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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
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NATIONAL QUALITY CARE, INC.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
803659101
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(CUSIP Number)
Jerry Jacobson, Esq.
10866 Wilshire Boulevard, Suite 850, Los Angeles,
California 90024, (310) 441-7374
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 15, 1997
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(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 this statement / /. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP No. 803659101 13D Page 2 of 5 Pages
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(1) Names of Reporting Persons. S.S. or I.R.S. Identification Nos. of Above
Persons
Isaac Flombaum (No S.S or I.R.S. Identification Number)
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(2) Check the Appropriate Box if a Member (a) / /
of a Group* (b) / /
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(3) SEC Use Only
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(4) Source of Funds*
PF
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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(6) Citizenship or Place of Organization
Argentina
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Number of Shares (7) Sole Voting
Beneficially Owned Power 630,206
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting
Power 0
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(9) Sole Dispositive
Power 630,206
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(10) Shared Dispositive
Power 0
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person
630,206
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares*
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(13) Percent of Class Represented by Amount in Row (11)
7.63%
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(14) Type of Reporting Person*
IN
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*SEE INSTRUCTION BEFORE FILLING OUT!
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Page 3 of 5 Pages
NATIONAL QUALITY CARE, INC.
SCHEDULE 13 D
APRIL 24, 1997
1. SECURITY AND ISSUER.
Common Stock
National Quality Care, Inc.
5901 West Olympic Boulevard
Suite 109
Los Angeles, California 90036
2. IDENTITY AND BACKGROUND.
a. Isaac Flombaum
b. Doblas 82
2nd Piso
Buenos Aires, Argentina
c. Mr. Flombaum is retired.
d. Not applicable
e. Not applicable
f. Argentina
3. SOURCES AND AMOUNT OF FUNDS OR OTHER CONSIDERATION; AND
4. PURPOSE OF TRANSACTION.
Mr. Flombaum entered into a Stock Purchase Agreement, dated as of February
24, 1997, pursuant to which Mr. Flombaum agreed to purchase 630,206 shares of
common stock, par value $0.01 (the "Common Stock") of National Quality Care,
Inc. (the "Company"), from certain unrelated third parties. The transactions
contemplated by the Stock Purchase Agreement were completed on April 15, 1997.
In connection with the transactions contemplated by the Stock Purchase
Agreement: (i) the Company agreed to cancel two (2) promissory notes in the
aggregate principal amount of approximately $865,000 (subject to certain
adjustments) payable to the Company by such third parties, (ii) Mr. Flombaum
agreed to pay the sum of $12,000 to such third parties, and (iii) Mr. Flombaum
agreed to execute a promissory note payable to the Company in the principal
amount of $1,000,000, bearing interest at the rate of 10% PER ANNUM, and due and
payable on or before February 23, 1998. The obligation owing to the Company on
the $1,000,000 promissory note is secured by the 630,206 shares of Common Stock,
which are held in escrow, and are subject to certain restrictions on
transferability
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Page 4 of 5 Pages
and alienation until the $1,000,000 promissory note has been paid in full. Mr.
Flombaum is entitled to vote the 630,206 shares until a default is declared on
the $1,000,000 promissory note..
5. INTEREST IN SECURITIES OF THE ISSUER.
a. 630,206 shares (7.63%)
b. SOLE VOTING AND DISPOSITIVE POWERS - 630,206 shares (See Item 6)
SHARED VOTING AND DISPOSITIVE POWERS - None (See Item 6)
c. Not applicable
d. See Item 6
e. Not applicable
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Mr. Flombaum entered into a Stock Purchase Agreement, dated as of February
24, 1997, pursuant to which Mr. Flombaum agreed to purchase 630,206 shares of
Common Stock of the Company from certain unrelated third parties. The
transactions contemplated by the Stock Purchase Agreement were completed on
April 15, 1997. In connection with the transactions contemplated by the Stock
Purchase Agreement: (i) the Company agreed to cancel two (2) promissory notes in
the aggregate principal amount of approximately $865,000 (subject to certain
adjustments) payable to the Company by such third parties, (ii) Mr. Flombaum
agreed to pay the sum of $12,000 to such third parties, and (iii) Mr. Flombaum
agreed to execute a promissory note payable to the Company in the principal
amount of $1,000,000, bearing interest at the rate of 10% PER ANNUM, and due and
payable on or before February 23, 1998. The obligation owing to the Company on
the $1,000,000 promissory note is secured by the 630,206 shares of Common Stock,
which are held in escrow, and are subject to certain restrictions on
transferability and alienation until the $1,000,000 promissory note has been
paid in full. Mr. Flombaum is entitled to vote the 630,206 shares until a
default is declared on the $1,000,000 promissory note.
7. MATERIAL TO BE FILED AS EXHIBITS.
a. Stock Purchase Agreement, dated as of February 24, 1997, by and among
Richard L. Messick, Richard A. Messick, Douglas G. Messick and Isaac Flombaum.
b. Stock Deposit Escrow Agreement, dated as of February 24, 1997.
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Page 5 of 5 Pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) State the aggregrate number and percentage of the class of securities
identified pursuant to Item 1 (which may be based on the number of
securities outstanding as contained in the most recently available filing
with the Commission by the issuer unless the filing person has reason to
believe such information is not current) beneficially owned (identifying
those shares which there is a right to acquire) by each person named in
Item 2. The above mentioned information should also be furnished with
respect to persons who, together with any of the persons named in Item 2,
comprise a group within the meaning of Section 13(d)(3) of the Act;
(b) For each person named in response to paragraph (a), indicate the number of
shares as to which there is sole power to vote or to direct the vote,
shared power to vote or to direct the vote, sole power to dispose or to
direct the disposition, or shared power to dispose or to direct the
disposition. Provide the applicable information required by Item 2 with
respect to each person with whom the power to vote or to dispose direct
the disposition is shared;
(c) Describe any transactions in the class of securities reported on that were
effected during the past sixty days or since the most recent filing on
Schedule 13D (Section 240.13d-191), whichever is less, but the persons
named in response to paragraph (a).
INSTRUCTION. The description of a transaction required by Item 5(c) shall
include, but not necessarily be limited to: (1) the identity of the person
covered by Item 5(c) who effected the transaction; (2) the date of the
transaction; (3) the amount of securities involved; (4) the price per
share or unit; and (5) where and how the transaction was effected.
(d) If any other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
such securities, a statement to that effect should be included in response
to this item and, if such interest relates to more than five percent of
the class, such person should be identified. A listing of the
shareholders of an investment company registered under the Investment
Company Act of 1940 or the beneficiaries of an employee benefit plan,
pension fund or endowment fund is not required.
(e) If applicable, state the date on which the reporting person ceased to be
the beneficial owner of more than five percent of the class of securities.
INSTRUCTION. For computations regarding securities which represent a
right to acquire an underlying security, see Rule 13d-3(d)(1) and the
note thereto.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH REPSECT TO
SECURITIES OF THE ISSUER.
Describe any contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 and between such
persons and any person with respect to any securities of the issuer,
including but not limited to transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, put or calls,
guarantees of profits, division of profits or loss, of the giving or
withholding of proxies, naming the persons with whom such contracts,
arrangements, understandings or relationships have been entered into.
Include such information for any of the securities that are pledged or
otherwise subject to a contingency the occurrence of which would give another
person voting power or investment power over such securities except that
disclosure of standard default and similar provisions contained in loan
agreements need not be included.
ITEM 7. MATERIAL TO FILED AS EXHIBITS
The following shall be filed as exhibits: copies of written agreements
relating to the filing of joint acquisition statements as required by Rule
13d-1(f) (Section 240.13d-1(f) and copies of all written agreements,
contracts, arrangements, understandings, plans or proposals relating to (1)
the borrowing of funds to finance the acquisition as disclosed in Item 3; (2)
the acquisition of issuer control, liquidation, sale of assets, merger, or
change in business or corporate structure or any other matter as disclosed in
Item 4; and (3) the transfer or voting of the securities, finder's fees,
joint ventures, options, puts, calls, guarantees of loans, guarantees against
loss or of profit, or the giving or withholding of any proxy as disclosed in
Item 6.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 24, 1997 /s/ Isaac Flombaum
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Date Signature
Isaac Flombaum
----------------------------------
Name/Title
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EXHIBIT A
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), made and entered into as of
February 24, 1997, by and among Richard L. Messick, Richard A. Messick and
Douglas G. Messick (collectively referred to as the "Sellers") and Isaac
Flombaum ("Buyer");
WHEREAS, Sellers own an aggregate of 648,206 shares (the "Escrowed NQCI
Shares"), of the common stock, par value $0.01 per share (the "NQCI Common
Stock") of National Quality Care, Inc., a Delaware corporation ("NQCI");
WHEREAS, Sellers and NQCI have entered into an Assignment and Exercise of
Option to Sell Agreement and an Agreement to Pay Additional Consideration for
Purchase of Real Estate (collectively, the "Warehouse Sale Agreements"), each
dated October 18, 1996, copies of which are attached as Exhibits "A" and "B"
hereto, respectively;
WHEREAS, in connection with the Warehouse Sale Agreements, Sellers have
executed and issued certain Non-Recourse Secured Promissory Notes (the
"Promissory Notes"), each dated October 18, 1996, in favor of NQCI, in the
principal amounts of $250,000 and $615,201.70, copies of which are attached
hereto as Exhibits "C" and "D" hereto, respectively;
WHEREAS, Sellers and NQCI have entered into an Escrow Agreement, dated
April 9, 1996, and as amended by agreements dated May 11, 1996, July 12, 1996
and October 18, 1996, copies of which are attached as Exhibit "E" hereto
(collectively, the "Escrow Agreements");
WHEREAS, in connection with the Escrow Agreements, Sellers have deposited
the 648,206 Escrowed NQCI Shares into an escrow, with Jeffrey P. Berg, as escrow
holder (the "Escrow Holder");
WHEREAS, Sellers desire to sell to Buyer and Buyer desires to purchase from
Sellers 630,206 of the Escrowed NQCI Shares (the "Transferred NQCI Shares") and
Sellers desire to assign to Buyer and Buyer desires to assume all of Sellers'
rights and obligations to NQCI under the Warehouse Agreements, the Promissory
Notes and the Escrow Agreements (collectively, the "Transactional Documents");
WHEREAS, each of the Sellers will be permitted to retain ownership of 6,000
of the Escrowed NQCI Shares, or an aggregate of 18,000 Escrowed NQCI Shares (the
"Retained NQCI Shares"); and
WHEREAS, the parties intend and believe that it is in their best interests
to enter into this Agreement and the other agreements contemplated herein;
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NOW, THEREFORE, in consideration of the premises and the mutual promises,
covenants and conditions herein contained, the parties hereto do hereby agree as
follows:
SECTION 1: TERMS OF AGREEMENT AND CLOSING
1.1 SALE OF SECURITIES. On the basis of the representations and warranties
and subject to the terms and conditions of this Agreement: (a) Sellers agree to
sell and deliver the 630,206 Transferred NQCI Shares to Buyer; (b) Buyer agrees
to pay to Gilbert McSwain, counsel to Sellers, as a payment of certain fees
owing to Gilbert McSwain by the Sellers, the sum of $12,000; and (c) Sellers
agree to assign to Buyer and Buyer agrees to assume from Sellers all of Sellers'
rights and obligations due and owing by the Sellers, jointly and severally, to
NQCI in connection with the Transactional Documents.
1.2 CLOSING TRANSACTIONS. At the Closing:
(a) Sellers shall deliver to Buyer certificates representing the
630,206 Transferred NQCI Shares registered in the name of Sellers, with fully
executed, signature guaranteed stock powers, medallions attached;
(b) Buyer shall deliver to Gilbert McSwain, the sum of $12,000
payable by check; and
(c) The parties shall deliver to each other such other
certificates, agreements or other documents and payments as may be required by
this Agreement.
1.3 CLOSING DATE. Subject to Section 1.4 hereof, the consummation of the
transactions contemplated herein (the "Closing") shall take place at the Law
Offices of Matthias & Berg LLP, 515 South Flower Street, 7th Floor, Los Angeles,
California 90071, or at such other place, time or date as may be mutually agreed
upon by the parties (the "Closing Date").
1.4 CERTAIN EVENTS PRIOR TO CLOSING. In addition to any conditions to the
Closing set forth in this Agreement, the parties agree as follows:
(a) CONSENT OF NQCI. Sellers and Buyer shall obtain the consent
of NQCI to the transactions contemplated by this Agreement, including, but not
limited to the transfer of the 630,206 Transferred NQCI Shares to Buyer, the
release of the 18,000 Retained NQCI Shares to Sellers, and the assignment to and
assumption by Buyer of the rights and obligations of Sellers to NQCI pursuant to
the Transactional Documents.
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SECTION 2: CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions contemplated at the
Closing are subject to the fulfillment at the Closing of each of the conditions
set forth in this Section 2. Buyer may waive any or all of these conditions in
whole or in part without prior notice; PROVIDED, HOWEVER, that no such waiver
shall constitute a waiver of any of its other rights or remedies, at law or in
equity, if Sellers shall be in default of any of their material representations,
warranties or covenants under this Agreement.
2.1 REPRESENTATIONS AND WARRANTIES OF SELLERS. On the Closing Date, all
the representations and warranties of Sellers contained in this Agreement shall
be true and correct as of such date, and all of the agreements of Sellers which
are provided in this Agreement to be performed at or prior to the Closing shall
have been performed.
2.2 AUTHORIZATION OF TRANSACTIONS. All actions on the part of Sellers
necessary to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions provided for herein shall have been
duly and validly taken by Sellers.
2.3 GOVERNMENTAL ACTION. No claim, action, suit or proceeding by any
governmental body or authority, seeking to restrain the transactions provided
for in this Agreement or the consummation of the transactions contemplated
herein, shall have been threatened or instituted on or before the Closing Date.
2.4 AGREEMENTS AND CONSENTS. All material consents of any persons,
including governmental authorities, which are necessary to be obtained by
Sellers for the consummation of the transactions provided for herein shall have
been obtained by Sellers, and delivered to Buyer.
2.5 FORM OF DOCUMENTS. The form and substance of all certificates,
instruments and other documents delivered to Buyer under this Agreement shall be
satisfactory in all reasonable respects to Buyer and its counsel.
SECTION 3: CONDITIONS TO SELLERS OBLIGATIONS
The obligations of Sellers to consummate the transactions contemplated at
the Closing are subject to the fulfillment at the Closing of each of the
conditions set forth in this Section 3. Sellers may waive any or all of these
conditions in whole or in part without prior notice; PROVIDED, HOWEVER, that no
such waiver shall constitute a waiver of any of its other rights or remedies, at
law or in equity, if Buyer shall be in default of any of its representations,
warranties or covenants under this Agreement.
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3.1 REPRESENTATIONS AND WARRANTIES OF BUYER. On the Closing Date, all the
representations and warranties of Buyer contained in this Agreement shall be
true and correct as of such date, and all of the agreements of Buyer which are
provided in this Agreement to be performed at or prior to the Closing shall have
been performed.
3.2 AUTHORIZATION OF TRANSACTIONS. All actions on the part of Buyer
necessary to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions provided for herein shall have been
duly and validly taken by Buyer.
3.3 GOVERNMENTAL ACTION. No claim, action, suit or proceeding by any
governmental body or authority, seeking to restrain the transactions provided
for in this Agreement or the consummation of the transactions contemplated
herein, shall have been threatened or instituted on or before the Closing Date.
3.4 AGREEMENTS AND CONSENTS. All material consents of any persons,
including governmental authorities, which are necessary to be obtained by Buyer
for the consummation of the transactions provided for herein, shall have been
obtained by Buyer, and delivered to Sellers.
3.5 FORM OF DOCUMENTS. The form and substance of all certificates,
instruments and other documents delivered to Sellers under this Agreement shall
be satisfactory in all reasonable respects to Sellers and their counsel.
SECTION 4: REPRESENTATIONS AND WARRANTIES OF BUYER.
4.1 DUE AUTHORIZATION. Buyer has full power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby.
4.2 BINDING OBLIGATION: NO DEFAULT. Buyer has duly taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the other instruments and agreements contemplated hereby. Such execution,
delivery and performance does not and will not, to the best of Buyer's
knowledge, constitute a default under or a violation of any agreement, order,
award, judgment, decree, statute, law, rule, regulation or any other instrument
to which Buyer is a party or by which Buyer or the property of Buyer may be
bound or may be subject. This Agreement, when executed and delivered, will
constitute the valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms assuming due authorization, execution and delivery
by Sellers.
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4.3 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the execution and
delivery of this Agreement by Buyer nor compliance by Buyer with the terms and
conditions of this Agreement will: (a) require Buyer to obtain the consent of
any governmental agency; (b) constitute a material default under any indenture,
mortgage or deed of trust to which Buyer is a party or by which Buyer or its
properties may be subject; (c) cause the creation or imposition of any lien,
charge or encumbrance on any of its assets; or (d) breach any statute or
regulation of any governmental authority, domestic or foreign, or will on the
Closing Date conflict with or result in a breach or any of the terms or
conditions of any judgment, order, injunction, decree or ruling of any court or
governmental authority, domestic or foreign, to which Buyer is subject.
4.4 CONSENTS. No consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority is
required to be made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
4.5 LITIGATION. To the best of Buyer's knowledge, there is no claim,
action, suit, proceeding or investigation, pending or threatened, against or
involving Buyer which questions the validity of this Agreement or seeks to
prohibit, enjoin or otherwise challenge the transactions contemplated hereby,
and, to the best of Buyer's knowledge, there is no basis for any such claim,
action, suit, proceeding or governmental investigation, pending or, threatened
against any of its assets before any court, agency or other governmental body
which might materially and adversely affect the transactions contemplated by
this Agreement.
SECTION 5: REPRESENTATIONS AND WARRANTIES OF SELLERS
5.1 DUE AUTHORIZATION. Each of Sellers has full power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
5.2 BINDING OBLIGATION; NO DEFAULT. Each of Sellers has duly taken all
action necessary to authorize the execution, delivery and performance of this
Agreement and the other instruments and agreements contemplated hereby. Such
execution, delivery and performance does not and will not, to the best of
Sellers' knowledge, constitute a default under or a violation of any agreement,
order, award, judgment, decree, statute, law, rule, regulation or any other
instrument to which any of the Sellers or the properties of Sellers may be bound
or may be subject. This Agreement, when executed and delivered, will constitute
the legal, valid and binding obligation of each of the Sellers, enforceable
against the Sellers in accordance with its terms, assuming due authorization,
execution and delivery by Buyer.
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5.3 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the execution and
delivery of this Agreement by Sellers nor compliance by Sellers with the terms
and conditions of this Agreement will: (a) require Sellers to obtain the consent
of any governmental agency; (b) constitute a material default under any
indenture, mortgage or deed of trust to which any of the Sellers is a party or
by which Sellers or their respective properties may be subject; (c) cause the
creation or imposition of any lien, charge or encumbrance on any of their
assets; or (d) breach any statute or regulation of any governmental authority,
domestic or foreign, or will on the Closing Date conflict with or result in a
breach of any of the terms or conditions of any judgment, order, injunction,
decree or ruling of any court or governmental authority, domestic or foreign, to
which Sellers are subject.
5.4 CONSENTS. No consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority is
required to be made or obtained by Sellers in connection with the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
5.5 LITIGATION. To the best of the Sellers' knowledge, there is no claim,
action, suit, proceeding or investigation pending or, threatened, against or
involving Sellers which questions the validity of this Agreement or seeks to
prohibit, enjoin or otherwise challenge the transactions contemplated hereby,
and to the best of the Sellers' knowledge, there is no basis for any such claim,
action, suit, proceeding or governmental investigation pending or, threatened
against or involving the Sellers before any court, agency or other governmental
body which might materially and adversely affect the transactions contemplated
by this Agreement.
5.6 TITLE TO THE TRANSFERRED NQCI SHARES. At the Closing, and upon
delivery to Buyer of the certificates described in Section 1.2(a) of this
Agreement, subject to the terms and conditions of the Transactional Documents,
Buyer shall receive good and marketable title to the Transferred NQCI Shares,
all of the Transferred NQCI Shares shall be received by Buyer as validly issued,
fully paid and nonassessable, free and clear of all pledges, liens,
encumbrances, security interests, equities, options, claims, charges,
limitations on voting rights or rights to receive dividends, or other
restrictions of any kind (other than any generally imposed by federal, corporate
or state securities laws or as otherwise provided for in the this Agreement).
From the date of this Agreement through the Closing Date, Sellers shall not
sell, transfer, hypothecate, pledge, assign, suffer any lien to be incurred with
respect to any interest in or otherwise dispose of any of the Transferred NQCI
Shares.
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SECTION 6: OTHER AGREEMENTS
6.1 AGREEMENT TO OBTAIN CONSENTS AND APPROVALS. Sellers and Buyer shall
cooperate with one another and use their best efforts to obtain any and all
governmental or third-party consents and approvals necessary to complete the
transactions contemplated by this Agreement.
6.2 IRREVOCABLE INSTRUCTION TO ESCROW HOLDER. Each of Sellers hereby
irrevocably instructs Escrow Holder to take all actions necessary to effectuate
the transactions contemplated by this Agreement, including, but not limited to
the transfer of the Transferred NQCI Shares into the name of Buyer and the
release of the 18,000 Retained NQCI Shares to Sellers.
SECTION 7: INDEMNIFICATION
7.1 INDEMNITY BY SELLERS. From and after the Closing Date, Sellers agree
to defend, indemnify and hold harmless Buyer against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies (including reasonable attorneys' fees), arising,
resulting from or relating to any misrepresentation by Sellers made or contained
in this Agreement or Sellers' breach of any warranty, covenant or agreement made
or contained in this Agreement.
7.2 INDEMNITY BY BUYER. From and after the Closing Date, Buyer agrees to
defend, indemnify and hold harmless Sellers against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies (including reasonable attorneys' fees), arising,
resulting from or relating to any misrepresentation by Buyer made or contained
in this Agreement or Buyer's breach of any warranty, covenant or agreement made
or contained in this Agreement.
7.3 CONSTRUCTION. It is understood and agreed that nothing in this
Section 7 shall be construed to limit in any respect the rights or remedies of
any party arising out of any of the agreements or other documents attached as
exhibits hereto. It is further understood and agreed that nothing in this
Section 7 shall be construed as a limitation or waiver of any right of
indemnification, subrogation or similar right accruing to any party independent
of this Agreement under any applicable statute, rule, code or common law
principle.
7.4 NOTICE. If any action, suit or proceeding shall be commenced, or any
claim or demand shall be asserted, in respect of which one party (the
"Indemnitee") proposes to demand indemnification under this Section 7.4, the
party from which indemnification is sought (the "Indemnitor") shall be notified
to that effect with reasonable promptness and shall have the right to assume the
entire control of (including the selection of counsel),
7
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subject to the right of the Indemnitee to participate (with counsel of its
choice) in, the defense, compromise or settlement thereof, but the fees and
expenses of such counsel shall be at the expense of the Indemnitee unless:
(a) the employment of such counsel by the Indemnitee has been specifically
authorized by the Indemnitor, or (b) the named parties to any such action
(including any impleaded parties) include both the Indemnitee and the
Indemnitor and the Indemnitee shall have been advised by its counsel that
there may be one or more legal defenses available to it which are different
from or in addition to those available to the Indemnitor. The Indemnitee
shall cooperate fully in all respects with the Indemnitor in any such
defense, compromise or settlement, including, without limitation, by making
available all pertinent information under its control to the Indemnitor. The
Indemnitor shall not compromise or settle any such action, suit, proceeding,
claim or demand without the prior written consent of the indemnitee;
PROVIDED, HOWEVER, that in the event the approval described above is
withheld, then the liabilities of the Indemnitor shall be limited to the
total sum representing the amount of the proposed compromise or settlement
and the amount of counsel fees accumulated at the time such approval is
withheld.
SECTION 8: MISCELLANEOUS
8.1 BROKERAGE AND FINDERS' FEES. Buyer and Sellers represent to and agree
with each other that no broker or finder has been or shall be involved in any
manner in the negotiation or consummation of the transactions contemplated
hereby. Buyer agrees to indemnify and hold Sellers harmless from and against
any and all claims, liabilities or obligations with respect to brokerage or
finders' fees or commissions in connection with the transactions contemplated by
this Agreement asserted by any person on the basis of any statement or
representation made or alleged to have been made by Buyer. Sellers agree to
indemnify and hold Buyer harmless from and against any and all claims,
liabilities or obligations with respect to brokerage or finders' fees or
commissions in connection with the transactions contemplated by this Agreement
asserted by any person on the basis of any statement or representation made or
alleged to have been made by Sellers.
8.2 EXPENSES. Each of the parties to this Agreement shall bear all expenses
incurred by it in connection with the negotiation of this Agreement and in the
consummation of the transactions provided for herein and the preparation
therefor.
8.3 FURTHER ASSURANCES. Each of the parties hereto shall from time to time
after the execution of this Agreement, execute and deliver, or cause to be
executed and delivered to the parties, such further consents, approvals,
conveyances, assignments and other documents and instruments as any party shall
reasonably request in order to carry out any and all of the terms and provisions
of this Agreement.
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8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer in this Agreement or in any instrument or document delivered
prior to, on or after the Closing Date shall survive the Closing Date or the
date of the delivery of such certificate or document for a period of two (2)
years from the later to occur of the Closing Date or the date of such delivery.
The representations, warranties and covenants of Sellers in this Agreement or in
any certificate or document delivered prior to, on or after the Closing Date
shall survive the Closing Date or the date of delivery of such certificate or
document.
8.5 ATTORNEYS' FEES. In any action at law or in equity to enforce or
construe any provisions or rights under this Agreement, the unsuccessful party
or parties to such litigation, as determined by a court pursuant to a final
order, judgment or decree, shall pay to the successful party or parties all
costs, expenses and reasonable attorneys' fees incurred by such successful party
or parties (including, without limitation, such costs, expenses and face on any
appeal), which costs, expenses and attorneys' fees shall be included as part of
any order, judgment or decree.
8.6 NOTICES. All necessary correspondence and notices required or permitted
to be given hereunder shall be in writing and shall be deemed to have been
properly given when hand delivered or when mailed by first class certified mail,
return receipt requested, postage prepaid, or by overnight mail, or when faxed
with a confirmation copy hand delivered or sent by first class mail:
(i) If to Buyer, to: Isaac Flombaum
c/o Jerry Jacobson, Esq.
10866 Wilshire Boulevard
Suite 850
Los Angeles, California 90024
Telecopier No. (310) 441-7379
(ii) If to Sellers, to: Richard L. Messick
c/o Gilbert McSwain
1660 South Albion
Suite 309
Denver, Colorado 80222
Telecopier No. (303) 758-9203
or such other address or telecopier number as shall be furnished in writing by
any party in the manner for giving notices hereunder, and any such notice or
communication shall be deemed to have been given as of the date so delivered,
mailed, telecopied or telegraphed.
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8.7 SEVERABILITY. In the event that any particular provision or provisions
of this Agreement or the other agreements attached hereto shall for any reason
hereafter be determined to be unenforceable, or in violation of any law,
governmental order or regulation, such unenforceability or violation shall not
affect the remaining provisions of such agreements, which shall continue in full
force and effect and be binding upon the respective parties hereto.
8.8 BENEFIT OF AGREEMENT. Prior to the Closing and unless otherwise
provided, the rights and obligations of Buyer and Sellers under this Agreement
and the other agreements attached hereto shall be binding upon and inure to the
benefit of the parties and their respective representatives, administrators,
heirs, successors and assigns.
8.9 ANNOUNCEMENTS. Buyer and Sellers agree that except in accordance with
applicable laws, neither will make any public announcement concerning the
consummation of the transactions provided herein without first informing the
other.
8.10 FAILURE OF CONDITIONS; TERMINATION. In the event any of the conditions
specified in Section 2 or Section 3 of this Agreement shall not be fulfilled on
or before the Closing Date, either Buyer with respect to the conditions in
Section 2, or Sellers with respect to the conditions in Section 3, shall have
the right either to proceed or, upon prompt written notice to the other, to
terminate and rescind this Agreement without liability to any other party. The
election to proceed shall not affect the right of such electing party reasonably
to require the other party to continue to use its efforts to fulfill the unmet
conditions.
8.11 NO STRICT CONSTRUCTION. The language of this Agreement shall be
construed as a whole, according to its fair meaning and intendment, and not
strictly for or against either party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or any specific term or
conditions hereof.
8.12 EXECUTION KNOWING AND VOLUNTARY. In executing this Agreement, Buyer
and Sellers severally acknowledge and represent that each: (a) has fully and
carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprised of its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; (c) has been
afforded the opportunity to negotiate as to any and all terms hereof; and
(d) is executing this Agreement voluntarily, free from any influence, coercion
or duress of any kind.
8.13 LITIGATION BY THIRD PARTIES. In the event that suit is brought by a
third party to enjoin or otherwise interfere with the consummation of the
transactions contemplated herein, the parties agree that the bringing of such
litigation shall not entitle any party hereto to terminate the within Agreement,
but that the parties shall bring an action for declaratory relief before a court
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of competent jurisdiction and shall terminate this Agreement if such court
adjudges termination to be required by the rights of such third party.
8.14 RECITALS. The recitals to this Agreement are a material part hereof,
and each recital is incorporated into this Agreement by reference and made a
part of this Agreement.
8.15 ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
and agreement between the parties hereto. This Agreement supersedes any and all
previous agreements, commitments and understandings among the parties hereto,
whether such agreements, commitments or understandings were oral or written, and
neither party hereto has relied or will rely on any representation of the other
except to the extent set forth herein. This Agreement may not be modified
except by a way of a writing signed by a duly authorized representative of each
of the parties hereto.
8.16 HEADINGS; CONTEXT. The headings of the sections and paragraphs
contained in this Agreement are for convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meaning of
this Agreement.
8.17 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties hereto and
delivered to the other.
8.18 AMENDMENT AND WAIVER. This Agreement may be amended, or any provision
of this Agreement may be waived, provided that any such amendment or waiver
shall be binding on Sellers only if such amendment or waiver is set forth in a
writing executed by Sellers, and provided that any such amendment or waiver
shall be binding upon Buyer only if such amendment or waiver is set forth in a
writing executed by Buyer. The waiver of any part hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other breach.
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IN WITNESS WHEREOF, Buyer and Sellers have caused this Agreement to be duly
executed and delivered in each of their respective names and on their behalf,
all as of the day and year first above written.
("Sellers")
/s/ Richard A. Messick
------------------------------------------
Richard A. Messick
/s/ Richard L. Messick
------------------------------------------
Richard L. Messick
/s/ Douglas G. Messick
------------------------------------------
Douglas G. Messick
("Buyer")
/s/ Isaac Flombaum
------------------------------------------
Isaac Flombaum
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EXHIBIT B
STOCK DEPOSIT ESCROW AGREEMENT
February 24, 1997
Matthias & Berg LLP
Jeffrey P. Berg, Esq.
515 South Flower Street
7th Floor
Los Angeles, California 90071
RE: STOCK DEPOSIT ESCROW AGREEMENT BY AND AMONG NATIONAL
QUALITY CARE, INC., ISAAC FLOMBAUM AND JEFFREY P. BERG,
AS ESCROW HOLDER.
Gentlemen:
The undersigned, National Quality Care, Inc., a Delaware corporation
(the "Company") and Isaac Flombaum ("Stockholder") (collectively, the
"Parties"), hereby agree to deliver to Jeffrey P. Berg, as escrow holder (the
"Escrow Holder"): (i) stock certificates (the "Stock Certificates") reflecting
630,206 shares of the common stock, par value $0.01 per share (the "Escrowed
Shares") of the Company, registered in the name of Stockholder, and stock
powers executed by Stockholder (the "Stock Powers") with respect to each of the
respective Stock Certificates for the Escrowed Shares, and (ii) a copy of a
Secured Promissory Note, of even date, in the principal amount of $1,000,000,
executed by Stockholder in favor of the Company (the "Promissory Note") (The
Escrowed Shares, the Stock Powers and the Promissory Note are collectively
referred to herein as the "Escrowed Documents"), on the following terms and
conditions:
1. Simultaneously with the closing of that certain Stock Purchase
Agreement (the "Stock Purchase Agreement"), of even date, by and among
Stockholder, on the one hand, and Richard A. Messick, Richard L. Messick and
Douglas G. Messick (collectively, the "Messicks"), on the other hand, and
subject to the terms and conditions of this Agreement, the Parties shall and
hereby deliver the Escrowed Documents to the Escrow Holder.
<PAGE>
2. Stockholder hereby represents, warrants and covenants to the Company
and the Escrow Holder as follows:
(a) The Escrowed Shares are duly and validly issued, fully paid and
nonassessable.
(b) Stockholder is the legal and equitable owner of, and has good title
to, all of the Escrowed Shares, free and clear of all claims, security
interests, mortgages, pledges, liens and other encumbrances of every nature
whatsoever and the Escrow Holder has the right to sell the Escrowed Shares as
herein provided, subject to the terms and conditions of this Agreement.
(c) Each certificate evidencing the Escrowed Shares is issued in the name
of Stockholder and each such certificate has attached thereto a stock power duly
signed in blank by each of the Escrowed Shares and with signature guaranteed by
a member of the New York Stock Exchange, Inc. or by a bank or trust company.
3. Notwithstanding anything to the contrary in this Agreement,
Stockholder hereby agrees that upon the deposit of the Escrowed Shares into the
escrow, the Escrow Holder is hereby directed to establish and maintain a
brokerage account (the "Account") with a registered broker dealer (the "Broker")
in the name of the Escrow Holder, or such other name as shall be reasonable and
necessary to effectuate Escrow Holder's duties pursuant to this Agreement, and
to transfer the Escrowed Shares into the name of such Broker or its nominee
(i.e. street name) in order to effectuate sales of the Escrowed Shares through
such Account.
4. During the term of this Agreement, Stockholder shall not sell,
transfer, encumber, alienate or dispose, by gift or otherwise, of all or any
part of the Escrowed Shares, except pursuant to the terms or this Agreement.
Any hypothetication or other encumbrance of the Escrowed Shares shall be subject
to this Agreement in that the transfer of title thereto or possession thereof to
the holder of any security interest or other lien or right providing such holder
a contingent right to title or possession of the Escrowed Shares shall be deemed
a transfer of the Escrowed Shares, subject to the terms and conditions of this
Agreement and shall only be exercised in accordance with this Agreement.
Transfers which are voluntary, involuntary or which occur by operation of law
are all restricted, but transfers which occur in connection with a merger,
reorganization, stock split or reverse stock split in which there is an exchange
or conversion of the Escrowed Shares are not affected by this Agreement.
Stockholder shall have the right to vote the Escrowed Shares and to receive any
dividends paid thereon until the Escrowed Shares are sold or transferred under
this Agreement. Notwithstanding anything to the contrary in this Agreement,
Stockholder shall, at all times that the Escrowed Shares shall remain in escrow
subject to the
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terms of this Agreement, be entitled to direct the Escrow Holder to sell and
deliver the Escrowed Shares in a commercially reasonable manner; PROVIDED,
HOWEVER, that the proceeds of each such sale shall be applied as provided in
Section 6.
5. In the event that Stockholder shall fail to pay to the Company any or
all obligations of Stockholder when due under the terms and conditions of the
Promissory Note, the Company shall give written notice thereof to Escrow Holder,
with a copy to Stockholder, stating the amount due and payable. In the further
event that Stockholder shall fail to deliver to Escrow Holder all such amounts
due to the Company within three (3) days of such written notice, upon written
notice to Escrow Holder of such non-payment and written instruction from the
Company, and without any further instruction from Stockholder, the Company shall
be entitled to do any one or more of the following: (a) declare the principal of
and all accrued interest on the Promissory Note to be due and payable
immediately in accordance with and subject to the terms of the Promissory Note
and this Agreement, (b) direct the Escrow Holder to sell and deliver, in its
discretion, any or all of the Escrowed Shares, in one or more parcels at the
same or different times, and all right, title and interest, claim and demand
therein and right of redemption thereof, on any securities exchange on which the
Escrowed Shares or any of them may then be listed, or at public or private sale,
for cash, upon credit or for future delivery, at any time and from time to time,
and at such price or prices and on such terms as Escrow Holder may determine,
Stockholder hereby agreeing that, upon such sale, any and all equity or right of
redemption of Stockholder shall be automatically waived and released without any
further action on the part of Stockholder, all without either demand,
advertisement or notice (except as required by law or set forth herein), all of
which (to the extent permitted by law or except as set forth therein) are hereby
expressly waived. In the event of any such sale and delivery, Escrow Holder
shall give Stockholder notice of its intention to sell and deliver the Escrowed
Shares hereunder in accordance with the California Commercial Code. Upon each
such sale and delivery, the Company may purchase all or any of the Escrowed
Shares being sold, free from any equity or right of redemption, which upon each
such sale and delivery shall be waived and released. The proceeds of each such
sale and delivery shall be applied as provided in Section 6, and (c) exercise
any or all the rights and remedies of a secured party under the California
Commercial Code or any other applicable law to the extent not enumerated in this
Section 5.
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6. Except as otherwise provided herein, all moneys that Escrow Holder
shall receive, in accordance with the provisions hereof, whether by sale of the
Escrowed Shares or otherwise, shall be applied in the following manner: FIRST,
to the payment of all securities brokerage fees incurred in connection with the
sale of the Shares; SECOND, to the payment of all of the obligations of
Stockholder under the Promissory Note, which payment shall be delivered to the
Company; and THIRD, the surplus, if any, to the person or persons entitled
thereto.
7. If at any time Escrow Holder shall sell all or any part of the
Escrowed Shares pursuant to Section 5, Escrow Holder, in its commercially
reasonable discretion is hereby expressly authorized to sell such or such part
thereof by private sale in such manner and under such circumstances as Escrow
Holder may deem necessary or advisable in order that such sale may legally be
effected without registration or qualification under federal or state securities
laws. Without limiting the generality of the foregoing, in any such event
Escrow Holder, in its sole and absolute discretion: (a) may proceed to make
such private sale; (b) may approach and negotiate with a restricted number of
potential purchasers as to their number, nature of business and investment
intention (including, without limitation, to purchasers each of whom will
represent and agree to the satisfaction of Escrow Holder that such purchaser is
purchasing for its own account, for investment and not with a view to the
distribution or sale of such Escrowed Shares or part thereof), it being
understood that Escrow Holder may require Stockholder, and Stockholder hereby
agrees, upon the written request of the Company, to require or use its best
efforts to cause to be required: (i) a legend or legends to be placed on the
certificates to be delivered to such purchasers to the effect that the Escrowed
Shares represented thereby have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and setting forth or referring to
restrictions on the transferability of such securities; (ii) the issuance of
stop transfer instructions to the Company's transfer agent, if any, with respect
to the Escrowed Shares, or, if the Company transfers its own securities, a
notation in the appropriate records of The Company; (iii) to be obtained from
the purchasers a signed written agreement that the Escrowed Shares will not be
sold without registration or other compliance with the requirements of the
Securities Act; and (iv) to be delivered to the purchasers a signed written
agreement of Stockholder and the Company that such purchasers shall be entitled
to the rights of the Company pursuant to this Agreement. In the event of any
such sale, Stockholder does hereby consent and agree that Escrow Holder shall
incur no responsibility or liability for selling all or any part of the Escrowed
Shares at a price which Escrow Holder, in its commercially reasonable
discretion, may deem reasonable under the circumstances, the expense and delay
which a public sale of the Escrowed Shares in conformity with applicable state
and federal securities laws would
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entail being agreed by Stockholder and Escrow Holder to be impracticable for
the purposes of this Agreement.
8. In case any stock dividend shall be declared on any of the Escrowed
Shares, or any shares of Common Stock or fractions thereof shall be issued
pursuant to any stock split involving any of the Escrowed Shares, or any
distribution of other securities shall be made with respect to the Escrowed
Shares pursuant to the recapitalization or reclassification of the Stock of any
issuer of the Escrowed Shares or the reorganization thereof, the shares or other
securities so distributed shall be delivered to Escrow Holder (accompanied by
proper instruments of assignment or stock powers executed by Stockholder in
accordance with instructions of the Company) to be held by it as collateral
security for the obligations of Stockholder under the Promissory Note.
9. So long as Stockholder shall not have defaulted on the obligations
under the Promissory Note and shall have not have been cured within any
available cure period under the Promissory Note (an "Event of Default"),
Stockholder shall be entitled to exercise as Stockholder shall think fit, but in
a manner not inconsistent with the terms hereof, the voting power with respect
to the Shares. Any and all dividends (other than stock dividends), at any time
and from time to time declared or paid upon any of the Escrowed Shares, shall be
received by Stockholder so long as no Event of Default of Stockholder shall
occur under the Promissory Note. All dividends received by Stockholder on the
dividends at any time that an Event of Default shall have occurred and is
continuing shall be paid over to Escrow Holder on account of the obligations of
Stockholder under the Promissory Note.
10. Stockholder shall, at the request of the Company or the Escrow Holder,
execute any and all appropriate agreements, documents or instruments in
connection with this Agreement that Escrow Holder may reasonably deem necessary
to effect the transactions contemplated by this Agreement.
11. All rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law or agreement
between the parties. Any single or partial exercise of any right or remedy
shall not preclude the further exercise thereof or the exercise of any other
right or remedy.
12. Any delay on the part of the Parties or the Escrow Holder in
exercising any of its rights, remedies, powers and privileges hereunder or any
partial or single exercise thereof shall not constitute a waiver thereof. None
of the terms and conditions of this Agreement may be changed, waived, modified
or varied in any manner whatsoever unless in writing duly signed by the Parties
and Escrow Holder.
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13. Escrow Holder is hereby appointed the attorney-in-fact of Stockholder
for the purpose of carrying out the provisions hereof and taking any action and
executing any instruments which Escrow Holder may deem necessary or advisable to
accomplish the purposes hereof, including the execution of any and all documents
necessary under law or as reasonably required by or its counsel to effectuate
the transactions contemplated by this Agreement, which appointment as
attorney-in-fact is irrevocable and coupled with an interest, in accordance with
the terms and conditions of the Power of Attorney delivered herewith to Escrow
Holder. Without limiting the generality of the foregoing, if any Event of
Default under the Promissory Note shall have occurred in accordance with the
terms of the Promissory Note, Escrow Holder shall have the right and power to
receive, endorse and collect all checks made payable to the order of Stockholder
representing any distribution in respect of the Escrowed Shares or any part
thereof and to give full discharge for the same.
14. In the event that the Escrow Holder shall have received written notice
to sell any Escrowed Shares in connection with this Agreement, and the net
proceeds of such sales so delivered to the Company shall equal the amount set
forth in the written notice with respect to any amounts due under Section 5 of
this Agreement, this escrow shall terminate, and Escrow Holder shall deliver the
remaining Escrowed Shares and Stock Powers, and any proceeds in excess of the
amounts set forth in Section 6 hereof to Stockholder.
15. The Escrow Holder is hereby instructed to receive and to hold the
Escrowed Documents in escrow. The Escrowed Documents shall not be released or
dealt with in any manner whatsoever, inconsistent with this Escrow Agreement.
16. In the event of the receipt by Escrow Holder from any of the Parties
of a written notice of a dispute over the Escrowed Documents or this Agreement,
the Escrow Holder must retain the Escrowed Documents in escrow until the dispute
is resolved or interplead the Escrowed Documents in any action filed respecting
the Escrowed Documents or this Agreement.
17. Without in any way restricting the generality of the foregoing, the
Escrow Holder shall be entitled to act in accordance with the provisions of this
Agreement, unless the Escrow Holder is first served with an order of a Court of
competent authority or shall receive written notice by any of the Parties of a
dispute with respect to this Agreement. In such event, the Escrow Holder shall
comply with such Order or as otherwise required under this Agreement.
18. The Escrow Holder shall have not duties or obligations other than
those specifically set forth herein.
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19. The Escrow Holder shall not be obligated to take any legal actions
hereunder which might, in the Escrow Holder's judgment, involve any expense or
liability, unless the Escrow Holder the shall have been furnished with
reasonable indemnity by the Parties.
20. The Escrow Holder is not bound in any way by any other contract or
agreement between the Parties hereto whether or not the Escrow Holder has
knowledge thereof of its terms and conditions and the Escrow Holder's only duty,
liability and responsibility shall be to hold and deal with the Escrowed
Documents as herein directed.
21. The Parties, covenant and agree, jointly and severally, to indemnify
and to hold the Escrow Holder harmless against all costs, charges, claims,
demands, damages, losses and expenses resulting from the Escrow Holder's
compliance in good faith with this Agreement.
22. In the event of any disagreement between or among the Parties,
concerning this Agreement or between them or any of them and any other person,
resulting in adverse claims or demands being made in connection with the
Escrowed Documents or in the event that the Escrow Holder, in good faith, is in
doubt as to what action the Escrow Holder should take hereunder, the Escrow
Holder may, at his option, refuse to comply with any claims or demands on him,
or refuse to take any other action hereunder, so long as such disagreement
continues or such doubt exists, and in any such event, the Escrow Holder shall
not be or become liable in any way or to any person for his failure or refusal
to act, and the Escrow Holder shall be entitled to continue so to refrain from
acting until:
(a) the rights of the Parties shall have been fully and finally
adjudicated by a court of competent jurisdiction; or
(b) all differences shall have been adjusted and all doubt resolved by
agreement among the Parties, and the Escrow Holder shall have been
notified thereof, in writing signed by the Parties.
The Escrow Holder's rights under this paragraph are cumulative of all other
rights which the Escrow Holder may have by law or otherwise.
23. The terms of these instructions are irrevocable by the undersigned
unless such revocation is consented to in writing by each of the Parties.
24. The terms herein shall be binding upon the Escrow Holder and his
successors and upon the Parties and their respective heirs, executors,
administrators, successors and assigns.
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25. The Escrow Holder may resign as escrow agent in respect of the
Escrowed Documents by giving notice to the Parties. The resignation of the
Escrow Holder shall be effective, and the Escrow Holder shall cease to be bound
by this Agreement, 60 days following the date that notice of resignation was
given. Before the effective date of the resignation of the Escrow Holder, the
Parties shall appoint another escrow agent acceptable to the Parties, and that
appointment, when made, the Parties shall be binding on the Parties. Upon
appointment by the new escrow agent, the Escrow Holder shall deliver the
Escrowed Documents to the new escrow agent whereupon the Escrow Holder shall not
be liable for the completion of any further acts pursuant to this Agreement. In
the event that the Parties do not appoint a new escrow agent, prior to the
expiration of the aforesaid 60 day period, the Escrow Holder shall be entitled
to make application to a Court of competent jurisdiction to be relieved of the
obligations upon him and for directions with respect to the delivery of the
Escrowed Documents. The Escrow Holder shall be entitled to act in accordance
with the direction of the court without any further liability to any other party
whatsoever.
26. Any notices or other communications required or permitted hereunder
shall be sufficiently given if personally delivered to or sent by: (a)
telecopier, followed by first class mail, postage prepaid, (b) overnight
delivery service, or (c) prepaid telegram addressed as follows:
If to the Company, to: National Quality Care, Inc.
Attn: Ron Berkowitz
5901 West Olympic Boulevard
Suite 109
Los Angeles, California 90036
Telecopier No. (213) 933-8836
If to Stockholder, to: Isaac Flombaum
c/o Jerry Jacobson, Esq.
10866 Wilshire Boulevard
Suite 850
Los Angeles, California 90024
Telecopier No. (310) 441-7379
If to Escrow Holder, to: Matthias & Berg LLP
Jeffrey P. Berg, Esq.
515 South Flower Street
7th Floor
Los Angeles, California 90071
Telecopier No. (213) 895-4058
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or such other address or telecopier number as shall be furnished in writing by
any party in the manner for giving notices hereunder, and any such notice or
communication shall be deemed to have been given as of the date so delivered,
mailed, telecopied or telegraphed.
27. This Agreement shall be construed according to the laws of the State
of California. Any dispute arising under this Agreement shall be resolved
exclusively in the courts of the State of California.
28. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same.
29. Escrow Holder shall not be compensated for his services pursuant to
this Agreement.
30. In the event of any dispute arising out of the interpretation or
performance of the terms of this Agreement, the prevailing party in any action
shall be entitled to its reasonable attorneys' fees and costs incurred.
Receipt of this Agreement and confirmation of the arrangement herein
provided will be acknowledged by signing and returning the enclosed copies
hereof to each of the Parties.
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This Agreement is executed as of the date first written above at Los
Angeles, California.
Very truly yours,
("Company") ("Stockholder")
NATIONAL QUALITY CARE, INC.
By: /s/ Ron Berkowitz By: /s/ Isaac Flombaum
------------------------------- -------------------------------
Name: Ron Berkowitz Name: Isaac Flombaum
Title: Chief Financial Officer
Escrow Holder agrees to hold and deal with the Escrowed Documents in
accordance with the above instructions. Executed as of the date first written
above at Los Angeles, California.
By: /s/ Jeffrey P. Berg
-------------------------------
Name: Jeffrey P. Berg
Title: Escrow Holder
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