AGREEMENT
AGREEMENT, dated as of October 20, 1996, by and between MEDPARTNERS, INC.,
a Delaware corporation ("MedPartners"), and INTEGRATED HEALTH SERVICES, INC., a
Delaware corporation ("IHS").
W I T N E S S E T H
WHEREAS, MedPartners recently acquired Caremark International, Inc., a
Delaware corporation ("CII"), in a manner pursuant to which CII became a wholly
owned subsidiary of MedPartners and CII and all of its subsidiaries continue as
a separate business organization, with MedPartners as the parent corporation;
WHEREAS, CII and Caremark, Inc., a California corporation and a wholly
owned subsidiary of CII ("Caremark"), are Defendants in the lawsuit styled Coram
Healthcare Corporation, et al. v. Caremark, Inc. and Caremark International
Inc., et al., filed in the Superior Court of California for the City and County
of San Francisco (Case No. 972431) and Plaintiffs in the lawsuit styled Caremark
Inc. and Caremark International Inc. x. Xxxxx Healthcare Corporation, filed in
the United States District Court for the Northern District of Illinois (Case No.
95C5878) (hereinafter referred to as the "Coram Litigation");
WHEREAS, IHS has entered into an agreement to acquire Coram Healthcare
Corporation, a Delaware corporation ("Coram"), the Defendant in the above
mentioned litigation filed in the United States District Court for the Northern
District of Illinois and both the Plaintiff and the parent corporation of the
other Plaintiffs in the above mentioned litigation filed in the Superior Court
of California; and
WHEREAS, MedPartners and IHS have agreed to settle the Coram Litigation on
the terms set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and promises hereinafter set forth, MedPartners and IHS hereby agree
as follows:
1. Coram Litigation.
(a) IHS hereby agrees that it will cause Coram, as a part of its
acquisition agreement with Coram, to join with CII and Caremark in motions to
stay all proceedings in the Coram Litigation until December 30, 1996.
Medpartners agrees that it will not move to change the scheduled trial date
until December 31, 1996. Medpartners shall cause CII and Caremark to join Coram
in the above motions. It is agreed by the parties that such motions shall be
made as soon as practicable after the announcement of IHS' agreement to acquire
coram.
(b) If IHS closes and consummates its acquisition of Coram, IHS, Coram, CII
and Caremark shall settle and terminate the Coram Litigation. The settlement of
the Coram Litigation shall include a complete release of all claims of the
parties against each other (including, without limitation, those claims
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arising under the Coram notes defined below) and any and all liabilities that
any of the parties in the Coram Litigation have with respect to each other and
shall provide for the issuance of the New Coram Note, as set forth in Section 2
of this Agreement and such other terms as IHS may determine necessary as a
result of its continuing due diligence investigation of Coram.
2. Coram Notes. As of September 30, 1996, there were outstanding the
following obligations of Coram payable to Caremark, both dated April 1, 1995:
7% Convertible Subordinated Notes due October 1, 2005
12% Non-Convertible Subordinated Notes due October 1, 2005
The above obligations, including all notes delivered in payment of interest
accrued on the above notes, are hereinafter called the "Coram Notes".
As part of the settlement of the Coram Litigation, the Coram Notes shall be
canceled as of consummation of the acquisition of Coram by IHS and in connection
therewith, Coram shall issue, in partial substitution therefor, its Promissory
Note in the principal amount of $52,687,000 plus an amount equal to the interest
accrued on all the Coram Notes from September 30, 1996 through the closing of
the acquisition of Coram by IHS (the "New Coram Note"). The New Coram Note shall
have a term of two years, payable interest only and shall bear interest at an
annual rate equal to the lesser of (a) one-half (1/2%) percent below the
long-term borrowing rate as in effect from time to time under IHS' senior
secured bank line of credit or (b) 8% per annum. Interest shall be payable on a
quarterly basis until maturity, at which time the entire amount of outstanding
and unpaid principal and interest due under the New Coram Note shall be due and
payable.
3. Services Agreement. MedPartners and IHS acknowledge that IHS/Coram has
the ability to provide services related to quality control, including the
gathering and synthesis of outcome data, satisfaction data, analysis by acuity
of post-acute patient costs and such other information pertaining to the home
care and sub-acute care business carried out by Coram and IHS. The parties
further acknowledge that the acrimony resulting from the Coram Litigation has
prevented the parties from previously entering into a Services Agreement for
such services and recognizing IHS' expertise in providing home care and subacute
care the parties desire, following IHS' acquisition of Coram to enter into a
Services Agreement pursuant to which IHS and/or Coram will provide the above
described services. The service fee to be paid in connection with the Services
Agreement shall be negotiated by the parties and shall be based upon the market
value of the actual services to be rendered by IHS and shall be as agreed
between the parties at the time of the execution and delivery of the Services
Agreement.
4. Termination. This Agreement shall terminate upon the termination of the
Acquisition Agreement between IHS and Coram or, if the acquisition is
consummated, upon execution of a formal Settlement Agreement.
5. Miscellaneous.
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(a) Confidentiality. It is agreed between the parties that the existence
and terms and provisions of this Agreement shall remain confidential, except to
the extent that such matters are required to be disclosed in connection with the
motion to stay the Coram Litigation and the acquisition of Coram by IHS. In such
latter event, IHS and MedPartners shall make such disclosures as shall be
required by law, upon advice of counsel, but only with the approval of the other
party.
(b) Notices. All notices, requests, demands and other communications
provided for by this Agreement or required to be given hereunder shall be in
writing and shall be deemed to have been given when hand delivered, when
received if sent by fax or by same day or overnight recognized commercial
courier service or three business days after being mailed in any general or
branch office of the United States Postal Service, enclosed in a registered or
certified postpaid envelope, addressed to the address of the parties stated
below or to such changed address as such party may have fixed by notice:
IHS: Integrated Health Services, Inc.
00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
MEDPARTNERS: MedPartners, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
provided that any notice of change of address shall be effective only upon
receipt of such change.
(c) Severability. Any term or provision of this Agreement which shall prove
to be invalid, void or illegal shall in no way affect, impair or invalidate any
other term or provisions herein and such remaining terms and provisions shall
remain in full force and effect.
(d) Assignment. Neither party shall have the right to assign this Agreement
without the prior written consent of the other party. Any attempted assignment
of this Agreement in contravention of this Paragraph 5(d) shall be null and void
and without any effect whatsoever.
(e) Successors and Assigns. Subject to the provisions of this Agreement
regarding assignment, the terms, covenants and conditions contained herein shall
be binding upon and inure to the benefit of the successors and assigns of the
parties hereto.
(f) Captions and Headings. The captions and headings throughout this
Agreement are for convenience of reference only and shall in no way be held or
deemed to be a part of or affect the interpretation of this Agreement.
(g) Entire Agreement; Amendment. This Agreement states the entire contract
between the parties in respect to the subject matter of this Agreement and
supersedes any oral or written proposals, statements, discussions, negotiations
or other agreements before or contemporaneous to this Agreement.
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The parties acknowledge that they have not been induced to enter into this
Agreement by any oral or written representations or statements not expressly
contained in this Agreement. This Agreement may be modified only by mutual
agreement of the parties, provided that, before any modification shall be
operative or valid, it be reduced to writing and signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
MEDPARTNERS, INC.
By: /s/ Xxxxx Xxxxx
Its:
INTEGRATED HEALTH SERVICES, INC.
By: /s/ Xxxxx Xxxxxxxx
Its:
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