STOCK PURCHASE AGREEMENT
EX- 10.25
This Stock Purchase Agreement is entered into as of the 14th day of
November, 1995, by and among Radnet Managed Imaging Services, Inc., a California
corporation ("Buyer"), Primedex Health Systems, Inc., a New York corporation
("Primedex"), Future Diagnostics, Inc., a California corporation (the
"Corporation"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D., Jaana ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇ ▇.
▇▇▇▇▇, M.D., ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (individually, a "Seller" or a
"Shareholder" and, collectively the "Sellers" or the "Shareholders"), with
reference to the following facts:
R E C I T A L S
A. Each Shareholder owns the number of shares of common stock
(collectively, the "Shares") in the Corporation as set forth in Schedule 1
attached hereto.
B. Buyer has agreed to purchase, and the Shareholders have agreed to sell,
all of Shares upon the terms and conditions set forth herein.
THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Purchase and Sale of Shares. Subject to the terms and conditions of this
Agreement, Buyer has agreed to purchase and each Shareholder agrees to sell,
transfer and deliver the number of Shares set forth opposite such Shareholder's
name on Schedule I attached hereto at the Closing on the Closing Date (as those
terms are defined in Section 3 hereof).
2. Purchase Price and Payment.
(a) Calculation of Purchase Price. Subject to the terms and condition
of this Agreement, and in full consideration for the assignment, transfer and
delivery to Buyer of the Shares, Buyer shall (i) pay to Sellers, at the times
specified in Section 2(b), a cash purchase price per Share determined by
dividing $2,405,000 (adjusted as indicated below) by the total number of
outstanding Shares as indicated in Schedule 1 attached hereto and (ii) cause to
be issued to Sellers a number of shares of capital stock of RadNetWork, Inc., a
California corporation recently organized by Primedex ("Newco"), which
represents an aggregate 20% interest in the outstanding capital stock of Newco,
which shares of Newco shall be issued to each of Sellers on a pro rata basis in
the same manner as the cash portion of the aggregate purchase price is allocated
among the Sellers as set forth herein; provided, however, that if the proposed
acquisition of MedLink of Texas is not completed by June 30, 1996, Sellers shall
be issued or transferred additional shares in Newco so that Sellers shall own an
aggregate of 40% of the outstanding capital stock of Newco. The parties
acknowledge and agree that, after the Closing, Buyer will cause the Corporation
to transfer to Newco all of the business and assets of the Corporation that is
outside of the State of California.
(b) Payment of Purchase Price. Buyer shall pay to Sellers at the
Closing an aggregate amount of $105,000 by Buyer's checks or, if any Seller
provides the necessary written instructions at least three business days prior
to the Closing Date, by wire transfer to such Seller's bank account. Such
payments shall be paid on a pro rata basis to the Sellers according to the
number of Shares owned by each Seller as compared to the total number of
outstanding Shares. The balance of the purchase price shall (subject to
adjustment as set forth in Section 2(c) below) be payable in installments as
follows:
(i) One payment of $900,000, payable on January 2, 1996;
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(ii)Four quarterly payments of $50,000 each, payable on February
29, 1996, May 31, 1996, August 31, 1996 and November 30, 1996;
(iiiEight quarterly payments of $75,000 each, payable on February
28, May 31, August 31 and November 30, in 1997 and 1998;
(iv)Four quarterly payments of $100,000 each, payable on February
28, 1999, May 31, 1999, August 31, 1999 and November 30, 1999; and
(v) one final installment of $200,000, payable on December 31,
1999.
(c) Adjustment of Purchase Price. The parties hereto acknowledge and
agree that the purchase price for the Shares is based upon the assumption that,
as of the Closing Date, the accounts receivable of the Corporation will result
in collections of at least $904,270 during the eight month period beginning on
the Effective Date and that the total liabilities of the Corporation as of the
Effective Date (including all Excluded Liabilities, as defined in Section 4(g)
below) to which the Corporation is subject as of the Effective Date or which are
based upon the business or activities of the Corporation on or before the
Effective Date (and which are not otherwise satisfied by the Shareholders) will
be not more than $2,172,095. In the event that either (i) $904,270 is in excess
of the total collections on the Corporation's Effective Date accounts receivable
during the eight month period following the Effective Date or (ii) the amount of
the Corporation's Effective Date liabilities attributable to business conducted
by the Corporation on or before the Closing Date (including any Excluded
Liabilities that are not satisfied by the Shareholders, but not including any
operating expenses based upon the contracts listed in Schedule 4 that accrue
after the Closing Date, e.g., lease payments under the Lease that are due after
the Closing Date) to which the Corporation is subject or otherwise is required
to pay is in excess of $2,172,095, then in either event the amount of such
excess shall reduce the purchase price. Any such reduction shall first be offset
against the next quarterly installment payments of the purchase price coming due
pursuant to Section 2(b) above and, thereafter, shall be payable by the Sellers
to Buyer on a pro rata basis according to the number of Shares held by each
Seller as compared to the total number of Shares acquired by Buyer; provided,
however, that the aggregate amount of all adjustments pursuant to this Section
2(c) shall not exceed $2,400,000. During the eight month period referred to in
clause (i) above, each Seller shall have the right to monitor the collection of
the accounts receivable referred to in this Section 2(c) and to take all
reasonable actions as they deem necessary to assist the Corporation in tie
collection of such receivables. In order to facilitate such monitoring and
collection, the Corporation shall prepare and provide Sellers with a monthly
report of the collection of such receivables and shall provide access to Sellers
to pertinent account information. As soon as is reasonably practicable after the
end of the eight month period referred to in clause (i) above, Buyer shall cause
the Corporation to prepare and provide to Sellers a report showing the collected
and uncollected Effective Date accounts receivable and the Effective Date
liabilities paid as of the end of such eight month period.
3. The Closing, the Closing Date and the Effective Date. The closing
referred to in Section 1 hereof (the "Closing") will take place at Buyer's
offices at 2:30 p.m., local time, on November 14, 1995, or at such other place
or at such other date and time as Buyer and ▇▇▇▇▇ shall agree. Such time and
date are referred to herein as the "Closing Date." Regardless of when the
Closing occurs, it shall be effective as of 12:01 a.m. on November 1, 1995 (the
"Effective Date"), and Buyer and Seller agree to acknowledge and use said
Effective Date for all purposes, including for accounting and federal and state
tax reporting purposes. Except as provided in Section 11 hereof, failure to
consummate the Closing on the date and time and at the place selected pursuant
to this Section 3 shall not result in any termination of this Agreement and
shall not relieve any party to this Agreement of any obligation hereunder.
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4. Representations and Warranties by Sellers. Except as specifically set
forth in Schedule 2 attached hereto, each Seller hereby represents and warrants
to Buyer as follows:
(a) Organization, Standing, etc. The information relating to the
Corporation and the Shareholders set forth in Schedule 1 is accurate and
complete with respect to the matters purported to be covered thereby. The
Corporation and Future Data Resources, Inc., a Delaware corporation that is
owned by one or more of the Shareholders ("Data"), are duly and validly
organized and existing corporations in good standing under the laws of the
States of California and Delaware, respectively, with full power and authority
to carry on its business as presently conducted, and the Corporation is duly
qualified and in good standing as a foreign corporation in the State of
Illinois. The Corporation does not have any direct or indirect interest of any
kind in any other corporation, partnership, association or business. Data is a
newly organized corporation and, prior to the Closing Date, has not conducted
any business. Except for an office in Illinois, the Corporation does not have
any facilities or employees outside of the State of California and, although the
Corporation has conducted certain business outside the State of California, such
activities do not require the Corporation to qualify to do business under the
laws of any state other than Illinois.
(b) Compliance with Instruments and Agreements. The execution of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any breach or violation of any of the terms or provisions of, or
constitute a default under, (i) the articles of incorporation or bylaws of the
Corporation, (ii) any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over any Seller or the
Corporation or (iii) assuming that the required consents referred to in Schedule
8 attached hereto are obtained at or prior to the Closing Date, any agreement,
instrument or commitment to which any Seller or the Corporation is a party, by
which any of them is bound or to which any of their property is subject.
(c) Capitalization and Indebtedness for Borrowed Moneys.
(i) Capitalization and Dividends. The Shares constitute all of the
issued and outstanding equity interests in the Corporation. Sellers have caused
the Corporation to deliver to Buyer true and complete copies of the articles of
incorporation and bylaws of the Corporation. Since January 1, 1995, the
Corporation has not (A) paid any dividend to any Shareholder, (B) made any other
distribution on or with respect to, or redeemed or otherwise acquired, any
Shares or any other equity interest in the Corporation or (C) made or permitted
any change in the authorized, issued or treasury shares of its equity
securities.
(ii)Indebtedness for Borrowed Moneys. The Corporation does not
have any outstanding indebtedness for borrowed moneys except as reflected in the
Balance Sheet included in Schedule 3 pursuant to subsection (f) below. True and
complete copies of every instrument, agreement and other document relating to
any such indebtedness have been delivered to Buyer. The receipt by Buyer of a
duly executed Assignment in the form of Exhibit G attached hereto shall be
sufficient to transfer to Buyer all right, title and interest in the
indebtedness of the Corporation referred to in the Balance Sheet as "2250-00 -
Notes Payable Image America - $202,696.67" and all related and incidental
contract rights held by the holder of such indebtedness. Except for the "accrued
officers salaries" as reflected in Schedule 3, immediately following the
Closing, the Corporation will not be indebted to or have any obligation to any
Shareholder, any of their respective relatives or any corporation, partnership,
trust or other entity in which any Shareholder or any relative of any
Shareholder (collectively, "Sellers, Affiliates") has any interest.
(iiiOptions or Rights. There are no outstanding agreements,
rights, subscriptions, options, warrants, convertible securities, commitments,
arrangements or understandings of any character under which the Corporation is
or may be obligated to issue or purchase any interest in the Corporation or
under which any Shareholder is or may be obligated to sell or transfer any
Shares or other interest in the Corporation.
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(d) Title to Shares. Each Shareholder has good and marketable title to
all of the Shares set forth opposite such Shareholder's name in Schedule 1, free
and clear of all liens, claims, encumbrances and restrictions, legal or
equitable, of every kind, except for restrictions on transfer imposed by federal
or state securities laws or as provided for on the Shareholder's respective
stock certificates evidencing their Shares. Each Shareholder has full and
unrestricted legal right, power and authority to sell, assign and transfer such
Shareholder's Shares without obtaining the consent or approval of any other
person, entity or governmental authority (other than the consents described in
Schedule 8), and the delivery of the Shares to Buyer pursuant to this Agreement
will transfer valid title thereto, free and clear of all liens, encumbrances,
claims and restrictions of every kind, except for restrictions on
transferability imposed by federal and state securities laws.
(e) Assets of the Corporation. The Corporation has good and marketable
title to all of the properties and assets used in its business (including
leasehold interests as to such assets that are leased), subject to no mortgage,
pledge, lien, security interest, encumbrance or other charge, other than (i) the
interests of equipment lessors with respect to leased equipment and (ii) liens
for taxes not yet due. The assets owned or leased by the Corporation constitute
all of the assets currently in existence which are being used in connection with
the Corporation's business. The Corporation has, and will transfer to Data, good
title to all of the Corporation's computer software and patents, as provided in
Section 6(j), and no such computer software or patent conflicts with or
infringes on, and no third party has asserted to the Corporation or any Seller
that such computer software or patent conflicts with or infringes upon, any
proprietary rights owned or used by any third party.
(f) Financial Statements. Attached hereto as Schedule 3 is a true and
complete copy of the unaudited balance sheet (the "Balance Sheet") of the
Corporation as of September 30, 1995 (the "Balance Sheet Date"). Sellers have
also caused the Corporation to provide to Buyer unaudited statements of
operations of the Corporation for the fiscal years ended March 31, 1994 and 1995
and for the six months ended on the Balance Sheet Date. The Balance Sheet and
such statements of operations (i) are in accordance with the books and records
of the Corporation, (ii) fairly present the financial condition of the
Corporation at the Balance Sheet Date and the results of its operations for the
periods therein specified and (iii) have been prepared in accordance with
generally accepted accounting principles consistently applied (except that such
financial statements are not audited and do not include footnotes and, as to the
interim financial statements, are subject to normal year end adjustments).
(g) Liabilities of the Corporation. Except for the liabilities
reflected in the Balance Sheet or the documents described in Schedule 4, and all
other obligations incurred in the ordinary course of business since the Balance
Sheet Date, the Corporation does not have and is not subject to any liability of
any nature, whether accrued, absolute, contingent or otherwise. Any other
liabilities or obligations of the Corporation are hereinafter collectively
referred to as the "Excluded Liabilities." Sellers shall assume and hold the
Corporation and Buyer harmless from and against any and all Excluded Liabilities
as provided in Section 9 The Excluded Liabilities include, without limitation,
the following:
(i) Any liability for any taxes, including without limitation any
state or federal gross receipts or income tax imposed on or payable by the
Corporation and any sales tax, transfer or other similar tax or governmental
charge associated with or arising from the business of the Corporation on or
before the Effective Date (all of which shall be the sole responsibility of
Sellers), except for any real estate taxes that are payable by the Corporation
pursuant to the Lease and any non-delinquent personal property taxes on the
other assets of the Corporation that are properly accounted for on the Balance
Sheet;
(ii)Any liability under any pending, threatened or contemplated
litigation or administrative proceeding, including without limitation workers'
compensation claims, EEOC claims, sexual harassment allegations and other
similar claims or allegations by employees or former employees of any
Corporation based upon acts or events prior to the Closing Date;
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(iiiAny liability for personal injury, medical malpractice or
property damage which relates to the period prior to the Closing Date;
(iv)Any liability under products liability, strict liability or
implied warranty claims relating to services rendered or products sold by the
Corporation or its independent contractors prior to the Closing Date;
(v) Any debt or obligation owed by the Corporation to any
Shareholder or any Sellers' Affiliate, except for the accrued officers salaries
reflected in the Balance Sheet;
(vi)Any liability related to any automobiles;
(viiAny obligation or liability under or relating to any pension
or profit sharing plan or any bonus or incentive compensation obligation to any
employee or independent contractor that is not reflected on the Balance Sheet;
(viii) Any Medicare or Medicaid contract, or any other possible
governmental liabilities, of the Corporation or any affiliate of any
Corporation;
(ix)Any liability or obligation associated with the computer
software or patents that are to be transferred to Data as described in Section
6(j);
(x) Any refund liability or other obligation resulting from
duplicate payments for services rendered prior to the Effective Date; and
(xi)The costs and expenses associated with this Agreement, as
described in Section 6(e).
(h) Noncompetition Covenants. The Corporation is not subject to any
noncompetition covenant or other similar agreement restricting its ability to
engage in competitive businesses and, following the Closing, Buyer, Primedex and
their affiliates will not be subject to any such noncompetition covenant or
restrictive agreement by virtue of Buyer's acquisition of the Shares.
(i) Account Receivable. A true and complete list of all outstanding
accounts receivable of the Corporation as of the Balance Sheet Date has been
delivered to Buyer. To Sellers' knowledge, all of the accounts receivable held
by the Corporation are valid and enforceable claims and are not subject to any
defenses, offsets, claims or counterclaims. The allowances for doubtful accounts
and contractual adjustments reflected in the Balance Skeet are based upon
historic collection activities of the Corporation and have been determined in
accordance with generally accepted accounting principles. Although no Seller
knows of any reason why such accounts will not be collected on a timely basis,
no representation is made hereby that such accounts will be collected and,
notwithstanding any of the provisions of this Agreement, Buyer's only remedy
with respect to the collection of any such accounts receivable shall be as
provided in Section 2(c).
(j) Real Property Lease. Sellers have caused the Corporation to provide
to Buyer, true and complete copies of those certain Lease Agreements, each dated
as of May 23, 1995 (collectively the "Lease") between the Corporation and
GreatWest Life Annuity & Insurance Company (the "Landlord") pursuant to which
the Corporation leases the office space and related leasehold improvements
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Suites 900 and 908A, Los Angeles, California
(the "Real Property"). The Corporation has not assigned, subleased or conveyed
any interest in the Lease or any of the premises covered thereby. The lease of
Suite 900 expires on November 30, 2000 and the lease on Suite 908A expires on
June 30, 1998 and there is no current extension option. Neither the Corporation
nor (to the best of each Seller's knowledge) Landlord is in default under the
Lease and no event or condition has occurred or exists which, with the passage
of time, the giving of notice or both, would cause either the
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Corporation or (to the best of each Seller's knowledge) Landlord to be in
default thereunder, including without limitation any deferred maintenance or
repairs for which either Landlord or the Corporation is responsible. The
Corporation does not have any interest, whether as lessee, owner, licensee or
otherwise, in any other real property.
(k) Material Contracts. Sellers have caused the Corporation to deliver
to Buyer an accurate list (attached hereto as Schedule 4) of all material
contracts, leases and instruments to which the Corporation is a party or by
which it or any of its assets are bound as of the date hereof. For purposes
hereof, the term "material contracts" shall mean the following: (i) all
equipment leases where the aggregate rent required to be paid on or after the
Effective Date under the terms of such lease is at least $5,000; (ii) all
executory purchase agreements relating to the purchase of equipment, supplies or
other goods where the amount that is payable after the Effective Date is at
least $5,000; (iii) all agreements with any Shareholder or any of Sellers,
Affiliates, and Schedule 4 sets forth the relationship (if any) of any party to
any agreement, lease or other document listed in Schedule 4 with any Shareholder
or Sellers' Affiliate; (iv) all agreements with any physician, owner of imaging
equipment or other provider of radiology services; (v) all employment,
consulting and retainer agreements; (vi) all agreements with hospitals,
employers, health maintenance organizations, workers' compensation health care
organizations, insurance companies, preferred provider organizations and other
managed care entities, or other contracts whereunder the Corporation is
committed to provide professional, technical or medical facility services; (vii)
all agreements with sales or marketing representatives; (viii) all documents and
instruments relating to any indebtedness reflected on the Balance Sheet (except
any such indebtedness that pursuant to the terms of this Agreement is to be
discharged at or prior to the Closing); (ix) all powers of attorney and agency
agreements with third parties; and (x) all other agreements and commitments in
which the financial obligation of the Corporation as of the Effective Date is at
least $5,000. Sellers have caused the Corporation to deliver to Buyer or its
counsel true and complete copies of the documents and instruments described in
Schedule 4.
(l) Bank Accounts. Set forth on Schedule 5 attached hereto is an
accurate and complete list showing the name and address of each bank in which
the Corporation has an account or safe deposit box, the number of any such
account or safe deposit box and the names of all persons authorized to draw
thereon or to have access thereto.
(m) Tax Returns and Audits. The Corporation has accurately prepared and
filed all federal, state and local income, employment and property tax returns
and all information statements required to he filed prior to the date of this
Agreement. The Corporation has withheld proper and accurate amounts from its
employees' compensation in full and complete compliance with all withholding and
similar provisions of all state and federal tax laws, including without
limitation employee withholding and social security taxes. True and complete
copies of each of the most recent of any such material return or statement have
been provided to Buyer. Any federal, state and local taxes required to be paid
or withheld with respect to the periods covered by such returns and statements
have been paid or withheld. The liability for unpaid taxes shown on the Balance
Sheet is and will be sufficient to pay all taxes not reported on and paid with
returns filed by the Corporation prior to' the Closing Date. No tax liability
will be incurred by the Corporation as a result of the transactions contemplated
by this Agreement. The Corporation is not delinquent in the payment of any tax,
assessment or governmental charge or in the filing of any tax return or
information statement. The Corporation does not have any tax deficiency proposed
or assessed against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax which is currently
effective. Neither the federal income tax returns nor the state income or
franchise tax returns (if any) of the Corporation have ever been audited by any
governmental authority.
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(n) Litigation and Proceedings. Except as described in Schedule 6,
there are no legal claims, actions, suits, disputes with payors or providers,
arbitrations or other legal, administrative or governmental proceedings pending
or, to the knowledge of each Seller, threatened against the Corporation or any
properties, assets or business of the Corporation and, to the knowledge of each
Seller, no facts exist which have been or should be reported under any
professional liability insurance policy covering the Corporation. Neither the
Corporation nor Seller is in default with respect to any judgment, order or
decree of any court, governmental agency or instrumentality. Schedule 6 contains
a complete and accurate description of the status of any matter covered thereby
and the Corporation carries adequate insurance to cover the costs, expenses and
damages of each of the matters described therein that include allegations of
medical malpractice. Except for normal collection efforts relating to accounts
receivable, the Corporation is not engaged in any legal action to recover money
due to or damages sustained by the Corporation.
(o) Compensation and Benefits. Attached hereto as Schedule 7 is an
accurate and complete list setting forth the names, dates of hire, salaries or
other remuneration, bonuses and employee benefits of all current employees and
consultants of the Corporation (including but not limited to vacation time and
pay, severance pay, incentive compensation programs, sick time and pay and group
insurance and other benefit plans, policies and arrangements), whether such
benefits are provided pursuant to contract, policy, custom or informal
understanding. Sellers have caused the Corporation to deliver to Buyer copies of
the Corporation's written employee policies and practices (including, for
example, any employee handbook). The Corporation does not have any collective
bargaining agreement with any labor union and is not currently negotiating with
a labor union. No employee of the Corporation has ever petitioned for a
representation election. No employee of the Corporation has ever filed with any
governmental authority any claim asserting sexual harassment, age or racial
discrimination or violation of OSHA by the Corporation, any Shareholder or any
other officer, director, employee or agent of the Corporation.
(p) Compliance with Law and Instruments. The business and operations of
the Corporation have been and are being conducted in material compliance with
all applicable laws, ordinances, codes, rules, regulations and licensing
requirements of all authorities (collectively, "Laws") including but not limited
to Laws relating to occupational safety, health care, zoning or environmental
matters. No Seller or the Corporation has received notice from any governmental
unit or administrative or regulatory agency claiming any violation of any. Law.
The Corporation has complied in all material respects with all applicable
federal and state securities Laws in connection with the sale or resale of the
Shares and any other equity interest in the Corporation. The Corporation meets
in all material respects the conditions for participation in the Medicare and
Medicaid programs. No governmental consent, review or other process is required
in connection with the sale of the Shares provided for herein or in order for
the Corporation to continue its business following the consummation of the
transactions contemplated hereby. The Corporation has never received payments
for procedures covered by the Medicare and Medicaid programs. No Seller knows of
any reason why the Corporation will not or may not be able to continue its
business, as presently conducted, following the Closing.
(q) No Consent Required. Except for the consents and notice
requirements described in Schedule 8, the execution and delivery of this
Agreement and the consummation of the transactions provided herein will not
require any governmental consent, review or other process or the consent of any
party to any lease (including the Lease), contract, agreement or instrument to
which the Corporation is a party or by which any of its assets is subject.
(r) Permits. Schedule 9 attached hereto lists all of the material
permits, approvals and authorizations that the Corporation holds in connection
with its business. No other permit, approval or authorization of any
governmental unit or administrative or regulatory agency is necessary for the
lawful conduct of the Corporation's businesses, except where the failure to
obtain any such permit would not have a material adverse affect on the
Corporation. Sellers have caused the Corporation to deliver to Buyer copies of
all permits, approvals and authorizations listed on Schedule 9.
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(s) Absence of Specified Changes. Except for the transactions and
agreement provided for or referred to herein, since the Balance Sheet Date there
has not been: (i) any transaction by the Corporation except in the ordinary
course of business; (ii) any capital expenditure by the Corporation exceeding
$5,000; (iii) any material adverse change in the working capital, financial
condition, business, markets, properties, assets, results of operation or
prospects of the Corporation; (iv) any event which has materially affected or
may materially and adversely affect the Corporation, including without
limitation any material reduction in the Corporation's charge or fee schedule;
(v) any material destruction, damage to or loss of any material asset of the
Corporation, whether or not covered by insurance; (vi) any indebtedness for
borrowed money incurred or the creation or imposition of any mortgage, pledge or
other encumbrance on any asset of the Corporation; (vii) any increase in
salaries or benefits to employees or independent contractors of the Corporation,
other than annual increases implemented in accordance with the past practices of
the Corporation; (viii) any material amendment to the Lease or any other
material contract or lease listed in Schedule 4, other than in the ordinary
course of business of the Corporation; (ix) any sale, transfer or disposition of
any equipment that is material to the Corporation, other than dispositions in
the ordinary course of business where the equipment disposed of is replaced by
equipment of at least equal value and utility; or (x) any agreement by the
Corporation to do any of the things described in this subsection (s).
(t) Insurance Policies. Sellers have caused the Corporation to provide
to Buyer complete and accurate copies of all insurance policies or certificates
of insurance under which the Corporation is insured, including the coverage
limits and deductibles applicable thereto. The Corporation's medical malpractice
insurance coverage has and will have coverage limits of at least $1,000,000 per
occurrence and $1,000,000 in the aggregate. Attached hereto as Schedule 10 is a
listing of all of the insurance policies covering the Corporation or its assets,
which Schedule 10 reflects the policy numbers, terms, identity of insurers and
amounts of coverage. All of such policies are now and will be until Closing in
full force and effect on an occurrences basis with no premium arrearages. The
Corporation is not in default with respect to any provision contained in any
such policy and has not failed to give any notice or present any claim under any
such policy in a due and timely fashion.
(u) Retirement Plans. The Corporation has never maintained any pension,
profit sharing or other retirement plan, nor does it participate in, nor has it
ever participated in, any multi-employer plan as defined in Section 400(a) (3)
of the Employee Retirement Income Security Act of 1974, as amended. Neither
Buyer nor the Corporation will incur any obligation or liability under or
relating to any such plan as a result of the transactions contemplated by this
Agreement, or otherwise.
(v) No Brokers or Finders. As a result of any act or failure to act by
any Shareholders, Sellers' Affiliate or the Corporation, no person or entity
has, or as a result of the transactions contemplated hereby will have, any
right, interest or valid claim against or upon Buyer, Primedex or the
Corporation for any commission, fee or other compensation as a broker, finder or
any similar capacity.
(w) Use of Names. The only names under which the Corporation currently
conducts business are "Future Diagnostics, Inc." and "FDI". The Corporation owns
the entire right, title and interest in and to such names, together with any
derivatives thereof, and no third party has ever notified the Corporation or any
Seller that the use of any such name is in violation of the rights of such third
party.
(x) Equipment. Each material item of equipment will be in good
operating condition, normal wear and tear excepted, as of the Closing Date.
(y) Environmental Matters.
(i) The Corporation is currently in compliance with all
Environmental Laws (as defined below), which compliance includes, without
limitation, the possession by the Corporation of all permits and other
governmental authorizations required under applicable Environmental Laws to
operate its business, and the Corporal ion is in compliance in all material
respects with the terms and conditions thereof;
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(ii)No Hazardous Substances (as defined below) have been generated
or stored on, at or adjacent to the Real Property by the Corporation, except in
compliance with applicable Environmental Laws;
(iiiNo Hazardous Substances have been disposed of or released on,
from or adjacent to the Real Property by the Corporation, except in compliance
with applicable Environmental Laws;
(iv)The Corporation has not received any written communication,
whether from a governmental authority, citizen's group, employee, consultant or
otherwise, that alleges that the Corporation or the Real Property is not in full
compliance with Environmental Laws, and there is no Environmental Claim (as
defined below) pending or, to the best of each Seller's knowledge, threatened
against the Corporation or any owner or lessor of the Real Property; and
(v) To the best of each Seller's knowledge, the Real Property does
not contain asbestos in any form.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice by any person or entity alleging potential liability
(including without limitation potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or resulting
from (A) the presence, or release on or from the Real Property or the
Corporation, of Hazardous Substances or (B) circumstances forming the basis of
any violation, or alleged violation, of any environmental law.
"Environmental Laws" means the federal, state, regional, county or
local environmental, 'health or safety laws (including the Medical Waste
Tracking Act of 1988, 42 U.S.C. ss.6992, et seq.), regulations, ordinances,
rules and policies and common law in effect on the date hereof and the Closing
Date relating to the use, refinement, handling, treatment, removal, storage,
production, manufacture, transportation or disposal, emissions, discharges,
releases or threatened releases of Hazardous Substances, or otherwise relating
to protection of human health or the environment (including without limitation
ambient air, surface water, ground water, land surface or subsurface strata), as
the same may be amended or modified to the date hereof and the Closing Date.
"Hazardous Substances" means any toxic or hazardous waste, pollutants
or substances, including without limitation medical wastes, asbestos containing
materials or substances, any substance defined or listed as a "hazardous
substance," "toxic substance," "toxic pollutant" or similarly identified
substances or mixture, in or pursuant to any Environmental Law and medical or
infectious wastes.
(z) Payments. The Corporation has not, directly or indirectly,
paid or delivered or agreed to pay or deliver any fee, commission or other sum
of money, item of property or other consideration, however characterized, to any
person, governmental official or other party which is illegal under any federal,
state or local Law.
(aa)Corporate Records. The minute books, stock certificate books
and stock transfer ledgers of the Corporation are in the Corporation's
possession, are complete and accurate in all material respects and reflect all
those transactions and corporate acts which properly should have been set forth
therein.
(bb)Investment Intent. Each Seller acknowledges that the shares of
Newco to be acquired pursuant hereto have been offered and will be transferred
to such Seller pursuant to an exemption from registration under the federal
Securities Act of 1933, as amended, and all applicable state securities laws.
Seller is acquiring such Shares of Newco for investment purposes only and has no
present intent to distribute, resell, pledge or otherwise dispose of any such
Newco shares.
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(cc) Full Disclosure. None of the representations, warranties or
disclosures made to Buyer by the Corporation or Sellers herein, or in any
exhibit, schedule, list, certificate or memorandum furnished or to be furnished
to Buyer by the Corporation or any Seller in connection herewith, contains or
will contain any untrue statement of a material fact or omits or will omit any
material fact, the omission of which would tend to make the statements made
herein or therein misleading in any material respect.
5. Representations and Warranties by Buyer. Buyer and Primedex hereby
jointly and severally hereby represent and warrants to Sellers as follows:
(a) Organization and Good Standing. Buyer and Newco each is a duly
organized and validly existing corporation in good standing under the laws of
the State of California, with full power and authority to carry on its
businesses as presently conducted. Primedex is a duly organized and validly
existing corporation under the laws of the State of New York and is duly
qualified and in good standing as a foreign corporation in the State of
California, with full power and authority to carry on its business as presently
conducted. Each of Buyer and Newco are newly organized corporations and, prior
to the Closing Date, have not conducted any business or incurred any liabilities
(other than organizational expenses).
(b) Due Authorization. The execution, delivery and performance of this
Agreement by Buyer and Primedex have been duly authorized by all requisite
action of the boards of directors of Buyer and Primedex and no further action is
necessary to make this Agreement valid and binding upon Buyer and Primedex in
accordance with its terms.
(c) Compliance with Instruments and Agreements. The execution of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any breach or violation of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or bylaws of either
Buyer or Primedex, any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over Buyer or Primedex, or any
agreement, instrument or commitment to which Buyer or Primedex is a party or by
which either Buyer -or Primedex is bound or to which any of their respective
property is subject.
(d) No Constant Required. Except for the consents and approvals listed
in Schedule 8, no authorization or consent of any federal or state
administrative or regulatory agency or other third party is required for the
execution, delivery and performance of this Agreement by Buyer and Primedex or
for the performance by Buyer and Primedex of the transactions contemplated by
this Agreement.
(e) No Finders or Brokers. As a result of any act or failure to act by
Buyer, Primedex or any of their affiliates, no person, firm or corporation has,
or as a result of the transactions contemplated hereby will have, any right,
interest or valid claim upon the Corporation or any Seller for any commission,
fee or other compensation as a finder, broker or in any similar capacity.
(f) Investment Intent. Buyer acknowledges that the Shares have been
offered and will be sold to Buyer pursuant to an exemption from registration
under the federal Securities Act of 1933, as amended, and all applicable state
securities laws. Buyer is purchasing the Shares for investment purposes only and
has no present intent to distribute, resell, pledge or otherwise dispose of any
of the Shares.
(g) Full Disclosure. None of the representations, warranties or
disclosures made to Sellers by Buyer or Primedex herein, or in any exhibit,
schedule, list, certificate or memorandum furnished or to be furnished to
Sellers by Buyer or Primedex in connection herewith, contains or will contain
any untrue statement of a material fact or omits or will omit any material fact,
the omission of which would tend to make the statements made herein or therein
misleading in any material respect.
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6. Pre-Closing Covenants. The parties agree that from the date hereof until
the Closing Date or the termination of this Agreement:
(a) Due Diligence. The Corporation and Sellers will afford officers and
authorized representatives of Buyer and Primedex with reasonable access to the
financial, legal, operational and statistical books and records of the
Corporation and shall permit Buyer and Primedex to conduct physical inspections
of the Real Property at such time or times as will not disrupt the Corporation's
business.
(b) Continuation of Business. Sellers shall cause the Corporation to:
(i) except as required or permitted by this Agreement, conduct its business only
in the usual and ordinary course as it has previously been conducted, including
without limitation its policies and practices relating to the collection of
accounts receivable and the payment of trade payables and other liabilities, and
not introduce any new methods of management, operations or accounting, without
Buyer's prior written consent (which shall not be unreasonably withheld); (ii)
use its best efforts to maintain its working capital at or above the working
capital shown on the Balance Sheet; (iii) maintain the assets of the Corporation
in as good working order and condition as at present, ordinary wear and tear
excepted; (iv) perform all material obligations under material agreements and
leases; (v) keep in full force and effect present insurance policies; and (vi)
maintain and preserve the business organization of the Corporation intact,
retain its present employees and maintain its relationships with, employees,
providers, patients, payors and others having business relations with the
Corporation.
(c) Actions Requiring Consent. From the date hereof until the Closing
Date, without Buyer's prior written consent (which shall not be unreasonably
withheld), except as required or permitted by this Agreement, Sellers shall not
permit the Corporation to: (i) prepay any debt in excess of $5,000 prior to its
stated maturity (except pursuant to an existing amortization payment schedule)
or enter into any contract or commitment or incur or agree to incur any debt or
make any capital expenditure requiring the payment of amounts in excess of
$5,000; (ii) create or assume any mortgage, pledge or other lien or encumbrance
upon any of its assets, whether now owned or hereafter acquired; (iii) make any
loan; (iv) incur any debt or other monetary obligation, other than normal trade
payables; (v) amend the Lease or any material contract listed in Schedule 4,
except changes made in the ordinary course of business, enter into any new
material contract or change any employee compensation (except normal annual
salary increases implemented in accordance with past practices) (vi) make any
commitment to reduce, fix or otherwise limit professional or technical fees or
rates or to purchase supplies, equipment or services, unless such commitment is
cancellable upon no more than 60 days notice; (vii) fail to pay any obligation
in a timely manner prior to delinquency; or (viii) declare, set aside or pay any
dividend or distribution to its shareholders, or directly or indirectly
purchase, redeem or otherwise acquire any outstanding equity interest in the
Corporation.
(d) Performance Covenant. Each of the parties hereto covenants and
agrees that it will take all action reasonably within its power and authority to
duly and timely carry out all of its obligations hereunder, to perform and
comply with all of the covenants, agreements, representations and warranties
hereunder applicable to it and, as and to the extent such party has the power
and authority to do so, to cause all conditions to the obligations of the other
parties to close the purchase and sale of the Shares pursuant hereto to be
satisfied as promptly as possible. Anything in any agreement, or any restriction
set forth on any stock certificate, to the contrary notwithstanding, each Seller
hereby consents to the sale of the Shares to Buyer pursuant hereto without such
Shares being first offered to the Corporation or any Shareholder.
(e) Costs of Agreement. Buyer and Sellers agree to bear all of their
own expenses incurred in preparing or complying with this Agreement, including
without limitation all legal and accounting expenses and fees. None of such
expenses shall be charged to or paid by the Corporation or Newco, whether before
or after the Closing Date.
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(f) Governmental Approvals. The Corporation and Sellers shall assist
and cooperate with Buyer and Buyer's representatives and counsel in obtaining
all governmental consents, approvals and licenses which Buyer deems necessary or
appropriate, and in the preparation of any document or other materials which may
be required by any governmental agency, in connection with the transactions
contemplated herein.
(g) No-Shop Clause. Neither the Corporation nor any Shareholder will,
without the prior written consent of Buyer (which may be withheld by Buyer in
its sole discretion) (a) offer for sale any of the Shares or any equity interest
or assets of the Corporation (or any material portion thereof), (b) solicit
offers to buy any of the Shares or any equity interest or assets of the
Corporation (or any material portion thereof), (c) hold discussions with any
party (other than Buyer) looking toward such an offer or solicitation or looking
toward a merger or consolidation of the Corporation, or (d) enter into any
letter of intent or agreement with any party (other than Buyer) with respect to
the sale or other disposition of any of the Shares or any equity interest or
assets of the Corporation (or any material portion thereof) or with respect to
any merger, consolidation or similar transaction involving any Seller or the
Corporation.
(h) Transfer of Software. At or prior to the Closing, the Corporation
shall transfer to Data certain computer software assets and patents owned by the
Corporation in exchange for the execution and delivery by Data of a License
Agreement substantially in the form of Exhibit A-1 attached hereto. The computer
software to be transferred is described in Annex 1 to said License Agreement.
All other computer software assets owned by the Corporation shall be retained by
the Corporation and shall be subject to a separate License Agreement to be
entered into between the Corporation and Data, which separate license agreement
shall be substantially in the form of Exhibit A-2 attached hereto.
(i) Interim Operating Reporting. During the period from the date of
this Agreement to the Closing, Sellers shall cause the officers of the
Corporation and other management personnel of the Corporation (a) to confer on a
regular and frequent basis with one or more representatives of Buyer to report
material operational matters relating to the Corporation and to report the
general status of on-going operations, (b) to notify Buyer in writing of any
material adverse change in the financial position or earnings of the Corporation
after the Balance Sheet Date, any unexpected emergency or other unanticipated
change in the business of the Corporation, any governmental complaints,
investigations or hearings or adjudicatory proceedings (or communications
indicating that the same may be contemplated) or any litigation, arbitration or
other such matter that has been filed or threatened against the Corporation and
(c) to keep Buyer fully informed of such events and permit its representatives
to participate in all discussions relating thereto. Within 10 business days
following any month-end which occurs on or after the date of execution of this
Agreement, Sellers shall cause the Corporation to provide Buyer with an
unaudited balance sheet and income statement of the Corporation which reflects
the operations of the Corporation for such month, which interim financial
statements shall be prepared in a manner consistent with the policies and
practices used in the preparation of the Balance Sheet.
(j) Insurance Ratings. Sellers shall cause the Corporation to take all
action reasonably requested by Buyer to enable Buyer to succeed to the workers,
compensation and unemployment insurance ratings, deposits and other interests of
the Corporation for insurance purposes. Buyer shall not be obligated to succeed
to any such rating, insurance policy, deposit or other interest, except as it
may elect to do so.
7. Conditions Precedent to Obligations of Buyer. The obligations of Buyer
and Primedex hereunder are subject to the satisfaction, on or prior to the
Closing Date, of the following conditions (unless waived by Buyer):
(a) Accuracy of Representations and Warranties of Sellers. The
representations and warranties of Sellers contained in this Agreement shall be
true in all material respects on and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of such
date. All of the agreements of Sellers and the Corporation to be performed on or
before the Closing Date pursuant to the terms hereof shall have been performed
in all material respects.
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(b) Action Restraining or Affecting Transaction. No action or
proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit the transfer of any of the
Shares, or which in the reasonable opinion of Buyer may otherwise materially and
adversely affect the Corporation, and no third party or governmental agency or
body shall have taken or threatened any action with respect this Agreement as a
result of which Buyer deems it inadvisable to proceed with the transactions
contemplated herein.
(c) Material Changes. The Corporation shall not have suffered any
change, loss or damage since the Balance Sheet Date which materially and
adversely affects or impairs the financial condition (including without
limitation the working capital) of the Corporation or the operations or
prospects of the Corporation.
(d) Governmental Permits. Buyer shall have obtained all licenses,
certificates, permits and rulings of, and made all notices to, all governmental
authorities that may be required in connection with the acquisition of the
Shares and the continuation of the operation of the business of the Corporation
following the Closing.
(e) Consents, Approvals and Authorizations. Sellers shall have obtained
all consents, approvals and authorizations and given all notices required in
connection with the transactions provided for herein, including the consents and
notices described in Schedule 8.
(f) Legal Opinion. Sellers shall have delivered to Buyer an opinion of
▇▇▇▇▇▇, Milliken, Clark, O'Hara & ▇▇▇▇▇▇▇▇▇, P.C., counsel to Sellers and to the
Corporation, dated the Closing Date, covering the matters set forth in Exhibit B
attached hereto and, otherwise, in form and substance satisfactory to Buyer and
its counsel. In rendering such opinion, such counsel may rely as to factual
matters upon certificates of public officials and upon certificates of officers
of the Corporation.
(g) Resignation of Officers and Directors. Each of the elected and
acting directors and officers of the Corporation shall have submitted his or her
resignation, effective as of the Closing Date.
(h) Transfer of Shares. Sellers shall have delivered to Buyer
certificates representing the Shares, duly endorsed in blank or accompanied by a
Stock Assignment Separate From Certificate from that is duly endorsed in blank.
(i) Delivery of Corporate Records. All of the books and records of the
Corporation, including but not limited to the shareholder register, stock
certificate book, corporate seal and minute books containing the minutes or
written consents of all meetings of the shareholders and directors (and all
committees thereof) of the Corporation shall have been delivered to Buyer.
(j) Certificate. If the Closing Date is other than the date of this
Agreement, Buyer shall have received a certificate, signed by each of the
Shareholders and dated as of the Closing Date, certifying that (i) the
representations and warranties of Sellers set forth herein are true and correct
as of the Closing Date and (ii) the Corporation and each Seller has performed
all of their respective obligations under this Agreement that were required to
be performed prior to or at the Closing (except as performance may have been
waived by Buyer prior to or at the Closing).
(k) License Agreements. Data shall have executed and delivered to Buyer
License Agreements in the form attached hereto as Exhibits A-1 and A-2.
(1) Newco Shareholders Agreements. Each Seller shall have executed and
delivered a Shareholders Agreement substantially in the form of Exhibit C
attached hereto, relating to the shares of Newco stock to be issued to Sellers
pursuant to Section 2 (a) (ii).
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(m) Legal Matters. All actions, proceedings, instruments and documents
required or incidental to carrying out this Agreement and all other related
legal matters shall have been approved by counsel for Buyer, which approval
shall not be unreasonably withheld.
(n) Employment Agreement. ▇▇▇▇▇ shall have executed and delivered an
Employment Agreement in the form attached hereto as Exhibit D.
(o) Assignment. Buyer shall have received an Assignment substantially
in the form of Exhibit G attached hereto duly executed by MedAlliance, Inc.
8. Conditions Precedent to Obligations of Sellers. The obligations of
Sellers hereunder are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions (unless waived by ▇▇▇▇▇, who is designated as
the duly authorized representative of Sellers for this purpose):
(a) Accuracy of Representations and Warranties of Buyer; Officer's
Certificates. The representations and warranties of Buyer and Primedex contained
in this Agreement shall be true in all material respects as of the Closing Date
as though such representations and warranties had been made at and as of that
time. All of the agreements of Buyer and Primedex to be performed by Buyer and
Primedex on or before the Closing Date shall have been duly performed in all
material respects. Buyer shall deliver to Seller's counsel certified copies of
all resolutions of the boards of directors of Buyer and Primedex approving or
otherwise relating to this Agreement and the transactions contemplated hereby.
If the Closing date is other than the date of this Agreement, Buyer shall have
delivered to Sellers' counsel an officer's certificate attesting to compliance
with this Section 8(a).
(b) Action Restraining or Affecting Transaction. No action or
proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit the transfer of any of the
Shares, or which in the reasonable opinion of Sellers may otherwise materially
and adversely affect Sellers, and no third party or governmental agency or body
shall have taken or threatened any action with respect to this Agreement as a
result of which Sellers deem it inadvisable to proceed with the transactions
contemplated herein.
(c) Receipt of Consideration. Buyer shall have delivered to Sellers the
portion of the purchase price for the Shares payable at the Closing in
accordance with Section 2(a).
(d) Legal Matters. All actions, proceedings, instruments and documents
required or incidental to carrying out this Agreement and all other related
legal matters shall have been approved by counsel for Sellers, which approval
shall not be unreasonably withheld.
(e) Guaranty. Primedex and its subsidiary, RadNet Management, Inc.,
shall have executed and delivered to Sellers a Guaranty and Security Agreement
in the form attached hereto as Exhibit F.
(f) License Agreements. Primedex and Buyer shall have executed and
delivered to Data License Agreements substantially in the form of Exhibits A-1
and A-2 attached hereto, respectively.
9. Indemnification.
(a) Indemnification by Buyer. Buyer and Primedex jointly and severally
covenant and agree to indemnify and hold Sellers and their successors and
assigns at all times harmless from and against any loss, liability, damage and
expense (including reasonable attorneys, fees and other costs of defense) caused
by or arising out of any misrepresentation, breach of warranty or nonfulfillment
of any agreement on the part of Buyer or Primedex under this Agreement.
14
(b) Indemnification by Sellers. Subject to the limitations set forth in
Section 9(c), each Seller covenants and agrees that such Seller will indemnify
and hold Buyer and the Corporation and their successors and assigns and their
respective officers, directors, employees, stockholders and agents at all times
harmless from and against any loss, liability, damage or expense (including
reasonable attorneys, fees and other costs of defense) caused by or arising out
of or in connection with any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of such Seller under this Agreement
or any Excluded Liability (as defined in Section 4(g) above).
(c) Limitations. Any claim asserted against any Seller pursuant to
Section 9(h) ("Claim") shall be subject to the following limitations:
(i) The liability of each Seller under Section 9(b) or for any
breach of such Seller's representations and warranties made in or pursuant to
this Agreement (other than the representations and warranties set forth in
Section 4(d) made by such Seller) shall be limited to such Seller's pro rata
share of such liability (based upon the amount such Seller receives for his or
her Shares as compared to the total consideration paid by Buyer for all of the
Shares) and, in any event, each Seller's total liability shall not exceed the
consideration received (or which would otherwise have been received) for such
Seller's Shares pursuant to this Agreement, with the Newco shares received by
Sellers being valued for purposes of this subsection (i) at the same price per
share paid (in cash and as an equity contribution) by Primedex for its Newco
shares that it retains as of December 31, 1995; provided, however, that Sellers
shall have the option to deliver Newco shares, valued at such per share value,
in satisfaction of any liability under Section 9(b) in excess of the cash
consideration received (or which otherwise would have been received) pursuant to
this Agreement;
(ii)Neither Buyer nor the Corporation shall be entitled to make
any Claim against any Seller with respect to any breach of such Sellers
representations and warranties set forth herein at any time after May 31, 1997,
except for (A) Claims asserted in writing pursuant to Section 9(b) on or before
May 31, 1997, (B) Claims made with respect to an Excluded Liability and (C)
Claims made with respect to any breach of Section 4(a), (b), (c)(i), (c)(iii),
(d), (e), (v), (y) or (z);
(iiiNeither Buyer nor the Corporation shall be entitled to make
any Claim against any Seller with respect to any Excluded Liability or with
respect to any breach of any of the representations and warranties referred to
in subsection (ii) (C) above it any time after December 31, 1999, except for
such Claims asserted in writing pursuant to Section 9(b) on or before December
31, 1999; and
(iv)All Claims against Sellers shall be satisfied first as an
offset against (or, if applicable, as an adjustment pursuant to Section 2 (c)
of) the payment obligations to Sellers set forth in Section 2(b), but Sellers
acknowledge and agree that to the extent their obligations under Section 9 (b)
exceed the amount that remains due under Section 2(b), they shall be obligated
to pay such excess Claims, subject to the other limitations set forth in this
Section 9(c).
(d) Undisputed Claims. A party (the "Indemnified Party") may assert a
Claim that it is entitled to, or may become entitled to, indemnification under
this Agreement by giving notice of its Claim to the party or parties that are,
or may become, required to indemnify the Indemnified Party (the "Indemnifying
Party," whether one or more), providing reasonable details of the facts giving
rise to the Claim and a statement of the Indemnified Party's loss, damage or
expense (including attorneys' fees and costs) incurred, suffered or paid
(collectively, the "Loss") in connection with the Claim or an estimate of the
amount of the Loss that it reasonably anticipates that it will incur or suffer.
If the Indemnifying Party does not object to the Claim during the 20 day period
following the date of delivery of the Indemnified Party's notice of its Claim
(the "Objection Period"), the Claim shall be considered undisputed and the
Indemnified Party shall be entitled to recover the amount of its Loss. The fact
that a Claim is not disputed by the Indemnifying Party shall not constitute an
admission or create any inference that the asserted Claim is valid for any
purpose other than the indemnity obligation of the Indemnifying Party as to such
Claim pursuant to this Section 9.
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(e) Disputed Claims. If the Indemnifying Party gives notice to the
Indemnified Party within the Objection Period that the Indemnifying Party
objects to the Claim, then (i) the parties shall attempt in good faith to
resolve their differences during the 30 day period following the date of
delivery of the Indemnifying Party's notice of its objection (the "Resolution
Period") and (ii) if the parties fail to resolve their disagreement during the
Resolution Period, either party may unilaterally submit the disputed Claim for
binding arbitration in Los Angeles, California in accordance with the American
Arbitration Association's rules for commercial arbitration in effect at the
time. The award of the arbitrator or panel of arbitrators shall include
reasonable attorneys' fees to the prevailing party and may be entered in any
appropriate court.
(f) Third Party Suits. In the case of any Claim relating to a claim by
a third party (a "Third Party Suit"), the Indemnified Party shall control the
defense of the Third Party Suit and the Indemnifying Party may, at its own
expense, participate in (but not control) the defense and employ counsel
separate from the counsel employed by the Indemnified Party; provided, however,
that the Indemnifying Party may assume control of the defense of the Third Party
Suit at any time during the course of the suit if the Indemnifying Party
confirms in writing to the Indemnified Party that the Indemnified Party is
entitled to indemnification under this Agreement with respect to the Claim and
for Losses arising out of the Third Party Suit. If the Indemnifying Party
assumes control of the defense of a Third Party Suits, (i) the Indemnifying
Party shall consult with the Indemnified Party with respect to the Third Party
Suit upon the Indemnified Party's reasonable request for consultation and (ii)
the Indemnified Party may, at its expense, participate in (but not control) the
defense and employ counsel separate from the counsel employed by the
Indemnifying Party. Regardless of whether the Indemnifying Party assumes the
defense of the Third Party Suit, all parties shall cooperate in its defense.
(g) Settlement or Compromise. Any settlement or compromise of any Third
Party Suit by the Indemnified Party shall also be binding on the Indemnifying
Party in the same manner as if a final judgment or decree had been entered by a
court of competent jurisdiction in the amount of the settlement or compromise.
The Indemnified Party shall give the Indemnifying Party at least 15 days prior
written notice of any proposed settlement or compromise, during which time the
Indemnifying Party may assume the defense of the Third Party Suit and, if it
does so (or if the Indemnifying Party has already assumed control of such Third
Party Suit), the proposed settlement or compromise may not be made without the
Indemnifying Party's consent, which shall not be unreasonably withheld.
(h) Failure to Act by Indemnified Party. Any failure by the Indemnified
Party to defend a Third Party Suit shall not relieve the Indemnifying Party of
its indemnification obligations if the Indemnified Party gives the Indemnifying
Party at least 30 days prior written notice of the Indemnified Party's intention
not to defend and affords the Indemnifying Party the opportunity to assume the
defense.
(i) Insured Claims. In case any event shall occur which would otherwise
entitle either party to assert a Claim for indemnification hereunder, no Loss
shall be deemed to have been sustained by the Indemnified Party to the extent of
any proceeds received by the Indemnified Party from any insurance policies with
respect thereto.
10. Post-Closing Covenants.
(a) Adoption of Newco Shareholders Agreement. Primedex and each
Shareholder hereby adopts, approves and agrees to be bound by the Shareholders
Agreement in the form attached to this Agreement as Exhibit C.
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(b) Release by Sellers and Sellers' Affiliates. Except for liabilities
and obligations to any Shareholder or Sellers' Affiliates expressly described in
Schedule 4, each Seller, on behalf of itself and all Sellers' Affiliates, as of
the Closing Date, hereby releases, discharges and acquits the Corporation of and
from any and all debts, liabilities and obligations of the Corporation to Seller
or any Sellers, Affiliate, including without limitation all management or
consulting fees, cost reimbursement obligations and any guarantee of any
obligation of or to such Seller or Sellers' Affiliate; provided, however, that
this Section 10(b) shall not apply to any obligation of Buyer or the Corporation
expressly provided for in this Agreement, including without limitation the
"accrued officers salaries" as reflected on Schedule 3. Each Seller hereby
agrees that the matters released hereby are not limited to matters which are
known or disclosed, and hereby waives any and all rights and benefits that
Seller or any Sellers' Affiliate now has or in the future may have conferred
upon Seller or any Sellers' Affiliate.
(c) Noncompetition Covenant. Each Seller, for himself or herself,
agrees that, within five years of the Closing Date and so long thereafter as
such Seller owns any interest in Newco (the "Non- Compete Period"), such Seller
will not directly or indirectly (including without limitation through any
directly or indirectly owned or controlled affiliated entity, any entity that
directly or indirectly controls or is under common control with such Seller or
through any financial interest held by immediate family members of such Seller
or in trust for the benefit of such Seller's immediate family members) engage
in, or have any interest in any business, facility or entity or in any person,
firm, corporation or other business (whether as a management employee, officer,
director, agent, security holder (except for the ownership of shares of a
publicly held corporation purchased through a broker on a national stock
exchange or the Nasdaq System at an initial purchase price of not more than
$25,000), creditor, consultant or otherwise) that engages in, any activity
within any of the counties in the State of California or any of the other states
listed in Exhibit E attached hereto (which Sellers acknowledge and represent is
a full and complete list of all California counties and states where the
Corporation is currently conducting business) that is the same as, similar to or
competitive with any activity engaged in by the Corporation; provided, however,
that this Section 10(c) is not intended to prevent any such person from (i)
performing professional services at or for any hospital or other facility or
otherwise practicing medicine in a private practice which may utilize such
competing facilities from time to time, (ii) participating on any hospital
medical staff, committee, office or board so long as no compensation (other than
customary fees for membership on general oversight or quality assurance
committees) is paid to such person for services directly related to any such
hospital's diagnostic imaging facility or program or (iii) participating in the
activities listed in Schedules 11 and 12 attached hereto (as to the Sellers
referred to in said Schedules). In addition, during the Non-Compete Period, no
Seller shall recruit, solicit or otherwise seek to induce any employee of the
Corporation, to terminate his or her employment or independent contractor
relationship with the Corporation. If, in any judicial proceeding, this covenant
not to compete is declared unenforceable for being of too long a duration or
covering too large an area, then this covenant not to compete shall still be
enforceable for such maximum period of time and within the largest geographic
area as will make the covenant enforceable. Sellers acknowledge that he rights
and privileges granted to Buyer herein are of special and unique character,
which gives them a peculiar value, the loss of which may not be reasonably or
adequately compensated for by damages in an action at law, and that the breach
by any Seller of this Agreement will cause Buyer great and irreparable injury
and damage. Accordingly, each Seller agrees that Buyer, together with its
affiliates or any of them, shall be entitled to seek the remedies of injunction,
specific performance or other equitable relief to prevent a breach of this
Agreement, without limiting the availability of any other remedy (including
monetary damages).
(d) Books and Records; Personnel. For a period of five years after the
Closing Date:
(i) Buyer shall not dispose of or destroy any of the material
books and records of the Corporation relating to periods prior to the Closing
Date ("Books and Records") without first offering to turn over possession
thereof to ▇▇▇▇▇ by written notice to ▇▇▇▇▇ it least 30 days prior to the
proposed date of such disposition or destruction.
17
(ii)Buyer shall allow Sellers and their agents access to all Books
and Records during normal working hours at Buyer's principal place of business
or at any location where any Books and Records are stored, and Sellers shall
have the right, at their expense, to make copies of any Books and Records;
provided, however, that any such access or copying shall be had or done in such
a manner so as not to unreasonably interfere with the normal conduct of Buyer's
and the Corporation's businesses.
(iiiBuyer shall make available to Sellers upon written notice (A)
copies of any Books and Records, (B) the Corporation's personnel to assist
Sellers in locating and obtaining any Books and Records, and (C) any of the
Corporation's personnel whose assistance or participation is reasonably required
by Sellers or any of their affiliates in anticipation of, or preparation for,
any litigation, tax or other matters in which any Seller is involved; provided,
however, that any such copying or assistance shall be had or done in such a
manner so as not to unreasonably interfere with the normal conduct of the
Corporation's business. Sellers shall reimburse the Corporation for the
reasonable direct out-of-pocket expenses incurred by Buyer or the Corporation in
performing the covenants contained in this subsection (d).
(e) Primedex Funding of Buyer. Primedex hereby agrees to provide to
Buyer the funds necessary for Buyer to pay the purchase price for the Shares
pursuant to Section 2 hereof. Primedex reserves the right to provide such funds,
or to cause one or more of its affiliates to provide such funds, pursuant to
capital contributions, loins or in any other manner deemed appropriate by
Primedex, hut the form in which such funds are provided to Buyer shall not
affect the absolute and unconditional obligation of Primedex to cause all
payments required by Section 2 to be made.
(f) Audit of Corporation's Financial Statements. Sellers acknowledge
and agree that Primedex, through its independent accountants, may conduct an
audit of the Corporation's financial statements for years 1992-1995, or some
portion thereof, for purposes of Primedex complying with its public reporting
obligations under the federal securities laws. Sellers agree to cooperate and
assist, and to cause the Corporation and its employees to cooperate and assist,
in such audit in all respects reasonably requested by Primedex and its
independent accountants, including without limitation making themselves
available to provide any information necessary or appropriate for such audits
and signing standard management representation letters to such independent
accountants.
11. Termination.
(a) By Mutual Consent. This Agreement may be terminated without further
obligation of the parties at any time prior to Closing by mutual consent of the
parties hereto.
(b) Damages. No party shall be liable in damages to any other party as
a result of the failure to consummate the transactions contemplated by this
Agreement unless such failure is caused by the material breach of such party of
any of the terms of this Agreement.
(c) Unilateral Termination. If, through no fault of or breach by a
party hereto, the Closing is not consummated on or before November 30, 1995,
this Agreement may be unilaterally terminated by written notice given by such
party to the other party.
12. Confidentiality. Subject to Section 13, prior to the Closing, the
parties hereto shall keep confidential all information relating to the others
that it obtains pursuant to this Agreement and shall use such information only
for the purposes contemplated by this Agreement. In the event that this
Agreement is terminated pursuant to Section 11, or otherwise, or the Closing
does not occur by reason of failure of one of the conditions to the Closing, the
parties hereto agree (a) to return to the transmitting party all documents,
financial statements and other information furnished or copied in connection
with the transactions contemplated by this Agreement and (b) not to disclose
without the prior written consent of the transmitting party any information
obtained with respect to the business or operations of the transmitting party or
any affiliate of such party.
18
13. Publicity. Prior to Closing, no public announcement or other publicity
regarding the transactions contemplated by this Agreement shall be made by any
party without the prior written approval of Primedex and the Corporation as to
form, timing and manner of distribution or publication. Primedex and the
Corporation shall agree on the form and content of any joint press release or
other public announcement (including, for example, letters to the Corporation's
employees, providers and payors) which is to be released at or immediately
following Closing. Nothing in this Section 13 or in Section 12 shall be
considered to prohibit any party from making any disclosure required by any Law
or any court order.
14. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall he
deemed to have been duly given when received if delivered personally, given by
prepaid telegram, mailed first class, postage prepaid, registered or certified
mail, delivered by Federal, Express or other courier service, or sent by
facsimile or other online transmission system, as follows:
If to Buyer:
RadNet Managed Imaging Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
AttentionSteven ▇. ▇▇▇▇▇▇▇▇▇▇,Senior Vice President and General Counsel
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Nossaman, Guthner, ▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Corporation or any Seller:
c/o Jaana ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Milliken, Clark, O'Hara ▇▇▇▇▇▇▇▇▇
333 So. Hope Street, 27th Floor
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX No. (▇▇▇) ▇▇▇-▇▇▇▇
15. Governing Law; Interpretation; Section Headings. This Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of California. The section headings contained herein are for
purposes of convenience only and shall not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
19
16. General. This Agreement (including the Schedules and Exhibits referred
to herein) sets forth the entire agreement and understanding of the parties with
respect to the transactions contemplate hereby and supersedes all prior
agreements, arrangements and understandings related to the subject matter
hereof, including without limitation the letter of intent, dated as of October
24, 1995, among Buyer, Primedex and the Corporation. No representation, promise,
inducement or statement of intention has been made by any party hereto which is
not embodied in this Agreement, or in the Exhibits hereto or the written
statements, certificates or other documents delivered pursuant hereto. Subject
to Section 9(c) hereof, all the terms, provisions, covenants, representations,
warranties and conditions of this Agreement shall survive the Closing and shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns. This Agreement may be
amended, modified, superseded or canceled, and any of the terms, provisions,
covenants, representations, warranties or conditions hereof may be waived, only
by a written instrument executed by all parties hereto, or, in the case of a
waiver, by the party waiving compliance. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the right to enforce the same. No waiver by any party of any condition, or of
the breach of any term, provision, covenant, representation or warranty
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or breach or a waiver of any other condition or of the
breach of any other term, provision, covenant, representation or warranty. In
the event that any one or more of the provisions of this Agreement shall he held
or otherwise found to be invalid, illegal or unenforceable, all other provisions
hereof shall be given effect separately therefrom and shall not be affected
thereby. None of the parties hereto shall assign any of its rights or
obligations hereunder without the prior written consent of the other parties
hereto; provided, however, and notwithstanding the foregoing, Buyer may (a)
prior to or at the Closing assign all or any portion of Buyer's rights and
obligations pursuant to this Agreement to any wholly owned subsidiary or
affiliate of Buyer, and (b) after the Closing, assign any or all of its rights
hereunder without any consent or approval of any other party to this Agreement.
This Agreement is for the sole benefit of the undersigned parties hereto and is
not for the benefit of any third party.
17. Further Assurances. Sellers shall execute and deliver such other
documents and instruments, and take such other actions, as Buyer may reasonably
request in order more fully to vest and perfect in Buyer all right, title and
interest in and to the Shares.
18. Counterparts. Separate copies of this Agreement may be signed by the
parties hereto, with the same effect as though all of the parties had signed one
copy of this Agreement. Signatures transmitted by facsimile shall be accepted as
original signatures.
19. Attorneys' Fees. In any action at law or equity to enforce any of the
provisions or rights under this Agreement, the unsuccessful party to such
litigation, as determined by the court in any final judgment or decree, shall
pay the successful party or parties all costs, expenses and reasonable
attorneys' fees incurred therein by such party or parties (including without
limitation such costs, expenses and fees on any appeal or in connection with any
bankruptcy proceeding), and if the successful party recovers judgment in any
such action or proceeding, such costs, expenses and attorneys' fees shall be
included in and as a part of such judgment.
20. Interpretation of Agreement. The parties hereto acknowledge and agree
that this Agreement has been negotiated at arm's length and between parties
equally sophisticated and knowledgeable in the matters dealt with in this
Agreement. Accordingly, any rule of law or legal decision that would require
interpretation of any ambiguities in this Agreement against the party that has
drafted it is not applicable and is waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the intent of the parties
as set forth in this Agreement.
20
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the day and year first above written.
BUYER: RADNET MANAGED IMAGING SERVICES, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
President and Chief Executive Officer
THE CORPORATION: FUTURE DIAGNOSTICS, INC.
By /s/ Jaana ▇▇▇▇▇
Jaana ▇▇▇▇▇, President
SHAREHOLDERS: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D.
▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D.
/s/ Jaana ▇▇▇▇▇
Jaana ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
