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EXHIBIT 10.2
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of June 2, 1998 (this "Agreement")
by and among Ramsay Managed Care, Inc., a Delaware corporation ("Seller"),
Ramsay Health Care, Inc., a Delaware corporation ("RHCI," collectively with the
Seller, the "Companies"), Horizon Health Corporation, a Delaware corporation
(the "Purchaser") and Xxxxxx & Xxxxxx (the "Escrow Agent").
WHEREAS, concurrently with the execution of this Agreement,
the closing of transactions contemplated by that certain Stock Purchase
Agreement (the "Purchase Agreement") among the Companies and the Purchaser,
dated as May 1, 1998, have occurred, pursuant to which the Seller has sold to
the Purchaser, and the Purchaser has purchased from the Seller, the Shares (as
defined in the Purchase Agreement); and
WHEREAS, Section 1.02 of the Purchase Agreement provides for
the Purchaser to deposit $1,000,000 (the "Escrow Deposit") with the Escrow
Agent upon the execution and delivery thereof, such amount to be held by the
Escrow Agent subject to the terms and conditions of this Agreement and the
Purchase Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Establishment of Escrow Account. The
Purchaser and the Companies hereby authorize the Escrow Agent to establish an
escrow account (the "Escrow Account"), and the Escrow Agent hereby acknowledges
receipt of the Escrow Deposit by wire transfer of immediately available funds
on the date hereof. The Escrow Deposit shall be held, administered and
disposed of by the Escrow Agent in accordance with the terms and conditions
hereinafter set forth.
Section 2. Investment of Escrow Property: Distribution
of Interest.
(a) The Escrow Agent shall act as custodian of the Escrow
Deposit and shall from time to time invest and reinvest the Escrow Deposit and
any interest, income and other proceeds therefrom (collectively, the "Escrow
Property") in any one or more of the following investments as the Purchaser may
from time to time elect by notice in writing:
(1) Any direct obligations of the United States
of America, or of any agency thereof, or obligations
guaranteed as to principal and interest by the United States
of America, or of any agency thereof, in either case maturing
not more than 30 days from the date of acquisition thereof;
(2) Any certificates of deposit issued by (and
other time deposits held at) any bank, savings and loan
company or trust company organized under the laws of the
United States of America or any state thereof and having
capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 30 days from the date of
acquisition thereof; or
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(3) Any money-market funds having aggregate
assets of at least $1,000,000,000 and that have a portfolio
consisting primarily of securities of the type and maturity
described in clauses (1) and (2) above.
The Escrow Agent shall have the power to sell or liquidate the
foregoing investments whenever the Escrow Agent shall be required to release
all or any portion of the Escrow Property pursuant to Section 3 below. The
Escrow Agent shall have no responsibility for any investment losses resulting
from the investment, reinvestment or liquidation of the Escrow Property in
accordance with this Agreement.
(b) Any interest or other income received on such
investment and reinvestment of the Escrow Property shall become part of the
Escrow Property, except as specified in Section 3 below.
(c) In the absence of written instructions to the
contrary from the Purchaser, the Escrow Agent shall invest the Escrow Property
in investments set forth in Section 2(a)(3) hereof.
Section 3. Release of the Escrow Property. The Escrow
Agent shall promptly pay and disburse the Escrow Property (or any portion
thereof) as directed jointly by the Purchaser and the Companies in writing or
pursuant to a final arbitrators' award pursuant to Section XV of the Purchase
Agreement. Notwithstanding anything to the contrary contained herein, the
parties hereto irrevocably instruct the Escrow Agent to, and agree that the
Escrow Agent shall, (i) pay and disburse all of the Escrow Property (held at
the time) to the Companies on the business day immediately following the second
anniversary of the Closing Date (as defined in the Purchase Agreement), unless
prior to such time the Escrow Agent has received written notice from the
Purchaser that such Escrow Property is the subject of a valid claim for
indemnification by the Purchaser pursuant to the Section IX of the Purchase
Agreement, in which case the Escrow Agent shall continue to hold the Escrow
Property in accordance with the terms of this Agreement and (ii) pay and
disburse to the Companies on a quarterly basis from and after the date hereof
any and all interest and other income received on any investment or
reinvestment of the Escrow Property (it being understood and agreed that upon
such payment and disbursement such amount(s) shall not constitute Escrow
Property). Except as expressly set forth herein, this Agreement will terminate
upon the release of the entire Escrow Property pursuant to this Section 3.
Section 4. Concerning the Escrow Agent. To induce the
Escrow Agent to act hereunder, it is further agreed by each of the parties
hereto that:
(a) The Escrow Agent shall not be under any duty to give
the Escrow Property held by it hereunder any greater degree of care than it
gives its own similar property and shall not be required to invest any funds
held hereunder except as directed in this Agreement.
(b) This Agreement expressly sets forth all the duties of
the Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read
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into this Agreement against the Escrow Agent. The Escrow Agent shall not be
bound by the provisions of any agreement among the other parties hereto except
this Agreement.
(c) The Escrow Agent shall not be liable, except for its
own gross negligence or willful misconduct, including a knowing breach of this
Agreement, and, except with respect to claims based upon such gross negligence
or willful misconduct, including a knowing breach of this Agreement, that are
asserted against the Escrow Agent, the Companies, on the one hand, and the
Purchaser, on the other hand, shall, jointly and severally, indemnify and hold
harmless the Escrow Agent (and any successor to the Escrow Agent) from and
against any and all, losses, liabilities, claims, actions, damages and
expenses, including reasonable attorney's fees and disbursements (collectively,
"Escrow Damages"), arising out of and in connection with this Escrow Agreement,
except with respect to Escrow Damages arising out of the gross negligence or
willful misconduct of the Escrow Agent, including a knowing breach of this
Agreement. Without limiting the foregoing, the Escrow Agent shall in no event
be liable in connection with its investment or reinvestment of any cash held by
it hereunder in good faith and in accordance with the terms hereof. This
paragraph shall survive notwithstanding any termination of this Agreement or
the resignation of the Escrow Agent.
(d) The Escrow Agent shall be entitled to rely in good
faith upon any order, judgment, certification, demand, notice, instrument or
other writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity or the service thereof. The Escrow Agent may act in reliance upon any
instrument or signature believed in good faith by it to be genuine and may
assume in good faith that any person purporting to give receipt or advice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so.
(e) The Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Agreement and shall not be
liable for any action taken or omitted in good faith in accordance with such
advice.
(f) The Escrow Agent does not have any interest in the
Escrow Property deposited hereunder but is serving as escrow holder only, and
the Companies, on the one hand, and the Purchaser, on the other hand, shall,
jointly and severally, pay or reimburse the Escrow Agent upon request for any
transfer taxes or other taxes relating to the Escrow Property incurred in
connection herewith and shall indemnify and hold harmless the Escrow Agent from
any such taxes that it is obligated to pay. Any payments of income from the
Escrow Property shall be subject to withholding regulations then in force with
respect to United States income taxation rules and regulations. The Seller
will provide the Escrow Agent with an appropriate W-9 form for Tax I.D. number
certificates. It is understood that the Escrow Agent shall be responsible for
income reporting only with respect to income earned on investment of funds
which are a part of the Escrow Property and is not responsible for any other
reporting. This paragraph shall survive notwithstanding any termination of
this Agreement or the resignation of the Escrow Agent.
(g) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectibility of any security or other
document or instrument held by or delivered to it.
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(h) The Escrow Agent shall not be called upon to advise
any party as to the wisdom in selling or retaining or taking or refraining from
any action with respect to any property deposited hereunder.
(i) The Escrow Agent (and any successor or substitute
escrow agent) may at any time resign as such by delivering the Escrow Property
to any successor escrow agent jointly designated by the other parties hereto in
writing, or to any court of competent jurisdiction in an interpleader action
brought by any such escrow agent, whereupon such escrow agent shall be
discharged of and from any and all further obligations arising in connection
with or relating to this Agreement. The resignation of any escrow agent
hereunder will take effect on the earlier of (a) the appointment of a successor
(including a court of competent jurisdiction in an interpleader action brought
by any such escrow agent) or (b) the close of business on the day which is 60
days after receipt by the other parties hereto of such escrow agent's written
notice of resignation. If at that time the resigning escrow agent has not
received a designation of a successor escrow agent, such escrow agent's sole
responsibility after that time shall be to safekeep the Escrow Property until
receipt of a designation of successor escrow agent. The Companies and the
Purchaser may agree at any time to replace the Escrow Agent (or any successor
or substitute escrow agent) with a substitute escrow agent upon delivery of
written notice thereof, signed by each such party, to such escrow agent, which
replacement shall be effective at the close of business on the day which is no
less than three (3) days after receipt by such escrow agent of such notice as
indicated in such notice.
(j) In the event of any disagreement between the other
parties hereto resulting in adverse claims or demands being made in connection
with the Escrow Property (or any portion thereof), or in the event that the
Escrow Agent in good faith is in doubt as to what action it should take
hereunder, the Escrow Agent shall be entitled to retain the Escrow Property
until the Escrow Agent shall have received (i) a final non-appealable order of
a court of competent jurisdiction directing delivery of the Escrow Property or
(ii) a written agreement executed by the other parties hereto directing
delivery of the Escrow Property, in which event the Escrow Agent shall disburse
the Escrow Property in accordance with such order or agreement. The Escrow
Agent shall act on such court order or joint written agreement without further
question.
(k) The Escrow Agent shall not receive compensation for
the services to be rendered by the Escrow Agent hereunder, but the Companies,
on the one hand, and the Purchaser, on the other hand, jointly and severally,
agree to reimburse the Escrow Agent for all reasonable expenses, disbursements
and advances incurred or made by the Escrow Agent in the performance of its
duties hereunder (including reasonable fees, expenses and disbursements of its
counsel).
(l) The parties hereto acknowledge and agree that Xxxxxx
& Xxxxxx has acted, and will continue to act, in the capacity as legal counsel
to each of the Companies, including, without limitation, in connection with the
transactions contemplated by the Purchase Agreement and this Agreement. Each
of the parties hereto hereby waive any conflict arising out of such
representation and Xxxxxx & Curley's acting hereunder as Escrow Agent and
hereby irrevocably and unconditionally consent and agree to such representation
and continued representation of the Companies and acting as Escrow Agent
hereunder.
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Section 5. Miscellaneous. (a) The parties hereto
hereby irrevocably submit to the jurisdiction of the State of New York or any
federal court sitting in New York, New York in any action or proceeding arising
out of or relating to this Agreement, and the parties hereby irrevocably agree
that all claims in respect of such action or proceeding arising out of or
relating to this Agreement shall be heard and determined in such State of New
York or federal court, as the case may be. The other parties hereby consent to
and grant to any such court jurisdiction over the persons of such parties and
over the subject matter of any such dispute and agree that delivery or mailing
of any process or other papers in the manner provided hereinabove, or in such
other manner as may be permitted by law, shall be valid and sufficient service
thereof.
(b) This Agreement shall be binding upon and inure solely
to the benefit of the parties hereto and their respective successors and
assigns and shall not be enforceable by or inure to the benefit of any third
party except as provided in Section 4(i) with respect to a resignation by or
the replacement of the Escrow Agent or any successor or substitute escrow
agent. Except as provided in Section 4(i) with respect to the Escrow Agent or
any successor or substitute escrow agent, no party may assign any of its rights
or obligations under this Agreement without the written consent of the other
parties. This Agreement shall be construed in accordance with and governed by
the internal law of the State of New York (without reference to any rules as to
conflicts of law which would apply the laws of any other jurisdiction).
(c) This Agreement may only be modified by a writing
signed by each of the parties hereto, and no waiver hereunder shall be
effective unless in a writing signed by the party to be charged.
(d) All notices, requests, instructions or other
communication required by or permitted to be given in connection with this
Agreement shall be in writing, except as expressly otherwise permitted herein,
and shall be delivered in person, sent by telecopy, sent by certified or
registered mail, return receipt requested, postage prepaid, or sent by Federal
Express or any other nationally recognized overnight courier service to the
respective parties as provided below:
(a) If to the Companies:
Ramsay Managed Care, Inc.
Columbus Center
Xxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
Ramsay Health Care, Inc.
Columbus Center
Xxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
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with a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Cost, Esq.
Telecopy: (000) 000-0000
(b) If to the Purchaser:
Horizon Health Corporation
National Support Center
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000-0000
Attention: Xx. Xxxxx X. XxXxxx
Executive Vice President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxxxx & Price, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(c) If to the Escrow Agent:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Cost, Esq.
Telecopy: (000) 000-0000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied, or sent by Federal Express or any other
recognized overnight courier service, and three (3) business days after the
date of mailing, if mailed by certified mail, return receipt requested.
(e) Counterparts. This Agreement may be executed in
counterparts, including by telecopy, each of which shall be deemed an original,
but all of which taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
RAMSAY MANAGED CARE, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: EVP
RAMSAY HEALTH CARE, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: EVP
HORIZON HEALTH CORPORATION
By: /s/ Xxxxx X. XxXxxx
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Name:
Title:
XXXXXX & XXXXXX
By: /s/ Xxxxxxx X. Cost
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Name:
Title:
