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EXHIBIT 10(a)
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STOCK PURCHASE AGREEMENT
BY AND AMONG
RESPONSE ONCOLOGY, INC.,
XXXX XXXXXX, M.D.,
XXXXXXXX XXXXXXXX, M.D.,
AND
XXXXXXX XXXXXXXX, M.D.
DATED AS OF
OCTOBER 1, 1996
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of October 1, 1996, by and
among RESPONSE ONCOLOGY, INC., a Tennessee corporation (the "Purchaser"), XXXX
XXXXXX, M.D., XXXXXXXX XXXXXXXX, M.D. AND XXXXXXX XXXXXXXX, M.D.,
(collectively, the "Sellers" and, individually, a "Seller").
WITNESSETH:
WHEREAS, the Sellers own 100% of the issued and outstanding shares
(the "Shares") of the common stock of Hematology Oncology Associates of the
Treasure Coast, P.A., a Florida professional association (the "Corporation");
and
WHEREAS, the Sellers desire to sell and Purchaser desires to purchase
the Shares on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and promises herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses, but specifically excluding consequential damages.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504 or any similar group defined under a similar provision of
state, local or foreign law.
"Applicable Rate" means the corporate base rate of interest announced
from time to time by NationsBank of Tennessee, N.A., Nashville, Tennessee plus
two percent (2%).
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction of which any Seller has Knowledge that
forms or could form the basis for any specified consequence.
"Cash Consideration" has the meaning set forth in Section 2(b) below.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contingent Purchase Price" has the meaning set forth in Section 2(c)
below.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
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"Corporation" has the meaning set forth in the first recital above.
"Deferred Intercompany Transaction" has the meaning set forth in
Treasury Regulation Section 1.1502-13.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Occupational Safety and Health Act
of 1970, the Medical Waste Tracking Act of 1988, the U. S. Public Vessel
Medical Waste Anti-Dumping Act of 1988, the Marine Protection, Research and
Sanctuaries Act and Human Services, National Institute for Occupational Safety
and Health, Infections Waste Disposal Guidelines, Publication No. 88-119, each
as amended, together with all other laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof) concerning pollution or protection of the environment, public health
and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of medical wastes,
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excess Loss Account" has the meaning set forth in Treasury Regulation
Section 1.1502-19.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statements" has the meaning set forth in Section 4(f)
below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Group" means Treasure Coast Oncology, P.A., a Florida professional
association wholly owned by the Sellers, its successors and assigns.
"Knowledge" means actual knowledge.
"Liability" means any liability (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes. Notwithstanding the foregoing, unknown liabilities shall only include
liabilities arising out of medical malpractice actions commenced against the
Corporation or Response after the Closing.
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"Note" means a promissory note of the Purchaser payable to the order
of a Seller in the form set forth as Exhibit 2(b)(ii).
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 4(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4(f) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section
4(f) below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" means the Purchaser or any Seller.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406
and Code Sec. 4975.
"Pro Rata" means, with respect to the Sellers, their proportionate
ownership interests in the Corporation.
"Purchase Price" has the meaning set forth in Section 2(a) below.
"Purchaser" has the meaning set forth in the initial paragraph of this
Stock Purchase Agreement and, after Closing (and as relates to Section 9(b)
regarding indemnification), shall mean Response Oncology, Inc. and any
subsidiary or affiliate thereof.
"Purchaser's Disclosure Letter" has the meaning set forth in Section
3(b) below.
"Receivables" means the amount, in dollars, of the Corporation's
accounts receivable as of the close of business on the day prior to the Closing
Date, net of contractual adjustments, courtesy discounts and a reasonable
allowance for doubtful accounts.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Response Stock" means the common stock of the Purchaser, $.01 par
value per share.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
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"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Sellers' Disclosure Letter" has the meaning set forth in Section 3(a)
below.
"Service Agreement" means that certain Service Agreement between the
Group and the Purchaser dated as of October 1, 1996.
"Shares" means all of the issued and outstanding shares of the Common
Stock of the Corporation.
"Short Term Note(s)" means promissory notes of the Purchaser payable
to the Order of the Sellers in the form set forth as Exhibit 2(b)(iii).
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9(c) below.
2. PURCHASE AND SALE OF SHARES.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase from the Sellers, and the
Sellers agree to sell to the Purchaser, all of the Shares for an aggregate
price (the "Purchase Price") of Ten Million Nine Hundred Thousand Dollars
($10,900,000.00).
(b) Payment of Purchase Price. The Purchaser shall pay or satisfy
the Purchase Price at Closing (hereinafter defined) in the following manner:
(i) Nine Hundred Fifteen Thousand Nine Hundred Twelve ($915,012.00) Dollars in
cash (the "Cash Consideration") to the Sellers (hereinafter defined), with the
amount payable to each Seller being set forth on Exhibit 2(b)(i), (ii) One
Million Three Hundred Sixty Two Thousand Five Hundred Dollars ($1,362,500) by
issuance and delivery of a Note to each Seller for his Pro Rata share of said
amount, (iii) Six Million Four Hundred Forty Two Thousand Five Hundred Six
Dollars ($6,442,506) by issuance and delivery of a Short-Term Note to each
Seller with the amount of each Short-Term Note payable to each Seller being set
forth on Exhibit 2(b)(i); and (iv) issuance and delivery of certificates
evidencing ownership of 55,897 unregistered shares of Response Stock to each
Seller. In the event that between the date of this Agreement and the Closing,
Purchaser changes the number of shares of Response Stock issued and outstanding
as a result of a stock split, reverse stock split, stock dividend,
recapitalization or other similar transactions, the number of shares of
Response Stock to be issued to the Sellers shall be appropriately adjusted.
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(c) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxxxx,
Diner, Stone & Xxxxxxx, counsel for the Sellers, 0000 Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx 00000-0000 commencing at 9:00 a.m. local time on the later of (i) the
second business day following the satisfaction or waiver of all conditions
precedent to the obligations of the Parties to consummate the transactions
contemplated hereby or (ii) October 3, 1996, or such other date as the
Purchaser and the Sellers may mutually determine (the "Closing Date");
provided, however, that the Closing Date shall be no later than December 31,
1996.
(d) Deliveries at the Closing. At the Closing, (i) the Purchaser
will deliver to the Sellers the Purchase Price and the various certificates,
instruments, and documents referred to in Section 8(a) below, (ii) the Sellers
will deliver to the Purchaser the various certificates, instruments, and
documents referred to in Section 8(b) below.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of the Sellers. The Sellers
severally and not jointly represent and warrant to the Purchaser that the
statements contained in this Section 3(a) are correct and complete as of the
date of this Agreement with respect to the Sellers, except as set forth in the
disclosure letter executed and delivered by the Sellers and the Group
contemporaneous with this Agreement (the "Sellers' Disclosure Letter""). The
Sellers' Disclosure Letter shall be satisfactory to the Purchaser and its
counsel and will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 3(a) and Section 4.
(i) Authorization of Transaction. Each Seller has the
requisite legal capacity and has full power and authority to execute
and deliver this Agreement and to perform his obligations hereunder.
No Seller is required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Person in order
to consummate the transactions contemplated by this Agreement , or, if
any such filing, authorization, consent or approval is required, the
same has been or, as of the Closing Date, shall have been made or
obtained. This Agreement constitutes the valid and legally binding
obligation of each Seller, enforceable in accordance with its terms,
subject to applicable bankruptcy, moratorium, insolvency and other
laws affecting the rights of creditors and general equity principles.
(ii) Noncontravention. To the best of the Sellers'
Knowledge, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (A)
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any Seller is
subject or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or
other arrangement to which any Seller is a party or by which he is
bound or to which any of his assets is subject.
(iii) Brokers' Fees. The Sellers have no Liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which the Purchaser could become liable or obligated.
(iv) Shares. Each Seller holds of record and owns
beneficially all of the Shares free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act and
state securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and
demands. No Seller is a party to any option, warrant, purchase right,
or other contract
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or commitment that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of the Corporation (other than
this Agreement). No Seller is a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any
Shares.
(b) Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to each Seller that the statements contained in this
Section 3(b) are correct and complete as of the date of this Agreement except
as set forth in the disclosure letter executed and delivered by the Purchaser
contemporaneous with this Agreement (the "Purchaser's Disclosure Letter").
(i) Organization of the Purchaser. The Purchaser is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Tennessee. The Purchaser is duly
authorized to conduct business and is in good standing as a foreign
corporation under the laws of each jurisdiction where such
qualification is required, except where failure to so qualify would
not have a material adverse effect on the Purchaser.
(ii) Authorization of Transaction. The Purchaser has full
power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of the Purchaser, enforceable in accordance with its terms,
subject to applicable bankruptcy, moratorium, insolvency and other
laws affecting the rights of creditors and general equity principles.
The Purchaser need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Person in order
to consummate the transactions contemplated by this Agreement, or, if
any such filing, authorization, consent or approval is required, the
same has been or, as of the Closing Date, shall have been made or
obtained.
(iii) Noncontravention. To the best of Purchaser's
Knowledge, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (A)
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Purchaser is
subject or any provision of its charter or bylaws or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement
to which the Purchaser is a party or by which it is bound or to which
any of its assets is subject.
(iv) Capitalization. The entire authorized capital stock of
the Purchaser consists of 30,000,000 shares of common stock, $.01 par
value, and 3,000,000 shares of preferred stock, $1.00 par value, of
which _______________ shares of common stock and 27,833 shares of
preferred stock are issued and outstanding. All of the issued and
outstanding shares of common stock and preferred stock of the
Purchaser have been duly authorized, are validly issued, fully paid
and nonassessable.
(v) Brokers' Fees. The Purchaser has no Liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which the Seller could become liable or obligated.
(vi) Public Reports. The Purchaser has delivered to the
Sellers its Annual Report to Shareholders for 1993, 1994 and 1995, its
proxy statements for its 1994, 1995 and 1996 Annual Meetings and its
quarterly reports on Form 10-Q for the quarters ended March 31, 1996
and June 30, 1996 (the "Response Public Documents"). Since the filing
of its quarterly report on Form 10-Q for the period ended June 30,
1996, the Company has filed Current Reports on Form 8-K dated July 15,
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1996 in respect of two acquisition transactions. The Response Public
Documents do not contain any misstatements of a material fact or omit
to state any material fact necessary to make other statements therein
not misleading. All financial statements contained therein have been
prepared in accordance with GAAP, consistently applied, and present
fairly the financial condition of the Purchaser as of the dates
thereof and the results of its operations for the periods then ended.
The Purchaser has timely filed all reports with the Securities and
Exchange Commission that it is required to file pursuant to the
Securities Exchange Act of 1934, as amended.
(vii) Investment. The Purchaser is not acquiring the Shares
with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act. The Purchaser is familiar
with the Sellers' business and the operation thereof, has such
knowledge and experience in such business matters and is capable of
evaluating and acknowledges that it understands the merits and risks
(including governmental regulation, increased competition and general
business risks) of purchasing the Shares and has had the opportunity
to ask questions of, and receive answers from, the Corporation and the
Sellers regarding the Corporation and its business.
(c) Undisclosed Liabilities. The Purchaser has no Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Purchaser that
may result in any Liability), except for (i) Liabilities set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business.
(d) Litigation. The Purchaser is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or is a party or, to the
best of the Purchaser's Knowledge, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator which, if adversely determined,
would have a material adverse affect on the Purchaser. Neither the Purchaser
nor the directors and officers (and employees with responsibility for
litigation matters) of the Purchaser has any Knowledge that any such action,
suit, proceeding, hearing, or investigation may be brought or threatened
against the Purchaser.
(e) Healthcare Compliance. The Purchaser has not received payment or
any remuneration whatsoever to induce or encourage the referral of patients or
the purchase of goods and/or services as prohibited under 42 U.S.C. Section
1320a-7b(b), or otherwise perpetrated any Medicare or Medicaid fraud or abuse
nor has any fraud or abuse been alleged within the last five (5) years by any
government agency. The Purchaser is participating in or otherwise authorized
to receive reimbursement from or is a party to Medicare, Medicaid, and other
third-party payor programs. All necessary certifications and contracts
required for participation in such programs are in full force and effect and
have not been amended or otherwise modified, rescinded, revoked or assigned
and, to the best of the Purchaser's Knowledge, no condition exists or event has
occurred which in itself or with the giving of notice or the lapse of time or
both would result in the suspension, revocation, impairment, forfeiture or
non-renewal of any such third party payor program. The Purchaser is and, after
the execution and delivery hereof and of the Service Agreement, will be, in
full compliance with the requirements of all such third party payor programs
applicable thereto.
(f) Fraud and Abuse. The Purchaser and employees thereof have not
engaged in any activities which are prohibited under 42 U.S.C. Section
1320a-7b, or the regulations promulgated thereunder pursuant to such statutes,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including but not limited to the following:
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(i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any
application for any benefit or payment;
(ii) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in
determining rights to any benefit or payment;
(iii) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to
any benefit or payment on its own behalf or on behalf of another, with
intent to fraudulently secure such benefit or payment; and
(iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe, or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offering to pay
or receive such remuneration (A) in return for referring an individual
to a person for the furnishing or arranging for the furnishing or any
item or service for which payment may be made in whole or in part by
Medicare or Medicaid, or (B) in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or
ordering any good, facility, service or item for which payment may be
made in whole or in part by Medicare or Medicaid.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE CORPORATION. The
Sellers, jointly and severally, represent and warrant to the Purchaser that the
statements contained in this Section 4 are true, correct and complete in all
material respects as of the date of this Agreement and will be correct and
complete in all material respects as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in the Sellers' Disclosure
Letter. Nothing in the Sellers' Disclosure Letter shall be deemed adequate to
disclose an exception to a representation or warranty made herein unless the
Sellers' Disclosure Letter identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. The
Sellers' Disclosure Letter will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 4.
(a) Organization, Qualification, and Corporate Power. The
Corporation is a business corporation duly organized, validly existing, and in
good standing under the laws of the State of Florida. Paragraph 4(a) of the
Sellers' Disclosure Letter lists the directors and officers of the Corporation.
The Sellers have delivered to the Purchaser correct and complete copies of the
charter and bylaws of the Corporation (as amended to date). The minute book
(containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors), the stock certificate
book, and the stock record book of the Corporation are correct and complete.
The Corporation is not in material default under or in violation of any
provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of the
Corporation consists of ______ Shares, of which ______ Shares are issued and
outstanding. All of the issued and outstanding Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the Sellers. There are no outstanding or authorized options,
warrants, purchase rights, preemptive rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Corporation to issue, sell, or otherwise cause to become outstanding any of
its capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Corporation. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the
Corporation.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate (A) to the best of Sellers'
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Knowledge,any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Corporation is subject or (B) any
provision of the charter or bylaws of the Corporation or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Corporation is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets). The Corporation is
not required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Person in order for the Parties to
consummate the transactions contemplated by this Agreement, or, if any such
filing, authorization, consent or approval is required, the same has been or,
as of the Closing Date, shall have been made or obtained.
(d) Brokers' Fees. The Corporation has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Assets. The Corporation has good and marketable title
to, or a valid leasehold interest in, all of its properties and assets, free
and clear of all Security Interests, and has not sold, transferred, exchanged
or conveyed any of its properties and assets, except as previously disclosed to
the Purchaser, since the date of the Most Recent Balance Sheet except for
properties and assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Balance Sheet.
(f) Financial Statements. Attached as collective Paragraph 4(f) to
the Sellers' Disclosure Letter are the following financial statements
(collectively the "Financial Statements"): (i) unaudited balance sheet and
statement of income, changes in stockholders' equity, and cash flow as of and
for the fiscal year ended December 31, 1995 (the "Most Recent Fiscal Year End")
for the Corporation; and (ii) unaudited balance sheet and statement of income,
changes in stockholders' equity, and cash flow (the "Most Recent Financial
Statements") as of and for the five (5) months ended May 31, 1996 (the "Most
Recent Fiscal Month End") for the Corporation. The Financial Statements
(including the notes thereto) have been prepared on a consistent basis
throughout the periods covered thereby, present fairly the financial condition
of the Corporation as of such dates and the results of operations of the
Corporation and its subsidiaries for such periods on a cash basis method of
accounting, are correct and complete in all material respects, and are
consistent with the books and records of the Corporation.
(g) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, or results of operations of the
Corporation. Without limiting the generality of the foregoing, since that date:
(i) the Corporation has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) the Corporation has not entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than $25,000.00
or outside the Ordinary Course of Business;
(iii) no party (including the Group) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $25,000.00 to which the Corporation is a
party or by which the Corporation or its properties are bound;
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(iv) the Corporation has not created, suffered or permitted
to attach or be imposed any Security Interest upon any of its assets,
tangible or intangible;
(v) the Corporation has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$25,000.00 or outside the Ordinary Course of Business;
(vi) the Corporation has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $25,000.00 or outside the
Ordinary Course of Business;
(vii) the Corporation has not issued any note, bond, or other
debt instrument or security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $25,000.00 or outside the
Ordinary Course of Business;
(viii) the Corporation has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) the Corporation has not canceled, compromised, waived,
or released any right or claim (or series of related rights and
claims) either involving more than $25,000.00 (other than contractual
allowances and adjustments in the Ordinary Course of Business);
(x) the Corporation has not granted any license or
sublicense of any rights under or with respect to any Intellectual
Property;
(xi) there has been no change made or authorized in the
charter or bylaws of the Corporation;
(xii) the Corporation has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(xiii) the Corporation has not experienced any material
damage, destruction, or loss (whether or not covered by insurance) to
its property;
(xiv) the Corporation has not made any loan to, or entered
into any other transaction with, any of its directors, officers, and
employees outside the Ordinary Course of Business (other than
transactions relating to the payment of compensation or benefits);
(xv) the Corporation has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvi) the Corporation has not granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xvii) the Corporation has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);
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12
(xviii) the Corporation has not made any other change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xix) the Corporation has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course
of Business;
(xx) there has not been any other material occurrence,
event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving the Corporation; and
(xxi) the Corporation has not committed to any of the
foregoing.
(h) Undisclosed Liabilities. The Corporation has no Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Corporation that
may result in any Liability), except for (i) Liabilities set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto); (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business and (iii) Liabilities described with particularity
in Paragraph 4(h) of the Sellers' Disclosure Letter (and, with respect to each
Liability described in items (i) through (iii) immediately above, none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, malpractice, infringement, or
violation of law).
(i) Legal Compliance. To the best of the Sellers' Knowledge, the
Corporation and its respective predecessors and Affiliates have complied in all
material respects with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply.
(j) Tax Matters.
(i) The Corporation has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in
all material respects. All Taxes owed by the Corporation (whether or
not shown on any Tax Return) through the Closing Date have been duly
paid or accrued. The Corporation is not the beneficiary of any
extension of time within which to file any Tax Return. No claim has
ever been made by an authority in a jurisdiction where the Corporation
does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Security Interests on any of the
assets of either the Corporation that arose in connection with any
failure (or alleged failure) to pay any Tax.
(ii) The Corporation has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder,
or other third party.
(iii) The Sellers have no knowledge that any authority will
assess any additional Taxes for any period for which Tax Returns have
been filed. There is no dispute or claim concerning any Tax Liability
of the Corporation either (A) claimed or raised by any authority in
writing or (B) as to which the Sellers have Knowledge. Paragraph 4(j)
of the Sellers' Disclosure Letter lists all federal, state, local, and
foreign income Tax Returns filed with respect to the Corporation for
taxable periods ended on or after December 31, 1992, indicates those
Tax Returns that have been audited, and indicates those Tax Returns
that currently are the subject of audit. The Sellers have delivered
to the Purchaser
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13
correct and complete copies of all examination reports and statements
of deficiencies assessed against or agreed to by the Corporation since
December 31, 1991.
(iv) The Corporation has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(v) The Corporation has not filed a consent under Code
Section 341(f) concerning collapsible corporations. The Corporation
has not made any payment, is not obligated to make any payment, or is
not a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under
Code Section 280G. The Corporation has not been a United States real
property holding corporation within the meaning of Code Sec. 897(c)(2)
during the applicable period specified in Code Section
897(c)(1)(A)(ii). The Corporation has disclosed on its federal income
Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of
Code Section 6662. The Corporation is not a party to any Tax
allocation or sharing agreement. The Corporation (A) has not been a
member of an Affiliated Group filing a consolidated federal income Tax
Return or (B) has no Liability for the Taxes of any Person (other than
of the Corporation under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(vi) Paragraph 4(j) of the Sellers' Disclosure Letter sets
forth the following information with respect to the Corporation as of
the most recent practicable date: (A) the basis of the Corporation in
its assets; and (B) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution.
(k) Real Property. The Corporation does not own any real property
and has not executed and delivered or otherwise entered into any contract to
purchase any real property. Paragraph 4(k) of the Sellers' Disclosure Letter
lists and describes briefly all real property leased or subleased to the
Corporation.
(l) Tangible Assets. The Corporation owns or leases all machinery,
equipment, and other tangible assets necessary for the conduct of its business
as presently conducted. The Corporation has received with respect to all such
machinery, and equipment all material approvals of governmental authorities
(including licenses, permits and certificates of need) required in connection
with the operation thereof, and to the best of the Sellers' Knowledge, the same
have been operated and maintained in substantial compliance with applicable
laws, rules, and regulations.
(m) Inventory. The inventory of the Corporation consists of medical
supplies and pharmaceuticals, substantially all of which is usable in the
Ordinary Course of Business.
(n) Contracts. Paragraph 4(n) of the Sellers' Disclosure Letter
lists the following contracts and other agreements to which the Corporation is
a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $25,000.00 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, result in a loss to the Corporation, or involve consideration in
excess of $25,000.00;
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14
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which the Corporation has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $25,000.00 or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with either the Sellers or their
Affiliates (other than the Corporation);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $25,000.00 or providing severance benefits;
(x) any agreement under which the Corporation has advanced
or loaned any amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xi) any agreement under which the consequences of a default
or termination could have an material adverse effect on the business,
financial condition, operations or results of operations of the
Corporation; or
(xii) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of
$25,000.00.
The Sellers have delivered to the Purchaser a correct and complete copy of each
written agreement listed in Paragraph 4(n) of the Sellers' Disclosure Letter
(as amended to date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Paragraph 4(n) of the Sellers'
Disclosure Letter. With respect to each such agreement: (1) the agreement is
legal, valid, binding, enforceable, and in full force and effect; (2) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (3) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; and (4) no party has repudiated any provision of the agreement.
(o) Notes and Accounts Receivable. All notes and accounts receivable
of the Corporation are reflected properly on its books and records, are valid
receivables and, to the best of the Sellers' Knowledge, are subject to no
setoffs or counterclaims except contractual adjustments or arrangements with
third-party reimbursers. To the best of the Sellers' Knowledge, all notes and
accounts receivable are collectible in accordance with their terms at their
recorded amounts, subject only to contractual adjustments consistent with past
practice.
(p) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Corporation.
- 13 -
15
(q) Insurance. Paragraph 4(q) of the Sellers' Disclosure Letter sets
forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, medical
malpractice, and workers' compensation coverage and bond and surety
arrangements) to which the Corporation has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five (5)
years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is in full force and
effect; (B) the policy will continue to be in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby unless and until canceled by the Purchaser; (C) to the best of the
Sellers' Knowledge, neither the Corporation nor any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any provision thereof. The Corporation has been
covered during the past five (5) years by the insurance policies listed or
comparable policies. Paragraph 4(q) of the Sellers' Disclosure Letter
describes any self-insurance arrangements affecting the Corporation.
(r) Litigation. Section 4(r) of the Sellers' Disclosure Letter sets
forth each instance in which either the Corporation (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or, to the best of the Sellers' Knowledge, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. Neither the
Sellers nor the directors and officers (and employees with responsibility for
litigation matters) of the Corporation has any Knowledge that any such action,
suit, proceeding, hearing, or investigation may be brought or threatened
against the Corporation.
(s) Employees. To the best of the Sellers' Knowledge, no executive,
key employee, or group of employees has any plans to terminate employment with
the Corporation or, after the Closing, with the Group. The Corporation is not
a party to or bound by any collective bargaining agreement, nor has it
experienced any strikes, grievances filed pursuant to any work rules of any
organized labor organization, claims of unfair labor practices, or other
collective bargaining disputes. To the best of the Sellers' Knowledge, the
Corporation has not committed any unfair labor practice. To the best of the
Sellers' Knowledge, no organizational effort is presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Corporation.
(t) Employee Benefits.
- 14 -
16
(i) Paragraph 4(t) of the Sellers' Disclosure Letter lists
each Employee Benefit Plan that the Corporation maintains or to which
the Corporation contributes.
(A) To the best of the Sellers' Knowledge, each such
Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all
material respects with the applicable requirements of ERISA,
the Code, and other applicable laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to each such Employee Benefit Plan.
To the best of the Sellers' Knowledge, the requirements of
Part 6 of Subtitle B of Title I of ERISA and of Code Sec.
4980B have been met with respect to each such Employee Benefit
Plan which is an Employee Welfare Benefit Plan.
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of the Corporation. All premiums
or other payments which are due for all periods ending on or
before the Closing Date have been paid with respect to each
such Employee Benefit Plan which is an Employee Welfare
Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Sec. 401(a) and has received,
within the last two years, a favorable determination letter
from the Internal Revenue Service.
(E) The market value of assets under each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan (other than any Multiemployer Plan) equals or exceeds the
present value of all vested and nonvested Liabilities
thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for determination.
(F) The Sellers have delivered to the Purchaser
correct and complete copies of the plan documents and summary
plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent
Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the
Corporation maintains or ever has maintained or to which it
contributes, ever has contributed, or ever has been required to
contribute:
(A) No such Employee Benefit Plan which is in
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC
to terminate any such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been instituted or
threatened.
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17
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration
or investment of the assets of any such Employee Benefit Plan.
No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims
for benefits) is pending or threatened. Neither the Sellers
nor the directors and officers (and employees with
responsibility for employee benefits matters) of the
Corporation has any Knowledge of any Basis for any such
action, suit, proceeding, hearing, or investigation.
(C) The Corporation has not incurred, and neither
the Sellers nor the directors and officers (and employees with
responsibility for employee benefits matters) of the
Corporation has any reason to expect that the Corporation will
incur, any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any
withdrawal Liability) or under the Code with respect to any
such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(iii) The Corporation does not contribute to, has never
contributed to, and has not been required to contribute to any
Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(iv) The Corporation does not maintain, has never maintained,
has never contributed, and has not been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future retired
or terminated employees, their spouses, or their dependents (other
than in accordance with Code Sec. 4980B).
(u) Guaranties. The Corporation is not a guarantor or to the best of
the Seller's Knowledge is not otherwise liable for any Liability or obligation
(including indebtedness) of any other Person.
(v) Environment, Health, and Safety.
(i) To the best of the Sellers' Knowledge, the Corporation
has complied in all material respects with all Environmental, Health,
and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding sentence, to
the best of the Sellers' Knowledge, the Corporation has obtained and
been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under,
and has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and
Safety Laws.
(ii) To the best of the Sellers' Knowledge, the Corporation
has no Liability (and the Corporation has not handled or disposed of
any substance, arranged for the disposal of any substance, exposed any
employee or other individual to any substance or condition, or owned
or operated any property or facility in any manner that could form the
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the
Corporation giving rise to any Liability) for damage to any site,
location, or body of water (surface or subsurface), for any illness of
or personal injury to any employee or other individual, or for any
reason under any Environmental, Health, and Safety Law.
- 16 -
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(iii) All properties and equipment used in the business of
the Corporation have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-trans-dichloroethylene, dioxins, dibenzofurans,
and Extremely Hazardous Substances.
(w) Healthcare Compliance. Neither the Corporation nor any physician
or employed by the Corporation has received payment or any remuneration
whatsoever to induce or encourage the referral of patients or the purchase of
goods and/or services as prohibited under 42 U.S.C. Section 1320a-7b(b), or
otherwise perpetrated any Medicare or Medicaid fraud or abuse nor has any fraud
or abuse been alleged within the last five (5) years by any government agency.
No Physician employed by the Group has ordered any service or procedure from or
made any referral of any patient to any entity in which such Physician or a
member of his or her immediate family has any ownership or investment interest
or with which such Physician or family member has any financial relationship in
violation of any Applicable Law. The Corporation and/or each physician employed
thereby is participating in or otherwise authorized to receive reimbursement
from or is a party to Medicare, Medicaid, and other third-party payor programs.
All necessary certifications and contracts required for participation in such
programs are in full force and effect and have not been amended or otherwise
modified, rescinded, revoked or assigned and, to the best of the Sellers'
Knowledge, no condition exists or event has occurred which in itself or with
the giving of notice or the lapse of time or both would result in the
suspension, revocation, impairment, forfeiture or non-renewal of any such third
party payor program. The Corporation is and, after the execution and delivery
hereof and of the Service Agreement, the Group will be, in full compliance with
the requirements of all such third party payor programs applicable thereto.
(x) Fraud and Abuse. The Corporation and its physician employees
have not engaged in any activities which are prohibited under 42 U.S.C. Section
1320a-7b, or the regulations promulgated thereunder pursuant to such statutes,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including but not limited to the following:
(i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any
application for any benefit or payment;
(ii) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in
determining rights to any benefit or payment;
(iii) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to
any benefit or payment on its own behalf or on behalf of another, with
intent to fraudulently secure such benefit or payment; and
(iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe, or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offering to pay
or receive such remuneration (A) in return for referring an individual
to a person for the furnishing or arranging for the furnishing or any
item or service for which payment may be made in whole or in part by
Medicare or Medicaid, or (B) in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or
ordering any good, facility, service or item for which payment may be
made in whole or in part by Medicare or Medicaid.
(y) Facility Compliance. There are no outstanding notices of
deficiencies relating to the Corporation or any physician employed thereby
issued by any governmental authority or third party payor requiring conformity
or compliance with any applicable law or condition for participation of such
governmental authority or third party payor, and after reasonable and
independent inquiry and due diligence and investigation, the
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Corporation has no Knowledge or reason to believe that such necessary
authorizations may be revoked or not renewed in the ordinary course.
(z) Rates and Reimbursement Policies. The Corporation has no rate
appeal currently pending before any governmental authority or any administrator
of any governmental third party payor program.
(aa) Disclosure. The representations and warranties contained in
this Section 4 and in the Sellers' Disclosure Letter do not, to the best of the
Sellers' knowledge, contain any untrue or misleading statement of a material
fact.
5. POST-CLOSING COVENANTS. The Parties agree as follows with respect
to the period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may reasonably
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 9
below). The Sellers acknowledge and agree that from and after the Closing the
Purchaser will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data of any sort relating to
the Corporation; provided, however, that the Sellers shall be permitted
reasonable access to such documents, books, records and financial data relating
to the operations of the Corporation prior to the Closing during regular
business hours for personal purposes.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Corporation or any Seller, each of the other
Parties will cooperate with him or it and his or its counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be necessary in connection with the contest
or defense, all at the sole cost and expense of the contesting or defending
Party (unless the contesting or defending Party is entitled to indemnification
therefor under Section 9 below).
(c) Transition. The Sellers will not take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Corporation from
maintaining the same business relationships with the Corporation or the Group
after the Closing as it maintained with the Corporation prior to the Closing.
The Sellers will refer all inquiries relating to the businesses of the
Corporation to the Purchaser from and after the Closing.
(d) Name Change. At the time of Closing, the Purchaser shall cause
the name of the Corporation to be changed to something distinguishable, within
the meaning of the corporation statutes of the state of Florida, from the name
of the Corporation and shall execute, deliver and/or cause to be filed such
documents or instruments that may be necessary to permit the Group to change
its name to and to do business under the name "Hematology Oncology Associates
of the Treasure Coast."
(e) Custody of Patient Records. The Group shall maintain custody of
all existing records, files, charts, X-ray files and similar data pertaining to
each patient in accordance with Applicable Laws and canons of professional
ethics.
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(f) Release from Personal Guaranties. The Purchaser shall use its
best efforts to obtain the release of each Seller from any personal guarantee
of any obligation of the Corporation. Failure of the Purchaser to obtain any
such release shall not be a breach of this Agreement or otherwise, without the
existence of a separate breach hereof, excuse any Seller from performance
hereunder. The Purchaser shall indemnify and hold each Seller harmless from
and against any Liability personally guaranteed by such Seller if and to the
extent the Purchaser is unable to procure the release of such guaranty. The
covenant contained in this Section 5(f) shall survive the Closing hereunder and
continue in full force and effect for a period of two (2) years thereafter
(subject to any applicable statutes of limitations).
6. CONDITIONS PRECEDENT TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3(a) and Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Sellers shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
(iii) the Sellers shall have caused the Corporation to make
all filings, give all notices and procure all of the third party
consents and authorizations specified in Section 5(b) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Purchaser to own
the Shares and to control the Corporation, or (D) affect adversely the
right of the Corporation to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(v) the Sellers and the Group shall have delivered to the
Purchaser a certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(iv) is satisfied in all respects;
(vi) the Purchaser shall have received the resignations,
effective as of the Closing, of each director and officer of the
Corporation other than those whom the Purchaser shall have specified
in writing at least five business days prior to the Closing;
(vii) the Purchaser shall have received from Xxxxxxxx, Diner,
Stone & Xxxxxxx, P.A., counsel to the Sellers and the Corporation, an
opinion as to matters customarily addressed in opinions of counsel in
transactions such as that described herein, which opinion shall be in
form and substance reasonably acceptable to the Purchaser and its
counsel;
(viii) the Group, the Corporation and the Sellers shall have
executed and delivered the Service Agreement to the Purchaser;
(ix) the President of the Corporation shall have executed and
delivered to the Purchaser the Certificate of Facts in substantially
the form set forth as Exhibit 6(a)(ix) hereto; and
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(x) all actions to be taken by the Sellers in connection
with consummation of the transactions contemplated hereby and all
certificates, opinion, instruments, and other documents required to
effect the transactions contemplated hereby will be satisfactory in
form and substance to the Purchaser.
The Purchaser may waive any condition specified in this Section 6(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3(b) above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) the Purchaser shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
(iii) the Purchaser shall have made all filings, give all
notices and procure all of the third party consents and authorizations
specified in Section 3(b)(ii) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(v) the Purchaser shall have executed and delivered the
Service Agreement to the Sellers;
(vi) the Purchaser shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified above
in Section 6(b)(i)-(iii) is satisfied in all respects; and
(vii) all actions to be taken by the Purchaser in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to the Sellers.
The Sellers may waive any condition specified in this Section 6(b) if they
execute a writing so stating at or prior to the Closing.
7. DELIVERIES AT CLOSING.
(a) Documents to be Delivered by the Purchaser. At the Closing, the
Purchaser shall deliver the following instruments and documents to the Sellers
or other appropriate party:
(i) the Cash Consideration, by cashier's check or wire
transfer pursuant to Sellers' instructions;
(ii) a Note payable to the order of each Seller;
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(iii) the Short-Term Note payable to the order of each Seller.
(iv) certificates representing 55,897 shares of Response
Stock issuable to each Seller pursuant to Section 2(b) above;
(v) the Registration Rights Agreement in the form set
forth as exhibit 7(a)(i) hereto;
(vi) the Service Agreement, duly executed by the Sellers,
the Group and the Purchaser;
(vii) the certificate described in Section 6(b)(iv) above;
and
(viii) such other documents as the Sellers may reasonably
request to affect the transactions contemplated by this Agreement.
(b) Documents to be Delivered by the Seller. At the Closing, the
Sellers shall deliver the following instruments and documents to the Purchaser:
(i) stock certificates representing all of the Shares,
endorsed in blank or accompanied by duly executed assignment
documents;
(ii) a certificate of existence from the Florida Secretary of
State evidencing the existence and good standing of the Corporation,
dated not more than five (5) days prior to the Closing Date;
(iii) a copy of the Corporation's Articles of Incorporation,
certified by the Florida Secretary of State and a copy of the
Corporation's bylaws certified by the Secretary of the Corporation as
being the bylaws of the Corporation then in effect;
(iv) all consents necessary regarding the transaction
contemplated by this Agreement;
(v) the opinion of counsel to the Sellers, in a form
reasonably satisfactory to the Purchaser's counsel, required by
Section 6(a)(vii) above;
(vi) the Certificate described in Section 6(a)(v) above;
(vii) the Service Agreement, duly executed by the Sellers and
the Group;
(viii) the Certificate of Facts described in 6(a)(ix) above;
and
(ix) such other documents as the Purchaser may reasonably
request to affect the transactions contemplated by this Agreement.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder and continue in full force and effect for a
period of two (2) years thereafter ; provided, however, that with respect to
Federal and state tax matters, such survival period shall be equal to the
statute of limitations (without regard to any extension by the Purchaser
following Closing) for assessment of additional taxes.
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(b) Indemnification Provisions for Benefit of the Parties. In the
event any Party breaches (or in the event any third party alleges facts that,
if true, would mean the Party has breached) any of such Party's
representations, warranties, and covenants contained herein and, provided that
the other Party (the "Indemnitee") makes a written claim for indemnification
against the breaching party (the "Indemnitor") pursuant to Section 9(c)(i)
below, then the Indemnitor (jointly and severally, in those instances where the
Sellers have made representations jointly and severally) agrees to indemnify
the Indemnitee from and against the entirety of any Adverse Consequences the
Indemnitee may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Indemnitee may suffer
after the end of any applicable survival period) resulting from, arising out
of, relating to, in the nature of, or caused by the breach (or the alleged
breach) or otherwise; provided, however, that the Indemitor's obligation to
indemnify and hold the Indemnitee harmless pursuant to this Section 9 shall
only accrue if and to the extent that the aggregate claim for indemnification
by the Indemnitee hereunder, determined in the exercise of good faith, shall
exceed $100,000.00, provided, that, no claim for indemnification shall be made
for any item otherwise covered hereby if such claim is for less than $5,000.00
excluding contracts that inure to the benefit of the Purchaser for an arms
length consideration, provided that payments thereunder shall be a Clinic
Expense under the Service Agreement, and such indemnification shall not exceed
the amount of Cash Consideration and shall be limited to Adverse Consequences
only to the extent the same are not covered by insurance for the benefit of the
Indemnitee.
(c) Matters Involving Third Parties.
(i) If any third party shall notify the Indemnitee with
respect to any matter (a "Third Party Claim") which may give rise to a
claim for indemnification under this Section 9, then the Indemnitee
shall promptly notify the Indemnitor thereof in writing; provided,
however, that no delay on the part of the Indemnitee in notifying the
Indemnitor shall relieve the Indemnitor from any obligation hereunder
unless (and then solely to the extent) the Indemnitor thereby is
prejudiced.
(ii) The Indemnitor will have the right to defend the
Indemnitee against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnitee so long as (A) it notifies
the Indemnitee in writing within 15 days after the Indemnitee has
given notice of the Third Party Claim that the Indemnitor will
indemnify the Indemnitee from and against the entirety of any Adverse
Consequences the Indemnitee may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim, and
(B) the Indemnitor conducts the defense of the Third Party Claim
actively and diligently.
(iii) So long as the Indemnitor is conducting the defense of
the Third Party Claim in accordance with Section 9(c)(ii) above, (A)
the Indemnitee may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim,
provided that the Indemnitor's counsel will be lead counsel, (B) the
Indemnitee will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnitor (not to be withheld unreasonably),
and (C) the Indemnitor will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnitee, not to be
unreasonably withheld.
(iv) In the event any of the conditions in Section 9(c)(ii)
above is or becomes unsatisfied, however, (A) the Indemnitee may
defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
may deem appropriate (and the Indemnitee need not consult with, or
obtain any consent from, the Indemnitor in connection therewith), (B)
the Indemnitor will reimburse the Indemnitee promptly and periodically
for the costs of defending against the Third Party Claim (including
attorneys' fees and expenses), and (C) the
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Indemnitor will remain responsible for any Adverse Consequences the
Indemnitee may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Section 9.
(d) Recoupment Under the Note. In the event that the Purchaser shall
suffer Adverse Consequences for which indemnification pursuant to the foregoing
provisions shall be payable by the Sellers and the Sellers shall not make any
such indemnification payment within sixty (60) days after such indemnity amount
shall become payable, the Purchaser shall have the option of recouping all or
any part of any Adverse Consequences it may suffer by notifying the Sellers
that the Purchaser is offsetting the amount of such Adverse Consequences
against the principal amount outstanding under the Note. An offset pursuant to
this subsection shall affect the timing and amount of payments required under
the Note in the same manner as if the Purchaser had made a permitted prepayment
(without premium or penalty) thereunder.
(e) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for any intentional
misrepresentation or intentional non-disclosure of any material fact. The
Sellers hereby agree that they will not make any claim for indemnification
against the Corporation by reason of the fact that they were directors,
officers, employees, or agents of the Corporation or were serving at the
request thereof as a partner, trustee, director, officer, employee, or agent of
another entity (whether such claim is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses, or otherwise and whether
such claim is pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding, complaint, claim, or
demand brought by the Purchaser against the Sellers (whether such action, suit,
proceeding, complaint, claim, or demand is pursuant to this Agreement,
applicable law, or otherwise).
9. TERMINATION.
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Purchaser and the Sellers may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) the Purchaser may terminate this Agreement by giving
written notice to the Sellers at any time prior to the Closing (A) in
the event any of the Sellers has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Purchaser has notified the Seller of the breach, and the
breach has continued without cure for a period of 10 days after the
notice of breach or (B) if the Closing shall not have occurred on or
before October 31, 1996, by reason of the failure of any condition
precedent under Section 7(a) hereof (unless the failure results
primarily from the Purchaser itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(iii) the Sellers may terminate this Agreement by giving
written notice to the Purchaser at any time prior to the Closing (A)
in the event the Purchaser has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, any of the Sellers has notified the Purchaser of the breach,
and the breach has continued without cure for a period of 10 days
after the notice of breach or (B) if the Closing shall not have
occurred on or before October 31, 1996 by reason of the failure of any
condition precedent under Section 7(b) hereof (unless the failure
results primarily from any of the Sellers themselves breaching any
representation, warranty, or covenant contained in this Agreement).
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(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
10. MISCELLANEOUS.
(a) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the Purchaser
and the Seller; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in
which case the disclosing Party will use its best efforts to advise the other
Parties prior to making the disclosure).
(b) Arbitration of Disputes; Legal Fees. Any dispute arising under
this Stock Purchase Agreement shall be submitted by the parties to binding
arbitration pursuant to the Florida Uniform Arbitration Act, with any such
arbitration proceeding being conducted in accordance with the rules of the
American Arbitration Corporation. Any arbitration panel presiding over any
arbitration proceeding hereunder is hereby empowered to render a decision in
respect of such dispute, to award costs and expenses (including reasonable
attorney fees) as it shall deem equitable and to enter its award in any court
of competent jurisdiction. Each of the Parties submits to the jurisdiction of
any state or federal court sitting in Xxxxxx County, Florida for purposes of
enforcement of any arbitration award hereunder. Each Party also agrees not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court. Each of the Parties waives any defense of inconvenient forum
to the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with
respect thereto.
(c) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Purchaser and the Seller.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
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If to the Seller: Copy to:
Xxxx Xxxxxx, M.D. Xxxx X. Xxxx, Esq.
Xxxxxxxx Xxxxxxxx, M.D. Xxxxxxxx, Diner, Stone & Xxxxxxx, P.A.
Xxxxxxx Xxxxxxxx, M.D. 0000 Xxxxx Xxxxxx
Hematology Oncology Associates Xxxxxxxxx, Xxxxxxx 00000-0000
of the Treasure Coast, P.A.
0000 X.X. Xxxxxxxx Xxxxx, Xxxxx X-000
Xxxx Xx. Xxxxx, Xxxxxxx 00000
If to the Purchaser: Copy to:
Xxxxxx X. Xxxxx Xxxx X. Good, Esq.
Response Oncology, Inc. Baker, Donelson, Bearman & Xxxxxxxx
0000 Xxxxxx Xxxxx Xxxx. 165 Madison, Suite 2000
Xxxxxxx, Xxxxxxxxx 00000 Xxxxxxx, Xxxxxxxxx 00000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Florida without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Florida or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Florida.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear his or its own costs and
expenses (including legal fees and expenses, and document stamps on any
promissory notes delivered as consideration hereunder shall be paid by
Purchaser) incurred in connection with this Agreement and the transactions
contemplated hereby. The Sellers agree that neither the Corporation has not
borne or will not bear any of the Sellers' costs and expenses (including any of
their legal fees and expenses) in connection with this Agreement or any of the
transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
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construed as if drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean including without limitation. The
Parties intend that each representation, warranty, and covenant contained
herein shall have independent significance.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy
to which they may be entitled, at law or in equity.
* * * * *
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
[as of] the date first above written.
PURCHASER:
RESPONSE ONCOLOGY, INC.
By:
--------------------------------------------
Title:
-----------------------------------------
SELLERS:
-----------------------------------------------
XXXX XXXXXX, M.D.
-----------------------------------------------
XXXXXXXX XXXXXXXX, M.D.
-----------------------------------------------
XXXXXXX XXXXXXXX, M.D.
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