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EXHIBIT 10(a)
ASSET PURCHASE AGREEMENT
BY AND AMONG
RESPONSE ONCOLOGY, INC.,
THE CENTER FOR HEMATOLOGY-ONCOLOGY, P.A.
AND
STOCKHOLDERS OF THE
CENTER FOR HEMATOLOGY-ONCOLOGY, P.A.
EFFECTIVE AS OF
OCTOBER 1, 1996
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated effective as of the Closing Date
(as hereinafter defined) by and among RESPONSE ONCOLOGY, INC, a Tennessee
corporation (the "Purchaser"), THE CENTER FOR HEMATOLOGY-ONCOLOGY, P.A., a
Florida professional association (the "Seller") and the STOCKHOLDERS OF THE
CENTER FOR HEMATOLOGY-ONCOLOGY, P.A., whose names appear on the signature page
hereof (collectively, the "Stockholders" and, individually, a "Stockholders").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the practice of medicine in the
specialty of medical oncology and hematology; and
WHEREAS, the Seller desires to sell and Purchaser desires to purchase
certain of the assets of the Seller on the terms and subject to the conditions
set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and promises herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504 or any similar group defined under a similar provision of
state, local or foreign law.
"Applicable Rate" means the corporate base rate of interest announced
from time to time by First Tennessee Bank National Association, Memphis,
Tennessee plus two percent (2%).
"Assumed Liabilities" has the meaning set forth in Section 2(a)(ii)
below.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
"Deposit" has the meaning set forth in Section 2(c) below.
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"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Occupational Safety and Health Act
of 1970, the Medical Waste Tracking Act of 1988, the U.S. Public Vessel
Medical Waste Anti-Dumping Act of 1988, the Marine Protection, Research and
Sanctuaries Act and Human Services, National Institute for Occupational Safety
and Health, Infections Waste Disposal Guidelines, Publication No. 88-119, each
as amended, together with all other laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof) concerning pollution or protection of the environment, public health
and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of medical wastes,
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means Capital Bank, a Florida banking corporation,
which shall serve as the Escrow Agent pursuant to the Escrow Agreement.
"Escrow Agreement" means that certain Escrow Agreement of even date
herewith among the Seller, the Stockholders, the Purchaser and the Escrow
Agent, which Escrow Agreement shall be in substantially the form attached
hereto as Exhibit 2(c).
"Excluded Assets" has the meaning set forth in Section 2(a)(iii)
below.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fair Market Value of Tangible Assets" means the historical cost of
Tangible Assets and Inventory (hereinafter defined) determined according to
GAAP.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statement" has the meaning set forth in Section 4(c) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
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"Intangible Assets" means all intangible assets of the Seller that are
not Medical Practice Assets, including, without limitation, the Seller's base
of non-medical employees, management information systems, business know-how as
it relates to operation of the business aspects of an oncology practice, the
name "The Center for Hematology-Oncology," accounting books and records and
goodwill.
"Inventory" means the inventory of pharmaceuticals and medical
supplies owned by the Seller as of the close of business on the day prior to
the Closing Date.
"Investments" means investment assets of the Seller including stocks,
bonds, certificates of deposits, interests in non-medical partnerships, joint
ventures and other and entities, and specifically including, without
limitation, the Seller's interest in South Florida Oncology Disease Management,
G.P.
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes.
"Medical Practice Assets" means all assets and property owned by the
Seller and used in its medical practice which cannot lawfully be acquired and
owned by the Purchaser, including, without limitation, all patient charts and
patient records that do not constitute business records and licenses to
practice medicine.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 4(c) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4(c) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section
4(c) below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business of
an oncology practice similar in size to the Seller, consistent with the
Seller's past custom and practice.
"Party" means the Purchaser or the Seller.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406
and Code Sec. 4975.
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Purchased Assets" has the meaning set forth in Section 2(a)(i) below.
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"Purchaser" has the meaning set forth in the preface above and, after
Closing (and as relates to Section 9(b) regarding indemnification), shall mean
Response Oncology, Inc. and any subsidiary or affiliate thereof.
"Receivables" means the accounts receivable of the Seller as of the
close of business on the day prior to the Closing Date.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Response Note" means a promissory note of the Purchaser payable to
the order of a Seller in the form set forth as Exhibit 2(b)(i).
"Response Stock" means the common stock of the Purchaser, $.01 par
value per share.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Disclosure Letter" has the meaning set forth in Section 3(a)
below.
"Service Agreement" means the Service Agreement among the Purchaser,
the Seller and the Shareholders to be executed and delivered thereby and which
will become effective at the time of the Closing.
"Tangible Assets" means all prepaid expenses, furniture, medical and
other equipment and leasehold improvements of the Seller.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9(c) below.
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2. PURCHASE AND SALE OF ASSETS.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Purchaser and Seller agree as follows:
(i) Purchased Assets. On the Closing Date, the Purchaser
shall purchase from the Seller, and the Seller shall sell, assign and
deliver to the Purchaser, the following assets of the Seller (the
"Purchased Assets"):
(A) the Tangible Assets;
(B) the Intangible Assets;
(C) the Inventory; and
(C) all rights of the Seller in, to and under the
leases and other contracts listed in paragraph 4(k) of the
Seller's Disclosure Letter (the "Seller Contracts").
(ii) Assumed Liabilities. In partial consideration for the
sale of the Purchased Assets by the Seller, on the Closing Date the
Purchaser shall assume and become primarily responsible for the
payment or other satisfaction of the following Liabilities of the
Seller (the "Assumed Liabilities"):
(A) term loan payable to Xxxxxxx Xxxxx Business
Financial Services, Inc. in an amount not to exceed $85,000,
secured by computer equipment included among the Acquired
Assets (the "Xxxxxxx Debt"); and
(B) accrued payroll and payroll taxes, vacation
time, medical insurance and other accrued benefits as of the
Closing Date.
(C) accrued taxes of the Seller, except income taxes
of the Seller, whether previously accrued or arising out of
the transaction contemplated hereby, and except sales and use
taxes arising out of the sale of the Purchased Assets pursuant
hereto; and
(D) obligations under all Seller Contracts,
including obligations under all capital leases of the Seller
in effect as of the Closing Date. For purposes of determining
whether a lease is a capital lease, the conclusion of the
Purchaser's independent auditors shall be binding on the
parties.
The Purchaser shall not assume any Liability of the Seller except those
Liabilities described above. As of the Closing Date, the parties shall jointly
prepare and agree upon a schedule of Assumed Liabilities, which shall be
attached hereto as Exhibit 2(a)(ii), and no Liability of the Seller which is
excluded from such schedule shall be assumed by the Purchaser. The Seller
shall remain responsible for all Liabilities not assumed by the Purchaser
hereunder, and shall indemnify and hold the Purchaser harmless from and against
any and all claims, assessments, damages, Liabilities and costs suffered by the
Purchaser in respect of or arising out of the assertion by any Person that the
Purchaser is responsible for any Liability of the Seller that is not an Assumed
Liability.
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(iii) Excluded Assets. The Purchaser shall not purchase from
the Seller any asset that is not a Purchased Asset as defined above.
In that regard, and without limiting the generality of the foregoing,
the Purchaser shall not purchase from the Seller the following:
(A) Medical Practice Assets;
(B) Receivables;
(C) Investments;
(D) Corporate minute book, stock ledgers and other
similar records of the Seller; and
(E) corporate automobiles, vehicles and other assets
used by shareholders and employees of the Seller for personal
as well as business purposes.
(b) Purchase Price; Payment of Purchase Price. The purchase price
for the Purchased Assets shall be the sum of (i) Thirteen Million Four Hundred
Forty Thousand Dollars ($13,440,000) and (ii) the Fair Market Value of
Tangible Assets (provided, however, that no Fair Market Value shall be
attributed to equipment pledged as collateral for the Xxxxxxx Debt). The
Purchaser shall pay or satisfy the Purchase Price at Closing in the following
manner: (i) Eight Million Sixty-four Thousand Dollars ($8,064,000) plus the
Fair Market Value of Tangible Assets in readily available United States funds,
to which the Purchaser's Deposit and earnings thereon shall be credited; (ii)
Four Million Thirty-two Thousand Dollars ($4,032,000) by delivery of three
separate Response Notes, each in the principal amount of $1,344,000.00; and
(iii) the balance by delivery of 105,552 shares of Response Stock, which will
be evidenced by three (3) separate certificates representing 35,184 shares
each. In the event that the average closing price of the Response Stock on the
Nasdaq Stock Market for the ten (10) trading days immediately preceeding the
Closing shall be less than $12.733, then the number of shares issuable
hereunder shall be increased to that number required, at such average closing
price, to yield an aggregate $1,344,000 of value to the Seller.
(c) The Closing. The closing of the transactions contemplated hereby
shall occur in the following manner: (i) On July 25, 1996, the Parties shall
execute and deliver the Escrow Agreement and, pursuant thereto, shall deliver
to the Escrow Agent two (2) duly executed copies of this Agreement and each
shall deliver to the Escrow Agent Two Hundred Fifty Thousand Dollars ($250,000)
as a good faith deposit (the "Deposit"); (ii) On October 1, 1996, or such other
date prior thereto that the Parties shall mutually designate in writing (the
"Closing Date"), assuming satisfaction of all conditions set forth in this
Agreement, the closing of the transaction contemplated hereby (the "Closing")
shall occur at the law offices of Xxxx Xxxxxxxxx, Esq., 0000 Xxxx Xxxxxx Xxxx,
Xxxx Xxxxx, Xxxxxxx commencing at 9:00 A.M. local time.
(d) Deliveries at the Closing. At the Closing, (i) the Purchaser
will deliver to the Seller the considerations described in Section 2(b) above
and the various certificates, instruments, and documents referred to in Section
8(a) below, (ii) the Seller will deliver to the Purchaser the various
certificates, instruments, and documents referred to in Section 8(b) below and
(iii) the Escrow Agent shall deliver an executed copy hereof to each Party and
the Deposit to the Seller.
(e) Allocation of Purchase Price. The Parties agree to allocate the
Purchase Price (and other capitalizable costs) among the Purchased Assets for
all purposes (including financial accounting and tax purposes) in accordance
with the Allocation Agreement attached hereto as Exhibit 2(e).
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3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of the Seller. The Seller and the
Stockholders jointly and severally represent and warrant to the Purchaser that
the statements contained in this Section 3(a) are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3(a)) with respect to the
Seller, except as set forth in the disclosure letter executed and delivered by
the Seller contemporaneous with this Agreement (the "Seller's Disclosure
Letter"). The Seller's Disclosure Letter shall be satisfactory to the
Purchaser and its counsel and will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 3(a) and Section
4.
(i) Authorization of Transaction. The Seller has the
requisite legal capacity and has full power and authority to execute
and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of
the Seller, enforceable in accordance with its terms and conditions.
The Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Person,
government or governmental agency in order to deliver the Purchased
Assets to the Seller or otherwise to consummate the transactions
contemplated by this Agreement, or, if any such consent is required,
each such consent has been obtained or will be obtained prior to
closing. This Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms,
subject to applicable bankruptcy, moratorium, insolvency and other
laws affecting the rights of creditors and general equity principles.
(ii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which the Seller is subject or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Seller is a
party or by which he is bound or to which any of his assets is subject
(or result in the imposition of any Security Interest upon any of the
Purchased Assets). The Seller is not required to give any notice to,
make any filing with, or obtain any authorization, consent or approval
of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(iii) Brokers' Fees. The Seller has no Liability or
obligation to pay any fee or commission to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which the Purchaser could become liable or obligated.
(b) Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Seller that the statements contained in this
Section 3(b) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(b)).
(i) Organization of the Purchaser. The Purchaser is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Tennessee.
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(ii) Authorization of Transaction. The Purchaser has full
power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of the Purchaser, enforceable in accordance with its terms,
subject to applicable bankruptcy, moratorium, insolvency and other
laws affecting the rights of creditors and general equity principles.
The Purchaser need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Person,
government or governmental agency in order to consummate the
transactions contemplated by this Agreement, or, if any such consent
is required, each such consent has been obtained.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Purchaser is subject or any provision of its charter or
bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Purchaser is a party or by which it is
bound or to which any of its assets is subject.
(iv) Brokers' Fees. The Purchaser has no Liability or
obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this
Agreement for which the Seller could become liable or obligated.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER. The Seller
and the Stockholders, jointly and severally, represent and warrant to the
Purchaser that the statements contained in this Section 4 are true, correct and
complete as of the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except
as set forth in the Seller's Disclosure Letter. Nothing in the Seller's
Disclosure Letter shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Seller's Disclosure
Letter identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. The Seller's Disclosure Letter will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4.
(a) Organization, Qualification, and Corporate Power. The Seller is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida. The Seller is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required. The Seller has full corporate power and authority
and all licenses, permits, and authorizations necessary to carry on the
business in which it is engaged and to own and use its properties. Paragraph
4(a) of the Seller's Disclosure Letter lists the directors and officers of the
Seller. The Seller has delivered to the Purchaser correct and complete copies
of the charter and bylaws of the Seller (as amended to date). The minute book
(containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors), the stock certificate
book, and the stock record book of both the Seller are correct and complete.
The Seller is not in default under or in violation of any provision of its
charter or bylaws.
(b) Title to Assets. The Seller has good and marketable title to, or
a valid leasehold interest in, all of its properties and assets including the
Purchased Assets, free and clear of all Security Interests except as provided
in paragraph 4(b) of the Seller's Disclosure Letter, and has not sold,
transferred, exchanged or conveyed any of its properties and assets since the
date of the Most Recent Balance Sheet except for
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properties and assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Balance Sheet.
(c) Financial Statements. Attached as collective Paragraph 4(c) to
the Seller's Disclosure Letter are the following financial statements
(collectively the "Financial Statements"): (i) unaudited balance sheet and
statement of income, changes in stockholders' equity, and cash flow as of and
for the fiscal years ended December 31, 1995 (the "Most Recent Fiscal Year
End") for the Seller; and (ii) unaudited balance sheet and statement of income
(the "Most Recent Financial Statements") as of and for the month ended May 31,
1996 (the "Most Recent Fiscal Month End") for the Seller. The Financial
Statements (including the notes thereto) have been prepared on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of the Seller as of such dates and the results of operations of the
Seller and its subsidiaries for such periods, are correct and complete, and are
consistent with the books and records of the Seller.
(d) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any adverse change in the business,
financial condition, operations, results of operations, or future prospects of
the Seller. Without limiting the generality of the foregoing, since that date:
(i) except for a lease of approximately 7,000 square feet in
East Boca Raton, Florida, the Seller has not entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) outside the Ordinary
Course of Business;
(ii) no party (including the Seller) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) outside the Ordinary Course of Business to which the Seller
is a party or by which the Seller or its properties are bound;
(iii) the Seller has not created, suffered or permitted to
attach or be imposed any Security Interest upon any of its assets,
tangible or intangible;
(iv) the Seller has not made any capital expenditure (or
series of related capital expenditures) outside the Ordinary Course of
Business except for reasonable leasehold improvements to practice
locations;
(v) the Seller has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans, and
acquisitions) outside the Ordinary Course of Business;
(vi) the Seller has not issued any note, bond, or other debt
instrument or security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized lease obligation
outside the Ordinary Course of Business;
(vii) the Seller has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of
Business;
(viii) the Seller has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
outside the Ordinary Course of Business;
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(ix) the Seller has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its assets, tangible
or intangible;
(x) the Seller has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xi) the Seller has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement outside the Ordinary
Course of Business;
(xii) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving the Seller; and
(xiii) the Seller has not committed to any of the foregoing.
(e) Undisclosed Liabilities. The Seller has no Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Seller that may
result in any Liability), except for (i) Liabilities set forth on the face of
the Most Recent Balance Sheet; (ii) Liabilities which have arisen after the
Most Recent Fiscal Month End in the Ordinary Course of Business and (iii)
Liabilities described with particularity in Paragraph 4(e) of the Seller's
Disclosure Letter (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of warranty,
tort, malpractice, infringement, or violation of law).
(f) Legal Compliance. The Seller and Affiliates have complied with
all applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply.
(g) Tax Matters.
(i) The Seller has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in
all respects. All Taxes owed by the Seller (whether or not shown on
any Tax Return) have been paid or accrued in the Financial Statements.
The Seller is not the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Seller does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There
are no Security Interests on any of the assets of the Seller that
arose in connection with any failure (or alleged failure) to pay any
Tax.
(ii) The Seller has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or
other third party.
(iii) The Seller has no knowledge of any fact that might
lead the Seller to expect any authority to assess any additional Taxes
for any period for which Tax Returns have been filed. There is no
dispute or claim concerning any Tax Liability of the Seller either (A)
claimed or raised by any authority in writing or (B) as to which the
Seller has Knowledge. Paragraph 4(g) of the Seller's Disclosure
Letter lists all federal, state, local, and foreign income Tax Returns
filed with respect to the Seller for taxable periods ended on or after
December 31, 1994, indicates those Tax Returns that have been audited,
and indicates those Tax Returns that currently are the subject
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of audit. The Seller has delivered to the Purchaser correct and
complete copies of all federal income Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to by the
Seller since December 31, 1994.
(iv) The Seller has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
(v) The Seller has not filed a consent under Code Section
341(f) concerning collapsible corporations. The Seller has not made
any payment, is not obligated to make any payment, or is not a party
to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Code Section 280G.
The Seller has not been a United States real property holding
corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). The
Seller has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Section 6662. The
Seller is not a party to any Tax allocation or sharing agreement. The
Seller (A) has not been a member of an Affiliated Group filing a
consolidated federal income Tax Return or (B) has no Liability for the
Taxes of any Person (other than of the Seller under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or
otherwise.
(vi) The unpaid Taxes of the Seller (A) did not, as of the
Most Recent Fiscal Month End, exceed the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto)
and (B) do not exceed that reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom and
practice of the Seller in filing its Tax Returns.
(h) Real Property. The Seller does not own any real property and has
not executed and delivered or otherwise entered into any contract to purchase
any real property. Paragraph 4(h) of the Seller's Disclosure Letter lists and
describes briefly all real property leased or subleased to the Seller. The
Seller has summarized the terms of the oral leases and subleases listed in
Paragraph 4(h) of the Seller's Disclosure Letter (as amended to date). With
respect to each oral lease and sublease listed in Paragraph 4(h) of the
Seller's Disclosure Letter, except as otherwise set forth in such Paragraph of
the Seller's Disclosure Letter:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease is not assignable by the Seller
to the Purchaser;
(iii) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated any
provision thereof;
(v) there are no material disputes in effect as to the lease
or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above are true and
correct with respect to the underlying lease;
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13
(vii) the Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses
and permits) required in connection with the operation thereof and
have been operated and maintained in accordance with applicable laws,
rules, and regulations; and
(ix) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation
of said facilities.
(i) Tangible Assets. The Seller owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of
its business as presently conducted. Each Tangible Asset is free from defects
(patent and latent), has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used.
(j) Inventory. The Inventory consists of pharmaceuticals and medical
supplies, all of which is merchantable and fit for the purpose for which it was
procured or manufactured.
(k) Contracts. Paragraph 4(k) of the Seller's Disclosure Letter
lists the following contracts and other agreements to which the Seller is a
party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $25,000.00 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of pharmaceuticals, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year,
result in a loss to the Seller, or involve consideration in excess of
$25,000.00;
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which the Seller has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation,
in excess of $25,000.00 or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with any health maintenance organization,
preferred provider organization, insurance company or other third
party payor for medical services;
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
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14
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $25,000.00 or providing severance benefits;
(x) any agreement under which the Seller has advanced or
loaned any amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xi) any agreement under which the consequences of a default
or termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of
the Seller; or
(xii) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of
$25,000.00.
The Seller has delivered to the Purchaser a correct and complete copy of each
written agreement listed in Paragraph 4(k) of the Seller's Disclosure Letter
(as amended to date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Paragraph 4(k) of the Seller's
Disclosure Letter. With respect to each written agreement: (1) the agreement
is legal, valid, binding, enforceable, and in full force and effect; (2) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (3) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; and (4) no party has repudiated any provision of the agreement.
(l) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Seller.
(m) Insurance. Paragraph 4(m) of the Seller's Disclosure Letter sets
forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, medical
malpractice, and workers' compensation coverage and bond and surety
arrangements) to which the Seller has been a party, a named insured, or
otherwise the beneficiary of coverage at any time since the incorporation of
the Seller:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is in full force and
effect and has not been canceled; (B) the policy will continue to be in
full force and effect on substantially identical terms following the
consummation of the transactions contemplated hereby; (C) based solely on
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15
no-default/estoppel letters dated within the (10) days of the date hereof,
which letters are attached to the Seller's Disclosure Letter, neither the
Seller nor any other party to the policy is in breach or default (including
with respect to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination, modification, or acceleration, under
the policy. Paragraph 4(m) of the Seller's Disclosure Letter describes any
self-insurance arrangements affecting the Seller.
(n) Litigation. Section 4(n) of the Seller's Disclosure Letter sets
forth each instance in which the Seller (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or is
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 4(n) of the Seller's Disclosure Letter
could result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of the
Seller. The Seller has no reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against the
Seller.
(o) Product Liability. The Seller has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Seller giving
rise to any Liability) arising out of any injury to individuals or property as
a result of the ownership, possession, or use of any product manufactured,
sold, leased, or delivered by the Seller.
(p) Employees. To the Knowledge of the Seller, no executive, key
employee, or group of employees has any plans to terminate employment with the
Seller. The Seller is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. The Seller has not
committed any unfair labor practice. The Seller has no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of either the Seller. Except as
described in paragraph 4(p) of the Seller's Disclosure Letter, the Seller has
not knowledge of any disciplinary or other proceeding alleging professional
misconduct or misfeasance against any Employee of the Seller.
(q) Employee Benefits.
(i) Paragraph 4(q) of the Seller's Disclosure Letter lists
each Employee Benefit Plan that the Seller maintains or to which the
Seller contributes.
(A) Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund) complies in form
and in operation in all respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to each such Employee Benefit Plan.
The requirements of Part 6 of Subtitle B of Title I of ERISA
and of Code Sec. 4980B have been met with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period
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16
ending on or before the Closing Date which are not yet
due have been paid to each such Employee Pension Benefit Plan
or accrued in accordance with the past custom and practice of
the Seller. All premiums or other payments for all periods
ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Sec. 401(a) and has received,
within the last two years, a favorable determination letter
from the Internal Revenue Service.
(E) The market value of assets under each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan (other than any Multiemployer Plan) equals or exceeds the
present value of all vested and nonvested Liabilities
thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for determination.
(F) The Seller has delivered to the Purchaser
correct and complete copies of the plan documents and summary
plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent
Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the
Seller maintains or ever has maintained or to which it contributes,
ever has contributed, or ever has been required to contribute:
(A) No such Employee Benefit Plan which is in
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC
to terminate any such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been instituted or
threatened.
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration
or investment of the assets of any such Employee Benefit Plan.
No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims
for benefits) is pending or threatened. The Seller has no
Knowledge of any Basis for any such action, suit, proceeding,
hearing, or investigation.
(B) The Seller has not incurred, and the Seller has
no reason to expect that it will incur, any Liability to the
PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or
under the Code with respect to any such Employee Benefit Plan
which is an Employee Pension Benefit Plan.
(iii) The Seller does not contribute to, has never
contributed to, or has not been required to contribute to any
Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
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17
(iv) The Seller does not maintain or has never maintained or
contributes, ever has contributed, or has not been required to
contribute to any Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type benefits for current
or future retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code Sec. 4980B).
(r) Guaranties. The Seller is not a guarantor or is not otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.
(s) Environment, Health, and Safety.
(i) Each of the Seller and its Affiliates has complied with
all Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has been filed or commenced against any of them alleging any
failure so to comply. Without limiting the generality of the preceding
sentence, each of the Seller and its Affiliates has obtained and been
in compliance with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and
Safety Laws.
(ii) The Seller has no Liability (and none of the Seller and
its Affiliates has handled or disposed of any substance, arranged for
the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any
property or facility in any manner that could form the Basis for any
present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Seller giving rise to
any Liability) for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any
Environmental, Health, and Safety Law.
(iii) All properties and equipment used in the business of
the Seller and its Affiliates have been free of asbestos, PCB's,
methylene chloride, trichloroethylene, 1,2-trans-dichloroethylene,
dioxins, dibenzofurans, and Extremely Hazardous Substances.
(t) Healthcare Compliance. Neither the Seller nor any physician
associated with or employed by the Seller has received payment or any
remuneration whatsoever to induce or encourage the referral of patients or the
purchase of goods and/or services as prohibited under 42 U.S.C. Section
1320a-7b(b), or otherwise perpetrated any Medicare or Medicaid fraud or abuse
to the best of Seller's Knowledge nor has any fraud or abuse been alleged
within the last five (5) years by any government agency. No physician
associated with or employed by the Seller has made any referral of any patient
to any entity in which such physician or a member of his/her immediate family
has any ownership or investment interest or with which such physician or family
member has any financial relationship in violation of 42 U.S.C. Section 1395nn
or any state law prohibiting referrals to such entities. The Seller (and/or
each physician employed thereby) is participating in or otherwise is authorized
to receive reimbursement from or is a party to Medicare, Medicaid, and other
third-party payor programs. All necessary certifications and contracts
required for participation in such programs are in full force and effect and
have not been amended or otherwise modified, rescinded, revoked or assigned and
no condition exists or event has occurred which in itself or with the giving of
notice or the lapse of time or both would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such third party payor program.
The Seller is in full compliance with the requirements of all such third party
payor programs applicable thereto.
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18
(u) Fraud and Abuse. The Seller and persons and entities providing
professional services for the Seller have not engaged in any activities which
are prohibited under 42 U.S.C. Section 1320a-7b, or the regulations promulgated
thereunder pursuant to such statutes, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct, including
but not limited to the following:
(i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any
application for any benefit or payment;
(ii) knowingly and willfully making or causing to be made
any false statement or representation of a material fact for use in
determining rights to any benefit or payment;
(iii) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to
any benefit or payment on its own behalf or on behalf of another, with
intent to fraudulently secure such benefit or payment; and
(iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe, or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offering to pay
or receive such remuneration (A) in return for referring an individual
to a person for the furnishing or arranging for the furnishing or any
item or service for which payment may be made in whole or in part by
Medicare or Medicaid, or (B) in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or
ordering any good, facility, service or item for which payment may be
made in whole or in part by Medicare or Medicaid.
(v) Facility Compliance. The Seller is duly licensed, and the Seller
and its clinics, offices and facilities are lawfully operated in accordance
with the requirements of all applicable law and has all necessary
authorizations for the use and operation, all of which are in full force and
effect. There are no outstanding notices of deficiencies relating to the
Seller issued by any governmental authority or third party payor requiring
conformity or compliance with any applicable law or condition for participation
of such governmental authority or third party payor, and after reasonable and
independent inquiry and due diligence and investigation, the Seller has not
received notice of and has no Knowledge of or reason to believe that such
necessary authorizations may be revoked or not renewed in the ordinary course.
(w) Rates and Reimbursement Policies. The Seller has no rate appeal
currently pending before any governmental authority or any administrator of any
third party payor program.
(x) Disclosure. The representations and warranties contained in this
Section 4 and in the Seller's Disclosure Letter do not contain any untrue
statement of a fact or omit to state any fact necessary in order to make the
statements and information contained in this Section 4 or the Seller's
Disclosure Letter not misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 7
below).
(b) Notices and Consents. The Seller will give any notices to third
parties and will use its best efforts to obtain any third-party consents, that
may be required by law or the terms of any contract to
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which the Seller may be subject or that the Purchaser may request in connection
with the transaction contemplated by this Agreement. Each of the Parties will
give any notices to, make any filings with, and use its best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies required to consummate the transaction contemplated by this Agreement.
(c) Operation of Business. The Seller will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing, the
Seller will not engage in any practice, take any action, or enter into any
transaction of the sort described in Section 4(d) above.
(d) Preservation of Business. The Seller will keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, patients, and employees.
(e) Full Access. The Seller will permit representatives of the
Purchaser to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Seller, to all
premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to the Seller.
(f) Notice of Developments. The Seller will give prompt written
notice to the Purchaser of any material adverse development causing a breach of
any of the representations and warranties in Section 4 above. Each Party will
give prompt written notice to the others of any material adverse development
causing a breach of any of his or its own representations and warranties in
Section 3 above.
(g) Exclusivity. The Seller will not (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets of, the Seller (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing. The
Stockholders will not vote their Shares in favor of any such acquisition
structured as a merger, consolidation, or share exchange. The Seller will
notify the Purchaser immediately if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect
to the period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may request, all at
the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Section 9 below). The Seller
acknowledges and agrees that from and after the Closing the Purchaser will be
entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the Seller.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Seller, each of the other Parties will
cooperate
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with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending Party (unless
the contesting or defending Party is entitled to indemnification therefor under
Section 9 below).
(c) Transition. The Seller will not take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, supplier,
or other business associate of the Seller from maintaining the same business
relationships with the Seller after the Closing as it maintained with the
Seller prior to the Closing. The Seller will refer all inquiries relating to
the businesses of the Seller to the Purchaser from and after the Closing.
(d) Employees. The Seller shall terminate the employment of, and the
Purchaser shall hire, at substantially the same pay rates and benefit levels as
paid or delivered by the Seller, the persons listed in Exhibit 6(d) attached
hereto.
(e) Collection of Accounts Receivable. From and after the Closing,
the Purchaser shall cooperate with and assist the Seller in the collection of
Receivables at no cost or charge to the Seller.
7. CONDITIONS PRECEDENT TO OBLIGATION TO CLOSE. Either Party may
waive any condition specified in this Section 7 if such Party executes a writing
so stating at or prior to the Closing. In the event that a Party executes such
waiver, such Party shall not be entitled to terminate this Agreement pursuant to
Section 10 below for the reason of failure to satisfy the condition so waived.
(a) Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) all representations and warranties set forth in Section
3(a) and Section 4 above over which the Seller has the reasonable
ability to cause such representations and warranties to remain true
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Seller shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
(iii) the Seller shall have procured all of the third party
consents specified in Section 5(b) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Purchaser to
acquire and own and operate the Purchased Assets and enter into the
Service Agreement, or (D) affect adversely the right of the Seller to
own its assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Purchaser a
certificate to the effect that each of the conditions specified above
in Section 7(a)(i)-(iv) is satisfied in all respects;
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21
(vi) the Purchaser shall have received from Xxxx Xxxxxxxxx,
Esq., counsel to the Seller, an opinion as to matters customarily
addressed in opinions of counsel in transactions such as that
described herein, which opinion shall be substantially in the form set
forth in Exhibit 8(b)(v) below;
(vii) the Seller shall have executed and delivered the
Service Agreement to the Purchaser;
(viii) the Purchaser shall have received an opinion from
Baker, Donelson, Bearman & Xxxxxxxx that the performance of the
Service Agreement by the Purchaser and the Group will not violate any
statute, regulation, official interpretation, order, decree or other
law of the United States of America; and
(ix) all actions to be taken by the Seller in connection
with consummation of the transactions contemplated hereby and all
certificates, opinion, instruments, and other documents required to
effect the transactions contemplated hereby will be satisfactory in
form and substance to the Purchaser; and
(x) the net collections of the Seller during the period
December 1, 1995 through August 31, 1996 for services rendered to
patients shall be at least Three Million Six Hundred Thousand Dollars
($3,600,000.00).
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3(b) above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) the Purchaser shall have performed and complied with
all of its covenants hereunder in all material respects through the
Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(iv) the Purchaser shall have delivered to the Seller a
certificate to the effect that each of the conditions specified above
in Section 7(b)(i)-(iii) is satisfied in all respects;
(v) all actions to be taken by the Purchaser in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to the Seller.
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8. DELIVERIES AT CLOSING.
(a) Documents to be Delivered by the Purchaser. At the Closing, the
Purchaser shall deliver the following instruments and documents to the Seller
or other appropriate party:
(i) the Response Notes provided for in Section 2(b), each
payable to the order of the Seller;
(ii) a certified or cashier's check or wire transfer equal
to the amount of cash deliverable by the Purchaser pursuant to Section
2(b);
(iii) three (3) certificates for the Response Stock
deliverable pursuant to Section 2(b);
(iv) an Assumption Agreement in respect of the Assumed
Liabilities;
(v) a Registration Rights Agreement in the form set forth as
Exhibit 8(a)(iv) below;
(vi) the certificate described in Section 7(b)(iv) above; and
(vii) such other documents as the Seller may reasonably
request to affect the transactions contemplated by this Agreement.
(b) Documents to be Delivered by the Seller. At the Closing, the
Seller shall deliver the following instruments and documents to the Purchaser:
(i) a xxxx of sale or other appropriate instrument of
transfer for the Tangible Assets and Inventory;
(ii) an assignment of the Intangible Assets and Seller
Contracts;
(iii) a certificate of existence from the Florida Secretary
of State evidencing the existence and good standing of the Seller,
dated not more than five (5) days prior to the Closing Date;
(iv) all consents necessary regarding the transaction
contemplated by this Agreement;
(v) the opinion of counsel to the Seller required by Section
7(a)(vi) above substantially in the form set forth in Exhibit 8(b)(v)
below;
(vi) the Certificate described in Section 7(a)(v) above;
(vii) the Service Agreement, duly executed by the Seller and
the Stockholders; and
(viii) such other documents or instruments as may be
required or as the Purchaser may reasonably request to affect the
transactions contemplated by this Agreement.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder and continue in full force and
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23
effect for a period of three (3) years from and after the Closing (subject to
any applicable statutes of limitations).
(b) Indemnification Provisions. In the event either Party (an
"Indemnitor") breaches (or in the event any third party alleges facts that, if
true, would mean such Indemnitor has breached) any of the representations,
warranties, and covenants contained herein and, provided that the non-breaching
Party (an "Indemnitee") makes a written claim for indemnification against the
Indemnitor pursuant to Section 9(c)(i) below, then the Indemnitor (and, if the
Indemnitor is the Seller, then the Stockholders, severally and not jointly),
agree to indemnify the Indemnitee from and against the entirety of any Adverse
Consequences the Indemnitee may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences the Indemnitee may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach), or otherwise; provided, however, that the provisions of this Section 9
shall be inapplicable to any breach or set of facts that shall have been
disclosed in writing to the other Party pursuant to this Agreement, including
Section 5(f) hereof; provided, further, however that the indemnification
obligation of the Seller or the Stockholders shall be limited to the amount of
cash paid at Closing pursuant to Section 2(b).
(c) Matters Involving Third Parties.
(i) If any third party shall notify an Indemnitee the
Purchaser with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification under this Section 9, then
the Indemnitee shall promptly notify the Indemnitor thereof in
writing; provided, however, that no delay on the part of the
Indemnitee in notifying the Indemnitor shall relieve the Indemnitor
from any obligation hereunder unless (and then solely to the extent)
the Indemnitor thereby is prejudiced.
(ii) The Indemnitor and the Stockholders, if applicable,
will have the right to defend the Indemnitee against the Third
Party Claim with counsel of their choice reasonably satisfactory to the
Indemnitee so long as (A) they notify the Indemnitee in writing within
fifteen (15) days after the Indemnitee has given notice of the Third
Party Claim that the Indemnitor (and/or the Stockholders, if
applicable) will indemnify the Indemnitee from and against the entirety
of any Adverse Consequences the Indemnitee may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnitor (and the Stockholder, if applicable)
provide the Indemnitee with evidence acceptable to the Indemnitee that
the Indemnitor (and the Stockholder, if applicable) will have the
financial resources to defend against the Third Party Claim and fulfill
their indemnification obligations hereunder, (C) the Third Party Claim
involves only money damages and does not seek an injunction or other
equitable relief, and (D) the Indemnitor (and the Stockholders, if
applicable) conduct the defense of the Third Party Claim actively and
diligently.
(iii) So long as the Indemnitor (and the Stockholders, if
applicable) are conducting the defense of the Third Party Claim in
accordance with Section 9(c)(ii) above, (A) the Indemnitee may retain
separate co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim, (B) the Indemnitee will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnitor (and the Stockholders, if applicable) (not to be
withheld unreasonably), and (C) the Indemnitor will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnitee,
which will not be unreasonably withheld.
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24
(iv) In the event any of the conditions in Section 9(c)(ii)
above is or becomes unsatisfied, however, (A) the Purchaser may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it may
deem appropriate (and the Purchaser need not consult with, or obtain
any consent from, the Seller and/or the Stockholders in connection
therewith), (B) the Seller and the Stockholders will reimburse the
Purchaser promptly and periodically for the costs of defending against
the Third Party Claim (including attorneys' fees and expenses), and
(C) the Seller and the Stockholders will remain responsible for any
Adverse Consequences the Purchaser may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Section 9.
(d) Determination of Adverse Consequences. The Parties shall take
into account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this Section 9.
(e) Recoupment Under the Response Note. If, and only if, it shall
have been finally determined that the Purchaser is entitled to indemnification
hereunder and the Purchaser shall have demanded payment from the Seller and the
Stockholders of the amount of Adverse Consequences which the Purchaser is
entitled to recover, and the Seller and Stockholders shall not pay such amount
within ten (10) days after such demand shall be made, then the Purchaser shall
have the option of recouping all or any part of the unpaid amount of Adverse
Consequences by notifying the Seller that the Purchaser is reducing the
principal amount outstanding under the Response Note held by the Seller. This
shall affect the timing and amount of payments required under the Response Note
in the same manner as if the Purchaser had made a permitted prepayment (without
premium or penalty) thereunder.
(f) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of
representation, warranty, or covenant.
10. TERMINATION.
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Purchaser and the Seller may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) the Purchaser may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing (A) in
the event the Seller has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Purchaser has notified the Seller of the breach, and the
breach has continued without cure for a period of 10 days after the
notice of breach or (B) if the Closing shall not have occurred on or
before October 30, 1996, by reason of the failure of any condition
precedent under Section 7(a) hereof (unless the failure results
primarily from the Purchaser itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(iii) the Seller may terminate this Agreement by giving
written notice to the Purchaser at any time prior to the Closing (A)
in the event the Purchaser has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Seller has notified the Purchaser of the breach, and the
breach has continued without cure for a
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25
period of 10 days after the notice of breach or (B) if the Closing
shall not have occurred on or before October 30, 1996 by reason of the
failure of any condition precedent under Section 7(b) hereof (unless
the failure results primarily from any of the Seller themselves
breaching any representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. Except as provided in Section 11(k)
below, if any Party terminates this Agreement pursuant to Section 10(a) above,
all rights and obligations of the Parties hereunder shall terminate without any
Liability of any Party to any other Party (except for any Liability of any
Party then in breach).
11. MISCELLANEOUS.
(a) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the Purchaser and the
Seller; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its best efforts to advise the other Parties prior to
making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Purchaser and the Seller; provided, however, that the
Purchaser may (i) assign any or all of its rights and interests hereunder to
one or more of its Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which cases the
Purchaser nonetheless shall remain responsible for the performance of all of
its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Seller: Copy to:
The Center for Hematology-Oncology, P.A. Xxxx Xxxxxxxxx, Esq.
00000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx 0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
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Xxxxxx Xxxxx, Xxxxxxx 00000 Xxxx Xxxxx, Xxxxxxx 00000
If to the Purchaser: Copy to:
Xxxxxx X. Xxxxx Xxxx X. Good, Esq.
Response Oncology, Inc. Baker, Donelson, Bearman & Xxxxxxxx
0000 Xxxxxx Xxxxx Xxxx. 000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxx 00000 Xxxxxxx, Xxxxxxxxx 00000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Florida without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Florida or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Florida.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby; provided, however, that if
(i) the Purchaser shall terminate this Agreement pursuant to Section 10(a)(ii)
hereof, then the Seller shall pay to the Purchaser, as liquidated damages, the
amount of Two Hundred Fifty Thousand Dollars ($250,000.00), which amount shall
be payable by the Escrow Agent pursuant to the Escrow Agreement; or (ii) if the
Seller shall terminate this Agreement pursuant to Section 10(a)(iii) hereof,
then the Purchaser shall pay the same liquidated damages amount in the same
manner. The Parties agree that a failure on the part of a Party to consummate
the transaction contemplated hereby would cause damages to the other Party in an
amount that is not reasonably ascertainable, and, in that regard, that the
foregoing payment shall be deemed liquidated damages to the terminating Party in
complete settlement of any and all claims that the Party might have against the
other Party on account of the such other Party's failure to consummate such
transaction. The Parties agree to look only to the Deposit for satisfaction of
such damages, and shall not xxx or otherwise commence any action or proceeding
against the other Party alleging any cause of action, whether in contract, tort
or equity, arising out of this Agreement.
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(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy
to which they may be entitled, at law or in equity.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Palm Beach County,
Florida in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each Party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with
respect thereto. Nothing in this Section 11(o), however, shall affect the
right of any Party to bring any action or proceeding arising out of or relating
to this Agreement in any other court or to serve legal process in any other
manner permitted by law or at
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28
equity. Each Party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law or at equity.
* * * * *
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written; provided, however, that the Stockholders shall
be bound by their signatures below only to the provisions of Sections 3, 4 and
9 hereof.
PURCHASER:
RESPONSE ONCOLOGY, INC.
By:
------------------------------------
Title:
---------------------------------
THE CENTER FOR HEMATOLOGY-ONCOLOGY, P.A.
By:
------------------------------------
Title:
---------------------------------
STOCKHOLDERS:
---------------------------------------
XXXXXX XXXXX, M.D.
---------------------------------------
XXXXX XXXXXXXXX, M.D.
---------------------------------------
XXXXXX XXXXXXX, M.D.
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