EXHIBIT 2.11
-----------------------------
ASSETS PURCHASE AGREEMENT
DATED AS OF JULY 24, 1998
AMONG
SYMPHONY DIAGNOSTIC SERVICES NO.1, INC.
AND
INTEGRATED HEALTH SERVICES, INC.
AND
TACOMA RADIOLOGICAL ASSOCIATES, P.S.
D/B/A MOBILE MEDICAL DIAGNOSTICS
AND
RADIOLOGICAL ASSOCIATES
AND
SHAREHOLDERS
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TABLE OF CONTENTS
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PAGE
ARTICLE I: SALE AND PURCHASE OF ASSETS.......................................1
1.1 Sale and Purchase of Assets.......................................1
1.2 Liabilities.......................................................2
1.3 Designated Contracts..............................................3
1.4 Accounts Receivable...............................................4
1.5 Employees and Consultants.........................................4
ARTICLE II: PURCHASE PRICE....................................................4
2.1 Determination and Payment of Purchase Price.......................4
2.2 Allocation........................................................4
ARTICLE III: IHS STOCK.........................................................5
3.1 IHS Stock.........................................................5
ARTICLE IV: THE CLOSING.......................................................9
4.1 Time and Place of Closing.........................................9
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND
SHAREHOLDERS..............................................................10
5.1 Organization and Standing of the Companies.......................10
5.2 Absence of Conflicting Agreements................................10
5.3 Consents.........................................................10
5.4 Capital Stock and Partnership Interests..........................10
5.5 Assets...........................................................11
5.6 Trademarks.......................................................11
5.7 Contracts........................................................11
5.8 Customers........................................................13
5.9 Financial Statements.............................................13
5.10 Fee Schedules and Reimbursement..................................13
5.11 Material Changes.................................................13
5.12 Licenses and Permits.............................................14
5.13 Title, Condition of Tangible Personal Property...................14
5.14 Legal Proceedings................................................15
5.15 Employees........................................................15
5.16 Collective Bargaining, Labor Contracts,
Employment Practices, Etc .....................................15
5.17 ERISA............................................................16
5.18 Insurance and Surety Agreements..................................17
(i)
5.19 Relationships...................................................17
5.20 Absence of Certain Events.......................................17
5.21 Compliance with Laws............................................18
5.22 Finders.........................................................19
5.23 Tax Returns.....................................................19
5.24 Encumbrances Created by this Agreement..........................19
5.25 Subsidiaries and Joint Ventures.................................19
5.26 Complete Disclosure.............................................20
5.27 Books of Account; Records.......................................20
5.28 Questionable Payments...........................................20
5.29 Reimbursement Matters...........................................20
5.30 Medicare/Medicaid Participation.................................20
5.31 Power and Authority.............................................21
5.32 Capacity........................................................21
5.33 Binding Effect..................................................21
5.34 Questionnaires..................................................21
ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF BUYER AND IHS.................21
6.1 Organization and Standing.......................................21
6.2 Power and Authority.............................................21
6.3 Binding Agreement...............................................21
6.4 Absence of Conflicting Agreements...............................22
6.5 Consents........................................................22
6.6 Finders.........................................................22
6.7 Capital Stock...................................................22
ARTICLE VII: INFORMATION AND RECORDS CONCERNING THE COMPANIES
....................................................................22
7.1 Access to Information and Records before Closing................22
ARTICLE VIII: OBLIGATIONS OF THE PARTIES UNTIL CLOSING.......................23
8.1 Conduct of Business Pending Closing.............................23
8.2 Negative Covenants of the Companies and their Subsidiaries......23
8.3 Affirmative Covenants...........................................23
8.4 Pursuit of Consents and Approvals...............................24
8.5 Exclusivity.....................................................24
ARTICLE IX: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS......................25
9.1 Representations and Warranties..................................25
9.2 Performance of Covenants........................................25
9.3 Delivery of Closing Certificate.................................25
9.4 Opinion of Counsel..............................................25
9.5 Legal Matters...................................................25
(ii)
9.6 Authorization Documents.........................................25
9.7 Material Change.................................................26
9.8 Approvals.......................................................26
9.9 IRS Form 8594...................................................26
9.10 Insurance.......................................................26
9.11 Good Standing Certificate.......................................26
9.12 Xxxx of Sale....................................................26
9.13 Regulatory Matters..............................................26
9.14 Title Matters...................................................26
9.15 Leased Property.................................................26
9.16 Sales Tax.......................................................27
9.17 Change of Name..................................................27
9.18 Patient Examination Summary.....................................27
9.20 Other Documents.................................................27
ARTICLE X: CONDITIONS PRECEDENT TO COMPANIES' OBLIGATIONS..................27
10.1 Representations and Warranties..................................27
10.2 Performance of Covenants........................................27
10.3 Delivery of Closing Certificate.................................27
10.4 Opinion of Counsel..............................................28
10.5 Legal Matters...................................................28
10.6 Good Standing Certificates......................................28
10.7 Other Documents.................................................28
ARTICLE XI: OBLIGATIONS OF THE PARTIES AFTER CLOSING........................28
11.1 Survival of Representations and Warranties......................28
11.2 Indemnification by Shareholders and the Companies...............28
11.3 Indemnification by Buyer........................................29
11.4 Control of Defense of Indemnifiable Claims......................29
11.5 Restrictions....................................................30
11.6 Records.........................................................31
11.7 Customer Transition.............................................32
11.8 Use of Premises.................................................32
ARTICLE XII: TERMINATION.....................................................32
12.1 Termination.....................................................32
12.2 Effect of Termination...........................................32
ARTICLE XIII: CASUALTY, RISK OF LOSS..........................................33
13.1 Casualty, Risk of Loss..........................................33
(iii)
ARTICLE XIV: MISCELLANEOUS...................................................33
14.1 Costs and Expenses..............................................33
14.2 Performance.....................................................33
14.3 Binding Effect..................................................33
14.4 Effect and Construction of this Agreement.......................33
14.5 Cooperation - Further Assistance................................34
14.6 Notices.........................................................34
14.7 Waiver, Discharge, Etc..........................................35
14.8 Rights of Persons Not Parties...................................35
14.9 Governing Law...................................................35
14.10 Amendments, Supplements, Etc....................................35
14.11 Severability....................................................35
14.12 Counterparts....................................................35
14.13 Arbitration.....................................................36
14.14 Public Announcements............................................36
(iv)
SCHEDULES & EXHIBITS
--------------------
Schedule 1.3 - Designated Contracts
Schedule 5.3 - Consent List of Companies
Schedule 5.4 - Capital Stock
Schedule 5.5 - Fixed Assets
Schedule 5.6 - Trademarks
Schedule 5.7 - Contracts
Schedule 5.8 - Customers
Schedule 5.9(a) - Unaudited Financial Statements
Schedule 5.9(b) - Unaudited Interim Financial Statements
Schedule 5.10 - Fee Schedules
Schedule 5.11 - Material Changes
Schedule 5.12 - Licenses, Permits, Certificates of Need
Schedule 5.13(a) - Liens Satisfied at Closing
Schedule 5.13(b) - Leases of Personal Property
Schedule 5.14 - Legal Proceedings
Schedule 5.15 - Employees
Schedule 5.17 - Employment Benefit Plans; COBRA Benefits
Schedule 5.18 - Insurance and Surety Agreements
Schedule 5.19 - Relationships
Schedule 5.20 - Absence of Certain Events
Schedule 5.21 - Compliance with Laws
Schedule 5.23 - Tax Returns
Schedule 5.25 - Subsidiaries, Joint Ventures, etc.
Schedule 5.29 - Reimbursement Matters
Exhibit 5.34 - Questionnaire
Exhibit 9.3 - Closing Certificate of Sellers and the Companies
Exhibit 9.4 - Opinion of Sellers' Counsel
Exhibit 9.12 - Xxxx of Sale
Exhibit 10.3 - Closing Certificate of Buyer
Exhibit 10.4 - Opinion of Buyer's Counsel
(v)
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ASSETS PURCHASE AGREEMENT
--------------------------
This Assets Purchase Agreement (the "AGREEMENT") is made as of the 24th day
of July, 1998, among SYMPHONY DIAGNOSTIC SERVICES NO.1, INC., a California
corporation ("Buyer"), INTEGRATED HEALTH SERVICES, INC. ("IHS"), TACOMA
RADIOLOGICAL ASSOCIATES, P.S. D/B/A MOBILE MEDICAL DIAGNOSTICS, a Washington
professional services corporation ("TACOMA"), RADIOLOGICAL ASSOCIATES, a
Washington general partnership ("RADIOLOGICAL") (together Tacoma and
Radiological shall hereafter be referred to as the "COMPANIES" and each a
"COMPANY"), and each of the shareholders of Tacoma and partners of Radiological
whose signatures appear at the end of this Agreement ("SHAREHOLDERS" or
"SELLERS").
WHEREAS, the Companies are the owners of certain assets utilized in
connection with the Companies' mobile x-ray, mobile EKG and mobile ultrasound
services business, excluding the physicians' interpretations (the "BUSINESS");
and
WHEREAS, Buyer wishes to purchase certain of the Companies' assets, and the
Companies wish to sell such assets to Buyer, in accordance with the terms and
conditions hereinafter set forth; and
WHEREAS, IHS is the parent company of Buyer; and
WHEREAS, Shareholders are the owners of all of the issued and outstanding
shares of the common stock of Tacoma and Shareholders are the owners of all of
the partnership interests of Radiological, and Shareholders are willing to be
bound by the non-competition provisions of this Agreement and to join in the
representations and warranties of the Companies hereunder; and
NOW, THEREFORE, for and in consideration of the foregoing premises and the
covenants and agreements contained in this Agreement, Shareholders, Buyer, IHS
and the Companies, intending to be legally bound, agree as follows:
ARTICLE I: SALE AND PURCHASE OF ASSETS
1.1 SALE AND PURCHASE OF ASSETS. Subject to the terms and conditions of
this Agreement, at the Closing (as hereinafter defined), Buyer shall acquire
from the Companies, and the Companies shall sell, assign, transfer and convey to
Buyer, free and clear of all liens, claims and encumbrances, all of the assets
of the Business, including, without limitation, all contract rights, leasehold
interests, fixed and moveable equipment, tangible personal property, inventory
and supplies, goodwill, trade names (including the name "Mobile Medical
Diagnostics" and any variations thereof), trademarks, patient records and files,
telephone numbers, all customer contracts between Tacoma and any other name
under which the business of Tacoma is conducted, including any affiliate, if
any, and the health care facilities that it services, all of the Companies'
right, title and interest in and to the business name "Mobile Medical
Diagnostics" and any other name under which the Business is conducted, and, to
the extent permitted by law, all permits, licenses and other governmental
approvals, as presently constituted and utilized in the Business (collectively,
the "Assets"), but excluding (i) all cash, whether on hand or in marketable
securities, and accounts receivable of the Companies as of the Closing Date,
(ii) inventory and supplies disposed of in the ordinary course of business from
the date hereof until Closing, (iii) all provider agreements and provider
numbers with Medicare and Medicaid, and (iv) the logo design used with the name
"Mobile Medical Diagnostics". Buyer shall not accept any assignment of the
Companies' or Sellers' provider agreements, provider numbers or any assignment
of any type or relationship with Medicare, Medicaid. Sellers will change the
Mobile Medical Diagnostics name to a name other than Mobile Medical Diagnostics
and Sellers will not change such name to a confusing similar name.
Notwithstanding the foregoing, Sellers shall be permitted to use the "Mobile
Medical Diagnostics" name for purposes of billing and collection only for a
period up to nine (9) months following the Closing Date.
1.2 LIABILITIES.
(A) Buyer shall not assume any liabilities or obligations of the
Companies. For purposes of this Agreement, the term "Liability" means any claim,
lawsuit, liability, obligation or debt of any kind or nature whatsoever, whether
absolute, accrued, due, direct or indirect, contingent or liquidated, matured or
unmatured, joint or several, whether or not for a sum certain, whether for the
payment of money or for the performance or observance of any obligation or
condition, and whether or not of a type which would be reflected as a liability
on a balance sheet (including, without limitation, federal, state and local
taxes of any nature) in accordance with generally accepted accounting
principles, consistently applied ("GAAP"), including without limitation (i) the
full dollar amount of all of Companies' commitments and contingencies over the
remaining life of any leases, contracts or other obligations to which either
Company is a party or subject as of the Closing Date; (ii) malpractice claims
asserted by patients or any other tort claims asserted, claims for breach of
contract, or any claims of any kind asserted by patients, former patients,
employees of Companies or any other party that are based on acts or omissions
occurring on or before the Closing Date; (iii) amounts due or that may become
due to Medicare or Medicaid or any other health care reimbursement or payment
intermediary or any carrier, nursing home or other facility, or other third
party payor on account of any health care reimbursement recapture, adjustment or
overpayment whatsoever with respect to any period on or prior to the Closing
Date ("EXCESS REIMBURSEMENT LIABILITIES"); (iv) any accounts payable, or
employment or other taxes and any other obligation or liability of Companies to
pay money whatsoever; (v) accrued but unpaid compensation or other benefits to
any of the Companies' employees, agents, consultants or advisers, including
accrued vacation; (vi) any amounts due or other obligations arising under the
Companies' transaction with Xx. X. Xxxxxxx; and (vii) any
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amounts due or other obligations arising under Tacoma's (i) Money Purchase
Pension Plan and Trust and (ii) Profit Sharing Plan and Trust. Following the
Closing Date, the Purchase Price (as defined below) will be subject to reduction
to any extent that the Buyer becomes liable for the payment of any Liability
which arises from operation of the Company prior to the Closing Date.
(B) Notwithstanding the provisions of the immediately preceding
paragraph, on the Closing Date, contingent upon the consummation of the
transactions contemplated hereby, Buyer shall assume those obligations arising
under the Designated Contracts specified pursuant to Section 1.3, below, and
assigned by Companies to Buyer, with respect to, and only with respect to,
services to be rendered or goods to be supplied to or benefits to be conferred
upon Buyer solely after the Closing Date. Liabilities and obligations under such
Designated Contracts that have accrued, or the performance of which is due, on
or prior to the Closing Date, and all liabilities and obligations under all
other Contracts or which are in payment or consideration for any excluded
assets, shall remain the sole responsibility of Companies and shall be paid or
performed on or prior to the Closing Date.
1.3 DESIGNATED CONTRACTS.
(A) As soon as practicable after the date hereof but in no event later
than the day immediately preceding the Closing Date, Buyer shall deliver notice
in writing to Company designating which, if any, of the Contracts (defined
herein) set forth on Schedule 5.7 will be assigned to and assumed by Buyer (the
"DESIGNATED CONTRACTS"). Such notice of designation will be set forth on
Schedule 1.3 to be attached hereto. If within said period of time Buyer fails to
so deliver notice to Companies, Buyer will be deemed to have designated none of
the Contracts and Companies will remain fully liable thereunder. Upon Closing,
Buyer will provide mobile x-ray and/or mobile EKG services to the facilities or
organizations with which the Companies currently have service contracts. To the
extent Buyer makes any such designation and subject to the rights of third
parties to any assignment, Companies shall at Closing be obligated to assign all
of its right, title and interest under such Contracts to Buyer and Buyer shall
assume the obligations accruing after Closing under such Designated Contracts.
The Companies shall bring current, as of the Closing Date, all amounts due under
the Designated Contracts. At the Closing, the cash portion of the Purchase Price
shall be reduced by an amount equal to the aggregate amount due as of the
Closing under all of the Designated Contracts which are assumed by Buyer, and
such aggregate withheld amount shall be divided among and paid directly to the
such Designated Contract vendors in accordance with the amounts owed to each of
them.
(B) Notwithstanding anything to the contrary contained herein, Buyer is
not assuming and will not be responsible for any liabilities or obligations
under the Designated Contracts incurred on or occurring before the Closing Date;
all such liabilities and obligations remaining the sole and exclusive
responsibility of Companies pursuant to Section 1.2 herein and shall be paid or
performed on or prior to the Closing Date.
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(C) Immediately after notice of the designation by Buyer of the
Designated Contracts to be assigned by Companies, Companies will use their best
efforts and shall diligently proceed to obtain any consents of any parties
necessary to permit the assignment of the Designated Contracts. In the event
that any of the Designated Contracts are not assignable, or the parties to such
Designated Contract fail or refuse to consent to any assignment on or before the
Closing Date, Buyer shall have no liability to assume any such Designated
Contracts.
1.4 ACCOUNTS RECEIVABLE. The Assets to be purchased by Buyer shall not
include any accounts receivable of the Company as in existence on the Closing
Date (the "CLOSING DATE RECEIVABLES"). The Companies and the Shareholders will
retain full responsibility and expense for the collection and administration of
the Closing Date Receivables. In the event that the Buyer should receive payment
of any Closing Date Receivables, the proceeds thereof will be paid over to the
Companies within fifteen (15) days after receipt of same by Buyer. Likewise, if
the Companies or the Shareholders should receive payment of any accounts
receivable of Buyer which arise out of the operation of the Assets after the
Closing Date, the proceeds thereof will be paid over to Buyer within fifteen
(15) days after receipt of same by the Companies or the Shareholders.
1.5 EMPLOYEES AND CONSULTANTS. It is expressly understood and agreed that
Buyer's purchase of the Assets does not involve any undertaking on the part of
Buyer to retain any of the employees or consultants of the Companies, although
the Buyer shall have the right to offer employment or engagement to any such
employees or consultants. The Companies and Sellers shall remain fully
responsible for any severance, benefits, costs or liabilities arising out of the
termination by either Company of any of its employees or consultants. The
Companies and Sellers shall also remain fully responsible for any benefits,
costs or liabilities incurred or accrued prior to Closing with respect to each
employee or consultant retained by Buyer.
ARTICLE II: PURCHASE PRICE
2.1 DETERMINATION AND PAYMENT OF PURCHASE PRICE. Subject to adjustment
pursuant to Section 1.2 hereof, the aggregate purchase price to be paid by Buyer
to the Companies for the Assets (the "Purchase Price") and the aforementioned
non-competition agreement of the Companies and Shareholders, shall be FOUR
HUNDRED SEVENTY-FIVE THOUSAND AND 00/100 DOLLARS ($475,000.00), payable to the
Companies by delivery of newly issued shares of the Common Stock, par value
$.001, of IHS (the "IHS STOCK").
2.2 ALLOCATION. The Purchase Price shall be allocated among the Assets and
non-competition agreement for all accounting, reimbursement, and tax reporting
purposes as follows:
(A) $305,000 - customer lists, contracts, goodwill, trademarks and
tradenames;
4
(B) $95,000 - non-competition covenants set forth in Article XII;
(C) $60,000 - equipment, materials, furnishings, and inventory; and
(D) $15,000 - motor vehicles
ARTICLE III: IHS STOCK
3.1 IHS STOCK. The Purchase Price shall be payable by means of the
delivery to the Companies of IHS Stock in accordance with the following:
(A) SHARE VALUE. The number of shares of IHS Stock issuable at Closing
(the "CLOSING DATE SHARE COUNT") pursuant to Section 2.1 shall be calculated
based upon a price per share of such stock equal to the average closing NYSE
price of such stock for the thirty (30) trading day period immediately preceding
the date which is two (2) trading days before the Closing Date.
(B) REGISTRATION RIGHTS. IHS will use its best efforts to cause to be
prepared, filed and declared effective by the Securities and Exchange Commission
(the "COMMISSION") within ninety (90) days following the Closing Date, a
registration statement for the registration under the Securities Act of 1933
(the "Securities Act") of the IHS Stock issued to Companies pursuant to this
Agreement, including the shares issuable under Section 3.1(c) in respect of any
re-calculation of the Closing Date Share Count, and IHS shall maintain the
effectiveness of such registration statement for a period of one (1) year
following the date on which it becomes effective (the "REGISTRATION DATE"), or
until Companies shall not own any of the IHS Stock issued pursuant to this
Agreement, whichever shall occur first, in each case except to the extent that
an exemption from registration may be available.
(C) SHARE ADJUSTMENT. Upon registration of the IHS Stock as provided
above, the number of shares deliverable as part of the Purchase Price under
Section 2.1 hereof shall be re-calculated based upon the average closing NYSE
price of IHS Stock for the 30-trading day period immediately preceding the date
which is two (2) trading days before the Registration Date. If the number of
shares as re-calculated under this subsection (the "Adjusted Share Count")
exceeds the Closing Date Share Count, the Buyer promptly shall deliver over to
the Companies an additional number of shares of IHS Stock as shall be equal to
the amount of such excess, and such additional shares shall be included in the
aforementioned registration statement by means of an amendment thereto prior to
the Registration Date. If the Closing Date Share Count exceeds the Adjusted
Share Count, the Companies promptly will return to the Buyer that number of
shares of IHS Stock as shall be equal to such excess.
5
(D) REGISTRATION EXPENSES. Companies shall not be responsible for, and
Buyer shall bear, all of the reasonable expenses of Buyer related to such
registration including, without limitation, the fees and expenses of its counsel
and accountants, all of its other costs, fees and expenses incident to the
preparation, printing, registration and filing under the Securities Act
of the registration statement and all amendments and supplements thereto, the
cost of furnishing copies of each preliminary prospectus, each final prospectus
and each amendment or supplement thereto to underwriters, dealers and other
purchasers of IHS Stock. Buyer, however, shall not be required to pay
underwriter's or brokerage discounts, commissions or expenses, or to pay any
costs or expenses arising out of the Companies' or any transferee's failure to
comply with its obligations under this Article III.
(E) RESALE LIMITATIONS. All resales of IHS Stock issued pursuant to
this Agreement shall be effected solely through Xxxxxxx Xxxxx Xxxxxx Inc., as
broker.
(F) REGISTRATION PROCEDURES, ETC. In connection with the registration
rights granted to the Companies with respect to the IHS Stock as provided in
this Section 3.1, IHS covenants and agrees as follows:
(I) At IHS's expense, IHS will keep the registration and
qualification under this Section 3.1 effective (and in compliance with the
Securities Act) by such action as may be necessary or appropriate for a period
of one (1) year following the date on which the registration becomes effective,
except to the extent that an exemption from registration may be available. Buyer
will immediately notify the Companies, at any time when a prospectus relating to
a registration statement under this Section 3.1 is required to be delivered
under the Securities Act, of the happening of any event known to IHS as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
(II) IHS shall furnish the Companies with such number of
prospectuses as shall reasonably be requested.
(III) IHS shall take all necessary action which may be required in
qualifying or registering IHS Stock included in a registration statement for
offering and sale under the securities or Blue Sky laws of such states as
reasonably are requested by the Companies, provided that IHS shall not be
obligated to qualify as a foreign corporation or dealer to do business under the
laws of any such jurisdiction.
(IV) The information included or incorporated by reference in the
registration statement filed pursuant to this Section 3.1 will not, at the time
any such registration statement becomes effective, contain any untrue statement
of a material fact, or omit to state any material fact required to be stated
therein as necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or necessary to correct
6
any statement in any earlier filing of such registration statement or any
amendments thereto. The registration statement will comply in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder. IHS shall indemnify the holders of IHS Stock to be sold pursuant to
the registration statement, their successors and assigns, and each person, if
any, who controls such holders within the meaning of ss.15 of the Securities Act
or ss.20(a) of the Securities Exchange Act of 1934 ("EXCHANGE ACT"), against all
loss, claim, damage expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
to which any of them may become subject under the Securities Act, the Exchange
Act or any other statute, common law or otherwise, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement executed by IHS or based upon written information
furnished by IHS filed in any jurisdiction in order to qualify IHS Stock under
the securities laws thereof or filed with the Commission, any state securities
commission or agency, NYSE or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements contained therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to IHS by the Companies expressly for use in such
registration statement, any amendment or supplement thereto or any application,
as the case may be. If any action is brought against the Companies or any
controlling person of the Companies in respect of which indemnity may be sought
against IHS pursuant to this subsection 3.1(f)(iv), the Companies or such
controlling person shall within thirty (30) days after the receipt thereby of a
summons or complaint, notify IHS in writing of the institution of such action
and IHS shall assume the defense of such actions, including the employment and
payment of reasonable fees and expenses of counsel (reasonably satisfactory to
the Companies or such controlling person). The Companies or such controlling
person shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of the
Companies or such controlling person unless (A) the employment of such counsel
shall have been authorized in writing by IHS in connection with the defense of
such action, or (B) IHS shall not have employed counsel to have charge of the
defense of such action, or (C) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to IHS (in which case, IHS
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events the fees and expenses of
not more than one additional firm of attorneys for the Companies and/or such
controlling person shall be borne by IHS. Except as expressly provided in the
previous sentence, in the event that IHS shall not previously have assumed the
defenses of any such action or claim, IHS shall not thereafter be liable to the
Companies or such controlling person in investigating, preparing or defending
any such action or claim. IHS agrees promptly to notify the Companies of the
commencement of any litigation or proceedings against IHS or any of its
officers, directors or controlling persons in connection with the resale of IHS
Stock or in connection with such registration statement.
(V) The holders of IHS Stock to be sold pursuant to a registration
statement, and their successors and assigns, shall severally, and not jointly,
indemnify IHS, its officers and directors and each person, if any, who controls
IHS within the meaning of ss.15 of the
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Securities Act or ss.20(a) of the Exchange Act against all loss, claim, damage,
or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Securities Act, the Exchange Act or any other
statute, common law or otherwise, arising from information furnished by or on
behalf of such holder, or its successors or assigns for specific inclusion in
such registration statement.
(G) NOTICE OF SALE. If the Companies desire to transfer all or any
portion of IHS Stock, the Companies will deliver written notice to IHS,
describing in reasonable detail their intention to effect the transfer and the
manner of the proposed transfer. If the transfer is to be pursuant to an
effective registration statement as provided herein, the Companies will sell the
IHS Stock in compliance with the disclosure therein and discontinue any offers
and sales thereunder upon notice from IHS that the registration statement
relating to the IHS Stock being transferred is not "current" until IHS gives
further notice that offers and sales may be recommenced. In the event of any
such notice from IHS, IHS agrees to file expeditiously such amendments to the
registration statement as may be necessary to bring it current during the period
specified in Section 3.1(f) and to give prompt notice to the Companies when the
registration statement has again become current. If the Companies deliver to IHS
an opinion of counsel reasonably acceptable to IHS and its counsel and to the
effect that the proposed transfer of IHS Stock may be made without registration
under the Securities Act, the Companies will be entitled to transfer IHS Stock
in accordance with the terms of the notice and opinion of their counsel.
(H) FURNISH INFORMATION. It shall be a condition precedent to the
obligations of IHS to take any action pursuant to this Article III that the
Companies shall furnish to IHS such information regarding themselves, the IHS
Stock held by them, and the intended method of disposition of such securities as
shall be required to effect the registration of their IHS Stock. In that
connection, each transferee of the Companies shall be required to represent to
the Buyer that all such information which is given is both complete and accurate
in all material respects. The Companies shall deliver to IHS a statement in
writing from the beneficial owners of such securities that they bona fide intend
to sell, transfer or otherwise dispose of such securities. Each transferee will,
severally, promptly notify IHS at any time when a prospectus relating to a
registration statement covering such transferee's shares under this Section 3.1
is required to be delivered under the Securities Act, of the happening of any
event known to such transferee as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the statements as then existing.
(I) INVESTMENT REPRESENTATIONS. All shares of IHS Stock to be issued
hereunder will be newly issued shares of IHS. The Companies represent and
warrant to IHS that the IHS Stock being issued hereunder is being acquired, and
will be acquired, by the Companies for investment for their own accounts and not
with a view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act or the applicable state securities law, except
pursuant to on effective registration statement in accordance with this Article
III; the Companies acknowledge that the IHS Stock constitutes restricted
securities under Rule 144
8
promulgated by the Commission pursuant to the Securities Act, and may have to be
held indefinitely, and the Companies agree that no shares of IHS Stock may be
sold, transferred, assigned, pledged or otherwise disposed of except pursuant to
an effective registration statement or an exemption from registration under the
Securities Act, the rules and regulations thereunder, and under all applicable
state securities laws. The Companies have the knowledge and experience in
financial and business matters, are capable of evaluating the merits and risks
of the investment, and are able to bear the economic risk of such investment.
The Companies have had the opportunity to make inquiries of and obtain from
representatives and employees of IHS such other information about IHS as they
deem necessary in connection with such investment.
(J) LEGEND. It is understood that, prior to sale of any shares of IHS
Stock pursuant to an effective registration pursuant to subsection (b) above,
the certificates evidencing such shares of IHS Stock shall bear the following
(or a similar) legend (in addition to any legends which may be required in the
opinion of IHS's counsel by the applicable securities laws of any state), and
upon sale of such shares pursuant to such an effective registration, new
certificates shall be issued for the shares sold without such legends except as
otherwise required by law:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF THE COMPANY'S COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
(K) CERTAIN TRANSFEREES. Prior to the effective date of registration of
the IHS Stock, no transferee shall transfer any shares of IHS Stock to any
person or entity unless such transferee shall have agreed in writing to be bound
by the provisions applicable to the Companies under this Article III.
ARTICLE IV: THE CLOSING
4.1 TIME AND PLACE OF CLOSING. The closing (the "CLOSING") of the
transactions contemplated by this Agreement shall be effective as of 12:01 a.m.
and shall take place on July 24, 1998, by facsimile, or at such other time and
place upon which the parties may agree. The date on which the Closing is held is
hereinafter called the "Closing Date."
9
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND
SHAREHOLDERS
The Companies and the Shareholders hereby represent and warrant with
respect to the Companies to Buyer and IHS as follows (it being understood that,
for the purposes of this Article V, "Companies" shall be deemed to refer
collectively to the Companies and their subsidiaries listed on Schedule 5.25,
unless the context requires otherwise):
5.1 ORGANIZATION AND STANDING OF THE COMPANIES. Tacoma is a professional
services corporation duly organized, validly existing and in good standing under
the laws of the State of Washington. Copies of Tacoma's Articles of
Incorporation and By-Laws, and all amendments thereof to date, have been
delivered to Buyer and are complete and correct. Radiological is a general
partnership duly organized, validly existing and in good standing under the laws
of the State of Washington. Copies of Radiological's Partnership Agreement, and
all amendments thereof to date, have been delivered to Buyer and are complete
and correct. The Companies have the power and authority to own the property and
assets now owned by them and to conduct the business presently being conducted
by them. Tacoma and Radiological are qualified to do business as a foreign
corporation or a foreign partnership, as the case may be, in each state where
the ownership of such Company's assets or the conduct of such Company's business
makes such qualification necessary.
5.2 ABSENCE OF CONFLICTING AGREEMENTS. Neither the execution nor delivery
of this Agreement including all Schedules and Exhibits hereto, or any of the
other instruments and documents required or contemplated hereby and thereby
("TRANSACTION DOCUMENTS") by Shareholders and the Companies nor the performance
by Shareholders and the Companies of the transactions contemplated hereby and
thereby, conflicts with, or constitutes a breach of or a default under (i) the
Articles of Incorporation or By-Laws of Tacoma or the Partnership Agreement of
Radiological; or (ii) any applicable law, rule, judgment, order, writ,
injunction, or decree of any court, currently in effect, provided that the
consents set forth in Schedule 5.3 are obtained prior to the Closing; or (iii)
any applicable rule or regulation of any administrative agency or other
governmental authority currently in effect; or (iv) any agreement, indenture,
contract or instrument to which either Company is now a party or by which any of
the assets of either Company is bound.
5.3 CONSENTS. Except as set forth in Schedule 5.3, no authorization,
consent, approval, license, exemption by, filing or registration with any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary in connection with
the execution, delivery and performance of this Agreement or any of the
Transaction Documents by the Shareholders or the Companies.
5.4 CAPITAL STOCK AND PARTNERSHIP INTERESTS. Schedule 5.4 sets forth a
complete list and description of the authorized capital stock of Tacoma (the
"Company Stock"), the number of shares issued and outstanding of each class or
series of such capital stock, and the identity of each shareholder of Tacoma, in
each case indicating the class and number of shares held. No shares of the
Company Stock are held in the treasury of Tacoma. The Shareholders are
10
the record owners of all of the Company Stock and all of such stock is duly
authorized, validly issued, and fully paid and non-assessable. On the Closing
Date, there will be no preemptive or first refusal rights to purchase or
otherwise acquire shares of capital stock of Tacoma pursuant to any provision of
law or the Articles of Incorporation or By-Laws of Tacoma or by agreement or
otherwise. On the Closing Date, there shall not be outstanding any warrants,
options, or other rights to subscribe for or purchase from Tacoma any shares of
capital stock of Tacoma, nor shall there be outstanding any securities
convertible into or exchangeable for such shares. Schedule 5.4 also sets forth a
complete list and description of the partners of Radiological and their
percentage ownership interest in Radiological.
5.5 ASSETS. As of the Closing, the Assets will include all of the tangible
and intangible assets of the Business as presently constituted; other than cash,
whether on hand or in any deposit accounts or certificates of deposit, the
Closing Date Receivables, provider agreements and provider numbers with Medicare
and Medicaid, and inventory, supplies and other assets disposed of in the
ordinary course of business, consistent with the prior practice of the Business.
Schedule 5.5 sets forth a complete list and description of all fixed assets of
Business, including but not limited to fixtures, equipment and motor vehicles.
The Assets are not subject to any liens, claims or encumbrances, except such
existing liens which will be paid at Closing and are set forth on Schedule 5.5.
5.6 TRADEMARKS. Schedule 5.6 sets forth a complete and accurate list of all
trademarks, service marks, or applications for any of the same, copyrights, and
other items of intellectual property that are owned, possessed or used by the
Business. There are no claims or proceedings pending or, to the knowledge of the
Companies, overtly threatened against the Companies asserting that the use of
any of the aforementioned properties or rights infringes the rights of any other
person, and, to the knowledge of the Companies, the Companies are not infringing
on the intellectual property rights of any other person. To the Companies' and
Sellers' knowledge, there is nothing which would prohibit the transaction of
business by Buyer or any company designated by Buyer in the State of Washington
under the trade name "Mobile Medical Diagnostics".
5.7 CONTRACTS. Schedule 5.7 sets forth a complete and correct list of all
agreements, contracts and commitments of the following type related to the
Business to which either Company is a party or by which either Company or any of
the Companies' assets are bound and as to which either Company has any
outstanding material obligations as of the date hereof (the "CONTRACTS"):
(A) each contract or agreement for the employment or retention of, or
collective bargaining, severance or termination agreement with, any director,
officer, employee, consultant, agent or group of employees of the Companies;
(B) each profit sharing, thrift, bonus, incentive, deferred
compensation, stock option, stock purchase, severance pay, pension, retirement,
hospitalization, insurance or other similar plan, agreement or arrangement;
11
(C) each agreement or arrangement for the sale of any of the Companies'
assets, properties or rights outside the ordinary course of business (by sale of
assets, sale of stock, merger or otherwise) which is currently in effect;
(D) each contract currently in effect which contains any provisions
requiring either Company to indemnify or act for, or guarantee the obligation
of, any other person or entity;
(E) each agreement restricting either Company from conducting business
anywhere in the world;
(F) each partnership or joint venture contract or similar arrangement
or agreement which is likely to involve a sharing of profits or future payments
with respect to the Business or any portion thereof;
(G) each licensing, distributor, dealer, franchise, sales or
manufacturer's representative, agency or other similar contract, arrangement or
commitment which involves consideration of more than $5,000;
(H) each contract under which either Company performs mobile
radiological, mobile EKG or mobile ultrasound services for any nursing home,
healthcare or other facility;
(I) each agreement with a nursing home, health care facility or any
other customer with special pricing arrangements, together with a list of such
rates or description of such arrangements;
(J) each lease of real property;
(K) any other radiologist, cardiologist or other physician's
agreements;
(L) each agreement, consent order, settlement or similar arrangement
with any party, including any Governmental Authority (as defined in Section
5.23); or
(M) any other agreement not made in the ordinary and normal course of
business which involves consideration of more than $5,000.
Except as indicated on Schedule 5.7, each of the Contracts was entered into
and requires performance in the ordinary course of business and is in full force
and effect. The Companies are not in material default under any Contract and
there has not been asserted, either by or against the Companies under any
Contract, any written notice of default, set-off or claim of default. To the
knowledge of the Companies, the parties to the Contracts other than the
Companies are not in material default of any of their respective obligations
under the Contracts, and there has not occurred any event which with the passage
of time or the giving of notice (or both) would
12
constitute a material default or material breach under any Contract. All amounts
payable under the Contracts are, or will at the Closing Date, be on a current
basis. Each Contract with respect to which consent is required by reason of the
transactions contemplated by this Agreement is identified on Schedule 5.7.
Neither of the Companies nor any Shareholder has received notice or has reason
to believe that any of the Contracts will be terminated by any party thereto
after the date hereof.
5.8 CUSTOMERS. Schedule 5.8 sets forth: (i) a complete and correct list of
the name and address of all current customers of the Companies related to the
Business; and (ii) a summary of the patient examinations and procedures by
customer by month for the two years ended December 31, 1996 and December 31,
1997 and the first five months of 1998 related to the Business. As of the date
hereof, the Companies and Shareholders have received no notice that any customer
related to the Business will cancel a contract or request a change of service.
5.9 FINANCIAL STATEMENTS.
(A) The unaudited balance sheets of the Companies related to the
Business for the fiscal years ended December 31, 1996, and December 31, 1997,
and the related statements of operations and stockholders' equity and statements
of cash flows for the years then ended (the "UNAUDITED FINANCIAL STATEMENTS"),
annexed hereto as Schedule 5.9(a), present fairly in all material respects the
financial condition and results of operations of the Companies related to the
Business at and for the periods therein specified.
(B) The unaudited balance sheet of the Companies related to the
Business as of May 31, 1998, and the related statements of operations and
stockholders' equity and statements of cash flows for the period then ended (the
"UNAUDITED INTERIM FINANCIAL STATEMENTS"), annexed hereto as Schedule 5.9(b),
present fairly in all material respects the financial condition and results of
operations of the Companies related to the Business at and for the periods
therein specified.
5.10 FEE SCHEDULES AND REIMBURSEMENT. Schedule 5.10 sets forth (i) a
complete and correct list of the 1997 and 1998 fee schedules of the Companies
related to the Business, including the amounts charged and the Medicare and
Medicaid allowable rates; and (ii) a complete and correct list of any and all
Medicaid and Medicare refunds paid by the Companies related to the Business or
pending payment by the Companies related to the Business during the last three
(3) fiscal years.
5.11 MATERIAL CHANGES. Except as noted on Schedule 5.11, between the date
of the Unaudited Interim Financial Statements and the date of this Agreement,
there has not been any material adverse change in the condition (financial or
otherwise) of the assets, properties, operations, operating results, Medicare
and Medicaid reimbursement, third party billing and/or direct billing, customer
and employee relations or business prospects of the Companies related solely to
the Business or any damage or destruction of any of the Assets or their places
of business
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by fire or other casualty, whether or not covered by insurance, and during such
period of time the Companies have conducted the Business only in the ordinary
and normal course.
5.12 LICENSES AND PERMITS. Schedule 5.12 sets forth a description of (a)
all licenses and other governmental or other regulatory permits or approvals
required for the operation of the Business that are now in effect, including all
certificates of occupancy issued with respect to the Business; and (b) each
other license, permit, or other authorization that is necessary for the
operation of the Business (collectively, the "Licenses"). Shareholders have
delivered to Buyer copies of all of the Licenses. The Companies own, possess or
have the legal right to use the Licenses, free and clear of all liens, pledges,
claims or other encumbrances of any nature whatsoever. To the knowledge of the
Companies, the Companies are not in default under any such License, and the
Companies have not received any notice of any default or any other claim or
proceeding relating to, any such License. No shareholder, director or officer,
employee or former employee of the Companies, or any person, firm or corporation
other than the Companies owns or has any proprietary, financial or other
interest, direct or indirect, in whole or in part in any of the Licenses.
5.13 TITLE, CONDITION OF TANGIBLE PERSONAL PROPERTY.
(A) The Companies have good and marketable title to, or valid and
subsisting leasehold interests in, all of the tangible personal property located
at their places of business or used in connection with the operation of the
Business, subject to no mortgage, security interest, pledge, lien, claim,
encumbrance or charge, or restraint on transfer whatsoever other than Permitted
Liens (as defined below) or liens or security interests to be paid or satisfied
before Closing as set forth on Schedule 5.13(a) hereof. No other person has any
right to the use or possession of any of such property which is owned and no
currently effective financing statement with respect to such tangible personal
property has been filed under the Uniform Commercial Code in any jurisdiction,
and the Companies have not signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such financing
statement. All of such tangible personal property comprising equipment,
vehicles, improvements, furniture and other tangible personal property in use by
the Companies, whether owned or leased, is in good operating condition and
repair, subject to normal wear and tear, and comprises the equipment used by the
Companies to operate the Business in a manner consistent with their operation
during the immediately preceding twelve (12) months.
(B) Except as set forth on Schedule 5.13(b), no tangible personal
property used by the Companies in connection with the operation of the Business
is subject to a lease, conditional sale, security interest or similar
arrangement except security interests to be paid before Closing. The Companies
do not lease any of the Assets.
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(C) "Permitted Liens" shall mean:
(I) carriers', warehouseman's, mechanics, materialmen's,
repairmen's or other like liens arising in the ordinary course of business which
are (A) not overdue for a period of more than 30 days or (B) which are being
contested in good faith and by appropriate proceedings, provided that if such
contest shall continue for more than 30 days, the amount thereof shall be bonded
or properly reserved against at the end of such 30-day period;
(II) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of like nature incurred in
the ordinary course of business;
(III) rights of lessors under leases set forth on Schedule 5.13(b);
(IV) pledges or deposits in connection with worker's compensation,
unemployment insurance, and other social security legislation; and
(V) liens for taxes not yet due and payable.
5.14 LEGAL PROCEEDINGS. Other than as set forth on Schedule 5.14, there are
no claims, actions, suits or proceedings or arbitrations, either administrative
or judicial, pending, or, to the knowledge of the Companies, overtly threatened
against or affecting the Business, or the Companies' ability to consummate the
transactions contemplated herein, at law or in equity or otherwise, before or by
any court or governmental agency or body, domestic or foreign, or before an
arbitrator of any kind.
5.15 EMPLOYEES. Schedule 5.15 contains a complete and correct list of the
name, position, and current rate of compensation and any other compensation
arrangements or fringe benefits, and Federal W-2 Forms for the 1997 calendar
year, of (i) each employee related to the Business, and (ii) any consultant or
agent of the Companies related to the Business that are not reflected in any
agreement or document referred to in Schedule 5.7. Except as set forth on
Schedule 5.15, the Companies currently do not have any pension, profit sharing,
or welfare benefit plan applicable to any of the employees of the Companies
related to the Business. No such employee, consultant or agent has any vested or
unvested retirement benefits or other termination benefits, except as described
on Schedule 5.15.
5.16 COLLECTIVE BARGAINING, LABOR CONTRACTS, EMPLOYMENT PRACTICES, ETC.
During the two years prior to the Closing Date, there has been no material
adverse change in the relationship between the Companies related to the Business
and their employees nor any strike or material labor disturbance by such
employees affecting the Business and, to the knowledge of the Companies, there
is no indication that such a change, strike or labor disturbance is likely. The
Companies' employees related to the Business are not represented by any labor
union or similar organization and the Companies have no reason to believe that
there are pending or threatened any activities, the purpose of which is to
achieve such representation, of all or some of the Companies'
15
employees related to the Business. Except as set forth on Schedule 5.7 or
Schedule 5.15, the Companies have no collective bargaining or other labor
contracts, employment contracts, pension, profit-sharing, retirement, insurance,
bonus, deferred compensation or other employee benefit plans, agreements or
arrangements in connection with the Business with respect to their employees.
The Companies are in material compliance with the requirements prescribed by all
Federal, state and local statutes, orders and governmental rules and regulations
applicable to any of the employee benefit plans, agreements and arrangements
related to the Business identified on Schedule 5.7 and Schedule 5.15, including,
without limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Immigration Reform and Control Act, the Worker Adjustment
and Retraining Notification Act of 1988, any such Government Requirements
respecting employment determination, equal opportunity, affirmative action,
employee privacy, wrongful or unlawful termination, workers' compensation,
occupational safety and health requirements, labor management relations and
unemployment insurance, or related matters and there are no threatened or
pending claims relating thereto, in each case. In the event of termination of
employment of an employee of either Company related to the Business, Buyer will
not, pursuant to any agreement with any Shareholder or either Company or by
reason of any representation made or plan adopted by any Shareholder or either
Company prior to the Closing, be liable to any employee of either Company
related to the Business for so-called "severance pay", parachute payments or any
other similar payments or benefits, including, without limitation, post-
employment healthcare, insurance benefits, accrued vacation and sick days.
5.17 ERISA.
(A) The Companies do not maintain or make contributions to and have not
at any time in the past maintained or made contributions to, any employee
benefit plan related to the Business which is subject to the minimum funding
standards of ERISA. The Companies do not now maintain or make contributions to,
and have not at any time in the past maintained or made contributions to, any
multi-employer plan related to the Business subject to the terms of the
Multi-Employer Pension Plan Amendment Act of 1980 (the "MULTI-EMPLOYER ACT").
(B) Schedule 5.17(b) sets forth each severance agreement, and each
plan, agreement or arrangement, bonus plan, deferred compensation agreement,
employee pension, profit sharing, savings or retirement plan, group life,
health, or accident insurance or other employee benefit plan, agreement,
arrangement or commitment, including, without limitation, any commitment arising
under severance, holiday, vacation, Christmas or other bonus plans (including,
but not limited to, "employee benefit plans", as defined in Section 3(3) of
ERISA maintained by either Company related to the Business for any employees of
either Company, or with respect to which either Company has liability with
respect to any employees of either Company related to the Business, or makes or
has an obligation to make contributions on behalf of employees of either Company
related to the Business ("PLANS").
(C) Schedule 5.17(c) identifies all employees of the Companies related
to the Business on leave of absence eligible to receive health benefits, as
required by the continuation health care provisions of Section 4980B of the
Internal Revenue Code of 1986, as amended or Section 601 through 608 of ERISA
("COBRA"). Notice of the availability of
16
COBRA coverage has been provided to all employees of the Companies related to
the Business on leave of absence entitled thereto, and all persons electing such
coverage are being (or have been, if applicable) provided such coverage.
5.18 INSURANCE AND SURETY AGREEMENTS. Schedule 5.18 contains a true and
correct list of: (a) all policies of fire, liability and other forms of
insurance held or owned by either Company in connection with the Business
(including but not limited to medical malpractice insurance, and any state
sponsored plan or program for worker's compensation); and (b) all bonds,
indemnity agreements and other agreements of suretyship made for or held by
either Company in connection with the Business, including a brief description of
the character of the bond or agreement and the name of the surety or
indemnifying party. Schedule 5.18 sets forth for each such insurance policy the
name of the insurer, the amount of coverage, the type of insurance, the policy
number, the annual premium and a brief description of the nature of insurance
included under each such policy and of any claims made thereunder during the
past two years. Such policies are owned by and payable solely to the Companies,
and said policies or renewals or replacements thereof will be outstanding and
duly in force at the Closing Date. All insurance policies listed on Schedule
5.18 are in full force and effect, all premiums due on or before the Closing
Date have been or will be paid on or before the Closing Date, the Companies have
not been advised by any of their insurance carriers of an intention to terminate
or modify any such policies other than under circumstances where the Companies
have received a commitment for a replacement policy, nor have the Companies
failed to comply with any of the material conditions contained in any such
policies.
5.19 RELATIONSHIPS. Except as disclosed on Schedule 5.19 hereto, neither
the Companies nor any Shareholder nor any principal, officer, director,
employee, partner or affiliate of the Companies or any controlling shareholder
has, or at any time within the last two (2) years has had, a material ownership
interest in any business, corporate or otherwise, that is a party to, or in any
property that is the subject of, business relationships or arrangements of any
kind relating to the operation of the Business.
5.20 ABSENCE OF CERTAIN EVENTS. Except as set forth on Schedule 5.20, since
the date of the Unaudited Interim Financial Statements the Companies in
connection with the Business have not, and from the date of this Agreement
through the Closing Date, the Companies in connection with the Business will not
have:
(A) sold, assigned or transferred any of their assets or properties
related to the Business, except in the ordinary course of business;
(B) mortgaged, pledged or subjected to any lien, pledge, mortgage,
security interest, conditional sales contract or other encumbrance of any nature
whatsoever, other than a Permitted Lien, any of the Assets;
17
(C) made or suffered any termination of any mobile radiological, mobile
EKG or mobile ultrasound services contract related to the Business other than in
the ordinary course of business;
(D) made or suffered any amendment or termination of any other
contract, commitment, instrument or agreement involving consideration or
liability in excess of $10,000 related to the Business, other than in the
ordinary course of business;
(E) except in the ordinary course of business, or otherwise as
necessary to comply with any applicable minimum wage law, increased the salaries
or other compensation of any of their employees, or made any increase in, or any
additions to, other benefits to which any of such employees may be entitled in
connection with the Business;
(F) failed to pay or discharge when due any liabilities, the failure to
pay or discharge which has caused or will cause any actual damage or give rise
to the risk of a loss to the Companies related to the Business in excess of
$10,000;
(G) changed any of the accounting principles followed by them or the
methods of applying such principles related to the Business;
(H) failed to collect, withhold and/or pay to any proper Governmental
Authority, any Taxes (as defined in Section 5.23) required by applicable law to
be so collected, withheld and/or paid related to the Business;
(I) instituted, settled or agreed to settle any litigation, action or
proceeding before any Governmental Authority relating to them or their property
or received any threat thereof related to the Business; and
(J) entered into any transaction related to the Business other than in
the ordinary course of business involving consideration in excess of $10,000.
5.21 COMPLIANCE WITH LAWS.
(A) The Companies in connection with the Business are in compliance
with all Governmental Requirements (as defined herein). Except for notices of
non-compliance as to which the Companies have taken corrective action acceptable
to the applicable governmental agency, and as set forth in Schedule 5.21, the
Companies in connection with the Business have not, within the period of twelve
months preceding the date of this Agreement, received any written notice that
they fail to comply in any material respect with any applicable Federal, state,
local, Medicare, Medicaid or other governmental laws or ordinances, or any
applicable order, rule or regulation of any Federal, state, local, Medicare,
Medicaid or other governmental agency having jurisdiction over the Business
("GOVERNMENTAL REQUIREMENTS"). The Companies shall report to Buyer, within five
(5) business days after receipt thereof, any written notices that the Companies
are not in compliance in any material respect with any of the foregoing.
18
(B) Without limiting the generality of subsection (a) above, the
Companies have at all times complied, and are complying in all respects, with
all federal, state and local environmental laws, rules, regulations, ordinances,
governmental rules and related laws applicable to them, their leased properties,
and all other real properties used by them in the operation of the Business,
including, but not limited to, the Resource Conservation and Recovery Act of
1976, as amended, the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, the Federal Water Pollution Control Act, as
amended by the Clean Water Act, and subsequent amendments, the Federal Toxic
Substances Control Act, as amended, with respect to the environmental or
healthful state, condition or quality of any property related to the Business
(collectively "ENVIRONMENTAL LAWS"). The foregoing representation and warranty
applies to all aspects of the operations of the Business and the use and
ownership of the Assets including, but not limited to, the use, handling,
treatment, storage, transportation and disposal of any hazardous, toxic or
infectious waste, material or substance (including medical waste), and to
petroleum products, material or waste, at any other location of the Business. No
notice from any Governmental Authority has ever been served upon either Company
related to the Business claiming any violation of, or addressing any possible
non-compliance with respect to, any Environmental Law.
5.22 FINDERS. No broker or finder has acted for the Shareholders or the
Companies in connection with the transactions contemplated by this Agreement,
and no other broker or finder is entitled to any broker's or finder's fee or
other commission in respect thereof based in any way on agreements,
understandings or arrangements with the Shareholders or the Companies.
5.23 TAX RETURNS.
(A) Except as set forth in Schedule 5.23, (i) all Tax (as defined
below) returns, statements, reports and forms or extensions with respect thereto
required to be filed with any Federal, state, local or other governmental
department or court or other authority having jurisdiction over it
("GOVERNMENTAL AUTHORITY") on or before the Closing Date by or on behalf of the
Companies, have been or will be timely filed on or before the Closing Date in
accordance in all material respects with all applicable Governmental
Requirements; and (ii) the Companies have timely paid all Taxes payable by it.
(B) For purposes of this Agreement, "Tax" means any net income, gross
income, sales, use, franchise, personal, or real property tax.
5.24 ENCUMBRANCES CREATED BY THIS AGREEMENT. The execution and delivery of
this Agreement, or any of the Companies' Transaction Documents, does not, and
the consummation of the transactions contemplated hereby or thereby will not,
create any liens or other encumbrances on any of the Companies' assets in favor
of third parties.
5.25 SUBSIDIARIES AND JOINT VENTURES. Schedule 5.25 sets forth a complete
list of all subsidiaries, joint ventures and partnerships related to the
Business only in which either Company is the record or beneficial owner of more
than ten (10%) percent of the equity interest.
19
All of the issued and outstanding capital stock of the subsidiaries listed on
Schedule 5.25 hereto is owned of record or beneficially by either Company or by
one of the listed subsidiaries except as listed on Schedule 5.25.
5.26 COMPLETE DISCLOSURE. No representation or warranty by the Companies or
the Shareholders in this Agreement or any Exhibit or Schedule referred to herein
and no written statement, certificate or other writing furnished to the Buyer by
or on behalf of the Companies or the Shareholders pursuant to this Agreement,
when considered in conjunction with all other such representations, warranties,
schedules, written statements, certificates or other writings furnished to Buyer
by or on behalf of the Companies or the Shareholders pursuant to this Agreement,
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading.
5.27 BOOKS OF ACCOUNT; RECORDS. The Companies' general ledgers, stock
record books, minute books and other material records relating to the assets,
properties, contracts and outstanding legal obligations of the Companies related
to the Business are, in all material respects, complete and correct, and have
been maintained on a consistent basis. All documents furnished to Buyer will be
correct and complete copies.
5.28 QUESTIONABLE PAYMENTS. None of the Shareholders nor the Companies, or
any director, officer, controlling person or employee of the Companies, and no
affiliate of Companies, (a) has used any corporate funds of the Companies to
make any payment to any officer, employee, representative, agent of any
government, or to any political party or official thereof, where such payment
either (i) is unlawful under laws applicable thereto; or (ii) would be unlawful
under the Foreign Corrupt Practices Act of 1977, as amended; or (b) has made or
received an illegal payment, bribe, kickback, political contribution or other
similar questionable payment for any referrals or recommendations or otherwise
in connection with the operation of the Business.
5.29 REIMBURSEMENT MATTERS. Except as disclosed on Schedule 5.29, (i) the
Companies and Sellers have not received any notice of recoupment from the
Medicare or Medicaid programs, or any other third party reimbursement source
(inclusive of managed care organizations), (ii) the Shareholders and the
Companies are not aware of any basis for the assertion after the Closing Date of
any such recoupment claim against the Companies related to the Business, and
(iii) the Sellers have not received notice from any Medicare or Medicaid program
or any other third party reimbursement source (inclusive of managed care
organizations) of any pending or threatened investigations or surveys related to
the Business, and neither the Sellers, nor the Companies have any reason to
believe that any such investigation or survey is pending, threatened or
imminent.
5.30 MEDICARE/MEDICAID PARTICIPATION. All services provided by the
Companies related to the Business are certified for participation or enrollment
in all Medicare and Medicaid programs, have a current and valid provider
contract with the Medicare and Medicaid programs or other third party
reimbursement source (inclusive of managed care organizations), are in
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compliance with the conditions of participation of such programs, and have
received all approvals or qualifications necessary for capital reimbursement, if
applicable.
5.31 POWER AND AUTHORITY. The Companies have all requisite corporate power
and authority to execute, deliver and perform this Agreement, and as of the
Closing, the Companies will have all requisite corporate power and authority to
execute, deliver and perform the Transaction Documents required to be delivered
by them to the Buyer at the Closing. All action required by Tacoma's Articles of
Incorporation, By-Laws or Radiological's Partnership Agreement or otherwise, to
authorize the execution, delivery and performance of this Agreement and the
Transaction Documents has been taken.
5.32 CAPACITY. As of the Closing, the Shareholders have the full legal
power and capacity to make, execute, deliver and perform this Agreement and the
Transaction Documents required or contemplated hereby or thereby to be executed
or delivered by them at the Closing. Such execution, delivery, performance and
consummation have been made in the exercise of each such Shareholder's free will
and volition.
5.33 BINDING EFFECT. This Agreement and all Transaction Documents executed
by the Companies and Shareholders constitute the legal, valid and binding
obligations of each such party, enforceable against such party in accordance
with their respective terms.
5.34 QUESTIONNAIRES. The healthcare law questionnaire heretofore delivered
to the Companies by Buyer (the "Questionnaire") will be attached hereto as
Exhibit 5.34 and will as of the Closing Date have been fully and accurately
completed and will not contain any material misstatement of any fact and will
not omit any fact that would have to be stated in order not to render any
response to such questionnaire materially misleading.
ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF BUYER AND IHS
Buyer and IHS represent and warrant to the Companies and the Shareholders
as follows:
6.1 ORGANIZATION AND STANDING. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
IHS is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware.
6.2 POWER AND AUTHORITY. Buyer and IHS have the corporate power and
authority to execute, deliver and perform this Agreement, and as of the Closing,
Buyer and IHS will have the corporate power and authority to execute and deliver
the Transaction Documents required to be delivered by such party to the
Companies at the Closing.
6.3 BINDING AGREEMENT. This Agreement has been duly executed and delivered
by Buyer and IHS. This Agreement is, and when executed and delivered by Buyer
and IHS at the Closing each of the Transaction Documents executed by Buyer and
IHS will be, the legal, valid
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and binding obligations of Buyer and IHS, enforceable against Buyer and IHS in
accordance with their respective terms.
6.4 ABSENCE OF CONFLICTING AGREEMENTS. Neither the execution or
delivery of this Agreement or any of the Transaction Documents by Buyer and IHS
nor the performance by the Buyer and IHS of the transactions contemplated hereby
and thereby conflicts with, or constitutes a breach of or a default under (i)
the formation documents of the Buyer and IHS, or (ii) any law, rule, judgment,
order, writ, injunction, or decree of any court currently in effect applicable
to Buyer and IHS, or (iii) any rule or regulation of any administrative agency
or other governmental authority currently in effect applicable to Buyer and IHS,
or (iv) any agreement, indenture, contract or instrument to which the Buyer or
IHS is now a party or by which any of the assets of the Buyer or IHS is bound.
6.5 CONSENTS. No authorization, consent, approval, license, exemption
by, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary in connection with the execution, delivery and performance of
this Agreement or any of the Transaction Documents by Buyer or IHS.
6.6 FINDERS. No broker or finder has acted for Buyer or IHS in
connection with the transactions contemplated by this Agreement, and no other
broker or finder is entitled to any broker's or finder's fee or other commission
in respect thereof based in any way on agreements, understandings or
arrangements with the Buyer or IHS.
6.7 CAPITAL STOCK. IHS has duly authorized and reserved for issuance
the shares of IHS Stock to be issued in connection herewith, and, when issued in
accordance with the terms of Article III, such shares of IHS Stock will be
validly issued, fully paid, and nonassessable and free of preemptive rights.
ARTICLE VII: INFORMATION AND RECORDS CONCERNING THE COMPANIES
7.1 ACCESS TO INFORMATION AND RECORDS BEFORE CLOSING. Prior to the
Closing Date, Companies' (it being understood that, for the purpose of this
Article VII, "Companies" shall be deemed to refer collectively to the Companies
and their subsidiaries listed on Schedule 5.25) shall make available to Buyer
such records of the Business as reasonably required by Buyer to update its due
diligence review of the Companies and provide access to representatives of the
Companies to discuss the due diligence update process with representatives of
Buyer.
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ARTICLE VIII: OBLIGATIONS OF THE PARTIES UNTIL CLOSING
8.1 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Closing, the Companies and their subsidiaries shall maintain
their existence and shall conduct the Business in the customary and ordinary
course of business consistent with past practice.
8.2 NEGATIVE COVENANTS OF THE COMPANIES AND THEIR SUBSIDIARIES. Without
the prior written approval of Buyer, neither Company nor any of their
subsidiaries shall, between the date hereof and the Closing:
(A) cause or permit to occur any of the events or occurrences
described in Section 5.20 (Absence of Certain Events) of this Agreement related
to the Business;
(B) dissolve, merge or enter into a share exchange with or into any
other entity;
(C) enter into any contract or agreement with any union or other
collective bargaining representative representing any employees of the Business
without the prior written consent of Buyer;
(D) sell off any Assets related to the Business other than in the
ordinary course of business; or
(E) make any change to their by-laws, articles of incorporation or
partnership agreement.
8.3 AFFIRMATIVE COVENANTS. Between the date hereof and the Closing, the
Companies and each of their subsidiaries shall:
(A) maintain the Business in substantially the state of repair,
order and condition as on the date hereof, reasonable wear and tear or loss by
casualty excepted;
(B) maintain in full force and effect all Licenses currently in
effect with respect to the Business unless such License is no longer necessary
for the operation of the Business;
(C) maintain in full force and effect the insurance policies and
binders currently in effect related to the Business, or the replacements thereof
related to the Business, including without limitation those listed on Schedule
5.18;
(D) utilize their reasonable efforts to preserve intact the present
business organization of the Companies and their subsidiaries in connection with
the Business; keep available the services of the Companies' and their
subsidiaries' present employees and agents
23
related to the Business; and maintain the Companies' relations and goodwill with
suppliers, employees, affiliated medical personnel and any others having
business relating to the Business;
(E) maintain all of the books and records in accordance with their
past practices in connection with the Business;
(F) comply in all material respects with all provisions of the
Contracts listed in Schedule 5.7 and with any other material agreements that the
Companies and their subsidiaries in connection with the Business have entered
into in the ordinary course of business since the date of this Agreement, and
comply in all material respects with the provisions of all material laws, rules
and regulations applicable to the Business;
(G) cause to be paid when due, all taxes, assessments and charges
or levies imposed upon them in connection with the Business or on any of their
properties in connection with the Business or which they are required to
withhold and pay over in connection with the Business;
(H) to the knowledge of the Sellers or Companies, promptly advise
Buyer in writing of the threat or commencement against the Companies and their
subsidiaries of any claim, action, suit or proceeding, arbitration or
investigation or any other event that would materially adversely affect the
operations, properties, assets or prospects of the Business, including, but not
limited to the threatened cancellation of any contract to provide radiological,
EKG or ultrasound services; and
(I) to the knowledge of the Sellers or Companies, notify the Buyer
in writing of any event involving the Companies and their subsidiaries which has
had or may be reasonably expected to have a material adverse effect on the
business or financial condition of the Companies and their subsidiaries or may
involve the loss of contracts with any of the Companies' or their subsidiaries'
customers.
8.4 PURSUIT OF CONSENTS AND APPROVALS. Prior to the Closing, Buyer
shall use its reasonable efforts to obtain all consents and approvals of
governmental agencies and all other parties necessary for the lawful
consummation of the transactions contemplated hereby and the lawful use,
occupancy and enjoyment of the Companies' and their subsidiaries' businesses in
accordance herewith ("Required Approvals"). The Companies and their subsidiaries
shall cooperate with and use their reasonable efforts to assist Buyer in
obtaining all such approvals.
8.5 EXCLUSIVITY. Until the earlier of Closing or the termination of
this Agreement pursuant to Section 12.1, neither Company nor any Shareholder,
nor any of their respective affiliates, shall enter into any agreement,
commitment or understanding with respect to, or engage in any discussions or
negotiations directly or indirectly with, or encourage or respond to any
solicitations from, any other party with respect to the sale of the Assets, or
in
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respect of the sale of any shares of capital stock in Tacoma, or in respect of
the sale of any partnership interest in Radiological.
ARTICLE IX: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Buyer's obligations to consummate the purchase of the Assets is subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions, any one or more of which may be waived by Buyer in writing. Upon
failure of any of the following conditions, Buyer may terminate this Agreement
pursuant to and in accordance with Article XII herein.
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Companies and the Shareholders made pursuant to this Agreement, shall be
true and correct in all material respects at and as of the Closing Date, as
though such representations and warranties were made at and as of such time,
except to the extent affected by the transactions herein contemplated.
9.2 PERFORMANCE OF COVENANTS. The Shareholders and the Companies shall
have performed or complied in all material respects with their respective
agreements and covenants required by this Agreement to be performed or complied
with by it prior to or at the Closing.
9.3 DELIVERY OF CLOSING CERTIFICATE. The Shareholders and the Companies
shall have executed and delivered to Buyer a certificate of its president or
general partners, as the case may be, dated the Closing Date, upon which Buyer
may rely, certifying that the conditions contemplated by Sections 9.1 and 9.2
applicable to it have been satisfied.
9.4 OPINION OF COUNSEL. The Companies shall have delivered to Buyer an
opinion, dated the Closing Date, of its counsel, in substantially the form
attached hereto as Exhibit 9.4. Said opinion shall be addressed to and may be
relied upon by Buyer and its counsel.
9.5 LEGAL MATTERS. No preliminary or permanent injunction or other
order (including a temporary restraining order) of any governmental authority
which prevents the consummation of the transactions contemplated by this
Agreement shall have been issued and remain in effect.
9.6 AUTHORIZATION DOCUMENTS. Buyer shall have received a certificate of
the Secretary or other officer of the Company certifying as of the Closing Date
a copy of Resolutions of Tacoma's Board of Directors and Radiological's managing
partner authorizing their execution and full performance of the Transaction
Documents and the incumbency of their respective officers.
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9.7 MATERIAL CHANGE. Since the date of the Unaudited Interim Financial
Statements, there shall not have been any material adverse changes in the
condition (financial or otherwise) of the assets, properties, operations,
operating results, Medicare and Medicaid reimbursement, third party billing
and/or direct billing, customer and employee relations or business prospects of
the Companies.
9.8 APPROVALS.
(A) The consent or approval of all persons necessary for the
consummation of the transactions contemplated hereby shall have been granted,
including without limitation, the Required Approvals;
(B) None of the foregoing consents or approvals (i) shall have been
conditioned upon the modification, cancellation or termination of any material
lease, contract, commitment, agreement, license, easement, right or other
authorization with respect to the Business, other than as disclosed or approved
hereunder, or (ii) shall impose on the Buyer any material condition or provision
or requirement with respect to the Business or its operation that is more
restrictive than or different from the conditions imposed upon such operation
prior to Closing.
9.9 IRS FORM 8594. The Companies shall have executed and delivered to
Buyer IRS Form 8594 reflecting the allocation of the Purchase Price in
accordance with Section 2.2.
9.10 INSURANCE. If the Companies' existing general and professional
liability coverage is on a claim made basis, then the Companies shall have paid
for and delivered to Buyer a tail policy with respect to liability insurance
coverage satisfactory to Buyer.
9.11 GOOD STANDING CERTIFICATE. Tacoma shall have delivered to Buyer a
good standing certificate issued by the Washington Secretary of State with
respect to Tacoma, dated not more than thirty (30) days prior to the Closing
Date.
9.12 XXXX OF SALE. The Companies shall have executed and delivered to
Buyer the Xxxx of Sale substantially in the form of Exhibit 9.12.
9.13 REGULATORY MATTERS. Companies shall have provided to Buyer all
licenses, permits, and other regulatory materials pertaining to the Business as
shall have been reasonably requested by Buyer.
9.14 TITLE MATTERS. Companies and Sellers shall have furnished all
recorded title documents, mortgages, liens, and other matters affecting title to
the Assets.
9.15 LEASED PROPERTY. Companies shall have purchased any equipment or
vehicles previously leased by the Companies in connection with the Business.
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9.16 SALES TAX. Sellers shall have paid all sales tax for motor
vehicles and equipment, if applicable.
9.17 CHANGE OF NAME. Radiological shall have taken such reasonable
steps as Buyer shall have requested to change its name so as not to include any
trade names or service names included in the Assets.
9.18 PATIENT EXAMINATION SUMMARY. Companies shall have provided Buyer
with a true and correct summary of the mobile x-ray, EKG and ultrasound patient
examinations and procedures for each of their customers by month for the two
years ended December 31, 1997 and the first five months of 1998.
9.19 BOARD APPROVAL. Buyer and IHS shall have received all necessary
Board of Directors Approvals.
9.20 OTHER DOCUMENTS. Shareholders and the Companies shall have
furnished Buyer with all other documents, certificates and other instruments
required to be furnished to Buyer by Shareholders and the Companies pursuant to
the terms hereof.
ARTICLE X: CONDITIONS PRECEDENT TO COMPANIES' OBLIGATIONS
The Companies' obligation to consummate the sale of the Assets is
subject to the fulfillment, prior to or at the Closing, of each of the following
conditions, any one or more of which may be waived by Sellers in writing. Upon
failure of any of the following conditions, Sellers may terminate this Agreement
pursuant to and in accordance with Article XII herein.
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer made pursuant to this Agreement, shall be true in all material respects
at and as of the Closing Date, as though such representations and warranties
were made at and as of such time, except to the extent affected by the
transactions herein contemplated.
10.2 PERFORMANCE OF COVENANTS. Buyer shall have performed or complied
in all material respects with each of its agreements and covenants required by
this Agreement to be performed or complied with by it prior to or at the
Closing.
10.3 DELIVERY OF CLOSING CERTIFICATE. Buyer shall have delivered to the
Companies a certificate of a senior vice president of Buyer dated the Closing
Date upon which the Companies can rely, certifying that the statements made in
Sections 10.1 and 10.2 are true, correct and complete as of the Closing Date.
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10.4 OPINION OF COUNSEL. Buyer shall have delivered to the Companies an
opinion, dated the Closing Date, of Blass & Xxxxxx, Esqs., counsel for Buyer, in
the form attached as Exhibit 10.4.
10.5 LEGAL MATTERS. No preliminary or permanent injunction or other
order (including a temporary restraining order) of any governmental authority
which prevents the consummation of the transactions contemplated by this
Agreement shall have been issued and remain in effect.
10.6 GOOD STANDING CERTIFICATES. Buyer shall have delivered to the
Companies good standing certificates issued by the California and Washington
Secretaries of State with respect to the Buyer, and IHS shall have delivered to
the Companies a good standing certificate issued by the Delaware Secretary of
State with respect to IHS, all of which shall be dated not more than thirty (30)
days prior to the Closing Date.
10.7 OTHER DOCUMENTS. Buyer shall have furnished the Companies with all
documents, certificates and other instruments required to be furnished to the
Companies by Buyer pursuant to the terms hereof.
ARTICLE XI: OBLIGATIONS OF THE PARTIES AFTER CLOSING
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Companies and Shareholders set forth in this Agreement or
in any Schedule, certificate, document or list delivered by any such party
pursuant hereto shall survive the Closing. Notwithstanding any investigation
conducted before or after the Closing or the decision of any party to consummate
the Closing, each party hereto shall be entitled to rely and is hereby declared
to have reasonably relied upon the representations and warranties of the other
party.
11.2 INDEMNIFICATION BY SHAREHOLDERS AND THE COMPANIES. The
Shareholders and the Companies shall indemnify jointly and severally and defend
Buyer and hold it harmless against and with respect to any and all damage, loss,
liability, deficiency, cost and expense (including, without limitation,
reasonable attorney's fees and expenses) (all of the foregoing hereinafter
collectively referred to as "Loss") resulting from:
(A) any inaccuracy in any representation or certification, or
breach of any warranty, made by the Shareholders or the Companies in this
Agreement or any Transaction Document;
(B) the breach of any covenant or undertaking by the Shareholders
or the Companies contained in this Agreement which survives the Closing and is
not waived by Buyer at or prior to the Closing;
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(C) ownership or operation of the Companies or their business or
assets prior to the Closing Date, including, without limitation, (i) any Excess
Reimbursement Liabilities (as defined in Section 1.2); (ii) any Loss arising out
of any bulk transfer act (whether relating to liabilities in general or taxes or
otherwise; (iii) any Taxes resulting from the operation of the business of the
Companies or ownership of any of the Assets for any period ending on or before
the Closing Date; (iv) any Loss arising out of the noncompliance of the
Companies with COBRA or any like statute; (v) any claim of the type that would
be covered by a standard liability insurance policy, including, without
limitation, professional liability, malpractice, general liability, automobile
liability, workers' compensation and/or employer's liability insurance, arising
out of the operation of the Business prior to the Closing Date, including
payments of any deductibles applicable to the aforesaid policies; and (vi) any
and all actions, suits, proceedings, demands, assessments, judgments,
settlements (to the extent approved by the Companies, such approval not to be
unreasonably withheld, delayed or conditioned), costs and legal expenses
incident to any of the foregoing.
Without limiting the foregoing, the Companies and Shareholders hereby
represent and warrant to Buyer that they have complied with any and all bulk
transfer act or similar procedures applicable to the transactions herein
contemplated.
11.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and defend
Shareholders and the Companies and hold them harmless against and with respect
to any and all Loss occurring or suffered resulting from:
(A) any inaccuracy in any representation or certification, or
breach of any warranty, made by the Buyer in this Agreement or any Transaction
Document;
(B) the breach of any covenant or undertaking by Buyer which
survives the Closing and is not waived by Shareholders or the Companies at or
prior to the Closing.
11.4 CONTROL OF DEFENSE OF INDEMNIFIABLE CLAIMS.
(A) Buyer shall give Shareholders prompt written notice of the
claim for which it seeks indemnification. Failure of the Buyer to give such
prompt notice shall not relieve the Shareholders of their indemnification
obligation, provided that such indemnification obligation shall be reduced by
any damages suffered by Shareholders resulting from a failure to give prompt
notice hereunder. The Shareholders shall be entitled to participate in the
defense of such claim. If at any time the Buyer acknowledges in writing that the
claim is fully indemnifiable under this Agreement, it shall have the right to
assume total control of the defense of such claim at its own expense. If the
Shareholders do not assume total control of the defense of any such claim, the
Buyer agrees not to settle such claim without the written consent of the
Shareholders, which consent shall not be unreasonably withheld. Nothing
contained in this Section 11.4 shall prevent either party from assuming total
control of the defense and/or settling any claim against it for which
indemnification is not sought under this Agreement.
29
(B) The Shareholders and the Companies shall give Buyer prompt
written notice of the claim for which they seek indemnification. Failure of the
Shareholders and the Companies to give such prompt notice shall not relieve the
Buyer of its indemnification obligation, provided that such indemnification
obligation shall be reduced by any damages suffered by Buyer resulting from a
failure to give prompt notice hereunder. The Buyer shall be entitled to
participate in the defense of such claim. If at any time the Shareholders and
the Companies acknowledge in writing that the claim is fully indemnifiable under
this Agreement, they shall have the right to assume total control of the defense
of such claim at their own expense. If the Buyer does not assume total control
of the defense of any such claim, the Shareholders and the Companies agree
not to settle such claim without the written consent of the Buyer, which consent
shall not be unreasonably withheld. Nothing contained in this Section 11.4 shall
prevent either party from assuming total control of the defense and/or settling
any claim against it for which indemnification is not sought under this
Agreement.
(C) Notwithstanding anything to the contrary contained in this
Agreement, if there shall be any claim for Excess Reimbursement Liabilities with
respect to which Buyer shall be seeking indemnification, Buyer will have the
sole right to contest or appeal such claim, using at least the same standard of
care as it would apply to contests or appeals with respect to reimbursement
liabilities in general. Buyer may, in its sole and absolute discretion, at any
time discontinue any such contest or appeal or enter into a settlement with
respect thereto prior to the final determination thereof (a "Final
Determination"); provided, however, that if it intends to discontinue or settle
any such appeal or contest prior to Final Determination, then it must provide
the Shareholders with reasonable prior written notice of such intent and of the
current status of the appeal or contest or proposed settlement, and upon request
of the Shareholders, Buyer shall permit the Companies and the Shareholders, as
the indemnifying parties, to thereafter control (without the right to settle the
same unless Buyer shall consent to such settlement, which consent shall not
unreasonably be withheld) the contest and appeal of such Excess Reimbursement
Liabilities claim on behalf of Buyer; it being understood, however, that the
Companies and the Shareholders shall continue to be obligated to indemnify Buyer
for any Excess Reimbursement Liabilities unless the Buyer shall, in its sole
discretion, elect not to permit the Companies and the Shareholders to control
the contest and appeal of any such Excess Reimbursement Liabilities for which
the Shareholders have requested control in accordance with the foregoing.
11.5 RESTRICTIONS.
(A) From and after the Closing Date, neither the Companies nor
the Shareholders shall disclose, directly or indirectly, to any person outside
of Buyer's employ without the express authorization of the Buyer, any patient
lists, customer lists, pricing strategies, customer files, or patient files and
records related to the Business, any proprietary data or trade secrets owned by
the Companies related to the Business or any financial or other information
about the Business not then in the public domain; provided, however, that
Shareholders shall be permitted to make such disclosures as may be required by
law or by a court or governmental
30
authority; provided further, such patient files and records shall be available
for use by the Companies in connection with other treatment of the Companies'
patients where such treatment is unrelated to the Business.
(B) After the Closing Date, neither the Companies nor the
Shareholders shall engage or participate in any effort or act to induce any of
the customers, physicians, suppliers, associates, employees or independent
contractors of the Business to cease doing business, or their association or
employment, with the Business.
(C) For a period of three (3) years following the Closing Date,
neither the Companies nor the Shareholders shall, directly or indirectly for, or
on behalf of themselves or any other person, firm, entity or other enterprise,
be employed by, be a director or manager of, act as a consultant for, be a
partner in, have a proprietary interest in, give advice to, loan money to any
person, enterprise, partnership, association, corporation, joint venture or
other entity of any type, licensed or unlicensed, which is engaged in or
provides mobile radiological, mobile EKG or mobile ultrasound services in the
State of Washington. Notwithstanding the foregoing, the Shareholders shall not
be restricted from performing radiological interpretations for any party other
than one which is engaged in the mobile radiological, mobile EKG or mobile
ultrasound service business or engaging in any activity or enterprise not
related to a mobile radiological, mobile EKG or mobile ultrasound service
business.
(D) The Shareholders and the Companies acknowledge that the
restrictions contained in this Section 11.5 are reasonable and necessary to
protect the legitimate business interests of Buyer and that any violation
thereof by any of them would result in irreparable harm to Buyer. Accordingly,
Shareholders agree that upon the violation by any of them of any of the
restrictions contained in this Section 11.5, Buyer shall be entitled to obtain
from any court of competent jurisdiction a preliminary and permanent injunction
as well as any other relief provided at law or equity, under this Agreement or
otherwise. In the event any of the foregoing restrictions are adjudged
unreasonable in any proceeding, then the parties agree that the period of time
or the scope of such restrictions (or both) shall be adjusted in such a manner
or for such a time (or both) as is adjudged to be reasonable.
11.6 RECORDS. On the Closing Date, the Companies shall deliver, or
cause to be delivered, to Buyer all records and files not then in Buyer's
possession relating to the operations of the Business, including without
limitation x-ray films, EKG tracings, ultrasound studies, radiology and
cardiology reports, physician orders, customer marketing and advertising
information and personnel records (collectively the "Records"). Buyer shall keep
and maintain the Records in accordance with state and federal requirements, keep
the Records available for review and copying by the Sellers for reasonable
medical or other purposes, and keep a contact person for access to the Records
for so long as state and federal law requires such records to be maintained.
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11.7 CUSTOMER TRANSITION. Upon Closing, the Companies and certain
Shareholders will join in signing a letter to the Companies' customers
announcing the transfer of the Companies' business to the Buyer, the form of
such letter to be mutually satisfactory to such Shareholders, the Companies, and
the Buyer. The Companies' marketing representative shall be available to
accompany representatives of the Buyer in visiting or otherwise contacting
customers of the Companies to discuss the transition of their existing service
agreements to the Buyer. In addition, the Shareholders and the Companies'
administrator will be available for a period of four (4) months following the
Closing Date for a reasonable period of time per month to answer questions
regarding such transaction.
11.8 USE OF PREMISES. The Companies shall provide, without charge, the
right of access to the Companies' premises at 0000 Xxxxx 00xx Xxxxxx, Xxxxxx,
Xxxxxxxxxx ("PREMISES") during normal business hours to Buyer's employees in
order to use the processor, that Buyer will be acquiring during this transaction
which is located at the Premises, and to store the films and records for a
period of sixty (60) days following the Closing Date. Also, Companies shall
permit Buyer to store and operate Buyer's teleradiography equipment at the
Premises for a period of sixty (60) days following the Closing Date, provided,
Buyer shall pay all costs and expenses related to the installation and operation
of the equipment.
ARTICLE XII: TERMINATION
12.1 TERMINATION. This Agreement may be terminated at any time at or
prior to the Closing by:
(A) Buyer, if any condition precedent to Buyer's obligations
hereunder set forth in Article IX hereof has not been satisfied by the Closing
Date or pursuant to Section 13.1 if any portion of the Assets is damaged or
destroyed as a result of fire, other casualty or for any reason whatsoever;
(B) the Companies, if any condition precedent to Companies'
obligations hereunder set forth in Article X hereof has not been satisfied by
the Closing Date; or
(C) the mutual consent of Buyer and the Companies.
12.2 EFFECT OF TERMINATION. If a party terminates this Agreement
because one of its conditions precedent has not been fulfilled, or if this
Agreement is terminated by mutual consent, or if it is terminated pursuant to
Section 13.1, this Agreement shall become null and void without any liability of
any party to the other; provided, however, that if such termination is by reason
of the breach by any party of any of its representations, warranties or
obligations under this Agreement, the other party shall be entitled to be
indemnified for any Losses incurred by it by reason thereof in accordance with
Article XI hereof (and for such purposes such Article XI shall survive the
termination of this Agreement). Further, nothing in this Section 12.2 shall
affect
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Buyer's right to specific performance of the obligations of the Companies and
Shareholders at Closing hereunder.
ARTICLE XIII: CASUALTY, RISK OF LOSS
13.1 CASUALTY, RISK OF LOSS. The Companies and Shareholders shall bear
the risk of all loss or damage to any of the Assets from all causes which occur
prior to the Closing. If at any time prior to the Closing any portion of the
Assets is damaged or destroyed as a result of fire, other casualty or for any
reason whatsoever, the Companies and Shareholders shall immediately give notice
thereof to Buyer. Buyer shall have the right, in its sole and absolute
discretion, within ten (10) days of receipt of such notice, to (1) elect not to
proceed with the Closing and terminate this Agreement, or (2) proceed to Closing
and consummate the transactions contemplated hereby and receive any and all
insurance proceeds received or receivable by any Shareholder or either Company
on account of any such casualty. Nothing contained in this Section 13.1 shall
limit or adversely affect the right of Buyer to receive indemnification for any
Losses incurred by either of them by reason of any breach by any Shareholder or
either Company of any representation, warranty or obligation under this
Agreement in accordance with Section 11.2 hereof (and for such purposes such
Section 11.2 shall survive the termination of this Agreement).
ARTICLE XIV: MISCELLANEOUS
14.1 COSTS AND EXPENSES. Except as expressly otherwise provided in this
Agreement, Buyer, Shareholders and the Companies shall bear their own costs and
expenses in connection with this Agreement and the transactions contemplated
hereby; provided, however, no such costs and expenses shall be charged to the
Assets.
14.2 PERFORMANCE. In the event of a breach by any party of its
obligations hereunder, the other party shall have the right, in addition to any
other remedies which may be available, to obtain specific performance of the
terms of this Agreement, and, to the extent allowed or not prohibited by
applicable law, the breaching party hereby waives the defense that there may be
an adequate remedy at law. Should any party default in its performance, or other
remedy, the prevailing party shall be entitled to its reasonable attorneys'
fees.
14.3 BINDING EFFECT. This Agreement binds and inures to the benefit of
each party hereto and its successors and proper assigns.
14.4 EFFECT AND CONSTRUCTION OF THIS AGREEMENT. This Agreement and the
Exhibits and Schedules hereto embody the entire agreement and understanding of
the parties and supersede any and all prior agreements, arrangements and
understandings relating to matters provided for herein. The captions used herein
are for convenience only and shall not control or
33
affect the meaning or construction of the provisions of this Agreement. This
Agreement may be executed in one or more counterparts, and all such counterparts
shall constitute one and the same instrument.
14.5 COOPERATION - FURTHER ASSISTANCE. From time to time, as and when
reasonably requested by any party hereto after the Closing, the other parties
will (at the expense of the requesting party) execute and deliver, or cause to
be executed and delivered, all such documents, instruments and consents and will
use reasonable efforts to take all such action as may be reasonably requested or
necessary to carry out the intent and purposes of this Agreement, and to vest in
Buyer good title to, possession of and control of all of the Assets.
14.6 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed to be properly given or made when personally
delivered to the party or parties entitled to receive the notice or within five
(5) days when sent by certified or registered mail, postage prepaid, or on the
next business day if sent for next day delivery by a nationally recognized
overnight courier, in either case, properly addressed to the party or parties
entitled to receive such notice at the address stated below:
If to the Companies Tacoma Radiological Associates, P.S.
and Shareholders: X.X. Xxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx, M.D.
with a copy to: Xxx X. Xxxxxxxx, Esq.
McGavick Xxxxxx
0000 Xxxxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
If to the Buyer: Symphony Diagnostic Services No.1, Inc.
0000 X. Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx, Senior Vice President
with a copy to: Integrated Health Services, Inc.
00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
With a copy to: Xxxxxxx X. Xxxxx, Esq.
Blass & Xxxxxx, Esqs.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
34
14.7 WAIVER, DISCHARGE, ETC. This Agreement shall not be released,
discharged, abandoned, changed or modified in any manner, except by an
instrument in writing executed by or on behalf of each of the parties hereto by
their duly authorized officer or representative. The failure of any party to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
14.8 RIGHTS OF PERSONS NOT PARTIES. Nothing contained in this Agreement
shall be deemed to create rights in persons not parties hereto, other than the
successors and proper assigns of the parties hereto.
14.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington, disregarding any rules
relating to the choice or conflict of laws.
14.10 AMENDMENTS, SUPPLEMENTS, ETC. At any time before or after the
execution and delivery of this Agreement by the parties hereto, this Agreement
may be amended or supplemented by additional agreements, articles or
certificates, as may be mutually determined by the parties to be necessary,
appropriate or desirable to further the purposes of this Agreement, to clarify
the intention of the parties, or to add to or to modify the covenants, terms or
conditions hereof or thereof. The parties hereto shall make such technical
changes to this Agreement, not inconsistent with the purposes hereof, as may be
required to effect or facilitate any governmental approval or acceptance of this
Agreement or to effect or facilitate any filing or recording required for the
consummation of any portion of the transactions contemplated hereby. This
Agreement may not be amended except by an instrument in writing signed by each
of the parties.
14.11 SEVERABILITY. Any provision, or distinguishable portion of any
provision, of this Agreement which is determined in any judicial or
administrative proceeding to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. It
is the intention of the parties that if any provision of Section 11.5 shall be
determined to be overly broad in any respect, then it should be enforceable to
the maximum extent permissible under the law. To the extent permitted by
applicable law, the parties waive any provision of law which renders a provision
hereof prohibited or unenforceable in any respect.
14.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
35
14.13 ARBITRATION. Any dispute or controversy between any of the parties
hereto pertaining to the performance or interpretation of this Agreement shall
be settled by binding arbitration pursuant to the rules of the American
Arbitration Association. The venue of any arbitration related to this Agreement
shall be located in the State of Washington. The cost of such proceeding shall
be shared equally by all parties thereto, and each such party shall bear its own
costs incurred as a result of its participation in any such arbitration.
14.14 PUBLIC ANNOUNCEMENTS. Any general public announcements or similar
media publicity with respect to this Agreement or the transactions contemplated
herein shall be at such time and as such manner as Buyer or IHS shall determine;
provided that nothing herein shall prevent either party, upon as much prior
notice as shall be possible under the circumstances to the other, from making
such written announcements as such party's counsel may consider advisable in
order to satisfy the party's legal and contractual obligations in such regard.
[SIGNATURES ON THE FOLLOWING PAGE]
36
IN WITNESS WHEREOF, each of the parties hereto and in the capacity
indicated below has executed this Agreement as of the day and year first above
written.
TACOMA:
WITNESS: TACOMA RADIOLOGICAL
ASSOCIATES, P.S. D/B/A MOBILE
MEDICAL DIAGNOSTICS
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXXXX
----------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxxxx
-----------------------------
Title: President
RADIOLOGICAL:
WITNESS: RADIOLOGICAL ASSOCIATES
By: /s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXXXX
--------------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------
Title: Partner
----------------------------
WITNESS: SHAREHOLDERS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXXX X. XXXXXXX
-------------------------------- ----------------------------------
Xxxxxxx X. Xxxxxxx, M.D.
WITNESS:
By:/s/ XXXXX X. XXXXXX /s/ XXXXX X. XXXXXXXX, M.D.
-------------------------------- ---------------------------------
Xxxxx X. Xxxxxxxx, M.D.
WITNESS:
By:/s/ XXXXX X. XXXXXX /s/ XXXXXXX X. XXXXX
-------------------------------- ------------------------------
Xxxxxxx X. Xxxxx, M.D.
37
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXX X. XXXXXXXXX
---------------------------------- ----------------------------------
Xxxxxx X. Xxxxxxxxx, M.D.
WITNESS:
By:/s/ XXXXX X. XXXXXX /s/ XXXXXX X. XXXX
---------------------------------- ----------------------------------
Xxxxxx X. Xxxx, M.D.
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXX X. XXXXXX
---------------------------------- ----------------------------------
Xxxxxx X. Xxxxxx, M.D.
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXX X. XXXX
---------------------------------- ----------------------------------
Xxxxxx X. Xxxx, M.D.
WITNESS:
By:/s/ XXXXX X. XXXXXX /s/ XXXXXXX X. XXXXX
---------------------------------- ----------------------------------
Xxxxxxx X. Xxxxx, M.D.
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXXX X. XXXXX
---------------------------------- ----------------------------------
Xxxxxxx X. Xxxxx, M.D.
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXX X. XXXXXXXXXX
---------------------------------- ----------------------------------
Xxxxxx X. Xxxxxxxxxx, M.D.
38
WITNESS:
By:/s/ XXXXX X. XXXXXX /s/ XXXXXXX X. XXXX
---------------------------------- ---------------------------------
Xxxxxxx X. Xxxx, M.D.
WITNESS:
By:/s/ XXXXX X. XXXXXX /s/ XXXX X. XXXXXX
---------------------------------- ---------------------------------
Xxxx X. Xxxxxx, M.D.
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXX X. DEUTSCH
---------------------------------- ---------------------------------
Xxxx X. Deutsch, M.D.
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXXXX X. XXXX
---------------------------------- ---------------------------------
Xxxxxxxx X. Xxxx, M.D.
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXX X. XXXXXXXX
---------------------------------- ---------------------------------
Xxxx X. Xxxxxxxx, M.D.
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXXX X. XXXXXXXXXX
---------------------------------- ---------------------------------
Xxxxxxx X. Xxxxxxxxxx, M.D.
WITNESS:
By:/s/ XXXXX X. XXXXXX /s/ XXX X. XXXXX
---------------------------------- ---------------------------------
Xxx X. Xxxxx, M.D.
39
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXX X. XXXXXX
---------------------------------- ---------------------------------
Xxxxxx X. Xxxxxx, M.D.
WITNESS:
By: /s/ XXXXX X. XXXXXX /s/ XXXXXX X. XXXXXX
---------------------------------- ---------------------------------
Xxxxxx X. Xxxxxx, M.D.
BUYER:
SYMPHONY DIAGNOSTIC SERVICES
NO.1, INC.
By: /s/ XXXXXX XXXXXX
------------------------------
Xxxxxx Xxxxxx
Senior Vice President
IHS:
INTEGRATED HEALTH SERVICES,
INC.
By: /s/ XXXXXXXXX X. XXXXX
------------------------------
Name: Xxxxxxxxx X. Xxxxx
Executive Vice President
Corporate Development
40
