Exhibit 1
FIRST AMENDMENT TO THE ASSET PURCHASE AGREEMENT
This First Amendment to the Asset Purchase Agreement (the "AGREEMENT"), dated as
of November 24, 1997, is by and among UNIVERSAL SELF CARE, INC., a Delaware
corporation ("UNIVERSAL"), each of its wholly owned subsidiaries, CLINISHARE
DIABETES CENTERS, INC., a California corporation, PHYSICIANS SUPPORT SERVICES,
INC., a California corporation, USC-MICHIGAN, INC., a Michigan corporation, its
wholly owned subsidiary, PCS, INC. - WEST, a Michigan corporation, DIABETES SELF
CARE, INC., a Virginia corporation, USCI HEALTHCARE MANAGEMENT SOLUTIONS, INC.,
a Delaware corporation, and certain of the stockholders of Universal, XXXXX X.
XXXXXXXXX, XXXXXX X. XXXXXXXX, XXXXXXX X. XXXXXXX, and XXXX X. XXXXX
(individually, each a "STOCKHOLDER" and collectively, the "STOCKHOLDERS"), on
the one hand, and XXXXXX MEDICAL MANAGEMENT, LLC ("XXXXXX MANAGEMENT"), a
Georgia limited liability company, and its subsidiary XXXXXX MEDICAL ACQUISITION
COMPANY, a Georgia corporation ("XXXXXX ACQUISITION", and collectively with
Xxxxxx Management, "XXXXXX"), on the other hand. The parties named above entered
into an Asset Purchase Agreement on November 14, 1997 (the "Purchase
Agreement"). The Purchase Agreement contained an error with respect to the
calculation of the amount to be paid to Universal, using the revenue of the
"Purchased Companies" for calculation of the Post Closing Revenue, rather than
the revenue of Diabetes Self Care, Inc. only, as agreed by the parties. In order
to correct such mistake, and to make additional changes agreed to by the
parties, the parties hereby agree as follows:
1. Sections 2.2(a)(ii) and (iii) of the Asset Purchase Agreement are hereby
replaced in their entirety with the following:
(ii) an amount equal to 75% of the Post Closing Revenue (as defined in
Section 2.5(b)) or $17 million, whichever is less, plus
(iii) the sum (whether positive or negative) of (1) the cash shown on the
Closing Balance Sheets, less (2) the book value at Closing of the Xxxxxx Assumed
Liabilities required to be listed in a balance sheet, prepared in accordance
with GAAP, less (3) all liabilities of the Purchased Companies shown on the
Closing Balance Sheets, and less (4) the amount of the pledge by the Universal
Entities to the American Diabetes Association (the aggregate of (1)-(4) being
referred to herein as the "Closing Net Asset Value"); and
2. The second sentence of Section 2.3(b) is hereby replaced in its entirety
with the following:
The Note shall be reduced post closing as set forth in Section 2.5(b)
3. Section 2.5 (b) of the Asset Purchase Agreement is hereby replaced in its
entirety with the following:
(b) Upon determination of the Post Closing Revenue (as defined below),
the principal amount of the Note shall be adjusted to equal the lesser of (i)
$17 million or (ii) 75% of the Post Closing Revenue following the procedure set
forth in Section 2.7. "Post Closing Revenue" shall mean the gross revenues of
Diabetes Self Care, Inc. for calendar year 1998, less sales taxes, allowable
adjustments and other sales adjustments, all determined in accordance with GAAP.
In the event that Diabetes Self Care, Inc. is consolidated with other of
Xxxxxx'x businesses or companies, then the Post Closing Revenue shall exclude
revenue from then existing customers of such other businesses and companies, but
the revenue of customers of both Diabetes Self Care, Inc. and the consolidated
businesses or companies shall be included in Post Closing Revenue. By February
1, 1999, Xxxxxx shall deliver to Universal a statement showing the Post Closing
Revenue. Universal shall review such statement and shall, within 10 days of
receipt of such statement, notify Xxxxxx in writing of any objections thereto.
If Universal fails to give such notice by such time, Universal shall be deemed
to have agreed with the statement as delivered. If Universal gives such notice
by such time, Xxxxxx and Universal shall then have 10 business days after such
notice to agree on the Post Closing Revenue. If Xxxxxx and Universal are not
able to agree by such time, such statement will be submitted to Ernst & Young,
LLP, Atlanta, Georgia (or any successor accounting firm), who shall have
responsibility for determining the correct Post Closing Revenue, under GAAP,
within 30 days following such submission. Ernst & Young, LLP's (or any such
successor accounting firm's) determination shall be final and binding on Xxxxxx
and Universal. The costs of any such determination shall be shared equally by
Xxxxxx and Universal.
4. Section 2.5(c) of the Asset Purchase Agreement is hereby replaced in its
entirety with the following:
(c) Twelve months following the Closing, the principal amount of the
Note shall be reduced (following the procedure set forth in Section 2.7) in the
event and to the extent that the amount by which collections of the trade
accounts receivable shown on the Closing Balance Sheet shall be less than $6
million during that 12 month period.
5. Section 2.6(a) shall be replaced in its entirety with the word "Omitted".
6. Section 6.6 of Exhibit C to the Asset Purchase Agreement entitled
"Employment Agreement" shall have a new Section 6.6 as follows:
6.6 For a period of three years from the date hereof, Employee shall
not directly or indirectly work for Universal Self Care, Inc. or any of its
subsidiaries, affiliates or successors in interest to its business or
assets, whether as an officer, director, key employee, partner, consultant,
holder of an equity or debt investment, lender or in any other management,
sales, consulting or business development capacity, except in accordance
with the written authorization of HMS.
Each of the parties hereto has caused this Agreement to be duly executed on its
behalf as of the date indicated on the first page hereof.
XXXXXX:
XXXXXX MEDICAL MANAGEMENT, LLC XXXXXX MEDICAL ACQUISITION COMPANY
By:/s/ Xxxx X. Xxxxxx By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx Xxxx X. Xxxxxx
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Print Name Print Name
Pres./CEO/Mgr Part. Pres/CEO
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Print Title Print Title
UNIVERSAL:
UNIVERSAL SELF CARE, INC. CLINISHARE DIABETES CENTERS, INC.
By:/s/ Xxxxx X. Xxxxxxxxx By:/s/Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxxxxx
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Print Name Print Name
President President
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Print Title Print Title
PHYSICIANS SUPPORT SERVICES, INC. USC-MICHIGAN, INC.
Xxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxxxxx
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Print Name Print Name
President President
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Print Title Print Title
PCS, INC. - WEST DIABETES SELF CARE, INC.
By:/s/ Xxxxx X. Xxxxxxxxx By:/s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx Xxxxx X. Xxxxxxxxx
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Print Name Print Name
President President
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Print Title Print Title
USCI HEALTHCARE MANAGEMENT SOLUTIONS, INC.
By:/s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
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Print Name
President
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Print Title
STOCKHOLDERS:
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxxxxx
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XXXXX X. XXXXXXXXX XXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxx X. Xxxxx
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XXXXXXX X. XXXXXXX XXXX X. XXXXX
