. Tit. 10, Section
765-1.13, IHI is in the process of submitting an application to the New York
State Department of Health, to acquire Services' interest in IHNY; and
WHEREAS, IHI (which will be a wholly owned subsidiary of Catamaran
following the consummation of the transactions contemplated by the Purchase
Agreement) is capable of providing management services in the home care services
industry and agrees to provide management services to IHNY pending the Public
Health Council's approval of IHI's application to operate IHNY.
NOW, THEREFORE, in consideration of the covenants and promises
contained herein and in the Purchase Agreement, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. DUTIES AND LIMITATIONS.
a. IHNY hereby appoints IHI as its exclusive manager and,
subject to Section 1(b) below, grants IHI all the power and authority
necessary to carry out, in the manner deemed best by IHI and IHNY, the
management of IHNY. Each party will be and act as an independent
contractor and not as the agent, employee or partner of, or joint venture
partner with, the other party for any purpose, and neither party, by virtue
of this Agreement, shall have any right, power or authority to act or
create any obligation, express or implied, on behalf of the other party.
<PAGE>
b. Notwithstanding Section 1(a) above or any other provisions
of this Agreement, IHI's obligations as the exclusive manager of IHNY shall
be subject to the following limitations:
(i) The Board of Directors of IHNY shall retain ongoing
responsibility for IHNY's compliance with all statutory and regulatory
requirements.
(ii) The responsibilities of the Board of Directors of
IHNY are in no way lessened by entering into this Agreement. The
Board of Directors of IHNY retains full legal authority over the
operation of IHNY. Any powers not delegated specifically to IHI
through the provisions of this Agreement shall remain with the Board
of Directors of IHNY.
(iii) Notwithstanding any other provision of this
Agreement, THE BOARD OF DIRECTORS OF IHNY RETAINS: (A) DIRECT
INDEPENDENT AUTHORITY TO HIRE OR FIRE THE ADMINISTRATOR OR MANAGER OF
IHNY; (B) INDEPENDENT CONTROL OF IHNY'S BOOKS AND RECORDS;
(C) AUTHORITY OVER THE DISPOSITION OF IHNY'S ASSETS; (D) AUTHORITY TO
INCUR LIABILITIES ON BEHALF OF IHNY NOT NORMALLY ASSOCIATED WITH THE
DAY-TO-DAY OPERATION OF IHNY; AND (E) AUTHORITY FOR THE INDEPENDENT
ADOPTION, AMENDMENT, IMPLEMENTATION AND ENFORCEMENT OF POLICIES AND
PROCEDURES REGARDING THE OPERATION OF IHNY AND/OR AFFECTING THE
DELIVERY OF HEALTH CARE SERVICES IN ORDER TO ENSURE THE PROVISION OF
QUALITY HOME CARE SERVICES AND THAT IHNY IS OPERATED IN COMPLIANCE
WITH ALL APPLICABLE STATUTES AND REGULATIONS. For purposes of this
Section 1(b)(iii)(A)-(D), "IHNY" shall be deemed to include IHNY
and/or any of its licensed agencies.
c. IHI's specific duties as the exclusive manager of IHNY are
as follows:
(i) Conduct sales, marketing, advertising, and
promotion activities;
(ii) Administer matters regarding customer service and
other public relations matters;
(iii) Evaluate the costs associated with the treatment of
patients requiring home care services;
(iv) Review data (e.g., incidence, prevalence, cost, and
outcomes data) associated with the treatment of patients requiring
home care services;
(v) Advise and assist IHNY regarding third party
payment issues;
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(vi) Assist in the development, implementation, and
assurance of compliance with protocols for patients requiring home
care services;
(vii) Participate in training, continuing education, and
other programs designed to disseminate new information regarding home
care services;
(viii) Furnish, train, manage, supervise, and discipline
sufficient personnel who will provide various administrative services,
including secretarial support services and billing and collecting
services;
(ix) Monitor staff workloads and productivity and
provide leadership and recommendations to IHNY's administrative and
professional staff concerning staff matters;
(x) Maintain complete and accurate records concerning
the current licensure status of any IHNY staff member who is required
by law to be licensed;
(xi) Maintain ongoing communication between IHI and
IHNY;
(xii) Monitor workflows and communication to assist IHNY
in ensuring that cases are complete, care is initiated properly, and
appropriate communication documentation occurs;
(xiii) Monitor the quality of services provided by IHNY;
(xiv) Review and assist IHNY in developing policies and
procedures to assist IHNY in ensuring compliance with all pertinent
federal, state, and local laws, regulations, and rules, applicable to
all aspects of IHNY, including applicable home care services agency
standards;
(xv) Oversee contractual and inter-agency relationships
with other providers;
(xvi) Provide accounting and related financial support
services (which shall be performed in the name of and on behalf of
IHNY), including budgeting; financial record keeping; financial
management, consultation, and advice; accounts receivable and accounts
payable processing;
(xvii) Provide all equipment (including computer hardware
and software), furnishings, products, and supplies necessary for IHNY
to conduct its business;
(xviii) Provide all services related to the maintenance of
patient medical records and financial records, including record
retrieval services of patients receiving home care services; assist
IHNY in ensuring that IHNY's professional personnel make appropriate
entries in the patient's medical record
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regarding services provided to the patient by such personnel; and
assist IHNY in ensuring that the strict confidentiality of all
patients' medical records is maintained;
(xix) Arrange for the provision by a duly licensed
insurance company of all necessary insurance coverage for IHNY to
conduct its business;
(xx) Establish, implement, administer, and manage the
preparation and issuance of bills (which are prepared in the name of
and on behalf of IHNY) to patients and the collection of accounts and
monies owed to IHNY;
(xxi) Provide and maintain a management information
system, including all equipment and computer hardware and software
related thereto; and
(xxii) Provide periodic reports, as IHI or IHNY considers
appropriate, as to the status and conditions of IHNY's operations.
2. COMPENSATION. As compensation for IHI's services and all of its
obligations under this Agreement, IHNY will accrue and pay to IHI a monthly
service charge in accordance with the attached Schedule B, and IHNY shall pay
such invoices within fifteen (15) days after receipt thereof. IHI shall submit
invoices to IHNY for these expenses showing the costs incurred by IHI in
reasonable detail on the last day of each calendar month. Such payments shall
be due and payable without regard to IHNY's receipt of payment for home care
services from patients and third party payers.
3. SUBMISSION TO THE NEW YORK STATE DEPARTMENT OF HEALTH. The
parties shall submit this Agreement to the New York State Department of Health
for approval.
4. TERM AND TERMINATION.
a. This Agreement shall commence as of the date of approval by
the New York State Department of Health and shall continue until the
earlier of (i) receipt of all regulatory approvals reasonably necessary
under New York law with respect to IHI's acquisition of IHNY (the "New York
Regulatory Approvals") and the subsequent closing of such acquisition, as
set forth in the Purchase Agreement, or (ii) the completion of an orderly
transition of IHI's obligations under this Agreement to Services, in the
event of a final denial of the New York Regulatory Approvals, which
transition shall occur as promptly as reasonably possible, however in no
event to exceed sixty (60) days from receipt of such denial.
b. The parties acknowledge that, notwithstanding Section 4(a)
above, IHNY may terminate this Agreement "For Cause" (which is defined
below) and discharge IHI and its employees at IHNY upon sixty (60) days
prior written notice. In such an event, IHNY shall notify the New York
State Department of Health in writing at the time buyer is notified, and
IHNY shall provide a plan for the operation of IHNY,
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subsequent to the termination and discharge, to be submitted with the
notification to the New York State Department of Health.
c. For purposes of this Agreement, "For Cause" for the basis of
early termination shall mean:
(i) In the event IHI becomes insolvent or a party to
any bankruptcy or receivership proceeding or any similar action
affecting the business affairs or property of IHI; or
(ii) In the event IHI materially fails to perform or
comply with the terms and conditions of this Agreement and continues
to not perform or comply with the terms and conditions of this
Agreement and continues to not perform or comply after notice of such
failure to perform and a sixty (60) day period to cure has expired.
5. INDEMNIFICATION.
a. IHNY shall indemnify each of IHI and Services and each of
IHI and Services' respective directors, officers, employees, agents and
affiliates (collectively "Indemnitees of IHNY") against any losses,
liabilities, damages or expenses (including without limitation, reasonable
attorney fees and expenses in connection therewith and amounts paid in
settlement thereof) to which any of the Indemnitees of IHNY may become
subject in connection with this Agreement or arising out of, incident to or
in any manner occasioned by the performance or nonperformance of any duty
or responsibility under this Agreement by IHNY, or any of its directors,
officers, employees, agents and affiliates, other than Services, except (i)
in the case of IHI, to the extent that the matter which is the basis of the
claim involves negligence, gross negligence, fraud, willful misconduct,
willful violation of law or breach of the Agreement by IHI, or any of its
directors, officers, employees, agents and affiliates (other than IHNY) and
(ii) in the case of Services, to the extent that the matter which is the
basis of the claim involves negligence, gross negligence, fraud, willful
misconduct, willful violation of law or breach of the Agreement by
Services, or any of its directors, officers, employees, agents and
affiliates (other than IHNY). IHNY will pay the expenses incurred by any
such Indemnitee of IHNY in connection with any proceeding in advance of the
final disposition, provided that IHNY receives an undertaking by such
person to repay the full amount advanced if there is a final determination
that indemnification is not due hereunder. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or a pleas
of nolo contendere or its equivalent, shall not of itself, create a
presumption that any of the Indemnitees of IHNY did not satisfy the
standards set forth herein.
b. IHI shall indemnify each of IHNY and Services and each of
IHNY and Services' respective directors, officers, employees, agents and
affiliates (collectively "Indemnitees of IHI") against any losses,
liabilities, damages or expenses (including without limitation, reasonable
attorney fees and expenses in connection therewith and
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amounts paid in settlement thereof) to which any of the Indemnitees of IHI
may become subject in connection with this Agreement or arising out of,
incident to or in any manner occasioned by the performance or
nonperformance of any duty or responsibility under this Agreement by IHI,
or any of its directors, officers, employees, agents and affiliates,
provided the action, or inaction, giving rise to the claim involves
negligence, gross negligence, fraud, willful misconduct, willful violation
of law or breach of the Agreement by IHI, or any of its directors,
officers, employees, agents and affiliates. IHI will pay the expenses
incurred by any such Indemnitee of IHI in connection with any proceeding in
advance of the final disposition, provided that IHI receives an undertaking
by such person to repay the full amount advanced if there is a final
determination that indemnification is not due hereunder. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction, or a pleas of nolo contendere or its equivalent, shall not of
itself, create a presumption that any of the Indemnitees of IHI did not
satisfy the standards set forth herein.
c. Services shall indemnify each of IHI and IHNY and each of
IHI and IHNY's respective directors, officers, employees, agents and
affiliates (collectively "Indemnitees of Services") against any losses,
liabilities, damages or expenses (including without limitation, reasonable
attorney fees and expenses in connection therewith and amounts paid in
settlement thereof) to which any of the Indemnitees of Services may become
subject in connection with this Agreement or arising out of, incident to or
in any manner occasioned by the performance or nonperformance of any duty
or responsibility under this Agreement by Services, or any of its
directors, officers, employees, agents and affiliates, other than IHNY,
provided the action, or inaction, giving rise to the claim involves
negligence, gross negligence, fraud, willful misconduct, willful violation
of law or breach of the Agreement by Services, or any of its directors,
officers, employees, agents and affiliates, excluding IHNY. Services will
pay the expenses incurred by any such Indemnitee of Services in connection
with any proceeding in advance of the final disposition, provided that
Services receives an undertaking by such person to repay the full amount
advanced if there is a final determination that indemnification is not due
hereunder. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or a pleas of nolo contendere or its
equivalent, shall not of itself, create a presumption that any of the
Indemnitees of Services did not satisfy the standards set forth herein.
d. Notwithstanding the foregoing, in the event that Services
and/ or IHNY receives any liquidated damages pursuant to Section 2.3 (g) of
the Purchase Agreement, any amounts payable by IHI pursuant to this Section
5 shall be reduced dollar-for-dollar to the extent that any such liquidated
damages are attributable to the basis for which indemnification by IHI
hereunder is due. This Section 5 is intended to provide indemnification
among the parties hereto with respect to their respective obligations under
this Agreement and not with respect to any relationships that exist between
the parties as a result of the Purchase Agreement.
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6. NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing (including TELEX and
telegraphic communication) and shall be deemed to have been duly given when
received if delivered personally, telecommunicated, sent by overnight or
second-day courier service, or mailed by registered or certified mail (postage
prepaid), return receipt requested, addressed to the following addresses (or to
such other addresses as any party may hereafter designate in writing to the
other parties):
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, FL 33309-3008
Att: John B. Smith, Esq.
Fax No.: (954) 938-7780
Interim Healthcare of New York Inc.
2050 Spectrum Boulevard
Fort Lauderdale, FL 33309-3008
Att: Raphael D. Umansky, Esq.
Fax No.: (954) 938-7780
Interim Healthcare Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309-3008
Att: Raphael D. Umansky, Esq.
Fax No.: (954) 938-7780
7. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which counterparts
together shall constitute one and the same instrument.
8. ASSIGNMENT. IHI may not assign its respective rights and
obligations without the prior written approval of: (i) IHNY, except to an
affiliated company, which shall have adequate personnel and experience to
perform IHI's duties with the same level of competence as IHI; and (ii) the New
York State Department of Health. Notwithstanding the foregoing, IHI may assign
its rights, but not its obligations, hereunder as collateral security to any
person providing financing to IHI.
9. SEVERABILITY. In the event that any provision or part of any
provision of this Agreement shall be determined to be invalid or unenforceable,
such determination shall not affect the remaining parts or provisions of this
Agreement which shall continue in full force and effect.
10. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
without regard to the laws which might otherwise be applicable under the
principles of conflict of laws.
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11. ENTIRE AGREEMENT. Except for the IHNY Transitional Consultative
Agreement between the parties hereto, which shall be superseded by this
Agreement upon its effectiveness, this Agreement constitutes the entire
agreement by and among the parties related to the subject matter of this
Agreement and no modification shall be effective unless made by a supplemental
agreement in writing executed by the parties and, as necessary, approved in
writing by the New York State Department of Health.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed by their duly authorized officers as of the date first above
written.
INTERIM HEALTHCARE OF NEW YORK INC.
By:
-----------------------------------
Roy G. Krause
Executive Vice President
INTERIM HEALTHCARE INC.
By:
-----------------------------------
James H. Booth
President
INTERIM SERVICES INC.
By:
-----------------------------------
Roy G. Krause
Executive Vice President
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EXHIBIT 2.9(h)
IHNY TRANSITIONAL CONSULTATIVE AGREEMENT
This INTERIM CONSULTATIVE AGREEMENT (the "Agreement") is effective as
of the 26th day of September, 1997 (the "Effective Date"), by and among Interim
Healthcare of New York Inc. ("IHNY"), Interim Healthcare Inc. ("IHI"), and
Interim Services Inc. ("Services").
WITNESSETH:
WHEREAS, contemporaneous with the execution of this Agreement,
Catamaran Acquisition Corp. ("Catamaran") and Services have entered into a Stock
Purchase Agreement (the "Purchase Agreement"), pursuant to which Catamaran will
purchase the stock of IHI and IHNY; and
WHEREAS, Catamaran intends to assign its right to purchase the stock
of IHNY to IHI; and
WHEREAS, IHNY, a wholly owned subsidiary of Services, has several
licenses in New York to operate home care services agencies and operates at the
locations described in Schedule A to this Agreement; and
WHEREAS, pursuant to N.Y. Comp. Codes R. & Regs. Tit. 10, Section
765-1.13, IHI is in the process of submitting an application to the New York
State Department of Health, Public Health Council, to acquire Services' interest
in IHNY; and
WHEREAS, IHI (which will be a wholly-owned subsidiary of Catamaran
following the consummation of the transactions contemplated by the Purchase
Agreement) is capable of providing management services in the home care services
industry and agrees to provide management services to IHNY pending the Public
Health Council's approval of IHI's application to operate IHNY; and
WHEREAS, pursuant to N.Y. Comp. Codes R. & Regs. Tit. 10, Section
766-1, IHNY has submitted to the New York State Department of Health a copy of a
management agreement (the "Management Agreement") in which IHI has agreed to
provide management services to IHNY pending the Public Health Council's approval
of IHI's application to operate IHNY; and
WHEREAS, pending the approval of the Management Agreement by the New
York State Department of Health, the parties wish to enter into this Agreement.
NOW, THEREFORE, in consideration of the covenants and promises contained herein
and in the Stock Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
<PAGE>
1. DUTIES AND LIMITATIONS.
a. IHNY hereby appoints IHI as its exclusive consultant whereby
IHI shall provide IHNY with consulting services which shall include the
following:
(i) Consult and assist with sales and marketing
activities;
(ii) Consult and assist with evaluating the costs
associated with the treatment of patients requiring home care services;
(iii) Review data (e.g., incidence, prevalence, cost, and
outcomes data) associated with the treatment of patients requiring home
care services;
(iv) Advise and assist IHNY regarding third party payment
issues;
(v) Furnish personnel to provide various administrative
services, including secretarial support services and billing and
collecting services;
(vi) Consult with IHNY on protocols for patients requiring
home care services; and
(vii) Participate in training, continuing education, and
other programs designed to disseminate new information regarding home
care services.
b. Notwithstanding Section 1(a) above or any other provisions of
this Agreement, IHI's obligations as the exclusive consultant of IHNY shall be
subject to the following limitations:
(i) The Board of Directors of IHNY shall retain ongoing
responsibility for IHNY's compliance with all statutory and regulatory
requirements;
(ii) The responsibilities of the Board of Directors of
IHNY are in no way lessened by entering into this Agreement. The Board
of Directors of IHNY retains full legal authority over the operation of
IHNY. Any powers not delegated specifically to IHI through the
provisions of this Agreement shall remain with the Board of Directors
of IHNY;
(iii) (A) The Board of Directors of IHNY retains
responsibility for the day-to-day operations of IHNY.
(B) IHI shall have no authority to hire or fire
IHNY personnel.
2
<PAGE>
(C) IHNY, and not IHI, shall maintain and control the
books and records of IHNY.
(D) IHI shall have no authority to dispose of assets
or to incur any liability on behalf of IHNY.
(E) IHI shall have no authority to adopt or enforce
policies regarding the operation of IHNY. For purposes of this
Section 1(b), "IHNY" shall be deemed to include IHNY and/or any of its
licensed agencies.
2. COMPENSATION. As compensation for IHI's services and all of its
obligations under this Agreement, IHNY will accrue and pay to IHI a monthly
service charge in accordance with the attached Schedule B, and IHNY shall pay
such invoices within fifteen (15) days after receipt thereof. IHI shall submit
invoices to IHNY for these expenses showing the costs incurred by IHI in
reasonable detail on the last day of each calendar month. Such payments shall
be due and payable without regard to IHNY's receipt of payment for home care
services from patients and third party payers.
3. SUBMISSION TO THE NEW YORK STATE DEPARTMENT OF HEALTH. The
parties shall submit an application for change of control, a proposed Management
Agreement and all necessary supporting documentation to the New York State
Department of Health.
4. TERM AND TERMINATION.
a. This Agreement shall become effective on the Effective
Date and shall terminate upon the New York State Department of Health
approving or disapproving the Management Agreement by and among the
parties.
b. The parties acknowledge that, notwithstanding Section
4(a) above, IHNY may terminate this Agreement "For Cause" (which is defined
below) and discharge IHI and its employees at IHNY upon sixty (60) days
prior written notice.
c. For purposes of this Agreement, "For Cause" for the basis
of early termination shall mean:
(i) In the event IHI becomes insolvent or a party to
any bankruptcy or receivership proceeding or any similar action
affecting the business affairs or property of IHI; or
(ii) In the event IHI materially fails to perform or
comply with the terms and conditions of this Agreement and continues
to not perform or comply after notice of such failure to perform and a
sixty (60) day period to cure has expired.
3
<PAGE>
5. INDEMNIFICATION.
a. IHNY shall indemnify each of IHI and Services and each of
IHI and Services' respective directors, officers, employees, agents and
affiliates (collectively "Indemnitees of IHNY") against any losses,
liabilities, damages or expenses (including without limitation, reasonable
attorney fees and expenses in connection therewith and amounts paid in
settlement thereof) to which any of the Indemnitees of IHNY may become
subject in connection with this Agreement or arising out of, incident to or
in any manner occasioned by the performance or nonperformance of any duty
or responsibility under this Agreement by IHNY, or any of its directors,
officers, employees, agents and affiliates, other than Services, except (i)
in the case of IHI, to the extent that the matter which is the basis of the
claim involves negligence, gross negligence, fraud, willful misconduct,
willful violation of law or breach of the Agreement by IHI, or any of its
directors, officers, employees, agents and affiliates (other than IHNY) and
(ii) in the case of Services, to the extent that the matter which is the
basis of the claim involves negligence, gross negligence, fraud, willful
misconduct, willful violation of law or breach of the Agreement by
Services, or any of its directors, officers, employees, agents and
affiliates (other than IHNY). IHNY will pay the expenses incurred by any
such Indemnitee of IHNY in connection with any proceeding in advance of the
final disposition, provided that IHNY receives an undertaking by such
person to repay the full amount advanced if there is a final determination
that indemnification is not due hereunder. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or a pleas
of nolo contendere or its equivalent, shall not of itself, create a
presumption that any of the Indemnitees of IHNY did not satisfy the
standards set forth herein.
b. IHI shall indemnify each of IHNY and Services and each of
IHNY and Services' respective directors, officers, employees, agents and
affiliates (collectively "Indemnitees of IHI") against any losses,
liabilities, damages or expenses (including without limitation, reasonable
attorney fees and expenses in connection therewith and amounts paid in
settlement thereof) to which any of the Indemnitees of IHI may become
subject in connection with this Agreement or arising out of, incident to or
in any manner occasioned by the performance or nonperformance of any duty
or responsibility under this Agreement by IHI, or any of its directors,
officers, employees, agents and affiliates, provided the action, or
inaction, giving rise to the claim involves negligence, gross negligence,
fraud, willful misconduct, willful violation of law or breach of the
Agreement by IHI, or any of its directors, officers, employees, agents and
affiliates. IHI will pay the expenses incurred by any such Indemnitee of
IHI in connection with any proceeding in advance of the final disposition,
provided that IHI receives an undertaking by such person to repay the full
amount advanced if there is a final determination that indemnification is
not due hereunder. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or a pleas of nolo contendere or
its equivalent, shall not of itself, create a presumption that any of the
Indemnitees of IHI did not satisfy the standards set forth herein.
4
<PAGE>
c. Services shall indemnify each of IHI and IHNY and each of
IHI and IHNY's respective directors, officers, employees, agents and
affiliates (collectively "Indemnitees of Services") against any losses,
liabilities, damages or expenses (including without limitation, reasonable
attorney fees and expenses in connection therewith and amounts paid in
settlement thereof) to which any of the Indemnitees of Services may become
subject in connection with this Agreement or arising out of, incident to or
in any manner occasioned by the performance or nonperformance of any duty
or responsibility under this Agreement by Services, or any of its
directors, officers, employees, agents and affiliates, other than IHNY,
provided the action, or inaction, giving rise to the claim involves
negligence, gross negligence, fraud, willful misconduct, willful violation
of law or breach of the Agreement by Services, or any of its directors,
officers, employees, agents and affiliates, excluding IHNY. Services will
pay the expenses incurred by any such Indemnitee of Services in connection
with any proceeding in advance of the final disposition, provided that
Services receives an undertaking by such person to repay the full amount
advanced if there is a final determination that indemnification is not due
hereunder. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or a pleas of nolo contendere or its
equivalent, shall not of itself, create a presumption that any of the
Indemnitees of Services did not satisfy the standards set forth herein.
d. Notwithstanding the foregoing, in the event that Services
and/ or IHNY receives any liquidated damages pursuant to Section 2.3 (g) of
the Purchase Agreement, any amounts payable by IHI pursuant to this Section
5 shall be reduced dollar-for-dollar to the extent that any such liquidated
damages are attributable to the basis for which indemnification by IHI
hereunder is due. This Section 5 is intended to provide indemnification
among the parties hereto with respect to their respective obligations under
this Agreement and not with respect to any relationships that exist between
the parties as a result of the Purchase Agreement.
6. NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing (including TELEX and
telegraphic communication) and shall be deemed to have been duly given when
received if delivered personally, telecommunicated, sent by overnight or
second-day courier service, or mailed by registered or certified mail (postage
prepaid), return receipt requested, addressed to the following addresses (or to
such other addresses as any party may hereafter designate in writing to the
other parties):
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, FL 33309-3008
Att: John B. Smith, Esq.
Fax No.: (954) 938-7780
5
<PAGE>
Interim Healthcare of New York Inc.
2050 Spectrum Boulevard
Fort Lauderdale, FL 33309-3008
Att: Raphael D. Umansky, Esq.
Fax No.: (954) 938-7780
Interim Healthcare Inc.
2050 Spectrum Boulevard
Fort Lauderdale, FL 33309-3008
Att: Raphael D. Umansky, Esq.
Fax No.: (954) 938-7780
7. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which counterparts
together shall constitute one and the same instrument.
8. ASSIGNMENT. IHI may not assign its respective rights and
obligations without the prior written consent of IHNY, except to an affiliated
company, which shall have adequate personnel and experience to perform IHI's
duties with the same level of competence as IHI. Notwithstanding the foregoing,
IHI may assign its rights, but not its obligations, hereunder as collateral
security to any person providing financing to IHI.
9. SEVERABILITY. In the event that any provision or part of any
provision of this Agreement shall be determined to be invalid or unenforceable,
such determination shall not affect the remaining parts or provisions of this
Agreement which shall continue in full force and effect.
10. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
without regard to the laws which might otherwise be applicable under the
principles of conflict of laws.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement by and among the parties related to the subject matter of this
Agreement and no modification shall be effective unless made by a supplemental
agreement in writing executed by the parties.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed by their duly authorized officers as of the date first above
written.
INTERIM HEALTHCARE OF NEW YORK INC.
By:
-----------------------------------
Roy G. Krause
Executive Vice President
INTERIM HEALTHCARE INC.
By:
-----------------------------------
James H. Booth
President
INTERIM SERVICES INC.
By:
-----------------------------------
Roy G. Krause
Executive Vice President
7
<PAGE>
EXHIBIT 14.7
ASSIGNMENT AND ASSUMPTION OF HEALTHCARE NATIONAL ADVERTISING AGREEMENTS
ASSIGNMENT AND ASSUMPTION OF HEALTHCARE NATIONAL ADVERTISING AGREEMENTS
dated September 26, 1997 between INTERIM SERVICES INC., a Delaware corporation
("Interim") and INTERIM HEALTHCARE INC., a Florida corporation ("IHI").
Capitalized terms used but not otherwise defined herein shall have the
respective meanings given to them in the Stock Purchase Agreement, as defined
below.
RECITALS
1. Pursuant to the Stock Purchase Agreement among Interim, Catamaran
Acquisition Corp. ("Buyer") and Cornerstone Equity Investors IV, L.P. dated
June 29, 1997 (the "Stock Purchase Agreement"), Interim has agreed to sell the
Healthcare Business to Buyer by means of a transfer of the stock of IHI and
Interim Healthcare of New York (the "Transaction"); and,
2. In connection with the Transaction, IHI wishes to assume the rights
and obligations of Interim under the Healthcare National Advertising Contracts
with respect to Interim's National Advertising Program (the "National
Advertising Program") and Interim is willing to make such assignment and
agree to such continued participation, subject to the terms and conditions set
forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Interim hereby assigns to IHI all of Interim's right, title and
interest in, to and under the Healthcare National Advertising Contracts,
including all of the obligations and the covenants, terms and conditions
contained therein, and Interim is hereby released from all further obligations
with respect to the Healthcare National Advertising Contracts, except as may be
otherwise set forth herein.
2. IHI hereby accepts such assignment of the Healthcare National
Advertising Contracts, assumes the obligations of Interim thereunder and agrees
to observe and perform all of the terms, covenants and conditions to be observed
or performed by Interim thereunder with the same force and effect as if IHI had
executed the Healthcare National Advertising Contracts as the party originally
named therein.
3. In connection with IHI's administration of the National Advertising
Program subsequent to the Effective Time and until the Program expires on
December 31, 2004, the parties agree as follows:
(a) In the event that the aggregate of 1/4 of 1% of all branch
sales (IHI branches and Interim branches) does not equal or exceed the
aggregate of 1/4 of 1% of all franchisee sales (Franchisees and Interim
franchisees), then Interim shall remit to IHI an amount equal to any
<PAGE>
deficiency to enable IHI to comply with the matching obligations to the
Franchisees, as set forth in the Healthcare National Advertising Contracts.
(b) The calculation of Interim's contribution required by (a) above
(if any) for any year of the National Advertising Program shall be made by
using, in each case, sales during the preceding calendar year of all IHI and
Interim branch offices located in the United States and sales by all Franchisees
who have a Healthcare National Advertising Contract in effect as of the
Effective Time. Any payments required of Interim pursuant to 3(a) above
shall be prorated and paid monthly, on or before the fifteenth (15th) day of
each month.
(c) Interim and IHI agree that each of them shall spend substantially
all funds collected for their respective National Advertising Programs not
later than the end of the year following the year in which such funds are
collected. In the event that IHI reduces the amount payable for national
advertising by its branches and franchisees (whether by reduction to a
percentage less than 1/4 of 1% or by substitution of a fixed amount that
would be less than 1/4 of 1% of sales), then Interim shall only be obligated
to spend an amount equal to such percentage or fixed amount, and, in the case
of any such reduction by IHI, the amount payable by Interim pursuant to
Section 3(a) shall be correspondingly reduced. In the event that Interim
reduces the amount payable for national advertising by its branches and
franchisees (whether by reduction to a percentage of less than 1/4 of 1% or
by substitution of a fixed amount that would be less than 1/4 of 1% of sales)
then Interim's obligations under Section 3(a) shall not be reduced.
(d) All advertising campaigns developed and designed by IHI which utilize
any of Interim's tradenames or trademarks or other intellectual property shall
be subject to the prior approval of Interim with regard to the proper usage of
Interim's trademarks, trade names and other intellectual property, which
approval shall not be unreasonably withheld.
Any future form of national advertising agreement entered into by IHI and its
Franchisees shall not alter or increase the obligations of Interim under this
Agreement.
4. IHI shall defend, indemnify and hold Interim, its directors, officers,
employees and agents harmless from and against any Damages (as defined in the
Section 1.19 of the Stock Purchase Agreement for purposes of Section 10 thereof)
(i) arising out of, resulting from or related to the continued participation of
IHI in the National Program, (ii) the performance by Interim of any of its
obligations with respect to the Healthcare National Advertising Contracts and/or
the National Program, other than with respect to the performance of Interim's
obligations set forth in Section 3(a)
5. This Agreement (a) contains the entire agreement between the parties
with respect to the transactions contemplated hereby and supersedes all prior
arrangements or understandings with respect thereto; (b) shall not be assignable
by either party without the prior written consent of the other party, and any
purported assignment by any party without the prior written consent of the other
party shall be void; (c) may be amended or modified, or any term or condition
hereof waived, only by a written instrument specifying the amendment,
modification or waiver and signed by the parties; and (d) shall be governed by
and construed in accordance with the laws of the State of Delaware, except for
any principles of conflict of laws that would otherwise require the application
of the law of another jurisdiction.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
INTERIM SERVICES INC. INTERIM HEALTHCARE INC.
By: By:
------------------------- --------------------------
Roy G. Krause James H. Booth
Executive Vice President President
3
<PAGE>
INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
The following pro forma condensed consolidated statements of earnings of
the Company for the six months ended June 27, 1997 and the year ended December
27, 1996 and the pro forma condensed consolidated balance sheet of the Company
as of June 27, 1997 are based on historical financial statements of the Company
and have been adjusted to reflect the acquisition of Michael Page and other
acquisitions, and the sale of the Company's Healthcare Business.
On September 26, 1997, Interim completed the sale of substantially all of
its healthcare business. The consummation of the sale of IHNY has been
postponed but is reflected in the following pro forma financial information as
being sold with a promissory note receivable from Interim Healthcare Inc., a
wholly-owned subsidiary of Catamaran Acquisition Corp (Refer to ITEM 2.).
The pro forma condensed consolidated statements of earnings for the periods
ended June 27, 1997 and December 27, 1996 give effect to each of these
transactions as if such transactions had been completed as of December 28, 1996
and December 30, 1995. The pro forma condensed consolidated balance sheet as
of June 27, 1997 gives effect to the sale of the Company's Healthcare Business
as if it had been sold on June 27, 1997.
The pro forma condensed consolidated financial information does not purport
to represent the actual financial position or results of operations of the
Company had the transactions assumed therein in fact occurred on the dates
specified, nor are they necessarily indicative of the results of operations that
may be achieved in the future. The pro forma condensed consolidated financial
information is based on certain assumptions and adjustments described in the
notes hereto and should be read in conjunction therewith.
1
<PAGE>
INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
FOR THE SIX MONTHS ENDED JUNE 27, 1997
---------------------------------------------------------------------------------------------------------
ACQUISITIONS
-------------------------------------------- PRO FORMA PRO FORMA EFFECT
HISTORICAL MICHAEL OTHER PRO FORMA AFTER OF HEALTHCARE
INTERIM PAGE a) ACQUISITIONS a) ADJUSTMENTS ACQUISITIONS BUSINESS DIVESTMENT PRO FORMA
---------- ----------- --------------- ----------- ------------ ------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues from services $ 739,618 $ 76,253 $ 20,514 $ (107) b) $ 836,278 $ (125,842) h) $ 710,436
Cost of services 500,220 38,213 11,712 (107) b) 550,038 (74,868) h) 475,170
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Gross Profit 239,398 38,040 8,802 - 286,240 (50,974) 235,266
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Selling, general and
administrative
expenses 172,062 25,073 5,856 84 c) 203,075 (40,324) h) 162,751
Licensee commissions 20,462 - - (84) c) 20,378 (423) h) 19,955
Amortization of
intangibles 7,365 - - 3,757 d) 11,122 (1,195) h) 9,927
Interest expense 6,460 (964) - 13,182 e) 18,678 (3,462) i) 15,216
Merger expense - 5,064 - (5,064) f) - - -
---------- ----------- --------------- ----------- ------------ ------------------- ----------
206,349 29,173 5,856 11,875 253,253 (45,404) 207,849
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Earnings before taxes 33,049 8,867 2,946 (11,875) 32,987 (5,570) 27,417
Income taxes 14,602 4,593 - (3,197) g) 15,998 (2,860) j) 13,138
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Net earnings $ 18,447 $ 4,274 $ 2,946 $(8,678) $ 16,989 $ (2,710) $ 14,279
---------- ----------- --------------- ----------- ------------ ------------------- ----------
---------- ----------- --------------- ----------- ------------ ------------------- ----------
Net earnings per common
and common equivalant
shares $ 0.46 $ 0.36
---------- ----------
Weighted average shares
outstanding 39,880 39,880
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION.
2
<PAGE>
INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 27, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO FORMA EFFECT
HISTORICAL OF HEALTHCARE PRO FORMA
INTERIM BUSINESS DIVESTMENT AS ADJUSTED
----------- ------------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 25,548 $ 118,590 k)
(1,770) k)
(100,000) l) $ 42,368
Receivables 268,753 (47,769) k)
15,410 k) 236,394
Insurance deposits 21,449 - 21,449
Other current assets 40,789 (1,707) k)
4,000 k) 43,082
----------- ------------------- -----------
TOTAL CURRENT ASSETS 356,539 (13,246) 343,293
INTANGIBLE ASSETS, NET 731,668 (40,337) k) 691,331
PROPERTY AND EQUIPMENT, NET 71,413 (9,116) k) 62,297
OTHER ASSETS 36,436 (17,242) k) 19,194
----------- ------------------- -----------
$ 1,196,056 $ (79,941) $ 1,116,115
----------- ------------------- -----------
----------- ------------------- -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Notes payable to banks
and other $ 31,900 $ (5,700) l) $ 26,200
Accounts payable and other
accrued expenses 78,057 (5,159) k)
17,000 k) 89,898
Accrued salaries, wages,
and payroll taxes 73,403 (7,782) k) 65,621
Accrued Insurance 23,980 - 23,980
Accrued income taxes 19,534 12,000 k) 31,534
----------- ------------------- -----------
TOTAL CURRENT LIABILITIES 226,874 10,359 237,233
LONG-TERM DEBT 524,458 (94,300) l) 430,158
DEFERRED TAX LIABILITY 4,155 - 4,155
STOCKHOLDERS' EQUITY:
Common stock 392 - 392
Additional paid-in capital 253,174 - 253,174
Treasury stock (460) (460)
Retained earnings 182,397 4,000 k) 186,397
Cumulative translation
adjustment 5,066 5,066
----------- ------------------- -----------
TOTAL STOCKHOLDERS' EQUITY 440,569 4,000 444,569
----------- ------------------- -----------
$ 1,196,056 $ (79,941) $ 1,116,115
----------- ------------------- -----------
----------- ------------------- -----------
SEE NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION.
3
<PAGE>
INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
FOR THE TWELVE MONTHS ENDED DECEMBER 27,1996
---------------------------------------------------------------------------------------------------------
ACQUISITIONS
-------------------------------------------- PRO FORMA PRO FORMA EFFECT
HISTORICAL MICHAEL OTHER PRO FORMA AFTER OF HEALTHCARE
INTERIM PAGE a) ACQUISITIONS a) ADJUSTMENTS ACQUISITIONS BUSINESS DIVESTMENT PRO FORMA
----------- ----------- --------------- ----------- ------------ ------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues from services $ 1,147,151 $ 221,745 $ 64,922 $ (1,002) b) $ 1,432,816 $ (231,268) h) $1,201,548
Cost of services 795,789 153,162 21,984 (1,002) b) 969,933 (136,862) h) 833,071
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Gross Profit 351,362 68,583 42,938 - 462,883 (94,406) 368,477
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Selling, general and
administrative
expenses 243,652 23,565 39,519 (553) m) 306,183 (72,029) h) 234,154
Licensee commissions 39,500 - - (870) c) 38,630 (990) h) 37,640
Amortization of
intangibles 8,802 - 135 13,865 d) 22,802 (2,288) h) 20,514
Interest expense, net 5,696 (2,469) 220 41,121 e) 44,568 (7,757) i) 36,811
Merger expense 8,600 - - 8,600 - 8,600
----------- ----------- --------------- ----------- ------------ ------------------- ----------
306,250 21,096 39,874 53,563 420,783 (83,064) 337,719
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Earnings before taxes 45,112 47,487 3,064 (53,563) 42,100 (11,342) 30,758
Income taxes 22,097 16,630 - (13,758) g) 24,969 (5,711) j) 19,258
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Net earnings $ 23,015 $ 30,857 $ 3,064 $ (39,805) $ 17,131 $ (5,631) $ 11,500
----------- ----------- --------------- ----------- ------------ ------------------- ----------
----------- ----------- --------------- ----------- ------------ ------------------- ----------
Net earnings per common
and common equivalant
shares $ 0.69 $ 0.34
----------- ----------
Weighted average shares
outstanding 33,418 33,418
----------- ----------
----------- ----------
</TABLE>
SEE NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION.
4
<PAGE>
INTERIM SERVICES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
a) Reflects the historical financial statements of the acquired companies.
Michael Page's financial statements have been adjusted for differences
between U.S. and U.K. Generally Accepted Accounting Principles. Michael
Page's statement of income has been translated into U.S. dollars using
average exchange rates for the period.
b) To eliminate royalties as a result of the repurchase of an Interim
franchise.
c) To eliminate licensee commissions as a result of the repurchase of several
Interim license operations.
d) To reflect amortization of goodwill and other intangibles generated by the
acquisitions on a straight-line basis over a weighted average life of 40
years.
e) To reflect the pro forma effect of interest on the additional borrowings
used to fund the acquisitions. Interest on the credit facilities is
computed at LIBOR plus 95 basis points. The acquisitions were funded by
borrowings of approximately $580 million under a $675 million syndicated
credit facility entered into as of May 1, 1997. This credit facility
consists of a revolving loan facility of $400 million (terminating in 2003)
and a term loan of $275 million (due through 2002). Interest rates on
amounts outstanding under the facility are based on LIBOR plus a variable
margin.
f) To eliminate one-time costs incurred by Michael Page related to it being
acquired by the Company.
g) To reflect the aggregate tax benefit associated with the pro forma
adjustments to the statement of earnings.
h) To eliminate the results of operations of the healthcare business. A
portion of the eliminated selling, general and administrative costs
reflect corporate expenses that have been transferred to the healthcare
business or that will be eliminated. These corporate expenses reflect
management's best estimate of the costs no longer expected to be incurred
by Interim subsequent to the disposition of the healthcare business.
i) To reduce interest expense due to the reduction of debt from cash flows
generated from the sale.
j) To reflect the aggregate tax benefit of eliminating the healthcare business
and reducing borrowings.
5
<PAGE>
k) To reflect the stock sale of the company's healthcare business. The net
book value of this business as of June 30, 1997 is not expected to vary
materially with its book value as of the sale date. The sales price of $134
million was not adjusted for changes in the net book value.
The estimated pro forma increase to retained earnings of $4 million is
calculated as follows (in thousands):
Proceeds:
Cash $118,590
Subordinated note for IHNY 15,410
--------
134,000
Less:
Estimated book value of
business sold (including cash) 105,000
Transaction related costs 17,000
--------
12,000
Income Tax Benefit (Expense):
Current (12,000)
Deferred 4,000
--------
Estimated net increase to retained
earnings $4,000
--------
--------
Transaction related costs include investment banking expenses, legal and
audit fees, transaction related compensation costs and transaction related
cost indemnifications.
l) To reflect the usage of the net cash proceeds after taxes and certain
transaction related costs to reduce debt by approximately $100 million.
m) Represents the net adjustment (in thousands) to reflect: 1) a
reclassification of licensee commissions as a result of repurchase of
Interim licensees operations - $870; 2) the elimination of shareholder bonus
for payment of taxes of an S-corporation - $(800); and 3) the elimination of
legal fees related to a liability that was not assumed - $(623).
6
<PAGE>
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
Investor Contact: Roy Krause Press Contact: Liza Fiore
(954) 489-6225 (954) 938-7736
INTERIM COMPLETES DIVESTMENT OF ITS HEALTHCARE DIVISION
FT. LAUDERDALE, Fla., September 29, 1997 - Interim Services
Inc. (NYSE: IS) today announced it has completed the sale of its Interim
HealthCare business to Cornerstone Equity Investors, based in New York, for
$134 million. As previously announced, Interim Services Inc. will use net
proceeds to reduce debt.
Interim HealthCare is one of North America's largest providers
of home nursing and other specialized health care services.
Interim Services Inc. President and CEO Ray Marcy commented,
"It is clear that the divestment of our HealthCare Division is in the best
interest of our shareholders. With 100 percent concentration on our
commercial operations, we anticipate accelerated growth opportunities for
Interim moving forward. Furthermore, we believe shareholders will be
rewarded, as the investment community better understands our unique human
resource strategy and our leadership position in international professional
services.
"The future for Interim HealthCare, partnered with
Cornerstone, appears to be very positive, as well. In an industry of high
scrutiny, Interim HealthCare has a long history of financial viability and
high clinical and ethical standards, which we expect will continue to propel
it toward a leadership position," said Marcy.
Interim Services Inc., based in Ft. Lauderdale, Fla., is a
leading provider of human resource solutions. It had 1996 sales of $1.8
billion, and currently operates 700 offices throughout North America, Europe
and Asia. It provides staffing and consulting solutions in technology, legal,
accounting, human resources, search and outplacement; as well as clerical,
administrative and light industrial. Information on Interim Services Inc. is
available at website: http://www.interim.com.
<PAGE>
Interim - HealthCare Divestment
September 29, 1997
Page 2
This press release contains certain forward-looking statements
regarding the prospects of Interim and net income per share estimates which
involve risks and uncertainties. The company's actual results could differ
materially from the results anticipated in these forward-looking statements
as a result of certain factors set forth under the "Risk Factors" and
elsewhere in the company's Registration Statement on Form S-3 dated October 17,
1996, and as discussed in the company's reports on Forms 10-K, 10-Q and
8-K made under the Securities and Exchange Act of 1934. In addition, changes
in market, business or economic conditions, fluctuations in currency exchange
rates or significant acquisitions or other transactions could create material
differences in the results anticipated in these forward-looking statements.
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