ASSET PURCHASE AGREEMENT
By and Between
HEALTHCARE IMAGING SERVICES OF ▇▇▇▇▇▇▇▇▇▇▇ SQUARE, INC.
and
▇▇▇▇▇▇▇▇▇▇▇ IMAGING CENTER, L.P.
Dated: as of ▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇ PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of March 5, 2001 (the "Signature
Date") by and between HEALTHCARE IMAGING SERVICES OF ▇▇▇▇▇▇▇▇▇▇▇ SQUARE, INC., a
corporation having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "Seller"), and, ▇▇▇▇▇▇▇▇▇▇▇
IMAGING CENTER, L.P., a Pennsylvania limited partnership having an address at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred
to as "Purchaser").
W I T N E S S E T H
WHEREAS, Seller owns and operates a diagnostic imaging facility
(the "Facility") located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
(the "Premises"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase,
all of Seller's right, title, and interest in and to the assets utilized by
Seller in the operation of the Facility, excluding any real property, cash or
cash equivalents, and any accounts receivable or other rights to payment (the
"Assets");
NOW, THEREFORE, in consideration of the foregoing premises, the respective
promises, representations, covenants and warranties hereinafter set forth, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Seller and Purchaser hereby agree as follows:
1. PURCHASE.
(a) Subject to the terms and conditions hereof and on the basis of and in
reliance upon the covenants, agreements and representations and warranties set
forth herein, on March 5, 2001 or such earlier date as the parties may mutually
agree upon in writing (the "Closing Date"), Seller hereby agrees to sell,
transfer, assign, convey, release and deliver to Purchaser by ▇▇▇▇ of sale
("▇▇▇▇ of Sale"), free and clear of all liens, encumbrances and adverse claims
of any nature whatsoever and Purchaser hereby agrees to purchase and accept from
Seller, all of Seller's right, title and interest in and to the Assets. The
Assets shall include, without limitation, the following:
(i) Equipment. All of the fixtures, leasehold improvements, medical and
office equipment and furniture and other tangible property used at the Facility,
including the items listed on Exhibit 1A, but excluding the items listed on
Exhibit 1B.
(ii) Patient Records. All currently existing patient lists, patient credit
information and histories and clinical records, including but not limited to all
charts, documents, radiographs, photographs and slides pertaining to patients of
the Facility and other documents and records generated in connection with the
Facility.
(iii) Miscellaneous Assets. The goodwill of the Seller's business at the
Facility together with all of Seller's rights in and to the trade name
▇▇▇▇▇▇▇▇▇▇▇ Square Imaging and other intangible assets of the Facility,
including Seller's rights under the contracts listed on Exhibit 1C (the
"Assigned Contracts") and telephone and fax numbers, to the extent assignable,
but excluding any cash or cash equivalents, and any accounts receivable or other
rights to payment for services performed prior to the Closing Date.
(iv) Personal Property. All other personal property of the Seller used in
the Facility including, without limitation, prepaid items, utility and other
deposits, supplier lists, and to the extent assignable, all present and future
causes of action and claims, including claims
2
under warranties related to the Assets but excluding claims for payment for
medical services rendered prior to the Closing Date.
(b) Assumption. On the Closing Date, Purchaser shall assume all of Seller's
obligations that accrue from and after the Closing Date under the Assigned
Contracts.
(c) Maintenance of Assets. All of the Assets transferred hereunder shall be
maintained by Seller and delivered to Purchaser at the Premises on the Closing
Date in the same good condition and working order existing as of the Signature
Date, reasonable wear and tear excepted.
(d) Risk of Loss. Seller shall bear all risk of destruction, loss or damage
to the Assets due to fire or other casualty until the closing of the
transactions contemplated hereunder. In the event of any destruction, loss or
damage to the Assets, the Purchase Price (as defined below) may be adjusted at
the closing to reflect such destruction, loss or damage, in such amounts as
Purchaser and Seller shall agree upon in good faith; provided, that Purchaser
wishes to proceed with the purchase of the Assets hereunder.
(e) Liabilities. Except for Seller's obligations accruing from and after
the Closing Date under the Assigned Contracts, Purchaser shall not be deemed to
have assumed, and Seller shall remain responsible for, any liabilities,
obligations, or debts of Seller of any type or nature, whether known or unknown,
fixed, contingent or otherwise, and whether or not threatened or pending,
including, but not limited to, (i) liability based on tortious or wrongful
actions, (ii) taxes of any kind, (iii) wages or benefits for employees or
agents, (iv) obligations to any shareholders, (v) payment of rent, service fees
or any types of invoices payable by Seller or its shareholders, and (vi)
recoupment or refund of amounts paid by any third party payor, including refunds
requested by federal, state or local government. Further, Seller hereby
indemnifies and holds Purchaser harmless
from and against any and all obligations and liabilities of Seller not
expressly assumed by Purchaser hereunder.
2. PAYMENT. (a) Purchase Price. As consideration for the Assets, Purchaser
shall pay Seller One Million Five Hundred Thousand Dollars ($1,500,000) (the
"Purchase Price"):
(i) Eight Hundred Thousand ($800,000) Dollars, payable by certified or bank
check or wire transfer to an account designated by Seller on the Closing Date,
and
(ii) Seven Hundred Thousand Dollars ($700,000) (the "Post- Closing Price")
payable in the following manner: Twenty-five percent (25%) of the amount by
which revenue generated at the Facility following the Closing Date exceeds Two
Hundred Fifty-Thousand Dollars in any calendar quarter (the "Post-Closing
Revenue Payments "), up to a maximum of Seven Hundred Thousand ($700,000)
Dollars (subject to the credit described in Section 2(b) hereof), payable, with
respect to each calendar quarter, no later than twenty (20) days after the last
day of such calendar quarter; provided, however, that (A) Purchaser's obligation
to pay the outstanding balance of the Post-Closing Price shall terminate
following the payment of all Post-Closing Revenue Payments due with respect to
revenues generated prior to the twentieth (20th) complete calendar quarter
following the Closing Date (the "Five Year Anniversary"), and (B) the entire
unpaid balance of the Post-Closing Price shall become immediately due and
payable (1) if and when prior to the Five Year Anniversary the Purchaser shall
(X) fail on any ten consecutive business days to provide adequate staffing of
the Facility during normal business hours for the performance of substantially
all of the MRI services for which the Facility receives requests and which can
be properly performed with the Assets or (Y) (i) admit in writing its inability
to pay debts generally as they become due; (ii) file a petition to be
adjudicated as voluntary bankrupt or for reorganization, dissolution or
liquidation
or file a petition or otherwise take advantage of any state of federal
bankruptcy or insolvency law; (iii) be the subject of any involuntary petition
in bankruptcy and such petition has not been withdrawn or stayed within 60 days
of the filing of same; (iv) make an assignment for the benefit of creditors or
seek a composition with creditors; (v) have a receiver appointed for itself or
for the whole or any substantial part of its properties; or (vi) be adjudicated
as bankrupt, and (2) from the proceeds of any fire or casualty insurance
maintained with respect to the Facility to the extent that such proceeds are not
used within six (6) months of receipt thereof for the repair of the Facility.
Any insurance proceeds described in clause(B)(2) of this subparagraph shall be
held in a segregated account until applied to the repair of the Facility or to
payment of the Purchase Price.
(iii) . During the time when any Post-Closing Revenue Payments = shall be
due hereunder, Seller shall have the right of reasonable access, during
Purchaser's normal business hours and upon reasonable prior notice, to
Purchaser's financial records for the sole purpose of verifying the accuracy of
such Post-Closing Revenue Payments.
(b) Upgrade Credit.
(i) If at any time after the Closing Date, the Purchaser closes the
Facility and commences construction or renovations for the purpose of removing
the MRI system included in the Assets, and installing a new MRI system
("Facility Upgrade Closure"), Purchaser shall be entitled to a credit against
the Post-Closing Revenue Payments remaining due in an amount equal to the lesser
of (A) the Purchaser's Net Cost (as defined below), or (B) the amount by which
Seven Hundred Thousand $700,000 Dollars exceeds the Post-Closing Revenue
Payments accrued prior to the Facility Upgrade Closure (the "Post-Closing
Payment Balance"). "Purchaser's Net Cost" means the out-of-pocket costs incurred
by the Purchaser for the planning, construction, renovation and acquisition of a
new MRI system, less the trade-in value of the Existing MRI System at the time
of the Facility Upgrade Closure.
(ii) Purchaser shall have the sole discretion to determine whether or not
to upgrade the Facility as contemplated by this Section 2(b). In the event that
Purchaser elects to so upgrade the Facility, Purchaser shall inform Seller of
the proposed upgrade plans, and Seller and Purchaser shall each obtain and
submit written bids for the construction and renovation work from reputable
contractors that are licensed and qualified to conduct such business in the City
and County of Philadelphia and the Commonwealth of Pennsylvania ("Qualified
Contractors"). In the event that the bids differ by more than $50,000, Seller
and Purchaser shall each obtain and submit a second written bid from another
Qualified Contractor. For purposes of calculating the Purchaser's Net Cost, the
actual out-of-pocket costs for construction and renovation shall be limited to
the average of (i) the lower of the two bids submitted by the Seller and (ii)
the lower of the two bids submitted by the Purchaser. In the event that such an
upgrade is done, the entire Post-Closing Payment Balance, if any, shall be due
to Seller on the thirtieth (30th) day following the re-opening of the Facility.
(c) Allocation of Purchase Price. The allocation of the Purchase Price
among the Assets and the covenant not to compete (as set forth under Section 7
below) shall be made in accordance with the schedule set forth on Exhibit 2,
attached hereto and made a part hereof. The parties agree to abide by the
allocations set forth above in making any and all reports of the action
contemplated herein, including reports for purposes of federal and state
taxation.
(d) Closing Adjustments. Purchaser shall reimburse Seller for pre-paid
rent, real estate taxes and utilities for periods prior to the closing date, and
for any security deposits upon presentation of satisfactory evidence thereof by
Purchaser at the closing or within one month thereafter.
(e) Purchaser's right, title and interest in and to all personal property
of the Purchaser, including, but not limited to, all equipment, furnishings and
accounts and all proceeds thereof (the "Collateral"), to secure the unpaid
balance of the Purchase Price. Purchaser shall execute Uniform Commercial Code
financing statements and take such other actions as may be appropriate to
perfect the security interest granted hereby, and shall notify Seller not less
than 15 days prior to relocation of the Collateral or any change in the
Purchaser's principal place of business. Such security interest shall be subject
to the consent of and subject and subordinate to the interest of DVI Financial
Services Corp. ("DVI") in and to the Collateral, and Seller shall execute a
subordination agreement in favor of DVI reflecting the terms of such
subordination.
3. SELLER'S REPRESENIATIONS AND WARRANTIES. Except where otherwise set
forth in this Agreement, Seller represents, warrants, and agrees as follows:
(a) Organization and Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Pennsylvania. Seller has all power and authority to carry on its business as now
conducted and all governmental licenses, authorizations, consents and approvals
to carry on its business as now conducted.
(b) Binding Agreement. Seller has taken all corporate actions necessary to
authorize its execution of this Agreement and the other documents required to be
delivered to Seller herewith (collectively, "Seller's Transaction Documents")
and to which Seller is a party, and to carry out its obligations hereunder and
thereunder. This Agreement is a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
(c) Compliance with Law and Instruments. The business and operation of the
Facility have been and are being conducted in accordance with all applicable
laws, rules, regulations and ordinances including, without limitation, the
Federal Environmental Protection Act,
the Occupational and Safety Hazards Act, Medicare and Medicaid rules and
regulations, all federal, state and local licensing and health laws and other
similar laws. Except as set forth on Exhibit 3C, there are no outstanding
notices of violation or noncompliance involving Seller issued by the any
governmental agency or authority. In signing, delivering and performing this
Agreement, Seller, to the best of its knowledge, does not violate any law, rule,
regulation or ordinance, and does not cause a breach, default, or the imposition
of any lien or encumbrance on any property of any arrangement, agreement, or
other instrument to which Seller is a party or by which Seller is bound.
(d) Litigation. Except as set forth on Exhibit 3D, there are no legal
actions, litigation, suits, administrative proceedings, government proceedings,
arbitrations, judgments, orders, writs or injunctions presently pending or
threatened against Seller, its assets or business; and Seller is not aware of
any facts that it reasonably anticipates may result in any such action, suit,
arbitration or other proceeding.
(e) Governmental Permits. Attached hereto as Exhibit 3E is a true and
correct list of all governmental permits and approvals relating to the operation
of the Facility and the Assets and the provision of medical services by or on
behalf of Seller which Seller has heretofore obtained and which are now in
effect. Seller, to the best of its knowledge, is not in default under and has
not received any notices of any claim, default, deficiency or violation or any
other proceeding, relating to any such governmental permit or approval.
(f) Title to Properties and Assets. Except as set forth on Exhibit
3F, Seller is the sole owner of the Assets, holding good, absolute, and
marketable title to all of the Assets, free and clear of any mortgage, pledge,
lien, charge, security interest, encumbrance, or restriction (collectively,
"Title Objections"). Upon transfer of the Assets hereunder, Purchaser will
acquire good and marketable title thereto, free and clear of all Title
Obligations. Between the Signature Date and
the Closing Date, Seller shall not transfer, lease, mortgage or pledge the
Assets, or subject the Assets to any lien, charge, security interest or any
other encumbrance of any kind.
(g) Solvency. Seller is solvent and will not be rendered insolvent by the
transfer contemplated by this Agreement. Seller will be able to meet its
business obligations as they become due subsequent to the Closing Date.
(h) Condition of Properties and Assets. All equipment and furnishings
valued on Seller's books (net of depreciation) at greater than Five Hundred
($500) Dollars owned by Seller are in good condition and working order, taking
into account their age and subject to normal wear and tear, at the time of
execution of this Agreement. All manufacturer warranties for the equipment and
furnishings, if any, are in the name of Seller. Any leases, service contract,
licenses or other contract or instruments that constitute Assets hereunder are
valid and effective in accordance with their terms, and there is no existing
default by Seller of any of its obligations thereunder.
(i) Operations. Prior to the Closing Date, Seller shall not enter into any
transaction or perform any act that would constitute a breach of the
representations, warranties, or agreements contained in this Agreement. Prior to
the Closing Date, Seller shall operate the Facility in the ordinary course of
business.
(j) No Competing Practice. Seller does not own or control any other
practice or entity, including, without limitation, any entity providing services
similar to the Facility within the City of Philadelphia.
(k) Consents. Except as set forth on Exhibit 3K, no license, consent, order
or authorization of, or filing with any person, entity or governmental agency or
authority is required in connection with Seller's execution and delivery of this
Agreement or any of Seller's Transaction Documents or for the consummation by
Seller of the transactions contemplated hereby and thereby.
(l) Absence of Conflicting Agreements. The execution and delivery of this
Agreement does not, and the execution and delivery of Seller's Transaction
Documents by Seller and the performance by Seller of the transactions
contemplated hereby and thereby will not: (i) conflict with any provision of the
Articles of Incorporation, Bylaws or other charter document of Seller; (ii)
violate or conflict with any applicable law, or any applicable rule, judgment,
order, writ, injunction or decree of any court as such is applicable to Seller;
(iii) violate or conflict with any applicable rule or regulation of any
administrative agency or other governmental authority as such is applicable to
Seller; (iv) result in a breach of or a default under (or with notice or lapse
of time, or both, result in a breach of or constitute a default under) any
agreement lease, indenture, instrument or contract to which Seller is now a
party or by which it is bound. Such execution, delivery and performance will not
result in the creation or imposition of any liens or other encumbrances on any
of the Assets in favor of third parties.
(m) Labor Matters. None of the employees of the Facility is represented by
any union or other collective bargaining representative nor are there currently
any attempts by any union or other collective bargaining representative to
organize employees and there have been no such attempts within the last year.
All employees of the Facility are employees at will and may be terminated by
Seller without penalty or liability.
(n) Employee Benefit Plans. Seller has not established any profit-sharing
bonus, pension, retirement, incentive, vacation, holiday, health, life insurance
or other similar plan, policy or arrangement for any of the employees of the
Facility, whether subject to the Employee Retirement Income Security Act of
1974, as amended, or otherwise. Seller has no unfunded liabilities under any
pension or other employee benefit plan which it may have established or to which
it is bound.
(o) No Unusual Arrangements with Employees. Seller has no unusual or cash
payment arrangements with any of Seller's employees. All employees are paid
through Seller's payroll system and receive only the payments disclosed by such
system.
(p) Relationships. There are no disputes or controversies existing between
Seller or the Facility and any of its clients or patients with respect to any
service provided by the Facility. There are no disputes or controversies
existing between Seller or the Facility and any supplier or other contractor
with respect to any product or service purchased by Seller or the Facility from
such person.
(q) Third Party Payors. Seller is in good standing with the United States
Department of Health and Human Services ("DHHS") and all similar state agencies.
Seller, to the best of its knowledge, has not had any action or complaint
brought against it or been reprimanded or sanctioned, by DHHS or any similar
state agency for any alleged fraud, abuse or other wrongful conduct. Neither the
Health Care Financing Administration ("HCFA"), the Division of Medical
Assistance and Health Services nor any similar federal or state agency has any
claim or any possible claim for monies due or to become due.
(r) Insurance. Seller has policies of insurance on the Facility, equipment
and inventory in connection with the Facility in amounts deemed sufficient and
reasonable by management of Seller.
(s) Taxes. Seller has filed all tax returns required to be filed by Seller
under the laws of the United States, the Commonwealth of Pennsylvania, and the
applicable governmental localities. Seller has paid or set up an adequate
reserve in respect of all such taxes for the periods covered by such returns.
Seller has no tax liability for which no tax reserve has been made in respect of
any jurisdiction in which the failure to do so will have a material adverse
effect on
the Facility. The amounts set up as provisions for taxes by Seller for the
Facility are sufficient for all accrued and unpaid federal, state, county and
local taxes, including any interest and penalties in connection therewith, of
Seller, whether or not disputed, for all fiscal periods to the date of the
Balance Sheet (as hereinafter defined). Seller has not been notified that any
income tax returns of Seller is currently under audit by the Internal Revenue
Service or any state tax agency. No agreements have been made by Seller for the
extension of time or the waiver of the statute of limitation for assessment of
any tax. Seller has withheld proper and accurate amounts from its employees for
all periods to ensure full and complete compliance with tax withholding
provisions of applicable federal, state and local tax laws; proper and accurate
federal, state and local tax returns have been filed by Seller for all periods
for which returns were due with respect to sales, withholding, F.I.C.A. and
unemployment taxes, in the amount shown thereunder to be due and payable and all
such amounts have been paid in full.
(t) Hazardous Substances. To the best of Seller's knowledge, neither
Seller, nor to Seller's knowledge, any other person, has caused or permitted
Seller's assets to be used to generate, manufacture, refine, transport, treat,
store, handle, dispose, transfer, produce or process Hazardous Substances (as
hereinafter defined), or other dangerous or toxic substances, oils, or solid
waste, and neither Seller, nor to Seller's knowledge, any other person, has
caused or permitted any Release (as hereinafter defined) of any Hazardous
Substance on or offsite of Seller's property, including, but not limited to,
property leased to Seller. "Hazardous Substances" include any pollutants,
dangerous substances, toxic substances, hazardous wastes, hazardous materials,
oils, or hazardous substances as defined in or pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section
9601-9657 ("CERCLA"), or any other federal, state or local environmental law,
ordinance, rule or regulation as such laws, ordinances, rules or
regulations exist as of the date hereof. "Release" means releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping. Purchaser acknowledges that Seller has
caused medical waste arising from the Facility's operations to be disposed of in
accordance with applicable laws and regulations. Seller has not received any
notice from any governmental agency that Seller is a potentially responsible
party in any proceeding under CERCLA or any similar state or local environmental
statute or regulation.
(u) Finders. No broker or finder has acted for Seller in connection with
the transactions contemplated by this Agreement, and no broker or finder is
entitled to any broker's or finder's fee or other commission in respect thereof
based in any way on agreements, understandings or arrangements with Seller.
(v) Disclosure. No representation or warranty by Seller in this Agreement
and no information in any statement, certificate, schedule or other document
furnished or to be furnished to the Purchaser pursuant hereto, or in connection
with the transaction contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
Except as disclosed in this Agreement and the exhibits and schedules attached
hereto and excluding, economic, business and regulatory factors affecting the
Facility generally, there is no fact which Seller has not disclosed to the
Purchaser in writing which materially adversely affects or may materially
adversely affect the Facility, operations, prospects, assets, profits or
conditions (financial or otherwise) of the Facility.
(w) Financial Statements. Seller has delivered to Purchaser true and
correct copies of (i) Seller's income tax statements for the years ended
December 31, 1999, December 31, 1998 and December 31, 1997, and (ii) Seller's
unaudited income statement and balance sheet for the
six month period ended 2000 (the "Balance Sheet"). There is no basis for
the assertion against Seller or the Facility of any liability or obligation of
the Facility of any nature or in any amount.
(x) Absence of Certain Events. Since the date of Seller's last audited
balance sheet and except as reflected on Seller's most recent unaudited balance
sheet, (the "Balance Sheet"), Seller has not: (i) sold, assigned, transferred or
otherwise disposed of, or entered into an agreement to sell, assign, transfer or
otherwise dispose of, any asset used in the Facility, except in the ordinary
course of business consistent with past practice; (ii) increased the salaries or
other compensation of, or made any distributions, advances (excluding advances
for ordinary and necessary business expenses) or loans to any employees of the
Facility or made any increase in, or any additions to, other benefits to which
any employees of the Facility may be entitled other than salary increases to
non-management level employees made in the ordinary course of business; (iii)
entered into any transaction relating to, or affecting, the Facility other than
in the ordinary course of business consistent with past practice; (iv)
accelerated the collection of any fees or otherwise collected such fees in a
manner not consistent with the normal practice of the Facility; (v) mortgaged
and pledged any of the Assets, or suffered the creation of any lien, pledge,
mortgage, easement, security interest, conditional sales contract or other
encumbrance of any nature whatsoever, other than the liens, if any, of current
taxes not yet due and payable; (vi) made or suffered any amendment or
termination of any material contract, commitment, lease, instrument or agreement
relating to the Facility;
(vii) except in the ordinary course of the Facility consistent with past
practice, discharged or satisfied any lien or encumbrance, or paid any
liabilities or failed to pay or discharge when due any liabilities, the failure
to pay or discharge of which has caused or may cause any damage or risk of loss
to the Facility; (viii) changed any of the accounting principles followed by
Seller or the methods of applying such principles; (ix) forgiven, canceled,
modified or waived any debts or claims held by Seller with respect to the
Facility or waived any rights of substantial value relating to the Facility; (x)
borrowed or agreed to borrow any funds or voluntarily incurred, assumed, or
become subject to, whether directly or by way of guarantee or otherwise, any
obligation or liability other than in the ordinary course of the Facility; (xi)
issued or sold any stock, notes, bonds or other securities, or any options or
warrants to purchase the same, or entered into any agreement with respect
thereto, whether or not in the ordinary course of the Facility; or (xii) changed
the rates which it or its agent charges its patients for the rendering of
medical services.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Except where otherwise set
forth in this Agreement, Purchaser acknowledges, warrants, represents and agrees
as follows: (a) Qualifications. Purchaser is a Pennsylvania limited partnership,
duly organized and in good standing in the Commonwealth of Pennsylvania, and has
all requisite power and authority to enter into the transaction contemplated by
this Agreement.
obligation of Purchaser, enforceable against Purchaser in accordance with
its terms. (c) Compliance with Law and Instruments. The signing, delivery and
performance of this Agreement does not violate any law or constitute a breach or
default under any agreement or other restriction to which Purchaser is a party
or by which Purchaser is bound. (d) Patient Records. (i) Seller and Purchaser
shall maintain the confidentiality of and provide patients and their
representatives access in accordance with applicable law to the clinical and
financial content of all patient records which contain treatment, diagnostic or
other entries dated on or prior to the date of execution of this Agreement
("Patient Records"). (i) Purchaser shall preserve all of the Patient Records and
billing records in a safe place and manner and for a period of time consistent
with all applicable federal, state and local laws. (i) After the closing, all
Patient Records are and shall remain the sole property of purchaser; provided,
however, in the event litigation has been initiated against Seller as such
litigation relates to the delivery of services, by the Seller prior to the
Closing Date, Purchaser shall grant Seller and Seller's agents access, during
normal business hours, to the Patient Records to inspect and copy such records
(at Seller's sole and exclusive cost).
5. CONDITIONS PRECEDENT TO PURCHASER'S AND SELLER'S OBLIGATIONS.
(a) The obligation of Purchaser to consummate this Agreement is
subject to and conditioned on the delivery of the following to Purchaser, at or
prior to the closing: (i) a certification by Seller to the effect that (1)
Seller has complied with all of the terms and conditions of this Agreement to be
complied with and performed by Seller
at or prior to the Closing Date; (2) all of the representations and
warranties made by Seller herein remain true and accurate as of the Closing
Date; and (3) this Agreement is duly authorized, executed and delivered; (i) the
"Assignment" of the lease (in the form Assignment attached hereto as Exhibit
5(A)(ii)) for the Premises together with the written consent of landlord of the
Premises to the assignment of the lease to Purchaser; (i) the ▇▇▇▇ of Sale for
the Assets executed by Seller, in the form of ▇▇▇▇ of Sale attached hereto as
Exhibit 5(A)(iii); (i) a corporate good standing certificate, copies of Seller's
certificate of incorporation and bylaws, corporate resolutions authorizing the
transactions contemplated herein, and complete copies of any licenses, permits
or registrations held by Seller; (i) possession of the Assets; (i) a report of a
recognized search firm of the records of the Office of the Secretary of the
Commonwealth of Pennsylvania and the Offices of the Prothonotary and Recorder of
Deeds, of Philadelphia County, Pennsylvania regarding financing statements, tax
liens and judgments filed against the Assets and/or Seller indicating that there
are no liens or encumbrances against the Assets and/or Seller; (i) a
Certification from Hitachi Corporation that the MRI system, including magnet,
processor and all ancillary equipment purchased hereunder is in good condition
and working order; (i) the Assignment (in the form Assignment attached hereto as
Exhibit 5(A)(viii)) of Seller's right, title and interest as an in-network
participating provider in the Personal Choice health plan of Independence Blue
Cross ; and
(i) the ▇▇▇▇ of Sale for the Assets executed by Healthcare Imaging
Services, Inc., an affiliate of Seller, in the form of the ▇▇▇▇ of Sale attached
hereto as Exhibit 5(A)(ix). (a) The obligation of Seller to consummate this
Agreement is subject to and conditioned on delivery of the following to Seller
at or prior to the Closing: (i) a certification by Purchaser to the effect that
(1) Purchaser has complied with all of the terms and conditions of this
Agreement to be complied with and performed by Purchaser, at or prior to the
Closing Date; and (2) all of the representations and warranties made by the
Purchaser herein remain true and accurate as of the Closing Date.
6. PURCHASER'S RIGHT OF EXAMINATION. Seller shall afford Purchaser access,
upon reasonable notice, during normal business hours, to all of its business
operations, properties, books, files, and records, and shall cooperate in
Purchaser's examination thereof. Until the closing, Purchaser shall hold in
confidence all information so obtained, and any document or instrument obtained
by Purchaser in connection with this Agreement shall be held in express trust
for and on behalf of Seller. No examination by Purchaser shall constitute a
waiver or relinquishment by Purchaser of the right to rely on Seller's
covenants, representations, and warranties made in or pursuant to this
Agreement.
7. COVENANT NOT TO COMPETE. (a) Neither Seller, nor any corporation,
partnership, or other practice entity or person, controlling, controlled by or
under common control with, Seller shall at any time disclose, directly or
indirectly, to any person outside of the employ of Purchaser, without the
express written authorization of Purchaser, any patient lists, patient files or
records, pricing or Facility strategies, or any other type of proprietary data
or trade secrets relating to the Facility or any financial or other information
about Purchaser or any of its affiliates not in the public domain.
(a) Neither Seller (as owner or independent contractor) nor any
corporation, partnership, or other practice entity or person, controlling,
controlled by, or under common control with, Seller shall, for a period of two
(2) years after the Closing Date, directly or indirectly, operate, manage, work
for, own or control any business or services of the same general character as
those engaged in or performed by the Facility within the City of Philadelphia.
(a) Neither Seller nor any corporation, partnership, or other practice entity or
person, controlling, controlled by, or under common control with, Seller shall
engage or participate in any effort or act to induce any third-party payors,
health care services providers, physicians, suppliers, associates, employees, or
independent contractors of the Facility to cease to do business with the
Facility or, with respect to employees, to accept employment with Seller. (a)
The parties to this Agreement agree that if a court of competent jurisdiction
determines that any provision contained in this Section 7 is invalid or
unenforceable by reason of the duration or geographical scope of such covenant
such duration or geographical scope, or both, shall be reduced to a duration or
geographical scope consistent with the decree of the court. (a) Seller
acknowledges that damages alone shall not be an adequate remedy for any breach
by Seller of its covenants contained in this Section 7 of this Agreement, and
accordingly, Seller agrees that, in addition to any other remedies which
Purchaser may have, Purchaser shall be entitled to injunctive relief in any
court of competent jurisdiction for any breach or threatened breach of any such
covenants by Seller.
8. INDEMNIFICATION.(a) Indemnification by Seller. Seller agrees to
indemnify, protect, defend and hold Purchaser harmless from any and all damages,
claims, actions, demands, losses, expenses, liabilities, penalties, defenses,
judgments, proceedings, costs and disbursements (including, without
limitation, reasonable attorneys' fees and disbursements) which may at any
time be imposed upon, incurred by or asserted or awarded against Purchaser,
arising out of, resulting from, caused by or in any way connected with any act
or omission of Seller with respect to Seller's business operations that occurs
on or prior to the Closing Date (including, but not limited to, any amounts
payable accruing prior to the Closing Date under any Assigned Contracts), or a
breach of, any of the representations, warranties or agreements made by Seller
in this Agreement. Seller shall reimburse Purchaser on demand for any payment
made by Purchaser at any time after the Closing Date, based on the judgment of
any court of competent jurisdiction or (subject to Seller's right to control the
proceeding as set forth below) pursuant to a bona fide compromise or settlement
of claims, demands, or actions, in respect to any damages to which the foregoing
indemnity is related. Purchaser shall give Seller prompt written notice of any
litigation threatened or instituted against Purchaser that might constitute the
basis of a claim for indemnity by Purchaser against Seller, and Seller shall be
entitled, at its own cost and expense, to contest or defend, by appropriate
proceeding, or to compromise or settle, as Seller shall determine, any such
litigation or claim. If Seller elects not to participate in the defense of any
such claim, Seller shall be bound by the results obtained by Purchaser with
respect to such claim, provided Purchaser has used reasonable good faith efforts
to defend against such claim according to the merits of the claim. Additionally,
if Seller shall fail to indemnify Purchaser hereunder, notwithstanding any other
provision in this Agreement, Purchaser shall have the right, on written notice
to Seller, to set off ratably against any notes, payments, salary or bonus
Purchaser may otherwise owe to Seller for any amount to which Purchaser is
entitled by way of indemnification and which Seller has failed to pay or
provide. (a) Indemnification by Purchaser. Purchaser hereby agrees to indemnify,
protect, defend and hold Seller harmless after the Closing Date against and from
any and all damages,
claims, actions, demands, losses, expenses,
liabilities, penalties, defenses, judgments, proceedings, costs and
disbursements (including, without limitation reasonable attorneys' fees and
disbursements) which may at any time be imposed upon, incurred by or asserted or
awarded against Seller arising out of, resulting from, caused by or in any way
connected with any act or omission of Purchaser with respect to the Assets or
the Facility arising after the Closing Date (other than act or omission by any
shareholder in his capacity as an employee or agent of Purchaser), or a breach
of any of the representations, warranties or agreements made by Purchaser in
this Agreement. Purchaser shall reimburse Seller on demand for any payment made
by Seller at any time after the Closing Date, based on the judgment of any court
of competent jurisdiction or (subject to Purchaser's right to control the
proceeding as set forth below) pursuant to a bona fide compromise or settlement
of claims, demands, or actions, in respect to any damages to which the foregoing
indemnity is related. Seller shall give Purchaser prompt written notice of any
litigation threatened or instituted against Seller that might constitute the
basis of a claim for indemnity by Seller against Purchaser, and Purchaser shall
be entitled, at its own cost and expense, to contest or defend, by appropriate
proceeding, or to compromise or settle, as Purchaser shall determine, any such
litigation or claim. If Purchaser elects not to participate in the defense of
any such claim, Purchaser shall be bound by the results obtained by Seller with
respect to such claim, provided Seller has used reasonable good faith efforts to
defend against such claim according to the merits of the claim. Additionally, if
Purchaser shall fail to indemnify Seller hereunder, notwithstanding any other
provision in this Agreement, Seller shall have the right on written notice to
Purchaser, to set off ratably against any notes, payments, salary or bonus
Seller may otherwise owe to Purchaser for any amount to which Seller is entitled
by way of indemnification and which Purchaser has failed to pay or provide. (a)
Indemnification obligations are undertaken by the parties hereto solely
for the benefit of one another, and shall not be deemed to constitute
assumptions of liability or admissions against interest which may be relied upon
or enforced by any other party. There are no third-party beneficiaries of this
Agreement.
9. EMPLOYMENT BY THE PRACTICE. (a) Purchaser may offer employment to
non-physician employees of the Facility at compensation levels and on other
terms satisfactory to the Purchaser in its sole discretion. Seller shall use its
best efforts to facilitate acceptance of Purchaser's offer of employment by
those employees of the Facility to whom Purchaser makes such offer. Purchaser or
any affiliate employing such employees retains the exclusive right to terminate
any employee or to vary the terms of his or her offer of employment. Seller
shall cooperate with Purchaser in effectuating appropriate transitional payroll
arrangements.
(b) Employee Compensation, Benefit and Bonus Claims. Seller shall retain
the obligation, if any, to pay any amounts owing to employees of the Facility
with respect to employee compensation, bonus or incentive awards, if any, for
services rendered on or before the Closing Date, in accordance with the terms of
applicable plans or policies of the Facility.
10. CONFIDENTIALITY. All business
records, including without limitation, referral lists, and all patient records
of the Facility are the sole property of Seller and shall be the sole property
of Seller until the Closing Date. Prior to the Closing Date, Purchaser shall not
use, disseminate or in any way disclose any information contained in said
business or Patient Records, except as required in the performance of
Purchaser's duties hereunder, by operation of law, or as approved in writing by
Seller. In addition, until the Closing Date, Purchaser shall not remove any
Patient Records from the Premises. After the Closing Date, Seller shall not use,
disseminate or in any way disclose any information contained in said business or
Patient Records, except as required by
operation of law, or as approved in writing by Purchaser.
11. ACCOUNTS.(a) Commencing as of the Closing Date, all billing to patients
or their third- party payors for medical services provided in connection with
the Facility shall be performed by Purchaser or its agent for its own account.
(a) Purchaser and Seller acknowledge and agree that all accounts receivable and
capitation payments received by Seller for services provided by Purchaser after
the Closing Date shall be the property of Purchaser and shall be forwarded to
Purchaser within fifteen (15) days after receipt by Seller. Purchaser and Seller
acknowledge and agree that all accounts receivable and capitation payments
received by Purchaser for services provided by Seller before the Closing Date
shall be the property of Seller and shall be forwarded to Seller within fifteen
(15) days after receipt by Purchaser. Purchaser and Seller further acknowledge
and agree that, commencing as of the Closing, Purchaser shall be entitled to all
accounts receivable and capitation payments with respect to services rendered in
connection with the Facility on or subsequent to the Closing Date. (a) If Seller
receives any payment after the Closing Date from or on behalf of a patient who
is indebted to both Seller and Purchaser, such payment shall be credited
according to the payor's instructions. If one party ("Indebted Party") owes an
amount to the other party, such amounts shall be paid over to such other party,
in cash or by certified check, within fifteen (15) days after receipt by the
Indebted Party. (a) Purchaser shall provide Seller with access to patient
records for the purpose of pursuing collection on outstanding accounts or
resolving claims that pre-date the Closing.
12. BENEFIT/ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, and their respective legal
representatives, successors and assigns.
13. EXPENSES. Each party shall bear all expenses incurred by it in
connection with this Agreement and in the consummation and preparation for the
transactions contemplated in this Agreement, including the fees of any attorney,
accountant broker or adviser engaged by such party, except that Seller shall be
responsible for, and pay, any and all sales and transfer taxes, upon the sale of
the Assets.
14. GOVERNING LAW. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
15. MODIFICATION. This Agreement may not be amended or
supplemented at any time unless by a writing executed by the parties hereto.
16. ASSIGNMENT. Neither this Agreement nor any right created by this
Agreement shall be assignable by any party without the prior written consent of
the other party. Nothing in this Agreement is intended to confer on any person,
other than the parties and their successors, any rights or remedies under or by
reason of this Agreement.
17. NOTICE. Whenever under the provisions of this Agreement notice is
required to be given, it shall be in writing and shall be deemed given when
either served personally or mailed, return receipt requested to Seller or
Purchaser at the following addresses:
Seller Healthcare Imaging Services of ▇▇▇▇▇▇▇▇▇▇▇ Square, Inc.
c/o Healthcare Integrated Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
cc: ▇▇▇▇ ▇. Fanbug, Esq.
Brach, Eichler, ▇▇▇▇▇▇▇▇▇, Silver, ▇▇▇▇▇▇▇▇▇, Hammer & Gladstone
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Purchaser Rittenhouse Imaging Center, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
cc: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Schnader, Harrison, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,▇▇ ▇▇▇▇▇-▇▇▇▇
18. WAIVER. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
19. HEADINGS. The headings in this Agreement are solely for convenience or
reference and shall not affect its interpretation.
20. SEVERABILITY. If any
provision of this Agreement shall be declared invalid or illegal for any reason
whatsoever, then notwithstanding such invalidity or illegality, the remaining
terms and provisions of the within Agreement shall remain in full force and
effect in the same manner as if the invalid or illegal provisions had not been
contained herein.
21. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the sale of the Assets, and
there are no agreements, understandings, restrictions, warranties, or
representations between the parties other than those set forth herein or herein
provided. Seller and Purchaser agree that each and every term and condition of
this Agreement shall supersede any other agreement by and between Seller and
Purchaser with respect to the Assets, whether oral or written, and all such
prior agreements shall be declared null and void.
22. FURTHER ASSURANCES. Seller
and Purchaser agree that they will cooperate with each other in any manner which
may be required to fully effectuate the complete terms
and intent of this Agreement. Such cooperation shall include the execution
of any instrument and the doing of any act necessary to effectuate the complete
terms and intent of the Agreement.
23. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations, warranties, covenants and agreements made by
each party in this Agreement or in any exhibit, schedule, certificate, document
or list delivered by any such party pursuant hereto shall survive the closing,
and notwithstanding any investigation conducted before or after the closing or
the decision of any party to complete the closing, each party hereto shall be
entitled to rely upon the representations and warranties of the other parties
24. BEST EFFORTS. Seller shall use its best efforts with respect to matters
within its control to cause the transactions contemplated by this Agreement to
be consummated.
25. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have hereto set their hands and seals as of
the day and year first above written.
ATTEST: HEALTHCARE IMAGING SERVICES OF ▇▇▇▇▇▇▇▇▇▇▇
SQUARE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board and Chief
Executive Officer
▇▇▇▇▇▇▇▇▇▇▇ IMAGING CENTER, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
GUARANTEE OF FOX CHASE MEDICAL CENTER RADIOLOGY ASSOCIATES, PC
For good and sufficient consideration, the receipt of which is hereby
acknowledged, Fox Chase Medical Center Radiology Associates, P.C., as of the
date first above written, shall guarantee the prompt and punctual payment by
▇▇▇▇▇▇▇▇▇▇▇ Imaging Center, L.P. of the Post-Closing Revenue Payments, if any,
as more fully set forth under Section 2(a)(ii) hereof, equal to a maximum of
Twenty-Five (25%) percent of the amount by which revenue generated at the
Facility following the Closing Date exceeds Two Hundred Fifty Thousand
($250,000) Dollars in any calendar quarter, up to a maximum of Seven Hundred
Thousand ($700,000) Dollars, being the amount, subject to Section 2(b) hereof,
due and payable by Purchaser to Seller hereunder. Such guarantee shall expire
upon the payment of all Post-Closing Revenue Payments due to Seller by
Purchaser, if any, with respect to revenues generated prior to the twentieth
(20th) complete calendar quarter following the Closing Date. Such guarantee
shall include any Post-Closing Payment Balance that comes due under Section
2(b), but shall not include any amounts that come due by reason of the
acceleration provisions in Section 2(a)(ii).
FOX CHASE MEDICAL CENTER RADIOLOGY ASSOCIATES, P.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
President
GUARANTEE OF HEALTHCARE INTEGRATED SERVICES, INC.
For good and sufficient consideration, the receipt and sufficiency of which
is hereby acknowledged, HEALTHCARE INTEGRATED SERVICES, INC. hereby guarantees,
as surety, the obligations of the Seller under the Agreement, including, but not
limited to, the representations, warranties, covenants and undertakings made by
Seller under the Agreement, any breach thereof and any resulting damages
therefrom.
HEALTHCARE INTEGRATED SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board and Chief Executive
Officer
EXHIBIT 1A
AssetsT 1A
List of Assets at ▇▇▇▇▇▇▇▇▇▇▇ Square Imaging
10 Meridian telephonese
3 Sofas
2 End Tables
1 Coffee
Table 2 Arm Chairs
1 Television with VCR 1 Cable Box
2 Lamps
4 Pictures
6 rolling desk chairs
1 printer type 4019E01S/N11
1 Sharp UX3200 Facsimile machine
1 Sharp SF2022 Copier
1 Newco coffee pot
1 Sharp Carousel II microwave oven
1 Magic Chef ref.
1 Sanyo memo-▇▇▇▇▇▇▇ 6030 for dictation 3 metal shelves for
filing films
3 paper towel dispensers
1 single view box
2 double view boxes
4 (3 section) view boxes all mounted on the walls
1 tempest computer (patient reports
stored in) with Komdo Monitor
1 Hewlett Packard laser jet 1100
1 Processor 3MXP515
1 3M Laser printer for films
1 MRI unit MRP 7000 1 MRI MRP 7000 console
1 computer board for MRI unit system serial #7049
EXHIBIT 1B
Excluded Assets
List of Excluded Assets at ▇▇▇▇▇▇▇▇▇▇▇ Square Imaging
2 computer monitors for the ADS System
1 computer model #70386
1 stamp machine
EXHIBIT 1C
Assigned Contracts
None
EXHIBIT 2
Purchase Price Allocation
EquipmentPrice Allocation $1,150,000
----------------
Goodwill $150,000
Covenant Not to Compete $200,000
EXHIBIT 3C
Regulatory Violations
None
EXHIBIT 3D
Legal Actions
None
EXHIBIT 3E
Governmental Permits
NONE
EXHIBIT 3F
Liens
EXHIBIT 3K
Licenses and Consents
Licenses and Consents
Landlord Consent to Assignment
DVI Consent to Subordinated Security Interest
EXHIBIT 5(A)(ii)
Assignment of Lease
EXHIBIT 5(A)(iii)
▇▇▇▇ of Sale(iii)
---- -- ----
▇▇▇▇ of Sale(iii)
---- -- ----
This ▇▇▇▇ of Sale is delivered by Heathcare Imaging Services of ▇▇▇▇▇▇▇▇▇▇▇
Square, Inc. ("HIS"), to ▇▇▇▇▇▇▇▇▇▇▇ Imaging Center, L.P. ("▇▇▇▇▇▇▇▇▇▇▇").
BACKGROUND: For and in consideration of $1.00 and other good and valuable
consideration, the receipt of which is hereby acknowledged, HIS hereby
transfers, assigns and delivers to ▇▇▇▇▇▇▇▇▇▇▇, its successors and assigns, free
and clear of all liens and encumbrances, all of HIS' right, title and interest
in and to the Assets as such term is defined in the Asset Purchase Agreement by
and between ▇▇▇▇▇▇▇▇▇▇▇ and HIS, effective March 5, 2001and as set forth on
Schedule A attached hereto. Further, HIS hereby represents and warrants to
▇▇▇▇▇▇▇▇▇▇▇ that HIS has good and marketable title to the Assets and that the
Assets are in good condition and working order.
The representations, warrants, covenants and agreements made, and as
applicable to this, ▇▇▇▇ of Sale by HIS shall survive the execution and delivery
of this ▇▇▇▇ of Sale.
TO HAVE AND TO HOLD all such Assets hereby transferred to ▇▇▇▇▇▇▇▇▇▇▇ and its
successors and assigns forever.
IN WITNESS WHEREOF, HIS has executed this ▇▇▇▇ of Sale effective as of the 5th
day of March 2001.