SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 6, 1997
THC HOMECARE, INC.
(Exact name of registrant as specified in its charter)
Utah 1-11534 48-1092064
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
3261 S. Highland Drive, Suite 613, Las Vegas, Nevada 89109
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 796-1016
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(Former name and former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
Sale of Assets. On August 29, 1997, substantially all of the
assets ("Assets") of THC HomeCare, Inc., formerly known as
Medmarco, Inc. ("THC") and all of its subsidiaries, DigniCare,
Inc., Health Industries, Inc., OxyCare, Inc., and MedMart of
Nevada, Inc. (collectively with THC, the "Company"), were sold for
$3.2 million in cash and the assumption of certain leases and
contracts, personal property taxes owing to Clark County, Nevada,
current payroll, and other post-petition obligations up to $35,000,
in a sale to Sierra Health Services, Inc. ("Sierra"), free and
clear of all liens. The sale of the Assets was approved by the
United States Bankruptcy Court for the District of Nevada
("Bankruptcy Court") by order dated August 29, 1997, after notice
and hearing on the Company's Motion to Sell Substantially All
Assets Outside of the Ordinary Course of Business Free and Clear of
Liens and a finding by the Bankruptcy Court that Sierra presented
the high bid in the competitive bidding process. Pursuant to the
Bankruptcy Court's Order, approximately $1.8 million of the $3.2
million purchase price for the Assets was applied against the
Company's secured debt of approximately $1.8 million in principal
and interest (the"Debt") owed to Heller Financial, Inc. under
prepetition and postpetition loan documents. The remainder of the
sale proceeds, approximately $1.4 million, will be distributed to
the Company's creditors in accordance with the further orders of
the Bankruptcy Court and the provisions of the United States
Bankruptcy Code. The Company will determine, pursuant to the
provisions of the Bankruptcy Code, whether to assume or reject the
contracts and leases which were not assumed and sold to Sierra.
Due to the accelerated nature of the transaction, Sierra and the
Company entered into a management agreement whereby the Company
continued day to day operations on behalf of Sierra to allow Sierra
to determine how to incorporate the purchased assets into its
existing operations. Sierra is reimbursing the Company for all
operating expenses incurred in connection with the interim
management agreement.
Item 7. Financial Statements and Exhibits.
Exhibits
See the Index to Exhibits which is incorporated herein by
reference.
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.
THC HOMECARE, INC.
By: /s/ Robert Rackham
Robert Rackham, CEO
Date: September 11, 1997
Exhibit No. Description of Exhibits
2 Asset Purchase Agreement Filed Herewith
between THC Home Care, Inc.
and Sierra Health Services, Inc.
dated August 29, 1997
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of
the Effective Date (defined below) by and between THC Home Care,
Inc., a Utah corporation, also known as Total Home Care, Inc. and
formerly known as Medmarco, Inc. ("THC"), all of the subsidiaries
of THC (the "Subsidiaries"), which include DignaCare, Inc., an
Arizona corporation, Health Industries, Inc., an Arizona
corporation, OxyCare, Inc., an Arizona corporation, and MedMart of
Nevada, Inc., a Nevada corporation and doing business as Total Home
Care (THC and all of the Subsidiaries, collectively, the
"Seller"), and Sierra Health Services, Inc., a Nevada corporation
("Buyer").
RECITALS
WHEREAS, Seller (except for DignaCare, Inc.) has filed
proceedings under Chapter 11 of the United States Bankruptcy Code,
which such proceedings are pending in United States Bankruptcy
Court for the District of Nevada (the "Bankruptcy Court").
WHEREAS, Seller is engaged in the sale and rental of home
health equipment and supplies and the provision of home health care
services. Buyer desires to buy from Seller and Seller desires to
sell to Buyer, substantially all assets and properties of the
Seller, on such terms and conditions as set forth in this Agreement
and as approved by the Bankruptcy Court.
WHEREAS, THC owns all of the outstanding shares of capital
stock of each of the Subsidiaries and desires for the Subsidiaries
to enter into this Agreement.
WHEREAS, the Bankruptcy Court has entered an Order approving
the sale of the assets as contemplated hereunder, free and clear of
all liens (the "Order"), which Order is final and unappealable.
WHEREAS, the parties hereto acknowledge that the sale
contemplated hereunder involves only the assets of the Seller as
further defined herein, and does not include any stock of THC or
any of the Subsidiaries.
WHEREAS, the parties hereto, for the purpose of facilitating
the transactions contemplated by this Agreement, have entered into
an Interim Management Agreement of even date, a copy of which is
attached hereto and the terms at which are incorporated herein.
NOW, THEREFORE, for and in consideration of the mutual
agreements, representations and warranties contained below, Seller
and Buyer agree as follows:
1. Sale of Assets. Seller shall sell, transfer, assign,
convey and deliver to Buyer, and Buyer shall purchase, accept and
acquire from Seller, substantially all of the assets of the Seller
(the "Purchased Assets"), as of the Closing Date for the purchase
price and upon and subject to the terms and conditions as stated
below.
2. Purchase Price.
2.1 Buyer shall pay to Seller for the Purchased Assets
at the Closing (defined below) immediately available funds in
the amount of $3,200,000.00.
3. Nonassumption of Liabilities. Except for: (a) amounts
owing under any leases or contracts of Seller which Buyer may at
its option elect to assume under the terms of this Agreement,
personal property taxes owing to Clark County, Nevada, current
payroll, and certain other post-petition obligations up to a
maximum of $35,000.00, Buyer shall not assume any leases or
contracts, or any other liabilities of Seller, known or unknown.
All of the Purchased Assets shall be transferred to Buyer with good
and marketable title, free and clear of all liens, encumbrances and
liabilities, except for taxes not then due and payable, which shall
be prorated as described below.
4. Excluded Assets. Buyer is purchasing only the Purchased
Assets as described in this Agreement. Buyer is specifically not
purchasing certain other assets of Seller, including, but not
limited to, that certain promissory note dated January 10, 1994, in
the principal sum of $300,000, designated as the Hanger Note, or
any and all causes of action under Sections 542, 543, 544, 545,
547, 548 or 549 of the United States Bankruptcy Code, or any stock
Seller of the or any of the Subsidiaries.
5. Premises Leases, Contracts. Seller shall assign to Buyer
and Buyer shall assume such of those existing leases for the
premises occupied by THC and the Subsidiaries as specifically
designated by Buyer and as described in Schedule 1 to this
Agreement (the "premises Leases"). As indicated on Schedule 1 to
this Agreement, the parties shall designate those Premises Leases
which shall be assumed by Buyer as of the Closing Date and those
Premises Leases which may be assumed by Buyer after the Closing
Date. Seller shall also assign to Buyer and Buyer shall assume
such contracts between Seller and other parties, as designated by
Buyer all as specifically described in attached Schedule 2 to this
Agreement. As indicated in Schedule 2 to this Agreement, the
parties shall designate those contracts which shall be assumed by
Buyer as of the Closing Date and those contracts which may be
assumed by Buyer after the Closing Date. Any and all other leases
and contracts of Seller, not specifically assumed as of the
Effective Date, may be Buyer's option be assigned and assumed not
later than the termination date of the Management Agreement.
Seller shall not have right to assign, transfer, incumber, or
dilute in any manner, any of said leases as contracts with prior
written approval from Buyer.
6. Prorations and Credits. Seller shall pay all ad valorem
and personal property taxes on the Purchased Assets for all periods
prior to 1997 and through the Closing Date. To the extent any such
taxes have not been paid by the Closing Date, Buyer may deduct the
amount of such taxes (including penalties and interest) from the
cash portion of the Purchase Price. Buyer shall be responsible for
payment of taxes for all years and periods beginning on the date
after the Closing Date when they become due and payable.
Shall continue to maintain Seller's insurance currently in
place on the Purchased Assets during the term of the Interim
Management Agreement.
7. Seller's Representations and Warranties. In addition to
any and all other representations and warranties by Seller in this
Agreement, Seller represents and warrants to Buyer as follows:
(a) Due Organization. THC and the Subsidiaries are
corporations duly organized and in good standing under
the laws of the states in which they are incorporated,
and subject to Bankruptcy Court supervision and control,
have all necessary corporate power to conduct the
business as presently conducted.
(b) Authorization. Subject to approval of this
Agreement and the transactions contemplated hereby, the
execution, delivery and performance of this Agreement has
been fully and legally authorized by all required
corporate action of each Seller.
(c) Title. Seller, collectively, is the lawful
owner of all and has good title to the Purchased Assets,
and pursuant to the Order, has the legal right, power and
authority to sell the same free and clear of all liens
and encumbrances. Seller now has and will have at the
Closing and, subject to the terms and conditions of this
Agreement, will transfer to the Buyer, good title to all
of the Purchased Assets, free and clear of any and all
liens and encumbrances except for liens for taxes which
are not then due and payable, if any.
(d) No Conflicts. To the best of Seller's knowledge and
belief, the execution, delivery and performance of this
Agreement by the Seller will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the
Purchased Assets pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or, except to
the extent that any such instrument or agreement requires the
consent of the other party hereto with respect to the
transaction, give any other party a right to terminate any of
its obligations under its governing documents or any other
material contract, agreement or instrument to which the Seller
is a party or by which it or any of the Purchased Assets is
bound or affected, or violate or conflict with any judgement,
ruling decree, order, order, application, filing, declaration,
license, registration, statute, rule or regulation of any
court or other governmental agency or body applicable to the
business or Purchased Assets of the Seller.
(e) Purchased Assets. The Schedules attached hereto
represent a true and correct description of all of the
Purchased Assets, and are substantially complete to the best
knowledge and belief of Seller.
(f) Absence of Changes. From and after August 15, 1997,
through the Closing Date, there has been no material adverse
change in the business and operations of the Seller, or any of
the Purchased Assets.
(g) Compliance with Laws. To its best knowledge and
belief, Seller has, and at the Closing Date will have: (i) all
governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to carry on the business of
Seller; (ii) complied in all material respects with all
applicable laws, rules, regulations and ordinances the
violation of which would have a material and adverse effect on
the business of the Seller; and (iii) performed all material
obligations required to be performed by it and is not, and at
the Closing Date will not be, in default, under any material
contract or other instrument to which it is a party or by
which the Purchased Assets are bound or materially affected.
To the actual knowledge of the Seller, without undertaking any
independent investigation, no other party under any contract
or other instrument to which it is a party is in material
default in any respect thereunder.
(h) Labor Relations, Working Relationships. To the best
knowledge and belief of Seller, there are no pending or
threatened charges of unfair labor practices, and Seller's
business is in compliance in all material respects with all
federal and state laws governing employment and employment
practices, terms and conditions of employment and wages and
hours.
(i) Litigation and Compliance with Governmental
Regulations. As disclosed in Seller's Bankruptcy Schedules
and Statements of Affairs, there are no claims of any kind or
any actions, suits, proceedings, arbitrations or
investigations pending or threatened in any court or before
any governmental agency or instrumentality or arbitration
panel or otherwise against, by or affecting the Seller o the
Purchased Assets: (i) which would prevent the carrying out of
this Agreement or any of the transactions contemplated hereby
or declare the same unlawful or cause the rescission thereof,
or (ii) which, if determined adversely, would have a
materially adverse effect on the business, prospects,
properties or condition (financial or otherwise) of the
business of the Seller and to the knowledge of the Seller no
basis for any of the foregoing exists. The Seller's business
has not been charged with and, to the knowledge of the Seller,
is not threatened with or under any investigation with respect
to any charge concerning any violation of any provision of any
federal, state or local law, regulation, ordinance, order of
administrative ruling, and the business is not in default with
respect to any order, writ, injunction or decree of any court,
agency or instrumentality. The Seller's business is in
compliance with all federal, state and local laws,
regulations, ordinances and orders which are applicable to it
or to the conduct of its business.
(j) No Material Misstatement or Omission. The Seller's
representations, warranties and statements contained in this
Agreement (including the Schedules hereto) with respect to the
Seller contain no untrue statement of material fact and do not
omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
8. Buyer's Representations and Warranties. In addition to
any and all other representations and warranties by Buyer in this
Agreement, Buyer represents and warrants to Seller as follows:
(a) Buyer is a corporation duly organized and in
good standing under the laws of the State of Nevada, is
qualified and duly authorized to do business in the State
of Nevada and has all necessary legal power to conduct
its business as presently conducted.
(b) The execution and delivery of this Agreement,
and performance of all of the obligations of Buyer under
this Agreement, does not and will not conflict with any
agreement, contract or other instrument, or any court
order or administrative order, by which Buyer, or any of
the properties of Buyer are bound or affected.
(c) Buyer is purchasing the Purchased Assets on an
"AS IS, WITH ALL FAULTS" basis and solely based on any
review and inspection of the Assets made by Buyer prior
to the date of this Agreement, together with the
representations, warranties, covenants contained therein.
(d) No Material Misstatement or Omission. The
representations, warranties and statements contained in this
Agreement (including the Schedules hereto) with respect to the
Buyer contain no untrue statement of material fact and do not
omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
9. Survival of Representations and Warranties. Each and all
of the representations and warranties of Seller and Buyer in this
Agreement shall be true and correct on the Closing Date as a
condition of the Closing. All of such representations and
warranties shall survive the Closing for a period of six years
after the Closing Date.
10. Covenants.
(a) Except as permitted or required by the
Bankruptcy Court or under this Agreement or as may
otherwise be consented to in writing by the Buyer, Seller
agrees, from the Effective Date through the Closing Date,
that the Seller shall not incur, dispose of, encumber
assign or mortgage any of the Purchased Assets, except in
the ordinary course of business or as may be required by
the Bankruptcy Court. Any disposition of the Purchased
Assets shall require the prior written approval of Buyer,
which approval shall not be unreasonably withheld.
(b) As of the Closing Date, there will be no
material adverse change to the Purchased Assets or the
Business from the status and condition as it exists as of
the Effective Date.
11. Indemnification by Seller. Subject to any Bankruptcy
Court approvals or restrictions and subject to any of the
provisions of this Section, Seller agrees to indemnify and hold
harmless Buyer from and against any and all liability, loss,
damage, cost or expense resulting, directly or indirectly, from any
breach of any of Seller's warranties, representations or covenants
in this Agreement, or the refusal or failure of Seller to perform
any of its obligations hereunder, or any other liabilities or
obligations of, or claims against, Buyer or the business of the
Seller which result from operation or conduct of the business of
the Seller prior to the Closing Date, and thereafter as more fully
set forth in the Interim Management Agreement of even date.
Seller shall pay or defend Buyer against any claim made and
presented to Seller by Buyer, related to or resulting from any
liability, obligation or claim to which the foregoing indemnity
relates; provided, however, that any such claim made against Buyer
upon which Buyer believes Seller may have potential liability shall
first be promptly submitted by Buyer to Seller. Seller shall
either pay the claim directly or promptly reimburse Buyer for any
amount Buyer is required to pay as the result of such claim. Buyer
shall have the right to pay the claim, and seek reimbursement from
Seller, at any time that Seller's acts or omissions cause, or
threaten to cause, damage, loss or expense to Buyer or the assets
being purchased hereunder, or if Seller breaches the provisions of
this Section.
12. Employees. Buyer shall not be obligated to, but may,
employ any of the employees of Seller now employed in the Business.
Except with respect to current wages, which shall be assumed by
Buyer, Buyer shall not be obligated to pay any amounts to any
employees of Seller for services rendered prior to the Closing Date
or as the result of any commitment by Seller to such employees.
Seller shall pay all of its employees for services rendered through
the Closing Date, including but not limited to salary, commissions,
benefits, accrued vacation or holiday pay and any other amount due
to such employees for any reason.
13. Inspection and Access to Books and Records, Access to
Same. Buyer shall have the right to conduct an examination and
inspection of the Seller's assets and records prior to the Closing
and through the term of the Interim Management Agreement. During
such period, Seller shall give Buyer and its authorized
representatives complete access to the books and records relating
to the Purchased Assets for this inspection and examination, and
shall furnish copies of all applicable documents.
14. Conditions of Closing. The obligations of Seller and
Buyer to close under this Agreement shall be subject to the
following conditions of Closing (any of which may be waived by the
party for whose benefit the condition exists):
(a) All necessary corporate approvals of Seller and
Buyer to this Agreement and all of the transactions
contemplated by this Agreement shall have been obtained,
and the Secretaries of THC and the Subsidiaries and of
Buyer shall deliver to the other party at Closing a
certificate evidencing such corporate approval and
setting forth the names of the officers authorized to act
for each party. In this regard, Seller acknowledges and
agrees that Buyer shall provide Seller with a certified
copy of Buyer's resolution of its Board of Directors
authorizing this transaction as soon as reasonably
practicable following the Closing Date.
(b) The representations and warranties of Seller
and Buyer contained in this Agreement shall be true and
correct in all material respects at and as of the time of
Closing, and a certificate to that effect shall be
furnished to Buyer by an officer of Seller and to Seller
and the Subsidiaries by the Buyer at the Closing.
(c) Seller and Buyer shall each have executed,
performed and complied with all agreements required to be
executed, performed and complied with by each of them
under this Agreement prior to or at the Closing.
(d) Any third party consents or licenses required
for consummation of the transactions contemplated by this
Agreement or for Buyer's operation of the Seller's
business shall have been obtained or otherwise provided
for under the Interim Management Agreement.
(e) There shall have been no material adverse
change in the financial condition of Seller, determined
on a consolidated basis, or the Purchased Assets.
(f) Each party shall furnish to the other with
certificates dated on or reasonably before the Closing
Date and issued by the appropriate governmental offices
of each state in which Seller and Buyer are incorporated
and doing business that confirm that Seller and Buyer are
in existence and that they have paid all required and
appropriate franchise or other corporate taxes in the
states of their incorporation. Seller acknowledges and
agrees that Buyer shall deliver to Seller a certificate
of existence and good standing issued by the appropriate
governmental agency of the State of Nevada as soon as is
reasonably practicable following the Closing Date.
(g) The Bankruptcy Court shall have entered a final
nonappealable order approving the terms of the Purchase
Agreement and the transactions contemplated thereunder.
15. Closing and Possession. The closing shall occur on
August 29, 1997 (the "Closing Date") at the offices of Seller in
Las Vegas, Nevada, or at some other location as the parties may
mutually agree. Possession of the Purchased Assets and operation
of the Business shall be given as of the Closing Date.
16. Further Assurances. At the Closing, and at all times
thereafter as may be necessary, Seller shall execute and deliver to
Buyer such assignments, transfers, conveyances and other
instruments as shall be reasonably necessary or appropriate to vest
in Buyer good and marketable title to the assets of the Business,
whether owned or leased, and to comply with the purposes and intent
of this Agreement.
17. Notices. Any notice or other communication required
under this Agreement or desired to be given by any of the parties
hereto to any other party shall be deemed to be duly given when
personally delivered or when delivered by private courier, or by
telecopy, or when mailed by certified or registered mail, return
receipt requested, postage prepaid, to such other party at its
address as stated below, or at such other address as each party may
hereafter designate to the other party hereto in writing:
If to Seller: 3261 South Highland
Suite 613
Las Vegas, Nevada 89109
Attention: Bob Rackham, CEO
If to Buyer: Sierra Health Services, Inc.
Post Office Box 15645
Las Vegas, NV 89114-5645
Attention: Elizabeth C. Nozero, Esq.
Senior Corporate Counsel
18. Costs and Expenses. Each party shall pay its own costs
and expenses of consummating the sale (including but not limited to
legal and accounting fees). Each party shall be responsible for
any taxes imposed on it as a result of the prospective transactions
described herein.
19. Broker's Fees. Seller has engaged the services of
Paragon Ventures, Inc. ("Paragon"), as its broker in connection
with locating a buyer for Seller's assets. Seller shall be fully
responsible and shall pay all of Paragon's fees which are or may be
come due upon the closing of this transaction.
Except for Seller's engagement of Paragon as described above,
each party represents to the other that no other broker or agent
has been involved in effecting this sale and purchase. Each party
shall protect and indemnify the other from any claims by any
person, firm or corporation that a broker's fee for this sale is
due as a result of the action of the indemnifying party.
20. Successors and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
21. General.
21.1 Entire Agreement. This Agreement constitutes the
entire agreement between the parties and supersedes all prior
verbal or written agreements and understandings, including, in
particular, that certain letter dated July 16, 1997 signed by THC
and Philadelphia Investment Corporation describing the general
terms of this transaction. No warranties, representations,
covenants or agreements shall be binding upon any party except as
expressly set forth herein.
21.2 Captions, Headings. The captions in this Agreement
are for convenience or reference only and shall not define, limit
or qualify the provisions of this Agreement.
21.Agreement shall be governed and construed in
accordance with the
laws of the State of Nevada.
21.4 Schedules. If any Schedules are not available
at the time of execution of this Agreement, they may be
added at a later date, after approval by the parties, and
shall then be deemed to be Schedules hereto in the same
manner as if attached at the time of execution.
21.5 Joint Preparation. Sellers, THC and Buyer shall be
deemed to have jointly prepared this Agreement and the
Exhibits attached hereto and no ambiguity herein shall be
construed by or for any party based upon the identity of the
author of this Agreement or any portion hereof.
21.6 Attorney's Fees. In any action or proceeding
brought by any party to this Agreement to enforce its rights
under this Agreement or any other document or agreement
delivered at the Closing, the prevailing in such litigation
provided such litigation is resolved by judgment and not by
settlement, shall be entitled to its reasonable attorney's
fees, costs and expenses incurred in enforcing such rights.
21.7 No Third Party Beneficiaries. Except as otherwise
specifically provided herein, this Agreement is not intended
to confer any rights or remedies on or to any person or party
not executing this Agreement, and there are no third party
beneficiaries of this Agreement.
21.8 Time of Essence. Time is of the essence in this
Agreement.
22. Effective Date. The Effective Date of this Agreement is
August 29, 1997.
SELLER BUYER
THC HOME CARE, INC. SIERRA HEALTH SERVICES, INC.
By: By:
Printed Name and Title Authorized Officer
DIGNACARE, INC.
By:
Printed Name and Title
MEDMART OF NEVADA, INC.
By:
Printed Name and Title
HEALTH INDUSTRIES, INC.
By:
Printed Name and Title
OXYCARE, INC.
By:
Printed Name and Title
SCHEDULE 1
TO PURCHASE AGREEMENT
PREMISES LEASES ASSUMED BY BUYER
(SCHEDULE OMITTED - LIST OF LEASES ASSUMED)
SCHEDULE 2
TO PURCHASE AGREEMENT
CONTRACTS
(SCHEDULE OMITTED - LIST OF CONTRACTS ASSUMED)
SCHEDULE 3
TO PURCHASE AGREEMENT
OTHER PURCHASED ASSETS
(SCHEDULE OMITTED - LIST OF OTHER ASSETS
INCLUDING ACCOUNTS PAYABLE, NOTES RECEIVABLE
AND MAY 31, 1997 BALANCE SHEET)
The company will provide copies of the foreging schedules to the
Securities and
Exchange Commission upon request.
