UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
HEALTH MANAGEMENT, INC.
-----------------------
(Name of Issuer)
Common Stock, par value $.03 per share
--------------------------------------
(Title of Class of Securities)
42219B10
--------------
(CUSIP Number)
Vincent J. Caruso
Transworld Home HealthCare, Inc.
75 Terminal Avenue
Clark, New Jersey 07066
(908) 340-1144
- --------------------------------------------------------------------------------
(Name, Address, and Telephone Number of Person Authorized to
Receive Notices and Communications)
November 13, 1996
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box: [ ]
Check the following box if a fee is being paid with the
statement: [ ]
<PAGE>
CUSIP No. 42219B10
- ------------------
I. Name of Reporting Person Transworld Home
HealthCare, Inc.
S.S. or I.R.S. Identification No.
of Above Person (Intentionally
Omitted)
- --------------------------------------------------------------------------------
II. Check the Appropriate Box if a (a) [ ]
Member of a Group (b) [X]
- --------------------------------------------------------------------------------
III. SEC Use Only
- --------------------------------------------------------------------------------
IV. Source of Funds BK
- --------------------------------------------------------------------------------
V. Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
VI. Citizenship or Place of Organization New York
VII. Sole Voting -0-
Power
--------------------------------------------------------
Number of Shares VIII. Shared Voting 9,711,005
Power
--------------------------------------------------------
IX. Sole Dis- -0-
positive Power
--------------------------------------------------------
X. Shared Dis- 9,711,005
positive Power
- --------------------------------------------------------------------------------
XI. Aggregate Amount Beneficially
Owned By Each Reporting Person 9,711,005 shares
- --------------------------------------------------------------------------------
XII. Check Box if the Aggregate Amount
in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
XIII. Percent of Class Represented by
Amount in Row (11) 51.0%
- --------------------------------------------------------------------------------
XIV. Type of Reporting Person CO
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<PAGE>
CUSIP No. 42219B10
- ------------------
I. Name of Reporting Person Hyperion
Partners II L.P.
S.S. or I.R.S. Identification No.
of Above Person (Intentionally
Omitted)
- --------------------------------------------------------------------------------
II. Check the Appropriate Box if a (a) [ ]
Member of a Group (b) [X]
- --------------------------------------------------------------------------------
III. SEC Use Only
- --------------------------------------------------------------------------------
IV. Source of Funds BK,OO
- --------------------------------------------------------------------------------
V. Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
VI. Citizenship or Place of Organization Delaware
- --------------------------------------------------------------------------------
VII. Sole Voting
Power 0
--------------------------------------------------------
Number of Shares VIII. Shared Voting 9,966,773
Power
--------------------------------------------------------
IX. Sole Dis-
positive Power 0
--------------------------------------------------------
X. Shared Dis- 9,966,773
positive Power
- --------------------------------------------------------------------------------
XI. Aggregate Amount Beneficially 9,966,773 shares
Owned By Each Reporting Person
- --------------------------------------------------------------------------------
XII. Check Box if the Aggregate Amount
in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
XIII. Percent of Class Represented by
Amount in Row (11) 51.6%
- --------------------------------------------------------------------------------
XIV. Type of Reporting Person PN
- --------------------------------------------------------------------------------
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<PAGE>
CUSIP No. 42219B10
- ------------------
I. Name of Reporting Person Hyperion
Ventures II L.P.
S.S. or I.R.S. Identification No.
of Above Person (Intentionally
Omitted)
- --------------------------------------------------------------------------------
II. Check the Appropriate Box if a (a) [ ]
Member of a Group (b) [X]
- --------------------------------------------------------------------------------
III. SEC Use Only
- --------------------------------------------------------------------------------
IV. Source of Funds OO
- --------------------------------------------------------------------------------
V. Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
VI. Citizenship or Place of Organization Delaware
- --------------------------------------------------------------------------------
VII. Sole Voting 0
Power
--------------------------------------------------------
Number of Shares VIII. Shared Voting 9,966,773
Power
--------------------------------------------------------
IX. Sole Dis- 0
positive Power
--------------------------------------------------------
X. Shared Dis- 9,966,773
positive Power
- --------------------------------------------------------------------------------
XI. Aggregate Amount Beneficially 9,966,773 shares
Owned By Each Reporting Person
- --------------------------------------------------------------------------------
XII. Check Box if the Aggregate Amount
in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
XIII. Percent of Class Represented by
Amount in Row (11) 51.6%
- --------------------------------------------------------------------------------
XIV. Type of Reporting Person PN
- --------------------------------------------------------------------------------
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<PAGE>
CUSIP No. 42219B10
- ------------------
I. Name of Reporting Person Hyperion
Funding II Corp.
S.S. or I.R.S. Identification No.
of Above Person (Intentionally
Omitted)
- --------------------------------------------------------------------------------
II. Check the Appropriate Box if a (a) [ ]
Member of a Group (b) [X]
- --------------------------------------------------------------------------------
III. SEC Use Only
- --------------------------------------------------------------------------------
IV. Source of Funds OO
- --------------------------------------------------------------------------------
V. Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
VI. Citizenship or Place of Organization Delaware
- --------------------------------------------------------------------------------
VII. Sole Voting 0
Power
--------------------------------------------------------
Number of Shares VIII. Shared Voting 9,966,773
Power
--------------------------------------------------------
IX. Sole Dis- 0
positive Power
--------------------------------------------------------
X. Shared Dis- 9,966,773
positive Power
- --------------------------------------------------------------------------------
XI. Aggregate Amount Beneficially 9,966,773 shares
Owned By Each Reporting Person
- --------------------------------------------------------------------------------
XII. Check Box if the Aggregate Amount
in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
XIII. Percent of Class Represented by
Amount in Row (11) 51.6%
- --------------------------------------------------------------------------------
XIV. Type of Reporting Person CO
- --------------------------------------------------------------------------------
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<PAGE>
CUSIP No. 42219B10
- ------------------
I. Name of Reporting Person Lewis S. Ranieri
S.S. or I.R.S. Identification No.
of Above Person (Intentionally
Omitted)
- --------------------------------------------------------------------------------
II. Check the Appropriate Box if a (a) [ ]
Member of a Group (b) [X]
- --------------------------------------------------------------------------------
III. SEC Use Only
- --------------------------------------------------------------------------------
IV. Source of Funds OO
- --------------------------------------------------------------------------------
V. Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
VI. Citizenship or Place of Organization United States of
America
- --------------------------------------------------------------------------------
VII. Sole Voting 0
Power
--------------------------------------------------------
Number of Shares VIII. Shared Voting 9,966,773
Power
--------------------------------------------------------
IX. Sole Dis- 0
positive Power
--------------------------------------------------------
X. Shared Dis- 9,966,773
positive Power
- --------------------------------------------------------------------------------
XI. Aggregate Amount Beneficially 9,966,773 shares
Owned By Each Reporting Person
- --------------------------------------------------------------------------------
XII. Check Box if the Aggregate Amount
in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
XIII. Percent of Class Represented by
Amount in Row (11) 51.6%
- --------------------------------------------------------------------------------
XIV. Type of Reporting Person IN
- --------------------------------------------------------------------------------
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<PAGE>
CUSIP No. 42219B10
- ------------------
I. Name of Reporting Person Scott A. Shay
S.S. or I.R.S. Identification No.
of Above Person (Intentionally
Omitted)
- --------------------------------------------------------------------------------
II. Check the Appropriate Box if a (a) [ ]
Member of a Group (b) [X]
- --------------------------------------------------------------------------------
III. SEC Use Only
- --------------------------------------------------------------------------------
IV. Source of Funds OO
- --------------------------------------------------------------------------------
V. Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
VI. Citizenship or Place of Organization United States of
America
- --------------------------------------------------------------------------------
VII. Sole Voting 0
Power
--------------------------------------------------------
Number of Shares VIII. Shared Voting 9,966,773
Power
--------------------------------------------------------
IX. Sole Dis- 0
positive Power
--------------------------------------------------------
X. Shared Dis- 9,966,773
positive Power
- --------------------------------------------------------------------------------
XI. Aggregate Amount Beneficially 9,966,773 shares
Owned By Each Reporting Person
- --------------------------------------------------------------------------------
XII. Check Box if the Aggregate Amount
in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
XIII. Percent of Class Represented by
Amount in Row (11) 51.6%
- --------------------------------------------------------------------------------
XIV. Type of Reporting Person IN
- --------------------------------------------------------------------------------
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<PAGE>
Item 1. Security and Issuer
The class of equity securities to which this Schedule 13D relates is the
Common Stock, par value $.03 per share (the "Common Stock"), of Health
Management, Inc., a Delaware corporation (the "Issuer"). The principal executive
offices of the Issuer are located at 1371-A Abbott Court, Buffalo Grove,
Illinois 60089.
Item 2. Identity and Background
This Schedule 13D is being filed by Transworld Home HealthCare, Inc., a New
York corporation ("Transworld"), Hyperion Partners II L.P. (the "Fund"),
Hyperion Ventures II L.P. (the "General Partner"), Hyperion Funding II Corp.
("Funding"), Lewis S. Ranieri, and Scott A. Shay (individually, a "Reporting
Person" and collectively, the "Reporting Persons").
Transworld is a regional provider of a broad range of alternate site health
care services and products. Transworld provides the following services and
products to patients in their homes or in an outpatient setting: (i) patient
services, including nursing and para-professional services and radiation
therapy; (ii) infusion therapy; and (iii) respiratory therapy, home medical
equipment, and specialized mail-order pharmaceuticals and medical supplies,
including respiratory and diabetic medications and supplies, wound care
dressings, and ostomy and orthotic products. Certain information regarding the
directors and executive officers of Transworld is set forth on Annex A hereto.
To the best knowledge of Transworld, each of its directors and executive
officers is a citizen of the United
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<PAGE>
States of America. Transworld maintains its principal office at 75 Terminal
Avenue, Clark, New Jersey 07066.
The Fund owns 4,400,000 shares of common stock, par value $.01 per share
("Transworld Common Stock"), of Transworld, constituting approximately 44% of
the outstanding Transworld Common Stock. In addition, the Fund owns 3,000,000
warrants, with each warrant entitling the holder thereof to purchase one share
of Transworld Common Stock. Accordingly, the Fund may be deemed to be the
beneficial owner of 7,400,000 shares of Transworld Common Stock, representing
approximately 57% of the outstanding Transworld Common Stock.
The Fund is a Delaware private investment limited partnership that invests
directly or indirectly through its subsidiaries in equity and debt securities
for its own account. Its principal business and office address is 50 Charles
Lindbergh Boulevard, Suite 500, Uniondale, New York 11553.
The General Partner is the sole general partner of the Fund and Funding is
the sole general partner of the General Partner. The General Partner is a
Delaware limited partnership whose principal business and activity is to act as
general partner of the Fund. Its principal business and office address is 50
Charles Lindbergh Boulevard, Suite 500, Uniondale, New York 11553.
Funding is a Delaware corporation whose principal business and activity is
to act as general partner of the General Partner. Its principal business and
office address is 50 Charles Lindbergh Boulevard, Suite 500, Uniondale, New York
11553.
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<PAGE>
Lewis S. Ranieri and Scott A. Shay constitute all the stockholders and
directors of Funding and together with David M. Golush and Robert A. Perro
constitute all the executive officers of Funding. Certain information concerning
Messrs. Ranieri, Shay, Golush, and Perro is set forth in Annex B hereto.
During the past five years none of the Reporting Persons or, to the best
knowledge of the Reporting Persons, any of Transworld's directors or executive
officers, or David M. Golush or Robert A. Perro (i) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in his having been or being subject to a
judgment, decree, or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or state securities laws or finding
any violation with respect to such laws.
Item 3. Source and Amount of Funds
Transworld anticipates that the source of funds to be used by it to effect
the Merger, the Stock Purchase and (if Transworld elects to exercise the
Option), the Option exercise (each as defined and described in Item 4) will be
borrowed by Transworld pursuant to its Credit Agreement, dated July 31, 1996,
with Bankers Trust Company, as agent, and the lenders named therein (the "Credit
Agreement"), as amended by the First Amendment thereto (the "First Amendment").
For further information with respect thereto, reference is made to the Credit
Agreement (which
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<PAGE>
is filed as Exhibit 1 to Transworld's Current Report on Form 8-K, dated August
12, 1996) and to the First Amendment (which is annexed hereto as Exhibit 3),
which are incorporated herein by reference. Substantially all of Transworld's
assets, including its rights under the Stock Purchase Agreement and the Debt
Purchase Agreements (as hereinafter defined), are pledged to secure Transworld's
indebtedness under the Credit Agreement and the First Amendment and, upon
consummation of the Stock Purchase Agreement, all shares of Common Stock
purchased thereunder, including any purchased pursuant to the exercise of the
Option, will be similarly pledged.
The Fund anticipates that the source of funds to be used by it to effect
the purchase of the Issuer Payables, including the Convertible Note (each as
defined and described in Item 5) will be derived from capital calls from its
partners (which the Fund makes from time to time in the ordinary course of its
business) and from funds borrowed under a $40,000,000 amended secured credit
facility maintained by the Fund with The Bank of New York to fund working
capital needs and to make investments. For additional information with respect
to such secured credit facility, reference is made to The Secured Credit
Agreement, dated August 15, 1995 (which is incorporated herein by reference),
between the Fund and The Bank of New York and the Security Agreement, dated
August 15, 1995, between the Fund and The Bank of New York, which are filed as
Exhibits VII and VIII to the Schedule 13D, dated June 6, 1996, filed by the
Reporting Persons (other than Transworld) with respect to Transworld Common
Stock and to Amendments No. 1 and No. 2 to the Secured Credit Agreement and the
Security Agreement, dated as of August 2, 1996 and November 13, 1996,
respectively (which are annexed hereto as Exhibits 9 and 10), between the Fund
and The Bank of New York.
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<PAGE>
Item 4. Purpose of Transaction
On November 13, 1996, the Issuer, Transworld, and IMH Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Transworld ("Newco"),
entered into an agreement and plan of merger (the "Merger Agreement") that
provides for the acquisition of the Issuer by Transworld. The transaction will
be effected by means of a merger (the "Merger") of Newco into the Issuer
pursuant to which each holder (other than Transworld and its subsidiaries) of
Common Stock will receive $2.00 per share in cash. Consummation of the Merger is
subject to the completion of Transworld's lenders' due diligence, such lenders'
consent to the Merger and related transactions (including the Stock Purchase (as
hereinafter defined)), to the amendment of Transworld's credit facility to
permit the necessary borrowing thereunder, and to the receipt by Transworld of
the funds necessary to consummate the transactions. The Merger Agreement is also
subject to a number of other conditions, including the receipt of consents of
third parties, satisfaction of applicable Federal and state requirements, and
approval of the Merger Agreement by the stockholders of the Issuer. Reference is
made to the Merger Agreement, which is annexed hereto as Exhibit 4 and which is
incorporated herein by reference. The transactions described hereinafter in this
Item 4 are in furtherance of Transworld's intention to effect the Merger.
In addition, the Issuer and Transworld entered into a stock purchase
agreement, dated as of November 13, 1996 (the "Stock Purchase Agreement"), which
provides for the purchase (the "Stock
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<PAGE>
Purchase") by Transworld from the Issuer of 8,964,292 shares of newly issued
Common Stock at a price of $1.00 per share. Upon consummation of such purchase,
Transworld would thereupon own approximately 49% of the outstanding shares of
Common Stock, (assuming that none of the Issuer's outstanding warrants or
options are exercised or convertible securities are converted into Common
Stock). Under the Stock Purchase Agreement, the Issuer granted to Transworld an
option (the "Option"), which entitles Transworld to purchase, for $1.00 per
share, an additional 746,713 shares of Common Stock. After giving effect to the
exercise, if any, of the Option, Transworld would thereupon own 51% of the
outstanding shares of Common Stock (assuming that none of the Issuer's
outstanding options or warrants (other than the Option) are exercised or
convertible securities are converted into Common Stock). Consummation of the
Stock Purchase is subject to a number of conditions, including certain
conditions contained in the Merger Agreement. The Stock Purchase Agreement
provides that, if the Stock Purchase is consummated, Transworld and the Issuer
will enter into a Registration Rights Agreement (which is Exhibit A to the Stock
Purchase Agreement), which provides for the registration under the Securities
Act of 1933 of the shares of Common Stock to be purchased by Transworld pursuant
to the Stock Purchase Agreement (including pursuant to any exercise of the
Option). Reference is made to the Stock Purchase Agreement (which is annexed
hereto as Exhibit 5) and to the Registration Rights Agreement (which is
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<PAGE>
Exhibit A to the Stock Purchase Agreement), which are incorporated herein by
reference.
On November 13, 1996, Transworld also entered into the Purchase and Sale
Agreements (the "Debt Purchase Agreements") with the Issuer's senior lenders
and, pursuant thereto, purchased all of the Issuer's senior indebtedness.
Simultaneously, Transworld entered into an agreement with the Issuer (the "Debt
Agreement") which provides, among other things, that Transworld will forebear
until December 12, 1996 from exercising any remedies to which it is entitled
(including declaring an event of default on the Issuer's senior debt) as a
result of purchasing and holding the Issuer's senior debt. For further
information with respect to the Debt Purchase Agreements and the Debt Agreement,
reference is made to the Debt Purchase Agreements (which are filed as Exhibits 6
and 7 hereto) and to the Debt Agreement (which is filed as Exhibit 8 hereto),
which are incorporated herein by reference.
Item 5. Interest in Securities of the Issuer
As described in Item 4 above, Transworld may be deemed to be the beneficial
owner of 8,964,292 shares of Common Stock which it is entitled to purchase under
the Stock Purchase Agreement (representing 49% of the outstanding shares of
Common Stock) and 746,713 shares of Common Stock subject to the Option. After
giving effect to the exercise, if any, of the Option, Transworld would
thereafter own 51% of the outstanding shares of Common Stock, assuming, in each
case, that none of the Issuer's outstanding options (other than the Option) or
warrants are
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<PAGE>
exercised or convertible securities are converted into Common Stock.
As set forth above, the Fund may be deemed to be the beneficial owner of
7,400,000 shares of Transworld Common Stock, representing approximately 57% of
the outstanding Transworld Common Stock. The General Partner may, by reason of
its status as the sole general partner of the Fund, be deemed to own
beneficially the shares of Transworld Common Stock beneficially owned by the
Fund. Funding may, by reason of its status as the sole general partner of the
General Partner, be deemed to own beneficially the shares of Transworld Common
Stock beneficially owned by the Fund. Lewis S. Ranieri may, by reason of his
status as a control person of Funding, which is the general partner of the
General Partner, be deemed to own beneficially the shares of Transworld Common
Stock beneficially owned by the Fund. Scott A. Shay may, by reason of his status
as a control person of Funding, which is the general partner of the General
Partner, be deemed to own beneficially the shares of Transworld Common Stock
beneficially owned by the Fund.
Commencing November 13, 1996, the Fund entered into agreements with certain
trade and other creditors of the Issuer pursuant to which the Fund agreed to
purchase certain indebtedness of the Issuer ("Issuer Payables"). One of such
claims which the Fund agreed to purchase (for $2,025,000) was a subordinated
note of HMI Illinois, Inc. ("Maker"), a wholly-owned subsidiary of the Issuer,
dated March 31, 1995, in the initial principal amount of $3,000,000 (the
"Convertible Note"). The
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<PAGE>
Convertible Note provides that the holder thereof has "the right, any time on or
after the date upon which the Ratio of Net Debt to Equity [as defined in the
Convertible Note] [of the Issuer] exceeds 1:1 (the "Conversion Date"), upon
fifteen (15) business days notice to Maker, to convert all (but not less than
all) of the then outstanding and unpaid principal amount of [the Convertible
Note] and any accrued and unpaid interest into shares of [Common Stock] (the
"Note Conversion") based upon the average closing price of [the Common Stock]
for the ten (10) trading days immediately preceding the Conversion Date and the
ten (10) trading days immediately subsequent to the Conversion Date." The Issuer
has advised the Fund that the "Ratio of Net Debt to Equity" (as defined in the
Convertible Note) of the Issuer has exceeded one-to-one and, therefore, that the
Convertible Note is currently convertible into shares of Common Stock. Based
solely on such advice from the Issuer as to the applicable conversion rate, the
Convertible Note is currently convertible into approximately 255,768 shares of
Common Stock.
None of the Reporting Persons, or, to the best knowledge of the Reporting
Persons, any of Transworld's directors or executive officers, or Messrs. Golush
or Perro, has effected any transaction in shares of Common Stock during the past
60 days, other than as described above in Item 4.
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<PAGE>
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer
Except for the Merger Agreement, the Stock Purchase Agreement, the
Registration Rights Agreement, the Debt Purchase Agreements, the Debt Agreement,
and the arrangements to purchase the Convertible Note, the Reporting Persons
have no contracts, arrangements, understandings, or relationships, legal or
otherwise, with any person with respect to any securities of the Issuer,
including, but not limited to, transfer or voting of any of the securities,
finders' fees, joint ventures, loan or option agreements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies.
Item 7. Materials to be filed as Exhibits
Exhibit 1 - Joint Filing Agreement
Exhibit 2 - Power of Attorney
Exhibit 3 - First Amendment
Exhibit 4 - Merger Agreement
Exhibit 5 - Stock Purchase Agreement
Exhibit 6 - Debt Purchase Agreement
Exhibit 7 - Debt Purchase Agreement
Exhibit 8 - Debt Agreement
Exhibit 9 - Amendment No. 1 to Secured Credit Agreement and Security Agreement
Exhibit 10 - Amendment No. 2 to Secured Credit Agreement and Security Agreement
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<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the knowledge and belief of
each of the undersigned, each of the undersigned certifies that the information
set forth in this statement is true, complete, and correct.
TRANSWORLD HOME HEALTHCARE, INC.
November 22, 1996 By /s/ Vincent J. Caruso
-----------------------------------------
Name: Vincent J. Caruso
Title: Executive Vice President
HYPERION PARTNERS II L.P.
By: Hyperion Ventures II L.P.,
its general partner
By: Hyperion Funding II Corp.,
its general partner
By /s/ Scott A. Shay
------------------------------
Name: Scott A. Shay
Title: Executive Vice
President
HYPERION VENTURES II L.P.
By: Hyperion Funding II Corp.,
its general partner
By /s/ Scott A. Shay
------------------------------------
Name: Scott A. Shay
Title: Executive Vice
President
HYPERION FUNDING II CORP.
By /s/ Scott A. Shay
------------------------------------------
Name: Scott A. Shay
Title: Executive Vice
President
/s/ Lewis S. Ranieri
---------------------------------------------
Lewis S. Ranieri
/s/ Scott A. Shay
---------------------------------------------
Scott A. Shay
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<PAGE>
ANNEX A
Executive Officers, Directors, and Controlling Persons
of Transworld Home HealthCare, Inc.
Robert W. Fine. Mr. Fine is the President, Chief Operating Officer, acting
Chief Executive Officer, and a director of Transworld. Mr. Fine's address is 75
Terminal Avenue, Clark, New Jersey 07066.
Vincent J. Caruso. Mr. Caruso is an Executive Vice President and the Chief
Administrative Officer of Transworld. Mr. Caruso's address is 75 Terminal
Avenue, Clark, New Jersey 07066.
H. Gene Berger. Mr. Berger is an Executive Vice President of Transworld.
Mr. Berger's address is 75 Terminal Avenue, Clark, New Jersey 07066.
Wayne A. Palladino. Mr. Palladino is Senior Vice President and Chief
Financial Officer of Transworld. Mr. Palladino's address is 75 Terminal Avenue,
Clark, New Jersey 07066.
Michael Garippa. Mr. Garippa is a Vice President of Transworld. Mr.
Garippa's address is 75 Terminal Avenue, Clark, New Jersey 07066.
Kevin Buhrman. Mr. Buhrman is a Vice President of Transworld. Mr. Buhrman's
address is 75 Terminal Avenue, Clark, New Jersey 07066.
Richard A. Yoken. Mr. Yoken is a director of Transworld. Mr. Yoken is the
Chairman, President, and Chief Executive Officer of The Portfolio Stategy Group,
Inc., an investment consulting firm. Mr. Yoken's address is 75 Terminal Avenue,
Clark, New Jersey 07066.
Elliott H. Vernon. Mr. Vernon is a director of Transworld. Mr. Vernon is
the Chairman of the Board, President, and Chief Executive Officer of HealthCare
Imaging Services, Inc., a medical diagnostic imaging services company. Mr.
Vernon's address is 75 Terminal Avenue, Clark, New Jersey 07066.
Scott A. Shay. Mr. Shay is acting Chairman of the Board and a director of
Transworld. Mr. Shay is Executive Vice President, Assistant Secretary, a
director, and a stockholder of Funding. He also is a Managing Director of
Ranieri & Co., Inc., a registered broker dealer, and President, director, and
stockholder of SAS Hyperion Corp. and Chairman and President, director and
shareholder of SAS Hyperion Corp., general partners
<PAGE>
of the sole general partner of Hyperion Partners L.P., a Delaware private
investment limited partnership. His principal business and office address is 50
Charles Lindbergh Boulevard, Suite 500, Uniondale, New York 11553.
David M. Golush. Mr. Golush is a director of Transworld. Golush is Vice
President and Assistant Secretary of Funding. He also is a Managing Director of
Ranieri & Co., Inc., a registered broker dealer. His principal business and
office address is 50 Charles Lindbergh Boulevard, Suite 500, Uniondale, New York
11553.
Robert Zalaznick. Mr. Zalaznick is a director of Transworld. Mr. Zalaznick
is the Administrator of the Gene Therapy Core Facility at New York
Hospital-Cornell Medical Center. Mr. Zalaznick's address is 75 Terminal Avenue,
Clark, New Jersey 07066.
<PAGE>
ANNEX B
Lewis S. Ranieri is Chairman of the Board, President, a director, and a
stockholder of Funding. He also is the Chairman and Chief Executive Officer of
Ranieri & Co., Inc., a registered broker dealer, and Chairman of the Board,
President, a director, and a stockholder of Hyperion Funding Corp. and LSR
Hyperion Corp., general partners of the sole general partner of Hyperion
Partners L.P., a Delaware private investment limited partnership. His principal
business and office address is 50 Charles Lindbergh Boulevard, Suite 500,
Uniondale, New York 11553. He is a citizen of the United States of America.
Scott A. Shay is Executive Vice President, Assistant Secretary, a director,
and a stockholder of Funding. He also is a Managing Director of Ranieri & Co.,
Inc., a registered broker dealer, and President, director, and stockholder of
SAS Hyperion Corp. and Chairman and President, director and shareholder of SAS
Hyperion Corp., general partners of the sole general partner of Hyperion
Partners L.P., a Delaware private investment limited partnership. His principal
business and office address is 50 Charles Lindbergh Boulevard, Suite 500,
Uniondale, New York 11553. He is a citizen of the United States of America.
David M. Golush is Vice President and Assistant Secretary of Funding. He
also is a Managing Director of Ranieri & Co., Inc., a registered broker dealer.
His principal business and office address is 50 Charles Lindbergh Boulevard,
Suite 500, Uniondale, New York 11553. He is a citizen of the United States of
America.
Robert A. Perro is Vice President and Secretary of Funding. His principal
business and office address is 50 Charles Lindbergh Boulevard, Suite 500,
Uniondale, New York 11553. He is a citizen of the United States of America.
EXHIBIT 1
The undersigned agree that the statement to which this Exhibit is attached,
and any amendment thereto, is filed on behalf of each of them in the capacities
set forth below.
TRANSWORLD HOME HEALTHCARE, INC.
Dated: November 22, 1996
By /s/ Vincent J. Caruso
-----------------------------------------
Vincent J. Caruso
Executive Vice President
HYPERION PARTNERS II L.P.
By: Hyperion Ventures II L.P.,
its general partner
By: Hyperion Funding II Corp.,
its general partner
By /s/ Scott A. Shay
------------------------------
Name: Scott A. Shay
Title: Executive Vice
President
HYPERION VENTURES II L.P.
By: Hyperion Funding II Corp.,
its general partner
By /s/ Scott A. Shay
-----------------------------------
Name: Scott A. Shay
Title: Executive Vice
President
HYPERION FUNDING II CORP.
By /s/ Scott A. Shay
-----------------------------------------
Name: Scott A. Shay
Title: Executive Vice
President
/s/ Lewis S. Ranieri
--------------------------------------------
Lewis S. Ranieri, individually
/s/ Scott A. Shay
--------------------------------------------
Scott A. Shay, individually
EXHIBIT 2
POWER OF ATTORNEY
The undersigned, Lewis S. Ranieri, hereby irrevocably constitutes and
appoints Scott A. Shay, whose address is c/o Hyperion Partners II L.P., 50
Charles Lindbergh Blvd., Suite 500, Uniondale, New York 11553, as my true and
lawful attorney, with full power and authority, in my name, place and stead, as
fully as could I if personally present and acting:
(a) to act on my behalf with respect to all matters relating to any
Statement on Schedule 13D (including amendments thereto) with respect to the
Common Stock of Health Management, Inc.; and
(b) generally to execute, deliver and file all certificates, documents and
filings, and to do all things and to take or forego any action which he may deem
necessary or desirable in connection with or to effectuate the foregoing.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 22nd day of November, 1996.
/s/ Lewis S. Ranieri
----------------------------------
Lewis S. Ranieri
FIRST AMENDMENT TO CREDIT
AGREEMENT AND TO PLEDGE AGREEMENT
FIRST AMENDMENT TO CREDIT AGREEMENT AND TO PLEDGE AGREEMENT (this
"Amendment"), dated as of November 13, 1996, among TRANSWORLD HOME HEALTHCARE,
INC. (the "Borrower"), the Pledgors referred to below, the lenders from time to
time party to the Credit Agreement referred to below (each a "Bank" and,
collectively, the "Banks"), and BANKERS TRUST COMPANY, as Agent (the "Agent")
and as Collateral Agent (the "Collateral Agent") for the Secured Creditors. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and the Agent are parties to a
Credit Agreement, dated as of July 31, 1996 (as in effect on the date hereof,
the "Credit Agreement");
WHEREAS, the Borrower and certain Subsidiaries of the Borrower
(each, a "Pledgor" and collectively, the "Pledgors") and the Collateral Agent
are parties to a Pledge Agreement, dated as of July 31, 1996 (as amended,
modified, or supplemented to the date hereof, the "Pledge Agreement");
WHEREAS, the Borrower desires to purchase certain senior secured
indebtedness of Health Management, Inc. ("HMI");
WHEREAS, the Borrower desires to enter into a stock purchase
agreement (the "Stock Purchase Agreement") and a registration rights agreement
(the "Registration Rights Agreement") with HMI, pursuant to which the Borrower
may acquire 49% of the common stock of HMI and an option to purchase an
additional 2% of the common stock of HMI;
WHEREAS, the Borrower desires to enter into an agreement and plan of
merger (the "Merger Agreement") with HMI, pursuant to which the Borrower may
merge a newly created Wholly-Owned Subsidiary of the Borrower with and into HMI,
with HMI being the surviving company;
<PAGE>
WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement in connection with the transactions described in the three preceding
recitals and to effect certain other changes to the Credit Agreement;
WHEREAS, for the avoidance of doubt and in consideration for the
Banks agreeing to amend the Credit Agreement and allowing the Borrower to borrow
under the Credit Agreement in connection with the transactions described in the
third, fourth and fifth recitals hereof, the Pledgors desire to pledge to the
Collateral Agent for the benefit of the Secured Creditors all Notes acquired by
them along with all rights, stock or options obtained in connection with the
aforementioned transactions;
WHEREAS, the parties hereto wish to amend the Credit Agreement and
the Pledge Agreement as herein provided;
NOW, THEREFORE, it is agreed:
I. Amendments and Modifications to Credit Agreement.
1. Section 8.01 of the Credit Agreement is hereby amended by (x)
relettering clause (k) thereof as clause (l) and (y) inserting immediately prior
to relettered clause (l) the following new clause (k):
"(k) HMI Information. Promptly upon receipt thereof, copies of any
statements, reports, notices, certificates or other documents received
from HMI or any of its Subsidiaries pursuant to any of the HMI Credit
Documents."
2. Section 8.14(a) of the Credit Agreement is hereby amended by inserting
at the end thereof the following additional sentence:
"Notwithstanding anything herein to the contrary, no Permitted Acquisition
may be effected so long as the Borrower or any of its Subsidiaries has any
outstanding HMI Investments (calculated without regard to any write-downs
or write-offs thereof)."
3. Section 9.05 of the Credit Agreement is hereby amended by (x) deleting
the word "and" and the end of clause (i) thereof, (y) deleting the period at the
end of clause (j) thereof and inserting in lieu thereof a semicolon and (z)
inserting at the end thereof the following additional clauses:
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<PAGE>
"(k) the Borrower may purchase the rights and obligations of (x)
Chase pursuant to the Purchase and Sale Agreement, dated as of November
13, 1996, between Chase and the Borrower (the "Chase Purchase Agreement")
and (y) EAB pursuant to the Purchase and Sale Agreement, dated as of
November 13, 1996, between EAB and the Borrower (the "EAB Purchase
Agreement", and together with the Chase Purchase Agreement, the "Purchase
Agreements"), in either case under HMI Credit Agreement so long as (i) at
such time the Borrower acquires all of the rights and obligations of all
of the lenders under the HMI Credit Agreement, (ii) the aggregate amount
expended to acquire such rights and obligations does not exceed
$21,562,500, (iii) the purchase price for any such rights and obligations
does not exceed 75% of the principal amount of HMI Loans then outstanding
pursuant to such rights and obligations, (iv) all of the HMI Loans are
evidenced by one or more HMI Notes pledged by the Borrower pursuant to the
Pledge Agreements, (v) the Borrower shall have delivered to the Agent true
and correct copies, certified as true and complete by an Authorized
Officer of the Borrower, of (1) the Purchase Agreements, (2) the HMI
Credit Documents, (3) the HMI Stock Purchase Agreement, (4) the HMI
Registration Rights Agreement, (5) the HMI Merger Agreement, (6) all
agreements and instruments executed in connection with the foregoing and
(7) all of the annexes, schedules and exhibits to the foregoing and (vi)
all the terms and conditions of each of the HMI Credit Documents and the
Purchase Agreements are in form and substance satisfactory to the Agent
and the Required Banks; and
(l) the Borrower, in its discretion, may, at any time and from time
to time after the occurrence of the First Amendment Effective Date and the
purchase of rights and obligations as described in preceding clause (k),
make advances and loans in the form of additional HMI Loans to the HMI
Borrowers for their general corporate and working capital purposes, so
long as (i) the aggregate amount (determined without regard to any
write-downs or write-offs thereof) of such additional HMI Loans made
pursuant to this clause (l) does not exceed $3,500,000 plus the amount, if
any, by which the aggregate dollar amount of all accounts receivable of
the HMI Borrowers and the HMI Guarantors that were outstanding for 120
days or less as set forth in the most recent certificate delivered
pursuant to clause 3(b) of the HMI Acknowledgement exceeds $22,500,000;
(ii) unless the HMI Borrowers are in compliance with clause 3(b) of the
HMI Acknowledgement, the aggregate amount (determined without regard to
any write-downs or write-offs thereof) of any additional HMI Loans made
pursuant to this clause (l) shall not exceed $3,500,000; (iii) in no event
shall the aggregate amount (determined without regard to any write-downs
or write-offs thereof) of any additional HMI Loans
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<PAGE>
made pursuant to this clause (l) exceed $5,000,000; and (iv) each such
additional HMI Loan is evidenced by an HMI Note pledged by the Borrower
pursuant to the Pledge Agreement."
4. Section 9.12(a)(i) of the Credit Agreement is hereby amended by (x)
inserting the phrase "or, after the purchase thereof, any HMI Notes" immediately
after the phrase "Existing Indebtedness" appearing therein and (y) inserting
immediately prior to the semicolon at the end thereof, the phrase ", provided,
that, the HMI Acknowledgement shall be permitted so long as all the terms and
conditions thereof are in form and substance satisfactory to the Agent and the
Required Banks".
5. The definition of "Consolidated EBITDA" appearing in Section 11 of the
Credit Agreement is hereby amended by (x) inserting the number "(I)" immediately
after the phrase "adjusted by" and (y) inserting immediately prior to the period
at the end thereof the following additional phrase:
"and (II) excluding therefrom any amounts constituting income, loss or
non-cash charges related to any HMI Investment, in each case that would
otherwise (in the absence of this clause (II)) have been included in
arriving at Consolidated EBITDA for such period"
6. Section 11 of the Credit Agreement is hereby further amended by
inserting in appropriate alphabetical order the following new definitions:
""Chase" shall mean The Chase Manhattan Bank.
"Chase Purchase Agreement" shall have the meaning set forth in
Section 9.05(k).
"EAB" shall mean European American Bank.
"EAB Purchase Agreement" shall have the meaning set forth in Section
9.05(k).
"First Amendment Effective Date" shall mean the First Amendment
Effective Date under, and as defined in, the First Amendment, dated as of
November 13, 1996, to this Agreement.
"HMI" shall mean Health Management, Inc., a Delaware corporation,
and any successor thereto.
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<PAGE>
"HMI Acknowledgment" shall mean the letter agreement, dated November
13, 1996, among the Borrower, the HMI Borrowers and the HMI Guarantors.
"HMI Borrowers" shall mean HMI, Home Care Management, Inc., HMI
Illinois, Inc. and HMI Pennsylvania, Inc.
"HMI Credit Agreement" shall mean the Credit Agreement, dated as of
March 31, 1995, among the HMI Borrowers, the HMI Guarantors, the lenders
from time to time party thereto, and Chase (formerly known as Chemical
Bank), as agent, as modified by the HMI Forbearance Agreement, the HMI
Letter Agreement and the HMI Post-Closing Agreement and as the same may be
modified, amended or supplemented hereafter to the extent permitted in
accordance with the terms hereof and thereof.
"HMI Credit Documents" shall mean the HMI Credit Agreement, the HMI
Notes, the HMI Forbearance Agreement, the HMI Letter Agreement, the HMI
Post-Closing Agreement, the HMI Acknowledgment, the HMI Security Agreement
and the HMI Security Agreement - Patents and Trademarks.
"HMI Documents" shall mean and include each of the HMI Credit
Documents and, after the entering into thereof, the HMI Merger Agreement,
the HMI Stock Purchase Agreement, the HMI Registration Rights Agreement
and any other agreement entered into in connection with the foregoing
agreements or any HMI Investments.
"HMI Forbearance Agreement" shall mean the Forbearance Agreement,
dated as of July 26, 1996, among Chase, EAB, the HMI Borrowers and the HMI
Guarantors.
"HMI Guarantors" shall mean Health Reimbursement Corporation, HMI
Retail Corp., Inc., HMI PMA, Inc. and HMI Maryland, Inc.
"HMI Investments" shall mean any investment (equity or otherwise)
in, advance to, or loan to HMI or any of its Subsidiaries (determined
without regard to any write-downs or write-offs thereof), including,
without limitation, any HMI Loans, commitments under the HMI Credit
Agreement, stock of HMI, or options or warrants to purchase the stock of
HMI. Without limiting the foregoing, the HMI Investments shall include all
investments made pursuant to Sections 9.05(k) and (l).
-5-
<PAGE>
"HMI Letter Agreement" shall mean the Letter Agreement, dated as of
October 18, 1996, among Chase, EAB, the HMI Borrowers and the HMI
Guarantors.
"HMI Loans" shall mean the "Loans" as defined in the HMI Credit
Agreement.
"HMI Merger Agreement" shall mean the Agreement and Plan of
Merger, dated as of November 13, 1996, among the Borrower, IMH
Acquisition Corp. and HMI.
"HMI Notes" shall mean the "Notes" as defined in the HMI Credit
Agreement.
"HMI Post-Closing Agreement" shall mean the Post-Closing Agreement,
dated as of March 31, 1995, among Chase, EAB, the HMI Borrowers and the
HMI Guarantors.
"HMI Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of November 13, 1996, between HMI and the
Borrower.
"HMI Security Agreement" shall mean the "Security Agreement" as
defined in the HMI Credit Agreement.
"HMI Security Agreement - Patents and Trademarks" shall mean the
Security Agreement - Patents and Trademarks" as defined in the HMI Credit
Agreement.
"HMI Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated as of November 13, 1996, between HMI and the Borrower.
"Purchase Agreements" shall have the meaning set forth in Section
9.05(k)."
7. The Banks hereby agree that IMH Acquisition Corp. may be established as
a new Wholly-Owned Subsidiary of the Borrower, in order to enter into the HMI
Merger Agreement and, to the extent permitted by following paragraph numbered 7,
consummate the transactions contemplated thereby, so long as all requirements in
Section 9.15(a) are complied with in connection therewith, except that the Banks
hereby waive compliance with the requirements of sub-clause (i) of clause (A) of
the proviso thereto in connection with the establishment of IMH Acquisition
Corp. The Borrower
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<PAGE>
hereby agrees that all other actions required by Section 9.15(a) shall be taken
and completed with respect to IMH Acquisition Corp. prior to any purchase by it
pursuant to Section 9.05(k).
8. Notwithstanding anything to the contrary contained in Sections 7, 8 and
9 of the Credit Agreement, the Borrower may enter into the Stock Purchase
Agreement, the Registration Rights Agreement and the Merger Agreement, provided
that (x) the Stock Purchase Agreement, the Registration Rights Agreement and the
Merger Agreement are in form and substance satisfactory to the Agent and the
Required Banks and (y) the Borrower shall not be permitted to consummate any of
the transactions contemplated thereby without the express written consent of the
Required Banks. The parties hereto acknowledge and agree that (1) if any
transaction contemplated by any of the Stock Purchase Agreement, Registration
Rights Agreement and/or Merger Agreement is consummated without the written
consent of the Required Banks as required by the immediately preceding sentence,
such event shall constitute an immediate Event of Default pursuant to Section
10.03(a) of the Credit Agreement and (2) the Required Banks may, in their sole
discretion, refuse to consent to the consummation of any of the transactions
contemplated by the Stock Purchase Agreement, Registration Rights Agreement or
the Merger Agreement or impose conditions on such consent, including, without
limitation, the contribution of additional equity to the Borrower or
modifications in the capital structure of the Borrower. The parties hereto
hereby agree that no Bank shall have any liability whatsoever to any of the
parties hereto, or any other Person, as a result of any refusal (for any reason
whatsoever) of one or more Banks to grant their consent as is required above
with respect to the transactions described above.
II. Amendments to Pledge Agreement.
1. Section 2 of the Pledge Agreement is hereby deleted in its entirety and
the following new Section 2 inserted in lieu thereof:
"2. DEFINITION OF STOCK, NOTES, OPTIONS, SECURITIES, ETC. As used
herein: (i) the term "Stock" shall mean (x) with respect to corporations
incorporated under the law of the United States or any State or territory
thereof (each, a "Domestic Corporation), all of the issued and outstanding
shares of stock of any corporation at any time owned by each Pledgor of
any Domestic Corporation and all certificates and instruments evidencing
the same and (y) with respect to corporations not Domestic Corporations
(each, a "Foreign Corporation"), all of the issued and outstanding shares
of stock at any time owned by each Pledgor of any Foreign Corporation and
all certificates and instruments evidencing the same, provided that,
except
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<PAGE>
as provided in the last sentence of this Section 2, such Pledgor (to the
extent that it is the Borrower or a Domestic Subsidiary of the Borrower)
shall not be required to pledge hereunder more than 65% of the total
combined voting power of all classes of capital stock of any Foreign
Corporation entitled to vote; (ii) the term "Notes" shall mean (x) all
Intercompany Notes at any time issued to each Pledgor and (y) all other
promissory notes from time to time issued to, or held by, each Pledgor;
(iii) the term "Options" shall mean any right to subscribe for or to
purchase, or any options or warrants for the purchase of, stock of any
corporation at any time owned by each Pledgor; and (iv) the term
"Securities" shall mean all of the Stock, Notes and Options. Each Pledgor
represents and warrants that on the date hereof (i) each Subsidiary of
such Pledgor, and the direct ownership thereof, is listed on Annex A
hereto; (ii) the Stock held by such Pledgor consists of the number and
type of shares of the stock of the corporations as described in Annex B
hereto; (iii) such Stock constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in
Annex B hereto; (iv) the Notes held by such Pledgor consist of the
promissory notes described in Annex C hereto where such Pledgor is listed
as the lender; (v) the Options held by such Pledgor consist of the Options
described in Annex D hereto where such Pledgor is listed as the Owner;
(vi) such Pledgor is the holder of record and sole beneficial owner of the
Stock and Notes held by such Pledgor and there exist no options or
preemptive rights in respect of any such Stock; and (vii) on the date
hereof, such Pledgor owns no other Securities. To the extent provided in
the Credit Agreement, the 65% limitation set forth in clause (i)(y) of
this Section 2 and in Section 3.2 hereof shall no longer be applicable and
such Pledgor shall duly pledge and deliver to the Pledgee such of the
Securities not theretofore required to be pledged hereunder."
2. Section 3.1 of the Pledge Agreement is hereby deleted in its entirety
and the following new Section 3.1 inserted in lieu thereof:
"3.1. Pledge. To secure the Obligations and for the purposes set
forth in Section 1, each Pledgor hereby pledges and grants to the Pledgee
a first priority continuing security interest in, and as part of such
grant and pledge, hereby transfers and assigns to the Pledgee all of the
following, whether now existing or hereafter acquired:
(i) the Securities owned by such Pledgor, together with the
certificates or instruments therefor, duly endorsed in blank in the
case of Notes and accompanied by undated stock or other powers duly
exe-
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<PAGE>
cuted in blank by such Pledgor in the case of Stock, as the case may
be, or such other instruments of transfer as are acceptable to the
Pledgee;
(ii) all of such Pledgor's right, title and interest in and to
such Securities (and in and to all certificates or instruments
evidencing such Securities), to be held by the Pledgee, upon the
terms and conditions set forth in this Agreement;
(iii) all of the right, title and interest of such Pledgor in,
to and under, all HMI Investments and under all HMI Documents;
(iv) all of the right, title and interest of such Pledgor in,
to and under all of the following property and assets, and interests
in property and assets, of such Pledgor, whether now existing or
existing in the future or hereafter acquired or arising and in each
case to the extent relating to any of the Collateral (including,
without limitation any HMI Investments): (a) all rights to any goods
or merchandise represented by any of the foregoing (including,
without limitation, returned or repossessed goods), (b) all reserves
and credit balances with respect to any HMI Investments, (c) all
letters of credit, security or guarantees of any of the foregoing,
(d) all insurance policies or reports relating to any of the
foregoing, (e) all collection or deposit accounts relating to any of
the foregoing, (f) all books and records relating to any of the
foregoing and (g) all proceeds of any of the foregoing;
(v) all other property hereafter delivered in substitution for
or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof; and
(vi) to the extent not otherwise included, all proceeds of any
or all of the foregoing, including any securities and monies
received and at the time held by the Pledgee hereunder (all of the
above, collectively, the "Collateral")."
3. Section 3.4 of the Pledge Agreement is hereby deleted in its entirety
and the following new Section 3.4 inserted in lieu thereof:
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<PAGE>
"3.4. Definition of Pledged Stock, Pledged Notes, Pledged Options
and Pledged Securities. All Stock at any time pledged or required to be
pledged hereunder is hereinafter called the "Pledged Stock," all Notes at
any time pledged or required to be pledged hereunder are hereinafter
called the "Pledged Notes," all Options at any time pledged or required to
be pledged hereunder are hereinafter called the "Pledged Options" and all
of the Pledged Stock, Pledged Notes and Pledged Options together are
hereinafter called the "Pledged Securities." "
4. Section 5 of the Pledge Agreement is hereby amended by deleting the
phrase "Pledged Securities" appearing therein and by inserting in lieu thereof
the word "Collateral".
5. Section 6 of the Pledge Agreement is hereby amended by deleting the
phrase "Pledged Notes" the first place it appears therein and by inserting in
lieu thereof the word "Collateral".
6. Section 7 of the Pledge Agreement is hereby amended by inserting the
phrase "to exercise all of the rights and remedies of a secured party under the
UCC and shall also be entitled" immediately prior to the phrase ", without
limitation, to exercise".
7. Section 7 is hereby further amended by (x) deleting the word "and" at
the end off clause (iv) thereof, (y) deleting the period at the end of clause
(v) thereof and inserting in lieu thereof "; and" and (z) inserting at the end
thereof the following new clause (vi):
"(vi) instruct any of the HMI Borrowers or the HMI Guarantors or any
successor obligor to make any payment required by the terms of the HMI
Credit Agreement or with respect to any other HMI Investment directly to
the Collateral Agent and/or exercise all rights and remedies of a "Lender"
under, and as defined in, the HMI Credit Agreement or of the Pledgor under
the HMI Documents."
8. Section 15(a)(viii) of the Pledge Agreement is hereby amended by
inserting the phrase "together with the relevant filings or recordings (which
filings and recordings have been made)," immediately after the phrase "pursuant
to this Agreement,".
9. Section 15 of the Pledge Agreement is hereby amended by (x) deleting
the word "and" at the end of clause (vii) thereof, (y) deleting the period at
the end of clause (viii) thereof and inserting in lieu thereof a semicolon and
(z) inserting at the end thereof the following new clauses:
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<PAGE>
"(ix) the chief executive office and principal place of business of
such Pledgor and the sole location where the records of such Pledgor with
respect to the original HMI Credit Agreement are kept are located at the
address set forth for such Pledgor on Annex E hereto. No such Pledgor
shall move its chief executive office, principal place of business, or
such location of records unless (x) it shall have given to the Pledgee not
less than 30 days' prior written notice of its intention so to do, clearly
describing such new location and providing such other information in
connection therewith as the Pledgee may reasonably request and (y) with
respect to such new location, it shall have taken all action, reasonably
satisfactory to the Pledgee, to maintain the security interest of the
Pledgee in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect; and
(x) no Pledgor shall change its legal name or assume or operate in
any jurisdiction under any trade, fictitious or other name unless (x) it
shall have given to the Pledgee not less than 30 days' prior written
notice of its intention so to do, clearly describing such new name and the
jurisdictions in which such new name shall be used and providing such
other information in connection therewith as the Pledgee may reasonably
request and (y) with respect to such new name, it shall have taken all
action, reasonably satisfactory to the Pledgee, to maintain the security
interest of the Pledgee in the Collateral intended to be granted hereby at
all times fully perfected and in full force and effect."
10. Section 17(a) of the Pledge Agreement is hereby amended by inserting
the phrase "or Pledged Options" immediately following the phrase "Pledged Stock"
each of the three times it appears therein.
11. The Pledge Agreement is hereby further amended by inserting at the end
thereof new Annexes D and E in the form of Annexes D and E attached hereto.
III. Miscellaneous Provisions.
1. Each of the undersigned Banks hereby consents to the amendments to the
Pledge Agreement as set forth above in this Amendment.
2. In order to induce the Banks to enter into this Amendment, the Borrower
hereby represents and warrants that:
(a) no Default or Event of Default exists as of the First Amendment
Effective Date, both before and after giving effect to this Amendment; and
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<PAGE>
(b) all of the representations and warranties contained in the
Credit Agreement, the Pledge Agreement and the other Credit Documents are
true and correct in all material respects on the First Amendment Effective
Date both before and after giving effect to this Amendment, with the same
effect as though such representations and warranties had been made on and
as of the First Amendment Effective Date (it being understood that any
representation or warranty made as of a specific date shall be true and
correct in all material respects as of such specific date).
3. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement, the Pledge Agreement or any other Credit Document. Without in any way
limiting the generality of this Amendment, by executing this Amendment, the
Banks neither consent to the consummation of the stock purchase or any other
transactions contemplated by the HMI Stock Purchase Agreement or HMI Merger
Agreement nor waive any Default or Event of Default which may result from the
consummation of the stock purchase or merger, as the case may be, contemplated
therein.
4. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Agent.
5. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
6. This Amendment shall become effective on the date (the "First Amendment
Effective Date") when each of the Borrower, the Pledgors, the Collateral Agent
and the Required Banks shall have signed a counterpart hereof (whether the same
or different counterparts) and shall have delivered (including by way of
facsimile transmission) the same to the Agent at its Notice Office.
7. From and after the First Amendment Effective Date, all references in
the Credit Agreement, the Pledge Agreement and each of the other Credit
Documents to the Credit Agreement or the Pledge Agreement shall be deemed to be
references to the Credit Agreement, or the Pledge Agreement as modified hereby.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment as of the date first
above written.
TRANSWORLD HOME
HEALTHCARE, INC.,
as Borrower
and as a Pledgor
By /s/ Wayne Palladino
------------------------------
Title:
DERMAQUEST, INC.,
as a Pledgor
By /s/ Wayne Palladino
------------------------------
Title:
MK DIABETIC SUPPORT
SERVICES, INC.,
as a Pledgor
By /s/ Wayne Palladino
------------------------------
Title:
THE PROMPTCARE COMPANIES,
INC.,
as a Pledgor
By /s/ Wayne Palladino
------------------------------
Title:
<PAGE>
THE PROMPTCARE LUNG
CENTER, INC.,
as a Pledgor
By /s/ Wayne Palladino
------------------------------
Title:
STERI-PHARM, INC.,
as a Pledgor
By /s/ Wayne Palladino
------------------------------
Title:
TRANSWORLD NURSES, INC.,
as a Pledgor
By /s/ Wayne Palladino
------------------------------
Title:
RADAMERICA, INC.,
s a Pledgor
By /s/ Wayne Palladino
------------------------------
Title:
RESPIFLOW, INC.,
as a Pledgor
By /s/ Wayne Palladino
------------------------------
Title:
<PAGE>
BANKERS TRUST COMPANY,
Individually, as Agent
and as Collateral Agent
By /s/ Patricia Hogan
------------------------------
Title: Vice President
THE BANK OF NEW YORK (NJ)
By
------------------------------
Title:
BANQUE PARIBAS
By
------------------------------
Title:
By
------------------------------
Title:
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Among
TRANSWORLD HOME HEALTHCARE, INC.
IMH ACQUISITION CORP.,
and
HEALTH MANAGEMENT, INC.
Dated as of November 13, 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I THE MERGER................................................... 1
SECTION 1.1. The Merger................................................... 1
SECTION 1.2. Effective Time............................................... 2
SECTION 1.3. Effect of the Merger......................................... 2
SECTION 1.4. Certificate of Incorporation; By-Laws........................ 2
SECTION 1.5. Directors and Officers....................................... 2
SECTION 1.6. Conversion of Securities..................................... 3
SECTION 1.7. Surrender and Payment........................................ 3
SECTION 1.8. Dissenter's Rights........................................... 5
SECTION 1.9. Options and Restricted Shares................................ 6
SECTION 1.10. Closing...................................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF TRANSWORLD
AND NEWCO.................................................... 7
SECTION 2.1. Corporate Organization....................................... 7
SECTION 2.2. Authority Relative to this Agreement, the
Stock Purchase Agreement, and the
Registration Rights Agreement................................ 8
SECTION 2.3. No Conflict; Required Filings and
Consents..................................................... 9
SECTION 2.4. Proxy Material............................................... 10
SECTION 2.5. Litigation................................................... 10
SECTION 2.6. Brokers...................................................... 10
SECTION 2.7. Financing.................................................... 11
SECTION 2.8. Board Recommendation......................................... 11
SECTION 2.9. Fairness Opinion............................................. 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY...................................................... 11
SECTION 3.1. Organization and Qualification;
Subsidiaries................................................. 11
SECTION 3.2. Certificate of Incorporation and By-Laws..................... 12
SECTION 3.3. Capitalization............................................... 12
SECTION 3.4. Authority Relative to this Agreement, the
Stock Purchase Agreement, and the
Registration Rights Agreement................................ 13
SECTION 3.5. No Conflict; Required Filings and
Consents..................................................... 14
SECTION 3.6. SEC Filings; Financial Statements............................ 15
SECTION 3.7. Absence of Certain Changes or Events......................... 16
SECTION 3.8. Absence of Litigation........................................ 17
SECTION 3.9. Employee Benefit Plans....................................... 17
SECTION 3.10. Permits and Licenses......................................... 20
SECTION 3.11. Proxy Material............................................... 20
SECTION 3.12. Brokers...................................................... 21
SECTION 3.13. Properties, Contracts, and Insurance......................... 21
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SECTION 3.14. Board Recommendation......................................... 22
SECTION 3.15. Fairness Opinion............................................. 22
SECTION 3.16. Compliance with Environmental Laws........................... 23
SECTION 3.17. Employment Matters........................................... 26
SECTION 3.18. Tax Returns, Audits, and Liabilities......................... 27
SECTION 3.19. Full Disclosure.............................................. 29
ARTICLE IV COVENANTS OF THE COMPANY..................................... 30
SECTION 4.1. Conduct of Business by the Company Pending
the Merger................................................... 30
SECTION 4.2. No Solicitation of Transactions.............................. 33
SECTION 4.3. Option Plans, Convertible Debt, Options,
and Warrants................................................. 34
SECTION 4.4. State Takeover Statutes...................................... 34
SECTION 4.5. Consents and Approvals....................................... 34
ARTICLE V COVENANTS OF TRANSWORLD AND NEWCO............................ 35
SECTION 5.1. Directors' and Officers' Indemnification..................... 35
ARTICLE VI ADDITIONAL AGREEMENTS OF THE PARTIES......................... 35
SECTION 6.1. Proxy Material............................................... 35
SECTION 6.2. Meeting of Stockholders of the Company....................... 36
SECTION 6.3. HSR Act...................................................... 36
SECTION 6.4. Access to Information; Confidentiality....................... 36
SECTION 6.5. Notification of Certain Matters.............................. 37
SECTION 6.6. Further Action............................................... 38
SECTION 6.7. Public Announcements......................................... 38
SECTION 6.8. Government Compliance........................................ 38
ARTICLE VII CONDITIONS OF THE MERGER..................................... 39
SECTION 7.1. Conditions to Obligations of Each Party to
Effect the Merger............................................ 39
SECTION 7.2. Additional Conditions to Obligation of the
Company to Effect the Merger................................. 40
SECTION 7.3. Additional Conditions to Obligations of
Transworld and Newco to Effect the Merger.................... 41
ARTICLE VIII TERMINATION, AMENDMENT, AND WAIVER........................... 43
SECTION 8.1. Termination.................................................. 44
SECTION 8.2. Effect of Termination........................................ 45
SECTION 8.3. Fees and Expenses............................................ 45
SECTION 8.4. Amendment.................................................... 46
SECTION 8.5. Waiver....................................................... 46
ARTICLE IX GENERAL PROVISIONS........................................... 47
SECTION 9.1. Survival of Representations, Warranties,
and Agreements............................................... 47
SECTION 9.2. Notices...................................................... 47
SECTION 9.3. Certain Definitions.......................................... 48
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SECTION 9.4. Headings..................................................... 48
SECTION 9.5. Entire Agreement............................................. 48
SECTION 9.6. Parties in Interest; Assignment.............................. 49
SECTION 9.7. Governing Law................................................ 49
SECTION 9.8. Counterparts................................................. 49
SECTION 9.9. Severability................................................. 49
SECTION 9.10. Specific Performance......................................... 49
SECTION 9.11. Schedules.................................................... 50
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LIST OF DISCLOSURE SCHEDULES
Section
3.1 Names of jurisdictions of incorporation,
capitalization and percentage of outstanding
capital stock of Subsidiaries owned by the Company
3.3 Warrants, options, convertible debt and
convertible securities
3.5(a) Breaches or conflicts with existing agreements
3.5(b) Healthcare related licenses
3.6 Liabilities
3.7 Changes in business, etc. and material
transactions
3.8 Litigation
3.9 Employee benefits
3.13(a) Trademarks; trade names
3.13(b) Material contracts, etc.
3.13(c) Insurance coverage
3.16 Environmental laws and regulations
3.17(b) Change in ownership or control provisions
3.17(c) Labor dispute or litigation
3.18 Tax matters
4.1(f) Acquisitions; dispositions
4.1(i) Taxes
4.1(k) Contracts
9.11 Deferred schedules
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 13, 1996 (this
"Agreement"), among Transworld Home HealthCare, Inc., a New York corporation
("Transworld"), IMH Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Transworld ("Newco"), and Health Management, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Transworld, Newco, and the
Company have each approved the merger (the "Merger") of Newco with and into the
Company in accordance with the General Corporation Law of the State of Delaware
("Delaware Law") and upon the terms and subject to the conditions set forth
herein; and
WHEREAS, Transworld and the Company have entered into a Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement")
providing for (a) the purchase (the "Stock Purchase") by Transworld from the
Company of certain shares (the "Agreement Shares") of Company Common Stock (as
defined in Section 1.6(a)) and the grant by the Company to Transworld of an
option (the "Transworld Option") to purchase shares of Company Common Stock (the
"Transworld Option Shares") and (b) the execution and delivery by Transworld and
the Company of a Registration Rights Agreement (the "Registration Rights
Agreement") relating to the registration of the Agreement Shares under
applicable Federal and state securities laws;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Transworld, Newco, and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger.
At the Effective Time (as defined in Section 1.2) and subject to and
upon the terms and conditions of this Agreement and Delaware Law, Newco shall be
merged with and into the Company, the separate corporate existence of Newco
shall cease, and the Company shall continue as the surviving corporation. The
Company as the surviving corporation after
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the Merger is hereinafter sometimes referred to as the "Surviving Corporation."
SECTION 1.2. Effective Time.
As promptly as practicable after the satisfaction or waiver of the
conditions set forth in Article VII and after the Closing referred to in Section
1.10, the parties hereto shall cause the Merger to be consummated by delivering
a Certificate of Merger (the "Certificate of Merger") to the Secretary of State
of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, Delaware Law, for filing by the
Secretary of State (the time of such filing being the "Effective Time").
SECTION 1.3. Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as provided
in the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the rights,
privileges, powers, franchises, and property of the Company and Newco shall vest
in the Surviving Corporation, and all restrictions, disabilities, duties, debts,
and liabilities of the Company and Newco shall become the restrictions,
disabilities, duties, debts, and liabilities of the Surviving Corporation.
SECTION 1.4. Certificate of Incorporation;
By-Laws.
At the Effective Time, the Certificate of Incorporation and By-Laws
of Newco shall be the Certificate of Incorporation and By-Laws of the Surviving
Corporation until thereafter amended, except that, effective as of the Effective
Time, such Certificate of Incorporation will be amended in order to change the
name of the Surviving Corporation to "Health Management, Inc."
SECTION 1.5. Directors and Officers.
The directors of the Surviving Corporation shall be the directors of
Newco immediately prior to the Effective Time, and the officers of the Surviving
Corporation shall be the officers of the Company immediately prior to the
Effective Time, in each case until their respective successors are duly elected
or appointed and qualified.
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SECTION 1.6. Conversion of Securities.
At the Effective Time, by virtue of the Merger and without any
action on the part of Newco, the Company, or the holders of any of the following
securities:
(a) each share of Common Stock, par value $.03 per share ("Company
Common Stock"), of the Company then held by the Company as a treasury share or
then held by Transworld or Newco shall be cancelled and extinguished without
payment of any consideration therefor and without any conversion thereof;
(b) each share of Company Common Stock then issued and outstanding
(other than those referred to in Section 1.6(a) and other than Dissenting Shares
(as defined in Section 1.8)), shall, subject to and in accordance with Section
1.7 hereof, be automatically cancelled and extinguished and thereafter shall
represent the right to receive $2.00 in cash, without interest (the "Merger
Consideration"); and
(c) each share of common stock, par value $.01 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into and thereupon and thereafter shall represent one validly issued,
fully paid, and nonassessable share of common stock, par value $.03 per share,
of the Surviving Corporation.
SECTION 1.7. Surrender and Payment.
(a) Prior to the Effective Time, Newco shall designate a commercial
bank or trust company organized under the laws of the United States or any state
of the United States with capital, surplus, and undivided profits of at least
$100,000,000 to act as agent (the "Exchange Agent") for the purpose of
exchanging certificates representing shares of Company Common Stock for the
Merger Consideration. At or prior to the Effective Time, Transworld shall
deposit in trust with the Exchange Agent the funds necessary to pay the Merger
Consideration for shares of Company Common Stock converted by reason of the
Merger. Promptly after the Effective Time, the Surviving Corporation shall cause
the Exchange Agent to send to each holder of record of shares of Company Common
Stock at the Effective Time a letter of transmittal in customary form for use in
such exchange (which shall specify that the delivery of certificates shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the certificates representing shares of Company Common Stock to the Exchange
Agent).
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(b) Each holder of shares of Company Common Stock that have been
converted into a right to receive the Merger Consideration, upon surrender to
the Exchange Agent of a certificate or certificates representing such shares of
Company Common Stock, together with a properly completed letter of transmittal
covering such shares of Company Common Stock, will be entitled to receive the
Merger Consideration payable in respect of such shares. After the Effective
Time, each such certificate shall, until so surrendered, represent for all
purposes only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
person other than the registered holder of the shares of Company Common Stock
represented by the certificate or certificates in exchange therefor, it shall be
a condition to such payment that the certificate or certificates surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a person other than the
registered holder of such shares of Company Common Stock or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further registration
of transfers of shares of Company Common Stock outstanding prior to the
Effective Time. If, after the Effective Time, certificates representing shares
of Company Common Stock outstanding prior to the Effective Time are presented to
the Surviving Corporation, they shall be cancelled and exchanged for the Merger
Consideration provided for, and in accordance with the procedures set forth, in
this Agreement.
(e) Any portion of the funds deposited with the Exchange Agent
pursuant to Section 1.7(a) that remains unclaimed by the holders of shares of
Company Common Stock one year after the Effective Time shall be returned to the
Surviving Corporation upon demand, and any such holder who has not exchanged his
shares of Company Common Stock for the Merger Consideration in accordance with
this Section 1.7 prior to that time shall thereafter look only to the Surviving
Corporation for payment of the Merger Consideration in respect of his shares of
Company Common Stock, but shall have those rights against the Surviving
Corporation as may be accorded to general creditors under applicable law.
Notwithstanding the foregoing, the Surviving Corporation shall not be liable to
any holder of shares of Company Common Stock for any amount paid to a
4
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public official pursuant to applicable abandoned property laws. Any portion of
the funds remaining unclaimed by holders of shares of Company Common Stock as of
a date which is immediately prior to such time as such portion would otherwise
escheat to or become property of any governmental entity shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of any claims or interest of any person previously entitled
thereto.
(f) Any portion of the funds deposited with the Exchange Agent
pursuant to Section 1.7(a) to pay for Dissenting Shares shall be returned to the
Surviving Corporation upon demand.
(g) The funds deposited with the Exchange Agent shall be invested by
the Exchange Agent as directed by the Surviving Corporation in direct
obligations of the United States of America, obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, commercial paper rated of the highest quality
by Moody's Investors Services, Inc. or Standard & Poor's Corporation, or
certificates of deposit issued by a commercial bank having combined capital,
surplus, and undivided profits aggregating at least $500,000,000, or a fund,
substantially all of the assets of which are invested in the foregoing types of
investments, and any net earnings with respect thereto shall be paid to the
Surviving Corporation as and when requested by the Surviving Corporation.
SECTION 1.8. Dissenter's Rights.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of Company Common Stock outstanding immediately prior to the
Effective Time held by a holder who has demanded and perfected the right for
appraisal of those shares of Company Common Stock in accordance with the
provisions of Section 262 of Delaware Law and as of the Effective Time has not
withdrawn or lost such right to such appraisal ("Dissenting Shares") shall not
be converted into or represent a right to receive the Merger Consideration
pursuant to Section 1.6(b), but the holder shall only be entitled to such rights
as are granted by Delaware Law. If a holder of shares of Company Common Stock
who demands appraisal of those shares under Delaware Law shall effectively
withdraw or lose (through failure to perfect or otherwise) the right to
appraisal, then, as of the Effective Time or the occurrence of such event,
whichever occurs later, each such share of Company Common Stock shall be
converted into and represent the right to
5
<PAGE>
receive the Merger Consideration as provided in Section 1.6(b), without
interest, upon the surrender of the certificate or certificates representing
those shares. The Company shall give Transworld: (i) prompt notice of any
written demands for appraisal of any shares of Company Common Stock, attempted
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law and received by the Company relating to stockholders' rights of
appraisal and (ii) the authority to direct all negotiations and proceedings with
respect to demands for appraisal under Delaware Law. The Company shall not,
except with the prior written consent of Transworld, voluntarily make any
payment with respect to any demands for appraisals of shares of Company Common
Stock, offer to settle or settle any such demands, or approve any withdrawal of
any such demands.
(b) Each holder of Dissenting Shares who becomes entitled under
Delaware Law to payment for his Dissenting Shares shall receive payment therefor
after the Effective Time from the Surviving Corporation (but only after the
amount thereof shall have been agreed upon or finally determined pursuant to
Delaware Law) and such shares of Company Common Stock shall thereupon be
cancelled.
SECTION 1.9. Options and Restricted Shares.
(a) Immediately following the Effective Time, each outstanding stock
option (an "Option") granted under the Company's 1989 Stock Option Plan, 1996
Employee Stock Option Plan, the Shareholder Value Incentive Plan, or 1996
Nonemployee Director Stock Option Plan (the "Option Plans"), whether or not then
vested or exercisable, shall be converted into the right to receive an amount
equal to the product of (i) the number of shares of Company Common Stock subject
to the Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share of Company Common Stock of such Option (the "Option
Consideration").
(b) Immediately following the Effective Time, each outstanding
Option and warrant granted under any plan, agreement, or arrangement of the
Company other than the Option Plans, whether or not then vested or exercisable,
shall be cancelled and the holders thereof shall be entitled to receive from the
Company, in cancellation and settlement of the Option or warrant, an amount
equal to the Option Consideration.
(c) All awards of shares of Company Common Stock (the "Share
Awards") outstanding under any plan, agreement, or arrangement of the Company,
when vested, shall be
6
<PAGE>
cancelled and each holder of a cancelled Share Award shall be entitled to
receive from the Company upon vesting in such Share Award, in cancellation and
settlement of the vested Share Award, an amount equal to the product of (i) the
number of shares of Company Common Stock subject to the vested Share Award and
(ii) the Merger Consideration.
(d) Any amounts payable pursuant to this Section 1.9 shall be
subject to any required withholding of taxes and shall be paid without interest.
(e) The Company shall (without the payment of additional
consideration): (i) make any amendments to the Option Plans and any other plan,
agreement, or arrangement of the Company; (ii) use all reasonable best efforts
to obtain any consents or releases; and (iii) take any other action necessary to
effect the transactions contemplated by this Section 1.9. Notwithstanding any
other provision of this Section 1.9, payment may be withheld in respect of any
Option or Share Award until any necessary consents or releases are obtained.
SECTION 1.10. Closing.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Proskauer Rose Goetz & Mendelsohn
LLP, 1585 Broadway, New York, New York, at 11:00 a.m., local time, on the day on
which the conditions set forth in Article VII hereof are satisfied or waived, or
at such other place and time and on such other date as Transworld and the
Company shall agree (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TRANSWORLD AND NEWCO
Transworld and Newco hereby jointly and severally represent and
warrant to the Company that:
SECTION 2.1. Corporate Organization.
Each of Transworld and Newco is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and any
necessary governmental authority to own, operate, or lease the properties that
it purports to own, operate, or lease and to carry on its business as it is now
being conducted, and is
7
<PAGE>
in good standing in each jurisdiction where the character of its properties
owned, operated, or leased or the nature of its activities makes such
qualification necessary, except for such failures which, individually or in the
aggregate, would not have a Material Adverse Effect on Transworld. Newco is a
newly formed corporation which has not engaged in any business other than in
connection with its organization and the transactions contemplated by this
Agreement. The term "Material Adverse Effect," as used in this Agreement with
respect to Transworld or the Company, means any change or effect that is
materially adverse to the business, results of operations, assets, liabilities,
condition (financial or otherwise), or prospects of Transworld and its
Subsidiaries (as defined in Section 3.1), taken as a whole, or the Company and
its Subsidiaries, taken as a whole, as the case may be.
SECTION 2.2. Authority Relative to this Agreement,
the Stock Purchase Agreement,
and the Registration Rights
Agreement.
Each of Transworld and Newco has all necessary corporate power and
authority to enter into this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by Transworld and Newco and the
consummation by Transworld and Newco of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of Transworld and Newco. This Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement have been duly executed and delivered by
Transworld and Newco and, assuming the due authorization, execution, and
delivery hereof and thereof by the Company, constitute legal, valid, and binding
obligations of Transworld and Newco, enforceable against each in accordance with
their respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, and other similar laws relating to or
affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and fair dealing.
8
<PAGE>
SECTION 2.3. No Conflict; Required Filings and
Consents.
(a) The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by Transworld and Newco do not,
and neither the performance of this Agreement, the Stock Purchase Agreement, or
the Registration Rights Agreement by Transworld and Newco nor the Merger or
other transactions contemplated hereby or by the Stock Purchase Agreement or the
Registration Rights Agreement will (i) conflict with or violate the Certificate
of Incorporation or By-Laws of Transworld or the Certificate of Incorporation or
By-Laws of Newco, (ii) conflict with or violate in any material respect any law,
rule, regulation, order, judgment, or decree applicable to Transworld or Newco
or by which either of them or their respective properties is bound or affected
(assuming compliance with the requirements set forth in clauses (i), (ii),
(iii), and (iv) of Section 2.3(b)) or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration, or cancellation of, or result in the creation of a
material lien or encumbrance on any of the property or assets of Transworld or
Newco pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise, or other instrument or obligation to which
Transworld or Newco is a party or by which Transworld or Newco or any of their
respective properties is bound or affected, except as contemplated by Section
7.3(i) and except for any such breaches, defaults, or other occurrences which
would not, individually or in the aggregate, have a Material Adverse Effect on
Transworld.
(b) The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by Transworld and Newco do not,
and the performance of this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement by Transworld and Newco will not require
Transworld or Newco to obtain any consent, approval, authorization or permit of,
or to make any filing with or notification to, any governmental or regulatory
authority, domestic or foreign, except (i) for applicable requirements of state
securities laws ("Blue Sky Laws"), Federal securities laws, and filing and
recordation of the Certificate of Merger as required by Delaware Law, (ii)
filings required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"), (iii) filings with respect to Medicare and Medicaid provider number
licenses and other healthcare related
9
<PAGE>
licenses, and (iv) where failure to obtain such consents, approvals,
authorizations, or permits, or to make such filings or notifications, would not
prevent or materially delay consummation of the Merger, or otherwise prevent
Transworld or Newco from performing their respective obligations under this
Agreement.
SECTION 2.4. Proxy Material.
None of the information supplied or to be supplied by Transworld or
any of its affiliates or representatives for inclusion in (i) the proxy
statement to be mailed to holders of Company Common Stock in connection with the
special meeting of stockholders of the Company (the "Company Stockholders
Meeting") (such proxy statement, together with the letter to stockholders,
notice of meeting, and form of proxy being hereinafter collectively referred to
as the "Definitive Proxy Material") or any amendment or supplement thereto, or
(ii) any other documents to be filed with the Securities and Exchange Commission
(the "SEC") or any other regulatory agency in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and,
in the case of the Definitive Proxy Material or any amendment thereof or
supplement thereto, at the time of the Company Stockholders Meeting or at the
time of mailing of the Definitive Proxy Material to stockholders of the Company,
be false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, at the time and
in light of the circumstances under which they were made, not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Company Stockholders
Meeting.
SECTION 2.5. Litigation.
As of the date hereof, there is no suit, action, proceeding, or
investigation pending or, to the knowledge of Transworld or Newco, threatened,
against Newco or Transworld which seeks to prevent or challenge the transactions
contemplated by this Agreement, the Stock Purchase Agreement, or the
Registration Rights Agreement.
SECTION 2.6. Brokers.
No broker, finder, or investment banker is entitled to any
brokerage, finder's, or similar fee or commission in connection with the
transactions contemplated by this Agreement, the Stock Purchase Agreement, and
the Registration Rights Agreement, based upon arrangements made by or on behalf
of Transworld or Newco, except UBS
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Securities LLC, in connection with providing a fairness opinion and certain
financial advisory services to Transworld and BT Securities Corporation in
connection with certain other services, none of which will be paid by the
Company, except as provided in Section 8.3(a) hereof.
SECTION 2.7. Financing.
Subject to the receipt by Transworld of an amendment or consent
under its existing credit facility as contemplated by Section 7.3(i), Transworld
will have sufficient funds to enable it to consummate the Merger and the Stock
Purchase.
SECTION 2.8. Board Recommendation.
The Board of Directors of Transworld, at a meeting of such board
duly called and held on November 11, 1996, by the unanimous vote of all
directors present, approved and adopted this Agreement, the Merger, and the
other transactions contemplated hereby, and the Stock Purchase Agreement, the
Registration Rights Agreement, and the transactions contemplated thereby.
SECTION 2.9. Fairness Opinion.
Transworld has received the opinion of UBS Securities LLC that the
consideration paid by Transworld in connection with the purchase by Transworld
of certain indebtedness of the Company, the Merger, and the Stock Purchase is
fair, from a financial point of view, to Transworld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Transworld and Newco
that, except as set forth in the Disclosure Schedule previously delivered by the
Company to Transworld (the "Disclosure Schedule"):
SECTION 3.1. Organization and Qualification;
Subsidiaries.
Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
11
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authority and any necessary governmental authority to own, operate, or lease the
properties that it purports to own, operate, or lease and to carry on its
business as it is now being conducted, and is in good standing in each
jurisdiction where the character of its properties owned, operated, or leased or
the nature of its activities makes such qualification necessary, except for such
failures which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Section 3.1 of the Disclosure Schedule sets forth
the name, jurisdiction of incorporation, capitalization, and percentage of
outstanding capital stock owned, directly or indirectly, by the Company with
respect to each of its Subsidiaries. Except as set forth in Section 3.1 of the
Disclosure Schedule, all the outstanding capital stock and other ownership
interests or equity equivalents of each of the Subsidiaries of the Company is
duly authorized, validly issued, fully paid, and nonassessable and is owned by
the Company or another Subsidiary of the Company free and clear of any claim,
lien, or encumbrance. Except as disclosed in Section 3.1 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries directly or indirectly
controls or owns any interest in any other corporation, partnership, joint
venture, or other business association or entity. The term "Subsidiary" of a
person as used in this Agreement shall mean any corporation or other legal
entity of which that person (either alone or together with other Subsidiaries of
that person) owns, directly or indirectly, more than 50% of the stock or other
equity interests which are ordinarily and generally, in the absence of
contingencies or understandings, entitled to vote for the election of a majority
of the board of directors or governing body.
SECTION 3.2. Certificate of Incorporation and
By-Laws.
The Company has heretofore furnished to Transworld a complete and
correct copy of the Certificate of Incorporation and By-Laws, each as amended to
date, of the Company. Such Certificate of Incorporation and By-Laws are in full
force and effect. The Company is not in violation of any of the provisions of
its Certificate of Incorporation or By-Laws.
SECTION 3.3. Capitalization.
The authorized capital stock of the Company consists of 39,000,000
shares of Company Common Stock and 1,000,000 shares of preferred stock ("Company
Preferred Stock"). As of the date hereof, (i) no shares of Company Preferred
Stock are outstanding or reserved for issuance,
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(ii) 9,330,182 shares of Company Common Stock are issued and outstanding, (iii)
1,011,668 shares of Company Common Stock are reserved for issuance pursuant to
outstanding warrants, convertible debt, and Options, and (iv) 9,711,005 shares
of Company Common Stock are reserved for issuance pursuant to the Stock Purchase
Agreement. The names of the holders of all such warrants, convertible debt, and
Options, and the number of shares of Company Common Stock subject to such
warrants, convertible debt, and Options are set forth in Section 3.3 of the
Disclosure Schedule. Except as set forth in such Section 3.3 of the Disclosure
Schedule, there are no securities convertible into capital stock or other
ownership interests or equity equivalents, options, warrants, or other rights,
agreements, arrangements, or commitments of any character relating to the issued
or unissued capital stock, or ownership or equity equivalent of the Company or
any Subsidiary or obligating the Company or any Subsidiary to issue or sell any
shares of capital stock of, or other ownership interests or equity equivalents
in, the Company or a Subsidiary or any agreement to issue any such convertible
securities, options, warrants, rights, agreements, arrangements, or commitments.
All issued and outstanding shares of Company Common Stock are, and all shares of
Company Common Stock reserved for issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be, duly authorized, validly issued, fully paid, and
nonassessable. Without limiting the foregoing, the Agreement Shares and the
Transworld Option Shares, upon issuance on the terms and conditions specified in
the Stock Purchase Agreement, (x) will be duly authorized, validly issued, fully
paid, and nonassessable, (y) will be free of any pledges, liens, security
interests, or other encumbrances of any kind, and (z) will not be issued in
violation of any preemptive rights. There are no voting trusts or other
agreements or understandings to which the Company or any Subsidiary is a party
with respect to the voting of the capital stock of the Company or any
Subsidiary.
SECTION 3.4. Authority Relative to this
Agreement, the Stock Purchase
Agreement, and the Registration
Rights Agreement.
The Company has all necessary corporate power and authority to enter
into this Agreement, the Stock Purchase Agreement, and the Registration Rights
Agreement and to carry out its obligations hereunder and thereunder, and the
execution and delivery of this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement by the
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Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company, subject, in the case of this Agreement and the
Merger, to the calling and holding of the Company Stockholders Meeting and
approval of the Merger and adoption of this Agreement by a vote of the holders
of a majority of the outstanding shares of Company Common Stock ("Company
Stockholder Approval"). This Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement have been duly executed and delivered by the
Company and, assuming the due authorization, execution, and delivery by
Transworld and Newco, constitute legal, valid, and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws relating to or affecting
creditors' rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law),
or by an implied covenant or good faith and fair dealing.
SECTION 3.5. No Conflict; Required Filings and
Consents.
(a) The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by the Company do not, and
neither the performance of this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement by the Company nor the Merger or other
transactions contemplated hereby or by the Stock Purchase Agreement or the
Registration Rights Agreement (nor any change in control of the Company
resulting therefrom), subject to obtaining Company Stockholder Approval, will
(i) conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or any of its Subsidiaries, (ii) conflict with or violate in any
material respect any law, rule, regulation, order, judgment, or decree
applicable to the Company or any of its Subsidiaries or by which any of their
respective properties are bound or affected (assuming compliance with the
requirements set forth in clauses (i), (ii), (iii), (iv) and (v) of Section
3.5(b)), or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration, or
cancellation of, or give to others any other rights pursuant to, or result in
the creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
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franchise, or other instrument or obligation to which the Company or its
Subsidiaries is a party or by which the Company or its Subsidiaries or any of
their assets is bound or affected, except as set forth in Section 3.5(a) of the
Disclosure Schedule and except for any such breaches, defaults, or other
occurrences which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(b) The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by the Company do not, and the
performance of this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement by the Company will not, require the Company or
any of its Subsidiaries to obtain any consent, approval, authorization, or
permit of, or to make any filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) for applicable
requirements of Federal securities laws, Blue Sky Laws, and filing and
recordation of the Certificate of Merger as required by Delaware Law, (ii) in
connection with the Stock Purchase Agreement, a waiver by the NASDAQ Stock
Market of a section of the By-Laws of the National Association of Securities
Dealers, Inc., (iii) filings pursuant to the HSR Act, (iv) filings with respect
to MediCare and Medicaid provider number licenses and other healthcare related
licenses as set forth in Section 3.5(b) of the Disclosure Schedule, and (v)
where failure to obtain such consents, approvals, authorizations, or permits, or
to make such filings or notifications, would not prevent or materially delay
consummation of the Merger, or otherwise prevent the Company from performing its
obligations under this Agreement, the Stock Purchase Agreement, or the
Registration Rights Agreement and would not have a Material Adverse Effect on
the Company.
SECTION 3.6. SEC Filings; Financial Statements.
(a) As of their respective dates, all reports, schedules,
registration statements, and definitive proxy statements filed by the Company
with the SEC since April 30, 1994 (collectively, the "Company SEC Reports"),
except as described in subsequently filed Company SEC Reports (that have been
filed with the SEC prior to the date hereof) (i) complied as to form in all
material respects with the requirements of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as the case may be, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light
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of the circumstances under which they were made, not misleading. None of the
Company's Subsidiaries is required to file any forms, reports, or other
documents with the SEC.
(b) Except as described in subsequently filed Company SEC Reports
(that have been filed with the SEC prior to the date hereof), each of the
consolidated financial statements (including, in each case, any related notes
thereto) contained in the Company SEC Reports has been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly presents the consolidated financial position of the
Company and its consolidated Subsidiaries as at the respective dates thereof and
the consolidated results of its operations and changes in financial position for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
(c) Except as set forth in Section 3.6 of the Disclosure Schedule,
neither the Company nor any Subsidiary has any liability or obligation of any
nature whatsoever (whether known or unknown, due or to become due, accrued,
fixed, contingent, liquidated, unliquidated, or otherwise), other than
liabilities and obligations (i) which are set forth in the consolidated balance
sheet of the Company and its consolidated Subsidiaries as of April 30, 1996 or
reflected in the notes thereto or (ii) which arose in the ordinary course since
April 30, 1996 and do not and will not individually or in the aggregate, have a
Material Adverse Effect on the Company.
SECTION 3.7. Absence of Certain Changes or Events.
Except as contemplated by this Agreement or disclosed in the Company
SEC Reports or Section 3.7 of the Disclosure Schedule, since April 30, 1996, the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary course and in a manner consistent with past practice and, since
such date, (i) there has not been any change in the business, assets,
liabilities, results of operations, or condition (financial or otherwise) of the
Company or its Subsidiaries having a Material Adverse Effect on the Company, and
(ii) the Company and its Subsidiaries have not entered into any material
transaction with any third party.
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SECTION 3.8. Absence of Litigation.
Except as set forth in Section 3.8 of the Disclosure Schedule or in
the Company SEC Reports, no claim, action, proceeding, or investigation is
pending or, to the best knowledge of the Company, threatened against the Company
or its Subsidiaries which would, individually or in the aggregate, if adversely
determined, have a Material Adverse Effect on the Company. As of the date
hereof, there are no actions, suits, or proceedings pending or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries
arising out of or in any way related to this Agreement, the Stock Purchase
Agreement, the Registration Rights Agreement, or any of the transactions
contemplated hereby or thereby. From the date hereof until the Effective Time,
the Company shall promptly advise Transworld and Newco if any such claim, suit,
governmental proceeding, or litigation is commenced against the Company or any
of its Subsidiaries or is, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries.
SECTION 3.9. Employee Benefit Plans.
True, correct, and complete copies, as in effect on the date hereof,
of the employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and related
summary plan descriptions, currently or previously established, maintained,
sponsored or contributed to (or with respect to which any obligation to
contribute has been undertaken) by the Company or its Subsidiaries or any entity
that would be deemed a "single employer" with the Company or any of its
Subsidiaries (an "ERISA Affiliate") within the meaning of Section 414(b), (c),
(m) or (o) of the Internal Revenue Code of 1986, as amended (the "Code"), and
all bonus, stock option, stock purchase, stock appreciation right, incentive,
deferred compensation, supplemental retirement, severance, welfare, medical,
life, vacation, sickness, change in control, death benefit, and other similar
fringe or employee benefit plans, programs, policies, or arrangements, all
employment, consulting, or executive compensation agreements for the benefit of,
or relating to, any employee, former employee, consultant, director, or retiree
of the Company or any Subsidiary thereof or any ERISA Affiliate (including their
family members and other beneficiaries) (collectively, the "Employee Plans"),
and written descriptions of any oral arrangements or agreements with respect to
the foregoing, have been provided or made available to Transworld prior to the
date hereof and are listed in Section 3.9 of the
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Disclosure Schedule; provided that an Employee Plan that is no longer maintained
by the Company or an ERISA Affiliate shall not be listed in Section 3.9 of the
Disclosure Schedule and copies thereof need not be made available to Transworld
prior to the date hereof. With respect to any Employee Plans (i) each Employee
Plan intended to qualify under Section 401(a) of the Code has been qualified
since inception and has received a favorable determination letter under Revenue
Procedure 93-39 and subsequent revenue procedures from the Internal Revenue
Service (the "IRS") and delivered to Transworld for any such Employee Plan
evidencing its qualified status, and with respect to each such Employee Plan, no
event has occurred or condition exists that could disqualify such Employee Plan
or cause the loss of any tax deductions for contributions made to such Employee
Plan; (ii) no such Employee Plan is or has ever been a "multiemployer plan"
within the meaning of Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of
the Code or a single employer pension plan within the meaning of Section
4001(a)(15) of ERISA which is subject to Sections 4063 and 4064 of ERISA (a
"Multiple Employer Plan"), and neither the Company nor any ERISA Affiliate has
had an obligation to contribute to any multiemployer plan; (iii) there has been
no "prohibited transaction" within the meaning of Section 4975(c) of the Code or
Section 406 of ERISA, involving the assets of the Employee Plans, in connection
with which the Company or any of its ERISA Affiliates could be subject either to
a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code; (iv) all payments required by any Employee Plan, any
collective bargaining agreement or other agreement, or by law (including,
without limitation, all contributions, insurance premiums, or intercompany
charges) required to have been made shall have been made prior to the Closing or
provided for by the Company as applicable, by full accruals as if all targets
required by such Employee Plan had been or will be met at maximum levels) on its
financial statements; (v) no Employee Plan is or has ever been subject to
Section 412 of the Code, Section 302 of ERISA, or Title IV of ERISA; (vi) except
as disclosed in Section 3.9 of the Disclosure Schedule no claim, lawsuit,
arbitration or other action has been threatened, asserted, instituted, or
anticipated against the Employee Plans (other than non-material routine claims
for benefits, and appeals of such claims), any trustee or fiduciaries thereof,
the Company, any ERISA Affiliate, any director, officer, or employee thereof, or
any of the assets of any trust of the Employee Plans; (vii) each Employee Plan
complies and has been maintained and operated in all material respects in
accordance with its terms and applicable law, including, without limitation,
ERISA and the
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Code; (viii) no Employee Plan is or expected to be under audit or investigation
by the IRS, U.S. Department of Labor, or any other governmental authority and no
such completed audit, if any, has resulted in the imposition of any tax or
penalty; (ix) each Employee Plan intended to meet requirements for tax-favored
treatment under any provision of the Code, including, without limitation,
Sections 79, 105, 106, 117, 120, 125, 127, 129, 132, 162(m), 404, 404A, 419,
419A, or 501(c)(9) of the Code satisfies the applicable requirements under the
Code; (x) with respect to each Employee Plan that is funded mostly or partially
through an insurance policy, neither the Company nor any ERISA Affiliate has any
liability in the nature of retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring on or before the Closing; and (xi) the Company will make
available to Transworld as to each Employee Plan, a true and correct copy of the
most recent annual report (Form 5500) filed with the IRS and the most recent
report.
Except as listed in Section 3.9 of the Disclosure Schedule or as
required by Section 4980B(f) of the Code, no plan or arrangement provides
medical, death, or welfare benefits (whether or not insured) with respect to
current or former employees of the Company or its Subsidiaries beyond their
retirement or other termination of employment.
The consummation of the transactions contemplated by this Agreement
will not give rise to any liability, including, without limitation, liability
for severance pay, unemployment compensation, termination pay, or withdrawal
liability, or accelerate the time of payment or vesting or increase the amount
of compensation or benefits due to any employee, or director of the Company, its
Subsidiaries or ERISA Affiliates (whether current, former, or retired) or their
beneficiaries solely by reason of such transactions. No amounts payable under
any Employee Plan will fail to be deductible for federal income tax purposes by
virtue of Section 280G or 162(m) of the Code. Except as disclosed in Section 3.9
of the Disclosure Schedule, neither the Company nor any ERISA Affiliate, or any
officer or employee thereof, has made any promises or commitments, whether
legally binding or not, to create any additional plan, agreement, or
arrangement, or to modify or change any existing Employee Plan. Neither the
Company nor any ERISA Affiliate maintains a pension plan (as defined in Section
3(2) of ERISA), including, without limitation, a nonqualified deferred
compensation plan or excess benefit plan, that is unfunded. No event, condition,
or circumstance exists that would prevent the amendment or termination of any
Employee Plan.
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SECTION 3.10. Permits and Licenses.
Except as set forth in Section 3.10 of the Disclosure Schedule, the
Company and its Subsidiaries are now, and on the Closing Date will be, the
holder of all licenses, franchises, ordinances, authorizations, permits, and
certificates, domestic or foreign (collectively, the "Company Licenses"),
necessary to enable them to continue to conduct their businesses in all material
respects as presently conducted, except where the failure to have such Company
Licenses, individually or in the aggregate, would not have a Material Adverse
Effect on the Company. Except as set forth in Section 3.10 of the Disclosure
Schedule, all of the Company Licenses are now, and (assuming satisfaction of all
requirements set forth in Section 3.5(b)(iv) and (v)) on the Closing Date will
be, in full force and effect. The Company has no reason to believe that any
Federal, state, or local government or agency having jurisdiction will revoke,
cancel, rescind, refuse to renew in the ordinary course, or modify any of the
Company Licenses. Except as disclosed in the Company SEC Reports or except as
set forth in Section 3.10 of the Disclosure Schedule, there is not now pending,
or, to the best knowledge of the Company, threatened, any investigation before
any such Federal, state, or local governments or agencies which, either
individually or in the aggregate, would have a Material Adverse Effect on the
Company. Except as disclosed in the Company SEC Reports, each of the Company and
its Subsidiaries has conducted its business so as to comply with all applicable
laws, regulations, ordinances, and codes, domestic and foreign, including,
without limitation, laws, regulations, ordinances, and codes relating to the
protection of the environment, the failure to comply with which could have,
either individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 3.11. Proxy Material.
None of the information supplied or to be supplied by the Company or
any of its affiliates or representatives for inclusion, or included or
incorporated by reference, in (i) the Definitive Proxy Material or (ii) any
other documents to be filed with the SEC or any other regulatory agency in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and, in the case of the Definitive Proxy Material
or any amendment thereof or supplement thereto, at the time of the Company
Stockholders Meeting or at the time of mailing of the Definitive Proxy Material
to stockholders of the Company, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order
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to make the statements therein, at the time and in light of the circumstances
under which they were made, not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Company Stockholders Meeting. The Definitive Proxy Material and
any amendment thereof or supplement thereto will comply as to form in all
material respects with the provisions of the Exchange Act.
SECTION 3.12. Brokers.
No broker, finder, or investment banker, other than National
Westminster Bank Plc. ("NatWest"), is entitled to any brokerage, finder's, or
other fee or commission in connection with the transactions contemplated by this
Agreement, the Stock Purchase Agreement, or the Registration Rights Agreement,
based upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Transworld a complete and correct copy of all agreements
between the Company and NatWest pursuant to which such firm would be entitled to
any payment as a result of the transactions contemplated hereby.
SECTION 3.13. Properties, Contracts, and Insurance.
(a) Except as set forth in Section 3.13(a) to the Disclosure
Schedule, the Company and its Subsidiaries own, or are licensed to use, or
lease, all property and assets, real and personal, tangible and intangible
(including, but not limited to, all patents, trademarks, trade names,
copyrights, technology, know-how, and processes), used in or necessary for the
conduct of their businesses as currently conducted except where the failure so
to own, license, or lease would not have a Material Adverse Effect on the
Company. To the knowledge of the Company, the use of such patents, trademarks,
trade names, copyrights, technology, know-how, and processes by the Company or
its Subsidiaries does not infringe on the rights of any person, subject to such
claims and infringement which, individually or in the aggregate, have not had
and will not have a Material Adverse Effect on the Company.
(b) Section 3.13(b) of the Disclosure Schedule sets forth a true and
complete list of all contracts, agreements, notes, bonds, mortgages, indentures,
guarantees, instruments, or commitments (written or oral) relating to the
Company or any of its Subsidiaries which are material to the Company and its
Subsidiaries, taken as a whole (other than those relating to insurance
coverage), and all agreements which impose operational, geographic, or other
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restrictions upon the ability of the Company or any of its Subsidiaries to
engage in any business. To the best knowledge of the Company and except as set
forth in Section 3.13(b) of the Disclosure Schedule, all of such material
contracts of the Company and its Subsidiaries are presently valid and existing
and in full force and effect, and there is no violation, default or claim of
violation or default by any party thereto and no condition or event has occurred
which with notice or lapse of time or both would constitute a violation or
default thereunder, except for any such failure to be valid and existing and in
full force and effect, or any such violation, default, or claim, which would not
have a Material Adverse Effect on the Company.
(c) Section 3.13(c) of the Disclosure Schedule sets forth a true and
correct list of all insurance coverage maintained by or for the benefit of the
Company and its Subsidiaries with respect to their operations or any incident,
event, or thing arising therefrom or relating thereto, setting forth (i) the
name of the carrier, (ii) the nature and dollar limits of the coverage, (iii)
the policy number and scheduled expiration date, (iv) the premium rate and date
through which paid, and (v) the named insureds thereunder. Except as set forth
in Section 3.13(c) of the Disclosure Schedule, all such policies are in full
force and effect, no notice of default or termination has been given thereunder,
and no effect, occurrence, or thing has occurred which, with notice or lapse of
time or both, could result in the early termination thereof.
SECTION 3.14. Board Recommendation.
The Board of Directors of the Company, at a meeting of such board
duly called and held on November 12, 1996 (prior to the time of the execution of
this Agreement and the Stock Purchase Agreement), by the unanimous vote of all
directors voting, (a) determined that the Merger and the Stock Purchase are fair
to the Company and its stockholders, and approved and adopted this Agreement,
(b) approved (i) this Agreement, the Merger and the other transactions
contemplated hereby, and (ii) the Stock Purchase Agreement, the Registration
Rights Agreement, and the transactions contemplated thereby, and (c) resolved to
recommend approval and adoption of the Merger and this Agreement by the
Company's stockholders.
SECTION 3.15. Fairness Opinion.
The Company has received the opinion of NatWest that the Merger
Consideration is fair, from a financial point of view, to the stockholders of
the Company.
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SECTION 3.16. Compliance with Environmental Laws. For the purposes
of this Section 3.16:
"Contaminant" shall mean all Hazardous Materials and all those
substances which are regulated by or form the basis of liability under Federal,
state or local environmental, health and safety statutes or regulations
including, without limitation, asbestos, polychlorinated biphenyls ("PCBs"), and
radioactive substances, or any other material or substance which constitutes a
material health, safety or environmental hazard to any person or property.
"Environmental Claim" shall mean any written notice of violation,
claim, demand, abatement or other order by any governmental authority or any
person for personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or deed or use restrictions, resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden, accidental or nonaccidental Releases),
of, or exposure to, any substance, chemical, material, pollutant,
contaminant, odor, or audible noise or other release or emission in, into or
onto the environment (including, without limitation, the air, ground, water or
any surface) at, in, by or from any of the properties of the Company or any of
its Subsidiaries, (ii) the environmental aspects of the transportation, storage,
treatment, or disposal of materials in connection with the operation of any of
the properties of the Company or any of its Subsidiaries, or (iii) the
violation, or alleged violation by the Company or any of its Subsidiaries, of
any statutes, ordinances, orders, rules, regulations, permits or licenses of or
from any governmental authority, agency or court relating to environmental
matters connected with any of the properties of the Company or any of its
Subsidiaries, under any applicable Environmental Law.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Oil Pollution Act of
1990 (P.L. 101-380), the Safe Drinking Water Act (42 U.S.C. ss. 300(f), et
seq.), the Clear Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. ss. 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide
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Act (7 U.S.C. ss. 136 et seq.), and the Occupational Safety and Health Act (29
U.S.C. ss. 651 et seq.), as such laws have been and hereafter may be amended or
supplemented, and any related or analogous present or future Federal, state or
local, statutes, rules, regulations, ordinances, licenses, permits and
interpretations and orders of regulatory and administrative bodies and the
common law.
"Hazardous Material" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance or
material, defined or regulated as such in (or for purposes of) any Environmental
Law and any other toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or any fraction),
any radioactive substance and any PCBs; provided, in the event that any
Environmental Law is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date of
such amendment; and provided, further, to the extent that the applicable laws of
any state establish a meaning for "hazardous material," "hazardous substance,"
"hazardous waste," "solid waste" or "toxic substance" which is broader than that
specified in any Environmental Law, such broader meaning shall apply.
"Release" shall mean any releasing, spilling, leaking, seepage,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Law,
and shall include any "Threatened Release," as defined in Environmental Law.
"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind or
nature with respect to any property of the Company or any of its Subsidiaries
(whether such property is owned, leased, subleased or used), including, without
limitation, with respect to Contaminants and the Release thereof.
(a) Except as disclosed in Section 3.16 of the Disclosure Schedule:
(i) the operations of the Company and its Subsidiaries comply in all material
respects with all applicable Environmental Laws; (ii) the Company, its
Subsidiaries, and all of their present facilities or operations, and, to the
knowledge of the Company or any of its Subsidiaries, their past facilities or
operations, are not subject to any judicial proceeding or administrative
proceeding or any outstanding written order or agreement with any governmental
authority or private party regarding (a) any Environmental Law, (b) any Remedial
Work, or (c) any
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Environmental Claims arising from the Release of a Contaminant into the
environment; (iii) to the best of the knowledge of the Company and its
Subsidiaries, none of their operations is the subject of any Federal or state
investigation evaluating whether any Remedial Work is needed to respond to a
Release of any Contaminant into the environment; (iv) neither the Company nor
any of its Subsidiaries, nor any predecessor of the Company or any of its
Subsidiaries, has filed any notice under any Environmental Law indicating past
or present treatment, storage, or disposal of a Hazardous Material or reporting
a spill or Release of a Contaminant into the environment; (v) to the best of the
knowledge of the Company and its Subsidiaries, neither the Company nor any of
its Subsidiaries has any contingent liability in connection with any Release of
any Contaminant into the environment; (vi) none of the operations of the Company
and its Subsidiaries involve the generation, transportation, treatment, or
disposal of Hazardous Materials; (vii) neither the Company nor any of its
Subsidiaries has disposed of any Contaminant by placing it in or on the ground
or waters of any premises owned, leased or used by any of them and to the
knowledge of the Company and its Subsidiaries neither has any lessee, prior
owner, or other person; (viii) no underground storage tanks or surface
impoundments are on any property of the Company or any of its Subsidiaries; and
(ix) no lien in favor of any governmental authority for (A) any liability under
any Environmental Law or regulation, or (B) damages arising from or costs
incurred by such governmental authority in response to a Release of a
Contaminant into the environment, has been filed or attached to the property of
the Company or any of its Subsidiaries.
(b) Except as set forth in Section 3.16 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has contractually, nor, to the
knowledge of the Company or any of its Subsidiaries, by operation of law, or
under any Environmental Law, assumed or succeeded to any material environmental
liabilities relating to any Environmental Claims of any predecessor or other
person or entity.
(c) None of the matters set forth in Section 3.16 of the Disclosure
Schedule have, or are likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
SECTION 3.17. Employment Matters.
(a) Except as set forth in Section 3.17 of the Disclosure Statement,
each of the Company and its
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Subsidiaries: (i) is in compliance in all material respects with all applicable
Federal and state laws, rules, and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to current, former, or retired employees or consultants of the
Company or any of its Subsidiaries (collectively "Employees"); (ii) has withheld
all amounts required by law or by agreement to be withheld from the wages,
salaries, and other payments to Employees; (iii) is not liable for any arrears
of wages or any taxes or any penalty for failure to comply with any of the
foregoing; and (iv) (other than routine payments to be made in the ordinary
course of business and consistent with past practice) is not liable for any
payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social security
or other benefits for Employees, except in each case, for immaterial amounts.
(b) Except as set forth in Section 3.17(b) of the Disclosure
Schedule, no Employee Plans, employment or other agreements, or trusts exist
that expressly or impliedly make reference to, or provide that payments be made
or benefits provided, upon any "change in ownership or control," pursuant to
which, with or without notice, the lapse of time or action by the Company or any
of its Subsidiaries or by any Employee or other person, the payment, vesting, or
funding of compensation or benefits is or may be provided or accelerated, or a
reversion to the Company or any of its Subsidiaries of assets from an Employee
Plan may be prohibited, or an obligation to sell assets may arise, by reason of
or in connection with the consummation of a transaction contemplated by this
Agreement or the Stock Purchase Agreement (collectively, "Change of Control
Provisions").
(c) Except as set forth in Section 3.17(c) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is involved in or, to
the knowledge of the Company, threatened with, any labor dispute, grievance, or
litigation relating to labor, safety or discrimination matters involving any
Employee, including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, have a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act which would, individually
or in the aggregate, directly or indirectly, have a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries is
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presently or has been in the past a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by the Company or any of its
Subsidiaries.
SECTION 3.18. Tax Returns, Audits, and Liabilities.
(a) Except as set forth in Section 3.18 of the Disclosure Schedule,
each of the Company and its Subsidiaries has (i) timely filed in accordance with
all applicable laws, all Returns (as defined below) required to be filed by
them, (ii) paid all Taxes (as defined below) shown to have become due pursuant
to such Returns, and (iii) paid all Taxes (other than those being contested in
good faith, all of which are disclosed in Section 3.18 of the Disclosure
Schedule) for which a notice of, or assessment or demand for, payment has been
received or which are otherwise due and payable, in each case other than
failures to file or pay that would not, in the aggregate, have a Material
Adverse Effect on the Company. All Returns filed by each of the Company and each
of its Subsidiaries with respect to Taxes were true and correct in all material
respects as of the date on which they were filed or as subsequently amended to
the date hereof. Except as set forth in Section 3.18 of the Disclosure Schedule,
complete copies of (i) consolidated federal Income Tax Returns (as defined
below) for the Company and its Subsidiaries and (ii) state and local Income Tax
and other Tax Returns of the Company and its Subsidiaries for each of the years
ended April 30, 1995 and 1996, have heretofore been delivered or made available
to Transworld. Except as set forth in Section 3.18 of the Disclosure Schedule,
(A) there is no action, suit, proceeding, investigation, audit, claims or
assessment pending or proposed with respect to any liability for Tax that
relates to the Company or any of its Subsidiaries for which a material amount of
Tax is at issue, (B) all material amounts required to be collected or withheld
by the Company and each of its Subsidiaries with respect to Taxes have been duly
collected or withheld and any such amounts that are required to be remitted to
any taxing authority have been duly remitted, (C) no extension of time within
which to file any material Return that relates to the Company or any of its
Subsidiaries has been requested which Return has not since been filed, (D) there
are no waivers or extensions of any applicable statute of limitations for the
assessment or collection of Taxes with respect to any material Return that
relates to the Company or any of its Subsidiaries which remain in effect, (E)
there are no tax rulings, requests for rulings, or closing
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agreements relating to the Company or any of its Subsidiaries which could
materially affect their liability for Taxes for any period after the Effective
Time, (F) all material Federal, state, and local Income Tax Returns of the
Company and each of its Subsidiaries with respect to taxable periods through the
year ended April 30, 1992 have been examined and closed or are Returns with
respect to which the applicable statute of limitations has expired without
extension or waiver, (G) no power of attorney has been granted by the Company or
any of its Subsidiaries with respect to any matter relating to Taxes of the
Company and its Subsidiaries which is currently in force, (H) no excess loss
account (as referred to in Treasury Regulation Section 1.1502-19) exists with
respect to any Subsidiary of the Company, (I) neither the Company nor any of its
Subsidiaries has any deferred gain or loss (i) arising from deferred
intercompany transactions (as referred to in Treasury Regulation Sections
1.1502-13 and 1.1502-13T), or (ii) with respect to the stock or obligations of
any other member of the Company's affiliated group (as described in Treasury
Regulation Sections 1.1502-14 and 1.1502-14T) and (J) neither the Company nor
any Subsidiary has filed a consent under Section 341(f) of the Code or any
comparable provision of state revenue statutes. The Company has filed a
consolidated Return for Federal Income Tax purposes on behalf of itself and
other members of the affiliated group (within the meaning of Section 1504 of the
Code) of which it is the parent corporation since at least the date on which
each was incorporated. The accruals for deferred Federal income taxes reflected
in the audited financial statements of the Company for the year ended April 30,
1996 are adequate in all material respects to cover any deferred Federal Income
Tax liability of the Company and its Subsidiaries determined in accordance with
generally accepted principles through the date thereof. The accruals and
reserves for Taxes in such financial statements are adequate in all material
respects to cover any liability of the Company and its Subsidiaries for Taxes
for periods through the date thereof.
(b) The Company has heretofore provided Transworld with complete
copies (or, if oral, written descriptions) of any Tax Sharing Arrangement to
which the Company or any of its Subsidiaries is a party.
(c) For purposes of this Agreement, except as otherwise expressly
provided, unless the context otherwise requires:
"Income Taxes" means any Federal, state, local, or foreign
income, or franchise Tax and in each
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instance any interest, penalties, or additions to tax attributable to such Tax;
"Return" means any report, return, statement, estimate,
declaration, form, or other information required to be supplied to a taxing
authority in connection with Taxes;
"Tax" or "Taxes" means taxes of any kind, levies or other like
assessments, customs, duties, imposts, charges or, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real or
personal property, asset, sales, use, license, payroll, transaction, capital,
net worth and franchise taxes, estimated taxes, withholding, employment, social
security, workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains taxes or
other governmental taxes imposed or payable to the United States, or any state,
county, local, or foreign government or subdivision or agency thereof, and in
each instance such term shall include any interest, penalties, or additions to
tax attributable to any such Tax; and
"Tax Sharing Arrangement" means any written or unwritten
agreement or arrangement for the allocation or payment of or with respect to Tax
liabilities or Tax benefits.
SECTION 3.19. Full Disclosure.
No statement herein or in the Disclosure Schedule hereto or in any
certificate delivered pursuant to the requirements of this Agreement by or on
behalf of the Company contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading.
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ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1. Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, between the date of this
Agreement and the Effective Time, except as otherwise contemplated by this
Agreement or unless Transworld shall otherwise give its prior written consent,
the business of the Company shall be conducted only in, and the Company shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice (including financial and other controls of the
Company instituted since the commencement of the current fiscal year), and the
Company will use its commercially reasonable efforts to continue its business
development activities, to maintain in effect all licenses, approvals, and
authorizations, to preserve intact its business organization and to maintain
existing relationships with licensors, licensees, suppliers, contractors,
distributors, customers, and others having business relationships with it, and
Transworld and Newco agree to cooperate reasonably, if required by the Company,
with the Company in connection with the foregoing. By way of amplification and
not limitation, except as contemplated by this Agreement, neither the Company
nor any of its Subsidiaries shall, between the date of this Agreement and the
Effective Time, do or agree to do any of the following without the prior written
consent of Transworld:
(a) amend or otherwise change its Certificate of Incorporation or
By-Laws;
(b) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, or encumbrance of (i) any shares of capital
stock of any class, or any options, warrants, convertible securities,
subscriptions, or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest or equity equivalent, of the Company or
any of its Subsidiaries (including, without limitation, stock appreciation
rights) or any other securities in respect of, in lieu of, or in substitution
for any outstanding shares (other than, in the case of the Company, shares of
Company Common Stock issuable pursuant to the exercise of outstanding
convertible debt, warrants, or Options as set forth in Section 3.3 of the
Disclosure Schedule) or grant or accelerate any right to convert or exercise or
otherwise amend in any respect any
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such outstanding convertible debt, warrants, or Options or (ii) any material
assets of the Company or any of its Subsidiaries, except for sales of goods or
services in the ordinary course of business and in a manner consistent with past
practice;
(c) declare, set aside, make, or pay any dividend or other
distribution, payable in cash, stock, property, or otherwise, with respect to
any of its capital stock, any other ownership interest or equity equivalent, or
any other securities, or reclassify, combine, split, subdivide, redeem,
purchase, or otherwise acquire, directly or indirectly, any such capital stock,
ownership interest, equity equivalent, or other securities, or adopt a plan of
complete or partial liquidation or resolutions providing for or authorizing such
liquidation or a dissolution, restructuring, recapitalization, or other
reorganization or, except to the extent required by fiduciary obligations under
applicable law, a merger or consolidation;
(d) (i) except in the ordinary course of business and consistent
with past practice, issue any debt securities or assume, guarantee, or endorse
the obligations of any other person, except for immaterial amounts; (ii) except
in the ordinary course of business and consistent with past practice, make any
loans, advances, or capital contributions to, or investments in, any other
person (other than to or in the Company or its Subsidiaries or customary loans
or advances to employees in amounts not material to the maker of such loan or
advance); (iii) pledge or otherwise encumber shares of capital stock of or other
ownership interests or equity equivalents in the Company or any of its
Subsidiaries; or (iv) except in the ordinary course of business and consistent
with past practice, mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material lien thereupon;
(e) except as set forth in Section 4.3, enter into, adopt,
establish, or (except as may be required by law) amend or terminate any
collective bargaining agreement, bonus, profit sharing, thrift, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance, or other employee
benefit agreement, trust, plan, fund, or other arrangement for the benefit or
welfare of any director, officer, or employee, or (except for normal increases
in the ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expenses) increase in any manner the compensa-
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tion or benefits of any director, officer, or employee or pay any benefit not
required by any plan or arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock appreciation rights or
performance units), increase the amount or change in any material respect the
terms of any insurance covering directors or officers;
(f) except as set forth in Section 4.1(f) to the Disclosure
Schedule, acquire, sell, license, lease, or dispose of any assets outside the
ordinary course of business which in the aggregate are material to the Company
or enter into any commitment or transaction outside the ordinary course of
business consistent with past practice;
(g) change any of the accounting principles or practices used by it;
(h) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership, or other business organization or
division thereof or any interest therein; (ii) enter into any partnership, joint
venture, or similar agreement or arrangement or any contract or agreement other
than in the ordinary course of business consistent with past practice; (iii)
authorize any new capital expenditure(s) which, individually, is in excess of
$50,000 or, in the aggregate, are in excess of $100,000; or (iv) amend or modify
any material existing agreement, arrangement, or understanding which would
increase the obligations or impair or diminish the rights of the Company or any
of its Subsidiaries in any material respect;
(i) except as set forth in Section 4.1(i) to the Disclosure
Schedule, make any tax election or settlement or compromise any income tax
liability material to the Company or its Subsidiaries;
(j) except as set forth in Section 4.1(j) to the Disclosure
Schedule, pay, discharge, or satisfy any claims, liabilities, or obligations
(absolute, accrued, asserted, or unasserted, contingent or otherwise), other
than the payment, discharge, or satisfaction in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
Subsidiaries or incurred in the ordinary course of business consistent with past
practice, except for fees and expenses (including legal fees and expenses)
incurred in connection with this Agreement, the Stock Purchase Agreement
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and the Registration Rights Agreement and the transactions contemplated hereby
and thereby and except as required by applicable law.
(k) except as set forth in Section 4.1(k) to the Disclosure
Schedule, enter into (in writing or otherwise) any contract, agreement,
commitment, arrangement, or understanding to do any of the foregoing; or
(l) take, or agree to take, any action which would make any
representation or warranty untrue or incorrect in any material respect.
SECTION 4.2. No Solicitation of Transactions.
From and after the date hereof through the earlier to occur of the
Effective Date and the date of termination of this Agreement, the Company shall
not, directly or indirectly, through any officer, director, agent, or otherwise,
solicit, initiate, or encourage submission of, proposals or offers from any
person relating to any acquisition or purchase of all or a substantial portion
of the assets of, or any equity interest in, the Company or any of its
Subsidiaries or any business combination with the Company or any of its
Subsidiaries or, except to the extent required by fiduciary obligations under
applicable law, participate in any negotiations regarding, or furnish to any
other person any information with respect to, or encourage, any effort or
attempt by any other person to do or seek any of the foregoing; provided,
however, that nothing contained in this Section 4.2 shall prohibit the Company
or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making
such other disclosure to the Company's stockholders which, in the judgment of
the Board of Directors with advice of counsel, may be required under applicable
law. The Company will immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and shall immediately demand the return or
destruction of any non-public information concerning the Company distributed to
other persons for the purpose of soliciting or encouraging any of the foregoing;
provided, however, that nothing in this sentence shall restrict the Company to
the extent required by fiduciary obligations under applicable law from
participating in any activities, discussions, or negotiations with any such
parties. The Company shall as soon as practicable (a) notify Transworld if any
such proposal or offer, or any inquiry or contact with any person
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with respect thereto, is made and (b) disclose to Transworld the terms and
conditions of such proposal or offer and the identity of the offeror or
potential offeror.
SECTION 4.3. Option Plans, Convertible Debt, Options, and Warrants.
(a) The Company shall take such action, if any, as may be necessary
to terminate the Option Plans at the Effective Time and shall take the actions
contemplated by Section 1.9(e).
(b) The Company shall use commercially reasonable efforts to amend
the terms of the outstanding convertible debt of the Company (as disclosed in
Section 3.3 of the Disclosure Schedule) in order to provide that such
convertible debt will cease to be convertible into equity of the Company on and
after the Effective Time.
(c) The Company shall take such action, if any, as may be necessary
to cause the outstanding Options and warrants (as disclosed in Section 3.3 of
the Disclosure Schedule) to be cancelled and settled in the manner provided in
Section 1.9(b).
SECTION 4.4. State Takeover Statutes.
The Company, will, upon the request of Transworld, take all
reasonable steps to (i) exempt the Merger from the requirements of any state
takeover law by action of the Company's Board of Directors or otherwise and (ii)
assist in any challenge by Transworld or Newco to the validity or applicability
to the Merger of any state takeover law, it being understood that the Company
may condition any such action on the consummation of the Merger. The phrase
"state takeover law" does not include the New York State statute relating to the
taxation of corporate transactions.
SECTION 4.5. Consents and Approvals.
The Company shall use commercially reasonable efforts to obtain the
consents and approvals required with respect to the items described in Sections
3.5(a) and (b) of the Disclosure Schedule.
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ARTICLE V
COVENANTS OF TRANSWORLD AND NEWCO
SECTION 5.1. Directors' and Officers' Indemnification.
From and after the Effective Time, Transworld and the Surviving
Corporation shall jointly and severally (to the same extent as the Company
currently indemnifies its officers and directors pursuant to the Company's
Certificate of Incorporation and By-Laws as in effect on the date hereof),
indemnify, defend, and hold harmless the present officers and directors (the
"Indemnified Parties") of the Company against all losses, claims, damages, or
liabilities ("Claims") arising out of actions or omissions occurring at or prior
to the Effective Time that are based on or arising out of the fact that such
person is or was a director or officer of the Company prior to the Effective
Time, including, without limitation, any Claim arising out of this Agreement,
the Stock Purchase Agreement, or the Registration Rights Agreement or the
transactions contemplated hereby and thereby.
ARTICLE VI
ADDITIONAL AGREEMENTS OF THE PARTIES
SECTION 6.1. Proxy Material.
The Company shall prepare and, subject to the prior consent of
Transworld, file with the SEC preliminary proxy material relating to the
transactions contemplated by this Agreement (the "Preliminary Proxy Material")
as soon as reasonably practicable. The Company shall use its best efforts to
respond to the comments of the SEC, provide a copy of all amended Preliminary
Proxy Material to Transworld, file such amended Preliminary Proxy Material with
the SEC with Transworld's prior consent, and cause the Definitive Proxy Material
to be mailed to the stockholders of the Company. Each of the Company, Newco, and
Transworld shall notify the other parties promptly of the receipt of any
comments of the SEC and of any request by the SEC for amendments or supplements
to the Preliminary Proxy Material or the Definitive Proxy Material, or for
additional information. Each of the Company, Newco, and Transworld shall supply
the other parties with copies of all correspondence with the SEC with respect to
any of the
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foregoing filings. If at any time prior to the Company Stockholders Meeting, any
event should occur relating to the Company or any of its officers, directors, or
affiliates which should be described in an amendment or supplement to the
Definitive Proxy Material, the Company shall promptly inform Transworld. If at
any time prior to the Company Stockholders Meeting, any event should occur
relating to Transworld or any of its officers, directors, or affiliates which
should be described in an amendment or supplement to the Definitive Proxy
Material, Transworld shall inform the Company. Whenever any event occurs which
should be described in an amendment or supplement to the Definitive Proxy
Material, the Company, Newco, and Transworld shall, upon learning of such event,
cooperate with each other to promptly file and clear with the SEC and, if
applicable, mail such amendment or supplement to the stockholders of the
Company.
SECTION 6.2. Meeting of Stockholders of the Company.
The Company shall as promptly as reasonably practicable take all
action necessary in accordance with Delaware Law and its Certificate of
Incorporation and By-Laws duly to call, convene, and hold the Company
Stockholders Meeting. The Company shall, subject to the fiduciary obligations of
the Company's directors under applicable law as advised by outside counsel, use
reasonable efforts to solicit from stockholders of the Company proxies in favor
of the Merger and shall take such other action as is reasonably necessary to
secure the vote of stockholders required by Delaware Law to effect the Merger.
Transworld shall vote, or cause to be voted, in favor of the Merger all shares
of Company Common Stock beneficially owned by it.
SECTION 6.3. HSR Act.
Each of Transworld and the Company shall promptly following the date
hereof, file duly completed and executed Pre-Merger Notification and Report
Forms as required pursuant to the HSR Act and use its best efforts to comply
promptly with any requests made by the Federal Trade Commission or the
Department of Justice pursuant to the HSR Act.
SECTION 6.4. Access to Information; Confid- entiality.
(a) Subject to applicable law, from the date hereof to the Effective
Time, the Company shall afford the officers, employees, and authorized agents of
Transworld
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reasonable access, during normal business hours and upon reasonable notice, to
its officers, employees, authorized agents, properties, offices, books, and
records and shall furnish Transworld with all financial and operating data and
other information regarding the assets, properties, goodwill, and business of
the Company as Transworld may from time to time reasonably request.
(b) In the event of the termination of this Agreement and the Stock
Purchase Agreement, Transworld and Newco shall, and shall cause their respective
affiliates and their officers, directors, employees, and agents to, (i) return
promptly every document furnished to them by the Company or any of its officers,
directors, employees, and agents in connection with the transactions
contemplated hereby and any copies thereof, and shall use its best efforts to
cause others to whom such documents may have been furnished promptly to return
such documents and any copies thereof any of them may have made, other than
documents filed with the SEC or otherwise publicly available and (ii) destroy
promptly all documents created by them from any data, information, or document
furnished by the Company or any of its officers, directors, employees, and
agents in connection with the transactions contemplated hereby and any copies
thereof, and shall use its best efforts to cause others to whom such documents
may have been furnished promptly to destroy the same and any copies thereof,
other than documents created from data, information or documents filed with the
SEC or otherwise publicly available. The terms of the Confidentiality Agreement
dated October 23, 1996 among Hyperion Partners II L.P., the Company, and
Transworld shall survive the termination hereof.
(c) No investigation pursuant to this Section 6.4 or other
investigation shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties hereto.
SECTION 6.5. Notification of Certain Matters.
The Company shall give prompt notice to Transworld, and Transworld
shall give prompt notice to the Company, of (i) the occurrence, or
non-occurrence, of any event, the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate at or prior to the Effective Time and (ii)
any failure of the Company, Transworld, or Newco, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this
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Section 6.5 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 6.6. Further Action.
Upon the terms and subject to the conditions hereof, and subject, in
the case of the Company, to the exercise by the Board of Directors of the
Company of its fiduciary obligations, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper, or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and to obtain in a timely manner all necessary waivers, consents,
and approvals and to effect all necessary registrations and filings, including,
but not limited to: (i) reasonable efforts to lift or rescind any injunction or
restraining order or other order which may be entered; (ii) cooperation in
reasonable tax planning measures for the Company and the Surviving Corporation
in light of the transactions contemplated hereby so long as no action shall be
required to be taken which would result in adverse tax consequences to the
stockholders of the Company or, if the Merger does not occur, to the Company;
and (iii) reasonable cooperation in respect of the filing of the Definitive
Proxy Material and any amendment or supplement thereto and other filings to be
made in connection with the Merger and the transactions contemplated hereby.
SECTION 6.7. Public Announcements.
Transworld and the Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the Merger and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or by the
NASDAQ Stock Market.
SECTION 6.8. Government Compliance.
Each of the Company, Transworld, and Newco agrees promptly to effect
all necessary registrations, filings, applications, and submissions of
information requested by governmental authorities.
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ARTICLE VII
CONDITIONS OF THE MERGER
SECTION 7.1. Conditions to Obligations of Each Party to Effect
the Merger.
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company in accordance with the
Company's Certificate of Incorporation and Delaware Law.
(b) The Company and Transworld shall have received evidence, in form
and substance reasonably satisfactory to Transworld, that such licenses,
permits, consents, approvals, authorizations, qualifications, orders of
governmental authorities, and third parties as are required in connection with
the consummation of the transactions contemplated hereby or necessary to conduct
the business of the Company and its Subsidiaries as presently conducted have
been obtained and are in full force and effect other than those which, if not
obtained, would not, either individually or in the aggregate, have a Material
Adverse Effect on Transworld or the Company.
(c) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(d) At the Effective Time, there shall be no effective injunction,
writ, or preliminary restraining order or any order of any nature issued by a
court or governmental agency of competent jurisdiction directing that the
transactions provided for herein not be consummated as herein provided.
(e) The Company shall have received from NatWest a written opinion
addressed to the Company, for inclusion in the Definitive Proxy Material, that
the Merger Consideration is fair, from a financial point of view, to the
stockholders of the Company.
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SECTION 7.2. Additional Conditions to Obligation of the Company to
Effect the Merger.
The obligation of the Company to effect the Merger is also subject
to each of the following conditions:
(a) Each of Transworld and Newco shall in all material respects have
performed each obligation to be performed by it hereunder on or prior to the
Effective Time.
(b) The representations and warranties of each of Transworld and
Newco set forth in this Agreement shall be true and correct in all material
respects at and as of the Effective Time as if made at and as of such time,
except for changes contemplated by this Agreement and except to the extent that
any such representation or warranty is made as of a specified date, in which
case such representation or warranty shall have been true and correct in all
material respects as of such date.
(c) The Company shall have received a certificate of Transworld,
dated the Closing Date, signed by the Chief Executive Officer of Transworld, to
the effect that, to the best of the knowledge, information, and belief of such
officer, the conditions specified in Section 7.2(a) and (b) have been fulfilled.
(d) The Company shall have received an opinion from Proskauer Rose
Goetz & Mendelsohn LLP, counsel to Transworld and Newco, dated the Closing Date,
in form and substance reasonably satisfactory to the Company as to (i) the valid
existence and good standing of Transworld and Newco in their respective
jurisdictions of incorporation, (ii) the corporate power and authority of
Transworld and Newco to own their properties and to conduct their business,
(iii) the corporate power and authority of Transworld and Newco to execute and
deliver this Agreement and the due authorization thereof, (iv) the due execution
and delivery and enforceability of this Agreement, (v) the absence of conflicts
with the charter, bylaws or material agreements of Transworld and Newco, (vi)
the absence of material consents or approvals required to consummate the
transactions contemplated by this Agreement, and (vii) the absence of litigation
regarding the transaction.
(e) All actions, proceedings, instruments, and documents required to
carry out the transactions contemplated hereby or incidental hereto and all
other related legal matters shall have been reasonably satisfactory to and
approved by counsel for the Company and such counsel shall
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have been furnished with such certified copies of such corporate actions and
proceedings and such other instruments and documents as it shall have reasonably
requested.
SECTION 7.3. Additional Conditions to Oblig- ations of Transworld
and Newco to Effect the Merger.
The obligations of Transworld and Newco to effect the Merger are
also subject to each of the following conditions:
(a) The Company shall in all material respects have performed each
obligation to be performed by it hereunder on or prior to the Effective Time.
(b) The representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material respects at and as of
the Effective Time as if made at and as of such time, except for changes
contemplated by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct in all material
respects as of such date.
(c) Transworld shall have received a certificate of the Company,
dated the Closing Date, signed by the Chief Executive Officer of the Company, to
the effect that, to the best of the knowledge, information and belief of such
officer, the conditions specified in paragraphs (a) and (b) of this Section 7.3
have been fulfilled.
(d) There shall not have been any action taken, or any statute,
rule, regulation, or order enacted, promulgated, or issued or deemed applicable
to the Merger by any Federal or state government or governmental authority or
court, which would (i) prohibit the Surviving Corporation's or Transworld's
ownership or operation of all or a material portion of the Company's business or
assets, or compel the Surviving Corporation or Transworld to dispose of or hold
separate all or a material portion of the Company's business or assets, as a
result of the Merger; (ii) render Newco unable to consummate the Merger; (iii)
make such consummation illegal; or (iv) impose or confirm material limitations
on the ability of Transworld effectively to exercise full rights of ownership of
shares of the capital stock of the Surviving Corporation, including without
limitation, the right to vote any such shares on all matters properly presented
to the stockholders of the Surviving Corporation, and no such action shall have
been taken or any
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such statute, rule, regulation, or order enacted, promulgated, issued, or deemed
applicable to the Merger which in the reasonable judgment of Transworld will
produce such result.
(e) Transworld and Newco shall have received an opinion from
McDermott, Will & Emery, counsel to the Company, dated the Closing Date, in form
and substance reasonably satisfactory to Transworld and Newco, as to (i) the
valid existence and good standing of the Company and its Subsidiaries in their
respective jurisdictions of incorporation and qualification and good standing of
the Company and its Subsidiaries in certain foreign jurisdictions, (ii) the
corporate power and authority of the Company and its Subsidiaries to own their
properties and to conduct their business, (iii) the corporate power and
authority of the Company to execute and deliver this Agreement and the due
authorization thereof, (iv) the due execution and delivery and enforceability of
this Agreement, (v) the absence of conflicts with the Company's charter, bylaws
or material agreements, (vi) the absence of material consents or approvals
required to consummate the transactions contemplated by this Agreement, and
(vii) the absence of litigation regarding the transaction.
(f) All actions, proceedings, instruments, and documents required to
carry out the transactions contemplated hereby or incidental hereto and all
other related legal matters shall have been reasonably satisfactory to and
approved by counsel for Transworld and such counsel shall have been furnished
with such certified copies of such corporate actions and proceedings and such
other instruments and documents as it shall have reasonably requested.
(g) On or prior to the Closing Date, the Option Plans shall have
been terminated or arrangements for termination reasonably acceptable to
Transworld shall have been made.
(h) At or prior to the Effective Time that certain Stipulation of
Partial Settlement of the consolidated class actions under the caption In re
Health Management, Inc. Securities Litigation, Master File No. 96 Civ. 0889
(ADS) shall have been amended to provide for the settlement of such actions for
an aggregate cash payment of $7.2 million at the Effective Time, and such
settlement shall have been finally approved by the United States District Court.
(i) At or prior to December 12, 1996, (A) Transworld's lenders shall
have completed their due
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diligence investigation of the Company and the transactions contemplated by this
Agreement, the Stock Purchase Agreement, and the Registration Rights Agreement,
and such due diligence investigation and such transactions shall be satisfactory
in all respects to such lenders, (B) such lenders shall have consented to the
Merger and the Stock Purchase, and (C) such lenders shall have agreed to amend
Transworld's credit facility in order to lend, and shall have agreed to lend, to
Transworld the funds necessary for Transworld to consummate the Merger and the
Stock Purchase, all in the sole and absolute discretion of such lenders.
(j) At or prior to the Effective Time, the Company shall have
received waivers, in form and substance satisfactory to Transworld, from each
employee, director, officer, or consultant who is a party to any of the
agreements listed in Section 3.17(b) of the Disclosure Schedule and who will be
offered employment with the Surviving Corporation after the Effective Time, of
his or her rights under such Change of Control Provisions in such agreements.
(k) As of the Effective Time, the opinion of UBS Securities LLC
referred to in Section 2.9 hereof shall not have been modified or withdrawn.
(l) At or prior to the Effective Time, the outstanding convertible
debt of the Company (as disclosed in Section 3.3 of the Disclosure Schedule)
shall no longer be outstanding or the terms thereof shall have been amended to
provide that such convertible debt is no longer convertible into equity of the
Company on and after the Effective Time.
(m) At or prior to the Effective Time, the Company shall have
received all the consents or approvals required with respect to the items
described in Sections 3.5(a) and (b) of the Disclosure Schedule, except where
the failure to obtain such consents and approvals, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
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ARTICLE VIII
TERMINATION, AMENDMENT, AND WAIVER
SECTION 8.1. Termination.
(a) This Agreement may be terminated at any time prior to the
Effective Time, whether prior to or after approval hereof by the stockholders of
the Company:
(i) By mutual written consent duly authorized by the Boards of
Directors of Transworld and the Company;
(ii) By the Board of Directors of the Company acting on behalf
of the Company, if (x) a corporation, partnership, person, or other entity or
group shall have made a bona fide proposal that the Board of Directors believes,
in good faith after consultation with its outside legal counsel and financial
advisors, is more favorable to the Company's stockholders than the Merger (a
"Superior Proposal") and (y) Newco does not make, within five business days of
Newco's receiving notice of such third-party proposal, an offer that the Board
of Directors believes, in good faith after consultation with its outside legal
counsel and financial advisors, is at least as favorable to the Company's
stockholders as such Superior Proposal;
(iii) By Transworld if the Board of Directors of the Company
shall have withdrawn or modified in a manner adverse to Transworld or Newco its
approval or recommendation of this Agreement or the Merger or shall have
approved or recommended another offer or proposal;
(iv) By either Transworld or the Company if the Merger shall
not have been consummated by June 30, 1997, unless the absence of such
consummation shall be due to the failure of the party seeking to terminate this
Agreement (or its subsidiaries or affiliates) to perform its obligations under
this Agreement required to be performed by it at or prior to the Effective Time;
(v) By either Transworld or the Company, if at the Company
Stockholders Meeting (including any adjournment thereof), the stockholders of
the Company fail to approve and adopt this Agreement and the Merger;
(vi) By either Transworld or the Company if a United States or
state governmental authority, agency, or
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commission or United States or state court of competent jurisdiction shall have
issued an order, decree, or ruling or taken any other action (which order,
decree, ruling, or action the parties hereto shall use their best efforts to
lift), in each case permanently restraining, enjoining, or otherwise prohibiting
the Merger, and such order, decree, ruling, or action shall have become final
and non-appealable; or
(vii) (A) By Transworld, if the Company shall breach or fail
to perform in any material respect any of its material covenants or agreements
contained herein, or (B) by the Company, if Transworld or Newco shall breach or
fail to perform in any material respect any of their respective material
covenants or agreements contained herein.
(b) This Agreement may be terminated by Transworld, at any time
prior to 10 days after the Schedules Delivery Date (as defined in Section 9.11),
if Transworld in its sole discretion is not satisfied with the disclosures made
in the Deferred Schedules (as defined in Section 9.11) when delivered.
(c) This Agreement may be terminated by Transworld at any time on or
prior to December 16, 1996 if the condition set forth in Section 7.3(i) shall
not have been satisfied.
SECTION 8.2. Effect of Termination.
In the event of termination of this Agreement as provided in Section
8.1, there shall be no liability or further obligation on the part of any party
hereto except (i) as set forth in Sections 8.3 and 9.1 hereof and (ii) nothing
herein shall relieve any party from liability for any breach of this Agreement.
SECTION 8.3. Fees and Expenses.
(a) If this Agreement is terminated pursuant to Sections 8.1(a)(ii),
8.1(a)(iii), 8.1(a)(iv), 8.1(a)(v), 8.1(a)(vii)(A), or 8.1(b), and neither
Transworld nor Newco is in material breach of its material covenants and
agreements under this Agreement, the Company shall reimburse each of Transworld,
Newco, and their respective affiliates (not later than five days after
submission of statements therefor itemizing in reasonable detail such fees and
expenses) for all reasonable out-of-pocket expenses and fees (including, without
limitation, bank commitment fees, all reasonable fees and expenses of counsel,
accountants, experts, financial advisors, and consultants to Transworld
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and Newco and their lenders and financial advisors) incurred or required to be
paid by it or them or on its or their behalf in connection with all transactions
contemplated by this Agreement, the Stock Purchase Agreement, or the purchase by
Transworld of certain indebtedness of the Company.
(b) If this Agreement is terminated by the Company pursuant to
Section 8.1(a)(vii)(B) and the Company is not in material breach of its material
covenants and agreements under this Agreement, Transworld shall reimburse the
Company (not later than five days after submission of statements therefor
itemizing in reasonable detail such fees and expenses) for all reasonable
out-of-pocket expenses and fees (including, without limitation, filing fees, all
reasonable fees and expenses of printers, all reasonable fees and expenses of
NatWest and its counsel, and all reasonable fees and expenses of counsel,
accountants, experts, and consultants to the Company) incurred or required to be
paid by the Company or on its behalf in connection with the Merger and the
consummation of all transactions contemplated by this Agreement.
(c) Except as provided otherwise in Sections 8.3(a) and 8.3(b)
hereof, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses, and the costs of printing the Preliminary Proxy Material, Definitive
Proxy Material, and any other filings to be printed, and in each case all
exhibits, amendments, or supplements thereto shall be paid by the Company.
SECTION 8.4. Amendment.
This Agreement may be amended by the parties hereto by action taken
by or on behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after approval of the Merger by the
stockholders of the Company, no amendment may be made which would change the
Merger Consideration into which each share of Company Common Stock shall be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.5. Waiver.
At any time prior to the Effective Time, any party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pur-
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suant hereto, and (c) waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the parties hereto. The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Survival of Representations, War- ranties, and
Agreements.
The representations, warranties, and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Sections 1.7, 1.8, 1.9, 5.1, 6.7, 9.1, and 9.7 shall survive the
Effective Time indefinitely and those set forth in Sections 6.4(b) and (c), 6.7,
8.2, 8.3, 9.1, and 9.7 shall survive termination indefinitely.
SECTION 9.2. Notices.
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, if delivered personally or mailed by registered or certified
mail (postage prepaid, return receipt requested) or sent by Federal Express or
similar overnight delivery or courier service or by telecopy to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Transworld or Newco:
75 Terminal Avenue
Clark, New Jersey 07066
Attention: Vincent J. Caruso
with a copy to:
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036
Attention: Bruce L. Lieb, Esq.
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(b) if to the Company:
1371-A Abbott Court
Buffalo Grove, Illinois 60089
Attention: W. James Nicol
with a copy to:
McDermott, Will & Emery
50 Rockefeller Plaza
New York, New York 10020
Attention: Cheryl V. Reicin, Esq.
SECTION 9.3. Certain Definitions.
For purposes of this Agreement, the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;
(b) "beneficial owner" has the meaning in Rule
13d-3 under the Exchange Act;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise; and
(d) "person" means an individual, corporation,
partnership, association, trust, or any unincorporated
organization.
SECTION 9.4. Headings.
The headings contained in this Agreement and the Disclosure Schedule
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or the Disclosure Schedule.
SECTION 9.5. Entire Agreement.
This Agreement constitutes the entire agreement and supersedes all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof and, except as other-
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wise expressly provided herein, is not intended to confer upon any other person
any rights or remedies hereunder.
SECTION 9.6. Parties in Interest; Assignment.
This Agreement shall not be assigned by operation of law or
otherwise, except that Transworld and Newco may assign all or any of their
rights hereunder to a wholly-owned subsidiary of Transworld or of Newco or to
their lenders; provided, however, that no such assignment shall relieve the
assigning party of its obligations hereunder. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and such permitted
assigns of Transworld and Newco, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under this Agreement, except that any of the Indemnified
Parties shall be entitled after the Effective Time to enforce the provisions of
Section 5.1.
SECTION 9.7. Governing Law.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and
to be performed in that State, without regard to conflicts of laws, except that
Delaware Law shall apply to the Merger.
SECTION 9.8. Counterparts.
This Agreement may be executed in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 9.9. Severability.
If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
SECTION 9.10. Specific Performance.
Since a breach of the provisions of this Agreement could not
adequately be compensated by money damages, any party shall be entitled, in
addition to any other right or remedy available to it, to an injunction
restraining such breach or a threatened breach and to specific performance of
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any such provision of this Agreement, and in either case no bond or other
security shall be required in connection therewith, and the parties hereby
consent to the issuance of such injunction and to the ordering of specific
performance.
SECTION 9.11. Schedules.
It is acknowledged that the schedules listed in Section 9.11 of the
Disclosure Schedule are not being delivered in their entirety by the Company on
the date hereof (collectively, the "Deferred Schedules" and each, a "Deferred
Schedule"). The Company will use all reasonable best efforts promptly to deliver
to Transworld and Newco each Deferred Schedule, and the Company will have
delivered to Transworld and Newco all of the Deferred Schedules no later than 10
days after the date hereof. The date on which the last of the Deferred Schedules
is delivered to Transworld and Newco is referred to as the "Schedules Delivery
Date".
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IN WITNESS WHEREOF, Transworld, Newco, and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
TRANSWORLD HOME HEALTH CARE, INC.
By /s/ Vincent J. Caruso
--------------------------------
Name: Vincent J. Caruso
Title: Executive Vice President
IMH ACQUISITION CORP.
By /s/ Vincent J. Caruso
--------------------------------
Name: Vincent J. Caruso
Title: Executive Vice President
HEALTH MANAGEMENT, INC.
By /s/ Wm. James Nicol
--------------------------------
Name: Wm. James Nicol
Title: President & Chief Executive Officer
STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of November 13, 1996 (this "Agreement"), between
Health Management, Inc. (the "Company"), a Delaware corporation with offices at
1371-A Abbott Court, Buffalo Grove, Illinois 60089, and Transworld Home
HealthCare, Inc. (the "Purchaser"), a New York corporation with offices at 75
Terminal Avenue, Clark, New Jersey, 07066.
WHEREAS, the Boards of Directors of the Company and the Purchaser
have each approved an Agreement and Plan of Merger of even date herewith (the
"Merger Agreement") among the Company, the Purchaser, and a wholly-owned
subsidiary of the Purchaser ("Newco"), providing for the merger (the "Merger")
of Newco with and into the Company in accordance with the General Corporation
Law of the State of Delaware and upon the terms and subject to the conditions
set forth in the Merger Agreement;
WHEREAS, also in furtherance of such acquisition, the Purchaser is
today purchasing the rights of the Company's senior lenders under the Credit
Agreement dated as of March 31, 1995, as amended (the "Credit Agreement"), and
the Company, its subsidiaries, and the Purchaser are entering into a letter
agreement (the "Letter Agreement") relating to the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Purchaser and the Company hereby agree as follows:
ARTICLE I
Purchase and Sale of the Shares; Grant of Option
1.01 Agreement to Purchase and Sell. Subject to and in accordance
with the terms and conditions of this Agreement, on the Shares Closing Date (as
hereinafter defined), the Company shall sell to the Purchaser, and the Purchaser
shall purchase from the Company, 8,964,292 shares (the "Shares") of Common
Stock, par value $.03 per share (the "Company Common Stock"), of the Company. In
consideration of the issuance and sale of such Shares to the Purchaser, (i)
concurrently herewith (a) the Purchaser is entering into the Merger Agreement,
(b) the Purchaser is purchasing the rights of the Company's senior lenders under
the Credit Agreement, (c) the Purchaser is entering into the Letter Agreement
(which includes, among other things,
<PAGE>
certain limited forbearances), (d) the Purchaser is making additional revolving
credit loans to the Company in the amount of $3,000,000, and (e) the Purchaser
is causing to be cancelled rights to certain warrants to which the senior
lenders were entitled in connection with the Credit Agreement; and (ii) on the
Shares Closing Date (as hereinafter defined) the Purchaser shall pay to the
Company $8,964,292 (the "Cash Purchase Price").
1.02 The Closing. The closing (the "Shares Closing") of the purchase
and sale of the Shares shall take place at the offices of Proskauer Rose Goetz &
Mendelsohn LLP, 1585 Broadway, New York, New York at 10:00 a.m. on the later of
(i) December 12, 1996 and (ii) the day on which all the conditions set forth in
Article IV are satisfied or waived, or at such other place and time as the
parties shall agree (the time and date of the Shares Closing being herein
referred to as the "Shares Closing Date"). On the Shares Closing Date, the
Company will deliver to the Purchaser a certificate for the Shares registered in
the name of the Purchaser against delivery by the Purchaser to the Company of a
certified or bank check in the amount of the Cash Purchase Price payable to the
order of the Company or (at the Purchaser's election) by wire transfer;
provided, however, that the Purchaser shall be entitled to deduct as an offset
to the Cash Purchase Price all amounts loaned by the Purchaser to the Company on
or subsequent to the date hereof under the Credit Agreement and which are
outstanding on the Shares Closing Date (the amount of any such deduction to be
treated as a repayment first of the accrued interest on, and thereafter of the
outstanding principal amount of, the indebtedness under the Credit Agreement).
1.03 Option.
(a) The Company hereby grants to the Purchaser the option (the
"Option"), during the one-year period commencing on the Shares Closing Date (the
"Option Period"), to purchase up to an additional 746,713 shares (the
"Transworld Option Shares") of Company Common Stock at a cash purchase price of
$1.00 per Transworld Option Share (the "Exercise Price"), subject to adjustment
pursuant to Section 1.03(c).
(b) The Option may be exercised at any time or from time to
time during the Option Period by written notice delivered to the Company
pursuant to the provisions of Section 6.01 and shall specify the number of
Transworld Option Shares to be purchased. The closing of the Option exercise
(the "Option Closing") shall take place at the offices of Proskauer Rose Goetz &
Mendelsohn LLP, 1585 Broadway, New York, New York, at 10:00 a.m. on the fifth
Business Day after the giving of notice (the "Option Closing Date"). The number
of Transworld Option Shares being purchased at the Option Closing shall be
multiplied by the Exercise Price and the resulting total (the "Total Exercise
Price") shall be paid to the Company at the Option Closing by certified or bank
check payable to the order of the Company or
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(at the Purchaser's election) by wire transfer against delivery of certificates
representing the Transworld Option Shares so purchased, registered in the name
of the Purchaser; provided, however, that the Purchaser shall be entitled (to
the extent not previously offset as of the Shares Closing Date) to deduct as an
offset to the Total Exercise Price all amounts loaned by the Purchaser to the
Company on or subsequent to the date hereof under the Credit Agreement which are
outstanding on the Option Closing Date (the amount of any such deduction to be
treated as a repayment first of the accrued interest on, and thereafter of the
outstanding principal amount of, the indebtedness under the Credit Agreement).
(c) If, at any time within the Option Period, the Company
shall reclassify, split, reverse split, or pay a stock or cash dividend on any
of its securities, or if the Company shall be reorganized, or consolidated or
merged with another corporation, the Purchaser shall, at such time as it
exercises the Option, be entitled to receive the same number and kind of shares
of stock or other securities or property as it would have been entitled to
receive upon the occurrence of any of the events described in this Section
1.03(c), if it had exercised the Option and been a holder of shares of Company
Common Stock prior to such occurrence. Similarly, upon the occurrence of any of
the events described in this Section 1.03(c), the Exercise Price will be
adjusted accordingly, so that upon exercising the Option, the Purchaser will be
required to pay the same Total Exercise Price after the occurrence of such
event(s) as it would have paid prior thereto.
ARTICLE II
Representations, Warranties, Covenants,
and Agreements of the Company
2.01 Incorporation by Reference. The Company hereby makes to the
Purchaser all of the representations and warranties of the Company set forth in
Article III of the Merger Agreement and all of the covenants and agreements of
the Company set forth in Sections 4.1, 4.2, 4.4, 6.3, 6.4, 6.5, 6.6, and 9.11
(to the extent applicable to the period of time prior to the Shares Closing),
and 6.8 of the Merger Agreement, and all such provisions are hereby incorporated
in this Agreement as if such provisions, together with all definitions
applicable to such provisions, were set forth herein in their entirety, provided
that (i) when used herein references in the Merger Agreement to "this Agreement"
shall mean the Merger Agreement and references to the "Stock Purchase Agreement"
shall mean this Agreement and (ii) the covenants and agreements incorporated
herein from such Sections 4.1, 4.2, 4.4, 6.3, 6.4, 6.5, 6.6, and 6.8, for the
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purposes of this Agreement, shall terminate on the earlier of the effective date
of the Merger and June 30, 1997.
2.02 NASDAQ Notice. Promptly following the date hereof, the Company
shall take such action as may be necessary to comply with Section 6(i), Part
III, of Schedule D of the By-laws of the National Association of Securities
Dealers, Inc., including the mailing to its stockholders of the notice required
by such section.
2.03 Listing of Shares. Promptly following the date hereof, the
Company shall take all appropriate action to list on the NASDAQ/NMS (and any
other securities exchange on which the Common Stock is traded) the Shares and
the Option Shares upon notice of their issuance.
ARTICLE III
Representations, Warranties, and Agreements of the Purchaser
The Purchaser represents and warrants to, and agrees with, the
Company as follows:
3.01 Accredited Investor. The Purchaser is an "accredited investor,"
as that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933 (the "Securities Act"). The Purchaser has received all
requested documents from the Company and has had an opportunity to review
carefully such documents and to ask questions of and receive answers from the
officers of the Company concerning the Company and this offering of the Shares.
The Purchaser has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its investment.
3.02 Investment Intent. The Purchaser is acquiring the Shares for
its own account for investment and not with a view to, or for sale in connection
with, any public distribution thereof in violation of the Securities Act. The
Purchaser understands that the Shares have not been registered for sale under
the Securities Act or qualified under applicable state securities laws and that
the Shares are being offered and sold to the Purchaser pursuant to one or more
exemptions from the registration or qualification requirements of such
securities laws and that the representations and warranties contained in this
Article III are given with the intention that the Company may rely thereon for
purposes of claiming such exemptions. The Purchaser understands that it must
bear the economic risk of its investment in the Company for an indefinite period
of time, as the Shares cannot be sold unless subsequently registered under the
Securities Act and qualified under state securities laws, unless an exemption
from such registration and qualification is
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available. The Purchaser is not purchasing the Shares as a result of or pursuant
to any advertisement, article, notice, or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio.
3.03 Transfer of Shares. The Purchaser will not sell or otherwise
dispose of any of the Shares unless (a) a registration statement with respect
thereto has become effective under the Securities Act and such Shares have been
qualified under applicable state securities laws or (b) there is presented to
the Company notice of the proposed transfer and, if it so requests, a legal
opinion reasonably satisfactory to the Company that such registration and
qualification are not required. The Purchaser consents that the Company's
transfer agent may be instructed not to transfer any of the Shares unless it
receives satisfactory evidence of compliance with the foregoing provisions, and
that there may be endorsed upon any certificate representing the Shares (and any
certificates issued in substitution therefor) the following legend calling
attention to the foregoing restrictions on transferability of the Shares,
stating in substance:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER ANY STATE
SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS THEY HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION IS
AVAILABLE."
The Company shall issue a new stock certificate without such legend if (i) the
security evidenced by such certificate has been effectively registered under the
Securities Act and qualified under any applicable state securities law and sold
by the Purchaser or the holder thereof in accordance with such registration and
qualification or (ii) the Purchaser or such holder shall have delivered to the
Company a legal opinion reasonably satisfactory to the Company to the effect
that the restrictions set forth herein are no longer required or necessary under
the Securities Act or any applicable state law.
3.04 Authorization. All actions on the part of the Purchaser
necessary for the authorization, execution, delivery, and performance by the
Purchaser of this Agreement have been taken. This Agreement has been duly
authorized, executed, and delivered by the Purchaser, is the legal, valid, and
binding obligation of the Purchaser, and is enforceable as to such Purchaser in
accordance with its terms.
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ARTICLE IV
Conditions to Closing
4.01 Conditions Precedent to the Company's Obligations. The
obligation of the Company to consummate the sale of the Shares or the Transworld
Option Shares is subject to the fulfillment, prior to or on the Shares Closing
Date or the Option Closing Date, as the case may be, of each of the following
conditions, any one or more of which may be waived in writing by the Company:
(a) Representations and Warranties True. All of the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects as of the Shares Closing Date
or the Option Closing Date, as the case may be, except for changes contemplated
by this Agreement and except to the extent that any such representation or
warranty is made as of a specified date, in which case such representation or
warranty shall have been true and correct in all material respects as of such
date.
(b) Litigation. There shall be no injunction, restraining
order, or other order of any nature, issued by a court of competent
jurisdiction, which shall direct that this Agreement or any of the transactions
contemplated hereby not be consummated as herein provided.
(c) Compliance Certificate. The President or any Vice
President of the Purchaser shall have delivered to the Company at the Shares
Closing a certificate certifying that the representations and warranties of the
Purchaser contained in Article III are true and correct in all material respects
as of the Shares Closing Date.
4.02 Conditions Precedent to the Purchaser's Obligations. The
obligation of the Purchaser to consummate the purchase of the Shares is subject
to the fulfillment prior to or on the Shares Closing Date of each of the
following conditions, any one or more of which may be waived in writing by the
Purchaser:
(a) Representations and Warranties. All of the representations
and warranties of the Company contained in this Agreement and the Merger
Agreement shall be true and correct in all material respects as of the Shares
Closing Date as if made on and as of the Shares Closing Date, except for changes
contemplated by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct in all material
respects as of such date.
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(b) Performance. The Company shall have performed and complied
in all material respects with all agreements, covenants, obligations and
conditions contained in this Agreement and the Merger Agreement that are
required to be performed or complied with by it on or before the Shares Closing
Date.
(c) Compliance Certificate. The Chief Executive Officer of the
Company shall have delivered to the Purchaser at the Shares Closing a
certificate certifying that the conditions specified in paragraphs (a) and (b)
of this Section 4.02 have been fulfilled.
(d) Litigation. There shall be no injunction, restraining
order, or other order of any nature, issued by a court of competent
jurisdiction, which shall direct that this Agreement or any of the transactions
contemplated hereby not be consummated as herein provided.
(e) Registration Rights Agreement. The Company shall have
executed and delivered to the Purchaser the Registration Rights Agreement,
substantially in the form annexed hereto as Exhibit A.
(f) Legal Matters. All actions, proceedings, instruments, and
documents required to consummate the transactions contemplated herein and all
other related legal matters shall have been approved by counsel to the
Purchaser, and the Purchaser shall have received the opinion of McDermott, Will
& Emery, counsel to the Company, dated the Shares Closing Date, in form and
substance reasonably satisfactory to the Purchaser, as to (i) the valid
existence and good standing of the Company and its subsidiaries in their
respective jurisdictions of incorporation and qualification and good standing of
the Purchaser and its subsidiaries in certain foreign jurisdictions, (ii) the
corporate power and authority of the Company to own its properties and to
conduct its business, (iii) the corporate power and authority of the Company to
execute and deliver this Agreement and the Registration Rights Agreement and the
due authorization thereof, (iv) the due execution and delivery and
enforceability of this Agreement and the Registration Rights Agreement, (v) the
absence of conflicts with the Company's charter, bylaws, or material agreements,
(vi) the absence of consents or approvals required to consummate the
transactions contemplated by this Agreement and the Registration Rights
Agreement, (vii) the absence of litigation regarding this Agreement or the
Registration Rights Agreement or any actions taken hereunder or thereunder,
(viii) the authorized capital stock of the Company, and (ix) the due and valid
issuance, authorization, and non-assessable nature of the Shares and the
Transworld Option Shares.
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(g) Additional Conditions. The conditions set forth in Section
7.1(b) (with the reference to "hereby" being construed as a reference to this
Agreement) and Section 7.3(a), (b), (d), (i) and (j) of the Merger Agreement
shall have been satisfied (with all references therein to the "Effective Time"
being deemed to be references to the "Shares Closing Date"), and that certain
Stipulation of Partial Settlement of the consolidated class actions under the
caption In re Health Management, Inc. Securities Litigation, Master File No. 96
Civ. 0889 (ADS) shall have been amended to provide for the settlement of such
actions for an aggregate cash payment of $7.2 million at the effective time of
the Merger, and such settlement shall have been preliminarily approved by the
United States District Court.
ARTICLE V
Termination
5.01 Termination Prior to Shares Closing. This Agreement may be
terminated at any time prior to the Shares Closing:
(a) by the mutual consent of the Purchaser and the Company;
(b) by the giving of notice by the Purchaser at any time after
December 31, 1996 (or such later date as shall have been agreed to in writing by
the parties hereto), if at the time notice of such termination is given the
Shares Closing shall not have been consummated (other than by reason of the
Purchaser's breach or failure to perform in any material respect any of its
covenants or agreements contained herein); or
(c) (i) by the Purchaser, if there has been a material
misrepresentation or material breach on the part of the Company in any of the
representations, warranties, covenants or agreements of the Company set forth
herein or in the Merger Agreement, or if there has been any material failure on
the part of the Company to comply with its obligations hereunder or under the
Merger Agreement, or (ii) by the Company, if there has been a material
misrepresentation or material breach on the part of the Purchaser in any of the
representations, warranties, covenants or agreements of the Purchaser set forth
herein or in the Merger Agreement, or if there has been any material failure on
the part of the Purchaser to comply with its obligations hereunder or under the
Merger Agreement.
5.02 Liability Upon Termination.
(a) In the event of termination of this Agreement pursuant to
Sections 5.01(a) or 5.01(b) no party hereto shall
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have any liability or further obligation to any other party hereto except as
provided in Section 6.04.
(b) In the event of termination pursuant to Section 5.01(c),
(i) all costs and expenses shall be allocated as set forth in Section 6.04, and
(ii) the non-breaching party shall have the right to pursue all rights and
remedies available to it hereunder or otherwise provided at law or equity,
including without limitation, the right to seek specific performance and money
damages.
ARTICLE VI
Miscellaneous
6.01 Communications. All notices or other communications hereunder
shall be in writing and shall be given by registered or certified mail (postage
prepaid and return receipt requested), by personal delivery, by an overnight
courier service which obtains a receipt to evidence delivery, or by telex or
facsimile transmission (provided that written confirmation of receipt is
provided), to the addresses of the parties hereto set forth in the preamble
hereof or such other address as any party may designate to the other in
accordance with the aforesaid procedure. All notices and other communications
sent by overnight courier service shall be deemed to have been given as of the
second Business Day after delivery thereof to such courier service, those given
by personal delivery shall be deemed given when delivered, those given by telex
or facsimile transmission shall be deemed given when sent, and all notices and
other communications sent by mail shall be deemed given as of the third Business
Day after the date of deposit in the United States mail. As used herein,
"Business Day" shall mean any day other than Saturday, Sunday, or any other day
when banks in New York City are required or permitted to be closed.
6.02 Successors and Assigns. The Company may not sell, assign,
transfer, or otherwise convey any of its rights or delegate any of its duties
under this Agreement. This Agreement (including the Option) shall be binding
upon and inure to the benefit of and be enforceable by the Purchaser and its
successors and assigns. Without limiting the foregoing, the Purchaser and its
successors and assigns may assign their rights hereunder to their bank lenders.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement.
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6.03 Amendments and Waivers. Neither this Agreement nor any term
hereof may be changed or waived (either generally or in a particular instance
and either retroactively or prospectively) absent the written consent of the
Company and the Purchaser.
6.04 Expenses. (a) If this Agreement is terminated pursuant to
Section 5.01(b) or clause (i) of Section 5.01(c) the Company shall reimburse the
Purchaser for all reasonable out-of-pocket expenses and fees (including, without
limitation, bank commitment fees, all reasonable fees and expenses of counsel,
accountants, experts, financial advisors, and consultants to the Purchaser and
their lenders and financial advisors) incurred or required to be paid by it or
on its behalf in connection with this Agreement and the transactions
contemplated hereby.
(b) If this Agreement is terminated by the Company pursuant to
clause (ii) of Section 5.01(c) the Purchaser shall reimburse the Company for all
reasonable out-of-pocket expenses and fees (including, without limitation, all
reasonable fees and expenses of counsel, accountants, experts, and consultants
to the Company) incurred or required to be paid by the Company or on its behalf
in connection with this Agreement and the consummation of the transactions
contemplated hereby.
(c) Except as provided otherwise in Sections 6.04(a) and 6.04(b)
hereof, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses.
6.05 Survival of Representations, Etc. The representations,
warranties, covenants, and agreements made herein (including those that are
incorporated herein by reference) or in any certificate or document executed in
connection herewith shall survive the execution and delivery of this Agreement
and the issuance and delivery of the Shares. For purposes of this Agreement, the
provisions in the Merger Agreement which are incorporated by reference in this
Agreement shall survive the termination of the Merger Agreement or the
abandonment of the Merger. Neither any investigation by or on behalf of the
Purchaser, nor the receipt by the Purchaser of any data or information from the
Company, shall in any way affect the right of the Purchaser to rely on the
representations, warranties, covenants, and agreements of the Company or the
right of the Purchaser to terminate this Agreement as provided in Article V.
6.06 Delays or Omissions; Waiver. No delay or omission to exercise
any right, power, or remedy accruing to either the Company or the Purchaser upon
any breach or default by the other under this Agreement shall impair any such
right, power, or remedy nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein or in any similar breach or
default thereafter occurring; nor shall any waiver of
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any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.
6.07 Entire Agreement. This Agreement and the exhibits hereto
contain the entire understanding of the parties with respect to the subject
matter hereof and all prior negotiations, discussions, commitments, and
understandings heretofore had between them with respect thereto are merged
herein and therein.
6.08 Headings. All article and section headings herein are inserted
for convenience only and shall not modify or affect the construction or
interpretation of any provision of this Agreement.
6.09 Counterparts; Governing Law. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to rules governing the conflict of laws.
6.10 Further Actions. At any time and from time to time, each party
agrees, without further consideration, to take such actions and to execute and
deliver such documents as may be reasonably necessary to effectuate the purposes
of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed on the
date hereinabove set forth.
HEALTH MANAGEMENT, INC.
By /s/ Wm. James Nicol
---------------------------------
Name: Wm. James Nicol
Title: President & Chief Executive Officer
TRANSWORLD HOME HEALTHCARE, INC.
By /s/ Vincent J. Caruso
---------------------------------
Name: Vincent J. Caruso
Title: Executive Vice President
Exhibit A - Registration Rights Agreement
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
_____________, 199_ between Health Management, Inc., a Delaware corporation (the
"Company"), and Transworld Home HealthCare, Inc., a New York corporation (the
"Investor").
RECITALS:
A. Concurrently with the execution of this Agreement, the Investor
is acquiring from the Company 8,964,292 shares of common stock, par value $.03
per share of the Company (the "Common Shares") and an option to purchase an
additional 746,713 Common Shares pursuant to that certain Stock Purchase
Agreement dated November 13, 1996 between the parties hereto (the "Purchase
Agreement").
B. By entering into this Agreement, the Company wishes to provide a
further inducement to the Investor to purchase the Common Shares pursuant to the
Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties agree
as follows:
1. Definitions. For purposes of this Agreement:
(a) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(b) "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
(c) "Holder" means any Person owning or having the right to
acquire Registrable Securities, or any assignee thereof in accordance with
Section 11.
(d) "Initiating Holders" means the Holder(s) initiating a
registration request under Section 2.
(e) "majority in interest of the Initiating Holders" means
Initiating Holders holding a majority of the Registrable Securities held by all
Initiating Holders.
<PAGE>
(f) "Person" means any individual, partnership, joint venture,
corporation, association, trust or any other entity or organization.
(g) "Qualifying Request" means a request from the Investor or
any of its affiliates or assignees that in the aggregate possess at least fifty
percent (50%) of the Registrable Securities outstanding as of the date of such
request.
(h) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(i) "Registrable Securities" means (1) any Common Shares now
or hereafter owned by the Investor, including without limitation, any Common
Shares purchased pursuant to the Purchase Agreement, (2) any Common Shares
issuable or issued upon conversion or exercise of any warrant, right or other
security now or hereafter owned by the Investor, and (3) any Common Shares
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, or upon conversion of, such Common
Shares, warrants, rights or other securities owned by the Investor; provided,
however, that any Common Shares sold by a Person in a transaction in which such
Person's rights under this Agreement are not assigned pursuant to Section 11
below shall cease to be Registrable Securities from and after the time of such
sale.
(j) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of Common Shares outstanding, and
the number of Common Shares issuable, which are Registrable Securities.
(k) "SEC" means the Securities and Exchange Commission.
(l) "Securities Act" means the Securities Act of 1933, as
amended.
(m) "Violation" means any of the following statements,
omissions or violations: (i) any untrue statement or alleged untrue statement of
a material fact contained in a registration statement under this Agreement,
including any preliminary prospectus or final prospectus contained in such
registration statement or any amendments or supplements thereto or any documents
filed under state securities or "blue sky" laws in connection therewith, (ii)
the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the
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Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law.
2. Request for Registration.
(a) If, after the earlier of June 30, 1997 and the date on
which the Agreement and Plan of Merger among the Company, the Investor, and IMH
Acquisition Corp. is terminated, the Company shall receive a written Qualifying
Request that the Company file a registration statement under the Securities Act,
then the Company shall, within ten (10) days of the receipt thereof, give
written notice of such request to all Holders and shall, subject to the
limitations of Section 2(b) below, file as soon as practicable, and in any event
within sixty (60) days of the receipt of such request, a registration statement
and shall use its best efforts to cause such registration statement to be
declared effective as expeditiously as is reasonably practicable, the
registration under the Securities Act of all Registrable Securities which the
Holders request to be registered within twenty (20) days of the mailing of such
notice by the Company in accordance with Section 19 below.
(b) If Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2
and the Company shall include such information in the written notice referred to
in Section 2(a). In such event, the right of any Holder to include such Holder's
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. A majority in interest of the Initiating Holders shall select
the managing underwriter or underwriters in such underwriting. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in Section 4(f)) enter into an
underwriting agreement in customary form with the underwriter or underwriters so
selected for such underwriting by a majority in interest of the Initiating
Holders; provided, however, that no such Holder shall be required to make any
representations or warranties except as they relate to such Holder's ownership
of shares and authority to enter into the underwriting agreement and to such
Holder's intended method of distribution, and the liability of such Holder shall
be limited to an amount equal to the net proceeds from the offering received by
such Holder. Notwithstanding any other provision of this Section 2, if the
managing underwriter advises the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Initiating
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Holders shall so advise the Company and the Company shall so advise all Holders
of Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each such Holder. Except for
Common Shares subject to piggy-back registration rights set forth on Schedule A
hereto ("Piggy-Back Shares"), no securities other than Registrable Securities
shall be covered by such registration and, to the extent not inconsistent with
any existing agreements to which the Company is a party, such Piggy-Back Shares
shall be covered by such registration only if and to the extent that the
managing underwriter advises the Initiating Holders that the inclusion of such
Piggy-Back Shares will not adversely affect the marketing of the Registrable
Securities being registered and sold in such offering.
(c) The Company shall be obligated to effect only three (3)
registrations pursuant to this Section 2 (except as otherwise provided in
Section 6 hereof, registrations that do not result in an effective registration
statement shall not be counted for this purpose); provided, however, that the
Company shall be obligated to effect as many registrations as may be requested
by Holders in the event and so long as a registration pursuant to Form S-3 or
any similar "short-form" registration statement is available. Any Qualifying
Request made after three (3) registrations have been consummated pursuant to
this Section 2 shall cover Registrable Securities which, together with other
securities of the Company entitled to be included in such registration, are
proposed to be sold at an aggregate price to the public of not less than two
million dollars ($2,000,000). The Company shall not be obligated to effect more
than two (2) registrations pursuant to this Section 2 in any twelve (12) month
period or more than one (1) registration pursuant to this Section 2 in any six
(6) month period.
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
2, a certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration statement
to be filed by reason of a material pending transaction and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than ninety (90)
days after receipt of the request of the Initiating Holders; provided, however,
that the Company may not utilize this right more than once in any twelve (12)
month period.
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3. Company Registration. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock or other securities under the Securities Act in connection with the public
offering of such securities solely for cash (other than a registration on Form
S-8 relating solely to the sale of securities to participants in a Company stock
plan or to other compensatory arrangements to the extent includable on Form S-8,
or a registration on Form S-4), the Company shall, at such time, promptly give
each Holder written notice of such registration. Upon the written request of
each Holder given within twenty (20) days after mailing of such notice by the
Company in accordance with Section 19, the Company shall, subject to the
provisions of Section 8, use its best efforts to cause to be registered under
the Securities Act all of the Registrable Securities that each such Holder has
requested to be registered. The Company shall have no obligation under this
Section 3 to make any offering of its securities, or to complete an offering of
its securities that it proposes to make, and shall incur no liability to any
Holder for its failure to do so.
4. Obligations of the Company. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities being registered thereunder,
keep such registration statement effective for up to one hundred twenty (120)
days or until the Holders have completed the distribution referred to in such
registration statement, whichever occurs first (but in any event for at least
any period required under the Securities Act) (such period, the "Effective
Period"); provided that before filing such registration statement or any
amendments thereto, the Company will furnish to the Holders copies of all such
documents proposed to be filed.
(b) During any Effective Period, prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement.
(c) Furnish to the Holders such number of copies of such
registration statement and of each amendment and supplement thereto (in each
case including all exhibits), such number of copies of the prospectus contained
in such registration statement (including each preliminary prospectus and any
summary
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prospectus) and any other prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the Securities Act, and such other
documents as Holders may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
(d) Use diligent efforts to register and qualify the
securities covered by such registration statement under such other securities or
"blue sky" laws of such states or other domestic jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto (i) to qualify to do
business in any state or jurisdiction where it would not otherwise be required
to qualify but for the requirements of this clause (d), (ii) to file a general
consent to service of process in any such state or jurisdiction or (iii) subject
itself to taxation in any such state or jurisdiction.
(e) Use diligent efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
Company's business or operations to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities.
(f) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering.
(g) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, in which event, upon receipt of any such notice, each Holder agrees to
forthwith discontinue disposition of Registrable Securities until the Holder has
received copies of an amended or supplemented prospectus such that, as
thereafter delivered to purchasers of Registrable Securities, such prospectus
will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading in light of the circumstances then existing. The Company
agrees that after giving such notice to the Holders, it will use its best
efforts to fulfill its obligations under Section 4(b) and to deliver such
amended or supplemented prospectuses to the Holders.
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(h) Notify each Holder of Registrable Securities covered by
such registration statement and such Holder's underwriters, if any, and confirm
such advice in writing: (i) when the registration statement has become
effective, (ii) when any post-effective amendment to the registration statement
becomes effective and (iii) of any request by the SEC for any amendment or
supplement to the registration statement or prospectus or for additional
information, in which event, in the case of this clause (iii), each Holder
agrees upon receipt of any such notice, to forthwith discontinue disposition of
Registrable Securities until such amendment or supplement to the registration
statement has been declared effective by the SEC and the Holder has received
copies of an amended or supplemented prospectus. The Company agrees that after
giving such notice to the Holders, it will use its best efforts to fulfill its
obligations under Section 4(b) and to deliver such amended or supplemented
prospectuses to the Holders.
(i) Notify each Holder of Registrable Securities if at any
time the SEC should institute or threaten to institute any proceedings for the
purpose of issuing, or should issue, a stop order suspending the effectiveness
of the Registration Statement. Upon the occurrence of any of the events
mentioned in the preceding sentence, the Company will use diligent efforts to
prevent the issuance of any such stop order or to obtain the withdrawal thereof
as soon as possible. The Company will advise each Holder of Registrable
Securities promptly of any order or communication of any public board or body
addressed to the Company suspending or threatening to suspend the qualification
of any Registrable Securities for sale in any jurisdiction. In the event of any
such stop order or suspension, each Holder shall forthwith discontinue
disposition of Registrable Securities until such stop order or suspension has
been lifted.
(j) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Agreement, (i) on the
date that such Registrable Securities are delivered to the underwriters for sale
in connection with a registration pursuant to this Agreement, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) on the date that the
registration statement with respect to such securities becomes effective, a
"comfort" letter dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the
7
<PAGE>
underwriters, if any, and to the Holders requesting registration of Registrable
Securities, and, if such securities are being sold through underwriters, a
reaffirmation of such letter on the date that such Registrable Securities are
delivered to the underwriters for sale.
(k) As soon as practicable after the effective date of the
registration statement, and in any event within sixteen (16) months thereafter,
have "made generally available to its security holders" (within the meaning of
Rule 158 under the Securities Act) an earning statement (which need not be
audited) covering a period of at least twelve (12) months beginning after the
effective date of the registration statement and otherwise complying with
Section 11(a) of the Securities Act.
5. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities. If any registration statement or comparable statement under the
Securities Act refers to the Investor or any of its affiliates, by name or
otherwise, as the holder of any securities of the Company then, unless counsel
to the Company advises the Company that the Securities Act requires that such
reference be included in any such statement, each such holder shall have the
right to require the deletion of such reference to itself and its affiliates.
6. Expenses of Demand Registration. All expenses, other than
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 2, including
without limitation all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel (selected by the Holders of a
majority of the Registrable Securities being registered) for the selling Holders
shall be borne by the Company; provided, however, that the Company shall not be
required to bear such expenses in connection with any registration begun
pursuant to Section 2 if the registration request subsequently is withdrawn at
the request of the Holders of a majority of Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses pro
rata), unless the Holders of a majority of Registrable Securities then
outstanding agree to forfeit one (1) demand registration pursuant to Section 2;
provided further, however, that if at the time of such withdrawal, (a) the
Holders have learned of a material adverse change in the condition (financial or
otherwise), business or prospects of the Company from that known to the Holders
at the time of their request or (b) there has
8
<PAGE>
occurred a material adverse change in marketing factors related to the sale of
Registrable Securities to the public from those existing at the time of the
Holders' request, then the Holders shall not be required to pay any such
expenses and shall retain their rights pursuant to Section 2.
7. Expenses of Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 3 for each Holder, including without limitation all
registration, filing and qualification fees, printers' and accounting fees
relating or apportionable thereto and the fees and disbursements of one counsel
for the selling Holders (selected by the Holders of a majority of the
Registrable Securities being registered), but excluding underwriting discounts
and commissions relating to Registrable Securities.
8. Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 3 to include any of the Holders' securities
in such underwriting unless they accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it, and then only in
such quantity as will not, in the opinion of the underwriters, jeopardize the
success of the offering by the Company; provided however that no Holder
participating in such underwriting shall be required to make any representations
or warranties except as they relate to such Holder's ownership of shares and
authority to enter into the underwriting agreement and to such Holder's intended
method of distribution, and the liability of such Holder shall be limited to an
amount equal to the net proceeds from the offering received by such Holder. If
the total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters believe will not jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among the selling stockholders according to the total amount of securities
entitled to be included therein owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by such selling stockholders);
provided that, if any selling stockholder has the right to include its shares in
such offering on terms or in an amount more favorable than provided herein, then
each Holder shall have the right to participate along with such selling
stockholder(s) in such offering on such more favorable terms (i) pro rata based
upon the total amount of securities entitled to be included therein owned by
each such selling stockholder and the aggregate number of Registrable Securities
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<PAGE>
held by such Holder or (ii) in such other proportions as shall mutually be
agreed to by such selling stockholders and the Holders of a majority of the
Registrable Securities requested to be included in such offering).
9. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, its heirs, personal representatives and assigns,
each of such Holder's stockholders, each of such Holder's, and each of such
Holder's stockholders, officers, directors, employees, partners and affiliates,
any underwriter (as defined in the Securities Act) for such Holder and each
Person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act or the Exchange Act against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon a Violation (provided, however, that the Company will not
be required to indemnify any of the foregoing Persons on account of any losses,
claims, damages or liabilities arising from a Violation if and to the extent
that such Violation was made in a preliminary prospectus and was corrected in a
subsequent prospectus that was required by law to be delivered to the Person
making the claim with respect to which indemnification is sought hereunder (and
such subsequent prospectus was made available by the Company to permit delivery
of such prospectus in a timely manner), and such subsequent prospectus was not
so delivered to such Person); and the Company will pay to each such indemnified
party, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case to a particular indemnified
party for any such loss, claim, damage, liability or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by such indemnified party.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each Person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other
10
<PAGE>
Holder selling securities in such registration statement and any controlling
Person of any such underwriter or other Holder, against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing Persons
may become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
Person intended to be indemnified pursuant to this Section 9(b), in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld; and
provided further, that, in no event shall the liability of any Holder under this
Section 9(b) exceed the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be, in the opinion of the
indemnified party's counsel, inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 9 except if, and only to the extent that,
the indemnifying party is actually prejudiced thereby; and such failure to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 9.
11
<PAGE>
(d) The obligations of the Company and Holders under this
Section 9 shall survive the completion of any offering of Registrable Securities
in a registration statement under this Agreement, and otherwise.
(e) Any indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party.
(f) If for any reason the foregoing indemnity is unavailable,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such losses, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other (taking into consideration the fact that the provision of the
registration rights and indemnification hereunder is a material inducement to
the Investor to purchase Registrable Securities pursuant to the Purchase
Agreement) or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, in such proportion as is appropriate to
reflect not only the relative benefits received by the indemnifying party on the
one hand (taking into consideration the fact that the provision of the
registration rights and indemnification hereunder is a material inducement to
the Investor to purchase Registrable Securities pursuant to the Purchase
Agreement) and the indemnified party on the other but also the relative fault of
the indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Notwithstanding anything to the
contrary in this Section 9, no Holder shall be required, pursuant to this
Section 9, to contribute any amount in excess of the net proceeds received by
such indemnifying party from the sale of Common Shares in the offering to which
the losses, claims, damages, liabilities or expenses of the indemnified party
relate.
10. Reports Under the Exchange Act. With a view to making available
to the Holders the benefits of Rule 144 under
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<PAGE>
the Securities Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) use diligent efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times;
(b) take such reasonable actions as are necessary to enable
the Holders to utilize Form S-3 for the sale of their Registrable Securities;
(c) use diligent efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 under
the Securities Act or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time it so qualifies), (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.
11. Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Agreement may be
assigned in whole or in part by a Holder to one or more of its affiliates or to
one or more transferees or assignees of not less than twenty-five percent (25%)
of all Registrable Securities acquired by the Holder pursuant to the Purchase
Agreement, provided that such transferee or assignee delivers to the Company a
written instrument by which such transferee or assignee agrees to be bound by
the obligations imposed on Holders under this Agreement to the same extent as if
such transferee or assignee was a party hereto. Each Holder shall give prompt
written notice to the Company of any assignment under this Section 11. Notice of
any assignment shall include the notice information for the assignee.
12. Limitations on Subsequent Registration Rights; Existing
Registration Rights. From and after the date of this Agreement, the Company
shall not, without the prior written consent of the Holders of a majority of the
outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow such
holder or prospective holder (a) to include such securities in any registration
filed under this Agreement, unless
13
<PAGE>
under the terms of such agreement, such holder or prospective holder may include
such securities in any such registration only to the extent that the inclusion
of such Holder's securities will not reduce the amount of the Registrable
Securities of the Holders which is included or (b) to request a registration.
The Company represents and warrants to the Holders that all "registration
rights" relating to securities of the Company that exist on the date hereof are
listed on Schedule A attached hereto.
13. "Market Stand-Off" Agreement. Each Holder hereby agrees that,
during the period of ninety (90) days following the effective date of a
registration statement of the Company filed under the Securities Act in
connection with an underwritten offering, it shall not, to the extent requested
by the Company and such underwriter, sell or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any Registrable
Securities of the Company held by it which are of a similar class as the
Registrable Securities included in such registration, except Registrable
Securities included in such registration; provided, however, that:
(a) such agreement shall be applicable only to a registration
statement initiated by the Company which covers Common Shares (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers and directors of the Company and all other
Persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements.
14. Amendment; Waiver. Any provision of this Agreement may be
amended only with the written consent of the Company and the Holders of a
majority of the Registrable Securities then outstanding, which amendment shall
be binding upon all Holders. The observance of any provision of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the party to be
charged, provided that the holders of a majority of the Registrable Securities
then outstanding may act on behalf of all such holders. Any amendment or waiver
effected in accordance with this Section 14 shall be binding upon each holder of
Registrable Securities at the time outstanding, each future holder of all such
securities, and the Company.
15. Changes in Registrable Securities. If, and as often as, there
are any changes in the Registrable Securities by way of stock split, stock
dividend, combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions of this Agreement, as may be
required, so that the rights and privileges
14
<PAGE>
granted hereby shall continue with respect to the Registrable Securities as so
changed. Without limiting the generality of the foregoing, the Company will
require any successor by merger or consolidation to assume and agree to be bound
by the terms of this Agreement, as a condition to any such merger or
consolidation unless such merger or consolidation is with the Investor or a
wholly-owned subsidiary thereof.
16. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement among the parties with regard to the subject matter
hereof. Nothing in this Agreement, express or implied, is intended to confer
upon any Person, other than the parties hereto and their respective successors
and assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided herein.
17. Governing Law. This Agreement shall be governed in all respects
by the laws of the State of New York as such laws are applied to agreements
between New York residents entered into and to be performed entirely within New
York, whether or not all parties hereto are residents of New York.
18. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, permitted assigns, heirs, executors and administrators of
the parties hereto.
19. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon receipt by the party to be notified or one (1) day after
deposit with an overnight courier service or three (3) days after deposit with
the United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified (a) if to a party other than the
Company, at such party's address set forth at the end of this Agreement or at
such other address as such party shall have furnished the Company in writing,
or, until any such party so furnishes an address to the Company, then to and at
the address of the last holder of the shares covered by this Agreement who has
so furnished an address to the Company, or (b) if to the Company, at its address
set forth at the end of this Agreement, or at such other address as the Company
shall have furnished to the parties in writing.
20. Severability. Any invalidity, illegality or limitation on the
enforceability of this Agreement or any part thereof, by any party whether
arising by reason of the law of the respective party's domicile or otherwise,
shall in no way affect or impair the validity, legality or enforceability of
this Agreement with respect to other parties. If any provision of this Agreement
shall be judicially determined to be invalid,
15
<PAGE>
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
21. Titles and Subtitles. The titles of the Sections
of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
22. Delays or Omissions; Remedies Cumulative. It is agreed that no
delay or omission to exercise any right, power or remedy accruing to the
parties, upon any breach or default of the Company under this Agreement, shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach or default, or any acquiescence therein, or of any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. It is further agreed that any waiver, permit, consent
or approval of any kind or character by a party of any breach or default under
this Agreement, or any waiver by a party of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to a party, shall be cumulative and
not alternative.
23. Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
24. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
"Company"
HEALTH MANAGEMENT, INC.
Address:
1371-A Abbott Court
Buffalo Grove, IL 60089 By: ______________________________
Name:
Title:
"Investor"
TRANSWORLD HOME HEALTHCARE, INC.
Address:
75 Terminal Avenue
Clark, New Jersey 07066 By: _______________________________
Name:
Title:
17
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PURCHASE AND SALE AGREEMENT
Dated as of November 12, 1996
Between
THE CHASE MANHATTAN BANK
as Seller
and
TRANSWORLD HOME HEALTHCARE, INC.
as Buyer
================================================================================
<PAGE>
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of November 12, 1996 (the
"Agreement") between The Chase Manhattan Bank, a New York State banking
corporation (in its capacities both as a lender and as agent under the Credit
Agreement referred to below, the "Seller") and Transworld Home HealthCare, Inc.,
a New York corporation ("Buyer").
RECITALS
A. Capitalized terms used herein which are not defined in the Recitals
shall have the meanings set forth in Section 1 of this Agreement.
B. Health Management, Inc., Home Care Management, Inc., HMI Illinois, Inc.
and HMI Pennsylvania, Inc. (the "Borrowers") are parties to that certain Credit
Agreement dated as of March 31, 1995 (as heretofore amended, restated,
supplemented or otherwise modified, the "Credit Agreement") among the Borrowers,
the guarantors named therein, European American Bank and the Seller, in its
individual capacity and as agent for the Lenders thereunder.
C. Pursuant to the Credit Agreement: (A) the Lenders agreed (i) to make
Revolving Credit Loans available to the Borrowers; (ii) to make and to permit to
remain outstanding the Term Loan; and (iii) to purchase participations in
Letters of Credit issued by the Agent; and (B) the Agent agreed to issue
Letters of Credit.
D. Set forth in Schedule 1 annexed hereto is a complete and accurate list
of all material documents (including all amendments, supplements, modifications,
waivers and terminations relating thereto) that evidence or govern the Assigned
Interests (such documents shall for purposes of this Agreement be referred to as
the "Loan Documents")
E. (i) As of the Closing Date, the Seller, in its capacity as a Lender, is
the sole legal and beneficial owner of:
(a) $9,609,666.66 in aggregate outstanding principal amount of
Revolving Credit Loans (the "Seller's Revolving Credit
Loans"), constituting approximately 85% of the aggregate
principal amount of the Revolving Credit Loans of all Lenders
under the Credit Agreement;
(b) $14,571,428.53 in aggregate outstanding principal amount of
the Term Loan (the "Seller's Term Loan"), constituting
approximately 85% of the aggregate principal amount of the
Term Loan under the Credit Agreement; and
(c) $0 in Letter of Credit Usage ("Seller's Letters of Credit").
<PAGE>
(ii) As of the Closing Date, the aggregate amount of all accrued and
unpaid interest on the Principal Amount equals $68,926.44 (collectively, the
"Seller's Accrued Amount").
(iii) As of the Closing Date, the aggregate amount of all
out-of-pocket expenses reimbursable by the Borrowers to the Seller under or
pursuant to the Loan Documents approximately equals $112,500 (the "Seller's
Unreimbursed Expenses").
F. The Seller (in both its capacity as a Lender and as Agent) wishes to
sell, transfer and assign, and the Buyer wishes to buy, subject to the terms and
conditions hereof, all right, title and interest of the Seller in and to (i)
Seller's Revolving Credit Loans, Seller's Term Loan and Seller's Letters of
Credit (collectively, the "Assigned Interests"), (ii) the Loan Documents, (iii)
all guarantees, security deposits, liens, mortgages, pledges, deeds of trust or
any other Lien or other collateral relating to, arising from or securing any
claim, right, interest or cause of action in respect of the Assigned Interests
(collectively, the "Assigned Collateral"), (iv) any and all cash, securities,
interest, dividends and other property which may be received, payable, exchanged
for, distributed or collected in respect of any of the foregoing on or after the
Closing Date and the proceeds thereof (collectively, the "Assigned Proceeds")
and (v) any and all causes of action or claims of the Seller (whether known or
unknown) against any person or entity which is in any way based upon, arises out
of, or is related to any of the foregoing except with respect to that portion of
the Seller's Unreimbursed Expenses not paid pursuant to Section 2(C)(ii)(2) (the
"Assigned Claims" and together with the Assigned Interests, the Assigned
Collateral and the Assigned Proceeds, collectively the "Assigned Rights").
G. In connection with the assignment of the Assigned Rights and subject to
the terms and provisions hereof, the Buyer is willing to assume the Assumed
Obligations.
AGREEMENT
In consideration of the mutual covenants and agreements contained
herein, the Seller and the Buyer hereby agree as follows:
SECTION 1. Definitions.
The following terms shall have the following meanings when used herein:
Affiliate: As defined in ss.101(2) of the United States Bankruptcy Code.
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<PAGE>
Assigned Claims: Defined in Recital F.
Assigned Collateral: Defined in Recital F.
Assigned Interests: Defined in Recital F.
Assigned Proceeds: Defined in Recital F.
Assigned Rights: Defined in Recital F.
Assumed Obligations: Defined as all obligations of Seller under the Loan
Documents in respect of the Assigned Rights to the extent the facts,
circumstances, acts or omissions that give rise to such obligations occur after
the Closing Date or relate to obligations which are incurred after the Closing
Date.
Bankruptcy Code: 11 U.S.C. ss.101 et. seq.
Buyer: Defined in the preamble to the Agreement.
Buyer's Excluded Information: Defined in Section 3(I) of the Agreement.
Buyer Indemnitees: Defined in Section 7(A) of this Agreement.
Closing Date: The date on which the Purchase Price is paid to the Seller
and the Assigned Rights are conveyed to and received by the Buyer, all as
provided in Section 2 of this Agreement.
Confidential Terms: Defined in Section 10(K).
Disallowed Amount: Defined in Section 5(A)(ii).
Governmental Authority: A Federal, state or other governmental agency,
authority, administrative or regulatory body, arbitrator, court or other
tribunal, foreign or domestic.
Lenders: Defined in the Credit Agreement.
Letter of Credit Usage: Defined in the Credit Agreement.
3
<PAGE>
Liabilities: Defined in Section 7(A) of this Agreement.
Lien: Any security interest, mortgage, deed of trust, pledge, lien, claim,
charge or other encumbrance of any kind.
Loan Documents: Defined in Recital D.
Notes: Defined in the Credit Agreement.
Prime Rate: A rate per annum, calculated daily, equal to the "Prime Rate",
as published in The Wall Street Journal, Eastern Edition.
Principal Amount: $24,181,095.19, broken down as follows:
Revolving Credit Loans: $ 9,609,666.66
Term Loan: $14,571,428.53
Letters of Credit Usage: $ 0
Purchase Price: The result obtained by multiplying the Purchase Rate by
the Principal Amount.
Purchase Rate: 0.75.
Revolving Credit Loan: Defined in the Credit Agreement.
Revolving Credit Note: Defined in the Credit Agreement.
Seller: Defined in the preamble to this Agreement.
Seller Indemnitees: Defined in Section 8(A).
Seller's Accrued Amount: Defined in Recital E.
Seller's Excluded Information: Defined in Section 4(F).
Seller's Unreimbursed Expenses: Defined in Recital E.
Term Loan: Defined in the Credit Agreement.
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Term Note: Defined in the Credit Agreement.
All terms not otherwise defined herein shall bear the meanings ascribed in
the Credit Agreement.
SECTION 2. Sale; Payment of Purchase Price.
(A) As of the Closing Date, the Seller hereby sells, transfers and sets
over to the Buyer, without representation, warranty or recourse (in each case
except as expressly provided herein), the Assigned Rights and Buyer shall assume
the Assumed Obligations. Without limiting the foregoing, on the Closing Date
the Seller shall deliver or cause to be delivered to the Buyer (a) a fully
executed copy of this Agreement, (b) the Seller's Revolving Credit Note and the
Seller's Term Note (or an affidavit of loss in respect thereof acceptable in
form to the Buyer and Seller) and (c) such other instruments and documents as
Buyer may reasonably request as evidence of its ownership of the Assigned
Rights.
(B) Subject to Section 2(A) hereof, on the Closing Date, the Buyer shall
pay to the Seller at its New York, New York office the Purchase Price by wire
transfer of immediately available funds in the lawful currency of the United
States of America in accordance with the following wire instructions:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Gev Nentin, Managing Director
Special Loan Group
Account No.: 144-0-02419, Special Loan
Group Clearing Account
ABA No.: 021-000-021
Reference: Health Management, Inc.
(C) (i) The obligations of the Buyer to acquire the Assigned Rights on
the Closing Date shall be subject to the conditions that (x) the
representations and warranties of the Seller contained in this
Agreement shall have been true and correct in all material respects
when made and as of the Closing Date; and (y) the Seller shall have
complied in all material respects with all covenants required by
this Agreement to be complied with by it on or prior to the Closing
Date, including but not limited to Seller's obligations under
Section 2(A).
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<PAGE>
(ii) The obligations of the Seller to assign, sell and convey the
Assigned Rights on the Closing Date shall be subject to the
conditions that (w) the representations and warranties of the Buyer
contained in this Agreement shall have been true and correct in all
material respects when made and as of the Closing Date; (x) the
Buyer shall have complied in all material respects with all
covenants required by this Agreement to be complied with by it on or
prior to the Closing Date; (y) the Buyer shall simultaneously
therewith pay to the Seller the Purchase Price in accordance with
Section 2(B) hereof; and (z) the Seller shall simultaneously
therewith have received (in the account referred to in Section 2(B)
hereof) payment in immediately available funds of an amount equal to
the sum of (1) the Seller's Accrued Amount and (2) not less than
$37,500 in respect of the Seller's Unreimbursed Expenses.
SECTION 3. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Buyer that:
(A) The Seller is a New York State banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
The execution, delivery and performance by the Seller of this Agreement are
within its powers, have been duly authorized by all necessary action and do not
contravene, or result in a default under, any of its charter documents or any
law, agreement or other obligation to which it is subject.
(B) This Agreement has been duly and validly authorized, executed and
delivered by the Seller, and is the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms. No
registration with, or consent or approval of, or any other action by, any
Governmental Authority or other person is required in connection with the
execution, delivery and performance of this Agreement by the Seller. The Seller
has not made any offers to sell, transfer, assign or pledge, or solicitations of
offers to buy or obtain an assignment or participation with respect to, any
portion of the Assigned Rights in violation of any applicable laws.
(C) The Seller is the sole, legal and beneficial owner and holder of the
Assigned Rights, and on the Closing Date the Seller will convey to the Buyer
legal and beneficial ownership of the Assigned Rights. Such conveyance of
ownership and title will be free and clear of any Lien whatsoever and will not
result in the creation of any Lien upon all or any portion of the Assigned
Rights except pursuant to this Agreement. Seller has not sold, assigned,
transferred, pledged or hypothecated all or any portion of the Assigned Rights
except pursuant to this Agreement.
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(D) No judgment has been sought against or entered on the Seller's Notes.
(E) The Seller is not (i) a director or officer of the Borrowers, (ii) a
partnership in which the Borrowers are general partners, (iii) a general partner
of the Borrowers, (iv) an Affiliate, or insider of an Affiliate of the Borrowers
as if such Affiliate were the Borrowers, or (v) a managing agent of the
Borrowers.
(F) The Buyer has received true and complete copies of each of the Loan
Documents. The Seller will deliver promptly to the Buyer any other material
document identified after the Closing Date by the Seller, or which is identified
in writing to the Seller by the Buyer, that governs or evidences all or any
portion of the Assigned Interests. The Seller has not given its consent to
change any term or provision of any Loan Document, including, without
limitation, the amount or time of any payment of principal, or the rate or time
of payment of interest under the Seller's Revolving Credit Loan, the Seller's
Term Loan or the Seller's Notes, or with respect to the Seller's Letters of
Credit, except as expressly set forth in the Loan Documents or otherwise
described to the Buyer in writing prior to the Closing Date.
(G) Recitals D and E in this Agreement are true and correct.
(H) The Seller is a sophisticated seller with respect to the Assigned
Rights, has adequate information concerning the business and financial condition
of the Borrowers and the other Loan Parties to make an informed decision
regarding the sale of the Assigned Rights, and has independently and without
reliance upon the Buyer, and based on such information as the Seller has deemed
appropriate, made its own analysis and decision to enter into this Agreement,
except that the Seller has relied upon the representations, warranties,
covenants, agreements and indemnities of the Buyer expressly set forth in this
Agreement. The Seller acknowledges that the Buyer has not made and does not
make any representation or warranty, and has not entered into any covenant,
agreement or indemnity, in each case whether express or implied, with respect
to the subject matter of this Agreement except as expressly set forth herein.
The Seller acknowledges that the sale of the Assigned Rights by the Seller to
the Buyer is irrevocable, and that the Seller shall have no recourse to the
Assigned Rights or the Buyer, except with respect to breaches of
representations, warranties, covenants and agreements expressly set forth in
this Agreement, and pursuant to indemnities expressly set forth herein. The
Seller acknowledges that the consideration received pursuant hereto for the sale
of the Assigned Rights may differ both in kind and in amount from any payments
or distributions which may ultimately be received with respect thereto. The
Seller is not an agent for the Buyer in this transaction.
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<PAGE>
(I) The Seller acknowledges that the Buyer currently may possess and
hereafter may come into possession of certain information concerning the Loan
Documents, the Assigned Rights, and the Loan Parties which is not known to the
Seller and which may be material to a decision to sell the Assigned Rights,
including, without limitation, information received by the Buyer on a
confidential basis from the Loan Parties, or on a privileged basis from the
Buyer's counsel or advisors (the "Buyer's Excluded Information"), that it has
determined to sell the Assigned Rights notwithstanding its lack of knowledge of
the Buyer's Excluded Information, and that the Buyer shall have no liability to
Seller with respect to the non-disclosure of the Buyer's Excluded Information,
and the Seller hereby waives and releases any claims which it might have against
the Buyer or any Buyer Indemnitee (as hereinafter defined), whether pursuant to
applicable securities laws or otherwise, with respect to the non-disclosure of
the Buyer's Excluded Information; and no broker, finder or other person acting
pursuant to the authority of the Seller is entitled to a broker's fee or
compensation or other type of commission in connection with the transactions
contemplated hereby.
SECTION 4. Representations and Warranties of the Buyer.
The Buyer hereby represents and warrants to the Seller that:
(A) The Buyer is a corporation duly organized and validly existing under
the laws of the State of New York. The execution, delivery and performance by
the Buyer of this Agreement are within its powers, have been duly authorized by
all necessary action and do not contravene, or result in a default under, any of
its charter documents or any law, agreement or other obligation to which it is
subject.
(B) This Agreement has been duly and validly authorized, executed and
delivered by the Buyer, and sets forth the legal, valid and binding obligations
of the Buyer, enforceable against the Buyer in accordance with their respective
terms. No registration with, or consent or approval of, or any other action by,
any Governmental Authority or other person is required in connection with the
execution, delivery and performance of this Agreement by the Buyer.
(C) No proceedings are pending or to the best of the Buyer's knowledge,
threatened against or affecting the Buyer before any Governmental Authority
which, individually or in the aggregate, could reasonably be expected to
materially and adversely affect any action taken or to be taken by the Buyer
under this Agreement.
(D) The Buyer is a sophisticated investor (as such term is used under the
rules promulgated under the Securities Act of 1933, as amended) with respect to
the Assigned Rights,
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<PAGE>
has adequate information concerning the business and financial condition of the
Borrower to make an informed decision regarding the purchase of the Assigned
Rights and has independently and without reliance upon the Seller, and based on
such information as the Buyer has deemed appropriate, made its own analysis and
decision to enter into this Agreement, except that the Buyer has relied upon the
representations warranties, covenants, agreements and indemnities of the Seller
expressly set forth in this Agreement. The Buyer acknowledges that Events of
Default exist under the Credit Agreement, and that the Seller has not made and
does not make any representation or warranty, and has not entered into any
covenant, agreement or indemnity, in each case whether express or implied, with
respect to the subject matter of this Agreement except as expressly set forth
herein. The Buyer acknowledges that the sale of the Assigned Rights by the
Seller to the Buyer is irrevocable, and that the Buyer shall have no recourse to
the Seller, except with respect to breaches of representations, warranties,
covenants and agreements expressly set forth in this Agreement and pursuant to
indemnities expressly set forth herein. The Buyer acknowledges that the
consideration paid pursuant hereto for the purchase of the Assigned Rights may
differ both in kind and amount from any payments or distributions which may
ultimately be received with respect thereto. The Buyer (i) will continue to make
its own analysis and decisions with respect to the Assigned Rights without any
reliance on the Seller (except as previously stated), and (ii) will not rely
upon the Seller to furnish any documents or information, except as otherwise
required by this Agreement, regarding the credit, officers, financial condition
or business of, or any other matter concerning, the Loan Parties (including,
without limitation, documents and information received from the Borrowers under
the Credit Agreement, or otherwise). The Buyer acknowledges that it is assuming
the risk of full or partial loss which is inherent with the credit, and all
collateral and collectability risks associated therewith. The Buyer is not an
agent for the Seller in this transaction.
(E) Without implying characterization of the Assigned Rights as a security
within the meaning of applicable security laws, the Buyer is not purchasing the
Assigned Rights with a view to resale or distribution in a manner that would
violate applicable securities laws and has no present intention of making any
distribution of the Assigned Rights in any manner that would violate applicable
laws.
(F) The Buyer acknowledges that the Seller currently possesses and
hereafter may come into possession of certain information concerning the Loan
Documents, the Assigned Rights, and the Loan Parties which is not known to the
Buyer and which may be material to a decision to acquire the Assigned Rights,
including, without limitation, information received by Seller on a confidential
basis from any of the Loan Parties or on a privileged basis from Seller's
counsel and advisors (the "Seller's Excluded Information"), that it has
determined to acquire the Assigned Rights notwithstanding its lack of knowledge
of the Seller's Excluded Information, and that the
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Seller shall have no liability to it and the Buyer hereby waives and releases
any claims which it might have against the Seller, whether pursuant to
applicable securities laws or otherwise, with respect to the non-disclosure of
the Seller's Excluded Information; and no broker, finder or other person or
entity acting pursuant to the authority of the Buyer is entitled to a broker's
or other type of commission in connection with the transactions contemplated
hereby.
SECTION 5. Limitation of Damages; Reimbursement Rights; Procedure for
Reimbursement and Indemnification.
(A) (i) Notwithstanding anything to the contrary contained in Section 7
hereof or elsewhere, the aggregate amount for which the Seller shall be liable
pursuant to any and all indemnities set forth in this Agreement shall not
exceed, in the aggregate, the Purchase Price. In addition, with respect to each
claim under any such indemnity, the aggregate amount for which the Seller shall
be liable shall equal the Reduction Amount (as hereinafter defined) plus
interest from, and including, the date on which the Purchase Price is paid to
the Seller, to, but excluding the date on which the Reduction Amount is paid (so
long as such payment is received before noon on a business day; otherwise, the
business day next following the date of payment) at a rate per annum, calculated
daily, equal to the Prime Rate.
(ii) For purposes hereof, the "Reduction Amount" shall mean with
respect to each claim for indemnity an amount equal to the product obtained by
multiplying (1) a fraction, the numerator of which shall be the amount by which
the Principal Amount (or the Buyer's rights to distributions in respect thereof)
has been reduced, disallowed, offset, expunged, denied, rendered uncollectible
or subordinated as a direct result of the breach of representation or warranty
that gave rise to such indemnity claim (the "Disallowed Amount") and the
denominator of which shall be the Principal Amount by (2) the Purchase Price.
(B) If the Buyer exercises its remedies under this Section 5 and recovers
the Reduction Amount from the Seller and upon any payment to the Buyer pursuant
to the indemnity contained in Section 7(A) hereof, the Buyer shall reassign to
Seller, without recourse, all of its right, title and interest in such Assigned
Rights as have been reduced, disallowed, offset, expunged, denied, rendered
uncollectible or subordinated as a direct result of the breach of representation
or warranty that gave rise to such indemnity claim, including all of the Buyer's
rights to receive distributions thereon.
(C) If there is asserted any claim, liability or obligation that in the
judgment of a party that is indemnified pursuant to this Agreement, such
indemnified party shall give the indemnifying party notice within thirty (30)
business days after the assertion of any claim, liability or
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<PAGE>
obligation, or promptly, but in no event later than five (5) business days of
receipt of notice of the filing of any lawsuit based upon such assertion, or,
with respect to a claim not yet asserted against the indemnified party, promptly
upon the determination by an officer of the indemnified party of the existence
of the same, and shall give indemnifying party a reasonable opportunity of
assuming the defense of such claims, liability or obligation, using counsel of
the indemnifying party's choosing; provided, however, that notwithstanding the
foregoing the indemnified party shall have the right to participate in such
defense and retain separate counsel at its own cost and expense. Failure by the
indemnified party to give timely notice pursuant to this Section 5(C) shall not
relieve the indemnifying party of its obligations, except to the extent that the
indemnifying party is actually prejudiced by such failure to give timely notice.
No settlement or adjustment shall be made without the indemnified party's prior
written consent, which consent will not be unreasonably withheld. If, in any
case, the indemnifying party fails to contest in good faith any such claim,
liability or obligation, the indemnified party shall have the right to defend,
settle or pay the same and pursue its remedies against the indemnifying party
hereunder. The indemnified party shall cooperate with the indemnifying party in
any such defense which the indemnifying party elects to assume in the event the
indemnifying party makes such request to the indemnified party and such request
is reasonable, provided the indemnifying party will hold the indemnified party
harmless from all of its out-of-pocket expenses, including reasonable attorneys'
fees, incurred in connection with the indemnified party's cooperation.
SECTION 6. Distributions.
Upon Seller's receipt of any cash, securities, or other property
distributed on account of or in connection with the Assigned Rights, Seller
shall hold the same in trust for Buyer and shall deliver the same to Buyer
promptly (where possible in the form received), endorsed (where necessary)
without recourse to Seller. Any payments made to Buyer hereunder shall be made
in immediately available funds by wire transfer to Buyer in accordance with the
following wire instructions:
Fleet Bank
91 South Greeley Avenue
Chappaqua, New York 10514
ABA No: 021200339
Acct: 2369664279
Reference: Transworld Home HealthCare, Inc.
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SECTION 7. Seller's Obligations.
(A) Subject to Section 5 hereof, the Seller hereby agrees to indemnify,
defend and hold the Buyer and its agents, affiliates, controlling persons,
officers, directors, employees, successors and assigns (collectively, the "Buyer
Indemnitees") harmless from and against any and all expenses, losses, claims,
damages or liabilities ("Liabilities") which are incurred by the Buyer
Indemnitees or any of them, including but not limited to reasonable attorneys'
fees and expenses, caused by, resulting from or relating to any material breach
of any of the representations, warranties, covenants or agreements of the Seller
set forth in the Agreement. The express indemnities made by Buyer in this
Agreement shall be the sole remedy available in respect of any such expenses,
losses, claims, damages or liabilities incurred or suffered by Seller.
(B) The Buyer and the Seller intend and agree that the Buyer shall assume
the Assumed Obligations.
SECTION 8. Buyer's Obligations.
The Buyer hereby agrees to indemnify, defend and hold the Seller and its
agents, affiliates, controlling persons, officers, directors and employees
(collectively the "Seller Indemnitees") harmless from and against any and all
Liabilities which are incurred by the Seller Indemnitees or any of them,
including but not limited to reasonable attorneys' fees and expenses caused by,
resulting from or relating to the Buyer's material breach of any of the
representations, warranties, covenants or agreements of the Buyer set forth in
the Agreement. The express indemnities made by Buyer in this Agreement shall be
the sole remedy available in respect of any such expenses, losses, claims,
damages or liabilities incurred or suffered by Seller.
SECTION 9. Further Transfers.
The Buyer may sell, assign, grant a participation in, or otherwise transfer all
or any portion of the Assigned Interests and the other Assigned Rights,
provided, that notwithstanding any such sale, assignment, participation or
transfer (i) the Buyer may not sell, assign, grant a participation in, or
otherwise transfer its rights under this Agreement or any interest herein,
except for a collateral assignment of its interest herein to Bankers Trust
Company Company, in its capacity as collateral agent to secure obligations of
the Buyer under existing credit facilities of the Buyer and (ii) the obligations
of the Buyer hereunder, which are not delegable, shall remain in full force and
effect.
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SECTION 10. Miscellaneous.
(A) Recourse. Except to the extent set forth herein, the assignment of the
Seller's Notes pursuant to this Agreement shall be without recourse, as such
term is defined in Section 3-417(3) of the Uniform Commercial Code of New York.
Any and all endorsements of instruments by Seller in connection with such
assignment shall be without recourse and Seller shall undertake no endorsers'
liability under the Uniform Commercial Code of New York, including, without
limitation, Section 3-414(1) thereof or otherwise, in respect of such
endorsements.
(B) Survival. All representations, warranties, covenants, agreements and
other provisions made by the parties hereto shall be considered to have been
relied upon by the parties hereto and shall survive the execution, performance
and delivery of this Agreement and all other documents contemplated herein.
(C) Successors and Assigns. Subject to the proviso at the end of Section 9
hereof, this Agreement, including, without limitation, the representations,
warranties, covenants and agreements contained herein, (i) shall inure to the
benefit of and be enforceable by the respective parties hereto, and the Buyer's
and the Seller's successors and permitted assigns, and (ii) shall be binding
upon and enforceable against the respective parties hereto, and their successors
and permitted assigns.
(D) Further Assurances. Each of the parties hereto agrees to execute and
deliver, or to cause to be executed and delivered, all such instruments, and to
take all such action, as the other party may reasonably request in order to
effectuate the intent and purposes of this Agreement, all at the sole expense of
the requesting party.
(E) Costs and Expenses. Except as otherwise expressly provided herein,
each party to this Agreement shall bear its own costs and expenses, including
but not limited to attorneys' fees and expenses, in connection with the
transactions contemplated hereby. Each of the Buyer and the Seller represents
that it has not retained any broker or other intermediary to act on its behalf
in connection with this transaction.
(F) Counterpart Execution; Telecopies. This Agreement may be executed in
any number of counterparts, each of which, when so executed and delivered, shall
be an original, but all of which together shall constitute one agreement binding
all of the parties hereto. Transmission by telecopier of an executed counterpart
of this Agreement shall be deemed to constitute due and sufficient delivery of
such counterpart, provided that the party so delivering
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<PAGE>
such counterpart shall, promptly after such delivery, deliver the original of
such counterpart of this Agreement to the other party hereto.
(G) Amendments; Waivers. (i) No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by the Seller
and the Buyer and no waiver of any provision of this Agreement, nor consent to
any departure by the Seller or the Buyer therefrom, shall be effective unless it
is in writing and signed by the party affected thereby, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(ii) No failure on the part of any party to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof by such
party, nor shall any single or partial exercise of any right hereunder preclude
any other or further exercise thereof or the exercise of any other right. The
rights and remedies of each party provided herein (x) are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law
(except as otherwise expressly set forth herein) and (y) are not conditional or
contingent on any attempt by such party to exercise any of its rights under any
other related document against the other party or any other entity.
(H) Governing Law. This Agreement shall be construed and the obligations
of the parties. hereunder shall be determined in accordance with the laws of the
State of New York (without regard to any conflict of laws provisions thereof).
(I) Notices. All demands, notices, requests, consents and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered by courier service, messenger, telex or telecopy (with a
confirmed answerback) at, or when duly deposited in the mails, by certified or
registered mail, postage prepaid -- return receipt requested, to the following
addresses, or such addresses as may be furnished hereafter by notice in writing,
to the following parties:
in the case of the Buyer:
Transworld Home HealthCare, Inc.
75 Terminal Avenue
Clark, New Jersey 07066
Attention: Vincent J. Caruso & Wayne Palladino
Telephone: (908) 340-1144
Telecopier: (908) 340-9170
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with a copy to:
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036
Attention: Bruce L. Lieb, Esq.
Telephone: (212) 969-3000
Telecopier: (212) 969-2900
in the case of the Seller:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Gev Nentin, Managing Director, Special Loan Group
Telephone: 212-2704413
Telecopier: 212-270-5748
with a copy to:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Kevin C. Kelley
Vice President & Assistant General Counsel
Telephone: 212-270-5880
Telecopier: 212-270-6509
(J) Integration. This Agreement constitutes the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, understandings or representations
pertaining to the subject matter hereof, whether oral or written. There are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as specifically set forth or
incorporated herein.
(K) Disclosure of Agreement. The parties hereto agree that they shall not
disclose the terms and conditions of this Agreement (collectively, the
"Confidential Terms") to any person or entity, or the identity of the parties
hereto, except (i) Seller may disclose the sale of Assigned Interests to the
Lenders under the Credit Agreement and (ii) as may be required under the Credit
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Agreement or by applicable law, legal process or duly authorized regulatory
authorities; provided that the Buyer may disclose the Confidential Terms to any
prospective or actual transferees (and their advisors) of the Seller's Notes or
the other Assigned Rights, or any portion thereof who agree to maintain the
confidentiality of the Confidential Terms as provided herein, except that Buyer
shall not disclose the Purchase Price or the Purchase Rate to any prospective or
actual transferee.
(L) Captions and Headings. The section captions and headings in this
Agreement are for convenience only and are not intended to be full or accurate
descriptions of the contents hereof. They shall not be deemed to be part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provision hereof.
(M) Severability. The invalidity, illegality or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, all of which shall remain in full force
and effect.
(N) Relations of the Parties. The relationship between Seller and Buyer
shall be that of seller and purchaser. This Agreement shall not be construed to
create a partnership, joint venture or creditor-debtor relationship between the
parties hereto.
IN WITNESS WHEREOF, the Seller and the Buyer have executed this Agreement
by their duly authorized officers as of the date first set forth above.
THE CHASE MANHATTAN BANK
By: /s/ Lorraine Littell Pape
-------------------------------
Name: Lorraine Littell Pape
Title: VP
TRANSWORLD HOME
HEALTHCARE, INC.
By: /s/ Wayne Palladino
-------------------------------
Name: Wayne Palladino
Title:
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Each of the undersigned hereby agrees and consents to the transactions
contemplated by the foregoing Purchase and Sale Agreement; and confirms in favor
of the Seller and the Buyer (i) the accuracy of the Principal Amount (ii) that
it has no defense, offset, claim, counterclaim or recoupment with respect to any
of its obligations or liabilities under the Credit Agreement, any Note or any
other Loan Document (as such terms are defined in the Credit Agreement),
including, without limitation, the payment when due of all fees, interest,
principal and other obligations (as such term is defined in the Credit
Agreement) and (iii) set forth in Schedule 1 annexed hereto is a complete and
accurate list of all material documents (including all amendments, supplements,
modifications, waivers and terminations relating thereto) that evidence or
govern the Assigned Interests.
HEALTH MANAGEMENT, INC.
HOME CARE MANAGEMENT, INC.
HMI ILLINOIS, INC.
HMI PENNSYLVANIA, INC.
HEALTH REIMBURSEMENT CORPORATION
HMI RETAIL CORP., INC.
HMI PMA, INC.
HMI MARYLAND, INC.
By: /s/ Paul Jurewicz
------------------------------
Name: Paul Jurewicz
Title:
The Chase Manhattan Bank, in its capacity as Agent and a Lender under the Credit
Agreement, hereby consents to the transactions contemplated by the foregoing
Purchase and Sale Agreement notwithstanding the failure of the parties to comply
with the relevant provisions of Section 11.03 of the Credit Agreement.
THE CHASE MANHATTAN BANK, as a Lender and as Agent
By: /s/ Lorraine Littell Pape
-------------------------------
Name: Lorraine Littell Pape
Title: Vice President
================================================================================
PURCHASE AND SALE AGREEMENT
Dated as of November 12, 1996
Between
EUROPEAN AMERICAN BANK
as Seller
and
TRANSWORLD HOME HEALTHCARE, INC.
as Buyer
================================================================================
<PAGE>
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of November 12, 1996 (the
"Agreement") between European American Bank, a New York State banking
corporation (in its capacities both as a lender and as agent under the Credit
Agreement referred to below, the "Seller") and Transworld Home HealthCare, Inc.,
a New York corporation ("Buyer").
RECITALS
A. Capitalized terms used herein which are not defined in the Recitals
shall have the meanings set forth in Section 1 of this Agreement.
B. Health Management, Inc., Home Care Management, Inc., HMI Illinois, Inc.
and HMI Pennsylvania, Inc. (the "Borrowers") are parties to that certain Credit
Agreement dated as of March 31, 1995 (as heretofore amended, restated,
supplemented or otherwise modified, the "Credit Agreement") among the Borrowers,
the guarantors named therein, European American Bank and the Seller, in its
individual capacity and as agent for the Lenders thereunder.
C. Pursuant to the Credit Agreement: (A) the Lenders agreed (i) to make
Revolving Credit Loans available to the Borrowers; (ii) to make and to permit to
remain outstanding the Term Loan; and (iii) to purchase participations in
Letters of Credit issued by the Agent; and (B) the Agent agreed to issue Letters
of Credit.
D. Set forth in Schedule 1 annexed hereto is a complete and accurate list
of all material documents (including all amendments, supplements, modifications,
waivers and terminations relating thereto) that evidence or govern the Assigned
Interests (such documents shall for purposes of this Agreement be referred to as
the "Loan Documents").
E. (i) As of the Closing Date, the Seller, in its capacity as a Lender, is
the sole legal and beneficial owner of:
(a) $2,428,571.42 in aggregate outstanding principal amount of
Revolving Credit Loans (the "Seller's Revolving Credit
Loans"), constituting approximately 15% of the aggregate
principal amount of the Revolving Credit Loans of all Lenders
under the Credit Agreement;
(b) $1,740,333.34 in aggregate outstanding principal amount of the
Term Loan (the "Seller's Term Loan"), constituting
approximately 15% of the aggregate principal amount of the
Term Loan under the Credit Agreement; and
(c) $0 in Letter of Credit Usage ("Seller's Letters of Credit").
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(ii) As of the Closing Date, the aggregate amount of all accrued and
unpaid interest on the Principal Amount equals $12,858.35 (collectively, the
"Seller's Accrued Amount").
F. The Seller (in both its capacity as a Lender and as Agent) wishes to
sell, transfer and assign, and the Buyer wishes to buy, subject to the terms and
conditions hereof, all right, title and interest of the Seller in and to (i)
Seller's Revolving Credit Loans, Seller's Term Loan and Seller's Letters of
Credit (collectively, the "Assigned Interests"), (ii) the Loan Documents, (iii)
all guarantees, security deposits, liens, mortgages, pledges, deeds of trust or
any other Lien or other collateral relating to, arising from or securing any
claim, right, interest or cause of action in respect of the Assigned Interests
(collectively, the "Assigned Collateral"), (iv) any and all cash, securities,
interest, dividends and other property which may be received, payable, exchanged
for, distributed or collected in respect of any of the foregoing on or after the
Closing Date and the proceeds thereof (collectively, the "Assigned Proceeds"),
and (v) any and all causes of action or claims of the Seller (whether known or
unknown) against any person or entity which is in any way based upon, arises out
of, or is related to any of the foregoing (the "Assigned Claims," and together
with the Assigned Interests, the Assigned Collateral and the Assigned Proceeds,
collectively the "Assigned Rights").
G. In connection with the assignment of the Assigned Rights and subject to
the terms and provisions hereof, the Buyer is willing to assume the Assumed
Obligations.
AGREEMENT
In consideration of the mutual covenants and agreements contained
herein, the Seller and the Buyer hereby agree as follows:
SECTION 1. Definitions.
The following terms shall have the following meanings when used herein:
Affiliate: As defined in ss.101(2) of the United States Bankruptcy Code.
Assigned Claims: Defined in Recital F.
Assigned Collateral: Defined in Recital F.
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Assigned Interests: Defined in Recital F.
Assigned Proceeds: Defined in Recital F.
Assigned Rights: Defined in Recital F.
Assumed Obligations: Defined as all obligations of Seller under the Loan
Documents in respect of the Assigned Rights to the extent the facts,
circumstances, acts or omissions that give rise to such obligations occur after
the Closing Date or relate to obligations which are incurred after the Closing
Date.
Bankruptcy Code: 11 U.S.C. ss.101 et. seq.
Buyer: Defined in the preamble to the Agreement.
Buyer's Excluded Information: Defined in Section 3(I) of the Agreement.
Buyer Indemnitees: Defined in Section 7(A) of this Agreement.
Closing Date: The date on which the Purchase Price is paid to the Seller
and the Assigned Rights are conveyed to and received by the Buyer, all as
provided in Section 2 of this Agreement.
Confidential Terms Defined in Section 10(K).
Disallowed Amount: Defined in Section 5(A)(ii).
Governmental Authority: A Federal, state or other governmental agency,
authority, administrative or regulatory body, arbitrator, court or other
tribunal, foreign or domestic.
Lenders: Defined in the Credit Agreement.
Letter of Credit Usage: Defined in the Credit Agreement.
Liabilities: Defined in Section 7(A) of this Agreement.
Lien: Any security interest, mortgage, deed of trust, pledge, lien, claim,
charge or other encumbrance of any kind.
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Loan Documents: Defined in Recital D.
Notes: Defined in the Credit Agreement.
Prime Rate: A rate per annum calculated daily, equal to the "Prime Rate",
as published in The Wall Street Journal, Eastern Edition.
Principal Amount: $4,168,904.76, broken down as follows:
Revolving Credit Loans: $ 1,740,333.34
Term Loan: $ 2,428,571.42
Letters of Credit Usage: $ 0
Purchase Price: The result obtained by multiplying the Purchase Rate by
the Principal Amount.
Purchase Rate: 0.75.
Revolving Credit Loan: Defined in the Credit Agreement.
Revolving Credit Note: Defined in the Credit Agreement.
Seller: Defined in the preamble to this Agreement.
Seller Indemnitees: Defined in Section 8(A).
Seller's Accrued Amount: Defined in Recital E.
Seller's Excluded Information: Defined in Section 4(F).
Term Loan: Defined in the Credit Agreement.
Term Note: Defined in the Credit Agreement.
All terms not otherwise defined herein shall bear the meanings ascribed in
the Credit Agreement.
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SECTION 2. Sale; Payment of Purchase Price.
(A) As of the Closing Date, the Seller hereby sells, transfers and sets
over to the Buyer, without representation, warranty or recourse (in each case
except as expressly provided herein), the Assigned Rights and Buyer shall assume
the Assumed Obligations. Without limiting the foregoing, on the Closing Date the
Seller shall deliver or cause to be delivered to the Buyer (a) a fully executed
copy of this Agreement, (b) the Seller's Revolving Credit Note and the Seller's
Term Note and (c) such other instruments and documents as Buyer may reasonably
request as evidence of its ownership of the Assigned Rights.
(B) Subject to Section 2(A) hereof, on the Closing Date, the Buyer shall
pay to the Seller at its Uniondale, New York office the Purchase Price by wire
transfer of immediately available funds in the lawful currency of the United
States of America in accordance with the following wire instructions:
European American Bank
Uniondale, New York 11555-5774
Attention: Andrew Russell, Vice President
Account No.: K89 022222 0
ABA No.: 021-001486
Reference: Health Management, Inc.
(C) (i) The obligations of the Buyer to acquire the Assigned Rights on
the Closing Date shall be subject to the conditions that (x) the
representations and warranties of the Seller contained in this
Agreement shall have been true and correct in all material respects
when made and as of the Closing Date; and (y) the Seller shall have
complied in all material respects with all covenants required by
this Agreement to be complied with by it on or prior to the Closing
Date, including but not limited to Seller's obligations under
Section 2(A).
(ii) The obligations of the Seller to assign, sell and convey the
Assigned Rights on the Closing Date shall be subject to the
conditions that (w) the representations and warranties of the Buyer
contained in this Agreement shall have been true and correct in all
material respects when made and as of the Closing Date; (x) the
Buyer shall have complied in all material respects with all
covenants required by this Agreement to be complied with by it on or
prior to the Closing Date; (y) the Buyer shall simultaneously
therewith pay to the Seller the Purchase Price in
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accordance with Section 2(B) hereof; and (z) the Seller shall
simultaneously therewith have received (in the account referred to
in Section 2(B) hereof) payment in immediately available funds of an
amount equal to the Seller's Accrued Amount.
SECTION 3. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Buyer that:
(A) The Seller is a New York State banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
The execution, delivery and performance by the Seller of this Agreement are
within its powers, have been duly authorized by all necessary action and do not
contravene, or result in a default under, any of its charter documents or any
law, agreement or other obligation to which it is subject.
(B) This Agreement has been duly and validly authorized, executed and
delivered by the Seller, and is the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms. No
registration with, or consent or approval of, or any other action by, any
Governmental Authority or other person is required in connection with the
execution, delivery and performance of this Agreement by the Seller. The Seller
has not made any offers to sell, transfer, assign or pledge, or solicitations of
offers to buy or obtain an assignment or participation with respect to, any
portion of the Assigned Rights in violation of any applicable laws.
(C) The Seller is the sole, legal and beneficial owner and holder of the
Assigned Rights, and on the Closing Date the Seller will convey to the Buyer
legal and beneficial ownership of the Assigned Rights. Such conveyance of
ownership and title will be free and clear of any Lien whatsoever and will not
result in the creation of any Lien upon all or any portion of the Assigned
Rights except pursuant to this Agreement. Seller has not sold, assigned,
transferred, pledged or hypothecated all or any portion of the Assigned Rights
except pursuant to this Agreement.
(D) No judgment has been sought against or entered on the Seller's Notes.
(E) The Seller is not (i) a director or officer of the Borrowers, (ii) a
partnership in which the Borrowers are general partners, (iii) a general partner
of the Borrowers, (iv) an Affiliate, or insider of an Affiliate of the Borrowers
as if such Affiliate were the Borrowers, or (v) a managing agent of the
Borrowers.
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(F) The Buyer has received true and complete copies of each of the Loan
Documents. The Seller will deliver promptly to the Buyer any other material
document identified after the Closing Date by the Seller, or which is identified
in writing to the Seller by the Buyer, that governs or evidences all or any
portion of the Assigned Interests. The Seller has not given its consent to
change any term or provision of any Loan Document, including, without
limitation, the amount or time of any payment of principal, or the rate or time
of payment of interest under the Seller's Revolving Credit Loan, the Seller's
Term Loan or the Seller's Notes, or with respect to the Seller's Letters of
Credit, except as expressly set forth in the Loan Documents or otherwise
described to the Buyer in writing prior to the Closing Date.
(G) Recitals D and E in this Agreement are true and correct.
(H) The Seller is a sophisticated seller with respect to the Assigned
Rights, has adequate information concerning the business and financial condition
of the Borrowers and the other Loan Parties to make an informed decision
regarding the sale of the Assigned Rights, and has independently and without
reliance upon the Buyer, and based on such information as the Seller has deemed
appropriate, made its own analysis and decision to enter into this Agreement,
except that the Seller has relied upon the representations, warranties,
covenants, agreements and indemnities of the Buyer expressly set forth in this
Agreement. The Seller acknowledges that the Buyer has not made and does not make
any representation or warranty, and has not entered into any covenant, agreement
or indemnity, in each case whether express or implied, with respect to the
subject matter of this Agreement except as expressly set forth herein. The
Seller acknowledges that the sale of the Assigned Rights by the Seller to the
Buyer is irrevocable, and that the Seller shall have no recourse to the Assigned
Rights of the Buyer, except with respect to breaches of representations,
warranties, covenants and agreements expressly set forth in this Agreement, and
pursuant to indemnities expressly set forth herein. The Seller acknowledges that
the consideration received pursuant hereto for the sale of the Assigned Rights
may differ both in kind and in amount from any payments or distributions which
may ultimately be received with respect thereto. The Seller is not an agent for
the Buyer in this transaction.
(I) The Seller acknowledges that the Buyer currently may possess and
hereafter may come into possession of certain information concerning the Loan
Documents, the Assigned Rights, and the Loan Parties which is not known to the
Seller and which may be material to a decision to sell the Assigned Rights,
including, without limitation, information received by the Buyer on a
confidential basis from the Loan Parties, or on a privileged basis from the
Buyer's counsel or advisors (the "Buyer's Excluded Information"), that it has
determined to sell the Assigned Rights notwithstanding its lack of knowledge of
the Buyer's Excluded Information, and that the Buyer shall have no liability to
Seller with respect to the non-disclosure of the Buyer's Excluded
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Information, and the Seller hereby waives and releases any claims which it might
have against the Buyer or any Buyer Indemnitee (as hereinafter defined), whether
pursuant to applicable securities laws or otherwise, with respect to the
non-disclosure of the Buyer's Excluded Information; and no broker, finder or
other person acting pursuant to the authority of the Seller is entitled to a
broker's fee or compensation or other type of commission in connection with the
transactions contemplated hereby.
SECTION 4. Representations and Warranties of the Buyer.
The Buyer hereby represents and warrants to the Seller that:
(A) The Buyer is a corporation duly organized and validly existing under
the laws of the State of New York. The execution, delivery and performance by
the Buyer of this Agreement are within its powers, have been duly authorized by
all necessary action and do not contravene, or result in a default under, any of
its charter documents or any law, agreement or other obligation to which it is
subject.
(B) This Agreement has been duly and validly authorized, executed and
delivered by the Buyer, and sets forth the legal, valid and binding obligations
of the Buyer, enforceable against the Buyer in accordance with their respective
terms. No registration with, or consent or approval of, or any other action by,
any Governmental Authority or other person is required in connection with the
execution, delivery and performance of this Agreement by the Buyer.
(C) No proceedings are pending or to the best of the Buyer's knowledge,
threatened against or affecting the Buyer before any Governmental Authority
which, in individually or in the aggregate, could reasonably be expected to
materially and adversely affect any action taken or to be taken by the Buyer
under this Agreement.
(D) The Buyer is a sophisticated investor (as such term is used under the
rules promulgated under the Securities Act of 1933, as amended) with respect to
the Assigned Rights, has adequate information concerning the business and
financial condition of the Borrower to make an informed decision regarding the
purchase of the Assigned Rights and has independently and without reliance upon
the Seller, and based on such information as the Buyer has deemed appropriate,
made its own analysis and decision to enter into this Agreement, except that the
Buyer has relied upon the representations warranties, covenants, agreements and
indemnities of the Seller expressly set forth in this Agreement. The Buyer
acknowledges that Events of Default exist under the Credit Agreement, and that
the Seller has not made and does not make any representation or warranty, and
has not entered into any covenant, agreement or indemnity, in
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each case whether express or implied, with respect to the subject matter of this
Agreement except as expressly set forth herein. The Buyer acknowledges that the
sale of the Assigned Rights by the Seller to the Buyer is irrevocable, and that
the Buyer shall have no recourse to the Seller, except with respect to breaches
of representations, warranties, covenants and agreements expressly set forth in
this Agreement and pursuant to indemnities expressly set forth herein. The Buyer
acknowledges that the consideration paid pursuant hereto for the purchase of the
Assigned Rights may differ both in kind and amount from any payments or
distributions which may ultimately be received with respect thereto. The Buyer
(i) will continue to make its own analysis and decisions with respect to the
Assigned Rights without any reliance on the Seller (except as previously
stated), and (ii) will not rely upon the Seller to furnish any documents or
information, except as otherwise required by this Agreement, regarding the
credit, officers, financial condition or business of, or any other matter
concerning the Loan Parties (including, without limitation documents and
information received from the Borrowers under the Credit Agreement, or
otherwise). The Buyer acknowledges that it is assuming the risk of full or
partial loss which is inherent with the credit, and all collateral and
collectability risks associated therewith. The Buyer is not an agent for the
Seller in this transaction.
(E) Without implying characterization of the Assigned Rights as a security
within the meaning of applicable security laws, the Buyer is not purchasing the
Assigned Rights with a view to resale or distribution in a manner that would
violate applicable securities laws and has no present intention of making any
distribution of the Assigned Rights in any manner that would violate applicable
laws.
(F) The Buyer acknowledges that the Seller currently possesses and
hereafter may come into possession of certain information concerning the Loan
Documents, the Assigned Rights, and the Loan Parties which is not known to the
Buyer and which may be material to a decision to acquire the Assigned Rights,
including, without limitation, information received by Seller on a confidential
basis from any of the Loan Parties or on a privileged basis from Seller's
counsel and advisors (the "Seller's Excluded Information"), that it has
determined to acquire the Assigned Rights notwithstanding its lack of knowledge
of the Seller's Excluded Information, and that the Seller shall have no
liability to it and the Buyer hereby waives and releases any claims which it
might have against the Seller, whether pursuant to applicable securities laws or
otherwise, with respect to the non-disclosure of the Seller's Excluded
Information; and no broker, finder or other person or entity acting pursuant to
the authority of the Buyer is entitled to a broker's or other type of commission
in connection with the transactions contemplated hereby.
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SECTION 5. Limitation of Damages; Reimbursement Rights; Procedure for
Reimbursement and Indemnification.
(A) (i) Notwithstanding anything to the contrary contained in Section 7
hereof or elsewhere, the aggregate amount for which the Seller shall be liable
pursuant to any and all indemnities set forth in this Agreement shall not
exceed, in the aggregate, the Purchase Price. In addition, with respect to each
claim under any such indemnity, the aggregate amount for which the Seller shall
be liable shall equal the Reduction Amount (as hereinafter defined) plus
interest from, and including, the date on which the Purchase Price is paid to
the Seller, to, but excluding the date on which the Reduction Amount is paid (so
long as such payment is received before noon on a business day; otherwise, the
business day next following the date of payment) at a rate per annum, calculated
daily, equal to the Prime Rate.
(ii) For purposes hereof, the "Reduction Amount" shall mean with
respect to each claim for indemnity an amount equal to the product obtained by
multiplying (1) a fraction, the numerator of which shall be the amount by which
the Principal Amount (or the Buyer's rights to distributions in respect thereof)
has been reduced, disallowed, offset, expunged, denied, rendered uncollectible
or subordinated as a direct result of the breach of representation or warranty
that gave rise to such indemnity claim (the "Disallowed Amount") and the
denominator of which shall be the Principal Amount by (2) the Purchase Price.
(B) If the Buyer exercises its remedies under this Section 5 and recovers
the Reduction Amount from the Seller and upon any payment to the Buyer pursuant
to the indemnity contained in Section 7(A) hereof, the Buyer shall reassign to
Seller, without recourse, all of its right, title and interest in such Assigned
Rights as have been reduced, disallowed, offset, expunged, denied, rendered
uncollectible or subordinated as a direct result of the breach of representation
or warranty that gave rise to such indemnity claim, including all of the Buyer's
rights to receive distributions thereon.
(C) If there is asserted any claim, liability or obligation that in the
judgment of a party that is indemnified pursuant to this Agreement, such
indemnified party shall give the indemnifying party notice within thirty (30)
business days after the assertion of any claim, liability or obligation, or
promptly, but in no event later than five (5) business days of receipt of notice
of the filing of any lawsuit based upon such assertion, or, with respect to a
claim not yet asserted against the indemnified party, promptly upon the
determination by an officer of the indemnified party of the existence of the
same, and shall give indemnifying party a reasonable opportunity of assuming the
defense of such claims, liability or obligation, using counsel of the
indemnifying party's choosing; provided, however, that notwithstanding the
foregoing the indemnified party
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shall have the right to participate in such defense and retain separate counsel
at its own cost and expense. Failure by the indemnified party to give timely
notice pursuant to this Section 5(C) shall not relieve the indemnifying party of
its obligations, except to the extent that the indemnifying party is actually
prejudiced by such failure to give timely notice. No settlement or adjustment
shall be made without the indemnified party's prior written consent, which
consent will not be unreasonably withheld. If, in any case, the indemnifying
party fails to contest in good faith any such claim, liability or obligation,
the indemnified party shall have the right to defend, settle or pay the same and
pursue its remedies against the indemnifying party hereunder. The indemnified
party shall cooperate with the indemnifying party in any such defense which the
indemnifying party elects to assume in the event the indemnifying party makes
such request to the indemnified party and such request is reasonable, provided
the indemnifying party will hold the indemnified party harmless from all of its
out-of-pocket expenses, including reasonable attorneys' fees, incurred in
connection with the indemnified party's cooperation.
SECTION 6. Distributions.
Upon Seller's receipt of any cash, securities, or other property
distributed on account of or in connection with the Assigned Rights, Seller
shall hold the same in trust for Buyer and shall deliver the same to Buyer
promptly (where possible in the form received), endorsed (where necessary)
without recourse to Seller. Any payments made to Buyer hereunder shall be made
in immediately available funds by wire transfer to Buyer in accordance with the
following wire instructions:
Fleet Bank
91 South Greeley Avenue
Chappaqua, New York 10514
ABA No: 021200339
Acct: 2369664279
Reference: Transworld Home HealthCare, Inc.
SECTION 7. Seller's Obligations.
(A) Subject to Section 5 hereof, the Seller hereby agrees to indemnify,
defend and hold the Buyer and its agents, affiliates, controlling persons,
officers, directors, employees, successors and assigns (collectively, the "Buyer
Indemnitees") harmless from and against any and all expenses, losses, claims,
damages or liabilities ("Liabilities") which are incurred by the Buyer
Indemnitees or any of them, including but not limited to reasonable attorneys'
fees and expenses, caused by, resulting from or relating to any material breach
of any of the representations,
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warranties, covenants or agreements of the Seller set forth in the Agreement.
The express indemnities made by Buyer in this Agreement shall be the sole remedy
available in respect of any such expenses, losses, claims, damages or
liabilities incurred or suffered by Seller.
(B) The Buyer and the Seller intend and agree that the Buyer shall assume
the Assumed Obligations.
SECTION 8. Buyer's Obligations.
The Buyer hereby agrees to indemnify, defend and hold the Seller and its
agents, affiliates, controlling persons, officers, directors and employees
(collectively the "Seller Indemnitees") harmless from and against any and all
Liabilities which are incurred by the Seller Indemnitees or any of them,
including but not limited to reasonable attorneys' fees and expenses caused by,
resulting from or relating to the Buyer's material breach of any of the
representations, warranties, covenants or agreements of the Buyer set forth in
the Agreement. The express indemnities made by Buyer in this Agreement shall be
the sole remedy available in respect of any such expenses, losses, claims,
damages or liabilities incurred or suffered by Seller.
SECTION 9. Further Transfers.
The Buyer may sell, assign, grant a participation in, or otherwise transfer all
or any portion of the Assigned Interests and the other Assigned Rights,
provided, that notwithstanding any such sale, assignment, participation or
transfer (i) the Buyer may not sell, assign, grant a participation in, or
otherwise transfer its rights under this Agreement or any interest herein,
except for a collateral assignment of its interest herein to Bankers Trust
Company, in its capacity as collateral agent to secure obligations of the Buyer
under existing credit facilities of the Buyer and (ii) the obligations of the
Buyer hereunder, which are not delegable, shall remain in full force and effect.
SECTION 10. Miscellaneous.
(A) Recourse. Except to the extent set forth herein, the assignment of the
Seller's Notes pursuant to this Agreement shall be without recourse, as such
term is defined in Section 3-417(3) of the Uniform Commercial Code of New York.
Any and all endorsements of instruments by Seller in connection with such
assignment shall be without recourse and Seller shall undertake no endorsers'
liability under the Uniform Commercial Code of New York, including, without
limitation, Section 3-414(1) thereof or otherwise, in respect of such
endorsements.
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(B) Survival. All representations, warranties, covenants, agreements and
other provisions made by the parties hereto shall be considered to have been
relied upon by the parties hereto and shall survive the execution, performance
and delivery of this Agreement and all other documents contemplated herein.
(C) Successors and Assigns. Subject to the proviso at the end of Section 9
hereof, this Agreement, including, without limitation, the representations,
warranties, covenants and agreements contained herein, (i) shall inure to the
benefit of and be enforceable by the respective parties hereto, and the Buyer's
and the Seller's successors and permitted assigns, and (ii) shall be binding
upon and enforceable against the respective parties hereto, and their successors
and permitted assigns.
(D) Further Assurances. Each of the parties hereto agrees to execute and
deliver, or to cause to be executed and delivered, all such instruments, and to
take all such action, as the other party may reasonably request in order to
effectuate the intent and purposes of this Agreement, all at the sole expense of
the requesting party.
(E) Costs and Expenses. Except as otherwise expressly provided herein,
each party to this Agreement shall bear its own costs and expenses, including
but not limited to attorneys' fees and expenses, in connection with the
transactions contemplated hereby. Each of the Buyer and the Seller represents
that it has not retained any broker or other intermediary to act on its behalf
in connection with this transaction.
(F) Counterpart Execution; Telecopies. This Agreement may be executed in
any number of counterparts, each of which, when so executed and delivered, shall
be an original, but all of which together shall constitute one agreement binding
all of the parties hereto. Transmission by telecopier of an executed counterpart
of this Agreement shall be deemed to constitute due and sufficient delivery of
such counterpart, provided that the party so delivering such counterpart shall,
promptly after such delivery, deliver the original of such counterpart of this
Agreement to the other party hereto.
(G) Amendments; Waivers. (i) No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by the Seller
and the Buyer and no waiver of any provision of this Agreement, nor consent to
any departure by the Seller or the Buyer therefrom, shall be effective unless it
is in writing and signed by the party affected thereby, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
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(ii) No failure on the part of any party to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof by such
party, nor shall any single or partial exercise of any right hereunder preclude
any other or further exercise thereof or the exercise of any other right. The
rights and remedies of each party provided herein (x) are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law
(except as otherwise expressly set forth herein) and (y) are not conditional or
contingent on any attempt by such party to exercise any of its rights under any
other related document against the other party or any other entity.
(H) Governing Law. This Agreement shall be construed and the obligations
of the parties hereunder shall be determined in accordance with the laws of the
State of New York (without regard to any conflict of laws provisions thereof).
(I) Notices. All demands, notices, requests, consents and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered by courier service, messenger, telex or telecopy (with a
confirmed answerback) at, or when duly deposited in the mails, by certified or
registered mail, postage prepaid -- return receipt requested, to the following
addresses, or such addresses as may be furnished hereafter by notice in writing,
to the following parties:
in the case of the Buyer:
Transworld Home HealthCare, Inc.
75 Terminal Avenue
Clark, New Jersey 07066
Attention: Vincent J. Caruso & Wayne Palladino
Telephone: (908) 340-1144
Telecopier: (908) 340-9170
with a copy to:
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036
Attention: Bruce L. Lieb, Esq.
Telephone: (212) 969-3000
Telecopier: (212) 969-2900
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in the case of the Seller:
European American Bank
c/o Euram Management Inc.
1 EAB Plaza
Uniondale, New York 11555-5774
Attention: Andrew Russell, Vice President
Telephone: 516-296-6741
Telecopier: 516-296-5103
with a copy to:
European American Bank
c/o Euram Management Inc.
1 EAB Plaza
Uniondale, New York 11555-5774
Attention: Steven Gutman, Esq.
Senior Vice President & General Counsel
Telephone: 516-296-6404
Telecopier: 516-296-5323
(J) Integration. This Agreement constitutes the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, understandings or representations
pertaining to the subject matter hereof, whether oral or written. There are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as specifically set forth or
incorporated herein.
(K) Disclosure of Agreement. The parties hereto agree that they shall not
disclose the terms and conditions of this Agreement (collectively, the
"Confidential Terms") to any person or entity, or the identity of the parties
hereto, except (i) Seller may disclose the sale of Assigned Interests to the
Lenders under the Credit Agreement and (ii) as may be required under the Credit
Agreement or by applicable law, legal process or duly authorized regulatory
authorities; provided that the Buyer may disclose the Confidential Terms to any
prospective or actual transferees (and their advisors) of the Seller's Notes or
the other Assigned Rights, or any portion thereof who agree to maintain the
confidentiality of the Confidential Terms as provided herein, except that Buyer
shall not disclose the Purchase Price or the Purchase Rate to any prospective or
actual transferee.
15
<PAGE>
(L) Captions and Headings. The section captions and headings in this
Agreement are for convenience only and are not intended to be full or accurate
descriptions of the contents hereof. They shall not be deemed to be part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provision hereof.
(M) Severability. The invalidity, illegality or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, all of which shall remain in full force
and effect.
(N) Relations of the Parties. The relationship between Seller and Buyer
shall be that of seller and purchaser. This Agreement shall not be construed to
create a partnership, joint venture or creditor-debtor relationship between the
parties hereto.
IN WITNESS WHEREOF, the Seller and the Buyer have executed this Agreement
by their duly authorized officers as of the date first set forth above.
EUROPEAN AMERICAN BANK
By: /s/ Andrew J. Russell
-------------------------------
Name: Andrew J. Russell
Title: Vice President
TRANSWORLD HOME HEALTHCARE, INC.
By: /s/ Wayne Palladino
-------------------------------
Name: Wayne Palladino
Title:
16
<PAGE>
Each of the undersigned hereby agrees and consents to the transactions
contemplated by the foregoing Purchase and Sale Agreement; and confirms in favor
of the Seller and the Buyer (i) the accuracy of the Principal Amount (ii) that
it has no defense, offset, claim, counterclaim or recoupment with respect to any
of its obligations or liabilities under the Credit Agreement, any Note or any
other Loan Document (as such terms are defined in the Credit Agreement),
including, without limitation, the payment when due of all fees, interest,
principal and other Obligations (as such term is defined in the Credit
Agreement) and (iii) set forth in Schedule 1 annexed hereto is a complete and
accurate list of all material documents (including all amendments, supplements,
modifications, waivers and terminations relating thereto) that evidence or
govern the Assigned Interests.
HEALTH MANAGEMENT, INC.
HOME CARE MANAGEMENT, INC.
HMI ILLINOIS, INC.
HMI PENNSYLVANIA, INC.
HEALTH REIMBURSEMENT CORPORATION
HMI RETAIL CORP., INC.
HMI PMA, INC.
HMI MARYLAND, INC.
By: /s/ Paul S. Jurewicz
- -------------------------------
Name: Paul S. Jurewicz
Title: CFO
The Chase Manhattan Bank, in its capacity as Agent and a Lender under the Credit
Agreement, hereby consents to the transactions contemplated by the foregoing
Purchase and Sale Agreement notwithstanding the failure of the parties to comply
with the relevant provisions of Section 11.03 of the Credit Agreement.
THE CHASE MANHATTAN BANK, as a Lender and as Agent
By: ___________________________
Name:
Title:
TRANSWORLD HOME HEALTHCARE, INC.
11 Skyline Drive
Hawthorne, New York 10532
November 13, 1996
Health Management, Inc.
and the other Loan Parties
under and as defined in the
Credit Agreement referred to below
1371-A Abbott Court
Buffalo Grove, Illinois 60089
Attention: Mr. Paul Jurewicz
Re: HMI Senior Credit Facility
Ladies and Gentlemen:
Reference is made to (a) the Credit Agreement dated as of March 31,
1995 (as heretofore, herein or hereafter amended, restated, supplemented or
otherwise modified, the "Credit Agreement") among Health Management, Inc.
("HMI"), Home Care Management, Inc., HMI Illinois, Inc., HMI Pennsylvania, Inc.,
the Guarantors named therein, the Lenders named therein and The Chase Manhattan
Bank (formerly known as Chemical Bank), as Agent; (b) the agreement dated July
26, 1996 (the "First Forbearance Agreement") among The Chase Manhattan Bank,
individually and as Agent, European American Bank and the Loan Parties; (c) the
agreement dated October 18, 1996 (the "Second Forbearance Agreement") among The
Chase Manhattan Bank, individually and as Agent, European American Bank and the
Loan Parties; and (d) the Credit Agreement dated as of July 31, 1996 (as
amended, restated, supplemented or otherwise modified, the "BT Credit
Agreement") among Transworld Home HealthCare, Inc., various lenders (the "NL
Lenders") and Bankers Trust Company as agent (the "NL Agent").
On the date hereof, The Chase Manhattan Bank (individually and as
Agent) ("Chase"), European American Bank ("EAB") and Transworld Home Healthcare,
Inc. (the "New Lender") have entered into Purchase and Sale Agreements
(collectively, the "Purchase and Sale Agreements") whereby, inter alia, the New
Lender has purchased the Assigned Rights (as defined in the Purchase and Sale
Agreements) of the Agent and the Lenders under the Loan Documents. Also on the
date hereof, Transworld Home HealthCare, Inc., IMH Acquisition Corp. and Health
Management, Inc., have executed and delivered an Agreement and Plan of Merger,
(the "Merger Agreement").
Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Credit Agreement, the First Forbearance
Agreement and the Purchase and Sale Agreements, as applicable. To the extent
there is any inconsistencies in the definitions, the priority of the agreements
(and definitions set forth therein) shall be: the First Forbearance
<PAGE>
Agreement, the Second Forbearance Agreement, the Credit Agreement and the
Purchase and Sale Agreement.
1. Consent to Purchase and Sale Agreements
The Loan Parties hereby consent and agree to the transactions
contemplated by the Purchase and Sale Agreements, including, without limitation,
by waiving any requirement of section 11.03(c) of the Credit Agreement with
respect thereto. The Loan Parties acknowledge in favor of the New Lender that
the New Lender (i) has acquired the Assigned Rights of the Agent and the Lenders
under the Credit Agreement, the Security Documents and the other Loan Documents
and (ii) hereafter will be authorized to take such actions and exercise such
powers under the Credit Agreement, the Security Documents and the other Loan
Documents as are granted or delegated to, or required of, the Agent and the
Lenders together with such powers as are reasonably incidental thereto.
2. Forbearance
You have requested that the New Lender agree to extend the First
Forbearance Period and forbear from exercising any of its legal, contractual or
equitable rights or remedies in respect of any of the Existing Events of Default
(as set forth in the First Forbearance Agreement and/or the Second Forbearance
Agreement) or any other Defaults or Events of Default under the Credit
Agreement, the First Forbearance Agreement or the Second Forbearance Agreement
during the period commencing on the date hereof through December 12, 1996 (the
"Additional Forbearance Period"). Subject to the agreement of the Loan Parties
to the terms and conditions set forth herein as evidenced by their signature
below, the New Lender agrees to forbear during the Additional Forbearance Period
from exercising any of its legal, contractual or equitable rights or remedies in
respect of any of the Existing Events of Default or any other currently existing
Defaults or Events of Default under the Credit Agreement, the First Forbearance
Agreement or the Second Forbearance Agreement.
3. Additional Revolving Credit Loans
Pursuant to Section 5.01 of the Credit Agreement, the obligation of
the New Lender to make Loans and to issue or cause to be issued Letters of
Credit is subject to, inter alia, the conditions precedent that (i) no Event of
Default shall have occurred and be continuing and (ii) no material adverse
change in the business, assets, operations or financial condition of any
Borrower or any of its subsidiaries shall have occurred since April 30, 1994.
You acknowledge that you have not satisfied all applicable conditions precedent
set forth in Section 5.01 of the Credit Agreement by virtue of, inter alia, the
occurrence of such a material adverse change and the continuance of the Existing
Events of Default, and you further acknowledge that you have not complied with
all of the representations, warranties, terms, covenants and conditions
contained in the First Forbearance Agreement and the Second Forbearance
Agreement. Notwithstanding the foregoing, you have requested that the New Lender
make additional Revolving Credit Loans to the Borrowers up to a maximum
aggregate amount equal to $3,000,000.
Notwithstanding the failure to satisfy the conditions precedent set
forth in Section 5.01 of the Credit Agreement and all of the representations,
warranties, terms, covenants and conditions contained in the First Forbearance
Agreement, the New Lender is willing, subject to its continuing
2
<PAGE>
sole and absolute discretion, to make additional Revolving Credit Loans to the
Borrowers up to an aggregate amount of $3,000,000 from time to time in
accordance with the foregoing request, subject, however, without limiting the
New Lender's sole and absolute discretion as aforesaid, to (i) satisfaction of
all other applicable conditions precedent set forth in Section 5.01 of the
Credit Agreement with respect to each such Revolving Credit Loan and (ii) the
agreement of the Loan Parties, evidenced by their signature below, (1) to the
terms and conditions hereof, (2) that the proceeds of any such Revolving Credit
Loan shall be used solely and exclusively for the proper operation of the
Borrowers' businesses under their present circumstances in the ordinary course,
including, without limitation, the payment of professional fees and expenses
incurred in connection with the transactions contemplated in this Agreement and
the Merger Agreement, and all other agreements between the New Lender and the
Loan Parties contemplated to be executed and delivered simultaneously therewith,
and (3) that each such Revolving Credit Loan shall be and shall remain an
Alternate Base Loan. Nothing herein shall constitute or be deemed to constitute
a waiver of any conditions precedent set forth in Section 5.01 of the Credit
Agreement, the First Forbearance Agreement or the Second Forbearance Agreement
with respect to any Credit Event.
Notwithstanding (i) that the New Lender may, subject to its
continuing sole and absolute discretion, make Revolving Credit Loans in
accordance with the foregoing terms and conditions, and (ii) anything to the
contrary in any other agreement, you agree and acknowledge that the Total
Commitment and the obligations of the New Lender to issue or cause to be issued
Letters of Credit has terminated and has not been renewed or reinstated by this
agreement or by any act or failure to act by the New Lender.
The willingness of the New Lender to make Revolving Credit Loans to
the Borrowers from time to time as provided above is subject to, inter alia, the
Borrowers' reaffirmation of certain of their obligations under the First
Forbearance Agreement and the Second Forbearance Agreement for the benefit of
the New Lender, and their agreement to certain other terms and conditions, as
follows:
(a) The Loan Parties shall provide to the New Lender no later
than the 15th day following the end of each month hereafter a report
in form, scope and substance satisfactory to the New Lender
indicating that HMI's Consolidated gross sales revenues for each
such month exceeded $12,000,000 for each month covered by this
Agreement, each such report to be certified as true and correct by
your chief financial or chief operating officer.
(b) The Loan Parties shall provide to the New Lender no later
than the 15th day following the end of each month hereafter a report
in form, scope and substance satisfactory to the New Lender
indicating that the aggregate dollar amount of all accounts
receivable of HMI and its Consolidated subsidiaries that were
outstanding as of the last day of such month for 120 days or less
exceeded $22,500,000.
(c) The Loan Parties shall provide to the New Lender no later
than the 10th day following the end of each calendar week hereafter
a "flash" report providing information substantially similar in form
and scope to the four-page summary report contained in the "flash
reports" which in the past were prepared by Ernst & Young, LLP, with
respect to HMI and its subsidiaries, which "flash reports" shall be
certified
3
<PAGE>
as true and correct by your chief financial or chief operating
officer, provided, however, that the Loan Parties shall provide to
the New Lender upon its request the documentation supporting such
report.
(d) The Loan Parties shall provide to the New Lender such
other and further financial and operational information and reports,
and satisfy such other and further financial requirements, as to
which the New Lender is or may be subject, or is required or may be
requested to deliver, pursuant to the BT Credit Agreement or the
requirements of the board of directors of the New Lender, in form,
scope and substance, and in compliance with applicable timing
requirements with respect thereto, as set forth in the BT Credit
Agreement or necessary for compliance with the requirements of the
New Lender, in all cases in form, scope and substance satisfactory
to the New Lender and, if requested, prepared as if the fiscal year
of the Loan Parties ended on October 31.
(e) The Loan Parties shall execute, acknowledge, deliver and
cause to be duly filed all such instruments and other documents, and
shall take all such actions, as the New Lender may from time to time
request to assure the validity, enforceability, attachment,
perfection and first priority of the New Lender's Liens in the
Collateral including, without limitation, as required in or
permitted by the Security Documents.
(f) All other (i) obligations or actions required of the Loan
Parties under the Credit Agreement or the Loan Documents including,
without limitation, those set forth in Articles VI and VII of the
Credit Agreement, or (ii) non-payment obligations or actions (to the
extent applicable and practicable) of the Borrower under the BT
Credit Agreement or the Credit Documents (as defined in the BT
Credit Agreement, including, without limitation, those set forth in
Sections 8 and 9 of the BT Credit Agreement, shall be performed by
the Loan Parties for the benefit of the New Lender. Without limiting
the generality of the foregoing, the Loan Parties shall provide to
the New Lender, to the NL Agent and the NL Lenders all documents,
reports, filings and information heretofore required to be provided
to the Agent and/or the Lenders under the Credit Agreement or the
Loan Documents, or to be provided to the NL Agent and/or the NL
Lenders under the BT Credit Agreement or the Credit Documents (to
the extent applicable and practicable), in each case in form, scope
and substance satisfactory to the New Lender and the NL Agent.
(g) Notwithstanding anything to the contrary contained in
Section 2.09(c) of the Credit Agreement, unless the New Lender, in
its sole and absolute discretion, otherwise consents in writing, the
net proceeds of any issuance of any debt or equity securities of HMI
or its subsidiaries shall be applied to reduce the Obligations until
all Obligations have been repaid in full.
(h) Notwithstanding anything to the contrary contained in the
Credit Agreement, Section 2.05(a) of the Credit Agreement is hereby
deleted in its entirety and replaced, amended and restated as
follows:
(a) Subject to the provisions of
Section 2.05(c) and Section 2.08
hereof, each Alternate Base Loan shall
4
<PAGE>
bear interest at a rate per annum equal
to the Applicable Margin plus the Base
Rate (the two preceding capitalized
terms, as defined in the BT Credit
Agreement) in effect from time to
time, plus .50%.
(i) Section 11.01(b) of the Credit Agreement is hereby amended
such that notices, consents and other communications provided for in
the Credit Agreement or the Loan Documents, if to the Agent, shall
be delivered, mailed or telecopied (with receipt confirmed) to
Transworld Home Healthcare, Inc., 75 Terminal Avenue, Clark, New
Jersey 07066, Attn: Mr. Wayne A. Palladino, with a copy to Proskauer
Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York
10036, Attn: Bruce L. Lieb, Esq., and to Bankers Trust Company, One
Bankers Trust Plaza, New York, New York 10006, Attn: Patricia Hogan.
(j) Notwithstanding anything to the contrary contained in the
Credit Agreement, a "Change of Control" with respect to the Credit
Agreement shall be deemed to have occurred if (i) any person or
group (within the meaning of Rule 13d-5 of the Securities and
Exchange Commission as in effect on the date hereof) shall acquire,
directly or indirectly, beneficially or of record, shares
representing more than 20% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of HMI or
(ii) HMI shall cease to own 100% of all classes of stock of each
other Borrower.
4. Miscellaneous
Except to the extent otherwise expressly set forth in the Merger
Agreement (including the disclosure schedules attached hereto), each of the Loan
Parties reaffirms and restates for the benefit of the New Lender the
representations and warranties set forth in Article IV of the Credit Agreement
and section 7 of the Security Agreement and all such representations and
warranties are true and correct in all material respects on the date hereof with
the same force and effect as if made on such date (except to the extent that
they relate expressly to an earlier date in which case they were true and
correct as of such date). In addition, each of the Loan Parties represents and
warrants (which representations and warranties shall survive the execution and
delivery hereof) to the New Lender that:
(a) it has the power and authority to execute, deliver and
carry out the terms and provisions of this agreement and the
transactions contemplated hereby (including, without limitation,
those contemplated in the Purchase and Sale Agreements) and has
taken or caused to be taken all necessary actions to authorize the
execution, delivery and performance of this agreement and the
transactions contemplated hereby;
(b) no consent of any other person (including, without
limitation, shareholders or creditors of any Loan Party) and no
action of or filing with any governmental or public body or
authority is required to be maintained by any Loan Party to
authorize, or is otherwise required in connection with the
execution, delivery
5
<PAGE>
and performance of this agreement or the consummation of the
transactions contemplated hereby;
(c) this agreement has been duly executed and delivered by or
on behalf of it and constitutes its legal, valid and binding
obligation enforceable in accordance with its terms;
(d) the execution, delivery and performance of this agreement
will not violate any law, statute or regulation, or any order or
decree of any court or governmental instrumentality applicable to
it, or conflict with, or result in the breach of, or constitute a
default under any contractual obligations of the Loan Parties; and
(e) as of the date hereof there exists no Default or Event of
Default other than the Existing Events of Default.
Each of the Loan Parties confirms in favor of the New Lender that as
of the date hereof (i) it has no defense, offset, claim, counterclaim or
recoupment, whether with respect to any of its Obligations under the Credit
Agreement (including, without limitation, the payment when due of all principal,
interest, fees and other Obligations), any Note, any other Loan Document or
otherwise; (ii) the aggregate outstanding principal amount of the Obligations to
Chase under the Seller's Revolving Credit Loans, Seller's Term Loan and Seller's
Letters of Credit as of the date hereof is $24,181,095.19 (the "Chase Principal
Amount"), the aggregate amount of all accrued and unpaid interest on the Chase
Principal Amount (together with all fees payable to Chase under or pursuant to
the Loan Documents) as of the date hereof is $68,926.44, the aggregate amount of
all out-of-pocket expenses reimbursable by the Loan Parties to Chase under or
pursuant to the Loan Documents approximately equals $112,500, the aggregate
outstanding principal amount of the Obligations to EAB under the Seller's
Revolving Credit Loans, Seller's Term Loan and Seller's Letters of Credit as of
the date hereof is $4,168,904.76 (the "EAB Principal Amount"), and the aggregate
amount of all accrued and unpaid interest on the EAB Principal Amount (together
with all fees payable to EAB under or pursuant to the Loan Documents) as of the
date hereof is $12,858.35; (iii) the Obligations are secured by the Collateral
described in the Security Documents and the New Lender has a valid, perfected,
enforceable and non-avoidable first priority Lien on and security interest in
the Collateral; (iv) no claims or causes of action exist in favor of the Loan
Parties against the Agent, the Lenders or the New Lender, including, without
limitation, claims or causes of action (1) under principles of lender liability,
(2) that would enable the Loan Parties to equitably subordinate any of the
Obligations under the Credit Agreement owing to the New Lender to the claims of
other creditors or interests of equity security holders of the Loan Parties, (3)
that would give rise to any avoidance or recovery actions against the New Lender
under sections 542, 544, 545, 547, 548, 549, 550, 551 and 553 of 11 U.S.C.
ss.ss. 101 et seq. ("the Bankruptcy Code"), (4) that any of the Agent, the
Lenders or the New Lender is an insider of the Loan Parties as defined in
section 101(31) of the Bankruptcy Code; or (5) under any other principle or
theory whether similar or dissimilar to the foregoing; and, if any such claims
and causes of action exist as of the date hereof, all such claims and causes of
action are hereby waived and released by each of the Loan Parties.
Notwithstanding the foregoing, the Loan Parties hereby waive and release any
claim or cause of action against the Agent, the Lenders or the New Lender
described in this paragraph that exists or could be asserted as of the date
hereof.
This agreement constitutes a Loan Document and a default by the Loan
Parties with respect to any of their obligations hereunder (which are joint and
several), including, without limitation, under any covenant contained herein,
shall constitute an immediate Event of Default.
6
<PAGE>
Each Guarantor confirms that the principal and interest of the
Revolving Credit Loan described herein, if and when made, shall constitute
Obligations guaranteed by it pursuant to Article XIII of the Credit Agreement,
and each Grantor confirms that the principal and interest of such Revolving
Credit Loan shall constitute Obligations secured by all Collateral pledged by
such Grantor pursuant to each Loan Document to which it is a party.
The Credit Agreement and each of the other Loan Documents is hereby
ratified and confirmed in all respects and all of the representations,
warranties, terms, covenants and conditions of the Credit Agreement and each of
the other Loan Documents, and all obligations of the Loan Parties thereunder,
shall remain unamended, unwaived and in effect in accordance with their
respective terms. Each of the Loan Parties hereby acknowledges and agrees that
any willingness of the New Lender to make Revolving Credit Loans under section
above shall be subject to the continuing sole and absolute discretion of the
New Lender and shall not be deemed to constitute an amendment to, or waiver or
modification of, any term or provision of any Loan Document or any other
document or instrument referred to herein or therein.
The New Lender's willingness, subject to its continuing sole and
absolute discretion, to make Revolving Credit Loans in accordance with this
agreement does not, and shall not, create (nor shall the Borrowers rely upon the
existence of or claim or assert that there exists) any obligation of the New
Lender to consider or agree to any amendment to or waiver or modification of any
term or provision of any Loan Document or any other document or instrument
referred to herein or therein. In the event that the New Lender subsequently
agrees to consider any such amendment, waiver or modification, neither the New
Lender's willingness, subject to its continuing sole and absolute discretion, to
make Revolving Credit Loans as set forth herein, nor anything else contained in
this agreement nor any other conduct of the New Lender, shall be of any force or
effect on the New Lender's consideration or decision with respect to any such
requested amendment, waiver or modification, and the New Lender shall have no
obligation whatsoever to consider or agree to any amendment to or waiver or
modification of any Loan Document or any other document referred to herein or
therein or waive or forbear with respect to any Default or Event of Default.
The New Lender reserves all legal, contractual and equitable rights
and remedies available to it as a result of any past, present or future Default
or Event of Default.
This agreement shall be governed by the laws of the State of New
York (other than the conflicts of law principles thereof). This agreement may be
executed in counterparts and shall become effective upon the New Lender's
receipt of copies hereof (which may include facsimile copies) executed by the
New Lender and acknowledged and agreed to by each Loan Party.
[End of Text]
7
<PAGE>
Very truly yours,
TRANSWORLD HOME HEALTHCARE, INC.,
as New Lender
By: /s/ Wayne Palladino
-------------------------------
Name: Wayne Palladino
Title: Chief Financial Officer
Senior Vice President
ACCEPTED AND AGREED:
HEALTH MANAGEMENT, INC.
HOME CARE MANAGEMENT, INC.
HMI ILLINOIS, INC.
HMI PENNSYLVANIA, INC.
HEALTH REIMBURSEMENT CORPORATION
HMI RETAIL CORP., INC.
HMI PMA, INC.
HMI MARYLAND, INC.
By: Paul S. Jurewicz
---------------------------
Name: Paul S. Jurewicz
Title: CFO
8
EXHIBIT 9
EXECUTION COPY
Amendment No. 1 to
Secured Credit Agreement
and Amendment No. 1 to
Security Agreement
dated as of August 2, 1996
In re:
SECURED CREDIT AGREEMENT
dated as of August 15, 1995
Between
HYPERION PARTNERS II L.P.
and
THE BANK OF NEW YORK
<PAGE>
Amendment No. 1
to
Secured Credit Agreement
and
Amendment No. 1 to Security Agreement
Dated as of August 2, 1996
HYPERION PARTNERS II L.P., a Delaware limited partnership (the
"Partnership") and THE BANK OF NEW YORK (the "Bank"), having previously entered
into between themselves a Secured Credit Agreement dated as of August 15, 1995
(the "Secured Credit Agreement"), and a related Security Agreement dated as of
August 15, 1995 (the "Security Agreement") agree, subject to the terms and
conditions herein stated, to amend the Secured Credit Agreement and the Security
Agreement as follows (capitalized terms used but not defined herein are used as
defined in the Secured Credit Agreement; this Agreement being hereafter referred
to as this "Amendment"):
I. Secured Credit Agreement Amendments
Upon the effectiveness of this Amendment, the Secured Credit
Agreement is amended as follows:
1.1 The last sentence of Section 1.01 shall be amended to read in
its entirety as follows:
"The Commitment on the Amendment Date is $20,000,000".
1.2 Section 3.02 shall be amended by replacing the phrase "As of the
Agreement Date," with "As of the Amendment Date,".
1.3 Section 9.01(a) of the Secured Credit Agreement is amended by
adding the following definition:
"'Amendment Date' means, August 2, 1996, which date is the date
executed copies of Amendment No. 1 to this
<PAGE>
Agreement and Amendment No. 1 to the Security Agreement were
delivered by all parties thereto and, accordingly, the date on which
Amendment No. 1 to this Agreement and Amendment No. 1 to the
Security Agreement became effective and, for the first time, binding
upon the parties hereto.".
1.4 The definition of "Termination Date", as set forth in Section
9.01(a) of the Secured Credit Agreement is amended in its entirety to read as
follows:
"'Termination Date' means the date which is 364 days from and
including the Amendment Date.".
1.5 Schedule 3.08 of the Secured Credit Agreement is replaced with
Exhibit A hereto.
1.6 Exhibit A-1 to the Secured Credit Agreement is replaced with
Exhibit A-1 hereto.
II. Security Agreement Amendments
Upon the effectiveness of this Amendment, the Security Agreement is
amended as follows:
2.1 the First WHEREAS recital is amended to read in its entirety as
follows:
"WHEREAS, Debtor and Secured Party entered into a Secured
Credit Agreement dated as of August 15, 1995 (as amended from time
to time, the "Secured Credit Agreement"), pursuant to which the
Secured Party has committed to extend to the Debtor, and the Debtor
may obtain from the Secured Party, credit in the form of Loans in
the aggregate principal amount not to exceed $20,000,000 (the
"Commitment"), and Debtor has executed and delivered to the Secured
Party a promissory note dated as of August 2, 1996 in the aggregate
principal amount of $20,000,000 bearing interest as set forth in the
Secured Credit Agreement (as amended or substituted from time to
time, the "Note"). This Agreement, the Secured Credit Agreement, the
Note and all other agreements, documents and instruments relating
to, arising out of, or in any way connected with any of the
foregoing, are referred to herein as the "Loan Documents"; all
debts, liabilities and obligations evidenced by or arising hereunder
or by or under any of the Loan Documents, including any extensions,
renewals, refinancing or changes in form thereof, are hereinafter
referred to as the "Obligations"; other terms used but not defined
-2-
<PAGE>
herein that are defined in the Secured Credit Agreement are used
with the meanings there ascribed to them;".
2.2 Schedule A to the Security Agreement is replaced by Exhibit B
hereto.
2.3 Schedule C to the Security Agreement is replaced by Exhibit C
hereto.
III. Conditions
3.1 Conditions to the Effectiveness of This Amendment. The
effectiveness of this Amendment is subject to the receipt by the Bank of each of
the following, in form and substance and, in the case of the materials referred
to in clause (b), certified in a manner satisfactory to the Bank:
(a) this Amendment and the replacement Note each duly executed
by every Loan Party thereto;
(b) a certificate of the Vice President and Secretary of the
general partner of the General Partner of the Borrower, dated as of the date
hereof, substantially in the form of Annex A hereof and the resolutions referred
to in such certificate;
(c) replacement Capital Call Notices in the form of Schedule C
to the Security Agreement (as amended hereby), duly executed in blank with
respect to, and in the amounts of, each of the Pledged Capital Commitments set
forth opposite such partner's name on Schedule A to the Security Agreement (as
amended hereby); and
IV. Representations and Warranties
4.1 Representations and Warranties. The Borrower represents and
warrants that:
(a) except for any Default or Event of Default expressly
waived by the Bank in Section 5.2 below, no Default or Event of Default has or
shall have occurred and be continuing either before or after giving effect to
this Amendment; and
(b) except as stated in writing to the Secured Party on or
before the date hereof, all of the Loan Document Representations and Warranties
are true and accurate as if made on the date hereof, provided that, for purposes
of this Section 4.1(b), the reference to "this Agreement" in Section 3.03 to the
Secured Credit Agreement shall be deemed to be a reference to this Amendment.
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<PAGE>
V. Miscellaneous
5.1. Effect on Loan Documents. (a) Except as specifically amended or
supplemented by this Amendment and the other documents delivered hereunder, each
of the Loan Documents and the Schedules and Exhibits thereto shall remain in
full force and effect and are hereby ratified and affirmed.
(b) Except as may be expressly stated in this Amendment, nothing
contained in this Amendment or any documents delivered hereunder, nor the
execution, delivery or effectiveness thereof, shall operate as a waiver of any
right, power or remedy of the Secured Party under any provision of the Loan
Documents.
5.2 Waiver of Notice. The Bank hereby consents to the admission of
each of LJR Limited Partnership and BT Investment Partners, Inc. (the "New
Partners") to Hyperion Partners II L.P. and waives any notice required to be
delivered to it in accordance with the Secured Credit Agreement as such notice
relates to the admission to the partnership of the New Partners. The Bank's
consent set forth in this Section 5.2 shall be effective as of June 27, 1996.
5.2 Governing Law. This Amendment and the documents delivered
hereunder shall be construed in accordance with and governed by the laws of the
State of New York.
5.3 Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized representatives on this 2nd day of August,
1996.
HYPERION PARTNERS II L.P.,
a Delaware limited partnership
By: HYPERION VENTURES II L.P.,
Its General Partner
By: HYPERION FUNDING II CORP.,
Its General Partner
By /s/ Robert A. Perro
------------------------------
Name: Robert A. Perro
Title: Vice President and
Secretary
THE BANK OF NEW YORK
By: /s/ Robert A. Tweed
------------------------------
Name: Robert A. Tweed
Title: Vice President
Agreement Date: August 2, 1996
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EXHIBIT 10
Execution Copy
Amendment No. 2 to
Secured Credit Agreement
and Amendment No. 2 to
Security Agreement
dated as of November 13, 1996
In re:
SECURED CREDIT AGREEMENT
dated as of August 15, 1995
Between
HYPERION PARTNERS II L.P.
and
THE BANK OF NEW YORK
<PAGE>
Amendment No. 2
to
Secured Credit Agreement
and
Amendment No. 2 to Security Agreement
Dated as of November 13, 1996
HYPERION PARTNERS II L.P., a Delaware limited partnership (the
"Partnership") and THE BANK OF NEW YORK (the "Bank"), having previously entered
into between themselves a Secured Credit Agreement dated as of August 15, 1995,
as amended by Amendment No. 1 dated as of August 2, 1996 (as amended, the
"Secured Credit Agreement"), and a related Security Agreement dated as of August
15, 1995, as amended by Amendment No. 1 dated as of August 2, 1996 (the
"Security Agreement"), agree, subject to the terms and conditions herein
stated, to amend the Secured Credit Agreement and the Security Agreement as
follows (capitalized terms used but not defined herein are used as defined in
the Secured Credit Agreement; this Agreement being hereafter referred to as this
"Amendment"):
I. Secured Credit Agreement Amendments
Upon the effectiveness of the Secured Credit Agreement is amended as
follows:
1.1 The last sentence of Section 1.01 shall be amended to read in its
entirety as follows:
"The Commitment on the Amendment Date is $40,000,000".
<PAGE>
1.2 Section 9.01(a) of the Secured Credit Agreement is amended by
restating the definition of "Amendment Date" contained therein in its entirety
as follows:
"'Amendment Date' means, November 13, 1996, which date is the date executed
copies of Amendment No. 2 to this Agreement and Amendment No. 2 to the
Security Agreement were delivered by all parties thereto and, accordingly,
the date on which Amendment No. 2 to this Agreement and Amendment No. 2 to
the Security Agreement became effective and, for the first time, binding
upon the parties hereto.".
1.3 Schedule 3.08 of the Secured Credit Agreement is replaced with Exhibit
A hereto.
1.4 Exhibit A-1 to the Secured Credit Agreement is replaced with Exhibit
A-1 hereto.
II. Security Agreement Amendments
Upon the effectiveness of this Amendment, the Security Agreement is
amended as follows:
2.1 the First WHEREAS recital is amended to read in its entirety as
follows:
"WHEREAS, Debtor and Secured Party entered into a Secured Credit
Agreement dated as of August 15, 1995 (as amended from time to time, the
"Secured Credit Agreement"), pursuant to which the Secured Party has
committed to extend to the Debtor, and the Debtor may obtain from the
Secured Party, credit in the form of Loans in the aggregate principal
amount not to exceed $40,000,000 (the "Commitment"), and Debtor has
executed and delivered to the Secured Party a promissory note dated as of
November 13, 1996 in the aggregate principal amount of $40,000,000 bearing
interest as set forth in the Secured Credit Agreement (as amended or
substituted from time to time, the "Note"). This Agreement, the Secured
Credit Agreement, the Note and all other agreements, documents and
instruments relating to, arising out of, or in any way connected with any
of the foregoing, are referred to herein as the "Loan Documents"; all
debts, liabilities and obligations evidenced by or arising hereunder or by
or under any of the Loan Documents, including any extensions, renewals,
refinancing or changes in form thereof, are hereinafter referred to as the
"Obligations"; other terms used but not defined herein that are defined in
the Secured Credit Agreement are used with the meanings there ascribed to
them;".
2.2 Schedule A to the Security Agreement is replaced by Exhibit hereto.
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<PAGE>
2.3 Schedule C to the Security Agreement is replaced by Exhibit C hereto.
III. Conditions
3.1. Conditions to the Effectiveness of This Amendment. The effectiveness
of this Amendment is subject to the receipt by the Bank of each of the
following, in form and substance and, in the case of the materials referred to
in clause (b), certified in a manner satisfactory to the Bank:
(a) this Amendment and the replacement Note each duly executed by
every Loan Party thereto;
(b) a certificate of the Vice President and Secretary of the general
partner of the General Partner of the Borrower, dated as of the date hereof,
substantially in the form of Annex A hereto and the resolutions referred to in
such certificate;
(c) replacement Capital Call Notices in the form of Schedule C to
the Security Agreement (as amended hereby), duly executed in blank with respect
to, and in the amounts of, each of the Pledge Capital Commitments set forth
opposite such partner's name on Schedule A to the Security Agreement (as amended
hereby); and;
(d) payment by the Borrower, within ten (10) days of the
effectiveness of this Amendment, of all legal fees and other expenses incurred
by the Bank in connection with the negotiation, execution and delivery of this
Amendment.
IV. Representations and Warranties
4.1. Representations and Warranties. The Borrower represents and warrants
that:
(a) no Default or Event of Default has or shall have occurred and be
continuing either before or after giving effect to this Amendment; and
(b) except as stated in writing to the Secured Party on or before
the date hereof, all of the Loan Document Representations and Warranties are
true and accurate as if made on the date hereof, provided that, for purposes of
this Section 4.1(b), the reference to "this Agreement" in Section 3.03 to the
Secured Credit Agreement shall be deemed to be a reference to this Amendment.
V. Miscellaneous
5.1 Effect on Loan Documents. (a) Except as specifically amended or
supplemented by this Amendment and the other documents delivered hereunder, each
of the
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<PAGE>
Loan Documents and the Schedules and Exhibits thereto shall remain in full force
and effect and are hereby ratified and affirmed.
(b) Except as may be expressly stated in this Amendment, nothing
contained in this Amendment or any documents delivered hereunder, nor the
execution, delivery or effectiveness thereof, shall operate as a waiver of any
right, power or remedy of the Secured Party under any provision of the Loan
Documents.
5.2 Governing Law. This Amendment and the documents delivered hereunder
shall be construed in accordance with and governed by the laws of the State of
New York.
5.3 Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.,
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized representatives on this 13th day of
November, 1996.
HYPERION PARTNERS II L.P.
a Delaware limited partnership
By: HYPERION VENTURES II L.P.,
Its General Partner
By: HYPERION FUNDING II CORP.,
Its General Partner
By: /s/ Robert A. Perro
--------------------
Name: Robert A. Perro
Title: Vice President and
Secretary
THE BANK OF NEW YORK
By: /s/ Robert A. Tweed
--------------------
Name: Robert A. Tweed
title:Vice President
Agreement Date: November 13, 1996
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