Document/Exhibit Description Pages Size
1: 8-K Current Report 7± 38K
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 7± 31K
Liquidation or Succession
3: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 21± 77K
Liquidation or Succession
4: EX-3.1 Articles of Incorporation/Organization or By-Laws 3± 14K
5: EX-3.2 Articles of Incorporation/Organization or By-Laws 11± 41K
6: EX-10.1 Material Contract 19± 76K
7: EX-10.2 Material Contract 18± 60K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 1, 1999
ALLION HEALTHCARE, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-17821 11-2962027
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
33 WALT WHITMAN ROAD, SUITE 200A, HUNTINGTON STATION, N.Y. 11746
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 516-547-6520
Former name or former address: THE CARE GROUP, INC.
Item 1. Changes in Control of Registrant
--------------------------------
In connection with the Registrant's reorganization described
under Item 3 below (the "Reorganization"), the Registrant will experience a
change in its equity ownership that may constitute a change of control. See Item
3 for a discussion of the relevant cancellations and issuances of equity
interests of the Registrant.
Item 2. Acquisition or Disposition of Assets
------------------------------------
Effective as of June 26, 1999, The Care Group of Texas, Inc.
and Care Line of Houston, Inc., wholly owned subsidiaries of the Registrant
(collectively, the "Sellers"), consummated the sale of substantially all of
their operating assets to Osher Investments, Ltd. (the "Buyer") pursuant to the
Assets Purchase Agreement, dated as of June 25, 1999, between the Sellers and
Buyer, a copy of which is attached hereto as Exhibit 10.1
The Buyer paid the Sellers $2,820,505, consisting of
$2,420,505 in cash and a non-interest bearing promissory note in the amount of
$400,000. The Buyer also assumed certain obligations of the Sellers, including
the obligations under the assumed contracts and the remaining liability to
Metamed Software after the payment by the Registrant of $15,000 to Metamed
Software.
The Sellers agreed not to compete with the Buyer in Houston
for a period of 36 months following the closing date, nor will the Sellers
solicit any of the employees of Buyer within the City of Houston to leave the
employment of the Buyer.
Item 3. Bankruptcy or Receivership; Confirmation of Plan of
Reorganization
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(1) & (2) Identity of Court and Date of Order
On September 15, 1998, The Care Group, Inc. ("Care Group") and
its 19 wholly-owned subsidiaries (collectively, the "Company") filed voluntary
petitions under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Western District of Texas, Austin Division (the
"Bankruptcy Court"), Case No. 98-13247FM.
On January 4, 1999, the Company filed its Second Amended Plan
of Reorganization (the "Plan"), which was confirmed by the Bankruptcy Court
pursuant to an order dated February 1, 1999 (the "Order"). The Order is attached
hereto as Exhibit 2.1. Descriptions of the Plan herein are qualified in their
entirety by reference to the Plan, which is attached hereto as Exhibit 2.2.
(3) Summary of Plan
The following are the material features of the Plan:
a. The name of the reorganized Company is Allion Healthcare, Inc. ("Allion"),
which will have three divisions located in Houston, Texas; Austin Texas; and
Long Island, New York. The Restated Certificate of Incorporation of the
Registrant is attached hereto as Exhibit 3.1 and the Amended and Restated
By-laws of the Registrant are attached hereto as Exhibit 3.2. Each of the
Restated Certificate of Incorporation and the Amended and Restated By-laws was
approved by the Bankruptcy Court.
b. The following subsidiaries of Care Group survive bankruptcy and become
wholly-owned subsidiaries of Allion: Mail Order Meds, Inc., CareLine of New York
d/b/a Mail Order Meds of New York, Inc., The Care Group of Texas, Inc. and
CareLine of Houston, Inc. Please see Item 2 above for a discussion of the sale
of substantially all of the assets of The Care Group of Texas, Inc. and Care
Line of Houston, Inc.
c. Commonwealth Certified Home Care, Inc. ("Commonwealth") also survives
bankruptcy and becomes a wholly-owned subsidiary of Allion, but does so subject
to an agreement with Visiting Nurse Services of New York Home Care to purchase
certain assets of Commonwealth. Please see Item 5 below for a discussion of the
agreement with Visiting Nurse Services of New York Home Care
d. The following remaining 14 wholly-owned subsidiaries of the Registrant will
be dissolved: The Care Group of New York, Inc., Windsor Wholesale, Inc., The
Care Group of Georgia, Inc., CareLine of Georgia, Inc., Advanced Care
Associates, Therafusion, Inc., The Care Group of Los Angeles, Inc., CareLine of
Dallas, The Care Group of Florida, Inc., CareLine Laboratories of Maryland,
Inc., Millwo Management, Inc., CareLine of Louisiana, Inc., CareLine Acquisition
Co., Inc., and The Care Group, L.L.C.
e. John Pappajohn, Dr. Derace Schaffer and Michael P. Moran are appointed as the
initial directors of Allion.
f. General Description of Treatment of Claims and Interests.
Administrative Claims. Administrative Claims are claims for any cost or
expense of the Chapter 11 cases allowed under Sections 503(b) and 507(a)(1) of
the United States Bankruptcy Code, including all actual and necessary costs and
expenses relating to the preservation of the Company's estate or the operation
of the Company's businesses (including tort claims arising from the postpetition
conduct of the Company), all allowances of compensation or reimbursement of
expenses to the extent allowed by the Bankruptcy Code, and all claims for cure
payments arising from the assumption of executory contracts pursuant to Section
365(b)(1) of the Bankruptcy Code. To become entitled to payment under the Plan,
the holder of an Administrative Claim against the Company must comply with the
requirements of the Plan, including specifically the requirement that a proper
notice of the claim be filed within 30 days after the Confirmation Date (unless
the claim is a Fee Claim (as defined in the Plan), a liability incurred in the
ordinary course of business of the Company or an Allowed Administrative Claim
(as defined in the Plan)). The Administrative Claims are estimated to be between
$100,000 and $200,000.
Under the Plan, Allowed Administrative Claims against the Company will
be (i) paid in one cash payment on the Distribution Date, or (ii) accorded such
other treatment as may be agreed upon in writing by the Company and such holder
provided that an Administrative Claim representing a liability incurred in the
ordinary course of business of the Company may be paid in the ordinary course of
business by the Company and provided that Allowed Administrative Claims for cure
payments arising from the assumption under the Plan of executory contracts and
leases may be made in one or more cash payments over a period of time as the
Bankruptcy Court determines to be appropriate.
Priority Tax Claims. Priority Tax Claims are claims against the debtors
that are entitled to priority in accordance with Section 507(a)(7) of the United
States Bankruptcy Code. These claims consist of certain unsecured claims of
governmental units for taxes. Each holder of an Allowed Priority Tax Claim
against the Company will receive in full satisfaction of such holder's Allowed
Priority Tax Claim, at the sole option and in full satisfaction of the Allowed
Priority Tax Claim of such holder, (i) the amount of such Allowed Priority Tax
Claim with Post-Confirmation Interest, in equal annual cash payments on each
anniversary of the Distribution Date, until the sixth anniversary of the date of
assessment of such Allowed Priority Tax Claim, or (ii) such other treatment as
may otherwise be acceptable to Allion and the holder of such claim. In the case
of Allowed Priority Tax Claims against the Care Group, Post-Confirmation
Interest on deferred payments will be payable at 6% per annum or such other rate
as the Bankruptcy Court determines is appropriate.
Secured Claims. Allion reaffirms all indebtedness owing to HCFP
Funding, Inc. ("HCFP") on the effective date of the Plan, acknowledges the
priority and validity of HCFP's liens and security interests, and the absence of
any defenses, setoff or counterclaims to the Company's obligations to HCFP.
Allion releases HCFP from any and all claims which it holds or which are
assigned pursuant to the Plan. Allion will execute a new Note, Loan and Security
Agreement with HCFP to secure Allion's indebtedness under a post-Confirmation
revolving line of credit.
For the balance of HCFP's claim (i.e., the difference between its total
claim as of the Effective Date of the Plan minus the amount of HCFP's claim that
is allocated to the line of credit, as provided for above), Allion will execute
a three-year Note, in form and substance acceptable to HCFP, which shall be
repaid annually, with quarterly interest payments, at a rate of prime plus 4%.
In addition to being secured by Allion's accounts receivable, the Note will be
secured by a first and senior lien and security interest covering all inventory,
equipment, furniture and fixtures of Allion, and all proceeds of any of the
foregoing (unless the continued priority of any existing lien on such assets of
Allion is required for confirmation of the Plan). On the effective date, Allion
will issue to HCFP warrants to purchase 750,000 shares of common stock of Allion
as set forth in Section (4) below.
Unsecured Claims. On the Distribution Date, each holder of an Allowed
Unsecured Claim shall receive, in full satisfaction, settlement, release and
discharge of and in exchange for such Allowed Unsecured Claim, such holder's Pro
Rata Share of (a) 500,000 shares of Allion's common stock issued on the
Effective Date pursuant to the Plan and (b) 50% of the net Distributable Third
Party Recoveries (as defined in the Plan).
Convenience Claims. Convenience claims are those claims against the
Company that would otherwise by an Allowed Unsecured Claim (a) for $1,000 or
less, or (b) for more than $1,000 if the holder of such claim has elected, on
the ballot providing for voting on the Plan within the time fixed by the
Bankruptcy Court for completing and returning such ballot, to accept $250 in
cash in full satisfaction, discharge and release of such claim. On the Effective
Date, or as soon thereafter as practicable, each holder of a Convenience Claim
shall receive, in full satisfaction, settlement, release and discharge of an in
exchange for the Convenience Claim a cash payment equal to 25% of the amount of
the claim, up to a maximum of $250.
Equity Interests. Equity interests in Care Group will receive no
distributions under the Plan and, on the Effective Date, the interests shall be
cancelled.
g. Allion succeeds to causes of action held by Care Group. Funds recovered from
such actions will be distributed in accordance with the Plan. In addition,
Allion, in its discretion, may utilize any recovered funds in order to finance
the prosecution of such claims.
(4) Number of Shares Issued and Outstanding
Prior to the Reorganization, there were 14,237,539 shares outstanding.
Prior to the Reorganization, approximately (i) 20.6% of the equity interests in
Care Group were beneficially held by John Pappajohn, (ii) 2.9% of the equity
interests in Care Group were beneficially held by Derace Schaffer, M.D., (iii)
19.3% of the equity interests in Care Group were beneficially held by Edgewater
Private Equity Fund II, L.P., and (iv) 11.1% of the equity interests in Care
Group were beneficially held by Ann Mittasch. As part of the Company's
restructuring, all outstanding shares and equity interests of Care Group become
void. Under the Plan, Allion will issue 5,000,000 shares of common stock (the
"Common Stock"), par value $0.01. It is anticipated that these shares will be
issued as follows:
a. 2,500,000 shares will be issued to an investor group led by John Pappajohn, a
current member of the Allion board of directors, through a private placement.
The Pappajohn group will pay $1 million cash and assign to Allion all causes of
action it may have against Deloitte & Touche LLP ("Deloitte"), the Company's
former accountant, the Company's prior management team, and any other claims it
may have, including any claims against the Company's insurers. This will
represent approximately 83.3% of the outstanding common stock of Allion
following the Reorganization (50% on a fully diluted basis)
b. 500,000 shares will be distributed to holders of Allowed Unsecured Claims -
approximately 200 creditors - the precise allocation of which is currently being
finalized.
c. Up to 1,250,000 fully diluted shares will be reserved for issuance to
officers and key employees of Allion pursuant to a stock option plan.
d. Warrants to purchase 750,000 shares of Allion common stock will be issued to
HCFP in exchange for its provision of post-Reorganization financing to Allion.
The warrants will be exercisable at $0.134 per share.
e. Pursuant to Section 1145 of Title 11 of the United States Code, the issuance
of the Common Stock will be exempt from registration under the Securities Act of
1933.
f. As of the date of the order confirming the Plan, the Company had both assets
and liabilities equal to $5,844,482 and a liquidation value of approximately
$5.2 million. At such date the Company had a bank note secured by all of the
Company's assets in the amount of $5.15 million. No other financial information
was provided to the Bankruptcy Court on such date.
Item 4. Changes in Registrant's Certifying Accountant
---------------------------------------------
During the course of its Chapter 11 proceeding, the Company
rejected its contract with its principal accountant, Deloitte. Following the
confirmation of the Plan, the Company received a letter from Deloitte, dated
February 2, 1999, confirming the termination of the parties' client-auditor
relationship.
As stated in the Order, given the state of the Company's
records and the acts and omissions of the Company's former Chief Financial
Officer and management group (which were publicly disclosed in a press release
issued by the Company on April 14, 1998), the Company was unable to complete its
financial statements for fiscal years 1997 and 1998, and no opinion was issued
with respect thereto.
In November 1998, the Company engaged the services of Holtz
Rubinstein & Company, LLP ("HR") as an outside accounting firm, which engagement
was approved by order of the Bankruptcy Court. HR has not, as of the date of
this report, been approved as Allion's outside auditor, however, Allion expects
to have a shareholders' vote regarding this issue as soon as practical.
Item 5. Other Events
------------
In connection with the Reorganization, Care Group and
Commonwealth entered into an agreement, dated November 1, 1998, with Visiting
Nurse Service of New York Home Care ("VNS"), pursuant to which VNS acquired all
of the records, specified contracts and licenses, operating certificates and
permits of Commonwealth relating to the operation of a certified home health
agency in exchange for $302,000. The sale was consummated in August 1999, after
receipt of required approvals from the State of New York. A copy of the
agreement with VNS is attached hereto as Exhibit 10.2.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
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Exhibit 2.1 Confirmation Order dated February 1,1999.
2.2 First Amended Plan of Reorganization of The
Care Group, Inc., et al dated January 2,
1998.
3.1 Restated Certificate of Incorporation of the
Registrant, filed with the Secretary of
State of the State of Delaware on October 7,
1999.
3.2 Amended and Restated By-laws of the
Registrant.
10.1 Asset Purchase Agreement, dated as of June
25, 1999, by and between The Care Group of
Texas, Inc., Care Line of Houston, Inc. and
Osher Investments, Ltd.
10.2 Agreement, dated as of November 1, 1999,
among The Care Group, Inc., Commonwealth
Certified Home Care, Inc. and Visiting Nurse
Service of New York Home Care.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Allion Healthcare, Inc.
(the Registrant)
Dated: October 8, 1999 By: /s/ Michael P. Moran
------------------------------------------
Michael P. Moran
President and Chief Executive Officer
EXHIBIT INDEX
Exhibit Number Description
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2.1 Confirmation Order dated February 1,1999.
2.2 First Amended Plan of Reorganization of The Care Group, Inc.,
et al dated January 2, 1998.
3.1 Restated Certificate of Incorporation of the Registrant, filed
with the Secretary of State of the State of Delaware on
October 7, 1999.
3.2 Amended and Restated By-laws of the Registrant.
10.1 Asset Purchase Agreement, dated as of June 25, 1999, by and
between The Care Group of Texas, Inc., Care Line of Houston,
Inc. and Osher Investments, Ltd.
10.2 Agreement, dated as of November 1, 1999, among The Care Group,
Inc., Commonwealth Certified Home Care, Inc. and Visiting
Nurse Service of New York Home Care.
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘8-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 11/1/99 | | 2 | | 4 |
| Filed on: | | 10/18/99 |
| | 10/8/99 | | 3 |
| | 10/7/99 | | 2 | | 4 |
| | 6/26/99 | | 2 |
| | 6/25/99 | | 2 | | 4 |
| | 2/2/99 | | 2 |
| For Period End: | | 2/1/99 | | 1 | | 2 | | | 4, 8-K/A |
| | 1/4/99 | | 2 |
| | 11/1/98 | | 2 |
| | 9/15/98 | | 2 |
| | 4/14/98 | | 2 |
| | 1/2/98 | | 2 | | 4 |
| List all Filings |
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