UNITED STATES
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 (Date of earliest event reported) February 12, 1997
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OAK TREE MEDICAL SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-16206 02-0401674
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2500 Westchester Avenue, Suite 306, Purchase, New York 10577
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 253-9494
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 12, 1997, Oak Tree Medical Systems, Inc. (the "Company")
completed the sale of the assets and operations of its clinics in Jacksonville,
Florida and Orange Park, Florida to MB Data Corporation (the "Purchaser"). The
Jacksonville assets were held by the Company's ACORN CORF I, Inc. subsidiary,
and the Orange Park assets were held by the Company's Riverside CORF, Inc.
subsidiary. The assets included the physical assets located at the clinic
facilities, the Comprehensive Outpatient Rehabilitation Facility (CORF) license
relating to such facilities, the right to use the names formerly used by the
Company in conducting business at these facilities and certain accounts
receivable. In addition, the Company sold to the Purchaser the outstanding
shares of its subsidiary Oak Tree Receivables, Inc., a Florida corporation ("OT
Receivables"). OT Receivables holds receivables of the two North Florida clinics
sold by the Company, and is a party to a receivables funding facility in the
original amount of $1,900,000 (the "Receivables Facility").
The purchase price for the assets and the shares included $100,000 in
cash, a note in the amount of $100,000 and the Purchaser's assumption of $75,000
in accounts payable. In consideration of the consent of the lender under the
Receivables Facility to the sale, the Company transferred to the lender the
$100,000 cash consideration and $700,000 in face amount of receivables of the
disposed operations which had been pledged to the lender. The Company may be
entitiled to receive a portion of the amounts collected on such receivables, to
the extent collections exceed the amount owed to the lender. As a result of the
sale, the Company and its affiliates have ceased to have any liability under the
Receivables Facility.
ITEM 5. OTHER EVENTS
The former medical director of the North Florida clinics disposed of by
the Company caused to be returned to the Company 400,000 shares of the Company's
common stock which were owned by an entity affiliated with the former medical
director. The shares had been issued in connection with the Company's
acquisition in 1995 of the disposed clinics and were returned in connection with
the former medical director's termination of his employment with the Company. In
addition to the return of the shares, the Company has also been relieved of any
obligation to deliver additional shares in respect of the 1995 acquisition and
any other obligations it may have had to the former medical director.
The Company intends to write-off as of the end of its third fiscal
quarter its investment in Accord Futronics, Inc. ("Accord"), which has been
valued on the Company's balance sheet at $5,000,000. The Company received its
interest in Accord in June 1995 in exchange for the transfer to Accord of the
shares of a subsidiary of the Company holding 50,000 tons of gold ore with an
appraised value of $5,000,000. The Company has determined to write-down the
Accord interest because of the absence of current financial information for
Accord and management's present inability to determine, after due investigation
and inquiry, whether any value can be realized on the interest. The Company
intends to continue to pursue possibilites of realizing value on the Accord
interest, but there can be no assurance that it will be successful in doing so.
Page 2 of 4 Pages
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information
To be filed by amendment.
(c) Exhibits
10.1 Purchase Agreement dated February 6, 1997, among ACORN CORF I, Inc.,
Riverside CORF, Inc., Oak Tree Medical Systems, Inc. and MB Data
Corporation
99.1 Press Release, dated February 12, 1997
Page 3 of 4 Pages
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
By: /s/ William Kedersha
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Name: William Kedersha
Title: Chief Executive Officer
Date: February 27, 1997
Page 4 of 4 Pages
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement"), dated to be effective as of
February 6, 1997, is among ACORN CORF I, Inc., a Nevada corporation ("Acorn"),
Riverside CORF, Inc., a Florida corporation ("Riverside"), Oak Tree Medical
Systems Inc., a Delaware corporation that owns all of the outstanding capital
stock of Acorn ("Oak Tree") and MB Data Corporation, a Delaware corporation
("Purchaser"),
W I T N E S S E T H :
WHEREAS, Oak Tree is the owner of all of the outstanding common stock
of Oak Tree Receivables, Inc., a Florida corporation ("Receivables"); and
WHEREAS, Oak Tree desires to sell, and Purchaser desires to purchase,
all of the issued and outstanding common stock of Receivables; and
WHEREAS, Acorn and Riverside desire to sell, and Purchaser desires to
purchase, certain of the assets of Acorn and Riverside;
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants herein contained, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
ARTICLE I
Purchase and Sale
Section I.1. Purchase and Sale of Assets. Subject to and upon the terms
and conditions contained herein, at the Closing (as defined below), Acorn and
Riverside shall sell, transfer, assign, convey and deliver to Purchaser, free
and clear of all security interests, liens, claims and encumbrances except as
contemplated herein, and Purchaser shall purchase, accept and acquire from Acorn
and Riverside, the physical assets located at Acorn and Riverside's facilities
at Orange Park, Florida and Jacksonville, Florida and the storage facilities at
Jacksonville (except for four computers and a power box located at the
Jacksonville facility as mutually agreed to among the parties), the CORF license
relating to the Orange Park and Jacksonville facilities, the right to use the
names Riverside CORF and 1st Coast Rehabilitation and the accounts receivable
listed on Schedule 1.1 hereto (collectively, the "Assets"). The physical assets
are generally but not accurately listed on Schedule 1.1.
The parties agree and acknowledge that Purchaser shall acquire no
interest in any of Acorn's St. Augustine operations (except for certain accounts
receivable specifically listed on Schedule 1.1)
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or, except as specifically provided herein, in any of Oak Tree's other
affiliates, or any of their directors, officers or employees.
Section I.2. Purchase and Sale of Shares. Subject to and upon the terms
and conditions contained herein, at the Closing, Oak Tree shall sell, transfer,
assign, convey and deliver to Purchaser, free and clear of all security
interests, liens, claims and encumbrances, and Purchaser shall purchase, accept
and acquire from Oak Tree, all of the issued and outstanding capital stock of
Receivables (the "Shares").
Section I.3. Purchase Price. The total price for the Assets and the
Shares, in the aggregate, shall be $200,000, payable $100,000 concurrent with
the execution of this Agreement as set forth in Section 1.5 hereof, $50,000 on
the 60th day following the date hereof, and $50,000 on the 90th day following
the date hereof (the "Purchase Price").
Section I.4. Assumption of Liabilities. Purchaser shall assume the
foregoing liabilities of Acorn and Riverside, and except for such foregoing
liabilities (the "Assumed Liabilities"), Purchaser shall not assume or agree to
pay, perform or discharge any liabilities or obligations of Acorn or Riverside,
whether accrued, absolute, contingent or otherwise:
(a) the obligations under the accounts payable of Acorn or Receivables,
as the case may be, specifically listed on Schedule 1.4 hereof; and
(b) all obligations under the leases related to 1950 Miller Street in
Orange Park, Florida and 9143 Philips Highway in Jacksonville, Florida
(collectively, the "Leases").
Section I.5. SAM Fund Loan. Receivables is party to that certain Health
Care Receivables Loan and Security Agreement dated as of September 16, 1996 (the
"Loan Agreement") among Receivables, SAM FUND I, L.P. ("Lender") and SAM PM,
L.P. ("Program Manager"). Lender and Program Manager have agreed to consent to
the transfer of Receivables to Purchaser pursuant to the terms of that certain
Consent Agreement dated February 5, 1997 among Purchaser, Lender, Receivables,
Oak Tree and Program Manager (the "Consent Agreement"). Acorn, Riverside and Oak
Tree agree that the $100,000 portion of the Purchase Price otherwise payable to
them at Closing shall instead be paid by Purchaser to Receivables concurrent
with the Closing, which sum shall then be paid to Lender as provided in the
Consent Agreement.
Section I.6. Employment Matters. Purchaser shall enter into an
employment agreement with Dr. Ronald W. Dennie, M.D. ("Dennie"), which
employment agreement shall be in a form mutually agreeable to Purchaser and
Dennie. Oak Tree, Riverside, Acorn and Dennie agree to terminate any existing
employment or other agreement between Dennie on the one hand and Oak Tree, Acorn
or Riverside on the other hand, and any such employment agreement shall be null
and void and of no further force and effect following execution of this
Agreement except for any obligations of confidentiality set forth in any such
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employment agreement, and Dennie on the one hand and Oak Tree, Acorn and
Riverside on the other hand hereby release each other from all claims against
the other with respect thereto. In addition, as partial inducement to Oak Tree
to enter into this Agreement and to terminate such employment agreements,
concurrently with the execution of this Agreement Dennie is hereby causing to be
returned to Oak Tree the 400,000 shares of restricted stock of Oak Tree acquired
by him in connection with Oak Tree's acquisition of 1st Coast Physical Medicine,
Inc. and affiliated companies. Dennie hereby represents and warrants (i) that
the Ronald W. Dennie Family Limited Partnership (the "Partnership") is the
beneficial and record owner of good and marketable title to the shares of Oak
Tree stock (ii) that the Partnership is transferring such shares to Oak Tree
free and clear of all security interests, liens, adverse claims, encumbrances,
equities, proxies, options or shareholders' agreements and (iii) that Dennie
Holdings, L.C. is the sole General Partner of the Partnership and that Dennie is
authorized to approve and execute all powers of attorney and stock powers on
behalf of the General Partner and the Partnership.
Section I.7. Additional Payments. With respect to accounts receivable
owned by Receivables (the "Collateral Receivables"), which will be rejected by
Lender and returned to Purchaser, and which total, at the Closing, approximately
$700,000 in face amount (the "Rejected Receivables"), Purchaser shall pay to Oak
Tree an amount equal to 40% of all amounts actually collected with respect to
such Rejected Receivables; provided that Purchaser shall have no obligation to
make any payment with respect to any Rejected Receivable that Purchaser
repledges to Lender or any successor thereto as security pursuant to the Loan
Agreement or any successor agreement thereto.
ARTICLE II
Representations and Warranties of Oak Tree
Oak Tree represents and warrants that the following are true and
correct as of the date hereof:
Section II.1. Organization and Good Standing; Qualification. Each of
Acorn, Riverside, Receivables and Oak Tree (collectively, the "Corporations") is
a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, with all requisite corporate power and
authority to carry on the business in which it is engaged, to own the properties
it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Each of Acorn, Riverside and Receivables is
duly qualified to do business as a foreign corporation in each jurisdiction
where it is required to be so qualified, except where failure to be so qualified
will not have a material adverse effect on such Corporation.
Section II.2. Authorization and Validity. The execution, delivery and
performance by each Corporation of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby,
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have been duly authorized by each Corporation. This Agreement and each other
agreement contemplated hereby have been duly executed and delivered by each
Corporation, as the case may be, and constitute legal, valid and binding
obligations of each Corporation, as the case may be, enforceable against such
party in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
Section II.3. No Violation. Other than the Loan Agreement and any
contracts being assumed hereunder, neither the execution, delivery or
performance of this Agreement or the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default under, the charter documents of any
Corporation or any agreement, contract, indenture or other instrument under
which any Corporation is bound or to which the Shares on any of the Assets are
subject, or result in the creation or imposition of any security interest, lien,
charge or encumbrance upon the Shares or any of the Assets or (ii) violate or
conflict with any judgment, decree, order, statute, rule or regulation of any
court or any public governmental or regulatory agency or body having
jurisdiction over the Shares or the Assets.
Section II.4. Consents. Except for Lender, no consent, authorization,
approval, permit or license of, or filing with, any governmental or public body
or authority, any lender or lessor or any other person or entity is required to
authorize, or is required in connection with, the execution, delivery and
performance of this Agreement or the agreements contemplated hereby on the part
of any Corporation.
Section II.5. Taxes.
(a) Filing of Tax Returns. Each Corporation has duly and timely filed
with the appropriate governmental agencies all income, excise, corporate,
franchise, property, sales, use, payroll, tax returns (including information
returns) and reports required to be filed by the United States or any state or
any political subdivision thereof or any foreign jurisdiction. All such tax
returns or reports are complete and accurate and properly reflect the taxes of
such Corporation for the periods covered thereby.
(b) Payment of Taxes. Each Corporation has paid or accrued all taxes,
penalties and interest that have become due with respect to any returns that it
has filed and any assessments of which it is aware. No Corporation is delinquent
in the payment of any tax, assessment or governmental charge.
Section II.6. Compliance with Laws. The Corporations have complied with
all laws, regulations and licensing requirements and have filed with the proper
authorities all necessary statements and reports. There are no existing
violations by the Corporations of any federal, state or local law or regulation
that could affect the property or business of the Corporations.
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Section II.7. Litigation. There are no legal actions or administrative
proceedings or investigations instituted, or the best knowledge of Oak Tree
threatened, against or adversely affecting, or that could adversely affect
Receivables, the Shares, any of the Assets, or the business of Receivables,
Acorn or Riverside.
Section II.8. Accounts Receivable. Schedule 2.8 sets forth the accounts
receivable of Acorn, Riverside and Receivables for services performed as of the
date on which this Agreement is executed and the payments and rights to receive
payments related thereto, which is a complete and accurate listing of all
accounts receivable of such date. All such accounts receivable have arisen from
bona fide transactions in the ordinary course of business and represent payments
due from patients who have received services from Seller (other than receivables
from offsite representation). Oak Tree makes no representation and warranty with
respect to the collectability of such accounts receivable.
Section II.9. Capitalization. The authorized capital stock of
Receivables consists of (i) 1,000 shares of common stock, par value $0.01 per
share, of which 1,000 shares are issued and outstanding, and no shares of such
capital stock are held in the treasury of Receivables. All of issued and
outstanding Shares are duly authorized, validly issued, fully paid and
nonassessable, and are free and clear of all security interests, liens, claims
and encumbrances. There exist no options, warrants, subscriptions or other
rights to purchase, or securities convertible into or exchangeable for, the
capital stock of Receivables. Neither Receivables nor Oak Tree is party to or
bound by, nor do they have any knowledge of, any agreement, instrument,
arrangement, contract, obligation, commitment or understanding of any character,
whether written or oral, express or implied, relating to the sale, assignment,
encumbrance, conveyance, transfer or delivery of any capital stock of
Receivables. No shares of capital stock of Receivables have been issued or
disposed of in violation of the preemptive rights of any of Receivables'
shareholders. All accrued dividends on the capital stock of Receivables, whether
or not declared, have been paid in full.
Section II.10. Ownership of the Stock. Oak Tree owns, beneficially and
of record, good and marketable title to the Shares, which constitutes all of the
issued and outstanding capital stock of Receivables, free and clear of all
security interests, liens, adverse claims, encumbrances, equities, proxies,
options or shareholders' agreements. At the Closing, Oak Tree will convey to
Purchaser good and marketable title to all of the issued and outstanding capital
stock of Receivables, free and clear of any security interests, liens, adverse
claims, encumbrances, equities, proxies, options, shareholders' agreements or
restrictions.
Section II.11. Assets. Each of Riverside and Acorn owns good and
marketable title to all of the Assets (other than the Collateral Receivables),
which are being sold to Purchaser free and clear of all security interests,
liens, claims and encumbrances, except for liens granted with respect to
equipment leases. Receivables owns good and marketable title to the Collateral
Receivables, free and clear of all security interests, liens, claims and
encumbrances, other than those granted pursuant to the Loan Agreement.
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ARTICLE III
Representations and Warranties of Purchaser
Section III.1. Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation, with all requisite corporate power and
authority to carry on the business in which it is engaged, to own the properties
it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
Section III.2. Authority and Validity. The execution, delivery and
performance by Purchaser of this Agreement and the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by Purchaser. This Agreement and each other
agreement contemplated hereby have been duly executed and delivered by Purchaser
and constitute legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
Section III.3. No Violation. Neither the execution, delivery or
performance of this Agreement or the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions and
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of Purchaser or any agreement, indenture or other instrument under which
Purchaser is bound or (ii) violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over Purchaser or the properties
or assets of Purchaser.
ARTICLE IV
Closing Deliveries
Section IV.1. Deliveries of Acorn and Riverside. The closing of the
transactions contemplated herein (the "Closing") shall take place simultaneously
with execution of this Agreement. Acorn and Riverside are hereby delivering to
Purchaser the following:
(a) a bill of sale conveying the Assets that are personal property to
Purchaser;
(b) an assignment of the Leases, assigning the interest of Acorn or
Riverside therein, as appropriate, to Purchaser;
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(c) an Assignment and Assumption Agreement (the "Assignment and
Assumption Agreement") with respect to all rights and obligations of Acorn and
Riverside, as appropriate, under the assigned contracts and Purchaser's
assumption of the Assumed Liabilities.
Section IV.2. Deliveries of Oak Tree. Oak Tree is hereby delivering to
Purchaser the following:
(a) a certificate representing all of the issued and outstanding shares
of Common Stock of Receivables duly endorsed for transfer;
(b) certificates from the Secretary of State of the State of Florida
(or other appropriate party) certifying that Receivables is a corporation duly
existing and in good standing in the State of Florida;
(c) certificates or other evidence reasonably satisfactory to Purchaser
that each of Acorn and Receivables has paid all payroll, withholding and sales
taxes when due; and
(d) resignations of all directors and officers of Receivables.
Section IV.3. Deliveries of Purchaser. Purchaser is hereby delivering
the Assignment and Assumption Agreement to Acorn and Riverside.
Section IV.4. Deliveries of Dennie. Dennie is hereby delivering
certificates representing the shares of common stock of Oak Tree to be returned
to Oak Tree pursuant to Section 1.6 above.
ARTICLE V
Post Closing Matters
Section V.1. Further Instruments of Transfer; Further Payments.
Following the Closing, at the request of any party, the parties shall deliver
any further instruments of transfer and take all reasonable action as may be
necessary or appropriate to vest in Purchaser good and marketable title to the
Assets or to assign the Assumed Liabilities or the Shares to Purchaser. To the
extent that any Corporation has received or receives payment on any account
receivable purchased by Purchaser hereunder, such Corporation shall promptly
forward such payments to Purchaser at the address set forth below.
Section V.2. Corporate Names. Following the Closing, Oak Tree and Acorn
shall take such actions as shall be necessary to change the corporate names of
1st Coast Rehabilitation, Inc. and Riverside CORF, Inc. to names that are
dissimilar from their existing corporate names.
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ARTICLE VI
Remedies
Section VI.1. Indemnification by Oak Tree, Riverside and Acorn. Subject
to the terms and conditions of this Article, Oak Tree agrees to indemnify,
defend and hold Purchaser and its directors, officers, agents, attorneys and
affiliates harmless from and against all losses, claims, obligations, demands,
assessments, penalties, liabilities, costs, damages, attorneys' fees and
expenses (collectively,"Damages"), asserted against or incurred by such
indemnitees by reason of or resulting from:
(a) a breach of any representation, warranty or covenant of Acorn,
Riverside or Oak Tree contained herein, or in any exhibit, schedule, or
certificate delivered hereunder, or in any agreement executed in connection with
the transactions contemplated hereby;
(b) the operations of Acorn, Riverside or Receivables, as the case may
be, prior to and through the Closing and not specifically disclosed herein or on
the Schedules attached hereto;
(c) any failure to comply with any applicable bulk transfer laws; or
(d) any other liability related to Acorn, Riverside or Oak Tree that
has not been expressly assumed by Purchaser.
Notwithstanding the foregoing, the obligations of Oak Tree hereunder
shall not exceed $100,000 in the aggregate.
Subject to the terms and conditions of this Article, each of Riverside
and Acorn (except for Acorn's St. Augustine operations), jointly and severally,
shall indemnify, defend and hold Purchaser and its directors, officers, agents,
attorneys and affiliates harmless from and against all Damages asserted against
or incurred by such indemnitees by reason of or resulting from any claim by
Medicare or other payor for repayment with respect to past mispayments or
misrepresentations in connection with matters billed prior to the Closing Date;
regardless of whether such claim is in the form of an offset against current
payments or otherwise.
Section VI.2. Indemnification by Purchaser. Subject to the terms and
conditions of this Article, Purchaser hereby agrees to indemnify, defend and
hold each of Acorn, Riverside and Oak Tree and any of their respective
directors, officers, agents, attorneys and affiliates harmless from and against
all Damages asserted against or incurred by any of such indemnitees by reason of
or resulting from:
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(a) a breach by Purchaser of any representation, warranty or covenant
of Purchaser contained herein or in any exhibit, schedule or certificate
delivered hereunder, or in any agreement executed in connection with the
transactions contemplated hereby;
(b) the use of any of the Assets after the Closing; or
(c) the failure of Purchaser to pay, perform and discharge when due any
of the Assumed Liabilities.
Section VI.3. Conditions of Indemnification. The respective obligations
and liabilities of Oak Tree, Acorn and Riverside, on the one hand, and Purchaser
on the other hand (the "indemnifying party") to the other (the "party to be
indemnified") under Sections 6.1 and 6.2 with respect to claims resulting from
the assertion of liability by third parties shall be subject to the following
terms and conditions:
(a) Within 20 days (or such earlier time as might be required to avoid
prejudicing the indemnifying party's position) after receipt of notice of
commencement of any action evidenced by service of process or other legal
pleading, the party to be indemnified shall give the indemnifying party written
notice thereof together with a copy of such claim, process or other legal
pleading, and the indemnifying party shall have the right to undertake the
defense thereof by representatives of its own choosing and at its own expense;
provided that the party to be indemnified may participate in the defense with
counsel of its own choice, the fees and expenses of which counsel shall be paid
by the party to be indemnified unless (i) the indemnifying party has agreed to
pay such fees and expenses, (ii) the indemnifying party has failed to assume the
defense of such action or (iii) the named parties to any such action (including
any impleaded parties) include both the indemnifying party and the party to be
indemnified and the party to be indemnified has been advised by counsel that
there may be one or more legal defenses available to it that are different from
or additional to those available to the indemnifying party (in which case, if
the party to be indemnified informs the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the party to be indemnified, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the party to be indemnified, which firm shall be designated in writing
by the party to be indemnified).
(b) In the event that the indemnifying party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the 10th day preceding
the day on which an answer or other pleading must be served in order to prevent
judgment by default in favor of the person asserting such claim), does not elect
to defend against such claim, the party to be indemnified will (upon further
notice to the indemnifying party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the indemnifying party
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and at the indemnifying party's expense, subject to the right of the
indemnifying party to assume the defense of such claims at any time prior to
settlement, compromise or final determination thereof.
(c) Notwithstanding the foregoing, the indemnifying party shall not
settle any claim without the consent of the party to be indemnified unless such
settlement involves only the payment of money and the claimant provides to the
party to be indemnified a release from all liability in respect of such claim.
If the settlement of the claim involves more than the payment of money, the
indemnifying party shall not settle the claim without the prior consent of the
party to be indemnified.
(d) The party to be indemnified and the indemnifying party will each
cooperate with all reasonable requests of the other.
Section VI.4. Waiver. No waiver by any party of any default or breach
by another party of any representation, warranty, covenant or condition
contained in this Agreement, any exhibit or any document, instrument or
certificate contemplated hereby shall be deemed to be a waiver of any subsequent
default or breach by such party of the same or any other representation,
warranty, covenant or condition. No act, delay, omission or course of dealing on
the part of any party in exercising any right, power or remedy under this
Agreement or at law or in equity shall operate as a waiver thereof or otherwise
prejudice any of such party's rights, powers and remedies. All remedies, whether
at law or in equity, shall be cumulative and the election of any one or more
shall not constitute a waiver of the right to pursue other available remedies.
Section VI.5. Remedies Not Exclusive. The remedies provided in this
Article shall not be exclusive of any other rights or remedies available to one
party against the other, either at law or in equity.
Section VI.6. Offset. Any and all amounts owing or to be paid by
Purchaser to Sellers, hereunder or otherwise, shall be subject to offset and
reduction pro tanto by any amounts that may be owing at any time by Oak Tree to
Purchaser in respect of any obligation under Section 6.1 hereof or any failure
or breach of any representation, warranty or covenant of Oak Tree under or in
connection with this Agreement or any other agreement with Purchaser or any
transaction contemplated hereby or thereby, as reasonably determined by
Purchaser. If Purchaser determines that such offset is appropriate, notice shall
be given to Oak Tree of such determination at least 10 days prior to the due
date of the payment to be reduced. If the conditions upon which the reduction is
based are cured by Oak Tree prior to such due date, as determined by Purchaser,
the amount of such payment shall not be so cured. In the event Oak Tree
disagrees with respect to the amount to be offset, Purchaser shall, at the time
the payment in question is due, place the disputed funds in escrow with a
mutually acceptable escrow agent. The parties shall then work to resolve the
dispute and, if they are unable to so do after 45 days, the dispute shall be
referred to a mutually acceptable arbitrator, whose decision shall be final
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and binding on the parties. Purchaser shall pay interest at the rate of prime
plus 2% on all overdue amounts owing or to be paid by Purchaser to Oak Tree or
to any other Corporation, from the date due to the date of actual payment, it
being understood that amounts placed in escrow shall not be considered overdue.
Section VI.7. Costs, Expenses and Legal Fees. Each party hereto shall
bear its own costs and expenses (including attorneys' fees), except that each
party hereto agrees to pay the costs and expenses (including reasonable
attorneys' fees and expenses) incurred by the other parties in successfully (i)
enforcing any of the terms of this Agreement or (ii) proving that another party
breached any of the terms of this Agreement.
ARTICLE VII
Miscellaneous
Section VII.1. Amendment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto.
Section VII.2. Assignment. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto, except by Purchaser
to an affiliate of Purchaser; provided that the affiliate must sign a copy of
this Agreement as Purchaser and Purchaser shall unconditionally guaranty all of
the affiliate's obligations under this Agreement.
Section VII.3. Parties In Interest; No Third Party Beneficiaries.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
Section VII.4. Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof, and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
Section VII.5. Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
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Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
Section VII.6. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants contained herein shall survive the
Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of any party pursuant to this Agreement
shall be deemed to have been representations and warranties by such party, and,
notwithstanding any provision in this Agreement to the contrary, shall survive
the Closing for a period of two years.
Section VII.7. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING
CONFLICT OF LAWS) OF THE STATE OF FLORIDA.
Section VII.8. Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.
Section VII.9. Gender and Number. When the context requires, the gender
of all words used herein shall include the masculine, feminine and neuter and
the number of all words shall include the singular and plural.
Section VII.10. Reference to Agreement. Use of the words "herein",
"hereof", "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
Section VII.11. Notice. Any notice or communication hereunder or in any
agreement entered into in connection with the transactions contemplated hereby
must be in writing and given by depositing the same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person.
Such notice shall be deemed received on the date on which it is hand-delivered
or on the third business day following the date on which it is so mailed. For
purposes of notice, the addresses of the parties shall be:
If to Purchaser:
Oak Tree Medical Services, Inc.
2 Gannett Drive, Suite 215
White Plains, NY 10604
Attention: William Kedersha
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If to Seller:
MB Software Corporation
2225 E. Randol Mill Rd.
Suite 323
Arlington, Texas 76011
with a copy to:
Brad L. Whitlock
Jackson & Walker, L.L.P.
901 Main Street
Suite 6000
Dallas, Texas 75202
Any party may change its address for notice by written notice given to the other
parties in accordance with this Section.
Section VII.12. Service of Process. Service of any and all process that
may be served on any party hereto in any suit, action or proceeding arising out
of this Agreement may be made in the manner and to the address set forth in
Section 0 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
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Section VII.13. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
MB DATA CORPORATION
By /s/
----------------------------
Its: President
---------------------------
OAK TREE MEDICAL SYSTEMS, INC.
By /s/ William Kedersha
----------------------------
Its: CEO
---------------------------
RIVERSIDE CORF, INC.
By /s/ William Kedersha
---------------------------
Its: VP
--------------------------
ACORN CORF, INC.
By /s/ William Kedersha
---------------------------
Its: VP
---------------------------
/s/ Ronald W. Dennie
---------------------------
Ronald W. Dennie, M.D.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT
WILLIAM KEDERSHA, CEO
OAK TREE MEDICAL SYSTEMS, INC.
(914) 694-2500
White Plains, New York, February 12, 1997--In keeping with management's decision
to focus on its core physical therapy business, Oak Tree Medical Systems, Inc.
(MOAK:BB) announces the successful completion of the sale of its two clinics in
Jacksonville and Orange Park, Florida which were primarily physiatry medical
practices.
In a statement today, William Kedersha, Chief Executive Officer of Oak Tree
Medical Systems, Inc. emphasized that the company will now be in a stronger
position to concentrate on its physical therapy businesses, while pursuing its
strategy of expansion in the Northeast.
Oak Tree Medical Systems, Inc. owns or operates ten physical therapy clinics,
including two clinics managed under hospital contracts, primarily in the New
York metropolitan area.
