<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 20, 1996
MEDICAL RESOURCE COMPANIES OF AMERICA
-------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 0-8187 75-2399477
- ------------------------------ ----------- ------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4265 KELLWAY CIRCLE, ADDISON, TEXAS 75244
------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 407-8400
----------------
Page 1 of 9
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not Applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 9, 1996 Medical Resource Companies of America "(The Company)" sold
it's wholly owned subsidiary American Mobility, Inc. "(AMI)" along with AMI's
subsidiaries Odyssey Mobility, Inc., Aviation Mobility, Inc. and Alpha Mobility,
Inc. to Innovative Health Services, Inc. "(IHS)" an non reporting company. The
sales price was $4,300,000 which was comprised of a $2 million note and
$2,300,000 of Class "A" convertible preferred stock of IHS. The price and terms
of the sale were determined through arms length negotiations between the
parties.
The $2 million note bears interest at the prime rate plus 1% and is payable
quarterly. The note calls for annual principal payments equal to a percentage
of IHS' earnings with a final payment due on February 9, 2001. The preferred
stock has a cumulative dividend rate of 8% per annum payable quarterly. The
preferred stock has no voting rights unless dividends are in arrears. After
three years under certain circumstances, the Company can convert the preferred
stock into common stock of IHS a price of 75% of the prevailing market price at
the time of conversion.
The Company will record a gain of $750,000 on the sale of AMI.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not Applicable
ITEM 5. OTHER EVENTS.
Not Applicable
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not Applicable
Page 2 of 9
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Pro-forma balance sheet for September 30, 1995
Pro-forma Statement of Operations for 1994 and
the nine months ended September 30, 1995.
(c) Exhibits
1 - Contract of sale
ITEM 8 CHANGE IN FISCAL YEAR.
Not Applicable
Page 3 of 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDICAL RESOURCE COMPANIES
OF AMERICA
Dated: February 21, 1996 By: Gene S. Bertcher
-----------------------
Name: Gene S. Bertcher
Title: Chief Financial Officer
Page 4 of 9
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MEDICAL RESOURCE COMPANIES OF AMERICA
ITEM #7 (b)
- -----------
Pro Forma Balance Sheet and Statement of Operations
(Unaudited)
The following pro forma balance sheet as of September 30, 1995 and Statement
of Operations For the Year Ended December 31, 1994 and the Nine Months Ended
September 30, 1995 give effect to the disposition of American Mobility, Inc.
along with it's wholly owned subsidiaries, Odyssey Mobility, Inc., Aviation
Mobility, Inc. and Alpha Mobility, Inc. These statements should be read in
conjunction with the separate financial statements and notes thereto of the
company. They are not necessarily indicative of the results of operations of
the company as it may be in the future or as it might have been had the assets
been sold prior to the periods indicated.
Page 5 of 9
<PAGE>
Medical Resource Companies of America
Pro Forma Consolidated Balance Sheet
September 30, 1995
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Disposition
As Previously Of American Consolidated
Reported Mobility, Inc Proforma
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash 10,567 (253) (1) 10,314
Accounts receivable
Trade 884 (149) (1) 735
Due from affiliates 181 181
Other 1,190 1,190
Supplies 342 (342) (1) 0
Other 1,200 (55) (1) 1,145
Total current assets 14,364 (799) 13,565
---------------------------------------------------
REAL ESTATE 3,158 3,158
INVESTMENT IN SECURITIES, AT COST 1,780 2300 (2) 4080
NOTES RECEIVABLE 6,870 2000 (2) 8870
PROPERTY AND EQUIPMENT
Buildings and improvements 767 767
Furniture, fixtures and equipment 2,299 (2,134) (1) 165
Construction in progress 122 122
Land 100 100
Less accumulated depreciation
& amortization (1,317) 1081 (1) (236)
---------------------------------------------------
1,971 (1,053) 918
OTHER ASSETS
Goodwill 1,281 (1,281) (1) 0
Other 752 (565) (1) 187
---------------------------------------------------
2,033 (1,846) 187
30,176 602 30,778
===================================================
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable 630 (97) (1) 533
Accrued expenses 1,355 (1) (1) 1354
Other 107 (54) (1) 53
Current maturities of long-term
obligations 71 71
---------------------------------------------------
2,163 (152) 2011
DEFERRED GAIN 3,083 3083
LONG-TERM DEBT, less current maturities 904 904
STOCKHOLDERS EQUITY 24,026 754 (3) 24780
---------------------------------------------------
30,176 602 30,778
===================================================
</TABLE>
Page 6 of 9
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Medical Resource Companies of America
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 1994
(unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
As Less
Previously Operations
Reported of American Consolidated
Consolidated Mobility, Inc. Adjustments Pro forma
<S> <C> <C> <C> <C>
REVENUE
Sales and rentals of mobility products 2,011 (2,011) 0
Long-term care facilities
operating revenue 7,939 7,939
Real estate operating revenue 2,029 2,029
Gain on sales of assets 4,633 4,633
Interest and dividends 418 344 (4) 762
-------------------------------------------------------
17,030 (2,011) 344 15,363
EXPENSES
Cost of mobility products sales and rentals 1,636 (1,636) 0
Long-term care facilities
operating expenses 5,059 5,059
Real estate operating expense 1,486 1,486
General and administrative 4,942 (907) 4,035
Interest 2,979 2,979
-------------------------------------------------------
16,102 (2,543) 0 13,559
-------------------------------------------------------
Earnings from continuing operations
before income taxes 928 532 344 1,804
Income tax expense (benefit) 57 57
-------------------------------------------------------
Earnings from continuing operations 871 532 344 1,747
=======================================================
Earnings per share from continuing
Operations $0.15 $0.10 $0.05 $0.30
Weighted average number of common and
equivalent shares outstanding 3,551 3,551
</TABLE>
Page 7 of 9
<PAGE>
Medical Resource Companies of America
Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 1995
(unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Less
As Previously Operations
Reported of American Consolidated
Consolidated Mobility, Inc. Adjustments Pro forma
<S> <C> <C> <C> <C>
REVENUE
Sales and rentals of mobility 1,659 (1,659) 0
products
Long-term care facilities
operating revenue 552 552
Real estate operating revenue 521 521
Gain on sales of assets 7,043 7,043
Interest and dividends 966 258 (4) 1,224
Other 14
--------------------------------------------------------------------
10,755 (1,659) 258 9,354
EXPENSES
Cost of mobility products sales and 1,275 (1,275) 0
rentals
Long-term care facilities
operating expenses 318 318
Real estate operating expense 270 270
General and administrative 2,371 (381) 1,990
Interest 179 179
--------------------------------------------------------------------
4,413 (1,656) 0 2,757
--------------------------------------------------------------------
Earnings from continuing operations
before income taxes 6342 (3) 258 6,597
Income tax expense (benefit) 2,152 2,152
--------------------------------------------------------------------
Earnings from continuing operations 4,190 (3) 258 4,445
====================================================================
Earnings per share from continuing
operations $1.15 $0.00 $0.10 $1.25
Weighted average number of common and
equivalent shares outstanding 3,678 3,678
</TABLE>
Page 8 of 9
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Medical Resource Companies of America
Notes to Pro Forma Financial Statements
September 30, 1995
(Unaudited)
The pro forma balance sheet has been prepared as though the disposition occured
on September 30, 1995, and the Statements of Operations have been prepared as
though the disposition took place as of the beginning of the periods presented.
The disposition will result in a gain of $754,000 which has not been reflected
in the pro forma statements of operations. The pro forma adjustments included in
the accompanying statements are as follows:
(1) To reflect the reduction of assets and liabilities
(2) To record the proceeds received on the sale
(3) To record the gain on the sale
(4) To record the interest and dividend income that would have been
received had the transaction occured at the beginning of the periods presented.
(5) Earnings per share and outstanding share amounts have been adjusted to
reflect a 5 for 1 reverse split which was effective December 1, 1995
Page 9 of 9
<PAGE>
EXHIBIT 1: Contract of Sale
STOCK PURCHASE AGREEMENT
By and between
JOSEPH L. DURANT, INNOVATIVE HEALTH SERVICES, INC.
and
MEDICAL RESOURCE COMPANIES OF AMERICA
<PAGE>
TABLE OF CONTENTS
Section
1. PURCHASE OF SHARES AND CLOSING ........................... 1
1.1. Purchase of Shares .............................. 1
1.2. Consideration ................................... 1
1.3. Additional Consideration by
Selling Stockholder ............................. 2
1.4. Additional Consideration by
Purchaser ....................................... 3
1.5. Pre-Closing Transactions ........................ 3
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING
STOCKHOLDERS ........................................... 3
2.1. Ownership of Shares ............................. 3
2.2. Organization .................................... 4
2.3. Corporate Action ................................ 4
2.4. Capitalization .................................. 4
2.5. Compliance with Law and Other
Instruments ..................................... 4
2.6. Tax Returns and Payments ........................ 5
2.7. Absence of Undisclosed Liabilities .............. 6
2.8. Absence of Certain Changes and Events ........... 6
2.9. Trademarks, Trade Names,
Copyrights, Etc ................................. 7
2.10. Material Litigation and Other
Proceedings ..................................... 7
2.11. Contracts ....................................... 7
2.12. Transactions with Affiliates .................... 8
2.13. Insurance and Banking Facilities ................ 8
2.14. Personnel, Compensation and Benefit
Plans ........................................... 8
2.15. Powers of Attorney and Suretyship ............... 9
2.16. Minutes and Stock Records ....................... 9
2.17. Governmental Consents ........................... 10
2.18. Brokers and Finders ............................. 10
3. REPRESENTATIONS AND WARRANTIES WITH RESPECT
TO THE PURCHASER SHARES ................................ 10
3.1. Investment Experience and
Economic Risk ................................... 10
3.2. Access to Information ........................... 10
3.3. Investment Representation ....................... 11
3.4. Restricted Securities ........................... 11
3.5. Further Limitations on Disposition .............. 11
3.6. Legends ......................................... 11
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Section
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER .............. 12
4.1. Organization .................................... 12
4.2. Authorization ................................... 12
4.3. Brokers and Finders ............................. 12
4.4. Compliance with Law and Other
Instruments ..................................... 12
5. COVENANTS OF THE SELLING STOCKHOLDER 12
5.1. Agreement Not to Compete ........................ 12
5.2. Further Assurances .............................. 14
6. AFFIRMATIVE COVENANTS OF PURCHASER AND THE
COMPANIES .............................................. 14
7. NEGATIVE COVENANTS OF PURCHASER ON BEHALF OF
THE COMPANIES .......................................... 17
7.1 Indebtedness and Liens .......................... 17
7.2 Continuity of Operations ........................ 18
7.3 Loans, Acquisitions and Guaranties .............. 18
7.4 Mergers, Consolidations, Etc. ................... 18
7.5 Dividends, Distributions and
Redemption ...................................... 18
7.6 Capital Structure ............................... 19
7.7 Prepayment of Indebtedness ...................... 19
7.8 Capital Commitments ............................. 19
7.9 Lease or Contractual Commitments ................ 19
7.10 Related Party Commitments ....................... 19
7.11 Compensation .................................... 19
7.12 Park & Airline Contracts ........................ 19
8. MISCELLANEOUS ............................................ 20
8.1. Expenses ........................................ 20
8.2. Entire Agreement ................................ 20
8.3. Governing Law ................................... 20
8.4. Notices ......................................... 20
8.5. Severability .................................... 21
8.6. Waiver, Amendment ............................... 21
8.7. Assignment ...................................... 21
8.8. No Third Party Rights ........................... 21
8.9. Counterparts .................................... 22
8.10. Headings, Gender ................................ 22
8.11. This Agreement Subject to Board
Approval ........................................ 22
8.12 Nondisclosure ................................... 22
ii
<PAGE>
Schedules
---------
Schedule 2.6 - Tax Returns and Payments
Schedule 2.7 - Absence of Undisclosed Liabilities
Schedule 2.8 - Absence of Certain Chances and Events
Schedule 2.10 - Litigation and Other Proceedings
Schedule 2.11 - Contracts
Schedule 2.12 - Transactions with Affiliates
Schedule 2.13 - Insurance and Banking Facilities
Schedule 2.14 - Personnel, Compensation and Benefit Plans
Exhibits
--------
Exhibit "A" -
Exhibit "B" -
Exhibit "C" -
Exhibit "D" -
Exhibit "E" -
iii
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement") dated as of January 30, 1996
by and between INNOVATIVE HEALTH SERVICES, INC., a Georgia corporation,
("Purchaser"), JOSEPH L. DURANT ("DuRant") and MEDICAL RESOURCE COMPANIES OF
AMERICA, a Nevada corporation ("Selling Stockholder").
W I T N E S S E T H:
WHEREAS, MEDICAL RESOURCE COMPANIES OF AMERICA is the owner of
20,000 shares of the Common Stock of AMERICAN MOBILITY, INC., a Texas
corporation (the "Company"), which shares constitute all of the issued and
outstanding shares of capital stock of the Company;
WHEREAS, on or before the closing of this Agreement the subsidiaries
of the Company shall be Alpha Mobility, Inc., Odyssey Mobility Systems, Inc.,
and Aviation Mobility, Inc., (together with the Company known as the
"Companies");
WHEREAS, the Selling Stockholder desires to sell and Purchaser
desires to purchase the stock of the Company owned by the Selling Stockholder
on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements and provisions contained herein, the parties hereto
agree as follows:
1. PURCHASE OF SHARES AND CLOSING.
1.1. Purchase of Shares.
On or before February 8, 1996 (the "Closing"), and subject to the
terms and conditions set forth in this Agreement, Selling Stockholder will
sell, convey, assign, transfer and deliver to Purchaser the shares of stock of
the Company owned by it (individually and collectively the "Shares"), and
deliver to Purchaser certificates representing such Shares, duly endorsed in
blank or with appropriate stock powers attached, which Selling Stockholder
warrants are free and clear of all liens, security interests, pledges,
agreements, claims, charges, options or encumbrances of any nature whatsoever,
except as otherwise contemplated by this Agreement. It shall be a condition
precedent to the Selling Stockholder fulfilling its obligations pursuant to
this Agreement that Purchaser shall receive $2,000,000 in cash or marketable
securities, less associated expenses, from a private placement of it's equity
(the "Private Placement").
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1.2. Consideration.
The purchase price for the Shares shall consist of the following,
which shall be paid at Closing:
(i) a recourse note payable to the Selling Stockholder in the
original principal balance of $2,000,000, together with interest thereon at
prime plus 1% with interest payable quarterly with payment in full on December
15, 2000 (the "Recourse Note"). In addition, Purchaser shall make principal
reductions of 25% of its net income, up to $400,000 payable annually following
the end of the Purchaser's fiscal year.
(iii) 230,000 shares of preferred stock of the Purchaser (the
"Preferred Stock"). The Preferred Stock shall: (a) be fully paid and non-
assessable, and free from taxes, liens and charges, (b) have a par value of
$1.00 per share, (c) have a redemption value and liquidation preference over
all other current or future stock of Purchaser of $10 per share, (d) be
convertible into the common stock of Purchaser, as set forth in more detail
below, any time following three (3) years from Closing at the option of the
holder of the Preferred Stock, and (e) shall pay an annual dividend, if
legally allowable, paid quarterly, of eighty cents ($.80) per share.
Dividends are fixed an cumulative, payable quarterly and may be deferred at
the discretion of the Purchaser, but no dividends will be paid to any other
preferred or common stockholders prior to the payment of any accrued dividends
on the Preferred Stock. Dividends may be paid in the form of registered
common stock of the Purchaser with the deemed value of such payment at 75% of
the then current market value of the common stock. The Preferred Stock shall
be non-voting stock, but i) shall have voting rights on a basis of one vote
per share, along with all other voting stock, so long as any dividend is
payable, as provided for above, and remains unpaid, ii) the holder of the
Preferred Stock can elect one director out of a maximum board of seven (7)
directors of Purchaser and iii) if, after ten years following issuance, the
Preferred Stock has not previously been converted or redeemed into the
registered common stock of Purchaser, the shareholders of the Preferred Stock
will be entitled to elect a majority of the board of directors of Purchaser.
All of the rights, preferences, restrictions and other matters relating to the
Preferred Stock are more particularly described on the attached Exhibit "E".
The Preferred Stock may be redeemed, in whole or in part, by Purchaser at any
time after issuance, with 30 days written notice to the holder of the
Preferred Stock for $10 per share plus any accrued and unpaid dividends. The
Preferred Stock may be converted, in whole or in part, by the holder of the
Preferred Stock at any time following three (3) years from the Closing, or
sooner, if approved by the Board of Directors of the Purchaser, into the
registered common stock of the Purchaser, with the cost of the common stock
being 75% of the then current market value of the common stock and the
conversion value of the Preferred Stock being
2
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$10 per share plus any accrued and unpaid dividends. Any accrued dividends
may be converted on the same terms or may be paid in cash by the Purchaser, at
the Purchaser's discretion. However, if the Purchaser pays accrued dividends
in cash, the cash payment must be made within 30 days of the notice of intent
to convert by the holder of the Preferred Stock. Current market value is
defined as the average of the median between the closing bid and offered price
of the common shares of Purchaser for the 10 trading days prior to the notice
of conversion.
The Recourse Note shall be drafted by the Selling Stockholder
subject to the reasonable approval of Purchaser.
1.3. Additional Consideration By Selling Stockholder
As additional consideration for this Agreement, Selling Stockholder
agrees to provide reasonable access, without charge, to the Company to the
facilities currently used by the Company at 4265 Kellway Circle, Addison, TX
75244 (the "Building") until the earlier to occur of January 31, 1996 or the
date that Selling Stockholder ceases to occupy the Building.
1.4 Selling Stockholder Pre-Closing Transactions.
Immediately prior to the consummation of the purchase and sale
contemplated by this Agreement, the following transaction shall be effected by
the Selling Stockholder and one or more of the Companies:
(i) Selling Stockholder shall transfer to the Company, all right,
title and interest of the Selling Stockholder in and to Alpha Mobility, Inc.;
and
(ii) Selling Stockholder shall receive without charge from one or
more of the Companies two forklifts and racking, including associated parts
and tools, located in the Building.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER.
The Selling Stockholder hereby makes the following representations,
warranties and covenants to Purchaser:
2.1. Ownership of Shares.
Immediately prior to the purchase and sale of the Shares, the
Selling Stockholder was the true and lawful owner of the Shares. The Selling
Stockholder has all necessary power and authority to execute this Agreement
and to sell the Shares to Purchaser, free and clear of all claims, liens,
security interests, rights of spouses or present or former family members or
stockholders of the Company, pledges, options, encumbrances and
3
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other restrictions of any nature whatsoever, other than transfer restrictions
imposed by applicable federal securities laws and as contemplated by this
Agreement. Other than this Agreement, there is no agreement between the
Selling Stockholder and any other person relating to or restricting the
transfer of the Shares. On the date hereof, Purchaser will acquire good and
indefeasible title to the Shares free and clear of any restrictions of the
type referred to in this Section 2.1, except as contemplated by this
Agreement. The Selling Stockholder owns no securities of the Company other
than the Shares and hereby irrevocably waives any and all rights to acquire at
any time any shares or securities of the Company or any interest in any such
shares or securities, except as contemplated by this Agreement.
2.2. Organization.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of Texas, has the full power and authority to own
or lease its properties and to carry on its business as it is now being
conducted. The Selling Stockholder has delivered to Purchaser complete and
correct copies of the articles of incorporation and bylaws of the Company as
in effect on the date of this Agreement. No action has been taken by the
board of directors of the Company or by the Selling Stockholder to amend any
such documents.
2.3. Corporate Action.
Prior to the Closing, the board of directors of each of the
Companies and the Selling Stockholder will have taken all actions, if any,
required by applicable law, the articles of incorporation or bylaws of the
Company or otherwise, to authorize the transactions contemplated by this
Agreement.
2.4. Capitalization.
The authorized capital stock of the Company consists of 100,000
shares of Common Stock, and 100,000 shares of Preferred Stock, of which only
the Shares owned by the Selling Stockholder are issued and outstanding. All
of the Shares were validly issued and are fully paid and nonassessable, and
other than the Shares there are no outstanding options, warrants, scrip,
preemptive rights or other subscription rights, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company.
2.5. Compliance with Law and Other Instruments.
The Companies are not in violation of any term of their charter
documents or bylaws. To the best of the Selling Stockholder' knowledge, the
Companies are not in material violation of any term or provision of any
mortgage, indebtedness, indenture,
4
<PAGE>
contract, agreement, instrument, judgment, decree, order, statute, law, rule
or regulation applicable to them or their properties. The execution, delivery
and performance of, and compliance with this Agreement by the Selling
Stockholder, and the consummation of the transactions contemplated herein,
have not resulted and will not result in any such violation or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Companies.
2.6. Tax Returns and Payments.
Except as otherwise described in this Agreement and its exhibits and
except as set forth on Schedule 2.6:
(i) All federal, state, local and foreign tax returns and
reports required to be filed by the Companies, have been filed with the
appropriate governmental agencies in all jurisdictions in which such returns
and reports are required to be filed, and to the best knowledge of the Selling
Stockholder such returns were prepared in accordance with all applicable laws
and regulations;
(ii) to the best of the Selling Stockholder' knowledge, all federal,
state, local and foreign income, profits, gross receipts, net worth, capital,
franchise, sales, use, employment, occupation, property, premium, excise and
other taxes (including interest and penalties) due or claimed by appropriate
tax authorities to be due from the Companies have been fully paid or provided
for on the books of the Companies or (b) are being contested in good faith by
appropriate proceedings and are not material;
(iii) no issues have been raised (and are pending) by the Internal
Revenue Service or any other taxing authority in connection with any of the
returns and reports referred to in the foregoing clause (i) which, if
adversely determined, would have a material adverse effect on the financial
condition of the Companies;
(iv) no waivers of statutes of limitations have been given or
requested with respect to the Companies;
(v) no election has been made, or consent given, under Section
341(f) of the Internal Revenue Code of 1986, as amended; and
(vi) for all tax years where the statute of limitations is still
open, the Companies federal income tax returns have not been audited by the
Internal Revenue Service.
2.7 Absence of Undisclosed Liabilities.
Except as otherwise described in this Agreement and its
5
<PAGE>
exhibits and except as set forth on Schedule 2.7, the Company has no
obligations or liabilities of any nature, whether absolute, accrued,
contingent or otherwise, whether liquidated or unliquidated, and whether now
due or to become due, which, individually or in the aggregate, would have a
material adverse effect on the financial condition of the Company. As of the
date hereof and except as otherwise disclosed in writing, the Company has no
accounts payable which are unpaid other than incurred in the ordinary course
of business.
To the extent that there should be such undisclosed liabilities, and
to the extent that they would have an adverse affect on the financial
condition of the Companies of more than $10,000, the principal amount of the
Recourse Note described in Section 1.2 above shall be reduced by such amount.
2.8 Absence of Certain Changes and Events.
Except as shown on Schedule 2.8 and as set forth in this Agreement
and its exhibits, between June 30, 1995 and the date of this Agreement there
has not been:
(i) any transaction entered into by the Companies other than in
the ordinary course of business or any material adverse change in the
condition (financial or otherwise), earnings, assets, liabilities, prospects
or business of the Companies whether or not arising from transactions in the
ordinary course;
(ii) any declaration, payment or setting aside of any dividend or
other distribution in respect of the capital stock of the Companies or any
direct or indirect redemption, purchase or other acquisition by the Companies
of any such stock;
(iii) any modification or rescission of, or waiver, except in the
ordinary course of business, by the Selling Stockholder or the Companies
(written or oral) of rights under any contract now existing relating to the
Companies;
(iv) any mortgage, pledge or imposition of any security interest,
claim, encumbrance or other restriction on, or any sale or other disposition
(other than in the ordinary course of business) of, any assets of the
Companies, tangible or intangible;
(v) any change in accounting practice or any new method of
accounting introduced in respect of the business of the Companies or any of
its assets, properties or rights;
(vi) any change in the policies or practices of the Companies
regarding the timely discharge of accounts payable and other obligations;
(vii) any cancellation or release of any debt or other obligation
owed the Companies, or of any claim held by the
6
<PAGE>
Companies, except in the ordinary course of business; or
(viii) any borrowing by the Companies or any incurrence by the
Companies of any obligation or liability (absolute or contingent), except for
current liabilities incurred, and obligations under contracts entered into, in
the ordinary course of business.
2.9. Trademarks, Trade Names, Copyrights. Etc.
To the best of the Selling Stockholder' knowledge, the Companies (i)
own or have the right to use, free and clear of all liens, claims and
restrictions, all patents, trademarks, trade names, service marks, copyrights,
trade secrets, know-how, inventions, designs, processes and technical data,
licenses with respect to the foregoing, and other proprietary rights of any
nature relating to or used in their business, or used or useful in promoting
such business, in the manner in which such business has been or is being
conducted (hereinafter, "Business Property"), without infringing upon or
otherwise acting adversely to the right or claimed right of any person under
or with respect to any of the foregoing, and (ii) are free of any obligation
or liability whatsoever to make any payment by way of royalties, fees or
otherwise to any person with respect to the use of Business Property. To the
best knowledge of the Selling Stockholder, there has not been any infringement
or unauthorized use by any third party of any of the Business Property.
2.10. Material Litigation and Other Proceedings.
Unless covered by applicable insurance, and except as shown on
Schedule 2.10, neither the Company nor any of its directors, officers or
stockholders, is a party to any pending or, to the knowledge of the Selling
Stockholder, threatened action, suit, proceeding or investigation, which is
material to the Companies, in or by any court or governmental board,
commission, agency, department or office, or before any arbitrator, in the
United States or elsewhere (nor, to the knowledge of the Selling Stockholder,
is there any reasonable basis therefor), arising or claimed to arise from
actions or inactions of the Companies or, in the case of an individual, from
actions or inactions in such individual's capacity as a director, officer or
stockholder of the Companies.
2.11. Contracts.
Schedule 2.11 describes, and the Selling Stockholder has delivered
to Purchaser, complete and correct copies of, all currently effective
agreements, contracts, indebtedness, liabilities and other obligations to
which any of the Companies is a party or by which it or any of its properties
or assets is bound or affected (other than the documents listed on and
delivered to
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Purchaser pursuant to other Schedules hereto) which are material to the
conduct or operations of the business of any of the Companies. The Companies
are, and to the knowledge of the Selling Stockholder, all other parties to
such agreements are, in compliance with all material provisions of such
agreements, except as set forth in Schedule 2.11.
2.12. Transactions with Affiliates.
Schedule 2.12 is a true and complete list of (i) all transactions
between the Companies and the Selling Stockholder or any affiliate of the
Selling Stockholder, except for reimbursements, since June 30, 1995, which
list includes amounts payable or receivable in connection with such
transactions, and (ii) all interests, direct or indirect, of the Selling
Stockholder and all affiliates of the Selling Stockholder in any corporation,
partnership, firm or association which is a competitor of the Companies.
Except as described in Schedule 2.12, (i) none of the Companies are indebted
to the Selling Stockholder or any of its affiliates other than in respect of
salaries for periods not exceeding the normal monthly or semi-monthly payroll
period, or for amounts due in respect of ordinary travel and business expenses
and employee benefit plans referred to in this Agreement, and (ii) neither the
Selling Stockholder nor any of their affiliates is indebted to the Companies.
2.13. Insurance and Banking Facilities.
Schedule 2.13 comprises a complete and correct list of (i) all
contracts of insurance and indemnity of or relating to the Companies in force
at the date of this Agreement (including name of insurer or indemnitor, agent,
annual premium, coverage and expiration date), and the Selling Stockholder has
delivered to Purchaser complete and correct copies of all such contracts, (ii)
the names and locations of all banks in which the Companies have accounts, and
(iii) the names of all persons authorized to draw on such accounts. All
premiums and other payments due with respect to all such contracts of
insurance and indemnity have been paid, and to the knowledge of the Selling
Stockholder there is no act or failure to act that has caused or might cause
any such contract to be canceled or terminated. All notices have been given,
all known claims have been presented and all other required or appropriate
action with respect to such contracts has been taken by the Companies in a due
and timely fashion.
2.14. Personnel, Compensation and Benefit Plans.
(i) Schedule 2.14 comprises a complete and correct list of (a) all
permanent employees of the Companies and the current compensation rate of each
such person, and (b) all employment, non-competition and similar agreements,
bonus, profit-sharing, deferred compensation, commission, insurance,
termination,
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vacation, fringe benefit, pension and retirement agreements, plans and
programs (whether formal or informal) respecting or affecting any directors,
officers or other employees or agents of the Companies. Schedule 2.14
includes with respect to each such person, his or her name, base compensation,
bonus for the last fiscal year, title, date of birth and start date.
(ii) All of the agreements, plans and programs described on Schedule
2.14 comply with applicable law, including, without limitation, the reporting,
disclosure and other requirements of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). None of the Companies has engaged in a
transaction which would subject it to any tax, penalty or liability for
prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of
the Internal Revenue Code, as amended (the "Code"). None of the Companies nor
any of their directors, officers or employees has breached in a material
respect any of the responsibilities or obligations imposed upon such person as
a fiduciary under Title I of ERISA with respect to any employee benefit plan
or the Terminated Plan. No employee benefit plan which is subject to Part 3
of Subtitle B of Title I of ERISA or Section 412 of the Code has an
accumulated funding deficiency (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived. The Companies have made all required
contributions under each employee pension benefit plan for all periods through
and including the date hereof, or adequate accruals there for have been
provided. None of the existing or terminated employee pension benefit plans of
the Companies is or was a defined benefit pension plan. The Companies has
never been obligated to contribute to any employee pension benefit plan which
is a multi-employer plan at any time on or after September 26, 1980. The
Companies have no obligation to provide, and has made no payments in respect
of, life or other insurance benefits or medical benefits to retired employees
or former employees of the Companies. As used in this Agreement, the terms
"employee benefit plan", "employee pension benefit plan" and "multi-employer
plan" shall have the respective meanings assigned to such terms in Section 3
of ERISA. None of the Companies nor any of their employees is a party or
subject to any collective bargaining agreement.
2.15. Powers of Attorney and Suretyship.
The Companies have no powers of attorney outstanding or obligations
or liabilities (absolute or contingent) as guarantor, surety, co-signor,
endorser, co-maker, indemnitor or otherwise respecting the obligation of any
person, corporation or other organization.
2.16. Minutes and Stock Records.
The Selling Stockholder has delivered to Purchaser the originals or
complete and correct copies of the minute books and
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stock records of the Companies. Such items contain a complete and correct
record of all proceedings and actions taken at all meetings of, and all
actions taken by written consent by, the holders of capital stock and board of
directors of the Companies.
2.17. Governmental Consents.
To the knowledge of the Selling Stockholder, no consents or other
such items are required of the Companies or Selling Stockholder, (or
Purchaser, as the sole stockholder of the Company) in connection with this
Agreement or the consummation of the transactions contemplated by this
Agreement.
2.18. Brokers and Finders.
None of the Companies nor the Selling Stockholder has retained or
dealt with any broker, finder or investment banker in connection with this
Agreement or the transactions contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE SHARES.
The Purchaser hereby represents, warrants, and covenants to the
Selling Stockholder that:
3.1. Investment Experience and Economic Risk.
The Purchaser is an experienced investor in unregistered and
restricted securities, has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of an
investment in the Shares and, by reason of its financial and business
experience, has the capacity to protect its interests in connection with such
investment. The Purchaser is financially able to bear the economic risk of
its investment in the Shares, including the total loss thereof.
3.2. Access to Information.
The Purchaser has received all information it considers necessary or
appropriate for deciding whether to acquire the Shares. The Purchaser further
represents that it has had an opportunity to review any documents of Selling
Stockholder on file with the SEC and to ask questions of and receive answers
from Selling Stockholder and its officers regarding the business, financial
affairs and other aspects of the Companies, and has further had the
opportunity to obtain any other information which it deems necessary to
evaluate the investment or to verify the accuracy of information otherwise
provided.
3.3. Investment Representation.
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The Purchaser acknowledges that it is aware that the Shares have not
been registered under the Act or qualified under any state securities laws, in
reliance, in part, on the representations and warranties of the Selling
Stockholder in this Agreement. The Shares are acquired by such Purchaser for
investment purposes only for its own account and not for sale or with a view
to distribution of all or part of the Shares.
3.4. Restricted Securities.
The Purchaser understands that the Shares are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
acquired from Selling Stockholder in a transaction not involving a public
offering and that under such laws and applicable regulations, such securities
may not be resold without registration under the Act except in certain limited
circumstances, and that otherwise the Shares must be held indefinitely. In
this connection, the Purchaser represents that it is familiar with SEC Rule
144, as presently in effect, and the conditions which must be met in order for
that Rule to be available for resale of "restricted securities."
3.5. Further Limitations on Disposition.
Without in any way limiting their representations set forth in this
Agreement, the Purchaser further agrees not to make any disposition of all or
any part of the Shares unless and until it has paid off the Recourse Note or
as otherwise agreed with Selling Stockholder.
3.6. Legends.
It is understood that the certificates evidencing the Shares may
bear one or both of the following legends:
(i) "These securities have not been
registered under the Securities Act of 1933, as
amended. They may not be sold, offered for sale,
transferred, pledged or hypothecated in the
absence of a registration statement in effect with
respect to the securities under such Act or an
opinion of counsel satisfactory to the Company
that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(ii) "These securities are subject to a
note, and a security or pledge agreement, as
set forth in a Stock Purchase Agreement dated as
of July 1, 1995, which is on file with the
Secretary of the Company."
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
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Purchaser represents, warrants and covenants to the Selling
Stockholder that:
4.1. Organization.
Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia.
4.2. Authorization.
Purchaser has taken all requisite corporate action to authorize the
execution and delivery by Purchaser of this Agreement and the performance by
Purchaser of its obligations hereunder. Purchaser has duly and validly
executed and delivered this Agreement. This Agreement constitutes the valid,
binding and enforceable obligation of Purchaser in accordance with its terms,
subject to applicable bankruptcy laws.
4.3. Brokers and Finders.
Purchaser has not retained any broker, finder or investment banker
in connection with this Agreement or the transactions contemplated by this
Agreement.
4.4. Compliance with Law and Other Instruments.
Purchaser is not in violation of any term of its charter documents
or bylaws. To the best of Purchaser's knowledge, Purchaser is not in material
violation of any term or provision of any mortgage, indebtedness, indenture,
contract, agreement, instrument, judgment, decree, order, statute, law, rule
or regulation applicable to it or its properties. The execution, delivery and
performance of, and compliance with this Agreement by Purchaser, and the
consummation of the transactions contemplated herein, have not resulted and
will not result in any such violation or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Purchaser.
5. COVENANTS OF THE SELLING STOCKHOLDER.
5.1. Agreement Not to Compete.
So long as Purchaser is not in default of the Recourse Note the
Selling Stockholder agrees as follows:
(i) Except for all aspects of the real estate business, the
Selling Stockholder covenants and agrees that, without the prior written
consent of Purchaser or its successors, for a period commencing on the date
hereof and ending five years after the date of this Agreement, such Selling
Stockholder shall
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not, directly or indirectly, individually or together or through any affiliate
or other firm, person, corporation or entity, (1) engage in or acquire any
interest in any business to provide strollers, motorized scooters, and wheel
chairs, etc. for rent to their guests (except that such Selling Stockholder
may acquire interests in companies whose shares are traded on a national
exchange or the NASDAQ or OTC markets and in which Selling Stockholder and
affiliates own no more that 1% of the outstanding shares), (2) approach,
solicit, accept business from or otherwise engage in business in any
competitive way with, any person or entity which is, has been or becomes, a
customer or client of the Companies, or any affiliate of such a person or
entity, (3) approach, counsel or attempt to induce any person who is then in
the employ of any of the Companies to leave the employ of the Companies, or
employ or attempt to employ any such person or any person who at any time
during the preceding 24 months was in the employ of the Companies, or (4) aid
or counsel any other person, firm or corporation to do any of the above.
(ii) In view of the position the Selling Stockholder enjoyed as
stockholder of the Company, and recognizing both the access to confidential
financial and other information derived by the Selling Stockholder pursuant to
its control of the Companies, the Selling Stockholder expressly acknowledges
that the agreement not to compete and related restrictive covenants set forth
in this Section 5.1 are reasonable and necessary in order to protect and
maintain the proprietary interests and other legitimate business interests of
the Companies. The Selling Stockholder further acknowledges (a) that it would
be difficult to calculate damages to Purchaser from any breach by it of its
obligations under this Section 5.1, (b) that injury to Purchaser from any such
breach would be irreparable and impossible to measure and (c) that the remedy
at law for any breach or threatened breach of this Section 5.1 would therefore
be an inadequate remedy and, accordingly, that Purchaser shall, in addition to
all other available remedies (including without limitation seeking such
damages as it can show it has sustained by reason of such breach), be entitled
to injunctive and other similar equitable remedies without proving or showing
any actual damage sustained.
(iii) In the event the provisions of this Section 5.1 should ever be
deemed to exceed the time or geographic limitations permitted by applicable
law, then such provisions shall be reformed to the maximum time or geographic
limitations permitted by applicable law. The covenants contained in Section
5.1(i) shall be construed as a series of separate covenants, one for each
month of each year and for each county of the state of Texas and for each
state of the United States. In the event that any one or more of such
covenants shall for any reason be held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not have any effect on any
other such separate covenant, but such other covenants shall be construed as
if the invalid or
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unenforceable covenant had never been contained in Section 5.1(i).
5.2. Further Assurances.
The Selling Stockholder agrees that they will from time to time, at
the request of Purchaser and without further consideration, execute and
deliver such other instruments of conveyance, assignment and transfer and take
such other actions as Purchaser may reasonably request in order more
effectively to convey, assign, transfer to and vest in Purchaser the Shares,
and to convey, assign, transfer to and vest in the Companies the ownership or
exclusive rights to the Business Property.
6. AFFIRMATIVE COVENANTS OF PURCHASER AND THE COMPANIES.
6.1 Purchaser covenants and agrees with Selling Stockholder that,
while this Agreement is in effect, Purchaser will:
(a) LITIGATION. Promptly inform Selling Stockholder in writing of (a)
all material adverse changes in the financial condition of Purchaser or any of
the Companies, and (b) all litigation and claims and all threatened litigation
and claims affecting Purchaser which could materially affect the financial
condition of Purchaser or the financial condition of any of the Companies.
(b) FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis, and
permit Selling Stockholder to examine and audit Purchaser's books and records
at all reasonable times.
(c) FINANCIAL STATEMENTS. Furnish Selling Stockholder with, as soon as
available, but in no event later than ninety (90) days after the end of each
fiscal year, Purchaser's balance sheet and income statement for the year
ended, audited by a certified public accountant satisfactory to Selling
Stockholder, and, as soon as available, but in no event later than forty-five
(45) days after the end of each quarter, Purchaser's balance sheet and profit
and loss statement for the period ended, prepared and certified as correct to
the best knowledge and belief by Purchaser's chief financial officer or other
officer or person acceptable to Selling Stockholder. All financial reports
required to be provided under this Agreement shall be prepared in accordance
with generally accepted accounting principles, applied on a consistent basis,
and certified by Purchaser as being true and correct.
(d) ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities,
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agings of receivables and payables, inventory schedules, budgets, forecasts,
tax returns, and other reports with respect to Purchaser's financial condition
and business operations as Selling Stockholder may request from time to time.
(e) INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Selling Stockholder may require with
respect to Purchaser's properties and operations, in form, amounts, and
coverages reasonably acceptable to Selling Stockholder. PURCHASER MAY FURNISH
THE REQUIRED INSURANCE WHETHER THROUGH EXISTING POLICIES OWNED OR CONTROLLED
BY PURCHASER OR THROUGH EQUIVALENT INSURANCE FROM ANY INSURANCE COMPANY
AUTHORIZED TO TRANSACT BUSINESS IN THE STATE OF TEXAS. If Purchaser fails to
provide any required insurance or fails to continue such insurance in force,
Selling Stockholder may, but shall not be required to, do so at Purchaser's
expense, and the cost of the insurance will be added to the balance of the
Recourse Note. If any such insurance is procured by Selling Stockholder at a
rate or charge not fixed or approved by the State Board of Insurance,
Purchaser will be so notified, and Purchaser will have the option for five (5)
days of furnishing equivalent insurance through any insurer authorized to
transact business in Texas. Purchaser, upon request of Selling Stockholder,
will deliver to Selling Stockholder from time to time the policies or
certificates of insurance in form satisfactory to Selling Stockholder,
including stipulations that coverages will not be canceled or diminished
without at least thirty (30) days' prior written notice to Selling
Stockholder. In connection with all policies covering assets in which Selling
Stockholder holds or is offered a security interest for the Recourse Note, the
Non-Recourse Note or the Third Lien Note, Purchaser will include Selling
Stockholder as an additional insured or other endorsements as Selling
Stockholder may require.
In addition, so long as any portion of the Recourse Note remains unpaid,
Purchaser agrees to allow Selling Stockholder the right to obtain insurance
through the policies of the Companies, so long as the premium for such
insurance is separately identified by the insurer and is paid in advance by
the Selling Stockholder.
(f) INSURANCE REPORTS. Furnish to Selling Stockholder, upon request of
Selling Stockholder, reports on each existing insurance policy showing such
information as Selling Stockholder may reasonably request, including without
limitation the following: (a) the name of the insurer; (b) the risks insured;
(c) the amount of the policy; (d) the properties insured; (e) the then current
property values on the basis of which insurance has been obtained, and the
manner
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of determining those values; and (f) the expiration date of the policy. In
addition, upon request of Selling Stockholder (however not more often than
annually), Purchaser will have an independent appraiser satisfactory to
Selling Stockholder determine, as applicable, the actual cash value or
replacement cost of any Collateral.
(g) OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Purchaser and each of
the Companies, and any other party and notify Selling Stockholder immediately
in writing of any default in connection with any other such agreements.
(h) TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Purchaser or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if unpaid,
might become a lien or charge upon any of Purchaser's properties, income, or
profits. Provided however, Purchaser will not be required to pay and
discharge any such assessment, tax, charge, levy, lien or claim so long as (a)
the legality of the same shall be contested in good faith by appropriate
proceedings, and (b) Purchaser shall have established on its books adequate
reserves with respect to such contested assessment, tax, charge, levy, lien,
or claim in accordance with generally accepted accounting practices.
Purchaser, upon demand of Selling Stockholder, will furnish to Selling
Stockholder evidence of payment of the assessments, taxes, charges, levies,
liens and claims and will authorize the appropriate governmental official to
deliver to Selling Stockholder at any time a written statement of any
assessments, taxes, charges, levies, liens and claims against Purchasers
properties, income, or profits.
(i) PERFORMANCE. Perform and comply with all terms, conditions, and
provisions set forth in this Agreement and in all other instruments and
agreements between Purchaser and Selling Stockholder in a timely manner, and
promptly notify Selling Stockholder if Purchaser learns of the occurrence of
any event which constitutes an Event of Default under this Agreement.
(j) OPERATIONS. Conduct its business affairs in a reasonable and prudent
manner and in compliance with all applicable federal, state and municipal
laws, ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including compliance with CERCLA, SARA, and other
federal and state environmental laws and regulations and with all minimum
funding standards and other
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requirements of ERISA and other laws applicable to Purchaser's employee
benefit plans.
(k) INSPECTION. Permit employees or agents of Selling Stockholder at any
reasonable time to inspect any and all assets of the Purchaser or the
Companies and to examine or audit Purchaser's books, accounts, and records and
to make copies and memoranda of Purchaser's books, accounts, and records. If
Purchaser now or at any time hereafter maintains any records (including
without limitation computer generated records and computer software programs
for the generation of such records) in the possession of a third party,
Purchaser, upon request of Selling Stockholder, shall notify such party to
permit Selling Stockholder free access to such records at all reasonable times
and to provide Selling Stockholder with copies of any records it may request,
all at Purchaser's expense.
(l) COMPLIANCE CERTIFICATE. Unless waived in writing by Selling
Stockholder, provide Selling Stockholder at least annually with a certificate
executed by Purchaser's chief financial officer, or other officer or person
acceptable to Selling Stockholder, certifying that the representations and
warranties set forth in this Agreement are true and correct as of the date of
the certificate and further certifying that, as of the date of the
certificate, no Event of Default exists under this Agreement.
(m) ADDITIONAL ASSURANCES. Make, execute and deliver to Selling
Stockholder such promissory notes, mortgages, deeds of trust, security
agreements, financing statements, instruments, documents and other agreements
as Selling Stockholder or its attorneys may reasonably request to evidence and
secure the Recourse Note, the Non-Recourse Note and the Third Lien Note and to
perfect all security interests.
6.2 Purchaser also covenants and agrees with Selling Stockholder
that Purchaser has inspected all of the assets owned by the Companies, or has
been given an opportunity to do so, and SELLING STOCKHOLDER MAKES NO
REPRESENTATIONS OR WARRANTIES WHETHER EXPRESS, IMPLIED OR STATUTORY (OTHER
THAN WARRANTIES OF TITLE) WITH REGARD TO THE CONDITION OF THE ANY ASSETS OF
THE COMPANIES, OR MERCHANTABILITY, FITNESS, OR SUITABILITY FOR THE USES FOR
WHICH PURCHASER INTENDS AND PURCHASER AGREES TO ACCEPT SUCH ASSETS IN THEIR
PRESENT CONDITION "AS IS, WHERE IS" AND "WITH ALL FAULTS".
7. NEGATIVE COVENANTS OF PURCHASER ON BEHALF OF THE COMPANIES.
Purchaser covenants and agrees with Selling Stockholder that while
any portion of the Recourse Note remains unpaid, the Companies, shall not,
without the prior written consent of Selling
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Stockholder:
7.1 Continuity of Operations.
Cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, dissolve or transfer or sell material
assets out of the ordinary course of business.
7.2 Dividends, Distributions and Redemptions.
Purchaser will not declare or pay any dividend, purchase, redeem, or
otherwise acquire for value any of its stock, now or hereafter outstanding,
return any capital to its stockholders, or make any distribution of its assets
to its stockholders, except for the net earnings of the Purchaser consolidated
with all of its subsidiaries in accordance with generally accepted accounting
principals.
8. CONDITIONS TO OBLIGATION OF PURCHASER.
The obligations of Purchaser hereunder are subject to the fulfillment, at
or before Closing, of each of the following conditions (all of which may be
waived in whole or in part by Purchaser at its sole discretion):
8.1 Representation of Warranties.
The representations and warranties made by the Selling Stockholder
and the Company in this Agreement shall be true and correct on and as of the
Closing Date, as though made on the Closing Date.
8.2 Performance.
The Selling Stockholder has performed and shall have complied with,
in all material respects, the agreements, covenants and obligations required
by this Agreement to be so performed or complied with by the Selling
Stockholder, at or before Closing.
8.3 Officer Certificate.
The Companies shall have delivered to Purchaser a certificate, dated
the Closing Date and executed by the chairman of the board or the president,
substantially in the form and to the effect of Exhibit "C" hereto, and a
certificate, dated the Closing Date, and executed by the Secretary of the
Company, substantially in the form and to the effect of Exhibit "D" hereto.
8.4 Orders and Laws.
There shall not be in effect on the Closing Date any
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order or law restraining, enjoining or otherwise prohibiting or making illegal
any business of the Company or the consummation of any of the transactions
contemplated by this Agreement.
8.5 Regulatory Consents and Approvals.
All consents, approvals and actions of, fillings with or notices to,
any governmental or regulatory authorities necessary to permit Purchaser and
the Selling Stockholder to perform their obligations under this Agreement and
to consummate the transactions contemplated hereby, shall have been duly
obtained, made or given, and shall be in full force and effect, and all
termination or expirations are waived supposed by any governmental or
regulatory authority necessary for the consummation of the transaction
contemplated by this Agreement, shall have occurred.
8.6 Third-Party Consents.
The consents of any and all third-parties, which are necessary for
consummation of the transactions contemplated hereby shall have been obtained
and shall be in full force and effect. However, Purchaser acknowledges all
terms and conditions of all theme park and airline contracts, specifically
allowing such theme park or airline to terminate such agreement under various
circumstances including, but not limited to, a change of ownership or
management without their consent.
8.7 Private Placement.
Purchaser shall have completed a private placement of securities in
the net amount of $2,000,000.00.
9. CONDITIONS AND OBLIGATIONS OF SELLING STOCKHOLDER.
The obligations of the Selling Stockholder hereunder are subject to
the fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole of in part by the Selling
Stockholder, in its sole discretion).
9.1 Representations and Warranties.
The representations and warranties made by Purchaser in this
Agreement shall be true and correct on and as of the Closing Date, as though
made on the Closing Date.
9.2 Performance.
Purchaser shall have performed and complied with, in all material
respects, the agreements, covenants and obligations required by this Agreement
to be so performed or complied with by Purchaser at or before the Closing.
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9.3 Officer Certificates.
Purchaser shall have delivered to the Selling Stockholder a
certificate, dated the Closing Date, and executed by the chairman of the board
or the president, substantially in the form and to the effect of Exhibit "A"
hereto, and a certificate dated the Closing Date and executed by the Secretary
of the Purchaser, substantially in the form and to the effect of Exhibit "B"
hereto.
9.4 Orders and Laws.
There shall not be in effect on the Closing Date any order or law
restraining, enjoining, or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.
9.5 Regulatory Consents and Approvals.
All consents, approvals and actions of, filings with or notices to,
any governmental or regulatory authority necessary for the consummation of the
transactions contemplated by this Agreement, shall have occurred.
9.6 Third-Party Consents.
The consents of any and all third parties necessary to consummation
of the transactions contemplated hereby shall have been obtained and shall be
in full force and effect.
10. MISCELLANEOUS.
10.1. Expenses.
Purchaser shall pay its own costs and expenses, and the Selling
Stockholder shall pay its own costs and expenses (and those of the Company, if
any) relating to this Agreement, the negotiations leading up to this Agreement
and the performance of this Agreement.
10.2. Entire Agreement.
This Agreement and the exhibits, schedules and other documents
delivered pursuant to this Agreement, contain all of the terms and conditions
agreed upon by the parties relating to the subject matter of this Agreement
and supersedes all prior and contemporaneous agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, respect that subject matter.
10.3. Governing Law.
This Agreement is performable and payment shall be made
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in Dallas County, Texas, and shall be governed by, and construed in accordance
with, the laws of the State of Texas.
10.4. Notices.
All notices, requests, demands, and other communications made in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given on the date of delivery, if delivered to the persons
identified below, or two days after mailing if mailed by certified or
registered mail, postage prepaid, return receipt requested, addressed as
follows:
If to Purchaser, to:
Joseph L. DuRant
INNOVATIVE HEALTH SERVICES, INC.
3343 Peachtree Rd., NE
Suite 805
Atlanta, GA 30326
W. Thomas King
Smith, Gambrell & Russell
3343 Peachtree Road, N.E.
Atlanta, GA 30326
If to the Selling Stockholder, to:
James R. Gilley
Medical Resource Companies of America
4265 Kellway Circle
Addison, TX 75244
Mark E. Bennett, Esq.
Bennett & Weston, P.C.
10670 North Central Expressway
Suite 200
Dallas, TX 75231
Such persons and addresses may be changed, from time to time, by
means of a notice given in the manner provided in this Section.
10.5. Severability.
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
10.6. Waiver, Amendment.
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No waiver of any term or condition contained in this Agreement and
no purported amendment of this Agreement shall be effective unless it is
signed by the party against whom enforcement of such waiver or amendment is
sought. The waiver of any term or condition of this Agreement by any party
shall not be construed as a waiver of any other breach or failure of the same
term or condition, or a waiver of any other term or condition of this
Agreement.
10.7. Assignment.
This Agreement shall inure to the benefit of, and be binding upon,
the respective successors, heirs, personal representatives and assigns of the
parties hereto, provided, however, that, no assignment may be made either
party without the prior written consent of the other party.
10.8. No Third Party Rights.
This Agreement is made for the benefit of the parties hereto and
their successors and permitted assigns as provided in Section 10.7, and
neither this Agreement nor any provision hereof shall be construed or deemed
to give rise to rights in any other person.
10.9. Counterparts.
This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same Agreement.
10.10. Headings, Gender.
The section headings in this Agreement are inserted for convenience
of reference only and shall not affect the meaning or interpretation of this
Agreement. Gender references in this Agreement shall be deemed to include the
masculine, feminine and neuter, as the context may require.
10.11. This Agreement Subject To Board Approval
Selling Stockholder shall not be obligated to perform under this
Agreement and may terminate this Agreement by notice to Purchaser unless the
Board of Directors of Selling Stockholder will have approved the transaction
contemplated hereby. Selling Stockholder will promptly notify Purchaser in
writing of the approval or disapproval by Selling Stockholder's board of
directors.
10.12. Nondisclosure
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It is a material inducement to Selling Stockholder to enter into
this Agreement to control disclosure of information on this transaction.
Purchaser specifically agrees that, without the prior written consent of
Selling Stockholder, it will not at any time, in any fashion, form, or manner,
either directly or indirectly, divulge, disclose or communicate to any person,
firm, or corporation in any manner whatsoever any information of any kind,
nature or description concerning any matter affecting or relating to this
transaction. Without regard to whether any or all of the foregoing matters
would be deemed confidential, material, or important under common law, the
parties hereto stipulate that the same are confidential, material, important
and gravely affect the effective and successful development of the Purchaser,
and that any breach of the terms of this paragraph is a material breach
hereof.
In addition, Purchaser specifically agrees that it, its affiliates and
its agents will not at any time, in any fashion, form, or manner, either
directly or indirectly, i) buy or sell in any form any of the stock of Selling
Stockholder based on information about this Agreement before there is a public
disclosure by Selling Stockholder regarding this Agreement, or ii) divulge,
disclose or communicate to any person, firm or corporation in any manner
whatsoever any information of any kind, nature or description which would
induce them buy or sell in any form any of the stock of Selling Stockholder.
Selling Stockholder hereby acknowledges that Purchaser has disclosed
the possible terms of this Agreement in the Private Placement.
10.13 Closing Deadline
If this Agreement fails to close on or before February 8, 1996 this
Agreement shall, unless extended by the parties in writing, terminate and be
without any further force or effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth in the first paragraph of this Agreement.
MEDICAL RESOURCE COMPANIES OF AMERICA
/s/ James R. Gilley
----------------------------
By: James R. Gilley
------------------------
Title: Chairman, President & CEO
--------------------------
/s/ Joseph L. Durant
--------------------------
JOSEPH L. DURANT
Personally
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INNOVATIVE HEALTH SERVICES, INC.
/s/ Joseph L. Durant
---------------------------------
JOSEPH L. DURANT
President
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