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ASSET PURCHASE AGREEMENT
dated as of November 4, 1997
by and between
HEALTHCARE IMAGING SERVICES, INC.
as the Purchaser
and
M.R. RADIOLOGY IMAGING OF LOWER MANHATTAN, P.C.
as the Seller
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TABLE OF CONTENTS
1. Definitions...............................................................1
1.1 Defined Terms....................................................1
1.2 Use of Defined Terms.............................................4
1.3 Accounting Terms.................................................4
1.4 Sections, Exhibits and Schedules.................................5
1.5 Miscellaneous Terms..............................................5
2. Purchase and Sale of Assets; License to Use Tradename.....................5
2.1 Assets...........................................................5
2.2 Excluded Assets..................................................7
2.3 Assumed Liabilities..............................................7
2.4 Purchase Price and Payment.......................................8
2.5 Purchase Price Adjustments.......................................8
2.6 Deliveries by the Purchaser at Closing..........................11
2.7 Deliveries by the Seller at Closing.............................11
2.8 Further Assurances..............................................12
2.9 Risk of Loss....................................................12
2.10 Conditions Precedent to the Asset Purchase......................12
2.11 Power of Attorney...............................................13
2.12 License to Use Tradename........................................13
3. Representations, Warranties and Covenants of the Seller..................14
3.1 Organization and Qualification..................................14
3.2 Authority.......................................................14
3.3 Compliance......................................................14
3.4 Title to Assets.................................................15
3.5 Contracts.......................................................15
3.6 Intellectual Property...........................................15
3.7 Investment Intent...............................................15
3.8 Unregistered Securities.........................................15
3.9 Accredited Investor.............................................15
3.10 Consents........................................................15
3.11 Permits and Licenses............................................16
3.12 Employment Arrangements.........................................16
3.13 Compliance With Laws............................................16
3.14 Legal Proceedings...............................................16
4. Representations, Warranties and Covenants of the Purchaser...............16
4.1 Organization and Qualification..................................16
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4.2 Authority.......................................................17
4.3 Compliance......................................................17
4.4 Consents........................................................17
5. Non-Competition; Non-Solicitation........................................17
5.1 Non-Competition.................................................17
5.2 Non-Solicitation................................................17
5.3 Ownership of Certain Securities.................................18
5.4 Remedies........................................................18
6. Indemnification..........................................................18
6.1 Survival of Representations, Warranties, Covenants
and Agreements................................................18
6.2 General Indemnity...............................................19
6.3 Reimbursement...................................................19
6.4 Claims..........................................................19
6.5 Disputes........................................................21
7. Miscellaneous............................................................21
7.1 Legal and Accounting Expenses...................................21
7.2 Publicity.......................................................21
7.3 Headings........................................................21
7.4 Notices.........................................................21
7.5 Successors and Assigns..........................................22
7.6 Governing Law...................................................22
7.7 Entire Agreement................................................22
7.8 Counterparts....................................................22
7.9 Severability....................................................23
7.10 No Prejudice....................................................23
7.11 No Third Party Beneficiaries....................................23
7.12 Amendment and Modification......................................23
7.13 Waiver..........................................................23
SCHEDULE 2.1(a)..............................................................25
SCHEDULE 2.1(c)..............................................................26
SCHEDULE 2.1(d)..............................................................27
SCHEDULE 2.1(e)..............................................................28
SCHEDULE 2.1(f)..............................................................29
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SCHEDULE 2.1(g)..............................................................30
SCHEDULE 2.1(h)..............................................................31
SCHEDULE 2.3.................................................................32
SCHEDULE 3.4.................................................................33
SCHEDULE 3.11................................................................34
SCHEDULE 4.5.................................................................36
SCHEDULE 5.1.................................................................37
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of
November 4, 1997, by and between HealthCare Imaging Services, Inc., a Delaware
corporation (the "Purchaser"), and M.R. Radiology Imaging of Lower Manhattan,
P.C., a New York professional corporation (the "Seller").
WHEREAS, the Seller currently operates a magnetic resonance imaging
facility under the name of "MR Radiology Imaging of Lower Manhattan" located at
00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (the "Facility") and is engaged in the
provision of diagnostic imaging services at the Facility (the "Practice");
WHEREAS, the Purchaser desires to purchase (the "Asset Purchase") and the
Seller desires to sell, all right, title and interest in and to the assets of
the Seller set forth herein relating to the Facility and the Practice and the
Seller desires to assign, and the Purchaser desires to assume, the obligations
and liabilities of the Seller with respect to the Facility and the Practice
specifically set forth herein, subject, in each case, to the exceptions, terms
and conditions set forth herein; and
WHEREAS, the Board of Directors of the Purchaser and the stockholder and
directors of the Seller have duly approved the Asset Purchase.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, each intending to be legally bound, hereby agree as
follows:
1. Definitions.
1.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
Accounts Receivable: Defined in Section 2.1(a).
Acquired Assets: Defined in Section 2.1.
Actual Pre-Tax Profits: Defined in Section 2.5(c).
Agreement: Defined in the prologue hereof.
A/R Deficiency Adjustment Amount: Defined in Section 2.5(b).
Asset Purchase: Defined in the prologue of this Agreement.
Assumed Liabilities: Defined in Section 2.3.
Business Day: A day on which commercial banks in the State of New York
are authorized to be open for business or are not required to close.
Closing: The consummation of the purchase and sale contemplated by
this Agreement.
Closing Cash Purchase Price: Defined in Section 2.4(a).
Closing Date: The date of this Agreement.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
Collectable Accounts Receivable: Defined in Section 2.5(b).
Collected Amounts: Defined in Section 2.5(a).
Collected Amounts Schedule: Defined in Section 2.5(a).
Common Stock: Defined in Section 2.4(b).
Consents: All governmental and third party consents, permits,
approvals, orders, authorizations, qualifications, and waivers required to be
received by a Person for the consummation of the transactions contemplated by
this Agreement.
Contract: Any contract, agreement, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant,
right, instrument (including insurance policies or benefit plans), invoice,
purchase order, sales order or other similar document or agreement, whether
written or oral.
Determination Date: Defined in Section 2.4(b)(i)
Dollars or "$": The legal currency of the United States of America.
DVI Capital Lease. That certain capital lease between the Seller and
DVI Financial Services, Inc. set forth on Schedule 2.3.
Employees: Means all persons employed by the Seller in connection with
the Practice or at the Facility, who are employed on the day immediately prior
to the Closing Date, including any persons on disability, sick leave, layoff or
leave of absence from such employment , whose names,
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job descriptions and current annual salaries and accrued bonuses are set forth
on Schedule 3.12 hereto.
Estimated Short Term Note Amount: Defined in Section 2.4(c).
Excluded Assets: Defined in Section 2.2.
Facility: Defined in the prologue of this Agreement.
Final Adjustment: Defined in Section 2.5(d).
Financial Statements: Defined in Section 2.5(c).
GAAP: Generally accepted accounting principles set forth in the
opinions and pronouncements of the Financial Accounting Standards Board,
applied on a consistent basis and consistent with past practices.
Governmental Authority: Any United States or foreign governmental
authority, including all agencies, bureaus, commissions, authorities or bodies
of the federal government or any state, county, municipal or local government,
including any court, judge, justice or magistrate.
Intellectual Property: As defined in Section 2.1(j).
Judgment: Any judgment, writ, order, injunction, determination, award
or decree of or by any Governmental Authority.
Law: Any statute, ordinance, code, rule, regulation, order or other
law enacted, adopted, promulgated, applied or followed by any Governmental
Authority.
Lease: Defined in Schedule 2.1(f).
Lien: Any security agreement, financing statement (whether or not
filed), security or other like interest, conditional sale or other title
retention agreement, lease or consignment or bailment given for security
purposes, lien, mortgage, deed of trust, indenture, pledge, constructive or
other trust or attachment.
Material Adverse Effect: A material adverse effect on the business,
assets, operations, condition (financial or otherwise), cash flows or prospects
of (i) with respect to the Purchaser, the Purchaser, and (ii) with respect to
the Seller, the Seller.
Maturity Date: Defined in Section 2.4(c)
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1996 Financial Statements: Defined in Section 2.5(c).
1997 Financial Statements: Defined in Section 2.5(c).
Person: Any individual, trustee, corporation, general or limited
partnership, limited liability partnership, limited liability company, joint
venture, joint stock company, bank, firm, Governmental Authority, trust,
association, organization or unincorporated entity of any kind or nature
whatsoever.
Practice: Defined in the prologue of this Agreement.
Pre-Tax Profit Adjustment Amount: Defined in Section 2.5(c).
Professional Services Agreement: Defined in Section 2.10(a).
Purchase Price: Defined in Section 2.4.
Purchaser: Defined in the prologue of this Agreement.
Purchaser's Counsel: The law firm of Shereff, Friedman, Xxxxxxx &
Xxxxxxx, LLP.
Seller: Defined in the prologue of this Agreement.
Short Term Note: Defined in Section 2.4(c)
Taxes: All foreign, U.S. federal, state, county, local, municipal,
sales, corporate income and other taxes, levies, customs duties, impositions,
deductions, charges and withholdings, including income, sales and use taxes,
and shall include any interest, penalties or additions thereto.
Tax Returns: All returns, declarations and reports filed with a taxing
authority and all information returns and statements of any kind or nature
whatsoever filed with a taxing authority.
1.2 Use of Defined Terms. Any defined term used in the plural shall refer
to all members of the relevant class, and any defined term used in the singular
shall refer to any one or more of the members of the relevant class. The use of
any gender shall be applicable to all genders.
1.3 Accounting Terms. All United States accounting terms not otherwise
defined in this Agreement shall be construed in conformity with GAAP.
1.4 Sections, Exhibits and Schedules. References in this Agreement to
Sections, Exhibits and Schedules are to Sections, Exhibits and Schedules of and
to this Agreement. The Exhibits and
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Schedules to this Agreement are hereby incorporated herein by this reference as
if fully set forth herein.
1.5 Miscellaneous Terms. The term "or" shall not be exclusive. The terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific
article, Section, paragraph or clause where such terms may appear. The term
"including" shall mean "including, but not limited to."
2. Purchase and Sale of Assets; License to Use Tradename.
2.1 Assets. Subject to the terms and conditions set forth in this
Agreement, the Seller hereby sells, conveys, transfers, assigns and delivers to
the Purchaser, and the Purchaser hereby purchases from the Seller, all of the
Seller's right, title and interests in and to the following assets, property
and business of the Seller (whether or not owned or held under name MR
Radiology Imaging of Lower Manhattan, P.C., MR Imaging of Lower Manhattan,
P.C., MR Imaging Associates of Lower Manhattan, P.C., or any deviation of any
of the foregoing) pertaining to the operation of the Practice at the Facility
(the "Acquired Assets"), but in each case excluding the assets set forth in
Section 2.2 hereto:
(a) all accounts receivable, including, but not limited to, all accounts
receivable arising from services provided prior to the Closing Date,
notwithstanding that invoices relating thereto have not yet been issued,
including the accounts receivable set forth on Schedule 2.1(a) (the "Accounts
Receivable");
(b) all furniture, furnishings, fixtures and leasehold improvements of the
Seller relating to the Practice, located at, or in transit to or from, the
Facility;
(c) all equipment, machinery, tools, personal property and other physical
assets of any nature or kind of the Seller relating to the Practice, located
at, or in transit to or from, the Facility, including the assets set forth on
Schedule 2.1(c);
(d) all rights of the Seller with respect to leasehold interests relating
to the personal property used in the Practice, including the personal property
set forth on Schedule 2.1(d);
(e) all rights of the Seller under the Contracts set forth on Schedule
2.1(e);
(f) all rights of the Seller under the real property lease set forth on
Schedule 2.1(f) (the "Lease");
(g) to the extent permitted by applicable Law, all rights under all
permits, consents, plans, registrations and other documents, commitments,
arrangements, undertakings, practices or
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authorizations held in connection with or necessary to the operation of the
Practice at the Facility set forth on Schedule 2.1(g);
(h) all office and other supplies and inventories used by the Seller in
connection with the Practice, including as set forth on Schedule 2.1(h);
(i) all computer software (including documentation and related object and
source codes) and hardware used in connection with the Practice;
(j) all patents, patent rights, inventions, processes, designs and
applications for patents used or useful in connection with the Practice, all
trademarks, trademark applications, service marks, service xxxx applications,
copyrights, copyright applications, trade names, registered designs and
unregistered design rights used or useful in the operation of the Practice at
the Facility, including, but not limited to, all right, title and interest in
and to the names "MR Radiology Imaging of Lower Manhattan", "M.R. Imaging of
Lower Manhattan", and "MR Imaging Associates of Lower Manhattan" or any
derivative of any of the foregoing (subject to the license granted to the
Seller pursuant to Section 3.12 below), and all rights to xxx for past
infringement of any of the foregoing ("Intellectual Property");
(k) all books of account, general, financial, accounting records, marketing
and advertising material, legal forms and documents, files, invoices, patient,
customer and supplier lists and other lists and data owned or used by Seller in
connection with the Practice , including, without limitation, copies of the
books and records of the Seller with respect to the Accounts Receivable;
(l) all causes of action, judgments, claims, demands and other rights of
the Seller of every kind or nature arising in connection with the operation of
the Practice;
(m) all rights of the Seller relating to or arising out of or under express
or implied warranties from suppliers with respect to any of the Acquired
Assets; and
(n) all prepaid expenses, advances or deposits of any kind or nature
whatsoever paid or made in connection with the Acquired Assets or the operation
of the Practice at the Facility.
To the extent that the conveyance, transfer or assignment of any Contract
shall require the Consent of any Person other than the Purchaser or the Seller,
this Agreement shall not constitute any such conveyance, transfer or
assignment, or any agreement or attempt to agree to convey, transfer or assign
the same, if such action would constitute a breach thereof unless and until
such Consent shall have been obtained, provided that the Seller shall, to the
extent not prohibited by the relevant Contract, license the Purchaser at the
Closing to use in the Practice the Acquired Assets which are the subject
thereof. Following the Closing Date, the Seller shall, if requested by the
Purchaser, use its best efforts to obtain the consent of any party or parties
to any such Contracts to the transfer, sublease or assignment thereof by the
Seller to the Purchaser hereunder in all cases in which such
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consent is required for transfer, sublease or assignment. If any such consent
is not obtained, or if any attempted assignment thereof would be ineffective or
would affect the rights of the Seller thereunder such that the Purchaser would
not in fact receive all such rights, the Seller shall perform such Contract for
the account of the Purchaser or otherwise cooperate with the Purchaser in any
arrangement necessary or desirable to provide for the Purchaser the benefits
under any such agreement, including, without limitation, enforcement for the
benefit of the Purchaser of any and all rights of the Seller against the other
party thereto arising out of the breach, termination or cancellation of such
agreement by such other party or otherwise. Notwithstanding the foregoing, the
Seller delegates to the Purchaser and the Purchaser undertakes to pay, perform
and discharge in a timely manner all Contracts under which the Seller is bound
with respect to the Practice, whether or not any Consent to the assignment
thereof is required.
2.2 Excluded Assets. The term "Acquired Assets" shall not include any of
the following (the "Excluded Assets"):
(a) income and other tax records of the Seller, provided that the Seller
shall retain these records for a period of not less than five years after the
Closing and, upon a showing of good cause and execution of confidentiality
agreements, in each case acceptable to the Seller, make them available to the
Purchaser upon the Purchaser's reasonable request;
(b) all cash of the Seller; and
(c) the 1991 Cadillac Sedan used by the Seller.
2.3 Assumed Liabilities. Except for the liabilities pertaining solely to
the operation of the Practice at the Facility expressly set forth below (the
"Assumed Liabilities"), the Purchaser shall not assume or become responsible
for any of the debts, claims, liabilities, obligations, damages or expenses of
the Seller, whether or not any of the foregoing relate to, or arise out of, the
operation of the Practice at the Facility, of any kind or nature, whether
known, unknown, contingent, absolute, liquidated, unliquidated, disputed,
undisputed or otherwise, incurred or accruing on or prior to the Closing Date,
including, without limitation, (w) any liabilities for Taxes which relate to
periods prior to the Closing Date, (x) claims, suits, actions or proceedings
arising out of events occurring in the operation or business of the Facility or
the Practice on or prior to the Closing Date and (y) all claims that may arise
with respect to services provided in connection with the Practice at the
Facility on or prior to the Closing Date. The Assumed Liabilities shall be
limited to all of the (a) accounts payable by the Seller in the ordinary course
of business consistent with prior practice, (b) amounts due with respect to
periods after the Closing Date under the Contracts and the Leases, and (c)
amounts due with respect to periods after the Closing Date under the DVI
Capital Lease; provided, however, that on the Closing Date the amount of all
payments (including principal and interest) due under the DVI Capital Lease
shall not exceed the sum of $306,386.85 (payable in 21 monthly installments of
$14,589.85), and the Seller shall be current with all of its obligations
thereunder, and will not be otherwise in default of any term of the DVI Capital
Lease. To the extent that amounts due under the DVI Capital Lease shall exceed
the sum of $306,386.85, the Seller shall be solely responsible for the payment
of such excess amounts.
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2.4 Purchase Price and Payment. In consideration of the sale of the
Acquired Assets hereunder, and subject to the adjustment provisions set forth
in Section 2.5 below, in addition to assuming the Assumed Liabilities, the
Purchaser shall pay to the Seller the purchase price (the "Purchase Price") as
follows:
(a) Cash Purchase Price. The sum of $900,000 (the "Cash Purchase Price"),
to be paid to the Seller at the Closing, in immediately available funds by wire
transfer to an account or accounts designated in writing by the Seller or by
certified check or bank cashier's check made payable to the order of the
Seller.
(b) Stock Purchase Price. At the Closing, a certificate representing one
million (1,000,000) shares of common stock, $.01 par value per share, of
Purchaser (the "Common Stock") registered in the name of the Seller and bearing
such restrictive legends as are required by applicable Law shall be delivered
to the Seller.
(c) Short Term Note. A promissory note of the Purchaser (the "Short Term
Note") in the principal amount of $300,000 (the "Short Term Note Amount"), the
form of which is attached as Exhibit A hereto, will be issued to Seller at the
Closing. The Short Term Note will bear simple interest of eight (8) percent per
annum. Subject Section 2.5(d) and subject to the terms of the Short Term Note,
all accrued interest on the unpaid principal balance, along with the unpaid
principal balance of the Short Term Note, will mature and be due and payable in
full on December 31, 1997 (the "Maturity Date").
2.5 Purchase Price Adjustments. The Purchase Price will be subject to
adjustment in accordance with the following provisions.
(a) Closing Date Cash Purchase Price Adjustment. On the Closing Date, the
Seller shall deliver to the Purchaser a schedule (the "Collected Amounts
Schedule"), calculated as of the Closing Date, reflecting all funds or other
goods or services received by the Seller or collected by any party on behalf of
the Seller or for which credit was received by Seller in respect of services
rendered, or to be rendered, by the Practice or the Facility (cumulatively, the
"Collected Amounts") during the period beginning on November 1, 1997 and
continuing through the Closing Date less any and all expenses incurred by the
Seller during such period in connection with the operation of the Practice at
the Facility during such period, together with documentation reasonably
satisfactory to the Purchaser of all such amounts and payments and all
collection activities of the Seller or its agents during such period. The Cash
Purchase Price will be reduced dollar-for-dollar to the extent of the Collected
Amounts.
(b) Collectable Accounts Receivable Adjustment.
(i) On or prior to the twentieth (20th) calendar day prior to the
Maturity Date, the Purchaser shall deliver to the Seller a schedule (the "A/R
Reconciliation Schedule"), calculated
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as of the twentieth (20th) calendar day prior to the Maturity Date (the
"Determination Date"), reflecting (i) a listing of the Accounts Receivable as
of the Closing Date as set forth on Schedule 2.1(a), (ii) the amount of each
counterclaim, offset, deduction or allowance asserted by a payor, or allowed by
the Purchaser (provided that any such allowance is given in accordance with the
Purchaser's past business practices), with respect to the Accounts Receivable,
including the reasons underlying each such counterclaim, offset, deductions or
allowance, (iii) the Purchaser's calculation of the amount of valid
counterclaims, offsets, deductions and allowances, and (iv) the (aa) aggregate
amount of collections by the Purchaser, as of the Determination Date, with
respect to the Accounts Receivable set forth on Schedule 2.1(a) hereto and (bb)
the aggregate amount of those Accounts Receivable set forth on Schedule 2.1(a)
hereto not yet collected but which the Purchaser reasonably believes will be
collected within one hundred eighty (180) days of the Determination Date
(together, the "Collectable Accounts Receivable").
(ii) Unless the Seller, within ten (10) days after receipt of the A/R
Reconciliation Schedule, notifies the Purchaser that it objects to the
computation of the A/R Reconciliation Schedule, specifying the basis for such
objection and its alternative computation of the A/R Reconciliation Schedule,
the Collectable Accounts Receivable as set forth in the A/R Reconciliation
Schedule shall be binding upon the parties. If the Purchaser and the Seller are
unable to agree upon the A/R Reconciliation Schedule within thirty (30) days
after any such notification has been given by the Seller or within a mutually
agreed extended time period, the controversy shall be referred for final
determination to a "Big 6" accounting firm, acceptable to the Seller and the
Purchaser, for a determination of the A/R Reconciliation Schedule. Such
determination shall be binding upon the parties, absent manifest error. The
parties shall share equally the fees and expenses of the accounting firm.
(iii) In accordance with the procedures described in Section 2.5(d)
below, the Purchase Price will be reduced dollar-for-dollar to the extent that
the aggregate of the Collectable Accounts Receivable is less than $500,000 (the
"A/R Deficiency Adjustment Amount").
(c) Pre-Tax Profits Deficiency Adjustment.
(i) On or before the Closing Date, the Purchaser shall deliver to the
Seller financial statements for the Practice for the 1996 fiscal year and for
the first three quarters of the 1997 fiscal year prepared and reviewed by
Purchaser's independent public accountants in accordance with GAAP (the "1996
Financial Statements" and the "1997 Financial Statements" respectively, and,
together, the "Financial Statements") setting forth, among other things, the
pre-tax profits of the Practice for such periods (the "Actual Pre-Tax
Profits"). The Financial Statements shall be prepared in conformity with GAAP
and shall be subject to such adjustments as shall be agreed between the
Purchaser and the Seller. The Seller and its designated independent accounting
firm shall have the right to review the procedures used to prepare the
Financial Statements and to examine, at the Seller's expense, the books,
records, work papers and all other information and material used in the
preparation of the Financial Statements.
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(ii) Unless the Seller, within ten (10) days after receipt of the
Financial Statements, notifies the Purchaser that it objects to the computation
of the Actual Pre-Tax Profits, specifying the basis for such objection and its
alternative computation of the Actual Pre-Tax Profits, the Actual Pre-Tax
Profits set forth in the Financial Statements shall be binding upon the
parties. If the Purchaser and the Seller are unable to agree upon the Actual
Pre-Tax Profits within thirty (30) days after any such notification has been
given by the Seller or within a mutually agreed to extended time period, the
controversy shall be referred for final determination to a "Big 6" accounting
firm, acceptable to the Seller and the Purchaser, for a determination of the
Actual Pre-Tax Profits. Such determination shall be binding upon the parties,
absent manifest error. The parties shall share equally the fees and expenses of
the accounting firm.
(iii) In accordance with the procedures described in Section 2.5(d)
below, the Purchase Price will be reduced by $5.50 for every dollar by which
the Actual Pre-Tax Profits as set forth in the 1997 Financial Statements (after
deducting all business expenses of the Practice incurred in the ordinary course
of business during such period) are less than eighty percent (80%) of $375,000
(the "Pre-Tax Profit Adjustment Amount" and, together with the A/R Deficiency
Adjustment, the "Purchase Price Adjustment Amounts").
(d) Method of Adjustment. Once the A/R Reconciliation Schedule and the
1997 Financial Statements have been finalized, the Purchase Price shall be
adjusted in the manner set forth below to reflect any requisite Purchase Price
Adjustments Amounts (the "Final Adjustment").
(i) In the event that the aggregate of the Purchase Price Adjustment
Amounts is less than the Short Term Note Amount, then within 10 days following
the delivery by the Seller of the A/R Reconciliation Schedule and the 1997
Financial Statements and any period during which either is being contested, the
Seller shall deliver to the Purchaser a notice of the adjusted principal amount
of the Short Term Note which will be calculated by subtracting the aggregate of
the Purchase Price Adjustment Amounts from the Short Term Note Amount.
(ii) In the event that the aggregate of the Purchase Price Adjustment
Amounts exceeds the Short Term Note Amount, then the Seller will, within ten
calendar days after the final determination of the Purchase Price Adjustment
Amounts pursuant to this Section 2.5, make payment to the Seller of the amount
of such difference in immediately available funds by wire transfer to an
account or accounts designated in writing by the Seller or by certified check
or bank cashier's check made payable to the order of the Seller.
(e) Payment at Maturity Date. Notwithstanding anything to the contrary
set forth herein or in the Short Term Note, if, as a result of the Seller's
contesting either the A/R Reconciliation Schedule or the 1997 Financial
Statements pursuant to Sections 2.5(b) or 2.5(c) above, either or both of the
A/R Deficiency Adjustment Amount or the Pre-Tax Profit Adjustment Amount have
not been finally agreed upon by the parties as of the Maturity Date, then, in
such event the amount which the Seller is obligated to pay under the Short Term
Note on the Maturity Date shall be reduced by the
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amount which remains in dispute. The Seller's obligation to pay any remaining
amounts due under the Short Term Note shall be deferred until such time as such
disputes are resolved pursuant to the provisions of this Agreement; provided,
however, that interest shall cease to accrue on the Short Term Note following
the Maturity Date.
2.6 Deliveries by the Purchaser at Closing. At the Closing, the Purchaser
shall have delivered to the Seller the following:
(a) resolutions duly adopted by the board of directors of the
Purchaser authorizing the transactions which are the subject of this Agreement,
certified by the Secretary of the Purchaser;
(b) certificate executed by the Chief Executive Officer of the
Purchaser certifying that the representations and warranties contained in
Section 4 hereof are true and correct in all material respects as of the
Closing Date;
(c) certificates issued by appropriate Governmental Authorities
evidencing, as of a recent date, the good standing of the Purchaser in
Delaware;
(d) copies of the applicable charter documents and all amendments
thereto of the Purchaser, certified by the appropriate Governmental
Authorities;
(e) the Professional Services Agreement executed by the Purchaser; and
2.7 Deliveries by the Seller at Closing. At the Closing, the Seller shall
deliver to the Purchaser the following:
(a) executed and acknowledged (if appropriate) warranty deeds,
assignments, bills of sale and/or certificates of title, dated the Closing
Date, transferring to the Purchaser all of the Acquired Assets free and clear
of all Liens, each reasonably satisfactory to the Purchaser in form and
substance;
(b) resolutions duly adopted by the board of directors and the
stockholders of the Seller authorizing the transactions contemplated hereby,
certified by the Secretary of the Seller;
(c) certificates of the Seller executed by its authorized officers
certifying that the representations and warranties contained in Section 3
hereof are true and correct as of the Closing Date;
(d) all necessary third party consents to the assignment of the DVI
Capital Lease, and other consents required hereunder;
(e) an executed assignment of the Lease from the Seller to the
Purchaser on terms and conditions satisfactory to the Purchaser in
substantially the form attached hereto as Exhibit B (the
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"Lease Assignment") together with an executed consent of the landlord under the
Lease to the Lease Assignment in form and substance reasonably satisfactory to
the Purchaser;
(f) certificate issued by appropriate Governmental Authorities
evidencing, as of a recent date, the good standing and tax status of the Seller
in New York, which is the jurisdiction in which the Seller, with respect to
operating to the Practice, is qualified to do business;
(g) copies of the applicable charter instruments and all amendments
thereto of the Seller, certified by the applicable Governmental Authorities;
(h) copies of books and records relating to the Accounts Receivable;
and
(i) all other certificates and documents reasonably requested by the
Purchaser.
2.8 Further Assurances. With respect to any Acquired Assets which cannot be
physically delivered to the Purchaser because they are in the possession of
third parties, the Seller will give all necessary instructions to the party in
possession thereof and any other person that the Purchaser reasonably shall
designate, with copies to the Purchaser, that all of the Seller's right, title
and interest in and to the same have been vested in the Purchaser and that the
same are to be held for the Purchaser's exclusive use and benefit.
2.9 Risk of Loss. The Seller shall bear the risk of loss for the Acquired
Assets until the Acquired Assets are transferred to the Purchaser on the
Closing Date, and the Seller shall be entitled to retain any insurance proceeds
received, or any other rights, as a result of any such loss.
2.10 Conditions Precedent to the Asset Purchase. The Asset Purchase is
subject to:
(a) Xxxxxx Xxxxx, M.D. entering into a professional services agreement
with the Purchaser with respect to his continued provision of services to the
Practice at the Facility on terms and conditions satisfactory to the Purchaser
in substantially the form attached hereto as Exhibit A (the "Professional
Services Agreement");
(b) all accrued accounts payable, accrued expenses and accrued Taxes
being paid to the extent practicable through the Closing Date and otherwise all
such accrued accounts payable, accrued expenses and accrued Taxes that accrue
through the Closing Date shall be borne by the Seller;
(c) the delivery by the Seller at the Closing of the executed Lease
Assignment together with an executed consent of the landlord under the Lease to
the Lease Assignment in form and substance reasonably satisfactory to the
Purchaser;
(d) the Practice having, for the 1996 fiscal year and the first three
quarters of the 1997 fiscal year, respectively, aggregate revenues of at least
$1,580,000 and $875,000 and Actual Pre-Tax
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Profits of at least $400,000 and $297,500 (in each case, after deducting all
business expenses of the Practice incurred in the ordinary course of business
during such periods), in each case as shown in the final 1996 Financial
Statements and the final 1997 Financial Statements, respectively;
(e) with respect to the Master Equipment Lease dated June 1, 1995 by
and between DVI Financial Services and the Seller, the segregation of the
equipment leased for the Facility from all other equipment leased by the Seller
pursuant to such lease, and the acceptance and assumption of the segregated
portion of the lease relating to the equipment leased for the Facility, by the
Purchaser;
(f) the receipt of all other requisite consents and approvals,
including, without limitation, the approval of the board of directors and
stockholders of the Seller; and
2.11 Power of Attorney. Effective upon the Closing Date, the Seller hereby
irrevocably constitutes and appoints the Purchaser, its successors and assigns,
the true and lawful attorney of the Seller with full power of substitution, in
the name of Purchaser, or the name of the Seller , on behalf of and for the
benefit of the Purchaser, to collect all accounts receivable and other items
being transferred, conveyed and assigned to the Purchaser as provided herein,
to endorse, without recourse, checks, notes and other instruments in the name
of the Seller, to institute and prosecute, in the name of the Seller or
otherwise, all proceedings which the Purchaser may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
Acquired Assets, to defend and compromise any and all actions, suits or
proceedings in respect of any of the Acquired Assets and to do all such acts
and things in relation thereto as the Purchaser may deem advisable. The Seller
agrees that the foregoing powers are coupled with an interest and shall be
irrevocable by the Seller directly or indirectly by the dissolution of the
Seller or in any manner or for any reason. The Seller further agrees that the
Purchaser shall retain for its own account any amounts collected pursuant to
the foregoing power, and the Seller shall promptly transfer and deliver to the
Purchaser any cash or other property received by the Seller after the Closing
Date in respect of any accounts receivable or otherwise relating to the
Acquired Assets or the Practice or the Facility.
2.12 License to Use Tradename. The Purchaser hereby grants to the Seller,
for so long as the Professional Services Agreement is in effect, a
royalty-free, limited, exclusive, non-assignable (without the right to
sublicense) license for the Seller to use the name "MR Radiology Imaging of
Lower Manhattan" (the "Tradename") in the ordinary course of business in
connection with the day-to-day operation of the Practice and the provision of
services by Xxxxxx Xxxxx, M.D. pursuant to the terms of the Professional
Services Agreement. The Seller agrees that it shall use the Tradename only in a
professional manner, in a fashion designed to protect and enhance the value,
recognition and reputation of the Tradename and in accordance with all
applicable Laws. Notwithstanding the foregoing, the Seller shall not and shall
cause its and its affiliates' officers, directors, agents and shareholders not
to use the Tradename on or in connection with any contract or transaction, nor
incur any liability under the Tradename not in the ordinary course of Business
of the Practice without the prior written consent of the Purchaser. The Seller
acknowledges and agrees that the Purchaser shall continue to own all rights,
title and interest in and to the Tradename and does not convey any
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proprietary interest therein to the Seller other than the license rights
specifically granted in this Section 2.12. Immediately upon the termination of
the Professional Services Agreement all of the Seller's rights to use the
Tradename shall terminate and the Seller shall and shall cause its and its
affiliates' officers, directors, employees and agents to cease all use of the
Tradename.
3. Representations, Warranties and Covenants of the Seller.
The Seller hereby represents, warrants and covenants to the Purchaser as
follows:
3.1 Organization and Qualification. The Seller is a corporation duly
formed, validly existing and in good standing under the Laws of the State of
New York, has the requisite power and authority to carry on its business of
operating the Practice as it is now being conducted and to own the Acquired
Assets in connection therewith. The Seller is duly qualified or licensed as a
foreign entity, and is in good standing, to do business in the State of New
York.
3.2 Authority. The Seller has all requisite power and authority to enter
into this Agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement and the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Seller. This Agreement has been duly executed and delivered by the Seller and,
assuming due authorization, execution and delivery by the Purchaser, this
Agreement constitutes the valid and binding agreement of the Seller,
enforceable against it in accordance with its terms, except as may be limited
by bankruptcy, moratorium and insolvency Laws and other Laws affecting the
rights of creditors' generally and except as may be limited by the availability
of equitable remedies.
3.3 Compliance. None of the execution and delivery of this Agreement by the
Seller, the consummation by the Seller of the transactions contemplated hereby,
or compliance by the Seller with any of the provisions hereof, will (i)
violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the
Acquired Assets under, any of the terms, conditions or provisions of (x) the
organizational documents of the Seller, or (y) any Contracts to which the
Seller is a party or to which any of the Acquired Assets or the Practice may be
subject; or (ii) violate any Judgment applicable to either the Seller or to
which any of the Acquired Assets or the Practice may be subject, except for, in
the case of each of clauses (i)(y) and (ii) above, such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of Liens which
would not, individually or in the aggregate, have a Material Adverse Effect.
3.4 Title to Assets. The Seller owns and has good and marketable title to
or, in the case of leased properties, a valid leasehold interest in, all of the
Acquired Assets. Except as set forth in Schedule 3.4, the Seller holds title to
each Acquired Asset free and clear of all Liens, which title will be terminated
at the Closing in favor of the Purchaser.
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3.5 Contracts. Schedule 2.1(f) hereto contains a true and correct list of
the Contracts with respect to the Acquired Assets to which the Seller is a
party or to which the Acquired Assets are subject. The Seller is not, nor, to
the knowledge of the Seller, is any other party, in default under any of the
material Contracts.
3.6 Intellectual Property. To the knowledge of the Seller, the use of the
Intellectual Property by the Seller does not infringe upon or otherwise violate
the rights of any third party and no claim has been asserted with respect
thereto. The Seller is not aware of any claim which can be asserted by any
Person against the Seller with respect to the use of any item of Intellectual
Property or challenging or questioning the validity or effectiveness of such
use of any such item. No officer, director, stockholder or employee of the
Seller has a right to receive a royalty or similar payment, or has any other
monetary rights, in respect of any item of Intellectual Property.
3.7 Investment Intent. Seller is acquiring the Common Stock of the
Purchaser for its own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
3.8 Unregistered Securities. Seller understands that (i) the Common Stock
has not been registered under the Securities Act, by reason of its issuance by
the Company in a transaction exempt from the registration requirements of the
Securities Act and (ii) such Common Stock must be held by Seller indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration requirements.
3.9 Accredited Investor. The Seller is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act
because each stockholder of the Seller is an individual (a) whose net worth
exceeds $1,000,000 on the date hereof and (b) whose individual income exceeded
$200,000 in each of the two previous years and who has a reasonable expectation
of reaching the same income level in the current year.
3.10 Consents. No notice to, filing with, or Consent of, any Person is
necessary for the consummation by the Seller of the transactions contemplated
by this Agreement other than those Consents (i) that are specifically required
pursuant hereto, including the Schedules hereto, and (ii) the failure to obtain
of which would not have a Material Adverse Effect.
3.11 Permits and Licenses. Except as set forth on Schedule 3.11, all
licenses and permits issued by any Governmental Authority used by the Seller in
connection with the operation of the Practice at the Facility are in full force
and effect and the Seller has not committed any act or failed to take any
action which would (with notice or the lapse of time or both) result in the
revocation or suspension of any such licenses or permits or in any other
disciplinary action relating thereto nor has the Seller received any notice
that it has committed any such act or failed to so act.
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3.12 Employment Arrangements. Set forth on Schedule 3.12 hereto is a true
and complete list of all employees of Seller who are involved with the
Practice, the Facility or the Acquired Assets in any respect (the "Employees"),
together with a brief summary of their titles, duties, terms of employment and
compensation arrangements. Purchaser is under no obligation to, but may, offer
employment to any or all of these Employees. Seller is not a party to any
contract with any of its Employees, agents, consultants, officers,
salespersons, sales representatives, distributors or dealers that is not
cancelable by Seller or its assignee without penalty or premium on not more
than thirty (30) days' notice. The Seller shall be solely responsible for all
compensation accruing with respect to periods on or after the Closing Date with
respect to the Employees. The Seller shall be solely responsible for all
severance and termination payments, if any, to be paid on or after the Closing
Date with respect to the Employees.
3.13 Compliance With Laws. The Seller is in compliance with all Laws
applicable to the operation of the Practice at the facility, except for such
Laws the noncompliance which is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
3.14 Legal Proceedings. There is no action, suit, proceeding, complaint,
charge, Tax or other audit, investigation or arbitration or other method of
settling disputes or disagreements by or before any Governmental Authority
pending or, to the knowledge of the Seller, threatened against or affecting the
Acquired Assets or which questions the validity of this Agreement or any action
taken or to be taken by the Seller in connection with the transactions
contemplated hereby. There are no Judgments applicable to the Seller which
would affect the Acquired Assets.
4. Representations, Warranties and Covenants of the Purchaser.
The Purchaser hereby represents, warrants and covenants to the Seller as
follows:
4.1 Organization and Qualification. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State
of Delaware, and the Purchaser has the requisite corporate power and authority
to own its properties and carry on its business as it is now being conducted.
The Purchaser is duly qualified as a foreign corporation to do business, and is
in good standing, in each other jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary, except to the extent that any such failure so to
qualify would not, individually or in the aggregate, have a Material Adverse
Effect.
4.2 Authority. The Purchaser has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser and, assuming due authorization,
execution and delivery by the Seller, this Agreement constitutes the valid and
binding agreement of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as may be limited by bankruptcy, moratorium
and
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insolvency Laws and other Laws affecting the rights of creditors' generally and
except as may be limited by the availability of equitable remedies.
4.3 Compliance. None of the execution and delivery of this Agreement by the
Purchaser, the consummation by the Purchaser of the transactions contemplated
hereby, or compliance by the Purchaser with any of the provisions hereof, will
(i) violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, any of the
terms, conditions or provisions of (x) the organizational documents of the
Purchaser; or (y) any Contracts to which the Purchaser is a party or (ii)
violate any Judgment applicable to the Purchaser.
4.4 Consents. No notice to, filing with, or Consent of, any Person is
necessary for the consummation by the Purchaser of the transactions
contemplated by this Agreement.
5. Non-Competition; Non-Solicitation.
5.1 Non-Competition. During the term of the Professional Services Agreement
and for a period of eighteen (18) months thereafter, the Seller shall refrain
and shall cause its and its affiliates' officers, directors and shareholders to
refrain from directly or indirectly carrying on, engaging in, being employed
by, having a financial interest in or otherwise connected with a business
similar to the business of the Practice (as further described below) located in
the Borough of Manhattan, New York City, south of 42nd Street. For the purposes
of this Section, the business of the Practice includes the business of owning,
operating or managing diagnostic imaging centers and providing related
healthcare management services, as well as any business in which, at the
Closing Date, there was a bona fide intention on the part of either the
Purchaser or the Practice to engage in the future; provided, however, that only
businesses of the Purchaser or the Practice in which Seller, its or its
affiliates' officers, directors and shareholders were engaged or with respect
to which any of the foregoing had access to confidential information shall be
included within the scope of this description. The Purchaser agrees that the
performance by Xxxxxx Xxxxx, M.D. of the Professional Services Agreement shall
not be deemed to violate the foregoing non-compete covenant.
5.2 Non-Solicitation. Seller further agrees that, during the term of the
Professional Services Agreement and for a period of eighteen (18) months
thereafter, the Seller shall refrain and shall cause its and its affiliates'
officers, directors and shareholders to refrain from directly or indirectly
soliciting any patient, client, customer, employee or consultant of the
Practice or the Purchaser, including, for these purposes, any potential
patient, client, customer, employee or consultant who, at the Closing Date, had
been engaged in bona fide negotiations with the Practice or the Purchaser to
become a client, customer, employee or consultant, from taking any action which
may otherwise divert the clientele of the Practice or the Purchaser, and from
directly or indirectly seeking or otherwise actively assisting any employee or
consultant of the Practice or the Purchaser to leave the employ of or cease
consulting for the Practice or the Purchaser.
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5.3 Ownership of Certain Securities. Anything to the contrary herein
notwithstanding, the provisions of this Section shall not be deemed violated by
the purchase and/or ownership by Seller or any of its or its affiliates'
officers, directors or shareholders of shares of any class of equity securities
(or options, warrants or rights to acquire such securities, or any securities
convertible into such securities) representing (together with any securities
which would be acquired upon the exercise of any such options, warrants or
rights, or upon the conversion of any other security convertible into such
securities) two percent (2%) or less of the outstanding shares of any such
class of equity securities of any issuer whose securities are traded on a
national securities exchange or listed or quoted by The Nasdaq Stock Market,
the National Quotation Bureau Incorporated or any similar organization;
provided, however, that you shall not be otherwise connected with or active in
the business of the issuers described in this paragraph.
5.4 Remedies. Seller hereby acknowledges that in the event of any breach or
threatened breach by you of any of the provisions of this Section, the
Purchaser would have no adequate remedy at law and could suffer substantial and
irreparable damage. Accordingly, Seller agrees that, in such event, the
Purchaser shall be entitled, and notwithstanding any election by the Purchaser
to claim damages, to obtain a temporary and/or permanent injunction (without
proving a breach therefor) to restrain any such breach or threatened breach or
to obtain specific performance of any such provisions, all without prejudice to
any and all other remedies the Purchaser may have at law or in equity.
6. Indemnification.
6.1 Survival of Representations, Warranties, Covenants and Agreements. All
representations and warranties of the parties hereto included or provided for
herein shall survive for a period of twelve (12) months from the Closing Date;
provided, however, that the representations and warranties of the (i) Seller
set forth in Sections 3.2, 3.3, and 3.4 and (ii) Purchaser set forth in
Sections 4.2, 4.3 and 4.4 shall survive indefinitely. All covenants, agreements
and undertakings of the parties hereto included or provided for herein,
including, without limitation (i) the undertaking of the Purchaser set forth in
Section 2.3, and (ii) the covenants, agreements and undertakings of the Seller
set forth in Sections 3.7, 3.8, and 3.12, shall survive indefinitely.
6.2 General Indemnity.
(a) The Seller agrees to indemnify and hold harmless the Purchaser,
and all directors, officers, employees and representatives of the Purchaser,
against (A) any and all damage, loss, claim, expense, deficiency or cost in
connection with the breach or threatened breach by the Seller of any
representation, warranty or covenant made by the Seller hereunder or the
failure to comply or threatened failure to comply by the Seller with any
covenant, agreement or undertaking made by the Seller hereunder, (B) any and
all liabilities, obligations, costs and expenses associated with the Practice
or the Facility other than the Assumed Liabilities and (C) any and all actions,
suits,
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proceedings, demands, assessments, Judgments, costs, costs of collection and
legal and other expenses incident to any of the foregoing.
(b) The Purchaser agrees to indemnify and hold harmless the Seller,
and all directors, officers, employees and representatives of the Seller,
against (A) any and all damage, loss, claim, expense, deficiency or cost in
connection with the breach or threatened breach by the Purchaser of any
representation, warranty or covenant made by the Purchaser hereunder or the
failure to comply or threatened failure to comply by the Purchaser with any
covenant, agreement or undertaking contained herein, (B) any and all
liabilities, obligations, costs and expenses associated with the Assumed
Liabilities and (C) any and all actions, suits, proceedings, demands,
assessments, Judgments, costs, costs of collection and legal and other expenses
incident to any of the foregoing.
6.3 Reimbursement.
(a) Subject to Section 6.4, the Seller agrees to reimburse the
Purchaser on demand for any payment made by the Purchaser or any loss, damage,
cost or expense suffered by the Purchaser at any time after the date hereof in
respect of any matter to which the indemnity referred to in Section 5.2(a)
relates.
(b) Subject to Section 6.4 hereof, the Purchaser agrees to reimburse
the Seller on demand for any payment made by the Seller or any loss, damage,
cost or expense suffered by the Seller at any time after the date hereof in
respect of any matter to which the indemnity referred to in Section 5.2(b)
relates.
6.4 Claims.
(a) In the event that at any time a claim is made by any Person not a
party to this Agreement with respect to any matter to which the indemnity
provided for by Section 6.2(a) relates, the Purchaser, on not less than twenty
(20) days' notice to the Seller, may make settlement of such claim and such
settlement shall be binding upon the Seller; provided, however, that the Seller
shall have the option, to be exercised by notice to the Purchaser within ten
(10) days after such first mentioned notice shall have been given, to assume
the contest and defense of such claim; provided further, however, that the
Seller shall not be liable for any settlement of any such claim effected by the
Purchaser without the Seller's written consent but, if settled with the
Seller's written consent, the Seller agrees to indemnify and hold harmless the
Purchaser from and against any loss, liability, damage or expense by reason of
such settlement. If the Seller shall exercise such option, it shall have
control over such contest and defense and over the payment, settlement or
compromise of such claim, and the Purchaser agrees to cooperate fully with the
Seller and its attorneys with respect to such contest and defense. Any payment
or settlement resulting from such contest, together with the total expenses
thereof, including reasonable attorneys' fees, shall be binding upon the
Seller. Notwithstanding the foregoing, the Seller agrees that, without the
Purchaser's prior written consent, the Seller will not settle, compromise or
consent to the entry of any Judgment in any pending or
- 19 -
threatened claim in respect of which indemnification could be sought under the
indemnification provisions of this Section 6 (whether or not the Purchaser or
any other Person who may be indemnified hereunder is an actual or potential
party to such claim) unless such settlement, compromise or consent includes an
unconditional release of the Purchaser and each other Person who may be
indemnified hereunder from all loss, liability, damage or expense arising out
of such claim.
(b) In the event that at any time a claim is made by any Person not a
party to this Agreement with respect to any matter to which the indemnity
provided for by Section 6.2(b) relates, the Seller, on not less than twenty
(20) days' notice to the Purchaser, may make settlement of, such claim and such
settlement shall be binding upon the Purchaser; provided, however, that the
Purchaser shall have the option, to be exercised by notice to the Seller within
ten (10) days after such first mentioned notice shall have been given, to
assume the contest and defense of such claim; provided further, however, that
the Purchaser shall not be liable for any settlement of any such claim effected
by the Seller without its written consent but if settled with its written
consent, the Purchaser agrees to indemnify and hold harmless the Seller from
and against any loss, liability, damage or expense by reason of such
settlement. If the Purchaser shall exercise such option, it shall have control
over such contest and defense and over the payment, settlement or compromise of
such claim, and the Seller agrees to cooperate fully with the Purchaser and its
attorneys with respect to such contest and defense. Any payment or settlement
resulting from such contest, together with the total expenses thereof,
including but not limited to reasonable attorneys' fees, shall be binding upon
the Purchaser and the Seller. Notwithstanding the foregoing, the Purchaser
agrees that, without the prior written consent of the Seller, the Purchaser
will not settle, compromise or consent to the entry of any Judgment in any
pending or threatened claim in respect of which indemnification could be sought
under the indemnification provisions of this Section 6 (whether or not the
Seller or any other Person who may be indemnified hereunder is an actual or
potential party to such claim) unless such settlement, compromise or consent
includes an unconditional release of the Seller and each other Person who may
be indemnified hereunder from all loss, liability, damage or expense arising
out of such claim.
6.5 Disputes.
(a) If the Purchaser claims that the Seller is liable with respect to
any matter to which the foregoing indemnity relates, the Purchaser shall give
written notice to the Seller, which notice shall specify the amount claimed and
the facts upon which the claim is based. Each claim shall be deemed approved by
the Seller unless the Seller gives the Purchaser written notice of disapproval
within twenty (20) days of receipt of such claim. The parties shall undertake,
in good faith, to adjust any such claim which is so disapproved.
(b) If the Seller claims that the Purchaser is liable with respect to
any matter to which the foregoing indemnity relates, the Seller shall give
written notice to the Purchaser, which notice shall specify the amount claimed
and the facts upon which the claim is based. Each claim shall be deemed
approved by the Purchaser, unless the Purchaser gives the Seller written notice
of disapproval within
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twenty (20) days of receipt of such claim. The parties shall undertake, in good
faith, to adjust any such claim which is so disapproved.
7. Miscellaneous.
7.1 Legal and Accounting Expenses. Except as otherwise provided herein,
the Seller and the Purchaser shall each bear its own expenses in connection
with this transaction.
7.2 Publicity. At all times from the date hereof to the Closing, the
parties shall agree with each other as to timing and content prior to issuing
any announcement, press release, public statement or other information to the
press or any third party with respect to this Agreement or the transactions
contemplated hereby; provided, however, that nothing herein shall prohibit any
party to this Agreement from making any public disclosure regarding this
Agreement and the transactions contemplated hereby if, in the opinion of
counsel to such party, such disclosure is required by Law or by valid judicial
process.
7.3 Headings. Section headings contained in this Agreement are included for
convenience only and shall not affect the interpretation of any provisions of
this Agreement.
7.4 Notices. Any notice, demand, request, waiver, or other communication
under this Agreement shall be in writing (including facsimile or similar
writing) and shall be deemed to have been duly given (i) on the date of service
if personally served, (ii) on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid or (iii) on the date sent if sent by
facsimile, to the parties at the following addresses or facsimile numbers with
a copy sent by mail as aforesaid on the same date (or at such other address or
facsimile number for a party as shall be specified by like notice):
If to the Buyer, to
HealthCare Imaging Services, Inc.
Tri-Parkway Corporate Park
000 Xxxxxx Xxxxx - 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Seller, to:
Xxxxxx Xxxxx, M.D.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
7.5 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Neither of the parties hereto shall assign any rights or delegate any
duties hereunder without the prior written consent of the other
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party hereto, and any assignment made without such consent shall be void and
constitute a default hereunder.
7.6 Governing Law. This Agreement shall be construed in accordance with,
and governed by, the internal laws of the State of New York, without giving
effect to the principles of conflict of laws thereof. The parties agree that
any dispute arising out of or relating to this Agreement shall be resolved by
binding arbitration in the City of New York, State of New York, under the
Commercial Arbitration Rules of the American Arbitration Association. Each of
the parties hereto consents, for itself and in respect of its property, to the
jurisdiction and venue of the City of New York, State of New York for purposes
of this Section 7.6 and hereby irrevocably waives any objection, including any
objection to the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have to the bringing of any dispute in
the City of New York, State of New York, under the Commercial Arbitration Rules
of the American Arbitration Association, in respect of this Agreement or any
documents related thereto. Each of the parties hereto waives personal service
of any summons, complaint or other process, which may be made by any other
means permitted under the law of the State of New York.
7.7 Entire Agreement. This Agreement, including the Exhibits and Schedules,
sets forth the entire understanding and agreement of the parties with respect
to its subject matter and supersedes any and all prior understandings,
negotiations or agreements among the parties hereto, both written and oral,
with respect to such subject matter.
7.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which, when taken together, shall constitute one and the same agreement.
7.9 Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, in whole or in part, the validity of the
remaining provisions shall not be affected and the remaining portion of any
provision held to be invalid, illegal or unenforceable shall in no way be
affected, prejudiced or disturbed thereby.
7.10 No Prejudice. This Agreement has been jointly prepared and negotiated
by the parties hereto and the terms hereof shall not be construed in favor of
or against any party on account of its participation in such preparation.
7.11 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.
7.12 Amendment and Modification. This Agreement may be amended or modified
only by written agreement executed by all parties hereto.
- 22 -
7.13 Waiver. Each of the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (iii) waive compliance
with any of the covenants, agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed by the party granting
such waiver. Such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or future failure.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
HEALTHCARE IMAGING
SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board,
President and Chief
Executive Officer
M.R. RADIOLOGY IMAGING OF LOWER
MANHATTAN, P.C.
By: /s/ Xxxxxx Xxxxx, M.D.
--------------------------------
Name: Xxxxxx Xxxxx, M.D.
Title: President
The undersigned, Xxxxxx Xxxxx, M.D., hereby joins in the execution of this
Agreement only with respect to the provisions of Sections 5 and 6 hereof and
the enforceability thereof.
/s/ Xxxxxx Xxxxx, M.D.
--------------------------------
Xxxxxx Xxxxx, M.D.
- 23 -
SCHEDULE 2.1(a)
ACCOUNTS RECEIVABLE
Attached hereto are:
o M.R. Radiology Imaging of Lower Manhattan, P.C. - Accounts Receivable Due
Diligence memorandum dated 10/6/97
o Aged Trial Balance dated 1/1/90 - 10/30/97
- 24 -
SCHEDULE 2.1(c)
EQUIPMENT, MACHINERY, TOOLS, PERSONAL
PROPERTY AND OTHER PHYSICAL ASSETS
o One (1) G.E. MR MAX .5 Tesla MRI Unit with coils: knee, head, lumbar spine,
cervical spine, shoulder and body
o One (1) G.E. laser printer
o One (1) Fuji FPM 2100 processor
o One (1) Hitachi Ultrasound unit EUB 405 Plus with two probes
o Panther II telephone system with eight (8) phones
o Assorted office furniture
Assorted Leased Office Equipment
o Digital dictation system model # 9906
o Postage machine model # E500
o ADS Billing/Radiology transcription system
o Xerox 5328 copy machine
- 25 -
SCHEDULE 2.1(d)
LEASEHOLD INTERESTS RELATING TO PERSONAL PROPERTY
None
- 26 -
SCHEDULE 2.1(e)
CONTRACTS
Various Contracts:
o RDS Deliver Service - For MRI Month to Month
o ADEQ Inc. - MR Scanner Maintenance Service Month to Month
o SwissRay Empower, Inc. - Month to Month
Service Agreement for Fuji 2100 X-ray Processor
o HealthSource/Chubb - Health Insurance Expires: June 1998
o Pitney Xxxxx - Postange Machine lease Contracts*
Pitney Xxxxx - Digital System
o Purchase Power - Postage by Phone account Revolving credit line
o Great Bear - Water cooler delivery Month to Month
* In process of obtaining.
- 27 -
SCHEDULE 2.1(f)
PROPERTY LEASE
Property Lease attached hereto.
- 28 -
SCHEDULE 2.1(g)
PERMITS, CONSENTS, PLANS, REGISTRATIONS
Attached hereto, Xxxxxx Xxxxx, M.D., License to Practice in the State of New
York.
- 29 -
SCHEDULE 2.1(h)
OFFICE AND OTHER SUPPLIES AND INVENTORY
o Two (2) Optical Discs - not used
o Twelve (12) Vials Contrast - 15 ml Magnonist
o Eleven (11) Boxes Film
o Seven (7) Boxes Developer
o Five (5) Boxes Fixer
o One (1) Filing Cabinet - 5 drawer
o Three (3) Filing Cabinets - 4 drawer
o One (1) Metal Shelf
o Two (2) IBM Wheelwriter Typewriters
o Two (2) Xxxx Rolling Carts
o One (1) Stretcher
o Four (4) sets of View Boxes
o One (1) Water Cooler
- 30 -
SCHEDULE 2.3
DVI CAPITAL LEASE
Lease attached hereto.
- 31 -
SCHEDULE 3.4
LIENS
None.
- 32 -
SCHEDULE 3.11
EXCEPTED PERMITS AND LICENSES
None.
- 33 -
SCHEDULE 3.12
EMPLOYEES AND EMPLOYMENT ARRANGEMENTS
Xxxxxxx, Xxxxx X. SS #: ###-##-#### DOB: 6/28/52
0 Xxxx Xxxx Xxxx Xxxxxx Hire Date: 10/21/94 Salary: $74,500
Xxx Xxxxx, XX 00000
Position: Technician
Hao, Xxxxx X. SS #: ###-##-#### DOB: 4/18/49
65-31 164 Street Hire Date: 7/91 Salary: $32,500
Xxxxx Xxxxxxx, XX 00000
Position: Transcriptionist
Xxxxx, Xxxxxxxx X. SS #: ###-##-#### DOB: 9/04/60
31 Xxxx xxxx Hire Date: 2/77 Salary: $42,000
Xxxx Xxxxxxx, XX 00000
Position: Office Manager
Attached hereto is the most recent Payroll Journal for the period ending
10/24/97.
- 34 -
SCHEDULE 4.5
CERTAIN EMPLOYEES TO BE RETAINED
Xxxxxxx, Xxxxx X. SS #: ###-##-#### DOB: 6/28/52
0 Xxxx Xxxx Xxxx Xxxxxx Hire Date: 10/21/94 Salary: $74,500
Xxx Xxxxx, XX 00000
Position: Technician
Hao, Xxxxx X. SS #: ###-##-#### DOB: 4/18/49
65-31 164 Street Hire Date: 7/91 Salary: $32,500
Xxxxx Xxxxxxx, XX 00000
Position: Transcriptionist
Xxxxx, Xxxxxxxx X. SS #: ###-##-#### DOB: 9/04/60
31 Xxxx xxxx Hire Date: 2/77 Salary: $42,000
Xxxx Xxxxxxx, XX 00000
Position: Office Manager
- 35 -
SCHEDULE 5.1
BUSINESS LOCATIONS
One (1) Location: M.R. Radiology Imaging of Lower Manhattan, P.C.
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
- 36 -
