<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 18th day of September, 2000 by and among EXPRESS-MED, INC., an
Ohio corporation or a designated wholly-owned subsidiary ("Buyer") and MK
DIABETIC SUPPORT SERVICES, INC., RESPIFLOW, INC. and TRANSWORLD OSTOMY INC.,
(collectively referred to herein as "TSPD" or "Sellers").
RECITALS
Sellers and Buyer are separate and independent companies with no
cross-ownership or common management.
Sellers desire to sell to Buyer, and Buyer desires to purchase from
Sellers, certain business assets of TSPD, including customer lists, physical
assets, inventory and certain intangible assets owned by Sellers and used in its
business of supplying respiratory, diabetic and ostomy products (the
"Business"), subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter contained, the parties hereto agree as follows:
AGREEMENT
Section 1. Sale and Purchase of Assets. On the terms and subject to the
conditions herein expressed, Sellers agree to sell, transfer, assign and deliver
to Buyer, and Buyer agrees to purchase, acquire and accept from Sellers, on and
as of the Closing Date (as defined herein ), all of Sellers' right, title and
interest as of the Closing Date in and to all of the following assets used in
the Business:
(a) a list of all of Sellers' current and former
patient/customer accounts and contact information, including phone numbers, with
respect to Sellers' Business patients (the recipients of products and services),
customers (such as third party payors, but excluding federal health care
payors), providers (such as physicians) and referral sources (including
providers and suppliers) (collectively, the "Customer List"), all as identified
on Schedule 1(a) which shall be completed as of September 29, 2000, approved by
the parties on October 2, 2000 and attached hereto at the Closing;
(b) the right to service and supply Business products to the
customers of Sellers (the "Patient Accounts"). While Buyer through this
Agreement is given the opportunity to service and supply products to customers
and patients of Sellers, such opportunity is at all times subject to the consent
of the patients and customers and may be terminated by any of them at any time
and Sellers are in no way making any guarantees or representations regarding
Buyer's ability to continue the Business and/or to service the customers and
patients of Sellers;
(c) certain re-saleable items of Sellers' Business inventory,
which shall be specifically limited to respiratory products, diabetic products,
ostomy products and oral
<PAGE>
pharmaceuticals which are in re-saleable condition and have not expired, all as
identified on Schedule 1(c) which shall be completed as of September 29, 2000,
approved by the parties on October 2, 2000 and attached hereto at the Closing
(the "Inventory");
(d) certain fixed assets, including, but not limited to,
software, computer equipment, office equipment, pharmacy equipment, furniture
and fixtures and such other fixed assets specifically identified on Schedule
1(d) which shall be completed as of September 29, 2000, approved by the parties
on October 2, 2000 and attached hereto at the Closing (the "Fixed Assets"); and
(e) to the extent transferable, the intangible assets relating
to Sellers' Business, including but not limited to the following intangible
assets: sales contracts, referral sources, relationships, and arrangements with
customers (except for federal health care payors), suppliers, and providers,
together with all rights, interests and claims of Seller thereunder, and for a
period not to exceed 6 months from Closing, the right to share Seller's
telephone, fax and other contact numbers and information (the "Intangibles").
For the purposes of this Agreement, the Customer List, Patient Accounts,
Inventory, Fixed Assets and Intangibles are collectively referred to as the "
Purchased Assets."
Section 2. Retained Assets. The Purchased Assets shall not include any
right, title or interest of Seller in, to or under any assets not described in
Section 1, including, without limitation, the following: cash, accounts
receivable, prepaid expenses, tax returns, advances owed to Seller, fixed assets
not included in Section 1, insurance policies, licenses, permits, corporate
minutes, seals and capital stock books of account of Seller, recoupments from
the federal government, amounts awarded to one or more Sellers as a result of
litigation, arbitration or other award or settlement or similar payment plan,
and payments which may be made pursuant to pending litigation but which have not
yet been reduced to awards (the "Retained Assets"). In addition, Buyer is not
purchasing Sellers' Part B supplier number and Buyer will not use the Sellers'
Part B supplier number for any services provided by Buyer after the Closing.
Section 3. No Assumption of Liabilities.
(a) General. Buyer shall not purchase the Purchased Assets
subject to, and Buyer shall not in any manner assume or be liable or responsible
for, any debt, liability, taxes, or obligation of Seller of any nature, whether
secured, unsecured, recourse, nonrecourse, liquidated, unliquidated, accrued,
absolute, fixed, contingent, ascertained, unascertained, known, unknown or
otherwise, including but not limited to, any employment law liabilities,
employee salary, severance, benefit or similar liabilities, any Medicare
recoupment charges or offsets, any federal, state or local taxes or similar
charges (including any penalties and interest), any liability for personal and
bodily injury, property damage or product warranty, express or implied, arising
with respect to products sold by Seller or with respect to Seller's operation of
the Business or ownership of the Purchased Assets prior to the Closing; and any
liabilities or obligations under any real property or equipment lease, contract
or commitment not expressly assumed by Buyer
2
<PAGE>
hereunder (collectively, referred to as "Obligations"), and all Obligations of
Sellers shall remain the sole responsibility of Sellers.
(b) Post-Closing Items. In addition to the items set forth
above, the parties agree that Buyer shall not incur any liability as a result of
any actions, or failures to act, by any Seller employee that continues to
provide services following the Closing consistent with Section 12 herein;
provided, however, that Buyer will be responsible for any such liability if said
liability was the result of any Sellers' employee acting pursuant to the order,
direction, mandate and/or guidance of Buyer. Other than as set forth in this
Section 3(b), after the Closing, any and all costs, expenses, liabilities and/or
obligations of any nature arising out of or in connection with the Purchased
Assets shall be the sole obligation and responsibility of the Buyer.
Section 4. Purchase Price. The purchase price for the Purchased Assets
shall be equal to the sum of (i) Two Million Dollars ($2,000,000) and (ii) an
amount equal to the value of Sellers' re-saleable Inventory on hand as of the
close of business on September 29, 2000 (the "Purchase Price"). For purposes of
the Inventory valuation, the parties agree that it shall be measured by Sellers'
cost of such Inventory remaining as of the close of business on September 29,
2000 and as listed on Schedule 1(c) on the date of Closing. The Purchase Price
was the result of arm's length negotiations between Buyer and Sellers, who are
unrelated parties.
Section 5. Payment of Purchase Price. The Purchase Price shall be
payable as follows: provided this Agreement is executed by Friday September 15,
2000, Two Million Dollars ($2,000,000) in cash shall be placed by Buyer on
September 18, 2000 into an escrow account (the "Escrow Funds") mutually
acceptable to the parties and governed by an Escrow Agreement, which shall be
negotiated in good-faith by the Buyer and Sellers, entered into prior to the
deposit of the Escrow Funds and attached hereto at Closing. If this Agreement is
not executed by September 15, 2000, the Escrow Funds shall be deposited by Buyer
the next Business Day following the execution of this Agreement. At Closing,
said Escrow Funds shall be disbursed to Sellers and an additional cash payment
shall be made to Sellers to reflect the value of the Inventory as set forth on
Schedule 1(c). The Purchase Price shall be paid to Sellers in cash via wire
transfer and shall be allocated among the Sellers in accordance with directions
provided by Sellers.
Buyer agrees that until such time as the Escrow Funds are
deposited in accordance herewith, it shall not make any disclosures or
communications to any person or entity not a party to this Agreement or take any
further actions in connections with this Agreement (other than as expressly
permitted herein), particularly with respect to the Customer List.
Section 6. Allocation of Purchase Price. The Purchase Price shall be
allocated to the Purchased Assets in accordance with the allocation set forth on
Schedule 6 to be attached hereto. The allocation shall be binding upon both
Buyer and Seller for purposes of reporting the sale of the Purchased Assets to
the appropriate taxing authorities and Buyer and Seller shall cooperate in
timely preparing and filing IRS Form 8594 on a basis consistent with Schedule 6.
The parties hereby agree that neither will take a position before any
governmental or regulatory body
3
<PAGE>
charged with the collection of any tax, or in any judicial proceeding, that is
in any way inconsistent with Schedule 6.
Section 7. Access to Sellers' Records/Patient Files. Upon the execution
of this Agreement and the deposit of the Escrow Funds and subject to applicable
federal and state laws and regulations regarding confidentiality of patient
information, Sellers shall provide Buyer full access to their patient files and
contact information to allow Buyer to send any notifications and related
paperwork that it deems necessary to the process of transferring Sellers'
patients to Buyer. Sellers shall also provide Buyer access to their physical
facilities for the purpose of assessing personnel issues relating to the
post-closing customer service, billing and facility clean-up functions. The
access provided hereunder shall extend for a period not to exceed 6 months
following Closing, unless otherwise agreed to between the parties. Buyer agrees
during this time period that no shipments of Business products will be made by
Buyer to the Sellers' patients until after the Closing. Buyer agrees to maintain
the confidentiality of patient records and patient identifying information
pursuant to all applicable federal and state laws.
Buyer shall have the right to use Sellers' corporate names and
any tradenames/trademarks identified on Schedule 7 for up to one year solely for
purposes of customer and patient transition. The substance and form of any
notifications and related paperwork, including use of Sellers' corporate names
and permitted tradenames/trademarks, provided to any patients, customers,
suppliers, vendors and other parties shall be subject to prior approval by
Sellers, provided such approval may not be unreasonably withheld. Sellers agree,
effective from the date of Closing, that they shall not use the corporate names
of Sellers and/or the tradenames/trademarks set forth on Schedule 7 in any
manner relating to the providing of Business products and services to patients
and customers.
Furthermore, Sellers shall have, upon prior written notice to
Buyer, reasonable access to the Purchased Assets and records, to the extent
relating to periods prior to Closing, in the event Sellers are subject to
litigation, investigation, or audit and Buyer agrees to maintain such records
for a period of not less than 10 years following Closing.
Sellers will cooperate with Buyer in giving any notices to
third parties, and the Sellers will use reasonable best efforts to obtain any
third party consents that may be necessary as required in connection with this
Agreement and the assignment and transfer of the Purchased Assets hereunder.
Each of the parties will give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the consummation of the
transactions contemplated by this Agreement.
Section 8. Receivables Management Agreement. As a condition to this
transaction, the parties shall, prior to Closing, enter into a separate
Receivables Management Agreement, a form of which shall be attached hereto as
Exhibit 8 and which is incorporated herein by reference, whereby Buyer shall
assume, in exchange for a fee, the management of Sellers' Business accounts
receivables for purposes of collection.
4
<PAGE>
Section 9. The Closing. The transaction contemplated by this Agreement
shall be closed (the "Closing") at the offices of Sellers, 555 Madison Ave.,
30th Floor, New York, New York 10022 on October 3, 2000 (the "Closing Date"), or
such other date or place as the parties may mutually agree.
Section 10. Buyer's Obligations at the Closing. At the Closing, Buyer
shall deliver to Sellers the following:
(a) the payment of the Purchase Price as provided in Section 5;
(b) a certificate of its Secretary setting forth the action
taken by the Board of Directors to approve and authorize this Agreement and the
transaction contemplated hereby;
(c) a duly executed Receivables Management Agreement and
Escrow Agreement; and
(d) a certificate signed by an authorized officer of Buyer
stating that the representations and warranties of Buyer set forth in Section 15
hereof are true and correct in all material respects as of the Closing Date, and
that all of Buyer's obligations as set forth herein, to the extent such
obligations pertain to items prior to Closing, have been fulfilled.
Section 11. Sellers Obligations at the Closing. At the Closing, Sellers
shall deliver to Buyer the following:
(a) good and sufficient conveyance documents in form
satisfactory to Buyer, vesting title to the Purchased Assets in Buyer, free and
clear of all liens, charges, encumbrances, conditions, easements, reservations
and restrictions whatsoever, and possession of the Purchased Assets;
(b) a certificate of the Secretary of each of the Sellers,
setting forth the action taken by the Board of Directors and Shareholder of each
Seller to approve and authorize this Agreement and the transactions contemplated
hereby;
(c) a certificate signed by an authorized officer of each
Seller stating that the representations and warranties of Sellers set forth in
Section 14 hereof are true and correct in all material respects as of the
Closing Date, and that all of Sellers' obligations as set forth herein have been
fulfilled, to the extent that such obligations pertain to items prior to
Closing;
(d) a duly executed Receivables Management Agreement and Escrow
Agreement; and
(e) Schedules 1(a), 1(c) and 1(d).
Section 12. Personnel Issues. Upon execution of this Agreement and
prior to Closing, Buyer and Sellers shall identify those employees of Seller
that will be utilized for post-Closing
5
<PAGE>
transition matters as set forth below for billing, customer service and
miscellaneous functions such as assisting the billing and customer service or
facility clean up. The parties shall create five categories for Sellers'
employees: (i) transition customer service; (ii) transition billing and
collection; (iii) terminated immediately upon Closing; (iv) given notice of
termination 15 days prior to Closing but provided severance or continued
employment following Closing due to prior agreements or employment regulations;
and (v) any such other employees of Seller as Seller in its discretion desires
to retain to provide administration and other functions for the Seller for a
time to be determined by Seller at its discretion. Buyer agrees that it will not
employ or offer to employ any of Sellers' employees or management personnel
following the Closing.
Following the Closing and consistent with the remaining provisions of
this Section 12 and the Receivables Management Agreement, Buyer will manage the
duties of the employees in categories (i) and (ii) and a limited number of
personnel from category (iv) who will perform miscellaneous functions where
Buyer deems these individuals to be useful. All salary and benefits of each of
the persons in the above categories will remain the sole responsibility of
Seller, except as set forth below with respect to the customer service
employees. It is agreed that Seller will not be required to replace any such
employee who resigns, quits or voluntarily terminates his or her employment with
Seller.
With respect to the category (i) customer service personnel, Seller
shall be responsible for any payroll/benefit costs for these employees for the
first 60 days following Closing. Thereafter, Buyer agrees to reimburse Seller,
at Seller's direct cost (payroll and benefits only, not to include any
allocation of overhead, administrative costs, equipment, telephone etc.) for the
cost of said personnel for up to an additional 30 days. Additional customer
service incentives may be provided to Sellers to be paid to said personnel at
Buyer's sole discretion and expense.
With respect to the category (ii) billing and collection personnel,
Seller agrees to employ, as its sole expense, said individuals for up to 6
months following Closing to assist Buyer in providing billing, basic accounting,
collection, I/S support and ancillary administrative assistance, all as may be
reasonably requested by Buyer in order to fulfill its obligations under the
Receivables Management Agreement. Said personnel will be eligible for bonus
money and various contests, subject in form and substance to approval by Seller,
which shall be funded by the employee incentive portion of the Receivables
Management Agreement. Notwithstanding anything herein to the contrary, following
the Closing, Sellers shall have the right to terminate said employees and the
Receivables Management Agreement upon 30 days prior written notice to Buyer.
With respect to the category (iv) terminated personnel who are provided
continued employment during their notice period, Sellers agree to employ, at
their sole expense, said individuals for up to their notice periods as defined
by their severance agreements or employment regulations or such additional time
as Buyer requests, not to exceed 60 days from Closing. At Closing, Buyer will
schedule (as to function and number) and thereafter direct such employees to
assist in billing, customer service, clean up of the facility, packing and
shipping of the final inventory or whatever function Buyer reasonably deems
useful for the swift completion
6
<PAGE>
of the activities contemplated under this agreement. Said personnel will be
allowed to resign prior to the end of their notice period if they so chose.
With respect to the category (v) administrative personnel, Seller
agrees to employ, at its sole discretion and expense, administrative personnel
necessary to process payroll, payables and perform other functions through the
transition period and the final shut down of Sellers' facilities.
Buyer shall not offer employment to any of Sellers' employees following
the Closing and Buyer's payment to Seller of an amount equal to the salaries of
those certain category (i) customer service representatives during the
post-closing transition period as set forth above shall not be considered the
employment of, or an offer of employment to, such persons, nor shall it be
deemed to create any obligation or a contract of continuing employment.
Sellers shall have satisfied all of their current or accrued
(or accruable) obligations with respect to its employees, including, without
limitation, obligations relating to payroll, commissions, bonuses, payroll
taxes, benefit plans, vacation and sick pay and any other fringe benefits with
respect to work performed through the Closing Date and agrees to be solely
responsible for such items during the transition period as outlined above. Buyer
shall have no responsibility with respect to such obligations.
Section 13. Pre-Closing Covenants. The Parties agree as follows with
respect to the period between the deposit of the Escrow Funds pursuant to
Section 5 and the Closing:
(a) General. Each of the parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this
Agreement.
(b) Preservation of the Business. Sellers will, to the best of their
efforts, keep the Business and Purchased Assets substantially intact, including
their present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, patients, customers, and
employees. Sellers will limit inventory purchases to those necessary for the
Business to function through Closing.
(c) Full Access. Sellers will permit representatives of the Buyer to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of the Sellers, to all premises, properties,
personnel, books, records, contracts, and documents of or pertaining to the
Purchased Assets and the Business.
(d) Notice of Developments. Each party will give prompt written notice
to the other party of any material adverse development causing a breach of any
of its own representations and warranties contained in this Agreement. No
disclosure by any party pursuant to this subsection 13(d), however, shall be
deemed to prevent or cure any misrepresentation, breach of warranty, or breach
of covenant.
7
<PAGE>
(e) Exclusivity. Upon the execution of this Agreement and the deposit
of the Escrow Funds, Sellers shall not directly or indirectly, solicit or in any
manner encourage any proposal of any other person relating to the acquisition of
Sellers, their stock, assets or business, in whole or in part, whether through
direct purchase, merger, consolidation or other business combination, other than
sales of inventory in the ordinary course.
(f) Confidentiality. Unless and until the transactions contemplated by
this Agreement are consummated, Buyer will keep in confidence all proprietary
and financial information of Sellers including information concerning its
customers, suppliers, methods, and know-how, and will not, except to the extent
required by law or to the extent any such information is otherwise publicly
available or received from a third party not affiliated with Sellers, without
the prior written consent of Sellers, reveal any such financial or proprietary
information to any third party other than affiliates or representatives of Buyer
and potential lenders and other providers of funds each of whom shall agree to
be bound by the same restrictions with respect to confidentiality imposed on
Buyer hereunder. In the event that the transactions contemplated by this
Agreement are not consummated, Buyer shall return to Sellers at Sellers'
request, all documents supplied to Buyer by Sellers in connection with the
transactions herein, including any copies, worksheets or confidential
information.
Section 14. Representations and Warranties of Sellers. Each of Sellers,
jointly and severally, warrant and represent to and covenant with Buyer and its
successors and assigns as follows:
14.1 Organization of Sellers. Sellers are each corporations
duly organized, validly existing and in good standing under the laws of the
state set opposite their names below, and each have all requisite corporate
power and authority to (i) own, lease and operate the assets and properties of
each respective entity and (ii) carry on the Business as now presently
conducted. Sellers do not have any predecessors, subsidiaries, or affiliated
companies. Sellers have no fictitious, assumed or other names of any type that
are registered or used by any of the Sellers or under which any of Sellers have
done business at any time since their respective dates of formation. There have
been no name changes, recapitalization, mergers, reorganizations or similar
events since the Sellers' respective dates of formation. Transworld Healthcare,
Inc. owns 100% of the outstanding stock of the subsidiary entities free and
clear of all liens, encumbrances, or claims of any third party.
NAME STATE OF INCORPORATION
---- ----------------------
MK Diabetic Support Services, Inc. Florida
Respiflow, Inc. Florida
Transworld Ostomy, Inc Florida
14.2 Validity and Execution. Subject to Sellers' Boards of
Directors approval of this Agreement, which approval shall be obtained prior to
Closing, Sellers have the full legal right, capacity and power and all requisite
authority and approval required to enter into, execute and deliver this
Agreement and to perform fully their obligations hereunder and this
8
<PAGE>
Agreement has been duly executed and delivered by Sellers and constitutes the
valid and binding obligation of Sellers enforceable against them in accordance
with its terms, subject to the qualifications that enforcement of the rights and
remedies created hereby may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and (ii) general principles of equity.
14.3. No Conflict. There is no consent, approval,
authorization or other order of, filing with, registration with, or
certification by, any party required in connection with any of the actions of
Sellers contemplated by this Agreement. Further, the execution and delivery of
this Agreement and the performance thereunder by Sellers will not conflict with
or result in a material violation of, or material breach of, or constitute a
material default or potential material default under, any law or administrative
regulation or any of the terms, conditions or provisions of any judgment,
decree, loan agreement, bond, note, resolution, indenture, mortgage, deed of
trust or other agreement or instrument to which any of Sellers is a party or by
which any of Sellers is bound.
14.4. Compliance with Law. Sellers have not operated the
Business in any manner that would have a material adverse effect on the
Purchased Assets. Except as would not have a material adverse effect on the
Purchased Assets, Sellers have obtained and hold all licenses, permits,
approvals, waivers, orders, authorizations, rights or privileges of any nature,
granted, issued, approved or allowed by any foreign, federal, state or local
governmental body, administrative agency or regulatory authority required for
the lawful operation of the Business as and where such business is presently
conducted.
14.5. No Investigation or Litigation. There is no action,
suit, inquiry, investigation or other proceeding at law or in equity pending or,
to the knowledge of Sellers, threatened against or affecting Sellers or the
Business, in or before any court, governmental agency, authority, body or
arbitrator which would have a material adverse effect on the Purchased Assets.
14.6. Financial Statements. Sellers' consolidated financial
statements, books, and records pertaining to the Business and provided to Buyer
in connection with this transaction are complete and have been, to the best of
Sellers' knowledge, properly prepared and maintained and fairly and accurately
reflect all assets and liabilities of the Business and all transactions to which
Sellers are or were a party or by which Sellers, the Business or any of Sellers'
assets are or were affected and which relate or pertain to the Business for the
periods and as of the dates indicated on such financial statements.
14.7. Assets. As to the Purchased Assets only, Sellers are not
in default thereunder nor would be in default thereunder with the passage of
time, the giving of notice or both, under any active patient file/account or
other provider contract, and, to the best knowledge and belief of Sellers, none
of the other parties to any such contract is in default thereunder or would be
in default thereunder with the passage of time, the giving of notice or both.
Sellers have, and pursuant to this Agreement will convey, sell, transfer and
assign to Buyer, good and marketable title to the Purchased Assets, free and
clear of liens, encumbrances, encroachments,
9
<PAGE>
defects of title, easements, licenses, covenants, leases, claims of third
parties, security interests, mortgages, deeds of trust, pledges, agreements and
rights of others. The Purchased Assets are being purchased "as is/where is" and
Sellers do not provide any guarantees or warranties in connection with the
Purchased Assets except as otherwise provided in this Agreement.
14.8. Customers. To the best of its knowledge, Sellers have
provided Buyer with a complete and accurate list of all former and active
patients and customers of the Business as set forth on Schedule 1(a).
14.9. No Broker. Except for Ultimate Resource, Inc., none of
Sellers nor any of their officers, shareholders, or employees have employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions, or finder's fees in connection with this Agreement
or the transactions contemplated herein. Any fee payable to Ultimate Resource,
Inc. shall be the sole obligation of Sellers.
14.10. Full Disclosure. To the best of its knowledge, no
representation or warranty made by Sellers in this Agreement or pursuant hereto
(a) contains any untrue statement of any material fact; or (b) omits to state
any material fact that is necessary to make the statements made, in the context
in which made, not false or misleading in any material respect. There is no
material fact known to Sellers that it has not, to the best of its knowledge,
disclosed to Buyer in this Agreement or otherwise in writing that had or has, or
so far as Sellers can reasonably foresee will have, a material adverse effect on
the Purchased Assets or the ability of Sellers to perform their obligations
under this Agreement.
14.11. Representation and Warranties. All of the
representations and warranties of Sellers contained herein shall,
notwithstanding any investigation at any time made by or on behalf of Buyer,
survive the Closing Date and remain in full force and effect for a period of one
(1) year.
Section 15. Representations and Warranties of Buyer. Buyer warrants and
represents to and covenants with Sellers and their successors and assigns as
follows:
15.1 Organization of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio and has all requisite corporate power and authority to deliver and to
perform this Agreement and consummate the transactions contemplated hereby.
Buyer has no fictitious, assumed or other names of any type that are registered
or used by Buyer or under which Buyer has done business at any time since its
formation. Alan T. Rudy owns 100% of the outstanding stock of Buyer free and
clear of all liens, encumbrances, or claims of any third party.
15.2 Validity and Execution. Buyer has the full legal right,
capacity and power and all requisite authority and approval required to enter
into, execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer enforceable against it in
accordance with its terms, subject to the qualifications that enforcement
10
<PAGE>
of the rights and remedies created hereby may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and (ii) general principles of
equity.
15.3. No Conflict. There is no consent, approval,
authorization or other order of, filing with, registration with, or
certification by, any party required in connection with any of the actions of
Buyer contemplated by this Agreement. Further, the execution and delivery of
this Agreement and the performance thereunder by Buyer will not conflict with or
result in a material violation of, or material breach of, or constitute a
material default or potential material default under, any law or administrative
regulation or any of the terms, conditions or provisions of any judgment,
decree, loan agreement, bond, note, resolution, indenture, mortgage, deed of
trust or other agreement or instrument to which Buyer is a party or by which
Buyer is bound.
15.4. No Investigation or Litigation. There is no action,
suit, inquiry, investigation or other proceeding at law or in equity pending or,
to the knowledge of Buyer, threatened against or affecting Buyer, in or before
any court, governmental agency, authority, body or arbitrator which would have a
material adverse effect on its ability or authority to enter into this
Agreement.
15.5. No Broker. Neither Buyer nor any of its officers,
shareholders, or employees have employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions, or
finder's fees in connection with this Agreement or the transactions contemplated
herein.
15.6. Full Disclosure. To the best of its knowledge, no
representation or warranty made by Buyer in this Agreement or pursuant hereto
(a) contains any untrue statement of any material fact; or (b) omits to state
any material fact that is necessary to make the statements made, in the context
in which made, not false or misleading in any material respect. There is no
material fact known to Buyer that it has not, to the best of its knowledge,
disclosed to Sellers in this Agreement or otherwise in writing that had or has,
or so far as Buyer can reasonably foresee will have, a material adverse effect
on the ability of Buyer to perform its obligations under this Agreement.
15.7. Representation and Warranties. All of the
representations and warranties of Buyer contained herein shall, notwithstanding
any investigation at any time made by or on behalf of Seller, survive the
Closing Date and remain in full force and effect for a period of one (1) year.
Section 16. Transition and Cooperation. For a period of six months from
the Closing Date, (a) Sellers shall fully cooperate to transfer to Buyer the
control and enjoyment of the Purchased Assets; (b) neither Sellers nor Buyer
shall take any action, directly or indirectly, alone or together with others,
which obstructs or impairs the smooth assumption by Buyer of the Purchased
Assets and Sellers shall cooperate with Buyer in good faith during the
transition period; (c) to the best of its efforts, Sellers shall promptly
deliver to Buyer all correspondence, papers, documents and other items and
materials received by Seller or found to be in the
11
<PAGE>
possession of Seller which pertain to the Purchased Assets; (d) to the best of
their efforts, Buyer and Sellers shall cooperate with each other to obtain any
necessary consents from any other party to accomplish the purposes of this
Agreement; and (e) Sellers shall permit Buyer and its authorized representatives
to have reasonable access to Sellers' books and records, financial statements,
accounting information, workpapers, notes and related materials, prepared,
reviewed or compiled with respect to the Purchased Assets.
Section 17. Noncompetition.
(a) In consideration for the purchase by Buyer hereunder
during the period beginning on the Closing Date and ending on the eighteen (18)
month anniversary thereof, Sellers agree:
(i) Not to engage or participate, directly or
indirectly in the operation, management or ownership of any business,
firm, corporation, association, or other entity engaged in the
diabetic, respiratory medication or ostomy medical supply business
within the United States; and
(ii) Not to knowingly communicate with or solicit,
directly or indirectly, any employee, salesman, agent or representative
of Buyer, in any manner which seeks to end or interfere with the
relationship of such person with Buyer.
(b) Notwithstanding the above, the parties agree that Sellers'
continued operation of PromptCare Incorporated and its expansion into new
geographic areas or by merger, acquisition or otherwise shall not be considered
a violation of these noncompete provisions set forth herein; provided, however,
that PromptCare Incorporated may not access, retain, use or otherwise refer to
in any manner the Customer List.
Section 18. Indemnification.
18.1 Sellers' Indemnification of Buyer. Sellers, jointly and
severally, agree to defend, indemnify and hold Buyer and its affiliates harmless
from any and all liability, assessment, cost, expense and damage, including
reasonable fees for consultants and attorneys, arising out of or resulting from
any and all claims (whether or not groundless) and liabilities, of whatsoever
nature, asserted against Buyer or its affiliates arising out of or resulting
from any of the following:
(a) any breach of a warranty or representation made by Sellers
in this Agreement or the non-performance of any covenant or obligation to be
performed by Sellers pursuant to this Agreement; and
(b) any Obligation of any of Sellers, including, without
limitation, any Obligation of Sellers relating to the Purchased Assets and
accruing, arising or relating to an event occurring prior to the Closing Date,
or any liability of Seller relating to Section 3(b) of this Agreement.
12
<PAGE>
18.2 Buyer's Indemnification of Sellers. Buyer agrees to defend,
indemnify and hold Sellers and their affiliates harmless from any and all
liability, assessment, cost, expense and damage, including reasonable fees for
consultants and attorneys, arising out of or resulting from any and all claims
(whether or not groundless) and liabilities, of whatsoever nature, asserted
against Sellers or their affiliates arising out of or resulting from any of the
following:
(a) any breach of a warranty or representation made by Buyer
in this Agreement or the non-performance of any covenant or obligation to be
performed by Buyer pursuant to this Agreement; and
(b) any obligation of Buyer, including, without limitation,
any obligation of Buyer relating to the Purchased Assets and accruing, arising
or relating to an event occurring after to the Closing Date, or any liability of
Buyer relating to Section 3(b) of this Agreement.
18.3 Limitation on Liability. Neither Seller nor Buyer shall
have any liability (for indemnification or otherwise) with respect to the
matters described in this Section 18 until the total of said liability with
respect to such matters exceeds $25,000 and then only for amounts in excess of
$25,000. In no event shall Sellers' or Buyer's cumulative liability with respect
to the matters described in this Section 18 exceed the aggregate amount of the
Purchase Price, unless the liability results from a fraudulent breach of this
Agreement by the breaching party.
The obligations set forth in this Section 18 shall survive the Closing
for a period of one (1) year.
Section 19. Expenses. Each party shall be obligated to pay its own
legal, accounting and other fees and expenses incurred with respect to this
Agreement and the transactions contemplated herein.
Section 20. Termination.
20.1 General. This Agreement may be terminated and any or all
of the transactions may be abandoned as follows:
(a) at any time by either Buyer or Sellers for any reason prior to the
deposit of the Escrow Funds pursuant to Section 5;
(b) after the deposit of the Escrow Funds but prior to the Closing:
(i) By mutual written consent of the parties;
(ii) By either Buyer or Sellers, if Sellers (in the case of
termination by Buyer) or Buyer (in the case of termination by Sellers) shall
have breached in any material respect any of its covenants or obligations under
this Agreement or any representation or warranty of Sellers (in the case of
termination by Buyer) or of Buyer (in the case of termination by Seller) shall
have been
13
<PAGE>
incorrect in any material respect when made or at any time prior to
the Closing (unless such breach is capable of cure, and in such case the
breaching party shall have cured such breach within 10 days after the receipt of
written notice of such breach from the non-breaching party);
(iii) By Sellers if prior to Closing, Buyer's board of
directors shall have withdrawn or modified or changed in a manner materially
adverse to Sellers, its approval or recommendation of this Agreement or the
transactions hereunder.
(iv) By Buyer if prior to the Closing, Sellers' boards of
directors shall have (i) failed to approve, or withdrawn, or modified or changed
in a manner materially adverse to Buyer, its approval or recommendation of this
Agreement or the transactions or (ii) shall have approved a sale of the Purchase
Assets to a party other than Buyer; and
(v) By Buyer, if prior to the Closing, Sellers have undertaken
any action, or failed to take any action, that results in a material adverse
effect on the Purchased Assets.
(c) By either Buyer or Sellers, if the transaction has not been
consummated by October 10, 2000, provided that the party seeking to exercise
such right is not then in breach in any material respect of any of its
obligations under this Agreement or whose actions or inaction are the cause for
the failure of the Agreement to Close by October 10, 2000.
The party desiring to terminate this Agreement pursuant to this Section
20 shall give prompt written notice of such termination to the other party.
20.2 Return of Escrow Funds. Notwithstanding any other
provision of this Agreement, if this Agreement is terminated pursuant to
Sections 20.1(b)(i), (b)(iv) or (b)(v), the Escrow Funds shall be returned to
Buyer. If the Agreement is terminated pursuant to Section (b)(iii), the Escrow
Funds shall be released to Sellers. If the Agreement is terminated pursuant to
Sections 20.1(b)(ii) and the Sellers are the breaching party, the Escrow Funds
shall be returned to Buyer. If the Agreement is terminated pursuant to Sections
20.1(b)(ii) and the Buyer is the breaching party, the Escrow Funds shall be
released to Seller. If the Agreement is terminated by the Buyers pursuant to
Section 20.1(c), the Escrow Funds shall be returned to Buyer. If the Agreement
is terminated by Sellers pursuant to Section 20.1(c), the Escrow Funds shall be
released to Seller.
20.3 Effect of Termination. If this Agreement is terminated
pursuant to Section 20.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto except to the extent that such
termination results from a material breach by a party of any representation,
warranty or covenant contained in this Agreement. Notwithstanding the foregoing,
the provisions contained in Sections 13(f) and 18 shall survive the termination
hereof.
Section 21. Reliance by Buyer. Notwithstanding the right of Buyer to
investigate the Business and Purchased Assets and financial condition of
Sellers, and notwithstanding any knowledge determined or determinable by Buyer
as a result of such investigation, Buyer has the
14
<PAGE>
unqualified right to rely upon, and have relied upon, each of the
representations and warranties made by Sellers in this Agreement or pursuant
hereto.
Section 22. Applicable Law and Venue. This Agreement shall be construed
and enforced in accordance with the laws of the State of Delaware without
reference to its choice of law rules.
Section 23. Construction. The captions preceding the Articles and
Sections in this Agreement have been inserted for convenience only and shall not
be used to modify, expand or construe any of the provisions of this Agreement.
This Agreement and the documents to be delivered pursuant hereto constitute the
entire Agreement between the parties hereto with respect to the subject matter
contained in them, and they supersede all prior and contemporaneous agreements,
representations and understandings of the parties, express or implied, oral or
written. This Agreement may not be amended or modified in any way except in a
writing signed by each of the parties hereto.
Section 24. Assignment. This Agreement shall not be assignable by
either party.
Section 25. Binding Effect. This Agreement shall be binding upon the
heirs and successors of the respective parties hereto.
Section 26. Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties hereto and their
respective heirs, successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third persons to any party to this Agreement, nor shall any provision give any
third party any right of subrogation over or action against any party to this
Agreement.
Section 27. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be sent, via certified mail or overnight delivery (in which case
delivery shall be deemed to have occurred two business days after deposit in
mail or next business day if sent via overnight delivery, with business day
defined as Monday through Friday except those days recognized as legal holidays
by the State of Delaware.) Any such notices shall be given, if to Express-Med,
Inc., to:
Express-Med, Inc.
6530 West Campus Oval
New Albany, Ohio 43054-8777
Attn: Michael Newcomb
Telephone: 614-855-6320
Facsimile: 614-855-6055
15
<PAGE>
with copies to:
Porter, Wright, Morris & Arthur, LLP
41 South High Street, Suite 2900
Columbus, Ohio 43215
Attn: Kelly J. Fox, Esq.
Telephone: 614-227-2005
Facsimile: 614-227-2100
if to Sellers, to:
c/o Transworld HealthCare, Inc.
11 Skyline Drive
Hawthorne, NY 10532
Attn: Jack Wynne
Telephone: 914-345-8880
Facsimile: 914-345-8935
with copies to:
Baer Marks & Upham, LLP
205 Third Avenue
New York, New York 10022
Attn: Jill Cobert-Alvarez, Esq.
Telephone: 212-702-5954
Facsimile: 212-812-3334
Section 28. Publicity. Neither Sellers nor Buyer shall make or issue,
or cause to be made or issued, any announcement or statement (whether written or
oral) concerning this Agreement, the termination hereof or the transactions
contemplated hereby for dissemination to the general public without the prior
written approval of the other party. This provision shall not apply, however, to
any announcement or statement required in the reasonable opinion of Buyer or
Sellers to be made by law or the regulations of any federal or state
governmental agency or any stock exchange, except that the party required to
make such announcement or statement shall provide a draft copy thereof to other
party, and consult with such other party concerning the timing and content
thereof, before making or releasing the same.
Section 29. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original instrument. This
Agreement shall not be deemed a binding Agreement between Buyer and any
particular Seller until the same duly has been executed and delivered to the
Buyer and such Seller.
16
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLERS: BUYER:
MK DIABETIC SUPPORT SERVICES, INC. EXPRESS-MED. INC.
RESPIFLOW, INC.
TRANSWORLD OSTOMY, INC.
By: /s/ Sarah Eames By: /s/ Alan Rudy
-------------------------------- -------------------------------
Sarah Eames Alan Rudy
Title: President and Director Title: Chief Executive Officer
17
