Healthcare Corporation of America entered into an agreement to acquire Selway Capital Acquisition Corporation (OTCBB: SWCA) in a reverse merger transaction.
For the purpose of the closing payment, an aggregate of 0.52 million shares and promissory notes with an aggregate face value of $0.75 million are being held in escrow for a period of 12 months following the merger in order to satisfy any indemnification obligations of the HCCA. Upon closing, Selway will change its name to HCCA. Either party may terminate the agreement in the event that the merger has not taken place by March 8, 2013.
The agreement provides that, for the two year period following the merger, Gary Sekulski, as the representative of the stockholders of HCCA, will designate three persons to the combined company's Board of Directors, Edmundo Gonzalez, as Selway's representative, will designate one person to the combined company's Board and such designees will unanimously designate three persons to the combined company's Board of Directors pursuant to the terms of a voting agreement to be entered into at closing. The Directors of Selway shall resign at the closing and the Directors of HCCA immediately prior to the effective time shall be the initial Directors of the surviving corporation and shall hold office and the Selway Capital Acquisition Corporation Board shall be composed of the persons described in the Selway Capital Acquisition Corporation voting agreement.
The transaction is subject to HCCA's shareholder approval, holders of less than 10% of HCCA's common stock having exercised their appraisal rights, dissenter's right limited, financial audit of Selway, third party, regulatory approval and execution of registration rights agreement. The transaction has been approved by Board of Directors of HCCA and unanimously approved by the Board of Directors of Selway Capital Acquisition. The transaction has been approved by stockholders of HCCA. The transaction is expected to close on March 8, 2013. Mitchell S. Nussbaum of Loeb & Loeb LLP and Durkin & Durkin, LLP acted as legal advisors for HCCA and Edwin L. Miller of Sullivan & Worcester LLP and Zysman, Aharoni, Gayer & Co. acted as legal advisors for Selway Capital Acquisition Corporation. Chardan Capital Markets LLC acted as financial advisor for Selway Acquisitions and will be paid 5% of all equity consideration issued in the transaction and promissory notes having an aggregate principal amount of 5% of all promissory notes issued in connection with the transaction.