<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 15, 1997
------------------------------------------------
Date of Report (date of earliest event reported)
NEWCARE HEALTH CORPORATION
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Exact name of Registrant as Specified in its Charter
Nevada 0-24110 86-0594391
- --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
3600 Oak Manor Lane, Building 4, Largo, Florida 34644
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Address of Principal Executive Offices, Including Zip Code
(813) 229-7777
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Registrant's Telephone Number, Including Area Code
<PAGE>
ITEM 5. OTHER EVENTS.
Effective April 15, 1997, the Company entered into and closed a
Settlement Agreement with Karen and Robert Hagan (the "Hagans") and
Christopher F. Brogdon ("Brogdon"). This agreement provides for, among other
things, the following:
1. At the closing, the Company paid Robert Hagan $150,000 for the
termination of his employment agreement dated May 22, 1995.
2. At the closing, the Company paid Cimmeron Properties, Inc., a
company owned by the Hagans, $65,000 for termination of a commercial real
estate lease for office space occupied by the Company in Roswell, Georgia,
which was scheduled to terminate on December 31, 1997.
3. Brogdon will purchase a total of 714,000 shares from Karen Hagan
over a two year period commencing April 15, 1997. The transaction is
structured such that Karen Hagan will sell to Brogdon four options for 178,500
shares each. The options will be exercisable in six month intervals at an
exercise price of $3.00 per share, with the first option exercisable at any
time on or before October 15, 1997. Brogdon must pay $21,420 for the first
option (which expires October 15, 1997); $42,820 for the second option;
$64,260 for the third option; and $85,860 for the fourth option. The purchase
price for each option will be payable in monthly installments of $3,570 each
beginning on May 15, 1997, and continuing monthly thereafter until such time
as the option has been exercised by Brogdon or until it lapses.
Brogdon has also granted to Karen Hagan four put options which
essentially provide that during the 10 day periods following each of the four
option periods Karen Hagan can force Brogdon to purchase any shares that he
doesn't purchase under the prior six month option. The purchase price for the
put options is $2.95 per share.
4. At the closing, the Company delivered to the Hagans title to a
1994 Ford Ranger pickup.
5. At the closing, Robert Hagan, Karen Hagan and Richard Vanderberg
tendered his or her resignation as an officer and/or director of the Company
and any of its subsidiaries.
6. The Company agrees to continue to employ Richard Vanderberg
according to his employment agreement as the Chief Financial Officer of
Cimmeron Health Care, Inc., until October 1, 1997. At that time, the Company
will pay Vanderberg $116,250 to terminate his employment agreement which
otherwise continues until May 22, 2000.
On April 15, 1997, Robert Hagan and Christopher Brogdon were both
directors of the Company, and Robert Hagan is a principal shareholder by
virtue of the 714,287 shares owned by his wife. Robert Hagan resigned as a
director effective on April 15, 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS. The following exhibit is filed herewith:
EXHIBIT
NUMBER DESCRIPTION
10 Settlement Agreement
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
NEWCARE HEALTH CORPORATION
Dated: May 5, 1997 By/s/ Ashok Dalal
Ashok Dalal, President<PAGE>
<PAGE>
<PAGE>
EXHIBIT 10
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is made effective as of
April 15, 1997, by and among Karen Hagan and Robert Hagan (the "Hagans"),
NewCare Health Corporation ("NewCare") and Christopher F. Brogdon ("Brogdon").
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the Hagans, NewCare and Brogdon agree as follows:
BACKGROUND
1. Pursuant to a Plan and Agreement of Merger and Supplemental
Agreement, both dated May 22, 1995 (together, the "Merger Agreement"), NewCare
Acquisition Corporation, a wholly-owned subsidiary of NewCare, was the
surviving entity in a merger with Cimerron Health Care, Inc. and its wholly-
owned subsidiaries (together with Emory Nursing Center, Inc., the "Cimerron
Group"). Pursuant to the Merger Agreement, the name of the surviving entity
was changed to Cimerron Health Care, Inc.
2. On the same date, pursuant to an Asset Purchase Agreement,
Memorial Nursing Center, Inc., also a wholly-owned subsidiary of NewCare,
acquired all the assets and assumed certain liabilities of Emory Nursing
Center, Inc.
3. In connection with the preceding transactions, NewCare made a cash
payment of $1,500,000 and issued 714,000 shares of its $.02 par value common
stock to Karen Hagan, the sole shareholder of the corporations comprising the
Cimerron Group. NewCare also agreed to other consideration, including an
employment agreement with Robert Hagan, support for the election of Robert
Hagan as a director of NewCare, certain understandings regarding the post-
merger management of the Cimerron Group, assumption of a lease for the
premises occupied by the Cimerron Group, and an undertaking to either include
the NewCare stock issued to Karen Hagan in a registration statement filed on
or before April 30, 1996 or repurchase such stock at a specified price.
4. NewCare and the Hagans disagree as to whether or not the
conditions of the undertaking regarding the filing of a registration statement
have been satisfied.
5. NewCare is in the process of transferring management control of
NewCare to an affiliate of Brogdon and the Hagans and NewCare agree that it is
in the best interest of the Hagans and NewCare to enter into this Agreement to
settle all matters existing between them, except for certain Notes (as
hereinafter described).
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the Hagans, NewCare and Brogdon agree as follows:
TERMS
1. Background. The parties agree that the background is true and
correct and is therefore incorporated into this Agreement by this reference.
2. Consideration. In consideration of the making of this Agreement,
the promises and releases set forth below, and other good and valuable
consideration, the receipt of which are hereby acknowledged, the Hagans,
NewCare and Brogdon have entered into this Agreement intending to be legally
bound.
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3. Termination of Employment Agreement and Lease Agreement.
At the Closing (as hereinafter defined), NewCare will make payments as
follows:
(a) $150,000 will be paid to Robert Hagan for termination of all
rights and obligations of all parties as set forth in an Employment Agreement
dated May 22, 1995 by and between Cimerron Health Care, Inc. and Robert W.
Hagan, a copy of which is attached hereto as Exhibit "A". Until the Closing,
NewCare will continue to pay Robert Hagan according to the terms of said
agreement.
(b) $65,000 will be paid to Cimerron Properties, Inc. for
termination of all rights and obligations of all parties as set forth in a
Real Estate Commercial Lease dated December 29, 1991 and the Addendum to Lease
dated September 14, 1994, a copy of which is attached hereto as Exhibit "B".
Until the Closing, NewCare will continue to pay Cimerron Properties, Inc.
according to the terms of said lease and addendum.
4. Option to Purchase Stock owned by Karen Hagan.
Brogdon agrees to purchase 714,000 shares (the "Shares") of NewCare
common stock from Karen Hagan, constituting all of the shares issued to her
pursuant to the Merger Agreement.
To effect such purchase, Karen Hagan will grant Brogdon at Closing four
separate options on the following terms (each an "Option" and together, the
"Options"):
(a) Each Option shall grant Brogdon the right to purchase
178,500 Shares at a purchase price of $3.00 per Share. The Options will be
exercisable in six month intervals, with the first option exercisable at any
time on or before October 15, 1997. The subsequent Options will be
exercisable on April 15, 1998, October 15, 1998 and April 15, 1999. The form
of Option is attached hereto as Exhibit "C".
(b) The maximum purchase price for the Options will be $21,420
for the October 15, 1997 Option; $42,820 for the April 15, 1998 Option;
$64,260 for the October 15, 1998 Option; and $85,680 for the April 15, 1999
Option. The purchase price for each Option will be payable in monthly
installments of $3,570 each beginning on May 15, 1997 and continuing monthly
thereafter until such time as the Option has been exercised by Brogdon or
lapses.
(c) At Closing, Brogdon and Karen Hagan will enter into an
Escrow Agreement in the form attached hereto as Exhibit "D" and will deliver
the certificate for the Shares to the law firm of Jacobs, Forlizzo & Neal,
P.A., Clearwater, Florida (the "Escrow Agent") as escrow agent. Upon exercise
of each Option, the Escrow Agent will be authorized by the Escrow Agreement to
cause the transfer agent to register 25% of the Shares in such names and
amounts as directed by Brogdon.
5. Certain Other Consideration.
In addition to the consideration set forth elsewhere in this Agreement,
the parties agree as follows:
(a) At Closing, NewCare will deliver to the Hagans title to a
1994 Ford Ranger pickup (Serial No. 1FTCR10A6RUA00589). Such title shall be
transferred free of any liens.
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<PAGE>
(b) For a period of six months beginning April 1, 1997, NewCare
will continue to employ Richard Vandenberg ("Vandenberg") pursuant to the
terms of his Employment Agreement attached hereto as Exhibit "E". Upon
expiration of such six month period, NewCare will make a cash payment to
Vandenberg of $116,250, whereupon NewCare and Vandenberg will execute mutual
releases and the rights and obligations of both parties under said employment
agreement will be terminated.
(c) Until December 31, 1997, NewCare will continue to pay the
Hagans, Vandenberg and Patricia Dempsey the same health and life insurance
benefits to which they have been entitled prior to the date of this Agreement.
Beginning at the Closing and continuing until termination of his employment
agreement, Vandenberg will be covered under the employee benefits generally
available from time to time to employees of NewCare. Until termination of
Vandenberg's employment agreement, the Hagans will cause Cimerron Properties,
Inc. to permit him to occupy office space at 1144 Canton Street, Roswell,
Georgia 30075 without charge to NewCare or any of its affiliates.
(d) At Closing, Robert Hagan, Karen Hagen and Richard Vandenberg
will each tender his or her resignation as an officer and/or director of
NewCare and any of its subsidiaries and Robert Hagan will waive any rights he
has under the Merger Agreement to the support of NewCare for election as a
director.
6. Certain Contractual Obligations to Continue. In addition to the
matters addressed elsewhere in this Agreement, the Hagans and NewCare have
certain other business arrangements which shall be dealt with as follows:
(a) NewCare and its indirect subsidiary Pleasant Valley Nursing
Home, Inc. will continue to make scheduled payments to Cimmeron Properties,
Inc. under that certain Lease Agreement pertaining to a 1992 Infinity Q45.
(b) Real Estate Note, dated August 31, 1995 in the amount of
$195,000 made by Memorial Nursing Center, Inc. in favor of Cimerron
Properties, Inc. - At Closing, the Hagans will cause Cimerron Properties, Inc.
to deliver to NewCare and Memorial Nursing Center, Inc. confirmation that the
note is current and the due date of August 25, 1995 set forth in the note is
not correct and that the correct due date is August 25, 1998.
(c) Promissory Note, dated July 1, 1996 in the amount of $80,000
made by Fitzgerald Nursing Center in favor of Karen Hagan -NewCare will cause
this note to continue to be paid according to its terms, with the final
payment due July 1, 1997. At Closing, Karen Hagan will deliver to NewCare
confirmation that the note is current.
(d) Real Estate Note, dated September 22, 1995 in the amount of
$300,000 made by Memorial Nursing Center, Inc. in favor of Karen Hagan -
NewCare will cause this note to continue to be paid according to its terms,
with the final payment due September 15, 1998. At Closing, Karen Hagan will
deliver to NewCare confirmation that the note is current.
(e) The due of that certain Mortgage Note, dated October 11,
1995 in the amount of $600,000 made by NewCare Health Corporation in favor of
Karen Hagan will be extended until April 15, 1998. At Closing, Karen Hagan
will deliver to NewCare confirmation that the note is current.
7. Mutual General Releases. The Hagans and NewCare shall execute the
General Releases attached hereto as Composite Exhibit "F". However, nothing
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<PAGE>
contained in this Agreement, or the Exhibits attached hereto, shall relieve
any party from their obligations under this Agreement.
8. Closing. Closing shall take place at 6000 Lake Forest Dr.,
Suite 200, Atlanta, Georgia at 10 am on April 15, 1997, or such other date
mutually acceptable to the Hagans and Brogdon.
9. Execution. This Agreement may be executed in counter- parts and
shall be binding only on those parties who have executed the Agreement. Any
party failing to execute this Agreement shall not be entitled to claim any
benefits or exercise any rights hereunder. The failure of any party to
execute this Agreement shall have no effect on the enforceability of this
Agreement as to the executing parties. NewCare and Brogdon acknowledge that
Vandenberg is executing this Agreement solely for the purpose of acknowledging
his consent to the provisions of Sections 5(b) and 5(c) hereof.
10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto as to the subject matter hereof and there are not
other prior or contemporaneous agreements, understandings, promises,
representations, or warranties between or among the parties with regard
thereto. This Agreement shall not be modified unless such modification is in
writing and is executed by all parties to be bound by such modification.
11. Governing Law. The parties agree that this Agreement will be
governed by and construed in accordance with Georgia.
/s/ Karen Hagan
Karen Hagan
/s/ Robert Hagan
Robert Hagan
/s/ Richard Vandenberg
Richard Vandenberg
NewCare Health Corporation,
a Nevada Corporation
By:/s/ Ashok Dalal
Name (Print): Ashok Dalal
Title (Print): President
/s/ Christopher F. Brogdon
Christopher F. Brogdon
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<PAGE>
EXHIBIT A
[Robert Hagan Employment Agreement]
<PAGE>
EXHIBIT B
[Lease]
<PAGE>
EXHIBIT C
OPTION TO PURCHASE
COMMON STOCK
This Option Agreement is made and entered into this 15th day of April,
1997 by and between Christopher F. Brogdon ("Brogdon") and Karen Hagan
("Hagan").
W I T N E S S E T H:
WHEREAS, the parties have, together with NewCare Health Corporation, a
Nevada corporation (the "Company") and certain other persons, entered into a
Settlement Agreement dated April __, 1997 (the "Settlement Agreement"); and
WHEREAS, pursuant to the Settlement Agreement, Brogdon and Hagan have
agreed to an option on the part of Brogdon to purchase from Hagan, up to One
Hundred Seventy Eight Thousand Five Hundred (178,500) shares of the Common
Stock, par value $0.02 per share (the "Shares") of the Company.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, receipt of which is hereby acknowledged, the
parties covenant and agree as follows:
1. Grant of Option. Hagan grants to Brogdon an option (the
"Option") to purchase, One Hundred Seventy Eight Thousand Five Hundred
(178,500) shares of the Common Stock, par value $0.02 per share (the "Shares")
of the Company, or such lesser number of shares as designated by Brogdon on
the Purchase Form attached hereto.
2. Purchase Price. The purchase price for each Share subject to this
Option will be $3.00 per share.
3. Term of Option. This Option shall have a term of [six, twelve,
eighteen, twenty-four] months (the "Term") from April 15, 1997, and may be
exercised during such term by Brogdon at any time from and after April 15,
1997.
4. Purchase price of Option. In consideration for this Option,
Brogdon shall pay Hagan the sum of [$21,420; $42,840; $64,260; $85,680]. The
purchase price for the Option shall be payable to Hagan at the address shown
herein in monthly installments of $3,570 each, with the first payment due on
May 15, 1997 and continuing on the 15th day of each month thereafter until
Brogdon exercises the Option or the Term expires. Upon exercise of this
Option, Brogdon will make the exercise price payable to "Jacobs, Forlizzo &
Neal, P.A., Trust Account."
5. Notice of Election to Exercise. This Option shall be exercised by
Brogdon by delivering to Hagan the Purchase Form attached hereto.
6. Successors and Assigns. This Option shall be binding upon the
successors of Hagan. Brogdon may assign his rights under this Option without
the prior consent of Hagan.
7. Representations and Warranties by Hagan. Hagan represents and
warrants to Brogdon as follows:
(a) Absence of Prohibition. Hagan is not a party to any
agreement or understanding which would in any way prevent Hagan from entering
into or performing this Option. Further, throughout the term of this Option,
Hagan shall not enter into any agreement or understanding which would in any
way prevent Hagan from performing this Option. Hagan will not at any time
throughout the
<PAGE>
Term, directly or indirectly, sell, assign, transfer, mortgage, encumber,
pledge or otherwise deal with or dispose of the Shares.
(b) Authorization. No authorization or approvals of
governmental bodies or any court or otherwise are necessary in order to enable
Hagan to enter into and perform this Option.
(c) Title to Shares. Hagan holds of record and owns
beneficially the Shares free and clear of any restrictions on transfer (other
than any restrictions under the Securities Act of 1933 and state securities
laws), pledge, lien, encumbrance, charge, or other security interest, options,
warrants, purchase rights, contracts, commitments, claims and demands.
8. Indemnification. Hagan covenants and agrees to indemnify and hold
Brogdon harmless by reason of any loss, cost or expense, including attorneys'
fees and court costs, incurred by Brogdon as a result of any failure by Hagan
to honor the terms of the Option granted herein or the breach of any covenant
or representation and warranty by Hagan contained in this Option.
9. Specific Performance. Hagan acknowledges that in the event
Brogdon exercises the Option and Hagan fails to honor the terms of the Option
granted herein for any reason, damages resulting therefrom will be difficult,
if not impossible, to ascertain, and therefore Hagan will be entitled to
specific performance of her obligation to convey the Shares to Brogdon, in
addition to any other remedies that may be available to Brogdon at law or in
equity.
10. Nature and Survival of Representations. All statements contained
in the agreements, instruments or documents delivered by or on behalf of
either of the parties pursuant to this Option, and the covenants and
representations and warranties made by either party shall survive, except to
the extent waived in writing by the other party, the consummation of the
transactions contemplated by this Option, including the exercise of the
Option, notwithstanding any investigation heretofore or hereafter made by by
either of them or on behalf of either of them.
11. Endorsement of Stock Certificates. Simultaneously with the
execution of this Option, Hagan shall cause the following legend to be placed
on each of her stock certificates for the Shares:
The sale, encumbrance or other disposition of the shares represented by
this certificate is subject to the terms and conditions of one or more
option agreements dated April 15, 1997, by and between the holder of
this certificate and others and such shares are further subject to the
terms and conditions of an Escrow Agreement dated April 15, 1997 by and
among the holder of this certificate and others. A copy of which option
or options and Escrow Agreement are on file in the office of this
corporation and the offices of the corporation's stock transfer agent.
Copies of the option or options and the Escrow Agreement will be
furnished without charge upon request.
12. Notices. All notices, requests, and other communications under
this Option shall be deemed duly given if sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Hagan: Karen Hagan
1144 Canton Street
Suite 200
Roswell, Georgia 30075
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<PAGE>
If to Brogdon:
Christopher F. Brogdon
c/o NewCare Health Corporation
6000 Lake Forest Dr.
Suite 200
Atlanta, Georgia 30328
13. Invalidity of Portions of Option. The invalidity or
unenforceability of any one or more phrases, sentences, clauses or sections in
this Option shall not affect the validity or enforceability of the remaining
portions hereof, or any other part hereof.
14. Section Headings. The section headings or captions contained
herein are merely for the convenience of the parties and are not to be
construed as a limitation on the provisions herein.
15. Governing Law. This Option shall be construed in accordance with
and governed by the laws of the State of Georgia.
IN WITNESS WHEREOF, the undersigned have executed and Karen Hagan has
delivered this Option in Atlanta, Georgia on the 15th day of April, 1997.
-------------------------------
Karen Hagan
-------------------------------
Christopher F. Brogdon
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<PAGE>
FORM OF NOTICE OF EXERCISE
(To be signed only upon exercise of Option)
TO: Karen Hagan
1144 Canton Street
Suite 200
Roswell, Georgia 30075
The undersigned, the holder of the within Option, hereby irrevocably
elects to exercise the purchase rights represented by such Option for, and to
purchase thereunder, ________ shares of the Common Stock of NewCare Health
Corporation (the "Company"), par value $0.02 per share, and herewith makes
payment of $______ therefor to "Jacobs, Forlizzo & Neal, P.A., Trust Account",
and requests that the certificates for such shares be issued in the name of
______________________, and delivered to _____________________, whose address
is ______________________, and if such shares shall not be all of the shares
purchasable hereunder, that a new Option for such additional shares be
delivered to the undersigned.
DATED:
__________________________________________
(Signature must conform in all
respects to name of holder as specified on
the face of the Option)
<PAGE>
EXHIBIT D
[Escrow Agreement]
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of the __ day of
April 1997, by and among KAREN HAGAN ("Hagan"), CHRISTOPHER F. BROGDON
("Brogdon"), and JACOBS, FORLIZZO & NEAL, P.A. ("Escrow Agent").
PRELIMINARY STATEMENTS
A. Hagan is the holder and beneficial owner of 714,000 shares of $.02
par value common stock in NewCare Health Corporation, a Nevada corporation
(the "Shares").
B. Hagan, Brogdon, and certain other parties entered into that
certain Settlement Agreement dated as of April __, 1997 (the "Settlement
Agreement").
C. Escrow Agent is engaged in the practice of law in the State of
Florida and has agreed to act as Escrow Agent hereunder.
D. This Agreement and the transfers provided herein secure the
payment in full of all obligations of Brogdon to Hagan in connection with the
sale of the Shares from Hagan to Brogdon, as evidenced by certain Options made
by Hagan in favor of Brogdon (the "Options"), copies of which are attached
hereto as Exhibit "A".
E. Simultaneously herewith, Hagan is delivering and pledging to
Escrow Agent the Shares, on the terms and conditions of this Agreement and for
the benefit of the parties.
F. Hagan, Brogdon and Escrow Agent each desire to enter into this
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the sum of TEN DOLLARS AND NO/100
($10.00) and other good and valuable consideration, receipt and adequacy of
which is hereby acknowledged, and in further consideration of the covenants
and agreements contained herein, the parties agree as follows:
Article I. Appointment of Escrow Agent
Section 1.1 The parties acknowledge and agree that Escrow Agent shall
act as Escrow Agent under this Agreement.
Section 1.2 To induce Escrow Agent to act as Escrow Agent hereunder,
Hagan and Brogdon agree that:
A. Escrow Agent shall not be under any duty to give the Shares
held by it hereunder any greater degree of care than it gives its own similar
property.
B. This Agreement expressly sets forth all of the duties of
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Agreement against Escrow Agent.
Escrow Agent shall not be bound by the provisions of any agreement among the
other parties hereto except those of this Agreement.
C. Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct, and, except with respect to claims based
upon such gross negligence or willful misconduct that are successfully
asserted
<PAGE>
against Escrow Agent, the other parties hereto, shall jointly and severally
indemnify and hold harmless Escrow Agent (and any successor Escrow Agent) from
and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees and disbursements, arising out
of and in connection with this Agreement.
D. Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity or the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person
purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
E. Escrow Agent does not have any interest in the Shares
deposited hereunder but is serving as escrow holder of the Shares only and
having only possession thereof.
F. Escrow Agent makes no representation as to the validity,
value, genuineness or the collectability of any security or other documents or
instrument held by or delivered to it.
G. Escrow Agent shall not be called upon to advise any party as
to the wisdom in selling or retaining or taking or refraining from any action
with respect to the Shares.
H. Escrow Agent (and any successor Escrow Agent) may at any
time resign as such by delivering the Escrow Property to any successor Escrow
Agent jointly designated by the other parties hereto in writing, or to any
court of competent jurisdiction if no such successor Escrow Agent is agreed
upon within 30 days of the date of Escrow Agent's written notice of
resignation, whereupon Escrow Agent shall be discharged of and from any and
all further obligations arising in connection with this Agreement. The
resignation of Escrow Agent will take effect on the earlier of (a) the
appointment of a successor (including a court of competent jurisdiction) or
(b) the day which is thirty (30) days after the date of delivery of its
written notice of resignation to the other parties hereto. If at that time
Escrow Agent has not received a designation of a successor Escrow Agent,
Escrow Agent's sole responsibility after that time shall be to safekeep the
Shares until receipt of a designation of successor Escrow Agent or a joint
written disposition instruction by the other parties hereto or a final order
of a court of competent jurisdiction.
I. In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection with
the Shares, or in the event that Escrow Agent in good faith is in doubt as to
what action it should take hereunder, Escrow Agent shall be entitled to
deposit the Shares with the clerk of the Circuit Court of Pinellas County,
Florida or to retain the Escrow Property until Escrow Agent shall have
received (i) a final non-appealable order of a court of competent jurisdiction
directing delivery of the Shares or (ii) a written agreement executed by the
other parties hereto directing delivery of the Shares, in which event Escrow
Agent shall disburse and deliver the Shares in accordance with such order or
agreement. Any court order referred to in (i) above shall be accompanied by a
legal opinion of counsel for the presenting party satisfactory to Escrow Agent
to the effect that said court order is final and non-appealable. Escrow Agent
may act on such court order and legal opinion without further questions.
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<PAGE>
J. Hagan and Brogdon shall pay Escrow Agent compensation (as
payment in full) for the services to be rendered by Escrow Agent hereunder of
$10, payable in advance on the date of execution of this Agreement. Hagan and
Brogdon further agree to reimburse Escrow Agent for all reasonable expenses,
disbursement and advances incurred or made by Escrow Agent in performance of
its duties hereunder.
Article II. Deposits into Escrow; Pledge
Section 2.1 The Escrow Property. Hagan has directed Securities
Transfer Corporation ("Transfer Agent") to place a "stop order" with respect
to the Shares as follows:
"The sale, encumbrance or other disposition of the shares represented by
this certificate is subject to the terms and conditions of one or more
option agreements dated April 15, 1997, by and between the holder of
this certificate and others and such shares are further subject to the
terms and conditions of an Escrow Agreement dated April 15, 1997 by and
among the holder of this certificate and others. A copy of which option
or options and Escrow Agreement are on file in the office of this
corporation and the offices of the corporation's stock transfer agent.
Section 2.2 Further Assurances. Hagan shall, at any time and from time
to time, at the expense of Hagan, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or desirable, or that Escrow Agent requests, in order to enable Escrow Agent
to exercise any or all of its rights hereunder with respect to any of the
Shares.
Section 2.3 Transfer and Other Liens. Hagan shall not (i) sell or
otherwise dispose of any of the Shares, or (ii) create or permit to exist any
lien, security interest, or other charge or encumbrance upon or with respect
to any of the Shares, except pursuant to this Agreement.
Section 2.4 Escrow Agent Appointed Attorney-in-Fact. Hagan hereby
appoints Escrow Agent her attorney-in-fact, with full authority in the place
and stead of Hagan and in the name of Hagan or otherwise, from time to time in
Escrow Agent's discretion, to take any action and to executed any instrument
which Escrow Agent may deem necessary or advisable to accomplish the purposes
of this Agreement and the Options.
Section 2.5 Escrow Agent May Perform. If Hagan fails to perform any
agreement contained herein, Escrow Agent may itself perform, or cause
performance of, such agreement, and the expenses incurred in connection
therewith shall be payable by Hagan.
Article III. Responsibilities of Escrow Agent
Section 3.1 Holding of Shares. On behalf of the parties, Escrow Agent
shall hold and disburse the Shares in accordance with the terms of this
Agreement. Escrow Agent shall be the only signatory and/or authorized
representative in connection with any safe deposit box or other depository
into which the Shares or any part thereof is to be deposited or placed by
Escrow Agent pursuant to the terms of this Agreement.
Section 3.2 Disbursements of Shares. Escrow Agent shall make
disbursements of the Shares as follows:
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<PAGE>
(a) Upon receipt of the required payment to Escrow Agent for the
benefit of Hagan for the Shares, Escrow Agent will transmit such payment to
Hagan within two business days after receipt of good funds. Thereafter,
Escrow Agent will direct the transfer agent to register 178,500 Shares, or
such number of Shares for which the Option has been exercised, in such names
and amounts as directed by Brogdon in such notice.
(b) If Escrow Agent receives notice from Hagan that Brogdon is
in default under the terms of the Option, Escrow Agent will not make any
further disbursements of Shares until such time as it has received written
notice, in a form acceptable to it, signed by both Hagan and Brogdon that such
default has been cured and authorizing Escrow Agent to disburse the number of
Shares specified in such notice. Hagan may notify Escrow Agent either
verbally or in writing that a default exists under one or more Options, but if
such notice is given verbally, Hagan shall confirm such notice pursuant to the
notice provisions of Section 5.1 of this Agreement within two days thereafter.
(c) In the event that Escrow Agent receives a written statement
from Hagan stating that Brogdon has defaulted in his obligations under one or
more Options (a "Failure Notice"), then Escrow Agent shall transmit the Shares
pursuant to Hagan's instructions and give notice to Brogdon of such
transmittal.
Article IV. Representations and Warranties.
Section 4.1 Hagan's Representations and Warranties. Hagan represents
and warrants to Brogdon as follows:
A. The execution, delivery and performance by Hagan of this
Agreement are within Hagan's powers, do not contravene law or any contractual
restriction binding on or affecting Hagan, and do not result in or require the
creation of any lien, security interest or other charge or encumbrance (other
than pursuant hereto) upon or with respect to the Shares.
B. Karen Hagan holds of record and owns beneficially the Shares
free and clear of any restrictions on transfer (other than any restrictions
under the Securities Act of 1933 and state securities laws), pledge, lien,
encumbrance, charge, or other security interest, options, warrants, purchase
rights, contracts, commitments, claims and demands.
C. Hagan has received adequate consideration for executing and
delivering this Agreement, and this Agreement is the legal, valid and binding
obligation of Hagan enforceable against her in accordance with its terms.
Section 4.2 Brogdon's Representations and Warranties. Brogdon
represents and warrants to Hagan as follows:
A. The execution, delivery and performance by Brogdon of this
Agreement are within Brogdon's powers, do not contravene law or any
contractual restriction binding on or affecting Brogdon.
B. Brogdon has received adequate consideration for executing
and delivering this Agreement, and this Agreement is the legal, valid and
binding obligation of Brogdon enforceable against him in accordance with its
terms.
Article V. Miscellaneous
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<PAGE>
Section 5.1 Notices. When any party intends to give notice to any
other party or to make demands, such notices or demands shall be in writing
and either delivered personally, sent by facsimile transmission, sent by
overnight courier or sent by certified mail, return receipt requested, and
shall be addressed as follows:
As to Hagan:
Karen Hagan
1144 Canton Street
Suite 200
Roswell, Georgia 30075
with a copy to:
Richard W. Jones, Esq.
Perrie, Buker & Jones, P.C.
115 Perimeter Center Place
Suite 170
Atlanta, Georgia 30346
As to Brogdon:
Christopher F. Brogdon
c/o NewCare Health Corporation
6000 Lake Forest Dr.
Suite 200
Atlanta, Georgia 30328
with a copy to:
Philip Rees, Esq.
c/o NewCare Health Corporation
6000 Lake Forest Dr.
Suite 200
Atlanta, Georgia 30328
As to Escrow Agent:
Jacobs, Forlizzo & Neal, P.A.
c/o A.R. Neal, Esq.
13577 Feather Sound Drive
Suite 300
Clearwater, Florida 34622
Notices (other than to Escrow Agent) shall be deemed to have been received on
the date when delivered personally, when transmitted, if sent by facsimile, on
the date forty-eight (48) hours after the date the notice was placed in the
mail, if sent by overnight courier, and on the date seventy-two (72) hours
after the date the notice is placed in the mail, if sent by certified mail,
return receipt requested. Notices to Escrow Agent shall be deemed delivered
when received.
Section 5.2 Termination of this Agreement. Escrow Agent's
responsibilities under this Agreement shall terminate upon disbursement and
delivery of all of the Shares.
Section 5.3 Successors and Assigns. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their
respective
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<PAGE>
successors and assigns, heirs, administrators and representatives and shall
not be enforceable by or inure to the benefit of any third party. No party
other than Escrow Agent may assign any of its rights or obligations under this
Agreement without the written consent of the other parties. This Agreement
shall be construed in accordance with and governed by the laws of the State of
Georgia (without reference to its rule as to conflicts of law).
Section 5.4 Modifications; Waivers. This Agreement can only be
modified by a writing signed by all of the parties hereto, and no waiver
hereunder shall be effective unless in a writing signed by the party to be
charged.
Section 5.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 5.6 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.
Section 5.7 Waiver of Trial by Jury. Each of the parties hereby
knowingly, voluntarily and intentionally waives the right any of them may have
to a trial by jury in respect of any litigation based hereon, or arising out
of, under or in connection with, this Agreement and any agreement contemplated
to be executed in conjunction herewith or any course of conduct, course of
dealing, statements (whether verbal or written) or actions of any party.
Section 5.8 Attorneys' Fees. In the event that any legal proceeding is
brought due to a dispute under this Agreement or in relation thereto, the
prevailing party in such proceeding shall be entitled to recover from the
other party after final judgment on the merits, reasonable attorneys' fees,
including fees for any appeal, and costs incurred in all such proceedings. In
addition, should there be a dispute concerning the satisfaction of the Option,
the prevailing party in such dispute shall be entitled to his or her
reasonable attorneys' fees and related costs incurred as a result of such
dispute, whether legal proceedings be commenced or not.
IN WITNESS WHEREOF, Hagan, Brogdon and Escrow Agent have executed this
Agreement as of the date and year first above written.
-------------------------
Karen Hagan
-------------------------
Christopher F. Brogdon
ESCROW AGENT:
Jacobs, Forlizzo & Neal, P.A.
By:------------------------
A. R. Neal
Florida Bar No.: 0369152
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<PAGE>
EXHIBIT E
[Vandenberg Employment Agreement]
<PAGE>
EXHIBIT F
[Mutual Releases]
GENERAL RELEASE
For and in consideration of ten dollars ($10.00) and certain
undertakings set forth in a Settlement Agreement dated as of the ___th day of
April, 1997, NewCare Health Corporation ("NewCare"), a Nevada corporation,
hereby releases Karen Hagan and Robert Hagan (individually a "Releasee" and
jointly, the "Releasees") from any and all claims, demands, and causes of
action of any kind whatever (collectively referred to herein as Claims),
whether known or unknown, that it now has or ever has had against either
Releasee, from the beginning of time to the date of this Release, provided,
however, that this Release shall not apply to any cause of action arising out
of the failure of a Releasee to perform his or her obligations under the
aforementioned Settlement Agreement.
Without limiting the generality of the foregoing, and in addition to
and independent of that paragraph, NewCare releases each Releasee from any and
all Claims, whether known or unknown, it now has or ever has had or ever in
the future may have and that are or may be based in whole or in part on, or do
or may arise out of, or are or may be related to or in any way arise out of,
or are or may be related to or in any way connected with (i) their ownership
of stock in NewCare, (ii) their employment by NewCare, or (iii) any other
Claims of violation of any contract of any kind (whether oral or written,
express, implied in law, or implied in fact) or any applicable law, rule,
regulation, or order arising prior to the execution of this Release.
NewCare agrees and represents that it is within its contemplation that
it may have claims against Releasees of which, at the time of the execution of
this Release, it has no knowledge or suspicion, but it agrees and represents
that this Release extends to all Claims in any way based upon, connected with,
or related to the matters described in the preceding paragraphs, whether or
not known, claimed, or suspected by it.
NewCare, acting through the undersigned, declares that it knows and
understands the contents of this Release, that it has executed it voluntarily,
and that it understands that after signing this Release it cannot proceed
against any person mentioned in it with respect to or on account of any
matters referred to herein.
This Release is made to buy peace and for no other reason. It shall not
be deemed an admission of liability or of a violation of any applicable law,
rule, regulation, or order of any kind.
This Release shall be binding upon NewCare and its assigns,
successors, beneficiaries, employees, and agents and shall inure to the
benefit of Releasees and their successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed this Release on behalf
of NewCare Health Corporation as of this __th day of April, 1997.
NewCare Health Corporation, a
Nevada corporation
By:
Name (Print):
Title (Print):
<PAGE>
GENERAL RELEASE
For and in consideration of ten dollar ($10.00) and certain undertakings
set forth in a Settlement Agreement dated as of the __th day of April, 1997,
Karen Hagan and Robert Hagan hereby release NewCare Health Corporation, a
Nevada corporation, and its successors and assigns (the "Releasee") from any
and all claims, demands, and causes of action of any kind whatever
(collectively referred to herein as Claims), whether known or unknown, that
they or either of them now has or ever has had against Releasee, from the
beginning of time to the date of this Release, provided, however, that this
Release shall not apply to any cause of action arising out of the failure of
Releasee to perform its obligations under the aforementioned Settlement
Agreement or the agreements and notes described in Section 6 of the Settlement
Agreement.
Without limiting the generality of the foregoing, and in addition to and
independent of that paragraph, Karen Hagan and Robert Hagan release Releasee
from any and all Claims, whether known or unknown, that they or either of them
now has or ever has had or ever in the future may have and that are or may be
based in whole or in part on, or do or may arise out of, or are or may be
related to or in any way arise out of, or are or may be related to or in any
way connected with (i) their ownership of stock in NewCare, (ii) their
employment by NewCare, or (iii) any other Claims of violation of any contract
of any kind (whether oral or written, express, implied in law, or implied in
fact) or any applicable law, rule, regulation, or order arising prior to the
execution of this Release.
Karen Hagan and Robert Hagan agree and represent that it is within their
contemplation that they may have claims against Releasee of which, at the time
of the execution of this Release, they have no knowledge or suspicion, but
they agree and represent that this Release extends to all Claims in any way
based upon, connected with, or related to the matters described in the
preceding paragraphs, whether or not known, claimed, or suspected by them.
Karen Hagan and Robert Hagan declare that they know and understand the
contents of this Release, that they have executed it voluntarily, and that
they understand that after signing this Release they cannot proceed against
any person mentioned in it with respect to or on account of any matters
referred to in it.
This Release is made to buy peace and for no other reason. It shall not
be deemed an admission of liability or of a violation of any applicable law,
rule, regulation, or order of any kind.
This Release shall be binding upon Karen Hagan and Robert Hagan and
their respective heirs, executors, administrators, assigns, successors,
beneficiaries, and agents and shall inure to the benefit of Releasee and its
successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Release as of
this __th day of April, 1997.
---------------------------
Karen Hagan
----------------------------
Robert Hagan
