CONTINGENT PAYMENT AGREEMENT

Exhibit 10.15

EXECUTION VERSION

THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND INTERCREDITOR AGREEMENT (THE “ SUBORDINATION AGREEMENT ”) DATED AS OF SEPTEMBER 19, 2006 AMONG W. ANDREW WRIGHT, III, ADDUS TERM TRUST, W. ANDREW WRIGHT GRANTOR RETAINED ANNUITY TRUST, MARK S. HEANEY, JAMES A. WRIGHT, COURTNEY E. PANZER, ADDUS HEALTHCARE, INC. (THE “ COMPANY ”), ADDUS HOLDING CORPORATION, ADDUS ACQUISITION CORPORATION, ADDUS MANAGEMENT CORPORATION AND FREEPORT FINANCIAL LLC (TOGETHER WITH ITS SUCCESSORS AND ASSIGNS, THE “ SENIOR AGENT ”), TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY THE COMPANY PURSUANT TO THAT CERTAIN CREDIT AGREEMENT DATED AS OF SEPTEMBER 19, 2006 AMONG THE COMPANY, THE SENIOR AGENT AND THE LENDERS FROM TIME TO TIME PARTY THERETO, AND THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT) AS SUCH CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS MAY BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME AND TO INDEBTEDNESS REFINANCING THE INDEBTEDNESS THEREUNDER AS CONTEMPLATED BY THE SUBORDINATION AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

CONTINGENT PAYMENT AGREEMENT

This Contingent Payment Agreement (this “ Agreement ”) is entered into as of September 19, 2006 by and among Addus Holding Corporation, a Delaware corporation (“ Holdings ”), Addus Acquisition Corporation, a Delaware corporation (“ Acquisition Co .”), Addus Management Corporation, a Delaware corporation (“ Management Co. ”, and together with Holdings and Acquisition Co., the “ Purchasers ”), Addus HealthCare, Inc., an Illinois corporation (the “ Company ”), W. Andrew Wright, III, as Sellers’ Representative (the “ Sellers’ Representative ”) and each of the individuals and entities identified as “Contingent Payment Recipients” set forth on Exhibit A attached hereto (each a “ Contingent Payment Recipient ”, and collectively, the “ Contingent Payment Recipients ”).

RECITALS

WHEREAS , the parties hereto are party to that certain Stock Purchase Agreement, dated as of September 19, 2006, among the Purchasers, the Contingent Payment Recipients, the Company and the Sellers’ Representative (the “ Purchase Agreement ”), pursuant to which, on the date hereof, Purchasers are acquiring all of the issued and outstanding securities of the Company (the “ Addus Acquisition ”);

WHEREAS , pursuant to the Purchase Agreement, the execution and delivery of this Agreement is a condition precedent to the consummation of the Addus Acquisition; and

WHEREAS , in connection with the Addus Acquisition, Purchasers are acquiring all of the Company’s issued and outstanding Equity Securities (the “ Original Securities ”) from

 

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the Contingent Payment Recipients for a combination of (i) cash, (ii) Holdings’ common stock, par value $.001 per share (“ Holdings Common Stock ”), and (iii) other consideration set forth in the Purchase Agreement, including the right to the Contingent Payments (as defined below).

NOW, THEREFORE , in consideration of the premises and of the covenants and provisions contained herein, the parties hereby agree as follows:

ARTICLE I

CONTINGENT PAYMENT

1.1. Contingent Payments . Pursuant to the terms and subject to the conditions set forth herein, the Contingent Payment Recipients (in accordance with such Contingent Payment Recipient’s Contingent Payment Percentage) shall be eligible to receive certain contingent payments from Management Co. as future additional, deferred consideration for the sale of the Original Securities.

1.2. Timing and Manner of Contingent Payment . On the Contingent Payment Date, subject to Sections 1.3 and 1.4 hereof, Management Co. shall pay, or cause to be paid, the Contingent Payments (or portion thereof), if any, due to the Contingent Payment Recipients. The Contingent Payments payable to the Contingent Payment Recipients shall be payable in cash to the Sellers’ Representative (on behalf of the Contingent Payment Recipients, pm rata based on their respective Contingent Payment Percentage) in accordance with the terms and subject to the conditions set forth in this Agreement, by wire transfer of immediately available U.S. funds to one or more accounts previously designated in writing by the Sellers’ Representative to Management Co. The right of the Contingent Payment Recipients to receive the Contingent Payments shall not, without the prior written consent of the board of directors of Holdings, be transferable, in whole or in part, to any other Person other than to a Permitted Family Transferee.

1.3. Right of Set-Off . Subject to the terms and conditions hereof and of the Purchase Agreement, Management Co. shall have the right to withhold and set-off, against any Contingent Payment due to each Contingent Payment Recipient under this Agreement, the amount of any Losses that such Contingent Payment Recipient is, pursuant to a Final Determination (as defined in the Purchase Agreement), required to pay to the Purchasers or the Purchaser Group (as applicable, the “ Indemnified Party ”) under Article X of the Purchase Agreement on or prior to the Contingent Payment Date. If Contingent Payments due under this Agreement are so set-off, the amount of such set-off shall be treated as an adjustment to the Purchase Price (as defined in the Purchase Agreement).

1.4. Contingent Payment Conditions and Limitations; Remedy .

(a) Upon the occurrence of the Contingent Payment Date, Management Co. shall make, and the Contingent Payment Recipients shall be entitled to receive, their respective portion of the Contingent Payment, to the extent such Contingent Payment is due and payable pursuant to the terms and conditions of this Agreement.

(b) Notwithstanding anything contained herein to the contrary, Management Co. shall not be obligated to make any Contingent Payments if, and then only to the extent that, making such Contingent Payment would cause Management Co. (or its directors) to violate Section 160 of the Delaware General Corporation Law.

 

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(c) In the event that Management Co. is unable to or fails to pay the full amount of the Contingent Payments, if any, by the Outside Date, at any time after the Outside Date, at the request of the Sellers’ Representative, the Purchasers and the Company shall retain a nationally recognized investment bank (which shall be reasonably acceptable to the Sellers’ Representative and to the holders of a majority of all then outstanding Holdings’ Equity Securities) for the purpose of effecting a Sale of Holdings. Upon such request, each Purchaser and the Company shall cause each of its officers to participate actively in the sale process (including assisting with the preparation of an offering memorandum and being available to meet with representatives of prospective purchasers) as reasonably requested by such investment bank. Each Purchaser and the Company shall in such event expeditiously effect a Sale of the Company on terms reasonably satisfactory to the Purchasers and the Company and shall, subject to the terms of this Agreement, use the proceeds of such Sale of the Company to pay the Contingent Payment Recipients the full amount of all Contingent Payments due hereunder, if any.

1.5. The Sellers’ Representative . Each of the Contingent Payment Recipients hereby authorizes and directs the Sellers’ Representative to take any and all action on behalf of all of the Contingent Payment Recipients under this Agreement. As the representative of the Contingent Payment Recipients, the Sellers’ Representative shall act as the agent for the Contingent Payment Recipients and shall have authority to bind each such Contingent Payment Recipient in accordance with the terms and conditions of this Agreement. The Purchasers and the Company may rely on such appointment and authority until receipt of notice of the appointment of a successor to the Sellers’ Representative upon ten (10) days prior written notice to the Purchasers.

1.6. Subordination . The Contingent Payment Recipients agree that in connection with the transactions contemplated hereby, each Seller will execute the subordination agreement in the form attached hereto as Exhibit B .

1.7. Additional Purchase Price . Any Contingent Payment will be treated by the parties for all purposes as additional Purchase Price (as defined in the Purchase Agreement) under the Purchase Agreement.

1.8. Further Assurances of the Purchasers . Each Purchaser and the Company shall (i) take all necessary corporate action (including, without limitation, that of the stockholders and boards of directors of the Company and each Purchaser) to fully effectuate and carry out the terms and conditions of this Agreement; (ii) execute, acknowledge and deliver, and cause to be taken, executed, acknowledged and delivered, all such other further authorizations, consents, approvals, agreements, assignments or assurances as may be necessary to fully effectuate and carry out the terms and conditions of this Agreement; and (iii) use commercially reasonable efforts to obtain any consents, Orders, authorizations and approvals of, or effect the notification of or filing with, each Person, whether private or governmental, whose consent or approval is required in order to permit the consummation of the transactions contemplated hereby.

 

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ARTICLE II

CONTINGENT PAYMENT RECIPIENT PROTECTIVE COVENANTS

2.1. Protective Covenants . Until such time as the Contingent Payment Recipients receive the Contingent Payments to which they are entitled under this Agreement, the Purchasers each warrant, covenant and agree that it shall not take any of the following actions without the prior written approval of the Sellers’ Representative (on behalf of the Contingent Payment Recipients):

(a) effect any changes in the strategic direction or lines of business of (i) the Company not specified in the business plan approved by Holdings’ board of directors or (ii) Holdings;

(b) create any subsidiary of any Purchaser or the Company (a “ Subsidiary ”) not, directly or indirectly, wholly-owned by Holdings, or issue any Equity Securities or rights to acquire Equity Securities in any such Subsidiary (other than to Holdings or a wholly-owned Subsidiary of Holdings);

(c) create any committee of the board of directors of Holdings (the “ Board ”), or the board of directors of the Company or any other Purchaser;

(d) enter into any contract or agreement with any officer, director, stockholder, Affiliate or employee of any Purchaser, the Company or any Subsidiary (each, a “ Related Person ”), including, without limitation, for the sale or repurchase of any Equity Securities of the Company or any Purchaser (other than (i) repurchase rights existing on or prior to the date of the Holdings Stockholders’ Agreement, (ii) the Eos Management Agreement or (iii) any contract or agreement entered into with such Related Person on terms materially not less favorable to Holdings or a Subsidiary, as the case may be, than would be obtained in a transaction with a Person which is not a Related Person);

(e) in any manner, directly or indirectly, and whether in cash, securities, dividends or other property, pay or declare or set apart for payment, any dividends or make any other distribution on or with respect to any Equity Securities of any Purchaser or the Company (other than (i) the payment of dividends to the holders of the Series A Convertible Preferred Stock of Holdings at the Series A Dividend Rate (as such terms are defined in the Charter) or (ii) the payment of dividends to the holders of Additional Securities, if any);

(f) in any manner conduct or operate the Subject Business through a Subsidiary in which Management Co. owns, directly or indirectly, less than 80% of the issued and outstanding Equity Securities, except in connection with a Sale of Holdings;

(g) in any manner alter or change the terms and conditions of this Agreement;

(h) in any manner alter or change the terms, designations, powers, preferences or relative, participating, optional or other special rights, or the qualifications, limitations or restrictions, of the Series A Convertible Preferred Stock in a manner that is adverse to the Contingent Payment Recipients;

 

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(i) except as otherwise contemplated in the Holdings Stockholders’ Agreement, alter the size of Holding’s Board or any committee thereof;

(j) effect any changes in the Charter, Bylaws, Stockholders’ Agreement or Registration Rights Agreement to the extent that such change would have an adverse impact on the rights of the Contingent Payment Recipients hereunder (other than an amendment or modification effected solely to provide rights to holders of Undesignated Preferred Stock (as defined in the Charter)); or

(k) agree to take any of the foregoing actions.

At any time that any Purchaser or the Company has any subsidiary or committee, it shall not permit such subsidiary or committee, as the case may be, to take any of the actions set forth in this Article II (with all references to such party deemed to be references to such Subsidiary or committee) without the prior written approval of the Sellers’ Representative (on behalf of the Contingent Payment Recipients).

ARTICLE III

DEFINITIONS

Capitalized terms that are used but not identified herein shall have the meaning assigned to such terms in Annex I attached hereto.

ARTICLE IV

MISCELLANEOUS

4.1. Benefit of Parties . All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto, the Subject Persons and their respective successors and permitted assigns, personal representatives, heirs and estates, as the case may be. Neither this Agreement nor any rights hereunder shall be assigned in whole or in part by any party hereto without the prior written consent of the other parties hereto; provided, however , that Purchasers may assign any or all of their rights, obligations and interests hereunder without any such written consent as security for any obligations arising in connection with the financing of the transactions contemplated by the Purchase Agreement.

4.2. Entire Agreement . This Agreement, together with the Purchase Agreement and the transactions and documents contemplated hereby and thereby, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties (whether written or oral) with respect thereto; and may not be contradicted or otherwise interpreted by evidence of any such prior or contemporaneous agreement, draft, understanding or representation (whether written or oral).

4.3. Severability . If any provision or section of this Agreement is determined to be void or otherwise unenforceable, it shall not affect the validity or enforceability of any other provisions of this Agreement which shall remain unenforceable in accordance with their terms.

 

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4.4. Counterparts and Electronic Signatures . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute a single instrument. Execution and delivery of this Agreement by electronic exchange bearing the copies of a party’s signature shall constitute a valid and binding execution and delivery of this Agreement by such party. Such electronic copies shall constitute enforceable original documents.

4.5. Taxes . Management Co. shall withhold or cause to be withheld from any Contingent Payment any Taxes that are required by law to be withheld. Any amounts so withheld shall be treated for all purposes of this Agreement as having been paid to the applicable Contingent Payment Recipient.

4.6. Notices . All notices, amendments, waivers or other communications pursuant to this Agreement shall be in writing and shall be deemed to have been duly given if personally delivered, telecopied, sent by e-mail, sent by nationally recognized overnight courier or mailed by registered or certified mail with postage prepaid, return receipt requested, to the parties hereto at the following addresses (or at such other address for a party as shall be specified by like notice):

(a) to the Company, to:

Addus HealthCare, Inc.

2401 South Plum Grove Road

Palatine, Illinois 60067

Attention: Edward Budy, Esq.

Telephone: (847) 303-5300

Facsimile: (847) 303-5376

Email: EBudy@addus.com

with a copy to:

Eos Management, Inc.

320 Park Avenue

New York, New York 10022

Attention: Mark L. First

Telephone: (212) 832-5800

Facsimile: (212) 832-5815

Email: MFirst@eospartners.com

with a copy to:

King & Spalding LLP

1185 Avenue of the Americas

New York, New York 10036

Attention: Dominick P. DeChiara, Esq.

Telephone: (212) 827-4098

Facsimile: (212) 556-2222

Email: DDeChiara@kslaw.com

 

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(b) if to Purchasers, to:

c/o Eos Management, Inc.

320 Park Avenue

New York, New York 10022

Attention: Mark L. First

Telephone: (212) 832-5800

Facsimile: (212) 832-5815

Email: MFirst@eospartners.com

with a copy to:

King & Spalding LLP

1185 Avenue of the Americas

New York, New York 10036

Attention: Dominick P. DeChiara, Esq.

Telephone: (212) 827-4098

Facsimile: (212) 556-2222

Email: DDeChiara@kslaw.com; and

(c) if to any Contingent Payment Recipient, to such Contingent Payment Recipient at the address set forth on Exhibit A opposite the name of such Contingent Payment Recipient;

with a copy to:

Foley & Lardner LLP

777 East Wisconsin Avenue

Milwaukee, WI 53202

Attention: Patrick G. Quick, Esq.

Telephone: (414) 297-5678

Facsimile: (414) 297-4900

Email: pgquick@foley.com;

4.7. Amendments: Waiver . This Agreement may not be amended except by an instrument in writing signed by each of the Purchasers and the Sellers’ Representative (on behalf of the Contingent Payment Recipients). By an instrument in writing the Company, the Purchasers and the Sellers’ Representative may waive compliance by any other party with any term or provision of this Agreement that such other party was or is obligated to comply with or perform.

4.8. Governing Law; Dispute Resolution .

(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any law or rule that would cause the laws of any jurisdiction other than the State of Delaware to be applied.

(b) Any controversy or claim arising out of or relating to this Agreement (including, without limitation, as to arbitrability), or the breach thereof, shall be settled by

 

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individual arbitration (as opposed to class or collective arbitration) administered by a Person mutually selected by the Sellers’ Representative and the Purchasers (the “Arbitrator”). If the parties are unable to agree upon the Arbitrator, they shall each select an arbitrator and the two selected arbitrators shall appoint a third arbitrator to act as the Arbitrator.

(c) In the event of any dispute, claim, question or disagreement arising from or relating to this Agreement, or the breach hereof or thereof, with the exception of those items excluded above, the Purchasers and the Sellers’ Representative shall use their commercially reasonable efforts to resolve the dispute, claim, question or disagreement. To this effect, the Purchasers and the Sellers’ Representative will meet in person or by telephone within ten (10) Business Days of any party’s receipt of a written notice informing that party of the existence of a dispute, claim, question or disagreement. If the Purchasers and the Sellers’ Representative do not resolve or settle the matter within ten (10) Business Days after the initial meeting, or following any longer period as the parties may agree to in writing, the Purchasers and the Sellers’ Representative shall then immediately submit the dispute to binding arbitration in accordance with this Section 4.8.

(d) The arbitration hearing shall commence within ninety (90) calendar days after the Arbitrator is selected, unless the Purchasers and the Sellers’ Representative agree to extend this time period. The arbitration shall take place in New York, New York.

(e) The arbitration shall be conducted pursuant to the Federal Rules of Procedure and the Federal Rules of Evidence. The Arbitrator will have full power to give directions and make such orders as the Arbitrator deems just. Nonetheless, the Arbitrator explicitly shall not have the authority, power, or right to alter, change, amend, modify, add, or subtract from any provision of this Agreement.

(f) The Arbitrator shall issue a written decision within thirty (30) days after the conclusion of the arbitration hearing, which decision shall be rendered without reference to the reason for the arbitrator’s decision or any citation to precedent. The agreement to arbitrate will be specifically enforceable. The award rendered by the arbitrator shall be final and binding (absent fraud or manifest error), and any arbitration award may be enforced by judgment entered in any court of competent jurisdiction. The fees and expenses of the arbitrator shall be allocated between the Sellers’ Representative (on behalf of the Contingent Payment Recipients), on the one hand, and the Purchasers, on the other hand in the same proportion that the aggregate amount of the disputed items submitted to the Arbitrator that is unsuccessfully disputed by each such party (as finally determined by the Arbitrator) bears to the total amount of such disputed items so submitted.

(g) During any arbitration proceeding, the parties shall continue to perform their respective obligations under this Agreement.

4.9. Construction . Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party hereto. Without limitation, there shall be no presumption against any party on the ground that such party was responsible for drafting this Agreement or any part hereof.

 

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4.10. Captions . The captions of the Articles and Sections of this Agreement are solely for convenient reference and shall not be deemed to affect the meaning or interpretation of any Article or Section hereof

4.11. Termination . This Agreement will terminate and be of no further force and effect, with no additional action required by any of the parties hereto, upon the earlier to occur of the following:

(a) the mutual agreement of the Purchasers, the Company and the Sellers’ Representative (on behalf of the Contingent Payment Recipients);

(b) the receipt by the Contingent Payment Recipients of the Contingent Payments to which they are entitled; and

(c) any (i) voluntary or involuntary liquidation, dissolution or winding up of Holdings, other than any dissolution, liquidation or winding up in connection with any reincorporation of Holdings in another jurisdiction, or (ii) any Sale of Holdings, in each case, which results in a Net Value of Holdings of less than the Target Amount.

[Signature page to follow.]

 

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IN WITNESS WHEREOF , the parties have hereunto caused this Agreement to be executed as of the date set forth above.

 

Signature Page to

Contingent Payment Agreement

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Contingent Payment Agreement

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Contingent Payment Agreement

ANNEX I

DEFINITIONS

“ Acquisition Co. ” has the meaning set forth in the caption to this Agreement.

“ Additional Securities ” means any Holdings Equity Securities that are issued after the date hereof that rank senior to the Series A Convertible Preferred Stock with respect to the payment of dividends and upon a Liquidation.

“ Addus Acquisition ” has the meaning set forth in the recitals to this Agreement.

“ Affiliate ” means with respect to any Person, any Persons directly or indirectly controlling, controlled by or under common control with, such other Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made.

“ Board ” has the meaning set forth in Section 2.1(c) of this Agreement.

“ Business Day ” means any day that is not a Saturday, Sunday or a day on which banking institutions in New York, New York are not required to be open.

“ Bylaws ” means Holdings’ Bylaws dated as or about the date hereof (as the same may be amended, restated, modified or otherwise supplemented from time to time).

“ Charter ” means Holdings’ Restated Certificate of Incorporation substantially in the form attached as Exhibit B to the Purchase Agreement (as the same may be amended, restated, modified or otherwise supplemented from time to time).

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Company ” has the meaning set forth in the caption to this Agreement.

“ Contingent Payment ” means an amount equal to the lesser of (i) the Net Value of Holdings minus the Target Amount or (ii) the sum of (A) $10,000,000 plus (B) eight percent (8%) per annum multiplied by $10,000,000, compounded annually, through the Contingent Payment Date; provided, however, that, after the occurrence of the Outside Date, the rate applied in this clause (B) shall be equal to ten (10%) per annum, compounded annually for such period of time commencing on the Outside Date through the date that such payment is actually made.

“ Contingent Payment Date ” means the earliest to occur of the following: (i) the closing date of a QIPO, (ii) the occurrence of a Liquidation or (iii) the date that is five (5) years from the date hereof; provided, however , that if the creditors of the Purchasers or the Company under the Financing Documents request in good faith, in a writing delivered to the Sellers’ Representative on or before the date that is five (5) years from the date hereof, that Management Co. delay the payment of the Contingent Payments, the Contingent Payment Date shall be extended for the period so requested; provided further, however, that in no event shall the Contingent Payment Date be a date occurring after the Outside Date.

“ Contingent Payment Percentage ” means the percentage designated in the column “Contingent Payment Percentage” corresponding to such Contingent Payment Recipient as set forth on Exhibit A hereto.

“ Contingent Payment Recipients ” has the meaning set forth in the preamble of this Agreement.

“ Eos Management Agreement ” means that certain Management Agreement dated as of the date hereof between the Company and Eos Management, Inc. (as the same may be amended, restated or otherwise modified from time to time).

“ Equity Securities ” means all shares of capital stock of any entity, all securities convertible into or exchangeable for shares of capital stock of such entity, and all options, warrants and other rights to purchase or otherwise acquire from such entity shares of such capital stock, including any stock appreciation or similar rights, contractual or otherwise.

“ Event of Default ” has the meaning set forth in the Financing Documents.

“ Financing Documents ” means the Company’s third party financing documents with the Company’s senior secured lenders as of the Closing Date, and any subsequent refinancing thereof.

“ GAAP ” means generally accepted accounting principles employed in the United States.

“ Holdings ” has the meaning set forth in the caption to this Agreement.

“ Holdings Common Stock ” has the meaning set forth in the recitals to this Agreement.

“ Holdings Equity Securities ” means all shares of capital stock of Holdings, all securities convertible into or exchangeable for shares of capital stock of Holdings, and all options, warrants, and other rights to purchase or otherwise acquire from Holdings shares of such capital stock, including any stock appreciation or similar rights, contractual or otherwise.

“ Holdings Stockholders’ Agreement ” means the Holdings Stockholders’ Agreement, substantially in the form of Exhibit C to the Purchase Agreement (as the same may be amended, restated, modified or otherwise supplemented from time to time).

“ Incremental Amount ” means the amount of cash consideration received by the Company upon the issuance of any Additional Securities, plus the amount of any accrued and unpaid dividends with respect to such Additional Securities calculated as of the Contingent Payment Date.

“ Indemnified Party ” has the meaning set forth in Section 1.5.

“ Liquidation ” means any (i) voluntary or involuntary liquidation, dissolution or winding up of Holdings, other than any dissolution, liquidation or winding up in connection with any reincorporation of Holdings in another jurisdiction, or (ii) any Sale of Holdings, in each case, which results in a Net Value of Holdings greater than the Target Amount.

“ Management Co .” has the meaning set forth in the caption to this Agreement.

“ Net Value of Holdings ” means, as of the Contingent Payment Date (and in all cases without taking into account any amounts owing under this Agreement), (i) in the case of a QIPO, the implied equity value of Holdings on a debt-free basis, (ii) in the case of a Sale of Holdings, the implied equity value of Holdings resulting from such Sale of Holdings, taking into account the net consideration received by the stockholders in respect of such Sale of Holdings, less (to the extent not already taken into account in determining net consideration) all outstanding indebtedness of Holdings and its Subsidiaries, and (iii) in all other circumstances, the aggregate proceeds that would be available for distribution to the stockholders of Holdings (assuming an orderly liquidation of Holdings as of the Contingent Payment Date), after the satisfaction of all outstanding indebtedness of Holdings and its Subsidiaries and third party claims of Holdings’ other creditors.

“ Original Securities ” has the meaning set forth in the recitals to this Agreement.

“ Outside Date ” means the date that is five (5) years and six (6) months from the date hereof (and if such date is not a Business Day, then on the next succeeding Business Day).

“ Permitted Family Transferee ” means, with respect to any Contingent Payment Recipient, (i) the spouse or any lineal descendant (including adopted children) of such Contingent Payment Recipient, (ii) any trust solely for the benefit of such Contingent Payment Recipient and/or the spouse or lineal descendants (including adopted children) of such Contingent Payment Recipient, (iii) a family trust, partnership or limited liability company under the control of such Contingent Payment Recipient or established solely for the benefit of such Contingent Payment Recipient and/or such Contingent Payment Recipient’s spouse or lineal descendants (including adopted children) or for estate planning purposes provided such family trust, partnership or limited liability company remains under the control of such Contingent Payment Recipient, or (iv) the estate of such Contingent Payment Recipient.

“ Person ” means any individual, partnership, limited liability company, corporation, trust, unincorporated organization, or any other form of legal entity.

“ Purchase Agreement ” has the meaning set forth in the recitals to this Agreement.

“ Purchasers ” has the meaning set forth in the caption to this Agreement.

“ QIPO ” means the consummation of the first firm commitment underwritten public offering pursuant to an effective registration statement filed on Form S-1 (or its successor form) under the Securities Act of 1933, as amended, resulting in aggregate proceeds (net of underwriting discounts and commissions) to Holdings of not less than Fifty Million Dollars ($50,000,000).

“ Registration Rights Agreement ” means that certain Registration Rights Agreement dated on or about the date hereof by and among the Corporation, the holders of the Series A Convertible Preferred Stock and the other parties thereto, as the same may be modified, supplemented or amended from time to time.

“ Related Person ” has the meaning set forth in Section 2.1(d).

“ Requirements ” has the meaning set forth in Section 4.9.

“ Sale of Holdings ” means (i) the sale of all or substantially all of the assets of Holdings, (ii) the sale or transfer of the outstanding shares of capital stock of Holdings, or (iii) the merger or consolidation of Holdings with another person or entity, in each case in clauses (ii) and (iii) above under circumstances in which the holders (together with any Affiliates of such holders) of the voting power of outstanding capital stock of Holdings, immediately prior to such transaction, own less than 50% in voting power of the outstanding capital stock of Holdings or the surviving or resulting corporation or acquirer, as the case may be, immediately following such transaction. A sale (or multiple related sales) of one or more subsidiaries of Holdings (whether by way of merger, consolidation, reorganization or sale of all or substantially all assets or securities) which constitutes all or substantially all of the consolidated assets of Holdings or the Subject Business shall be deemed a Sale of Holdings.

“ Sellers’ Representative ” has the meaning set forth in the caption to this Agreement.

“ Series A Convertible Preferred Stock ” has the meaning set forth in the Charter.

“ Stockholders’ Agreement ” means that certain Stockholders’ Agreement dated on or about the date hereof by and among Holdings, the holders of the Series A Convertible Preferred Stock and the other parties thereto, as the same may be modified, supplemented or amended from time to time.

“ Subject Business ” means (i) the provision of paraprofessional and skilled home health and adult daycare services, (ii) healthcare staffing services, and (iii) any other line of business (a) in which the Company and/or its Subsidiaries are engaged in as of the date of this Agreement (or have taken substantial steps to enter into) and (b) in which the Company and/or its Subsidiaries have been engaged in the previous five (5) years.

“ Subject Persons ” means Purchasers, the Company and their respective Affiliates, shareholders and directors.

“ Subsidiary ” means, with respect to any Person, (i) any corporation or other entity of which at least a majority of the securities or other interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such entity is directly or indirectly owned by such Person and (ii) any corporation or other entity whose assets, or portions thereof, are consolidated with the net earnings of such Person and are recorded on the books of such Person for financial reporting purposes in accordance with GAAP.

“ Target Amount ” means an amount equal to the sum of (i) (a) $37,750,000 plus (b) ten percent (10%) per annum multiplied by $37,750,000, compounded annually (which

compounding shall take into account the timing of any dividends paid or other distributions or other payments made to the holders of the Series