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Stock Purchase Agreement

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Sectors: Services
Governing Law: Delaware, View Delaware State Laws
Effective Date: June 18, 2008
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This is a Stock Purchase Agreement dated as of June 18, 2008 (the " Agreement "), among (i) Almost Family, Inc., a Delaware corporation (" Buyer "), (ii) PCI Holding Corp., a Delaware corporation (" Seller "), and (iii) National Home Care, Inc., a New York corporation, solely in its capacity as the Seller Representative (the " Seller Representative "):


A. Seller holds 250 shares (the " Shares ") of common stock, par value $0.01 per share (the " Company Common Stock "), of Patient Care, Inc., a Delaware corporation (" Company ?), which represents 100% of the issued and outstanding shares of capital stock of the Company. Company holds 100% of the issued and outstanding stock of each of (i) Patient Care Medical Services, Inc., a New Jersey corporation (" MSI "), (ii) Priority Care, Inc., a Connecticut corporation (" Priority Care "), (iii) Patient Care Pennsylvania, Inc., a Delaware corporation ( ? PCPA ") and (iv) Patient Care New Jersey, Inc., a Delaware corporation (" PCNJ " and collectively with MSI, Priority Care and PCPA, the " Subsidiaries " and each a " Subsidiary "). Company and the Subsidiaries are referred to in this Agreement individually as a " Company Group Member " and collectively as " Company Group ".

B. Company Group owns and operates home health and agencies and hospice services operating in the States of Connecticut, Pennsylvania and New Jersey, including Medicare-Certified, Medicaid/Waiver, county contracts, HMO and other significant non-certified or "private duty" operations (collectively, the " Business ").

C. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Shares on the terms and conditions set forth herein.


Article 1

Purchase and Sale of Shares; Definitions; Seller Representative

1.1 Purchase and Sale of Shares. Subject to the terms and conditions set forth in this Agreement and in reliance on the representations and warranties contained herein, at the Closing (as defined below), Seller shall sell to Buyer, and Buyer shall purchase from Seller, all of the Shares for the Purchase Price.

1.2 Definitions. For purposes of this Agreement, the following terms and variations thereof shall have the meanings specified or referred to in this paragraph 1.2:

" Accountants " ? defined in paragraph 2.1(d).

" Anti-Kickback Statutes " ? defined in paragraph 4.27(a).

" Applicable Date " shall mean, (i) with respect to the Company, MSI or Priority Care, October 12, 2002 and (ii) with respect to PCPA or PCNJ, November 1, 2004.

" Assumption and Indemnification Agreement " shall mean the assumption and indemnification agreement in the form attached as Attachment A .

" Claim " ? defined in paragraph 7.6.

" Claimant " ? defined in paragraph 11.7(c).

" Closing Balance Sheet " ? defined in paragraph 2.1(c).

" Closing Date " ? defined in paragraph 3.1(a).

" Code " shall mean the Internal Revenue Code of 1986, as amended from time to time.

" Company Group " ? defined in Recital A.

" Company Group Contracts " ? defined in paragraph 4.9.

" Company Group Plan " shall mean any material Employee Benefit Plan maintained, or contributed to, by any Company Group Member, or any ERISA Affiliate.

" Company Subsidiary " shall mean any corporation, partnership, trust, limited liability company or other non-corporate business enterprise in which any Company Group Member holds stock or other ownership interests representing (a) more than 50% of the voting power of all outstanding stock or ownership interests of such entity or (b) the right to receive more than 50% of the net assets of such entity available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution of such entity.

" Confidentiality Agreement " ? defined in paragraph 12.14.

" Counterparty " ? defined in paragraph 11.7(c).

" Credit Agreement " shall mean the Amended and Restated Revolving Credit Note by and among Seller (as successor by merger with PCI-A Holding Corp.) and Steel City Capital Funding, LLC (successor to PNC Bank, National Association) dated March 26, 2008, as amended from time to time.

" Distribution " shall mean the distribution by Company to Seller, prior to the Closing, of the capital stock of the Excluded Corporations.

" Employee Benefit Plan " shall mean any "employee pension benefit plan" (as defined in Section 3(2) of ERISA), any "employee welfare benefit plan" (as defined in Section 3(1) of ERISA), and any other written or oral plan, agreement or arrangement involving direct or indirect compensation, including insurance coverage, severance benefits, disability benefits, deferred compensation, bonuses, stock options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement compensation.

" Encumbrance " shall mean any mortgage, pledge, lien, conditional sale agreement, security title, encumbrance or other charge.


" Environmental Laws " ? defined in paragraph 4.3(a).

" ERISA " shall mean the Employee Retirement Income Security Act of 1974, as amended.

" ERISA Affiliate " shall mean any entity which is, or at any applicable time was, a member of (1) a controlled group of corporations (as defined in Section 414(b) of the Code), (2) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), or (3) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes or included any Company Group Member.

" Escrow Agent " ? defined in paragraph 1.6.

" Escrow Agreement " ? defined in paragraph 3.1(b)(v).

" Escrow Amount " ? defined in paragraph 1.6.

" Estimated Net Working Capital " ? defined in paragraph 2.1(c).

" Excluded Corporations " shall mean those corporations described on Schedule 1.1 .

" Financial Statements " ? defined in paragraph 4.17.

" GAAP " ? defined in paragraph 4.17.

" Government Programs " shall mean Medicare, Medicaid, and all other similar Federal, state or local governmental health care reimbursement programs.

" Governmental Authority " shall mean (i) any Federal, state, county, municipal or other government, domestic or foreign, or any agency, board, bureau, commission, court, department or other instrumentality of any such government, (ii) any court, arbitrational tribunal, administrative agency or commission, (iii) any Person having the authority under any applicable Law to assess and collect Taxes, or (iv) the U.S. Department of Health and Human Services (DHHS), the Center for Medicare and Medicaid Services or its fiscal intermediary and carrier agents, the DHHS Office of Inspector General, the U.S. Department of Justice, any state attorney general, any state Medicaid Fraud unit, the Office of Civil Rights and any state department of health.

" Hazardous Substances " ? defined in paragraph 4.3(a).

" Health Care Licenses " shall mean all licenses, Permits, accreditations, certificates of need, provider numbers, provider agreements, approvals, qualifications, certifications, and other authorizations or governmental approvals granted by any health care regulatory agency, healthcare accreditation body, such as Joint Commission on the Accreditation of Healthcare Organizations, or other Governmental Authority or Third Party Payor relating to or affecting the Business, the ownership, operation, maintenance, management, use, regulation, development or expansion of the Business, the provision of health care services thereby, or the reimbursement of


health care costs relating thereto.

" HIPAA " ? shall mean Health Insurance Portability and Accountability Act.

" Insurance Policies " ? defined in paragraph 4.7(a).

" Insurer " ? shall mean Zurich American Insurance Company.

" Law " shall mean applicable statutes, common laws, rules, ordinances, regulations, codes and governmental guidelines or interpretations having the force of law, in each case, of a Governmental Authority.

" Legal Proceeding " shall mean any action, suit, proceeding, claim, arbitration or investigation before any Governmental Authority or before any arbitrator.

" Licenses " ? defined in paragraph 4.2.

" List of Excluded Individuals/Entities " shall mean the database maintained by the DHHS Office of Inspector General relating to parties excluded from participation in Medicare, Medicaid and all other Federal health care programs.

" Losses " of a specified person shall mean any damage, liability, loss, cost or expense (including reasonable attorneys' fees) actually suffered or incurred by such person; provided , however , that Losses shall not include any indirect, incidental, consequential, exemplary, special or punitive damages or any diminution in value, multiple of damages or lost profits.

" Management Incentive Plan " shall mean the PCI Holding Corp. Management Incentive Plan.

" Material Adverse Effect " shall mean a change, event or effect that, individually or in the aggregate, has had a material adverse effect on the business, operations, assets, results of operations, or financial condition of Company Group taken as a whole or would reasonably be expected to prevent or materially delay the consummation by Seller of the transactions contemplated by this Agreement or prevent or materially impair or delay the ability of Seller to perform its obligations under this Agreement; provided , however , that "Material Adverse Effect" shall not include (other than with respect to items (ii) through (iv) below, to the extent such changes have a materially disproportionate effect on Company Group, taken as a whole, when compared to other companies operating in the same industries in which Company Group operates) for any such changes, events or effects resulting from (i) this Agreement, the transactions contemplated hereby or the announcement or pendency thereof, (ii) changes in general economic or political conditions or the securities markets in general, (iii) changes in economic conditions in the markets and regions in which Company Group operates, (iv) changes that are generally applicable to the industry in which Company Group operates, (v) changes in Laws generally applicable to such businesses or industry, (vi) changes in GAAP or its application, (vii) actions taken (or omitted to be taken) upon the written request of Buyer or its affiliates or actions taken by Company Group Members which are required pursuant to this Agreement, and (viii) loss of business by Company Group to Buyer or its affiliates.


" Net Working Capital " ? defined in paragraph 2.1(b).

" PCI Illinois " shall mean Patient Care, Inc. ? Illinois, an Illinois corporation.

" Permits " shall mean all licenses, certificates of occupancy and other permits, consents and approvals required by any Governmental Authority to lawfully operate the Business (including any pending applications for such licenses, certificates, certificates of need, permits, consents or approvals).

" Permitted Encumbrances " shall mean (1) all statutory or other liens for Taxes or assessments that are not yet due or that are being contested in good faith under appropriate proceedings, (2) all workmen's and repairmen's liens and other similar liens imposed by law incurred in the ordinary course of business for sums not yet due, if, in each case, adequate reserves are being maintained on the Company Group's financial statements in accordance with GAAP, (3) all liens arising in favor of the United States government as a result of any progress payment clause contained in any contract with a Governmental Authority, (4) other encumbrances to the extent fully reflected in the Financial Statements, and (5) other encumbrances that do not materially detract from the value of, materially interfere with, or otherwise materially affect, the present use and enjoyment of the asset or property subject thereto or affected thereby.

" Person " shall mean an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity, including a Governmental Authority.

" Private Programs " shall mean private, non-governmental health care reimbursement programs.

" Purchase Price " ? defined in paragraph 2.1(a).

" Retention Bonuses " ? defined in paragraph 1.9.

" Seller Indemnified Persons " ? defined in paragraph 11.4.

" Subsidiaries " ? defined in Recital A.

" Tail Policy " ? defined in paragraph 7.6.

" Taxes " (including with correlative meaning " Tax " and " Taxable ") shall mean (x) any and all taxes, and any and all other similar charges, fees, levies, duties, deficiencies, customs or other similar assessments or liabilities in the nature of a tax, including without limitation any income, gross receipts, ad valorem, net worth, premium, value-added, alternative or add-on minimum, excise, severance, stamp, occupation, windfall profits, real property, personal property, assets, sales, use, capital stock, capital gains, documentary, recapture, transfer, transfer gains, estimated, withholding, employment, unemployment insurance, unemployment compensation, social security, business license, business organization, workers compensation, payroll, profits, license, lease, service, service use, gains, franchise and other taxes imposed by any federal, state, local, or foreign Governmental Authority, (y) any interest, fines, penalties, assessments, or additions resulting from, attributable to, or incurred in connection with any items


described in this paragraph or any contest or dispute thereof, and (z) any items described in this paragraph that are attributable to another person but that any Company Group Member is liable to pay by law, by contract, or otherwise.

" Tax Returns " shall mean any and all reports, returns, declarations, statements, forms, or other information required to be supplied to a Governmental Authority or to any individual or entity in connection with Taxes and any associated schedules, attachments, work papers or other information provided in connection with such items, including any amendments, thereof.

" Third Party Payor " includes any entity charged with paying claims or reimbursing the Business for health care services provided to Government Program or Private Program patients including but not limited to Government Program fiscal intermediaries and carriers or Durable Medical Equipment Regional Carriers and Private Program health insurance administrators or third party administrators.

" Workers' Compensation Indemnified Entities " shall mean Seller, each Company Group Member, PCI Illinois, National Home Care, Inc., a New York corporation, Patient Care Medical Services, Inc. (Ohio), an Ohio corporation, Georgia Nursing Services, Inc., a Georgia corporation, Patient Care Massachusetts, Inc., a Delaware corporation, and E.C. Solutions, Inc., a Kentucky corporation.

" Workers' Compensation Liability Policy " shall mean the Workers Compensation and Employers Liability Insurance Policy by and between Patient Care, Inc. and Zurich American Insurance Company, with policy number WC 2938825-03, as amended, supplemented or otherwise modified from time to time.

" Workers' Compensation Claim " shall mean any facts, event or occurrence, or any claim asserted against a Workers' Compensation Indemnified Entity, arising from or relating to accident, bodily injury and/or death of an employee of a Workers' Compensation Indemnified Entity arising out of or occurring in the course of an employee's employment with a Workers' Compensation Indemnified Entity at any time through the Closing Date, regardless of whether those facts, events, occurrences or claims were reported or made before or after the Closing Date and regardless of whether the Workers' Compensation Claim is covered by the Workers ? Compensation Liability Policy.

1.3 Seller Representative.

(a) Seller hereby irrevocably constitutes and appoints the Seller Representative as its true and lawful agent and attorney-in-fact, with full power of substitution to act in Seller's name, place and stead with respect to all transactions contemplated by and all terms and provisions of this Agreement, and to act on Seller's behalf in any dispute, litigation or arbitration involving this Agreement, and to do or refrain from doing all such further acts and things, and execute all such documents as Seller Representative shall deem necessary or appropriate in connection with the transactions contemplated by this Agreement, including, without limitation, the power:

(i) to waive any condition to the obligations of Seller to consummate the transactions contemplated by this Agreement;


(ii) to execute and deliver all ancillary agreements, certificates and documents, and to make representations and warranties therein, on behalf of Seller that the Seller Representative deems necessary or appropriate in connection with the consummation of the transactions contemplated by this Agreement;

(iii) to receive on behalf of, and to distribute all amounts payable to Seller under the terms of this Agreement;

(iv) to execute any amendment or modification to this Agreement on behalf of Seller; and

(v) to do or refrain from doing any further act or deed on behalf of Seller which the Seller Representative deems necessary or appropriate in its sole discretion relating to the subject matter of this Agreement, as fully and completely as Seller could do if personally present.

(b) The appointment of the Seller Representative shall be deemed coupled with an interest and shall be irrevocable, and Buyer, Company, each of their affiliates and any other Person may conclusively and absolutely rely, without inquiry, upon any action of the Seller Representative on behalf of Seller in all matters referred to herein. All notices delivered by Buyer or the Company (following the Closing) to the Seller Representative (whether pursuant hereto or otherwise) for the benefit of Seller and the Seller Representative shall constitute notice to Seller. The Seller Representative shall act for Seller on all of the matters set forth in this Agreement in the manner the Seller Representative believes to be in the best interest of Seller and consistent with its obligations under this Agreement, but the Seller Representative shall not be responsible to Seller for any loss or damages it may suffer by reason of the performance by the Seller Representative of its duties under this Agreement, other than loss or damage arising from willful violation of the law.

(c) Seller hereby agrees to indemnify and hold harmless the Seller Representative from any loss, damage or expense arising from the performance of its duties as the Seller Representative hereunder, including, without limitation, the cost of legal counsel retained by the Seller Representative on behalf of Seller, but excluding any loss or damage arising from willful violation of the law. The Seller Representative may receive reimbursement from Seller for any and all expenses, charges and liabilities, including attorneys' fees, reasonably incurred by the Seller Representative in the performance or discharge of his rights and obligations under this Agreement.

(d) All actions, decisions and instructions of the Seller Representative taken, made or given pursuant to the authority granted to the Seller Representative pursuant to this paragraph 1.3 shall be conclusive and binding upon Seller, and Seller shall not have the right to object, dissent, protest or otherwise contest the same.

(e) The provisions of this paragraph 1.3 are independent and severable, shall constitute an irrevocable power of attorney, coupled with an interest and surviving death or dissolutions, granted by Seller to the Seller Representative and shall be binding upon the executors, heirs, legal representatives, successors and assigns of Seller.


1.4 Workers' Compensation.

(a) Buyer acknowledges and agrees that pursuant to the Assumption and Indemnification Agreement, Buyer shall (i) assume all obligations and liabilities of the Workers ? Compensation Indemnified Entities under or with respect to all Workers' Compensation Claims and (ii) indemnify and hold harmless each Workers' Compensation Indemnified Entity from, against and in respect of, and reimburse each Workers ? Compensation Indemnified Entity for, any Losses incurred by such Workers' Compensation Indemnified Entity resulting from, arising out of or in connection with all Workers' Compensation Claims, in each case, regardless of whether the Workers ? Compensation Claim was made or reported to an Indemnified Entity before or after the Closing Date and regardless of whether the Workers' Compensation Claim is covered by the Workers' Compensation Liability Policy. For the avoidance of doubt, the parties acknowledge and agree that the indemnification obligations of Buyer under the Assumption and Indemnification Agreement shall not be subject to the provisions hereof, including the limitations on indemnification set forth in Article 11.

(b) Buyer acknowledges and agrees that pursuant to the Assumption and Indemnification Agreement, in connection with, and as of the time of, the Closing, Buyer shall (i) deposit or cause to be deposited with the Insurer substitute letters of credit for the benefit of Insurer as security for the obligations of Company under the Workers' Compensation Liability Policy, and (ii) execute and deliver all agreements, certificates and documents necessary or appropriate and take all steps required to arrange for the Insurer to return and surrender certain letters of credit held by Insurer to Seller or Seller's lenders for cancellation. Upon request of Buyer, Seller agrees to use its commercially reasonable efforts to cooperate with Buyer, at Buyer's expense, to take such steps as are necessary to arrange for the Insurer to return and surrender such letters of credit to Seller or Seller's lenders for cancellation.

1.5 Distribution. Before the Closing, the Company shall complete the Distribution.

1.6 Escrow Agreement. At the Closing, Seller, Seller Representative and Buyer shall enter into the Escrow Agreement with JPMorgan Chase Bank, National Association (the ? Escrow Agent "), and Buyer shall pay the Escrow Amount to the Escrow Agent to be held by the Escrow Agent and disbursed pursuant to and in accordance with the provisions of this Agreement and the Escrow Agreement. The fees and expenses of the Escrow Agent shall be paid in equal shares by Seller and Buyer. The " Escrow Amount " shall be $4,500,000. The Escrow Amount shall be distributed to Seller (or its assigns) as follows: (a) $2,250,000 of such amount plus any interest accrued thereon shall be paid to Seller (or its successors and assigns) on the first anniversary of the Closing Date, net of (i) the aggregate amount of any indemnification claims paid to Buyer pursuant to this Agreement through such first anniversary of the Closing Date and any distributions made to Buyer pursuant to paragraph 2.1(e), and (ii) the reasonable and good faith estimates by Buyer of Losses of Buyer pursuant to any then pending indemnification claims made by Buyer in accordance with Article 11, and (b) the balance of the Escrow Amount shall be distributed to Seller (or its successors and assigns) on the second anniversary of the Closing Date net of the reasonable and good faith estimates by Buyer of Losses of Buyer pursuant to any then pending indemnification claims made by Buyer in accordance with Article 11, which withheld amounts shall be distributed to Seller (or its successors and assigns) or Buyer, as applicable, when the indemnification claim is finally



1.7 Robert Nixon Agreement. Concurrently the execution and delivery of with this Agreement, the Company and Robert Nixon are entering into (i) Consulting Agreement in the form attached hereto as Attachment B-1 and (ii) a Non-solicitation and Non-competition Agreement in the form attached hereto as Attachment B-2 . Seller hereby consents to Robert Nixon's entry into and performing under each of the Consulting Agreement and Non-solicitation and Non-competition Agreement.

1.8 Releases by Company Group Executives. Concurrently with the execution and delivery of this Agreement, each Company Group Member and each of Robert Nixon, Elias Nemnom and Ray Rasa shall execute a Release Agreement as of the date of this Agreement, in the form attached as Attachment C .

1.9 Retention Bonuses. Buyer shall provide retention bonuses to certain employees as described in a letter delivered by Buyer to Seller concurrently with the execution and delivery of this Agreement, to be paid by Buyer or the Company upon consummation of the Closing (collectively, the " Retention Bonuses "). For the avoidance of doubt, (i) Seller shall not be responsible for and shall not be required to pay any such Retention Bonuses, (ii) prior to the consummation of the Closing, no Company Group Member shall be responsible for or shall be required to pay any such Retention Bonuses, (iii) the Retention Bonuses shall be in addition to any other compensation, bonuses or severance otherwise payable to such employees, and (iv) Buyer shall bear all costs associated with the Retention Bonuses.

Article 2

Purchase Price and Payments

2.1 Purchase Price.

(a) The aggregate consideration (the " Purchase Price ") payable by Buyer to Seller for the Shares shall be as follows:

(i) $45,250,000, plus ;
(ii) an amount (which may be negative) equal to (A) Company Group's Net Working Capital minus (B) Company Group's long-term debt for money borrowed (excluding capital leases), in each case determined as of the close of business on the business day preceding the Closing Date. Notwithstanding anything to the contrary, the maximum positive adjustment to the Purchase Price based on this paragraph 2.1(a)(ii) shall be $600,000; plus
(iii) an amount equal to the deposits held by Insurer with respect to the Workers' Compensation Liability Policy, to the extent not included in Net Working Capital.

(b) " Net Working Capital " shall mean, as of the close of business on the business day immediately preceding the Closing Date, Company Group's current assets minus


current liabilities (excluding capital leases), minus any severance payments to be made by Company Group to Robert Nixon (which payments shall be made at Closing), as determined in accordance with generally accepted accounting principles and otherwise consistent with Company Group's historical accounting methods, practices and estimates. Notwithstanding anything in this Agreement to the contrary, current liabilities of Company Group shall (i) include for purposes of calculation of Net Working Capital all unpaid Taxes for Company Group for the period through the close of business on the business day preceding the Closing Date, other than (x) any Taxes that will be shown on any combined, consolidated, group or unitary Tax Return that includes Seller and (y) any Taxes relating to or arising from payments of the Retention Bonuses or severance, and (ii) exclude all liabilities relating to the Retention Bonuses and severance payments made or to be made by any Company Group Member to any Person other than Robert Nixon (regardless of whether such payments are be made at or after Closing).

(c) Seller shall determine and provide Buyer with
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