<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 15, 1996
COMMUNITY MEDICAL TRANSPORT, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in charter)
Delaware 0-24640 13-3507464
- ---------------- --------------------- -----------------
(State or Other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
45 Morris Street, Yonkers, New York 10705
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 963-6666
---------------
================================================================================
<PAGE>
Item 2. Acquisition or Disposition of Assets
On August 15, 1996, a wholly-owned subsidiary (the
"Subsidiary") of Community Medical Transport, Inc. ("Registrant") completed the
purchase from Hudvalco, Inc. ("Hudvalco") and Harvey H. McGeorge, Inc. ("HMM")
of ambulances and certain other assets, including equipment and licenses of the
New York State Department of Health to operate an ambulance business (the "Asset
Purchase") previously conducted by Hudvalco. Hudvalco operated an ambulance
business under the name Hudson Valley Ambulance in the lower Hudson Valley
region of New York State. This business included "911" emergency service in two
townships in Rockland County, New York. The transaction was made pursuant to an
asset purchase agreement entered into as of February 28, 1996 and as amended as
of August 12, 1996 among the Registrant, Hudvalco, HHM and Alan McGeorge (the
"Purchase Agreement"). As part of the acquisition, the Subsidiary also (i)
acquired related corporate entities providing services to Hudson Valley
Ambulance and (ii) agreed to acquire shares of a corporation owned by Alan
McGeorge operating an ambulance service in the Catskill area of the Hudson
Valley region (the "Entity"), subject only to regulatory approval. The
Subsidiary provides operating services to the Entity and is to receive all the
revenues from its operations until closing. The Registrant is also entering into
leases for Hudvalco's facilities.
The total consideration for the acquisition was $7,000,000,
subject to certain adjustments, of which $3,000,000 was paid in cash,
approximately $940,000 consisted of the assumption of debt and $3,060,000
consisted of a ninety-day (90) promissory note (the "Note"). Up to $1,000,000 of
the principal amount of the Note is convertible into shares of Registrant's
Common Stock at $6.50 per share. In connection with the acquisition, the parties
are obligated to indemnify each other for certain matters limited in the case of
the Registrant to $1,000,000 and to $5,000,000, in most instances, in the case
of the sellers. The Company utilized a portion of equity financing from foreign
investors in connection with the acquisition.
Reference is made to the Purchase Agreement and the Note,
copies of which are attached hereto and incorporated by reference herein, for
more detailed information as to the Asset Purchase and the other interrelated
transactions described herein.
Item 7. Financial Statements, Pro-Forma Information and Exhibits
(a) Financial Statements of Hudvalco, Inc., Subsidiary
and Affiliates*
(i) (A) Report of Independent Auditors.
(B) Consolidated and Combined Balance
Sheet as at December 31, 1995.
2
<PAGE>
(C) Consolidated and Combined Statements
of Operations for the years ended
December 31, 1995 and December 31,
1994.
(D) Consolidated and Combined Statements
of Changes in Stockholders' Equity
for the years ended December 31,
1995 and December 31, 1994.
(E) Consolidated and Combined Statements
of Cash Flows for the years ended
December 31, 1995 and December 31,
1994.
(F) Notes to the Financial Statements.
(ii) (A) Consolidated and Combined Balance Sheet
as at June 30, 1996 (unaudited).
(B) Consolidated and Combined Statement
of Operations and Retained Earnings
for the six months ended June 30,
1996 (unaudited).
(C) Consolidated and Combined Statement
of Cash Flows for the six months
ended June 30, 1996 (unaudited).
(D) Notes to Financial Statements.
(b) Pro Forma Financial Statements of Registrant*
(i) Pro-Forma Consolidated Balance Sheet as of June
30, 1996.
(ii) Pro-Forma Consolidated Statement of Income for
the six months ended June 30, 1996.
(iii) Pro-Forma Consolidated Statement of Income for
the year ended December 31, 1995.
(c) Exhibits
(i) Asset Purchase Agreement, dated as of February
28, 1996, among Registrant, Alan McGeorge, Harvey
H. McGeorge Co., Inc. and Hudvalco, Inc.
(ii) Amendment, dated as of August 12, 1996, among
Registrant, Alan McGeorge, Harvey H. McGeorge
Co., Inc. and Hudvalco, Inc.
3
<PAGE>
(iii) Ninety Day Promissory Note, dated as of August
15, 1996, between Registrant and Alan McGeorge,
as attorney on his own behalf and on behalf of
Hudvalco, Inc. and Harvey H. McGeorge Co., Inc.
*________________
Registrant's requirements, pursuant to Regulation S-X, promulgated by
the Securities and Exchange Commission, to file financial statements and
pro-forma information relating to the Asset Purchase within 15 days after the
Asset Purchase is impracticable. Registrant will file such financial statements
and pro forma financial information by amendment hereto no later than 75 days
after consummation of the Asset Purchase.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: August 29, 1996 COMMUNITY MEDICAL TRANSPORT, INC.
(registrant)
By: /S/ Dean L. Sloane
------------------------------------------
Dean L. Sloane, President
5
<PAGE>
ASSET PURCHASE AGREEMENT DATED AS OF
FEBRUARY 28, 1996 AMONG COMMUNITY MEDICAL
TRANSPORT, INC. ("COMMUNITY"), A DELAWARE
CORPORATION, AND ALAN MCGEORGE ("MCGEORGE")
AND HARVEY H. McGEORGE CO., INC. ("HHM"),
HUDVALCO, INC. D/B/A HUDSON VALLEY AMBULANCE
("HUDVALCO") (HEREINAFTER REFERRED TO
COLLECTIVELY AS THE "MCGEORGE COMPANIES" AND
SINGLY AS A "MCGEORGE COMPANY").
INTRODUCTION
HHM is the owner of an ambulance service certificate (the
"Certificate") and Hudvalco is the operator of an ambulance service in New York
pursuant to appropriate licenses (the "Business");
McGeorge is the sole shareholder of each of the McGeorge
Companies; and
Community, through subsidiaries, operates ambulances and
ambulette services in the New York metropolitan area.
The McGeorge Companies desire to sell and Community (or a
subsidiary to be wholly-owned by Community) desires to acquire operating and
other assets utilized in the Business.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and covenants contained herein, the parties, intending to be
legally bound, hereby represent, warrant and agree as follows:
1. PURCHASE AND SALE
1.1 Assets To Be Conveyed. Subject to the terms and conditions
herein set forth, and on the basis of the mutual representations, warranties and
covenants herein set forth, at the Closing (as hereinafter defined), the
McGeorge Companies agree to sell, and Community agrees to buy, substantially all
of the operating assets used in, or related to, the Business (collectively the
"Assets"), as more fully described in Schedule A-1, free and clear of all
mortgages, liens, encumbrances, security interests, equities and claims, to
other persons of every kind and character ("Liens"), including but not limited
to all physical assets of McGeorge reflected on the Balance Sheet, other than
Excluded Assets, which may include one or more of the items described below in
this Section 1.1, with only such changes therein as shall have occurred in the
ordinary course of conduct of the Business between the close of business on the
date hereof and the Closing Date (as hereinafter defined);
<PAGE>
(a) all ambulances and other vehicles, as well as all
machinery and equipment used in connection with the Business, together with all
replacements thereof and additions thereto;
(b) all of the McGeorge Companies' right, title and
interest in, to and under all contracts, leases of personal and real property
and other agreements related to the Business (exclusive of those relating to
Excluded Assets) as well as customer lists;
(c) all governmental licenses, operating certificates
and permits, including reimbursement authorizations, which may be transferred
pursuant to applicable law.
(d) all books, papers, files, documents, and records
(including without limitation, records stored on electronic media) pertaining to
the Assets (other than the corporate minute and stock books and tax returns);
1.2 Delivery of Disclosure Schedules. On or prior to March 15,
1996, (a) the McGeorge Companies shall deliver a schedule relating to the
McGeorge Companies (the "McGeorge Companies Disclosure Schedule") together with
all documents referred to therein, Schedules A-1 and A-2 and all documents and
financial statements referred to therein, and (b) Community shall deliver a
schedule relating to Community (the "Community Disclosure Schedule" and
collectively with the McGeorge Companies Disclosure Schedule, the "Disclosure
Schedules") setting forth the matters required to be set forth in the Disclosure
Schedules as described elsewhere in this Agreement. The Disclosure Schedules,
together with Schedules A-1 and A-2, shall be deemed to be part of this
Agreement.
1.3 Excluded Assets. The McGeorge Companies shall retain
following the Closing all of the McGeorge Companies' right, title and interest
as at the Closing to each of the "Excluded Assets" listed in Schedule A-2,
including accounts receivable of McGeorge Companies.
1.4 No Liabilities. From and after the Closing Date, Community
shall not assume any liabilities of the McGeorge Companies.
1.5 Subsidiary. On or prior to the Closing Date, Community
shall designate a wholly owned subsidiary (the "Subsidiary") to acquire the
Assets and Business. Unless otherwise indicated by the context, references
herein to Community shall include the Subsidiary. Community shall remain
primarily liable, however, for all obligations herein.
1.6 Definitions - General. As used herein the following terms
shall have the definitions set forth below:
-2-
<PAGE>
(a) The term "Knowledge" shall mean with respect to a
party's awareness of the presence or absence of a fact, event or condition shall
mean (a) actual knowledge plus, if different, (b) the knowledge that would be
obtained if such party conducted itself faithfully and exercised reasonable
diligence in light of known facts.
(b) The term "Regulatory Agency" shall refer to any
foreign federal state or local governmental agency licensing any aspect of the
Business or otherwise regulating McGeorge or any aspect of the Business.
(c) "Reimbursement Agency" shall refer to any
Regulatory Agency, any insurance company or other private or public association
corporation, partnership or other entity or person of any description
responsible for administering or paying amounts to any public or private medical
reimbursement program including but not limited to the governmental programs
under Medicaid, Medicare, or pursuant to any private insurance program or
policy.
2. PURCHASE PRICE
2.1 Purchase Price. The Purchase Price to be paid by Community
for the Assets shall be $8,000,000 payable at Closing. Such Purchase Price shall
be paid to Alan McGeorge as attorney.
2.2 Allocation of Purchase Price. For the purposes of Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code"), the parties
hereto agree that the Purchase Price shall be allocated pursuant to the mutual
agreement of the Parties.
3. CLOSING; TERMINATION
3.1 Closing. The closing of the purchase and sale of the
Assets and other transactions contemplated hereby (the "Closing") shall be held
on such date as the parties may mutually agree upon (the "Closing Date") after
all conditions precedent to the obligations of Community and the McGeorge
Companies, as set forth in Articles VII and VIII have been satisfied (or waived
in writing) and at a time mutually agreeable to Community and the McGeorge
Companies but not later than July 15, 1996. The Closing shall be at the offices
of Community's counsel in New York, New York or such other place as may be
mutually agreed upon by the parties. The parties shall use their best efforts to
fulfill all conditions as promptly as possible.
3.2 McGeorge's Closing Deliveries. At the Closing the McGeorge
Companies and McGeorge (sometimes referred to as the "McGeorge Parties") shall
deliver to Community
-3-
<PAGE>
or the Subsidiary (duly executed by each of the McGeorge Companies or McGeorge
where appropriate):
(a) an instrument or instruments of conveyance in the
form to be agreed upon including bills of sale, and other instruments of
conveyance pertaining to the Assets, all containing a general warranty of title
as shall, in Community's opinion, be necessary or appropriate to convey to the
Subsidiary all of the Assets, including but not limited to all vehicles free and
clear of all liability;
(b) originals of all Material Contracts (as
hereinafter defined);
(c) a certificate, dated as of the Closing Date, to
be executed by the chairman or the President of each of the McGeorge Companies
and by McGeorge, to the effect that the representations and warranties of
McGeorge contained in this Agreement are true and correct in all material
respects at and as of the Closing Date and that the McGeorge Companies have
substantially performed all material terms, covenants and conditions to be
complied with or performed by the McGeorge Companies pursuant to the terms
hereof on or prior to the Closing Date;
(d) Non-Competition Agreement ("Non-Competition
Agreement") substantially in the form of Exhibit I to be mutually agreed upon
and to be attached hereto, dated as of the Closing Date, among Community, each
of the McGeorge Parties;
(e) an opinion of counsel of McGeorge and the
McGeorge Companies in form and substance satisfactory to Community;
(f) written consents, licenses, permits, certificates
and authorizations, to the extent required to be obtained by the McGeorge
Companies from all third parties, including without limitation any Regulatory
Authority with respect to the assignment of all McGeorge's contracts comprising
a portion of the Assets, or the transfer of McGeorge's Assets, or Business;
(g) such other documents, at the Closing or
subsequently, as may be reasonably requested by Community from the McGeorge
Companies as necessary for the implementation and consummation of this Agreement
and the other transactions contemplated hereby.
3.3 Community's Closing Deliveries. At the Closing, Community
shall deliver to the McGeorge Companies:
-4-
<PAGE>
(a) certified or bank checks in clearing house funds
drawn to the order of Alan McGeorge as attorney, in the amount of the Purchase
Price to be paid at closing pursuant to paragraph 2.2;
(b) a certificate of Community, dated as of the
Closing Date, executed by the Chairman or the President or a Vice President of
Community to the effect that the representations and warranties of Community
contained in this Agreement are true and correct in all material respects and
that Community has substantially complied with or performed all material terms,
covenants, and conditions to be complied with or performed by Community on or
prior to the Closing Date;
(c) an opinion of Community's counsel, Parker Duryee
Rosoff & Haft, in form and substance reasonably satisfactory to the McGeorge
Companies;
(d) Non-Competition Agreement;
(e) such other documents, at the Closing or
subsequently, as may be reasonably requested by the McGeorge Companies from
Community as necessary for the implementation and consummation of this Agreement
and the other transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF MCGEORGE
AND THE MCGEORGE COMPANIES
Except as set forth in the Disclosure Schedule, each of the
McGeorge Parties and jointly and severally represent and warrant to Community,
as follows as of the date hereof and the Closing date, with the Knowledge and
understanding that Community and Subsidiary are relying materially upon such
representations and warranties:
4.1 Organization and Standing of the McGeorge Companies
Authorization. (a) The McGeorge Companies are corporations, duly organized,
validly existing and, except as set forth in the Disclosure Schedule, in good
standing under the laws of the State of New York. Each of the McGeorge Companies
has all requisite corporate power to carry on its business as it is now being
conducted and is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where such qualification is necessary
under applicable law, except where the failure to qualify (individually or in
the aggregate) would not have material adverse effect on the Business or the
Assets. Neither of the McGeorge Companies owns any capital stock in any other
corporation, business trust or similar entity; and (b) this Agreement and the
transactions contemplated hereby have been duly authorized by all necessary
action of the directors and shareholders of the McGeorge Companies. This
Agreement constitutes, and all other agreements contemplated hereby, when
executed and delivered by the
-5-
<PAGE>
McGeorge Companies in accordance herewith, will constitute the valid and binding
obligations of the McGeorge Companies, enforceable in accordance with their
respective terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency and other laws affecting the enforcement of creditors'
rights generally and by equitable principles.
4.2 Properties. Except as set forth on the Disclosure
Schedule, each of the McGeorge Companies has good and marketable title, free and
clear of liens, claims and encumbrances, to all of the Assets which it purports
to own as reflected on the Balance Sheet and which are being conveyed hereunder.
Neither the whole nor any material portion of the Assets is subject to any
governmental decree or order to be sold or is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the McGeorge Parties' Knowledge has any such condemnation,
expropriation or taking been proposed. Except as otherwise disclosed, none of
the Assets is subject to any restriction which would prevent continuation in any
material respect of the use currently made thereof or materially adversely
affect the value thereof. Each of the McGeorge Companies has complete and
unrestricted power and the unqualified right to sell, assign, transfer and
deliver to Community, the General Assignment and all deeds, endorsements,
assignments and other instruments to be executed and delivered to Community by
each of the McGeorge Companies at the Closing. Such transfer documents will be
valid and binding obligations of McGeorge, enforceable in accordance with their
respective terms except as such enforcement may be limited by applicable
bankruptcy, insolvency and other laws affecting the enforcement of creditors
rights generally and by equitable principles, and will effectively vest in
Community, and Community will acquire good and valid title to the Assets, free
and clear of all Liens, except as otherwise reflected in the Disclosure
Schedule. McGeorge does not own any interest in real property, whether in fee or
leaseholds, that constitutes any part of the Assets.
4.3 Contracts Listed; No Default. All material contracts,
agreements, licenses, leases, permits, commitments, instruments and
understandings, written or oral, presently existing and in force, (individually,
a "Contract" and collectively, the "Contracts"), connected with or relating in
any respect to present or proposed material operations of the Business or the
Assets will be listed in the Disclosure Schedule. The McGeorge Company are the
holder of, or party to, or beneficiary of, all the Contracts. The Contracts
constitute all contracts necessary for the operation of the Business as it is
currently being operated and are each valid, binding and enforceable by the
McGeorge Company and, to the extent assigned at the Closing, will be valid,
binding and enforceable by Community, against the other parties thereto in
accordance with their respective terms except in each such case as such
enforcement may be limited by applicable bankruptcy, insolvency and other laws
affecting the enforcement of creditors' rights generally and by equitable
principles and the provisions of such contracts. Except as otherwise set forth
therein or in the Disclosure Schedule, the Contracts do not provide for any
change after the Closing Date, in amounts presently being paid or received by
the McGeorge Company thereunder. Except as set forth in the Disclosure Schedule,
McGeorge is not in default or breach of any material provision of the Contracts.
The McGeorge Company's
-6-
<PAGE>
operation of the Business has been, is, and will, between the date hereof and
the Closing Date, continue to be, consistent in all material respects with the
terms and conditions of the Contracts. True, correct and complete copies of all
the Contracts were previously delivered to Community along with the McGeorge
Companies' Disclosure Schedule.
4.4 Litigation. Except as otherwise disclosed, (a) there is no
claim, action, proceeding, or investigation pending or, to the McGeorge Parties'
knowledge, threatened against or affecting McGeorge Company, the Assets or the
Business before or by any court, arbitrator or governmental agency or authority.
Except as set forth in the Disclosure Schedule, all such pending actions are
covered by insurance and in no event shall Community or Subsidiary have any
liability therefor nor (b) to the McGeorge Parties' knowledge, has either of the
McGeorge Companies engaged in any conduct that would give rise to any such
claim, action, proceeding or investigation. There is no strike or unresolved
labor dispute relating to either of the McGeorge Companies' employees which, in
the McGeorge Companies' reasonable judgment, have any material adverse effect on
the Business or the Assets. There are no decrees, injunctions or orders of any
court, arbitrator, governmental department, or agency against any McGeorge
Company relating to or affecting the Assets or the Business.
4.5 Taxes and Fees. For purposes of this Agreement, (A) "Tax"
(and, with correlative meaning, Taxes") shall mean any federal, state, local or
foreign, income, alternative or add-on minimum, business, employment, franchise,
occupancy, payroll, property, sales, transfer, use, withholding or other tax,
levy, impost, fee, imposition, assessment or similar charge together with any
related addition to tax, interest, penalty or fine thereon; (B) "Returns" shall
mean all returns (including, without limitation, information returns and other
material information) reports and forms relating to Taxes; and (C) "Fees" shall
mean any fees payable to third parties in connection with the Business or the
Assets;
Each of the McGeorge Companies has duly filed all Returns
required to be filed by it. All such Returns were, when filed, and to McGeorge's
Representatives's Knowledge, are, accurate and complete in all material respects
and were prepared in conformity with applicable laws and regulations. Each of
the McGeorge Companies has paid or will pay in full or has adequately reserved
against (with disclosure of such reserves in the Disclosure Schedule) all Taxes
otherwise assessed against it through the Closing Date except for assessments
being challenged in good faith as set forth in the Disclosure Schedule and has
paid or will pay all Fees and all installment payments for Fees due and payable
through the Closing Date.
Neither of the McGeorge Companies is a party to any pending
action or proceeding by any governmental authority for the assessment of any
Tax, and no claim for assessment or collection of any Tax has been asserted
against McGeorge that has not been paid. There are no Tax liens upon the Assets
(other than the lien of personal property taxes not yet due and payable). To the
Knowledge of the McGeorge's Parties, there is no valid basis for any assessment,
deficiency, notice, 30-day letter or similar intention to assess any Tax to be
issued
-7-
<PAGE>
to the McGeorge Companies by any governmental authority. All material Returns of
McGeorge have been closed by applicable statute for all periods to and including
December 31, 1989 and examined by all relevant tax authorities for all such
periods. All deficiencies proposed or assessed as a result of such examinations
have been paid and settled. There are no outstanding agreements or waivers
extending any statutory period of limitations applicable to any material return
of either McGeorge Company for any period. No property of either McGeorge
Company comprising part of the Assets is property which Community is or will be
required to treat as owned by another person pursuant to the safe harbor leasing
provisions (now repealed) of the Code.
4.6 Compliance with Laws and Regulations and Reimbursement
Agents.
(a) Except as otherwise disclosed, the Business,
operations, property and Assets of the McGeorge Companies, conform with and have
been conducted and operated in compliance with all, and are not in violation of
any, applicable federal, state and local laws, rules and regulations, the
violation of which (individually or in the aggregate) would have a material
adverse effect on the financial condition, operations, properties, assets,
liabilities or prospects of the Business or the Assets (taken as a whole).
(b) Except as otherwise disclosed, to the knowledge
of the McGeorge Parties', each of the McGeorge Companies is conforming, and has
conformed in all material respects, with all policies, procedures, contracts,
rules, regulations, and laws with respect to reimbursement from any source,
including governmental sources (including without limitation Medicare and
Medicaid), third party payors and individual payors. Neither of the McGeorge
Companies has made any payment or other inducement to any individual or entity
in return for using or ordering services from a McGeorge Company, or in return
for referring or influencing another individual or entity to use or order
services from either McGeorge Company. Nor has either McGeorge Company received
any payment or other inducement from any individual or entity in return for
using or ordering services from any healthcare provider or in return for
referring or influencing another individual or entity to use or order services
from any healthcare provider.
(c) Without limiting any other representations, no
McGeorge Party has engaged in any activities that are prohibited under federal
Medicare and Medicaid statutes, 42 U.S.C. section 1320a-7b, or the regulations
promulgated pursuant to such statutes, or related state or local statutes or
regulations or which are prohibited by binding rules of professional conduct,
including but not limited to the following:
i) knowingly and willfully making or causing
to be made a false statement or representation of a material fact in any
applications for any benefit or payment;
-8-
<PAGE>
ii) knowingly and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment;
iii) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment on its own behalf or on behalf of another, with intent
to secure such benefit or payment fraudulently;
iv) knowingly and willfully soliciting or
receiving any remuneration (including any kickback, bribe or rebate), directly
or indirectly, overtly or covertly, in cash or in kind, or offering to pay such
remuneration (i) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by any Reimbursement Agency, or (ii) in
return for purchasing, leasing or ordering or arranging for or recommending the
purchasing, leasing or order of any good, facility, service, or item for which
payment may be made in whole or in part by any Reimbursement Agency.
4.7 Audits, Inquiries, etc. Except as otherwise disclosed, no
McGeorge Party is, or has been subject to any audit, inquiry or dispute of any
nature with the United States Department of Health or any other Regulatory
Agency or Reimbursement Agency.
4.8 Hazardous Materials. To their best knowledge, neither
McGeorge Company has violated any law, rule, regulation or ordinance pertaining
to the use, maintenance, storage, transportation or disposal of "Hazardous
Materials". As used herein, the term "Hazardous Materials" means any substance
now or hereafter designated pursuant to Section 307(a) and 311(b)(2)(a) of the
Federal Clean Water Act, 33 USC Sections 1317(a), 1321(b)(2)(A), Section 112 of
the Federal Clean Air Act, 42 USC Section 3412, Section 3001 of the Federal
Resource Conservation and Recovery Act, 42 USC Section 6921, Section 7 of the
Federal Toxic Substances Control Act, 15 USC Section 2606, or Section 101(14)
and Section 102 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 USC Sections 9601(14) and 9602.
4.9 Insurance. Each of the McGeorge Companies has in force
insurance policies, or renewals thereof, as identified and described in the
Disclosure Schedule, reasonably adequate to cover the Assets and the Business
against loss, damage and liability and will maintain such insurance up to and
including the Closing Date.
4.10 Condition of Assets. Except as set forth in the
Disclosure Schedule, all Assets, including the vehicles, equipment, fixtures and
other personal property, will be in good operating condition and repair
(ordinary wear and tear excepted) on the Closing Date.
-9-
<PAGE>
4.11 No Breaches. The making and performance of this Agreement
and the other agreements contemplated hereby by either McGeorge Company does not
(i) conflict with or violate the articles of incorporation or the bylaws of
McGeorge, (ii) violate any material laws, ordinances, rules, or regulations, or
any order, writ, injunction or decree to which such McGeorge Company is a party
or by which a McGeorge Company or any of its material assets, businesses, or
operations are bound or affected or (iii) result in any material breach or
termination of, or constitute a default under, or constitute an event which,
with notice or lapse of time, or both, would become a default under, or result
in the creation of any encumbrance upon any material Asset under, or create any
rights of termination, cancellation or acceleration in any person under, any
material Contract to which a McGeorge Company is a party.
4.12 Disclosure Schedule Complete. Each of the McGeorge
Companies shall promptly supplement the McGeorge Companies' Disclosure Schedule
if events occur prior to the Closing that would have been required to be
disclosed had they existed at the time of executing this Agreement. The McGeorge
Companies' Disclosure Schedule contains a true, correct and complete list and
description of all material items required to be set forth therein. The McGeorge
Companies' Disclosure Schedule is expressly incorporated herein by reference.
4.13 Employees. The McGeorge Companies' Disclosure Schedule
lists the executive officers of each McGeorge Company employed in the Business
and their monthly compensation (as well as a brief description of all benefits
and other perquisites payable to employees). The Disclosure Schedule lists all
collective bargaining agreements.
4.14 Financial Statements.
(a) The McGeorge Companies' Disclosure Schedule
contains unaudited balance sheets of McGeorge as at December 31, 1993, December
31, 1994 and June 30, 1995 (the balance sheet as at June 30, 1995 is herein
called the "Balance Sheet" June 30, 1995 shall be referred to as the Balance
Sheet Date) and an unaudited statement of income, changes in cash flow and
stockholder equity for the periods, then ended, (collectively the "McGeorge
Financial Statements"). The Balance Sheet and related income, changes in cash
flow and stockholder equity statements for the period ending on the Balance
Sheet Date shall be referred to as the "Interim Statements".
(b) The Financial Statements for December 31, 1993
and the period then ended have been audited. The McGeorge Financial Statements
and the Audited McGeorge Financial Statements required to be delivered pursuant
to Section 8.1 have and will be prepared on an accrual basis and present fairly
the financial position and results of operations of the McGeorge Companies
relating to the Business as of the dates and for the periods indicated, prepared
in accordance with generally accepted accounting principles ("GAAP"),
consistently applied. Except as otherwise disclosed, during the fiscal periods
to which the statements of income relate, the Business was conducted in
substantially the same manner as it is currently
-10-
<PAGE>
conducted. Except as otherwise disclosed, there are no (i) material debts,
liabilities (contingent or otherwise) or obligations of any kind or nature
relating to the Business or its operations not fully reflected or reserved
against in the Balance Sheet; and (ii) there are no Assets of the McGeorge
Companies relating to the Business, the value of which is materially overstated
in the Balance Sheet. The physical assets shown on the Balance Sheet are carried
at actual cost less depreciation computed on a basis consistent with prior
years.
4.15 Absence of Certain Changes or Events. Except as set forth
in the McGeorge Disclosure Schedule, since the Balance Sheet Date, there has not
been: (a) any material adverse change in the financial condition, operations,
properties, assets, liabilities or prospects of the Business, including but not
limited to:
(a) to the best of their knowledge, any material
adverse change in the financial condition, assets, liabilities (contingent or
otherwise), or income of either McGeorge Company;
(b) any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the properties or business
of McGeorge;
(c) any change in the authorized capital of McGeorge
or in the securities outstanding or any change in the ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(d) any distribution in respect of the capital stock
(other than dividends) or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of McGeorge;
(e) any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become payable by either of the
McGeorge Companies to its officers, directors, McGeorge, employees, consultants
or agents, other than step increases given to employees in the ordinary course
of business consistent with past practice;
(f) any work interruptions or labor grievances
materially adversely affecting the business of McGeorge;
(g) any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of either McGeorge Company to
any person, including, without limitation, McGeorge or their affiliates;
(h) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to any McGeorge Company other than in the
ordinary course of business,
-11-
<PAGE>
including without limitation any indebtedness or obligation of McGeorge or any
affiliate which could reasonably be expected to have a Material Adverse Effect;
(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of McGeorge or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(j) any purchase or acquisition, or agreement, plan
or arrangement to purchase or acquire, any property, rights or assets other than
transactions in the ordinary course of business;
(k) any waiver of any material rights or claims of
McGeorge; or
(l) any breach, amendment or termination of any
material contract, agreement, license, permit or other right to which a McGeorge
Company is a party.
4.16 Governmental Licenses, Permits, Etc. The McGeorge
Companies have all governmental licenses, permits, authorizations and approvals
for the conduct of the Business as currently conducted ("Licenses and Permits").
Except as otherwise disclosed, McGeorge has been operating in compliance with
such licenses and permits. The McGeorge Companies' Disclosure Schedule includes
a list of all such known Licenses and Permits. All such known Licenses and
Permits are in full force and effect, and no proceedings for the suspension or
cancellation of any thereof is pending or to McGeorge Parties' knowledge,
threatened.
4.17 Employee Benefit Plans; ERISA.
(a) Except as set forth in the McGeorge Companies
Disclosure Schedule, at the date hereof, neither McGeorge Company maintains or
contributes to any employee benefit plans, programs, arrangements and practices
(such plans, programs, arrangement and practices of the McGeorge Companies being
hereinafter collectively referred to as the "McGeorge Plans"), including
employee benefit plans within the meaning set forth in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, and all regulations
promulgated thereunder, as in effect from time to time ("ERISA"), or any written
employment contracts providing for an annual base salary in excess of $100,000
and having a term in excess of one year, which contracts are not immediately
terminable without penalty or further liability, or other similar arrangements
for the provision of benefits (excluding any "Multiemployer Plan" within the
meaning of Section 3(37) of ERISA or a "Multiple Employer Plan" within the
meaning of Section 413(c) of the Code, and all regulations promulgated
thereunder, as in effect from time to time. The McGeorge Companies Disclosure
Schedule lists all Multiemployer Plans and Multiple Employer Plans which a
McGeorge Company maintains or to which it makes contributions. The McGeorge
Companies have no obligation to create any
-12-
<PAGE>
additional such plan or to amend any such plan so as to increase benefits
thereunder, except as required under the terms of the McGeorge Companies' Plans,
under existing collective bargaining agreements or to comply with applicable
law.
(b) Except as set forth in the McGeorge Companies
Disclosure Schedule, (1) there have been no prohibited transactions within the
meaning of Section 406 and 407 of ERISA or Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), with respect to any of the McGeorge
Companies' Plans that could result in penalties, taxes or liabilities which,
singly or in the aggregate, could have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) results
of operations or prospects of the McGeorge Companies, (ii) except for premiums
due, there is no outstanding liability in excess of $10,000, whether measured
alone or in the aggregate, under Title IV or ERISA with respect to any of the
McGeorge Companies Plans, (iii) neither the Pension Benefit Guaranty Corporation
nor any plan administrator has instituted proceedings to terminate any of the
McGeorge Plans subject to Title IV of ERISA other than in a "standard
termination" described in Section 4041(b) of ERISA, (iv) none of the McGeorge
Plans has incurred any "accumulated funding deficiency" (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, as of the last
day of the most recent fiscal year of each of the McGeorge Plans ended prior to
the date of this Agreement, (v) the current present value of all projected
benefit obligations under each of the McGeorge Plans which is subject to Title
IV of ERISA did not, as of its latest valuation date, exceed the then current
value of the assets of such plan allocable to such benefit liabilities by more
than the amount, if any, disclosed in the Financial Statements as of September
30, 1994 (based upon reasonable actuarial assumptions currently utilized for
such McGeorge Companies Plan), (vi) each of the McGeorge Companies' Plans has
been operated and administered in all material respects in accordance with
applicable laws during the period of time covered by the applicable statute of
limitations, (vii) each of the McGeorge Companies Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the IRS to be so qualified and such determination has not been modified,
revoked or limited by failure to satisfy any condition thereof or by a
subsequent amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain the
"qualified" status of such the McGeorge Companies' Plans, and the period for
making any such necessary retroactive amendments has not expired, (viii) with
respect to Multiemployer Plans, neither McGeorge or its subsidiaries has made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203, 4204 and 4205 of ERISA and, to the
knowledge of the McGeorge Companies, no event has occurred or is expected to
occur which presents a material risk of a complete or partial withdrawal under
said Sections 4203, 4204 and 4205, and neither the McGeorge Companies or its
subsidiaries would be subject to any withdrawal liability as of the Closing Date
due to McGeorge's or any of its subsidiaries' "complete withdrawal" or "partial
withdrawal" from any such multi-employer plan; (ix) there are no pending or, to
the knowledge of the either McGeorge Company, threatened or anticipated claims
involving any of the McGeorge Companies' Plans other than claims for benefits in
the ordinary course, and (x)
-13-
<PAGE>
neither the McGeorge Companies nor any McGeorge Company subsidiary has any
current liability in excess of $10,000, whether measured alone or in the
aggregate, for plan termination or withdrawal (complete or partial) under Title
IV of ERISA based on any plan to which any entity that would be deemed one
employer with the McGeorge Company or any McGeorge Company Subsidiary under
Section 4001 of ERISA or Section 414 of the Code contributed during the period
of time covered by the applicable statute of limitations (the "McGeorge Company
Controlled Group Plans"), and the McGeorge Companies do not anticipate that any
such liability will be asserted against the McGeorge Companies or any Company
Subsidiary, none of the McGeorge Company Controlled Group Plans has an
"accumulated funding deficiency" (as defined in Section 302 of ERISA and 412 of
the Code), and no McGeorge Company Controlled Group Plan has an outstanding
funding waiver which could result in the imposition of liens, excise taxes or
liability against the McGeorge Companies in excess of $10,000 whether measure
alone or in the aggregate.
4.18 Assumed Names. Neither McGeorge Company has owned,
operated or conducted the Business under any name other than their respective
names, or Hudson Valley Ambulance.
4.19 Accounts and Notes Receivable. Schedule 4.19 of the
McGeorge Disclosure Schedule sets forth an accurate list as of the Balance Sheet
Date of the accounts and notes receivable of McGeorge, including receivables
from and advances to employees and the stockholders, including any such amounts
which are not reflected in the most recent available balance sheet, and an aging
of all accounts and notes receivable showing amounts due in 30-day aging
categories. Except to the extent reflected on Schedule 4.19, all accounts and
notes receivable of the McGeorge Companies arose from the sale of products and
services provided in the ordinary course of business and are legal and binding
claims of the McGeorge Companies, collectible in the amounts shown on Schedule
4.19 net of reserves.
4.20 Business Locations. Neither McGeorge Company owns nor has
owned or leased, any real or personal property relating to the Business in any
state or country subsequent to January 1, 1990. Neither McGeorge Company has
facilities relating to the Business (including, without limitation, McGeorge's
executive offices or places where the books and records of the Business are
kept) except as otherwise set forth on the McGeorge Companies Disclosure
Schedule.
4.21 Relationships and Continuity of Relationships. Except as
otherwise disclosed, the McGeorge Companies are not subject to any special
credit or other restrictions by a client, government or Reimbursement Agency.
Except as otherwise disclosed, the present customers of the Business, as well as
governmental agencies or the Reimbursement Agency of the Business are expected
to continue to conduct business with Community and the Subsidiary after the
Closing Date in substantially the same manner as it has conducted business with
The McGeorge Companies in the past.
-14-
<PAGE>
4.22 Governmental Approvals. Except as otherwise set forth in
the McGeorge Companies Disclosure Schedule, no authorization, license, permit,
franchise, approval, order or consent of, and no registration, declaration or
filing by the McGeorge Companies with, any Regulatory Authority, is required in
connection with the McGeorge Companies' execution, delivery and performance of
this Agreement or the other agreements contemplated hereby.
4.23 Predecessor Status, etc. Set forth in Schedule 4.23 is a
listing of all names of all predecessor companies of McGeorge, including the
names of any entities from whom McGeorge previously acquired significant assets.
Except as disclosed in Schedule 4.23, McGeorge has not been a subsidiary or
division of another corporation nor been a part of an acquisition which was
later rescinded. Except as set forth in Schedule 4.23, there has been no sale or
spin-off of significant assets of McGeorge within the last two years other than
in the ordinary course of business.
4.24 Labor Matters. Except as set forth in Schedule 4.24,
McGeorge is not bound by or subject to (and none of its assets or properties is
bound by or subject to) any arrangement with any labor union. Except as set
forth in Schedule 4.24, no employees of McGeorge are represented by any labor
union or covered by any collective bargaining agreement nor, to their knowledge,
is any organization campaign to establish such representation in progress. There
is no pending or, to the best of their knowledge, threatened labor dispute
involving McGeorge and any group of employees, nor has McGeorge experienced any
labor interruptions over the past three (3) years. McGeorge considers its
relationship with employees to be good.
4.25 No Omissions or Untrue Statements. To the McGeorge's
Parties' knowledge, no representation or warranty made by the McGeorge's Parties
in this Agreement (including the exhibits hereto) or in any schedule,
certificate, or other instrument furnished or to be furnished by McGeorge's
Representatives to Community pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will knowingly contain any untrue
statement of a material fact, or omits or will knowingly omit to state a
material fact necessary to make the statements contained herein or therein not
materially misleading.
5. REPRESENTATIONS AND WARRANTIES OF COMMUNITY
Community represents and warrants to the McGeorge Parties as
follows as of the date hereof and the Closing Date, with the Knowledge and
understanding that the McGeorge Parties are relying materially on such
representations and warranties:
5.1 Organization and Standing of Community. Community is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Community has all requisite corporate power to carry
on its business as it is now being conducted, and it and each of its
subsidiaries (and the Subsidiary), will be duly qualified to do
-15-
<PAGE>
business as a foreign corporation and in good standing in each jurisdiction
where such qualification is necessary under applicable law except where the
failure to qualify (individually or in the aggregate) does not have any material
adverse effect on the business of Community and its subsidiaries considered as
one enterprise.
5.2 Community's Authority. This Agreement and the transactions
contemplated hereby have been duly authorized by all necessary action of the
directors and shareholders of Community. This Agreement constitutes, and all
other agreements contemplated hereby will constitute, when executed and
delivered by Community, the valid and binding obligations of Community,
enforceable in accordance with their respective terms.
5.3 Governmental Approval; Consents. Subject to Section 8.9,
no authorization, license, permit, franchise, approval, order or consent of, and
no registration, declaration or filing by Community with, any governmental
authority, domestic or foreign, federal, state or local, is required in
connection with Community's execution, delivery and performance of this
Agreement or the other agreements contemplated hereby.
5.4 Compliance with Laws and Regulations. The business,
operations, property and assets of Community and each of its subsidiaries,
conform with and have been conducted and operated in material compliance with,
and are not in material violation of applicable federal, state and local laws,
rules and regulations.
5.5 Community's SEC Reports. Community has previously
delivered to McGeorge true and complete copies, of (i) its Annual Report on Form
10-K for 1994 and (ii) Quarterly Report on Form 10-Q made by Community
(collectively, "Community's SEC Reports"). Community's SEC Reports do not
contain any untrue statement of a material fact, or fail to state any material
fact required to be stated therein or necessary to make the statements made
therein not materially misleading and the financial statements therein fairly
present the financial position and results of operations of Community on a
consolidated or combined basis as of the dates and for the periods indicated,
prepared in accordance with GAAP.
5.6 Adverse Developments. Since September 30, 1995 there have
been no materially adverse changes in the assets, properties, operations,
prospects or financial condition of Community and its subsidiaries considered as
one enterprise, and no event has occurred other than in the ordinary and usual
course of business or as set forth in Community's SEC Reports which could be
reasonably expected to have a materially adverse effect upon Community and its
subsidiaries considered as one enterprise, and Community does not know of any
development or threatened development of a nature that will, or which could be
reasonably expected to, have a materially adverse effect upon Community and its
subsidiaries considered as one enterprise.
5.7 No Omissions or Untrue Statements. To Community's
Knowledge, no representation or warranty made by Community in this Agreement
(including the exhibits hereto)
-16-
<PAGE>
or in any schedule, certificate, or other instrument furnished or to be
furnished by Community to McGeorge or McGeorge Shareholders pursuant hereto, or
in connection with the transactions contemplated hereby, contains or will
knowingly contain any untrue statement of a material fact, or omits or will
knowingly omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
6. CONDUCT OF BUSINESS PENDING CLOSING
The parties covenant that between the date hereof and the
Closing:
6.1 Access for Community. The McGeorge Companies shall give to
Community and to Community's counsel, accountants and other representatives full
and reasonable access, during normal business hours throughout the period prior
to the Closing Date, to all of the McGeorge Companies' properties, books,
contracts, commitments, reimbursement and accounting records relating to the
Assets, and the Business, and records pertaining to customers, employees,
suppliers and other persons having business relations with the McGeorge
Companies relating to the Assets and the Business and shall furnish Community
during such period with all information concerning the Assets and the Business
that Community may reasonably request. The McGeorge Companies shall permit
Community and Community's representatives, agents, employees and independent
contractors, reasonable access to the properties of the McGeorge Companies at
which the operations of the Business are carried out in order to conduct
engineering, environmental and other inspections at Community's expense, as well
as access to professionals to determine that the Business is operating in full
compliance with all federal, state and local statutes, rules and regulations,
and all building, fire and zoning laws or regulations and that the Assets are in
the condition and of the capacities represented and warranted in this Agreement.
Any such investigation or inspection by Community shall not be deemed a waiver
of, or otherwise limit, the representations, warranties and covenants of the
McGeorge Parties contained herein.
6.2 Conduct of Business. During the period from the date
hereof to the Closing Date, the Business shall be operated by the McGeorge
Companies solely in the usual and ordinary course and in compliance with the
terms of this Agreement, and all additions to and substitutions for and changes
of form of the Assets occurring from the date hereof to the Closing Date shall
be deemed to constitute Assets hereunder. Without limiting the generality of the
foregoing:
(a) The McGeorge Companies will use their best
efforts to preserve the Business and their respective organizations so as to (i)
keep available the services of the present employees and agents of McGeorge
employed in the Business; (ii) complete or maintain all of the Contracts in full
force and effect in accordance with their existing terms, unimpaired by
litigation; (iii) maintain the integrity of all confidential information
regarding the Business; (iv)
-17-
<PAGE>
maintain in full force and effect the insurance policies (or policies providing
substantially the same coverage, copies of which shall be made available to
Community); and (v) preserve the goodwill of, and the Business and contractual
relationship with, suppliers, customers and others having relations with the
Business;
(b) The McGeorge Companies shall use their best
efforts to keep in a normal state of repair and operating efficiency all real
property, tangible personal property, leased property and leasehold improvements
used in the operation of the Business;
(c) The McGeorge Companies will continue to pay
accounts payable of the Business in accordance with present practice or as
otherwise agreed upon by Community and the McGeorge Companies;
(d) The McGeorge Companies will maintain their
consumable materials and supplies and the like at customary levels;
(e) The McGeorge Companies will not sell or transfer
any assets or property relating to the Business except for the Excluded Assets
and enter into or permit any transaction which would result in a breach of any
representation or warranty made by the McGeorge Parties herein.
6.3 Certain Prohibitions. The McGeorge Companies will not
amend, waive, terminate, release or otherwise modify any Contract or other
agreement relating to the Business, except as same shall be necessary to conduct
business in the ordinary course.
6.4 Consents and Notices. The McGeorge Companies shall, on or
prior to the Closing Date, at their expense, obtain all Regulatory Agency,
Reimbursement Agency, and third-party consents and approvals, or give all
notices, which are necessary to be obtained or given by or on the part of the
McGeorge Companies to authorize and validate the sale of the Assets and the
Business to Community, as provided herein.
6.5 Exclusivity to Community. The McGeorge Companies, its
officers, directors, representatives, or agents, as appropriate, shall not, from
the date hereof until the Closing or termination, hold discussions with any
person other than Community concerning the sale of the Business, solicit,
negotiate or entertain any inquiries, proposals or offers to purchase the
Business from any person other than Community, or disclose any information
concerning the Business to any person other than Community. This restriction
shall lapse if the Closing shall not have occurred by July 15, 1996.
-18-
<PAGE>
7. CONDITIONS TO THE MCGEORGE COMPANIES' OBLIGATIONS
The McGeorge Companies' obligation to consummate the Closing
is subject to the following conditions:
7.1 Compliance by Community. Community shall have performed
and complied with all agreements and conditions required by this Agreement to be
performed or complied with by Community prior to or on the Closing Date;
7.2 Accuracy of Community's Representations. Community's
representations and warranties contained in this Agreement (including the
exhibits hereto) or any schedule, certificate, or other instrument delivered
pursuant to the provisions hereof or in connection with the transactions
contemplated hereby shall be true in all material respects at and as of the
Closing Date (except for such changes permitted by this Agreement) and shall be
deemed to be made again as of the Closing Date.
7.3 Litigation. No litigation seeking to enjoin the
transactions contemplated by this Agreement or to obtain damages on account
hereof shall be pending or threatened.
7.4 Material Adverse Change. Except as disclosed in the
Disclosure Schedule, no material adverse change shall have occurred subsequent
to the Balance Sheet Date in the financial position or prospects of the business
of Community.
7.5 Non-Competition Agreement. The McGeorge Companies and the
McGeorge Parties shall have entered into the Non-Competition agreement.
7.6 Documents. All documents and instruments to be delivered
by Community to the McGeorge Companies at the Closing pursuant to Section 3.3
shall have been delivered in form and substance reasonably satisfactory to
McGeorge.
8. CONDITIONS TO COMMUNITY'S OBLIGATIONS
Community's and Subsidiary's obligation to consummate the
Closing is subject to the following conditions:
8.1 1995 Audited Financial Statements. On the earliest
practicable date but no later than May 1, 1996, McGeorge shall cause the
McGeorge Financial Statements of December 31, 1994 and the year then ended, as
well as the balance sheet as at December 31, 1995 and income cash flow and
stockholder's equity statements for the year then ended (the "1995 Audited
Financial Statements") to be audited at Community's expense by an auditor
selected by it, and deliver copies thereof to Community (without any qualified
opinion). Such
-19-
<PAGE>
financial statements, together with the 1993 Audited Statements, shall be
referred to as the Audited McGeorge Financial Statements and such statements
shall comply in all respects with Regulation S-X promulgated by the Securities
and Exchange Commission. The 1995 income statement included in Audited McGeorge
Financial Statements shall reflect EBITDA of $1,500,000 after adjustments agreed
to by parties in a separate document executed simultaneously herewith. The
representations of Section 4.14(b) hereof shall be applicable to such Audited
McGeorge Financial Statements. EBITDA shall refer to earning before interest,
taxes, depreciation and amortization. The McGeorge Companies shall cooperate
with such auditors in connection with such audit.
8.2 Compliance by the McGeorge Parties. The McGeorge Parties
shall have performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with by the McGeorge Companies or
McGeorge prior to or on the Closing Date.
8.3 Accuracy of McGeorge's Parties' Representations. The
representations and warranties of McGeorge's Representatives contained in this
Agreement (including the exhibits hereto and the Disclosure Schedule) or any
schedule, certificate, or other instrument delivered pursuant to the provisions
hereof or in connection with the transactions contemplated hereby shall be true
in all material respects at and as of the Closing Date (except for changes
permitted by this Agreement) and shall be deemed to be made again as of the
Closing Date.
8.4 Material Adverse Change. Except as set forth in the
Disclosure Schedule, no material adverse change shall have occurred subsequent
to the date hereof in the customer service, maintenance, financial position,
results of operations, liabilities, or prospects of the Business, or the Assets
nor shall any event or circumstance have occurred which would result in a
material adverse change in the customer service, maintenance, financial
position, results of operations, liabilities, or prospects of the Business or
the Assets.
8.5 Consents and Notices. The McGeorge Companies shall have
obtained or given, and delivered to Community, in form and substance reasonably
satisfactory to Community, the consents and notices required by Section 6.4,
3.2(f) and 8.9 hereof.
8.6 Litigation. No litigation seeking to enjoin the
transactions contemplated by this Agreement or to obtain damages on account
hereof shall be pending or to Community's Knowledge be threatened.
8.7 Non-Competition Agreement. The McGeorge Companies and
McGeorge shall have entered into the Non-Competition Agreement.
8.8 Compliance with Laws. Community shall have received such
additional evidence or assurances it shall have reasonably requested regarding
the operation of the Business
-20-
<PAGE>
being conducted in full compliance with all applicable health, environmental and
employee safety laws, rules and regulations, state and federal, and any
approvals as required under applicable law shall have been obtained as provided
herein.
8.9 Governmental Approvals. Community, at its expense, shall
have received the approval of the New York State Department of Health with
respect to the transfer of any license to Community. The McGeorge Parties shall
cooperate fully in facilitating the completion of this condition described
herein.
8.10 Financing. Community shall have completed financing for
the transaction.
8.11 Documents. All documents and instruments delivered by
McGeorge to Community at the Closing shall be in form and substance reasonably
satisfactory to Community.
9. CASUALTIES
9.1 Risk of Loss. The risk of loss of any Assets by fire,
tornado, hurricane, or for any other reason between the date hereof and the
Closing Date shall be upon the McGeorge Companies. The McGeorge Companies shall
notify Community of any material casualty loss prior to the Closing and shall
furnish Community copies of the insurance policy (if any) applicable to such
loss and a written statement of the insurance carrier (if any) as to whether and
to what extent such loss is covered by such policy. Within 15 days of receiving
such insurance policy and written statement of the insurance carrier, the
McGeorge Companies, upon written notice to Community, or Community, upon written
notice to the McGeorge Companies, may terminate this Agreement. If neither party
elects to terminate this Agreement, the McGeorge Companies shall promptly
restore or replace the damaged facilities at their cost and expense.
10. INDEMNIFICATION
10.1 By McGeorge's Parties. The McGeorge Parties jointly and
severally, shall indemnify, defend, and hold Community harmless from and against
any and all losses, costs, liabilities, damages, and expenses (including
reasonable legal and other expenses incident thereto) of every kind, nature, and
description, including any unassumed liabilities, and any undisclosed
liabilities (collectively "Losses") that result from or arise out of (i) the
breach of any representation or warranty of the McGeorge Parties set forth in
this Agreement (including the exhibits hereto) or in any certificate or
schedule, or other instrument delivered to Community pursuant hereto; (ii) the
breach of any of the covenants of the McGeorge Parties contained in this
Agreement; (iii) any liability of the McGeorge with respect to the ownership or
use of the Assets prior to the Closing Date or to the Business conducted prior
to
-21-
<PAGE>
the Closing Date, whether or not such liability arises prior to, on or following
the Closing Date (as well as any liability arising under Section 13.1); or (iv)
any Taxes of the McGeorge Parties for any and all taxable periods of the
McGeorge Parties up to and including the Closing Date, without regard to whether
or not the existence of such tax liability would constitute a breach of a
representation or warranty made by the McGeorge Parties hereunder.
10.2 Claims Procedure. Should any claim covered by Section
10.1 be asserted against a party entitled to indemnification under this Article
X (the "Indemnitee"), the Indemnitee shall promptly notify the party obligated
to make indemnification (the "Indemnitor"), provided that any delay or failure
in notifying the Indemnitor shall not affect the Indemnitor's liability under
this Article X if such delay or failure was not prejudicial to the Indemnitor.
The Indemnitor upon receipt of such notice shall assume the defense thereof with
counsel reasonably satisfactory to the Indemnitee and the Indemnitee shall
extend reasonable cooperation to the Indemnitor in connection with such defense.
No settlement of any such claim shall be made without the consent of the
Indemnitor, such consent not to be unreasonably withheld, nor shall any such
settlement be made by the Indemnitor which does not provide for the absolute,
complete, and unconditional release of the Indemnitee from such claim. In the
event that the Indemnitor shall fail, within a reasonable time, to defend a
claim, the Indemnitee shall have the right to assume the defense thereof without
prejudice to its rights to indemnification hereunder.
10.3 Payment. All amounts due hereunder shall be paid upon
demand. In the event any dispute herein is litigated, the losing party shall
bear all costs of litigation including reasonable attorneys' fees, and costs of
experts. Interest on any improperly withheld amount by either party shall accrue
at prime rate.
10.4 No Limitation. Nothing herein shall preclude an action
against a McGeorge Party as a result of any claim or action brought against
Community or the Subsidiary relating to any liability referred to in Section
10.1(iii).
10.5 Deductible, Maximum Amount, Duration. Neither Community
nor the Subsidiary shall be entitled to indemnification pursuant to this
Agreement until the total amount for which Community or the Subsidiary shall be
entitled to exceeds Fifty Thousand ($50,000) Dollars (the "Deductible"), in
which case the indemnification shall be for such amount as is in excess of the
Deductible. Neither Community nor the Subsidiary shall be entitled to any
indemnification in excess of Five Million Dollars ($5,000,000). Neither
Community, nor the Subsidiary shall be entitled to any indemnification for any
claims unless such claims have been presented as provided herein prior to
thirtieth month anniversary date of the Closing.
-22-
<PAGE>
11. COVENANTS
11.1 No Transferee Liability. The parties agree that Community
will not by virtue of the transactions contemplated hereby assume any
liabilities or obligations of the McGeorge Companies whatsoever ("Transferee
Liability") and, accordingly, the McGeorge Companies agree both prior and
subsequent to the Closing to take all actions which Community may reasonably
request so as to fully protect Community from and against any and all Transferee
Liability arising out of the transaction which is the subject of this Agreement.
11.2 Preservation of Records. Community and the McGeorge
Companies each covenant that they will preserve and make reasonably available to
the other party, its attorneys and accountants, for six (6) years from and after
the Closing Date and during normal business hours, such of the books, records,
files, correspondence, memoranda and other documents (collectively, the
"Records") as the other party may reasonably require in connection with any
legitimate purpose, including, but not limited to, the preparation of tax
reports and returns and the preparation of financial statements provided,
however, that the McGeorge Companies shall not be required to furnish
information reflecting attorney-client communications or attorney work product.
After the sixth anniversary of Closing Date, neither Community nor the McGeorge
Companies shall dispose of any of the Records, without giving the other party at
least thirty (30) days' prior notice of its intention to do so. Such other party
may, by written notice, request that such Records be retained and such Records
shall be transferred to the other party at such other party's expense.
11.3 Payment of Taxes. The McGeorge Companies, with
cooperation of Community, will cause to be prepared and filed all returns
required to be filed relating to the Assets or the Business for periods prior to
the Closing Date. The McGeorge Companies will be solely responsible for and will
pay all Taxes relating to the Assets or the Business for periods prior to or
ending on the Closing Date. Community shall be responsible for and pay all
sales, use or transfer taxes, if any, arising from the transfer of the Assets
hereunder.
11.4 Mutual Cooperation. The parties hereto will cooperate
with each other, and will use all reasonable efforts to cause the fulfillment of
the conditions to the parties' obligations hereunder and to obtain as promptly
as possible all consents, authorizations, orders or approvals from each and
every third party, whether private or governmental, required in connection with
the transactions contemplated by this Agreement.
11.5 Changes in Representations and Warranties of McGeorge.
Between the date of this Agreement and the Closing Date, neither of the McGeorge
Parties directly or indirectly, shall enter into any transaction, take any
action, or by inaction permit an event to occur, which would result in any of
its or his representations and warranties herein contained not being true and
correct at and as of the Closing Date. The McGeorge Companies shall
-23-
<PAGE>
promptly give written notice to Community upon becoming aware of (A) any fact
which, if known on the date hereof, would have been required to be set forth or
disclosed pursuant to this Agreement and (B) any threatened breach in any
material respect of any of their respective representations and warranties
contained in this Agreement and with respect to the latter shall use all
reasonable efforts to remedy same.
11.6 Post-Closing Tax Returns. Community and the McGeorge
Companies will duly file all post-Closing Returns required to be filed by them.
All such post-closing returns shall be accurate and complete in all material
respects and be prepared in conformity with applicable laws and regulations.
11.7 COBRA Compliance. The McGeorge Companies shall bear the
responsibility of satisfying any COBRA continuing health care coverage
requirements with respect to any employees of the McGeorge Companies who will
have been entitled to continuing coverage as of the Closing Date and who have
not been hired by Community or the Subsidiary.
11.8 Brokers' and Consultants' Fees. Community and the
McGeorge Companies shall save and hold the other harmless from any claims made
against the other on account of their acts or alleged acts from any person for
any other agent's, broker's or finder's fee or commission incurred in connection
with the transactions contemplated by this Agreement. The provisions of this
Section 11.8 (and not the provisions of Article X) shall apply to any claim
within the scope of the preceding sentence.
11.9 Employees. Community shall not be obligated to hire any
employees of the McGeorge Companies.
12. TERMINATION
12.1 Termination Prior to Closing.
(a) Community may terminate this Agreement without
liability during the two (2) week period following receipt of the schedules,
documents and financial statements referred to in Section 1.2. In the event
Community determines to terminate this Agreement (i) without reason after such
two week period and until April 30, 1996 or (ii) after April 30, 1996 for breach
of any covenant or representation it shall pay the McGeorge Companies an amount
equal to $1,000 multiplied by the number of days elapsing between the expiration
of such two week period and the date of termination, but shall have no further
liability. Notwithstanding the foregoing, Community shall have no liability
pursuant to Section 12(a)(ii) if such termination results from a fraudulent
misrepresentation or willful failure to perform a covenant or inability of
McGeorge to deliver or transfer assets including any license.
-24-
<PAGE>
(b) If the Closing has not occurred by July 15, 1996,
the McGeorge Companies or Community or subsidiary may terminate this Agreement
at any time thereafter by giving written notice of termination to the other
parties; provided, however, that no party may terminate this Agreement if such
party has willfully and materially breached any of the terms and conditions
hereof.
(c) Prior to July 15, 1996 either McGeorge or
Community may terminate this Agreement following the insolvency or bankruptcy of
the other, or if one of the conditions to Closing set forth in Article VII or
Article VIII shall become incapable of fulfillment and shall not have been
waived by the party for whose benefit the condition was established, then
McGeorge Companies (in the case of a condition specified in Article VII) or
Community (in the case of a condition specified in Article VIII) may terminate
this Agreement.
12.2 Consequences of Termination. Upon termination of this
Agreement pursuant to either Section 12.1 or any other express right of
termination provided elsewhere in this Agreement, the parties shall be relieved
of any further obligation to the others except as specified in Section 13.5
provided, however, that no termination of this Agreement, pursuant to Section
12.1 hereof or under any other express right of termination provided elsewhere
in this Agreement, shall operate to release any party from any liability to any
other party incurred before the date of such termination or from any liability
resulting from any willful misrepresentation made in connection with this
Agreement or willful breach hereof. The provisions of this Section 12.2 shall
not be considered as a waiver by either Community or McGeorge of the remedy of
specific performance, it being agreed that each of Community and McGeorge shall
have the right to specific performance with respect to this Agreement.
13. MISCELLANEOUS
13.1 Waiver of Bulk Sales Law Compliance; Indemnity.
Community, the McGeorge Parties hereby waive compliance with any applicable bulk
sales laws. McGeorge's Representatives jointly and severally, agree to fully
indemnify Community, without any deductible, for any and all liabilities,
expenses and costs resulting from the parties' failure to fully comply with
applicable bulk sales laws.
13.2 Expenses. Each party shall pay its own expenses incident
to the negotiation, preparation, and carrying out of this Agreement, including
all fees and expenses of its counsel and accountants for all activities of such
counsel and accountants undertaken pursuant to this Agreement, whether or not
the transactions contemplated hereby are consummated.
13.3 Survival of Representations, Warranties and Covenants.
All statements contained in this Agreement (including the exhibits hereto) or in
any schedule, certificate or other instrument delivered by or on behalf of the
McGeorge Companies or Community pursuant
-25-
<PAGE>
hereto or in connection with the transactions contemplated hereby shall be
deemed representations, warranties, agreements and covenants by the McGeorge
Parties, or by Community, as the case may be, hereunder. All representations,
warranties, and covenants made by all parties to this Agreement or pursuant
hereto, shall survive the Closing until the thirty month anniversary of the
Closing.
13.4 Further Assurances. The McGeorge Companies and Community
will comply with any and all requirements imposed by applicable federal law or
state law which are necessary to authorize and validate the sale, transfer and
assignment of the Assets to Community and otherwise to effectuate the purposes
of this Agreement.
13.5 Nondisclosure. Community will not at any time after the
date of this Agreement divulge, furnish to or make accessible to anyone any
Knowledge or information with respect to confidential or secret processes,
inventions, discoveries, improvements, formulae, plans, material, devices or
ideas or know-how, whether patentable or not, with respect to any confidential
or secret aspects of the Business (including, without limitation, customer
lists, supplier lists and pricing arrangements with customers or suppliers)
("confidential information"); provided such undertaking shall lapse if the
Closing of this Agreement does not take place as provided herein. In the event
that the transactions contemplated hereby are not consummated, Community will
not thereafter divulge, furnish to or make accessible to anyone any confidential
information and all copies of all such information in Community's possession
shall be returned by Community to the McGeorge Companies.
Any information, which (i) at or prior to the time of
disclosure by the McGeorge Companies or Community was generally available to the
public through no breach of this covenant, (ii) was available to the public on a
nonconfidential basis prior to its disclosure by the McGeorge Companies or
Community or (iii) was made available to the public from a third party provided
that such third party did not obtain or disseminate such information in breach
of any legal obligation of the McGeorge Companies or Community, shall not be
deemed confidential information for purposes hereof, and the undertakings in
this covenant with respect to confidential information shall not apply thereto.
13.6 Succession and Assignments; Third Party Beneficiaries.
This Agreement may not be assigned (either voluntarily or involuntarily) by any
party hereto without the express written consent of the other party. Any
attempted assignment in violation of this Section shall be void and ineffective
for all purposes. In the event of an assignment permitted by this Section, this
Agreement shall be binding upon the heirs, successors and assigns of the parties
hereto. Except as expressly set forth in this Section, there shall be no third
party beneficiaries of this Agreement.
The provisions of this Section shall not apply to the
acquisition of the Assets and the Business by a wholly owned subsidiary
corporation of Community, or following such
-26-
<PAGE>
acquisition, to Community's use of the Assets and Business. Without limiting the
generality of the preceding sentence, references to Community in Article V shall
be deemed to include references to the Subsidiary.
13.7 Accuracy of Documents. All documents delivered by the
McGeorge Companies to Community, and by Community to the McGeorge Companies, as
photocopies faithfully reproduce the originals thereof, and such originals are
authentic and were, to the extent execution was required, duly executed.
13.8 Notices. All notices, requests, demands, or other
communications with respect to this Agreement shall be in writing and shall be
personally delivered by a nationally recognized express courier service, charges
prepaid, to the following addresses (or such other addresses as the parties may
specify from time to time in accordance with this Section).
(a) To the McGeorge Companies and McGeorge:
109 Clove Avenue
Haverstraw, NY 10927
Fax:
(b) To Community or Subsidiary:
Community Medical Transport, Inc.
45 Morris Street
Yonkers, NY 10705
Attn: Dean Sloane, President
Fax: 914-963-7896
With a copy to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, NY 10017
Attn: Michael D. DiGiovanna, Esq.
Fax: 972-9487
Any such notice shall, when sent in accordance with the preceding sentence, be
deemed to have been given and received twenty-four hours after shipment by such
courier service.
-27-
<PAGE>
13.9 Construction. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of New York without
giving effect to the principles of conflicts of law thereof.
13.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall together constitute one and the same Agreement.
13.11 No Implied Waiver; Remedies. No failure or delay on the
part of the parties hereto to exercise any right, power, or privilege hereunder
or under any instrument executed pursuant hereto shall operate as a waiver nor
shall any single or partial exercise of any right, power, or privilege preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege. All rights, powers, and privileges granted herein shall be in
addition to other rights and remedies to which the parties may be entitled at
law or in equity.
13.12 Entire Agreement. This Agreement, including the Exhibits
and Schedules attached hereto, sets forth the entire understandings of the
parties with respect to the subject matter hereof, and it incorporates and
merges and supersedes any and all previous communications, representations,
warranties, understandings, agreements, oral or written and can not be amended
or changed except in writing, signed by the parties.
13.13 Headings. The headings of the Sections of this
Agreement, where employed, are for the convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meanings of
the parties.
13.14 Severability. To the extent that any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
hereof and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
COMMUNITY MEDICAL TRANSPORT, INC.
By: /s/ Dean Sloane
-------------------------------
Name: Dean Sloane
Title: Chairman and President
HARVEY H. MCGEORGE CO., INC.
By: /s/ Alan McGeorge
-------------------------------
Name: Alan McGeorge
Title: President
-28-
<PAGE>
HUDVALCO, INC.
By: /s/ Alan McGeorge
-------------------------------
Name:
Title:
/s/ Alan McGeorge
-------------------------------
Alan McGeorge, Individually
-29-
<PAGE>
AMENDMENT DATED AS OF AUGUST 12, 1996 TO ASSET
PURCHASE AGREEMENT DATED AS OF FEBRUARY 28,
1996 AMONG COMMUNITY MEDICAL TRANSPORT, INC.
("COMMUNITY"), A DELAWARE CORPORATION, AND
ALAN MCGEORGE ("MCGEORGE") AND HARVEY H.
MCGEORGE CO., INC. ("HHM"), HUDVALCO, INC. D/B/A
HUDSON VALLEY AMBULANCE ("HUDVALCO"),
AMENDING THE ASSET PURCHASE AGREEMENT DATED
FEBRUARY 28, 1996 AMONG COMMUNITY, MCGEORGE
AND THE MCGEORGE COMPANIES, AND RENAMING
THIS AGREEMENT THE "PURCHASE AGREEMENT" (THE
"AGREEMENT").
INTRODUCTION
McGeorge owns all of the shares of Richards/Decker Operating
Co., Inc. ("RDO") and additional entitles listed on Schedule S attached
hereto("Additional Entities"). Hudvalco, HHM and RDO and the Additional Entities
shall be collectively referred to as the "McGeorge Companies" and singly as a
"McGeorge Company."
HHM and RDO are the owners of ambulance service certificates
(the "Certificates") and Hudvalco is the operator of an ambulance service in New
York authorized by the Certificates and appropriate operating agreements and the
Additional Entities provide employees and various other services to HHM, RDO and
Hudvalco in connection with the ambulance service business.
Such business shall be referred to as the "Business";
McGeorge is the sole shareholder of each of the McGeorge
Companies; and
Community, through subsidiaries, operates ambulances and
ambulette services in the New York metropolitan area and the Hudson Valley area.
The McGeorge Companies desire to sell and Community (through a
subsidiary wholly-owned by Community (the "Subsidiary")) desires to acquire
operating and other assets utilized in the Business either by purchasing shares
of such entities or assets.
The parties entered into the Agreement but covering only the
sale of assets by HHM and Hudvalco and desire to amend the Agreement to include
the sale of shares (the "Shares") of RDO and the Additional Entities
(collectively, sometimes referred to as the "Share Entities").
NOW, THEREFORE, in consideration of the premises and of the
mutual promises and covenants contained herein, the parties, intending to be
legally bound, hereby represent, warrant and agree as follows:
<PAGE>
1. Amendment.
Except as set forth herein, defined terms in the Agreement shall have
the same meaning herein.
2. The introductory paragraph to Section 1.1 is amended as follows:
1.1 Shares and Assets To Be Conveyed. Subject to the terms and
conditions herein set forth, and on the basis of the mutual representations,
warranties and covenants herein set forth, at the Closing (as hereinafter
defined), (A) McGeorge agrees to sell and Community agrees to buy, the Shares of
the Share Entities, and (B) Community agrees to buy from Hudvalco and HHM,
substantially all of the operating assets used in, or related to, the Business
not owned by the Share Entities (collectively the "Assets"), as more fully
described in Schedule A-1, free and clear of all mortgages, liens, encumbrances,
security interests, equities and claims, to other persons of every kind and
character ("Liens"), including but not limited to all physical assets of the
McGeorge Companies reflected on the Balance Sheet other than assets owned by the
Share Entities which may include one or more of the items described below in
this Section 1.1, limited to such changes therein as shall have occurred in the
ordinary course of conduct of the Business between the close of business on the
date hereof and the Closing Date (as hereinafter defined);
3. Section 1.4 of the Agreement shall be amended to read as follows
1.4 Liabilities. Except as set forth in Schedule A-3, from and after
the Closing Date, Community shall not assume any liabilities of the McGeorge
Companies, including any of the Share Entities.
4. The Disclosure Schedule shall be delivered simultaneously herewith.
5. Section 2.1 of the Agreement is amended as follows:
2.1 Purchase Price.
(i) The Purchase Price to be paid by Community for the Shares
and Assets shall be $7,000,000.
(ii) At the Closing, as hereinafter provided, Community shall
(A) pay $3,000,000 by certified check or wire transfer; (B) assume all
liabilities to which any of Assets are subject and cause the McGeorge Companies
and/or McGeorge to be removed as obligors or guarantors thereof and (ii) assume
the balance of the Assumed Liabilities and (C) issue a
-2-
<PAGE>
Promissory Note (the "Note") equal to the difference between $4,000,000 and the
sum of (i) liabilities referred to in paragraph 2.1(ii)(B) plus(ii) any
liabilities of the Share Entities not paid or released remaining after the
Closing known or assumed as of the closing date (Share Entity Liabilities" as
further defined below). The Purchase Price shall be paid to Alan McGeorge as
attorney who shall allocate the Purchase Price among the McGeorge entities in
accordance with their previously agreed upon respective valuations. The Note
shall be secured by assets of the Subsidiary pursuant to the Security Agreement
attached as Exhibit 2B and the parties shall execute the Contingent Management
Agreement attached as Exhibit 2C.
As used herein, "Share Entity Liabilities" shall refer to
liabilities of the Share Entities arising, directly or indirectly out of any
action or occurrence prior to the Closing Date and not an Assumed Liability, or
not released by the creditors or paid by a third party including any Tax
Liability of a Shareholder Entity with respect to a period prior to Closing. The
amount of such Share Entity Liabilities shall be set off against the principal
of the Note as set forth therein. Notwithstanding any other provisions, (i) the
limitations set forth in paragraph 10.5 shall not apply to the Share Entity
Liabilities, and (ii) the Share Entity Liabilities of RDO shall include any
liability of RDO, including Tax Liability, arising directly or indirectly out of
any action or occurrence prior to Deferred Delivery Date, except such liability
arising out of the ordinary course of business of RDO between the Closing Date
and the Deferred Delivery Date.
The Note shall be payable the earlier of ninety (90) days
after Closing or the completion of bank financing by Community. If payment of
the Note is made prior to the Deferred Delivery Date, One Million Fifty Thousand
Dollars ($1,050,000) of the principal of the Note ("the RDO Consideration")
shall be deposited pursuant to the Escrow Agreement as hereinafter provided. The
Note shall be in the form of Exhibit 2. The Note shall bear interest at an
annual rate of two (2%) percent above the prime rate of Community's principal
lender on the date prior to Closing.
6. Section 3.1 is amended to read as follows:
3.1 Closing. The closing of the purchase and sale of the
Shares and Assets and other transactions contemplated hereby (the "Closing")
shall be held on such date as the parties may mutually agree upon (the "Closing
Date") after all conditions precedent to the obligations of Community and the
McGeorge Companies, as set forth in Articles VII and VIII have been satisfied
(or waived in writing). The parties shall use their best efforts to close on or
prior to August 15, 1996. At the Closing all of the Shares and Assets shall be
transferred, other than the Shares of RDO and that portion of the Certificate
owned by HHM covering counties located in New York City. The Shares of RDO shall
be deposited pursuant to the Escrow Agreement as hereinafter provided. Such
shares of RDO shall be delivered to Community and the RDO Consideration
delivered to McGeorge, two business days after such date that the governmental
-3-
<PAGE>
approvals are obtained pursuant to paragraph 6.8(i) ("Deferred Delivery Date"
but not earlier than the Maturity Date (unless consented to by Community) of the
Note, and not later than December 31, 1997. The Closing and Deferred Delivery
shall be at the offices of Community's counsel in New York, New York or such
other place as may be mutually agreed upon by the parties. The parties shall use
their best efforts to fulfill all conditions as promptly as possible.
7. Section 3.2(e) shall be deleted. The following new additional
subsection in (f) through (k) shall be added to Section 3.2 and 3.2(g) shall
be renumbered 3.2(l):
(f) certificates representing the Shares accompanied by
properly executed blank stock powers except that the certificate for
RDO Shares and accompanying Stock Powers shall be delivered to Parker
Duryee Rosoff & Haft to be held in escrow pursuant to the provisions of
the Escrow Agreement attached hereto as Exhibit 3 to be executed by
McGeorge, Community and Parker Duryee Rosoff & Haft.
(g) Leases in mutually agreeable form containing the terms set
forth in Exhibits 4A through 4B attached hereto shall be executed by
the respective landlords and delivered at Closing (the "Leases").
(h) RDO and Hudvalco shall execute and deliver a mutually
agreeable Operating Agreement containing the terms set forth in Exhibit
5 to Community and Subsidiary.
(i) McGeorge shall execute the Employment Agreement in the
form of Exhibit 6 attached hereto.
(j) McGeorge shall deliver to Community releases between each
of the Share Entities and Hudvalco, HHM and McGeorge and affiliates of
McGeorge releasing all liabilities and claims between the Share
Entities, Hudvalco, HHM and McGeorge and affiliates of McGeorge.
(k) Unaudited financial statements of the McGeorge Companies
as of June 30, 1996.
8. Section 3.3(c) shall be deleted and the following additional subsections (d)
through (f) shall be added to Section 3.3 and existing 3.3(e) shall be
renumbered 3.3(h):
(d) Community and Subsidiary shall execute and deliver the
Note.
-4-
<PAGE>
(e) Community and Subsidiary shall assume or pay the Assumed
Liabilities.
(f) Community and Subsidiary shall execute and deliver
counterparts of the Securities Agreement, Contingent Management
Agreement, Leases, Escrow Agreement, Operating Agreement and Employment
Agreement.
9. A new Section 3.4 shall be modified as follows:
3.4 Deferred Delivery. Upon the completion of
governmental approval provided for in Section 6.8(i) the parties shall
direct the Escrow Agent to release certificates for the RDO Shares and
stock powers to Community and Community shall pay that portion of the
Note representing the RDO Consideration or such amount shall be
released from Escrow, as the case may be. The only conditions on the
obligation of Community to the Deferred Delivery shall be compliance by
McGeorge with the provision of Section 6.9 and the Operating Agreement.
10. A new subparagraph (c) shall be added to Section 4.1 as follows:
The Disclosure Schedule sets forth the capitalization of each
Share Entity. McGeorge is the owner of all of the outstanding shares of
the Share Entities and may transfer the Shares to the Subsidiary, free
and clear of all liens, encumbrances or claims of any nature
whatsoever. There are no outstanding warrants, options, convertible
securities or other rights to accrue any securities of the Share
Entities.
11. Section 6.5 shall be modified as follows:
(i) the date in the last sentence shall be changed to August
31, 1996.
(ii) a new sentence shall be added as follows.
(iii) If the Closing occurs by such date, the restrictions
shall continue until the Deferred Delivery Date.
12. Additional Sections 6.8 and 6.9 shall be added as follows:
6.8 Approval Subsequent to Closing. McGeorge and Community shall use
their best efforts to obtain the approval of all governmental authorities (i) to
the transfer of the beneficial ownership of RDO's license to operate ambulance
services resulting from the sale of the RDO Shares and (ii) any rights of HHM to
operate an ambulance service in the five counties of New York.
-5-
<PAGE>
6.9 Operations of RDO. Between the Closing and Deferred Delivery Date
McGeorge shall cause RDO to operate in the ordinary cause of business consistent
with Operating Agreement and the provisions of paragraph 6.9 shall continue to
apply to operation of RDO until the Deferred Delivery Date.
13. Section 8.6 is amended as follows:
8.6 Litigation. No litigation seeking to enjoin the
transactions contemplated by this Agreement or to obtain damages on account
hereof shall be pending or to Community's knowledge, threatened, other than
pending litigation arising out of the claim that the HHM is not entitled to its
certificate ("Certificate Claims") unless there is a judgment or order which
finds that HHM does not own this Certificate, or prohibiting transfer.
14. Section 8.9 shall be amended to read as follows:
8.9 Governmental Approvals. Community, at its expense, shall
have received the approval of the New York State Department of Health with
respect to the transfer of any license to Community, excluding the approval
referred to in Section 6.8, but approval of the transfer of the beneficial
ownership of the license owned by RDO shall be a condition to the Deferred
Delivery.
15. New sections 8.11 and 8.12 shall be added as follows, and existing 8.10
shall be renumbered 8.13:
8.11 Leases. Subsidiary shall enter into the Lease.
8.12 Operating Agreement. RDO and Hudvalco shall enter into
the Operating Agreement.
16. A new subparagraph (iv) as follows shall be added to Section 10.1 and the
existing subparagraph (iv) shall be renumbered subparagraph (v):
(iv) "any McGeorge Liabilities"
17. The following sentence shall be added to Section 10.5:
The limitation on amount or duration shall not apply to the
indemnity provided in Section 10.6.
-6-
<PAGE>
18. A new sentence shall be added to Section 11.6 as follows:
The parties shall allocate the Purchase Price as previously
agreed and Community or the Subsidiary shall not make a Section 338
election.
19. A new section 10.6 shall be added to Article 10 as follows:
10.6 Certificate Claim. The McGeorge Parties shall jointly and
severally indemnify and hold Community harmless from all liability, expense and
damages resulting in any judgment or order which would result in the
cancellation or denial of transfer of the Certificate of HHM whether pursuant to
existing litigation or new litigation. The McGeorge Parties acknowledge that the
ability to operate an ambulance service in countries west of the Hudson River is
a prime inducement for Community to enter into the transaction. The provisions
of Section 10.2 and 10.3 shall apply to this section 10.6.
20. Section 12.1 shall be amended as follows:
12.1 Termination Prior to Closing.
(a) Community may terminate this Agreement without
liability during the two (2) week period following receipt of the schedules,
documents and financial statements referred to in Section 1.2. As used herein,
"cause" shall refer to a material breach of any covenant or representation. In
the event Community determines to terminate this Agreement without cause it
shall pay the McGeorge Companies an amount equal to $1,000 multiplied by the
number of days elapsing between May 15, 1996 and date of termination, but shall
have no further liability. Notwithstanding the foregoing, Community shall have
no liability pursuant to Section 12(a)(ii) if such termination results from a
fraudulent misrepresentation or willful failure to perform a covenant or
inability of McGeorge to deliver or transfer assets including any certificate or
license setting forth the reasons therefor which shall exclude any matter
disclosed in documents delivered to Community or counsel prior to this date.
(b) If the Closing has not occurred by August 31,
1996, the McGeorge Companies or Community or subsidiary may terminate this
Agreement at any time thereafter by giving written notice of termination to the
other parties; provided, however, that no party may terminate this Agreement if
such party has willfully and materially breached any of the terms and conditions
hereof.
(c) Prior to August 31, 1996 either McGeorge or
Community may terminate this Agreement following the insolvency or bankruptcy of
the other, or if one of the conditions to Closing set forth in Article VII or
Article VIII shall become incapable of fulfillment
-7-
<PAGE>
and shall not have been waived by the party for whose benefit the condition was
established, then McGeorge Companies (in the case of a condition specified in
Article VII) or Community (in the case of a condition specified in Article VIII)
may terminate this Agreement.
21. Continuation of Agreement. Except as modified herein, the Agreement shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement the day and year first above written.
COMMUNITY MEDICAL TRANSPORT, INC.
By: /s/ Donald J. Panos
--------------------------------------
Name: Donald J. Panos
Title: Chief Financial Officer
HARVEY H. MCGEORGE CO., INC.
By: /s/ Alan McGeorge
--------------------------------------
Name: Alan McGeorge
Title: President
HUDVALCO, INC.
By: /s/ Alan McGeorge
--------------------------------------
Name: Alan McGeorge
Title: President
/s/ Alan McGeorge
--------------------------------------
Alan McGeorge, Individually
-8-
<PAGE>
SCHEDULES
RICHARDS/DECKER OPERATING CO., INC.
HUDSON VALLEY MEDTEX, INC.
CLOVE PROFESSIONAL SERVICES, INC.
RICHARDS/DECKER PAYROLL CO., INC.
CONSOLIDATED COLLECTIONS, INC.
<PAGE>
PROMISSORY NOTE
$3,059,528.92 August 15, 1996
FOR VALUE RECEIVED,
Community Medical Transport, Inc. (the "Undersigned"), hereby promises
to pay to the order of Alan McGeorge, as attorney (referred to as the "Payee")
on his own behalf, and on behalf of Hudvalco, Inc. ("Hudvalco") Harvey H.
McGeorge Co., Inc. ("HHM") at Payee's Bank or at such other place as the holder
of this Promissory Note ("Note") may designate from time to time in writing, the
principal sum of $3,059,528.92, subject to adjustment] in U.S. Dollars with
interest at the per annum rate of 10.25% upon the unpaid principal balance
hereof until paid in full. The Note is issued pursuant to a Purchase Agreement
dated as of February 28, 1996, as amended as of August 12, 1996, among the
Undersigned, Payee, Hudvalco and HHM (the "Purchase Agreement"). Payment of
principal and interest of this Note shall be subject to Article X of the
Purchase Agreement.
Subject to the provisions hereinafter set forth, the Note shall be paid
as follows:
(1) $100,000 Principal Amount on September 1, 1996.
(2) $100,000 Principal Amount on October 1, 1996.
(3) $100,000 Principal Amount on November 1, 1996.
(4) The balance of the Principal Amount and all accrued interest
shall be paid on November 15, 1996 (the "Maturity Date").
Notwithstanding the foregoing, if the Deferred Closing, as provided for
in the Purchase Agreement, has not taken place on the Maturity Date, there shall
be deducted from the payment provided herein, the amount of $1,050,000 which
shall be placed in escrow pursuant to an Escrow Agreement among the Undersigned,
Hudvalco and HHM, the undersigned and Parker Duryee Rosoff & Haft. The
Undersigned shall, however, be obligated to prepay and principal and accrued
interest of this Note in full if the undersigned has completed Bank financing in
the amount of $7,000,000. Notwithstanding the foregoing, there shall be deducted
from payment of the Note any liability of the Share Entities arising prior to
the date hereof which is not paid or assumed by a third party.
The maturity of this Note may be accelerated at any time by the Payee
upon the occurrence of a "Default" as hereinafter defined. Any one or more of
the following events shall constitute an event of default ("Default") by the
Undersigned hereunder:
i. If the Undersigned fails to pay when due and payable any of
its obligations hereunder to the Payee which failure remains uncured for a
period of seven (7) business days after notice to the Undersigned;
<PAGE>
ii. There is a default pursuant to the Security Agreement
dated this date;
iii. If any proceeding is commenced by or against the
Undersigned under any provision of the Bankruptcy Code, as amended, or any other
bankruptcy or insolvency law, including but not limited to assignments for the
benefit of creditors, formal or informal moratoriums, compositions, or
extensions with some or all creditors, any proceeding seeking a reorganization,
arrangement or any other relief under the Bankruptcy Code, as amended, or any
other bankruptcy or insolvency law and any such proceeding commenced against the
Undersigned is not dismissed within thirty (30) days thereafter;
iv. If any proceeding is filed or commenced by or against the
Undersigned for its dissolution or liquidation and not dismissed within thirty
days;
In the event of a Default, Payee may, at its election, upon three (3)
days prior written notice of its election, declare the note immediately due and
payable and exercise any other right or remedy available to Payee under
applicable law.
Payee's failure at any time or time hereafter to require strict
performance by the Undersigned of any of the provisions, terms and conditions
contained in this Note or in any of the other Agreements shall not waive, affect
or diminish any right of the Payee at any time or times hereafter to demand
strict performance thereof and such right shall not be deemed to have been
waived by any act or knowledge of the Payee, unless such waiver is contained in
an instrument in writing signed by the Payee and directed to the Undersigned
specifying such waiver. No waiver by the Payee of any Default shall operate as a
waiver of any other Default or the same default on a future occasion. No delay
or omission on the part of the Payee in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Payee of any right or remedy shall preclude other of further exercise thereof or
the exercise of any other right or remedy.
Up to $1,000,000 of the Principal Amount of the Note shall be
convertible from time to time, at or prior to the Maturity Date at the
Conversion Price $6.50, into fully paid and nonassessable shares of common stock
of the Undersigned (the "Common Stock"). The number of shares of Common Stock
issuable upon conversion shall equal the principal amount desired to be
converted divided by 6.50. If the Note is partially converted, the certificates
of shares shall be delivered and the principal amount of the Note shall be
deemed paid to the extent of such conversion. The Company makes the
representation and covenants set forth in the attached Security Annex.
No fractional share shall be issued upon the conversion of any shares,
the Undersigned, in lieu of issuing any fractional share, shall pay the holder
otherwise entitled to such fraction a sum in cash equal to the market price of
the Common Stock on the date prior to the Maturity Date.
-2-
<PAGE>
If, prior to Maturity Date the number of outstanding shares of Common
Stock is increased by a stock split, stock dividend, or other similar event, the
Conversion Price shall be proportionately reduced, or if the number of
outstanding shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Conversion Price shall
be proportionately increased.
This Note, the indebtedness evidenced hereby, and any interest payable
hereon shall be subject and subordinate in right of payment to the following,
which is hereinafter referred to as "Senior Indebtedness": The principal of,
premium, if any, and interest on bank indebtedness on the date hereof, and
renewals, extensions, and refundings of any such borrowings or indebtedness by
such bank or banks or any substitute bank.
(a) Upon any distribution of the assets of the Company upon any
dissolution, winding-up, liquidation or reorganization of the
Company, whether in bankruptcy, insolvency or receivership
proceedings, or upon any assignment for the benefit of creditors
or any other marshalling of the assets and liabilities of the
Company, or otherwise, the holders of Senior Indebtedness shall
be entitled to receive payment in full of all principal of and
premium, if any, and interest due upon all such Senior
Indebtedness before the holder of this Note is entitled to
receive any payment on account of principal, premium, if any, or
interest upon this Note.
(b) During the continuance of any default in the payment of principal
or interest on the Senior Indebtedness, no payment shall be made
on account of principal or premium, of any, or interest on this
Note.
Nothing contained in the foregoing paragraphs (a) or (b) shall prevent
the Company from making any payment on account of the principal or interest of
this Note, except during the existence of any of the conditions described in
such paragraphs (a) or (b).
Notices. All notices, requests, demands or other communications with respect to
this Agreement shall be in writing and shall be delivered personally or by
registered or certified mail, return receipt requested, or by nationally
recognized express courier service, charges prepaid, to the following addresses
(or such other addresses as the parties may specify from time to time in
accordance with this Section):
a) To Payee:
Alan McGeorge
109 Clove Avenue
Haverstraw, NY 10927
-3-
<PAGE>
With a copy to:
A person designated by Payee by notice hereunder, if so designated
(b) To the undersigned:
Community Medical Transport, Inc.
45 Morris Street
Yonkers, NY 10705
Attn: Dean Sloane, President
Fax: 914-963-7896
With a copy to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, NY 10017
Attn: Michael D. DiGiovanna, Esq.
Fax: 972-9487
Any such notice shall, when sent in accordance with the preceding sentence, be
deemed to have been given and received on the earliest of (i) the day personally
delivered, (ii) the fifth business day following the date deposited with the
United States Postal Service, or (iii) twenty-four hours after shipment by such
courier service.
The foregoing addresses may be changed at any time by notice given in the manner
herein provided.
The Undersigned waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence.
COMMUNITY MEDICAL TRANSPORT, INC.
By:______________________________________
[SEAL]
-4-
<PAGE>
CONVERSION ELECTION
The undersigned hereby irrevocably elects to exercise the
right set forth in the Note of Community Medical Transport, Inc. (the
"Company"), dated August 15 , 1996 to convert $_______ principal amount of the
Note to acquire __________ Shares thereby reducing the principal amount of the
Note by the amount so converted. The undersigned hereby makes the
representations, acknowledgments and covenants contained in the attached
Securities Annex.
Dated: Signature:___________________________________
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
SECURITIES ANNEX TO PROMISSORY NOTE
1. Definitions. Unless otherwise indicated by the context, defined terms in the
note shall have the same meaning herein. In addition, as used in this Article,
the following terms shall have the following respective meanings:
a. "Commission" shall mean the Securities and Exchange Commission, or
any other Federal agency at the time administering the Securities Act.
b. "The Company" shall refer to the Undersigned.
c. "Person" shall mean and include an individual, a corporation, a
partnership, a trust, an unincorporated organization and a government or any
department, agency or political subdivision thereof.
d. "Holder" shall mean McGeorge.
e. "Restricted Securities" shall mean the Common Stock.
f. "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
g. "Transfer" shall include any disposition of any Restricted
Securities or of any interest therein which would constitute a sale thereof
within the meaning of the Securities Act.
2. Restriction on Transfer. Holder represents and warrants that Holder is
acquiring the Restricted Securities for investment and not for distribution.
Holder acknowledges that the Restricted Securities may only be sold pursuant to
an effective registration statement under the Securities Act or an exemption
therefrom. The Restricted Securities and any shares of capital stock received in
respect thereof, whether by reason of a stock split or share reclassification
thereof, a stock dividend thereon or otherwise, shall not be transferable except
upon the conditions specified herein.
3. Restrictive Legends. Each certificate for the Restricted Securities and any
shares of capital stock received in respect thereof, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon or
otherwise, and each certificate for any such securities issued to subsequent
transferees of any such certificate shall contain a legend to the effect that:
"The Restricted Securities covered by a certificate
have not been registered under the Securities Act of 1933, as
amended, and may not be sold, offered for sale, assigned,
transferred or otherwise disposed of, unless registered
pursuant to the provisions of that Act
<PAGE>
or an opinion of counsel to The Company is obtained stating
that such disposition is in compliance with an available
exemption from such registration."
4. Registration.
The Company agrees to promptly file a "shelf" Registration
Statement under Rule 415 promulgated under the Act on Form S-3 (or such other
form as counsel to The Company may reasonably determine is appropriate) to
register under Section 5 of the Act all of the Restricted Shares. The Company
shall use its reasonable best efforts to cause such Registration Statement to
become effective, including responses to comment letters of the Commission.
5. Preparation and Filing. In connection with any Registration Statement to be
filed herein, The Company shall:
a. furnish to each seller of the Restricted Securities such number of
copies of such registration statement and of each such amendment or supplement
thereto (in each case including all exhibits), including a preliminary
prospectus, in conformity with the requirements of the Securities Act;
b. notify each seller of Restricted Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Securities
Act of the happening of any event as a result of which the Registration
Statement, the prospectus or any document incorporated therein by reference,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading and at the request of such seller, prepare and furnish to such
seller a post-effective amendment or supplement to the registration statement or
the related prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the purchasers
of such shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
6. Expenses. All expenses incurred by The Company in complying with its
obligations under Sections 4 and 5 hereof, including, without limitation, all
registration and filing fees, fees and expenses of complying with securities and
blue sky laws (not to exceed five (5) states), printing expenses and fees and
disbursements of counsel and of independent certified public accountants of The
Company shall be paid by The Company; provided, however, that all selling
commissions and stock transfer taxes applicable to the Restricted Securities
covered by the registration effected hereof, and Holder's counsel fees, shall be
borne by the seller or sellers thereof.
- 7 -
<PAGE>
7. Indemnification.
a. In the event of any registration of any Restricted Securities under
the Securities Act pursuant to this Section 11, The Company shall indemnify and
hold harmless the seller of such shares, each underwriter of such shares, if
any, each broker or any other person acting on behalf of such seller and each
other person, if any, who controls any of the foregoing persons, within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities (including reasonable attorneys' fees), joint or several, to which
any of the foregoing persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration statement
under which such Restricted Securities were registered under the Securities Act,
final prospectus contained therein, any document incorporated by reference
therein or any amendment or supplement thereto, or any document prepared and/or
furnished by The Company incident to the registration or qualification of any
Restricted Securities pursuant to Section 11.4 and 11.5 hereof, provided,
however, that The Company shall not be liable in any such case to the extent
that such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact made in said registration statement, said prospectus or said
amendment or supplement or any document incident to the registration or
qualification of any Restricted Securities pursuant to Section 11.4 and 11.5
hereof in reliance upon and in conformity with written information furnished to
The Company through an instrument duly executed by such seller or such
underwriter specifically for use in the preparation thereof or arises out of
information relating to the McGeorge Companies prior to the transaction covered
by the Purchase Agreement, and would have constituted a breach of any
representations herein with respect to the McGeorge Companies.
b. Holder agrees to indemnify and hold harmless (in the same manner and
to the same extent as set forth in the preceding paragraph (a) The Company, each
director of The Company, each officer of The Company who shall sign such
registration statement and any person who controls The Company within the
meaning of the Securities Act, with respect to any untrue statement or omission
of a material fact from such registration statement, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto,
if such untrue statement or omission of a material fact was made in reliance
upon and in conformity with written information furnished to The Company through
an instrument duly executed by such seller or such underwriter specifically for
use in the preparation of such registration statement, final prospectus or
amendment or supplement. The foregoing shall not affect the indemnification
obligations pursuant to the Purchase Agreement.
c. Promptly after receipt by an indemnified party of notice of the
commencement of any actions involving a claim referred to in paragraph (a) or
(b) of this Section 7, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the
- 8 -
<PAGE>
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided, however, that if any indemnified party shall have reasonably
concluded that there may be one or more legal defenses available to such
indemnified party which are differed from or additional to those available to
the indemnifying party, or that such claim or litigation involves or could have
an effect upon matters beyond the scope of the indemnity agreement provided in
this Section 7, the indemnifying party shall reimburse such indemnified party
for that portion of the fees and expenses of any counsel retained by the
indemnified party which are reasonably related to the matters covered by the
indemnity agreement provided in this Section 7.
d. The failure to notify an indemnifying party promptly of the
commencement of any such action, if materially prejudicial to the ability of the
indemnifying party to defend such action, shall relieve such indemnifying party
of any liability to the indemnified party under this Section 7, but the omission
so to notify the indemnifying party will not relieve the indemnifying party of
any liability that it may have to any indemnified party otherwise than under
this Section 7.
e. The indemnifying party shall not make any settlement of any claims
indemnified against hereunder without the written consent of the indemnified
party or parties, which consent shall not be unreasonably withheld.
f. If the indemnification provided for in Section 11.7 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
from the offering by The Company, the holders of Restricted Securities and any
underwriter; but if such allocation is not permitted by applicable law or if the
indemnified party failed to give the notice required under paragraph (c) above,
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportions as are appropriate to reflect not only
such relative benefits but also relative fault of The Company, the holders of
Restricted Securities and any underwriter in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The parties agree that the relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged untrue statement of a material
fact relates to information supplied by The Company, the holders of Restricted
Securities or underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
that it would not be just and equitable if contribution pursuant to such
agreement were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable consideration referred
to above in this paragraph (e) that the amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof), referred to above in this
- 9 -
<PAGE>
paragraph (e) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim; that the holders of Restricted Securities shall not be
required to contribute any amount in excess of the dollar amount by which the
proceeds to be received by such holders from the sale of their respective
Restricted Securities exceeds the amount of damages such holders of Restricted
Securities would have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the shares or securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission; and that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
8. Holder. Each Holder shall provide The Company with such documentation and
information as is generally customary.
- 10 -
