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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 20, 1996
SEAFIELD CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
MISSOURI
(State or other jurisdiction of incorporation)
0-16946 43-1039532
(Commission File Number) (I.R.S. Employer Identification No.)
2600 Grand Blvd., Suite 500, P.O. Box 410949, Kansas City, MO 64141
(Address of principal executive offices, including Zip Code)
(816) 842-7000
(Registrant's telephone number, including Area Code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On June 20, 1996, the Registrant's 54% owned subsidiary, Response
Oncology, Inc. ("Response"), acquired (the "Transaction") from
Jeffrey L. Paonessa, M.D. (the "Seller") 100% of the outstanding common stock
(the "Acquired Stock") of Jeffrey L. Paonessa, M.D., P.A. (the "Acquired
Business"). The total consideration (the "Purchase Price") paid for the
Acquired Stock was approximately $9.5 million in cash, $5.1 million in
Response's unsecured, subordinated promissory note payable on or before
December 1, 1998, with the balance being paid by delivery of 196,154 restricted
shares of common stock of Response ("Common Stock"), valued at approximately
$1.9 million. The Note may, at the election of the holder, be paid in shares
of Response Common Stock based on a price of $15.50 per share. The delivery of
the Response Common Stock as partial consideration for the Acquired Stock,
the Note and the Response Common Stock potentially issuable by Response in full
or partial satisfaction of the Note have not been registered under the
Securities Act of 1933 in reliance upon an exemption from such registration.
The Acquired Stock was purchased by Response directly from the
Seller. At the time of the Transaction, the Seller had no material
relationship with Response. The assets of the Acquired Business include
medical equipment, accounts receivable, office furnishings and fixtures, rights
under a certain lease for certain office space, employee base and expertise,
know-how in respect of management of a medical practice in the oncology and
hematology specialty, computer systems, accounting books and records and other
intangible assets. Such assets were historically used in the conduct by the
Acquired Business of a group medical practice in the oncology and hematology
specialty.
Simultaneous with the consummation of the Transaction, a newly-formed
professional association wholly owned by the Seller and formed to continue the
group medical practice theretofore conducted by the Seller (the "New PA")
entered into a long-term management services agreement (the "Service
Agreement") with Response providing for the management by Response
of the non-medical aspects of the practice thereafter conducted by the New PA.
Pursuant to the Service Agreement, Response will manage the non-medical
aspects of the New PA's business and will permit the New PA to use office
space, equipment and other assets owned or leased by Response in exchange
for an agreed-upon management fee.
The cash portion of the Purchase Price was provided from the proceeds
of a draw on Response's unsecured acquisition credit facility provided
through a syndicate of commercial banks led by NationsBank of Tennessee, N.A.
Borrowings under such facility bear interest at a rate equal to LIBOR plus 2
5/8%, and are payable on or before May 31, 1998.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements: none
(b) Pro Forma Financial Information: none
(c) Exhibits: Form of the following agreement filed with Response's
current report on Form 8-K:
99.1. Stock Purchase Agreement by and among Response Oncology,
Inc., Jeffrey L. Paonessa, M.D. and J. Paonessa, M.D., P.A.
dated as of June 19, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SEAFIELD CAPITAL CORPORATION
Dated: July 9, 1996 By: /s/ Steven K. Fitzwater
----------------------------
Steven K. Fitzwater
Vice President, Chief
Accounting Officer
and Secretary
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EXHIBIT 99.1
================================================================================
STOCK PURCHASE AGREEMENT
BY AND AMONG
RESPONSE ONCOLOGY, INC.,
JEFFREY L. PAONESSA, M.D.
AND
JEFFREY L. PAONESSA, M.D., P.A.
June 19, 1996
================================================================================
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of June 19, 1996, by and among
RESPONSE ONCOLOGY, INC., a Tennessee corporation (the "Purchaser"), JEFFREY L.
PAONESSA, M.D., an individual resident of the State of Florida (the "Seller")
and J. PAONESSA, M.D., P.A., a Florida professional association (the "Group").
W I T N E S S E T H:
WHEREAS, the Seller owns in the aggregate 1,000 shares (the "Shares")
of the common stock, par value $1.00, per share of Response Oncology of St.
Petersburg, Inc., a Florida business corporation (the "Corporation"); and
WHEREAS, the Seller desires to sell and Purchaser desires to purchase
the Shares on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and promises herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. The following terms, as used herein, have the
following meanings:
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504 or any similar group defined under a similar provision of
state, local or foreign law.
"Applicable Rate" means the prime or base rate of interest announced
from time to time by NationsBank of Tennessee, N.A., Nashville, Tennessee plus
two percent (2%).
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction of which the Seller has Knowledge that
forms or could form the basis for any specified consequence.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
"Corporation" has the meaning set forth in the first recital above.
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"Debt" means any liability except accounts payable and accrued
liabilities arising in the ordinary course of business.
"Deferred Intercompany Transaction" has the meaning set forth in
Treasury Regulation Section 1.1502-13.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Occupational Safety and Health Act
of 1970, the Medical Waste Tracking Act of 1988, the U. S. Public Vessel
Medical Waste Anti-Dumping Act of 1988, the Marine Protection, Research and
Sanctuaries Act and Human Services, National Institute for Occupational Safety
and Health, Infections Waste Disposal Guidelines, Publication No. 88-119, each
as amended, together with all other laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof) concerning pollution or protection of the environment, public health
and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of medical wastes,
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excess Loss Account" has the meaning set forth in Treasury Regulation
Section 1.1502-19.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statements" has the meaning set forth in Section 4(f)
below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Group" has the meaning set forth in the initial paragraph of this
Stock Purchase Agreement, which entity has been organized for the purpose of
conducting a medical practice.
"Knowledge" means to the best of one's knowledge .
"Liability" means any liability or obligation to pay money (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.
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"Note" means the promissory note of the Purchaser payable to the order
of the Seller in the form set forth as Exhibit 2(b)(i).
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 4(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in
Section 4(f) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section
4(f) below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" means the Purchaser, the Seller or the Group.
"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(a) below.
"Purchaser" has the meaning set forth in the initial paragraph of this
Stock Purchase Agreement and, after Closing (and as relates to Section 9(b)
regarding indemnification), shall mean Response Oncology, Inc. and any
subsidiary or Affiliate thereof, (including, without limitation, the
Corporation).
"Purchaser's Disclosure Letter" has the meaning set forth in Section
3(b) below.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Response Stock" means the common stock of the Purchaser, $.01 par
value per share.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanics', materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable, and (c) other
liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Disclosure Letter" has the meaning set forth in Section 3(a)
below.
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"Service Agreement" means the Service Agreement among the Purchaser,
the Seller and the Group dated as of June 19, 1996.
"Shares" means all of the issued and outstanding shares of the Common
Stock, par value $1.00 per share, of the Corporation.
"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 any Tax, including any schedule
or attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9(c) below.
2. Purchase and Sale of Shares.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase from the Seller, and the
Seller agree to sell to the Purchaser, all of the Shares for an aggregate price
(the "Purchase Price") of Fourteen Million Five Hundred Thirty-seven Thousand
Five Hundred Dollars ($14,537,500.00), less the amount of any Debt of the
Corporation remaining unpaid at the time of Closing (hereinafter defined).
(b) Payment of Purchase Price. The Purchaser shall pay or satisfy the
Purchase Price in the following manner: (i) Nine Million Four Hundred
Thirty-seven Thousand Five Hundred Dollars ($9,437,500.00) in cash to the
Seller at Closing (reduced by the amount of Debt of the Corporation remaining
unpaid at the time of Closing), and (ii) Five Million One Hundred Thousand
Dollars ($5,100,000.00) by issuance and delivery of the Note to the Seller. In
addition to the foregoing, at the time of Closing, the Purchaser shall issue
and deliver to the Seller as additional consideration 196,154 shares of
Response Stock to the Seller, which shares shall be subject to restrictions on
transfer arising under the Securities Act.
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Patel, Moore &
O'Connor, P.A., 18167 U.S. Highway 19 North, Suite 150, Clearwater, Florida,
commencing at 1:00 p.m. local time on June 19, 1996, or such other date as the
Purchaser and the Seller may mutually determine (the "Closing Date"); provided,
however, that the Closing Date shall be no later than September 1, 1996.
(d) Deliveries at the Closing. At the Closing, (i) the Purchaser will
deliver to the Seller the various considerations, certificates, instruments,
and documents referred to in Section 8(a) below, (ii) the Seller will deliver
to the Purchaser the various considerations, certificates, instruments, and
documents referred to in Section 8(b) below.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Seller. The Seller
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 with
respect to the Seller, except as set forth in the disclosure letter executed
and delivered by the Seller and the Group contemporaneous with this Agreement
(the "Seller's Disclosure Letter"). The Seller's Disclosure Letter shall be
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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. The Seller has the requisite
legal capacity and has full power and authority to execute and deliver
this Agreement and to perform his obligations hereunder. The Seller is
not required to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any Person in order to
consummate the transactions contemplated by this Agreement, or, if any
such filing, authorization, consent or approval is required, the same
has been or, as of the Closing Date, shall have been made or obtained.
This Agreement constitutes the valid and legally binding obligation of
the Seller, enforceable in accordance with its terms, subject to
applicable bankruptcy, moratorium, insolvency and other laws affecting
the rights of creditors and general equity principles.
(ii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any injunction, judgment, order,
decree, ruling, or charge of any court to which the Seller is subject
or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which he is bound or
to which any of his assets is subject.
(iii) Brokers' Fees. The Seller 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 Purchaser could become liable or obligated.
(iv) Shares. The Seller holds of record and owns beneficially
all of the Shares free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and
demands. The Seller is not a party to any option, warrant, purchase
right, or other contract or commitment that could require the Seller
to sell, transfer, or otherwise dispose of any capital stock of the
Corporation (other than this Agreement). The Seller is not a party to
any voting trust, proxy, or other agreement or understanding with
respect to the voting of any Shares.
(b) Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Seller that the statements contained in this
Section 3(b) are correct and complete as of the date of this Agreement except
as set forth in the disclosure letter executed and delivered by the Purchaser
contemporaneous with this Agreement (the "Purchaser's Disclosure Letter"). The
Purchaser's Disclosure Letter shall be satisfactory to the Seller and his
counsel and will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 3(b).
(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 in order
to consummate the transactions contemplated by this Agreement, or, if
any such filing, authorization, consent or approval is required, the
same has been or, as of the Closing Date, shall have been made or
obtained.
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(iii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any injunction, judgment, order,
decree, ruling, or charge of any 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 Seller or the Group could become liable or obligated.
(v) Investment. The Purchaser is not acquiring the Shares with
a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
4. Representations and Warranties Concerning the Corporation. The
Seller and the Group, jointly and severally, represent and warrant to the
Purchaser that the statements contained in this Section 4 are true, correct and
complete as of the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except
as set forth in the 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 unless the Seller's Disclosure Letter
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail.
(a) Organization, Qualification, and Corporate Power. The Corporation
is a business corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida. The Corporation is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. The Corporation has full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the business in which it is engaged and to own and use
its properties. Paragraph 4(a) of the Seller's Disclosure Letter lists the
directors and officers of the Corporation. The Seller has delivered to the
Purchaser correct and complete copies of the charter and bylaws of the
Corporation (as amended to date). The minute book (containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors), the stock certificate book, and the stock record book of
the Corporation are correct and complete. The Corporation is not in default
under or in violation of any provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of the
Corporation consists of 10,000 Shares, of which 1,000 Shares are issued and
outstanding. All of the issued and outstanding Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the Seller. There are no outstanding or authorized options, warrants,
purchase rights, preemptive rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require the
Corporation to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Corporation. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the
Corporation.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any injunction, judgment, order, decree, ruling, or charge of any
court to which the Corporation is subject or any provision of the charter or
bylaws of the Corporation or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Corporation is a party or by which it is bound or to which any of
its assets is subject (or result in the imposition of any Security Interest
upon any of its assets). The Corporation is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
Person
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in order for the Parties to consummate the transactions contemplated by this
Agreement, or, if any such filing, authorization, consent or approval is
required, the same has been or, as of the Closing Date, shall have been made or
obtained.
(d) Brokers' Fees. The Corporation has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Assets. The Corporation has good and marketable title to,
or a valid leasehold interest in, all of its properties and assets, free and
clear of all Security Interests, and has not sold, transferred, exchanged or
conveyed any of its properties and assets since the date of the Most Recent
Balance Sheet except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet.
(f) Financial Statements. Attached as collective Paragraph 4(f) to the
Seller's Disclosure Letter are the following financial statements of the
Corporation (collectively the "Financial Statements"): (i) unaudited balance
sheet and statement of income, changes in stockholders' equity, and cash flow
as of and for the fiscal year ended December 31, 1995 (the "Most Recent Fiscal
Year End"); and (ii) unaudited balance sheet and statement of income, changes
in stockholders' equity, and cash flow (the "Most Recent Financial Statements")
as of and for the four (4) months ended April 30, 1996 (the "Most Recent Fiscal
Month End"). The Financial Statements (including the notes thereto) have been
prepared on a consistent basis throughout the periods covered thereby, present
fairly the financial condition of the Corporation as of such dates and the
results of operations of the Corporation and its subsidiaries for such periods
on a cash basis method of accounting, are correct and complete, and are
consistent with the books and records of the Corporation.
(g) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Corporation. Without limiting the generality of the foregoing,
since that date:
(i) the Corporation has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) the Corporation has not entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than $25,000.00
or outside the Ordinary Course of Business;
(iii) no party (including the Corporation) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $25,000.00 to which the Corporation is a
party or by which the Corporation or its properties are bound;
(iv) the Corporation has not created, suffered or permitted to
attach or be imposed any Security Interest upon any of its assets,
tangible or intangible;
(v) the Corporation has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$25,000.00 or outside the Ordinary Course of Business;
(vi) the Corporation has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $25,000.00 or outside the
Ordinary Course of Business;
(vii) the Corporation has not issued any note, bond, or other
debt instrument or security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation;
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(viii) the Corporation has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) the Corporation has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $25,000.00 or outside the Ordinary Course
of Business;
(x) the Corporation has not granted any license or sublicense
of any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of the Corporation;
(xii) the Corporation has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(xiii) the Corporation has not declared, set aside, or paid
any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
(xiv) the Corporation has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
property;
(xv) the Corporation has not made any loan to, or entered into
any other transaction with, any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xvi) the Corporation has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvii) the Corporation has not granted any increase in the
base compensation of any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xviii) the Corporation has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);
(xix) the Corporation has not made any other change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xx) the Corporation 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 Corporation; and
(xxii) the Corporation has not committed to any of the
foregoing.
(h) Undisclosed Liabilities. The Corporation has no Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Corporation
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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 in Paragraph 4(h)
of the Seller's Disclosure Letter (and, with respect to each Liability
described in items (i) through (iii) immediately above, none of which results
from, arises out of, relates to, is in the nature of, or was caused by any
breach of contract, breach of warranty, tort, malpractice, infringement, or
violation of law).
(i) Legal Compliance. To the best of Seller's and the Group's
Knowledge, the Corporation and its respective predecessors and Affiliates have
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.
(j) Tax Matters.
(i) The Corporation has filed all Tax Returns that it has been
required to file. All such Tax Returns are correct and complete in all
material respects. All Taxes owed by the Corporation (whether or not
shown on any Tax Return) have been paid or accrued in the Financial
Statements. The Corporation is not the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made
by an authority in a jurisdiction where the Corporation does not file
Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests with respect to any of
the assets of the Corporation that have arisen in connection with any
failure (or alleged failure) to pay any Tax.
(ii) The Corporation has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder,
or other third party.
(iii) The Seller has no Knowledge of any Basis for any
authority to assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim concerning any
Tax Liability of the Corporation either (A) claimed or raised by any
authority in writing or (B) as to which the Seller has Knowledge.
Paragraph 4(j) of the Seller's Disclosure Letter lists all federal,
state, local, and foreign income Tax Returns filed with respect to the
Corporation for taxable periods ended on or after December 31, 1992,
indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. The Seller
has delivered to the Purchaser correct and complete copies of all
examination reports in respect of the audit of any Tax Return and
statements of deficiencies assessed against or agreed to by the
Corporation since December 31, 1991.
(iv) The Corporation has not waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to
a Tax assessment or deficiency.
(v) The Corporation has not filed a consent under Code Section
341(f) concerning collapsible corporations. The Corporation has not
made any payment, is not obligated to make any payment, or is not a
party to any agreement that under certain circumstances could obligate
it to make any payments that will not be deductible under Code Section
280G. The Corporation has not been a United States real property
holding corporation within the meaning of Code Sec. 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii). The
Corporation has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code
Section 6662. The Corporation is not a party to any Tax allocation or
sharing agreement. The Corporation (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return or
(B) has no Liability for the Taxes of any Person (other than of the
Corporation under
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Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(vi) Paragraph 4(j) of the Seller's Disclosure Letter sets
forth the following information with respect to the Corporation as of
the most recent practicable date: (A) the basis of the Corporation in
its assets; and (B) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution.
(k) Real Property. The Corporation does not own any real property and
has not executed and delivered or otherwise entered into any contract to
purchase any real property. Paragraph 4(k) of the Seller's Disclosure Letter
lists and describes briefly all real property leased or subleased to the
Corporation. The Seller has delivered to the Purchaser correct and complete
copies of the leases and subleases listed in Paragraph 4(k) of the Seller's
Disclosure Letter (as amended to date). With respect to each lease and sublease
listed in Paragraph 4(k) 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) the Corporation, and, to the best of Seller's Knowledge,
no other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse
of time, would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(iv) the Corporation, and, to the best of Seller's Knowledge,
no party to the lease or sublease has repudiated any provision
thereof;
(v) to the best of Seller's Knowledge, there are no disputes,
oral agreements, or forbearance programs in effect as to the
lease or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above are
true and correct with respect to the underlying lease;
(vii) the Corporation has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses, permits and certificates of need) required in
connection with the operation thereof and have been operated
and maintained in accordance with applicable laws, rules, and
regulations; and
(ix) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities;
(l) Tangible Personal Property. The Corporation owns or leases all
machinery, equipment, and other tangible assets necessary for the conduct of
its business as presently conducted. The Corporation has received with respect
to all such machinery and equipment all approvals of governmental authorities
(including licenses, permits and certificates of need) required in connection
with the operation thereof, and the same have been operated and maintained in
accordance with applicable laws, rules, and regulations.
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<PAGE> 12
(m) Inventory. The inventory of the Corporation consists of medical
supplies and pharmaceuticals, all of which is merchantable and fit for the
purpose for which it was procured or manufactured, and none of which is
slow-moving, obsolete, damaged, or defective.
(n) Contracts. The Seller has either made available to the Purchaser
or listed in Paragraph 4(n) of the Seller's Disclosure Letter the following
contracts and other agreements to which the Corporation is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $25,000.00 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of inventory, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, result in a loss to the Corporation, or involve consideration in
excess of $25,000.00;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under
which the Corporation has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $25,000.00 or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with either the Seller or any Affiliate of
the Seller (other than the Corporation);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $25,000.00 or providing severance benefits;
(x) any agreement under which the Corporation has advanced or
loaned any amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xi) any agreement the default or termination of which could
have material Adverse Consequences to the Corporation; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000.00.
The Seller has delivered or made available to the Purchaser a correct and
complete copy of each written agreement listed in Paragraph 4(n) 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(n) 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) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (3) no party is in breach
or default, and
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<PAGE> 13
no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
the agreement; and (4) no party has repudiated any provision of the agreement.
(o) Notes and Accounts Receivable. All notes and accounts receivable
of the Corporation are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims except contractual
adjustments or discount arrangements with third-party reimbursers, are current
and collectible, and will be collected in accordance with their terms at their
adjusted amounts, subject only to the reserve for bad debts as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Corporation.
(p) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Corporation.
(q) Insurance. Paragraph 4(q) 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 Corporation has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five (5)
years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is in full force and
effect; (B) the policy will continue to be in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby unless caused to be terminated by the Purchaser or the Corporation; (C)
neither the Corporation nor any other party to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) no party to the policy has
repudiated any provision thereof. The Corporation has been covered during the
past five (5) years by insurance in scope and amount customary and reasonable
for the businesses in which it has engaged during the aforementioned period.
Paragraph 4(q) of the Seller's Disclosure Letter describes any self-insurance
arrangements affecting the Corporation.
(r) Litigation. Section 4(r) of the Seller's Disclosure Letter sets
forth each instance in which either the Corporation (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or 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(r) of the Seller's Disclosure Letter
could result in any material Adverse Consequences to the Corporation or the
Group. The Seller and the Group have no Basis to believe that any such action,
suit, proceeding, hearing, or investigation may be brought or threatened
against the Corporation or the Group.
(s) Employees. To the best of the Seller's Knowledge, no executive,
key employee, or group of employees has any plans to terminate employment with
the Corporation or, after the Closing, with the Group. The Corporation is not a
party to or bound by any collective bargaining agreement, nor has it
experienced any strikes, grievances
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<PAGE> 14
filed pursuant to any work rules of any organized labor organization, claims of
unfair labor practices, or other collective bargaining disputes. To the best of
the Seller's Knowledge, the Corporation has not committed any unfair labor
practice. To the best of the Seller's Knowledge, no organizational effort is
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Corporation.
(t) Employee Benefits.
(i) Paragraph 4(t) of the Seller's Disclosure Letter lists
each Employee Benefit Plan that the Corporation maintains or to which
the Corporation 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 Corporation. All premiums
or other payments for all periods ending on or before the
Closing Date have been paid with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Sec. 401(a) and has received,
within the last two years, a favorable determination letter
from the Internal Revenue Service.
(E) The market value of assets under each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan (other than any Multiemployer Plan) equals or exceeds the
present value of all vested and nonvested Liabilities
thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for determination.
(F) The Seller has delivered to the Purchaser correct
and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the
Corporation maintains or ever has maintained or to which it
contributes, ever has contributed, or ever has been required to
contribute:
(A) No such Employee Benefit Plan which is in
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding
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<PAGE> 15
by the PBGC to terminate any such Employee Pension Benefit
Plan (other than any Multiemployer Plan) has been instituted
or threatened.
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration
or investment of the assets of any such Employee Benefit Plan.
No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims
for benefits) is pending or threatened. Neither the Seller nor
the directors and officers (and employees with responsibility
for employee benefits matters) of the Corporation has any
Knowledge of any Basis for any such action, suit, proceeding,
hearing, or investigation.
(C) The Corporation has not incurred, and neither the
Seller nor the directors and officers (and employees with
responsibility for employee benefits matters) of the
Corporation has any reason to expect that the Corporation will
incur, any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any
withdrawal Liability) or under the Code with respect to any
such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
(iii) The Corporation does not contribute to, has never
contributed to, and has not been required to contribute to any
Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(iv) The Corporation does not maintain, has never maintained,
has never contributed, and has not been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future retired
or terminated employees, their spouses, or their dependents (other
than in accordance with Code Sec. 4980B).
(u) Guaranties. The Corporation is not a guarantor or is not otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.
(v) Environment, Health, and Safety.
(i) To the best of the Seller's and the Group's Knowledge,
each of the Seller, the Corporation and their respective 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, to the best of the Seller's and
the Group's Knowledge, each of the Seller, the Corporation and their
respective Affiliates has obtained and been in compliance with all of
the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health, and Safety Laws.
(ii) To the best of the Seller's and the Group's Knowledge,
the Corporation has no Liability (and none of the Seller, the
Corporation and their respective Affiliates has handled or disposed of
any substance, arranged for the disposal of any substance, exposed any
employee or other individual to any substance or condition, or owned
or operated any property or facility in any manner that could form the
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the
Corporation giving rise to any Liability) for damage to any site,
location, or body of water (surface or subsurface), for any illness of
or personal injury to any employee or other individual, or for any
reason under any Environmental, Health, and Safety Law.
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<PAGE> 16
(iii) To the best of the Seller's and the Group's Knowledge,
all properties and equipment used in the historical business of the
Corporation have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-trans-dichloroethylene, dioxins, dibenzofurans,
and Extremely Hazardous Substances.
(w) Healthcare Compliance. Neither the Corporation nor any physician
associated with or employed by the Corporation has received payment or any
remuneration whatsoever to induce or encourage the referral of patients or the
purchase of goods and/or services as prohibited under 42 U.S.C. Section
1320a-7b(b), or otherwise perpetrated any Medicare or Medicaid fraud or abuse
nor has any such fraud or abuse been alleged within the last five (5) years by
any government agency. No physician associated with or employed by the
Corporation has made any referral of any patient to any entity in which such
physician or a member of his or her immediate family has any ownership or
investment interest or with which such physician or family member has any other
financial relationship. The Corporation and/or each physician employed thereby
is participating in or, to the best of the Seller's and the Group's Knowledge,
otherwise authorized to receive reimbursement from, or is a party to Medicare,
Medicaid, and other third-party payor programs, and, after the execution and
delivery hereof and of the Service Agreement, the foregoing representation
shall be true with respect to the Group and all physicians employed thereby.
All necessary certifications and contracts required for participation in such
programs are in full force and effect and have not been amended or otherwise
modified, rescinded, revoked or assigned and, to the best of the Seller's and
the Group's Knowledge, no condition exists or event has occurred which in
itself or with the giving of notice or the lapse of time or both would result
in the suspension, revocation, impairment, forfeiture or non-renewal of any
such third party payor program. The Corporation is and, after the execution and
delivery hereof and of the Service Agreement, the Group will be, in full
compliance with the requirements of all such third party payor programs
applicable thereto.
(x) Fraud and Abuse. The Corporation and persons and entities
providing professional services for the Corporation have not engaged in any
activities which are prohibited under 42 U.S.C. Section 1320a-7b, or the
regulations promulgated thereunder pursuant to such statutes, or related state
or local statutes or regulations, or which are prohibited by rules of
professional conduct, including but not limited to the following:
(i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any
application for any benefit or payment;
(ii) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in
determining rights to any benefit or payment;
(iii) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to
any benefit or payment on its own behalf or on behalf of another, with
intent to fraudulently secure such benefit or payment; and
(iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe, or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offering to pay
or receive such remuneration (A) in return for referring an individual
to a person for the furnishing or arranging for the furnishing or any
item or service for which payment may be made in whole or in part by
Medicare or Medicaid, or (B) in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or
ordering any good, facility, service or item for which payment may be
made in whole or in part by Medicare or Medicaid.
(y) Facility Compliance. The Corporation is duly licensed, and the
Corporation and its clinics, offices and facilities are lawfully operated in
accordance with the requirements of all applicable laws and certificates of
need and has all necessary authorizations and certificates of need for their
use and operation, all of which are in full force
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<PAGE> 17
and effect. There are no outstanding notices of deficiencies relating to the
Corporation or any physician employed thereby issued by any governmental
authority or third party payor requiring conformity or compliance with any
applicable law or condition for participation of such governmental authority or
third party payor, and after reasonable and independent inquiry and due
diligence and investigation, the Corporation has no Knowledge or reason to
believe that such necessary authorizations may be revoked or not renewed in the
ordinary course.
(z) Rates and Reimbursement Policies. The jurisdiction in which the
Corporation is located does not currently impose any restrictions or
limitations on rates which may be charged to private pay patients receiving
services provided by the Corporation. The Corporation has no rate appeal
currently pending before any governmental authority or any administrator of any
third party payor program.
(aa) Disclosure. The representations and warranties contained in this
Section 4 and in the Seller's Disclosure Letter do not contain any untrue or
misleading statement of a fact.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in Section 7 below).
(b) Notices and Consents. The Seller will use reasonable effort to
cause the Corporation to give all notices to third parties, and to obtain all
third-party consents and authorizations, that may be required by law or the
terms of any contract to which the Seller may be subject or that the Purchaser
may request in connection with the transaction contemplated by this Agreement.
Each of the Parties will (and the Seller will use reasonable effort to cause
the Corporation to) give any notices to, make any filings with, and use its
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies required to consummate the transaction
contemplated by this Agreement.
(c) Operation of Business. Except as otherwise contemplated by this
Agreement and except for the distribution by the Corporation of all S
corporation taxable income through the day prior to the Closing Date, the
Seller will not cause or permit the Corporation or the Group to engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing, the
Seller will not cause or permit the Corporation to (i) declare, set aside, or
pay any dividend or make any distribution with respect to its capital stock or
redeem, purchase, or otherwise acquire any of its capital stock or (ii)
otherwise engage in any practice, take any action, or enter into any
transaction of the sort described in Section 4(g) above.
(d) Full Access. The Seller will permit, and the Seller will cause the
Corporation to permit, representatives of the Purchaser to have full access at
all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Corporation, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Corporation. In that regard, the Seller will cause the
Corporation to permit the independent accountants for the Purchaser to conduct
such audits of the financial statements of the Corporation as the Purchaser
shall elect or be required to obtain, and shall cause the accounting personnel
of the Corporation to assist such accountants in the preparation for and
conduct of such audit.
(e) Notice of Developments. The Seller will give prompt written notice
to the Purchaser of any material adverse development of which he learns which
would constitute or otherwise cause a breach of any of the representations and
warranties in Section 4 above. Each Party will give prompt written notice to
the others of any material adverse development causing a breach of any of his
or its own representations and warranties in Section 3
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above. No disclosure by any Party pursuant to this Section 5(f), however, shall
be deemed to amend or supplement the Seller's Disclosure Letter or to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant.
(f) Exclusivity. For so long as this Stock Purchase Agreement shall
remain in effect, the Seller will not (and the Seller will not cause or permit
the Corporation to) (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets of,
the Corporation (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. The Seller will not vote their
Shares in favor of any such acquisition structured as a merger, consolidation,
or share exchange. The Seller will notify the Purchaser immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any of
the foregoing.
(g) Payment of Debt; Release from Personal Guaranties. At the request
of the Purchaser, the Seller shall cause the Corporation to pay all Debt or
shall cause the Group to assume the same and indemnify the Corporation with
respect to any Liability therefor. The Purchaser shall use its best efforts to
obtain the release of the Seller from any personal guarantee of any obligation
of the Corporation. Failure of the Purchaser to obtain any such release shall
not be a breach of this Agreement or otherwise, without the existence of a
separate breach hereof, excuse the Seller from performance hereunder.
(h) Corporate Governance Matters. Immediately prior to Closing, the
Seller shall have solicited and obtained from each existing officer and
director of the Corporation such Person's resignation as an officer and/or
director thereof.
6. Post-Closing Covenants. The Parties agree as follows with respect
to the period following the Closing.
(a) General. If 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 instruments
and documents) as any other Party may reasonably request, all at the sole cost
and expense of the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 9 below). The Seller 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 Corporation.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Corporation or the Seller, each of the other
Parties will cooperate with him or it and his or its counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be necessary in connection with the contest
or defense, all at the sole cost and expense of the contesting or defending
Party (unless the contesting or defending Party is entitled to indemnification
therefor under Section 9 below).
(c) Transition. The Seller will not take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Corporation from maintaining the
same business relationships with the Corporation or the Group after the Closing
as it maintained with the Corporation prior to the Closing. The Seller will
refer all inquiries relating to the businesses of the Corporation to the
Purchaser from and after the Closing.
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<PAGE> 19
7. Conditions Precedent to Obligation to Close.
(a) Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3(a) and Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Seller and the Group shall have performed and
complied with all of their covenants hereunder in all material
respects through the Closing;
(iii) All third party consents and authorizations specified in
Section 5(b) above shall have been obtained;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Purchaser to own
the Shares and to control the Corporation, or (D) affect adversely the
right of the Corporation to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(v) the Seller and the Group shall have delivered to the
Purchaser a certificate to the effect that each of the conditions
specified above in Section 7(a)(i)-(iv) is satisfied in all respects;
(vi) the Purchaser shall have received the resignations,
effective as of the Closing, of each director and officer of the
Corporation other than those whom the Purchaser shall have specified
in writing at least five business days prior to the Closing;
(vii) the Purchaser shall have received from Patel, Moore &
O'Connor, P.A., counsel to the Seller and the Corporation, an opinion
as to matters customarily addressed in opinions of counsel in
transactions such as that described herein, which opinion shall be in
form and substance reasonably acceptable to the Purchaser and its
counsel;
(viii) the Group shall have executed and delivered the Service
Agreement to the Purchaser;
(ix) the Seller shall have executed an employment contract
with the Group in substantially the form set forth as Exhibit 7(a)(ix)
hereto; and
(x) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinion, instruments, and other documents required to
effect the transactions contemplated hereby will be satisfactory in
form and substance to the Purchaser.
The Purchaser may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
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<PAGE> 20
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by him 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 Seller a
certificate to the effect that each of the conditions specified above
in Section 7(b)(i)-(iii) is satisfied in all respects;
(v) all actions to be taken by the Purchaser in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to the Seller.
(vi) the Seller shall have received an opinion from John A.
Good, Esq., Executive Vice President and General Counsel of the
Purchaser, in form and substance satisfactory to the Seller and his
counsel with respect to the corporate existence and standing of the
Purchaser, the corporate action taken in respect of this Agreement and
the enforceability of this Agreement.
The Seller may waive any condition specified in this Section 7(b) if they
execute a writing so stating at or prior to the Closing.
8. Deliveries at Closing.
(a) Documents to be Delivered by the Purchaser. At the Closing, the
Purchaser shall deliver the following instruments and documents to the Seller
or other appropriate party:
(i) the cash amount set forth in Section 2(b)(i) above;
(ii) the Note, payable to the order of the Seller;
(iii) certificates representing 196,154 shares of Response
Stock issuable to the Seller pursuant to Section 2(b) above;
(iv) the certificate described in Section 7(b)(iv) above;
(v) the opinion of counsel, in a form reasonably satisfactory
to the Seller's counsel, required pursuant to Section 7(b)(vi) above;
(vi) the Registration Rights Agreement in the form set forth
as Exhibit 8(a)(v) hereto; and
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<PAGE> 21
(vii) such other documents as the Seller may reasonably
request to affect the transactions contemplated by this Agreement.
(b) Documents to be Delivered by the Seller. At the Closing, the
Seller shall deliver the following instruments and documents to the Purchaser:
(i) stock certificates representing all of the Shares,
endorsed in blank or accompanied by duly executed assignment
documents;
(ii) a certificate of existence or good standing from the
Florida Secretary of State evidencing the existence and good standing
of the Corporation, dated not more than five (5) days prior to the
Closing Date;
(iii) all consents required by Section 5(b) of this Agreement;
(iv) a certificate, executed by the Secretary of the
Corporation, to the effect that attached thereto is a copy of the
Articles of Incorporation of the Corporation, including amendments,
certified by the Florida Secretary of State as of a date not more than
five (5) days before Closing and, bylaws of the Corporation, all of
which are in full force and effect and have not been amended;
(v) the opinion of counsel to the Seller, in a form reasonably
satisfactory to the Purchaser's counsel, required by Section 7(a)(vii)
above;
(vi) the Certificate described in Section 7(a)(v) above;
(vii) the Service Agreement, duly executed by the Group; and
(viii) such other documents as the Purchaser may reasonably
request to affect the transactions contemplated by this Agreement.
9. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect thereafter for a period of two (2) years with
respect to medical malpractice matters, and for a period of three (3) years in
all other events.
(b) Indemnification Provisions for Benefit of the Purchaser. In the
event the Seller breaches (or in the event any third party alleges facts that,
if true, would mean the Seller has breached) any of the Seller's
representations, warranties, and covenants contained herein and, provided that
the Purchaser makes a written claim for indemnification against the Seller
pursuant to Section 9(c)(i) below prior to the expiration of the survival
period set forth in Section 9(a) above, then the Seller and the Group, jointly
and severally, agree to indemnify the Purchaser from and against the entirety
of any Adverse Consequences the Purchaser may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences the
Purchaser may suffer after the end of any applicable survival period with
respect to any claim for indemnification made by the Purchaser prior to the end
of such period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach), or otherwise; provided,
however, that the aggregate amount of the foregoing indemnification obligations
shall be limited to the amount of the Purchase Price, and the indemnification
obligation shall not accrue unless and until the Purchaser shall have submitted
to the Seller and/or the Group indemnification claims exceeding $100,000 in the
aggregate. Any such indemnification obligation may be satisfied either in cash
or by the Seller's
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<PAGE> 22
cancellation of the Note or delivery of the Response Stock held by the Seller,
valued at the greater of the price per share set forth in Section 2(c) above or
the then-current fair market value of such Response Stock at the time of
delivery in satisfaction of such indemnification obligation, all at the sole
option of the Seller and/or the Group.
(c) Matters Involving Third Parties.
(i) If any third party shall notify the Purchaser with respect
to any matter (a "Third Party Claim") which may give rise to a claim
for indemnification under this Section 9, then the Purchaser shall
promptly notify the Seller thereof in writing; provided, however, that
no delay on the part of the Purchaser in notifying the Seller shall
relieve the indemnitor from any obligation hereunder unless (and then
solely to the extent) the indemnitor thereby is prejudiced.
(ii) The Seller and/or the Group will have the right to defend
the Purchaser against the Third Party Claim with counsel of their
choice satisfactory to the Purchaser so long as (A) they notify the
Purchaser in writing within 15 days after the Purchaser has given
notice of the Third Party Claim that the Seller and/or the Group will
indemnify the Purchaser from and against the entirety of any Adverse
Consequences the Purchaser may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim, (B)
the Seller and/or the Group provide the Purchaser with evidence
acceptable to the Purchaser that the Seller and/or the Group will have
the financial resources to defend against the Third Party Claim and
fulfill their indemnification obligations hereunder, (C) the Third
Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Purchaser, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Purchaser, and (E) the Seller and/or the Group conduct the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Seller and/or the Group are conducting
the defense of the Third Party Claim in accordance with Section
9(c)(ii) above, (A) the Purchaser may retain separate co-counsel at
its sole cost and expense and participate in the defense of the Third
Party Claim, (B) the Purchaser will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Seller and/or the Group
(not to be withheld unreasonably), and (C) the Seller and/or the Group
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Purchaser.
(iv) In the event any of the conditions in Section 9(c)(ii)
above is or becomes unsatisfied, however, (A) the Purchaser may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it may
deem appropriate (and the Purchaser need not consult with, or obtain
any consent from, the Seller or the Group in connection therewith),
(B) the Seller and/or the Group will reimburse the Purchaser promptly
and periodically for the costs of defending against the Third Party
Claim (including attorneys' fees and expenses), and (C) the Seller and
the Group will remain responsible for any Adverse Consequences the
Purchaser may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Section 9.
(d) Determination of Adverse Consequences. The Parties shall take into
account the time cost of money (using the Applicable Rate as the discount rate)
in determining Adverse Consequences for purposes of this Section 9. All
indemnification payments under this Section 9 shall be deemed adjustments to
the Purchase Price.
(e) Recoupment Under the Note. In the event that the Purchaser shall
suffer Adverse Consequences for which indemnification pursuant to the foregoing
provisions shall be payable by the Seller and the Seller shall not make any
such indemnification payment within sixty (60) days after such indemnity amount
shall become payable,
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<PAGE> 23
the Purchaser shall have the option of recouping all or any part of any Adverse
Consequences it may suffer by notifying the Seller that the Purchaser is
offsetting the amount of such Adverse Consequences against the principal amount
outstanding and/or interest payable under the Note. An offset pursuant to this
subsection shall affect the timing and amount of payments required under the
Note in the same manner as if the Purchaser had made a permitted prepayment
(without premium or penalty) thereunder.
(f) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of
representation, warranty, or covenant. The Seller hereby agrees that he will
not make any claim for indemnification against the Corporation by reason of the
fact that he was a director, officer, employee, or agent of the Corporation or
was serving at the request thereof as a partner, trustee, director, officer,
employee, or agent of another entity (whether such claim is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such claim is pursuant to any statute, charter
document, bylaw, agreement, or otherwise) with respect to any action, suit,
proceeding, complaint, claim, or demand brought by the Purchaser against the
Seller (whether such action, suit, proceeding, complaint, claim, or demand is
pursuant to this Agreement, applicable law, or otherwise); provided, however,
that nothing in the foregoing shall be deemed to preclude the Seller from
filing a claim pursuant to any policy of insurance possessed by the Corporation
at the time of Closing to the extent the filing of such claim cannot thereafter
result in any claim or assessment against the Corporation pursuant to any
reservation of rights on the part of the insurance carrier or any other
contractual, legal or equitable theory.
10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Purchaser and the Seller 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 Seller at any time prior to the Closing (A) in
the event any of the Seller has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Purchaser has notified the Seller of the breach, and the
breach has continued without cure for a period of 10 days after the
notice of breach or (B) if the Closing shall not have occurred on or
before September 1, 1996, by reason of the failure of any condition
precedent under Section 7(a) hereof (unless the failure results
primarily from the Purchaser itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(iii) the Seller may terminate this Agreement by giving
written notice to the Purchaser at any time prior to the Closing (A)
in the event the Purchaser has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, any of the Seller has notified the Purchaser of the breach,
and the breach has continued without cure for a period of 10 days
after the notice of breach or (B) if the Closing shall not have
occurred on or before September 1, 1996 by reason of the failure of
any condition precedent under Section 7(b) hereof (unless the failure
results primarily from any of the Seller themselves breaching any
representation, warranty, or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
(c) Confidentiality following Termination. In the event this Agreement
is terminated pursuant to this Section 10, then the confidentiality agreements
set forth in that certain letter of intent between certain of the parties dated
May 6, 1996 shall survive such termination, shall remain in full force and
effect, and are incorporated herein by reference to the extent necessary to
effect the intention of this subsection.
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<PAGE> 24
11. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Purchaser and the
Seller; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its best efforts to advise the other Parties prior to
making the disclosure).
(b) Arbitration of Disputes; Legal Fees. Any dispute arising under
this Stock Purchase Agreement shall be submitted by the parties to binding
arbitration pursuant to the Tennessee Uniform Arbitration Act, with any such
arbitration proceeding being conducted in accordance with the rules of the
American Arbitration Association. Any arbitration panel presiding over any
arbitration proceeding hereunder is hereby empowered to render a decision in
respect of such dispute, to award costs and expenses (including reasonable
attorney fees) as it shall deem equitable and to enter its award in any court
of competent jurisdiction. Each of the Parties submits to the jurisdiction of
any state or federal court sitting in Memphis, Shelby County, Tennessee for
purposes of enforcement of any arbitration award hereunder. Each Party also
agrees not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought
and waives any bond, surety, or other security that might be required of any
other Party with respect thereto.
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes
any prior understandings, agreements, or representations by or among the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Purchaser and the Seller; 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).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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<PAGE> 25
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, or by expedited courier and addressed to
the intended recipient as set forth below:
If to the Seller: Copy to:
Jeffrey L. Paonessa, M.D. Patrick M. O'Connor, Esq.
6122 Kipps Colony Drive West Patel, Moore & O'Connor, P.A.
Gulfport, Florida 33707 18167 U.S. Highway
19 North, Suite 150
Clearwater, Florida 34624
If to the Purchaser: Copy to:
Joseph T. Clark John A. Good, Esq.
Response Oncology, Inc. Response Oncology, Inc.
1775 Moriah Woods Blvd. 1775 Moriah Woods Blvd.
Memphis, Tennessee 38117 Memphis, Tennessee 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, 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 shall have been followed by the identical notice being given in the manner
described in the first paragraph of this subsection. Any Party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Parties notice in the manner
herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of 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.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. The Seller agrees that the
Corporation has not borne or will not bear any of the Seller's costs and
expenses (including any of his legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by
24
<PAGE> 26
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.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy
to which they may be entitled, at law or in equity.
* * * * *
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<PAGE> 27
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
[as of] the date first above written.
PURCHASER:
Response Oncology, Inc.
By:
------------------------------------
Title:
---------------------------------
Jeffrey L. Paonessa, M.D., P.A.
By:
------------------------------------
Title:
---------------------------------
SELLER:
---------------------------------------
Jeffrey L. Paonessa
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<PAGE> 28
Exhibit 2(b)(i)
to
Stock Purchase Agreement
NON-NEGOTIABLE PROMISSORY NOTE
$5,100,000.00 Memphis, Tennessee
June 19, 1996
FOR VALUE RECEIVED, the undersigned, RESPONSE ONCOLOGY, INC., a
Tennessee corporation (the "Maker"), promises to pay to the order of JEFFREY L.
PAONESSA, a resident of the State of Florida, (the "Lender"), the principal sum
of Five Million One Hundred Thousand Dollars ($5,100,000.00), together with
interest on the unpaid principal balance thereof at the rate of Four (4%)
percent per annum from date until Maturity (hereinafter defined), interest
being payable in eight (8) quarterly installments commencing September 1, 1996,
and on the first day of December March, June and September thereafter until
Maturity. The entire remaining unpaid balance of principal of this Note, and
any accrued interest thereon, shall be due and payable on June 17, 1998
("Maturity").
This Note may be prepaid in whole or in part prior to Maturity, but
only upon fifteen (15) days advance written notice given by the Maker to the
Lender.
At the written election and request of the Lender, duly given to the
Maker not later than fifteen (15) days prior to any payment of principal
(including any prepayment) on this Note, any 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 foregoing
election shall be determined by dividing the amount of principal with respect
to which the Lender elects to be paid in Shares by the Maker by $15.60, 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.
Based on current interpretations of Rule 144 under the Securities Act of 1933,
the Shares will be unrestricted on or after June 19, 1998, and after such time,
certificates representing such Shares shall be issued without a legend
restricting transfer thereof.
Any amounts not paid when due hereunder (whether by acceleration or
otherwise) shall bear interest after maturity at the lesser of (a) eighteen
percent (18%) per annum or (b) the maximum effective contract rate which may be
charged by the Lender under applicable law from time to time in effect.
In the event that the foregoing provisions should be construed by a
court of competent jurisdiction not to constitute a valid, enforceable
designation of a rate of interest or method of determining same, the
indebtedness hereby evidenced shall bear interest at the maximum effective
contract rate which may be charged by the Lender under applicable law from time
to time in effect.
This Note is non-negotiable.
Notwithstanding anything to the contrary, the payments required
pursuant to this Note are subject to a right of offset, setoff, and recoupment
as a result of any indemnification required pursuant to the provisions of that
certain Stock Purchase Agreement by and between Lender and Maker dated as of
June 19, 1996 and/or as a result of the application of certain provisions for
the payment of liquidated damages in that certain Service Agreement dated as of
June 19, 1996 to which Lender and Maker are parties; provided, however, that
the foregoing right shall be
27
<PAGE> 29
limited to the amount of such indemnification, and the outstanding principal
balance of this note not so offset shall remain due and payable on the terms
set forth herein. Notwithstanding the foregoing, such right shall not be
exercised by the Maker unless the Maker shall have provided the Lender the
opportunity, which opportunity may be elected only for a period of ten (10)
days after the Lender shall have received notice of the Maker's intention to
exercise the rights described in this paragraph, to deliver to the Maker Shares
in complete or partial satisfaction of the Lender's obligations to the Maker
which give rise to the rights described herein.
All installments of interest, and the principal hereof, are payable by
Maker's corporate check at 6122 Kipps Colony Drive West, Gulfport, Florida
33707 or at such other place as the holder may designate in writing, in lawful
money of the United States of America, which shall be legal tender in payment
of all debts and dues, public and private, at the time of payment.
If the Maker shall fail to make payment of any installment of
principal and interest, as above provided, and such failure shall continue
unremedied for a period of thirty (30) days following written notice thereof,
or upon the dissolution of the Maker or any endorser, and (if there is a cure
period applicable thereto) such default is not cured within such applicable
cure period, then and in any such event, the entire unpaid principal balance of
the indebtedness evidenced hereby, together with all interest then accrued,
shall, at the absolute option of the holder hereof, at once become due and
payable, without demand or notice, the same being hereby expressly waived.
If this Note is placed in the hands of an attorney for collection, by
suit or otherwise, the Maker shall pay on demand all costs of collection and
litigation (including court costs), together with a reasonable attorney's fee
if Lender is successful in the litigation.
It is the intention of the Lender and the Maker to comply strictly
with applicable usury laws; and, accordingly, in no event and upon no
contingency shall the holder hereof ever be entitled to receive, collect, or
apply as interest any interest, fees, charges or other payments equivalent to
interest, in excess of the maximum effective contract rate which the Lender may
lawfully charge under applicable statutes and laws from time to time in effect;
and in the event that the holder hereof ever receives, collects, or applies as
interest any such excess, such amount which, but for this provision, would be
excessive interest, shall be applied to the reduction of the principal amount
of the indebtedness hereby evidenced; and if the principal amount of the
indebtedness evidenced hereby, all lawful interest thereon and all lawful fees
and charges in connection therewith, are paid in full, any remaining excess
shall forthwith be paid to the Maker, or other party lawfully entitled thereto.
All interest paid or agreed to be paid by the Maker shall, to the maximum
extent permitted under applicable law, be amortized, prorated, allocated and
spread throughout the full period until payment in full of the principal so
that the interest hereon for such full period shall not exceed the maximum
amount permitted by applicable law. Any provision hereof, or of any other
agreement between the holder hereof and the Maker, that operates to bind,
obligate, or compel the Maker to pay interest in excess of such maximum
effective contract rate shall be construed to require the payment of the
maximum rate only. The provisions 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 Florida from time to time in effect.
RESPONSE ONCOLOGY, INC.
By:
------------------------------------
Title:
---------------------------------
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Exhibit 7(a)(ix)
EMPLOYMENT AGREEMENT FOR
PROFESSIONAL EMPLOYEE OF
JEFFREY L. PAONESSA, M.D., P.A.
THIS AGREEMENT is entered into as of June 19, 1996 (the "Effective
Date"), by and between JEFFREY L. PAONESSA, M.D., P.A., a Florida professional
association ("Employer") and ____________________, M.D., an individual residing
in the State of Florida, ("Employee").
WITNESSETH:
WHEREAS, Employer is a professional group practice engaged in the
practice of medicine in the State of Florida;
WHEREAS, Employee is an individual duly licensed to practice as a
physician in the State of Florida;
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 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.
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(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.
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;
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(b) The revocation, termination, restriction, or suspension of
Employee's license to practice his or her profession in the State of
Florida, 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 100 miles of the St. Petersburg, Florida City Hall
(the "Restricted Territory");
(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
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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
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 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
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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 Florida.
25. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
Jeffrey L. Paonessa, M.D., P.A.
("Employer")
By:
-------------------------------------
Jeffrey L. Paonessa, M.D., President
----------------------------------------
Jeffrey L. Paonessa, M.D. ("Employee")
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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 Stockholders of Employer or as otherwise approved by the
Stockholders 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: ________
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