EXHIBIT 99.7
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
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AGREEMENT, dated as of March 14, 1997, between Grove Diagnostic
Imaging Center, Inc., a California corporation with a mailing address at 0000
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000 ("Seller"), J.
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Xxxxxxx Xxxx ("Xxxx") and X.X. Xxxxxxx ("Xxxxxxx", and together with Luke, the
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"Stockholders"), and Rancho Cucamonga Resources, Inc., a Delaware corporation
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with a mailing address at 000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
("Buyer") and, solely with respect to the Closing Shares (as herein defined) and
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Sections 1.3, 1.8 and 3.1 through 3.3, Medical Resources, Inc. ("MRI"), of which
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the Buyer is a wholly-owned subsidiary.
W I T N E S S E T H:
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WHEREAS, Seller owns and manages an imaging center located at 0000
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000, Rancho Cucamonga,
California (the "Center"), and
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owns or has the right to use certain of the assets, properties, business and
goodwill relating thereto (the "Business"); and
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WHEREAS, Buyer desires to acquire the Business and substantially all
of the properties and assets of Seller used or held for use in connection with
the Business, and Seller desires to sell the Business and transfer such
properties and assets to Buyer, upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Stockholders own the outstanding common stock of the
Seller.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, Seller, Stockholders and Buyer agree as follows:
ARTICLE 1
SALE OF ASSETS AND PURCHASE PRICE
1.1 Sale and Purchase of Assets. On the basis of the
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representations, warranties, covenants and agreements contained in this
Agreement and subject to the terms and conditions set forth in this Agreement,
on the Closing Date (as defined in Section 1.2 hereof), Seller shall sell,
assign, transfer and deliver to Buyer,
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and Buyer shall purchase and acquire from Seller, free and clear of all Liens
(as defined in Section 2.5(b) hereof) except as otherwise contemplated by
Section 2.5(b) hereof, all of the assets of the Business associated with the
Center, other than the assets listed on Schedule 1.1 (the "Excluded Assets")),
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including, without limitation, all machinery, equipment and furnishings used or
held for use exclusively or primarily in the Business, as set forth on Schedule
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2.5(A) hereto (the Business and all of the foregoing, excepting only the
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Excluded Assets, being hereinafter referred to as the "Purchased Assets"). As
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used herein, the term "Purchased Assets" shall also include, without limitation
of the foregoing:
(a) all warranties and claims or potential claims against Seller's
suppliers or lessors with respect to any assets included in the Purchased Assets
to the extent said warranties and claims may be assignable; and
(b) all names, trademarks, contractual rights, telephone numbers,
Licenses (as defined in Section 2.6), books and records, business and good will
of Seller relating to the Business and the Purchased Assets; and
(c) all of Seller's accounts receivable arising out of services
performed by Seller on or prior to the business day
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immediately preceding the Closing Date at the Center (including any related
claims in respect of the collection thereof) (the "Accounts Receivable"); and
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(d) all rights of the Sellers arising from, in and to all Contracts
(as defined in Section 2.7) listed in Schedule 1.4 as Contracts to be assumed by
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Buyers (the "Assumed Contracts"); and
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(e) in addition, as an integral part of the Purchased Assets and which
Buyer is relying on in entering into this Agreement, the restrictive agreements
that the Seller and the Stockholders shall herein agree to in Article 8.
1.2 Closing Date. The purchase and sale of the Business and the
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Purchased Assets (the "Closing") shall take place on March 14, 1997 at the
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offices of Xxxxxx & Carnelutti, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at
10:00 a.m. New York City time or as soon thereafter as all of the conditions
specified in Articles 5 and 6 of this Agreement shall be satisfied or waived, or
at such other place or time or on such other date as Seller and Buyer may agree
upon in writing (such date and time being hereinafter called the "Closing
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Date").
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1.3 (a) Purchase Price. As consideration for the Purchased Assets,
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Buyer and MRI shall pay to Seller the purchase
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price (the "Purchase Price") (subject to adjustment pursuant to clauses (b) and
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(c) below) in the form and manner as follows:
(i) $2,500,000 by wire transfer in immediately available funds
on the Closing Date (the "Closing Date Amount"); and
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(ii) MRI shall deliver to Seller a stock certificate evidencing
the number of shares (the "Closing Shares") of common stock
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(the "MRI Common Stock"), par value $.01 per shares, of MRI
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which equals the quotient obtained by dividing $500,000
(the "Threshold Amount") by the Market Value (as defined in
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Section 10.15) of the MRI Common Stock as of the trading
day immediately preceding the Closing Date (the "Closing
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Date Price").
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(iii) Pursuant to the terms of an escrow agreement (the "Escrow
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Agreement") in the form attached hereto as Exhibit E, at
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the Closing, Buyer agrees to remit the Closing Shares to
Xxxxxx & Carnelutti, as escrow agent (the "Escrow Agent").
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It is expressly understood that
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such consideration shall be held in escrow for purposes of
satisfying any indemnification liability incurred by Seller
pursuant to Article 9 of this Agreement. It is expressly
agreed that the Closing Shares shall be released to Seller
pursuant to the terms of the Escrow Agreement.
(b) Post Closing Adjustment if Closing Shares Registered Within 180
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Days of Closing. In the event that the Effective Date (as defined in Section
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1.8) occurs within 180 days of the Closing Date and the Market Value as of the
Effective Date (the "Effective Date Price") is less than the Closing Date Price,
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MRI, at its option, shall either
(i) issue to Seller promptly following the Effective Date (but in any
event not less than the third Business Day following the Effective Date)
such additional number of shares of MRI Common Stock (rounded to the
nearest whole number) registered for resale under the Securities Act of
1933 (the "Securities Act") as shall equal a fraction, the numerator of
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which is an amount (the "Deficiency Amount") equal to the difference
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between (1) the Threshold Amount and (2) the
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product obtained by multiplying the Effective Date Price by the number of
Closing Shares, and the denominator of which is the Effective Date Price,
or
(ii) deliver to Seller a certified check in the amount equal to the
Deficiency Amount.
(c) Seller's Right to Return Closing Shares if Closing Shares Not
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Registered Within 180 Days of Closing. In the event that the Effective Date
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does not occur within 180 days of the Closing Date (such 180th date, the
"Determination Date"), Seller shall have the right, exercisable at its sole
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discretion, to return all of the Closing Shares to MRI within twenty (20) days
of the later to occur of (i) the Determination Date and (ii) if the Seller is
entitled to the return of any Closing Shares pursuant to the Escrow Agreement,
the date Seller receive such Closing Shares from the Escrow Agent and Seller
shall receive from MRI cash in an amount equal to the Threshold Amount (or such
proportionate amount thereof if less than all the Closing Shares are released to
Seller pursuant to the Escrow Agreement). Seller's right to return the Closing
Shares pursuant to this Section 1.3(c) shall be exercised by returning the
Closing Shares to MRI at the address set forth in Section 10.7, together with
notice of such exercise, and such right
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shall expire if the Closing Shares have not been so delivered to MRI by the
close of business on the date specified in the immediately preceding sentence.
Upon exercise of such right of return by Seller, MRI shall issue to Seller a
certified check in an amount equal to the Threshold Amount (or such
proportionate amount thereof if less than all the Closing Shares are released to
Seller pursuant to the Escrow Agreement) within two business days of its receipt
of the stock certificate for the Closing Shares.
(d) Allocation of Purchase Price. The Seller and the Buyer agree to
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allocate the Purchase Price in accordance with IRC Section 1060. Such
allocation shall be agreed to by the Seller and the Buyer prior to the Closing
Date. In addition, the Seller and the Buyer hereby agree to file timely any
information that may be required to be filed pursuant to Treasury Regulations
promulgated under IRC Section 1060.
1.4 Liabilities. Buyer shall not assume or be bound by any duties,
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responsibilities, obligations or liabilities of Seller, the Business or the
Center of any kind or nature, known, unknown, contingent or otherwise
(including, without limitation, any benefit plan maintained by Buyer, any trade
payables or any professional fees), except as specifically set forth on Schedule
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1.4 annexed
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hereto. Such liabilities retained by Seller are herein referred to as "Retained
Liabilities" and such liabilities expressly assumed by Buyer in Schedule 1.4 are
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herein referred to as "Assumed Liabilities." Seller hereby agree to indemnify
and hold Buyer harmless against all Retained Liabilities.
1.5 Additional Closing Date Deliveries and Actions.
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(a) On the Closing Date, Seller shall (i) deliver, or execute and
deliver, to Buyer (w) a Xxxx of Sale, Assignment and Assumption Agreement in
substantially the form annexed hereto as Exhibit A with respect to the Purchased
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Assets, (x) all evidences of consent, waiver or approval obtained by Seller in
respect of the Purchased Assets or the consummation of the transactions contem
plated by this Agreement, (y) all of the documents, instruments and opinions
contemplated to be delivered by Seller to Buyer on the Closing Date pursuant to
Article 5 hereof, and (z) all such other bills of sale, assignments and other
instruments of transfer or conveyances as Buyer may reasonably request or as may
otherwise be necessary to evidence and effect the sale, assignment, transfer,
conveyance and delivery of the Purchased Assets to Buyer and the retention by
the Sellers of the Retained Liabilities and (ii) take all steps and actions as
Buyer may reasonably request or as may
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otherwise be necessary to put Buyer in actual possession and control and provide
Buyer with the benefits of the Purchased Assets and the Business. All of the
documents described in (w) through (z) hereof are hereinafter referred to
as "Seller's Closing Documents".
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(b) On the Closing Date, Buyer shall (i) deliver, or execute and
deliver, to Seller (w) the Closing Date Amount, (x) the Closing Shares, (y) a
Xxxx of Sale, Assignment and Assumption Agreement in substantially the form
annexed hereto as Exhibit A with respect to the Purchased Assets, and (z) all of
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the documents, instruments and opinions contemplated to be delivered by Buyer to
Seller on the Closing Date pursuant to Article 6 hereof, and (ii) take all steps
and actions as may be reasonably necessary to effectuate the transactions
contemplated hereby. All of the documents described in (w) through (z) hereof
are hereinafter referred to as "Buyer's Closing Documents" and, collectively
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with Seller's Closing Documents, the "Closing Documents".
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(c) On the Closing Date, Buyer and Seller shall apportion trade
payables, such as equipment lease payments and office lease payments, for the
month in which the Closing Date occurs based upon the number of days elapsed in
such month up to
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the Closing Date. Buyer shall pay to the Seller on a pro rata basis any net
credit owed to the Seller and Buyer shall deduct on a pro rata basis from the
Closing Date Amount payable to Seller any net credit owed to the Buyer.
1.6 Consents, Waivers and Further Assurances. (a) From time to time
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following the Closing, Seller shall execute and deliver, or cause to be executed
and delivered to Buyer such other instruments of assignment, conveyance and
transfer as Buyer may reasonably request or as may be otherwise necessary more
effectively to convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets.
(b) With respect to any properties or assets sold hereunder that
cannot be physically delivered to Buyer because they are in the possession of
third parties, or otherwise, Seller shall give irrevocable instructions to the
party in possession thereof, if such be the case, with copies to Buyer, that all
right, title, and interest therein have been vested in Buyer and that the same
are to be held for Buyers' exclusive use and benefit.
1.7 Termination. Anything contained in this Agreement to the
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contrary notwithstanding, this Agreement may be terminated and the transactions
contemplated herein abandoned at any time
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prior to the Closing Date: (a) by the mutual written agreement of Buyer and
Seller; or (b) by Buyer or Seller in the event of any material breach
by the other party of any of its agreements, representations or warranties
contained herein; or (c) subject to the provisions of Section 4.3 hereof, by
either Buyer or Seller if the Closing has not occurred on or before March 31,
1997 (provided, however, that if the party seeking to terminate this Agreement
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pursuant to this clause (c) has failed to use good faith and best efforts to
bring about the Closing, that party shall not have the right to terminate the
Agreement pursuant to this clause), or such later date as may be agreed upon in
writing by Seller and Buyer or may result from the operation of the provisions
of Section 4.3 (the "Termination Date"). Notwithstanding any such termination,
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the provisions of Section 8.1 of this Agreement shall remain in full force and
effect and no such termination shall be deemed to constitute a release or waiver
by either party of any claim against the other party hereto based on any breach
by such party of its agreements or its representations and warranties contained
herein.
1.8 Registration of MRI Common Stock. (a) At any time during the 180
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days following the Closing Date when MRI proposes to
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file a registration statement (other than a registration statement on Form S-8
or Form S-4, or their successor forms) with the Securities and Exchange
Commission (the "SEC"), it will, prior to such filing, give written notice to
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Seller of its intention to do so and, upon the written request of Seller given
within five (5) days after MRI provides such notice (which request shall state
the intended method of disposition of such Closing Shares), MRI shall use its
best efforts to cause all Closing Shares that MRI has been requested by such
Seller to register under the Securities Act to the extent necessary to permit
their sale or other disposition in accordance with the intended methods of
distribution specified in the request of such Seller; provided that MRI shall
have the right to postpone or withdraw any registration effected pursuant to
this Section 1.8 without obligation to the Seller.
(b) In connection with any offering under this Section 1.8 involving
an underwriting, MRI shall not be required to include any Closing Shares in such
offering unless the holders thereof accept the terms of the underwriting as
agreed upon between MRI and the underwriters selected by it (provided that such
terms must be consistent with this Agreement), and then only in such quantity as
will not, in the opinion of the underwriters,
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jeopardize the success of the offering by MRI. If in the opinion of the managing
underwriter the registration of all, or part of, the Closing Shares that the
Seller has requested to be included would materially and adversely affect such
public offering, then MRI shall be required to include in the underwriting only
that number of Closing Shares, that the managing underwriter believes may be
sold without causing such adverse effect; provided that no persons or entities
other than MRI and persons or entities holding registration rights shall be
permitted to include securities in the offering. If the number of Closing Shares
to be included in the underwriting in accordance with the foregoing is less than
the total number of shares that the Seller has requested to be included, then
the Seller and other holders of shares of MRI Common Stock entitled to include
shares of MRI Common Stock in such registration shall participate in the
underwriting pro rata based upon their total ownership of shares of MRI Common
Stock (giving effect to the conversion into MRI Common Stock of all securities
convertible thereinto). If any holder would thus be entitled to include more
shares than such holder requested to be registered, the excess shall be
allocated among other requesting holders pro rata based upon their total
ownership of shares of MRI Common
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Stock. The Company shall also use its best efforts to keep any such registration
statement, and the accompanying prospectus, effective and current under the
Securities Act at its expense for a period ending on the earlier to occur of (i)
the date on which Seller has completed its disposition of such shares pursuant
to the registration statement or (ii) the date which is 60 days after the
Closing Shares have been released to the Seller pursuant to the Escrow
Agreement. The date such registration is declared effective by the SEC is
referred to herein as the "Effective Date."
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(c) In connection with the registration of the Closing Shares
pursuant to this Section 1.8:
(i) The Seller will cooperate in furnishing promptly to MRI in writing any
information reasonably requested by MRI in connection with the
preparation, filing and processing of such registration statement;
(ii) MRI shall use reasonably diligent efforts to have the Closing Shares
qualified for listing on The Nasdaq Stock Market;
(iii) MRI will prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be
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necessary to keep such registration statement effective and current
for the period required herein and use reasonably diligent efforts to
comply with the provisions of the Securities Act and the rules and
regulations of the SEC with respect to the sale or disposition of
shares covered by such registration statement;
(iv) MRI will furnish to the Seller such number of prospectuses or other
documents incident to such registration as may from time to time be
reasonably requested, and cause its shares to be qualified under the
blue-sky laws of those states reasonably requested by the Seller
(provided that MRI will not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be required
to qualify, (B) subject itself to taxation in any such jurisdiction or
(C) consent to general service of process in any such jurisdiction);
(v) MRI shall notify Seller, at any time when a prospectus relating to the
Closing Shares is required to be delivered under the Securities Act,
of the happening of any event as a result of which the prospectus
included in
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the registration statement contains an untrue statement of material
fact or omits any fact necessary to make the statements therein not
misleading and MRI shall take such steps at it shall deem necessary to
correct such prospectus;
(vi) MRI shall use reasonably diligent efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration statement,
suspending or preventing the use of any related prospectus or
suspending the qualification in any jurisdiction in which the sale of
the Closing Shares has been qualified;
(vii) Except as set forth in subsection (viii) below, MRI shall bear
all costs and expenses incident to any registration pursuant to this
Section 1.8; and
(viii) The Seller shall pay any and all brokerage fees and transfer
taxes incident to the sale of any share of MRI Common Stock sold by
the Seller pursuant to the registration effected pursuant to this
Section 1.8, and shall pay the fees and expenses of any special
attorneys or accountants retained by it.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller and, with respect to
Sections 2.1, 2.2 and 2.14 only, Stockholders represent and warrant to Buyer and
agree as follows:
2.1 Organization and Qualification. Seller is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
California. Seller has all requisite corporate power and authority to own or
lease its properties and assets and to conduct its business as presently
conducted. Other than the Stockholders no other person or entity has an equity
interest in the Seller or any right with respect to an equity interest in the
Seller.
2.2 Authority to Effect Transactions. (a) Seller and Stockholders
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have all requisite power and authority to execute, deliver and perform this
Agreement and all of Seller's Closing Documents. All necessary corporate action
(including, without limitation, action by Stockholders) on the part of Seller
has been duly taken to authorize the execution, delivery and performance by
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Seller of this Agreement and all of Seller's Closing Documents. This Agreement
has been duly authorized, executed and delivered by Seller, has been duly
executed and delivered by Stockholders, and is the legal, valid and binding
obligation of Seller and Stockholders, enforceable against Seller and
Stockholders in accordance with its terms. Each of Seller's Closing Documents
has been duly authorized by Seller and, upon execution and delivery by Seller,
as contemplated hereby, will be the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
(b) Except as set forth in Schedule 2.2(B) hereto, (i) no consent,
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authorization, approval, order, license, certificate, permit or act of or from,
or declaration or filing with, any foreign, federal, state, local or other
governmental authority or regulatory body or any court or other tribunal or any
party to any contract, agreement, instrument, lease or License (as defined in
Section 2.6) to which Seller or any Stockholder is a party or by which it is
bound or to which any of the Purchased Assets is subject, is required for the
execution, delivery or performance by Seller or Stockholders of this Agreement
or any of Seller's Closing Documents or the consummation of the transactions
contemplated hereby or thereby and (ii) neither the execution, delivery or
performance of this Agreement or any of Seller's Closing Documents nor the
consummation of the transactions contemplated
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hereby or thereby (v) conflicts with or will conflict with, or (with or without
the giving of notice or the passage of time or both) results or will result in a
breach of the terms, conditions or provisions of, (w) constitutes or will
constitute a default under, (x) results or will result in the creation of any
Lien except for Permitted Liens (as defined in Section 2.5(b) hereof) upon the
Purchased Assets pursuant to, (y) constitutes or will constitute an event
creating rights of acceleration, termination or cancellation, or loss of rights
under, or (z) results or will result in a violation of, (A) Seller's
organizational documents and agreements, each as amended to date, (B) any law,
statute, rule, regulation, order, award, judgment or decree to which Seller, the
Stockholders or any of the Purchased Assets is subject or (C) any contract,
agreement, instrument, lease or License to which Seller or any Stockholder is a
party or by which it is bound.
2.3 Financial Statements. Seller has delivered to Buyer true and
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correct copies of the following: unaudited balance sheets of Seller as of
December 31, 1996 and December 31, 1995 and the
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unaudited statements of operations for the years then ended. Each such balance
sheet presents fairly the financial condition, assets, liabilities and
stockholder's equity of Seller as of its date and each such statement of
operations presents fairly the results of operations of Seller for the period
indicated. The financial statements referred to in this Section 2.3 have been
prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods involved, are correct and complete,
and are in accordance with the books and records of Seller. Except as set forth
in Schedule 2.3 hereto, Seller is not subject to any liability (including,
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without limitation, unasserted claims whether known or unknown and liabilities
for federal, state or local income tax), whether absolute, contingent, accrued
or otherwise, which is not shown or which is in excess of the amount shown or
reserved for on the balance sheets, other than liabilities of the same nature as
those set forth on the balance sheets and reasonably incurred after the Balance
Sheet Date (as defined below) in amount and in the ordinary course of business
consistent with past practice and are not material in amount.
2.4 Absence of Certain Developments. Except as contem plated by this
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Agreement or as otherwise set forth on Schedule 2.4 hereto, since December 31,
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1996 (the "Balance Sheet Date"), the
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Business has been conducted in all respects only in the ordinary course of
business of the Center consistent with past practice. Except as set forth on
Schedule 2.4 hereto, since the Balance Sheet Date, there has been (a) no adverse
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change in the Purchased Assets or in the business, liabilities, operations,
profits, condition (financial or otherwise) or prospects of the Center, and, no
fact or condition exists or, to the best knowledge of Seller, is contemplated or
threatened which might be expected to cause such a change in the future, and (b)
no damage, destruction, loss or claim or condemnation or other taking adversely
affecting any Purchased Asset.
2.5 Tangible Personal Property; Title and Liens. (a) Set forth on
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Schedule 2.5(A) hereto is a list of all of the tangible personal property
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included in the Purchased Assets.
(b) Seller has good title to all of the Purchased Assets, free and
clear of all mortgages, liens, security interests, easements, encumbrances,
equities, claims and obligations to other Persons (as such term and all other
defined terms used herein and not otherwise defined are defined in Section
10.15) of every kind and character (any of the foregoing, a "Lien"), other than
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as set forth on Schedule 2.5(B) hereto. Upon delivery to Buyer on the Closing
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Date of the instruments of assignment and transfer
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contemplated by this Agreement, Seller will thereby transfer to and vest in
Buyer good and marketable title to the Purchased Assets, free and clear of all
Liens other than Liens, if any, created by Buyer and Liens set forth on Schedule
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2.5(B) (collectively, "Permitted Liens"). Seller shall discharge and indemnify
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Buyer from and against any and all claims, suits, actions, proceedings (formal
and informal), investigations, judgments, deficiencies, damages, settlements,
liabilities, losses, costs and legal and other expenses resulting or arising
from any Lien existing on the Closing Date (whether inchoate, or not, and
whether perfected or not) on or with respect to any of the Purchased Assets
other than any Permitted Lien. Except as set forth on Schedule 1.1 hereto, the
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Purchased Assets constitute all assets and properties presently used in the
operation of the Business as it is currently being operated.
(c) No real property owned by Seller is used in the conduct of the
Business.
2.6 Licenses and Authorizations. Seller owns, holds or possesses all
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foreign, federal, state or local governmental licenses, franchises, permits,
privileges, approvals and other authorizations and licenses which are necessary
to entitle it to own or lease the Purchased Assets and to operate and use the
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Purchased Assets to conduct and carry on the Business as presently conducted at
the Center (the "Licenses"). Set forth on Schedule 2.6
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hereto is a list and brief description of each of the Licenses. Each of the
Licenses is valid and in full force and effect and, except as disclosed in
Schedule 2.6, may be assigned and transferred to Buyer in accordance with this
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Agreement and will continue in full force and effect thereafter, without default
or forfeiture of any rights thereunder. No notice of cancellation, default or
breach of or any dispute concerning any of the Licenses owned, possessed or held
by Seller or of any event or condition or state of facts described in the next
following sentence has been received by Seller with respect to any of such
Licenses. There is not now pending, or to the knowledge of Seller threatened,
any action to revoke, cancel, rescind, modify or refuse to renew in the ordinary
course any of the Licenses. Seller and, to the best of its knowledge, its
predecessors in interest have performed and fulfilled in all respects all of
their respective obligations under each of the Licenses, and Seller is not aware
of any event or condition or state of facts which constitutes or, after notice
or lapse of time or both, would constitute a breach or default under any of such
Licenses or which permits or, after notice or lapse of
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time or both, would permit revocation or termination of any of such Licenses or
which would adversely affect any of the rights of Seller thereunder.
2.7 Contracts and Other Instruments. (a) Schedule 2.7(A) hereto sets
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forth a list of all contracts, agreements, instruments and leases to which
Seller is a party or by which it is bound, relating to the Business or the
Purchased Assets or to which any of the Purchased Assets is subject
(collectively, together with any contracts, agreements, instruments and leases
entered into by Seller with respect to the Business or the Purchased Assets
between the date hereof and the Closing Date consistent with the terms of this
Agreement, being herein called the "Contracts"). Seller has provided Buyer with
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a true and complete copy of each Contract.
(b) Each of the Contracts constitutes the valid and binding obligation
of Seller and, to the best of Seller's knowledge, the other party thereto, is in
full force and effect. Seller has performed and fulfilled all of its
obligations under each of such Contracts required to be performed as of the date
hereof, is not in default or breach thereunder, and, to the knowledge of Seller,
no other party is in default or breach thereunder.
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2.8 Employees. (a) Schedule 2.8A hereto contains (i) a list of the
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names and relationships with Seller of all employees of Seller at the Center as
of the date hereof, (ii) a description of all agreements (oral or written) with
such employees, (iii) the dates on which such employees commenced working for
Seller, (iv) any increase in such employee's compensation since January 1, 1997,
and (v) the compensation of such employees. Except as set forth on Schedule
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2.8B hereto, Seller is not a party to any collective bargaining agreement,
----
employment agreement, retirement plans (whether qualified or non-qualified),
deferred compensation or severance (except to the extent that accrued vacation
and accrued sick days may be deemed to be severance under applicable law)
agreement, consulting or advisory agreement, confidentiality agreement or
covenant not to compete (except as set forth in this Agreement) relating to the
employees or otherwise relating to the Business.
(b) Seller has complied in all material respects with all applicable
laws, rules and regulations affecting the employment of labor, including, but
not limited to, those relating to wages, hours, discrimination and the payment
of social security, withholding and similar taxes, and is not liable for any
arrears of
-26-
wages or any penalties for failure to comply with any of the foregoing. There
are no controversies pending or threatened between Seller and any of its
employees, or any labor unions or collective bargaining unit representing or
purporting to represent any of its employees.
2.9 Compliance with Laws; Litigation. The Purchased Assets and their
--------------------------------
uses comply with, and Seller with respect to the Purchased Assets and the
operation of the Business and the Center is in compliance with, all applicable
laws, regulations, rules, or ordinances of, and all applicable judgments, writs,
decrees, injunctions and orders of, any foreign, federal, state, local or other
governments or court or governmental departments, commissions, bureaus, agencies
or instrumentalities. Seller is not, with respect to the Business, the Center
or the Purchased Assets, subject to any judgments, writs, decrees, injunctions
or orders of any foreign, federal, state or local government or court or
governmental department, commission, bureau, agency or instru-mentality. Except
as set forth on Schedule 2.9 hereto, there is no suit, action, administrative
------------
proceeding, arbitration or other proceeding or governmental investigation,
including any medical board or similar professional body proceeding, involving
Seller,
-27-
the Stockholders or the Center (including any medical professionals practicing
at the Center, whether or not the proceeding involves activities performed at
the Center) pending or, to the best knowledge of Seller and Stockholders,
threatened against Seller or the Stockholders or otherwise with respect to the
Business, the Center or the Purchased Assets (including, without limitation, any
claim for malpractice) nor is there any basis for any of the same, and there are
no suits, actions, administrative proceedings, arbitrations or other proceedings
or investigations pending in which Seller or any Stockholder is the plaintiff or
claimant relating to the Purchased Assets, the Business or the Center. There is
no suit, action, administrative proceeding, arbitration or governmental
investigation involving Seller, the Stockholders, or the Center pending or, to
the best knowledge of Seller and the Stockholders, threatened, which questions
the legality, validity or propriety of the transactions contemplated by this
Agreement.
2.10 Machinery, Equipment and Supplies. All machinery, equipment and
---------------------------------
supplies of Seller included in the Purchased Assets are in good and usable
condition, ordinary wear and tear excepted.
2.11 Insurance. Schedule 2.11 hereto sets forth a list of all
--------- -------------
policies of insurance in force with respect to the Purchased
-28-
Assets, the Center and the Business. Seller has received no
notices of any pending or threatened terminations with respect to such policies
and Seller is in compliance with all conditions contained therein. All such
policies are valid and enforceable and in full force and effect and are
sufficient for all applicable requirements of law. All such policies will remain
in full force and effect through the Closing Date.
2.12 Environmental Matters. There has been no (a) release or
---------------------
threatened release of any hazardous substance, pollutant or contaminant as each
such term presently is defined by the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, resulting from any activity by or on
behalf of Seller, any Stockholder or, to the knowledge of Seller, any
predecessor in interest, including but not limited to, the generation, handling,
storage, treatment, transportation or disposal of any hazardous substance,
pollutant or contaminant at the Center; (b) past or future action taken or to be
taken by any federal, state or local entity or by any private party under any
federal, state or local statute, rule, regulation or guideline concerning the
release of any hazardous substance, pollutant or contaminant into the soil, air,
surface or subsurface waters or the
-29-
environment in general from the Center; and (c) claims or actions brought or
which may be brought by any third party for damages occurring at or outside of
the Premises resulting from the alleged release or threatened release of any
hazardous substance, pollutant or contaminant by Seller or, to the knowledge of
Seller, any predecessor in interest, including but not limited to, claims for
health effects to persons, property damage and/or damage to natural resources;
nor does Seller have any knowledge of any basis for any of the foregoing.
2.13 Accounts Receivable. Seller has good title, free and clear of
-------------------
all Liens except Permitted Liens, to the receivables reflected on its balance
sheets (the "Accounts Receivable"). The Accounts Receivable have arisen from
-------------------
bona fide transactions entered into in the ordinary course of business and are
not in dispute or subject to defense, counterclaim or set-off, except that they
may be subject to adjustments following the Closing Date occurring in the
ordinary course of business consistent with past practice.
2.14 Brokers. Neither Seller, the Stockholders nor any Affiliate of
-------
Seller or the Stockholders has incurred any liability or obligation to any
broker, finder or agent for any brokerage
-30-
fees, finder's fees or commissions with respect to the transactions contemplated
by this Agreement.
2.15 Investment Intent. The Seller is acquiring the Shares which are
-----------------
issuable under this Agreement for investment for its own account, not as a
nominee or agent, and not with the view to, or for resale in connection with,
any distribution thereof and understands that the Shares are being offered under
an exemption in Section 4(2) of the Securities Act upon reliance on such
representation. The Seller is an "accredited investors" as such term is defined
in Rule 501(a) under the Securities Act. Notwithstanding the obligations of MRI
and Buyer pursuant to Section 1.8, the Seller understands that the Shares
representing the MRI Common Stock which are issuable hereunder, have not been,
and will not as of the Closing Date be, registered under the Securities Act. The
Seller acknowledges that the Shares which are issuable hereunder must be held
indefinitely until subsequently registered under the Securities Act or unless an
exemption from such registration is available. The Seller is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit limited
resale of shares subject to the satisfaction of the requirements set forth
therein.
-31-
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER AND MRI
As an inducement to Seller and the Stockholders to enter into this
Agreement and to consummate the transactions contemplated hereby, Buyer and MRI
represent and warrant to Seller and the Stockholders and agree as follows:
3.1 Organization. Each of Buyer and MRI is a corporation duly
------------
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Buyer and MRI has all requisite corporate power and authority
to own or lease its properties and assets and to conduct its business as
presently conducted. Buyer is a wholly owned subsidiary of MRI.
3.2 Authority to Effect Transactions. (a) Each of Buyer and MRI has
--------------------------------
all requisite corporate power and authority to execute, deliver and perform this
Agreement and Buyer's Closing Documents. All necessary corporate action on the
part of Buyer and MRI has been duly taken to authorize the execution, delivery
and performance of this Agreement and Buyer's Closing Documents. This Agreement
has been duly authorized, executed and delivered by Buyer and MRI, and is the
legal, valid and binding obligation of Buyer
-32-
and MRI enforceable against Buyer and MRI in accordance with its terms. Buyer's
Closing Documents have been duly authorized by Buyer and, upon execution and
delivery by Buyer as contemplated hereby, will be the legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their terms.
The Closing Shares, when issued pursuant to the terms hereof, shall be
duly and validly issued and fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof.
(b) (i) No consent, authorization, approval, order, license,
certificate or permit of or from, or declaration or filing with, any foreign,
federal, state, local or other governmental authority or regulating body or any
court or other tribunal or any party to any contract, agreement, instrument,
lease or license to which Buyer or MRI is a party or by which it is bound, is
required for the execution, delivery or performance by Buyer or MRI of this
Agreement or any of Buyer's Closing Documents or in connection therewith or for
consummation of the transactions contemplated hereby or thereby and (ii) neither
the execution, delivery or performance by Buyer or MRI of this Agreement or any
of Buyer's Closing Documents, nor the consummation of the transactions contem-
-33-
plated hereby or thereby (w) conflicts with or will conflict with or (with or
without the giving of notice or the passage of time or both) results or will
result in a breach of the terms, conditions or provisions of, (x) constitutes or
will constitute a default under, (y) constitutes or will constitute an event
creating rights of acceleration, termination or cancellation, or loss of rights
under, or (z) results or will result in a violation of, (A) the certificate of
incorporation, by-laws or other constitutional documents, each as amended to
date, of Buyer or MRI, (B) any law, statute, rule, regulation, order, award,
judgment or decree to which Buyer or MRI is subject, or (c) any contract,
agreement, instrument, lease or license to which Buyer or MRI is a party or by
which it is bound.
3.3 Litigation. Other than as set forth on Schedule 3.3, there is no
---------- ------------
suit, action, administrative proceeding, arbitration or other proceeding or
governmental investigation (including by the SEC or The Nasdaq Stock Market)
pending or, to the best knowledge of Buyer or MRI, threatened against Buyer or
any MRI Group Entity, which questions the legality, validity or propriety of the
transactions contemplated by this Agreement or
-34-
which would reasonably be expected to have a material adverse effect on the
business of MRI and its subsidiaries taken as whole.
ARTICLE 4
CONDUCT OF BUSINESS AND TRANSACTIONS PRIOR TO CLOSING
Between the date hereof and the Closing Date:
4.1 Access. Seller shall (a) afford to the officers, stockholders,
------
employees, consultants, attorneys, agents, engineers, accountants and other
representatives ("Agents") of Buyer and of any prospective lenders or to
------
investors in Buyer or its Affiliates (the "Buyer's Lenders and Investors") free
-----------------------------
and full access to the properties, assets, books and records of Seller relating
exclusively or primarily to the Purchased Assets, (b) permit them to make
extracts from and copies of such books and records and (c) from time to time
furnish to Buyer, Buyer's Agents or Buyer's Lenders and Investors such financial
and operating data and other information concerning the results of operations of
the Center and the Business as Buyer may reasonably request including all
interim financial statements with respect to the Center. No investigation by or
on behalf of Buyer shall affect the representations and warranties of Seller
hereunder.
-35-
4.2 Conduct of Business. Seller and Buyer shall refrain from taking
-------------------
any action which would render any of their respective representations and
warranties inaccurate as of the Closing Date, except for changes therein
permitted by this Agreement or resulting from transactions carried out pursuant
to this Agreement. Each party shall promptly notify the other of any action,
suit, proceeding or investigation that may be threatened, brought,
asserted or commenced of which it becomes aware that would have been listed, in
the case of Seller, on Schedule 2.9 hereto or, in the case of Buyer, on Schedule
------------ --------
3.3 hereof, if such action, suit, proceeding or investigation had arisen or were
---
in existence on or prior to the date hereof. Seller shall act diligently and
reason ably (a) to preserve the Purchased Assets intact, (b) to keep available,
if so requested by Buyer, the services of the present personnel of the Center
and (c) to preserve the goodwill of suppliers and customers of the Center and
others having business relations therewith. Except as otherwise contemplated by
this Agreement or consented to in writing by Buyer, Seller shall conduct the
business and operations of the Center in all respects only in the ordinary
course and substantially as presently operated. Notwithstanding the foregoing,
except as otherwise contemplated by
-36-
this Agreement or consented to in writing by Buyer, Seller shall not, with
respect to the Purchased Assets, sell, lease, transfer or otherwise dispose of
(including transfers to any Affiliates of Seller), or mortgage or pledge, or
impose or suffer to be imposed any Lien on, any Purchased Assets. In addition,
Seller shall ensure that all liabilities and obligations to vendors, lenders and
other creditors are current in accordance with their terms and not past due and
the Seller shall indemnify and hold Buyer harmless against all past due
obligations of the Center as of the Closing incurred prior to Closing.
Additionally, pending the Closing, and except as otherwise specifically
contemplated by this Agreement, Seller:
(i) shall not enter into contracts or commitments involving,
individually, in excess of $5,000 (or $25,000 in the aggregate);
(ii) will not grant any increase in compensation to any officer,
employee or agent or enter into or amend any stock option plan or
any employment or consulting agreement;
(iii) shall not dispose of or encumber any of its properties and
assets;
-37-
(iv) shall not merge or consolidate with any other corporation, or
acquire any stock, business, or substantially all of the property
or assets of any other person, firm, association, corporation or
other business organization; and
(v) shall not do any act or omit to do any act which with or without
the giving of notice or the passage of time, or both, would
result in a breach of or default under any contract, commitment
or obligation of the Seller.
4.3 Maintenance. Seller shall act reasonably and in accordance with
-----------
its prior practice with respect to the Business to preserve, maintain in good
and usable condition and insure and repair the Purchased Assets and the Center
in the ordinary course. In the event of any material loss of, or material
damage to, tangible Purchased Assets or the Center prior to the Closing, Seller
shall either pay the lesser of the repair or replacement cost thereof to Buyer
at the Closing or, at the option of Buyer, promptly repair or replace the lost
or damaged Purchased Assets in order to minimize the interruption to the
Business. If, despite the best efforts of Seller to repair or replace such lost
or
-38-
damaged Purchased Assets prior to the Closing Date, such repair or replacement
is not completed prior to the Termination Date, then, at the option of Buyer,
(a) this Agreement shall terminate, (b) the Termination Date shall be extended
for an additional period not to exceed ten days or (c) Seller shall pay to the
Buyer on the Closing Date the lesser of the repair or replacement cost of the
lost or damaged Purchased Assets.
4.4 Consents and Approvals. Seller shall act diligently and
----------------------
reasonably to secure the consents and approvals of any govern mental agencies
and authorities and any other Persons, as set forth on Schedule 2.2(B) annexed
---------------
hereto, required to be obtained in order to assign or transfer to Buyer, any
contract or License included within the Purchased Assets or to otherwise satisfy
the conditions set forth in Sections 5.4 and 5.6 hereof, provided, that Seller
--------
shall not make any agreement or understanding affecting the Purchased Assets,
the Center or the Business as a condition for obtaining any such consent or
waiver except with the prior written consent of Buyer. Buyer shall act
diligently and reasonably to cooperate with Seller to obtain the consents or
approvals contem plated by this Section 4.4.
-39-
4.5 Renewal of Contracts. Seller shall consult with Buyer fully with
--------------------
respect to the renewal of any Contracts that are scheduled to expire between the
date hereof and the Termination Date and will not enter into any such renewals
without the prior written consent of the Buyer.
4.6 Stockholder Covenants. Insofar as the Stockholders control the
----------------------
Seller, any covenant contained herein requiring action on the part of the Seller
shall require the Stockholders to cause Seller to take such action.
ARTICLE 5
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall be subject, at the
option of Buyer, to the fulfillment of each of the following conditions as of
the Closing Date:
5.1 Accuracy of Representations and Compliance With Conditions. All
----------------------------------------------------------
representations and warranties of Seller and the Stockholders contained in this
Agreement shall be true and accurate when made and, except (a) as a result of
the taking of any action contemplated hereby or (b) insofar as any
representation or warranty relates to any specified earlier date, shall be true
and
-40-
accurate as of the Closing Date, as though such representations and warranties
were then made by Seller and the Stockholders; and Seller and the Stockholders
shall have performed and complied with all of their covenants and agreements set
forth in this Agreement to be performed or complied with at or before the
Closing.
5.2 No Changes; Destruction of Property and Due Diligence. Between
-----------------------------------------------------
the date hereof and the Closing Date, there shall have been (a) no material
adverse change in the Business or any of the Purchased Assets; (b) no federal,
state or local legislative or regulatory change adversely affecting the Business
or the Purchased Assets; (c) no damage, destruction, loss or claim or
condemnation or other taking adversely affecting the Business or the Purchased
Assets that has not been repaired or replaced in accordance with Section 4.3
hereof; (d) no lawsuit, proceeding or claim filed or asserted against Seller
that, if adversely determined, may have an adverse effect on the Business or the
Purchased Assets and (e) no event or fact concerning the Seller, the Center or
the Business shall have come to the attention of the Buyer during Buyer's due
diligence investigation that would cause the Buyer, in its reasonable judgment,
not to proceed with the Closing.
-41-
5.3 Opinion of Counsel for Seller. Buyer shall have received from
-----------------------------
counsel to Seller and the Stockholders, an opinion dated the Closing Date in the
form set forth in Exhibit B hereto.
---------
5.4 Necessary Government Approvals. The parties shall have received
------------------------------
all governmental and regulatory approvals, actions and consents, if any,
necessary to consummate the transactions contemplated hereby.
5.5 Assumption of Lease and Assumed Contracts. The landlord of the
-----------------------------------------
Center shall have agreed to the assumption by Buyer of the leases for the Center
(the "Leases"). The Assumed Contracts shall be
------
assigned to Buyer on terms satisfactory to Buyer.
5.6 Necessary Consents. The parties shall have received written
------------------
consents, in form and substance reasonably satisfactory to Buyer, to the
transactions contemplated hereby from all Persons whose consent is required
therefor, as set forth on Schedule 2.2(B) or otherwise under any Contract.
---------------
5.7 Review of Proceedings. All actions, proceedings, instruments and
---------------------
documents required to carry out the transactions contemplated by this Agreement
or any other agreement to be executed and delivered by any of the parties
hereunder or in connection herewith shall be subject to the reasonable approval
of
-42-
Buyer's counsel, and Seller shall have furnished to such counsel such
documents as such counsel may have reasonably requested for the purpose of
enabling such counsel to pass upon legal matters incidental thereto.
5.8 Threatened or Pending Proceedings. No proceedings shall have
---------------------------------
been initiated or threatened by any governmental department, commission, bureau,
board, agency or instrumentality seeking to enjoin or otherwise restrain the
consummation of the transactions contemplated hereby.
5.9 Authorization to Endorse Certain Checks. Buyer shall have
---------------------------------------
received a duly executed letter from Seller in the form of Exhibit C annexed
---------
hereto, dated the Closing Date, authorizing Buyer to endorse certain checks made
payable to Seller.
5.10 Deliveries Complete. All documents required to have been
-------------------
delivered by Seller to Buyer, including each of the certificates, instruments
and documents listed on Schedule 5.10 hereto, and all actions required under
-------------
this Agreement to have been taken by Seller, at or prior to the Closing shall
have been delivered or taken.
-43-
5.11 Accounts Payable. All trade and lender accounts payable
----------------
relating to the Business shall, as of the Closing Date, be current in accordance
with Section 4.2.
5.12 Closing Certificate. On the Closing Date, Seller and each
-------------------
Stockholder shall deliver to Buyer a certificate signed by the President of
Seller or such Stockholder to the effect that: (a) all representations and
warranties of Seller and the Stockholders contained in this Agreement are true
and correct as if made on and as of such date, except (i) as a result of the
taking of any action contemplated hereby, (ii) insofar as any such
representation or warranty relates to a specified earlier date; (b) Seller has
performed and complied with all of its covenants and agreements set forth in
this Agreement to be performed or complied with at or before the Closing; and
(c) each of the other conditions precedent to Buyer's obligations to close under
this Agreement has been fulfilled.
5.13 Employees. Subject to Buyer's normal recruiting standards,
---------
anticipated needs and wage scale and fringe benefit program, Buyer shall
consider each of Seller's employees employed at the Center (the "Employees") for
---------
possible employment by Buyer at the Center from and after the Closing Date, it
being agreed,
-44-
however, that Buyer shall have no obligation to employ any such
person. Buyer will make available to the Employees employed by it the benefit
plans which are currently available to employees of MRI. At least three business
days prior to the Closing Date, Buyer shall deliver to Seller a list of those
Employees that Buyer wishes to so employ and Seller shall use its best efforts
to cause each such designated Employee to accept such employment. As to any
Employees not entering into Buyer's employ on the Closing Date, Seller shall be
solely responsible for (i) properly notifying such Employees of their
termination, and (ii) making all severance and related payments, including but
not limited to payments for accrued vacation and accrued sick days, if any.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF SELLER
AND THE STOCKHOLDERS
The obligations of Seller and the Stockholders under this Agreement
shall be subject, at the option of Seller, to the fulfillment of each of the
following conditions as of the Closing Date:
-45-
6.1 Accuracy of Representations and Compliance With Conditions. All
----------------------------------------------------------
representations and warranties of Buyer contained in this Agreement shall be
true and accurate when made and, except (a) as a result of the taking of any
action contemplated hereby or (b) insofar as any representation or warranty
relates to any specified earlier date, shall be true and accurate as of the
Closing Date, as though such representations and warranties were then made by
Buyer; and Buyer shall have performed and complied with all of its covenants and
agreements set forth in this Agreement to be performed or complied with at or
before the Closing.
6.2 Orders. No order shall have been rendered enjoining or otherwise
------
restraining the consummation of the transactions contemplated hereby.
6.3 Opinion of Counsel to Buyer. Seller shall have received from
---------------------------
Xxxxxx & Carnelutti, counsel for Buyer, an opinion dated the Closing Date in the
form set forth in Exhibit D hereto.
---------
6.4 Deliveries Complete. All documents required to have been
-------------------
delivered by Buyer to Seller, including each of the certifi xxxxx, instruments
and documents listed on Schedule 6.4 hereto, and all actions required under this
------------
Agreement to have been taken by
-46-
Buyer, at or prior to the Closing shall have been delivered or taken.
6.5 Closing Certificate. On the Closing Date, Buyer shall deliver to
-------------------
Seller a certificate signed by the President (or a Vice President) of Buyer to
the effect that: (a) all representa tions and warranties of Buyer contained in
this Agreement are true and correct as if made on and as of such date, except
(i) as a result of the taking of any action contemplated hereby, (ii) insofar as
any such representation or warranty relates to a specified earlier date; (b)
Buyer has performed and complied with all of its covenants and agreements set
forth in this Agreement to be performed or complied with at or before the
Closing; and (c) each of the other conditions precedent to Seller's obligations
to close under this Agreement has been fulfilled.
-47-
ARTICLE 7
TRANSACTIONS SUBSEQUENT TO CLOSING
7.1 Record Retention; Access. (a) Buyer shall retain the books and
------------------------
records of the Center and the Purchased Assets transferred to it hereunder for a
period of not less than three (3) years; provided, however that Buyer shall have
-------- -------
the right to dispose of or destroy any such books and records at any earlier
time upon giving Seller reasonable notice of such intent and the right to obtain
from Buyer those books and records which it intends to dispose of or destroy.
Seller shall have the right, at the expense of Seller, (i) of reasonable access
to and examination of such records and books for a period of three (3) years
from and after the Closing Date upon reasonable notice to Buyer and during
normal business hours and (ii) to make copies of such of the books, contracts
and records included in the Purchased Assets as are in Buyer's possession which
relate to any period prior to the Closing. With the approval of Buyer, which
approval shall not be unreason ably withheld or delayed, Seller may remove from
Buyer's possession the originals of such of the books and records included in
the Purchased Assets as Seller may require, for use in litigation,
-48-
provided that Seller shall indemnify Buyer against losses, expenses, or damages
--------
resulting from the loss, destruction or non-return of such books and records.
(b) Seller shall retain the books and records of the Center not
transferred to Buyer hereunder for a period of not less than three (3) years;
provided, however that Seller shall have the right to dispose of or destroy any
-------- -------
such books and records at any earlier time upon giving Buyer reasonable notice
of such intent and the right to obtain from Seller those books and records which
it intends to dispose of or destroy. Buyer shall have the right at the expense
of Buyer, (i) of reasonable access to and examination of such records and books
for a period of three (3) years from and after the Closing Date upon reasonable
notice to Seller and during normal business hours, and (ii) to make copies of
such books, contracts and records as are in Seller's possession. With the
approval of Seller, which approval shall not be unreasonably withheld, Buyer may
remove from Seller's possession the originals of such books and records as Buyer
may require, for use in litigation, provided that Buyer shall indemnify Seller
--------
against any losses, expenses or damages resulting from the loss, destruction or
non-return of the same.
-49-
ARTICLE 8
CONFIDENTIALITY AND NON-COMPETE
8.1 Confidentiality. (a) Prior to and after the Closing, no party
---------------
to this Agreement shall directly or indirectly make or cause to be made any
public announcement or disclosure, or issue any notice with respect to this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties hereto, except for disclosures or notices, (i) based upon the
advice of MRI's counsel, to be made by MRI as a result of its public status,
including, but not limited to a press release announcing the transaction
contemplated by this Agreement and (ii) which may be required in order to
consummate the transactions contemplated by this Agreement. Each party shall be
permitted to disclose non-public information received in connection with the
transactions contemplated in this Agreement from the other party to its
authorized representatives, including legal and accounting advisors, to the
extent such representatives retain the confidentiality of such information. In
the event this Agreement terminates without the purchase and sale of the
Purchased Assets having taken place, the parties and their respective Affiliates
and
-50-
Agents will (i) hold in confidence and refrain from using all non-public
information received in connection with the transactions contemplated in this
Agreement, and (ii) promptly return all such non-public information and any and
all copies thereof to the party to which such information relates. Seller and
Stockholders acknowledge that the common stock of Buyer's parent, MRI, is
publicly traded and agree to refrain from using non-public information regarding
this transaction in connection with the purchase or sale of such securities.
(b) During the period commencing on the date hereof and ending ten
years from the date hereof, neither the Stockholders, Seller nor any Affiliate
of Seller or Stockholders, shall disclose intentionally to anyone, or use or
otherwise exploit for the Stockholders', the Seller's or any Affiliate of Seller
or Stockholders' benefit, or for the benefit of anyone other than Buyer or MRI
Group Entities, (i) any confidential information of Buyer or MRI Group Entities
relating to the Business or the Center, including, without limitation, any trade
secrets, customer lists, details of client or consultant contracts, marketing
plans, product or service development plans, business acquisition plans of the
Buyer or MRI Group Entities related to the Business, or (ii) any
-51-
portion or phase of any technical information, ideas, "know-how", discoveries,
product designs, computer programs (including source or object codes),
processes, procedures, formulae or improvements relating to the Center that is
valuable, and whether or not in written or tangible form, and including all
memoranda, notes, plans, reports, records, documents and other evidence thereof
(all such information, documents and materials being hereinafter called
"Confidential Information").
(c) The foregoing notwithstanding, the term "Confidential
Information" does not include, and there shall be no obligation hereunder with
respect to, (i) information that becomes generally available to the public,
other than as a result of a disclosure by Stockholders, Seller or any Affiliate
of Seller or Stockholders or any agent or other representative thereof, and (ii)
business and technical methods applicable to diagnostic imaging businesses
generally. Neither the Stockholders, Seller nor any Affiliate of Seller shall
have any obligation hereunder to keep confidential any Confidential Information
if and to the extent disclosure of any thereof is required by law, and the
Stockholders, Seller or any Affiliate of Seller or Stockholders concerned shall
provide Buyer with prompt notice of such requirement, prior to
-52-
making any disclosure, so that the Buyer may seek an appropriate protective or
restrictive order.
(d) At the request of Buyer, Stockholders and Seller agree to deliver
to Buyer, at any time during the term of this Agreement, all Confidential
Information which any of them may possess or control.
8.2 Non-Competition/Noninterference. As long as the Buyer and MRI
-------------------------------
have not breached the provisions of Section 1.3(c), during the period commencing
on the date hereof and ending five (5) years from the date hereof, none of the
Stockholders, Seller nor any Affiliate of Seller or Stockholders shall, directly
or indirectly:
(a) anywhere within a ten (10) mile radius from the Center own,
manage, operate, advise (whether or not for compensation), control, or invest or
acquire an interest in any business, or otherwise engage or participate in,
whether as a proprietor, partner, stockholder, director, officer, Key Employee,
joint venturer, lender, advisor, consultant, investor or other participant, any
business which offers diagnostic imaging services (a "Competitive Business");
--------------------
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(b) solicit, induce or influence any customer, supplier, or any other
person or entity which has a business relationship with Buyer or any MRI Group
Entity to discontinue or reduce the extent of such relationship with Buyer or
any MRI Group Entity; or
(c) (i) recruit, solicit, or otherwise induce or influence any
employee of Buyer or any MRI Group Entity to discontinue such employment with
Buyer or any MRI Group Entity or any radiologist who, at the time has a business
relationship with Buyer or any MRI Group Entity, from discontinuing such
relationship with Buyer or an MRI Group Entity, or (ii) employ or seek to
employ, or cause any Competitive Business or permit any Competitive Business to
employ or seek to employ any person who is then (or was at any time within six
months prior to the date either Stockholders, Seller, or Stockholders' Affiliate
or the Competitive Business employs or seeks to employ such person) employed by
Buyer or any MRI Group Entity.
(d) Notwithstanding the foregoing, the provisions of this Section 8.2
will not be deemed breached merely because either Stockholders or Seller
beneficially own, in the aggregate, not more than 5% of the outstanding common
stock of a corporation, if, at the time of its acquisition by either Seller or
Stockholders, such
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stock is listed on a national securities exchange, is reported on Nasdaq, or is
regularly traded in the over-the-counter market by a member of a national
securities exchange.
(e) Sellers and Stockholders acknowledge and agree that in the event
of any breach or likely breach of any of the covenants of Article 8 herein, the
Buyer and any relevant Affiliate would incur damages in an amount difficult to
ascertain and/or be irreparably harmed and could not be made whole solely by
monetary damages. It is accordingly agreed that such persons, in addition to
any other remedy to which they may be entitled at law or in equity, shall be
entitled to injunctive relief in respect of such breach or likely breach as may
be ordered by any court of competent jurisdiction including, but not limited to,
an injunction restraining any violation of Article 8 herein and without the
proof of actual damages. It is intended that full third party rights are
granted under this provision.
(f) Sellers and Stockholders acknowledge and agree that the covenants
and other provisions set forth in Article 8 herein are reasonable, including
with respect to duration and subject matter, and that they are receiving
valuable and adequate consideration for such covenants under this Agreement.
The parties
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acknowledge that it is their intention that all such covenants and provisions be
enforceable to the fullest extent possible under applicable law. If any of the
provisions set forth in this Article 8 are found to be unenforceable in any
instance, such finding or invalidity shall not effect the enforceability of any
remaining provision and such unenforceable provision to the specific extent that
it is unenforceable, shall be interpreted to extend only over the maximum period
of time and to the maximum extent as to the which it is enforceable, in order to
effectuate the parties' intention, as represented hereby, to the greatest extent
possible.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnity by Seller and the Stockholders. Seller agrees to
----------------------------------------
indemnify and hold harmless Buyer and its successors and assigns and its and
their respective officers, directors, control ling Persons (if any), employees,
attorneys, agents, Affiliates, partners and stockholders, in each case past,
present, or as they may exist at any time after the date of this Agreement
(including
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Buyer, the "Buyer Indemnitees") against and in respect of any and all:
-----------------
(a) claims, suits, actions, proceedings (formal and informal),
investigations, judgments, deficiencies, damages, settlements,
liabilities, losses, costs and legal and other expenses arising
out of or based upon (i) any breach of any representation,
warranty, covenant or agreement of Seller or the Stockholders
contained in this Agreement or in any other agreement executed
and delivered by Seller or the Stockholders hereunder or in
connection herewith (ii) any obligation or liability of any
nature, accrued or contingent, not assumed by Buyer in accordance
with Section 1.4 of this Agreement, including but not limited to
any trade and lender payable obligations incurred prior to the
Closing Date, (iii) the waiver by Buyer of compliance by Seller
with the provisions of applicable bulk sales laws, and (iv) the
application of appropriate health care laws as they pertain to
the provision of services by the Center prior to the Closing
Date; and
(b) claims, suits, actions and proceedings, including but not limited
to professional liability claims, (formal and informal) of
Persons not a party to this Agreement and related investigations,
judgments, deficiencies, damages, settlements, liabilities,
losses, costs and legal and other expenses arising from events
occurring prior to the Closing Date relating to the Purchased
Assets or the operation or conduct of the Business.
If the Seller breaches any provision of Section 9.4 hereof, the Stockholders
shall thereafter be jointly and severally liable with the Seller to the Buyer
Indemnitees pursuant to this Section 9.1.
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9.2 Indemnity by Buyer. Buyer agrees to indemnify and hold harmless
------------------
Seller and their successors and assigns and their respective partners,
controlling Persons (if any), employees, attorneys, agents, Affiliates, partners
and stockholders (including Seller, the "Seller Indemnitees") against and in
------------------
respect of any and all:
(a) claims, suits, actions, proceedings (formal and informal),
investigations, judgments, deficiencies, damages, settlements,
liabilities, losses, costs and legal and other expenses arising
out of or based upon (i) any breach of any representation,
warranty, covenant or agreement of Buyer contained in this
Agreement, or in any other agreement executed and delivered by
Buyer hereunder or in connection here with and (ii) the
liabilities assumed by Buyer pursuant to Section 1.4 of this
Agreement; and
(b) claims, suits, actions and proceedings (formal and informal) of
Persons not a party to this Agreement and related investigations,
judgments, deficiencies, damages, settlements, liabilities,
losses, costs and legal and other expenses arising from events
occur ring on and after the Closing Date relating to the
Purchased Assets or the operation or conduct of the
Business except to the extent that same results from the breach
of any representation or warranty of Seller hereunder.
9.3 Defense of Claims. Any Buyer Indemnitee or Seller Indemnitee
-----------------
(the "Indemnified Party") seeking indemnification under this Agreement shall
-----------------
give to the party obligated to provide indemnification to such Indemnified Party
(the "Indemnitor") a
----------
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notice (a "Claim Notice") describing in reasonable detail the facts giving rise
------------
to any claim for indemnification hereunder promptly upon learning of the
existence of such claim. Upon receipt by the Indemnitor of a Claim Notice from
an Indemnified Party with respect to any claim of a third party, such Indemnitor
may assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party and, in such event, shall agree to pay and otherwise discharge
with the Indemnitor's own assets all judgments, deficiencies, damages,
settlements, liabilities, losses, costs and legal and other expenses related
thereto; and the Indemnified Party shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony and attend all
such conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested in connection therewith. If the Indemnitor does not assume
the defense thereof, the Indemnitor shall similarly cooperate with the
Indemnified Party in such defense or prosecution. The Indemnified Party shall
have the right to participate in the defense or prosecution of any lawsuit with
respect to which the Indemnitor has assumed the defense and to employ its own
counsel therein, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Party unless (i)
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the Indemnitor shall not have promptly employed counsel reasonably satisfactory
to such Indemnified Party to take charge of the defense of such action or (ii)
such Indemnified Party shall have reasonably concluded that there exists a
significant conflict of interest with respect to the conduct of such Indemnified
Party's defense by the Indemnitor, in either of which events such fees and
expenses shall be borne by the Indemnitor and the Indemnitor shall not have the
right to direct the defense of any such action on behalf of the Indemnified
Party. The Indemnitor shall have the right, in its sole discretion, to settle
any claim solely for monetary damages for which indemnification has been sought
and is available hereunder, provided that the Indemnitor shall not agree to the
--------
settlement of any claim which constitutes the subject of a Claim Notice which
settlement in the reasonable opinion of the Indemnified Party would have an
adverse continuing effect on the business of the Indemnified Party without the
prior written consent of the Indemnified Party. The Indemnified Party shall give
written notice to the Indemnitor of any proposed settlement of any suit, which
settlement the Indemnitor may, if it shall have assumed the defense of the suit,
reject in its reasonable judgment within 10 days of receipt of such notice.
Notwithstanding the foregoing the Indemnified Party shall have the
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right to pay or settle any suit for which indemnification has been sought and is
available hereunder, provided that, if the defense of such claim shall have been
--------
assumed by the Indemnitor, the Indemni-fied Party shall automatically be deemed
to have waived any right to indemnification hereunder.
9.4 Retention of Assets By Seller. The Seller covenants and agrees
-----------------------------
that during the one-year period beginning on the Closing Date (the "Restricted
----------
Period"), it will maintain ownership, at all times during such period, of at
------
least $1,000,000 of cash or other tangible assets, which cash or other assets
shall free and clear of all Liens, except for such Liens as may be incurred in
the ordinary course of the Seller's business. The Seller also covenants and
agrees that, during the Restricted Period, it will not, without the prior
written consent of Buyer, which consent shall not be unreasonably withheld, (i)
merge with or into or consolidate with any other corporation, (ii) sell, lease,
or otherwise dispose of all or substantially all of its properties or assets,
except that Seller may enter to leases upon fair market terms and Seller may
utilize $1,000,000 of the Closing Date Amount to purchase tangible assets, (iii)
dissolve itself, (iv) file a petition in voluntary bankruptcy or a petition or
answer seeking reorganization or arrangement under
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the Federal or state bankruptcy laws, and (v) be the subject of a filing of a
petition seeking a decree or order adjudicating the Seller a bankrupt or
appointing a receiver or a trustee of the major portion of the property to the
Seller upon the application of any creditor in an insolvency or bankruptcy
proceeding or other creditors' suit.
ARTICLE 10
MISCELLANEOUS
10.1 Bulk Sales Laws. Buyer waives compliance by Seller with any
---------------
applicable bulk sales law and Seller hereby agrees to indemnify buyer from any
liability thereunder.
10.2 Payment of Sales, Use and Similar Taxes. Seller shall be
---------------------------------------
responsible for, and shall pay when due, all taxes (but excluding any income
taxes), of any nature whatsoever, applicable to, or resulting from, the sale and
purchase of the Purchased Assets hereunder.
10.3 Expenses. Each party hereto shall pay its own expenses incident
--------
to the negotiation, preparation and consummation of this Agreement and all other
agreements, instruments and documents executed and delivered by it hereunder or
in connection
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herewith, including all fees and expenses of its or their respective counsel and
accountants, whether or not the transactions contemplated hereby or thereby are
consummated.
10.4 Further Actions. At any time and from time to time after the
---------------
Closing, each party hereto agrees, at its own expense (except as otherwise
provided herein), to take such actions and to execute and deliver such documents
as may be reasonably necessary to effectuate the purposes of this Agreement.
10.5 Survival. The representations, warranties, covenants and
--------
agreements contained in or made pursuant to this Agreement shall survive the
Closing for a period of one year from the Closing Date.
10.6 Entire Agreement; Modification. This Agreement (including
------------------------------
the Schedules and Exhibits hereto) sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all existing
agreements among them concerning such subject matter and may be modified only by
a written instrument duly executed by each party hereto.
10.7 Notices. Any notice given pursuant to this Agreement to any
-------
party hereto shall be deemed to have been duly given when mailed by registered
or certified mail, return receipt requested, or when hand delivered as follows:
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If to Seller or the Stockholders:
c/o Mr. J. Xxxxxxx Xxxx
Medquest Associates, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX. 00000
with a copy to:
Brown, Massey, Xxxxx & XxXxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx XxXxxx, Esq.
If to Buyer:
Rancho Cucamonga Resources, Inc.
c/o Medical Resources, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx & Carnelutti
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
or at such other address as either such party shall from time to time designate
by written notice, in the manner provided herein, to the other party hereto.
All references to days in this Agreement shall be deemed to refer to calendar
days, unless otherwise specified.
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10.8 Waiver. Any waiver must be in writing, and any waiver by any
------
party of a breach of any provision of this Agreement shall not operate as or be
construed to be a waiver of any other breach of that provision or of any breach
of any other provision of this Agreement. The failure of a party to insist upon
strict adherence to any term of this Agreement on one or more occasions will not
be considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement.
10.9 Binding Effect; Assignment. (a) Neither this Agreement nor any
--------------------------
of the rights, interests or obligations hereunder shall be assigned by either of
the parties hereto without the prior written consent of the other party, and any
purported assignment without such consent shall be void.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and assigns.
10.10 Separability. If any provision of this Agreement is invalid,
------------
illegal or unenforceable, such provision shall be ineffective to the extent, but
only to the extent of, such invalidity, illegality or unenforceability, without
invalidating the
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remainder of such provision or the remaining provisions of this Agreement,
unless such a construction would be unreasonable.
10.11 Headings. The headings in this Agreement are solely for
--------
convenience of reference and shall be given no effect in the construction and
interpretation of this Agreement.
10.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.13 Governing Law. This Agreement shall be construed and enforced
-------------
in accordance with the laws of the State of New York, without giving effect to
conflict of laws.
10.14 Incorporation by Reference. The Schedules and Exhibits
--------------------------
attached hereto and the letters referred to herein as having been executed or
delivered concurrently with the execution of this Agreement are an integral part
of this Agreement and are incorporated herein by reference.
10.15 Definitions. As used herein, the following terms shall have
-----------
the meanings herein specified unless the context otherwise requires. Defined
terms in this Agreement shall include
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in the singular number the plural and in the plural number the singular.
"Affiliate" of a Person shall mean any other Person controlling,
---------
controlled by or under common control with such Person.
"Key Employee" shall mean any person who is employed in a management,
------------
executive, supervisory, marketing or sales capacity for another person.
"Market Value" shall mean, with respect to any trading day, the
------------
average of the closing price per share of the MRI Common Stock on the five
consecutive trading days ending on such date. The closing price for each such
day shall be the last sale price regular way or, in case no such sale takes
place on such day, the average of the closing bid and asked prices of such MRI
Common Stock, in either case on The Nasdaq Stock Market or the principal
securities exchange on which the shares of MRI Common Stock are listed or
admitted to trading.
"MRI" shall mean Medical Resources, Inc., a Delaware corporation.
---
"MRI Group Entity" shall mean any entity in which the Buyer, MRI, any
----------------
direct or indirect subsidiary of MRI, or any such
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other entity has a significant direct or indirect equity or financial interest
at any time during the term of this Agreement.
"Person" shall mean and include any individual, partner ship, firm,
------
corporation, association, joint venture, trust or other entity, or any
government or political subdivision or agency, department or instrumentality
thereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the date first written above.
GROVE DIAGNOSTIC IMAGING CENTER, INC.
By:_____________________________
Name:
Title:
________________________________
Stockholder: J. Xxxxxxx Xxxx
________________________________
Stockholder: X.X. Xxxxxxx
RANCHO CUCAMONGA RESOURCES, INC.
By:_____________________________
Name:
Title:
Solely with respect to the issuance of
the Closing Shares and Sections 1.3,
1.8 and 3.1 through 3.3 hereof:
MEDICAL RESOURCES, INC.
By:_____________________________
Name:
Title:
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