Exhibit 10.6
AGREEMENT
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THIS AGREEMENT, dated as of May 1, 1996 (this "Agreement"), by and among NW
REHABILITATION ASSOCIATES, INC., a Pennsylvania corporation ("NW"), NORTHSTAR
HEALTH SERVICES, INC., a Delaware corporation ("Northstar") and XXXXX X. XXXXX
("White").
RECITALS:
A. NW and Northstar are parties to a Purchase and Sale Agreement made and
entered into as of November 1, 1993 (the "Purchase Agreement") pursuant to which
NW sold certain assets to Northstar.
X. Xxxxx and Northstar are parties to an Employment Agreement dated
December 6, 1993 (the "Employment Agreement").
C. NW, Northstar and White desire to modify their existing business
relationship in certain respects as more fully set forth herein.
D. This Agreement is intended to be effective as of 12:01 a.m. on May 1,
1996 (the "Effective Date").
NOW, THEREFORE, in consideration of the premises and the related agreements
hereinafter set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Termination of Employment Agreement. The Employment Agreement
-----------------------------------
(including without limitation all non-compete restrictions contained therein) is
hereby terminated, effective immediately. However, White will continue to be
employed by Northstar and her new employment relationship with Northstar
hereinafter will be governed by Section 2 below. White and Northstar hereby
mutually release each other and their respective affiliates, successors and
assigns from any and all claims arising under or relating to the Employment
Agreement that either may have against the other, except for the payment of
accrued but unpaid salary and benefits owed by Northstar to White.
2. New Employment Relationship.
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(a) Duties and Compensation. White shall be employed by Northstar
-----------------------
with such duties and responsibilities as White and Northstar may mutually agree
from time to time. Such employment shall commence as of the date hereof and
shall continue through April 30, 1997 (the "Term"). White shall be paid in
connection therefor an annual amount of $102,000 payable in equal bi-weekly
installments.
(b) Reimbursement of Expenses. During the Term, Northstar shall
--------------------------
reimburse White for all reasonable and necessary out-of-pocket prior approved
expenses (including without limitation travel expenses) incurred by White in
connection with the performance of her duties, upon proper verification therefor
in accordance with Northstar's customary policies.
(c) Other Benefits. During the Term, White shall be entitled to
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receive four weeks of paid vacation per annum and such other benefits, including
participation in Northstar's 401(k) Plan, medical insurance and continuing
education benefits as are from time to time made available to employees of
Northstar.
(d) Automobile Allowance. During the Term, White shall be entitled
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to receive an automobile allowance of $6,000 per annum, payable in equal monthly
installments, to be used for loan or lease payments, plus prompt reimbursement
for prior approved maintenance and repairs.
(e) Employee Expenses. On the Effective Date, Northstar will pay to
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White all accrued, unpaid amounts due her under the Employment Agreement as of
the Effective Date.
(f) Withholding. All payments required to be made by Northstar to
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White shall be subject to withholding of such amounts relating to taxes as are
required pursuant to any applicable law or regulation.
(g) Prepayment. Northstar, at its option, may at any time prepay all
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amounts due under this Section 2 for the entire Term by making a lump-sum
payment equal to all amounts remaining to be paid.
3. Earnout Payments. Northstar shall remain liable to pay to NW the
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additional consideration called for by Section 2.2 of the Purchase Agreement for
the year ended December 31, 1995 and the four months ended April 30, 1996. The
amount of such payment shall be determined in accordance with said Section 2.2
and shall be determined by such firm of independent public accountants as may be
agreeable to the parties. Northstar and NW shall each pay one-half the cost of
such determination. The parties shall use their best efforts to have the amount
determined as soon as practicable and in any event not later than June 30, 1996.
The amount so determined to be owned shall be paid by Northstar to NW within
fifteen (15) days of the determination and in any event not later than July 15,
1996. Except as set forth above, no further earnout payments will be due under
the Purchase Agreement.
4. Non-Compete. (a) White will not, directly or indirectly, during the
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Term own or operate any outpatient physical or occupational therapy facility
anywhere within a 50 mile radius of any such facility operated by Northstar or
its affiliates. White also will not during the Term, directly or indirectly,
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compete with North with respect to any existing contract arrangements of
Northstar and its affiliates, including without limitation the contract
arrangements listed on Schedule 1 hereto but excluding however the contract
arrangements being assigned to NW. This Section 4 sets forth the only
non-compete covenant which shall be binding upon White, NW and their affiliates
hereafter with respect to Northstar and its affiliates.
(b) Neither Northstar nor any of its affiliates will, during the Term
(i) engage in the business of providing temporary ("fill-in") physical or
occupational therapy or medical staffing services within a 50 mile radius of
Pittsburgh, Pennsylvania (except fill-in services for its own facilities and
contracts), or (ii) compete with White or any affiliate of White with respect to
the contract arrangements listed on Schedule 2 hereto or any other contracts
currently being performed by White or any of her affiliates. This Section 4 sets
forth the only non-compete covenant which shall be binding upon Northstar and
its affiliates hereafter with respect to White, NW and their affiliates.
(c) Except to the extent provided in Section 7 hereof, neither NW nor
its affiliates, on the one hand, nor Northstar nor its affiliates, on the other,
will seek, to induce or solicit the other's employees to leave their respective
employment.
(d) Each party will promptly advise the other if its receives notice
that any of its contract arrangements are being terminated. In such event, the
party receiving such advice will be permitted to solicit such business
notwithstanding the other provisions of this Section 4, and to hire the related
employees notwithstanding the provisions of Section 7 of this Agreement.
5. Accrued Expenses for Staffing Services. As set forth on the attached
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Schedule 3, Northstar and certain of its affiliates owe to NW and certain of its
affiliates accrued amounts through March 31, 1996. On the Effective Date,
Northstar will pay to Medical Temporary Specialists, Inc. ("MTS") and Allegheny
Rehabilitation Associates, Inc. ("ARA") the net amount of $63,1665.50 through
March 31, 1996 to settle all accrued amounts owed for staffing services.
Accordingly, no separate payments will be made to Northstar by MTS or ARA and
any amounts owed by MTS or ATA will be deemed satisfied. Northstar will pay,
within 30 days of submission by NW, the net amount owed for staffing services
with respect to the month of April 1996. NW will pay, within 30 days of
submission of Northstar, the net amount owed for staffing services with respect
to the month of April 1996.
6. Office Space. Northstar will provide to NW without charge office space
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at Northstar's Monroeville facility through June, 1996.
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7. Employees. Northstar acknowledges and agrees that NW is free to hire
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those current employees of Northstar who are listed on Schedule 4 hereto and
that those employees who are listed on Schedule 5 hereto may perform services
for both NW and Northstar. The parties hereby consent to such shared employment.
Nothing herein, however, requires any party to hire any of the listed persons.
8. Indemnification. Northstar, on behalf of itself and its affiliates,
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hereby ratifies and confirms all prior indemnification obligations entered into
by any of them in favor of White or NW. In addition, Northstar will indemnify
and hold harmless White, NW and their respective affiliates from and against
any and all claims, demands, losses, costs, expenses, obligations, liabilities
and damages, including attorneys' fees and costs, which any of them may incur or
suffer as a result of or relating to (i) Northstar's ownership or operation of
the Purchased Assets (as defined in the Purchase Agreement), or (ii)
Northstar's prior direct or indirect use of provider or billing numbers
assigned to NW or White.
9. Contracts. (a) It is understood and agreed that all of the contract
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arrangements listed on the attached Schedule 1 will be carried out by Northstar
and all compensation or other benefits thereunder will inure to Northstar.
(b) It is understood and agreed that all of the contract arrangements
listed on the attached Schedule 2 will be carried out by NW or its designee and
all compensation or other benefits thereunder will inure to NW. Northstar will
not, however, be conveying any equipment to NW. Northstar, on behalf of itself
and its subsidiaries, hereby assigns to NW any and all interest they may have in
and to such contracts. Northstar and NW Rehabilitation, Inc. will execute and
deliver to NW on the Closing Date an assignment in the form of Exhibit A hereto.
10. Time of Essence. The parties hereto understand and agree that time is
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of the essence in performing their respective obligations hereunder.
11. Corporate and Business Names. White and/or entities controlled by
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her shall be entitled to conduct business under any name which does not
conflict with Northstar. Without limiting the generality of the foregoing, White
and/or such affiliates may conduct business under the names Medical Temporary
Specialists, Allegheny Rehabilitation Associates, NW Rehabilitation Associates
and variations thereof (including by way of corporate designations).
From the Effective Date and within two weeks thereof, Northstar will change
the name of its subsidiary "NW Rehabilitation, Inc." to another name which does
not include the term "NW" and which is not otherwise likely to be confused in
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the marketplace with any entity controlled by White. Neither Northstar nor any
affiliate of Northstar shall have any further right to use the "NW" name or any
variation thereof.
12. Billing. Neither Northstar nor any affiliate of Northstar shall use
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any provider or billing number assigned to NW, White or any other entity
controlled by White for any purpose whatsoever.
13. Non-Assignability. This Agreement and any rights pursuant hereto shall
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not be assignable by any party hereto without the consent of the other party,
which consent will not be unreasonably withheld.
14. Applicable Law. This Agreement and the legal relations between the
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parties hereto shall be governed by and in accordance with the laws of the
Commonwealth of Pennsylvania.
15. Section and Other Headings. The section and other headings contained
--------------------------
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
16. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
17. Severability. The invalidity or unenforceability of any particular
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provision of this Agreement shall not affect any other provision hereof and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision were omitted.
18. Modification. This Agreement may be amended, modified or supplemented
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only by a written instrument executed (in counterpart or otherwise) by each of
the parties hereto. Except as expressly modified by this Agreement, the
provisions of the Purchase Agreement shall remain in full force and effect.
19. Further Assurances. From time to time after the Effective Date each
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party will execute, deliver and acknowledge such further instruments and such
other acts as may be reasonably necessary under the circumstances to carry out
the purposes of this Agreement.
20. Arbitration. If any dispute shall arise between the parties hereto
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concerning the terms of this Agreement, arbitration by a single arbitrator (the
"Arbitrator") shall be had in Pittsburgh, Pennsylvania in accordance with the
rules of the American Arbitration Association. The Arbitrator shall be selected
by the American Arbitration Association upon petition of the parties. Judgment
upon the award rendered by the Arbitrator
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may be entered in any court having jurisdiction thereof. The decision or award
of the Arbitrator shall be final and binding on the parties hereto and their
respective successors and assigns. Notwithstanding the foregoing, discovery
shall be permitted pursuant to the Federal Rules of Civil Procedure.
21. No Third Party Beneficiaries. Nothing herein expressed or implied is
----------------------------
intended or shall be construed to confer upon or give to any person or
corporation other than the parties hereto and their respective corporate
affiliates, successors or assigns any rights or remedies under or by reason of
this Agreement.
22. Announcements. No party hereto will make any announcements or
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communications to the public, to employees or the business community concerning
this Agreement or the matters related hereto without the prior approval of the
other parties in each instance, unless required by law.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as of the date first above written.
WITNESS: NW REHABILITATION ASSOCIATES, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxx
--------------------------------- ----------------------------------
Title: President
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NORTHSTAR HEALTH SERVICES, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
--------------------------------- ----------------------------------
Title: Chairman & Chief Executive Officer
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/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxx
--------------------------------- ----------------------------------
Xxxxx Xxxxx
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SCHEDULE 1
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Avalon
Fox Chapel
Monroeville
Moon
Sewickley
Wexford
Nentwick Convalescent
Eastern Star
East Liverpool Ext.
Xxxx Convalescent
Golfview Manor
Monroeville Contracts
Reformed Presby.
Xxxxxx Convalescent
Aliquippa Hospital
Xxxxxxx Nursing Home
Indian Creek (Crossroads)
Commonwealth Rehab.
O'Brien Memorial Home
Fox Nursing Home
Camp Hill Corp.
Windsor House
Western Center
Xxxxxxx Nursing Center
Xxxxx Nursing Center
Avalon Contracts
Moon Contracts
Diversified Health Care
Rochester Manor
SCHEDULE 2
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Lemington Center
Western Pa. School for the Blind
Western Pa. School for the Deaf
Amateur Penguins
Heritage Shadyside
Xxxxxxxx Xxxx
Riverside Nursing Home
South Hills Convalescent
St. Xxxxxxx North
Xxxxx Women's Hospital
Mercy Hospital
Mercy Providence Hospital
Mon Valley Hospital
Southside Hospital
Xxxxxxx Health (Xxxxxxxx)
West Penn Hospital
St. Barnabus (Adv. Rehab.)
Valley View Nursing
St. Xxxxxxx NC East
IHS of Laurelview
XxXxxxx Hills Manor
Heartland
McKeesport Hospital
Allegheny Valley Hospital
Xxxxxxxx District Memorial Hospital
Carriage Inn of Steubenville
Ohio Valley Hospital
TBI Neurorehabilitation
IHS of Mountainview Manor
SCHEDULE 3
Northstar owes Med Temps Med Temps owes Northstar
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1. Due from NW Rehab 12/94 - 12/95 23,955.50
Dec. 1995 17,201.25
April 4,000.00 Jan. 1996 7,807.50
---------- February 8,550.00
$21,201.25 March 6,747.25
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Jan. 1996 17,673.75 $23,104.75
February 14,445.00
March 13,196.25
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$45,315.00 Total Due Northstar from
Med Temps $47,060.25
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2. Due from Tri-state
July 1995 200.00
August 1,600.00
September 1,025.00
December 887.50
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$ 3,712.50
3. Due from Medical Rehab. Systems
Jan. 1996 7,180.00
February 6,720.00
March 6,400.00
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$20,300.00
Total Due Med Temps from Northstar
and Related Companies $90,528.75
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Northstar owes Allegheny Rehab
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for Xxxxxxx Xxxxxxx
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Aug. 1995 4,060.00
September 2,860.00
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6,920.00
paid@ 692.00 Check written for $6,920.00, however, bank error
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Due $ 6,228.00 and only credited for $692.00
October 2,380.00
November 1,630.00
December 2,000.00
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1995 Total $12,238.00
Jan. 1996 2,290.00
February 2,670.00
March 2,500.00
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$ 7,460.00
Total Due to Allegheny Rehab $19,698.00
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SCHEDULE 4
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Xxxxxxx, Xxxxx (as of 5/31/96)
Xxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxxxx
Xxxxxxx-Xxxxxx, Xxxxx
Xxxxx, Xxxxxxxx
Xxxxxxx, Xxxxx
Xxxxxxxxx, Xxxx
Xxxxx, Xxxxxxx
Xxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxx
Xxxxxxx, Xxxxx
Xxxxx, Xxxxx
Xxxxxxx, Xxxxx
Xxxxx, Xxxx
Xxxxxx, Xxxx
Xxxxxxxx, Xxxxx
Xxxxx, Xxxxx
Xxxx, Xxxxx
Xxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxx
Xxxxxxx, Xxxxxxxxxx
Xxxxxx, Xxxxx (as of 5/31/96)
Henshawe, Xxxxx
Xxxxxxx, Xxxx
Xxxxxxxx,Xxxxx
Xxxxx, Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxxx, Xxxx
Xxxxxxxxxx, Xxxx
Xxxxx, Xxxxxx
Xxxxxxxx, Xxxxxx
Xxxx, Xxxx
Xxxxxxxxx, Xxxxx
Xxxxxxx Winter, Xxxx Xxx
Marangoni, Xxxxx
XxXxxxxxx, Xxxxx
XxXxxxxx, Xxxx
Xxxxx, Xxxxxx
Xxxxxx, Xxxxxx
Xxxxxx, Xxxxx
Xxxx, Xxxxxx
Och, Xxxxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxxxx
Xxxxx, Xxxx
Xxxxxxx, Xxxxxxxx
Xxxxxxxx, Xxxxx
Xxxx, Xxxxxx
Xxxxxx, Xxxxx
Xxxxxx, Xxxxxx
Xxxxx, Xxxxxxx
Xxxxxxxx, Xxxxx
Xxxx, Xxx Xxx
Xxxxxxx, Xxxxx
Simbahau, Xxxxxxxx
Xxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxx
Xxxx, Xxxxxxx
Trasaline, Xxxxxxxx
Xxxxx, Xxxxx
SCHEDULE 5
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Xxxxxxx, Xxxxx
Xxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxx
Xxxxxx, Xxxxxxx
Xxxxxxxx, Xxx
Xxxxxxxx, Xxxx
Xxxxxx, Xxxxx
Xxxx, Xxxxxx
Xxxxxx, Xxxx
Xxxxxxx, Xxxxxxx
Xxxxxx, Xxxxxx
Xxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxx
Xxxx, Xxxxxxx
Xxxxxx, Xxxxxxx
Xxxxx, Xxxx
Xxxxxx, Xxxxxxxx
Xxxx, Xxx Xxx
Xxxx, Xxxxxxx
Xxxxx, Xxxxx
Xxxxxxx, Xxxx
Xxxxxxxxxx, Xxxx
Xxxxx, Xxxxx
EXHIBIT A
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Lemington Center
Western Pa. School for the Blind
Western Pa. School for the Deaf
Amateur Penguins
Heritage Shadyside
Xxxxxxxx Xxxx
Riverside Nursing Home
South Hills Convalescent
St. Xxxxxxx North
Xxxxx Women's Hospital
Mercy Hospital
Mercy Providence Hospital
Mon Valley Hospital
Southside Hospital
Xxxxxxx Health (Xxxxxxxx)
West Penn Hospital
St. Barnabus (Adv. Rehab.)
Valley View Nursing
St. Xxxxxxx NC East
IHS of Laurelview
XxXxxxx Hills Manor
Heartland
McKeesport Hospital
Allegheny Valley Hospital
Xxxxxxxx District Memorial Hospital
Carriage Inn of Steubenville
Ohio Valley Hospital
TBI Neurorehabilitation
IHS of Mountainview Manor
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "Assignment") is made as of the 1st day of
May, 1996, by and between NW REHABILITATION, INC. and NORTHSTAR HEALTH SERVICES,
INC. (collectively, "Assignors") and NW REHABILITATION ASSOCIATES, INC., a
Pennsylvania corporation ("Assignee"), with respect to the following recitals:
A. Assignors and Assignee are parties to an Agreement dated as of May 1,
1996 (the "Agreement") which Agreement provides, among other things, for the
assignment to Assignee of certain contract arrangements (the "Contract
Arrangements") identified on Exhibit A hereto.
B. Assignors desire to assign to Assignee all of their right, title and
interest in and to each of the Contract Arrangements.
C. Assignee desires to accept the assignment of Assignors' interest in
each Contract Arrangement on the terms and subject to the conditions contained
in the Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuation consideration, receipt of which is acknowledged, and on the terms and
subject to the conditions contained in the Agreement, Assignors hereby assign,
transfer and convey to Assignee all their right, title and interest in and to
each of the Contract Arrangements under the terms and provisions of each of the
Contract Arrangements.
IN WITNESS WHEREOF, Assignors and Assignee have executed and delivered this
Assignment as of the day and year first written above.
NW REHABILITATION, INC. NW REHABILITATION ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
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Its: Chairman Its: President
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NORTHSTAR HEALTH SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Its: Chairman & Chief Executive Officer
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