EXHIBIT 2.1
RECAPITALIZATION AGREEMENT
DATED AS OF JULY 16, 2002
BY AND AMONG
MQ INVESTMENT HOLDINGS, LLC,
AS THE BUYER,
MQ ASSOCIATES, INC.,
AS THE COMPANY,
THE STOCKHOLDERS OF THE COMPANY
AND
XXXXX XXXX
AND
XXXX XXXXXXX,
AS STOCKHOLDERS' REPRESENTATIVES
TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE OF COMMON AND PREFERRED STOCK;
REDEMPTION AND EXCHANGE; CLOSING...............................................2
1.1 Certain Definitions..................................................2
1.2 Conversion...........................................................4
1.3 Purchase and Sale Obligation.........................................4
1.4 Financing; Redemption and Reclassification...........................4
1.5 Closing Date Payments................................................5
1.6 Updated Schedule 1.4.................................................6
1.7 Payment of Funded Indebtedness and Capital Leases....................6
1.8 Time and Place of Closing............................................6
1.9 Transactions to Occur at the Closing.................................7
1.10 Treatment of Recapitalization........................................9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................9
2.1 Existence; Good Standing; Authority..................................9
2.2 Capitalization; Subsidiaries........................................10
2.3 No Conflict.........................................................11
2.4 Financial Statements................................................12
2.5 Absence of Undisclosed Liabilities..................................12
2.6 Absence of Certain Changes..........................................12
2.7 Consents and Approvals..............................................15
2.8 Litigation..........................................................15
2.9 Taxes...............................................................15
2.10 Employee Benefit Plans..............................................18
2.11 Real and Personal Property..........................................20
2.12 Labor and Employment Matters........................................21
2.13 Contracts and Commitments...........................................22
2.14 Intellectual Property...............................................23
2.15 Environmental Matters...............................................24
2.16 Insurance...........................................................24
2.17 Brokers; No Other Potential Transactions............................25
2.18 Accounts and Notes Receivable.......................................25
2.19 Accounts and Notes Payable..........................................25
2.20 Bank Accounts; Powers of Attorney...................................25
2.21 Compliance with Laws................................................26
2.22 Regulated Customers.................................................26
2.23 Certain Payments....................................................26
2.24 Related Transactions................................................27
2.25 Inspections and Investigations......................................27
2.26 Medicare Participation..............................................27
2.27 Fraud and Abuse.....................................................28
2.28 False Claims........................................................28
2.29 Disclosure..........................................................28
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS................28
3.1 Title to Shares.....................................................28
3.2 Existence; Good Standing; Authority.................................29
3.3 No Conflict.........................................................29
3.4 Consents............................................................30
3.5 Brokers; No Other Potential Transactions............................30
3.6 Tax Matters.........................................................30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER........................30
4.1 Existence; Good Standing; Authority.................................30
4.2 No Conflict.........................................................31
4.3 Consents and Approvals..............................................31
4.4 Litigation..........................................................31
4.5 Financing...........................................................32
4.6 Brokers.............................................................32
4.7 Accredited Investor; Knowledgeable Investor.........................32
ARTICLE V CERTAIN COVENANTS OF THE BUYER, THE COMPANY AND THE STOCKHOLDERS....32
5.1 Affirmative Covenants...............................................32
5.2 Negative Covenants..................................................33
5.3 Investigation.......................................................35
5.4 Access to Information...............................................35
5.5 Confidentiality.....................................................36
5.6 Regulatory and Other Authorizations; Consents.......................36
5.7 Further Action......................................................36
5.8 Press Releases......................................................36
5.9 No Solicitation.....................................................37
5.10 Funded Indebtedness and Capital Lease Obligations...................37
5.11 Use of Name.........................................................38
5.12 Taxes...............................................................38
5.13 Creation of MedQuest, Inc...........................................38
5.14 Option Plan.........................................................38
5.15 Updated Financials..................................................39
ARTICLE VI EMPLOYEE MATTERS...................................................39
6.1 Employees...........................................................39
6.2 Employee Benefits...................................................40
6.3 Other Employee Benefits.............................................40
6.4 Benefit Plan Corrections............................................40
6.5 No Third Party Beneficiaries........................................40
ARTICLE VII TAX MATTERS.......................................................40
7.1 Conveyance Taxes; Costs.............................................40
7.2 Treatment of Indemnity Payments.....................................41
7.3 Payment of Delinquent Taxes.........................................41
7.4 Responsibility for Filing Tax Returns...............................41
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7.5 Payment of Covered Taxes............................................41
7.6 Refunds and Tax Benefits............................................41
ARTICLE VIII CONDITIONS TO CLOSING............................................42
8.1 Conditions to Obligations of the Company and the Stockholders.......42
8.2 Conditions to Obligations of the Buyer..............................43
ARTICLE IX INDEMNIFICATION....................................................45
9.1 Survival............................................................45
9.2 Indemnification by the Stockholders.................................45
9.3 Indemnification by the Buyer........................................50
9.4 Payment of Claims; Right of Set-Off.................................52
9.5 No Contribution from the Company....................................53
9.6 Directors' and Officers' Insurance..................................53
9.7 General Release.....................................................53
9.8 Termination of Related Transactions.................................54
ARTICLE X MISCELLANEOUS.......................................................55
10.1 Termination.........................................................55
10.2 Effect of Termination...............................................56
10.3 Waiver..............................................................56
10.4 Appointment of Stockholders' Representatives........................56
10.5 Non-Compete; Non-Solicitation.......................................58
10.6 InMed Litigation....................................................58
ARTICLE XI GENERAL PROVISIONS.................................................59
11.1 Notices.............................................................59
11.2 Fees and Expenses...................................................61
11.3 Interpretation; Construction........................................61
11.4 Counterparts........................................................62
11.5 Amendments..........................................................62
11.6 Entire Agreement; No Third-Party Beneficiaries; Severability........62
11.7 Governing Law.......................................................63
11.8 Assignment..........................................................63
11.9 Consent to Jurisdiction.............................................63
11.10 Remedies............................................................63
11.11 Waiver of Jury Trial................................................63
11.12 Independence of Covenants and Representations and Warranties........63
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EXHIBITS
Exhibit A Stockholders and Company Shares; Allocation of Purchase Price
Exhibit B Third Restated Charter
Exhibit C Fourth Restated Charter
Exhibit D Form of Spousal Consent
Exhibit E Commitment Letter
Exhibit F Confidentiality Agreement
Exhibit G Terms of Option Plan
Exhibit H Form of Solvency Opinion
Exhibit I Form of Employment Agreement
Exhibit J Form of Stockholders' Agreement
SCHEDULES
SECTION TITLE
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Schedule 1.2 Converted Shares
Schedule 1.4 Redemption and Exchange
Schedule 2.1(a) Organization and Good Standing of the Company
Schedule 2.1(b) Organization and Good Standing of the Subsidiaries
Schedule 2.2(a) Company Capitalization
Schedule 2.2(b) Subsidiaries
Schedule 2.2(c) Other Interests
Schedule 2.3 Conflicts
Schedule 2.4 Financial Statements
Schedule 2.5 Absence of Undisclosed Liabilities
Schedule 2.6 Absence of Certain Changes
Schedule 2.7(a) Government Consents
Schedule 2.7(b) Third-Party Consents
Schedule 2.8 Litigation
Schedule 2.9(a) Taxes
Schedule 2.9(b) Tax Return Jurisdictions
Schedule 2.10(b) Employee Benefit Plans
Schedule 2.10(c) Employee Benefit Plans Exceptions
Schedule 2.11(a) Leased Real Property
Schedule 2.11(b) Owned Real Property
Schedule 2.11(c) Personal Property
Schedule 2.12(a) Employment Matters
Schedule 2.12(b) Labor Matters
Schedule 2.13(a) Certain Contracts and Commitments
Schedule 2.13(b) Certain Contract Exceptions
Schedule 2.14 Intellectual Property
Schedule 2.15 Environmental Permits
Schedule 2.16 Insurance
Schedule 2.18 Accounts and Notes Receivable
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Schedule 2.19 Accounts and Notes Payable
Schedule 2.20 Bank Accounts; Power of Attorney
Schedule 2.21 Compliance with Laws
Schedule 2.24 Related Party Transactions
Schedule 2.25 Inspections and Investigations
Schedule 2.26 Qualifications; Medicare Provider Numbers
Schedule 3.1 Title to Shares
Schedule 3.4 Stockholder Consents
Schedule 4.3 Buyer Consents
Schedule 5.1 Conduct of Business
Schedule 5.1(b) Inactive Subsidiaries
Schedule 5.2(i) Acquisitions
Schedule 5.2(k) Indebtedness
Schedule 5.2(q) Litigation
Schedule 5.10 Funded Indebtedness
Schedule 6.3 Severance Arrangements
Schedule 9.8 Termination of Related Transactions
Schedule 10.5(a) Non-Compete; Non-Solicitation
ANNEXES
Annex A Certain Definitions
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RECAPITALIZATION AGREEMENT
This
RECAPITALIZATION AGREEMENT (this "AGREEMENT") is dated as of July
16, 2002, by and among MQ ASSOCIATES, INC., a Delaware corporation (the
"COMPANY"), MQ INVESTMENT HOLDINGS, LLC, a Delaware limited liability company
(the "BUYER"), Xxxxx Xxxx and Xxxx Xxxxxxx as the Stockholders' Representatives,
and the stockholders of the Company listed on the signature pages hereto (each,
a "STOCKHOLDER" and collectively, the "STOCKHOLDERS").
WHEREAS, the Company is engaged in the business of providing fixed-site
outpatient single and multi-modality diagnostic imaging services (the "SUBJECT
BUSINESS");
WHEREAS, the Stockholders own beneficially and of record all of the
issued and outstanding shares of capital stock of the Company (collectively, the
"COMPANY SHARES"), in such amounts and of such classes as set forth on EXHIBIT A
hereto;
WHEREAS, immediately prior to the Purchase (as contemplated by SECTION
1.3), the Company intends to amend and restate in its entirety its second
amended and restated certificate of incorporation, substantially in the form of
EXHIBIT B hereto (the "THIRD RESTATED CHARTER"), pursuant to which, among other
things, the Company will authorize the issuance of shares of (i) Class C Common
Stock, $.001 par value per share (the "CLASS C COMMON STOCK"), and (ii) Series E
Preferred Stock, $.001 par value per share (the "SERIES E PREFERRED STOCK"), in
each case with the rights, preferences, powers, designations, limitations and
restrictions therefor as set forth in the Third Restated Charter;
WHEREAS, the Company wishes to issue and sell shares of Class C Common
Stock and Series E Preferred Stock to the Buyer, and the Buyer wishes to
purchase shares of Class C Common Stock and Series E Preferred Stock from the
Company, upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, immediately following the Purchase, the Company intends to
enter into financing arrangements with the Lenders upon terms mutually
acceptable to the Company and the Buyer (the "FINANCING"), the proceeds of which
will be used by the Company to, in part, purchase and redeem shares of capital
stock pursuant to the Redemption and repay outstanding Funded Indebtedness and
Capital Lease Obligations of the Company and its Subsidiaries as of the Closing
in accordance with SECTION 1.7;
WHEREAS, immediately following the Purchase, the Stockholders will sell
and the Company will purchase and redeem from the Stockholders (i) approximately
7,488,185 shares of the Company's existing Common Stock, par value $0.01 per
share (the "COMMON STOCK"), (ii) approximately 51,057 shares of the Company's
existing Class B Common Stock, par value $0.01 per share (the "EXISTING CLASS B
COMMON STOCK"), (iii) an aggregate of 1,276,000 shares of the Company's existing
Series A Redeemable Preferred Stock, par value $0.01 per share (the "EXISTING
SERIES A PREFERRED STOCK"), which shares will be issued and outstanding upon the
conversion set forth in SECTION 1.2, (iv) an aggregate of 680,000 shares of the
Company's existing Series B Redeemable Preferred Stock, par value $0.01 per
share (the "EXISTING SERIES B PREFERRED STOCK"), which shares will be issued and
outstanding upon the
conversion set forth in SECTION 1.2, and (v) Convertible Notes dated March 30,
2001 issued by the Company in an aggregate principal amount of $8,800,000 (the
"TA NOTES") upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, immediately following the aforementioned redemption, the
Company intends to amend and restate in its entirety the Third Restated Charter,
substantially in the form of EXHIBIT C hereto (the "FOURTH RESTATED CHARTER"),
pursuant to which, among other things, the Company will (i) authorize the
issuance of shares of (A) Class A Common Stock, $0.001 par value per share (the
"NEW CLASS A COMMON STOCK"), and (B) Preferred Stock, $0.001 par value per
share, which will be designated as (1) Series A Preferred Stock (the "NEW SERIES
A PREFERRED STOCK"), and (2) Series B Preferred Stock (the "NEW SERIES B
PREFERRED STOCK"), in each case with the rights, preferences, powers,
designations, limitations and restrictions therefor as set forth in the Fourth
Restated Charter, and (ii) reclassify (A) shares of Common Stock and shares of
Existing Class B Common Stock outstanding immediately following the Redemption
as shares of common stock, $0.001 par value per share (the "NEW COMMON STOCK")
and shares of New Series B Preferred Stock, (B) shares of Class C Common Stock
as shares of New Class A Common Stock, and (C) shares of Series E Preferred
Stock as shares of New Series A Preferred Stock; and
WHEREAS, unless otherwise defined herein, capitalized terms used herein
shall have the respective meaning ascribed to them on ANNEX A attached hereto.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF COMMON AND PREFERRED STOCK; REDEMPTION
AND EXCHANGE; CLOSING
1.1 CERTAIN DEFINITIONS.
The following terms used in this ARTICLE I shall have the following
meanings:
"AGGREGATE PURCHASE PRICE" means an amount equal to
$108,439,385.00.
"AGGREGATE REDEMPTION PRICE" means an amount equal to (i) the
result of (x) $350,000,000 MINUS (y) the Xxxxxx Amount minus (ii) the result of
(A) the aggregate amount required to pay off all outstanding Funded Indebtedness
of the Company and its Subsidiaries as of the Closing Date (immediately prior to
consummation of the Closing and not including the Xxxxxx Note Amount or the
principal and interest component of the TA Note Purchase Amount) PLUS (B) the
aggregate amount required to pay off all Capital Lease Obligations of the
Company and its Subsidiaries as of the Closing Date (immediately prior to
consummation of the Closing) PLUS (C) the TA Note Purchase Amount PLUS (D) the
Change in Control Payment Amount.
"CAPITAL LEASE OBLIGATIONS" means the obligations (including all
prepayment or other similar fees, expenses or penalties on or relating to the
repayment or assumption thereof) of
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the Company and its Subsidiaries, on a consolidated basis, to pay rent or other
amounts under any lease of (or other arrangement covering the right to use) real
or personal property, which obligations are required to be classified and
accounted for as capital leases on a consolidated balance sheet of the Company
as of such date computed in accordance with GAAP, consistently applied with the
Financial Statements.
"CHANGE IN CONTROL PAYMENT AMOUNT" means the aggregate amount of
(i) any and all fees and expenses required to be paid by the Company or any
Subsidiary, regardless of when such payments are required to be actually made,
to X.X. Xxxxxx Securities Inc. ("JPMSI") in its capacity as advisor to the
Company and its Subsidiaries and (ii) any and all payments required to be made
by the Company or any Subsidiary to any current or former consultant, employee,
director or officer, regardless of when such payments are required to be
actually made, whether pursuant to written agreements, employee or executive
incentive or bonus arrangements, or otherwise, as a result of the closing of the
transactions contemplated by this Agreement.
"COMMON STOCK PER SHARE REDEMPTION AMOUNT" means that amount set
forth on SCHEDULE 1.4.
"EXISTING CLASS B COMMON STOCK PER SHARE REDEMPTION AMOUNT"
means that amount set forth on SCHEDULE 1.4.
"EXISTING SERIES A PREFERRED STOCK PER SHARE REDEMPTION AMOUNT"
means that amount set forth on SCHEDULE 1.4.
"EXISTING SERIES B PREFERRED STOCK PER SHARE REDEMPTION AMOUNT"
means that amount set forth on SCHEDULE 1.4.
"FUNDED INDEBTEDNESS" means, without duplication, the aggregate
amount (including the current portions thereof) of all (i) indebtedness for
money borrowed and purchase money indebtedness (other than accrued expenses and
accounts payable in the ordinary course) of the Company and its Subsidiaries;
(ii) indebtedness of the type described in CLAUSE (i) above guaranteed, directly
or indirectly, in any manner by the Company and its Subsidiaries or in effect
guaranteed, directly or indirectly, in any manner by the Company and its
Subsidiaries through an agreement, contingent or otherwise, to supply funds to,
or in any other manner invest in, the debtor, or to purchase indebtedness, or to
purchase and pay for property if not delivered or pay for services if not
performed, primarily for the purpose of enabling the debtor to make payment of
the indebtedness or to assure the owners of the indebtedness against loss (any
such arrangement being hereinafter referred to as a "GUARANTY") (but the term
"Guaranty" shall exclude endorsements of checks and other instruments in the
ordinary course); (iii) all interest expense accrued but unpaid on or relating
to any of such indebtedness; and (iv) all prepayment or other similar fees,
expenses or penalties on or relating to the repayment or assumption of any of
such indebtedness.
"NEW BOARD" means those individuals appointed to the Board of
Directors of the Company immediately following the Purchase in accordance with
the Stockholders' Agreement.
"PER SHARE REDEMPTION AMOUNT" means, as applicable, the Common
Stock Per Share Redemption Amount, the Existing Class B Common Stock Per Share
Redemption
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Amount, the Existing Series A Preferred Stock Per Share Redemption Amount, and
the Existing Series B Preferred Stock Per Share Redemption Amount.
"REDEEMED SHARES PERCENTAGE" shall mean, for each Stockholder,
the percentage set forth opposite such Stockholder's name on SCHEDULE 1.4.
"ROLLOVER STOCKHOLDERS" means each of Xxxx Xxxxxxx, J. Xxxxxxx
Xxxx, Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxx.
"TA NOTE PURCHASE AMOUNT" means an amount equal to the sum of
(x) $8,800,000 plus any accrued but unpaid interest thereon through the Closing
Date, PLUS (y) the result of (i) the product of (X) the Common Stock Per Share
Redemption Amount and (Y) 88,608 MINUS (ii) $880.00.
"XXXXXX AMOUNT" means the sum of (i) the aggregate amount of
principal and interest outstanding as of the Closing Date (whether or not due
and payable as of such date) under that certain Subordinated Promissory Note
made as of July __, 1997, by Xxxxxxxx Diagnostic Imaging, Inc. in favor of
Xxxxxx Xxxxxx, III, M.D., P.A., in the aggregate principal amount of $250,000
PLUS (ii) any and all amounts to be paid (whether or not due and payable as of
the Closing Date) pursuant to that certain Noncompetition Agreement dated as of
__________, 1997, by and between Xxxxxxxx Diagnostic Imaging, Inc., Xxxxxx
Xxxxxx, III, M.D. and Xxxxxx Xxxxxx, III, M.D., P.A.
1.2 CONVERSION.
On or prior to the Closing Date, the holders of the Company's existing
Series A Convertible Participating Preferred Stock, par value $.01 per share,
and the Company's existing Series C Convertible Participating Preferred Stock,
par value $.01 per share, shall convert such shares into such number and class
of shares as set forth on SCHEDULE 1.2 hereto (collectively, the "CONVERTED
SHARES").
1.3 PURCHASE AND SALE OBLIGATION.
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing the Company shall (a) file the Third Restated Charter
and (b) immediately thereafter, issue and sell to the Buyer, and the Buyer shall
purchase, acquire and accept from the Company, for the Aggregate Purchase Price,
72,939,385 shares of Class C Common Stock and 35,500,000 shares of Series E
Preferred Stock (collectively, the "PURCHASED SHARES"), and such Purchased
Shares shall be delivered by the Company to the Buyer free and clear of all
Encumbrances (the "PURCHASE").
1.4 FINANCING; REDEMPTION AND RECLASSIFICATION.
(a) Immediately following the Purchase:
(i) immediately prior to the Financing, the Company
shall accept the resignations of all directors of the Company, and the
New Board shall be appointed;
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(ii) the Company and its Subsidiaries shall
consummate the Financing; and
(iii) the Company shall repurchase and redeem the
Converted Shares and that number of shares of Common Stock and Existing
Class B Common Stock as set forth on SCHEDULE 1.4 hereto (collectively,
the "REDEEMED SHARES"), in each case at the applicable Per Share
Redemption Amount, from those Stockholders and in such amounts as set
forth on SCHEDULE 1.4 hereto, (the "REDEMPTION") and (B) repurchase the
TA Notes for the TA Note Purchase Amount.
(b) Immediately following the Redemption and the repurchase
of the TA Notes, the Company shall file the Fourth Restated Charter and, in
accordance with the terms thereof:
(i) (A) such number of shares of Common Stock and
Existing Class B Common Stock set forth opposite each Rollover
Stockholder's name on SCHEDULE 1.4 hereto shall be reclassified into and
exchanged for such number of shares of New Common Stock and New Series B
Preferred Stock set forth opposite such Rollover Stockholder's name on
SCHEDULE 1.4 (such shares of New Series B Preferred Stock, together with
the shares of New Common Stock, the "ROLLOVER SHARES");
(ii) all issued and outstanding shares of Class C
Common Stock shall be reclassified as shares of New Class A Common Stock
and all issued and outstanding shares of Series E Preferred Stock shall
be reclassified as shares of New Series A Preferred Stock (such
reclassification, together with the reclassification of those certain
shares of Common Stock and Existing Class B Common Stock pursuant to
PARAGRAPH (i) above, the "RECLASSIFICATION", and such shares of New
Class A Common Stock and New Series A Preferred Stock, the "RECLASSIFIED
BUYER SHARES"); and
(iii) the Company shall deliver to (A) each Rollover
Stockholder a certificate or certificates representing the Rollover
Shares and (B) the Buyer a certificate or certificates representing the
Reclassified Buyer Shares, in each case duly registered in the name of
such Rollover Stockholder and the Buyer, as the case may be, on the
books and records of the Company.
1.5 CLOSING DATE PAYMENTS.
On the Closing Date, the following payments shall be made by wire
transfer of immediately available funds as follows:
(i) by the Buyer to the Company, an amount equal to
the Aggregate Purchase Price as consideration for the Purchased Shares
purchased pursuant to SECTION 1.3, to the account designated in writing
by the Company at least two Business Days prior to the Closing Date;
(ii) by the Company to each Stockholder, an amount
equal to the applicable Per Share Redemption Amount for each Redeemed
Share being redeemed by the Company from such Stockholder pursuant to
SECTION 1.4(a)(iii), to the account designated in writing by each
Stockholder to the Company at least two Business Days prior to the
Closing Date; and
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(iii) by the Company to the holders of the TA Notes,
an amount equal to the TA Note Purchase Amount as consideration for the
TA Notes being repurchased pursuant to SECTION 1.4(a)(iii), to the
account designated in writing by such holders at least two Business Days
prior to the Closing Date.
1.6 UPDATED SCHEDULE 1.4.
One Business Day prior to the Closing Date, the Company shall deliver to
the Buyer a revised SCHEDULE 1.4 (such Schedule to be mutually agreed upon by
the Buyer and the Company), which shall include any adjustments to such Schedule
as may be required after giving effect to any changes to the aggregate amount of
outstanding Funded Indebtedness and Capital Lease Obligations of the Company and
its Subsidiaries as of the Closing Date.
1.7 PAYMENT OF FUNDED INDEBTEDNESS AND CAPITAL LEASES.
(a) On the Closing Date, the Company shall direct the
Lenders to deliver to the holders of Funded Indebtedness and Capital Lease
Obligations (subject to SECTION 1.7(b) below) an amount sufficient to repay all
Funded Indebtedness and Capital Lease Obligations outstanding as of the Closing
Date, with the result that immediately following the Closing there will be no
further monetary obligations of the Company or any Subsidiary with respect to
any Funded Indebtedness or Capital Lease Obligations outstanding immediately
prior to the Closing. On the Closing Date, the Company will deliver to the Buyer
and such Lenders customary pay-off letters from all holders of Funded
Indebtedness and Capital Lease Obligations in form and substance satisfactory to
such Lenders, and make arrangements satisfactory to such Lenders for such
holders to provide to such Lenders recordable form mortgage and lien releases,
canceled notes, trademark and patent assignments and other documents requested
by such Lenders simultaneously with or promptly following the Closing. The Buyer
and the Company may agree that the Company may pay off any Funded Indebtedness
or Capital Lease Obligations with any cash or cash equivalents available to the
Company on the Closing Date.
(b) If the Buyer and the Company mutually agree that the
Company shall not pay off any Funded Indebtedness or one or more Capital Lease
Obligations at the Closing, then such Funded Indebtedness or Capital Lease
Obligation(s) shall not be paid off, and the aggregate outstanding principal
amount due on such Funded Indebtedness or Capital Lease Obligation(s) as of the
Closing Date (exclusive of any prepayment premiums or penalties) shall be used
to decrease the Aggregate Redemption Price, it being understood that the Xxxxxx
Amount shall remain outstanding following the Closing and, other than as
specifically set forth in the definition of "Aggregate Redemption Price", such
Xxxxxx Amount shall not be used to decrease the Aggregate Redemption Price
pursuant to this SECTION 1.7(b).
1.8 TIME AND PLACE OF CLOSING.
The closing of the Purchase, Financing and Redemption, and the delivery
of all documents and instruments necessary to consummate the transactions
contemplated by this Agreement (the "CLOSING"), shall be held at the offices of
X'Xxxxxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other
place as the parties hereto may mutually determine, on a date to be mutually
agreed upon by the Buyer and the Stockholders' Representatives, which
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date shall be not later than the third Business Day after all of the conditions
set forth in ARTICLE VIII have been satisfied or waived (other than those
conditions which by their terms are intended to be satisfied at the Closing).
The date on which the Closing is actually held hereunder is sometimes referred
to herein as the "CLOSING DATE".
1.9 TRANSACTIONS TO OCCUR AT THE CLOSING.
(a) At the Closing, the Company will deliver or cause to be
delivered to the Buyer the following:
(i) certificates evidencing the Purchased Shares,
duly registered in the Buyer's name on the books and records of the
Company;
(ii) the minute books and stock transfer books of the
Company and its Subsidiaries;
(iii) an officer's certificate, dated as of the
Closing Date and duly executed by an authorized officer of the Company,
certifying (i) that attached thereto are true and complete copies of the
Organizational Documents of the Company and each of its Subsidiaries and
all amendments thereto as in effect on such date; (ii) that attached
thereto are correct and complete copies of the requisite board,
stockholder or other authorizing resolutions of the Company and its
Subsidiaries authorizing this Agreement, the Related Documents to which
the Company or any Subsidiary is a party and the transactions
contemplated thereby and hereby; (iii) as to the incumbency and
genuineness of the signature of each officer of the Company or any
Subsidiary executing this Agreement and each Related Document to which
the Company or any Subsidiary is a party; and (iv) that the Company is
not, as of the Closing Date, nor has it ever been, a "U.S. real property
holding corporation";
(iv) duly executed counterparts of each of the
Closing Documents to which the Stockholders, the Stockholders'
Representative, the Company or any Subsidiary is a party, as applicable;
(v) opinion(s) of Xxxxxxx Procter LLP and such other
legal counsel for the Company, its Subsidiaries and the Stockholders as
are acceptable to the Buyer, such opinions to be dated as of the Closing
Date and in a form mutually agreed to by the Buyer and the Company;
(vi) a duly executed CapEx Certificate;
(vii) duly executed resolutions of the Stockholders
and the boards of directors of the Company and each of its Subsidiaries,
ratifying all respective actions taken by the respective officers and
directors of the Company and each of its Subsidiaries prior to the
Closing;
(viii) evidence in form and substance satisfactory to
the Buyer in its sole discretion that each Subsidiary is wholly-owned,
directly or indirectly, by the Company;
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(ix) each of the certificates and other documents
required to be delivered at the Closing pursuant to SECTION 8.2 hereof;
and
(x) evidence in form and substance satisfactory to
the Buyer (including a certification dated the Closing Date by an
officer of the Company) that the Company has not less than $1,000,000.00
cash on hand and available as of the Closing.
(b) At the Closing, the Buyer will deliver or cause to be
delivered to the Company the following:
(i) the Aggregate Purchase Price in accordance with
CLAUSE (i) of SECTION 1.5;
(ii) an officer's certificate, dated as of the
Closing Date and duly executed by an authorized officer of the Buyer,
certifying (A) that attached thereto are true and complete copies of the
Organizational Documents of the Buyer and all amendments thereto as in
effect on such date; and (B) as to the incumbency and genuineness of the
signature of each officer of the Buyer executing this Agreement and each
Closing Document to which the Buyer is a party;
(iii) duly executed counterparts of each of the
Closing Documents to which the Buyer is a party; and
(iv) each of the certificates and other documents
required to be delivered at the Closing pursuant to SECTION 8.1 hereof.
(c) At the Closing, each Stockholder and each Rollover
Stockholder, as applicable, will deliver or cause to be delivered to the Company
the following:
(i) a certificate or certificates evidencing the
Redeemed Shares to be redeemed from such Stockholder pursuant to the
Redemption, duly endorsed in blank for transfer or accompanied by stock
powers duly executed in blank, free and clear of all Encumbrances;
(ii) a certificate or certificates evidencing the
shares held by such Rollover Stockholder which are to be reclassified
pursuant to the Reclassification, duly endorsed in blank for transfer or
accompanied by stock powers duly executed in blank, free and clear of
all Encumbrances;
(iii) the TA Notes;
(iv) a certificate or certificates evidencing the
shares to be converted into the Converted Shares pursuant to SECTION
1.2, duly endorsed in blank for transfer or accompanied by stock powers
duly executed in blank, free and clear of all Encumbrances;
(v) duly executed counterparts of each of the
Related Documents to which such Stockholder or Rollover Stockholder is a
party, as applicable;
8
(vi) in the case of any such Stockholder who is an
individual, a duly executed Spousal Consent in the form attached as
EXHIBIT D hereto (the "SPOUSAL CONSENT"); and
(vii) a Section 1445 Certificate in accordance with
SECTION 3.6.
(d) At the Closing, the Company will deliver or cause to be
delivered to each Stockholder and each Rollover Stockholder, as applicable, the
following:
(i) a certificate or certificates representing the
Converted Shares to be held by such Stockholder upon the conversion
contemplated by SECTION 1.2;
(ii) the applicable Per Share Redemption Amount to be
received by such Stockholder in accordance with CLAUSE (ii) of SECTION
1.5; and
(iii) a certificate representing the Rollover Shares
to be held by such Rollover Stockholder immediately following the
Reclassification.
(e) At the Closing, the Company will deliver or cause to be
delivered to the holders of the TA Notes, the TA Note Purchase Amount in
accordance with CLAUSE (a)(iii) of SECTION 1.4.
1.10 TREATMENT OF RECAPITALIZATION.
The transactions contemplated by this ARTICLE I are intended to qualify
as a recapitalization of the Company for financial accounting purposes. The
transactions contemplated by SECTION 1.4 hereof are intended to qualify as a
reorganization described in Section 368(a)(1)(E) of the Code for federal and
state income Tax purposes. Each transaction contemplated by SECTION 1.4 hereof
is intended to meet the requirements of Section 302(b)(2) and/or (3) of the Code
and not to be treated as a dividend under Section 356(a)(2) of the Code. This
Agreement constitutes a plan of reorganization. The parties hereby agree to
report the transactions referred to in this SECTION 1.10 for financial
accounting and income Tax purposes in a manner consistent with the foregoing
terms of this SECTION 1.10.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby makes to the Buyer the representations and
warranties contained in this ARTICLE II as of the date hereof and as of the
Closing Date.
2.1 EXISTENCE; GOOD STANDING; AUTHORITY.
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the Laws of the State of Delaware. Except as
set forth on SCHEDULE 2.1(a), the Company is duly licensed or qualified to do
business as a foreign corporation and is in good standing under the Laws of any
other jurisdiction in which the character of the properties owned or leased by
it therein or in which the transactions of its business makes such qualification
9
necessary, except where the failure to be so licensed or qualified or to be in
good standing would not reasonably be expected, either individually or in the
aggregate, to cause a Material Adverse Change. SCHEDULE 2.1(a) sets forth each
jurisdiction in which the Company is licensed or qualified to do business as a
foreign corporation. The Company has all requisite corporate power and authority
to own, operate, lease and encumber its properties and to carry on its business
as now conducted.
(b) Each of the Subsidiaries is a corporation, partnership
or limited liability company duly incorporated or organized, validly existing
and, except as set forth on SCHEDULE 2.1(b), in good standing under the Laws of
its jurisdiction of incorporation or organization and has all requisite
corporate, partnership or limited liability company (as applicable) power and
authority to own, operate, lease and encumber its properties and carry on its
business as now conducted. Each such Subsidiary is duly licensed or qualified to
do business as a foreign corporation, partnership or limited liability company
and is in good standing in any other jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
licensed or qualified or to be in good standing would not reasonably be
expected, either individually or in the aggregate, to cause a Material Adverse
Change. SCHEDULE 2.1(b) sets forth each jurisdiction in which any Subsidiary is
licensed or qualified to do business as a foreign corporation or limited
liability company.
(c) The Company has the corporate power and authority to
execute and deliver this Agreement and the Closing Documents, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Closing Documents, the performance by the Company of its obligations
hereunder and thereunder, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all requisite corporate action
on the part of the Company, and no other corporate proceedings on the part of
the Company are required to authorize the Agreement or the Closing Documents, or
to consummate the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by the Company and assuming the due
authorization, execution and delivery of this Agreement by the Buyer, this
Agreement constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or similar
Laws affecting creditors' rights generally and by general equitable principles.
2.2 CAPITALIZATION; SUBSIDIARIES.
(a) The authorized, issued and outstanding capital stock of
the Company is set forth on SCHEDULE 2.2(a). All of the issued and outstanding
shares of capital stock of the Company are duly authorized, validly issued,
fully paid and nonassessable. Except as set forth on SCHEDULE 2.2(a), there are
no outstanding options, warrants or other rights of any kind (preemptive or
otherwise) to acquire any additional shares of capital stock of the Company or
securities convertible into or exchangeable for, or which otherwise confer on
the holder thereof any right to acquire, any such additional shares, nor is the
Company committed to issue any such option, warrant, right or security. Except
as set forth on SCHEDULE 2.2(a), there are no agreements to which the Company or
any Subsidiary is a party with respect to the voting of any shares of
10
capital stock of the Company or which restrict the transfer of any such shares,
nor, to the Company's Knowledge, are there any third party agreements or
understandings with respect to the voting of any such shares or which restrict
the transfer of any such shares. Except as set forth on SCHEDULE 2.2(a), there
are no outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock, other
equity interests or any other securities of the Company or any Subsidiary.
Except as set forth ON SCHEDULE 2.2(a), neither the Company nor any Subsidiary
is under any obligation, contingent or otherwise, by reason of any agreement to
register the offer and sale or resale of any of their securities under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "SECURITIES ACT").
(b) SCHEDULE 2.2(b) sets forth a true, correct and complete
list of each Person in which the Company, either directly or indirectly, holds
an interest representing more than fifty percent (50%) of the capital stock or
other equity interests of such Person or otherwise has the power to vote or
direct the voting of sufficient securities to elect a majority of the board of
directors or similar governing body of such Person (each such Person, a
"SUBSIDIARY", and collectively, the "SUBSIDIARIES"). Except as set forth on
SCHEDULE 2.2(b), the Company owns directly or indirectly 100% of the outstanding
shares of capital stock or other equity interests of each of the Subsidiaries
free and clear of any and all Encumbrances. The authorized, issued and
outstanding capital stock or other equity interest of each Subsidiary is set
forth on SCHEDULE 2.2(b). Each of the outstanding shares of capital stock or
other equity interest of each of the Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable.
(c) Except for the Subsidiaries or as set forth on
SCHEDULE 2.2(c), neither the Company nor any Subsidiary owns directly or
indirectly any interest or investment (whether equity or debt) in any Person.
2.3 NO CONFLICT.
Neither the execution and delivery by the Company of this Agreement and
the Closing Documents, nor the consummation by the Company of the transactions
in accordance with the terms hereof or thereof, nor compliance by the Company
with any provision hereof or thereof will (a) violate, or 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 or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the creation of any
Encumbrance upon any of the properties of the Company or the Subsidiaries under,
or result in being declared void, voidable or without further binding effect,
any of the terms, conditions or provisions of (i) the Organizational Documents
or, (ii) except as set forth in SCHEDULE 2.3, any Contract to which the Company
or any of the Subsidiaries is a party, or by which the Company or any of the
Subsidiaries or any of their properties is bound, relating to the sale of goods
or services for an amount in excess of $50,000 individually or the breach of
which would reasonably be expected to result in losses, claims or other damages
to the Company or any Subsidiary involving an amount in excess of $50,000,
individually, or (b) violate any Laws applicable to the Company, any Subsidiary
or any of their respective properties, which violation of Law would reasonably
be expected to result in fines, penalties or other similar charges in an amount
in excess of $5,000, individually, or $50,000, in the aggregate (PROVIDED that
such violation of Law would not otherwise adversely
11
affect (A) the Company's ability to conduct the Subject Business or (B) the
Company's or any of its Subsidiaries' ability to enter into this Agreement or
any Closing Document or perform the transactions contemplated hereby or
thereby).
2.4 FINANCIAL STATEMENTS.
Attached as SCHEDULE 2.4 are true, correct and complete copies of (i)
the audited consolidated balance sheets of the Company as of December 31, 2000
(together with the report thereon of Xxxxxx Xxxxx LLC) and as of December 31,
2001 (together with the report thereon of PricewaterhouseCoopers LLP) (the
"LATEST AUDITED BALANCE SHEET" and the date thereof being, the "LATEST AUDITED
BALANCE SHEET DATE"), and the related audited statements of income, shareholders
equity and cash flows for the fiscal years then ended, and (ii) the unaudited
consolidated balance sheet of the Company as of March 31, 2002 (the "LATEST
BALANCE SHEET" and the date thereof being the "LATEST BALANCE SHEET DATE"), and
the related statements of income, shareholders' equity and cash flows for the
fiscal period then ended (such related statements, together with the Latest
Balance Sheet, the "LATEST FINANCIAL STATEMENTS"). The financial statements
referenced in this SECTION 2.4 are collectively referred to as the "FINANCIAL
STATEMENTS". The Financial Statements (i) are in accordance with the books and
records of the Company, (ii) present fairly in all material respects the
consolidated financial condition of the Company as of the respective dates
indicated and the statements of income, shareholders' equity and cash flows of
the Company for the respective periods indicated and (iii) have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby
except that the Latest Financial Statements are subject to normal year-end
adjustments and the addition of footnotes.
2.5 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as set forth on SCHEDULE 2.5, neither the Company nor the
Subsidiaries have any Liabilities for an amount in excess of $150,000,
individually, or $300,000 in the aggregate, except for (i) Liabilities reflected
or reserved against in the Latest Audited Balance Sheet, and (ii) Liabilities
that have arisen since the Latest Audited Balance Sheet Date in the ordinary
course of business. Except as set forth on SCHEDULE 2.5, neither the Company nor
any of its Subsidiaries has expressly assumed or undertaken any Liability of any
other non-Affiliated Person, which Liability relates to an amount in excess of $
10,000, individually, or $100,000 in the aggregate. Solely for purposes of this
SECTION 2.5 Liabilities shall refer only to those Liabilities relating to the
payment or borrowing of monies (including any guaranty thereof) or which are
otherwise monetary or financial in nature.
2.6 ABSENCE OF CERTAIN CHANGES.
Since the Latest Audited Balance Sheet Date, there has not been any
Material Adverse Change. Except as set forth on SCHEDULE 2.6 or pursuant to the
transactions contemplated by this Agreement, since the Latest Audited Balance
Sheet Date, the Company and its Subsidiaries have operated only in the ordinary
course of business consistent with past practice and there has not been any of
the following:
12
(a) the entering into of any Contract (or series of related
Contracts) that requires expenditures (other than capital expenditures) in
excess of $50,000, individually, or $100,000 in the aggregate;
(b) the making of any Capital Expenditures and commitments
therefor in excess of $150,000 individually, or $250,000, in the aggregate;
(c) change in the Company's or any Subsidiary's authorized
or issued capital stock or other equity interests; grant of any option, right to
purchase or similar right regarding the capital stock or other equity interests
of the Company or any Subsidiary; grant of any registration rights by the
Company or any Subsidiary; purchase, redemption, retirement, or other
acquisition by the Company or any Subsidiary of any such capital stock;
declaration or payment of any dividend or other distribution or payment in
respect of the capital stock or other equity interests of the Company or any
Subsidiary; split, combination or reclassification of the capital stock of the
Company or any Subsidiary; or issuance or authorization or proposed issuance or
authorization of capital stock or other equity interests of the Company or any
Subsidiary in respect of, in lieu of, or in substitution for shares of capital
stock of the Company or any Subsidiary;
(d) amendment to the Organizational Documents of the Company
or any of its Subsidiaries;
(e) payment of any bonuses, or increase in salaries or other
compensation, by the Company or any of its Subsidiaries to any of its directors,
officers, consultants or employees, except for bonus awards and increases in
salaries or other compensation made in the ordinary course of business
consistent with past practice; or entry into any employment, severance, or
similar Contract with any director, officer, consultant, agent or employee
involving any payments for an amount in excess of $150,000, individually, or
$750,000, in the aggregate;
(f) the making of any loan, advance or capital contribution
to or investment or purchase of any equity interest in any Person, other than
advances to employees in the ordinary course of business for travel and similar
business expenses;
(g) adoption of, or increase, acceleration or modification
in the schedule of payments or benefits under, any Benefit Plan, for or with any
officer, director, consultant, or employee of the Company or any of its
Subsidiaries;
(h) damage to or destruction or loss of any asset or
property of the Company, whether or not covered by insurance, having a fair
market value in excess of $50,000, individually, or $100,000 in the aggregate;
(i) sale, purchase or other transfer of any debt securities
or shares of capital stock or other equity interest or securities convertible
into, or rights, warrants or options to acquire, any such shares of capital
stock or other equity interest or other convertible securities of the Company or
any Subsidiary, or other proposed change to the capitalization of the Company or
any Subsidiary, or mortgage, pledge, or imposition of any Encumbrance on any
such shares of capital stock or other equity interest of the Company or any
Subsidiary;
13
(j) sale, transfer, license, pledge, mortgage or other
disposition of tangible or intangible assets of the Company or any Subsidiary
having a fair market value in excess of $50,000, individually, or $100,000 in
the aggregate; the creation of any Encumbrance on any of the assets or
properties of the Company or any Subsidiary, other than Permitted Encumbrances,
(k) acquisition of or agreement to acquire by merging or
consolidating with, or by purchasing any material portion of the capital stock
or other equity interest or assets of, or by any other manner, any business or
any Person or division thereof, by either the Company or any Subsidiary;
(l) termination, or receipt by the Company or any Subsidiary
of any written or, to the Company's Knowledge, oral, notice of termination or
non-renewal, of any Contract between the Company or any Subsidiary, on the one
hand, and clinics, medical or healthcare providers, health maintenance
organizations or other customers or third party payors, on the other hand, which
Contract accounted for (i) more than 5% of the revenues of any center operated
by the Company or any Subsidiary or (ii) otherwise accounted for more than
$1,000,000 of the revenues of the Company, in each of items (i) and (ii), during
the fiscal year of the Company ended December 31, 2001;
(m) any removal or written, or, to the Company's Knowledge,
oral, notice of removal of the Company or any Subsidiary from any "payor panel";
(n) incurrence of indebtedness or guarantee of debt of any
third party by the Company or any of its Subsidiaries other than in the ordinary
course of business;
(o) write-down or write-up of the value of any asset of the
Company or the Subsidiaries by more than $50,000, individually, or $100,000, in
the aggregate;
(p) any write-off of any accounts receivable or notes
receivable of the Company or the Subsidiaries for a principal amount in excess
of $50,000, individually, or $100,000, in the aggregate, other than in the
ordinary course of business consistent with past practice;
(q) change in the accounting methods or principles used by
the Company or any of its Subsidiaries or any change in depreciation or
amortization policies or rates theretofore adopted;
(r) any termination of employment of any officer (including
any Executive) of the Company or the Subsidiaries;
(s) receipt by the Company or any of its Subsidiaries of
written or, to the Company's Knowledge, oral, notice of the commencement of any
litigation or other action by or against the Company or the Subsidiaries
asserting losses claims or other damages in an amount in excess of $50,000,
individually, or $100,000, in the aggregate;
(t) the creation of any Person that would constitute a
Subsidiary or entry into any joint venture or partnership; or
14
(u) entry into any Contract, whether oral or written, by the
applicable party bound by CLAUSES (a) THROUGH (t), as the case may be, to do any
of the actions described in clauses (a) through (t).
2.7 CONSENTS AND APPROVALS.
(a) Except as set forth on SCHEDULE 2.7(a), neither the
execution, delivery and performance of this Agreement and the Closing Documents
by the Company, nor the consummation of the transactions by the Company, the
Stockholders' Representative and the Stockholders contemplated thereby, will, as
of the Closing Date, require any consent, approval, authorization or other
action by, or filing with or notification to, any federal, state, local, or
foreign government, governmental, regulatory or administrative authority, agency
or commission, or any court, tribunal, or judicial or arbitral body (a
"GOVERNMENTAL AUTHORITY"), except (i) the notification requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), if applicable, (ii) any such consent, approval, authorization or other
action the failure to obtain or take would not result in fines, penalties or
other similar charges in an amount in excess of $5,000, individually, or
$50,000, in the aggregate (PROVIDED that such failure to obtain or make would
not otherwise adversely affect (A) the Company's and its Subsidiaries' ability
to conduct the Subject Business or (B) the Company's or any of its Subsidiaries'
ability to enter into this Agreement or any Closing Document or perform the
transactions contemplated hereby or thereby) and (iii) as may be necessary as a
result of any facts or circumstances relating solely to the Buyer (including its
sources of financing).
(b) Except as set forth on SCHEDULE 2.7(b), the execution,
delivery and performance of this Agreement and the Closing Documents by the
Company, and the consummation of the transactions contemplated thereby, will not
require any third-party consents, approvals, authorizations or actions.
2.8 LITIGATION.
Except as set forth on SCHEDULE 2.8, there is no (a) Proceeding pending
or, to the Company's Knowledge, threatened against the Company or any of its
Subsidiaries before or by any Governmental Authority or (b) Order of any
Governmental Authority against the Company or any of its Subsidiaries.
2.9 TAXES.
(a) Except as set forth on SCHEDULE 2.9(a):
(i) The Company, each Subsidiary and each other
Person with which the Company or a Subsidiary has filed, or been
required to file, a combined, consolidated, unitary, affiliated or
similar Tax Return (the "COMPANY TAX GROUP") has paid or caused to be
paid all Taxes required to be so paid prior to the date hereof (together
with all Taxes required to be paid pursuant to SECTION 7.5, the "COVERED
TAXES"); PROVIDED that, for purposes of the foregoing sentence, Taxes of
Persons other than the Company or the Subsidiaries shall only include
Taxes of such other Persons for which the Company or any Subsidiary has
Liability. The Company has made provision on its books and records for
all Taxes owed or accrued by the Company or any Subsidiary through the
date hereof;
15
(ii) the Company and its Subsidiaries have timely
filed or been included in all Tax Returns required to be filed by them
or in which they are to be included, taking into account any extension
of time to file granted to or obtained on behalf of the Company or any
of its Subsidiaries. All such filed Tax Returns are complete and
accurate in all material respects. No extension to file any such Tax
Return has been granted to or requested by the Company or any
Subsidiary, other than for Tax Returns that have already been filed;
(iii) neither the Internal Revenue Service (the "IRS")
nor any other Governmental Authority is asserting by written notice to
the Company or its Subsidiaries or, to the Company's Knowledge,
threatening to assert against the Company or its Subsidiaries, any
deficiency or claim for any amount of additional Taxes;
(iv) no federal, state, local or foreign audits or
other Proceedings are, to the Company's Knowledge, pending with regard
to any Taxes or Tax Returns of the Company or any of its Subsidiaries
and neither the Company nor any of its Subsidiaries has received a
written notice prior to the date of this Agreement of any actual or
threatened Proceedings with regard thereto or is otherwise aware of any
such Proceedings;
(v) the Company and its Subsidiaries have previously
made available to the Buyer true, correct and complete copies of (i) all
Tax Returns filed by or on behalf of any member of the Company Tax Group
for all completed Tax years of the Company and its Subsidiaries that
remain open for audit or review by the relevant Governmental Authority,
other than with respect to (a) federal or state income/franchise Tax
Returns for the 1998 Tax year and (b) state income/franchise Tax Returns
for the stub period of January 1, 1999 through October 7, 1999 (the
"UNDISCLOSED RETURNS") and (ii) all ruling requests, private letter
rulings, notices of proposed deficiencies, closing agreements,
settlement agreements, and any similar documents or communication sent
or received by the Company Tax Group relating to Taxes;
(vi) neither the Company nor any Subsidiary has been
notified in writing that either the IRS or any other Governmental
Authority has raised any issues, or notified in writing any member of
the Company Tax Group of an intent to raise such issues, in connection
with any Tax Return of the Company, any Subsidiary, any other member of
the Company Tax Group, or relating to Covered Taxes, and no waivers of
statutes of limitations have been given or requested with respect to the
Company, the Subsidiaries or any other member of the Company Tax Group,
or relating to Covered Taxes;
(vii) neither the Company nor the Subsidiaries have
incurred any Liability for Taxes from and after the Latest Audited
Balance Sheet Date other than Taxes incurred in the ordinary course of
business consistent with previous years and past practices and other
than as a result of the transactions contemplated hereby;
(viii) the Company and the Subsidiaries (A) are not,
and have not made an election to be treated as, a "consenting
corporation" under Section 341(f) of the Code and
16
(B) are not, and have not been, a "personal holding company" within the
meaning of Section 542 of the Code;
(ix) the Company and the Subsidiaries have complied
in all respects with all applicable Laws relating to the collection or
withholding of Taxes (such as sales Taxes or withholding of Taxes from
the wages of employees);
(x) neither the Company nor any Subsidiary has ever
been a member of a combined, consolidated, affiliated or unitary group
for Tax filing purposes, other than the group in which it currently is a
member;
(xi) neither the Company nor any of the Subsidiaries
is, and has ever been, a party to any Tax sharing, indemnity or similar
agreement allocating Tax Liability that will not be terminated on the
Closing Date without any future Liability to the Company or a Subsidiary
(including for past Taxes);
(xii) the Company and the Subsidiaries have not
incurred any Liability to make or possibly make any payments on or prior
to the Closing Date, either alone or in conjunction with any other
payments, that:
(A) are non-deductible under, or would
otherwise constitute a "parachute payment" within the meaning
of, Section 280G of the Code (or any corresponding provision of
state, local or foreign income Tax Law); or
(B) are or may be subject to the imposition
of an excise Tax under Section 4999 of the Code;
(xiii) neither the Company nor any of the Subsidiaries
has agreed to make any adjustments or changes either on, before or after
the Closing Date, to its accounting methods pursuant to Section 481 of
the Code (or similar provisions of state, local or foreign Law), and
neither the IRS nor any other Governmental Authority has proposed in
writing any such adjustments or changes in the accounting methods of the
Company and the Subsidiaries;
(xiv) to the Company's Knowledge, no claim has ever
been made by any taxing authority in a jurisdiction in which the Company
or the Subsidiaries do not file Tax Returns that any such Person is or
may be subject to Taxation by that jurisdiction;
(xv) neither the Company nor any of the Subsidiaries
is or has ever been a "United States real property holding corporation"
within the meaning of Section 897(c)(2) of the Code within the period
specified in Section 897(c)(1)(A)(ii)(II) of the Code;
(xvi) neither the Company nor any Subsidiary will be
required to include in income during a taxable period that ends after
the Closing Date any income that economically accrued and was accounted
for prior to the Closing Date by reason of the installment method of
accounting, the completed method of accounting or otherwise;
17
(xvii) no liens for Taxes (other than Taxes not yet due
and payable) exist with respect to any assets or properties of the
Company or any of the Subsidiaries. The Tax Returns of the Company and
the Subsidiaries and with respect to all Covered Taxes have either been
examined and settled with the relevant Governmental Authority or closed
by virtue of the expiration of the applicable statute of limitations for
all periods through December 31, 1997; and
(xviii) The period from December 29, 1998 to October 7,
1999 is the only time during which the Company elected to be taxed as an
"S Corporation" within the meaning of Code Section 1362(a). During such
time period, the Company properly elected to be taxed as an "S
Corporation" within the meaning of Code Section 1362(a).
(b) SCHEDULE 2.9(b) lists all the jurisdictions in which the
Company or any Subsidiary is required to file Tax Returns or pay Taxes.
2.10 EMPLOYEE BENEFIT PLANS.
(a) "BENEFIT PLAN" means any "employee benefit plan" (as
that term is defined in Section 3(3) of ERISA), as well as any other plan,
program or arrangement involving direct and indirect compensation, under which
the Company, or any entity that is a member of a "controlled group of
corporations" with or is under "common control" with the Company as defined in
Section 414(b) or (c) of the Code ("ERISA AFFILIATE"), has any present or future
Liability on behalf of its employees or former employees, contractual employees
or their dependents or beneficiaries.
(b) SCHEDULE 2.10(b) contains a true and complete list of
all Benefit Plans.
(c) Except as provided on SCHEDULE 2.10(c):
(i) each of the Benefit Plans sponsored by the
Company or an ERISA Affiliate that is qualified under Section 401 of the
Code has received a favorable determination or opinion letter from the
IRS as to the qualification of such Benefit Plan, and such letter has
not been modified, revoked or limited by the failure to satisfy any
condition thereof or by a subsequent amendment thereto, or failure to
amend such Benefit Plan;
(ii) each Benefit Plan has been operated and
administered in accordance with its terms and is in material compliance
with ERISA and the Code;
(iii) all contributions due and payable on or before
the Closing Date in respect of any Benefit Plan have been made in full
and proper form, or adequate accruals have been provided for in the
Company's consolidated financial statements for such amounts for periods
ending on the Closing Date;
(iv) neither the Company nor any of its ERISA
Affiliates, nor to the Company's Knowledge any other "disqualified
person" or "party in interest" (as defined in Section 4975 of the Code
and Section 3(14) of ERISA, respectively) with respect to any Benefit
Plan, has breached the fiduciary rules of the ERISA or engaged in a
18
prohibited transaction which could subject the Company or its ERISA
Affiliates to any tax or penalty imposed under Section 4975 of the Code
or Section 502 (i), (j) or (l) of ERISA;
(v) all bond coverage and reporting and disclosure
obligations imposed under ERISA and the Code have been satisfied with
respect to each Benefit Plan;
(vi) the Company and its ERISA Affiliates have
neither made nor agreed to make, nor are required to make (in order to
bring any Benefit Plan into compliance with ERISA or the Code) any
changes in benefits that would materially increase the costs of
maintaining any of the Benefit Plans;
(vii) each Benefit Plan which is subject to the
requirements of the Consolidated Omnibus Budget Reconciliation of 1985
("COBRA") and the Health Insurance Portability and Accountability Act
("HIPAA") has been maintained in material compliance with COBRA and
HIPAA, including all notice requirements, and no Tax payable on account
of Section 4980B or any other section of the Code has been or is
expected to be incurred;
(viii) neither the Company nor its ERISA Affiliates is
or ever has been obligated to contribute to any "multiemployer plan"
(within the meaning of Section 3(37) of ERISA), a "multiple employer
plan" (within the meaning of Section 413 of the Code), or a defined
benefit plan (within the meaning of Section 3(35) of ERISA);
(ix) each Benefit Plan which is intended to meet the
requirements of Section 125 of the Code meets such requirements and each
program of benefits for which employee contributions are provided
pursuant to elections made under such Benefit Plan meets the
requirements of the Code applicable thereto;
(x) with respect to any Benefit Plan, there has not
been any act or omission by the Company or any of its ERISA Affiliates
that has given rise to or could give rise to any material fines,
penalties or related charges under ERISA or the Code for which the
Company or any of its ERISA Affiliates could be liable;
(xi) no Proceedings (other than routine benefit
claims) are pending or, to the Company's Knowledge, threatened against
or relating to any Benefit Plan, or, to the Company's Knowledge, any
fiduciary thereof, and to the Company's Knowledge, there is no basis for
any such Proceeding;
(xii) the Company has timely deposited and transmitted
all amounts withheld from employees for contributions or premium
payments for each Benefit Plan into the appropriate trusts or accounts;
(xiii) each Benefit Plan that allows loans to plan
participants has been operated in accordance with its terms, the plan's
written loan policy and all applicable Laws. In addition, all
outstanding loans from such Benefit Plans are current as of the Closing
Date, and there are no loans in default; and
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(xiv) no individual who has been classified by the
Company and its ERISA Affiliates as a non-employee (such as an
independent contractor, leased employee or consultant) shall have a
claim against the Company and its ERISA Affiliates for eligibility to
participate in any Benefit Plans, if such individual is later
reclassified as an employee of the Company and its ERISA Affiliates.
(d) The Company has delivered or otherwise made available to
the Buyer true and complete copies of the following documents, as they have been
amended to the date hereof, relating to the Benefit Plans: (i) all Benefit Plan
documents; (ii) the current summary plan description for each Benefit Plan;
(iii) the Form 5500, 5500-C or 5500-R for each Benefit Plan for the three most
recent plan years; (iv) all current insurance Contracts related to any Benefit
Plan; and (v) the most recent financial records pertaining to each Benefit Plan.
2.11 REAL AND PERSONAL PROPERTY.
(a) REAL PROPERTY. SCHEDULE 2.11(a) sets forth a list of all
real property leased by the Company or any of its Subsidiaries (the "LEASED REAL
PROPERTY") and SCHEDULE 2.11(b) sets forth a list of all real property owned by
the Company or any of its Subsidiaries (the "OWNED REAL PROPERTY"). All leases
relating to Leased Real Property are identified on SCHEDULE 2.11(a) (the
"LEASES") and true and complete copies thereof have been delivered to the Buyer.
With respect to each Lease, except as set forth on SCHEDULE 2.11(a):
(i) the Company or such Subsidiary, as applicable,
has good, valid and enforceable leasehold interests to the leasehold
estate in the Leased Real Property granted to the Company or such
Subsidiary, as applicable, pursuant to each pertinent Lease, subject to
all matters affecting fee title to such Leased Real Property and
applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity;
(ii) each of said Leases has been duly authorized and
executed by the Company or such Subsidiary, as applicable, and is in
full force and effect as to the Company's or such Subsidiary's rights
and obligations and, to the Company's Knowledge, is in full force and
effect as to the rights and obligations of each other party to said
Leases;
(iii) neither the Company, any Subsidiary nor, to the
Company's Knowledge, any other party to any Lease, is in default, under
any of said Leases, nor, to the Company's Knowledge, has any event
occurred or does any condition exist which, with notice or the passage
of time, or both, would give rise to such a default by the Company, any
Subsidiary or any other party;
(iv) there are no Persons (other than the Company or
any of its Subsidiaries) in possession of the Leased Real Property, and
there are no Contracts granting to any Person other than the Company or
any Subsidiary, as applicable, the right of use or occupancy of any
portion of the Leased Real Property; and
(v) no consent or approval is required with respect
to the transactions contemplated by this Agreement from the other
parties to any Lease.
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(b) With respect to the Owned Real Property, except as set
forth on SCHEDULE 2.11(b):
(i) the Company or any Subsidiary, as applicable,
has legal, valid and marketable title to the Owned Real Property, free
and clear of all encumbrances, except for Permitted Encumbrances;
(ii) no portion thereof is subject to any pending
condemnation Proceeding or Proceeding by any Governmental Authority and,
to the Company's Knowledge, there is no threatened condemnation or
Proceeding with respect thereto;
(iii) the Owned Real Property is in good operating
condition and repair (normal wear and tear excepted), is, to the
Company's Knowledge, free from structural defects, and is suitable for
the uses for which it is used in the business of the Company and its
Subsidiaries;
(iv) there are no Contracts to which the Company or
any of its Subsidiaries is a party, granting to any one or more Persons
the right of use or occupancy of any portion of the parcels of the Owned
Real Property; and
(v) there are no Persons (other than the Company or
any of its Subsidiaries) in possession of any portion of the parcels of
the Owned Real Property.
(c) PERSONAL PROPERTY. To the Company's Knowledge, except as
set forth on SCHEDULE 2.11(c) and as specifically disclosed in the Latest
Balance Sheet, and except with respect to leased personal property, the Company
and each Subsidiary has good title to all of its tangible personal property and
assets shown on the Latest Balance Sheet or acquired after the date of the
Latest Balance Sheet, free and clear of any Encumbrances except for (i) assets
which have been disposed of to nonaffiliated third parties since the Latest
Balance Sheet Date in the ordinary course of business, (ii) Encumbrances
reflected in the Latest Balance Sheet, (iii) Permitted Encumbrances or
imperfections of title which are not, individually or in the aggregate, material
in character, amount or extent or which do not materially detract from the value
or materially interfere with the present or presently contemplated use of the
assets subject thereto or affected thereby and (iv) Encumbrances for current
Taxes not yet due and payable. Such tangible personal property and assets are in
good operating condition and repair (normal wear and tear excepted), are free
from structural defects, and are suitable for the uses for which they are used
in the business of the Company and its Subsidiaries.
2.12 LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth on SCHEDULE 2.12(a), the Company and
each of its Subsidiaries are, as of the date hereof, in compliance in all
material respects with all Laws relating to the hiring and retention of all
employees, leased employees and independent contractors, relating to wages,
hours, labor, employment and employment practices, terms and conditions of
employment, equal employment opportunity, collective bargaining and the payment
of social security and other taxes, and there are no unlawful arrearages in the
payment of wages, social security tax or any other employment related levy or
tax.
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(b) Except as set forth on SCHEDULE 2.12(b), neither the
Company nor its Subsidiaries are a party to or otherwise bound by any collective
bargaining agreement, Contract or other agreement or understanding with a labor
union or labor organization. Except as set forth on SCHEDULE 2.12(b), neither
the Company nor its Subsidiaries are subject to any charge, demand, petition or
representation proceeding seeking to compel, require or demand it to bargain
with any labor union or labor organization nor is there pending or, to the
Company's Knowledge, threatened, any labor strike, dispute, walkout, work
stoppage or lockout involving the Company or any Subsidiary.
2.13 CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 2.13(a) is a correct and complete list of all
of the following types of Contracts to which the Company or any Subsidiary is a
party:
(i) partnership agreements, limited liability
company agreements, joint venture agreements, and Contracts relating to
the creation of any Person that would otherwise constitute a Subsidiary;
(ii) Contracts relating to services provided to or at
clinics, or medical or healthcare providers, or to other customers or
for services paid for by health maintenance organizations or other third
party payors, and any reimbursement arrangements related thereto, in
either case which involves consideration in excess of $50,000,
individually, or $100,000, in the aggregate;
(iii) Contracts relating to the construction,
reconstruction, maintenance, transportation, acquisition, disposition or
use of magnetic resonance imaging equipment, CT scanning equipment, or
other diagnostic imaging equipment that involve aggregate consideration
in excess of $50,000, individually, or $100,000, in the aggregate;
(iv) Contracts with customers, agents,
representatives, suppliers or vendors that involve consideration in
excess of $50,000, individually, or $100,000, in the aggregate;
(v) Contracts that have not expired or otherwise
been terminated relating to employment, consulting, non-competition,
severance, bonus or indemnification between the Company or any
Subsidiary and any current or former director, officer or employee of or
consultant to the Company or any Subsidiary and which involve annual
payments of cash consideration in excess of $50,000, individually, or
$100,000, in the aggregate;
(vi) Contracts relating to the provision of services
provided to the Company by, for or on behalf of physicians, physician
groups or other medical professionals (including reading agreements) and
which involve annual payments of cash consideration in excess of
$50,000, individually, or $100,000, in the aggregate;
(vii) Contracts relating to the referral of patients
to the Company or any Subsidiary (including purchased services
agreements and physician services agreements);
22
(viii) Contracts relating to the incurrence of
indebtedness, or guarantee of any Liability of any third party, or the
sale, transfer, licensing, mortgaging, pledging or otherwise disposing
of or creating or suffering to exist any Encumbrance (other than a
Permitted Encumbrance) on any material property owned, leased or
licensed by the Company or any Subsidiary;
(ix) Contracts relating to the sale, issuance,
purchase or other transfer of any debt securities or shares of capital
stock or other equity interests, or securities convertible into, or
rights, warrants or options to acquire, any such shares of capital
stock, other equity interests or other convertible securities;
(x) Contracts relating to the acquisition, by merger
or consolidation with, or by purchase of a material portion of the
capital stock or other equity interests or assets of, or by any other
manner, any business of any Person or division thereof;
(xi) Contracts limiting or restricting the ability of
the Company or any of its Subsidiaries to enter into or engage in any
market or line of business with any Person anywhere in the world;
(xii) confidentiality agreements or contracts
containing standstill, non-solicitation (of employees or customers) or
similar restrictive covenants on the actions of the Company or any of
its Subsidiaries;
(xiii) any other Contracts (or group of related
Contracts) with any Person, the performance of which involves
consideration in excess of $50,000, individually, or $100,000, in the
aggregate; and
(xiv) any Contract under which the consequences of a
default or termination would reasonably be expected to result in a
Material Adverse Change.
(b) True and complete copies of the Contracts disclosed
pursuant to SECTION 2.13(a) hereof have been delivered to the Buyer. Except as
disclosed on SCHEDULE 2.13(b), (i) upon consummation of the transactions
contemplated by this Agreement, each such Contract shall continue in full force
and effect in accordance with its respective terms without penalty or other
adverse consequence, (ii) neither the Company nor its Subsidiaries are in breach
of, or default under, any such Contract, and (iii) to the Company's Knowledge,
no other party to any such Contract is in breach thereof or default thereunder.
2.14 INTELLECTUAL PROPERTY.
To the Company's Knowledge, except as set forth on SCHEDULE 2.14, the
Company or its Subsidiaries are the owner of, or have the right to use, all
items of intangible property, including patents, registered trademarks and
service marks, trade names, unregistered trademarks and service marks,
copyrights and other intellectual property rights (collectively, the
"INTELLECTUAL PROPERTY RIGHTS"), as are necessary in connection with the
business of the Company and its Subsidiaries as currently conducted taken as a
whole.
23
2.15 ENVIRONMENTAL MATTERS.
The Company and its Subsidiaries have been and are currently in
compliance with Environmental Laws, including all Permits required under
Environmental Laws for the operation of the business of the Company and its
Subsidiaries. A list of such Permits is set forth on SCHEDULE 2.15. The Company
and its Subsidiaries have not received any written notice, report or other
communication from any Governmental Authority regarding any actual or alleged
violation of Environmental Laws, or any Liabilities or potential Liabilities,
including any investigatory, remedial or corrective obligations, relating to the
Company or its Subsidiaries or their facilities arising under Environmental
Laws. Neither the Company nor any Subsidiary has treated, stored, disposed of,
arranged for the disposal of, transported, handled, or released any Hazardous
Substances, or owned or operated any property or facility (and no such property
or facility is contaminated by any such Hazardous Substance) in a manner that
has given or would give rise to any Liabilities or investigative, corrective or
remedial obligations pursuant to Environmental Laws. The Company has furnished
to the Buyer all environmental site assessments and reports of environmental
testing, sampling and analysis and any documents relating to unresolved
violations of or Liabilities arising under Environmental Laws relating to the
Company or any of its Subsidiaries which are in its possession or reasonable
control.
2.16 INSURANCE.
(a) SCHEDULE 2.16 contains a true and complete list of all
material policies of liability, theft, fidelity, business interruption, life,
fire, product liability, workmen's compensation, health and other forms of
insurance held by the Company or any Subsidiary for the benefit of the Company
or any Subsidiary (specifying the insurer, amount of coverage, type of
insurance, policy number, and any material pending claims thereunder).
(b) With respect to each policy of insurance listed on
SCHEDULE 2.16: (i) all premiums due with respect thereto are currently paid and,
pursuant to the applicable terms of such policy, are not subject to adjustment
other than as a result of normal policy year audits, and, to the Company's
Knowledge, no Person is in default in any respect with respect to its
obligations under any such policy, and, to the Company's Knowledge, no basis
exists that would give any insurer under any such policy the right to cancel or
unilaterally reduce or limit the stated coverages contained in such policy; (ii)
there are no outstanding claims currently pending under any such policy that
would, to the Company's Knowledge, reasonably be expected to cause a material
increase in the insurance rates of the Company or any Subsidiary, and, to the
Company's Knowledge, no facts or circumstances exist that might reasonably be
expected to (A) relieve the insurer under any such policy of its obligations to
satisfy in full any claim thereunder or (B) give rise to any claim thereunder;
and (iii) none of the Company or any Subsidiary has received any written or, to
the Company's Knowledge, oral notice that such policy has been or shall be
canceled or terminated or will not be renewed on substantially the same terms as
are now in effect or the premium on such policy shall be materially increased on
the renewal thereof. With respect to any facts or circumstances giving rise to
any claim specified in CLAUSE (ii)(B) above and set forth on SCHEDULE 2.16, such
claim has been reported to the applicable insurance carrier in material
compliance with all applicable claims made reporting procedures.
24
2.17 BROKERS; NO OTHER POTENTIAL TRANSACTIONS.
Except for the fee payable to JPMSI, which shall be paid by the Company,
neither the Company, nor any of its officers, directors, stockholders,
consultants, agents or employees (or any Affiliates of the foregoing) has
employed any broker or finder or incurred or become liable for any broker's
commission or finder's fee relating to or in connection with the transactions
contemplated by this Agreement. Neither the Company nor any of its Seller
Representatives is bound to negotiate or otherwise party to any Contract
relating to a Potential Transaction with any other Person.
2.18 ACCOUNTS AND NOTES RECEIVABLE.
SCHEDULE 2.18 sets forth all accounts receivable and notes receivable
of the Company and the Subsidiaries outstanding as of the Latest Balance Sheet
Date by (i) government program and (ii) commercial program (each, a "PAYOR
CLASS"), at each center operated by the Company or any Subsidiary and
identifying for each such center (A) the amount owed by each such Payor Class
and (B) with respect to commercial programs, the five largest payors of such
Payor Class at each such center, and the aging of the receivables owed by such
Payor Class. All receivables set forth on SCHEDULE 2.18 have arisen in the
ordinary course of business, are, to the Company's Knowledge, owned free and
clear of any security interest or other Encumbrance, other than Permitted
Encumbrances, are not subject to any valid counterclaim, set-off, or defense,
except as disclosed on SCHEDULE 2.18, and have been accurately and fairly
reflected on SCHEDULE 2.18. To the Company's Knowledge, all accounts receivable
and notes receivable set forth on SCHEDULE 2.18 are collectible in the ordinary
course (net of any allowances for doubtful accounts or notes shown on SCHEDULE
2.18 and subject to contract adjustments and give-backs as set forth on SCHEDULE
2.18) consistent with past practice and custom. Neither the Company nor any of
its Subsidiaries has altered its credit policies or practices since the Latest
Balance Sheet Date, except as described on SCHEDULE 2.18.
2.19 ACCOUNTS AND NOTES PAYABLE.
SCHEDULE 2.19 sets forth all accounts payable and notes payable by the
Company and the Subsidiaries outstanding as of the Latest Balance Sheet Date,
with the name of each account creditor, the amount owed, and the aging of each
payable owed by the Company or the Subsidiaries. All payables set forth on
SCHEDULE 2.19 have arisen in the ordinary course of business consistent with
past practice and custom. Neither the Company nor any of its Subsidiaries has
materially altered its payment policies or practices since the Latest Balance
Sheet Date, except as described on SCHEDULE 2.19.
2.20 BANK ACCOUNTS; POWERS OF ATTORNEY.
SCHEDULE 2.20 sets forth a true and complete list of (i) all bank
accounts and safe deposit boxes of the Company and the Subsidiaries and all
Persons who are signatories thereunder or who have access thereto and (ii) the
names of all Persons holding general or special powers of attorney from the
Company or the Subsidiaries.
25
2.21 COMPLIANCE WITH LAWS.
Except as set forth on SCHEDULE 2.21 hereto, the Company and the
Subsidiaries have been and are in material compliance with all Laws applicable
to their respective assets, properties, businesses and operations. Neither the
Company nor any Subsidiary is relying on any exemption from or deferral of any
Law that would not, to the Company's Knowledge, be available to the Company or
its Subsidiaries after the consummation of the transactions contemplated hereby.
Except as set forth in SCHEDULE 2.21 and except for routine inspections and
audits in the ordinary course of business, no investigation or review by any
Governmental Authority with respect to the Company or its Subsidiaries is
pending or, to the Company's Knowledge, threatened, nor has the Company or any
of the Subsidiaries received written or, to the Company's Knowledge, oral,
notice of any Governmental Authority's intention to conduct the same. SCHEDULE
2.21 sets forth a list of all material permits, licenses, certificates
(including certificates of need) and approvals of all Governmental Authorities
(the "PERMITS") held by the Company and its Subsidiaries, which Permits
represent all Permits necessary for the Company and its Subsidiaries to own,
lease and operate their properties and assets and to conduct their respective
businesses, and neither the Company nor any Subsidiary is in default thereunder.
To the Company's Knowledge, none of such Permits shall be adversely affected as
a result of the Company's execution and delivery of, or the performance of its
obligations under, this Agreement, any Related Document, or the consummation of
the transactions contemplated hereby or thereby. To the Company's Knowledge,
there is no proposed Law which could prohibit or restrict the Company or the
Subsidiaries from, or otherwise affect the Company or any Subsidiary in,
conducting its respective business in any jurisdiction in which it is now
conducting business or which it proposes to conduct business. Except as set
forth on SCHEDULE 2.21, the Company and the Subsidiaries have timely filed all
reports, data, and other information required to be filed with such Governmental
Authorities and which are material to the operation of the Subject Business. For
purposes of clarification, this SECTION 2.21 does not relate to those matters
that are the subject of clause (b) of SECTION 2.3 (No Conflict with Laws),
Section 2.9 (Tax Matters), SECTION 2.10 (ERISA), SECTION 2.12(a) (Labor and
Employment Matters), SECTION 2.15 (Environmental Laws), SECTION 2.23 (Certain
Payments), SECTION 2.25 (Inspections and Investigations), SECTION 2.26 (Medicare
Participation), SECTION 2.27 (Fraud and Abuse) and SECTION 2.28 (FALSE CLAIMS).
2.22 REGULATED CUSTOMERS.
To the Company's Knowledge, each physician or physician group that is
party to a Contract with the Company or any Subsidiary or to which the Company
or any Subsidiary otherwise provides services, has all Permits necessary for
participation in Medicare and Medicaid programs and state and local healthcare
programs and there are no Proceedings pending or, to the Company's Knowledge,
threatened against such Person, in each case, relating to such Contract or
services.
2.23 CERTAIN PAYMENTS.
Neither the Company, nor any Subsidiary, nor any director, officer,
agent, or, to the Company's Knowledge, employee of the Company or any
Subsidiary, or any other Person acting at the Company's or any Subsidiary's
direction for or on behalf of the Company or any Subsidiary, has directly or
indirectly, in violation of any Law, in connection with the business of
26
the Company made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, regardless of form, whether
in money, property, or services: (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, or (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of the Company or any Subsidiary.
2.24 RELATED TRANSACTIONS.
Except as set forth in SCHEDULE 2.24, and except for compensation to
regular employees of the Company or the Subsidiaries made in the ordinary course
of business, no current or former officer, director, stockholder or Affiliate of
the Company or the Subsidiaries, or to the Company's Knowledge, any family
member of such Person or any employee of the Company or any of its Subsidiaries,
(i) is now a party to any Contract with the Company or any Subsidiary, (ii) is
now, other than any interests owned by the TA Entities, the direct or indirect
owner of an interest in any Person which is a present or potential competitor,
supplier or customer of the Company or the Subsidiaries (other than
non-affiliated holdings in publicly-held companies), or (iii) receive income
from any source which should properly accrue to the Company or the Subsidiaries.
Except as set forth on SCHEDULE 2.24, neither the Company nor the Subsidiaries
are a guarantor or otherwise liable for any actual or potential Liability,
whether direct or indirect, of any of its Affiliates.
2.25 INSPECTIONS AND INVESTIGATIONS.
Except as set forth and described on SCHEDULE 2.25: (i) neither the
Company's right nor, to the Company's Knowledge, the right of any licensed
professional or other individual affiliated with the Company or its Subsidiaries
to receive reimbursements pursuant to any government program or private program
have been terminated or otherwise adversely affected as a result of any
investigation or action, whether by any Governmental Authority or other third
party, and the Company has verified that each such licensed professional or
other individual affiliated with the Company is appropriately licensed by
applicable Governmental Authorities to provide services to the Company and its
Subsidiaries; and (ii) neither the Company nor, to the Company's Knowledge, any
licensed professional who is affiliated with the Company or any of its
Subsidiaries, has, during the past three (3) years, been the subject of any
inspection, investigation, survey, audit, monitoring, or other form of review by
any Governmental Authority, accrediting organization, or certifying agency based
upon any alleged improper activity on the part of such individual, nor has the
Company or any Subsidiary received any notice of deficiency during the past
three (3) years in connection with the operations of its business. For purposes
of clarification with respect to this SECTION 2.25 only, "affiliated with the
Company or its Subsidiaries" shall mean the Person or Persons who have
contracted with the Company or its Subsidiaries to provide services thereto.
2.26 MEDICARE PARTICIPATION.
Except as set forth on SCHEDULE 2.26, the Company and its Subsidiaries
are qualified for participation in the Medicare and Medicaid programs, have
current and valid provider contracts with the Medicare and Medicaid programs,
are in compliance with all conditions of participation in such programs, and
have received all approvals or qualifications necessary for reimbursement.
27
The Company and the Subsidiaries presently have the Medicare certified provider
numbers described on SCHEDULE 2.26 hereto.
2.27 FRAUD AND ABUSE.
Neither the Company nor any of its Subsidiaries has engaged in any
activities that are prohibited under 42 U.S.C. Sections 1320a-7, 1320a-7b,
1395nn or 1396b, or any similar federal, state, or local statutes, or the
regulations promulgated pursuant to such statutes, to the extent such similar
statues or regulations have the same, substantially similar or more stringent
scienter requirements as those contained in 42 U.S.C. Section 1320a-7b.
2.28 FALSE CLAIMS.
The Company, its Subsidiaries and any Person for which the Company or
any of its Subsidiaries provide billing services have submitted all claims for
reimbursement to federal healthcare programs in accordance with, and have not
engaged in any activities that are prohibited under, the Federal False Claims
Act, 31 U.S.C. Sections 3729-3733, the Federal Civil Monetary Penalties Act, 42
U.S.C. Section 1320a-7a, or any similar federal, state, or local statutes, or
the regulations promulgated pursuant to such statutes, to the extent such
similar statues or regulations have the same, substantially similar or more
stringent scienter requirements as that contained in the Federal False Claims
Act or the Federal Civil Monetary Penalties Act, as applicable.
2.29 DISCLOSURE.
Neither this Agreement nor any of the Closing Documents (including the
Schedules and Annexes referred to herein or therein) contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements contained herein or therein not misleading in the light of
the circumstances in which they were made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby makes to the
Buyer, as to itself and not any other Stockholder, the representations and
warranties contained in this ARTICLE III as of the date hereof and as of the
Closing Date.
3.1 TITLE TO SHARES.
Such Stockholder is the lawful owner, of record and beneficially, of
the Company Shares set forth opposite its name on EXHIBIT A and has valid title
to such Company Shares, free and clear of any Encumbrances whatsoever, except as
set forth on SCHEDULE 3.1. Except as set forth on SCHEDULE 3.1 there are no
Contracts between such Stockholder and any other Person with respect to the
acquisition, disposition or voting of, or any other matters pertaining to, any
of the capital stock of the Company or any Subsidiary.
28
3.2 EXISTENCE; GOOD STANDING; AUTHORITY.
(a) Such Stockholder, as applicable, is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
organization or formation. Such Stockholder, as applicable, is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other jurisdiction in which the character of the properties
owned or leased by it therein or in which the transactions of its business makes
such qualification necessary, except where the failure to be so licensed or
qualified or to be in good standing would not, either individually or in the
aggregate, have a material adverse effect on the ability of such Stockholder to
perform its obligations under this Agreement. Such Stockholder has all requisite
power and authority to own, operate, lease and encumber its properties and carry
on its business as now conducted.
(b) Such Stockholder, as applicable, has the power and
authority to execute, deliver and perform this Agreement and the Related
Documents, and to consummate the transactions contemplated hereunder and
thereunder, including the transfer and conveyance of the Company Shares held by
such Stockholder. The execution, delivery and performance of this Agreement and
the Related Documents, the performance by such Stockholder of its obligations
hereunder and thereunder, and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all requisite action on the part
of such Stockholder, and no other proceedings on the part of the Stockholder are
required to authorize this Agreement or the Related Documents, or to consummate
the transactions contemplated hereby or thereby. This Agreement and each of the
Related Documents to which it is a party has been duly executed and delivered by
such Stockholder and, assuming the due authorization, execution and delivery of
this Agreement by the Buyer, the other Stockholders and the Company, constitute
legal, valid and binding obligations of such Stockholder, enforceable against
such Stockholder in accordance with their terms, except as such enforceability
may be limited by bankruptcy, insolvency, moratorium or similar Laws affecting
creditors' rights generally or by general equitable principles. If such
Stockholder is a trust, such trust is a validly created and existing trust under
applicable Law.
3.3 NO CONFLICT.
Neither the execution and delivery by such Stockholder of this
Agreement and the Related Documents to which it is a party, the consummation by
such Stockholder of the transactions contemplated hereby or thereby in
accordance with the terms hereof or thereof, nor compliance by such Stockholder
with any provision hereof or thereof will (a) violate, or 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 or in a right of termination or cancellation of or
a loss of any material benefit under, or accelerate the performance required by,
or result in the creation of any Encumbrance upon any of the properties of such
Stockholder under, or result in being declared void, voidable or without further
binding effect, any of the terms, conditions or provisions of (i) the
Organizational Documents of such Stockholder or (ii) any material Contract to
which such Stockholder is a party, or by which such Stockholder or any of its
properties is bound or (b) violate any Laws applicable to such Stockholder or
any of its properties.
29
3.4 CONSENTS.
Except as set forth on SCHEDULE 3.4, neither the execution, delivery
and performance of this Agreement and the Related Documents to which such
Stockholder is a party, nor the consummation of the transactions contemplated
hereby or thereby, will require any Permit, consent or other action by, or
filing with or notification to, any Governmental Authority or other Person,
except (i) the notification requirements of the HSR Act, (ii) where failure to
obtain such consent, approval, authorization or action, or to make such filing
or notification, would not have a material adverse effect on the ability of such
Stockholder to perform its obligations under this Agreement, and (iii) as may be
necessary as a result of any facts or circumstances relating solely to the
Buyer.
3.5 BROKERS; NO OTHER POTENTIAL TRANSACTIONS.
Except for the fee payable to JPMSI, which shall be paid by the
Company, neither such Stockholder, nor any of its officers, directors,
consultants, agents or employees (or any Affiliates of the foregoing) has
employed any broker or finder or incurred or become liable for any broker's
commission or finder's fee relating to or in connection with the transactions
contemplated by this Agreement or the Related Documents. Neither such
Stockholder nor any of its officers, directors, consultants, agents or employees
(or any Affiliate of the foregoing) is bound to negotiate or otherwise party to
any Contract relating to a Potential Transaction with any other Person.
3.6 TAX MATTERS.
Such Stockholder is not a foreign Person within the meaning of
Section 1.1445-2(b) of the rules and regulations promulgated under Section 1445
of the Code, and the Buyer has been furnished pursuant to Section 1445 of the
Code with a true and accurate certificate (a "SECTION 1445 CERTIFICATE") of such
Stockholder so stating such that the Company is not required to withhold any of
the Aggregate Redemption Price.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby makes to the Company and the Stockholders the
representations and warranties contained in this ARTICLE IV as of the date
hereof and as of the Closing Date.
4.1 EXISTENCE; GOOD STANDING; AUTHORITY.
(a) The Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Buyer is duly licensed or qualified to do business as a foreign limited
liability company and is in good standing under the laws of any other
jurisdiction in which the character of the properties owned or leased by it
therein or in which the transactions of its business makes such qualification
necessary, except where the failure to be so licensed or qualified or to be in
good standing would not, either individually or in the aggregate, have a
material adverse effect on the ability of the Buyer to
30
perform its obligations under this Agreement. The Buyer has all requisite
limited liability company power and authority to own, operate, lease and
encumber its properties and carry on its business as now conducted.
(b) The Buyer has the limited liability company power and
authority to execute and deliver this Agreement and the Closing Documents to
which it is a party, and to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Closing Documents to which
it is a party, the performance by the Buyer of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all requisite limited liability company
action on the part of the Buyer, and no other limited liability company
proceedings on the part of the Buyer are required to authorize this Agreement or
the Closing Documents to which it is a party, or to consummate the transactions
contemplated hereby or thereby. This Agreement has been duly executed and
delivered by the Buyer and, assuming the due authorization, execution and
delivery of this Agreement by the other parties to this Agreement, constitutes a
legal, valid and binding obligation of the Buyer, enforceable against the Buyer
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or similar Laws affecting creditors' rights
generally or by general equitable principles.
4.2 NO CONFLICT.
Neither the execution and delivery by the Buyer of this Agreement and
the Closing Documents to which it is a party, the consummation by the Buyer of
the transactions contemplated hereby or thereby in accordance with the terms
hereof or thereof, nor compliance by the Buyer with any provision hereof or
thereof will (a) violate, or 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
or in a right of termination or cancellation of or a loss of any material
benefit under, or accelerate the performance required by, or result in the
creation of any Encumbrance upon any of the properties of the Buyer under, or
result in being declared void, voidable or without further binding effect, any
of the terms, conditions or provisions of (i) the Organizational Documents of
the Buyer or (ii) any Contract to which the Buyer is a party, or by which the
Buyer or any of its properties is bound or (b) violate any Laws applicable to
the Buyer or any of its properties.
4.3 CONSENTS AND APPROVALS.
Except as set forth on SCHEDULE 4.3, neither the execution, delivery and
performance of this Agreement and the Closing Documents to which the Buyer is a
party, nor the consummation of the transactions contemplated hereby or thereby,
will require any Permit, consent or other action by, or filing with or
notification to, any Governmental Authority or other Person, except (i) the
notification requirements of the HSR Act, and (ii) as may be necessary as a
result of any facts or circumstances relating solely to the other parties
hereto.
4.4 LITIGATION.
There is no (a) Proceeding pending or, to the Buyer's knowledge,
threatened, against the Buyer before or by any Governmental Authority or (b)
Order of any Governmental Authority
31
against the Buyer, which, if adversely determined, would delay or prevent the
consummation of the transactions contemplated by this Agreement, or would have a
material adverse effect on the ability of the Buyer to perform its obligations
under this Agreement.
4.5 FINANCING.
The Buyer has received a letter of commitment dated as of June 6, 2002
from JPMSI, JPMorgan Chase Bank, General Electric Capital Corporation, UBS AG,
Stanford Branch, Wachovia Securities and Wachovia Bank, National Association
with respect to financing the transactions contemplated by this Agreement, a
true and correct copy of which is attached hereto as EXHIBIT E, and has provided
such letter to the Company.
4.6 BROKERS.
Neither the Buyer nor any of its officers, directors, consultants,
agents or employees (or any Affiliates of the foregoing) has employed any broker
or finder or incurred or become liable for any broker's commission or finder's
fee relating to or in connection with the transactions contemplated by this
Agreement.
4.7 ACCREDITED INVESTOR; KNOWLEDGEABLE INVESTOR.
The Buyer is an "accredited investor" as such term is defined in Rule
501 under the Securities Act. The Buyer is acquiring the Purchased Shares for
its own account, for investment only and not with a view to, or any present
intention of, effecting a distribution of such securities or any part thereof
except pursuant to a registration or an available exemption. The Buyer
acknowledges that the Purchased Shares to be acquired by the Buyer pursuant to
the transactions contemplated hereby have not been registered under the
Securities Act or the securities laws of any state or other jurisdiction and
cannot be disposed of unless they are subsequently registered under the
Securities Act and the securities laws of any applicable state or other
jurisdiction or an exemption from such registration is available. By reason of
the Buyer's business and financial experience, and the business and financial
experience of those Persons retained by the Buyer to advise it in connection
with the transactions contemplated by this Agreement, the Buyer has such
knowledge, sophistication and experience in business and financial matters as to
be capable of evaluating the merits and risks of the prospective investment, and
is (and will be) able to bear the economic risk of such investment and is able
to afford a complete loss of such investment.
ARTICLE V
CERTAIN COVENANTS OF THE BUYER, THE COMPANY AND THE STOCKHOLDERS
5.1 AFFIRMATIVE COVENANTS.
The Company and its Subsidiaries shall, and the Stockholders agree
that, between the date hereof and the Closing (the "TRANSITION PERIOD"), they
shall cause the Company and its Subsidiaries to operate, in the ordinary course
of business, consistent with past practice, except as described in SCHEDULE 5.1
or as otherwise contemplated by this Agreement. Without limiting
32
the generality of the foregoing, the Stockholders shall cause the Company and
each of its Subsidiaries to:
(a) on or prior to the Closing Date, deliver to the Buyer
true, correct and complete copies of SCHEDULES 2.18 and 2.19, in each case as
such Schedules have been updated to provide the information requested by
SECTIONS 2.18 and 2.19 as of a date that is not earlier than the seventh
Business Day prior to the Closing Date;
(b) as promptly as practicable, cause the Company and its
Subsidiaries to make all filings with Governmental Authorities and provide all
other notices and take such other actions necessary to cause the dissolution of
those Subsidiaries set forth on SCHEDULE 5.1(b) (the "INACTIVE SUBSIDIARIES");
(c) maintain its assets in customary repair, order and
condition, replace, in accordance with past practice, inoperable, worn out or
obsolete assets with assets of comparable quality and, in the event of a
casualty, loss or damage to any of such assets or properties prior to the
Closing Date for which the Company is insured or the condemnation of any assets
or properties, either repair or replace such assets or property in a manner
agreed to by the Buyer or, if the Buyer shall direct, retain such insurance or
condemnation proceeds;
(d) furnish to the Buyer as soon as available, but in any
event within thirty (30) days of each calendar month, the unaudited consolidated
balance sheets and income statements of the Company and its Subsidiaries (all to
be prepared in accordance with GAAP consistently applied) showing its financial
condition as of the close of such month and the results of operations during
such month and for the then elapsed portion of the Company's fiscal year, in
each case, setting forth the comparative figures for the corresponding month in
the prior fiscal year and the corresponding elapsed portion of the prior fiscal
year; and
(e) promptly after acquiring Knowledge thereof, inform the
Buyer in writing of any material variances from the representations and
warranties contained in this Agreement or the Related Documents.
5.2 NEGATIVE COVENANTS.
During the Transition Period, without the prior written consent of the
Buyer, except as expressly contemplated by this Agreement or any Related
Document, the Company shall not, and it shall cause each Subsidiary not to:
(a) enter into, amend or otherwise modify, or waive any
material provision of, any Contract (or series of related Contracts) that
requires expenditures in excess of $50,000 individually, or $100,000 in the
aggregate;
(b) permit any Capital Expenditures and commitments therefor
in excess of $150,000, individually, or $250,000 in the aggregate;
(c) change its authorized or issued capital stock or other
equity interests; issue or grant any debt security, warrant, option, right to
purchase or similar right regarding the capital stock or other equity interests;
grant any registration rights; purchase, redeem, retire, or
33
otherwise acquire any such debt securities, capital stock or equity interests;
declare or pay any dividend or make any other distribution or payment in respect
of its capital stock or other equity interests; split, combine or reclassify its
capital stock or other equity interests; issue or authorize or propose the
issuance or authorization of debt securities, capital stock or other equity
interests in respect of, in lieu of, or in substitution for shares of capital
stock or other equity interest; or impose any Encumbrance on any such shares of
capital stock or other equity interests;
(d) amend its Organizational Documents;
(e) pay any bonuses, or increase salaries or other
compensation, to any of its directors, officers, consultants or employees,
except for bonus awards and increases in salaries or other compensation made in
the ordinary course of business consistent with past practice; enter into any
employment, severance, or similar Contract with any director, officer,
consultant or employee of the Company or any Subsidiary involving any payments
for an amount in excess of $150,000, individually, or $750,000, in the
aggregate, enter into any other transaction or Contract with any Stockholder,
director, officer, employee or Affiliate of the Company or any Subsidiary, or
enter into any collective bargaining agreement;
(f) make any loan, advance or capital contribution to or
cash investment in any Person, other than advances to employees in the ordinary
course of business for travel and similar business expenses;
(g) adopt, or increase, accelerate or modify the schedule of
payments or benefits under, any Benefit Plan, for or with any director, officer,
consultant, agent or employee, other than in the ordinary course of business,
consistent with past practice;
(h) sell, transfer, license, pledge, mortgage, encumber or
otherwise dispose of tangible or intangible assets having a fair market value in
excess of $50,000, individually, or $100,000 in the aggregate; or create or
suffer to exist any Encumbrance on any of its material assets or properties,
other than Permitted Encumbrances;
(i) except as set forth on SCHEDULE 5.2(i), acquire or agree
to acquire, by merging or consolidating with, or by purchasing any material
portion of the capital stock, other equity interests or assets of, or by any
other manner, any business or any Person or division thereof;
(j) terminate or not renew any Contract or agreement with
clinics, medical or healthcare providers, health maintenance organizations or
other customers or third party payors, or any reimbursement arrangement related
thereto having a fair market value in excess of $50,000, individually, or
$100,000, in the aggregate;
(k) except as set forth on SCHEDULE 5.2(k), incur
indebtedness or guarantee any indebtedness of any third party, other than in the
ordinary course of business and with respect to indebtedness having an aggregate
outstanding principal amount not in excess of $50,000;
(l) write-down or write-up the value of any asset by more
than $50,000, individually, or $100,000 in the aggregate;
34
(m) write-off any accounts receivable or notes receivable
for a principal amount in excess of $50,000, individually, or $100,000 in the
aggregate, other than in the ordinary course of business consistent with past
practice;
(n) delay or postpone the payment of accounts payable and
other obligations and Liabilities or accelerate the collection of accounts
receivable, other than in the ordinary course of business, consistent with past
practice;
(o) change its accounting methods or principles or change
its depreciation or amortization policies or rates theretofore adopted;
(p) terminate the employment of any officer (including any
Executive) of the Company or any Subsidiary;
(q) except as set forth on SCHEDULE 5.2(q), commence any
litigation asserting damages, claims or losses in excess of $50,000,
individually, or $100,000, in the aggregate against any other Person other than
in the ordinary course of business consistent with past practice;
(r) intentionally discourage customers, employees,
suppliers, lessors, and other associates of the Company and its Subsidiaries
from maintaining the materially same business relationships with the Company and
its Subsidiaries after the date of this Agreement as were maintained prior to
the date of this Agreement;
(s) create any Person that would constitute a Subsidiary or
enter into any partnership or joint venture; or
(t) enter into a Contract to do any of the actions described
in CLAUSES (a) through (s) above.
5.3 INVESTIGATION.
Each of the parties hereto hereby acknowledges and agrees that it does
not make, and has not made, any representations or warranties in connection with
the transactions contemplated hereby other than those expressly set forth in
this Agreement or the Related Documents.
5.4 ACCESS TO INFORMATION.
(a) Without undue disruption of its business, the Company
and its Subsidiaries shall give the Buyer and its Affiliates, officers,
employees, accountants, counsel, financial advisers and other representatives
reasonable access upon reasonable notice and during times mutually convenient to
the Buyer and senior management of the Company to the facilities, properties,
employees, Contracts, commitments, personnel, books, and records of the business
as from time to time may be reasonably requested. The Buyer will hold, and will
cause its officers, employees, accountants, counsel, financial advisers and
other representatives and Affiliates to hold, any and all information received
from the Company and its Subsidiaries, directly or indirectly, in confidence,
according to the terms of the Confidentiality Agreement.
35
(b) The Buyer's investigation shall not unreasonably
interfere with any of the businesses or operations of the Company or its
Subsidiaries. The Buyer shall not, prior to the Closing Date, have any contact
whatsoever with respect to the Company or its Subsidiaries or with respect to
the transactions contemplated by this Agreement with any partner, lender, ground
lessor, vendor, supplier, employee or consultant of the Company or any of its
Subsidiaries, except in consultation with the Company and the Stockholders'
Representative and then only with the express prior approval of the Company and
the Stockholders' Representative, which approval shall not be unreasonably
withheld. All requests by the Buyer for access or information shall be submitted
or directed exclusively to an individual or individuals to be designated by the
Company and the Stockholders' Representative. The Buyer shall not be permitted
to conduct any invasive tests on any Leased Real Property or Owned Real Property
without the Company's prior written consent.
5.5 CONFIDENTIALITY.
The parties shall adhere to the terms and conditions of that certain
Confidentiality Agreement, dated January 2, 2002 by and between the Company and
the Buyer (the "CONFIDENTIALITY AGREEMENT") attached hereto as EXHIBIT F.
5.6 REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS.
The Company and the Stockholders shall use their commercially reasonable
efforts to obtain the authorizations, consents, Orders and approvals necessary
for their execution and delivery of, and the performance of their obligations
pursuant to, this Agreement and the Related Documents. If required by the HSR
Act and if the appropriate filing of a Notification and Report Form pursuant to
the HSR Act has not been filed prior to date hereof, each party hereto agrees to
make an appropriate filing of a Notification and Report Form with respect to the
transactions contemplated by this Agreement within ten (10) Business Days after
the date hereof and to supply promptly any additional information and
documentary material that may be requested pursuant to the HSR Act. The parties
hereto will not take any action that will have the effect of delaying, impairing
or impeding the receipt of any required approvals. The Buyer shall pay the HSR
filing fee.
5.7 FURTHER ACTION.
Each of the parties hereto shall use its respective commercially
reasonable efforts to take or cause to be taken all appropriate action, do or
cause to be done all things necessary, proper or advisable (including in
connection with the obtaining of all necessary consents of third parties listed
in SCHEDULES 2.7(a) and (b)), and execute and deliver such documents and other
papers (including with respect to the Financing), as may be required to carry
out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement.
5.8 PRESS RELEASES.
Until such time as an initial, mutually agreed upon press release or
other similar announcement has been made regarding the transactions contemplated
hereby, the parties hereto will, and will cause each of their Affiliates to,
maintain this Agreement confidential and will not,
36
and will cause each of their Affiliates not to, issue or cause the publication
of any press release or other public announcement with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of the
other parties hereto which consent shall not be unreasonably withheld; PROVIDED,
HOWEVER, that a party may, without the prior consent of the other parties
hereto, issue or cause publication of any such press release or public
announcement to the extent that such party is required to do so by Law or by the
rules of any applicable self-regulatory organization and delivers to the other
parties an opinion of legal counsel to such effect, in which event such party
will use its commercially reasonable efforts to allow the other parties hereto
reasonable time to comment on such press release or public announcement in
advance of its issuance.
5.9 NO SOLICITATION.
(a) During the Transition Period, the Company and the
Stockholders shall, and shall cause their respective Affiliates, directors,
officers, employees, agents and advisors (including JPMSI) (collectively, the
"SELLER REPRESENTATIVES") to deal exclusively with the Buyer and its designated
Affiliates and representatives regarding the acquisition of or investment in the
Company, whether by way of merger, purchase of capital stock, purchase of assets
or otherwise (a "POTENTIAL TRANSACTION") and, without the prior written consent
of the Buyer, the Company and the Stockholders shall not, and shall cause the
Seller Representatives not to, (i) solicit, initiate or otherwise engage in
negotiations, discussions or any other communications with any Person (whether
such negotiations are initiated by the Company, a Stockholder, a Seller
Representative or otherwise), other than the Buyer and its designated Affiliates
and representatives relating to a Potential Transaction, (ii) provide
information or documentation with respect to the Company relating to a Potential
Transaction to any Person, other than the Buyer and its designated Affiliates
and representatives or (iii) enter into an agreement with any Person, other than
the Buyer or its designated Affiliates, providing for any Potential Transaction.
If the Company, a Stockholder or any Seller Representative receives an
unsolicited inquiry, offer or proposal relating to any of the above, the
Company, such Stockholder or such Seller Representative shall immediately notify
the Buyer thereof, including information as to the contents and terms of such
inquiry, offer or proposal.
(b) From the date of this Agreement until the earlier of the
Closing or one year from the date of this Agreement, the Buyer shall not, and
shall ensure that its directors, officers, employees, partners, agents,
Affiliates, advisers or representatives shall not, directly or indirectly, (i)
solicit for employment or employ any employee, officer (including any Executive)
or consultant of the Company or any Subsidiary, or (ii) encourage, induce or
attempt to induce any employee, officer (including any Executive) or consultant
of the Company or any of its Subsidiaries to terminate his or her employment
with the Company or any of its Subsidiaries (it being understood that a reply to
a general solicitation or advertisement by any such employee, officer or
consultant shall not constitute a violation of this SECTION 5.9(b)).
5.10 FUNDED INDEBTEDNESS AND CAPITAL LEASE OBLIGATIONS.
On the date hereof, the Company shall deliver SCHEDULE 5.10 to the
Buyer. SCHEDULE 5.10 shall set forth, as of June 30, 2002, a true, correct and
complete list of all of the outstanding Funded Indebtedness and Capital Lease
Obligations of the Company and its Subsidiaries as of
37
the date hereof and shall be certified by the Chief Financial Officer of the
Company to such effect. On the Closing Date, the Company shall deliver an
updated SCHEDULE 5.10 to the Buyer and the Lender, which shall set forth a true,
correct and complete list of all of the outstanding Funded Indebtedness and
Capital Lease Obligations of the Company and its Subsidiaries as of immediately
prior to the Closing and before giving effect to SECTION 1.7 and shall be
certified by the Chief Financial Officer of the Company to such effect.
5.11 USE OF NAME.
The Stockholders shall not allege or assert that the name "MedQuest",
"MQ Associates" or any variant thereof (the "NAMES") has not become distinctive
and unique and none of the Stockholders shall allege or assert that the Names
have not obtained secondary meaning, identifying the Names or any variant
thereof as the source of services associated with such Name. Other than the TA
Entities, the Stockholders undertake in this Agreement as a matter of contract
to refrain from, (A) owning any interest, directly or indirectly, in, or
becoming associated with or otherwise lending any aid or support to, any Person
(other than the Company, the Buyer or any Affiliate thereof) using the Names or
(B) performing any service or offering any goods identified with the Names in a
manner that is likely to cause confusion in the minds of ordinary purchasers,
except on behalf of the Company, the Buyer or any Affiliate thereof. In
connection therewith, it is agreed that the undertaking under this SECTION 5.11
is of a special and unique nature, the loss of which cannot be adequately
compensated for in damages by an action at law, and that the breach or
threatened breach of the provisions of this SECTION 5.11 would cause the
Company, the Buyer and their Affiliates irreparable harm. In the event of any
such breach, the Company and the Buyer shall be entitled, as a matter of right,
to injunctive and other equitable relief without waiving any other rights which
they may have to damages or otherwise.
5.12 TAXES.
Neither the Company nor any Subsidiary (or any member of the Company Tax
Group) shall make any material Tax election, settle or compromise any Liability
for Taxes or, other than in the ordinary course of business or as contemplated
by this Agreement, engage in any transaction or operate the business in a manner
that would directly or indirectly result in any Liability for Taxes of the
Company or any Subsidiary.
5.13 CREATION OF MEDQUEST, INC.
No later than three (3) Business Days prior to the Closing Date, the
Company shall organize a wholly-owned subsidiary, "MedQuest, Inc.," a Delaware
corporation, and shall transfer 100% of its ownership interests in each of its
Subsidiaries to MedQuest, Inc., such transfer to be completed in a manner
satisfactory to the Buyer and the Lenders.
5.14 OPTION PLAN.
As promptly as practicable following the Closing Date, the Company shall
adopt a stock option plan (the "2002 OPTION PLAN"), the material terms of which
shall be as set forth on EXHIBIT G and with such other terms as shall be
determined by the Board of Directors of the Company.
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5.15 UPDATED FINANCIALS.
As promptly as practicable, but in no event later than ten (10) Business
Days from the date hereof, the Company shall provide to the Buyer a true and
correct copy of the unaudited consolidated balance sheet of the Company as of
each of April 30, 2002 and May 31, 2002, and the related statements of income,
shareholders' equity and cash flows for the respective fiscal periods then
ended. As promptly as practicable, but in no event later than ten (10) Business
Days prior to the Closing Date, the Company shall provide to the Buyer a true
and correct copy of the unaudited consolidated balance sheet of the Company as
of June 30, 2002, and the related statements of income, shareholders' equity and
cash flows for the period then ended, and such balance sheet shall include a
reserve in the amount of $250,000 for Liabilities in connection with the Siemens
Matter (the "SIEMENS RESERVE").
ARTICLE VI
EMPLOYEE MATTERS
6.1 EMPLOYEES.
(a) Following the Closing, the Buyer shall cause the Company
to ensure that all persons (other than Company Employees who are party to
written employment agreements, which agreements shall govern the employment
terms of such Company Employees) who were employed by the Company and its
Subsidiaries immediately preceding the Closing Date, including those on
vacation, leave of absence or disability (the "COMPANY EMPLOYEES"), will remain
employed in a comparable position on and immediately after the Closing Date, at
not less than the same base rate of pay for at least 180 days after the Closing
Date; PROVIDED, HOWEVER, that nothing contained herein shall prevent the Company
from treating all Company Employees (other than Company Employees who are party
to written employment agreements with the Company) as at-will employees, or
taking such employment actions as necessary in the ordinary course of business.
At any time prior to 180 days after the Closing Date, the Company shall not and
the Buyer shall cause the Company to not effectuate a "mass layoff" or "plant
closing" as such terms are defined in the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN"), or comparable conduct under any applicable
state Law, affecting in whole or in part any facility, site of employment,
operating unit or employee of the Company or any of its Subsidiaries without
complying fully with the requirements of WARN.
(b) To the extent that service is relevant for purposes of
eligibility, vesting, calculation of any benefit, or benefit accrual under any
employee benefit plan, program or arrangement established or maintained by the
Company (other than any defined benefit pension plan) following the Closing Date
for the benefit of Company Employees, such plan, program or arrangement shall
credit such employees for service on or prior to the Closing Date that was
recognized by the Company, as the case may be, for purposes of employee benefit
plans, programs or arrangements maintained by any of them. In addition, with
respect to any welfare benefit plan (as defined in Section 3(l) of ERISA)
established or maintained by the Company following the Closing Date for the
benefit of Company Employees, such plan shall waive any
39
pre-existing condition exclusions and provide that any covered expenses incurred
on or before the Closing Date by an Company Employee or by a covered dependent
shall be taken into account for purposes of satisfying applicable deductible
coinsurance and maximum out-of-pocket provisions after the Closing Date.
6.2 EMPLOYEE BENEFITS.
Following the Closing until the date that is twelve (12) months
following the Closing Date, the Buyer shall cause the Company to provide the
Company Employees with benefits (including retirement and welfare benefits) that
are substantially comparable, in the aggregate, to the benefits provided under
the Benefit Plans as in effect immediately prior to the Closing Date.
6.3 OTHER EMPLOYEE BENEFITS.
From and after the Closing Date, the Buyer shall cause the Company and
its Subsidiaries to honor in accordance with their terms all of the written
severance arrangements set forth on SCHEDULE 6.3 between the Company or any
Subsidiary and their respective employees.
6.4 BENEFIT PLAN CORRECTIONS.
Prior to the Closing Date, the Company and its Subsidiaries shall take
all action required to bring each Benefit Plan into compliance with the Annual
Report (IRS Form 5500) reporting and filing requirements, including taking all
corrective action required pursuant to the Department of Labor's Delinquent
Filer Voluntary Compliance Program. The Company shall provide the Buyer with
written confirmation that all such corrections have been completed prior to the
Closing Date.
6.5 NO THIRD PARTY BENEFICIARIES.
Notwithstanding anything else contained herein to the contrary, nothing
in this ARTICLE VI shall be construed to create any third party beneficiary
rights in any Person who is not a party to this Agreement.
ARTICLE VII
TAX MATTERS
7.1 CONVEYANCE TAXES; COSTS.
The Company shall be liable for and shall hold the Buyer and the
Stockholders harmless against any transfer, value added, excise, stock transfer,
stamp, recording, registration and any similar Taxes that become payable in
connection with the Purchase, and the applicable parties shall file such
applications and documents as shall permit any such Tax to be assessed and paid
on or prior to the Closing Date in accordance with any available pre-sale filing
procedure.
Each Stockholder shall be liable for and shall hold the Company and the
Buyer harmless against any transfer, value added, excise, stock transfer, stamp,
recording, registration and any similar Taxes that become payable in connection
with the Redemption, and the applicable parties
40
shall file such applications and documents as shall permit any such Tax to be
assessed and paid on or prior to the Closing Date in accordance with any
available pre-sale filing procedure.
7.2 TREATMENT OF INDEMNITY PAYMENTS.
Any indemnity payments made pursuant to SECTION 9.3 shall, (i) to the
extent made between the Company and the Stockholders, be treated for all Tax
purposes as an adjustment to the Aggregate Redemption Price, (ii) to the extent
made between the Company and the Buyer, be treated for all Tax purposes as an
adjustment to the Aggregate Purchase Price and (iii) to the extent made between
the Buyer and the Stockholders, be treated for all Tax purposes as an adjustment
to the Aggregate Redemption Price and the Aggregate Purchase Price, in each case
unless a final determination by a Governmental Authority (which shall include
the execution of Form 870-AD and the resolution of which shall be treated as a
Third Party Claim subject to the provisions of SECTIONS 9.2(j) - 9.2(l)) and
9.3(g) - 9.3(i), as applicable) requires otherwise. For purposes of SECTION
9.2(i), (i) the Tax costs of a Buyer Indemnified Party shall in no event include
any Tax costs as a result of such Buyer Indemnified Party's receipt of all or
any part of any payment that is properly treated as a reduction in the Aggregate
Redemption Price and (ii) the Tax costs of a Stockholder Indemnified Party shall
in no event include any Tax costs as a result of such Stockholder Indemnified
Party's receipt of all or any part of any payment that is properly treated as a
reduction in the Aggregate Purchase Price.
7.3 PAYMENT OF DELINQUENT TAXES.
Prior to the Closing, the Company and its Subsidiaries shall have paid
all then delinquent and past due Taxes to the applicable Governmental Authority
to which such Taxes are owed and shall have provided the Buyer with evidence of
such payments.
7.4 RESPONSIBILITY FOR FILING TAX RETURNS.
The Buyer shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the Company and its Subsidiaries for any Straddle
Period. The Buyer shall permit the Stockholders' Representative to review and
comment on each such Tax Return described in the preceding sentence prior to
filing and shall make such reasonable revisions to such Tax Returns as are
reasonably requested by the Stockholders' Representative at the direction of the
Majority Stockholders.
7.5 PAYMENT OF COVERED TAXES.
The Company will pay or cause to be paid all Taxes required to be paid
on or prior to the Closing Date by the Company Tax Group pursuant to any Tax
Return of the Company Tax Group.
7.6 REFUNDS AND TAX BENEFITS.
Any Tax refunds that the Buyer or the Company or its Subsidiaries have
received, and any amounts credited against Taxes that the Buyer or the Company
or its Subsidiaries have become entitled to, shall, if such amounts or credits
relate to Tax periods ending on or before the Closing Date or which include the
Closing Date, be for the account of the Stockholders (except
41
for Tax periods which include but do not end on the Closing Date, in which case
such amounts or credits will be equitably allocated to the Stockholders based on
the nature of the Tax to which the refund or credit relates), and the Company
shall pay over to the Stockholders' Representative any such refund or the amount
of any such credit within fifteen (15) Business Days after (i) in the case of a
refund, receipt thereof, or (ii) in the case of a credit, the Buyer determines
that such credit actually reduced Tax payments to be made in a post-Closing Tax
period. Notwithstanding anything to the contrary contained in this SECTION 7.6,
(i) this SECTION 7.6 shall not apply to refunds or credits resulting from the
carry back of losses incurred or accrued from a Taxable year that ends after the
Closing Date to a Taxable year ending on or prior to the Closing Date and (ii)
neither the Buyer, the Company nor any Subsidiary shall have an obligation to
make a payment pursuant to this SECTION 7.6 until the aggregate amount of all
such refunds and credits (that actually reduce Tax payments) actually received
by the Buyer, the Company or any Subsidiary, which refunds and credits (that
actually reduce Tax payments) actually received by the Buyer, the Company or any
Subsidiary would otherwise be payable pursuant to this SECTION 7.6, on a
cumulative basis exceeds $2,000,000, and then only to the extent the amount of
such aggregate refunds and credits (that actually reduce Tax payments) exceeds
such amount. The Buyer and the Company or its Subsidiaries will at the request
of the Stockholders' Representatives use commercially reasonable efforts to
obtain any Tax refund or credit, the benefit of which the Stockholders may be
entitled (in whole or in part) and of which the Buyer, the Company or its
Subsidiaries become aware, with expenses to be borne in proportion to the
benefits received.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS.
(a) The obligations of the Company and the Stockholders to
fulfill their respective obligations hereunder and consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver,
at or prior to the Closing, of each of the following conditions:
(i) COVENANTS. All covenants contained in this
Agreement or any Closing Document to be complied with by the Buyer at or
before the Closing shall have been complied with by the Buyer at or
before the Closing, in all respects, and the Company shall have received
a certificate of the Buyer to such effect signed by a duly authorized
officer of the Buyer;
(ii) REPRESENTATIONS; WARRANTIES. Each of the
representations and warranties of the Buyer contained in ARTICLE IV or
any Closing Document shall be true and correct in all material respects
(except for such representations and warranties that are qualified by
their terms as to materiality, which representations and warranties as
so qualified shall be true in all respects) as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing (except for such representations and warranties that are made as
of a date specified therein, which representations and warranties shall
be true and correct in all material respects as of such date), and the
Buyer shall have delivered to the Company a certificate of the Buyer
dated as of the Closing
42
Date and signed by a duly authorized officer of the Buyer to the effect
that the statements set forth in this SECTION 8.1(a)(ii) above are true
and correct;
(iii) HSR ACT. Any waiting period (and any extension
thereof) under the HSR Act applicable to the transactions to be
consummated at the Closing shall have expired or been terminated;
(iv) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other Order
(whether temporary, preliminary or permanent) that is in effect and has
the effect of making the transactions contemplated by this Agreement for
the Closing illegal or otherwise restraining or prohibiting consummation
of such transactions;
(v) CONSENTS. The Buyer shall have received the
authorizations, Orders, approvals and consents of Governmental
Authorities and third parties described in SCHEDULE 4.3, in form and
substance reasonably satisfactory to the Company; and
(vi) SOLVENCY OPINION. The Company shall have
received the opinion, dated as of the Closing Date, of Xxxxx X. Deutsch
& Company, LLC (the "SOLVENCY OPINION") that the transactions
contemplated hereby do not render the Company and its Subsidiaries
insolvent and do not otherwise "impair the capital of the corporation"
within the meaning of Section 160(a) of the Delaware General Corporation
Law, which opinion shall be substantially in the form of EXHIBIT H
hereto.
8.2 CONDITIONS TO OBLIGATIONS OF THE BUYER.
(a) The obligations of the Buyer to fulfill its obligations
hereunder and consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction or waiver, at or prior to the Closing, of each of
the following conditions:
(i) COVENANTS OF THE COMPANY. All covenants
contained in this Agreement or any Closing Document to be complied with
by the Company at or before the Closing shall have been complied with at
or before the Closing, in all respects, and the Buyer shall have
received a certificate of the Company to such effect signed by a duly
authorized officer of the Company;
(ii) COVENANTS OF THE STOCKHOLDERS. All covenants
contained in this Agreement or any Closing Document to be complied with
by the Stockholders' Representatives and/or the Stockholders at or
before the Closing shall have been complied with at or before the
Closing, in all respects, and the Buyer shall have received a
certificate from each such Stockholder to such effect;
(iii) REPRESENTATIONS; WARRANTIES OF THE COMPANY. Each
of the representations and warranties of the Company contained in
ARTICLE II or any Closing Document shall be true and correct in all
material respects (except for such representations and warranties that
are qualified by their terms as to materiality, which representations
and warranties as so qualified shall be true in all respects) as of the
date
43
of this Agreement and as of the Closing Date as though made on and as of
the Closing (except for such representations and warranties that are
made as of a date specified therein, which representations and
warranties shall be true and correct in all material respects as of such
date), and the Company shall have delivered to the Buyer a certificate
of the Company's President and Chief Financial Officer dated as of the
Closing Date to the effect that the statements set forth in this SECTION
8.2(a)(iii) above are true and correct;
(iv) REPRESENTATIONS; WARRANTIES OF THE STOCKHOLDERS.
Each of the representations and warranties of the Stockholders contained
in ARTICLE III or any Closing Document shall be true and correct in all
material respects (except for such representations and warranties that
are qualified by their terms as to materiality, which representations
and warranties as so qualified shall be true in all respects) as of the
date of this Agreement and as of the Closing Date as though made on and
as of the Closing (except for such representations and warranties that
are made as of a date specified therein, which representations and
warranties shall be true and correct in all material respects as of such
date), and each Stockholder shall have delivered to the Buyer a
certificate of such Stockholder (or, as applicable, a duly authorized
officer thereof) dated as of the Closing Date to the effect that the
statements set forth in this SECTION 8.2(a)(iv) above are true and
correct with respect to such Stockholder;
(v) HSR ACT. Any waiting period (and any extension
thereof) under the HSR Act applicable to the transactions to be
consummated at the Closing shall have expired or been terminated;
(vi) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other Order
(whether temporary, preliminary or permanent) which is in effect and has
the effect of making the transactions contemplated by this Agreement for
the Closing illegal or otherwise restraining or prohibiting consummation
of such transactions;
(vii) CONSENTS. The Stockholders and the Company, as
applicable, shall have received the authorizations, Orders, approvals
and consents of Governmental Authorities and third parties described in
SCHEDULES 2.7(a) and 2.7(b) in form and substance reasonably
satisfactory to the Buyer;
(viii) ABSENCE OF MATERIAL ADVERSE CHANGE. Since the
Latest Balance Sheet Date, there shall have been no Material Adverse
Change with respect to the Company, the Subsidiaries or their respective
businesses;
(ix) DISSOLUTION OF INACTIVE SUBSIDIARIES. The
Company and it Subsidiaries shall have taken the actions required
pursuant to SECTION 5.1(b); and
(x) SOLVENCY OPINION. The Company shall have
received the Solvency Opinion.
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ARTICLE IX
INDEMNIFICATION
9.1 SURVIVAL.
Subject to the limitations and other provisions of this Agreement, the
representations and warranties of the Company, the Stockholders and the Buyer
contained in this Agreement or any Closing Document shall survive the Closing
Date until the date that is fifteen (15) months following the Closing Date;
PROVIDED, HOWEVER, that (i) the representations and warranties of the Company
contained in SECTIONS 2.1(c), 2.2, and 2.17, the representations and warranties
of the Stockholders contained in SECTIONS 3.1, 3.2(b) and 3.5 (such
representations and warranties of the Stockholders, the "EXCLUDED STOCKHOLDER
REPRESENTATIONS"), and the representations and warranties of the Buyer contained
in SECTIONS 4.1(b), 4.6 and 4.7 (such representations and warranties of the
Buyer, the "EXCLUDED BUYER REPRESENTATIONS") shall survive the Closing Date
without any time limit, (ii) the representations and warranties of the Company
set forth in SECTIONS 2.9, 2.24, 2.27 and 2.28 shall survive the Closing Date
until the date that is 30 days after the expiration of the statute of
limitations, if any, applicable to the matters set forth in such respective
representation or warranty and (iii) the representations and warranties of the
Company set forth in SECTIONS 2.10 and 2.15 shall survive the Closing Date until
the date that is 36 months following the Closing Date. The covenants and other
agreements of the parties contained in this Agreement and the Closing Documents
shall survive the Closing Date until they are otherwise terminated, whether by
their terms or as a matter of applicable Law. For convenience of reference, the
date upon which any representation, warranty, covenant or other agreement
contained herein shall terminate, if any, is referred to herein as the "SURVIVAL
DATE".
9.2 INDEMNIFICATION BY THE STOCKHOLDERS.
(a) Subject to the limitations and other provisions of this
Agreement, each Stockholder shall, severally (on a PRO RATA basis based on its
respective Stockholder Percentage) and not jointly, indemnify the Buyer and its
respective Affiliates (which, following the Closing, shall include the Company
and its Subsidiaries), officers, directors, employees, stockholders, partners,
members, managers, agents and representatives (each a "BUYER INDEMNIFIED PARTY")
against and hold them harmless from all Losses arising out of, relating to or
otherwise in respect of:
(i) any breach of any representation or warranty of
the Company or any of its Subsidiaries contained in this Agreement or
any Closing Document delivered by the Company or any Subsidiary at or
prior to the Closing;
(ii) any breach of any covenant or agreement of the
Company, any of its Subsidiaries or the Stockholders' Representative in
this Agreement or any Closing Document delivered by the Company, any
Subsidiary or the Stockholders' Representative at or prior to the
Closing;
(iii) the assertion of any claim, demand or Liability
against any Buyer Indemnified Party arising from or in connection with
any assertion by any current or
45
former stockholder, warrantholder, optionholder or other securityholder
of the Company or any of its Subsidiaries or the respective heirs,
representatives or estate thereof of any impropriety with respect to any
actions or transactions of or involving the Company or any of its
Subsidiaries prior to or at the Closing (including the actions and
transactions contemplated by this Agreement and the Closing Documents);
(iv) the Company's practice of allocating
administrative fees to its Subsidiaries, including Losses (but limited
in the case of any increased Tax liability or restatement of Taxes to
Losses for pre-Closing Tax periods only) arising out of, relating to or
otherwise in respect of the Company's failure to maintain formal
agreements with the Subsidiaries with respect thereto;
(v) item #2 set forth on SCHEDULE 2.5 hereto
regarding the Company's dispute with Siemens Medical (the "SIEMENS
MATTER");
(vi) the Undisclosed Returns; and
(vii) any InMed Proceedings in excess of the InMed
Reserve Amount.
(b) Subject to the limitations and other provisions of this
Agreement, each Stockholder shall, severally and not jointly, indemnify the
Buyer Indemnified Parties against and hold them harmless from all Losses arising
out of, relating to or otherwise in respect of:
(i) any breach of any representation or warranty of
such Stockholder contained in ARTICLE III or any Closing Document
delivered by such Stockholder at or prior to the Closing; and
(ii) any breach of any covenant or agreement of such
Stockholder in this Agreement or any Closing Document delivered by such
Stockholder at or prior to the Closing.
(c) Subject to the limitations and other provisions of this
Agreement, (i) the indemnification obligations of the Stockholders (A) pursuant
to SECTIONS 9.2(a)(i) and (b)(i) shall not be effective until the aggregate
dollar amount of all Losses that would otherwise be indemnifiable pursuant to
SECTIONS 9.2(a)(i) and (b)(i) on a cumulative basis exceeds $2,000,000 (the
"THRESHOLD AMOUNT") and then only to the extent the amount of such aggregate
Losses exceeds the Threshold Amount and (B) pursuant to SECTION 9.2(a)(v) shall
not be effective until the aggregate amount of such Losses exceeds the Siemens
Reserve, and (ii) the Stockholders shall not be obligated to indemnify any Buyer
Indemnified Party pursuant to SECTIONS 9.2(a)(i), 9.2(a)(iv), 9.2(a)(v) and
(b)(i) for the aggregate amount of Losses that exceeds the Threshold Amount by
more than $20,000,000 (the "MAXIMUM AMOUNT").
(d) Notwithstanding anything contained herein to the
contrary, but subject to the limitations set forth in SECTION 9.2(g), in no
event shall the limitations set forth above in SECTION 9.2(c) apply to the
rights of the Buyer Indemnified Parties to be indemnified by a Stockholder
pursuant to:
46
(i) SECTION 9.2(a)(i) with respect to any
representation or warranty of the Company contained in SECTIONS 2.1(c),
2.2, 2.9, 2.17, 2.24, or 2.27 (such representations and warranties of
the Company, the "EXCLUDED COMPANY REPRESENTATIONS"); PROVIDED, HOWEVER,
that the right of the Buyer Indemnified Parties to be indemnified
pursuant to SECTION 9.2(a)(i) with respect to any representation or
warranty contained in SECTION 2.9 (other than SECTION 2.9(a)(xviii))
shall be subject to the Threshold Amount; or
(ii) any claim arising from the fraud or willful
breach by the Company, any Subsidiary or the Stockholders'
Representative of any term or provision of this Agreement or any Closing
Document delivered by the Company, any Subsidiary or the Stockholders'
Representative at or prior to the Closing.
(e) Notwithstanding anything contained herein to the
contrary, in no event shall the limitations set forth above in SECTION 9.2(c)
apply to the rights of the Buyer Indemnified Parties to be indemnified by a
Stockholder pursuant to:
(i) SECTION 9.2(b)(i) with respect to any Excluded
Stockholder Representations; or
(ii) any claim arising from the fraud or willful
breach by such Stockholder of any term or provision of this Agreement or
any Closing Document delivered by such Stockholder at or prior to the
Closing.
(f) Notwithstanding the limitation set forth in
SECTION 9.2(c)(ii) as it may apply to SECTION 9.2(a)(i) with respect to the
representations and warranties contained in SECTION 2.28, the Stockholders shall
not be obligated to indemnify any Buyer Indemnified Party pursuant to SECTION
9.2(a)(i) with respect to any representation or warranty contained in SECTION
2.28 for the aggregate amount of Losses relating thereto that, (i) at any time
on or prior to the third anniversary of the Closing Date, exceeds the Threshold
Amount by the SECTION 2.28 Aggregate Amount, and (ii) at any time following the
third anniversary of the Closing Date until the applicable Survival Date,
exceeds the Threshold Amount by the Maximum Amount; PROVIDED, HOWEVER, that any
such Losses shall be applied, first, to the SECTION 2.28 Additional Amount and,
second, to the Maximum Amount; and PROVIDED FURTHER, HOWEVER, that amount of the
Maximum Amount available pursuant to CLAUSE (i) or (ii) above at any time shall
be that amount of the Maximum Amount remaining after reduction for Losses, if
any, for which the Buyer Indemnified Parties have been indemnified pursuant to
the terms of this SECTION 9.2 as of such time and to which the Maximum Amount is
otherwise applicable pursuant to this SECTION 9.2; and PROVIDED FURTHER STILL,
that the limitations set forth in THIS PARAGRAPH (f) shall not apply to the
extent that the right of any Buyer Indemnified Party to be indemnified for
Losses pursuant to SECTION 9.2(a)(i) with respect to any representation or
warranty contained in SECTION 2.28 arises out of, is related to or is otherwise
in respect of, the intentional or fraudulent acts of the Company, any Subsidiary
or any Stockholder.
(g) Notwithstanding any provision contained herein to the
contrary, in no event shall any Stockholder be obligated to indemnify any Buyer
Indemnified Party (i) pursuant to SECTION 9.2(a)(i) (other than with respect to
Excluded Company Representations) or SECTION 9.2(b)(i) (other than with respect
to Excluded Stockholder Representations) for Losses
47
exceeding, in the aggregate, the amount equal to such Stockholder's Stockholder
Percentage of (A) the Maximum Amount or (B) the SECTION 2.28 Aggregate Amount,
as applicable, or (ii) pursuant to this ARTICLE IX for any Losses exceeding the
amount equal to such Stockholder's Redeemed Shares Percentage of the Aggregate
Redemption Price (including with respect to Excluded Company Representations and
Excluded Stockholder Representations), and in no event shall any Stockholder
other than the breaching Stockholder(s) be obligated to indemnify any Buyer
Indemnified Party for Losses pursuant to SECTIONS 9.2(b).
(h) No indemnification shall be payable to a Buyer
Indemnified Party with respect to claims arising on or prior to the applicable
Survival Date for which such Buyer Indemnified Party has not given notice to the
Stockholders' Representative on or prior to the date that is ten (10) Business
Days after the applicable Survival Date.
(i) Payments by the Stockholders pursuant to SECTIONS 9.2(a)
and (b) shall be (i) limited to the amount of any Losses that remain after
deducting therefrom any insurance proceeds and any indemnity, contribution or
other similar payment actually received by the Buyer Indemnified Parties from
any third party with respect thereto (after first deducting therefrom any
expenses incurred by Buyer Indemnified Parties in pursuing the same), (ii)
increased to take account of any net Tax cost incurred by the Buyer Indemnified
Parties arising from the receipt or accrual of any payments hereunder (grossed
up for such increase), and (iii) reduced to take account of any net Tax benefit
realized by the Buyer Indemnified Parties arising from the deductibility of any
such Loss or Tax. In computing the amount of any such Tax cost or Tax benefit,
the Buyer Indemnified Parties shall be deemed to recognize all other items of
income, gain, Loss, deduction or credit before recognizing any item arising from
the receipt or accrual of any payment hereunder or the deductibility of any
Loss. Any payment hereunder shall initially be made without regard to this
paragraph and shall be increased or reduced to reflect any such net Tax cost
(including gross-up) or net Tax benefit only after the Buyer Indemnified Parties
have actually realized such cost or benefit. For purposes of this Agreement, a
Buyer Indemnified Party shall be deemed to have "actually realized" a net Tax
cost or a net Tax benefit to the extent that, and at such time as, the amount of
Taxes payable by such Buyer Indemnified Party is increased above or reduced
below, as the case may be, the amount of Taxes that such Buyer Indemnified Party
would have been required to pay but for the receipt or accrual of the payment or
the deductibility of such Loss, as the case may be. The amount of any increase
or reduction hereunder shall be adjusted to reflect any final determination of a
Governmental Authority (which shall include the execution of Form 870-AD or a
successor form and the resolution of which shall be treated as a Third Party
Claim subject to the provisions of SECTIONS 9.2(j) - (l)) with respect to the
Buyer Indemnified Party's Liability for Taxes and, if necessary, each of the
Buyer Indemnified Parties or Stockholder Indemnified Parties, as the case may
be, shall make payments to the other to reflect such adjustment.
(j) A Buyer Indemnified Party shall give the Stockholders'
Representative written notice of any claim, assertion, event or proceeding by or
in respect of a third party (each, a "THIRD PARTY CLAIM") as to which such Buyer
Indemnified Party requests indemnification hereunder or as to which the
Threshold Amount may be applied as soon as is practicable and in any event
within thirty (30) days of the time that such Buyer Indemnified Party learns of
such Third Party Claim; PROVIDED, HOWEVER, that the failure to so notify the
Stockholders'
48
Representative shall not affect rights to indemnification hereunder unless and
only to the extent that the Stockholder Group is materially prejudiced by such
failure.
(k) If the Stockholders' Representative acknowledges in a
writing delivered to Buyer Indemnified Party that the Stockholder Group is
obligated under the terms of their indemnification obligations hereunder, then
the Stockholders' Representative, in consultation with the Stockholders, shall
have the right to direct, through counsel of its own choosing, which counsel
shall be reasonably acceptable to Buyer Indemnified Party, the defense or
settlement of any such Third Party Claim at their own expense; PROVIDED,
HOWEVER, that the Stockholders' Representative shall not have the right to
assume the defense of any Third Party Claim, notwithstanding the giving of such
written acknowledgment, if (i) Buyer Indemnified Party shall have been advised
by counsel that there are one or more legal or equitable defenses available to
it that are different from or in addition to those available to the Stockholder
Group, and, in the reasonable opinion of Buyer Indemnified Party, counsel for
the Stockholder Group could not adequately represent the interests of Buyer
Indemnified Party because such interests could be in conflict with those of the
Stockholder Group, (ii) such Third Party Claim involves, or could have an effect
on, any material matter beyond the scope of the indemnification obligation of
the Stockholder Group as involves injunctive or other non-monetary relief or
relates to Tax matters; or (iii) the Stockholders' Representative shall not have
assumed the defense of the Third Party Claim in a timely fashion.
(l) If the Stockholders' Representative elects to assume the
defense of any such Third Party Claim (under circumstances in which the proviso
in SECTION 9.2(j) is not applicable), the Stockholders' Representative shall
consult with the Buyer Indemnified Party and such Buyer Indemnified Party may
participate in such defense, but in such case the expenses of such Buyer
Indemnified Party shall be paid by the Buyer Indemnified Party. The Buyer
Indemnified Party shall provide the Stockholders' Representative with access to
its records and personnel relating to any such claim, assertion, event or
proceeding during normal business hours and shall otherwise reasonably cooperate
with the Stockholders' Representative in the defense or settlement thereof, and
the Stockholders' Representative shall reimburse the Buyer Indemnified Party for
all its reasonable out-of-pocket expenses in connection therewith. The
Stockholders' Representative may not settle any such claim without the consent
of the Majority Stockholders, which consent shall not be unreasonably withheld
or delayed. If the Stockholders' Representative fails to defend a Third Party
Claim, is otherwise restricted from so defending, or if, after commencing or
undertaking any such defense, the Stockholders' Representative fails to
prosecute or withdraw from such defense, the Buyer Indemnified Party shall have
the right to undertake the defense or settlement thereof, at the Stockholders'
expense. If the Buyer Indemnified Party assumes the defense of any such Third
Party Claim in accordance with the terms hereof and proposes to settle such
Third Party Claim prior to a final judgment thereon or to forego any appeal with
respect thereto, then the Buyer Indemnified Party shall give the Stockholders'
Representative prompt written notice thereof, and may not settle such Third
Party Claim or forego such an appeal without the consent of the Majority
Stockholders, which consent shall not be unreasonably withheld or delayed, or
unless a final judgment from which no appeal may be taken by or on behalf of the
Stockholders is entered against the Stockholders for such Liability.
49
(m) The Buyer hereby acknowledges and agrees that, from and
after the Closing, its sole and exclusive remedy with respect to any and all
monetary claims relating to this Agreement shall be pursuant to the
indemnification provisions set forth in this ARTICLE IX.
(n) The Buyer shall, and following the Closing shall take
all commercially reasonable efforts to cause the Company and its Subsidiaries
to, take all reasonable steps to mitigate Losses for which indemnification may
be claimed pursuant to this Agreement upon and after becoming aware of any event
that would give rise to any such Losses.
9.3 INDEMNIFICATION BY THE BUYER.
(a) Subject to the limitations and other provisions of this
Agreement, the Buyer shall indemnify the Stockholders and their respective
Affiliates, officers, directors, employees, stockholders, partners, members,
managers, agents and representatives (each a "STOCKHOLDER INDEMNIFIED PARTY")
against and hold them harmless from all Losses arising out of, relating to or
otherwise in respect of:
(i) any breach of any representation or warranty of
the Buyer contained in this Agreement or in any Closing Document
delivered by the Buyer at or prior to the Closing; and
(ii) any breach of any covenant or agreement of the
Buyer in this Agreement or any Closing Document delivered by the Buyer
at or prior to the Closing.
(b) Subject to the limitations and other provisions of this
Agreement, (i) the indemnification obligations of the Buyer pursuant to SECTION
9.3(a)(i) shall not be effective until the aggregate dollar amount of all Losses
that would otherwise be indemnifiable pursuant to SECTION 9.3(a)(i) exceeds the
Threshold Amount, and then only to the extent the amount of such aggregate
Losses exceeds the Threshold Amount, and (ii) the Buyer shall not be obligated
to indemnify any Stockholder Indemnified Party pursuant to SECTION 9.3(a)(i) for
the amount of Losses that exceed the Threshold Amount by more than the Maximum
Amount.
(c) Notwithstanding anything contained herein to the
contrary, in no event shall the limitations set forth above in SECTION 9.3(b)
apply to the rights of the Stockholder Indemnified Parties to be indemnified
pursuant to:
(i) SECTION 9.3(a)(i) with respect to any Excluded
Buyer Representation; or
(ii) any claim arising from the fraud or willful
breach by the Buyer of any term or provision of this Agreement or any
Closing Document delivered by the Buyer at or before the Closing.
(d) In no event shall the Buyer be obligated to indemnify
any Stockholder Indemnified Party pursuant to ARTICLE IX for Losses which, in
the aggregate, exceed the Aggregate Purchase Price.
(e) No indemnification shall be payable to a Stockholder
Indemnified Party with respect to claims arising on or prior to the applicable
Survival Date for which such Stockholder
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Indemnified Party has not given notice to the Buyer on or prior to the date that
is ten (10) Business Days after the applicable Survival Date.
(f) Payments by the Buyer pursuant to SECTION 9.3(a) shall
be (i) limited to the amount of any Losses that remains after deducting
therefrom any insurance proceeds and any indemnity, contribution or other
similar payment actually recovered by the Stockholder Indemnified Parties from
any third party with respect thereto (after first deducting therefrom any
expenses incurred by the Stockholder Indemnified Parties in pursuing the same),
(ii) increased to take account of any net Tax cost incurred by the Stockholder
Indemnified Parties arising from the receipt or accrual of any payments
hereunder (grossed up for such increase), and (iii) reduced to take account of
any net Tax benefit realized by the Stockholder Indemnified Parties arising from
the deductibility of any such Loss or Tax. In computing the amount of any such
Tax cost or Tax benefit, the Stockholder Indemnified Parties shall be deemed to
recognize all other items of income, gain, Loss, deduction or credit before
recognizing any item arising from the receipt or accrual of any payment
hereunder or the deductibility of any Loss. Any payment hereunder shall
initially be made without regard to this paragraph and shall be increased or
reduced to reflect any such net Tax cost (including gross-up) or net Tax benefit
only after the Stockholder Indemnified Parties have actually realized such cost
or benefit. For purposes of this Agreement, a Stockholder Indemnified Party
shall be deemed to have "actually realized" a net Tax cost or a net Tax benefit
to the extent that, and at such time as, the amount of Taxes payable by such
Stockholder Indemnified Party is increased above or reduced below, as the case
may be, the amount of Taxes that such Stockholder Indemnified Party would have
been required to pay but for the receipt or accrual of the payment or the
deductibility of such Loss, as the case may be. The amount of any increase or
reduction hereunder shall be adjusted to reflect any final determination of a
Governmental Authority (which shall include the execution of Form 870-AD or a
successor form and the resolution of which shall be treated as a Third Party
Claim subject to the provisions of SECTIONS 9.3(g) - (i)) with respect to the
Stockholder Indemnified Party's Liability for Taxes and, if necessary, each of
the Stockholder Indemnified Parties or Buyer Indemnified Parties, as the case
may be, shall make payments to the other to reflect such adjustment.
(g) The Stockholders' Representative shall give the Buyer
written notice of any Third Party Claim as to which any Stockholder Indemnified
Party may request indemnification hereunder or as to which the Threshold Amount
may be applied as soon as is practicable and in any event within thirty (30)
days of the time that such Stockholder Indemnified Party learns of such Third
Party Claim; PROVIDED, HOWEVER, that the failure to so notify the Buyer shall
not affect rights to indemnification hereunder unless and only to the extent
that the Buyer is materially prejudiced by such failure.
(h) If the Buyer acknowledges in a writing delivered to the
Stockholders' Representative that the Buyer is obligated under the terms of its
indemnification obligations hereunder, then the Buyer shall have the right to
direct, through counsel of its own choosing, which counsel shall be reasonably
acceptable to the Stockholders' Representative, the defense or settlement of any
such Third Party Claim at its own expense; PROVIDED, HOWEVER, that the Buyer
shall not have the right to assume the defense of any such Third Party Claim,
notwithstanding the giving of such written acknowledgment, if (i) the
Stockholders' Representative shall have been advised by counsel that there are
one or more legal or equitable defenses available to the
51
Stockholder Indemnified Party that are different from or in addition to those
available to the Buyer, and, in the reasonable opinion of the Stockholders'
Representative, counsel for the Buyer could not adequately represent the
interests of the Stockholder Indemnified Party because such interests could be
in conflict with those of the Buyer, (ii) such Third Party Claim involves, or
could have an effect on, any material matter beyond the scope of the
indemnification obligation of the Buyer as involves injunctive or other
non-monetary relief or relates to Tax matters or (iii) the Buyer shall not have
assumed the defense of the Third Party Claim in a timely fashion.
(i) If the Buyer elects to assume the defense of any such
Third Party Claim (under circumstances in which the proviso in SECTION 9.3(h) is
not applicable), the Buyer shall consult with the Stockholders' Representative
and the Stockholders' Representative may participate in such defense, but in
such case the expenses of the Stockholders' Representative shall be paid by the
Stockholder Indemnified Parties. The Stockholders' Representative and the
Stockholder Indemnified Parties shall provide the Buyer with reasonable access
to their records and personnel relating to any such Third Party Claim during
normal business hours and shall otherwise reasonably cooperate with the Buyer in
the defense or settlement thereof, and the Buyer shall reimburse the Stockholder
Indemnified Parties for all the reasonable out-of-pocket expenses of such
Stockholder Indemnified Parties in connection therewith. If the Buyer fails to
defend such a Third Party Claim, is otherwise restricted from so defending, or
if, after commencing or undertaking any such defense, the Buyer fails to
prosecute or withdraws from such defense, the Stockholders' Representative shall
have the right to undertake the defense or settlement thereof, at the Buyer's
expense. If the Stockholders' Representative assumes the defense of any such
Third Party Claim in accordance with the terms hereof and proposes to settle
such Third Party Claim prior to a final judgment thereon or to forego appeal
with respect thereto, then the Stockholders' Representative shall give the Buyer
prompt written notice thereof and may not settle such Third Party Claim or
forego such an appeal without the consent of the Buyer, which consent shall not
be unreasonably withheld or delayed, or unless a final judgment from which no
appeal may be taken by or on behalf of the Buyer is entered against the Buyer
for such Liability.
(j) The Stockholders hereby acknowledge and agree that from
and after the Closing, their sole and exclusive remedy with respect to any and
all monetary claims relating to this Agreement shall be pursuant to the
indemnification provisions set forth in this ARTICLE IX.
(k) The Stockholders shall, and prior to the Closing shall
take all commercially reasonable efforts to cause the Company and its
Subsidiaries to, take all reasonable steps to mitigate Losses for which
indemnification may be claimed pursuant to this Agreement upon and after
becoming aware of any event that would give rise to any such Losses.
9.4 PAYMENT OF CLAIMS; RIGHT OF SET-OFF.
(a) Each Stockholder's respective obligations to indemnify
the Buyer Indemnified Parties pursuant to this ARTICLE IX shall be satisfied by
such Stockholder by payment of cash to the appropriate Buyer Indemnified Party.
In no event shall any obligation to indemnify the Buyer Indemnified Parties be
satisfied by the return or forfeiture of Rollover Shares.
52
(b) Buyer Indemnified Parties shall have the right to
set-off against amounts owed by any member of the Buyer Group to such
Stockholder Indemnified Party (i) any amount owed by any member of the
Stockholder Group to any Buyer Indemnified Party under this Agreement or
otherwise; and (ii) any Losses incurred as a result of the indemnification
events set forth in SECTIONS 9.2(a) AND 9.2(b). Stockholder Indemnified Parties
shall have the right to set-off against amounts owed by any member of the
Stockholder Group to any Buyer Indemnified Party (i) any amount owed by any
member of the Stockholder Group to any Buyer Indemnified Party under this
Agreement or otherwise; and (ii) any Losses incurred as a result of the
indemnification events set forth in SECTIONS 9.3(a). Only amounts that have been
determined by a non-appealable judgment or pursuant to an agreement among the
applicable parties to be owed by one party to another can be used to offset any
other amount pursuant to this SECTION 9.4(b). In the event of the election by
any party to exercise any right of set-off under this SECTION 9.4(b), the
appropriate party shall deliver a written notice to the other parties specifying
the specific right of set-off to be exercised and the amount thereof.
9.5 NO CONTRIBUTION FROM THE COMPANY.
The obligations of the Stockholders to indemnify the Buyer Indemnified
Parties pursuant to the terms of this Agreement are primary obligations of the
Stockholders, subject to the limitations set forth herein. The Stockholders
hereby waive any right to seek or obtain indemnification or contribution from
the Company or any Subsidiary for Losses as a result of any breach by the
Company of any representation, warranty or covenant contained in this Agreement.
9.6 DIRECTORS' AND OFFICERS' INSURANCE.
Prior to the Closing, the Company shall purchase an extended reporting
period endorsement ("REPORTING TAIL COVERAGE") under the Company's existing
directors' and officers' liability insurance coverage for the Company's
directors and officers in a form acceptable to the Company and the Buyer which
shall provide such directors and officers with coverage for six (6) years
following the Closing of not less than the existing coverage under, and have
other terms not materially less favorable to, the insured persons than the
directors' and officers' liability insurance coverage presently maintained by
the Company. The Company and the Stockholders (for themselves and their
respective officers, directors and affiliates) acknowledge that the Company
shall have no liability to any existing director or officer in excess of the
amount of insurance coverage purchased by the Reporting Tail Coverage with
respect to, or in connection with, any Liability arising from, related to or in
connection with any fact, event or occurrence existing or taking place prior to
the Closing.
9.7 GENERAL RELEASE.
(a) Each of the Stockholders does from and after the
Closing hereby release forever and discharge the Company, the Subsidiaries, each
of the Company's and its Subsidiaries' respective Affiliates, and each of their
respective officers, managers, directors, members and employees (collectively,
the "COMPANY RELEASEES"), of and from any and all claims, demands, causes of
action, damages or Liabilities of any kind or nature whatsoever that relate to
or arise out of any dealings, relationships or transactions by and between such
Stockholder, on the one
53
hand, and any Company Releasee, on the other hand, in law or equity, which
against any Company Releasee such Stockholder, has ever had, now has or which
he, she or it hereafter can, shall or may have, whether or not now known, from
the beginning of the world to the Closing Date. Each of the Stockholders
understands and agrees that it is expressly waiving all claims, even those it
may not know or suspect to exist, which if known may have materially affected
the decision to provide this release, and such Stockholder expressly waives any
rights under applicable Law that provide to the contrary.
(b) The Company does from and after the Closing hereby
release forever and discharge each Stockholder, its Affiliates, and each of
their respective officers, managers, directors, members and employees
(collectively, the "STOCKHOLDER RELEASEES") of and from any and all claims,
demands, causes of action, damages or Liabilities of any kind or nature
whatsoever that relate to or arise out of any dealings, relationships or
transactions by and between the Company or its Subsidiaries, on the one hand,
and such Stockholder Releasee, on the other hand, in law or equity, which
against such Stockholder Releasee the Company has ever had, now has or which it
hereafter can, shall or may have, whether or not now known, from the beginning
of the world to the Closing Date. The Company understands and agrees that it is
expressly waiving all claims, even those it may not know or suspect to exist,
which if known may have materially affected the decision to provide this
release, and the Company expressly waives any rights under applicable Law that
provide to the contrary.
(c) The releases set forth in PARAGRAPHS (a) and (b) above
shall not apply to any rights such Stockholder, the Company or such Subsidiary
has pursuant to (i) this Agreement, any Related Document or the transactions
contemplated hereby or thereby, (ii) any immunities and indemnification under
the Company's or the Subsidiaries' Organizational Documents or contractual
arrangements, (iii) any directors' and officers' liability insurance policies,
if any, maintained by or on behalf of the Company or the Subsidiaries and (iv)
any claim of fraud.
9.8 TERMINATION OF RELATED TRANSACTIONS.
Each Stockholder agrees that, effective as of the Closing Date and
without any further action by the Company, the Subsidiaries, or any Stockholder,
the Company, its Subsidiaries and their respective Affiliates shall be released
from any and all obligations and liabilities under (i) the Contracts set forth
on SCHEDULE 2.24 in response to SECTION 2.24, (ii) any and all Contracts that
were not, but by their terms should have been, set forth on SCHEDULE 2.24, (iii)
any and all Contracts or arrangement set forth on SCHEDULE 2.2(a) in response to
SECTION 2.2(a), and (iv) any and all Contracts or arrangements that were not,
but by their terms should have been, set forth on SCHEDULE 2.2(a), and all such
Contracts and arrangements shall have no further force or effect as of the
Closing Date; PROVIDED that the provisions of this SECTION 9.8 shall not apply
to those arrangements set forth on SCHEDULE 9.8.
54
ARTICLE X
MISCELLANEOUS
10.1 TERMINATION.
This Agreement may be terminated:
(a) at any time, by the mutual written consent of the
Majority Stockholders, the Company and the Buyer;
(b) by the Majority Stockholders or the Company, upon
written notice to the Buyer, upon a material breach of any representation,
warranty or covenant of the Buyer contained in this Agreement or any Closing
Document, PROVIDED that such breach is not capable of being cured or has not
been cured within thirty (30) days after the giving of notice thereof by the
Company to the Buyer;
(c) by the Buyer, upon written notice to Company, upon a
material breach of any representation, warranty or covenant of the Company, any
Stockholder or the Stockholders' Representative contained in this Agreement or
any Closing Document, PROVIDED that such breach is not capable of being cured or
has not been cured within thirty (30) days after the giving of notice thereof by
the Buyer to the Company, such Stockholder or the Stockholders' Representative;
(d) by the Buyer, if there shall have occurred after the
date of this Agreement any change concerning the Company or its Subsidiaries
which has resulted in or would reasonably be expected to result in a Material
Adverse Change; PROVIDED, HOWEVER, that, for purposes of this SECTION 10.1(d)
only, the following shall not be deemed to constitute and shall not be taken
into account in determining whether there has been a Material Adverse Change:
(i) the consummation of this Agreement, the transactions contemplated hereby, or
any announcement or indication thereof, or any actions taken by the Buyer
hereunder or in contemplation hereof, or any action which the Company was
required to take hereunder, or (ii) any contact of the Buyer with any of the
customers or suppliers, or potential customers or suppliers, or any of the
officers of the Company or any of its Subsidiaries (including the departure of
any such officer);
(e) by the Majority Stockholders and the Company, if the
Closing has not occurred by August 22, 2002 (or such other date as the Buyer and
the Majority Stockholders may agree to in writing), PROVIDED that neither the
Company, the Stockholders' Representative nor any Stockholder is in breach of
any provision contained herein; or
(f) by the Buyer, if the conditions to the obligations of
the Buyer set forth in SECTION 8.2 have not been satisfied by October 31, 2002
(or such other date as the Buyer and the Majority Stockholders may agree to in
writing), PROVIDED that the Buyer is not in breach of any provision contained
herein;
PROVIDED, HOWEVER, that, in the case of CLAUSES (b) or (c), no party shall be
entitled terminate this Agreement if a breach by such party of any of its
representations, warranties, covenants or
55
agreements contained in this Agreement is causing the failure by the other party
to satisfy a condition set forth in ARTICLE VIII.
10.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement as provided in
SECTION 10.1, this Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto except as set forth in SECTION 5.5,
SECTION 5.9(b), this SECTION 10.2, SECTION 10.4 and ARTICLE XI, PROVIDED,
HOWEVER, that nothing herein shall relieve either party from liability for any
willful breach hereof.
10.3 WAIVER.
At any time prior to the Closing, the Buyer, the Company and the
Majority Stockholders hereto may (a) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant hereto or (c)
waive compliance with any of the agreements of the other party or conditions to
its own obligations contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the parties to be
bound thereby (the Stockholders being bound by the signatures of the Majority
Stockholders). Waiver of any term or condition of this Agreement by a party
shall not be construed as a waiver of any subsequent breach or waiver of the
same term or condition by such party, or a waiver of any other term or condition
of this Agreement by such party.
10.4 APPOINTMENT OF STOCKHOLDERS' REPRESENTATIVES.
(a) Each of the Stockholders hereby irrevocably appoints two
Persons designated from time to time pursuant to SECTION 10.4(f) as its true and
lawful attorneys-in-fact, to act as its representatives (each, a "STOCKHOLDERS'
REPRESENTATIVE," and together, the "STOCKHOLDERS' REPRESENTATIVES") under this
Agreement and, as such, to act, as such Stockholder's agents (with full power of
substitution), to take such action on such Stockholder's behalf with respect to
all matters under ARTICLE I, ARTICLE VIII, ARTICLE IX, and this ARTICLE X to the
extent expressly set forth therein. Each of Xxxxx Xxxx and Xxxx Xxxxxxx hereby
accepts his appointment as the initial Stockholders' Representatives and the
authorization set forth above. The Stockholders' Representatives shall not have
any duties or responsibilities except those expressly set forth in this
Agreement, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or shall otherwise
exist against the Stockholders' Representatives. With respect to all other
actions, the Stockholders' Representatives shall only take or authorize such
actions approved orally or in writing by the Majority Stockholders. Any actions
taken by the Stockholders' Representatives pursuant to this SECTION 10.4 shall
require the consent of both Stockholders' Representatives.
(b) The Stockholders' Representatives shall be entitled to
rely, and shall be fully protected in relying, upon any statements furnished to
them by any Stockholder, or any other evidence deemed by the Stockholders'
Representatives to be reliable, and the Stockholders' Representatives shall be
entitled to act on the advice of counsel selected by it. The Stockholders'
56
Representatives shall be fully justified in failing or refusing to take any
action under this Agreement unless they shall have received such advice or
concurrence of such Stockholders as it deems appropriate or it shall have been
expressly indemnified to its satisfaction by the Stockholders appointing them
severally according to their respective Stockholder Percentages against any and
all liability and expense that the Stockholders' Representatives may incur by
reason of taking or continuing to take any such action.
(c) The Stockholders' Representatives shall be entitled to
retain counsel and to incur such expenses as the Stockholders' Representatives
deem to be necessary or appropriate in connection with their performance of
their obligations under this Agreement, and all such fees and expenses
(including reasonable attorneys' fees and expenses) incurred by the
Stockholders' Representatives shall be borne by the Stockholders PRO RATA
according to their respective Stockholder Percentages.
(d) The Stockholders hereby agree to indemnify the
Stockholders' Representatives (in their capacities as such) PRO RATA according
to their respective Stockholder Percentages against, and to hold the
Stockholders' Representatives (in their capacities as such) harmless from, any
and all Losses of any kind which may at any time be imposed upon, incurred by or
asserted against the Stockholders' Representatives in such capacities in any way
relating to or arising out of their action or failures to take action pursuant
to this Agreement or in connection herewith in such capacity; PROVIDED, THAT no
Stockholder shall be liable for the payment of any portion of such Losses
resulting solely from the gross negligence or willful misconduct of either
Stockholders' Representative. The agreements in this SECTION 10.4 shall survive
termination of this Agreement.
(e) To the extent this Agreement provides that the
Stockholders shall be jointly and severally liable to personally pay any cost,
expense or other liability, the Stockholders shall share such payment PRO RATA
in accordance with their respective Stockholder's Percentages, and shall
reimburse each other as necessary to give effect to the intent of this
provision.
(f) Each of Xxxxx Xxxx and Xxxx Xxxxxxx shall be the initial
Stockholders' Representatives and shall serve as the Stockholders'
Representatives until the earlier of their respective resignation or removal
(with or without cause) by Stockholders whose Stockholder's Percentages exceed,
in the aggregate, 50% of the sum of the Stockholder Percentages of all
Stockholders (the "MAJORITY STOCKHOLDERS"). Upon the resignation or removal of
either or both of Xxxxx Xxxx or Xxxx Xxxxxxx, the Majority Stockholders shall
select a new Stockholders' Representative or Stockholders' Representatives, as
the case may be, who may resign, be removed or replaced in such a manner as the
Majority Stockholders agree. Each time a new Stockholders' Representative is
appointed pursuant to this Agreement, such Person shall accept such position in
writing.
(g) The Majority Stockholders shall notify the Buyer of each
change of Stockholders' Representatives. Until the Buyer receives the foregoing
notice, it shall be entitled to assume that any prior Person acting as a
Stockholders' Representative is still a duly authorized Stockholders'
Representative.
57
10.5 NON-COMPETE; NON-SOLICITATION.
(a) Subject to the further provisions of this SECTION 10.5,
during the period commencing on the Closing Date and ending on the date that is
two (2) years following the date of termination of employment of such Executive
(the "NON-COMPETE PERIOD"), each Executive covenants and agrees that he will
not, directly or indirectly, enter into, engage in, assist, give or lend funds
to or otherwise finance, be employed by or consult with, or have a financial or
other interest in, any business which engages in any Competitive Business in any
state listed on SCHEDULE 10.5(a), whether for or by himself or as an independent
contractor, agent, stockholder, partner or joint venturer for any other Person;
PROVIDED, HOWEVER, that nothing contained in this SECTION 10.5 shall be deemed
to prohibit such Executive from acquiring, solely as an investment, up to two
(2) percent of the publicly-traded shares of capital stock of any corporation.
To the extent that the covenant provided for in this SECTION 10.5 may later be
deemed by a court to be too broad to be enforced with respect to its duration or
with respect to any particular activity or geographic area, the court making
such determination shall have the power to reduce the duration or scope of the
provision, and to add or delete specific words or phrases to or from the
provision. The provision as modified shall then be enforced.
(b) The parties hereto agree and acknowledge that $10,000 of
the Aggregate Redemption Price shall be allocated to each Stockholder that is an
Executive as consideration for the covenants made by each Stockholder in SECTION
10.5(a)
10.6 INMED LITIGATION.
(a) From and after the Closing Date, the Stockholders shall
assume and direct, through counsel of its choosing, which counsel shall be
reasonably acceptable to the Company, the defense, appeal or settlement of any
Proceeding relating to, arising out of or in connection with the InMed
Litigation (collectively, the "InMed PROCEEDINGS") at the Stockholders' sole
expense. Any decision to continue to litigate, arbitrate, mediate, appeal or
settle any such InMed Proceedings shall be the sole decision of the Stockholders
after consultation with the Company; PROVIDED, however that the Stockholders
shall not settle any InMed Proceedings if such settlement involves injunctive or
other non-monetary relief against the Company. The Company shall provide the
Stockholders with access to records and personnel relating to the InMed
Proceedings during normal business hours and shall otherwise reasonably
cooperate with the Stockholders in the defense, appeal or settlement thereof,
and the Stockholders shall reimburse the Buyer Indemnified Parties for all of
their out-of-pocket expenses (including, without limitation, reasonable
attorneys', accountants' and other professionals' fees and expenses) in
connection therewith. Based on any final and binding settlement agreement or
judgment relating to the InMed Proceedings, the Stockholders shall be (i)
entitled to receive from the Company the amount, if any, by which (A) the InMed
Reserve plus any other monetary award granted in favor of the Company in the
InMed Proceedings and actually received exceeds (B) the amount owed by the
Company or any of its Subsidiaries or Affiliates as set forth and determined in
any such final and binding settlement or judgment (the amount in CLAUSE (i)(b)
hereof, "INMED RESOLUTION AMOUNT") or (ii) obligated to pay to the Company the
amount, if any, by which the InMed Resolution Amount exceeds the InMed Reserve
Amount. Any payment required to be made pursuant to CLAUSE (i) shall be made
promptly following the Company's receipt of (A) such excess amount from the
escrow established in connection with the InMed Litigation and (B)
58
actual receipt by the Company of any such monetary reward. Any payment required
to be made pursuant to this CLAUSE (ii) shall be immediately paid by wire
transfer of immediately available funds to an account designated by the party
entitled to receive payment hereunder.
(b) If the Stockholders fail to defend or appeal any such
InMed Proceedings, are otherwise restricted from so defending or appealing, or
if, after commencing or undertaking any such defense or appeal, the Stockholders
fail to prosecute or withdraw from such defense or appeal, the Company shall
have the right to undertake the defense, appeal or settlement thereof, at the
Stockholders' sole expense. If the Company assumes the defense or appeal of any
InMed Proceedings pursuant to this SECTION 10.6(b), (i) any decision to continue
to litigate, arbitrate, mediate, appeal or settle any such InMed Proceedings
shall be the sole decision of the Company and shall be binding upon the
Stockholders and (ii) the Stockholders shall (A) not be entitled to the amount,
if any, by which the InMed Reserve Amount exceeds the InMed Resolution Amount
and (B) be obligated to indemnify to the Company for any losses in accordance
with SECTION 9.2(a)(vii). Any payment required to be made pursuant to this
SECTION 10.6(b) shall be immediately paid by the Stockholders to the Company by
wire transfer of immediately available funds to an account designated by the
Company.
(c) Any amounts required to be paid by or to the
Stockholders pursuant to this SECTION 10.6 shall be treated for all income Tax
purposes as an adjustment to the Aggregate Redemption Price, the Aggregate
Purchase Price, or both, as applicable.
(d) If at any time prior to the Closing, the TA Entities
deliver written notice to the Buyer that such TA Entities elect not to have any
obligations or rights under this SECTION 10.6, then, for purposes of this
SECTION 10.6 only and without any further action, all references to
"STOCKHOLDERS" in this SECTION 10.6 shall be deemed to refer only to "ROLLOVER
STOCKHOLDERS", and no other Stockholders other than the Rollover Stockholders
shall have any rights or obligations under this SECTION 10.6, including any
indemnification obligations pursuant to SECTION 9.2(a)(vii).
ARTICLE XI
GENERAL PROVISIONS
11.1 NOTICES.
All notices, requests, claims, demands and other communications under
this Agreement will be in writing and will be deemed given if delivered
personally, sent by nationally-recognized overnight courier (providing proof of
delivery), or via facsimile to the parties at the following addresses (or at
such other address for a party as specified by like notice):
(a) if, prior to the Closing, to the Company or to any
Stockholders employed by the Company, to:
MQ Associates, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: J. Xxxxxxx Xxxx, President
Fax Number: (000) 000-0000
59
with copy to:
MQ Associates, Inc.
X.X. Xxx 000000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx, Esq.
Fax Number: (000) 000-0000
Xxxxxxx Procter LLP
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, P.C.
Fax Number: (000) 000-0000
(b) if, after the Closing, to any Stockholder (other than TA
Associates, Inc.) to the address set forth opposite such Stockholder's name on
the signature pages hereto:
(c) if to TA Associates, Inc., to:
TA Associates, Inc.
Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. X. Xxxx
Fax Number: (000) 000-0000
with a copy to:
Xxxxxxx Procter LLP
Exchange Place
Boston, MA 02109
Attn: Xxxxx X. Xxxxxx, P.C.
Fax Number: (000) 000-0000
(d) if to the Buyer, and, following the Closing, to the
Company, to:
MQ Investment Holdings, LLC
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Official Notices Clerk
Fax Number: 000-000-0000
with a copy to:
60
X'Xxxxxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxxxx, Esq.
Fax Number: (000) 000-0000.
All such notices and other communications shall be deemed to
have been given and received (i) in the case of personal delivery, on the date
of such delivery, (ii) in the case of delivery by facsimile, on the date of such
delivery, and (iii) in the case of delivery by nationally- recognized overnight
courier, on the Business Day following dispatch.
11.2 FEES AND EXPENSES.
Except as otherwise provided herein or in the Related Documents, each
of the Buyer, on the one hand, and the Company on the other hand, shall bear its
own fees and expenses in connection with the preparation for and consummation of
the transaction contemplated by this Agreement and the Related Documents;
PROVIDED, HOWEVER, that this provision shall not limit any party's right to
include such expenses in any claim for damages against any other party who
breaches any provision of this Agreement or the Related Documents. On the
Closing Date, immediately following the consummation of the Redemption and
Reclassification, the Company shall reimburse the Buyer for all fees and
expenses incurred in connection with the transactions contemplated by this
Agreement and the Related Documents, including the fees and expenses of counsel,
advisers and consultants. All other fees and expenses of the Company incurred in
connection with the preparation for and consummation of the transaction
contemplated by this Agreement and the Related Documents (including all fees and
expenses payable to JPMSI) and all fees and expenses of the Stockholders'
Representative and the Stockholders shall be the sole obligation of the
Stockholders.
11.3 INTERPRETATION; CONSTRUCTION.
(a) When a reference is made in this Agreement to an
Article, Section, Schedule, Annex, or Exhibit, such reference will be to an
Article or Section of, or an Annex, Schedule or Exhibit to, this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they will be deemed to be
followed by the words "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement will refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms used herein with initial capital letters have the meanings
ascribed to them herein and all terms defined in this Agreement will have such
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and
61
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns. The Schedules, Annexes and Exhibits identified
in this Agreement are incorporated herein by reference and made a part hereof.
(b) Where specific language is used to clarify by example a
general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
(c) Whenever a provision in this Agreement refers to the
"COMPANY'S KNOWLEDGE," it shall be deemed to refer to (i) actual knowledge and
(ii) that knowledge that a prudent businessperson would have obtained after
making such due inquiry that a prudent business person would have made in order
to gain a full understanding and determination of the accuracy of the relevant
representation or warranty set forth herein. In connection therewith, the
knowledge (both actual and constructive) of Xxxx Xxxxxxx, J. Xxxxxxx Xxxx,
Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxx and Xxxxx Xxxxx shall be imputed
to be the Company's Knowledge.
11.4 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which will be considered one and the same agreement and will become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties. This Agreement may be executed and delivered in
counterpart signatures delivered via facsimile transmission and any such
counterpart so delivered shall be deemed and original for all intents and
purposes.
11.5 AMENDMENTS.
This Agreement may not be amended or modified, nor may compliance with
any condition or covenant set forth herein be waived, except by a writing duly
and validly executed by each party hereto, or in the case of a waiver, the party
waiving compliance.
11.6 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES; SEVERABILITY.
This Agreement (including the documents, instruments, annexes, exhibits
and schedules referred to herein), and the Confidentiality Agreement hereto
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (including the letter of intent dated April 30,
2002, between the Buyer, the Company and the Stockholders, as the same may be
amended). If any term, condition or other provision of this Agreement is found
to be invalid, illegal or incapable of being enforced by virtue of any rule of
Law, public policy or court determination, all other terms, conditions and
provisions of this Agreement shall nevertheless remain in full force and effect.
62
11.7 GOVERNING LAW.
This Agreement will be governed by, and construed in accordance with,
the internal Laws of the State of
New York regardless of the Laws that might
otherwise govern under applicable principles of conflict of laws.
11.8 ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement may be assigned, in whole or in part, by operation of law
or otherwise by either of the parties hereto without the prior written consent
of the other parties; PROVIDED, HOWEVER, that the Buyer may, without the prior
consent of any other party, assign any or all of its rights and interests
hereunder to (i) the Lenders as contemplated by the Security Agreement, it being
understood that such collateral assignment is for security purposes only and any
exercise or action by the Lenders with respect to assignment of any such rights
and interests shall not occur unless and until the Lenders exercise their rights
and remedies with respect to such rights and interests collaterally assigned
pursuant to the Security Agreement or (ii) any Affiliate. Any assignment in
violation of the preceding sentence will be void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
11.9 CONSENT TO JURISDICTION.
Each of the parties hereby consents to personal jurisdiction, service
of process and venue in the federal or state courts of the state of
New York for
any claim, suit or Proceeding arising under this Agreement, or in the case of a
third party claim subject to indemnification hereunder, in the court where such
claim is brought.
11.10 REMEDIES.
Subject to the provisions of SECTION 9.2(m), SECTION 9.3(j) and
SECTION 10.2, the parties shall each have and retain all other rights and
remedies existing in their favor at law or equity, including any actions for
specific performance and/or injunctive or other equitable relief to enforce or
prevent any violations of the provisions of this Agreement.
11.11 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
11.12 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or
63
warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is
correct or is not breached will not affect the incorrectness of or a breach of a
representation and warranty hereunder.
[Remainder of page intentionally left blank]
64
IN WITNESS WHEREOF, the parties hereto have caused this
Recapitalization Agreement to be signed by their respective officers thereunto
duly authorized, all as of the date first written above.
MQ ASSOCIATES, INC.
By: /s/ XXXX XXXXXXX
---------------------------------------
Xxxx Xxxxxxx
Chairman and CEO
BUYER:
MQ INVESTMENT HOLDINGS, LLC
By: X.X. XXXXXX PARTNERS (BHCA), L.P.,
its Managing Member
By: JPMP MASTER FUND MANAGER, L.P.,
its general partner
By: JPMP CAPITAL CORP.,
its General Partner
By: /s/ XXXXXXXX XXXXX
---------------------------------------
Xxxxxxxx Xxxxx, M.D.
Executive Vice President
S-1
STOCKHOLDERS:
TA/ADVENT VIII, L.P.
By: TA Associates VIII LLC, its
General Partner
By: TA Associates, Inc., its
Manager Member
By: /s/ XXXXXXX X. XXXXXX
---------------------------------------
Xxxxxxx X. Xxxxxx
Managing Director
TA/ADVENT II ATLANTIC AND PACIFIC IV,
L.P.
By: TA Associates AP IV, L.P., its
General Partner
By: TA Associates, Inc., its
General Partner
By: /s/ XXXXXXX X. XXXXXX
---------------------------------------
Xxxxxxx X. Xxxxxx
Managing Director
TA INVESTORS LLC
By: TA Associates, Inc., its Manager
By: /s/ XXXXXXX X. XXXXXX
---------------------------------------
Xxxxxxx X. Xxxxxx
Managing Director
S-2
TA EXECUTIVES FUND LLC
By: TA Associates, Inc., its Manager
By: /s/ XXXXXXX X. XXXXXX
---------------------------------------
Xxxxxxx X. Xxxxxx
Managing Director
0000 XXXXXXXX XXXXX FUND, LLC
By: /s/ H. XXXXX XXXXXX
---------------------------------------
H. Xxxxx Xxxxxx
Managing Member
GPH MQ PARTNERS
By: /s/ XXXXX XXXXXX
---------------------------------------
Xxxxx Xxxxxx
Managing Partner
GPH MQ PARTNERS II
By: /s/ XXXXX XXXXXX
---------------------------------------
Xxxxx Xxxxxx
Managing Partner
1998 GPH FUND, LLC
By: /s/ H. XXXXX XXXXXX
---------------------------------------
H. Xxxxx Xxxxxx
Managing Member
S-3
/s/ XXXX XXXXXXX
---------------------------------------
Xxxx Xxxxxxx
/s/ J. XXXXXXX XXXX
---------------------------------------
J. Xxxxxxx Xxxx
/s/ XXXXXX X. XXXXXX
---------------------------------------
Xxxxxx X. Xxxxxx
/s/ XXXXXX X. XXXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ XXXXXXX X. XXXXX
---------------------------------------
Xxxxxxx X. Xxxxx
STOCKHOLDERS' REPRESENTATIVES
By: /s/ XXXX XXXXXXX
---------------------------------------
Xxxx Xxxxxxx
Stockholder
By: /s/ XXXXX XXXX
---------------------------------------
Xxxxx Xxxx
Stockholder
S-4
ANNEX A
For purposes of this Agreement, the following terms shall have
the following meanings.
"AFFILIATE" of any Person means another Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
"AGGREGATE PURCHASE PRICE" has the meaning set forth in SECTION
1.1.
"AGGREGATE REDEMPTION PRICE" has the meaning set forth in
SECTION 1.1.
"AGREEMENT" has the meaning set forth in the preamble.
"BENEFIT PLANS" has the meaning set forth in SECTION 2.10(a).
"BUSINESS DAY" means any day of the year other than (a) any
Saturday or Sunday or (b) any other day on which the banks located in the State
of
New York generally are closed for business other than the retail depository
business.
"BUYER GROUP" means Buyer and its successors and assigns.
"BUYER INDEMNIFIED PARTY" has the meaning set forth in SECTION
9.2(a).
"BUYER" has the meaning set forth in the preamble.
"CAPEX CERTIFICATE" means the true and accurate certificate of
the Chief Financial Officer of the Company dated as of the Closing Date and
setting forth the amount of Capital Expenditures made and actually paid for
during the period from January 1, 2002 to the Closing Date, which amount shall
not be less than $20,800,000.00.
"CAPITAL EXPENDITURES" means, for any period, without
duplication, all expenditures (whether made in the form of cash, deposits or
other property) by the Company or any Subsidiary actually made during such
period for any fixed assets or improvements, or for renewals, replacements,
substitutions or additions thereto, that would be reflected as capital
expenditures on a cash flow statement of the Company or any such Subsidiary in
accordance with GAAP (including the amount of assets recorded on the balance
sheet upon the incurrence of Capital Lease Obligations).
"CAPITAL LEASE OBLIGATIONS" has the meaning set forth in SECTION
1.1.
"CHANGE IN CONTROL PAYMENT AMOUNT" has the meaning set forth in
SECTION 1.1.
"CLASS C COMMON STOCK" has the meaning set forth in the
preamble.
"CLOSING" has the meaning set forth in SECTION 1.8.
A-1
"CLOSING DATE" has the meaning set forth in SECTION 1.8.
"CLOSING DOCUMENT" means (i) each of the certificates delivered
by the Buyer pursuant to SECTION 8.1, (ii) each of the certificates delivered by
the Company, the Stockholders' Representative or any Stockholder pursuant to
SECTION 8.2, (iii) each of the certificates to be delivered by the Company
pursuant to SECTIONS 1.9(a)(x) and 5.10 and (iv) the CapEx Certificate.
"COBRA" has the meaning set forth in SECTION 2.10(c)(vii).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" has the meaning set forth in the preamble.
"COMMON STOCK PER SHARE REDEMPTION AMOUNT" has the meaning set
forth in SECTION 1.1.
"COMPANY" has the meaning set forth in the preamble.
"COMPANY EMPLOYEES" has the meaning set forth in SECTION 6.1(a).
"COMPANY RELEASEES" has the meaning set forth in SECTION 9.7(a).
"COMPANY SHARES" has the meaning set forth in the preamble.
"COMPANY TAX GROUP" has the meaning set forth in SECTION
2.9(a)(i).
"COMPANY'S KNOWLEDGE" has the meaning set forth in SECTION
11.3(c).
"COMPETITIVE BUSINESS" means any business that is primarily
engaged in providing fixed-site outpatient single and multi-modality diagnostic
imaging services.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in SECTION
5.5.
"CONTRACT" means any written or oral loan or credit agreement,
note, bond, mortgage, indenture, deed of trust, lease, sublease, purchase order
or other agreement, commitment, obligation or instrument.
"CONVERTED SHARES" has the meaning set forth in SECTION 1.2.
"COVERED TAXES" has the meaning set forth in SECTION 2.9(a)(i).
"CREDIT AGREEMENT" means the Credit Agreement, to be executed in
connection with the consummation of the transactions contemplated hereby, among
the Company, the Subsidiaries, MedQuest, Inc., the Buyer, the financial
institutions from time to time party thereto as lenders, and Wachovia Bank,
National Association, as administrative agent (as the same may from time to time
be amended, restated, supplemented or otherwise modified).
A-2
"EMPLOYMENT AGREEMENTS" means each of the Employment Agreements
to be entered into as of the Closing Date, between the Company, on the one hand,
and each of the Executives, on the other hand, substantially in the Form of
EXHIBIT I hereto.
"ENCUMBRANCES" means any mortgage, pledge, security interest,
lien, claim, hypothecation, assignment for security, encumbrance or charge of
any kind (including any agreement to give any of the foregoing).
"ENVIRONMENTAL LAWS" means all Laws relating to pollution or
protection of health, safety or the environment, including the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), Resources Conservation
and Recovery Act (42 U.S.C. Section 6901 ET. SEQ.), Safe Drinking Water Act (42
U.S.C. Section 3000(f) ET. SEQ.), Toxic Substances Control Act (15 U.S.C.
Section 2601 ET SEQ.), Clean Air Act (42 U.S.C. Section 7401 ET. SEQ.),
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 ET SEQ.), and other similar state and local statutes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" has the meaning set forth in SECTION 2.10(a).
"EXCLUDED BUYER REPRESENTATIONS" has the meaning set forth in
SECTION 9.1.
"EXCLUDED COMPANY REPRESENTATIONS" has the meaning set forth in
SECTION 9.2(d)(i).
"EXCLUDED STOCKHOLDER REPRESENTATIONS" has the meaning set forth
in SECTION 9.1.
"EXECUTIVES" means Xxxx Xxxxxxx, J. Xxxxxxx Xxxx, Xxxxxx Xxxxxx,
Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxx and Xxxxx Xxxxx.
"EXISTING CLASS B COMMON STOCK" has the meaning set forth in the
preamble.
"EXISTING CLASS B COMMON STOCK REDEMPTION AMOUNT" has the
meaning set forth in SECTION 1.1.
"EXISTING SERIES A PREFERRED STOCK" has the meaning set forth in
the preamble.
"EXISTING SERIES A PREFERRED STOCK REDEMPTION AMOUNT" has the
meaning set forth in SECTION 1.1.
"EXISTING SERIES B PREFERRED STOCK" has the meaning set forth in
the preamble.
"EXISTING SERIES B PREFERRED STOCK REDEMPTION AMOUNT" has the
meaning set forth in SECTION 1.1.
"FINANCING" has the meaning set forth in the preamble.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 2.4.
A-3
"FOURTH RESTATED CHARTER" has the meaning set forth in the
preamble.
"FUNDED INDEBTEDNESS" has the meaning set forth in SECTION 1.1.
"GAAP" means generally accepted accounting principles in the
United States of America.
"GOVERNMENTAL AUTHORITY" has the meaning set forth in SECTION
2.7(a).
"GUARANTY" has the meaning set forth in SECTION 1.1.
"HAZARDOUS SUBSTANCES" means any substance as to which
Liabilities or standards of conduct are or may be imposed under Environmental
Laws, including medical wastes and radioactive materials.
"HIPPA" has the meaning set forth in SECTION 2.10(c)(vii).
"HSR ACT" has the meaning set forth in SECTION 2.7(a).
"INACTIVE SUBSIDIARIES" has the meaning set forth in SECTION
5.1(b).
"INDEMNIFIED PARTY" means, as applicable, the Buyer Indemnified
Parties or the Stockholder Indemnified Parties.
"INDEMNIFYING PARTY" means, as applicable, the Buyer or the
Stockholders.
"INCOME TAXES" means all Taxes based on or measured by net or
gross income, revenue, profits or capital.
"INMED LITIGATION" means InMed Diagnostic Service, L.L.C. v.
MedQuest Associates, Inc., Siemens Medical Systems, Inc., Palmetto Imaging, Inc.
and Open MRI of Xxxxxxxx, Inc. brought in the Court of Common Pleas for Richland
County, South Carolina, as such InMed Litigation has been appealed by the
Company and its Subsidiaries and Affiliates to a court of competent
jurisdiction.
"INMED PROCEEDINGS" has the meaning set forth in SECTION
10.6(a).
"INMED RESERVE AMOUNT" means the $2,100,000 placed into escrow
and reserved on the Latest Audited Balance Sheet for purposes of any payment due
or payable as a result of any final and binding settlement or judgment in
connection with the InMed Litigation.
"INMED RESOLUTION AMOUNT" has the meaning set forth in SECTION
10.6(a).
"INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in
SECTION 2.14.
"IRS" has the meaning set forth in SECTION 2.9(a)(iii).
"JPMSI" has the meaning set forth in the definition of Change in
Control Payment Amount
A-4
"LATEST AUDITED BALANCE SHEET DATE" has the meaning set forth in
SECTION 2.4.
"LATEST AUDITED BALANCE SHEET" has the meaning set forth in
SECTION 2.4.
"LATEST BALANCE SHEET DATE" has the meaning set forth in SECTION
2.4.
"LATEST BALANCE SHEET" has the meaning set forth in SECTION 2.4.
"LATEST FINANCIAL STATEMENTS" has the meaning set forth in
SECTION 2.4.
"LAW" means all national, federal, state or local laws (both
common and statutory law and civil and criminal law) and all Permits or Orders
of any Governmental Authority.
"LEASED REAL PROPERTY" has the meaning set forth in SECTION
2.11(a).
"LEASES" has the meaning set forth in SECTION 2.11(a).
"LENDERS" means the financial institutions from time to time
party to the Company's Subordinated Notes Purchase Agreement and/or the
Company's Credit Agreement, and each of the respective permitted successors and
assigns of such financial institutions.
"LIABILITY" means any liability or obligation (including as
related to Taxes), whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated and whether due or
to become due, regardless of when asserted.
"LOSSES" means any and all losses, claims, shortages, damages,
diminution in value of securities, Liabilities, expenses (including reasonable
attorneys' and accountants' and other professionals' fees), assessments, Tax
deficiencies and Taxes (including interest or penalties thereon) incurred in
connection with the receipt of indemnification payments arising from or in
connection with any such matter that is the subject of indemnification under
ARTICLE IX.
"MAJORITY STOCKHOLDERS" has the meaning set forth in SECTION
10.4(f).
"MATERIAL ADVERSE CHANGE" means any material adverse change in
the business, operations, assets, financial condition or operating results of
the Company and its Subsidiaries, taken as a whole.
"MAXIMUM AMOUNT" has the meaning set forth in SECTION 9.2(c).
"NAMES" has the meaning set forth in SECTION 5.11.
"NEW BOARD" has the meaning set forth in SECTION 1.1.
"NEW CLASS A COMMON STOCK" has the meaning set forth in the
preamble.
"NEW COMMON STOCK" has the meaning set forth in the preamble.
A-5
"NEW SERIES A PREFERRED STOCK" has the meaning set forth in the
preamble.
"NEW SERIES B PREFERRED STOCK" has the meaning set forth in the
preamble.
"NON-COMPETE PERIOD" has the meaning set forth in SECTION
10.5(a).
"ORDERS" means judgments, writs, decrees, compliance agreements,
injunctions or orders of any Governmental Authority or arbitrator.
"ORGANIZATIONAL DOCUMENTS" means (a) any certificates or
articles filed with any state which filing forms a Person and (b) all
agreements, documents or instruments governing the internal affairs of a Person,
including such Person's bylaws, codes of regulations, memoranda of incorporation
or association, partnership agreements, limited liability company agreements and
operating agreements, in each of (a) and (b) above, as amended and restated and
in effect at the time in question.
"OWNED REAL PROPERTY" has the meaning set forth in SECTION
2.11(a).
"PAYOR CLASS" has the meaning set forth in SECTION 2.18.
"PERMITS" has the meaning set forth in SECTION 2.21.
"PERMITTED ENCUMBRANCES" means (i) Encumbrances for Taxes not
yet due and payable or being contested in good faith by appropriate proceedings
and for which there are adequate reserves on the books, (ii) all liens,
encumbrances, covenants, conditions, restrictions, easements and other matters
of record, (iii) such state of facts as would be disclosed by an accurate survey
and/or physical inspection of the Owned Real Property (iv) the provisions of all
existing building, zoning and other applicable laws, rules, ordinances and
regulations; (v) workers or unemployment compensation liens arising in the
ordinary course of business; and (vi) mechanic's, materialman's, supplier's,
vendor's or similar liens arising in the ordinary course of business securing
amounts that are not delinquent.
"PER SHARE REDEMPTION AMOUNT" has the meaning set forth in
SECTION 1.1.
"PERSON" shall be construed broadly and shall include an
individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a Governmental Authority (or any department, agency or political
subdivision thereof).
"POTENTIAL TRANSACTION" has the meaning set forth in SECTION
5.9(a).
"PROCEEDINGS" means actions, suits, claims, investigations or
legal or administrative or arbitration proceedings.
"PURCHASE" has the meaning set forth in SECTION 1.3.
"PURCHASED SHARES" has the meaning set forth in SECTION 1.3.
A-6
"RECLASSIFICATION" has the meaning set forth in SECTION
1.4(b)(ii).
"RECLASSIFIED BUYER SHARES" has the meaning set forth in SECTION
1.4(b)(ii).
"REDEEMED SHARES" has the meaning set forth in SECTION
1.4(a)(iii).
"REDEEMED SHARES PERCENTAGE" has the meaning set forth in
SECTION 1.1.
"REDEMPTION" has the meaning set forth in SECTION 1.4(a)(iii).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement to be entered into as of the Closing Date among the Company, the Buyer
and the other parties thereto, as same may be amended, restated, supplemented or
otherwise modified from time to time.
"REGULATORY SIDELETTER" means the Regulatory Sideletter, dated
as of the date hereof, among the Company, and the other parties thereto, as same
may be amended from time to time.
"RELATED DOCUMENTS" means each of the (i) Stockholders'
Agreement, (ii) Registration Rights Agreement, (iii) Regulatory Sideletter, (iv)
Employment Agreements and (v) Closing Documents.
"REPORTING TAIL COVERAGE" has the meaning set forth in SECTION
9.6.
"ROLLOVER SHARES" has the meaning set forth in SECTION
1.4(b)(i).
"ROLLOVER STOCKHOLDERS" has the meaning set forth in SECTION
1.1.
"SECTION 1445 CERTIFICATE" has the meaning set forth in SECTION
3.6.
"SECTION 2.28 ADDITIONAL AMOUNT" means $15,000,000.
"SECTION 2.28 AGGREGATE AMOUNT" means the sum of (A) the Maximum
Amount PLUS (B) the SECTION 2.28 Additional Amount.
"SECURITIES ACT" has the meaning set forth in SECTION 2.2(a).
"SECURITY AGREEMENT" means any security agreements to be entered
into between the Company and the Lenders or for the benefit of the Lenders in
connection with the Financing.
"SELLER REPRESENTATIVES" has the meaning set forth in SECTION
5.9(a).
"SERIES E PREFERRED STOCK" has the meaning set forth in the
PREAMBLE.
"SIEMENS MATTER" has the meaning set forth in SECTION 9.2(a)(v).
"SIEMENS RESERVE" has the meaning set forth in SECTION 5.15.
"SOLVENCY OPINION" has the meaning set forth in SECTION
8.1(a)(vi).
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"SPOUSAL CONSENT" has the meaning set forth in SECTION 1.9(c).
"STOCKHOLDER" and "STOCKHOLDERS" has the meaning set forth in
the preamble.
"STOCKHOLDER GROUP" means each of the Stockholders and their
respective successors, assigns, heirs and estates.
"STOCKHOLDER INDEMNIFIED PARTY" has the meaning set forth in
SECTION 9.3(a).
"STOCKHOLDER RELEASEES" has the meaning set forth in SECTION
9.7(b).
"STOCKHOLDERS' AGREEMENT" means the Stockholders' Agreement to
be entered into as of the Closing Date among the Company, the Buyer and the
other parties thereto, substantially in the form of EXHIBIT J hereto.
"STOCKHOLDER'S PERCENTAGE" means, for each Stockholder, the
percentage set forth opposite such Stockholder's name on EXHIBIT A hereto.
"STOCKHOLDERS' REPRESENTATIVE" and "STOCKHOLDERS'
REPRESENTATIVES" has the meaning set forth in SECTION 10.4(a).
"SUBJECT BUSINESS" has the meaning set forth in the preamble.
"SUBORDINATED NOTES PURCHASE AGREEMENT" means the Purchase
Agreement relating to the purchase and sale of the Company's Senior Subordinated
Notes due 2012, between the Company, the Subsidiaries, MedQuest, Inc., the
financial institutions from time to time party thereto and X.X. Xxxxxx
Securities Inc., as representative of the Initial Purchasers thereunder, or any
other senior subordinated credit agreement or note entered into by the Company
and MedQuest, Inc. with financial institutions to provide financing in lieu
thereof (in either case, as the same may from time to time be amended, restated,
supplemented or otherwise modified).
"STRADDLE PERIOD" means any period that includes but does not
end on the Closing Date.
"SUBSIDIARIES" has the meaning set forth in SECTION 2.2(a).
"SURVIVAL DATE" has the meaning set forth in SECTION 9.1.
"TA ENTITIES" means each of T/A Advent VIII, L.P., T/A Advent
Atlantic and Pacific IV, L.P., TA Investors LLC and TA Executive Fund LLC.
"TA NOTE PURCHASE AMOUNT" has the meaning set forth in SECTION
1.1.
"TA NOTES" has the meaning set forth in the preamble.
"TAX RETURNS" shall mean any report, return, document or other
filing required to be supplied to any Governmental Authority with respect to
Taxes.
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"TAXES" shall mean any and all taxes, charges, fees, levies,
withholding obligations or other assessments, imposed by the IRS or any other
Governmental Authority and such term shall include any interest, whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments and shall include any Liability payable as a result of (i) Treasury
Regulation Section 1.1502-6, or similar provisions of state, local or foreign
Law (ii) being a transferee, or (iii) by reason of a contract or otherwise.
"THIRD PARTY CLAIM" has the meaning set forth in SECTION 9.2(j).
"THIRD RESTATED CHARTER" has the meaning set forth in the
preamble.
"THRESHOLD AMOUNT" has the meaning set forth in SECTION 9.2(c).
"TRANSITION PERIOD" has the meaning set forth in SECTION 5.1.
"2002 OPTION PLAN" has the meaning set forth in SECTION 5.14.
"UNDISCLOSED RETURNS" has the meaning set forth in SECTION
2.9(a)(v).
"WARN" has the meaning set forth in SECTION 6.1(a).
"XXXXXX AMOUNT" has the meaning set forth in SECTION 1.1.
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