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
JANUARY 24, 1997
-------------------------------------
Date of Report (Date of earliest event reported)
TELMED, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-20438 65-0273037
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(State or other (Commission file (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
9350 S. DIXIE HIGHWAY, MIAMI, FLORIDA 33156
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(Address of Principal Executive Offices) Zip Code
Registrant's telephone number, including area code (305) 670-9773
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ITEM 2. ACQUISITION OR DISPOSAL OF ASSETS
On January 24, 1997, Consul-Med, Inc., a Florida corporation
("Consul- Med"), a wholly-owned subsidiary of the Company, disposed of all of
the issued and outstanding shares of Specialty Therapy Services, Inc., a Florida
corporation ("Specialty"). Consul-Med sold its ownership in Specialty to
Consolidated Medical Centers, Inc., a Florida corporation ("CMC"), for a
purchase price of $500,000 plus up to an additional $250,000 based on certain
performance criteria. Concurrent with the sale, CMC has retained Consul-Med of
South Florida, Inc., a Florida corporation, another wholly-owned subsidiary of
Consul-Med, to manage the certified outpatient rehabilitation facility owned by
Specialty. Jeffrey I. Binder, who is Chairman of the Board of Directors of the
Company and of Consul-Med, is also Chairman of the Board of Directors of CMC, a
wholly-owned subsidiary of HP America, Inc., of which Mr. Binder is Chairman and
Chief Executive Officer. The transaction was approved by the independent
directors of Consul-Med and CMC, respectively.
ITEM 7. EXHIBITS
(2) Purchase Agreement dated January 24, 1997 between Consolidated
Medical Centers, Inc. and Consul-Med, Inc. Included in the
Purchase Agreement but not attached to this Exhibit are
Schedule 4.3 (Financial Statements of Specialty), Schedule 4.9
(List of Contracts), Schedule 4.10 (List of Assets used in
Specialty's Business), Schedule 4.13 (List of Employees),
Schedule 4.14 (Employee Benefit Plan), Schedule 4.16 (List and
Description of Insurance Policies), Schedule 4.18 List of Bank
Accounts), Schedule 4.22 (Audits/Accountings Summary), and
Exhibit A CORF Management Agreement (which is attached as Item
7.(10), below).
(10) CORF Management Agreement dated January 24, 1997 between
Specialty Therapy Services, Inc. and Consul-Med of South
Florida, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: February 7, 1997 TELMED, INC.,
a Delaware corporation
By: /S/ JEFFREY I. BINDER
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Jeffrey I. Binder,
Chairman of the Board of
Directors
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INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
2 Purchase Agreement
10 CORF Management Agreement
EXHIBIT 2
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of this 24th day of January, 1997, by and among Consolidated Medical Centers,
Inc., a Florida corporation ("Buyer"), and Consul-Med, Inc., a Florida
corporation ("Seller").
RECITALS
A. Buyer is a Florida licensed health maintenance organization.
B. Seller owns all the issued and outstanding Common Stock of
Specialty Therapy Services, Inc., a Florida corporation ("Specialty").
C. The Seller is willing to sell to Buyer certain assets of the Seller
described in Schedule 2.1 attached hereto in exchange for the payment of the
Purchase Price, as defined below, and subject to the terms and conditions
contained herein.
NOW, THEREFORE, for the mutual consideration set out herein, the
parties hereby agree as follows:
AGREEMENT
1. RECITALS. The foregoing Recitals are true and correct, and
are incorporated herein and made a part hereof.
2. PURCHASE AND SALE.
2.1 PURCHASE PRICE FOR ASSETS. At the Closing on the Closing
Date (as defined in Section 7), Buyer agrees to purchase, and Seller agrees to
sell, convey, assign, transfer and deliver the assets owned by the Seller listed
on Schedule 2.1 attached hereto (the "Assets"), in exchange for the purchase
price set forth in Section 2.3, below. If Schedule 2.1 lists only 100 shares of
Specialty's Common Stock, then no other assets are being sold to Buyer by
Seller.
2.2 PURCHASE PRICE.
(1) The purchase price (the "Purchase Price")
for the Assets shall be:
(i) $500,000; and
(ii) up to $250,000 if the certified
outpatient rehabilitation
facility ("CORF") owned by
Specialty attains the gross
revenues levels set forth in
Section 2.2(2), below.
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(2) If during the period commencing February
1, 1997 and ending January 31, 1999 the
CORF shall produce gross revenues in any
12 month period in the amounts listed
below the Buyer shall pay the Seller the
additional Purchase Price listed below,
up to an aggregate additional Purchase
Price of $250,000:
1997 GROSS REVENUES ADDITIONAL PAYMENT
$950,000 to $999,999 $ 50,000
$1,000,000 to $1,199,999 $100,000
$1,200,000 or more $100,000
"Gross Revenues" means the total billings
for the CORF less Medicare contractual
allowances. Payment of any additional
Purchase Price shall be made to Seller
within 15 days after Buyer verifies the
above goals have been met.
During the period ending January 31,
1998, no gross revenues prior to February
1, 1997 may be included but the above
goals may be met in less than 12 months.
In no event shall achieving any goal be
paid for more than once.
3. LIABILITIES.
3.1 LIABILITIES NOT ASSUMED. Buyer will not assume or be
required to pay any liabilities of Seller.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller, as a
material inducement to Buyer to enter into this Agreement, pay the Purchase
Price and consummate the transaction contemplated hereby, makes the following
representations and warranties to Buyer:
4.1 DUE ORGANIZATION. The Seller and Specialty are
corporations duly organized, validly existing and in good standing in the State
of Florida and are not doing business in any other state. The Seller and
Specialty have the corporate power to own their respective properties and assets
and to carry on their business as now presently conducted. Specialty is a
wholly-owned subsidiary of Seller.
4.2 DUE AUTHORIZATION. This Agreement has been duly
authorized, executed and delivered by Seller and constitutes a valid and legally
binding agreement of Seller enforceable in accordance with its terms. The Board
of Directors of Seller have authorized the execution of this Agreement and the
consummation of the transactions contemplated hereby. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor
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compliance with any of the provisions hereof, will violate in any material
respect any order, writ, injunction or decree of any court or governmental
authority, or violate or conflict with in any material respect or constitute a
default under (or give rise to any right of termination, cancellation or
acceleration under), any provisions of applicable law or the Seller's Articles
of Incorporation or Bylaws, the terms, conditions or provisions of any Contract
(as defined in Section 4.9, below), note, bond, lease, lien, obligation,
agreement, understanding, arrangement or restriction of any kind to which the
Seller is a party or by which Seller's properties may be bound, or violate in
any material respect any statute, law, rule or regulation applicable to it.
4.3 FINANCIAL STATEMENTS. The unaudited financial statements
of Specialty at October 31, 1996 and for the year then ended ("Financial
Statements") have been previously delivered to Buyer. The Financial Statements
are in the form that they may be used for required filings with the Securities
and Exchange Commission ("SEC") other than any recasting that may be necessary
to provide for a pro forma consolidation with Buyer's financial statements. Such
Financial Statements and financial information contained therein, including any
of the notes thereto, present fairly the financial condition of Specialty at the
dates indicated and for the periods covered, subject to normal year-end audit
adjustments which will not be material to Specialty in amount or effect. Such
Financial Statements have been prepared in accordance with generally accepted
accounting principles, consistently applied. The books and records of the
Specialty, financial and other, are in all material respects complete and
correct and have been maintained in accordance with good business and accounting
practice applied on a consistent basis.
4.4 UNDISCLOSED LIABILITIES. Except for the liabilities set
forth on Schedule 4.4 attached hereto (the "Liabilities"), Specialty does not
have any liabilities, guarantees or obligations of any nature, fixed or
contingent, matured or unmatured, that are not shown, disclosed, reserved or
otherwise provided for in its Financial Statements, except for liabilities and
obligations arising subsequent to the date of its most recent Financial
Statements in the ordinary course of business, none of which individually or in
the aggregate is adverse to the business or financial condition of Specialty.
All reserves established by Specialty and set forth in its most recent Financial
Statements are adequate and there are no material loss contingencies (as such
term is used in Statement of Financial Accounting Standards No. 5 of the
Financial Accounting Standards Board) that are not adequately provided for by
Specialty.
4.5 MATERIAL ADVERSE CHANGE. Except as set forth in Schedule
4.5 attached hereto, or as otherwise specifically stated in this Agreement,
since the date of the most recent Financial Statements, the business of
Specialty has been operated in the ordinary course and there has not been any:
(1) material adverse change in the business, condition
(financial or otherwise), results of operations, prospects, properties,
liabilities, earnings or net worth of Specialty;
(2) material damage, destruction or loss (whether or not
covered by insurance) affecting Specialty, its property, or its business;
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(3) sale, assignment or transfer of any of
Specialty's assets, except in the ordinary course of business;
(4) liens, mortgages, security interests, pledges,
charges or any other encumbrance (collectively, a "Lien") on or to any of the
Assets or the assets owned by Specialty except for current property taxes not
yet due and payable;
(5) statute, rule, regulation or order adopted by any
governmental body, agency or authority (including orders of regulatory
authorities with jurisdiction over the Seller or its business) that materially
and adversely affects Specialty or its business or financial condition, and
which (i) makes the operation of the Specialty illegal or uneconomic or (ii)
materially and adversely affects the transaction contemplated in this Agreement
or the continuing operations of the Specialty; or
(6) other events or conditions of any character that
may reasonably be expected to have a materially adverse effect on Specialty, or
its business or financial condition.
4.6 LITIGATION. Except to the extent disclosed on Schedule 4.6
attached hereto, there are no actions, suits, claims, investigations or legal,
administrative or arbitration proceedings, including, without limitation,
malpractice claims and Department of Professional Regulation or Board of
Medicine investigations, suits, or notices of intent to institute proceedings
(collectively, "Legal Proceedings") pending or, to the knowledge of the Seller,
threatened against Specialty, the Assets or Specialty's business or assets, or
any employees of or independent contractors engaged by Specialty, whether at law
or in equity, or before or by any federal, state, municipal, local, foreign or
other governmental department, commission, board, bureau, agency or
instrumentality, nor does Seller know of a threat of, or any basis for, any such
Legal Proceedings. Except as disclosed on Schedule 4.6, Specialty has not
received notice of any adverse finding or determination in connection with any
review conducted by any entity, commission, board or agency in connection with
Medicare or Medicaid or with any health insurer or health care payor.
4.7 COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. Specialty has
complied with all federal, state, local and foreign laws, ordinances,
regulations and orders applicable to its assets and its business. Specialty has
all federal, state, local and foreign governmental authorizations, licenses and
permits necessary (collectively, "Permits") for the conduct of its business and
all such Permits are listed on Schedule 4.7 attached hereto. Such Permits are in
full force and effect and Seller does not know of any violations of any such
Permits. No proceedings are pending or, to the knowledge of the Seller
threatened, to revoke or limit the use of such Permits. Schedule 4.7 contains a
complete and accurate list of all Permits held by Specialty's employed or
independent contractor physicians, nurses, technicians and other health care
providers (collectively, "Specialty's Professionals"). Specialty's Professionals
are duly licensed under the laws of the State of Florida and have complied with
all laws, rules and regulations relating to the rendering of services in their
respective specialty areas.
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4.8 TAX MATTERS.
(1) Specialty has filed, with the appropriate
governmental entities, within the times and in the manner required by law,
including extensions, all Tax Returns (as defined in Section 4.8(3) below),
required to be filed by it up to and including the date hereof, or has not been
required to so file, being part of a consolidated group, and has maintained all
material records with respect to Taxes (as defined in Section 4.8(2) below).
Such Tax Returns, if any, accurately reflect all liabilities for Taxes of
Specialty for the periods covered thereby. With respect to all taxable periods
prior to the date hereof, Specialty has paid all Taxes shown to be due on its
Tax Returns and has paid all Taxes required to be paid to the Internal Revenue
Service (the "IRS") or any other taxing authority (each constituting a "Taxing
Authority") and, to the extent required by generally accepted accounting
principles, has set up adequate accruals on the Financial Statements for the
payment of all Taxes which have accrued but are not yet payable. Specialty does
not have any tax liability which could result in a Lien hereafter being imposed
on any of the Assets, except Liens for current Taxes not yet due. There are no
audits of any Tax Returns of any of Specialty by any Taxing Authority currently
in progress. Except as disclosed on Schedule 4.8(1) attached hereto, Specialty
has not received any written notice of deficiency or assessment or proposed
deficiency or assessment from any Taxing Authority which has not been paid.
Except as disclosed on Schedule 4.8(1) there are no outstanding agreements or
waivers extending the statutory period of limitations applicable to any Tax
Returns required to be filed by Specialty.
(2) As used in this Agreement, "Taxes" includes all
taxes, charges, fees, levies or other assessments which are imposed or claimed
by any federal, state, local or foreign Taxing Authority, including, without
limitation, income, capital, excise, property, sales, transfer, employment,
payroll, withholding and franchise taxes and all interest, penalties or
additions attributable to or imposed on or with respect to such assessments.
(3) As used in this Agreement, "Tax Returns" means
any return, report, information return, or other document (including any related
or supporting information) filed or required to be filed by Speciality with any
federal, state, local, or foreign Taxing Authority in connection with the
determination, assessment or collection of any Tax or the administration of any
laws, regulations or administrative requirements relating to Taxes.
4.9 CONTRACTS. Schedule 4.9 attached hereto contains a true
and complete list and brief description of all written or oral contracts,
agreements, leases, mortgages, obligations, understandings, arrangements,
restrictions and other instruments to which Specialty is a party or by which it
or its assets or the Assets may be bound, including all amendments thereto
("Contracts"). True and complete copies of all Contracts set forth on Schedule
4.9 have been heretofore delivered to the Buyer. No event has occurred that
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a default by Seller or Specialty under any of
its Contracts. Seller has no knowledge of any default by the other parties to
such Contracts. In addition, no violations have occurred pursuant to any
Contracts which are loan agreements that could result in the acceleration of
such loan agreements or Specialty being required to pay the
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obligations under such loan agreements other than in the ordinary course, or
which could result in the payment of any penalties or amounts other than the
payment of principal and interest, or the payment of higher rates of interest
than those initially stated in the loan agreements, or which would entitle any
other parties to the loan agreements to foreclose or otherwise realize on any
security given for the payment of such loan agreements.
4.10 TITLE TO PROPERTY AND RELATED MATTERS. Schedule 4.10 is a
true and complete list of all the assets used in the operation of Specialty's
business which are not owned by Specialty as well as a list of all material
tangible assets owned by Speciality. Except as disclosed on Schedule 4.10
attached hereto, the Seller and Specialty have good and marketable title to the
Assets or Specialty's assets, as the case may be, free and clear of any Liens
except Liens for current Taxes not yet due. All tangible property, other than
inventory, forming a part of the Assets and Specialty's assets are in good
operating condition and repair, reasonable wear and tear excepted. There does
not exist any condition that interferes with the use thereof in the ordinary
course of the business of Specialty. Specialty owns no real property except to
the extent any trade fixtures owned or improved by it in its place of business
constitutes real property. Specialty has an inventory of medical supplies in a
quantity customary in a health care practice of its size and type and such
inventory is not obsolete or otherwise not merchantable.
4.11 LICENSES; TRADEMARKS; TRADE NAMES. Specialty does not use
nor does it own any licenses, trademarks, trade names, service marks,
copyrights, patents or any applications for any of the foregoing that relates to
its business except for the trade name "Institute for Health and Healing" and as
disclosed on Schedule 4.11 attached hereto (the "Intellectual Property"). None
of the Intellectual Property listed on Schedule 4.11 infringes on the
Intellectual Property of any other person nor, to the knowledge of Seller, is
any other person infringing on the Intellectual Property nor does it have any
knowledge that any other person has asserted a claim to such effect.
4.12 CONSENTS. No consent of any federal, state, municipal or
other governmental authority is required by Seller for the execution, delivery
or performance of this Agreement. Any and all consents which are required to
permit the consummation of the transactions contemplated hereby are listed on
Schedule 4.12 attached hereto (the "Consents"). Except as disclosed on Schedule
4.12 attached hereto, no consent of any party to any contract or agreement to
which Seller or Specialty is a party or by which any of the Assets or
Specialty's assets are subject is required for the execution, delivery or
performance of this Agreement by Seller that has not been obtained at the date
of this Agreement or by the date of Closing.
4.13 EMPLOYEES. Each employee and independent contractor,
including Specialty's Professionals (collectively, the "Employees"), of
Specialty is listed on Schedule 4.13 attached hereto, along with each Employee's
compensation, date of hire, position, and any other materially relevant term of
their employment or independent contractor agreement. A true, correct and
complete copy of any employment or independent contractor agreement with any
Employee, along with all amendments thereto (the "Employment Agreements"), has
been previously delivered to Buyer. Except as set forth in Schedule 4.13, the
Employment Agreements thereto, or as set forth
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below in subparagraph 4.14, there are no agreements, understandings or
expectations of compensation or benefits by any Employee.
4.14 EMPLOYEE BENEFIT PLANS.
(1) Set forth on Schedule 4.14 attached hereto is a
true and complete list of all (i) bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, active, retiree or former
employee medical, life, disability or accident benefits (whether or not
insured), accrued leave, vacation, sick pay, sick leave, supplemental retirement
or unemployment benefit plans, programs, arrangements or practices; and (ii)
employment, termination, and severance contracts or agreements, whether or not
any such plans, programs, arrangements, contracts, agreements or practices
(referred to in clause (i) or (ii)) are in writing or are exempt from the
provisions of the Employee Retirement Income Act of 1974, as amended ("ERISA"),
which were established, participated in as a subsidiary, maintained or
contributed to (or with respect to which an obligation to contribute to has been
undertaken) by Specialty since its inception (collectively, the "Employee
Benefit Plans").
(2) Except as set forth on Schedule 4.14,
each Employee Benefit Plan has at all times been maintained and operated in
substantial compliance with its terms and the requirements of all applicable
laws, including, without limitation, ERISA and the Internal Revenue Code of
1986, as amended (the "Code").
(3) Specialty has no other plans, whether or
not governed by ERISA, nor does it maintain any other programs, arrangements,
contracts, agreements or practices to provide any employee benefits, other than
those disclosed on Schedule 4.14.
(4) The Seller has delivered or caused to be
delivered to Buyer true and complete copies of all material documents in
connection with each Employee Benefit Plan, including, without limitation (where
applicable): (i) all Employee Benefit Plans as in effect on the date hereof,
together with all amendments thereto, including, in the case of any Employee
Benefit Plan not set forth in writing, a written description thereof; (ii) all
current summary plan descriptions, summaries of material modifications, and
material communications; (iii) all current trust agreements, declarations of
trust and other documents establishing other funding arrangements (and all
amendments thereto and the latest financial statements thereof); (iv) the most
recent IRS determination letter obtained with respect to each Employee Benefit
Plan intended to be qualified under Section 401(a) of the Code or exempt under
Section 501(a) of the Code; (v) Form 5500 for each of the last three years for
each Employee Benefit Plan required to file such Form; (vi) the most recently
prepared financial statements; and (vii) all contracts relating to each Employee
Benefit Plan, including, without limitation, service provider agreements,
insurance contracts, annuity contracts, investment management agreements,
subscription agreements, participation agreements, and record keeping
agreements.
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4.15 EMPLOYEE RELATIONS. Specialty is not a party to or
subject to any collective bargaining agreements with respect to any Employee or
otherwise. No material controversies, disputes or proceedings are pending or
threatened against Specialty and any Employee (singly or collectively).
Specialty currently complies in all material respects with the applicable laws,
rules and regulations relating to employment and employment practices,
including, without limitation, equal employment opportunities, and has not and
is not engaged in any unfair labor practice or discriminatory employment
practice. Specialty has not received any notice alleging the failure to comply
in any material respect with any such laws, rules or regulations.
4.16 INSURANCE. Schedule 4.16 attached hereto sets forth a
true and complete list and brief description of all policies of insurance
(including all bonding arrangements) owned or held by Specialty (the
"Policies"). The premiums with respect to such Policies owned by Specialty are
fully paid through the date hereof (and will remain fully paid through the
Closing Date) and all such Policies owned by Specialty are in good standing and
in full force and effect. Such Policies, with respect to their amounts and types
of coverage, are adequate to insure against all material risks to which
Specialty is normally exposed in the operation of its business and against which
it is customary to insure except to the extent Specialty is covered by policies
of insurance owned by Seller. Neither Seller nor Specialty have been advised
that any of their policies of insurance will be canceled or not renewed.
4.17 ENVIRONMENTAL MATTERS. Except as set forth in Schedule
4.17 attached hereto, Specialty has not been alleged to be in violation of, and
has not been subject to any administrative or judicial proceeding pursuant to,
any laws or regulations governing the generation, use, collection, discharge or
disposal of Hazardous Materials (as defined below) either now or at any time.
Specialty has complied in all material respects with all Environmental Laws (as
defined below). Also set forth in Schedule 4.17 is a list of all permits or
licenses of the Specialty to generate, store, transport or otherwise handle
Hazardous Materials. For purposes of this Section 4.17 "Hazardous Materials"
shall mean materials defined as "hazardous substances," "hazardous wastes,"
"bio- hazardous wastes" or "solid wastes" in (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. ss.ss. 9601-9657,
and any amendments thereto ("CERCLA"), (ii) the Resource Conservation and
Recovery Act, 42 U.S.C. ss.ss. 6901-6987 and any amendments thereto ("RCRA"),
and (iii) any similar Federal, state or local environmental statute or
regulation, including, without limitation, bio-hazardous or medical waste
statutes or regulations, (together with CERCLA and RCRA, the "Environmental
Laws").
4.18 POWERS OF ATTORNEY, SURETYSHIPS, ETC. Schedule 4.18
contains a true and complete list showing (i) the names of all persons holding
powers of attorney from Specialty and a summary statement of the material terms
thereof, (ii) the names of all persons standing in the position of surety to, or
otherwise holding rights or subrogation against Specialty under a performance,
surety or other bond or similar instrument and a summary statement of the
material terms thereof, (iii) the names of all persons authorized to sign on
credit or charge cards in the name of Specialty and a list of the related cards,
and (iv) a list of all bank, financial institution, brokerage, mutual fund
accounts,
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and safety deposit boxes maintained in the name of Specialty and the authorized
signers on all of these accounts.
4.19 [RESERVED]
4.20 HEALTH CARE FACILITIES. Specialty's Professionals
maintain in good standing staff memberships or similar affiliations with the
health care facilities listed on Schedule 4.20 attached hereto.
4.21 MEDICARE/MEDICAID. Except as disclosed on Schedule 4.21
attached hereto:
(1) the operations of Specialty have complied
in all material respects with all laws relating to Medicare and/or Medicaid,
including, but not limited to, 42 U.S.C. ss. 1320(a) - 7(a) ET SEQ., 42 U.S.C.
ss. 1320(a) - 7(b) ET SEQ., 31 U.S.C. ss. 3729, and any other federal or state
provision relating to the filing of false claims or payments for referrals, and
there is not and will not be any liability arising from or related to any
violations thereof prior to Closing, and Seller has no knowledge of any
violations thereof;
(2) neither Seller nor Specialty has received
any notice from any governmental body or other person alleging any failure to
comply with any law, rule or regulation;
(3) Seller or Specialty has timely filed, in
a complete and correct manner all requisite claims and other reports required to
be filed in connection with all state and federal Medicare and/or Medicaid
programs which are due on or before the date hereof;
(4) there are no claims, actions, payment reviews,
or appeals pending or threatened before any commission, board or agency,
including, without limitation, any intermediary or carrier, the Administrator of
the Health Care Financing Administration, or the Florida Department of Health
and Rehabilitative Services or any other state or federal agency with respect to
any Medicare or Medicaid claims filed by Specialty on or before the date hereof
or program compliance matters, which would adversely affect Specialty, or the
consummation of the transactions contemplated hereby; and
(5) no validation review or program integrity review
related to the Seller or Specialty has been conducted by any commission, board
or agency in connection with the Medicare or Medicaid program, and no such
reviews are scheduled, pending nor threatened against or affecting Specialty or
the consummation of the transactions contemplated hereby.
Specialty's Medicare Provider Number is 10-4583.
4.22 AUDITS/ACCOUNTINGS. Except as disclosed on Schedule 4.22
attached hereto, there are no audits, accountings or payment reviews pending or
threatened in connection with any agreements with physicians or with insurance
companies, managed care plans, employers, or other
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third party payors (collectively, "Third Parties"), and except as disclosed on
Schedule 4.22, all amounts owed under any such agreements have been
appropriately reconciled and there are no outstanding balances. Specialty is not
a party to any risk-pooling agreements or arrangements whatsoever.
4.23 CERTAIN BUSINESS RELATIONSHIPS. Except as disclosed in
Schedule 4.23 attached hereto, Seller does not (i) own any property right,
tangible or intangible, which is used in the course of the business of
Specialty; (ii) has any claim or cause of action against the Assets or any
property of Specialty; or, (iii) except in the ordinary course of business, owes
or is due any money to or from Specialty.
4.24 GOOD HEALTH. To Seller's knowledge, all of Specialty's
Professionals are in good physical and mental health and do not suffer from any
illnesses or disabilities or drug or alcohol abuse which could prevent any of
them from fulfilling their professional responsibilities as presently
constituted.
4.25 BROKERAGE FEES. Neither Seller nor Specialty has
incurred, and will not incur, any liability for brokerage or finder's fees or
similar charges in connection with this Agreement.
4.26 FULL DISCLOSURE. The information about Specialty's
businesses and properties and the Assets previously disclosed to the Buyer by
Seller or disclosed in the Schedules to this Agreement does not contain any
untrue statement of a material fact or omit to state a material fact required or
necessary to be stated therein to make the statements made therein, in light of
the circumstances in which they were made, not misleading. Seller acknowledges
that it has a duty from the date hereof and through the Closing Date to update
all schedules to this Agreement in regard to any material adverse changes or
additions to the matters adverse disclosed therein without the necessity of a
written request therefore.
4.27 SPECIALTY COMMON STOCK. Specialty has 10,000 shares of
authorized Common Stock, par value $0.01 per share, of which 100 shares are
issued and outstanding. All such issued and outstanding shares are fully paid
and non-assessable and are free and clear of all liens, charges and
encumbrances. Specialty has no outstanding warrants, options or other rights to
purchase its capital stock and has no agreements to issue any such capital
stock, warrants, options or other rights.
4.28 LEASES. The Lease for Office Space dated February 6, 1995
by and between Ropal, Ltd. as landlord and Specialty as tenant regarding Suite
164, 1300 Park of Commerce Boulevard, Delray Beach, Florida and the Lease for
Office Space dated October 23, 1995 by and between Ropal, Ltd. and Specialty
regarding Suite 161 at the same address (collectively, "the "Leases") are in
full force and effect. Specialty is not in material default of any term or
condition of the Leases (whether with or without notice, lapse of time or the
happening or occurrence of any other event) and to Seller's knowledge Ropal,
Ltd. is not in material default of any term or condition of the Leases. Complete
and correct copies of the Leases, including all amendments thereto, have been
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given to Buyer. The security deposits held by Ropal, Ltd. are the property of
Specialty and Seller on its own behalf and that of its affiliates waives any
claim thereto.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer, as a
material inducement to the Seller to enter into this Agreement and consummate
the transactions contemplated hereby, make the following representations and
warranties to the Seller:
5.1 DUE ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing in the State of Florida, and is qualified
to do business in every state in which the failure to be so qualified would have
a material adverse effect on its business or properties. Buyer has the corporate
power to own its property and assets and to carry on its businesses as now
presently conducted.
5.2 DUE AUTHORIZATION. This Agreement has been duly
authorized, executed, and delivered by Buyer, and constitutes a valid, and
legally binding agreement of Buyer, enforceable in accordance with its terms and
has been approved by the Board of Directors of Buyer. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor compliance with any of the provisions hereof, will
violate in any material respect any order, writ, injunction or decree of any
court or governmental authority, or violate or conflict with in any material
respect or constitute a default under (or give rise to any right of termination,
cancellation or acceleration under), any provisions of applicable law or the
Buyer's Articles of Incorporation or By-laws, the terms, conditions or
provisions of any note, bond, lease, mortgage, obligation, agreement,
understanding, arrangement or restriction of any kind to which the Buyer is a
party or by which it or its properties may be bound, or violate in any material
respect any statute, law, rule or regulation applicable to it.
5.3 CONSENTS. No consent of any federal, state, municipal or
other governmental authority is required by the Buyer for the execution,
delivery or performance of this Agreement by the Buyer. No consent of any party
to any contract or agreement to which Buyer is a party or by which any of its
property or assets are subject is required for the execution, delivery or
performance of this Agreement by Buyer that has not been obtained at the date of
this Agreement on the date of Closing.
5.4 PULMONARY PROGRAM. Buyer acknowledges that the pulmonary
program currently used by Specialty is not owned by Specialty and rights to such
pulmonary program are not being acquired as an asset of Speciality.
6. COVENANTS OF SELLER AND BUYER.
6.1 MAINTAIN BUSINESS. Prior to the Closing Date, the Seller
shall:
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(1) not suffer or permit Specialty to engage in any
practice, take any action, embark on any course of action, or enter into any
transaction outside the ordinary course of business without the prior written
consent of the Buyer;
(2) keep Specialty 's business, Permits, and
properties and the Assets substantially intact, including Specialty's present
operations, physical facilities, working conditions, and relationships with
licensees, lessees, licensor, suppliers, patients, customers and employees;
(3) not suffer or permit any salary or compensation
increase, dividends or loans to any officers or directors of Specialty without
the prior written consent of the Buyer which prohibition shall not extend to
other employees in the ordinary course of business;
(4) not contact any third party for the purpose of
soliciting or arranging for the solicitation of any proposals involving a
business combination, equity financing, sale of the Assets, or of Specialty,
suffer or permit issuance of additional securities by Specialty or the merger,
consolidation or any other capital transaction outside the ordinary course of
business of Specialty; and
(5) obtain all required Consents.
6.2 PAYABLES. Seller will be liable for and pay all
liabilities of Specialty incurred before the Closing Date regardless of when
invoiced. Upon receipt of an invoice for such a payable Seller will timely pay
the invoice. Speciality at its option may pay such an invoice and upon
Specialty's request to Seller for reimbursement Seller shall promptly reimburse
the payment to Specialty.
6.3 RECEIVABLES. Specialty shall collect as Seller's agent all
receivables arising from Specialty's services rendered before the Closing Date.
As such receivables are collected Specialty shall promptly pay the amounts to
Seller.
6.4 HCFA AUDITS. Seller shall be fully liable for, or shall
receive the benefit of, as the case may be, the results of any Health Care
Financing Administration ("HCFA") final cost report audits for the years ended
October 31, 1995 and 1996. Seller shall be fully liable for, or shall receive
the benefit of, as the case may be, 25% of the results of the HCFA final cost
report audit for the year ending October 31, 1997.
6.5 EQUIPMENT LEASES. Seller will use its best efforts to
cause the following equipment leases to be assigned to Specialty: (1) RFB System
equipment, a 60-month lease from Affiliated Capital Corp. as lessor, dated
October 10, 1996; (2) KIN-COM AP with Graphic Plus System equipment, 60-month
lease from Clearlake Financial Corp. as lessor, dated May 23, 1996
(collectively, the "Equipment Leases"). Until the Equipment Leases are assigned
to Specialty, Specialty may use said equipment at no charge.
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7. CLOSING. The Closing shall occur within ten business days after the
last of the conditions to Closing in Sections 9 and 10 have been satisfied or
waived but not later than January 31, 1997 (the "Closing Date"). If the
transaction contemplated herein is unable to be timely consummated by the
Closing Date, without fault by any party hereto, this Agreement shall be of no
further force and effect and all rights and obligations of the parties shall
terminate without liability of either party to any other party. The Closing
shall take place at 10:00 a.m. on the date set by Buyer in conformity with this
Section 7 at the offices of counsel to Buyer or such other time and place as the
parties shall mutually agree.
8. MANAGEMENT AGREEMENT. Seller shall at Closing enter into a
management agreement with Buyer substantially in the form set forth in Exhibit A
attached hereto (the "Management Agreement").
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. All obligations of the
Buyer under this Agreement are subject to the fulfillment, prior to or on the
Closing Date, of each of the following conditions, any one or all of which may
be waived in writing by the Buyer:
9.1 CORPORATE APPROVAL. The Board of Directors of the Seller
shall have approved the execution of this Agreement and the transactions
contemplated hereby.
9.2 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties by the Seller contained in this Agreement or in
any certificate or document delivered to the Buyer pursuant to the provisions
hereof shall be true in all material respects at and as of the time of the
Closing as though such representations and warranties were made at and as of
such time.
9.3 COMPLIANCE WITH CONDITIONS. Seller shall have performed
and complied in all respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or at
the Closing.
9.4 OFFICER'S CERTIFICATE. There shall be delivered to the
Buyer an officer's certificate of Seller to the effect that all of the
representations and warranties of the Seller set forth herein are true and
complete in all respects as of the Closing Date, and that the Seller has
complied in all material respects with its covenants and agreements set forth
herein required to be complied with by the Closing.
9.5 EXECUTION OF AGREEMENTS. Consul-Med of South Florida,
Inc., a Florida corporation, shall have executed and delivered the Management
Agreement.
9.6 NO ADVERSE CHANGES. No material adverse change from the
date hereof shall have occurred in the Assets or Specialty's liabilities,
condition, financial or otherwise, or business or in the results of operation of
Specialty either in the aggregate or taken individually.
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9.7 NO LEGAL RESTRAINTS. There shall be no court order
restraining or prohibiting consummation of the transaction contemplated herein
or any pending proceeding brought by or before any governmental commission,
board, agency or body seeking to restrain or prohibit consummation of the
transaction contemplated herein.
9.8 CONSENTS. The Seller shall have obtained all required
Consents.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER. All
obligations of the Seller under this Agreement are subject to the fulfillment,
prior to or on the Closing Date (unless otherwise stated herein), of each of the
following conditions, any one or all of which may be waived in writing by the
Seller:
10.1 CORPORATE APPROVAL. The Board of Directors of Buyer shall
have approved the execution of this Agreement.
10.2 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by Buyer contained in this Agreement or in
any certificate or document delivered to the Seller or pursuant to the
provisions hereof at the Closing shall be true in all material respects at and
as of the time of the Closing as though such representations and warranties were
made at and as of such time.
10.3 COMPLIANCE WITH CONDITIONS. Buyer shall have performed
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
10.4 OFFICER'S CERTIFICATE. There shall be delivered to the
Seller an officer's certificate of the Buyer to the effect that all of the
representations and warranties of the Buyer set forth herein are true and
complete in all respects as of the Closing Date, and that Buyer has complied in
all material respects with its covenants and agreements set forth herein
required to be complied with by the Closing.
10.5 NO LEGAL RESTRAINT. There shall be no court order
restraining or prohibiting consummation of the transaction contemplated herein
or any pending proceeding brought by or before any governmental commission,
board, agency or body seeking to restrain or prohibit consummation of such
transaction.
10.6 DELIVERY OF AGREEMENTS. Specialty shall have executed and
delivered the Management Agreement.
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11. INDEMNIFICATION.
11.1 INDEMNIFICATION BY THE SELLER. Seller (the "Indemnifying
Party"), shall indemnify, defend and hold Buyer (the "Indemnified Party")
harmless from all claims, losses, damages, costs and expenses incurred by the
Indemnified Party, including, without limitation, all reasonable legal fees
incurred in investigating, litigating (at trial or appellate level) or otherwise
resolving any dispute (collectively, "Damages"), arising out of or in connection
with any of the following:
(1) any material breach of any representation or
warranty made by the Seller in this Agreement or in any certificate or document
delivered to Buyer pursuant hereto;
(2) any breach of any covenant, agreement or
obligation to be performed by the Seller contained in this Agreement; or
(3) any act or omission by the Seller or Specialty
arising out of any fact or circumstance occurring prior to the Closing Date.
11.2 INDEMNIFICATION BY BUYER. Buyer, (the "Indemnifying
Party"), shall indemnify, defend and hold the Seller (the "Indemnified Party")
harmless from all claims, losses, damages, costs and expenses incurred by the
Indemnified Party, including, without limitation, all reasonable legal fees
incurred in investigating, litigating (at trial or appellate level) or otherwise
resolving any dispute (collectively, "Damages"), arising out of or in connection
with any of the following:
(1) any material breach of any representation or
warranty made by Buyer in this Agreement or in any certificate or document
delivered to the Seller pursuant hereto; or
(2) any breach of any covenant, agreement or
obligation to be performed by Buyer contained in this Agreement.
11.3 THIRD PARTY CLAIM PROCEDURE. If a third party (including,
without limitation, a governmental entity) asserts a claim against an
Indemnified Party and indemnification in respect of such claim is sought under
the provisions of this Section, the Indemnified Party shall promptly (but no
later than 15 business days prior to the time when an answer or other responsive
pleading or notice with respect to the claim is required) give written notice to
the Indemnifying Party of such claim. The Indemnifying Party shall have the
right at its election to take over the defense or settlement of such claim by
giving prompt written notice to the Indemnified Party at least five business
days prior to the time when an answer or other responsive pleading or notice
with respect thereto is required. If the Indemnifying Party makes such election,
it may conduct the defense of such claim through counsel or representatives of
its choosing (subject to the Indemnified Party's approval of such counsel or
representatives, which approval shall not be unreasonably withheld), shall be
responsible for the expenses of such defense, and shall be bound by the results
of its defense or settlement of claim to
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the extent it produces Damages to the Indemnified Party. The Indemnifying Party
shall not settle any such claim without prior notice to and consultation with
the Indemnified Party and no such settlement involving any equitable relief or
which might have a material and adverse effect on the Indemnified Party shall be
agreed to without the written consent of the Indemnified Party. So long as the
Indemnifying Party is diligently contesting any such claim in good faith, the
Indemnified Party may pay or settle such claim only at its own expense. If the
Indemnifying Party does not make such election, or having made such election
does not proceed diligently to defend such claim, or does not continue
diligently to contest such claim, or does not make the financial arrangements
described in the immediately preceding sentence, then the Indemnified Party may
(but is not obligated to), upon 10 business days' written notice and at the
expense of the Indemnifying Party, take over the defense of and proceed to
handle such claim in its exclusive discretion and the Indemnifying Party shall
be bound by any defense or settlement that the Indemnified Party may make in
good faith with respect to such claim. The parties shall cooperate in defending
such third party claims and the defending party shall have access to records,
information and personnel in control of the other party or parties which are
necessary and pertinent to the defense thereof.
12. DOCUMENTS AT CLOSING.
At the Closing, the following transactions shall occur, all of
which shall be deemed to occur simultaneously:
12.1 DELIVERY BY SELLER. Seller will deliver to Buyer the
following:
(1) A Bill of Sale substantially in the form
attached hereto as Exhibit B executed and delivered by Seller conveying to Buyer
the Assets, if any other than the Common Stock of Specialty, along with any
other documents or instruments of conveyance which may be reasonably requested
by Buyer;
(2) Stock Certificate No. 1 for 100 shares of the
Common Stock, par value $0.01 per share, of Specialty duly endorsed in blank for
transfer;
(3) a certificate of the Seller's President to the
effect that all representations and warranties made by the Seller under this
Agreement are true and correct as of the Closing Date, as though originally
given to Buyer on said date;
(4) a certificate of good standing for Specialty
from the Florida Secretary of State, dated within two weeks of the Closing Date,
to the effect that such corporation is in good standing under the laws of
Florida;
(5) Board of Directors resolutions certified by the
Secretary of Seller dated on the Closing Date authorizing the transactions
contemplated under this Agreement;
(6) the Management Agreement executed by Seller;
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(7) the executed Consents, if any; and
(8) such other instruments, documents and
certificates, if any, as are required to be delivered pursuant to the provisions
of this Agreement or that may be reasonably requested by Buyer in furtherance of
the provisions of this Agreement.
12.2 DELIVERY BY BUYER. Buyer will deliver to the Seller the
following:
(1) $500,000 by wire transfer or cashier's check;
(2) a certificate of the Buyer's President to the
effect that all representations and warranties made by Buyer under this
Agreement are true and correct as of the Closing Date, as though originally
given to the Seller on said date;
(3) a certificate from the Secretary of State of
Florida dated within two weeks of the Closing Date that Buyer is in good
standing under the laws of Florida;
(4) resolutions of the Board of Directors certified
by the Secretary of the Buyer, all dated on the Closing Date authorizing the
transactions contemplated under this Agreement; and
(5) such other instruments, documents and
certificates, if any, as are required to be delivered pursuant to the provisions
of this Agreement, or that may be reasonably requested by Seller in furtherance
of the provisions of this Agreement.
13. NOTICES.
All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person or sent by overnight delivery or prepaid first class
certified mail, return receipt requested, to the following addresses, or such
other addresses as are given to the other parties to this Agreement in the
manner set forth herein:
(a) If to the Buyer, to:
Jeffrey Binder, Chairman
HP America, Inc.
9350 S. Dixie Highway, Suite 1220
Miami, Florida 33156
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with a courtesy copy to:
Richard M. Spector, Esq.
Adorno & Zeder, P.A.
Suite 1600
2601 S. Bayshore Drive
Miami, FL 33133
(b) If to the Seller, to:
Alan I. Miller, M.D., President
Consul-Med, Inc.
3275 W. Hillsboro Rd., Suite 207
Deerfield Beach, FL 33442
with a courtesy copy to:
David Brenner, Esq.
4601 Ponce de Leon Blvd., Suite 110
Coral Gables, FL 33146
Any such notices shall be effective when delivered in person or one business day
after being sent by overnight delivery or three business days after being sent
by certified mail. Any of the foregoing addresses may be changed by giving
notice of such change in the foregoing manner, except that notices for changes
of address shall be effective only upon receipt.
14. FURTHER ASSURANCES. At any time, and from time to time, after the
Closing, each party will execute such additional instruments and take such
further action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of this Agreement.
15. COSTS AND EXPENSES. Each party hereto agrees to pay its own costs
and expenses incurred in negotiating this Agreement and consummating the
transactions described herein, regardless of whether or not the transactions
contemplated herein are consummated.
16. SURVIVAL OF SUCCESSORS. All covenants and agreements by or on
behalf of the parties hereto that are contained or incorporated in this
Agreement shall bind and inure to the benefit of the successors and assigns of
all parties hereto.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. It
supersedes all prior negotiations, letters and understandings relating to the
subject matter hereof.
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18. AMENDMENT. This Agreement may not be amended, supplemented or
modified in whole or in part except by an instrument in writing signed by the
party or parties against whom enforcement of any such amendment, supplement or
modification is sought.
19. ASSIGNMENT. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties hereto.
20. CHOICE OF LAW. This Agreement shall be interpreted, construed and
enforced in accordance with the internal and substantive laws of the State of
Florida, without regard to any conflict of law provisions.
21. HEADINGS. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. GENDER AND NUMBER. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
context may require. Words used in this Agreement, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate.
23. CONSTRUCTION. The parties hereto and their respective legal counsel
participated in the preparation of this Agreement; therefore, this Agreement
shall be construed neither against nor in favor of any of the parties hereto,
but rather in accordance with the fair meaning thereof.
24. EFFECT OF WAIVER. The failure of any party at any time or times to
require performance of any provision of this Agreement will in no manner affect
the right to enforce the same. The waiver by any party of any breach of any
provision of this Agreement will not be construed to be a waiver by any such
party of any succeeding breach of that provision or a waiver by such party of
any breach of any other provision.
25. SEVERABILITY. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other provision of
this Agreement, which will remain in full force and effect, nor will the
invalidity, illegality or unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event that any one or
more of the provisions contained in this Agreement or any portion thereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be reformed, construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein.
26. ENFORCEMENT. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs. Any suit, action or proceeding with
respect to this Agreement shall be brought in a court of competent jurisdiction
located in Dade County in the State of Florida or in the U.S. District Court for
the Southern District of Florida. The
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parties hereto hereby accept the exclusive jurisdiction of those courts for the
purpose of any such suit, action or proceeding. Venue for any such action, in
addition to any other venue permitted by statute, will be Dade County, Florida.
The parties hereto hereby irrevocably waive, to the fullest extent permitted by
law, any objection that any of them may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Agreement or any judgment entered by any court in respect thereof brought in
Dade County, Florida, and hereby further irrevocably waive any claim that any
suit, action or proceeding brought in Dade County, Florida, has been brought in
an inconvenient forum.
27. NO THIRD-PARTY BENEFICIARIES. No person shall be deemed to possess
any third-party beneficiary right pursuant to this Agreement. It is the intent
of the parties hereto that no direct benefit to any third party is intended or
implied by the execution of this Agreement.
28. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
IN WITNESS THEREOF, the parties have executed this Agreement on the
date and year first above written.
CONSULT-MED, INC.
By: /s/ ALAN I. MILLER, M.D.
------------------------------------
Alan I. Miller, M.D., President
CONSOLIDATED MEDICAL CENTERS,
INC.
By: /s/ MICHAELE MORRISON
------------------------------------------
Michaele Morrison, Chief Operating Officer
20
EXHIBIT 10
CORF MANAGEMENT AGREEMENT
THIS CORF MANAGEMENT AGREEMENT is made this 24th day of
January, 1997 by and between Specialty Therapy Services, Inc., a Florida
corporation (the "Company"), and Consul-Med of South Florida Inc., a Florida
corporation ("CMSF").
RECITALS
A. The Company owns a certified outpatient rehabilitation
facility (the "CORF").
B. CORF is a Medicare certified facility in the State of Florida.
C. CMSF desires to provide management services for the CORF.
D. It is CMSF'S desire to perform management services consistent
with the terms and conditions of this Agreement and the Company's desire to have
CMSF perform such services.
Therefore, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties agree as follows:
AGREEMENT
1. TERM. This Agreement shall be effective on the date first set forth
above (the "Effective Date") and shall continue for a two year period, subject,
however, to termination for cause as provided in this Section 1. This Agreement
maybe terminated for cause at any time by either party after written notice and
a 30 day opportunity to cure. If the cause for termination has not been cured by
the party receiving the termination notice within 30 days of its receipt this
Agreement shall automatically terminate.
2. SERVICES.
(i) CMSF shall be responsible for the administrative and
management responsibilities for the billing and collection services of the CORF.
These services include, but are not limited to, collection and verification of
CORP demographic information, preparing UB92 claim forms for third payers,
providing monthly detailed reports of changes, collections, write-offs and
allowances and aged accounts receivable listings, and maintaining and processing
accounting records.
(ii) CMSF shall follow up on ADR denials and reconsiderations.
<PAGE>
(iii) CMSF shall file all Medicare appeals for the Company and
provide to the Company monthly detailed reports by PT service codes, including
identification of all co-insurance and deductibles outstanding, and shall
additionally file copies of all remittance advises.
(iv) CMSF shall assist in the preparation and compilation of the
year-end cost report for the CORF. Such assistance shall include, without
limitation, review of the financial and accounting procedures for the collection
of statistical and expense data; review of departmental cost allocations;
compiling a review of interim reimbursement reports; and compiling a review of
projected quarterly cost reimbursement settlements.
(v) CMSF shall be responsible for the management of in-service
training for all specialized programs; coordination of patient admissions and
treatment programs; coordination of administration and management of medical
record documentation; coordination of quality assurance procedures; and quality
control for required meetings.
(vi) At the request of the Company, CMSF shall provide training in
special programs, participate in joint marketing and community liaison program
support and follow up on Medicare meeting and conference requirements.
(viii) CMSF shall provide the Company with use of its proprietary
pulmonary program (the "Pulmonary Program"). The Pulmonary Program may be used
only at the CORF and at no other facility owned or operated by the Company.
3. ACCESS.
(i) The Company shall provide CMSF access to the CORF, during
reasonable business hours, to copies of the CORF's medical records, patient
demographic and insurance information, patient release and assignment forms,
copies of progress notes and any other pertinent financial information, subject
to all federal and state laws and regulations governing the confidentiality of
such records.
(ii) The Company shall provide work space sufficient for billing and
collection services personnel which is accessible to the CORF's medical records
and financial records.
4. FEE.
(i) The Company shall pay CMSF a management fee of 15% of the CORF's
gross receipts, subject to Section 4(ii), below. CMSF shall be paid within 48
hours of the CORF's receipt of Medicare reimbursements with respect to bills
submitted by CMSF.
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(ii) To the extent that the Company's expenses attributable to its
employees are not reimbursable under CORF regulations, then the 15% management
fee provided in paragraph 4(i) shall be proportionately reduced, but in no
event shall be below 10%.
5. INDEPENDENT CONTRACTOR. CMSF shall, at all times, act as an
independent contractor with respect to the Company and not as an agent of the
CORF or the Company, and nothing contained in this Agreement shall be construed
to create a joint relationship between CMSF and the Company or the CORF. The
relationship shall be that of independent parties to a contractual relationship.
In no event shall either party to this Agreement be liable for the debts or
obligations of the other nor CMSF or the CORF be liable for the debts or
obligations of the other.
6. INDEMNITY BY CMSF. CMSF shall indemnify and hold harmless the
Company and the CORF from any and all liability, losses, claims, damages, costs,
causes of action, judgments or settlements, including, without limitation,
reasonable attorneys' fees, arising out of CMSF's breach of the terms of this
Agreement or any negligent or willful act by CMSF in the performance of its
duties hereunder.
7. INDEMNITY BY THE COMPANY. The Company shall indemnify and hold
harmless CMSF from any and all liability, losses, claims, damages, costs, causes
of action, judgments or settlements, including, without limitation, reasonable
attorneys' fees, arising out of the Company's breach of the terms of this
Agreement or any negligent or willful act by the Company or the CORF in the
performance of their duties hereunder.
8. MEDICAL RECORDS. All medical records, case histories, test results,
or personal and regular files concerning the CORF's clients and patients shall
be the sole and permanent property of the CORF. Unless required by law, no
medical records shall be displayed or delivered to, or any information therefrom
disclosed to, any person not connected with the CORF or CMSF except on a
need-to-know basis.
9. CONFIDENTIALITY. CMSF acknowledges that as a result of the
engagement hereunder, it will be making use of confidential information of a
special and unique and value relating to such matters as the CORF's arrangements
with facilities and other service providers, confidential reports, lists of
patients and the fees paid by such patients or third party payers. As a material
inducement to the Company to enter into this Agreement and to pay to CMSF the
compensation referred to in Section 4 hereof, CMSF covenants and agrees that it
shall not at any time during or for three years following the term of its
engagement hereunder divulge or disclose for any purpose whatsoever any
proprietary or confidential information of the CORF except information (i)
already in CMSF's possession, (ii) already known to the public, (iii) disclosed
to a third party by the CORF not under any condition of confidentiality, or (iv)
required by law to be disclosed by CMSF.
The Company acknowledges that as a result of the engagement
hereunder,
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it and the CORF will be making use of confidential information of a special and
unique and value relating to such matters as CMSF's arrangements with facilities
and other service providers, and other confidential reports and protocols. The
Company covenants and agrees that it and the CORF shall not at any time during
or for three years following the term of its engagement hereunder divulge or
disclose for any purpose whatsoever any proprietary or confidential information
of CMSF except information (I) already in the Company's or the CORF's
possession, (ii) already known to the public, (iii) disclosed to a third party
by CMSF not under any condition of confidentiality, or (iv) required by law to
be disclosed by the Company or the CORF.
The Company shall for a period of ten years from the date
hereof shall treat all procedures, protocols, and written materials of the
Pulmonary Program confidentially and protect such information as would the
Company treat its own proprietary information disclosing it only as a need-to-
know basis to its or the CORF's employees.
10. FORCE MAJEURE. If either party is prevented from performing any
task hereunder in whole as in part as a result of an Act of God, war, civil
disturbance or other cause beyond such party's reasonable control, such
non-performance by that party shall not be grounds for default, and that party
shall not be held liable for any non-performance of this Agreement as a result
of any of the above.
11. NOTICES. All notices or communications required or permitted
pursuant to the terms of this Agreement shall be in writing and delivered in
person or by means of certified or registered mail, postage prepaid, return
receipt requested, to such party at its address as set forth below, or such
other person or address as such party may specify by similar notice to the other
party hereto. All such notices will be deemed given upon delivery if delivered
by hand or on the third business day after deposit postage paid with the U.S.
Postal Service.
If to CMSF: 3275 W. Hillsboro Road
Suite 207
Deerfield Beach, FL 33442
Attn: Alan I. Miller, M.D., President
If to Company: Specialty Therapy Services, Inc.
8551 W. Sunrise Blvd., Suite 200
Plantation, FL 33322
12. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Florida. If any provision hereof shall be held legally
unenforceable, the remaining provisions shall remain effective.
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<PAGE>
13. PREVAILING PARTY. If any litigation or arbitration arises as a
result of enforcement or interpretation of the terms, conditions, or provisions
of this Agreement, or any of the transactions contemplated hereunder, the
prevailing party shall be entitled to recover reasonable attorneys' fees as well
as all costs and expenses incurred thereby.
14. WAIVER. Any waiver of any term or condition, or any amendment or
supplementation, of this Agreement shall be effective only if in writing signed
by all of the parties hereto. A waiver of any breach of any terms or conditions
of this Agreement shall not, in any way, be construed as a waiver of any
subsequent breach.
15. ASSIGNMENT. No party voluntarily may assign any of its rights and
duties under this Agreement without the prior written consent of the other party
and this Agreement shall be binding on the permitted successors and assigns of
the parties.
16. CHANGE IN LAW. In the event of changes in federal or state law,
statute, regulation or interpretation of same by any regulatory authority having
jurisdiction over the CORF, the parties agree to renegotiate the affected terms
or provisions of this Agreement in order to conform to such change. In the event
the parties are unable to agree either party may terminate in accordance with
Section 1, above.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date and year first set forth above.
SPECIALTY THERAPY SERVICES, INC.
By: /s/ MICHAELE MORRISON
------------------------------------------
Michaele Morrison, Chief Executive Officer
CONSUL-MED OF SOUTH FLORIDA, INC.
By: /s/ ALAN I. MILLER, M.D.
------------------------------------------
Alan I. Miller, M.D., President
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