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Exhibit 10(m)
STOCK PURCHASE AGREEMENT
BY AND AMONG
RESPONSE ONCOLOGY, INC.,
STOCKHOLDERS OF ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A.
AND
SOUTH FLORIDA ONCOLOGY HEMATOLOGY ASSOCIATES, P.A.
DECEMBER 20, 1995
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of December 20, 1995, by and
among RESPONSE ONCOLOGY, INC, a Tennessee corporation (the "Purchaser"),
each of the STOCKHOLDERS OF ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A.,
acting by and through Leonard Kalman, M.D., their duly-appointed
attorney-in-fact (collectively, the "Sellers" and, individually, a "Seller")
and SOUTH FLORIDA ONCOLOGY HEMATOLOGY ASSOCIATES, P.A., a Florida professional
association (the "Group").
W I T N E S S E T H:
WHEREAS, the Sellers own in the aggregate eighty (80) shares (the
"Shares") of the common stock, par value $1.00 per share, of Oncology
Hematology Group of South Florida, P.A., a Florida professional association
engaged in the practice of medicine (the "Association"); 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 attorneys' fees and expenses which, in the
aggregate, would have a material adverse effect on the financial condition or
results of operations of the Purchaser.
"Affiliate" has the meaning set forth in Rule 12-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504 or any similar group defined under a similar provision of state,
local or foreign law.
"Agreement among Sellers" means an agreement, effective as of a time
prior to the execution and delivery of this Agreement, pursuant to which the
Sellers appoint an attorney-in-fact to execute and deliver this Agreement,
collect the cash portion of the Purchase Price, take delivery of the Long-term
Note and the Warrants, receive payments under the Long-Term Note, exercise
Warrants and otherwise act on behalf of the Sellers for all purposes connected
with the performance of this Agreement.
"Applicable Rate" means the corporate base rate of interest announced
from time to time by First Tennessee Bank National Association, Memphis,
Tennessee plus two percent (2%).
"Association" has the meaning set forth in the first recital above.
"Base Purchase Price" has the meaning set forth in Section 2(a) below.
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"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.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
"Deferred Intercompany Transaction" has the meaning set forth in Treasury
Regulation Section 1.1502-13.
"Deferred Purchase Price" has the meaning set forth in Section 2(b)
below.
"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 Statement" has the meaning set forth in Section 4(g) below.
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"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Group" has the meaning set forth in the initial paragraph of this Stock
Purchase Agreement.
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes.
"Long-Term Note" means the promissory note of the Purchaser payable to
the order of the Sellers in the form set forth as Exhibit 2(b)(i).
"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 Association.
"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 face amount, in dollars, of the Association's
accounts receivable as of the close of business on the day prior to the Closing
Date.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
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"Response Stock" means the common stock of the Purchaser, $.01 par value
per share.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Sellers' Disclosure Letter" has the meaning set forth in Section 3(a)
below.
"Service Agreement" means the Service Agreement between the Purchaser and
the Group to be executed and delivered by the Purchaser and the Group, and
which will become effective, at the time of Closing.
"Shares" means all of the issued and outstanding shares of the Common
Stock, par value $1.00 per share, of the Association.
"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(d) below.
"Warrant" means a warrant to purchase 20,000 shares of Response Stock at
$12.50 per share, issuable to a Seller at Closing in the form set forth as
Exhibit 2(b)(ii).
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 the sum of (i)
the aggregate base price (the "Base Purchase Price") equal to the sum of Ten
Million Three Hundred Three Thousand Seven Hundred Twenty-Two Dollars
($10,303,722.00), plus the Net Realizable Value of Receivables, and (ii) the
deferred price (the "Deferred Purchase Price") equal to Fifty Thousand Dollars
($50,000.00) per calendar quarter for each quarter, or portion thereof, that
the Service Agreement remains if effect, up to a maximum of Eight Hundred
Thousand Dollars ($800,000). In the event of termination of the Service
Agreement on any day which is not the last day of a calendar quarter, then the
Deferred Purchase Price shall be pro rated through the last day of the calendar
month of termination as if such termination occurred on that day. In addition
to the foregoing, the Purchaser shall issue to each Seller, at such Seller's
election, either (i) a Warrant to purchase 20,000 shares Response Stock, (ii)
options to purchase 20,000 shares
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of Response Stock at a price of $12.50 per share, which options shall be issued
pursuant to the Purchaser's Non- Qualified Stock Option Plan, or (iii) any
combination of Warrants and options. At the time of such issuance, any options
issued to any Seller pursuant to said plan shall be immediately vested and
exercisable.
(b) Payment of Purchase Price. The Purchaser shall pay or satisfy the
Base Purchase Price in the following manner: (i) Five Million Two Hundred
Thousand ($5,343,750) Dollars in cash to the Sellers, pro rata according to
their ownership of Shares, at Closing (hereinafter defined), (ii) Five Million
Nine Hundred Fifty-Nine Thousand Nine Hundred Seventy-Two ($5,959,972) Dollars
by issuance and delivery of the Long-Term Note to the Sellers; and (iii)
issuance and delivery of the Warrants and/or option to the Sellers in
accordance with Section 2(a) above. The Deferred Purchase Price shall be paid
to the Sellers, pro rata according to their ownership of Shares, by the
Purchaser Fifty Thousand Dollars (or such portion thereof as may be computed in
accordance with Section 2(a) in the event of termination of the Service
Agreement) in arrears on the last day of each calendar quarter, commencing
March 31, 1996 (which date is subject to change in the event the Closing occurs
later than January 2, 1996), with the last such payment being due and payable
on the earlier of the last day of the quarter during which the Service
Agreement is terminated or December 31, 1999. In addition to the foregoing,
the Purchaser shall pay to the Sellers, pro rata according to their ownership
of Shares, as additional Purchase Price, on a monthly basis during the period
after Closing, the amount of Receivables collected by Response in excess of
$1,200,000.00. Such obligation shall terminate on the first anniversary of the
Closing. In that regard, during such one year period, the Purchaser shall make
monthly accountings to the Sellers with respect to the collection of
Receivables, and the Sellers may, at their option and sole expense, assist in
the collection of any Receivable.
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Baker, Donelson,
Bearman & Caldwell, 165 Madison Avenue, 21st Floor, Memphis, Tennessee 38103
commencing at 9:00 a.m. local time on January 2, 1996, or such other date as
the Purchaser and the Sellers may mutually determine (the "Closing Date").
(d) Deliveries at the Closing. At the Closing, (i) the Purchaser will
deliver to the Sellers 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 jointly
and severally represent and warrant to the Purchaser that the statements
contained in this Section 3(a) are correct and complete as of the date of this
Agreement 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. This Agreement
constitutes the valid and legally binding obligation of each Seller,
enforceable in accordance with its terms and conditions. Each Seller
need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement. 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.
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(ii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which 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 or commitment that
could require the Seller to sell, transfer, or otherwise dispose of any
capital stock of the Association (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.
(v) Agreement among Sellers. The Agreement among Sellers has been
duly executed by each Seller and constitutes the valid and legally
binding obligation of each Seller, enforceable according to its terms.
(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.
(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 government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Purchaser
is subject or any provision of its charter or bylaws or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Purchaser
is a party or by which it is bound or to which any of its assets is
subject.
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(iv) Brokers' Fees. The Purchaser has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the
Seller could become liable or obligated.
(v) 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.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE ASSOCIATION. The
Sellers and the Group, jointly and severally, represent and warrant to the
Purchaser that the statements contained in this Section 4 are true, correct and
complete as of the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except
as set forth in the 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 Association
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Florida. The Association is duly authorized to
conduct business and are in good standing under the laws of each jurisdiction
where such qualification is required. The Association has full corporate power
and authority and all licenses, permits, and authorizations necessary to carry
on the business in which it is engaged and to own and use its properties.
Paragraph 4(a) of the Sellers' Disclosure Letter lists the directors and
officers of the Association. The Sellers have delivered to the Purchaser
correct and complete copies of the charter and bylaws of the Association (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
Association are correct and complete. The Association is not in default under
or in violation of any provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of the
Association consists of 5,000 Shares, of which 80 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 Association 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
Association. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the
Association.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) 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 Association is subject or any
provision of the charter or bylaws of the Association 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 Association 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 Association
is not required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
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(d) Brokers' Fees. The Association 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 Association 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 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
years ended December 31, 1994 (the "Most Recent Fiscal Year End") for the
Association; 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 six (6) months ended June 30, 1995 (the "Most Recent Fiscal
Month End") for the Association. 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 Association as
of such dates and the results of operations of the Association and its
subsidiaries for such periods on a cash basis method of accounting, are correct
and complete, and are consistent with the books and records of the Association.
(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, results of operations, or future
prospects of the Association. Without limiting the generality of the foregoing,
since that date:
(i) the Association 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 Association 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 Association) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $25,000.00 to which the Association is a
party or by which the Association or its properties are bound;
(iv) the Association has not created, suffered or permitted to
attach or be imposed any Security Interest upon any of its assets,
tangible or intangible;
(v) the Association 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 Association 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 Association 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;
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(viii) the Association has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of
Business;
(ix) the Association has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $25,000.00 or outside the Ordinary Course of
Business;
(x) the Association 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 Association;
(xii) the Association 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 Association has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiv) the Association has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property;
(xv) the Association 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;
(xvi) the Association 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;
(xvii) the Association has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xviii) the Association 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);
(xix) the Association has not made any other change in employment
terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xx) the Association has not made or pledged to make any charitable
or other capital contribution outside the Ordinary Course of Business;
(xxi) there has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving the Association; and
(xxii) the Association has not committed to any of the foregoing.
(h) Undisclosed Liabilities. The Association 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 Association that
may result in any Liability), except for (i) Liabilities set forth on the face
of the Most Recent
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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. The Association and its respective predecessors
and Affiliates have complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.
(j) Tax Matters.
(i) The Association has filed all Tax Returns that it was required
to file. All such Tax Returns were correct and complete in all respects.
All Taxes owed by the Association (whether or not shown on any Tax
Return) have been paid or accrued in the Financial Statements. The
Association 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 Association 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 Association that
arose in connection with any failure (or alleged failure) to pay any Tax.
(ii) The Association 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) Neither the Sellers nor any director or officer (or employee
responsible for Tax matters) of the Association expects any authority to
assess any additional Taxes for any period for which Tax Returns have
been filed. There is no dispute or claim concerning any Tax Liability of
the Association either (A) claimed or raised by any authority in writing
or (B) as to which the Sellers or the directors and officers (and
employees responsible for Tax matters) of the Association 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
Association 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 correct and complete copies of all examination
reports and statements of deficiencies assessed against or agreed to by
the Association since December 31, 1991.
(iv) The Association 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 Association has not filed a consent under Code Section
341(f) concerning collapsible corporations. The Association 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
Association 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
Association has not 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 Association is not a party to any Tax allocation or sharing
agreement. The Association (A) has not been a member
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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
Association 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 Association as of the most
recent practicable date: (A) the basis of the Association 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 Association 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
Association. The Sellers have delivered to the Purchaser correct and complete
copies of the leases and subleases listed in Paragraph 4(k) of the Sellers'
Disclosure Letter (as amended to date). With respect to each lease and
sublease listed in Paragraph 4(k) of the Sellers' Disclosure Letter, except as
otherwise set forth in such Paragraph 4(k) of the Sellers' Disclosure Letter:
(i) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(ii) the lease or sublease 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;
(iii) the Association, and, to the best of Sellers' Knowledge, no
other party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification,
or acceleration thereunder;
(iv) the Association, and, to the best of Sellers' Knowledge, no
party to the lease or sublease has repudiated any provision thereof;
(v) to the best of Sellers' Knowledge, there are no disputes, oral
agreements, or forbearance programs in effect as to the lease or
sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above are true
and correct with respect to the underlying lease;
(vii) the Association has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable laws,
rules, and regulations;
(ix) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of
said facilities; and
(x) to the best of Sellers' Knowledge, the owner of the facility
leased or subleased has good and marketable title to the parcel of
real property, free and clear of any Security Interest, easement,
covenant, or other restriction, except for installments of special
easements not yet
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delinquent and recorded easements, covenants, and other restrictions
which do not impair the current use, occupancy, or value, or the
marketability of title, of the property subject thereto.
(l) Tangible Assets. The Association owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of
its business as presently conducted.
(m) Inventory. The inventory of the Association consists of medical
supplies, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is slow-moving, obsolete, damaged,
or defective, subject only to the reserve for inventory writedown set forth on
the face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of the Association.
(n) Contracts. Paragraph 4(n) of the Sellers' Disclosure Letter lists
the following contracts and other agreements to which the Association 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 Association, or involve consideration in excess
of $25,000.00;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which the
Association 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 Association);
(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 Association has advanced or loaned
any amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xi) any agreement under which the consequences of a default or
termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the
Association; or
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(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000.00.
The Sellers has 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 Association are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Association.
(p) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Association.
(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 Association 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 legal, valid,
binding, enforceable, and in full force and effect; (B) the policy 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; (C) neither the Association 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 Association has been covered during
the past five (5) years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. Paragraph 4(q) of the Sellers' Disclosure Letter describes any
self-insurance arrangements affecting the Association.
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(r) Litigation. Paragraph 4(r) of the Sellers' Disclosure Letter sets
forth each instance in which either the Association (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Paragraph 4(r) of the Sellers' Disclosure Letter
could result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of either the
Association or the Group. Neither the Sellers nor the directors and officers
(and employees with responsibility for litigation matters) of the Association
and the Group has any reason to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against the Association
or the Group.
(s) Employees. To the best of the Sellers' Knowledge, no physician,
executive, key employee, or group of employees has any plans to terminate
employment with the Association or, after the Closing, with the Group. The
Association 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
Association 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
Association.
(t) Employee Benefits.
(i) Paragraph 4(t) of the Sellers' Disclosure Letter lists each
Employee Benefit Plan that the Association maintains or to which the
Association contributes.
(A) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in
all respects with the applicable requirements of ERISA, the Code,
and other applicable laws.
(B) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of
Part 6 of Subtitle B of Title I of ERISA and of Code Sec. 4980B
have been met with respect to each such Employee Benefit Plan which
is an Employee Welfare Benefit Plan.
(C) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been
paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period 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 Association. All premiums or other
payments for all periods ending on or before the Closing Date have
been paid with respect to each such Employee Benefit Plan which is
an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan"
under Code Sec. 401(a) and has received, within the last two years,
a favorable determination letter from the Internal Revenue Service.
(E) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than
any Multiemployer Plan) equals or exceeds the present value of all
vested and nonvested Liabilities thereunder determined in accordance
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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 Association
maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute:
(A) No such Employee Benefit Plan which is in Employee
Pension Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a
Reportable Event as to which notices would be required to be filed
with the PBGC. No proceeding by the PBGC to terminate any such
Employee Pension Benefit Plan (other than any Multiemployer Plan)
has been instituted or threatened.
(B) There have been no Prohibited Transactions with respect
to any such Employee Benefit Plan. No Fiduciary has any Liability
for breach of fiduciary duty or any other failure to act or comply
in connection with the administration or investment of the assets of
any such Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other
than routine claims for benefits) is pending or threatened. Neither
the Sellers nor the directors and officers (and employees with
responsibility for employee benefits matters) of the Association has
any Knowledge of any Basis for any such action, suit, proceeding,
hearing, or investigation.
(C) The Association has not incurred, and neither the Sellers
nor the directors and officers (and employees with responsibility
for employee benefits matters) of the Association has any reason to
expect that the Association 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 Association 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 Association 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 Association is not a guarantor or is not otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.
(v) Environment, Health, and Safety.
(i) Each of the Sellers, the Association and their respective
Affiliates has complied with all Environmental, Health, and Safety Laws,
and no action, suit, proceeding, hearing, investigation,
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charge, complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply. Without limiting
the generality of the preceding sentence, each of the Sellers, the
Association and their respective Affiliates has obtained and been in
compliance with all of the terms and conditions of all permits, licenses,
and other authorizations which are required under, and has complied with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained
in, all Environmental, Health, and Safety Laws.
(ii) The Association has no Liability (and none of the Sellers, the
Association and their respective Affiliates has handled or disposed of
any substance, arranged for the disposal of any substance, exposed any
employee or other individual to any substance or condition, or owned or
operated any property or facility in any manner that could form the Basis
for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the
Association giving rise to any Liability) for damage to any site,
location, or body of water (surface or subsurface), for any illness of or
personal injury to any employee or other individual, or for any reason
under any Environmental, Health, and Safety Law.
(iii) All properties and equipment used in the business of the
Sellers, the Association and their respective Affiliates 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 Association nor any physician
associated with or employed by the Association 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. The Association 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, and, after
the execution and delivery hereof and of the Service Agreement, the foregoing
representation shall be true with respect to the Group and all physicians
employed thereby. 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 Association 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 Association and persons and entities providing
professional services for the Association 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
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(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. The Association is duly licensed, and the
Association and its clinics, offices and facilities are lawfully operated in
accordance with the requirements of all applicable law and has all necessary
authorizations for their use and operation, all of which are in full force and
effect. There are no outstanding notices of deficiencies relating to the
Association 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 Association 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 jurisdiction in which the
Association is located does not currently impose any restrictions or
limitations on rates which may be charged to private pay patients receiving
services provided by the Association. The Association has no rate appeal
currently pending before any governmental authority or any administrator of any
third party payor program. The Association has no Knowledge of any applicable
law, which has been enacted, promulgated or issued within the eighteen (18)
months preceding the date of this Agreement or any such legal requirement
proposed or currently pending in the jurisdiction in which the Association is
located which could have a material adverse effect on the Association or may
result in the imposition of additional Medicaid, Medicare, charity, free care,
welfare, or other discounted or government assisted patients at the Association
or require the Association to obtain any necessary authorization which the
Association does not currently possess.
(aa) Disclosure. The representations and warranties contained in this
Section 4 and in the Sellers' Disclosure Letter do not contain any untrue or
misleading statement of a fact.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in Section 7 below).
(b) Notices and Consents. The Sellers will cause the Association to
give any notices to third parties, and will cause the Association to use its
best efforts to obtain any third-party consents, that may be required by law or
the terms of any contract to which the Sellers may be subject or that the
Purchaser may request in connection with the transaction contemplated by this
Agreement. Each of the Parties will (and the Sellers will cause the
Association to) give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, and approvals of governments
and governmental agencies required to consummate the transaction contemplated
by this Agreement.
(c) Operation of Business. The Sellers will not cause or permit the
Association or the Group to engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business. Without limiting
the generality of the foregoing, the Sellers will not cause or permit the
Association to (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem,
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purchase, or otherwise acquire any of its capital stock or (ii) otherwise
engage in any practice, take any action, or enter into any transaction of the
sort described in Section 4(g) above.
(d) Preservation of Business. The Sellers will cause the Association to
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, patients, and employees.
(e) Full Access. The Sellers will permit, and the Sellers will cause
the Association to permit, representatives of the Purchaser to have full access
at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Association, to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Association.
(f) Notice of Developments. The Sellers will give prompt written notice
to the Purchaser of any material adverse development of which any of them
learns which would constitute or otherwise cause a breach of any of the
representations and warranties in Section 4 above. Each Party will give prompt
written notice to the others of any material adverse development causing a
breach of any of his or its own representations and warranties in Section 3
above. No disclosure by any Party pursuant to this Section 5(f), however,
shall be deemed to amend or supplement the Sellers' Disclosure Letter or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
(g) Exclusivity. For so long as this Stock Purchase Agreement shall
remain in effect, the Sellers will not (and the Sellers will not cause or
permit the Association to) (i) solicit, initiate, or encourage the submission
of any proposal or offer from any Person relating to the acquisition of any
capital stock or other voting securities, or any substantial portion of the
assets of, the Association (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. The Sellers will not vote their
Shares in favor of any such acquisition structured as a merger, consolidation,
or share exchange. The Sellers will notify the Purchaser immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any of
the foregoing.
(h) 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 Association. 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. In that regard, the Purchaser hereby agrees to indemnify and hold
each Seller harmless from and against any claim made by such Seller in respect
of any such personal guarantee.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party may 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
Association.
(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
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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 Association 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 Association from maintaining the
same business relationships with the Association or the Group after the Closing
as it maintained with the Association prior to the Closing. The Sellers will
refer all inquiries relating to the businesses of the Association to the
Purchaser from and after the Closing.
(d) Name Change. At the time of Closing, the Purchaser shall cause the
name of the Association to be changed to something distinguishable, within the
meaning of the corporation statutes of the state of Florida, from the name of
the Association 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 "Oncology Hematology Group of
South Florida, P.A."
(e) Medical Director Arrangement. From and after Closing, the Parties
will continue to negotiate in good faith and establish consistent with past
practice all fees related to the performance by some or all of the Sellers of
services as medical directors of the Purchaser's IMPACT Center in Miami,
Florida.
7. 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 Association to procure all
of the third party consents specified in Section 5(b) above;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation,
(C) affect adversely the right of the Purchaser to own the Shares and to
control the Association, or (D) affect adversely the right of the
Association 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 7(a)(i)-(iv) is satisfied in all respects;
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(vi) the Purchaser shall have received the resignations, effective
as of the Closing, of each director and officer of the Association 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 Cohen, Chase, Hoffman &
Trautman, P.A., counsel to the Sellers and the Association, 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 shall have executed and delivered the Service
Agreement to the Purchaser;
(ix) the President of the Association shall have executed and
delivered to Baker, Donelson, Bearman & Caldwell, a professional
corporation, and any state healthcare counsel engaged to render the
opinion described in subparagraph (x) below, the Certificate of Fact in
substantially the form set forth as Exhibit 7(a)(ix) hereto
(x) the Purchaser shall have received an opinion from Florida
counsel reasonably satisfactory to the Purchaser that the Service
Agreement is the legal, valid and binding obligation of the Group,
enforceable according to its terms (subject to standard bankruptcy,
insolvency and principles of equity exceptions) and that the performance
of the Service Agreement by the Purchaser and the Group will not violate
any statute, regulation, official interpretation, order, decree or other
law of the state of Florida;
(xi) the Purchaser shall have received an opinion from Baker,
Donelson, Bearman & Caldwell that the performance of the Service
Agreement by the Purchaser and the Group will not violate any statute,
regulation, official interpretation, order, decree or other law of the
United States of America;
(xii) each Seller shall have executed an employment contract with
the Group in substantially the form required by the Service Agreement;
and
(xiii) 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 7(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) 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
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arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(iv) the Purchaser shall have delivered to the Sellers a certificate
to the effect that each of the conditions specified above in Section
7(b)(i)-(iii) is satisfied in all respects;
(v) all actions to be taken by the Purchaser in connection with
consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Sellers.
(vi) the Sellers shall have received an opinion from Baker,
Donelson, Bearman & Caldwell, in form and substance satisfactory to the
Sellers and their counsel with respect to the enforceability of the
Long-Term Note and the legality of the rate of interest thereupon.
(vii) the Sellers shall have received an opinion from Florida
counsel reasonably satisfactory to the Sellers that the Service Agreement
is the legal, valid and binding obligation of the Purchaser, enforceable
according to its terms (subject to standard bankruptcy, insolvency and
principles of equity exceptions) and that the performance of the Service
Agreement by the Purchaser and the Group will not violate any statute,
regulation, official interpretation, order, decree or other law of the
state of Florida.
(viii) the Sellers shall have received an opinion from Baker,
Donelson, Bearman & Caldwell that the performance of the Service
Agreement by the Purchaser and the Group will not violate any statute,
regulation, official interpretation, order, decree or other law of the
United States of America;
The Sellers may waive any condition specified in this Section 7(b) if they
execute a writing so stating at or prior to the Closing.
8. DELIVERIES AT CLOSING.
(a) Documents to be Delivered by the Purchaser. At the Closing, the
Purchaser shall deliver the following instruments and documents to the Sellers
or other appropriate party:
(i) the amount described in Section 2(b)(i) above;
(ii) the Long-Term Note, payable to the order of the Sellers;
(iii) the Warrants;
(iv) the certificate described in Section 7(b)(iv) above;
(v) the opinions of counsel, in a form reasonably satisfactory to
the Sellers' counsel, required pursuant to Sections 7(b)(vi) through
(viii) above; and
(vi) such other documents as the Sellers may reasonably request to
affect the transactions contemplated by this Agreement.
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(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 Association, dated not
more than five (5) days prior to the Closing Date;
(iii) all consents necessary regarding the transaction contemplated
by this Agreement;
(iv) the opinion of counsel to the Sellers, in a form reasonably
satisfactory to the Purchaser's counsel, required by Section 7(a)(vii)
above;
(v) the opinion, in a form reasonably acceptable to the Purchaser's
counsel, required by Section 7(a)(ix) above;
(vi) the Certificate described in Section 7(a)(v) above;
(vii) the Service Agreement, duly executed by the Group; and
(viii) such other documents as the Purchaser may reasonably request
to affect the transactions contemplated by this Agreement.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect forever thereafter (subject to any applicable
statutes of limitations).
(b) Indemnification Provisions for Benefit of the Purchaser . In the
event any of the Sellers breaches (or in the event any third party alleges
facts that, if true, would mean the Seller has breached), in a manner which has
a material adverse effect on the Purchaser, any of such Seller's
representations, warranties, and covenants contained herein and, provided that
the Purchaser makes a written claim for indemnification against the Seller
pursuant to Section 9(c)(i) below, then the Sellers and the Group, jointly and
severally, agree to indemnify the Purchaser from and against the entirety of
any Adverse Consequences the Purchaser may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the Purchaser
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.
(c) Matters Involving Third Parties.
(i) If any third party shall notify the Purchaser with respect to
any matter (a "Third Party Claim") which may give rise to a claim for
indemnification under this Section 9, then the Purchaser shall promptly
notify the Sellers thereof in writing; provided, however, that no delay
on the part of the Purchaser in notifying the Sellers shall relieve the
indemnitor from any obligation hereunder unless (and then solely to the
extent) the indemnitor thereby are prejudiced.
(ii) The Sellers and the Group will have the right to defend the
Purchaser against the Third Party Claim with counsel of its choice
satisfactory to the Purchaser so long as (A) they notify the
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Purchaser in writing within 15 days after the Purchaser has given notice
of the Third Party Claim that the Sellers will indemnify the Purchaser
from and against the entirety of any Adverse Consequences the Purchaser
may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim, (B) the Sellers and the Group
provides the Purchaser with evidence acceptable to the Purchaser that the
Sellers and the Group will have the financial resources to defend against
the Third Party Claim and fulfill his indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages and does
not seek an injunction or other equitable relief, (D) settlement of, or
an adverse judgment with respect to, the Third Party Claim is not, in the
good faith judgment of the Purchaser, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Purchaser, and (E) the Sellers and the Group conduct the defense of the
Third Party Claim actively and diligently.
(iii) So long as the Sellers and the Group are conducting the
defense of the Third Party Claim in accordance with Section 9(c)(ii)
above, (A) the Purchaser may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim, (B)
the Purchaser 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 Sellers and the Group (not to be withheld
unreasonably), and (C) the Sellers and the Group 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 Purchaser.
(iv) In the event any of the conditions in Section 9(c)(ii) above is
or becomes unsatisfied, however, (A) the Purchaser may defend against,
and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem
appropriate (and the Purchaser need not consult with, or obtain any
consent from, the Seller in connection therewith), (B) the Sellers and
the Group will reimburse the Purchaser promptly and periodically for the
costs of defending against the Third Party Claim (including attorneys'
fees and expenses), and (C) the Sellers and the Group will remain
responsible for any Adverse Consequences the Purchaser may suffer
resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this Section
9.
(d) Determination of Adverse Consequences. The Parties shall take into
account the time cost of money (using the Applicable Rate as the discount rate)
in determining Adverse Consequences for purposes of this Section 9. All
indemnification payments under this Section 9 shall be deemed adjustments to
the Purchase Price.
(e) Recoupment Under the Long-Term 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
Long-Term Note. An offset pursuant to this subsection shall affect the timing
and amount of payments required under the Long-Term Note in the same manner as
if the Purchaser had made a permitted prepayment (without premium or penalty)
thereunder.
(f) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of
representation, warranty, or covenant. The Sellers hereby agree that they will
not make any claim for indemnification against the Association by reason of the
fact that they were directors, officers, employees, or agents of the
Association 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,
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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).
10. 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 in the event any
of the Sellers has breached or failed to satisfy in any material respect
any representation, warranty, covenant or condition contained in this
Agreement, the Purchaser has notified the Seller of the breach or
failure, and the breach or failure has continued without cure for a
period of 10 days after the notice of breach or failure;
(iii) the Sellers may terminate this Agreement by giving written
notice to the Purchaser at any time prior to the Closing in the event the
Purchaser has breached or failed to satisfy in any material respect any
representation, warranty, covenant or condition contained in this
Agreement, any of the Sellers has notified the Purchaser of the breach or
failure, and the breach or failure has continued without cure for a
period of 10 days after the notice of breach or failure; and
(iv) if the Closing shall not have occurred on or before February
29, 1996 (unless the failure to close is primarily attributable to the
breach of or failure to satisfy any representation, warranty, covenant or
condition contained in this Agreement by the Party seeking to terminate
this Agreement).
(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).
11. MISCELLANEOUS.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Purchaser and the
Seller; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its best efforts to advise the other Parties prior to
making the disclosure).
(b) 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 Tennessee Uniform Arbitration Act, with any such
arbitration proceeding being conducted in accordance with the rules of the
American Arbitration Association. 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 Memphis, Shelby County, Tennessee 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
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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) Liquidated Damages. In the event that the Sellers shall be willing,
ready and able to close on the Closing Date and the Purchaser shall fail to
close on such date, the Purchaser shall pay to the Sellers, as liquidated
damages and in complete satisfaction of all claims that Sellers may have
against the Purchaser on account of said failure, the amount of $250,000.00,
which shall be payable within ten (10) business days after such failure shall
occur, and such reasonable attorneys' fees as shall have been incurred by the
Sellers or the Group in connection with this Agreement.
(d) 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.
(e) 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.
(f) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Purchaser and the Seller; provided, however, that the
Purchaser may (i) assign any or all of its rights and interests hereunder to
one or more of its Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which cases the
Purchaser nonetheless shall remain responsible for the performance of all of
its obligations hereunder).
(g) 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.
(h) 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.
(i) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Seller: Copy to:
Leonard Kalman, M.D. Alan R. Chase, Esq.
Oncology Hematology Group of South Florida, P.A. Cohen, Chase, Hoffman & Trautman, P.A.
8940 N. Kendall Dr., Suite 300-E East Tower Suite 600, 9400 South Dadeland Blvd.
Miami, Florida 33176 Miami, Florida 33156
If to the Purchaser: Copy to:
Daryl P. Johnson John A. Good, Esq.
Response Oncology, Inc. Baker, Donelson, Bearman & Caldwell
1775 Moriah Woods Blvd. 200 First Tennessee Building
Memphis, Tennessee 38117 Memphis, Tennessee 38103
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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.
(j) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Tennessee without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Tennessee or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Tennessee.
(k) 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.
(l) 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.
(m) Expenses. Each of the Parties will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. The Sellers agree that
neither the Association 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.
(n) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(o) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(p) 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
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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:__________________________________________
GROUP:
South Florida Oncology Hematology Associates, P.A.
By:_______________________________________________
Title:____________________________________________
SELLERS:
__________________________________________________
Dr. Leonard Kalman, individually and as
duly-authorized attorney-in-fact
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Exhibit 2(b)(i)
to
Stock Purchase Agreement
NON-NEGOTIABLE PROMISSORY NOTE
$5,959,972.00 Miami, Florida
January 2, 1996
FOR VALUE RECEIVED, the undersigned, RESPONSE ONCOLOGY, INC., a Tennessee
corporation (the "Maker"), promises to pay to the order of DR. LEONARD KALMAN,
a resident of the State of Florida, individually and acting as attorney-in-fact
for all Selling Shareholders pursuant to that certain Agreement among Selling
Shareholders of even date herewith (the "Lender"), the principal sum of FIVE
MILLION NINE HUNDRED FIFTY-NINE THOUSAND NINE HUNDRED SEVENTY-TWO DOLLARS
($5,959,972.00), together with interest from date until maturity at the rate of
nine (9%) percent per annum from date until Maturity (hereinafter defined),
said principal and interest being payable in fifty nine (59) consecutive,
equal, quarterly amortized installments of ONE HUNDRED EIGHTY-TWO THOUSAND
SEVEN HUNDRED THIRTEEN AND FIFTY-FOUR ONE HUNDREDTHS DOLLARS ($182,713.54),
commencing April 1, 1996, and on the first day of each calendar quarter
thereafter. The entire remaining unpaid balance of principal, and any accrued
interest thereon, shall be due and payable on January 1, 2011.
This Note may be prepaid in whole or in part prior to Maturity only with
the advance written consent of the Lender. Any partial prepayment of principal
shall, however, not have the effect of suspending or deferring the payments
provided for herein, but the same shall continue to be due and payable on each
due date subsequent to any such partial prepayment of the principal and shall
operate to effect full payment of the principal at an earlier date.
At the option of the Lender, exercisable not later than ten (10) days
prior to any payment of principal or interest on this Note, such payment shall
be paid in whole or in part in shares of common stock of the Maker, $.01 par
value per share (the "Shares"). For purposes of this paragraph, the number of
Shares to which the Lender shall be entitled upon exercise of the option
provided hereunder shall be determined by dividing the amount of principal and
interest to be paid in Shares by the Maker by $17.50, which price shall be
adjusted for stock splits, stock dividends, reverse stock splits,
recapitalizations, reorganizations and other changes in the capital structure
of the Maker affecting the value of the Shares.
Any amounts not paid when due hereunder (whether by acceleration or
otherwise) shall bear interest after maturity at the lesser of (a) eighteen
percent (18%) per annum or (b) the maximum effective contract rate which may be
charged by the Lender under applicable law from time to time in effect.
In the event that the foregoing provisions should be construed by a court
of competent jurisdiction not to constitute a valid, enforceable designation of
a rate of interest or method of determining same, the indebtedness hereby
evidenced shall bear interest at the maximum effective contract rate which may
be charged by the Lender under applicable law from time to time in effect.
This Note is non-negotiable.
Notwithstanding anything to the contrary, the payments required pursuant
to this Note are subject to a right of offset, setoff, and recoupment as a
result of any indemnification required pursuant to the provisions of that
certain Stock Purchase Agreement by and between Lender and Maker dated as of
December ___, 1995.
2(b)(i)-1
30
All installments of interest, and the principal hereof, are payable by
Maker's corporate check at ______________________________ or at such other
place as the holder may designate in writing, in lawful money of the United
States of America, which shall be legal tender in payment of all debts and
dues, public and private, at the time of payment.
If the Maker shall fail to make payment of any installment of principal
and interest, as above provided, and such failure shall continue unremedied for
a period of thirty (30) days following written notice thereof, or upon the
dissolution of the Maker or any endorser, and (if there is a cure period
applicable thereto) such default is not cured within such applicable cure
period, then and in any such event, the entire unpaid principal balance of the
indebtedness evidenced hereby, together with all interest then accrued, shall,
at the absolute option of the holder hereof, at once become due and payable,
without demand or notice, the same being hereby expressly waived.
If this Note is placed in the hands of an attorney for collection, by
suit or otherwise, the Maker shall pay on demand all costs of collection and
litigation (including court costs), together with a reasonable attorney's fee
if Lender is successful in the litigation.
It is the intention of the Lender and the Maker to comply strictly with
applicable usury laws; and, accordingly, in no event and upon no contingency
shall the holder hereof ever be entitled to receive, collect, or apply as
interest any interest, fees, charges or other payments equivalent to interest,
in excess of the maximum effective contract rate which the Lender may lawfully
charge under applicable statutes and laws from time to time in effect; and in
the event that the holder hereof ever receives, collects, or applies as
interest any such excess, such amount which, but for this provision, would be
excessive interest, shall be applied to the reduction of the principal amount
of the indebtedness hereby evidenced; and if the principal amount of the
indebtedness evidenced hereby, all lawful interest thereon and all lawful fees
and charges in connection therewith, are paid in full, any remaining excess
shall forthwith be paid to the Maker, or other party lawfully entitled thereto.
All interest paid or agreed to be paid by the Maker shall, to the maximum
extent permitted under applicable law, be amortized, prorated, allocated and
spread throughout the full period until payment in full of the principal so
that the interest hereon for such full period shall not exceed the maximum
amount permitted by applicable law. Any provision hereof, or of any other
agreement between the holder hereof and the Maker, that operates to bind,
obligate, or compel the Maker to pay interest in excess of such maximum
effective contract rate shall be construed to require the payment of the
maximum rate only. The provisions
2(b)(i)-2
31
of this paragraph shall be given precedence over any other provision contained
herein or in any other agreement between the holder hereof and the Maker that
is in conflict with the provisions of this paragraph.
Neither Lender, nor any subsequent holder of this Note, shall have any
right to commute, sell, assign, transfer or otherwise convey the right to
receive any payments hereunder (except to the Maker, or to ONCOLOGY HEMATOLOGY
GROUP OF SOUTH FLORIDA, P.A. [the "P.A."]), which payments and the rights
thereto are hereby expressly declared: (i) to be nonassignable and
non-transferrable (except to the Maker or to the P.A.), and (ii) not liable for
or subject to the debts, liabilities, or obligations or the Lender or the P.A.
(except for those debts, obligations and liabilities of the P.A. to Maker which
are secured by the security interest in this Note granted to Maker pursuant to
a security agreement of even date herewith; and, in the event of any attempted
assignment or transfer (except to the Maker or to the P.A.), the Maker shall
have no further liability under this Note.
This Note shall be governed and construed according to the statutes and
laws of the State of Tennessee from time to time in effect.
RESPONSE ONCOLOGY, INC.
By:_____________________________________
Title:__________________________________
2(b)(i)-3