-----------------------------
MEMBERSHIP INTEREST PURCHASE AGREEMENT
DATED AS OF APRIL 7, 1998
AMONG
INTEGRATED HEALTH SERVICES, INC.,
DOWNSTATE LITHOTRIPTER LLC,
METRO/LITHO L.P.,
LONG ISLAND LITHOTRIPTER, LLC,
LITHOTRIPTER CORPORATION
AND
ALLIED UROLOGICAL SERVICES, LLC
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TABLE OF CONTENTS
PAGE
ARTICLE I: SALE AND PURCHASE OF COMPANY ASSETS; ALLOCATION......................2
1.1 Downstate..........................................................2
1.2 Metro/Litho........................................................2
1.3 Long Island........................................................3
1.4 Litho Corp.........................................................3
1.5 Assignment of Rights and Obligations...............................4
1.6 Allocation of Purchase Price.......................................4
ARTICLE II: COMPANY ASSETS AND LIABILITIES.....................................4
2.1 Downstate..........................................................4
2.2 Metro/Litho........................................................5
2.3 Long Island........................................................6
2.4 Litho Corp.........................................................8
2.5 Lithotripsy Practice...............................................9
ARTICLE III: ADJUSTMENTS TO STOCK PORTION OF PURCHASE PRICE.....................10
3.1 Adjustments to the Aggregate Stock Portion of Purchase Price.......10
3.2 Definition of Working Capital......................................12
3.3 Allocation among the Companies.....................................13
ARTICLE IV: ASSUMED CONTRACTS...................................................13
4.1 Assumed Contracts..................................................13
ARTICLE V: IHS STOCK...........................................................14
5.1 IHS Stock..........................................................14
5.2 Transfers of IHS Stock and Membership Interests....................18
ARTICLE VI: THE CLOSING........................................................19
6.1 Time and Place of Closing..........................................19
ARTICLE VII: REPRESENTATIONS AND WARRANTIES.....................................19
7.1 Representations and Warranties of IHS..............................19
7.2 Representations and Warranties of Downstate........................19
7.3 Representations and Warranties of Metro/Litho......................19
7.4 Representations and Warranties of Long Island......................19
7.5 Representations and Warranties of Litho Corp.......................19
7.6 Representations and Warranties Regarding Lithotripsy Practice......19
ARTICLE VIII: INFORMATION AND RECORDS CONCERNING THE COMPANIES.................20
8.1 Access to Information and Records before Closing...................20
ARTICLE IX: OBLIGATIONS OF THE PARTIES UNTIL CLOSING...........................20
9.1 Conduct of Business Pending Closing................................20
9.2 Negative Covenants of the Companies................................20
9.3 Affirmative Covenants..............................................22
9.4 Pursuit of Consents and Approvals..................................23
(i)
9.5 Supplementary Financial Information...............................23
9.6 Exclusivity.......................................................23
ARTICLE X: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.........................23
10.1 Representations and Warranties....................................23
10.2 Performance of Covenants..........................................24
10.3 Delivery of Closing Certificate...................................24
10.4 Opinions of Counsel...............................................24
10.5 Legal Matters.....................................................24
10.6 Authorization Documents...........................................24
10.7 Material Change...................................................24
10.8 Approvals.........................................................24
10.9 [Intentionally Omitted]...........................................25
10.10 Engineering Report................................................25
10.11 Surveys...........................................................25
10.12 Zoning Report.....................................................25
10.13 Title Insurance...................................................25
10.14 Operating Agreement...............................................25
10.15 Management Agreement and Leases...................................25
10.16 Liens on Lithotripsy Practice Assets..............................25
10.17 Westchester Facility..............................................25
10.18 Employment and Consulting Agreements..............................25
10.19 Non-Compete Agreements............................................26
10.20 Agreements with Certain Urologists, Radiology
Technologists and Anesthesiologists..............................26
10.21 Investor Representation and Indemnification Agreements............26
10.22 Working Capital...................................................26
10.23 Long-term Liabilities.............................................26
10.24 Estimated Lithotripsy Practice Balance Sheet......................26
10.25 Other Documents...................................................26
ARTICLE XI: CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANIES...............26
11.1 Representations and Warranties....................................27
11.2 Performance of Covenants..........................................27
11.3 Delivery of Closing Certificate...................................27
11.4 Opinion of Counsel................................................27
11.5 Legal Matters.....................................................27
11.6 Authorization Documents...........................................27
11.7 Employment Agreements.............................................27
11.8 Release of Guaranties.............................................27
11.9 Operating Agreement...............................................27
11.10 Management Agreement and Leases...................................28
11.11 IHS Non-compete/First Offer Agreement.............................28
11.12 Consent of Existing Equity Holders................................28
11.13 Other Documents...................................................28
11.14 No Decline in Stock Price.........................................28
ARTICLE XII: SURVIVAL AND INDEMNIFICATION; POST-CLOSING OBLIGATIONS............28
12.1 Survival of Representations and Warranties........................28
12.2 Indemnification by the Companies..................................28
12.3 Indemnification by IHS............................................30
12.4 Indemnification by Allied.........................................30
(ii)
12.5 Limitations on Indemnification Obligations.......................30
12.6 Control of Defense of Indemnifiable Claims.......................32
12.7 Agreement Regarding Certain Urologists...........................33
ARTICLE XIII: TERMINATION.......................................................33
13.1 Termination......................................................33
13.2 Effect of Termination............................................34
ARTICLE XIV: CASUALTY, RISK OF LOSS.............................................34
14.1 Casualty, Risk of Loss...........................................34
ARTICLE XV: MISCELLANEOUS......................................................34
15.1 Representatives..................................................34
15.2 Performance......................................................36
15.3 Benefit and Assignment...........................................36
15.4 Effect and Construction of this Agreement........................37
15.5 Cooperation - Further Assistance.................................37
15.6 Notices..........................................................37
15.7 Waiver, Discharge, Etc...........................................38
15.8 Rights of Persons Not Parties....................................38
15.9 Governing Law....................................................38
15.10 Amendments, Supplements, Etc.....................................38
15.11 Severability.....................................................39
15.12 Costs and Expenses...............................................39
15.13 Public Announcements.............................................39
15.14 Arbitration......................................................39
ARTICLE XVI: CERTAIN DEFINITIONS................................................39
(iii)
SCHEDULES & EXHIBITS
Schedule 1.6 - Allocation
Schedule 3.3 - Allocation Among Companies
Schedule 4.1-A - Designated Contracts
Schedule 4.1-B - Termination Contracts
Schedule 10.19 - Urologists Entering into Non-Competes
Exhibit A - Operating Agreement
Exhibit 7.1 - IHS Representations and Warranties
Exhibit 7.2 - Downstate Representations and Warranties
Exhibit 7.3 - Metro/Litho Representations and Warranties
Exhibit 7.4 - Long Island Representations and Warranties
Exhibit 7.5 - Litho Corp. Representations and Warranties
Exhibit 7.6 - Lithotripsy Practice Representations and Warranties
Exhibit 10.15 - Form of Management Agreement
Exhibit 10.18-1 - ▇▇▇▇▇▇▇ Employment Agreement
Exhibit 10.18-2 - ▇▇▇▇▇▇▇▇▇ Employment Agreement
Exhibit 10.19 - Form of Non-Compete Agreement
Exhibit 10.21 - Form of Representation and Indemnification Instrument
Exhibit 11.11 - Form of Non-Compete/First Offer Agreement
(iv)
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
---------------------------------------
This Membership Interest Purchase Agreement (this "AGREEMENT")
is made as of the 7th day of April, 1998, among Allied Urological Services, LLC,
a limited liability company formed under the laws of Delaware ("ALLIED"),
Integrated Health Services, Inc., a Delaware corporation ("IHS"), Downstate
Lithotripter LLC, a limited liability company formed under the laws of New York
("DOWNSTATE"), Metro/Litho L.P., a limited partnership formed under the laws of
New York ("METRO/LITHO"), Long Island Lithotripter, LLC, a limited liability
company formed under the laws of New York ("LONG ISLAND") and Lithotripter
Corporation, a New York corporation ("LITHO CORP", and together with Downstate,
Metro/Litho and Long Island, the "COMPANIES", and each a "COMPANY").
RECITALS
WHEREAS, the Companies currently provide equipment and management
services to Metropolitan Lithotripter Associates, PC (the "LITHOTRIPSY
PRACTICE"), a professional corporation composed of approximately 200 urologists
that provides renal lithotripsy and other services ("SERVICES") in the Greater
New York metropolitan area, including Manhattan and Long Island; and
WHEREAS, the equipment and services provided by the Companies to the
Lithotripsy Practice (the "EQUIPMENT AND MANAGEMENT SERVICES") include the
following:
(A) Manhattan: Sublease to the Lithotripsy Practice by Metro/Litho of a
fixed site lithotripter facility (the "MANHATTAN FACILITY") and provision of
management services to the Lithotripsy Practice relating to such Manhattan
Facility (the "MANHATTAN MANAGEMENT SERVICES");
(B) Long Island: Lease to the Lithotripsy Practice by Downstate of a
mobile lithotripter (expected to be converted to a fixed site lithotripter) (the
"LONG ISLAND MOBILE LITHOTRIPTER"), lease to the Lithotripsy Practice of a
urology-specific procedure facility in East Meadow, Long Island owned by
Downstate (the "LONG ISLAND FACILITY"), and provision of management services to
the Lithotripsy Practice relating to the Long Island Mobile Lithotripter and the
Long Island Facility by Long Island (the "LONG ISLAND MANAGEMENT SERVICES"); and
(C) Westchester: Sublease to the Lithotripsy Practice by Downstate of a
fixed site lithotripter facility (the "NEW WESTCHESTER FACILITY", and together
with the Manhattan Facility and the Long Island Facility, the "FACILITIES", and
each a FACILITY") that is under construction and, upon completion of the New
Westchester Facility, the provision to the Lithotripsy Practice by Downstate of
management services relating to such New Westchester Facility (the "WESTCHESTER
MANAGEMENT SERVICES"); and
WHEREAS, the Companies are owned by approximately 90 urologists (the
"UROLOGIST INVESTORS") (of which approximately all are also investors in the
Lithotripsy Practice), Cabrini Medical Center ("CABRINI"), and five other
non-urologist investors (together with Cabrini, the "NON-UROLOGIST INVESTORS",
and the Urologist Investors and the Non-Urologist Investors are collectively
referred to as the "EXISTING EQUITY HOLDERS"); and
WHEREAS, the Companies desire to combine their assets and businesses,
and IHS desires to invest in such combined business ("BUSINESS"); and
WHEREAS, Allied has been formed as a limited liability company under
the laws of the State of Delaware on behalf of the parties hereto to be the
owner of the Business and, as of the date hereof, IHS owns the entire membership
interest in Allied (the "AGGREGATE MEMBERSHIP INTEREST"); and
WHEREAS, the parties hereto desire and intend that at the Closing (as
such term is defined in Section 5.1), the Companies shall transfer the Aggregate
Assets to Allied, as assignee of IHS pursuant to Section 1.5 hereof, and, in
consideration therefor, IHS shall deliver to the Companies shares of IHS Stock
(as hereinafter defined) and Allied shall deliver to the Companies membership
interests in Allied, in each case in such amounts as are determined pursuant to
the terms hereof; and
WHEREAS, the parties hereto desire and intend that immediately after
the Closing, the Aggregate Membership Interest shall be owned sixty percent
(60%) by IHS, and forty percent (40%) by the Companies in the aggregate; and
WHEREAS, the Operating Agreement of Allied is as set forth on Exhibit A
hereto (the "OPERATING AGREEMENT").
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, each of the parties hereto intending to be
legally bound, agree as follows:
ARTICLE I: SALE AND PURCHASE OF COMPANY ASSETS; ALLOCATION
1.1 DOWNSTATE.
(A) ACQUISITION OF DOWNSTATE ASSETS. Subject to the terms
and conditions of this Agreement, at the Closing, IHS will acquire from
Downstate, and Downstate will sell, assign, transfer and convey to IHS, all of
the Downstate Assets (as such term is hereinafter defined in Section 2.1(a)),
free and clear of all Liens (as such term is hereinafter defined in Article XV),
other than Permitted Liens (as such term is hereinafter defined in Article XV).
(B) PURCHASE PRICE FOR DOWNSTATE ASSETS. Subject to
adjustment as provided below, the aggregate purchase price (the "DOWNSTATE
PURCHASE PRICE") for all of the Downstate Assets shall consist of: (i) the
issuance by IHS to Downstate of that number of shares of the common stock of
IHS, par value $.001 per share ("IHS STOCK"), determined as of the Closing Date
in accordance with Section 5.1(a) hereof, as shall have an aggregate value,
subject to adjustment pursuant to Section 3.1 below, of $3,381,951 (the
"DOWNSTATE STOCK PORTION"); and (ii) the issuance by Allied to Downstate of
12.8836% (the "DOWNSTATE PERCENTAGE") of the Aggregate Membership Interest (the
"DOWNSTATE MEMBERSHIP INTEREST"), free and clear of all Liens other than the
restrictions set forth in the Operating Agreement.
1.2 METRO/LITHO.
(A) ACQUISITION OF METRO/LITHO ASSETS. Subject to the
terms and conditions of this Agreement, at the Closing, IHS will acquire from
Metro/Litho, and Metro/Litho will sell, assign, transfer and convey to IHS, all
of the Metro/Litho Assets (as such term is hereinafter defined in Section
2.2(a)), free and clear of all Liens, other than Permitted Liens.
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(B) PURCHASE PRICE FOR METRO/LITHO ASSETS. Subject to
adjustment as provided below, the aggregate purchase price (the "METRO/LITHO
PURCHASE PRICE") for all of the Metro/Litho Assets shall consist of: (i) the
issuance by IHS to Metro/Litho of that number of shares of IHS Stock determined
as of the Closing Date in accordance with Section 5.1(a) hereof, as shall have
an aggregate value, subject to adjustment pursuant to Section 3.1 below, of
$5,891,198 (the "METRO/LITHO STOCK PORTION"), and (ii) the issuance by Allied to
Metro/Litho of 22.4427% (the "METRO/LITHO PERCENTAGE") of the Aggregate
Membership Interest (the "METRO/LITHO MEMBERSHIP INTEREST"), free and clear of
all Liens other than the restrictions set forth in the Operating Agreement.
1.3 LONG ISLAND.
(A) ACQUISITION OF LONG ISLAND ASSETS. Subject to the
terms and conditions of this Agreement, at the Closing, IHS will acquire from
Long Island, and Long Island will sell, assign, transfer and convey to IHS, all
of the Long Island Assets (as such term is hereinafter defined in Section
2.3(a)), free and clear of all Liens, other than Permitted Liens.
(B) PURCHASE PRICE FOR LONG ISLAND ASSETS. Subject to
adjustment as provided below, the aggregate purchase price (the "LONG ISLAND
PURCHASE PRICE") for all of the Long Island Assets shall consist of: (i) the
issuance by IHS to Long Island of that number of shares of IHS Stock determined
as of the Closing Date in accordance with Section 5.1(a) hereof, as shall have
an aggregate value, subject to adjustment pursuant to Section 3.1 below, of
$376,668 (the "LONG ISLAND STOCK PORTION"); and (ii) the issuance by Allied to
Long Island of 1.1036% (the "LONG ISLAND PERCENTAGE") of the Aggregate
Membership Interest (the "LONG ISLAND MEMBERSHIP INTEREST"), free and clear of
all Liens other than the restrictions set forth in the Operating Agreement.
1.4 LITHO CORP.
(A) ACQUISITION OF LITHO CORP ASSETS. Subject to the terms
and conditions of this Agreement, at the Closing, IHS will acquire from Litho
Corp, and Litho Corp will sell, assign, transfer and convey to IHS, all of the
Assets (as such term is hereinafter defined in Section 2.4(a)), free and clear
of all Liens, other than Permitted Liens.
(B) PURCHASE PRICE FOR LITHO CORP ASSETS. Subject to
adjustment as provided below, the aggregate purchase price (the "LITHO CORP
PURCHASE PRICE", and together with the Downstate Purchase Price, the Metro/Litho
Purchase Price, and the Long Island Purchase Price, the "AGGREGATE PURCHASE
PRICE", and each a "PURCHASE PRICE") for all of the Litho Corp Assets shall
consist of: (i) the issuance by IHS to Litho Corp of that number of shares of
IHS Stock determined as of the Closing Date in accordance with Section 5.1(a)
hereof, as shall have an aggregate value, subject to adjustment pursuant to
Section 3.1 below, of $1,250,183 (the "LITHO CORP STOCK PORTION", and together
with the Downstate Stock Portion, the Metro/Litho Stock Portion, and the Long
Island Stock Portion, the "AGGREGATE STOCK PORTION", and each a "STOCK
PORTION"); and (ii) the issuance by Allied to Litho Corp, of 3.5701% (the "LITHO
CORP PERCENTAGE", and together with the Downstate Percentage, the Metro/Litho
Percentage, and the Long Island Percentage, the "AGGREGATE PERCENTAGE", and each
a "PERCENTAGE") of the Aggregate Membership Interest (the "LITHO CORP MEMBERSHIP
INTEREST", and together with the Downstate Membership Interest, the Metro/Litho
Membership Interest and the Long Island Membership Interest, the "AGGREGATE
COMPANY MEMBERSHIP INTEREST", and each a "COMPANY MEMBERSHIP INTEREST"), free
and clear of all Liens other than the restrictions set forth in the Operating
Agreement.
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1.5 ASSIGNMENT OF RIGHTS AND OBLIGATIONS. Notwithstanding any
contrary provisions contained herein, the parties hereto agree that prior to the
Closing IHS shall assign its rights and obligations under this Article I to take
title to the Aggregate Assets to Allied, and upon such assignment IHS shall be
relieved of said obligations; except that no such assignment shall relieve IHS
of its obligation to pay the Aggregate Purchase Price.
1.6 ALLOCATION OF PURCHASE PRICE. The Aggregate Purchase Price
shall be allocated among the Aggregate Assets as set forth in Schedule 1.6
hereof, and the parties shall adhere to such allocations in filing all returns
to the appropriate taxing authorities. If the Aggregate Purchase Price is
increased or reduced on account of any adjustment provided for herein, or if
payments on account of indemnification obligations are made by IHS or the
Companies hereunder, then the parties shall in good faith agree upon a
reallocation of the Aggregate Purchase Price to the extent necessary to correct
any material discrepancy or inconsistency with respect to the original
allocation.
ARTICLE II: COMPANY ASSETS AND LIABILITIES
2.1 DOWNSTATE.
(A) DOWNSTATE ASSETS. For purposes of this Agreement, the
"DOWNSTATE ASSETS" shall mean, except as set forth in the following sentence,
all of the tangible and intangible assets, real, personal or mixed, that are
owned by Downstate or in which it has an ownership interest and that are
utilized or are held for use in connection with or are necessary to the business
of Downstate, including, without limitation, all lithotripters and other
property, plant, and equipment, real property leasehold rights, contract rights
(including, without limitation, rights under leases of lithotripters and
management agreements with the Lithotripsy Practice and non-competition
agreements), telephone numbers, books and records, inventory and supplies, trade
names, trademarks, cash, cash equivalents, bank accounts and accounts
receivable, and, to the extent permitted by law, all licenses, permits, and
authorizations. Notwithstanding the foregoing, the Downstate Assets shall not
include assets disposed of from the date hereof until Closing in the ordinary
course of business consistent with past practice and otherwise in conformity
with the obligations of Downstate under this Agreement, Downstate's Certificate
of Formation and Operating Agreement, its qualification to do business in any
jurisdiction, taxpayer identification number, minute books, membership interest
transfer records and other documents related specifically to such Downstate's
limited liability company organization and maintenance (collectively, the
"DOWNSTATE EXCLUDED ASSETS").
(B) DOWNSTATE LIABILITIES.
(I) Subject to the terms and conditions hereof, at the
Closing, Allied shall assume and thereafter in due course fully satisfy the
following liabilities of Downstate (the "DOWNSTATE ASSUMED LIABILITIES"):
(A) all trade payables, operating expenses and other
current liabilities of Downstate that are taken into account as current
liabilities ("DOWNSTATE CURRENT LIABILITIES") in determining the
Proposed Working Capital (as such term is hereinafter defined in
Section 3.1(b)(i)(A));
(B) long-term liabilities of Downstate that are taken into
account as long-term liabilities ("DOWNSTATE LONG-TERM LIABILITIES") in
determining the Proposed Long-term Liabilities (as such term is
hereinafter defined Section 3.1(b)(i)(C)); and
4
(C) those obligations that arise under the Downstate
Assumed Contracts (as such term is hereinafter defined in Section 4.1)
assigned by Downstate to Allied, with respect to services to be
rendered or goods to be supplied or benefits to be conferred to Allied
solely after the Closing Date. Liabilities under such Downstate Assumed
Contracts that have accrued, or the performance of which is due, on or
prior to the Closing Date, or which are in payment or consideration for
Downstate Excluded Assets, shall remain the sole responsibility of
Downstate except to the extent same constitute Downstate Current
Liabilities or Downstate Long-term Liabilities.
(II) Except for the Downstate Assumed Liabilities, Allied
will not assume, and Downstate shall continue to be liable for and shall satisfy
as the same become due all Liabilities (as such term is hereinafter defined in
Article XV) that arise out of acts or omissions by it or circumstances for which
it is responsible attributable to any period on or prior to the Closing Date
("DOWNSTATE EXCLUDED LIABILITIES"), including, without limitation, (A)
liabilities arising out of arrangements between it or the Lithotripsy Practice
with any third party payor, or arrangements with any person or entity that
participates in any third party payor program, including without limitation,
with respect to any excess reimbursement, recapture, adjustment or overpayment
whatsoever ("DOWNSTATE REIMBURSEMENT LIABILITIES"), (B) 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 or any other party, (C) any accounts payable or employment or other
taxes (except to the extent of the amount thereof, if any, that constitute
Downstate Current Liabilities or Downstate Long-term Liabilities), and (D)
accrued but unpaid compensation or other benefits to any of the employees,
agents, consultants or advisers of Downstate, including accrued vacation (except
to the extent the amount thereof, if any, constitutes Downstate Current
Liabilities).
(III) It is expressly understood that all Liabilities of
Downstate for amounts owing or payable to any organizing adviser of, or finder
for, Downstate, incurred with respect to the transactions contemplated by this
Agreement or with respect to any prior transactions, shall be deemed Downstate
Excluded Liabilities (regardless of whether the same would constitute a
liability to be set forth on a balance sheet of Downstate), and Allied will not
assume, and Downstate shall continue to be liable for and shall satisfy same.
2.2 METRO/LITHO.
(A) METRO/LITHO ASSETS. For purposes of this Agreement,
the "METRO/LITHO ASSETS" shall mean, except as set forth in the following
sentence, all of the tangible and intangible assets, real, personal or mixed,
that are owned by Metro/Litho or in which it has an ownership interest and that
are utilized or are held for use in connection with or are necessary to the
business of Metro/Litho, including, without limitation, the TUNA machine, all
lithotripters and other property, plant, and equipment, real property leasehold
rights, contract rights (including, without limitation, rights under leases of
lithotripters and management agreements with the Lithotripsy Practice and
non-competition agreements), telephone numbers, books and records, inventory and
supplies, trade names, trademarks, cash, cash equivalents, bank accounts and
accounts receivable, and, to the extent permitted by law, all licenses, permits,
and authorizations. Notwithstanding the foregoing, the Metro/Litho Assets shall
not include assets disposed of from the date hereof until Closing in the
ordinary course of business consistent with past practice and otherwise in
conformity with the obligations of Metro/Litho under this Agreement,
Metro/Litho's Limited Partnership Certificate and Limited Partnership Agreement,
its qualification to do business in any jurisdiction, taxpayer identification
number, minute books, partnership transfer records and other documents related
specifically to such Metro/Litho's limited partnership organization and
maintenance, and its membership interest in Downstate (collectively, the
"METRO/LITHO EXCLUDED ASSETS").
5
(B) METRO/LITHO LIABILITIES.
(I) Subject to the terms and conditions hereof, at the
Closing, Allied shall assume and thereafter in due course fully satisfy the
following liabilities of Metro/Litho (the "METRO/LITHO ASSUMED LIABILITIES"):
(A) all trade payables, operating expenses and other
current liabilities of Metro/Litho that are taken into account as
current liabilities ("METRO/LITHO CURRENT LIABILITIES") in determining
the Proposed Working Capital; and
(B) long-term liabilities of Metro/Litho that are taken
into account as long-term liabilities ("METRO/LITHO LONG-TERM
LIABILITIES") in determining the Proposed Long-term Liabilities; and
(C) those obligations that arise under the Metro/Litho
Assumed Contracts (as such term is hereinafter defined in Section 4.1)
and assigned by Metro/Litho to Allied, with respect to services to be
rendered or goods to be supplied or benefits to be conferred to Allied
solely after the Closing Date. Liabilities under such Metro/Litho
Assumed Contracts that have accrued, or the performance of which is
due, on or prior to the Closing Date, or which are in payment or
consideration for Metro/Litho Excluded Assets, shall remain the sole
responsibility of Metro/Litho except to the extent same constitute
Metro/Litho Current Liabilities or Metro/Litho Long-term Liabilities.
(II) Except for the Metro/Litho Assumed Liabilities,
Allied will not assume, and Metro/Litho shall continue to be liable for and
shall satisfy as the same become due all Liabilities that arise out of acts or
omissions by it or circumstances for which it is responsible attributable to any
period on or prior to the Closing Date ("METRO/LITHO EXCLUDED LIABILITIES"),
including, without limitation, (A) liabilities arising out of arrangements
between it or the Lithotripsy Practice with any third party payor, or
arrangements with any person or entity that participates in any third party
payor program, including without limitation, with respect to any excess
reimbursement, recapture, adjustment or overpayment whatsoever ("METRO/LITHO
REIMBURSEMENT LIABILITIES"), (B) 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 or any other party, (C)
any accounts payable or employment or other taxes (except to the extent of the
amount thereof, if any, that constitute Metro/Litho Current Liabilities or
Metro/Litho Long-term Liabilities), and (D) accrued but unpaid compensation or
other benefits to any of the employees, agents, consultants or advisers of
Metro/Litho, including accrued vacation (except to the extent the amount
thereof, if any, constitutes Metro/Litho Current Liabilities).
(III) It is expressly understood that all Liabilities of
Metro/Litho for amounts owing or payable to any organizing adviser of, or finder
for, Metro/Litho, incurred with respect to the transactions contemplated by this
Agreement or with respect to any prior transactions, shall be deemed Metro/Litho
Excluded Liabilities (regardless of whether the same would constitute a
liability to be set forth on a balance sheet of Metro/Litho), and Allied will
not assume, and Metro/Litho shall continue to be liable for and shall satisfy
same.
2.3 LONG ISLAND.
(A) LONG ISLAND ASSETS. For purposes of this Agreement,
the "LONG ISLAND ASSETS" shall mean, except as set forth in the following
sentence, all of the tangible and intangible assets,
6
real, personal or mixed, that are owned by Long Island or in which it has an
ownership interest and that are utilized or are held for use in connection with
or are necessary to the business of Long Island, including, without limitation,
all lithotripters and other property, plant, and equipment, real property
leasehold rights, contract rights (including, without limitation, rights under
leases of lithotripters and management agreements with the Lithotripsy Practice
and non-competition agreements), telephone numbers, books and records, inventory
and supplies, trade names, trademarks, cash, cash equivalents, bank accounts and
accounts receivable, and, to the extent permitted by law, all licenses, permits,
and authorizations. Notwithstanding the foregoing, the Long Island Assets shall
not include assets disposed of from the date hereof until Closing in the
ordinary course of business consistent with past practice and otherwise in
conformity with the obligations of Long Island under this Agreement, Long
Island's Certificate of Formation and Operating Agreement, its qualification to
do business in any jurisdiction, taxpayer identification number, minute books,
membership interest transfer records and other documents related specifically to
such Long Island's limited liability company organization and maintenance, and
its membership interest in Downstate (collectively, the "LONG ISLAND EXCLUDED
ASSETS").
(B) LONG ISLAND LIABILITIES.
(I) Subject to the terms and conditions hereof, at the
Closing, Allied shall assume and thereafter in due course fully satisfy the
following liabilities of Long Island (the "LONG ISLAND ASSUMED LIABILITIES"):
(A) all trade payables, operating expenses and other
current liabilities of Long Island that are taken into account as
current liabilities ("LONG ISLAND CURRENT LIABILITIES") in determining
the Proposed Working Capital; and
(B) long-term liabilities of Long Island that are taken
into account as long-term liabilities ("LONG ISLAND LONG-TERM
LIABILITIES") in determining the Proposed Long-term Liabilities; and
(C) those obligations that arise under the Long Island
Assumed Contracts (as such term is hereinafter defined in Section 4.1)
and assigned by Long Island to Allied, with respect to services to be
rendered or goods to be supplied or benefits to be conferred to Allied
solely after the Closing Date. Liabilities under such Long Island
Assumed Contracts that have accrued, or the performance of which is
due, on or prior to the Closing Date, or which are in payment or
consideration for Long Island Excluded Assets, shall remain the sole
responsibility of Long Island except to the extent same constitute Long
Island Current Liabilities or Long Island Long-term Liabilities.
(II) Except for the Long Island Assumed Liabilities,
Allied will not assume, and Long Island shall continue to be liable for and
shall satisfy as the same become due all Liabilities that arise out of acts or
omissions by it or circumstances for which it is responsible attributable to any
period on or prior to the Closing Date ("LONG ISLAND EXCLUDED LIABILITIES"),
including, without limitation, (A) liabilities arising out of arrangements
between it or the Lithotripsy Practice with any third party payor, or
arrangements with any person or entity that participates in any third party
payor program, including without limitation, with respect to any excess
reimbursement, recapture, adjustment or overpayment whatsoever ("LONG ISLAND
REIMBURSEMENT LIABILITIES"), (B) 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 or any other party, (C)
any accounts payable or employment or other taxes (except to the extent of the
amount thereof, if any, that constitute Long Island Current Liabilities or Long
Island Long-term Liabilities), and (D) accrued but unpaid compensation or other
benefits to any of the employees, agents, consultants or advisers of Long
Island, including accrued vacation (except to the extent of the amount thereof,
if any, that constitute Long Island Current Liabilities).
7
(III) It is expressly understood that all Liabilities of
Long Island for amounts owing or payable to any organizing adviser of, or finder
for, Long Island, incurred with respect to the transactions contemplated by this
Agreement or with respect to any prior transactions, shall be deemed Long Island
Excluded Liabilities (regardless of whether the same would constitute a
liability to be set forth on a balance sheet of Long Island), and Allied will
not assume, and Long Island shall continue to be liable for and shall satisfy
same.
2.4 LITHO CORP.
(A) LITHO CORP ASSETS. For purposes of this Agreement, the
"LITHO CORP ASSETS" shall mean, except as set forth in the following sentence,
all of the tangible and intangible assets, real, personal or mixed, that are
owned by Litho Corp or in which it has an ownership interest and that are
utilized or are held for use in connection with or are necessary to the business
of Litho Corp, including, without limitation, all lithotripters and other
property, plant, and equipment, real property leasehold rights, contract rights
(including, without limitation, rights under leases of lithotripters and
management agreements with the Lithotripsy Practice and non-competition
agreements), telephone numbers, books and records, inventory and supplies, trade
names, trademarks, cash, cash equivalents, bank accounts, and accounts
receivable, and, to the extent permitted by law, all licenses, permits, and
authorizations. Notwithstanding the foregoing, the Litho Corp Assets shall not
include assets disposed of from the date hereof until Closing in the ordinary
course of business consistent with past practice and otherwise in conformity
with the obligations of Litho Corp under this Agreement, Litho Corp's
Certificate of Incorporation and By-Laws, its qualification to do business in
any jurisdiction, taxpayer identification number, minute books, stock transfer
records and other documents related specifically to such Litho Corp's corporate
organization and maintenance, and its partnership interest in Metro/Litho and
its membership interest in Downstate (collectively, the "LITHO CORP EXCLUDED
ASSETS").
(B) LITHO CORP LIABILITIES.
(I) Subject to the terms and conditions hereof, at the
Closing, Allied shall assume and thereafter in due course fully satisfy the
following liabilities of Litho Corp (the "LITHO CORP ASSUMED LIABILITIES"):
(A) all trade payables, operating expenses and other
current liabilities of Litho Corp that are taken into account as
current liabilities ("LITHO CORP CURRENT LIABILITIES") in determining
the Proposed Working Capital;
(B) long-term liabilities of Litho Corp that are taken
into account as long-term liabilities ("LITHO CORP LONG-TERM
LIABILITIES") in determining the Proposed Long-term Liabilities; and
(C) those obligations that arise under the Litho Corp
Assumed Contracts (as such term is hereinafter defined in Section 4.1)
and assigned by Litho Corp to Allied with respect to services to be
rendered or goods to be supplied or benefits to be conferred to Allied
solely after the Closing Date. Liabilities under such Litho Corp
Assumed Contracts that have accrued, or the performance of which is
due, on or prior to the Closing Date, or which are in payment or
consideration for Litho Corp Excluded Assets, shall remain the sole
responsibility of Litho Corp except to the extent same constitute Litho
Corp Current Liabilities or Litho Corp Long- term Liabilities.
8
(II) Except for the Litho Corp Assumed Liabilities, Allied
will not assume, and Litho Corp shall continue to be liable for and shall
satisfy as the same become due all Liabilities that arise out of acts or
omissions by it or circumstances for which it is responsible attributable to any
period on or prior to the Closing Date ("LITHO CORP EXCLUDED LIABILITIES"),
including, without limitation, (A) liabilities arising out of arrangements
between it or the Lithotripsy Practice with any third party payor, or
arrangements with any person or entity that participates in any third party
payor program, including without limitation, with respect to any excess
reimbursement, recapture, adjustment or overpayment whatsoever ("LITHO CORP
REIMBURSEMENT LIABILITIES"), (B) 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 or any other party, (C)
any accounts payable or employment or other taxes (except to the extent of the
amount thereof, if any, that constitute Litho Corp Current Liabilities or Litho
Corp Long-term Liabilities), and (D) accrued but unpaid compensation or other
benefits to any of the employees, agents, consultants or advisers of Litho Corp,
including accrued vacation (except to the extent of the amount thereof, if any,
constitute Litho Corp Current Liabilities).
(III) It is expressly understood that all Liabilities of
Litho Corp for amounts owing or payable to any organizing adviser of, or finder
for, Litho Corp, incurred with respect to the transactions contemplated by this
Agreement or with respect to any prior transactions, shall be deemed Litho Corp
Excluded Liabilities (regardless of whether the same would constitute a
liability to be set forth on a balance sheet of Litho Corp), and Allied will not
assume, and Litho Corp shall continue to be liable for and shall satisfy same.
2.5 LITHOTRIPSY PRACTICE.
(A) LITHOTRIPSY PRACTICE ASSETS. It shall be a condition
of IHS to Closing that, as of the Closing Date, the assets of the Lithotripsy
Practice will include all of the Lithotripsy Practice Assets, and for purposes
of this Agreement, the "LITHOTRIPSY PRACTICE ASSETS" shall mean all of the
tangible and intangible assets, real, personal or mixed, that are owned by
Lithotripsy Practice or in which it has an ownership interest and that are
utilized or are held for use in connection with or are necessary to the business
of Lithotripsy Practice, including, without limitation, all lithotripters and
other property, plant, and equipment, real property leasehold rights, contract
rights (including, without limitation, restrictive covenants and rights under
contracts with third party payors), telephone numbers, books and records,
inventory and supplies, trade names, cash, cash equivalents and accounts
receivable, and, to the extent permitted by law, all licenses, permits, and
authorizations. Notwithstanding the foregoing, the Lithotripsy Practice Assets
shall not include assets disposed of from the date hereof until Closing in the
ordinary course of business consistent with past practice and otherwise in
conformity with the obligations of the Companies under this Agreement
(collectively, the "LITHOTRIPSY PRACTICE EXCLUDED ASSETS"). At the Closing, all
of the Lithotripsy Practice Assets shall be free and clear of Liens, other than
Permitted Liens.
(B) LITHOTRIPSY PRACTICE LIABILITIES.
(I) As of the Closing, except for Lithotripsy Practice
Permitted Liabilities (as hereinafter defined in clause (ii)), there will not be
any Liabilities against Lithotripsy Practice that arise out of acts or omissions
by it or circumstances for which it is responsible attributable to any period on
or prior to the Closing Date ("LITHOTRIPSY PRACTICE PROHIBITED LIABILITIES"),
including, without limitation, (A) liabilities arising out of arrangements
between it with any third party payor, or arrangements with any person or entity
that participates in any third party payor program, including without
limitation, with respect to any excess reimbursement, recapture, adjustment or
overpayment whatsoever ("LITHOTRIPSY PRACTICE REIMBURSEMENT LIABILITIES"), (B)
malpractice claims asserted by patients or any other tort claims
9
asserted, claims for breach of contract, or any claims of any kind asserted by
patients, former patients, employees or any other party, (C) any accounts
payable or employment or other taxes (except to the extent of the amount
thereof, if any, constitute Lithotripsy Practice Current Liabilities (as
hereinafter defined in clause (ii)), and (D) accrued but unpaid compensation or
other benefits to any of the employees, agents, consultants or advisers of
Lithotripsy Practice, including accrued vacation (except to the extent of the
amount thereof, if any, constitute Lithotripsy Practice Current Liabilities).
(II) For purposes of this Agreement, the following
liabilities of Lithotripsy Practice shall constitute "LITHOTRIPSY PRACTICE
PERMITTED LIABILITIES":
(A) all trade payables, operating expenses and other
current liabilities of Lithotripsy Practice that are taken into account
as current liabilities ("LITHOTRIPSY PRACTICE CURRENT LIABILITIES") in
preparing the Estimated Lithotripsy Practice Closing Date Balance Sheet
(as such term is hereinafter defined in Section 10.24);
(B) those obligations that arise under agreements,
contracts, instruments and commitments of the Lithotripsy Practice with
respect to services to be rendered or goods to be supplied or benefits
to be conferred to the Lithotripsy Practice solely after the Closing
Date. Liabilities under such agreements, contracts, instruments and
commitments that have accrued, or the performance of which is due, on
or prior to the Closing Date shall constitute Lithotripsy Practice
Prohibited Liabilities (except to the extent of the amount thereof, if
any, that constitute Lithotripsy Practice Current Liabilities); and
(C) such other liabilities of the Lithotripsy Practice as
are disclosed on Schedule 2.5 hereto.
ARTICLE III: ADJUSTMENTS TO STOCK PORTION OF PURCHASE PRICE
3.1 ADJUSTMENTS TO THE AGGREGATE STOCK PORTION OF PURCHASE PRICE.
(A) (I) At the Closing, the Representatives (as defined in
Article XIV hereof) shall deliver to Allied and IHS a certificate certifying to
be their best good faith estimate of the aggregate amount of working capital (as
defined in Section 3.2 below) of the Companies on a combined basis immediately
prior to the Closing (the "ESTIMATED CLOSING DATE WORKING CAPITAL").
(A) If the Estimated Closing Date Working Capital is less
than $625,000 (the "MINIMUM WORKING CAPITAL"), the Aggregate Stock
Portion, and the amount thereof payable to the Companies at Closing,
will be reduced by an amount equal to the amount of such deficiency,
with such reduction to be made by reducing the number of shares of IHS
Stock, in the proportions set forth on Schedule 3.3 hereto (valued
using the Closing Date as the date of determination in accordance with
Section 5.1(a) below), otherwise deliverable to the Companies.
(B) If the Estimated Closing Date Working Capital is
greater than the Minimum Working Capital, then the Aggregate Stock
Portion and the amount thereof payable to the Companies at Closing,
will be increased by an amount equal to the amount of such excess, and
IHS shall deliver to the Companies, in the proportions set forth on
Schedule 3.3 hereto, shares of IHS Stock equal in value to such excess
(with such IHS Stock being valued using the Closing Date as the date of
determination in accordance with Section 5.1(a) below).
10
(II) Additionally, at the Closing, the Representatives
shall deliver to Allied and IHS the combined balance sheet of the Companies as
of the point in time immediately prior to the Closing, certified by the
Representatives to be their best good faith estimate of the items thereon (the
"ESTIMATED CLOSING DATE BALANCE SHEET").
(A) If the Estimated Closing Date Balance Sheet discloses
that the aggregate amount of the long-term liabilities of the Companies
on a combined basis (the "ESTIMATED LONG-TERM LIABILITIES") as
determined in accordance with GAAP exceeds $1,151,000 (the "MAXIMUM
LONG-TERM LIABILITIES"), the Aggregate Stock Portion, and the amount
thereof payable to the Companies at Closing, will be reduced by an
amount equal to the amount of such excess, with such reduction to be
made by reducing the number of shares of IHS Stock, in the proportions
set forth on Schedule 3.3 hereto (valued using the Closing Date as the
date of determination in accordance with Section 5.1(a) below),
otherwise deliverable to the Companies.
(B) If the Estimated Long-term Liabilities is less than
the Maximum Long-term Liabilities, then the Aggregate Stock Portion and
the amount thereof payable to the Companies at Closing, will be
increased by an amount equal to the amount of such deficiency, and IHS
shall deliver to the Companies, in the proportions set forth on
Schedule 3.3 hereto, shares of IHS Stock equal in value to such
deficiency (with such IHS Stock being valued using the Closing Date as
the date of determination in accordance with Section 5.1(a) below).
(B) (I) Within ninety (90) days following the Closing
Date, IHS shall complete a review (the "IHS REVIEW") of the combined balance
sheet of the Companies as of the point in time immediately prior to the Closing
and shall deliver a proposed closing date balance sheet (the "PROPOSED CLOSING
DATE BALANCE SHEET") to the Representatives. If IHS shall fail to timely deliver
its Proposed Closing Date Balance Sheet, the Estimated Closing Date Working
Capital and the Estimated Long-term Liabilities delivered by the Representatives
on the Closing Date shall be deemed accepted by IHS and shall be conclusive and
binding on all parties hereto, absent fraud.
(A) If the aggregate amount of working capital of the
Companies on a combined basis as of the Closing Date as shown on the
Proposed Closing Date Balance Sheet (the "PROPOSED WORKING CAPITAL")
was less than the Estimated Closing Date Working Capital, then, subject
to Section 3.1(c), the Aggregate Stock Portion shall be deemed to have
been reduced by the amount of such deficiency, and within ten (10)
business days after request from IHS, the Companies shall refund to
IHS, in the proportions set forth on Schedule 3.3 hereto, the amount of
such deficiency with such payment to be made in shares of IHS Stock
(valued using the Closing Date as the date of determination in
accordance with Section 5.1(a)).
(B) If the IHS Review reveals that the Proposed Working
Capital was greater than the Estimated Closing Date Working Capital,
then the Aggregate Stock Portion shall be deemed to have been increased
by the amount of such excess, and within ten (10) business days after
delivery of the Proposed Closing Date Balance Sheet to the
Representatives, IHS will deliver to the Companies, in the proportions
set forth on Schedule 3.3 hereto, shares of IHS Stock equal in value to
such excess (with such IHS Stock being valued using the Closing Date as
the date of determination in accordance with Section 5.1(a) below).
11
(C) Furthermore, if the aggregate amount of the long-term
liabilities of the Companies on a combined basis as of the Closing Date
as shown on the Proposed Closing Date Balance Sheet (the "PROPOSED
LONG-TERM LIABILITIES") exceeded the Estimated Long- term Liabilities,
then, subject to Section 3.1(c) below, the Aggregate Stock Portion
shall be deemed to have been reduced by the amount of such excess, and
within ten (10) business days after request from IHS, the Companies
shall refund to IHS, in the proportions set forth on Schedule 3.3
hereto, the amount of such reduction, with such payment to be made in
shares of IHS Stock (valued using the Closing Date as the date of
determination in accordance with Section 5.1(a)).
(D) If the IHS Review reveals that the Proposed Long-term
Liabilities was less than the Estimated Long-term Liabilities, then the
Aggregate Stock Portion shall be deemed to have been increased by the
amount of such deficiency, and within ten (10) business days after
delivery of the Proposed Closing Date Balance Sheet to the
Representatives, IHS will deliver to the Companies, in the proportions
set forth on Schedule 3.3 hereto, shares of IHS Stock equal in value to
the amount of such deficiency (with such IHS Stock being valued using
the Closing Date as the date of determination in accordance with
Section 5.1(a) below).
(C) If at least seventy-five percent (75%) of the
Representatives shall in good faith dispute the Proposed Working Capital or
Proposed Long-term Liabilities of the Companies on a combined basis as of the
Closing Date as set forth on the Proposed Closing Date Balance Sheet, they shall
give notice to IHS (a "DELAY PAYMENT NOTICE") within thirty (30) days after
delivery to them of the Proposed Closing Date Balance Sheet setting forth in
reasonable detail their objections and the basis therefor, in which case, the
disputed portion of any payment otherwise required to be made pursuant to
subsection (a) or (b) above shall be delayed, and IHS and the Representatives
shall meet and in good faith attempt to resolve any disagreements within thirty
(30) days after delivery to IHS of the Delay Payment Notice. If the
Representatives shall fail to timely deliver a Delay Payment Notice, the working
capital and long-term liabilities amounts set forth in the Proposed Closing Date
Balance Sheet shall be deemed accepted by the Companies and shall be conclusive
and binding on all parties hereto, absent fraud. If a Delay Payment Notice is
timely delivered and the parties are unable to resolve such disagreements within
such time period, the disagreements shall be referred to Ernst & Young LLP (the
"ARBITRATING ACCOUNTANTS"), and the determination of the Arbitrating Accountants
shall be final, conclusive and binding on the parties hereto. The Arbitrating
Accountants shall be directed to use their best efforts to reach a determination
not more than thirty (30) days after such referral. The costs and expenses of
the services of the Arbitrating Accountants shall be borne by the party against
whom the Arbitrating Accountants shall rule; provided that if the Arbitrating
Accountants shall not rule against any party, then such costs and expenses shall
be borne equally by the Companies, on the one hand, and IHS, on the other hand.
On the third business day following the final resolution of any matter covered
by a Delay Payment Notice, the Companies shall, if applicable, pay to IHS any
delayed payment to the extent determined to be due to IHS in accordance with
such resolution, with such payment to be made in shares of IHS Stock, in the
proportions set forth on Schedule 3.3 hereto (valued using the Closing Date as
the date of determination in accordance with Section 5.1(a)).
3.2 DEFINITION OF WORKING CAPITAL. For the purposes of this
Article III, "WORKING CAPITAL" means the excess of current assets over current
liabilities, as determined in accordance with GAAP; provided, however, that all
inter-company receivables and payables among the Companies and the Lithotripsy
Practice, all investments by any of the Companies in any of the other Companies,
and all other inter-company assets and liabilities among the Companies and the
Lithotripsy Practice shall be excluded, and "LONG-TERM LIABILITY" means any
liability that would be set forth as a long-term liability on a balance sheet in
accordance with GAAP. Notwithstanding anything to the contrary contained in this
Agreement, any Taxes (as such term is hereinafter defined in Article XV) arising
out of the transactions contemplated by this Agreement, including without
limitation, any "built-in" gains Taxes, shall be paid by the Companies, shall be
Excluded Liabilities, and shall not be included as Current Liabilities in the
computation of Proposed Working Capital.
12
3.3 ALLOCATION AMONG THE COMPANIES.
(A) The Companies may agree among themselves in a separate
agreement as to the allocation of any cash amounts that may be receivable by
them or any shares of IHS Stock that may be deliverable to them or by them
pursuant to Article V hereof, and IHS agrees to make any deliveries, pursuant to
this Article III or Article V, in accordance with the written instructions
executed by not less than seventy-five percent (75%) of the Representatives. In
the absence of any such written instructions, IHS shall be permitted to rely for
all purposes on the allocations set forth in Schedule 3.3 hereto, and any
written instructions delivered under this Section 3.3(a) shall expressly state
that such instructions supersede any prior written instructions as to
allocations, including Schedule 3.3.
(B) With respect to any refund of shares of IHS Stock due
to IHS pursuant to this Article III or Article V hereof, IHS shall use its
reasonable efforts to collect said shares from the Companies in the proportions
set forth in Schedule 3.3, or otherwise in accordance with written instructions
(expressly stating that they supersede all prior written instructions as to
allocations, including Schedule 3.3) executed by not less than seventy-five
percent (75%) of the Representatives; provided however, that if at least
seventy-five percent (75%) of the Representatives do not notify IHS in writing
prior to the date such refund is due to IHS, or if after receiving such notice
IHS is unable to so collect such IHS Stock when same is due in accordance with
the instructions of at least seventy-five percent (75%) of the Representatives,
or, if in the absence of any such notice, IHS is unable to collect such IHS
Stock when same is due in accordance with the allocations set forth on Schedule
3.3, then IHS shall be entitled to collect the cash value of such IHS Stock
(valued in accordance with the provision under which such IHS Stock was to be
returned) from the Companies (and the Companies' Existing Equity Holders
pursuant to their Representation and Indemnification Agreements) jointly and
severally; provided further that any amount due to IHS pursuant to this Article
III or pursuant to Article V that is not paid when due shall accrue interest at
the rate per anum equal to ten percent (10%) and IHS shall be indemnified and
held harmless by the Companies (and the Companies' Existing Equity Holders
pursuant to their Representation and Indemnification Agreements) jointly and
severally from all costs and expenses of the collection of all amounts due to it
without regard to any limitations set forth in Section 12.5(c) below or
otherwise.
ARTICLE IV: ASSUMED CONTRACTS
4.1 ASSUMED CONTRACTS. Set forth on Schedule 4.1A, is a list of the
agreements, contracts, instruments and commitments, if any, of each of the
Companies, that Allied shall not assume as of the Closing ("DESIGNATED
CONTRACTS"). Each agreement, contract, instrument and commitment of each Company
that is disclosed by it pursuant to Section 7.x.7 of its respective
Representation and Warranty Exhibit and that is not a Designated Contract shall
be deemed to be a "DOWNSTATE ASSUMED CONTRACT", a "METRO/LITHO ASSUMED
CONTRACT", a "LONG ISLAND ASSUMED CONTRACT", or a "LITHO CORP ASSUMED CONTRACT",
as the case may be. Collectively, the Downstate Assumed Contracts, the
Metro/Litho Assumed Contracts, the Long Island Assumed Contracts, and the Litho
Corp Assumed Contracts are referred to as the "ASSUMED CONTRACTS". If any
Company shall enter into any agreement, contract, instrument or commitment after
the date hereof and prior to Closing, or if there shall be disclosed any
agreement, contract, instrument or commitment that should have been disclosed on
any Schedule 7.x.7 to any Representation and Warranty Exhibit, but that was not
so disclosed, then IHS shall have five (5) business days to notify the
applicable Representative as to whether such agreement, contract, instrument or
commitment shall be an Assumed Contract. If IHS fails to so notify such
Representative, then such agreement, contract, instrument or commitment shall be
deemed to be a Designated Contract. It shall be a condition of IHS and Allied to
consummate the transactions contemplated by this Agreement (the "TRANSACTION")
that all consents required
13
to transfer the material Assumed Contracts shall have been obtained. It also
shall be a condition to the obligation of IHS to close the Transaction that IHS
shall be reasonably satisfied that no material agreements, contracts,
instruments and commitments of the Lithotripsy Practice (including, without
limitation, contracts to provide Services) will be terminated by reason of the
Transaction. It also shall be a condition of IHS to Closing that the agreements,
contracts, instruments and commitments, if any, of the Lithotripsy Practice set
forth on Schedule 4.1-B shall have been terminated.
ARTICLE V: IHS STOCK
5.1 IHS STOCK. The Aggregate Stock Portion shall be payable by means of
the delivery of IHS Stock in accordance with the following:
(A) SHARE VALUE. The number of shares of IHS Stock issuable at Closing
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 (the "CLOSING DATE PRICE PER SHARE").
(B) REGISTRATION RIGHTS. IHS 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 (the "REGISTRATION STATEMENT") for the registration under
the Securities Act of 1933, as amended (the "SECURITIES ACT") of the IHS Stock
issued pursuant to this Agreement, and IHS shall maintain the effectiveness of
the Registration Statement for a period of one (1) year following the date on
which such Registration Statement becomes effective (the "REGISTRATION DATE"),
or until the Companies (and their respective partners, members or shareholders,
as distributees of such IHS Stock), shall not own any of the IHS Stock issued
pursuant to this Agreement, whichever shall occur first.
(C) REGISTRATION DATE SHARE ADJUSTMENT. If the average closing NYSE
price per share of IHS Stock for the 30-day trading period immediately preceding
the Registration Date (the "REGISTRATION DATE PRICE PER SHARE") is above or
below the Closing Date Price Per Share, then the number of shares of IHS Stock
issued by IHS as the Aggregate Stock Portion (as adjusted under Section 3.1)
shall be recalculated based upon the Registration Date Price Per Share, and the
following shall apply:
(I) If the number of shares of IHS Stock as recalculated under this
Section 5.1 (c) exceeds the number of shares of IHS Stock issued by IHS as the
Aggregate Stock Portion (as adjusted under Section 3.1), then IHS promptly shall
deliver to the Companies (in the proportions set forth in Schedule 3.3 hereto)
an additional number of shares of IHS Stock as shall be equal to the amount of
such excess, and such additional shares shall be included in the Registration
Statement by means of a post-effective amendment thereto.
(II) If the number of shares of IHS Stock issued by IHS as the
Aggregate Stock Portion (as adjusted under Section 3.1) exceeds the number of
shares of IHS Stock as recalculated under this Section 5.1(c), then the
Companies shall promptly return to IHS that number of shares of IHS Stock as
shall be equal to one-half (1/2) of such excess.
(D) POST-REGISTRATION DATE SHARE ADJUSTMENT. If as of the close of
trading on the NYSE on the date which is the fifteenth (15th) consecutive
trading day from (and including) the Registration Date (the "FINAL ADJUSTMENT
DATE"), the difference between (i) the average sale price per share of all IHS
Stock theretofore issued pursuant to this Agreement and sold during the period
from the
14
Registration Date to the Final Adjustment Date under the Registration Statement
in bona fide sales to third parties that are not affiliates and otherwise in
accordance with the provisions of this Article V (such shares are the "DISPOSED
SHARES"), and (ii) the average per share cost of the brokerage commissions and
expenses paid by them to the Broker (defined below) in connection with such
sales of the Disposed Shares (the difference between (i) and (ii) is the "FINAL
ADJUSTMENT DATE PRICE PER SHARE") is below the lower of (x) the Closing Date
Price Per Share, and (y) the Registration Date Price Per Share, then IHS
promptly shall issue to the Companies (in the proportions set forth in writing
by at least seventy-five (75%) percent of the Representatives pursuant to
Section 3.3 (b) hereof) an additional number of shares of IHS Stock as shall be
equal in value to the product of (A) the difference between (1) the lower of (p)
the Closing Date Price Per Share, and (q) the Registration Date Price Per Share,
and (2) the Final Adjustment Date Price Per Share, multiplied by (B) the number
of Disposed Shares, and such additional shares of IHS Stock shall be included in
the Registration Statement by means of a post-effective amendment thereto.
Shares of IHS Stock issuable pursuant to this Section 5.1 (d) 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 Final Adjustment Date.
(E) DELAYED REGISTRATION ADJUSTMENT. If the Registration Statement is
not filed and declared effective by the Commission within one-hundred twenty
(120) days following the Closing Date (the "REGISTRATION DEADLINE DATE"), then
interest shall be deemed to accrue on the value of the Aggregate Stock Portion
(as adjusted under Section 3.1) from the period beginning with the Registration
Deadline Date and ending on the Registration Date (the "INTEREST PERIOD") at the
rate of ten (10%) percent per annum for the first thirty (30) days of the
Interest Period, eleven (11%) percent per annum for the second thirty (30) days
of the Interest Period and twelve (12%) percent per annum for the remainder of
the Interest Period, and IHS shall pay to the Companies in cash (in the
proportions set forth in Schedule 3.3 hereto), not later than the fifth day of
each month during the Interest Period, the aggregate amount of accrued and
unpaid interest under this Section 5.1(e) through the last day of the
immediately preceding month of the Interest Period.
(F) REGISTRATION EXPENSES. The Companies, and their respective
partners, members and shareholders ("PARTICIPANTS") shall not be responsible
for, and IHS shall bear, all of IHS's expenses related to the registration
referred to herein, 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
the Companies' IHS Stock under the Blue Sky laws of various jurisdictions.
Except to the extent accounted for in the post-registration date share
adjustment under Section 5.1(d) above, IHS shall not pay any brokerage
discounts, commissions or expenses, or pay any costs and expenses arising out of
the Companies' or any transferee's failure to comply with its obligations under
this Article V.
(G) RESALE LIMITATIONS. All resales of IHS Stock issued pursuant to
this Agreement shall be effected solely through ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ("BROKER"),
and resales by the Companies and the Participants shall not at any time, in the
aggregate, exceed (i) Thirty-Five Thousand (35,000) shares per day for each of
the fifteen (15) consecutive trading days commencing with the Registration Date,
and (ii) Seventy-Five Thousand (75,000) shares during any thirty (30) day period
thereafter.
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(H) REGISTRATION PROCEDURES, ETC. In connection with the registration
rights granted to the Companies with respect to the IHS Stock as provided in
this Section 5.1, IHS covenants and agrees as follows:
(I) At IHS's expense, IHS will keep the registration and
qualification under this Section 5.1 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 Registration Date, or until the Companies and the
Participants shall not own any of the IHS Stock issued pursuant to this
Agreement, whichever shall occur first. IHS will promptly notify the Companies
and the Representatives, at any time when a prospectus relating to a
registration statement under this Section 5.1 is required to be delivered under
the Securities Act, of the happening of any event known to IHS 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.
(II) IHS shall furnish the Companies with such number of
prospectuses as shall reasonably be requested.
(III) IHS 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 Companies, provided that IHS 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 registration statement filed pursuant to this Section 5.1 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. IHS 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 IHS or based upon written information
furnished by IHS 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 IHS by the Companies for use in such registration
statement (it being understood that IHS may rely on the representations and
warranties of the Companies made pursuant to this Agreement in preparing such
Registration Statement), any amendment or supplement thereto or any application,
as the case may be. If any action is brought against the Companies or any
controlling person of the Companies in respect of which indemnity may be sought
against IHS pursuant to this subsection 5.1(h)(iv), the Companies or such
controlling person shall within thirty (30) days after the receipt thereby of a
summons or complaint, notify
16
IHS in writing of the institution of such action and IHS shall assume the
defense of such actions, including the employment and payment of reasonable fees
and expenses of counsel (reasonably satisfactory to the Companies or such
controlling person). The Companies 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 Companies or such
controlling person unless (A) the employment of such counsel shall have been
authorized in writing by IHS in connection with the defense of such action, or
(B) IHS 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 IHS (in which case, IHS 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 Companies and/or such controlling person
shall be borne by IHS. Except as expressly provided in the previous sentence, in
the event that IHS shall not previously have assumed the defenses of any such
action or claim, IHS shall not thereafter be liable to the Companies or such
controlling person in investigating, preparing or defending any such action or
claim.
(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 IHS, its officers and directors and each person, if any,
who controls IHS 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 in writing by or on behalf of such
holders, or their successors or assigns, for specific inclusion in such
registration statement.
(I) NOTICE OF SALE. If any Company desires to transfer all or any
portion of the IHS Stock, such party shall deliver written notice to IHS
describing in reasonable detail its 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, such party shall sell the
IHS Stock in compliance with the disclosure therein and discontinue any offers
and sales thereunder upon notice from IHS that the registration statement
relating to the IHS Stock being transferred is not "current" until IHS gives
further notice that offers and sales may be recommenced. In the event of any
such notice from IHS, IHS agrees to file expeditiously such amendments to the
registration statement as may be necessary to bring it current during the period
specified in Section 5.1(b) and to give prompt notice to the Companies and to
the Representatives when the registration statement has again become current. If
any Company desires to transfer any IHS Stock without use of the registration
statement, it shall deliver to IHS an opinion of counsel reasonably acceptable
to IHS and its counsel to the effect that the proposed transfer of IHS Stock may
be made without registration under the Securities Act, and, in such event, such
party will be entitled to transfer IHS Stock in accordance with the terms of the
notice and opinion of his counsel.
(J) FURNISH INFORMATION. It shall be a condition precedent to the
obligations of IHS to take any action pursuant to this Article V that the
Companies shall furnish to IHS in writing such information regarding themselves
and the IHS Stock held by them, and the intended method of disposition of such
securities as shall be required to effect the registration of the IHS Stock. In
that connection, the Companies shall be required to represent to IHS that all
such information which is given is both complete and accurate in all material
respects. The Companies shall deliver to IHS a statement in writing from the
beneficial owner of such securities that they bona fide intend to sell, transfer
or otherwise dispose of such securities. The Companies will promptly notify IHS
at any time when a prospectus relating to a registration statement covering
their respective shares under this Section 5.1 is required to be delivered under
the Securities Act, or the happening of any event known to them as a result of
which the prospectus included
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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.
(K) INVESTMENT REPRESENTATIONS. All shares of IHS Stock to
be issued hereunder will be newly issued shares of IHS. The Companies represent
and warrant to IHS that the IHS Stock being issued hereunder is being acquired,
and will be acquired, by the Companies for investment for their own account and
not with a view to or for sale in connection with any unlawful distribution
thereof within the meaning of the Securities Act or the applicable state
securities law; the Companies acknowledge 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 Companies
agree 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
Companies represent and warrant that they have the knowledge and experience in
financial and business matters, are capable of evaluating the merits and risks
of the investment, and are able to bear the economic risk of such investment.
The Companies have had the opportunity to make inquiries of and obtain from
representatives and employees of IHS such other information about IHS as they
deem necessary in connection with such investment.
(L) 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 IHS'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.
(M) CERTAIN TRANSFEREES. Prior to the effective date of
registration of the IHS Stock, the Companies and shall not 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 Companies under this
Article V.
5.2 TRANSFERS OF IHS STOCK AND MEMBERSHIP INTERESTS. Each
Company agrees that no portion of the IHS Stock or Company Membership Interest
issued to it pursuant to this Agreement 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.
Without limiting the generality of the foregoing, no Company may transfer any
portion of its IHS Stock or Membership Interest to any of its members or
partners unless IHS and its legal counsel shall be satisfied that such transfer
shall comply with all applicable Federal and state securities laws, including,
without limitation, the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
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ARTICLE VI: THE CLOSING
6.1 TIME AND PLACE OF CLOSING.
(A) The closing (the "CLOSING") of the Transaction shall
take place at the office of IHS's counsel at 10:00 A.M. on the day that is one
(1) business day after all of the conditions to closing set forth in this
Agreement shall have been tendered, satisfied or expressly waived, but in no
event later than May 31, 1998, or at such other time and place upon which the
parties may agree. The date on which the Closing is held is referred to in this
Agreement as the "CLOSING DATE".
(B) If prior to or on the date scheduled for the Closing
any of any party's conditions precedent to Closing shall not have been satisfied
(and the other party shall not be prepared to tender satisfaction of all
unsatisfied conditions at such time), then such party whose conditions have not
been satisfied shall be entitled, but shall not be obligated, to extend the date
scheduled for the Closing, from time to time, until such time as all of such
party's conditions precedent are satisfied; provided that no party shall be
entitled to extend the Closing to a date that is later than June 30, 1998, or if
the failure of such condition to occur is the result of any bad faith action or
failure to act of such party seeking to extend the Closing.
ARTICLE VII: REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES OF IHS. IHS hereby
represents and warrants to each of the Companies as set forth on Exhibit 7.1
(the "IHS REPRESENTATION AND WARRANTY EXHIBIT"), which exhibit is hereby
incorporated herein by reference and made an integral part of this Agreement.
7.2 REPRESENTATIONS AND WARRANTIES OF DOWNSTATE. Downstate
hereby represents and warrants to IHS and Allied as set forth on Exhibit 7.2
(the "DOWNSTATE REPRESENTATION AND WARRANTY EXHIBIT"), which exhibit is hereby
incorporated herein by reference and made an integral part of this Agreement.
7.3 REPRESENTATIONS AND WARRANTIES OF METRO/LITHO.
Metro/Litho hereby represents and warrants to IHS and Allied as set forth on
Exhibit 7.3 (the "METRO/LITHO REPRESENTATION AND WARRANTY EXHIBIT"), which
exhibit is hereby incorporated herein by reference and made an integral part of
this Agreement.
7.4 REPRESENTATIONS AND WARRANTIES OF LONG ISLAND. Long
Island hereby represents and warrants to IHS and Allied as set forth on Exhibit
7.4 (the "LONG ISLAND REPRESENTATION AND WARRANTY EXHIBIT"), which exhibit is
hereby incorporated herein by reference and made an integral part of this
Agreement.
7.5 REPRESENTATIONS AND WARRANTIES OF LITHO CORP. Litho
Corp, hereby represents and warrants to IHS and Allied as set forth on Exhibit
7.5 (the "LITHO CORP REPRESENTATION AND WARRANTY EXHIBIT").
7.6 REPRESENTATIONS AND WARRANTIES REGARDING LITHOTRIPSY
PRACTICE. Each of the Companies hereby jointly and severally represent and
warrant to IHS and Allied with respect to the Lithotripsy Practice as set forth
on Exhibit 7.6 (the "LITHOTRIPSY PRACTICE REPRESENTATION AND WARRANTY EXHIBIT",
and together with the Downstate Representation and Warranty Exhibit, the
Metro/Litho Representation and Warranty Exhibit, the Long Island Representation
and Warranty Exhibit, and the Litho Corp Representation and Warranty Exhibit,
the "REPRESENTATION AND WARRANTY EXHIBITS", and each a "REPRESENTATION AND
WARRANTY EXHIBIT"), which exhibit is hereby incorporated herein by reference and
made an integral part of this Agreement.
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ARTICLE VIII: INFORMATION AND RECORDS CONCERNING THE COMPANIES
8.1 ACCESS TO INFORMATION AND RECORDS BEFORE CLOSING.
Prior to the Closing Date, IHS may make, or cause to be
made, such investigation of the financial and legal condition of the Companies
and the Lithotripsy Practice as it deems necessary or advisable to familiarize
itself with the Companies and the Lithotripsy Practice and/or matters relating
to their history or operation. The Companies shall permit, and shall cause the
Lithotripsy Practice to permit IHS and its authorized representatives (including
legal counsel and accountants), to have full access to the books and records of
the Companies and the Lithotripsy Practice upon reasonable notice and during
normal business hours, and the Companies will furnish, or cause to be furnished,
to IHS such financial and operating data and other information and copies of
documents with respect to the products, services, operations and assets of the
Companies and the Lithotripsy Practice as IHS shall from time to time reasonably
request. The documents to which IHS shall have access shall include, but not be
limited to, the tax returns and related work papers since inception of the
Companies and the Lithotripsy Practice; and the Companies shall make, or cause
to be made, extracts thereof as IHS and its representatives may request from
time to time to enable IHS and its representatives to investigate the affairs of
the Companies and the accuracy of the representations and warranties made in
this Agreement. The Companies shall cause their accountants to cooperate with
IHS and to disclose the results of audits relating to the Companies and the
Lithotripsy Practice to produce the working papers relating thereto. Without
limiting any of the foregoing, it is agreed that IHS will have full access to
any and all agreements between and among the previous and current equity holders
regarding their ownership of equity or the management or operation of the
Companies and the Lithotripsy Practice. The Companies will, subject to mutually
acceptable conditions and schedules, permit IHS (or its representatives) to meet
with and interview the employees and representatives of the Companies and the
Lithotripsy Practice that are responsible for the responses to, or have
information with respect to, the questions set forth on the Questionnaires
referred to in the Representation and Warranty Exhibits.
ARTICLE IX: OBLIGATIONS OF THE PARTIES UNTIL CLOSING
9.1 CONDUCT OF BUSINESS PENDING CLOSING. Between the date
of this Agreement and the Closing, each Company shall, and each of the Companies
shall use its respective best efforts to cause the Lithotripsy Practice to,
maintain its respective existence and conduct its business in good faith and in
the customary and ordinary course of business consistent with past practice.
9.2 NEGATIVE COVENANTS OF THE COMPANIES. Without the prior
written approval of IHS, no Company shall (and each Company shall use its
respective best efforts to cause the Lithotripsy Practice not to) between the
date hereof and the Closing (or the earlier termination of this Agreement):
(A) (I) sell, assign, transfer or dispose of any of its
assets, except in the ordinary course of business consistent with past practice
and which does not result in a material depletion of assets;
(II) mortgage, pledge or subject to any Lien of any nature
whatsoever any of its assets, other than Permitted Liens;
(III) enter into any contract, agreement, instrument or
commitment or make or suffer any termination of any contract, agreement,
instrument or commitment, or make or suffer any modification or amendment of any
contract, agreement, instrument or commitment except, in each case, in the
ordinary course of business consistent with past practice and which will not
materially adversely affect its earnings or otherwise be material;
20
(IV) except in the ordinary course of business, consistent
with past practice, fail to comply with any applicable minimum wage law,
increase the salaries or other compensation of any of its employees, consultants
or representatives, or make any increase in, or any additions to, other benefits
to which any of such employees, consultants or representatives may be entitled;
(V) discharge or satisfy any Lien or encumbrance, or
satisfy, pay or prepay any material liabilities, other than in the ordinary
course of business consistent with past practice, or fail to pay or discharge
when due any liabilities, the failure to pay or discharge of which would likely
cause any actual damage or risk of loss to it or its business or its assets;
(VI) incur any liabilities, other than trade payables and
other operating liabilities that would be reflected on the date incurred as
current liabilities on its balance sheet in accordance with GAAP, and in the
ordinary course of business consistent with past practice;
(VII) fail to use its commercially reasonable efforts
collect any accounts receivable in the ordinary course of business consistent
with past practice;
(VIII) change any of the accounting principles followed by
it or the methods of applying such principles;
(IX) cancel, modify or waive any debts or claims held by
it, other than in the ordinary course of business consistent with past practice,
or waive any rights of substantial value, whether or not in the ordinary course
of business; or
(X) issue any capital stock, or declare or pay or set
aside or reserve any amounts for payment of any dividend or other distribution
in respect of any equity interest or other securities, or redeem or repurchase
any of its capital stock or other securities, or make any payment to any
Affiliate (as such term is defined in the Representation and Warranty Exhibits)
except for payments of ordinary dividends and tax distributions to Existing
Equity Holders and fees and compensation to Affiliates in the ordinary course of
business consistent with past practice and disclosed to IHS as such; provided,
however, that IHS will not withhold its consent to any payment otherwise
prohibited hereby so long as it reasonably believes that such payment will not
result in a Stock Portion reduction at Closing in accordance with Article III
above;
(XI) fail to collect, withhold and/or pay to any proper
Governmental Authority (as such term is defined in the Representation and
Warranty Exhibits), any Taxes (as such term is defined in the Representation and
Warranty Exhibits) required by applicable law to be so collected, withheld
and/or paid, except to the extent such Taxes are being contested in good faith
by appropriate proceedings and a proper reserve therefor has been made and is
disclosed on the relevant Balance Sheet;
(XII) institute, settle or agree to settle any litigation,
action or proceeding before any Governmental Authority (as such term is defined
in the Representation and Warranty Exhibits) relating to it or its property;
(XIII) enter into any material transaction other than in
the ordinary course of business consistent with past practice; or
(XIV) agree or otherwise become committed to do any thing
described in any of clauses (i) through and including (xiii) above;
21
(B) dissolve, reorganize, merge, consolidate or enter into
a share exchange with or into any other entity;
(C) make any change to its Governing Documents (as such
term is defined in the Representation and Warranty Exhibits);
(D) perform, take or fail to take any action or incur or
permit to exist any of the acts, transactions, events or occurrences of a type
which would be inconsistent with the representations, warranties and covenants
made by it pursuant to this Agreement had the same occurred prior to the date
hereof; provided however, that the foregoing shall not prohibit it from
acquiring or disposing of assets, or incurring trade payables, or entering into
contracts, in each case, to the extent not otherwise prohibited by this
Agreement;
(E) take any action that would prevent it from
consummating the transactions contemplated by this Agreement.
9.3 AFFIRMATIVE COVENANTS. Between the date hereof and the
Closing, each Company shall (and each Company shall use its respective
reasonable best efforts to cause the Lithotripsy Practice to):
(A) maintain its assets 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 (as
such term is defined in the Representation and Warranty Exhibits) currently in
effect with respect to its business;
(C) maintain in full force and effect the insurance
policies and binders currently in effect, or the replacements thereof;
(D) preserve intact its present business organization;
keep available the services of its present employees and agents; and maintain
the relations and goodwill with suppliers, employees, affiliated medical
personnel and any others having business relating to it;
(E) maintain all of its books and records in accordance
with its past practices;
(F) comply in all material respects with all provisions of
contracts, agreements, instruments and commitments to which it is a party, and
comply in all material respects with the provisions of all Governmental
Requirements applicable to its business;
(G) cause to be paid when due, all Taxes, imposed upon it
or on any of its properties or which it is required to withhold and pay over,
except to the extent such Taxes are being contested in good faith by appropriate
proceedings and a proper reserve therefore has been made and is disclosed on the
relevant Balance Sheet;
(H) promptly notify IHS in writing of the threat or
commencement against it of any claim, action, suit or proceeding, arbitration or
investigation;
(I) promptly notify IHS in writing of any act, event or
occurrence that constitutes, or that will constitute on the Closing Date, a
breach by it of any representation, warranty or covenant made pursuant to this
Agreement; and
22
(J) promptly notify IHS in writing of any event involving
it which has had or may be reasonably expected to have a material adverse effect
on its business or financial condition or may involve the material loss of
relationships with any of its customers.
9.4 PURSUIT OF CONSENTS AND APPROVALS. Prior to the Closing,
the parties shall cooperate and use their respective reasonable efforts to
obtain all consents and approvals of Governmental Authorities and all other
parties necessary for the lawful consummation of the transactions contemplated
hereby and the lawful use, occupancy and enjoyment of the business of the
Companies by Allied in accordance herewith ("REQUIRED APPROVALS").
9.5 SUPPLEMENTARY FINANCIAL INFORMATION. Within fifteen (15)
days after the end of each calendar month between the date of this Agreement and
the Closing Date, each Company shall provide to IHS unaudited financial
statements (including at a minimum, income statements, a balance sheet and a
statement of cash flows, and an accounts receivable aging list) for such month
then ended that shall present fairly the results of the operations of the
Companies, on a combined basis, at such date and for the period covered thereby,
all in accordance with GAAP (except as otherwise specifically disclosed in
schedules annexed thereto), in each case, certified as true and correct in all
material respects by each of the Representatives.
9.6 EXCLUSIVITY. Until the earlier of the Closing Date or the
termination of this Agreement pursuant to Section 13.1, neither the Company, nor
any of their respective Affiliates, shall, directly or indirectly (through any
brokers, finders or otherwise), solicit or entertain any offers or engage in any
discussions or negotiations or enter into any agreement or letter of intent
directly or indirectly with any other party in respect of the sale of any equity
in any Company or of substantially all of the assets of any Company, or in
respect of any merger, consolidation or other sale of any Company or, except as
contemplated by this Agreement, with respect to the management of the
Lithotripsy Practice or any lease to the Lithotripsy Practice (any of said
transactions being referred to herein as a "PROHIBITED TRANSACTION"). Any
Company shall promptly advise IHS of any offer or solicitation that he, she or
it receives for a Prohibited Transaction, including, without limitation, the
name of the person making such offer or solicitation and the terms of such offer
or solicitation.
ARTICLE X: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligation of IHS to consummate the Transaction is subject
to the satisfaction, prior to or at the Closing, of each of the following
conditions, any one or more of which may be waived by IHS, with any such waiver
to be effective only if in writing. Upon failure of any of the following
conditions, IHS may terminate this Agreement pursuant to and in accordance with
Article XII herein.
10.1 REPRESENTATIONS AND WARRANTIES.
(A) The representations and warranties of each Company
made pursuant to this Agreement shall be true and correct in all material
respects (except those representations and warranties that are qualified by
materiality, which shall be true and correct in all respects) at and as of the
Closing, as though such representations and warranties were made at and as of
such time.
(B) The representations and warranties of each Existing
Equity Holder made pursuant to its, his or her Representation and
Indemnification Agreement shall be true and correct in all material respects
(except those representations and warranties that are qualified by materiality,
which shall be true and correct in all respects) at and as of the Closing, as
though such representations and warranties were made at and as of such time.
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10.2 PERFORMANCE OF COVENANTS.
(A) Each of the Companies 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 them prior to or at the
Closing.
(B) Each Existing Equity Holder shall have performed or
complied in all material respects with such party's respective agreements and
covenants required by this Agreement to be performed or complied with by such
party prior to or at the Closing.
10.3 DELIVERY OF CLOSING CERTIFICATE. An authorized officer,
manager or general partner of each Company shall have executed and delivered to
IHS a certificate dated the Closing Date, upon which IHS may rely, certifying
that the conditions contemplated by Sections 10.1 and 10.2 applicable to them
have been satisfied.
10.4 OPINIONS OF COUNSEL.
(A) The Companies shall have delivered to IHS an opinion,
dated the Closing Date, of their counsel, in form and substance to be mutually
agreed.
(B) In addition, IHS shall have received an opinion
acceptable to it from legal counsel in New York on the present ownership,
referral and reimbursement structure of the lithotripsy business conducted by
each of the Companies, and on such other matters, as IHS shall reasonably
request. The cost of such regulatory opinion shall be borne by IHS.
10.5 LEGAL MATTERS. No preliminary or permanent injunction or
other order (including a temporary restraining order) of any Governmental
Authority which prohibits or prevents the consummation of the transactions
contemplated by this Agreement shall have been issued and remain in effect.
10.6 AUTHORIZATION DOCUMENTS. IHS shall have received a
certificate of an authorized officer, manager or general partner of each Company
certifying as of the Closing Date a copy of resolutions of its shareholders,
members or partners authorizing the execution and full performance of this
Agreement and the Transaction Documents and the incumbency of its authorized
representatives.
10.7 MATERIAL CHANGE. Since the date of the Balance Sheet
there shall not have been any material adverse change in the condition
(financial or otherwise) of the assets, properties or operations of any Company
or the Lithotripsy Practice, taken as a whole.
10.8 APPROVALS.
(A) The Required Approvals shall have been granted;
(B) None of the Required 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 business of any Company or Allied or IHS (or
any of its subsidiaries or affiliates), or (ii) shall impose upon any of them
any material condition or provision or requirement with respect to its business
or the respective operation thereof that is more restrictive than the conditions
imposed upon such operation prior to Closing.
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10.9 [INTENTIONALLY OMITTED].
10.10 ENGINEERING REPORT. IHS shall have received a copy of an
engineering survey and report in form and substance reasonably satisfactory to
it from a qualified engineering or other firm of its choice concerning a full
and complete inspection of the Long Island Facility. If such report states that
a material problem exists, IHS may terminate this Agreement.
10.11 SURVEYS. IHS shall have received a standard real estate
boundary and as built survey of the Long Island Facility, prepared by a land
surveyor licensed in New York and approved by IHS that confirms the condition of
the property without Liens or exceptions other than Permitted Liens. If such
report states that a material problem exists, IHS may terminate this Agreement.
10.12 ZONING REPORT. IHS shall have received reports from
qualified zoning inspectors approved by it with respect to the compliance of the
Long Island Facility with all applicable zoning requirements. If such report
states that a material problem exists, IHS may terminate this Agreement.
10.13 TITLE INSURANCE. IHS shall have obtained, at its
expense, at normal rates, a title commitment from a reputable title insurance
company selected by IHS (the "TITLE COMPANY") for a title policy (owner's ALTA
Policy Form B, as amended 10/17/70), insuring that title to the Long Island
Facility shall be good and marketable and free and clear of all Liens and other
title objections (including any lien or future claim from materials or labor
supplied for improvement of such property), except for Permitted Liens and the
standard exceptions normally contained in the ALTA Form B Title Policy and
schedules thereto; provided, however, that at the request of IHS the applicable
Company, shall provide such affidavits to the Title Company or take such other
reasonable actions (at no expense to IHS or Allied) that would enable the Title
Company to remove any of such standard exceptions. If such title commitment
shall indicate that any Liens or other exceptions exist that are not permitted
as aforesaid, IHS may terminate this Agreement.
10.14 OPERATING AGREEMENT. The Operating Agreement shall
be in the form and substance of Exhibit A.
10.15 MANAGEMENT AGREEMENT AND LEASES. The Lithotripsy
Practice shall have entered into a Management Agreement (the "MANAGEMENT
AGREEMENT") with Allied in the form and substance of Exhibit 10.15, and shall
have entered into equipment and facility leases with Allied on terms and
conditions no less favorable to Allied than those presently governing with
respect to the leases of equipment and facilities by the Companies to the
Lithotripsy Practice, and otherwise on terms and conditions reasonably
satisfactory to the parties hereto, provided, however, that the aggregate amount
of rent payable by the Lithotripsy Practice for equipment and facility space
attributable to the Manhattan Facility, the Long Island Facility and the
Westchester Facility shall in no event be less than $3,750,000.
10.16 LIENS ON LITHOTRIPSY PRACTICE ASSETS. All security
interests held by any of the Comapnies with respect to any of the assets and
property, including receivables, of the Lithotripsy Practice, shall be
terminated.
10.17 WESTCHESTER FACILITY. The Westchester Facility shall
be operational.
10.18 EMPLOYMENT AND CONSULTING AGREEMENTS. Allied shall
have entered into Employment Agreements with ▇▇. ▇▇▇▇▇▇▇ in the form and
substance of Exhibit 10.18-1 (the "▇▇▇▇▇▇▇ EMPLOYMENT AGREEMENT") and with ▇▇.
▇▇▇▇▇▇▇▇▇ in the form and substance of Exhibit 10.18-2 (the "▇▇▇▇▇▇▇▇▇
EMPLOYMENT AGREEMENT", and collectively, the "EMPLOYMENT AGREEMENTS").
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10.19 NON-COMPETE AGREEMENTS. At least eighty-five (85%)
percent of the urologists that hold equity interests in any of the Companies on
the date hereof, and the Lithotripsy Practice and each Company, shall have
entered into non-competition agreements with Allied in the form and substance of
Exhibit 10.19 (the "NON-COMPETE AGREEMENTS"). Without limiting the foregoing,
each of the urologists set forth on Schedule 10.19 shall have entered into
Non-Compete Agreements.
10.20 AGREEMENTS WITH CERTAIN UROLOGISTS, RADIOLOGY
TECHNOLOGISTS AND ANESTHESIOLOGISTS. The Companies shall use their respective
reasonable best efforts to cause each radiology technologist and
anaesthesiologist that performs services for the Lithotripsy Practice, to have
entered into an agreement with respect to their provision of services to the
Lithotripsy Practice on terms and conditions reasonably satisfactory to IHS.
10.21 INVESTOR REPRESENTATION AND INDEMNIFICATION
AGREEMENTS. Each Existing Equity Holder shall have executed and delivered a
Representation and Indemnification Agreement in the form of Exhibit 10.21 (the
"REPRESENTATION AND INDEMNIFICATION AGREEMENTS"), pursuant to which it, he or
she shall make certain representations, warranties and covenants with respect to
its, his or her equity interest in the applicable Company, its, his or her
proposed investment in Allied, and with respect to certain other matters, and
pursuant to which it, he or she shall agree to indemnify Allied and IHS, subject
to the terms and conditions set forth in such Representation and Indemnification
Agreements, with respect to breaches of representations, warranties and
covenants of the Companies in which it, he or she is an equity holder.
10.22 WORKING CAPITAL. The aggregate Estimated Closing
Date Working Capital of the Companies shall be at least $525,000.
10.23 LONG-TERM LIABILITIES. The aggregate Estimated
Long-term Liabilities of the Companies shall not be greater than $1,300,000.
10.24 ESTIMATED LITHOTRIPSY PRACTICE BALANCE SHEET. The
Companies shall have delivered to IHS a certificate signed by each
Representative certifying his or her best good faith estimate of the balance
sheet of the Lithotripsy Practice as of the Closing Date (the "ESTIMATED
LITHOTRIPSY PRACTICE CLOSING DATE BALANCE SHEET"). If the working capital of the
Lithotripsy Practice as set forth on the Estimated Lithotripsy Practice Balance
Sheet shall be less than $3,000,000 (the "MINIMUM LITHOTRIPSY PRACTICE WORKING
CAPITAL"), or if there shall be any long-term liabilities set forth thereon, IHS
shall not be required to close the transactions contemplated hereby. Any working
capital in excess of the Minimum Lithotripsy Practice Working Capital may be
distributed to the Companies prior to Closing.
10.25 OTHER DOCUMENTS. The Companies shall have furnished
IHS or Allied with all other documents, certificates and other instruments
required to be furnished by them pursuant to the terms hereof.
ARTICLE XI: CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANIES
The obligation of the Companies to consummate the
transactions contemplated by this Agreement is subject to the satisfaction,
prior to or at the Closing, of each of the following conditions, any one or more
of which may be waived by the applicable Representative, with any such waiver to
be effective only if in writing. Upon failure of any of the following
conditions, the applicable Representative may terminate this Agreement pursuant
to and in accordance with Article XIII herein.
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11.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of IHS made pursuant to this Agreement shall be true and correct
in all material respects (except those representations and warranties that are
qualified by materiality, which shall be true and correct in all respects) at
and as of the Closing as though such representations and warranties were made at
and as of such time.
11.2 PERFORMANCE OF COVENANTS. IHS 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. IHS shall have delivered to
the Representatives a certificate of an officer of IHS dated the Closing Date
upon which the Companies may 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.
(A) IHS shall have delivered to the Representatives an
opinion, dated the Closing Date, of its counsel, in form and substance to be
mutually agreed.
(B) In addition, the Representatives shall have received
an opinion acceptable to them from legal counsel in New York on the present
ownership, referral and reimbursement structure of the lithotripsy business
conducted by each of the Companies, and on such other matters, as the
Representatives shall reasonably request.
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 AUTHORIZATION DOCUMENTS. The Representatives shall have
received a certificate of the Secretary or other officer of IHS certifying a
copy of resolutions of the Board of Directors of IHS authorizing IHS's execution
and full performance of this Agreement and the Transaction Documents and the
incumbency of the officers of IHS.
11.7 EMPLOYMENT AGREEMENTS. Each of the Employment Agreements
shall have been executed and delivered.
11.8 RELEASE OF GUARANTIES. Each Existing Equity Holder shall have
been released from any guaranties of the Assumed Liabilities. The parties shall
use their respective commercially reasonable efforts to obtain such releases.
Notwithstanding the foregoing, if any of such releases are not obtained, IHS, in
its sole and absolute discretion, may cause the condition set forth herein to be
satisfied by electing that Allied indemnify and hold any Existing Equity Holder
harmless from and against one-hundred (100%) percent of any Losses (as such term
is hereinafter defined in Section 12.2) arising out of any guaranty by such
Existing Equity Holder of any Assumed Liability.
11.9 OPERATING AGREEMENT. The Operating Agreement shall be in the
form and substance of Exhibit A.
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11.10 MANAGEMENT AGREEMENT AND LEASES. The Lithotripsy Practice
shall have entered into the Management Agreement with Allied in the form and
substance of Exhibit 10.15, and shall have entered into equipment and facility
leases with Allied on terms and conditions no less favorable to Allied than
those presently governing with respect to the leases of equipment and facilities
by the Companies to the Lithotripsy Practice, and otherwise on terms and
conditions reasonably satisfactory to the parties hereto, provided, however,
that the aggregate amount of rent payable by the Lithotripsy Practice for
equipment and facility space attributable to the Manhattan Facility, the Long
Island Facility and the Westchester Facility shall in no event be less than
$3,750,000.
11.11 IHS NON-COMPETE/FIRST OFFER AGREEMENT. IHS shall have
entered into a Non- compete/First Offer Agreement with Allied in the form and
substance of Exhibit 11.11.
11.12 CONSENT OF EXISTING EQUITY HOLDERS. To the extent required
by each of their respective organizational agreements and charters, or otherwise
pursuant to applicable law, each Company shall have obtained the approval from
its shareholders, partners or members, as applicable, of the transactions
contemplated hereby.
11.13 OTHER DOCUMENTS. IHS shall have furnished the Companies with
all documents, certificates and other instruments required to be furnished to
them by IHS pursuant to the terms hereof.
11.14 NO DECLINE IN STOCK PRICE. The closing NYSE price per share
of IHS Stock as of the close of trading on the most recent trading day prior to
the Closing shall not be more than thirty-three (33%) percent below the NYSE
price per share of IHS Stock as of the close of trading on the date of this
Agreement (or, if the date hereof is not a trading date, then the most recent
trading day prior to the date of this Agreement).
ARTICLE XII: SURVIVAL AND INDEMNIFICATION; POST-CLOSING OBLIGATIONS
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by each party in this Agreement and in each
Schedule and Transaction Document shall survive the Closing Date notwithstanding
any investigation at any time made by or on behalf of the other party.
12.2 INDEMNIFICATION BY THE COMPANIES.
(A) DOWNSTATE. Subject to the limitations set forth in Section
12.5 below, Downstate shall indemnify and defend IHS and Allied and each of
their respective shareholders, members, managers, officers, directors, agents
and employees, and their respective successors and assigns ("IHS/ALLIED
INDEMNITEES") and hold each of them 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 or arising out
of:
(I) any inaccuracy in, or any breach of, any representation or
warranty made or certification delivered by Downstate pursuant to this
Agreement;
(II) the breach of any covenant or agreement by Downstate made
pursuant to this Agreement;
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(III) any Downstate Excluded Liability;
(IV) any Lithotripsy Practice Prohibited Liability; or
(V) any action, suit, proceeding, demand, assessment, judgment,
settlement, cost or legal or other expense incident to any of the foregoing.
(B) METRO/LITHO. Subject to the limitations set forth in Section
12.5 below, Metro/Litho shall indemnify and defend the IHS/Allied Indemnitees
and hold each of them harmless against and with respect to any and all Loss
resulting from or arising out of:
(I) any inaccuracy in, or any breach of, any representation or
warranty made or certification delivered by Metro/Litho pursuant to this
Agreement;
(II) the breach of any covenant or agreement by Metro/Litho made
pursuant to this Agreement;
(III) any Metro/Litho Excluded Liability;
(IV) any Lithotripsy Practice Prohibited Liability; or
(V) any action, suit, proceeding, demand, assessment, judgment,
settlement, cost or legal or other expense incident to any of the foregoing.
(C) LONG ISLAND. Subject to the limitations set forth in Section
12.5 below, Long Island shall indemnify and defend the IHS/Allied Indemnitees
and hold each of them harmless against and with respect to any and all Loss
resulting from or arising out of:
(I) any inaccuracy in, or any breach of, any representation or
warranty made or certification delivered by Long Island pursuant to this
Agreement;
(II) the breach of any covenant or agreement by Long Island made
pursuant to this Agreement;
(III) any Long Island Excluded Liability;
(IV) any Lithotripsy Practice Prohibited Liability; or
(V) any action, suit, proceeding, demand, assessment, judgment,
settlement, cost or legal or other expense incident to any of the foregoing.
(D) LITHO CORP. Subject to the limitations set forth in Section
12.5 below, Litho Corp shall indemnify and defend the IHS/Allied Indemnitees and
hold each of them harmless against and with respect to any and all Loss
resulting from or arising out of:
(I) any inaccuracy in, or any breach of, any representation or
warranty made or certification delivered by Litho Corp pursuant to this
Agreement;
(II) the breach of any covenant or agreement by Litho Corp made
pursuant to this Agreement;
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(III) any Litho Corp Excluded Liability;
(IV) any Lithotripsy Practice Prohibited Liability; or
(V) any action, suit, proceeding, demand, assessment, judgment,
settlement, cost or legal or other expense incident to any of the foregoing.
12.3 INDEMNIFICATION BY IHS. IHS shall indemnify and defend each
Company and hold them and their respective members, partners, shareholders,
directors, officers and managers and their respective successors and assigns
harmless against and with respect to any and all Loss resulting from or arising
out of:
(A) any inaccuracy in, or breach of, any representation or
warranty made or certification delivered by IHS pursuant to this Agreement;
(B) the breach of any covenant or agreement by IHS made pursuant
to this Agreement; or
(C) any action, suit, proceeding, demand, assessment, judgment,
settlement, cost or legal or other expenses incident to any of the foregoing.
12.4 INDEMNIFICATION BY ALLIED. Allied shall indemnify and defend
each Company and hold them and their respective members, partners, shareholders,
directors, officers and managers and their respective successors and assigns
harmless against and with respect to any and all Loss resulting from or arising
out of the ownership and operation of the Aggregate Assets, and the assumption
and satisfaction of Aggregate Assumed Liabilities, after the Closing Date.
12.5 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.
(A) EXCEPTIONS TO SEVERAL LIABILITY. Except as hereinafter
provided or as otherwise expressly provided in this Agreement, each of the
parties (and each of the Existing Equity Holders, pursuant to their respective
Representation and Indemnification Agreements) shall be severally and not
jointly liable for any indemnification obligations arising out of this Article
XII.
(I) Downstate shall be jointly and severally liable with the
Downstate Existing Equity Holders (pursuant to their respective Representation
and Indemnification Agreements) for all of its indemnification obligations
hereunder and their indemnification obligations under their respective
Representation and Indemnification Agreements.
(II) Metro/Litho shall be jointly and severally liable with the
Metro/Litho Existing Equity Holders (pursuant to their respective Representation
and Indemnification Agreements) for all of its indemnification obligations
hereunder and their indemnification obligations under their respective
Representation and Indemnification Agreements.
(III) Long Island shall be jointly and severally liable with the
Long Island Existing Equity Holders (pursuant to their respective Representation
and Indemnification Agreements) for all of its indemnification obligations
hereunder and their indemnification obligations under their respective
Representation and Indemnification Agreements.
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(IV) Litho Corp shall be jointly and severally liable with the
Litho Existing Equity Holders (pursuant to their respective Representation and
Indemnification Agreements) for all of its indemnification obligations hereunder
and their indemnification obligations under their respective Representation and
Indemnification Agreements.
(V) Downstate, Metro/Litho, Long Island, Litho Corp and their
respective Existing Equity Holders (pursuant to their respective Representation
and Indemnification Agreements), shall be jointly and severally liable for all
indemnification obligations relating to representations and warranties made
pursuant to the Lithotripsy Practice Representation and Warranty Exhibit.
(B) ASSERTION OF INDEMNIFICATION CLAIMS FOR BREACHES OF
REPRESENTATIONS AND WARRANTIES. Any claim for indemnification for any Loss
arising out of any breach of any representation or warranty made or
certification delivered pursuant to this Agreement must be asserted by written
notice by no later than the fifteen (15) month anniversary of the Closing Date,
except that any claim by any IHS/Allied Indemnitee for indemnification arising
out of a breach of any representation or warranty with respect to any Tax matter
may be asserted any time prior to expiration of the applicable statute of
limitations for the assertion of the related tax claim by the applicable
Governmental Authority, including extensions for any necessary appeals.
(C) MAXIMUM LIABILITY. Subject to subsection (d) below, the
maximum aggregate liability of each of: (i) the Companies and the Existing
Equity Holders (pursuant to their Representation and Indemnification Agreements)
(considered together), or (ii) Allied, or (iii) IHS, for indemnification
pursuant to this Agreement, shall not exceed $5,000,000. Each Representation and
Indemnification Agreement provides that, subject to subsection (d) below, each
Existing Equity Holder shall not be liable for more than forty-seven and
six-tenths percent (47.6%) of his or her allocable share (based on the portion
of such Company that is owned by him or her) of any indemnification obligation
to any IHS/Allied Indemnitee for any Losses for which said Company is jointly
and severally liable in accordance with subsection (a) above.
(D) EXCEPTIONS TO MAXIMUM LIABILITY. Notwithstanding anything to
the contrary contained in subsection (c) above or elsewhere in this Agreement,
there shall be no limit on the liability for indemnification obligations of any
of the parties hereto or any of the Existing Equity Holders pursuant to this
Agreement or pursuant to their respective Representation and Indemnification
Agreements with respect to any obligation to make any payment or refund pursuant
to Article III or Article V hereof. Furthermore, notwithstanding anything to the
contrary contained in subsection (c) above or elsewhere in this Agreement, the
Companies, and the Existing Equity Holders (pursuant to their respective
Representation and Indemnification Agreements) shall, without limitation on
amount, indemnify and hold the IHS/Allied Indemnitees harmless from and against
any Loss incurred by any of them by reason of any claim of any Company, or any
Existing Equity Holder against any IHS/Allied Indemnitee, or against any other
Company or Existing Equity Holder arising out of any breach of any
representation, warranty, or covenant made, or certification delivered, by any
Company, or any Existing Equity Holder to any IHS/Allied Indemnitee, or to each
other in connection with the transactions contemplated by this Agreement, except
to the extent that any such Loss shall have been caused by IHS (whether by
action or by omission to act when a duty to act existed and including as a
result of a breach of any representation, warranty or covenant made by IHS).
Furthermore, the limitations contained in subsection (c) above shall not apply
to any cost or expense, including without limitation, reasonable legal fees and
expenses, incurred in connection with the enforcement of the indemnification
obligations.
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(E) BASKET. None of (i) the Companies, and the Existing Equity
Holders (considered together), (ii) IHS, or (iii) Allied shall be liable for
indemnification obligations pursuant to this Agreement or the Representation and
Indemnification Agreements unless and until the aggregate amount of the
indemnification liabilities against them, Allied or IHS, as the case may be,
shall exceed $10,000, in which case they, Allied or IHS, as the case may be,
shall be liable for the entire amount of such indemnification liabilities.
(F) RIGHT AND OBLIGATION TO PROCEED AGAINST AMOUNTS DUE TO THE
COMPANIES, AND THE EXISTING EQUITY HOLDERS. Each of the Companies hereby
irrevocably grants, and each of the Existing Equity Holders shall, pursuant to
their respective Representation and Indemnity Agreements, irrevocably grant to
each IHS/Allied Indemnitee the right to collect any amounts that it, he or she
may owe to such IHS/Allied Indemnitee by reason of indemnification rights under
this Agreement or any Representation and Indemnity Agreement by taking an
assignment of any amount that shall then or thereafter become due to it, him or
her by Allied. In furtherance of the foregoing, each of the Companies hereby
irrevocably authorizes and instructs Allied, and each of the Existing Equity
Holders shall, pursuant to their respective Representation and Indemnity
Agreements, irrevocably authorize and instruct Allied, to pay (out of any
amounts that shall then be due by Allied to such indemnifying party) to any
IHS/Allied Indemnitee, upon receipt of a written demand from such IHS/Allied
Indemnitee (with copies thereof delivered to the Representatives) any amount
that such IHS/Allied Indemnitee claims pursuant to the indemnification
provisions of this Agreement or any Representation and Indemnity Agreement.
Allied shall be required to make such payment to such IHS/Allied Indemnitee (to
the extent of any amounts that shall then be due to such indemnifying party by
Allied), provided, however, that if the indemnifying party so requests, Allied
shall deposit (out of any amounts that shall then be due by Allied to such
indemnifying party) in an escrow account with Crestar Bank (to be held in escrow
pending joint written delivery instructions from the indemnifying party and the
applicable IHS/Allied Indemnitee, or an order of a court of competent
jurisdiction) any amount that such IHS/Allied Indemnitee claims pursuant to the
indemnification provisions of this Agreement or any Representation and
Indemnification Agreement. If there shall be a Closing, each IHS/Allied
Indemnitee shall be required to proceed to collect any amounts that it claims
pursuant to its, his or her indemnification rights under this Agreement or any
Representation and Indemnity Agreement to the extent of any amounts that shall
then be due by Allied to the applicable indemnifying party prior to proceeding
directly against such indemnifying party.
12.6 CONTROL OF DEFENSE OF INDEMNIFIABLE CLAIMS.
(A) IHS/ALLIED INDEMNITEE CLAIMS. IHS shall be entitled to control
any indemnification claims and rights of Allied. IHS shall give the applicable
Representative (or, in case of a claim involving the Lithotripsy Practice, to
all of the Representatives) prompt written notice of each claim for which any
IHS/Allied Indemnitee seeks indemnification. Failure to give such prompt written
notice shall not relieve any party of its, his or her respective indemnification
obligation (each, an "INDEMNIFYING PARTY"), provided that such indemnification
obligations shall be reduced by any damages that the applicable Indemnifying
Party demonstrates that it, he or she has suffered resulting from a failure to
give prompt notice hereunder. Any Indemnifying Party shall be entitled to
participate in the defense of such claim; however, unless an applicable
Indemnifying Party acknowledges in writing that the claim is fully indemnifiable
by it, him, or her under this Agreement (without any limitations imposed
pursuant to Section 12.5 (c) above), and, if requested by IHS, posts adequate
bond or security, IHS shall be entitled to control the defense of such claim at
the cost and expense of the Indemnifying Parties. If any Indemnifying Party does
acknowledge in writing that the claim is fully indemnifiable by it, him, or her
under this Agreement (without any limitations imposed pursuant to Section
12.5(c) above), and, if requested by IHS, posts adequate bond or security, then
such Indemnifying Party (together with any other Indemnifying Party that is so
qualified) may assume
32
control of the defense of any such claim, and IHS shall not settle such claim
without the consent of the Representative for such Indemnifying Party, which
consent shall not be unreasonably withheld, delayed or conditioned. Nothing
contained in this Section 12.6 shall prevent either party from assuming control
of the defense and/or settling any claim against it for which indemnification is
not sought under this Agreement.
(B) COMPANY CLAIMS. Any Company seeking indemnification from IHS
pursuant to this Agreement shall give IHS prompt written notice of each claim
for which such indemnification is sought. Failure to give such prompt written
notice shall not relieve IHS of its indemnification obligation, provided that
such indemnification obligation shall be reduced by any damages that IHS
demonstrates it has suffered resulting from a failure to give prompt notice
hereunder. IHS shall be entitled to participate in the defense of any such
claim; however, unless IHS acknowledges in writing that the claim is fully
indemnifiable by it under this Agreement (without any limitations imposed
pursuant to Section 12.5(c) above), and, if requested by such indemnified party,
posts adequate bond or security, such indemnified party shall be entitled to
control the defense of such claim at the cost and expense of IHS. If IHS does
acknowledge in writing that the claim is fully indemnifiable by it under this
Agreement (without any limitations imposed pursuant to Section 12.5(c) above),
and, if requested by the indemnified party, posts adequate bond or security,
then IHS may assume control of the defense of any such claim, and the
indemnified party shall not settle such claim without the consent of IHS, which
consent shall not be unreasonably withheld, delayed or conditioned. Nothing
contained in this Section 12.6 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.
12.7 AGREEMENT REGARDING CERTAIN UROLOGISTS. After the
Closing, the Companies shall in good faith use their reasonable best efforts to
cause Drs. Lui, Peng, Salant, ▇▇▇▇ and ▇▇▇▇▇ to become members of Allied,
pursuant to the terms of the Operating Agreement.
ARTICLE XIII: TERMINATION
13.1 TERMINATION. This Agreement may be terminated at any time at
or prior to the time of Closing by:
(A) IHS, if any condition precedent to the obligations of IHS
under this Agreement, including without limitation, those conditions set forth
in Section 2.5(a), Section 4.1 or Article X hereof, have not been satisfied by
the date scheduled for the Closing, as the same may be extended pursuant to
Section 6.1(b), or pursuant to Section 14.1 if any material portion of the
Downstate Assets, the Long Island Assets, the Metro/Litho Assets or the Litho
Corp Assets is damaged or destroyed as a result of fire, other casualty or from
any reason whatsoever, or otherwise as expressly provided in this Agreement;
(B) any Representative, if any condition precedent to the
obligations of any party for whom it is acting as the Representative hereunder,
including without limitation those conditions set forth in Article XI hereof,
have not been satisfied by the date scheduled for the Closing, as the same may
be extended pursuant to Section 6.1(b), or otherwise as expressly provided in
this Agreement;
(C) the mutual consent of IHS and each Representative.
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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, 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 Section 12.2 or 12.3, as the case may be, hereof (and
for such purposes such Section 12.2 or 12.3, as the case may be, shall survive
the termination of this Agreement). Notwithstanding the foregoing, if at any
time on or prior to the Closing, (i) IHS shall determine that the certificate
contemplated in Section 11.3 hereof as it relates to the condition set forth at
Section 11.1 hereof cannot be delivered at Closing, or (ii) any Company shall
determine that the certificate contemplated in Section 10.3 hereof as it relates
to the condition set forth at Section 10.1(a) hereof cannot be delivered at
Closing, in either case as the result of events occurring or circumstances
arising after the date hereof, which events or circumstances have not occurred
or arisen as a result of any act or omission in violation of such party's
obligations hereunder, then the party whose condition has not been fulfilled
shall have the right to waive such condition and proceed with the Closing or
terminate this Agreement, without any liability of any party to the other.
Nothing in this Section 13.2 shall affect the right of any party to seek
specific performance of the obligations of any other parties at Closing
hereunder.
ARTICLE XIV: CASUALTY, RISK OF LOSS
14.1 CASUALTY, RISK OF LOSS. The Companies shall bear the risk of
all loss or damage to any of the Aggregate Assets from all causes which occur
prior to the Closing. If at any time prior to the Closing any material portion
of the Aggregate Assets is damaged or destroyed as a result of fire, other
casualty or for any reason whatsoever, the applicable Representative shall
immediately give notice thereof to IHS. IHS 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 the applicable
Company on account of any such casualty (and such insurance proceeds shall not
be included as current assets for purposes of determining Proposed Closing Date
Working Capital).
ARTICLE XV: MISCELLANEOUS
15.1 REPRESENTATIVES.
(A) DOWNSTATE REPRESENTATIVE. Downstate hereby designates, and
each Downstate Existing Equity Holder shall designate (pursuant to its, his or
her Representation and Indemnification Agreement) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D., and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D. hereby accepts the designation as the representative of
Downstate and each Downstate Existing Equity Holder (the "DOWNSTATE
REPRESENTATIVE") to act for and on behalf of Downstate and each Downstate
Existing Equity Holder as provided in this Agreement and each applicable
Representation and Indemnification Agreement. Downstate and each Downstate
Existing Equity Holder shall be bound by all actions taken or omitted by the
Downstate Representative on behalf of any of them as provided in this Agreement
and each applicable Representation and Indemnification Agreement, and Downstate
and each Downstate Existing Equity Holder shall be deemed to have received any
notice given or payment made to the Downstate Representative in accordance with
the notice provisions of this Agreement on the date deemed given or the date
paid to the Downstate Representative, and IHS shall be entitled to rely on all
notices and consents given, and all settlements entered into on behalf of
Downstate or any Downstate Existing Equity Holder to the extent authorized
pursuant to the terms of this Agreement notwithstanding any objections made by
any Downstate Existing Equity Holder prior to, concurrently with or subsequent
to the giving of any such notice or consent or the settlement of any such
matter. The Downstate Representative may be replaced only if and when Downstate
and each
34
Downstate Existing Equity Holder shall notify IHS that a new individual person
(named in such notice) has been selected by a majority of Downstate Existing
Equity Holders to be the new Downstate Representative, in which case such new
person shall thereafter be the Downstate Representative. The Downstate
Representative shall not be liable to Downstate or any Downstate Existing Equity
Holder for any costs, losses, liabilities, damages, expenses and claims imposed
upon or asserted against the Downstate Representative (including fees and
disbursements of counsel) on account of any action taken or omitted to be taken
in connection with his acceptance of or performance of his duties and
obligations under this Agreement, other than any act or omission involving gross
negligence or willful misconduct.
(B) METRO/LITHO REPRESENTATIVE. Metro/Litho hereby designates, and
each Metro/Litho Existing Equity Holder shall designate (pursuant to its, his or
her Representation and Indemnification Agreement) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D., and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D. hereby accepts the designation as the representative of
Metro/Litho and each Metro/Litho Existing Equity Holder (the "METRO/LITHO
REPRESENTATIVE") to act for and on behalf of Metro/Litho and each Metro/Litho
Existing Equity Holder as provided in this Agreement and each applicable
Representation and Indemnification Agreement. Metro/Litho and each Metro/Litho
Existing Equity Holder shall be bound by all actions taken or omitted by the
Metro/Litho Representative on behalf of any of them as provided in this
Agreement and each applicable Representation and Indemnification Agreement, and
Metro/Litho and each Metro/Litho Existing Equity Holder shall be deemed to have
received any notice given or payment made to the Metro/Litho Representative in
accordance with the notice provisions of this Agreement on the date deemed given
or the date paid to the Metro/Litho Representative, and IHS shall be entitled to
rely on all notices and consents given, and all settlements entered into on
behalf of Metro/Litho or any Metro/Litho Existing Equity Holder to the extent
authorized pursuant to the terms of this Agreement notwithstanding any
objections made by any Metro/Litho Existing Equity Holder prior to, concurrently
with or subsequent to the giving of any such notice or consent or the settlement
of any such matter. The Metro/Litho Representative may be replaced only if and
when Metro/Litho and each Metro/Litho Existing Equity Holder shall notify IHS
that a new individual person (named in such notice) has been selected by a
majority of the Metro-Litho Existing Equity Holders be the new Metro/Litho
Representative, in which case such new person shall thereafter be the
Metro/Litho Representative. The Metro/Litho Representative shall not be liable
to Metro/Litho or any Metro/Litho Existing Equity Holder for any costs, losses,
liabilities, damages, expenses and claims imposed upon or asserted against the
Metro/Litho Representative (including fees and disbursements of counsel) on
account of any action taken or omitted to be taken in connection with his
acceptance of or performance of his duties and obligations under this Agreement,
other than any act or omission involving gross negligence or willful misconduct.
(C) LONG ISLAND REPRESENTATIVE. Long Island hereby designates, and
each Long Island Existing Equity Holder shall designate (pursuant to its, his or
her Representation and Indemnification Agreement) ▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D., and ▇▇▇▇▇
▇▇▇▇▇▇▇, M.D. hereby accepts the designation as the representative of Long
Island and each Long Island Existing Equity Holder (the "LONG ISLAND
REPRESENTATIVE") to act for and on behalf of Long Island and each Long Island
Existing Equity Holder as provided in this Agreement and each applicable
Representation and Indemnification Agreement. Long Island and each Long Island
Existing Equity Holder shall be bound by all actions taken or omitted by the
Long Island Representative on behalf of any of them as provided in this
Agreement and each applicable Representation and Indemnification Agreement, and
Long Island and each Long Island Existing Equity Holder shall be deemed to have
received any notice given or payment made to the Long Island Representative in
accordance with the notice provisions of this Agreement on the date deemed given
or the date paid to the Long Island Representative, and IHS shall be entitled to
rely on all notices and consents given, and all settlements entered into on
behalf of Long Island or any Long Island Existing Equity Holder to the extent
authorized pursuant to the terms of this Agreement notwithstanding any
objections made by any
35
Long Island Existing Equity Holder prior to, concurrently with or subsequent to
the giving of any such notice or consent or the settlement of any such matter.
The Long Island Representative may be replaced only if and when Long Island and
each Long Island Existing Equity Holder shall notify IHS that a new individual
person (named in such notice) has been selected by a majority of the Long Island
Existing Equity Holders to be the new Long Island Representative, in which case
such new person shall thereafter be the Long Island Representative. The Long
Island Representative shall not be liable to Long Island or any Long Island
Existing Equity Holder for any costs, losses, liabilities, damages, expenses and
claims imposed upon or asserted against the Long Island Representative
(including fees and disbursements of counsel) on account of any action taken or
omitted to be taken in connection with his acceptance of or performance of his
duties and obligations under this Agreement, other than any act or omission
involving gross negligence or willful misconduct.
(D) LITHO CORP REPRESENTATIVE. Litho Corp hereby designates, and
each Litho Corp Existing Equity Holder shall designate (pursuant to his
Representation and Indemnification Agreement) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D., and ▇▇▇▇▇▇
▇▇▇▇▇▇▇, M.D., hereby accepts the designation as the representative of Litho
Corp and each Litho Corp Existing Equity Holder (the "LITHO CORP
REPRESENTATIVE", and together with the Downstate Representative, the Metro/Litho
Representative, and the Long Island Representative, the "REPRESENTATIVES", and
each a "REPRESENTATIVE") to act for and on behalf of Litho Corp and each Litho
Corp Existing Equity Holder (as provided in this Agreement. Litho Corp and each
Litho Corp Existing Equity Holder shall be bound by all actions taken or omitted
by the Litho Corp Representative on behalf of any of them as provided in this
Agreement, and Litho Corp and each Litho Corp Existing Equity Holder shall be
deemed to have received any notice given or payment made to the Litho Corp
Representative in accordance with the notice provisions of this Agreement on the
date deemed given or the date paid to the Litho Corp Representative, and IHS
shall be entitled to rely on all notices and consents given, and all settlements
entered into on behalf of Litho Corp or any Litho Corp Existing Equity Holder to
the extent authorized pursuant to the terms of this Agreement notwithstanding
any objections made by any Litho Corp Existing Equity Holder prior to,
concurrently with or subsequent to the giving of any such notice or consent or
the settlement of any such matter. The Litho Corp Representative may be replaced
only if and when Litho Corp and each Litho Corp Existing Equity Holder shall
notify IHS that a new individual person (named in such notice) has been selected
by a majority of the Litho Corp Existing Equity Holder to be the new Litho Corp
Representative, in which case such new person shall thereafter be the Litho Corp
Representative. The Litho Corp Representative shall not be liable to Litho Corp
or any Litho Corp Existing Equity Holder for any costs, losses, liabilities,
damages, expenses and claims imposed upon or asserted against the Litho Corp
Representative (including fees and disbursements of counsel) on account of any
action taken or omitted to be taken in connection with his acceptance of or
performance of his duties and obligations under this Agreement, other than any
act or omission involving gross negligence or willful misconduct
15.2 PERFORMANCE. In the event of a breach by any Company, on
the one hand, or IHS, on the other hand, of its respective obligations
hereunder, the non-breaching 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 the breaching party hereby waives the defense that
there may be an adequate remedy at law.
15.3 BENEFIT AND ASSIGNMENT. This Agreement binds and inures
to the benefit of each party hereto and its successors and permitted assigns. No
party may assign its, his or her respective interests under this Agreement to
any other person or entity without the prior written consent of the other
parties hereto; provided, however, that IHS may assign its rights, duties and/or
obligations hereunder to one or more subsidiaries or affiliates of IHS if IHS
shall remain responsible for its obligations hereunder, except as otherwise
provided in this Agreement.
36
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; provided, however that
any confidentiality agreements among the parties shall survive until the
Closing, at which time they shall terminate except to the extent provided in
this Agreement. 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 agreement.
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
necessary to carry out the intent and purposes of this Agreement.
15.6 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed to be properly given when personally delivered to
the party or parties entitled to receive the notice or three (3) business days
after sent by certified or registered mail, postage prepaid, or on the business
day after sent by nationally recognized overnight courier, or on the same day
when faxed and a confirmation of fax transmission is received, in each case,
properly addressed to the party or parties entitled to receive such notice at
the address stated below:
If to Downstate or any Downstate
Existing Equity Holder,
to the Downstate Representative at: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: Nixon, Hargrave, Devans & ▇▇▇▇▇ LLP
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Metro/Litho or any Metro/Litho
Existing Equity Holder,
to the Metro/Litho Representative at: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D.
Metro/Litho L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: Nixon, Hargrave, Devans & ▇▇▇▇▇ LLP
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Long Island or any Long Island
Existing Equity Holder, to the Long
Island Representative at: ▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
37
with a copy to: Nixon, Hargrave, Devans & ▇▇▇▇▇ LLP
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Litho Corp or any Litho Corp
Existing Equity Holder,
to the Litho Corp Representative at: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
Metropolitan Lithotripter Associates, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: Nixon, Hargrave, Devans & ▇▇▇▇▇ LLP
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to IHS: Integrated Health Services, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Executive
Vice-President
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive
Vice-President
cc: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel
with a copy to: Blass & ▇▇▇▇▇▇, Esqs.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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. Except as expressly provided
with respect to indemnification rights, nothing contained in this Agreement
shall be deemed to create rights in persons not parties hereto, other than the
successors and permitted 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 York, disregarding any
contrary rules relating to the choice or conflict of laws.
15.10 AMENDMENTS, SUPPLEMENTS, ETC. This Agreement may not be
amended except by an instrument in writing signed by each of the parties.
38
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 only, 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.
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 COSTS AND EXPENSES. Except as expressly otherwise provided
in this Agreement, each party hereto shall bear its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby. The
Companies shall pay all sales, transfer, recording, stamp and like taxes payable
in connection with any of the transactions contemplated by this Agreement, and
shall timely and truthfully complete and file any filings or returns necessary
in connection therewith. The transaction costs and expenses of Allied, the
Companies and the Existing Equity Holders (including, without limitation, the
costs of preparation and implementation of (but not the costs of review thereof
by, or input from, IHS's counsel) the proxy/information statement relating to
the Transaction) shall not be reflected on the Estimated Closing Date Balance
Sheet, and shall constitute Excluded Liabilities. Notwithstanding the foregoing,
IHS shall reimburse the Existing Equity Holders (other than the Litho Corp
Existing Equity Holders) for up to $50,000 of any legal or accounting
transaction costs and expenses above those otherwise expected to be incurred in
connection with the transaction contemplated hereby that such Existing Equity
Holders reasonably demonstrate they have incurred by reason of structuring the
transaction as an asset purchase rather than as a stock purchase.
15.13 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 in such manner as the parties
shall mutually 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.
15.14 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 in New York, New York. 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.
ARTICLE XVI: CERTAIN DEFINITIONS
For purposes of this Agreement the following terms shall have the
following meanings:
"ARBITRATING ACCOUNTANTS" shall have the meaning as set forth in Section 3.1(c).
"AGGREGATE ASSETS" shall mean the Downstate Assets, the Metro/Litho Assets, the
Long Island Assets, and the Litho Corp Assets.
"AGGREGATE ASSUMED LIABILITIES" shall mean the Downstate Assumed Liabilities,
the Metro/Litho Assumed Liabilities, the Long Island Assumed Liabilities, and
the Litho Corp Assumed Liabilities.
"AGGREGATE PERCENTAGE" shall have the meaning as set forth in Section 1.4(b)
"AGGREGATE PURCHASE PRICE" shall have the meaning as set forth in Section 1.4(b)
"AGGREGATE STOCK PORTION" shall have the meaning as set forth in Section 1.4(b)
"AGGREGATE COMPANY MEMBERSHIP INTEREST" shall have the meaning as set forth in
Section 1.4(b)
"AGREEMENT" shall have the meaning as set forth in the Introduction hereto.
39
"ALLIED" shall have the meaning as set forth in the Introduction hereto.
"BALANCE SHEET" shall mean each of the Downstate Balance Sheet, the Metro-Litho
Balance Sheet, the Long Island Balance Sheet, the Litho-Corp Balance Sheet and
the Lithotripsy Practice Balance Sheet, as the context shall require.
"BROKER"shall have the meaning as set forth in Section 5.1(g).
"BUSINESS" shall have the meaning as set forth in the Introduction hereto.
"CABRINI" shall have the meaning as set forth in the Introduction hereto.
"CLOSING" shall have the meaning as set forth in Section 6.1.
"CLOSING DATE" shall have the meaning as set forth in Section 6.1.
"CLOSING DATE PRICE PER SHARE" shall have the meaning as set forth in Section
5.1(a).
"COMMISSION" shall have the meaning as ser forth in Section 5.1(b).
"COMPANY" shall have the meaning as set forth in the Introduction hereto.
"COMPANIES" shall have the meaning as set forth in the Introduction hereto.
"COMPANY MEMBERSHIP INTEREST" shall have the meaning as set forth in Section
1.4(b)
"CONTRACT" shall have the meaning as set forth in Section 7.x.7 of each
Representation and Warranty Exhibit.
"DESIGNATED CONTRACTS" shall have the meaning as set forth in Section 4.1.
"DISPOSED SHARES" shall have the meaning as ser forth in Section 5.1(d).
"DOWNSTATE ASSUMED LIABILITIES" shall have the meaning as set forth in Section
2.1(b)(i)
"DOWNSTATE CURRENT LIABILITIES" shall have the meaning as set forth in Section
2.1(b)(i)(A)
"DOWNSTATE LONG-TERM LIABILITIES" shall have the meaning as set forth in Section
2.1(b)(i)(B)
"DOWNSTATE MEMBERSHIP INTEREST" shall have the meaning as set forth in Section
1.1(b)
"DOWNSTATE PERCENTAGE" shall have the meaning as set forth in Section 1.1(b)
"DOWNSTATE" shall have the meaning as set forth in the Introduction hereto.
"DOWNSTATE ASSETS" shall have the meaning as set forth in Section 2.1.
"DOWNSTATE PURCHASE PRICE" shall have the meaning as set forth in Section
1.2(b).
"DOWNSTATE EXCLUDED ASSETS" shall have the meaning as set forth in Section 2.1.
"DOWNSTATE STOCK PORTION" shall have the meaning as set forth in Section
1.1(b)."
"DOWNSTATE REPRESENTATIVE" shall have the meaning as set forth in Section 15.1.
"DOWNSTATE CLOSING DATE BALANCE SHEET" shall have the meaning as set forth in
Section 2.5(b)(i)
"DOWNSTATE EXCLUDED LIABILITIES" shall have the meaning as set forth in Section
2.1(ii).
"DOWNSTATE REIMBURSEMENT LIABILITIES" shall have the meaning as set forth in
Section 2.1(ii).
"DOWNSTATE REPRESENTATION AND WARRANTY EXHIBIT" shall have the meaning as set
forth in Section 7.2.
"EMPLOYMENT AGREEMENT" shall have the meaning as set forth in Section 10.18.
"EQUIPMENT AND MANAGEMENT SERVICES" shall have the meaning as set forth in the
Introduction hereto.
"ESTIMATED CLOSING DATE BALANCE SHEET" shall have the meaning as set forth in
Section 3.1(ii).
"ESTIMATED CLOSING DATE WORKING CAPITAL" shall have the meaning as set forth in
Section 3.1(a)(i).
"ESTIMATED LONG ISLAND CLOSING DATE WORKING CAPITAL" shall have the meaning as
set forth in Section 3.3(a)(i).
"ESTIMATED LONG-TERM LIABILITIES" shall have the meaning as set forth in Section
3.1(ii)(A).
"ESTIMATED LONG ISLAND CLOSING DATE BALANCE SHEET" shall have the meaning as set
forth in Section 3.3(ii).
"ESTIMATED LITHOTRIPSY PRACTICE CLOSING DATE BALANCE SHEET" shall have the
meaning as set forth in Section 10.24.
"EXCHANGE ACT" shall have the meaning as set forth in Section 5.1(h)(iv).
"EXISTING EQUITY HOLDERS" shall have the meaning as set forth in the
Introduction hereto.
"EXECUTIVE DIRECTOR EMPLOYMENT AGREEMENT" shall have the meaning as set forth in
Section 10.18.
"FACILITY" shall have the meaning as set forth in the Introduction hereto.
"FACILITIES" shall have the meaning as set forth in the Introduction hereto.
"FINAL ADJUSTMENT DATE" shall have the meaning as set forth in Section 5.1(d).
"FINAL ADJUSTMENT DATE PRICE PER SHARE" shall have the meaning as set forth in
Section 5.1(d).
40
"▇▇▇▇▇▇▇▇▇ EMPLOYMENT AGREEMENT" shall have the meaning as set forth in Section
10.18.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"IHS" shall have the meaning as set forth in the Introduction hereto.
"IHS/ALLIED INDEMNITEES" shall have the meaning as set forth in Section 12.2.
"IHS REPRESENTATION AND WARRANTY EXHIBIT" shall have the meaning as set forth in
Section 7.1.
"IHS REVIEW" shall have the meaning as set forth in Section 3.2(b)(i).
"IHS STOCK" shall have the meaning as set forth in Section 1.1(b).
"INDEMNIFYING PARTY" shall have the meaning as set forth in Section 12.6(a).
"IDENTIFIED UROLOGISTS" shall have the meaning as set forth in Section 9.7.
"INTEREST PERIOD" shall have the meaning as set forth in Section 5.1(e).
"LIABILITY(IES)" shall mean any claims, lawsuits, liabilities, obligations or
debts of any kind or nature whatsoever (regardless of whether the same would
constitute a liability to be set forth on a balance sheet in accordance with
GAAP (as such term is defined in this Section XVI) 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.
"LIEN(S)" shall mean any liens, claims, security interests, mortgages, pledges,
charges, easements, rights of set off, restraints on transfer, restrictions on
use, options, or encumbrances of any kind or nature whatsoever.
"LITHO CORP" shall have the meaning as set forth in the Introduction hereto.
"LITHO CORP ASSETS" shall have the meaning as set forth in Section 2.4(a).
"LITHO CORP ASSUMED LIABILITIES" shall have the meaning as set forth in Section
2.4(b)(i).
"LITHO CORP CURRENT LIABILITIES" shall have the meaning as ser forth in Section
2.4(A).
"LITHO CORP EXCLUDED ASSETS" shall have the meaning as set forth in Section
2.4(a).
"LITHO CORP LONG-TERM LIABILITIES" shall have the meaning as set forth in
Section 2.4(B).
"LITHO CORP EXCLUDED LIABILITIES" shall have the meaning as set forth in Section
2.4(b)(ii).
"LITHO CORP PURCHASE PRICE" shall have the meaning as set forth in Section
1.4(b).
"LITHO CORP STOCK PORTION" shall have the meaning as set forth in Section
1.4(b).
"LITHO CORP MEMBERSHIP INTEREST" shall have the meaning as set forth in Section
1.4(b).
"LITHO CORP PERCENTAGE" shall have the meaning as set forth in Section 1.4(b).
"LITHO CORP PERCENTAGE" shall have the meaning as set forth in Section 1.4(b).
"LITHO CORP REIMBURSEMENT LIABILITIES" shall have the meaning as set forth in
Section 2.4(a)(i).
"LITHO CORP REPRESENTATIVE" shall have the meaning as set forth in Section
15.1(d).
"LITHO CORP REPRESENTATION AND WARRANTY EXHIBIT" shall have the meaning as set
forth in Section 7.5
"LITHO CORP ASSETS" shall have the meaning as set forth in Section 2.4(a).
"LITHOTRIPSY PRACTICE ASSETS" shall have the meaning as set forth in Section
2.5(i).
"LITHOTRIPSY PRACTICE EXCLUDED ASSETS" shall have the meaning as set forth in
Section 2.5(a).
"LITHOTRIPSY PRACTICE" shall have the meaning as set forth in the Introduction
hereto.
"LITHOTRIPSY PRACTICE REIMBURSEMENT LIABILITIES" shall have the meaning as set
forth in Section 2.4(i).
"LITHOTRIPSY PRACTICE REPRESENTATION AND WARRANTY EXHIBIT" shall have the
meaning as set forth in Section 7.6.
"LITHOTRIPSY PRACTICE PERMITTED LIABILITIES" shall have the meaning as set forth
in Section 2.5(ii).
"LITHOTRIPSY PRACTICE CURRENT LIABILITIES" shall have the meaning as set forth
in Section 2.5(A).
"LONG ISLAND" shall have the meaning as set forth in the Introduction hereto.
"LONG ISLAND LONG-TERM LIABILITIES" shall have the meaning as set forth in
Section 2.3(B).
"LONG ISLAND REPRESENTATIVE" shall have the meaning as set forth in Section
15.1(c).
"LONG ISLAND REPRESENTATION AND WARRANTY EXHIBIT" shall have the meaning as set
forth in Section 7.4
"LONG ISLAND ASSETS" shall have the meaning as set forth in Section 2.3(a).
"LONG ISLAND ASSUMED LIABILITIES" shall have the meaning as set forth in Section
2.3(i).
"LONG ISLAND CURRENT LIABILITIES" shall have the meaning as set forth in Section
2.3(A).
"LONG ISLAND EXCLUDED ASSETS" shall have the meaning as set forth in Section
2.3(a).
"LONG ISLAND EXCLUDED LIABILITIES" shall have the meaning as set forth in
Section 2.3(ii).
"LONG ISLAND FACILITY" shall have the meaning as set forth in the Introduction
hereto.
"LONG ISLAND MANAGEMENT SERVICES" shall have the meaning as set forth in the
Introduction hereto.
41
"LONG ISLAND MEMBERSHIP INTEREST" shall have the meaning as set forth in Section
1.3(b).
"LONG ISLAND MOBILE LITHOTRIPTER" shall have the meaning as set forth in the
Introduction hereto.
"LONG ISLAND PERCENTAGE" shall have the meaning as set forth in Section 1.3(b).
"LONG ISLAND PURCHASE PRICE" shall have the meaning as set forth in Section
1.3(b).
"LONG ISLAND REIMBURSEMENT LIABILITIES" shall have the meaning as set forth in
Section 2.3(ii).
"LONG ISLAND STOCK PORTION" shall have the meaning as set forth in Section
1.3(b).
"LOSS" shall have the meaning as set forth in Section 12.2(a).
"MANHATTAN FACILITY" shall have the meaning as set forth in the Introduction
hereto.
"MANHATTAN MANAGEMENT SERVICES" shall have the meaning as set forth in the
Introduction hereto.
"MANAGEMENT AGREEMENT" shall have the meaning as set forth in Section 10.15.
"MAXIMUM LONG-TERM LIABILITIES" shall have the meaning as set forth in Section
3.1(ii)(A).
"▇▇▇▇▇▇▇ EMPLOYMENT AGREEMENT" shall have the meaning as set forth in Section
10.18.
"METRO/LITHO" shall have the meaning as set forth in the Introduction hereto.
"METRO/LITHO ASSETS" shall have the meaning as set forth in Section 2.2.
"METRO/LITHO ASSUMED LIABILITIES" shall have the meaning as set forth in Section
2.2(i).
"METRO/LITHO CURRENT LIABILITIES" shall have the meaning as set forth in Section
2.2(b)(i)(A).
"METRO/LITHO EXCLUDED ASSETS" shall have the meaning as set forth in Section
2.2(a).
"METRO/LITHO EXCLUDED LIABILITIES" shall have the meaning as set forth in
Section 2.2(ii).
"METRO/LITHO LONG-TERM LIABILITIES" shall have the meaning as set forth in
Section 2.2(b)(i)(B)
"METRO/LITHO REPRESENTATION AND WARRANTY EXHIBIT" shall have the meaning as set
forth in Section 7.3
"METRO/LITHO REPRESENTATIVE" shall have the meaning as set forth in Section
15.1(b).
"METRO/LITHO REIMBURSEMENT LIABILITIES" shall have the meaning as set forth in
Section 2.2(ii).
"METRO/LITHO STOCK PORTION" shall have the meaning as set forth in Section
1.2(b).
"MINIMUM DOWNSTATE WORKING CAPITAL" shall have the meaning as set forth in
Section 3.1(A).
"MINIMUM LITHOTRIPSY PRACTICE WORKING CAPITAL" shall have the meaning as set
forth in Section 10.24.
"MINIMUM WORKING CAPITAL" shall have the meaning as set forth in Section
3.1(i)(A).
"NEW WESTCHESTER FACILITY" shall have the meaning as set forth in the
Introduction hereto.
"NON-COMPETE AGREEMENTS" shall have the meaning as set forth in Section 10.19.
"NON-UROLOGIST INVESTORS" shall have the meaning as set forth in the
Introduction hereto.
"OPERATING AGREEMENT" shall have the meaning as set forth in the Introduction
hereto.
"PARTICIPANTS" shall have the meaning as set forth in Section 5.1(f).
"PERCENTAGE" shall have the meaning as set forth in Section 1.4(b).
"PERMITTED LIEN(S)" shall mean with respect to any Company or the Lithotripsy
Practice, as the case may be:
(A) each lien, if any, described on Schedule 6.x.6(c) to the
Representation and Warranty Exhibit of such Company or the Lithotripsy Practice,
as the case may be;
(B) carriers', warehouseman's, mechanics, materialmen's,
repairmen's or other like liens arising in the ordinary course of business which
are not overdue for a period of more than 30 days, that in the aggregate do not
exceed $25,000;
(C) 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, provided that each such deposit
shall be included in the Assets of such Company or the Lithotripsy Practice, as
the case may be, and shall not exceed $15,000 in any one case, or $75,000 in the
aggregate; and
(D) pledges or deposits in connection with worker's
compensation, unemployment insurance, and other social security legislation.
"PROHIBITED TRANSACTION" shall have the meaning as set forth in Section 9.6.
"PROPOSED WORKING CAPITAL" shall have the meaning as set forth in Section 3.1(b)
(i)(A).
42
"PROPOSED CLOSING DATE BALANCE SHEET" shall have the meaning as set forth in
Section 3.1(b)(i).
"PROPOSED LONG-TERM LIABILITIES" shall have the meaning as set forth in Section
3.1(c).
"PURCHASE PRICE" shall have the meaning as set forth in Section 1.4(b).
"REGISTRATION DATE PRICE PER SHARE" shall have the meaning as set forth in
Section 5.1(c).
"REGISTRATION DEADLINE DATE" shall have the meaning as set forth in Section
5.1(e).
"REGISTRATION STATEMENT" shall have the meaning as set forth in Section 5.1(b).
"REPRESENTATION AND WARRANTY EXHIBIT" shall have the meaning as set forth in
Section 7.6.
"REPRESENTATION AN WARRANTY EXHIBITS" shall have the meaning as set forth in
Section 7.6.
"REPRESENTATION AND INDEMNIFICATION AGREEMENTS" shall have the meaning as set
forth in Section 10.21.
"REQUIRED APPROVALS" shall have the meaning as set forth in Section 9.4.
"SECURITIES ACT" shall have the meaning as set forth in Section 5.1(b).
"SERVICES" shall have the meaning as set forth in the Introduction hereto.
"TARGET AMOUNT" shall have the meaning as set forth in Section 3.1(a)(iii).
"TAXES" shall mean any and all federal, state, local and foreign net or gross
income, profits, property, sales, use, excise, license, franchise, severance,
stamp, occupation, premium, windfall profits tax, alternative and add-on minimum
taxes, customs duty, added value, payroll, employer's income, withholding and
social security taxes, excise or other taxes, and any penalties, interest,
governmental charges, assessments and deficiencies related thereto.
"TITLE COMPANY" shall have the meaning as set forth in Section 10.13.
"UROLOGIST INVESTORS" shall have the meaning as set forth in the Introduction
hereto.
"WESTCHESTER MANAGEMENT SERVICES" shall have the meaning as set forth in the
Introduction hereto.
[SIGNATURES ON THE FOLLOWING PAGE]
43
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT made this 4th day of May, 1998, by and among Allied
Urological Services, LLC, a limited liability company formed under the laws of
Delaware ("Allied"), Integrated Health Services, Inc., a Delaware corporation
("IHS"), Downstate Lithotripter LLC, a limited liability company formed under
the laws of New York ("Downstate"), Metro/Litho L.P., a limited partnership
formed under the laws of New York ("Metro/Litho"), Long Island Lithotripter,
LLC, a limited liability company formed under the laws of New York ("Long
Island") and Lithotripter Corporation, a New York corporation ("Litho Corp", and
together with Downstate, Metro/Litho and Long Island, the "Companies").
WHEREAS, Allied, IHS and the Companies have entered into a Membership
Interest Purchase Agreement, dated as of April 7, 1998 (the "Purchase
Agreement") and desire to amend Section 5.1(d) thereof.
WHEREAS, capitalized terms used in this Amendment Agreement and not
otherwise defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement.
NOW, THEREFORE, it is agreed:
1. Section 5.1(d) of the Purchase Agreement is hereby amended in its
entirety to read as follows:
"(D) POST-REGISTRATION DATE SHARE ADJUSTMENT. If as of the close of
trading on the NYSE on the date which is the fifteenth (15th)
consecutive trading day from (and including) the Registration Date (the
"FINAL ADJUSTMENT DATE"), the difference between (i) the average sale
price per share of all IHS Stock theretofore issued pursuant to this
Agreement and sold during the period from the Registration Date to the
Final Adjustment Date under the Registration Statement in bona fide
sales to third parties that are not affiliates and otherwise in
accordance with the provisions of this Article V (such shares are the
"DISPOSED SHARES"), and (ii) the average per share cost of the
brokerage commissions and expenses paid by them to the Broker (defined
below) in connection with such sales of the Disposed Shares (the
difference between (i) and (ii) is the "FINAL ADJUSTMENT DATE PRICE PER
SHARE") is below the lower of (x) the Closing Date Price Per Share, and
(y) the Registration Date Price Per Share, then IHS promptly shall
issue to the Companies (in the proportions set forth in writing by at
least seventy-five (75%) percent of the Representatives pursuant to
Section 3.3 (b) hereof) an additional number of shares of IHS Stock as
shall be equal in value to the product of (A) the difference between
(1) the lower of (p) the Closing Date Price Per Share, and (q) the
Registration Date Price Per Share, and (2) the Final Adjustment Date
Price Per Share, multiplied by (B) the number of Disposed Shares
(such product of (A) multiplied by (B) is the "FINAL ADJUSTMENT
AMOUNT") . IHS will use its best efforts to cause to be prepared, filed
and declared effective by the Commission within sixty (60) days
following the Final Adjustment Date, a registration statement for the
registration under the Securities Act of the IHS Stock issued pursuant
to this Section 5.1(d), and IHS shall maintain the effectiveness of
such registration statement for a period of one (1) year following the
date on which such registration statement becomes effective (the
"SECOND EFFECTIVE DATE"), or until the Companies (and their respective
partners, members or shareholders, as distributees of such IHS Stock),
shall not own any of the IHS Stock issued pursuant to this Section
5.1(d), whichever shall occur first. The number of shares of IHS Stock
issuable pursuant to this Section 5.1(d) 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 Final Adjustment Date; provided, however, that (x) if the
number of shares of IHS Stock issued pursuant to this Section 5.1(d) is
less than the number of shares of IHS Stock that would have been
issuable had such IHS stock been valued 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 trading days before the Second Effective Date, then IHS promptly
shall deliver to the Companies (in the proportions set forth in writing
by at least seventy-five (75%) percent of the Representatives pursuant
to Section 3.3 (b) hereof) an additional number of shares of IHS Stock
as shall be equal to the amount of such difference, and such additional
shares shall be included in the aforementioned registration statement
by means of a pre-effective amendment thereto, and (y) if the number of
shares of IHS Stock issued pursuant to this Section 5.1(d) exceeds the
number of shares of IHS Stock that would have been issuable had such
IHS stock been valued 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 trading
days before the Second Effective Date, then the Companies promptly
shall return to IHS that number of shares of IHS Stock as shall be
equal to such excess. Notwithstanding anything to the contrary set
forth in this Section 5.1(d), IHS shall have the right, exercisable in
its sole discretion, to pay to the Companies (in the proportions set
forth in writing by at least seventy-five (75%) percent of the
Representatives pursuant to Section 3.3 (b) hereof), in lieu of IHS
Stock otherwise issuable pursuant to this Section 5.1(d), cash in
amount equal to the Final Adjustment Amount."
2. Except as expressly amended hereby, all of the terms and conditions
of the Purchase Agreement shall remain in full force and effect.
3. This Amendment Agreement may be executed in counterparts, each of
which being deemed an original and both of which, when taken together, being
deemed one and the same instrument.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
-2-
IN WITNESS WHEREOF, each of the parties hereto and in the
capacity indicated below has executed this Amendment Agreement as of the day and
year first above written.
INTEGRATED HEALTH SERVICES, INC.
By:
-----------------------------
Title:
--------------------------
LONG ISLAND LITHOTRIPTER, LLC ALLIED UROLOGICAL SERVICES, LLC
By: By:
-------------------------------- -----------------------------
Title: Title:
------------------------------ --------------------------
LITHOTRIPTER CORPORATION
By: [SIG]
--------------------------------
Title:
-----------------------------
DOWNSTATE LITHOTRIPTER LLC
By: [SIG]
--------------------------------
Title:
-----------------------------
METRO/LITHO L.P.
By: [SIG]
--------------------------------
Title:
-----------------------------
3
IN WITNESS WHEREOF, each of the parties hereto and in the
capacity indicated below has executed this Amendment Agreement as of the day and
year first above written.
INTEGRATED HEALTH SERVICES, INC.
By:
-----------------------------
Title:
--------------------------
LONG ISLAND LITHOTRIPTER, LLC ALLIED UROLOGICAL SERVICES, LLC
By: By:
-------------------------------- -----------------------------
Title: Title:
------------------------------ --------------------------
LITHOTRIPTER CORPORATION
By: [SIG]
--------------------------------
Title:
-----------------------------
DOWNSTATE LITHOTRIPTER LLC
By: [SIG]
--------------------------------
Title:
-----------------------------
METRO/LITHO L.P.
By: [SIG]
--------------------------------
Title:
-----------------------------
4
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.
INTEGRATED HEALTH SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: EVP
LONG ISLAND LITHOTRIPTER, LLC
By:
---------------------------------- ALLIED UROLOGICAL SERVICES, LLC
Title:
-------------------------------
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: EVP
LITHOTRIPTER CORPORATION
By:
----------------------------------
Title:
-------------------------------
DOWNSTATE LITHOTRIPTER LLC
By:
----------------------------------
Title:
-------------------------------
METRO/LITHO L.P.
By:
----------------------------------
Title:
-------------------------------
5
AMENDMENT TO
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
AND RESTRICTIVE COVENANTS
AGREEMENT, made this 29th day of April, 1998, among Regional Medical
Supply, Inc. ("Seller"), ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (each a "Shareholder"
and collectively, the "Shareholders") and Integrated Health Services at
Jefferson Hospital, Inc. ("Buyer").
WHEREAS, Buyer, Seller and the Shareholders entered into that certain
Agreement for Sale and Purchase of Assets and Restrictive Covenants, dated as of
March 20, 1998 (the "Purchase Agreement"); and
WHEREAS, the parties wish to amend certain terms of the Purchase
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and intending to be legally bound, the parties agree as
follows:
1. Section 8 of the Purchase Agreement is amended to read that the
Effective Date for the transactions consummated under the Purchase Agreement
shall be April 8, 1998.
2. Except as expressly modified hereby, all of the terms and
conditions of the Purchase Agreement shall remain in full force and effect.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER:
REGIONAL MEDICAL
SUPPLY, INC.
By: ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Its: President
SHAREHOLDERS:
▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
BUYER:
INTEGRATED HEALTH
SERVICES AT JEFFERSON
HOSPITAL, INC.
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: SVP-Corporate Development
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER:
REGIONAL MEDICAL
SUPPLY, INC.
By:
---------------------------
Name:
Its:
SHAREHOLDERS:
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
BUYER:
INTEGRATED HEALTH
SERVICES AT JEFFERSON
HOSPITAL, INC.
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: SVP-Corporate Development