EXHIBIT 10(af)
SETTLEMENT AGREEMENT
This Settlement Agreement (this "AGREEMENT") is entered into this 5th
day of May, 2002 (the "EXECUTION DATE"), by and among Response Oncology, Inc., a
Tennessee corporation with its principal place of business at 0000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxxxxx 00000 ("RESPONSE"), The Center for
Hematology-Oncology, P.A., a Florida professional association with its principal
place of business at 0000 X.X. 00xx Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000
(the "CENTER" or the "PRACTICE") and the stockholders of the Center set forth on
the signature page hereto (the "STOCKHOLDERS").
WHEREAS, Response, the Center and its then-stockholders entered into a
service agreement as of October 1, 1996 (the "SERVICE AGREEMENT"), pursuant to
which, among other things, Response provides management and other services to
the Center in exchange for a service fee which includes reimbursement to
Response for expenses of operating the Practice's clinics and percentages of the
Practice's net operating income for base and ancillary services;
WHEREAS, Response and the Center have operated under the Service
Agreement since its effective date, and various disputes have arisen between
them with regard to Response's performance of its duties and the Practice's
cooperation with Response, among others;
WHEREAS, Response filed for protection under Chapter 11 of the United
States Bankruptcy Code (the "BANKRUPTCY CODE") on March 29, 2001 (the "PETITION
DATE"), resulting in a case captioned In re Response Oncology, Inc., No.
01-24607 DSK (the "BANKRUPTCY CASE") in the United States Bankruptcy Court for
the Western District of Tennessee (the "BANKRUPTCY COURT");
WHEREAS, the parties hereto desire to resolve all disputes between them
and sever the relationship between Response, on the one hand, and the Center and
the Stockholders, on the other hand, in an amicable manner, to avoid the expense
and uncertainty of further litigation and to expedite the administration of the
Bankruptcy Case; and
WHEREAS, in furtherance of the foregoing, the parties have executed a
letter of intent dated March 4, 2002 (the "LETTER OF INTENT") and desire to
consummate the transactions contemplated thereby, all as more fully described
herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises hereinafter set forth, and for such other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto promise and agree as follows:
Each party hereto agrees and acknowledges that the recitals set forth
above are incorporated by reference as if fully stated here.
1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions set forth in
this Agreement, including the conditions precedent set forth in Section 9
hereof, as of the Closing (as defined in Section 4 below), Response agrees to
sell, convey, transfer, assign and deliver to the Center, and the Center agrees
to purchase from Response, for the consideration set
forth in Section 3 hereof, free and clear of all liens, claims and encumbrances,
all of the tangible personal property and leasehold improvements that Response
holds which, pursuant to the Service Agreement, are used exclusively by, or made
available for the exclusive use of, the Center in connection with its medical
practice, together with certain books, records, rights to certain prepayments
and deposits, and leases, agreements and contracts of Response which are used or
useful in connection with the operation of the Center's medical practice
(collectively, the "PURCHASED ASSETS"). The Purchased Assets shall include the
following:
(a) TANGIBLE PERSONAL PROPERTY. All tangible personal property,
including furniture, fixtures, equipment, and leasehold improvements and real
property owned or leased by Response as of Closing (as defined below), including
inventory and supplies and Response's interests in leased real property, which,
pursuant to the Service Agreement, are used or held for use exclusively in the
operation of the Center's medical practice and which were acquired by Response
exclusively to satisfy certain of its obligations under the Service Agreement
(collectively, the "ACQUIRED ASSETS").
(b) CONTRACTS. Those leases, contracts and agreements to which Response
is a party, which relate to the Acquired Assets and are listed on Schedule 1(b)
hereto, including those listed maintenance agreements for the Acquired Assets,
software license agreements for software used exclusively in connection with the
Center's medical practice, which are in existence as of Closing and which were
entered into by Response solely to satisfy certain of its obligations under the
Service Agreement, together with all rights of Response under such contracts,
including rights to licensed software, and such other agreement(s) agreed to by
the Parties and listed on such schedule (collectively, the "ASSIGNED
CONTRACTS"). As of the date hereof, neither Response nor the Center are aware of
any defaults or existing cure obligations under any of the Assigned Contracts.
To the extent any such obligations do exist with respect to any Assigned
Contracts, and such obligations were incurred prior to January 1, 2002, Response
would agree to cure such obligations, and any such cure shall not be charged to
the reconciliation described below.
(c) PREPAIDS. All rights of Response, as of Closing, to all
prepayments, prepaid service contracts (to the extent such contracts are
included in the Assigned Contracts) and all deposits paid by Response under the
Assigned Contracts or with respect to goods or services provided to or on behalf
of the Center, which are described (or of the type described) on Response's
balance sheet for the Center's operations.
(d) RECORDS. All lists and records of Response pertaining to suppliers,
vendors, personnel and patients doing business with, providing services to or
receiving medical services or goods from the Center, together with all other
books, ledgers, and files of Response of any kind and nature which relate
exclusively to the Center or the Center's medical practice.
(e) PRACTICE NAME. All rights of Response in and to the name "THE
CENTER FOR HEMATOLOGY-ONCOLOGY" and all variations thereof, and to the telephone
numbers, web site names, domain names, and relevant intellectual property, if
any, relating to the Center.
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2. TERMINATION OF SERVICE AGREEMENT AND SETTLEMENT OF ALL CLAIMS. For the
consideration recited herein, in addition to purchasing the Purchased Assets,
the parties agree that effective as of the Closing the Service Agreement shall
terminate. In connection with such termination, the following terms shall apply:
(a) LINE OF CREDIT. Response shall forgive the line of credit extended
by Response to the Center pursuant to Section 5.12 of the Service Agreement.
Response shall release or cause to be released any and all liens, claims and
encumbrances on any assets of the Center and the Stockholders, including the
Center's accounts receivable and proceeds paid to the Center with respect
thereto, which either secure the Center's obligations to Response under the
Service Agreement or which secure any obligations of Response.
(b) PRE-PETITION DATE PHYSICIAN RETAINAGE. The Center shall forgive
certain physician compensation (such compensation commonly referred to as
"PHYSICIAN RETAINAGE") not paid prior to the Petition Date in the amount of
$435,000.00.
3. PURCHASE PRICE AND PAYMENT TERMS.
(a) CALCULATION OF PURCHASE PRICE / TERMINATION FEE. In consideration
for the purchase and sale of the Purchased Assets, termination of the Service
Agreement, and settlement of all Claims (as defined in Section 8(a) below)
between the Center and/or the Stockholders on the one hand, and Response on the
other, and in addition to the consideration referenced in Section 2 above, the
Center shall pay to Response the sum of $1,500,000.00 (the "PURCHASE PRICE"). At
Closing ninety percent (90%) of the Purchase Price shall be paid directly to
AmSouth Bank, as Agent for the senior secured lenders (the "BANKS") and the
remaining ten percent (10%) of the Purchase Price shall be placed in an escrow
account, with Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. as escrow agent, which
escrow shall be released as part of the reconciliation that is described below.
(b) RECONCILIATION. Within five (5) business days after the Closing, or
such other time mutually agreeable to the Parties, a final reconciliation (the
"FINAL RECONCILIATION") shall be conducted as follows:
(i) take the sum of all collections relating to practice revenues
of the Center or any other funds of the Center which are transferred or paid to
Response or deposited in, transferred or swept to any bank account of Response
at any time during the period commencing January 1, 2002 and ending on the date
of the Closing (the "RECONCILIATION PERIOD"); add
(ii) the Clinic Expenses (as defined in the Service Agreement)
accrued or incurred after the Petition Date which remained unpaid as of December
31, 2001; subtract
(iii) the sum of any and all Clinic Expenses, Physician Expense (as
defined in the Service Agreement), and any other expenses paid by Response for
or on behalf of the Center during the Reconciliation Period.
To the extent the reconciliation calculation described above yields a positive
figure then such amount shall represent an overpayment by the Center to Response
and Response shall remit to
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the Center an amount equal thereto within three (3) business days. However, if
the reconciliation calculation described above yields a negative figure then
such amount shall represent the Center's underpayment to Response and the Center
shall remit to Response a payment in an amount equal thereto within three (3)
business days, provided that all amounts payable to Response which arise out of
the Final Reconciliation shall be directly wired to AmSouth Bank, as Agent for
the Banks, by the Center or its escrow agent as the case may be. To the extent
the result of the reconciliation calculation is zero, no payments shall be due.
If, after all disbursements from the escrow accounts described above additional
amounts are owed by one party to the other, such party shall be obligated to pay
the remaining balance, if any, to the other party (or, in the case of payments
to Response, shall be paid by the Center by wire to AmSouth, as Agent for the
Banks) within three (3) business days following completion of the Final
Reconciliation.
For the purposes of the formula set forth above, all components will be
calculated on a cash basis (instead of an accrual basis, and except for 3(b)(ii)
above). For the purposes of the foregoing calculation, Clinic Expenses,
Physician Expenses and capital expenditures will be deemed paid once a check is
cut and mailed (or wire is sent) by Response relating to such expenses. For the
purposes of the formula set forth above, Cash Collections will exclude any
collections relating to Practice Revenues which are associated with deposits in
transit as of December 31, 2001 that were included in the December 31, 2001
balance sheet.
(c) ASSUMPTION OF LIABILITIES. As of the Closing Date, the Center shall
assume all outstanding liabilities related to the practice or the Purchased
Assets, including any and all liabilities of Response relating to the practice
and all accrued but unpaid expenses associated with the Center and any expenses
on a going-forward basis, including without limitation Clinic Expenses (as
defined in the Service Agreement), Physician Expenses (as defined in the Service
Agreement) and any other related or similar practice expenses, provided however,
that any such liabilities either were incurred during the Reconciliation Period
or were included in the amount described in 3(b)(ii) above. Notwithstanding the
foregoing, the Center shall assume all accrued Physician Expenses as of the
Closing Date, including those amounts accrued prior to the Reconciliation
Period.
(d) RECONCILIATION PERIOD PHYSICIAN RETAINAGE. During the Reconciliation
Period, the Center shall be entitled to compensation consistent with previous
practice (i.e., 24% of net revenues) as such amounts paid will be included in
the foregoing Final Reconciliation as a Physician Expense.
(e) DISPUTE RESOLUTION. If the parties cannot agree upon the Final
Reconciliation within thirty (30) days after the Closing, or such other time as
is mutually agreeable to the parties, then Response's designated accountant and
the Center's designated accountant shall each designate an independent
accountant and the two independent accountants so designated shall select a
third independent accountant; the final determination of the items in dispute
shall be made by a majority decision of the three independent accountants so
selected. The three accountants selected shall each be a certified public
accountant, who has not (and whose firm has not) previously been engaged by
either party or any affiliates thereof, unless agreed by both parties. In the
absence of missing or undisclosed relevant financial information, the decision
of the three independent accountants will be final and binding, subject to
limited review by the
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Xxxxxxxxxx Xxxxx, if applicable, with respect to the absence of financial
information described above. The expense of the outside independent accountants'
review shall be split equally by the parties. Only the items that are in dispute
shall be subject to evaluation and determination by the three independent
accountants. Once the items in dispute have been so resolved, the parties shall
promptly agree upon the Final Reconciliation, consistent with the party's
agreement as to the undisputed items, and the decision of the three independent
accountants on the disputed items. Enforcement of the order of the three
accountants shall be made only by the Bankruptcy Court upon application to it by
the party which prevailed before the panel of accountants.
(f) TAX ALLOCATION. The parties hereto agree to allocate the purchase
price for the Purchased Assets (as described above) among the Purchased Assets
for all purposes (including financial accounting and tax purposes) in accordance
with the allocation set forth on Schedule 3(f), attached hereto and incorporated
by reference, and shall make all necessary filings (including those required
under Internal Revenue Code Section 1060) in accordance with such allocation. In
the event Schedule 3(f) is not prepared as of the Closing, the Center shall
prepare such Schedule after the Closing, subject to Response's reasonable
consent, and such Schedule shall be appended to, and made a part of, this
Agreement at that time.
4. CLOSING. The Closing of the transactions contemplated hereby, including
without limitation, the purchase and sale of the Purchased Assets and the
termination of the Service Agreement (the "CLOSING"), shall take place on the
eleventh (11th) day following entry by the Bankruptcy Court of an order
approving this Agreement and the relief requested herein, or the first (1st)
business day after such eleventh (11th) day, if not a business day, or if such
approval is appealed, on the first (1st) business day following the final
dismissal of such appeal (the "CLOSING DATE"). The Closing shall take place at
such place and at such time on the Closing Date as Response and The Center shall
mutually agree. If the Bankruptcy Court does not approve this Agreement
substantially in accordance with its terms, or affirmatively rejects this
Agreement, then this Agreement shall automatically terminate upon the occurrence
of such event, unless otherwise agreed by the Center and Response in writing.
Further, if the Closing has not occurred by May 15, 2002 (or by such later
date(s), if any, agreed to, in writing, by Response and the Center), this
Agreement shall automatically terminate; provided, that, neither Response nor
the Center shall be permitted to so terminate this Agreement if the failure to
close the transactions contemplated herein arises from a breach by such party of
the terms of this Agreement or otherwise results from any willful action or
inaction of such party designed to delay the approval of this Agreement.
(a) RESPONSE DELIVERABLES. At the Closing, Response shall execute and
deliver, or cause to be delivered, to the Center (unless otherwise indicated)
the following instruments, documents and amounts, against execution and delivery
of the items specified in Section 4(b) hereof:
(i) A certified copy of an Order of the Bankruptcy Court approving
this Agreement.
(ii) Delivery of the Response escrow amount described in Section
3(a) hereof to the applicable escrow agent.
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(iii) Such assignment documents and/or Order(s) from the Bankruptcy
Court authorizing the assignment and assumption of the Assigned Contracts.
(iv) A xxxx of sale and/or assignment instrument(s) conveying title
to any other Purchased Assets to be transferred hereunder not already conveyed
by the deliverables described in subsections 4(a)(1) and (2) above, free and
clear of liens and encumbrances.
(v) Corporate resolutions authorizing the transaction provided for
herein.
(vi) All other documents reasonably requested by the Center to
accomplish the transactions hereunder.
(b) THE CENTER DELIVERABLES. At the Closing, the Center shall execute
and deliver, or cause to be delivered, to Response (unless otherwise indicated)
the following instruments and documents against execution and delivery of the
items specified in Section 4(a) hereof:
(i) All amounts payable to Response in accordance with Section 3
hereof, by wire transfer or payment in immediately available funds.
(ii) Delivery of the Center's escrow amount described in Section
3(a) hereof to the applicable escrow agent.
(iii) Such assignment documents authorizing the assignment and
assumption of the Assigned Contracts.
(iv) A xxxx of sale and/or assignment instrument(s) conveying title
to any other Purchased Assets to be transferred hereunder not already conveyed
by the deliverables described in subsections 4(b)(1) and (2) above, free and
clear of liens and encumbrances.
(v) Corporate resolutions authorizing the transaction provided for
herein.
(vi) All other documents reasonably requested by Response to
accomplish the transactions hereunder.
5. REPRESENTATIONS AND WARRANTIES OF RESPONSE. Response represents and warrants
to the Center that, except as set forth on the Disclosure Schedule attached
hereto as Schedule 5.0 and incorporated herein by reference (which Disclosure
Schedule makes explicit reference to the particular representation or warranty
as to which exception is taken, which in each case shall constitute the sole
representation and warranty as to which such exception shall apply):
(a) ORGANIZATION, QUALIFICATION, AND POWER OF RESPONSE. Response: (1) is
a duly organized and validly existing corporation under the laws of the State of
Tennessee; and (2) is qualified to do business and is in good standing in
Florida.
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(b) VALIDITY. Response has the full legal power and authority to
execute, deliver and perform the Agreement and all other agreements and
documents necessary to consummate the contemplated transactions and all actions
of Response necessary for such execution, delivery and performance have been or
will have been duly taken by Closing. The Agreement and all agreements related
to this transaction have been duly executed and delivered by Response and
constitute the legal, valid and binding obligation of Response enforceable in
accordance with their terms (subject as to enforcement of remedies to the
discretion of courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting the rights of
creditors generally). Any other agreement contemplated to be entered into by
Response in connection with the transactions contemplated by the Agreement, when
executed and delivered, will constitute the legal, valid and binding obligation
of Response, enforceable in accordance with its respective terms (subject as to
enforcement of remedies to the discretion of courts in awarding equitable relief
and to applicable bankruptcy, reorganization, insolvency, moratorium and similar
laws affecting the rights of creditors generally). Other than approval by the
Bankruptcy Court, the execution and delivery by Response of the Agreement and
the performance of its obligations under the Agreement, including the sale and
delivery of the Purchased Assets (including the assignment of the Assigned
Contracts) do not require any action or consent of any party other than Response
pursuant to any contract, agreement or other understanding of Response or
pursuant to any order or decree to which Response is a party or to which any of
Response's properties or assets are subject, and, will not violate any provision
of law, the Articles of Incorporation or Bylaws of Response, any of the Assigned
Contracts, any order of any court or other agency of the government, or any
indenture, agreement or other instrument to which Response or any of its
properties or assets are bound or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any of the
Assigned Contracts or any such indenture, agreement or other instrument or
result in the creation or imposition of any lien, claim encumbered by any nature
whatsoever upon any of the Purchased Assets.
(c) ASSETS FREE AND CLEAR. As of Closing, the Purchased Assets, pursuant
to an order of the Bankruptcy Court, will be deemed free and clear of any lien,
claim or encumbrance of any kind whatsoever.
(d) ASSIGNED CONTRACTS. Each of the Assigned Contracts is a valid and
existing contract or agreement, and as of Closing, pursuant to an order of the
Bankruptcy Court, the Assigned Contracts will be deemed free of default.
(e) TRANSFERRED EMPLOYEES. Set forth on Schedule 5(e) hereto is a list
of all Transferred Employees (as defined below), their respective titles, annual
compensation and severance compensation, if any, status as either full-time or
part-time employees and the aggregate accrued, but unused vacation time to which
each of the Transferred Employees is entitled as of the date of this Agreement
(and the rate by which additional paid vacation leave will accrue after the date
of this Agreement).
(f) FEES AND COMMISSIONS. Response has not agreed to pay or become
liable to pay any broker's, finder's, or originator's fees or commissions by
reason of services alleged to have been rendered for, or at the instance of, it
in connection with this Agreement or the transactions contemplated hereby.
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(g) TAXES. Response has prepared and filed all federal and state tax
returns including income, sales, payroll and withholding tax returns, required
to be filed by it. All taxes due by reason of the operations conducted by
Response in connection with the Center have been paid, including all taxes that
Response is obligated to withhold from accounts owing to the employees employed
at any of the Center's places of business.
(h) DISCLOSURE. No representation or warranty by Response in this
Agreement, and no exhibit, schedule, or certificate furnished or to be furnished
by Response pursuant hereto, (i) contains any untrue statement of a material
fact, or (ii) omits to state a fact required to be stated therein or necessary
to make the statements contained herein or therein, in light of the
circumstances in which they were made, not materially misleading.
6. REPRESENTATIONS AND WARRANTIES OF THE CENTER. The Center represents and
warrants to Response that except as set forth on the Disclosure Schedule
attached hereto as Schedule 6.0, and incorporated by reference (which Disclosure
Schedule makes explicit reference to the particular representation or warranty
as to which exception is taken, which in each case shall constitute the sole
representation and warranty as to which such exception shall apply):
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER OF THE CENTER. The
Center is (1) a duly organized and validly existing professional corporation
under the laws of the State of Florida; and (2) qualified to do business and is
in good standing in Florida.
(b) VALIDITY. Each of the Center and the Stockholders has the full legal
power and authority to execute, deliver and perform the Agreement and all other
agreements and documents necessary to consummate the contemplated transactions
and all corporate actions of the Center necessary for such execution, delivery
and performance have been or will have been duly taken by Closing. The Agreement
and all agreements related to this transaction have been duly executed and
delivered by each of the Center and the Stockholders, to the extent parties
thereto, and constitute the legal, valid and binding obligation of the Center
and/or the Stockholders, as the case may be, enforceable in accordance with
their terms (subject as to enforcement of remedies to the discretion of courts
in awarding equitable relief and to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the rights of creditors
generally). Any other agreement contemplated to be entered into by the Center in
connection with the transactions contemplated by the Agreement, when executed
and delivered, will constitute the legal, valid and binding obligation of the
Center, enforceable in accordance with its respective terms (subject as to
enforcement of remedies to the discretion of courts in awarding equitable relief
and to applicable bankruptcy, reorganization, insolvency, moratorium and similar
laws affecting the rights of creditors generally).
(c) FEES AND COMMISSIONS. Except for fees to The Bloom Organization, LLC
which shall be paid by the Center, neither the Center nor the Stockholders has
agreed to pay or become liable to pay any broker's, finder's, or originator's
fees or commissions by reason of services alleged to have been rendered for, or
at the instance of, the Center and/or the Stockholders in connection with this
Agreement and the transactions contemplated hereby.
(d) OTHER APPROVALS. All consents, approvals, qualifications, orders, or
authorizations of, or filings with, any governmental authority, including any
court or other third
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party, required in connection with the Center's valid execution, delivery, or
performance of this Agreement, or the consummation of any transaction
contemplated by this Agreement, shall have been duly made and obtained and shall
be effective on and as of the Closing Date.
(e) DISCLOSURE. No representation or warranty by the Center and/or the
Stockholders in this Agreement, and no exhibit, schedule, or certificate
furnished or to be furnished by the Center and/or the Stockholders pursuant
hereto, (I) contains any untrue statement of a material fact or (II) omits to
state a fact required to be stated therein or necessary to make the statements
contained herein or therein, in light of the circumstances in which they were
made, not materially misleading.
7. PRE-CLOSING COVENANTS.
(a) MUTUAL COVENANTS.
(i) APPROVAL OF SETTLEMENT AGREEMENT BY BANKRUPTCY COURT. As soon as
reasonably practicable after execution of this Agreement, the parties hereto
agree to submit this Agreement to the Bankruptcy Court under Rule 9019 of the
Federal Rules of Bankruptcy Procedure (the "BANKRUPTCY RULES"), and Sections
105, 363 and 365 of the Bankruptcy Code and to take all actions reasonably
necessary to obtain Bankruptcy Court approval of this Agreement and the relief
contemplated herein.
(ii) MANAGEMENT OF MEDICAL PRACTICE. From the date hereof through
the Closing, the Parties shall continue to perform their obligations under the
Service Agreement in the ordinary course (except as otherwise contemplated by
this Agreement and the Letter of Intent) and shall refrain from entering into or
consummating any transactions or engaging in any activities out of the ordinary
course of business (to the extent such transactions or activities relate to the
Service Agreement and/or the Center's medical practice) without the prior
written consent of the affected party.
(b) RESPONSE COVENANTS. Without limiting the foregoing, Response
expressly agrees that, without the prior written consent of the Center, until
Closing (or, if sooner, until termination of this Agreement), Response shall
not:
(i) advance additional monies to or on behalf of the Center out of
the ordinary course of business, as established by past practice;
(ii) pledge or encumber any of the Purchased Assets or incur any
indebtedness or obligations which are or will be secured by a lien on any of the
Purchased Assets or on any assets of the Center, other than property that is
already pledged or encumbered;
(iii) sell, transfer or dispose of any of the Purchased Assets
without the prior written consent of the Center, except for the sale, transfer
or disposal of pharmacy and laboratory supplies and inventory sold or consumed
in the ordinary course, consistent with past practices, and in accordance with
the terms of the Service Agreement; or
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(iv) execute, after the date of this Agreement, any new contracts,
leases or agreements with respect to the Center's medical practice or renew,
extend, amend, modify, sign or pledge any existing contracts, leases and
agreements included with the Assigned Contracts (or which, if in existence as of
Closing, would be within the Assigned Contracts), other than the pledge of
contracts, leases and agreements already pledged or collateralized.
In addition, Response agrees to use its reasonable efforts to maintain
all contractual arrangements with respect to the Center's medical practice in
effect as of February 28, 2002, and shall maintain all insurance obtained or
maintained with respect to any assets or property used or held for use
exclusively in the Center's medical practice, to the extent in place as of
February 28, 2002. Response also agrees to direct or instruct its employees
rendering services on Response's behalf at the Center's facility or facilities,
to abide by the instructions and directions of the Stockholders with respect to
the billing of services rendered by the Center and the collection of fees for
services rendered and goods sold; provided, that, such instructions or
directions do not violate the provisions of Section 7(c) below.
(c) THE CENTER'S COVENANTS. Without limiting any other covenants set
forth herein, the Center and the Stockholders expressly agree that, without the
prior written consent of Response, until Closing (or, if sooner, until
termination of this Agreement), the Center and the Stockholders shall not:
(i) fail to remit payments of any components of the Service Fee to
Response consistent with past practices and the terms of the Service Agreement
(except as otherwise provided for herein) and deposit/deliver all cash amounts
required by the Service Agreement;
(ii) alter their ordinary course, historical pattern of conduct in
collecting and attempting to collect accounts receivable (unless such different
conduct is intended to result in an overall increase in collections of
outstanding accounts receivables);
(iii) alter their ordinary course, historical pattern of conduct in
billing for services rendered (including but not limited to physician and
ancillary services);
(iv) materially increase or alter the historical patterns of the
pharmaceuticals and supplies which they request Response to purchase (and shall
not request or purchase extraordinary or unusual amounts of pharmaceuticals,
whether or not supported by any historical pattern, without Response's prior
consent);
(v) alter their ordinary course, historical pattern of conduct in
hours of work or in treating patients (including but not limited to the number,
type and financial ability of patients, and use of ancillary services); or
(vi) approve, implement, or make any capital expenditure without the
written approval of Response.
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8. OTHER AGREEMENTS.
(a) MUTUAL RELEASES.
(i) RESPONSE RELEASE. Upon and following Closing, Response, on
behalf of itself and its successors and assigns, and on behalf of any person
claiming by or through Response, does hereby forever and absolutely release and
discharge the Center, the Stockholders and each of the Center's and the
Stockholders' directors, officers, shareholders, representatives, employees,
agents, attorneys, parents, subsidiaries and other affiliated entities
(collectively, the "CENTER AFFILIATES") from any and all claims, demands,
losses, damages, causes of actions or liabilities of any kind or nature, whether
known or unknown, fixed or contingent, filed, unfiled or scheduled
(collectively, the "CLAIMS"), that Response now has or may have ever had from
the beginning of the world to Closing against the Center, the Stockholders or
any of the Center Affiliates, excluding only those Claims which Response may
have against the Center or the Stockholders arising out of or attributable to a
breach of any provisions of this Agreement.
(ii) THE CENTER AND STOCKHOLDERS' RELEASES. Upon and following
Closing, the Center and the Stockholders, both individually and in such
Stockholders' capacities as officers or directors of the Center, on behalf of
each of such party, each such party's successors and assigns, and on behalf of
any person claiming by or through each such party, does hereby forever and
absolutely release and discharge Response and each of Response's directors,
officers, shareholders, representatives, employees, agents, attorneys, parents,
subsidiaries and other affiliated entities (collectively, the "RESPONSE
AFFILIATES") from any and all Claims that the Center or the Stockholders now has
or may have ever had from the beginning of the world to Closing against Response
or any Response Affiliates, excluding only those Claims which the Center or the
Stockholders may have against Response arising out of or attributable to a
breach of any provisions of this Agreement. The Center would further release
Response from any and all obligations necessary to satisfy the award of the
arbitrator, Xxxxxx Xxxxxxx, issued on or about December 27, 2000.
(iii) DISMISSAL OF SUITS. At Closing, each of the Center and the
Stockholders, individually, and Response, to the extent applicable, shall
dismiss with prejudice all claims and/or contested matters, suits or other
actions that any such party has brought as of Closing, or which could have
brought as of Closing or can bring at or prior to Closing against any such other
party (or against any of the Center Affiliates or Response Affiliates, as the
case may be). As of the Closing, Response shall release all liens on the
accounts receivable of the Center. No additional payments other than those
expressly provided herein shall be paid for such releases or suit dismissals.
(b) EMPLOYEES. As of Closing, Response shall transfer the employment of
all of its personnel who physically provide services to the Center, on behalf of
Response, in accordance with the Service Agreement, at the Center's medical
facilities in Florida (individually, a "TRANSFERRED EMPLOYEE" and, collectively,
the "TRANSFERRED EMPLOYEES"). The Center and the Stockholders acknowledge their
present expectation to employ all or substantially all of the Transferred
Employees, however, Response acknowledges that the Center would have no
obligation to hire any specific Transferred Employee.
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The Center and the Stockholders agree to use their reasonable efforts to
cause all of the Transferred Employees whom the Center offers to employ after
Closing to waive any claims that such employees have or may have against
Response for severance benefits or otherwise. The Center agrees to assume, with
respect to all of the Transferred Employees employed by the Center after
Closing, all of such Transferred Employee's unused, paid vacation leave (as of
Closing) accrued while employed by Response; provided, that the Center receives
a credit towards payment of the Purchase Price/Termination Fee in an amount
equal to the dollar amount of any such accrued vacation leave which accrued
before January 1, 2002.
(c) TERMINATION OF NON-COMPETE. As of Closing, all non-compete and
non-solicitation obligations and covenants of the Center, the Stockholders and
the Transferred Employees hired by the Center after Closing shall be terminated
and be of no further legal force or effect.
(d) TRANSFER OF STOCK / CANCELLATION OF OPTIONS. The Center and the
Stockholders shall transfer (or cause to be transferred) to Response any shares
of Response common stock, par value $0.01 per share ("RESPONSE STOCK"), in its
or their possession as of the Closing, if any, and the Stockholders would
surrender and/or terminate any options to purchase Response Stock that are
outstanding as of the Closing.
9. CONDITIONS TO CLOSING.
(a) CONDITIONS PRECEDENT TO OBLIGATIONS OF RESPONSE. Response's
obligation to consummate the purchase of the Purchased Assets and the other
transactions contemplated to occur in connection with the Closing is subject to
the satisfaction of each condition precedent listed below (unless explicitly
waived by Response):
(i) The Bankruptcy Court shall have approved this Agreement and the
relief contemplated herein.
(ii) Each and every representation and warranty made by the Center
and the Stockholders is true in all material respects when made and is true as
of the Closing Date in all material respects as if originally made on the
Closing Date.
(iii) All material obligations of the Center and the Stockholders to
be performed between the Execution Date and the Closing Date have been
performed.
(iv) All documents, instruments and amounts required to have been
delivered by the Center and/or the Stockholders pursuant to Section 4(b) hereof,
and all actions required to have been taken by the Center and/or the
Stockholders, shall have been delivered or taken (unless otherwise waived by
Response) as applicable, including without limitation payment of the
consideration described in Section 3 hereof and delivery of all releases.
(v) No suit or proceeding shall be pending by any governmental
agency on any grounds, to restrain, enjoin or hinder the transactions
contemplated under this Agreement.
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(vi) All corporate and other proceedings to be undertaken by the
Center and the Stockholders in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably satisfactory in
form and substance to Response and its counsel, and Response and its counsel
shall have received all such counterpart originals or certified or other copies
of such documents as they reasonably may request.
(b) CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CENTER. The Center's
obligation to consummate the purchase of the Purchased Assets and the other
transactions contemplated to occur in connection with the Closing is subject to
the satisfaction of each condition precedent listed below (unless explicitly
waived by the Center):
(i) The Bankruptcy Court shall have approved this Agreement and the
relief contemplated herein.
(ii) Each and every representation and warranty made by Response is
true in all material respects when made and is true as of the Closing Date in
all material respects as if originally made on the Closing Date.
(iii) All material obligations of Response to be performed between
the Execution Date and the Closing Date have been performed.
(iv) All documents, instruments and amounts required to have been
delivered by Response pursuant to Section 4(a) hereof, and all actions required
to have been taken by Response, shall have been delivered or taken (unless
otherwise waived by the Center) as applicable.
(v) No suit or proceeding shall be pending by any governmental
agency on any grounds, to restrain, enjoin or hinder the transactions
contemplated under this Agreement.
(vi) All corporate and other proceedings to be undertaken by
Response in connection with the transactions contemplated hereby and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Center and its counsel, and the Center and its counsel shall
have received all such counterpart originals or certified or other copies of
such documents as they reasonably may request.
10. ACCESS TO RECORDS.
(a) THE CENTER. At all times following the execution date hereof and up
to Closing, in furtherance of the Center's acquisition of the Purchased Assets
and the termination of the Service Agreement, Response agrees to provide the
Center, and its legal, accounting and financial representatives, access to and,
if requested, copies of such of Response's books, records, documents and
information, including contracts, leases and agreements, to the extent they
relate to the Purchased Assets or the Center's medical practice, as the Center
may reasonably request, from time-to-time. All costs incurred in connection
therewith by the Center or any of its representatives, shall be borne solely by
the Center.
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(b) RESPONSE. After Closing, Response (or its successor) and its legal,
accounting and financial representatives shall have such reasonable access to
and, if requested, copies of all records within the Center's or the
Stockholders' control or possession as is reasonably required for purposes of
the administration of its bankruptcy estate, or as otherwise reasonably needed,
subject to applicable laws or the provisions of any agreement to which the
Center is subject to, including laws restricting access to confidential patient
information. All costs incurred in connection therewith by Response or any of
its representatives shall be borne solely by Response.
11. CONFIDENTIALITY. Each party shall keep the contents of this Settlement
Agreement confidential until after disclosure to the Bankruptcy Court. In
addition, the parties hereto have received and hereafter may receive various
financial and other information concerning the activities, business, assets, and
properties of the other parties hereto. The parties agree that (a) all such
information thus received by a party hereto shall not at any time, or in any way
or manner, be utilized by such party for its respective advantage or disclosed
by it to others for any purpose whatsoever; and (b) the parties shall take all
reasonable measures to assure that no employee or agent under its respective
control shall at any time improperly use or disclose any information described
in this Section. This Section shall not apply to (I) any such information that
was known or available to a party prior to its disclosure to such party in
accordance with this Section or was, is, or becomes generally available to the
public other than by disclosure by the party or any of its respective employees
or agents in violation of this Section; (II) any disclosure that such party
makes to any regulatory agency pursuant to that party's obligations of
disclosure to such agency; (III) any disclosure that is necessary or appropriate
in obtaining any consent or approval required for the consummation of the
transactions contemplated by this Agreement; or (IV) any disclosure required by
or necessary or appropriate in connection with legal proceedings. In the event
this Agreement is terminated prior to the Closing, the Parties agree that they
shall promptly return to the originating party the confidential information of
the other.
12. TERMINATION.
(a) This Agreement may, by notice given prior to or at the Closing, be
terminated:
(i) by the Center, if a material breach of this Agreement has been
committed by Response and such breach has not been expressly waived by the
Center in writing and has not been cured by the earlier of (A) ten (10) days
after written notice of such breach has been provided to Response, or (B) the
Closing Date;
(ii) by Response, if a material breach of this Agreement has been
committed by the Center and such breach has not been expressly waived by
Response in writing and has not been cured by the earlier of (A) ten (10) days
after written notice of such breach has been provided to the Center, or (B) the
Closing Date;
(iii) by the Center if any of the conditions in Section 9(b) have
not been satisfied as of the Closing Date or if satisfaction of such condition
is or becomes impossible (other than through failure of the Center to comply
with its obligations under this Agreement) and the Center has not expressly
waived such condition in writing on or before the Closing Date;
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(iv) by Response, if any of the conditions in Section 9(a) have not
been satisfied as of the Closing Date or satisfaction of such condition is or
becomes impossible (other than through failure of Response to comply with its
obligations under this Agreement) and Response has not expressly waived such
condition in writing on or before the Closing Date; or
(v) by written mutual consent of Response and the Center.
(b) Termination of this Agreement shall be without prejudice to any
other right or remedy of either of the Parties hereto. The parties agree that
except as modified by this Agreement and the Letter of Intent, the Service
Agreement shall remain in effect until the Closing of the transactions
contemplated hereby. In the event the transactions contemplated herein are not
approved by the Bankruptcy Court or this Agreement is terminated for any reason,
the Service Agreement shall continue in full force and effect, retroactive to
January 1, 2002.
13. MISCELLANEOUS.
(a) COSTS. Each party will be responsible for its own legal, accounting
and other expenses incurred in connection with this letter of intent and the
transactions contemplated herein.
(b) INTEGRATED AGREEMENT. This Agreement constitutes the entire
understanding of the parties in respect of the subject matter hereof and
supersedes and replaces all prior understandings and agreements of the parties,
oral or written, in respect of the subject matter of the Agreement, including
the Letter of Intent. The provisions of this Agreement may be amended,
supplemented, waived, or changed only by a writing signed by the party against
whom enforcement of any such amendment, supplement, waiver, or modification is
sought and making specific reference to this Agreement.
(c) ASSIGNMENT. Neither party may assign its rights and/or delegate its
obligations hereunder without the prior written consent of the other party,
which consent shall not be unreasonably withheld.
(d) NOTICES. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
facsimile and telegraphic communication) and shall be (as elected by the person
giving such notice) hand delivered by messenger or courier service,
telecommunicated (to be followed by hard copy by overnight delivery), or mailed
by registered or certified mail (postage prepaid), return receipt requested,
addressed to such address as any party may designate by notice complying with
the terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery, and (b) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
Notices in respect of this Agreement shall be provided to the following
individuals or entities:
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If to Response:
Response Oncology, Inc.
0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. XxXxxxxxx
Facsimile: 000-000-0000
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxx, Xx.
Facsimile: 000-000-0000
If to the Center:
The Center for Hematology-Oncology, P.A.
0000 X.X. 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxx, M.D.
Facsimile: _________________
with a copy to:
Xxxxx Xxxxx, Esquire
000 Xxxxx 00
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
If any notice is being sent to either Response or the Center, notice
shall also be sent to:
AmSouth Bank, as Agent for the Banks
Special Assets Department
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Xx.
Facsimile: 000-000-0000
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with a copy to:
Waller, Lansden, Xxxxxx & Xxxxx, PLLC
Nashville City Center
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Guy, Esquire
Facsimile: 615-244-6804
(e) SEVERABILITY. If any part of this Agreement or any other Agreement
entered into pursuant hereto is contrary to, prohibited by or deemed invalid
under applicable law or regulation, such provision shall (to the extent such
omission will not materially alter the remaining terms of this Agreement) be
inapplicable and deemed omitted to the extent so contrary, prohibited, or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given full force and effect so far as possible.
(f) WAIVER. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if known,
shall not affect the rights of such party to require performance of that
provision or to exercise any right, power, or remedy hereunder, and any waiver
by any party of any breach of any provision of this Agreement shall not be
construed as a waiver of the provision itself, or a waiver of any right, power,
or remedy under this Agreement. No notice to or demand on any party in any case
shall, of itself, entitle such party to any other or further notice or demand in
similar or other circumstances.
(g) THIRD PARTY BENEFICIARIES. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any person other than the parties hereto and their
respective legal representatives, successors and permitted assigns, nor is
anything in this Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement, nor shall any
provision give any third persons any right of subrogation or action over or
against any party to this Agreement.
(h) EXCLUSIVE REMEDIES. No remedy herein conferred upon any party is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. No single or partial exercise by any party of any right, power, or
remedy hereunder shall preclude any other or further exercise thereof.
(i) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. Any and all disputes that may
arise with respect to this letter of intent or the Settlement Agreement
excluding disputes concerning the computation of the Final Reconciliation, which
disputes are to be resolved in accordance with Section 3(e) above (subject to
enforcement by the Bankruptcy Court), shall be adjudicated by the Bankruptcy
Court to the extent that its jurisdiction permits, and neither party shall
object to the jurisdiction of the Bankruptcy Court for any purpose or to its
jurisdiction over their person.
(j) NO SURVIVAL. In no event will any representation or warranty survive
the Closing.
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(k) FURTHER ASSURANCES. In addition to the actions, documents, and
instruments specifically required to be taken or delivered hereby, prior to and
after the Closing and without further consideration, the parties hereto shall
execute, acknowledge, and deliver such other assignments, transfers, consents,
and other documents and instruments and take such other actions as any other
party, or their counsel, may reasonably request in order to complete and perfect
the transactions contemplated by this Agreement.
(l) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(m) HEADINGS. The use in this Agreement of paragraph headings is for
convenience only and is not intended to limit or enlarge the rights of any
party.
(n) SUCCESSORS AND ASSIGNS. The terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assign, including, but not limited to any trustee
appointed in the Chapter 11 Bankruptcy Case of Response or in any Chapter 7 case
to which the Chapter 11 Bankruptcy Case of Response may be converted. The terms
of this Agreement shall survive and may not be modified in any way by
confirmation of a Chapter 11 plan of reorganization in the bankruptcy case of
Response, regardless of who the proponent of such plan(s) may be.
Signature Page Follows
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
RESPONSE ONCOLOGY, INC.
By:
-------------------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: President and CEO
THE CENTER FOR HEMATOLOGY-ONCOLOGY, P.A.
By:
-------------------------------------
Name: Xxxxxx Xxxxx, M.D.
Title: President
STOCKHOLDERS
----------------------------------------
Name: Xxxxxx Xxxxx, M.D.
----------------------------------------
Name: Xxxxx Xxxxxxxxx, M.D.
----------------------------------------
Name: Xxxxxx Xxxxxxx, M.D.
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