10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
(X)	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended March 31, 2002 or
(  )	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from                           to
	Commission file number 0-15416

RESPONSE ONCOLOGY, INC.

(Exact name of registrant as specified in its charter)

Tennessee	62-1212264
(State or Other Jurisdiction of Incorporation or Organization)	(I. R. S. Employer Identification No.)

1805 Moriah Woods Blvd., Memphis, TN	38117
(Address of principal executive offices)	(Zip Code)

(901) 761-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [  ]         No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 Par Value, 12,178,701 shares as of June 17, 2002.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
	CONSOLIDATED BALANCE SHEETS
	CONSOLIDATED BALANCE SHEETS
	CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
SECOND AMENDED JOINT PLAN
ORDER CONFIRMING PLAN

INDEX

		Page
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements
	Consolidated Balance Sheets, March 31, 2002 and December 31, 2001		3
	Consolidated Statements of Operations for the Three Months Ended
	March 31, 2002 and March 31, 2001		5
	Consolidated Statements of Cash Flows for the Three Months Ended
	March 31, 2002 and March 31, 2001		6
	Notes to Consolidated Financial Statements		7
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3	Quantitative and Qualitative Disclosures About Market Risk		23
PART II	OTHER INFORMATION
Item 1	Legal Proceedings		24
Item 2	Changes in Securities and Use of Proceeds		24
Item 3	Defaults Upon Senior Securities		24
Item 4	Submission of Matters to a Vote of Security Holders		24
Item 5	Other Information		24
Item 6	Exhibits and Reports on Form 8-K		25
Signatures			26

-2-

PART I — FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)

			March 31, 2002		December 31, 2001
			(Unaudited)		(Note 2)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	9,008	$	7,914
	Accounts receivable, less allowance for doubtful accounts of $1,524 and $2,342			3,455		5,915
	Pharmaceuticals and supplies			2,496		3,193
	Prepaid expenses and other current assets			2,504		2,472
	Due from affiliated physician groups			8,353		8,661
		TOTAL CURRENT ASSETS		25,816		28,155
Property and equipment, net				260		614
Other assets				98		133
		TOTAL ASSETS	$	26,174	$	28,902

Continued:

-3-

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)

Continued:

					March 31, 2002			December 31, 2001
					(Unaudited)			(Note 2)
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
	Accounts payable				$	456		$	276
	Accrued expenses and other liabilities					1,478			2,035
			TOTAL CURRENT LIABILITIES			1,934			2,311
NON-CURRENT LIABILITIES
	Minority interest					433			447
			TOTAL NON-CURRENT LIABILITIES			433			447
LIABILITIES SUBJECT TO SETTLEMENT UNDER
		REORGANIZATION PROCEEDINGS
	Accounts payable					15,654			15,654
	Accrued expenses and other liabilities					1,895			1,955
	Secured notes payable					25,042			26,404
	Subordinated notes payable					50			50
	Capital lease obligations					85			85
				TOTAL LIABILITIES SUBJECT TO SETTLEMENT
				UNDER REORGANIZATION PROCEEDINGS		42,726			44,148
STOCKHOLDERS’ DEFICIT
	Series A convertible preferred stock, $1.00 par value (aggregate involuntary liquidation preference $183) authorized 3,000,000 shares; issued and outstanding 16,631 shares					17			17
	Common stock, $.01 par value, authorized 30,000,000 shares; issued and outstanding 12,279,555 shares					123			123
	Paid-in capital					102,011			102,011
	Accumulated deficit					(121,070	)		(120,155	)
TOTAL STOCKHOLDERS’ DEFICIT						(18,919	)		(18,004	)
			TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	26,174		$	28,902

See accompanying notes to consolidated financial statements.

-4-

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollar amounts in thousands except for share data)

				Three Months Ended
				March 31,			March 31,
				2002			2001
NET REVENUE				$	22,790		$	31,552
COSTS AND EXPENSES
		Salaries and benefits			2,620			4,684
		Pharmaceuticals and supplies			18,222			22,852
		Other operating costs			570			1,787
		General and administrative			1,223			1,838
		Depreciation and amortization			127			986
		Interest			323			990
		Provision for (recovery of) doubtful accounts			(92	)		232
					22,993			33,368
REORGANIZATION COSTS					727			—
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST					(930	)		(1,817	)
		Minority owners’ share of net earnings			(15	)		4
	LOSS BEFORE INCOME TAXES				(915	)		(1,821	)
		Income tax benefit			—			(601	)
NET LOSS					($915	)		($1,220	)
LOSS PER COMMON SHARE:
			Basic		($0.07	)		($0.10	)
			Diluted		($0.07	)		($0.10	)
Weighted average number of common shares:
			Basic		12,279,555			12,290,764
			Diluted		12,279,555			12,290,764

See accompanying notes to consolidated financial statements.

-5-

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollar amounts in thousands)

				Three Months Ended
				March 31,			March 31,
				2002			2001
OPERATING ACTIVITIES
Net loss					($915	)		($1,220	)
Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization			127			986
		Provision for (recovery of) doubtful accounts			(92	)		232
		(Gain)/loss on sale of property and equipment			208			(10	)
		Minority owners’ share of net earnings			(15	)		4
		Changes in operating assets and liabilities:
			Accounts receivable		2,551			(1,585	)
			Supplies and pharmaceuticals, prepaid expenses and other current assets		665			198
			Other assets		35			77
			Due from affiliated physician groups		308			4,456
			Accounts payable and accrued expenses		14			560
NET CASH PROVIDED BY OPERATING ACTIVITIES
	BEFORE REORGANIZATION ITEMS				2,886			3,698
OPERATING CASH FLOW USED IN REORGANIZATION ITEMS
		Bankruptcy related professional fees paid			(449	)		—
NET CASH PROVIDED BY OPERATING ACTIVITIES					2,437			3,698
INVESTING ACTIVITIES
		Proceeds from sale of property and equipment			32			22
		Purchase of equipment			(13	)		(42	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES					19			(20	)
FINANCING ACTIVITIES
		Distributions to joint venture partners			—			(793	)
		Principal payments on notes payable			(1,362	)		(4,554	)
		Principal payments on capital lease obligations			—			(68	)
NET CASH USED IN FINANCING ACTIVITIES					(1,362	)		(5,415	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					1,094			(1,737	)
		Cash and cash equivalents at beginning of period			7,914			7,327
CASH AND CASH EQUIVALENTS AT END OF PERIOD				$	9,008		$	5,590

See accompanying notes to consolidated financial statements.

-6-

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2002

NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS/BANKRUPTCY PROCEEDINGS

Response Oncology, Inc. and its wholly-owned and majority-owned subsidiaries (the “Company”) was, prior to the events discussed below, a comprehensive cancer management company. As of June 17, 2002, the Company has liquidated substantially all of its operating assets and anticipates that the remaining assets will be liquidated and all wind-down activities completed by the end of 2002. Prior to the sale of its assets, the Company provided: advanced cancer treatment services through outpatient facilities known as IMPACT® Centers under the direction of practicing oncologists; owned the assets of and managed the nonmedical aspects of oncology practices; compounded and dispensed pharmaceuticals to certain oncologists for a fixed or cost plus fee; and conducted outcomes research on behalf of pharmaceutical manufacturers.

On March 29, 2001, the Company (excluding entities that are majority-owned by Response Oncology, Inc.) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Code”) in the United States Bankruptcy Court for the Western District of Tennessee, Western Division (the “Court”). The case is jointly administered under case number 01-24607-DSK. As of March 31, 2002, the Company was operating as a debtor-in-possession under the Code, which protects it from its creditors pending reorganization or liquidation under the jurisdiction of the Court. As debtor-in-possession, the Company is authorized to operate its business but may not engage in transactions outside the ordinary course of business without approval of the Court. A statutory creditors committee may be appointed in the Chapter 11 case, but as of March 31, 2002, such a committee had not been formed. As part of the Chapter 11 process, the Company has attempted to notify all known or potential creditors of the Chapter 11 filing for the purpose of identifying all prepetition claims against the Company.

The Court approved a disclosure statement (the “Disclosure Statement”) filed in connection with the First Joint Plan filed by the Company and AmSouth Bank, as agent for itself, Bank of America, N.A. and Union Planters Bank, N.A. (the “Lenders”) on Friday, May 3, 2002. Under the Plan, originally filed April 12, 2002, and amended April 19, 2002 and June 14, 2002 (collectively the “Plan”), the Company’s outstanding common stock, preferred stock, options and warrants will be cancelled and current shareholders and warrantholders will not receive any consideration. The Plan is a liquidating plan and does not contemplate the financial rehabilitation of the Company or the continuation of its business. Most of the Company’s assets have been sold or are in the process of being liquidated, with such funds being paid to creditors as set forth in the Plan.

Under the Plan, the Lenders, whose outstanding secured claim was allowed in the amount of $29,545,087.31 by Court order dated October 26, 2001, will be paid all proceeds from the liquidation, except for amounts to be paid on account of allowed administrative and priority claims (estimated to be approximately $3,500,000), and $250,000, which will be distributed to general unsecured creditors. The liquidation of the Company’s assets will not return to the Lenders or general unsecured creditors the full amount of their claims.

The Court confirmed the Plan on June 14, 2002. Upon completion of the liquidation of all the Company’s assets and distribution of those proceeds in accordance with the Plan, the Company will be dissolved.

Generally, substantially all of the Company’s liabilities as of the filing date (“prepetition liabilities”) are subject to settlement under a plan of reorganization. Actions to enforce or otherwise effect repayment of all prepetition liabilities as well as all pending litigation against the Company are stayed while the Company continues to operate as debtor-in-possession. Absent approval from the Court, the Company is prohibited from paying prepetition obligations. The Court has approved payment of certain prepetition obligations such as employee wages and benefits. Additionally, the Court has approved the retention of various legal, financial and other professionals. Schedules were filed by the Company with the Court setting forth its assets and liabilities as of the filing date as reflected in the Company’s accounting records.

-7-

Differences between amounts reflected in such schedules and claims filed by creditors will be investigated and either amicably resolved or subsequently adjudicated before the Court. As previously discussed, a Plan has been confirmed by the Court and proceeds will be distributed pursuant to the Plan during the third quarter of 2002.

Under the Code, the Company may elect to assume or reject real property leases, employment contracts, personal property leases, service contracts and other executory prepetition contracts, subject to Bankruptcy Court review. Parties affected by such rejections may file prepetition claims with the Bankruptcy Court in accordance with bankruptcy procedures. At this time, because of material uncertainties, prepetition claims are generally carried at face value in the accompanying financial statements. The Company cannot presently determine or reasonably estimate the ultimate liability that may result from rejecting leases or from filing of claims for any rejected contracts, and no provisions have been made for the majority of these items. Additionally, the net expense resulting from the Chapter 11 filing by the Company has been segregated and reported as reorganization costs in the consolidated statements of operations for the three months ended March 31, 2002.

The Company’s consolidated financial statements have been prepared in accordance with the American Institute of Certified Public Accountants (AICPA) Statement of Position 90-7 (SOP 90-7), “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.” In addition, the consolidated financial statements have been prepared using accounting principles applicable to a going concern, which contemplates the realization of assets and the payment of liabilities in the ordinary course of business. As a result of the Chapter 11 filing, such realization of assets and liquidation of liabilities is subject to uncertainty. Based on the liquidation values of the Company’s assets sold in April and May of 2002, the carrying value of these assets was adjusted to the net realizable value as of December 31, 2001. The financial statements include reclassifications made to reflect the liabilities that have been deferred under the Chapter 11 proceedings as “Liabilities Subject to Settlement under Reorganization Proceedings.” The Company will adopt “Fresh-Start Reporting” pursuant to SOP 90-7 on the effective date of the Plan, which will be June 25, 2002 unless confirmation of the Plan is appealed or otherwise stayed. Certain accounting and business practices have been adopted that are applicable to companies that are operating under Chapter 11.

NOTE 2 — BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements by generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2001.

Net Revenue: The Company’s net patient service revenue includes charges to patients, insurers, government programs and other third-party payers for medical services provided. Such amounts are recorded net of contractual adjustments and other uncollectible amounts. Contractual adjustments result from the differences between the amounts charged for services performed and the amounts allowed by government programs and other public and private insurers.

The Company’s revenue from practice management affiliations includes a fee equal to practice operating expenses incurred by the Company (which excludes expenses that are the obligation of the physicians, such as physician salaries and benefits) and a management fee either fixed in amount or equal to a percentage of each affiliated oncology group’s adjusted net revenue or net operating income. In certain affiliations, the Company may also be entitled to a performance fee if certain financial criteria are satisfied.

Pharmaceutical sales to physicians are recorded based upon the Company’s contracts with physician groups to manage the pharmacy component of the groups’ practice. Revenue recorded for these contracts represents the cost of pharmaceuticals plus a fixed or percentage fee.

Clinical research revenue is recorded based on the Company’s contracts with various pharmaceutical manufacturers to manage clinical trials and is generally measured on a per patient basis for the monitoring and collection of data.

-8-

The following table is a summary of net revenue by source for the respective three-month periods ended March 31, 2002 and 2001.

	Three Months Ended
	March 31,
	2002		2001
	(In thousands)
Net patient services revenue	$	194	$	2,189
Practice management service fees		14,178		18,049
Pharmaceutical sales to physicians		8,418		11,196
Clinical research revenue		—		118
	$	22,790	$	31,552

Revenue is recognized when earned. Sales and related cost of revenues are generally recognized upon delivery of goods or performance of services.

Net Loss Per Common Share: A reconciliation of the basic loss per share and the diluted loss per share computation is presented below for the three month periods ended March 31, 2002 and 2001.

	Three Months Ended
	March 31,
	2002			2001
	(Dollar amounts in thousands
	except per share data)
Weighted average shares outstanding		12,279,555			12,290,764
Net effect of dilutive stock options and warrants based on the treasury stock method		—	(A)		—	(A)
Weighted average shares and common stock equivalents		12,279,555			12,290,764
Net loss		($915	)		($1,220	)
Diluted per share amount		($0.07	)		($0.10	)

(A) Stock options and warrants are excluded from the weighted average number of common shares due to their anti-dilutive effect.

NOTE 3 — NOTES PAYABLE

The terms of the Company’s original lending agreement provided for a $42.0 million Credit Facility, to mature in June 2002, to fund the Company’s acquisition and working capital needs. The Credit Facility, originally comprised of a $35.0 million Term Loan Facility and a $7.0 million Revolving Credit Facility, is collateralized by the assets of the Company and the common stock of its subsidiaries. The Credit Facility originally bore interest at a variable rate equal to LIBOR plus an original spread between 1.375% and 2.5%, depending upon borrowing levels. The Company was also obligated to a commitment fee of .25% to .5% of the unused portion of the Revolving Credit Facility. The Company was subject to certain affirmative and negative covenants which, among other things, originally required that the Company maintain certain financial ratios, including minimum fixed charge coverage, funded debt to EBITDA and minimum net worth. This original lending agreement was subsequently and significantly amended in November 1999 and March 2000, as described below.

In November 1999, the Company and its Lenders amended certain terms of the Credit Facility. As a result of this amendment, the Revolving Credit Facility was reduced from $7.0 million to $6.0 million and the interest rate was adjusted to LIBOR plus a spread of 3.25%. The Company’s obligation for commitment fees was adjusted from a maximum of .5% to .625% of the unused portion of the Revolving Credit Facility. Repayment of the January 1, 2000 quarterly installment was accelerated. In addition, certain affirmative and negative covenants were added or modified,

-9-

including minimum EBITDA requirements for the fourth quarter of 1999 and the first quarter of 2000. Compliance with certain covenants was also waived for the quarters ended September 30, 1999 and December 31, 1999.

On March 30, 2000, the Company and its Lenders again amended various terms of the Credit Facility. As a result of this amendment, certain affirmative and negative covenants were added (including minimum quarterly cash flow requirements through March 2001), and certain other existing covenants were modified. Additionally, certain principal repayment terms were modified and certain future and current compliance with specific covenants was waived. Finally, the maturity date of the Credit Facility was accelerated to June 2001.

During the third quarter of 2000, the Company did not meet certain financial covenants of the Credit Facility, including those related to minimum cash flow requirements, resulting in an event of default under the Credit Facility. This occurred primarily due to further erosion in high dose chemotherapy volumes. As a result of this event of default, the Company’s Lenders adjusted the interest rates on the outstanding principal to the default rate of prime plus 3% (12.5% at the time of default) and terminated any obligation to advance additional loans or issue letters of credit. As a result of this termination, the Company has not experienced an impact on operating cash flow. Under the terms of the Credit Facility, additional remedies available to the Lenders (as long as an event of default exists and has not been cured) included acceleration of all principal and accrued interest outstanding, the right to foreclose on related security interests in the assets of the Company and stock of its subsidiaries, and the right of setoff against any monies or deposits that the Lenders have in their possession.

Effective December 29, 2000, the Company executed a forbearance agreement with its Lenders. Under the terms of the forbearance agreement, the Lenders agreed to forbear from enforcing their rights or remedies pursuant to the Credit Facility documents until the earlier of (i) March 30, 2001 (as amended), or (ii) certain defined events of default. During this period, the interest rate was adjusted to prime plus 2%. The forbearance agreement also provided that a financial advisor be retained by the Company to assist in the development of a restructuring plan and to perform certain valuation analyses.

Pursuant to the Plan, the Lenders’ claims under the Credit Facility have been liquidated and no future revisions to the Credit Facility will occur. The terms of the permanent cash collateral order provide for the payment of interest to the Lenders at the non-default rate as set forth in the original credit agreement (currently LIBOR plus 2.5%). Additionally, as of the date of the bankruptcy filing, the Company was in technical default under the terms of the Credit Facility. Consistent with all of the above-described factors, the Company has classified all amounts due under the Company’s Credit Facility as a liability subject to settlement under reorganization proceedings in the accompanying consolidated balance sheets as of March 31, 2002 and December 31, 2001. At March 31, 2002, $25.0 million aggregate principal was outstanding under the Credit Facility with an interest rate of approximately 5.2%.

Absent the impact of the Company’s bankruptcy filing, amounts under the Credit Facility are contractually due entirely in the Company’s fiscal 2002.

The Company entered into a LIBOR-based interest rate swap agreement with the Company’s Lender as required by the terms of the Credit Facility. Effective July 1, 2000, the Company entered into a new Swap Agreement under which amounts hedged accrued interest at the difference between 7.24% and the ninety-day LIBOR rate and were settled quarterly (“Swap Agreement”). The Company has hedged $17.0 million under the terms of the Swap Agreement. The Swap Agreement terminated upon the filing of the Company’s bankruptcy petitions and has not been renewed.

The installment notes payable to affiliated physicians and physician practices were issued as partial consideration for the practice management affiliations. Pursuant to the physician practice management sale transactions that occurred in the first and second quarters of 2002, the related subordinated debt that was forgiven as part of these transactions was adjusted to the net realizable value at December 31, 2001. The unpaid principal amount of a note related to a physician practice management affiliation was $50,000 at March 31, 2002.

-10-

NOTE 4 — INCOME TAXES

Upon the consummation of the physician practice management affiliations, the Company recognized deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of purchased assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

NOTE 5 — COMMITMENTS AND CONTINGENCIES

With respect to professional and general liability risks, the Company currently maintains an insurance policy that provides coverage during the policy period ending August 1, 2002, on a claims-made basis, for $1,000,000 per claim in excess of the Company retaining $25,000 per claim, and $3,000,000 in the aggregate. Costs of defending claims are in addition to the limit of liability. In addition, the Company maintains a $5,000,000 umbrella policy with respect to potential professional and general liability claims. Since inception, the Company has incurred no professional or general liability losses and as of March 31, 2002 the Company was not aware of any pending professional or general liability claims that would have a material adverse effect on the Company’s financial condition or results of operations.

NOTE 6 — DUE FROM AFFILIATED PHYSICIANS

Due from affiliated physicians consists of management fees earned and due pursuant to the management service agreements (“Service Agreements”). In addition, the Company funds certain working capital needs of the affiliated physicians from time to time.

NOTE 7 — SEGMENT INFORMATION

The Company’s reportable segments are strategic business units that offer different services. The Company had three reportable segments: IMPACT Services, Physician Practice Management and Cancer Research Services. The IMPACT Services segment provided stem cell supported high dose chemotherapy and other advanced cancer treatment services under the direction of practicing oncologists and pharmacy management services for certain medical oncology practices through IMPACT Center pharmacies. The Physician Practice Management segment owned the assets of and managed oncology practices. The Cancer Research Services segment conducted clinical cancer research on behalf of pharmaceutical manufacturers.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies except that the Company does not allocate interest expense, taxes or corporate overhead to the individual segments. The Company evaluates segment performance based on profit or loss from operations before income taxes and unallocated amounts.

			Physician Practice		Cancer Research
	IMPACT Services		Management		Services		Total
	(In thousands)
For the three months ended March 31, 2002:
Net revenue	$	8,612	$	14,178		—	$	22,790
Total operating expenses		8,486		12,647		—		21,133
Segment contribution		126		1,531		—		1,657
Depreciation and amortization		19		—		—		19
Segment profit	$	107	$	1,531		—	$	1,638
Segment assets	$	5,589	$	10,461	$	102	$	16,152
Capital expenditures	$	6		—		—	$	6

-11-

				Physician Practice		Cancer Research
	IMPACT Services			Management		Services		Total
For the three months ended March 31, 2001:
Net revenue	$	13,385		$	18,049	$	118	$	31,552
Total operating expenses		13,485			16,329		87		29,901
Segment contribution (deficit)		(100	)		1,720		31		1,651
Depreciation and amortization		99			822		—		921
Segment profit (loss)		($199	)	$	898	$	31	$	730
Segment assets	$	14,129		$	62,080	$	809	$	77,018
Capital expenditures		—		$	36		—	$	36

Reconciliation of profit:

		Three Months Ended
		March 31,
		2002			2001
Segment profit		$	1,638		$	730
Unallocated amounts:
	Corporate salaries, general and administrative		2,122			1,485
	Corporate depreciation and amortization		108			65
	Corporate interest expense		323			1,001
Loss before income taxes			($915	)		($1,821	)

Reconciliation of consolidated assets:

		As of March 31,
		2002		2001
Segment assets		$	16,152	$	77,018
Unallocated amounts:
	Cash and cash equivalents		9,008		5,590
	Prepaid expenses and other assets		919		3,152
	Property and equipment, net		95		718
Consolidated assets		$	26,174	$	86,478

-12-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Management has included in this report certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used, statements which are not historical in nature, including the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are, by their nature, subject to known and unknown risks and uncertainties. Forward-looking statements include statements about the Plan (as defined below) and the timing of completion of the liquidation of the Company (as described below). These statements are based on current expectations and the current status of the Company’s financial condition and filings with the Court (as defined below). They involve a number of risks and uncertainties that are difficult to predict, including, but not limited to the ability of the Company to liquidate its assets under the terms of the Plan as confirmed by the Court. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other important factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements are detailed from time to time in other filings by the Company with the SEC. The Company assumes no obligation to publicly release any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

Response Oncology, Inc. and its wholly-owned and majority-owned subsidiaries (the “Company”) was, prior to the events described below, a comprehensive cancer management company. As of June 17, 2002, the Company has liquidated substantially all of its operating assets and anticipates that the remaining assets will be liquidated and all wind-down activities completed by the end of 2002. Prior to the sale of its assets, the Company provided: advanced cancer treatment services through outpatient facilities known as IMPACT® Centers under the direction of practicing oncologists; owned the assets of and managed the nonmedical aspects of oncology practices; compounded and dispensed pharmaceuticals to certain oncologists for a fixed or cost plus fee; and conducted outcomes research on behalf of pharmaceutical manufacturers.

Filings Under Chapter 11 of the Bankruptcy Code

On March 29, 2001, the Company (excluding entities that are majority-owned by Response Oncology, Inc.) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Code”) in the United States Bankruptcy Court for the Western District of Tennessee, Western Division (the “Court”). The case is jointly administered under case number 01-24607-DSK. As of March 31, 2002, the Company was operating as a debtor-in-possession under the Code, which protects it from its creditors pending reorganization or liquidation under the jurisdiction of the Court. As debtor-in-possession, the Company is authorized to operate its business but may not engage in transactions outside the ordinary course of business without approval of the Court. A statutory creditors committee may be appointed in the Chapter 11 case, but at this point such a committee has not been formed. As part of the Chapter 11 process, the Company has attempted to notify all known or potential creditors of the Chapter 11 filing for the purpose of identifying all prepetition claims against the Company.

The Court approved a disclosure statement (the “Disclosure Statement”) filed in connection with the First Joint Plan by the Company and AmSouth Bank, as agent for itself, Bank of America, N.A. and Union Planters Bank, N.A. (the “Lenders”) on Friday, May 3, 2002. Under the Plan, originally filed April 12, 2002, and amended April 19, 2002, and June 14, 2002 (collectively the “Plan”), the Company’s outstanding common stock, preferred stock, options and warrants will be cancelled and current shareholders and warrantholders will not receive any consideration. The Plan is a liquidating plan and does not contemplate the financial rehabilitation of the Company or the continuation of its business. Most of the Company’s assets have been sold or are in the process of being liquidated, with such funds being paid to creditors as set forth in the Plan.

-13-

Under the Plan, the Lenders, whose outstanding secured claim was allowed in the amount of $29,545,087.31 by Court order dated October 26, 2001, will be paid all proceeds from the liquidation, except for amounts to be paid on account of allowed administrative and priority claims (estimated to be approximately $3,500,000), and $250,000, which will be distributed to general unsecured creditors. The liquidation of the Company’s assets will not return to the Lenders or general unsecured creditors the full amount of their claims.

The Court confirmed the Plan on June 14, 2002. Upon completion of the liquidation of all the Company’s assets and distribution of those proceeds in accordance with the Plan, the Company will be dissolved.

Generally, substantially all of the Company’s liabilities as of the filing date (“prepetition liabilities”) are subject to settlement under a plan of reorganization. Actions to enforce or otherwise effect repayment of all prepetition liabilities as well as all pending litigation against the Company are stayed while the Company continues to operate as debtor-in-possession. Absent approval from the Court, the Company is prohibited from paying prepetition obligations. The Court has approved payment of certain prepetition obligations such as employee wages and benefits. Additionally, the Court has approved the retention of various legal, financial and other professionals. Schedules were filed by the Company with the Court setting forth its assets and liabilities as of the filing date as reflected in the Company’s accounting records. Differences between amounts reflected in such schedules and claims filed by creditors will be investigated and either amicably resolved or subsequently adjudicated before the Court. As previously discussed, a Plan has been confirmed by the Court and proceeds will be distributed pursuant to the Plan during the third quarter of 2002.

Under the Code, the Company may elect to assume or reject real property leases, employment contracts, personal property leases, service contracts and other executory prepetition contracts, subject to Bankruptcy Court review. Parties affected by such rejections may file prepetition claims with the Bankruptcy Court in accordance with bankruptcy procedures. At this time, because of material uncertainties, prepetition claims are generally carried at face value in the accompanying financial statements. The Company cannot presently determine or reasonably estimate the ultimate liability that may result from rejecting leases or from filing of claims for any rejected contracts, and no provisions have been made for the majority of these items. Additionally, the net expense resulting from the Chapter 11 filing by the Company has been segregated and reported as reorganization costs in the consolidated statements of operations for the quarter ended March 31, 2002.

The Company’s consolidated financial statements have been prepared in accordance with the American Institute of Certified Public Accountants (AICPA) Statement of Position 90-7 (SOP 90-7), “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.” In addition, the consolidated financial statements have been prepared using accounting principles applicable to a going concern, which contemplates the realization of assets and the payment of liabilities in the ordinary course of business. As a result of the Chapter 11 filing, such realization of assets and liquidation of liabilities is subject to uncertainty. Based on the liquidation values of the Company’s assets sold in April and May of 2002, the carrying value of these assets was adjusted to the net realizable value as of December 31, 2001. The financial statements include reclassifications made to reflect the liabilities that have been deferred under the Chapter 11 proceedings as “Liabilities Subject to Settlement under Reorganization Proceedings.” The Company will adopt “Fresh-Start Reporting” pursuant to SOP 90-7 on the effective date of the Plan, which will be June 25, 2002 unless confirmation of the Plan is appealed or otherwise stayed. Certain accounting and business practices have been adopted that are applicable to companies that are operating under Chapter 11.

Generally, the Company has exited its IMPACT Services business that provided high dose chemotherapy with stem cell support to cancer patients on an outpatient basis. Through its IMPACT Centers, the Company had developed extensive medical information systems and databases containing clinical and patient information, analysis of treatment results and side effects and clinical care pathways. These systems and databases supported the Company’s clinical trials program, which involved carefully planned, uniform treatment regimens administered to a significant group of patients together with the monitoring of outcomes and side effects of these treatments. The clinical trials program allowed the Company to develop a rational means of improving future treatment regimens by predicting which patients are most likely to benefit from different treatments. The Company’s clincial trials assets and related infrastructure were sold in April 2002.

Each IMPACT Center was staffed by, and made extensive use of, experienced oncology nurses, pharmacists, laboratory technologists, and other support personnel to deliver outpatient services under the direction of independent medical oncologists. IMPACT Center services included preparation and collection of stem cells, administration of high dose

-14-

chemotherapy, reinfusion of stem cells and delivery of broad-based supportive care. IMPACT Center personnel extended the support mechanism into the patient’s home, further reducing the dependence on hospitalization. The advantages of this system to the physician and patient included: (i) convenience of the local treatment facility; (ii) specialized on-site laboratory and pharmacy services, including home pharmacy support; (iii) access to the Company’s clinical trials program to provide ongoing evaluation of current cancer treatment; (iv) specially trained medical and technical staff; (v) patient education and support materials through computer, video and staff consultation; and (vi) reimbursement assistance.

High dose chemotherapy is most appropriate for patients with lymphoma, acute leukemia, multiple myeloma and breast and ovarian cancer. Patients referred to the Company by the treating oncologists were placed on a treatment protocol developed from the cumulative analysis of the Company’s approximately 4,000 high dose cases. Cases conducted at the IMPACT Center began with a drug regimen which allowed for the collection and cryopreservation of stem cells. A stem cell is a cell which originates in the bone marrow and is a precursor to white blood cells. At the appropriate time, stem cells capable of restoring immune system and bone marrow functions were harvested over a two to three day period. The harvested stem cells were then frozen and stored at the IMPACT Center, and following confirmation of response to treatment and a satisfactory stem cell harvest, patients received high dose chemotherapy followed by reinfusion of stem cells. Most patients were then admitted to an affiliated hospital for approximately 8-12 days. After discharge, the patient was monitored in the oncologist’s office. The Company believed that the proprietary databases and the information gathering techniques developed from the foregoing programs enabled practicing oncologists to cost effectively manage cancer cases while ensuring quality. Clinical research conducted by the Company focused on: (i) improving cancer survival rates; (ii) enhancing the cancer patient’s quality of life; (iii) reducing the costs of cancer care; and (iv) developing new approaches to cancer diagnosis, treatment and post-treatment monitoring.

In May of 1999, the results of certain breast cancer studies were released at the meeting of the American Society of Clinical Oncology (ASCO). These studies, involving the use of high dose chemotherapy, sparked controversy among oncologists, and, in the aggregate, caused confusion among patients, third-party payers, and physicians about the role of high dose chemotherapy in the treatment of breast cancer. After the release of these data, the Company’s high dose business slowed extensively. The Company closed 4 IMPACT Centers in the first quarter of 2002, 16 IMPACT Centers in 2001, 19 IMPACT Centers in 2000, and 12 IMPACT Centers in 1999 due to decreased patient volumes. All remaining IMPACT Centers are currently being sold or closed by the Company. The decline in the IMPACT Center business was a significant factor that led to the Company’s bankruptcy filing.

While additional data presented at the 2000 ASCO annual meeting appeared to clarify somewhat the role of high dose therapies for breast cancer and indicated favorable preliminary results, the Company did not experience an increase in referrals for breast cancer patients, nor did the Company expect this trend to reverse in the foreseeable future. The continuing declines in high dose therapy volumes and the inability to develop new referral lines or treatment options for the network related to non-breast cancer volumes adversely affected the financial results of this line of business. Such adverse results have required the Company to close or sell the remaining IMPACT Centers in the network.

During the first quarter of 2000, the Company decided to expand into the specialty pharmaceutical business and began to put in place certain of the resources necessary for this expansion. The Company intended to leverage its expertise and resources in the delivery of complex pharmaceuticals to cancer patients into the delivery of specialty drugs to patients with a wide range of chronic, costly and complex diseases. Specifically, this would have included the distribution of new drugs with special handling requirements, and was expected to involve the use of the Company’s regional network of specialized pharmaceutical centers. In addition, the Company intended to use its national network of IMPACT Centers and its highly trained healthcare professionals to administer the most fragile compounds to the expanded patient population. The Company had hired an expert consultant to assist in the development of the business plan. In addition, the Company recruited a chief medical officer and a vice president of operations in the third quarter of 2000. These individuals had operating responsibilities over the existing business segments and for the development of the specialty pharmaceutical business. The Company also engaged in discussions with potential strategic partners, including certain pharmaceutical manufacturers, partner hospitals, and affiliated physicians. Various clinical and marketing materials were also developed. These services were marketed to select physicians and third-party payers in existing locations within the IMPACT Center network. The Company treated very few patients utilizing such specialty drugs. Given the Company’s liquidation of all of its assets, the Company is no longer pursuing this strategy.

-15-

The Company provided pharmacy management services to certain medical oncology practices through its IMPACT Center pharmacies. These services included compounding and dispensing pharmaceuticals for a fixed or cost plus fee. The Company has sold or is in the process of selling all of its pharmacy management assets.

During 1996, the Company adopted a strategy of diversification into physician practice management and ultimately consummated affiliations with 12 medical oncology practices, including 43 medical oncologists in Florida and Tennessee. Pursuant to management service agreements (“Service Agreements”), the Company provided management services that extended to all nonmedical aspects of the operations of the affiliated practices. As described below, the Company recognized deterioration in the value of its Service Agreements through financial charges and termination and modification negotiations. As of May 10, 2002, the Company had terminated all of its Service Agreements and sold all of its assets related to oncology practice management services.

The Service Agreements named the Company as the sole and exclusive manager and administrator of all day-to-day business functions connected with the medical practice of an affiliated physician group. The Company was responsible for providing facilities, equipment, supplies, support personnel, and management and financial advisory services. Under the terms of the Service Agreements, the Company (among other things): (i) prepared annual capital and operating budgets; (ii) prepared financial statements; (iii) ordered and purchased medical and office inventory and supplies; (iv) billed patients and third party payers as agent for the affiliated practices; (v) maintained accounting, billing, medical, and collection records; (vi) negotiated and administered managed care contracts as agent for affiliated physicians; (vii) arranged for legal and accounting services related to practice operations; (viii) recruited, hired and appointed an executive director to manage and administer all of the day-to-day business functions of each practice; and (ix) managed all non-physician professional support, administrative, clerical, secretarial, bookkeeping and billing personnel. The Company sought to combine the purchasing power of numerous physicians to obtain favorable pricing and terms for equipment, pharmaceuticals and supplies.

In return for its management services, the Company received a service fee, depending on Service Agreement form, based on net revenue or net operating income of the practice. Pursuant to each Service Agreement, the physicians and the practice agreed not to compete with the Company and the practice. Each Service Agreement had an initial term of 40 years and, after the initial term, would have been automatically extended for additional five year terms unless either party delivered written notice to the other party 180 days prior to the expiration of the preceding term. The Service Agreement only provided for termination “for cause.” If the Company terminated the Service Agreement for cause, the practice was typically obligated to purchase assets (which typically include intangible assets) and pay liquidated damages, which obligations were wholly or partially guaranteed by individual physician owners of the practice for a period of time. Each Service Agreement provided for the creation of an oversight committee, a majority of the members of which were designated by the practice. The oversight committee was responsible for developing management and administrative policies for the overall operation of each practice.

In February 1999 and March 1999, respectively, the Company announced that it had terminated its Service Agreements with Knoxville Hematology Oncology Associates, PLLC, and Southeast Florida Hematology Oncology Group, P.A., two of the Company’s three underperforming net revenue model relationships. Since these were not “for cause” terminations initiated by the Company, the affiliated practices were not responsible for liquidated damages. The structure of these contracts failed over time to align the physician and Company incentives, producing deteriorating returns and/or negative cash flows to the Company. The Company terminated the Service Agreement with the third physician group effective December 31, 2001.

In the fourth quarter of 1999, the Company terminated its Service Agreement with one single-physician practice in Florida. This termination was initiated on a “for cause” basis and the Company sought recovery of liquidated damages and other amounts owed. This dispute was settled pending execution of definitive documents in May 2002 for $275,000. No recovery has been recorded in the consolidated financial statements as of and for the year ended December 31, 2001. During the same period, the Company began negotiations to terminate another Service Agreement with a single-physician practice. Since this was not a “for cause” termination initiated by the Company, the affiliated practice was not responsible for liquidated damages. The Company experienced deteriorating returns on this particular Service Agreement and concluded that continuing the relationship was not economically feasible. At December 31, 1999, the Company recorded an impairment charge related to both Service Agreements and associated assets. The Company terminated the second Service Agreement in April 2000.

-16-

In the fourth quarter of 2000, the Company began negotiating, in response to certain contract disputes, to sell the assets of Oncology/Hematology Group of South Florida, P.A. (“OHGSF”) to the existing physician group. Concurrent with the sale of the assets, the Service Agreement was terminated, and the parties signed a pharmacy management agreement for the Company to provide turnkey pharmacy management services to the practice. The sale and pharmacy management agreement were completed and effective February 1, 2001. At December 31, 2000, the Company adjusted the Service Agreement and associated assets to their net realizable value as measured by the termination and sale agreement. The pharmacy management agreement with OHGSF expired on February 1, 2002.

During the first and second quarters of 2002, the Company terminated all of the remaining Service Agreements and sold the associated assets to the physician groups that were parties to the agreements. At December 31, 2001, the Company adjusted the Service Agreements and associated assets to their net realizable values as measured by the termination and sale agreements. This resulted in an impairment charge of $42.1 million related to the Service Agreements and $5.0 million related to adjustments to associated assets that was recorded in the year ended December 31, 2001. The aggregate proceeds generated from the termination of the remaining six Service Agreements as sale of related assets were approximately $11.3 million.

The filings of the voluntary bankruptcy petitions by the Company were technical defaults under the terms of the Service Agreements. However, such provisions are not enforceable under the Bankruptcy Code and the affiliated practices were stayed from terminating their agreements for cause because of the bankruptcy filings. As discussed above, all of the remaining Service Agreements and associated assets were terminated and sold back to the affiliated physicians in the first and second quarters of 2002.

During the second quarter of 2000, the Centers for Medicare and Medicaid Services (“CMS” — fka the Health Care Financing Administration), which oversees the Medicare program, announced its intent to adjust certain pharmaceutical reimbursement mechanisms. CMS targeted dozens of drugs, principally those used for the treatment of cancer and AIDS. More specifically, Medicare utilizes the average wholesale price (“AWP”) of pharmaceuticals as the benchmark for reimbursement. It is CMS’s stated position that some drug companies are reporting artificially inflated AWPs to industry guides that are used for government-reimbursement purposes, resulting in overpayments by Medicare and excess profits for physicians and other providers. CMS’s investigation into inflated AWPs is ongoing. If the Service Agreements had not been terminated, the management fees earned by the Company pursuant to the Service Agreements would have been exposed to reduction resulting from decreases in reimbursement rates.

On December 1, 2000, the Company received a delisting notification from the Nasdaq Stock Market for failure to maintain a minimum bid price of $1.00 over 30 consecutive trading days as required under the maintenance standards of the Nasdaq National Market. On March 15, 2001, the Company’s common stock was delisted from the Nasdaq Stock Market. Following the delisting, quotations for the Company’s common stock were available on the OTC Bulletin Board.

Results of Operations

Net revenue decreased 28% to $22.8 million for the quarter ended March 31, 2002, compared to $31.6 million for the quarter ended March 31, 2001. Practice management service fees were $14.2 million for the first quarter of 2002 compared to $18.0 million for the same period in 2001 for a 21% decrease. This decrease is primarily due to the termination and sale of related assets of two Service Agreements effective February 1, 2001 and December 31, 2001, respectively. This decrease was partially offset by a 2% increase in practice management fees on the remaining practice groups. Pharmaceutical sales to physicians decreased $2.8 million, or 25%, from $11.2 million for the first three months of 2001 to $8.4 million in 2002. This decrease is primarily due to the terminations of two pharmaceutical sales agreements with physician practices effective April 1, 2001 and February 1, 2002, but was partially offset by the addition of one pharmacy management contract effective January 1, 2002. Additionally, net patient service revenues from IMPACT services decreased $2.0 million, or 91%, from $2.2 million in the first quarter of 2001 to $.2 million in the first quarter of 2002. This decrease in high dose chemotherapy revenues was due to overall decreases in referrals to the IMPACT Centers, with some continued pullback in breast cancer admissions resulting from high dose chemotherapy/breast cancer study results presented at ASCO in May 1999. In addition, the Company experienced a decline in insurance approvals on the high dose referrals obtained. These decreases in referrals and approvals led to the

-17-

closure of numerous IMPACT Centers each year since 1999. As stated above, the Company has closed or is in the process of selling all remaining IMPACT Centers.

Salaries and benefits costs decreased $2.1 million, or 45%, from $4.7 million for the first quarter of 2001 to $2.6 million in 2002. The decrease is primarily due to the termination of certain Service Agreements, the closing of various IMPACT Centers and a significant reduction in corporate staffing. Salaries and benefits expense as a percentage of net revenue was 11% and 15% for the quarters ended March 31, 2002 and 2001, respectively.

Supplies and pharmaceuticals expense decreased $4.6 million, or 20%, from the first quarter of 2001 to the first quarter of 2002. The decrease is primarily related to the termination of a pharmacy management contract with two physician practices effective April 1, 2001 and February 1, 2002, as well as the termination and sale of two Service Agreements effective February 1, 2001 and December 31, 2001. A decrease in patient volumes in the IMPACT Centers also contributed to the decrease. Supplies and pharmaceuticals expense as a percentage of net revenue was 80% and 72% for the quarters ended March 31, 2002 and 2001, respectively. The increase as a percentage of net revenue is primarily due to general price increases in pharmaceuticals used in the pharmaceutical sales and practice management divisions.

General and administrative expenses decreased $.6 million, or 33%, from $1.8 million in the first quarter of 2001 to $1.2 million in the first quarter of 2002. The decrease was primarily due to the net effect of decreased administrative expenses due to the closure of various IMPACT Centers and the termination of certain Service Agreements, offset by increased expenses for professional services, principally legal and consulting fees, related to the Company’s restructuring efforts prior to the bankruptcy filing.

Other operating expenses decreased $1.2 million, or 67%, from $1.8 million in 2001 to $.6 million in 2002. Other operating expenses consist primarily of medical director fees, purchased services related to global case rate contracts, rent expense, and other operational costs. The decrease is primarily due to the closure of various IMPACT Centers and lower purchased services and physician fees as a result of lower IMPACT and cancer research volumes as compared to the first quarter of 2001.

For the three months ended March 31, 2002, all operating and general expenses other than those related to pharmaceuticals and supplies were reduced by $3.9 million, or 47%, as compared with those for the three months ended March 31, 2001. These reductions reflect cost reduction and containment steps put in place in the first quarter of 2000, the closure of 17 IMPACT Centers since the first quarter of 2001, lower patient volumes, lower corporate overhead expenses and the termination of Service Agreements in February and December 2001, partially offset by increased expenses for professional services, principally legal and consulting fees, related to the Company’s restructuring efforts prior to the bankruptcy filing.

Depreciation and amortization decreased $.9 million from $1.0 million for the first quarter of 2001 to $.1 million for the first quarter of 2002. This decrease is primarily due to the write-off of the Company’s Service Agreements in 2001, resulting in lower amortization in 2002.

Reorganization costs of $.7 million for the quarter ended March 31, 2002, consist of expenses for professional services, principally legal and consulting fees, that were incurred by the Company in 2002 as a result of the bankruptcy filing.

EBITDA (earnings (loss) before interest, taxes, depreciation and amortization) decreased $.6 million to ($.4) million for the quarter ended March 31, 2002 in comparison to $.2 million for the quarter ended March 31, 2001. EBITDA from the IMPACT services segment increased $.2 million for the quarter ended March 31, 2002 as compared to the quarter ended March 31, 2001. The increase is primarily due to certain bad debt recoveries in the first quarter of 2002. EBITDA from the physician practice management division decreased $.2 million primarily due to increases in pharmaceutical and supply costs, increases in contractual adjustments, and the termination and modification of certain Service Agreements. Corporate general and administrative expenses, principally reorganization costs, increased $.6 million in the first quarter of 2002 as compared to the first quarter of 2001, thereby accounting for the overall net decrease in EBITDA. EBITDA is presented because it is a widely accepted financial indicator of a company’s ability to service indebtedness. However, EBITDA should not be considered as an alternative to income (loss) from operations or to cash flows from operating, investing or financing activities, as determined in accordance with generally accepted accounting principles. EBITDA should also not be construed as an indication of the Company’s operating performance or as a measure of liquidity. In

-18-

addition, because EBITDA is not calculated identically by all companies, the presentation herein may not be comparable to other similarly titled measures of other companies.

Liquidity and Capital Resources

At March 31, 2002, the Company’s working capital totaled $23.9 million, with current assets of $25.8 million and current liabilities of $1.9 million (excluding liabilities subject to settlement under reorganization proceedings of $42.7 million). Cash and cash equivalents represented $9.0 million of the Company’s current assets. Approximately $1.1 of the Company’s cash and cash equivalents as of March 31, 2002 is escrowed pursuant to the Company’s employee retention plan that was approved by the Bankruptcy Court in the third quarter of 2001. Positive working capital is primarily attributable to the change in balance sheet classification of liabilities subject to settlement under reorganization proceedings, as further described below.

Cash provided by operating activities was $2.4 million in the first quarter of 2002 compared to cash provided by operating activities of $3.7 million for the same period in 2001. This decrease is largely attributable to a reduction in amounts due from affiliated physician groups in the first quarter of 2001 resulting from the sale proceeds and recovery of working capital associated with the asset sale and concurrent termination of a Service Agreement in the first quarter of 2001 and the payment of bankruptcy related professional fees. In addition, this decrease was partially offset by an increase in cash generated from accounts receivable due to the termination of certain pharmacy management agreements and the closure of various IMPACT Centers.

Cash provided by investing activities was $19,000 for the quarter ended March 31, 2002. Cash used in investing activities was $20,000 for the quarter ended March 31, 2001. The increase is primarily attributable to a reduction in capital expenditures in the first quarter of 2002 as compared to the first quarter of 2001.

Cash used in financing activities was $1.4 million for the first quarter of 2002 and $5.4 million for the same period in 2001. The decrease in cash used in financing activities is primarily attributable to additional payments on notes payable due to the remittances of the sale proceeds discussed above and distributions to joint venture partners in the first quarter of 2001 as compared to the first quarter of 2002.

Under the terms of the Company’s Bankruptcy case, liabilities in the approximate amount of $42.7 million are subject to settlement. Generally, actions to enforce or otherwise effect repayment of all prepetition liabilities as well as all pending litigation against the Company are stayed while the Company continues its business operations as debtor-in-possession. The ultimate amount and settlement terms for such liabilities are subject to the Plan which provides a mechanism for the allowance of claims and distribution on account of such claims. The precise treatment of such claims is not presently determinable.

Since the filing of the bankruptcy petitions, the Company has been operating under various interim cash collateral orders whereby the Company is authorized to utilize cash according to cash budgets approved by the Court. On October 26, 2001, a permanent cash collateral order was approved by the Court. Pursuant to the terms of the permanent cash collateral order, the Company was authorized to utilize cash according to approved cash budgets until the earlier of the occurrence of a specific defined event or March 31, 2002. Such defined events included, but were not limited to, the filing of a reorganization plan, the sale of all of the assets of the Company, conversion of the cases to Chapter 7 of the Code, or the occurrence of an uncured default. Furthermore, a lump sum principal payment to the Lenders of $2.6 million was made on October 31, 2001. The terms of the permanent cash collateral order also provide for the payment of interest to the Lenders at the non-default rate as set forth in the original credit agreement (currently LIBOR plus 2.5%). On April 12, 2002, an order extending and modifying the order entered on October 26, 2001 was approved by the Court. Pursuant to the terms of this amendment, the termination date for the use of cash collateral was extended until July 15, 2002. Furthermore, additional default provisions were added to the order. Such additional defaults include, but are not limited to, failure of the Company to support through confirmation the Plan, the disposition or settlement of any assets without full consultation of the Lenders, payment of any additional professional fees above the amount set forth in the budget, and the accrual of additional professional fees in excess of $250,000 for services performed for the period from April 1, 2002, through the effective date of the Plan. The Company’s historical cash flow since the filing of the petitions and current cash budgets indicate sufficient liquidity to fund its operations during the aforementioned periods.

-19-

On July 31, 2001 (and subsequently amended on or about January 25, 2002), the Court approved the establishment of an Employee Retention Plan (“ERP”) by the Company in order to provide monetary incentives for certain employees to remain with the Company during its restructuring and liquidation efforts. The ERP also provides severance benefits for certain employees in the event of a “without cause” termination. In addition, amendments to certain employment agreements of officers of the Company were approved. Pursuant to these court orders, approximately $1.3 million was placed in escrow for the benefit of various employees and officers related to the stay bonus components of the ERP and employment contracts. At March 31, 2002, approximately $1.1 million in ERP funds is reflected in cash and cash and equivalents. The aggregate contingent liability of the ERP, including certain employment agreements, was approximately $1.7 million as of March 31, 2002. Approximately $1.1 million was paid out to certain employees and officers from April 1, 2002, through May 31, 2002, and such amounts were not accrued in the consolidated financial statements as of and for the quarter ended March 31, 2002 because the triggers for payment of such obligations occurred subsequent to quarter-end.

The terms of the Company’s original lending agreement provided for a $42.0 million Credit Facility, to mature in June 2002, to fund the Company’s acquisition and working capital needs. The Credit Facility, originally comprised of a $35.0 million Term Loan Facility and a $7.0 million Revolving Credit Facility, is collateralized by the assets of the Company and the common stock of its subsidiaries. The Credit Facility originally bore interest at a variable rate equal to LIBOR plus an original spread between 1.375% and 2.5%, depending upon borrowing levels. The Company was also obligated to a commitment fee of .25% to .5% of the unused portion of the Revolving Credit Facility. The Company is subject to certain affirmative and negative covenants which, among other things, originally required that the Company maintain certain financial ratios, including minimum fixed charge coverage, funded debt to EBITDA and minimum net worth. This original lending agreement was subsequently and significantly amended in November 1999 and March 2000, as described below.

In November 1999, the Company and its Lenders amended certain terms of the Credit Facility. As a result of this amendment, the Revolving Credit Facility was reduced from $7.0 million to $6.0 million and the interest rate was adjusted to LIBOR plus a spread of 3.25%. The Company’s obligation for commitment fees was adjusted from a maximum of .5% to .625% of the unused portion of the Revolving Credit Facility. Repayment of the January 1, 2000 quarterly installment was accelerated. In addition, certain affirmative and negative covenants were added or modified, including minimum EBITDA requirements for the fourth quarter of 1999 and the first quarter of 2000. Compliance with certain covenants was also waived for the quarters ended September 30, 1999 and December 31, 1999.

On March 30, 2000, the Company and its Lenders again amended various terms of the Credit Facility. As a result of this amendment, certain affirmative and negative covenants were added (including minimum quarterly cash flow requirements through March 2001), and certain other existing covenants were modified. Additionally, certain principal repayment terms were modified and future and current compliance with specific covenants was waived. Finally, the maturity date of the Credit Facility was accelerated to June 2001.

During the third quarter of 2000, the Company did not meet certain financial covenants of the Credit Facility, including those related to minimum cash flow requirements, resulting in an event of default under the Credit Facility. This occurred primarily due to further erosion in high dose chemotherapy volumes. As a result of this event of default, the Company’s Lenders adjusted the interest rates on the outstanding principal to the default rate of prime plus 3% (12.5% at the time of default) and terminated any obligation to advance additional loans or issue letters of credit. Under the terms of the Credit Facility, additional remedies available to the Lenders (as long as an event of default exists and has not been cured) included acceleration of all principal and accrued interest outstanding, the right to foreclose on related security interests in the assets of the Company and stock of its subsidiaries, and the right of setoff against any monies or deposits that the Lenders have in their possession.

Effective December 29, 2000, the Company executed a forbearance agreement with its Lenders. Under the terms of the forbearance agreement, the Lenders agreed to forbear from enforcing their rights or remedies pursuant to the Credit Facility documents until the earlier of (i) March 30, 2001 (as amended), or (ii) certain defined events of default. During this period, the interest rate was adjusted to prime plus 2%. The forbearance agreement also provided that a financial advisor be retained by the Company to assist in the development of a restructuring plan and to perform certain valuation analyses.

-20-

Pursuant to the Plan, the Lenders’ claims under the Credit Facility have been liquidated and no future revisions to the Credit Facility will occur. Additionally, as of the date of the bankruptcy filing, the Company was in technical default under the terms of the Credit Facility. Consistent with all of the above-described factors, the Company has classified all amounts due under the Company’s Credit Facility as a liability subject to settlement under reorganization proceedings in the accompanying consolidated balance sheets as of March 31, 2002 and December 31, 2001. At March 31, 2002, $25.0 million aggregate principal was outstanding under the Credit Facility with an interest rate of approximately 5.2%.

The Company entered into a LIBOR-based interest rate swap agreement with the Company’s Lender as required by the terms of the Credit Facility. Effective July 1, 2000, the Company entered into a new Swap Agreement Under which amounts hedged accrued interest at the difference between 7.24% and the ninety-day LIBOR rate and were settled quarterly (“Swap Agreement”). The Company has hedged $17.0 million under the terms of the Swap Agreement. The Swap Agreement terminated upon the filing of the Company’s bankruptcy petitions and has not been renewed.

The installment notes payable to affiliated physicians and physician practices were issued as partial consideration for the practice management affiliations. Pursuant to the physician practice management sale transactions that occurred in the first and second quarters of 2002, the related subordinated debt that was forgiven as part of these transactions was adjusted to the net realizable value at December 31, 2001. The unpaid principal amount of a note related to a practice management affiliation was $50,000 at March 31, 2002.

The Company is committed to future minimum lease payments under operating leases of $93,000 for administrative and operational facilities through June 30, 2002. As of June 30, 2002, the Company will cease operations at its headquarters in Memphis, Tennessee.

Health Insurance Portability and Accountability Act of 1996

The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) mandated the development of regulations to standardize electronic healthcare transactions and to ensure the privacy and protection of individually identifiable health information. On August 17, 2000, the Department of Health and Human Services (“HHS”) published the first final rule of this set, Standards for Electronic Transactions (“Transactions Rule”). Most entities subject to the Transactions Rule must be in compliance by October 16, 2003. On December 28, 2000, HHS published a second final rule, addressing the privacy of individually identifiable health information (“Privacy Rule”). Most entities subject to the Privacy Rule are currently required to be in compliance by April 14, 2003. A third final regulation establishing a unique identifier for employers to use in electronic health care transactions was published on May 31, 2002. Two other HIPAA components — a rule creating a unique identifier for providers to use in such transactions and a rule setting standards for the security of electronic health information – were proposed in 1998, but have not been finalized. Still to be proposed are rules establishing a unique identifier for health plans for electronic transactions, standards for claims attachments, and enforcement standards. Plans for a national individual identifier rule have been placed on hold.

The Company will likely be dissolved prior to implementation of the HIPAA regulations.

New Accounting Standards

In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. Statement 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. Statement 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provision of Statement 142. Statement 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with FAS Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.

-21-

The Company is required to adopt the provisions of Statement 141 immediately except with regard to business combinations initiated prior to July 1, 2001, and Statement 142 effective January 1, 2002. Furthermore, goodwill and intangible assets determined to have an indefinite useful life acquired in a purchase business combination completed after June 30, 2001, but before Statement 142 is adopted in full will not be amortized, but will continue to be evaluated for impairment in accordance with the appropriate pre-Statement 142 accounting literature. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 will continue to be amortized and tested for impairment in accordance with the appropriate pre-Statement 142 accounting requirements prior to the adoption of Statement 142.

Statement 141 requires upon adoption of Statement 142 that the Company evaluate its existing intangible assets and goodwill that were acquired in prior purchase business combinations, and make any necessary reclassifications in order to conform with the new criteria in Statement 141 for recognition apart from goodwill. Upon adoption of Statement 142, the Company will be required to reassess the useful lives and residual values of all intangible assets acquired, and make any necessary amortization period adjustments by the end of the first interim period after adoption. In addition, to the extent an intangible asset is identified as having an indefinite useful life, the Company will be required to test the intangible asset for impairment in accordance with the provisions of Statement 142 within the first interim period. Any impairment loss will be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period.

In connection with Statement 142’s transitional goodwill impairment evaluation, the Statement will require the Company to perform an assessment of whether there is an indication that goodwill (and equity-method goodwill) is impaired as of the date of adoption. To accomplish this, the Company must identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The Company will then have up to six months from the date of adoption to determine the fair value of each reporting unit and compare it to the reporting unit’s carrying amount. To the extent a reporting unit’s carrying amount exceeds its fair value, an indication exists that the reporting unit’s goodwill may be impaired and the Company must perform the second step of the transitional impairment test. In the second step, the Company must compare the implied fair value of the reporting unit’s goodwill determined by allocating the reporting unit’s fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with Statement 141, to its carrying amount, both of which would be measured as of the date of adoption. This second step is required to be completed as soon as possible, but no later than the end of the year of adoption. Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in the Company’s statement of earnings.

Any unamortized negative goodwill (and equity-method goodwill) existing at the date Statement 142 is adopted must be written off as the cumulative effect of a change in accounting principle.

As of the date of adoption, the Company had no unamortized identifiable intangible assets that were subject to the transitional provisions of Statements 141 and 142. Amortization expense related to identifiable intangible assets was $.6 million for the quarter ended March 31, 2001. There was no amortization expense related to identifiable intangible assets for the quarter ended March 31, 2002.

In August 2001, the FASB issued FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (Statement 144), which supersedes both FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (Statement 121) and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions (Opinion 30), for the disposal of a segment of a business (as previously defined in that Opinion). Statement 144 retains the fundamental provisions in Statement 121 for recognizing and measuring impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with Statement 121. For example, Statement 144 provides guidance on how a long-lived asset that is used as part of a group should be evaluated for impairment, establishes criteria for when a long-lived asset is held for sale, and prescribes the accounting for a long-lived asset that will be disposed of other than by sale. Statement 144 retains the basic provisions of Opinion 30 on how to present discontinued operations in the income statement but broadens that presentation to include a component of an entity (rather than a segment of a business). Unlike Statement 121, an impairment assessment under Statement 144 will never result in a write-down of goodwill. Rather, goodwill is evaluated for impairment under Statement No. 142, Goodwill and Other Intangible Assets.

-22-

The Company has adopted Statement 144 for the quarter ended March 31, 2002. Such adoption of Statement 144 for long-lived assets held for use did not have a material impact on the Company’s financial statements because the impairment assessment under Statement 144 is largely unchanged from Statement 121. Furthermore, the Company has no unamortized identifiable intangible assets. The provisions of the Statement for assets held for sale or other disposal generally are required to be applied prospectively after the adoption date to newly initiated disposition activities.

Critical Accounting Policies

Financial Reporting Release No. 60, recently issued by the SEC, requires all companies to include a discussion of critical accounting policies or methods used in the preparation of the financial statements. Notes 1 and 2 of the Notes to the Consolidated Financial Statements includes a summary of the significant accounting policies and methods used in the preparation of the Company’s Consolidated Financial Statements. The following is a brief discussion of the Company’s more significant accounting policies.

The Company’s consolidated financial statements have been prepared in accordance with the American Institute of Certified Public Accountants (AICPA) Statement of Position 90-7 (SOP 90-7), “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.” In addition, the consolidated financial statements have been prepared using accounting principles applicable to a going concern, which contemplates the realization of assets and the payment of liabilities in the ordinary course of business. As a result of the Chapter 11 filing, such realization of assets and liquidation of liabilities is subject to uncertainty. Based on the liquidation values of the Company’s assets sold in April and May of 2002, the carrying value of these assets has been adjusted to their net realizable value as of December 31, 2001. The financial statements include reclassifications made to reflect the liabilities that have been deferred under the Chapter 11 proceedings as “Liabilities Subject to Settlement under Reorganization Proceedings.” The Company will adopt “Fresh- Start Reporting” pursuant to SOP 90-7 on the effective date of the Plan, which will likely be June 25, 2002. Certain accounting and business practices have been adopted that are applicable to companies that are operating under Chapter 11.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s primary market risk exposure has been to changes in interest rates obtainable on its Credit Facility. The Company’s interest rate risk objective has been to limit the impact of interest rate fluctuations on earnings and cash flows and to lower its overall borrowings by selecting interest periods for traunches of the Credit Facility that are more favorable to the Company based on the current market interest rates. Prior to the Company’s bankruptcy filing, the Company had the option of fixing current interest rates for interest periods of 1, 2, 3 or 6 months. Since the filing of the Company’s bankruptcy petitions and consistent with the cash collateral orders, interest rates have been set exclusively for one-month periods.

The Company was also a party to a LIBOR based interest rate swap agreement, effective July 1, 2000, with the Company’s Lender as required by the terms of the Credit Facility. Amounts hedged under the Swap Agreement accrued interest at the difference between 7.24% and the ninety-day LIBOR rate and were settled quarterly (“Swap Agreement”). The Swap Agreement terminated upon the filing of the Company’s bankruptcy petitions and has not been renewed. The Company does not enter into derivative or interest rate transactions for speculative purposes.

At March 31, 2002, $25.0 million aggregate principal was outstanding under the Credit Facility with a current interest rate of approximately 5.2%. The Company does not have any other material market-sensitive financial instruments.

-23-

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company filed voluntary petitions seeking reorganization under Chapter 11 of the United States Bankruptcy Code on March 29, 2001. Additional information related to the filing is set forth under Part I, Note 1 of the Notes to Consolidated Financial Statements, Part I Item 2, and Part II Item 5 of this Form 10-Q. Such information is incorporated herein by reference.

No material litigation is currently pending against the Company, and the Company is not aware of any outstanding claims against any former affiliated physician group that would have a material adverse effect on the Company’s financial condition or results of operations. The Company expects its former affiliated physician groups to be involved in legal proceedings incident to their business, most of which are expected to involve claims related to the alleged medical malpractice of its formerly affiliated oncologists.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On or about May 15, 2002, the Plan and Disclosure Statement were mailed to all shareholders of the Company. Because the secured claim of the Lenders and unsecured non-priority claims are not being paid in full, shareholders will receive nothing on account of their claims, and their interests in the Company will be cancelled on the effective date of the Plan. Therefore, shareholders were deemed to have rejected the Plan, and the votes of the shareholder class were not solicited.

ITEM 5. OTHER INFORMATION

     Bankruptcy or Receivership

     As previously reported, on March 29, 2001, the Company (excluding entities that are majority-owned by Response Oncology, Inc.) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Code”) in the United States Bankruptcy Court for the Western District of Tennessee, Western Division (the “Court”). The case is jointly administered under case number 01-24607-DSK. The Company has operated its business as a debtor-in-possession since the filing date.

     A hearing on the confirmation of the Company’s Second Amended Joint Plan (the “Plan”) was held on June 14, 2002, and the Plan was confirmed by the Court pursuant to an Order Confirming Plan (the “Confirmation Order”). A copy of the Confirmation Order is attached hereto as Exhibit 99.1 and is incorporated herein by reference. A copy of the Plan is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Confirmation Order will become a Final Order on June 25, 2002, unless an objection is filed (the “Effective Date”). All capitalized terms not defined herein shall have the meanings as set forth in the Plan.

     The Plan constitutes a liquidating plan, whereby all of the Company’s assets have been or will be liquidated, and net proceeds will be distributed to the Company’s creditors. The Plan designates four classes of creditor claims and one class of claims of shareholders. These classes take into account the differing nature and priority under the Code.

     Holders of Allowed Claims in Class 1 will be paid in full. Holders of Allowed Claims in Class 2 will receive all amounts collected through the liquidation of the Company’s assets except those amounts paid to other Classes. Holders of Class 3 Allowed Claims, to the extent they exist, will be satisfied at the election of the Lenders by tendering the

-24-

collateral for such secured claim or by paying from the Assets the value of such collateral to any such claimant. In full satisfaction of all Allowed Claims in Class 4, Allowed Claims will receive a pro rata portion of $250,000 from the Creditors Trust. Class 5 claimants will receive nothing under the Plan, and all stock, options, warrants, and ROI Interests shall be deemed cancelled on the Effective Date.

     The following table briefly summarizes the classification and treatment of Claims and equity interests under the Plan. The recoveries set forth below are estimates based upon various assumptions. The following summary is qualified in its entirety by reference to the Confirmation Order and the Plan, which are attached as Exhibits 99.1 and 2.1, respectively.

	Type of Claim or		Estimated
Class	Equity Interest	Treatment	Recovery
1	Administrative Claims	Unimpaired; Allowed Claims paid in full, in cash		100	%
2	Secured Claim of Lenders ($29.6 million)	Impaired; will receive all amounts collected through the liquidation except those amounts paid to other Classes.		80	%
3	Claims of Other Secured Creditors (Estimated at $0)	Unimpaired; Allowed Claims satisfied by tendering collateral for such Claims.		100	%
4	Unsecured Non-Priority Claims (Estimated at $6.5 million after allowances and settlements)	Impaired; Allowed Claims to be paid pro rata share of $250,000.		4	%
5	Claims of Shareholders	Impaired; no distribution		0	%

     Prior to the Effective Date of the Plan, the Company had 12,279,555 shares of common stock issued and outstanding and 16,631 shares of preferred stock issued and outstanding. As of May 31, 2002, the latest practicable date that such information is available, and before giving effect to the consummation of the Plan, the Company estimated that it had consolidated assets with a book value of approximately $7.2 million and liabilities with a book value of approximately $29.6 million (of which approximately $27.6 million are liabilities subject to settlement under reorganization proceedings). The Company will adopt “Fresh-Start Reporting” pursuant to SOP 90-7 on the Effective Date of the Plan. Furthermore, the Company intends to take the steps necessary to cease being subject to the periodic reporting requirements of the federal securities laws.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (A)  EXHIBITS

2.1	Second Amended Joint Plan filed by Registrant and AmSouth Bank, as Agent for the Lenders, filed June 14, 2002.
99.1	Order Confirming Plan entered by Court on June 14, 2002.

     (B)  REPORTS ON FORM 8-K

The Company filed a Current Report on Form 8-K on February 13, 2002, disclosing the approval of the order establishing bidding procedures providing for the sale of all of the operating assets of the Company.

-25-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Response Oncology, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RESPONSE ONCOLOGY, INC.
By:	/s/ Charles E. Sweet Charles E. Sweet President and Chief Executive Officer and Director
	Date: June 25, 2002
By:	/s/ Peter A. Stark Peter A. Stark Executive Vice President and Chief Financial Officer and Director
	Date: June 25, 2002

-26- EX-2.1 3 g76942exv2w1.txt SECOND AMENDED JOINT PLAN EXHIBIT 2.1 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION IN RE : ] CASE NO. 01-24607-DSK ] RESPONSE ONCOLOGY, INC., ] CHAPTER 11 RESPONSE ONCOLOGY MANAGEMENT ] OF SOUTH FLORIDA, INC., ] RESPONSE ONCOLOGY OF FORT ] LAUDERDALE, INC., AND ] RESPONSE ONCOLOGY OF TAMARAC, ] INC., ] ] DEBTORS. ] ] (JOINTLY ADMINISTERED) SECOND AMENDED JOINT PLAN The Debtors (as defined herein), jointly with AmSouth Bank ("AmSouth"), as lender and as agent on behalf of the Senior Secured Lenders, including itself, Bank of America, N.A. and Union Planters Bank, N.A., (collectively the "Lenders") hereby propose and file this First Amended Joint Plan (the "Plan") pursuant to the provisions of Title 11, United States Code, Chapter 11, as follows: ARTICLE I DEFINITIONS For the purposes of this Plan, all capitalized terms shall have the meanings ascribed to them in this Article I, except as expressly provided or unless the context otherwise requires. Any term used in this Plan that is not defined herein, but is defined in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed to that term therein. Administrative Claims Bar Date shall mean the thirtieth (30) day after entry of the Confirmation Order. Administrative Expense Claim shall mean a Claim for payment of an administrative expense pursuant to 11 U.S.C. ss. 503(b). Administrative Expenses Fund shall mean that certain account established by the Lenders for the payment in full of all Allowed Administrative Expense Claims and all Allowed Priority Claims. The Administrative Expenses Fund will be funded with proceeds from the Assets. The Administrative Expenses Fund shall be owned by the Lenders and established at AmSouth Bank, and monies from such Administrative Expenses Fund shall be distributed to Allowed Administrative Claims and Allowed Priority Claims. The Lenders shall retain all additional monies that exist in the Administrative Expenses Fund after distribution to all Allowed Administrative Claims and Allowed Priority Claims (whether such Claims are Allowed on the Effective Date or subsequent thereto). Allowed Claim shall mean a Claim or any portion thereof (a) that has been allowed by Final Order, or (b) as to which, on or by the Effective Date, (i) no proof of claim has been filed with the Bankruptcy Court and (ii) the liquidated and noncontingent amount of which is listed by any of the Debtors on its schedules and remaining unpaid, other than a Claim that is scheduled at zero, in an unknown amount, or as disputed, (c) for which a proof of claim in a liquidated amount has been timely filed with the Bankruptcy Court pursuant to the Bankruptcy Code, any Final Order of the Bankruptcy Court or other 2 applicable bankruptcy law, and as to which either (i) no objection to its allowance has been filed within the periods of limitation fixed by the Plan or by any order of the Bankruptcy Court or (ii) any objection to its allowance has been settled or withdrawn, or has been denied by a Final Order, or (d) that is expressly allowed in a liquidated amount in this Plan. Allowed means, when used in reference to a Claim or ROI Interest within a particular Class, an Allowed Claim or Allowed ROI Interest of the type described in such class. Amended Charter and Bylaws shall mean the Amended Charter and By-Laws attached hereto as Exhibit A. AmSouth shall mean AmSouth Bank, one of the Lenders and Agent for the Lenders. Assets shall mean all tangible and intangible property, and the proceeds thereof or anything else of value, including but not limited to cash on hand or in accounts, owned by the Debtors or the Estates, or in which the Debtors or the Estates have rights, and including without limitation Litigation Matters. Avoidance Claims shall mean those claims, and the recoveries from those claims, arising under Chapter 5 of the Bankruptcy Code, including but not limited to amounts recovered from certain physician practice management groups in settlement of claims the Debtors had pursuant to Chapter 5 of the Bankruptcy Code. Avoidance Claims, as used in this Plan, shall not include Claims the Debtors may have for obligations incurred with the Debtors which have not been fully performed by such obligor on the Confirmation Date 3 (including partially performed settlements), whether such Claims are recoverable under Chapter 5 of the Bankruptcy Code or otherwise. Bankruptcy Cases shall mean In re Response Oncology, Inc., Case No. 01-24607-K, In re: Response Oncology Management of South Florida, Inc., Case No. 01-24608-K, Response Oncology of Fort Lauderdale, Inc., Case No. 01-24609-K, and Response Oncology of Tamarac, Inc., Case No. 01-246010-K, administratively consolidated, pending in the United States Bankruptcy Court for the Western District of Tennessee. Bankruptcy Code shall mean Title 11 U.S.C. ss. 101, et seq. Bankruptcy Court shall mean the United States Bankruptcy Court for the Western District of Tennessee and any court having jurisdiction to hear appeals therefrom, or such other court as may have jurisdiction over the Chapter 11 case. Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure, as amended, and the Local Rules of the Bankruptcy Court for the Western District of Tennessee, as amended, as applicable to these Bankruptcy Cases. Budget shall mean that certain document attached hereto as Exhibit B that shows the amounts to be paid to particular classifications or groups of Holders of Allowed Claims. Cases shall mean the Debtors' cases under Chapter 11 of the Bankruptcy Code. Cash Collateral shall have the meaning ascribed to it in the Cash Collateral Order. 4 Cash Collateral Order shall mean that certain Final Order Authorizing Debtors to Use Cash Collateral entered by the Bankruptcy Court in the Debtors' cases on October 26, 2001, as it has or will be amended, extended and/or modified through the Effective Date. Claim shall have the meaning ascribed to it in 11 U.S.C. ss. 101(5). Claimant shall mean the Holder of a Claim. Class shall mean a category of Holders of Claims or ROI Interests, as described in Article II of the Plan. Collateral shall mean any property or interest in property of a Debtor's Estate that serves as security for the repayment of a debt or the performance of an obligation owed by a Debtor to the Holder of an Allowed Secured Claim. Confirmation or Confirmation Date shall mean the date upon which the Bankruptcy Court enters an order confirming this Plan. Confirmation Order shall mean that certain Order entered by the Court confirming this Plan. Creditor shall mean any person or entity holding a Claim against any of the Debtors. Creditors Trust shall mean the trust established pursuant to this Plan into which $250,000 for disbursement to Holders of certain Allowed Claims, as identified in this Plan, are deposited. The Creditors Trust shall be administered by the Creditors Trustee. Creditors Trustee shall mean the law firm of Harris, Shelton, Dunlap, Cobb & Ryder, PLLC ("Harris Shelton"), 2700 One Commerce Square, Memphis 5 TN 38103, or such other firms as agreed to by the Lenders on the one hand and the Debtors or the Winddown Person on the other hand. Nothing herein, however, shall preclude Harris Shelton from acting as counsel to the Debtors. Debtors shall mean Response Oncology, Inc. and three of its direct subsidiaries: Response Oncology Management of South Florida, Inc., Response Oncology of Fort Lauderdale, Inc., and Response Oncology of Tamarac, Inc. For purposes of this Plan, the Assets and Liabilities of each Debtor shall be consolidated, and such Assets made available to Creditors of all Debtors on an equal basis without regard to Debtor entity, subject however to the priorities of each Creditor as set out in this Plan. Disallowed shall mean a Claim to the extent it is not Allowed. Debtors' Agents shall mean the Debtors' officers, directors, employees, representatives, attorneys, accountants, agents, and other Debtors' Professionals, serving at any time during these Cases. Debtors' Boards of Directors shall mean the Boards of Directors of the Debtors as they exist on the Confirmation Date. Debtors' Professionals shall mean all professionals retained by the Debtors to provide services during the Bankruptcy Cases, and whose retention was approved by the Court, pursuant to 11 U.S.C. ss.ss. 327-331, whether or not such professionals remain employed by the Debtors as of the Effective Date. Disclosure Statement shall mean that certain disclosure statement approved by the Bankruptcy Court pursuant to 11 U.S.C. ss. 1125 in connection with this Plan. 6 Disputed Claim shall mean a Claim against a Debtor as to which an objection has been filed on or before the deadline for objecting to a Claim and which objection has not been withdrawn or otherwise resolved by Final Order. Disputed Claims Reserve shall mean a segregated account to be held in trust for the benefit of Holders of Disputed Claims in accordance with the provisions of the Plan. Duplicate Claim shall mean a Claim arising out of the same alleged bases of liability or alleged obligation asserted against the same Debtor or against more than one Debtor whether on the basis of joint and several liability otherwise. Effective Date shall mean the eleventh day after Confirmation of this Plan unless an appeal of the Confirmation Order shall have occurred, in which event, the Effective Date shall be, at the election of the Parties, the eleventh day after Confirmation of the Plan, or the date upon which any such judicial decree sustaining the Confirmation Order is final and non-appealable. Employee Retention Plan and Executive Contracts shall mean the Employee Retention Plan approved by the Court on July 23, 2001, as amended on January 25, 2002, and the employment contracts of Anthony LaMacchia and Peter A. Stark, approved by the Court by Final Order entered on July 31, 2001. ERP Funds shall mean those amounts of cash carved out from the Lenders' Cash Collateral which amounts were deposited into escrow for employees pursuant to the Cash Collateral Order and the Employee Retention 7 Plan and Executive Contracts. Any ERP Funds not exhausted in paying Allowed Post-Petition Employee Claims shall be paid to the Lenders. Estate(s) shall mean, individually, the estate of each Debtor in the Bankruptcy Cases, and collectively, the estates of all Debtors in the Bankruptcy Cases, created pursuant to 11 U.S.C. ss. 541. Executory Contract shall mean any contract or unexpired lease to which the Debtors are a party and which is executory within the meaning of section 365 of the Bankruptcy Code. Expense Payment shall mean the sum of $25,000 to be paid to the Creditors Trustee on the Effective Date for the performance of its duties under this Plan. File, Filed or Filing shall mean file, filed or filing with the Bankruptcy Court in the Cases. Final Order shall mean an order or judgment (or any revision, modification, or amendment thereof) of the Bankruptcy Court, or other court of competent jurisdiction, as entered on the docket in the Bankruptcy Cases, the operation or effect of which has not been stayed, reversed, or amended and as to which the time to appeal or seek review or rehearing has expired without such appeal or petition for review or rehearing being filed or, if filed, remains pending. Funds shall mean the Administrative Expenses Fund, the Expense Payment, the Unsecured Distribution, and the Winddown Fund. Holder shall mean a Person who holds a Claim or Interest. 8 Impaired shall have the meaning associated to it in Section 1124 of the Bankruptcy Code. Lenders shall mean AmSouth Bank, Bank of America, N.A. and Union Planters Bank, N.A., and their individual successors and assigns, as Lenders, and AmSouth Bank, and its individual successors and assigns, as Agent, pursuant to the Loan Agreements. Lenders' Agents shall mean the Lenders' officers, directors, employees, representatives, attorneys, accountants, agents, and other Lenders' Professionals, serving at any time during the Cases. Lenders' Professionals shall mean the firms of Casas Benjamin & White, LLC and Waller Lansden Dortch & Davis, PLLC, and the individuals of such firms participating on behalf of Lenders in these Cases. Lien shall mean a charge against or interest in property to secure payment of a debt or performance of an obligation. Litigation Matters shall mean those lawsuits or claims, identified on Exhibit C, belonging to the Debtors or the Debtors' Estates. The Litigation Matters shall be retained and preserved, and shall vest in the Debtors following Confirmation. Loan Agreements shall mean those certain promissory notes, credit agreement, loan agreements, guaranties, security agreements, financing statements, mortgages and other documents or agreements among the Lenders and the Debtors, as more specifically identified on the proof of claim filed by the Lenders in this case. 9 Parties shall mean the Debtors and the Lenders, the proponents of this Plan. Petition Date shall mean March 29, 2001. Post-Petition shall mean the period beginning on the Petition Date at the time these Bankruptcy Cases were commenced, and continuing through the Effective Date. Post-Petition Employee Claims shall mean a claim of an officer, director or employee of any of the Debtors pursuant to 11 U.S.C. ss. 503(b), including but not limited to severance and stay amounts arising under the Employee Retention Plan and Executive Contract. Priority Claims shall mean those claims identified in 11 U.S.C. ss. 507. Pro Rata Share shall mean a percentage determined by the numerator being the amount of the Allowed Claim of such creditor and the denominator being the total amount of Allowed Claims against all the Debtors. Released Parties shall mean those persons or entities identified in Article X of this Plan. ROI shall mean Response Oncology, Inc. ROI Interests shall mean, collectively, all shares of stock in any of the Debtors, together with any other options, warrants, conversion rights, rights of first refusal or other rights, contractual or otherwise, to acquire or receive any stock or other ownership interests in Debtors, and any contracts subscriptions, commitments or agreements pursuant to which the non-debtor party was or 10 could have been entitled to receive shares, securities, or other ownership interests in Debtors. RO-Fort Lauderdale shall mean Response Oncology of Fort Lauderdale, Inc. RO-S. Florida shall mean Response Oncology Management of South Florida, Inc. RO-Tamarac shall mean Response Oncology of Tamarac, Inc. Secured Claim shall mean any Claim that is secured by a lien on property in which an Estate has an interest or that is subject to setoff under Section 553 of the Bankruptcy Code, to the extent of the value of the Holder of such Claim's interest in the Estate's interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to 506(a) or Section 1111(b) of the Bankruptcy Code. Subordinated Claimants shall mean those persons or entities identified on Exhibit D hereto, each of whom has contractually subordinated its Claim to the Lenders. To the extent that such Claims have not previously been released pursuant to Final Order of the Bankruptcy Court, or paid in full prior to the Bankruptcy, such Claims shall constitute Allowed Claims. Termination Date shall mean the later of September 30, 2002 or the date upon which the Winddown Person and Lenders determine that no further operations of the Debtors are needed or necessary, and is the date upon which all operations of the Debtors shall cease. Unimpaired shall mean with respect to any Claimant such Claim is not Impaired. 11 Unsecured Distribution shall mean the sum of $250,000.00. Winddown Fund shall mean the amounts shown on the Budget necessary to continue winding down the Debtors' businesses during the Winddown Period for the budgeted period, or as mutually agreed between Lenders and the Winddown Person. Winddown Period shall mean the period between the Effective Date and the Termination Date. Winddown Person shall mean such person appointed by the Debtors and the Lenders, to act as the sole Director, and Chief Executive Officer and President, of the Debtors to supervise the liquidation of the Assets and the winding down of the Debtors' operations and business existence during the Winddown Period. ARTICLE II CLASSIFICATION AND TREATMENT OF CLAIMS The classification and treatment of Claims is made for the purpose of voting on the Plan, making distributions thereunder and for administration thereof. For purposes of the Plan, those parties holding Claims against the Debtors are grouped and shall be treated as follows: Class 1 Administrative Claims CLASS 1A PROFESSIONAL FEES AND EXPENSES All Allowed Administrative Expense Claims for fees and expenses owed to any of the Debtors' Professionals shall be paid in full in cash from the 12 Administrative Expenses Fund on the later of (a) the date that such Claim is Allowed or (b) within (30) thirty days of the Effective Date, unless otherwise agreed to by the Lenders and the Holder of any such allowed Administrative Expense Claim. The Debtors' Professionals shall be required to apply to the Court for approval of the fees, costs, and disbursements in the manner prescribed by the Bankruptcy Code no later than the thirtieth (30) day following Confirmation. The Parties have attached a Budget showing the total Administrative Expense Claims they believe are payable under the Plan to the Debtors' Professionals. The Lenders' Professionals shall not seek or receive compensation under the Plan but will be paid by the Lenders either from proceeds the Lenders receive under the Plan or from their own funds. This subclass is Unimpaired, and pursuant to 11 U.S.C. ss. 1126(f) is conclusively presumed to have accepted the Plan. Accordingly, the votes of this subclass will not be solicited. CLASS 1B U.S. TRUSTEE FEES. To the extent not already paid, the Chapter 11 Fees required pursuant to 28 U.S.C. ss. 1930 shall be paid in full from the Administrative Expenses Fund on or before the Effective Date of Confirmation. These fees will continue to be paid quarterly until the case is closed. United States Trustee fees are included on the Budget attached hereto as a part of bankruptcy costs. The Lenders and the Winddown Person shall work with the United States Trustee to provide whatever accounting the United States Trustee may require indicating the cash disbursements for the relevant period the fees are due. This subclass is 13 Unimpaired, and pursuant to 11 U.S.C. ss. 1126(f) is conclusively presumed to have accepted the Plan. Accordingly, the votes of this subclass will not be solicited. CLASS 1C POST-PETITION PAYABLES/EMPLOYEE CLAIMS. All trade payables and other Administrative Expense Claims (including Post-Petition Employee Claims) which constitute Allowed Claims and are incurred by the Debtors Post-Petition for normal, reasonable and necessary operating expenses (other than Claims under Classes 1A and 1B, or as otherwise provided in the Plan) shall be paid in full on the later of (a) the date such Claim is Allowed, or (b) the thirtieth (30) day following the Effective Date. All Allowed Post-Petition Employee Claims shall be paid at the times set out in the Employee Retention Plan and Executive Contract, first from the ERP Funds, with any remaining amounts satisfied from the Administrative Expenses Fund. This subclass is Unimpaired, and pursuant to 11 U.S.C. ss. 1126(f) is conclusively presumed to have accepted the Plan. Accordingly, the votes of this subclass will not be solicited. CLASS 1D PRIORITY CLAIMS. All Priority Claims which constitute Allowed Claims shall be paid in full in cash from the Administrative Expenses Fund on the later of (a) the date that such Claim is Allowed or (b) within (30) thirty days of the Effective Date, unless otherwise agreed to by the Lenders and the Holder of any such Allowed 14 Administrative Expense Claim. This subclass is Unimpaired, and pursuant to 11 U.S.C. ss. 1126(f) is conclusively presumed to have accepted the Plan. Accordingly, the votes of this subclass will not be solicited. Class 2 Secured Claim Of Lenders The Claims of the Lenders have been Allowed, pursuant to the Cash Collateral Order, the terms and conditions of which are incorporated herein by reference. In full and final satisfaction of the Lender's Claims, AmSouth, as agent for the Lenders, shall receive and retain the total of (1) on the Effective Date, all amounts collected through that date through the liquidation of all the Assets, except for those amounts deposited into (a) the Administrative Expenses Fund, which shall be segregated by AmSouth; (b) the Unsecured Distribution paid to the Creditors Trust; (c) the Expense Payment, (d) the Winddown Fund, plus (2) all amounts collected after the Effective Date from the liquidation of all the Assets or collected by the Debtors (except to the extent such amounts are needed to be deposited into a Fund to meet the obligations of the Plan). Monthly, beginning on the last day of the month in which the Effective Date occurs, the Winddown Person shall remit to AmSouth, all amounts collected through that date (less any amounts required to fund the Funds). Except as provided in the Plan, all sums remitted to AmSouth pursuant to this Plan shall be paid to the Lenders and applied to the Lenders' Claims in accordance with the Loan Agreements. 15 Further, pursuant to the subordination provisions, the Subordinated Claimants' Claims have been assigned to the Lenders. Accordingly, this Plan will give effect to all such subordination provisions and any recovery which would otherwise go to the Subordinated Claimants shall be received by the Lenders. This Class is Impaired, and the votes of this Class will be solicited. Class 3 Claims of Other Secured Creditors The Parties do not believe there are any holders of Secured Claims against the Debtors other than the Lenders. To the extent there are such Creditors whose Secured Claims against the Assets are not junior in priority to the Claims of the Lenders, and which Claims have not been otherwise paid or released, then upon the allowance of any such Secured Claim, such Allowed Claim shall be satisfied, at the Lender's election, by the Winddown Person tendering the Collateral for such secured Claim in full satisfaction of such secured Claim, or by paying from the Assets the value of such collateral to any such secured Claimant. This Class is Unimpaired, and pursuant to 11 U.S.C. ss. 1126(f) is conclusively presumed to have accepted the Plan. Accordingly, the votes of this Class will not be solicited. 16 Class 4 Unsecured Non-Priority Claims This Class consists of all Allowed unsecured non-priority Claims. The total of all unsecured non-priority Claims scheduled (without regard to allowance and subject to objections) is approximately $17.4 million dollars. In full satisfaction of all Allowed Claims in this Class, Allowed Claims in this Class shall receive, pro rata, a distribution from the Creditors Trust, on the Effective Date, in the amount of the Unsecured Distribution, subject to Article XI, paragraphs 3 and 4. Upon distribution of the Unsecured Distribution, no further property shall be payable or distributable to the Claimants in this Class. The Claims of Subordinated Claimants fall within this Class. Any recovery on account of the Allowed Claims of the Subordinated Claimants shall be paid to the Lenders and the Subordinated Claimants shall receive nothing on account of their Claims. This Class is Impaired, and the votes of this Class will be solicited. Class 5 Claims of Shareholders This Class consists of all Holders of ROI Interests. Because Holders of Class 2, 3, and 4 Claims are not being paid in full, this Class shall receive nothing under this Plan. All shares of stock ever issued by the Debtors, along with all other ROI Interests, shall be deemed cancelled and shall have no further claim against any of the Debtors' Assets upon the Effective Date. 17 This Class is Impaired, and pursuant to 11 U.S.C. ss. 1126(g), Class 5 Creditors or ROI Interests are deemed to have rejected the Plan, and the votes of this Class will not be solicited. ARTICLE III CONSOLIDATION OF ESTATES, TREATMENT OF DUPLICATE CLAIMS 1. Substantive Consolidation. On the Effective Date, the Estates, and all assets and liabilities, of RO-S. Florida, Ro-Fort Lauderdale and Ro-Tamarac shall be deemed substantively consolidated with and into the Estate of ROI. All claims by any of the Debtors against another Debtor shall not be entitled to any distribution under this Plan. 2. Treatment of Duplicate Claims. Upon the Effective Date, any Duplicate Claim shall be treated as a single Claim against the Estate of ROI. To the extent any Holder holds Duplicate Claims that become Allowed Claims, they shall be treated as a single Allowed Claim only against the ROI Estate, and all other Duplicate Claims shall not be Allowed. ARTICLE IV DUTIES, POWERS AND ADMINISTRATION OF THE WINDDOWN PERSON AND WINDDOWN OF DEBTORS' ESTATES Between the Confirmation Date and the Effective Date, the Lenders and the Debtors' Boards of Directors shall select the Winddown Person. In order to effectuate the winddown of the Debtors' operations during the Winddown Period, on the Effective Date, the Debtors' Boards of Directors shall be deemed disbanded and relieved of all duties without the need for any vote or other 18 action. Further, as of the Effective Date, RO-Fort Lauderdale, RO-S. Florida, and RO-Tamarac shall be deemed merged into ROI, and ROI shall be the only entity. Pursuant to the Amended Charter and Bylaws, which shall become effective on the Effective Date without any act by the Debtors' Boards of Directors, the Winddown Person shall then become the sole Director and the Chief Executive Officer and President of ROI, which shall issue a single share to AmSouth or, at AmSouth's direction, a subsidiary, affiliate or trust, as agent on behalf of the Lenders, which shall constitute the only existing ownership interest in ROI. Pursuant to the Budget, the Winddown Person shall retain or employ only those persons whom the Winddown Person determines, in his discretion and within the constraints of the Budget, are necessary to allow him to perform the duties required under this Plan, including the collection and liquidation of the Assets, and the payment of the collected Assets to the Lenders. On or before September 30, 2002, the Winddown Person and the Lenders shall determine at what point the operations of the Debtors and duties of the Winddown Person shall cease. Once the Termination Date is determined, the Lenders and Winddown Person shall file with the Court a notice (to be served upon the Debtors and their counsel, the United States Trustee's Office, and all parties requesting notices in this case) as to the Termination Date. On the Termination Date, the Winddown Person shall terminate all remaining employees, independent contractors, and/or agents, and turn over all books and records of the Debtors to the Lenders. Any medical records or related 19 documents requiring storage and retention under law shall be stored by the Winddown Person for any period provided by law, by obtaining an appropriate storage facility at reasonable cost, such cost to be paid from the Winddown Fund. To the extent permitted by law, on the Termination Date, the Debtors' corporate existences shall cease and the Debtors shall be deemed, under applicable governing corporate law, to have been dissolved and no longer operational or functioning, and the single ownership share issued to AmSouth shall be deemed cancelled. It is the express intention of the Parties that this Plan prohibit the use of the corporate entities comprising the Debtors following the Termination Date, unless the conditions in Article XII, Section 9, are met. On or at a time to coincide with the Termination Date, the Winddown Person shall file a motion to close the Bankruptcy Case. To the extent necessary, the Winddown Person shall file articles of dissolution and take such actions as necessary under applicable state law to effect fully the dissolution of the Debtors. The term of the Winddown Person shall be deemed to be terminated as of the Termination Date, unless otherwise extended by Agreement of the Lenders and Winddown Person. In the event of a vacancy in the position of Winddown Person, the Lenders shall have sole discretion to choose a replacement, and shall have no liability in connection with such choosing. The Winddown Person, on behalf of the Debtors, is vested with the maximum authority permitted by law in order to dispose of any remaining 20 Assets, execute documents, pursue litigation and the Litigation Matters, file and pay taxes and to conduct all other duties assigned to it under this Plan. The Winddown Person shall be compensated from the Winddown Funds in an amount to be agreed upon by the Lenders and the Winddown Person. ARTICLE V MEANS OF EXECUTION OF THE PLAN This is a liquidating plan. Because the Lenders' Allowed Secured Claim exceeds the total amount of any recovery from the sale of all Assets of the Debtors', the Plan shall be funded through the liquidation of the Debtors' Assets, the payment from the Assets, in full, of all Allowed Administrative and Priority Claims, the remittance to Allowed unsecured, non-priority Creditors of the Unsecured Distribution as set forth in this Plan (to which such Creditors would not otherwise be entitled), and the remittance of any balance to the Lenders. Presently, and continuing until the Effective Date, the Debtors shall liquidate all Assets and remit all such collections, in accordance with the Budget, to the Lenders. On the Effective Date, the Winddown Person shall deposit from cash on hand, or if cash on hand is insufficient then from the Lenders, the amounts shown on the Budget as necessary to fund the Funds. After the Effective Date, the Winddown Person will continue to sell all the Debtors' Assets, terminate employment agreements, and pay to the Lenders all proceeds of the liquidation of the Debtors' and Estates' Assets in accordance with this Plan. All proceeds of the Assets existing on the Effective Date or from the liquidation of any of the Assets, other than the Funds, shall be remitted to the Lenders, and Lenders 21 shall retain all liens against such Assets until their liquidation and remittance to Lenders, subject to the distribution under the Plan. In the event, on the Termination Date, Assets remain in the Debtors' possession over and above the amounts contemplated by the Budget and other payments required pursuant to this Plan, all Assets shall be remitted to the Lenders (or the Lenders' designee) within one (1) business day after the Termination Date. After all distributions required in the Plan are made, if amounts remain in any Funds (except the Expense Fund), such amounts shall be paid to the Lenders. ARTICLE VI UNEXPIRED LEASES AND EXECUTORY CONTRACTS 1. Rejection. All unexpired Executory Contracts of the Debtors are hereby rejected pursuant to 11 U.S.C. ss. 365 as of the Effective Date, except those which shall on the Confirmation have been assumed or are the subject of pending motions to assume pursuant to 11 U.S.C. ss.365. 2. Rejection Damages Bar Date. If the rejection by any Debtor of an unexpired lease or Executory Contract results in a Claim, then such Claim shall be forever barred and shall not be enforceable against any Debtor or the properties of any of them unless a proof of claim is filed with the clerk of the Bankruptcy Court and served upon counsel to the Lenders within thirty (30) days after service of the earlier of (a) notice of the Confirmation Order, or (b) other notice that the Executory Contract or unexpired lease has been rejected. 3. Possession of Rejected Property. If an Executory Contract pursuant to which the Debtors' leased equipment is rejected, the owner of such 22 equipment shall take physical possession of the equipment within ten Business Days after the Effective Date. Any previously leased equipment of which the owner does not take possession within ten Business Days after the Effective Date may be disposed of by the Winddown Person. The owner of such equipment shall reimburse the Debtors for full cost of such disposal. If any leased equipment is not in possession of the Debtors, the Winddown Person shall cooperate with the owner's efforts to take possession of the equipment, but the Winddown Person shall not be required to turnover possession of the equipment. ARTICLE VII MODIFICATION OF THE PLAN The right is reserved in accordance with the Bankruptcy Code and the Bankruptcy Rules to amend or modify this Plan prior to Confirmation or as soon as practical thereafter. Before or after Confirmation, the Bankruptcy Court may, upon application, remedy any defect or omission or reconcile any inconsistencies in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan. ARTICLE VIII WITHDRAWAL OF THIS PLAN If, for any reason, the Effective Date does not occur by August 15, 2002, this Plan shall be deemed withdrawn, without prejudice, unless the Debtors and the Lenders file a notice with the Bankruptcy Court further extending that 23 date. If the Plan is withdrawn, the Lenders may petition the Court to dismiss the Bankruptcy Case. ARTICLE IX RETENTION OF JURISDICTION BY THIS COURT The Bankruptcy Court shall retain jurisdiction of this Chapter 11 case pursuant to and for the purposes set forth in 1127(b) of the Bankruptcy Code and to: 1. Allow, disallow, determine, liquidate, classify, estimate or establish the priority or unsecured status of any Claim, including the resolution of any request for payment of any Administrative Expense Claim and the resolution of any and all objections to the allowance of, or priority of, Claims. Objections to Claims shall be filed on or before 90 days after the entry of the Confirmation Order. 2. To hear and determine pending motions for the assumption or rejection of Executory Contracts and the allowance of Claims resulting therefrom. 3. Grant or deny any applications for Allowance of administrative compensation or reimbursement of expenses authorized pursuant to the Bankruptcy Code or the Plan extending beyond the Effective Date. 4. Ensure the distributions to Holders of Allowed Claims are accomplished pursuant the provisions of the Plan. 5. Enter such Orders as may be necessary or appropriate to implement or consummate the provision of the Plan and all instruments, 24 releases and other agreements or documents created in connection with the Plan or the Disclosure Statement or the Confirmation Order. 6. Resolve any cases, controversies, suits or disputes that may arise in connection with the consummation, interpretation or enforcement of the Plan or any entity's obligations incurred in connection with the Plan, or the distribution of Funds under the Plan. 7. Permit the Debtors or Lenders to modify the Plan before or after the Effective Date pursuant to Section 1127 of the Bankruptcy Code, the Confirmation Order, instrument, or other agreement or document created in connection with the Plan, the Disclosure Statement or the Confirmation Order; or remedy any defect or omission or reconcile any inconsistency in any Bankruptcy Court Order, the Plan, the Disclosure Statement or the Confirmation Order or any instrument or other agreement or document created in connection with the Plan, the Disclosure Statement or the Confirmation Order, in such manner as may be necessary or appropriate to consummate the Plan, to the extent authorized by the Bankruptcy Code. 8. Issue injunctions and enter and implement other Orders to take such other actions as may be necessary or appropriate to restrain interference by any person or entity with the consummation, implementation or enforcement of the Plan. 9. Determine any other matters that may arise in connection with or relate to the Plan, the Disclosure Statement, the Confirmation Order, the 25 Creditors Trust or any contract, instrument or other agreement or document created in connection with the Plan or the Disclosure Statement. 10. To hear and determine all controversies arising in connection with the implementation of the Plan, including any controversies relating to the Winddown Person's obligations in connection with the implementation of the Plan. 11. Enter an Order concluding the Bankruptcy Case. 12. To hear and determine controversies related to Claims the Debtors may have, including matters arising after the Confirmation Date. 13. To hear and resolve any dispute arising out of any retention, employment or matter concerning representation, services or compensation of any Debtors' Professional or any agent or professional who provided services to the Debtors' during Bankruptcy Cases or prior to the Petition Date. ARTICLE X EXCULPATION, RELEASES AND INJUNCTIONS Neither the Debtors' Agents, the Lenders, nor the Lenders' Agents shall have or incur any liability to any holder of any Claim or ROI Interest for any act or omission in connection with, or arising out of, the Bankruptcy Cases, the confirmation of the Plan, the consummation of the Plan or the administration of the Plan or Assets to be distributed under the Plan except for willful misconduct or gross negligence, unless specifically reserved in this Plan. In addition, this Plan shall be deemed to act as a release by the Debtors and Debtors' Agents of any and all Claims that were or could have been 26 asserted against the Lenders or the Lenders' Agents, through the date of Confirmation, whether known or unknown, at the time of Confirmation. In addition, the Plan shall also act as a release by the Lenders and the Lenders' Agents of any and all Claims that were or could have been asserted against the Debtors and the Debtors' Agents, whether known or unknown, at the time of Confirmation. This Plan acts to enjoin permanently any and all suits or other proceedings which could be brought on account of any Claims that are released by operation of this Article X. Such injunction, along with the releases described in this Article, shall be effective on the Confirmation Date. Notwithstanding anything to the contrary, this provision does not limit or restrain any action against any person for violating the terms of the Plan. Further, nothing herein shall be construed to release or discharge Lenders' Liens or Claims against the Assets, and the right of Lenders to payment upon the liquidation or application of those Assets, as set out in this Plan. Nothing contained in this Article shall limit or impair any claim of indemnity against the Debtors by the Debtors' Boards of Directors or any officer of the Debtors. ARTICLE XI CLAIM OBJECTIONS, DISPUTED CLAIMS, AND AVOIDANCE ACTIONS 1. Allowance of Claims. The Creditors Trustee shall have the exclusive right to object to Claims which are classified in Class 4, except for the Claims of the Subordinated Claimants. Any such objections shall be filed within sixty (60) days after Confirmation. For purposes of administrative convenience, Class 27 4 Claims for which the pro rata share of the Unsecured Distribution is less than $2,500.00 shall not be subject to objection, and as of the Effective Date shall be deemed Allowed. Further, the Creditors Trustee shall have no duty to object to any Claim except to the extent that the Creditors Trustee, in its reasonable discretion, believes that disallowance of the Claim will substantially affect distributions, and will preserve for the Creditors Trust an amount which is significantly greater than the costs to be incurred in connection with the objection. The Lenders and/or their agent shall have the exclusive right to object to all other Claims, except those in Class 4. Any such objections shall be filed within ninety (90) days after Confirmation, except for objections to claims paid in the ordinary course of business during the case pursuant to 11 U.S.C. ss. 363(c)(1), for which objections (or other actions) must be taken within any applicable state law statutes of limitation. The Creditors Trustee or the Lenders may file an omnibus objection to all Claims as to which they have the right to object, and Claimants shall have thirty (30) days from the service of such objection (or omnibus objection) to respond. If a response is filed, the Court shall fix a hearing date on such Claims objection. If no response is filed within thirty days after the service of such objection, then such objection shall be deemed upheld and such Claim shall be Disallowed and treated in the manner provided for in the objection or omnibus objection. 28 2. Setoffs and Defenses. Subject to the limitations provided in 11 U.S.C. ss.553, the Lenders and Creditors Trustee, as applicable, shall be allowed, but not required, to assert any right of setoff against any Claim which the Debtors may have in connection with the allowance of any such Claim, including without limitation the payments or other distributions to be made pursuant to this Plan in respect to such Claim. Unless otherwise provided herein, neither the failure to do so nor the disallowance of any Claim hereunder shall constitute a waiver or release of any claim that the Debtors may have against such Claimant. Further, and unless otherwise provided herein, Lenders and Creditors Trustee, as applicable, shall be allowed, but not required, to assert any rights and defenses, both legal and equitable, of the Debtors with respect to any Claims, which are hereby retained and preserved. 3. Disputed Claims Reserves. The following Disputed Claims Reserves shall be established: (1) A Disputed Claims Reserve established and maintained by the Creditors Trustee for the treatment of Disputed Claims in Class 4, (2) A Disputed Claims Reserve established and maintained by the Lenders for the treatment of all Disputed Administrative Claims and Disputed Priority Claims (with amounts from the Administrative Expenses Fund); and (3) A Disputed Claims Reserve established and maintained by the Winddown Person for the Debtors for any Disputed Secured Claims or any Disputed expenses associated with the Debtors' operations during the Winddown Period (to the extent any latter such dispute is brought to the attention of the Winddown Person). The Creditors Trustee, Lenders and the Winddown 29 Person, as appropriate, shall deposit into a Disputed Claims Reserve an amount equal to the Pro Rata Share of the distribution allocable to such Disputed Claims, as if such Claims were Allowed Claims, from Funds otherwise payable to the respective Funds. The respective Disputed Claims Reserve shall be held in trust by the Creditors Trustee, Lenders and the Winddown Person, for the benefit of the Holders of Allowed Claims whose Distributions are unclaimed and the Holders of Disputed Claims pending a determination of their entitlement thereto under the terms of the Plan. 4. Distributions to Holders of Disputed Claims. At the time a Disputed Claim becomes an Allowed Claim, any Distributions reserved for such Allowed Claim shall be released from the Disputed Claims Reserve and be delivered to such Holder of such Allowed Claim in an amount proportionate to the Allowed Amount of any such Claim. In the event that such Disputed Claim is Disallowed in its entirety, the Distributions provided for any Claims in the Disputed Claims Reserve shall be returned to the Creditors Trust. 5. Delivery of Distributions and Notices. Except as otherwise provided in the Plan and except as may otherwise be agreed to by the Holder of a particular Claim and the Creditors Trustee (as to Claims to be paid from the Creditors Trust) or the Lenders (as to all other Claims), any property or notice to which such Claimant shall become entitled under the provisions of this Plan, shall be delivered to such Claimant by regular mail, postage prepaid, in an envelope addressed to such Claimant at the address of each such Holder as set forth on the proofs of claim filed by such Holders, or at the last known address 30 of such Holder if no proof of claim is filed or if the Debtor has been notified in writing of a change of address. If any Holder's distribution or notice is returned as undeliverable, no further distributions to such Holder will be made unless and until the Creditors Trustee, or the Lenders, as appropriate, are notified in writing of such Holder's then current address. 6. Unclaimed Distributions and Uncashed Checks. In the event (1) distributions determined distributable on any Allowed Claim of a Creditor are returned as undeliverable and one year passes without such Creditor making known to the Creditors Trustee or the Lenders, as appropriate, a corrected mailing address (an "unclaimed distribution"); or (2) Assets are located after the Termination Date, then, in such event, all such unclaimed distributions shall be payable to Lenders, and all such Assets shall be liquidated by the Lenders and applied to the outstanding Claim of the Lenders. The Claim of any Holder with respect to the treatment of any unclaimed distribution hereunder will be discharged and forever barred. Checks issued as distributions to Claims, other than Claims of the Lenders or Subordinated Claimants, will be null and void if not negotiated within six (6) months after the date of issuance thereof. 7. De Minimus Distributions. Any Claims entitled to a distribution of less than $10.00 will not be paid. 8. Avoidance Actions. The Debtors' management, after review of their books and records has reported to the Lenders that with the exception of some Avoidance Actions asserted during the course of this Bankruptcy Case, that to the best of their knowledge there are no Avoidance Actions (maintained 31 pursuant to state or federal law) which should be pursued, unless specifically identified on the attached Exhibit C. The Debtors' management have examined their books and records and considered the likely success of pursing Avoidance Actions and have determined that the likely cost of pursuing such Avoidance Actions (other than those already pursued and settled, or reserved for litigation on the attached Exhibit C) outweigh any potential recovery. As such, all such Avoidance Claims, except for those already recovered upon, settled or reserved on Exhibit C, shall be released on the Effective Date. 9. Other Claims of the Debtors. Notwithstanding the previous paragraph, the Debtors continue to liquidate their Assets and provide certain limited services. To the extent any amount owed to the Debtors for goods, services or as accounts are unpaid on the Confirmation Date, then such Claims shall survive the Confirmation, this Plan shall not act to release or adjudicate any such Claims, and such Claims shall be fully collectible by the Debtors, the Lenders and/or the Winddown Person. ARTICLE XII MISCELLANEOUS PROVISIONS 1. Pre-Confirmation Amendment. The Parties may modify the Plan at any time prior to the entry of the Confirmation Order as provided under Section 1127(a) of the Bankruptcy Code, provided that the Plan, as modified, and the Disclosure Statement meet applicable Bankruptcy Code requirements. 2. Post-Confirmation/Pre-Consummation Amendment Requiring Resolicitation. After the Confirmation Date, the Lenders may modify the Plan as provided in Section 1127(b) of the Bankruptcy Code. 32 3. Reservation of Cramdown Right/Withdrawal of the Plan. To the extent that any Class which is impaired rejects the Plan or is deemed to have rejected the Plan, the Parties may request confirmation of the Plan, as it may be modified from time to time, under 11 U.S.C. ss. 1129(b). The Parties reserve the right to alter, amend, modify, revoke, or withdraw the Plan or any exhibit or schedule hereto at any time before the Effective Date. In addition, if the Plan is not confirmed on or before July 15, 2002, the Plan shall be deemed withdrawn, unless the Lenders give written notice of their intent to extend such deadline. 4. Confirmation Order and Plan Control. To the extent the Confirmation Order and/or the Plan is inconsistent with the Disclosure Statement, any other agreement entered into between or among the Lenders and any party, this Plan controls the Disclosure Statement and any such agreements, and the Confirmation Order (and any other orders of the Bankruptcy Court) controls the Plan. 5. Administrative Claims Bar Date. Any Creditor or party in interest alleging it is entitled to payment of an Administrative Expense Claim, which is not an Allowed Claim, or which has not already been incurred and paid in the ordinary course of business during the case pursuant to 11 U.S.C. ss. 363(c)(1) without objection, shall file a motion seeking the allowance and payment of such Administrative Expense Claim within thirty (30) days after the entry of the Confirmation Order. Any party failing to file such motion seeking the allowance and payment of such Administrative Expense Claim shall be forever barred from asserting its right to any recovery under the Plan or from the Assets, the 33 Debtors, the Debtors' Agents, the Lenders, or Lenders' Agents, and such claim shall be discharged. 6. Post-Confirmation Matters. The Debtors shall be required to continue filing operating reports and to pay any appropriate quarterly fees until a Final Order closing the Bankruptcy Case is entered. The following requirements will need to have been satisfied before the Debtors can file an application for a final decree pursuant to Fed. R. Bank. P. 3022: a. The Confirmation Order has become final. b. Deposits required by the Plan have been distributed. c. Payments under the Plan have commenced (but prior to making all payments allowed under the Plan). d. There are no pending motions, contested matters or adversary proceedings. e. All U.S. Trustee's quarterly fees have been paid. f. The U.S. Trustee has consented to such final decree. 7. Automatic Stay/Post Confirmation Injunction. The stay under 11 U.S.C. ss.362 shall be lifted upon the Effective Date. However, this Plan shall act as a temporary injunction against the filing of any lawsuits against the Debtors or the Lenders through the Termination Date by any Creditor, ROI Interest holder, or party-in-interest in this Bankruptcy Case, other than the assertion of any claims or defenses that may be raised in connection with any Claims allowance procedure. From the date of entry of the Confirmation Order 34 through the Termination Date, this Plan shall act to toll any statute of limitation against any Claim that is enjoined by operation of this paragraph. 8. Title to Property. Title to all Assets of the Debtors shall vest in the Debtors on the Effective Date, and shall be subject to liquidation and distribution as provided for in this Plan. As of the Effective Date, all property of the Debtors' shall be free and clear of all Claims and Interests, except as specifically provided in the Plan or the Confirmation Order. Upon the Termination Date, title to all Assets of the Debtors not previously administered shall be deemed transferred to AmSouth, as agent for the Lenders. 9. Injunction against use of Corporate Entities Following Termination Date. Following the Termination Date, this Plan shall act as a permanent injunction against the use or resurrection of any corporation which is a Debtor in this Bankruptcy Case, except to the extent necessary to reopen the Bankruptcy Cases to finally administer an Asset. This injunction shall remain in effect forever, unless all Allowed Claims in Classes 2, 3 and 4 are paid in full, in cash (plus interest which may accrue pursuant to the applicable documents establishing such Allowed Claims), and the ROI Interests whose shares are cancelled under this Plan have their shares reissued and redistributed in the same amount, and of the same priority, as existed on the Petition Date. Only this Court may be allowed to lift the permanent injunction of this Plan as to the use or resurrection of the Debtors' corporate existence. 10. Entire Agreement. This Plan, as described herein and the Disclosure Statement and the Exhibits hereto and thereto, sets forth the entire 35 agreement and understanding among the Debtors, Lenders and all Creditors relating to the subject matter hereof and supersedes all prior discussions and documents. No party shall be bound by any terms, conditions, definitions, warranties, understandings or representations with respect to the subject matter hereof, other than is expressly provided for herein or as may hereafter be agreed to by the Lenders and the Debtors in a writing signed by the Lenders. 11. Preservation of Claims. Except as expressly released herein, the Debtors' causes of action and claims which make up the Litigation Matters are hereby retained and preserved, and shall vest in the Debtors. The Winddown Person, on behalf of the Debtors, may pursue, settle, or transfer such retained Litigation Matters, as appropriate. 12. Claims of Lenders Under Section 507(b) of the Bankruptcy Code. To the extent the Avoidance Claims are not used by the Debtors, in the ordinary course of business, to pay operating expenses as provided herein, such funds constituting the Avoidance Claims shall be deemed subject to the Secured Claim by virtue of 11 U.S.C. ss.507(b). 13. Exemption From Certain Transfer Taxes. Pursuant to Section 1146(c) of the Bankruptcy Code, any transfers from a Debtor to a Debtor or any other Person or entity pursuant to the Plan in the United States shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, or other similar tax or governmental assessment, and the Plan hereby directs all appropriate state or local government officials or 36 agents to forego the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without payment of any such tax or governmental assessment. 14. Continuation of Anti-Discrimination Provisions of Bankruptcy Code A governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, or discriminate with respect to such a grant against, the Debtors or another Person with whom the Debtor has been or is associated or affiliated, solely because of the commencement, continuation, or termination of the case or because of any provision of the Plan or the legal effect of the Plan, and the Plan will constitute an express injunction against any such discriminatory treatment by a governmental unit. 15. Effectuating Documents and Necessary Authorizations. Following Confirmation, Lenders will seek such orders, judgments, injunctions, regulatory approvals, and rulings that may be required to carry out and further the intentions and purposes, and give full effect to the provisions, of the Plan. 16. Legally Binding Effect. The provisions of this Plan shall bind all Creditors and ROI Interest Holders, whether or not they accept this Plan. On and after the Effective Date, all Holders of Claims shall be precluded and enjoined from asserting any Claim against the Assets based on any transaction or other activity of any kind that occurred prior to the Confirmation Date except as permitted under the Plan. 37 17. Governing Law. Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of Tennessee shall govern the construction and implementation of the Plan and any agreements, documents, or instruments executed in connection with the Plan, without giving effect to the principles of conflicts of law thereof. 18. Time. In computing any period of time prescribed or allowed by this Plan, the provisions of Bankruptcy Rule 9006(a) shall apply. RESPECTFULLY SUBMITTED this day of April, 2002. ---- HARRIS, SHELTON, DUNLAP, COBB & RYDER, PLLC By: -------------------------------------------- Steven N. Douglass (Bar No. 9770) Jonathan E. Scharff (Bar No. 16890) One Commerce Square, Suite 2700 Memphis, Tennessee 38103-2555 (901) 525-1455 Co-Counsel to the Debtors and Debtors in Possession By: -------------------------------------------- John C. Tishler (Bar. No. 13441) Robert A. Guy (Bar No. 16715) WALLER LANSDEN DORTCH & DAVIS A Professional Limited Liability Corporation 511 Union Street, Suite 2100 Nashville, TN 37219 Phone: (615) 244-6380 Fax: (615) 244-6804 Attorneys for AmSouth Bank, as Agent 38 EXHIBIT A 39 EXHIBIT B 40 EXHIBIT C Litigation Matters All pending claims and other litigation, and all unasserted claims, including the following, shall be preserved for action after Confirmation pursuant to the Plan, including the pursuit of such Claims to judgment or settlement, including, but not limited to the following matters: 1. Response Oncology, Inc. vs. Stephen Krathan, American Arbitration Association No. 321930026900JB, to be arbitrated in Coral Gables, Florida. Claims include breach of contract claims against Dr. Krathan by the Debtors for breaching the service agreement between the parties, and breaching a promissory note between the parties. The charge also includes a request for an accounting, foreclosure on the Debtors' security interest, and the appointment of a receiver. The Debtors estimate that the Claims exceed $850,000, although a settlement is in discussions. 2. Claims of the Debtors against Bristol-Myers Squibb Co. ("BMS"). No lawsuit has been filed, but the Debtors believe they have claims against BMS pursuant to federal antitrust statutes related to BMS filing false patent extensions on the drug Taxol, thus prohibiting the availability of a generic drug. The claim arises for the period September 1999 through October 2001. The Claims are for more than $7.2 million. 3. Claims of the Debtors against OTN. The Debtors have certain pre- and post-petition claims against Oncology Therapeutics Network ("OTN"), a wholly owned subsidiary of BMS. No lawsuit has been filed, and the Debtors are discussing settlement with OTN. Thus, the claims described herein may be resolved prior to confirmation. The claims against OTN include claims for rebates, contract pricing whereby Debtors may have been overbilled. The Debtors also have certain reconciliation disputes related to direct debits and credits against post-petition items. The Claims are for more than $1 million. 4. Claims of the Debtors against Oncology Hematology Associates of West Broward, P.A. ("OHAWB"). The Debtors have certain post-petition Claims against OHAWB for goods sold to OHAWB. The amount owing to the Debtors by R&K was approximately $1.2 million as of June 4, 2002. The Debtors reserve their rights to pursue OHAWB for payment in full for these goods. 5. Claims of the Debtors against McDonough. The Debtors have certain pre-petition Claims against Patrick McDonough in the approximate amount of $50,000, plus interest and legal fees. The Claim relates to a certain loan that was made to McDonough pursuant to his employment agreement with the Debtor. The payment obligation of McDonough is secured by a lien in favor of the Debtors against McDonough's residence at 7469 Meadow Rise 41 Cove, Memphis, TN 38119 (the "Mortgaged Property"). The Debtors reserve all rights to proceed against McConough or the Mortgaged Property. Notwithstanding the values placed upon the Claims in this attachment, given the uncertainties of litigation and the potential or known defenses against the Claims, the exact amount that recoverable on any of the Claims is unknown. The values shown are the amounts the Debtors or Lenders believe are owing, without regard for any defenses, setoffs or benefit of a Court order. 42 EX-99.1 4 g76942exv99w1.txt ORDER CONFIRMING PLAN EXHIBIT 99.1 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION IN RE: ) ) RESPONSE ONCOLOGY, INC., et al., ) Case No. 01-24607-DSK ) Chapter 11 Debtors ) Jointly Administered - -------------------------------------------------------------------------------- ORDER CONFIRMING PLAN - -------------------------------------------------------------------------------- This matter having come before the Honorable David S. Kennedy, Chief United States Bankruptcy Judge, for hearing on Friday, June 14, 2002, the Court having considered the evidence before it, hereby finds as follows:(1) The First Joint Plan under Chapter 11 of the Bankruptcy Code filed by Response Oncology, Inc., Response Oncology Management of South Florida, Inc., Response Oncology of Fort Lauderdale, Inc., and Response Oncology of Tamarac, Inc. (collectively the "Debtors"), jointly with AmSouth Bank, as lender and as agent on behalf of the lenders, including itself, Bank of America, N.A. and Union Planters Bank, N.A. (the "Lenders") (together with the Debtors, the "Plan Proponents"), on April 12, 2002, as modified by the First Amended Joint Plan filed on April 19, 2002, or a summary thereof (the "Plan"), having been transmitted to creditors and equity security holders; and Proper notice having been given to creditors and equity security holders of the Plan; and The creditors having been properly solicited and having voted overwhelmingly in favor of confirmation of the Plan; and - -------- (1) Capitalized terms shall have the meaning set forth in the Amended Plan, as that term is defined herein. In re: Response Oncology, Inc., et al. Case No. 01-24607-DSK Order Confirming Plan Page 2 of 4 Certain technical and conforming amendments having been made and a Second Amended Joint Plan having been filed with this Court on June 13, 2002 (collectively, with the Plan, the "Amended Plan"); and Only one objection having been filed to the Plan, that by the Office of the United States Trustee (the "Objection"); and The Objection, upon oral statements in Court, having been withdrawn; The Court hereby finds that the Amended Plan contains technical changes and/or changes with respect to Claims, which do not materially adversely affect or change the treatment of any Claims or equity interests, and comply in all respects with the requirements of 11 U.S.C. ss. 1127. As such, these modifications do not require additional disclosure under 11 U.S.C ss. 1125 or resolicitation of votes under 11 U.S.C. ss. 1126, nor do they require that holders of Claims or equity interests be afforded an opportunity to change previously cast acceptances or rejections of the Plan; and Based upon the evidence presented at the confirmation hearing, with respect to the releases, exculpation and injunctions contained in Article X of the Amended Plan, the Court finds that such releases, exculpation and injunction provisions are fair and equitable, are given for valuable and substantial consideration, and are in the best interests of the Debtors and their chapter 11 estates, and that such provisions shall be effective and binding upon the parties identified. Further, the Court is mindful of the Sixth Circuit's holding in In re Dow Corning, Inc., 280 F.3d 648 (6th Cir. 2002). To the extent the Dow Corning case is applicable, the In re: Response Oncology, Inc., et al. Case No. 01-24607-DSK Order Confirming Plan Page 3 of 4 Court finds that the releases are not violative of 11 U.S.C. ss. 524(e) because the releases do not constitute "discharges" of the Debtors, nor do the releases or exculpation release claims of non-consenting third party Creditors, so that the intention of Dow Corning is met; and It having been determined after hearing on notice that the requirements for confirmation as set forth in 11 U.S.C. ss. 1129(a)-(b) have been satisfied through proffered testimony; and The Court having been provided with a copy of that certain "Notice of Confirmation of Plan and of Bar Dates," the Court hereby approves the mailing of such Notice in the form attached hereto to all creditors and parties in interest, in satisfaction of Bankruptcy Rules 2002(f), 2002(k) and 3020(c), and counsel for the Debtors are directed to make such mailing of such notice (as opposed to the clerk of this Court), IT IS ORDERED that: The Second Amended Joint Plan filed on June 14, 2002, is confirmed. A copy of the confirmed plan is attached. ---------------------------------------- CHIEF JUDGE DAVID S. KENNEDY ---------------------------------------- DATE In re: Response Oncology, Inc., et al. Case No. 01-24607-DSK Order Confirming Plan Page 4 of 4 SUBMITTED FOR ENTRY BY: - ---------------------------------- John C. Tishler (BPR # 13441) WALLER LANSDEN DORTCH & DAVIS A Professional Limited Liability Company 511 Union Street, Suite 2100 Nashville, TN 37219 (615) 244-6380 Attorneys for AmSouth Bank, as Agent for the Lenders - ---------------------------------- Steven N. Douglass (BPR # 9770) Jonathan E. Scharff (BPR # 16890) HARRIS, SHELTON, DUNLAP, COBB & RYDER, PLLC One Commerce Square, Suite 2700 Memphis, TN 38103-2555 (901) 525-1455 Co-Counsel to the Debtors and Debtors in Possession -----END PRIVACY-ENHANCED MESSAGE-----

EX-2.1

                                                                     EXHIBIT 2.1

                         UNITED STATES BANKRUPTCY COURT

                          WESTERN DISTRICT OF TENNESSEE

                                WESTERN DIVISION

IN RE :                       ]     CASE NO. 01-24607-DSK
                              ]
RESPONSE ONCOLOGY, INC.,      ]     CHAPTER 11
RESPONSE ONCOLOGY MANAGEMENT  ]
OF SOUTH FLORIDA, INC.,       ]
RESPONSE ONCOLOGY OF FORT     ]
LAUDERDALE, INC., AND         ]
RESPONSE ONCOLOGY OF TAMARAC, ]
INC.,                         ]
                              ]
         DEBTORS.             ]
                              ]     (JOINTLY ADMINISTERED)

                            SECOND AMENDED JOINT PLAN

         The Debtors (as defined herein), jointly with AmSouth Bank ("AmSouth"),
as lender and as agent on behalf of the Senior Secured Lenders, including
itself, Bank of America, N.A. and Union Planters Bank, N.A., (collectively the
"Lenders") hereby propose and file this First Amended Joint Plan (the "Plan")
pursuant to the provisions of Title 11, United States Code, Chapter 11, as
follows:

                                    ARTICLE I
                                   DEFINITIONS

         For the purposes of this Plan, all capitalized terms shall have the
meanings ascribed to them in this Article I, except as expressly provided or
unless the context otherwise requires. Any term used in this Plan that is not
defined herein, but is defined in the Bankruptcy Code or the Bankruptcy Rules,
shall have the meaning ascribed to that term therein.




         Administrative Claims Bar Date shall mean the thirtieth (30) day after
entry of the Confirmation Order.

         Administrative Expense Claim shall mean a Claim for payment of an
administrative expense pursuant to 11 U.S.C. ss. 503(b).

         Administrative Expenses Fund shall mean that certain account
established by the Lenders for the payment in full of all Allowed Administrative
Expense Claims and all Allowed Priority Claims. The Administrative Expenses Fund
will be funded with proceeds from the Assets. The Administrative Expenses Fund
shall be owned by the Lenders and established at AmSouth Bank, and monies from
such Administrative Expenses Fund shall be distributed to Allowed Administrative
Claims and Allowed Priority Claims. The Lenders shall retain all additional
monies that exist in the Administrative Expenses Fund after distribution to all
Allowed Administrative Claims and Allowed Priority Claims (whether such Claims
are Allowed on the Effective Date or subsequent thereto).

         Allowed Claim shall mean a Claim or any portion thereof (a) that has
been allowed by Final Order, or (b) as to which, on or by the Effective Date,
(i) no proof of claim has been filed with the Bankruptcy Court and (ii) the
liquidated and noncontingent amount of which is listed by any of the Debtors on
its schedules and remaining unpaid, other than a Claim that is scheduled at
zero, in an unknown amount, or as disputed, (c) for which a proof of claim in a
liquidated amount has been timely filed with the Bankruptcy Court pursuant to
the Bankruptcy Code, any Final Order of the Bankruptcy Court or other


                                       2


applicable bankruptcy law, and as to which either (i) no objection to its
allowance has been filed within the periods of limitation fixed by the Plan or
by any order of the Bankruptcy Court or (ii) any objection to its allowance has
been settled or withdrawn, or has been denied by a Final Order, or (d) that is
expressly allowed in a liquidated amount in this Plan.

         Allowed means, when used in reference to a Claim or ROI Interest within
a particular Class, an Allowed Claim or Allowed ROI Interest of the type
described in such class.

         Amended Charter and Bylaws shall mean the Amended Charter and By-Laws
attached hereto as Exhibit A.

         AmSouth shall mean AmSouth Bank, one of the Lenders and Agent for the
Lenders.

         Assets shall mean all tangible and intangible property, and the
proceeds thereof or anything else of value, including but not limited to cash on
hand or in accounts, owned by the Debtors or the Estates, or in which the
Debtors or the Estates have rights, and including without limitation Litigation
Matters.

         Avoidance Claims shall mean those claims, and the recoveries from those
claims, arising under Chapter 5 of the Bankruptcy Code, including but not
limited to amounts recovered from certain physician practice management groups
in settlement of claims the Debtors had pursuant to Chapter 5 of the Bankruptcy
Code. Avoidance Claims, as used in this Plan, shall not include Claims the
Debtors may have for obligations incurred with the Debtors which have not been
fully performed by such obligor on the Confirmation Date


                                       3


(including partially performed settlements), whether such Claims are recoverable
under Chapter 5 of the Bankruptcy Code or otherwise.

         Bankruptcy Cases shall mean In re Response Oncology, Inc., Case No.
01-24607-K, In re: Response Oncology Management of South Florida, Inc., Case No.
01-24608-K, Response Oncology of Fort Lauderdale, Inc., Case No. 01-24609-K, and
Response Oncology of Tamarac, Inc., Case No. 01-246010-K, administratively
consolidated, pending in the United States Bankruptcy Court for the Western
District of Tennessee.

         Bankruptcy Code shall mean Title 11 U.S.C. ss. 101, et seq.

         Bankruptcy Court shall mean the United States Bankruptcy Court for the
Western District of Tennessee and any court having jurisdiction to hear appeals
therefrom, or such other court as may have jurisdiction over the Chapter 11
case.

         Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure, as
amended, and the Local Rules of the Bankruptcy Court for the Western District of
Tennessee, as amended, as applicable to these Bankruptcy Cases.

         Budget shall mean that certain document attached hereto as Exhibit B
that shows the amounts to be paid to particular classifications or groups of
Holders of Allowed Claims.

         Cases shall mean the Debtors' cases under Chapter 11 of the Bankruptcy
Code.

         Cash Collateral shall have the meaning ascribed to it in the Cash
Collateral Order.


                                       4


         Cash Collateral Order shall mean that certain Final Order Authorizing
Debtors to Use Cash Collateral entered by the Bankruptcy Court in the Debtors'
cases on October 26, 2001, as it has or will be amended, extended and/or
modified through the Effective Date.

         Claim shall have the meaning ascribed to it in 11 U.S.C. ss. 101(5).

         Claimant shall mean the Holder of a Claim.

         Class shall mean a category of Holders of Claims or ROI Interests, as
described in Article II of the Plan.

         Collateral shall mean any property or interest in property of a
Debtor's Estate that serves as security for the repayment of a debt or the
performance of an obligation owed by a Debtor to the Holder of an Allowed
Secured Claim.

         Confirmation or Confirmation Date shall mean the date upon which the
Bankruptcy Court enters an order confirming this Plan.

         Confirmation Order shall mean that certain Order entered by the Court
confirming this Plan.

         Creditor shall mean any person or entity holding a Claim against any of
the Debtors.

         Creditors Trust shall mean the trust established pursuant to this Plan
into which $250,000 for disbursement to Holders of certain Allowed Claims, as
identified in this Plan, are deposited. The Creditors Trust shall be
administered by the Creditors Trustee.

         Creditors Trustee shall mean the law firm of Harris, Shelton, Dunlap,
Cobb & Ryder, PLLC ("Harris Shelton"), 2700 One Commerce Square, Memphis


                                       5


TN 38103, or such other firms as agreed to by the Lenders on the one hand and
the Debtors or the Winddown Person on the other hand. Nothing herein, however,
shall preclude Harris Shelton from acting as counsel to the Debtors.

         Debtors shall mean Response Oncology, Inc. and three of its direct
subsidiaries: Response Oncology Management of South Florida, Inc., Response
Oncology of Fort Lauderdale, Inc., and Response Oncology of Tamarac, Inc. For
purposes of this Plan, the Assets and Liabilities of each Debtor shall be
consolidated, and such Assets made available to Creditors of all Debtors on an
equal basis without regard to Debtor entity, subject however to the priorities
of each Creditor as set out in this Plan.

         Disallowed shall mean a Claim to the extent it is not Allowed.

         Debtors' Agents shall mean the Debtors' officers, directors, employees,
representatives, attorneys, accountants, agents, and other Debtors'
Professionals, serving at any time during these Cases.

         Debtors' Boards of Directors shall mean the Boards of Directors of the
Debtors as they exist on the Confirmation Date.

         Debtors' Professionals shall mean all professionals retained by the
Debtors to provide services during the Bankruptcy Cases, and whose retention was
approved by the Court, pursuant to 11 U.S.C. ss.ss. 327-331, whether or not such
professionals remain employed by the Debtors as of the Effective Date.

         Disclosure Statement shall mean that certain disclosure statement
approved by the Bankruptcy Court pursuant to 11 U.S.C. ss. 1125 in connection
with this Plan.


                                       6


         Disputed Claim shall mean a Claim against a Debtor as to which an
objection has been filed on or before the deadline for objecting to a Claim and
which objection has not been withdrawn or otherwise resolved by Final Order.

         Disputed Claims Reserve shall mean a segregated account to be held in
trust for the benefit of Holders of Disputed Claims in accordance with the
provisions of the Plan.

         Duplicate Claim shall mean a Claim arising out of the same alleged
bases of liability or alleged obligation asserted against the same Debtor or
against more than one Debtor whether on the basis of joint and several liability
otherwise.

         Effective Date shall mean the eleventh day after Confirmation of this
Plan unless an appeal of the Confirmation Order shall have occurred, in which
event, the Effective Date shall be, at the election of the Parties, the eleventh
day after Confirmation of the Plan, or the date upon which any such judicial
decree sustaining the Confirmation Order is final and non-appealable.

         Employee Retention Plan and Executive Contracts shall mean the Employee
Retention Plan approved by the Court on July 23, 2001, as amended on January 25,
2002, and the employment contracts of Anthony LaMacchia and Peter A. Stark,
approved by the Court by Final Order entered on July 31, 2001.

         ERP Funds shall mean those amounts of cash carved out from the Lenders'
Cash Collateral which amounts were deposited into escrow for employees pursuant
to the Cash Collateral Order and the Employee Retention


                                       7


Plan and Executive Contracts. Any ERP Funds not exhausted in paying Allowed
Post-Petition Employee Claims shall be paid to the Lenders.

         Estate(s) shall mean, individually, the estate of each Debtor in the
Bankruptcy Cases, and collectively, the estates of all Debtors in the Bankruptcy
Cases, created pursuant to 11 U.S.C. ss. 541.

         Executory Contract shall mean any contract or unexpired lease to which
the Debtors are a party and which is executory within the meaning of section 365
of the Bankruptcy Code.

         Expense Payment shall mean the sum of $25,000 to be paid to the
Creditors Trustee on the Effective Date for the performance of its duties under
this Plan.

         File, Filed or Filing shall mean file, filed or filing with the
Bankruptcy Court in the Cases.

         Final Order shall mean an order or judgment (or any revision,
modification, or amendment thereof) of the Bankruptcy Court, or other court of
competent jurisdiction, as entered on the docket in the Bankruptcy Cases, the
operation or effect of which has not been stayed, reversed, or amended and as to
which the time to appeal or seek review or rehearing has expired without such
appeal or petition for review or rehearing being filed or, if filed, remains
pending.

         Funds shall mean the Administrative Expenses Fund, the Expense Payment,
the Unsecured Distribution, and the Winddown Fund.

         Holder shall mean a Person who holds a Claim or Interest.


                                       8


         Impaired shall have the meaning associated to it in Section 1124 of the
Bankruptcy Code.

         Lenders shall mean AmSouth Bank, Bank of America, N.A. and Union
Planters Bank, N.A., and their individual successors and assigns, as Lenders,
and AmSouth Bank, and its individual successors and assigns, as Agent, pursuant
to the Loan Agreements.

         Lenders' Agents shall mean the Lenders' officers, directors, employees,
representatives, attorneys, accountants, agents, and other Lenders'
Professionals, serving at any time during the Cases.

         Lenders' Professionals shall mean the firms of Casas Benjamin & White,
LLC and Waller Lansden Dortch & Davis, PLLC, and the individuals of such firms
participating on behalf of Lenders in these Cases.

         Lien shall mean a charge against or interest in property to secure
payment of a debt or performance of an obligation.

         Litigation Matters shall mean those lawsuits or claims, identified on
Exhibit C, belonging to the Debtors or the Debtors' Estates. The Litigation
Matters shall be retained and preserved, and shall vest in the Debtors following
Confirmation.

         Loan Agreements shall mean those certain promissory notes, credit
agreement, loan agreements, guaranties, security agreements, financing
statements, mortgages and other documents or agreements among the Lenders and
the Debtors, as more specifically identified on the proof of claim filed by the
Lenders in this case.


                                       9


         Parties shall mean the Debtors and the Lenders, the proponents of this
Plan.

         Petition Date shall mean March 29, 2001.

         Post-Petition shall mean the period beginning on the Petition Date at
the time these Bankruptcy Cases were commenced, and continuing through the
Effective Date.

         Post-Petition Employee Claims shall mean a claim of an officer,
director or employee of any of the Debtors pursuant to 11 U.S.C. ss. 503(b),
including but not limited to severance and stay amounts arising under the
Employee Retention Plan and Executive Contract.

         Priority Claims shall mean those claims identified in 11 U.S.C. ss.
507.

         Pro Rata Share shall mean a percentage determined by the numerator
being the amount of the Allowed Claim of such creditor and the denominator being
the total amount of Allowed Claims against all the Debtors.

         Released Parties shall mean those persons or entities identified in
Article X of this Plan.

         ROI shall mean Response Oncology, Inc.

         ROI Interests shall mean, collectively, all shares of stock in any of
the Debtors, together with any other options, warrants, conversion rights,
rights of first refusal or other rights, contractual or otherwise, to acquire or
receive any stock or other ownership interests in Debtors, and any contracts
subscriptions, commitments or agreements pursuant to which the non-debtor party
was or


                                       10


could have been entitled to receive shares, securities, or other ownership
interests in Debtors.

         RO-Fort Lauderdale shall mean Response Oncology of Fort Lauderdale,
Inc.

         RO-S. Florida shall mean Response Oncology Management of South Florida,
Inc.

         RO-Tamarac shall mean Response Oncology of Tamarac, Inc.

         Secured Claim shall mean any Claim that is secured by a lien on
property in which an Estate has an interest or that is subject to setoff under
Section 553 of the Bankruptcy Code, to the extent of the value of the Holder of
such Claim's interest in the Estate's interest in such property or to the extent
of the amount subject to setoff, as applicable, as determined pursuant to 506(a)
or Section 1111(b) of the Bankruptcy Code.

         Subordinated Claimants shall mean those persons or entities identified
on Exhibit D hereto, each of whom has contractually subordinated its Claim to
the Lenders. To the extent that such Claims have not previously been released
pursuant to Final Order of the Bankruptcy Court, or paid in full prior to the
Bankruptcy, such Claims shall constitute Allowed Claims.

         Termination Date shall mean the later of September 30, 2002 or the date
upon which the Winddown Person and Lenders determine that no further operations
of the Debtors are needed or necessary, and is the date upon which all
operations of the Debtors shall cease.

         Unimpaired shall mean with respect to any Claimant such Claim is not
Impaired.


                                       11


         Unsecured Distribution shall mean the sum of $250,000.00.

         Winddown Fund shall mean the amounts shown on the Budget necessary to
continue winding down the Debtors' businesses during the Winddown Period for the
budgeted period, or as mutually agreed between Lenders and the Winddown Person.

         Winddown Period shall mean the period between the Effective Date and
the Termination Date.

         Winddown Person shall mean such person appointed by the Debtors and the
Lenders, to act as the sole Director, and Chief Executive Officer and President,
of the Debtors to supervise the liquidation of the Assets and the winding down
of the Debtors' operations and business existence during the Winddown Period.

                                   ARTICLE II
                     CLASSIFICATION AND TREATMENT OF CLAIMS

         The classification and treatment of Claims is made for the purpose of
voting on the Plan, making distributions thereunder and for administration
thereof. For purposes of the Plan, those parties holding Claims against the
Debtors are grouped and shall be treated as follows:

                          Class 1 Administrative Claims

                                    CLASS 1A

                         PROFESSIONAL FEES AND EXPENSES

         All Allowed Administrative Expense Claims for fees and expenses owed to
any of the Debtors' Professionals shall be paid in full in cash from the


                                       12


Administrative Expenses Fund on the later of (a) the date that such Claim is
Allowed or (b) within (30) thirty days of the Effective Date, unless otherwise
agreed to by the Lenders and the Holder of any such allowed Administrative
Expense Claim. The Debtors' Professionals shall be required to apply to the
Court for approval of the fees, costs, and disbursements in the manner
prescribed by the Bankruptcy Code no later than the thirtieth (30) day following
Confirmation. The Parties have attached a Budget showing the total
Administrative Expense Claims they believe are payable under the Plan to the
Debtors' Professionals. The Lenders' Professionals shall not seek or receive
compensation under the Plan but will be paid by the Lenders either from proceeds
the Lenders receive under the Plan or from their own funds.

         This subclass is Unimpaired, and pursuant to 11 U.S.C. ss. 1126(f) is
conclusively presumed to have accepted the Plan. Accordingly, the votes of this
subclass will not be solicited.

                                    CLASS 1B
                               U.S. TRUSTEE FEES.

         To the extent not already paid, the Chapter 11 Fees required pursuant
to 28 U.S.C. ss. 1930 shall be paid in full from the Administrative Expenses
Fund on or before the Effective Date of Confirmation. These fees will continue
to be paid quarterly until the case is closed. United States Trustee fees are
included on the Budget attached hereto as a part of bankruptcy costs. The
Lenders and the Winddown Person shall work with the United States Trustee to
provide whatever accounting the United States Trustee may require indicating the
cash disbursements for the relevant period the fees are due. This subclass is


                                       13


Unimpaired, and pursuant to 11 U.S.C. ss. 1126(f) is conclusively presumed to
have accepted the Plan. Accordingly, the votes of this subclass will not be
solicited.

                                    CLASS 1C
                     POST-PETITION PAYABLES/EMPLOYEE CLAIMS.

         All trade payables and other Administrative Expense Claims (including
Post-Petition Employee Claims) which constitute Allowed Claims and are incurred
by the Debtors Post-Petition for normal, reasonable and necessary operating
expenses (other than Claims under Classes 1A and 1B, or as otherwise provided in
the Plan) shall be paid in full on the later of (a) the date such Claim is
Allowed, or (b) the thirtieth (30) day following the Effective Date. All Allowed
Post-Petition Employee Claims shall be paid at the times set out in the Employee
Retention Plan and Executive Contract, first from the ERP Funds, with any
remaining amounts satisfied from the Administrative Expenses Fund.

         This subclass is Unimpaired, and pursuant to 11 U.S.C. ss. 1126(f) is
conclusively presumed to have accepted the Plan. Accordingly, the votes of this
subclass will not be solicited.

                                    CLASS 1D
                                PRIORITY CLAIMS.

         All Priority Claims which constitute Allowed Claims shall be paid in
full in cash from the Administrative Expenses Fund on the later of (a) the date
that such Claim is Allowed or (b) within (30) thirty days of the Effective Date,
unless otherwise agreed to by the Lenders and the Holder of any such Allowed


                                       14


Administrative Expense Claim. This subclass is Unimpaired, and pursuant to 11
U.S.C. ss. 1126(f) is conclusively presumed to have accepted the Plan.
Accordingly, the votes of this subclass will not be solicited.

                        Class 2 Secured Claim Of Lenders

         The Claims of the Lenders have been Allowed, pursuant to the Cash
Collateral Order, the terms and conditions of which are incorporated herein by
reference. In full and final satisfaction of the Lender's Claims, AmSouth, as
agent for the Lenders, shall receive and retain the total of (1) on the
Effective Date, all amounts collected through that date through the liquidation
of all the Assets, except for those amounts deposited into (a) the
Administrative Expenses Fund, which shall be segregated by AmSouth; (b) the
Unsecured Distribution paid to the Creditors Trust; (c) the Expense Payment, (d)
the Winddown Fund, plus (2) all amounts collected after the Effective Date from
the liquidation of all the Assets or collected by the Debtors (except to the
extent such amounts are needed to be deposited into a Fund to meet the
obligations of the Plan). Monthly, beginning on the last day of the month in
which the Effective Date occurs, the Winddown Person shall remit to AmSouth, all
amounts collected through that date (less any amounts required to fund the
Funds). Except as provided in the Plan, all sums remitted to AmSouth pursuant to
this Plan shall be paid to the Lenders and applied to the Lenders' Claims in
accordance with the Loan Agreements.


                                       15


         Further, pursuant to the subordination provisions, the Subordinated
Claimants' Claims have been assigned to the Lenders. Accordingly, this Plan will
give effect to all such subordination provisions and any recovery which would
otherwise go to the Subordinated Claimants shall be received by the Lenders.

         This Class is Impaired, and the votes of this Class will be solicited.

                    Class 3 Claims of Other Secured Creditors

         The Parties do not believe there are any holders of Secured Claims
against the Debtors other than the Lenders. To the extent there are such
Creditors whose Secured Claims against the Assets are not junior in priority to
the Claims of the Lenders, and which Claims have not been otherwise paid or
released, then upon the allowance of any such Secured Claim, such Allowed Claim
shall be satisfied, at the Lender's election, by the Winddown Person tendering
the Collateral for such secured Claim in full satisfaction of such secured
Claim, or by paying from the Assets the value of such collateral to any such
secured Claimant.

         This Class is Unimpaired, and pursuant to 11 U.S.C. ss. 1126(f) is
conclusively presumed to have accepted the Plan. Accordingly, the votes of this
Class will not be solicited.


                                       16


                      Class 4 Unsecured Non-Priority Claims

         This Class consists of all Allowed unsecured non-priority Claims. The
total of all unsecured non-priority Claims scheduled (without regard to
allowance and subject to objections) is approximately $17.4 million dollars. In
full satisfaction of all Allowed Claims in this Class, Allowed Claims in this
Class shall receive, pro rata, a distribution from the Creditors Trust, on the
Effective Date, in the amount of the Unsecured Distribution, subject to Article
XI, paragraphs 3 and 4. Upon distribution of the Unsecured Distribution, no
further property shall be payable or distributable to the Claimants in this
Class.

         The Claims of Subordinated Claimants fall within this Class. Any
recovery on account of the Allowed Claims of the Subordinated Claimants shall be
paid to the Lenders and the Subordinated Claimants shall receive nothing on
account of their Claims.

         This Class is Impaired, and the votes of this Class will be solicited.

                         Class 5 Claims of Shareholders

         This Class consists of all Holders of ROI Interests. Because Holders of
Class 2, 3, and 4 Claims are not being paid in full, this Class shall receive
nothing under this Plan. All shares of stock ever issued by the Debtors, along
with all other ROI Interests, shall be deemed cancelled and shall have no
further claim against any of the Debtors' Assets upon the Effective Date.


                                       17


         This Class is Impaired, and pursuant to 11 U.S.C. ss. 1126(g), Class 5
Creditors or ROI Interests are deemed to have rejected the Plan, and the votes
of this Class will not be solicited.

                                   ARTICLE III
             CONSOLIDATION OF ESTATES, TREATMENT OF DUPLICATE CLAIMS

         1.       Substantive Consolidation. On the Effective Date, the Estates,
and all assets and liabilities, of RO-S. Florida, Ro-Fort Lauderdale and
Ro-Tamarac shall be deemed substantively consolidated with and into the Estate
of ROI. All claims by any of the Debtors against another Debtor shall not be
entitled to any distribution under this Plan.

         2.       Treatment of Duplicate Claims. Upon the Effective Date, any
Duplicate Claim shall be treated as a single Claim against the Estate of ROI. To
the extent any Holder holds Duplicate Claims that become Allowed Claims, they
shall be treated as a single Allowed Claim only against the ROI Estate, and all
other Duplicate Claims shall not be Allowed.

                                   ARTICLE IV
          DUTIES, POWERS AND ADMINISTRATION OF THE WINDDOWN PERSON AND
                          WINDDOWN OF DEBTORS' ESTATES

         Between the Confirmation Date and the Effective Date, the Lenders and
the Debtors' Boards of Directors shall select the Winddown Person. In order to
effectuate the winddown of the Debtors' operations during the Winddown Period,
on the Effective Date, the Debtors' Boards of Directors shall be deemed
disbanded and relieved of all duties without the need for any vote or other


                                       18


action. Further, as of the Effective Date, RO-Fort Lauderdale, RO-S. Florida,
and RO-Tamarac shall be deemed merged into ROI, and ROI shall be the only
entity. Pursuant to the Amended Charter and Bylaws, which shall become effective
on the Effective Date without any act by the Debtors' Boards of Directors, the
Winddown Person shall then become the sole Director and the Chief Executive
Officer and President of ROI, which shall issue a single share to AmSouth or, at
AmSouth's direction, a subsidiary, affiliate or trust, as agent on behalf of the
Lenders, which shall constitute the only existing ownership interest in ROI.

         Pursuant to the Budget, the Winddown Person shall retain or employ only
those persons whom the Winddown Person determines, in his discretion and within
the constraints of the Budget, are necessary to allow him to perform the duties
required under this Plan, including the collection and liquidation of the
Assets, and the payment of the collected Assets to the Lenders. On or before
September 30, 2002, the Winddown Person and the Lenders shall determine at what
point the operations of the Debtors and duties of the Winddown Person shall
cease. Once the Termination Date is determined, the Lenders and Winddown Person
shall file with the Court a notice (to be served upon the Debtors and their
counsel, the United States Trustee's Office, and all parties requesting notices
in this case) as to the Termination Date. On the Termination Date, the Winddown
Person shall terminate all remaining employees, independent contractors, and/or
agents, and turn over all books and records of the Debtors to the Lenders. Any
medical records or related


                                       19


documents requiring storage and retention under law shall be stored by the
Winddown Person for any period provided by law, by obtaining an appropriate
storage facility at reasonable cost, such cost to be paid from the Winddown
Fund.

         To the extent permitted by law, on the Termination Date, the Debtors'
corporate existences shall cease and the Debtors shall be deemed, under
applicable governing corporate law, to have been dissolved and no longer
operational or functioning, and the single ownership share issued to AmSouth
shall be deemed cancelled. It is the express intention of the Parties that this
Plan prohibit the use of the corporate entities comprising the Debtors following
the Termination Date, unless the conditions in Article XII, Section 9, are met.
On or at a time to coincide with the Termination Date, the Winddown Person shall
file a motion to close the Bankruptcy Case. To the extent necessary, the
Winddown Person shall file articles of dissolution and take such actions as
necessary under applicable state law to effect fully the dissolution of the
Debtors. The term of the Winddown Person shall be deemed to be terminated as of
the Termination Date, unless otherwise extended by Agreement of the Lenders and
Winddown Person. In the event of a vacancy in the position of Winddown Person,
the Lenders shall have sole discretion to choose a replacement, and shall have
no liability in connection with such choosing.

         The Winddown Person, on behalf of the Debtors, is vested with the
maximum authority permitted by law in order to dispose of any remaining


                                       20


Assets, execute documents, pursue litigation and the Litigation Matters, file
and pay taxes and to conduct all other duties assigned to it under this Plan.
The Winddown Person shall be compensated from the Winddown Funds in an amount to
be agreed upon by the Lenders and the Winddown Person.

                                    ARTICLE V
                         MEANS OF EXECUTION OF THE PLAN

         This is a liquidating plan. Because the Lenders' Allowed Secured Claim
exceeds the total amount of any recovery from the sale of all Assets of the
Debtors', the Plan shall be funded through the liquidation of the Debtors'
Assets, the payment from the Assets, in full, of all Allowed Administrative and
Priority Claims, the remittance to Allowed unsecured, non-priority Creditors of
the Unsecured Distribution as set forth in this Plan (to which such Creditors
would not otherwise be entitled), and the remittance of any balance to the
Lenders. Presently, and continuing until the Effective Date, the Debtors shall
liquidate all Assets and remit all such collections, in accordance with the
Budget, to the Lenders.

         On the Effective Date, the Winddown Person shall deposit from cash on
hand, or if cash on hand is insufficient then from the Lenders, the amounts
shown on the Budget as necessary to fund the Funds. After the Effective Date,
the Winddown Person will continue to sell all the Debtors' Assets, terminate
employment agreements, and pay to the Lenders all proceeds of the liquidation of
the Debtors' and Estates' Assets in accordance with this Plan. All proceeds of
the Assets existing on the Effective Date or from the liquidation of any of the
Assets, other than the Funds, shall be remitted to the Lenders, and Lenders

                                       21


shall retain all liens against such Assets until their liquidation and
remittance to Lenders, subject to the distribution under the Plan.

         In the event, on the Termination Date, Assets remain in the Debtors'
possession over and above the amounts contemplated by the Budget and other
payments required pursuant to this Plan, all Assets shall be remitted to the
Lenders (or the Lenders' designee) within one (1) business day after the
Termination Date. After all distributions required in the Plan are made, if
amounts remain in any Funds (except the Expense Fund), such amounts shall be
paid to the Lenders.

                                   ARTICLE VI
                    UNEXPIRED LEASES AND EXECUTORY CONTRACTS

         1.       Rejection. All unexpired Executory Contracts of the Debtors
are hereby rejected pursuant to 11 U.S.C. ss. 365 as of the Effective Date,
except those which shall on the Confirmation have been assumed or are the
subject of pending motions to assume pursuant to 11 U.S.C. ss.365.

         2.       Rejection Damages Bar Date. If the rejection by any Debtor of
an unexpired lease or Executory Contract results in a Claim, then such Claim
shall be forever barred and shall not be enforceable against any Debtor or the
properties of any of them unless a proof of claim is filed with the clerk of the
Bankruptcy Court and served upon counsel to the Lenders within thirty (30) days
after service of the earlier of (a) notice of the Confirmation Order, or (b)
other notice that the Executory Contract or unexpired lease has been rejected.

         3.       Possession of Rejected Property. If an Executory Contract
pursuant to which the Debtors' leased equipment is rejected, the owner of such


                                       22


equipment shall take physical possession of the equipment within ten Business
Days after the Effective Date. Any previously leased equipment of which the
owner does not take possession within ten Business Days after the Effective Date
may be disposed of by the Winddown Person. The owner of such equipment shall
reimburse the Debtors for full cost of such disposal. If any leased equipment is
not in possession of the Debtors, the Winddown Person shall cooperate with the
owner's efforts to take possession of the equipment, but the Winddown Person
shall not be required to turnover possession of the equipment.

                                   ARTICLE VII
                            MODIFICATION OF THE PLAN

         The right is reserved in accordance with the Bankruptcy Code and the
Bankruptcy Rules to amend or modify this Plan prior to Confirmation or as soon
as practical thereafter. Before or after Confirmation, the Bankruptcy Court may,
upon application, remedy any defect or omission or reconcile any inconsistencies
in the Plan in such manner as may be necessary to carry out the purpose and
intent of the Plan.

                                  ARTICLE VIII
                             WITHDRAWAL OF THIS PLAN

         If, for any reason, the Effective Date does not occur by August 15,
2002, this Plan shall be deemed withdrawn, without prejudice, unless the Debtors
and the Lenders file a notice with the Bankruptcy Court further extending that


                                       23


date. If the Plan is withdrawn, the Lenders may petition the Court to dismiss
the Bankruptcy Case.

                                   ARTICLE IX
                     RETENTION OF JURISDICTION BY THIS COURT

         The Bankruptcy Court shall retain jurisdiction of this Chapter 11 case
pursuant to and for the purposes set forth in 1127(b) of the Bankruptcy Code and
to:

         1.       Allow, disallow, determine, liquidate, classify, estimate or
establish the priority or unsecured status of any Claim, including the
resolution of any request for payment of any Administrative Expense Claim and
the resolution of any and all objections to the allowance of, or priority of,
Claims. Objections to Claims shall be filed on or before 90 days after the entry
of the Confirmation Order.

         2.       To hear and determine pending motions for the assumption or
rejection of Executory Contracts and the allowance of Claims resulting
therefrom.

         3.       Grant or deny any applications for Allowance of administrative
compensation or reimbursement of expenses authorized pursuant to the Bankruptcy
Code or the Plan extending beyond the Effective Date.

         4.       Ensure the distributions to Holders of Allowed Claims are
accomplished pursuant the provisions of the Plan.

         5.       Enter such Orders as may be necessary or appropriate to
implement or consummate the provision of the Plan and all instruments,


                                       24


releases and other agreements or documents created in connection with the Plan
or the Disclosure Statement or the Confirmation Order.

         6.       Resolve any cases, controversies, suits or disputes that may
arise in connection with the consummation, interpretation or enforcement of the
Plan or any entity's obligations incurred in connection with the Plan, or the
distribution of Funds under the Plan.

         7.       Permit the Debtors or Lenders to modify the Plan before or
after the Effective Date pursuant to Section 1127 of the Bankruptcy Code, the
Confirmation Order, instrument, or other agreement or document created in
connection with the Plan, the Disclosure Statement or the Confirmation Order; or
remedy any defect or omission or reconcile any inconsistency in any Bankruptcy
Court Order, the Plan, the Disclosure Statement or the Confirmation Order or any
instrument or other agreement or document created in connection with the Plan,
the Disclosure Statement or the Confirmation Order, in such manner as may be
necessary or appropriate to consummate the Plan, to the extent authorized by the
Bankruptcy Code.

         8.       Issue injunctions and enter and implement other Orders to take
such other actions as may be necessary or appropriate to restrain interference
by any person or entity with the consummation, implementation or enforcement of
the Plan.

         9.       Determine any other matters that may arise in connection with
or relate to the Plan, the Disclosure Statement, the Confirmation Order, the

                                       25


Creditors Trust or any contract, instrument or other agreement or document
created in connection with the Plan or the Disclosure Statement.

         10.      To hear and determine all controversies arising in connection
with the implementation of the Plan, including any controversies relating to the
Winddown Person's obligations in connection with the implementation of the Plan.

         11.      Enter an Order concluding the Bankruptcy Case.

         12.      To hear and determine controversies related to Claims the
Debtors may have, including matters arising after the Confirmation Date.

         13.      To hear and resolve any dispute arising out of any retention,
employment or matter concerning representation, services or compensation of any
Debtors' Professional or any agent or professional who provided services to the
Debtors' during Bankruptcy Cases or prior to the Petition Date.

                                    ARTICLE X
                      EXCULPATION, RELEASES AND INJUNCTIONS

         Neither the Debtors' Agents, the Lenders, nor the Lenders' Agents shall
have or incur any liability to any holder of any Claim or ROI Interest for any
act or omission in connection with, or arising out of, the Bankruptcy Cases, the
confirmation of the Plan, the consummation of the Plan or the administration of
the Plan or Assets to be distributed under the Plan except for willful
misconduct or gross negligence, unless specifically reserved in this Plan.

         In addition, this Plan shall be deemed to act as a release by the
Debtors and Debtors' Agents of any and all Claims that were or could have been

                                       26


asserted against the Lenders or the Lenders' Agents, through the date of
Confirmation, whether known or unknown, at the time of Confirmation.

         In addition, the Plan shall also act as a release by the Lenders and
the Lenders' Agents of any and all Claims that were or could have been asserted
against the Debtors and the Debtors' Agents, whether known or unknown, at the
time of Confirmation.

         This Plan acts to enjoin permanently any and all suits or other
proceedings which could be brought on account of any Claims that are released by
operation of this Article X. Such injunction, along with the releases described
in this Article, shall be effective on the Confirmation Date.

         Notwithstanding anything to the contrary, this provision does not limit
or restrain any action against any person for violating the terms of the Plan.
Further, nothing herein shall be construed to release or discharge Lenders'
Liens or Claims against the Assets, and the right of Lenders to payment upon the
liquidation or application of those Assets, as set out in this Plan. Nothing
contained in this Article shall limit or impair any claim of indemnity against
the Debtors by the Debtors' Boards of Directors or any officer of the Debtors.

                                   ARTICLE XI
            CLAIM OBJECTIONS, DISPUTED CLAIMS, AND AVOIDANCE ACTIONS

         1.       Allowance of Claims. The Creditors Trustee shall have the
exclusive right to object to Claims which are classified in Class 4, except for
the Claims of the Subordinated Claimants. Any such objections shall be filed
within sixty (60) days after Confirmation. For purposes of administrative
convenience, Class


                                       27


4 Claims for which the pro rata share of the Unsecured Distribution is less than
$2,500.00 shall not be subject to objection, and as of the Effective Date shall
be deemed Allowed. Further, the Creditors Trustee shall have no duty to object
to any Claim except to the extent that the Creditors Trustee, in its reasonable
discretion, believes that disallowance of the Claim will substantially affect
distributions, and will preserve for the Creditors Trust an amount which is
significantly greater than the costs to be incurred in connection with the
objection.

         The Lenders and/or their agent shall have the exclusive right to object
to all other Claims, except those in Class 4. Any such objections shall be filed
within ninety (90) days after Confirmation, except for objections to claims paid
in the ordinary course of business during the case pursuant to 11 U.S.C. ss.
363(c)(1), for which objections (or other actions) must be taken within any
applicable state law statutes of limitation.

         The Creditors Trustee or the Lenders may file an omnibus objection to
all Claims as to which they have the right to object, and Claimants shall have
thirty (30) days from the service of such objection (or omnibus objection) to
respond. If a response is filed, the Court shall fix a hearing date on such
Claims objection. If no response is filed within thirty days after the service
of such objection, then such objection shall be deemed upheld and such Claim
shall be Disallowed and treated in the manner provided for in the objection or
omnibus objection.


                                       28


         2.       Setoffs and Defenses. Subject to the limitations provided in
11 U.S.C. ss.553, the Lenders and Creditors Trustee, as applicable, shall be
allowed, but not required, to assert any right of setoff against any Claim which
the Debtors may have in connection with the allowance of any such Claim,
including without limitation the payments or other distributions to be made
pursuant to this Plan in respect to such Claim. Unless otherwise provided
herein, neither the failure to do so nor the disallowance of any Claim hereunder
shall constitute a waiver or release of any claim that the Debtors may have
against such Claimant. Further, and unless otherwise provided herein, Lenders
and Creditors Trustee, as applicable, shall be allowed, but not required, to
assert any rights and defenses, both legal and equitable, of the Debtors with
respect to any Claims, which are hereby retained and preserved.

         3.       Disputed Claims Reserves. The following Disputed Claims
Reserves shall be established: (1) A Disputed Claims Reserve established and
maintained by the Creditors Trustee for the treatment of Disputed Claims in
Class 4, (2) A Disputed Claims Reserve established and maintained by the Lenders
for the treatment of all Disputed Administrative Claims and Disputed Priority
Claims (with amounts from the Administrative Expenses Fund); and (3) A Disputed
Claims Reserve established and maintained by the Winddown Person for the Debtors
for any Disputed Secured Claims or any Disputed expenses associated with the
Debtors' operations during the Winddown Period (to the extent any latter such
dispute is brought to the attention of the Winddown Person). The Creditors
Trustee, Lenders and the Winddown


                                       29


Person, as appropriate, shall deposit into a Disputed Claims Reserve an amount
equal to the Pro Rata Share of the distribution allocable to such Disputed
Claims, as if such Claims were Allowed Claims, from Funds otherwise payable to
the respective Funds. The respective Disputed Claims Reserve shall be held in
trust by the Creditors Trustee, Lenders and the Winddown Person, for the benefit
of the Holders of Allowed Claims whose Distributions are unclaimed and the
Holders of Disputed Claims pending a determination of their entitlement thereto
under the terms of the Plan.

         4.       Distributions to Holders of Disputed Claims. At the time a
Disputed Claim becomes an Allowed Claim, any Distributions reserved for such
Allowed Claim shall be released from the Disputed Claims Reserve and be
delivered to such Holder of such Allowed Claim in an amount proportionate to the
Allowed Amount of any such Claim. In the event that such Disputed Claim is
Disallowed in its entirety, the Distributions provided for any Claims in the
Disputed Claims Reserve shall be returned to the Creditors Trust.

         5.       Delivery of Distributions and Notices. Except as otherwise
provided in the Plan and except as may otherwise be agreed to by the Holder of a
particular Claim and the Creditors Trustee (as to Claims to be paid from the
Creditors Trust) or the Lenders (as to all other Claims), any property or notice
to which such Claimant shall become entitled under the provisions of this Plan,
shall be delivered to such Claimant by regular mail, postage prepaid, in an
envelope addressed to such Claimant at the address of each such Holder as set
forth on the proofs of claim filed by such Holders, or at the last known address


                                       30


of such Holder if no proof of claim is filed or if the Debtor has been notified
in writing of a change of address. If any Holder's distribution or notice is
returned as undeliverable, no further distributions to such Holder will be made
unless and until the Creditors Trustee, or the Lenders, as appropriate, are
notified in writing of such Holder's then current address.

         6.       Unclaimed Distributions and Uncashed Checks. In the event (1)
distributions determined distributable on any Allowed Claim of a Creditor are
returned as undeliverable and one year passes without such Creditor making known
to the Creditors Trustee or the Lenders, as appropriate, a corrected mailing
address (an "unclaimed distribution"); or (2) Assets are located after the
Termination Date, then, in such event, all such unclaimed distributions shall be
payable to Lenders, and all such Assets shall be liquidated by the Lenders and
applied to the outstanding Claim of the Lenders. The Claim of any Holder with
respect to the treatment of any unclaimed distribution hereunder will be
discharged and forever barred. Checks issued as distributions to Claims, other
than Claims of the Lenders or Subordinated Claimants, will be null and void if
not negotiated within six (6) months after the date of issuance thereof.

         7.       De Minimus Distributions. Any Claims entitled to a
distribution of less than $10.00 will not be paid.

         8.       Avoidance Actions. The Debtors' management, after review of
their books and records has reported to the Lenders that with the exception of
some Avoidance Actions asserted during the course of this Bankruptcy Case, that
to the best of their knowledge there are no Avoidance Actions (maintained

                                       31


pursuant to state or federal law) which should be pursued, unless specifically
identified on the attached Exhibit C. The Debtors' management have examined
their books and records and considered the likely success of pursing Avoidance
Actions and have determined that the likely cost of pursuing such Avoidance
Actions (other than those already pursued and settled, or reserved for
litigation on the attached Exhibit C) outweigh any potential recovery. As such,
all such Avoidance Claims, except for those already recovered upon, settled or
reserved on Exhibit C, shall be released on the Effective Date.

         9.       Other Claims of the Debtors. Notwithstanding the previous
paragraph, the Debtors continue to liquidate their Assets and provide certain
limited services. To the extent any amount owed to the Debtors for goods,
services or as accounts are unpaid on the Confirmation Date, then such Claims
shall survive the Confirmation, this Plan shall not act to release or adjudicate
any such Claims, and such Claims shall be fully collectible by the Debtors, the
Lenders and/or the Winddown Person.

                                   ARTICLE XII
                            MISCELLANEOUS PROVISIONS

         1.       Pre-Confirmation Amendment. The Parties may modify the Plan at
any time prior to the entry of the Confirmation Order as provided under Section
1127(a) of the Bankruptcy Code, provided that the Plan, as modified, and the
Disclosure Statement meet applicable Bankruptcy Code requirements.

         2.       Post-Confirmation/Pre-Consummation Amendment Requiring
Resolicitation. After the Confirmation Date, the Lenders may modify the Plan as
provided in Section 1127(b) of the Bankruptcy Code.


                                       32


         3.       Reservation of Cramdown Right/Withdrawal of the Plan. To the
extent that any Class which is impaired rejects the Plan or is deemed to have
rejected the Plan, the Parties may request confirmation of the Plan, as it may
be modified from time to time, under 11 U.S.C. ss. 1129(b). The Parties reserve
the right to alter, amend, modify, revoke, or withdraw the Plan or any exhibit
or schedule hereto at any time before the Effective Date. In addition, if the
Plan is not confirmed on or before July 15, 2002, the Plan shall be deemed
withdrawn, unless the Lenders give written notice of their intent to extend such
deadline.

         4.       Confirmation Order and Plan Control. To the extent the
Confirmation Order and/or the Plan is inconsistent with the Disclosure
Statement, any other agreement entered into between or among the Lenders and any
party, this Plan controls the Disclosure Statement and any such agreements, and
the Confirmation Order (and any other orders of the Bankruptcy Court) controls
the Plan.

         5.       Administrative Claims Bar Date. Any Creditor or party in
interest alleging it is entitled to payment of an Administrative Expense Claim,
which is not an Allowed Claim, or which has not already been incurred and paid
in the ordinary course of business during the case pursuant to 11 U.S.C. ss.
363(c)(1) without objection, shall file a motion seeking the allowance and
payment of such Administrative Expense Claim within thirty (30) days after the
entry of the Confirmation Order. Any party failing to file such motion seeking
the allowance and payment of such Administrative Expense Claim shall be forever
barred from asserting its right to any recovery under the Plan or from the
Assets, the


                                       33


Debtors, the Debtors' Agents, the Lenders, or Lenders' Agents, and such claim
shall be discharged.

         6.       Post-Confirmation Matters. The Debtors shall be required to
continue filing operating reports and to pay any appropriate quarterly fees
until a Final Order closing the Bankruptcy Case is entered. The following
requirements will need to have been satisfied before the Debtors can file an
application for a final decree pursuant to Fed. R. Bank. P. 3022:

         a.       The Confirmation Order has become final.

         b.       Deposits required by the Plan have been distributed.

         c.       Payments under the Plan have commenced (but prior to making
                  all payments allowed under the Plan).

         d.       There are no pending motions, contested matters or adversary
                  proceedings.

         e.       All U.S. Trustee's quarterly fees have been paid.

         f.       The U.S. Trustee has consented to such final decree.

         7.       Automatic Stay/Post Confirmation Injunction. The stay under 11
U.S.C. ss.362 shall be lifted upon the Effective Date. However, this Plan shall
act as a temporary injunction against the filing of any lawsuits against the
Debtors or the Lenders through the Termination Date by any Creditor, ROI
Interest holder, or party-in-interest in this Bankruptcy Case, other than the
assertion of any claims or defenses that may be raised in connection with any
Claims allowance procedure. From the date of entry of the Confirmation Order

                                       34


through the Termination Date, this Plan shall act to toll any statute of
limitation against any Claim that is enjoined by operation of this paragraph.

         8.       Title to Property. Title to all Assets of the Debtors shall
vest in the Debtors on the Effective Date, and shall be subject to liquidation
and distribution as provided for in this Plan. As of the Effective Date, all
property of the Debtors' shall be free and clear of all Claims and Interests,
except as specifically provided in the Plan or the Confirmation Order. Upon the
Termination Date, title to all Assets of the Debtors not previously administered
shall be deemed transferred to AmSouth, as agent for the Lenders.

         9.       Injunction against use of Corporate Entities Following
Termination Date. Following the Termination Date, this Plan shall act as a
permanent injunction against the use or resurrection of any corporation which is
a Debtor in this Bankruptcy Case, except to the extent necessary to reopen the
Bankruptcy Cases to finally administer an Asset. This injunction shall remain in
effect forever, unless all Allowed Claims in Classes 2, 3 and 4 are paid in
full, in cash (plus interest which may accrue pursuant to the applicable
documents establishing such Allowed Claims), and the ROI Interests whose shares
are cancelled under this Plan have their shares reissued and redistributed in
the same amount, and of the same priority, as existed on the Petition Date. Only
this Court may be allowed to lift the permanent injunction of this Plan as to
the use or resurrection of the Debtors' corporate existence.

         10.      Entire Agreement. This Plan, as described herein and the
Disclosure Statement and the Exhibits hereto and thereto, sets forth the entire


                                       35


agreement and understanding among the Debtors, Lenders and all Creditors
relating to the subject matter hereof and supersedes all prior discussions and
documents. No party shall be bound by any terms, conditions, definitions,
warranties, understandings or representations with respect to the subject matter
hereof, other than is expressly provided for herein or as may hereafter be
agreed to by the Lenders and the Debtors in a writing signed by the Lenders.

         11.      Preservation of Claims. Except as expressly released herein,
the Debtors' causes of action and claims which make up the Litigation Matters
are hereby retained and preserved, and shall vest in the Debtors. The Winddown
Person, on behalf of the Debtors, may pursue, settle, or transfer such retained
Litigation Matters, as appropriate.

         12.      Claims of Lenders Under Section 507(b) of the Bankruptcy Code.
To the extent the Avoidance Claims are not used by the Debtors, in the ordinary
course of business, to pay operating expenses as provided herein, such funds
constituting the Avoidance Claims shall be deemed subject to the Secured Claim
by virtue of 11 U.S.C. ss.507(b).

         13.      Exemption From Certain Transfer Taxes. Pursuant to Section
1146(c) of the Bankruptcy Code, any transfers from a Debtor to a Debtor or any
other Person or entity pursuant to the Plan in the United States shall not be
subject to any document recording tax, stamp tax, conveyance fee, intangibles or
similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage
recording tax, or other similar tax or governmental assessment, and the Plan
hereby directs all appropriate state or local government officials or


                                       36


agents to forego the collection of any such tax or governmental assessment and
to accept for filing and recordation any of the foregoing instruments or other
documents without payment of any such tax or governmental assessment.

         14.      Continuation of Anti-Discrimination Provisions of Bankruptcy
Code A governmental unit may not deny, revoke, suspend, or refuse to renew a
license, permit, charter, franchise, or other similar grant to, condition such a
grant to, or discriminate with respect to such a grant against, the Debtors or
another Person with whom the Debtor has been or is associated or affiliated,
solely because of the commencement, continuation, or termination of the case or
because of any provision of the Plan or the legal effect of the Plan, and the
Plan will constitute an express injunction against any such discriminatory
treatment by a governmental unit.

         15.      Effectuating Documents and Necessary Authorizations. Following
Confirmation, Lenders will seek such orders, judgments, injunctions, regulatory
approvals, and rulings that may be required to carry out and further the
intentions and purposes, and give full effect to the provisions, of the Plan.

         16.      Legally Binding Effect. The provisions of this Plan shall bind
all Creditors and ROI Interest Holders, whether or not they accept this Plan. On
and after the Effective Date, all Holders of Claims shall be precluded and
enjoined from asserting any Claim against the Assets based on any transaction or
other activity of any kind that occurred prior to the Confirmation Date except
as permitted under the Plan.


                                       37


         17.      Governing Law. Unless a rule of law or procedure is supplied
by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of
the State of Tennessee shall govern the construction and implementation of the
Plan and any agreements, documents, or instruments executed in connection with
the Plan, without giving effect to the principles of conflicts of law thereof.

         18.      Time. In computing any period of time prescribed or allowed by
this Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.

         RESPECTFULLY SUBMITTED this      day of April, 2002.
                                     ----

                            HARRIS, SHELTON, DUNLAP, COBB & RYDER, PLLC

                            By:
                               --------------------------------------------
                                 Steven N. Douglass (Bar No. 9770)
                                 Jonathan E. Scharff (Bar No. 16890)
                                 One Commerce Square, Suite 2700
                                 Memphis, Tennessee  38103-2555
                                        (901) 525-1455

                            Co-Counsel to the Debtors and Debtors in
                            Possession


                            By:
                               --------------------------------------------
                                 John C. Tishler (Bar. No. 13441)
                                 Robert A. Guy (Bar No. 16715)
                                 WALLER LANSDEN DORTCH & DAVIS
                                 A Professional Limited Liability Corporation
                                 511 Union Street, Suite 2100
                                 Nashville, TN 37219

                            Phone: (615) 244-6380
                            Fax: (615) 244-6804

                            Attorneys for AmSouth Bank, as Agent


                                       38


                                    EXHIBIT A



















                                       39



                                    EXHIBIT B






















                                       40


                                    EXHIBIT C

                               Litigation Matters

         All pending claims and other litigation, and all unasserted claims,
including the following, shall be preserved for action after Confirmation
pursuant to the Plan, including the pursuit of such Claims to judgment or
settlement, including, but not limited to the following matters:

         1.       Response Oncology, Inc. vs. Stephen Krathan, American
Arbitration Association No. 321930026900JB, to be arbitrated in Coral Gables,
Florida. Claims include breach of contract claims against Dr. Krathan by the
Debtors for breaching the service agreement between the parties, and breaching a
promissory note between the parties. The charge also includes a request for an
accounting, foreclosure on the Debtors' security interest, and the appointment
of a receiver. The Debtors estimate that the Claims exceed $850,000, although a
settlement is in discussions.

         2.       Claims of the Debtors against Bristol-Myers Squibb Co.
("BMS"). No lawsuit has been filed, but the Debtors believe they have claims
against BMS pursuant to federal antitrust statutes related to BMS filing false
patent extensions on the drug Taxol, thus prohibiting the availability of a
generic drug. The claim arises for the period September 1999 through October
2001. The Claims are for more than $7.2 million.

         3.       Claims of the Debtors against OTN. The Debtors have certain
pre- and post-petition claims against Oncology Therapeutics Network ("OTN"), a
wholly owned subsidiary of BMS. No lawsuit has been filed, and the Debtors are
discussing settlement with OTN. Thus, the claims described herein may be
resolved prior to confirmation. The claims against OTN include claims for
rebates, contract pricing whereby Debtors may have been overbilled. The Debtors
also have certain reconciliation disputes related to direct debits and credits
against post-petition items. The Claims are for more than $1 million.

         4.       Claims of the Debtors against Oncology Hematology Associates
of West Broward, P.A. ("OHAWB"). The Debtors have certain post-petition Claims
against OHAWB for goods sold to OHAWB. The amount owing to the Debtors by R&K
was approximately $1.2 million as of June 4, 2002. The Debtors reserve their
rights to pursue OHAWB for payment in full for these goods.

         5.       Claims of the Debtors against McDonough. The Debtors have
certain pre-petition Claims against Patrick McDonough in the approximate amount
of $50,000, plus interest and legal fees. The Claim relates to a certain loan
that was made to McDonough pursuant to his employment agreement with the Debtor.
The payment obligation of McDonough is secured by a lien in favor of the Debtors
against McDonough's residence at 7469 Meadow Rise


                                       41


Cove, Memphis, TN 38119 (the "Mortgaged Property"). The Debtors reserve all
rights to proceed against McConough or the Mortgaged Property.

         Notwithstanding the values placed upon the Claims in this attachment,
given the uncertainties of litigation and the potential or known defenses
against the Claims, the exact amount that recoverable on any of the Claims is
unknown. The values shown are the amounts the Debtors or Lenders believe are
owing, without regard for any defenses, setoffs or benefit of a Court order.


                                       42

EX-99.1

                                                                    EXHIBIT 99.1

                         UNITED STATES BANKRUPTCY COURT
                          WESTERN DISTRICT OF TENNESSEE
                                WESTERN DIVISION

IN RE:                                  )
                                        )
RESPONSE ONCOLOGY, INC., et al.,        )       Case No. 01-24607-DSK
                                        )       Chapter 11
         Debtors                        )       Jointly Administered


- --------------------------------------------------------------------------------

                              ORDER CONFIRMING PLAN

- --------------------------------------------------------------------------------



        This matter having come before the Honorable David S. Kennedy, Chief
United States Bankruptcy Judge, for hearing on Friday, June 14, 2002, the Court
having considered the evidence before it, hereby finds as follows:(1)

        The First Joint Plan under Chapter 11 of the Bankruptcy Code filed by
Response Oncology, Inc., Response Oncology Management of South Florida, Inc.,
Response Oncology of Fort Lauderdale, Inc., and Response Oncology of Tamarac,
Inc. (collectively the "Debtors"), jointly with AmSouth Bank, as lender and as
agent on behalf of the lenders, including itself, Bank of America, N.A. and
Union Planters Bank, N.A. (the "Lenders") (together with the Debtors, the "Plan
Proponents"), on April 12, 2002, as modified by the First Amended Joint Plan
filed on April 19, 2002, or a summary thereof (the "Plan"), having been
transmitted to creditors and equity security holders; and

        Proper notice having been given to creditors and equity security holders
of the Plan; and

        The creditors having been properly solicited and having voted
overwhelmingly in favor of confirmation of the Plan; and


- --------
(1) Capitalized terms shall have the meaning set forth in the Amended Plan, as
that term is defined herein.


In re: Response Oncology, Inc., et al.
Case No. 01-24607-DSK
Order Confirming Plan
Page 2 of 4



        Certain technical and conforming amendments having been made and a
Second Amended Joint Plan having been filed with this Court on June 13, 2002
(collectively, with the Plan, the "Amended Plan"); and

        Only one objection having been filed to the Plan, that by the Office of
the United States Trustee (the "Objection"); and

        The Objection, upon oral statements in Court, having been withdrawn;

        The Court hereby finds that the Amended Plan contains technical changes
and/or changes with respect to Claims, which do not materially adversely affect
or change the treatment of any Claims or equity interests, and comply in all
respects with the requirements of 11 U.S.C. ss. 1127. As such, these
modifications do not require additional disclosure under 11 U.S.C ss. 1125 or
resolicitation of votes under 11 U.S.C. ss. 1126, nor do they require that
holders of Claims or equity interests be afforded an opportunity to change
previously cast acceptances or rejections of the Plan; and

        Based upon the evidence presented at the confirmation hearing, with
respect to the releases, exculpation and injunctions contained in Article X of
the Amended Plan, the Court finds that such releases, exculpation and injunction
provisions are fair and equitable, are given for valuable and substantial
consideration, and are in the best interests of the Debtors and their chapter 11
estates, and that such provisions shall be effective and binding upon the
parties identified. Further, the Court is mindful of the Sixth Circuit's holding
in In re Dow Corning, Inc., 280 F.3d 648 (6th Cir. 2002). To the extent the Dow
Corning case is applicable, the




In re: Response Oncology, Inc., et al.
Case No. 01-24607-DSK
Order Confirming Plan
Page 3 of 4



Court finds that the releases are not violative of 11 U.S.C. ss. 524(e) because
the releases do not constitute "discharges" of the Debtors, nor do the releases
or exculpation release claims of non-consenting third party Creditors, so that
the intention of Dow Corning is met; and

        It having been determined after hearing on notice that the requirements
for confirmation as set forth in 11 U.S.C. ss. 1129(a)-(b) have been satisfied
through proffered testimony; and

        The Court having been provided with a copy of that certain "Notice of
Confirmation of Plan and of Bar Dates," the Court hereby approves the mailing of
such Notice in the form attached hereto to all creditors and parties in
interest, in satisfaction of Bankruptcy Rules 2002(f), 2002(k) and 3020(c), and
counsel for the Debtors are directed to make such mailing of such notice (as
opposed to the clerk of this Court),

        IT IS ORDERED that:

        The Second Amended Joint Plan filed on June 14, 2002, is confirmed. A
copy of the confirmed plan is attached.


                                       ----------------------------------------
                                       CHIEF JUDGE DAVID S. KENNEDY


                                       ----------------------------------------
                                       DATE



In re: Response Oncology, Inc., et al.
Case No. 01-24607-DSK
Order Confirming Plan
Page 4 of 4





SUBMITTED FOR ENTRY BY:



- ----------------------------------
John C. Tishler (BPR # 13441)

WALLER LANSDEN DORTCH & DAVIS
A Professional Limited Liability Company
511 Union Street, Suite 2100
Nashville, TN 37219
(615) 244-6380

Attorneys for AmSouth Bank, as Agent for the Lenders




- ----------------------------------
Steven N. Douglass (BPR # 9770)
Jonathan E. Scharff (BPR # 16890)

HARRIS, SHELTON, DUNLAP, COBB & RYDER, PLLC
One Commerce Square, Suite 2700
Memphis, TN 38103-2555
(901) 525-1455

Co-Counsel to the Debtors and Debtors in Possession