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Page 1 of 3 Pages.
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): April 3, 1997
RX MEDICAL SERVICES CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Nevada 1-10963 87-0436782
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
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Suite 210
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888 East Las Olas Boulevard
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Fort Lauderdale, Florida 33301
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 462-1711
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 3, 1997, Consolidated Health Corp. of Pittsburgh, Inc. ("CHC/P"), a
Pennsylvania corporation 100% owned by Consolidated Health Corporation of
Mississippi, Inc. ("CHC"), Registrant's wholly-owned hospital management
subsidiary, acquired the operating assets of the Podiatry Hospital, an acute
care foot and ankle hospital with 13 licensed beds located in Pittsburgh,
Pennsylvania (the "Hospital"), from the Podiatry Hospital of Pittsburgh, a
not-for-profit Pennsylvania corporation (the "Seller"). The acquisition was
effective retroactive to January 1, 1997, when CHC/P assumed operational
responsibility for the Hospital from the Seller. CHC/P will continue to
operate the Hospital as an acute care hospital.
The purchase price for the assets of the Hospital, which consist of land,
buildings, inventory and equipment, was $1,542,366, of which $1,166,000 was
cash, $250,000 was in the form of a purchase money second mortgage taken back
by the Seller, and $126,366 represents the assumption of certain liabilities.
The cash portion of the purchase price was funded by NPF X, Inc., an affiliate
of the Registrant's primary lender, through a $500,000 cash advance on a new
accounts receivable lending facility obtained by Registrant for the Hospital,
and the issuance by CHC/P to NPF X, Inc. of a $635,000 promissory note secured
by a first mortgage on the acquired assets (i.e. land, buildings and owned
equipment).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired:
Not required pursuant to Rule 3-05(b)(2)(i) of Regulation S-X.
(b) Pro forma financial information:
Not required pursuant to Rule 11-01(c) of Regulation S-X.
(c) Exhibits
2(a) Asset Purchase Agreement, dated August 28, 1996
2(b) Amendment to Asset Purchase Agreement, undated.
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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.
RX MEDICAL SERVICES CORP.
(Registrant)
Date: April 15, 1997 By: /s/ Randolph H. Speer
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Randolph H. Speer
President
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ASSET PURCHASE AGREEMENT [EXHIBIT 2(a)]
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made this 28th day of
August, 1996, by and between THE PODIATRY HOSPITAL OF PITTSBURGH, a
not-for-profit hospital organized under the laws of the Commonwealth of
Pennsylvania ("Seller"), and CONSOLIDATED HEALTH CORPORATION OF MISSISSIPPI,
INC., a Mississippi corporation ("Purchaser"). (Seller and Purchaser are from
time to time referred to herein together as the "parties" and separately as a
"party").
WITNESSETH:
WHEREAS, Purchaser is engaged in the operation and management of hospitals
and clinics; and
WHEREAS, Seller owns and operates a hospital facility located in
Pittsburgh, Pennsylvania (the "Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain of the tangible and intangible assets used or
held for use in connection with the Business.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations and warranties hereinafter contained, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the parties do hereby
agree as follows:
1. SALE AND PURCHASE OF BUSINESS.
1.1. SALE AND PURCHASE. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties contained
herein, Seller shall, on the Closing Date (as such term is defined in Section 5
hereof) sell, assign, transfer, convey and deliver to Purchaser, and Purchaser
shall, on the Closing Date, purchase and acquire from Seller, free and clear of
all liabilities (fixed or contingent), obligations, security interests, liens,
claims or encumbrances of any kind or nature whatsoever, except those set forth
on Schedule 1.1A to this Agreement ("Permitted Encumbrances"), good and
marketable title to all of those tangible and intangible assets of Seller,
real, personal and mixed (hereinafter "Assets", as that term is defined below),
that relate to the ownership, operation and maintenance of the Business.
1.2. ASSETS. For the purposes of this Agreement, the term "Assets"
shall include, without limitation, all real property owned and/or leased by
Seller and used in or related to the operation of the Business, and
the improvements, structures and fixtures on such real property, as more
particularly described on
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Schedule 1.2A attached or to be attached hereto and made a part hereof
(the "Real Property"), all transferable licenses and permits, medical
diagnostic and testing equipment, office furniture and equipment, display and
storage racks, fixtures, machinery, telephone systems, vehicles, supplies,
inventory, patient accounts receivable, trade names (including, without
limitation, the name "The Podiatry Hospital of Pittsburgh" and any derivatives
thereof), patient lists, and all the rights of Seller under any and all
contracts with patients, all information systems, program software and
documentation thereof (including, without limitation, all media in which such
software and documentation is resident), and all data and records relating to
the operation, ownership and maintenance of the Business; all advertising,
marketing and related material intended for use or used in connection with the
Business; all rights of Seller under those agreements listed on Schedule 1.2B
annexed or to be annexed hereto and made a part hereof or entered into
hereafter with the prior approval of Purchaser, including, but not limited to,
real estate leases, equipment leases, insurance contracts and utility
agreements, (the "Assumed Agreements") and under all options and claims
relating to assets used or usable in the Business; all contract rights, and
other similar assets related to the Business; and all correspondence, books and
records of Seller relating to the ownership, maintenance or operation of the
Business, including, without limitation, payroll, and patient records, provided
that Purchaser shall make such books and records available to Seller at its
request, at no cost to Seller, at all reasonable times at the offices of the
Business and shall preserve such books and records for not less than three (3)
years after the Closing Date. The Assets include, without limitation, all
those tangible assets more specifically set forth on Schedule 1.2C annexed or
to be annexed hereto and made a part hereof subject to such changes therein as
may occur between the date hereof and the Closing Date to the extent permitted
by this Agreement. The Assets shall not include the following, which shall be
retained by Seller and shall not be sold or transferred to Purchaser
(collectively, the "Excluded Property"): (i) the rights of Seller under this
Agreement; (ii) those items set forth on Schedule 1.2D annexed or to be annexed
hereto; (iii) all of the books and records that Seller may deem necessary for
the purposes of any statute, rule, regulation or ordinance or for tax returns
or for other tax purposes of Seller, provided, however, that Seller shall make
such books and records, to the extent they relate to the Business or the
Property, available to Purchaser at its request at all reasonable times at the
office of Seller, and shall preserve such books and records for not less than
three (3) years after the Closing Date.
2. PURCHASE PRICE.
2.1. GENERAL. In consideration for the sale, conveyance, transfer and
delivery of the Business and the Assets, subject to the terms and conditions of
this Agreement and in
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reliance upon the representations and warranties of Seller contained herein,
Purchaser shall pay for the Assets as follows:
(a) ASSETS. One Million Two Hundred Fifty Four Thousand
($1,254,000.00) Dollars for the Assets, excluding the Supplies.
(b) SUPPLIES. At August 31, 1996 inventory cost, cost figure to be
provided.
(c) LIABILITIES. Purchaser to assume accrued expenses in the
amount of One Hundred Seventy Five Thousand ($175,000.00) Dollars and
accrued payroll up to Two Hundred Thousand ($200,000.00) Dollars, which
liabilities of the Business are specifically set forth on Schedule 2.2 of the
Agreement (the "Assumed Liabilities").
2.2. PAYMENT. (a) The Purchase Price shall be payable at the "Closing"
(as that term is defined in Section 5 of this Agreement) by (i) wire transfer
of immediately available funds in the amount of One Million ($1,000,000.00)
Dollars to the trust account of Rothman Gordon and (ii) wire transfer of funds
representing inventory cost of supplies, and (iii) the assumption by Purchaser
of the Assumed Liabilities.
(b) INDEMNIFICATION ESCROW. Three Hundred Thousand ($300,000.00)
Dollars of the payment referred to in Section 2.2(a)(i) above (the
"Escrow") shall be held back and retained in escrow by Seller's attorneys,
Rothman Gordon, pursuant to a separate escrow agreement, for the express
purpose of providing Purchaser with available funds to pay any liabilities of
Seller assessed against Purchaser after the Closing Date, which assessments
would entitle Purchaser to indemnification pursuant to Section 10.1 below. The
Escrow shall remain in effect for a period of ninety (90) days.
(c) SECOND MORTGAGE ON REAL ESTATE ASSET. Purchaser will give
Seller a second mortgage lien on the Real Property in the Business in
the amount of Two Hundred Fifty Thousand ($250,000.00) Dollars to be amortized
over one hundred twenty (120) equal monthly payments, plus interest, as billed,
at the PNC Bank, N.A. Prime Rate of interest, adjusted yearly on the
anniversary date thereof. The note and mortgage will contain terms customarily
included in notes and mortgages of Allegheny County lending institutions
including, without limitation, no prepayment penalty and due on sale
provisions. SELLER WILL AGREE TO SUBORDINATE THE LIEN OF ITS MORTGAGE TO A
FIRST MORTGAGE TO BE PLACED ON THE PROPERTY, AND ANY REFINANCING OF THAT FIRST
MORTGAGE, SO LONG AS THE FIRST MORTGAGE AMOUNT DOES NOT EXCEED 65% LOAN TO
VALUE RATIO.
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3. DOWN PAYMENT. Upon execution of this Agreement by both parties hereto,
Purchaser shall deliver to Seller a good faith deposit of One Hundred Thousand
($100,000.00) Dollars (the "Deposit"), which Seller's attorneys shall hold
pursuant to an escrow agreement. Should Purchaser terminate this Agreement
pursuant to the provisions of Section 4 below, the Deposit shall forthwith be
returned to Purchaser. Should Purchaser proceed to close this transaction, the
Deposit shall be credited against Purchaser's obligations as set forth in
Section 2.2(a)(i) above.
4. DUE DILIGENCE PERIOD. Purchaser shall have two (2) weeks from and
after the date this Agreement is executed by both parties (the "Due Diligence
Period"), during which it shall conduct a review of the books and financial
records of the Business (all of which shall be made available to Purchaser at
the primary location of the Business during normal hours of operation) and
shall be entitled to observe the Business at such primary location (and such
other places as may be incident thereto). If the Schedules annexed or to be
annexed hereto reveal material adverse change in financial circumstances from
conditions existing prior to annexation or if such change is otherwise revealed
and Purchaser determines not to proceed with the purchase of the Business,
Purchaser shall have the right to terminate this Agreement by giving written
notice thereof to Seller on or before the end of the aforesaid two (2) week
period. If Purchaser terminates this Agreement pursuant to this Section 4,
Purchaser shall receive a full refund of the Deposit and the parties hereto
shall thereupon be released from all obligations from and to each other under
this Agreement, but for the Confidentiality provisions of Section 9.1 hereof
which shall remain binding.
5. CLOSING. The closing of the transaction contemplated by this Agreement
(the "Closing") shall take place in the offices of Seller's attorneys
at 10:00 a.m. on September 30, 1996, or as soon thereafter as may be permitted
by Required Consents and as Seller may specify by not less than five (5) days
notice (the "Closing Notice") to Purchaser. Seller shall give the Closing
Notice as soon as practicable following the fulfillment by Seller of the
Purchaser's conditions precedent to the Closing contained in Section 6.1
hereof, provided, however, that if the Closing does not occur on or prior to
November 30, 1996, notwithstanding the performance by each of the parties
hereto of their respective obligations hereunder, then this Agreement shall, at
Purchaser's option, be null and void and of no further force or effect. The
date on which the Closing takes place is herein referred to as the "Closing
Date". The Closing shall be effective as of 12:01 a.m. on the Closing Date.
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6. CONDITIONS TO CLOSING.
6.1. PURCHASER'S CONDITIONS. The obligation of Purchaser to consummate
the transactions contemplated by this Agreement are subject to the fulfillment
on or before the Closing Date of the following conditions:
(a) All Required Consents (as such term is defined in Section
7.18 hereof) shall have been obtained, in form and substance reasonably
satisfactory to Purchaser, with no change in the terms of any of the Assumed
Agreements, and no conditions imposed on the transfer of any thereof, in each
case without the prior written approval of Purchaser, and shall be in full
force and effect on the Closing Date.
(b) All of the representations and warranties of Seller contained
in this Agreement and in documents referred to herein, the Schedules
and Exhibits annexed hereto and all Transfer Documents (as such term is defined
in Section 6.3 hereof) and closing certificates delivered pursuant hereto or in
connection with the consummation of the transactions contemplated hereby and
all exhibits and schedules thereto shall be true on the Closing Date as if then
made (except to the extent waived hereunder or as affected by the transactions
contemplated hereby or by the conduct of the Business by Seller in the manner
provided in Section 7.11 hereof). Seller shall have performed and complied
with all other covenants, agreements and conditions required by this Agreement,
including, without limitation, all of the Schedules hereto, to be performed or
complied with by it prior to or on the Closing Date; and Purchaser shall have
been furnished with a certificate executed on behalf of Seller, dated the
Closing Date, representing and certifying in such detail as Purchaser may
reasonably request, to the fulfillment of the foregoing conditions.
(c) All documents and proceedings of Seller in connection with the
transactions contemplated hereby, including, without limitation, those
referred to in this Section 6.1, shall have been approved as to form and
substance by Purchaser and its counsel, which approval shall not be
unreasonably withheld.
(d) Seller shall have delivered to Purchaser all Transfer
Documents, in form and substance reasonably satisfactory to Purchaser
and its counsel, an opinion of counsel by Seller's counsel in the form annexed
hereto as Exhibit 6.1(d), and all such other certificates as Purchaser or its
counsel may reasonably request.
(e) No action or proceeding shall be pending or, to the knowledge
of Seller or Purchaser, threatened before any court or governmental
body to restrain or prohibit, or to obtain material damages in respect of, this
Agreement, or the consummation
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of the transactions contemplated hereby; and there shall be no Legal
Proceedings (as defined in Section 7.13 hereof) pending or, to the best of the
knowledge of Purchaser or Seller, threatened which, either separately or in the
aggregate, could materially adversely affect the Business.
6.2. SELLER'S CONDITIONS. The obligations of Seller to consummate the
transactions contemplated by this Agreement are subject to the fulfillment on
or before the Closing Date of the following conditions:
(a) All of the representations and warranties of Purchaser
contained in this Agreement and in the documents evidencing Purchaser's
assumption of the Assumed Agreements (the "Assumption Documents") and closing
certificates delivered pursuant hereto or in connection with the consummation
of the transactions contemplated hereby and all exhibits and schedules thereto
shall be true on the Closing Date as if then made (except as and to the extent
waived hereunder or as affected by the transactions contemplated hereby).
Purchaser shall have performed and complied with all covenants and agreements
required by this Agreement to be performed or complied with by Purchaser prior
to or on the Closing Date; and Seller shall have been furnished with a
certificate executed on behalf of Purchaser, dated the Closing Date,
representing and certifying in such detail as Seller may reasonably request to
the fulfillment of the foregoing conditions.
(b) All documents and proceedings of Purchaser in connection with
the transactions contemplated hereby shall have been approved as to
form and substance by Seller and its counsel, which approval shall not be
unreasonably withheld.
(c) Purchaser shall have delivered to Seller the Assumption
Documents, the Purchase Price and mortgage documents as contemplated by
Section 2.2 hereof.
(d) No action or proceeding shall be pending or, to the knowledge
of Seller or Purchaser, threatened before any court or governmental
body to restrain or prohibit, or to obtain material damages in respect of, this
Agreement or the consummation of the transactions contemplated hereby.
(e) Purchaser and Seller shall have received all Required
Consents, in form and substance reasonably satisfactory to Seller, all
of which shall be in full force and effect on the Closing Date, and Purchaser
shall have exerted its best efforts to obtain Required Consents within its
power to obtain, shall have cooperated with Seller in obtaining Seller Required
Consents and shall have fully complied with all conditions of all Required
Consents to be complied with by Purchaser, to the extent Purchaser had
theretofore approved thereof in writing. Notwithstanding the
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foregoing, this condition shall be deemed satisfied with respect to any
Required Consent which is not obtained on or prior to the Closing Date if
Purchaser agrees in writing to waive the obtaining of such Required Consent and
Seller agrees to indemnify, defend and hold harmless Purchaser from any Claim
(as such term is defined in Section 10.1 hereof) arising out of or resulting
from the failure to obtain such Required Consent in a manner reasonably
satisfactory to Seller based on the nature of the Required Consent being
waived.
(f) Purchaser will use its best efforts to maintain surgical
facilities for the practice of podiatric medicine as well as general
surgery. Podiatrists will be granted privileges on the same terms and
conditions as privileges are granted other physicians. Purchaser will exert
its best efforts to maintain the facility's identification with Podiatry.
(g) There will be no mass layoff of Seller's current employees at
or immediately after Closing.
6.3. INSTRUMENTS ON CONVEYANCE AND TRANSFER. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Purchaser contained herein, Seller shall, on the Closing Date,
deliver, or cause to be delivered, to Purchaser such bills of sale, deeds,
assignments, instruments and documents (collectively, the "Transfer
Documents"), the mortgage note and mortgage referred to in Section 2.2 and
Seller shall take, and cause to be taken, all such additional steps, as may be
necessary or appropriate to effect the transactions contemplated by Section 1.1
hereof and to transfer to Purchaser complete record and beneficial ownership of
the Property of the Business free and clear of liens and obligations to other
persons of every kind and character except as contemplated by the Assumed
Agreements, including all of the right, title and interest of Seller therein
and thereunder.
7. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents, warrants
and covenants to and with Purchaser, as an inducement to Purchaser to enter
into this Agreement and to consummate the transactions contemplated hereby,
that, as of the date hereof:
7.1. ORGANIZATION. Seller is a not-for-profit corporation organized and
existing under the laws of the Commonwealth of Pennsylvania and has the
requisite power and authority to own, lease and operate and carry on the
Business as it is now being conducted.
7.2. BINDING AGREEMENT. This Agreement, and the Transfer Documents
constitute, or when duly executed and delivered will constitute, the valid and
binding obligations of Seller enforceable against Seller in accordance with
their respective terms (except as such enforceability may be limited by rules
of equity or applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws from time to time in effect which
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effect the enforceability of creditor's rights generally). Seller has all
requisite power and authority to execute and deliver this Agreement and the
Transfer Documents and to consummate the transactions contemplated hereby and
thereby. All persons who have executed this Agreement and will execute the
Transfer Documents on behalf of Seller have been duly authorized to do so.
Neither the execution and delivery of this Agreement and the Transfer Documents
nor the consummation of the transactions contemplated hereby or thereby will
(a) violate, conflict with or result in the breach or termination of, or
otherwise give any other contracting party the right to terminate, or
constitute a default (by way of substitution, novation or otherwise) under the
terms of, any Assumed Agreement or any other agreement to which Seller is a
party or by which it is bound or which effects it or its assets (a "Seller
Agreement"); (b) violate any judgment, order, injunction, decree or award
against, or binding upon, Seller or the securities, assets, properties,
operations or business of Seller; or (c) violate any law or regulation of any
jurisdiction as such law or regulation relates to Seller or to the assets,
properties, operations or business of Seller.
7.3. FINANCIAL STATEMENTS. Seller has heretofore delivered to Purchaser
true and complete copies of its balance sheet as of June 30, 1994 and
1995 and its statements of operations for the years then ended. (Referred to
herein as the "Financial Statements"). The Financial Statements have been
prepared on the basis of generally accepted accounting principles, consistently
applied, except as noted in the attached Schedule 7.3. Since the aforesaid
balance sheet date, there has been no material adverse change in the business,
assets, liabilities, properties, operations or conditions (financial or other)
of Seller or the Business except as set forth on Schedule 7.3. and unaudited
statements for 1996.
7.4. LIABILITIES. Except as and to the extent reflected on Schedule
7.4, Purchaser shall have no responsibility for any liability of Seller
whether or not reflected on the Financial Statements.
7.5. BOOKS AND RECORDS, TAXES. The books of account of Seller reflect
all items of income, gain, loss, and expense and all assets and liabilities of
Seller subject to customary month-end and year-end adjustments and are
accurate and complete in all material respects. All of the other records of
Seller, including, without limitation, all of its payroll and customer records,
are accurate and complete in all material respects. Seller agrees to
cooperate in providing access to its books and records on a reasonable basis
in the event an audit of such books and records is deemed necessary by counsel
for Purchaser in order to comply with any federal or state securities laws or
regulations.
7.6. OBLIGATIONS; AUTHORIZATIONS. Seller is not in
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violation of any judgment, order, injunction, award or decree which is
binding on Seller or any of its assets, properties, operations, securities or
business or which would effect the consummation of the transactions
contemplated hereby. Seller has in all material respects performed all
obligations required to be performed by it under, is not in default in any
material respect under, in violation in any material respect of, aware of any
material default or violation by any other party to, and has not breached any
material representation or incurred any contingent liability contained in, any
of the Assumed Agreements. All of the Assumed Agreements are valid, binding
and enforceable in accordance with their respective terms and in full force and
effect. Subject to obtaining the Required Consents, all of the Assumed
Agreements will be in full force and effect in accordance with their respective
terms following the consummation of the transaction contemplated hereby. There
is no pending or, to the best knowledge of Seller, threatened claim that
operations pursuant to any of the Assumed Agreements have been improperly
conducted or maintained or which would lessen the rights of Seller thereunder,
and, to the best knowledge of Seller, no event has occurred and no condition
exists that would increase the obligations or costs of Seller thereunder in any
manner or amount that would be material to such Assumed Agreements standing
alone. All material licenses, permits and other governmental authorizations
that are required for the ownership, operation and maintenance of the Business
as now owned, operated and maintained have been obtained and are valid and
sufficient for such ownership, operation, maintenance and location and are in
full force and effect. Seller has not taken any action, or failed to take any
action, or permitted or allowed to exist any condition, which, with notice or
lapse of time, or both, would result in the termination, cancellation or
forfeiture of, or cause a default under, any such license, permit or other
governmental authorization.
7.7. COMPLIANCE. Seller represents that to the best of its knowledge it
has consistently complied and is currently complying with any and every
applicable federal, state and municipal law, rule, regulation and other
requirement of any court or governmental body, court or arbitrator applicable
to it or relating to the conduct of the Business, including, without
limitation, any and every law, rule and regulation relating to the employment,
health and safety of its personnel, to the disposition of infectious wastes, to
the entitlement of Medicare or Medicaid reimbursement and to the discharge of
substances into the atmosphere or water in all cases where noncompliance
therewith, singly or in the aggregate, would, but for this Agreement, have a
material adverse effect on the business, assets, liabilities, properties,
operations or condition (financial or other) of Seller or the Business.
7.8. CONTRACTS AND OTHER OBLIGATIONS. Except for
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contracts and Agreements listed on Schedule 1.2B, or on other Schedules
hereto, Seller is not a party to (in its own name or as a successor in interest
to any predecessor), nor is the Business bound by, any written or oral: (i)
agreement or contract not made in the ordinary course of business; (ii)
employment, advisory or consulting agreement or contract extending for more
than 30 days except as set forth on Schedule 7.8; (iii) agreement or contract
with any labor or trade union or association; (iv) bonus, pension,
profit-sharing, retirement, stock purchase, hospitalization, insurance or other
plan providing for employee benefits except as set forth on Schedule 7.8; (v)
lease in respect to any property, real, personal or mixed, whether as lessor or
lessee except as set forth on Schedule 7.8; (vi) obligation for the sale of
provision of material, supplies, equipment or services (other than service to
customers) which is not cancelable without penalty; (vii) single agreement or
contract for expenditures or commitment for expenditures in excess of Three
Thousand ($3,000.00) Dollars or agreements or contracts for expenditures or
commitments for expenditures in excess of Ten Thousand ($10,000.00) Dollars in
the aggregate or, in any case, extending beyond June 30, 1997; (viii) loan
agreement, mortgage, security agreement or other agreement, instrument,
obligation, understanding or relationship creating any lien, charge, or other
encumbrance; (ix) other contract or agreement not referred to elsewhere in this
Section 7.8 for the purchase, sale or provision of any assets by or to Seller,
with a value of Three Thousand ($3,000.00) Dollars singly or Ten Thousand
($10,000.00) Dollars in the aggregate, which is not cancelable without penalty;
or (x) purchase order in excess of Three Thousand ($3,000.00) Dollars or open
purchase order, in each case which cannot be canceled without penalty or
premium.
7.9. BENEFIT PLANS. There is an employee benefit plan established or
maintained for employees (the "Plan") of Seller or to which contributions have
been made by Seller for such employees. Seller covenants and agrees that it
shall either suspend all future accruals to or terminate the Plan. If the Plan
is terminated, the Seller shall (i) obtain approval from the Internal Revenue
Service that such termination does not adversely affect the tax-qualified
status under Sections 401 and 501 of the Code or the Plan and the funds held
pursuant to the Plan, (ii) obtain approval from the Pension Benefit Guaranty
Corporation, (iii) thereafter to distribute such funds to the Plan participants
and, if applicable, their beneficiaries, as soon as administratively feasible.
Seller is and shall remain, both before and after the Closing, in compliance
with those provisions of the consolidated Omnibus Budget Reconciliation Act of
1985 that relate to continued coverage under any plan to be made available to
any of its present or former employees.
7.10. ADVERSE EVENTS. Since June 30, 1996 (the "Current Balance Sheet
Date"), there has not been (a) any
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destruction, taking in condemnation or eminent domain, damage by fire,
accident or other casualty or act of God of or to any of the properties or
assets of Seller which materially affects the operation or maintenance of the
Business as it was conducted on the Current Balance Sheet Date, whether or not
covered by insurance; (b) any labor strike or other occurrence, event or
condition of any similar character which effects employees of Seller or, to the
actual knowledge of Seller, any supplier of goods or services to Seller which
materially adversely affects of may materially adversely affect the assets,
properties, business, operations or condition (financial or other) of the
Business except Schedule 7.10 (defined as audited 06/30/96 Balance Sheet); (c)
any other occurrence, event or condition relating to or affecting Seller which
adversely affects or may adversely affect the assets, properties, business,
operations or condition (financial or other) of the Business, or (to any
material increase in any obligation of Seller relating to the Business or any
of the Assumed Agreements which would or might be effective after the Closing
Date except in accordance with the express terms of any of the Assumed
Agreements or required by law.
7.11. CONDUCT OF BUSINESS. Since the Current Balance Sheet Date, Seller
has not: (a) incurred any obligation which would survive the Closing and become
an obligation of Purchaser to pay, directly or indirectly, commissions or other
amounts to any employee, agent, officer, director or shareholder of Seller (a
"Related Person"), or to any firm of which any of such Related Person or any
member of their families or any corporation, partnership or other entity in
which any of such individuals or any member of their families has any direct or
indirect interest (other than the ownership of two (2%) percent or less or any
outstanding class or series of its securities which are listed on a national
securities exchange); (b) incurred any debt, obligation or liability (absolute
or contingent) in excess of Three Thousand ($3,000.00) Dollars in the aggregate
except obligations and liabilities incurred in the ordinary course of the
operation of the business of Seller; (c) canceled, without payment in full, any
notes, loans or other obligations receivable or other debts or claims held by
it other than in the ordinary course of business; (d) sold, assigned,
transferred, abandoned, mortgaged, pledged or subjected to lien any of the
property, tangible or intangible, or rights under any contract, permit, license
or any other agreement other than sales or the dispositions of equipment or
service in the ordinary course of business at customary terms and prices; (e)
waived or compromised any material rights in its favor; (f) entered into any
line of business other than that conducted by it on the Current Balance Sheet
Date or entered into any transaction not in the ordinary course of its
business; or (g) conducted any line of business then conducted by it in any
manner except by transactions customary in the operation of its business as
conducted on the Current Balance Sheet Date and except as specifically
contemplated
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<PAGE> 12
hereby.
7.12. DAMAGES. Seller has not, directly or through any of its agents,
(i) performed or failed to perform any act, which performance or
failure, singly or in the aggregate, will make it liable for, or (ii) incurred
any single or aggregate liability for, direct or consequential damages which
are not fully covered by insurance at the date hereof and at the date on which
such damages are determined.
7.13. SELLER LEGAL PROCEEDINGS. There are no:
(a) suits, actions or administrative, arbitration or other similar
proceedings (including, without limitation, proceedings concerning labor
disputes or grievances, civil rights discrimination cases and affirmative
action proceedings) pending or, to the best of the knowledge of Seller,
threatened, or, to the best of the knowledge of Seller, investigations pending
or threatened, by or before, any federal, state, municipal or other
governmental department, commission, board, agency or instrumentality to which
Seller is a Party or by which Seller or any part of the Business may be bound,
including, without limitation, the Internal Revenue Service, any state or local
tax authority, the U. S. Department of Health and Human Services or any agency
or subcontractor thereof, the Health Care Financing Administration, the
Pennsylvania Department of Health, or any other agency that regulates the
Business or judgments, orders, injunctions, decrees or awards (whether rendered
by a court, administrative agency or by arbitration pursuant to a grievance or
other procedure) against Seller or any of the Property which is unsatisfied or
requires continuing compliance therewith (such suits, actions, etc., and
judgments, orders, etc., are hereinafter referred to as "Legal Proceedings");
and
(b) persons holding powers of attorney from Seller.
7.14. ENVIRONMENTAL MATTERS. Seller is in material compliance with all
requirements for the operation of the Business under federal, state, or local
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic substances, materials or wastes
into ambient air, surface water, ground water, or land, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or hazardous or
toxic substances, materials or wastes (collectively, "Environmental
Requirements"). For the purpose of this Section, "hazardous substances",
"hazardous materials" and "hazardous waste" refers to such terms as defined in
the Comprehensive Environmental Response
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<PAGE> 13
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 et seq., and
regulations thereunder; the Resource Conservation and Recovery Act; and
applicable federal, state and local laws pertaining to environmental
regulations.
7.15. INSURANCE. Schedule 7.15 annexed hereto and made a part hereof
correctly lists all insurance policies of Seller now in effect with
respect to the Business and all bonds, letters of credit and similar
instruments securing performance under the Assumed Agreements or required by
law. No beneficiary under any such bond, letter of credit or similar
instrument has demanded, or, with the giving of notice or passage of time,
would have the right to demand, payment thereunder. Seller has no reason to
believe that such insurance policies are not valid, binding and enforceable
policies in full force and effect, and Seller has paid all premiums due and
payable thereon. Seller is not in default with respect to any provisions
contained in any such insurance policy nor has it failed to give any material
notice or present any material claim under any such insurance policy in due and
timely fashion in each case where such default or failure to give notice or to
present a claim could reasonably be expected to lead to a denial of coverage.
No insurer under any such insurance policies has refused, or threatened to
refuse, to pay any claim currently pending under any of such insurance policies
with respect to the Business of the Property. Seller shall maintain insurance
coverage of similar kinds and amounts and shall pay premiums for such coverage
through the Closing Date. Notwithstanding the preceding sentence Purchaser
shall be responsible for all insurance expense for periods subsequent to
Closing Date.
7.16. TRADEMARKS, ETC. There are no registered trademarks (including
service marks), trademarks registrations or copyrights or applications
therefor, trade names, patents or applications therefor or assumed names owned
or used by Seller or licensed to Seller by others or material to the operation
of the Business. To the best knowledge of Seller, Seller is not infringing
upon, or otherwise violating the rights of any third party with respect to, any
trademark, service mark, copyright, trade name or patent. No proceedings have
been instituted or, to the best of the knowledge of Seller, threatened, nor has
any claim been made, against Seller alleging any such infringement or
violation.
7.17. LABOR; EMPLOYEES. Seller is not at the date hereof, nor during
the past twelve (12) months has it been, involved with any labor
discussions with any unit or group seeking to become the bargaining unit for
any of its employees.
Schedule 7.17 annexed hereto and made part hereof lists all of the
present employees of Seller employed in connection with the Business,
their titles, the date on which they became employees
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<PAGE> 14
of Seller, their vacation allowances, accrued vacation days, accrued
sick days and their present rate of compensation. Seller has made no
commitment, oral or written and whether or not enforceable, which would bind or
purport to bind Purchaser, concerning the future employment or compensation of
any such employees. To its knowledge, Seller's relations with its employees
are good.
7.18. CONSENTS. The term "Required Consents" shall mean all the
consents required to be received by or on the part of Seller for the
execution and delivery of this Agreement and the performance of its obligations
hereunder, including, without limitation, the ownership, maintenance and
operation of the Business by Purchaser in the same manner as it is currently
owned, operated and maintained by Seller.
7.19. ASSETS. All of the Assets owned by, or leased to Seller and
used or usable in connection with the Business and operations thereof,
including, without limitation, those listed on Schedule 1.2C, are in working
order, ordinary wear and tear expected, have been maintained in accordance with
good industry practice, are suitable for the purposes for which they are being
used and are sufficient in the aggregate for the operation and maintenance of
the Business.
All of the patient accounts receivable of Seller will be bona fide
accounts receivable representing the fees receivable for equipment and/or
services provided by Seller in valid transactions in the ordinary course of
business. None of such accounts receivable is known by Seller to be
uncollectible or in controversy or subject to offset or counterclaim or to
proceedings under any assignment for the benefit of creditors or any
bankruptcy, reorganization, insolvency, moratorium or other similar law.
All Medicare, Medicaid, Blue Cross and other third party payor cost
reports and other reports and claims filed or required to be filed by or on
behalf of Seller have been filed, where appropriate, and are complete and
accurate. To the best of Sellers knowledge, such cost reports and other
reports and claims properly claim and disclose, where appropriate, all
allowable costs and other items required to be disclosed for the periods
covered thereby. There are no outstanding, pending or threatened negative
adjustments, recoupments or deficiencies pertaining to the cost reports or
claims of Seller, and there are no existing Medicare or Medicaid compliance
deficiencies otherwise and with respect of the conduct of the Business such as,
but not limited to, licensing, audit, and quality assurance requirements, or if
such deficiencies have been found, Seller has prepared such documentation as is
necessary to cure any such deficiency.
7.20. HEALTH CARE LICENSES. Schedule 7.20 annexed
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<PAGE> 15
hereto and made a part hereof contains a true and complete list of all health
care licenses, permits, certifications, authorizations, accreditations, orders
or approvals required for Seller to operate and continue to operate, and under
which Seller operates, the Business, and the expiration date of each thereof
(the "Licenses"). All of the Licenses are and as of the Closing Date will be
valid and in good standing with applicable governmental authorities or
agencies. There is no pending or, to best of Seller's knowledge, threatened
action by any governmental authority or agency or third party to suspend,
revoke, terminate or challenge any of such Licenses or otherwise investigate
the operation of the Business. Seller is in material compliance with all
regulations concerning such Licenses and the facilities associated therewith
and all other federal statutes, and rules, regulations and policies or
governmental authorities or agencies applicable to Seller, such licenses, and
the Business. None of such Licenses are currently subject to or operating
under any agreement encumbering any of such Licenses or any waiver of
governmental authorities of otherwise applicable rules and regulations. No
other material licenses, permits, certifications, authorities, accreditations,
orders or approvals are required in connection with the ownership or operation
of the Business as currently owned and operated.
7.21. BUSINESS NAMES. There are no other names, either real or
fictitious, under which the Business has been operated since July, 1976, except
for the name: The Podiatry Hospital of Pittsburgh.
7.22. MISLEADING STATEMENTS. None of the information concerning Seller
or the Business contained in this Agreement (including, without limitation, the
preamble hereto), in the Financial Statements, the exhibits and schedules
hereto, the materials concerning the Seller of the Business provided to
Purchaser or in the documents to be delivered by Seller at or prior to Closing
contains or will, when delivered, contain any untrue or misleading statements
of material fact or omit or will, when delivered, omit any material fact or
statement necessary to make the other facts or statements set forth herein or
therein not materially misleading. To the extent that the business is
conducted by an affiliate of Seller, the term "Seller", when used in this
Section 7, includes the Seller and each such affiliate.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to Seller, as an inducement to Seller to enter into this Agreement and
consummate the transactions contemplated hereby, that, as of the date hereof.
8.1. ORGANIZATION. Purchaser is a corporation duly organized and
validly existing under the laws of the State of Mississippi. Purchaser
has all requisite power and authority to execute and deliver this Agreement and
the Assumption Documents and
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<PAGE> 16
to consummate the transactions and perform its obligations contemplated hereby.
8.2. AGREEMENT. This Agreement and the Assumption Documents
constitute, or when duly executed and delivered will constitute, the
valid and binding obligations of Purchaser enforceable against Purchaser in
accordance with their respective terms (except as such enforceability may be
limited by rules of equity or applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect which affect
creditors' rights generally). All persons who have executed each of this
Agreement and who will execute the Assumption Documents on behalf of Purchaser
have been authorized to do so by all necessary action; and neither the
execution and delivery of this Agreement or the Assumption Documents nor the
consummation of the transactions contemplated hereby or thereby will (a)
violate any provision of the Certificate of Incorporation or by-laws of
Purchaser; (b) violate any judgment, order, injunction, decree or award again,
or binding upon, Purchaser; (c) violate, conflict with or result in the breach
or termination of, or otherwise give any other contracting party the right to
terminate, or constitute a default (by way of substitution, novation or
otherwise) under the terms of, any contract, franchise, lease, License,
agreement or instrument to which Purchaser is a party or by which it or any of
its assets is bound; or (d) violate any law or regulation of any jurisdiction
as such law or regulation relates to Purchaser or to the assets, properties,
operations or business of Purchaser.
8.3. PURCHASER LEGAL PROCEEDINGS. There are no Legal Proceedings
pending or, to the best of the knowledge of Purchaser, threatened to
which Purchaser is a party or by which Purchaser may be affected which relate
to or may materially adversely affect the consummation of the transactions
contemplated hereby.
8.4. PURCHASER QUALIFICATIONS. Purchaser has no reason to believe that
it will not be on the Closing Date legally, technically and otherwise qualified
to acquire and hold the licenses, permits, authorizations and other requisite
approvals currently issued to Seller or required for the operation of the
Business.
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<PAGE> 17
9. COVENANTS.
9.1. ACCESS. Seller shall, between the date hereof and the Closing
Date, give Purchaser's representatives, including, without limitation,
such advisors, accountants and attorneys as may be designated by Purchaser,
full access, during normal business hours, to all of the Assets, properties,
books, records, agreements and commitments of Seller; furnish Purchaser's
representatives with all such information concerning the affairs of Seller as
Purchaser may reasonably request in connection with the transactions
contemplated hereby or in connection with any financing by Purchaser of the
transactions contemplated hereby and cause its employees to render to the
representative of Purchaser reasonable access to all of the properties and
Assets of Seller, all contracts, agreements and other commitments of Seller and
all books, records, and other information concerning the business and operation
of the Business; provided, however, that Purchaser's representatives shall not
remove any original books, records or other documents from the premises of
Seller (although Purchaser's representatives may make and remove copies of any
of such originals) and Purchaser shall, and shall cause its representatives to,
hold in strict confidence and not use for its own benefit any documents or
information concerning Seller so furnished; and, if the transactions
contemplated by this Agreement shall not be consummated, such confidence shall
be maintained and all such documents, and all copies thereof, shall immediately
thereafter be returned to Seller. No investigation by the representatives of
Purchaser of the assets, properties, contracts, agreements and other
commitments of Seller and the books and records and other information
concerning the affairs of Seller shall affect the continuing validity or effect
of the representations, warranties or obligations of Seller contained in this
Agreement; provided, however, that, if, prior to Closing, Purchaser has actual
knowledge of any information which would indicate that any of the
representations or warranties of Seller contained herein was untrue or contains
any omission, without regard to the knowledge of Seller, Purchaser shall notify
Seller as soon as practicable prior to Closing.
9.2. CONDUCT OF BUSINESS. Seller shall use its best efforts to conduct
the Business between the date hereof and the Closing Date in a manner
consistent with ensuring the accuracy of the representations and warranties of
Seller contained in this Agreement as if made on the Closing Date and shall
make no changes in the Business except for changes therein which occur in the
ordinary course of business. Seller shall use its best efforts to fulfill all
conditions required to be fulfilled by it pursuant to Section 6.1 hereof on or
prior to the Closing Date. In addition, Seller shall use its best efforts to
preserve the goodwill of the suppliers, customers and employees of the Business
between the date hereof and the Closing Date and shall not change the rates for
the services currently provided by the Business between the date hereof
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<PAGE> 18
and the Closing Date without Purchaser's knowledge.
9.3. FURTHER ASSURANCES. Each of the parties hereto shall, subject to
the fulfillment at or before the Closing Date of each of the conditions
to its performance set forth herein or the waiver thereof, use its best efforts
to perform such further acts and execute such documents as may be reasonably
required to effectuate timely the transactions contemplated hereby. In
particular, without limiting the generality of the preceding sentence, Seller
shall use its best efforts, prior and, if necessary, subsequent to the Closing
Date, without additional consideration, to perform such other acts and take
such other actions as may be requested by Purchaser more fully to vest in
Purchaser complete control over the Business on and after the Closing Date as
contemplated hereby. Purchaser shall cooperate with Seller in completing,
executing and filing any and all applications to, and making any appearances
before, any governmental body and in obtaining all Required Consents.
10. INDEMNIFICATION.
10.1. SELLER. After the Closing Seller shall indemnify, defend and
hold harmless Purchaser from and against any and all demands, claims,
actions or causes of action, judgments, assessments, losses, liabilities,
damages, penalties, fines or forfeitures and reasonable attorneys' fees and
related disbursements (collectively, "Claims") asserted against, imposed upon
or incurred by Purchaser which arise out of or result from (i) a
misrepresentation, breach of warranty or breach of any covenant (or an
allegation which, if true, would be such a misrepresentation or breach) of
Seller contained herein or in the Financial Statements referred to herein or
the Schedules annexed hereto or in any Transfer Document or closing certificate
furnished by Seller pursuant hereto or in connection with the consummation of
the transactions contemplated hereby or any exhibit or schedule thereto or (ii)
liabilities asserted against Purchaser by any party other than Seller to any
agreement that is not an Assumed Agreement or arising under any such other
agreement because of the termination thereof by Seller or (iii) conditions or
states of facts which came into existence or events which occurred prior to the
Closing Date out of which liabilities or obligations accrue thereafter under
any of the Assumed Agreements. With respect to those representations and
warranties of Seller that are limited to matters of which Seller has knowledge
or is aware, Purchaser shall be entitled to indemnity hereunder whether or not
Seller has such knowledge or awareness.
10.2. PURCHASER. After the Closing, Purchaser shall indemnify, defend
and hold harmless Seller from and against any and all Claims asserted
against, imposed upon or incurred by Seller which arise out of or result from a
misrepresentation, breach of warranty or breach of any covenant (or an
allegation which, if
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<PAGE> 19
true, would be such a misrepresentation or breach) of Purchaser contained
herein or in the Assumption Documents or in any ancillary certificates or other
documents or instruments furnished by Purchaser pursuant hereto or arise out of
or result from the conduct of the Business by Purchaser after the Closing or
conditions or states of fact which come into existence or events which occur on
or subsequent to the Closing Date out of which liabilities or obligations
accrue under any of the Assumed Agreements.
10.3. METHODS OF ASSERTING CLAIMS FOR INDEMNIFICATION. All claims for
indemnification under this Agreement shall be asserted as follows:
(a) THIRD PARTY CLAIMS. In the event that any Claim for which
a party (the "Indemnitee") would be entitled to indemnification under
this Agreement is asserted against or sought to be collected from the
Indemnitee by a third party, the Indemnitee shall promptly notify the other
party (the "Indemnitor") of such Claim, specifying the nature thereof, the
applicable provision in this Agreement or other instrument under which the
Claim arises, and the amount or the estimated amount thereof (the "Claim
Notice"). The Indemnitor shall have thirty (30) days (or, if shorter, a period
to a date not less than ten (10) days prior to when a responsive pleading or
other document is required to be filed but in no event less than ten (10) days
from delivery or mailing of the Claim Notice) (the "Notice Period") to notify
the Indemnitee (a) whether or not it disputes the Claim and (b) if liability
hereunder is not disputed, whether or not it desires to defend the Indemnitee.
If the Indemnitor elects to defend by appropriate proceedings, such proceedings
shall be promptly settled or prosecuted to a final conclusion in such a manner
as to avoid any risk of damage to the Indemnitee; and all costs and expenses of
such proceedings and the amount of any judgment shall be paid by the
Indemnitor. If the Indemnitee desires to participate in, but not control, any
such defense or settlement, it may do so at its sole cost and expense. If the
Indemnitor has disputed the Claim, as provided above, and shall not defend such
Claim, the Indemnitee shall have the right to control the defense or settlement
of such Claim, in its reasonable discretion, and shall be reimbursed by the
Indemnitor hereunder. In such case, the Indemnitor may participate in, but not
control, any such defense or settlement at its sole cost and expense.
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<PAGE> 20
(b) NON-THIRD PARTY CLAIMS. In the event that the Indemnitee
should have a Claim for indemnification hereunder which does not
involve a Claim being asserted against it or sought to be collected by a third
party, the Indemnitee shall promptly send a Claim Notice with respect to such
Claim to the Indemnitor. If the Indemnitor does not notify the Indemnitee
within five (5) days allowing its receipt of such Claim Notice that it disputes
such Claim, the Indemnitor shall pay the amount thereof to the Indemnitee.
10.4. SURVIVAL AND LIMITATION OF CLAIMS. If any Claim is asserted by
either party hereunder against the other by a Claim Notice and is in dispute on
the third anniversary of the Closing Date, the Indemnitor shall remain liable
with respect to such Claim until the extent of its liability, if any, has been
finally determined.
10.5. REMEDIES TO BE CUMULATIVE. The remedies of the Indemnitee
provided herein shall be in addition to, and not in lieu of, any other
remedies to which the Indemnitee is entitled to law or in equity for any breach
or noncompliance by the Indemnitor with the provisions of this Agreement. As
to any costs imposed upon or suffered by Purchaser for which Seller may be
covered by insurance, Seller does hereby assign to Purchaser Seller's rights as
an insured thereunder, to the extent the policy so permits.
10.6. LIMITATION ON INDEMNITY OBLIGATIONS. It is the intention of the
Parties that there be afforded to each of them certain de minimis protections
with respect to the application of the foregoing indemnity provisions.
Accordingly, notwithstanding anything in this Agreement to the contrary, the
Parties agree as follows:
(a) the Parties agree that Claims will not be submitted for
indemnification, unless the demands, claims, actions, or causes of action,
judgments, assessments, losses, liabilities, damages, penalties, fines, or
forfeitures and reasonable attorneys' fees and related expenses are
disbursements making up such Claims, will aggregate at least Ten Thousand
($10,000.00) Dollars in amount.
(b) regardless of the limitations placed by subsection (a) above,
the notice provisions of Section 10.3 shall continue to apply.
10.7. ARBITRATION. Any controversy or claim arising out of, or
relating to, the indemnification provisions of this Section 10, shall
be settled by arbitration in the County of Allegheny, Pennsylvania under the
commercial arbitration rules of the American Arbitration Association, or such
other dispute resolution firm as the parties may mutually agree upon, then
existing, and judgment on
<PAGE> 21
the arbitration award may be entered in any court having jurisdiction over the
subject matter of the controversy.
10.8. RIGHT OF SET-OFF. To the extent Purchaser has incurred
liability as to which it is entitled to indemnification pursuant to
Section 10.1 above (subject to Sellers' rights under Section 10.3), and an
arbitration award to that effect has been made to Purchaser pursuant to Section
10.7 above, or, in the alternative, Seller has acquiesced to Purchaser's Claim
for indemnification, payment of such indemnity may be made by off-setting and
reducing the amount thereof against future installment payments due to Sellers
under the purchase money second mortgage note (the "Note"). In the event that
Purchaser becomes entitled to a reduction of its obligations under the Note,
then interest payable on the Note shall be recalculated in accordance with
Purchaser's reduced obligation on the Note and any excess interest theretofore
paid by Purchaser shall be credited against and reduced to the extent of the
installments next falling due under the Note.
11. MISCELLANEOUS.
11.1. SURVIVAL OF OBLIGATIONS. All warranties, representatives,
indemnities and other agreements made by the parties in this Agreement or
pursuant hereto shall survive the Closing Date until the third anniversary of
the Closing Date and shall then and thereupon lapse and be of no further force
or effect for any purpose whatsoever except as provided in Section 10.5 and 6.2
hereof, provided, however, that the liability of Purchaser for those
obligations and liabilities expressly assumed by Purchaser hereunder and the
liability of Seller for those obligations and liabilities not expressly assumed
by Purchaser hereunder shall continue indefinitely.
11.2. NOTICES. All notices given hereunder shall be in writing and
shall be personally delivered or sent by overnight package delivery
service or by facsimile machine (if confirmed in writing within one day
thereafter) or sent by registered or certified mail, postage prepaid, addressed
to the appropriate party at the following address:
(a) If to Purchaser, to it at
Consolidated Health Corporation of Mississippi, Inc.
888 East Las Olas Boulevard
Third Floor
Fort Lauderdale, Florida 33301
Attn: Randolph H. Speer, President and
Joseph C. Wasch, General Counsel
(954) 462-1711 (telephone)
(954) 462-5411 (telefax)
<PAGE> 22
with a copy to:
Gordon Fisher, Esquire
300 Baum Building
Liberty Avenue
Pittsburgh, PA 15222
(412) 471-7979 (telephone)
(b) If to Seller, to it in care of:
The Podiatry Hospital of Pittsburgh
215 South Negley Avenue
Pittsburgh, PA 15206-3594
Attn: Mr. Donald Hutchinson
(telephone)
(telefax)
with a copy to:
Mark L. Unatin, Esquire
Rothman Gordon Foreman & Groudine, P.C.
Third Floor, Grant Building
Pittsburgh, PA 15219
(412) 338-1105 (telephone)
(412) 281-7304 (telefax)
(c) Any party hereby may change the address to which any notice
hereunder is to be sent to it by giving notice of such change of
address as provided in this Section 11.2
(d) All notices given hereunder shall be effective, if personally
delivered or sent by overnight package delivery service or by facsimile
machine, on the date delivered or if sent by mail, as provided above, on the
fifth day after deposit in the mail.
11.3. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the Commonwealth of
Pennsylvania applicable to agreements made and to be entirely performed therein
without giving effect to the conflicts of laws principles thereof.
11.4. BROKERAGE COMMISSIONS AND FINDER'S FEES. Each party shall
indemnify the other from and against any other claims for brokerage commissions
or finder's fees in connection with the transactions contemplated by this
Agreement asserted by any broker, finder or other purported agent claiming
through such party. Each party represents and warrants to the other that it is
not aware of any broker or finder which is entitled to a fee or other
compensation in connection with this Agreement or the consummation
<PAGE> 23
of the transactions contemplated hereby.
11.5. EXPENSES. Except as otherwise specifically provided herein,
Purchaser and Seller shall each pay their respective expenses and costs
incurred or to be incurred by them in negotiating and preparing this Agreement
and in closing and carrying out the transactions contemplated by this
Agreement, including, without limitation, all of their attorney's fees and
accounting fees. To the extent applicable, Seller shall be responsible for and
pay all applicable state and local sales taxes arising out of the transactions
contemplated by this Agreement. Realty transfer taxes will be divided evenly
by the parties. Real estate taxes will be prorated at Closing. To the extent
applicable, Purchaser shall withhold from the Purchase Price the estimated
amount of such taxes, and shall pay that amount to the appropriate tax
authorities within twenty (20) business days after the Closing. Purchaser
shall deliver a receipt to Seller evidencing payment of such amounts to the
applicable tax authority.
11.6. ASSIGNABILITY. This Agreement may not be assigned by Purchaser
without prior written consent of Seller, except to an entity controlled by,
controlling or under common control with Purchaser; provided, however, that no
such assignment by Purchaser shall relieve Purchaser of its obligations
hereunder prior to the completion of the closing of the transactions
contemplated hereby. This Agreement may not be assigned by Seller without the
prior written consent of Purchaser. In the event of any such assignment by
Purchaser, the provisions of Section hereof shall be deemed amended to
reflect the organizational form of the assignee with respect to representations
and warranties referring to events and circumstances occurring after the date
of such assignment. The provisions of this Agreement and the related
instruments shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective successors and assigns.
11.7. ENFORCEMENT COSTS. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any provisions
of this Agreement, the successful or prevailing party shall be entitled to
recover reasonable attorneys' fees, court costs and all expenses even if not
taxable as court costs (including, without limitation, all such fees, costs and
expenses incident to appeals), incurred in that action or proceeding, in
addition to any other relief to which such party may be entitled.
11.8. PRONOUNS, PLURALS AND CERTAIN WORDS. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identity of the person, firm, or corporation may
require. Plurals of defined terms shall include the singular. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this
<PAGE> 24
Agreement as a whole, including the schedules annexed to this Agreement, and
not to any particular section, subsection or clause contained in this
Agreement.
11.9. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof,
supersedes all prior written agreements and negotiations and oral
understandings, if any, and may not be amended, supplemented or discharged,
except by performance or by an instrument in writing signed by all of the
parties hereto.
11.10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.11. CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12. NO THIRD PARTY BENEFICIARIES. This Agreement is intended only
for the benefit of the parties hereto and their heirs, successors and
assignees and not for the benefit of any third party and shall not be deemed to
give any rights or remedies to any third party whether referred to herein or
not.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their representatives thereunto duly authorized as of the day
and year first above written.
THE PODIATRY HOSPITAL OF PITTSBURGH
Attest:
/s/ Mark L. Unatin By: /s/ Donald C. Hutchinson
- --------------------------- --------------------------------
Acting Chairperson Acting CEO
CONSOLIDATED HEALTH CORPORATION OF
MISSISSIPPI, INC.
Attest:
/s/ Joseph C. Wasch By: /s/ Randolph H. Speer
- --------------------------- --------------------------------
Secretary Randolph H. Speer, President
<PAGE> 1
AMENDMENT TO ASSET PURCHASE AGREEMENT [EXHIBIT 2(b)]
MADE this ______ day of ______________, 1996 by and between the Podiatry
Hospital of Pittsburgh, a not for profit hospital organized under the laws of
the Commonwealth of Pennsylvania (in Asset Purchase Agreement and herein
referred to as "Seller") and Consolidated Health Corporation of Mississippi,
Inc., a Mississippi Corporation (in Asset Purchase Agreement and herein
referred to as "Purchaser").
WHEREAS, Seller and Purchaser entered into an Asset Purchase Agreement
dated the 28th day of August, 1996 (hereinafter the "Agreement"); and
WHEREAS, Seller and Purchaser desire to make certain amendments and
corrections to said Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations and warranties in Agreement and hereinafter
contained, and for other good and valuable consider-action, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound
hereby, Seller and Purchaser to do hereby amend Agreement as follows:
A. Paragraph 2 Section 2.1(b) shall be amended to read as follows:
Supplies. At September 4, 1996 inventory costs, cost figured to be
provided.
B. Paragraph 2.1(c) of Agreement shall be amended to read as follows:
(c) LIABILITIES. Purchaser to assume accrued expenses in the
amount of One Hundred Seventy Five Thousand ($175,000.00) Dollars
and accrued payroll up to Two Hundred Thousand ($200,000.00)
Dollars, which liabilities of the Business are specifically set
forth on Schedule 2.1 of the Agreement (the "Assumed Liabilities").
<PAGE> 2
C. Paragraph 2.2(a) of Agreement shall be amended to read as follows:
PAYMENT. (a) The Purchase Price shall be payable at the "Closing"
(as that term is defined in Section 5 of this Agreement) by (i)
wire transfer of immediately available funds in the amount of One
Million Four Thousand ($1,004,000.00) Dollars to the trust account
of Rothman Gordon and (ii) wire transfer of funds representing
inventory cost of supplies, and (iii) the assumption by Purchaser
of the Assumed Liabilities.
D. Paragraph 2.2(b) of Agreement shall be amended to read as follows:
INDEMNIFICATION ESCROW. Three Hundred Thousand ($300,000.00)
Dollars of the payment referred to in Section 2.2(a)(i) above (the
"Escrow") shall be held back and retained in escrow by Purchaser's
attorneys, Purcell & Scott, 6035 Memorial Drive, Dublin, Ohio
43017, pursuant to a separate escrow agreement, for the express
purpose of providing Purchaser with available funds to pay any
liabilities of Seller assessed against Purchaser after the Closing
Date, which assessments would entitle Purchaser to indemnification
pursuant to Section 10.1 below. The Escrow shall remain in effect
for a period of ninety (90) days.
E. Paragraph 5 of Agreement shall be amended to read as follows:
Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall take place in the offices of
Seller's attorneys at 10:00 a.m. on December 6, 1996, or as soon
thereafter as may be permitted by Required Consents and as Seller
may specify by not less than five (5) days notice (the "Closing
Notice") to Purchaser. Seller shall give the Closing Notice as
soon as practicable following the fulfillment by Seller of the
conditions precedent to the Closing contained in Section 6.1
hereof, provided, however, that if the Closing does not occur on or
prior to December 30, 1996, notwithstanding the performance
by each of the parties hereto of their respective obligations
hereunder, then this Agreement shall, at Purchaser's option, be
null and void and of no further force or effect. The date on which
the Closing takes place is herein referred to as the "Closing
Date". The Closing shall be effective as of 12:01 a.m. on the
Closing Date.
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<PAGE> 3
F. Paragraph 7.13 of Agreement shall be amended to read as follows:
(a) SELLER LEGAL PROCEEDINGS. There are no:
(1) suits, actions or administrative, arbitration or other
similar proceedings (including, without limitation, proceedings
concerning labor disputes or grievances, civil rights
discrimination cases and affirmative action proceedings) pending
or, to the best of the knowledge of Seller, threatened, or, to the
best of the knowledge of Seller, investigations pending or
threatened, by or before, any federal, state, municipal or other
governmental department, commission, board, agency or
instrumentality to which Seller is a Party or by which Seller or
any part of the Business may be bound, including, without
limitation, the Internal Revenue Service, any state or local tax
authority, the U. S. Department of Health and Human Services or any
agency or subcontractor thereof, the Health Care Financing
Administration, the Pennsylvania Department of Health, or any other
agency that regulates the Business or judgments, orders,
injunctions, decrees or awards (whether rendered by a court,
administrative agency or by arbitration pursuant to a grievance or
other procedure) against Seller or any of the Property which is
unsatisfied or requires continuing compliance therewith (such
suits, actions, etc., and judgments, orders, etc., are hereinafter
referred to as "Legal Proceedings") except as set forth on Schedule
7.13; and
(b) persons holding powers of attorney from Seller.
G. Paragraph 7.19 of Agreement shall be amended at the first paragraph
thereof to read as follows:
Assets. All of the Assets owned by, or leased to Seller and
used or usable in connection with the Business and operations thereof,
including, without limitation, those listed on Schedule 1.2C, are in
working order, ordinary wear and tear excepted, have been maintained in
accordance with good industry practice, are suitable for the purposes
for which they are being used and are sufficient in the aggregate for
the operation and maintenance of the Business. Except as set forth on
Schedule 7.19 annexed hereto and made a part hereof, Seller has good
and marketable title to the Assets, free and clear of all liens, claims
and encumbrances and
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<PAGE> 4
taxes not due and payable, and will hold good and marketable title
to the Assets as of the Closing Date.
H. Paragraph 7.21 of Agreement shall be amended to read as follows:
Business Names. There are no other names, either real or
fictitious, under which the Business has been operated since July,
1976, except for the name: The Podiatry Hospital of Pittsburgh and
Tri-State Foot and Ankle.
I. The Agreement and this Amendment to Agreement contain the entire
Agreement between Seller and Purchaser with respect to the subject matter of
Agreement and hereof, supersedes all prior written agreements and negotiations
and oral understandings, if any, and may not be amended, supplemented or
discharged, except by performance or by an instrument in writing signed by all
of the parties hereto.
J. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their representatives thereunto duly authorized as of the day
and year first above written.
THE PODIATRY HOSPITAL OF PITTSBURGH
Attest:
/s/ Mark L. Unatin By: /s/ Donald C. Hutchinson
- ------------------------------ --------------------------------
Acting Chairperson Acting CEO
CONSOLIDATED HEALTH CORPORATION OF
MISSISSIPPI, INC.
Attest:
/s/ Joseph C. Wasch By: /s/ Randolph H. Speer
- ------------------------------ --------------------------------
Secretary Randolph H. Speer, President
4
