Exhibit 10.10
ASSET PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is made as of the 14th day of
July, 1999, by and among PresGar Imaging, L.C., a Florida Limited Liability
Company, together with any one or more affiliates to which it assigns its rights
(but not its obligations) hereunder (collectively the "PURCHASER"), Innovative
Clinical Solutions, Ltd., a Delaware corporation ("ICSL"), PhyMatrix Management
Company, Inc., a Florida corporation ("PMC"), PhyMatrix Diagnostic Imaging,
Inc., a Delaware corporation ("PDI"), Biltmore Imaging Center, Inc., an Arizona
corporation ("BILTMORE"), BabRad, Inc., a New York corporation ("BABRAD"),
PhyMatrix Diagnostic Imaging Northeast, Inc., a Delaware corporation ("PDI NE"),
and Deerco, Inc., a New York corporation ("DEERCO," and collectively with PMC,
PDI, Biltmore and BabRad, the "SELLER GROUP").
WHEREAS, PMC, Biltmore, PDI NE, BabRad, Deerco and PDI, each direct or
indirect subsidiaries of ICSL, own the assets used by and administer the
following diagnostic imaging centers: (i) the Bensonhurst imaging center (the
"BENSONHURST CENTER"), (ii) the Queens Open MRI imaging center (the "RAY-X
CENTER"), (iii) the Highway imaging center (the "HIGHWAY CENTER"), (iv) the five
Bab nuclear radiology centers (the "BAB CENTERS"), (v) Biltmore Advanced Imaging
Center (the "BILTMORE CENTER"), (vi) Central Magnetic Imaging North and South
Centers (the "CMI NORTH & SOUTH Centers") and (vii) Central Magnetic Imaging
Center of Palm Beach County (the "CMI-PALM BEACH CENTER," and collectively with
the Bensonhurst Center, the Ray-X Center, the Highway Center, the Bab Centers,
the Biltmore Center, and the CMI North & South Centers, the "DIAGNOSTIC
CENTERS");
WHEREAS, Purchaser desires to purchase and PMC, PDI NE, Biltmore,
BabRad, Deerco and PDI collectively desire to sell, the assets related to the
Diagnostic Centers.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants set forth in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
1.01 "Assumed Obligations" shall have the meaning set forth in Section
2.01(b).
1.02 "Balance Sheets" means the balance sheets dated April 30, 1999 of
the Seller Group relating to the Business, appearing in the Financial
Statements, and the accompanying schedules thereto.
1.03 "Balance Sheet Date" means April 30, 1999.
1.04 "Business" means, collectively, the business of owning the assets
of and operating and/or administering the Diagnostic Centers.
1.05 "Closing" means the closing of the transactions contemplated by
this Agreement with respect to the purchase and sale of the Transferred Assets
and the assumption of the Assumed Obligations.
1.06 "Closing Date" shall have the meaning set forth in Section 5.01.
1.07 "Diagnostic Centers" shall have the meaning set forth in the
recitals.
1.08 "Disclosure Schedule" means the disclosure schedule attached
hereto as Schedule 1.
1.09 "Eligible Employee" shall have the meaning set forth in Section
3.02.
1.10 "Financial Statements" means the financial statements of the
Seller Group relating to the Business attached hereto as EXHIBIT A consisting of
the Balance Sheets and the statements of operations for the one year and three
month periods ended January 31 and April 30, 1999, respectively.
1.11 "HSR Act" shall have the meaning set forth in Section 11.04.
1.12 "ICSL Group" means, collectively, ICSL and the Seller Group.
1.13 "Liens" shall have the meaning set forth in Section 2.01.
1.14 "Material Adverse Effect" shall have the meaning set forth in
Section 7.01.
1.15 "Permitted Liens" shall mean:
(a) liens for taxes not due;
(b) pledges or deposits made in the ordinary course
of business in connection with workers' compensation,
unemployment insurance and other social security legislation;
(c) easements, rights-of-way, restrictions and other
similar encumbrances which are not material, and which do not
materially detract from the value of any such properties or
assets or materially interfere with any present use of such
properties or assets;
(d) liens on deposits which have been made to secure
the performance of bids, contracts (other than for borrowed
money), leases, statutory obligations,
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surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course
of business;
(e) statutory and contractual liens in favor of
landlords or lessors securing leases; and
(f) liens arising pursuant to Assumed Obligations.
1.16 "Transferred Assets" means the assets listed on EXHIBIT B hereto.
1.17 References to the "knowledge" of any party regarding the existence
of any factual matter shall refer to the knowledge that the officers and
directors of such party, in the exercise of their corporate law fiduciary
responsibilities, had regarding such matter.
2. PURCHASE AND SALE OF ASSETS
2.01 PURCHASE OF ASSETS.
(a) ASSETS. Upon the terms and subject to the conditions set forth in
this Agreement, at the Closing the Seller Group will sell, transfer and assign
to the Purchaser, free and clear of all liens, pledges, security interests,
charges, claims or encumbrances other than Permitted Liens (collectively,
"LIENS"), those assets, properties and rights related to the ownership and
operation of the Diagnostic Centers, which are all listed or described on
EXHIBIT B hereto (collectively, the "TRANSFERRED ASSETS"). Excluded from the
Transferred Assets are cash and cash equivalents, accounts receivable, books and
records (other than patient records which are expressly included in Transferred
Assets), and all other assets, properties and rights not expressly listed or
described on EXHIBIT B hereto.
(b) LIABILITIES. Upon the terms and subject to the conditions set forth
in this Agreement, at the Closing the Purchaser will assume only those
obligations related to the Transferred Assets that are expressly identified on
EXHIBIT C hereto (the "ASSUMED OBLIGATIONS") and will thereafter timely perform
the Seller Group's obligations under each and timely pay and discharge the same
when due.
3. OTHER PROVISIONS RELATING TO THE PURCHASE AND
SALE OF THE TRANSFERRED ASSETS
3.01 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the request and at the expense of the Purchaser, and without further
consideration, the ICSL Group will execute and deliver such other instruments of
sale, transfer, conveyance, assignment and confirmation as may be reasonably
requested by the Purchaser in order to more effectively transfer, convey and
assign to the Purchaser and to confirm Purchaser's title to the Transferred
Assets.
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4. PURCHASE PRICE
4.01 PURCHASE PRICE. In consideration for the Transferred Assets and
the other covenants and agreements set forth herein, including the assumption of
the Assumed Obligations, the Purchaser will pay to ICSL Group or their
designee(s), an aggregate of Thirty-Three Million Five Hundred Fifty Thousand
Dollars ($33,550,000) less the outstanding amount at Closing of the "Long-Term
Obligations" identified as such on EXHIBIT C (currently estimated to be
approximately $4,000,000) and the amount mutually agreed to by the parties at
the Closing to adjust for modifications in the Contracts as a result of the
transactions contemplated by this Agreement (which amount is currently estimated
by the parties to be approximately $1,500,000), payable by certified or bank
check or wire transfer at the Closing.
4.02 PURCHASE PRICE ALLOCATION. The Purchase Price shall be allocated
among the Transferred Assets as reasonably determined by the parties and set
forth on EXHIBIT D attached hereto, which the parties agree to attach to this
Agreement on or before the Closing Date. The parties agree that any reporting of
the Purchase Price or the allocation thereof on any federal or state tax return
shall be consistent with EXHIBIT D.
5. CLOSING; CLOSING DELIVERIES
5.01 CLOSING. The closing of the sale of the Transferred Assets and the
assumption of the Assumed Obligations pursuant to this Agreement (the "CLOSING")
shall take place no more than three business days after expiration of the
applicable HSR Act waiting period and the fulfillment or satisfaction of all
conditions to closing described in Section 6, at 10:00 a.m., local time, at the
offices of Xxxxxx, XxXxxxxxx & Fish, LLP, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx, and otherwise on such date as may be mutually agreed upon by the
parties (the "CLOSING DATE").
5.02 CLOSING DELIVERIES OF THE SELLER GROUP. At the Closing, as a
condition of the Purchaser's obligations to consummate the transactions
contemplated by this Agreement, the ICSL Group shall cause to be delivered to
the Purchaser the following (or receive the Purchaser's written waiver with
respect thereto):
(a) BILLS OF SALE AND ASSIGNMENT. Simultaneously with the
Closing, the Seller Group will deliver, if applicable, to the Purchaser
or its designee(s), Bills of Sale in the form attached hereto as
EXHIBIT E, an Assignment and Assumption Agreement in the form attached
hereto as EXHIBIT F, and other transfer documents which will be
sufficient to vest good and valid title to the tangible Transferred
Assets free and clear of any and all Liens.
(b) RESOLUTIONS. A copy of the resolutions of the Board of
Directors of each member of the Seller Group certified by a duly
elected officer as being complete and correct as of such date and
satisfactory in form and substance to the Purchaser, authorizing and
approving the execution, delivery and performance of this Agreement and
the
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transactions contemplated hereby and the acts of the officers and
employees of the Seller Group in carrying out the terms and provisions
hereof.
(c) CLOSING CERTIFICATE. A certificate of an officer of ICSL
delivered pursuant to Sections 6.01(a) and (b).
(d) ORGANIZATIONAL DOCUMENTS. A copy of the certificate of
incorporation, certified as of a recent date by the Secretary of State
of the state of incorporation for each of the members of the Seller
Group, and a copy of the By-laws of each member of the Seller Group,
certified by a duly elected officer of such company; a certificate or
certificates of good standing, also certified as of a recent date by
the Secretary of State of the state of incorporation for each of the
members of the Seller Group; and certificates of foreign qualification
with respect to all jurisdictions in which the Seller Group, by the
conduct of their business, are required to be so qualified.
(e) OPINIONS OF COUNSEL. An opinion of counsel for the ICSL
Group in a form mutually agreed to by the parties.
5.03 CLOSING DELIVERIES OF PURCHASER. At the Closing, as a condition of
the ICSL Group's obligation to consummate the transactions contemplated by this
Agreement, the Purchaser shall deliver or cause to be delivered to the ICSL
Group the following (or receive the ICSL Group's written waiver with respect
thereto):
(a) PURCHASE PRICE. The Purchaser must pay the Purchase Price
as provided in Section 4.01.
(b) ASSIGNMENT AND ASSUMPTION AGREEMENT. An Assignment and
Assumption Agreement in the form attached hereto as EXHIBIT F pursuant
to which the Purchaser shall assume and undertake to perform the
Assumed Obligations pursuant to Section 2.01(b).
(c) RESOLUTIONS. A copy of the resolutions of the Board of
Directors of the Purchaser certified by a duly elected officer as being
complete and correct as of such closing date, authorizing and approving
the execution, delivery and performance of this Agreement and the
transactions contemplated hereby and the acts of the officers and
employees of the Purchaser in carrying out the terms and provisions
hereof.
(d) ORGANIZATIONAL DOCUMENTS. A copy of the Purchaser's
Articles of Organization, certified as of a recent date by the
Secretary of State of the state of organization of the Purchaser and a
copy of the Regulations and Operating Agreement of the Purchaser,
certified by a member or manager; a certificate of active status, also
certified as of a recent date by the Secretary of State of the state of
organization of the Purchaser; and certificates of foreign
qualification with respect to all states in which the Purchaser, by the
conduct of its business, is required to be so qualified.
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(e) CLOSING CERTIFICATE. A certificate of a member of the
Purchaser delivered pursuant to Sections 6.02(a) and (b).
(f) OPINION OF COUNSEL. An opinion of counsel for the
Purchaser in a form mutually agreed to by the parties.
6. CONDITIONS
6.01 CONDITIONS TO PURCHASER'S OBLIGATIONS. At the Closing, it shall be
a condition of Purchaser's obligation to consummate the transactions
contemplated by this Agreement that the following shall be true:
(a) REPRESENTATIONS AND WARRANTIES TRUE. All of the
representations and warranties of the ICSL Group contained in this
Agreement shall be true, correct and complete in all material respects
as of the Closing Date. On such date, a duly elected and currently
serving officer of ICSL shall have executed and delivered to the
Purchaser a certificate to such effect.
(b) PERFORMANCE. The ICSL Group shall have performed and
complied in all material respects with all covenants and agreements
contained herein required to be performed or complied with by them
prior to or at the Closing Date. A duly elected and currently serving
officer of ICSL shall have executed and delivered to the Purchaser a
certificate to such effect.
(c) CLOSING DELIVERIES. The ICSL Group shall have delivered
all of the resolutions, certificates, documents and instruments
required to be delivered by it by this Agreement.
(d) ORDERS, DECREES, JUDGMENTS. No order, decree or judgment
of any court or governmental body shall have been issued and remain in
effect at such date restraining, prohibiting, restricting or delaying
the consummation of the transactions contemplated by this Agreement.
(e) CONSENTS. All consents or approvals required for the
consummation of the transactions contemplated by this Agreement by any
third party shall have been obtained, except where the failure to
obtain any such consent or approval would not have a Material Adverse
Effect (as defined below).
(f) GOVERNMENTAL APPROVALS. All approvals, consents, permits
or licenses from any federal, state or local governmental agency or
body required in connection with the consummation of the transactions
contemplated hereby shall have been duly obtained to the extent that
such approvals, consents, permits or licenses can be legally obtained
prior to
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such date, except where the failure to obtain any such approval,
consent, permit or license would not have a Material Adverse Effect (as
defined below).
(g) HSR ACT REQUIREMENTS. The filing and waiting requirements
under the HSR Act shall have been complied with and shall have expired
or terminated.
6.02 CONDITIONS TO THE ICSL GROUP'S OBLIGATIONS. At the Closing, it
shall be a condition to the ICSL Group's obligation to consummate the
transactions contemplated by this Agreement that the following shall be true:
(a) REPRESENTATIONS AND WARRANTIES TRUE. All of the
representations and warranties of the Purchaser contained in this
Agreement shall be true, complete and correct in all material respects
as of the Closing Date. On such date, a member of the Purchaser shall
have executed and delivered to the ICSL Group a certificate to such
effect.
(b) PERFORMANCE. The Purchaser shall have performed and
complied with all agreements and covenants contained herein required to
be performed or complied with by the Purchaser prior to or at the
Closing Date. A member of the Purchaser shall have delivered a
certificate to the ICSL Group to such effect.
(c) CLOSING DELIVERIES. The Purchaser shall have delivered the
Purchase Price and all of the resolutions, certificates, documents and
instruments required to be delivered by it by this Agreement.
(d) ORDERS, DECREES, JUDGMENTS. No order, decree or judgment
of any court or governmental body shall have been issued and remain in
effect at such date restraining, prohibiting, restricting or delaying
the consummation of the transactions contemplated by this Agreement.
(e) GOVERNMENTAL APPROVALS. All approvals, consents, permits
or licenses from any federal, state or local governmental agency or
body required in connection with the consummation of the transactions
contemplated hereby shall have been obtained, except where the failure
to obtain any such approval, consent, permit or license would not have
a Material Adverse Effect.
(f) HSR ACT REQUIREMENTS. The filing and waiting requirements
under the HSR Act shall have been complied with and shall have expired
or terminated.
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7. REPRESENTATIONS AND WARRANTIES OF THE
ICSL GROUP RELATING TO THE TRANSFERRED ASSETS
The members of the ICSL Group jointly and severally represent and
warrant to the Purchaser that, except as disclosed in the DISCLOSURE SCHEDULE,
the following representations and warranties are true and correct as of the date
hereof. Disclosure appearing on the DISCLOSURE SCHEDULE with respect to any
particular representation or warranty shall be deemed disclosure with respect to
every other representation and warranty, as applicable. Subject to the rights of
the Purchaser pursuant to Section 13.01(b) of this Agreement, the ICSL Group may
attach the DISCLOSURE SCHEDULE to this Agreement after the execution hereof by
delivering a copy of the DISCLOSURE SCHEDULE to the Purchaser with a notice
stating that it is to be attached to this Agreement as the DISCLOSURE SCHEDULE.
7.01 ORGANIZATION. Each corporation constituting the Seller Group is a
corporation organized, existing, and in good standing under the laws of the
State of its incorporation. Each member of the Seller Group is qualified or
licensed and in good standing as a foreign corporation in those states listed on
the DISCLOSURE SCHEDULE, which are the only jurisdictions in which the property
owned, leased or operated by it or the nature of the business conducted by it in
connection with the Business makes such qualification or licensing necessary,
except where failure to qualify would not result in a material adverse effect on
the Business taken as a whole (a "Material Adverse Effect").
7.02 POWER AND AUTHORITY. Each member of the Seller Group has corporate
power and authority to carry on its business as now being conducted and to own,
operate and lease its properties in the places where such business is now
conducted and where such properties are now owned, leased or operated. This
Agreement and the transactions contemplated hereby have been approved by all
necessary corporate action on the part of the ICSL Group. Each member of the
ICSL Group has corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, and this Agreement and all
other agreements to be executed and delivered by the ICSL Group in connection
herewith constitute the legal, valid and binding obligations of the ICSL Group
enforceable against them in accordance with their respective terms.
7.03 COMPLIANCE. The execution and delivery of this Agreement, together
with all documents and instruments contemplated herein (the "Transaction
Documents") and the consummation of the transactions contemplated thereby by the
ICSL Group will not (i) violate any provision of the organizational documents of
the ICSL Group, (ii) violate any material provision of or result in the breach
of or entitle any party to accelerate (whether after the giving of notice or
lapse of time or both) any material obligation under, any mortgage, lien, lease,
contract, license, instrument or any other agreement to which any member of the
ICSL Group is a party, (iii) result in the creation or imposition of any
material lien, charge, pledge, security interest or other material encumbrance
upon the Transferred Assets or (iv) to the best of the ICSL Group's knowledge,
violate or conflict with any court order, judgment or decree, or any law,
ordinance
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or regulation to which any member of the ICSL Group or the Transferred Assets is
subject, except for such violation or conflict that would not result in a
Material Adverse Effect.
7.04 APPROVALS. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
person is required in connection with the execution and delivery of this
Agreement by the ICSL Group or the consummation by the ICSL Group of the
transactions contemplated hereby, except for the filing to be made in accordance
with the HSR Act and except where failure to obtain or make such consent,
approval, order, authorization, declaration or filing would not result in a
Material Adverse Effect.
7.05 FINANCIAL INFORMATION AND RECORDS; UNDISCLOSED LIABILITIES.
(a) RECORDS. The books of account and related records of the
Seller applicable to the Business and the Transferred Assets are
correct and complete.
(b) FINANCIAL STATEMENTS. The Financial Statements (a)
correctly reflect the books of account and records of the Seller Group;
(b) have been prepared in accordance with generally accepted accounting
principles, consistently applied throughout the indicated periods
("GAAP"), except that the Financial Statements contain no footnotes and
the interim Financial Statements contain no year-end adjustments; and
(c) fairly present the financial condition, assets and liabilities and
results of operation of the Business at the dates and for the relevant
periods indicated.
(c) UNDISCLOSED LIABILITIES. The Seller Group has no
liabilities applicable to the Business or the Transferred Assets,
except: (a) those reflected or reserved for within the Financial
Statements in the amounts shown therein; (b) those not required under
GAAP to be reflected or reserved for within the Financial Statements
that are expressly quantified and set forth on SCHEDULE 7.05(c)
Disclosure Schedule; and (c) those of the same nature as those set
forth within the Financial Statements that have arisen or will arise in
the ordinary course of business after the date of the Balance Sheet
through the Closing Date, all of which have been consistent in amount
and character with past practice and experience, and none of which,
individually or in the aggregate, has had or will have a Material
Adverse Effect on the Business.
7.06 CONDUCT OF BUSINESS SINCE THE BALANCE SHEET DATE. Since the
Balance Sheet Date, no member of the Seller Group has taken or agreed to take
any action that would obligate any member of the Seller Group to have done or
failed to do any of the following with respect to the Business, except where the
consequence of such action would not have a Material Adverse Effect:
(a) entered into any transaction, agreement or commitment with
respect to the Business, other than in the ordinary course of business;
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(b) incurred indebtedness for borrowed money;
(c) mortgaged, pledged or otherwise encumbered (except through
a Permitted Lien), or, other than in the ordinary course of business,
sold, transferred or otherwise disposed of, any of the Transferred
Assets; or
(d) made any investment of a capital nature or entered into a
commitment for such investment with respect to the Business.
7.07 LEASED AND TANGIBLE PERSONAL PROPERTIES.
(a) LIST OF REAL PROPERTY LEASED. The Seller Group owns no
real property comprising Transferred Assets. SCHEDULE 7.07(a) of the
Disclosure Schedule sets forth as of the date hereof a correct and
complete list of all real property possessed and used by any member of
the Seller Group under any lease agreement comprising a Transferred
Asset (the "LEASED PROPERTY"). All Leased Property is in condition and
repair adequate for its current use.
(b) STATUS OF LEASES. Each contract pertaining to Leased
Property is in full force and effect and such Leased Property is
subject to no term or condition other than as contained in such
contract. The Seller Group has complied with all commitments and
obligations on its part to be performed or observed under each such
contract, except for such noncompliance which will not, individually or
in the aggregate, have a Material Adverse Effect upon the tenant's
right of possession and use. To the knowledge of the Seller Group, each
party to each such contract other than any member of the Seller Group
has complied with all commitments and obligations on its part to be
performed or observed thereunder, except for such noncompliance which
is not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect upon tenant's right of possession and use. No
member of the ICSL Group has waived any material obligation of any
landlord or any right of such member or any other under any lease or
sublease of Leased Property. No member of the Seller Group has received
any notice of a default, offset or counterclaim under any such contract
and no event or condition has occurred or presently exists that
constitutes a default or, after notice or lapse of time or both and
without a timely cure, would constitute a default under any such
contract, except for such notices, defaults, offsets or counterclaims
which are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect upon tenant's right of possession or
use. No security interests, charges or other encumbrance of any kind
attach to any leasehold interest of the Seller Group under any lease or
sublease. SCHEDULE 7.07(b) of the Disclosure Schedule identifies each
existing lease or sublease of Leased Property which will have to be
assigned upon the Closing under circumstances requiring the consent or
approval by another person.
(c) NO ADVERSE ACTIONS. There are no pending nor, to the
knowledge of the ICSL Group, threatened actions or proceedings
(including condemnation and foreclosure)
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involving, or that might have a Material Adverse Effect upon the
interest of the Seller Group in any Leased Property.
(d) TITLE TO TANGIBLE ASSETS. The Seller Group has good and
marketable title to all tangible personal property comprising
Transferred Assets ("TANGIBLE PERSONAL PROPERTY"), free and clear of
all liens, security interests, charges or encumbrances of any kind,
except as identified in SCHEDULE 7.07(d) of the Disclosure Schedule and
liens the presence of which would not have a Material Adverse Effect
upon ownership or transferability. The Seller Group makes no
representation as to the operating condition or state of repair of any
of Tangible Personal Property, or as to their suitability or adequacy
for the purposes for which they are presently being used by any member
of the Seller Group in its conduct of the Business, and Purchaser
herein acknowledges that it is acquiring the Tangible Personal
Property, in an AS IS, WHERE IS condition.
(e) TANGIBLE PERSONAL PROPERTY LEASES. Each Tangible Personal
Property lease or sublease is in full force and effect. The Seller
Group has complied with all material commitments and obligations on its
part to be performed or observed under each such lease or sublease, and
has received no notice of a default, offset or counterclaim under any
such lease or sublease, and no event or condition has occurred or
presently exists which constitutes a material default or, after notice
or lapse of time or both, would constitute a material default
thereunder.
7.08 PROPRIETARY RIGHTS. SCHEDULE 7.08 of the Disclosure Schedule
contains a complete and accurate listing of all proprietary rights that comprise
Transferred Assets, which are limited to all registered service marks, medical
equipment and billing and collection licenses and any other material licenses,
assignments or other rights relating to the operation of the Business and other
material proprietary rights that are attributable to the conduct of, used in, or
otherwise related to the Business (collectively the "PROPRIETARY RIGHTS").
Except as identified in such Schedule, the ICSL Group maintains sole, valid and
transferable right, title and interest in and to each such Proprietary Right,
the same are enforceable and unencumbered by any encumbrance, none infringe the
rights of others (nor has any claim been made that there is any such
infringement), and no royalty or other payment is required in connection with
the ownership, use or enjoyment of such Transferred Assets by the ICSL Group. No
claim has been asserted against any member of the ICSL Group with respect to the
ownership, possession or use of any of such Proprietary Rights or to the effect
that such member is infringing on or otherwise acting adversely to the rights of
any person in respect of any of such Proprietary Rights, and, to the ICSL
Group's knowledge, no valid basis for such claim exists. SCHEDULE 7.08 of the
Disclosure Schedule contains a correct and complete listing of all material
computer software, databases and programs used by the Seller Group in the
conduct of the Business that are being purchased under this Agreement. All such
items are owned or properly licensed by the Seller Group, and, except as
disclosed in SCHEDULE 7.08 of the Disclosure Schedule, may be transferred to
Purchaser without the consent of another.
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7.09 CONTRACTS. Set forth on the DISCLOSURE SCHEDULE is a complete and
correct list of all material agreements, contracts and commitments (collectively
"CONTRACTS") entered into in connection with the Business and to which a member
of the Seller Group is a party or by which such party or any of such party's
properties used in the Business is bound. Except as set forth on the DISCLOSURE
SCHEDULE, the ICSL Group has made, or prior to Closing will make, available to
the Purchaser complete and correct copies of all such Contracts (together with
all amendments thereto). All such Contracts are in full force and effect on the
date hereof and, to the knowledge of the ICSL Group, all parties thereto have
performed all obligations required to be performed by them to the date hereof
except where the failure to perform would not constitute a material default
thereunder. At the CMI North and South Centers, CMI-Palm Beach Center and the
Biltmore Center, members of the Seller Group have entered into arrangements with
radiologists to provide professional interpretation of diagnostic imaging
studies on a percentage of net collected revenue or on a per study basis. At the
other Diagnostic Centers members of the Seller Group have entered into service
agreements with radiologists that state that such members will provide
administrative services on a fixed fee basis. Except as set forth in SCHEDULE
7.09 of the Disclosure Schedule, no such Contract contains a non-competition
agreement, "most favored nation" clause, exclusive dealings provision or other
provision that would restrict Purchaser's right to freely deal with other third
parties, nor extend benefits to any contracting party (other than Purchaser as
assignee of the Seller Group) that would not exist if the Closing were not to
occur, or impose obligations on Purchaser or its affiliates upon and after
Closing that either extend to their business and operations other than the
Diagnostic Centers or would not be imposed on any member of the Seller Group if
the Closing were not to occur.
7.10 TITLE TO ASSETS. The Seller Group will transfer to the Purchaser
at the Closing, good, marketable and undivided title to and possession of all of
the owned Transferred Assets, free and clear of any Liens.
7.11 LITIGATION. There are no claims, actions, suits or proceedings
(arbitration or otherwise) pending, or, to the best of the ICSL Group's
knowledge, threatened against any member of the Seller Group with respect to the
Business at law or in equity in any court or before or by any governmental
authority which would have a Material Adverse Effect. No member of the Seller
Group is in default in respect of any judgment, order, writ, injunction or
decree of any court or other governmental authority with respect to the Business
or the transactions contemplated by this Agreement.
7.12 EMPLOYMENT MATTERS.
(a) COMPLIANCE WITH EMPLOYMENT LAWS. Except as stated in
SCHEDULE 7.12(a) of the Disclosure Schedule or to the extent any such
non-compliance (of which it has no knowledge) would not reasonably
involve aggregate expenditures in excess of $25,000, each member of the
Seller Group has, with respect to the Business, complied, and is in
compliance, with all laws relating to the employment of labor,
including, without limitation, all laws and provisions thereof relating
to wages, hours, equal opportunity,
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collective bargaining, the payment of social security and other taxes,
and occupational safety and health;
(b) LABOR AGREEMENTS. No member of the Seller Group is a party
to or otherwise bound by any labor union or collective bargaining
agreement with respect to the Business, and there are no pending labor
negotiations with or union organizing efforts by any employees of any
member of the Seller Group working in the Business or with any union
representing or attempting to represent any such employees. No member
of the ICSL Group has knowledge of any grievance under a collective
bargaining agreement by an employee of any member of the Seller Group
that has not been resolved. To the knowledge of the ICSL Group, no key
employee or agent or group of employees or agents of any member of the
Seller Group whose principal responsibilities are associated with the
operation of the Business has or have any plans to terminate employment
by or agency with such member or would not be available for employment
by the Purchaser;
(c) NON-COMPETITION AGREEMENTS. To the knowledge of the Seller
Group, no employee of any member of the Seller Group is subject to any
secrecy or non-competition agreement or any other agreement or
restriction of any kind that would impede in any material way the
ability of such employee to carry out fully all activities of such
employee in furtherance of the Business.
7.13 PERMITS. Except as identified in SCHEDULE 7.13 of the Disclosure
Schedule, the Seller Group holds all governmental permits, certificates,
licenses, franchises, privileges, approvals, registrations and authorizations
required under any applicable law or otherwise advisable in connection with the
operation of the Business (for purposes of this Section only, each a "PERMIT"
and collectively, "PERMITS"). Each Permit is valid, subsisting and in full force
and effect, but, except as stated in SCHEDULE 7.13 of the Disclosure Schedule is
non-assignable. The Seller Group is in material compliance with and has
fulfilled and performed its material obligations under each Permit, and no
event, condition or state of facts exists (or would exist upon the giving of
notice or lapse of time or both) that could constitute a material breach or
default under any Permit. No member of the ICSL Group has received any notice of
any violation of law as related to a Permit, and no event has occurred or
condition or state of facts exists that, to the ICSL Group's knowledge, could
reasonably give rise to any such violation. No member of the ICSL Group has
received any notice of non-renewal of any Permit. The ICSL Group makes no
representation or warranty about the requirement or lack of requirement to
obtain any Permit to engage in the practice of medicine or that the Business
does not violate any New York statute, rule or regulation prohibiting the
corporate practice of medicine or splitting fees with non-physicians.
7.14 INSURANCE. All general liability insurance policies with respect
to which any member of the ICSL Group is the owner, insured or beneficiary and
which is applicable to any of the Transferred Assets or the Business have been
issued on an "claims made" basis and are reasonable, in both scope and amount,
in light of the risks attendant to the Business and
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comparable in coverage to policies customarily maintained by others engaged in
similar lines of business.
7.15 TAXES. Except as disclosed in SCHEDULE 7.15 of the Disclosure
Schedule, the Seller Group has filed or caused to be filed on a timely basis, or
will file or cause to be filed on a timely basis, all tax returns that are
required to be filed by it with respect to the Business prior to the Closing
Date, pursuant to the law of each governmental authority with taxing power over
it. All such filed tax returns were or will be, as the case may be, correct and
complete. The Seller Group has paid or will pay all taxes that have or will
become due as shown on such filed tax returns or pursuant to any assessment
received as an adjustment to such tax returns, except (a) such taxes, if any, as
are being contested in good faith and disclosed on SCHEDULE 7.15 (which remain
the obligation of the Seller Group); (b) such taxes as are fully reserved for
within the Financial Statements; and (c) such taxes accruing after April 30,
1999 that will be due on or before the Closing Date. No claim has been made by a
taxing authority of a jurisdiction where any member of the Seller Group does not
file any tax return that it is or may be subject to taxation in that
jurisdiction. The Seller Group has withheld and paid all taxes required to have
been withheld in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party.
7.16 ENVIRONMENTAL MATTERS. Except as disclosed in SCHEDULE 7.16
of the Disclosure Schedule:
(a) COMPLIANCE; NO LIABILITY. The Seller Group has managed the
Business in material compliance with all applicable Environmental Laws
(as defined in subsection (d) below). The Seller Group is not subject
to any liability, penalty or expense (including legal fees) as a result
of its operation of the Business, and Purchaser will not suffer or
incur any loss, liability, penalty or expense (including legal fees) by
virtue of any violation by any member of the Seller Group of any
Environmental Law, any environmental activity conducted by such member,
or any environmental condition existing on or with respect to any
Leased Property on or prior to the Closing Date, in each case whether
or not the member permitted or participated in such act or omission.
(b) TREATMENT; CERCLIS. The Seller Group has not treated,
recycled, released or disposed of any Regulated Material (as defined in
subsection (h) below) on any Leased Property, and no member of the
Seller Group has knowledge of any other person treating, recycling,
releasing or disposing of any Regulated Material on any part of the
Leased Property. No member of the ICSL Group has transported, or
arranged for the transport of, any Regulated Material in connection
with the Business to any location that is listed or proposed for
listing on the National Priorities List pursuant to Superfund or on
CERCLIS or to any other location that is the subject of a federal,
state or local enforcement action or other investigation that may lead
to claims against such member for cleanup costs, remedial action,
damages to natural resources, to other property or for personal injury,
including claims under Superfund. To the knowledge of the Seller Group,
none of the
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Leased Property is listed or proposed for listing on the National
Priorities List pursuant to Superfund, CERCLIS or any state or local
list of sites requiring investigation or cleanup.
(c) NOTICES; EXISTING CLAIMS; CERTAIN REGULATED MATERIALS;
STORAGE TANKS. No member of the Seller Group has received any request
for information, notice of claim, demand or other notification that it
is or may be potentially responsible with respect to any investigation,
abatement or cleanup of any threatened or actual release of any
Regulated Material in connection with the Business nor is required to
place any notice or restriction relating to the presence of any
Regulated Material upon any Leased Property. There has been no past,
and there is no pending or contemplated, claim by any member of the
Seller Group under any Environmental Law based on actions of others
that may have impacted on the Leased Property, and no member of such
Group has entered into any agreement with any person regarding any
Environmental Law, remedial action or other environmental liability or
expense in connection with the Business. No member of the Seller Group
knows of any storage tank to be located on the Leased Property, whether
underground or aboveground.
(d) Certain of the capitalized terms used in subsections (a),
(b) or (c) above, or in this subsection, shall be deemed to have the
following meanings:
(i) "CERCLIS" means the United States Comprehensive
Environmental Response Compensation Liability Information
System, as promulgated under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986.
(ii) "ENVIRONMENTAL LAW" means any applicable law
relating to public health and safety or protection of the
environment, including common law nuisance, property damage
and law similar to such common law theories.
(iii) "NATIONAL PRIORITIES LIST PURSUANT TO
SUPERFUND" means the list of Regulated Materials sites
established by the United States Environmental Protection
Agency.
(iv) "PCBS" means polychlorinated biphenyls.
(v) "REGULATED MATERIAL" means any pollutant,
contaminant, waste or chemical, or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous
substance as defined by any Environmental Law, and any other
substance or material, in each case that is regulated by any
applicable Environmental Law, expressly including petroleum,
petroleum-related material, crude oil or any fraction thereof,
PCBs and friable asbestos.
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(vi) "SUPERFUND" means the United States
Comprehensive Environmental Response Compensation and
Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as
amended.
7.17 EMPLOYEE BENEFIT PLANS.
(a) LIST OF EMPLOYEE BENEFIT PLANS. Except as set forth in
SCHEDULE 7.17(A) of the Disclosure Schedule, no member of the Seller
Group, maintains or contributes to, nor is committed to establish,
adopt or implement, any of the following agreements, plans or
arrangements, whether oral or written and whether formal or informal
with respect to any of its employees that perform service for the
benefit of the Business, or any of the dependents and beneficiaries of
such employees: (a) pension, profit sharing, stock bonus, stock option,
supplemental retirement or deferred compensation plans (whether or not
qualified or defined in Sections 3(2), 3(34) or 3(35) of the United
States Employee Retirement Income Security Act of 1974, as amended, and
the applicable rulings and regulations thereunder ("ERISA") or in
Sections 414(i) or 414(j) of the Internal Revenue Code of 1986, as
amended (the "CODE")); (b) medical, surgical, health care,
hospitalization, dental, vision, life insurance, disability, severance,
sickness or accident plans (whether or not as defined in Section 3(1)
of ERISA); or (c) other benefit plans. All such plans, contracts or
arrangements set forth on SCHEDULE 7.17(a) of the Disclosure Schedule
are hereinafter in this Section collectively referred to as "BENEFIT
PLANS" and separately as a "BENEFIT PLAN.")
(b) WRITTEN CONTRACTS, ABSENT EMPLOYEES. SCHEDULE 7.17(b) of
the Disclosure Schedule identifies each employee of any member of the
Seller Group who normally performs service related to the Business and
is currently (A) absent from active employment due to short or long
term disability, or (B) employed pursuant to a written contract or
agreement specifying the term of employment.
(c) CONTINUATION OF RIGHTS. With respect to continuation
rights arising under federal or state law as applied to Benefit Plans
that are group health plans (as defined in Section 601, ET SEQ. of
ERISA), SCHEDULE 7.17(c) of the Disclosure Schedule identifies each
employee, former employee and qualifying dependent who has elected
continuation coverage as of or prior to June 30, 1999 and whose
coverage period had not expired as of such date.
(d) CONTRIBUTIONS TO BENEFIT PLANS. With respect to those
Benefit Plans set forth in SCHEDULE 7.17(a) of the Disclosure Schedule:
(a) all contributions required to be made to or in support of the
Benefit Plans as of the date of this Agreement have been made, (b) a
proper accrual has been made on the books of the Seller Group for all
contributions due in the current fiscal year on or prior to the Closing
Date but not made as of the date of this Agreement, and (c) no
contribution has been made in support of any Plan that is in excess of
the allowable deduction for federal income tax purposes for the year
with respect to which the
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contribution was made (whether under Section 162, Section 280G, Section
404, Section 419 or Section 419A of the Code or otherwise).
7.18 NO REFERRALS BY INTERESTED PARTIES. Except as identified in
SCHEDULE 7.18 of the Disclosure Schedule, from and after commencement of
administration of the Business by the Seller Group at each Diagnostic Center,
and through the Closing Date, there have been no referrals of Medicare or
Medicaid patients to any member of the Seller Group by physicians owning any
equity interest, whether direct or indirect, in such member or, to the knowledge
of the Seller Group, in any of the Diagnostic Centers, or having any financial
relationship, other than the right to receive a fee for professional services
rendered, with such member, to the knowledge of the Seller Group, or Center
(other than Medical Directors.)
7.19 RELATED PARTY TRANSACTIONS. SCHEDULE 7.19 of the Disclosure
Schedule identifies each entity, related through "common ownership or control"
to any member of the Seller Group or, to the knowledge of the Seller Group, a
Diagnostic Center under the definitions of such quoted term set forth under
regulations promulgated by the federal Medicare program or by the Medicaid
program of any state, that has transacted business with any member of the Seller
Group or, to the knowledge of the Seller Group, with a Diagnostic Center. For
each such entity, the Schedule also states the nature of the transaction and the
nature of the relationship, including, but not limited to, the percentage of
common ownership or relationship that creates control. A copy of each contract
and written agreement between such entity and the applicable member of the
Seller Group or Diagnostic Center have been or will be delivered to the
Purchaser prior to or at the Closing.
7.20 DIAGNOSTIC CENTER OPERATION. Each of the Diagnostic Centers is
certified for participation in the Medicare, Medicaid and CHAMPUS programs, has
a current and valid provider contract with each of such programs, is in
compliance in all material respects with the conditions of participation of each
of such programs and has received all approvals or qualifications necessary for
capital reimbursement, except where the failure to be so certified, to have such
contracts to be in such compliance or to have such approvals or qualifications
would not have a Material Adverse Effect on the Business or financial condition
of any particular Diagnostic Center. No member of the ICSL Group has received
notice from the regulatory authorities which enforce the statutory or regulatory
provisions in respect of any of the Medicare, Medicaid or CHAMPUS programs of
any pending or threatened investigation with respect to the operation of any
Diagnostic Center.
7.21 PERIODIC ASSESSMENTS ON HEALTH CARE ENTITIES. Except as disclosed
in SCHEDULE 7.21 of the Disclosure Schedule, each member of the Seller Group has
timely filed all material reports required of it by federal or state agencies
having jurisdiction over any aspect of the operation of the Diagnostic Centers
and has timely paid all periodic assessments imposed by law or regulation with
respect to the revenues derived from such operation, and will be solely
responsible for the payment of any such assessment that becomes payable after
the Closing Date as a result of the operation of any of the Diagnostic Centers
on or before such Date.
17
7.22 DISCLOSURE. None of the representations or warranties contained in
this Section 7 and none of the information contained in the Schedules referred
to in such Section is false or misleading in any material respect or omits to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect. The ICSL Group shall, between
the date of this Agreement and the Closing Date, timely provide to the Purchaser
such additional documents and information concerning the Business or Transferred
Assets as may have a Material Adverse Effect upon the accuracy or completeness
of the foregoing warranties and representations, the Scheduled information or
other written information furnished by the ICSL Group to Purchaser.
8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the ICSL Group, except as set
forth in the Purchaser's DISCLOSURE SCHEDULE, that the following representations
and warranties are true and correct on the date hereof:
8.01 ORGANIZATION. The Purchaser is a limited liability company
organized, existing and in active status under the laws of the state of its
incorporation. The Purchaser is duly qualified or licensed and in good standing
as a foreign corporation in those states listed on the DISCLOSURE SCHEDULE,
which are the only jurisdictions in which the property owned, leased or operated
by the Purchaser or the nature of the business conducted by the Purchaser makes
such qualification or licensing necessary, except where failure to qualify would
not result in a material adverse effect on the business of the Purchaser.
8.02 POWER AND AUTHORITY. The Purchaser has full corporate power and
authority to carry on its business as now being conducted and to own, operate
and lease its properties in the places where such business is now conducted and
such properties are now owned, leased or operated. This Agreement and the
transactions contemplated hereby have been duly approved by the Board of
Directors of the Purchaser. The Purchaser has full corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby, and this Agreement and all other agreements to be executed and delivered
by the Purchaser in connection herewith constitute the legal, valid and binding
obligations of the Purchaser enforceable against it in accordance with their
respective terms.
8.03 COMPLIANCE. The execution and delivery of this Agreement and the
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby by the Purchaser will not (i) violate any provision of the
organizational documents of the Purchaser, (ii) violate any material provision
of or result in the breach of or entitle any party to accelerate (whether after
the giving of notice or lapse of time or both) any material obligation under,
any mortgage, lien, lease, contract, license, instrument or any other agreement
to which the Purchaser is a party, (iii) result in the creation or imposition of
any material lien, charge, pledge, security interest or other material
encumbrance upon any property of the Purchaser or (iv) to the best of the
Purchaser's knowledge, violate or conflict with any court order, judgment or
decree, or any
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law, ordinance or regulation to which the Purchaser or its
property is subject, except for any such violation or conflict that would not
result in a material adverse effect on the business or operations of the
Purchaser.
8.04 LITIGATION. There are no material claims, actions, suits or
proceedings (arbitration or otherwise) pending or, to the best of the
Purchaser's knowledge, threatened against the Purchaser at law or in equity in
any court or before or by any governmental authority which would have a material
adverse effect on the business or operations of the Purchaser. The Purchaser is
not in default in respect of any judgment, order, writ, injunction or decree of
any court or other governmental authority with respect to the transactions
contemplated by this Agreement.
8.05 APPROVALS. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
person is required in connection with the execution and delivery of this
Agreement by the Purchaser or the consummation by the Purchaser of the
transactions contemplated thereby.
9. COVENANTS OF THE ICSL GROUP
9.01 COOPERATION. The ICSL Group shall use reasonable efforts in good
faith to perform and fulfill all conditions and obligations to be fulfilled or
performed by them hereunder, to the end that the transactions contemplated
hereby will be fully and timely consummated.
9.02 ACCESS. Until the Closing, the ICSL Group shall give the
Purchaser, its attorneys, accountants and other authorized representatives
access, upon reasonable notice and at reasonable times, to the ICSL Group's
offices, suppliers, employees, business and financial records, contracts,
business plans, budgets and projections, agreements and commitments and other
documents and information concerning the Seller Group and the Business (the
"Information") and persons employed by or doing business with the Seller Group,
except such documents covered by the attorney-client privilege. In order that
the Purchaser may have full opportunity to make such examination and
investigation as it may desire of the Business, the ICSL Group will furnish the
Purchaser and its representatives during such period with all such Information
as such representatives may reasonably request and cause the respective
officers, employees, consultants, agents, accountants and attorneys of the
Seller Group to cooperate fully with the representatives of the Purchaser in
connection with such review and examination; provided, however, that the
Purchaser will hold the documents and information concerning the ICSL Group and
the Business confidential in accordance with Section 11.02 hereof.
9.03 ACTIONS PRIOR TO CLOSING. The Seller Group shall conduct the
Business pending the Closing only in the ordinary and usual course consistent
with past practice. Without limiting the generality of the foregoing, the Seller
Group will not, except in the ordinary and usual course, without the prior
written consent of the Purchaser, except to the extent that a Material Adverse
Effect would not result, (i) make any acquisition or disposition of assets used
in connection with the Business; (ii) enter into any contract (other than this
Agreement or as otherwise provided for
19
in this Agreement) or terminate any contract or other right relating to the
Business; or (iii) make any loans, advances or capital contributions to, or
investments in, any other entity or person involved in the operation of the
Business, other than travel or other advances to employees in the ordinary
course of business consistent with past practice.
9.04 COVENANT NOT TO COMPETE. For a period of three years from and
after the Closing Date, no member of the ICSL Group, nor any subsidiary thereof
shall, directly or indirectly:
(a) own, administer, operate, control or participate in the
ownership, management, operation or control of, or be engaged or
otherwise connected as a stockholder, partner, member, or otherwise
with, any business that at any time during such period directly or
indirectly owns, administers or operates diagnostic imaging centers
within 25 miles of any of the Diagnostic Centers; or
(b) solicit any employee, independent contractor or vendor of
the Purchaser to terminate his, her or its employment, consulting
arrangement or vending arrangement with the Purchaser.
Notwithstanding the foregoing, the following shall not be a violation
of this Section 9.04:
(a) the ownership of not more than two percent of any publicly
traded company that conducts any prohibited activities;
(b) ICSL or any member of the ICSL Group engaging in the
business of providing (A) clinical investigative site management and
outcomes research services, (B) network management services to
independent physician associations and specialty care physician
networks and management and consulting services to hospitals and (C)
management and consulting services to managed care companies; and
(c) Any entity which is not currently an affiliate of ICSL
which acquires a controlling interest in ICSL from conducting any of
the business operations of such entity or its subsidiaries.
10. COVENANTS OF PURCHASER
10.01 COOPERATION. The Purchaser covenants and agrees that it shall use
its best efforts in good faith to perform and fulfill all conditions and
obligations to be fulfilled or performed by it hereunder, to the end that the
transactions contemplated hereby will be fully and timely consummated.
10.02 TAXES AND FEES. The Purchaser shall pay all sales, use, transfer,
recordation and documentary taxes and fees, if any, arising out of the transfer
of the Transferred Assets pursuant to this Agreement.
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10.03 EMPLOYEES OF THE SELLER GROUP. Except as provided in Section
10.03(c) below, Purchaser will offer employment after the Closing Date, on terms
and conditions to be determined by Purchaser in its sole discretion, to all of
the employees of the Seller Group whose principal current duties are involved
with the operation of the Business.
(a) WORKERS' COMPENSATION. The Seller Group shall continue to
be responsible for each workers' compensation claim and premium
relating to the Business which is based on an injury occurring on or
prior to the Closing Date, regardless of the date on which such claim
is filed, and shall indemnify and hold Purchaser harmless against all
Damages arising out of or relating to all such claims and premiums in
accordance with Section 12 hereof. Purchaser shall be responsible for
all workers' compensation claims relating to the Business based on
injuries occurring after the Closing Date, and shall indemnify and hold
the Seller Group harmless against all Damages arising out of or
relating to all such claims in accordance with Section 12 hereof.
(b) DESIGNATION OF PURCHASER AS SUCCESSOR EMPLOYER. If
requested by Purchaser, the Seller Group shall consent to the
designation of Purchaser as successor employer of the former employees
of a member of the Seller Group employed in the Business after the
Closing Date for purposes of unemployment insurance, payroll taxes or
workers' compensation contribution premium ratings under applicable
federal or state law.
(c) EMPLOYEE BENEFIT PLANS.
(i) Purchaser shall not be required to maintain, or
cause to be maintained, any Benefit Plan for the benefit of
individuals employed by the Seller Group on the Closing Date
who accept Purchaser's offer of employment, nor to provide any
retiree health or life benefits with respect to such employees
or to any other former employees of the Seller Group or to
their spouses or dependents under any of its existing or new
benefit plans.
(ii) The Seller Group shall remain responsible for
all unemployment compensation claims arising out of
terminations of its employees who do not accept Purchaser's
offer of employment on or prior to the Closing Date, and
Purchaser shall be responsible for any such claims arising out
of terminations after the Closing Date of former employees of
the Seller Group accepting the Purchaser's offer of
employment.
(iii) The Seller Group shall remain responsible for
all benefits payable to each of its employees who, as of the
close of business on the day immediately preceding the Closing
Date, shall be totally and permanently disabled in accordance
with the applicable provisions of any of health, accident,
sickness, salary continuation, or disability benefit (whether
short-term or long-term) plans or programs of the Seller
Group. As of the Closing, any employee who is on
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approved leave of absence from any member of the Seller Group,
including any employee receiving benefits under any short-term
disability plan or program of such member, or on workers'
compensation leave, shall be deemed to be an employee of the
Seller Group until such time as such employee is no longer on
such approved leave. At the time such employee is available to
return to work, such employee shall be offered employment by
the Purchaser in accordance with the terms of this Section if
his or her principal job duties, at the time of commencement
of such leave, shall have been involved with the operation of
the Business. If at such time the subject employee is eligible
for long-term disability benefits and declines the Purchaser's
employment offer, such employee shall receive such benefits
under the long-term disability plan or program of the Seller
Group.
(d) NO ERISA LIABILITY TO PURCHASER. Nothing in this Agreement
shall be construed to constitute a sale of assets under Section 4204 of
ERISA, and Purchaser shall have no obligation to contribute to, and
shall incur no withdrawal liability, as defined in Section 4201 of
ERISA, or any other liability, cost or expense, whether prior to or
after the Closing, with respect to, any multiemployer plan (as defined
in Section 4001(a)(3) of ERISA) to which the Seller Group or any of its
affiliates contributes or has ever had an obligation to contribute.
10.04 RECORD RETENTION. The Seller Group shall retain the books and
records of the Diagnostic Centers not transferred to Purchaser hereunder for a
period of not less than three years following the Closing Date; subject to a
right of prior disposal of any of the same following its furnishing to Purchaser
of reasonable notice of such intent and to Purchaser's right to obtain from the
Seller Group those books and records which it intends to dispose of. The
Purchaser shall have the further right, at its expense, (i) to have reasonable
access to and examination of such retained books and records during the subject
three year period or until such earlier date on which the Seller Group shall
have disposed of such books and records as provided above, upon reasonable
notice to the Seller Group and during normal business hours, and (ii) to make
copies of the same, subject to the obligation to maintain the confidentiality of
such books and records in accordance with the reasonable direction of the Seller
Group.
11. MUTUAL COVENANTS
11.01 GENERAL COVENANTS. Following the execution of this Agreement,
the Purchaser and the ICSL Group agree:
(a) If any event should occur, either within or without the
knowledge or control of any party, which would prevent fulfillment of
the conditions to the obligations of any party hereto to consummate the
transactions contemplated by this Agreement, to use its or their
reasonable efforts to cure the same as expeditiously as possible;
-22-
(b) To cooperate fully with each other in preparing, filing,
prosecuting, and taking any other actions which are or may be
reasonable and necessary to obtain the consent of any governmental
instrumentality or any third party to accomplish the transactions
contemplated by this Agreement or to comply with the requirements of
the HSR Act;
(c) To deliver such other instruments of title, certificates,
consents, endorsements, assignments, assumptions and other documents or
instruments, in form reasonably acceptable to the party requesting the
same and its counsel, as may be reasonably necessary to carry out
and/or to comply with the terms of this Agreement and the transactions
contemplated herein;
(d) To confer on a regular basis with the other, report on
material operational matters and promptly advise the other orally and
in writing of any change or event having, or which, insofar as can
reasonably be foreseen could have, a Material Adverse Effect on such
party or which would cause or constitute a material breach of any of
the representations, warranties or covenants of such party contained
herein; and
(e) To promptly provide the other (or its counsel) with copies
of all other filings made by such party with any state or federal
governmental entity in connection with this Agreement or the
transactions contemplated hereby (other than HSR Act filings).
11.02 CONFIDENTIALITY. As used herein, "Confidential Information" means
any information or data that a party has acquired from another party that is
confidential or not otherwise available to the public, whether oral or written,
including without limitation any analyses, computations, studies or other
documents prepared from such information or data by or for the directors,
officers, employees, agents or representatives of such party (collectively, the
"Representatives"), but excluding information or data which (i) the party can
demonstrate it independently developed, (ii) became available to the public
other than as a result of such party's violation of this Agreement, (iii) became
available to such party from a source other than the other party if that source
was not bound by a confidentiality agreement with such other party and such
source lawfully obtained such information or data, or (iv) is required to be
disclosed by applicable law, provided that promptly after being compelled to
disclose any such information or data, the party being so compelled shall
provide prompt notice thereof to the other party so that such other party may
seek a protective order or other appropriate remedy. Each party covenants and
agrees that it and its Representatives shall keep confidential and shall not
disclose any Confidential Information, except to its Representatives and lenders
who need to know such information and keep it confidential. Each party shall be
responsible for any breach of this provision by its Representatives. In the
event that the Closing does not occur, each party will promptly return to the
other all copies of such other party's Confidential Information.
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11.03 BROKER'S FEE. Except as otherwise provided herein, the Purchaser
and ICSL agree that each party is solely responsible for any financial advisory
fee, brokerage commission, finder's fee or like payment due any person or firm
retained by such party in connection with this Agreement or otherwise.
11.04 XXXX-XXXXX-XXXXXX FILING.
(a) Purchaser and the ICSL Group agree to file with the Antitrust
Division of the United States Department of Justice and the Federal Trade
Commission a Notification and Report Form in accordance with the notification
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and to use their best efforts to achieve the prompt
termination or expiration of the waiting period or any extension thereof
provided for under the HSR Act as a prerequisite to the consummation of the
transactions provided for herein. The Purchaser shall bear the expense of any
filing fees required under the HSR Act as a result of the proposed acquisition
of the Business by Purchaser.
(b) Nothing in this Section 11.04 shall be construed as requiring any
party to this Agreement or its affiliates to (i) sell or otherwise dispose of
any of its assets or voting securities other than as otherwise contemplated by
this Agreement and (ii) take any action which either would have a Material
Adverse Effect on the operations, business or financial condition of any such
party or its affiliates or would materially impair the value of the Business.
11.05 ACCOUNTS RECEIVABLE. For 180 days after Closing, the Purchaser
will collect the accounts receivable of the ICSL Group
existing at the Closing, except for accounts receivable
related to personal injury services (the "Seller
Receivables"), using the same diligence and efforts as
Purchaser uses to collect its own accounts receivable. The
Purchaser will remit to the ICSL Group payments collected by
the Purchaser on the Seller Receivables no less frequently
than weekly. The ICSL Group and the Purchaser shall cooperate
in the collection of the Seller Receivables and the ICSL Group
shall have the ability to assist Purchaser in the collection
of the Seller Receivables. After 180 days, Purchaser's
obligation to collect the Seller Receivables shall cease, and
the ICSL Group shall assume full responsibility for such
collection. The ICSL Group shall use only commercially
reasonable efforts to collect all Seller Receivables. If the
ICSl Group at any time receives payment for post-Closing
accounts receivable of the Purchaser, or if the Purchaser at
any time shall receive accounts receivable of the ICSl Group,
each party agrees to forthwith remit such payment to the other
party promptly, but not later than one week after receipt of
such payment. In determining the proper application of payment
with respect to any account receivable, payment will be
applied towards the invoice referenced in each particular
payment or, in the absence of any such reference, to the
oldest invoice for such vendor.
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12. SURVIVAL AND INDEMNIFICATION
12.01 SURVIVAL. All representations and warranties made in this
Agreement, or in any instrument or document furnished in connection with this
Agreement or the transactions contemplated hereby, shall expire six (6) months
after the Closing Date.
12.02 AGREEMENT BY THE PURCHASER REGARDING NO OTHER REPRESENTATIONS OR
WARRANTIES BY THE ICSL GROUP. The Purchaser agrees that except for the
representations and warranties (including the Schedules with respect thereto)
made by the ICSL Group expressly set forth in Section 7 of this Agreement, no
member of the ICSL Group nor any affiliate, agent or representative thereof has
made and shall not be construed as having made to the Purchaser or to any
representatives or affiliates thereof, and neither the Purchaser nor any
affiliates, agents or representatives thereof has relied upon, any
representation or warranty of any kind.
12.03 AGREEMENTS TO INDEMNIFY.
(a) As used in this Section 12:
(i) "Indemnified Claims" means assertions of indemnification
obligations hereunder made by an Indemnified Party.
(ii) "Damages" means damages, liabilities, losses, judgments,
settlements, and expenses, including, without limitation, all
reasonable attorneys' fees; provided that, in no event shall
"Damages" mean consequential, special or punitive damages
(except where an underlying cause of action giving rise to any
such Damages is fraud or intentional misrepresentation).
(iii) "Indemnified Party" means (a) with respect to the ICSL
Group's obligations hereunder, the Purchaser and each of its
subsidiaries and affiliates, and (b) with respect to the
Purchaser's obligations hereunder, the ICSL Group and each of
their subsidiaries and affiliates.
(iv) "Indemnifying Party" means (a) the ICSL Group, jointly
and severally with respect to indemnity obligations owed by
the ICSL Group on and after the Closing, and (b) the
Purchaser, with respect to indemnity obligations owed by the
Purchaser on and after the Closing.
(b) On the terms and subject to the limitations set forth in this
Agreement, each Indemnifying Party shall indemnify, defend and hold each
Indemnified Party harmless from, against and in respect of any and all Damages
incurred by any Indemnified Party arising from or in connection with any
material breach of any representation or warranty, or any breach or
non-fulfillment of any covenant or agreement, in each case made by the
Indemnifying Party in this Agreement.
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12.04 LIMITATIONS OF INDEMNITY OBLIGATIONS.
(a) Except as otherwise explicitly provided in this Agreement or by
statute to the extent that statutory remedies cannot legally be waived by the
person entitled thereto, and except for fraud, deceit or intentional
misrepresentation by the Purchaser or a member of the ICSL Group, the indemnity
obligations of the Indemnifying Party shall expire eighteen (18) months after
the Closing Date and after consummation of the transactions contemplated by this
Agreement the sole and exclusive remedy of the Purchaser or the ICSL Group in
this Agreement are as set forth in this Section 12. Each party acknowledges and
agrees that the other parties would not have entered into this Agreement but for
the inclusion herein of this Section 12.04.
(b) The aggregate indemnity obligations of the ICSL Group under this
Agreement shall not in any event exceed $24,000,000.
(c) An Indemnified Party shall be entitled to indemnification only if
the aggregate and collective Damages for which it or he otherwise would be
entitled to indemnification under this Agreement exceed $460,000, in which event
it or he shall be entitled to indemnification of the full amount of Damages for
which it would be entitled to indemnification under this Section 12 exceeding
such amount.
12.05 NOTICE OF CLAIM. An Indemnified Party shall promptly notify the
Indemnifying Party in writing (the "Claim Notice") of any Indemnified Claim
asserted by a third person that might give rise to any indemnity obligation
hereunder (a "Third Party Claim"), specifying in reasonable detail the nature
thereof and indicating the amount (estimated if necessary) of the Damages that
have been or may be sustained by the Indemnified Party. Failure of an
Indemnified Party to promptly give such notice shall not relieve an Indemnifying
Party of its obligation to indemnify under this Section 12, except to the extent
that such failure is actually and materially prejudicial to the rights or
obligations of the Indemnifying Party, in which event the Indemnifying Party's
obligation shall be reduced by the amount of damages it suffers as a direct
result of the failure. Together with or following such Claim Notice, the
Indemnified Party shall deliver to the Indemnifying Party copies of all notices
and documents received by such Indemnified Party relating to the Third Party
Claim (including court papers).
12.06 DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS. An Indemnifying
Party shall have the right (without prejudice to the right of an Indemnified
Party to participate at his or its own expense through counsel of his or its own
choosing) to defend against any Third Party Claim at his or its expense and
through counsel of his or its own choosing and to control such defense if he or
it gives written notice of his or its intention to do so within 15 business days
of his or its receipt of a Claim Notice of such Third Party Claim. The
Indemnified Party shall cooperate fully in the defense of such Third Party Claim
and shall make available to the Indemnifying Party or his or its counsel all
pertinent information under its or his control relating thereto. The Indemnified
Party shall have the right to elect to settle any Third Party Claim; provided,
however, the Indemnifying Party shall not have any indemnification obligation
with respect to any monetary
-26-
payment to any third party required by such settlement unless the Indemnifying
Party shall have consented in writing thereto. The Indemnifying Party shall have
the right to elect to settle any Third Party Claim subject to the written
consent of the Indemnified Party which consent shall not be unreasonably
withheld; provided, however, that if the Indemnified Party fails to give such
written consent within 15 business days of being requested to do so, the
Indemnified Party shall, at its or his expense, assume the defense of such Third
Party Claim and regardless of the outcome of such matter, the Indemnifying
Party's liability hereunder shall be limited to the amount of any such proposed
settlement.
13. TERMINATION
13.01 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) By the Purchaser or ICSL if:
(i) consented to by the other of those named
parties;
(ii) if the Closing shall not have occurred on or
before August 15, 1999, unless the failure
of the Closing to have occurred by such date
is due to the failure of the party seeking
to terminate this Agreement to perform or
observe the covenants and agreements of such
party set forth herein;
(iii) any court or governmental body of competent
jurisdiction shall have issued an order,
decree or ruling, or taken any other action,
permanently restraining, enjoining or
otherwise prohibiting the transactions
contemplated by this Agreement, provided
that no termination shall be permitted under
this paragraph unless the party seeking such
termination shall have used its reasonable
best efforts to oppose such issuance or
taking; or
(iv) the other party commits any material breach
of its representations, warranties or
covenants set forth herein and such breach,
if curable, has not been cured within thirty
(30) days after notice is given to terminate
this Agreement as a result of such breach.
(b) By the Purchaser, if within 24 hours after the ICSL
Group delivers to the Purchaser a final DISCLOSURE
SCHEDULE (i) the Purchaser determines that the
information disclosed in the DISCLOSURE SCHEDULE is
materially different than that which the Purchaser
expected to be in the DISCLOSURE SCHEDULE based upon
its due diligence investigation to the date of such
receipt and (ii) the Purchaser provides notice to the
ICSL Group of its determination.
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Upon the occurrence of any of the events specified in this Section
13.01 (other than paragraph (a) hereof), written notice of such event shall
forthwith be given to the other parties to this Agreement, whereupon this
Agreement shall terminate.
13.02 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 13.01, this Agreement, except
for the provisions of Sections 11.02, 12.01, 13 and 14, shall forthwith become
void and be of no effect, without any liability on the part of any party or its
affiliates, directors, officers or shareholders; provided that nothing in this
Section 13.02 shall relieve any party to this Agreement of liability for breach
of this Agreement.
14. MISCELLANEOUS
14.01 NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, addressed to the receiving party's address set
forth below or to such other address as a party may designate by notice
hereunder, and either (j) delivered by hand, (ii) made by facsimile
transmission, (iii) sent by recognized overnight courier, or (iv) sent by
registered or certified mail, return receipt requested, postage prepaid.
If to Purchaser:
PresGar Imaging, L.C.
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Facsimile telephone number: 813/000-0000
with a copy to:
Xxxxxx X. Xxxx
Xxxx Xxxx Xxxxxxx Xxxxxx & Xxxx, P.A.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Facsimile telephone number: 813/000-0000
If to the ICSL Group (or any member thereof):
Innovative Clinical Solutions, Ltd.
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: President
Facsimile telephone number: 401/000-0000
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with a copy to:
Xxxxxx, XxXxxxxxx & Fish, LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile telephone number: (000) 000-0000
All notices, requests, consents and other communications hereunder shall be
deemed to have been properly given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by facsimile transmission, at the time that receipt thereof has
been acknowledged by electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (iv) if sent by registered or certified
mail, on the fifth business day following the day such mailing is made.
14.02 ENTIRE AGREEMENT. It is agreed that all offers, statements of
intent, understandings and agreements heretofore had among the parties or their
affiliates respecting this transaction are merged in this Agreement (including
the Schedules and Exhibits thereto), which fully and completely expresses the
agreement of the parties, and that there are no other representations,
warranties or agreements.
14.03 WAIVER. No waiver of any breach of any provision of this
Agreement shall constitute a waiver of any other breach of that or any other
provision hereof.
14.04 GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
internal laws of the Delaware, without giving effect to the conflict of law
principles thereof.
14.05 SEVERABILITY. In the event that any court of competent
jurisdiction shall finally determine that any provision, or any portion thereof,
contained in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court determines
it enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall determine any such provision, or portion thereof,
wholly unenforceable, the remaining provisions of this Agreement nevertheless
shall remain in full force and effect.
14.06 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
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14.07 PUBLICITY. None of the parties hereto shall issue any press
release or otherwise make any public statement with respect to the execution of,
or the transactions contemplated by, this Agreement without the prior written
consent of the others, except as may be required by applicable state or federal
securities or other laws.
14.08 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
14.09 EXPENSES. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
14.10 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
expressed or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
14.11 SCHEDULES. All information disclosed in a particular schedule to
this Agreement shall be deemed to be disclosed with respect to all other
schedules to this Agreement as if such information had been set forth in such
other schedules.
14.12 LIMITATION ON DAMAGES. Neither the ICSL Group nor the Purchaser
shall be liable for punitive, special or consequential damages in connection
with this Agreement or the transactions contemplated thereby (except where an
underlying cause of action giving rise to any such damages is fraud or
intentional misrepresentation).
IN WITNESS WHEREOF, Purchaser and the members of the ICSL Group have
executed this Agreement as of the day and year first above written.
PRESGAR IMAGING, L.C.
By PresGar Management, a member
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx, a managing member
INNOVATIVE CLINICAL SOLUTIONS, LTD.
BY: /s/ Xxxxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Treasurer
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PHYMATRIX MANAGEMENT COMPANY, INC.
BY: /s/ Xxxxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
PHYMATRIX DIAGNOSTIC IMAGING, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
PHYMATRIX DIAGNOSTIC IMAGING, NORTHEAST,
INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
BABRAD, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Treasurer, Chief Financial
Officer
DEERCO, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Treasurer, Chief Financial
Officer
BILTMORE IMAGING CENTER, INC.
BY: /s/ Xxxxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Treasurer, Chief Financial
Officer
