Exhibit 2.6
================================================================================
INDEMNIFICATION AGREEMENT
AMONG
HOME HEALTH CORPORATION OF AMERICA, INC.
AND ITS NOMINEES,
LHS HOLDINGS, INC.,
LIBERTY HEALTH SERVICES, INC.,
NURSES TODAY M/C, INC.,
PDN, INC.,
MEDICAL I.V., INC.,
AND
XXXX X. X'XXXXX
December 4, 1996
================================================================================
TABLE OF CONTENTS
Page
1. Covenants of the Parties................................... 2
------------------------
1.1 Non-Solicitation................................. 2
----------------
1.2 Management Agreement............................. 2
--------------------
1.3 Public Offering.................................. 2
---------------
1.4 Winding Up of LHS, Nurses, PDN and MIV........... 3
--------------------------------------
1.5 Confidentiality.................................. 3
---------------
1.6 Restrictive Covenant............................. 4
--------------------
1.7 Replacement Financing............................ 5
---------------------
1.8 Use of Names..................................... 5
------------
2. Survival of Representations and Warranties................. 5
------------------------------------------
3. Indemnification............................................ 6
---------------
3.1 Obligation to Indemnify by the Selling Parties... 6
----------------------------------------------
3.2 Obligation to Indemnify by Purchaser............. 6
------------------------------------
3.3 Losses........................................... 6
------
3.4 Procedures for Claims Between the Parties........ 7
-----------------------------------------
3.5 Defense of Third-Party Actions................... 7
------------------------------
3.6 Bulk Sales....................................... 8
----------
3.7 Interest on Unpaid Obligations................... 8
------------------------------
3.8 Reduction for Insurance.......................... 8
-----------------------
4. Breaches and Defaults; Termination; Remedies............... 8
--------------------------------------------
4.1 Breaches and Defaults; Opportunity to Cure....... 8
------------------------------------------
4.2 Termination...................................... 9
-----------
4.3 Effect of Termination............................ 9
---------------------
4.4 Specific Performance.............................10
--------------------
5. Miscellaneous..............................................10
-------------
5.1 Consent to Jurisdiction..........................10
-----------------------
5.2 Expenses.........................................10
--------
5.3 Further Assurances...............................10
------------------
5.4 Indemnification of Brokerage.....................11
----------------------------
5.5 Severability.....................................11
------------
5.6 Notices..........................................11
-------
5.7 Entire Agreement.................................12
----------------
5.8 Amendments and Waivers; Non-Contractual Remedies.12
------------------------------------------------
5.9 Governing Law....................................12
-------------
5.10 Binding Effect; Assignment.......................13
--------------------------
5.11 Joint and Several................................13
-----------------
ii
5.12 Beneficiaries of Agreement.......................13
--------------------------
5.13 Counterparts; Facsimile Signatures...............13
----------------------------------
5.14 Exhibits and Schedules...........................13
----------------------
5.15 Holidays.........................................13
--------
5.16 Headings.........................................13
--------
LIST OF EXHIBITS
----------------
1.2 Terms of Management Agreement
iii
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of December 4,
1996, by and among HOME HEALTH CORPORATION OF AMERICA, INC., a Pennsylvania
corporation ("HHCA"), and its nominees, LHS HOLDINGS, INC., a Kentucky
corporation ("Holdings"), LIBERTY HEALTH SERVICES, INC., a Texas corporation and
wholly-owned subsidiary of Holdings ("LHS"), NURSES TODAY M/C, INC., a Texas
corporation and wholly-owned subsidiary of LHS ("Nurses"), PDN, INC., a Texas
corporation ("PDN"), MEDICAL I.V., INC., a Texas corporation ("MIV"), and XXXX
X. X'XXXXX, an individual and sole shareholder of Holdings, PDN and MIV
("Shareholder"). HHCA and its nominees are sometimes collectively referred to
herein as the "Purchasing Parties". Holdings, LHS, Nurses, PDN, MIV and the
Shareholder are sometimes collectively referred to herein as the "Selling
Parties".
Background.
----------
A. Holdings, LHS, Nurses, PDN and MIV are engaged in the business of
providing Medicare and Medicaid-reimbursed home nursing services, private duty
home nursing services, infusion services and related services in the home health
care industry in Texas (the "Business").
B. The Purchasing Parties and their affiliates are engaged in the States
of Pennsylvania, New Jersey, Delaware, Maryland and Florida in the business of:
(i) providing private duty or Medicare-reimbursable nursing and related health
care services and equipment to home-bound patients (including without limitation
bedside care and treatment, infusion therapy, pharmaceutical and rehabilitative
services); (ii) providing mobile diagnostic services; (iii) selling durable
medical equipment; and (iv) providing respiratory services and related
equipment.
C. Holdings, LHS, Nurses, Shareholder, HHCA and its nominees have entered
into an Asset Acquisition Agreement of even date herewith pursuant to which HHCA
through its nominees has agreed to acquire, and Holdings, LHS and Nurses have
agreed to sell, substantially all of the assets owned or used by or useful to
Holdings, LHS and Nurses in connection with the Business (the "LHS/Holdings
Acquisition Agreement").
D. PDN, MIV, Shareholder, HHCA and its nominees have entered into an Asset
Acquisition Agreement of even date herewith pursuant to which HHCA through its
nominees has agreed to acquire, and PDN and MIV have agreed to sell,
substantially all of the assets owned or used by or useful to PDN and MIV in
connection with the Business (the "PDN/MIV Acquisition Agreement" and together
with the LHS/Holdings Acquisition Agreement, "Acquisition Agreements").
E. The parties desire to enter into this Agreement to set forth their
agreement and understanding with respect to various matters concerning the
Acquisition Agreements, including without limitation, the respective rights of
the parties to terminate the Acquisition Agreements and the obligations of the
parties to indemnify each other.
F. All capitalized terms used but not otherwise defined in this Agreement
shall have meanings ascribed to such terms in the Acquisition Agreements.
1
NOW, THEREFORE, in consideration of the foregoing Background and the mutual
covenants and agreements contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Covenants of the Parties.
------------------------
1.1 Non-Solicitation. From the date hereof until the closing under the
----------------
PDN/MIV Acquisition Agreement (the "PDN/MIV Closing"), neither the Selling
Parties nor any Related Party will, directly or indirectly, solicit, initiate,
encourage, entertain or participate in discussions or negotiations, enter into
any agreements relating to, or consummate any transaction with respect to any
Third-Party Proposal with any person other than the Purchasing Parties or the
Purchasing Parties' representatives. During such period, Seller shall promptly
inform the Purchasing Parties of the occurrence of a Third-Party Proposal and
the terms thereof (including the identity of the prospective purchaser or
soliciting party).
1.2 Management Agreement. At the closing under the LHS/Holdings
--------------------
Acquisition Agreement (the "LHS/Holdings Closing"), PDN and MIV will enter into
a Management Agreement with HHCA pursuant to which HHCA will manage PDN and MIV
during the period commencing on the date of the LHS/Holdings Closing and ending
on the date of the PDN/MIV Closing substantially on the terms set forth on
Exhibit 1.2 (the "Management Agreement").
-----------
1.3 Public Offering. HHCA filed with the Securities and Exchange
---------------
Commission ("SEC") on November 1, 1996 a registration statement for an
underwritten public offering (the "Public Offering") of shares of common stock
of HHCA ("Registration Statement"). Each of HHCA's nominees and the Selling
Parties shall use all reasonable efforts to assist HHCA in having the
Registration Statement declared effective under the Securities Act of 1933, as
amended ("Securities Act"), as promptly as practicable after such filing. The
Purchasing Parties and the Selling Parties shall cooperate to take any action
required to be taken under any applicable state securities or "blue sky" laws in
connection with the Public Offering. The Selling Parties shall furnish promptly
to HHCA and its counsel for inclusion in any prospectus and the Registration
Statement in connection with the Public Offering in a form reasonably
satisfactory to HHCA and its counsel, such information concerning each of
Holdings, LHS, Nurses, PDN and MIV, its respective operations, capitalization,
stock ownership, financial statements, businesses, assets and other matters as
HHCA or its counsel may reasonably request in connection with the Public
Offering, including without limitation, audited financial statements (including
pro formas) for any period prior the date of the PDN/MIV Closing. The Purchasing
Parties agree to reimburse the Selling Parties (in an amount not to exceed
$50,000) for the reasonable fees and expenses of the Selling Parties'
independent certified public accounting firm for its work in connection with the
Registration Statement. The information supplied by any of the Selling Parties
to be included in the Registration Statement or in any prospectus made a part
thereof, or in any amendments thereof or supplements thereto, will not, taken as
a whole, at the date the Registration Statement (or on the date of any
amendments thereof or supplements thereto) is declared effective by the SEC and
on the closing of the Public Offering, (i) contain any statement that, at such
time and in light of the circumstances under which it was made, will be false or
misleading with respect to any material fact, or (ii) omit to state any material
fact
2
required to be stated therein or necessary in order to make the statements made
therein not misleading or necessary to correct any statement in any earlier
communication with respect to the Public Offering that has become false or
misleading.
1.4 Winding-Up of LHS, Nurses, PDN and MIV. Notwithstanding anything to
--------------------------------------
the contrary contained herein or in the Employment Agreements, the Purchasing
Parties shall permit each of the Executives to devote such time during regular
business hours as may be reasonably necessary to the winding-up of LHS and
Nurses (commencing on the date of the LHS/Holdings Closing) and the winding-up
of PDN and MIV (commencing on the date of the PDN/MIV Closing) with respect to
xxxxxxxx, collection of Accounts Receivable, preparation of cost reports, cost
report audits and related managerial and administrative duties; provided that:
(i) such activities do not, in the Purchasing Parties' reasonable opinion,
interfere in any material respect with the performance of Executives' duties
under the Employment Agreements; (ii) the Executives use their best efforts to
give priority to their HHCA-related work in the event of a conflict; and (iii)
Executives shall not be permitted to devote time to such duties during regular
business hours after the conclusion of the final procedural step with respect to
any third-party reimbursement program audit for any period prior to the date of
the LHS/Holdings Closing.
1.5 Confidentiality.
---------------
(a) As used in this Agreement, the term "Confidential Information"
shall mean all confidential and proprietary knowledge and information not
readily available to the public heretofore or hereafter conceived, learned or
disclosed (including all documents, writings, memoranda, business plans,
computer software, reports, pricing, cost and sales information, financial
statements, customer lists, provider lists, patient lists, referral source and
supplier lists, trade secrets, discoveries, ideas, concepts, models, prototypes,
diagrams and marketing strategies, plans and techniques).
(b) From and after the date hereof, the Selling Parties shall (and
shall use their respective best efforts to cause the Related Parties to) keep
secret and retain in strictest confidence, and shall not, without the Purchasing
Parties' express prior written consent, directly or indirectly, disclose,
disseminate, publish, reproduce, retain, use (for their benefit or for the
benefit of others), or otherwise make available in any manner whatsoever, any
Confidential Information regarding the Selling Parties or the Purchasing Parties
(or the Acquisition Agreements, this Agreement or the transactions contemplated
hereby) to anyone except (i) to their representatives (who shall be informed of
the confidential nature of such information and who shall agree to keep such
information confidential), (ii) to the Purchasing Parties and their affiliates
or representatives, (iii) as otherwise required by law, including securities
laws, (iv) as required by the Selling Parties to the extent necessary to enforce
their rights or to enjoy any benefit under this Agreement or the Acquisition
Agreements including, by way of illustration and not limitation, to collect
accounts receivable, to make such filings with third-party payors as may be
appropriate, to defend program audits and the like, or (v) as required to obtain
the Regulatory Approvals or any consents that are required for consummation of
the transactions contemplated by the Acquisition Agreements; provided, however,
that prior to the date of the LHS/Holdings Closing the Selling Parties shall be
permitted to use such Confidential Information as may be necessary to conduct
the Business in the ordinary course and
3
thereafter to do so as may be required to enforce their rights, or to enjoy any
benefit, under this Agreement or the Acquisition Agreements; and provided
further that during the period from the date of the LHS/Holdings Closing until
the date of the PDN/MIV Closing, the Selling Parties shall be permitted to use
such Confidential Information relating to PDN and MIV as may be necessary to
conduct the portion of the Business conducted by PDN and MIV in the ordinary
course and thereafter to do so as may be required to enforce their rights, or to
enjoy any benefit, under this Agreement or the Acquisition Agreements.
(c) From and after the date hereof and continuing until the date of
the LHS/Holdings Closing (with respect to any Confidential Information regarding
the Selling Parties) and from and after the date of the LHS/Holdings Closing
until the date of the PDN/MIV Closing (with respect to Confidential Information
regarding PDN and MIV), the Purchasing Parties shall keep secret and retain in
strictest confidence, and shall not, without the Selling Parties' express prior
written consent, directly or indirectly, disclose, disseminate, publish,
reproduce, retain, use (for its benefit or for the benefit of others) or
otherwise make available in any manner whatsoever, any Confidential Information
regarding the Selling Parties (or the Acquisition Agreements, this Agreement or
the transactions contemplated hereby) to anyone except (i) to its
representatives (who shall be informed of the confidential nature of such
information and who shall agree to keep such information confidential), (ii) as
otherwise required by law, including securities laws, (iii) as required by its
lenders or underwriters, (iv) as required by the Purchasing Parties to enforce
their rights under this Agreement, or (v) as required to obtain the Regulatory
Approvals. Notwithstanding the foregoing, the Purchasing Parties may following
execution of the Acquisition Agreements, issue a statement of public
dissemination describing the Acquisition Agreements, this Agreement and the
transactions contemplated herein.
1.6 Restrictive Covenant. Each of the Selling Parties acknowledges that
--------------------
(a) Holdings', LHS's, Nurses', PDN's and MIV's ownership of the Business and the
Shareholder's ownership of stock of Holdings, PDN and MIV and Shareholder's
position as an officer of Holdings, LHS, Nurses, PDN and MIV have necessarily
brought each of them in close contact with certain confidential and proprietary
information of the Business (including the Confidential Information) not readily
available to the public; and (b) the Purchasing Parties would not purchase the
Business but for the agreements and covenants of the Selling Parties contained
in this Section 1.6. In respect of the foregoing, each of the Selling Parties
-----------
covenants and agrees, for a period of three (3) years from the date of the
LHS/Holdings Closing (which period of time shall be extended as appropriate for
any period(s) of time that any applicable party is in violation of the
provisions of this Section 1.6) that none of the Selling Parties shall, directly
-----------
or indirectly:
(i) be engaged, either for their own account or as agent,
consultant, employee, partner, shareholder, creditor, officer, director,
proprietor, investor, or otherwise of any person in a business similar to the
Business within the State of Texas (the "Territory"), unless the Purchasing
Parties shall agree otherwise in writing;
(ii) call on or solicit or divert or take away from Purchasing
Parties (including by divulging to any competitor or potential competitor of the
Purchasing Parties) any person that is or was a patient, customer or referral
source of the Business;
4
(iii) render financial or other assistance to any person engaged in a
business similar to the Business in the Territory, unless the Purchasing Parties
shall agree otherwise in writing or the Selling Parties are acting exclusively
on behalf of the Purchasing Parties; or
(iv) solicit or employ or cause to be solicited or employed, for or
on behalf of the Selling Parties or any third party, any persons who are
employees of Holdings, LHS, Nurses, PDN or MIV immediately prior to the date of
the LHS/Holding Closing or at any time in the six (6) month period immediately
prior thereto.
Notwithstanding anything in this Section 1.6 to the contrary, during the period
-----------
commencing on the date of the LHS/Holdings Closing and ending on the date of the
PDN/MIV Closing, the Selling Parties shall be permitted to engage in the
activities described in Sections 1.6(i) and 1.6(iii) above in connection with
----------------------------
the conducting of the portion of the Business conducted by PDN and MIV in
accordance with Section 5 of the PDN/MIV Acquisition Agreement.
1.7 Replacement Financing. Each of Holdings, LHS, Nurses, PDN and MIV
---------------------
hereby agrees to execute, deliver and perform on behalf of any successor or
replacement lender to the Senior Lender, a subordination agreement on terms
substantially similar to the terms of the Subordination Agreement.
1.8 Use of Names. From and after the date of the LHS/Holdings Closing,
------------
the Selling Parties shall not conduct business: (i) in any location under the
name "Liberty Health Services" or "Nurses Today" or any variation thereof or
(ii) under the name "LHS" in the State of Texas. The Selling Parties shall,
effective as of the LHS/Holdings Closing, amend the articles of incorporation of
LHS and Nurses to change their respective names to dissimilar names, withdraw or
terminate any foreign qualification filing in Texas of Holdings, and shall
provide the Purchasing Parties with satisfactory evidence thereof. From and
after the date of the PDN/MIV Closing, the Selling Parties shall not conduct
business in any location under the name "PDN" or "Medical I.V." or any variation
thereof. The Selling Parties shall, effective as of the PDN/MIV Closing, amend
the articles of incorporation of PDN and MIV to change their respective names to
dissimilar names and shall provide the Purchasing Parties with satisfactory
evidence thereof.
2. Survival of Representations and Warranties. The representations and
------------------------------------------
warranties of the Selling Parties and the Purchasing Parties contained in the
Acquisition Agreements (or in any schedule or certificate delivered thereunder)
shall survive the consummation of the transactions contemplated by the
Acquisition Agreements, without regard to any investigation made by any of the
parties hereto, and shall expire on June 30, 1998; provided, however, that the
-------- -------
representations and warranties (and all claims and causes of action with respect
thereto) in Sections 3.1, 3.2, 3.3, 3.14, 3.18, 3.21, 3.22, 3.23, 3.26, 4.1,
4.2 and 4.3 of the Acquisition Agreements shall survive the date of the PDN/MIV
Closing until the expiration of the applicable statute of limitations. The
termination of the representations and warranties provided herein shall not
affect the rights of a party seeking indemnification under this Agreement,
provided that such party shall have given written notice to the other party,
prior to the expiration of the applicable survival period provided above, of:
(a) a claim for indemnification or (b) a contingent claim for indemnification
(provided that the party seeking indemnification for such contingent claim has
reasonable grounds to believe that the claim
5
or demand for indemnification will be made and sets forth the estimated amount
of such claim to the extent then ascertainable).
3. Indemnification.
---------------
3.1 Obligation to Indemnify by the Selling Parties. Subject to the terms
----------------------------------------------
of Section 2, the Selling Parties agree to indemnify, defend and hold harmless
---------
the Purchasing Parties (their respective affiliates, and their respective
directors, officers, stockholders, representatives and employees), from and
against all losses, Taxes, liabilities, damages, lawsuits, deficiencies, claims,
demands, costs or expenses, including interest, penalties, and reasonable
attorneys', accountants' and other professionals' fees and disbursements
("Losses"), based upon, incurred in connection with, arising out of or otherwise
in respect of (a) any inaccuracy in or any breach of any representation or
warranty of the Selling Parties contained in the Acquisition Agreements or in
any document delivered pursuant to the Acquisition Agreements, (b) any breach of
any covenant or agreement of the Selling Parties contained in the Acquisition
Agreements, this Agreement or in any document or instrument contemplated
thereunder or hereunder, (c) the Release or presence of any Regulated Substance
at the Real Property at any time prior to the date of the LHS/Holdings Closing
with respect to any Real Property owned or occupied by LHS, Nurses, or Holdings
or prior to date of the PDN/MIV Closing with respect to any Real Property owned
or occupied by PDN or MIV, or (d) any liability or obligation of the Selling
Parties that is not an Assumed Liability.
3.2 Obligation to Indemnify by the Purchasing Parties. Subject to the
-------------------------------------------------
terms of Section 2, the Purchasing Parties agree to indemnify, defend and hold
---------
harmless the Selling Parties (their affiliates, and their respective directors,
officers, stockholders, representatives and employees) from and against all
Losses based upon, incurred in connection with, arising out of or otherwise in
respect of (a) any inaccuracy in or any breach of any representation or warranty
of the Purchasing Parties contained in the Acquisition Agreements or in any
document delivered pursuant to the Acquisition Agreements, (b) any breach of any
covenant or agreement of the Purchasing Parties contained in the Acquisition
Agreements, this Agreement or in any document or instrument contemplated
hereunder or thereunder, (c) any liability or obligation arising on and after
the date of the LHS/Holdings Closing with respect to any Assumed Liability under
the LHS/Holdings Acquisition Agreement or the date of the PDN/MIV Closing with
respect to any Assumed Liability under the PDN/MIV Acquisition Agreement, or (d)
any liability or obligation resulting from any Action described in Section 7.4
of the Acquisition Agreements for which the Purchasing Parties have agreed in a
separate writing to indemnify the Selling Parties.
3.3 Losses. The term "Losses" as used herein (a) is not limited to
------
matters asserted by third parties against the Selling Parties or the Purchasing
Parties, but includes Losses incurred or sustained by the Selling Parties or the
Purchasing Parties in the absence of third-party claims, and (b) includes Losses
incurred through and after the date of the claim for indemnification (including
any Losses suffered after the end of any applicable survival period), provided
that in the case of a claim for Losses incurred because of the breach of a
representation or warranty hereunder, such claim is made within the applicable
survival period under Section 2. Payments by the Purchasing Parties of amounts
---------
for which the Purchasing Parties are indemnified hereunder, and payments by the
Selling Parties of amounts for which the Selling Parties are indemnified
hereunder, shall not be
6
condition precedent to recovery. The indemnification rights contained in
Section 3 shall not limit any other rights, including rights of contribution
---------
with respect to environmental liabilities, that either party may have under
statute or common law.
3.4 Procedures for Claims Between the Parties. If a claim (a "Claim") is
-----------------------------------------
to be made by the party claiming indemnification (the "Claimant") against the
other party (the "Indemnifying Party"), the Claimant shall give written notice
(a "Claim Notice") to the Indemnifying Party as soon as practicable after the
Claimant becomes aware of the facts, condition or event that may give rise to
Losses for which indemnification may be sought under this Section 3. Following
---------
receipt of the Claim Notice from the Claimant, the Indemnifying Party shall have
thirty (30) calendar days to make such investigation of the Claim as the
Indemnifying Party deems necessary or desirable; provided, however, that if
-------- -------
Claimant reasonably determines that it will be materially prejudiced by
affording the Indemnifying Party such period of time for investigation, the
Indemnifying Party and the Claimant shall agree promptly on the appropriate
period of time for such investigation. For the purposes of such investigation,
the Claimant agrees to make available to the Indemnifying Party and/or its
authorized representative(s) the information relied upon by the Claimant to
substantiate the Claim. If the Claimant and the Indemnifying Party agree at or
prior to the expiration of said thirty (30) day period (or any mutually agreed
upon period or extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall pay promptly to the Claimant the full amount of such
Claim. If the Claimant and the Indemnifying Party do not agree within said
period (or any mutually agreed upon period or extension thereof), the Claimant
may seek appropriate legal remedy.
3.5 Defense of Third-Party Actions. If any lawsuit or enforcement action
------------------------------
(a "Third Party Action") is filed against a Claimant entitled to the benefit of
indemnity hereunder, written notice thereof (the "Third-Party Action Notice")
shall be given by Claimant to the Indemnifying Party as promptly as practicable
(and in any event within fifteen (15) calendar days after the service of the
citation or summons or other manner of process). The failure of any Claimant to
give notice timely hereunder shall not affect rights to indemnification
hereunder, except to the extent that the Indemnifying Party demonstrates actual
damage caused by such failure. After such notice, if the Indemnifying Party
shall acknowledge in writing to the Claimant that the Indemnifying Party shall
be obligated under the terms of its indemnity hereunder in connection with such
Third-Party Action, then the Indemnifying Party shall be entitled, if it so
elects, (i) to take control of the defense and investigation of such Third-Party
Action, (ii) to employ and engage attorneys reasonably satisfactory to the
Claimant to handle and defend the same, at the Indemnifying Party's cost, risk
and expense, and (iii) to compromise or settle such Third-Party Action, which
compromise or settlement shall be made only with the written consent of the
Claimant, such consent not to be unreasonably withheld. If the Indemnifying
Party fails to assume the defense of such Third-Party Action within fifteen (15)
calendar days after receipt of the Third-Party Action Notice, the Claimant will
(upon delivering notice to such effect to the Indemnifying Party) have the right
to undertake, at the Indemnifying Party's cost and expense, the defense,
compromise or settlement of such Third-Party Action on behalf of and for the
account and risk of the Indemnifying Party; provided, however, that such Third-
-------- -------
Party Action shall not be compromised or settled without the written consent of
the Indemnifying Party, which consent shall not be unreasonably withheld,
conditioned or delayed. In the event the Claimant assumes the defense of the
Third-Party Action, the Claimant will keep the Indemnifying Party reasonably
informed of the progress of any such defense, compromise or settlement. The
7
Indemnifying Party shall be liable for any settlement of any Third-Party Action
effected pursuant to and in accordance with this Section 3 and for any final
---------
judgment (subject to any right of appeal), and the Indemnifying Party agrees to
indemnify and hold harmless Claimant from and against any Losses by reason of
such settlement or judgment.
3.6 Bulk Sales. It may not be practicable to comply or attempt to comply
----------
with the procedures of the "Bulk Sales Act," if applicable, or similar law of
any or all of the states in which the Purchased Assets are situated or of any
other state that may be asserted to be applicable to the transactions
contemplated hereby. Accordingly, to induce the Purchasing Parties to waive any
requirements for compliance with any or all of such laws, the Selling Parties
hereby agree that the indemnity provisions of this Section 3 hereof shall apply
---------
to any Losses of the Purchasing Parties arising out of or resulting from the
failure of the Selling Parties or the Purchasing Parties to comply with any such
laws.
3.7 Interest on Unpaid Obligations. If all or part of any indemnification
------------------------------
obligation under this Agreement is not paid when due, the Indemnifying Party
shall pay the Claimant interest on the unpaid amount of such obligation for each
day from the date the amount became due until it is paid in full, interest at
the rate of 200 basis points in excess of the prime rate in effect from time to
time at CoreStates Bank, N.A., Philadelphia, Pennsylvania, or any successor
thereto.
3.8 Reduction for Insurance. The amount which an Indemnifying Party is
-----------------------
required to pay to, for or on behalf of the Claimant pursuant to this Section 3
---------
shall be reduced (including, without limitation, retroactively) by eighty
percent (80%) of any insurance proceeds actually recovered by or on behalf of
such Claimant in reduction of the related indemnifiable loss (the "Indemnifiable
Loss"). Amounts required to be paid, as so reduced, are hereafter called an
"Indemnity Payment". If a Claimant shall have received or shall have had paid
on its behalf an Indemnity Payment in respect of an Indemnifiable Loss and shall
subsequently receive insurance proceeds in respect of such Indemnifiable Loss,
then such Claimant shall pay to such Indemnifying Party a sum equal to the
amount of eighty percent (80%) of such insurance proceeds up to an amount equal
to the Indemnity Payment).
4. Breaches and Defaults; Termination; Remedies.
--------------------------------------------
4.1 Breaches and Defaults; Opportunity to Cure. Prior to the exercise by
------------------------------------------
a party of any termination rights afforded under this Agreement, if either party
(the "Non-Breaching Party") believes the other (the "Breaching Party") to be in
breach of an Acquisition Agreement or hereunder, the Non-Breaching Party shall
provide the Breaching Party with written notice specifying in reasonable detail
the nature of such breach, whereupon the Breaching Party shall have fifteen (15)
calendar days from the receipt of such notice to cure such breach. If a breach
has in fact occurred but is not cured within such time period, then the
Breaching Party shall be in default hereunder and the Non-Breaching Party shall
be entitled to terminate the Acquisition Agreements and this Agreement (as
provided in Section 4.2). This right of termination shall be in addition to,
-----------
and not in lieu of, any legal or equitable remedies available to the Non-
Breaching Party.
8
4.2 Termination. This Agreement and the Acquisition Agreements may be
-----------
terminated at any time prior to the LHS/Holdings Closing as follows:
(a) by mutual written agreement of the parties hereto;
(b) by the Purchasing Parties, provided the Purchasing Parties are not
then in breach of the Acquisition Agreements or this Agreement, at the election
of the Purchasing Parties (pursuant to a written notice to the Selling Parties),
(i) if any one or more of the conditions to the Purchasing Parties' obligations
to consummate the LHS/Holdings Closing under the LHS/Holdings Acquisition
Agreement has not been fulfilled in any material respect as of the date of the
LHS/Holdings Closing, (ii) subject to Section 4.1, if the Selling Parties have
breached in any material respect any representation, warranty, covenant or
agreement contained in the Acquisition Agreements or in any other agreement or
document delivered pursuant to the Acquisition Agreements, or (iii) if the
LHS/Holdings Closing shall not have taken place by January 15, 1997 (the
"Outside Date") (unless any of the foregoing events shall have resulted
primarily from the Purchasing Parties' breach of any representation, warranty,
covenant or agreement contained in this Acquisition Agreements or this
Agreement); and
(c) by the Selling Parties, provided the Selling Parties are not then
in breach of the Acquisition Agreements or this Agreement, at the election of
the Selling Parties (pursuant to a written notice to the Purchasing Parties),
(i) if any one or more of the conditions to the Selling Parties' obligations to
consummate the LHS/Holdings Closing has not been fulfilled in any material
respect as of the date of the LHS/Holdings Closing, (ii) subject to Section 4.1,
-----------
if the Purchasing Parties have breached in any material respect any
representation, warranty, covenant or agreement contained in the Acquisition
Agreements or this Agreement or in any other agreement or document delivered
pursuant to the Acquisition Agreements, or (iii) if the LHS/Holdings Closing
shall not have taken place by the Outside Date (unless any of the foregoing
events shall have resulted primarily from the Selling Parties' breach of any
representation, warranty, covenant or agreement contained in this Agreement).
Notwithstanding any provision that may be to the contrary in this Agreement or
in the Acquisition Agreements, the parties shall have no right to terminate this
Agreement and the Acquisition Agreements after the LHS/Holdings Closing occurs.
4.3 Effect of Termination. In the event of any termination of the
---------------------
Acquisition Agreements and this Agreement, all obligations of the parties hereto
thereunder and hereunder shall terminate as of such date of termination and the
Acquisition Agreements and this Agreement shall thereafter become void and be of
no further force and effect, and upon such termination no party hereto shall be
liable to the other party, except for Losses resulting from such termination and
from breaches of the Acquisition Agreement and this Agreement prior to such
termination; provided, however, that (a) the obligations contained in Sections
-------- ------- --------
1.5, 3 and 5.2 shall survive any termination hereof, and (b) the foregoing
--------------
provisions shall not limit or restrict the availability of specific performance
(as provided in Section 4.4) or other injunctive relief as to the obligations
-----------
referred to in clause (a) to the extent that specific performance or such other
relief would otherwise be available to a party hereunder.
9
4.4 Specific Performance. Each of the Selling Parties agrees that the
--------------------
Purchased Assets under the Acquisition Agreements and the Business are unique
assets that cannot be readily obtained on the open market and that the
Purchasing Parties will be irreparably injured if the Acquisition Agreements are
not specifically enforced. Therefore, notwithstanding anything to the contrary
contained in the Acquisition Agreements, this Agreement or otherwise, the
Purchasing Parties shall have the right (but not the obligation) to enforce
specifically the Selling Parties's performance under this Agreement (including
those obligations contained in Sections 1.1, 1.5 and 1.6) in lieu of the
--------------------------
termination of this Agreement and the Acquisition Agreements, and each of the
Selling Parties waives the defense in any such suit that the Purchasing Parties
have an adequate remedy at law and will interpose no opposition, legal or
otherwise, as to the propriety of specific performance as a remedy. The remedies
described in this Section 4.4 shall be in addition to, and not in lieu of, any
-----------
other remedies that the Purchasing Parties may elect to pursue.
5. Miscellaneous.
-------------
5.1 Consent to Jurisdiction. All actions to enforce the provisions of
-----------------------
this Acquisition Agreements and this Agreement shall be brought in the
Commonwealth of Pennsylvania and, in connection therewith, each of the parties
hereto (a) submits and consents to the personal jurisdiction of any Pennsylvania
state or federal court with respect to any suit, action or proceeding relating
to this Agreement or any of the transactions contemplated hereby, (b) waives any
objection that such party may now or hereafter have to the laying of venue of
any such suit, action or proceeding brought in any such court, and waives any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum, (c) waives the right to object that any
such court does not have personal jurisdiction over such party, and (d) consents
to the service of process in any such suit, action or proceeding upon the
receipt through the United States mail of copies of such process to such party
by certified mail to the addresses indicated herein or at such other addresses
of which the other parties shall have received written notice.
5.2 Expenses. Except as otherwise specifically provided herein, the
--------
parties to this Agreement shall bear their respective expenses incurred in
connection with the preparation, negotiation, execution and performance of the
Acquisition Agreements and this Agreement and the transactions contemplated
hereby, including all fees and expenses of agents, advisors, representatives,
consultants, counsel and accountants. Notwithstanding the foregoing, in the
event that the Acquisition Agreements and this Agreement are terminated pursuant
to Section 4.2(c),the Purchasing Parties shall reimburse the Selling Parties for
--------------
the reasonable out-of-pocket costs and expenses (including the reasonable fees
of attorneys and accountants) incurred by them in connection with the
Acquisition Agreements and this Agreement.
5.3 Further Assurances. Each of the parties shall execute such agreements
------------------
and documents and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall use its reasonable best efforts to fulfill or
obtain the fulfillment of the conditions to the LHS/Holdings Closing and the
PDN/MIV Closing, including the execution and delivery of any other agreement or
document, the execution and delivery of which are conditions precedent to the
LHS/Holdings Closing or the PDN/MIV Closing.
10
5.4 Indemnification of Brokerage. Each party agrees to indemnify and save
----------------------------
the others harmless from any claim or demand for commissions or other
compensation by any broker, finder, agent or similar intermediary claiming to
have been employed by or on behalf of such party, and to bear the cost of legal
fees and expenses incurred in defending against any such claim.
5.5 Severability. Any provision of this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. If any court determines that any covenant, or any part of
any covenant is invalid or unenforceable, such covenant shall be enforced to the
extent permitted by such court, and all other covenants shall not thereby be
affected and shall be given full effect, without regard to the invalid portions.
5.6 Notices. Any notice or other communication required or permitted
-------
hereunder shall be in writing and shall be deemed to have been duly given when
received if delivered personally against receipt; when transmitted if
transmitted by facsimile, electronic or digital transmission method with
electronic confirmation; the next day if sent for next day delivery by a
nationally recognized overnight courier service; or upon receipt if sent by
certified, registered or express mail, return receipt requested, postage
prepaid. In each case notice shall be sent as follows:
(a) if to the Purchasing Parties, to:
Home Health Corporation of America, Inc.
0000 Xxxxxxxxxxx Xxxxxxxxx / Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000-0000
Phone: (000) 000-0000
FAX: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxxx, President
with a required copy to:
Kleinbard Xxxx & Xxxxxxx
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
FAX: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esquire
11
(b) if to the Selling Parties, to:
LHS Holdings, Inc.
00000 X.X. Xxxxxxx 00, Xxxxx 000
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
FAX: (000) 000-0000
Attention: Xx. Xxxx X. X'Xxxxx, President
with a required copy to:
Xxxxx X. Xxxxxx, Esquire
Four Market Centre
000 Xxxx Xxxxxx Xxxxxx, X.X. Xxx 000
Xxxxxxxxxxxxxx, XX 00000-0000
Phone: (000) 000-0000
FAX: (000) 000-0000
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
5.7 Entire Agreement. This Agreement (including the Schedules and
----------------
Exhibits) together with the Acquisition Agreements and the agreements,
certificates and other documents delivered thereunder or hereunder contain the
entire agreement between the parties with respect to the transactions described
herein, and supersede all prior agreements, written or oral, with respect
thereto.
5.8 Amendments and Waivers; Non-Contractual Remedies. This Agreement may
------------------------------------------------
be modified or amended, and the terms hereof may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any such right, power or privilege, nor any
single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or
privilege. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
5.9 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the Commonwealth of Pennsylvania without regard to
principles of conflicts of law or any rule of interpretation or construction as
to which party drafted this Agreement, except with respect to matters of law
concerning the internal corporate affairs of any corporate entity that is a
party to or the subject of this Agreement (as to those matters of law, the
jurisdiction under which the respective entity derives its powers shall govern).
12
5.10 Binding Effect; Assignment. Neither this Agreement nor any of the
--------------------------
rights or obligations hereunder may be assigned (including by operation of law)
by any party without the prior written consent of the other party, except that
the Purchasing Parties may, without such consent, assign any and all such rights
and obligations to any affiliate, provided that the Purchasing Parties shall
remain liable for the discharge of such obligations, and the Purchasing Parties
may, without such consent, assign any and all such rights and obligations to any
purchaser of the Purchased Assets under the Acquisition Agreements. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
5.11 Joint and Several. Notwithstanding anything to the contrary herein
-----------------
contained or otherwise: (i) the obligations of the Selling Parties under this
Agreement shall be joint and several; and (ii) the obligations of the Purchasing
Parties under this Agreement shall be joint and several
5.12 Beneficiaries of Agreement. The covenants and agreements expressed
--------------------------
in this Agreement are for the sole benefit of the respective other parties
hereto and are not intended to benefit, and may not be relied upon or enforced
by, any other person as a third party beneficiary or otherwise.
5.13 Counterparts; Facsimile Signatures. This Agreement may be executed
----------------------------------
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by all
of the parties hereto. Facsimile signatures on this Agreement and any of the
agreements and documents executed in connection herewith shall be deemed
original signatures.
5.14 Exhibits and Schedules. The Exhibits and Schedules are a part of
----------------------
this Agreement as if fully set forth herein. All references herein to Sections,
subsections, clauses, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require.
5.15 Holidays. Whenever this Agreement provides for a date, day or period
--------
of time on or prior to which actions or events are to occur or not occur, and if
such date, day or last day of such period of time falls on a Saturday, Sunday,
or legal holiday, then the same shall be deemed to fall on the immediately
following business day.
5.16 Headings. The headings in this Agreement are for reference only,
--------
and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
HOME HEALTH CORPORATION OF AMERICA, INC.
By:
----------------------------------------
Xxxxx X. Xxxxxxx, President
[Signatures continued on next page.]
13
LHS HOLDINGS, INC.
By:
----------------------------------------
Name:
Title:
LIBERTY HEALTH SERVICES, INC.
By:
----------------------------------------
Name:
Title:
NURSES TODAY M/C, INC.
By:
----------------------------------------
Name:
Title:
PDN, INC.
By:
----------------------------------------
Name:
Title:
MEDICAL I.V., INC.
By:
----------------------------------------
Name:
Title:
-------------------------------------------
Xxxx X. X'Xxxxx, Individually
14
