AGREEMENT OF SALE OF
PARTNERSHIP INTEREST
December 29, 2000
THIS AGREEMENT OF SALE OF PARTNERSHIP INTEREST (the "Agreement"), dated
December 29, 2000, is by and between HealthCare Imaging Services of ▇▇▇▇▇, Inc.
(the "Seller"), Healthcare Integrated Services, Inc. ("HIS") and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D., and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, M.D.
(collectively the "Buyers").
RECITALS
WHEREAS, the Buyers and Seller are parties to a certain Agreement of
Limited Partnership dated January 31, 1992 (the "Limited Partnership
Agreement"); and
WHEREAS, pursuant to the Limited Partnership Agreement, the Buyers and
Seller formed a limited partnership under the laws of the State of New Jersey,
the name of which is ▇▇▇▇▇ Imaging Associates, L.P. (the "Partnership"); and
WHEREAS, pursuant to the Partnership Agreement, Seller presently owns a
fifty-one (51%) percent interest in the Partnership (the "Seller's Partnership
Interest") while the Buyers presently collectively own the remaining forty-nine
(49%) percent interest of the Partnership (the "Buyers' Partnership Interest");
and
WHEREAS, Seller desires to sell all of Seller's Partnership Interest to
Buyers, and Buyers desire to purchase all of Seller's Partnership Interest, all
under the terms and conditions as hereinafter set forth; and
WHEREAS, HIS and ▇▇▇▇▇▇ are parties to this Agreement solely to the
extent of their being obligated and bound by the terms and conditions as set
forth in Section 10 of this Agreement;
NOW, THEREFORE, in consideration as hereinafter set forth, and other
good and valuable consideration receipt of which is hereby acknowledge, the
parties agree as follows:
Parties and Purpose
1. Buyers now agree to purchase, and Seller now agrees to sell, all of
Seller's Partnership Interest on the terms and for the consideration set forth
in this Agreement.
Transfer of Interest
2. (a) Seller, in consideration of (i) the payment of $1,250,000 (the
"Purchase Price") which is subject to adjustment as provided below, (ii) the
assumption by
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Buyers of all liabilities of the Partnership that are attributable to Seller,
and (iii) the payments contemplated by 3(b) below agrees to transfer to Buyers
all of Seller's right, title, and interest in Seller's Partnership Interest. The
Purchase Price shall be payable as follows:
i. At Closing, by certified check, bank check or wired funds, the sum of
Three Hundred Thirty-Seven Thousand Five Hundred Dollars
($337,500.00)
ii. At Closing, by loan obtained from DVI Financial, upon which loan this
Contract is contingent, Two Hundred Seventy-Five Thousand Dollars
($275,000.00);
iii. By Buyers satisfying the liability owed by HIS to DVI
Financial in the amount of $451,089.60 ("DVI Debt"),
said DVI Debt to be satisfied by the Buyers within
six (6) months of Closing. Until such time as the
Buyers pay the DVI Debt in full;
(1) The Operations Management Agreement between the Partnership and
HealthCare Imaging Services, Inc., dated February 1, 1992 ("Management
Agreement") shall remain in full force and effect;
(2) HIS shall continue to ▇▇▇▇ and collect all patients and third party
payers related to the facility known as ▇▇▇▇▇ MRI as well as all accounts
receivable of ▇▇▇▇▇ MRI, P.A., on a continuing basis; and
(3) HIS shall continue to utilize the proceeds of payments referred to in
Section 2(a)(iii)((2)) above and collected accounts receivable to pay expenses
under the Management Agreement, make all payments to the Buyers as provided
under the Management Agreement, pay itself its 14% management fee and pay the
remaining 51% to Seller and 49% to Buyers. In the event the DVI Debt has not
been paid in full within six (6) months of Closing, all accounts receivable as
of that date shall be utilized by the Seller to pay the DVI Debt and then to
turn over any unused accounts receivable less expenses to Buyer. If there is a
shortfall following the collection of all of the accounts receivable and
payments referred to in this paragraph, Buyers shall remain obligated to pay
same.
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iv. By Buyers executing a Promissory Note to Seller in the amount of
$98,910.40, which note shall provide for an interest rate of 12% per annum and a
lump sum payment of all principal and interest by January 31, 2001.
v. By Promissory Note executed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D., in the amount of
$87,500 which shall be paid in full, without interest, by January 4, 2001.
(b). In addition to the Purchase Price, Buyer shall pay Seller
an amount equal to twenty (20%) percent of the Partnership's gross revenue that
exceeds $400,000 in any fiscal quarter, beginning with the quarter ending March
31, 2001, and continuing for the duration of the covenant not to compete as set
forth in Section 10 of this Agreement. This purchase payment shall be computed
separately with respect to each fiscal quarter, and there shall be no carry
backs or carry forwards with respect to any fiscal quarter. The percentage
payment shall be paid within thirty (30) days after the end of each fiscal
quarter, without notice or demand. In the event the Partnership's gross revenue
fails to exceed $400,000 for a fiscal quarter, Buyer shall serve Seller with a
notice so advising Seller that no payment is due for that quarter. Along with
payment or notice that no payment is due, Buyer shall also submit to Seller a
statement setting forth the amount of gross revenue for the fiscal quarter,
certified as complete and correct by Buyer's principal financial officer.
Buyer's financial records shall be subject to inspection by Seller and Seller's
representatives for verification purposes. For the purposes of this provision,
the Buyer shall calculate the gross revenue in accordance with generally
accepted accounting principles in conformity with the accounting practices
utilized by the Partnership for the fiscal year ending 1999.
(c). The Purchase Price shall be adjusted at Closing by
amounts owed to the Partnership by Seller, representing loans or advances on
profits from the Partnership to Seller.
(d) In the event one or more of the Buyers contracts to sell,
sells or otherwise transfers all or any portion of the Partnership to Sonix
Medical Resources, Inc. for a period of eighteen (18) months after Closing,
Buyers shall pay Seller an additional sum of $175,000 upon closing of any such
sale or transfer.
Closing
3. The closing date shall be on or about December 31, 2000, at the offices
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., at 11:00 a.m. (the "Closing Date") or such other time
and place as the parties agree.
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Allocation of Sale Price
4. The Purchase Price shall be allocated to Seller's Partnership
Interest in Partnership assets as agreed upon by the parties' respective
Certified Public Accountants.
The parties make this allocation with the knowledge and understanding that it
will be used by all parties for income tax purposes.
Responsibility for Profits and Losses
5. Seller shall be allocated, shall be responsible for, and shall
assume all income tax consequences of its pro rata percentage share of all
profits and losses for the period prior to the Closing Date , as provided by the
terms of the Partnership Agreement.
Agreement to Execute Documents
6. Each of the parties agrees to execute and file any and all stipulations,
orders and documents necessary or appropriate to transfer the interests conveyed
by this Agreement.
Assumption of Obligations
7. By the execution and delivery of this Agreement, Buyers expressly
assume all obligations of the Partnership as set forth on the Profit and Loss
and Balance Sheet heretofore prepared by Seller, incurred prior to or following
the Closing in respect to the percentages of interest purchased pursuant to the
terms of this Agreement. This Agreement shall be binding on and inure to the
benefit of the parties to this Agreement and to their respective heirs,
executors, administrators, assigns, and legal representatives.
Continuation of Partnership Business
8. The Buyers shall carry on the business of the Partnership
without any winding up or termination of the Partnership.
Conditions to Closing
9. Subject to Section 2(a) of this Agreement, the obligations of the
parties to close the purchase contemplated by this Agreement shall be
conditioned upon (i) the parties procurement of the release and/or termination
of the Operations Management Agreement by and between the Partnership and
HealthCare Imaging Services, Inc., dated February 1, 1992; (ii) the parties
executing and delivering a Settlement Agreement in the form of Exhibit A hereto;
and (iii) Seller's delivery of UCC-3 termination statement duly executed by DVI
Financial releasing its security interest in the Partnership's accounts
receivable.
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Covenant Not to Compete
10. (a). Except as provided herein, Seller, HIS and ▇▇▇▇▇▇ hereby
agrees that HIS, ▇▇▇▇▇▇ and neither Seller nor its affiliates shall enter into
an agreement or contract with any person or entity wherein Seller provides or
manages magnetic resonance imaging services located within 4 miles of Suite 6
and 8 at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ("Restricted Area") for a
period of four (4) years following the Closing.
(b). The obligations of the parties under this Paragraph 10
supercede and replace any and all prior agreements between the parties,
including, but not limited to, Article X of the Limited Partnership Agreement.
Representations and Warranties by Seller
11. Seller to the best of its knowledge, and excepting any actions
or inactions of Buyer, represents and warrants to Buyer as follows:
(a). Organization, Standing and Qualifications. The
Partnership is a Limited Partnership duly organized, validly existing and in
good standing under the laws of New Jersey. To Seller's knowledge the
Partnership has all requisite power and authority and is entitled to carry on
its business as now being conducted and to own, lease or operate its properties
as in the place where such business is now conducted and such properties are now
owned, leased or operated.
(b). Subsidiaries. The Partnership has no subsidiaries.
The Partnership neither owns nor has any commitment to purchase any equity
securities of any other corporation or any equity interest in any partnership,
joint venture or other enterprise.
(c). Transactions with Certain Persons. Except as set forth on
Schedule "B", the Partnership does not owe any amount to, or have any contract
with or commitment to any of its partners, employees, or consultants (other than
compensation for current services not yet due and payable and reimbursement of
expenses arising in the ordinary course of business), and none of such persons
owe any amount to the Partnership.
(d). Execution, Delivery and Performance of Agreement;
Authority. To Seller's knowledge, neither the execution, delivery or performance
of this Agreement by Seller, with or without the giving of notice or passage of
time, or both, will conflict with, result in a default, right to accelerate or
loss of rights, under, or result in the creation of any lien, charge or
encumbrance which would have a materially adverse effect on any provision of
such Seller's Limited Partnership Agreement or any franchise, note, mortgage,
deed of trust, lease, license, agreement, understanding, law, rule or regulation
or any order, judgment
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or decree to which such Seller or the Partnership is a party or by which any of
them may be bound or affected. The Seller has the full power and authority to
enter into this Agreement and to carry out the transactions contemplated hereby,
and this Agreement constitutes a valid and binding obligation of the Seller,
enforceable in accordance with its terms.
(e). Absence of Undisclosed Liabilities. Except as and to the
extent reflected or reserved against the balance sheet or otherwise disclosed
herein, there are no other debts, liabilities or obligations which would have a
materially adverse effect on the Partnership which occurred or existed on or
before the balance sheet date, (i.e., the date of closing) whether or not then
known, due and payable, including any violation of any federal, state or local
environmental legislation.
(f). Absence of Changes or Events. Except as set forth in
Schedule "C" annexed hereto, since the balance sheet date the Partnership has
conducted its business only in the ordinary course and has not incurred any
obligation or liability, absolute, accrued, contingent or otherwise, whether due
or to become due, except current liabilities for trade or business obligations
incurred in the ordinary course of business and consistently with their prior
practice.
(g). Litigation. Except as set forth in Schedule "D" annexed
hereto, there is no claim, legal action, suit, arbitration, governmental
investigation or other legal or administrative proceeding, or any order, decree
or judgment in progress, pending or in effect, or to the knowledge of Seller
threatened, against or relating to the Partnership, its properties, assets or
business or the transactions contemplated by this Agreement, and the Seller does
not know of any basis for the same. Schedule "D" litigation and any ultimate
liability is the responsibility of Seller. There is no legal action, suit,
arbitration, governmental investigation or other legal or administrative
proceeding, nor any order, decree or judgment in progress, pending or in effect,
or to the knowledge of Seller threatened, against or relating to Seller, in
connection with or relating to the transactions contemplated by this Agreement,
and Seller does not know of any basis for the same.
(h). Compliance with Laws and Other Instruments. Except as set
forth in Schedule "E" annexed hereto, the Partnership has complied in all
material respects with all existing laws, rules, regulations, ordinances,
orders, judgments and decrees, the violation of which would have a materially
adverse effect on its business, properties or operations as presently conducted,
and neither the ownership nor use of its properties nor the conduct of its
business conflicts with the rights of any other person, firm or corporation or
violates, or with or without the giving of notice or the passage of time, or
both, will violate, conflict with, result in a default, right to accelerate or
loss of rights under, any terms or provisions of regulations as presently in
effect, or any lien, encumbrance, mortgage, deed of trust, lease, license,
agreement, franchise, understanding, law, ordinance, rule or regulation, or any
order, judgment or decree to which it is a party or by which it may be bound or
affected,
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which conflict, violation, default, acceleration or loss would have a material
adverse effect on the Partnership's business, properties, or operations as
presently conducted.
(i). Title to Properties. Except as may be specified in
Schedule "F" attached hereto, the Partnership has good and marketable title to
all the properties and assets it owns or uses in its business , including
without limitation, those reflected in its books and records and in the Balance
Sheet. None of such properties and assets are subject to any mortgage, pledge,
lien, charge, security interest, encumbrance, restriction, lease, license,
easement, liability or adverse claim of nature whatsoever, direct or indirect,
whether accrued, absolute, contingent or otherwise, except for:
i. those which are expressly set forth in the Balance Sheet as securing
specific liabilities; or
ii. those securing liabilities and obligations which are disclosed herein
or expressly permitted by the terms hereof; or
iii. those imperfections of title and encumbrances, if any, which
(1) are not substantial in character, amount or extent and do
not materially detract from the value of the properties
subject thereto,
(2) do not interfere with either the present and continued
use of such property or the conduct of normal operations,
and
(3) have arisen only in the ordinary course of business.
All of the material properties and assets owned, leased or used by the
Partnership are in good operating condition and repair, normal wear and tear
excepted, are suitable for the purposes used, are adequate, repairable and
sufficient for all of their current operations and are directly related to the
business of the Partnership.
(j). Schedules. Attached hereto as Schedule "G" is a separate schedule
containing an accurate and complete list of:
i. All property owned by the Partnership or in
which the Partnership has a leasehold or
other interest or which is used by the
Partnership in connection with the operation
of its business, together with a description
of each lease, sublease, license or any
other instrument under which the Partnership
claims or
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holds such leasehold or other interest or
right to the use thereof or pursuant to
which it has assigned, sublet or granted any
rights therein, identifying the parties
thereto, the rental or other payment terms,
expiration date and cancellation and renewal
terms thereof.
ii. As of a date no earlier than June 30, 2000,
all of the Partnership's receivables (which
shall include accounts receivable, loans
receivable and any advances), (together with
detailed information as to each such listed
receivable which has been outstanding for
more than thirty (30) days to be provided at
Closing).
iii. All machinery, tools, equipment, motor vehicles, rolling stock and
other tangible personal property owned, leased or used by the Partnership except
for items having a value of less than One Hundred ($100) Dollars which, in the
aggregate, do not have a total value of more than One Thousand ($1,000) Dollars,
setting forth with respect to all such listed property a summary description of
all leases, liens, claims, encumbrances, charges, restrictions, covenants and
conditions relating thereto, identifying the parties thereto, the rental or
other payment terms, expiration date and cancellation and renewal terms thereof.
iv. All fire, theft, casualty, liability and other insurance policies
insuring the Partnership, specifying with respect to each such policy the name
of the insurer, the risk insured against, the limits of coverage, the deductible
amount (if any), the premium rate and the date through which coverage will
continue by virtue of premiums already paid. Such policies are with reputable
insurers, provide adequate coverage for all normal risks incident to the
Partnership assets, properties and business operations and are in character and
amount at least equivalent to that carried by persons engaged in a business
subject to the same or similar perils or hazards.
v. All agreements providing for the services of an independent contractor
to which the Partnership is a party or by which it is bound.
vi. All loan agreements, indentures, mortgages, pledges, conditional sale
or title retention agreements, security agreements,
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equipment obligations, guarantees, leases or
lease purchase agreements to which the
Partnership is a party or by which it is
bound.
vii. All contracts, agreements and commitments
whether or not fully performed, in receipt
of the issuance, sale or transfer of the
notes, bonds or other securities of the
Partnership or pursuant to which the
Partnership has acquired any substantial
portion of its business or assets.
viii. All contracts, agreements, commitments or
other understanding or arrangements to which
the Partnership is a party or by which it or
any of its property is bound or affected by
excluding:
(1) purchase and commitments made in the
ordinary course of business
involving payments or receipts by
the Partnership of less then One
Hundred ($100) Dollars in any single
case, but not more than One Thousand
($1,000) Dollars in the aggregate;
(2) contracts entered into in the
ordinary course of business
involving payments or receipts by
the Partnership of less than One
Hundred ($100) Dollars in the case
of any single contract but nor more
than One Thousand ($1,000) Dollars
in the aggregate; and
(3) contracts entered into in the
ordinary course of business which
are terminable by the Partnership on
less than thirty (30) days notice
without any penalty or consideration
and involving payments or receipt by
them of less than One Hundred ($100)
Dollars in the case of any single
contract, but not more than One
Thousand ($1,000) Dollars in the
aggregate.
ix. All collective bargaining agreements, employment and consulting
agreements, executive compensation plans, bonus plans, deferred compensation
agreements, employee pension plans or retirement plans, employee stock opinions
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, arrangements or commitments, whether or not
legally binding, including without limitation, holiday, vacation, Christmas and
other bonus
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practices, to which the Partnership is a party or which relates to
the operation of its business.
x. The names and current annual salary rates of
all persons (including independent agents)
and showing separately for each such person
the amounts paid or payable as salary, bonus
payments and any indirect compensation for
the quarter ending June 30, 2000.
All of the contracts, agreements, leases, licenses and commitments required to
be listed on Schedule "G" (other than those which have been fully performed) are
valid and binding, enforceable in accordance with their respective terms, in
full force and effect and, except as otherwise specified in Schedule "G", will
be unaffected by the sale of Partnership interest to Buyer hereunder so that,
after such sale, the Partnership will be entitled to the full benefits thereof.
Except as disclosed in Schedule "G", there is not under any such contract,
agreement, lease, license or commitment any existing default or event which,
after notice or lapse of time, or both would constitute a default or result in a
right to accelerate or loss of rights. None of the Partnership's existing or
completed contracts are subject to re- negotiation with any governmental body
except as specified on Schedule "G". True and complete copies of all such
contracts, agreements, leases, licenses, provider numbers and other documents
listed on Schedule "G" (together with any and all amendments thereto) have been
delivered to Buyers and initialed by General Partners of the Partnership and
identified with a reference to this Section of this Agreement.
k. No Guarantees. None of the obligations or liabilities of the Partnership
are guaranteed by any other person, firm or corporation, nor has the
Partnership guaranteed the obligations or liabilities of any other person, firm
or corporation, except as may be disclosed herein.
l. Receivables. All receivables of the Partnership (including amounts
receivable, loans receivable and advances) which are reflected in the
Balance Sheets, and all such receivables which will have arisen since the date
thereof, shall have arisen only from bona fide transactions in the ordinary
course of business.
m. Service Contracts. To the best of Seller's knowledge, its service
contracts with its vendors have been paid in the ordinary course of
business and are not in material default.
n. Business Description. Exhibit "H" attached hereto contains an
accurate and substantially complete summary description of the Partnership's
business.
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o. Customer and Supplier List. Schedule "I" to be provided at closing and
made part hereof constitutes a full and complete list
of all significant patients, customers, suppliers and vendors. The Partnership
has performed all of the obligations required to be performed by them and are
not in default under any of such agreements.
Counsel
12. The parties to this Agreement represent and warrant that each has
been represented by counsel of its own choice in the negotiations which
proceeded the execution of this Agreement, and each has received independent
legal advice. Each party further represents and warrants that no other party or
agent, of any other party has made any promise, representation or warranty,
express or implied, not contained herein, concerning the subject matter of this
Agreement to induce it to execute this Agreement; and that this instrument was
not executed in reliance on any such promise, representation or warranty.
Expenses
13. Except as to any costs or expenses incurred in connection with the
enforcement or interpretation of this Agreement, each party to this Agreement
shall bear its own costs and attorneys fees in connection with the transfer of
Seller's Partnership Interest to Buyers.
Dispute Resolution
14. Any and all disputes related to the enforcement, interpretation,
validity or scope of this Agreement shall be resolved by the Courts in the State
of New Jersey.
Drafting of Agreement
15. All parties to this Agreement have negotiated and participated in
the drafting and preparation of this Agreement, and it shall not be construed
against any party to this Agreement.
Entire Agreement
16. Subject to the release, Settlement Agreement, and UCC-3 described
in Section 9 of this Agreement, this Agreement contains the entire agreement of
the parties with respect to the transfer of Seller's Partnership Interest and
supersedes all prior representations and agreements. This Agreement may not be
modified in any respect except by a writing signed by each of the parties to
this Agreement. No party to this Agreement has relied upon any representation,
statement of fact or opinion, or any statement except that expressly set forth
in this Agreement.
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Void Provisions
17. In the event any provision of this Agreement is held void or
unenforceable by any court of competent jurisdiction, the remaining provisions
of this Agreement shall have the same force and effect as though the
unenforceable parts had been deleted.
Future Cooperation
18. Each party to this Agreement will, upon the request of any other
party, execute, acknowledge or deliver or cause to be executed, acknowledged or
delivered, such further documents as may be necessary to carry out the intent
and purpose of this Agreement.
Counterpart Execution
19. This Agreement may be executed by the parties in counterpart originals.
Applicable Law
20. This Agreement is entered into the state of New Jersey and is to be
construed in accordance with New Jersey law without regard to conflicts of law.
Survival of Closing
21. All post Closing obligations of the parties shall survive Closing
and shall continue until fully performed or released by the other party.
(Signature Page to Follow)
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EXECUTED on the date first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, M.D., Buyer
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D., Buyer
HealthCare Imaging Services of
▇▇▇▇▇, Inc., Seller
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman &
CEO
HealthCare Integrated Services,
Seller
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually
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