EXHIBIT 10.46
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement"), dated July 11, 1997, is
entered into by and among Xxxxxxx Xxxxxxx ("Xxxxxxx"), an individual and
resident of the State of Florida, US Diagnostic Inc., a Delaware corporation
having its headquarters in West Palm Beach, Florida, ("USD"), and Xxxxxxx
Xxxxxxxx (the "Escrow Agent"), an attorney licensed to practice law in the State
of Florida.
RECITALS
X. Xxxxxxx is a former officer and director of USD.
X. Xxxxxxx and USD are parties to that certain Settlement Agreement and
Mutual Release (the "Settlement Agreement") entered into of even date herewith
which provides for certain securities and cash to be delivered to Goffman and
for the establishment of this Escrow in connection with Goffman's resignation as
an officer, director, employee and proxy holder of USD. The purpose of the
Escrow is to hold certain securities and the proceeds thereof as security for
certain potential liabilities of Goffman to USD which have not been released in
the Settlement Agreement. Goffman disputes any and all such claims.
C. The Escrow Agent has agreed to serve as escrow agent and to hold
certain portions of the aforementioned securities in accordance with the terms
and conditions hereof.
AGREEMENT
In consideration of the recitals set forth above and of the mutual
covenants and agreements contained herein, and intending to be legally bound,
the parties hereto hereby covenant and agree as follows:
1. ESTABLISHMENT OF ESCROW FUND.
(a) Within two business days after full execution of this Agreement by
all parties hereto, the Escrow shall be funded by:
(i) USD's delivery to the Escrow Agent of an original
Option Agreement from USD currently held by Goffman representing the right to
acquire 100,000 shares at an exercise price of $5.125, a copy of which is
attached hereto as Exhibit A. It is expressly understood and agreed that this
grant is part of a larger grant of 150,000 options which 50,000 have already
vested and are being retained by Goffman pursuant to the Settlement Agreement.
The balance of 100,000 which are to be escrowed options shall vest and become
exercisable by Goffman 50,000 on August 25, 1997 and 50,000 on August 25, 1998.
(ii) USD's delivery to the Escrow Agent of the following
additional shares and options; (a) a letter confirming USD's commitment to
deliver a certificate representing
25,000 shares of restricted USD stock granted to Goffman on August 1,1995 which
shall vest on August 1, 1997 and be delivered to the Escrow Agent (or to Goffman
if the Escrow has already terminated) on August 1, 1997; (b) a certificate for
65,000 shares of common stock representing 1/3 of the 195,000 shares of
restricted stock granted to Goffman on August 1, 1995, which portion vested on
May 1, 1997; and (c) a letter confirming USD's commitment to deliver
certificates representing 65,000 shares which shall vest on May 1, 1998, and
65,000 shares which shall vest on May 1, 1999, which represent the presently
unvested portion of the August 1, 1995 grant and the certificates for which
shall be delivered by USD to the Escrow Agent on their vesting date (or to
Goffman if the Escrow has already terminated). In the event that there is a sale
of USD or a change of control of USD (as defined in Section 15(b) of the 1993
and 1995 stock plans, as applicable) the vesting and date for delivery of such
shares and options shall immediately accelerate.
(b) The assets described in subparagraphs (i) and (ii) above and that
are to be delivered to the Escrow are hereinafter referred to as the "Escrowed
Securities".
(c) Until the termination of the escrow, as defined below, the Escrow
Agent shall hold the Escrowed Securities on behalf of Goffman and USD and shall
receive any distributions, dividends, replacements, substitutes, or proceeds
thereof including any shares issued by USD pursuant to an exercise of the
options or fulfillment of the restricted stock commitment. All such assets shall
be deposited with the Escrow Agent and shall be subject to this Agreement and
become part of the Escrow Fund.
(d) If during the period of the Escrow, Goffman elects to exercise any
of the options which are held in the Escrow Fund, he shall deliver to the Escrow
Agent written notice of such election, together with directions as to the number
of shares to be purchased by virtue of such exercise. This notice shall be
accompanied by Goffman's payment in the form of a check made payable to US
Diagnostic Inc. in the amount necessary to complete the exercise of options. The
Escrow Agent shall promptly transmit the payment to USD together with directions
to exercise the options and deliver the shares acquired to the Escrow Agent.
Upon receipt of such shares, the Escrow Agent shall release to Goffman a portion
of the shares which, based upon the closing price on the date immediately prior
to such exercise, had a value equal to the cash amount delivered by Goffman as
the exercise price.
2. ESCROW TO SECURE PAYMENT OF CERTAIN CLAIMS.
Goffman hereby acknowledges to USD that the Escrowed Securities, the
Escrow Fund and any and all assets which are required to be deposited into the
Escrow Fund pursuant to this Agreement and their proceeds, replacements and
substitutes shall secure any obligation Goffman may have now or hereafter to USD
based upon;
(a) Claims asserted in or arising out of the Shareholder Class Action
as defined in the Settlement Agreement, including any rights of contribution or
indemnity which USD may have against Goffman in connection with such claims,
regardless of whether asserted in the same or separate litigation;
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(b) Intentional fraud or other intentional misconduct by Goffman,
provided such claims are brought by USD on or before April 24, 1998.
(c) Allegations that Goffman either directly or indirectly, received
improper financial benefit from any transaction involving USD, provided such
claims are brought by USD on or before April 24, 1998, and provided further that
no salary, bonus or options paid to Goffman by USD and approved by USD's Board
of Directors or other benefits provided to Goffman in accordance with Goffman's
employment contract with USD shall constitute "improper financial benefit"; and
(d) Claims to require Goffman to reimburse any attorneys' fees or costs
of defense paid on his behalf by USD.
USD's right to draw down on the Escrow to satisfy a judgment or
settlement regarding the claims delineated in paragraph 2 above shall remain
until the termination of this escrow. Goffman shall not grant, and shall take
reasonable steps to oppose the imposition of, any lien, security interest in or
other claim upon the Escrowed Securities or Escrow Fund except for the lien in
favor of the Escrow Agent set forth herein. Goffman represents and warrants that
none of the Escrowed Securities, nor any of the rights they represent, have been
transferred, assigned, pledged, encumbered, or hypothecated and that he will not
encumber and part of the Escrow Fund at any time prior to the termination of
this escrow.
3. DISTRIBUTION OF THE ESCROW FUND; TERMINATION.
(a) The escrow shall continue in full force and effect until April 24,
1998 (or, if earlier, the final resolution of all claims delineated in paragraph
2 above), at which time the Escrow Fund shall be released to Goffman unless the
Escrow Agent has received written notice from USD on or before close of banking
business on that date certifying that (A) a claim of the type specified in
paragraph 2 of this Agreement has been made by USD against Goffman in a judicial
proceeding and (B) a copy of such written notice has been delivered by USD to
Goffman in accordance with the provisions of Section 7 hereof, in which event
the Escrow Agent shall continue to hold the Escrow Fund until a further notice
is delivered to the Escrow Agent in accordance with subsection 3(b) below.
(b) The Escrow Agent shall release to USD the Escrow Fund or portion
thereof as directed by USD upon receipt of written notice from USD, certifying
that USD has made a claim of the type specified in paragraph 2 of this Agreement
against Goffman and further certifying that written notice thereof has been
delivered to Goffman and that (x) a final, nonappealable judgment has been
entered by a court of competent jurisdiction in connection with such claim and
attaching to such notice a certified copy of the judgment, or (y) a settlement
of such claim has been reached and attaching to such notice a true and correct
copy of the settlement agreement executed by Goffman. The specific portion of
the Escrow Fund to be released to USD shall be determined as set forth in
subparagraph (c) below.
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(c) Together with the Notice set forth in subparagraph (b) above, USD
shall provide the Escrow Agent and Goffman with a computation of the fair market
value ("Fair Market Value") of any securities held in the Escrow Fund as of the
date of such Notice, and shall precisely identify the particular securities to
be released from escrow based upon such computation. "Fair Market Value" shall
be determined as of the date that the applicable judgment became final and
non-appealable or the date that the Settlement became final and enforceable, and
with respect to shares of Common Stock shall be determined as follows, (i) the
mean between the closing bid and asked prices for such shares on the
over-the-counter market as reported by the National Association of Securities
Dealers' automatic quotation system ("NASDAQ"); or (ii) if such shares are
traded on a national securities exchange or quoted on the NASDAQ National Market
System, by reference to the closing price; or (iii) if the Common Stock is not
so listed or admitted to unlisted trading privileges and bid and asked prices
are not reported, the Fair Market Value shall be determined in such reasonable
manner as may be agreed to by the parties. With respect to options in the
Escrow, Fair Market Value shall be calculated pursuant to the "Black Scholes"
formula. USD shall certify that such computations in reasonable detail have been
delivered to Goffman and, prior to any release from escrow, there shall elapse
five (5) business days without written objection from Goffman being received by
the Escrow Agent. If the Escrow Agent receives a written objection from Goffman,
then the Escrow Agent shall retain the Escrow Fund in escrow until receipt of a
written notice signed by Goffman and USD or a certified copy of a final,
nonappealable judgment entered by court of competent jurisdiction, in either
such event directing how the Escrow Fund or portion thereof shall be released.
If, however, 125% of the Fair Market Value of the securities to be released from
Escrow pursuant to USD's Notice is less than the total Fair Market Value of the
Escrow Fund, then the securities or other assets over and above 125% of the Fair
Market Value of the securities to be released pursuant to USD's Notice shall
immediately be released from the Escrow to GOFFMAN. Under any circumstances
where a portion of the Escrow Fund is to be distributed to Goffman and a portion
either distributed to USD or retained in escrow, USD shall be entitled to select
which assets are to be distributed to whom.
(d) Prior to Service of a notice as set forth in subparagraph (b)
above, Goffman shall be entitled to direct the Escrow Agent to invest any cash
or cash equivalents in the Escrow Account in any "Permitted Investment".
"Permitted Investments" means (i) obligations of the United States government
due within one year; (ii) certificates of deposit or Eurodollar deposits due
within one year with a commercial bank having capital funds of at least
$500,000,000 or more; (iii) commercial paper rated at least A-1 by Standard &
Poor's Corporation or at least P-1 by Xxxxx'x Investors Service, Inc.; (iv) debt
of any state or political subdivision that is rated among the two highest rating
categories obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc. and is due within one year; (v) repurchase agreements
and reverse repurchase agreements relating to marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition;
provided, however, that the terms of such agreements comply with the guidelines
set forth in the Federal Financial Agreements of Depository institutions with
Securities Dealers and Others, as adopted by the Comptroller of the Currency;
and (vi) Investments represented by Interest Rate Protection Obligations and
Currency Hedging Agreements. Subsequent to service
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of a notice as set forth in subsection (b) above, the Escrow Agent shall accept
such investment instructions only from USD.
4. ESCROW AGENT.
(a) The Escrow Agent shall hold the Escrow Fund in trust for the
parties and, prior to receipt of a Notice from USD conforming with paragraph
3(c), shall accept written instructions from Goffman regarding the exercise of
options which are held in the Escrow Fund. With regard to all matters other than
the exercise of such options or the notices set forth in paragraphs 3(b) and
3(d) above, instructions given to the Escrow Agent must be jointly executed by
Goffman and USD.
(b) The Escrow Agent shall not in any way be bound or affected by a
notice of modification or cancellation of this Agreement unless written notice
thereof is given to the Escrow Agent by Goffman and USD, nor shall the Escrow
Agent be bound by any modification of its obligations hereunder unless the same
shall be consented to by the Escrow Agent in writing. The Escrow Agent shall be
entitled to rely upon any judgment, certification, demand or other writing
delivered to it hereunder without being required to determine the validity,
authenticity or the correctness of any facts stated therein, the propriety or
validity of the service thereof, or the jurisdiction of any court issuing any
judgment.
(c) The Escrow Agent shall not be under any duty to give the property
held by it hereunder any greater care that it gives its own similar property.
(d) The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine, and it may assume that any person
purporting to give any notice or make any statement in connection with the
provisions hereof has been duly authorized to do so.
(e) The Escrow Agent shall not be liable for any mistake of fact or
error of judgment, or for any acts or omissions of any kind except as such act
or omission constitutes willful misconduct, bad faith, gross negligence or
fraud.
(f) The Escrow Agent shall not have any responsibility for the payment
of taxes. Goffman hereby represents that his Social Security Number is
###-##-####. For tax and withholding purposes all dividends, income and proceeds
of the Escrow Fund realized prior to a final distribution shall be allocable
exclusively to Goffman.
(g) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent hereto. Except as otherwise
expressly provided herein, the Escrow Agent shall not refer to, and shall not be
bound by, the provisions of any other agreement and no implied duties or
obligations shall be read into this Agreement against the Escrow Agent.
(h) USD and Goffman, jointly and severally, agree to indemnify the
Escrow Agent and to hold the Escrow Agent harmless from and against any and all
claims, actions, suits, proceedings, investigations, demands, damages,
penalties, interest, expenses, fees or charges or
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any other liabilities of any character or nature, including attorneys' fees
(whether suit is instituted or not and, if instituted, whether at trial or
appellate level) (collectively, the "Liabilities"), whether raised by the
parties hereto or any third party, which the Escrow Agent may incur or with
which it may be threatened by reason of acting as Escrow Agent under this
Agreement, and the Escrow Agent shall have a lien on the Escrow Fund for such
indemnification which lien shall be prior to all other liens upon or claims
against such Escrow Fund; provided, however, that the Escrow Agent shall not be
entitled to indemnification for any Liabilities caused solely by its own gross
negligence, willful misconduct, bad faith or fraud.
(i) The Escrow Agent shall not be required to institute or defend any
action involving any matters referred to herein or which affect it or its
duties, unless or until requested to do so by any party to this Agreement and
then only upon receiving full indemnity, in character reasonably satisfactory to
the Escrow Agent, against any and all Liabilities in relation thereto.
(j) If the parties to this Agreement shall be in disagreement
concerning the interpretation of this Agreement, their rights and obligations
under this Agreement or the propriety of any action contemplated by the Escrow
Agent under this Agreement, the Escrow Agent may, but shall not be obligated to,
file an interpleader action to resolve such disagreement. The Escrow Agent shall
be indemnified for all costs and expenses, including reasonable attorneys' fees,
incurred in connection with such interpleader action in accordance with Section
4 (h) above.
(k) The Escrow Agent shall be entitled to be reimbursed for all costs
and expenses incurred by it in the performance of its duties under this
Agreement, including, without limitation, the customary hourly rates of any of
its representatives involved in performing its duties hereunder, and such costs,
expenses and fees shall be paid by USD and Goffman in equal proportions. The
Escrow Agent shall have a lien on the Escrow Fund for such reimbursement
obligations, which shall be the only permitted lien upon such Escrow Fund.
5. RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign at any time
upon giving the parties hereto sixty (60) days written notice to that effect. In
such event the successor shall be a person, firm or corporation which shall be
mutually selected by Goffman and USD. It is understood and agreed that such
resignation shall not be effective until a successor is appointed and agrees to
act hereunder, and upon the effectiveness of such resignation, the Escrow Agent
shall be relieved of any liability or responsibility with respect to the Escrow
Fund arising thereafter; provided, however, in the event no successor is
appointed and acting hereunder within sixty (60) days of such notice, the Escrow
Agent may either petition a court of competent jurisdiction to name a successor
or deliver the Escrow Fund into a court of competent jurisdiction in the State
of Florida, and upon such deposit, the Escrow Agent shall be relieved of any
liability or responsibility with respect thereto arising thereafter.
6. TERMINATION. This Agreement and the escrow created by its terms
shall terminate upon the full distribution of the Escrow Fund or upon mutual
written agreement of the parties hereto (the "Termination Date"), and the Escrow
Agent shall thereafter be relieved of all further responsibilities hereunder.
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7. NOTICES. Any notice, direction, request, instruction, legal process
or other instrument to be given or served hereunder shall be in writing and
shall be delivered by certified mail, return receipt requested, or by hand or
courier service, and shall be deemed received upon actual receipt, provided that
the issuing party can furnish evidence of receipt by the addressee, to all
parties at the following addresses:
(i) If to Goffman: Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxx Xxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
(ii) If to USD: US Diagnostic Inc.
000 Xxxxx Xxxxxxx Xxxxx
Xxxx Xxxx Xxxxx, XX 00000
Attention: President
(iii) If to Escrow Agent: Xxxxxxx Xxxxxxxx, Esq.
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, XX 00000
Any party may change his or its address by written notice to each of the other
parties.
8. MISCELLANEOUS.
(a) The parties hereto agree that this Agreement has been
executed and delivered in the State of Florida and shall be governed and
construed in accordance with the laws of such state without regard to the
conflicts of laws provisions thereof.
(b) USD and Goffman hereby irrevocably submit in any suit, action or
proceeding arising out of or relating to this Agreement or any transactions
contemplated hereby to the exclusive jurisdiction of the United State District
Court for the Southern District of Florida or if jurisdiction is not available
therein the jurisdiction of any court of the State of Florida, and waive any and
all objections to such jurisdiction or venue that they may have under the laws
of any state or county, including, without limitation, any argument that
jurisdiction, suits and/or venue are inconvenient or otherwise improper. Each
party further agrees that process may be served
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upon such party in any manner authorized under the laws of the United States or
Florida, and waives any objections that such party may otherwise have to such
process.
(c) The parties hereto agree to execute and deliver any and all
documents and to take such further action as shall be reasonably required to
effectuate the provisions of this Agreement.
(d) This Agreement and the Settlement Agreement contain the entire
understanding of the parties hereto with respect to the subject matter herein
contained and shall not be modified except by a writing signed by all the
parties hereto.
(e) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, estates, beneficiaries,
representatives, successors and assigns.
(f) This Agreement may be executed in one or more counterparts, all of
which when taken together shall comprise one instrument.
Date: 7/11, 1997 /s/ XXXXXXX X. XXXXXXX
---------------------------
Xxxxxxx X. Xxxxxxx
US DIAGNOSTIC INC.
Date: July 11, 1997 By: /s/ XXXXXX X. XXXX
---------------------------
Xxxxxx X. Xxxx, President
ESCROW AGENT
Date: July 16, 1997 /s/ XXXXXXX XXXXXXXX
---------------------------
Xxxxxxx Xxxxxxxx
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EXHIBIT A
OPTIONEE: XXXXXXX X. XXXXXXX
US DIAGNOSTIC INC.
NON-STATUTORY NON-QUALIFIED
STOCK OPTION AGREEMENT
(THE "UNVESTED $5.125 OPTION AGREEMENT")
OPTION AGREEMENT dated as of July 11, 1997, between US DIAGNOSTIC INC., a
Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxx (the "Optionee"),
an individual, residing at 0000 Xxxxxxxx Xxxxx Xxxx., Xxxxxxxx Xxxxx, XX 00000.
The Company has adopted the 1995 Long-Term Incentive Plan (the "Plan"), a
copy of which is attached hereto or has previously been provided to Optionee,
and desires to grant to the Optionee the Non-Statutory Non-Qualified Stock
Option provided for herein, all subject to the terms and conditions of the Plan
except as provided herein. Capitalized terms used herein and not defined have
the same meanings as set forth in the Plan.
IT IS AGREED as follows:
1. GRANT OF OPTION. The Company hereby confirms that it granted to the
Optionee on August 28, 1995 the right and option to purchase (subject to
adjustment pursuant to Section 15 of the Plan) an aggregate of one hundred
thousand (100,000) of its shares of Common Stock, $.01 par value, ("Common
Stock") at an option price per share equal to $5.125.
2. OPTION PERIOD. The option granted hereby shall expire on August 28,
2001, subject to earlier termination as provided in the Plan exclusive of
provisions for earlier termination relating to termination of employment.
3. EXERCISE OF OPTION.
A. The Optionee may exercise the option hereby granted to the extent and
from and after the dates set forth below on a cumulative basis, or, if earlier,
upon a sale or Change of Control ("Change of Control") of the Company (as
defined in Section 15(b) of the USD Long Term Incentive Plan) on or before
March 31, 1999:
NUMBER OF SHARES INITIAL EXERCISE DATE
---------------- ---------------------
50,000 August 28, 1997
50,000 August 28, 1998
B. The Optionee may exercise the option (to the extent then exercisable)
by delivering to the Company a written notice duly signed by the Optionee
stating the number of shares that the Optionee has elected to purchase and
accompanied by (i) payment (by certified or cashiers check) of an amount equal
to the full purchase price for the shares to be purchased, or (ii) any other
method of payment provided for in the Plan to which the Committee of the
Company's Board of Directors administering the Plan may consent. "Fair Market
Value" of a share of Common Stock of the Company as of a specified date for the
purposes of the Plan shall mean the closing sale price of a share of the Common
Stock on the principal securities exchange or the Nasdaq National Market on
which such shares are traded on the date immediately preceding the date as of
which Fair Market Value is being determined, or on the next preceding date on
which such shares are traded if no shares were traded on such immediately
preceding day, or if the shares are not traded on a securities exchange or the
Nasdaq National Market, Fair Market Value shall be deemed to be average of the
high bid and low asked prices of the shares on the over-the-counter market on
the date immediately preceding the date as of which Fair Market Value is being
determined on or the next preceding date on which such
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high bid and low asked prices were recorded. If the shares are not publicly
traded, Fair Market Value of a share of Common Stock (including, in the case of
any repurchase of shares, any distributions with respect thereto which would be
repurchased with the shares) shall be determined in good faith by the Board of
Directors. In no case shall Fair Market Value be determined with regard to
restrictions other than restrictions, which by their terms, will never lapse.
Within twenty days after receipt by the Company of such notice and payment, the
Company shall issue the shares in the name of the Optionee and deliver the
certificate therefor to the Optionee shall have none of the rights of a
shareholder in respect of such shares until they are issued.
4. NON-TRANSFERABILITY OF OPTION. This option shall not be transferable
other than by will or by the laws of descent and distribution, and may be
exercised during the Optionee's lifetime only by the Optionee.
5. INCORPORATION OF PLAN. The option granted hereby is subject to, and
governed by, all the terms and conditions of the Plan, which are hereby
incorporated by reference. In the case of any conflict between the terms of
this agreement and the Plan, the provisions of this Agreement shall control.
6. PURCHASE FOR INVESTMENT. As a condition to the exercise in whole or in
part of the option hereby granted, each written notice of election shall include
a representation by the Optionee that the shares are being purchased for
investment and not for distribution or resale.
7. NOTICES. Any notice to be given by the Optionee hereunder shall be sent
to the Company at its principal executive offices, and any notice from the
Company to the Optionee shall be sent to the Optionee at Optionee's address set
forth above; all such notices shall be in
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writing and shall be delivered in person or by registered or certified mail.
Either party may change the address to which notices are to be sent by notice
in writing given to the other in accordance with the terms hereof.
8. GOVERNING LAW. The parties hereto hereby acknowledge and agree that the
option granted in the State of Florida and any shares issued upon exercise of
the option will be issued in the State of Florida. This Agreement, as well as
the grant of such option and issuance of such shares, is and shall be governed
by and construed in accordance with the laws of the State of Florida applicable
to the agreements made and to be performed entirely within such State.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
US DIAGNOSTIC INC.
By:
------------------------
Xxxxxx X. Xxxx, President
------------------------
Xxxxxxx X. Xxxxxxx, Optionee
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