SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 31, 1997
MEADOWBROOK REHABILITATION GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19726 94-3022377
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation)
2200 Powell Street, Suite 800, Emeryville, CA 94608 (Address of
principal executive offices) (zip code)
Registrant's telephone number, including area code:
(510) 420-0900
<PAGE>
Item 2. Acquisition or Disposition of Assets
On August 31, 1997, a subsidiary of Meadowbrook Rehabilitation Group, Inc.,
a Delaware corporation (the "Company"), sold five outpatient rehabilitation
clinics and certain other assets located in Florida and Georgia. The outpatient
rehabilitation clinics were located in St. Augustine, Palatka, Palm Coast, and
Ormond Beach, Florida and in Moultrie, Georgia. The Company sold the clinics in
two separate transactions. The purchaser of the St. Augustine and Palatka
outpatient rehabilitation clinics and certain other assets, was Remlap Services,
Inc., and the purchaser of the Ormond Beach, Palm Coast, and Moultrie outpatient
rehabilitation clinics was Titan Healthcare, Inc. The aggregate sale price for
the outpatient rehabilitation clinics and other assets was $550,000. The Company
received promissory notes from the purchasers for the aggregate purchase price
($215,000 from Remlap Services, Inc. and $335,000 from Titan Healthcare, Inc.).
The promissory notes are secured by the acquired assets and the Company also
received personal guarantees from the shareholders of Remlap Services, Inc. and
Titan Healthcare, Inc. The purchasers acquired all assets including accounts
receivable and are responsible for all accounts payable and certain payroll
liabilities. As part of the transaction, the Company retained all liabilities
for amounts due to the former owners of the clinics. At closing, this amount was
$197,000.
This transaction resulted in a loss of $2,046,000, primarily as a result of
the write-off of goodwill associated with the Company's acquisition of certain
of the clinics in 1994. The loss will be recorded as other operating expense in
the Company's financial statements for the twelve months ended June 30, 1997.
The selling price for the clinics and other assets sold was determined based on
arms-length negotiations between the parties. Kim Palmer, the Company's former
Vice President of outpatient operations, is a shareholder in both Remlap
Services, Inc. and Titan Healthcare, Inc. Otherwise, there was no material
relationship between either of the purchasers and the Company or any of its
affiliates, any director or officer of the Company or any associate of any such
director or officer.
<PAGE>
Item 7. Financial Statements and Exhibits.
(b) Pro Forma financial information required pursuant to Article 11 of
Regulation S-X.
The following Pro Forma financial statements are included
following the signature page to this Form 8-K:
Introduction to the Pro Forma Condensed Consolidated financial
information.
Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1997 (unaudited).
Pro Forma Condensed Consolidated Statements of Income for the
twelve months ended June 30, 1996 and for the nine months ended
March 31, 1997 (unaudited).
Notes to Pro Forma Condensed Consolidated financial information
(unaudited).
(c) Exhibits:
Exhibit 2.1 Agreement of Purchase and Sale, dated August 31, 1997, between
Remlap Services, Inc., and Medbrook Corp. and the Agreement of Purchase and
Sale, dated August 31, 1997, between Titan Healthcare, Inc., and Medbrook Corp.
The Registrant agrees to furnish to the Commission supplementally a copy of the
omitted schedules.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: September 12, 1997.
MEADOWBROOK REHABILITATION
GROUP, INC.
By:/s/Harvey Wm. Glasser, M.D.
Harvey Wm. Glasser, M.D.
President and Chief Executive Officer
<PAGE>
Item 7(b) Meadowbrook Rehabilitation Group, Inc. reflecting the sale of
five outpatient rehabilitation clinics and certain other assets
located in Florida and Georgia. Introduction to unaudited Pro Forma
Condensed Consolidated Financial information.
The following tables set forth the unaudited Pro Forma Condensed
Consolidated Balance Sheet of the Company as of March 31, 1997, and the
unaudited Pro Forma Condensed Consolidated Statements of Income of the Company
for the twelve months ended June 30, 1996 and the nine months ended March 31,
1997. The Pro Forma Condensed Consolidated Statements of Income include
adjustments related to the sale of the five outpatient rehabilitation clinics
and certain other assets in Florida and Georgia (the "Assets"), the sale of
Meadowbrook Rehabilitation Group of Georgia, Inc. and the sale of the assets of
Meadowbrook Neurocare-Kansas City, Inc. The closing date for the sale of
Meadowbrook Rehabilitation Group of Georgia, Inc. was March 31, 1997 and
therefore the Condensed Consolidated Balance Sheet as of March 31, 1997 reflects
the disposition. The Pro Forma Condensed Consolidated Balance Sheet was prepared
assuming that the Company's disposition of the Assets and the sale of the assets
of Meadowbrook Neurocare-Kansas City, Inc. took place on March 31, 1997. The Pro
Forma Condensed Consolidated Statements of Income were prepared assuming that
the disposition of the Assets, the sale of the assets of Meadowbrook
Neurocare-Kansas City, Inc. and the disposition of Meadowbrook Rehabilitation
Group of Georgia, Inc. took place as of the beginning of the twelve months ended
June 30, 1996 and at the beginning of the nine months ended March 31, 1997,
respectively.
The unaudited pro forma financial information furnished herein reflects all
adjustments for the twelve months ended June 30, 1996 and the nine months ended
March 31, 1997, respectively, consisting only of normal recurring adjustments
which, in the opinion of management, are necessary to fairly state the Company's
financial position and the results of its operations for the periods presented.
The unaudited pro forma financial information does not purport to present
the consolidated financial position and consolidated results of operations of
the Company had the Company's disposition of the Assets, the disposition of
Meadowbrook Neurocare-Kansas City, Inc. and the disposition of Meadowbrook
Rehabilitation Group of Georgia, Inc. actually occurred on the dates indicated;
nor does it purport to be indicative of results that will be attained in the
future.
The pro forma financial information should be read in conjunction with the
Company's historical Consolidated Financial Statements and Notes thereto
contained in the Company's From 10-K for the fiscal year ended June 30, 1996,
the Company's Form 8-K dated March 31, 1997, and the Company's Form 8-K dated
July 31, 1997.
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
As of March 31, 1997
----------------------------------------------------------------------------------------
Kansas Pro Forma Florida Pro Forma
Adjustments Adjustments
-------------------------------------------------------------
Actual Debit Credit Ref Debit Credit Ref Pro Forma
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $3,639,993 $1,500,000 (B) $5,139,993
Net patient accounts receivable 5,122,109 $361,695 (A) 4,760,414
Due from intermediaries 9,630 $40,369 (A) 49,999
Prepaid expenses and other assets 1,198,336 $2,410 (B) 550,000 361,862 (A) 1,384,064
-----------
-----------
Total current assets 9,970,068 11,334,470
----------- -----------
PROPERTY AND EQUIPMENT, (net) 1,188,669 208,148 (B) 263,104 (A) 717,417
GOODWILL AND INTANGIBLE
ASSETS 1,820,472 1,468,673 (A) 351,799
----------- -----------
TOTAL ASSETS $12,979,209 $12,403,686
=========== ===========
CURRENT LIABILITIES $3,550,872 146,000 (B) 181,227 (A) $3,878,099
LONG-TERM LIABILITIES 380,956 380,956
----------- -----------
Total Liabilities 3,931,828 4,259,055
----------- -----------
MINORITY INTEREST -- --
STOCKHOLDERS' EQUITY
Common stock 19,302 19,302
Paid-in capital 17,908,122 17,908,122
Retained deficit (8,880,043) 1,143,442 (B) 2,046,192 (A) (9,782,793)
----------- -----------
Total stockholders' equity 9,047,381 8,144,631
----------- ---------- ---------- ---------- ---------- -----------
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $12,979,209 $1,500,000 $1,500,000 $2,636,561 $2,636,561 $12,403,686
=========== ========== ========== ========= ========== ===========
<FN>
Footnotes on page 9.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
Year Ended June 30, 1996
----------------------------------------------------------------------------------------------
Georgia and Kansas Florida Pro Forma
Pro Forma Adjustments Adjustments
-----------------------------------------------------------
Actual Debit Credit Ref Debit Credit Ref Pro Forma
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Net patient revenues $23,622,560 $12,399,325 $184,000 (F,G) $2,253,763 (C) $9,153,472
----------- -----------
Net operating revenues 23,622,560 9,153,472
----------- -----------
OPERATING EXPENSES:
Salaries and employee 15,189,173 7,591,751 (D,F) $1,274,039 (C,D) 6,323,383
benefits
Other operating expenses 9,108,509 4,103,036 (D,F) 1,083,718 (C,D) 3,921,755
----------- -----------
Total operating expenses 24,297,682 10,245,138
----------- -----------
Loss from operations (675,122) (1,091,666)
----------- -----------
OTHER (INCOME) EXPENSE:
Gain on sale of assets -- --
Interest income (113,834) 140,000 (E) 55,000 (E) (308,834)
----------- -----------
Net other income (113,834) (308,834)
----------- -----------
Loss before income taxes (561,288) (782,832)
INCOME TAX PROVISION
(BENEFIT) -- --
----------- -----------
NET LOSS BEFORE
MINORITY INTEREST (561,288) (782,832)
----------- -----------
MINORITY INTEREST 29,016 29,016 (C) --
----------- ----------- ----------- ---------- ---------- -----------
NET LOSS ($590,304) $12,399,325 $12,018,787 $2,253,763 $2,441,662 ($782,832)
=========== =========== =========== ========== ========== ===========
NET LOSS PER SHARE
(primary and fully diluted) ($0.31) ($0.41)
=========== ===========
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING
1,930,349 1,930,349
=========== ===========
<FN>
Footnotes on page 9.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
Nine Months Ended March 31, 1997
-------------------------------------------------------------------------------------------
Georgia and Kansas Florida Pro Forma
Pro Forma Adjustments Adjustments
---------------------------------------------------------------
Actual Debit Credit Ref Debit Credit Ref Pro Forma
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Net patient revenues $17,013,035 $8,594,961 $138,000 (F,G) $1,244,531 (C) $7,311,543
------------ ----------
Net operating revenues 17,013,035 7,311,543
------------ ----------
OPERATING EXPENSES:
Salaries and employee benefits 11,926,130 5,924,265 (D,F) $1,088,875 (C,D) 4,912,990
Other operating expenses 6,668,417 2,869,724 (D,F) 761,999 (C,D) 3,036,694
------------ ----------
Total operating expenses 18,594,547 7,949,684
------------ ----------
Loss from operations (1,581,512) (638,141)
------------ ----------
OTHER (INCOME) EXPENSE:
Gain on sale of assets (530,942) (530,942)
Interest income (38,184) 105,000 (E) 41,250 (E) (184,434)
------------ ----------
Net other income (569,126) (715,376)
------------ ----------
Loss before income taxes (1,012,386) 77,235
----------
INCOME TAX PROVISION
(BENEFIT) -- --
------------ ----------
NET LOSS BEFORE MINORITY
INTEREST (1,012,386) 77,235
------------ ----------
MINORITY INTEREST 26,660 26,660 (C) --
------------ ---------- ---------- ---------- ---------- ----------
NET LOSS ($1,039,046) $8,594,961 $9,036,989 $1,244,531 $1,918,784 $77,235
============ ========== ========== ========== ========== ==========
NET LOSS PER SHARE
(primary and fully diluted) ($0.54) $0.04
============ ==========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
1,930,244 1,930,244
============ ==========
</TABLE>
<PAGE>
Meadowbrook Rehabilitation Group, Inc.
Reflecting the Sale of Five Outpatient Rehabilitation Clinics
and Certain Other Assets in Florida
Notes to Pro Forma Condensed Consolidated Financial Information
1. The amounts reflected in these notes are based on estimates
which are subject to change. The following pro forma
adjustments were made to the March 31, 1997 Condensed
Consolidated Balance Sheet to reflect the sale of five
outpatient rehabilitation clinics and certain other assets in
Florida. The Company received promissory notes from the
purchasers for the aggregate purchase price of $550,000.
(A) To record the sale of five outpatient rehabilitation clinics
and certain other assets in Florida and Georgia and the
assumption of certain liabilities by the purchasers.
(B) To record the sale of certain assets of Meadowbrook
Neurocare-Kansas City, Inc. and the assumption of certain
liabilities by the purchaser.
2. The following pro forma adjustments were made to the Condensed
Consolidated Statements of Income for the twelve months ended
June 30, 1996 and the nine months ended March 31, 1997.
(C) Elimination of all operating revenue and expenses for the five
outpatient rehabilitation clinics in Florida and Georgia.
(D) Estimated reduction of corporate office salaries and wages
and operating expenses.
(E) Estimated increase in Meadowbrook Rehabilitation Group, Inc.'s
interest income due to payments on promissory notes received
in connection with the sale of five outpatient clinics and
certain other assets in Florida and Georgia.
(F) Elimination of all operating revenue and expenses for
Meadowbrook Neurocare- Kansas City, Inc. and Meadowbrook
Rehabilitation Group of Georgia, Inc.
(G) Estimated increase in revenue due to increased Medicare
reimbursement based on higher overall Medicare utilization.
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made and entered into as of August
29, 1997, by and between MEDBROOK CORP., a Florida corporation ("Medbrook"), and
TITAN HEALTHCARE, INC., ("Purchaser").
P R E A M B L E
Medbrook owns and operates several physical and rehabilitation
therapy clinics in North Florida and South Georgia. In addition, Medbrook
manages the practice of several physicians. Purchaser desires to purchase
certain of Medbrook's assets upon the terms and conditions set forth below.
ACCORDINGLY, the parties hereto agree as follows:
ARTICLE 1.
Sale and Purchase of Assets
Section 1.1 Sale of Assets by Medbrook. Subject to the terms and
conditions of this Agreement, effective August 31, 1997 (the "Effective Date"),
for the consideration set forth in Section 1.4 below, Medbrook shall sell,
transfer, assign and convey to Purchaser, and Purchaser shall purchase from
Medbrook, all of the assets of Medbrook at the following locations (the
"Clinics"):
Moultrie Physical Therapy
713 S. Main Street
Moultrie, GA 31768
Medbrook Rehab of PC
4 Office Park Drive #4
Palm Coast, Florida 32137
Medbrook Rehab of Ormond
1275 W. Granada Blvd.
Ormond Beach, Florida
Medbrook Rehab of Daytona
1480 International Speedway
Daytona Beach, Florida 32114
Such assets purchased shall include the following (herein referred to
as the "Assets"):
(a) Equipment. All of the furniture, furnishings,
computer hardware and software, and equipment of
Medbrook at the Clinics, as more fully described on
Schedule 1.1(b) (the "Equipment").
(b) Leasehold improvements. All Leasehold improvements
owned by Medbrook at the Clinics, as more fully
described on Schedule 1.1(c) (collectively, the
"Leasehold Improvements").
(c) Accounts Receivable. All accounts receivable of the
Clinics outstanding on the date of Closing. A
detailed listing of such accounts receivable (as of
June 30, 1997) is described on Schedule 1.1(d) (the
"Accounts Receivable"). Medbrook hereby agrees to
sell all accounts receivable notwithstanding the fact
that Schedule 1.1(d) is only current through June 30,
1997.
(d) Name. Use of the name "Medbrook" as described in
Article 8 below.
(e) Telephone Numbers. The telephone numbers of each of
the Clinics (the "Telephone Numbers").
(f) Contracts. All of Medbrook's right, title and
interest in and to contracts for services entered
into by Medbrook, as more fully described in Exhibit
1.1(g) hereof (the "Contracts").
(g) Deposits. All deposits owned by Medbrook for any
equipment purchases, leases, or otherwise, except as
otherwise specified herein.
(h) Patient Charts and Records. All charts and records of
Medbrook's patients who were treated at the Clinics.
Section 1.2 Excluded Assets. Purchaser shall purchase only the Assets
listed above. Specifically excluded from the Assets, among other things, shall
be the following:
(a) All cash and cash equivalents owned by Medbrook on the
Effective Date.
(b) All prepaid Assets, including insurance and rent.
(c) All intangible Assets of Medbrook, except those
intangible Assets specifically included in the Assets
in paragraph 1.1 above.
(d) Medbrook's deposit with Paychex, a staff leasing
company, in the amount of $15,000.
Section 1.3 Liabilities. Purchaser shall not assume any liabilities
of Medbrook or of the Clinics except for the following:
(a)Leases. Purchaser shall assume the ongoing
obligations with respect the leases (the "Leases")
including, but not limited to, office space,
equipment, and computer maintenance, including any
obligations to make monthly rent or lease payments,
all as more specifically described in Exhibit 1.3(a)
attached hereto.
(b)Contracts. Purchaser shall assume the ongoing
obligations with respect the Contracts and shall
fulfill all obligations and responsibilities under the
Contracts.
(c)Accounts Payable. Purchaser shall assume all accounts
payable of Medbrook on the Closing Date. A detailed
listing of such accounts payable (as of June 30, 1997)
is described in Schedule 1.3(c) attached hereto.
Purchaser hereby agrees to assume all accounts payable
of Medbrook, as of the Effective Date, notwithstanding
the fact that Schedule 1.3(c) is only current through
June 30, 1997.
(d)Telephone Numbers. Purchaser shall assume ongoing
bills and obligations with respect to the Telephone
Numbers, including any expenses associated with yellow
page or other telephone book advertising that arise
after the Effective Date.
(e)Payroll Liabilities. Purchaser shall assume all
payroll liability of Medbrook from and after Closing,
and shall assume all paid time off reserve of
Medbrook.
(f)Closed Clinics. All obligations of Medbrook with
respect to the Medbrook Rehab of Ormond located at
1275 W. Granada Blvd., Ormond Beach, Florida, and
Medbrook Rehab of Daytona, located at 1480
International Speedway, Daytona Beach, Florida,
including but not limited to, office rent,
electricity, and water.
All liabilities of Medbrook not specifically listed above shall
remain the sole responsibility of Medbrook including, without limitation, any
payments owed by Medbrook to the former owners of the Clinics.
Section 1.4 Purchase Price.
(a) In consideration for the transfer of the Assets
described in Section 1.1 above, Purchaser shall pay to
Medbrook Three Hundred Thirty-five Thousand Dollars
($335,000.00) (the "Purchase Price").
(b) The Purchase Price shall be evidenced by a promissory
note with interest occurring on the unpaid principal
balance at the rate of ten percent (10%) per annum.
The Promissory Note shall be payable in twelve equal
monthly payments of principal plus interest in the
amount of $29,451.82 on the last day of each month
commencing on September 30, 1997 and continuing on the
last day of each successive month through August 31,
1998.
(c) Payment of the promissory note shall be secured by a
first security interest in all of the assets of
Purchaser, including any assets now existing or
hereafter acquired and any proceeds therefrom. The
individual owners of Purchaser shall provide personal
guarantees to payment of the promissory note.
(d) Purchaser shall not sell, transfer or otherwise
dispose of any assets of the Purchaser until the
promissory note is paid in full except in the ordinary
course of business and for fair and adequate
consideration unless approved in advance by Medbrook.
(e) Medbrook is financing the acquisition of the Assets by
Purchaser due to Kim Palmer's affiliation with and
ownership of Purchaser. In the event that Kim Palmer
either ceases being an owner of Purchaser or ceases
controlling the operations of Purchaser, then Medbrook
may accelerate all sums due under the promissory note
and call all amounts due owing immediately.
Section 1.5 Closing.
(a) The sale and purchase of the Assets contemplated
hereunder shall take place at a closing (the
"Closing") to be held at the offices of Rogers,
Towers, Bailey, Jones & Gay, P.A., 1301 Riverplace
Boulevard, Suite 1500, Jacksonville, Florida on August
29, 1997, or on such date as soon as practicable after
or concurrently with the satisfaction or waiver of the
conditions set forth in Article 4 hereof (such date
being herein referred to as the "Closing Date").
Notwithstanding anything herein to the contrary, the
sale and purchase of the Assets shall be effective as
of the Effective Date.
(b) At the Closing, Medbrook shall deliver to Purchaser
(i) duly executed instruments of conveyance,
assignment or transfer with respect to the Assets;
(ii) the certificates required by Section 4.1; and
(iii) such other agreements, instruments, certificates
or other documents as Purchaser may reasonably
request.
(c) At the Closing, Purchaser shall deliver to Medbrook
(i) the certificates required by Section 4.2, and (ii)
such other agreements, instruments, certificates or
other documents as Medbrook may reasonably request.
Section 1.6 Tail Insurance. Medbrook shall purchase extended ("Tail")
malpractice insurance coverage in an appropriate amount to cover Medbrook for
malpractice claims asserted for services rendered at the Clinics by Medbrook
during the term that Medbrook provided professional services at the Clinics.
ARTICLE 2.
Representations and Warranties
Section 2.1 Representations and Warranties of Medbrook. Medbrook
represents and warrants to Purchaser, as of the execution hereof, as follows:
(a)Power and Authority of Medbrook. Medbrook is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Florida.
Medbrook has all requisite power and authority to
enter into this Agreement and perform its obligations
as contained herein, and this Agreement constitutes
the valid and legally binding obligation of Medbrook
enforceable against it in accordance with its terms,
except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally.
(b)No Conflicts. The execution and delivery of this
Agreement by Medbrook and the consummation of the
transactions contemplated hereby will not violate any
provision of any law or violate any term or provision
of any order, writ, judgment, injunction or decree of
any court or any other governmental department or
agency applicable to Medbrook, or conflict with or
result in a breach of any of the terms, conditions, or
provisions of the Articles of Incorporation, Bylaws or
other organizational document of Medbrook, or any
agreement to which Medbrook is a party.
(c)Title to Equipment. Medbrook has good, valid and
marketable title to the Equipment, free and clear of
all mortgages, liens, pledges, security interests, and
other encumbrances.
(d)Broker's Fees. No commission, fee, or compensation of
any kind on account of any services rendered in
connection with this Agreement or the transactions
contemplated hereby, other than the fees and expenses
of counsel for Medbrook, has been contracted for by
Medbrook.
(e)Legal Compliance. To the best of Medbrook's knowledge
and belief, Medbrook has conducted its business in
accordance with all material law and regulations, is
not in violation of any material law or material
regulation applicable to Medbrook for the operation of
its business, and is not in material default with
respect to any of its obligations.
(f)Officers. Each of the officers of Medbrook executing
this Agreement and all documents at Closing are and
will be duly authorized and empowered to execute such
documents on behalf of Medbrook.
Section 2.2 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Medbrook, as of the execution hereof, as follows:
(a)Power and Authority of Purchaser. Purchaser is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Florida.
Purchaser has all requisite power and authority to
enter into this Agreement and perform its obligations
as contained herein and this Agreement constitutes the
valid and legally binding obligations of Purchaser
enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally.
(b)No Conflicts. The execution and delivery of this
Agreement by Purchaser and the consummation of the
transactions contemplated hereby will not violate any
provision of law or violate any term or provision of
any order, writ, judgment, injunction or decree of any
court or any other governmental department or agency
applicable to Purchaser, or conflict with or result in
a breach of any of the terms, conditions or provisions
of the Articles of Incorporation, Bylaws or other
organizational documents of Purchaser, or any
agreement to which Purchaser is a party.
(c)Broker's Fees. No commission, fee, or compensation of
any kind on account of any services rendered in
connection with this Agreement or the transactions
contemplated hereby, other than the fees and expenses
of counsel for Purchaser, has been contracted for by
Purchaser.
(d)Legal Compliance. To the best of Purchaser's
knowledge and belief, Purchaser has conducted its
business in accordance with all material law and
regulations, is not in violation of any material law
or material regulation applicable to Purchaser for the
operation of its business, and is not in material
default with respect to any of its obligations.
(e)Officers. Each of the officers of Purchaser executing
this Agreement and all documents at Closing are and
will be duly authorized and empowered to execute such
documents on behalf of Purchaser.
ARTICLE 3.
Covenants of the Parties
Section 3.1 Best Efforts and Further Assurances. Between the date
hereof and the Closing Date, Medbrook and Purchaser will use their best efforts
to fulfill all conditions prerequisite to the obligation of the other party to
consummate the transactions contemplated hereby and, after the Closing, take
such action as may be reasonably requested by the other party to accomplish the
intent set forth herein. Purchaser agrees to assist Medbrook in obtaining all
necessary consents, including those required of any equipment lessors and
landlords of office space, whether before or after the Closing Date, to
effectively assign the Leases to Purchaser. The parties hereby agree that
Purchaser shall be responsible for all of the Leases, and Purchaser shall
defend, indemnify and hold Medbrook harmless from any such Leases regardless of
whether the landlord or lessor consents to the assignment of any particular
lease.
Section 3.2 Correctness of Schedules. Many of the schedules attached
to this Agreement have been prepared by Kim Palmer, part owner of Purchaser and
chief operations officer of Medbrook. Purchaser is well aware of the Assets, the
condition of the Assets, and the obligations of Medbrook. Purchaser hereby
accepts the schedules as true and accurate and agrees not to contest the
accuracy of the schedules or the condition of the Assets.
ARTICLE 4.
Conditions Precedent
Section 4.1 Conditions to the Obligation of Purchaser. The obligation
of Purchaser to purchase the Assets shall be subject to the satisfaction or
waiver, on or prior to the Closing Date, of the following conditions:
(a)Representations and Warranties. The representations
and warranties of Medbrook set forth in Section 2.1
hereof shall be true and correct in all respects on
the Closing Date and Purchaser shall have received a
certificate to such effect, executed by Medbrook and
dated as of the Closing Date.
(b)Threatened or Pending Proceedings. No proceeding
shall have been initiated or threatened by any
governmental department or agency or any other person
seeking to enjoin or otherwise restrain or obtain
relief with respect to the consummation of the
transactions contemplated hereby.
(c)Corporate Action. All corporate action necessary to
authorize (i) the execution, delivery and performance
by Medbrook of this Agreement and (ii) the
consummation of the transactions contemplated hereby
shall have been duly and validly taken by Medbrook.
Section 4.2 Conditions to the Obligations of Medbrook. The obligation
of Medbrook to sell the Assets shall be subject to the satisfaction or waiver,
on or prior to the Closing Date, of the following conditions:
(a)Representations and Warranties. The representations
and warranties of Purchaser set forth in Section 2.2
hereof shall be true and correct in all respects on
the Closing Date and Medbrook shall have received a
certificate to such effect, executed by Purchaser and
dated as of the Closing Date.
(b)Threatened or Pending Proceedings. No proceeding
shall have been initiated or threatened by any
governmental department or agency or any other person
seeking to enjoin or otherwise restrain or obtain
relief with respect to the consummation of the
transactions contemplated hereby.
(c)Corporate Action. All corporate action necessary to
authorize (i) the execution, delivery and performance
by Purchaser of this Agreement and (ii) the
consummation of the transactions contemplated hereby
shall have been duly and validly taken by Purchaser.
ARTICLE 5.
Indemnification for Breach of Representations and Warranties
Section 5.1 Survival of Certain Representations and Warranties.
(a) All representations and warranties provided by
Medbrook in this Agreement shall terminate one (1)
year after the Closing Date.
Section 5.2 Indemnification for Breach of Certain Representations and
Warranties and Covenants.
(a) Purchaser hereby agrees to indemnify and hold Medbrook
harmless from and against all liabilities, losses,
claims, costs or damages (including reasonable
attorney's fees) incurred by Medbrook resulting from
or arising out of (i) any breach of any
representations and warranties by Purchaser contained
herein or in any certificate delivered pursuant
hereto, including any certificate delivered on the
Closing Date, (ii) any failure by Purchaser to perform
any of its obligations contained herein, or (iii) any
claim based upon facts and circumstances occurring
after the Closing Date.
(b) Medbrook hereby agrees to indemnify and hold Purchaser
harmless from and against all liabilities, losses,
claims, costs or damages (including reasonable
attorney's fees) incurred by Purchaser resulting from
or arising out of (i) any breach of any
representations and warranties by Purchaser contained
herein or in any certificate delivered pursuant
hereto, including any certificate delivered on the
Closing Date, (ii) any claim arising from Medbrook's
actions that occur prior to the Closing Date,
excluding any liability arising from actions of
Purchaser or Purchaser's agents, officers, or
employees, or (iii) any breach of Medbrook's
obligations contained herein.
(c) In addition to the above indemnification granted by
Medbrook, Medbrook shall defend and indemnify
Purchaser and Kim Palmer from any claims or offsets
brought by James W. Powell, M.D. ("Powell") which
arise out of (i) the ownership of any Assets purchased
by Purchaser herein, or (ii) any ongoing relationship
or obligations owed by Medbrook to Powell after the
Closing Date. The parties agree that the
indemnification provision contained in this paragraph
5.2 (c) shall not apply to any actions taken
personally by Kim Palmer prior to or after the Closing
Date.
(d) Promptly after a party's (the "Indemnified Party")
receipt of notice from a third party of the
commencement of any action or proceeding in respect of
indemnification provision contained in this paragraph
5.2(d) shall not apply to any actions taken personally
by Kim Palmer prior to or after the Closing Date.
(e) Promptly after a party's (the "Indemnified Party")
receipt of notice from a third party of the
commencement of any action or proceeding in respect of
which indemnification may be sought against the other
party (the "Indemnitor") pursuant to this Section 5.2
(but in no event later than ten days prior to the time
any response thereto is required), the Indemnified
Party shall notify the Indemnitor of the commencement
thereof and the Indemnitor shall assume the defense of
such action (including the employment of counsel).
Thereafter, the Indemnitor shall have the right to
conduct the defense of such action (including through
appeal); provided, however, that the Indemnified Party
shall have the right to participate in such defense at
its own expense. If the Indemnitor fails to undertake
such defense after notification (in accordance with
the provisions above) from the Indemnified Party, the
Indemnified Party may conduct such defense itself or
settle any such claim without relieving the Indemnitor
from any of its obligations to make indemnification
payments under this Section 5.2.
ARTICLE 6.
Condition of Equipment
Section 6.1 As Is. Medbrook and Purchaser agree that all Assets to be
purchased hereunder from Medbrook by Purchaser are being sold and purchased "AS
IS," "WHERE IS" and "WITH ALL FAULTS" and Medbrook makes no warranty in respect
of such Assets of any nature or description whatsoever other than as stated
herein, including the warranty of merchantability or fitness for a particular
purpose. Purchaser, through Kim Palmer, is aware of the condition of the Assets,
the Leases, and all contracts, agreements, and other obligations of Medbrook
with respect to the Clinics and Purchaser agrees to accept the Assets in their
current condition without any recourse against Medbrook.
ARTICLE 7.
Employees
Section 7.1 Employment of Personnel.
(a) Medbrook hires a majority of its personnel through
Paychex, a staff leasing company. Medbrook shall, as
of the Effective Date, terminate its relationship with
Paychex. Purchaser shall make its own arrangements
with Paychex, or with any other entity, regarding
retention of certain personnel and the terms of the
continued employment of such personnel.
(b) Medbrook shall terminate the employment of all of its
direct employees (those persons working for Medbrook
that are not employed through Paychex) as of the
Effective Date. Purchaser shall, as of the Effective
Date, hire all direct employees of Medbrook who work
at the Clinics. Purchaser shall assume all obligations
of Medbrook with respect to such employees and shall
provide all employees with credit for their term of
service with Medbrook. Purchaser shall assume full
responsibility for severance pay to all employees of
Medbrook who work at the Clinics. Provided, that
Medbrook shall be responsible for the payment of wages
and benefits (except severance pay which is hereby
assumed by Purchaser) to its employees through the
Effective Date.
(c) Purchaser shall immediately notify Medbrook of any
claim or threatened claim against Medbrook by Paychex,
by any employee, or by any third party. Purchaser
agrees to cooperate fully and assist Medbrook in the
defense of any such claim.
(d) Medbrook will pay when due all withholding and other
taxes required to be paid on Medbrook's employees that
arise or accrue prior to the Closing Date.
Article 8.
License of Medbrook.
Section 8.1 Background. Medbrook is in the health care business and
provides health related services using the service mark "MEDBROOK."
Section 8.2 Grant. To the extent that Medbrook has rights to the name
"Medbrook" (the "Mark"), Medbrook hereby grants to Purchaser the non-exclusive
right to use such Mark throughout Florida and Georgia, but only so long as the
Mark is used by Purchaser only for the provision of professional services and in
a manner consistent with the past use of the Mark by Medbrook. Medbrook hereby
grants this license to Purchaser royalty free.
Section 8.3 Transfer of goodwill. The right of Purchaser to use the
Mark shall be conditioned upon the payment by Purchaser for the transfer of all
of Medbrook's assets as stated above. Upon any default in payment of the
purchase price described in Section 1.4 above, Purchaser's right to use the Mark
shall immediately cease and terminate.
Section 8.4 Representations. Medbrook makes no representations or
warranties with respect to the Mark. Purchaser acknowledges that it is only
receiving such rights to the Mark as are owned by Medbrook and that any such
rights to the Mark may be terminated at anytime. Under no circumstances shall
Medbrook be required to defend, support, or maintain any rights that it may have
to the Mark.
Section 8.5 Enforcement. Purchaser shall have a duty to notify
Medbrook of any known and/or suspected infringement of the Mark rights occurring
in Georgia or Florida. Purchaser shall have the exclusive right to bring any
actions in Georgia or Florida in which the action is based upon an unauthorized
use of the Mark. Upon written notice, Medbrook shall assist Purchaser with the
enforcement of the Mark rights against such third parties only to the extent
necessary to enable Purchaser to maintain its actions. Purchaser shall bear all
costs and expenses for any actions taken and shall solely be entitled to any and
all monetary awards and other relief. Notwithstanding anything to the contrary
in this Agreement, Medbrook may, at its option, either solely or in conjunction
with Purchaser, defend any action challenging the validity of the Mark.
Article 9.
Meadowbrook
Section 9.1 Use of Name Meadowbrook. Purchaser acknowledges and
agrees that it is not acquiring any right to the name "Meadowbrook" or to the
Meadowbrook operations. Purchaser agrees that it will not at any time use the
name Meadowbrook or make or allow any inference or statement that it is in any
way affiliated with Meadowbrook.
Article 10.
Non-Competition Provisions
Section 10.1 Non-competition Provisions. Medbrook agrees, for a
period of four (4) years after the Effective Date, that it, its parent
corporation and any affiliates of its parent corporation, will not directly or
indirectly, own, license, or acquire any interest whatsoever in any physical
therapy or rehabilitation therapy business located in Florida or Georgia.
Section 10.2 Reasonableness. Medbrook hereby acknowledge that the
provisions of this Article 10 constitute essential inducements to Purchaser's
entering into this Agreement and paying Medbrook the consideration stated
herein, and that the provisions of this Article 10 are reasonable and necessary
for the protection of Purchaser.
Section 10.3 Remedies. In the event of a breach or a threatened
breach of this Article 10 by Medbrook, Purchaser shall be entitled to such
injunctive relief as may be available to restrain Medbrook from violating the
provisions of this Article 10. Purchaser acknowledges that its sole remedy
against Medbrook for a violation of this Article 10 shall be injunctive relief
and that Medbrook shall not be responsible to Purchaser for any money damages.
Section 10.4 Reasonable. If any aspect of the restrictive covenants
contained in this Article 10 is deemed by a court of competent jurisdiction to
be too broad as to time, area or restricted activity, then such defective aspect
shall be reduced to such scope as is reasonable and enforceable, and the
restrictive covenant as so modified shall be enforceable by injunction or any
other legal or equitable remedy.
ARTICLE 11.
Post Closing Matters
Section 11.1 True-up Period. The parties acknowledge that (i)
Medbrook has advanced certain funds to Purchaser as described in Schedule 11.1,
(ii) Medbrook may inadvertently pay certain obligations assumed by Purchaser
pursuant to the terms of this Agreement, (iii) Purchaser may inadvertently pay
certain obligations of Medbrook not assumed by Purchaser, and (iv) one party may
receive a payment that is the property of the other. Therefore, every thirty
(30) days after the Effective Date (for a total period of ninety (90) days (the
"True-up Period)) each party agrees to prepare and send to the other party a
schedule of payments made and received which were the obligation or property of
the other party. The party owing money to the other shall make payment in full
within five (5) days after each party receives the schedule from the other
party.
Section 11.2 Additional Claims. After the True-up Period, with
respect to items listed in Section ? neither party shall have any liability to
the other unless the amount of such individual claim exceeds $500 and the
aggregate of such individual claims in excess of $500 exceeds $10,000.
ARTICLE 12.
Miscellaneous
Section 12.1 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Florida.
Section 12.2 Waiver. The waiver of any covenant, condition or duty
hereunder by either party shall not prevent that party from later insisting upon
full performance of the same.
Section 12.3 Amendment. No amendment to the terms of this Agreement
shall be binding on either party unless in writing and executed by the duly
authorized representatives of each party.
Section 12.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties in connection with the subject matter hereof, and
supersedes all prior agreements, whether written or oral, and whether explicit
or implicit, which have been entered into before the execution hereof. Should
any litigation or arbitration arise between the parties, neither party shall
(and each party hereby waives the right to) introduce any parol evidence which
would tend to contradict or impeach any of the express written terms, conditions
and covenants of this Agreement.
Section 12.5 Notice. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be personally
delivered or sent by certified mail, return receipt, and shall be deemed given
when so received (for personal delivery) or on the date on the return receipt,
as follows:
(a) If to Medbrook, to:
Medbrook Corporation
2200 Powell Street
Suite 800
Emeryville, CA 94608
Telecopier: (510) 420-7008
Attn: Chief Executive Officer
(b) If to Purchaser, to:
Titan Healthcare, Inc.
800 Zeagler Drive, Suite 610
Palatka, FL 32177
Section 12.6 Partial Invalidity. If any one or more of the terms,
provisions, promises, covenants or conditions of this Agreement or the
application thereof to any person or circumstance shall be adjudged to any
extent invalid, unenforceable, void or voidable for any reasons whatsoever by a
court of competent jurisdiction, each and all of the remaining terms,
provisions, promises, covenants and conditions of this Agreement or their
application to other persons or circumstances shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.
Section 12.7 Headings, Titles. The headings appearing herein are for
convenience and reference only and shall not be deemed to govern, limit, modify
or in any manner affect the scope, meaning or intent of the provisions of this
Agreement.
Section 12.8 Binding Effect. Subject to the provisions contained
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and upon their respective successors.
Section 12.9 Enforcement. In the event either party resorts to legal
action to enforce the terms of this Agreement, the prevailing party in such
action shall be entitled to recover its cost from the non-prevailing party,
including reasonable attorney's fees and costs.
Section 12.10 Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation, the Court interpreting or construing
the same shall not apply a presumption that the terms hereof shall be more
strictly construed against one party by reason of the rule of construction that
a document is to be construed more strictly against the party who itself or
through its agents prepared the same, it being agreed that the agents of all
parties have participated in the preparation hereof.
Section 12.11 Expenses. Each party hereto shall pay all expenses
incurred by it in connection with the negotiation, execution and performance of
this Agreement, whether or not the transactions contemplated herein are
consummated, including the fees and expenses of the counsel and accountants of
each.
Section 12.12 Legal Counsel. The undersigned parties have had the
opportunity to seek the advice and counsel of attorneys in connection with the
matters referred to herein, and they have executed and delivered this Agreement
and the agreements and documents required to be executed hereby, freely and
knowingly after having received and duly considered the terms hereof, and any
such advice and counsel of their attorneys. The parties acknowledge that Rogers,
Towers, Bailey, Jones & Gay, P.A. ("Rogers, Towers") has represented each of the
parties (or principals of each of the parties) in the past. Purchaser
acknowledges that Rogers, Towers represents Medbrook in this transaction and has
concerned itself solely with the interests of Medbrook in this transaction.
Purchaser consents to such representation of Medbrook by Rogers, Towers and
Purchaser has engaged its own counsel for purposes of this transaction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
MEDBROOK CORP.
By: /s/ James F. Murphy
Name: James F. Murphy
Title: Vice President and Chief Financial Officer
(Corporate Seal)
TITAN HEALTHCARE, INC.
By: /s/ Robert Silvera
Name: Robert Silvera
Title: President
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made and entered into as of August
29, 1997, by and between MEDBROOK CORP., a Florida corporation ("Medbrook"), and
REMLAP SERVICES, INC., ("Purchaser").
P R E A M B L E
Medbrook owns and operates several physical and rehabilitation
therapy clinics in North Florida and South Georgia. In addition, Medbrook
manages the practice of several physicians. Purchaser desires to purchase
certain of Medbrook's assets upon the terms and conditions set forth below.
ACCORDINGLY, the parties hereto agree as follows:
ARTICLE 1.
Sale and Purchase of Assets
Section 1.1 Sale of Assets by Medbrook. Subject to the terms and
conditions of this Agreement, effective August 31, 1997 (the "Effective Date"),
for the consideration set forth in Section 1.4 below, Medbrook shall sell,
transfer, assign and convey to Purchaser, and Purchaser shall purchase from
Medbrook, all of the assets (the "Assets") owned by Medbrook located in the
State of Florida that is not specifically located at the following locations:
4570 San Juan Avenue
Jacksonville, Florida
Moultrie Physical Therapy
713 S. Main Street
Moultrie, GA 31768
Medbrook Rehab of PC
4 Office Park Drive #4
Palm Coast, Florida 32137
Medbrook Rehab of Ormond
1275 W. Granada Blvd.
Ormond Beach, Florida
Medbrook Rehab of Daytona
1480 International Speedway
Daytona Beach, Florida 32114
Such Assets shall specifically include all of the Assets owned by Medbrook at
the following locations (the "Clinics"):
Medbrook Rehab
220 State Road 312
St. Augustine, Florida 32086
BodyMax Physical Therapy
800 Zeagler Drive #510
Palatka, Florida 32177
BodyMax of Palm Coast
35 Old Kings Road
Palm Coast, Florida 32137
Southpark/Soliel
220 State Road 312
St. Augustine, Florida 32086
Beaches Physical Therapy
1043 A1A Beach Blvd.
St. Augustine, Florida 32086
Such Assets purchased shall include the following:
(a)Equipment. All of the furniture, furnishings,
computer hardware and software, and equipment owned by
Medbrook at the Clinics, as more fully described on
Schedule 1.1(b) (the "Equipment").
(b)Leasehold improvements. All Leasehold improvements
owned by Medbrook at the Clinics, as more fully
described on Schedule 1.1(c) (collectively, the
"Leasehold Improvements").
(c)Accounts Receivable of Clinics. All accounts
receivable of the Clinics outstanding on the date of
Closing. A detailed listing of such accounts
receivable (as of June 30, 1997) is described on
Schedule 1.1(d) (the "Accounts Receivable"). Medbrook
hereby agrees to sell all accounts receivable
notwithstanding the fact that Schedule 1.1(d) is only
current through June 30, 1997.
(d) Name. Use of the name "Medbrook" as described in
Article 8 below.
(e) Telephone Numbers. The telephone numbers of each of
the Clinics (the "Telephone Numbers").
(f)Contracts. All of Medbrook's right, title and
interest in and to contracts for services entered into
by Medbrook, as more fully described in Exhibit 1.1(g)
hereof (the "Contracts").
(g)Deposits. All deposits owned by Medbrook for any
equipment purchases, leases, or otherwise, except as
otherwise specified herein.
(h)Patient Charts and Records. All charts and records of
Medbrook's patients who were treated at the Clinics.
Section 1.2 Excluded Assets. Purchaser shall purchase only the Assets
listed above. Specifically excluded from the Assets, among other things, shall
be the following:
(a) All cash and cash equivalents owned by Medbrook on the
Effective Date.
(b) All prepaid Assets, including insurance and rent.
(c) All intangible Assets of Medbrook, except those
intangible Assets specifically included in the Assets
in paragraph 1.1 above.
(d) Medbrook's deposit with Paychex, a staff leasing
company, in the amount of $15,000.
Section 1.3 Liabilities. Purchaser shall not assume any liabilities
of Medbrook or of the Clinics except for the following:
(a) Leases. Purchaser shall assume the ongoing
obligations with respect the Leases including, but
not limited to, office space, equipment, and computer
maintenance, including any obligations to make
monthly rent or lease payments, all as more
specifically described in Exhibit 1.3(a) attached
hereto.
(b) Contracts. Purchaser shall assume the ongoing
obligations with respect the Contracts and shall
fulfill all obligations and responsibilities under
the Contracts.
(c) Accounts Payable. Purchaser shall assume all accounts
payable of Medbrook less than sixty (60) days old on
the Closing Date. A detailed listing of such accounts
payable (as of August 19, 1997) is described in
Schedule 1.3(c) attached hereto. Purchaser hereby
agrees to assume all accounts payable of Medbrook
less than sixty (60) days old, as of the Effective
Date, notwithstanding the fact that Schedule 1.3(c)
is only current through August 19, 1997. Medbrook
hereby expressly assumes any accounts payable more
than sixty (60) days old.
(d) Telephone Numbers. Purchaser shall assume ongoing
bills and obligations with respect to the Telephone
Numbers, including any expenses associated with
yellow page or other telephone book advertising that
arise after the Effective Date.
(e) Payroll Liabilities. Purchaser shall assume all
payroll liability of Medbrook from and after Closing,
and shall assume all paid time off reserve of
Medbrook.
(f) Closed Clinics. All obligations of Medbrook with
respect to the BodyMax of Palm Coast Clinic located
at 35 Old Kings Road, Palm Coast, Florida, including
but not limited to, office rent, electricity, and
water.
All liabilities of Medbrook not specifically listed above shall
remain the sole responsibility of Medbrook including, without limitation, any
payments owed by Medbrook to the former owners of the Clinics.
Section 1.4 Purchase Price.
(a) In consideration for the transfer of the Assets
described in Section 1.1 above, Purchaser shall pay to
Medbrook Two Hundred Fifteen Thousand Dollars
($215,000.00) (the "Purchase Price").
(b) The Purchase Price shall be evidenced by a promissory
note payable as follows:
(i) Interest only shall accrue and be payable
monthly on the last date of each month,
beginning September 30, 1997, at the rate of ten
percent (10%) per annum, simple interest.
(ii) The entire principal balance, plus any
accrued interest, shall be due and payable in
full on August 31, 1998.
(c) Payment of Payment of the promissory note shall be
secured by a first security interest in all the assets
of Purchaser, including any assets now existing or
hereafter acquired and any proceeds therefrom. The
individual owners of Purchaser shall provide personal
guarantees to payment of the promissory note.
(d) Purchaser shall not sell, transfer or otherwise
dispose of any assets of the Purchaser until the
promissory note is paid in full except in the ordinary
course of business and for fair and adequate
consideration unless approved in advance by Medbrook.
(e) Medbrook is financing the acquisition of the Assets by
Purchaser due to Kim Palmer's affiliation with and
ownership of Purchaser. In the event that Kim Palmer
either ceases being an owner of Purchaser or ceases
controlling the operations of Purchaser, then Medbrook
may accelerate all sums due under the promissory note
and call all amounts due owing immediately.
Section 1.5 Closing.
(a) The sale and purchase of the Assets contemplated
hereunder shall take place at a closing (the
"Closing") to be held at the offices of Rogers,
Towers, Bailey, Jones & Gay, P.A., 1301 Riverplace
Boulevard, Suite 1500, Jacksonville, Florida on August
29, 1997, or on such date as soon as practicable after
or concurrently with the satisfaction or waiver of the
conditions set forth in Article 4 hereof (such date
being herein referred to as the "Closing Date").
Notwithstanding anything herein to the contrary, the
sale and purchase of the Assets shall be effective as
of the Effective Date.
(b) At the Closing, Medbrook shall deliver to Purchaser
(i) duly executed instruments of conveyance,
assignment or transfer with respect to the Assets;
(ii) the certificates required by Section 4.1; and
(iii) such other agreements, instruments, certificates
or other documents as Purchaser may reasonably
request.
(c) At the Closing, Purchaser shall deliver to Medbrook
(i) the certificates required by Section 4.2, and (ii)
such other agreements, instruments, certificates or
other documents as Medbrook may reasonably request.
Section 1.6 Tail Insurance. Medbrook shall purchase extended ("Tail")
malpractice insurance coverage in an appropriate amount to cover Medbrook for
malpractice claims asserted for services rendered at the Clinics by Medbrook
during the term that Medbrook provided professional services at the Clinics.
ARTICLE 2.
Representations and Warranties
Section 2.1 Representations and Warranties of Medbrook. Medbrook
represents and warrants to Purchaser, as of the execution hereof, as follows:
(a)Power and Authority of Medbrook. Medbrook is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Florida.
Medbrook has all requisite power and authority to
enter into this Agreement and perform its obligations
as contained herein, and this Agreement constitutes
the valid and legally binding obligation of Medbrook
enforceable against it in accordance with its terms,
except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally.
(b)No Conflicts. The execution and delivery of this
Agreement by Medbrook and the consummation of the
transactions contemplated hereby will not violate any
provision of any law or violate any term or provision
of any order, writ, judgment, injunction or decree of
any court or any other governmental department or
agency applicable to Medbrook, or conflict with or
result in a breach of any of the terms, conditions, or
provisions of the Articles of Incorporation, Bylaws or
other organizational document of Medbrook, or any
agreement to which Medbrook is a party.
(c)Title to Equipment. Medbrook has good, valid and
marketable title to the Equipment, free and clear of
all mortgages, liens, pledges, security interests, and
other encumbrances.
(d)Broker's Fees. No commission, fee, or compensation of
any kind on account of any services rendered in
connection with this Agreement or the transactions
contemplated hereby, other than the fees and expenses
of counsel for Medbrook, has been contracted for by
Medbrook.
(e)Legal Compliance. To the best of Medbrook's knowledge
and belief, Medbrook has conducted its business in
accordance with all material law and regulations, is
not in violation of any material law or material
regulation applicable to Medbrook for the operation of
its business, and is not in material default with
respect to any of its obligations.
(f)Officers. Each of the officers of Medbrook executing
this Agreement and all documents at Closing are and
will be duly authorized and empowered to execute such
documents on behalf of Medbrook.
Section 2.2 Representations and Warranties of Purchaser. Purchaser
represents and warrants to Medbrook, as of the execution hereof, as follows:
(a)Power and Authority of Purchaser. Purchaser is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Florida.
Purchaser has all requisite power and authority to
enter into this Agreement and perform its obligations
as contained herein and this Agreement constitutes the
valid and legally binding obligations of Purchaser
enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally.
(b)No Conflicts. The execution and delivery of this
Agreement by Purchaser and the consummation of the
transactions contemplated hereby will not violate any
provision of law or violate any term or provision of
any order, writ, judgment, injunction or decree of any
court or any other governmental department or agency
applicable to Purchaser, or conflict with or result in
a breach of any of the terms, conditions or provisions
of the Articles of Incorporation, Bylaws or other
organizational documents of Purchaser, or any
agreement to which Purchaser is a party.
(c)Broker's Fees. No commission, fee, or compensation of
any kind on account of any services rendered in
connection with this Agreement or the transactions
contemplated hereby, other than the fees and expenses
of counsel for Purchaser, has been contracted for by
Purchaser.
(d)Legal Compliance. To the best of Purchaser's
knowledge and belief, Purchaser has conducted its
business in accordance with all material law and
regulations, is not in violation of any material law
or material regulation applicable to Purchaser for the
operation of its business, and is not in material
default with respect to any of its obligations.
(e)Officers. Each of the officers of Purchaser executing
this Agreement and all documents at Closing are and
will be duly authorized and empowered to execute such
documents on behalf of Purchaser.
ARTICLE 3.
Covenants of the Parties
Section 3.1 Best Efforts and Further Assurances. Between the date
hereof and the Closing Date, Medbrook and Purchaser will use their best efforts
to fulfill all conditions prerequisite to the obligation of the other party to
consummate the transactions contemplated hereby and, after the Closing, take
such action as may be reasonably requested by the other party to accomplish the
intent set forth herein. Purchaser agrees to assist Medbrook in obtaining all
necessary consents, including those required of any equipment lessors and
landlords of office space, whether before or after the Closing Date, to
effectively assign the Leases to Purchaser. The parties hereby agree that
Purchaser shall be responsible for all of the Leases, and Purchaser shall
defend, indemnify and hold Medbrook harmless from any such Leases regardless of
whether the landlord or lessor consents to the assignment of any particular
lease.
Section 3.2 Correctness of Schedules. Many of the schedules attached
to this Agreement have been prepared by Kim Palmer, part owner of Purchaser and
chief operations officer of Medbrook. Purchaser is well aware of the Assets, the
condition of the Assets, and the obligations of Medbrook. Purchaser hereby
accepts the schedules as true and accurate and agrees not to contest the
accuracy of the schedules or the condition of the Assets.
ARTICLE 4.
Conditions Precedent
Section 4.1 Conditions to the Obligation of Purchaser. The obligation
of Purchaser to purchase the Assets shall be subject to the satisfaction or
waiver, on or prior to the Closing Date, of the following conditions:
(a)Representations and Warranties. The representations
and warranties of Medbrook set forth in Section 2.1
hereof shall be true and correct in all respects on
the Closing Date and Purchaser shall have received a
certificate to such effect, executed by Medbrook and
dated as of the Closing Date.
(b)Threatened or Pending Proceedings. No proceeding
shall have been initiated or threatened by any
governmental department or agency or any other person
seeking to enjoin or otherwise restrain or obtain
relief with respect to the consummation of the
transactions contemplated hereby.
(c)Corporate Action. All corporate action necessary to
authorize (i) the execution, delivery and performance
by Medbrook of this Agreement and (ii) the
consummation of the transactions contemplated hereby
shall have been duly and validly taken by Medbrook.
Section 4.2 Conditions to the Obligations of Medbrook. The obligation
of Medbrook to sell the Assets shall be subject to the satisfaction or waiver,
on or prior to the Closing Date, of the following conditions:
(a)Representations and Warranties. The representations
and warranties of Purchaser set forth in Section 2.2
hereof shall be true and correct in all respects on
the Closing Date and Medbrook shall have received a
certificate to such effect, executed by Purchaser and
dated as of the Closing Date.
(b)Threatened or Pending Proceedings. No proceeding
shall have been initiated or threatened by any
governmental department or agency or any other person
seeking to enjoin or otherwise restrain or obtain
relief with respect to the consummation of the
transactions contemplated hereby.
(c)Corporate Action. All corporate action necessary to
authorize (i) the execution, delivery and performance
by Purchaser of this Agreement and (ii) the
consummation of the transactions contemplated hereby
shall have been duly and validly taken by Purchaser.
ARTICLE 5.
Indemnification for Breach of Representations and Warranties
Section 5.1 Survival of Certain Representations and Warranties.
(a) All representations and warranties provided by
Medbrook in this Agreement shall terminate one (1)
year after the Closing Date.
(b) All representations and warranties of Purchaser shall
last for the longer period of: (i) two years after
the Closing Date; or (ii) until the Purchase Price is
paid in full.
Section 5.2 Indemnification for Breach of Certain Representations and
Warranties and Covenants.
(a) Purchaser hereby agrees to indemnify and hold Medbrook
harmless from and against all liabilities, losses,
claims, costs or damages (including reasonable
attorney's fees) incurred by Medbrook resulting from
or arising out of (i) any breach of any
representations and warranties by Purchaser contained
herein or in any certificate delivered pursuant
hereto, including any certificate delivered on the
Closing Date, (ii) any failure by Purchaser to perform
any of its obligations contained herein, or (iii) any
claim based upon facts and circumstances occurring
after the Closing Date.
(b) Medbrook hereby agrees to indemnify and hold Purchaser
harmless from and against all liabilities, losses,
claims, costs or damages (including reasonable
attorney's fees) incurred by Purchaser resulting from
or arising out of (i) any breach of any
representations and warranties by Purchaser contained
herein or in any certificate delivered pursuant
hereto, including any certificate delivered on the
Closing Date, (ii) any claim arising from Medbrook's
actions that occur prior to the Closing Date,
excluding any liability arising from actions of
Purchaser or Purchaser's agents, officers, or
employees, or (iii) any breach of Medbrook's
obligations contained herein.
(c) In addition to the above indemnification granted by
Medbrook, Medbrook shall defend and indemnify
Purchaser and Kim Palmer from any claims or offsets
brought by James W. Powell, M.D. ("Powell") which
arise out of (i) the ownership of any Assets purchased
by Purchaser herein, or (ii) any ongoing relationship
or obligations owed by Medbrook to Powell after the
Closing Date. The parties agree that the
indemnification provision contained in this paragraph
shall not apply to any actions taken personally by Kim
Palmer prior to or after the Closing Date.
(d) Promptly after a party's (the "Indemnified Party")
receipt of notice from a third party of the
commencement of any action or proceeding in respect of
which indemnification may be sought against the other
party (the "Indemnitor") pursuant to this Section 5.2
(but in no event later than ten days prior to the time
any response thereto is required), the Indemnified
Party shall notify the Indemnitor of the commencement
thereof and the Indemnitor shall assume the defense of
such action (including the employment of counsel).
Thereafter, the Indemnitor shall have the right to
conduct the defense of such action (including through
appeal); provided, however, that the Indemnified Party
shall have the right to participate in such defense at
its own expense. If the Indemnitor fails to undertake
such defense after notification (in accordance with
the provisions above) from the Indemnified Party, the
Indemnified Party may conduct such defense itself or
settle any such claim without relieving the Indemnitor
from any of its obligations to make indemnification
payments under this Section 5.2.
ARTICLE 6.
Condition of Equipment
Section 6.1 As Is. Medbrook and Purchaser agree that all Assets to be
purchased hereunder from Medbrook by Purchaser are being sold and purchased "AS
IS," "WHERE IS" and "WITH ALL FAULTS" and Medbrook makes no warranty in respect
of such Assets of any nature or description whatsoever other than as stated
herein, including the warranty of merchantability or fitness for a particular
purpose. Purchaser, through Kim Palmer, is aware of the condition of the Assets,
the Leases, and all contracts, agreements, and other obligations of Medbrook
with respect to the Clinics and Purchaser agrees to accept the Assets in their
current condition without any recourse against Medbrook.
ARTICLE 7.
Employees
Section 7.1 Employment of Personnel.
(a) Medbrook hires a majority of its personnel through
Paychex, a staff leasing company. Medbrook shall, as
of the Effective Date, terminate its relationship with
Paychex. Purchaser shall make its own arrangements
with Paychex, or with any other entity, regarding
retention of certain personnel and the terms of the
continued employment of such personnel.
(b) Medbrook shall terminate the employment of all of its
direct employees (those persons working for Medbrook
that are not employed through Paychex) as of the
Effective Date. Purchaser shall, as of the Effective
Date, hire all direct employees of Medbrook who work
at the Clinics. Purchaser shall assume all obligations
of Medbrook with respect to such employees and shall
provide all employees with credit for their term of
service with Medbrook. Purchaser shall assume full
responsibility for severance pay to all employees of
Medbrook who work at the Clinics. Provided, that
Medbrook shall be responsible for the payment of wages
and benefits (except severance pay which is hereby
assumed by Purchaser) to its employees through the
Effective Date.
(c) Purchaser shall immediately notify Medbrook of any
claim or threatened claim against Medbrook by Paychex,
by any employee, or by any third party. Purchaser
agrees to cooperate fully and assist Medbrook in the
defense of any such claim.
(d) Medbrook will pay when due all withholding and other
taxes required to be paid on Medbrook's employees that
arise or accrue prior to the Closing Date.
Article 8.
License of Medbrook.
Section 8.1 Background. Medbrook is in the health care business and
provides health related services using the service mark "MEDBROOK."
Section 8.2 Grant. To the extent that Medbrook has rights to the name
"Medbrook" (the "Mark"), Medbrook hereby grants to Purchaser the non-exclusive
right to use such Mark throughout Florida and Georgia, but only so long as the
Mark is used by Purchaser only for the provision of professional services and in
a manner consistent with the past use of the Mark by Medbrook. Medbrook hereby
grants this license to Purchaser royalty free.
Section 8.3 Transfer of goodwill. The right of Purchaser to use the
Mark shall be conditioned upon the payment by Purchaser for the transfer of all
of Medbrook's assets as stated above. Upon any default in payment of the
purchase price described in Section 1.4 above, Purchaser's right to use the Mark
shall immediately cease and terminate.
Section 8.4 Representations. Medbrook makes no representations or
warranties with respect to the Mark. Purchaser acknowledges that it is only
receiving such rights to the Mark as are owned by Medbrook and that any such
rights to the Mark may be terminated at anytime. Under no circumstances shall
Medbrook be required to defend, support, or maintain any rights that it may have
to the Mark.
Section 8.5 Enforcement. Purchaser shall have a duty to notify
Medbrook of any known and/or suspected infringement of the Mark rights occurring
in Georgia or Florida. Purchaser shall have the exclusive right to bring any
actions in Georgia or Florida in which the action is based upon an unauthorized
use of the Mark. Upon written notice, Medbrook shall assist Purchaser with the
enforcement of the Mark rights against such third parties only to the extent
necessary to enable Purchaser to maintain its actions. Purchaser shall bear all
costs and expenses for any actions taken and shall solely be entitled to any and
all monetary awards and other relief. Notwithstanding anything to the contrary
in this Agreement, Medbrook may, at its option, either solely or in conjunction
with Purchaser, defend any action challenging the validity of the Mark.
Article 9.
Meadowbrook
Section 9.1 Use of Name Meadowbrook. Purchaser acknowledges and
agrees that it is not acquiring any right to the name "Meadowbrook" or to the
Meadowbrook operations. Purchaser agrees that it will not at any time use the
name Meadowbrook or make or allow any inference or statement that it is in any
way affiliated with Meadowbrook.
Article 10.
Non-Competition Provisions
Section 10.1 Non-competition Provisions. Medbrook agrees, for a
period of four (4) years after the Effective Date, that it, its parent
corporation and any affiliates of its parent corporation, will not directly or
indirectly, own, license, or acquire any interest whatsoever in any physical
therapy or rehabilitation therapy business located in Florida or Georgia.
Section 10.2 Reasonableness. Medbrook hereby acknowledge that the
provisions of this Article 10 constitute essential inducements to Purchaser's
entering into this Agreement and paying Medbrook the consideration stated
herein, and that the provisions of this Article 10 are reasonable and necessary
for the protection of Purchaser.
Section 10.3 Remedies. In the event of a breach or a threatened
breach of this Article 10 by Medbrook, Purchaser shall be entitled to such
injunctive relief as may be available to restrain Medbrook from violating the
provisions of this Article 10. Purchaser acknowledges that its sole remedy
against Medbrook for a violation of this Article 10 shall be injunctive relief
and that Medbrook shall not be responsible to Purchaser for any money damages.
Section 10.4 Reasonable. If any aspect of the restrictive covenants
contained in this Article 10 is deemed by a court of competent jurisdiction to
be too broad as to time, area or restricted activity, then such defective aspect
shall be reduced to such scope as is reasonable and enforceable, and the
restrictive covenant as so modified shall be enforceable by injunction or any
other legal or equitable remedy.
ARTICLE 11.
Post Closing Matters
Section 11.1 True-up Period. The parties acknowledge that (i)
Medbrook has advanced certain funds to Purchaser as described in Schedule 11.1,
(ii) Medbrook may inadvertently pay certain obligations assumed by Purchaser
pursuant to the terms of this Agreement, (iii) Purchaser may inadvertently pay
certain obligations of Medbrook not assumed by Purchaser, and (iv) one party may
receive a payment that is the property of the other. Therefore, every thirty
(30) days after the Effective Date (for a total period of ninety (90) days (the
"True-up Period)) each party agrees to prepare and send to the other party a
schedule of payments made and received which were the obligation or property of
the other party. The party owing money to the other shall make payment in full
within five (5) days after each party receives the schedule from the other
party.
Section 11.2 Additional Claims. After the True-up Period, with
respect to items listed in Section neither party shall have any liability to the
other unless the amount of such individual claim exceeds $500 and the aggregate
of such individual claims in excess of $500 exceeds $10,000.
ARTICLE 12.
Miscellaneous
Section 12.1 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Florida.
Section 12.2 Waiver. The waiver of any covenant, condition or duty
hereunder by either party shall not prevent that party from later insisting upon
full performance of the same.
Section 12.3 Amendment. No amendment to the terms of this Agreement
shall be binding on either party unless in writing and executed by the duly
authorized representatives of each party.
Section 12.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties in connection with the subject matter hereof, and
supersedes all prior agreements, whether written or oral, and whether explicit
or implicit, which have been entered into before the execution hereof. Should
any litigation or arbitration arise between the parties, neither party shall
(and each party hereby waives the right to) introduce any parol evidence which
would tend to contradict or impeach any of the express written terms, conditions
and covenants of this Agreement.
Section 12.5 Notice. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be personally
delivered or sent by certified mail, return receipt, and shall be deemed given
when so received (for personal delivery) or on the date on the return receipt,
as follows:
(a) If to Medbrook, to:
Medbrook Corporation
2200 Powell Street
Suite 800
Emeryville, CA 94608
Telecopier: (510) 420-7008
Attn: Chief Executive Officer
(b) If to Purchaser, to:
Remlap Services, Inc.
220 State Road 312
St. Augustine, FL 32086
Attn: Kim Palmer
Section 12.6 Partial Invalidity. If any one or more of the terms,
provisions, promises, covenants or conditions of this Agreement or the
application thereof to any person or circumstance shall be adjudged to any
extent invalid, unenforceable, void or voidable for any reasons whatsoever by a
court of competent jurisdiction, each and all of the remaining terms,
provisions, promises, covenants and conditions of this Agreement or their
application to other persons or circumstances shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.
Section 12.7 Headings, Titles. The headings appearing herein are for
convenience and reference only and shall not be deemed to govern, limit, modify
or in any manner affect the scope, meaning or intent of the provisions of this
Agreement.
Section 12.8 Binding Effect. Subject to the provisions contained
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and upon their respective successors.
Section 12.9 Enforcement. In the event either party resorts to legal
action to enforce the terms of this Agreement, the prevailing party in such
action shall be entitled to recover its cost from the non-prevailing party,
including reasonable attorney's fees and costs.
Section 12.10 Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation, the Court interpreting or construing
the same shall not apply a presumption that the terms hereof shall be more
strictly construed against one party by reason of the rule of construction that
a document is to be construed more strictly against the party who itself or
through its agents prepared the same, it being agreed that the agents of all
parties have participated in the preparation hereof.
Section 12.11 Expenses. Each party hereto shall pay all expenses
incurred by it in connection with the negotiation, execution and performance of
this Agreement, whether or not the transactions contemplated herein are
consummated, including the fees and expenses of the counsel and accountants of
each.
Section 12.12 Legal Counsel. The undersigned parties have had the
opportunity to seek the advice and counsel of attorneys in connection with the
matters referred to herein, and they have executed and delivered this Agreement
and the agreements and documents required to be executed hereby, freely and
knowingly after having received and duly considered the terms hereof, and any
such advice and counsel of their attorneys. The parties acknowledge that Rogers,
Towers, Bailey, Jones & Gay, P.A. ("Rogers, Towers") has represented each of the
parties (or principals of each of the parties) in the past. Purchaser
acknowledges that Rogers, Towers represents Medbrook in this transaction and has
concerned itself solely with the interests of Medbrook in this transaction.
Purchaser consents to such representation of Medbrook by Rogers, Towers and
Purchaser has engaged its own counsel for purposes of this transaction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
MEDBROOK CORP. REMLAP SERVICES, INC.
By: /s/James F. Murphy By: /s/ Kim Palmer
Name: James F. Murphy Name: Kim Palmer
Title: Vice President and Title: President
Chief Financial Officer
(Corporate Seal) (Corporate Seal)
