Exhibit 2.2
STOCK PURCHASE AGREEMENT
by and between:
AVEANNA HEALTHCARE LLC
a Delaware limited liability company;
and
BARRY R. BERGER AND JILL TAFFY STEINFELD-BERGER,
TRUSTEES OF THE BARRY R. BERGER AND JILL TAFFY STEINFELD-BERGER
FAMILY TRUST DATED SEPTEMBER 19, 2006,
and
DUNN & BERGER, INC., DBA ACCREDITED NURSING SERVICES,
a California corporation
And
BARRY R. BERGER AND JILL TAFFY STEINFELD-BERGER
(solely for purposes of Sections 6.9 and 12.17)
Dated as of November 14, 2021
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of November 14, 2021, by and between (1) Aveanna Healthcare LLC, a Delaware limited liability company (the “Purchaser”), (2) Barry R. Berger and Jill Taffy Steinfeld-Berger, Trustees of The Barry R. Berger and Jill Taffy Steinfeld-Berger Family Trust dated September 19, 2006 (the “Seller”), and (3) Dunn & Berger, Inc. dba Accredited Nursing Services, a California corporation (the “Company”), and (4) Barry R. Berger (“B Berger”) and Jill Taffy Steinfeld-Berger (“T Steinberg-Berger”), residents of the State of California, solely for purposes of Section 6.9 and Section 12.17. The Purchaser, the Seller and the Company are hereinafter sometimes referred to as a “party” and collectively as the “parties”).
W I T N E S S E T H:
WHEREAS, Seller is owner, beneficially and of record, of all of the issued and outstanding shares (the “Shares”) of capital stock of the Company;
WHEREAS, the Company holds all issued and outstanding shares of capital stock in the four subsidiaries identified in Section 4.4 (the “Subsidiaries”), which Subsidiaries are engaged in the Business;
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, all the Shares for the consideration and on the terms set forth in this Agreement; and
WHEREAS, B Berger and T Steinfeld-Berger are beneficiaries of Seller and will benefit from the consummation of the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:
DEFINITIONS
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
“Anti-Kickback Statute” means the Medicare and Medicaid Patient and Program Protection Act of 1987 (42 U.S.C. § 1320a-7b) as amended, and its implementing regulations, collectively with any amendments or successor law(s) or regulations, and includes any applicable state Law concerning the same or similar subject matter.
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“Applicable Look-Back Date” means the date that is the five (5) years prior to the date of this Agreement for those representations and warranties in Section 4.11, Section 4.12 and Section 4.18, and three (3) years prior to the date of this Agreement for all other representations and warranties.
“Approval” means all notices, reports, filings, approvals, orders, authorizations, consents, licenses, Permits, qualifications or registrations or waivers of any of the foregoing, required to be obtained from or made with, or any notice, statement or other communications required to be filed with or delivered to, any Governmental Body or any other Person.
“Average EOR Hours” means the average of the Employer of Record hours of the Company and its Subsidiaries for September, October and November of 2021, calculated by averaging the actual non-agency Employer of Record hours billed up through the date that is ninety (90) days following the Closing relating to the services provided in the months of September, October and November 2021.
“Average EOR Hours Escrow Amount” means Forty-Five Million Dollars and No/100 ($45,000,000.00).
“Average EOR Hours Escrow Fund” means the balance of the Average EOR Hours Escrow Amount, and any interest earned thereon, held in an account by the Escrow Agent pursuant to the Escrow Agreement.
“Business” means, individually and collectively, the business of the Company and the Subsidiaries, as currently conducted, including the provision of (i) private duty nursing homecare services (skilled and non-skilled) and related homecare and home health services, (ii) employer of record services, (iii) respite services, and (iv) financial management services related to Medi-Cal and employer of record services.
“Business Day” means any day of the year on which national banking institutions in California are open to the public for conducting business and are not required or authorized to close.
“Business Employees” shall have the meaning assigned to it in Section 4.11(a).
“Business Participation” means with respect to participation in or conduct on behalf of the Business, Company, or any Subsidiary.
“Business Services” means all services to patients and clients provided by the Business.
“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act of 2020, or Pub.L.116-136 and applicable rules and regulations, as amended from time to time.
“CARES Act Provider Relief Fund” means the funds distributed to Medicare providers by the U.S. Department of Health and Human Services pursuant to the Public Health and Social Services Emergency Fund in the CARES Act and subsequent amendments.
“Cash” means cash and cash equivalents (as determined in accordance with GAAP) of the Company and its Subsidiaries excluding (i) amounts held in escrow or as security, or deposits with third parties (including landlords), or if usage of or access to such cash or cash equivalents is restricted by Law, Contract or otherwise and (ii) all uncleared checks, checks-in-transit, wire transfer, and drafts written by the Company or any Subsidiary but not yet cleared.
“Code” means the Internal Revenue Code of 1986, as amended.
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“Company Benefit Plan” means all “employee benefit plans”, as defined in Section 3(3) of ERISA, and all other employee benefit plans, programs, agreements, arrangements or payroll practices, including, without limitation, bonus plans, employment consulting or other compensation agreements, incentive, equity or equity-based compensation, or deferred compensation arrangements, stock purchase, severance pay, sick leave, vacation pay, salary continuation, disability, hospitalization, medical insurance, life insurance, scholarship programs, in each case, sponsored, maintained, or contributed to by the Company, its Subsidiaries and/or its ERISA Affiliates, or under which the Company, its Subsidiaries and/or its ERISA Affiliates could have any obligation or liability.
“Company Personnel” means, individually and collectively, all Persons who are the directors, officers, managers, employees, contractors, and agents of each of the Company or any of its Subsidiaries, as applicable.
“Confidential Information” means information that is not available in the public domain, including books and records, with respect to the Business, including, methods of operation, lists of patients/clients/customers, patient/client/customer records, products, prices, fees, costs, finances, Technology, inventions, Trade Secrets, know-how, software, marketing methods, plans, personnel, suppliers, competitors, markets or other specialized information and proprietary information of the Company and any Subsidiary.
“Contract” means any contract, agreement, indenture, note, bond, loan, warrant, instrument, lease, license, security agreement, sales and purchase orders, commitment or other arrangement or agreement, whether written or oral, including any amendments, modifications, or supplements thereto.
“COVID-19” means the coronavirus SARS-CoV-2 and coronavirus disease commonly referred to as COVID-19.
“COVID Relief Benefit” means any subsidy, grant, participation, note, bond, debenture or other debt security, or any rebate, deferral or abatement of Taxes, issued or granted by any Governmental Body to the Company or its Subsidiaries pursuant to any economic relief program or Law enacted as a result of the COVID-19 pandemic, including the Paycheck Protection Program administered by the U.S. Small Business Administration, the Coronavirus Aid, Relief, and Economic Security Act and the Accelerated & Advanced Payment Program, the Main Street Lending Program, or any other similar federal, state or local Government Reimbursement Program.
“Disclosure Schedule” shall have the meaning assigned to it in Article IV.
“Environmental Law” means any foreign, federal, state or local statute, regulation, ordinance, rule of common law or other legal requirement, as now or hereafter in effect, in any way relating to the protection of human health and safety, the environment or natural resources including, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as each has been or may be amended and the regulations promulgated pursuant thereto.
“ERISA” means the Employment Retirement Income Security Act of 1974, as amended.
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“ERISA Affiliate” means any trade or business (whether or not incorporated) which are or have ever been under common control, or which are or have ever been treated as a single employer, with the Company and/or any Subsidiary under Section 414(b), (c), (m) or (o) of the Code and/or Section 4001(b)(1) of ERISA.
“Escrow Account” means the escrow account(s) set up pursuant to the Escrow Agreement.
“Escrow Agreement” means the Escrow Agreement between Purchaser, Seller and PNC Bank as escrow agent (the “Escrow Agent”), substantially in the form of Exhibit B hereto.
“Escrow Amount” means (a) the Indemnification Escrow Amount, plus (b) the Net Working Capital Holdback, plus (c) the Average EOR Hours Escrow Amount.
“Excluded Status” means (i) excluded, suspended or debarred from (or deemed ineligible for participation under) any Government Reimbursement Program or from other programs funded in whole or in part by any Governmental Body, including the Department of Health and Human Services, Office of Inspector General “List of Excluded Individuals/Entities,” or similar lists maintained by state or local Governmental Body, including any state Medicaid program exclusion list.
“Estimated Purchase Price” shall have the meaning assigned to it in Section 3.5.
“FTC” means the United States Federal Trade Commission.
“GAAP” means generally accepted accounting principles in the United States as of the date hereof as applied by the Company and its Subsidiaries, consistently applied.
“Governmental Body” means any government or governmental or statutory or regulatory body thereof, or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority or agent or representative thereof, or any court or arbitrator (public or private).
“Government Reimbursement Program” or “Government Reimbursement Programs” means the Medicare program, TriCare/CHAMPUS, any state Medicaid program, any other federal healthcare program (as defined in 42 U.S.C. §1320a-7b(F)), and other similar federal, state and local programs for which a Governmental Body pays in whole or in part, directly or indirectly, for the provision of services or goods, including Business Services, to beneficiaries of the applicable program, and includes the California state Medi-Cal program, the California Department of Developmental Services/Regional Center program, and any other governmental program responsible for payment or reimbursement for medical and home aid or home health services.
“Hazardous Material” means any substance, material or waste that is regulated, classified, or otherwise characterized under or pursuant to any Environmental Law as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words of similar meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold, and urea formaldehyde insulation.
“Health Care Laws” means any and all Laws uniquely pertaining to the business, including the Business, of providing and payment for health care services and/or items, including such Laws related to or constituting (i) the relationships among providers, payors, vendors, and consumers in the health care industry; (ii) the delivery, purchase, sale or support of health care services and/or items; (iii) the licensure, certification, registration, qualification, or authority to provide health care services and/or items (including home health, hospice, and medical housecalls); (iv) fraud and abuse (including the following statutes, as amended, modified or supplemented from time to time and any successor statutes thereto and regulations
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promulgated from time to time thereunder: the Anti-Kickback Statute, the Stark Law, the Federal False Claims Act (31 U.S.C. §§ 3729 et seq.), the Federal Civil Monetary Penalties Law (42 U.S.C. § 1320a -7a), the Health Care Fraud Statute (18 U.S.C. § 1347), the Federal Program Fraud Civil Remedies Act (31 U.S.C. § 3801 et seq. and similar state Laws); (v) participation in Government Reimbursement Programs and Private Programs; (vi) quality, safety certification, and accreditation standards and requirements; (vii) the billing, coding or submission of claims or collection of accounts receivable or refund of overpayments; (viii) HIPAA and all other Laws relating to the privacy and security of health information.
“Health Care Practitioner” means each of the Company Personnel who is health care physician, nurse, physician assistant, medical technician, physical/occupational/speech therapists or other clinical or health care provider.
“HIPAA” means, collectively, (i) the Health Insurance Portability and Accountability Act of 1996, and its implementing regulations, including the HIPAA Privacy Rule and the HIPAA Security Rule, and (ii) applicable provisions of the Health Information Technology for Economic and Clinical Health Act as incorporated in the American Recovery and Reinvestment Act of 2009 and any implementing regulations, as the foregoing (i) and (ii) may, from time -to- time, be amended.
“HIPAA Privacy Rule” means the Standards for Privacy of Individually Identifiable Health Information at 45 C.F.R., Parts 160 and 164, subparts A, D and E, and all related regulations.
“HIPAA Security Rule” means the HIPAA Security Standards (45 C.F.R. Parts 160, and 164, subparts A and C), and all related regulations.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“HSR Clearance” shall have the meaning assigned to it in Section 6.8.
“Indebtedness” of any Person means, without duplication, (i) the principal of and premium (if any) in respect of (A) indebtedness of such Person for money borrowed (including intercompany and related party (including shareholder) payables net of intercompany and related party receivables) and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property or services (including earn-out payments and obligations that are non-recourse to the credit of such Person but are secured by the assets of such Person, but excluding trade accounts payable included in the calculation of Net Working Capital), all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement; (iii) all obligations of such Person under leases required to be capitalized in accordance with GAAP; (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction; (v) the liquidation value of all redeemable preferred stock of such Person; (vi) all obligations of the type referred to in clauses (i) through (v) of any Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations; (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person); (viii) the aggregate amount of all Liabilities to any shareholder of the Company or any Affiliate of the Company (whether or not due and owing); (ix) any Liability of the Company or any Subsidiary in respect of amounts due under any incentive plan (for stock appreciation rights) or any severance plan or arrangement (including, without limitation, any accrued and unpaid severance obligations related to acquisitions) accrued and unpaid prior to the Closing Date; (x) any forgiveness of any Liability that remains subject to any condition or obligation, including any Tax increment financing, economic incentive or
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similar item; (xi) accrued and unpaid obligations under any deferred compensation or employee bonus plan or arrangement or any pre-Closing vacation or paid time off (“PTO”) balances; (xii) credit balances, arising out of overpayments to the Company or any Subsidiary, due to patients or to payors under any Government Reimbursement Programs; (xiii) obligations of such Person under any interest rate, currency swap or other hedging arrangement; (xiv) liabilities for accrued and unpaid pre-Closing Taxes (excluding (A) any liabilities or reserves in respect of any deferred Taxes attributable to timing differences, and (B) any liabilities or reserves for contingent or uncertain Taxes, (xv) any accrued interest, premiums, fees, expenses, penalties or guarantees for the benefit of another Person on any of the foregoing; (xvi) all other liabilities classified as non-current liabilities in accordance with GAAP; (xvii) accrued workers compensation balances; (xviii) the amount of any Medicare Advanced Payments under Medicare that are required to be repaid or recouped after Closing; and (xix) any and all payroll Taxes deferred pursuant to the CARES Act PPP, the Families First Coronavirus Response Act or federal executive order. To the extent any of the foregoing are considered a Transaction Cost they shall not also be deemed Indebtedness (and vice versa).
“Indemnification Escrow Amount” shall have the meaning assigned to it in Section 3.3.
“Indemnification Escrow Fund” means the balance of the Indemnification Escrow Amount, and any interest earned thereon, held in an account by the Escrow Agent pursuant to the Escrow Agreement.
“Indemnified Taxes” means any (a) Taxes of or with respect to the Company or its Subsidiaries or their assets or operations for any Pre-Closing Tax Period (including the amount of Taxes relating to the portion of any Straddle Period ending on the Closing Date pursuant to Section 11.4); (b) Transfer Taxes for which Seller is responsible pursuant to Section 11.3; (c) Taxes for which Seller is responsible pursuant to Section 11.1; (d) Taxes imposed on Seller and any owner or Affiliate of Seller for any Taxable period (including for this purpose any withholding Taxes imposed on Purchaser or any of its Affiliates with respect to any payment to Seller); (e) the amount of payroll Tax liabilities deferred until after the Closing (including the employer portion of social security tax deferred under Section 2302 of the CARES Act with respect to any Pre-Closing Tax Period), (f) Taxes of any other Person for which the Company or its Subsidiaries is liable, including as a transferee, successor, withholding or collection agent, by contract, by reason under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign Law) or being a member of any consolidated, affiliated, unitary or other combined group, or pursuant to any Law and (g) Taxes related to a breach of any representation made in Section 4.10.
“Independent Auditor” shall mean such independent accounting firm of national reputation as may be mutually acceptable to the Seller and Purchaser.
“Intellectual Property Licenses” means (i) any grant to a third Person of any right to use any of the Purchased Intellectual Property, and (ii) any grant to the Company and Subsidiaries of a right to use a third Person’s intellectual property rights used in the Business or which is necessary for the use of any Purchased Intellectual Property.
“Inventory” means all merchandise and inventory owned and intended for resale in connection with the Business, all manufactured and purchased parts, goods in process, raw materials, supply and packing materials and finished goods and other tangible personal property that is used in connection with the Business, wherever located, in each case as of the Closing Date.
“IRS” means the Internal Revenue Service.
“Knowledge” means (i) with respect to the Seller, the knowledge after due inquiry of B Berger” and T Steinfeld-Berger, and (ii) with respect to the Company, the knowledge after due inquiry of
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B Berger, T Steinfeld-Berger, Neil Rotter (Chief Strategy Officer of the Company), and Millette Arredondo (Chief Operating Officer of the Company).
“Law” or “Laws” means any federal, state or local (including common law), statute, code, ordinance, rule, regulation or other requirement, policy guideline, directive or Permit enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body.
“Legal Proceeding” means any and all judicial, administrative or arbitral actions, litigation, suits, charges, audits, examinations, investigations, orders, motions, complaints, demands, inquiries, surveys, arbitrations, mediations, claims or proceedings by or before any Person (in each case, whether civil, criminal, administrative, judicial or investigative, whether formal or informal, and whether public or private, whether by or for a Governmental Body or any other Person).
“Liability” means any debt, loss, damage, adverse claim, fines, penalties, liability or obligation (whether direct or indirect, known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, and whether in contract, tort, strict liability or otherwise), and including all costs and expenses relating thereto (including reasonable legal fees and disbursements and costs to the extent actually incurred by a party to this Agreement whether or not involving a third-party claim).
“Lien” means any lien, pledge, mortgage, deed of trust, security interest, mortgage, equitable interest, community property interest, claim, lease, charge, option, right of first refusal or other preferential purchase right, condemnation award, easement, encroachment, right of way, servitude, proxy, voting trust or agreement, transfer restriction under any shareholder or similar agreement, encumbrance or any other restriction or limitation whatsoever.
“Losses” means any and all debts, losses, liabilities, obligations, damages, Taxes, costs, fines, penalties, interest and expenses, including all reasonable attorneys’, accountants’ and experts’ fees, disbursements and costs of investigations, deficiencies, levies, duties and imposts actually suffered or incurred by a Person whether or not involving a third-party claim.
“Material Adverse Effect” means any change, event, development or circumstance that is or would reasonably be expected to have, individually or in the aggregate (i) a material adverse effect on the historical, near-term or long-term projected business, assets, properties, results of operations, condition (financial or otherwise) or prospects of the Company and the Subsidiaries, or of the Business, or (ii) a material adverse effect on the ability of Seller or the Company to consummate the transactions contemplated by this Agreement or perform its obligations under this Agreement or any applicable Transaction Documents in accordance with their respective terms and applicable Law.
“Medicaid” means Title XIX of the Social Security Act, codified at 42 U.S.C. 1396 et seq.
“Medicare” means Title XVIII of the Social Security Act, codified at 42 U.S.C. 1396 et seq.
“National Provider Identifier” means a unique, 10-position numeric health identifier issued to a covered health care provider, as that term is defined at 45 C.F.R. § 162.406, by the National Provider System, as that term is used in 45 C.F.R. § 162.408.
“Net Working Capital” means, as of any certain date, (x) current assets (excluding Cash) less (y) current liabilities (other than Indebtedness) as of such date of the Company and the Subsidiaries, on a consolidated basis, calculated in accordance with the Seller’s Reference Statement.
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“Net Working Capital Holdback” shall have the meaning assigned to it in Section 3.3.
“Non-Competition Agreement” shall mean the non-competition agreement substantially in the form of Exhibit A attached hereto, to be executed by Seller, B Berger and T Steinfeld-Berger.
“Order” means any order, injunction, consent, subpoena, verdict, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Body or entered into with any Governmental Body.
“Ordinary Course of Business” means the ordinary and usual course of day-to-day operations of the Business through the date hereof consistent with past practice.
“Permit” or “Permits” means any approvals, authorizations, consents, licenses, permits or certificates issued by any Person, including any permit, license, identifier number, approval, certificate, certificate of need, registration, notification, exemption, accreditation, and other authorization available from or required by or from any Governmental Body under Law or any accreditation body, and all amendments and modifications of any of the foregoing and all pending initial and renewal applications therefor.
“Permitted Exceptions” means (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in policies of title insurance which have been made available to the Purchaser; (ii) statutory liens for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings, provided an appropriate reserve is established therefor on the Financial Statements; (iii) mechanics’, carriers’, workers’, repairers’ and similar Liens that are not material to the Business so encumbered and that are not resulting from a breach, default or violation by the Company and its Subsidiaries of any Contract or any Law; (iv) zoning, entitlement and other land use and environmental regulations by any Governmental Body, provided that such regulations have not been violated; and (v) such other imperfections in title, charges, easements, restrictions and encumbrances which do not materially detract from the value of or materially interfere with the present use or occupancy of any properties currently used or proposed to be used in connection with the Business.
“Person” means (i) any individual, and (ii) limited liability company, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.
“Personal Property Leases” shall have the meaning assigned to it in Section 4.14.
“PPP Loan” means any loan received by the Company or any Subsidiary pursuant to the Paycheck Protection Program under the Small Business Administration 7(a) Loan Program, as implemented by the CARES Act, including any interest, penalties or other amounts with respect thereto.
“Pre-Closing Tax Period” means any taxable period (or portion thereof) that ends on or before the Closing Date, including the portion of any Straddle Period ending on the Closing Date.
“PRF Payments” has the meaning assigned to it in Section 4.26(d).
“Private Program” means contractual arrangements with private third-party payors or self-payors that are not a Governmental Body such as managed care companies, managed care organizations, insurance companies, provider networks, health maintenance organizations, third-party payor reimbursement and insurance programs, and employer of record programs, and includes such third-party payors that contract with any Governmental Body to administer or pay reimbursement to providers or
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beneficiaries funded in whole or in part by a Government Reimbursement Program such as Medicare Advantage plans and state Medicaid managed care plans.
“Purchased Intellectual Property” means all intellectual property rights used by the Company and its Subsidiaries in connection with the Business arising from or in respect of the following, whether protected, created or arising under the laws of the United States or any other jurisdiction: (i) all patents and applications therefor, including continuations, divisionals, continuations-in-part, or reissues of patent applications and patents issuing thereon (collectively, “Patents”), (ii) all trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, corporate names and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof, (collectively, “Marks”), (iii) copyrights and registrations and applications therefor, works of authorship and mask work rights (collectively, “Copyrights”), (iv) discoveries, concepts, ideas, research and development, know-how, formulae, inventions, compositions, manufacturing and production processes and techniques, technical data, procedures, designs, drawings, specifications, databases, and other proprietary and confidential information, including customer lists, supplier lists, pricing and cost information, and business and marketing plans and proposals of the Company and its Subsidiaries, in each case excluding any rights in respect of any of the foregoing that comprise or are protected by Copyrights or Patents (collectively, “Trade Secrets”); (v) all Internet domain names (collectively, “Domain Names”); and (vi) all software and Technology of the Company and its Subsidiaries used in connection with the Business.
“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, or leaching into the indoor or outdoor environment, or into or out of any property.
“Remedial Action” means all actions to (i) clean up, remove, treat or in any other way address any Hazardous Material; (ii) prevent the Release of any Hazardous Material so it does not endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care; or (iv) to correct a condition of noncompliance with Environmental Laws.
“Stark Law” means the Federal Physician Self-Referral Law, Section 1877 of the Social Security Act (42 U.S.C. § 1395nn), and its implementing regulations, as amended, collectively with any successor law or regulations.
“Straddle Period” means any taxable period that includes, but does not end on, the Closing Date.
“Subsidiary” means any Person of which a majority of the outstanding voting securities or other voting equity interests are owned or controlled, directly or indirectly, by the Company or any direct or indirect Subsidiary, or of which the Company or any Subsidiary has the power, directly or indirectly, whether through ownership of equity securities, by contract or otherwise, to direct or manage its business or affairs. A list of the Subsidiaries is set forth in Section 4.4 of the Disclosure Schedule.
“Tail Policy” or “Tail Policies” shall be each of (a) the three-year professional liability insurance “tail” coverage, (b) three-year EPL insurance “tail” coverage and (c) the three-year directors’ and officers’ liability insurance “tail” coverage.
“Target Amount” in relation to Net Working Capital, means Eleven Million Three Hundred Seventy-Two Thousand Dollars ($11,372,000.00)
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“Taxes” means (i) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, environmental, escheat, unclaimed property, occupation, property and estimated taxes, customs duties, fees, assessments and any other taxes or charges of any kind whatsoever imposed by any Taxing Authority or other Governmental Body, (ii) all interest, penalties, fines, additions to tax or additional amounts paid or payable in connection with any item described in clause (i) above, and (iii) any liability in respect of any items described in clauses (i) and/or (ii) of any other Person payable by reason of contract, assumption, transferee liability, operation of Law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof of any analogous or similar provision under Law) or otherwise.
“Taxing Authority” means the IRS and any other Governmental Body responsible for the administration of any Tax.
“Tax Return” means any return, report or statement required to be filed with respect to any Tax (including any attachments thereto, and any amendment thereof) including any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities that includes the Company or any of its Subsidiaries.
“Technology” means, collectively, all designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development, technical data, programs, subroutines, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, improvements, works of authorship and other similar materials, and all recordings, graphs, drawings, reports, analyses, and other writings, and other tangible embodiments of the foregoing, in any form whether or not specifically listed herein, and all related technology, that are used in, incorporated in, embodied in, displayed by or relate to, or are used by the Company or any Subsidiary.
“Total Purchase Price” means the Base Purchase Price (as defined in Section 3.1), plus the amount, if any, received by Seller in accordance with Section 3.4(c).
“Transaction Costs” means, with respect to the Seller (a) the aggregate amount of all fees, costs and expenses incurred or payable by the Seller or the Company and its Subsidiaries to service providers (including any brokers or investment advisory firms) or otherwise in connection with the transactions contemplated by this Agreement that, as of the Closing Date, remain unpaid; (b) any sale, transaction, change of control, stay, retention or similar bonuses or any success fees, severance or other payments payable to employees, contractors, consultants, officers or members of the board of directors of the Company or any Subsidiaries as a result of the consummation of the transactions contemplated hereby, including such bonuses set forth on Section 4.9(b)(iii) of the Disclosure Schedule to the extent not paid prior to Closing, and the aggregate amount of the employer portion of any payroll or other employment Taxes related thereto; (c) any fees or expenses associated with obtaining the release and termination of any Liens (to the extent not included in the calculation of Indebtedness); (d) 100% of the premium(s) payable for the Tail Policies; and (e) fifty percent (50%) of all fees, costs and expenses of the Escrow Agent.
“Transaction Documents” means (i) the Seller Documents, (ii) the Purchaser Documents, (iii) the Non-Competition Agreement and (iv) all other agreements, conveyances, documents, instruments and certificates delivered at or prior to the Closing pursuant to this Agreement.
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“TriCare/CHAMPUS” means the program addressed at 32 CFR 199.17 and in related regulations.
“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and similar state and local laws related to plant closings, relocations, mass layoffs and employment losses.
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(d) Any document or item will be deemed “delivered,” “provided,” or “made available” by a party to another party within the meaning of this Agreement if such document or item is included in the Company’s electronic data room and the other party and its authorized representatives had unrestricted access thereto prior to 5:00 p.m. Pacific Standard Time on the date that is at least two (2) days immediately prior to the date of this Agreement.
PURCHASE AND SALE OF SHARES
CONSIDERATION
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(i) If the Final Purchase Price is less than the Estimated Purchase Price, then, subject to the following sentence, the Seller shall, within five (5) Business Days of the date of final determination of the Final Purchase Price, pay to the Purchaser the amount equal to the absolute value of the difference between the Estimated Purchase Price and the Final Purchase Price (“Purchase Price Shortfall True-up Amount”). The Seller may elect to apply all or part the Net Working Capital Holdback towards satisfaction of the Purchase Price Shortfall True-up Amount, in which case, the parties shall provide written authorization to the Escrow Agent (i) to pay the Purchase Price Shortfall True-up Amount to Purchaser out of the Net Working Capital Holdback and, (ii) subject to satisfaction of the Purchase Price Shortfall True-up Amount, release the balance if any of the Net Working Capital Holdback to Seller, all as contemplated in Section 6(b)(ii) of the Escrow Agreement. If no Purchase Price Shortfall True-up Amount is due to Purchaser, the parties shall provide written authorization to the Escrow Agent to release the whole of Net Working Capital Holdback and any earnings thereon to Seller. In the event that the Purchase Price Shortfall True-up Amount is more than the Net Working Capital Holdback, Purchaser shall be entitled to recover the portion of the Purchase Price Shortfall True-up Amount exceeding the Net Working Capital Holdback from Seller.
(ii) Purchaser acknowledges that if the Final Purchase Price exceeds the Estimated Purchase Price, Seller shall be solely entitled to the excess amount (the “Purchase Price Surplus”). Purchaser shall pay the Purchase Price Surplus to Seller by wire transfer of immediately available funds, to an account or accounts designated by Seller, within five (5) Business Days of such determination. In addition, the parties shall provide written authorization to the Escrow Agent to release the whole of Net Working Capital Holdback and any earnings thereon to Seller.
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REPRESENTATIONS AND WARRANTIES OF THE SELLER and the Company
Except as specifically set forth in the disclosure schedule prepared by the Seller and the Company, dated as of the date hereof, and delivered to the Purchaser concurrently with the parties’ execution of this Agreement setting forth specific exceptions to the Seller’s and Company’s representations and warranties set forth in accordance with Article IV and covenants set forth in Articles VI and VII (collectively, the “Disclosure Schedule”), the Seller and the Company, jointly and severally, represent and warrant to the Purchaser as of the date hereof and through the Closing Date, as follows:
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(a) The Company and the Subsidiaries (i) have timely filed all Tax Returns required to be filed by or on behalf of the Company and its Subsidiaries and such Tax Returns have been duly, properly and timely filed in accordance with applicable Law with the appropriate Taxing Authority in all jurisdictions in which such Tax Returns are required to be filed (after giving effect to any valid extensions of time in which to make such filings), and all such Tax Returns are true, complete and correct in all material respects; and (ii) have fully and timely paid all Taxes payable by or on behalf of the Company and the Subsidiaries, whether or not such Taxes are reported or shown on any Tax Return. With respect to any period for which Tax Returns have not yet been filed or for which Taxes are not yet due or owing, the Company and its Subsidiaries have made due and sufficient accruals for such Taxes in the Financial Statements and its books and records. The aggregate unpaid Taxes of the Company and its Subsidiaries (i) did not, as of July 31, 2021, materially exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the balance sheet included as part of the Interim Financial Statements and (ii) do not materially exceed that reserve as adjusted for the passage of time through the Closing in accordance with the past custom and practice of the Company and its Subsidiaries in preparing financial statements and accruing for Tax liabilities. All required estimated Tax payments sufficient to avoid any underpayment penalties have been made by or on behalf of the Company and its Subsidiaries.
(b) The Company and its Subsidiaries have complied in all material respects with all applicable Laws relating to the collection, payment and remittance and withholding of Taxes, including without limitation with respect to withholding, payroll or other Taxes relating to payments to any equity owner, employee, creditor, vendor or other Person, and sales and other Taxes relating to amounts received from any customer or other Person and have duly and timely withheld, collected and paid over to the appropriate Taxing Authority all amounts required to be so withheld, collected and paid under in accordance with all applicable Laws. The Company and its Subsidiaries have complied in all material respects with all reporting and record keeping requirements related to the matters described in the preceding sentence, including filing of Forms W-2 and 1099s (or other applicable forms). No claim has been made by a Taxing Authority in a jurisdiction where the Company or any Subsidiary does not file Tax Returns such that it is or may be subject to taxation by that jurisdiction.
(c) All deficiencies asserted or assessments made as a result of any examinations by any Taxing Authority of the Tax Returns of, or including, the Company and its Subsidiaries have been fully paid, and there are no other audits or investigations relating to or affecting the Company or its Subsidiaries by any Taxing Authority in progress. The Company and its Subsidiaries have not received any notice from
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any Taxing Authority that it intends to conduct such an audit or investigation. No issue has been raised by a Taxing Authority in any prior examination of the Company or any of its Subsidiaries which, by application of the same or similar principles, could reasonably be expected to result in a proposed deficiency for any subsequent taxable period. The Company and its Subsidiaries have not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency that, in either case, remains in effect. No extensions of time for the filing of Tax Returns of the Company and its Subsidiaries are currently in effect other than extensions of time of not more than six months granted in accordance with applicable Laws which were obtained in the Ordinary Course of Business.
(d) Neither the Company nor any of its Subsidiaries is a party to any Tax sharing, allocation, indemnity, gross-up or other similar Tax agreement or arrangement (whether or not written) pursuant to which it will have any obligation to make any payments after the Closing. There are no Liens as a result of any unpaid Taxes upon any of the assets of the Company or its Subsidiaries.
(e) The Company and its Subsidiaries are not and shall not be required to include an item of income, or exclude an item of deduction for Tax purposes, for any period or portion of any period after the Closing Date as a result of (i) an installment sale transaction occurring on or before the Closing governed by Section 453 of the Code (or any similar provision of state, local or non-U.S. applicable Laws); (ii) a transaction occurring on or before the Closing reported as an open transaction for U.S. federal income Tax purposes (or any similar doctrine under state, local, or non-U.S. applicable Laws); (iii) any prepaid amounts, deposits or advance payments received on or prior to the Closing Date; (iv) a change in method of accounting requested or occurring on or prior to the Closing Date or the use of a cash or improper method of accounting on or prior to the Closing Date (including for the avoidance of doubt any adjustments under Section 481 of the Code relating to any of the foregoing); (v) an agreement entered into with any Governmental Body (including a “closing agreement” under Section 7121 of the Code) on or prior to the Closing Date; (vi) an income inclusion under Sections 951 or 951A of the Code or Subchapter K of the Code relating to income accruing prior to the Closing with respect to any interest held by the Company or any Subsidiary in a “controlled foreign corporation” (as defined in Section 957 of the Code) or entity classified as a partnership at or prior to the Closing; (vii) any deferred intercompany gain or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or non-U.S. law); or (viii) any election to defer income under the Code (or any corresponding or similar provision of applicable Law) made by the Company or its Subsidiaries on or prior to the Closing Date. The Company and its Subsidiaries are not and shall not be required to include any amount in income pursuant to Section 965 of the Code or pay any installment of the “net tax liability” or any other Tax pursuant to Section 965 of the Code. The Company and its Subsidiaries have not deferred until after the Closing the payment of any payroll Taxes the due date for the original payment of which was at or prior to the Closing.
(f) The Company and its Subsidiaries (i) have never been members of any group of Persons filing affiliated, consolidated, unitary or other combined Tax Returns, other than a group consisting only of the Company or its Subsidiaries, and (ii) do not have any liability for the Taxes of any other Persons under Treasury Regulations Section 1.1502-6 (or any similar provision of applicable Law) or by reason of being a member of any affiliated, consolidated, unitary or other combined group, as a transferee or successor, or by any contract, any applicable Law, or otherwise.
(g) None of the assets of the Company and its Subsidiaries are an interest in an entity or arrangement classified as a partnership, trust, pass-through entity or foreign corporation for U.S. federal, state, or local income Tax purposes.
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(h) The Company and its Subsidiaries have not participated in any “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code or Treasury Regulations Section 1.6011-4(b).
(i) None of the Company and its Subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction within the two-year period ending on the date of this Agreement that was purported to be governed in whole or in part by Section 355 of the Code.
(j) The Company is currently classified as a “C corporation” within the meaning of Code Section 1361(a)(2), and no election to change such classification has been made or is currently pending. The classification for federal Tax and state and local Tax purposes of each Subsidiary of the Company is as set forth in Section 4.4 of the Disclosure Schedule and no election to change any such classification has been made or is currently pending.
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REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller that:
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COVENANTS
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Each Releasing Person:
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POST-CLOSING COVENANTS
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CONDITIONS TO CLOSING
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(f) Non-Competition Agreements. The Purchaser shall have delivered to the Purchaser a counterpart of the non-competition agreement in the form of Exhibit A hereto duly executed by Seller, B Berger and T Steinfeld-Berger;
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TERMINATION
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SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
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Subject to the provisions of this Section 10.1, the parties acknowledge and agree that the Survival Periods set forth in this Section 10.1 and the limitation on the parties’ right to make claims for recovery of Losses in connection therewith are in lieu of all applicable statutes of limitations.
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TAX MATTERS
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MISCELLANEOUS
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If to the Purchaser, to:
Aveanna Healthcare LLC
400 Interstate North Parkway, SE
Suite 1600
Atlanta, Georgia 30339
Attention: Shannon Drake, General Counsel
Phone: (678) 385-4005
Facsimile: (678) 784-4705
E-mail: sdrake@Aveanna.com
with a copy (which shall not constitute notice) to:
Greenberg Traurig, LLP
3333 Piedmont Road NE
Suite 2500
Atlanta, GA 30305
Telephone: 678-553-2121
Facsimile: 678-553-2120
Attention: Gary E. Snyder
E-mail: SnyderG@GTLAW.com
If to the Seller:
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The Barry R. Berger and Jill Taffy Steinfeld-Berger Family Trust
dated September 19, 2006
638 Lindero Canyon Road, #387
Oak Park, CA 91377
Attention: Barry R. Berger, Trustee
brberger@sbcglobal.net
with a copy (which shall not constitute notice) to:
Yong Gruber Associates, LLP
8939 S. Sepulveda, Suite 514
Los Angeles, CA 90045
Attention: Jindy Gruber (jgruber@ygalaw.com )
Phone & Facsimile: (818) 539-7872
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(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed by its officers thereunto duly authorized, as of the date first written above.
PURCHASER:
AVEANNA HEALTHCARE LLC,
a Delaware limited liability company
By: __ /s/ Rodney Windley____________
Name: Rodney D. Windley
Its: Executive Chairman
COMPANY:
DUNN & BERGER, INC. dba
Accredited Nursing Services,
a California corporation
By: ____/s/ Barry Berger__________________
Name: Barry Berger
Its: President
SELLER:
THE BARRY R. BERGER AND JILL TAFFY STEINFELD-BERGER FAMILY TRUST DATED SEPTEMBER 19, 2006
By: __/s/ Barry Berger _____
Barry R. Berger, Trustee
By: __/s/ Taffy Steinfeld-Berger______________
Jill Taffy Steinfeld-Berger, Trustee
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SELLER GUARANTORS:
___/s/ Barry Berger ___
Barry R. Berger
__/s/ Taffy Steinfeld-Berger______________
Jill Taffy Steinfeld-Berger
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Exhibit A
Form of Non-Competition Agreement
(Seller, B Berger and T Steinfeld-Berger)
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Exhibit B
Form of Escrow Agreement
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Schedule 3.5(a)
Seller’s Reference Statement
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Disclosure Schedule
Section 4.3(b); Required Consent, Waiver, Order, Permit, Authorization
Section 4.4; Subsidiaries and Tax Classification
Section 4.6(a); Financial Statements
Section 4.6(b); Financial Statements
Section 4.6(e); Financial Statements
Section 4.6(f); Financial Statements
Section 4.7; Undisclosed Liabilities
Section 4.8; List of Personal Property Items Being Retained by Seller
Section 4.9(a), Section 4.9(b) and Section 4.9(iii); Developments since July 31, 2021
Section 4.11(a); List of Business Employees, Position, Hire Date, Compensation, Fringe Benefits
Section 4.11(k); Employment Actions
Section 4.12(a); Company Benefit Plans
Section 4.12(c); Company Benefit Plans Liabilities
Section 4.12(m); Company Benefit Plans Post-Closing Amendment and Actions
Section 4.13(a); List of Leased Real Properties
Section 4.14; List of Leased Personal Property
Section 4.15(a); List of Registered Intellectual Property
Section 4.15(b); Exceptions to Purchased Intellectual Property
Section 4.15(c); Intellectual Property Licenses
Section 4.16(a); Material Contracts
Section 4.16(c); Largest Payors
Section 4.17(a); Litigation Disclosure
Section 4.18(a); Compliance with Laws
Section 4.18(c); List of Permits held
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Section 4.18(d); Government Reimbursement Programs
Section 4.18(f); Bill and Collection Practices
Section 4.18(h); HIPAA
Section 4.18(k); Health Care Regulatory Approval
Section 4.21; Disclosure of Related Party Transactions
Section 4.23; List of Insurance Policies and Fidelity Bonds
Section 4.24; List of Banks and Locations; Authorized Signatories
Schedule 4.25; Power of Attorney
Section 4.26(a); Covid-19
Section 4.26(b); Covid-19
Section 4.26(c); Covid-19
Section 4.26(d); Covid-19
Section 4.26(f); Covid-19
Section 4.26(h); Covid-19
Section 6.2; Conduct of Business Pending Closing
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