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ASSET PURCHASE AGREEMENT
By and Among
MEDIQ MOBILE X-RAY SERVICES, INC.,
MEDIQ INCORPORATED
and
SYMPHONY DIAGNOSTIC SERVICES NO. 1, INC.
Dated as of November 6, 1996
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TABLE OF CONTENTS
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Background...................................................................1
ARTICLE I PURCHASE AND SALE OF ASSETS........................................1
1.1 Assets Being Sold and Purchased...............................1
1.2 Excluded Assets...............................................3
1.3 Assumption of Liabilities.....................................4
1.4 Assignment of Assets..........................................6
ARTICLE II PURCHASE PRICE AND CLOSING........................................7
2.1 Purchase Price................................................7
2.2 Purchase Price Contingency....................................8
2.3 Post-Closing Purchase Price Adjustment........................9
2.4 Closing Date.................................................12
2.5 Closing Documents of Seller..................................12
2.6 Closing Documents of Parent..................................13
2.7 Closing Documents of Buyer...................................13
2.8 Legal Opinions...............................................14
2.9 IHS Stock....................................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................20
3.1 Representations and Warranties of Seller and Parent..........20
(a) Authority...............................................20
(b) Organization and Standing of Seller and Parent..........20
(c) Ownership...............................................20
(d) Subsidiaries of the Seller..............................21
(e) Financial Statements....................................21
(f) Taxes...................................................21
(g) Assets Other than Real Property.........................22
(h) Title to Real Property..................................23
(i) Intellectual Property...................................23
(j) Contracts...............................................23
(k) Litigation; Decrees.....................................25
(l) Insurance...............................................25
(m) Benefit Plans...........................................26
(n) Absence of Changes or Events............................26
(o) Compliance with Applicable Laws.........................27
(p) Licenses; Permits.......................................28
(q) Environmental Matters...................................28
(r) Employee and Labor Relations............................28
(s) Special Fee Arrangements................................29
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(t) Patient Volumes.........................................29
(u) Employees...............................................29
(v) Relationships...........................................29
(w) Questionable Payments...................................29
(x) Reimbursement Matters...................................29
(y) Medicare/Medicaid Participation.........................30
(z) Customer List...........................................30
(aa) Financial Statements and SEC Documents..................30
3.2 Representations and Warranties of Buyer......................31
(a) Authority...............................................31
(b) Sufficient Funds........................................31
(c) Organization and Standing of Buyer......................31
(d) Financial Statements and SEC Documents..................32
ARTICLE IV COVENANTS........................................................32
4.1 Covenants of Seller..........................................32
(a) Insurance...............................................32
(b) Employment Agreements...................................32
4.2 Covenants of Buyer...........................................33
(a) Financial Information...................................33
(b) Accounts................................................33
(c) Employees...............................................33
(d) Insurance...............................................33
4.3 Mutual Covenants.............................................34
(a) Records.................................................34
(b) Publicity...............................................35
ARTICLE V OTHER AGREEMENTS..................................................35
5.1 Certain Understandings.......................................35
5.2 Further Assurances...........................................35
5.3 Transfer Taxes...............................................35
5.4 Use of Mediq Name............................................35
5.5 Covenant Not to Compete......................................36
5.6 Restrictions.................................................38
5.7 Adjustments for Medicare Reimbursement Rate Increases........38
5.8 Audit........................................................39
5.9 Billing and Collection Agent.................................39
5.10 Benefits under Excluded Contracts............................39
ARTICLE VI INDEMNIFICATION..................................................40
6.1 Indemnification by Seller and Parent.........................40
6.2 Indemnification by Buyer.....................................41
6.3 Losses Net of Insurance, Etc.................................41
6.4 Termination of Indemnification...............................41
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6.5 Procedures Relating to Indemnification under Sections
6.1 and 6.2................................................42
ARTICLE VII DEFINITIONS.....................................................43
ARTICLE VIII MISCELLANEOUS..................................................47
8.1 Assignment...................................................47
8.2 No Third-Party Beneficiaries.................................48
8.3 Survival of Representations..................................48
8.4 Expenses.....................................................48
8.5 Amendments...................................................48
8.6 Notices......................................................48
8.7 Fees.........................................................50
8.8 Severability.................................................50
8.9 Interpretation...............................................50
8.10 Waiver.......................................................51
8.11 Counterparts.................................................51
8.12 Entire Agreement.............................................51
8.13 Governing Law................................................51
8.14 Joint and Several............................................51
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LIST OF SCHEDULES
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Schedule 1.1(a)(vii) Third Party Consents
Schedule 1.3 Assumed Liabilities
Schedule 3.1(a) Authority Schedule
Schedule 3.1(b) Qualification to do Business Schedule
Schedule 3.1(e) Financial Statements Schedule
Schedule 3.1(f) Taxes Schedule
Schedule 3.1(g) Assets Other than Real Property Schedule
Schedule 3.1(h) Title to Real Property Schedule
Schedule 3.1(i) Intellectual Property Schedule
Schedule 3.1(j) Contracts Schedule
Schedule 3.1(j)-A Contracts Not in Effect Schedule
Schedule 3.1(j)-B Breaches and Defaults Schedule
Schedule 3.1(j)-C Contracts not Current in Payments Schedule
Schedule 3.1(j)-D Consents Schedule
Schedule 3.1(k) Litigation; Decrees Schedule
Schedule 3.1(l) Insurance Schedule
Schedule 3.1(m) Benefit Plans Schedule
Schedule 3.1(n) Absence of Changes or Events Schedule
Schedule 3.1(o) Compliance with Applicable Laws Schedule
Schedule 3.1(p) Licenses; Permits Schedule
Schedule 3.1(q) Environmental Matters Schedule
Schedule 3.1(r) Employee and Labor Relations Schedule
Schedule 3.1(s) Special Fee Arrangements Schedule
Schedule 3.1(t) Patient Volumes Schedule
Schedule 3.1(u) Employees Schedule
Schedule 3.1(v) Relationships Schedule
Schedule 3.1(w) Questionable Payments Schedule
Schedule 3.1(x) Reimbursement Matters Schedule
Schedule 3.1(y) Medicare/Medicaid Participation Schedule
Schedule 3.1(z)-A Facilities List Schedule
Schedule 3.1(z)-B Patients List Schedule
Schedule 5.5 Non-Competition Agreement Parties
LIST OF EXHIBITS
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Exhibit 2.5(d)-1 ▇▇▇▇ of Sale
Exhibit 2.5(d)-2 Assignment and Assumption of Contracts
Exhibit 2.7(i) Assumption Agreement
Exhibit 2.8(a) Legal Opinion of Dechert Price & ▇▇▇▇▇▇
Exhibit 2.8(b) Legal Opinion of Blass & ▇▇▇▇▇▇, Esqs.
Exhibit 3.1(j)-A Customer Contract
Exhibit 3.1(j)-B Customer Contract
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of November 6, 1996 by and
among MEDIQ Mobile X-Ray Services, Inc., a Delaware corporation ("Seller"),
MEDIQ Incorporated, a Delaware corporation ("Parent"), and Symphony Diagnostic
Services No. 1, Inc., a California corporation ("Buyer").
Background
WHEREAS, Seller operates a business which provides portable
X-ray, EKG and nutritional services to residents of nursing homes and other
institutions and home care patients, and ancillary services related thereto (the
"Business");
WHEREAS, Buyer wishes to purchase and assume from Seller and
Seller wishes to sell and transfer to Buyer certain assets used and liabilities
arising in the Business, all as more fully described herein;
WHEREAS, Parent owns 100% of the issued and outstanding capital
stock of Seller and is entering into this Agreement as an inducement to Buyer to
enter into this Agreement;
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements contained in
this Agreement, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Assets Being Sold and Purchased.
(a) Subject to and upon the terms and conditions of this
Agreement, concurrently herewith Seller shall transfer, sell, convey, assign and
deliver to Buyer free and clear of all Liens, other than Permitted Liens (as
hereinafter defined), and Buyer shall purchase from Seller, all of Seller's
right and title to and interest in the following properties and assets as the
same exist on the date hereof:
(i) all tangible assets used in or useful or held for
use in connection with the ownership or operation of the Business whether owned
or leased, including, without limitation, all inventory, supplies, furnishings,
moveable and other equipment, instruments, machinery, tools, vehicles, furniture
and office equipment, all fixtures and leasehold improvements and other items of
personal property owned by Seller;
(ii) manufacturers' and vendors' warranties in
connection with the assets being transferred hereunder;
(iii) except for Excluded Contracts (as defined in
Section 1.4), agreements to provide services or equipment, real estate leases,
equipment maintenance agreements, non-competition and proprietary information
agreements (other than such confidentiality agreements and letters of intent
that arose from the sale of the Business) and other agreements related to, and
incurred in the ordinary course of, the Business, including its contracts to
provide portable x-ray, EKG and other ancillary services and all other Contracts
(as such term is hereinafter defined in Section 3.1(j));
(iv) trade names, including but not limited to, "MMXR"
and the names, service marks, trademarks, copyrights, copyright applications,
trademark applications, patents, and patent applications used or useful or held
for use in connection with the ownership or operation of the Business and the
right to use the logos, except for the name and service ▇▇▇▇ "MEDIQ" and any
derivations thereof;
(v) all prepaid expenses and deposits used or useful or
held for use in connection with the ownership or operation of the Assets being
transferred hereunder (the "Prepaid Expenses"), which excludes those prepaid
expenses and deposits (which expenses and deposits remain the property of
Seller) relating to those liabilities that are not Assumed Liabilities;
(vi) all original agreements, documents, books,
instruments, papers, records, and files of all kind and nature relating to the
Business (collectively, the "Records"), but excluding its charter, minute books,
stock record books and corporate seal;
(vii) all consents, licenses, permits, certifications
and approvals granted by any governmental or non-governmental third party
(collectively, the "Third Party Consents"), to the extent transferable in
accordance with applicable law, including without limitation, those specified on
Schedule 1.1(a)(vii);
(viii) its past and present customer lists and all
telephone numbers, patient records, including without limitation, patient x-ray
films and EKGs, and files and other confidential or proprietary information
(other than confidentiality agreements and letters of intent that arose from the
sale of the Business), in each case only to the extent transferable in
accordance with applicable law;
(ix) its cash, cash equivalents, accounts and notes
receivable and the proceeds of any Non-Assignable Receivables (as defined
below);
(x) any provider or participation agreements and
provider numbers relating to Medicare or Medicaid to which Seller is a party
(including, without limitation, any hereafter issued with respect to Michigan)
and any IPL numbers;
(xi) its goodwill and going concern value; and
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(xii) all other assets that are used, useful or held for
use in connection with the ownership or operation of the Business.
(b) The assets being sold and purchased hereunder are
hereinafter collectively referred to as the "Assets".
1.2 Excluded Assets. Notwithstanding anything contained in
Section 1.1 hereof to the contrary, Seller is not selling, assigning,
transferring or conveying to Buyer any asset or item not described in Section
1.1. Without limiting the foregoing, the following assets, rights and properties
are excluded from the transactions contemplated in this Agreement (the "Excluded
Assets"):
(a) the ownership interest in equipment and other personal
property, wherever located, leased, licensed or rented by the Company and owned
by third parties who are not affiliated with Seller;
(b) refunds for Taxes (as hereinafter defined in Section
3.1(f)(i)) paid;
(c) prepaid expenses and deposits relating to those
liabilities that are not Assumed Liabilities (as hereinafter defined);
(d) inter-company accounts receivable from Affiliates of
Seller, and Seller's pension, profit-sharing or other funded employee benefit
plan assets;
(e) the capital stock of Seller owned or held by Parent;
(f) banking or financial institution accounts or any deposit
or concentration accounts or safety deposit boxes (it being understood that the
foregoing does not apply to any funds or other assets held in any such accounts,
all of which are included in the Assets);
(g) Seller's rights under any Excluded Contracts except
under the Agreement between ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and Parent, dated as of February
27, 1996 (which rights are expressly included as Assets) or except as expressly
provided in Section 5.5(f);
(h) Medicare Provider Numbers for Pennsylvania, Ohio,
Florida, Maryland, Rhode Island and Washington, D.C.;
(i) the name and service ▇▇▇▇ "MEDIQ" and any derivations
thereof (the "Name");
(j) Seller's rights under this Agreement or any other
Transaction Documents (as hereinafter defined); and
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(k) all Accounts Receivable of Seller from governmental
payors that by law may not be assigned to Buyer ("Non-Assignable Receivables")
(it being understood however, that for purposes of Section 2.3 of this Agreement
the Non-Assignable Receivables shall be deemed to be Accounts Receivable).
1.3 Assumption of Liabilities. (a) At Closing, Seller shall
transfer to Buyer, and Buyer shall assume and shall thereafter pay, perform and
discharge, to the extent not paid, performed and discharged at the Closing, all
of the Assumed Liabilities.
For purposes of this Agreement "Assumed Liabilities" shall mean,
without duplication:
(i) all operating trade payables, other liabilities and
accrued expenses of Seller that would be classified as current liabilities
("Current Liabilities") on a balance sheet of Seller as of the Closing Date
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with the balance sheet delivered to Buyer and included in the
financial statements of Seller as at August 31, 1996 referred to in Section
3.1(e) ("GAAP"), other than: (A) any liabilities that Buyer is expressly not
assuming as provided in this Agreement (other than payables under Excluded
Contracts that are reflected on the Closing Balance Sheet and that constitute
Current Liabilities), (B) any liability due to Parent of the type included under
the heading "Intercompany Advance-Parent" on Seller's balance sheet or any other
fee, loan, advance or other similar item due by Seller to Parent that does not
represent a Current Liability that is a reimbursement for expenses actually
incurred by Parent on Seller's behalf, (it being understood, however, that any
other Liabilities due to Parent or any of its Affiliates constituting Current
Liabilities shall be Assumed Liabilities), (C) any liability for taxes (other
than Buyer Taxes), (D) any obligation or liability arising out of any of the
Seller's Benefit Plans (as defined in Section 3.1(m)) except as provided in
Section 4.2(d), and (E) any obligation or liability to any Designated Employee
(as defined in Section 4.2(c)).
(ii) those obligations that arise or accrue under the
Contracts assigned by Seller to Buyer, with respect to, and only with respect
to, services to be rendered or goods to be supplied or benefits to be conferred
to or by Buyer or otherwise arising or accruing on or after the date that such
Contracts are assigned to Buyer. Notwithstanding the foregoing, Liabilities
under such Contracts that have accrued, or the performance of which is due, on
or prior to such date of assignment or which are in payment or consideration for
Excluded Assets, or that arise out of breaches that occurred prior to Closing,
shall remain the sole responsibility of Seller except to the extent such
liabilities constitute Current Liabilities; and
(iii) liabilities for severance or other payments related to
the termination of employment (as opposed to accrued compensation for services
rendered to Buyer) ("Employee Termination Payments") with respect to each
employee of Seller (other than the Subject Employees as hereinafter defined in
Section 4.1(b)) that Buyer employs as of the Closing Date through a date that
ends at least sixty (60) days after the Closing Date. Within ten (10) days of
request, Seller shall reimburse Buyer for any Employee Termination Payments paid
or incurred by it for any employee of Seller that Buyer terminates prior to the
end of such sixty (60) day period except to the extent such Employee Termination
Payments exceed $150,000. Subject to
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the aforesaid reimbursement obligation of Seller, Buyer shall be responsible for
the payment of all Employee Termination Payments for all of Buyer's employees
that are so terminated. If Buyer shall terminate the employment of any such
employee prior to the end of such sixty (60) day period, then the Employee
Termination Payment with respect to such terminated employee shall include any
severance obligations with respect to such employee included in any Benefit
Plans, severance or employment agreement disclosed in the Disclosure Schedule
(and not constituting an Excluded Contract). If Buyer shall terminate the
employment of any such employee on or after the end of such sixty (60) day
period, then the Employee Termination Payment with respect to such terminated
employee shall exclude any severance obligations included in any Benefit Plan
but shall include any severance obligations with respect to such employees
included in any severance or employment agreement disclosed in the Disclosure
Schedule (and not constituting a Excluded Contract and not otherwise expressing
assumed by Seller pursuant to said agreement).
(b) Buyer will not assume any, and Seller shall remain liable for
each, Liability of Seller existing on the Closing Date, other than the Assumed
Liabilities (the "Excluded Liabilities"). For purposes of this Agreement the
term "Liability" means any claim, lawsuit, liability, obligation or debt of any
kind or nature whatsoever, whether absolute, accrued, due, direct or indirect,
contingent or liquidated, matured or unmatured, joint or several, whether or not
for a sum certain, whether for the payment of money or for the performance or
observance of any obligation or condition, and whether or not of a type which
would be reflected as a liability on a balance sheet in accordance with
generally accepted accounting principles, including without limitation (i)
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 that are based on acts or
omissions occurring on or before the Closing Date; (ii) amounts due or that may
become due to Medicare or Medicaid or any other health care reimbursement or
payment intermediary on account of Medicare or Medicaid cost report adjustments
or other payment adjustments attributable to any period on or prior to the
Closing Date (including, without limitation, any of the same which becomes due
to any nursing home, hospital, other facility or other third party pursuant to
any Contract directly, by reason of offset or indemnification, or otherwise, or
any other form of Medicare or other health care reimbursement denial, recapture,
adjustment or overpayment whatsoever with respect to any period on or prior to
the Closing Date), or any liabilities arising out of the Middle District of
Pennsylvania investigation of Seller, or out of any Questionable Payment (as
defined in Section 3.1(w)) ("Reimbursement Liabilities"), (iii) any obligation
or liability arising out of any Excluded Contract, unless and until it is
assigned to and assumed by Buyer in accordance with Section 1.4 and any
Liabilities arising out of any Excluded Asset, (iv) any obligation or liability
arising out of any United States Department of Labor (or any similar State
agency or department) investigation or claim with regard to any employment
matters of the Business, (v) any obligation or liability arising out of any
Seller's Benefit Plan (as such term is hereinafter defined in Section 3.1(m)),
(vi) any liabilities arising out of Taxes due or owing by Seller, including,
without limitation, to the extent such Taxes are accrued on the Closing Balance
Sheet, (vii) any obligation or liability arising out of any of the matters
described on Schedule 3.1(k) (viii) any obligation for bonus, unpaid vacation or
salary of any Subject Employee (as hereinafter defined) outstanding on the
Closing Date, except to the extent included as a Current Liability; (ix) any
liability or obligation arising out of any noncompliance with law
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described in the Memorandum, dated April 26, 1996, to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ from
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; and (x) any liabilities due to Parent for
management fees for repayment of working capital or other advances, to the
extent such liabilities are not accrued on the Closing Balance Sheet.
1.4 Assignment of Assets.
(a) Buyer agrees to assume and Seller agrees to assign to
Buyer all of the Contracts set forth on Schedule 3.1(j), except for the
Contracts set forth on Schedule 1.4(a) ("Excluded Contracts"). Notwithstanding
the foregoing, to the extent that any lease, contract, license, permit,
agreement, sales or purchase order, commitment, property interest, qualification
or other Asset described in Section 1.1, and not constituting an Excluded
Contract or otherwise excluded in Section 1.2, to be sold, assigned or conveyed
to Buyer, cannot be sold, assigned or conveyed, without the approval, consent or
waiver of any third person, or if such sale, assignment or conveyance or
attempted sale, assignment or conveyance would constitute a breach thereof or a
violation of any law, decree, order, regulation or other governmental edict
(collectively, "Impracticalities"), this Agreement shall not (unless and until
such Impracticality is resolved) constitute or require a sale, assignment or
conveyance thereof, or an attempted sale, assignment or conveyance thereof, and
each Contract covered by the foregoing sentence (a "Temporary Excluded
Contract") shall be deemed to be an Excluded Contract unless and until the
Impracticalities applicable to it are resolved. The foregoing sentence shall not
be deemed to limit any representation or warranty made by Seller pursuant to
this Agreement.
(b) Buyer and Seller shall each use commercially reasonable
efforts, and shall cooperate with each other, to resolve any Impracticalities
necessary to sell, assign or convey the Assets to Buyer as soon as practicable,
provided that neither Seller nor Buyer shall be required to expend money,
commence any litigation or offer or grant any accommodation (financial or
otherwise) to any third party.
(c) With respect to any asset, contract, lease, agreement,
permit, license, interest or other right of Seller (other than any Excluded
Contract) which is not included in the Assets assigned to Buyer at the Closing
by reason of the immediately preceding paragraphs of this Section 1.4, after the
Closing), (i) the parties shall cooperate with each other, upon written request,
in endeavoring to obtain the requisite third-party consent(s) to the assignment
thereof to Buyer (or the resolution of any other Impracticalities), without
either party being obligated, however, to make any payment to any such third
party which is not otherwise due in order to obtain such consent or resolution,
unless Buyer shall make such payment or agree to reimburse Seller for such
payment, and (ii) if any such requisite consent cannot be obtained, Seller shall
use its commercially reasonable efforts in endeavoring to obtain for Buyer, at
no cost to Seller, an arrangement reasonably acceptable to Buyer designed to
provide for Buyer the benefits thereof (subject to assumption and performance of
all related liabilities in some other manner reasonably acceptable to Buyer and
Seller to the extent they otherwise would be assumed by Buyer in accordance with
this Agreement but for the failure to obtain such consent or resolve such
Impracticality). A Temporary Excluded Contract shall cease to be an
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Excluded Contract for the purposes of this Agreement and shall be assigned to
the Buyer when the Impracticalities applicable to it are resolved.
(d) Provided that Seller complies with its obligations under
Sections 1.4(b) and (c) above, Buyer agrees that Seller shall not have any
liability whatsoever arising out of or relating to the failure to obtain any of
the consents set forth on Schedule 3.1(j)-D.
ARTICLE II
PURCHASE PRICE AND CLOSING
2.1 Purchase Price.
(a) The aggregate purchase price for the Assets and for the
NonCompetition Agreement (as hereinafter defined in Section 5.5) shall be equal
to the sum of: (a) $10,502,347 payable at Closing (as hereinafter defined)
subject to the adjustment provided in Section 2.3 , which amount shall be
payable as follows: (i) FIVE MILLION THREE HUNDRED AND TWO THOUSAND THREE
HUNDRED AND FORTY-SEVEN DOLLARS ($5,302,347) shall be payable in cash; and (ii)
FIVE MILLION TWO HUNDRED THOUSAND DOLLARS ($5,200,000) shall be paid at the
Closing by delivery to Seller of newly issued shares of the Common Stock, par
value $.001 per share, of IHS (the "IHS Stock"), based upon the valuation and
subject to the terms and conditions of Section 2.9 below; and (b) the Contingent
Payment, as defined in Section 2.2(a) (collectively, the "Purchase Price"). The
cash portion of the Purchase Price shall be paid by wire transfer to an account
designated by Seller. Of the cash portion of the Purchase Price payable at
Closing, the outstanding balance of the $2,100,000 amount due to the United
States Government pursuant to the Settlement Agreement, dated as of September
25, 1995, shall be paid into an escrow account to be released to the United
States Government on behalf of Seller and Parent at Closing.
(b) The Purchase Price as adjusted pursuant to this
Agreement (and all other capitalizable costs) shall be allocated among the
Assets as shall be determined by Buyer, subject to the consent of Seller (which
consent shall not unreasonably be withheld, delayed or conditioned), in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"). Each of the parties hereto agrees to prepare and file all tax
returns (including Form 8594) in a manner consistent with such allocation and to
report this transaction for Federal and state income tax purposes in accordance
with such allocation of the Purchase Price.
2.2 Purchase Price Contingency.
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(a) A contingent payment of $2,000,000 (the "Contingent
Payment") shall be payable, if at all, only in the following amounts and as set
forth in Section 2.2(d):
(i) if there occurs any EKG Transportation Reimbursement
Change (defined below) with respect to any period prior to February 1, 1998,
then no portion of the Contingent Payment shall be paid;
(ii) if no EKG Transportation Reimbursement Change
occurs with respect to the period prior to February 1, 1999, then fifty percent
(50%) of the Contingent Payment shall be paid; and
(iii) if no EKG Transportation Reimbursement Change
occurs with respect to the period prior to February 1, 2000, then the balance of
the Contingent Payment shall be paid.
(b) If any portion of the Contingent Payment shall become
due in accordance with subparagraph (a) above, then the payment of such portion
shall be made thirty (30) days after the Date of Determination (hereinafter
defined) that such portion has become due. As used herein, the phrase "Date of
Determination" shall mean, with respect to any period in question, the earliest
to occur of: (i) the date on which the Health Care Finance Administration
("HCFA") or any other Applicable Authority (defined below) makes a final
determination (that is not in conflict with or being contested or appealed by
any action or proceeding by or before or threatened by any other Applicable
Authority) that any pending, threatened or currently contemplated EKG
Transportation Reimbursement Change will not be enacted, promulgated or
otherwise effectuated with respect to the period in question, and (ii) the last
day of the period in question if no EKG Transportation Reimbursement Change
shall have occurred or be so pending, threatened or currently contemplated with
respect to such period in question.
(c) As used herein, the phrase "EKG Transportation
Reimbursement Change" shall mean an alteration, modification or other change in
the amount of EKG transportation reimbursement paid with respect to the
operation of the Business before, on or after the Closing Date, from either
Medicare Part A or Part B, third party billing, facility billing or direct
billing, which alteration, modification or change: (i) results from any actions
taken by HCFA, Medicare, U.S. Congress or any U.S. Court (an "Applicable
Authority"); and (ii) has the effect of eliminating or reducing the
reimbursement amount which Seller (prior to Closing) or Buyer (after the
Closing) is paid for its services. Notwithstanding anything to the contrary
contained in this Section 2.2, no EKG Transportation Reimbursement Change shall
be deemed to have occurred if it shall only affect payments made or due to
Seller prior to Closing and that do not constitute any part of the Assets.
(d) If there shall be an EKG Transportation Change, but such
EKG Transportation Reimbursement Change shall be a reduction in the amount of
EKG transportation reimbursement paid with respect to the operation of the
Business as aforesaid by less than 40% of the amount payable on the date hereof,
then, in addition to the portion of the Contingent Payment which shall be paid
in accordance with subsection (a) above, if any, within thirty (30)
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days after the Date of Determination of the amount of such EKG Transportation
Change, Buyer shall pay to Seller a portion of the Contingent Payment which has
not previously been paid in accordance with subsection (a), which portion shall
be equal to the percentage set forth in Column "Y" below of the amount not
previously paid which corresponds to the range of percentage reduction in EKG
transportation reimbursement set forth in column "X" below.
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"X" "Y"
Range of % Reduction in EKG % Payment of
Transportation Reimbursement Remaining Contingent Payment
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More than 40% Reduction 0
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Less than or equal to 40% Reduction/ 25%
More than 30% Reduction
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Less than or equal to 30% Reduction/ 35%
More than 20% Reduction
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Less than or equal to 20% Reduction/ 45%
More than 10% Reduction
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Less than or equal to 10% Reduction 55%
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2.3 Post-Closing Purchase Price Adjustment.
(a) In addition to any adjustment to the Purchase Price
arising under Section 2.2, the Purchase Price shall be further subject to
adjustment after Closing as follows: (i) if the Closing Date Working Capital (as
hereinafter defined) of Seller is less than $2,700,000 (the "Required Amount")
then the Purchase Price shall be reduced dollar-for-dollar by the amount of such
deficiency; and (ii) if the Closing Date Working Capital of Seller shall exceed
$2,700,000 then the Purchase Price shall be increased dollar-for-dollar by the
amount of such excess to the extent payable as provided in Section 2.3(b)(ii).
If the Closing Date Working Capital equals $2,700,000 there will be no
adjustment to the Purchase Price under this Section 2.3(a). As used herein, the
"Closing Date Working Capital" of Seller shall mean the excess of (x) the
aggregate amount of cash and accounts receivable, inventories and prepaid
expenses and other current assets of Seller, in each case, included in the
Assets on the Closing Balance Sheet (as such term is hereinafter defined) over
(y) the aggregate amount of current liabilities reflected on the Closing Balance
Sheet (excluding therefrom any portion thereof constituting Excluded
Liabilities). There shall be no accrual on the Closing Balance Sheet for any
bonuses due to any Subject Employee or for any bonuses arising out of the
consummation of the transactions contemplated by this Agreement, and all of such
liabilities shall be Excluded Liabilities. No accrual shall be made for Employee
Termination Payments.
(b) Regarding the Closing Balance Sheet. (i) At the Closing,
Seller shall deliver to Buyer the balance sheet of Seller and a calculation of
the amount of the Closing
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Date Working Capital, certified by the Chief Financial Officer of the Seller to
be his or her best good faith estimate of such balance sheet and Closing Date
Working Capital as of the Closing (the "Preliminary Closing Date Balance
Sheet"). The Preliminary Closing Date Balance Sheet shall be prepared in
accordance with GAAP (the "Accounting Principles"). Buyer shall complete, at its
own expense, a review of such calculation of the Closing Date Working Capital
and shall deliver to Seller within ninety (90) days after the Closing, its
written report (the "Working Capital Review") setting forth the amount of such
Closing Date Working Capital as confirmed or determined in accordance with such
review. The Working Capital Review must be done in accordance with the same
Accounting Principles used by Seller. In the event that the Working Capital
Review delivered to Seller in accordance with the provisions of this Agreement
discloses that the Closing Date Working Capital was greater than $2,700,000, the
Purchase Price shall be deemed to have been increased by the amount of such
excess (the "Working Capital Increase"), provided that Buyer collects in respect
of Accounts Receivable (hereinafter defined) at least the Target Amount
(hereinafter defined). The "Target Amount" shall mean the amount of accounts
receivable that must be included as current assets in the Closing Date Working
Capital in order to obtain a Closing Date Working Capital amount equal to
$2,700,000. Any payment by Seller to Buyer of a Purchase Price adjustment
pursuant to clause (ii) below shall decrease the Target Amount by the principal
amount of such payment. In the event that the Working Capital Review delivered
to Seller in accordance with the provisions of this Agreement discloses that the
Closing Date Working Capital was less than $2,700,000, the Purchase Price shall
be deemed to have been reduced by the amount of such deficiency and Seller, upon
demand, shall immediately pay the amount of such deficiency to Buyer. If Seller
shall dispute the amount set forth in the Working Capital Review, it shall give
notice to Buyer (a "Delay Payment Notice") within thirty (30) days after
delivery to it of the Working Capital Review that the adjusting payment required
above should not then be made and setting forth in reasonable detail its
objections and the basis therefor, in which case the parties shall meet and in
good faith attempt to resolve any disagreements within thirty (30) days after
delivery to Buyer of the Delay Payment Notice. If Seller shall not have
delivered a Delay Payment Notice within such thirty (30) day period, Seller
shall be deemed to conclusively have accepted the determination of Buyer of the
amount of Working Capital as of the Closing Date, in which case such
determination shall be final and shall not be subject to further review,
challenge or adjustment, absent fraud. If Seller and Buyer cannot resolve any
such disputes, such disputes shall be resolved by KPMG Peat Marwick LLP or if
such firm is unable to so act or is not at the time independent of both Seller
and Buyer, by an independent nationally recognized accounting firm selected by
KPMG Peat Marwick LLP, which accounting firm is reasonably acceptable to both
Seller and Buyer (the accounting firm so engaged shall hereinafter be referred
to as the "Independent Accounting Firm"); provided, the Independent Accounting
Firm shall only resolve disputes properly raised in accordance with the
provisions of this Section 2.3. The Independent Accounting Firm shall be
directed to make its determination as promptly as practicable (and no later than
30 days after referral to it of such dispute by Seller and Buyer) and such
determination shall be final and binding upon Seller and Buyer. The expenses
relating to the engagement of the Independent Accounting Firm shall be borne by
the party against whom the Independent Accounting Firm shall rule; provided that
if it does not clearly rule in favor of either party, the expenses shall be
shared one-half by Seller and one-half by Buyer. For purposes of this Agreement,
the Closing Balance Sheet shall be as set forth in the Working Capital Review,
as accepted by Seller as set
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forth above, or as modified by resolution of Seller and Buyer or by the
Independent Accounting Firm.
(ii) Any adjustment to the Purchase Price due to Buyer
pursuant to this Section shall be paid by Seller to Buyer (together with
interest on such amount from the date on which it shall become due to Buyer in
accordance with this Agreement until paid at a rate equal to 7% per annum)
within 10 days after the final determination of such adjustment is made. Subject
to subsection (c)(ii) below, any Excess Collections (hereinafter defined) shall
be paid by Buyer to Seller on the fifteenth business day of each calendar month
in an amount equal to all Excess Collections (hereinafter defined) during the
calendar month then most recently ended, and any such payments shall be first
applied against any Working Capital Increases and any excess shall thereafter be
paid to Seller. "Excess Collections" means the amount of Accounts Receivable
collected in excess of the Target Amount. If Buyer shall fail to timely pay any
such amount in accordance with the foregoing two sentences, then such amount
shall bear interest from the date on which it shall become so due to Seller
until paid at a rate equal to 7% per annum, and such interest shall be payable
upon demand.
(c) Accounts Receivable Collection and Reporting. (i)
Commencing 90 days after the Closing Date and continuing until the first
anniversary of the Closing Date, or if earlier, until all Accounts Receivable
shall have been collected, Buyer shall provide quarterly reports to Seller
regarding the amounts collected on the accounts receivable of the Business
outstanding as of the Closing Date (the "Accounts Receivable") and Buyer's
efforts to collect such accounts. Buyer shall, at Buyer's election, either (i)
apply at least the same efforts in the collection of the Accounts Receivable as
Buyer applies in the collection of its own accounts receivable or (ii) use
substantially the same personnel and procedures to collect the Accounts
Receivable as were used by the Business immediately prior to the Closing Date,
in the substantially same positions, with the substantially same
responsibilities and at the substantially same salaries and hours. Buyer shall
have no liability or responsibility to collect Accounts Receivable to the extent
Seller fails to deliver to Buyer such documentation as Buyer shall reasonably
request with respect thereto. The collection of all Accounts Receivable received
from an account debtor of the Business as of the Closing Date shall be applied
to the oldest outstanding invoice with such account debtor which is not then in
dispute consistent with Buyer's general overpayment policies; provided, however,
notwithstanding the foregoing, any payments made by an account debtor in respect
of a designated account shall be applied to the account so designated. For
purposes of the preceding sentence, a disputed invoice is an invoice that is the
subject of a written dispute from the account debtor which is reasonably
recognized by Buyer as disputed in accordance with its general policies; upon
the resolution of any such dispute, such invoice shall no longer be considered
disputed and collections from the account debtor shall be applied in accordance
with the previous sentence as if such dispute had not arisen. Provided that
Buyer has collected in respect of Accounts Receivable at least the Target
Amount, then on the fifteenth (15th) business day of each calendar month until
one month after the first anniversary of the Closing Date, Buyer shall provide
reports to Seller regarding the amounts collected on such Accounts Receivable
with respect to the preceding calendar month, and Buyer's efforts to collect
such accounts.
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(ii) In the event that Buyer has complied with its
collection obligations set forth in this paragraph (c) but has not collected at
least the Target Amount by the first anniversary of the Closing Date, (i) Buyer
shall notify Seller of the amount of such Accounts Receivable actually collected
by Buyer, (ii) Seller shall promptly remit to Buyer the amount, if any, by which
the amount of such Accounts Receivable actually collected is less than the
Target Amount (to the extent not already paid), and (iii) Buyer shall promptly
remit to Seller all amounts thereafter collected by Buyer in respect of the
Accounts Receivable.
2.4 Closing Date. The closing (the "Closing") of the purchase and
sale of the Assets shall be held pursuant to overnight courier and escrow
arrangements acceptable to all parties hereto as of 12:01 a.m. on November 6,
1996 or on such other date or in such other manner as the parties may mutually
agree. The date on which the Closing shall occur is hereinafter referred to as
the "Closing Date".
2.5 Closing Documents of Seller. At the Closing, Seller shall
deliver or cause to be delivered to Buyer the following documents:
(a) copies of the Certificate of Incorporation of Seller as
amended to the Closing Date, certified by its Secretary and the Secretary of
State of the State of Delaware;
(b) copies of the By-laws of Seller as amended to the
Closing Date, certified by its Secretary;
(c) long form corporate good standing certificate with
respect to Seller from the Secretary of State of the State of Delaware, dated no
earlier than five (5) days prior to the Closing Date;
(d) a duly executed ▇▇▇▇ of sale (the "▇▇▇▇ of Sale"), in
the form attached hereto as Exhibit 2.5(d)-1 and an assignment and assumption of
Contracts in the form of Exhibit 2.5(d)-2, and such documents as shall be
reasonably necessary to convey title to all owned motor vehicles and the
registrations of all equipment included in the Assets to Buyer in a fashion
consistent with the provisions of this Agreement;
(e) the Records contemplated by Section 4.3;
(f) a certificate from the Chief Financial Officer of Seller
setting forth in reasonable detail the best good faith estimate of such Chief
Financial Officer of the Closing Date Working Capital;
(g) a certificate dated the Closing Date and signed by the
duly authorized signatories of Seller stating that the transactions contemplated
hereunder have been duly authorized and approved by Seller and certifying the
attached resolutions of Seller's shareholders, if applicable, and Board of
Directors approving said transactions; and
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(h) an affidavit that Seller is not a foreign person.
2.6 Closing Documents of Parent. At the Closing, Parent shall
deliver or cause to be delivered to Buyer the following documents:
(a) copies of the Certificate of Incorporation of Parent as
amended to the Closing Date, certified by its Secretary and the Secretary of
State of the State of Delaware;
(b) copies of the By-laws of Parent as amended to the
Closing Date, certified by its Secretary;
(c) long form corporate good standing certificate with
respect to Parent from the Secretary of State of the State of Delaware, dated no
earlier than five (5) days prior to the Closing Date; and
(d) a certificate dated the Closing Date and signed by the
duly authorized signatories of Parent stating that the transactions contemplated
hereunder have been duly authorized and approved by Parent and certifying the
attached resolutions of Parent's Board of Directors approving said transactions
2.7 Closing Documents of Buyer. At the Closing, Buyer shall
deliver or cause to be delivered to Parent the following documents:
(a) copies of its Certificate of Incorporation as amended to
the Closing Date, certified by its Secretary;
(b) copies of its By-laws, as amended to the Closing Date,
certified by its Secretary;
(c) long form tax and corporate good standing certificate
from the Secretary of State of the State of California, dated no earlier than
five (5) days prior to the Closing Date;
(d) copies of the Certificate of Incorporation of Integrated
Health Services, Inc. ("IHS") as amended to the Closing Date, certified by its
Secretary;
(e) copies of the By-laws of IHS as amended to the Closing
Date, certified by its Secretary;
(f) long form corporate good standing certificate for IHS
from the Secretary of State of the State of Delaware, dated no earlier than five
(5) days prior to the Closing Date;
(g) a certificate dated the Closing Date and signed by the
duly authorized signatories of Buyer stating that the transactions contemplated
hereunder have been
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duly authorized and approved by the Buyer and certifying the attached
resolutions of its Board of Directors, and if applicable, its shareholders,
approves said transactions;
(h) a certificate dated the Closing Date and signed by the
duly authorized signatories of IHS stating that the transactions hereunder have
been duly authorized and approved by IHS including the guarantee by IHS of
Buyer's performance under such transactions and certifying the attached
resolutions of its Board of Directors, and if applicable, its shareholders,
approves said transactions;
(i) a duly executed assumption agreement (the "Assumption
Agreement"), in the form attached hereto as Exhibit 2.7(i), and such other
documents as Seller shall reasonably request to evidence Buyer's assumption of
the Assumed Liabilities; and
(j) stock certificates representing the shares of IHS Stock
issued to Seller in connection with this Agreement.
2.8 Legal Opinions. In addition to the other documents to be
delivered at Closing, (a) Buyer shall have received the favorable opinion, dated
as of the Closing Date, from Dechert Price & ▇▇▇▇▇▇, counsel for Seller and for
Parent, in the form attached hereto as Exhibit 2.8(a) and (b) Parent and Seller
shall have received the favorable opinion, dated as of the Closing Date, from
Blass & ▇▇▇▇▇▇, Esq., counsel for Buyer, in the form attached hereto as Exhibit
2.8(b).
2.9 IHS Stock.
(a) As set forth in Section 2.1(b) above, a portion of the
Purchase Price shall be payable by means of the delivery to Seller of IHS Stock
valued at $5,200,000 based upon a price per share (the "Initial Market Value Per
Share") of such stock equal to the average closing NYSE price of such stock for
the twenty (20) business day period ending on the date which is four (4)
business days prior to the Closing Date.
(b) Resale Limitations. All sales of IHS Stock issued
pursuant to this Agreement shall be effected solely through ▇▇▇▇▇ ▇▇▇▇▇▇, Inc.,
as broker, and sales of such shares shall not at any time, in the aggregate,
exceed one-hundred thousand (100,000) shares during any thirty (30) day period.
The restriction on the number of shares that may be sold in accordance with this
subsection (b) shall lapse at such time as the Seller or the Parent shall have
sold at least 100,000 of such shares in accordance with this subsection (b). If
▇▇▇▇▇ ▇▇▇▇▇▇, Inc. shall be unable to act as the broker for any of such sales,
then IHS shall designate another broker that is reasonably acceptable to Seller
through which such sales shall be made.
(c) Investment Representations. All shares of IHS Stock to
be issued hereunder will be newly issued shares of IHS. Seller represents and
warrants to IHS and Buyer that the IHS Stock being issued hereunder is being
acquired, and will be acquired, by it for investment for its own account or the
account of the Parent, to whom transfer of any of such shares is expressly
permitted in accordance with this Agreement, and not with a view to or for
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sale in connection with any distribution thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act") or any applicable
state securities law; Seller acknowledges that the IHS Stock constitutes
restricted securities under Rule 144 promulgated by the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act, may have to be
held indefinitely and may not 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 and the rules and
regulations thereunder. Seller and Parent 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.
Seller and Parent have been provided with such materials as are generally
provided to shareholders of IHS and has 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.
(d) Legends. It is understood that the certificates
evidencing the 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):
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.
Upon the written request of Seller and Parent, accompanied by a legal
opinion in form and substance and from counsel reasonably acceptable to IHS and
setting forth that the shares evidenced by the stock certificate are freely
transferable without registration under the Securities Act, IHS shall cause a
new certificate, evidencing such shares and that does not bear such legend, to
be issued to Seller or the Parent.
(e) Transfers. Upon prior notice to IHS, Seller shall be
permitted to transfer any of the shares of IHS Stock acquired by it pursuant to
this Agreement and the registration rights related thereto to Parent.
(f) Registration of IHS Stock. (i) IHS will use its best
efforts to cause to be prepared, filed and declared effective by the Commission
within sixty (60) to ninety (90) days following the Closing Date, a registration
statement for the registration under the Securities Act of the IHS Stock issued
to Seller pursuant to this Agreement, and IHS shall maintain the effectiveness
of such registration statement for a period of two (2) years following the date
on which it becomes effective, or for so long as Seller or Parent shall own any
of the IHS Stock issued pursuant to this Agreement, whichever shall occur first,
in each case except to the extent that such shares shall become freely
transferable without registration under the Securities Act. If the number of
shares of IHS Stock included in the Purchase Price shall be increased pursuant
to clause (ii) below, IHS shall, prior to the effective date of such
registration statement estimate the number of additional shares and shall use
its best efforts to include all of the newly issued shares in the registration
statement.
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(ii) (A) As of the date that such registration statement
shall become effective, the number of shares of IHS Stock included in the
Purchase Price shall be adjusted so that the number of shares issued to Seller
pursuant to this Agreement shall have an aggregate fair market value (the
"Adjusted Fair Market Value") equal to $5,200,000 based upon a price per share
of such stock equal to the average closing NYSE price of such stock for the
twenty (20) business day period ending on the date which is two (2) business
days prior to such effective date (the "Adjusted Market Value Per Share").
Within five (5) business days after such effective date IHS shall deliver notice
(the "Adjustment Notice") to Seller of the Adjusted Fair Market Value, the
Adjusted Market Value Per Share and the number of shares to be delivered by
Buyer to Seller (if the Adjusted Market Value Per Share shall be less than the
Initial Market Value Per Share) or by Seller to Buyer (if the Adjusted Market
Value Per Share shall be greater than the Initial Market Value Per Share) so as
to effect the adjustment described in this clause (ii). The number of shares to
be delivered or issued, as the case may be, shall be rounded up or down so that
no fractional shares need be issued. Within five (5) business days the parties
shall make the delivery of the shares of IHS Stock required in the Adjustment
Notice.
(B) In lieu of (and not in addition to) the adjustment
set forth in paragraph (A) above, in addition to any other remedy available at
law, if the registration statement referred to in clause (i) above shall not
have been declared effective on or prior to the second anniversary of the
Closing Date and the Adjusted Market Value Per Share as of such second
anniversary date shall be less than Initial Market Value Per Share, then, the
adjustment set forth in paragraph (A) above shall be made as of such second
anniversary date.
(g) Registration Procedures, etc. In connection with the
registration rights granted to Seller with respect to the IHS Stock as provided
in this Section 2.9, IHS agrees as follows:
(i) IHS will promptly notify Seller at any time when a
prospectus relating to a registration statement covering Seller's shares under
this Section 2.9 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 Seller with such number of
prospectuses as shall reasonably be requested, and Seller agrees to comply with
the prospectus delivery requirements of the Securities Act in connection with
any sale of IHS Stock by it.
(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
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under the securities or Blue Sky laws of such states as reasonably are requested
by Seller, 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 2.9 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. With respect to sales of IHS Stock sold in
accordance with the provisions of this Section 2.9 pursuant to the registration
statement, IHS shall indemnify Seller and its successors and assigns, and the
Parent, and each person, if any, who controls Seller within the meaning of ss.15
of the Securities Act or ss.20(a) of the Securities Exchange Act of 1934, as
amended (the "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, 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,
NASDAQ, 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 Seller or the Parent for use in such registration statement,
any amendment or supplement thereto or any application, as the case may be. If
any action is brought against Seller or any controlling person of Seller or the
Parent in respect of which indemnity may be sought against IHS pursuant to this
subsection, Seller or the Parent or such controlling person of Seller or the
Parent shall within thirty (30) days after the receipt thereof of a summons or
complaint, notify IHS in writing of the institution of such action and IHS shall
assume the defense of such action, including the employment and payment of
reasonable fees and expenses of counsel. Seller or any such controlling person
or the Parent 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
such Seller or such controlling person or such Parent 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
- 17 -
fees and expenses of not more than one additional firm of attorneys for Seller,
such controlling person and the Parent shall be borne by IHS and such law firm
shall be reasonably acceptable to IHS. Except as expressly provided in the
previous sentence, in the event that Seller, any such controlling person or any
the Parent assumes control of the defense of any such action or claim, IHS shall
not thereafter be liable to Seller or any such controlling person or the Parent
in investigating, preparing or defending any such action or claim. IHS agrees
promptly to notify Seller of the commencement of any litigation or proceedings
against IHS or any of its officers, directors or controlling persons in
connection with the resale of IHS Stock or in connection with such registration
statement. If the indemnification provided for in this Section 2.9 is held by a
court of competent jurisdiction to be unavailable to Seller or any controlling
person of Seller or any Parent with respect to any loss, liability, claim,
damage or expense referred to herein, then IHS in lieu of indemnifying Seller or
any controlling person of Seller or the Parent hereunder, shall contribute to
the amount paid or payable by Seller or any controlling person of Seller or the
Parent hereunder, as a result of such loss, liability, claim, damage, expense or
liability in such proportion as is appropriate to reflect the relative fault of
IHS on the one hand and of Seller or any controlling person of Seller or the
Parent on the other hand in connection with the statements or omissions which
resulted in such loss, liability, claim, damage, expense, or liability, as well
as any other relevant equitable considerations. The relative fault of IHS and of
Seller or any controlling person of Seller or the Parent shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by IHS or by Seller or any controlling person of Seller or
the Parent and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(v) Seller and Parent and their respective successors
and assigns, shall severally, and not jointly, indemnify IHS and Buyer, their
respective officers, directors and advisers, and each person, if any, who
controls IHS or Buyer within the meaning of ss.15 of the Securities Act or
ss.20(a) of the 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 they may become
subject under the Securities Act, the Exchange Act or any other statute, common
law or otherwise, arising from information that was furnished by or on behalf of
Seller, or the Parent or its, respective successors or assigns and which was
included in the selling shareholder provisions in such registration statement.
The indemnification rights set forth in this clause (v) shall be subject to the
same procedures as are to be applied to the indemnification rights set forth in
clause (iv) above, although references to Buyer and IHS on the one hand, and
Seller and Parent, on the other hand, shall be reversed.
(h) Registration Expenses. Seller and the Parent shall not be
responsible for, and IHS shall bear, all of the reasonable expenses of IHS
related to such registration including, without limitation, the fees and
expenses of its counsel and accountants, all of its other costs, fees and
expenses incident to the preparation, printing, registration and filing under
the Securities Act of the registration statement and all amendments and
supplements thereto, the cost of furnishing copies of each preliminary
prospectus, each final prospectus and each amendment or supplement thereto to
underwriters, dealers and other purchasers of IHS Stock and the costs
- 18 -
and expenses (including fees and disbursements of its counsel) incurred in
connection with the qualification of IHS Stock under the Blue Sky laws of
various jurisdictions. IHS, however, shall not be required to pay underwriter's
or brokerage discounts, commissions or expenses, or to pay any costs and
expenses in excess in the aggregate of $20,000 for Blue Sky qualifications of
Seller's (and the Parent's) IHS Stock, or to pay any costs or expenses arising
out of Seller's or the Parent's failure to comply with its obligations under
this Section 2.9.
(i) Notice of Sale. Except for transfers permitted under
Section 2.9(e), above, if the Seller (or the Parent) desires to transfer all or
any portion of its IHS Stock, Seller (or the Parent, as the case may be) will
deliver written notice to IHS, describing in reasonable detail its intention to
effect the transfer and the manner of the proposed transfer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller and Parent.
Seller and Parent hereby, jointly and severally, represent and warrant to Buyer
as follows:
(a) Authority. This Agreement and each of the certificates,
instruments, agreements and documents executed and delivered by Seller or Parent
pursuant to this Agreement (Seller's "Transactions Documents") have been duly
executed and delivered by Seller and Parent and constitute the legal, valid and
binding obligations of Seller and Parent enforceable against each of them, in
accordance with their respective terms. The Seller and Parent have all requisite
corporate power and authority to enter into this Agreement and each Seller's
Transaction Document and to consummate the transactions contemplated hereby and
thereby. All corporate acts and other proceedings required to be taken by the
Seller and Parent to authorize the execution, delivery and performance of this
Agreement and each Seller's Transaction Document and the consummation of the
transactions contemplated hereby and thereby have been duly and properly taken.
The execution and delivery of this Agreement and the Seller's Transaction
Documents do not, and the consummation of the transactions contemplated hereby
and thereby and compliance with the terms hereof and thereof will not: result in
any violation of or default, under, or require any consents or approvals under
(i) any material note, bond, mortgage, indenture, deed of trust, license, lease,
contract, commitment or agreement to which Seller or the Parent is a party or by
which any of their respective properties are bound except as set forth on
Schedule 3.1(a), (ii) any provision of the Certificate of Incorporation or
Bylaws of Seller or Parent and (iii) any judgment, injunction, order or decree,
or material statute, law, ordinance, rule or regulation applicable to Seller or
Parent, or the property or assets of Seller or Parent.
(b) Organization and Standing of Seller and Parent. Seller
and Parent are each a corporation duly organized and validly existing under the
laws of Delaware. Seller
- 19 -
has full corporate power and authority and possesses all material governmental
franchises, licenses, permits, authorizations and approvals necessary to enable
it to use its corporate name and to own, lease or otherwise hold its properties
and assets and to carry on its business in all material respects as presently
conducted. Seller is duly qualified and in good standing to do business in each
jurisdiction set forth on Schedule 3.1(b) and Seller is not doing business and
none of the Assets are located in any other jurisdiction where the failure to be
so qualified and in good standing would have a Material Adverse Effect. Seller
and Parent have delivered to Buyer true and complete copies of the Certificates
of Incorporation, as amended to date, and the Bylaws, as in effect on the date
hereof, of Seller and Parent.
(c) Ownership. Parent owns of record and beneficially all of
the outstanding capital stock of Seller.
(d) Subsidiaries of the Seller. Seller does not, directly or
indirectly, own any stock of, or any other interest in, any other corporation or
business entity (including, without limitation, joint ventures and
partnerships).
(e) Financial Statements. Schedule 3.1(e) sets forth the
unaudited consolidated balance sheets of Seller as of September 30, 1994 (the
"1994 Balance Sheet"), September 30, 1995 (the "1995 Balance Sheet"), July 31,
1996, and August 31, 1996 (the "Balance Sheet"), and the unaudited consolidated
statements of income, shareholders' equity, and cash flows of Seller for the
periods ended September 30, 1994, September 30, 1995, July 31, 1996, and August
31, 1996 (collectively, the "Financial Statements"). The Financial Statements
have been prepared in accordance with the books and records of Seller and
present fairly, in all material respects, the financial position and operations
as of September 30, 1994, September 30, 1995, July 31, 1996, and August 31, 1996
and the results of operations and cash flows of Seller for the periods then
ended in conformity with generally accepted accounting principles, consistently
applied, except for (i) the absence of certain notes which would otherwise be
required by generally accepted accounting principles and (ii) no accrual has
been made in connection with the governmental inquiries described on Schedule
3.1(e). Except as set forth on Schedule 3.1(e), the income statements included
in the Financial Statements do not contain any material items of special or
nonrecurring income or expense or any other income not earned or expense not
incurred in the ordinary course of business except as expressly specified
therein, and, except as so set forth, such financial statements include all
adjustments, which consist only of normal recurring accruals, necessary for such
presentation. Except under general principles of successor liability law
(including, without limitation, such principles arising under applicable
healthcare law), there is no basis for the assertion against Seller of any
material Liability of any nature or in any amount (other than Liabilities
reflected on the Balance Sheet or as have been incurred since the date of the
Balance Sheet in the ordinary course of business consistent with past practice)
for which Buyer may become liable.
- 20 -
(f) Taxes.
(i) For purposes of this Agreement, (A) "Tax" or "Taxes"
shall mean all Federal, state, local and foreign taxes, charges and assessments,
including all interest, penalties and additions imposed with respect to such
amounts and (B) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(ii) Seller has filed or caused to be filed in a timely
manner (within any applicable extension periods) all Tax returns, reports and
forms required to have been filed by the Code or by applicable state, local or
foreign Tax laws, rules, regulations and orders (collectively, "Returns") other
than those the failure which to file would not have a Material Adverse Effect;
all Taxes shown to be due on such Returns have been timely paid in full; and no
tax Liens have been filed and no material claims are being asserted in writing
with respect to any Taxes, except as set forth on Schedule 3.1(f). True and
complete copies of all Returns with respect to income or sales or use for any
period during the two-year period ending on the date hereof have been delivered
to Buyer, and as of the time of filing, the Returns correctly reflected in all
material respects or will correctly reflect in all material respects the facts
regarding the income, business, assets, operations, activities and status of
Seller and any other information required to be shown therein.
(g) Assets Other than Real Property. Schedule 3.1(g) sets
forth a complete description and list of all of Seller's motor vehicles, all
x-ray, EKG and other equipment, all computers, all office furniture and each
other item of tangible personal property included in the Assets that has a fair
market value of at least $500. Except as disclosed on Schedule 3.1(g) hereto,
Seller has such title to all Assets comprising personal property, tangible or
intangible, reflected on the Balance Sheet or thereafter acquired, except those
since sold or otherwise disposed of in the ordinary course of business,
consistent with past practice, as is necessary to permit the use and enjoyment
of such assets and properties in the same manner as used and enjoyed by Seller
and none of such Assets are subject to any liens, claims, security interests,
mortgages, pledges, charges, easements, rights of setoff, restraints on
transfers, restrictions on use, options, conditional sale agreements, subleases,
sublicenses or encumbrances of any kind or nature whatsoever ("Liens"), other
than Permitted Liens. For the purposes of this Agreement, "Permitted Liens"
means: (i) each lien set forth on Schedule 3.1(g) hereto; (ii) 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; (iii) 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 and shall not exceed $15,000 in any one case, or
$75,000 in the aggregate; (iv) pledges or deposits in connection with worker's
compensation, unemployment insurance, and other social security legislation; and
(v) capitalized financing leases to the extent reflected on the Balance Sheet
and copies of which have been delivered to Buyer. No person
- 21 -
other than Seller has any right to the use or possession of any of such property
(other than in the ordinary course of business in accordance with contractual
rights) and no currently effective financing statement (other than Permitted
Liens) with respect to such personal property has been filed in any
jurisdiction, and (other than Permitted Liens) Seller has not signed any such
financing statement or any security agreement authorizing any secured party
thereunder to file any such financing statement. All of such personal property
owned by Seller and necessary to the operation of the Business, or currently
being used by Seller in the operation of the Business, comprising equipment,
improvements, furniture, vehicles and other tangible personal property, whether
owned or leased, is in good operating condition and repair except for normal
wear and tear in the ordinary course of business. The Assets, other than the
Excluded Assets, represent all of the assets, including without limitation, all
property (real, personal and mixed), licenses, intellectual property, permits
and authorizations, contracts, leases and other agreements that are owned by
Seller, and include all of the Assets owned by Seller, other than any Excluded
Assets, that are necessary or material to the operation of the Business as now
operated (the "Necessary Assets"). The preceding sentence shall not apply to
assets owned by any other person. This paragraph (g) does not relate to real
property or interests in real property, such items being the subject of
paragraph (h) of this Section 3.1.
(h) Title to Real Property. Schedule 3.1(h) sets forth a
complete list of all real property and interests in real property leased by
Seller. Except as disclosed on the appropriate Schedule, Seller has such
leasehold interest in all real property and interests in real property shown on
Schedule 3.1(h) to be leased by it, as is necessary to permit the use and
enjoyment of such real property substantially in the manner such real property
is now utilized by Seller, and there are no Liens (other than capitalized
financing leases) affecting any such leasehold interest except for (A)
easements, covenants, rights-of-way and other encumbrances or restrictions of
record on the date hereof, (B) zoning, building and other statutory or
regulatory restrictions, (C) liens for taxes and assessments not yet due and
payable, (D) easements, covenants, rights-of-way, liens, encumbrances or other
restrictions, none of which have a Material Adverse Effect.
(i) Intellectual Property. Schedule 3.1(i) sets forth a true
and complete list of all material patents, trademarks, trade names, service
marks and copyrights and applications therefor owned by, licensed to, or, to its
Knowledge, used by Seller. Except as set forth in Schedule 3.1(i), Seller has no
notice or Knowledge of any objections or claim being asserted in writing by any
person with respect to the ownership, validity, enforceability or use of any
such patents, trademarks, trade names, copyrights, applications therefor, or
trade secrets or challenging or questioning the validity or effectiveness of any
such license which would (or would reasonably be expected to) have a Material
Adverse Effect (or of the basis for any such claim).
(j) Contracts. Except as described in Schedule 3.1(j) or the
other Schedules hereto, Seller is not as of the date of this Agreement a party
to or bound by any:
- 22 -
(i) employee collective bargaining agreement or other
contract with any labor union;
(ii) employment or severance agreements or
non-competition or, to the extent included in the Assets, confidentiality
agreements with any current or former director, officer or employee (excluding
any such employment contracts or arrangements for which the total compensation
during each of the last two years was less than $20,000 per person);
(iii) (A) lease or similar agreement under which Seller
is lessee of, or holds or uses, any machinery, equipment, vehicle or other
tangible personal property owned by a third party, (B) continuing contract for
the future purchase of materials, supplies or equipment, (C) management,
service, consulting or other similar type of contract, (D) distribution or sales
agency agreement or arrangement, or (E) advertising agreement or arrangement, in
any such case which has an aggregate future liability in excess of $25,000 or
which is not terminable by Seller (x) on not more than 90 days' notice without
penalty or premium or (y) for a cost of less than $25,000;
(iv) agreement or contract under which Seller has
borrowed or loaned any money or issued any note, bond, indenture or other
evidence of indebtedness or guaranteed indebtedness, liabilities or obligations
of others, in each case for an amount in excess of $25,000 in any single case,
or in excess of $100,000 in the aggregate (other than endorsements for the
purpose of collection in the ordinary course of business);
(v) mortgage, pledge, security agreement, deed of trust
or other document, in each case granting a lien (including liens upon properties
acquired under conditional sales, capital leases or other title retention or
security devices) securing obligations in excess of $25,000 in any single case,
or in excess of $100,000 in the aggregate;
(vi) independent contractor agreements with any
radiologist, cardiologist, or company representing a physician or other
physician including annual payments in excess of $25,000 in any single case, or
in excess of $100,000 in the aggregate;
(vii) agreement or arrangement for the sale of any of
its assets, property or rights outside the ordinary course of business or
requiring the consent of any party to the transfer and assignment of any such
assets, property or rights (by sale of assets, sale of stock, merger or
otherwise);
(viii) contract which contains any provisions requiring
Seller or, with respect to the Business, the Parent, to indemnify or act for any
other person or entity or to guaranty or act as surety for any other person or
entity;
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(ix) agreement restricting Seller from conducting
business anywhere in the world for any period of time or restricting its use or
disclosure of any confidential or proprietary information (other than those
agreements not included in the Assets);
(x) partnership, joint venture or management contract or
similar arrangement or agreement which involves a right to share profits or
future payments with respect to the business of Seller or any portion thereof or
the business of any other person or entity;
(xi) agreement granting a leasehold or other interest in
real property;
(xii) contract under which the Seller performs
radiological, EKG, ultrasound or other services for any nursing home or other
facility or institution ("Customer Contracts"); or
(xiii) agreement not made in the ordinary and normal
course of business and consistent with past practice or involving consideration
in excess of $25,000 in any single case or $100,000 in the aggregate or the
omission of which would otherwise cause a Material Adverse Effect.
Each agreement, contract, lease, license, commitment or
instrument of Seller described on Schedule 3.1(j) or the other Schedules hereto
(collectively, the "Contracts") is in full force and effect, except as expressly
disclosed on Schedule 3.1(j)-A or the other Schedules hereto. Seller is not
(with or without the lapse of time or the giving of notice, or both) in breach
or default under any Contract, and to the Knowledge of Seller, no other party to
any of the Contracts is (with or without the lapse of time or the giving of
notice, or both) in breach or default thereunder, except for such breaches or
defaults as are disclosed on Schedule 3.1(j)-B. Except as set forth on Schedule
3.1(j)-C all amounts payable under each of the Contracts are on a current basis.
Seller has delivered to Buyer true, complete and correct copies of each written
Contract and a written description of the material terms of each oral Contract
except for Customer Contracts. Each Customer Contract is in the form and
substance of Exhibits 3.1(j)-A and 3.1(j)-B hereto, except for deviations that
individually or in the aggregate would not be likely to and shall not have a
Material Adverse Effect. At Closing, possession of each written Customer
Contract shall be delivered to Buyer at the location where such Contract is
presently located. Except as set forth in Schedule 3.1(j)-C, each of the
Contracts is freely and fully assignable to Buyer without the consent of the
remaining parties thereto. Seller has obtained the consent from each party to
each Contract not set forth on Schedule 1.4(a) that is necessary for the
assignment thereof to Buyer other than the consents set forth on Schedule
3.1(j)-D. Seller has not received written notice that any of the Contracts will
be terminated by any party thereto pursuant to any provision thereof permitting
any such party to terminate such Contract with or without cause.
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(k) Litigation; Decrees. Schedule 3.1(k) sets forth a list
as of the date of this Agreement of all lawsuits, claims, proceedings or
investigations pending or, to the Knowledge of Seller, threatened by or against
or affecting Seller or any of its properties, assets, operations or business
which, if determined adversely to Seller, could reasonably be expected to have a
Material Adverse Effect, or which challenge the legality of this Agreement or
any action to be taken in connection herewith. To the Knowledge of Seller,
Seller is not in default under any judgment, order or decree applicable to it or
any of its properties.
(l) Insurance. Seller maintains such policies of fire and
casualty, liability and other forms of insurance in such amounts, with such
deductibles and against such risks and losses as are set forth in Schedule
3.1(l). True and complete copies of each of such policies have been delivered to
Buyer.
(m) Benefit Plans.
(i) Schedule 3.1(m) sets forth a list of all "employee
benefit plans" (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), bonus, incentive, deferred
compensation, stock or stock option plans or arrangements, and other material
employee fringe benefit plans or arrangements (all the foregoing being herein
called the "Seller's Benefit Plans") maintained, or contributed to, by Seller or
Parent for the benefit of any employees of Seller. Seller will on request
deliver to Buyer copies of (A) each of Seller's Benefit Plans (or, in the case
of any unwritten Benefit Plans, written descriptions thereof), (B) the most
recent annual report on Form 5500 filed with the Internal Revenue Service with
respect to any of Seller's Benefit Plans (if applicable), and (C) each trust
agreement and group annuity contract relating to any of Seller's Benefit Plans.
(ii) Seller's Benefit Plans are in compliance in all
respects with the applicable provisions of ERISA and the regulations and
published interpretations thereunder, except where noncompliance would not have
a Material Adverse Effect. None of Seller's Benefit Plans are subject to the
provisions of Title IV of ERISA. Seller does not maintain or make contributions
to and has not at any time in the past maintained or made contributions to any
multi-employer plan subject to the terms of the Multi-employer Pension Plan
Amendment Act of 1980.
(n) Absence of Changes or Events. Except as set forth in
Schedule 3.1(n) or expressly in any other Schedule to this Agreement, since the
Balance Sheet Date the business of Seller, has been conducted in the ordinary
course consistent with past practice and Seller has not:
(i) sold, assigned, failed to replace, transferred or
disposed of any of its assets or properties, except in the ordinary course of
business consistent with past practice;
(ii) mortgaged, pledged or subjected to any Lien of any
nature whatsoever any of the Assets, other than Permitted Liens;
- 25 -
(iii) made or suffered any termination of any Contract,
or made or suffered any amendment of any Contract except for amendments or
terminations of Contracts made in the ordinary course of business consistent
with past practice;
(iv) except in the ordinary course of business,
consistent with past practice, or otherwise to comply with any applicable
minimum wage law, increased the salaries or other compensation of any of its
employees, or made any increase in, or any additions to, other benefits to which
any of such employees may be entitled;
(v) discharged or satisfied any Lien or encumbrance,
other than in the ordinary course of business consistent with past practice, or
failed to pay or discharge when due any Liabilities, the failure to pay or
discharge which has caused a Material Adverse Effect or any actual damage or
risk of loss to Seller or its Business or the Assets;
(vi) changed any of the accounting principles followed
by it or the methods of applying such principles;
(vii) cancelled, modified or waived any debts or claims
held by it, other than in the ordinary course of business consistent with past
practice that would have a Material Adverse Effect, or waived any rights of
substantial value, whether or not in the ordinary course of business;
(viii) declared or paid or set aside or reserved any
amounts for payment of any dividend or other distribution in respect of any
equity or other securities, or redeemed or repurchased or agreed to redeem or
repurchase any capital stock or other securities, or made any material payment
to any Affiliate (as such term is hereinafter defined in Article VII) except for
payments or compensation in the ordinary course of business consistent with past
practice and disclosed to Buyer as such;
(ix) failed to collect, withhold and/or pay to any
proper governmental agency or authority, any federal, state or local income,
franchise, sales, use, withholding or similar tax required by applicable law to
be so collected, withheld and/or paid, except those whose failure to collect or
withhold or pay would not have a Material Adverse Effect;
(x) instituted, settled or agreed to settle any
litigation, action or proceeding before any court or governmental body relating
to it or its property or to its Knowledge received any threat of any such
litigation, action or proceeding;
(xi) entered into any material transaction other than in
the ordinary course of business consistent with past practice; or
(xii) suffered any event, circumstance or occurrence
that would (or would reasonably be likely to) have a Material Adverse Effect on
Seller.
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(o) Compliance with Applicable Laws. Except as set forth in
Schedule 3.1(o), Seller and its operations, properties and assets are in
compliance with all applicable statutes, laws, ordinances, rules and regulations
of any governmental authority or instrumentality, domestic or foreign, except
where noncompliance would not (and would not reasonably be expected to) have a
Material Adverse Effect.
(p) Licenses; Permits. To the Knowledge of Seller, all
material licenses, permits or authorizations of Seller are validly held by
Seller, Seller has complied in all material respects with all requirements in
connection therewith and the same are not subject to suspension, modification or
revocation and will not be so subject, as a result of this Agreement or the
consummation of the transactions contemplated hereby, except as set forth on
Schedule 3.1(p). Seller has all of the licenses, permits or authorizations which
are required to carry on the business of Seller as such business is now
conducted (the "Permits"), except for such licenses, permits or authorizations
the failure to obtain which would not (and would not reasonably be expected to)
have a Material Adverse Effect. True and correct copies of each of such Permits
have been delivered to Buyer. No Affiliate of Seller or of any other person,
firm or corporation other than Seller owns or has any proprietary, financial or
other interest, direct or indirect, in whole or in part in any of the Permits.
(q) Environmental Matters. Except as set forth on Schedule
3.1(q) hereto:
(i) Seller has all material permits, licenses, and other
authorizations required for the operations, or conduct of the business of Seller
under applicable Environmental Laws. Seller is in compliance with all terms and
conditions of such authorizations, and with all applicable Environmental Laws,
except for such noncompliance which would not (and would not be reasonably
likely to) have a Material Adverse Effect.
(ii) During the past three (3) years, Seller has
received no written notice of any citation, summons, order, complaint, penalty,
investigation, or review by any governmental or other entity with respect to any
violation by Seller of any Environmental Law.
(iii) Seller has received no written requests for
information, notice of claim, demand, or notification that it is, or may be,
potentially responsible with respect to any investigation or cleanup of any
threatened or actual release of any Hazardous Substance.
(r) Employee and Labor Relations. Except as set forth in
Schedule 3.1(r) hereto:
(i) there is no labor strike, dispute, slowdown or work
stoppage or lockout actually pending or, to the Knowledge of Seller, threatened
against or affecting Seller and during the past year there has not been any such
action;
- 27 -
(ii) no employees of Seller are represented by any labor
union or similar organization in connection with their employment relationship
with Seller, and to the Knowledge of Seller, no material union organizational
campaign is in progress with respect to any of the employees of Seller and no
question concerning representation exists respecting such employees; and (iii)
there is no unfair labor practice charge or complaint against Seller pending or,
to the Knowledge of Seller, threatened before the National Labor Relations
Board.
(s) Special Fee Arrangements. Schedule 3.1(s) sets forth a
true and complete list of any special fee arrangements in effect between Seller
and any of its customers as of the date hereof that contain terms and conditions
other than the Seller's customary terms and conditions as of the time the
arrangement was entered into.
(t) Patient Volumes. Schedule 3.1(t) sets forth a true and
complete list of Seller's patient volumes for x-rays, EKGs, and other exams from
the commencement of fiscal year 1994 through August 31, 1996.
(u) Employees. Schedule 3.1(u) and Schedule 3.1(m) together
contain a true, complete and correct list of the name, position, current rate of
compensation and any vacation or holiday pay, sick pay, personal leave and any
other material compensation arrangements or fringe benefits, of each current
employee of Seller (together with a description of any specific arrangements or
rights concerning such persons that are not reflected in any agreement or
document referred to in Schedule 3.1(j)). No employee, consultant or commission
agent of Seller has any vested or unvested retirement benefits or other
termination benefits, except as described on Schedule 3.1(m). The Balance Sheet
contains an adequate reserve for vacation and all other vested employee-related
accruals.
(v) Relationships. Except as disclosed on Schedule 3.1(v),
to Seller's knowledge, no Affiliate of Seller or Parent has, and at no time
within the last two (2) years has had, a material ownership interest in any
business, corporate or otherwise, that is a party to, or in any property that is
the subject of, business relationships or arrangements of any kind relating to
the operation of the Business.
(w) Questionable Payments. Except as set forth on Schedule
3.1(w), Seller has not, and to Seller's Knowledge, no Affiliate (a) has used any
corporate funds of Seller or, with respect to the Business, of the Parent, in
any case, to make any payment to any officer or employee of the government, or
to any political party or official thereof, where such payment either (i) was,
at the time, unlawful under laws applicable thereto; or (ii) was, at the time,
unlawful under the Foreign Corrupt Practices Act of 1977, as amended; or (b) has
made or received an illegal payment, bribe, kickback, political contribution or
other similar questionable illegal payment in connection with the operation of
the Business (collectively, "Questionable Payments") or made any illegal
referrals in connection with the operation of the Business.
- 28 -
(x) Reimbursement Matters. Except as disclosed on Schedule
3.1(x), (a) Seller has not and, to the Seller's Knowledge, no nursing home,
hospital or other facility with respect to which Seller provides services has
received any written notice of denial or recoupment from the Medicare or
Medicaid programs, or any other third party reimbursement source (inclusive of
managed care organizations) with respect to products or services provided by
Seller, (b) to the Seller's Knowledge, there is no basis for the assertion after
the Closing Date of any such denial or recoupment claim, and (c) neither Seller
nor, to the Seller's Knowledge, any nursing home, hospital or other facility
with respect to which Seller provides services has received written notice from
any Medicare or Medicaid program or any other third party reimbursement source
(inclusive of managed care organizations) of any pending or threatened
investigations or surveys specifically with respect to, or arising out of,
products or services provided by Seller, and to the Seller's Knowledge, no such
investigation or survey is pending, threatened or imminent. Seller has fully and
accurately disclosed to the appropriate intermediaries and carriers all material
billing and business practices with respect to Medicare and Medicaid
reimbursement with respect to the Business to the extent necessary for Seller to
comply with applicable law. Seller has complied with all material requirements
imposed by any such intermediary or carrier with respect to such billing. Seller
has billed the applicable intermediaries and/or carriers for the services
rendered by Seller in material compliance with all applicable Medicare and
Medicaid laws, and Seller is not aware of any non-compliance by it with any
state licensing or corporate practice of medicine law that would cause such
billing or business practices to not be in material compliance with any of such
Medicare or Medicaid laws. Seller has not received any notice from any
regulatory authority or intermediary that indicates that Buyer could not
continue to ▇▇▇▇ intermediaries in substantially the same manner and structure
as Seller is billing on the date hereof.
(y) Medicare/Medicaid Participation. All services provided
by the Seller for which Seller directly or indirectly receives payment under the
Medicare or Medicaid programs are, to the extent required by law, certified for
participation or enrollment in all Medicare and Medicaid programs, have a
current and valid provider contract with the Medicare and Medicaid programs or
other third party reimbursement source (inclusive of managed care
organizations), are in compliance with the conditions of participation of such
programs, and, to the extent required by law, have received all approvals or
qualifications necessary for capital reimbursement, except for such
certifications, contracts, compliances, approvals and qualifications which are
set forth on Schedule 3.1(y) and which, individually or in the aggregate, would
not have a Material Adverse Effect. Seller has delivered to Buyer true and
complete copies of all Medicare and Medicaid compliance reports by the
applicable licensing authority for any period after October 1, 1994 for each
location of Seller for which there is a Medicare or Medicaid provider number.
(z) Customer List. Schedule 4.1(z)-A contains a complete and
accurate list of each of the nursing homes, prisons and other facilities which
is currently serviced by Seller in connection with the Business, and Schedule
4.1(z)-B contains a complete and accurate list of patients serviced by the
facilities during the one year period ending on the date hereof.
- 29 -
(aa) Financial Statements and SEC Documents. Each of the
balance sheets in or incorporated by reference into any annual reports filed on
Form 10-K and all other reports, registration statements, definitive proxy
statements or information statements filed by Parent after December 31, 1995
with the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (together with the rules and regulations thereunder, the
"Securities Act"), or under Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "Exchange Act") (collectively, the "Parent SEC
Documents") fairly presents in all material respects the financial position of
Parent as of the date it was filed and each of the statements of income and
changes in shareholders' equity and cash flows or equivalent statements in such
report and documents (including any related notes and schedules thereto) as of
such date fairly presents in all material respects the results of operations,
changes in shareholders' equity and changes in cash flows, as the case may be,
of the Parent for the periods set forth therein, in each case in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except in each case as may be noted therein, subject to normal and
recurring year-end audit adjustments in the case of unaudited statements (and,
where applicable, the absence of footnotes).
3.2 Representations and Warranties of Buyer. Buyer hereby
represents and warrants to Seller as follows:
(a) Authority. Buyer and IHS have all requisite corporate
power and authority to enter into this Agreement and each of the certificates,
instruments, agreements and documents executed and delivered by Buyer pursuant
to this Agreement (Buyer's "Transaction Documents") and to consummate the
transactions contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by Buyer and IHS to authorize the execution,
delivery and performance of this Agreement and each Buyer Transaction Documents,
and the consummation of the transactions contemplated hereby have been duly and
properly taken. This Agreement and each Buyer Transaction Document have been
duly executed and delivered by Buyer and, as applicable, IHS and constitute the
legal, valid and binding obligations of Buyer and, as applicable, IHS,
enforceable against Buyer and IHS in accordance with their respective terms. The
execution and delivery of this Agreement and each Buyer Transaction Document, do
not, and the consummation of the transactions contemplated hereby and thereby
and compliance with the terms hereof will not: result in any violation of or
default, under (i) any provision of the Certificate or Articles of Incorporation
or Bylaws of Buyer or IHS, (ii) any material note, bond, mortgage, indenture,
deed of trust, license, lease, contract, commitment or agreement to which Buyer
or IHS is a party or by which any of their respective properties are bound or
(iii) any judgment, injunction, order or decree, or material statute, law,
ordinance, rule or regulation applicable to Buyer or IHS or to the property or
assets of Buyer or IHS. No Consent is required to be obtained or made by or with
respect to Buyer or IHS in connection with the execution and delivery of this
Agreement or the consummation by Buyer of the transactions contemplated hereby,
other than as set forth on Schedule 3.1(a).
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(b) Sufficient Funds. IHS and Buyer have sufficient funds
available to pay in full the Purchase Price.
(c) Organization and Standing of Buyer. Buyer is a
corporation duly organized and validly existing under the laws of California.
IHS is a corporation duly organized and validly existing under the laws of
Delaware. Buyer and IHS have full corporate power and authority and possess all
material governmental franchises, licenses, permits, authorizations and
approvals necessary to enable them to use their corporate names and to own,
lease or otherwise hold their properties and assets and to carry on their
business in all material respects as presently conducted.
(d) Financial Statements and SEC Documents. Each of the
balance sheets in or incorporated by reference into any annual reports filed on
Form 10-K and all other reports, registration statements, definitive proxy
statements or information statements filed by IHS after December 31, 1995 with
the SEC under the Securities Act or under Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act (collectively, the "IHS SEC Documents") fairly presents in all
material respects the financial position of IHS as of the date it was filed and
each of the statements of income and changes in shareholders' equity and cash
flows or equivalent statements in such report and documents (including any
related notes and schedules thereto) as of such date fairly presents in all
material respects the results of operations, changes in shareholders' equity and
changes in cash flows, as the case may be, of IHS for the periods set forth
therein, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal and recurring year-end audit
adjustments in the case of unaudited statements (and, where applicable, the
absence of footnotes).
(e) IHS Stock. Upon delivery to Seller in accordance with
the terms of this Agreement, each share of IHS Stock shall be duly authorized,
validly issued, and nonassessable.
ARTICLE IV
COVENANTS
4.1 Covenants of Seller. Seller covenants and agrees as follows:
(a) Insurance. Effective as of the Closing Date and for a
period of three (3) years thereafter, Seller at its own expense shall purchase
and maintain a tail insurance policy with respect to all claims-made insurance
policies of Seller currently in effect, such tail coverage to name Seller as
insured and Buyer as an additional insured.
(b) Employment Agreements. In the event that Buyer terminates
the employment (including upon expiration of the Initial Term (as such term is
defined in the Employment Agreements) if Buyer elects not to extend the Initial
Term pursuant to the applicable Employment Agreement) of any of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or ▇▇▇▇▇▇▇
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▇▇▇▇▇ (the "Subject Employees") at any time after the one year anniversary of
the Closing Date and on or prior to the expiration of the Initial Term (as such
term is defined in such Employment Agreement), Seller will be solely responsible
for the payment of any compensation, severance, benefits, or other amounts
becoming thereafter due to such terminated Subject Employee solely under
Employment Agreements between Seller and the Subject Employees in an amount not
to exceed the aggregate amount that would have been due had such Employment
Agreements not been amended or modified on or after the Closing Date; provided
however, that any liability to any Subject Employee that constitutes a Current
Liability on the Closing Balance Sheet shall be Buyer's responsibility. Any
liabilities or obligations of any nature to the Subject Employees arising out of
any matters occurring after the Closing or arising out of such Employment
Agreements, other than those arising under the preceding sentence (or as
expressly assumed by Seller under the applicable Assignment and Amendment of
Employment Agreement) shall be the sole liability and responsibility of Buyer.
Buyer's liabilities under this Section 4.1(c) shall be Assumed Liabilities. Any
liability to ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly assumed by Seller under paragraph 3 of his
Assignment and Amendment of Employment Agreement shall be an Excluded Liability.
(c) COBRA. Seller shall give all notices, make all offers, pay
and collect all premiums, obtain all group health plan coverage, and perform all
other actions mandated by Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), which are required to be given, made,
paid, obtained, and performed as a result of the Closing under this Agreement.
This provision shall not be construed, however, to require Seller to maintain
its group health insurance coverage following Closing, except as may be required
by applicable Governmental Requirements or Section 4.2(c).
4.2 Covenants of Buyer. Buyer covenants and agrees as follows:
(a) Financial Information. Buyer will use reasonable
commercial efforts to (i) hold all of the books and records of Seller delivered
to it and existing on the Closing Date and not destroy or dispose of any thereof
for a period of three (3) years from the Closing Date, and thereafter if it
desires to destroy or dispose of such books and records, will offer first in
writing at least 60 days prior to such destruction or disposition to surrender
them to Parent, provided that such books and records must be held as
confidential information by Parent and Parent must state the reason it wants
possession of the books and records, and (ii) promptly provide to Parent upon
request, financial information provided to it by Seller with respect to Seller
for the period of the current fiscal year up to Closing in accordance with past
practice to allow Parent to comply with securities law, financial and tax
reporting and accounting requirements.
(b) Accounts. Buyer shall pay to Parent all amounts owed to
Parent by Seller on the Closing Date to the extent such amounts constitute
Assumed Liabilities when they shall become due in the ordinary course of
business consistent with past practice.
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(c) Employees. Buyer undertakes to offer employment to all
employees of Seller other than two (2) employees to be designated by Buyer (the
"Designated Employees"), on such terms and with such benefits and compensation
as Buyer shall deem advisable in its sole discretion. Buyer agrees, at Seller's
prior written request, to use its reasonable commercial effort to continue
(until no later than March 31, 1997) the employment of ▇▇. ▇▇▇▇▇-▇▇▇▇▇▇▇ after
the date which is thirty (30) days after the date hereof to provide Seller with
such assistance as it shall reasonably request of her (within the scope of her
employment arrangement or agreement with Buyer); provided that Seller shall be
liable for all compensation to, and costs and expenses payable with respect to,
such employee with respect to any period during which said employee is employed
by Buyer at Seller's request, and if Seller requests that Buyer continue such
employment, Buyer shall be entitled to reimbursement for any Employment
Termination Payment due to such employee to the extent provided in Section
1.3(a)(iii) regardless of when she is thereafter terminated.
(d) Insurance. The disability, life, health, dental and vision
insurance plans of Seller described on Schedule 3.1(l) shall constitute
Contracts and shall be assigned to, and assumed by, Buyer as provided in Section
1.4 of this Agreement.
4.3 Mutual Covenants. Each of Seller and Buyer, as applicable,
covenants and agrees as follows:
(a) Records.
(i) On the Closing Date, Seller shall cause to be
delivered to Buyer all Records and, to the extent transferred hereunder, the
items described in Section 1.1(a)(viii), in the possession of Seller relating to
the Business to the extent not then in the possession of Seller, subject to the
following exceptions:
(A) Buyer recognizes that certain Records may
contain incidental confidential information relating to Parent and not relating
to Seller, and that Seller may delete and retain such information from such
Records; and
(B) Seller may retain all bids received from other
parties and analyses relating to Seller.
(ii) Upon reasonable written notice, Buyer and Seller
agree to furnish or cause to be furnished to each other and their
representatives, employees, counsel and accountants access, during normal
business hours, such information (including Records pertinent to Seller) and
assistance relating to Seller as is reasonably necessary for financial reporting
and accounting matters, the preparation and filing of any Returns or the defense
of any Tax claim or assessment or the defense or prosecution of any litigation
matters; provided, however, that such access does not unreasonably disrupt the
normal operations of Buyer, Seller or any of their Affiliates.
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(iii) Buyer agrees that it will use its commercially
reasonable efforts to make available to Seller the services of ▇▇▇▇▇▇▇ ▇▇▇▇▇ (to
the extent he shall continue to be employed by Buyer and within the scope of his
Employment Agreement with Buyer) and/or his designees for the time period
commencing on the date hereof and ending on March 31, 1997 to assist Seller with
the defense of litigation matters and any investigation by the Department of
Labor and oversight of accounting matters; provided that Seller shall pay to
Buyer an amount equal to $4,000 per month in respect thereof and such services
to Seller shall not materially interfere with the performance of his obligations
to Buyer under his Employment Agreement.
(b) Publicity. Seller (and Parent) and Buyer (and IHS) agree
that no public release or announcement concerning the transactions contemplated
hereby shall be issued by either of them without the prior consultation and
written consent (which consent shall not be unreasonably withheld) of the other,
except such release or announcement as may be required by law or the rules or
regulations of any United States or foreign securities exchange, in which case
the party required to make the release or announcement shall allow the other
party reasonable time to comment on such release or announcement in advance of
such issuance.
ARTICLE V
OTHER AGREEMENTS
5.1 Certain Understandings. Buyer acknowledges that neither Parent,
Seller, nor any other person has made any representation or warranty, expressed
or implied, as to the accuracy or completeness of any information regarding
Seller not included in this Agreement or the Schedules hereto or the Seller's
Transaction Documents, and none of Parent, Seller, or any other person will have
or be subject to any liability to Buyer or any other person resulting from the
distribution to Buyer, or Buyer's use of, any such information (including,
without limitation, any offering memorandum, brochure or other publication
provided to Buyer, and any other document or information provided to Buyer in
connection with the transactions contemplated hereby).
5.2 Further Assurances. From time to time, as and when requested by
either party hereto, the other party shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions as such other party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
5.3 Transfer Taxes. Seller shall be responsible for and shall timely
pay all sales and use taxes and personal property transfer taxes imposed by any
governmental entity in connection with the transfer of the Assets. Buyer shall
be responsible for and shall pay all other
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transfer taxes, documentary stamp taxes, recording charges and other fees and
taxes imposed by any governmental entity in connection with the transfer of the
Assets ("Buyer Taxes").
5.4 Use of Mediq Name. Buyer acknowledges and agrees that the name
and service ▇▇▇▇ "MEDIQ" and all derivations thereof (the "Name") is owned by
Parent and that by the sale of the Assets, or otherwise, Parent is not
relinquishing any interest in or rights to the Name or any derivation thereof,
nor permitting Buyer (after the Closing Date) to use, license or otherwise have
any rights in or to the Name, except on such terms as are expressly set forth in
this Section. Parent will permit use of the Name by Buyer for transition
purposes during a period not to exceed 365 days subsequent to the Closing Date
(the "Transition Period"), on the following terms and conditions:
(a) By the end of the Transition Period, Buyer shall have
caused the removal in all material respects of the Name from all of Buyer's
assets, motor vehicles, machinery, equipment, stationery, business cards, and
other documents. During the Transition Period, Buyer and Seller shall not affix,
or cause to be affixed, the Name to any of its assets, vehicles, machinery or
equipment.
(b) Within a reasonable period of time after the Closing Date,
Buyer shall cease to use the Name in its dealings with its customers, suppliers
and others with whom it does business.
(c) Buyer may use the Name solely in connection with its
operation of the Business pursuant to this Section 5.4 and shall have no right
to license, assign or otherwise transfer any rights in or to the Name.
5.5 Covenant Not to Compete.
(a) Each of Parent and Seller agrees that for a period of 3
years after the Closing Date neither of them nor any of their respective
Affiliates shall, directly or indirectly, for himself, herself or itself, or on
behalf of any other person, firm, entity or other enterprise, be employed by, be
an officer, director or manager of, act as a consultant for, be a partner in,
have a proprietary interest in, or loan money to any person, enterprise,
partnership, association, corporation, limited liability company, joint venture
or other entity which is directly or indirectly in the business of owning,
operating or managing any mobile radiological, EKG, or any other business
currently conducted by Seller (the "Applicable Businesses"), now or hereafter
competitive with any such Applicable Business of Buyer (including, without
limitation, the Business), IHS or any of their respective Affiliates, located in
any state in which Buyer, IHS or Seller is currently conducting such business;
provided, however, that nothing contained herein shall restrict Seller from
performing its obligations under any Temporary Excluded Contracts as provided in
Section 1.4(c) or restrict Parent or any of its Affiliates from operating or
owning any of their existing businesses or investments or renting or leasing any
equipment, provided that they do not expand into the foregoing prohibited
activities. The restrictions contained in this Section 5.5 (other than the
confidentiality provisions) shall not be binding upon any third party
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purchaser of Parent, or of any assets, stock, division or business unit of
Parent or of any Affiliate of Parent.
(b) Seller and Parent represent and warrant that there are no
employees, consultants or agents of Parent having expertise in the operation of
the Applicable Business or having a relationship with any customers of the
Applicable Business. Notwithstanding anything to the contrary contained in this
Agreement, the foregoing representation and warranty and all indemnification
rights with respect thereto shall not expire until the date that is three (3)
years after the date hereof.
(c) Seller and the Parent hereby agree that, for a period of
three (3) years following the date hereof, without the express written consent
of IHS, none of Seller, the Parent and their respective Affiliates will directly
or indirectly, for themselves or on behalf of any other person, firm, entity or
other enterprise:
(i) solicit any client, facility or patient who, prior to the date
hereof, was a client, facility or patient of Seller with respect to the
Applicable Business; or
(ii) hire, entice away or in any other manner persuade any employee,
consultant, representative or agent who was an employee, consultant,
representative or agent of Seller prior to the date hereof, to alter, modify or
terminate their relationship with Buyer or IHS.
(d) The Parent and Seller each acknowledges that the
restrictions contained in this Section 5.5 are reasonable and necessary to
protect the legitimate business interests of Buyer and IHS and that any
violation thereof by either of them would result in irreparable harm to Buyer
and IHS, and that damages in the event of such a breach will be difficult, if
not impossible, to ascertain. Accordingly, the Parent and Seller each agrees
that upon the violation by it of any of the restrictions contained in this
Section 5.5, Buyer and IHS shall be entitled to obtain from any court of
competent jurisdiction a preliminary and permanent injunction as well as any
other relief provided at law, equity, under this Agreement or otherwise, without
the necessity of posting any bond or other security whatsoever. In the event any
of the foregoing restrictions are adjudged unreasonable in any proceeding, then
the parties agree that the period of time or the scope of such restrictions (or
both) shall be adjusted to such a manner or for such a time (or both) as is
adjudged to be reasonable.
(e) The Parent and Seller each acknowledges that the covenants
contained in this Section 5.5 are independent covenants and that any failure by
the Buyer or IHS to perform its obligations under this Agreement shall not be a
defense to enforcement of the covenants contained in this Agreement, including
but not limited to a temporary or permanent injunction.
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(f) Seller and Parent agree to take any and all actions
necessary, including, without limitation, commencement of legal proceedings, to
enforce each of the non-competition agreements set forth on Schedule 1.4(a)
hereto upon the request of and in accordance with the instructions of Buyer.
Seller and Parent shall not be required to advance or expend any funds in
connection with their respective obligations under this subsection (f). Buyer
shall indemnify and hold harmless Seller and Parent from any loss, liability,
damage, cost and expense, including without limitation, reasonable legal fees
and expenses, arising out of taking any such actions at Buyer's request. Buyer
acknowledges that Seller intends to terminate all Excluded Contracts (not
otherwise terminated); provided that Seller shall not shorten the
non-competition provisions of such agreements in effect immediately prior to
their termination.
5.6 Restrictions.
(a) From and after the Closing Date, neither Seller nor the
Parent shall disclose, directly or indirectly, to any person or entity, or make
use of, without the express authorization of IHS and Buyer, any non-public
pricing strategies or records acquired by Buyer from Seller, any proprietary
data or trade secrets acquired by Buyer from Seller or any financial or other
information acquired by Buyer from Seller; provided that the foregoing
restrictions shall not apply to any information which:
(i) is or becomes publicly known through no wrongful act
on the part of Seller or Parent; or
(ii) is or becomes available to the disclosing party on
a non- confidential basis from a third party without restriction and without
breach of this Agreement; or
(iii) is approved for release by written authorization
signed by Buyer or IHS; or
(iv) is required to be disclosed in accordance with
applicable law; provided, however, prior to making any such disclosure the party
required to make such disclosure shall provide Buyer with prompt notice of such
requirement to enable Buyer to seek an appropriate protective order and such
party will use its best efforts to preserve the confidentiality of such
information and will disclose only that portion of the information as is
required to be disclosed.
(b) Each of Seller and Parent acknowledges that the
restrictions contained in this Section 5.6 are reasonable and necessary to
protect the legitimate business interests of Buyer and IHS, and that any
violation thereof by any of them would result in irreparable harm to Buyer and
IHS. Accordingly, each of Seller and Parent agrees that upon the violation by
any of them of any of the restrictions contained in this Section 5.6, Buyer and
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IHS shall be entitled to obtain from any court of competent jurisdiction a
preliminary and permanent injunction as well as any other relief provided at law
or equity, under this Agreement or otherwise, without the necessity of posting
any bond or security whatsoever.
5.7 Adjustments for Medicare Reimbursement Rate Increases.
(i) If the Medicare carrier for the States of Maine,
Massachusetts, New Hampshire or Vermont (each, an "Applicable State"): increases
the reimbursement rate for the transport component for mobile x-ray or EKG
services performed by Seller prior to the Closing Date, then the difference
between the amount due with respect to the transport component for mobile x-ray
or EKG services performed by Seller in all Applicable States prior to the
Closing Date at the increased rate of reimbursement shall be deemed to be an
Account Receivable, and accordingly, Seller shall be entitled to additional
Purchase Price payments if and to the extent provided in Section 2.3(b)(ii)
above; provided that such increases in Purchase Price by reason of this Section
5.7(a) shall not exceed $800,000 in the aggregate.
(b) Buyer and IHS shall cooperate and use their commercially
reasonable efforts to collect any amounts that shall become due to Seller as
contemplated by subsection (a) above, including, without limitation,
resubmitting billing if necessary, but only to the extent that Seller has
specifically identified and compiled and delivered to Buyer all of the necessary
bills and records.
(c) Seller shall have the right to assume the prosecution of
any action, suit, claim, proceeding or investigation relating to an increase in
the Medicare reimbursement rate for the transport component for mobile x-ray or
EKG services in the Applicable States that could result in an Account Receivable
(as provided in subsection (a) above) (each, an "Action") in a manner consistent
with the prosecution of similar Actions with respect to such reimbursement rates
in the Applicable States by other businesses in the Seller's industry in such
Applicable States, and Buyer and Seller agree to cooperate in good faith with
each other and shall not have the right to compromise or settle an Action
without the other's consent (which shall not be unreasonably withheld or
delayed).
5.8 Audit. Following Closing, Seller and the Parent will cooperate
with and assist Buyer in a review of the financial statements of Seller. Buyer
may, at its own expense, have an audit performed of such financial statements,
and Seller and the Parent will cooperate in the performance of such audit.
5.9 Billing and Collection Agent. (a) Seller hereby appoints Buyer
to act as Seller's exclusive authorized agent to ▇▇▇▇ and collect all
Non-Assignable Receivables, and Buyer and Seller hereby agree that the proceeds
of such Non-Assignable Receivables shall be distributed in accordance with the
provisions of Section 1.1 and 2.3(b) above.
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(b) Buyer shall not receive a fee or any other compensation
for said billing and collection services.
(c) Seller hereby constitutes and appoints Buyer its true,
lawful, and irrevocable attorney to demand, receive, and enforce the billing and
collection of the NonAssignable Receivables, and to give receipts, releases, and
satisfactions for the same.
5.10 Benefits under Excluded Contracts. If Buyer is provided with
any requested benefit under an Excluded Contract (such as use of space or access
to programs available with respect to leased motor vehicles), Buyer shall
reimburse Seller for its proportionate out-of-pocket cost of providing such
benefit.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Seller and Parent. (a) Seller and Parent
hereby jointly and severally agree to indemnify Buyer, IHS and their respective
Affiliates and their respective officers, directors, employees and agents
against and hold them harmless from any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses but excluding punitive
damages and unforeseen or other consequential damages other than punitive
damages and unforeseen or other consequential damages which are paid to third
parties) (a "Loss") suffered or incurred by any such indemnified party, as a
direct consequence of (i) any breach of any representation or warranty of Seller
or Parent contained in this Agreement or any Transaction Document, which by the
terms of Section 8.3 survives the Closing, (ii) any breach of any covenant of
Seller contained in this Agreement or any Transaction Document, (iii) all
Reimbursement Liabilities; (iv) any Loss relating to any Excluded Liability
(except as expressly assumed by Buyer under Section 1.4(c)); (v) any Loss
arising out of any bulk transfer act (whether relating to liabilities in general
or taxes or otherwise); (vi) any Loss arising out of the noncompliance of Seller
with COBRA or any like statute; (vii) any Loss that is attributable to the
pre-Closing conduct by Seller and relates to matters presently being
investigated by the U.S. Department of Labor with respect to Seller; and (viii)
any and all actions, suits, proceedings, demands assessments, judgments,
settlements (to the extent approved by Seller, such approval not to be
unreasonably withheld, delayed or conditioned) costs and legal and other
expenses incident to any of the foregoing; provided, however, that Seller shall
not have any liability under clause (i) above until the aggregate of all Losses,
for which Seller would, but for this proviso, be liable exceeds on a cumulative
basis $100,000, upon which Seller shall be liable for such $100,000 amount and
all other amounts under this Section 6.1; provided, further, that the aggregate
liability of Seller hereunder with respect to any and all Losses shall be
limited to the aggregate amount of the final Purchase Price.
(b) Buyer acknowledges and agrees that its sole and exclusive
remedy with respect to any and all claims for monetary damages relating to the
subject matter of this Agreement shall be pursuant to the indemnification
provisions set forth in this Article VI.
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(c) Buyer acknowledges and agrees that Parent and Seller shall
not have any liability under any provision of this Agreement for any Loss to the
extent that such Loss is caused by actions taken by or omitted to be taken by
Buyer after the Closing Date. Buyer shall take and cause its Affiliates to take
all reasonable steps to mitigate any Loss to the extent the same would have been
required by applicable law if Buyer's rights to compensation for damages arose
under law rather than by reason of contractual rights.
(d) Buyer may offset any of its indemnification claims against
payment of the Contingent Payment (as defined in Section 2.2), provided that if
Seller disputes the claim, Buyer shall place the amount of the claim into an
escrow account with a nationally recognized financial institution, until the
dispute is settled under the procedures set forth in this Article VI.
6.2 Indemnification by Buyer. (a) The Buyer hereby agrees to
indemnify Parent, Seller and their Affiliates against and hold them harmless
from any Loss suffered or incurred by any such indemnified party as a direct
consequence of (i) any breach of any representation or warranty of Buyer
contained in this Agreement or any Transaction Document, which by the terms of
Section 8.3 survives the Closing, (ii) any breach of any covenant of Buyer
contained in this Agreement or any Transaction Document, (iii) any guarantee or
obligation to assure performance given or made by Parent or any of its
Affiliates with respect to any obligation or liability of the Business that
constitutes an Assumed Liability, (iv) any Assumed Liability or any liability,
expense or obligation of the Business arising after the Closing Date, (v) any
use of the Name by Buyer or IHS not authorized by this Agreement and (vi) any
and all actions, suits, proceedings, demands assessments, judgments, settlements
(to the extent approved by Buyer, such approval not to be unreasonably withheld,
delayed or conditioned) costs and legal and other expenses incident to any of
the foregoing.
(b) Seller and Parent shall take all reasonable steps to
mitigate any Loss to the extent the same would have been required by applicable
law if the rights of Seller and Parent to compensation for damages arose under
law rather than by reason of contractual rights..
6.3 Losses Net of Insurance, Etc. The amount of any Loss for which
indemnification is provided under this Article VI shall be net of (i) in the
case of Section 6.1, any reserves established on the Closing Balance Sheet of
the Seller, to the extent covering such Loss, (ii) any net insurance proceeds
actually collected by the indemnified party covering such loss and (iii) an
amount equal to the present value of the net Tax benefit, if any, attributable
to such Loss and used by the indemnified party, taking into account the receipt
of such recovery; it being understood that each party will use such Tax benefits
as promptly as reasonably practicable. If the amount to be netted hereunder from
any payment required under Sections 6.1 or 6.2 is determined after payment by
the indemnifying party of any amount otherwise required to be paid to an
indemnified party pursuant to this Article VI, the indemnified party shall repay
to the indemnifying party, promptly after such determination, any amount that
the indemnifying party would not have had to pay pursuant to this Article VI had
such determination been made at the time of such payment.
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6.4 Termination of Indemnification. The obligations to indemnify and
hold harmless a party hereto, (i) pursuant to Sections 6.1(a)(i) and 6.2(a)(i),
shall terminate when the applicable representation or warranty terminates
pursuant to Section 8.3, and (ii) pursuant to the other clauses of Sections 6.1
and 6.2, shall not terminate; provided; however, that as to clauses (i) and (ii)
above such obligations to indemnify and hold harmless shall not terminate with
respect to any item as to which the person to be indemnified (or the related
party thereto) shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice (stating in reasonable detail the
basis of such claim) to the party providing the indemnification.
6.5 Procedures Relating to Indemnification under Sections 6.1 and
6.2. (a) A party seeking indemnification pursuant to Sections 6.1 and 6.2 (an
"Indemnified Party") shall give prompt notice to the party from whom such
indemnification is sought (the "Indemnifying Party") of the assertion of any
claim or assessment, or the commencement of any action, suit, audit or
proceeding, by a third party in respect of which indemnity may be sought
hereunder (a "Third Party Claim") and will give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may reasonably
request, but no failure to give such notice shall relieve the Indemnifying Party
of any liability hereunder (except to the extent the Indemnifying Party has
suffered actual prejudice thereby). The Indemnifying Party (which, in the case
of Seller or Parent, must include both such parties) shall have the right,
exercisable by written notice (the "Notice") to the Indemnified Party (which
notice shall state that the Indemnifying Party expressly agrees that as between
the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall
be solely obligated to satisfy and discharge the Third Party Claim) within
fourteen (14) days of receipt of notice from the Indemnified Party of the
commencement of or assertion of any Third Party Claim, to assume the defense of
such Third Party Claim, using counsel selected by the Indemnifying Party and
reasonably acceptable to the Indemnified Party; provided, that the Indemnifying
Party shall not have the right to assume a Third Party Claim if (i) the named
parties to any such action (including any impleaded parties) include both the
Indemnified Party and the Indemnifying Party and (ii) the Indemnified Party
shall have been advised by counsel in writing that under applicable standards of
professional responsibility, a conflict will arise in the event both the
Indemnified Party and the Indemnifying Party are represented by the same counsel
with respect to the Third Party Claim, in which case such Indemnified Party
shall have the right to participate in the defense of such Third Party Claim and
all Losses in connection therewith shall be reimbursed by the Indemnifying
Party. In addition, if the Indemnifying Party fails to give the Indemnified
Party the Notice complying with the provisions stated above within the stated
time period, the Indemnified Party shall have the right to assume control of the
defense of the Third Party Claim and all Losses in connection therewith shall be
reimbursed by the Indemnifying Party upon demand of the Indemnified Party.
(b) If at any time after the Indemnifying Party assumes the defense
of a Third Party Claim, any of the conditions set forth in clauses (i) or (ii)
of subsection (a) above come
- 41 -
into existence the Indemnified Party shall have the same rights as set forth
above as if the Indemnifying Party never assumed the defense of such claim.
(c) The Indemnifying Party or the Indemnified Party, as the case may
be, shall in any event have the right to participate, at its own expense, in the
defense of any Third Party Claim which the other is defending.
(d) The Indemnifying Party, if it shall have assumed the defense of
any Third Party Claim in accordance with the terms hereof, shall have the right,
upon thirty (30) days prior written notice to the Indemnified Party, to consent
to the entry of judgment with respect to, or otherwise settle such Third Party
Claim unless (i) the Third Party Claim involves equitable or other non-monetary
damages or (ii) in the reasonable judgment of the Indemnified Party such
settlement would have a continuing material adverse effect on the Indemnified
Party's business (including any material impairment of its relationships with
customers and suppliers), in which case such settlement only may be made with
the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. Seller shall keep Buyer appraised of any material
negotiations between Seller and the U.S. Department of Labor, or any material
occurrences with respect to the same (to the extent within the knowledge of
Seller or the Parent), and will not enter into a settlement of such matters
without Buyer's consent, such consent not to be unreasonably withheld or
delayed.
(e) Whether or not the Indemnifying Party chooses to defend or
prosecute any claim involving a third party, all the parties hereto shall
cooperate in the defense or prosecution thereof and shall furnish such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested in connection
therewith.
ARTICLE VII
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Accounting Principles" shall have the meaning set forth in Section
2.3(b).
"Accounts Receivable" shall have the meaning set forth in Section
2.3(b).
"Action" shall have the meaning set forth in Section 5.7(d).
"Affiliate" shall have the meaning given to such term in Rule 12b-2
under the Exchange Act, as in effect as of the date of this
Agreement.
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"Applicable Authority" shall have the meaning set forth in Section
2.2(c).
"Applicable State" shall have the meaning set forth in Section
5.7(a).
"Balance Sheet" shall have the meaning set forth in Section 3.1(e).
"Base Rate" shall have the meaning set forth in Section 5.7(a).
"Buyer" shall have the meaning set forth in the first paragraph of
this Agreement.
"Buyer Taxes" shall have the meaning set forth in Section 5.3
"Buyer's Transaction Documents" shall have the meaning set forth in
Section 3.2(a).
"Closing" shall have the meaning set forth in Section 2.4.
"Closing Date" shall have the meaning set forth in Section 2.4.
"Closing Date Working Capital" shall have the meaning set forth in
Section 2.3(a).
"COBRA" shall have the meaning set forth in Section 4.1(e).
"Code" shall have the meaning set forth in Section 3.1(f).
"Collateral Source" shall have the meaning set forth in Section 6.3.
"Confidentiality Agreement" shall have the meaning set forth in
Section 4.1(a).
"Contingent Payment" shall have the meaning set forth in Section
2.2(a).
"Contracts" shall have the meaning set forth in Section 3.1(j).
"Customer Contracts" shall have the meaning set forth in Section
3.1(j)(xii).
"Date of Determination" shall have the meaning set forth in Section
2.2(b).
"Delay Payment Notice" shall have the meaning set forth in Section
2.3(b).
"EKG Transportation Reimbursement Change" shall have the meaning set
forth in Section 2.2(c).
- 43 -
"Environmental Laws" means federal, state and local laws, rules,
regulations, codes and ordinances, and any orders, decrees,
judgments or injunctions issued, promulgated, approved or entered
thereunder, relating to the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act ("CERCLA"); the Resource Conservation and
Recovery Act of 1976, as amended ("RCRA"); the Federal Water
Pollution Control Act, as amended; the Federal Clear Air Act, as
amended; the Toxic Substances Control Act, as amended; the Surface
Mining Control and Reclamation Act of 1977, as amended; the Safe
Drinking Water Act, as amended; the Pollution Control Act of 1990,
as amended; the Federal Insecticide, Fungicide and Rodenticide Act,
as amended; and comparable state and local laws in effect on the
date hereof.
"ERISA" shall have the meaning set forth in Section 3.1(m).
"Excess Amount" shall have the meaning set forth in Section 5.7(a).
"Excess Amount Dispute Notice" shall have the meaning set forth in
Section 5.7(b).
"Excess Amount Schedule" shall have the meaning set forth in Section
5.7(b).
"Exchange Act" shall have the meaning set forth in Section 3.1(aa).
"Excluded Contracts" shall have the meaning set forth in Section
1.4(a).
"Excluded Liabilities" shall have the meaning set forth in Section
1.3(b).
"Final Excess Amount" shall have the meaning set forth in Section
5.7(b).
"Financial Statements" shall have the meaning set forth in Section
3.1(e).
"Hazardous Substances" shall have the meaning set forth in Section
101(14) of CERCLA, 42 U.S.C. Section 9601(14).
"IHS SEC Documents" shall have the meaning set forth in Section
3.2(d).
"Impracticalities" shall have the meaning set forth in Section
1.4(a).
"Indemnified Party" shall have the meaning set forth in Section 6.5.
"Indemnifying Party" shall have the meaning set forth in Section
6.5.
- 44 -
"Independent Accounting Firm" shall have the meaning set forth in
Section 2.3(b).
"Knowledge" means, with respect to Seller, the actual knowledge of
the officers of Seller.
"Liability" shall have the meaning set forth in Section 1.3(b).
"Liens" shall have the meaning set forth in Section 3.1(g).
"Loss" shall have the meaning set forth in Section 6.1(a).
"Material Adverse Effect" means a material adverse effect on the
value of the Assets, the transactions contemplated by this
Agreement, the financial condition, or results of operations of the
Seller, or the Buyer, as the case may be. Seller or Buyer may,
however, at its option, include in the Schedules of this Agreement
or elsewhere items which would not have a Material Adverse Effect
within the meaning of the previous sentence in order to avoid any
misunderstanding, and such inclusion shall not be deemed to be an
acknowledgment by the Seller or Buyer that such items would have a
Material Adverse Effect or further define the meaning of such term
for the purpose of this Agreement.
"Name" shall have the meaning set forth in Section 5.4.
"Non-competition Agreement" shall have the meaning set forth in
Section 5.5.
"Notice" shall have the meaning set forth in Section 6.5.
"Parent SEC Documents" shall have the meaning set forth in Section
3.1(aa).
"Permitted Liens" shall have the meaning set forth in Section
3.1(g).
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Preliminary Closing Date Balance Sheet" shall have the meaning set
forth in Section 2.3(b).
"Questionable Payments" shall have the meaning set forth in Section
3.1(w).
"Records" shall have the meaning set forth in Section 1.1(a)(vi).
"Required Amount" shall have the meaning set forth in Section
2.3(a).
"Returns" shall have the meaning set forth in Section 3.1(f).
"SEC" shall have the meaning set forth in Section 3.1(aa).
- 45 -
"Securities Act" shall have the meaning set forth in Section
3.1(aa).
"Seller" shall have the meaning set forth in the first paragraph of
this Agreement.
"Seller's Benefit Plans" shall have the meaning set forth in Section
3.1(m).
"Seller's Transaction Documents" shall have the meaning set forth in
Section 3.1(a).
"▇▇▇▇▇ Agreement" shall have the meaning set forth in Section
1.4(a).
"Specified Party" shall have the meaning set forth in Section 6.7.
"Subject Employees" shall have the meaning set forth in Section
4.1(c).
"Tax" or "Taxes" shall have the meanings set forth in Section
3.1(f).
"Third Party Claim" shall have the meaning set forth in Section 6.5.
"Transition Period" shall have the meaning set forth in Section 5.4.
"Working Capital Increase" shall have the meaning set forth in
Section 2.3(b).
"Working Capital Review" shall have the meaning set forth in Section
2.3(b).
ARTICLE VIII
MISCELLANEOUS
8.1 Assignment. This Agreement and the rights hereunder shall not be
assignable or transferable by Buyer or Seller (including by sale of stock,
operation of law in connection with a merger, or sale of substantially all the
assets of Buyer) without the prior written consent of the other party hereto;
provided that Buyer may assign this Agreement to any other Affiliate of IHS or
to any person that acquires all or substantially all of the assets of Buyer,
with IHS remaining as guarantor of the assignee's obligations and liabilities
under this Agreement and further provided Buyer remains liable hereunder. This
Agreement shall inure to the benefit of, and be binding upon and enforceable
against, the successors and permitted assigns of the respective parties hereto.
8.2 No Third-Party Beneficiaries. Except as provided in Section 4.2
and Article VI, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns
- 46 -
and nothing herein expressed or implied shall give or be construed to give to
any person or entity, other than the parties hereto and such assigns, any legal
or equitable rights hereunder.
8.3 Survival of Representations. The representations and warranties
in this Agreement and in any other document delivered in connection herewith
shall survive the Closing solely for purposes of Sections 6.1 and 6.2 of this
Agreement and shall terminate at the close of business twelve months following
the Closing Date, except that such time limitation shall not apply to (i) claims
for misrepresentations or breaches of warranty relating to Section 3.1(f)
(relating to Taxes), Section 3.1(w) (relating to Questionable Payments), Section
3.1(x) (relating to Reimbursement Matters), or Section 3.1(z) (relating to
Medicare/Medicaid Participation) which may be asserted within 60 days after the
expiration of the applicable statute of limitations with respect to the period
to which the particular claims relate, and (ii) claims for any other
misrepresentation or breach of warranty as to which Buyer has described in
reasonable detail pursuant to a written notice given to Seller prior to the
expiration of such 12-month period.
8.4 Expenses. Whether or not the transactions contemplated hereby
are consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses, except as may otherwise be expressly provided
in this Agreement. None of Seller's cost and expenses arising out of the
transactions contemplated by this Agreement, including without limitation, legal
and accounting fees, shall be included as Current Liabilities.
8.5 Amendments. No amendment to or modification of this Agreement
shall be effective unless it shall be in writing and signed by each of the
parties hereto.
8.6 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given (a) on the date of delivery if delivered
personally; (b) on the date of transmission if sent via facsimile transmission
to the facsimile number given below, and telephonic confirmation of receipt is
obtained promptly after completion of transmission; (c) on the business date
after delivery to a reputable nationally recognized overnight courier service or
(d) three business days after being mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(i) If to Buyer,
Symphony Diagnostic Services
No. 1, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
- 47 -
With required copies to:
Integrated Health Services, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
and
Blass & ▇▇▇▇▇▇, Esqs.
▇▇▇ ▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
(ii) If to Seller, to:
Mediq Mobile X-Ray Services, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Nassau, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to Parent to:
Mediq Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
- 48 -
With a required copy to:
Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Nassau, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Such addresses may be changed, from time to time by means of a notice given in
the manner provided in this Section (provided that no such notice shall be
effective until it is received by the other parties hereto).
8.7 Fees. Each party hereto hereby represents and warrants that the
only broker or finder that has acted for such party in connection with this
Agreement or the transactions contemplated hereby or that may be entitled to any
brokerage fee, finder's fee or commission in respect thereof is ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with respect to Seller. Seller will pay all fees or commissions which may be
payable to the firms so named.
8.8 Severability. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
8.9 Interpretation. All references to immediately available funds or
dollar amounts contained in this Agreement shall mean United States dollars. All
references to generally accepted accounting principles contained in this
Agreement shall mean United States generally accepted accounting principles
consistently applied. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. The parties acknowledge and agree that (i) each party and its
counsel have reviewed the terms and provisions of this Agreement and have
contributed to its revision, (ii) the normal rule of construction, to the effect
that any ambiguities are resolved against the drafting party, shall not be
employed in the interpretation of it, and (iii) the terms and provisions of this
Agreement shall be constructed fairly as to all parties hereto and not in favor
of or against any party, regardless of which party was generally responsible for
the preparation of this Agreement. All information disclosed by Seller in any
Schedule hereto or any representation or warranty herein shall be deemed to have
been disclosed in any other Schedule hereto or any representation or warranty
herein where such disclosure of such information is required or pertains to a
representation or warranty made by Seller herein; provided that a reasonable
reading of such schedule, representation or warranty would clearly indicate that
information contained therein is required in or pertains to another Schedule,
representation or warranty. Reference in this Agreement to dollar amount
thresholds (including such references in Article VIII of this Agreement) shall
not, for purposes of this Agreement, be deemed to be evidence of materiality or
a Material Adverse Effect.
8.10 Waiver. Waiver of any term or condition of this Agreement by
any party shall be effective if in writing and shall not be construed as a
waiver of any subsequent breach
- 49 -
or failure of the same term or condition, or a waiver of any other term of this
Agreement. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
8.12 Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto and the other documents delivered pursuant to this Agreement,
contain the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements, negotiations, correspondence, undertakings and understandings, oral
or written, relating to such subject matter. Any Confidentiality Agreements in
effect between the parties hereto prior to the date hereof are hereby
terminated.
8.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Pennsylvania applicable to agreements made and to be performed entirely within
Pennsylvania, without regard to the conflicts of law principles thereof.
8.14 Joint and Several. All obligations, representations,
warranties, covenants and agreements of Seller and Parent under this Agreement
or any of Seller's Transaction Documents shall be joint and several obligations,
representations, warranties, covenants and agreements of Seller and Parent. All
obligations, representations, warranties, covenants and agreements of Buyer and
IHS under this Agreement or any of Buyer's Transaction Documents shall be joint
and several obligations, representations, warranties, covenants and agreements
of Buyer and IHS.
[SIGNATURES ON FOLLOWING PAGE]
- 50 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
MEDIQ INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
MEDIQ MOBILE X-RAY SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
SYMPHONY DIAGNOSTIC SERVICES
NO.1, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
GUARANTEE:
The performance of all the covenants, liabilities and obligations of
Symphony Diagnostic Services No. 1, Inc. hereunder are unconditionally and
irrevocably, jointly and severally guaranteed as surety by Integrated Health
Services, Inc., its parent.
INTEGRATED HEALTH SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Senior Vice President,
Corporate Development