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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report May 2, 1995
(Date of earliest event reported) (April 19, 1995)
TRICARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-18217 33-0378756
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
3353 PEACHTREE ROAD, SUITE 1000
ATLANTA, GA 30326
(404) 364-8000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
DAVID W. MURPHY
CHIEF FINANCIAL OFFICER
3353 PEACHTREE ROAD, SUITE 1000
ATLANTA, GA 30326
(404) 364-4600
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Item 2. Acquisition or Disposition of Assets.
Pursuant to an agreement dated April 19, 1995 (the "Purchase
Agreement"), Transcend Services, Inc. ("Transcend") purchased defined
assets and liabilities of Medical Transcription of Atlanta, Inc.
("MTA") for a negotiated price of One million, three hundred
seventy-two thousand five hundred dollars ($1,372,500) as follows:
(i) The sum of Five hundred fifty thousand dollars ($550,000) in cash
at closing; (ii) Subordinated Promissory Note in the face amount of
One hundred thousand dollars ($100,000) bearing interest at 8.5% per
annum. All accrued interest and principal shall be paid on the
maturity date of January 2, 1996. (iii) Subordinated Promissory Note
in the face amount of Five hundred fifty thousand dollars ($550,000)
bearing interest at 8.5% per annum commencing May 19, 1995, payable
monthly thereafter, with the principal and interest payable in sixty
equal monthly installments starting May 19, 1995 and continuing until
April 19, 2000. (iv) One hundred seventy-two thousand five hundred
dollars ($172,500) of TriCare Stock (60,000 shares) issued at closing.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired: to be filed by
amendment as soon as practicable but not later than July 3,
1995.
b) Pro Forma Financial Information: to be filed by amendment as
soon as practicable but not later than July 3, 1995.
(c) Exhibits.
2(a) Asset Purchase Agreement dated April 19, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRICARE, INC.
Date: May 2, 1995 By: /s/ David W. Murphy
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David W. Murphy
Chief Financial Officer
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Exhibit 2(a)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement"), dated as of April 19,
1995, by and among MEDICAL TRANSCRIPTION OF ATLANTA, INC., a Georgia
corporation ("Seller"), WANDA H. JONES and HOWARD W. JONES (collectively the
"Owners") and TRANSCEND SERVICES, INC., a California corporation ("Buyer");
W I T N E S S E T H:
WHEREAS, Seller operates a medical transcription service business in
which it types notes of doctors and other medical personnel pursuant to
contracts with hospitals and other medical organizations (the "Business");
WHEREAS, Seller wishes to sell and assign and Buyer wishes to buy and
assume all of the assets and certain of the liabilities of the Business as
specifically set forth herein;
WHEREAS, Buyer desires to continue the operations of the Business in
substantially its present form, either as a division of Buyer or as a
subsidiary or affiliated corporation of Buyer; and
WHEREAS, Owners own all of the issued and outstanding stock of Seller
and are the principal officers of Seller responsible for operating the
Business;
NOW, THEREFORE, in consideration of the promises, mutual
representations, warranties and covenants set forth herein, Seller, Owners and
Buyer agree that:
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1. SALE AND PURCHASE
1.1 SALE AND PURCHASE OF CERTAIN ASSETS. On and subject to the
terms and conditions set forth in this Agreement, Seller shall sell, assign,
transfer and convey to Buyer, and Buyer shall purchase from Seller, all of the
assets, business, properties and rights of Seller, including, without
limitation:
(a) all cash and cash equivalents held as of the Closing Date (as
defined below);
(b) all equipment, furnishings, computers, supplies and other
items of personal property used or useful in the Business;
(c) all contract and contract rights, leases, instruments,
licenses, franchises and other agreements attributable to the
Business;
(d) all accounts receivable and rights to invoice customers of the
Business for goods and services (regardless of when provided),
including any payments received by Seller with respect to
accounts receivable after the Closing Date, unpaid interest
accrued on any Accounts Receivable and any security or
collateral relating thereto;
(e) all rights arising from advance payments, prepaid expenses,
prepaid rents, deposits and credits that are related to the
Business;
(f) all intangible properties that are related to the Business,
including but not limited to licenses, know-how, computer
software, trade secrets, customer lists and goodwill; and
(g) all books, records and materials relating to the Business,
subject to Seller's right of access to such records and
materials as set forth in Section 3.1 hereof.
(All of the assets, business, properties and rights listed above are
hereinafter collectively referred to as the "Sold Assets".) Seller shall convey
the Sold Assets free and clear of all liens, claims, charges and encumbrances
of any nature.
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1.2 LIABILITIES OF SELLER. Except for Buyer's assumption at
Closing of balance sheet liabilities of Seller incurred in the ordinary course
of up to (but not exceeding) $18,000 (as further identified on Exhibit 1.2
hereto (the "Assumed Liabilities")), Buyer shall not, and shall not be required
to, assume or be obligated to pay, discharge or perform, any debts,
liabilities, adverse claims or obligations of any kind or nature whatsoever of
Seller or Owners, including, without limiting the generality of the foregoing,
(i) all balance sheet liabilities; (ii) any liability for leasehold rentals,
accounts payable, accrued expenses, warranty claims or liabilities; (iii) any
off-balance sheet liability or other contingent liabilities, howsoever arising;
(iv) any trade payables or accounts payable with respect to the Sold Assets;
(v) any obligations or liabilities of Seller to any of its employees under any
collective bargaining agreements, employment contracts, or Employee Benefit
Plans (as defined in Section 4.14 hereof), with respect to accrued vacation
liability to employees, or with respect to compliance with applicable federal,
state or local laws, rules or regulations relating to minimum wages, overtime
rates, labor or employment; (vi) any obligations or liabilities of Seller or
Owners with respect to any federal or state income, withholding, social
security, unemployment or payroll taxes with respect to wages or salaries paid
in connection with Seller's operation of the Business, or any federal, state or
local sales, use, franchise, excise, gross receipts or other tax in connection
with the operation of the Business for any periods prior to the Closing Date;
(vii) the expenses of Seller and Owners incident to the negotiation, execution
and consummation of this Agreement and the sale of the Sold Assets purchased
hereunder; (viii) any obligations or liabilities of Seller or Owners resulting
from their negotiating, entering into, carrying out, or failing to carry out,
their respective obligations under this Agreement; (ix) any litigation, pending
or threatened as of the Closing Date or in any event arising from or relating
to activities of the Business prior to and through the Closing Date; (x) any
liability for violations of OSHA, fair labor laws, environmental laws, or
similar or related laws arising out of or resulting from any events,
circumstances, plans, programs, or conditions occurring or existing prior to or
on the Closing Date; and (xi) any obligations or liabilities incurred by Seller
or Owners for services performed prior to Closing in the nature of warranty
claims or other claims of customer dissatisfaction, or for any other actions
taken by Seller or Owners prior or subsequent to the Closing Date.
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1.3 EMPLOYEES AND INDEPENDENT CONTRACTORS OF SELLER. Prior to
Closing, Buyer may communicate with Seller's employees and independent
contractors performing services for Buyer in connection with the proposed
establishment of an employment or independent contractor relationship by Buyer
with Seller's employees and independent contractors on such terms and
conditions as Buyer may determine. Provided, however, that nothing in this
Agreement shall require Buyer to continue to employ any person or engage any
person as an independent contractor, for any particular period of time after
Closing or to preserve any terms or conditions related thereto for any
particular period of time after Closing.
2. PURCHASE PRICE AND CLOSING
2.1 PURCHASE PRICE. In consideration of the sale, transfer,
conveyance, assignment and delivery of the Sold Assets, and in reliance upon
the representations and warranties made herein by Seller and Owners, Buyer
shall (i) pay to Seller the sum of Five Hundred Fifty Thousand Dollars
($550,000.00), subject to adjustment as provided immediately below, payable by
certified check or wire transfer payable to Seller and delivered at Closing,
(ii) issue a promissory note of Buyer in the principal amount of One Hundred
Thousand Dollars ($100,000.00) in the form of Exhibit 2.1(a) hereto and a
promissory note of Buyer in the principal amount of Five Hundred Fifty Thousand
Dollars ($550,000.00) in the form of Exhibit 2.1(b), and (iii) cause to be
issued to Seller as of the Closing Date 60,000 validly issued, fully paid and
nonassessable shares of Common Stock of TriCare, Inc. (the "Purchase Price").
In respect of the shares to be issued to Seller hereunder, at Closing Seller
shall execute a Subscription Agreement in the form attached hereto as Exhibit
2.1(c). As of the close of business on the Closing Date, Seller's Net Assets
Acquired shall be an amount equal to at least $350,000 (the "Minimum Net Assets
Acquired"). Prior to Closing, Seller shall deliver to Buyer for Buyer's review
an estimate of the amount of Seller's Net Assets Acquired as of the Closing
Date (the "Estimated Net Assets Acquired"). If the Estimated Net Assets
Acquired is less than the Minimum Net Assets Acquired, the cash portion of the
Purchase Price shall be decreased, dollar for dollar, by the amount of such
shortfall. If the Estimated Net Assets Acquired is greater than $355,000, the
cash portion of the Purchase Price shall be increased, dollar for dollar, by
that amount of such overage. For purposes of this Agreement, "Net
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Assets Acquired" shall mean the amount equal to the book value of total assets
(as computed in accordance with generally accepted accounting principles,
consistently applied) minus the Assumed Liabilities. As promptly as
practicable after the Closing Date, Buyer shall determine the actual amount of
Seller's Net Assets Acquired (the "Actual Net Assets Acquired"). Upon
determination of the Actual Net Assets Acquired, the parties will make an
appropriate adjustment of the Purchase Price by a prompt cash payment,
determined in accordance with the foregoing.
2.2 CLOSING.
(a) The Closing of the transactions contemplated herein (the
"Closing") shall be held at 7:00 A.M., local time, on April
19, 1995, or on such later date and at such other time as may
be agreed upon by the parties, at the offices of Buyer, 3353
Peachtree Road, N.E., Suite 1000, Atlanta, Georgia 30326, or
at such other place as the parties may mutually agree in
writing. The time and date on which the Closing is actually
held is referred to herein as the "Closing Date."
(b) At the Closing, Seller and Owners shall deliver to the Buyer
the following:
(1) such good and sufficient bills of sale, assignments,
deeds and other good and sufficient instruments of
sale, conveyance, transfer and assignment as shall be
required or as may be appropriate in order to
effectively vest in Buyer good and marketable title
to the Sold Assets, free and clear of all liens,
security interests and encumbrances of whatever
nature, except the Assumed Liabilities;
(2) Assignment of Contracts and Assumption of Liabilities
executed by Seller in form and content reasonably
acceptable to Seller and Buyer;
(3) Subscription Agreement executed by Seller in the form
attached hereto as Exhibit 2.1(c);
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(4) Employment Agreement executed by Wanda H. Jones in
the form attached hereto as Exhibit 2.5;
(5) Consulting Agreement executed by Wanda H. Jones in
the form attached hereto as Exhibit 2.6(a);
(6) Consulting Agreement executed by Howard W. Jones in
the form attached hereto as Exhibit 2.6(b);
(7) Covenant Not to Compete executed by Seller and Owners
in the form attached hereto as Exhibit 2.7;
(8) Incentive Stock Option Agreement pursuant to TriCare,
Inc. 1992 Stock Option Plan executed by Wanda H.
Jones in the form attached hereto as Exhibit 2.8;
(9) Registration Rights Agreement executed by Seller in
the form attached hereto as Exhibit 2.9;
(10) the certificate described in Section 7(b);
(11) copies of the consents and waivers described in
Section 7(d);
(12) satisfactory evidence of the approvals described in
Section 7(e);
(13) certificate of good standing of Seller, as of the
most recent practicable date, from the office of the
Secretary of State of Georgia;
(14) certified copies of resolutions of the Board of
Directors and shareholders of Seller approving the
transactions set forth in this Agreement;
(15) certificate of incumbency for the officers of Seller
who are executing this Agreement and the other
documents contemplated hereunder;
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(16) physical possession of the Sold Assets where located;
and
(17) such other evidence of the performance of all
covenants and satisfaction of all conditions required
of Seller and Owners by this Agreement, at or prior
to the Closing, as Buyer or its counsel may
reasonably require.
(c) At the Closing, Buyer shall deliver to Seller the following:
(1) certified check or wire transfer of the cash portion
of the Purchase Price, as provided in Section 2.1
hereof, payable to Seller;
(2) stock certificate representing the shares to be
issued to Seller as contemplated by Section 2.1
hereof;
(3) the promissory notes in the forms attached hereto as
Exhibit 2.1(a) and Exhibit 2.1(b);
(4) Subscription Agreement executed/accepted by TriCare,
Inc. in the form attached hereto as Exhibit 2.1(c);
(5) Assignment of Contracts and Assumption of Liabilities
executed by Buyer in form and content reasonably
acceptable to Buyer and Seller;
(6) Employment Agreement executed by Buyer in the form
attached hereto as Exhibit 2.5;
(7) Consulting Agreement executed by Buyer in the form
attached hereto as Exhibit 2.6(a);
(8) Consulting Agreement executed by Buyer in the form
attached hereto as Exhibit 2.6(b);
(9) Covenant Not to Compete executed by Buyer in the form
attached hereto as Exhibit 2.7;
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(10) Incentive Stock Option Agreement pursuant to TriCare,
Inc. 1992 Stock Option Plan executed by TriCare, Inc.
in the form attached hereto as Exhibit 2.8;
(11) Registration Rights Agreement executed by TriCare,
Inc. in the form attached hereto as Exhibit 2.9;
(12) the certificate described in Section 8(b); and
(13) such other evidence of the performance of all the
covenants and satisfaction of all of the conditions
required of Buyer by this Agreement at or before the
Closing as Seller, Owners or their counsel may
reasonably require.
2.3 CONDUCT OF THE BUSINESS PRIOR TO CLOSING. Except with the
consent in writing of Buyer and except as may be required to effect the
transactions contemplated by this Agreement, Seller and the Owners covenant,
between the date of this Agreement and the Closing Date, that they will conduct
the Business in the ordinary course, and that they will, except as otherwise
provided in this Agreement: (a) use their best efforts to preserve the Business
intact and to preserve the goodwill of customers and others having business
relations with Seller in connection with the Business; (b) maintain the Sold
Assets in the same working order and condition as such assets are in as of the
date of this Agreement, ordinary wear and tear excepted; (c) keep in force at
no less than their present limits all existing bonds and policies of insurance
insuring the Sold Assets or the Business; (d) not enter into any contract,
commitment, arrangement or transaction, including any cash distributions or
capital expenditures, other than transactions in the ordinary course of the
Business; and (e) promptly advise Buyer in writing of any matters arising or
discovered after the date of this Agreement which, if existing or known at the
date hereof, would be required to be set forth or described in this Agreement
or the Exhibits hereto.
2.4 CONSENTS AND APPROVALS. Seller and the Owners shall use their
respective best efforts to obtain the waiver, consent and approval of all
persons whose waiver, consent or approval is required in order to consummate
the transactions contemplated by this Agreement, or is required by any
agreement, lease,
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instrument, arrangement, judgment, decree, order or license to which Seller is
a party or subject on the Closing Date, and which would prohibit, or require
the waiver, consent or approval of any person to such transaction or under
which, without such waiver, consent or approval, such transaction would
constitute an occurrence of default under the provisions thereof, result in the
acceleration of any obligation thereunder, or give rise to a right of any party
thereto to terminate its obligations thereunder. All obtained written waivers,
consents and approvals shall be produced at Closing in form and content
reasonably satisfactory to Buyer.
2.5 EMPLOYMENT AGREEMENT. At Closing, Buyer and Wanda H. Jones
shall execute an Employment Agreement substantially in the form attached hereto
as Exhibit 2.5.
2.6 CONSULTING AGREEMENTS. At Closing, Buyer and Wanda H. Jones
shall execute a Consulting Agreement substantially in the form attached hereto
as Exhibit 2.6(a), and Buyer and Howard W. Jones shall execute a Consulting
Agreement substantially in the form attached hereto as Exhibit 2.6(b).
2.7 NON-COMPETITION AGREEMENT. At Closing, Seller, Owners and
Buyer shall execute a Covenant Not to Compete substantially in the form
attached hereto as Exhibit 2.7.
2.8 STOCK OPTION AGREEMENT. At Closing, TriCare, Inc. and Wanda
H. Jones shall execute an Incentive Stock Option Agreement pursuant to TriCare,
Inc.'s 1992 Stock Option Plan in the form attached hereto as Exhibit 2.8,
pursuant to which Wanda H. Jones shall be granted an option to purchase 10,000
shares of Common Stock of TriCare, Inc.
2.9 REGISTRATION RIGHTS AGREEMENT. In respect of the shares to be
issued pursuant to Section 2.1 hereof, at Closing, Buyer and Seller shall
execute a Registration Rights Agreement substantially in the form attached
hereto as Exhibit 2.9 providing for certain "piggyback" registration rights.
3. INSPECTIONS
3.1 ACCESS. Prior to the Closing Date, Seller will afford to
Buyer, its legal counsel, accountants and other representatives, access to the
Business, the Sold Assets and the
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books and records relating to the Business, and will furnish Buyer with such
additional financial and operating data and other information regarding the
Business as Buyer may from time to time reasonably request. As of the Closing,
the parties hereto understand that title to the books, records and materials
relating to the Business shall be assigned, transferred and conveyed to Buyer
in accordance with Section 1.1 hereof. However, the parties agree that Buyer
shall, for a period not exceeding three (3) years after the Closing Date, allow
Seller reasonable access during regular business hours to review books and
records of the Business relating to any period of time prior to Closing.
3.2 CONFIDENTIALITY. Buyer agrees to keep confidential and not to
use to its own or anyone else's advantage any information obtained by Buyer in
connection with Buyer's inspection of Seller's financial statements and records
except as necessary to consummate this transaction and operate its business
after the Closing Date; provided, however, that the foregoing shall not apply
to any information (a) in the public domain not as a result of the violation of
Buyer's undertakings herein, (b) available to Buyer on a non-confidential basis
without regard to the disclosure by Seller to Buyer, (c) available to Buyer
from a source other than Seller (provided that such source in so acting is not
violating any duty or agreement of confidentiality known to Buyer), or (d)
required to be disclosed by any law, rule or regulation.
4. REPRESENTATIONS AND WARRANTIES OF
SELLER AND OWNERS
Seller and each Owner, jointly and severally, represent and warrant to
Buyer that:
4.1 CORPORATE STATUS AND AUTHORITY. Seller is a corporation duly
organized, validly existing, and in good standing under Georgia law and has all
corporate power and authority to conduct the Business as it is now being
conducted and to own and lease the Sold Assets. The Seller and each of the
Owners has the power, capacity and authority to execute and deliver this
Agreement to perform hereunder, and to consummate the transactions contemplated
hereby. The execution, delivery of and performance by Seller of this Agreement
and each and every agreement, document and instrument provided for herein have
been
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duly authorized by the Board of Directors and shareholders of Seller. This
Agreement and such other agreements, documents and instruments are the legal,
valid and binding agreements of Seller and each of the Owners, enforceable
against each of them according to their respective terms.
4.2 CONSENTS. No consent, authorization or approval of any third
party or governmental authority is required for the execution and delivery by
Seller and Owners of this Agreement or the consummation by Seller and Owners of
the transactions contemplated hereby, and there exist no rights of first
refusal or other preferential purchase rights with respect to any of the Sold
Assets.
4.3 WORKING ORDER. All of the tangible Sold Assets are in good
condition, working order and repair, normal wear and tear excepted and are fit
for the purpose for which they are ordinarily used. The Sold Assets constitute
all of the assets used in, or necessary to the conduct of, the Business as
presently conducted.
4.4 TITLE. A list of all material items of property owned or
leased by Seller is attached hereto as Exhibit 4.4. Seller has and will convey
to Buyer hereunder good and marketable title to all of the Sold Assets, free
and clear of all liens, claims, charges, lease or conditional sale obligations,
licenses, and other encumbrances or rights of third parties of any nature,
except the Assumed Liabilities. There does not exist and will not exist by
virtue of this Agreement any claim or right of third persons by virtue of
applicable bulk transfers laws or otherwise that may be legally asserted
against any of the Sold Assets.
4.5 TAXES. Seller has paid all past and current income, social
security, withholding, use, sales, and unemployment insurance taxes, and all
other taxes and governmental fees and charges of every type whatsoever (whether
or not shown on any tax return) related to the Business. There is no pending
litigation or claim involving Seller regarding any such taxes, fees, or
charges, and Seller is not undergoing any audits. Seller has at all times
maintained in effect a valid election to be taxed as an S-Corporation pursuant
to Section 1362(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
4.6 LITIGATION. There are no known unsatisfied, pending, or
threatened judgments, liens, suits, actions, hearings,
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adjudications, claims, investigations or proceedings of any type whatsoever
against Seller, or affecting the Sold Assets or the Business, nor is there any
basis or grounds for any such judgment, suit, action, hearing, adjudication,
claim, investigation or proceeding.
4.7 ACCURACY OF BOOKS AND RECORDS. The books of account and other
written materials of Seller delivered to Buyer contain a complete record of the
financial affairs of Seller, set forth all liabilities, assets, sales and other
matters pertaining to the financial condition of Seller, are true and accurate
as of the date that they bear, and since the respective dates of such
materials, there has been, in the aggregate, no material adverse change in any
of the information contained thereunder.
4.8 CUSTOMERS. Seller has delivered a true, correct and complete
list of the names and addresses of each customer of the Business to Buyer.
Seller has good customer relations with each such customer, and none of the
customers of the Business has notified Seller, and neither Seller nor the
Owners have any reason to believe that any such customer intends to discontinue
or materially reduce its relationship with Seller.
4.9 AGREEMENT DOES NOT VIOLATE OTHER INSTRUMENTS. The execution
and delivery of this Agreement by Seller and the Owners does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of the Articles of Incorporation, as amended, or By-Laws, as amended,
of Seller, or violate or constitute an occurrence of default under any
provision of, or conflict with, or result in acceleration of any obligation
under, or give rise to a right by any party to terminate its obligations under,
any mortgage, deed of trust, conveyance to secure debt, note, loan, lien,
lease, contract, agreement, instrument, or any order, judgment, decree or other
arrangement of which Seller or any Owner is a party or bound or by which the
Sold Assets or the Business are affected.
4.10 LICENSES AND PERMITS; COMPLIANCE WITH LAW. Seller holds all
licenses, certificates, permits, franchises and rights from all appropriate
federal, state or other public authorities necessary for the conduct of the
Business and the use of the Sold Assets. Seller is presently conducting the
Business so as to comply in all material respects with all applicable statutes,
ordinances, rules, regulations and orders of any governmental authority.
Further, Seller has neither received any notice of,
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been charged with, nor is under governmental investigation with respect to, any
actual or alleged violation of any statute, ordinance, rule or regulation, nor
is presently the subject of any pending or threatened adverse proceeding by any
regulatory authority having jurisdiction over the Sold Assets or the Business.
Neither the execution nor delivery of this Agreement, nor the consummation of
the transactions contemplated hereby will result in the termination of any
license, certificate, permit, franchise or right held by Seller which is to be
assigned pursuant to this Agreement, and all such assigned licenses,
certificates, permits, franchises and rights will inure to the benefit of Buyer
after the transactions contemplated by this Agreement.
4.11 CONTRACTS, ETC. Exhibit 4.11 attached hereto consists of a
true and complete list of all contracts, agreements and other instruments
relating to the Sold Assets or the Business (the "Contracts") to which Seller
is a party, including but not limited to all customer contracts, real and
personal property leases, maintenance contracts and software agreements, and
contemporaneously herewith Seller has delivered to Buyer a true and complete
copy of each Contract. All of the Contracts to be assumed by Buyer are valid
and binding upon Seller and the other parties thereto, are in full force and
effect and enforceable in accordance with their terms, and neither Seller, nor
any other party to any such Contract has breached any provision of, or is in
default in any respect under, the terms thereof. Neither Seller nor, to the
knowledge of Seller or Owners, any other party to any Contract, intends to
terminate, materially reduce or materially modify the terms of any of its
obligations or commitments thereunder, and neither Seller nor Owners have any
reason to believe that any party to a Contract is likely to terminate,
materially reduce or materially modify the terms of any of its obligations or
commitments thereunder. Neither Seller nor Owners have received any payment
from any contracting party in connection with or as an inducement for entering
into any Contract, or other agreement or instrument, except for payment for
actual services rendered or to be rendered by Seller consistent with amounts
historically charged for such services.
4.12 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Exhibit 4.12 hereto
sets forth a complete and correct list and summary description of all
trademarks, trade names, service marks, service names, brand names, copyrights
and patents, registrations thereof and applications therefor, applicable to or
used in the
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Business, together with a complete list of all licenses granted by or to Seller
with respect to any of the above. Seller is not currently in receipt of any
notice of any violation of, and has no reason to believe that the Business is
violating the rights of others in any trademark, trade name, service mark,
copyright, patent, trade secret, know-how or other intangible asset.
4.13 LABOR MATTERS. Seller has not violated any applicable
federal, state, local or other applicable law or regulation relating to labor
or labor practices in the operation of the Business.
4.14 EMPLOYEE BENEFIT PLANS.
(a) All Employee Benefit Plans of Seller have been maintained in
substantial compliance with the requirements of the Code and
ERISA and any regulations issued thereunder including the
provisions of Part 6 of Title I of ERISA and Section 4980B of
the Code to the extent applicable.
(b) Seller does not maintain, contribute to, and is not obligated
to contribute to any pension plan subject to the provisions of
Title IV of ERISA (including any multiemployer plan).
(c) As of Closing, none of the Sold Assets will be subject to any
liens arising under ERISA or the Code, and Seller will not
have any liability in respect of any Employee Benefit Plan for
which the Buyer could be held liable.
(d) There is no written or oral employment agreement with any
employee or agent of the Business that is not terminable at
will and without penalty, and Seller has previously delivered
to Buyer copies of all its Employee Benefit Plans and employee
policy manuals of the Business, whether or not delivered to
any employee.
For purposes of this Agreement, the term "Employee Benefit Plans"
shall mean all pension, retirement, profit sharing, deferred compensation,
stock ownership, stock purchase, stock option, restricted stock, bonus,
severance or termination pay, payroll practice, vacation, medical, hospital,
life, health,
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accident, disability, death, or other employee benefit plans or arrangements,
including (without limitation) any pension plan (within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any welfare plan (within the meaning of Section 3(1) of ERISA),
whether funded or unfunded, whether formal or informal, whether written or
unwritten, and whether legally binding or not, covering any present or former
employees, consultants, officers, or directors of Seller or to which Seller is
a party or bound or by which Seller otherwise may have any liability to any
present or former employee, consultant, officer or director of Seller.
4.15 FINANCIAL STATEMENTS AND MATERIAL DEVELOPMENTS. Attached
hereto as Exhibit 4.15, are true, correct and complete copies of Seller's
statement of earnings and retained earnings and balance sheet for the years
ended December 31, 1993 and 1994 and for the three (3) months ended March 31,
1995 (the "Financial Statements"). The Financial Statements are complete, have
been prepared in accordance with generally accepted accounting principles
consistently applied, fairly present the financial condition and results of
operation of the Business as of the dates and for the periods indicated, and
disclose all liabilities of the Business, whether absolute, contingent, accrued
or otherwise, existing as of the date thereof that are of a nature required to
be reflected in financial statements prepared in accordance with generally
accepted accounting principles. Since March 31, 1995, there has been no
material adverse change in the condition, financial or otherwise, in the
assets, liabilities, properties or business or prospects of Seller.
4.16 MATERIAL LIABILITIES. Other than to the extent reflected in
the Financial Statements, Seller has no material liabilities or obligations,
absolute or contingent (individually or in the aggregate), except (i)
obligations and liabilities incurred in the ordinary course of business since
February 28, 1995, that are not, individually or in the aggregate, material,
and (ii) obligations under contracts made in the ordinary course of business
which are not required to be reflected in the Financial Statements.
4.17 CASH AND ACCOUNTS RECEIVABLE. At Closing, the Seller will
convey to Buyer as part of the Sold Assets, cash and accounts receivable in an
amount equal to at least $240,000, inclusive of at least $60,000 in cash. The
accounts receivable of the Business reflect, and will reflect as of Closing,
actual
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transactions which arose from bona fide transactions in the ordinary course of
business. As of the Closing, such accounts receivable will be fully
collectible in the ordinary course within 60 days of Closing, and none of the
accounts receivable shall be subject to any rightful setoff by any customer of
Seller.
5. REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to Seller and Owners as follows:
5.1 ORGANIZATION AND STANDING. Buyer is a duly organized and
validly existing corporation in good standing under the laws of the State of
California.
5.2 CORPORATE POWER AND AUTHORITY. Buyer has the corporate power
and authority to execute and deliver this Agreement, to perform hereunder and
to consummate the transactions contemplated hereby without the necessity of any
act or consent of any other person whomsoever. The execution, delivery and
performance by Buyer of this Agreement and each and every agreement, document
and instrument provided for herein have been duly authorized and approved by
all necessary corporate action. This Agreement, and each and every other
agreement, document and instrument to be executed, delivered and performed by
Buyer in connection herewith, constitute or will, when executed and delivered,
constitute the valid and legally binding obligation of Buyer enforceable
against it in accordance with their respective terms.
5.3 AGREEMENT DOES NOT VIOLATE OTHER INSTRUMENTS. The execution
and delivery of this Agreement by Buyer do not,and the consummation of the
transactions contemplated hereby will not, violate any provisions of the
Articles of Incorporation, as amended, or Bylaws, as amended, or Buyer, or
violate or constitute an occurrence of default under any provision of, or
conflict with, result in acceleration of any obligation under, or give rise to
a right by any party to terminate its obligations under, any mortgage, deed of
trust, conveyance to secure debt, note, loan, lien, lease, agreement,
instrument or any order, judgment, decree or other arrangement to which Buyer
is a party or is bound or by which it or its assets are affected.
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6. SELLER'S CORPORATE NAME
Immediately after the Closing, Seller shall change its corporate name
to a name that in the reasonable judgment of Buyer is not substantially similar
to the name "Medical Transcription of Atlanta, Inc.", and Seller and Owners
agree that they will not, directly or indirectly, continue to use said name or
names substantially similar thereto as Seller's corporate name or for the
conduct of any trade or Business, except as may be explicitly authorized by
Buyer. Buyer shall be entitled to use the name "Medical Transcription of
Atlanta, Inc.", and Seller shall execute such consents as may be necessary in
order for Buyer to use said name.
7. CONDITIONS PRECEDENT TO OBLIGATIONS
OF BUYER TO CLOSE
The obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, on or before the
Closing Date, of each and every one of the following conditions, all or any of
which may be waived, in whole or in part, by Buyer for purposes of consummating
such transactions, but without prejudice to any other right or remedy which
Buyer may have hereunder as a result of any misrepresentations by, or breach of
any covenant or warranty of Seller or the Owners contained in this Agreement or
any other certificate or instrument furnished by Seller hereunder.
(a) Representations True at Closing. The representations and
warranties made by Seller and the Owners in this Agreement,
the Exhibits hereto or any document or instrument delivered to
Buyer or its representatives hereunder shall be true and
correct on the Closing Date with the same force and effect as
though such representations and warranties had been made on
and as of such time.
(b) Covenants of Seller and Owners. Seller and Owners shall have
duly performed all of the covenants, acts and undertakings to
be performed by them on or prior to the Closing Date and an
officer of Seller and each Owner shall deliver to Buyer a
certificate dated as
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of the Closing Date certifying to the fulfillment of this
condition and the condition set forth in Section 7(a) hereof.
(c) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency
or legislative body to enjoin, restrain, prohibit, or obtain
substantial damages in respect of, or which is related to, or
arises out of, this Agreement or the consummation of the
transactions contemplated hereby, or which is related to or
arises out of the Sold Assets or the Business, if such action,
proceeding, investigation, regulation or legislation, in the
reasonable judgment of Buyer would make it inadvisable to
consummate such transactions.
(d) Consents and Waivers. Seller shall have received a true and
correct copy of any consent or waiver (a) required pursuant to
Section 2.4 hereof, or (b) otherwise required for the
execution of this Agreement and the consummation of the
transactions contemplated hereby.
(e) Approvals. The execution and the delivery of this Agreement
and the consummation of the transactions contemplated hereby
shall have been approved by all regulatory authorities whose
approvals are required by law.
(f) Absence of Material Changes. Since the date of the Financial
Statements, Seller shall not have suffered any change that
materially and adversely affects the Sold Assets or the
Business.
(g) Buyer shall have received estoppel certificates with respect
to all real property leases for the Business in the form and
substance satisfactory to Buyer, which estoppel certificates
shall state that Seller is not in default of any such leases.
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8. CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER AND THE
OWNERS TO CLOSE
The obligations of Seller and the Owners to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part,
by Seller and the Owners but without prejudice to any other right or remedy
which they may have hereunder as a result of any misrepresentation by, or
breach of any covenant or warranty of Buyer contained in this Agreement, or any
certificate or instrument furnished by it hereunder.
(a) Representations True at Closing. The representations and
warranties made by Buyer in this Agreement or any document or
instrument delivered to Seller or its representatives
hereunder shall be true and correct on the Closing Date with
the same force and effect as though such representations and
warranties had been made on and as of such date, except for
changes contemplated by this Agreement.
(b) Covenants of Buyer. Buyer shall have duly performed all of
the covenants, acts and undertakings to be performed by it on
or prior to the Closing Date, and an officer of Buyer shall
deliver a certificate dated as of the Closing Date certifying
to the fulfillment of this condition and the condition set
forth under Section 8(a) above.
(c) No Injunction, Etc. No action, proceeding or investigation,
shall have been instituted or threatened before any court or
governmental agency to enjoin, restrain, prohibit, or obtain
substantial damages in respect of, or which is related to, or
arises out of, this Agreement or the consummation of the
transactions contemplated hereby.
(d) Approvals. The execution and the delivery of this Agreement
and the consummation of the transactions contemplated hereby
shall have been approved by all regulatory authorities whose
approvals are required by law.
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9. RIGHT TO TERMINATE
9.1 TERMINATION. This Agreement constitutes the binding and
irrevocable agreement of the parties to consummate the transactions
contemplated hereby, the consideration for which is (a) the covenants set forth
herein, and (b) expenditures and obligations incurred and to be incurred by
Buyer, Seller and the Owners in respect of this Agreement, and this Agreement
may be terminated or abandoned only as follows:
(a) By the mutual written consent of the Buyer, Seller and the
Owners;
(b) By Seller and the Owners on or after May 15, 1995, if any of
the conditions set forth in Section 8 hereof, to which their
obligations are subject, have not been fulfilled or waived,
unless such fulfillment has been frustrated or made impossible
by any act or failure to act of Seller or the Owners; or
(c) By Buyer on or after May 15, 1995, if any of the conditions
set forth in Section 7 hereof, to which the obligations of
Buyer are subject, have not been fulfilled or waived, unless
such fulfillment has been frustrated or made impossible by any
act or failure to act of Buyer.
9.2 COSTS. In the event of a termination of this Agreement
pursuant to Section 9.1(a) hereof, each party shall pay the costs and expenses
incurred by it in connection with this Agreement, and no party (or any of its
officers, directors, employees, agents, representatives or shareholders) shall
be liable to any other party for any costs, expenses, damage or loss of
anticipated profits hereunder. In the event of any other termination, the
parties shall retain any and all rights, claims or causes of action in
existence at the time of such termination which are based upon, or arose
incident to a breach of any covenant, representation or warranty made
hereunder.
10. POST-CLOSING OBLIGATIONS
10.1 TAXES. Seller and Owners shall file all federal, state and
local tax returns of any nature required to be filed by them with respect to
the Business following the Closing Date, in
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a timely manner (unless granted an extension by the appropriate taxing
authority, and then in accordance with the terms of such extension). Seller
shall also pay (and Seller and Owners shall indemnify and hold harmless Buyer
for) any and all liability for taxes of any nature whatsoever which are
actually imposed upon or assessed against Buyer in respect of the operation of
the Business or ownership of the Sold Assets for any period ending on or before
the Closing Date. Ad valorem property taxes and similar duties assessed in
respect of the Sold Assets for the period including the Closing Date shall be
prorated between Seller and Buyer based on their respective periods of
ownership of the Sold Assets during the period to which such taxes or duties
apply.
10.2 ALLOCATION OF PURCHASE PRICE. The parties have agreed to
allocate the Purchase Price as set forth in Exhibit 10.2 hereto. The allocation
of the Purchase Price is intended to comply with Section 1060 of the Code, and
any Treasury Regulations issued thereunder. Buyer and Seller shall file Form
8594, known as the "Asset Acquisition Statement Under Section 1060", with their
respective federal income tax returns in a manner consistent with said
allocation. The parties acknowledge and agree that $200,000 of the Purchase
Price plus any amounts paid pursuant to Section 2.7 hereof is payable in
respect of, and in consideration for, the Covenant Not to Compete Agreement
referred to in Section 2.7 hereof.
10.3 SURVIVAL OF WARRANTIES, REPRESENTATIONS, COVENANTS AND
OBLIGATIONS OF SELLER AND OWNERS. The warranties, representations, covenants
and obligations of all parties shall survive for a period of three years from
the Closing Date; provided, however, that notwithstanding the foregoing, all
representations and warranties relating to taxes shall expire no later than the
date of the expiration of the applicable statute of limitations.
10.4 RIGHT OF SET-OFF. If Seller or Owners breach any of its or
their warranties, representations, covenants or obligations hereunder, Buyer
shall have the right to offset upon written notice to Seller or Owners any
losses, claims or other expenses incurred as a result of such breach against
any amounts remaining to be paid to Seller or any of the Owners under any of
the instruments or agreements provided for or referenced herein.
11. MISCELLANEOUS
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11.1 BINDING EFFECT. This Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the parties and their respective legal
representatives, successors, and permitted assigns.
11.2 COOPERATION. Seller and Owners shall, at the request of Buyer
on or after Closing, execute and deliver such other documents as may be
reasonably necessary to transfer or further perfect title to the Sold Assets.
11.3 ANCILLARY DOCUMENTS. This writing, along with the ancillary
documents referred to herein, constitutes the parties' entire agreement
relating to the transactions contemplated hereby or the subject matter herein.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an agreement in writing signed by
the party against whom or which the enforcement of such change, waiver,
discharge or termination is sought.
11.4 EXPENSES; TAXES; RECORDING. Except as otherwise provided
herein, all fees, costs, and expenses incurred by each party hereto in
connection with the negotiation, authorization, and performance of this
Agreement shall be paid by the party incurring the same. Seller shall pay (and
indemnify and hold harmless Buyer for) all sales, use, transfer, conveyance or
other similar taxes, duties, excise or governmental charges imposed by any
taxing jurisdiction with respect to the transfer of the Sold Assets or the
transactions contemplated hereby, whether payable before or after Closing.
Buyer shall pay the cost of any recording fees associated with recording
documents delivered by Seller or Owners.
11.5 BROKERS. Buyer represents and warrants to the Seller and
Owners, and the Seller and Owners, jointly and severally, represent and warrant
to Buyer, that no broker or finder has acted for it or them or any entity
controlling, controlled by or under common control with it or them in
connection with this Agreement. Buyer agrees to indemnify and hold harmless
the Seller and the Owners against any fee, loss or expense arising out of any
claim by any broker or finder employed or alleged to have been employed by it.
The Seller and the Owners, jointly and severally, agree to indemnify and hold
harmless against any fee, loss, or expense arising out of any claim by any
broker or finder employed or alleged to have been employed by them or any of
them.
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11.6 GOVERNING LAW. This Agreement and the other documents and
transactions contemplated hereby shall be construed in accordance with, and
governed by, the laws of the State of Georgia.
11.7 ASSIGNMENTS. Neither party shall assign its rights and/or
obligations hereunder without the prior written consent of the other party to
this Agreement.
11.8 NOTICES.
(a) All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered by hand,
telecopy, or mailed by registered or certified mail, return
receipt requested, first class postage prepaid, addressed as
follows:
If to the Seller or the Owners:
Wanda H. Jones
2471 Chancery Place
Marietta, Georgia 30066
Telecopy: 924-1757
Howard W. Jones
2471 Chancery Place
Marietta, Georgia 30066
Telecopy: 924-1757
If to Buyer:
Transcend Services, Inc.
3353 Peachtree Road, N.E.
Suite 1000
Atlanta, Georgia 30326
Attention: Mr. David W. Murphy
Telecopy : (404) 364-8010
(b) If delivered personally or by telecopier, the date on which
the notice, request, instruction or document is delivered
shall be the date on which such delivery is made and, if
delivered by mail, the date on which such notice, request,
instruction or document is received shall be the date of
delivery.
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(c) Any party hereto may change its address specified for notices
herein by designating a new address by notice in accordance
with this Section 11.8.
11.9 MISCELLANEOUS. The Section and other headings in this
Agreement are inserted solely as a matter of convenience and for reference, and
are not a part of this Agreement. All pronouns used herein shall be deemed to
refer to the masculine, feminine or neuter gender as the context requires. All
Exhibits attached hereto are incorporated herein by reference, and all blanks
in such Exhibits, if any, will be filled in as required in order to consummate
the transactions contemplated herein and in accordance with this Agreement.
Time is of the essence in this Agreement.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf as of the date first stated above.
"SELLER":
MEDICAL TRANSCRIPTION OF
ATLANTA, INC.
By:/s/ Howard W. Jones
Name: Howard W. Jones
Title: President
"OWNERS":
/S/ WANDA H. JONES
------------------
WANDA H. JONES
/S/ HOWARD W. JONES
-------------------
HOWARD W. JONES
"BUYER":
TRANSCEND SERVICES, INC.
By:/s/ David W. Murphy
Name: David W. Murphy
Title:Vice President,
Acquisitions
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<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C>
1.2 Assumed Liabilities
2.1(a) Form of Promissory Note ($100,000)
2.1(b) Form of Promissory Note ($550,000)
2.1(c) Form of Subscription Agreement
2.5 Form of Employment Agreement -- Wanda Jones
2.6(a) Form of Consulting Agreement -- Wanda Jones
2.6(b) Form of Consulting Agreement -- Howard Jones
2.7 Form of Covenant Not to Compete
2.8 Stock Option Agreement
2.9 Registration Rights Agreement
4.4 Material Property Owned or Leased
4.11 Contracts
4.12 Patents, Trademarks, Tradenames, etc.
4.15 Financial Statements
10.2 Purchase Price Allocation
</TABLE>
Copies of the foregoing schedules and exhibits, which are omitted from this
Form 8-K report will be furnished to the Securities and Exchange Commission
upon request.
26
