Exhibit 10.3
AGREEMENT OF SALE
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This AGREEMENT OF SALE is made this 23rd day of December, 1998 by and between
Oak Tree Medical Practice, P.C., a New York Professional Corporation, having an
address at 00000 Xxxxxxx Xxxxxx Xxx Xxxxxx, XX 00000 ("Oak Tree" or "Seller")
and Rehabilitation Medicine Practice of N.Y., P.L.L.C., a New York Professional
Limited Liability Company, having an address at 000 Xxxxxxxx Xxxxxx Xxx Xxxx, XX
00000 ("RMP" or "Purchaser").
W I T N E S S E T H:
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WHEREAS, Purchaser desires to acquire, and Seller desires to sell, the patient
accounts receivable of Seller's physical therapy practice formerly located at
000 Xxxxxxxx Xxxxxx Xxx Xxxx, XX 00000 ("A/R"), hereinafter specified, upon the
terms and conditions hereinafter set forth, and
NOW, THEREFORE, in consideration of the covenants and agreements hereafter set
forth, and other valuable consideration, the receipt and sufficiency of which
hereby is acknowledged, the parties hereto agree as follows:
1. Agreement To Sell. Seller agrees to sell, transfer and deliver to Purchaser,
and Purchaser agrees to purchase, upon the terms and conditions hereinafter set
forth, all of the A/R of Seller's physical therapy practice formerly located at
000 Xxxxxxxx Xxxxxx Xxx Xxxx, XX 00000, including without limitation the
following:
The Accounts Receivable listed in Exhibit A-1, such A/R having been generated by
Seller from July 16, 1997 through November 2, 1998 and solely from Seller's
practice formerly located at 000 Xxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000.
2. Purchase Price. The purchase price to be paid by Purchaser shall be
calculated as follows:
The Parties agree that Seller shall satisfy, at or before closing, any
liens which may be filed against the subject A/R, including but not
limited to those filed by Reservoir Capital Corporation and PFS VI, Inc.
Such lien satisfaction shall be evidenced by Purchaser's receipt of
Seller's UCC-3 forms at or before Closing. Closing is contingent upon
Purchaser's receipt of same on or before January 2, 1999
Purchaser agrees that until Seller has collected the full amount of the
payoff amount it paid to PFS VI, Inc., with a maximum allowance of
Fifteen Thousand Dollars ($15,000.00), Seller shall be entitled to One
Hundred Percent (100%) of all the subject A/R collected by Purchaser. In
calculating such payoff amount, Reservoir Capital Corporation fees for
escrowed Reserves and expenses, as per the Agreement between Seller and
Reservoir Capital Corporation, shall not be counted as part of the total
payoff
figure. After Seller has collected such A/R to cover its PFS VI, Inc.
lien payoff, Purchaser shall then be entitled to collect and retain One
Hundred percent (100%) of all the subject A/R until such time as it has
collected the total of Seller's PFS VI, Inc. payoff amount.
Thereafter, RMP shall pay to Seller, on at least a biweekly basis, fifty
percent (50%) of all A/R coming into its possession, through May 1,
1999. Subsequent to May 1, 1999, RMP shall pay to Seller, on at least a
biweekly basis, forty percent (40%) of all A/R coming into its
possession, until such time as all applicable A/R are collected.
In the event that Seller obtains possession of Purchaser's A/R from any
and all third party payors, which A/R may or may not be lumped or
combined with other of Seller's receivables from its other locations,
Seller shall forward a check for the full amount of Purchaser's A/R
within five (5) days of receipt of such A/R, or upon such funds clearing
Seller's bank, whichever is later. In the event Seller does not release
Purchaser's A/R within five (5) days of receipt (or bank clearance) of
same, Seller shall be liable to Purchaser for a penalty of twenty five
percent (25%) of such payment due, in addition to such A/R.
Seller will retain all A/R collections received by Seller since December 22,
1998. Checks dated after closing shall belong to Purchaser.
2A. Purchaser's A/R. The Parties agree that Purchaser will initially
receive all Purchaser's A/R attributable to the 000 Xxxxxxxx Xxxxxx
practice and all Seller's A/R attributable to all of Seller's New York
physical therapy practices at Purchaser's 000 Xxxxxxxx Xxxxxx address.
It is understood that the A/R received at Purchaser's address which are
attributable to the 000 Xxxxxxxx Xxxxxx practice, will belong to RMP.
All other A/R will continue to belong to Oak Tree. After closing, Oak
Tree will use its best efforts to notify its insurance company payors
and patients that all future accounts attributable to Oak Tree's other
physical therapy facilities should be paid to Oak Tree at another
designated location.
Purchaser agrees to provide, on a weekly basis, an appropriate
accounting of all funds which are received by Purchaser. Such accounting
shall include, but shall not be limited to, ledger reconciliations, bank
statements and daily copies of all checks received. Purchaser agrees to
apportion A/R payments coming into its possession as between its 000
Xxxxxxxx Xxxxxx facility and Oak Tree's other facilities. Purchaser will
reimburse Oak Tree for the apportionment of A/R due to Oak Tree but
received by Purchaser. Both Parties shall have the right to audit each
other's books and accounts pertaining to the A/R for the 000 Xxxxxxxx
Xxxxxx facility.
In the event that RMP obtains possession of Seller's outside A/R
attributable to Seller's other practices, which A/R may or may not be
lumped or combined with RMP's A/R,
RMP shall forward a check for the full amount of Seller's A/R within
five (5) days of receipt of such A/R, or upon such funds clearing RMP's
bank, whichever is later. In the event RMP does not release Seller's A/R
within five (5) days of receipt (or bank clearance) of same, RMP shall
be liable to Seller for a penalty of twenty five percent (25%) of such
payment due, in addition to such A/R.
The provisions of Paragraphs 2 and 2A shall survive closing.
3. The Closing. The "closing" means the settlement of the obligations of Seller
and Purchaser to each other under this agreement, including the payment of the
purchase price to Seller as provided in Article 2 hereof and the delivery of the
appropriate closing documents. The closing shall be held at the offices of
Purchaser's attorneys and shall take place on or about Thursday, December 17,
1998 (the "closing date").
4. Closing Documents. At the closing Seller and Purchaser shall execute and
deliver to each other the following documents:
(a) an Assignment and Assumption of Assignment of the rights of Seller
to the A/R;
(b) certified copies of resolutions duly adopted by the Directors of
Seller and Purchaser authorizing the sale and purchase the A/R and the
performance by Seller and Purchaser of their obligations hereunder;
(c) an opinion of Seller's counsel, Xxxxxxxxx X. Xxxx, Esq. dated as of
the closing date, in form and substance satisfactory to Purchaser's
counsel, stating such counsel's opinion that: (i) Seller is a
corporation duly organized, validly existing and in good standing under
the laws of New York; (ii) Seller has full power and authority to enter
into this agreement and perform its obligations hereunder; (iii) the
execution and delivery of this agreement and the performance by Seller
of its obligations hereunder have been duly authorized by the Directors
of Seller and no further action or approval is required in order to
constitute this agreement as the binding obligation of Seller,
enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, moratorium, insolvency or other laws affecting
creditor's rights generally; (iv) the execution and delivery of this
agreement and the performance by Seller of its obligations hereunder do
not and will not violate any provision of the Seller's governing
instruments; and (v) except as may be set forth in this agreement, such
counsel is not representing Seller in any suit, action or proceeding
against Seller which, if adversely determined, would prohibit the
consummation of the transactions contemplated by this agreement
(d) such other instruments and information in form and substance
satisfactory to Purchaser's and Seller's attorneys as may be
necessary or proper to transfer to Purchaser good and marketable
title to all ownership interests in the A/R to be transferred
under this agreement.
Except as expressly provided herein, Purchaser shall not be obligated to pay or
perform any obligations or liabilities of Seller including without limitation
obligations or liabilities of Seller to its creditors or any legal, accounting,
brokerage or finder's fees or any taxes or other expenses in connection with
this agreement or the consummation of the transactions contemplated hereby.
5. Closing Adjustments. Any errors or omissions in computing apportionments
shall be corrected after the closing, with both parties fully cooperating.
6. Representations And Warranties Of Seller. Seller represents and warrants to
Purchaser as follows:
(a) Seller is a corporation duly organized and validly existing under
the laws of New York, and is duly qualified to do business in New York.
Seller has full power and authority to own its properties and to conduct
its business as now carried on, and to carry out and perform its
undertakings and obligations as provided herein. The execution and
delivery by Seller of this agreement and the consummation of the
transactions contemplated herein have been duly authorized by the
Directors of Seller and will not conflict with or breach any provision
of the governing instruments of Seller and do not and will not conflict
with or result in any breach of any condition or provision of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon the A/R by reason of the provisions
of any contract, lien, lease, agreement, instrument or judgment to which
Seller is a party, or which is or purports to be binding upon Seller or
which affects or purports to affect the Assets. No further action or
approval is required in order to constitute this agreement the binding
and enforceable obligation of Seller.
(b) No action, approval, consent or authorization, including without
limitation any action, approval, consent or authorization of any
governmental or quasi-governmental agency, commission, board, bureau or
instrumentality, is necessary for Seller to constitute this agreement
the binding and enforceable obligation of Seller or to consummate the
transactions contemplated hereby.
(c) Seller is the owner of and has good and marketable title to the A/R,
free of all liens, claims and encumbrances, except as set forth herein.
(d) There are no violations, potential claims of violations or questions
of irregularity regarding any law or governmental rule or regulation
pending or, to the best of Seller's knowledge, threatened against Seller
or the A/R. Seller has strictly complied with all laws and governmental
rules and regulations applicable to the business or the A/R.
(e) There are no judgments, liens, suits, actions or proceedings pending
or, to the best of Seller's knowledge, threatened against Seller or the
A/R. Neither Seller nor the A/R are a party to, subject to or bound by
any agreement or any judgment or decree of any court, governmental body
or arbitrator which would conflict with or be breached by the execution,
delivery or performance of this agreement, or which could prevent the
carrying
out of the transactions provided for in this agreement, or which could
prevent the use by Purchaser of the A/R or adversely affect the conduct
of the business by Purchaser.
(f) Seller has not entered into, and the A/R are not subject to, any:
(i) written contract or agreement for the employment of any employee of
the business; (ii) contract with any labor union or guild; (iii)
pension, profit-sharing, retirement, bonus, insurance, or similar plan
with respect to any employee of the business; or (iv) similar contract
or agreement affecting or relating to the A/R.
(g) Seller has filed each tax return, including without limitation all
income, excise, property, gain, sales, franchise and license tax
returns, required to be filed by Seller prior to the date hereof. Each
such return is true, complete and correct, and Seller has paid all
taxes, assessments and charges of any governmental authority required to
be paid by it and has created reserves or made provision for all taxes
accrued but not yet payable. No government is now asserting, or to
Seller's knowledge threatening to assert, any deficiency or assessment
for additional taxes or any interest, penalties or fines with respect to
Seller.
(h) That the aggregate amount owing on the Closing Date for the A/R sold
to Purchaser hereunder will be the amount set forth on the Seller's
Statement of the actual amount due;
(i) That each A/R will, as of the close of business on the Closing Date,
be owned by Seller free and clear of all liens, charges and
encumbrances, and will then represent a valid and legally binding
obligation of a bona fide customer of Seller, and each such obligation
will then be enforceable by Seller in accordance with its terms;
(j) That the Assignment, when executed and delivered to Purchaser by
Seller, will then vest in Purchaser, Seller's entire right, title and
interest in and to all of the A/R, and Seller will not have to sold,
pledged, assigned, or transferred, and will not sell, pledge, assign, or
transfer, the A/R to anyone other than Purchaser;
(k) That the A/R are not now and will not hereafter be subject to any
offset, counterclaim, or other defense;
(l) If any of the foregoing covenants, representations or warranties in
respect of any A/R shall prove to have been materially incorrect at the
Closing Date or thereafter, or shall be materially breached, and such
incorrectness or breach shall not be corrected prior to the Settlement
Date in the calendar month after such incorrectness or breach became
known to Seller or to Purchaser, then on such Settlement Date, Seller
will pay to Buyer the unpaid balance of such A/R. Any amount paid by
Seller under this provision shall be treated as a collection in the
manner provided above and upon the receipt of such payment and all other
amounts then due Purchaser, Purchaser shall resell such A/R to Seller
without recourse, representation or warranty.
(m) All of these covenants, representations and warranties shall survive
the Closing hereunder and shall remain effective for the entire term of
this Agreement. Seller's obligation to Purchaser under this Agreement
shall not be affected by reason of the invalidity or illegality of any
A/R.
7. Representations And Warranties Of Purchaser. Purchaser represents and
warrants to Seller as follows:
(a) Purchaser is a professional limited liability company organized
under the laws of New York, and is duly qualified to do business in New
York. Purchaser has full power and authority to carry out and perform
its undertakings and obligations as provided herein. The execution and
delivery by Purchaser of this agreement and the consummation of the
transactions contemplated herein have been duly authorized by the Board
of Directors of Purchaser and will not conflict with or breach any
provision of the Certificate of Incorporation or governing documents of
Purchaser. No further action or approval, corporate or otherwise, is
required in order to constitute this agreement the binding and
enforceable obligation of Purchaser.
(b) No action, approval, consent or authorization, including without
limitation any action, approval, consent or authorization of any
governmental or quasi-governmental agency, commission, board, bureau or
instrumentality, is necessary for Purchaser to constitute this agreement
the binding and enforceable obligation of Purchaser or to consummate the
transactions contemplated hereby.
8. Conditions To Closing. The obligations of Seller and Purchaser to close
hereunder are subject to the following conditions:
(a) All of the terms, covenants and conditions to be complied with or
performed by Seller under this agreement on or before the closing
shall have been complied with or performed in all material
respects.
(b) All representations or warranties of Seller and Purchaser herein
are true in all material respects as of the closing date. Such
representations and warranties shall also survive closing.
(c) On the closing date, there shall be no liens or encumbrances
against the A/R, except as provided for herein.
(d) The business of the Seller will have been conducted only in the
ordinary course of business.
(e) Seller will supply, upon request by Purchaser representatives,
such pertinent information as may be required by Purchaser in
order to conduct its due diligence survey of Seller. It is agreed
that any documents or information provided hereunder shall be
kept in full and complete confidence.
(f) The Closing is contingent upon the granting of Seller's factor's
(PFS VI, Inc.) approval to release such factor's UCC/secured
interest in the A/R being purchased.
9. Indemnification. Each party hereto shall indemnify and hold the other parties
harmless from and against all liability, claim, loss, damage or expense,
including reasonable attorneys' fees, incurred or required to be paid by such
other parties by reason of any breach or failure of observance or performance of
any representation, warranty, covenant or other provision (including lists and
Exhibits) of this agreement by such party. Seller shall indemnify and hold
Purchaser harmless against all actions, suits, proceedings, judgments, costs and
expenses incurred by or levied against Purchaser, due to Seller's prior acts,
omissions, negligence or other wrongful conduct. Purchaser shall similarly
indemnify and hold Seller harmless for Purchaser's acts subsequent to closing.
10. Risk Of Loss. The risk of loss to the A/R sold hereunder, until the closing,
is assumed and shall be borne by Seller. Seller agrees to keep its A/R fully
insured against any loss to the date of closing.
11. Brokerage. The parties hereto represent and warrant to each other that they
have not dealt with any broker or finder in connection with this agreement other
than the broker, Xxxxxxx Xxxxxxxx.
00. Notices. All notices, demands and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been
properly given if delivered by hand, fax or by registered or certified mail,
return receipt requested, with postage prepaid, to Seller's attorneys, Xxxxxxxx,
Xxxxxxx & Associates, P.C. 000 Xxxxx Xxxxxx Xxxxx 0000 Xxx Xxxx, XX 00000 Attn:
Xxxxxx Xxxx, Esq., and to Purchaser's attorney, Xxxxxxxxx X. Xxxx, Esq., at 00
Xxxxxx Xxxxxx, Xxxxxxxxxx Xxxxx, XX 00000. The respective attorneys for the
parties are hereby authorized to give any notice required or permitted hereunder
and to agree to adjournments of the closing.
13. Survival. The representations, warranties and covenants contained herein or
in any document, instrument, certificate or schedule furnished in connection
herewith shall survive the delivery of the closing of sale and shall continue in
full force and effect after the closing, except to the extent waived in writing.
14. Further Assurances. In connection with the transactions contemplated by this
agreement, the parties agree to execute and deliver such further instruments,
and to take such further actions, as may be reasonably necessary or proper to
effectuate and carry out the transactions contemplated in this agreement.
15. Changes Must Be In Writing. No delay or omission by either Seller or
Purchaser in exercising any right shall operate as a waiver of such right or any
other right. This agreement may not be altered, amended, changed, modified,
waived or terminated in any respect or
particular unless the same shall be in writing signed by the party to be bound.
No waiver by any party of any breach hereunder shall be deemed a waiver of any
other or subsequent breach.
16. Captions And Exhibits. The captions in this agreement are for convenience
only and are not to be considered in construing this agreement. The Exhibits
annexed to this agreement are an integral part of this agreement, and where
there is any reference to this agreement it shall be deemed to include said
Exhibits.
17. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York.
18. Binding Effect. This agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
IN WITNESS WHEREOF, the parties have executed this agreement the date first
above written.
Seller:
Oak Tree Medical Practice, P.C.
By: /s/ XXXXXXX XXXXX, M.D.
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Xxxxxxx Xxxxx, M.D.
Director and Sole Shareholder
ATTEST:
By: /s/ XXXX XXXXX
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Xxxx Xxxxx
Secretary
Purchaser:
Rehabilitation Medicine Practice of N.Y., P.L.L.C.
By: /s/ XXXXXX XXXXXXXX
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Name:
Title:
ATTEST:
By:
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Name:
Title:
