EXHIBIT 10.7
ASSET PURCHASE AGREEMENT
MAY 29, 2001
ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT is dated this 29th day of May, 2001 by
and among MIRACOR DIAGNOSTIC, INC., a Utah corporation (the "PURCHASER"), US
DIAGNOSTIC INC., a Delaware corporation ("USD"), and MICA PACIFIC, INC., a
California corporation (the "SELLER").
RECITALS
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WHEREAS, Seller owns and operates an outpatient medical diagnostic
imaging center located at 00000 Xxxxxx Xxxxxx Xxxx xx Xxxxxx Xxxxxx, Xxxxxxxxxx
00000, otherwise known as "Laguna Niguel MRI" (the "Business") which provides
magnetic resonance imaging; and
WHEREAS, USD owns 100% of the issued and outstanding capital stock and
Assets of Seller; and
WHEREAS, the respective boards of directors and shareholders of
Purchaser and Seller have determined that it is advisable and in their best
interests that Purchaser purchase substantially all of the assets constituting
the Business, upon the terms and subject to the conditions set forth herein; and
WHEREAS, Purchaser, Seller and USD desire to make certain
representations, warranties, covenants and agreements in connection with, and
establish various conditions precedent to the consummation of the transactions
contemplated under this Agreement.
NOW, THEREFORE, in consideration of the recitals herein before stated
and the mutual representations, warranties, covenants and agreements hereinafter
set forth, the receipt and sufficiency of which are hereby acknowledged,
Purchaser, Seller and USD do hereby represent, warrant, covenant and agree as
follows:
AGREEMENT
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SECTION 1.
DEFINITIONS
1.1. DEFINED TERMS. In addition to terms defined elsewhere in this
Agreement, the following terms when utilized in this Agreement, unless the
context otherwise requires, shall have the meanings indicated, which meanings
shall be equally applicable to both the singular and plural forms of such terms:
"ACCOUNTING STANDARDS" means the accounting policies and procedures of
Seller as described in the USD's 2000 Annual Report on Form 10-K, which policies
and procedures comply with GAAP.
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation of
which USD or Seller is aware or has received notice or audit.
"ADDITIONAL FINANCIAL INFORMATION" is defined in Section 6.6 of this
Agreement.
"AFFILIATE" with respect to any Person means any Person which,
directly or indirectly, through one or more intermediaries, controls the subject
Person or any Person which is controlled by or is under common control with a
Controlling Person. For purposes of this definition, "CONTROL" (including the
correlative terms "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH"), with respect to any Person, means possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"AGREEMENT" means this Asset Purchase Agreement together with all
exhibits and schedules contemplated hereby.
"BENEFIT PLAN" means any Plan established by the Company or any
Subsidiary or any ERISA Affiliate and existing on the Closing Date or
within five years prior to the Closing Date, ,or to which the Company
or any Subsidiary or an ERISA Affiliate contributes or has contributed
within five years prior to the Closing Date, or under which any
employee,, former employee, independent contractor, former independent
contractor or director of the company or any Subsidiary or an ERISA
Affiliate or any dependent or beneficiary thereof is covered, is
eligible for coverage or has benefit rights with respect to performing
services for the Company or an Affiliate.
"BOOKS AND RECORDS" means all files, documents, instruments, papers,
books and records relating to the business or condition of the Seller,
including without limitation financial statements, and related work
papers and letters from accountants, ledgers, journals, deeds, title
policies, contracts, licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and
environmental studies and plans. Books and Records excludes computer
programs and files that relate to Medic Vision or USD-owned software.
"BUSINESS" is defined in the preamble of this Agreement.
"CLOSING" is defined in Section 4.1 of this Agreement.
"CLOSING DATE" is defined in Section 4.1 of this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"EMPLOYEE BENEFIT PLAN" means any (i) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (ii) defined contribution retirement plan or arrangement which is
an Employee Pension Benefit Plan intended to be qualified under Section 401(a)
of the Code, (iii) defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan intended to be qualified under Section 401(a) of
the Code, or (iv) Employee Welfare Benefit Plan.
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"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"EMPLOYEES" is defined in Section 5.8(a) of this Agreement.
"ENVIRONMENTAL LAWS" means all applicable federal, state, local and
foreign laws, rules, regulations, codes, ordinances, orders, decrees,
directives, permits, licenses and judgments relating to pollution,
contamination or protection of the environment (including without
limitation, all applicable federal, state, local and foreign laws,
rules, regulations, codes, ordinances, orders, decrees, directives,
permits, licenses and judgments relating to Hazardous Materials in
effect as of the date of this Agreement).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"FINANCIAL STATEMENTS" is defined in Section 5.11 of this Agreement.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America at the time of application thereof.
"GOVERNMENTAL AUTHORITY" means any government, court, regulatory or
administrative agency or commission, or other governmental authority, agency or
instrumentality, whether federal, state or local (domestic or foreign).
"GUARANTIES" is defined in Section 11.5 of this Agreement.
"HAZARDOUS MATERIALS" means any dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance so
defined in or governed by any federal, state or local law, statute,
code, ordinance, regulation, rule or other requirement relating to such
substance or otherwise relating to the environment or human health or
safety, including without limitation any waste, material, substance,
pollutant or contaminant that might cause any injury to human health or
safety or to the environment or might subject the Company to any
imposition of costs or liability under any Environmental Law.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 5.14 of
this Agreement.
"IRS" means the Internal Revenue Service.
"LEASED REAL PROPERTY" is defined in Section 5.9(a) of this Agreement.
"LIEN" means any lien, charge, claim, restriction, encumbrance,
security interest or pledge of any kind whatsoever.
"LOSSES" is defined in Section 12.2 of this Agreement.
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"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, properties, results of operations or financial condition of
the Business taken as a whole.
"MATERIAL ADVERSE EFFECT ON PURCHASER" means (i) a material adverse
effect on the business, assets, properties, results of operations or financial
condition of Purchaser or (ii) a material adverse effect on the Purchaser's
ability to enter into or perform its obligations under this Agreement.
"MATERIAL CONTRACT" means any written contract or agreement to which
Seller is a party or by which its assets are bound, and which (i) relates to
indebtedness in excess of $10,000 for money borrowed from others, purchase money
indebtedness or capitalized lease obligations, (ii) relates to the purchase,
maintenance or acquisition, or sale or furnishing of materials, supplies,
merchandise, machinery, equipment, parts or any other property or services
(excluding any such contract made in the ordinary course of the Business and
which is expected to be fully performed within 90 days of the date hereof or
which involves revenues or expenditures of less than $10,000), (iii) is a
collective bargaining agreement, (iv) obligates Seller not to compete with any
business (excluding customary restrictive covenants contained in agreements
entered into in the ordinary course of business), (v) is a lease or sublease of
real property, or a lease, sublease or other title retention agreement or
conditional sales agreement involving annual payments in excess of $10,000 for
any machinery, equipment, vehicle or other tangible personal property (whether
Seller is a lessor or lessee), (vi) is a contract for capital expenditures or
the acquisition or construction of fixed assets for or in respect of any real
property involving payments in excess of $10,000, or (vii) is a contract
granting any Person a Lien on any of the assets having a value of $10,000 or
more of Seller, in whole or in part (other than Permitted Liens).
"PERMITTED LIENS" means (i) Liens for taxes not yet due and payable or
being contested in good faith by appropriate proceedings, (ii) easements,
covenants, conditions and restrictions of record, (iii) easements, covenants,
conditions and restrictions not of record as to which no material violation or
encroachment exists or, if such violation or encroachment exists, as to which
the cure of such violation or encroachment would not materially interfere with
the conduct of the Business, (iv) any zoning or other governmentally established
restrictions or encumbrances, (v) workers or unemployment compensation Liens
arising in the ordinary course of business securing amounts which are not
delinquent, (vi) mechanic's, materialman's, supplier's, vendor's or similar
Liens arising in the ordinary course of business securing amounts which are not
delinquent, (vii) railroad trackage agreements, utility, slope and drainage
easements, right-of-way easements and leases regarding signs, and (viii) other
immaterial imperfections of title, easements, covenants, conditions,
restrictions or encumbrances.
"PERSON" means any natural person, corporation, limited liability
company, unincorporated organization, partnership, association, joint-stock
company, joint venture, trust or government, or any agency or political
subdivision of any government.
"PURCHASE PRICE" is defined in Section 3.1 of this Agreement.
"PURCHASER" is defined in the preamble of this Agreement.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" is defined in the preamble of this Agreement.
"SELLER'S KNOWLEDGE" means the actual knowledge, without independent
investigation, of the chief executive officer and chief financial officer of
Seller.
"TAXES" shall mean all taxes (whether federal, state, local or
foreign) including, without limitation, taxes based upon or measured by income,
gross receipts, profits, sales, use, occupation, value added, ad valorem,
franchise, withholding, payroll, employment, excise, capital stock, license,
social security, workers' compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premium or transfer taxes and
customs duties, together with any interest, additions to tax or penalties
imposed with respect thereto.
"TRADE SECRETS" is defined in Section 14.12(c) of this Agreement.
"TRANSFERRED EMPLOYEES" is defined in Section 11.4 of this Agreement.
1.2. OTHER DEFINITIONAL AND INTERPRETIVE PROVISIONS.
(a) Unless otherwise defined herein, all terms defined in this
Agreement shall have the defined meanings when used in any certificate, report
or other document made or delivered pursuant hereto.
(b) The inclusion of any information on any schedule to this
Agreement shall not be deemed to be an admission or acknowledgment by Seller, in
and of itself, that such information is required to be listed on such schedule
or is material to or outside the ordinary course of the Business of Seller. Any
disclosure made in any schedule to this Agreement which should, based on the
substance of such disclosure, be applicable to another schedule to this
Agreement shall be deemed to be made with respect to such other schedule
regardless of whether or not a specific reference is made thereto.
SECTION 2.
SALE OF ASSETS
2.1. PURCHASE AND SALE OF ASSETS. On the Closing Date, Seller will
convey, transfer and assign to Purchaser all of Seller's right, title and
interest in and to the personal property, inventory and other assets relating to
the Business of Seller (individually an "Asset" and collectively the "Assets"),
free and clear of all obligations, security interests, liens and encumbrances
whatsoever, except as specifically assumed by Purchaser pursuant to the terms of
this Agreement. Without limiting the generality of the foregoing, the Assets
specifically include:
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(a) All personal property, plants, furniture, fixtures and
equipment owned by Seller which are utilized in or related to the Business which
includes all items identified on SCHEDULE 2.1(A) attached hereto.
(b) All contracts and leases (whether capital or operating
leases) identified on SCHEDULE 2.1(B) attached hereto (excluding this Agreement
and the agreements, instruments and documents executed and delivered by
Purchaser pursuant to this Agreement). Such leases are fully assignable to
Purchaser.
(c) All inventory maintained by Seller as of the Closing Date
which includes all items identified on SCHEDULE 2.1(C) attached hereto.
(d) All accounts receivable of Seller relating to the Business
in existence on the Closing Date. The transfer of such accounts receivable and
related records is discussed in Section 14.16.
(e) Subject to applicable laws and regulations, all accounts
receivable records of Seller.
(f) The books and records of Seller relating to the Assets
including correspondence with governmental agencies, Medicare, Medicaid and
Champus, etc. In addition, such books and records of Seller relating to the
assets are to be made available to satisfy Purchaser's SEC audit requirements.
(g) Subject to applicable laws and regulations, and to the
extent transferable, all licenses and other regulatory approvals necessary for
or incident to the operation of the Assets identified on SCHEDULE 2.1(G)
attached hereto. Including medical records, radiology contract and facility
lease agreement, etc.
(h) All deposits relating to all leases to the Business in
existence on the Closing Date.
(i) Copies of all management care contracts and, if possible,
transfer of lockbox to Purchaser, transfer of name, transfer of utilities and
telephone.
2.2 EXCLUDED ASSETS. There shall be excluded from the Assets to be
transferred and conveyed hereunder, and Seller shall retain all of its right,
title and interest in and to, the following assets:
(a) Cash and cash equivalents held by Seller, including
without limitation, bank accounts, certificates of deposit, treasury bills,
securities, money market accounts, mutual funds and repurchase agreements.
(b) The minute books of Seller and similar corporate records
of Seller.
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(c) All consideration to be delivered by Purchaser on the
Closing Date.
(d) All medical records of Seller relating to services
performed prior to the Closing Date. However, Purchaser shall have access to
such medical records to continue its normal operations (e.g. collection of
accounts receivable after the 120 day period referred to in Section 14.16.
(e) All assets, properties and other rights owned by USD or
Seller which do not relate in any way to the ownership, management, and
operation of Seller's Business.
(f) All assets listed on SCHEDULE 2.2(f) attached hereto.
SECTION 3.
PURCHASE PRICE
3.1. PURCHASE PRICE.
(a) CASH. The aggregate purchase price for the Assets is One
Million Two Hundred Fifty Thousand Dollars and no cents ($1,250,000) (the
"PURCHASE PRICE"), which shall be payable by wire transfer of immediately
available funds to the account designated by Seller to Purchaser prior to the
Closing. The Purchase Price shall be allocated to the purchase of the Assets as
set forth on SCHEDULE 3.1(A) attached hereto for purposes of IRS Form 8594.
(b) ASSUMPTION OF LIABILITIES. Purchaser shall assume at the
Closing Date, and shall perform or discharge on or after the Closing Date and
hold Seller and USD harmless from, (i) all liabilities arising out of
Purchaser's conduct of the Business on and after the Closing Date (ii) all
contracts, leases, commitments, obligations and liabilities of Seller identified
on SCHEDULE 3.1(B) attached hereto; and (iii) all trade accounts payable and
accrued expenses that have been incurred in the ordinary course of Seller's
business, including without limitation, all payments due (whether such payments
were due and payable prior to, on or after the Closing Date) relating to all
radiology and billing services rendered to Seller prior to the Closing Date
related to accounts receivable transferred to Purchaser hereunder, all of which
accounts payable and accrued expenses are identified on SCHEDULE 3.1(B); and
(iv) all unpaid paid time off for the employees as estimated on SCHEDULE 3.1(B);
and (v) all other agreements related to the Business entered into in the
ordinary course of business after the date hereof and prior to the Closing (all
liabilities described in subsections (i) and (iv) are hereinafter collectively
referred to as the "Assumed Obligations").
SECTION 4.
CLOSING
4.1. CLOSING. Subject to the provisions of Sections 7 and 8, the
closing of the transaction (the "CLOSING") shall occur at the offices of Seller
(or at such other place as is mutually agreed upon by the parties) no later than
the fifth business day after all of the conditions set forth in Sections 7 and 8
have been satisfied or waived, but in no event later than May 29, 2001. The date
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as of which the Closing occurs is hereinafter referred to as the "CLOSING DATE."
Except as otherwise provided herein, all proceedings to be taken and all
documents to be executed at the Closing shall be deemed to have been taken,
delivered and executed simultaneously, and no proceeding shall be deemed taken
nor documents deemed executed or delivered until all have been taken, delivered
and executed.
4.2 At the Closing the parties agree to take the following steps in the
order listed below (provided, however, that upon their completion, all of these
steps shall be deemed to have occurred simultaneously):
(a) Seller shall duly execute and deliver a Xxxx of Sale in
the form similar to Schedule No. 4.2 and also deliver to Purchaser such other
conveyance instrument(s) as may reasonably be required;
(b) Seller shall also deliver to Purchaser an assignment of
all Lease(s), consents, of each Lessor and other conveyance instruments as may
reasonably be required by Purchaser; and
(c) Seller shall also deliver to Purchaser a corporate
Resolution adopted by Seller's Board of Directors approving the transaction(s)
contemplated by this Agreement, and certified to by Seller's corporate
Secretary.
SECTION 5.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise disclosed to Purchaser in the schedules to this
Agreement, Seller hereby represents and warrants the following to Purchaser:
5.1. ORGANIZATION, POWER AND QUALIFICATION. Each of Seller and USD (i)
is a corporation duly incorporated, validly existing and in good standing under
the laws of its state of incorporation as set forth on SCHEDULE 5.1, and (ii)
has full corporate power to own, lease, and operate its properties and assets
and to carry on the Business and to enter into this Agreement and to consummate
the transactions contemplated hereby. Seller is not required to be licensed or
qualified to do business in any state other than those in which it is qualified,
except any state where the failure to be so licensed or qualified would not have
a Material Adverse Effect.
5.2. CORPORATE ACTION. All corporate action necessary on the part of
Seller and USD to authorize the execution and delivery to Purchaser of this
Agreement and the performance or satisfaction of the obligations of Seller and
USD in connection with the transactions contemplated by this Agreement has been
or will have been duly taken prior to the Closing. This Agreement constitutes
the valid and binding obligation of each of Seller and USD and is enforceable
against each of Seller and USD in accordance with its terms, except as such
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enforcement may be affected by bankruptcy, moratorium or other laws relating to
creditor's rights generally or general principles of equity.
5.3. CONSENTS; NO BREACH. With the exception of filings that may be
required as set forth on SCHEDULE 5.3, no consent, approval or authorization of,
or designation, declaration or filing with, any Governmental Authority on the
part of Seller or USD is required in connection with the valid execution and
delivery of this Agreement. Except as set forth on SCHEDULE 5.3, the execution,
delivery and performance of this Agreement by Seller and USD and the
consummation of the transactions contemplated hereby will not: (i) violate any
provision of the Articles of Incorporation or Bylaws of Seller or USD, as the
case may be; (ii) violate, conflict with or result in the breach of any of the
material terms of, result in a material modification of, otherwise give any
other contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any Material Contract of
Seller; (iii) violate in any material manner any order, judgment, injunction,
award or decree of any court, arbitrator or governmental or regulatory body
against, or binding upon, Seller or USD; or (iv) violate any statute, law or
regulation of any jurisdiction applicable to the transactions contemplated
herein.
5.4. COMPLIANCE WITH LAW; LICENSES. To Seller's Knowledge, Seller is
not operating the Business in violation of any applicable federal, state or
municipal laws, regulations or ordinances, the violation of which would have a
Material Adverse Effect. Seller possesses all licenses and other required
governmental or official approvals, permits, consents and authorizations
required for the operation of the Business, except to the extent failure to
possess such license, approval, permit, consent or authorization would not have
a Material Adverse Effect.
5.5. INSURANCE. SCHEDULE 5.5 contains a list of all policies or binders
of liability, and other forms of insurance policies or binders currently in
force insuring against risks of the Assets. All such insurance policies or
binders are valid, outstanding and enforceable and will remain in full force and
effect at least through the Closing Date.
5.6. LITIGATION. Except as disclosed on SCHEDULE 5.6, there is no
outstanding order, judgment, injunction, award or decree of any court,
governmental or regulatory body or arbitration tribunal against or involving
Seller with respect to the Business which, if adversely determined, would result
in a Material Adverse Effect. Except as disclosed on SCHEDULE 5.6, there is no
action, suit, or claim or legal, administrative or arbitration proceeding or any
investigation (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) pending, or to Seller's Knowledge, threatened,
against or involving Seller with respect to the Business which, if adversely
determined, would result in a Material Adverse Effect.
5.7. MATERIAL CONTRACTS. SCHEDULE 5.7 sets forth all Material Contracts
of Seller. The Material Contracts are, to Seller's Knowledge, valid, binding,
enforceable and existing agreements, in full force and effect against Seller,
except as such enforcement may be affected by bankruptcy, moratorium or other
laws affecting creditor's rights generally or general principles of equity. To
Seller's Knowledge, Seller is not in default in any material respect under any
of the Material Contracts (nor has it received notice of the default of any
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other party to any of the Material Contracts), no condition exists which with
notice or lapse of time or both would constitute default thereunder.
5.8. EMPLOYMENT MATTERS; BENEFITS.
EMPLOYEE BENEFIT PLANS. Purchaser is expressly not obligated
under any Benefit Plan and will be indemnified against any such
liability.
5.9. PROPERTY.
(a) LEASED REAL PROPERTY. SCHEDULE 5.9(A) contains a
description of each parcel of real property leased by Seller (the "LEASED REAL
PROPERTY"). To Seller's Knowledge, Seller has received notice of any material
violation of any applicable deed restriction, building code, zoning ordinance,
covenant or other law or regulation with respect to the Leased Real Property. To
Seller's Knowledge, no default or breach exists under any of the terms,
covenants, conditions, or restrictions set forth in the leases pursuant to which
Seller occupies the Leased Real Property, except defaults or breaches which
would not have a Material Adverse Effect. Seller does not own any real property.
(b) PERSONAL PROPERTY; TITLE; ENCUMBRANCES. Seller has (i)
good title to all of the Assets free and clear of any material Liens, other than
as set forth on SCHEDULE 5.9(B) or Permitted Liens. No default or breach exists
under any terms, covenants, conditions, or restrictions set forth on any leases
relating to such Assets, except defaults or breaches which would not have a
Material Adverse Effect.
5.10. ENVIRONMENTAL MATTERS. SCHEDULE 5.10 sets forth information as to
any violation, with respect to any real property leased by Seller relating to
the Business, of any Environmental Laws of which Seller is aware of or has
received notice which would result in a Material Adverse Effect. Purchaser is
indemnified by any environmental matters set forth above as stated in Section
12, hereunder.
5.11. FINANCIAL STATEMENTS. Attached to this Agreement as SCHEDULE 5.11
are unaudited consolidated balance sheets of Seller as of December 31, 1999 and
2000 and statements of earnings of Seller for the twelve (12) -month periods
ending December 31, 1999 and 2000 (collectively, the "FINANCIAL STATEMENTS").
The Financial Statements (i) present fairly in all material respects the
financial condition of Seller and its results of operations for such period in
accordance with the Accounting Standards, and (ii) have been prepared in
accordance with the Accounting Standards (other than the absence of notes to the
Financial Statements) for the periods covered by such statements.
5.12. UNDISCLOSED LIABILITIES. Except as and to the extent reflected in
the Financial Statements or in SCHEDULE 5.12 to this Agreement, to Seller's
Knowledge, Seller does not have any material liabilities, commitments or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
other than those incurred in the ordinary course of business since December 31,
2000, which, (i) under the Accounting Standards, are required to be disclosed in
the Financial Statements, and (ii) would have a Material Adverse Effect.
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5.13. TAXES. All federal, state and other tax returns of Seller
required by law to be filed have been duly filed, except for such returns the
failure of which to file would not have a Material Adverse Effect; and all
federal, state and other taxes, assessments, fees and other federal governmental
charges shown to be due and payable on such returns have been paid, except such
taxes which are being contested in good faith or for which the dates for payment
have been extended. Seller is responsible for all tax filings up to and
including the Closing Date.
5.14. INTELLECTUAL PROPERTY. Seller has no right, title or interest in
or to patents, patent rights, patent applications, trademarks, trademark
applications, service marks, service xxxx applications, trade names and
copyrights (collectively, "INTELLECTUAL PROPERTY") relating to the Business or
Assets. Except for off-the-shelf software licenses, Seller is not a licensee in
respect of any Intellectual Property. No claim is pending or, to Seller's
Knowledge, threatened to the effect that the operations of the Business infringe
upon or conflict with the asserted rights of any other person under any
Intellectual Property or licensed software.
5.15. NO BROKERS OR FINDERS. No Person has or will have, as a result of
the transactions contemplated by this Agreement, any right, interest or claim
against or upon Seller for any commission, fee or other compensation as a finder
or broker as a result of the consummation of this Agreement, except as disclosed
on SCHEDULE 5.15.
5.16. TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
5.16 hereto and except for normal advances to employees consistent with past
practices, payment of compensation for employment to employees consistent with
past practices, and participation in Employee Benefit Plans by employees, Seller
has not purchased, acquired or leased any property or services from, or sold,
transferred or leased any property or services to, or loaned or advanced any
money to, or borrowed any money from or entered into or been subject to any
management, consulting, or similar agreement with, any officer, director or
shareholder of USD or any of their respective Affiliates. Except as set forth on
SCHEDULE 5.16, no Affiliate of Seller is indebted to Seller for money borrowed
or other loans or advances, and Seller is not indebted to any such Affiliate.
5.17. ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 5.17
hereto or as otherwise disclosed herein, since December 31, 2000 (a) there has
not occurred an event which has resulted in a Material Adverse Effect, and (b)
Seller has operated the Business in the ordinary course of business.
5.18 Equipment. All equipment forming part of the Assets purchased/sold
herein are Year 2000 Compliant. Further, all such equipment at Closing
will be in good condition, good operating order and will be fit for the
purposes for which they are used or intended to be used, subject only
to ordinary wear and tear.
5.19 Books and Records. All Books and Records and Schedules, contracts,
instruments, agreements and other documents delivered by Seller to
Purchaser for its review in connection with this Agreement and the
transactions contemplated hereby, are true, correct and complete.
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5.20 Leases. With respect to the leases forming part of the Assets
purchased hereunder, to the Seller's knowledge, there are no pending or
threatened actions, suits, claims or proceedings which will affect any
of the equipment and/or real estate Leases. Further, the operation of
the Leases will not violate any zoning or similar law or any
certificate of occupancy. Further, the Seller has not received any
notice of any deficiencies or inadequacies which would materially
adversely affect the insurability of either the equipment or the Leased
Premises.
5.21 Environmental Laws. The Seller has no knowledge of any violations
of the Environmental Laws, and to the best of its knowledge, it has
never illegally used or illegally disposed of Hazardous Materials on
the premises on which the Seller's business is presently conducted.
5.22 Assignment of Lease. The Lease for the premises upon which the
Seller's business is presently conducted is fully assignable and/or the
Seller has secured the Lessor's express written consent before the
Closing. Further, there have been no oral modifications to the subject
real estate Lease, and the same is in full force and effect, and there
are no uncured events of Default.
5.23 Losses. To the best of the Seller's knowledge, there is no Loss
within the meaning of subparagraph 12.2 that has not been disclosed in
writing to the Purchaser either in the Seller's Books and Records
and/or disclosure Schedules.
5.24 NO ADDITIONAL REPRESENTATIONS. Seller is not making any
representations or warranty, express or implied, of any nature whatsoever, with
respect to the Assets or the Business, except for the representations and
warranties in this Section 5. It is understood that any cost estimates,
projections or other predictions contained or referred to in the schedules
hereto and any cost estimates, projections or predictions or any other
information contained or referred to in other materials that have been or shall
hereafter be provided to Purchaser or any of its representatives are not and
shall not be deemed to be representations or warranties of Seller.
SECTION 6.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as otherwise disclosed to Seller in the schedules to this
Agreement, Purchaser hereby represents and warrants to Seller and USD, the
following:
6.1. ORGANIZATION, POWER AND QUALIFICATIONS. Purchaser is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of ______________, and has full corporate power to own, lease and operate
its properties and to carry on its business and to enter into this Agreement and
to consummate the transactions contemplated hereby.
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6.2. CORPORATE ACTION. All corporate action necessary on the part of
Purchaser to authorize the execution and delivery to Seller and Company of this
Agreement and the performance or satisfaction of the obligations of Purchaser in
connection with the transactions contemplated by this Agreement has been or will
have been duly taken prior to the Closing. This Agreement constitutes the valid
and binding obligation of Purchaser and is enforceable against Purchaser in
accordance with its terms, except as such enforcement may be affected by
bankruptcy, moratorium or general principles of equity.
6.3. CONSENTS; NO BREACH. No consent, approval or authorization of, or
designation, declaration or filing with, any Governmental Authority on the part
of Purchaser is required in connection with the valid execution and delivery of
this Agreement. Purchaser shall have on or before the Closing all necessary or
appropriate licenses, permits or others approvals from the applicable
Governmental Authority which allow it to operate the Business and to assume the
obligations and operations of the Business. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not: (i) violate any provision of the Articles of
Incorporation or Bylaws of Purchaser; (ii) violate, conflict with or result in
the breach of any of the material terms of, result in a material modification
of, otherwise give any other contracting party the right to terminate, or
constitute (or with notice or lapse of time or both constitute) a default under,
any material contract or other agreement to which Purchaser is a party; (iii)
violate in any material manner any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body against, or binding
upon, Purchaser; or (iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated herein.
6.4. LITIGATION. There is no outstanding order, judgment, injunction,
award or decree of any court, governmental or regulatory body or arbitration
tribunal against or involving Purchaser which, if adversely determined, would
result in a Material Adverse Effect on Purchaser. There is no action, suit or
claim or legal, administrative or arbitration proceeding or any investigation
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance) pending, or to the knowledge of Purchaser, threatened,
against or involving Purchaser which, if adversely determined, would result in a
Material Adverse Effect on Purchaser.
6.5. NO BROKERS OR FINDERS. No Person has or will have, as a result of
the transactions contemplated by this Agreement, any right, interest or claim
against or upon the Purchaser for any commission, fee or other compensation as a
finder or broker as a result of the consummation of this Agreement.
6.6. INFORMATION. Purchaser has been given access to information
concerning the condition, properties, operations and prospects of the Business.
Purchaser has had an opportunity to ask questions of and to receive information
from Seller and persons acting on its behalf concerning the Business. Purchaser
acknowledges that it has undertaken an independent investigation and
verification of the Business and the assets, including without limitation the
Business's financial condition. As part of its investigation, Purchaser is given
certain forecasts, projections and opinions prepared or furnished by or on
behalf of Seller with respect to the Business (the "ADDITIONAL FINANCIAL
INFORMATION"). Purchaser has taken responsibility for evaluating the adequacy of
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the Additional Financial Information. Purchaser is familiar with the
uncertainties inherent in attempting to make such forecasts, projections and
opinions and has taken such uncertainties into account in its evaluation of the
Additional Financial Information. Purchaser expressly acknowledges and agrees
that it is not relying on Seller with respect to any matter in connection with
Purchaser's investigation or evaluation of the Business or the assets,
including, but not limited to, any Additional Financial Information provided by
Seller with respect to the Business, except for the representations of Seller
set forth in Section 5 of this Agreement.
6.7. FINANCIAL ABILITY. Purchaser has sufficient funds to consummate
the transactions contemplated by this Agreement and knows of no circumstance or
condition that will prevent the availability at the Closing Date of such funds.
SECTION 7.
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER TO CLOSE
The obligations of Purchaser to consummate this Agreement and the
transactions contemplated hereby are subject to the satisfaction at or before
the Closing of each and every one of the following conditions, any of which
Purchaser may, in its sole discretion, waive.
7.1. REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of Seller contained in this Agreement shall be true and correct
in all material respects as of the Closing, as though made on and as of the
Closing. Purchaser shall have received a certificate of the Chief Executive
Officer or Chief Financial Officer of Seller to that effect.
7.2. PERFORMANCE OF OBLIGATIONS OF SELLER. Seller shall have performed
in all material respects all obligations and covenants required to be performed
by it under this Agreement prior to or as of the Closing Date.
7.3. NO OBSTRUCTIVE PROCEEDINGS. No action or proceedings shall have
been instituted against, and no order, decree or judgment of any court, agency,
commission or Governmental Authority shall be existing against Purchaser which
seeks to or would render it unlawful as of the Closing to effect the sale of
Assets in accordance with the terms hereof, and no such action shall seek
damages against the Purchaser in a material amount by reason of the transactions
contemplated hereby.
7.4. PERMITS, APPROVALS AND CONSENTS . Any and all permits, approvals
and consents from any Person set forth on SCHEDULE 7.4 and SCHEDULE 9.1(F)
required for the consummation of the Closing and which are material to operation
of the business shall have been obtained or waived.
7.5. FINANCING. Purchaser shall have obtained financing necessary to
close the transaction.
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SECTION 8.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER TO CLOSE
The obligations of Seller to consummate this Agreement and the
transactions contemplated hereby are subject to the satisfaction at or before
the Closing of each and every one of the following conditions, any of which
Seller may, in its sole discretion, waive.
8.1. REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of Purchaser contained in this Agreement shall be true and
correct in all material respects as of the Closing, as though made on and as of
the Closing. Seller shall have received a certificate of the Chief Executive
Officer or Chief Financial Officer of the Purchaser to that effect.
8.2. PERFORMANCE OF OBLIGATIONS OF PURCHASER. Purchaser shall have
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement prior to or as of the Closing Date.
8.3. NO OBSTRUCTIVE PROCEEDING. No action or proceeding shall have been
instituted against and no order, decree or judgment of any court, agency,
commission or Governmental Authority shall be existing against Seller, USD or
the Business which seeks to or would render it unlawful as of the Closing to
effect the sale of Assets in accordance with the terms hereof, and no such
action shall seek damages against Seller, USD or the Business in a material
amount by reason of the transactions contemplated hereby.
8.4. PERMITS, APPROVALS AND CONSENTS . Any and all permits, approvals
and consents from any Person required for the consummation of the Closing set
forth on SCHEDULE 8.4 and SCHEDULE 9.1(f) shall have been obtained or waived.
8.5. PAYMENT OF PURCHASE PRICE. Seller shall have received payment of
the full amount of the Purchase Price.
8.6 GUARANTIES. Purchaser shall have provided substitute Guaranties in
accordance with Section 11.5.
8.7 THIRD PARTY CONSENTS. All consents (or in lieu thereof, waivers) to
the performance by the Seller of its material obligations under this
Agreement or the consummation of the transactions contemplated hereby
as required under any Contract to which Seller is a party, or by which
any of the Assets sold hereunder are bound shall have been obtained
and/or waived by the Purchaser and shall be in full force and effect as
at the Closing.
8.8 REGULATORY CONSENTS AND APPROVALS. All consents, approvals and
actions of, filings with, and notices to any governmental or regulatory
authority necessary to permit the Purchaser to perform its obligations
under this Agreement and to consummate the transactions contemplated
hereby, shall have been obtained, made or given in form reasonably
satisfactory and/or waived by the Seller and shall be in full force and
effect as at the Closing.
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8.9 OPINION OF COUNSEL. Purchaser shall have received an opinion of
Seller's counsel substantially in the form set forth in SCHEDULE 8.09.
SECTION 9.
CLOSING OF THE TRANSACTION
9.1. DELIVERIES BY SELLER. On the Closing Date, Seller shall deliver
(or cause delivery) to Purchaser all of the following:
(a) a general xxxx of sale, assignment and assumption
agreement in the form set forth as SCHEDULE 9.1(a) (the "Xxxx of Sale");
(b) Articles of Incorporation of Seller and all amendments
thereto, duly certified by the Secretary of State of its state of incorporation;
(c) a certificate of good standing of Seller from the
Secretary of State of its state of incorporation;
(d) a certified copy of the resolutions adopted by Seller's
board of directors authorizing the execution, delivery and performance of this
Agreement and the consummation of all of the transactions contemplated by this
Agreement and an incumbency certificate duly certified by the Secretary of
Seller listing the current directors and officers of Seller;
(e) the books and records of Seller relating to the Assets;
and
(f) all executed consents obtained by Seller and required for
assignment and transfer by Seller to Purchaser of the contracts and leases
assumed pursuant to this Agreement which are enumerated on SCHEDULE 8.4 and
SCHEDULE 9.1(f).
9.2. DELIVERIES BY PURCHASER. On the Closing Date, Purchaser shall
deliver (or cause delivery) to Seller all of the following:
(a) a certificate of good standing of Purchaser from the
Secretary of State of the state of its incorporation;
(b) a certified copy of the resolutions adopted by Purchaser's
board of directors authorizing the execution, delivery and performance of this
Agreement and the consummation of all of the transactions contemplated by this
Agreement; and
(c) the Xxxx of Sale and the Purchase Price.
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SECTION 10.
TAX MATTERS
10.1. AD VALOREM AND SIMILAR TAXES. Ad valorem, property and similar
taxes and assessments (other than taxes on income, gain or receipts, or transfer
taxes in respect of the Assets) based upon or measured by the value of the
Assets shall be divided or prorated between Seller and Purchaser as of the
Closing Date based on the amount of such taxes paid for the previous year,
unless a new tax statement is received prior to the Closing Date, in which event
the tax apportionment made as of the Closing Date shall be adjusted in
accordance with such new tax statement or as otherwise mutually agreed. In this
regard, Seller shall assume responsibility for such taxes attributable to the
period of time prior to the Closing Date and Purchaser shall assume
responsibility for the periods of time thereafter. Not later than 30 days after
the Closing Date, Seller and Purchaser shall determine and shall pay all amounts
required to be paid pursuant to such allocation. Purchaser is indemnified from
any unpaid pre-Closing tax liabilities per Section 12.
SECTION 11.
COVENANTS
11.1. ACCESS TO INFORMATION. From and after the date hereof and until
the Closing, Seller will give to the Purchaser and the Purchaser's authorized
representatives reasonable access during normal business hours to its offices,
books and records, medical records, tax returns, contracts, commitments,
officers, facilities, personnel and accountants, and to furnish and make
available to the Purchaser and its authorized representatives all such documents
and copies of documents and all such additional financial and operating data and
other information pertaining to the affairs of Seller as the Purchaser and its
authorized representatives may reasonably request; provided, however, that the
activities of the Purchaser and its representatives shall be conducted in such a
manner as not to interfere with the operation of the Business.
11.2. CONDUCT OF BUSINESS. During the period from the date hereof to
the Closing Date, Seller will continue to conduct the business affairs of Seller
in the usual and ordinary course of business and in substantially the same
manner as previously conducted.
11.3. EFFORTS TO CONSUMMATE. Subject to the terms and conditions of
this Agreement, each party hereto shall use commercially reasonable efforts to
take or cause to be taken all actions and do or cause to be done all things
required under applicable law in order to consummate the transactions
contemplated hereby, including, without limitation, (i) obtaining all permits,
authorizations, consents and approvals of any authority or other Person which
are required for or in connection with the consummation of the transactions
contemplated hereby and by the other documents, (ii) taking any and all
reasonable actions necessary to satisfy all of the conditions to such party's
obligations hereunder, and (iii) executing and delivering all agreements and
documents required by the terms hereof to be executed and delivered by such
party on or prior to the Closing.
11.4. EMPLOYMENT OF EMPLOYEES. At Purchaser's sole discretion,
Purchaser may will employ the Employees as of the Closing Date (the "TRANSFERRED
EMPLOYEES"), with the understanding that such employment shall be at will for
17
all employees other than those who have entered into employment agreements with
the Purchaser. With respect to such Transferred Employees, Purchaser shall not
assume responsibility for the vacation time and sick leave benefits due from
Seller to the Transferred Employees as of the Closing Date.
11.5. GUARANTIES. Purchaser shall use all reasonable efforts to cause
itself or one or more of its affiliates to be substituted in all respects for
Seller or USD, as the case may be, effective as of the Closing, in respect of
all obligations of Seller and USD under each of the contracts, guaranties,
letters of credit, letters of comfort, bid bonds, performance bonds and other
similar type bonds obtained or granted by Seller or USD or any of its affiliates
for the benefit of the Business or relating to the Assets, which contracts,
guaranties, letters of credit, letters of comfort, bid bonds and performance
bonds are set forth on SCHEDULE 11.5 (the "GUARANTIES"). If Purchaser is unable
to effect such a substitution with respect to any Guaranty after using its best
efforts to do so, Purchaser shall obtain letters of credit, on terms and from
financial institutions satisfactory to Seller, with respect to the obligations
covered by each of the Guaranties for which Purchaser does not effect such
substitution. As a result of the substitution contemplated by the first sentence
of this Section 11.5 and/or the letter or letters of credit contemplated by the
second sentence hereof, Seller and USD shall from and after the Closing cease to
have any obligation whatsoever arising from or in connection with the Guaranties
except for obligations, if any, for which Seller and USD will be fully
indemnified pursuant to a letter of credit obtained by Purchaser and
satisfactory to Seller.
11.7. USE OF NAME. Purchaser shall have the right to continue to use
the name "Laguna Niguel MRI" with respect to its operations of the Business to
the same extent such current rights exist in favor of Seller and USD; provided,
however, that Purchaser will not be allowed to associate the use of that name in
any manner with the name "U S Diagnostic Inc." or any service marks or logos of
USD. Purchaser shall also have the right to use existing telephone numbers of
Laguna Niguel MRI.
11.8. INSURANCE MATTERS. Seller shall be responsible and liable for the
expense of all worker's compensation claims that arise out of any injury or
damage sustained prior to the Closing Date. The Purchaser shall be responsible
and liable for the expense of all bodily injury, property damage and worker's
compensation claims that arise out of any injury or damage sustained on or after
the Closing Date.
11.9 PUBLICITY. Except as otherwise required by applicable law or the
disclosure rules and regulations of the Securities Exchange Commission,
Purchaser shall not issue any press release or make any other public statement
(including statements to Employees) relating to this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
Seller to the contents and manner of presentation and publication thereof.
11.10 REIMBURSEMENT OBLIGATIONS. The parties acknowledge that
overpayments or underpayments to Seller by the Medicaid or Medicare programs or
other third party payors for periods ending prior to the Closing Date may be
discovered after the Closing, whether in connection with an audit of the
Business or otherwise. Seller shall remain liable for all such overpayments
received by Seller. Seller shall be entitled to receive any additional payments
18
from Medicaid or Medicare programs or other third party payors which relate to
underpayments for periods prior to the Closing Date and which, if received by
Purchaser, shall be paid to Seller promptly. Any appeals from any Medicare,
Medicaid or other third-party payor adjustments may be pursued by Seller at
Seller's cost.
XXXXXXX 00.
XXXXXXXXXXXXXXX
00.0. XXXXXXXX .
(x) All representations and warranties of the parties contained in this
Agreement or in any schedule hereto shall survive the Closing only until the
first anniversary of the Closing Date; provided, however, the representations
and warranties set forth in Section 5.10 (Environmental Matters) shall not
survive the Closing. No action or proceeding may be brought with respect to any
of the representations or warranties set forth in this Agreement, unless written
notice thereof, setting forth in reasonable detail the claimed misrepresentation
or breach of warranty shall have been delivered to the party alleged to have
breached such representation or warranty prior to the expiration of the survival
terms set forth for such representation or warranty in the preceding sentence.
(b) The covenants and agreements contained in Sections 11.1, 11.2 and
11.3 shall not survive the Closing. The remaining covenants or agreements
(including but not limited to the indemnities) contained in this Agreement shall
survive the execution and delivery hereof and the completion of the transactions
contemplated herein.
12.2. INDEMNIFICATION BY SELLER. Seller agrees to indemnify Purchaser
with respect to, and hold Purchaser harmless from, any loss, liability, damage,
cost or expense (including, but not limited to, reasonable legal fees and
expenses, but specifically excluding any Tax Losses, the responsibility for
which, if any, is provided in Section 10 hereof) (collectively, the "LOSSES")
which Purchaser may incur or suffer which results from or arises out of (a) the
inaccuracy of any representation or warranty made by Seller in this Agreement
(unless any inaccuracy is corrected by Seller or USD prior to Closing in a
supplement to any schedule hereto), or (b) the failure of Seller to comply with
any covenants or other commitments made by Seller in this Agreement, or (c) the
operation of the Business prior to the Closing Date; PROVIDED, HOWEVER, (i) the
Purchaser shall not be entitled to indemnification until all such Losses exceed,
in the aggregate $50,000, in which case the Purchaser shall be entitled to
indemnification only to the extent such Losses exceed $50,000, (ii) the
Purchaser shall not be entitled to indemnification with respect to any breach of
any representation or warranty under Section 5 hereof if Seller can prove by a
preponderance of the evidence that any director or officer of the Purchaser or
doctor employed or retained by Purchaser had actual knowledge at any time on or
prior to the Closing Date of the events or conditions constituting or resulting
in such breach of representation or warranty or were the result of operations
conducted by Purchaser prior to the Closing Date, (iii) in no event shall Seller
be required to pay an aggregate amount in excess of $500,000 in respect of
Purchaser's Losses, and (iv) Losses shall be net of any insurance proceeds
payable or tax benefits realizable to the indemnified party with respect to the
Loss.
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12.3. INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify
Seller with respect to, and hold Seller harmless from, any Losses (specifically
excluding Tax Losses, the responsibility for which, if any, is provided in
Section 10 hereof) which Seller may incur or suffer which results from or arises
out of (a) the Assumed Obligations, (b) the inaccuracy of any representation or
warranty made by Purchaser in this Agreement, (c) the failure of Purchaser to
comply with any covenants or other commitments made by Purchaser in this
Agreement, or (d) the operation of the Business on and after the Closing Date;
provided however, (i) the Seller shall not be entitled to indemnification until
all such Losses exceed, in the aggregate $50,000, in which case Seller shall be
entitled to indemnification only to the extent such Losses exceed $50,000; (ii)
in no event shall Purchaser be required to pay an aggregate amount in excess of
$500,000; and (iii) Losses shall be net of any insurance payable to the
indemnified party with respect to the Loss.
12.4. PROCEDURES FOR INDEMNIFICATION. Promptly after receipt by an
indemnified party under Sections 12.2 and 12.3 of notice of the commencement of
any action for which indemnification may be available under Section 12.2 or
12.3, such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement thereof, but the failure so to notify
that indemnifying party shall not relieve it of any liability that it may have
to any indemnified party, except to the extent the indemnifying party
demonstrates that the defense of such action is prejudiced thereby. In case any
such action shall be brought against an indemnified party and it shall give
notice to the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
elect, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
Section for any fees of other counsel or any other expenses, in each case
incurred by such indemnified party in connection with the defense thereof, other
than reasonable costs of investigation and costs and expenses of legal counsel
if the indemnified party and the indemnifying party are both parties to the
action and the indemnified party has been advised by counsel that there may be
one or more defenses available to it and not available to the indemnifying party
which defenses result in a conflict of interest. If an indemnifying party
assumes the defense of such an action, (a) no compromise or settlement thereof
may be effected by the indemnifying party without the indemnified party's
consent (which shall not be unreasonable withheld) unless (i) there is no
finding or admission or any violation of law or any violation of the rights of
any person and no effect on any other claims that may be made against the
indemnified party and (ii) the sole relief provided is monetary damages that are
paid in full by the indemnifying party and (b) the indemnifying party shall have
no liability with respect to any compromise or settlement thereof effected
without its consent (which shall not be unreasonably withheld).
12.5. LIMITATION OF RECOURSE. The rights of the parties for
indemnification relating to this Agreement or the transactions contemplated
hereby shall be strictly limited to those contained in Section 12 hereof, and
such indemnification rights shall be the exclusive remedies of the parties
subsequent to the Closing Date with respect to any matter in any way relating to
this Agreement or arising in connection herewith.
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12.6. PUNITIVE DAMAGES. No party to this Agreement shall seek or be
entitled to punitive, exemplary and/or consequential damages with respect to any
claim.
SECTION 13.
TERMINATION
13.1. TERMINATION EVENTS.
(a) Seller or USD may terminate this Agreement by delivery of
notice of termination to the Purchaser if at any time prior to the Closing Date:
(i) The Purchaser fails or refuses to perform in any
material respect any obligation or covenant to be performed by it
pursuant to this Agreement or pursuant to the agreements relating to
the Related Transactions prior to the Closing Date and the breach has
not been cured within ten (10) business days following the receipt of
notice by the Purchaser of the breach; or
(ii) Any of the conditions in this Agreement or in
the agreements relating to the Related Transactions has not been
satisfied as of the Closing Date or, if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Seller or USD to comply with its obligations under this Agreement or
under the agreements relating to the Related Transactions), Seller or
USD has not waived such condition on or before the Closing Date.
(b) The Purchaser may terminate this Agreement by delivery of
notice of termination to Seller if any time prior to the Closing Date:
(i) USD or Seller fails or refuses to perform in any
material respect any obligation or covenant to be performed by it
pursuant to this Agreement or pursuant to the agreements relating to
the Related Transactions prior to the Closing Date which has not been
cured within ten (10) business days following receipt of notice of the
breach; or
(ii) Any of the conditions in this Agreement or in
the agreements relating to the Related Transactions has not been
satisfied as of the Closing Date or, if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Purchaser to comply with its obligations under this Agreement or under
the agreements relating to the Related Transactions), the Purchaser has
not waived such condition on or before the Closing Date.
(c) The parties may terminate this Agreement at any time prior
to the Closing Date by mutual written consent.
13.2. EFFECT OF TERMINATION. Each party's right of termination under
Section 13.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination shall not be an
election of remedies. If this Agreement is terminated pursuant to Section 13.1,
21
all further obligations of the parties under this Agreement shall terminate,
except that the rights and obligations in Sections 11.9, 14.4, 14.6, 14.7, 14.12
and 14.13 of this Agreement shall survive; provided, however, notwithstanding
anything to the contrary contained in this Agreement, that if this Agreement is
terminated by a party because of the breach of the Agreement by another party or
because one or more of the conditions of the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies shall survive such termination unimpaired.
SECTION 14.
MISCELLANEOUS
14.1. SEVERABILITY. Should any part of this Agreement for any reason be
declared invalid, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated and
it is hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including thereon any
such part, parts, or portion which may, for any reason, be hereafter declared
invalid.
14.2. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which, taken together,
shall constitute one Agreement.
14.3. HEADINGS. Section and article headings used in this Agreement
have no legal significance and are used solely for convenience of reference.
14.4. EXPENSES. Each party shall pay for its own legal, accounting and
other similar expenses incurred in connection with the transactions contemplated
by this Agreement, whether or not such transactions are consummated.
14.5. TAXES. Any income, sales, transfer, use or excise taxes payable
in connection with these transactions shall be paid by the party responsible
therefor under applicable local law.
14.6. LAW GOVERNING. This Agreement shall be deemed to have been
entered into under the laws of the State of Florida, and the rights and
obligations of the parties hereunder shall be governed and determined according
to the laws of said state without giving any effect to conflict of laws.
14.7. INDEMNIFICATION FOR BROKER FEES. Seller agrees to indemnify and
save harmless the Purchaser, and the Purchaser agrees to indemnify and save
harmless Seller, and their respective partners, officers, directors, employees
and agents, from and against any and all actions, causes of action, suits,
losses, liabilities and damages, and expenses (including, without limitation,
reasonable attorneys' fees and disbursements in connection therewith) for any
brokers or finders fees arising with respect to brokers or finders engaged by
the non-indemnifying party.
14.8. BINDING ON SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and bind the respective successors and assigns of the parties
hereto; provided, that, the Purchaser may not assign its rights or obligations
22
under this Agreement without the prior written consent of Seller which may be
withheld in its sole discretion. Other than as specifically provided in this
Agreement, nothing expressed or referred to in this Agreement is intended or
shall be construed to give any person other than the parties to this Agreement
or their respective successors or permitted assigns any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provision
contained herein, it being the intention of the parties to this Agreement that
this Agreement shall be for the sole and exclusive benefit of such parties or
such successors and assigns and not for the benefit of any other person. The
agreements attached hereto as exhibits shall be binding and subject to the
assignment provisions as set forth in such agreements.
14.9. ENTIRE AGREEMENT. This Agreement and the schedules, exhibits and
documents delivered pursuant hereto constitute the entire contract between the
parties hereto pertaining to the subject matter hereof and supersede all prior
and contemporaneous agreements, understandings, negotiations and discussions,
whether written or oral. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party or parties to be bound
thereby. No delay in the exercise of any rights by any party hereunder shall
operate as a waiver of any rights of such party.
14.10. ACCESS TO RECORDS. For a period of ten (10) years after the
Closing Date, USD and Seller shall have the right, at their expense, and during
normal business hours upon prior written notification, to inspect and copy any
of the records relating to the operation of the Business delivered to Purchaser
in connection with this transaction, for the purposes of (a) preparing and/or
defending tax returns for the period prior to the Closing Date, (b) obtaining
information relating to claims arising from the operation of the Business prior
to the Closing Date or (c) any other commercially reasonable purpose. During
such ten (10) year period, Purchaser shall not destroy or discard such records
without giving Seller ninety (90) days' prior written notice of its intentions
and giving Seller the right, at its expense, to remove from Purchaser's premises
any such financial records. The parties hereto acknowledge and agree that
although the records relating to patients treated at the Business prior to the
Closing Date shall remain the property of Seller, Seller agrees to leave such
records at the Business in Purchaser's custody after the Closing Date and
Purchaser agrees to retain such records in its custody for Seller's benefit as
long as such records are required to be maintained by law. Purchaser agrees to,
during normal business hours, afford Seller, its counsel, its accountants, or
agents who have reasonable need for such access, full access to the patient
records as Seller may reasonably request as Seller's expense.
14.11. NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, mailed by national overnight courier, postage prepaid, or sent via
telecopier:
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If to Purchaser:
MIRACOR DIAGNOSTIC, INC.
0000 Xxxx Xxxxxx XxxxxXxxxx 000
Xxx Xxxxx, XX 00000
Attn: M. Xxx Xxxxxxxx
If to Seller:
U S Diagnostic Inc.
000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxx
or to such other address as Seller or Purchaser may designate by notice to the
other.
14.12. CONFIDENTIALITY.
(a) Prior to the Closing, Purchaser shall, and shall cause its
Affiliates and its and their respective employees, agents, accountants, legal
counsel and other representatives and advisers to, hold in strict confidence
all, and not divulge or disclose any, information of any kind concerning Seller
and its Business; provided, however, that the foregoing obligation of confidence
shall not apply to (i) information that is or becomes generally available to the
public other than as a result of a disclosure by Purchaser or its Affiliates or
any of its or their respective employees, agents, accountants, legal counsel or
other representatives or advisers, (ii) information that is or becomes available
to Purchaser or its Affiliates or any of its or their respective employees,
agents, accountants, legal counsel or other representatives or advisers on a
nonconfidential basis prior to its disclosure by Purchaser or its Affiliates or
any of its or their respective employees, agents, accountants, legal counsel or
other representatives or advisers and (iii) information that is required to be
disclosed by Purchaser or its Affiliates or any of its or their respective
employees, agents, accountants, legal counsel or other representatives or
advisers as a result of any applicable law, rule or regulation of any
Governmental Authority; and provided further that Purchaser promptly shall
notify Seller of any disclosure pursuant to clause (iii) of this Section
14.13(a) in order to give Seller a reasonable opportunity to response to any
such required disclosure.
(b) Seller shall, and shall cause its Affiliates and their
respective employees, agents, accountants, legal counsel and other
representatives and advisers to, hold in strict confidence all, and not divulge
or disclose any, information of any kind concerning the transactions
contemplated by this Agreement, Purchaser or its business; provided, however,
that the foregoing obligation of confidence shall not apply to (i) information
that is or becomes generally available to the public other than as a result of a
disclosure by Seller or its Affiliates or any of their respective employees,
agents, accountants, legal counsel or other representatives or advisers, (ii)
information that is or becomes available to Seller or its Affiliates or any of
their respective employees, agents, accountants, legal counsel or other
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representatives or advisers after the Closing on a nonconfidential basis prior
to its disclosure by Seller or its Affiliates or any of their respective
employees, agents, accountants, legal counsel or other representatives or
advisers and (iii) information that is required to be disclosed by Seller or its
Affiliates or any of their respective employees, agents, accountants, legal
counsel or other representatives or advisers as a result of any applicable law,
rule or regulation of any Governmental Authority; and provided further that
Seller shall promptly shall notify Purchaser of any disclosure pursuant to
clause (iii) of this Section 14.12(b).
(c) Purchaser understands that in connection with the
transactions contemplated hereby and after the Closing, Purchaser may come in
contact with means and methods by which Seller, USD and its subsidiaries or
Affiliates (collectively, "SELLER ENTITIES") conduct and operate their
businesses (other than the Business), including, but not limited to, contract
terms, bidding information, methods of operation, levels of costs, software,
systems, utilization and profits, and the procedures, forms and techniques for
servicing accounts, any other operating and procedure manuals, product-lines
developed by Seller Entities, together with any other materials prepared or
provided by, or on behalf of Seller Entities (collectively, the "TRADE
SECRETS"). Purchaser understands that the Trade Secrets are confidential and
proprietary materials of Seller Entities. Purchaser agrees to keep the Trade
Secrets confidential and not to use the Trade Secrets or reveal the Trade
Secrets to any other person or entity, unless required by law. Purchaser shall
also obligate each of its employees and agents to a level of care sufficient to
protect the Trade Secrets from unauthorized use or disclosure. Upon the request
of Seller Entities, Purchaser shall return the Trade Secrets to Seller Entities.
14.13. ATTORNEYS' FEES. In the event that a suit for the collection of
any damages resulting from, or for the injunction of any action constituting, a
breach of any of the terms or provisions of this Agreement, then the prevailing
party shall pay all reasonable costs, fees (including reasonable attorneys'
fees) and expenses of the non-prevailing party.
14.14. NON-COMPETITION. Seller shall, for a period from the Closing
Date until the third anniversary thereof, (the "Covenant Period") but only so
long as Purchaser remains engaged in the medical imaging business in the
Restricted Location (as hereinafter defined), refrain from, anywhere within a
25-mile radius of the primary location of the Business (the "Restricted
Location"), directly or indirectly, owning, managing, operating, controlling or
financing, any mobile or fixed diagnostic imaging business that is competitive
with the Business or recruit any employees or referring physicians of Purchase
at this location; provided, however, that the foregoing shall not apply to the
ownership of not more than five (5) percent of the outstanding capital stock of
any company listed by a national securities exchange or an over-the-counter
stock listed by the National Association of Securities Dealers; and provided,
further, however, that if USD acquires or is acquired by or merges with or into,
a multi-facility company engaged in a business with is competitive with the
Business, and such company owns, operates, or has placed a deposit on an MRI
for, a facility within the Restricted Location, USD will not be deemed in breach
of this covenant by virtue of the consummation of any such merger or
acquisition.
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14.15. EMPLOYEE DISCUSSIONS. USD and Seller each expressly authorize
and empower Purchaser, prior to the Closing Date, to commence negotiations and
discussions with any past and/or present employees of either entity working at
the center, and if appropriate, thereafter enter into employment agreements to
become effective on the Closing Date; it being understood that any such
employment agreements shall be subject to any restrictions contained in any
existing written employment agreements between USD or Seller and any such
individuals.
14.16. COLLECTION OF AR. USD shall continue to collect accounts
receivable ("AR") acquired by Purchaser for a period of one hundred twenty days
after the Closing Date. Subject to the provisions provided below, USD shall
remit received AR to Purchaser on a semi-monthly basis. USD shall receive a
collection fee of 3% of AR collected. USD shall also receive an additional fee
for its collection efforts determined as follows:
On amounts collected, up to a maximum of $100,000, calculated
as a combined percentage equal to the percent of $100,000 to the net realizable
value of accounts receivable as of the Date of Closing, plus an additional 10%.
For example, $100,000 would equal 20.8% of an assumed net realizable value of
accounts receivable at closing of $480,000; and an additional 10% would make the
combined percentage of collected accounts receivable to be paid to USD, 30.8%.
USD would thus receive 30.8% of ongoing collections up to the maximum of
$100,000.
If the accounts receivable is more or less than $480,000 (as referenced in the
agreed-upon Letter of Intent dated February 12, 2001), then the $100,000
referred to in the previous paragraph will be increased/reduced proportionally.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the day and year first above written.
PURCHASER:
MIRACOR DIAGNOSTICS, INC.
By:
---------------------------------------------
Title:
-------------------------------------------
SELLER:
MICA PACIFIC, INC.
By:
---------------------------------------------
Title:
-------------------------------------------
US DIAGNOSTIC, INC.
By:
---------------------------------------------
Title:
-------------------------------------------
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