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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission file number 0-16206
OAK TREE MEDICAL SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 02-0401674
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2797 OCEAN PARKWAY
BROOKLYN, NEW YORK 11235
(Address of principal executive offices)
(718) 332-1919
(Issuer's telephone number, including area code)
-----------------------
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
--- ---
Indicate number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date:
Common Stock, $.01 par value 5,395,037 shares
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Class Outstanding at January 13, 1999
Transitional Small Business Disclosure Format (check one):
YES NO X
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<PAGE>
Oak Tree Medical Systems, Inc. and Subsidiaries
Index
Part I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet as of November 30, 1998 and May 31,
1998
Consolidated Statement of Operations for the three and six months
ended November 30, 1998 and 1997
Consolidated Statement of Stockholders' Equity for the six
months ended November 30, 1998
Consolidated Statement of Cash Flows for the six months ended
November 30, 1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II - OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
-1-
<PAGE>
Oak Tree Medical Systems, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
November 30, 1998 May 31, 1998
----------------- ------------
<S> <C>
ASSETS
Current Assets
Cash $ 370,808 $ 455,391
Patient care receivables, less allowance for contractual
allowances and doubtful accounts of $992,000 and
$642,000 as of November 30, 1998 and May 31, 1998 352,071 788,121
Other current assets 26,388 107,403
- --------------------------------------------------------------------------------------------
Total Current Assets 749,267 1,350,915
Other Assets
Investment in gold ore and affiliated company 1,994,214 1,994,214
Fixed assets 13,163 502,339
Other assets 66,389 97,740
Goodwill 103,448 226,888
Deferred acquisition costs 118,447 98,804
============================================================================================
TOTAL ASSETS $3,044,928 $4,270,900
============================================================================================
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
Oak Tree Medical Systems, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
November 30, 1998 May 31, 1998
----------------- ------------
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $ 334,769
Accounts payable and accrued expenses $ 778,579 844,726
Current portion of long-term debt 66,856
Current portion of capitalized lease obligations 130,572
- --------------------------------------------------------------------------------------------
Total Current Liabilities 778,579 1,376,923
Long-term debt 208,201
Capitalized lease obligations 458,414
Accounts payable 60,883 61,551
- --------------------------------------------------------------------------------------------
Total Liabilities 839,462 2,105,089
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Stockholders' Equity
Common stock, $.01 par value, 25,000,000 shares
authorized, 5,257,703 and 4,657,753 shares issued
and outstanding as of November 30, 1998 and
May 31, 1998, respectively 52,577 46,577
Additional paid-in-capital 12,789,222 12,140,841
Deficit (10,483,889) (9,784,203)
Less: prepaid consulting and stock
subscription receivable (152,444) (237,404)
- --------------------------------------------------------------------------------------------
Total Stockholders' Equity 2,205,466 2,165,811
- --------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,044,928 $4,270,900
============================================================================================
See notes to consolidated financial statements.
-3-
<PAGE>
Oak Tree Medical Systems, Inc. and Subsidiaries
Consolidated Statement of Operations
(Unaudited)
For the Three Months For the Six Months
Ended November 30, Ended November 30,
============================================================================================
1998 1997 1998 1997
---- ---- ---- ----
REVENUE
Net patient services $ 225,657 $ 701,636 $ 702,683 $1,167,783
- --------------------------------------------------------------------------------------------
EXPENSES
Costs of patient services 122,928 574,522 375,420 1,008,512
Selling, general and administrative 476,512 592,193 957,825 941,681
Depreciation and Amortization 27,525 68,691 68,685 130,215
Interest 374 91,663 14,303 116,519
(Gain) loss on sale 156,406 (13,864)
- --------------------------------------------------------------------------------------------
TOTAL EXPENSES 783,745 1,327,069 1,402,369 2,196,927
- --------------------------------------------------------------------------------------------
NET LOSS ($558,088) ($625,433) ($699,686) ($1,029,144)
============================================================================================
NET LOSS PER COMMON SHARE ($0.11) ($0.17) ($0.14) ($0.28)
============================================================================================
Weighted average number of common and
common equivalent shares outstanding 5,032,003 3,714,588 4,899,737 3,621,894
============================================================================================
See notes to consolidated financial statements.
-4-
<PAGE>
Oak Tree Medical Systems, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
For the Six Months Ended November 30, 1998
(Unaudited)
Prepaid Consulting
and Stock Total
Common Stock Additional Subscription Stockholders'
Shares Amount Paid-in-Capital Deficit Receivable Equity
============================================================================================================
BALANCE MAY 31, 1998 4,657,753 $46,577 $12,140,841 ($9,784,203) ($237,404) $2,165,811
Sale of common stock (net
expenses of $725,619) 599,950 6,000 648,381 654,381
Amortization of prepaid
consulting 84,960 84,960
Net Loss (699,686) (699,686)
============================================================================================================
BALANCE November 30, 1998 5,257,703 $52,577 $12,789,222 ($10,483,889) ($152,444) $2,205,466
============================================================================================================
See notes to consolidated financial statements.
-5-
<PAGE>
Oak Tree Medical Systems, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
(Unaudited)
For the Six Months
Ended November 30,
=========================
1998 1997
---- ----
OPERATING ACTIVITIES
Net Loss ($699,686) ($1,029,144)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 153,595 288,765
Gain on sale (13,864)
Common stock issued for services 14,094
Provision for doubtful accounts 50,000
Increase (decrease) in cash from
Patient care receivables 86,050 (148,420)
Other current assets 81,015 99,732
Other assets 29,788
Accounts payable and accrued payable (57,595) 178,037
- ----------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES: (370,697) (596,936)
- ----------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition (net of notes payable of $300,000) (100,000)
Purchases of fixed assets (net of capital
lease obligations of $171,335 in 1998) (73,216)
Proceeds from sale of fixed assets 171,335
Deferred acquisition costs (19,643)
Refund (Payments) on security deposits 3,180 (7,140)
- ----------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES: (16,463) (9,021)
- ----------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from notes payable and long-term debt 225,000
Payments of notes payable and long-term debt (301,625) (137,348)
Payments of capital lease obligations (50,179) (27,910)
Proceeds from issuance of common stock 654,381 733,507
Payments of note payable -- bank (441,750)
Proceeds from notes payable -- account receivable financing 982,341
Payments of notes payable -- account receivable financing (340,734)
- ----------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 302,577 993,106
- ----------------------------------------------------------------------------------------
NET INCREASE ( DECREASE) IN CASH ( 84,583) 387,149
CASH - Beginning of Period 455,391 125,919
- ----------------------------------------------------------------------------------------
CASH - End of Period $370,808 $513,068
=========================================================================================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest Expense Paid $34,580 $72,857
=========================================================================================
NONCASH TRANSACTIONS:
During the six months ended November 30, 1998, as a result of contractual
provisions, the Company reduced a note payable by $85,000 and further reduced
goodwill by $85,000. Also, in connection with the July 1998 sale of two physical
therapy centers and the November 1998 sales of a third, certain capital lease
obligations of the Company totaling of $365,000 and $194,000, respectively, were
either paid off by the company with proceeds or assumed by the purchaser.
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
OAK TREE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. OPERATIONS
Oak Tree Medical Systems, Inc., a Delaware corporation, and its
subsidiaries (the "Company") are engaged in the business of operating and
managing physical therapy care centers. The Company currently operates one
facility in New York City.
2. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements include all the accounts of Oak
Tree Medical Systems, Inc., and its wholly-owned subsidiaries and Oak Tree
Medical Practice, P.C., a professional practice entity over which the Company
exercises significant influence and control. All material intercompany balances
and transactions have been eliminated.
The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all the information and footnotes required by generally accepted accounting
principles for consolidated financial statements. In the opinion of management,
all adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation have been included. Operating results for the six months ended
November 30, 1998 are not necessarily indicative of the results that may be
expected for the fiscal year ending May 31, 1999. These statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
May 31, 1998.
3. SALE OF PHYSICAL THERAPY CENTERS
On July 16, 1998, the Company sold substantially all the equipment and
operations of two physical therapy centers in exchange for $375,000, payable in
cash at closing. Proceeds of $365,000 were used to repay certain lease
obligations. The Company also incurred a brokerage fee of 10% of the sales price
which remains partially unpaid and is included in accounts payable and accrued
expenses.
On November 2, 1998, the Company sold all the assets (excluding accounts
receivable) of its Lower Manhattan, New York physical therapy facility for
$250,000 in cash plus the assumption of outstanding equipment lease obligations
of $194,000. Proceeds of $200,000 were used to repay a note payable to the
previous owner of the facility.
4. CONTINGENCY
Insurance
Following the completion of the sales of the Company's physical therapy
care centers in Florida in April 1997, the Company has self-insured for medical
malpractice liabilities. Through January 12, 1999, the Company has not been
notified of any claims for malpractice.
5. SUBSEQUENT EVENTS
Subsequent to November 30, 1998, the Company issued 48,708 shares in
exchange for consulting and legal services valued at $108,000.
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is engaged in the business of operating and managing
physical therapy care centers. The Company currently operates one facility in
New York City.
In July 1997, the Company acquired a physical therapy care center in the
downtown area of New York City. In November 1998, the Company sold all the
assets and operations of this facility due to insufficient cash flows.
In July 1998, the Company sold all of the assets and operations of its
facilities located in Flushing and Upper Manhattan, New York due to insufficient
cash flows from these facilities.
In September 1997, the Company entered into a letter of intent,
subsequently amended in December 1998, to acquire approximately 30 medical
practices and MRI facilities in the greater New York metropolitan area, subject
to raising the capital necessary for the acquisitions and other conditions.
RESULTS OF OPERATIONS
Six and Three months ended November 30, 1998 compared to Six and Three months
ended November 30, 1997
Patient revenues decreased by 39.8% to $702,683 from $1,167,783 in the
six months ended November 30, 1998 (the "Fiscal 1999 Six Month Period") compared
with the six months ended November 30, 1997 (the "Fiscal 1998 Six Month
Period"). Revenues decreased by 67.8% to $225,657 from $701,636 in the three
months ended November 30, 1998 (the "Fiscal 1999 2nd Quarter") compared with the
three months ended November 30, 1997 (the "Fiscal 1998 2nd Quarter"). This
reduction in revenue was attributable to the Company's disposition of three New
York City facilities during the first and second quarters of Fiscal 1999.
Total expenses decreased by 36.2% to $1,402,369 from $2,196,927 for the
Fiscal 1999 Six Month Period compared with the Fiscal 1998 Six Month Period.
Total expenses decreased by 40.9% to $783,745 from $1,327,069 for the Fiscal
1999 2nd Quarter compared with the Fiscal 1998 2nd Quarter. This reduction in
expenses was attributable to the Company's disposition of three New York City
facilities during the first and second quarters of Fiscal 1999. The loss on sale
for the Fiscal 1999 2nd Quarter was related to the sale of one facility in
November 1998. Total expenses as a percent of revenues increased from 188% to
200% for the Fiscal 1999 Six Month Period compared with the Fiscal 1998 Six
Month Period (or, exclusive of the gain on sale, to 202%). The increase in
expenses in relation to revenues was attributable to the Company's legal and
accounting costs not decreasing despite the disposition of the three New York
City facilities during the Fiscal 1999 Six Month Period. The legal and
accounting costs were attributable to the transactional activities of the
Company, the settlement of certain litigation matters and the preparation of
reports filed with the Securities and Exchange Commission.
The above factors contributed to a net loss of $699,686 for the Fiscal
1999 Six Month Period as compared to the net loss of $1,029,144 for the Fiscal
1998 Six Month Period, and a net loss of $558,088 for the Fiscal 1999 2nd
Quarter as compared to the net loss of $625,433 for the Fiscal 1998 2nd Quarter.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its capital requirements from operating cash
flow, loans against its accounts receivable, sales of equity securities and the
issuance of equity securities in exchange for assets acquired and services
rendered. During the six months ended November 30, 1998, the Company has been
and is continuing
-8-
<PAGE>
to attract new investment capital, which the Company believes will be necessary
to sustain its ongoing operations and to facilitate growth. The Company
continues to explore opportunities to raise private equity capital and, in
conjunction therewith, to provide credit support for the Company's operations
and potential acquisitions. Although the Company has in the past been and
continues to be in discussions with potential investors, there can be no
assurance that its efforts to raise any substantial amount of private capital
will be successful. Any substantial private equity investment in the Company
will result in voting dilution of the Company's existing stockholders and could
also result in economic dilution. If the Company is unable to obtain new
capital, the Company will be unable to carry out its strategy of growth through
acquisitions and the long-term ability of the Company to continue its operations
may be in doubt.
A significant portion of the revenues of the Company are for services
that are paid by third party payors, including insurance companies and Medicare.
As is typical in the health care industry, the Company receives payment after
services are rendered. Such payment is based, in part, on established cost
reimbursement principles and is subject to audit and retroactive adjustment.
While waiting for payment from third party payors, the Company is required to
fund its expenses from internal and, to the extent available, external financing
sources.
In September 1997, the Company entered into a financing agreement to
borrow on all of its existing and future patient care receivables for the next
two years. Under the agreement, the financing company will advance to the
Company 75% of under 180-day, eligible receivables (as defined). At the initial
closing, the Company paid an origination fee of $17,457, and, upon each advance,
the Company will pay a discount equal to prime plus 5% per annum. The Company
has assigned and will continue to assign substantially all of these receivables
to the finance company. The Company used the initial proceeds to pay off the
bank term loans.
In May 1993, the Company acquired 50,000 tons of gold ore from Nevada
Minerals Corporation in exchange for the issuance of 1,350,000 shares of the
Company's common stock, par value $.01 per share ("Common Stock"). The ore was
appraised as having a value of $5,000,000. The Company subsequently formed a
wholly-owned subsidiary, Aurum Mining Corporation, with the gold ore as its only
asset. In June 1995, the Company exchanged the stock of Aurum for 6,000,000
shares of common stock of Accord Futronics Corp ("Accord"). The Company had the
right to receive a royalty of 12.5% of the net mining proceeds from the
processing of the ore transferred to Accord. In November 1997, the Company
returned the 6,000,000 shares of common stock of Accord in exchange for 100% of
Aurum, because Accord had not commenced and did not anticipate commencing mining
operations and the Company desired to take action to realize the value of the
gold ore.
As of May 31, 1998, the Company (i) had been unsuccessful in its
attempts to sell the gold ore and (ii) did not have the capability or the
resources to commence the mining of the gold ore. For those reasons, and due to
the absence of current financial and other information for Accord, the Company
wrote down the value of its investment in the gold ore by $3,000,000 (from
$4,994,214 to $1,994,214). The Company intends to continue its attempt to sell
the gold ore and anticipates a sale in the near future, although there can be no
assurance that it will be successful in doing so.
On January 29, 1998 and during the six months ended November 30, 1998,
the Company closed offshore placements of 1,500,000 and 599,950 shares of Common
Stock, respectively, for aggregate purchase prices of $3,324,025 and $1,380,000,
respectively. The Company incurred expenses of $1,600,868 and $654,381 in
connection with such placements, resulting in net proceeds of $1,723,157 and
$725,619, respectively.
On July 16, 1998, the Company sold substantially all the equipment and
operations of two physical therapy centers in exchange for $375,000 in cash.
Proceeds of $365,000 were used to repay certain lease obligations. The Company
also incurred a brokerage fee of 10% of the sales price, which remains partially
unpaid and is included in accounts payable and accrued expenses.
-9-
<PAGE>
On November 2, 1998, the Company sold all the assets (excluding accounts
receivable) of its Lower Manhattan, New York physical therapy facility for
$250,000 in cash plus the assumption of outstanding equipment lease obligations
of $194,000. Proceeds of $200,000 were used to repay a note payable to the
previous owner of the facility.
In December 1998, the Company entered into an agreement to sell its
Lower Manhattan accounts receivable for 50% of their value. Accordingly, the
Company recorded a provision for doubtful accounts of $300,000 which is included
on the "(gain) loss on sale" caption in Fiscal 1999 2nd Quarter.
Working capital decreased from $26,008 as of May 31, 1998 to ($29,312)
as of November 30, 1998, as a result of the provision for doubtful accounts,
weaker cash flow from the operating facilities partially offset by the sale of
Common Stock and the sale of the two facilities in July 1998.
YEAR 2000
The Company has assessed its financial accounting and reporting system
and considers it to be fully Year 2000 compliant. The Company's patient
receivable system will be assessed in the near future, after taking into account
the proposed acquisition, but the Company does not anticipate that it will incur
significant expenses or be required to make significant investment in computer
systems improvements to make the patient receivable system Year 2000 compliant.
However, any problems associated with any aspect of the Year 2000 compliance of
the Company, managed care organizations, or relevant government agencies or
providers could have a material adverse effect on the Company's business,
results of operations land financial condition. Accordingly, the Company plans
to devote the necessary resources to resolve all significant Year 2000 issues in
a timely manner.
FORWARD LOOKING STATEMENTS
Certain statements in this report set forth management's intentions,
plans, beliefs, expectations or predictions of the future based on current facts
and analyses. Actual results may differ materially from those indicated in such
statements. Additional information on factors that may affect the business and
financial results of the Company can be found in the other filings of the
Company with the Securities and Exchange Commission.
-10-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10.1 Agreement of Sale, dated November 2, 1998, between
Rehabilitation Medicine Practice of N.Y., P.L.L.C.
and Oak Tree Medical Management, Inc.
Exhibit 10.2 Agreement of Sale, dated November 2, 1998, between
Rehabilitation Medicine Practice of N.Y., P.L.L.C.
and Oak Tree Medical Practice, P.C.
Exhibit 10.3 Agreement of Sale, dated December 23, 1998,
between Oak Tree Medical Practice, P.C. and
Rehabilitation Medicine Practice of N.Y., P.L.L.C.
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K
None.
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<PAGE>
SIGNATURE
In accordance with the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
OAK TREE MEDICAL SYSTEMS, INC.
By: /s/ HENRY DUBBIN
-----------------
Henry Dubbin
President
Dated: January 14, 1998
-12-
Exhibit 10.1
AGREEMENT OF SALE
-----------------
AGREEMENT OF SALE, made November 2, 1998, among Rehabilitation Medicine
Practice of N.Y., P.L.L.C. a New York Professional limited liability company
with an office at 638 Mount Prospect Avenue, Newark, NJ 07104, to be known
herein as "Purchaser", and Oak Tree Medical Management, Inc. ("OTMM"), a New
York corporation, located at 163-03 Horace Harding Expressway, Flushing, New
York 11365, to be known herein as "Seller" and the Purchaser and Seller to be
known herein collectively as the "Parties";
W I T N E S S E T H:
--------------------
WHEREAS, Purchaser desires to acquire, and Seller desires to sell, the
assets of Seller's managed physical therapy facility located at 130 Williams
Street, New York, New York, to be known as the "The Practice", with such Seller
corporation doing business as noted herein and hereinafter specified, upon the
terms and conditions hereinafter set forth, and
WHEREAS, Jose F. Colon and Robert D. Kranberg are the Managers of
Rehabilitation Medicine Center of N.Y., P.L.L.C.,
WHEREAS, Oak Tree Medical Systems, Inc. is the Shareholder of OTMM,
NOW, THEREFORE, in consideration of the covenants and agreements
hereafter set forth, and other valuable consideration, the receipt and
sufficiency of which hereby is acknowledged, the Parties hereto agree as
follows:
1. Agreement To Sell. Seller agrees to sell, transfer and deliver to Purchaser,
and Purchaser agrees to purchase, upon the terms and conditions hereinafter set
forth, all of the assets of Seller's The Practice as noted herein.
2. The Assets of the Corporation. It is the understanding of the Parties that
the shareholder of Seller is the owner of the following assets of the The
Practice (the "Assets"):
(a) the equipment and general assets described in Exhibit A-1 hereto and
all similar equipment acquired or owned by the businesses on or before the
closing date (the "General Assets");
(b) the furniture, fixtures and improvements described in Exhibit A-2
hereto and all similar items acquired or owned by the businesses on or before
the closing date (the "Improvements");
(c) the lease described in Exhibit A-3 hereto (the "Lease");
(d) the equipment leases, contracts and agreements described in Exhibit
A-4 hereto (the "Contracts");
Notwithstanding anything to the contrary contained herein, there shall be
excluded from the Assets, all cash on hand and in Seller's bank accounts and
accounts receivable.
3. Purchase Price. The purchase price to be paid by Purchaser is Four Hundred
Eighteen Thousand Eight Hundred Ninety ($418,890) ) Dollars, payable as follows:
<PAGE>
(a) A deposit of Fifty Thousand Dollars ($50,000) at the signing of this
Agreement to be deposited into an interest-bearing escrow account. One Hundred
(100%) Percent of the deposit all be returned to Purchaser if due diligence is
not satisfactory to buyer. If Purchaser defaults under the terms of this
Agreement, then such payment shall be retained by Seller as liquidated damages.
The parties agree that such amount shall be retained by Seller to reimburse it
for expenses and costs incurred in preparing to sell the businesses and that
such liquidated damages are reasonable in the circumstances.
(b) The full assumption by Purchaser of up to forty six (46) monthly
payments at the rate of Four Thousand Two Hundred fifteen ($4,215) Dollars for a
maximum of One Hundred Ninety Three Thousand Eight Hundred Ninety ($193,890)
Dollars of Seller's debt obligations to Seller's equipment financing company,
Americorp. IN NO CASE SHALL PURCHASER BE RESPONSIBLE FOR ANY INDEBTEDNESS OF
SELLER, OTHER THAN AS INDICATED HEREIN.
(c) The balance of the purchase price in cash, to be paid at closing.
<TABLE>
<CAPTION>
<S> <C> <C>
The Purchase price shall be allocated as follows: $50,000 to buy the Lease
$85,000 to Restrictive Covenant
$40,000 to furniture & fixtures
$50,000 Goodwill
</TABLE>
4. The Closing. The "closing" means the settlement of the obligations of Seller
and Purchaser to each other under this agreement, including the payment of the
purchase price to Seller as provided in Article 3 hereof and the delivery of the
closing documents provided for in Article 5 hereof. The closing shall be held at
the offices of Purchaser's attorneys and shall take place on, November 1,1998
(the "closing date"), unless otherwise agreed by the parties.
4. Closing Documents. At the closing Seller shall execute and deliver to
Purchaser:
(a) an Assignment of the rights of the lessees under the facility Lease.
(b) certified copies of resolutions duly adopted by the Board of
Directors and Shareholder of Seller authorizing the sale of the Assets and the
performance by Seller of its obligations hereunder
(c) an opinion of Seller's counsel, Frederick C. Veit, Esq. dated as of
the closing date, in form and substance satisfactory to Purchaser's counsel,
stating such counsel's opinion that: (i) Corporation is duly organized, validly
existing and in good standing under the laws of New York; (ii) Seller has full
power and authority, corporate and otherwise, to enter into this agreement and
perform its obligations hereunder; (iii) the execution and delivery of this
agreement and the performance by Corporate Seller of its obligations hereunder
have been duly authorized by the Board of Directors and Shareholder of Seller
and no further action or approval is required in order to constitute this
agreement as the binding obligation of Seller, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, moratorium,
insolvency or other laws affecting creditor's rights generally; (iv) the
execution and delivery of this agreement and the performance by Seller of its
obligations hereunder do not and will not violate any provision of the
Certificate of Incorporation or Bylaws of Seller; and (v) except as may be set
forth in this agreement, such counsel is not representing Seller in any suit,
action or proceeding against them which, if adversely determined, would prohibit
the consummation of the transactions contemplated by this agreement, nor is
Counsel aware of any other suits, actions, or proceedings which would affect
this transaction.
(d) the Certificate of Incorporation, Bylaws, filing receipts and other
organizational documents of Seller; any bills, vouchers, and records showing the
ownership of the Assets used in the operations of Seller; and all other books of
account, records and contracts of Seller;
<PAGE>
(e) Restrictive Covenant as enumerated in Article Ten (10),
(f) Statements executed by Seller, releasing and indemnifying Purchaser
from any and all obligations and liabilities of Seller, other than those
specifically assumed herein,
(g) assignments of the rights and liabilities of lessees under the
Equipment Contracts
(h) a Bill of Sale and such other instruments and information in form
and substance satisfactory to Purchaser's attorneys as may be necessary or
proper to transfer to Purchaser good and marketable title to all other ownership
interests in the Assets to be transferred under this agreement.
(i) an agreement providing for Purchaser to use Seller's computer system
and software for billing for a period of up to six months following the closing.
(j) such other documents as may be reasonably required in accordance
with the intent and purpose of this agreement.
At the closing Seller shall deliver to Purchaser all keys for the businesses. If
any keys for the businesses or Assets are held by employees or others, Seller
shall identify such individuals, their addresses and their relationship to the
Seller. Seller shall do all further acts and things as may be necessary, or
reasonably requested by Purchaser, to consummate the transactions contemplated
by this agreement, including the acquisition of and possession of the Assets.
Seller shall advise Purchaser of, and cause to be delivered to Purchaser, all
applicable trade secrets and proprietary information pertaining to the Assets of
the businesses.
At the closing Purchaser shall execute and deliver to Seller:
(i) an Assumption of the obligations of the lessees under the facility
Lease and Equipment Contracts.
(ii) reciprocal documentation and Counsel's opinion as listed in
subparagraphs (b), (c ), (d) and (f) above.
Except as expressly provided herein, Purchaser shall not be obligated to pay or
perform any obligations or liabilities of Seller including without limitation,
obligations or liabilities of Seller to their creditors or any legal,
accounting, brokerage or finder's fees or any taxes or other expenses in
connection with this agreement or the consummation of the transactions
contemplated hereby.
6. Closing Adjustments. The following items shall be apportioned as of
midnight of the day preceding the closing date:
(a) rent, including any additional rent, and security deposits under the
facility Lease or Equipment Contracts
(b) taxes and applicable common charges under the leases
(c) water and sewer charges
(d) utilities , as applicable
Any errors or omissions in computing apportionments shall be corrected within 21
days after the closing, with both parties fully cooperating.
Post Closing - The Parties shall account to each other for payments received
related to services provided at the The Practice after the Closing Date. All
payments with respect to dates of service prior to the Closing Date shall belong
<PAGE>
to Seller and all payments with respect to dates of service after the Closing
Date shall belong to Purchaser. Either party receiving a payment belonging to
the other shall promptly remit said payment to the other.
7. Representations And Warranties Of Seller. Seller represents and warrants to
Purchaser as follows:
(a) Seller is a corporation duly organized and validly existing under the laws
of New York, and is duly qualified to do business in New York. Seller has full
power and authority to own its assets and to conduct its business as now carried
on, and to carry out and perform their undertakings and obligations as provided
herein. The execution and delivery by Seller of this agreement and the
consummation of the transactions contemplated herein have been duly authorized
by the Board of Directors and Shareholder of Seller and will not conflict with
or breach any provision of the Certificate of Incorporation or Bylaws of Seller,
and do not and will not conflict with or result in any breach of any condition
or provision of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon the Assets by reason of the
provisions of any contract, lien, lease, agreement, instrument or judgment to
which Seller is a party, or which are or purport to be binding upon Seller or
which affect or purport to affect the Assets. No further action or approval,
corporate or otherwise, is required in order to constitute this agreement the
binding and enforceable obligation of Seller.
(b) No action, approval, consent or authorization, including without limitation
any action, approval, consent or authorization of any governmental or
quasi-governmental agency, commission, board, bureau or instrumentality, is
necessary for Seller to constitute this agreement the binding and enforceable
obligation of Seller or to consummate the transactions contemplated hereby.
(c) Seller is the owner of and has good and marketable title to the Assets, free
of all liens, claims and encumbrances.
(d) There are no violations, potential claims of violations or questions of
irregularity regarding any law or governmental rule or regulation pending or, to
the best of Seller's knowledge, threatened against Seller, or the Assets. Seller
has obtained and operated pursuant to all required licenses and has complied
with all laws and governmental rules and regulations applicable to the business
or the Assets. The Assets have been continuously covered since July 1, 1994 by
insurance policies covering physical damage, general liability, professional
liability and worker's compensation. Seller has duly notified all insurance
carriers or third party payers of any suspected or known claims or potential
claims which may be asserted against Seller, or the Assets.
(e) Notwithstanding Peter B. Saadeh, M.D., potential claim there are no
judgments, liens, suits, actions or proceedings pending or, to the best of
Seller's knowledge, threatened against Seller, or the Assets. Neither Seller,
nor the Assets are a party to, subject to or bound by any agreement or any
judgment or decree of any court, governmental body or arbitrator which would
conflict with or be breached by the execution, delivery or performance of this
agreement, or which could prevent the carrying out of the transactions provided
for in this agreement, or which could prevent the use by Purchaser of the Assets
or adversely affect the conduct of the business by Purchaser.
(f) Seller has not entered into, and the Assets are not subject to, any: (i)
written contract or agreement for the employment of any employee of the
business; (ii) contract with any labor union or guild; (iii) pension,
profit-sharing, retirement, bonus, insurance, or similar plan with respect to
any employee of the business; or (iv) similar contract or agreement affecting or
relating to the Assets.
(g) At the time of the closing, there will be no (secured or unsecured)
creditors of Seller, except for general business creditors or equipment lessors.
Except as set forth herein, Seller shall be liable for all other obligations
incurred by Seller prior to closing.
(h) The facility Lease is in full force and effect and without any default by
Seller thereunder. The copy of the facility Lease provided by Seller to
Purchaser is a true and complete copy of the original Lease. (1) The assigned
lease shall be for the same terms and conditions as specified in the present
lease. In the event that the landlord
<PAGE>
assigns, mortgages, sells or transfers its interest in said lease then the
present terms and conditions shall remain in effect.
(i) All Contracts and Equipment Leases are in full force and effect and without
any default by Seller or thereunder. All copies of the Contracts and Leases
provided by Seller to Purchaser are true and complete copies of the original
Contracts. Seller is not indebted under any executory Contracts or Leases.
(j) There are no agreements or understandings with referral sources which are
violative of the federal and/or state anti-kickback and/or self-referral
statutes.
(k) Seller has filed each tax return, including without limitation all excise,
property, capital gain, sales, franchise and license tax returns, required to be
filed by Seller prior to the date hereof. Each such return is true, complete and
correct, and Seller has paid all taxes, assessments and charges of any
governmental authority required to be paid by them and has created reserves or
made provision for all taxes accrued but not yet payable. No government entity
is now asserting, or to Seller's knowledge threatening to assert, any deficiency
or assessment for additional taxes or any interest, penalties or fines with
respect to Seller. Seller shall hold Purchaser harmless and indemnify Purchaser
against all claims for taxes due from and owed by Seller.
(l) Seller will have terminated the employment of all Employees effective as of
the Closing Date. It being understood that Seller will terminate the employment
of all of its Employees at The Practice and that Purchaser shall entertain
applications of employment from those Employees who wish to be so employed by
Purchaser. Seller has filed and will file all employment tax forms required to
be filed by Seller prior to the Closing. Seller has paid, and will pay
employment taxes required to be paid by Seller prior to Closing.
(m) Oak tree has satisfied any and all outstanding debt or contractual
obligations with any and all of its employee's prior to the execution of this
Agreement. A breach of this clause will be a material breach of this contract.
(n) The present phone number (212) 619-2610 as well as the present fax number
(212) 619 -2617 will be assigned to the purchaser.
(o) In the event that the landlord changes any of the terms and conditions of
the lease, the purchase price in this Agreement will be reduced by the same
amount to cover any and all increases. At the closing Seller shall execute and
deliver an affidavit setting forth the above representations.
8. Representations And Warranties Of Purchaser. Purchaser represents and
warrants to Seller as follows:
(a) Purchaser is a Limited Liability Company organized under the laws of New
York, and is duly qualified to do business in New York as a physical therapy
practice and as a physical medicine practice. Purchaser has full power and
authority to carry out and perform its undertakings and obligations as provided
herein. The execution and delivery by Purchaser of this agreement and the
consummation of the transactions contemplated herein have been duly authorized
by the Board of Directors of Purchaser and will not conflict with or breach any
provision of the Certificate of Incorporation or Bylaws of Purchaser. No further
action or approval, corporate or otherwise, is required in order to constitute
this agreement the binding and enforceable obligation of Purchaser.
(b) No action, approval, consent or authorization, including without
limitation any action, approval, consent or authorization of any governmental or
quasi-governmental agency, commission, board, bureau or instrumentality, is
necessary for Purchaser to constitute this agreement the binding and enforceable
obligation of Purchaser or to consummate the transactions contemplated hereby.
(c) Purchaser will be given permission by OTMM, to begin its transition period
at the 130 William Street, New York, New York facility by October 5, 1998.
9. Conditions To Closing. The obligations of Purchaser to close hereunder are
subject to the following conditions:
<PAGE>
(a) All of the terms, covenants and conditions to be complied with or performed
by Seller under this agreement on or before the closing shall have been complied
with or performed in all material respects.
(b) The Purchaser shall have secured assignment to it of the lease for the
premises at the The Practice, and the Equipment leases.. Such assignment shall
be at no additional cost to Purchaser and shall provide that such lease and the
contract shall be at the same terms and conditions as currently exist.
(c) All representations or warranties of Seller herein are true in all material
respects as of the closing date.
(d) All Assets are in good working order, as applicable, and have been
calibrated within the past twelve (12) months.
(e) On the closing date, there shall be no liens or encumbrances against the
Assets, except as enumerated herein.
(f) The business of Seller has been conducted only in the ordinary course of
business. No contracts or purchase agreements/orders will have been entered
into, other than in the ordinary course of business. No expenditures or credit
purchases will be made by Seller other than in the ordinary course of business.
Seller shall perform all maintenance and repair reasonably necessary to keep the
Assets in their existing operating condition and repair and shall keep all
supplies at levels which are consistent with prior practice (but shall be no
less than adequate for the operations) at the The Practice.
(g) Seller, and its representatives and advisors will supply, upon
request by Purchaser and its representatives, such pertinent information as may
be required by Purchaser in order to conduct its due diligence survey of Seller
and shall cooperate with Purchaser to assure an orderly transition. Purchaser
shall be given reasonable access to the facility and the parties shall cooperate
in communicating and meeting with employees, vendors, contracting parties, ,
etc. It is agreed that any documents or information provided hereunder shall be
kept in full and complete confidence.
If this agreement is terminated as provided because any of the above
have not been satisfied, Seller shall return any payments made by Purchaser on
account of the purchase price, whereupon all rights of Purchaser hereunder and
to the businesses shall terminate, and neither Seller nor Purchaser shall have
any further claim against the other hereunder, except as otherwise provided
herein. If Seller wrongfully fails to close as contemplated under this
Agreement, Purchaser shall be entitled to specific performance, as well as
damages. If Purchaser wrongfully fails to close as contemplated under this
Agreement, Seller shall be entitled to retain the deposit as liquidated damages
therefor.
10. Restrictive Covenant Not to Compete. For a period of two (2) years from the
date of closing, Seller and its affiliates are restricted from opening NEW
outpatient, exclusive physical therapy practices within 25 blocks of Seller's
Manhattan facility located at 130 Williams Street. Seller represents that, for a
period of two (2) years, it will not solicit physical therapy referral business
from any source which is presently referring physical therapy patients to The
Practice being purchased. Seller shall execute at closing, such documents as
will evidence this surviving provision. To the extent a court of competent
jurisdiction determines this provision to be excessively restrictive, the
Parties agree to abide by any modification acceptable to such court.
11. Indemnification. Each party hereto shall indemnify and hold the other
parties harmless from and against all liability, claim, loss, damage or expense,
including reasonable attorneys' fees, incurred or required to be paid by such
other parties by reason of any breach or failure of observance or performance of
any representation, warranty, covenant or other provision (including lists and
Exhibits) of this agreement by such party. Sellers shall indemnify and hold
Purchaser harmless against all actions, suits, proceedings, judgments, costs and
expenses incurred by or levied against Purchaser, due to Seller's acts,
omissions, negligence or other wrongful conduct. Purchaser shall
<PAGE>
indemnify and hold Seller harmless against all actions, suits, proceedings,
judgments, costs and expenses incurred by or levied against Seller, due to
Purchaser's acts, omissions, negligence or other wrongful conduct.
12. Risk Of Loss. The risk of loss to the Assets of the businesses sold
hereunder, until the closing, is assumed and shall be borne by Seller. Seller
agrees to keep all of its Assets fully insured against any loss, either by fire,
theft or casualty, to the date of closing. In the event that prior to closing,
such Assets are totally or substantially damaged by reason of fire, theft,
casualty, or breakage, Seller will repair or replace such Assets at or prior to
closing or Purchaser may, in its sole discretion, terminate the within
transaction. In such case, all money heretofore deposited with Seller or
Seller's representative shall be refunded to Purchaser and the parties shall be
released from any further liability hereunder. If the Purchaser elects to
consummate this transaction despite such loss or damage, it may do so by paying
the purchase price set forth herein, reduced by any insurance proceeds received
by Seller.
13. Brokerage. The parties hereto represent and warrant to each other that they
have not dealt with any broker or finder in connection with this agreement other
than William Kedersha. Seller shall be solely responsible for and shall pay at
closing all commission, fees, expenses and charges due or owing to the Broker in
connection with this transaction, pursuant to a separate agreement between the
Seller and Broker. Seller shall indemnify, defend and hold Purchaser harmless
from and against any loss, cost, expense, claim or liability (including, without
limitation, reasonable attorney's fees) arising under or in respect of any claim
by any person or entity for any commission, fee or expense in respect of the
transaction contemplated by this Agreement. The provisions of this Article shall
survive the expiration, termination or cancellation of this Agreement.
14. Notices. All notices, demands and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been
properly given if delivered by hand or by registered or certified mail, return
receipt requested, with postage prepaid, to the parties' at the address set
forth below with copies to their attorneys. The respective attorneys for the
parties hereby are authorized to give any notice required or permitted hereunder
and to agree to adjournments of the closing.
<TABLE>
<CAPTION>
<S> <C> <C>
Purchaser: Rehabilitation Medicine Seller: Oak Tree Medical Management, Inc.
Associates, LLC 163-03 Horace Harding Expressway
638 Mount Prospect Avenue Flushing, N.Y.11365
Newark, N.J. 07104
Copy to: Lifshutz, Polland_& Assoc., P.C. Copy to: Frederick Veit, Esq.
675 Third Avenue, Ste. 2400 21 Gordon Avenue
New York, N.Y. 10017 Briarcliff Manor, N.Y. 10510
Att: Benjamin Geizhals
</TABLE>
15. Survival. The representations, warranties and covenants contained herein or
in any document, instrument, certificate or schedule furnished in connection
herewith shall survive the delivery of the Bill of Sale and shall continue in
full force and effect after the closing, except to the extent waived in writing.
16. Further Assurances. In connection with the transactions contemplated by this
agreement, the parties agree to execute and deliver such further instruments,
and to take such further actions, as may be reasonably necessary or proper to
effectuate and carry out the transactions contemplated in this agreement.
17. Changes Must Be In Writing. No delay or omission by either Seller or
Purchaser in exercising any right shall operate as a waiver of such right or any
other right. This agreement may not be altered, amended, changed, modified,
waived or terminated in any respect or particular unless the same shall be in
writing signed by the party to be bound. No waiver by any party of any breach
hereunder shall be deemed a waiver of any other or subsequent breach.
<PAGE>
18. Captions And Exhibits. The captions in this agreement are for convenience
only and are not to be considered in construing this agreement. The Exhibits
annexed to this agreement are an integral part of this agreement, and where
there is any reference to this agreement it shall be deemed to include said
Exhibits.
19. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York.
20. Binding Effect. This agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
21. Cancellation. Purchaser reserves the right to cancel this Agreement, without
penalty, if any negative disclosure is discovered regarding Seller, or the
Assets, which would materially affect the value of Assets. Purchaser's right to
cancel under this provision shall be null and void subsequent to actual closing.
22. Confidentiality. Each party acknowledges and agrees that any information or
data it has acquired from the other party, not otherwise properly in the public
domain, was received in confidence. Each party hereto agrees not to divulge,
communicate or disclose, except as may be required by law or for the performance
of this Agreement (including conducting due diligence or notifying a party's
lender), or use to the detriment of the disclosing party or for the benefit of
any other person or persons, except Purchaser and related entities or misuse in
any way, any confidential information of the disclosing party concerning the
subject matter hereof, including any trade or business secrets of the disclosing
party and any technical or business materials that are treated by the disclosing
party as confidential or proprietary, including without limitation information
(whether in written, oral or machine readable form) concerning: general business
operations, methods of doing business, servicing clients, client relations, and
of pricing and making charge for services and products; financial information,
including costs, profits and sales; marketing strategies; business forms
developed by or for the disclosing party; names of suppliers, personnel, clients
and potential clients; negotiations or other business contacts with suppliers,
personnel, clients and potential clients; form and content of bids, proposals
and contracts; the disclosing party's internal reporting methods; technical and
business data and documentation; software programs, however embodied; diagnostic
techniques; and information obtained by or given to the disclosing party about
or belonging to third parties.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement the date first
above written.
SELLER:
Oak Tree Medical Management, Inc.
ATTEST: By /s/ HENRY DUBBIN
-------------------------------
Name:
By /s/ FRED L. SINGER Title:
-------------------------------
Name:
Secretary
Oak Tree Medical Systems, Inc.
Shareholder
ATTEST:
By /s/ HENRY DUBBIN
-------------------------------
By /s/ FRED L. SINGER Name:
------------------------------- President
Name:
Secretary
PURCHASER:
Rehabilitation Medicine
Center of N.Y., P.L.L.C.
ATTEST: By /s/ ROBERT KRAMBERG
-------------------------------
By Authorized Signature
------------------------------
Authorized Signature
Exhibit 10.2
AGREEMENT OF SALE
-----------------
AGREEMENT OF SALE, made November 2, 1998, among Rehabilitation Medicine
Practice of N.Y., P.L.L.C. with offices at 638 Mount Prospect Avenue, Newark, NJ
07104, to be known herein as "Purchaser", and Oak Tree Medical Practice, P.C.
("OTPC"), a New York professional corporation, located at 163-03 Horace Harding
Expressway, Flushing, New York 11365, to be known herein as "Seller" and the
Purchaser and Seller to be known herein collectively as the "Parties";
W I T N E S S E T H:
--------------------
WHEREAS, Purchaser desires to acquire, and Seller desires to sell, the
assets of Seller's physical therapy facility located at 130 Williams Street, New
York, New, York, to be known herein as the "The Practice", with such Seller
corporation doing business as noted herein and hereinafter specified, upon the
terms and conditions hereinafter set forth, and
WHEREAS, Jose F. Colon, M.D. and Robert D. Kramberg, M.D. intend to form
an entity to which the rights and obligations of this Agreement will be assigned
without any personal liability to either Dr. Colon or Dr. Kramberg,
WHEREAS, Douglas Spiel, M.D. is the Shareholder of OTPC,
NOW, THEREFORE, in consideration of the covenants and agreements
hereafter set forth, and other valuable consideration, the receipt and
sufficiency of which hereby is acknowledged, the Parties hereto agree as
follows:
1. Agreement To Sell. Seller agrees to sell, transfer and deliver to
Purchaser, and Purchaser agrees to purchase, upon the terms and conditions
hereinafter set forth and in accordance with all applicable law and regulations,
all of the assets of The Practice as noted herein.
2. The Assets of the Corporation. It is the understanding of the Parties
that Seller is the owner of the following assets of The Practice (the "Assets"):
(a) the patient files and related medical assets owned by the The
Practice and described in Exhibit A-1 hereto (the "General Assets");
Notwithstanding anything to the contrary contained herein, there shall
be excluded from the Assets, all cash on hand and in Seller's bank accounts and
accounts receivable.
3. Purchase Price. The purchase price to be paid by Purchaser is Twenty
five Thousand ($25,000) Dollars, to be paid in full, at closing.
4. The Closing. The "closing" means the settlement of the obligations of
Seller and Purchaser to each other under this agreement, including the payment
of the purchase price to Seller as provided in Article 3 hereof and the delivery
of the closing documents provided for in Article 5 hereof. The closing shall be
held at the offices of Purchaser and shall take place on or about November 1,
1998 (the "closing date"), or such other date as may be agreed upon by the
parties.
5. Closing Documents. At the closing Seller shall execute and deliver to
Purchaser:
<PAGE>
(a) Certified copies of resolutions duly adopted by the Board of
Directors and Shareholder of Seller authorizing the sale of the Assets and the
performance by Seller of its obligations hereunder
(b) An opinion of Seller's counsel, Frederick C. Veit, Esq. dated as of the
closing date, in form and substance satisfactory to Purchaser's counsel, stating
such counsel's opinion that: (i) Corporation is duly organized, validly existing
and in good standing under the laws of New York; (ii) Seller has full power and
authority, corporate and otherwise, to enter into this agreement and perform its
obligations hereunder; (iii) the execution and delivery of this agreement and
the performance by Seller of its obligations hereunder have been duly authorized
by the Board of Directors and Shareholder of Seller and no further action or
approval is required in order to constitute this agreement as the binding
obligation of Seller, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, moratorium, insolvency or other
laws affecting creditor's rights generally; (iv) the execution and delivery of
this agreement and the performance by Seller of its obligations hereunder do not
and will not violate any provision of the Certificate of Incorporation or Bylaws
of Seller; and (v) except as may be set forth in this agreement, such counsel is
not representing Seller in any suit, action or proceeding against them which, if
adversely determined, would prohibit the consummation of the transactions
contemplated by this agreement, nor is Counsel aware of any other suits,
actions, or proceedings which would affect this transaction.
(c) The Certificate of Incorporation, Bylaws, filing receipts and other
organizational documents of Seller; any bills, vouchers, and records showing the
ownership of the Assets used in the operations of Seller; and all other books of
account, records and contracts of Seller;
(d) Restrictive Covenant as enumerated in Article Ten (10),
(e) Statements executed by Seller, releasing and indemnifying Purchaser from any
and all obligations and liabilities of Seller, other than those specifically
assumed herein,
(f) A Bill of Sale and such other instruments and information in form and
substance satisfactory to Purchaser's attorneys as may be necessary or proper to
transfer to Purchaser good and marketable title to all other ownership interests
in the Assets to be transferred under this agreement.
(h) An agreement providing for Purchaser to use Seller's computer system and
software for billing for a period of up to six months following the closing.
(i) Such other documents as may be reasonably required in accordance
with the intent and purpose of this agreement
Seller shall do all further acts and things as may be necessary, or reasonably
requested by Purchaser, to consummate the transactions contemplated by this
agreement, including the acquisition of and possession of the Assets. Seller
shall advise Purchaser of, and cause to be delivered to Purchaser, all
applicable trade secrets and proprietary information pertaining to the Assets of
the businesses.
At the closing Purchaser shall execute and deliver to Seller:
Reciprocal documentation and Counsel's opinion as listed in
subparagraphs (a)(b) and (c) above
Except as expressly provided herein, Purchaser shall not be obligated to
pay or perform any obligations or liabilities of Seller including without
limitation, obligations or liabilities of Seller to their creditors or any
legal, accounting, brokerage or finder's fees or any taxes or other expenses in
connection with this agreement or the consummation of the transactions
contemplated hereby.
<PAGE>
6. Post Closing. The Parties shall account to each other for payments
received related to services provided at The Practice after the Closing Date.
All payments with respect to dates of service prior to the Closing Date shall
belong to Seller and all payments with respect to dates of service after the
Closing Date shall belong to Purchaser. Either party receiving a payment
belonging to the other shall promptly remit said payment to the other.
7. Representations And Warranties Of Seller. Seller represents and
warrants to Purchaser as follows:
(a) Seller is a professional corporation duly organized and validly
existing under the laws of New York, and is duly qualified to do business in New
York.. Seller has full power and authority to own its assets and to conduct its
business as now carried on, and to carry out and perform their undertakings and
obligations as provided herein. The execution and delivery by Seller of this
agreement and the consummation of the transactions contemplated herein have been
duly authorized by the Board of Directors and Shareholder of Seller and will not
conflict with or breach any provision of the Certificate of Incorporation or
Bylaws of Seller, and do not and will not conflict with or result in any breach
of any condition or provision of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon the Assets by
reason of the provisions of any contract, lien, lease, agreement, instrument or
judgment to which Seller is a party, or which are or purport to be binding upon
Seller or which affect or purport to affect the Assets. No further action or
approval, corporate or otherwise, is required in order to constitute this
agreement the binding and enforceable obligation of Seller.
(b) No action, approval, consent or authorization, including without
limitation any action, approval, consent or authorization of any governmental or
quasi-governmental agency, commission, board, bureau or instrumentality, is
necessary for Seller to constitute this agreement the binding and enforceable
obligation of Sellers or to consummate the transactions contemplated hereby.
(c) Seller is the owner of and has good and marketable title to the
Assets, free of all liens, claims and encumbrances, except as set forth herein.
(d) There are no violations, potential claims of violations or questions
of irregularity regarding any law or governmental rule or regulation pending or,
to the best of Seller's knowledge, threatened against Seller, or the Assets.
Seller has obtained and operated pursuant to all required licenses and has
complied with all laws and governmental rules and regulations applicable to the
business or the Assets. Seller has duly notified all insurance carriers or third
party payers of any suspected or known claims or potential claims which may be
asserted against Seller, or the Assets.
(e) Notwithstanding Peter B. Saadeh, M.D., potential claim there are no
judgments, liens, suits, actions or proceedings pending or, to the best of
Seller's knowledge, threatened against Seller, or the Assets. Neither Seller,
nor the Assets are a party to, subject to or bound by any agreement or any
judgment or decree of any court, governmental body or arbitrator which would
conflict with or be breached by the execution, delivery or performance of this
agreement, or which could prevent the carrying out of the transactions provided
for in this agreement, or which could prevent the use by Purchaser of the Assets
or adversely affect the conduct of the business by Purchaser.
(f) Seller has not entered into, and the Assets are not subject to, any:
(i) written contract or agreement for the employment of any employee of the
business; (ii) contract with any labor union or guild; (iii) pension,
profit-sharing, retirement, bonus, insurance, or similar plan with respect to
any employee of the business; or (iv) similar contract or agreement affecting or
relating to the Assets.
(g) At the time of the closing, there will be no (secured or unsecured)
creditors of Seller, except for general business creditors or equipment lessors
as may be disclosed herein. Except as set forth herein, Seller shall be liable
for all other obligations incurred by Seller prior to closing.
<PAGE>
(h) Seller has filed each tax return, including without limitation all
excise, property, capital gain, sales, franchise and license tax returns,
required to be filed by Seller prior to the date hereof. Each such return is
true, complete and correct, and Seller has paid all taxes, assessments and
charges of any governmental authority required to be paid by them and has
created reserves or made provision for all taxes accrued but not yet payable. No
government entity is now asserting, or to Seller's knowledge threatening to
assert, any deficiency or assessment for additional taxes or any interest,
penalties or fines with respect to Seller. Seller shall hold Purchaser harmless
and indemnify Purchaser against all claims for taxes due from and owed by
Seller.
At the closing Seller shall execute and deliver an affidavit setting forth the
above representations.
8, Representations And Warranties Of Purchaser. Purchaser represents
and warrants to Seller as follows:
(a) Purchaser will be duly organized under the laws of New York, and
duly qualified to do business in New York as a physical therapy practice and as
a physical medicine practice. Purchaser will have full power and authority to
carry out and perform its undertakings and obligations as provided herein. The
execution and delivery by Purchaser of this agreement and the consummation of
the transactions contemplated herein will be duly authorized and will not
conflict with or breach any provision of the organizational documents of
Purchaser. No further action or approval, corporate or otherwise, will be
required in order to constitute this agreement the binding and enforceable
obligation of Purchaser.
(b) Subject to the formation of a duly constituted entity by Drs. Colon
and Kramberg (to which the rights and obligations of this Agreement are to be
assigned), no action, approval, consent or authorization, including without
limitation any action, approval, consent or authorization of any governmental or
quasi-governmental agency, commission, board, bureau or instrumentality, is
necessary for Purchaser to constitute this agreement the binding and enforceable
obligation of Purchaser or to consummate the transactions contemplated hereby.
(c) In the event that Ginette Saadeh remains in employment with the
Purchaser for a cumulative six (6) month period during the 12 months from
closing (minimum of three days a week) Purchaser agrees to pay Ginette Saadeh a
sum equal to Fifty Thousand ($50,000) Dollars immediately upon the realization
that the she has satisfied the terms of this paragraph. Purchaser shall execute
at Closing, an affidavit setting forth the above representations and warranties.
9. Conditions To Closing. The obligations of Purchaser to close
hereunder are subject to the following conditions:
(a) All of the terms, covenants and conditions to be complied with or
performed by Seller under this agreement on or before the closing shall have
been complied with or performed in all material respects.
(b) All representations or warranties of Seller herein are true in all
material respects as of the closing date.
(c) On the closing date, there shall be no liens or encumbrances against
the Assets, or equipment except as enumerated herein.
(d) The business of Seller has been conducted only in the ordinary
course of business. No contracts or purchase agreements/orders will have been
entered into, other than in the ordinary course of business. No expenditures or
credit purchases will be made by Seller other than in the ordinary course of
business.
(e) Seller, and its representatives and advisors will supply, upon
request by Purchaser and its representatives, such pertinent information as may
be required by Purchaser in order to conduct its due diligence survey of Seller.
It is agreed that any documents or information provided hereunder shall be kept
in full and complete confidence.
<PAGE>
If this agreement is terminated as provided because any of the above
have not been satisfied, Seller shall return any payments made by Purchaser on
account of the purchase price, whereupon all rights of Purchaser hereunder and
to the businesses shall terminate, and neither Seller nor Purchaser shall have
any further claim against the other hereunder, except as otherwise provided
herein, if Seller wrongfully fails to close this transaction as contemplated
under this Agreement, Purchaser shall be entitled to specific performance as
well as damages.
10. Restrictive Covenant Not to Compete. For a period of two (2) years
from the date of closing, Seller and its affiliates are restricted from opening
NEW outpatient, exclusive physical therapy practices within 25 blocks of
Seller's Manhattan facility located at 130 Williams Street, New York, New York.
Seller and their affiliates represents that, for a period of two years, they
will not solicit physical therapy referral business from any source which is
presently referring physical therapy patients to The Practice being purchased.
Seller shall execute at closing, such documents as will evidence this surviving
provision. To the extent a court of competent jurisdiction determines this
provision to be excessively restrictive, the Parties agree to abide by any
modification acceptable to such court.
11. Indemnification. Each party hereto shall indemnify and hold the
other parties harmless from and against all liability, claim, loss, damage or
expense, including reasonable attorneys' fees, incurred or required to be paid
by such other parties by reason of any breach or failure of observance or
performance of any representation, warranty, covenant or other provision
(including lists and Exhibits) of this agreement by such party. Seller will
indemnify and hold Purchaser harmless against all actions, suits, proceedings,
judgments, costs and expenses incurred by or levied against Purchaser, due to
Seller's prior acts, omissions, negligence or other wrongful conduct. Purchaser
shall indemnify and hold Seller harmless against all actions, suits,
proceedings, judgments, costs and expenses incurred by or levied against Seller,
due to Purchaser's acts, omissions, negligence or other wrongful conduct.
12. Risk Of Loss. The risk of loss to the Assets of the businesses sold
hereunder, until the closing, is assumed and shall be borne by Seller. Seller
agrees to keep all of its Assets fully insured against any loss, either by fire,
theft or casualty, to the date of closing. In the event that prior to closing,
such Assets are totally or substantially damaged by reason of fire, theft,
casualty, or breakage, Seller will repair or replace such Assets at or prior to
closing or Purchaser may, in its sole discretion, terminate the within
transaction. In such case, all money heretofore deposited with Seller or
Seller's representative shall be refunded to Purchaser and the parties shall be
released from any further liability hereunder. If the Purchaser elects to
consummate this transaction despite such loss or damage, it may do so by paying
the purchase price set forth herein, reduced by any insurance proceeds received
by Seller.
13. Brokerage. The parties hereto represent and warrant to each other
that they have not dealt with any broker or finder in connection with this
agreement other than William Kedersha. Seller shall be solely responsible for
and shall pay at closing all commission, fees, expenses and charges due or owing
to the Broker in connection with this transaction, pursuant to a separate
agreement between the Seller and Broker. Seller shall indemnify, defend and hold
Purchaser harmless from and against any loss, cost, expense, claim or liability
(including, without limitation, reasonable attorney's fees) arising under or in
respect of any claim by any person or entity for any commission, fee or expense
in respect of the transaction contemplated by this Agreement. The provisions of
this Article shall survive the expiration, termination or cancellation of this
Agreement.
14. Notices. All notices, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been properly given if delivered by hand or by registered or certified mail,
return receipt requested, with postage prepaid, to the parties' at the address
set forth below with copies to their attorneys. The respective attorneys for the
parties hereby are authorized to give any notice required or permitted hereunder
and to agree to adjournments of the closing.
15. Survival. The representations, warranties and covenants contained
herein or in any document, instrument, certificate or schedule furnished in
connection herewith shall survive the delivery of the Bill of Sale and shall
continue in full force and effect after the closing, except to the extent waived
in writing.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Purchaser: Jose F. Colon, M.D. Seller: Oak Tree Medical Practice, P.C.
Robert Kramberg, M.D. 163-03 Horace Harding
638 Mount Prospect Avenue Expressway
Newark, N.J. 07104 Flushing, N.Y. 11365
Copy to: Lifshutz, Polland_& Assoc., P.C. Copy to: Frederick Veit, Esq.
675 Third Avenue, Ste. 2400 21 Gordon Avenue
New York, N.Y. 10017 Briarcliff Manor, N.Y. 10510
Att: Mathew Levy
</TABLE>
16. Further Assurances. In connection with the transactions contemplated
by this agreement, the parties agree to execute and deliver such further
instruments, and to take such further actions, as may be reasonably necessary or
proper to effectuate and carry out the transactions contemplated in this
agreement.
17. Changes Must Be In Writing. No delay or omission by either Seller or
Purchaser in exercising any right shall operate as a waiver of such right or any
other right. This agreement may not be altered, amended, changed, modified,
waived or terminated in any respect or particular unless the same shall be in
writing signed by the party to be bound. No waiver by any party of any breach
hereunder shall be deemed a waiver of any other or subsequent breach.
18. Captions And Exhibits. The captions in this agreement are for
convenience only and are not to be considered in construing this agreement. The
Exhibits annexed to this agreement are an integral part of this agreement, and
where there is any reference to this agreement it shall be deemed to include
said Exhibits.
19. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York.
20. Binding Effect. This agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
21. Cancellation. Purchaser reserves the right to cancel this Agreement,
without penalty, if any negative disclosure is discovered regarding Seller, or
the Assets, which would materially affect the value of Assets. Purchaser's right
to cancel under this provision shall be null and void subsequent to actual
closing.
22. Confidentiality. Each party acknowledges and agrees that any
information or data it has acquired from the other party, not otherwise properly
in the public domain, was received in confidence. Each party hereto agrees not
to divulge, communicate or disclose, except as may be required by law or for the
performance of this Agreement (including conducting due diligence or notifying a
party's lender), or use to the detriment of the disclosing party or for the
benefit of any other person or persons, except Purchaser and related entities or
misuse in any way, any confidential information of the disclosing party
concerning the subject matter hereof, including any trade or business secrets of
the disclosing party and any technical or business materials that are treated by
the disclosing party as confidential or proprietary, including without
limitation information (whether in written, oral or machine readable form)
concerning: general business operations, methods of doing business, servicing
clients, client relations, and of pricing and making charge for services and
products; financial information, including costs, profits and sales; marketing
strategies; business forms developed by or for the disclosing party; names of
suppliers, personnel, clients and potential clients; negotiations or other
business contacts with suppliers, personnel, clients and potential clients; form
and content of bids, proposals and contracts; the disclosing party's internal
reporting methods; technical and business data and documentation; software
programs, however embodied; diagnostic techniques; and information obtained by
or given to the disclosing party about or belonging to third parties.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement the date
first above written.
SELLER:
Oak Tree Medical Practice, P.C.
ATTEST:
By /s/ DOUGLAS SPIEL, M.D.
---------------------------
By /s/ FRED SINGER Douglas Spiel, M.D.
------------------------- Shareholder
Fred Singer
Secretary
By /s/ DOUGLAS SPIEL, M.D.
---------------------------
Douglas Spiel, M.D.
President
PURCHASER:
Rehabilitation Medicine
Center of N.Y., P.L.L.C.
By /s/ ROBERT KRAMBERG
---------------------------
Robert Kramberg, M.D.,
Manager
Exhibit 10.3
AGREEMENT OF SALE
-----------------
This AGREEMENT OF SALE is made this 23rd day of December, 1998 by and between
Oak Tree Medical Practice, P.C., a New York Professional Corporation, having an
address at 10155 Collins Avenue Bal Harbor, FL 33154 ("Oak Tree" or "Seller")
and Rehabilitation Medicine Practice of N.Y., P.L.L.C., a New York Professional
Limited Liability Company, having an address at 130 Williams Street New York, NY
10038 ("RMP" or "Purchaser").
W I T N E S S E T H:
--------------------
WHEREAS, Purchaser desires to acquire, and Seller desires to sell, the patient
accounts receivable of Seller's physical therapy practice formerly located at
130 Williams Street New York, NY 10038 ("A/R"), hereinafter specified, upon the
terms and conditions hereinafter set forth, and
NOW, THEREFORE, in consideration of the covenants and agreements hereafter set
forth, and other valuable consideration, the receipt and sufficiency of which
hereby is acknowledged, the parties hereto agree as follows:
1. Agreement To Sell. Seller agrees to sell, transfer and deliver to Purchaser,
and Purchaser agrees to purchase, upon the terms and conditions hereinafter set
forth, all of the A/R of Seller's physical therapy practice formerly located at
130 Williams Street New York, NY 10038, including without limitation the
following:
The Accounts Receivable listed in Exhibit A-1, such A/R having been generated by
Seller from July 16, 1997 through November 2, 1998 and solely from Seller's
practice formerly located at 130 Williams Street, New York, NY 10038.
2. Purchase Price. The purchase price to be paid by Purchaser shall be
calculated as follows:
The Parties agree that Seller shall satisfy, at or before closing, any
liens which may be filed against the subject A/R, including but not
limited to those filed by Reservoir Capital Corporation and PFS VI, Inc.
Such lien satisfaction shall be evidenced by Purchaser's receipt of
Seller's UCC-3 forms at or before Closing. Closing is contingent upon
Purchaser's receipt of same on or before January 2, 1999
Purchaser agrees that until Seller has collected the full amount of the
payoff amount it paid to PFS VI, Inc., with a maximum allowance of
Fifteen Thousand Dollars ($15,000.00), Seller shall be entitled to One
Hundred Percent (100%) of all the subject A/R collected by Purchaser. In
calculating such payoff amount, Reservoir Capital Corporation fees for
escrowed Reserves and expenses, as per the Agreement between Seller and
Reservoir Capital Corporation, shall not be counted as part of the total
payoff
<PAGE>
figure. After Seller has collected such A/R to cover its PFS VI, Inc.
lien payoff, Purchaser shall then be entitled to collect and retain One
Hundred percent (100%) of all the subject A/R until such time as it has
collected the total of Seller's PFS VI, Inc. payoff amount.
Thereafter, RMP shall pay to Seller, on at least a biweekly basis, fifty
percent (50%) of all A/R coming into its possession, through May 1,
1999. Subsequent to May 1, 1999, RMP shall pay to Seller, on at least a
biweekly basis, forty percent (40%) of all A/R coming into its
possession, until such time as all applicable A/R are collected.
In the event that Seller obtains possession of Purchaser's A/R from any
and all third party payors, which A/R may or may not be lumped or
combined with other of Seller's receivables from its other locations,
Seller shall forward a check for the full amount of Purchaser's A/R
within five (5) days of receipt of such A/R, or upon such funds clearing
Seller's bank, whichever is later. In the event Seller does not release
Purchaser's A/R within five (5) days of receipt (or bank clearance) of
same, Seller shall be liable to Purchaser for a penalty of twenty five
percent (25%) of such payment due, in addition to such A/R.
Seller will retain all A/R collections received by Seller since December 22,
1998. Checks dated after closing shall belong to Purchaser.
2A. Purchaser's A/R. The Parties agree that Purchaser will initially
receive all Purchaser's A/R attributable to the 130 Williams Street
practice and all Seller's A/R attributable to all of Seller's New York
physical therapy practices at Purchaser's 130 Williams Street address.
It is understood that the A/R received at Purchaser's address which are
attributable to the 130 Williams Street practice, will belong to RMP.
All other A/R will continue to belong to Oak Tree. After closing, Oak
Tree will use its best efforts to notify its insurance company payors
and patients that all future accounts attributable to Oak Tree's other
physical therapy facilities should be paid to Oak Tree at another
designated location.
Purchaser agrees to provide, on a weekly basis, an appropriate
accounting of all funds which are received by Purchaser. Such accounting
shall include, but shall not be limited to, ledger reconciliations, bank
statements and daily copies of all checks received. Purchaser agrees to
apportion A/R payments coming into its possession as between its 130
Williams Street facility and Oak Tree's other facilities. Purchaser will
reimburse Oak Tree for the apportionment of A/R due to Oak Tree but
received by Purchaser. Both Parties shall have the right to audit each
other's books and accounts pertaining to the A/R for the 130 Williams
Street facility.
In the event that RMP obtains possession of Seller's outside A/R
attributable to Seller's other practices, which A/R may or may not be
lumped or combined with RMP's A/R,
<PAGE>
RMP shall forward a check for the full amount of Seller's A/R within
five (5) days of receipt of such A/R, or upon such funds clearing RMP's
bank, whichever is later. In the event RMP does not release Seller's A/R
within five (5) days of receipt (or bank clearance) of same, RMP shall
be liable to Seller for a penalty of twenty five percent (25%) of such
payment due, in addition to such A/R.
The provisions of Paragraphs 2 and 2A shall survive closing.
3. The Closing. The "closing" means the settlement of the obligations of Seller
and Purchaser to each other under this agreement, including the payment of the
purchase price to Seller as provided in Article 2 hereof and the delivery of the
appropriate closing documents. The closing shall be held at the offices of
Purchaser's attorneys and shall take place on or about Thursday, December 17,
1998 (the "closing date").
4. Closing Documents. At the closing Seller and Purchaser shall execute and
deliver to each other the following documents:
(a) an Assignment and Assumption of Assignment of the rights of Seller
to the A/R;
(b) certified copies of resolutions duly adopted by the Directors of
Seller and Purchaser authorizing the sale and purchase the A/R and the
performance by Seller and Purchaser of their obligations hereunder;
(c) an opinion of Seller's counsel, Frederick C. Veit, Esq. dated as of
the closing date, in form and substance satisfactory to Purchaser's
counsel, stating such counsel's opinion that: (i) Seller is a
corporation duly organized, validly existing and in good standing under
the laws of New York; (ii) Seller has full power and authority to enter
into this agreement and perform its obligations hereunder; (iii) the
execution and delivery of this agreement and the performance by Seller
of its obligations hereunder have been duly authorized by the Directors
of Seller and no further action or approval is required in order to
constitute this agreement as the binding obligation of Seller,
enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, moratorium, insolvency or other laws affecting
creditor's rights generally; (iv) the execution and delivery of this
agreement and the performance by Seller of its obligations hereunder do
not and will not violate any provision of the Seller's governing
instruments; and (v) except as may be set forth in this agreement, such
counsel is not representing Seller in any suit, action or proceeding
against Seller which, if adversely determined, would prohibit the
consummation of the transactions contemplated by this agreement
(d) such other instruments and information in form and substance
satisfactory to Purchaser's and Seller's attorneys as may be
necessary or proper to transfer to Purchaser good and marketable
title to all ownership interests in the A/R to be transferred
under this agreement.
<PAGE>
Except as expressly provided herein, Purchaser shall not be obligated to pay or
perform any obligations or liabilities of Seller including without limitation
obligations or liabilities of Seller to its creditors or any legal, accounting,
brokerage or finder's fees or any taxes or other expenses in connection with
this agreement or the consummation of the transactions contemplated hereby.
5. Closing Adjustments. Any errors or omissions in computing apportionments
shall be corrected after the closing, with both parties fully cooperating.
6. Representations And Warranties Of Seller. Seller represents and warrants to
Purchaser as follows:
(a) Seller is a corporation duly organized and validly existing under
the laws of New York, and is duly qualified to do business in New York.
Seller has full power and authority to own its properties and to conduct
its business as now carried on, and to carry out and perform its
undertakings and obligations as provided herein. The execution and
delivery by Seller of this agreement and the consummation of the
transactions contemplated herein have been duly authorized by the
Directors of Seller and will not conflict with or breach any provision
of the governing instruments of Seller and do not and will not conflict
with or result in any breach of any condition or provision of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon the A/R by reason of the provisions
of any contract, lien, lease, agreement, instrument or judgment to which
Seller is a party, or which is or purports to be binding upon Seller or
which affects or purports to affect the Assets. No further action or
approval is required in order to constitute this agreement the binding
and enforceable obligation of Seller.
(b) No action, approval, consent or authorization, including without
limitation any action, approval, consent or authorization of any
governmental or quasi-governmental agency, commission, board, bureau or
instrumentality, is necessary for Seller to constitute this agreement
the binding and enforceable obligation of Seller or to consummate the
transactions contemplated hereby.
(c) Seller is the owner of and has good and marketable title to the A/R,
free of all liens, claims and encumbrances, except as set forth herein.
(d) There are no violations, potential claims of violations or questions
of irregularity regarding any law or governmental rule or regulation
pending or, to the best of Seller's knowledge, threatened against Seller
or the A/R. Seller has strictly complied with all laws and governmental
rules and regulations applicable to the business or the A/R.
(e) There are no judgments, liens, suits, actions or proceedings pending
or, to the best of Seller's knowledge, threatened against Seller or the
A/R. Neither Seller nor the A/R are a party to, subject to or bound by
any agreement or any judgment or decree of any court, governmental body
or arbitrator which would conflict with or be breached by the execution,
delivery or performance of this agreement, or which could prevent the
carrying
<PAGE>
out of the transactions provided for in this agreement, or which could
prevent the use by Purchaser of the A/R or adversely affect the conduct
of the business by Purchaser.
(f) Seller has not entered into, and the A/R are not subject to, any:
(i) written contract or agreement for the employment of any employee of
the business; (ii) contract with any labor union or guild; (iii)
pension, profit-sharing, retirement, bonus, insurance, or similar plan
with respect to any employee of the business; or (iv) similar contract
or agreement affecting or relating to the A/R.
(g) Seller has filed each tax return, including without limitation all
income, excise, property, gain, sales, franchise and license tax
returns, required to be filed by Seller prior to the date hereof. Each
such return is true, complete and correct, and Seller has paid all
taxes, assessments and charges of any governmental authority required to
be paid by it and has created reserves or made provision for all taxes
accrued but not yet payable. No government is now asserting, or to
Seller's knowledge threatening to assert, any deficiency or assessment
for additional taxes or any interest, penalties or fines with respect to
Seller.
(h) That the aggregate amount owing on the Closing Date for the A/R sold
to Purchaser hereunder will be the amount set forth on the Seller's
Statement of the actual amount due;
(i) That each A/R will, as of the close of business on the Closing Date,
be owned by Seller free and clear of all liens, charges and
encumbrances, and will then represent a valid and legally binding
obligation of a bona fide customer of Seller, and each such obligation
will then be enforceable by Seller in accordance with its terms;
(j) That the Assignment, when executed and delivered to Purchaser by
Seller, will then vest in Purchaser, Seller's entire right, title and
interest in and to all of the A/R, and Seller will not have to sold,
pledged, assigned, or transferred, and will not sell, pledge, assign, or
transfer, the A/R to anyone other than Purchaser;
(k) That the A/R are not now and will not hereafter be subject to any
offset, counterclaim, or other defense;
(l) If any of the foregoing covenants, representations or warranties in
respect of any A/R shall prove to have been materially incorrect at the
Closing Date or thereafter, or shall be materially breached, and such
incorrectness or breach shall not be corrected prior to the Settlement
Date in the calendar month after such incorrectness or breach became
known to Seller or to Purchaser, then on such Settlement Date, Seller
will pay to Buyer the unpaid balance of such A/R. Any amount paid by
Seller under this provision shall be treated as a collection in the
manner provided above and upon the receipt of such payment and all other
amounts then due Purchaser, Purchaser shall resell such A/R to Seller
without recourse, representation or warranty.
<PAGE>
(m) All of these covenants, representations and warranties shall survive
the Closing hereunder and shall remain effective for the entire term of
this Agreement. Seller's obligation to Purchaser under this Agreement
shall not be affected by reason of the invalidity or illegality of any
A/R.
7. Representations And Warranties Of Purchaser. Purchaser represents and
warrants to Seller as follows:
(a) Purchaser is a professional limited liability company organized
under the laws of New York, and is duly qualified to do business in New
York. Purchaser has full power and authority to carry out and perform
its undertakings and obligations as provided herein. The execution and
delivery by Purchaser of this agreement and the consummation of the
transactions contemplated herein have been duly authorized by the Board
of Directors of Purchaser and will not conflict with or breach any
provision of the Certificate of Incorporation or governing documents of
Purchaser. No further action or approval, corporate or otherwise, is
required in order to constitute this agreement the binding and
enforceable obligation of Purchaser.
(b) No action, approval, consent or authorization, including without
limitation any action, approval, consent or authorization of any
governmental or quasi-governmental agency, commission, board, bureau or
instrumentality, is necessary for Purchaser to constitute this agreement
the binding and enforceable obligation of Purchaser or to consummate the
transactions contemplated hereby.
8. Conditions To Closing. The obligations of Seller and Purchaser to close
hereunder are subject to the following conditions:
(a) All of the terms, covenants and conditions to be complied with or
performed by Seller under this agreement on or before the closing
shall have been complied with or performed in all material
respects.
(b) All representations or warranties of Seller and Purchaser herein
are true in all material respects as of the closing date. Such
representations and warranties shall also survive closing.
(c) On the closing date, there shall be no liens or encumbrances
against the A/R, except as provided for herein.
(d) The business of the Seller will have been conducted only in the
ordinary course of business.
(e) Seller will supply, upon request by Purchaser representatives,
such pertinent information as may be required by Purchaser in
order to conduct its due diligence survey of Seller. It is agreed
that any documents or information provided hereunder shall be
kept in full and complete confidence.
<PAGE>
(f) The Closing is contingent upon the granting of Seller's factor's
(PFS VI, Inc.) approval to release such factor's UCC/secured
interest in the A/R being purchased.
9. Indemnification. Each party hereto shall indemnify and hold the other parties
harmless from and against all liability, claim, loss, damage or expense,
including reasonable attorneys' fees, incurred or required to be paid by such
other parties by reason of any breach or failure of observance or performance of
any representation, warranty, covenant or other provision (including lists and
Exhibits) of this agreement by such party. Seller shall indemnify and hold
Purchaser harmless against all actions, suits, proceedings, judgments, costs and
expenses incurred by or levied against Purchaser, due to Seller's prior acts,
omissions, negligence or other wrongful conduct. Purchaser shall similarly
indemnify and hold Seller harmless for Purchaser's acts subsequent to closing.
10. Risk Of Loss. The risk of loss to the A/R sold hereunder, until the closing,
is assumed and shall be borne by Seller. Seller agrees to keep its A/R fully
insured against any loss to the date of closing.
11. Brokerage. The parties hereto represent and warrant to each other that they
have not dealt with any broker or finder in connection with this agreement other
than the broker, William Kedersha.
12. Notices. All notices, demands and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been
properly given if delivered by hand, fax or by registered or certified mail,
return receipt requested, with postage prepaid, to Seller's attorneys, Lifshutz,
Polland & Associates, P.C. 675 Third Avenue Suite 2400 New York, NY 10017 Attn:
Mathew Levy, Esq., and to Purchaser's attorney, Frederick C. Veit, Esq., at 21
Gordon Avenue, Briarcliff Manor, NY 10510. The respective attorneys for the
parties are hereby authorized to give any notice required or permitted hereunder
and to agree to adjournments of the closing.
13. Survival. The representations, warranties and covenants contained herein or
in any document, instrument, certificate or schedule furnished in connection
herewith shall survive the delivery of the closing of sale and shall continue in
full force and effect after the closing, except to the extent waived in writing.
14. Further Assurances. In connection with the transactions contemplated by this
agreement, the parties agree to execute and deliver such further instruments,
and to take such further actions, as may be reasonably necessary or proper to
effectuate and carry out the transactions contemplated in this agreement.
15. Changes Must Be In Writing. No delay or omission by either Seller or
Purchaser in exercising any right shall operate as a waiver of such right or any
other right. This agreement may not be altered, amended, changed, modified,
waived or terminated in any respect or
<PAGE>
particular unless the same shall be in writing signed by the party to be bound.
No waiver by any party of any breach hereunder shall be deemed a waiver of any
other or subsequent breach.
16. Captions And Exhibits. The captions in this agreement are for convenience
only and are not to be considered in construing this agreement. The Exhibits
annexed to this agreement are an integral part of this agreement, and where
there is any reference to this agreement it shall be deemed to include said
Exhibits.
17. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York.
18. Binding Effect. This agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement the date first
above written.
Seller:
Oak Tree Medical Practice, P.C.
By: /s/ DOUGLAS SPIEL, M.D.
------------------------------
Douglas Spiel, M.D.
Director and Sole Shareholder
ATTEST:
By: /s/ ANDY FRIED
--------------
Andy Fried
Secretary
Purchaser:
Rehabilitation Medicine Practice of N.Y., P.L.L.C.
By: /s/ ROBERT KRAMBERG
-------------------
Name:
Title:
ATTEST:
By:
----------------------------
Name:
Title:
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