Hampden County Physician Associates asset sale

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF MASSACHUSETTS __________________________________

)

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 Debtor’s

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 Court’s 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:


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 Debtor’s 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 Buyer’s 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.


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 Debtor’s 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 Debtor’s 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.


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 Bank’s and SPHS’s 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 Debtor’s patients.


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 debtor’s 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 debtor’s 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 Debtor’s 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.


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 business’s 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 Debtor’s monthly

operating expenses.

24. Despite implementing a series of cost-savings

measures, the Debtor’s 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 Debtor’s 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 Debtor’s 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


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 Debtor’s 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 Debtor’s 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;


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. O’CONNOR, ESQ.

(BBO No. 679540)

For HENDEL & COLLINS, P.C.

101 State Street

Springfield, MA 01103

Tel. (413) 734-6411

[email protected]

[email protected]


mailto:[email protected]


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 Seller’s 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.


AMM

Typewritten Text

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


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

Seller’s 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, Seller’s 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 Seller’s employees or Seller’s obligations of any kind or

nature to Seller’s 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.”


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 Buyer’s Certificate of Formation, as in effect as of the

Closing;

(c) Certified copies of the resolutions duly adopted by Buyer’s 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


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 Seller’s 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,

finder’s 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.


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 Buyer’s 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,

finder’s 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 Buyer’s 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.


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 Party’s 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;


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;


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 Seller’s 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: ____________


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: [email protected]

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: [email protected]

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



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.


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.

* * * * *



4833-3166-7999.2

Exhibit A

Offices

1. 175 Carew Street, Springfield, Massachusetts.

2. 98 Shaker Road, East Longmeadow, Massachusetts.

3. 1 Moody Street, Ludlow, Massachusetts.

4. 1158 Springfield Street, Feeding Hills, Massachusetts.

5. 140 Southampton Road, Westfield, Massachusetts


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


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


Documents

Hampden County Physician Associates asset sale