EXHIBIT 99.2
DEPOSIT ESCROW AGREEMENT
THIS DEPOSIT ESCROW AGREEMENT is made this 3rd day of
December, 2002, by and among Integrated Health Services, Inc., a Delaware
corporation ("SELLER"), THI Holdings, LLC, a Delaware limited liability company
("PURCHASER"), and WILMINGTON TRUST COMPANY, as "DEPOSIT ESCROW AGENT."
WHEREAS, the Purchaser and the Seller have executed a stock purchase
agreement dated as of the date hereof (the "STOCK PURCHASE AGREEMENT") providing
for the purchase by Purchaser of the capital stock of each of IHS Long Term
Care, Inc. and IHS Therapy Care, Inc. and, in connection therewith, Purchaser is
required to deliver for the benefit of the Seller a deposit simultaneously with
the execution of the Stock Purchase Agreement; and
WHEREAS, pursuant to Section 2.2(b) of the Stock Purchase Agreement,
Purchaser has delivered a deposit to the Deposit Escrow Agent in the amount of
$12,000,000 (the "PURCHASER DEPOSIT") in satisfaction of such requirement; and
WHEREAS, the Deposit Escrow Agent shall deliver the Purchaser Deposit
as specified herein.
NOW, THEREFORE, in consideration of the premises, and further
consideration of the covenants set forth hereafter, it is hereby agreed mutually
as follows:
I. DESIGNATION AS DEPOSIT ESCROW AGENT.
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Subject to the terms and conditions hereof, Purchaser and
Seller hereby appoint Wilmington Trust Company as Deposit Escrow Agent and
Wilmington Trust Company hereby accepts such appointment.
II. RECEIPT OF PURCHASER DEPOSIT.
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(a) By its signature below, Deposit Escrow Agent acknowledges
receipt of funds from the Purchaser in the amount of the Purchaser Deposit
totaling $12,000,000.
(b) Deposit Escrow Agent will hold all right, title and
interest in and to the Purchaser Deposit in accordance with the terms and
conditions set forth in this Deposit Escrow Agreement and shall not disburse the
Purchaser Deposit except as provided herein.
III. INVESTMENT OF PURCHASER DEPOSIT.
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(a) Purchaser and Seller shall indicate the investments in
which the Purchaser Deposit is to be invested. In the absence of such written
instructions, Deposit Escrow Agent shall initially maintain the Purchaser
Deposit in a non-interest bearing account. Any other investment of the Purchaser
Deposit shall be upon written instructions of the Purchaser and the Seller;
provided, however, that upon the written instructions of the Purchaser alone
(with a copy
of such instructions delivered to the Seller), the Purchaser Deposit shall be
invested in U.S. Government Portfolio class shares of Wilmington Trust Company
family of mutual funds until the disbursement of the Purchaser Deposit, which
instructions shall be delivered to the Deposit Escrow Agent no later than 30
days after the date hereof. If the Purchaser Deposit is invested in a mutual
fund, the parties acknowledge that shares in mutual funds are not obligations of
Wilmington Trust Company or Wilmington Trust Corporation, are not deposits and
are not insured by the Federal Deposit Insurance Corporation. The Deposit Escrow
Agent or its affiliate may be compensated by the mutual fund for services
rendered in its capacity as investment advisor, or other service provider, and
such compensation is both described in detail in the prospectus for the fund,
and is in addition to compensation, if any, paid to Wilmington Trust Company in
its capacity as the Deposit Escrow Agent hereunder.
(b) All earnings received from the investment of the Purchaser
Deposit shall be credited to, and shall become part of, the Purchaser Deposit
(and any losses on such investments shall be debited to the Purchaser Deposit).
(c) For tax purposes, all interest and other income earned on
the Purchaser Deposit shall be the income of the party receiving the Purchaser
Deposit. The parties hereto shall file tax returns and information returns
consistent with such treatment.
IV. RELEASE OF ESCROW FUNDS.
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(a) The Deposit Escrow Agent shall deliver the Purchaser
Deposit (including, without limitation, any interest or other earnings thereon),
solely as follows: (i) to the Seller upon the Closing (as defined in the Stock
Purchase Agreement) if the Seller and the Purchaser have both executed a written
request to Deposit Escrow Agent no later than the business day prior to the
Closing requesting the release of the Purchaser Deposit to the Seller at the
Closing, provided that Deposit Escrow Agent shall release the Purchaser Deposit
pursuant to this clause (i) only if Deposit Escrow Agent has received written
instructions from both the Seller and the Purchaser on the day of Closing that
the Closing is occurring; (ii) to the Seller upon the 10th business day
following the receipt by Deposit Escrow Agent of a written request from the
Seller requesting the release of the Purchaser Deposit accompanied by a
statement either that the Seller has terminated the Stock Purchase Agreement
either as a result of a material breach of the Stock Purchase Agreement by the
Purchaser or as a result of a failure of any of the conditions set forth in
Sections 7.1, 7.2, 7.3, 7.7 or 7.10 of the Stock Purchase Agreement, specifying
in reasonable detail the basis for such request (which request shall be
delivered to the Purchaser at the same time it is delivered to Deposit Escrow
Agent and Deposit Escrow Agent shall confirm delivery of such request to the
Purchaser); (iii) to the Purchaser upon the 10th business day following the
receipt by Deposit Escrow Agent of a written request from the Purchaser
requesting the release of the Purchaser Deposit accompanied by a statement that
the Stock Purchase Agreement has been terminated for any reason except if the
provisions described in clause (ii) apply, specifying in reasonable detail the
basis for such request (which request shall be delivered to the Seller at the
same time it is delivered to Deposit Escrow Agent and Deposit Escrow Agent shall
confirm delivery of such request to the Seller); and (iv) to the Purchaser upon
the 10th business day following the receipt by Deposit Escrow Agent of a written
request from the Purchaser requesting the release of the Purchaser Deposit
accompanied by a statement that the Seller's Bid Procedures Order (the "BID
PROCEDURES ORDER"), which Bid Procedures Order shall include an
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approval and authorization by the United States Bankruptcy Court for the
District of Delaware (the "BANKRUPTCY COURT") of the Seller's execution and
delivery of this Deposit Escrow Agreement, has not been entered on the docket by
the Bankruptcy Court within 45 days of the execution of the Stock Purchase
Agreement (which request shall be delivered to the Seller at the same time it is
delivered to Deposit Escrow Agent and Deposit Escrow Agent shall confirm
delivery of such request to the Seller).
(b) Notwithstanding the foregoing, if at any time Deposit
Escrow Agent shall receive joint written instructions executed by the Seller and
the Purchaser, other than pursuant to Section IV(a)(i) above ("JOINT WRITTEN
INSTRUCTIONS"), to release all or a portion of the Purchaser Deposit, then
within five (5) business days after receipt of such Joint Written Instructions,
Deposit Escrow Agent shall release the Purchaser Deposit in accordance with such
Joint Written Instructions.
(c) Deposit Escrow Agent shall deliver the Purchaser Deposit
as set forth above unless it shall have received a notice of objection from
either of the parties by the end of such 10 business day period. If Deposit
Escrow Agent shall have received a notice of objection, it shall deliver the
Purchaser Deposit (i) upon joint written instructions of the Purchaser and
Seller, or (ii) to the Bankruptcy Court.
(d) Notwithstanding anything contained herein to the contrary,
in the event release instructions are given, whether in writing, by telecopier
or otherwise, Deposit Escrow Agent is authorized (but not required) to seek
confirmation of such instructions by telephone call-back, and the Deposit Escrow
Agent may rely upon the confirmations of anyone purporting to be the person or
persons designated in the instructions. The persons and telephone numbers for
call-backs may be changed only in a writing actually received and acknowledged
by the Deposit Escrow Agent. The parties to this Deposit Escrow Agreement
acknowledge that such security procedure is commercially reasonable.
V. AUTHORITY OF DEPOSIT ESCROW AGENT AND LIMITATION OF LIABILITY.
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(a) In acting hereunder, Deposit Escrow Agent shall have only
such duties as are specified herein and no implied duties shall be read into
this Deposit Escrow Agreement. Deposit Escrow Agent shall not be liable for any
act done, or omitted to be done, by it in the absence of its gross negligence or
willful misconduct.
(b) Deposit Escrow Agent may act in reliance upon any writing
or instrument or signature which it, in good faith, believes to be genuine, and
may assume the validity and accuracy of any statement or assertion contained in
such a writing or instrument and may assume that any person purporting to give
any writing, notice, advice or instruction in connection with the provisions
hereof has been duly authorized so to do.
(c) Deposit Escrow Agent shall be entitled to consult with
legal counsel in the event that a question or dispute arises with regard to the
construction of any of the provisions hereof, and shall incur no liability and
shall be fully protected in acting in accordance with the advice or opinion of
such counsel.
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(d) Deposit Escrow Agent shall not be required to use its own
funds in the performance of any of its obligations or duties or the exercise of
any of its rights or powers, and shall not be required to take any action which,
in Deposit Escrow Agent's sole and absolute judgment, could involve it in
expense or liability unless furnished with security and indemnity which it
deems, in its sole and absolute discretion, to be satisfactory.
(e) Seller shall pay to Deposit Escrow Agent compensation for
its services hereunder to be determined from time to time by the application of
the current rates then charged by Deposit Escrow Agent for accounts of similar
size and character, with a minimum rate of $3,500 per annum. In the event
Deposit Escrow Agent renders any extraordinary services in connection with the
Purchaser Deposit at the request of the parties, Deposit Escrow Agent shall be
entitled to additional compensation therefor. The terms of this paragraph shall
survive termination of this Deposit Escrow Agreement.
(f) Purchaser and Seller hereby agree, jointly and severally,
to indemnify Deposit Escrow Agent and hold it harmless from any and against all
liabilities, losses, actions, suits or proceedings at law or in equity, and any
other expenses, fees or charges of any character or nature, including, without
limitation, attorney's fees and expenses, which Deposit Escrow Agent may incur
or with which it may be threatened by reason of its acting as Deposit Escrow
Agent under this Deposit Escrow Agreement or arising out of the existence of the
Purchaser Deposit, except to the extent the same shall be caused by Deposit
Escrow Agent's gross negligence or willful misconduct. The terms of this
paragraph shall survive termination of this Deposit Escrow Agreement.
(g) In the event Deposit Escrow Agent receives conflicting
instructions hereunder, Deposit Escrow Agent shall be fully protected in
refraining from acting until such conflict is resolved to the satisfaction of
Deposit Escrow Agent.
(h) Deposit Escrow Agent may resign as Deposit Escrow Agent,
and, upon its resignation, shall thereupon be discharged from any and all
further duties and obligations under this Deposit Escrow Agreement by giving
notice in writing of such resignation to Purchaser and Seller, which notice
shall specify a date upon which such resignation shall take effect. Upon the
resignation of Deposit Escrow Agent, Purchaser and Seller shall, within sixty
(60) business days after receiving the foregoing notice from Deposit Escrow
Agent, designate a substitute escrow agent (the "SUBSTITUTE DEPOSIT ESCROW
AGENT"), which Substitute Deposit Escrow Agent shall, upon its designation and
notice of such designation to Deposit Escrow Agent, succeed to all of the
rights, duties and obligations of Deposit Escrow Agent hereunder, unless
otherwise agreed in writing by the Seller, the Purchaser and the Substitute
Deposit Escrow Agent.
VI. NOTICES.
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Except as otherwise provided herein, any notice, instruction
or instrument to be delivered hereunder shall be in writing and shall be
effective upon receipt at the addresses set forth on the signature page hereof
or at such other address specified in writing by the addressee to each other
party hereto, or if to the Deposit Escrow Agent, upon receipt via facsimile or
telecopier transmission, at the number set forth on the signature page hereof,
or at such other number specified by Deposit Escrow Agent to each other party
hereto.
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VII. AMENDMENT.
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This Deposit Escrow Agreement may not be amended, modified,
supplemented or otherwise altered except by an instrument in writing signed by
the parties hereto.
VIII. TERMINATION.
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This Deposit Escrow Agreement will terminate upon the
disbursement of all funds in the Purchaser Deposit, as provided above, by the
Deposit Escrow Agent.
IX. GOVERNING LAW.
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This Deposit Escrow Agreement shall be governed by the laws of
the State of Delaware without regard to the conflicts of law principles thereof.
In addition, each party hereto hereby irrevocably submits
itself in respect of its property, generally and unconditionally, to the
exclusive jurisdiction of the Bankruptcy Court in any legal action or proceeding
arising out of this Deposit Escrow Agreement and the transactions contemplated
hereby (and the parties agree not to commence any action, suit or proceeding
relating thereto, except in such court). Each party hereto hereby irrevocably
waives any objection which such party may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out of or in
connection with this Deposit Escrow Agreement brought in the Bankruptcy Court,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in such court has been brought in an inconvenient forum. Each party
hereto hereby consents to process being served in any such action or proceeding
by the mailing of a copy thereof to the address set forth below and agrees that
such service upon receipt shall constitute good and sufficient service of
process or notice thereof.
X. COUNTERPARTS.
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This Deposit Escrow Agreement may be executed in any number of
counterparts (including by means of facsimile transmission), each of which when
so executed shall be deemed to be an original, and such counterparts together
shall constitute and be one and the same instrument.
XI. ENTIRE AGREEMENT.
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This Agreement, and with respect to the Seller and the
Purchaser, the Stock Purchase Agreement, embody the entire agreement and
understanding of the parties concerning the Purchaser Deposit, and, in the event
of any inconsistency between this Agreement and the Stock Purchase Agreement,
this Agreement shall control.
XII. ASSIGNMENT.
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This Agreement shall bind and inure to the benefit of the
parties hereto and their respective, heirs, personal representatives, successors
and permitted assigns. The Seller and the
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Purchaser may assign rights under this Agreement to the same extent they are
permitted to assign their rights and obligations under the Stock Purchase
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused their names
to be subscribed to this Deposit Escrow Agreement by their respective authorized
officers as of the day and year first above written.
INTEGRATED HEALTH SERVICES, INC. WILMINGTON TRUST COMPANY,
as Deposit Escrow Agent
By: /s/ Guy Sansone By: /s/ Michael Diaz
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Title: Senior Vice President Title: Authorized Signatory
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Address: Address:
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The Highlands Rodney Square North
910 Ridgebrook Road 1100 North Market Street
Sparks, MD 21152 Wilmington, Delaware 19890
Fax No.:(410) 773-1325 Fax No.:(302) 636-4140
Tel.No.: (410) 773-1000 Tel.No.: (302) 636-6449
Attention: General Counsel Attention: Scott Huff
THI HOLDINGS, LLC
By: /s/ Anthony Misitano
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Title: President, Chief Executive Officer
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and Assistant Secretary
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Address:
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4660 Trindle Road
Suite 103
Camp Hill, PA 17011
Fax No.:(717) 730-8722
Tel. No.:(717) 730-8710
Attention: Anthony Misitano