EXHIBIT 2.5
-----------------------------
ASSETS PURCHASE AGREEMENT
DATED AS OF MARCH 16, 1998
AMONG
SYMPHONY DIAGNOSTIC SERVICES NO.1, INC.
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
AND
JERSEY SHORE PORTABLE X-RAY, INC.
-----------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I: SALE AND PURCHASE OF ASSETS...........................................1
1.1 Sale and Purchase of Assets..........................................1
1.2 Liabilities..........................................................2
1.3 Designated Contracts.................................................2
1.4 Accounts Receivable..................................................3
1.5 Employees and Consultants............................................3
ARTICLE II: PURCHASE PRICE.......................................................3
2.1 Determination and Payment of Purchase Price..........................3
2.2 Allocation...........................................................3
ARTICLE III: IHS STOCK............................................................4
3.1 IHS Stock............................................................4
ARTICLE IV: THE CLOSING..........................................................7
4.1 Time and Place of Closing............................................7
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
SHAREHOLDER..................................................................7
5.1 Organization and Standing of the Company.............................7
5.2 Absence of Conflicting Agreements....................................7
5.3 Consents.............................................................8
5.4 Capital Stock........................................................8
5.5 Assets...............................................................8
5.6 Trademarks...........................................................8
5.7 Contracts............................................................8
5.8 Customers...........................................................10
5.9 Financial Statements................................................10
5.10 Fee Schedules and Reimbursement.....................................10
5.11 Material Changes....................................................10
5.12 Licenses and Permits................................................10
5.13 Title, Condition of Personal Property...............................11
5.14 Legal Proceedings...................................................11
5.15 Employees...........................................................11
5.16 Collective Bargaining, Labor Contracts, Employment Practices, Etc...12
5.17 ERISA...............................................................12
5.18 Insurance and Surety Agreements.....................................13
5.19 Relationships.......................................................13
5.20 Absence of Certain Events...........................................13
5.21 Compliance with Laws................................................14
5.22 Finders.............................................................14
5.23 Tax Returns.........................................................15
5.24 Encumbrances Created by this Agreement..............................15
5.25 Subsidiaries and Joint Ventures.....................................15
5.26 Complete Disclosure.................................................15
5.27 Books of Account; Records...........................................15
5.28 Questionable Payments...............................................15
5.29 Environmental Compliance............................................16
5.30 Reimbursement Matters...............................................16
(i)
5.31 Medicare/Medicaid Participation.....................................16
5.32 Power and Authority.................................................16
5.33 Capacity............................................................16
5.34 Binding Effect......................................................16
5.35 Questionnaires......................................................16
ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF SELLER............................17
6.1 Authority...........................................................17
6.2 Binding Effect......................................................17
6.3 Absence of Conflicting Agreements...................................17
6.4 Consents............................................................17
6.5 Ownership of Company Stock..........................................17
ARTICLE VII: REPRESENTATIONS AND WARRANTIES OF BUYER............................17
7.1 Organization and Standing...........................................17
7.2 Power and Authority.................................................17
7.3 Binding Agreement...................................................18
7.4 Absence of Conflicting Agreements...................................18
7.5 Consents............................................................18
7.6 Finders.............................................................18
ARTICLE VIII: INFORMATION AND RECORDS CONCERNING THE COMPANY....................18
8.1 Access to Information and Records before Closing....................18
ARTICLE IX: OBLIGATIONS OF THE PARTIES UNTIL CLOSING............................19
9.1 Conduct of Business Pending Closing.................................19
9.2 Negative Covenants of the Company and its Subsidiaries..............19
9.3 Affirmative Covenants...............................................19
9.4 Pursuit of Consents and Approvals...................................20
9.5 Exclusivity.........................................................20
ARTICLE X: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS..........................20
10.1 Representations and Warranties......................................20
10.2 Performance of Covenants............................................20
10.3 Delivery of Closing Certificate.....................................20
10.4 Opinion of Counsel..................................................21
10.5 Legal Matters.......................................................21
10.6 Authorization Documents.............................................21
10.7 Material Change.....................................................21
10.8 Approvals...........................................................21
10.9 IRS Form 8594.......................................................21
10.10 Insurance...........................................................21
10.11 Good Standing Certificate...........................................21
10.12 ▇▇▇▇ of Sale and Assignment.........................................21
10.13 Regulatory Matters...................................................21
10.14 Title Matters........................................................22
10.15 Leased Property......................................................22
10.16 Sales Tax............................................................22
10.17 Change of Name.......................................................22
10.18 Consents.............................................................22
10.19 Real Property Consents...............................................22
10.20 Nursing Home Meetings................................................22
(ii)
10.21 Patient Volume Summary..............................................22
10.22 Board Approval......................................................22
10.23 Other Documents.....................................................22
ARTICLE XI: CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS.......................22
11.1 Representations and Warranties......................................23
11.2 Performance of Covenants............................................23
11.3 Delivery of Closing Certificate.....................................23
11.4 Opinion of Counsel..................................................23
11.5 Legal Matters.......................................................23
11.6 Other Documents.....................................................23
ARTICLE XII: OBLIGATIONS OF THE PARTIES AFTER CLOSING...........................23
12.1 Survival of Representations and Warranties..........................23
12.2 Indemnification by Shareholder and the Company......................23
12.3 Indemnification by Buyer............................................24
12.4 Control of Defense of Indemnifiable Claims..........................24
12.5 Restrictions........................................................25
12.6 Records.............................................................26
12.7 Customer Transition.................................................26
12.8 Exclusive Use.......................................................26
ARTICLE XIII: TERMINATION.......................................................26
13.1 Termination.........................................................26
13.2 Effect of Termination...............................................26
ARTICLE XIV: CASUALTY, RISK OF LOSS..............................................27
14.1 Casualty, Risk of Loss..............................................27
ARTICLE XV: MISCELLANEOUS.......................................................27
15.1 Costs and Expenses..................................................27
15.2 Performance.........................................................27
15.3 Binding Effect......................................................27
15.4 Effect and Construction of this Agreement...........................27
15.5 Cooperation - Further Assistance....................................27
15.6 Notices.............................................................27
15.7 Waiver, Discharge, Etc..............................................28
15.8 Rights of Persons Not Parties.......................................28
15.9 Governing Law.......................................................28
15.10 Amendments, Supplements, Etc........................................28
15.11 Severability........................................................29
15.12 Counterparts........................................................29
15.13 Arbitration.........................................................29
15.14 Public Announcements................................................29
(iii)
SCHEDULES & EXHIBITS
--------------------
Schedule 1.3 - Designated Contracts
Schedule 5.3 - Consent List of Company
Schedule 5.4 - Capital Stock
Schedule 5.5 - Fixed Assets
Schedule 5.6 - Trademarks
Schedule 5.7 - Contracts
Schedule 5.8 - Customers
Schedule 5.9 - Unaudited Financial Statements
Schedule 5.10 - Fee Schedules
Schedule 5.11 - Material Changes
Schedule 5.12 - Licenses, Permits, Certificates of Need
Schedule 5.13(b) - Leases of Personal Property
Schedule 5.14 - Legal Proceedings
Schedule 5.15 - Employees
Schedule 5.17 - Employment Benefit Plans; COBRA Benefits
Schedule 5.18 - Insurance and Surety Agreements
Schedule 5.19 - Relationships
Schedule 5.20 - Absence of Certain Events
Schedule 5.21 - Compliance with Laws
Schedule 5.23 - Tax Returns
Schedule 5.25 - Subsidiaries, Joint Ventures, etc.
Schedule 5.30 - Reimbursement Matters
Schedule 6.5 - Ownership of Company Stock
Exhibit 5.35 - Questionnaire
Exhibit 10.3 - Closing Certificate of Seller and the Company
Exhibit 10.4 - Opinion of Seller's Counsel
Exhibit 10.12A - ▇▇▇▇ of Sale
Exhibit 10.12B - Assignment and Assumption Agreement
Exhibit 11.3 - Closing Certificate of Buyer
Exhibit 11.4 - Opinion of Buyer's Counsel
(iv)
--------------------------
ASSETS PURCHASE AGREEMENT
--------------------------
This Assets Purchase Agreement (the "Agreement") is made as of the 16th
day of March, 1998, among SYMPHONY DIAGNOSTIC SERVICES NO.1, INC., a California
corporation ("Buyer"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Shareholder" or "Seller"), and
JERSEY SHORE PORTABLE X-RAY, INC., a New Jersey corporation (the "Company").
WHEREAS, Buyer wishes to purchase certain of the Company's assets, and
the Company wishes to sell such assets to Buyer, in accordance with the terms
and conditions hereinafter set forth.
WHEREAS, Shareholder is the sole owner of all of the issued and
outstanding shares of the common stock of the Company and is willing to be bound
by the non-competition provisions of this Agreement and to join in the
representations and warranties of the Company hereunder; and
NOW, THEREFORE, for and in consideration of the foregoing premises and
the covenants and agreements contained in this Agreement, Shareholder, Buyer,
and the Company, intending to be legally bound, agree as follows:
ARTICLE I: SALE AND PURCHASE OF ASSETS
--------------------------------------
1.1 SALE AND PURCHASE OF ASSETS. Subject to the terms and conditions of
this Agreement, at the Closing (as hereinafter defined), Buyer shall acquire
from the Company, and the Company shall sell, assign, transfer and convey to
Buyer, free and clear of all liens, claims and encumbrances, all of the assets
of the Company, including, without limitation, all contract rights, leasehold
interests, fixed and moveable equipment, furnishings, tangible personal
property, inventory and supplies, goodwill, trade names (including the name
"Jersey Shore Portable X-Ray" and any variations thereof), trademarks, patient
records and files, telephone numbers, all customer contracts between the Company
and any other name under which the business of the Company is conducted,
including any affiliate, if any, and the health care facilities that it
services, all of the Company's right, title and interest in and to the business
name "Jersey Shore Portable X-Ray" and any other name under which the business
of the Company is conducted, and, to the extent permitted by law, all permits,
licenses and other governmental approvals, as presently constituted and utilized
in the business of the Company (collectively, the "Assets"), but excluding (i)
all cash, whether on hand or in marketable securities, and accounts receivable
of the Company which specifically exist prior to the Closing Date, (ii)
inventory and supplies disposed of in the ordinary course of business from the
date hereof until Closing, and (iii) all provider agreements and provider
numbers with Medicare, Medicaid, and third party payors. Buyer shall not accept
any assignment of the Company's or Seller's provider agreements, provider
numbers or any assignment of any type or relationship with Medicare, Medicaid or
a third party payor. Seller will change the Company's name to a name other than
Jersey Shore Portable X-Ray and Seller will not change such name to a confusing
similar name. Notwithstanding the foregoing, for a period of up to six (6)
months following the Closing, Seller shall be permitted to utilize the computer
included in the assets in connection with the billing and collection of Seller's
pre-Closing receivables.
1.2 LIABILITIES.
(A) Buyer shall not assume any liabilities or obligations of the
Company. For purposes of this Agreement, the term "Liability" means any claim,
lawsuit, liability, obligation or debt of any kind or nature whatsoever, whether
absolute, accrued, due, direct or indirect, contingent or liquidated, matured or
unmatured, joint or several, whether or not for a sum certain, whether for the
payment of money or for the performance or observance of any obligation or
condition, and whether or not of a type which would be reflected as a liability
on a balance sheet (including, without limitation, federal, state and local
taxes of any nature) in accordance with generally accepted accounting
principles, consistently applied ("GAAP"), including without limitation (i) the
full dollar amount of all of Company's commitments and contingencies over the
remaining life of any leases, contracts or other obligations to which Company is
a party or subject as of the Closing Date; (ii) malpractice claims asserted by
patients or any other tort claims asserted, claims for breach of contract, or
any claims of any kind asserted by patients, former patients, employees of
Company or any other party that are based on acts or omissions occurring on or
before the Closing Date; (iii) amounts due or that may become due to Medicare or
Medicaid or any other health care reimbursement or payment intermediary or any
carrier, nursing home or other facility, or other third party payor on account
of any health care reimbursement recapture, adjustment or overpayment whatsoever
with respect to any period on or prior to the Closing Date ("Excess
Reimbursement Liabilities"); (iv) any accounts payable, or employment or other
taxes and any other obligation or liability of Company to pay money whatsoever;
and (v) accrued but unpaid compensation or other benefits to any of the
Company's employees, agents, consultants or advisers, including accrued
vacation. Following the Closing Date, the Purchase Price (as defined below) will
be subject to reduction to any extent that the Buyer becomes liable for the
payment of any Liability which arises from operation of the Company prior to the
Closing Date.
(B) Notwithstanding the provisions of the immediately preceding
paragraph, on the Closing Date, contingent upon the consummation of the
transactions contemplated hereby, Buyer shall assume those obligations arising
under the Designated Contracts specified pursuant to Section 1.3, below, and
assigned by Company to Buyer, with respect to, and only with respect to,
services to be rendered or goods to be supplied to or benefits to be conferred
upon Buyer solely after the Closing Date. Liabilities and obligations under such
Designated Contracts that have accrued, or the performance of which is due, on
or prior to the Closing Date, and all liabilities and obligations under all
other Contracts or which are in payment or consideration for any excluded
assets, shall remain the sole responsibility of Company and shall be paid or
performed on or prior to the Closing Date.
1.3 DESIGNATED CONTRACTS.
(A) As soon as practicable after the date hereof but in no event
later than the day immediately preceding the Closing Date, Buyer shall deliver
notice in writing to Company designating which, if any, of the Contracts
(defined herein) set forth on Schedule 5.7 will be assigned to and assumed by
Buyer (the "Designated Contracts"). Such notice of designation will be set forth
on Schedule 1.3 to be attached hereto. If within said period of time Buyer fails
to so deliver notice to Company, Buyer will be deemed to have designated none of
the Contracts and Company will remain fully liable thereunder. To the extent
Buyer makes any such designation and subject to the rights of third parties to
any assignment, Company shall at Closing be obligated to assign all of its
right, title and interest under such Contracts to Buyer and Buyer shall assume
the obligations accruing after Closing under such Designated Contracts. The
Company shall bring current, as of the Closing Date, all amounts due under the
Designated Contracts. At the Closing, the Purchase Price shall be reduced by an
amount equal to the aggregate amount due as of the Closing under all of the
Designated Contracts which are assumed by Buyer, and such aggregate withheld
amount shall be divided among and paid directly to the such Designated Contract
vendors in accordance with the amounts owed to each of them.
2
(B) Notwithstanding anything to the contrary contained herein,
Buyer is not assuming and will not be responsible for any liabilities or
obligations under the Designated Contracts incurred on or occurring before the
Closing Date; all such liabilities and obligations remaining the sole and
exclusive responsibility of Company pursuant to Section 1.2 herein and shall be
paid or performed on or prior to the Closing Date.
(C) Immediately after notice of the designation by Buyer of the
Designated Contracts to be assigned by Company, Company will use its best
efforts and shall diligently proceed to obtain any consents of any parties
necessary to permit the assignment of the Designated Contracts. In the event
that any of the Designated Contracts are not assignable, or the parties to such
Designated Contract fail or refuse to consent to any assignment on or before the
Closing Date, Buyer shall have no liability to assume any such Designated
Contracts.
1.4 ACCOUNTS RECEIVABLE. The Assets to be purchased by Buyer shall not
include any accounts receivable of the Company as in existence on the Closing
Date (the "Closing Date Receivables"). The Company and the Shareholder will
retain full responsibility and expense for the collection and administration of
the Closing Date Receivables. In the event that the Buyer should receive payment
of any Closing Date Receivables, the proceeds thereof will be paid over to the
Company within fifteen (15) days after receipt of same by Buyer. Likewise, if
the Company or the Shareholder should receive payment of any accounts receivable
of Buyer which arise out of the operation of the Assets after the Closing Date,
the proceeds thereof will be paid over to Buyer within fifteen (15) days after
receipt of same by the Company or the Shareholder.
1.5 EMPLOYEES AND CONSULTANTS. It is expressly understood and agreed
that Buyer's purchase of the Assets does not involve any undertaking on the part
of Buyer to retain any of the employees or consultants of the Company, although
the Buyer shall have the right to offer employment or engagement to any such
employees or consultants. The Company and Seller shall remain fully responsible
for any severance, benefits, costs or liabilities arising out of the termination
by the Company of any of its employees or consultants. The Company and Seller
shall also remain fully responsible for any benefits, costs or liabilities
incurred or accrued prior to Closing with respect to each employee or consultant
retained by Buyer.
ARTICLE II: PURCHASE PRICE
--------------------------
2.1 DETERMINATION AND PAYMENT OF PURCHASE PRICE. Subject to adjustment
pursuant to Section 2.2 hereof, the aggregate purchase price to be paid by Buyer
to the Company for the Assets (the "Purchase Price") and the aforementioned
non-competition agreement of the Company and Shareholder, shall be FOUR HUNDRED
THOUSAND AND 00/100 DOLLARS ($400,000.00), payable to the Company by delivery of
newly issued shares of the Common Stock, par value $.001, of Integrated Health
Services, Inc. ("IHS"), the parent company of Buyer (the "IHS Stock").
2.2 ALLOCATION. The Purchase Price shall be allocated among the Assets
and non-competition agreement for all accounting, reimbursement, and tax
reporting purposes as follows:
(A) $363,000 - customer lists, contracts, goodwill, trademarks and
tradenames;
(B) $10,000 - non-competition covenants set forth in Article XII;
(C) $23,000 - equipment, materials, furnishings, and inventory; and
3
(D) $4,000 - motor vehicles.
ARTICLE III: IHS STOCK
----------------------
3.1 IHS STOCK. The entire Purchase Price shall be payable by means of
the delivery to the Company of IHS Stock in accordance with the following:
(A) SHARE VALUE. The number of shares of IHS Stock issuable at
Closing pursuant to Section 2.1 shall be calculated based upon a price per share
of such stock equal to the average closing NYSE price of such stock for the
thirty (30) trading day period immediately preceding the date which is two (2)
trading days before the Closing Date.
(B) REGISTRATION RIGHTS. Buyer will use its best efforts to cause
to be prepared, filed and declared effective by the Securities and Exchange
Commission (the "Commission") within ninety (90) days following the Closing
Date, a registration statement for the registration under the Securities Act of
1933 (the "Securities Act") of the IHS Stock issued to Company pursuant to this
Agreement, and Buyer shall maintain the effectiveness of such registration
statement for a period of one (1) year following the date on which it becomes
effective (the "Registration Date"), or until Company shall not own any of the
IHS Stock issued pursuant to this Agreement, whichever shall occur first, in
each case except to the extent that an exemption from registration may be
available.
(C) REGISTRATION EXPENSES. Company shall not be responsible for,
and Buyer shall bear, all of the reasonable expenses of Buyer related to such
registration including, without limitation, the fees and expenses of its counsel
and accountants, all of its other costs, fees and expenses incident to the
preparation, printing, registration and filing under the Securities Act of the
registration statement and all amendments and supplements thereto, the cost of
furnishing copies of each preliminary prospectus, each final prospectus and each
amendment or supplement thereto to underwriters, dealers and other purchasers of
IHS Stock and the costs and expenses (including fees and disbursements of its
counsel) incurred in connection with the qualification of IHS Stock under the
Blue Sky laws of various jurisdictions. Buyer, however, shall not be required to
pay underwriter's or brokerage discounts, commissions or expenses, or to pay any
costs and expenses in excess in the aggregate of $20,000 for Blue Sky
qualifications of the Company's (and any transferee's) IHS Stock, or to pay any
costs or expenses arising out of the Company's or any transferee's failure to
comply with its obligations under this Article III.
(D) RESALE LIMITATIONS. All resales of IHS Stock issued pursuant to
this Agreement shall be effected solely through ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as broker.
(E) REGISTRATION PROCEDURES, ETC. In connection with the
registration rights granted to the Company with respect to the IHS Stock as
provided in this Section 3.1, Buyer covenants and agrees as follows:
(I) At Buyer's expense, Buyer will keep the registration and
qualification under this Section 3.1 effective (and in compliance with the
Securities Act) by such action as may be necessary or appropriate for a period
of one (1) year following the date on which the registration becomes effective,
except to the extent that an exemption from registration may be available. Buyer
will immediately notify the Company, at any time when a prospectus relating to a
registration statement under this Section 3.1 is required to be delivered under
the Securities Act, of the happening of any event known to Buyer as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
4
(II) Buyer shall furnish the Company with such number of
prospectuses as shall reasonably be requested.
(III) Buyer shall take all necessary action which may be
required in qualifying or registering IHS Stock included in a registration
statement for offering and sale under the securities or Blue Sky laws of such
states as reasonably are requested by the Company, provided that Buyer shall not
be obligated to qualify as a foreign corporation or dealer to do business under
the laws of any such jurisdiction.
(IV) The information included or incorporated by reference in
the the registration statement filed pursuant to this Section 3.1 will not, at
the time any such registration statement becomes effective, contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein as necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading or necessary to
correct any statement in any earlier filing of such registration statement or
any amendments thereto. The registration statement will comply in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder. Buyer shall indemnify the holders of IHS Stock to be sold pursuant
to the registration statement, their successors and assigns, and each person, if
any, who controls such holders within the meaning of ss.15 of the Securities Act
or ss.20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), against all
loss, claim, damage expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
to which any of them may become subject under the Securities Act, the Exchange
Act or any other statute, common law or otherwise, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement executed by Buyer or based upon written information
furnished by Buyer filed in any jurisdiction in order to qualify IHS Stock under
the securities laws thereof or filed with the Commission, any state securities
commission or agency, NYSE or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements contained therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to Buyer by the Company expressly for use in such
registration statement, any amendment or supplement thereto or any application,
as the case may be. If any action is brought against the Company or any
controlling person of the Company in respect of which indemnity may be sought
against Buyer pursuant to this subsection 3.1(e)(iv), the Company or such
controlling person shall within thirty (30) days after the receipt thereby of a
summons or complaint, notify Buyer in writing of the institution of such action
and Buyer shall assume the defense of such actions, including the employment and
payment of reasonable fees and expenses of counsel (reasonably satisfactory to
the Company or such controlling person). The Company or such controlling person
shall have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of the Company or
such controlling person unless (A) the employment of such counsel shall have
been authorized in writing by Buyer in connection with the defense of such
action, or (B) Buyer shall not have employed counsel to have charge of the
defense of such action, or (C) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to Buyer (in which case,
Buyer shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties), in any of which events the fees and expenses
of not more than one additional firm of attorneys for the Company and/or such
controlling person shall be borne by Buyer. Except as expressly provided in the
previous sentence, in the event that Buyer shall not previously have assumed the
defenses of any such action or claim, Buyer shall not thereafter be liable to
the Company or such controlling person in investigating, preparing or defending
any such action or claim. Buyer agrees promptly to notify the Company of the
commencement of any litigation or proceedings against Buyer or any of its
officers, directors or controlling persons in connection with the resale of IHS
Stock or in connection with such registration statement.
5
(V) The holders of IHS Stock to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify Buyer, its officers and directors and each person, if
any, who controls Buyer within the meaning of ss.15 of the Securities Act or
ss.20(a) of the Exchange Act against all loss, claim, damage, or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Securities Act, the Exchange Act or any other statute, common
law or otherwise, arising from information furnished by or on behalf of such
holder, or its successors or assigns for specific inclusion in such registration
statement.
(F) NOTICE OF SALE. If the Company desires to transfer all or any
portion of IHS Stock, the Company will deliver written notice to Buyer,
describing in reasonable detail their intention to effect the transfer and the
manner of the proposed transfer. If the transfer is to be pursuant to an
effective registration statement as provided herein, the Company will sell the
IHS Stock in compliance with the disclosure therein and discontinue any offers
and sales thereunder upon notice from Buyer that the registration statement
relating to the IHS Stock being transferred is not "current" until Buyer gives
further notice that offers and sales may be recommenced. In the event of any
such notice from Buyer, Buyer agrees to file expeditiously such amendments to
the registration statement as may be necessary to bring it current during the
period specified in Section 3.1(e) and to give prompt notice to the Company when
the registration statement has again become current. If the Company delivers to
Buyer an opinion of counsel reasonably acceptable to Buyer and its counsel and
to the effect that the proposed transfer of IHS Stock may be made without
registration under the Securities Act, the Company will be entitled to transfer
IHS Stock in accordance with the terms of the notice and opinion of their
counsel.
(G) FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Buyer to take any action pursuant to this Article III that
the Company shall furnish to the Buyer such information regarding themselves,
the IHS Stock held by them, and the intended method of disposition of such
securities as shall be required to effect the registration of their IHS Stock.
In that connection, each transferee of the Company shall be required to
represent to the Buyer that all such information which is given is both complete
and accurate in all material respects. The Company shall deliver to the Buyer a
statement in writing from the beneficial owners of such securities that they
bona fide intend to sell, transfer or otherwise dispose of such securities. Each
transferee will, severally, promptly notify Buyer at any time when a prospectus
relating to a registration statement covering such transferee's shares under
this Section 3.1 is required to be delivered under the Securities Act, of the
happening of any event known to such transferee as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the statements as then existing.
(H) INVESTMENT REPRESENTATIONS. All shares of IHS Stock to be
issued hereunder will be newly issued shares of Buyer. The Company represents
and warrants to Buyer that the IHS Stock being issued hereunder is being
acquired, and will be acquired, by the Company for investment for its own
account and not with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act or the applicable state
securities law; the Company acknowledges that the IHS Stock constitutes
restricted securities under Rule 144 promulgated by the Commission pursuant to
the Securities Act, and may have to be held indefinitely, and the Company agrees
that no shares of IHS Stock may be sold, transferred, assigned, pledged or
otherwise disposed of except pursuant to an effective registration statement or
an exemption from registration under the Securities Act, the rules and
regulations thereunder, and under all applicable state securities laws. The
Company has the knowledge and experience in financial and business matters, is
capable of evaluating the merits and risks of the investment, and is able to
bear the economic risk of such investment. The Company has had the opportunity
to make inquiries of and obtain from representatives and employees of Buyer such
other information about Buyer as they deem necessary in connection with such
investment.
7
(I) LEGEND. It is understood that, prior to sale of any shares of
IHS Stock pursuant to an effective registration pursuant to subsection (b)
above, the certificates evidencing such shares of IHS Stock shall bear the
following (or a similar) legend (in addition to any legends which may be
required in the opinion of Buyer's counsel by the applicable securities laws of
any state), and upon sale of such shares pursuant to such an effective
registration, new certificates shall be issued for the shares sold without such
legends except as otherwise required by law:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES
UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF THE COMPANY'S
COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
(J) CERTAIN TRANSFEREES. Prior to the effective date of
registration of the IHS Stock, no transferee shall transfer any shares of IHS
Stock to any person or entity unless such transferee shall have agreed in
writing to be bound by the provisions applicable to the Company under this
Article III.
ARTICLE IV: THE CLOSING
-----------------------
4.1 TIME AND PLACE OF CLOSING. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place as of 12:00 a.m. on
March 16, 1998, at the offices of Seller's counsel or by facsimile and mail, or
at such other time and place upon which the parties may agree. The date on which
the Closing is held is hereinafter called the "Closing Date."
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
------------------------------------------------------------
SHAREHOLDER
-----------
The Company and the Shareholder hereby represent and warrant with
respect to the Company to Buyer as follows (it being understood that, for the
purposes of this Article V, "Company" shall be deemed to refer collectively to
the Company and its subsidiaries listed on Schedule 5.25, unless the context
requires otherwise):
5.1 ORGANIZATION AND STANDING OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey. Copies of the Company's Articles of Incorporation
and By-Laws, and all amendments thereof to date, have been delivered to Buyer
and are complete and correct. The Company has the power and authority to own the
property and assets now owned by it and to conduct the business presently being
conducted by it. The Company is qualified to do business as a foreign
corporation in each state where the ownership of its assets or the conduct of
its business makes such qualification necessary.
5.2 ABSENCE OF CONFLICTING AGREEMENTS. Neither the execution nor
delivery of this Agreement including all Schedules and Exhibits hereto, or any
of the other instruments and documents required or contemplated hereby and
thereby ("Transaction Documents") by Shareholder and the Company nor the
performance by Shareholder and the Company of the transactions contemplated
hereby and thereby,
7
conflicts with, or constitutes a breach of or a default under (i) the Articles
of Incorporation or By-Laws of the Company; or (ii) any applicable law, rule,
judgment, order, writ, injunction, or decree of any court, currently in effect,
provided that the consents set forth in Schedule 5.3 are obtained prior to the
Closing; or (iii) any applicable rule or regulation of any administrative agency
or other governmental authority currently in effect; or (iv) any agreement,
indenture, contract or instrument to which the Company is now a party or by
which any of the assets of the Company is bound.
5.3 CONSENTS. Except as set forth in Schedule 5.3, no authorization,
consent, approval, license, exemption by, filing or registration with any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary in connection with
the execution, delivery and performance of this Agreement or any of the
Transaction Documents by the Shareholder or the Company.
5.4 CAPITAL STOCK. Schedule 5.4 sets forth a complete list and
description of the authorized capital stock of the Company (the "Company
Stock"), the number of shares issued and outstanding of each class or series of
such capital stock, and the identity of each shareholder of the Company, in each
case indicating the class and number of shares held. No shares of the Company
Stock are held in the treasury of the Company. The Shareholder is the record
owner of all of the Company Stock and all of such stock is duly authorized,
validly issued, and fully paid and non-assessable. On the Closing Date, there
will be no preemptive or first refusal rights to purchase or otherwise acquire
shares of capital stock of the Company pursuant to any provision of law or the
Articles of Incorporation or By-Laws of the Company or by agreement or
otherwise. On the Closing Date, there shall not be outstanding any warrants,
options, or other rights to subscribe for or purchase from the Company any
shares of capital stock of the Company, nor shall there be outstanding any
securities convertible into or exchangeable for such shares.
5.5 ASSETS. As of the Closing, the Assets of the Company will include
all of the tangible and intangible assets of the Company as presently
constituted; other than cash, whether on hand or in any deposit accounts or
certificates of deposit, the Closing Date Receivables, provider agreements and
provider numbers with Medicare, Medicaid and third party payors, and inventory,
supplies and other assets disposed of in the ordinary course of business,
consistent with the prior practice of the business of the Company. Schedule 5.5
sets forth a complete list and description of all fixed assets of the Company,
including but not limited to furniture, fixtures, equipment and motor vehicles.
The Assets are not subject to any liens, claims or encumbrances, except as
identified to and expressly accepted by Buyer hereto.
5.6 TRADEMARKS. Schedule 5.6 sets forth a complete and accurate list of
all trademarks, service marks, or applications for any of the same, copyrights,
and other items of intellectual property that are owned, possessed or used by
the Company. There are no claims or proceedings pending or, to the knowledge of
the Company, overtly threatened against the Company asserting that the use of
any of the aforementioned properties or rights infringes the rights of any other
person, and, to the knowledge of the Company, the Company is not infringing on
the intellectual property rights of any other person. There is nothing which
would prohibit the transaction of business by Buyer or any company designated by
Buyer in the State of New Jersey under the trade name "Jersey Shore Portable
X-Ray".
5.7 CONTRACTS. Schedule 5.7 sets forth a complete and correct list of
all agreements, contracts and commitments of the following type to which the
Company is a party or by which the Company or any of the Company's assets are
bound and as to which the Company has any outstanding material obligations as of
the date hereof (the "Contracts"):
8
(A) each contract or agreement for the employment or retention of,
or collective bargaining, severance or termination agreement with, any director,
officer, employee, consultant, agent or group of employees of the Company;
(B) each profit sharing, thrift, bonus, incentive, deferred
compensation, stock option, stock purchase, severance pay, pension, retirement,
hospitalization, insurance or other similar plan, agreement or arrangement;
(C) each agreement or arrangement for the sale of any of the
Company's assets, properties or rights outside the ordinary course of business
(by sale of assets, sale of stock, merger or otherwise) which is currently in
effect;
(D) each contract currently in effect which contains any provisions
requiring the Company to indemnify or act for, or guarantee the obligation of,
any other person or entity;
(E) each agreement restricting the Company from conducting business
anywhere in the world;
(F) each partnership or joint venture contract or similar
arrangement or agreement which is likely to involve a sharing of profits or
future payments with respect to the Company's business or any portion thereof;
(G) each licensing, distributor, dealer, franchise, sales or
manufacturer's representative, agency or other similar contract, arrangement or
commitment which involves consideration of more than $5,000;
(H) each contract under which the Company performs radiological,
EKG or ultrasound services for any nursing home, healthcare or other facility;
(I) each lease of real property;
(J) each agreement with a nursing home, health care facility or any
other customer with special pricing arrangements;
(K) any other radiologist, cardiologist or other physician's
agreements;
(L) each agreement, consent order, settlement or similar
arrangement with any party, including any Governmental Authority (as defined in
Section 5.23); or
(M) any other agreement not made in the ordinary and normal course
of business which involves consideration of more than $5,000.
Except as indicated on Schedule 5.7, each of the Contracts was entered
into and requires performance in the ordinary course of business and is in full
force and effect. The Company is not in material default under any Contract and
there has not been asserted, either by or against the Company under any
Contract, any written notice of default, set-off or claim of default. To the
knowledge of the Company, the parties to the Contracts other than the Company
are not in material default of any of their respective obligations under the
Contracts, and there has not occurred any event which with the passage of time
or the giving of notice (or both) would constitute a material default or
material breach under any Contract. All
9
amounts payable under the Contracts are, or will at the Closing Date, be on a
current basis. Each Contract with respect to which consent is required by reason
of the transactions contemplated by this Agreement is identified on Schedule
5.7. Neither the Company nor the Shareholder has received notice or has reason
to believe that any of the Contracts will be terminated by any party thereto
after the date hereof.
5.8 CUSTOMERS. Schedule 5.8 sets forth: (i) a complete and correct list
of the name and address of all current customers of the Company; (ii) a complete
and correct list of all contracts that the Company has with each customer; and
(iii) a summary of the patient volume and examinations by customer by month for
the three (3) years ended December 31, 1997. As of the date hereof, the Company
and Shareholder have received no notice that any customer will cancel a contract
or request a change of service.
5.9 FINANCIAL STATEMENTS. The unaudited balance sheets of the Company
for the fiscal years ended December 31, 1996 and December 31, 1997, and the
related statements of operations and stockholders' equity and statements of cash
flows for the years then ended (the "Unaudited Financial Statements"), annexed
hereto as Schedule 5.9, present fairly in all material respects the financial
condition and results of operations of the Company at and for the periods
therein specified.
5.10 FEE SCHEDULES AND REIMBURSEMENT. Schedule 5.10 sets forth (i) a
complete and correct list of the 1997 and 1998 fee schedules of the Company,
including the amounts charged and the Medicare and Medicaid allowable rates;
(ii) a complete and correct list of any and all Medicaid and Medicare refunds
paid by the Company or pending payment by the Company during the last three (3)
fiscal years; and (iii) a complete list of any customers having special rates or
fee arrangements with the Company, together with a list of such rates or
description of such arrangements.
5.11 MATERIAL CHANGES. Except as noted on Schedule 5.11, between the
date of the Unaudited Interim Financial Statements and the date of this
Agreement, there has not been any material adverse change in the condition
(financial or otherwise) of the assets, properties, operations, operating
results, Medicare and Medicaid reimbursement, third party billing and/or direct
billing, customer and employee relations or business prospects of the Company or
any damage or destruction of any of the Company's Assets or its place of
business by fire or other casualty, whether or not covered by insurance, and
during such period of time the Company has conducted its business only in the
ordinary and normal course. Shareholder has identified and communicated to Buyer
all material information with respect to any fact or condition that is
reasonably likely to adversely affect the future prospects (financial or
otherwise) of the Company, other than information concerning the industry
generally in which the Company conducts its business.
5.12 LICENSES AND PERMITS. Schedule 5.12 sets forth a description of
(a) all licenses and other governmental or other regulatory permits or approvals
required for the operation of the Company's business that are now in effect,
including all certificates of occupancy issued with respect to the Company's
business; and (b) each other license, permit, or other authorization that is
necessary for the operation of the Company's business (collectively, the
"Licenses"). Shareholder has delivered to Buyer copies of all of the Licenses.
The Company owns, possesses or has the legal right to use the Licenses, free and
clear of all liens, pledges, claims or other encumbrances of any nature
whatsoever. To the knowledge of the Company, the Company is not in default under
any such License, and the Company has not received any notice of any default or
any other claim or proceeding relating to, any such License. No shareholder,
director or officer, employee or former employee of the Company, or any person,
firm or corporation other than the Company owns or has any proprietary,
financial or other interest, direct or indirect, in whole or in part in any of
the Licenses.
10
5.13 TITLE, CONDITION OF PERSONAL PROPERTY.
(A) The Company has good and marketable title to, or valid and
subsisting leasehold interests in, all of the personal property located at its
place of business or used in connection with the operation of its business,
subject to no mortgage, security interest, pledge, lien, claim, encumbrance or
charge, or restraint on transfer whatsoever other than Permitted Liens (as
defined below) or liens or security interests to be paid or satisfied before
Closing. No other person has any right to the use or possession of any of such
property which is owned and no currently effective financing statement with
respect to such personal property has been filed under the Uniform Commercial
Code in any jurisdiction, and the Company has not signed any such financing
statement or any security agreement authorizing any secured party thereunder to
file any such financing statement. All of such personal property comprising
equipment, improvements, furniture and other tangible personal property in use
by the Company, whether owned or leased, is in good operating condition and
repair, subject to normal wear and tear, and is sufficient to enable the Company
to operate its business in a manner consistent with its operation during the
immediately preceding twelve (12) months.
(B) Except as set forth on Schedule 5.13(b), no tangible personal
property used by the Company in connection with the operation of its business is
subject to a lease, conditional sale, security interest or similar arrangement
except security interests to be paid before Closing. The Company does not lease
any of the Assets.
(C) "Permitted Liens" shall mean: (I) carriers', warehouseman's,
mechanics, materialmen's, repairmen's or other like liens arising in the
ordinary course of business which are (A) not overdue for a period of more than
30 days or (B) which are being contested in good faith and by appropriate
proceedings, provided that if such contest shall continue for more than 30 days,
the amount thereof shall be bonded or properly reserved against at the end of
such 30-day period;
(II) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of like nature
incurred in the ordinary course of business;
(III) rights of lessors under leases set forth on Schedule
5.13(b);
(IV) pledges or deposits in connection with worker's
compensation, unemployment insurance, and other social security legislation; and
(V) liens for taxes not yet due and payable.
5.14 LEGAL PROCEEDINGS. Other than as set forth on Schedule 5.14,
there are no claims, actions, suits or proceedings or arbitrations, either
administrative or judicial, pending, or, to the knowledge of the Company,
overtly threatened against or affecting the Company, or the Company's ability to
consummate the transactions contemplated herein, at law or in equity or
otherwise, before or by any court or governmental agency or body, domestic or
foreign, or before an arbitrator of any kind.
5.15 EMPLOYEES. Schedule 5.15 contains a complete and correct list
of the name, position, and current rate of compensation and any other
compensation arrangements or fringe benefits, and Federal W-2 Forms for the 1997
calendar year, of (i) each employee of the Company, and (ii) any consultant
11
or agent of the Company that are not reflected in any agreement or document
referred to in Schedule 5.7. Except as set forth on Schedule 5.15, the Company
currently does not have any pension, profit sharing, or welfare benefit plan
applicable to any of the employees of the Company. No such employee, consultant
or agent has any vested or unvested retirement benefits or other termination
benefits, except as described on Schedule 5.15.
5.16 COLLECTIVE BARGAINING, LABOR CONTRACTS, EMPLOYMENT PRACTICES,
ETC. During the two years prior to the Closing Date, there has been no material
adverse change in the relationship between the Company and its employees nor any
strike or material labor disturbance by such employees affecting the Company's
business and, to the knowledge of the Company, there is no indication that such
a change, strike or labor disturbance is likely. The Company's employees are not
represented by any labor union or similar organization and the Company has no
reason to believe that there are pending or threatened any activities, the
purpose of which is to achieve such representation, of all or some of the
Company's employees. Except as set forth on Schedule 5.7 or Schedule 5.15, the
Company has no collective bargaining or other labor contracts, employment
contracts, pension, profit-sharing, retirement, insurance, bonus, deferred
compensation or other employee benefit plans, agreements or arrangements with
respect to its employees. The Company is in material compliance with the
requirements prescribed by all Federal, state and local statutes, orders and
governmental rules and regulations applicable to any of the employee benefit
plans, agreements and arrangements identified on Schedule 5.7 and Schedule 5.15,
including, without limitation, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), the Immigration Reform and Control Act, the Worker
Adjustment and Retraining Notification Act of 1988, any such Government
Requirements respecting employment determination, equal opportunity, affirmative
action, employee privacy, wrongful or unlawful termination, workers'
compensation, occupational safety and health requirements, labor management
relations and unemployment insurance, or related matters and there are no
threatened or pending claims relating thereto, in each case. In the event of
termination of employment of an employee of the Company, Buyer will not,
pursuant to any agreement with the Shareholder or the Company or by reason of
any representation made or plan adopted by the Shareholder or the Company prior
to the Closing, be liable to any employee of the Company for so-called
"severance pay", parachute payments or any other similar payments or benefits,
including, without limitation, post-employment healthcare, insurance benefits,
accrued vacation and sick days.
5.17 ERISA.
(A) The Company does not maintain or make contributions to and has
not at any time in the past maintained or made contributions to, any employee
benefit plan which is subject to the minimum funding standards of ERISA. The
Company does not now maintain or make contributions to, and has not at any time
in the past maintained or made contributions to, any multi-employer plan subject
to the terms of the Multi-employer Pension Plan Amendment Act of 1980 (the
"Multi-employer Act").
(B) Schedule 5.17 sets forth each severance agreement, and each
plan, agreement or arrangement, bonus plan, deferred compensation agreement,
employee pension, profit sharing, savings or retirement plan, group life,
health, or accident insurance or other employee benefit plan, agreement,
arrangement or commitment, including, without limitation, any commitment arising
under severance, holiday, vacation, Christmas or other bonus plans (including,
but not limited to, "employee benefit plans", as defined in Section 3(3) of
ERISA maintained by the Company for any employees of the Company, or with
respect to which the Company has liability with respect to any employees of the
Company, or makes or has an obligation to make contributions on behalf of
employees of the Company ("Plans").
12
(C) Schedule 5.17 identifies all employees of the Company on leave
of absence eligible to receive health benefits, as required by the continuation
health care provisions of Section 4980B of the Internal Revenue Code of 1986, as
amended or Section 601 through 608 of ERISA ("COBRA"). Notice of the
availability of COBRA coverage has been provided to all employees of the Company
on leave of absence entitled thereto, and all persons electing such coverage are
being (or have been, if applicable) provided such coverage.
5.18 INSURANCE AND SURETY AGREEMENTS. Schedule 5.18 contains a true and
correct list of: (a) all policies of fire, liability and other forms of
insurance held or owned by the Company (including but not limited to medical
malpractice insurance, and any state sponsored plan or program for worker's
compensation); and (b) all bonds, indemnity agreements and other agreements of
suretyship made for or held by the Company, including a brief description of the
character of the bond or agreement and the name of the surety or indemnifying
party. Schedule 5.18 sets forth for each such insurance policy the name of the
insurer, the amount of coverage, the type of insurance, the policy number, the
annual premium and a brief description of the nature of insurance included under
each such policy and of any claims made thereunder during the past two years.
Such policies are owned by and payable solely to the Company, and said policies
or renewals or replacements thereof will be outstanding and duly in force at the
Closing Date. All insurance policies listed on Schedule 5.18 are in full force
and effect, all premiums due on or before the Closing Date have been or will be
paid on or before the Closing Date, the Company has not been advised by any of
its insurance carriers of an intention to terminate or modify any such policies
other than under circumstances where the Company has received a commitment for a
replacement policy, nor has the Company failed to comply with any of the
material conditions contained in any such policies.
5.19 RELATIONSHIPS. Except as disclosed on Schedule 5.19 hereto,
neither the Company nor Shareholder nor any principal, officer, director,
employee, partner or affiliate of the Company or any controlling shareholder
has, nor at any time within the last two (2) years has had, a material ownership
interest in any business, corporate or otherwise, that is a party to, or in any
property that is the subject of, business relationships or arrangements of any
kind relating to the operation of the Company or its business.
5.20 ABSENCE OF CERTAIN EVENTS. Except as set forth on Schedule 5.20,
since the date of the Unaudited Interim Financial Statements the Company has
not, and from the date of this Agreement through the Closing Date, the Company
will not have:
(A) sold, assigned or transferred any of its assets or properties,
except in the ordinary course of business;
(B) mortgaged, pledged or subjected to any lien, pledge, mortgage,
security interest, conditional sales contract or other encumbrance of any nature
whatsoever, other than a Permitted Lien, any of the Company's assets;
(C) made or suffered any termination of any radiological or EKG
services contract other than in the ordinary course of business;
(D) made or suffered any amendment or termination of any other
contract, commitment, instrument or agreement involving consideration or
liability in excess of $10,000, other than in the ordinary course of business;
(E) except in the ordinary course of business, or otherwise as
necessary to comply with any applicable minimum wage law, increased the salaries
or other compensation of any of its employees, or made any increase in, or any
additions to, other benefits to which any of such employees may be entitled;
13
(F) failed to pay or discharge when due any liabilities, the
failure to pay or discharge which has caused or will cause any actual damage or
give rise to the risk of a loss to the Company in excess of $10,000;
(G) changed any of the accounting principles followed by it or the
methods of applying such principles;
(H) failed to collect, withhold and/or pay to any proper
Governmental Authority, any Taxes (as defined in Section 5.23) required by
applicable law to be so collected, withheld and/or paid;
(I) instituted, settled or agreed to settle any litigation, action
or proceeding before any Governmental Authority relating to it or its property
or received any threat thereof; and
(J) entered into any transaction other than in the ordinary course
of business involving consideration in excess of $10,000.
5.21 COMPLIANCE WITH LAWS.
(A) The Company is in compliance with all Governmental Requirements
(as defined herein). Except for notices of non-compliance as to which the
Company has taken corrective action acceptable to the applicable governmental
agency, and as set forth in Schedule 5.21, the Company has not, within the
period of twelve months preceding the date of this Agreement, received any
written notice that it fails to comply in any material respect with any
applicable Federal, state, local, Medicare, Medicaid or other governmental laws
or ordinances, or any applicable order, rule or regulation of any Federal,
state, local, Medicare, Medicaid or other governmental agency having
jurisdiction over its business ("Governmental Requirements"). The Company shall
report to Buyer, within five (5) business days after receipt thereof, any
written notices that the Company is not in compliance in any material respect
with any of the foregoing.
(B) Without limiting the generality of subsection (a) above, the
Company has at all times complied, and is complying in all respects, with all
federal, state and local environmental laws, rules or regulations applicable to
it, its leased properties, and all other real properties used by it in the
operation of its business, including, but not limited to, the Resource
Conservation and Recovery Act of 1976, as amended, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, the
Federal Water Pollution Control Act, as amended by the Clean Water Act, and
subsequent amendments, the Federal Toxic Substances Control Act, as amended,
with respect to the environmental or healthful state, condition or quality of
any property (collectively "Environmental Laws"). The foregoing representation
and warranty applies to all aspects of the Company's operations and the use and
ownership of the Assets including, but not limited to, the use, handling,
treatment, storage, transportation and disposal of any hazardous, toxic or
infectious waste, material or substance (including medical waste), and to
petroleum products, material or waste, at any other location. No notice from any
Governmental Authority has ever been served upon the Company claiming any
violation of, or addressing any possible non-compliance with respect to, any
Environmental Law.
5.22 FINDERS. No broker or finder has acted for the Shareholder or the
Company in connection with the transactions contemplated by this Agreement, and
no other broker or finder is entitled to any broker's or finder's fee or other
commission in respect thereof based in any way on agreements, understandings or
arrangements with the Shareholder or the Company.
14
5.23 TAX RETURNS.
(A) Except as set forth in Schedule 5.23, (i) all Tax (as defined
below) returns, statements, reports and forms or extensions with respect thereto
required to be filed with any Federal, state, local or other governmental
department or court or other authority having jurisdiction over it
("Governmental Authority") on or before the Closing Date by or on behalf of the
Company, have been or will be timely filed on or before the Closing Date in
accordance in all material respects with all applicable Governmental
Requirements; and (ii) the Company has timely paid all Taxes payable by it.
(B) For purposes of this Agreement, "Tax" means any net income,
gross income, sales, use, franchise, personal, or real property tax.
5.24 ENCUMBRANCES CREATED BY THIS AGREEMENT. The execution and delivery
of this Agreement, or any of the Company's Transaction Documents, does not, and
the consummation of the transactions contemplated hereby or thereby will not,
create any liens or other encumbrances on any of the Company's assets in favor
of third parties.
5.25 SUBSIDIARIES AND JOINT VENTURES. Schedule 5.25 sets forth a
complete list of all subsidiaries, joint ventures and partnerships in which the
Company is the record or beneficial owner of more than ten (10%) percent of the
equity interest. All of the issued and outstanding capital stock of the
subsidiaries listed on Schedule 5.25 hereto is owned of record or beneficially
by the Company or by one of the listed subsidiaries except as listed on Schedule
5.25.
5.26 COMPLETE DISCLOSURE. No representation or warranty by the Company
or the Shareholder in this Agreement or any Exhibit or Schedule referred to
herein and no written statement, certificate or other writing furnished to the
Buyer by or on behalf of the Company or the Shareholder pursuant to this
Agreement, when considered in conjunction with all other such representations,
warranties, schedules, written statements, certificates or other writings
furnished to Buyer by or on behalf of the Company or the Shareholder pursuant to
this Agreement, contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading. To the best of the Company's and the Shareholder's knowledge, there
is no fact which materially and adversely affects or may materially and
adversely affect the business, operations, affairs, condition, properties or
assets of the Company which has not been set forth in this Agreement or the
Schedules or other documents delivered by the Company or the Shareholder in
connection with the transactions contemplated hereby.
5.27 BOOKS OF ACCOUNT; RECORDS. The Company's general ledgers, stock
record books, minute books and other material records relating to the assets,
properties, contracts and outstanding legal obligations of the Company are, in
all material respects, complete and correct, and have been maintained in
accordance with good business practices. All documents furnished to Buyer will
be correct and complete copies.
5.28 QUESTIONABLE PAYMENTS. Neither the Shareholder nor the Company, or
any director, officer, controlling person or employee of the Company, and no
affiliate of Company, (a) has used any corporate funds of the Company to make
any payment to any officer, employee, representative, agent of any government,
or to any political party or official thereof, where such payment either (i) is
unlawful under laws applicable thereto; or (ii) would be unlawful under the
Foreign Corrupt Practices Act of 1977, as amended; or (b) has made or received
an illegal payment, bribe, kickback, political contribution or other similar
questionable payment for any referrals or recommendations or otherwise in
connection with the operation of the Company's business.
15
5.29 ENVIRONMENTAL COMPLIANCE. The Company is in material compliance
with all applicable environmental and related laws, ordinances and governmental
rules and regulations applicable to it, including, but not limited to, the
Resource Conservation and Recovery Act of 1976, as amended, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, the
Federal Water Pollution Control Act, as amended by the Clean Water Act, the
Federal Toxic Substances Control Act, as amended, and all other Federal, state
and local laws, regulations and ordinances with respect to the protection of the
environment. The foregoing representation and warranty applies to all aspects of
the operation of the Company's business including, but not limited to, the use,
handling, treatment, storage, transportation and disposal of any hazardous,
toxic or infectious waste, material or substance.
5.30 REIMBURSEMENT MATTERS. Except as disclosed on Schedule 5.30, (i)
the Company and Seller have not received any notice of recoupment from the
Medicare or Medicaid programs, or any other third party reimbursement source
(inclusive of managed care organizations), (ii) the Shareholder and the Company
are not aware of any basis for the assertion after the Closing Date of any such
recoupment claim against the Company, and (iii) the Seller has not received
notice from any Medicare or Medicaid program or any other third party
reimbursement source (inclusive of managed care organizations) of any pending or
threatened investigations or surveys, and neither the Seller, nor the Company
have any reason to believe that any such investigation or survey is pending,
threatened or imminent.
5.31 MEDICARE/MEDICAID PARTICIPATION. All services provided by the
Company are certified for participation or enrollment in all Medicare and
Medicaid programs, have a current and valid provider contract with the Medicare
and Medicaid programs or other third party reimbursement source (inclusive of
managed care organizations), are in compliance with the conditions of
participation of such programs, and have received all approvals or
qualifications necessary for capital reimbursement.
5.32 POWER AND AUTHORITY. The Company has all requisite corporate power
and authority to execute, deliver and perform this Agreement, and as of the
Closing, the Company will have all requisite corporate power and authority to
execute, deliver and perform the Transaction Documents required to be delivered
by it to the Buyer at the Closing. All action required by Company's Articles of
Incorporation, By-Laws or otherwise, to authorize the execution, delivery and
performance of this Agreement and the Transaction Documents has been taken.
5.33 CAPACITY. As of the Closing, the Shareholder has the full legal
power and capacity to make, execute, deliver and perform this Agreement and the
Transaction Documents required or contemplated hereby or thereby to be executed
or delivered by them at the Closing. Such execution, delivery, performance and
consummation have been made in the exercise of Shareholder's free will and
volition.
5.34 BINDING EFFECT. This Agreement and all Transaction Documents
executed by the Company and Shareholder constitute the legal, valid and binding
obligations of each such party, enforceable against such party in accordance
with their respective terms.
5.35 QUESTIONNAIRES. The healthcare law questionnaire heretofore
delivered to the Company by Buyer (the "Questionnaire") will be attached hereto
as Exhibit 5.35 and will as of the Closing Date have been fully and accurately
completed and will not contain any material misstatement of any fact and will
not omit any fact that would have to be stated in order not to render any
response to such questionnaire materially misleading.
16
ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------------------
The Seller hereby represents and warrants to Buyer as follows:
6.1 AUTHORITY. Seller has the full legal power and authority to make,
execute, deliver and perform this Agreement and the Transaction Documents. Such
execution, delivery, performance and consummation has been duly authorized by
all necessary action, corporate or otherwise, on the part of Seller, and any
necessary consents of holders of indebtedness of Seller have been obtained.
6.2 BINDING EFFECT. This Agreement and all Transaction Documents
executed by Seller constitute the valid and binding obligations of such party,
enforceable against Seller in accordance with their respective terms.
6.3 ABSENCE OF CONFLICTING AGREEMENTS. Neither the execution or
delivery of this Agreement or any of the Transaction Documents by Seller nor the
performance by Seller of the transactions contemplated hereby and thereby
conflicts with, or constitutes a breach of or a default under (i) any law, rule,
judgment, order, writ, injunction, or decree of any court currently in effect
applicable to Seller, or (ii) any rule or regulation of any administrative
agency or other governmental authority currently in effect applicable to Seller,
or (iii) any agreement, indenture, contract or instrument to which such party is
now a party or by which any of the assets of Seller is bound.
6.4 CONSENTS. No authorization, consent, approval, license, exemption
by, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary in connection with the execution, delivery and performance of
this Agreement or any of the Transaction Documents by Seller.
6.5 OWNERSHIP OF COMPANY STOCK. Except as disclosed on Schedule 6.5
hereto, Seller is the lawful record and beneficial owner of all of the Company
Stock shown as owned by Seller in Schedule 5.4, with good and marketable title
thereto, free and clear of all liens and encumbrances, claims and other charges
thereon of any kind. The shares of Company Stock indicated on Schedule 5.4 as
being owned by the Seller constitute all of the issued and outstanding shares of
the capital stock of the Company. On the Closing Date, there shall not be
outstanding any warrants, options, or other rights to subscribe for or purchase
from the Company any shares of capital stock of the Company, nor shall there be
outstanding any securities convertible into or exchangeable for such shares.
ARTICLE VII: REPRESENTATIONS AND WARRANTIES OF BUYER
----------------------------------------------------
Buyer represents and warrants to the Company and the Shareholder as
follows:
7.1 ORGANIZATION AND STANDING. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
7.2 POWER AND AUTHORITY. Buyer has the corporate power and authority to
execute, deliver and perform this Agreement, and as of the Closing, Buyer will
have the corporate power and authority to execute and deliver the Transaction
Documents required to be delivered by it to the Company at the Closing.
17
7.3 BINDING AGREEMENT. This Agreement has been duly executed and
delivered by Buyer. This Agreement is, and when executed and delivered by Buyer
at the Closing each of the Transaction Documents executed by Buyer will be, the
legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms.
7.4 ABSENCE OF CONFLICTING AGREEMENTS. Neither the execution or
delivery of this Agreement or any of the Transaction Documents by Buyer nor the
performance by the Buyer of the transactions contemplated hereby and thereby
conflicts with, or constitutes a breach of or a default under (i) the formation
documents of the Buyer, or (ii) any law, rule, judgment, order, writ,
injunction, or decree of any court currently in effect applicable to Buyer, or
(iii) any rule or regulation of any administrative agency or other governmental
authority currently in effect applicable to Buyer, or (iv) any agreement,
indenture, contract or instrument to which the Buyer is now a party or by which
any of the assets of the Buyer is bound.
7.5 CONSENTS. No authorization, consent, approval, license, exemption
by, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary in connection with the execution, delivery and performance of
this Agreement or any of the Transaction Documents by Buyer.
7.6 FINDERS. No broker or finder has acted for Buyer in connection with
the transactions contemplated by this Agreement, and no other broker or finder
is entitled to any broker's or finder's fee or other commission in respect
thereof based in any way on agreements, understandings or arrangements with the
Buyer.
ARTICLE VIII: INFORMATION AND RECORDS CONCERNING THE COMPANY
------------------------------------------------------------
8.1 ACCESS TO INFORMATION AND RECORDS BEFORE CLOSING. Prior to the
Closing Date, Buyer may make, or cause to be made, such investigation of the
Company's (it being understood that, for the purpose of this Article VIII,
"Company" shall be deemed to refer collectively to the Company and its
subsidiaries listed on Schedule 5.25) financial and legal condition as Buyer
deems necessary or advisable to familiarize itself with the Company and the
Assets and/or matters relating to their history or operation. The Company shall
permit Buyer and its authorized representatives (including legal counsel and
accountants), to have full access to the Company's books and records upon
reasonable notice and during normal business hours, and the Company will
furnish, or cause to be furnished, to Buyer such financial and operating data
and other information and copies of documents with respect to the Company's
products, services, operations and assets as Buyer shall from time to time
reasonably request. The documents to which Buyer shall have access shall
include, but not be limited to, the Company's tax returns and related work
papers since its inception; and the Company shall make, or cause to be made,
such extracts thereof as Buyer or its representatives may request from time to
time to enable Buyer and its representatives to investigate the affairs of the
Company and the accuracy of the representations and warranties made in this
Agreement. The Company shall cause its accountants to cooperate with Buyer and
to disclose the results of audits relating to the Company and to produce the
working papers relating thereto. Without limiting any of the foregoing, it is
agreed that Buyer will have full access to any and all agreements between and
among the previous and current shareholders regarding their ownership of shares
or the management or operation of the Company.
18
ARTICLE IX: OBLIGATIONS OF THE PARTIES UNTIL CLOSING
----------------------------------------------------
9.1 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Closing, the Company and its subsidiaries shall maintain their
existence and shall conduct their business in the customary and ordinary course
of business consistent with past practice.
9.2 NEGATIVE COVENANTS OF THE COMPANY AND ITS SUBSIDIARIES. Without the
prior written approval of Buyer, neither the Company nor any of its subsidiaries
shall, between the date hereof and the Closing:
(A) cause or permit to occur any of the events or occurrences
described in Section 5.20 (Absence of Certain Events) of this Agreement;
(B) dissolve, merge or enter into a share exchange with or into any
other entity;
(C) enter into any contract or agreement with any union or other
collective bargaining representative representing any employees without the
prior written consent of Buyer;
(D) sell off any Assets other than in the ordinary course of
business; or
(E) make any change to their by-laws or articles of incorporation.
9.3 AFFIRMATIVE COVENANTS. Between the date hereof and the Closing, the
Company and each of its subsidiaries shall:
(A) maintain their businesses in substantially the state of repair,
order and condition as on the date hereof, reasonable wear and tear or loss by
casualty excepted;
(B) maintain in full force and effect all Licenses currently in
effect with respect to their businesses unless such License is no longer
necessary for the operation of the Company and its subsidiaries;
(C) maintain in full force and effect the insurance policies and
binders currently in effect, or the replacements thereof, including without
limitation those listed on Schedule 5.18;
(D) utilize their reasonable efforts to preserve intact the present
business organization of the Company and its subsidiaries; keep available the
services of the Company's and its subsidiaries' present employees and agents;
and maintain the Company's relations and goodwill with suppliers, employees,
affiliated medical personnel and any others having business relating to the
Company and its subsidiaries;
(E) maintain all of the books and records in accordance with their
past practices;
(F) comply in all material respects with all provisions of the
Contracts listed in Schedule 5.7 and with any other material agreements that the
Company and its subsidiaries have entered into in the ordinary course of
business since the date of this Agreement, and comply in all material respects
with the provisions of all material laws, rules and regulations applicable to
the Company's and its subsidiaries' businesses;
19
(G) cause to be paid when due, all taxes, assessments and charges
or levies imposed upon them or on any of their properties or which they are
required to withhold and pay over;
(H) promptly advise Buyer in writing of the threat or commencement
against the Company and its subsidiaries of any claim, action, suit or
proceeding, arbitration or investigation or any other event that would
materially adversely affect the operations, properties, assets or prospects of
the Company and its subsidiaries, including, but not limited to the threatened
cancellation of any contract to provide radiological or EKG services; and
(I) notify the Buyer in writing of any event involving the Company
and its subsidiaries which has had or may be reasonably expected to have a
material adverse effect on the business or financial condition of the Company
and its subsidiaries or may involve the loss of contracts with any of the
Company's or its subsidiaries' customers.
9.4 PURSUIT OF CONSENTS AND APPROVALS. Prior to the Closing, Buyer
shall use its reasonable efforts to obtain all consents and approvals of
governmental agencies and all other parties necessary for the lawful
consummation of the transactions contemplated hereby and the lawful use,
occupancy and enjoyment of the Company's and its subsidiaries' businesses in
accordance herewith ("Required Approvals"). The Company and its subsidiaries
shall cooperate with and use their reasonable efforts to assist Buyer in
obtaining all such approvals.
9.5 EXCLUSIVITY. Until the earlier of Closing or the termination of
this Agreement pursuant to Section 13.1, neither the Company nor Shareholder,
nor any of their respective affiliates, shall enter into any agreement,
commitment or understanding with respect to, or engage in any discussions or
negotiations directly or indirectly with, or encourage or respond to any
solicitations from, any other party with respect to the sale of the Assets, or
in respect of the sale of any shares of capital stock in the Company.
ARTICLE X: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
------------------------------------------------------
Buyer's obligations to consummate the purchase of the Assets is subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions, any one or more of which may be waived by Buyer in writing. Upon
failure of any of the following conditions, Buyer may terminate this Agreement
pursuant to and in accordance with Article XIII herein.
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company and the Shareholder made pursuant to this Agreement, shall be
true and correct in all material respects at and as of the Closing Date, as
though such representations and warranties were made at and as of such time,
except to the extent affected by the transactions herein contemplated.
10.2 PERFORMANCE OF COVENANTS. The Shareholder and the Company shall
have performed or complied in all material respects with their respective
agreements and covenants required by this Agreement to be performed or complied
with by it prior to or at the Closing.
10.3 DELIVERY OF CLOSING CERTIFICATE. The Shareholder and the Company
shall have executed and delivered to Buyer a certificate of its president, dated
the Closing Date, upon which Buyer may rely, certifying that the conditions
contemplated by Sections 10.1 and 10.2 applicable to it have been satisfied.
20
10.4 OPINION OF COUNSEL. The Company shall have delivered to Buyer an
opinion, dated the Closing Date, of its counsel, in substantially the form
attached hereto as Exhibit 10.4. Said opinion shall be addressed to and may be
relied upon by Buyer and its counsel.
10.5 LEGAL MATTERS. No preliminary or permanent injunction or other
order (including a temporary restraining order) of any governmental authority
which prevents the consummation of the transactions contemplated by this
Agreement shall have been issued and remain in effect.
10.6 AUTHORIZATION DOCUMENTS. Buyer shall have received a certificate
of the Secretary or other officer of the Company certifying as of the Closing
Date a copy of Resolutions of the Company's Board of Directors authorizing its
execution and full performance of the Transaction Documents and the incumbency
of its respective officers.
10.7 MATERIAL CHANGE. Since the date of the Unaudited Interim Financial
Statements, there shall not have been any material adverse changes in the
condition (financial or otherwise) of the assets, properties, operations,
operating results, Medicare and Medicaid reimbursement, third party billing
and/or direct billing, customer and employee relations or business prospects of
the Company.
10.8 APPROVALS.
(A) The consent or approval of all persons necessary for the
consummation of the transactions contemplated hereby shall have been granted,
including without limitation, the Required Approvals;
(B) None of the foregoing consents or approvals (i) shall have been
conditioned upon the modification, cancellation or termination of any material
lease, contract, commitment, agreement, license, easement, right or other
authorization with respect to the Company's business, other than as disclosed or
approved hereunder, or (ii) shall impose on the Buyer any material condition or
provision or requirement with respect to the Company's business or its operation
that is more restrictive than or different from the conditions imposed upon such
operation prior to Closing.
10.9 IRS FORM 8594. The Company shall have executed and delivered to
Buyer IRS Form 8594 reflecting the allocation of the Purchase Price in
accordance with Section 2.2.
10.10 INSURANCE. If the Company's existing general liability coverage
is not on an "occurrence" basis, then the Company shall have paid for and
delivered to Buyer a tail policy with respect to liability insurance coverage
satisfactory to Buyer, which policy shall name Buyer as an additional insured.
10.11 GOOD STANDING CERTIFICATE. The Company shall have delivered to
Buyer a good standing certificate issued by the New Jersey Secretary of State
with respect to the Company, dated not more than thirty (30) days prior to the
Closing Date.
10.12 ▇▇▇▇ OF SALE AND ASSIGNMENT. The Company shall have executed and
delivered to Buyer the ▇▇▇▇ of Sale and the Assignment and Assumption Agreement
substantially in the form of Exhibit 10.12A and 10.12B, respectively.
10.13 REGULATORY MATTERS. Company shall have provided to Buyer all
licenses, permits, and other regulatory materials pertaining to the Company's
operations as shall have been reasonably requested by Buyer.
21
10.14 TITLE MATTERS. Company and Seller shall have furnished all
recorded title documents, mortgages, liens, and other matters affecting title to
the Assets. vehicles previously leased by the Company in connection with the
Company's business.
10.16 SALES TAX. Seller shall have paid all sales tax for motor
vehicles and equipment, if applicable.
10.17 CHANGE OF NAME. The Company shall have taken such reasonable
steps as Buyer shall have requested to change its name so as not to include any
trade names or service names included in the Assets.
10.18 CONSENTS. Buyer shall have received the written consent to
assignment from each of those nursing homes, retirement facilities or other
healthcare facilities with whom the Company or its subsidiaries has a
radiological or EKG services contract as listed on Schedule 5.7(h), where such
consent is required.
10.19 REAL PROPERTY CONSENTS. The Company shall have used its best
efforts to obtain the written consent to assignment of each landlord with whom
the Company or any of its subsidiaries has a lease of real property which, by
its terms, requires consent, and the written consent of such landlords shall
have been received by the Buyer. Alternatively, the Company shall have delivered
a waiver from each such landlord of any provision contained in any of such
leases which would require the landlord's consent upon any assignment of the
lease. Buyer shall have received notice from the Company by the Closing Date,
identifying any landlord that has not given any necessary consent as of such
date.
10.20 NURSING HOME MEETINGS. The Buyer shall have had personal meetings
with the respective Administrators and Directors of Nurses of Bayview
Convalescent Center, Country Manor and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, accompanied by
Shareholder, at which meetings the said Administrators and Directors of Nurses
shall have confirmed their intention to utilize the Buyer's mobile x-ray and EKG
services as their exclusive mobile x-ray and EKG provider following Closing.
10.21 PATIENT VOLUME SUMMARY. Company shall have provided Buyer a true
and correct summary of the x-ray and EKG patient volume and examinations for
each of its customers by month for the three years ended December 31, 1997.
10.22 BOARD APPROVAL. Buyer will have received all necessary Board of
Director approvals.
10.23 OTHER DOCUMENTS. Shareholder and the Company shall have furnished
Buyer with all other documents, certificates and other instruments required to
be furnished to Buyer by Shareholder and the Company pursuant to the terms
hereof.
ARTICLE XI: CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
---------------------------------------------------------
The Company's obligation to consummate the sale of the Assets is
subject to the fulfillment, prior to or at the Closing, of each of the following
conditions, any one or more of which may be waived by Seller in writing. Upon
failure of any of the following conditions, Seller may terminate this Agreement
pursuant to and in accordance with Article XIII herein.
22
11.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer made pursuant to this Agreement, shall be true in all material respects
at and as of the Closing Date, as though such representations and warranties
were made at and as of such time, except to the extent affected by the
transactions herein contemplated.
11.2 PERFORMANCE OF COVENANTS. Buyer shall have performed or complied
in all material respects with each of its agreements and covenants required by
this Agreement to be performed or complied with by it prior to or at the
Closing.
11.3 DELIVERY OF CLOSING CERTIFICATE. Buyer shall have delivered to the
Company a certificate of a senior vice president of Buyer dated the Closing Date
upon which the Company can rely, certifying that the statements made in Sections
11.1 and 11.2 are true, correct and complete as of the Closing Date.
11.4 OPINION OF COUNSEL. Buyer shall have delivered to the Company an
opinion, dated the Closing Date, of Blass & ▇▇▇▇▇▇, Esqs., counsel for Buyer, in
the form attached as Exhibit 11.4.
11.5 LEGAL MATTERS. No preliminary or permanent injunction or other
order (including a temporary restraining order) of any governmental authority
which prevents the consummation of the transactions contemplated by this
Agreement shall have been issued and remain in effect.
11.6 OTHER DOCUMENTS. Buyer shall have furnished the Company with all
documents, certificates and other instruments required to be furnished to the
Company by Buyer pursuant to the terms hereof.
ARTICLE XII: OBLIGATIONS OF THE PARTIES AFTER CLOSING
-----------------------------------------------------
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company and Shareholder set forth in this Agreement or in
any Schedule, certificate, document or list delivered by any such party pursuant
hereto shall survive the Closing. Notwithstanding any investigation conducted
before or after the Closing or the decision of any party to consummate the
Closing, each party hereto shall be entitled to rely and is hereby declared to
have reasonably relied upon the representations and warranties of the other
party.
12.2 INDEMNIFICATION BY SHAREHOLDER AND THE COMPANY. The Shareholder
and the Company shall indemnify jointly and severally and defend Buyer and hold
it harmless against and with respect to any and all damage, loss, liability,
deficiency, cost and expense (including, without limitation, reasonable
attorney's fees and expenses) (all of the foregoing hereinafter collectively
referred to as "Loss") resulting from:
(A) any inaccuracy in any representation or certification, or
breach of any warranty, made by the Shareholder or the Company in this Agreement
or any Transaction Document;
(B) the breach of any covenant or undertaking by the Shareholder or
the Company contained in this Agreement which survives the Closing and is not
waived by Buyer at or prior to the Closing;
23
(C) ownership or operation of the Company or its business or assets
prior to the Closing Date, including, without limitation, (i) any Excess
Reimbursement Liabilities (as defined in Section 1.2); (ii) any Loss arising out
of any bulk transfer act (whether relating to liabilities in general or taxes or
otherwise; (iii) any Taxes resulting from the operation of the business of the
Company or ownership of any of the Assets for any period ending on or before the
Closing Date; (iv) any Loss arising out of the noncompliance of the Company with
COBRA or any like statute; (v) any claim of the type that would be covered by a
standard liability insurance policy, including, without limitation, professional
liability, malpractice, general liability, automobile liability, workers'
compensation and/or employer's liability insurance, arising out of the operation
of the Company's business prior to the Closing Date, including payments of any
deductibles applicable to the aforesaid policies; and (vi) any and all actions,
suits, proceedings, demands, assessments, judgments, settlements (to the extent
approved by the Company, such approval not to be unreasonably withheld, delayed
or conditioned), costs and legal expenses incident to any of the foregoing.
Without limiting the foregoing, the Company and Shareholder hereby
represent and warrant to Buyer that they have complied with any and all bulk
transfer act or similar procedures applicable to the transactions herein
contemplated.
12.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and defend
Shareholder and the Company and hold them harmless against and with respect to
any and all Loss occurring or suffered resulting from:
(A) any inaccuracy in any representation or certification, or
breach of any warranty, made by the Buyer in this Agreement or any Transaction
Document;
(B) the breach of any covenant or undertaking by Buyer which
survives the Closing and is not waived by Shareholder or the Company at or prior
to the Closing;
(C) operation of the business of the Company or Assets on and after
the Closing Date.
12.4 CONTROL OF DEFENSE OF INDEMNIFIABLE CLAIMS.
(A) Buyer shall give Shareholder prompt written notice of the claim
for which it seeks indemnification. Failure of the Buyer to give such prompt
notice shall not relieve the Shareholder of her indemnification obligation,
provided that such indemnification obligation shall be reduced by any damages
suffered by Shareholder resulting from a failure to give prompt notice
hereunder. The Shareholder shall be entitled to participate in the defense of
such claim. If at any time the Buyer acknowledges in writing that the claim is
fully indemnifiable under this Agreement, it shall have the right to assume
total control of the defense of such claim at its own expense. If the
Shareholder does not assume total control of the defense of any such claim, the
Buyer agrees not to settle such claim without the written consent of the
Shareholder, which consent shall not be unreasonably withheld. Nothing contained
in this Section 12.4 shall prevent either party from assuming total control of
the defense and/or settling any claim against it for which indemnification is
not sought under this Agreement.
(B) The Shareholder and the Company shall give Buyer prompt written
notice of the claim for which they seek indemnification. Failure of the
Shareholder and the Company to give such prompt notice shall not relieve the
Buyer of its indemnification obligation, provided that such indemnification
obligation shall be reduced by any damages suffered by Buyer resulting from a
failure to
24
give prompt notice hereunder. The Buyer shall be entitled to participate in the
defense of such claim. If at any time the Shareholder and the Company
acknowledge in writing that the claim is fully indemnifiable under this
Agreement, they shall have the right to assume total control of the defense of
such claim at their own expense. If the Buyer does not assume total control of
the defense of any such claim, the Shareholder and the Company agree not to
settle such claim without the written consent of the Buyer, which consent shall
not be unreasonably withheld. Nothing contained in this Section 12.4 shall
prevent either party from assuming total control of the defense and/or settling
any claim against it for which indemnification is not sought under this
Agreement.
(C) Notwithstanding anything to the contrary contained in this
Agreement, if there shall be any claim for Excess Reimbursement Liabilities with
respect to which Buyer shall be seeking indemnification, Buyer will have the
sole right to contest or appeal such claim, using at least the same standard of
care as it would apply to contests or appeals with respect to reimbursement
liabilities in general. Buyer may, in its sole and absolute discretion, at any
time discontinue any such contest or appeal or enter into a settlement with
respect thereto prior to the final determination thereof (a "Final
Determination"); provided, however, that if it intends to discontinue or settle
any such appeal or contest prior to Final Determination, then it must provide
the Shareholder with reasonable prior written notice of such intent and of the
current status of the appeal or contest or proposed settlement, and upon request
of the Shareholder, Buyer shall permit the Company and the Shareholder, as the
indemnifying parties, to thereafter control (without the right to settle the
same unless Buyer shall consent to such settlement, which consent shall not
unreasonably be withheld) the contest and appeal of such Excess Reimbursement
Liabilities claim on behalf of Buyer; it being understood, however, that the
Company and the Shareholder shall continue to be obligated to indemnify Buyer
for any Excess Reimbursement Liabilities unless the Buyer shall, in its sole
discretion, elect not to permit the Company and the Shareholder to control the
contest and appeal of any such Excess Reimbursement Liabilities for which the
Shareholder has requested control in accordance with the foregoing.
12.5 RESTRICTIONS.
(A) From and after the Closing Date, neither the Company nor the
Shareholder shall disclose, directly or indirectly, to any person outside of
Buyer's employ without the express authorization of the Buyer, any patient
lists, customer lists, pricing strategies, customer files, or patient files and
records of the Company, any proprietary data or trade secrets owned by the
Company or any financial or other information about the Company not then in the
public domain; provided, however, that Shareholder shall be permitted to make
such disclosures as may be required by law or by a court or governmental
authority.
(B) After the Closing Date, neither the Company nor the Shareholder
shall engage or participate in any effort or act to induce any of the customers,
physicians, suppliers, associates, employees or independent contractors of the
Company to cease doing business, or their association or employment, with the
Company.
(C) For a period of three (3) years following the Closing Date,
neither the Company nor the Shareholder shall, directly or indirectly for, or on
behalf of themselves or any other person, firm, entity or other enterprise, be
employed by, be a director or manager of, act as a consultant for, be a partner
in, have a proprietary interest in, give advice to, loan money to or otherwise
associate with, any person, enterprise, partnership, association, corporation,
joint venture or other entity of any type, licensed or unlicensed, which is
engaged in or provides mobile radiological, EKG or mobile medical diagnostic
services or in any way competes with the Buyer or its subsidiaries or IHS or its
subsidiaries in the State of New Jersey.
25
(D) The Shareholder and the Company acknowledge that the
restrictions contained in this Section 12.5 are reasonable and necessary to
protect the legitimate business interests of Buyer and that any violation
thereof by any of them would result in irreparable harm to Buyer. Accordingly,
Shareholder agrees that upon the violation by any of them of any of the
restrictions contained in this Section 12.5, Buyer shall be entitled to obtain
from any court of competent jurisdiction a preliminary and permanent injunction
as well as any other relief provided at law or equity, under this Agreement or
otherwise. In the event any of the foregoing restrictions are adjudged
unreasonable in any proceeding, then the parties agree that the period of time
or the scope of such restrictions (or both) shall be adjusted in such a manner
or for such a time (or both) as is adjudged to be reasonable.
12.6 RECORDS. On the Closing Date, the Company shall deliver, or cause
to be delivered, to Buyer all records and files not then in Buyer's possession
relating to the operations of the Company, including without limitation x-ray
films, EKG tracings, radiology and cardiology reports, physician orders,
customer marketing and advertising information and personnel records.
12.7 CUSTOMER TRANSITION. Upon Closing, the Company and the Shareholder
will join in signing a letter to the Company's customers announcing the transfer
of the Company's business to the Buyer, the form of such letter to be mutually
satisfactory to the Shareholder, the Company, and the Buyer. The Shareholder
shall be available to accompany representatives of the Buyer in visiting or
otherwise contacting customers of the Company to discuss the transition of their
existing service agreements to the Buyer. In addition, the Shareholder will be
available for a period of six (6) months following the Closing Date to answer
questions regarding such transaction.
12.8 EXCLUSIVE USE. Following Closing, Bayview Convalescent Center,
Country Manor and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ shall utilize the Buyer's mobile x-ray and
EKG services as their exclusive mobile x-ray and EKG provider.
ARTICLE XIII: TERMINATION
-------------------------
13.1 TERMINATION. This Agreement may be terminated at any time at or
prior to the Closing by:
(A) Buyer, if any condition precedent to Buyer's obligations
hereunder set forth in Article X hereof has not been satisfied by the Closing
Date or pursuant to Section 14.1 if any portion of the Assets is damaged or
destroyed as a result of fire, other casualty or for any reason whatsoever;
(B) the Company, if any condition precedent to Company's
obligations hereunder set forth in Article XI hereof has not been satisfied by
the Closing Date; or
(C) the mutual consent of Buyer and the Company.
13.2 EFFECT OF TERMINATION. If a party terminates this Agreement
because one of its conditions precedent has not been fulfilled, or if this
Agreement is terminated by mutual consent, or if it is terminated pursuant to
Section 14.1, this Agreement shall become null and void without any liability of
any party to the other; provided, however, that if such termination is by reason
of the breach by any party of any of its representations, warranties or
obligations under this Agreement, the other party shall be entitled to be
indemnified for any Losses incurred by it by reason thereof in accordance with
Article XII hereof (and for such purposes such Article XII shall survive the
termination of this Agreement). Further, nothing in this Section 13.2 shall
affect Buyer's right to specific performance of the obligations of the Company
and Shareholder at Closing hereunder.
26
ARTICLE XIV: CASUALTY, RISK OF LOSS
-----------------------------------
14.1 CASUALTY, RISK OF LOSS. The Company and Shareholder shall bear the
risk of all loss or damage to any of the Assets from all causes which occur
prior to the Closing. If at any time prior to the Closing any portion of the
Assets is damaged or destroyed as a result of fire, other casualty or for any
reason whatsoever, the Company and Shareholder shall immediately give notice
thereof to Buyer. Buyer shall have the right, in its sole and absolute
discretion, within ten (10) days of receipt of such notice, to (1) elect not to
proceed with the Closing and terminate this Agreement, or (2) proceed to Closing
and consummate the transactions contemplated hereby and receive any and all
insurance proceeds received or receivable by Shareholder or the Company on
account of any such casualty. Nothing contained in this Section 14.1 shall limit
or adversely affect the right of Buyer to receive indemnification for any Losses
incurred by either of them by reason of any breach by Shareholder or the Company
of any representation, warranty or obligation under this Agreement in accordance
with Section 12.2 hereof (and for such purposes such Section 12.2 shall survive
the termination of this Agreement).
ARTICLE XV: MISCELLANEOUS
-------------------------
15.1 COSTS AND EXPENSES. Except as expressly otherwise provided in this
Agreement, Buyer, Shareholder and the Company shall bear their own costs and
expenses in connection with this Agreement and the transactions contemplated
hereby; provided, however, no such costs and expenses shall be charged to the
Assets.
15.2 PERFORMANCE. In the event of a breach by any party of its
obligations hereunder, the other party shall have the right, in addition to any
other remedies which may be available, to obtain specific performance of the
terms of this Agreement, and, to the extent allowed or not prohibited by
applicable law, the breaching party hereby waives the defense that there may be
an adequate remedy at law. Should any party default in its performance, or other
remedy, the prevailing party shall be entitled to its reasonable attorneys'
fees.
15.3 BINDING EFFECT. This Agreement binds and inures to the benefit of
each party hereto and its successors and proper assigns.
15.4 EFFECT AND CONSTRUCTION OF THIS AGREEMENT. This Agreement and the
Exhibits and Schedules hereto embody the entire agreement and understanding of
the parties and supersede any and all prior agreements, arrangements and
understandings relating to matters provided for herein. The captions used herein
are for convenience only and shall not control or affect the meaning or
construction of the provisions of this Agreement. This Agreement may be executed
in one or more counterparts, and all such counterparts shall constitute one and
the same instrument.
15.5 COOPERATION - FURTHER ASSISTANCE. From time to time, as and when
reasonably requested by any party hereto after the Closing, the other parties
will (at the expense of the requesting party) execute and deliver, or cause to
be executed and delivered, all such documents, instruments and consents and will
use reasonable efforts to take all such action as may be reasonably requested or
necessary to carry out the intent and purposes of this Agreement, and to vest in
Buyer good title to, possession of and control of all of the Assets.
15.6 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed to be properly given or made when personally
delivered to the party or parties entitled to receive the notice or within five
(5) days when sent by certified or registered mail, postage prepaid, or on the
next business day if sent for next day delivery by a nationally recognized
overnight courier, in either case, properly addressed to the party or parties
entitled to receive such notice at the address stated below:
27
If to the Company or the Shareholder: ▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Jersey Shore Portable X-Ray, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
Toms River Corporate Center
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Buyer: Symphony Diagnostic Services No.1, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President
with a copy to: Integrated Health Services, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Blass & ▇▇▇▇▇▇, Esqs.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
15.7 WAIVER, DISCHARGE, ETC. This Agreement shall not be released,
discharged, abandoned, changed or modified in any manner, except by an
instrument in writing executed by or on behalf of each of the parties hereto by
their duly authorized officer or representative. The failure of any party to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
15.8 RIGHTS OF PERSONS NOT PARTIES. Nothing contained in this Agreement
shall be deemed to create rights in persons not parties hereto, other than the
successors and proper assigns of the parties hereto.
15.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey, disregarding any rules
relating to the choice or conflict of laws.
15.10 AMENDMENTS, SUPPLEMENTS, ETC. At any time before or after the
execution and delivery of this Agreement by the parties hereto, this Agreement
may be amended or supplemented by additional agreements, articles or
certificates, as may be mutually determined by the parties to be necessary,
appropriate or desirable to further the purposes of this Agreement, to clarify
the intention of the parties, or to add to or to modify the covenants, terms or
conditions hereof or thereof. The parties hereto shall make such technical
changes to this Agreement, not inconsistent with the purposes hereof, as may be
required to effect or facilitate any governmental approval or acceptance of this
Agreement or to effect or facilitate any filing or recording required for the
consummation of any portion of the transactions contemplated hereby. This
Agreement may not be amended except by an instrument in writing signed by each
of the parties.
28
15.11 SEVERABILITY. Any provision, or distinguishable portion of any
provision, of this Agreement which is determined in any judicial or
administrative proceeding to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. It
is the intention of the parties that if any provision of Section 12.5 shall be
determined to be overly broad in any respect, then it should be enforceable to
the maximum extent permissible under the law. To the extent permitted by
applicable law, the parties waive any provision of law which renders a provision
hereof prohibited or unenforceable in any respect.
15.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
15.13 ARBITRATION. Any dispute or controversy between any of the
parties hereto pertaining to the performance or interpretation of this Agreement
shall be settled by binding arbitration pursuant to the rules of the American
Arbitration Association. The cost of such proceeding shall be shared equally by
all parties thereto, and each such party shall bear its own costs incurred as a
result of its participation in any such arbitration.
15.14 PUBLIC ANNOUNCEMENTS. Any general public announcements or similar
media publicity with respect to this Agreement or the transactions contemplated
herein shall be at such time and as such manner as Buyer or IHS shall determine;
provided that nothing herein shall prevent either party, upon as much prior
notice as shall be possible under the circumstances to the other, from making
such written announcements as such party's counsel may consider advisable in
order to satisfy the party's legal and contractual obligations in such regard.
[SIGNATURES ON THE FOLLOWING PAGE]
29
IN WITNESS WHEREOF, each of the parties hereto and in the capacity
indicated below has executed this Agreement as of the day and year first above
written.
COMPANY:
WITNESS: JERSEY SHORE PORTABLE X-RAY, INC.
By: By:
-------------------------- --------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
WITNESS: SHAREHOLDER:
By:
------------------------- ------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
BUYER:
SYMPHONY DIAGNOSTIC SERVICES
NO.1, INC.
By:
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President