EXHIBIT 99.5
SETTLEMENT AGREEMENT
BETWEEN
T(2) MEDICAL, INC. AND
NORTHSIDE HOSPITAL & HEART INSTITUTE
This Settlement Agreement ("Agreement") is made and entered
into as of the 26th day of August 2002, ("Effective Date) by and between T(2)
Medical, Inc., a Delaware corporation which is a subsidiary of Coram, Inc.
("T(2)"), and Galencare, Inc., a Florida corporation d/b/a Northside Hospital &
Heart Institute (f/k/a Humhosco, Inc. d/b/a Humana Hospital Northside)
("Northside").
WITNESSETH:
WHEREAS, Bay Area Renal Stone Center, Ltd. ("Bay Area") and Northside
entered into that certain Medicare Lithotripsy Service Agreement dated January
19, 1987 (the "Service Agreement"); and
WHEREAS, Bay Area, Northside and First Union National Bank of Florida
("First Union") entered into that certain Escrow Agreement dated January 19,
1987, as amended by that certain Amendment to Escrow Agreement dated February
16, 1987 and that certain Addendum to Escrow Agreement dated January 23, 1992
(collectively, the "Escrow Agreement"); and
WHEREAS, pursuant to the terms of the Service Agreement and the Escrow
Agreement, 43% of the amounts paid by Northside to Bay Area under the Service
Agreement (the "Escrow Funds") were to be deposited into an escrow account (the
"Escrow Account") at First Union; and
WHEREAS, on or about January 1, 0000, Xxx Xxxx assigned the Service
Agreement and the Escrow Agreement to Bay Area Partners, Ltd. f/k/a Bay Area
Partners, a Florida General Partnership (the "Partnership"); and
WHEREAS, under the Escrow Agreement, Northside would be entitled to
certain distributions of the Escrow Funds from the Escrow Account as a result of
Medicare or Medicaid denials or reductions pursuant to final settlements, as
provided in Sections 4(b) and 10(c) of the Service Agreement; and
WHEREAS, under the Escrow Agreement, following final settlement of the
Medicare and Medicaid cost reports for a particular year and following necessary
distributions of Escrow Funds to Northside, if any, all remaining Escrow Funds
in the Escrow Account attributable to that year are to be released to Bay Area;
and
WHEREAS, Northside's 1994 Medicare and Medicaid cost reports have not
yet been finalized, and it is unclear when such cost reports will be finalized.
NOW THEREFORE, in consideration of the mutual premises, promises and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do
mutually covenant and agree as follows:
1. RELEASE OF CLAIMS TO ESCROW FUNDS. In consideration for Northside's
receipt from T(2) of the Release Payment and the Indemnification as provided in
Section 2 below, as well as the release provided by T(2) under Section 3 below,
Northside, for itself and its successors, trustees, directors, shareholders,
officers, agents, assigns, subsidiaries, parent companies and affiliated
entities, hereby forever terminates, cancels, discharges, disavows, releases,
relinquishes and disclaims, and holds harmless T(2), Bay Area and their
respective successors, trustees, and current and past directors, shareholders,
officers, agents, assigns, subsidiaries, parent companies and affiliated
entities from and against, any and all right, title, interest or claim, whether
known or unknown, foreseen or unforeseen, which Northside ever had, now has or
hereafter may have in the Escrow Account or any of the Escrow Funds. It is the
intention of Northside to provide a general termination, cancellation,
discharge,
disavowance, release and disclaimer of all right, title, interest or claim which
Northside ever had, now has or hereafter may have in the Escrow Account or any
of the Escrow Funds. In further consideration for Northside's receipt from T(2)
of the Release Payment and the Escrow Indemnification provided in Section 2
below, as well as the release provided by T(2) under Section 3 below, Northside
shall immediately sign and send to Bay Area the letter attached as Attachment A
hereto and made a part hereof.
2. RELEASE PAYMENT AND ESCROW INDEMNIFICATION.
A. RELEASE PAYMENT. In consideration for the releases provided
by Northside pursuant to Section 1 and 3 of this Agreement, T(2) shall pay or
cause to be paid to Northside, by wire transfer of immediately available funds,
the amount of Eighty Five Thousand and No/Hundred Dollars ($85,000.00) (the
"Release Payment").
B. ESCROW INDEMNIFICATION. In further consideration for the
releases provided by Northside pursuant to Section 1 and 3 of this Agreement,
T(2) shall indemnify and hold harmless Northside and its successors, directors,
shareholders, officers, agents, assigns, subsidiaries, parent companies and
affiliated entities (individually, an "Indemnified Party" and collectively, the
"Indemnified Parties") from and against any and all liabilities arising from
Medicare and/or Medicaid disallowances for lithotripsy services on Northside's
1994 cost reports filed with Medicare and/or Medicaid ("1994 Disallowances"),
but only to the extent such 1994 Disallowances exceed Eighty Five Thousand and
No/Hundred Dollars ($85,000.00) (the "Escrow Indemnification"); provided,
however, that the maximum indemnification amount payable by T(2) hereunder shall
in no event exceed Eighty Five Thousand and No/Hundred Dollars ($85,000.00). It
is hereby agreed by the parties that any and all claims that any Indemnified
Party has or may have against Bay Area with respect to any liabilities, losses
and damages whatsoever which any Indemnified Party may incur with respect to any
1994 Disallowances shall only be asserted against T(2) and shall be subject to
the Escrow Indemnification and the limitation imposed thereon, and no such
claims shall be asserted by any Indemnified Party against Bay Area or any of its
successors, directors, shareholders, officers, agents, assigns, subsidiaries,
parent companies or affiliated entities.
C. CLAIMS PROCESS. As soon as is reasonably practicable after
any Indemnified Party becomes aware of any claim which is subject to the Escrow
Indemnification covered under Section 2.B. ("Claim"), such Indemnified Party
shall notify T(2) in writing, which notice shall describe the Claim in
reasonable detail, and shall indicate the amount (estimated, if necessary to the
extent feasible) of the Claim. The failure of any Indemnified Party to promptly
give T(2) such notice shall not preclude such Indemnified Party from obtaining
indemnification under Section 2.B., except to the extent that such Indemnified
Party's failure has increased T(2)'s liabilities and obligations hereunder. In
the event of a third party Claim which is subject to indemnification under
Section 2.B., T(2) shall promptly defend such Claim by counsel of its own
choosing, and the Indemnified Party shall cooperate with T(2) in the defense of
such Claim including the settlement of the matter on the basis stipulated by
T(2) (with T(2) being responsible for all costs and expenses of such settlement
subject to the limitation on the Escrow Indemnification as set forth in Section
2(b) above). Any such settlement shall include a complete and unconditional
release of the Indemnified Party from the Claim. If T(2) within a reasonable
time after notice of a Claim fails to defend the Indemnified Party, the
Indemnified Party shall be entitled to undertake the defense, compromise or
settlement of such Claim at the expense of and for the account and risk of T(2)
subject to the limitation on the Escrow Indemnification as set forth in Section
2(b) above.
3. MUTUAL RELEASE. T(2) and Northside, respectively, do hereby for
themselves, their respective successors, trustees, directors, shareholders,
officers, agents, assigns, subsidiaries, parent companies and affiliated
entities, as applicable (hereinafter referred to collectively as the "Released
Parties"), remise, release and forever discharge the other and its respective
Released Parties, of and from any and all manner of liability, claims, demands,
actions, causes of actions, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments extents,
executions, grievances, arbitrations, administrative proceedings arising out of
Northside's 1994 cost reports filed with Medicare and/or Medicaid, including
claims for costs, expenses, or attorneys fees, except for claims or disputes
arising under or by virtue of this Settlement Agreement. T(2) and Northside,
respectively, do hereby for
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themselves and their respective Released Parties, agree and covenant that they
shall not file a charge or xxx or join with others in filing a charge or suing
the other and/or the others' Released Parties in connection with any of the
above released claim(s). By signing this Agreement, neither T(2) nor Northside
is in any way admitting to and specifically denies having committed any
violation of the other's rights or having violated any federal, state or local
statute(s), guideline(s), rule(s) and/or regulation(s) whatsoever.
4. CONFIDENTIALITY OF THIS AGREEMENT. T(2) and Northside respectively
agree and covenant that this Agreement and the terms hereof shall remain
strictly confidential and shall not be communicated to any third party(ies) or
in any way publicized whatsoever to the detriment of either party; provided,
however, that notwithstanding the foregoing, either party shall be allowed to
disclose the terms hereof as required by applicable law, including, without
limitation, applicable federal securities laws or as necessary to receive the
required approval, if any, of the United States Bankruptcy Court for the
District of Delaware in the Chapter 11 cases of Coram Healthcare Corporation and
Coram, Inc. and either party may discuss and disclose this Agreement and its
terms with its attorneys, accountants and/or others in seeking, legal, tax
and/or financial advice.
5. NOTICES. All notices, claims, demands, and other communications
hereunder shall be in writing and shall be deemed given upon (a) confirmation of
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand, or (c) the expiration of 5 business
days after the day when mailed by registered or certified mail (postage prepaid,
return receipt requested), addressed to the respective parties at the following
addresses (or such other address for a party as shall be specified by like
notice):
If to Northside, to
Northside Hospital & Heart Institute
0000 00xx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, XX 00000
Telecopy: 727/521-5007
Attention: Chief Financial Officer
with a copy to
Legal Department
Xxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Telecopy: 615/344-2598
Attention: Operations Counsel - West Florida Division
If to T(2), to
T(2) Medical, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telecopy: 000-000-0000
Attention: Legal Department
with a copy to
Coram, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telecopy: 000-000-0000
Attention: Legal Department
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6. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of each party and their respective successors and assigns.
7. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with, the laws of the State of Florida, without regard to
the conflict of laws provisions thereof.
8. REMEDIES IN THE EVENT OF BREACH AND ATTORNEY'S FEES. If any party
breaches or threatens to breach any term(s) of this Agreement, the non-breaching
party(ies) shall have the right to bring suit for the breach of this Agreement,
seeking damages and any other appropriate relief, legal and/or equitable,
including a temporary restraining order and a preliminary and/or permanent
injunction(s). Should any party breach this Agreement, the breaching party shall
pay all reasonable attorney's fees and court costs incurred by the non-breaching
party(ies) in connection with such breach and/or the enforcement of any of the
obligations hereunder or thereunder, or both of them, as determined by a court
of competent jurisdiction.
9. AUTHORITY TO EXECUTE AGREEMENT. Each party warrants and represents
that it is duly authorized to enter into this Agreement. Each party further
warrants and represents that it is fully aware of all facts and rights with
respect to the subject matter of this Agreement, and has been represented by
independent counsel with respect to the execution and delivery of this
Agreement.
10. WAIVER OF BREACH. No failure or delay of either party to detect,
protest, remedy, or enforce its rights due to a breach of any of its rights
under this Agreement shall be deemed a waiver of any of the aggrieved party's
rights. Any waiver of rights shall only occur by a written document specifying
the specific right waived and the specific circumstance covered by the waiver,
and shall be signed by the waiving party.
11. CONSTRUCTION AND ENFORCEMENT. Should any provision(s), sentence(s),
phrase(s) and/or word(s) of this Agreement or application thereof to any
person(s) and/or circumstance(s) be declared illegal, invalid or unenforceable,
then the remainder hereof or the application of such provision(s), sentence(s),
phrase(s) and/or word(s) to any person(s) and/or circumstances(s) other than
those to which it is held invalid shall not be affected thereby and shall remain
in full force and effect. In any interpretation of this Agreement, there shall
be no presumption(s) against the party that drafted this Agreement.
12. ENTIRE AGREEMENT. This Agreement and the Attachment hereto
constitutes the entire understanding and agreement between the parties regarding
the subject matter of this Agreement. This Agreement shall not be modified or
amended except by a further written document signed by all parties hereto.
13. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be an original and all of which together shall constitute one and
the same instrument.
14. NO THIRD PARTY BENEFICIARY. This Agreement is for the benefit of,
and may be enforced only by Northside and T(2) and their respective successors
and permitted transferees and assignees, and is not for the benefit of, and may
not be enforced by, any third party, except that Bay Area may enforce this
Agreement with respect to the benefits and protections provided to it under
Section 1 and 2 hereof.
15. EXCLUSION OF CORAM RESOURCE NETWORK, INC. AND CORAM INDEPENDENT
PRACTICE ASSOCIATION, INC. Notwithstanding any provision of this Agreement to
the contrary, the parties acknowledge and agree that Coram Resource Network,
Inc. and Coram Independent Practice Association, Inc., former affiliates of
T(2), are specifically excluded from this Agreement in all respects and shall
not be subject to, or bound by, any of the terms, conditions, releases,
indemnifications or other provisions set forth herein whatsoever.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been entered into by and between
the parties effective as of the Effective Date.
T(2) MEDICAL, INC.
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
Senior Vice President, Chief
Financial Officer and Treasurer
GALENCARE, INC. D/B/A NORTHSIDE HOSPITAL
& HEART INSTITUTE (F/K/A HUMHOSCO, INC.
D/B/A HUMANA HOSPITAL NORTHSIDE)
By: /s/ XXXXXX XXXX
------------------------------------
Xxxxxx Xxxx
Chief Financial Officer
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ATTACHMENT A
FORM OF LETTER TO BAY AREA
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[NORTHSIDE HOSPITAL LETTERHEAD]
August ___, 2002
Via Facsimile and U.S. First Class Mail
Xx. Xxxxxx Xxxxx
Chief Executive Officer
Bay Area Renal Stone Center, Ltd.
0000 00xx Xxxxxx X
Xx. Xxxxxxxxxx, XX 00000-0000
Re: Escrow fund held pursuant to the Medicare Lithotripsy Service Agreement
dated January 19, 1987 (the "Service Agreement") between Bay Area Renal
Stone Center, Ltd. ("Bay Area") and Galencare, Inc., a Florida
corporation d/b/a Northside Hospital & Heart Institute (f/k/a Humhosco,
Inc. d/b/a Humana Hospital Northside) ("Northside")
Dear Xx. Xxxxx:
As you are aware, pursuant to the above-referenced Service Agreement
and an Escrow Agreement dated January 19, 1987, as amended (the "Escrow
Agreement"), between Bay Area, Northside and First Union National Bank of
Florida ("First Union"), funds (the "Escrow Funds") were deposited and, to our
knowledge, remain in an escrow account ("Escrow Account") with First Union.
This will confirm that, by virtue of the Settlement Agreement by and
between Northside and T(2) Medical, Inc. ("T(2)") of even date herewith,
Northside has no right, title, interest or claim whatsoever in or to any of the
Escrow Funds in the Escrow Account at First Union or deposited in any other
account at First Union, or any other financial institution, and Northside
expressly disavows and disclaims any rights in or to such Escrow Funds.
Northside makes no recommendation as to the appropriate party or entity to which
the Escrow funds should be released. However, Northside has no objection to the
release of all such Escrow Funds (including a release to T(2) if you deem such
to be appropriate) and, upon the release of those Escrow Funds, Northside will
not institute or assert any claim, demand or action against Bay Area or First
Union in connection with the release of the Escrow Funds r in connection with
the final settlement of any Medicare and/or Medicaid cost reports including,
without limitation, Northside's cost reports relating to the year ended December
31, 1994, which served as the basis for the creation of the Escrow Account.
If you have any questions, please do not hesitate to contact the
undersigned at ____________.
Sincerely yours,
Xxxxxx Xxxx
Chief Financial Officer
Cc: Xxxx Xxxxxx, Vice President, First Union Bank
Xxxxxxx X. Dell, Esq., Assistant General Counsel, Coram, Inc.
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