EXHIBIT 10(ac)
TERMINATION OF SERVICE AGREEMENT AND
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This Termination of Service Agreement and Agreement for Purchase and
Sale of Assets ("AGREEMENT") is made as of the 31st day of January, 2001, by and
between RESPONSE ONCOLOGY, INC., a Tennessee corporation ("RESPONSE") and
ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A., a Florida professional service
corporation ("ONCOLOGY").
RECITALS:
WHEREAS, Response and Oncology entered into a Service Agreement dated
January 2, 1996, as amended February 25, 1997 ("1ST AMENDMENT"), August 15, 1997
("2ND AMENDMENT") and July 20, 1999 ("3RD AMENDMENT") (collectively, the
"SERVICE AGREEMENT"), pursuant to which Response agreed to perform certain
practice management functions described therein in exchange for payment by
Oncology to Response of various fees, as described therein; and
WHEREAS, Oncology desires to decrease its operating expenses; and
WHEREAS, the parties mutually desire to terminate the Service Agreement
and all of the parties' respective obligations and liabilities thereunder
(except as otherwise provided herein), and to provide for the transfer and/or
assumption of certain assets and liabilities, all upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the purchase price described hereunder and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
1. Recitals. The recitals set forth above are true and correct and are
incorporated herein by reference.
2. Termination of Service Agreement.
(a) Subject to the performance by each of the parties of their
respective obligations under this Agreement, and the survival of any obligations
which by the terms of this Agreement are intended to survive, the parties hereby
terminate the Service Agreement effective as of the Closing Date (as hereinafter
defined). In addition to the other transactions described herein, as
consideration for the termination of the Service Agreement which Oncology
believes will significantly reduce the operating expenses, and the mutual
release of the parties from their respective obligations thereunder, Oncology
shall pay to Response at Closing via cashier's or attorney's trust account check
or wire transfer Three Million Four Hundred Ninety-Eight Thousand Dollars and
00/100 ($3,498,000.00) (the "TERMINATION FEE") (based upon EBITDA of
$1,479,200.00), subject to adjustments, prorations, credits and setoffs
hereinafter described.
(b) It is the parties' intent that the Termination Fee shall be an
amount equal to 2.5 times EBITDA (including all ancillary and professional
departments of Oncology) for the calendar
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year 2000, as EBITDA is customarily reported on the Response/Oncology Statement
of Operations, based on accounting principles consistently applied with prior
practice, less Two Hundred Thousand Dollars ($200,000.00) (the "FORMULA
TERMINATION FEE"). In the event the calendar year 2000 EBITDA has not been
determined as of the Closing Date (as hereinafter defined), an appropriate
adjusting payment shall be made within thirty (30) days after the Closing Date
by Oncology to Response if the Formula Termination Fee exceeds the Termination
Fee or by Response to Oncology if the Formula Termination Fee is less than the
Termination Fee. The parties both acknowledge and agree to the EBITDA figure as
it is reflected on the Response/Oncology Statement of Operations dated as of
December 31, 2000, which is attached hereto as EXHIBIT 2.
3. [REPAYMENT OF RESPONSE NOTES AND TERMINATION OF STOCK OPTIONS.
ONCOLOGY SHALL RECEIVE AS A CREDIT AGAINST THE TERMINATION FEE, AN AMOUNT EQUAL
TO THE OUTSTANDING PRINCIPAL AND INTEREST BALANCE OF THOSE CERTAIN PROMISSORY
NOTES WITH AN AGGREGATE ORIGINAL PRINCIPAL AMOUNT OF ONE MILLION EIGHT HUNDRED
TEN THOUSAND FIVE HUNDRED EIGHT DOLLARS AND 70/100 ($1,810,508.70) FROM RESPONSE
TO THE SHAREHOLDERS OF ONCOLOGY, WHICH ARE ATTACHED AS EXHIBIT 3(I) HERETO (THE
"RESPONSE NOTES"). THE PARTIES AGREE THAT THE AMOUNT NECESSARY TO SATISFY THE
RESPONSE NOTES IN FULL AS OF THE CLOSING DATE IS SEVEN HUNDRED FORTY-ONE
THOUSAND DOLLARS AND 00/100 ($741,000.00). ONCOLOGY SHALL RECEIVE A FURTHER
CREDIT AGAINST THE TERMINATION FEE IN THE AMOUNT OF TEN THOUSAND DOLLARS
($10,000.00) WHICH THE PARTIES AGREE IS EQUAL TO THE VALUE OF THOSE CERTAIN
STOCK OPTIONS IN FAVOR OF ONCOLOGY'S STOCKHOLDERS, AS DESCRIBED AND AS LISTED IN
EXHIBIT 3(II) HERETO AND INCORPORATED HEREIN (THE "RESPONSE STOCK OPTIONS").
ONCOLOGY SHALL CAUSE ITS SHAREHOLDERS TO SATISFY AND CANCEL THE RESPONSE NOTES
AND DELIVER SAME TO RESPONSE. ONCOLOGY SHALL FURTHER CAUSE ITS SHAREHOLDERS TO
TERMINATE ALL OF THE RESPONSE STOCK OPTIONS AT CLOSING SUCH THAT THE RESPONSE
STOCK OPTIONS ARE OF NO FURTHER FORCE OR EFFECT.]
4. Accounts Receivable Credit Line. Pursuant to paragraph 5 of the 2nd
Amendment to the Service Agreement, Response established an accounts receivable
line of credit (the "RECEIVABLES LINE" as described therein), constituting a
line of credit available to Oncology and secured by a first priority security
interest in and to all Accounts Receivable (as defined in the Service
Agreement). As of the date hereof (the "EFFECTIVE DATE" or the "CLOSING DATE")
the Receivables Line is Six Million Six Hundred and Sixty Five Thousand Dollars
($6,665,000.00). A listing of the Medicare, Medicaid, and CHAMPUS/TriCare
program receivables is set forth on EXHIBIT 4-1 (the "MEDICARE ACCOUNTS
RECEIVABLE"). A listing of all Accounts Receivable other than the Medicare
Accounts Receivable is set forth on EXHIBIT 4-2 (the "NON-MEDICARE ACCOUNTS
RECEIVABLE"). On the Closing Date, Oncology shall assign all of its rights,
title, and interest in and to the Non-Medicare Accounts Receivable to Response.
Oncology hereby assigns to Response a first priority security interest, to be
evidenced by a Security Agreement in the form attached hereto as EXHIBIT 4-3, in
and to the proceeds of the Medicare Accounts Receivable and hereby agrees that
it shall pay out an amount equal to the amount of such proceeds to Response on a
continuing basis. The parties agree to amend EXHIBITS 4-1 AND 4-2 to more
accurately reflect the actual accounts receivable within twenty (20) days after
Closing. The following provisions shall also apply with respect to the
assignment of the Non-Medicare Accounts Receivable, the security interest in the
proceeds of the Medicare Accounts Receivable and the satisfaction of the
Receivables Line:
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(a) To assist Response in collecting the Accounts Receivable,
Oncology will promptly cooperate and assist in such collection efforts as
reasonably requested by Response, in a manner consistent with prior practice. In
regard to both Non-Medicare Accounts Receivable and Medicare Accounts
Receivable, Oncology shall receive collections on account of said Accounts
Receivable and pay an amount equal to all amounts actually collected to Response
on a weekly basis. Oncology shall allow an employee or agent of Response to be
on-site at Oncology's billing and collections office and to have full access to
review, copy and transmit all incoming payments, explanations of benefits, and
other correspondence and documents relating to the collection of the Accounts
Receivable. In addition, said employee shall have "read only" access to
Oncology's medical billing information system for dates of service subsequent to
the Closing Date. The parties acknowledge and agree that in the event the
aforesaid procedure in regard to payments on account of the Medicare Accounts
Receivable are not permitted under applicable laws, rules, or regulations
affecting same, then the parties shall use such other reasonable means to effect
substantially the same results.
(b) The parties agree and acknowledge that the assignment of Accounts
Receivable pursuant to this SECTION 4 shall constitute satisfaction in full of
the Receivables Line, notwithstanding the amount or success of actual
collectability of the Accounts Receivables by Response or any other party.
Response shall deliver such releases of the Receivables Line, as may be
necessary to satisfy all liability of Oncology and/or its principals under the
Receivables Line and to release Oncology's Accounts Receivable arising after the
Closing Date from any liens, including, but not limited to, UCC-3 amendments to
financing statements, limiting the lien of Response and/or any other party
claiming by or through Response to the Accounts Receivable, to the actual
Accounts Receivable as of the Closing Date. Response shall indemnify Oncology
and hold it harmless against any and all claims, losses, liabilities and damages
incurred by Oncology as a result of the failure of Response to obtain such
releases of the Receivables Line and the release of liens, if any, on Oncology's
Accounts Receivable created after the Closing Date.
(c) As a condition precedent to Oncology's and to Response's
obligation to close hereunder, in addition to such releases, and other documents
and instruments required by Oncology pursuant to SECTION 4(B) hereunder,
Oncology shall have received a statement in the form of EXHIBIT 4(C) attached
hereto and incorporated herein by reference, executed by AmSouth, Response's
lead lender for the Receivables Line ("RESPONSE ACCOUNTS RECEIVABLE LOAN"), on
its own behalf and on behalf of all other lenders who have participated in the
Response Accounts Receivable Loan, stating each of the following:
(i) it has received and reviewed this Agreement;
(ii) it has reviewed the terms and provisions of this
Termination Agreement with counsel of its choosing and
has accepted the same as being fair and reasonable and
that the property tendered by Response to Oncology is a
fair and reasonably equivalent value for the
consideration being paid to Response by Oncology;
(iii) subject to assignment of the Non-Medicare Accounts
Receivable and grant by Oncology of a first priority
security interest in the Medicare
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Accounts Receivable, it releases any claims against
Oncology and Oncology's Representatives (as defined in
SECTION 10(A) below) and all liens or encumbrances
against the assets of Oncology other than the Accounts
Receivable arising prior to the Closing Date;
(iv) it acknowledges that the Amsouth acknowledgment and
estoppel letter shall constitute a release of all liens
and encumbrances against the assets of Oncology other
than the Accounts Receivable arising prior to the
Closing Date; and
(v) its commitment to execute and deliver such releases,
satisfactions, and termination statements, as shall be
necessary to release or discharge any liens against
Oncology's assets created or arising in connection with
the Response receivables loan that relate to the
Accounts Receivable arising after the Closing Date.
(d) [WITH RESPECT TO ALL ACCOUNTS RECEIVABLE ARISING FROM THE
RADIATION THERAPY PROFIT CENTER (AS DEFINED IN THE "SERVICE AGREEMENT") AS
LISTED ON EXHIBIT 4(D) ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE (THE
"RADIATION ACCOUNTS RECEIVABLE"), OHAWB, THROUGH ITS AGENT, MEDICAL SPECIALTY
SUPPORT, WILL CONTINUE TO XXXX AND COLLECT ALL RADIATION ACCOUNT RECEIVABLE ON
BEHALF OF RESPONSE, IN THE ORDINARY COURSE AND SHALL ENSURE THE PROMPT AND
ON-GOING PAYMENT OF AMOUNTS SO COLLECTED TO RESPECT ON A WEEKLY BASIS. AS
COMPENSATION THEREFOR, OHAWB SHALL BE ENTITLED TO 7% OF ALL AMOUNTS ACTUALLY
COLLECTED. I SHALL UTILIZE SUBSTANTIALLY THE SAME COLLECTION PRACTICES AS IT HAS
PROVIDED PRIOR TO CLOSING. FURTHER, RESPONSE SHALL BE ENTITLED TO REVIEW, COPY,
AND TRANSMIT INCOMING PAYMENTS, EXPLANATIONS OF BENEFITS AND OTHER
CORRESPONDENCE AND DOCUMENTS RELATING TO THE RADIATION ACCOUNTS RECEIVABLE, AS
WELL AS, TO "READ ONLY" ACCESS TO THE RELEVANT MEDICAL BILLING INFORMATION
SYSTEM FOR DATES OF SERVICE SUBSEQUENT TO THE CLOSING DATE. THE PARTIES AGREE TO
AMEND EXHIBIT 4(D), LISTING THE RADIATION ACCOUNTS RECEIVABLE TO MORE ACCURATELY
REFLECT THE SAME WITHIN TWENTY (20) DAYS AFTER CLOSING. OHAWB SHALL NOT MAKE
ADJUSTMENTS TO THE RADIATION ACCOUNTS RECEIVABLE OTHER THAN TO REFLECT
CONTRACTUAL ALLOWANCES AND POST PAYMENTS. OHAWB SHALL NOT WRITE OFF ANY OF SUCH
RADIATION ACCOUNTS RECEIVABLE WITHOUT THE PRIOR WRITTEN APPROVAL OF RESPONSE.
FURTHER, OHAWB AGREES TO EXERCISE REASONABLE COMMERCIAL CARE AND DILIGENCE IN
ITS COLLECTION EFFORTS AND SHALL NOT TAKE ACTION WHICH IS INCONSISTENT WITH
EITHER APPLICABLE LAW, RULE, OR REGULATION AFFECTING THE COLLECTION OF DEBTS
AND/OR PRIOR COLLECTION PRACTICES.]
5. Premises and Equipment Leases. Subject to the terms and conditions
set forth in this Agreement, by assignment or other appropriate instrument of
transfer, Response shall assign to Oncology the premises lease for the Baptist
Medical Arts Building, East Tower, 0000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000X,
business location (the "ASSIGNED LEASE") and Oncology shall assume and agree to
perform and to pay when due all remaining obligations on the Assigned Lease.
Copies of all of the premises leases for the business locations in which
Oncology operates (the "PREMISES LEASES") have been provided to Oncology and a
listing of same is attached as EXHIBIT 5(I) hereto. Copies of all of the leases
on equipment and other tangible personal property utilized by Oncology at any of
its
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business locations (the "EQUIPMENT LEASES") have been provided to Oncology and a
listing of same is attached as composite EXHIBIT 5(II) hereto. The parties
acknowledge and agree that in the event the Assigned Lease cannot be transferred
or assigned by Response without the consent of or notice to a third party and in
respect of which any necessary consent or notice has not as of the Closing Date
been given or obtained, Response covenants and agrees (a) to use reasonable
means to obtain and to secure such consent and give such notice as may be
required to effect a valid transfer of such property, assets, or rights, and (b)
to make or complete such transfer or transfers as soon as reasonably possible.
Further, in the event Response is required to remain primarily obligated under
the Assigned Lease, notwithstanding the assignment and assumption, Oncology
shall indemnify Response from and hold it harmless against any and all costs,
expenses, claims, or liabilities to which Response is subject, which should
properly be attributable to Oncology as a result of the assignment and
assumption of leases. Response shall assign to Oncology its interests, if any,
in the Premises Leases and Equipment Leases and Oncology shall assume and agree
to perform and to pay when due all remaining obligations on the Premises Leases
and Equipment Leases. Notwithstanding the foregoing, all obligations under the
Premises Leases and the Equipment Leases shall be prorated as of the Closing
Date and, Response shall remain obligated for and shall indemnify Oncology from
and hold it harmless against, any amounts due through the Closing Date and
Oncology shall be obligated for and shall indemnify Response from and hold it
harmless against any amounts from and after the Closing Date.
6. Purchase and Sale. Subject to the terms and conditions set forth in
this Agreement, Response agrees to sell, convey, transfer, assign and deliver to
Oncology, free and clear of all liens and encumbrances, and Oncology agrees to
purchase from Response for the cash purchase price set forth in SECTION 7 below,
certain of the assets of Response consisting of all or substantially all of the
assets used in the operation of Oncology's business, as described below:
(a) All property, furniture, fixtures, and equipment currently
utilized by Oncology in its practice at any location, a list of which is
attached as EXHIBIT 6(A) hereto and incorporated herein by reference (the
"PERSONAL PROPERTY"). The purchase price allocated to the Personal Property is
intended to be the book value thereof as reflected on the books and records of
Response, as further described in accordance with SECTION 7 hereof;
(b) All usable supply inventory, both on hand at the offices of
Oncology and in transit, as listed on EXHIBIT 6(B) hereto and incorporated
herein by reference (the "SUPPLY INVENTORY"). The parties agree to amend EXHIBIT
6(B) to more accurately reflect the actual amount of supply inventory within
twenty (20) days after the Closing Date. The purchase price allocated to the
Supply Inventory is intended to be the cost price thereof, as further described
in accordance with SECTION 7 hereof;
(c) All of Response's rights in and to all of the unused portion of
expenses which have been prepaid in connection with the assets transferred
hereunder ("PREPAID EXPENSES") and in deposits and advances which have been paid
in connection therewith, including, but not limited to, the Premises Leases and
the Equipment Leases ("DEPOSITS AND ADVANCES") in the amount set forth in
SECTION 7 hereof. The Deposits and Advances and Prepaid Expenses are listed and
described on EXHIBIT 6(C) attached hereto and incorporated herein by reference.
The parties agree to amend
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EXHIBIT 6(C) to more accurately reflect the actual amount of Deposits and
Advances within twenty (20) days after Closing;
(d) All of the goodwill associated with Oncology's practice;
(e) The parties agree that, upon the updating of EXHIBITS 6(B), 6(C),
AND 8, and in any case, no later than twenty (20) days after the Closing Date
appropriate adjusting payments, if any, will be made;
(f) The parties acknowledge and agree that in the event any property,
assets or rights to be transferred or assigned to Oncology cannot be transferred
or assigned by Response without the consent of or notice to a third party and in
respect of which any necessary consent or notice has not as of the Closing Date
been given or obtained, Response covenants and agrees (a) to hold such property,
assets or rights for the use of Oncology; (b) to use reasonable means to obtain
and to secure such consent and give such notice as may be required to effect a
valid transfer of such property, assets, or rights; and (c) to make or complete
such transfer or transfers as soon as reasonably possible.
7. Allocation of Purchase Price and Termination Fee. The purchase price
and Termination Fee shall be allocated, subject to adjustments, prorations,
credits and setoffs described herein, in the manner set forth below (the
"PURCHASE PRICE AND TERMINATION FEE ALLOCATION"):
Termination of Restrictive Covenants and Sale of Good Will $ 200,000
Supply Inventory $ 10,000
Personal Property $ 45,000
Deposits and Advances and Prepaid Expenses $ 86,000
Termination Fee (as described in paragraph 2(a) $3,498,000
TOTAL CASH PURCHASE PRICE $3,839,000
Response and Oncology each hereby covenant and agree that they will not
take a position that is in any manner inconsistent with this SECTION 7 on any
income tax returns, before any governmental agency charged with the collection
of any income tax or in any judicial, quasi-judicial and/or administrative
proceedings. The parties acknowledge that the Non-Medicare Accounts Receivable
are being assigned and an amount equal to the proceeds of the Medicare Accounts
Receivable are being paid in full satisfaction of the Receivables Line.
8. Accounts Payable.
(a) Response shall remain obligated for and agree to pay in full when
due, consistent with the prior business practices of Response, all trade
accounts payable and other liabilities arising from or created in connection
with Oncology's business prior to the Closing Date, including, but not limited
to, the accounts payable listed on EXHIBIT 8 attached hereto and incorporated
herein by reference (the "ACCOUNTS PAYABLE") except the liabilities existing
under the Equipment Leases, the Premises Leases, the Assigned Lease and any
other contracts which will be assumed or continued by Oncology on and after the
Closing Date. Response agrees that the
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Accounts Payable (as herein defined to include obligations arising through the
Closing Date) are the sole obligation of Response (notwithstanding that invoices
therefor may list the purchaser as Oncology) and agrees to pay the Accounts
Payable in full when due and consistent with the prior business practices of
Response.
(b) The parties agree to amend EXHIBIT 8 within twenty (20) days
after the Closing Date to accurately reflect actual Accounts Payable as of the
day before the Closing Date, consistent with the prior practices of Oncology and
Response. As described in SUBPARAGRAPH 6(E) above, an appropriate adjusting
payment shall be made by Response to Oncology or Oncology to Response, as
appropriate, within twenty (20) days after the Closing Date.
9. Termination of Restrictive Covenants/Payment for Goodwill. In
consideration of the sum of Two Hundred Thousand Dollars ($200,000.00), which
Oncology shall pay to Response simultaneously with the Closing hereof, in
addition to the sale of goodwill described in SECTION 6(D), the restrictive
covenants of the physicians employed by Oncology (described in Article 7 of the
Service Agreement) are hereby terminated.
10. Releases.
(a) Except for its rights and Oncology's obligations arising from
this Agreement, Response does hereby remise, release, acquit, satisfy, and
forever discharge Oncology and Oncology's present and former shareholders,
officers, directors, employees, agents and attorneys and its and their heirs,
successors, and employees, and each of them (collectively "ONCOLOGY'S
REPRESENTATIVES"), of and from, any and all manner of actions, causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, executions, claims and demands
whatsoever, in law or in equity or otherwise, whether known or unknown, matured
or unmatured, which Response ever had, now has, hereafter can, shall or may have
against Oncology and/or Oncology's Representatives arising from or relating to
acts or omissions which occurred prior to the Closing Date (specifically
including, but not limited to, the restrictive covenants referred to in SECTION
9 above) except those relating to medical malpractice claims and those relating
to fraudulent acts or omissions by Oncology and/or Oncology's Representatives.
Notwithstanding the foregoing, in the event that any claim(s) relating to
statements or submissions made to governmental or other payors is asserted
against Response or Response's Representatives (as defined below), or any of
them, by a person or entity which is not a party to this Agreement, Response or
Response's Representatives (as defined below), and each of them, hereby
specifically reserve and retain any and all rights, claims, and defenses which
they, or any of them, now have, have had, or would otherwise have against
Oncology or Oncology's Representatives, or any of them, arising out of the
act(s) or omission(s) which is the subject matter of each claim(s) against
Response or Response's Representatives (as defined below), or any of them.
(b) Except for its rights and Response's obligations arising from
this Agreement, Oncology does hereby remise, release, acquit, satisfy, and
forever discharge Response and Response's present and former shareholders,
officers, directors, employees, agents and attorneys and its and their heirs,
successors, and assigns, and each of them, (collectively "RESPONSE'S
REPRESENTATIVES"), of and from, any and all manner of actions, causes of action,
suits, debts, dues,
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sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, executions, claims and demands whatsoever, in law or in equity or
otherwise, whether known or unknown, matured or unmatured, which Oncology ever
had, now has, hereafter can, shall or may have against Response and/or
Response's Representatives, arising from or relating to facts or circumstances
which occurred prior to the Closing Date, except those relating to fraudulent
acts or omissions by Response and/or Response's Representatives. Notwithstanding
the foregoing, in the event that any claim(s) relating to statements or
submissions made to governmental or other payors is asserted against Oncology or
Oncology's Representatives, or any of them, by a person or entity which is not a
party to this Agreement, Oncology or Oncology's Representatives, hereby
specifically reserve and retain any and all rights, claims, and defenses, which
they, or any of them, now have, have had, or would otherwise have against
Response or Response's Representatives, or any of them, arising out of the
act(s) or omission(s) which is the subject matter of each claim(s) against
Oncology or Oncology's Representatives, or any of them.
(c) The parties agree that their respective liability for any claim
relating to statements or submissions made to governmental or other payors shall
be allocated among the parties pro rata as follows with respect to the charge
giving rise to such claim(s): (i) for charges made after January 1, 1998, 88.5%
to OHAWB and 11.5% to Response. Notwithstanding the relative obligation
therefor, the parties agree that prior to any payment being made by either party
in regard to any such claim(s) relating to statements or submissions made to
governmental or other payors, both parties will use their best efforts to
resolve such claims in the most cost efficient manner.
11. Employees. Effective as of the Closing Date, the employment of any
Executive Director (as such position is described in SECTION 5.6 of the Service
Agreement)and all other administrative personnel employed by Response at a
Clinic (as defined under SECTION 2.1 of the Service Agreement) shall be
terminated effective as of the Closing Date. All of such individuals shall be
hired by Oncology as employees simultaneous with such persons' termination of
employment by Response, effective as of the Closing Date. All expenses of
employment, including, but not limited to, salaries, benefits, taxes, insurance
and other costs, shall be prorated as of the Closing Date. Oncology agrees that,
for a period of two (2) years after Closing, neither it nor Oncology's
Representatives will actively solicit or attempt to influence any employee of
Response to terminate his or her relationship with Response nor will it employ
any such individual or former Response employee (within twelve (12) months of
the effective date of the individual's termination of his or her employment with
Response.)
12. Impact Center Service Agreement and Pharmacy Services Agreement.
Effective as of the Closing Date, the parties shall execute and deliver a new
service agreement limited to the ancillary services of the Impact Center (as
defined in the Service Agreement), upon terms and conditions materially the same
as the current Service Agreement relating to the Impact Center and reflecting
the expansion of Impact Center services to the treatment of certain chronic
diseases. Effective as of the Closing Date and as a condition precedent to
Response's Obligation to close, the parties shall execute and deliver an
Agreement for Pharmacy Services in the form attached hereto as EXHIBIT 12.
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13. Representations and Warranties of Oncology. Oncology represents,
warrants, covenants and agrees with Response that:
(a) Organization. Oncology is a professional association duly
organized, validly existing and in good standing under the laws of the State of
Florida. Oncology has the full power and authority to own its property, to carry
on its business as presently being conducted, to enter into this Agreement, and
to consummate the transactions contemplated hereby.
(b) Authority. Oncology has taken all necessary action to authorize
the execution, delivery, and performance of this Agreement as well as the
consummation of the transactions contemplated hereby. The execution and delivery
of this Agreement do not, and the consummation of the transactions contemplated
hereby will not violate any provisions of the charter or the bylaws of Oncology
or any indenture, mortgage, deed of trust, lien, lease agreement, arrangement,
contract, instrument license, order, judgment or decree, or result in the
acceleration of any obligation thereunder, to which Oncology is a party or by
which it is bound.
(c) Litigation. No action or proceeding by or before any court or
other Governmental Authority has been instituted or is, to the best of
Oncology's knowledge, threatened with respect to the transactions contemplated
by this Agreement.
(d) Full Disclosure. When considered in the context of all
information contained herein, no representation or warranty made by Oncology in
this Agreement contains or will contain any untrue statement of a material fact.
All representatives and warranties contained in this Agreement are true and
correct as of the date of their Agreement and shall remain true and correct
throughout the term of this Agreement.
(e) Fair Consideration. Oncology has reviewed each and every term
and provision of this Termination Agreement with counsel of its choosing and has
accepted same as being fair and reasonable. Oncology acknowledges that the
consideration tendered to Response is fair and reasonable and constitutes a
reasonably equivalent value for the consideration paid to it by Response.
Oncology acknowledges that the tender of the consideration to Response is not
undertaken in fraud of or to hinder or delay any of its creditors and will not
render it insolvent.
14. Representations and Warranties of Response. Response represents,
warrants, covenants and agrees with Oncology that:
(a) Organization. Response is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee. Response
has the full power to own its property, to carry on its business as presently
conducted, to enter into this Agreement, and to consummate the transactions
contemplated hereby.
(b) Authority. Response has taken all necessary action to authorize
the execution, delivery, and performance of this Agreement as well as the
consummation contemplated hereby. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby will not,
violate any provisions of the charter or the bylaws of Response or any
indenture, mortgage, deed of trust, lien, lease agreement, arrangement,
contract, instrument license,
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order, judgment or decree, or result in the acceleration of any obligation
thereunder, to which Response is a party or by which it is bound.
(c) Litigation. No action or proceeding by or before any court or
other Governmental Authority has been instituted or is, to the best of
Response's knowledge, threatened with respect to the transactions contemplated
by this Agreement.
(d) Full Disclosure. When considered in the context of all
information contained herein, no representation or warranty made by Response in
this Agreement contains or will contain any untrue statement of a material fact.
All representatives and warranties contained in this Agreement are true and
correct as of the date of this Agreement and shall remain true and correct
throughout the term of this Agreement.
(e) Fair Consideration. Response has reviewed each and every term
and provision of this Termination Agreement with counsel of its choosing and has
accepted same as being fair and reasonable. Response acknowledges that the
consideration tendered to Oncology is fair and reasonable and constitutes a
reasonably equivalent value for the consideration paid to it by Oncology.
Response acknowledges that the tender of the consideration to Oncology is not
undertaken in fraud of or to hinder or delay any of its creditors and will not
render it insolvent.
(f) No Liens or Encumbrances. Upon delivery to Oncology and
appropriate filing of the documents described in SECTION 4(A) and (B) above, the
assets to be transferred hereunder shall be delivered free and clear of any
liens or encumbrances except those which have arisen, directly or indirectly, as
a result of the following obligations being assumed by Oncology: [THE ASSIGNED
LEASE, THE PREMISES LEASES AND THE EQUIPMENT LEASES].
15. Closing. The Closing of the transactions contemplated hereby,
including, but not limited to, the transfer of assets and leases by Response to
Oncology (the "CLOSING"), shall take place simultaneously with the execution and
delivery of this Agreement (the "CLOSING DATE") at the offices of OHAWB's
counsel, Xxxxxx Xxxxx, P.A., 0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx 00000, or on
such other date and at such other place as the parties may agree to in writing.
(a) At the Closing, Response shall execute and deliver, or cause to
be delivered, to Oncology the following instruments and documents, against
execution and delivery of the items specified in SECTION 15(B):
(i) The original note and/or other instruments establishing
and/or securing the Receivables Line marked satisfied in
full.
(ii) Assignment of Response's interests in the Assigned Lease
as described in SECTION 5 above.
(iii) Assignment(s) of Response's interest, if any, in the
Premises Leases and the Equipment Leases.
(iv) Consent(s) to the assignment and assumption of the
Assigned Lease.
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(v) A xxxx of sale and/or assignment instrument(s) conveying
title to any other assets to be transferred hereunder
not already conveyed by the deliverables described in
SUBSECTIONS 15(A)(II) AND (III), free and clear of liens
and encumbrances, except those described in SECTION
14(F).
(vi) A consent to the termination of restrictive covenants as
described in SECTION 9 above.
(vii) An assignment of goodwill, as described in SECTION 6(D)
above.
(viii) Response's corporate resolutions of directors
authorizing the transaction.
(b) At the Closing, Oncology shall execute and deliver, or cause to
be delivered, to Response the following instruments and documents against
execution and delivery of the items specified in SECTION 15(A):
(i) A cashier's or trust account check or wire transfer in
the amount of the Termination Fee, subject to
adjustments, prorations, credits, and setoffs described
herein.
(ii) A cashier's or trust account check or wire transfer in
the amount of the Purchase Price for the Personal
Property, Supply Inventory, and Prepaid Expenses and
Deposits and Advances as set forth in SECTION 7 hereof,
subject to adjustments, prorations, credits, and setoffs
described herein.
(iii) A cashier's or trust account check or wire transfer in
the amount of Two Hundred Thousand Dollars ($200,000.00)
pursuant to SECTION 9 hereof.
(iv) The original Response Note marked satisfied in full.
(v) Evidence of termination of the Response Stock Options as
described in SECTION 3 hereof.
(vi) An assignment of Oncology's interest, if any, in its
Non-Medicare Accounts Receivable to Response, subject to
the terms and conditions hereof.
(vii) A Security Agreement executed by Oncology giving
Response a first priority Security Interest in and to
the Medicare Accounts Receivable as described in SECTION
4 above.
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(viii) A general assumption instrument assuming the Assigned
Lease, the accounts payable arising from and after the
Closing Date, and any other obligations to be assumed
hereunder.
(ix) Consents, if any, as the same shall be required to the
assignment and assumption of leases.
(x) An Agreement for Pharmacy Services effective as of the
Closing Date by and between Response and Oncology, in
the form set forth at EXHIBIT 12 and executed by
Oncology.
(xi) Oncology's corporate resolutions of shareholders and
directors authorizing the transaction.
(c) Each of the parties, at any time before or after the Closing
Date, will execute, acknowledge and deliver any further documents, instruments,
assignments, and other instruments of transfer, reasonably requested by the
other party, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by the other party for the purpose of
assigning, transferring, granting, conveying, and confirming to the other party,
or reducing to possession, any or all property to be conveyed and transferred by
this Agreement.
16. Indemnification.
(a) Each party hereby indemnifies the other from and holds it
harmless against any and all damages, claims, losses, expenses, costs,
obligations and liabilities (including, without limitation, reasonable
attorneys' fees) suffered by the other party resulting from or arising in
connection with any material false or incorrect representations or warranties
made by the indemnifying party hereunder, or the breach by the indemnifying
party of any of its covenants or agreements hereunder.
(b) Oncology hereby indemnifies Response from and holds it harmless
against any and all damages incurred or suffered by Response that result from,
relate to or arise out of any and all actions, suits, claims, legal,
administrative, arbitration, governmental or other proceedings or other
investigations against or involving Response that relate to Oncology or the
business to which this transaction relates in which the principal event giving
rise thereto (i) occurred after the Closing Date or which results from or arises
out of any action or inaction of Oncology or any employee, agent, or
representative of Oncology after the Closing Date; or (ii) is an act or omission
by Oncology that occurred prior to, on, or after the Closing Date and arose from
or is related to the provision of or failure to provide patient care or related
services; or (iii) relates to any statement or submission made to governmental
or other payors; provided, that as to matters falling within clause (iii), the
indemnification obligation shall be reduced by Response's allocable obligation
for such claim, as described in SECTION 10(C).
(c) Response hereby indemnifies Oncology from and holds it harmless
against any and all damages incurred or suffered by Oncology that result from,
relate to, or arise out of any and all actions, suits, claims, legal,
administrative, arbitration, governmental or other proceedings, or
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other investigations against or involving Oncology that relate to Response or
the business to which this transaction relates in which the principal event
giving rise thereto (i) occurred prior to the Closing Date and does not involve
the provision of or failure to provide patient care or related issues of
record-keeping related to such services or which results from or arises out of
any action or inaction of Response or any employee, agent, or representative of
Response prior to the Closing Date; or (ii) occurred prior to, on, or after the
Closing Date and involves a claim by any creditor of Response, including, but
not limited to, AmSouth; provided, that with respect to any such matter that may
involve a statement or submission made to governmental or other payors, the
indemnification obligation shall be reduced by OHAWB's allocable share, as
described in Section 10(c).
(d) If any person or entity not a party hereto (the "NON-PARTY
CLAIMANT") notifies any party to this Agreement (the "INDEMNIFIED PARTY") with
respect to any matter (a "NON-PARTY CLAIM") which may give rise to a claim for
indemnification against any other party to this Agreement (the "INDEMNIFYING
PARTY"), then the Indemnified Party shall promptly (and in any event within
fifteen (15) business days after receiving notice of the Non-Party Claim) notify
each Indemnifying Party thereof in writing. Such written notice shall specify
the nature and the amount of the claim(s) made or anticipated to be made and the
identity of the Non-Party Claimant and shall be accompanied by copies of any
documents provided to the Indemnified Party by the Non-Party Claimant in
connection with the making of such Non-Party Claim.
17. Brokers. Each of the parties represents and warrants that it has
dealt with no broker or finder in connection with any of the transactions
contemplated by this Agreement and, insofar as it knows, no broker is entitled
to a commission or finder's fee in connection with any of these transactions.
Response and Oncology each agree to indemnify and hold harmless one another
against any loss, liability, damage, cost, claim, or expense incurred by reason
of any brokerage, commission, or finder's fee alleged to be payable because of
any act, omission, or statement of the indemnifying party.
18. Costs. Except as may otherwise be provided in this Agreement, each
of the parties shall pay all costs and expenses incurred or to be incurred by it
in negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement.
19. Prorations. Rent, utilities, telephone charges, personal property
taxes, employee wages, salaries, and benefits, and all other comparable expenses
capable of proration shall be prorated as of the Closing Date.
20. Additional Post-Closing Covenants.
(a) Notwithstanding the termination of the Service Agreement,
Response shall cause to be paid to Oncology or the Physicians employed by
Oncology, as appropriate, the retainage amount applicable to January, 2001, in a
manner consistent with prior practice.
(b) For a period of four years following the Closing Date, Response
shall continue to maintain Xxxxxxx Xxxxxx, M.D. as a named insured on Response's
director's and officer's insurance for dates up to and including the Closing
Date.
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21. Miscellaneous Provisions.
(a) This Agreement represents the entire understanding and agreement
between the parties with respect to the subject matter hereof, and supersedes
all other negotiations, understandings and representations (if any) made by and
between such parties.
(b) 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) 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) All of the terms and provisions of this Agreement, whether so
expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective legal representatives,
successors and permitted assigns.
(e) 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
(airmail if international) 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.
(f) 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 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.
(g) In this Agreement, the use of any gender shall be deemed to
include all genders, and the use of the singular shall include the plural,
wherever it appears appropriate from the context.
(h) 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.
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(i) 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.
(j) 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.
(k) 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.
(l) This Agreement and all transactions contemplated by this
Agreement shall be governed by, and construed and enforced in or accordance
with, the internal laws of the State of Florida without regard to principles of
conflicts or choice of laws.
(m) Any suit, action, or other legal proceeding arising out of or
relating to this Agreement shall be brought in a court of the State of Florida,
Dade County, or in the United States District Court for the Southern District of
Florida, having subject matter jurisdiction thereof, and both parties agree to
submit to the jurisdiction of such forum.
(n) Each covenant set forth in SECTIONS 2(B), 4, 5, 6, 7, 8(B), 10,
11, 12, 15(C), 16, 19, 19(A), 20(M), 20(N), AND 20(O) shall survive the Closing
and delivery of the documents and other deliverables contemplated herein.
(o) Without the prior written consent of the other party, neither
party will disclose any term or condition of this Agreement to any person or
entity except that such disclosure may be made (i) to any lender to or other
person in a business relationship with any of the parties to whom such
disclosure is necessary in order to satisfy any of the conditions to the
consummation of this Agreement; (ii) to the extent appropriate, by each party,
to employees and legal counsel of that party; and (iii) to the extent the party
making such disclosure believes in good faith that such disclosure is required
by law (in which case such party will consult with the other party prior to
making such disclosure). Oncology hereby consents to the public announcement
Response will make on or after the Closing Date announcing the consummation of
the Agreement and the transactions contemplated thereby. No press release or
other public announcement related to this Agreement or the transactions
contemplated hereby will be issued by any party hereto without the prior
approval of the other party, except that any party may make such public
disclosure which it believes in good faith to be required by law (in which case
such party will consult with the other party prior to making such disclosure).
(p) If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
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recover reasonable attorneys' fees and expenses, court costs and all expenses
even if not taxable as court costs (including, but not limited to, all
attorneys' fees and expenses incident to any appeals), incurred in that action
or proceeding, in addition to any other relief to which such party or parties
may be entitled.
(q) The parties hereby agree from time to time to execute and
deliver such further and other transfers, assignments and documents and do all
matters and things which may be convenient or necessary to more effectively and
completely carry out the intentions of this Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
OHAWB HEMATOLOGY GROUP OF SOUTH RESPONSE ONCOLOGY, INC.,
FLORIDA, P.A., a Tennessee corporation
a Florida professional service corporation
By: By:
-------------------------------------- ------------------------------
President: President:
-------------------------------- ------------------------
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