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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
HORIZON HEALTH CORPORATION
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
44041Y 10 4
(CUSIP Number)
Roger A. Klein, Esq.
Howrey & Simon
1299 Pennsylvania Avenue NW
Washington, D.C. 20004-2402
(202) 783-0800
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 11, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 44041Y 10 4 PAGE 2 OF 10 PAGES EXCLUDING EXHIBITS
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON Howard B. Finkel
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS (see instructions)* OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER 663,600
NUMBER OF
SHARES ------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER -0-
OWNED BY
EACH ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER 639,292
PERSON
WITH: ------------------------------------------------
10 SHARED DISPOSITIVE POWER 24,308
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 663,600
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See instructions)* IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDED BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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ITEM 1. SECURITY AND ISSUER.
Common Stock, $.01 par value per share, of Horizon Health Corporation, a
Delaware corporation.
Horizon Health Corporation
1500 Waters Ridge Drive
Lewisville, TX 75057-6011
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ITEM 2. IDENTITY AND BACKGROUND.
(a) Howard B. Finkel
(b) 768 Chimney Creek
Golden, CO 80401
(c) The Reporting Person was the former Chief Executive Officer of
Specialty Healthcare
Management, Inc. He is currently retired.
(d) None
(e) None
(f) U.S.A.
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The shares of the Issuer reported herein were acquired in a share exchange
transaction, pursuant to that certain Share Exchange Reorganization Agreement
dated as of April 25, 1997, by and among the Issuer, Specialty Healthcare
Management, Inc., a Delaware corporation ("Specialty"), and the stockholders of
Specialty, as amended by an amendment dated as of July 2, 1997 (the "Share
Exchange Agreement"). In such share exchange, the Issuer acquired all of the
outstanding capital stock of Specialty in exchange for an aggregate of
1,400,000 shares of Common Stock of the Issuer. Pursuant to the Share Exchange
Agreement, the Reporting Person conveyed 4,500 shares of common stock, $.01 par
value per share, of Specialty to the Issuer in exchange for 663,600 shares of
Common Stock of the Issuer.
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ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the acquisition of the Issuer Common Stock of the Reporting
Person as reported herein is described in Item 3 of this Schedule, which
description is incorporated by reference into this Item 4.
(a) Pursuant to a Registration Rights Agreement signed at closing under
the Share Exchange Agreement, and on the terms and subject to the
conditions stated in such Registration Rights Agreement, the Issuer
has agreed to register for resale all of the 1,400,000 shares of
Issuer Common Stock issued in the share exchange pursuant to the Share
Exchange Agreement, including, without limitation, the 663,600 shares
issued to the Reporting Person as reported herein. Subject to certain
terms and conditions, it is expected that such registration statement
will be filed with the Securities and Exchange Commission as soon as
practicable on or after October 21, 1997. The Reporting Person has not
yet determined the number of his shares of Issuer Common Stock
reported herein which he intends to sell pursuant to such registration
statement.
(b) None
(c) None
(d) Pursuant to the Share Exchange Agreement, the Reporting Person has
been elected to the Board of Directors of the Issuer. Otherwise, none.
(e) None
(f) None
(g) None
(h) None
(i) None
(j) None
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) At the date of this Schedule, (i) the Reporting Person is the
beneficial owner of 663,600 shares of Common Stock, $.01 par value per
share, of the Issuer, and (ii) such shares represent approximately
9.5% of the issued and outstanding shares of the Issuer's Common
Stock.
(b) The Reporting Person currently has sole power to vote all 663,600
shares, but 24,308 of such shares are held in escrow by the Issuer
pursuant to that certain Post-Closing Escrow Agreement (the "Escrow
Agreement") dated August 11, 1997, entered into between the Issuer,
the Reporting Person and other parties in connection with certain
post-closing indemnification obligations of the Reporting Person and
such other parties pursuant to the Share Exchange Agreement, which
Escrow Agreement limits the Reporting Person's power of disposition
with respect to such escrowed shares during the escrow period.
(c) None
(d) As stated in Item 5(b) above, 24,308 shares reported herein are held
in escrow by the Issuer pursuant to the terms of the Escrow Agreement.
(e) Not applicable.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Pursuant to the Share Exchange Agreement, the Issuer has agreed that it shall
use its best efforts to cause the Reporting Person to be nominated and elected
as a member of the Board of Directors of the Issuer so long as the Reporting
Person beneficially owns 5% or more of the outstanding shares of Common Stock
of the Issuer as determined on a fully-diluted basis. Pursuant to the terms of
the Escrow Agreement, up to 24,308 shares of the Reporting Person are subject
to possible claim by the Issuer until February 11, 1998. See Item 4(a) of this
Schedule for a discussion of certain registration rights of the Reporting
Person.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits to this Schedule:
1. Share Exchange Reorganization Agreement dated as of April 25, 1997,
among the Issuer, the Reporting Person, John Harrison, Larry Reiff,
Argentum Capital Partners, L.P., Denise Dailey, Ken Dorman, G. Phillip
Woellner, Michael S. McCarthy, and Specialty, as amended by a First
Amendment to Share Exchange Reorganization Agreement dated as of July
2, 1997 (incorporated herein by reference to Appendix A to the
definitive Proxy Statement filed with the Commission by the Issuer on
July 11, 1997, relating to a Special Meeting of Stockholders of the
Issuer held on August 11, 1997).
2. Post-Closing Escrow Agreement dated as of August 11, 1997 by and among
the Issuer and the Reporting Person, individually and as agent and
attorney-in-fact for other persons named therein (filed herewith).
3. Registration Rights Agreement dated as of August 11, 1997 by and among
the Issuer and the Reporting Person, John Harrison, Larry Reiff,
Argentum Capital Partners, L.P., Denise Dailey, Ken Dorman, G. Phillip
Woellner, Michael S. McCarthy and NME Management Services, Inc., a
Delaware corporation (filed herewith).
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date 8/15/97 /s/ Howard B. Finkel
-------------------- -------------------------------
Signature
Howard B. Finkel
-------------------------------
Name/Title
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INDEX TO EXHIBITS
1. Share Exchange Reorganization Agreement dated as of April 25, 1997,
among the Issuer, the Reporting Person, John Harrison, Larry Reiff,
Argentum Capital Partners, L.P., Denise Dailey, Ken Dorman, G. Phillip
Woellner, Michael S. McCarthy, and Specialty, as amended by a First
Amendment to Share Exchange Reorganization Agreement dated as of July
2, 1997 (incorporated herein by reference to Appendix A to the
definitive Proxy Statement filed with the Commission by the Issuer on
July 11, 1997, relating to a Special Meeting of Stockholders of the
Issuer held on August 11, 1997).
2. Post-Closing Escrow Agreement dated as of August 11, 1997 by and among
the Issuer and the Reporting Person, individually and as agent and
attorney-in-fact for the other persons named therein (filed herewith).
3. Registration Rights Agreement dated as of August 11, 1997 by and among
the Issuer and the Reporting Person, John Harrison, Larry Reiff,
Argentum Capital Partners, L.P., Denise Dailey, Ken Dorman, G. Phillip
Woellner, Michael S. McCarthy and NME Management Services, Inc., a
Delaware corporation (filed herewith).
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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
Howard B. Finkel ("Finkel").
WHEREAS, Horizon, and Howard B. Finkel, John Harrison, Larry Reiff,
Argentum Capital Partners, L.P. a Delaware limited partnership, Denise Dailey,
Ken Dorman, G. Phillip Woellner, Michael S. McCarthy 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, Finkel and the Shareholders have agreed that Finkel 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 Finkel. 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. Finkel 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 Finkel 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 Finkel 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 Finkel
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 Finkel:
Howard B. Finkel
768 Chimney Creek
Golden, CO 80401
Facsimile Number: (303) 526-4205
With a copy to:
Howrey & Simon
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2402
Attn: Roger A. Klein, Esq.
Facsimile Number: (202) 383-6610
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(b) If to Horizon:
Horizon Mental Health Management, Inc.
1500 Waters Ridge Drive
Lewisville, Texas 75057
Attn: Mr. James Ken Newman, President
Facsimile Number: (972) 420-8282
With a copy to:
Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile Number: (214) 651-4330
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 Finkel 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 Finkel, 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.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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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/ Howard B. Finkel
--------------------------------------------
Howard B. Finkel
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/ James W. McAtee
----------------------------------------
James W. McAtee
Executive Vice President
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EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), is entered into
as of August 11, 1997, by and between Horizon Health Corporation, a Delaware
corporation formerly known as Horizon Mental Health Management, Inc.
("Horizon"), and Howard B. Finkel, John Harrison, Larry Reiff, Argentum Capital
Partners, L.P. a Delaware limited partnership, Denise Dailey, Ken Dorman, G.
Phillip Woellner, Michael S. McCarthy and NME Management Services, Inc., a
Delaware corporation (individually a "Shareholder" and collectively the
"Shareholders").
WHEREAS, Horizon and the Shareholders are simultaneously consummating
the transactions contemplated by that certain Share Exchange Reorganization
Agreement (the "Reorganization Agreement"), dated April 25, 1997, by and among
Horizon, the Shareholders and Specialty Healthcare Management, Inc., a Delaware
corporation ("Specialty"); and
WHEREAS, the Shareholders pursuant to the Reorganization Agreement
received unregistered shares of Common Stock of Horizon in a private offering
transaction (the "Share Exchange"); and
WHEREAS, Horizon and the Shareholders agreed to enter into this
Agreement pursuant to the Reorganization Agreement simultaneously with the
Share Exchange;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
6. Definitions.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, $.01 par value, of Horizon
issued in the Share Exchange pursuant to the Reorganization Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means a Shareholder or any assignee or transferee of a
Registrable Security.
"Registrable Securities" means the shares of Common Stock issued to
the Shareholders in the Share Exchange pursuant to the Reorganization
Agreement, other than the shares of Common Stock held in escrow under the
Post-Closing Escrow Agreement executed pursuant to the Reorganization
Agreement. Any Registrable Security will cease to be a Registrable Security
when (i) a registration statement covering such Registrable Security has been
declared effective by the Commission and the Registrable Security has been
disposed of pursuant to such effective registration statement, (ii) the
Registrable Security is sold under circumstances in which all of the applicable
conditions of Rule 144 (or any similar provisions then in force) under the
Securities Act are met or (iii) the Registrable Security has been otherwise
transferred, Horizon has delivered a new certificate or other evidence of
ownership for the Registrable Security not bearing a legend restricting further
transfer, and the Registrable Security may be resold without subsequent
registration under the Securities Act.
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"Registration Statement" means the registration statement contemplated
by this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to the Registration Statement.
"Underwriters" means a securities dealer which purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
7. Unregistered Securities.
Each Shareholder acknowledges that the shares of Common Stock
issued in the Share Exchange are unregistered securities and are subject to
Rule 144 under the Securities Act for the purposes of any resales of shares of
the Common Stock. Each Shareholder hereby represents and warrants to, and
agrees with, Horizon as follows:
(a) The Shareholder will not sell or otherwise transfer
any of the Common Stock in violation of the Securities Act or the
rules and regulations promulgated thereunder. The Shareholder has not
and will not, in any event, sell or otherwise transfer or enter into
any contract or otherwise agree to sell or otherwise transfer any of
the Common Stock until such time as financial results covering at
least thirty days of combined operations of Horizon and Specialty
after the Share Exchange have been published and distributed to the
stockholders of Horizon.
(b) The Shareholders hereby consent to the placing of a
legend on the certificate or certificates evidencing the Common Stock
referring to the issuance thereof in a private offering transaction
under the Securities Act and to the giving of stop transfer
instructions to the transfer agent for the Common Stock with respect
to such certificate or certificates. The legend will state in
substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or the Blue Sky
Laws of any state and may not be sold or otherwise
transferred in the absence of (a) an effective registration
statement for the sale of such shares under the Securities
Act of 1933 or (b) an opinion of counsel reasonably
satisfactory to Horizon to the effect that the transfer may
be made without such registration."
(c) Except as set forth herein, each Shareholder
understands that Horizon is under no obligation to take any action to
facilitate the sale, transfer or other disposition by any Shareholder,
or on behalf of any Shareholder, of any of the Common Stock.
(d) In the event of any sale or transfer of any of the
Common Stock in a transaction not involving a sale pursuant to Rule
144 under the Securities Act or not involving a sale in a registered
public offering, the Shareholder will obtain from each transferee of
the Common Stock in such transaction a letter agreement substantially
similar to this Section 2 or a letter containing such other
information reasonably required by Horizon to evidence an exception
from the applicable registration requirements of federal or state
securities laws, which is binding and enforceable by Horizon against
the transferee.
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It is understood and agreed that the legend set forth in paragraph (b)
above shall be removed, and the related stock transfer restrictions shall be
lifted forthwith in connection with the sale or other transfer of Common Stock
(i) if the sale or other transfer of the shares of Common Stock shall have been
registered under the Securities Act, or (ii) if the sale or other transfer of
the shares of Common Stock is not so registered, the Shareholder is not at the
time of such sale or other transfer an affiliate of Horizon and has held the
Stock for at least one year (or such other period as may be prescribed by the
Securities Act and the rules and regulations thereunder) and Horizon, for at
least twelve months immediately preceding the sale or other transfer, has filed
with the Commission all of the reports it is required to file under Exchange
Act, or (iii) if Horizon shall have received either a letter from the staff of
the Commission or an opinion of legal counsel acceptable to Horizon, to the
effect that the stock transfer restrictions and the legend are not required and
may be removed.
8. The Registration Statement.
(a) Registration Statement. Subject to the provisions of
this Section 3, Horizon agrees that it shall prepare and file with the
Commission as soon as practicable after the date hereof, but in no event
earlier than October 15, 1997, a registration statement (the "Registration
Statement") on any form for which Horizon then qualifies and Horizon considers
appropriate and which is available to sell the Registrable Securities;
provided, however, that it is understood that Horizon shall be required to
proceed with the Registration Statement only after its 1997 fiscal year-end
audited financial statements are available to be used for the purposes of the
Registration Statement. Horizon further agrees to use its best efforts to cause
the Registration Statement to be filed and declared effective within thirty
(30) days after the Horizon 1997 fiscal year-end audited financial statements
are available. Prior to the filing of the Registration Statement, Horizon shall
request from each Holder the number of shares of Registrable Securities owned
by the Holder desired to be included in the Registration Statement. Subject to
the provisions of Section 3(b) below, Horizon will include in the Registration
Statement all Registrable Securities with respect to which Horizon has received
written requests for inclusion therein within twenty (20) days after the
receipt by the applicable Holder of Horizon's notice. Each such request from a
Holder will specify the number of shares of Registrable Securities to be
registered. Unless the Holder or Holders of a majority of the Registrable
Securities to be registered in the Registration Statement shall consent in
writing, Horizon shall not be permitted to include any other securities under
the Registration Statement.
(b) Underwritten Offering. Horizon may elect to proceed
with the Registration Statement pursuant to Section 3(a) above in the form of
an underwritten offering and, in such event, the Holders participating in the
Registration Statement hereby agree that the offering shall be in the form of
an underwritten offering. In such event, Horizon shall select the managing
underwriter(s) and such additional investment bankers and managers to be used
in connection with the offering; provided, that such underwriter and additional
investment bankers and managers must be reasonably satisfactory to the Holders
participating in the Registration Statement. If the managing underwriter or
underwriters of such offering advise Horizon and the Holders in writing that in
their opinion the number of shares of Registerable Securities requested to be
included in such offering is sufficiently large to materially and adversely
affect the success of such offering, Horizon will only include in the
Registration Statement the Registrable Securities (and no securities offered by
Horizon or any other party) limited to an aggregate number of the Registrable
Securities which in the opinion of such managing Underwriter or Underwriters
can be sold without any such material adverse effect, and such amount shall be
allocated to the Holders of Registrable Securities based on the number of
Registrable Securities requested to be included in the Registration Statement.
As to any Registrable Securities requested to be included in the offering by
the Holders, but not included due to such opinion of the Managing Underwriters,
the Holders of such Registrable Securities shall have the piggyback
registration rights provided under Section 4 below.
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(c) Other Form of Offering. In the event that Horizon
elects not to proceed or is unable to effect the offering pursuant to the
Registration Statement as an underwritten offering, then Horizon shall
nevertheless still be obligated to proceed with the Registration Statement and
an offering of the Registerable Securities on a non-underwritten basis;
provided, however, that Horizon agrees to proceed in such event in the same
manner and at the same times as specified in Section 3(a) but provided further,
however, that the Holders agree that, in such event, the Shareholders shall
initially for at least a two week period after the effective date of the
Registration Statement attempt to sell the Registerable Securities through
block sales arranged by a broker/dealer selected by Horizon and reasonably
satisfactory to the Holders.
(d) Effective Registration and Expenses. A registration
will not count as the Registration Statement until it has become effective
(unless the Holders withdraw the Registrable Securities, in which case such
registration will count as the Registration Statement unless the Holders of
such Registrable Securities agree to pay all Registration Expenses (as
hereinafter defined)). Except as provided above, Horizon will pay all
Registration Expenses in connection with any Registration Statement whether or
not it becomes effective.
9. Finkel Piggyback Registration Rights.
(a) If at any time after the offering pursuant to the
Registration Statement contemplated under Section 3 above is completed and
before the expiration of one(1) year after the date of this Agreement, the
Company proposes for any reason to register any shares of Common Stock under
the Securities Act (other than pursuant to a registration statement on Form S-4
or Form S-8 (or a similar or successor form) with respect to an offering of
Common Stock by the Company for its own account or for the account of any of
its security holders, it shall at each such time promptly give written notice
to Howard B. Finkel ("Finkel") of its intention to do so (but in no event less
than ten days before the anticipated filing date). Such notice shall offer
Finkel the opportunity to register such number of shares of Registrable
Securities as Finkel may request.
(b) The Company shall use its best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the shares of Registrable Securities requested by Finkel to be included
in the registration statement for such offering to be included (on the same
terms and conditions as the Common Stock of the Company included therein to the
extent appropriate). Notwithstanding the foregoing, if in the reasonable
judgment of the managing Underwriter or Underwriters, due to the size of the
offering which the Company or such other persons or entities intend to make,
the success of the offering would be adversely affected by inclusion of the
Registrable Securities requested to be included by Finkel then, if the offering
is by the Company for its own account or is an offering by other holders
registering shares of Common Stock of the Company pursuant to demand
registration rights, then the number of shares of Common Stock to be offered
for the account of Finkel and any other holders registering shares of Common
Stock of the Company pursuant to similar piggyback registration rights, if any,
shall be reduced pro rata based on the relative percentage ownership of all
shares of Common Stock then outstanding owned by Finkel and such other holders
to the extent necessary to reduce the total number of shares of Common Stock to
be included in such offering to the amount recommended by such managing
Underwriter or Underwriters.
10. Holdback Agreements.
(a) Restrictions on Public Sale by Holders of Registrable
Securities. Each Holder whose securities are included in a Registration
Statement agrees not to effect any public sale or distribution of the issue
being registered or a similar security of Horizon or any securities convertible
into or exchangeable or exercisable
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for such securities, including a sale pursuant to Rule 144 or Rule 144A under
the Securities Act, during the ten days prior to, and during the 90-day period
beginning on, the effective date of the Registration Statement (except as part
of such registration), if and to the extent requested by Horizon in the case of
a non-underwritten public offering or if and to the extent requested by the
managing Underwriter or Underwriters in the case of an underwritten public
offering.
(b) Restrictions on Public Sale By Horizon. Horizon agrees
not to effect any public sale or distribution of any securities similar to
those being registered, or any securities convertible into or exchangeable or
exercisable for such securities (except pursuant to a registration statement on
Form S-4 or S-8 or any substitute form therefor that may be adopted by the
Commission), during the ten days prior to, and during the 90-day period
beginning on, the effective date of the Registration Statement (except as part
of the Registration Statement where the Holders of a majority of the
Registrable Securities to be included in the Registration Statement consent).
11. Registration Procedures.
In connection with the Registration Statement, Horizon will:
(a) prepare and file with the Commission a registration
statement on any form for which Horizon then qualifies and which Horizon shall
deem appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and use its best efforts to cause such
filed registration statement to become effective; provided, (i) that at least
five days before filing a registration statement or prospectus or as promptly
as practicable prior to filing any amendments or supplements thereto, Horizon
will furnish to one counsel selected by the Holders of a majority of the
Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed, which documents will be subject to the
review of such counsel, and (ii) that after the filing of the registration
statement, Horizon will promptly notify each Selling Holder of Registrable
Securities covered by such registration statement of comments received from, or
any stop order issued or threatened by, the Commission and take all reasonable
actions required to respond to such comments or, as the case may be, prevent
the entry of such stop order or to remove it if it has been entered;
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective pursuant to Section 3 for a period of not less than ninety (90) days
or such shorter period which will terminate when all Registrable Securities
covered by such registration statement have been sold (but not before the
expiration of the period referred to in subsection 4(3) of the Securities Act
and Rule 174 thereunder, if applicable) and comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Selling Holders
thereof set forth in much registration statement;
(c) furnish to each Selling Holder, prior to filing the
registration statement, if requested, copies of such registration statement as
proposed to be filed, and thereafter furnish to such Selling Holder such number
of copies of such registration statement, each amendment and supplement thereto
(in each case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus), and such other
documents as such Selling Holder may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Selling Holder;
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(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
states as any Selling Holder reasonably (in light of such Selling Holder's
intended plan of distribution) requests and do any and all other acts and
things which may be reasonably necessary to enable such Selling Holder to
consummate the disposition in such states of the Registrable Securities owned
by such Selling Holder; provided that Horizon will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection, (ii) subject itself
to taxation in any such jurisdiction, or (iii) consent to general service of
process in any such jurisdiction;
(e) use its best efforts to cause such Registrable
Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of Horizon to enable the Selling Holder or Selling Holders thereof
to consummate the disposition of such Registrable Securities; provided that
Horizon will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subsection, (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction;
(f) notify each Selling Holder of such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to each Selling
Holder any such supplement or amendment;
(g) enter into and perform customary agreements (including
an underwriting agreement in customary form with the managing Underwriter, if
any) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities;
(h) make available for inspection by any Selling Holder of
such Registrable Securities, any Underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant, or other
professional retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents, and properties of Horizon (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause Horizon's officers, directors, and employees to
supply all information reasonably requested by any such Inspectors in
connection with such registration statement. Records which Horizon determines,
in good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) in the
judgment of counsel to Horizon the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in such registration statement or
(ii) the release of such Records is ordered pursuant to a subpoena or other
order from a court or government agency of competent jurisdiction. Each Selling
Holder of such Registrable Securities agrees that information obtained by it as
a result of such inspections shall be deemed confidential and shall not be used
by it as the basis for any market transactions in the securities of Horizon
unless and until such is made generally available to the public. Each Selling
Holder of such Registrable Securities further agrees that it will, upon
learning that disclosure of such Records is sought in a court or government
agency of competent jurisdiction, give notice to Horizon and allow Horizon, at
its expense, to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(i) if such sale is pursuant to an underwritten offering,
use its best efforts to obtain a comfort letter or comfort letters from
Horizon's independent public accountants in customary form and covering such
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matters of the type customarily covered by comfort letters as the Selling
Holders of a majority of the Registrable Securities or the managing Underwriter
reasonably request;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
and
(k) use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar securities
issued by Horizon are then listed, or on the Nasdaq National Market, if
applicable, provided that the applicable listing requirements are satisfied.
Horizon may require each Selling Holder of Registrable
Securities to promptly furnish in writing to Horizon such information regarding
the distribution of the Registrable Securities as it may from time to time
reasonably request and such other information as may be legally required in
connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice
from Horizon of the happening of any event of the kind described in subsection
6(f) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection 6(f) hereof and,
if so directed by Horizon such Selling Holder, will deliver to Horizon all
copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. If Horizon shall give such notice,
Horizon shall extend the period during which such registration statement shall
be maintained effective (including the period referred to in subsection 6(b)
hereof) by the number of days during the period from and including the date of
the giving of notice pursuant to subsection 6(f) hereof to the date when
Horizon shall make available to the Selling Holders of Registrable Securities
covered by such registration statement a prospectus supplemented or amended to
conform with the requirements of subsection 6(f) hereof.
l2. Registration Expenses.
In connection with the Registration Statement required to be
filed hereunder, Horizon shall pay the following registration expenses (the
"Registration Expenses"): (i) all registration and filing fees; (ii) fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities); (iii) printing expenses; (iv) internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties); (v) fees and expenses
incurred in connection with the listing of the Registrable Securities if
Horizon shall choose to list such Registrable Securities; (vi) fees and
disbursements of counsel for Horizon and customary fees and expenses for
independent certified public accountants retained by Horizon (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort letters
requested pursuant to subsection 6(i) hereof); and (vii) fees and expenses of
any special experts retained by Horizon in connection with such registration.
Horizon shall not have any obligation to pay any underwriting fees, discounts,
or commissions attributable to the sale of Registrable Securities, or any
out-of-pocket expenses or fees, including attorney's fees, of the Holders or
Finkel.
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13. Indemnification; Contribution.
(a) Indemnification by Horizon. Horizon agrees to
indemnify and hold harmless each Selling Holder of Registrable Securities, its
officers, directors, shareholders, partners, trustees, beneficiaries and
agents, and each person or entity, if any, who controls such Selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; except insofar as such
losses, claims, damages, liabilities, or expenses arise out of, or are based
upon, any such untrue statement or omission or allegation thereof based upon
information furnished in writing to Horizon by such Selling Holder or on such
Selling Holder's behalf expressly for use therein; provided, that with respect
to any untrue statement or omission or alleged untrue statement or omission
made in any preliminary prospectus, the indemnity agreement contained in this
subsection shall not apply to the extent that any such loss, claim, damage,
liability, or expense results from the fact that a current copy of the
prospectus was not sent or given to the person asserting any such loss, claim,
damage, liability, or expense at or prior to the written confirmation of the
sale of the Registrable Securities to such person if it is determined that it
was the responsibility of such Selling Holder to provide such person with a
current copy of the prospectus and such current copy of the prospectus would
have cured the defect giving rise to such loss, claim, damage, liability or
expense. Horizon also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors, and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Selling Holders provided in this section 8(a).
(b) Indemnification by Holders of Registrable Securities.
Each Selling Holder agrees to indemnify and hold harmless Horizon, its
directors and officers, and each person, if any, who controls Horizon within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from Horizon to
such Selling Holder, but only with respect to information furnished in writing
by such Selling Holder or on such Selling Holder's behalf expressly for use in
any registration statement or prospectus relating to the Registrable
Securities, any amendment or supplement thereto, or any preliminary prospectus.
In case any action or proceeding shall be brought against Horizon or its
directors or officers, or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to Horizon, and Horizon or its directors or
officers or such controlling person shall have the rights and duties given to
such Selling Holder, by the preceding subsection. Each Selling Holder also
agrees to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors, and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
Horizon provided in this section 8(b).
(c) Conduct of Indemnification Proceedings. If any action
or proceeding (including any governmental investigation) shall be brought or
asserted against any person entitled to indemnification under subsections (a)
or (b) above (an "Indemnified Party") in respect of which indemnity may be
sought from any party who has agreed to provide such indemnification (an
"Indemnifying Party"), the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all expenses. Such Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Party has agreed to pay such fees and expenses
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or (ii) the named parties to any such action or proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that there
is a conflict of interest on the part of counsel employed by the Indemnifying
Party to represent such Indemnified Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party; it being understood, however,
that the Indemnifying Party shall not, in connection with any one such action
or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for all such Indemnified Parties, which firm shall be designated in
writing by such Indemnified Parties). The Indemnifying Party shall not be
liable for any settlement of any such action or proceeding effected without its
written consent, but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such action or proceeding, the
Indemnifying Party shall indemnify and hold harmless such Indemnified Parties
from and against any loss or liability (to the extent stated above) by reason
of such settlement or judgment.
(d) Contribution. If the indemnification provided for in
this Section 8 is unavailable to the Indemnified Parties in respect of any
losses, claims, damages, liabilities, or judgments referred to herein, then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities, and judgments as between Horizon
on the one hand and each Selling Holder on the other, in such proportion as is
appropriate to reflect the relative fault of Horizon and of each Selling Holder
in connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative fault of Horizon on the one hand and of
each Selling Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
Horizon and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this subsection 8(d) were
determined by pro rata allocation (even if the Selling Holders were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding subsection shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection 8(d), no
Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the securities of such Selling Holder
were offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Subsection 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) Survival. The indemnity and contribution agreements
contained in this Section 8 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement or any
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underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of Horizon, and (iii) the consummation of
the sale or any successive resale of the Registrable Securities.
14. Participation in Underwritten Registrations.
No person or entity may participate in any underwritten
registration hereunder unless such person or entity (a) agrees to sell such
person's or entity's securities on the basis provided in any underwriting
arrangements approved by the persons or entities entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this Agreement.
15. Miscellaneous.
(a) Remedies. Each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein and granted
by law, including recovery of damages, will be entitled to specific performance
of its rights under this Agreement. Horizon agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that remedy at law would be adequate. Each
party waives all provisions of law requiring that a bond be posted in order to
effectuate any remedy under this Agreement.
(b) No Inconsistent Agreements. Horizon will not on or
after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. Horizon has no outstanding agreement with respect to its
securities granting any registration rights to any other person.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified, or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless
Horizon has obtained the written consent of the Holders of at least a majority
of the Registrable Securities; provided that with respect to any such waiver or
consent relating to Registration Statement, Horizon shall obtain the consent of
the Holders of a majority of the Registrable Securities subject to such
registration.
(d) 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 the United States mail (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.
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If to Horizon:
Horizon Mental Health Management, Inc.
1500 Waters Ridge Drive
Lewisville, Texas 75057-6011
Attention: James Ken Newman
Facsimile Number: (972) 420-8282
With a copy to:
Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attention: David K. Meyercord, Esq.
Facsimile Number: (214) 651-4330
If to the Shareholders:
To the respective addresses
set forth on Exhibit A to the
Reorganization Agreement
With a copy to:
Howrey & Simon
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2402
Attention: Roger A. Klein, Esq.
Facsimile Number: (202) 383-6610
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.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of
Horizon and the Holders.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of each such illegal, invalid or unenforceable provision,
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there shall be added automatically as a part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
(h) Entire Agreement. This Agreement is intended by
Horizon and the Holders as a final expression of their agreement and is
intended to be a complete and exclusive statement of their agreement and
understanding in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between Horizon and the
Holders with respect to such subject matter. This Agreement may be amended only
in writing executed by Horizon and the Holders of a majority of the Registrable
Securities.
(i) Third Party Beneficiaries. This Agreement is intended
for the benefit of Horizon and the Holders and their respective successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person or entity.
(j) Attorney's Fees. In any proceeding brought to enforce
any provision of this Agreement, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses and
any other available remedy.
(k) Governing Law. This agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to principles of conflicts or choice of law.
(l) Effectiveness. This Agreement shall become effective
as of the day first set forth above.
(m) Counterparts. This Agreement may be executed in a
number of identical counterparts and it shall not be necessary for Horizon and
the Holders to execute each of such counterparts, but when both have executed
and delivered one or more of such counterparts, the several parts, when taken
together, shall be deemed to constitute one and the same instrument,
enforceable against each in accordance with its terms. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart executed by the party against whom enforcement of this
Agreement is sought.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HORIZON: SHAREHOLDERS:
HORIZON HEALTH CORPORATION, /s/ Howard B. Finkel
a Delaware corporation formerly known as ----------------------------------
HORIZON MENTAL HEALTH HOWARD B. FINKEL
MANAGEMENT, INC.
By:/s/ James W. McAtee /s/ John Harrison
---------------------------------- ----------------------------------
Title: Executive Vice President JOHN HARRISON
Name: James W. McAtee
/s/ Larry Reiff
----------------------------------
LARRY REIFF
ARGENTUM CAPITAL PARTNERS, L.P.
By:/s/ Daniel Raynor
-------------------------------
Name: Daniel Raynor
Title: Chairman
/s/ Denise Dailey
-----------------------------------
DENISE DAILEY
/s/ Ken Dorman
-----------------------------------
KEN DORMAN
/s/ G. Phillip Woellner
-----------------------------------
G. PHILLIP WOELLNER
/s/ Michael S. McCarthy
-----------------------------------
MICHAEL S. MCCARTHY
NME MANAGEMENT SERVICES, INC.
By:/s/ Lawrence G. Hixon
-------------------------------
Name: Lawrence G. Hixon
Title: Vice President
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