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EXHIBIT 10(q)
PURCHASE AND SALE AGREEMENT
BY AND AMONG
RESPONSE ONCOLOGY, INC.,
KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES
AND
PARTNERS OF KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES
APRIL 12, 1996
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, dated as of April 12, 1996, by and
among RESPONSE ONCOLOGY, INC, a Tennessee corporation (the "Purchaser"), and
the HOLDERS OF ALL GENERAL PARTNERSHIP INTERESTS OF KNOXVILLE HEMATOLOGY
ONCOLOGY ASSOCIATES, a Tennessee general partnership (the "Partnership"), each
of whom, together with his or her state of residence and address is listed on
Exhibit A hereto (collectively, the "Partners" and, individually, a "Partner").
W I T N E S S E T H:
WHEREAS, the Partners own 100% of the interests as general partners
(the "Partnership Interests") in the Partnership which is engaged in the
practice of medicine in the specialty of general oncology and hematology; and
WHEREAS, each of the Partners desires to sell and the Purchaser
desires to purchase 100% of the Partnership Interests of the Partnership from
the Partners 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.
"Affiliate" has the meaning set forth in Rule 12-2 of the regulations
promulgated under the Securities Exchange Act.
"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%).
"Assumed Liabilities" has the meaning set forth in Section 2(a)(ii)
below.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction 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.
"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
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arrangement which is an Employee Pension Benefit Plan (including any
Multi-employer 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.
"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(c) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Intangible Assets" means all intangible assets of the Partnership
that are not Medical Practice Assets, including, without limitation, the
Seller's base of non-medical employees, management information systems,
business know-how as it relates to operation of the business aspects of an
oncology practice, accounting books and records and non-medical goodwill.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (C) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form
or medium).
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"Inventory" means the inventory of pharmaceuticals and medical
supplies owned by the Partnership as of the close of business on the day prior
to the Closing Date.
"Investments" means investment assets of the Partnership including
stocks, bonds, certificates of deposits, interests in non-medical partnerships,
joint ventures, corporations, limited liability companies and other entities.
"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.
"Medical Practice Assets" means all assets and property owned by the
Partnership and used in its medical practice which cannot lawfully be acquired
and owned by the Purchaser, including, without limitation, all patient charts
and patient records that do not constitute business records, licenses to
practice medicine and goodwill related to Seller's patient base and/or medical
practice.
"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(c) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4(c) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section
4(c) below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business of
an oncology practice similar in size to the Seller, consistent with the
Seller's past custom and practice.
"Party" means the Purchaser or the 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.
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Partnership Interests" has the meaning set forth in Section 2(a)(i)
below.
"Purchaser" has the meaning set forth in the preface above 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.
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"Receivables" means the accounts receivable of the Partnership 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.
"Response Note" means the promissory note of the Purchaser payable to
the order of the Partners in the form set forth as Exhibit 2(b)(i).
"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's Disclosure Letter" has the meaning set forth in Section 3(a)
below.
"Service Agreement" means the Service Agreement among the Purchaser,
the Partnership and the Partners to be executed and delivered by thereby, and
which will become effective, at the Closing.
"Tangible Assets" means furniture, medical and other equipment and
leasehold improvements of the Partnership listed on Exhibit 2(a)(i)(A) hereto.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9(c) below.
"Warrants" means warrants to purchase an aggregate of 80,000 shares of
Response Stock at a price of $11.75 per share (subject to adjustment as
described in the Warrant), issuable by the Purchaser to the Partners pursuant
to Section 2(b) below, which Warrants shall be issued and delivered to the
Partners in substantially the form set forth as Exhibit 2(b)(ii) below.
2. PURCHASE AND SALE OF PARTNERSHIP INTERESTS.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Purchaser and Partners agree as follows:
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(i) Partnership Interests. On the Closing Date, the Purchaser
shall purchase from each of the Partners, and each of the Partners shall sell
and deliver to the Purchaser, 100% of the Partnership Interests of the
Partnership (the "Partnership Interests").
(ii) Assumed Liabilities. In partial consideration for the
sale of the Partnership Interests by the Partners, on the Closing Date the
Purchaser shall assume and become primarily responsible for the payment or
other satisfaction of all past and future liabilities of the Partnership, and
the Partners shall be held harmless for all such liabilities, provided,
however, the Partners shall be and remain liable for:
(A) all tax liabilities incurred by the Partnership
during the period prior to the Closing Date; and
(B) any existing liability, contingent on otherwise,
whether known or unknown, of the Partnership not
disclosed to the Purchaser on Exhibit 2(a)(ii)
hereto. As of the Closing Date, the parties shall
jointly prepare and agree upon a schedule of Assumed
Liabilities, which shall be attached hereto as
Exhibit 2(a)(ii), and no Liability of the Partnership
which is excluded from such schedule shall be assumed
by the Purchaser. The Partners shall remain
responsible for all Liabilities not assumed by the
Purchaser hereunder, and shall indemnify and hold the
Purchaser harmless from and against any and all
claims, assessments, damages, Liabilities and costs
suffered by the Purchaser in respect of or arising
out of the assertion by any Person that the Purchaser
is responsible for any Liability of the Partnership
that is not an Assumed Liability.
(b) Purchase Price; Payment and Allocation of Purchase Price. The
purchase price for the Partnership Interests shall be Nine Million Dollars
($9,000,000.00). The Purchaser shall pay or satisfy the Purchase Price in the
following manner: (i) One Hundred Fifty Thousand Dollars ($150,000.00) by
issuance and delivery of the Response Note to Allan M. Grossman, M.D.; (ii)
Six Hundred Fifty-four Thousand One Hundred Eighty Dollars ($654,180.00) by
assumption of the Assumed Liabilities; and (iii) the balance in readily
available United States funds at Closing. As additional consideration for the
Partnership Interests, the Purchaser shall issue the Warrants to the Partners
at Closing. The parties acknowledge and agree that a portion of the purchase
price must be allocated to those types of assets described in Section 751 ("751
Assets") of the Internal Revenue Code of 1986, as amended from time to time
(the "Code") and a portion of the purchase price must be allocated to all
remaining assets ("Non 751 Assets"). The Partnership's 751 Assets consist of
certain accounts receivable and unrealized receivables of the Partnership. The
balance of the Partnership's assets consist of Non 751 Assets. For purposes of
this transaction, the parties agree to and acknowledge that $800,000 of the
consideration is allocated to 751 Assets and the balance of the consideration
$8,200,000, is allocable to Non 751 Assets. The parties further agree and
acknowledge that the allocation of $800,000.00 to 751 Assets consists of
Partnership's accounts receivable and unrealized receivables as of the date
hereof. The parties further agree that the fair market value of the furniture,
fixtures and equipment of the Partnership is $50,000, and the fair market value
of the Partnership's leasehold improvements is $1,500,000.
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Bernstein, Stair &
McAdams, 530 South Gay Street, Suite 600, Knoxville, Tennessee 38902 commencing
at 9:00 a.m. local time on the second business day following the satisfaction
or waiver of all conditions precedent to the obligations of the Parties to
consummate the transactions contemplated hereby or such other date as the
Purchaser and the Partners may mutually determine (the "Closing Date");
provided, however, that the Closing Date shall be no later than June 30, 1996.
(d) Deliveries at the Closing. At the Closing, (i) the Purchaser will
deliver to the Partners the various certificates, instruments, and documents
referred to in Section 7(a) below, (ii) the Partners will deliver to the
Purchaser the various certificates, instruments, and documents referred to in
Section 7(b) below.
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3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of the Partners. Each of the
Partners jointly and severally represents and warrants to the Purchaser that
the statements contained in this Section 3(a) are 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 3(a)) with respect to the
Partnership, except as set forth in the disclosure letter executed and
delivered by the Partners contemporaneous with this Agreement (the "Seller's
Disclosure Letter"). The Seller's 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 of the Partners 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 Partner, enforceable in accordance with its terms and conditions.
The Partners need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Person,
government or governmental agency in order to deliver the Partnership
Interests to the Purchaser or otherwise to consummate the transactions
contemplated by this Agreement, or, if any such consent is required,
each such consent has been obtained. This Agreement constitutes the
valid and legally binding obligation of each of the Partners,
enforceable in accordance with its terms, subject to applicable
bankruptcy, moratorium, insolvency and other laws affecting the rights
of creditors and general equity principles.
(ii) Noncontravention. 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 Partnership or a Partner 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 the Partnership or a Partner is a party or by which he is
bound or to which any of his assets is subject (or result in the
imposition of any Security Interest upon any of the Partnership's
assets.) The Partners are 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.
(iii) Brokers' Fees. The Partners have no Liability or
obligation to pay any fee or commission 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) Title. Each of the Partners has good and marketable title
to the Partnership Interests being conveyed to the Purchaser
hereunder, with the sole and absolute right to sell, assign, transfer
and convey same to the Purchaser free and clear of all liens, claims,
options, pledges, security interests or other encumbrances.
(v) Existence of the Partnership. The Partnership is a general
partnership validly existing under the laws of the State of Tennessee.
The Partnership has the power to own its property and to carry on its
business as now being conducted. The Partnership is duly qualified to
do business and is in good standing in any jurisdiction in which the
character or location of the properties owned or leased by the
Partnership or the nature of the business conducted by the Partnership
makes such qualification necessary.
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(b) Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Partners that the statements contained in this
Section 3(b) are 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 3(b)), except as set forth in the disclosure letter
executed and delivered by the Purchaser contemporaneous with this Agreement
(the "Purchaser's Disclosure Letter"). The Purchaser's Disclosure Letter shall
be satisfactory to the Partners and their counsel.
(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 Person,
government or governmental agency in order to consummate the
transactions contemplated by this Agreement, or, if any such consent
is required, each such consent has been obtained.
(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.
(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 Partners could become liable or obligated.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE PARTNERS. Each of the
Partners, jointly and severally, represents and warrants 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 true, 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 Seller's Disclosure Letter. Nothing in the Seller's
Disclosure Letter shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Seller's Disclosure
Letter identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. The Seller's Disclosure Letter will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4.
(a) Power, Authority, and Partnership Matters. The Partnership has
full 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 Seller's Disclosure Letter lists the
employees and partners of the Partnership. The Partners have delivered to the
Purchaser correct and complete copies of the general partnership agreement of
the Partnership (as amended to date).
(b) Title to Assets. The Partnership 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
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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.
(c) Financial Statements. Attached as collective Paragraph 4(c) to the
Seller's Disclosure Letter are the following financial statements (collectively
the "Financial Statements"): (i) unaudited balance sheet and statement of
income, changes in partners' capital, and cash flow as of and for the fiscal
years ended December 31, 1995 (the "Most Recent Fiscal Year End") for the
Partnership; and (ii) unaudited balance sheet and statement of income (the
"Most Recent Financial Statements") as of and for the month ended March 31,
1996 (the "Most Recent Fiscal Month End") for the Partnership. 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 Partnership as of such dates and the results of operations of
the Partnership for such periods, are correct and complete, and are consistent
with the books and records of the Partnership.
(d) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any adverse change in the business,
financial condition, operations, results of operations, or future prospects of
the Partnership. Without limiting the generality of the foregoing, since that
date:
(i) the Partnership 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 Partnership 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 Partnership) 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 Partnership is a
party or by which the Partnership or its properties are bound;
(iv) the Partnership has not created, suffered or permitted to
attach or be imposed any Security Interest upon any of its assets,
tangible or intangible;
(v) the Partnership 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 Partnership 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 Partnership 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;
(viii) the Partnership has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) the Partnership 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 Partnership has not granted any license or sublicense
of any rights under or with respect to any Intellectual Property;
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(xi) there has been no change made or authorized in the
general partnership agreement of the Partnership;
(xii) none of the Partners has sold, or otherwise disposed of
any of the Partnership Interests, granted any options, warrants, or
other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of the Partnership Interests;
(xiii) the Partnership has not declared, set aside, or paid
any distribution with respect to its Partnership Interests (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of
its Partnership Interests;
(xiv) the Partnership has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
assets, tangible or intangible;
(xv) the Partnership has not made any loan to, or entered into
any other transaction with, any of its Partners and employees outside
the Ordinary Course of Business;
(xvi) the Partnership 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 Partnership has not granted any increase in the
base compensation of any of its Partners and employees outside the
Ordinary Course of Business;
(xviii) the Partnership 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 Partners
and employees (or taken any such action with respect to any other
Employee Benefit Plan);
(xix) the Partnership has not made any other change in
employment terms for any of its Partners and employees outside the
Ordinary Course of Business;
(xx) the Partnership 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 Partnership; and
(xxii) the Partnership has not committed to any of the
foregoing.
(e) Undisclosed Liabilities. To the best of the Partners' knowledge,
the Partnership 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 Partnership that may result in any Liability),
except for (i) Liabilities set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto); (ii) Liabilities which have arisen
after the Most Recent Fiscal Month End in the Ordinary Course of Business and
(iii) Liabilities described with particularity in Paragraph 4(e) of the
Seller's Disclosure Letter (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).
(f) Legal Compliance. To the best of the Partners' knowledge, the
Partnership and its 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
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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.
(g) Tax Matters.
(i) The Partnership has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in
all material respects. All Taxes owed by the Partnership (whether or
not shown on any Tax Return) have been paid or accrued in the
Financial Statements. The Partnership 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 Partnership
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 the Partnership that arose in connection with any failure
(or alleged failure) to pay any Tax.
(ii) The Partnership 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, or other
third party.
(h) Real Property. The Partnership 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(h) of the Seller's Disclosure Letter
lists and describes briefly all real property leased or subleased to the
Partnership. The Partnership has delivered to the Purchaser correct and
complete copies of the leases and subleases listed in Paragraph 4(h) of the
Seller's Disclosure Letter (as amended to date). With respect to each lease and
sublease listed in Paragraph 4(h) of the Seller's Disclosure Letter, except as
otherwise set forth in such Paragraph of the Seller's 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) no 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) no party to the lease or sublease has repudiated any
provision thereof;
(v) 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 Partnership 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 are
supplied with utilities and other services necessary for the
operation of said facilities; and
(i) Intellectual Property.
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(i) The Partnership owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of its business as presently
conducted. Each item of Intellectual Property owned or used by the
Partnership immediately prior to the Closing hereunder will be owned
or available for use by the Partnership on identical terms and
conditions immediately subsequent to the Closing hereunder. The
Partnership has taken all necessary action to maintain and protect
each item of Intellectual Property that it owns or uses. The
Partnership has not interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights
of third parties, and the Partnership has not received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that
the Partnership must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of each of the
Partners, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of the Partnership.
(j) Tangible Assets. The Partnership leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its business
as presently conducted. Each Tangible Asset is free from patent defects, and,
to the best of the Partners' knowledge, latent defects, has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which it presently is used.
(k) Inventory. Inventory consists of pharmaceuticals and medical
supplies, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and no material portion of which is slow-moving,
obsolete, damaged, or defective, subject only to the reserve for inventory
write down 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 Partnership.
(l) Contracts. Paragraph 4(l) of the Seller's Disclosure Letter lists
the following contracts and other agreements to which the Partnership 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 pharmaceuticals, 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 Partnership, or involve consideration in
excess of $25,000.00;
(iii) any agreement concerning a partnership or joint venture
involving the Partnership other than the Partnership's general
partnership agreement;
(iv) any agreement (or group of related agreements) under
which the Partnership 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 any health maintenance organization,
preferred provider organization, insurance company or other third
party payor for medical services;
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(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, partners, 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 Partnership has advanced or
loaned any amount to any of its Partners 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 Partnership; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000.00.
The Partners have delivered to the Purchaser a correct and complete copy of
each written agreement listed in Paragraph 4(l) of the Seller's 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(l) of the Seller's
Disclosure Letter. With respect to each such agreement: (1) the agreement is
legal, valid, binding, enforceable, and in full force and effect; (2) 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 (3) no party has
repudiated any provision of the agreement.
(m) Notes and Accounts Receivable. All notes and accounts receivable
of the Partnership are reflected properly on the Partnership's 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 (A) contractual allowances and
adjustments to third party payors, and (B) the reserve for bad debts 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 Partnership.
(n) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Partnership or the Partners.
(o) Insurance. Paragraph 4(o) of the Seller's 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 Partnership and each of the Partners is a party, a
named insured, or otherwise the beneficiary of coverage:
(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
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(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 Partnership, the
Partner, 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 (C) no party to the policy has repudiated any provision
thereof. The Partnership and each of the Partners 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(o) of the Seller's Disclosure Letter describes any self-insurance
arrangements affecting the Partnership or the Partners.
(p) Litigation. Section 4(p) of the Seller's Disclosure Letter sets
forth each instance in which the Partnership or any Partner (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 Section 4(p) of the Seller's Disclosure Letter
could result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of the
Partnership or the medical practice to be conducted by the Partners following
the Closing. Each of the Partners has no reason to believe that any such
action, suit, proceeding, hearing, or investigation may be brought or
threatened against the Partnership or any Partner.
(q) Employees. To the Knowledge of each of the Partners, no executive,
key employee, or group of employees has any plans to terminate employment with
the Partnership. The Partnership is not a party to or bound by any collective
bargaining agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. The
Partnership has not committed any unfair labor practice. Each of the Partners
has no Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Partnership. Except as described in paragraph 4(q) of the Seller's Disclosure
Letter, each of the Partners has no knowledge of any disciplinary or other
proceeding alleging professional misconduct or misfeasance against any employee
of the Partnership.
(r) Employee Benefits.
(i) Paragraph 4(r) of the Seller's Disclosure Letter lists
each Employee Benefit Plan that the Partnership maintains or to which
the Partnership 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 Partnership. All premiums
or
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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 with PBGC methods,
factors, and assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for determination.
(F) The Partners 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
Partnership 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. Each of the Partners
has no Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(C) The Partnership has not incurred, and neither the
Partnership nor the Partners (and employees with
responsibility for employee benefits matters) of the
Partnership has any reason to expect that the Partnership 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 Partnership does not contribute to, has never
contributed to, or has not been required to contribute to any
Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(iv) The Partnership does not maintain or has never maintained
or contributes, ever has contributed, or 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 Section 4980B).
16
(s) Guaranties. The Partnership is not a guarantor or is not otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.
(t) Environment, Health, and Safety. To the best of the Partners'
knowledge:
(i) Each of the Partnership and its predecessors and
Affiliates has complied with all Environmental, Health, and Safety
Laws, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, each of the
Partnership and its predecessors and 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 Partnership has no Liability (and none of the
Partnership and its predecessors and 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 Partnership 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
Partnership and its predecessors and Affiliates have been free of
asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-trans-dichloroethylene, dioxins, dibenzofurans, and Extremely
Hazardous Substances.
(u) Healthcare Compliance. Neither the Partnership nor any Partner or
other physician associated with or employed by the Partnership 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 Partnership (and/or each Partner or other
physician employed thereby) is participating in or is otherwise authorized to
receive reimbursement from or is a party to Medicare, Medicaid, and other
third-party payor programs. All necessary certifications and contracts required
for participation in such programs are in full force and effect and have not
been amended or otherwise modified, rescinded, revoked or assigned and 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 Partnership is in full compliance with the requirements of all such third
party payor programs applicable thereto.
(v) Fraud and Abuse. The Partnership and persons and entities
providing professional services for the Partnership 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;
17
(iii) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to
any benefit or payment on its own behalf or on behalf of another, with
intent to fraudulently secure such benefit or payment; and
(iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe, or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offering to pay
or receive such remuneration (A) in return for referring an individual
to a person for the furnishing or arranging for the furnishing or any
item or service for which payment may be made in whole or in part by
Medicare or Medicaid, or (B) in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or
ordering any good, facility, service or item for which payment may be
made in whole or in part by Medicare or Medicaid.
(w) Facility Compliance. The Partnership is duly licensed, and the
Partnership and its clinics, offices and facilities are lawfully operated in
accordance with the requirements of all applicable law and has all necessary
authorizations for the use and operation, all of which are in full force and
effect. There are no outstanding notices of deficiencies relating to the
Partnership 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, none of the Partners
has received notice of and has no Knowledge of or reason to believe that such
necessary authorizations may be revoked or not renewed in the ordinary course.
(x) Rates and Reimbursement Policies. The Partnership has no rate
appeal currently pending before any governmental authority or any administrator
of any third party payor program.
(y) Disclosure. The representations and warranties contained in this
Section 4 and in the Seller's Disclosure Letter do not contain any untrue
statement of a fact or omit to state any fact necessary in order to make the
statements and information contained in this Section 4 or the Seller's
Disclosure Letter not misleading in any material respect.
5. POST-CLOSING COVENANTS. The Parties agree as follows with respect
to the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party may reasonably request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section 8 below). Each of
the Partners acknowledges and agrees 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 Partnership. The Partners will be afforded access to such documents, books,
records, agreements and financial data for inspection and copying during
ordinary business hours.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Partnership, 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 8 below).
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(c) Transition. The Partners will not take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, supplier,
or other business associate of the Partnership from maintaining the same
business relationships with the Purchaser after the Closing as it maintained
with the Partnership prior to the Closing. The Partners will refer all
inquiries relating to the businesses of the Partnership to the Purchaser from
and after the Closing.
(d) Employees. The Partnership shall continue to employ, at
substantially the same pay rates and benefit levels as paid or delivered by the
Partnership, the persons listed on Exhibit 5(d) attached hereto.
(e) Amendment of Partnership Agreement. The Partners will cause the
general partnership agreement to be amended removing the Partners and adding
the Purchaser as the new partner of the Partnership.
6. CONDITIONS PRECEDENT TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3(a) and Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Partners shall have performed and complied with all
of the covenants hereunder in all material respects through the
Closing;
(iii) the Partners shall have given such notices to persons,
governments and governmental agencies and shall have procured from
third parties all consents to consummation of the transactions
contemplated hereby that may be required by law or the terms of any
contract to which the Partnership or any Partner may be subject or
that the Purchaser may reasonably request in connection with the
transactions contemplated hereby;
(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
acquire Partnership Interests and own and operate the Partnership and
enter into the Service Agreement, or (D) affect adversely the right of
the Partnership to own its assets and to operate its businesses (and
no such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(v) each of the Partners shall have delivered to the Purchaser
a certificate to the effect that each of the conditions specified
above in Section 6(a)(i)-(iv) is satisfied in all respects;
(vi) the Purchaser shall have received from Bernstein, Stair &
McAdams, counsel to the Partners, 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;
(vii) the Partners and Knoxville Hematology-Oncology
Associates, P.L.L.C. (the "Continuing Practice") shall have executed
and delivered to the Purchaser the Service Agreement in substantially
the form set forth as Exhibit 6(a)(vii) hereof;
19
(viii) the Purchaser shall have received an opinion from
Tennessee counsel reasonably satisfactory to the Purchaser that the
Service Agreement is the legal, valid and binding obligation of the
Partners and the Continuing Practice, 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, the Partners and the Continuing Practice will not
violate any statute, regulation, official interpretation, order,
decree or other law of the state of Tennessee;
(ix) each Partner shall have executed an employment contract
with the Continuing Practice in substantially the form set forth as
Exhibit 6(a)(x) hereto; and
(x) all actions to be taken by each of the Partners and the
Partnership in connection with consummation of the transactions
contemplated hereby and all certificates, opinion, instruments, and
other documents required to effect the transactions contemplated
hereby will be satisfactory in form and substance to the Purchaser.
The Purchaser may waive any condition specified in this Section 6(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Partners. The obligation of the
Partners 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
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 Partners a
certificate to the effect that each of the conditions specified above
in Section 6(b)(i)-(iii) is satisfied in all respects;
(v) the Partners shall have received an opinion from Baker,
Donelson, Bearman & Caldwell that the performance of the Service
Agreement by the Purchaser, the Partners and the Continuing Practice
will not violate any statute, regulation, official interpretation,
order, decree or other law of the United States of America; and
(vi) 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 Partners.
The Partners may waive any condition specified in this Section 6(b) if they
execute a writing so stating at or prior to the Closing.
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7. DELIVERIES AT CLOSING.
(a) Documents to be Delivered by the Purchaser. At the Closing, the
Purchaser shall deliver the following instruments and documents to the Partners
or other appropriate party:
(i) a certified or cashier's check or wire transfer equal to
the amount of cash deliverable by the Purchaser pursuant to Section
2(b);
(ii) the Response Note, payable to the order of Allan M.
Grossman, M.D.;
(iii) the Warrants, in denominations of 20,000 Warrants each;
(iv) the certificate described in Section 6(b)(iv) above;
(v) the opinion described in Section 6(b)(v) above; and
(vi) such other documents as the Partners may reasonably
request to affect the transactions contemplated by this Agreement.
(b) Documents to be Delivered by the Partners. At the Closing, the
Partners shall deliver the following instruments and documents to the
Purchaser:
(i) all consents necessary regarding the transaction
contemplated by this Agreement;
(ii) the opinion of counsel to the Partnership, in a form
reasonably satisfactory to the Purchaser's counsel, required by
Section 6(a)(vi) above;
(iii) the opinion, in a form reasonably acceptable to the
Purchaser's counsel, required by Section 6(a)(viii) above;
(iv) the Certificate described in Section 6(a)(v) above;
(v) the Service Agreement, duly executed by the Partners and
any entity in which they shall conduct a medical practice after
Closing; and
(vi) such other documents as may be required or as the
Purchaser may reasonably request to affect the transactions
contemplated by this Agreement.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (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 for a period of two (2) years (subject to any
applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Purchaser. In the
event any of the Partners breaches (or in the event any third party alleges
facts that, if true, would mean a Partner has breached) any of the
representations, warranties, and covenants contained herein and, provided that
the Purchaser makes a written claim for indemnification against the Partners
pursuant to Section 8(c)(i) below, then each of the Partners, 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, provided that the
Purchaser
21
shall have made a reasonable claim for indemnification hereunder prior to the
end of such 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 8, then the Purchaser shall
promptly notify the Partners thereof in writing; provided, however,
that no delay on the part of the Purchaser in notifying the Partners
shall relieve the indemnitor from any obligation hereunder unless (and
then solely to the extent) the indemnitor thereby is prejudiced.
(ii) The Partners will have the right to defend the Purchaser
against the Third Party Claim with counsel of their choice reasonably
satisfactory to the Purchaser so long as (A) the Partners indemnify
the Purchaser in accordance with this Section 8.
(iii) So long as the Partners are conducting the defense of
the Third Party Claim in accordance with Section 8(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 Partners (not to be withheld
unreasonably), and (C) the Partners 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 8(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 Partners in connection therewith), (B) the
Partners 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 Partners 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 8.
(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 8. All
indemnification payments under this Section 8 shall be deemed adjustments to
the Purchase Price.
(e) Recoupment Under the Response Note. If and only to the extent that
the Partners shall not have satisfied any indemnification obligation pursuant
hereto within ninety (90) days after the Purchaser shall have made written
demand therefor, the Purchaser shall have the option of recouping all or any
part of any Adverse Consequences it shall have suffered by notifying the
Partners that the Purchaser is reducing the principal amount outstanding under
the Response Note held by the Partners. This shall affect the timing and amount
of payments required under the Response 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.
9. TERMINATION.
22
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Purchaser and the Partners 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 Partners at any time prior to the Closing (A) in
the event any of the Partners has breached any material
representation, warranty, or covenant contained in this Agreement in
any material respect, the Purchaser has notified the Partners of the
breach, and the breach has continued without cure for a period of 10
days after the notice of breach or (B) if the Closing shall not have
occurred on or before June 30, 1996, by reason of the failure of any
condition precedent under Section 6(a) hereof (unless the failure
results primarily from the Purchaser itself breaching any
representation, warranty, or covenant contained in this Agreement);
and
(iii) the Partners may terminate this Agreement by giving
written notice to the Purchaser at any time prior to the Closing (A)
in the event the Purchaser has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Partners have notified the Purchaser of the breach, and
the breach has continued without cure for a period of 10 days after
the notice of breach or (B) if the Closing shall not have occurred on
or before June 30, 1996 by reason of the failure of any condition
precedent under Section 6(b) hereof (unless the failure results
primarily from any of the Partners themselves breaching any
representation, warranty, or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
10. MISCELLANEOUS.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Purchaser and the
Partners; 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) 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.
(c) 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.
(d) 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 Partners; 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).
(e) 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.
23
(f) 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.
(g) 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 Partners: Copy to:
Knoxville Hematology Oncology Associates James W. Parris, Esq.
1114 Weisgarber Road, #E Bernstein, Stair & McAdams
Knoxville, Tennessee 37909-2648 530 South Gay Street, Suite 600
Knoxville, Tennessee 38902
If to the Purchaser: Copy to:
Daryl P. Johnson John A. Good, Esq.
Response Oncology, Inc. Executive Vice President -General Counsel
1775 Moriah Woods Blvd. Response Oncology, Inc.
Memphis, Tennessee 38117 1775 Moriah Woods Blvd.
Memphis, TN 38117
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.
(h) 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.
(i) 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 Partners. 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.
(j) 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.
(k) 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.
24
(l) 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.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy
to which they may be entitled, at law or in equity.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Knoxville, Knox County,
Tennessee in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each Party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with
respect thereto. Nothing in this Section 11(p), however, shall affect the right
of any Party to bring any action or proceeding arising out of or relating to
this Agreement in any other court or to serve legal process in any other manner
permitted by law or at equity. Each Party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or at equity.
* * * * *
25
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
on [as of] the date first above written.
PURCHASER:
Response Oncology, Inc.
By:
------------------------------------------
Title:
---------------------------------------
Knoxville Hematology Oncology Associates
By:
------------------------------------------
Title:
---------------------------------------
Partners:
---------------------------------------------
Peter W. Carter, M.D.
---------------------------------------------
Albert S.C. Ebenezer, M.D.
---------------------------------------------
Jerry M. Foster, M.D.
---------------------------------------------
Allan M. Grossman, M.D.
26
Exhibit 2(a)(ii)
Assumed Liabilities
Accounts Payable (Per List Provided by the Partnership) $563,295.00
Capital Lease Obligations 90,885.00
-----------
Total Assumed Liabilities $654,180.00
===========
27
Exhibit 2(b)(i)
to
Purchase and Sale Agreement
NON-NEGOTIABLE PROMISSORY NOTE
$150,000.00 Knoxville, Tennessee
April 12, 1996
FOR VALUE RECEIVED, the undersigned, RESPONSE ONCOLOGY, INC., a
Tennessee corporation (the "Maker"), promises to pay to the order of ALLAN M.
GROSSMAN, M.D., (the "Lender"), the principal sum of ONE HUNDRED FIFTY THOUSAND
DOLLARS ($150,000.00), together with interest from date until maturity at the
rate of five (5%) percent per annum from date until Maturity (hereinafter
defined). Interest shall be payable on the unpaid principal balance hereof, in
arrears, at Maturity. The principal amount of this note shall be payable in
full on April 12, 1997 ("Maturity").
This Note may be prepaid in whole or in part prior to Maturity upon
sixty (60) days advance written notice given by the Maker to 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 (including any prepayment) or interest on
this Note, such payment shall be paid in whole or in part in whole shares of
common stock of the Maker, $.01 par value per share (the "Shares") .For
purposes of this paragraph, the number of whole 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 $11.75, 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. No fractional Shares shall be issued by the Maker, and the Lender shall
be paid cash in lieu of such fractional Shares in an amount equal to the
fractional Share to which the Lender would otherwise be entitled times the
conversion price stated above.
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 Purchase and Sale Agreement by and between Lender and Maker dated as of
April 12, 1996.
Subject to the Lender's option to require any payment of principal and
interest to be made in the form of Shares as hereinabove provided, all
installments of interest, and the principal hereof, are payable by Maker's
28
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 termination of the Service Agreement on account of a Response Event
of Default (as defined in the Service Agreement) 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 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.
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:
---------------------------------
29
Exhibit 2(b)(ii)
to
Purchase and Sale Agreement
CERTIFICATE NO. W-____
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAW, HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND ANY
APPLICABLE STATE SECURITIES LAW, OR THE PROPOSED TRANSFER IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND ANY APPLICABLE
STATE SECURITIES LAW.
- --------------------------------------------------------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
RESPONSE ONCOLOGY, INC.
- --------------------------------------------------------------------------------
This Warrant is granted as of April 12, 1996 by Response Oncology,
Inc., a Tennessee corporation (the "Issuer"), which certifies that, for value
received, the registered holder hereof, or its registered assigns (the
registered holder or assigns are referred to herein as the "Holder"), is
entitled to purchase from the Issuer, at any time and from time to time during
the Exercise Period (as hereinafter defined) at the Exercise Price (as
hereinafter defined) per share (as adjusted as herein provided), 20,000 shares
of common stock, $.01 par value per share (the "Common Stock") of Response
Oncology, Inc. (such number of shares of Common Stock purchasable upon the
exercise of this Warrant to Purchase Common Stock, as adjusted from time to
time pursuant to the provisions hereinafter set forth, are referred to in this
Warrant as the "Warrant Shares"). This Warrant has been issued in connection
with and as partial consideration for the acquisition (the "Purchase") by the
Issuer of 100% of the Partnership Interests in Knoxville Hematology Oncology
Associates (the "Partnership") from the partners of the Partnership (the
"Partners") pursuant to that certain Purchase and Sale Agreement dated as of
April 12, 1996 among the Issuer and the Partners of the Partnership.
VOID AFTER 5:00 P.M. MEMPHIS, TENNESSEE TIME, ON APRIL 11, 2001,
SUBJECT TO EARLIER TERMINATION AS HEREINAFTER SET FORTH
30
This Warrant is subject to the following terms and conditions:
1. Exercise Period. The period in which the Holder shall have the
right to exercise this Warrant (the "Exercise Period") shall commence on the
date that is one (1) year after the date hereof and shall terminate on (the
"Termination Date") the earlier of (i) April 11, 2001, (ii) the occurrence of
any merger, voluntary dissolution or other event pursuant to which the
existence of the Issuer shall terminate, or (iii) upon the termination of that
certain Service Agreement (the "Service Agreement") between the Issuer and
Knoxville Hematology-Oncology Associates, P.L.L.C. (the "Provider") in
accordance with its terms after occurrence of a Provider Event of Default (as
defined in the Service Agreement).
2. Exercise Price. The Exercise Price shall be equal to $11.75 per
share. The Exercise Price is subject to adjustment as provided in Section 5
below.
3. Termination of Warrants. The Warrants shall terminate on the
Termination Date and shall not be exercisable thereafter.
4. Exercise of Warrants. (a) The Warrants may be exercised in whole or
in part, at any time and from time to time, during the Exercise Period by
surrendering this Warrant, with the purchase form provided for herein duly
executed by the Holder or by the Holder's duly authorized attorney-in-fact, at
the principal office of the Issuer or at such other office in the United States
as the Issuer may designate by notice in writing to the Holder (the "Issuer's
Office") accompanied by payment of the Exercise Price in full, (i) in cash or
by certified or cashier's check, payable to the order of the Issuer, (ii) by
wire transfer in accordance with instructions provided by the Issuer, or (iii)
by the Holder's delivery, in transferable form, of certificates representing
the number of shares of the Issuer's Common Stock which, when valued at the
last sale price on the Nasdaq Stock Market's National Market on the dated date
of the purchase form, would be sufficient to satisfy the Exercise Price in
full. If fewer than all of the Warrants are exercised, the Issuer shall, upon
each exercise prior to the expiration of the Exercise Period, execute and
deliver to the Holder an amendment to this Warrant (dated the date hereof)
evidencing the balance of the Warrants that remain exercisable.
(b) On the date of exercise of the Warrant, the Holder exercising the
same shall be deemed to have become the holder of record for all purposes of
the Warrant Shares to which the exercise relates.
(c) As soon as practicable, but not later than ten (10) days after the
exercise of all or part of the Warrants, the Issuer shall, at the Issuer's
expense (including the payment of any applicable issue taxes and the cost of
any opinion of counsel required by the Issuer or its transfer agent), cause to
be issued in the name of and delivered to the Holder a certificate or
certificates evidencing the number of fully paid and nonassessable Warrant
Shares to which the Holder shall be entitled upon such exercise.
(d) The Warrant Shares issued upon exercise of this Warrant will not
be registered under the Securities Act of 1933, as amended (the "Act") or the
securities laws of any state in reliance on exemptions from the registration
requirements of the Act and such laws. Accordingly, the Warrant Shares may be
sold or otherwise transferred only upon (i) registration under the Act and
qualification under applicable state securities laws, (ii) compliance with Rule
144 under the Act, or (iii) the Issuer's receipt of an opinion, at the Holder's
expense, from counsel reasonably acceptable to the Issuer to the effect that
any such sale or transfer will not violate the Act or any state law. The Issuer
will cause an appropriate legend to be placed on certificates representing the
Warrant Shares to the foregoing effect.
5. Adjustments of Exercise Price, Number and Character of Warrant
Shares, and Number of Warrants. The Exercise Price, the number and kind of
securities purchasable upon the exercise of each Warrant, and the number of
Warrants outstanding shall be subject to adjustment from time to time upon the
happening of the events enumerated in this Section 5.
31
(a) In case the Issuer shall at any time on or after the date
hereof (i) pay a dividend in shares of Common Stock or other securities of the
Issuer or make a distribution in shares of Common Stock or such other
securities to holders of all its outstanding shares of Common Stock, (ii)
subdivide or reclassify the outstanding shares of Common Stock into a greater
number of shares, (iii) combine the outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue by reclassification of
its shares of Common Stock other securities of the Issuer (including any such
reclassification in connection with a consolidation or merger in which the
Issuer is the continuing corporation), then the number and kind of Warrant
Shares purchasable upon exercise of each Warrant outstanding immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
kind and number of shares of Common Stock or other securities of the Issuer
which the Holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Warrant been exercised
in full immediately prior to the earlier of the happening of such event or any
record date in respect thereof. In the event of any adjustment of the total
number of shares of Common Stock purchasable upon the exercise of the then
outstanding Warrants pursuant to this Section 5(a), the Exercise Price shall be
adjusted to be the amount resulting from dividing the number of shares of
Common Stock (including fractional shares of Common Stock) covered by such
Warrant immediately after such adjustment into the total amount payable upon
exercise of such Warrant in full immediately prior to such adjustment. An
adjustment made pursuant to this Section 5(a) shall become effective
immediately after the effective date of such event retroactive to the record
date for any such event. Such adjustment shall be made successively whenever
any event listed above shall occur.
(b) In case the Issuer shall at any time after the date hereof fix a
record date for the issuance of rights, options, or warrants to all holders of
its outstanding shares of Common Stock, entitling them (for a period expiring
within forty-five (45) days after such record date) to subscribe for or
purchase shares of Common Stock (or securities exchangeable for or convertible
into shares of Common Stock) at a price per common share (or having an exchange
or conversion price per common share, with respect to a security exchangeable
for or convertible into shares of Common Stock) which is lower than the
Exercise Price per common share on such record date, then the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior
to such record date by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding on such record date plus the number of
shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so to be offered (or the aggregate initial exchange
or conversion price of the exchangeable or convertible securities so to be
offered) would purchase at such current Exercise Price and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock to be offered
for subscription or purchase (or into which the exchangeable or convertible
securities so to be offered are initially exchangeable or convertible). Such
adjustment shall become effective at the close of business on such record date;
however, to the extent that shares of Common Stock (or securities exchangeable
for or convertible into shares of Common Stock) are not delivered after the
expiration of such rights, options, or warrants, the Exercise Price shall be
readjusted (but only with respect to Warrants exercised after such expiration)
to the Exercise Price which would then be in effect had the adjustments made
upon the issuance of such rights, options, or warrants been made upon the basis
of delivery of only the number of shares of Common Stock (or securities
exchangeable for or convertible into shares of Common Stock) actually issued.
In case any subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Issuer and
shall be described in a statement mailed to the Holder. Shares of Common Stock
owned by or held for the account of the Issuer shall not be deemed outstanding
for the purpose of any such computation.
(c) In case the Issuer shall at any time after the date hereof
distribute to all holders of its shares of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Issuer is the surviving corporation) evidences of its indebtedness or assets
(excluding cash dividends and distributions payable out of consolidated net
income or earned surplus in accordance with applicable law and dividends or
distributions payable in shares of stock described in Section 5(a) above) or
rights, options, or warrants or exchangeable or convertible securities
containing the right to subscribe for or purchase shares of Common Stock (or
securities exchangeable for or convertible into shares of Common Stock)
(excluding those expiring within
32
forty-five (45) days after the record date referred to in Section 5(b) above),
then the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to the record date for such distribution by a
fraction, of which the numerator shall be the fair market value of the shares
of Common Stock on such day, as determined in good faith by the Board of
Directors of the Issuer whose determination shall be conclusive, and described
in a notice to the Holder of the portion of the evidences of indebtedness or
assets so to be distributed or of such rights, options or warrants applicable
to one common share and of which the denominator shall be such fair market
value per common share. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of distribution
retroactive to the record date for such transaction.
(d) For the purpose of this Warrant, the fair market value per share
of Common Stock shall be determined by reference to the latest independent bid
for the Common Stock as set forth in the National Market of The Nasdaq Stock
Market or, if the Common Stock shall be traded on any national or regional
securities exchange, the latest bid price for the Common Stock, or, if none of
the foregoing apply, as determined in good faith by the Board of Directors of
the Issuer.
(e) No adjustment in the Exercise Price or the number of Warrant
Shares purchasable shall be required unless such adjustment would require an
increase or decrease of at least ten percent (10%) in the Exercise Price or the
number of Warrant Shares purchasable; provided, however, that any adjustments
which by reason of this Section 5(e) are not required to be made (i) shall be
carried forward and taken into account in any subsequent adjustment or (ii) if
no subsequent adjustment occurs, shall be made immediately prior to exercise of
this Warrant. All calculations under this Section 5 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be.
(f) Unless the Issuer shall have exercised its election as provided in
Section 5(g), upon each adjustment of the Exercise Price as a result of the
calculations made in Sections 5(b) or (c), each Warrant outstanding prior to
the making of the adjustment in the Exercise Price shall thereafter evidence
the right to purchase, at the adjusted Exercise Price, that number of shares of
Common Stock (calculated to the nearest hundredth) obtained by (i) multiplying
the number of shares of Common Stock purchasable upon exercise of a Warrant
prior to adjustment of the number of shares of Common Stock by the Exercise
Price in effect prior to adjustment of the Exercise Price and (ii) dividing the
product so obtained by the Exercise Price in effect after such adjustment of
the Exercise Price.
(g) The Issuer may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of Warrants, in substitution for any
adjustment in the number of Warrant Shares purchasable upon the exercise of
Warrants as provided in Sections 5(a) and (f). Each of the Warrants outstanding
after such adjustment of the number of Warrants shall be exercisable for one
share of Common Stock. Each Warrant held of record prior to such adjustment of
the number of Warrants shall become that number of Warrants (calculated to the
nearest hundredth) obtained by dividing the Exercise Price in effect prior to
adjustment of the Exercise Price by the Exercise Price in effect after
adjustment of the Exercise Price. The Issuer shall send to each Holder a notice
of its election to adjust the number of Warrants, indicating the record date
for the adjustment, and if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Exercise Price is
adjusted or any day thereafter, but shall be at least ten (10) days after the
date such announcement is sent to the Holders. Upon each adjustment of the
number of Warrants pursuant to this Section 5(g) the Issuer shall, as promptly
as practicable, cause to be distributed to holders of record of Warrants on
such record date new certificate(s) evidencing the additional Warrants to which
such holders shall be entitled as a result of such adjustment, or, at the
option of the Issuer, shall cause to be distributed to such holders of record
in substitution and replacement for the certificates held by such holders prior
to the date of adjustments, and upon surrender thereof if required by the
Issuer, new certificates evidencing all the Warrants to which such holders
shall be entitled after such adjustment.
(h) In case of any capital reorganization of the Issuer, or of any
reclassification of the shares of Common Stock [other than a reclassification,
subdivision or combination of shares of Common Stock referred to in Section
5(a)], or in case of the consolidation of the Issuer with, or the merger of the
33
Issuer with, or merger of the Issuer into, any other corporation, limited
partnership, limited liability company or other business entity (other than a
reclassification of the shares of Common Stock referred to in Section 5(a) or a
consolidation or merger which does not result in any reclassification or change
of the outstanding shares of Common Stock) or of the sale of the properties and
assets of the Issuer as, or substantially as, an entirety to any other
corporation or entity, each Warrant shall after such capital reorganization,
reclassification of shares of Common Stock, consolidation, merger, or sale be
exercisable, upon the terms and conditions specified in this Warrant, for the
kind, amount and number of shares or other securities, assets, or cash to which
a holder of the number of shares of Common Stock purchasable (at the time of
such capital reorganization, reclassification of shares of Common Stock,
consolidation, merger or sale) upon exercise of such Warrant would have been
entitled to receive upon such capital reorganization, reclassification of
shares of Common Stock, consolidation, merger, or sale; and in any such case,
if necessary, the provisions set forth in this Section 5 with respect to the
rights and interests thereafter of the holders of the Warrants shall be
appropriately adjusted so as to be applicable, as nearly equivalent as
possible, to any shares or other securities, assets, or cash thereafter
deliverable on the exercise of the Warrants. The subdivision or combination of
shares of Common Stock at any time outstanding into a greater or lesser number
of shares shall not be deemed to be a reclassification of the shares of Common
Stock for purposes of this Section 5(h).
(i) In the event that at any time, as a result of an adjustment made
pursuant to this Section 5, the holders of an Warrant or Warrants shall become
entitled to purchase any shares or securities of the Issuer other than the
shares of Common Stock, thereafter the number of such other shares or
securities so purchasable upon exercise of each Warrant and the exercise price
for such shares or securities shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as possible to the provisions
with respect to the shares of Common Stock contained in Sections 5(a) through
(h), inclusive.
(j) In any case in which this Section 5 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Issuer may elect to defer until the occurrence of such
event issuing to the holder of any Warrant exercised after such record date the
shares of Common Stock, if any, issuable upon such exercise over and above the
Warrant Shares, if any, issuable upon such exercise on the basis of the
Exercise Price in effect prior to such adjustment; provided, however, that the
Issuer shall deliver as soon as practicable to such holder a due bill or other
appropriate instrument provided by the Issuer evidencing such holder's right to
receive such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.
(k) Notwithstanding anything herein to the contrary, no adjustment
shall be required under this Section 5 in the event the Issuer (i) issues
options to purchase Common Stock or other securities to officers, directors,
employees or agents pursuant to an incentive or non-qualified stock option
plan, or (ii) issues shares of Common Stock or other securities pursuant to an
offering for cash or other consideration (including the assets or capital stock
or securities of any other corporation or other business entity), or pursuant
to a plan of merger whereby the Issuer is the surviving participant in the
merger, other than an issuance of rights, options or warrants exercisable for
shares of Common Stock (or securities exchangeable for or convertible into
shares of Common Stock) to all holders of its outstanding shares of Common
Stock.
6. Definition of shares of Common Stock. The shares of Common Stock
issuable upon exercise of the Warrants shall be the shares of Common Stock as
constituted on the date hereof except as otherwise provided in Section 5.
7. Notice of Number of Warrant Shares, Adjustment or Termination.
Within thirty (30) days of the occurrence of an event which results in an
adjustment in the number of Warrants, the number of Warrant Shares purchasable
upon the exercise of Warrants and/or the Exercise Price or the termination of
the Warrants shall have occurred as provided herein, the Issuer shall
forthwith:
(a) prepare and hold for inspection at the Issuer's principal place of
business, 1775 Moriah Woods Blvd., Memphis, Tennessee 38117, or such subsequent
principal place of business (the "Issuer's Office"), a statement,
34
signed by the Chief Financial Officer of the Issuer, stating either (i) the
number of Warrants or Warrant Shares, (ii) the adjusted number of Warrants or
Warrant Shares purchasable upon the exercise of Warrants and/or Exercise Price
determined as herein provided, such statement to show in detail the facts
requiring such adjustment or (iii) the termination of the Warrants, and
(b) give notice embodying such statement to each Holder as provided in
Section 13. Where appropriate, such notice may be given in advance and may be
included as part of a notice required to be mailed pursuant to Section 8.
8. Notices of Record Date, etc. In the event the Issuer shall propose
to take any action of the type requiring an adjustment of the Exercise Price or
the number or character of the Warrant Shares or Warrants pursuant to Section 5
or a dissolution, liquidation or winding up of the Issuer (other than in
connection with a consolidation, merger, or sale of all or substantially all of
its property, assets, and business as an entirety) shall be proposed, the
Issuer shall give notice to each Holder as provided in Section 15, which notice
shall specify the record date, if any, with respect to any such action and the
date on which such action is to take place. Such notice shall also set forth
such facts with respect thereto as shall be reasonably necessary to indicate
the effect of such action (to the extent such effect may be known at the date
of such notice) on the Exercise Price and the number, kind or class of shares
or other securities or property which shall be deliverable or purchasable upon
the occurrence of such action or deliverable upon the exercise of the Warrants.
In the case of any action which will require the fixing of a record date,
unless otherwise provided in this Warrant, such notice shall be given at least
twenty (20) days prior to the date so fixed, and in case of all other action,
such notice shall be given at least thirty (30) days prior to the taking of
such proposed action.
9. Replacement of Securities. If this Warrant shall be lost, stolen,
mutilated or destroyed, the Issuer shall, on such terms as to indemnity or
otherwise as the Issuer may in its discretion reasonably impose, issue a new
certificate of like tenor or date representing in the aggregate the right to
subscribe for and purchase the number of shares of Common Stock which may be
subscribed for and purchased hereunder. Any such new certificate shall
constitute an original contractual obligation of the Issuer, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time
enforceable by anyone.
10. Recordkeeping. This Warrant, as well as all other warrant
certificates representing Warrants of like tenor issued in connection with the
Purchase and Sale Agreement shall be numbered beginning with the alphabetic
prefix "KN" and shall be registered in a register (the "Warrant Register")
maintained at the Issuer's Office as they are issued. The Warrant Register
shall list the name, address and Social Security or other Federal
Identification Number, if any, of all Holders. Upon notice duly given by the
Holder, the Issuer shall be entitled to recognize the Holder as set forth in
the Warrant Register as the nominee for the beneficial owners of the Warrants
as set forth in such notice or subsequent notices with respect to such
beneficial ownership recognize for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person, and shall not be liable for any registration of
transfer of Warrants that are registered or to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith.
11. Transfer. This Warrant shall not be transferable and may not be
the subject of a sale, assignment, pledge or other conveyance without the
Issuer's advance consent, which the Issuer may withhold in its absolute
discretion. The Warrant shall be transferable only on the Warrant Register upon
delivery of such Warrants, with the assignment form provided for herein duly
executed by the Holder or by the Holder's duly authorized attorney-in-fact.
Upon any registration of transfer, the Issuer shall execute and deliver a new
Warrant certificate to the person entitled thereto.
35
The Warrants have not been registered under the Secuities Act of 1933
or any state securities law, and, accordingly, may not be sold, transferred,
assigned, pledged, hypothecated or otherwise disposed of unless they have been
registered under the Securities Act of 1933 and any applicable state securities
law or, in the opinion of counsel reasonably satisfactory to the Issuer, whose
fees and expenses in connection with such opinion will be borne by the Holder,
the proposed transfer is exempt from the registration requirements of the
Securities Act of 1933 and any applicable state securities law.
12. Exchange of Warrant Certificates. This Warrant may be exchanged
for another certificate or certificates entitling the Holder thereof to
purchase a like aggregate number of Warrant Shares as this Warrant entitles
such Holder to purchase. A Holder desiring to so exchange this Warrant shall
make such request in writing delivered to the Issuer, and shall surrender this
Warrant therewith. Thereupon, the Issuer shall execute and deliver to the
person entitled thereto a new certificate or certificates, as the case may be,
as so requested.
13. Piggyback Registration.
(a) Notice of Piggyback Registration and Inclusion of
Warrant Shares.
If, after the Holder's exercise of the Warrants pursuant to
Section 4 hereof, at any time or from time to time the Issuer shall elect to
file a registration statement ("Registration Statement") on Form S-1, S-2 or
S-3 (or any successor form thereto) under the Act with respect to any of its
securities, either for its own account or the account of a security holder or
holders, other than a registration of a public offering of Common Stock
commenced within one (1) year of the date hereof or a registration relating
solely to employee benefit plans (excluding the foregoing events, a
"Registration"), the Issuer will: (i) promptly give each Holder written notice
thereof (which shall include a list of the jurisdictions in which the Issuer
intends to attempt to qualify such securities under the applicable Blue Sky or
other state securities laws) and (ii) include in such Registration (and any
related registration and/or qualification under Blue Sky laws or other
compliance), and in any underwriting involved therein, all or such portion of
the Warrant Shares specified in a written request delivered to the Issuer by
any Holder within 30 days after delivery of such written notice from the
Issuer.
(b) Underwriting in Piggyback Registration.
(i) NOTICE OF UNDERWRITING IN PIGGYBACK
REGISTRATION.
If the Registration of which the Issuer gives notice
is for a Registered public offering involving an underwriting, the Issuer shall
so advise the Holders as a part of the written notice given pursuant to Section
13(a). In such event, the right of any Holder to Registration shall be
conditioned upon such underwriting and the inclusion of such Holder's Warrant
Shares in such underwriting to the extent provided in this Section 13. All
Holders proposing to distribute their securities through such underwriting
shall (together with the Issuer and any other holders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the Underwriter ("Underwriter's
Representative") for such offering. The Holders shall have no right to
participate in the selection of underwriters for an offering pursuant to this
Section.
(ii) MARKETING LIMITATION IN PIGGYBACK
REGISTRATION.
In the event the Underwriter's Representative advises
the Holders seeking Registration of Warrant Shares pursuant to Section 13 in
writing that market factors (including, without limitation, the aggregate
number of shares of Common Stock requested to be included in such Registration,
the general condition of the market, and the status of the persons proposing to
sell securities pursuant to the Registration) require a limitation of the
number of shares to be underwritten, the Underwriter's Representative (subject
to the allocation priority set forth in Section 13(a)(iii) may limit (or reduce
to zero) the number of Warrant Shares to be included in
36
such Registration and underwriting; provided however, that any Warrant Shares
so excluded shall retain any and all Registration rights set forth in Section
13 hereof.
(iii) ALLOCATION OF WARRANT SHARES IN PIGGYBACK
REGISTRATION.
In the event that the Underwriter's Representative
limits the number of shares to be included in a Registration pursuant to
Section 13(a)(ii), the number of shares to be included in such Registration
shall be allocated in the following manner: Common Stock held by persons who
are not contractually entitled to include shares in such Registration shall be
excluded from such Registration and underwriting to the extent required by such
limitation. If a limitation of the number of shares is still required after
such exclusion, the number of shares of Common Stock that may be included in
the Registration and underwriting by all selling shareholders (including the
Holders and all other persons contractually entitled to such registration)
shall be allocated among Holders and other holders of securities other than
Warrant Shares requesting and contractually entitled to include shares in such
Registration, in proportion, as nearly as practicable, to the respective
amounts of securities (including Warrant Shares) which such Holders and such
other holders would otherwise be entitled to include in such Registration. No
Warrant Shares or other securities excluded from the underwriting by reason of
this Section 13(a)(iii) shall be included in the Registration Statement.
(iv) WITHDRAWAL IN PIGGYBACK REGISTRATION.
If any Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Issuer and the underwriter delivered at least seven days prior to the effective
date of the Registration Statement. Any Warrant Shares or other securities
excluded or withdrawn from such underwriting shall be withdrawn from such
Registration.
(c) Blue Sky in Piggyback Registration.
In the event of any Registration of Warrant Shares pursuant to
Section 13, the Issuer will use its best efforts to register and/or qualify the
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of such securities; provided, however, that notwithstanding
anything in this Agreement to the contrary, in the event any jurisdiction in
which the securities shall be qualified imposes a non-waivable requirement that
expenses incurred in connection with the qualification of the securities be
borne by selling shareholders, the Holders shall pay their pro rata share of
such expenses.
14. Demand Registration.
(a) Request for Registration.
Subject to exceptions as hereinafter provided, after the first
anniversary of the Closing Date, the Holders which have exercised Warrants
pursuant to Section 4 hereof (the "Unregistered Shares"), may annually make a
single request (a "Demand") in writing within 30 days of the anniversary date
that the Issuer file and effect a registration statement with the Commission in
respect of all, but not less than all, shares of Unregistered Shares held by
the Holders. Upon receipt of a Demand, the Issuer shall as soon as practicable
cause a Registration Statement to be filed with the Commission, which
Registration Statement shall, if not an Underwritten Offering pursuant to
Section 13 above, contain all appropriate undertakings necessary to comply with
Rule 415 under the 1933 Act pertaining to "shelf registration", and the Issuer
shall use its best efforts to effect such Registration (including the execution
of an undertaking to file post effective amendments and any related
registration or qualification under Blue Sky Laws or other compliance with the
Securities Act) as may be so requested and as would permit or facilitate the
sale and distribution of the Unregistered Shares.
(b) Registration of Other Securities in Demand Registration.
37
Any Registration Statement filed pursuant to the request of
the Holders under this Section 14 may, subject to the provisions of Section
14(d), include securities of the Issuer other than the Unregistered shares.
(c) Blue Sky in Demand Registration.
In the event of any Registration of Warrant Shares pursuant to
Section 14, the Issuer will use its best efforts to register and/or qualify the
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of such securities; provided, however, that notwithstanding
anything in this Agreement to the contrary, in the event any jurisdiction in
which the securities shall be qualified imposes a non-waivable requirement that
expenses incurred in connection with the qualification of the securities be
borne by selling shareholders, the Holders shall pay their pro rata share of
such expenses.
(d) Underwritten Demand Registration.
The Holders making a Demand shall be entitled to engage an
underwriter reasonably acceptable to the Issuer to offer and sell in a public
offering the Unregistered Shares included in any Registration Statement filed
pursuant to Section 14(a) above. In such event, the Issuer and each
participating Holder shall enter into an underwriting agreement in customary
form with the representative of the underwriter ("Underwriter's
Representative") for such offering. Whether or not an underwriting agreement is
entered into, the Issuer shall:
(i) make such representation and warranties to
the Holders participating in such registration and the underwriters, if any, in
form, substance and scope as are customarily made by issuers to underwriters in
comparable underwritten offerings;
(ii) obtain opinions of counsel to the Issuer and
updates thereof (which counsel and opinions (if form, scope and substance)
shall be reasonably satisfactory to the Underwriter's Representative, if any,
and the Holders of a majority in number of the Unregistered Shares being sold)
addressed to such Holders and underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Holders and the
underwriters, if any;
(iii) obtain comfort letters and updates thereof
from the Issuer's independent certified public accountants addressed to the
selling Holders and the underwriters, if any, such letters to be in customary
form and covering matters of the type (including the "circling" of numbers in
the prospectus included in the Registration Statement, with appropriate legends
explaining the procedures performed with respect to "circled" numbers)
customarily covered in comfort letters by independent certified public
accountants in connection with underwritten offerings, on such date or dates as
may be reasonably requested by the Underwriters' Representative and the Holders
of a majority of the Unregistered Shares being sold; and
(iv) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep the Registration
Statement effective for the period of the distribution contemplated thereby and
to comply with the provisions of the Securities Act with respect to the
disposition of all Warrant Shares covered by the Registration Statement in
accordance with the selling Holders' intended method of disposition set forth
in the Registration Statement for such period;
(v) immediately notify each selling Holder under
the Registration Statement and each underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus contained in the
Registration Statement, as then in effect, includes any untrue statement of a
material fact or omits to state any material fact required to be
38
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(vi) make available for inspection by each selling
Holder, any underwriter participating in any distribution pursuant to the
Registration Statement, and any attorney, accountant or other agent retained by
such Holder or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney, accountant or agent in
connection with the Registration Statement;
(vii) use its best efforts to take actions
necessary or advisable to effect such registration in the manner contemplated
by this Agreement; and
(viii) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority of the Unregistered
Shares being sold and the Underwriters' Representative, if any, to evidence
compliance with any customary conditions contained in the underwriting
agreement.
In connection with such Underwritten Offering, the Issuer shall (i)
make provide to a single counsel for the Holders whose Unregistered Shares are
included in such Underwritten Offering, for such counsel's review and comment,
drafts of the Registration Statement; (ii) provide such counsel with a
reasonable number of executed copies of the Registration Statement and all
amendments thereto, as filed, as well as a reasonable number of preliminary
prospectuses used by the underwriters in such Underwritten Offering; (iii) give
prompt notice to such counsel of the effectiveness of such registration
statement and of any stop order issued by the Commission or proceeding, or
threat of such a proceeding, by the Commission for the purpose of issuing a
stop order or otherwise suspending the effectiveness of any Registration
Statement; (iv) provide to the Holders a reasonable number of final
prospectuses delivered to purchasers under the Securities Act; and (v) for such
period for which prospectuses are required to be delivered by dealers, provide
such dealers with an adequate number of final prospectuses in order to permit
the dealers to comply with their obligations under the Securities Act. In all
other regards, the Issuer agrees to comply with the requirements of the
Securities Act in connection with any Underwritten Offering.
(e) Right of Redemption. The Issuer shall have the right
to redeem the Unregistered Shares at a price equal to the average of the price
as quoted for the Common Stock as set forth in the National Market of The
Nasdaq Stock Market or, if the Common Stock shall be traded on any national or
regional securities exchange, the latest bid price for the Common Stock, for
the prior ten (10) trading days prior to the date the Demand is received;
provided, however, that in the event the Issuer shall elect to exercise such
redemption right, the Holder shall have the right, exercisable in writing for a
period of three (3) days following delivery by the Issuer of its notice of
intent to redeem Shares, to withdraw Holder's Demand, in which event the
redemption notice shall, with no further action on the part of the Issuer, be
deemed revoked and the Holder shall retain the Unregistered Shares that were
the subject of the Demand.
14A. Expenses of Registration. All expenses incurred in connection
with any registration, qualification or compliance pursuant to Sections 13 or
14, including, without limitation, all registration, filing and qualification
fees (including blue sky fees and expenses), printing expenses (including,
without limitation, those associated with printing a quantity of preliminary
and final prospectuses for distribution), accounting fees, escrow fees, the
fees and disbursements of counsel for the Company with respect to such
registration, fees of any exchange or of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars,
out-of-pocket expenses of any underwriter (to the extent required to be paid by
the Issuer or Holders), costs of insurance (if any) and expenses of any special
audits incidental to or required by such registration, shall be borne by the
Company; provided, however, that the following expenses shall be borne by the
Holders, pro rata, according to their securities so registered:
39
a. All fees and disbursements of counsel for the
Holders; and
b. Underwriters' fees, discounts and commissions
relating to the Warrant Shares which are the subject
of or included for sale in the Registration
Statement.
14B. Indemnification.
a. To the extent permitted by law, the Company shall
indemnify each Holder against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on (i) any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other documents (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or (ii) any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (iii) any violation by the
Company of any rule or regulation promulgated under the Securities Act or any
state securities law applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such person, each of its
officers and directors, and each person controlling such person, for any legal
and any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage or liability or action arises out of or is based on any untrue
statement or any omission based upon written information furnished to the
Company by an instrument duly executed by any such person and stated to be
specifically for use therein.
b. To the extent permitted by law, each Holder shall, if
securities held by or issuable to such person are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers who sign such
registration statement, each underwriter, if any, of the Company's securities
covered by such registration statement, each person who controls the Company
within the meaning of the Securities Act and each other such Holder, each
officer and director and each person controlling each such underwriter, or
other Holder against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on (i) any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or (ii) any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, and such other Holders, such directors, officers,
persons or underwriters for any legal or any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein.
c. Each party entitle to indemnification under this
Section 14B (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein within a reasonable amount
of time, if such failure is prejudicial to the Indemnifying Party's ability to
defend such action, shall relieve the Indemnifying Party of its obligations
under this Section 14B, but not of any obligation arising aprt from this
Section 14B. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the
40
claimant or plaintiff to such Indemnified Party of a release from all liability
with respect to such claim or litigation. If any such Indemnified Party shall
have reasonably concluded that there may be one or more legal defenses
available to such Indemnified party which are different from or additional to
those available to the Indemnifying Party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section 14B, the Indemnifying Party shall not have
the right to assume the defense of such action on behalf of such Indemnified
Party and such Indemnifying Party shall reimburse such indemnified Party and
any person controlling such Indemnified Party for that portion of the fees and
expenses of any counsel retained by the Indemnified Party which are reasonably
related to the matters covered by the indemnity agreement provided in this
Section 14B.
15. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered in person, against written
receipt therefor, or two days after being sent, by registered or certified
mail, postage prepaid, return receipt requested, and, if to the Holder, at such
address as is shown on the Warrant Register or as may otherwise may have been
furnished to the Issuer in writing by the Holder and, if to the Issuer, at the
Issuer's Office.
16. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This certificate is deemed to have been delivered in the
State of Tennessee and shall be construed and enforced in accordance with and
governed by the laws of such State. The headings in this Warrant to Purchase
Common Stock Certificate are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof.
17. Expiration. Unless as hereinafter provided, the right to exercise
these Warrants shall terminate upon the expiration of the Exercise Period.
IN WITNESS WHEREOF
RESPONSE ONCOLOGY, INC.
DATEED: April 12, 1996 By:
--------------------------------------
Daryl Johnson, Chief Financial Officer
41
PURCHASE FORM
TO: RESPONSE ONCOLOGY, INC.
Dated:_________________, 19__
The undersigned hereby irrevocably elects to exercise the within
Warrants, to the extent of purchasing __________ shares of Common Stock, and
hereby makes payment of $______________ in payment of the actual Exercise Price
thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
--------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address:
-----------------------------------------------------------------------
Signature:
---------------------------------------------------------------------
(Signature must conform in all respects to the name of the
Holder as set forth on the face of this Warrant.)
42
ASSIGNMENT FORM
FOR VALUE RECEIVED, __________________________________ hereby sells,
assigns and transfers unto
Name:
--------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address:
-----------------------------------------------------------------------
the right to purchase shares of Common Stock represented by this Warrant to the
extent of ___________________________________________ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint
_______________________________ Attorney-in-Fact, to transfer the same on the
books of the Issuer with full power of substitution in the premises.
Dated:________________, 19__
Signature
----------------------------------------------------------------------
(Signature must conform in all respects to the name of the
Holder as set forth on the face of this Warrant.)
43
Exhibit 6(a)(x)
to
Purchase and Sale Agreement
EMPLOYMENT AGREEMENT FOR
PROFESSIONAL EMPLOYEES OF
KNOXVILLE HEMATOLOGY-ONCOLOGY ASSOCIATES, P.L.L.C.
THIS AGREEMENT is entered into as of April 12, 1996 (the "Effective
Date"), by and between KNOXVILLE HEMATOLOGY-ONCOLOGY ASSOCIATES, P.L.L.C., a
Tennessee professional limited liability company ("Employer") and
________________________, an individual residing in the State of Tennessee,
("Employee").
WITNESSETH:
WHEREAS, Employer is a professional group practice engaged in the
practice of medicine in the State of Tennessee;
WHEREAS, Employee is an individual duly licensed to practice as a
physician in the State of Tennessee;
WHEREAS, Employer wishes to employ Employee on a full-time basis to
provide professional services on behalf of Employer; and
WHEREAS, Employee wishes to be so employed;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual promises and covenants hereinafter set forth, the parties agree as
follows:
1. SCOPE OF EMPLOYMENT. Employee agrees to devote substantially his
full time and energy to the practice of medicine, in the specialty of
oncology-hematology on behalf of Employer, and to practice medicine solely as
an employee of Employer, except as may be otherwise agreed to by Employer in
writing. Employee shall represent himself professionally only under such
business or clinic name as shall be approved or designated by Employer, and
shall practice at the office location designated by Employer. Employee
understands that the governing body of Employer has final authority and
responsibility for determining the fee schedule for professional services
rendered by employees of Employer.
2. COMPENSATION FOR SERVICES. Employer shall compensate Employee for
all services rendered by Employee under this Agreement in accordance with
Schedule A hereto. Employee understands and agrees that any and all monies due
to or received by Employee on account of the rendering of patient care services
or otherwise in the professional practice of his or her profession from and
after the effective date of this Agreement, regardless of the time and place
such services
44
are delivered, shall be the exclusive property of Employer. The compensation
paid to Employee under this Agreement shall constitute full compensation to
Employee for services rendered under this Agreement, and Employee shall not
seek additional compensation from any source for services rendered under this
Agreement.
3. BILLING. (a) Except as otherwise provided by law, only Employer
shall be entitled to bill for or otherwise receive payment from the patient or
any third party for services provided by Employee under this Agreement.
Employee shall have no right to receive, nor shall Employee attempt to bill for
or collect, payment from the patient or any third party for services provided
by Employee under this Agreement, except in the name of and for the sole
benefit of Employer.
(b) Employee shall cooperate with and assist Employer in the
preparation and documentation of claims for services rendered by Employee under
this Agreement. Employee agrees to cooperate and comply with the terms of
applicable utilization management and similar cost management protocols, and to
do all things necessary and appropriate to maximize reimbursement to Employer
for services rendered by Employee under this Agreement, to the extent
consistent with law and with the best clinical interests of the patient.
4. WORKING FACILITIES. Employer shall assure that Employee has
appropriate office space, support staff, supplies, equipment, and such other
facilities and services as Employer deems necessary and appropriate to his or
her position and for the performance of Employee's duties.
5. PROFESSIONAL RELATIONSHIPS. Employer and Employee each acknowledges
and agrees that the business relationship between Employer and Employee as
established by this Agreement does not, and shall not be construed to, alter or
in any way affect the legal, ethical, and professional relationship between
Employee and patients cared for by Employee, nor shall anything contained in
this Agreement abrogate any right, privilege, or obligation arising out of or
applicable to the physician-patient relationship.
6. CLINICAL RECORDS. Employee shall assure that appropriate clinical
records are prepared with regard to all professional services provided by
Employee under this Agreement. All such records shall be prepared and
maintained according to prudent record keeping procedures and as required by
law. All clinical records prepared and maintained with regard to services
rendered under this Agreement shall be and remain the property of Employer,
notwithstanding any termination of this Agreement.
7. PROFESSIONAL LIABILITY INSURANCE. Employer shall, at all times
during the initial and any renewal term of this Agreement, provide at its sole
cost and expense professional and general liability insurance coverage for
Employee in such amounts and with such carrier or carriers as Employer shall
deem necessary and appropriate.
45
8. EXPENSES. Ordinary and necessary business expenses incurred by
Employee in performing his or her duties under this Agreement, including but
not limited to professional dues, subscriptions, licenses, and continuing
education expenses, shall be borne by Employer.
9. EMPLOYEE BENEFITS. Employee shall be entitled to receive or
participate in all employee benefits generally available to employees of
Employer in accordance with the terms of the Employer's employee benefit plans
in effect from time to time. The governing body of Employer may increase,
decrease, or discontinue any benefit plan at any time without notice to or the
consent of Employee.
10. TERM. The initial term of this Agreement shall begin on the
Effective Date stated on page 1 hereof, and shall terminate on the next ensuing
December 31. This Agreement shall thereafter automatically renew for successive
terms of one (l) year each unless and until terminated as hereinafter provided.
11. VOLUNTARY TERMINATION. Either party may terminate this Agreement
at any time, with or without cause, by giving written notice thereof to the
other party at least ninety (90) days prior to the effective date of
termination.
12. TERMINATION FOR CAUSE. Employer may terminate this Agreement
immediately upon written notice to Employee on the occurrence any of the
following events:
(a) The failure of Employee to correct any material breach of
this Agreement to the reasonable satisfaction of Employer within
thirty (30) days following written notice from Employer specifying
such breach;
(b) The revocation, termination, restriction, or suspension of
Employee's license to practice his or her profession in the State of
Tennessee, Employee's DEA permit (if applicable), or the exclusion of
Employee from participation in Medicare, Medicaid, or CHAMPUS; or
(c) Any unprofessional or illegal conduct by Employee which
makes the performance of this Agreement impractical, including, but
not limited to, the conviction of a felony.
13. COVENANT NOT TO COMPETE. (a) Employee agrees and covenants that,
during the term of this Agreement and for a period of five (5) years after
termination of this Agreement, Employee shall not, either directly as a
partner, employer, agent, independent contractor, employee or indirectly
through a corporation, partnership, affiliate, subsidiary or otherwise:
(i) Establish, operate or provide professional medical
services substantially similar to those provided for Employer pursuant
to his employment relationship with Employer ("Prohibited Services")
at any medical office, clinic or other health care facility at any
location within Knox County, Tennessee (the "Restricted Territory");
46
(ii) Publicly announce or offer (by any method) to
provide Prohibited Services within the Restricted Territory;
(iii) Solicit, induce or attempt to induce patients
of any physician (including Employee) associated or affiliated
with Employer to leave the care of physicians associated or
affiliated with Employer; or
Employer acknowledges and agrees that nothing in the foregoing will be
construed to restrict the Employee from (i) delivering physician services that
are unrelated to the fields of hematology or oncology, including the practice
of internal medicine, (ii) teaching hematology or oncology, or (iii) assuming
directorships of hospices following termination of this Agreement.
(b) If Employee violates the covenants set forth in this Section 13,
then the duration of the restrictions contained herein shall be extended an
additional month for each month during which such violation occurred but was
not discovered by Employer, beginning upon the date that Employer learns of the
violation and so notifies Employee in writing.
(c) Employee acknowledges and agrees that the covenants contained in
this Section 13 are necessary to protect the business and goodwill of Employer
and that a breach of these covenants will result in irreparable harm and
continuing damage to Employer. As a result, Employee agrees that if Employee
breaches or threatens to breach these covenants, Employer shall be entitled to
specific performance and/or injunctive or other equitable relief in order to
prevent the continuation of such harm, as well as money damages. Employee
waives any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief.
(d) Employee acknowledges and agrees that if Employee breaches the
covenants contained in this Section 13 after the Fifteenth (15th) anniversary
of this Agreement, and Employer is unable for any reason to obtain a
restraining order from a court of competent jurisdiction within thirty (30)
days after application to enjoin the breach by Employee, it will be difficult
to calculate the precise amount of damages suffered by Employer. As a result,
the parties have determined that, in the event of such a breach, Employer shall
be entitled to liquidated damages equal to the lesser of (i) fifty percent
(50%) of the total amount of professional service revenues attributable to
Employee during the three years prior to the termination of this Agreement, or
(ii) fifty percent (50%) of the total professional services revenues earned by
the Employee from the competing activity during the three years immediately
following such violation. Any amount payable pursuant to the immediately
preceding sentence shall be paid by Employee in three (3) installments no later
than the 15th day of the third month following each of the first three
anniversaries of such violation.
(e) The parties have attempted to limit the provisions of this Section
13 only to the extent necessary to protect each party's interests. However, the
parties hereby agree that, in the event that any provision, section or
subsection of this Section 13 is adjudged by any court of competent
47
jurisdiction to be void or unenforceable, in whole or part, such court shall
modify and enforce any such provision, section or subsection to the extent that
it believes to be reasonable under the circumstances.
14. NOTICES. Any notice required or permitted under the terms of this
Agreement shall be in writing and shall delivered by any reasonable means,
which may include but is not limited to hand delivery or United States Mail.
Any notice given by United States Mail shall be effective on the mailing date.
Notice given by any other reasonable means, including hand delivery, shall be
effective on receipt.
15. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties relating to the subject matter addressed herein. Any prior
or contemporaneous agreement, promise, or representation, whether oral or
written, relating to the subject matter of this Agreement and not expressly set
forth or referenced in this Agreement or a proper amendment hereto shall be of
no force or effect.
16. AMENDMENT. This Agreement may be amended only by the mutual
written consent of the parties, and no oral modification or amendment shall be
permitted.
17. ASSIGNMENT. This Agreement and Employee's rights and obligations
hereunder may not be assigned or transferred by Employee. Employer may assign
this Agreement, and its rights and obligations hereunder, to any person that
controls, is controlled by, or is under common control with Employer, or which
is merged with or into Employer, or that purchases all or substantially all of
the assets of Employer.
18. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the respective parties hereto and their successors and
permitted assigns.
19. WAIVER. Any of the terms or conditions of this Agreement which may
be waived may be waived in writing at any time by any party hereto which is
entitled to the benefit thereof. Waiver of breach of any provision of this
Agreement shall not be deemed a waiver of any other breach of the same or a
different provision.
20. REMEDIES. Nothing in this Agreement shall be construed to limit
the lawful remedies available to either party in the event of breach of any
provision of this Agreement. The provisions of this Agreement and the
performance of each party hereunder may be enforced by any right or remedy
available at law or in equity.
21. SEVERABILITY. In the event that any provision of this Agreement is
rendered invalid or unenforceable, such provision shall be severed from this
Agreement and the remaining provisions of this Agreement shall continue in full
force and effect, provided, however, that if the effect of the severance of
such unenforceable provision is to substantially deprive Employer of the
benefit of the services of Employee or the revenues derived therefrom, or to
substantially deprive
48
Employee of the benefit of compensation for services rendered, this Agreement
may be terminated by the party so deprived immediately upon written notice to
the other party.
22. HEADINGS OR CAPTIONS. The headings or captions provided throughout
this Agreement are for reference purposes only, shall not be considered in
construing the terms and conditions of this Agreement, and shall not in any way
affect the meaning or interpretation of this Agreement.
23. SCHEDULES AND EXHIBITS. The schedules and exhibits referenced in
this Agreement are an essential part of the agreement of the parties, and shall
be considered for all purposes a part of this Agreement. Any and all
counterparts, photocopies, or other reproductions of this Agreement shall
include all of its schedules and exhibits, attached to and made a part of the
Agreement.
24. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the law of the State of Tennessee.
25. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original.
49
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
KNOXVILLE HEMATOLOGY-ONCOLOGY ASSOCIATES, P.L.L.C.
("EMPLOYER")
By:
---------------------------------------
Allan M. Grossman, M.D.
, M.D.
------------------------------------------
("EMPLOYEE")
50
SCHEDULE A
COMPENSATION OF EMPLOYEE
Employee shall be entitled to receive, throughout the term of this
Agreement, compensation determined in accordance with the formula approved from
time to time by the Members of Employer or as otherwise approved by the Members
of Employer.
THIS SCHEDULE IS AN ESSENTIAL PART OF THE AGREEMENT OF THE PARTIES AND MUST BE
INCLUDED WITH ANY AND ALL COPIES OF THE AGREEMENT
(Initial) Employer: ________