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EXHIBIT 2
POST-CLOSING ESCROW AGREEMENT
This Post-Closing Escrow Agreement (the "Agreement") is made as of
August 11, 1997 by and among Horizon Health Corporation, a Delaware corporation
formerly known as Horizon Mental Health Management, Inc. ("Horizon"), and
Xxxxxx X. Xxxxxx ("Xxxxxx").
WHEREAS, Horizon, and Xxxxxx X. Xxxxxx, Xxxx Xxxxxxxx, Xxxxx Xxxxx,
Argentum Capital Partners, L.P. a Delaware limited partnership, Xxxxxx Xxxxxx,
Xxx Xxxxxx, G. Xxxxxxx Xxxxxxxx, Xxxxxxx X. XxXxxxxx and NME Management
Services, Inc., a Delaware corporation (collectively the "Shareholders") and
Specialty Healthcare Management, Inc., a Delaware corporation ("Specialty"),
entered into that certain Share Exchange Reorganization Agreement, dated as of
April 25, 1997 (the "Reorganization Agreement"), providing for the exchange of
all of the shares of capital stock of Specialty by the Shareholders for shares
of Common Stock, $.01 par value per share, of Horizon ("Horizon Stock"); and
WHEREAS, pursuant to the Reorganization Agreement, the Shareholders
agreed that Horizon would hold in escrow, for the purposes, and on and subject
to the terms and conditions, hereinafter set forth, 51,282 shares of Horizon
Stock, representing a portion of the purchase price paid to Shareholders under
the Reorganization Agreement; and
WHEREAS, Xxxxxx and the Shareholders have agreed that Xxxxxx shall act
as the agent and attorney-in-fact for all the Shareholders under this
Agreement; and
WHEREAS, the transactions contemplated by the Reorganization Agreement
have been consummated on the date hereof and the parties desire to effectuate
the provisions of the Reorganization Agreement with respect to such
post-closing escrow;
NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions hereof, the parties hereby agree as follows:
1. Escrow Shares. Horizon agrees to hold in escrow the 51,282 shares
of Horizon Stock (the "Escrow Shares"), which constitute a portion of the
shares of Horizon Stock issued to the Shareholders in the Share Exchange
pursuant to the Reorganization Agreement, strictly in accordance with the terms
of this Agreement. The respective interests of the Shareholders in the Escrow
Shares as of the date of this Agreement are in the same proportions as was the
Shareholders' respective ownership interests in Specialty as set forth on
Exhibit A of the Reorganization Agreement. The receipt and delivery by the
Shareholders of the Escrow Shares is hereby acknowledged by Horizon.
2. Terms of Escrow. The Escrow Shares shall be held as a fund
available to satisfy any obligations of the Shareholders to Horizon which may
arise under Section 7.5 or Article VIII of the Reorganization Agreement in the
manner set forth below:
(a) In the event that Horizon shall assert a claim or claims
against the Shareholders arising out of or relating to any matter with
respect to which Horizon asserts that it is entitled to receive an
adjustment under Section 7.5 of the Agreement with respect to an
account receivable in arbitration on the
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Closing Date or to be indemnified by the Shareholders pursuant to
Article VIII of the Reorganization Agreement (collectively, the
"Claims"; singularly a "Claim"), Horizon shall furnish written notice
of the Claim (the "Notice of Claim") to Xxxxxx. The Notice of Claim:
(i) shall state in reasonable detail the nature of the alleged
liability; (ii) shall state the amount that Horizon claims it is
entitled to receive from the Escrow Shares based upon the Claim; and
(iii) shall further provide a particularized statement explaining the
basis for the estimate of the Claim. Xxxxxx shall have thirty (30)
days after receipt of the Notice of Claim in which to advise Horizon
that the Shareholders dispute the Claim by delivering written notice
of the Shareholders' dispute (the "Notice of Dispute") to Horizon. The
Notice of Dispute may contest all or any portion of the Notice of
Claim based on a dispute concerning the existence of a Claim, the
Shareholders' liability, the estimated amount of the alleged loss or
any other related matter.
(b) If Xxxxxx shall not deliver a Notice of Dispute within such
thirty (30) day period, the Shareholders shall be deemed to have
acknowledged that Horizon is entitled to amount as set forth in the
Notice of Claim and shall be deemed to have directed Horizon to
release to Horizon for cancellation the number of Escrow Shares which
are equal to the dollar amount of the Claim divided by $23.25 (which
is the per share dollar equivalent amount of the Escrow Shares as
determined pursuant to the Reorganization Agreement). In the event a
Notice of Dispute is timely delivered but only a portion of a Claim is
disputed, then the number of Escrow Shares equal to the undisputed
portion of the Claim divided by $23.25 shall be promptly released to
Horizon for cancellation. It is expressly understood that, in the
event of a stock dividend or stock split by Horizon, such dollar
amount shall be proportionately adjusted for the purposes of this
Section.
(c) Subject to the Shareholders' right to dispute a Claim, once
a Notice of Claim is delivered by Horizon, Horizon shall not permit
the Escrow Shares to be reduced by distribution to the Shareholders to
a dollar amount which is less than the difference between the
aggregate dollar amount of all Claims for which a Notice of Claim has
delivered in accordance with the terms of Section 3(a) above less the
amount of $50,000 (unless any such claim is not subject to the
Threshold limitation as specified in Section 8.6(b) of the
Reorganization Agreement and such fact is so stated in the Notice of
Claim). Furthermore, if the amount of any Claim or the aggregate
amount of all Claims should ever exceed the aggregate dollar
equivalent amount of all the Escrow Shares held by Horizon, then no
portion of the Escrow Shares shall be distributed pursuant to Section
3(d) below. If the Shareholders dispute that there is a reasonable
basis for the Claim or the reasonableness of the amount being held in
escrow with respect to the Claim, such matter shall be subject to
arbitration pursuant to Section 10 of this Agreement.
(d) On the date which is six (6) months after the date of this
Agreement (the "Release Date"), Horizon shall irrevocably and
unconditionally distribute to the Shareholders the Escrow Shares (less
the number of Escrow Shares previously released to Horizon for
cancellation to satisfy Claims pursuant to the terms of this
Agreement) to the extent the dollar equivalent amount of the Escrow
Shares exceeds the aggregate dollar amount of any then existing Claim
or Claims for which a Notice of Claim was delivered by Horizon on or
prior to the Release Date in accordance with the terms of Section 3(a)
above less $50,000 (unless any such Claim relates to an adjustment
under Section 7.5 of the Agreement or is not subject to the Threshold
limitation as specified in Section 8.6(b) of the Reorganization
Agreement and such fact is so stated in the Notice of Claim). The
portion of the Escrow Shares, if any, retained after the Release Date
shall be distributed to the Shareholders or Horizon, as appropriate,
in one or more distributions, from time to time, as and when there is
a final resolution of each such Claim; provided,
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however, that no distribution will be made upon final resolution of a
Claim if the amount of the remaining unresolved Claims exceed the
dollar equivalent amount of the Escrow Shares then held by Horizon.
(e) Unless delivery is made in person at Horizon's office or
unless Horizon is properly instructed in writing by Xxxxxx to make
delivery in such other manner, Horizon shall be deemed to have
properly delivered to the Shareholders such Escrow Shares as the
Shareholders are entitled to receive, upon placing the same in United
States Mail in a suitable package or envelope, registered or certified
mail, return receipt requested, postage prepaid, addressed to Xxxxxx
at the address listed in Section 4 hereof or such other address as may
be furnished to Horizon in writing.
(f) Any cash or stock dividends or other distributions with
respect to the Escrow Shares, to the extent paid or distributed prior
to release of the Escrow Shares to the Shareholders pursuant to the
terms hereof, shall be held by Horizon as a part of the Escrow Shares
subject to this Agreement.
3. Non-Waiver. Nothing contained in this Agreement shall be deemed
or construed to release or waive any of the rights or obligations of Horizon or
the Shareholders under the Reorganization Agreement, and all rights and
remedies of the Shareholders and Horizon under this Agreement are cumulative of
all other rights which either of them may have under the Reorganization
Agreement, by law or otherwise.
4. Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by: (i) depositing
the same so addressed, postage prepaid, first class, certified or registered,
in United States mail, return receipt requested, (herein referred to as
"Mailing"); (ii) overnight delivery by a nationally recognized overnight
courier service (e.g. UPS, Federal Express); (iii) delivering the same
personally to such other party(ies); or (iv) transmitting by facsimile and
Mailing the original. Any notice shall be deemed to have been given five (5)
U.S. Post Office delivery days following the date of Mailing; one business day
after timely delivery to an overnight courier; if by personal delivery, upon
such delivery; or if by facsimile, the day of transmission if made within
customary business hours, or if not transmitted within customary business hours
the following business day.
(a) If to Xxxxxx:
Xxxxxx X. Xxxxxx
000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile Number: (000) 000-0000
With a copy to:
Howrey & Simon
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile Number: (000) 000-0000
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(b) If to Horizon:
Horizon Mental Health Management, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxx Xxx Xxxxxx, President
Facsimile Number: (000) 000-0000
With a copy to:
Xxxxxxxxxxx & Price, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile Number: (000) 000-0000
Any of the parties hereto may change the address for notices to be sent to it
by written notice delivered pursuant to the terms of this section.
5. Entire Agreement; Amendments. This Agreement sets forth the
entire understanding of the parties and supersedes all prior agreements or
understandings, whether written or oral, with respect to the subject matter
hereof. No terms, conditions or agreements other than those contained herein,
and no amendments or modifications hereto shall be valid unless made in writing
and signed by the parties hereto.
6. Capitalized Terms. Capitalized terms in this Agreement which
are not otherwise defined herein shall have the same meanings as are provided
for such terms in the Reorganization Agreement.
7. Binding Effect. This Agreement shall extend to and be binding
upon and inure to the benefit of the parties hereto, their respective
successors and assigns.
8. Waiver; Remedies. Waiver by any party hereto of any breach of or
exercise of any rights under this Agreement shall not be deemed to be a waiver
of similar or other breaches or rights or a future breach of the same duty. The
failure of a party to take any action by reason of any such breach or to
exercise any such right shall not deprive any party of the right to take any
action at any time while such breach or condition giving rise to such right
continues. The parties shall have all remedies permitted to them by this
Agreement or law, and all such remedies shall be cumulative.
9. Attorney's Fees and Costs. In the event of a breach by any party
to this Agreement and commencement of a subsequent legal action in a court of
law or forum of arbitration, the prevailing party in any such dispute shall be
entitled to reimbursement of reasonable attorney's fees and court costs,
including, but not limited to, the costs of expert witnesses, transportation,
lodging and meal costs of the parties and witnesses, costs of transcript
preparation and other reasonable and necessary direct and incidental costs of
such dispute. "Prevailing party" is the party in whose favor final judgment is
rendered if, but only if, such judgment is in excess of any amounts offered in
settlement by the adverse party or parties.
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10. Arbitration.
(a) Arbitration Procedure. In the event of a dispute
regarding any matters arising out of or relating to this Agreement
(including, but not limited to, actions for injunctive or declaratory
relief) (hereinafter collectively "arbitrable issues") that cannot be
settled by agreement between the parties, such controversy or dispute
shall be submitted for arbitration in Denver, Colorado, and for this
purpose each party hereby expressly consents to such arbitration in
such forum. The arbitration process shall proceed as follows:
(1) Step One. In the event of a dispute, the
disputing party (herein so called) may at any time notify the
other party ("answering party") in writing that the disputing
party demands to pursue arbitration as provided in Step Two
below, setting forth in specific terms the disputing party's
proposed statement of the matters in dispute to be submitted
to arbitration and the name and address of the arbitrator
selected by the disputing party. Within five (5) business
days following receipt of the disputing party's written
arbitration demand complying with the requirements of this
Step One, the answering party shall notify the disputing
party in writing, setting forth in specific terms the
answering party's proposed statement of the matter in dispute
and identifying the name and address of the arbitrator
selected by such answering party.
(2) Step Two. The two (2) arbitrators so selected
shall meet and confer within twenty (20) business days after
receipt by the disputing party of the answering party's
written notice as called for under Step One above, and if
they are unable within said twenty (20) day period to reach a
decision on the matters in dispute, they shall, at the
expiration of said twenty (20) day period, jointly select a
neutral third arbitrator. If said arbitrators are unable to
choose a neutral third arbitrator, any party may request the
American Arbitration Association ("AAA") to appoint an
additional arbitrator from its National Panel of Commercial
Arbitrators. Any party to this Agreement may advise the AAA
that time is of the essence and that the parties to this
Agreement would like such selection as soon as is reasonably
possible, it being expressly understood that in such AAA
selection process the selection is in the sole discretion of
the AAA, and that the AAA shall not be required by reason of
this Agreement to consult with the parties to this Agreement
in said selection process; provided that all arbitrators,
including the additional arbitrator selected by the AAA,
shall be disinterested individuals knowledgeable in
commercial transactions. Upon selection of the additional
arbitrator, all arbitrators shall within ten (10) business
days thereafter convene an arbitration proceeding at a date,
time and place (in metropolitan Denver, Colorado) designated
by said arbitrators by a majority vote, written notice of
which shall be given to the parties not later than seven (7)
calendar days prior to said hearing date. At the hearing,
each party may be represented by counsel and present
testimony and evidence. If at the commencement of the hearing
the parties cannot agree on a joint statement of the matters
in dispute to be submitted to the arbitrators, the
arbitrators shall be empowered to frame the submission
issue(s). A Certified Court Reporter's transcript may be
demanded by any party or by the arbitrators and said official
transcript shall be prepared, completed, and delivered to the
arbitrators with copies to each party within ten (10)
business days following the conclusion of the hearing.
Arbitration sessions following the initial session, if
necessary, shall be scheduled by the arbitrators so that the
arbitration proceedings (i.e., presentation of evidence
and/or oral arguments) are completed within twenty (20) days
of the initial session. Each party shall be given the
opportunity to file with the
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arbitrators simultaneous written briefs five (5) business
days following receipt by the arbitrators of the official
transcript but, if no transcript is demanded as provided in
this Agreement, said briefs shall be filed simultaneously
five (5) business days following conclusion of the hearing.
Copies of any such briefs shall be provided to the other
party concurrently upon filing with the arbitrators.
(3) Step Three. Within ten (10) business days
following the receipt by the arbitrators of the brief(s) (or
within ten (10) business days following conclusion of the
hearing if all parties waive briefs), the arbitrators shall
make and deliver to the parties their decision and award in
writing. The arbitrators shall have the authority to enter
any award or to grant any relief which could be obtained in a
court of competent jurisdiction and reasonable attorneys',
arbitrators' and experts' fees and expenses of arbitration
may be awarded as the arbitrators see fit, consistent with
the provisions of this Agreement. The arbitrators shall have
no authority to modify, amend or alter the provisions of this
Agreement and shall base their decision and award on
applicable law, the language contained in this Agreement and
the facts giving rise to the dispute as presented on the
record at the hearing. The arbitrators shall issue a written
opinion explaining the basis for their findings.
(b) Self-Execution. It is expressly understood between the
parties that this Article 10 is a selfexecuting arbitration provision
and that any party may unilaterally select an arbitrator if the other
party refuses to arbitrate. It is further expressly agreed that said
unilaterally-selected arbitrator may proceed to arbitrate the issue(s)
and the arbitration and decision shall be self-executing and therefore
shall not require the order of any Court to proceed. The parties may,
however, mutually stipulate in writing to extend or to shorten the
prescribed time periods (including a stipulation to expedite the
referral and submission to arbitration). All provisions of this
Agreement not in dispute shall be observed and performed without
interruption during the pendency of any proceeding called for under
this Article 10.
(c) Arbitrator's Fees. If an additional arbitrator is
required pursuant to Step Two under Section (a) above, each party
shall pay its pr rata share of any required retainer or other payments
required by such arbitrator upon such arbitrator's demand, with the
ultimate responsibility for the arbitrators' fees to be determined by
the arbitrators in the final arbitration award pursuant to Step Three
of Section (a) above; otherwise, each party shall bear its own costs
and expenses in connection with any proceedings under this Article 10
and, in any event, each party shall pay the fees of the arbitrator it
selects.
(d) Rules Governing Arbitration. In all other respects,
the arbitration shall be conducted pursuant to the then-existing
Commercial Rules of the AAA to the extent such rules are not
inconsistent with any provision of this Agreement. Subject to the
foregoing, the arbitrators shall determine the scope and extent of
permissible discovery, if any.
(e) Entry of Award. The award of the arbitrators may be
entered as a final judgment by any court of competent jurisdiction.
(f) Injunctive Relief. Notwithstanding the provisions of
this Article 10 to the contrary, each party shall be entitled to seek
temporary or preliminary injunctive relief from a court of competent
jurisdiction if the failure to immediately obtain injunctive relief
will result in irreparable harm to that
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party. The jurisdiction of the court shall extend only to such relief
and any request for permanent injunctive relief shall remain subject
to the arbitration provisions of this Agreement.
11. Termination. This Agreement shall terminate at such time as
all of the Escrow Shares shall have been released in accordance with the terms
and conditions of this Agreement.
12. Agent. It is expressly understood that Xxxxxx is and shall act
hereunder as an agent and attorney-in-fact for and on behalf of all the
Shareholders under the Reorganization Agreement pursuant to the provisions of
the Reorganization Agreement. All allocations and distributions of the Escrow
Shares to the Shareholders shall be the responsibility of Xxxxxx, and Horizon
shall have no obligation or liability with respect thereto.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Post-Closing
Escrow Agreement as of the day herein first written above.
SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx
Individually and as agent and
attorney-in-fact for the Shareholders
HORIZON:
HORIZON HEALTH
CORPORATION, a Delaware
corporation formerly known
as HORIZON MENTAL HEALTH
MANAGEMENT, INC.
By: /s/ Xxxxx X. XxXxxx
----------------------------------------
Xxxxx X. XxXxxx
Executive Vice President
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