EXHIBIT 10(ag)
SETTLEMENT AGREEMENT
This Settlement Agreement (this "AGREEMENT") is entered into this 29th
day of March, 2002 (the "EXECUTION DATE"), by and among Response Oncology, Inc.,
a Tennessee corporation with its principal place of business at 0000 Xxxxxx
Xxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxx 00000 ("RESPONSE"), Oncology & Hematology
Consultants, PLLC, a Tennessee professional limited liability company with its
principal place of business at 000 X. Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx
00000 ("CANCER CARE" or the "PRACTICE") and the members of Cancer Care set forth
on the signature page hereto (the "MEMBERS").
WHEREAS, Response, Cancer Care and its then-members entered into a
service agreement as of November 1, 1996 (the "SERVICE AGREEMENT"), pursuant to
which, among other things, Response provides management and other services to
Cancer Care in exchange for a service fee which includes reimbursement to
Response for expenses of operating the Practice's clinics and percentages of the
Practice's net operating income for base and ancillary services;
WHEREAS, Response and Cancer Care have operated under the Service
Agreement since its effective date, and various disputes have arisen between
them with regard to Response's performance of its duties and the Practice's
cooperation with Response, among others;
WHEREAS, Response filed for protection under Chapter 11 of the United
States Bankruptcy Code (the "BANKRUPTCY CODE") on March 29, 2001 (the "PETITION
DATE"), resulting in a case captioned In re Response Oncology, Inc., No.
01-24607 DSK (the "BANKRUPTCY CASE") in the United States Bankruptcy Court for
the Western District of Tennessee (the "BANKRUPTCY COURT");
WHEREAS, the parties hereto desire to resolve all disputes between them
and sever the relationship between Response, on the one hand, and Cancer Care
and the Members, on the other hand, in an amicable manner, to avoid the expense
and uncertainty of further litigation and to expedite the administration of the
Bankruptcy Case; and
WHEREAS, in furtherance of the foregoing, the parties have executed a
letter of intent dated March 1, 2002 (the "LETTER OF INTENT") and desire to
consummate the transactions contemplated thereby, all as more fully described
herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises hereinafter set forth, and for such other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto promise and agree as follows:
Each party hereto agrees and acknowledges that the recitals set forth
above are incorporated by reference as if fully stated here.
1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions set forth in
this Agreement, including the conditions precedent set forth in Section 9
hereof, as of the
Closing (as defined in Section 4 below), Response agrees to sell, convey,
transfer, assign and deliver to Cancer Care, and Cancer Care agrees to purchase
from Response, for the consideration set forth in Section 3 hereof, free and
clear of all liens, claims and encumbrances, all or substantially all of the
tangible personal property and leasehold improvements that Response holds which,
pursuant to the Service Agreement, are used exclusively by, or made available
for the exclusive use of, Cancer Care in connection with its medical practice,
together with certain books, records, rights to certain prepayments and
deposits, and leases, agreements and contracts of Response which are used or
useful in connection with the operation of Cancer Care's medical practice, but
excluding those items described in Section 1(b) below (collectively, the
"PURCHASED ASSETS").
(a) PURCHASED ASSETS. The Purchased Assets shall include the following:
(i) TANGIBLE PERSONAL PROPERTY. All tangible personal property
(subject to the excluded assets in subsection 1(b) below), including furniture,
fixtures, equipment, and leasehold improvements and real property owned or
leased by Response as of Closing (as defined below), and Response's interests in
leased real property, which, pursuant to the Service Agreement, are used or held
for use exclusively in the operation of Cancer Care's medical practice and which
were acquired by Response exclusively to satisfy certain of its obligations
under the Service Agreement (collectively, the "ACQUIRED ASSETS").
(ii) CONTRACTS. Those leases, contracts and agreements to which
Response is a party, which relate to the Acquired Assets and are set forth on
Schedule 1(a)(ii) hereto, including those listed maintenance agreements for the
Acquired Assets, software license agreements for software used exclusively in
connection with Cancer Care's medical practice, which are in existence as of
Closing and which were entered into by Response solely to satisfy certain of its
obligations under the Service Agreement, together with all rights of Response
under such contracts, including rights to licensed software, and such other
agreement(s) agreed to by the Parties and listed on the aforementioned schedule
(collectively, the "ASSIGNED CONTRACTS"). As of the date hereof, neither
Response nor Cancer Care is aware of any defaults or existing cure obligations
under any of the Assigned Contracts, including but not limited to contracts or
leases to which Cancer Care or any related person or entity is a party. To the
extent any such obligations do exist, Cancer Care shall cure such obligations
(and waive any alleged cures pertaining to 9330 PW Condominium, LLC) at or prior
to the Closing if necessary to assign such Assigned Contracts.
(iii) PREPAIDS. All rights of Response, as of Closing, to all
prepayments, prepaid service contracts (to the extent such contracts are
included in the Assigned Contracts) and all deposits paid by Response under the
Assigned Contracts or with respect to goods or services provided to or on behalf
of Cancer Care, which are described (or of the type described) on Response's
balance sheet for Cancer Care's operations.
(iv) RECORDS. All lists and records of Response pertaining to
suppliers, vendors, personnel and patients doing business with, providing
services to or receiving medical services or goods from Cancer Care, together
with all other books, ledgers, and files of Response
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of any kind and nature which relate exclusively to Cancer Care or Cancer Care's
medical practice.
(v) PRACTICE NAME. All rights of Response in and to the name
"CANCER CARE OF EAST TENNESSEE," "ONCOLOGY & HEMATOLOGY CONSULTANTS, PLLC" and
all variations thereof.
(vi) ACCOUNTS RECEIVABLE. Any and all rights of Response in and to
the accounts receivable of Cancer Care.
(b) EXCLUDED ASSETS. The Purchased Assets shall exclude the items in
Cancer Care's pharmaceutical inventory (including some but not all I.V. fluids)
as of February 28, 2002 (the "INVENTORY"). The Inventory shall remain the
property of Response and, in accordance with the Letter of Intent, has been or
will be promptly returned to Response as soon as reasonably practicable after
February 28, 2002. All supply inventory items (i.e. catheters, needles, gloves,
gowns, reagents, etc.) will be purchased by Cancer Care at Closing. Accordingly,
Response shall sell to Cancer Care, and Cancer Care shall purchase, as of the
Closing, the aforementioned supply inventory items. The amount paid by Cancer
Care at Closing will be the extended cost of such supply items on hand as of
February 28, 2002, less any amount already paid by Cancer Care for these supply
items.
(c) TAX ALLOCATION. The parties hereto agree to allocate the purchase
price for the Purchased Assets (as described in Section 3 below) among the
Purchased Assets for all purposes (including financial accounting and tax
purposes) in accordance with the allocation set forth on Schedule 1(c), attached
hereto and incorporated by reference, and shall make all necessary filings
(including those required under Internal Revenue Code Section 1060) in
accordance with such allocation. In the event Schedule 1(c) is not prepared as
of the Closing, Cancer Care shall prepare such Schedule after the Closing,
subject to Response's reasonable consent, and such Schedule shall be appended
to, and made a part of, this Agreement at that time.
2. TERMINATION OF SERVICE AGREEMENT AND SETTLEMENT OF ALL CLAIMS. For the
consideration recited herein, in addition to purchasing the Purchased Assets,
the parties agree that effective as of the Closing the Service Agreement shall
terminate. In connection with the termination of the Service Agreement, the
parties expressly acknowledge and agree that all obligations of the parties
thereunder, including the non-competition and non-solicitation covenants of
Cancer Care and the Members, and any obligations of Cancer Care and the Members
with respect to the terms of the Members' employment agreements with Cancer
Care, as otherwise set forth therein, shall terminate, in full, as of Closing,
and shall be of no further legal force or effect. Response shall further release
or cause to be released any and all liens, claims and encumbrances on any assets
of Cancer Care and/or the Members, including Cancer Care's accounts receivable
and proceeds paid to Cancer Care with respect thereto, which either secure
Cancer Care's obligations to Response under the Service Agreement or which
secure any obligations of Response.
3. PURCHASE PRICE AND PAYMENT TERMS.
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(a) PURCHASE PRICE / TERMINATION FEE. In consideration for the purchase
and sale of the Purchased Assets, termination of the Service Agreement, and
settlement of all Claims (as defined in Section 8(a) below) between Cancer Care
and/or the Members on the one hand, and Response on the other, Cancer Care shall
pay to Response, at the Closing, a sum of $1,000,000.00 plus an amount to be
determined for supplies Cancer Care kept after February 28 and which it had not
previously paid for, which total amount (less $25,000 to be placed in escrow
pursuant to Section 3(c) below)) shall be sent by wire to AmSouth Bank, as Agent
for senior secured lenders (the "BANKS").
(b) SERVICE FEE AND CLINIC EXPENSES. In addition, Cancer Care shall pay
Response a monthly fee of $64,000 for each of January and February 2002, and
$32,000 for March 2002, all in lieu of the Percentage Portion of the Service Fee
(as defined in the Service Agreement), provided that Cancer Care shall continue
to reimburse Response for the Clinic Expense Portion of the Service Fee (as
defined in the Service Agreement) paid by Response through the Closing.
(c) ESCROW. If, as of Closing, the Final Reconciliation (as defined
below) is not completed, then out of the cash proceeds payable to Response at
Closing by Cancer Care, Response shall be obligated to place in escrow, with an
escrow agent mutually acceptable to Response and Cancer Care, and Cancer Care
shall separately deposit $25,000 in escrow with an escrow agent mutually
acceptable to Cancer Care and Response. The monies so escrowed shall be retained
in escrow after Closing pending completion of and agreement to the Final
Reconciliation. If, as a result of the Final Reconciliation, Response shall be
obligated to refund or pay monies to Cancer Care or Cancer Care shall be
obligated to pay an additional amount to Response, then, upon written notice of
such determination to the applicable escrow agent by either party, such escrow
agent shall disburse, from the escrow created by the party obligated to make
such payment, to the other party the amount such party is obligated to pay
pursuant to subsection (d) below (or, shall disburse to the other party, all
funds held in such escrow if less than the amount due). After such disbursement,
the balance of the monies held in the paying party's escrow, if any, shall be
disbursed to such party. Upon completion and agreement to the Final
Reconciliation, the party not obligated to make a payment to the other party
(the "NON-PAYING PARTY"), as set forth in subsection (d) below, shall be
immediately entitled to all monies held in the Non-Paying Party's escrow
account. Each of Response and Cancer Care shall be separately responsible for
the fees and costs of the escrow agent for each party's escrow and all costs of
creating, maintaining and terminating the same.
(d) RECONCILIATION. As of the Closing, the parties shall conduct a
final reconciliation (the "FINAL RECONCILIATION") as set forth below. If the
information necessary to conduct the Final Reconciliation is not available as of
the Closing, the parties shall conduct such Final Reconciliation as soon
thereafter as is reasonably practicable, but not later than five (5) business
days after the Closing, or such other time as is mutually agreeable to the
parties. The Final Reconciliation shall be conducted as follows:
(i) take the sum of all collections relating to practice revenues
of Cancer Care or any other funds of Cancer Care which are transferred or paid
to Response or deposited in, transferred or swept to any bank account of
Response at any time during the period commencing January 1, 2002 and ending on
the date of the Closing (the "RECONCILIATION PERIOD"); add
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(ii) the Clinic Expenses (as defined in the Service Agreement)
accrued after the Petition Date, but which remained unpaid as of December 31,
2001; add
(iii) all amounts paid by Cancer Care, and required by the
Bankruptcy Court to be paid, as cures of any defaults or breaches under any
Assigned Contracts; subtract
(iv) the sum of any and all Clinic Expenses, Physician Expense (as
defined in the Service Agreement) and any other expenses paid by Response on
behalf of or for the benefit of Cancer Care, including without limitation, any
capital expenses that are paid by Response during the Reconciliation Period;
subtract
(v) the monthly fee actually paid or due Response for all months
during the Reconciliation Period, as described in Section 3(b) above; and
subtract
(vi) the amount by which the Inventory, between and including
January 1, 2002 and February 28, 2002, has decreased.
To the extent the reconciliation calculation described above yields a
positive figure then such amount shall represent an overpayment by Cancer Care
to Response and Response shall remit to Cancer Care an amount equal thereto
within three (3) business days. However, if the reconciliation calculation
described above yields a negative figure then such amount shall represent Cancer
Care's underpayment to Response and Cancer Care shall remit to Response a
payment in an amount equal thereto within three (3) business days provided, that
all amounts payable to Response which arise out of the Final Reconciliation
shall be directly wired to AmSouth Bank, as Agent for the Banks, by Cancer Care
or its escrow agent as the case may be. To the extent the result of the
reconciliation calculation is zero, no payments shall be due. If, after all
disbursements from the escrow accounts described above additional amounts are
owed by one party to the other, such party shall be obligated to pay the
remaining balance, if any, to the other party (or, in the case of payments to
Response, shall be paid by Cancer Care by wire to AmSouth, as Agent for the
Banks) within three (3) business days following completion of the Final
Reconciliation.
The parties acknowledge and agree that the Final Reconciliation is
being calculated on a cash basis (except in Subsection 3(d)(ii) above) and that
for purposes of calculating the Final Reconciliation, the various components of
the foregoing calculation will be calculated on a cash basis (instead of the
accrual method of accounting provided in the Service Agreement). In addition,
the parties agree that for the purposes of the foregoing calculation, Clinic
Expenses (as defined in the Service Agreement), Physician Expenses (as defined
in the Service Agreement) and capital expenditures will be deemed paid once a
check is processed and mailed by Response (or wire transfer is sent) relating to
such expenses and such expenses will continue to be the responsibility of
Response after the Closing if such expenses are included in the Final
Reconciliation.
(e) DISPUTE RESOLUTION. If the parties cannot agree upon the Final
Reconciliation within five (5) business days after the Closing, or such other
time as is mutually agreeable to the parties, then Response's designated
accountant and Cancer Care's designated accountant shall
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each designate an independent accountant and the two independent accountants so
designated shall select a third independent accountant; the final determination
of the items in dispute shall be made by a majority decision of the three
independent accountants so selected. The three accountants selected shall each
be a certified public accountant, who has not (and whose firm has not)
previously been engaged by either party or any affiliates thereof, unless agreed
by both parties. In the absence of missing or undisclosed relevant financial
information, the decision of the three independent accountants will be final and
binding, subject to limited review by the Bankruptcy Court, if applicable, with
respect to the absence of financial information described above. The expense of
the outside independent accountants' review shall be split equally by the
parties. Only the items that are in dispute shall be subject to evaluation and
determination by the three independent accountants. Once the items in dispute
have been so resolved, the parties shall promptly agree upon the Final
Reconciliation, consistent with the party's agreement as to the undisputed
items, and the decision of the three independent accountants on the disputed
items.
(f) ASSUMPTION OF LIABILITIES. As of the Closing Date, Cancer Care
shall assume all outstanding liabilities related to the Practice or the
Purchased Assets, including any and all liabilities of Response relating to the
Practice and all Practice expenses going-forward, including without limitation
Clinic Expenses, Physician Expenses and any other related or similar practice
expenses but excluding any liabilities otherwise assumed by Response in this
Agreement and liabilities for Inventory.
4. CLOSING. The Closing of the transactions contemplated hereby, including
without limitation, the purchase and sale of the Purchased Assets and the
termination of the Service Agreement (the "CLOSING"), shall take place on the
eleventh (11th) day following entry by the Bankruptcy Court of an order
approving this Agreement and the relief requested herein, or the first (1st)
business day after such eleventh (11th) day, if not a business day, or if such
approval is appealed, on the first (1st) business day following the final
dismissal of such appeal (the "CLOSING DATE"). The Closing shall take place at
such place and at such time on the Closing Date as Response and Cancer Care
shall mutually agree. If the Bankruptcy Court does not approve this Agreement
substantially in accordance with its terms, or affirmatively rejects this
Agreement, then this Agreement shall automatically terminate upon the occurrence
of such event, unless otherwise agreed by Cancer Care and Response in writing.
Further, if the Closing has not occurred by May 15, 2002 (or by such later
date(s), if any, agreed to, in writing, by Response and Cancer Care), this
Agreement shall automatically terminate; provided, that, neither Response nor
Cancer Care shall be permitted to so terminate this Agreement if the failure to
close the transactions contemplated herein arises from a breach by such party of
the terms of this Agreement or otherwise results from any willful action or
inaction of such party designed to delay the approval of this Agreement.
(a) RESPONSE DELIVERABLES. At the Closing, Response shall execute and
deliver, or cause to be delivered, to Cancer Care (unless otherwise indicated)
the following instruments, documents and amounts, against execution and delivery
of the items specified in Section 4(b) hereof:
(i) A certified copy of an Order of the Bankruptcy Court approving
this Agreement;
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(ii) All amounts payable to Cancer Care in accordance with
Section 3 hereof, by wire transfer or payment in immediately available funds.
(iii) Delivery of the Response escrow amount described in Section
3(c) hereof to the applicable escrow agent.
(iv) Such assignment documents and/or Order(s) from the Bankruptcy
Court authorizing the assignment and assumption of the Assigned Contracts.
(v) A xxxx of sale and/or assignment instrument(s) conveying title
to any other Purchased Assets to be transferred hereunder not already conveyed
by the deliverables described in subsections 4(a)(1) and (2) above, free and
clear of liens and encumbrances.
(vi) Corporate resolutions authorizing the transaction provided for
herein.
(vii) All other documents reasonably requested by Cancer Care to
accomplish the transactions hereunder.
(b) CANCER CARE DELIVERABLES. At the Closing, Cancer Care shall execute
and deliver, or cause to be delivered, to Response (unless otherwise indicated)
the following instruments and documents against execution and delivery of the
items specified in Section 4(a) hereof:
(i) All amounts payable to Response in accordance with Section 3
hereof, by wire transfer or payment in immediately available funds.
(ii) Delivery of the Cancer Care escrow amount described in Section
3(c) hereof to the applicable escrow agent.
(iii) Such assignment documents authorizing the assignment and
assumption of the Assigned Contracts.
(iv) Consents from members authorizing the transaction provided for
herein.
(v) All other documents reasonably requested by Response to
accomplish the transactions hereunder.
5. REPRESENTATIONS AND WARRANTIES OF RESPONSE. Response represents and warrants
to Cancer Care that, except as set forth on the Disclosure Schedule attached
hereto as Schedule 5.0 and incorporated herein by reference (which Disclosure
Schedule makes explicit reference to the particular representation or warranty
as to which exception is taken, which in each case shall constitute the sole
representation and warranty as to which such exception shall apply):
(a) ORGANIZATION, QUALIFICATION, AND POWER OF RESPONSE. Response is a
duly organized and validly existing corporation under the laws of the State of
Tennessee.
(b) VALIDITY. Response has the full legal power and authority to
execute, deliver and perform the Agreement and all other agreements and
documents necessary to consummate the
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contemplated transactions and all actions of Response necessary for such
execution, delivery and performance have been or will have been duly taken by
Closing. The Agreement and all agreements related to this transaction have been
duly executed and delivered by Response and constitute the legal, valid and
binding obligation of Response enforceable in accordance with their terms
(subject as to enforcement of remedies to the discretion of courts in awarding
equitable relief and to applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting the rights of creditors generally). Any
other agreement contemplated to be entered into by Response in connection with
the transactions contemplated by the Agreement, when executed and delivered,
will constitute the legal, valid and binding obligation of Response, enforceable
in accordance with its respective terms (subject as to enforcement of remedies
to the discretion of courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
the rights of creditors generally). Other than approval by the Bankruptcy Court,
the execution and delivery by Response of the Agreement and the performance of
its obligations under the Agreement, including the sale and delivery of the
Purchased Assets (including the assignment of the Assigned Contracts) do not
require any action or consent of any party other than Response pursuant to any
contract, agreement or other understanding of Response or pursuant to any order
or decree to which Response is a party or to which any of Response's properties
or assets are subject, and, will not violate any provision of law, the Articles
of Incorporation or Bylaws of Response, any of the Assigned Contracts, any order
of any court or other agency of the government, or any indenture, agreement or
other instrument to which Response or any of its properties or assets are bound
or conflict with, result in a breach of or constitute (with due notice or lapse
of time or both) a default under any of the Assigned Contracts or any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, claim encumbered by any nature whatsoever upon any of the Purchased
Assets.
(c) ASSETS FREE AND CLEAR. As of Closing, the Purchased Assets,
pursuant to an order of the Bankruptcy Court, will be deemed free and clear of
any lien, claim or encumbrance of any kind whatsoever.
(d) ASSIGNED CONTRACTS. Each of the Assigned Contracts is a valid and
existing contract or agreement, and as of Closing, pursuant to an order of the
Bankruptcy Court, the Assigned Contracts will be deemed free of default.
(e) TRANSFERRED EMPLOYEES. Set forth on Schedule 5(e) hereto is a list
of all Transferred Employees, their respective titles and severance
compensation, if any, status as either full-time or part-time employees and the
aggregate accrued, but unused vacation time to which each of the Transferred
Employees is entitled as of the date of this Agreement (and the rate by which
additional paid vacation leave will accrue after the date of this Agreement).
(f) FEES AND COMMISSIONS. Response has not agreed to pay or become
liable to pay any broker's, finder's, or originator's fees or
commissions by reason of services alleged to have been rendered
for, or at the instance of, it in connection with this Agreement
or the transactions contemplated hereby.
(g) USE OF CASH COLLATERAL. Response will have the full right and
ability under all relevant court orders, including all cash
collateral orders, to fund the payroll of
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Cancer Care' non-physician employees and Response employees at
Cancer Care through Closing.
(h) DISCLOSURE. No representation or warranty by Response in this
Agreement, and no exhibit, schedule, or certificate furnished or to be furnished
by Response pursuant hereto, (I) contains any untrue statement of a material
fact, or (II) omits to state a fact required to be stated therein or necessary
to make the statements contained herein or therein, in light of the
circumstances in which they were made, not materially misleading.
6. REPRESENTATIONS AND WARRANTIES OF CANCER CARE. Cancer Care represents and
warrants to Response that except as set forth on the Disclosure Schedule
attached hereto as Schedule 6.0, and incorporated by reference (which Disclosure
Schedule makes explicit reference to the particular representation or warranty
as to which exception is taken, which in each case shall constitute the sole
representation and warranty as to which such exception shall apply):
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER OF CANCER CARE.
Cancer Care is (1) a duly organized and validly existing professional limited
liability company under the laws of the State of Tennessee; and (2) qualified to
do business and is in good standing in Tennessee.
(b) VALIDITY. Each of Cancer Care and the Members has the full legal
power and authority to execute, deliver and perform the Agreement and all other
agreements and documents necessary to consummate the contemplated transactions
and all corporate actions of Cancer Care necessary for such execution, delivery
and performance have been or will have been duly taken by Closing. The Agreement
and all agreements related to this transaction have been duly executed and
delivered by each of Cancer Care and the Members, to the extent parties thereto,
and constitute the legal, valid and binding obligation of Cancer Care and/or the
Members, as the case may be, enforceable in accordance with their terms (subject
as to enforcement of remedies to the discretion of courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the rights of creditors generally). Any other agreement
contemplated to be entered into by Cancer Care in connection with the
transactions contemplated by the Agreement, when executed and delivered, will
constitute the legal, valid and binding obligation of Cancer Care, enforceable
in accordance with its respective terms (subject as to enforcement of remedies
to the discretion of courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
the rights of creditors generally).
(c) FEES AND COMMISSIONS. Neither Cancer Care or the Members has agreed
to pay or become liable to pay any broker's, finder's, or originator's fees or
commissions by reason of services alleged to have been rendered for, or at the
instance of, Cancer Care and/or the Members in connection with this Agreement
and the transactions contemplated hereby.
(d) OTHER APPROVALS. All consents, approvals, qualifications, orders,
or authorizations of, or filings with, any governmental authority, including any
court or other third party, required in connection with Cancer Care's valid
execution, delivery, or performance of
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this Agreement, or the consummation of any transaction contemplated by this
Agreement, shall have been duly made and obtained and shall be effective on and
as of the Closing Date.
(e) DISCLOSURE. No representation or warranty by Cancer Care and/or the
Members in this Agreement, and no exhibit, schedule, or certificate furnished or
to be furnished by Cancer Care and/or the Members pursuant hereto, (I) contains
any untrue statement of a material fact or (II) omits to state a fact required
to be stated therein or necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not materially
misleading.
7. PRE-CLOSING COVENANTS.
(a) MUTUAL COVENANTS.
(i) APPROVAL OF SETTLEMENT AGREEMENT BY BANKRUPTCY COURT. As soon
as reasonably practicable after execution of this Agreement, the parties hereto
agree to submit this Agreement to the Bankruptcy Court under Rule 9019 of the
Federal Rules of Bankruptcy Procedure (the "BANKRUPTCY RULES"), and Sections
105, 363 and 365 of the Bankruptcy Code and to take all actions reasonably
necessary to obtain Bankruptcy Court approval of this Agreement and the relief
contemplated herein.
(ii) MANAGEMENT OF MEDICAL PRACTICE. From the date hereof through
the Closing, the Parties shall continue to perform their obligations under the
Service Agreement in the ordinary course (except as otherwise contemplated by
this Agreement and the Letter of Intent, including Cancer Care's purchase and
acquisition of the Practice's pharmaceuticals after February 28, 2002) and shall
refrain from entering into or consummating any transactions or engaging in any
activities out of the ordinary course of business (to the extent such
transactions or activities relate to the Service Agreement and/or Cancer Care's
medical practice) without the prior written consent of the affected party.
(b) RESPONSE COVENANTS. Without limiting the foregoing, Response
expressly agrees that, without the prior written consent of Cancer Care, until
Closing (or, if sooner, until termination of this Agreement), Response shall
not:
(i) advance additional monies to or on behalf of Cancer Care out
of the ordinary course of business, as established by past practice;
(ii) pledge or encumber any of the Purchased Assets or incur any
indebtedness or obligations which are or will be secured by a lien on any of the
Purchased Assets or on any assets of Cancer Care, other than property that is
already pledged or encumbered;
(iii) sell, transfer or dispose of any of the Purchased Assets
without the prior written consent of Cancer Care, except for the sale, transfer
or disposal of pharmacy and laboratory supplies and inventory sold or consumed
in the ordinary course, consistent with past practices, and in accordance with
the terms of the Service Agreement; or
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(iv) execute, after the date of this Agreement, any new contracts,
leases or agreements with respect to Cancer Care's medical practice or renew,
extend, amend, modify, sign or pledge any existing contracts, leases and
agreements included with the Assigned Contracts (or which, if in existence as of
Closing, would be within the Assigned Contracts), other than the pledge of
contracts, leases and agreements already pledged or collateralized.
In addition, Response agrees to use its reasonable efforts to maintain
all contractual arrangements with respect to Cancer Care's medical practice in
effect as of February 28, 2002, and shall maintain all insurance obtained or
maintained with respect to any assets or property used or held for use
exclusively in Cancer Care's medical practice, to the extent in place as of
February 28, 2002. Response also agrees to direct or instruct its employees
rendering services on Response's behalf at Cancer Care's facility or facilities,
to abide by the instructions and directions of the Members with respect to the
billing of services rendered by Cancer Care and the collection of fees for
services rendered and goods sold; provided, that, such instructions or
directions do not violate the provisions of Section 7(c) below.
(c) CANCER CARE'S COVENANTS. Without limiting any other covenants set
forth herein, Cancer Care and Members expressly agree that, without the prior
written consent of Response, until Closing (or, if sooner, until termination of
this Agreement), Cancer Care and the Members shall not:
(i) fail to remit payments of any components of the Service Fee to
Response consistent with past practices and the terms of the Service Agreement
(except as otherwise provided for herein) and deposit/deliver all cash amounts
required by the Service Agreement;
(ii) alter their ordinary course, historical pattern of conduct in
collecting and attempting to collect accounts receivable (unless such different
conduct is intended to result in an overall increase in collections of
outstanding accounts receivables);
(iii) alter their ordinary course, historical pattern of conduct in
billing for services rendered (including but not limited to physician and
ancillary services);
(iv) materially increase or alter the historical patterns of the
pharmaceuticals and supplies which they request Response to purchase (and shall
not request or purchase extraordinary or unusual amounts of pharmaceuticals,
whether or not supported by any historical pattern, without Response's prior
consent);
(v) alter their ordinary course, historical pattern of conduct in
hours of work or in treating patients (including but not limited to the number,
type and financial ability of patients, and use of ancillary services); or
(vi) approve, implement or make any capital expenditure without the
written approval of Response.
8. OTHER AGREEMENTS.
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(a) MUTUAL RELEASES.
(i) RESPONSE RELEASE. Upon and following Closing, Response, on
behalf of itself and its successors and assigns, and on behalf of any person
claiming by or through Response, does hereby forever and absolutely release and
discharge Cancer Care, the Members and each of Cancer Care's and the Members'
directors, officers, shareholders, representatives, employees, agents,
attorneys, parents, subsidiaries and other affiliated entities (collectively,
the "CANCER CARE AFFILIATES") from any and all claims, demands, losses, damages,
causes of actions or liabilities of any kind or nature, whether known or
unknown, fixed or contingent, filed, unfiled or scheduled (collectively, the
"CLAIMS"), that Response now has or may have ever had from the beginning of the
world to Closing against Cancer Care, the Members or any Cancer Care Affiliates,
excluding only those Claims which Response may have against Cancer Care or the
Members arising out of or attributable to a breach of any provisions of this
Agreement.
(ii) CANCER CARE AND MEMBERS' RELEASES. Upon and following Closing,
Cancer Care and the Members, both individually and in such Members' capacities
as officers or directors of Cancer Care, on behalf of each of such party, each
such party's successors and assigns, and on behalf of any person claiming by or
through each such party, does hereby forever and absolutely release and
discharge Response and each of Response's directors, officers, shareholders,
representatives, employees, agents, attorneys, parents, subsidiaries and other
affiliated entities (collectively, the "RESPONSE AFFILIATES") from any and all
Claims that Cancer Care or the Members now has or may have ever had from the
beginning of the world to Closing against Response or any Response Affiliates,
including without limitation any and all Claims by, on behalf of or relating to
9330 PW Condominium LLC but excluding only those Claims which Cancer Care or the
Members may have against Response arising out of or attributable to a breach of
any provisions of this Agreement. Drs. Xxxxxxxxx, Xxxxx and XxXxxxxxx shall
further release any and all of their Claims against Response arising out of or
in connection with the promissory notes issued by Response in connection with
execution of the Service Agreement on or about November 1996, excluding only
those Claims which Cancer Care or the Members may have against Response arising
out of or attributable to a breach of any provisions of this Agreement.
(iii) DISMISSAL OF SUITS. At Closing, each of Cancer Care and the
Members, individually, and Response, to the extent applicable, shall dismiss
with prejudice all claims and/or contested matters, suits or other actions that
any such party has brought as of Closing, or which could have brought as of
Closing or can bring at or prior to Closing against any such other party (or
against any Cancer Care Affiliates or Response Affiliates, as the case may be).
As of the Closing, Response shall release all liens on the accounts receivable
of Cancer Care. No additional payments other than those expressly provided
herein shall be paid for such releases or suit dismissals.
(b) EMPLOYEES. As of Closing, Response shall transfer the employment of
all of its personnel who physically provide services to Cancer Care, on behalf
of Response, in accordance with the Service Agreement, at Cancer Care's medical
facilities in Eastern Tennessee (individually, a "TRANSFERRED EMPLOYEE" and,
collectively, the "TRANSFERRED EMPLOYEES"). Cancer Care and the Members
acknowledge that it is their present expectation to employ all or
12
substantially all of the Transferred Employees, however, Response acknowledges
that Cancer Care shall have no obligation to hire any specific Transferred
Employee.
Cancer Care and the Members agree to use their reasonable efforts to
cause all of the Transferred Employees whom Cancer Care offers to employ after
Closing to waive any claims that such employees have or may have against
Response for severance benefits or otherwise. Cancer Care agrees to assume, with
respect to all of the Transferred Employees employed by Cancer Care after
Closing, all of such Transferred Employee's unused, paid vacation leave (as of
Closing) accrued while employed by Response.
(c) TERMINATION OF NON-COMPETE. As of Closing, all non-compete and
non-solicitation obligations and covenants of Cancer Care, the Members and the
Transferred Employees hired by Cancer Care after Closing shall be terminated and
be of no further legal force or effect.
9. CONDITIONS TO CLOSING.
(a) CONDITIONS PRECEDENT TO OBLIGATIONS OF RESPONSE. Response's
obligation to consummate the purchase of the Purchased Assets and the other
transactions contemplated to occur in connection with the Closing is subject to
the satisfaction of each condition precedent listed below (unless explicitly
waived by Response):
(i) The Bankruptcy Court shall have approved this Agreement and the
relief contemplated herein.
(ii) Each and every representation and warranty made by Cancer
Care and the Members is true in all material respects when made and is true as
of the Closing Date in all material respects as if originally made on the
Closing Date.
(iii) All material obligations of Cancer Care and the Members to be
performed between the Execution Date and the Closing Date have been performed.
(iv) All documents, instruments and amounts required to have been
delivered by Cancer Care and/or the Members pursuant to Section 4(b) hereof, and
all actions required to have been taken by Cancer Care and/or the Members, shall
have been delivered or taken (unless otherwise waived by Response) as
applicable, including without limitation payment of the consideration described
in Section 3 hereof and delivery of all releases.
(v) No suit or proceeding shall be pending by any governmental
agency on any grounds, to restrain, enjoin or hinder the transactions
contemplated under this Agreement.
(vi) All corporate and other proceedings to be undertaken by Cancer
Care and the Members in connection with the transactions contemplated hereby and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Response and its counsel, and Response and its counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they reasonably may request.
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(b) CONDITIONS PRECEDENT TO OBLIGATIONS OF CANCER CARE. Cancer Care's obligation
to consummate the purchase of the Purchased Assets and the other transactions
contemplated to occur in connection with the Closing is subject to the
satisfaction of each condition precedent listed below (unless explicitly waived
by Cancer Care):
(i) The Bankruptcy Court shall have approved this Agreement and the
relief contemplated herein.
(ii) Each and every representation and warranty made by Response is
true in all material respects when made and is true as of the Closing Date in
all material respects as if originally made on the Closing Date.
(iii) All material obligations of Response to be performed between
the Execution Date and the Closing Date have been performed.
(iv) All documents, instruments and amounts required to have been
delivered by Response pursuant to Section 4(a) hereof, and all actions required
to have been taken by Response, shall have been delivered or taken (unless
otherwise waived by Cancer Care) as applicable.
(v) No suit or proceeding shall be pending by any governmental
agency on any grounds, to restrain, enjoin or hinder the transactions
contemplated under this Agreement.
(vi) All corporate and other proceedings to be undertaken by
Response in connection with the transactions contemplated hereby and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Cancer Care and its counsel, and Cancer Care and its counsel shall
have received all such counterpart originals or certified or other copies of
such documents as they reasonably may request.
10. ACCESS TO RECORDS.
(a) CANCER CARE ACCESS. At all times following the execution date
hereof and up to Closing, in furtherance of Cancer Care's acquisition of the
Purchased Assets and the termination of the Service Agreement, Response agrees
to provide Cancer Care, and its legal, accounting and financial representatives,
access to and, if requested, copies of such of Response's books, records,
documents and information, including contracts, leases and agreements, to the
extent they relate to the Purchased Assets or Cancer Care's medical practice, as
Cancer Care may reasonably request, from time-to-time. All costs incurred in
connection therewith by Cancer Care or any of its representatives, shall be
borne solely by Cancer Care.
(b) RESPONSE ACCESS. After Closing, Response (or its successor) and its
legal, accounting and financial representatives shall have such reasonable
access to and, if requested, copies of all records within Cancer Care's or the
Members' control or possession as is reasonably required for purposes of the
administration of its bankruptcy estate, or as otherwise reasonably needed,
subject to applicable laws or the provisions of any agreement to which Cancer
Care is subject to, including laws restricting access to confidential patient
information.
14
All costs incurred in connection therewith by Response or any of its
representatives shall be borne solely by Response.
11. CONFIDENTIALITY. The parties hereto have received and hereafter may receive
various financial and other information concerning the activities, business,
assets, and properties of the other parties hereto. The parties agree that (a)
all such information thus received by a party hereto shall not at any time, or
in any way or manner, be utilized by such party for its respective advantage or
disclosed by it to others for any purpose whatsoever; and (b) the parties shall
take all reasonable measures to assure that no employee or agent under its
respective control shall at any time improperly use or disclose any information
described in this Section. This Section shall not apply to (I) any such
information that was known or available to a party prior to its disclosure to
such party in accordance with this Section or was, is, or becomes generally
available to the public other than by disclosure by the party or any of its
respective employees or agents in violation of this Section; (II) any disclosure
that such party makes to any regulatory agency pursuant to that party's
obligations of disclosure to such agency; (III) any disclosure that is necessary
or appropriate in obtaining any consent or approval required for the
consummation of the transactions contemplated by this Agreement; or (IV) any
disclosure required by or necessary or appropriate in connection with legal
proceedings. In the event this Agreement is terminated prior to the Closing, the
Parties agree that they shall promptly return to the originating party the
confidential information of the other.
12. TERMINATION.
(a) This Agreement may, by notice given prior to or at the Closing, be
terminated:
(i) by Cancer Care, if a material breach of this Agreement has
been committed by Response and such breach has not been expressly waived by
Cancer Care in writing and has not been cured by the earlier of (A) ten (10)
days after written notice of such breach has been provided to Response, or (B)
the Closing Date;
(ii) by Response, if a material breach of this Agreement has been
committed by Cancer Care and such breach has not been expressly waived by
Response in writing and has not been cured by the earlier of (A) ten (10) days
after written notice of such breach has been provided to Cancer Care, or (B) the
Closing Date;
(iii) by Cancer Care if any of the conditions in Section 9(b) have
not been satisfied as of the Closing Date or if satisfaction of such condition
is or becomes impossible (other than through failure of Cancer Care to comply
with its obligations under this Agreement) and Cancer Care has not expressly
waived such condition in writing on or before the Closing Date;
(iv) by Response, if any of the conditions in Section 9(a) have not
been satisfied as of the Closing Date or satisfaction of such condition is or
becomes impossible (other than through failure of Response to comply with its
obligations under this Agreement) and Response has not expressly waived such
condition in writing on or before the Closing Date; or
(v) by written mutual consent of Response and Cancer Care.
15
(b) Termination of this Agreement shall be without prejudice to any
other right or remedy of either of the Parties hereto. The parties agree that
except as modified by this Agreement and the Letter of Intent, the Service
Agreement shall remain in effect until the Closing of the transactions
contemplated hereby. In the event the transactions contemplated herein are not
approved by the Bankruptcy Court or this Agreement is terminated for any reason,
the Service Agreement shall continue in full force and effect, retroactive to
January 1, 2002.
13. MISCELLANEOUS.
(a) COSTS. Each party will be responsible for its own legal, accounting
and other expenses incurred in connection with this Agreement and the
transactions contemplated herein.
(b) INTEGRATED AGREEMENT. This Agreement constitutes the entire
understanding of the parties in respect of the subject matter hereof and
supersedes and replaces all prior understandings and agreements of the parties,
oral or written, in respect of the subject matter of the Agreement, including
the Letter of Intent. The provisions of this Agreement may be amended,
supplemented, waived, or changed only by a writing signed by the party against
whom enforcement of any such amendment, supplement, waiver, or modification is
sought and making specific reference to this Agreement.
(c) ASSIGNMENT. Neither party may assign its rights and/or delegate its
obligations hereunder without the prior written consent of the other party,
which consent shall not be unreasonably withheld.
(d) NOTICES. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
facsimile and telegraphic communication) and shall be (as elected by the person
giving such notice) hand delivered by messenger or courier service,
telecommunicated (to be followed by hard copy by overnight delivery), or mailed
by registered or certified mail (postage prepaid), return receipt requested,
addressed to such address as any party may designate by notice complying with
the terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery, and (b) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed. All
notices in respect of this Agreement shall be provided to each of the following
individuals or entities:
If to Response:
Response Oncology, Inc.
0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx XxXxxxxxx
Facsimile: 000-000-0000
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
16
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxx, Xx.
Facsimile: 000-000-0000
If to Cancer Care:
Oncology & Hematology Consultants, PLLC
000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxxx, M.D., President
Facsimile:
with a copy to:
Xxxxxxx Xxxxx
Gentry, Tipton, Xxxxx & XxXxxxxx, P.C.
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile: 000-000-0000
and
Xxxxxx Xxxxxxx
Haynes, Meeks, Xxxxxxx & Xxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile: 865-546-8731
If to the Banks:
AmSouth Bank, as Agent for the Banks
Special Assets Department
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Xx.
Facsimile: 000-000-0000
with a copy to:
Waller, Lansden, Xxxxxx & Xxxxx, PLLC
Nashville City Center
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
17
Attention: Xxxxxx X. Guy, Esq.
Facsimile: 615-244-6804
(e) SEVERABILITY. If any part of this Agreement or any other Agreement
entered into pursuant hereto is contrary to, prohibited by or deemed invalid
under applicable law or regulation, such provision shall (to the extent such
omission will not materially alter the remaining terms of this Agreement) be
inapplicable and deemed omitted to the extent so contrary, prohibited, or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given full force and effect so far as possible.
(f) WAIVER. The failure or delay of any party at any time to require
performance by another party of any provision of this Agreement, even if known,
shall not affect the rights of such party to require performance of that
provision or to exercise any right, power, or remedy hereunder, and any waiver
by any party of any breach of any provision of this Agreement shall not be
construed as a waiver of the provision itself, or a waiver of any right, power,
or remedy under this Agreement. No notice to or demand on any party in any case
shall, of itself, entitle such party to any other or further notice or demand in
similar or other circumstances.
(g) THIRD PARTY BENEFICIARIES. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any person other than the parties hereto and their
respective legal representatives, successors and permitted assigns, nor is
anything in this Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement, nor shall any
provision give any third persons any right of subrogation or action over or
against any party to this Agreement.
(h) EXCLUSIVE REMEDIES. No remedy herein conferred upon any party is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. No single or partial exercise by any party of any right, power, or
remedy hereunder shall preclude any other or further exercise thereof.
(i) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee. Any and all disputes that
may arise with respect to this Settlement Agreement excluding disputes
concerning the computation of the Final Reconciliation, which disputes are to be
resolved in accordance with Section 3(e) above shall be adjudicated by the
Bankruptcy Court to the extent that its jurisdiction permits, and neither party
shall object to the jurisdiction of the Bankruptcy Court to hear such disputes
or to its jurisdiction over their person.
(j) NO SURVIVAL. The representations and warranties of the parties
shall not survive beyond the completion of and agreement to the Final
Reconciliation.
(k) FURTHER ASSURANCES. In addition to the actions, documents, and
instruments specifically required to be taken or delivered hereby, prior to and
after the Closing and without further consideration, the parties hereto shall
execute, acknowledge, and deliver such other assignments, transfers, consents,
and other documents and instruments and take such other actions
18
as any other party, or their counsel, may reasonably request in order to
complete and perfect the transactions contemplated by this Agreement.
(l) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(m) HEADINGS. The use in this Agreement of paragraph headings is for
convenience only and is not intended to limit or enlarge the rights of any
party.
(n) SUCCESSORS AND ASSIGNS. The terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assign, including, but not limited to any trustee
appointed in the Chapter 11 Bankruptcy Case of Response or in any Chapter 7 case
to which the Chapter 11 Bankruptcy Case of Response may be converted. The terms
of this Agreement shall survive and may not be modified in any way by
confirmation of a Chapter 11 plan of reorganization in the bankruptcy case of
Response, regardless of who the proponent of such plan(s) may be.
Signature Page Follows
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
RESPONSE ONCOLOGY, INC.
By: /s/ Xxxxxxx XxXxxxxxx
------------------------------------
Name: Xxxxxxx XxXxxxxxx
Title: President & CEO
ONCOLOGY & HEMATOLOGY CONSULTANTS, PLLC
By: /s/ Xxxxxxx X. Xxxxxxxxx, M.D.
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, M.D.
Title: Managing Partner
MEMBERS
/s/ Xxxxxxx X. Xxxxxxxxx, M.D.
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, M.D.
/s/ Xxxx X. Xxxxx, M.D.
----------------------------------------
Name: Xxxx X. Xxxxx, M.D.
/s/ Xxxx X. XxXxxxxxx, M.D.
----------------------------------------
Name: Xxxx X. XxXxxxxxx, M.D.
