EXHIBIT 10(ad)
ASSET PURCHASE/SETTLEMENT AGREEMENT
BY AND AMONG
HEM-ONC ASSOCIATES OF THE TREASURE COAST, P.A.
A FLORIDA PROFESSIONAL ASSOCIATION
ALAN S. COLLIN
NICHOLAS O. IANNOTTI
PAUL M. SWANSON
MICHAEL S. WERTHEIM
AND
RESPONSE ONCOLOGY, INC.
A TENNESSEE CORPORATION
AND
ANTHONY M. LAMACCHIA
DATED
MARCH 15, 2002
TABLE OF CONTENTS
RECITALS...................................................................................1
1. Purchased Assets.....................................................................2
(a) Tangible Personal Property.....................................................2
(b) Contracts......................................................................2
(c) Prepaids.......................................................................3
(d) Records........................................................................3
(e) Practice Name..................................................................3
2. Termination of Service Agreement/Settlement of all Claims............................3
(a) Termination of Service Agreement...............................................3
(b) Modification of Service Fee....................................................3
3. Purchased Assets - Free and Clear of Liens/Release of Liens on Hem-Onc's Assets......4
4. Purchase Price.......................................................................5
(a) Purchased Assets Consideration.................................................5
(b) Consideration for Termination of Agreement and Settlement of Claims............5
5. Payments of the Purchase Price.......................................................6
(a) Payments at Closing............................................................6
(b) Response Payments..............................................................6
(c) Escrow.........................................................................6
(d) Prorations.....................................................................7
(e) Payment of Post-Petition Accrued Clinic Expenses...............................7
(f) Closing Date and Place/Closing Deliveries......................................8
6. Payment Reconciliation...............................................................8
(a) Final Reconciliation...........................................................8
(b) Reconciliation Payments/Payment Credits........................................9
(c) Dispute Resolution............................................................10
(d) Purpose of Reconciliation.....................................................10
7. Payment of Certain Expenses at or after Closing.....................................11
8. No Assumption of Liabilities........................................................12
9. Mutual Releases.....................................................................12
(a) Response's/LaMacchia's Releases...............................................12
(b) Hem-Onc's/Stockholders' Releases..............................................12
(c) Dismissal of Suits............................................................12
10. Certain Covenants of the Parties/Court Approval..................................13
(a) Termination of Employment.....................................................13
(b) Bankruptcy Court Approval.....................................................13
11. Management of Medical Practice...................................................14
(a) Response's Covenants..........................................................15
(b) Hem-Onc's/Stockholders' Covenants.............................................16
12. Conditions of Closing............................................................16
(a) Compliance with Covenants of Parties..........................................17
(b) Approval of Agreement.........................................................17
(c) Representations and Warranties of the Parties.................................17
(d) New Leases for Certain Purchased Assets.......................................17
13. No Bids..........................................................................17
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14. Access to Records................................................................18
(a) Hem-Onc Access................................................................18
(b) Response Access...............................................................18
15. Payment of Costs by Parties......................................................18
16. Public Announcement/Confidentiality..............................................18
17. Governing Law....................................................................18
18. Banks' Approval..................................................................19
19. Miscellaneous....................................................................19
(a) Survival......................................................................19
(b) Further Actions...............................................................19
(c) Amendments....................................................................19
(d) Notices.......................................................................20
(e) Binding/Assignment............................................................21
(f) Severability..................................................................21
(g) No Third Party Beneficiaries..................................................21
(h) No Strict Construction........................................................22
(i) Captions......................................................................22
(j) Complete Agreement............................................................22
(k) Counterparts..................................................................22
(l) Tax Allocation................................................................22
20. Definitions......................................................................22
SCHEDULES
Schedule 1 Leases, contracts and Agreements of Response as of December 31, 2001
with respect to Hem-Onc
Schedule 2 Balance Sheet of Response as of December 31 2001
Schedule 5(f) Closing/Closing Deliveries
Schedule 12(c) Representations and Warranties
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ASSET PURCHASE/SETTLEMENT AGREEMENT
THIS ASSET PURCHASE/SETTLEMENT AGREEMENT (the "Agreement") is made as of
this 15th day of March, 2002, by and among HEM-ONC ASSOCIATES OF THE TREASURE
COAST, P.A., a Florida professional association ("Hem-Onc"), ALAN S. COLLIN
("Collin"), NICHOLAS O. IANNOTTI ("Iannotti"), PAUL M. SWANSON ("Swanson") and
MICHAEL S. WERTHEIM ("Wertheim") (Collin, Iannotti, Swanson and Wertheim are
sometimes referred to herein, individually, as a "Stockholder" and,
collectively, as the "Stockholders"), and RESPONSE ONCOLOGY, INC., a Tennessee
corporation ("Response") and ANTHONY M. LAMACCHIA ("LaMacchia").
RECITALS
WHEREAS, Response furnishes Hem-Onc with certain facilities, equipment,
supplies, support personnel and management, practice development and financial
advisory services pursuant to that certain Service Agreement, dated as of
October 1, 1996 (the "Service Agreement") by and between Response, a former
wholly-owned subsidiary of Response, Hem-Onc and the Stockholders; and
WHEREAS, the Stockholders are the sole shareholders of Hem-Onc and
LaMacchia is the President and Chief Executive Officer of Response, and the
Stockholders and LaMacchia are members of that certain Oversight Committee
created under the Service Agreement to oversee the operation of Hem-Onc's
medical practice; and
WHEREAS, Response and certain of its wholly-owned affiliates are debtors
in possession under cases (the "Bankruptcy Case") filed under Chapter 11 of
Title 11 of the United States Code (the "Bankruptcy Code") on March 29, 2001, in
the United States Bankruptcy Court for the Western District of Tennessee (the
"Bankruptcy Court"), and jointly administered under Case Number 01-24607 DSK;
and
WHEREAS, a variety of material disputes have arisen between Hem-Onc and
the Stockholders, on one hand, and Response and LaMacchia, on the other hand,
some or most of which are the subject of an adversary proceeding, number
01-0502-DSK (the "Adversary Proceeding") or are included within various
contested matters pending in the Bankruptcy Case, including Hem-Onc's proof of
claims submitted in connection therewith; and
WHEREAS, the parties desire to settle all disputes between the parties
and in connection therewith, terminate the Service Agreement and cause Response
to sell to Hem-Onc certain of Response's tangible personal property, leasehold
improvements, leases, agreements and contracts and certain of Response's books,
records and rights, which relate to Hem-Onc, in accordance with the terms and
conditions set forth herein.
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NOW, THEREFORE, in consideration of the mutual premises and covenants
and agreements of the parties hereto as set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Purchased Assets. On the terms of and subject to the conditions of
this Agreement, on the Closing Date (as defined herein), Hem-Onc shall purchase
from Response, and Response shall sell, convey, assign, transfer and deliver to
Hem-Onc, all or substantially all tangible personal property and leasehold
improvements of Response which as of the Closing Date, pursuant to the Service
Agreement, are used exclusively by, or made available for the exclusive use of,
Hem-Onc in connection with its medical practice, together with certain books,
records, rights to certain prepayments and deposits, and leases, agreements and
contracts of Response which are used or useful in connection with the operation
of Hem-Onc's medical practice, as more particularly described as follows:
(a) Tangible Personal Property. All tangible personal and real
property--furniture, fixtures, equipment, and leasehold improvements and real
property (the "Acquired Assets")--owned or leased by Response as of the Closing
Date (as defined below), including inventory and supplies and Response's
interests in leased real property, which, pursuant to the Service Agreement, are
used or held for use exclusively in the operation of Hem-Onc's medical practice
and which were acquired by Response to satisfy certain of its obligations under
the Service Agreement.
(b) Contracts.
(i) Those leases, contracts and agreements to which Response is
a party and which are described on Schedule 1 attached hereto (but, only
to the extent and only with respect to the provisions thereof which
relate to assets or property used or held for use exclusively by
Hem-Onc), together with such additional leases, contracts or agreements
of Response expressly agreed to be assumed by Hem-Onc (collectively, all
such leases, contracts and agreements are referred to as the "Assigned
Contracts"), including maintenance agreements for the Acquired Assets,
software license agreements for software used exclusively in connection
with Hem-Onc's medical practice, which are in existence as of Closing
and which were entered into by Response solely to satisfy certain of its
obligations under the Service Agreement, together with all rights of
Response under the Assigned Contracts, including rights to licensed
software. All Assigned Contracts shall be current as of Closing.
(ii) With regard to the real property leases (individually, a
"Real Property Lease" and, collectively, the "Real Property Leases")
included within the Assigned Contracts, Response, Hem-Onc and the
Stockholders aver that, to their knowledge, no claims or cure
obligations exist with respect thereto. Notwithstanding anything herein
to the contrary, Hem-Onc and the Stockholders agree to use their
reasonable efforts to obtain at or before Closing representations or
agreements, as the case may be, from each of the "landlords" under each
Real Property Lease to the effect that: (1) no claims or cure
obligations exist under each said Real Property Lease; or (2) if
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any claim or cure obligation exists with respect to any such Real
Property Lease, such claims or cures shall be waived in full by each
such landlord. If any such claims or cure obligations do exist, and the
applicable landlord does not waive the same, then Hem-Onc agrees to pay
such claim or cure obligation, but only to the extent known as of
Closing and only to the extent that Hem-Onc receives a credit towards
payment of the Purchase Price (as defined below) as a result of such
agreement to pay.
(c) Prepaids. All rights of Response, as of Closing, to all prepayments
of Clinic Expenses (as defined in the Service Agreement), prepaid service
contracts (to the extent such contracts are included in the Assigned Contracts)
and all deposits paid by Response under the Assigned Contracts or with respect
to goods or services provided to or on behalf of Hem-Onc, which are described
(or are of the type described) on Response's balance sheet (the "Balance Sheet")
for its Hem-Onc operations, dated December 31, 2001, a copy of which is attached
hereto as Schedule 2 (the "Assigned Prepayments").
(d) Records. All lists and records of Response pertaining to suppliers,
vendors, personnel and patients doing business with, providing services to or
receiving medical services or goods from Hem-Onc, together with all other books,
ledgers, files, documents, correspondence, business analysis and records of
Response of any kind and nature which relate exclusively to Hem-Onc or Hem-Onc's
medical practice, to the extent the same have not already been provided to
Hem-Onc through discovery in the Adversary Proceeding (the "Assigned Records").
(e) Practice Name. All rights of Response in and to the name "Hematology
Oncology Associates of the Treasure Coast", and all variations thereof (the
"Assigned Name").
The Assigned Assets, Assigned Contracts, Assigned Prepayments, Assigned
Records and Assigned Name are, collectively, referred to herein as the
"Purchased Assets".
2. Termination of Service Agreement/Settlement of all Claims.
(a) Termination of Service Agreement. For the consideration recited
herein, in addition to purchasing the Purchased Assets, at Closing, the parties
agree that, at and as of Closing, the Service Agreement shall terminate, and in
connection therewith, effective as of Closing, all Claims (as defined below)
between the parties, including, but not limited to, those raised in the
Bankruptcy Case and the Adversary Proceeding, shall be waived and released. In
connection with the termination of the Service Agreement, the parties expressly
acknowledge and agree that all obligations of the parties thereunder, including
the non-competition and non-solicitation covenants of Hem-Onc and the
Stockholders, and any obligations of Hem-Onc and the Stockholders to Response
with respect to the terms of the Stockholders' Employment Agreements with
Hem-Onc, as otherwise set forth therein, shall terminate, in full, and shall be
of no further legal force or effect.
(b) Modification of Service Fee. In consideration of Hem-Onc's closing
on the purchase of the Purchased Assets and its and the Stockholders' release of
all Claims which Hem-Onc or the Stockholders have or may have had against
Response, as otherwise provided in
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Section 9(b) below, for all periods beginning on and after January 1, 2002 and
ending on or before Closing (the "Reconciliation Period"), Response shall not be
entitled to the Service Fee, as otherwise calculated for such periods in
accordance with Schedule A to the Service Agreement, but instead, in lieu
thereof, Hem-Onc shall only be obligated to pay or reimburse Response (without
interest) as follows:
(i) reimburse Response for all post-petition Clinic Expenses (as
defined in the Service Agreement) which are incurred at any time on or
after January 1, 2002, and which are actually paid by Response (from its
separate funds) during the Reconciliation Period or with respect to
which Response agrees to pay after Closing, to the extent it escrows
money to pay the same at Closing as and to the extent set forth in
Section 7 below; plus
(ii) reimburse Response for all Physician Expenses (as defined
in the Service Agreement) actually paid by Response (from its separate
funds) during the Reconciliation Period (regardless of when such
expenses are accrued); plus
(iii) reimburse Response for all capital expenditures ("Capital
Expenditures") actually paid by Response (from its separate funds)
solely for the benefit of Hem-Onc during the Reconciliation Period, but
only to the extent that such Capital Expenditures result in the
acquisition of a new asset (not owned as of December 31, 2001), to be
included in the Purchased Assets, and which were authorized or requested
by Hem-Onc, in writing, during the Reconciliation Period; and
(iv) pay Response a monthly fixed performance fee (the "Monthly
Fee") of $199,735 per month (prorated for partial months) for each month
(or partial month) during the Reconciliation Period; provided that, if
Closing has not occurred on or before March 31, 2002 through no fault of
Hem-Onc or the Stockholders, then no Monthly Fee (or any other fee in
lieu thereof) shall be paid Response for services rendered under the
Service Agreement with respect to the period after March 31, 2002,
through Closing.
For this purpose, Response shall be treated as paying a Clinic Expense,
Physician Expense or Capital Expenditure, if paid in accordance with the terms
of the Service Agreement and Response's historical payment practices, as
modified in accordance with Section 11 below, and such expenses or expenditures
are paid from any account or source, other than an account owned by Hem-Onc
[including the Provider Receipts Account and the Provider Operating Account (as
defined in Section 5.11 of the Service Agreement)]. Expenses will be deemed paid
as provided in Section 6(d) below.
3. Purchased Assets - Free and Clear of Liens/Release of Liens on Hem-Onc's
Assets. The Purchased Assets will be purchased and sold at Closing (as defined
herein), free and clear of all liens, claims and encumbrances. In addition, at
or before Closing, Response shall release or shall have obtained an order of the
Bankruptcy Court releasing, effective as of Closing, any and all liens, claims
and encumbrances on any assets of Hem-Onc or the Stockholders, including
Hem-Onc's Accounts Receivables (as defined in the Service Agreement)
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and proceeds paid Hem-Onc with respect thereto, which either secure Hem-Onc's
obligations to Response under the Service Agreement or which secure any
obligations of Response, including indebtedness of Response to the Banks (as
defined below) or to any other creditor of Response. In furtherance thereof, on
March 1, 2002, Response filed a motion seeking the approval of this Agreement by
the Bankruptcy Court, including the Bankruptcy Court's approval of this
Agreement under Rule 9019 of the Federal Rules of Bankruptcy Procedure (the
"Bankruptcy Rules"), and Sections 105, 363 and 365 of the Bankruptcy Code.
4. Purchase Price. The "Purchase Price" (as defined herein) shall equal
$3,093,725. The Purchase Price represents the sum of: (x) the purchase price for
the Purchased Assets, as set forth in Section 4(a) below; and (y) the
consideration payable by Hem-Onc to Response: (1) in connection with the
termination of the Service Agreement and the settlement of all Claims [other
than the Avoidance Claim (as defined below)]; and (2) in connection with the
settlement of the Avoidance Claim, both as set forth in Section 4(b) below:
(a) Purchased Assets Consideration. The purchase price for the Purchased
Assets shall equal $810,270, representing the book value of such assets as of
December 31, 2001, as determined in accordance with generally accepted
accounting principles ("GAAP"), and consistent with Response's historical
accounting practices, consistently applied, as set forth in the Balance Sheet.
(b) Consideration for Termination of Agreement and Settlement of Claims.
(i) The aggregate amount payable by Hem-Onc and the Stockholders
for the termination of the Service Agreement and the settlement of all
Claims (including the Avoidance Claim), as otherwise required by this
Agreement, shall equal $2,283,455.00. This sum (hereinafter the
"Settlement Amounts") represents the outstanding balance (principal
only) of advances paid by Response to or for the benefit of Hem-Onc, and
the aggregate accrued, but unpaid, Service Fee (calculated in accordance
with Schedule A to the Service Agreement), as of December 31, 2001, plus
the settlement of the Avoidance Claim.
(ii) As part of the consideration for the termination of the
Service Agreement and the settlement of all Claims (that is, as part of
the $2,283,455.00 Settlement Amounts), Hem-Onc agrees to pay Response
$476,605.50 in full satisfaction of Response's claim for the same amount
based on Response's contention that Hem-Onc transferred that amount to
itself after the filing of Response's Bankruptcy Case on March 29, 2001
(the "Avoidance Claim"). For purposes of the settlement effected by this
Agreement, the parties agree that the Avoidance Claim is deemed
recoverable by Response pursuant to Chapter 5 of the Bankruptcy Code,
and that, pursuant to this Agreement, the Avoidance Claim shall be
deemed recovered by Response for its bankruptcy estate pursuant to
Bankruptcy Code Section 550, upon payment of the Purchase Price.
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5. Payments of the Purchase Price.
(a) Payments at Closing. The Purchase Price [subject to credits toward
payment of the Purchase Price to which Hem-Onc is entitled, as set forth herein,
including, if applicable, in accordance with Section 6(b) below if the Final
Reconciliation (as defined therein) is completed as of Closing], shall be paid
as follows:
(i) at Closing, Hem-Onc will assume the then aggregate
outstanding capital lease obligations of Response to "Trimarc" and "GE
Medical" under the capital leases described on Schedule 1 (each a
"Capital Lease" and, collectively, the "Capital Leases"), by and between
Response and Trimarc Financial, Inc. and GE Medical Systems, Inc.
Hem-Onc will receive a credit at Closing towards the payment of the
Purchase Price equal to the then outstanding principal balance due and
payable under the Capital Leases (solely with respect to the leased
equipment subject thereto which is or are included within the Purchased
Assets); provided, that, if for any reason the Capital Leases (or either
of them) (or Response's interest under either Capital Lease to the
leased equipment included within the Purchased Assets), cannot be
assigned, then Response shall pay, in full, at or before Closing, all
amounts due under the affected Capital Lease and, in such event, Hem-Onc
shall not receive a credit towards payment of the Purchase Price with
respect to its assumption of the affected Capital Lease; and
(ii) the balance of the Purchase Price (as determined after
consideration of all other credits toward payment of the Purchase Price
contemplated herein) shall be paid, in cash or immediately available
funds, at Closing. As part of this payment of the balance of the
Purchase Price (and not as an additional payment), Hem-Onc shall
wire-transfer to AmSouth Bank, as Agent for the Banks (including
AmSouth), an amount equal to the balance of the Purchase Price payable
pursuant to this Section 5(a)(ii), less the $476,605.50 payment of the
Avoidance Claim, and less the funds to be escrowed by Response in
accordance with Sections 5(c) and 7 below; provided, that, such escrowed
funds, to the extent payable from escrow to Response, shall also be
wire-transferred to AmSouth in accordance with Sections 5(c) and 7 below
at the time or times and to the extent such escrowed funds are otherwise
required to be disbursed to Response (as set forth in said sections).
Notwithstanding anything to the contrary in this Agreement, the full
Avoidance Claim payment shall be made directly to Response.
(b) Response Payments. If, as of Closing, the aggregate credits toward
payment of the Purchase Price to which Hem-Onc is entitled, as provided herein
[including credits pursuant to Section 5(a)(i) above and Section 6(b) below if
the Final Reconciliation described in Section 6 below is completed as of
Closing] exceeds the Purchase Price, then at Closing, Response shall be
obligated to pay Hem-Onc, in cash or immediately available funds, an amount
equal to the excess of such aggregate credits over the Purchase Price.
(c) Escrow. If, as of Closing, the Final Reconciliation required by
Section 6 below is not completed, then out of the cash proceeds payable to
Response at Closing by Hem-Onc, Response shall be obligated to escrow (the
"Response Escrow"), with an escrow agent
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mutually acceptable to Response and Hem-Onc, and Hem-Onc shall separately
deposit in escrow (the "Hem-Onc Escrow") with an escrow agent mutually
acceptable to Hem-Onc and Response, such amounts as are mutually agreeable to
the parties based on the adjustments that would have been made if Closing had
occurred on January 31, 2002. The monies so escrowed shall be retained in escrow
after Closing pending completion of and agreement to the Final Reconciliation as
required by Section 6. If, as a result of the Final Reconciliation, Response
shall be obligated to refund or pay monies to Hem-Onc or Hem-Onc shall be
obligated to pay an additional amount to Response, then, upon written notice of
such determination to the applicable escrow agent by either Response or Hem-Onc,
as the case may be, such escrow agent, subject to the last sentence of this
Section 5(c), shall disburse, from the escrow created by the party obligated to
make such payment to the other party the amount such party is obligated to pay
pursuant to Section 6(b) below (or, shall disburse to the other party all funds
held in such escrow if less than the amount due). After such disbursement, the
balance of the monies held in the paying party's escrow, if any, subject to the
last sentence of this Section 5(c), shall be disbursed to such party. Upon
completion of and agreement to the Final Reconciliation, the party (the
"Non-Paying Party") not obligated to make a payment to the other party, as set
forth in Section 6(b) below, shall be immediately entitled to all monies held in
the Non-Paying Party's escrow, subject to the last sentence of this
subparagraph. Each of Response and Hem-Onc shall be separately responsible for
the fees and costs of the escrow agent for each party's escrow and all costs of
creating, maintaining and terminating the same. All monies, if any, required to
be disbursed to Response in accordance with the foregoing from the Response
Escrow or the Hem-Onc Escrow shall, at the time or times such monies are
otherwise required to be disbursed to Response, be wire-transferred directly to
AmSouth, as Agent for the Banks (including AmSouth).
(d) Prorations. Rents, telephone charges, personal property taxes,
employee wages, salaries and benefits and all other comparable expenses
reasonably capable of prorations, including Accrued Clinic Expenses payable by
Hem-Onc after Closing, as provided herein, shall be prorated as of the Closing
Date. To the extent any proratable items are unknown as of Closing, the parties
shall make their best estimate of such items at Closing. To the extent Closing
prorations are based on estimated expenses, no post-Closing re-prorations shall
be made should the actual amount of such estimated items vary from the amounts
estimated, unless otherwise expressly agreed, in writing, by the parties.
Notwithstanding the foregoing to the contrary, Response shall not be entitled to
a proration credit with respect to its payment, before Closing, of any expense
of Hem-Onc relating to the period after the Closing Date, if payment of such
expense is taken into account in the Final Reconciliation pursuant to Section
6(a)(iii) below. Similarly, Hem-Onc shall not be entitled to a proration credit
with regard to its payment, before or after Closing, of any item of expense of
Response relating to the period on or before Closing if and to the extent that
had Response paid such item of expense before Closing, such payment would have
been taken into account in the Final Reconciliation pursuant to Section
6(a)(iii) below.
(e) Payment of Post-Petition Accrued Clinic Expenses.
(i) Hem-Onc agrees to pay after Closing, all post-petition
Accrued Clinic Expenses (as defined below) outstanding as of Closing.
For this purpose and for
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purposes of the Final Reconciliation, a post-petition "Accrued Clinic
Expense" means a post-petition, Clinic Expense (as otherwise defined in
the Service Agreement), which is accrued, but unpaid, as of the Closing
Date, and which is allowed as an administrative claim in Response's
bankruptcy proceeding or which would have been allowed as an
administrative claim in Response's bankruptcy proceeding, but for
Hem-Onc's agreement to pay the same after Closing. In no event shall a
post-petition "Accrued Clinic Expense" include any interest charge,
fine, penalty or damages payable with respect to a valid post-petition
Clinic Expense as a result of a payment or performance breach by
Response prior to Closing (under any agreement or arrangement to which
Response is a party). Further, Hem-Onc's agreement to pay any
post-petition Accrued Clinic Expense after Closing is also predicated on
either Hem-Onc's knowledge, as of Closing, of the amounts due and owing,
the payment terms and the name and address of the applicable payees with
respect thereto, or Hem-Onc's receipt of a written list or written
record, at a reasonable time prior to the date any such expense is due,
setting forth, at a minimum, the amounts due and owing, the payment
terms and the name and address of the applicable payee with respect
thereto (including the date such expense would first become past due or
the first date on which, if such expense were not paid, a payment
default with respect to such expense would exist, whether with the
passage of time, the giving of notice or both, or otherwise). For this
purpose, "knowledge" of any of the Terminated Employees (as defined
below) employed by Hem-Onc immediately after Closing shall be deemed to
be the knowledge of Hem-Onc. In addition, in no event shall Hem-Onc pay
post-petition Accrued Clinic Expenses which consist of accrued payroll,
bonuses, vacation and other benefits to which the Terminated Employees
(as defined herein) are entitled as of Closing, or payroll or other
taxes payable after Closing with respect thereto, unless the Terminated
Employees to which such expenses relate are employed by Hem-Onc
immediately following Closing.
(ii) Hem-Onc shall be entitled to a credit towards payment of
the Purchase Price for those, and only for those post-petition Accrued
Clinic Expenses which it pays after Closing to the extent accrued and
outstanding before January 1, 2002 (including paid vacation leave for
those Terminated Employees employed by Hem-Onc immediately after Closing
to the extent accrued while employed by Response before January 1,
2002), but only to the extent such expenses are included within the
Settlement Amounts or in any Service Fee paid before January 1, 2002.
(f) Closing Date and Place/Closing Deliveries. Schedule 5(f) attached
hereto sets forth the date and place of Closing and the deliveries of the
respective parties at Closing.
6. Payment Reconciliation.
(a) Final Reconciliation. In order to calculate whether the payments
made by Hem-Onc to Response on and after January 1, 2002 and before Closing,
considering all payments made to Response by Hem-Onc pursuant to the Service
Agreement, as modified hereby during the Reconciliation Period, equals, exceeds
or are less than the aggregate amounts to which Response is entitled for such
period pursuant to Section 2(b) above, the parties agree to perform a final
reconciliation (the "Final Reconciliation") in accordance with the following
formula as of Closing or, if the information necessary to do the following
calculation is not
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available as of Closing, as soon thereafter as is possible, but not later than
seven (7) business days after the Closing Date. The Final Reconciliation shall
be made in accordance with the following formula:
(i) take the sum of all collections relating to Practice
Revenues (as defined in the Service Agreement) of Hem-Onc or any other
funds of Hem-Onc which are transferred or paid to Response or deposited
in, transferred or swept to any bank account of Response at any time
during the Reconciliation Period (the "Cash Collections"); add
(ii) $64,108.40 (representing 100% of the Clinic Expenses
incurred or accrued, but unpaid as of December 31, 2001, and with
respect to which Response has been paid at or before Closing); subtract
(iii) the sum of the post-petition Clinic Expenses (whether
accrued on or before or after December 31, 2001), Physician Expenses and
Capital Expenditures actually paid by Response for or on behalf of
Hem-Onc during the Reconciliation Period [provided that Response is
entitled to reimbursement for such Physician Expenses or Capital
Expenditures in accordance with the terms of Section 2(b) above];
subtract
(iv) the Monthly Fee actually paid or due Response for all
months (or partial months) during the Reconciliation Period, as
described in Section 2(b) above (such Monthly Fee to be prorated for the
month in which Closing occurs, if Closing is on or before April 1,
2002); and subtract
(v) the Accrued Clinic Expenses, as of the Closing Date, which
have been not previously paid and which are not to be paid by Hem-Onc
after Closing, but only to the extent allowable as an administrative
claim in Response's bankruptcy proceeding, and cash equal to such
Accrued Clinic Expenses is escrowed by Response, at Closing, in
accordance with the terms of Section 7 below.
(b) Reconciliation Payments/Payment Credits. Subject to Section 6(c)
below, to the extent the formula described in Section 6(a) above yields a
positive number, such amount shall represent an overpayment by Hem-Onc to
Response of the aggregate amounts otherwise due Response pursuant to Section
2(b) above, and Response shall remit to Hem-Onc not later than three (3)
business days following completion of the Final Reconciliation, in cash or
immediately available funds, an amount equal thereto; provided, that if the
Final Reconciliation is agreed to and completed as of Closing, then in lieu of
such payment by Response after Closing, Hem-Onc shall be entitled to a credit
towards payment of the Purchase Price at Closing equal to such positive amount.
If this formula yields a negative number, such negative number represents
Hem-Onc's underpayment of the aggregate amounts due Response pursuant to Section
2(b) above, and Hem-Onc shall remit to Response an amount equal thereto, not
later than the third business day following completion of the Final
Reconciliation, which amount shall be paid by wire by Hem-Onc directly to
AmSouth Bank, as Agent for the Banks (including AmSouth); provided, that if the
Final Reconciliation is completed and agreed to as of Closing, such payment by
Hem-Onc shall be made at Closing.
9
If the Final Reconciliation is completed and agreed to after the Closing
Date, then the party obligated to remit a sum to the other party, as provided
above, shall cause the escrow agent of such party's escrow established in
accordance with Section 5(c) above to promptly disburse to the other party (or,
in the case of disbursements to Response, by wire to AmSouth as Agent for the
Banks), not later than the first business day after completion of and agreement
to the Final Reconciliation, an amount equal to the sum so required to be paid
(or all of the monies in such party's escrow if less than such required
payment), and such party shall be obligated to pay the remaining balance, if
any, to the other party (or, in the case of payments to Response, shall be paid
by Hem-Onc by wire to AmSouth, as Agent for the Banks) within three (3) business
days following completion of the Final Reconciliation, subject to the last
sentence of Section 5(c) below.
(c) Dispute Resolution. If the parties cannot agree upon the Final
Reconciliation within three (3) business days from the completion of the Final
Reconciliation, then Response's designated independent accountant and Hem-Onc's
designated independent accountant shall each designate an independent accountant
and the two independent accountants so designated shall select a third
independent accountant; the final determination of the items in dispute shall be
made by a majority decision of the three independent accountants so selected.
The three accountants selected shall each be a certified public accountant, who
have not (and whose firm has not) previously been engaged by either party or any
affiliates thereof, unless agreed by both parties. In the absence of missing or
undisclosed relevant financial information, the decision of the three
independent accountants will be final and binding and not subject to review of
any kind. The expense of the outside independent accountants' review shall be
split equally by the parties. Only the items that are in dispute shall be
subject to evaluation and determination by the three independent accountants.
Once the items in dispute have been so resolved, the parties shall promptly
agree upon the Final Reconciliation, consistent with the party's agreement as to
the undisputed items and the decision of the three independent accountants on
the disputed items.
(d) Purpose of Reconciliation. The parties acknowledge and agree that
the Final Reconciliation or the items described therein, is being calculated on
a cash basis and that for purposes of calculating the Final Reconciliation, the
various components of the foregoing calculation [excluding Section 6(a)(ii) and
Section 6(a)(v) above] will be calculated on a cash basis consistent with the
payment obligations of Hem-Onc to Response described in Section 2(b) above,
instead of the accrual method of accounting. In addition, the parties agree that
for the purposes of the foregoing calculation, post-petition Clinic Expenses
(incurred after December 31, 2001), Physician Expenses and Capital Expenditures
will be deemed paid once a check is processed and mailed by Response (or
wire-transfer is sent) relating to such expenses and such expenses will continue
to be the responsibility of Response after the Closing if such expenses are
included in the Final Reconciliation pursuant to Sections 6(a)(iii) or (v).
For purposes of calculating the Final Reconciliation, Cash Collections
will include, in addition to all collections received and paid or transferred to
Response during the Reconciliation Period, any and all collections relating to
Practice Revenues which are associated with deposits in Hem-Onc's bank accounts
as of December 31, 2001, and which are paid or
10
transferred to Response or deposited or swept to a Response bank account on or
after January 1, 2002.
7. Payment of Certain Expenses at or after Closing. Response acknowledges
and agrees that it shall be required to pay, in accordance with the payment
terms applicable thereto, after Closing, from the Purchase Price payable, in
cash or immediately available funds, to Response by Hem-Onc at Closing, all
allowed post-petition Accrued Clinic Expenses which Hem-Onc has not agreed to
pay after Closing. Response further acknowledges that it shall be required to
pay at or before Closing, or to set aside in escrow, the amount necessary to
satisfy all other expenses, obligations or liabilities, if any, of Response
incurred prior to Closing, if payment thereof is required in order to release,
as of Closing, any lien, claim or encumbrance on any of the Purchased Assets or
on any property of Hem-Onc, including the Accounts Receivable and proceeds paid
or payable with respect to the Accounts Receivable).
Response agrees to escrow (the "Accrued Expense Escrow"), with an escrow
agent mutually acceptable to Response and Hem-Onc, out of the payments of the
Purchase Price made to Response at Closing by Hem-Onc, an amount equal to all
such post-petition Accrued Clinic Expenses described above (and which are to be
paid after Closing). The terms of the post-petition Accrued Expense Escrow shall
require the applicable escrow agent to pay, from the proceeds held in escrow,
all such Accrued Clinic Expenses when due or when directed by written notice
from either Response or Hem-Onc. To the extent that any of such post-petition
Accrued Clinic Expenses are not allowable as an administrative claim in
Response's bankruptcy proceeding or the obligation to pay the same is waived or
forgiven, and as a result Response is not obligated or permitted to pay the same
(in whole or in part), or the amount paid is less than the amount escrowed for
payment thereof, then the applicable escrow agent, upon receipt of written
notice of such event from either Response or Hem-Onc, shall promptly disburse to
Hem-Onc, out of the monies held in such escrow, an amount equal to such
post-petition Accrued Clinic Expenses which are not allowable as an
administrative claim in Response's bankruptcy proceeding or which otherwise
become non-payable (or an amount equal to the excess of the amount escrowed for
payment of any such expenses in excess of the amounts actually paid or due). If
after all such post-petition Accrued Clinic Expenses are paid in full (and after
disbursement to Hem-Onc of all escrowed funds to which it is entitled, as set
forth above), there remain proceeds in escrow, subject to the following, the
escrow agent shall disburse the remaining sums in escrow to Response. All
monies, if any, required to be disbursed in accordance with the above from the
Accrued Expense Escrow to Response shall, at the time or times such monies are
otherwise required to be disbursed to Response, be wire-transferred to AmSouth,
as Agent for the Banks (including AmSouth). Response shall be obligated to pay
all costs and expenses of the Accrued Expense Escrow, including all fees of the
applicable escrow agent related to the escrow, subject to bankruptcy court
approval. Hem-Onc agrees that Response's legal counsel, Akin, Gump, Strauss,
Hauer and Feld, LLP, may act as escrow agent for the Accrued Expense Escrow. For
the avoidance of doubt, the amounts to be escrowed pursuant to this Section 7
are not for payment of any pre-petition Clinic Expenses, and Hem-Onc and the
Stockholders waive (among other Claims) any claim for payment of unpaid
pre-petition Clinic Expenses.
11
8. No Assumption of Liabilities. Except as expressly provided to the
contrary in this Agreement, Hem-Onc shall not assume or pay any indebtedness or
liabilities of Response, fixed or contingent, known or unknown (including Clinic
Expenses), which are incurred or accrued or are otherwise attributable to the
period on or prior to Closing (including any liabilities of Response arising
from a breach of any of the Assigned Contracts by Response at or before
Closing). Hem-Onc shall expressly assume at Closing, and thereafter pay and
perform, all payment and performance obligations of Response under the Assigned
Contracts (or the portion thereof which relate to Purchased Assets), to the
extent such obligations accrue or are attributable to the period after Closing.
9. Mutual Releases.
(a) Response's/LaMacchia's Releases. Upon and following Closing, each of
Response and LaMacchia, both individually and in LaMacchia's capacity as
President and Chief Executive Officer of Response, on behalf of each such party,
each such party's successors and assigns, and on behalf of any person claiming
by or through each such party, does hereby forever and absolutely release and
discharge Hem-Onc, the Stockholders and each of Hem-Onc's and the Stockholders'
directors, officers, shareholders, representatives, employees, agents, attorneys
and affiliates, including, but not limited to, any affiliated entities (the
"Affiliated Persons") from any and all claims, demands, losses, damages, causes
of actions or liabilities of any kind or nature, whether known or unknown, fixed
or contingent, filed, unfiled or scheduled (collectively, the "Claims"), that
Response or LaMacchia now has or may have ever had from the beginning of the
world to Closing against Hem-Onc, the Stockholders or any Affiliated Persons of
Hem-Onc or the Stockholders, including, but not limited to, any preference or
avoidance claims or any claim attributable to a violation of the automatic stay
or arising out of or relating to the Bankruptcy Case, excluding only those
Claims which Response or LaMacchia may have against Hem-Onc or the Stockholders
arising out of or attributable to a breach of any provisions of this Agreement.
(b) Hem-Onc's/Stockholders' Releases. Upon and following Closing,
Hem-Onc and each Stockholder, both individually and in each Stockholder's
respective capacities as officer or director of Hem-Onc, on behalf of each of
such party, each such party's successors and assigns, and on behalf of any
person claiming by or through each such party, does hereby forever and
absolutely release and discharge Response, LaMacchia (both individually and in
his capacity as a Response officer and director) and each of Response's and
LaMacchia's Affiliated Persons from any and all Claims that Hem-Onc or any of
the Stockholders now has or may have ever had from the beginning of the world to
Closing against Response, LaMacchia or any Affiliated Persons of Response or
LaMacchia, excluding only those Claims which Hem-Onc or any of the Stockholders
may have against Response or LaMacchia arising out of or attributable to a
breach of any provisions of this Agreement.
(c) Dismissal of Suits. At Closing, each of Hem-Onc and the
Stockholders, individually, on one hand, and Response and LaMacchia,
individually, on the other hand, to the extent applicable, shall dismiss with
prejudice the Adversary Proceeding and all claims against the opposite parties
raised or which could have been raised or filed by the parties thereof in
connection therewith, and any other adversary proceedings, contested matters,
suits or other actions that any such parties have brought as of Closing, could
have brought as of Closing or can
12
bring at or prior to Closing against any such opposite parties (or against any
such opposite parties' Affiliated Persons).
10. Certain Covenants of the Parties/Court Approval.
(a) Termination of Employment.
(i) As of Closing, Response shall terminate the employment of
all of its personnel who physically provide services to Hem-Onc, on
behalf of Response, in accordance with the Service Agreement, at
Hem-Onc's medical facilities in Florida (individually, a "Terminated
Employee" and, collectively, the "Terminated Employees"). Hem-Onc and
the Stockholders acknowledge their present expectation to employ
immediately after Closing all or substantially all of the Terminated
Employees, however, Response acknowledges that Hem-Onc shall have no
obligation to hire any specific Terminated Employee.
(ii) Prior to Closing, Hem-Onc and the Stockholders agree to use
their reasonable efforts to cause all of the Terminated Employees who
Hem-Onc offers to employ immediately after Closing to waive any claims
that such employees have or may have against Response for severance
benefits or otherwise, pursuant to a "Release" in form and content
determined and prepared by Response; provided, that, neither Hem-Onc nor
the Stockholders shall have any liability to Response if any such
waivers are not given. Hem-Onc agrees to assume with respect to all of
the Terminated Employees employed by Hem-Onc immediately after Closing,
all of such Terminated Employee's unused, paid vacation leave (as of
Closing) accrued while employed by Response in an amount not in excess
of the aggregate amount set forth in Attachment 12(c)-I(g) attached to
Schedule 12(c); provided, that Hem-Onc shall receive a credit towards
payment of the Purchase Price in an amount equal to the dollar amount of
any such unused vacation leave which accrued before January 1, 2002, to
the extent included within the Settlement Amounts or in any Service Fee
paid before January 1, 2002.
(iii) Response agrees that as of Closing, all non-compete and
non-solicitation obligations and covenants, if any, of Hem-Onc or the
Terminated Employees hired by Hem-Onc after Closing shall terminate and
be of no further legal force or effect.
(b) Bankruptcy Court Approval.
(i) Hem-Onc and the Stockholders acknowledge that, as a
condition for closing on the transactions contemplated herein, the
consent of the Bankruptcy Court must be obtained. Towards that end,
Hem-Onc, Response and, by execution of a copy of this Agreement, the
Banks hereby agree that they shall take any and all actions as may be
reasonably necessary or desirable to cause the Bankruptcy Court to
consider and approve the transactions contemplated herein at a hearing
to approve the same scheduled for March 29, 2002 (as the same may be
rescheduled by mutual written agreement of Hem-Onc and Response). In
furtherance thereof, promptly following execution of this Agreement by
all parties hereto, Response shall submit or cause to be submitted to
the
13
Bankruptcy Court, as a supplement to the motion Response previously
filed for approval of the transactions contemplated by this Agreement, a
copy of this Agreement and the schedules hereto.
(ii) If the Bankruptcy Court does not approve this Agreement
substantially in accordance with its terms, or affirmatively rejects
this Agreement, then this Agreement shall automatically terminate upon
the occurrence of such event (collectively "Court Rejection"), unless
otherwise agreed by Hem-Onc and Response, in writing. Further, if the
Bankruptcy Court has not yet ruled on the motion to approve this
Agreement by April 30, 2002 or if the Bankruptcy Court's prior approval
of this Agreement has been appealed and remains on appeal as of April
30, 2002 (collectively "April 30th Status"), then either party may
terminate this Agreement at any time after April 30, 2002, upon delivery
of written notice to other party; provided, that, neither Response nor
Hem-Onc, as the case may be, shall be permitted to so terminate this
Agreement if such failure to approve this Agreement by April 30, 2002,
or the appeal of this Agreement which remains in effect as of April 30,
2002, arises from a breach by either party of the foregoing terms of
this Section 10(b) or a breach by Response of Sections 3 or 13 hereof,
or results from any willful action or inaction of such party designed to
delay the approval of this Agreement. Upon termination of this
Agreement, all terms of the Service Agreement, if any, that have been
altered by this Agreement shall be reinstated in full force and effect
as of January 1, 2002.
(iii) The Banks shall have the right to withdraw their consent
to and approval of this Agreement in the event of a Court Rejection or
if the April 30th Status materializes, unless the Court Rejection or
April 30th Status arises from the Banks' failure to support the
transactions contemplated herein or the Banks' failure to support
approval by the Bankruptcy Court of this Agreement, as otherwise
required herein. Notwithstanding anything herein to the contrary, if the
Banks breach their agreement to actively support the transactions
contemplated herein or the Bankruptcy Court's approval of this
Agreement, as described herein, then Hem-Onc shall have the right to
terminate this Agreement by delivery of written notice to Response and
the Banks.
(iv) Notwithstanding anything herein to the contrary, Hem-Onc
and Response agree that until the Bankruptcy Court approves this
Agreement and the transactions contemplated hereby, if either Hem-Onc or
Response shall be in breach of this Agreement, the other party shall
have the unilateral right, exercisable by delivery of written notice to
the breaching party to terminate this Agreement, without penalty.
11. Management of Medical Practice. Subject to the terms set forth herein,
the parties hereto acknowledge and agree that from the date of this Agreement
through Closing, Response shall continue to manage and administer Hem-Onc's
medical practice, and shall continue to provide the other services required
under the Service Agreement (as hereby modified), pursuant to and in accordance
with the Service Agreement, consistent with past practices; and that Hem-Onc and
the Stockholders shall reasonably cooperate with Response, and Response shall
reasonably cooperate with Hem-Onc and the Stockholders, as called for in this
Agreement, and continue to operate Hem-Onc's medical practice in the ordinary
course. In this regard, Response
14
acknowledges that by virtue of the revisions to the Service Fee in accordance
with Section 2(b) above applicable to the Reconciliation Period, Hem-Onc and the
Stockholders are effectively assuming the full risk of loss to the Purchased
Assets and all risks of Hem-Onc's medical practice through Closing. As such,
Response agrees that from the date of this Agreement through Closing, in
carrying out its duties pursuant to the Service Agreement, as modified herein,
Response shall reasonably consult and cooperate with Hem-Onc and the
Stockholders and abide by the reasonable directions of Hem-Onc and the
Stockholders, so long as the same does not violate the provisions set forth in
this Section 10(c).
(a) Response's Covenants. In connection with the foregoing, Response
expressly agrees that, without the prior written consent of Hem-Onc or the
Stockholders, until Closing (or, if sooner, until termination of this
Agreement), Response shall not:
(i) advance additional monies to or on behalf of Hem-Onc out of
the ordinary course of business, as established by past practice;
(ii) acquire any additional property or equipment, except for
the replacement of obsolete tangible personal property in the ordinary
course, consistent with past practices and the terms of the Service
Agreement; provided, that, Response shall not replace or purchase any
additional laboratory or pharmacy supplies (other than what is on hand
as of the date of this Agreement), except as directed, in writing, by
the Stockholders [so long as such directions do not violate Section
11(b) below]; and provided, further, that Response shall not acquire any
tangible personal property with a cost in excess of $10,000, or any
tangible personal property (excluding tangible personal property
acquired before the date of this Agreement), the cost of which, when
added to all other tangible personal property acquired on or after
January 1, 2002, exceeds $20,000, unless authorized, in writing, by the
Stockholders;
(iii) pledge or encumber any of the Purchased Assets or incur
any indebtedness or obligations which are or will be secured by a lien
on any of the Purchased Assets or on any assets of Hem-Onc, other than
property that is already pledged or encumbered;
(iv) sell, transfer or dispose of any of the Purchased Assets
without the prior written consent of Hem-Onc, except for the sale,
transfer or disposal of pharmacy and laboratory supplies and inventory
sold or consumed in the ordinary course, consistent with past practices,
and in accordance with the terms of the Service Agreement;
(v) execute, after the date of this Agreement, any new
contracts, leases or agreements with respect to Hem-Onc's medical
practice or renew, extend, amend, modify, sign or pledge any existing
contracts, leases and agreements included with the Assigned Contracts
(or which, if in existence as of Closing, would be within the Assigned
Contracts), other than the pledge of contracts, leases and agreements
already pledged or collateralized; or
15
(vi) alter the rate or basis of compensation paid to any of
Response's employees who provide services to Hem-Onc, on behalf of
Response, at Hem-Onc's facilities in Florida.
In addition, Response agrees to use its reasonable efforts to
maintain all contractual arrangements with respect to Hem-Onc's medical
practice in effect as of February 27, 2002, and shall maintain all
insurance obtained or maintained with respect to any assets or property
used or held for use exclusively in Hem-Onc's medical practice, to the
extent in place as of February 27, 2002. Response also agrees to direct
or instruct its employees rendering services on Response's behalf at
Hem-Onc's facility or facilities, to abide by the instructions and
directions of the Stockholders with respect to the billing of services
rendered by Hem-Onc and the collection of fees for services rendered and
goods sold; provided, that, such instructions or directions do not
violate the provisions of Section 11(b) below.
(b) Hem-Onc's/Stockholders' Covenants. In connection therewith, Hem-Onc
and Stockholders expressly agree that, without the prior written consent of
Response, until Closing (or, if sooner, until termination of this Agreement),
Hem-Onc and the Stockholders shall not:
(i) fail to remit payments of all components of the Service Fee
[as modified for the Reconciliation Period in accordance with Section
2(b) above] to Response consistent with past practices and the terms of
the Service Agreement;
(ii) alter their ordinary course, historical pattern of conduct
in collecting and attempting to collect Accounts Receivable (unless such
different conduct is intended to result in an overall increase in
collections of outstanding Accounts Receivables);
(iii) alter their ordinary course, historical pattern of conduct
in billing for services rendered (including but not limited to physician
and ancillary services);
(iv) materially increase the historical patterns of the
pharmaceuticals and supplies which they request Response to purchase
(and shall not request extraordinary or unusual amounts of
pharmaceuticals);
(v) alter their ordinary course, historical pattern of conduct
in hours of work or in treating patients (including but not limited to
the number, type and financial ability of patients, and use of ancillary
services); or
(vi) approve, implement or make any capital expenditure without
the written approval of Response.
12. Conditions of Closing. Closing on the purchase and sale of the Purchased
Assets is subject to satisfaction (or waiver by the adversely affected party) of
each of the following:
16
(a) Compliance with Covenants of Parties. Each of the parties hereto
(and the Banks, with respect to its agreement set forth herein) shall have
performed or complied in all material respects with all covenants and agreements
of each such party required to be performed or complied by each such party under
this Agreement at or prior to Closing.
(b) Approval of Agreement. The approval of this Agreement and the
transactions contemplated hereby by the Bankruptcy Court.
(c) Representations and Warranties of the Parties. The representations
and warranties of Response or Hem-Onc, as the case may be, as set forth on
Schedule 12(c) attached hereto, shall be true and correct as of the date of this
Agreement and shall be true and correct in all material respects as of the
Closing Date, with the same force and effect as if such representations and
warranties had been made at and as of the Closing Date.
(d) New Leases for Certain Purchased Assets. If any of the Purchased
Assets which are leased by Response are the subject of a lease which includes
property in addition to such leased Purchased Assets, Hem-Onc shall have entered
into an agreement for the lease of such leased Purchased Assets with the
applicable lessor thereof, on terms and conditions substantially similar to
those applicable to Response's lease thereof immediately before Closing.
13. No Bids. Response represents that prior to the date of this Agreement,
the bidding terminated, in the Bankruptcy Case for the Service Agreement, the
Purchased Assets (or any of them) and Response's rights in and to the Service
Agreement and all of such items were withdrawn from the auction of Response's
assets otherwise proposed in connection with the Bankruptcy Case. Response
hereby agrees that, from the date of this Agreement to Closing (or, if sooner,
until termination of this Agreement), it shall not accept or solicit any bids or
offers from any party for the Service Agreement, any of the Purchased Assets or
any of Response's rights in and to the Service Agreement. To the extent not
previously performed, upon execution of this Agreement, Response shall promptly
disclose to all bidders or prospective bidders of its assets in the Bankruptcy
Case of the existence of this Agreement (without sharing the contents hereof
unless required by the Bankruptcy Court) and its intention to close on the
transactions contemplated hereby in accordance with the terms hereof. Response
and Hem-Onc, and by execution hereof, the Banks, further agree to support,
without reservation, the approval of this Agreement by the Bankruptcy Court. In
the event that the Bankruptcy Court does not approve this Agreement, or that any
order approving this Agreement is reversed or materially modified (unless such
modification is acceptable to Response and Hem-Onc): (i) this Agreement shall
not be binding on any party (provided, that the provisions of Sections 15, 16
and 17 below, and the obligations of the parties pursuant thereto, as well as
any liability of any party hereunder arising from a breach by any such party
before such event of any of the provisions of this Agreement, shall survive such
event and shall survive the termination of this Agreement, as the case may be);
(ii) no representation or warranty made in this Agreement shall be binding on
any party; and (iii) Response, Hem-Onc, the Stockholders and the Banks shall
each be free to take any action permissible under law or equity with respect to
the Purchased Assets, the Service Agreement and all other areas or items
addressed herein, including a renewal of a bidding process and proposed auction
for those items.
17
14. Access to Records.
(a) Hem-Onc Access. At all times following the date of this Agreement
and up to Closing (or, if sooner, until the termination of this Agreement), in
furtherance of Hem-Onc's acquisition of the Purchased Assets and the termination
of the Service Agreement, Response agrees to provide Hem-Onc, and its legal,
accounting and financial representatives, access to and, if requested, copies of
such of Response's books, records, documents and information, including
contracts, leases and agreements, to the extent they relate to the Purchased
Assets or Hem-Onc's medical practice, as Hem-Onc may reasonably request, from
time to time, except as to those excluded from Section 1(d) above. All costs
incurred in connection therewith by Hem-Onc or any of its representatives, shall
be borne solely by Hem-Onc.
(b) Response Access. Hem-Onc already possesses and owns all clinical
records of its and its physicians' patients, including all patients treated at
the Impact Center in Port St. Lucie, Florida. After Closing, Response or its
successor shall have such reasonable access to all records within Hem-Onc's or
the Stockholders' control or possession as is reasonably required for purposes
of the administration of its bankruptcy estate, or as otherwise reasonably
needed, subject to applicable laws or the provisions of any agreement to which
Hem-Onc is subject to, including laws restricting access to confidential patient
information. All costs incurred in connection therewith by Response or any of
its representatives shall be borne solely by Response.
15. Payment of Costs by Parties. Each party will be responsible for its own
legal, accounting and other expenses incurred in connection with this Agreement
and the transactions contemplated herein.
16. Public Announcement/Confidentiality. Each of Hem-Onc and Response and,
by execution hereof, the Banks agree that neither such party, nor each such
party's Affiliated Persons, including each such party's attorneys and
accountants, shall disclose the existence or content of this Agreement to any
person (including disclosures to the public and disclosures to any person making
or seeking to make or who is in a position to make a competing offer or bid for
the Purchased Assets or Response's interest in the Service Agreement), other
than disclosures reasonably necessary in connection with the Bankruptcy Case
(including, without limitation, disclosures to unsecured creditors of Response,
and disclosures to the United States Trustee), without the prior written consent
of both Hem-Onc and Response. Notwithstanding the foregoing, any disclosures
required by law, or necessary to complete the transactions contemplated by this
Agreement or necessary to enforce any such party's rights hereunder may be made
without the need for either party's consent. It is the specific intent of the
parties hereto that in no event shall the contents of this Agreement be used by
Response or any of its representatives, directly or indirectly, as support for
or in formulating a competing offer or bid by any party for any of Response's
assets, including the Purchased Assets or Response's interest in the Service
Agreement.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. Any and all disputes that may
arise with respect to this Agreement [excluding disputes concerning the
computation of the Final
18
Reconciliation, which disputes are to be resolved in accordance with Section
6(c) above] shall be adjudicated by the Bankruptcy Court to the extent that its
jurisdiction permits, and neither party shall object to the jurisdiction of the
Bankruptcy Court to hear such disputes or to its jurisdiction over their person.
Response and Hem-Onc each shall have the right to seek enforcement of the other
party's respective obligations to close on the transactions hereby contemplated
by action for specific performance, injunction or other equitable relief filed
with the Bankruptcy Court, if the other party shall be in breach of such other
party's obligations with respect thereto. If the jurisdiction of the Bankruptcy
Court does not permit it to adjudicate any such equitable action, then either
party shall have the right to file an action for specific performance,
injunction or other equitable relief with any other court of competent
jurisdiction in the event of any such breach by the other party.
18. Banks' Approval. This Agreement shall not be effective until approved by
AmSouth Bank, Bank of America, N.A., and Union Planters Bank, N.A.
(collectively, the "Banks"), through the Banks' agent, AmSouth Bank. In this
regard, it is the expectation of the parties that this Agreement shall be
executed simultaneously by all parties hereto, and the Banks, through AmSouth.
19. Miscellaneous.
(a) Survival. Upon the termination of this Agreement in accordance with
the express terms hereof, all of the obligations of the parties set forth herein
shall automatically terminate; provided, that the provisions of Sections 15, 16
and 17 hereof and obligations of the parties pursuant thereto, as well as any
liability of any party hereunder arising from a breach by any such party before
termination of any of the provisions of this Agreement, shall survive the
termination of this Agreement. Upon Closing, the representations and warranties
of the parties set forth in Schedule 12(c) shall only survive until the
completion of and agreement to the Final Reconciliation and the payment of any
sums due thereunder pursuant to Section 6 above.
(b) Further Actions. Before Closing, each party hereto shall use its
reasonable efforts to cause the transactions hereby contemplated to be
consummated and to cause each of the conditions applicable to each such party's
and the other party's obligations to close to be satisfied. In furtherance
thereof, Hem-Onc and Response agree to reasonably cooperate in securing the
assignment of the Capital Leases to Hem-Onc or to secure the release therefrom
of the leased Purchased Assets which is subject thereto, if either such Capital
Lease includes the lease of other equipment or property; and in such event, to
cause the applicable lessor with respect thereto to enter into a new lease
agreement with Hem-Onc at Closing for Hem-Onc's continued lease thereof after
Closing, on terms and conditions substantially similar to those applicable to
Response's lease of such equipment immediately before Closing. After Closing,
each party hereto shall execute and deliver such further instruments and take
such further actions as any other party hereto may reasonably request to effect,
consummate, confirm or otherwise evidence the transfer to Hem-Onc of the
Purchased Assets in accordance with the terms hereof or the other transactions
contemplated herein.
(c) Amendments. This Agreement may only be amended by written instrument
signed by Hem-Onc and Response, and consented to by the Banks. No course of
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dealing between or among any of the parties hereto any other persons having any
interest in this Agreement shall be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any party
hereto under or by reason of this Agreement.
(d) Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when personally delivered, three
(3) days after deposit in the U.S. mail, if sent by registered or certified
mail, return receipt requested, postage prepaid and addressed as follows, the
next business day if sent by a nationally recognized overnight courier service
and addressed as follows, or upon receipt of electronic confirmation of delivery
if sent by facsimile to the respective parties' facsimile number as follows:
If to Response or LaMacchia:
Response Oncology, Inc.
1805 Moriah Woods Boulevard
Memphis, Tennessee 38117
Attention: Anthony M. LaMacchia, President and CEO
Facsimile: 901-763-7045
in each instance, with a copy to:
Akin, Gump, Strauss, Hauer and Feld, LLP
Robert S. Strauss Building
1333 New Hampshire Avenue--N.W.
Suite 400
Washington, District of Columbia 20036
Attention: James A. Barker, Jr., Esq./Sam J. Alberts, Esq.
Facsimile: 202-887-4288
If to Hem-Onc or the Stockholders:
Hem-Onc Associates of the Treasure Coast, P.A.
1801 SE Hillmoor Drive
Suite B-101
Port St. Lucie, Florida 34952
Attention: Alan S. Collin, M.D., President
Facsimile: 561-335-5082
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and in each instance, with a copy to:
Dean, Mead, Minton & Klein
1903 South 25th Street
Suite 200
Fort Pierce, Florida 34947
Attention: Michael D. Minton, Esq./Joel C. Zwemer, Esq.
Facsimile: 561-464-7877
If to the Banks:
AmSouth Bank, as Agent for the Banks
Special Assets Department
315 Deaderick Street, 8th Floor
Nashville, Tennessee 37237
Attention: John E. Adcox, Jr.
Title: Vice-President
Facsimile: 615-736-6633
and in each instance, with a copy to:
Waller, Lansden, Dortch & Davis, PLLC
Nashville City Center
511 Union Street, Suite 2100
Nashville, Tennessee 37219
Attention: Robert A. Guy, Esq./John C. Tishler, Esq.
Facsimile: 615-244-6804
(e) Binding/Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legatees, personal representatives, successors and assigns,
but neither this Agreement nor any of the rights, interests or obligations
hereunder of any party shall be assignable without prior written consent of the
other parties.
(f) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall, to the extent the
omission of such provision will not materially alter the substantive terms of
this Agreement, be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
(g) No Third Party Beneficiaries. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement to any other persons other than the parties hereto and
their respective successors, permitted assigns, heirs, legatees and personal
representatives, as the case may be, nor is anything in this
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Agreement intended to relieve or discharge the obligation or liability of any
third persons to any party, nor shall any provision give any third parties any
rights of subrogation or action over or against any party. This Agreement is not
intended to and does not create any third party beneficiary rights whatsoever.
(h) No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
(i) Captions. The captions used in this Agreement are for convenience or
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
(j) Complete Agreement. This Agreement, including the schedules and the
documents referred to herein, and that certain letter of intent, dated February
27, 2002, by and between the parties hereto and the Banks (to the extent not
replaced by or inconsistent with the terms hereof), contain the complete
agreement between the parties with respect to the subject matter hereof and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way.
(k) Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument. Facsimile signatures will constitute original signatures for
purposes of this Agreement; provided that the parties shall promptly exchange
original signatures after the execution thereof.
(l) Tax Allocation. The parties agree to allocate the Purchase Price
among the Purchased Assets and Settlement Amounts for federal income tax
purposes in accordance with the Purchased Assets' and Settlement Amounts'
relative "book" values as of December 31, 2001, as reflected on the Balance
Sheet; and shall make all necessary filings (including those required under
Internal Revenue Code Section 1060) in accordance with that allocation.
20. Definitions. The following described terms shall be defined as set forth
in the following described sections of this Agreement (or otherwise as follows):
(a) "Accrued Clinic Expense" is defined in Section 5(e).
(b) "Accrued Expense Escrow" is defined in Section 7.
(c) "Acquired Assets" is defined in Section 1(a).
(d) "Adversary Proceeding" is defined in the fourth "Whereas" clause in
the Recitals section of this Agreement.
(e) "Affiliated Persons" is defined in Section 9(a).
22
(f) "April 30th Status" is defined in Section 10(b)(ii).
(g) "Assigned Contracts" is defined in Section 1(b)(i).
(h) "Assigned Prepayments" is defined in Section 1(c).
(i) "Assigned Name" is defined in Section 1(e).
(j) "Assigned Records" is defined in Section 1(c).
(k) "Avoidance Claim" is defined in Section 4(b)(ii).
(l) "Balance Sheet" is defined in Section 1(c).
(m) "Bankruptcy Case" is defined in the third "Whereas" clause in the
Recitals section of this Agreement.
(n) "Bankruptcy Court" is defined in the third "Whereas" clause in the
Recitals section of this Agreement.
(o) "Bankruptcy Rules" is defined in Section 3.
(p) "Banks" is defined in Section 18.
(q) "Capital Expenditures" is defined in Section 2(b)(iii).
(r) "Capital Lease" or "Capital Leases" is defined in Section 5(a)(i).
(s) "Cash Collections" is defined in Section 6(a)(i).
(t) "Claims" is defined in Section 9(a).
(u) "Closing" is defined in Schedule 5(f), attached to this Agreement.
(v) "Closing Date" is defined in Schedule 5(f), attached to this
Agreement.
(w) "Court Rejection" is defined in Section 10(b)(ii).
(x) "Final Reconciliation" is defined in Section 6(a).
(y) "GAAP" is defined in Section 4(a).
(z) "Hem-Onc" is defined in the opening paragraph to this Agreement.
(aa) "Hem-Onc Escrow" is defined in Section 5(c).
23
(bb) "LaMacchia" means Anthony M. LaMacchia.
(cc) "Monthly Fee" is defined in Section 2(b)(iv).
(dd) "Non-Paying Party" is defined in Section 5(c).
(ee) "Overpayment" is defined in Section 5(b).
(ff) "Purchased Assets" is defined in the last sentence of Section 1.
(gg) "Purchase Price" is defined in Section 4.
(hh) "Real Property Lease" or "Real Property Leases" is defined in
Section 1(b)(ii).
(ii) "Reconciliation Period" is defined in Section 2(b).
(jj) "Response" is defined in the first paragraph of this Agreement.
(kk) "Response Escrow" is defined in Section 5(c).
(ll) "Service Agreement" is defined in the first "Whereas" clause in the
Recitals section of this Agreement.
(mm) "Settlement Amounts" is defined in Section 4(b)(i).
(nn) "Stockholders" is defined in the first paragraph of this Agreement.
(oo) "Terminated Employee" or "Terminated Employees" is defined in
Section 10(a)(i).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the first date written above.
"HEM-ONC"
HEM-ONC ASSOCIATES OF THE TREASURE COAST, P.A.
By: /s/ Alan S. Collin
-------------------------------
Alan S. Collin, M.D., President
"STOCKHOLDERS"
/s/ Alan S. Collin
-----------------------------------
Alan S. Collin, individually
/s/ Nicholas O. Iannotti
-----------------------------------
Nicholas O. Iannotti, individually
/s/ Paul M. Swanson
-----------------------------------
Paul M. Swanson, individually
/s/ Michael S. Wertheim
-----------------------------------
Michael S. Wertheim, individually
"RESPONSE"
RESPONSE ONCOLOGY, INC.
By: /s/ Anthony M. LaMacchia
-------------------------------
Anthony M. LaMacchia, President
"LAMACCHIA"
/s/ Anthony M. LaMacchia
-----------------------------------
Anthony M. LaMacchia, individually
25
CONSENTED TO AND APPROVED THIS 15th DAY OF MARCH, 2002.
AMSOUTH, AGENT TO BANKS
(including AmSouth Bank)
By: /s/ John E. Adcox, Jr.
----------------------------------
John E. Adcox, Jr., Vice-President
26