__________________________________ ) In re ) Chapter 11, No. 14-30961-HJB ) HAMPDEN COUNTY PHYSICIAN ) ASSOCIATES, LLC ) ) Debtor ) __________________________________)
MOTION FOR AUTHORITY TO SELL PROPERTY BY PRIVATE SALE FREE AND CLEAR OF LIENS, CLAIMS, AND ENCUMBRANCES, TO APPROVE ASSET PURCHASE AGREEMENT, AND FOR OTHER RELIEF
To the HONORABLE HENRY J. BOROFF, Bankruptcy Judge:
Now comes HAMPDEN COUNTY PHYSICIAN ASSOCIATES, LLC (Debtor), the Debtor in the above-captioned matter, and, pursuant to 11 U.S.C. 363(b), Rule 6004 of the Federal Rules of Bankruptcy Procedure, and Massachusetts Local Bankruptcy Rule 6004-1, and it does hereby move this Court for the entry of an Order authorizing the private sale of property of the Debtors Bankruptcy Estate free and clear of liens and encumbrances. In support of this Motion, the Debtor respectfully represents as follows:
1. On October 2, 2014 (Petition Date), the Debtor filed a Voluntary Petition under the provisions of Chapter 11 of the United States Bankruptcy Code (Bankruptcy Code) with the United States Bankruptcy Court for the District of Massachusetts (Bankruptcy Court). Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 1 of 25 2 2. Pursuant to the provisions of 1107 and 1108 of the Bankruptcy Code, the Debtor has continued to operate its business and manage its business affairs as a Debtor-in- Possession. No Trustee or Examiner has been requested or appointed. 3. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and 1334. This is a core matter within the meaning of 28 U.S.C. 157(b). Venue in this District is proper pursuant to 28 U.S.C. 1408 and 1409. 4. The Debtor is a multi-specialist physician group engaged in the practice of medicine in Western Massachusetts. Its approximately sixty-eight (68) healthcare providers serve about 50,000 patients. The business enterprise employs a total of approximately 270 individuals and operates fourteen (14) offices primarily located throughout Hampden County, Massachusetts. In addition, the Debtor and its staff serve patients at local hospitals, skilled-nursing facilities, and long-term care facilities. The Debtor operates its own laboratory, sleep disorder center, and urgent care center. The Proposed Sale 5. Subject to this Courts approval, the Debtor has entered into an Asset Purchase Agreement (APA) with Mercy Medical Group, Inc. (Buyer), an affiliate of the Sisters of Providence Health System, Inc. (SPHS) and Trinity Health. A copy of the APA is annexed hereto as Exhibit A. 6. The terms of the APA provide, in salient part, as follows: Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 2 of 25 3 (a) The purchase price for the assets to be acquired is $1,226,995.00 (Purchase Price). (b) The assets to be purchased include all tangible personal property, including but not limited to all supplies, inventory, furniture, machinery, office furnishings, and equipment located at five (5) of the Debtors medical offices; specifically the medical offices at 175 Carew Street, Springfield, Massachusetts; 98 Shaker Road, East Longmeadow, Massachusetts; 1 Moody Street, Ludlow, Massachusetts; 1158 Springfield Street, Feeding Hills, Massachusetts; 140 Southampton Road, Westfield, Massachusetts; and excepting specific personal property identified in the APA (Purchased Assets). (c) Among other conditions, the APA is conditioned upon the Buyers ability to enter into employment agreements with certain physicians presently employed by the Debtor. (d) The Closing shall take place on October 31, 2014, unless extended by agreement of the parties. (e) The APA requires that the Debtor deliver the Purchased Assets free and clear of liens, claims, and interests pursuant to 363 of the Bankruptcy Code. (f) The APA provides that the Buyer will take custody and responsibility for the storage of all patient medical records to the fullest extent permitted by law and medical ethics. (g) The APA is subject to approval of this Court and the receipt of counteroffers pursuant to Massachusetts Local Bankruptcy Rule 6004-1. Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 3 of 25 4 Background
7. On or about April 25, 2001, the Debtor entered into a financing transaction with First Massachusetts Bank, N.A. (First Massachusetts) whereby First Massachusetts loaned the Debtor the total sum of $1,035,000.00 pursuant to a Loan and Security Agreement and other loan documents. The Loan and Security Agreement granted First Massachusetts a security interest in all of the Debtors assets including, but not limited to, the Purchased Assets. 8. TD Bank, N.A. (TD Bank) is the successor in interest to First Massachusetts under the Loan and Security Agreement. TD Bank holds a first-priority security interest in the Purchased Assets. 9. Pursuant to a series of amendments to the TD Bank Loan and Security Agreement, there are currently four (4) outstanding loans owed to TD Bank and a Letter of Credit in the amount of $84,843.46 (TD Bank Loan). The total balance owed on account of the TD Bank Loan is approximately $2,335,000.00. 10. On or about January 23, 2014, the Debtor entered into a financing transaction with SPHS whereby SPHS loaned the Debtor the total sum of $1,000,000.00 pursuant to a Loan and Security Agreement and other loan documents (SPHS Loan). The Loan and Security Agreement granted SPHS a second-priority security interest in all of the Debtors assets including the Purchased Assets. The total balance owed on account of the SPHS Loan is approximately $1,000,000.00. 11. Upon information and belief, no other liens, claims, or encumbrances affect the Purchased Assets. Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 4 of 25 5 12. Prior to entering into the APA with the Buyer, management of HCPA discussed the sale of the Purchased Assets with two other local hospitals and one other hospital located in Boston. Also, the fact that HCPA is in the process of selling its assets has received substantial local media coverage in the press, on television and in internet news services. 13. HCPA is continuing to negotiate the sale of other assets that are not the subject of this Motion with other third parties. 14. As of the date of this Motion, no third party has made any offer, or has expressed any interest in the purchase of the Purchased Assets. 15. According to an Appraisal dated September 14, 2013 obtained by SPHS, the Purchased Assets have a fair market value of $1,226,955.00. 16. The APA was negotiated between the Debtor and the Buyer at arms length and in good faith. Except as set forth herein, there are no connections between the Debtor and the Buyer or the conduct by the Buyer that would prevent a finding that the Buyer is a good faith purchaser entitled to the protections of 363(m) of the Bankruptcy Code. 17. In light of the value of the Purchased Assets, the amount of TD Banks and SPHSs claims secured by the Purchased Assets, and the costs associated with conducting a public auction sale, the Debtor believes that a private sale under the terms described herein is in the best interests of the Bankruptcy Estate. Further, the Debtor believes that the transaction contemplated by the APA will assure the continuity of care of a substantial number of the Debtors patients. Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 5 of 25 6 Request for Relief; Authority to Sell Assets Free and Clear
18. Pursuant to 363(f) of the Bankruptcy Code, the Debtor seeks authority to sell the Purchased Assets free and clear of liens, claims, encumbrances, and interests of any kind. All perfected, enforceable, and valid liens and claims against the Purchased Assets will attach to the proceeds from the sale to the same extent, priority, and validity that existed on the Petition Date. 19. The Bankruptcy Code requires court approval for the use, sale, or lease of a debtors assets outside the ordinary course of business. 11 U.S.C. 363. Section 363 of the Bankruptcy Code provides, in relevant part, that, after notice and hearing, a debtor-in-possession may use, sell, or leases other than in the ordinary course of business, property of the estate. 11 U.S.C. 363(b)(1). 20. A sale of a debtors assets may be authorized if the proposed transaction represents the exercise of reasonable business judgment by the debtor or trustee. See In re Martin, 91 F.3d 389, 396 (3d Cir. 1996); In re Lionel Corp., 722 F.2d 1063, 1070 (2d Cir. 1983). 21. The filing of the Debtors bankruptcy case was precipitated by a series of events that resulted in a decrease in revenue and increase in expenses. Over the course of approximately the last few years, several healthcare providers have departed from the Debtor for a variety of reasons including retirement, health concerns, and other employment opportunities outside of Western Massachusetts. Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 6 of 25 7 22. During this same period of time, the Debtor attempted to expand its practice by leasing new office space, purchasing new equipment, and attempting to recruit new healthcare providers. The Debtor has also transitioned its patients medical records from paper to an electronic medium in an effort to provide better healthcare and operate more efficiently. Each of these investments increased the businesss operating expenses. 23. A number of new federal and state laws and regulations have also caused the Debtor to require additional skilled administrative staff, which also increased the Debtors monthly operating expenses. 24. Despite implementing a series of cost-savings measures, the Debtors cash flow has continued to decline. 25. In addition to the foregoing, recently, certain groups of doctors have represented to the Debtor that they wish to separate from the practice. The departure of additional physicians from the Debtors practice will likely further reduce its revenues. 26. In the absence of a sale of the Purchased Assets, the Debtor believes it is likely that the cost of continuing to operate its business will quickly deplete its available resources and it will no longer have sufficient cash to operate. The Purchased Assets must be sold as expeditiously as possible to ensure that the Debtors patients healthcare needs are met. 27. Section 363(f) permits a debtor-in-possession to sell assets free and clear of liens, claims, and interests if, among other things, the holder of the interest consents or if the Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 7 of 25 8 holder of the interest could be compelled to accept a money satisfaction of such interest. See 11 U.S.C. 363(f)(2) and (5); see also In re Healthco International, Inc., 174 B.R. 174 (Bankr. D. Mass. 1994). 28. The Debtor is contemporaneously herewith filing a proposed Notice of Intended Private Sale of Property, Solicitation of Counteroffers, Deadline for Submitting Objections and Higher Offers, and Hearing Date regarding the proposed sale of the Purchased Assets (Sale Notice) and Motion seeking expedited determination of this Motion, to limit notice, and to authorize certain notice procedures (Notice Motion). 29. The Debtor requests that the 14-day stay established by Rule 6004(h) be waived so that the sale can take place expeditiously because, under the APA, the deadline for closing the sale is October 31, 2014. 30. The Debtor represents that the proposed sale and requested waiver are necessary: (i) to avoid immediate and irreparable harm to the Estate; (ii) to prevent interruption in the medical services that the Debtor provides to its approximately 50,000 patients; (iii) to preserve the value of the Debtors assets for the benefit of the Estate, its creditors, and other parties-in-interest; and (iv) to prevent any unnecessary diminution in value of the Debtors Estate. WHEREFORE, the Trustee respectfully requests the entry of an Order: 1. Finding that that the Buyer is a good faith purchaser entitled to the protections of 363(m) of the Bankruptcy Code; Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 8 of 25 9 2. Approving the terms of the sale described herein and set forth more fully in the APA annexed hereto; 3. Authorizing the Debtor to prepare, execute, and deliver any and all documents, including, without limitation, deeds and settlement statements, and to perform any and all acts necessary to conduct and close the sale of the Purchased Assets, whether such documents and acts are known now or become known and necessary in the future; 4. Ordering that the Purchased Assets be sold free and clear of liens, claims, and encumbrances; 5. Ordering that the stay established pursuant to Rule 6004(h) of the Federal Rules of Bankruptcy Procedure is waived; and 6. Providing such other and further relief as the Court deems just and proper.
HAMPDEN COUNTY PHYSICIAN ASSOCIATES, LLC
Dated: October 20, 2014
By: /s/ Joseph B. Collins JOSEPH B. COLLINS, ESQ. (BBO No. 092660) ANDREA M. OCONNOR, ESQ. (BBO No. 679540) For HENDEL & COLLINS, P.C. 101 State Street Springfield, MA 01103 Tel. (413) 734-6411 jcollins@hendelcollins.com aoconnor@hendelcollins.com
Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 9 of 25
4833-3166-7999.2 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this Agreement) is made and entered into as of the _____ day of October, 2014, by and between HAMPDEN COUNTY PHYSICIAN ASSOCIATES, LLC, a Delaware limited liability company (HCPA or Seller), and MERCY MEDICAL GROUP, INC., a Massachusetts not-for-profit medical professional corporation (the Buyer). Seller and Buyer shall individually be referred to herein as a Party and collectively as the Parties. RECITALS
WHEREAS, Seller owns and operates fourteen (14) multispecialty medical offices located throughout Massachusetts; WHEREAS, Buyer is: (i) an affiliate of the Sisters of Providence Health System, Inc., a faith based Massachusetts not-for-profit health system serving the health care needs of residents in western Massachusetts and surrounding communities, and (ii) an affiliate of Trinity Health; WHEREAS, subject to the terms and conditions set forth herein, Seller desires to sell and Buyer desires to purchase certain assets located at five of the (5) of Sellers medical offices (the Offices), as set forth in Exhibit A, and associated with the medical practices of certain of the physicians providing care at the Offices (the Physicians), as set forth in Exhibit B; and WHEREAS, Seller has commenced a Chapter 11 bankruptcy case in the United States Bankruptcy Court, District of Massachusetts, pending as Docket No. 14-30961-HJB. NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements hereinafter set forth, and intending to be legally bound hereby, the Parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. As used in this Agreement, the following terms have the meanings specified in this Section 1.1:
Bankruptcy Code means title 11 of the United States Code, 11 U.S.C. 101, et seq. Bankruptcy Court means the United States Bankruptcy Court for the District of Massachusetts (Western Division) or such other court having competent jurisdiction over the Chapter 11 Case. Bill of Sale means the Bill of Sale to be executed and delivered by Seller to Buyer at the Closing, prepared in a form that is consistent with this Agreement and reasonably acceptable to the Parties. Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 10 of 25 Exhibit "A"
4833-3166-7999.2 Business Day means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in Springfield, Massachusetts. Claim(s) means any claim within the definition provided in 11 U.S.C. 101(5) of the Bankruptcy Code asserted or assertable against Seller or any of the property or assets of Seller to be acquired under this Agreement. Encumbrances means with respect to every property and asset of Seller, all rights and interests including, without limitation, mortgages, hypothecations, pledges, liens, claims against (including causes of action, options and rights of first and last offer and refusal), charges, security interests, conditional and installment sale agreements, activity and use limitations, conservation easements, servitudes, deed restrictions, equitable and legal interests, exceptions to title, licenses, leases, security interests, adverse claims, irregularities and imperfections of title, encumbrances and charges of every kind. Final Order or Order means an order of the Bankruptcy Court that is not subject to review, reargument, reconsideration or appeal, and as to which the time to seek review, reargument, reconsideration or appeal has expired or has been rendered moot. Governmental Authority means each federal, municipal, state, local or foreign governmental, administrative or regulatory authority, department, agency, commission or body. ARTICLE II PURCHASE AND SALE Section 2.1 Purchase and Sale of Purchased Assets. Upon the terms and subject to the conditions contained in this Agreement, at the Closing, Seller shall sell, assign, convey, transfer and deliver to Buyer, and Buyer shall, by payment of the Purchase Price, purchase and acquire from Seller, free and clear of all Claims and Encumbrances, all of the right, title and interest of Seller in and to all tangible personal property necessary to operate the practices of the Physicians, including but not limited to all supplies, inventory, furniture, machinery, office furnishings, and equipment of Seller located at the Offices (collectively, the Purchased Assets); excepting the personal property associated with the allegorists providing care at the Office at 175 West Carew Street, Springfield, Massachusetts, and specifically listed on Schedule 2.1 (the Excepted Personal Property). Section 2.2 Medical Records. To the fullest extent permitted by law and applicable professional ethics, Buyer agrees to take custody and store the patient medical records of Seller associated with the Offices and the Physicians. The Parties acknowledge that they shall enter into a Medical Records Custody Agreement which shall be consistent with this Agreement and in a form acceptable to the Parties. Section 2.3 Excluded Purchased Assets. Notwithstanding any provision herein to the contrary, the Purchased Assets shall not include (a) any cash and cash equivalents; (b) the Excepted Personal Property; (c) inventory sold by Seller in the ordinary course of the business prior to the Closing Date; (d) any lease, rental agreement, contract, agreement, license or similar arrangement which has terminated, terminates, expires or is rejected prior to the Closing Date in accordance with its terms or in the ordinary course of the business; and (e) all preference or Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 11 of 25
4833-3166-7999.2 avoidance claims and actions of Seller, including, without limitation, all such claims and actions arising under Sections 544, 547, 548, 549, 550, 551 and 553, respectively, of the Bankruptcy Code. Section 2.4 Excluded Liabilities. Except as expressly provided herein, Buyer shall not assume or be liable for (and Seller agrees that Seller shall remain liable for) any and all of Sellers debt, liabilities, obligations, taxes and obligations of every kind and nature, whether absolute or contingent, liquidated or unliquidated, known or unknown, disclosed or undisclosed, whether now or hereafter existing (the Excluded Liabilities), including, but not limited to, all liabilities, obligations, contracts and commitments of Seller arising from or relating to the Business, Sellers current or former employees, agents or representatives, or services Seller rendered in connection therewith, and any and all costs or attorneys fees or taxes incurred in connection with the Excluded Liabilities or sale and transfer to Buyer of the Purchased Assets. Buyer shall not be deemed to be, for any purpose whatsoever, a successor owner or employer of Seller or in any way responsible for Sellers employees or Sellers obligations of any kind or nature to Sellers employees. ARTICLE III PURCHASE PRICE Section 3.1 Purchase Price. In consideration for the Purchased Assets, and subject to the terms and conditions of this Agreement, and the entry and effectiveness of the Order, at the Closing, Buyer shall pay to Seller (the Purchase Price), an aggregate amount equal to One Million, Two Hundred Twenty Six Thousand, Nine Hundred Ninety Five Dollars ($1,226,995.00). On the Closing Date, Buyer shall pay and deliver to Seller the Purchase Price, by wire transfer of immediately available U.S. funds. The Purchase Price shall represent the fair market value of the Purchased Assets as determined by an independent valuation expert, selected by Buyer. Section 3.2 Use of Purchased Assets; Fairness of Consideration. All assets being transferred under this Agreement will be used in a manner that furthers the tax-exempt purposes and charitable nature of Buyer in accordance with applicable state and/or federal law. In this respect, the Parties agree that fair consideration is being paid for the Purchased Assets, as supported by a qualified, independent third-party appraisal, and as agreed to by the Parties as a result of arms length negotiations. ARTICLE IV THE CLOSING Section 4.1 Time and Place of the Closing. Upon the terms and subject to the satisfaction of the conditions contained in this Agreement, the closing of the sale of the Purchased Assets (the Closing) shall take place at a time and place to be mutually agreed upon by the Parties, but no later than October 31, 2014, or at such other place and time as Buyer and Seller may mutually agree. The date and time at which the Closing actually occurs is herein referred to as the Closing Date. Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 12 of 25
4833-3166-7999.2 Section 4.2 Deliveries by Seller. At or prior to the Closing (or as specifically provided in this Section 4.2), Seller shall deliver the following to Buyer: (a) A Bill of Sale, duly executed by Seller; (b) Certified copies of the resolutions duly adopted by Seller authorizing the execution, delivery and performance of this Agreement and each of the other transactions contemplated hereby; (c) A certified copy of the Order and a true and correct copy of the Bankruptcy Court docket for the Chapter 11 Case in the form available from the Bankruptcy Court on the day immediately preceding the Closing Date showing that no appeal, motion for stay pending appeal, request for rehearing or reconsideration of the Order is pending or appears on such docket; (d) Such other documents reasonably required by Buyer to consummate the transactions contemplated by this Agreement. Section 4.3 Deliveries by Buyer. At or prior to the Closing (or as specifically provided in this Section 4.3), Buyer shall deliver the following to Seller: (a) The Purchase Price; (b) A certified copy of Buyers Certificate of Formation, as in effect as of the Closing; (c) Certified copies of the resolutions duly adopted by Buyers shareholders or members authorizing the execution, delivery and performance of this Agreement and each of the other transactions contemplated hereby; Section 4.4 Post Closing Obligations. The Parties hereby covenant and agree that at all times after the Closing hereof, Buyer and Seller will, and will cause others as reasonably necessary to, sign, execute and deliver all such documents and instruments and perform, or cause to be performed, all other acts and things as necessary to carry out the provisions of this Agreement. ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER Seller hereby represents and warrants to Buyer as follows: Section 5.1 Organization and Good Standing. Seller is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware, and has the full power and authority necessary to: (i) execute, deliver and perform its obligations under this Agreement; and (ii) carry on its business as it has been and is now being conducted. Section 5.2 Authorization and Validity. The execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate actions. This Agreement Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 13 of 25
4833-3166-7999.2 constitutes the legal, valid, binding obligations of Seller, and is enforceable against Seller in accordance with its respective terms. Seller has the full power to perform its obligations under this Agreement. Section 5.3 Title to Purchased Assets. Seller has and will transfer good and marketable title to all of the Purchased Assets, free and clear of all liens, mortgages, encumbrances, claims or other adverse interests of any kind or nature whatsoever. All of the tangible Purchased Assets being acquired by Buyer are in the possession and control of Seller and are located at the Offices. Section 5.4 Consents and Approvals; No Violation. Except for contacts with TD Bank, N.A. and Sisters of Providence Health System, Inc. and except for the entry and effectiveness of the Order, neither the execution and delivery of this Agreement by Seller will: (a) conflict with or result in any breach of any provision of Sellers Certificate of Formation or corporate agreements; (b) require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority which has not otherwise been set forth in this Agreement; or (c) result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, license, agreement, lease or other instrument or obligation to which Seller is a party or by which any of its assets may be bound, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been obtained. Section 5.5 Statements True and Correct. No representation or warranty made herein by Seller or in any statement, certificate or instrument to be furnished to Buyer by Seller pursuant to this Agreement contains or will contain any untrue statement of material fact or omits or will omit to state a fact necessary to make the material statements contained therein not misleading. Section 5.6 Brokers. No Person is entitled to any brokerage, financial advisory, finders or similar fee or commission payable by Seller in connection with the transactions contemplated by this Agreement. REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to Seller as follows: Section 6.1 Organization, Authority and Capacity. Buyer is a nonprofit medical corporation, duly organized, validly existing and in good standing under the laws of the State of Massachusetts. Buyer has the full power and authority necessary to execute, deliver and perform its obligations under this Agreement. Section 6.2 Authorization and Validity. This Agreement constitutes a legal, valid and binding obligation of Buyer, enforceable in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, or other laws affecting creditors' rights generally, or as may be modified by a court of equity. Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 14 of 25
4833-3166-7999.2 Section 6.3 Consents and Approvals; No Violation. Except for the entry and effectiveness of the Order, neither the execution and delivery of this Agreement by Buyer, nor the purchase by Buyer of the Purchased Assets pursuant to this Agreement will: (a) conflict with or result in any breach of any provision of Buyers Certificate of Formation or corporate agreements; (b) require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority which has not otherwise been set forth in this Agreement; or (c) result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, license, agreement, lease or other instrument or obligation to which Buyer is a party or by which any of its assets may be bound, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been obtained. Section 6.4 Statements True and Correct. No representation or warranty made herein by Buyer or in any statement, certificate or instrument to be furnished to Seller by Buyer pursuant to this Agreement contains or will contain any untrue statement of material fact or omits or will omit to state a fact necessary to make the material statements contained therein not misleading. Section 6.5 Brokers. No Person is entitled to any brokerage, financial advisory, finders or similar fee or commission payable by Buyer or any of its Affiliates in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer. ARTICLE VII COVENANTS OF THE PARTIES Section 7.1 Conduct of Business. Prior to the Closing Date, Seller shall not sell, lease (as lessor), transfer or otherwise dispose of any of the Purchased Assets other than in the ordinary course of business. Section 7.2 Transition of Business. Buyer and Seller agree to cooperate with each other in the transition of the Offices from Seller to Buyer, including assuring continued access to care for the patients of the Offices. Seller covenants and agrees that it will not take or fail to take any action which is likely to affect Buyers relationship with any of its patients, Physicians, or staff following the Closing. Section 7.3 Public Statements. Seller and Buyer shall consult with each other prior to issuing any public announcement, statement or other disclosure with respect to this Agreement or the transactions contemplated hereby, except that each Party may make disclosures with respect to this Agreement and the transactions contemplated hereby to the extent required by law or by the rules or regulations of any securities exchange or commission or the Bankruptcy Code and other applicable bankruptcy laws and rules. Section 7.4 Submission for Bankruptcy Court Approval. (a) The Parties acknowledge that this Agreement is subject to Bankruptcy Court approval by issuance of the Order. Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 15 of 25
4833-3166-7999.2 (b) Upon the execution of this Agreement, the Seller agrees to file a motion for authority to sell in the form and substance acceptable to the Parties, such motion shall seek the entry of an Order on or before October 31, 2014. Section 7.5 Employment of Physicians. As a material condition precedent and subsequent to the purchase of Purchased Assets, and unless waived by Buyer in writing, all of the Physicians shall enter into a separate, new employment agreement with Buyer, whereby the Physicians will agree to provide clinical and/or certain administrative services on behalf of Buyer effective on or after the Closing Date. In furtherance of the foregoing, Seller shall reject any existing employment agreements with the designated Physicians. ARTICLE VIII CONDITIONS TO CLOSING Section 8.1 Conditions to Each Partys Obligations to Effect the Closing. The respective obligations of each Party to effect the sale and purchase of the Purchased Assets shall be subject to the fulfillment at or prior to the Closing Date of the following conditions: (a) No preliminary or permanent injunction or other order or decree by any federal or state court which prevents the consummation of the transactions contemplated hereby shall have been issued and remain in effect (each Party agreeing to use its commercially reasonable efforts to have any such injunction, order or decree lifted) and no statute, rule or regulation shall have been enacted by any Governmental Authority which prohibits the consummation of the sale of the Purchased Assets; and (b) The Bankruptcy Court shall have entered the Order and such Order shall be in full force and effect and shall not have been stayed, modified, reversed or amended (except if modified or amended with the written consent of Seller and Buyer). Section 8.2 Conditions to Obligations of Buyer. The obligation of Buyer to effect the purchase of the Purchased Assets contemplated by this Agreement shall be subject to the fulfillment at or prior to the Closing Date of the following additional conditions: (a) Seller shall have performed and complied in all material respects with the covenants contained in this Agreement which are required to be performed and complied with by Seller on or prior to the Closing Date and the representations and warranties of Seller which are set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement (except to the extent that any such representation and warranty is qualified as to materiality, in which case such representation and warranty shall be true and correct in all respects) and as of the Closing Date (except to the extent that any such representation or warranty speaks as of a particular date, in which case such representation or warranty shall be true and correct in all respects as of such other date) as though made at and as of the Closing Date; (b) There shall not be or exist any change, effect, event, circumstance, occurrence or state of facts that has a material adverse change in the Purchased Assets; Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 16 of 25
4833-3166-7999.2 (c) The Order provides that any and all of the Claims and Encumbrances (other than Permitted Liens) on the Purchased Assets shall, upon Closing, attach only to the proceeds of such Purchased Assets and not to the Purchased Assets; (d) Buyer shall have received the other items to be delivered to it pursuant to Section 4.2; and (e) The lessors of the Offices, shall have agreed to lease the Offices to Buyer on fair market value terms. Any condition specified in this Section 8.2 may be waived by Buyer; provided that no such waiver shall be effective against Buyer unless it is set forth in a writing executed by Buyer. Section 8.3 Conditions to Obligations of Seller. The obligation of Seller to effect the sale of the Purchased Assets contemplated by this Agreement shall be subject to the fulfillment at or prior to the Closing Date of the following additional conditions: (a) Buyer shall have performed and complied in all material respects with the covenants contained in this Agreement which are required to be performed and complied with by Buyer on or prior to the Closing Date and the representations and warranties of Buyer which are set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement (except to the extent that any such representation and warranty is qualified as to materiality, in which case such representation and warranty shall be true and correct in all respects) and as of the Closing Date (except to the extent that any such representation or warranty speaks as of a particular date, in which case such representation or warranty shall be true and correct in all respects as of such other date) as though made at and as of the Closing Date; (b) Seller shall have received the other items to be delivered to it pursuant to Section 4.3. Any condition specified in this Section 8.3 may be waived by Seller; provided that no such waiver shall be effective against Seller unless it is set forth in a writing executed by Seller. ARTICLE IX TERMINATION AND ABANDONMENT Section 9.1 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, by written notice promptly given to the other Parties hereto, at any time prior to the Closing Date by: (a) mutual written consent of Seller and Buyer; (b) Seller or Buyer, if (i) there shall be any law or regulation that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited or (ii) consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of (A) the Bankruptcy Court or (B) any court or Governmental Authority having competent jurisdiction; Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 17 of 25
4833-3166-7999.2 (c) Seller, if the Bankruptcy Court enters an order approving the sale of the Purchased Assets to a third-party; (d) Buyer, if there has been a material violation or breach by Seller of any covenant, representation or warranty made by Seller as contained in this Agreement which has prevented the satisfaction of any condition to the obligations of Buyer to effect the Closing and such violation or breach has not been cured by Seller within ten (10) Business Days after receipt of written notice thereof or is waived by Buyer. Section 9.2 Extension; Waiver. At any time prior to the Closing, Seller, on the one hand, or Buyer, on the other hand, may (a) extend the time for the performance of any of the obligations or acts of the other Party, (b) waive any inaccuracies in the representations and warranties of the other Party contained herein or in any document delivered pursuant hereto, (c) waive compliance with any of the agreements of the other Party contained herein or (d) waive any condition to its obligations hereunder. Any agreement on the part of Seller, on the one hand, or Buyer, on the other hand, to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of Seller or Buyer, as applicable. ARTICLE X MISCELLANEOUS PROVISIONS Section 10.1 No Impediment to Liquidation. Nothing herein shall be deemed or construed as to limit, restrict or impose any impediment to Sellers right to liquidate, dissolve and wind-up its affairs and to cease all business activities and operations at such time as it may determine following the Closing. Section 10.2 Notices. Any notice permitted or required under this Agreement shall be deemed to have been received (even if delivery is refused or unclaimed) on the date which is (i) the date of delivery, if sent by certified U.S. mail or by Express U.S. mail or private overnight courier; or (ii) the date on which sent, if sent by facsimile transmission, with confirmation by the recipient and with the original to be sent by certified U.S. mail, addressed as follows (or at such other addresses that the Parties may notify each other in accordance with this Section 11.5): If to Seller, to: Hampden County Physician Associates, LLC 354 Birnie Avenue Springfield, Massachusetts 01104 Attention: Shamin Najeebi, M.D. Chief Executive Officer and Chief Medical Officer Telephone: ___________ Facsimile: ____________
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4833-3166-7999.2 with a copy to: Bradford Martin, Esq. Morrison & Mahoney 1500 Main Street Springfield, MA
Telephone: (413) 737-4373 Facsimile: ___________
If to Buyer, to: Mercy Medical Group, Inc. Sisters of Providence Health System 271 Carew Street Springfield, MA 01104 Attention: Scott A. Wolf Chief Medical Officer/Chief Operating Officer Telephone: 413-748-9305 Email: scott.wolf@sphs.com
with a copies to: Alan Einhorn, Esq. Foley & Lardner LLP 111 Huntington Avenue, Suite 2500 Boston, Massachusetts 02199 Telephone: (617) 342-4094
And
Edward J. Green, Esq. Foley & Lardner LLP 321 North Clark Street, Suite 2800 Chicago, Illinois 60654 Telephone: (312) 832-4375 Facsimile: (312) 832-4700 Email: egreen@foley.com
Section 10.3 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns and with respect to Seller, any entity that may succeed to substantially all the assets of Seller, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by Buyer hereto, including by operation of law, without the prior Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 19 of 25
4833-3166-7999.2 written consent of Seller; provided, however, that this Agreement shall be assignable by Buyer, without the prior written consent of Seller, to an Affiliate of Buyer, so long as Buyer shall continue to remain obligated hereunder. Section 10.4 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, if the economic or legal substance of the transactions contemplated hereby is affected in a manner materially adverse to a Party, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. Section 10.4 Expenses. Each of the Parties hereto shall bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder. Section 10.5 Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Massachusetts, without giving effect to the principles of conflicts of laws thereof. Section 10.6 Submission to Jurisdiction. Unless and to the extent otherwise specifically provided herein, the Parties hereto irrevocably submit to the exclusive jurisdiction of the Bankruptcy Court (or any court exercising appellate jurisdiction over the Bankruptcy Court) over any dispute arising out of or relating to this Agreement or any other agreement or instrument contemplated hereby or entered into in connection herewith or any of the transactions contemplated hereby or thereby. Each Party hereby irrevocably agrees that all claims in respect of such dispute or proceedings may be heard and determined in such courts. The Parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute or proceeding brought in such courts or any defense of inconvenient forum in connection therewith. Section 10.7 Counterparts and Copies. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Copies (whether facsimile, electronic, photostatic or otherwise) of this Agreement and its Exhibits, Schedules, certificates and other documents, and all signatures thereon (including counterparts) shall be deemed to be originals and may be relied on to the same extent as the originals. Section 10.8 Third-Party Beneficiaries. No third parties are intended to benefit from this Agreement, and no third-party beneficiary rights shall be implied from anything contained in this Agreement. Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 20 of 25
4833-3166-7999.2 Section 10.9 Incorporation of Exhibits. All Schedules and all Exhibits attached hereto and referred to herein are hereby incorporated herein by reference and made a part of this Agreement for all purposes as if fully set forth herein. Section 10.10 Entire Agreement. This Agreement and the Exhibits, Schedules, certificates and other documents delivered pursuant hereto or incorporated herein by reference, contain and constitute the entire agreement among the Parties and supersede and cancel any prior agreements, representations, warranties, or communications, whether oral or written, among the Parties regarding the subject matter of this Agreement. Neither this Agreement nor any provision hereof may be amended, changed, waived, discharged or terminated orally, but only by an agreement in writing signed by the Parties. Section 10.11 Remedies. Seller and Buyer hereby acknowledge and agree that money damages may not be an adequate remedy for any breach or threatened breach of any of the provisions of this Agreement and that, in such event, Seller or its successors or assigns, or Buyer or its successors or assigns, as the case may be, may, in addition to any other rights and remedies existing in their favor, apply to the Bankruptcy Court or any other court of competent jurisdiction for specific performance, injunctive and/or other relief in order to enforce or prevent any violations of this Agreement. Section 10.12 Binding Effect on Successors. This Agreement shall remain binding on Seller from and after the Closing in the manner and for the purposes contemplated in the Order. All successors to Seller in the Chapter 11 Case shall continue to be bound by this Agreement, including without limitation any Chapter 11 or 7 trustee, any liquidating trustee or any plan administrator appointed by the Bankruptcy Court. * * * * * Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 21 of 25
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4833-3166-7999.2 Exhibit B Physicians 1. Radzicki, Mark Alan 2. Drennan, Peter J 3. Sobey, Anthony F 4. Cuadra, Hugo 5. Cichon, Joanna S 6. Chaganti, Uma Devi 7. Buckberg, Miriam S 8. Lyons, Sheldon Neil 9. Ballan, David A 10. Johnson, Jeanne Diane 11. Chauhan, Kirankumar P 12. Ryter, Edward K 13. Matin, Shaukat 14. Ingilizova, Marinela Y 15. Aleem, Tazeen 16. Ray, Subrata 17. Goldman, Marc A 18. Najeebi, Shamim A 19. Wojcik, Jan B Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 24 of 25
4833-3166-7999.2
Schedule 2.1 Excepted Personal Property
The following items are located at the Office located at 175 Carew Street, Springfield, and will be purchased by a separate group of physicians (specifically, the allegorists). These assets are not included in the Purchased Assets pursuant to this Agreement.
42 Chairs 2 Kitchen Chairs 22 Task Chairs 1 Scale 1 Infant Scale 1 Spirometer with printer 4 Desks 2 Exam Tables 1 Copier 1 Fax 1 Filing Cabinet 2 Small Fridge 1 Large Fridge 8 Otoscope/Ophthalmoscopes 12 Phones Case 14-30961 Doc 75 Filed 10/20/14 Entered 10/20/14 09:31:43 Desc Main Document Page 25 of 25