EXHIBIT 8
TRANSWORLD HOME HEALTHCARE, INC.
00 XXXXXXXX XXXXXX
XXXXX, XXX XXXXXX 00000
January 13, 1997
Health Management, Inc.
0000-X Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to (i) the Agreement and Plan of Merger, dated as of
November 13, 1996, as amended by letter agreements, dated November 27, 1996,
December 12, 1996, December 23, 1996 and January 10, 1997, among Transworld Home
HealthCare, Inc. ("Transworld"), IMH Acquisition Corp. ("Newco"), and Health
Management, Inc. (the "Company") (as amended, the "Merger Agreement") and (ii)
the Stock Purchase Agreement, dated as of November 13, 1996, as amended by
letter agreements, dated November 27, 1996, December 12, 1996, December 23, 1996
and January 10, 1997, among Transworld and the Company (as amended, the "Stock
Purchase Agreement"). Terms defined in the Merger Agreement shall have their
defined meanings herein, unless otherwise defined herein.
The parties have agreed that in view of the Company's recent business
performance, it is appropriate to amend the Merger Agreement, among other
things, to reduce the Merger Consideration.
Accordingly, the parties hereto agree as follows:
1. Section 1.6(b) of the Merger Agreement is hereby amended by
changing the amount "$2.00" to "$1.50". The Company hereby represents and
warrants to Transworld and Newco that the Company has received the opinion of
NatWest that the Merger Consideration, as hereby amended, is fair, from a
financial point of view, to the stockholders of the Company.
2. Section 7.3(b) of the Merger Agreement is hereby amended in its
entirety and, as so amended, shall read as follows:
"The representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects at and as of the
Effective Time as if made at and as of such time, except for changes
contemplated by this Agreement and by the Disclosure Schedule, the Deferred
Schedules and the Supplemental Disclosure Schedule dated January 13, 1997 and
changes disclosed in the Company's Quarterly Report on Form 10-Q for the
Quarterly Period ended October 31, 1996 (it being agreed, however, that all
descriptions therein as to the effect of Olanzapine or other antipsychotic drugs
shall be deemed superseded and replaced by the description set forth in item A.
of Section 3.19 of the Supplemental Disclosure Schedule dated January 13, 1997),
and except to the extent that any such representation or warranty is made as of
a specified date, in which case such representation or warranty shall have been
true and correct in all material respects as of such date."
Health Management, Inc.
January 13, 1997
Page 2
3. Section 7.3(h) of the Merger Agreement is hereby amended in its
entirety and, as so amended, shall read as follows:
"At or prior to the Effective Time, the Amended Stipulation of Partial
Settlement of the consolidated class actions under the caption IN RE HEALTH
MANAGEMENT, INC. SECURITIES LITIGATION, Master File No. 96-CV-889 (ADS), dated
December 19, 1996, shall have been finally approved by the United States
District Court and such Court shall have entered a judgment (including a bar
order) substantially in the form of Exhibit B to such Amended Stipulation and
all applicable proceedings for review, appeals, and rights of appeal of such
judgment (other than a proceeding or order, or any appeal or petition for a writ
of CERTIORARI, pertaining solely to any plan of allocation and/or application
for attorneys' fees, costs, or expenses) shall have been exhausted or all
applicable waiting periods during which any appeal or other request for review
of such judgment (other than a proceeding or order, or any appeal or petition
for a writ of CERTIORARI, pertaining solely to any plan of allocation and/or
application for attorneys' fees, costs, or expenses) may be made shall have
expired without any appeal having been filed."
4. Section 7.3(i) of the Merger Agreement is hereby amended in its
entirety, and, as so amended, shall read as follows:
"At or prior to the Effective Time, the lenders (the "Banks") party to
the Credit Agreement, dated as of July 31, 1996, as amended (the "Credit
Agreement"), among Transworld, the Banks, and Bankers Trust Company, as agent,
shall have consented to the Merger, shall have agreed to amendments to the
Credit Agreement in order to permit the Merger and shall have loaned to
Transworld the funds necessary for Transworld to consummate the Merger, all in
the sole and absolute discretion of such Banks."
5. Transworld hereby waives the condition set forth in Section 7.3(l)
of the Merger Agreement insofar as such condition applies to the $3,000,000
Subordinated Note dated March 31, 1995 made by HMI Illinois, Inc. in favor of
Caremark Inc. which was purchased from Caremark Inc. by Hyperion Partners II
L.P.
6. Section 8.1(c) of the Merger Agreement is hereby amended in its
entirety and, as so amended, shall read as follows:
"This Agreement may be terminated by Transworld at any time prior to
the Effective Time, whether prior to or after approval hereof by the
stockholders of the Company, if the condition set forth in Section 7.3(i) of
this Agreement shall not have been satisfied by June 30, 1997."
7. Notwithstanding anything to the contrary in the Merger Agreement,
Transworld hereby consents to the settlement by the Company of (i) the
consolidated derivative action filed in the United States District Court for the
Eastern District of New York entitled In re Health Management, Inc.
Stockholders' Derivative Litigation, Master File No. 96 Civ. 1208 (TCP) and (ii)
the derivative lawsuit filed in the Supreme Court of the State of New York,
County of New York entitled Xxxxxx Xxxxx, et al. v. BDO Xxxxxxx, LLP, et al.,
Index No. 96-603064, for an aggregate payment by the Company not to exceed
$175,000 (it being understood that the Company will
Health Management, Inc.
January 13, 1997
Page 3
preserve all of its claims against the defendants named in such actions, other
than Messrs. Xxxxxxx and Xxxxxxxxxxx).
* * *
The parties acknowledge and agree that, notwithstanding anything
contained in the letter agreement dated January 10, 1997 among Transworld, Newco
and the Company, in no event shall Transworld be deemed to have waived the
condition to Transworld's obligation to close the Merger Agreement set forth in
Section 7.3(i) of the Merger Agreement, and such condition, as hereby amended in
Section 4 hereof, is in full force and effect.
Except to the extent amended hereby, the Merger Agreement and the
Stock Purchase Agreement shall remain in full force and effect and nothing
herein shall affect, or be deemed to be a waiver of, the other terms and
provisions of the Merger Agreement or the Stock Purchase Agreement, including
without limitation the other termination provisions thereof.
Health Management, Inc.
January 13, 1997
Page 4
If this letter correctly sets forth our understanding with respect to
the foregoing matters, kindly execute and return the enclosed copy of this
letter to evidence our binding agreement.
Very truly yours,
TRANSWORLD HOME HEALTHCARE, INC.
By /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Administrative Officer
IMH ACQUISITION CORP.
By /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Administrative Officer
AGREED TO:
HEALTH MANAGEMENT, INC.
By /s/ Wm. Xxxxx Xxxxx
----------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President and Chief
Executive Officer
