Document:

Exhibit
10.3

 

Summary
Term Sheet

 

 

	
  Transaction:

  	
   

  	
  RevCare, Inc., a Nevada corporation (“RevCare”),
  and FBR Financial Services Partners, L.P. (“FBR”) are considering a
  transaction pursuant to which FBR would loan RevCare $1,000,000 (the “Financing”).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The consummation of the Financing, if any, is
  expected to be subject to the terms and conditions set forth herein as well
  as such other terms and conditions as are negotiated between the parties.

  
	
   

  	
   

  	
   

  
	
  Closing:

  	
   

  	
  It is anticipated that the closing of any Financing
  would occur on or about August 31, 2003 (the “Closing” or the “Closing
  Date”).

  
	
   

  	
   

  	
   

  
	
  Financing

  Terms:

  	
   

  	
  It is expected that the Financing would be made upon
  the following terms:

  
	
   

  	
   

  	
  •     RevCare
  would issue a secured convertible promissory note to FBR upon substantially
  the terms set forth in the form of note attached hereto as Exhibit A (the “Financing
  Note”).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •      RevCare’s
  obligations under the Financing Note would be secured by substantially all of
  its assets.  Such security interest
  would be subordinate to Bridge Bank, N.A., but senior to all of RevCare’s
  other lenders.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  due date of all other indebtedness owed by RevCare to FBR would be extended
  to two years from the date of the Closing, with the entire principal balance
  and accrued interest payable at maturity. 
  The parties anticipate that all such existing indebtedness would also
  be amended and restated into a single convertible promissory note, with all
  of the same terms and conditions as set forth in the Financing Note.  Further, all such indebtedness would be
  secured by a first priority lien in all of RevCare’s assets, subject only to
  the prior security interest in certain assets held by Bridge Bank, N.A.

  
	
   

  	
   

  	
   

  
	
  Closing

  Conditions:

  	
   

  	
  The Closing shall be subject to the following
  conditions (as well as any other customary conditions and the other
  conditions noted in this Summary Term Sheet):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  making of any necessary or advisable filings, and each party having obtained
  any necessary or advisable third party, governmental and regulatory  consents and approvals, including those
  necessary to grant FBR the security interest described above;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  consummation of the transactions generally described in RevCare’s current
  report on Form 8-K filed as of the date hereof with respect to RevCare’s
  proposed arrangements with Russell Mohrmann and his affiliated entities
  regarding RevCare’s business unit known as HELP, on terms satisfactory to

  

 

1

 

	
   

  	
   

  	
  FBR;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  execution and delivery of satisfactory legal documentation among Rob Perez,
  FBR and RevCare with respect to the possible future extension of additional
  indebtedness to RevCare without requiring Perez’s further consent or
  agreement to subordinate;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  requisite corporate approvals of RevCare and FBR; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  execution and delivery of legal documentation required for the Closing in
  form and substance satisfactory to the parties, including a Secured
  Convertible Promissory Note and a Security Agreement.

  

 

THIS SUMMARY TERM SHEET DOES NOT
REPRESENT A BINDING AGREEMENT BETWEEN THE PARTIES OR AN OFFER TO CREATE A
BINDING AGREEMENT.  A BINDING AGREEMENT
WILL BE CREATED ONLY IF THE PARTIES NEGOTIATE AND EXECUTE A DEFINITIVE SET OF
BINDING AGREEMENTS.

 

 

	
  Dated:  August
  14, 2003

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RevCare, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Manuel Occiano

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Manuel Occiano

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FBR Financial Services, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ George L. McCabe, Jr.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  George L. McCabe, Jr.

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  
						

 

2

 

EXHIBIT
A

 

THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR THE LAWS OF ANY STATE.  THIS NOTE AND
THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED ONLY IF REGISTERED AND
QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES
LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL, WHICH OPINION IS
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY, TO THE EFFECT THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED.

 

SECURED CONVERTIBLE PROMISSORY NOTE

 

	
  $1,000,000

  	
   

  	
  , 2003

  

 

For value received, RevCare,
Inc., a Nevada corporation (the “Company”), the principal offices of which
are located at 5400 Orange Avenue, Suite 200, Cypress, California 90630, for
value received hereby promises to pay to FBR Financial Services Partners, L.P.
(the “Holder”),
the principal sum of One Million
Dollars ($1,000,000), plus interest thereon from the date hereof until paid on
the terms and conditions set forth herein; provided, however,
that in the event this Note is converted into Stock (as defined below) as provided herein, any obligation
of the Company with respect to
payment of such amount shall be terminated.  Payment for all amounts
due hereunder shall be made by mail to the address of the Holder.

 

The following is a statement of the rights of the
Holder and the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees:

 

1.             Maturity
Date.  The unpaid principal balance
of this Note and all accrued but unpaid interest shall be due and payable on
the earlier of (i)
                               ,
2005 or (ii) when declared due and payable by the Holder upon the
occurrence of an Event of Default (as defined below) (the occurrence of any
event under either subclause (i) or (ii) shall constitute the “Maturity
Date”), unless this Note is earlier converted or paid in accordance
with the terms hereof.

 

2.             Interest.  This Note shall bear interest at the rate of
the prime rate of interest charged by the Company’s lender plus four percent
(4%) per annum.  The interest shall be
paid on the Maturity Date.

 

3.             Security
Interest.  Payment of this Note is
secured by a security interest in certain collateral, pursuant to the terms and
conditions of that certain Security Agreement entered into among the Company
and the Holder concurrently with the execution of this Note (the “Security
Agreement”).

 

A-1

 

4.             Events
of Default.  If any of the following
events specified in this Section 4 shall occur (herein individually referred to
as an “Event
of Default”), the Holder may, so long as such condition exists,
declare the entire outstanding principal and any accrued and unpaid interest
thereon immediately due and payable, by notice in writing to the Company:

 

(a)           The
institution by the Company of proceedings to be adjudicated as bankrupt or
insolvent, or the consent by it to the institution of bankruptcy or insolvency
proceedings against it or the filing by it of a petition or answer or consent
seeking reorganization or release under the federal Bankruptcy Act, or any
other similar federal or state bankruptcy or insolvency law, or the consent by
it to the filing of any such petition or the appointment of a receiver,
liquidator, assignee, trustee or other similar official of the Company, or of
any substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the taking of corporate action by the Company in
furtherance of any such action; or

 

(b)           If,
within thirty (30) days after the commencement of an action against the Company
(and service of process in connection therewith on the Company) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action
shall not have been resolved in favor of the Company or all orders or
proceedings thereunder affecting the operations or the business of the Company
stayed, or if the stay of any such order or proceeding shall thereafter be set
aside, or if, within thirty (30) days after the appointment without the consent
or acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company,
such appointment shall not have been vacated; or

 

(c)           If the Company fails to pay (i) any interest or
principal when due and payable hereunder, or (ii) any obligations other than
interest and principal payable hereunder within five (5) days of the date
written notice of demand for payment is received;

 

(d)           Upon the occurrence of an event of default under the
Security Agreement, should such default not be cured within five (5) days of
the date written notice thereof is given to the Company;

 

(e)           Upon the occurrence of an event of default as defined in
any material agreement or instrument to which the Company or its subsidiaries
is bound, beyond any period of grace;

 

(f)            Upon the incurrence of any indebtedness by the Company or
any of its subsidiaries other than (i) to pay off indebtedness owed by the
Company its then existing lenders, NA or (ii) indebtedness not to exceed $
                         in
any single transaction or series of related transactions or $
                     in
the aggregate; or

 

(g)           any
sale, merger or similar transaction or series of related transactions in which
the holders of the outstanding voting equity securities of the Company
immediately prior to such transaction or series of related transactions own
less than a majority of the outstanding voting equity securities of the Company
(or the successor entity) upon the closing of such transaction or series of
related transactions, or

 

(h)           the sale of all or substantially all of the Company’s
assets.

 

A-2

 

5.             Prepayment.  Subject to the earlier conversion of this
Note pursuant to Section 7, all or any portion of the unpaid principal balance
outstanding under this Note may be prepaid at any time during the term of this
Note at the option of the Company.  In
the event Company elects to prepay this Note, notice of such election shall be
given to the Holder not less than sixty (60) days prior to the date of
prepayment.  Each such notice shall
state the amount of principal to be paid in cash, the date on which such
prepayment will occur and the place at which Holder is to surrender this Note
to the Company.  Such notice by the
Company shall be delivered to the Holder at the address last shown on the
records of the Company for the Holder or given by the Holder to the Company for
the purpose of notice.  In the event only
a portion of this Note is prepaid, the Company shall, at the time of prepayment
and receipt of this Note, deliver to the Holder a new Note evidencing the
remaining unpaid principal balance of this Note, which Note shall in all other
respects be identical with this Note.

 

6.             Use of Proceeds.   The
proceeds of this Note shall be used solely to reduce the collections
payable owed to the Company’s California-based delinquent debt
collection clients.

 

7.             Optional
Conversion.  All or any portion of
the unpaid principal balance and any accrued but unpaid interest outstanding
under this Note may be converted into fully paid and nonassessable shares of
capital stock of the
Company (the “Stock”) concurrently
upon or at any time following a
Financing (as defined below) at the option of Holder.  The Stock shall have all of the rights,
preferences and privileges of the capital stock issued in the Financing.  The number of shares of Stock into which
this Note is to be converted shall be determined by dividing said unpaid
principal balance and all accrued but unpaid interest by the Conversion Price.  The “Conversion Price” shall be determined at such time as
the Company closes an equity financing 
of Stock or debt convertible into Stock with gross proceeds to the Company of least $500,000 (the “Financing”).  The Conversion Price shall be the price per share at which
the Stock is sold in the Financing or the price at which the debt converts into
Stock.

 

8.             Conversion
Procedure.

 

8.1           Notice
of Conversion.  If Holder desires to
convert the Note, Holder shall provide written notice to the Company at RevCare, Inc., 5400 Orange Avenue, Suite 200, Cypress, California
90630, Attention:  Manuel Occiano, Chief
Executive Officer, notifying the Company
of the requested conversion to be effected. 
Within ten (10) days of receipt of such notice, Company shall respond to
Holder’s request in writing, specifying the number of shares of Stock to be
issued upon conversion, the amount of accrued interest to be paid in cash, the
date on which such conversion will occur and calling upon such Holder to
surrender to the Company, in the
manner and at the place designated, this Note. 
Such response by the
Company shall be delivered to Holder at the address last shown on the records
of the Company for Holder or given
by Holder to the Company for the
purpose of notice.

 

8.2           Mechanics
and Effect of Conversion.  No
fractional shares of Stock shall be issued upon conversion of this Note.  In lieu of the Company issuing any fractional
shares to Holder upon the conversion of this Note, the Company shall pay to Holder the amount of outstanding principal
or interest that is not so converted. 
Upon the conversion of this Note, Holder shall surrender this Note, duly
endorsed, at the principal office of the Company.  Upon

 

A-3

 

conversion of this
Note, the Company
shall be forever released from all its obligations and liabilities under this
Note.

 

8.3           Delivery
of Stock Certificates.  As promptly
as practicable after the conversion of this Note, the Company at its expense will issue
and deliver to Holder a certificate or certificates for the number of full
shares of Stock issuable upon such conversion (bearing such legends as are
required by applicable state and federal securities laws in the opinion of
counsel to the Company), together
with any other securities and property to which Holder is entitled upon such
conversion under the terms of this Note, including a check payable to Holder
for any cash amounts payable for any accrued but unpaid interest and fractional
shares as described above.  In the event
only a portion of this Note is converted, the Company shall, at the time of delivery of the stock certificate
or certificates, deliver to Holder a new Note evidencing the remaining unpaid
principal balance of this Note, which Note shall in all other respects be
identical with this Note.

 

8.4           Identical
Terms.  Subject to the Holder’s
execution of any necessary investment documents executed by the other investors
in the Financing, any shares of Stock received by the Holder pursuant to the
conversion of this Note shall have the same rights, preferences and privileges
granted to the other investors in the Financing and under such investment
documents.

 

9.             Investment
Representations.  The Holder hereby
makes the representations, warranties and covenants set forth on the
Representation Statement attached hereto as Attachment A, as of the date hereof
and as of the date of any conversion of this Note, as though such
representations, warranties and covenants were fully set forth herein.

 

10.           Assignment.  Subject to the restrictions on transfer
described in Section 12 below, the rights and obligations of the Company and the Holder shall be
binding upon and benefit the successors, assigns, heirs, administrators and
transferees of the parties.

 

11.           Amendments;
Waivers.  Any term of this Note may
be amended or waived with the written consent of the Company and the
Holder.  Any amendment or waiver
effected in accordance with this Section 11 shall be binding upon the Holder, each future Holder and the
Company.  No waivers of, or exceptions
to, any term, condition or provision of this Note, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision and shall not be valid unless
in writing.

 

12.           Transfers.  This Note may not be transferred or assigned
in whole or in part without compliance with all applicable federal and state
securities laws by the transferor and the transferee (including the delivery of
investment representation letters). 
Subject to compliance with such applicable federal and state securities
laws, title to this Note may be transferred by endorsement and delivery in the
same manner as a negotiable instrument transferable by endorsement and
delivery.

 

13.           Attorneys’
Fees; Waivers.   The Company agrees
to pay the Holder’s reasonable costs incurred in collecting and enforcing this
Note, including reasonable attorneys’ fees. 
The Company hereby waives demand, notice, presentment, protest and
notice of dishonor.

 

A-4

 

14.           Governing
Law.  This Agreement shall be
governed by and construed under the laws of the State of California
(irrespective of its conflict of laws principles).

 

15.           Subordination.  This Note and the rights of the Holder
hereunder and under the Security and Intercreditor Agreement are subordinate to
the rights of Bridge Bank, N.A. pursuant to the terms of a Subordination
Agreement (the “Subordination Agreement”). 
Nothing contained in this Note shall directly or indirectly modify the
provisions of the Subordination Agreement in any manner which might terminate
or impair the subordination of the Subordinated Debt (as defined in the
Subordination Agreement) or the subordination of the security interest or lien
that the Holder may have in any property of Company or its subsidiaries.

 

IN WITNESS WHEREOF, the Company has caused this Note to be issued in
Cypress, California as of the date set forth above.

 

	
   

  	
  REVCARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

DO NOT DESTROY THIS ORIGINAL NOTE: When paid, said original
Note must be surrendered to the Company
for cancellation and retention.

 

A-5

 

ATTACHMENT A

REPRESENTATION STATEMENT

 

The undersigned Holder represents, covenants and agrees as follows:

 

1.             Purchase
for Own Account.  The Secured
Convertible Promissory Note issued by RevCare, Inc., a Delaware corporation
(the “Company”)
to be acquired by Holder (the “Note”) and the shares of capital stock of
the Company issued upon conversion of the Note (the “Shares”) (collectively, the “Securities”)
will be acquired for investment for Holder’s own account, not as a nominee or
agent, and not with a view to the public resale or distribution thereof within
the meaning of the Securities Act of 1933, as amended, (the “1933 Act”),
and Holder has no present intention of selling, granting any participation in,
or otherwise distributing the same. 
Holder also represents that Holder has not been formed for the specific
purpose of acquiring the Securities.

 

2.             Disclosure
of Information.  Holder believes it
has received or has had full access to all the information it considers
necessary or appropriate to make an informed investment decision with respect
to the Securities to be received by Holder under the Note.  Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and conditions
of the investment in the Securities and to obtain additional information (to
the extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished
to Holder or to which Holder had access.

 

3.             Investment Experience.  Holder understands that the investment in
the Securities involves substantial risk. 
Holder has experience as an investor in securities and acknowledges that
Holder is able to fend for itself, can bear the economic risk of Holder’s
investment in the Securities and has such knowledge and experience in financial
or business matters that Holder is capable of evaluating the merits and risks
of this investment in the Securities and protecting its own interests in
connection with this investment.

 

4.             Accredited Investor Status.  Holder is an “accredited investor” within the meaning of Regulation D
promulgated under the 1933 Act.

 

5.             Restricted Securities.  Holder understands that the Securities will
be characterized as “restricted
securities” under the 1933 Act inasmuch as they are being acquired from
the Company in a transaction not involving a public offering and that, under
the 1933 Act and applicable regulations thereunder, such securities may be
resold without registration under the 1933 Act only in certain limited
circumstances.  In this connection,
Holder represents that Holder is familiar with Rule 144 promulgated by the
Securities and Exchange Commission, as presently in effect, and understands the
resale limitations imposed thereby and by the 1933 Act.  Holder understands that the Company is under
no obligation to register any of the Securities.

 

6.             Legends.  It is understood that the certificates
evidencing the Securities will bear the legends set forth below:

 

(a)           THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR

 

A-6

 

UNDER THE SECURITIES LAWS
OF ANY STATE.  THESE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM.  THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.

 

(b)           Any
legend required by the laws of the State of California, including any legend
required by the California Department of Corporations and Sections 417 and 418
of the California Corporations Code or any other state securities laws.

 

The legend set forth in (a) above shall be removed by
the Company from any certificate evidencing the Securities upon delivery to the
Company of an opinion by counsel, reasonably satisfactory to the Company, that
a registration statement under the 1933 Act is at that time in effect with
respect to the legended security or that such security can be freely
transferred in a public sale without such a registration statement being in
effect; provided, however, that no opinion of counsel shall be
required for such a transfer in compliance with Rule 144.

 

7.             “Market Stand-Off” Agreement.  If requested by the Company and an
underwriter of shares of the common stock of the Company, Holder hereby agrees
not to sell or otherwise transfer or dispose of any shares of the common stock
(or other securities) of the Company then owned by Holder (other than those
included in the registration) during the one hundred eighty (180) day period
(or such shorter period as is permitted or requested by the underwriter)
following the effective date of a registration statement of the Company filed
under the 1933 Act.  In order to enforce
the above covenant, the Company shall have the right to place restrictive
legends on the certificates representing the registrable securities subject to
this Section 7 and to impose stop-transfer instructions with respect to the
shares (or securities) subject to the foregoing restriction.

 

 

	
   

  	
  HOLDER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Date)

  	
  (Signature)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Print Name)

  	
   

  
				

 

A-7Exhibit-10.4

 

 

Summary Term Sheet

 

	
  Transaction:

  	
   

  	
  RevCare, Inc., a Nevada
  corporation (“RevCare”), and Russell Mohrmann and his affiliated entities
  (collectively, “Mohrmann”) are considering a transaction
  pursuant to which Mohrmann would receive the assets used in RevCare’s
  business unit known as HELP, or the staffing division, as set forth in
  Schedule 1.1 of that certain Purchase Agreement dated May 30, 2000 among
  RevCare’s subsidiary, Mohrmann and other parties thereto (the “Original
  Purchase Agreement”), excluding any cash or cash equivalents
  (collectively, the “Business”) (the “Transaction”).   Mohrmann
  shall not acquire or become liable for any liability of RevCare.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The consummation of the
  Transaction, if any, is expected to be subject to the terms and conditions
  set forth herein as well as such other terms and conditions as are negotiated
  between the parties.

  
	
   

  	
   

  	
   

  
	
  Closing:

  	
   

  	
  It is anticipated that
  the closing of any Transaction would occur on or about August 31, 2003 (the “Closing”
  or the “Closing
  Date”).

  
	
   

  	
   

  	
   

  
	
  Consideration:

  	
   

  	
  As elements of any
  Transaction, it is expected that:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  amended and restated promissory notes issued by RevCare in favor of Mohrmann
  dated January 8, 2003 (collectively, the Mohrmann Notes”) would be reduced by an
  aggregate amount of $1,900,000.  The
  allocation of the reduction amongst the Mohrmann Notes shall be determined by
  Mohrmann, but the application shall be first to outstanding principal and
  then to outstanding interest.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     Mohrmann
  agrees to negotiate a satisfactory lease for approximately 1,000 square feet
  in the RevCare headquarters building in Orange CA.  Said lease will be for 2 years from the Closing Date and shall
  be priced at $1.35 per foot.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     Sufficient
  working capital will be provided to Mohrmann utilizing existing RevCare
  financing facilities; for a period not to exceed 6 months, such provision to
  be made through the renegotiation of RevCare’s receivables line of credit
  with Bridge Bank, N.A.  However
  Mohrmann will utilize his best efforts to obtain a working capital line for
  HELP prior to the Closing Date.

  
	
   

  	
   

  	
   

  
	
  Agreements regarding Indebtedness

  	
   

  	
  RevCare issued a
  promissory note in favor of Mohrmann and Manuel Occiano with respect to a
  line of credit and the current principal amount owed under said line is
  approximately $300,000 (the “Mohrmann/Occiano Note”).  Beginning no later than August 1, 2003,
  RevCare shall begin making payments of $25,000 of principal and interest per
  month on the Mohrmann/Occiano Note, until such note is paid in full.

  

 

1

 

	
   

  	
   

  	
  The remaining
  outstanding principal balance and accrued but unpaid interest under the
  Mohrmann Notes of approximately $500,000 shall be restructured as follows:
  (i) Mohrmann will completely subordinate its right to payment to the
  indebtedness RevCare owes to its lenders and release its security interest in
  the collateral securing such debt (which includes a secured loan of
  $1,000,000 which FBR Financial Services Partners, L.P. has agreed to make to
  RevCare upon the closing of the Transaction, subject to certain conditions)
  and (ii) following payoff of the Mohrmann/Occiano Note, but not later than
  September 1, 2004, payments will commence on the Mohrmann Notes, consisting
  of $25,000 of principal and interest per month until paid in full.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Upon the sale or
  transfer of substantially all of the assets or stock of RevCare, RevCare will
  be required to pay the Mohrmann Notes and the Mohrmann/Occiano Note in full.

  
	
   

  	
   

  	
   

  
	
  Closing Conditions:

  	
   

  	
  The Closing shall be
  subject to the following conditions (as well as any other customary
  conditions and other conditions noted in this Summary Term Sheet):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  making of any necessary or advisable filings, and each party having obtained
  any necessary or advisable third party, governmental and regulatory consents
  and approvals, including those necessary to transfer the assets free of any
  encumbrances;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  parties shall negotiate a mutually acceptable announcement letter to clients
  regarding the Transaction;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     The
  parties shall negotiate a mutually acceptable agreement to allow HELP to
  utilize email and telephone capabilities of RevCare for a period not to
  exceed 6 months from the Closing Date based upon RevCare’s out of pocket
  costs in incurring the services with its service provider;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     Russ
  Mohrmann shall be removed as a named party for any corporate credit cards,
  licenses, bonding requirements, office leases, etc.;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     Completion
  of legal, financial and business diligence review by Mohrmann as to the
  Business;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     Requisite
  corporate approvals of RevCare and Mohrmann;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     Execution
  and delivery of satisfactory legal documentation required for the Closing in
  form and substance satisfactory to the parties, including an Asset Purchase
  Agreement in substantially the form of the Original Purchase Agreement and
  Noncompetition and Nonsolicitation Agreements that would restrict RevCare, on
  the one hand, and Mohrmann, on the other hand, from competing with each
  other’s business within the geographic area in which such

  

 

2

 

	
   

  	
   

  	
  businesses are
  currently conducted and soliciting each other’s customers with respect
  thereto for a period of 2 years; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •     All
  accrued benefits payable to Staffing employees will be paid up to the
  employees under the standard separation policy used in the separations that
  have occurred at RevCare over the last 90 days.

  
	
   

  	
   

  	
   

  
	
  Resignation:

  	
   

  	
  At the Closing,
  Mohrmann will resign from RevCare and its subsidiaries in all capacities.

  
	
   

  	
   

  	
   

  
	
  Fees, Expenses:

  	
   

  	
  Each party shall bear
  its own expenses in connection with any Transaction, including, without
  limitation, all broker’s and finder’s fees.

  

 

THIS SUMMARY TERM SHEET DOES NOT
REPRESENT A BINDING AGREEMENT BETWEEN THE PARTIES OR AN OFFER TO CREATE A
BINDING AGREEMENT.  A BINDING AGREEMENT
WILL BE CREATED ONLY IF THE PARTIES NEGOTIATE AND EXECUTE A DEFINITIVE SET OF
BINDING AGREEMENTS.

 

 

	
   

  	
  RevCare, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MANUEL OCCIANO

  	
   

  
	
   

  	
  Name:

  	
  Manuel Occiano

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ RUSSELL MOHRMANN

  	
   

  
	
   

  	
  Russell Mohrmann

  

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]