STOCK PURCHASE AGREEMENT
AMONG
ALLIANCE IMAGING, INC.
AND
US DIAGNOSTIC INC.
MEDICAL DIAGNOSTICS, INC.
DATED AS OF MARCH 30, 1998
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . .4
2.1 Purchase and Sale of the Shares . . . . . . . . . . . . . . . . .4
2.2 Share Consideration . . . . . . . . . . . . . . . . . . . . . . .4
2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.4 Deliveries by Stockholder . . . . . . . . . . . . . . . . . . . .5
2.5 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . .5
2.6 Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . .6
(a) Preparation of Preliminary Statement of Working Capital. . .6
(b) Review of Preliminary Closing Balance Sheet. . . . . . . . .6
(c) Disputes . . . . . . . . . . . . . . . . . . . . . . . . . .6
(d) Final Statement of Working Capital . . . . . . . . . . . . .7
(e) Adjustment to the Purchase Price . . . . . . . . . . . . . .7
(f) Payment. . . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE III Representations and Warranties of Buyer . . . . . . . . . . .8
3.1 Organization; Authority . . . . . . . . . . . . . . . . . . . . .8
3.2 Authorization, Enforceability . . . . . . . . . . . . . . . . . .8
3.3 No Violation or Conflict. . . . . . . . . . . . . . . . . . . . .8
3.4 Consent of Governmental Authorities . . . . . . . . . . . . . . .8
3.5 Legal Proceeding. . . . . . . . . . . . . . . . . . . . . . . . .9
3.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.7 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . .9
3.8 Availability of Funds . . . . . . . . . . . . . . . . . . . . . .9
3.9 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE IV Representations and Warranties of Stockholder . . . . . . . . . .9
4.1 Organization; Authority Foreign Qualification . . . . . . . . . .9
4.2 Authorization; Enforceability . . . . . . . . . . . . . . . . . 10
4.3 No Violation or Conflict. . . . . . . . . . . . . . . . . . . . 10
4.4 Consent of Governmental Authorities . . . . . . . . . . . . . . 10
4.5 Health Care Providers . . . . . . . . . . . . . . . . . . . . . 11
4.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . 11
4.7 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 11
4.8 Legal Proceeding. . . . . . . . . . . . . . . . . . . . . . . . 12
4.9 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Absence of Material Adverse Changes . . . . . . . . . . . . . . 12
4.11 Transactions with Affiliates. . . . . . . . . . . . . . . . . . 12
4.12 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 12
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4.13 Rights, Warrants, Options . . . . . . . . . . . . . . . . . . . 13
4.14 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Real and Tangible Personal Property. . . . . . . . . . . . 13
(b) Intellectual Property Rights . . . . . . . . . . . . . . . 14
4.15 Governmental Authorizations . . . . . . . . . . . . . . . . . . 14
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.17 Employment Matters. . . . . . . . . . . . . . . . . . . . . . . 15
(a) Labor Unions . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Employment Policies. . . . . . . . . . . . . . . . . . . . 15
(c) Employment Agreements. . . . . . . . . . . . . . . . . . . 15
(d) Employee Benefit Plans . . . . . . . . . . . . . . . . . . 15
4.18 Material Agreements . . . . . . . . . . . . . . . . . . . . . . 17
4.19 List of Accounts. . . . . . . . . . . . . . . . . . . . . . . . 17
4.20 Major Customers . . . . . . . . . . . . . . . . . . . . . . . . 17
4.21 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.22 Guarantees: Powers of Attorney. . . . . . . . . . . . . . . . . 18
4.23 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 18
(a) Definitions. . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Environmental Status . . . . . . . . . . . . . . . . . . . 19
4.24 1997 Merger Agreement . . . . . . . . . . . . . . . . . . . . . 20
4.25 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.26 Certain Additional Regulatory Matters . . . . . . . . . . . . . 20
4.27 Medicare/Medicaid Participation . . . . . . . . . . . . . . . . 21
4.28 Physician Relationships . . . . . . . . . . . . . . . . . . . . 22
4.29 Other Hospital Relationships. . . . . . . . . . . . . . . . . . 22
ARTICLE V Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1 Interim Operations of MDI . . . . . . . . . . . . . . . . . . . 23
5.2 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 24
5.4 Notification. . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.5 Consent of Governmental Authorities and Others. . . . . . . . . 25
5.6 Acquisition Proposals; No Solicitation. . . . . . . . . . . . . 26
5.7 Commercially Reasonable Efforts . . . . . . . . . . . . . . . . 26
5.8 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.9 Intercompany Receivables. . . . . . . . . . . . . . . . . . . . 26
5.10 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.11 Insurance Matters . . . . . . . . . . . . . . . . . . . . . . . 27
5.12 Confidentiality Arrangements. . . . . . . . . . . . . . . . . . 27
ARTICLE VI Additional Agreements . . . . . . . . . . . . . . . . . . . . . 27
6.1 [Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . 27
6.2 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 Survival of the Representations, Warranties, Covenants and
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 28
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6.5 General Release . . . . . . . . . . . . . . . . . . . . . . . . 30
6.6 Assignment of Rights of Stockholder Under 1997 Merger Agreement 30
6.7 Post-Closing Access and Cooperation . . . . . . . . . . . . . . 30
6.8 Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . 31
6.8.1 Noncompetition . . . . . . . . . . . . . . . . . . . . . 31
6.8.2 Confidential Information . . . . . . . . . . . . . . . . 31
6.8.3 Solicitation of Business . . . . . . . . . . . . . . . . 32
6.8.4 Solicitation of Personnel. . . . . . . . . . . . . . . . 32
6.8.5 Use of Symbols . . . . . . . . . . . . . . . . . . . . . 32
6.8.6 Injunctive Relief. . . . . . . . . . . . . . . . . . . . 32
6.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 33
6.9.1 Tax and Other Filings. . . . . . . . . . . . . . . . . . 33
6.9.3 Returns for Tax Periods Ending on or Before the
Closing Date. . . . . . . . . . . . . . . . . . . . . . 33
6.9.4 Contest. . . . . . . . . . . . . . . . . . . . . . . . . 34
6.9.5 Returns for Tax Periods Beginning Before and Ending
After the Closing Date. . . . . . . . . . . . . . . . . 34
6.10 Stockholder's Obligations . . . . . . . . . . . . . . . . . . . 34
6.11 Letter of Credit. . . . . . . . . . . . . . . . . . . . . . . . 35
6.12 Clifton, New York Project . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII Closing; Conditions Precedent; Termination. . . . . . . . . 35
7.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Mutual Conditions Precedent . . . . . . . . . . . . . . . . . . 35
(a) Governmental Consents. . . . . . . . . . . . . . . . . . . 35
(b) No Litigation. . . . . . . . . . . . . . . . . . . . . . . 35
7.3 Conditions Precedent to the Obligations of Buyer. . . . . . . . 36
(a) Representations and Warranties True. . . . . . . . . . . . 36
(b) Covenants Performed. . . . . . . . . . . . . . . . . . . . 36
(c) Consents . . . . . . . . . . . . . . . . . . . . . . . . . 36
(d) Certificate of Stockholder . . . . . . . . . . . . . . . . 36
(e) Intercompany Receivables . . . . . . . . . . . . . . . . . 36
(f) Resignations . . . . . . . . . . . . . . . . . . . . . . . 36
(g) Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . 36
7.4 Conditions Precedent to the Obligations of Stockholder and MDI. 36
(a) Representations and Warranties True. . . . . . . . . . . . 37
(b) Covenants Performed. . . . . . . . . . . . . . . . . . . . 37
(c) Buyer Certificate. . . . . . . . . . . . . . . . . . . . . 37
(d) Intercompany Receivables . . . . . . . . . . . . . . . . . 37
7.5 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 38
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.2 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 38
8.3 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Waiver and Amendment. . . . . . . . . . . . . . . . . . . . . . 38
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8.5 No Third Parties Beneficiary. . . . . . . . . . . . . . . . . . 39
8.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.10 Litigation: Prevailing Party. . . . . . . . . . . . . . . . . . 39
8.11 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . 39
8.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.13 Jurisdiction and Venue. . . . . . . . . . . . . . . . . . . . . 40
8.14 Obligations of MDI. . . . . . . . . . . . . . . . . . . . . . . 40
8.15 Incorporation of Exhibits and Schedules . . . . . . . . . . . . 40
8.16 Independence of Covenants and Representations and Warranties. . 40
8.17 Interpretation; Construction. . . . . . . . . . . . . . . . . . 40
8.18 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . 41
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of March 30, 1998, by and
among US DIAGNOSTIC INC., a Delaware corporation ("Stockholder"), MEDICAL
DIAGNOSTICS, INC., a Delaware corporation ("MDI") which is wholly owned by
Stockholder, and Alliance Imaging, Inc., a Delaware corporation ("Buyer").
PRELIMINARY STATEMENT
MDI is engaged in the business of owning and operating diagnostic imaging
centers in Massachusetts, New York, Tennessee, West Virginia and Virginia and
Buyer desires to acquire such business through the purchase by Buyer from
Stockholder of all of MDI's outstanding capital stock.
AGREEMENT
In consideration of the preliminary statement and the respective covenants,
representations and warranties contained in this Agreement, the parties
intending to be legally bound, agree as set forth below.
ARTICLE I
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
terms when used in this Agreement shall have the meanings indicated below:
"Acquisition Date" means February 26, 1997.
"Affiliate" has the meaning specified in Rule 144 promulgated by the
Commission under the Securities Act.
"Affiliated Group Agreement" means this Agreement together with all
Exhibits and Schedules referred to herein.
"Applicable Rate" means the "prime rate" of interest, as set forth in The
WALL STREET JOURNAL, as published for the Closing Date.
"Assumed Debt" means, without duplication, the aggregate amount (including
the current portion thereof) of all (i) indebtedness of MDI and its Subsidiaries
for money borrowed from others, purchase money indebtedness (other than accounts
payable and accrued expenses in the ordinary course) including, but not limited
to, indebtedness in respect of capital leases, other equipment financing and
indebtedness evidenced by any mortgage, note, indenture, bond or similar
instrument ("Indebtedness"); (ii) Indebtedness secured by any Lien upon property
owned by MDI or any of its Subsidiaries, even though MDI or any of its
Subsidiaries has not in any
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manner become liable for the payment of such Indebtedness; and (iii) interest
expense accrued but unpaid, and all prepayment premiums which are due and
payable as of or as a result of the Closing, on or relating to any such
Indebtedness (except that if and to the extent such items are included in the
working capital adjustments elsewhere herein they shall not be deemed Assumed
Debt, Indebtedness or Obligations) (items (i) - (iii) being referred to
herein as "Obligations").
"Closing" has the meaning specified in Section 2.3.
"Closing Assumed Debt Schedule" means the schedule to be delivered by
Stockholder on the Closing Date setting forth the Assumed Debt as of the Closing
Date as reasonably estimated by Stockholder based on the books and records of
MDI and its Subsidiaries.
"Closing Date" has the meaning specified in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Covenant Period" has the meaning specified in Section 6.9.
"Delaware GCL" means the General Corporation Law of the State of Delaware.
"Environmental Laws" has the meaning specified in Section 4.23.
"Environmental Permits" has the meaning specified in Section 4.23.
"ERISA" has the meaning specified in Section 4.17.
"Escrow Agent" has the meaning provided in the Escrow Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Financial Statements" means MDI' s consolidated balance sheet and the
related consolidated statements of operations, stockholder's equity and cash
flow as of and for the year ended December 31, 1997, and the one-month period
ended January 31, 1998, and includes the Latest Balance Sheet.
"GAAP" means generally accepted accounting principles.
"Guaranty" means, as to any Person, any contract, agreement or
understanding of such Person pursuant to which such Person guarantees the
indebtedness, liabilities or obligations of others, directly or indirectly, in
any manner, including agreements to purchase such
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indebtedness, liabilities or obligations, or to supply funds to or in any
manner invest in others, or to otherwise assure the holder of such
indebtedness, liabilities or obligations against loss.
"Hazardous Substances" has the meaning specified in Section 4.23.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1 976,
as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" has the meaning specified in the definition of Assumed Debt.
"IRS" means the Internal Revenue Service.
"Knowledge" or "known" means, with respect to Stockholder and/or MDI, the
actual current knowledge of the executive officers of Stockholder, and with
respect to Buyer the executive officers of Buyer, in each case after limited
investigation.
"Latest Balance Sheet" means the consolidated balance sheet of MDI and its
Subsidiaries as of December 31, 1997.
"Licenses" has the meaning specified in Section 4.15.
"Liens" has the meaning specified in Section 2.1.
"Losses" has the meaning specified in Section 6.4.
"Material Adverse Change" with respect to a Person means, a material
adverse change in the financial condition, results of operations, assets,
liabilities, business or business prospects (it being understood that business
prospects shall exclude matters generally relating to the industry or economy
but not regulatory matters) of a Person and its Subsidiaries, taken as a whole.
"Material Adverse Effect" means an effect that is reasonably likely to
cause a Material Adverse Change.
"Material Agreements" has the meaning specified in Section 4.18.
"MDI Intellectual Property" has the meaning specified in Section 4.14(b).
"MDI Plans" has the meaning specified in Section 4.17.
"Obligations" has the meaning specified in the definition of Assumed Debt.
"Pension Plan" has the meaning specified in Section 4.17.
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"Person" means any natural person, corporation, limited liability company,
unincorporated organization, partnership, association, joint stock company,
joint venture, trust or government, or any agency or political subdivision of
any government, or any other entity.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Shares" means all of the issued and outstanding common stock, par value
$0.01 per share, of MDI.
"Subsidiary" of any Person means any Person, whether or not capitalized, in
which such Person owns, directly or indirectly, an equity or similar interests
of 50% or more, or any Person which may be controlled, directly or indirectly,
by such Person, whether through the ownership of voting securities, equity or
similar interests, by contract, or otherwise.
"Symbols" has the meaning set forth in Section 6.8.
"Tax Returns" means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of any Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Taxes" has the meaning specified in Section 4.21.
"Termination Date" has the meaning specified in Section 7.5.
"Welfare Plan" has the meaning specified in Section 4.17.
ARTICLE II
PURCHASE AND SALE
II.1 PURCHASE AND SALE OF THE SHARES. Upon the terms and subject to the
conditions of this Agreement, at the closing provided for in Section 2.3 (the
"Closing"), Stockholder shall sell, convey, assign, transfer and deliver to
Buyer, and Buyer shall purchase, acquire and accept from Stockholder, all right,
title and interest in and to the Shares, free of liens, encumbrances, security
interests, mortgages, pledges, claims, options, voting rights of others or
restrictions (other than those imposed under applicable securities laws) of any
kind or nature (collectively, "Liens").
II.2 SHARE CONSIDERATION. Upon the terms and subject to the conditions of
this Agreement, in consideration of the aforesaid sale, conveyance, assignment,
transfer and delivery of the Shares, Buyer shall pay to Stockholder in cash the
sum of $35,500,000, less the amount of Assumed Debt set forth on the Closing
Assumed Debt Schedule (the "Estimated Assumed
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Debt"), subject to post-Closing adjustment as provided in Section 2.6 (the
"Purchase Price"). The adjustments set forth in Sections 6.11 and 6.12 shall
also be deemed adjustments to the Purchase Price.
II.3 CLOSING. Unless this Agreement is terminated in accordance with its
terms, the consummation of the Transactions contemplated by this Agreement,
including the purchase and sale of the Shares hereunder (the "Transactions"),
shall take place at the headquarters offices of Stockholder as soon as
practicable, and in any event within three business days after the satisfaction
or waiver of the conditions precedent to the obligations of the parties set
forth in Article VII (the "Closing Date"), or on such other day and at such
other place as may be agreed to by the parties (the "Closing").
II.4 DELIVERIES BY STOCKHOLDER. Prior to or at the Closing, Stockholder
shall deliver or cause to be delivered to Buyer the following:
(a) a stock certificate or stock certificates representing the
Shares, duly endorsed or accompanied by stock powers duly executed in blank or
duly executed instruments of transfer with appropriate transfer stamps, if any,
affixed, and any other documents that are necessary to transfer title to the
Shares to Buyer, as contemplated hereby;
(b) the minute books, stock books, stock ledgers and corporate seals
of MDI and each of its Subsidiaries;
(c) the resignations referred to in Section 7.3(j); and
(d) all other documents, certificates, instruments or writings
required to be delivered by, Stockholder at or prior to the Closing pursuant
hereto or otherwise required in connection herewith.
II.5 DELIVERIES BY BUYER. Prior to or at the Closing, Buyer shall deliver
or cause to be delivered to Stockholder the following:
(a) cash in an amount equal to the Purchase Price (without giving
effect to the Purchase Price Adjustment) less $300,000 (the "Holdback Amount")
to be held by Buyer until the final resolution of the Purchase Price Adjustment
contemplated by Section 2.6 and which shall be credited against any amounts owed
by Stockholder to Buyer under Section 2.6(e) or added to any amounts owed by
Buyer to Stockholder under Section 2.6(e), as the case may be, by wire transfer
of immediately available funds to a bank account designated in writing by
Stockholder at least three business days prior to the Closing Date; and
(b) all other documents, certificates, instruments or writings
required to be delivered by Buyer at or prior to the Closing pursuant hereto or
otherwise required in connection herewith.
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II.6 POST-CLOSING ADJUSTMENT.
(a) PREPARATION OF PRELIMINARY STATEMENT OF WORKING CAPITAL. As soon
as reasonably practicable after the Closing Date (but not later than sixty (60)
days thereafter), Buyer will prepare a consolidated balance sheet of MDI and its
consolidated Subsidiaries as of the Closing Date (the "PRELIMINARY CLOSING
BALANCE SHEET") setting forth the Assumed Debt as of the Closing Date (the
"Closing Assumed Debt") and, based upon such Preliminary Closing Balance Sheet,
a statement of consolidated working capital of MDI and its consolidated
Subsidiaries (the "PRELIMINARY STATEMENT OF WORKING CAPITAL") setting forth the
Closing Working Capital. For purposes of this Agreement, "CLOSING WORKING
CAPITAL" shall be equal to (i) consolidated accounts receivable and other assets
included under the caption "other current assets" on the Preliminary Closing
Balance Sheet (excluding any intercompany receivables or other intercompany
current assets which shall be eliminated pursuant to Section 5.9) less (ii)
consolidated current liabilities (excluding current maturities of Obligations)
in each case, as of the Closing Date. The Preliminary Closing Balance Sheet
shall be prepared in accordance with GAAP on a basis consistent with the
Financial Statements.
(b) REVIEW OF PRELIMINARY CLOSING BALANCE SHEET. If either the
Closing Assumed Debt or the Closing Working Capital would result in an
adjustment in the Purchase Price in accordance with this Section 2.6, Buyer
shall deliver the Preliminary Closing Balance Sheet and the Preliminary
Statement of Working Capital to Stockholder promptly upon its completion. Each
of the Preliminary Closing Balance Sheet and the Preliminary Statement of
Working Capital shall be binding and conclusive upon, and deemed accepted by,
Stockholder if timely delivered by Buyer unless Stockholder shall have notified
Buyer in writing of any objections thereto consistent with the provisions of
this Section 2.6 within sixty (60) days after receipt thereof. The written
notice under this Section 2.6 shall specify in reasonable detail each item on
the Preliminary Closing Balance Sheet and/or the Preliminary Statement of
Working Capital that Stockholder disputes, and a summary of Stockholder's
reasons for such dispute. The parties and their employees, officers, directors,
agents and counsel shall cooperate with one another and provide access and
assistance to one another in connection with the matters contemplated in this
Section 2.6.
(c) DISPUTES. Disputes between Buyer and Stockholder relating to the
Preliminary Closing Balance Sheet and/or the Preliminary Statement of Working
Capital that cannot be resolved by Buyer and Stockholder within thirty (30) days
after receipt by Buyer of the notice referred to in Section 2.6(b) may be
referred thereafter for decision at the insistence of either party to Price
Waterhouse LLP. If Price Waterhouse LLP is unavailable, then Buyer and
Stockholder shall select an independent nationally recognized accounting firm to
decide the matter, Price Waterhouse LLP or such other firm being referred to
herein as the "AUDITOR"). Each of the parties agrees not to select an
accounting firm to review disputed items pursuant to this Section 2.6(c) if, at
the time of selection, either buyer, Stockholder, MDI or any of their respective
Affiliates currently uses or employs or contemplates retaining such accounting
firm, within one year year after such date, for any substantial engagement
having a purpose other than the performance of services pursuant to this Section
2.6(c). The Auditor's decision on any
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matter referred to it shall be rendered within thirty (30) days of its
referral and shall be final and binding on Stockholder and Buyer. The fee of
the Auditor (and any related legal fees and expenses) shall be borne by Buyer
and Stockholder in such proportions as are determined by comparing the
Purchase Price Adjustment as determined by each such party in relation to the
Purchase Price Adjustment as determined by the Auditor.
(d) FINAL STATEMENT OF WORKING CAPITAL. The Preliminary Closing
Balance Sheet and the Preliminary Statement of Working Capital shall become
final and binding upon the parties upon the earlier of (i) the failure by
Stockholder to object thereto within the period permitted under Section 2.6(b),
(ii) the agreement between Buyer and Stockholder with respect thereto and (iii)
the decision by the Auditor with respect to any disputes under Section 2.6(c).
The Preliminary Closing Balance Sheet and the Preliminary Statement of Working
Capital, as adjusted pursuant to the agreement of the parties or the decision of
the Auditor, when final and binding are referred to herein as the "FINAL CLOSING
BALANCE SHEET" and the "FINAL STATEMENT OF WORKING CAPITAL," respectively.
(e) ADJUSTMENT TO THE PURCHASE PRICE. As soon as practicable (but
not more than five (5) business days) after the determination and delivery of
the Final Closing Balance Sheet and the Final Statement of Working Capital in
accordance with this Section 2.6, (i) if the Estimated Assumed Debt is less than
the Closing Assumed Debt on the Final Closing Balance Sheet, then there shall be
an immediate downward adjustment to the Purchase Price payable by Stockholder to
Buyer in an amount equal to such deficiency PLUS the amount, if any, by which
the Closing Working Capital as reflected in the Final Statement of Working
Capital is less than $5,559,000 (the "Working Capital Difference") or (ii) if
the Estimated Assumed Debt is greater than the Closing Assumed Debt, then (A)
there shall be an immediate upward adjustment to the Purchase Price payable by
Buyer to Stockholder in an amount equal to such excess MINUS the Working Capital
difference (if any), or (B) if the amount resulting from the calculation set
forth in clause (ii)(A) of this Section 2.6(e) is a negative number, there shall
be an immediate downward adjustment to the Purchase Price payable by Stockholder
to Buyer in an amount equal to the Working Capital Difference MINUS the amount
by which the Estimated Assumed Debt is greater than the Closing Assumed Debt (in
each case, the "Purchase Price Adjustment"). Any amounts payable under this
Section 2.6(e) after taking into account the Holdback Amount shall be payable by
wire transfer of immediately available funds to the bank designated by Buyer or
Stockholder, as the case may be, within three (3) business days after delivery
of the final Closing Balance Sheet and the Final Statement of Working Capital.
(f) PAYMENT. All payments required to be made pursuant to this
Section 2.6 shall be paid by the Stockholder to the Buyer together with any and
all interest thereon at a rate per annum of 7 percent and accruing from the
Closing Date to the date of payment. Any payment under this Section 2.6 shall
offset any indemnification obligations of the Seller hereunder to the extent the
claim for such indemnification relates to matters pertaining to the purchase
price adjustment contemplated by this Section 2.6, but only to the extent of
such adjustment.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Stockholder to enter into this Agreement and to consummate the
Transactions, Buyer makes the representations and warranties set forth below to
Stockholder.
III.1 ORGANIZATION; AUTHORITY. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation. Buyer has the corporate authority to own or lease and operate
its properties and conduct its business as presently conducted. Buyer has the
corporate power and authority to execute, deliver and perform this Agreement.
III.2 AUTHORIZATION, ENFORCEABILITY. The execution, delivery and
performance of this Agreement by Buyer and the consummation by Buyer of the
Transactions have been duly authorized, all requisite corporate action. The
execution, delivery and performance of this Agreement by Buyer does not require
the approval of Buyer's stockholders. This Agreement has been duly executed and
delivered by Buyer and constitutes the legal, valid and binding obligation of
Buyer, enforceable against it in accordance with its terms, except to the extent
that its enforcement is limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of creditors' rights
generally, and by general principles of equity.
III.3 NO VIOLATION OR CONFLICT. The execution, delivery and
performance by by Buyer of this Agreement and the consummation by Buyer of the
Transactions: ( a) do not and will not violate or conflict with any provision of
law or any regulation, or any writ, order, judgment or decree of any court or
governmental or regulatory authority specifically naming Buyer or any of its
Subsidiaries (other than where such occurrence would not prohibit Buyer from
consummating the Transactions on or prior to the Termination Date), or any
provision of Buyer's certificate of incorporation or bylaws; and (b) do not and
will not, with or without the passage of time or the giving of notice, result in
the breach of, or constitute a default, cause the acceleration of performance,
or require any consent, authorization or approval under, or result in the
creation of any Lien upon any property or assets of Buyer pursuant to any
instrument or agreement to which Buyer is a party or any of its assets are bound
(other than where such occurrence would not prohibit Buyer from consummating the
Transactions on or prior to the Termination Date).
III.4 CONSENT OF GOVERNMENTAL AUTHORITIES. Except as set forth on
Schedule 3.4 and other than in connection with the HSR Act, the Exchange Act,
any applicable state securities laws, no consent, approval or authorization of,
or registration, qualification or filing with any federal, state, local or
foreign governmental or regulatory authority is required to be made by Buyer in
connection with the execution, delivery or performance by Buyer of this
Agreement or the consummation by Buyer of the Transactions, except where the
failure to obtain such consent, approval or authorization or to make such
registration, qualification or filing would not prevent Buyer from consummating
the Transactions on or prior to the Termination Date. Buyer knows
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of no reason why any of the consents, approvals or authorizations set forth
in this Section 3.4 or on Schedule 3.4 would not be granted.
III.5 LEGAL PROCEEDING. Neither Buyer nor any of its Subsidiaries
is a party to any pending or, to the knowledge of Buyer, threatened, legal,
administrative or other proceeding, arbitration or investigation, that would
hinder Buyer in consummating the Transactions on or prior to the Termination
Date. To Buyer's knowledge, neither Buyer nor any of its Subsidiaries is
subject to any order, injunction or other judgment of any court or
governmental authority that would hinder Buyer in consummating the
Transactions on or prior to the Termination Date.
III.6 BROKERS. Buyer has not employed any financial advisor, broker or
finder and has not incurred and will not incur any broker's, finders, investment
banking or similar fees, commissions or expenses, in connection with the
Transactions.
III.7 INVESTMENT INTENT. Buyer is acquiring the Shares for its own
account and not with a view to the distribution thereof.
III.8 AVAILABILITY OF FUNDS. Buyer will have cash available which is
sufficient to enable it to pay the Purchase Price and to consummate the
Transactions.
III.9 DISCLOSURE. No representation or warranty of Buyer contained in
this Agreement or the Schedules, and no certificate or notice furnished by or on
behalf of Buyer contains or will contain any untrue statement of a material fact
or omits to state a fact necessary in order to make the statements contained
herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
To induce Buyer to enter into this Agreement and to consummate the
Transactions, Stockholder makes the representations and warranties set forth
below to Buyer. Notwithstanding anything to the contrary set forth herein, the
parties expressly agree that any representation or warranty (other than the
representation and warranty set forth in Section 4.6) made by Stockholder or MDI
herein or in any agreement or document executed in connection herewith that
pertains to any period prior to the Acquisition Date shall be deemed to be made
subject to Stockholder's and MDI's knowledge.
IV.1 ORGANIZATION; AUTHORITY FOREIGN QUALIFICATION. Each of Stockholder,
MDI and MDI's corporate Subsidiaries is a corporation duly, organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Each of MDI's partnership Subsidiaries is a general or limited
partnership, as applicable, duly organized and validly existing under the laws
of its state of organization. Each of MDI and its Subsidiaries is duly
qualified to transact business as a foreign corporation or partnership, as
applicable, in all jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a Material Adverse
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Effect on MDI. Each jurisdiction in which MDI or any of its Subsidiaries is
qualified to transact business as a foreign corporation or partnership, as
applicable, is listed on Schedule 4.1. Other than those jurisdictions listed
on Schedule 4.1, there are no jurisdictions in which any of MDI or any of its
Subsidiaries owns or leases property (real or personal), has offices or
employees or maintains inventory. Each of MDI and its Subsidiaries has the
corporate or partnership authority, as applicable, to: (a) own or lease and
operate its properties; and (b) conduct its business as presently conducted.
Each of Stockholder and MDI has the corporate power and authority to execute,
deliver and perform this Agreement. Stockholder has heretofore delivered to
Buyer complete and correct copies of the certificate of incorporation and
by-laws of Stockholder, MDI and its Subsidiaries as each is currently in
effect.
IV.2 AUTHORIZATION; ENFORCEABILITY. The execution, delivery and
performance of this Agreement by Stockholder and MDI and the consummation by
them of the Transactions have been duly authorized by all requisite corporate
action. The execution, delivery and performance of this Agreement by
Stockholder and MDI and the consummation by them of the Transactions does not
require the approval of Stockholder's stockholders. This Agreement has been
duly executed and delivered by Stockholder and MDI, and constitutes the legal,
valid and binding obligation of Stockholder and MDI, enforceable against them in
accordance with its terms, except to the extent that its enforcement is limited
by bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally and by general principles of
equity.
IV.3 NO VIOLATION OR CONFLICT. The execution, delivery and performance by,
Stockholder and MDI of this Agreement and the consummation by Stockholder and
MDI of the Transactions: (a) do not and will not violate or conflict with any
provision of law or regulation, or any writ, order, judgment or decree of any
court or governmental or regulatory authority specifically naming Stockholder or
MDI or any of their respective Subsidiaries, or any provision of Stockholder's
or MDI's certificate of incorporation or bylaws; and (b) do not and will not,
with or without the passage of time or the giving of notice, result in the
breach of, or constitute a default, cause the acceleration of performance, or
require any consent, authorization or approval under, or result in the creation
of any Lien upon any property or assets of Stockholder or MDI or any of MDI's
Subsidiaries pursuant to any Material Agreement, except for consents required
under Material Agreements listed on Schedule 4.3, all of which shall have been
obtained by Stockholder on or prior to the Closing Date without any significant
cost or adverse effect, and except where the same would not have a Material
Adverse Effect on MDI.
IV.4 CONSENT OF GOVERNMENTAL AUTHORITIES. Except as set forth on Schedule
4.4 and except in connection with the HSR Act, the Exchange Act, any applicable
state securities laws, no consent approval or authorization of, or registration,
qualification or filing with any federal, state or local governmental or
regulatory authority is required to be made by Stockholder or MDI in connection
with the execution, delivery or performance by Stockholder and MDI of this
Agreement or the consummation by them of the Transactions, except where the
failure to obtain such consent, approval or authorization or to make such
registration, qualification or filing would not have a Material Adverse Effect
on MDI and its Subsidiaries or materially hinder MDI or
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Stockholder in consummating the Transactions on or prior to the Termination
Date. Neither Stockholder nor MDI knows of any reason any of the material
consents, approvals or authorizations set forth in this Section 4.4 or
Schedule 4.4 would not be granted.
IV.5 HEALTH CARE PROVIDERS. To Stockholder's knowledge, all physicians,
technologists and other personnel retained or employed by MDI or its
Subsidiaries maintain in good standing all staff memberships, licenses,
credentials and other similar affiliations necessary or desirable for their
current provision of services on behalf of MDI and its Subsidiaries, except
where failure to do so would not have a Material Adverse Effect.
IV.6 FINANCIAL STATEMENTS. (a) The Financial Statements, as of the dates
thereof and for the periods covered thereby, present fairly, in all material
respects, the financial position, results of operations and cash flows of MDI
and its Subsidiaries. Except as otherwise noted in Schedule 4.6, the Financial
Statements were prepared in conformity with GAAP applied on a consistent basis,
subject to year-end adjustments and a lack of footnotes for interim Financial
Statements. Other than as disclosed by the Financial Statements or on Schedule
4.18, neither MDI nor any of its Subsidiaries has any liabilities, commitments
or obligations (which could be material to any of them on a consolidated basis)
of any nature whatsoever whether accrued, contingent or otherwise (other than
liabilities, commitments or obligations incurred since December 31, 1997 in the
ordinary course of business consistent with past practices to Persons other than
Affiliates of Stockholder). MDI's accounts receivable, as set forth in the
Financial Statements, arose in the ordinary course of business.
(b) The consolidated sales, EBITDA and EBITDAR (as determined in
accordance with GAAP) of MDI and its Subsidiaries for the calendar month ended
February 28, 1998 shall not be materially less than the consolidated sales,
EBITDA and EBITDAR (as determined in accordance with GAAP consistently applied)
of MDI and its Subsidiaries for the calendar month ended January 31, 1998.
(c) MDI and each of its Subsidiaries shall make or commit to make all
of the capital expenditures and capital additions or betterments in accordance
with MDI's capital expenditure plan previously provided to Buyer and in
accordance with the plans regarding the Clifton, New York project.
(d) Except as set forth on the Closing Assumed Debt Schedule, neither
MDI nor any of its Subsidiaries will have, as of the Closing Date, any Assumed
Debt. The Closing Assumed Debt Schedule will be complete and correct in all
material respects and will set forth all Assumed Debt as of the Closing Date.
IV.7 COMPLIANCE WITH LAWS. MDI and its Subsidiaries (and the properties
held or used by them) are in compliance with all federal, state, local and
foreign laws, ordinances, regulations, judgments, rulings, orders and other
legal requirements applicable to them, their properties or their operations,
except where noncompliance would not have a Material Adverse Effect on MDI.
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IV.8 LEGAL PROCEEDING. Except asset forth in Schedule 4.8, neither MDI nor
any of its Subsidiaries, nor, to the extent relating to MDI or its Subsidiaries,
Stockholder or any of its other Affiliates, is a party to any pending or, to the
knowledge of Stockholder and MDI, threatened, legal, administrative or other
proceeding, arbitration or investigation. None of the proceedings, arbitrations
or investigations set forth in Schedule 4.8, are reasonably likely to have a
Material Adverse Effect on MDI and its Subsidiaries on a consolidated basis or
hinder Stockholder or MDI in consummating the Transactions on or prior to the
Termination Date. MDI is not subject to any order, injunction or other judgment
of any court or governmental authority.
IV.9 BROKERS. Neither Stockholder nor MDI has employed any financial
advisor, broker or finder and neither has incurred and neither will incur any
broker's, finder's, investment banking or similar fees, commissions or expenses
to any other party in connection with the Transactions contemplated by this
Agreement.
IV.10 ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth in
Schedule 4.10, since December 31, 1997: (a) each of MDI and its Subsidiaries
has conducted its businesses in the ordinary and usual course; (b) there has
been no Material Adverse Change with respect to MDI and its Subsidiaries; and
(c) neither MDI nor any of its Subsidiaries has engaged or agreed to engage in
any of the actions described in Section 5.1:(a) through (l), (n), (o), (p) (with
respect to workforce and operations), (q) and (r).
IV.11 TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule
4.11, there are no, and since December 31, 1997, there have been no, contracts,
Agreements or arrangements of any kind (including those relating to the sharing
of overhead, intercompany loans, the furnishing of services and the lease of
facilities) between any Affiliate of MDI, on the one hand, and MDI or any if its
Subsidiaries, on the other hand.
IV.12 CAPITALIZATION. The authorized capital stock of MDI consists of
1,000 Shares of which 100 shares of common stock par value $0.01 per share, are
issued and outstanding. All of the issued and outstanding Shares are owned
beneficially and of record by Stockholder, free and clear of any and all Liens.
Upon the delivery of the Shares in the manner contemplated by Section 2.4(a),
Buyer will acquire the beneficial and legal, valid and indefeasible title to
such Shares free and clear of any and all Liens. MDI has no treasury capital
stock. All shares of MDI's and each of its Subsidiaries' outstanding capital
stock have been duly authorized, are validly issued and outstanding, and are
fully paid and nonassessable, and are not subject to any preemptive rights. No
securities issued by MDI or any of its Subsidiaries from the date of its
incorporation were issued in violation of any statutory, contractual or common
law preemptive rights. There are no dividends or distributions which have
accrued or been declared but are unpaid on the capital stock of MDI or any of
its Subsidiaries. Except as set forth on Schedule 4.12, neither MDI nor any of
its Subsidiaries has declared or paid any dividends or distributions since the
Acquisition Date. All Taxes (including documentary stamp taxes) required to be
paid in connection with the issuance by MDI or any of its Subsidiaries of MDI's
and each of its Subsidiaries' capital stock have been paid. All authorizations
required to be obtained from or
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registrations required to be effected with any Person in connection with the
issuances of securities by MDI and each of its Subsidiaries from their
respective dates of incorporation have been obtained or effected and all
securities of MDI and its Subsidiaries have been issued in accordance with
the provisions of all applicable securities and other laws. All of the
outstanding securities of each of MDI's Subsidiaries are owned of recorded
and beneficially by either MDI or another of its Subsidiaries, free and clear
of all Liens, except as set forth on Schedule 4.12. Schedule 4.12 lists all
Subsidiaries of MDI, their jurisdictions of incorporation or organization,
the number shares of their respective capital stock or other equity interests
authorized, issued and outstanding. Except asset forth in Schedule 4.12,
neither MDI nor any of its Subsidiaries has any equity investment in any
other Person.
IV.13 RIGHTS, WARRANTS, OPTIONS. There are no outstanding: (a)
securities or instruments convertible into or exercisable for any of the capital
stock or other equity interests of MDI or any of its Subsidiaries issued by MDI
or any of its Subsidiaries or to which Stockholder or MDI or any of its
Subsidiaries is a party; (b) options, warrants, subscriptions or other rights to
acquire capital stock or other equity interests of MDI or any of its
Subsidiaries issued by Stockholder or MDI or any of its Subsidiaries; or (c)
commitments, agreements or understandings of any kind to which Stockholder or
MDI or any of its Subsidiaries is a party, including employee benefit
arrangements, relating to the issuance or repurchase by MDI or any of its
Subsidiaries of any capital stock or other equity interests of MDI or any of its
Subsidiaries, any such securities or instruments convertible into or exercisable
for capital stock or other equity interests of MDI or any such options, warrants
or rights. Each of the terms referenced in the foregoing sentence is
hereinafter referred to as "Options."
IV.14 PROPERTIES.
(a) REAL AND TANGIBLE PERSONAL PROPERTY. Except as set forth on
Schedule 4.14(a), MDI or its Subsidiaries has valid title to all properties,
interests in properties and assets (real and personal) reflected in the Latest
Balance Sheet (except properties, interests in properties and assets sold or
otherwise disposed of since the date of the Latest Balance Sheet in the ordinary
course of business to Persons other than Affiliates of MDI consistent with past
practices), free and clear of all Liens, except the Lien of current taxes not
yet due and payable. Schedule 4.14(a) hereof lists each piece of real property
owned, leased or utilized by MDI and/or its Subsidiaries, including the location
thereof and the use to which it is put by MDI and/or any of its Subsidiaries.
Each of the leases under which the real properties of MDI and its Subsidiaries
are leased is unmodified and in full force and effect and there are no
agreements between Stockholder, MDI or any of their respective Subsidiaries and
any third parties claiming an interest in MDI's or its Subsidiaries' interest in
the leased property occupied by MDI or its Subsidiaries or otherwise affecting
its use and occupancy thereof. Neither MDI nor any of its Subsidiaries is in
default under any of such leases and no defaults (whether or not subsequently
cured) by MDI or its Subsidiaries have been alleged thereunder. To the best of
MDI's and Stockholder's knowledge, each lessor named in any of such leases is
not in default thereunder, and no defaults by such lessor have been alleged
thereunder and are continuing. Schedule 4.14(a) also sets forth, with respect
to each lease (capitalized or otherwise) to which MDI or any
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of its Subsidiaries is a party which is a Material Agreement: (i) the parties
to such lease; (ii) the property covered by such lease; (iii) a schedule of
payments payable under such lease (both throughout the term of the lease and
at the end of the lease); (iv) whether MDI or any of its Subsidiaries has any
rights or obligations to acquire any property which is subject to such lease
and he price and terms thereof; (v) the term of such lease; and (vi) any
options which MDI or any of its Subsidiaries may have to extend the term of
such lease. Set forth on Schedule 4.14(a) is a list of the five largest
lessors of equipment (measured by dollar volume) to MDI and its Subsidiaries
during the fiscal year ended December 31, 1997, and with respect to each, the
name and address and the dollar volume involved.
(b) INTELLECTUAL PROPERTY RIGHTS. MDI or one of its Subsidiaries
owns, or is licensed or otherwise entitled to use, all patents, trademarks,
trade names, service marks, copyrights and applications for any of the
foregoing, together with all other technology, know-how, tangible or intangible
proprietary information or material and formulae in the countries to which such
apply, that are material to the business of MDI and its Subsidiaries as
currently conducted (the "MDI Intellectual Property"), all of which are set
forth on Schedule 4.14(b). Except as disclosed on Schedule 4.14(b), no claims
have been asserted in writing to MDI or any of its Subsidiaries or, to the
knowledge of Stockholder or MDI, otherwise asserted or threatened, by any
Person: (i) to the effect that the MDI Intellectual Property infringes on any
intellectual property rights of any other Person; (ii) against the use by MDI or
any of its Subsidiaries of any of the MDI Intellectual Property; or (iii)
challenging or questioning the validity or effectiveness of any of the MDI
Intellectual Property. All registered trademarks and copyrights listed on
Schedule 4.14(b) are valid and subsisting.
IV.15 GOVERNMENTAL AUTHORIZATIONS. MDI and its Subsidiaries have in
full force and effect and is in compliance with all authorizations, consents,
approvals, franchises, licenses, certificates of need, determinations of need
and permits required under applicable law or regulation (collectively, referred
to as "Licenses") for the ownership of MDI's and its Subsidiaries' properties
and operation of their businesses as presently operated except where the failure
to have the same would not have a Material Adverse Effect on MDI, except that
certificates of need and determinations of need shall be deemed material.
Except as set forth on Schedule 4.15, the execution, delivery and performance by
Stockholder and MDI of this Agreement and the consummation by them of the
Transactions do not and will not have a Material Adverse Effect on any of MDI's
Licenses.
IV.16 INSURANCE. Schedule 4.16 sets forth a list and description of
all insurance policies existing as of the date hereof providing insurance
coverage of any nature to MDI or any of its Subsidiaries. Furthermore: (a) none
of MDI or any of its Subsidiaries is in default under any such policies and
there is no inaccuracy in any application for any such policies; (b) each of
MDI's and its Subsidiaries' activities and operations have been conducted in a
manner so as to conform in all material respects to the applicable provisions of
such policies; (c) all premiums and other charges under each such policy shall
have been paid though the Closing Date and none of Stockholder, MDI nor any of
their respective Subsidiaries has received written notice of cancellation or
non-renewal with respect to any such policy; and (d) timely notice has been
given
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of any and all claims under all such policies. Schedule 4.16 also lists all
risks for which MDI and its Subsidiaries are self-insured. MDI and its
Subsidiaries have not, during the past two years, been refused insurance
coverage by any company, nor have any of them had insurance coverage offered
to them at unreasonably high premiums or with limited coverage.
IV.17 EMPLOYMENT MATTERS.
(a) LABOR UNIONS. None of the employees of MDI or any of its
Subsidiaries is represented by any labor union, and neither MDI nor any of its
Subsidiaries is subject to any labor or collective bargaining agreement. None
of the employees of MDI or any of its Subsidiaries is known by Stockholder or
MDI to be engaged in organizing any labor union or other employee group that is
seeking recognition as a bargaining unit. Neither MDI nor any of its
Subsidiaries has had any strikes, work stoppages, slow down, lockouts or claims
of unfair labor practices for the past three years, and to the best knowledge of
the Stockholder and MDI, there exist no facts which could reasonably be expected
to lead thereto.
(b) EMPLOYMENT POLICIES. MDI has provided to Buyer written employee
policies, employee manuals or other written statements of rules or policies
concerning employment applicable to the employees of MDI and/or its
Subsidiaries.
(c) EMPLOYMENT AGREEMENTS. Except as set forth on Schedule 4.17(c),
there are no employment, consulting, severance or indemnification arrangements,
agreements, or understandings between MDI or any of its Subsidiaries and any of
their current or former employees, directors, officers or consultants.
(d) EMPLOYEE BENEFIT PLANS. Schedule 4.17(d) sets forth a complete
list of all pension, retirement, stock purchase, stock bonus, stock ownership,
stock option, profit sharing, savings, medical, disability, hospitalization,
insurance, deferred compensation, bonus, incentive, welfare or any other
employee benefit plan, policy, agreement, commitment, arrangement or practice
currently, or previously maintained or contributed to (or required to be
contributed to) by Stockholder, MDI or any of MDI's Subsidiaries for any of
their directors, officers, consultants, employees or former employees of MDI or
any of its Subsidiaries (the "MDI Plans"). Schedule 4.17(d) also identifies
each MDI Plan which constitutes an "employee pension benefit plan" ("Pension
Plan") or an "employee welfare benefit plan" ("Welfare Plan"), as such terms are
defined in the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). None of the MDI Plans is a "multiemployer plan," as such term is
defined in ERISA, or is subject to Title IV of ERISA. With respect to each MDI
Plan sponsored by MDI, either MDI or a Subsidiary has delivered or made
available to Buyer true and complete copies of the following: (i) the Plan
document; (ii) summary plan description of the MDI Plan; (iii) the trust
agreement, insurance policy or other instrument relating to the funding of the
MDI Plan; (iv) the most recent Annual Report (Form 5500 series) and accompanying
schedules filed with the IRS or Department of Labor with respect to the MDI
Plan; (v) the most recent annual financial statement for the MDI Plan; and (vi)
the most recent determination letter issued by the IRS with respect to the MDI
Plan that is intended to qualify under Section 401(a) of the Code.
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Each Pension Plan has been determined by the IRS to be qualified under
Section 401 (a) of the Code, and to Stockholder's and MDI's knowledge, no
facts or circumstances exist which could reasonably be expected to result in
the revocation of such qualification or result in a material sanction or
liability to MDI or its Subsidiaries under the Internal Revenue Service's
Employee Plans Compliance Resolution System (as described in Revenue
Procedure 98-22). Each Welfare Plan which is intended to meet the
requirements for tax-favored treatment under the Code to Stockholder's and
MDI's knowledge meets such requirements. Without limiting the generality of
Section 4.7, each MDI Plan has been administered in accordance with its terms
and the Code, and each Pension Plan and Welfare Plan has been administered in
all material respects in accordance with ERISA. Stockholder and MDI have
paid all amounts required under applicable law, any Pension Plan and any
Welfare Plan to be paid as a contribution or insurance premium to or with
respect to each Pension Plan and Welfare Plan through the date hereof. MDI
has set aside adequate reserves to meet contributions which are not yet due
under any Pension Plan or Welfare Plan. Neither MDI nor any of its
Subsidiaries, nor any other Person has engaged in any transaction or taken
any other action with respect to any MDI Plan which would subject MDI, any
Subsidiary, Buyer to: (a) any material Tax, penalty or liability for
prohibited transactions under ERISA or the Code; (b) any material Tax under
Code Sections 4971, 4972, 4976, 4977, 4979 4980B or 4980D; or (c) a material
penalty under ERISA Sections 502(c) or 502(1). None of Stockholder, MDI or
any of their respective Subsidiaries, to the extent it is a fiduciary with
respect to any Pension Plan or Welfare Plan, has breached any of its
responsibilities or obligations imposed upon fiduciaries under ERISA or the
Code or which could result in any claim being made under, by or on behalf of
any Pension Plan or Welfare Plan or any participant or beneficiary thereof
other than benefit claims in the ordinary course, in any such event which
could give rise to material liability to MDI or any of its Subsidiaries.
Each Welfare Plan which is a group health plan within the meaning of Code
Section 5000(b)(1) complies in all material respects with and in each and
every case has complied in all material respects with the applicable
requirements of Code Section 4980B and 4980D and Parts 6 and 7 of Title I of
ERISA. Except as set forth in Schedule 4.17(d), no MDI Plan, other than an
MDI Plan which is an employeepension benefit plan (within the meaning of
Section 3(2)(A) of ERISA), provides benefits, including death, health or
medical benefits (whether or not insured), with respect to current or former
employees of MDI and any of its Subsidiaries beyond their retirement or other
termination of service with any of MDI and any of its Subsidiaries, other
than coverage mandated by applicable law.
Neither Stockholder nor any other member of the same controlled group of
organizations as Stockholder (within the meaning of Section 414(b), (c), (m) or
(o) of the Code), other than MDI and its Subsidiaries, has taken any action or
failed to take any action, nor has any event occurred which has resulted or
could result in MDI or any of its Subsidiaries becoming subject to liability
under Title IV of ERISA or the minimum funding requirements of Section 412 of
the Code or Part 3 of Title I of ERISA.
The execution and delivery of this Agreement and consummation of the
transactions contemplated herein shall not, either alone or upon the occurrence
of any additional event,
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require any payment, acceleration, vesting, forgiveness of indebtedness,
increase in benefits or obligation to fund benefits with respect to any
current or former employee or consultant of MDI or its Subsidiaries, or
preclude the amendment or termination of any MDI Plan or employment or
consulting agreement covering such employees or consultants, in each event
with respect to an MDI Plan sponsored by MDI.
IV.18 MATERIAL AGREEMENTS. Schedule 4.18 sets forth a list of all
written and oral Agreements, leases (whether capitalized or otherwise),
arrangements or commitments to which either MDI or any of its Subsidiaries is a
party or by which it or any of the assets it owns, leases or utilizes is bound
which are expected to result in the receipt or payment of $50,000 or more by MDI
or any of its Subsidiaries or which are material to the financial position,
results of operations or prospects of MDI and its Subsidiaries on a consolidated
basis or to the ability of MDI to consummate the Transactions (the "Material
Agreements"). MDI has provided Buyer access to true and complete copies of all
Material Agreements. To Stockholder's and MDI's knowledge, the Material
Agreements are each in full force and effect and are the valid and legally
binding obligations of MDI or the applicable Subsidiary which is a party to same
and, to Stockholder's and MDI's knowledge, are valid and legally binding
obligations of the other parties thereto; and neither MDI nor any of its
Subsidiaries is in material breach or in default under any Material Agreement to
which it is a party. Except as set forth on Schedule 4.18, neither MDI nor any
of its Subsidiaries: (a) has any agreement, contract or commitment which
requires the making of any charitable contributions; (b) has any agreement,
contract or commitment which is not terminable without penalty, liability or
premium upon notice of 30 days or less; (c) has any agreement, contract or
commitment containing any severance, termination or similar provisions; (d) has
any outstanding obligation for borrowed money; (e) has any outstanding loan or
advance to any Person; (f) has any power of attorney outstanding; (g) has any
agreement, contract or commitment relating to joint ventures, partnerships or
debt or equity investments; (h) has any agreements, contracts or commitments
relating to non-competition or, non-disclosure, non-solicitation or other
similar restrictive covenants; (i) has any agreements, contracts or commitments
relating to the registration of any of MDI's securities; (j) has any agreement,
contract or commitment relating to the voting or other rights with respect to
any securities of MDI or any of its Subsidiaries; and (k) has any contract,
commitment or arrangement with any hospital, hospital management company, health
maintenance organization, insurance company:, third party payor or managed care
provider or company.
IV.19 LIST OF ACCOUNTS. Schedule 4.19 sets forth, as of the date
hereof: (a) the name and address of each bank or other institution in which MDI
or any of its Subsidiaries maintains an account (cash, securities or other) or
safe deposit box; (b) the name and phone number of MDI's contact person at such
bank or institution; (c) the account number of the relevant account and a
description of the type of account; and (d) the persons authorized to transact
business in such accounts.
IV.20 MAJOR CUSTOMERS. Set forth on Schedule 4.20 is a list of the 10
largest customers (measured by dollar volume) of MDI and its Subsidiaries for
the year ended September 30, 1997, and with respect to each, the name and
address, dollar volume involved and nature of the
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relationship. None of such customers of MDI and its Subsidiaries has: (a)
modified in any material respect, cancelled, suspended or otherwise
terminated its relationship with MDI or any of its Subsidiaries; or (b)
advised MDI or any of its Subsidiaries of its intention to modify in any
material respect, cancel, suspend or terminate its relationship with MDI or
any of its Subsidiaries, to significantly decrease its purchase of services
from MDI or any of its Subsidiaries, to change the nature of its business
relationship with MDI or any of its Subsidiaries or to change adversely the
terms upon which it purchases services from MDI or any of its Subsidiaries.
IV.21 TAXES. Except as set forth in Schedule 4.21: (a) there have been
timely filed (or shall timely be filed prior to the Closing Date) all Tax
Returns with respect to MDI and its Subsidiaries required to be filed with any
taxing authority with respect to Taxes for any period ending on or before the
Closing Date, taking into account any extension of time to file granted to or
obtained on behalf of MDI and its Subsidiaries; (b) all Taxes shown to be
payable on such returns or reports that are due prior to the Closing Date have
been paid or shall be paid (prior to the Closing Date), and all such returns or
reports accurately reflect the proper amount of Taxes payable for the applicable
periods; (c) no deficiency for any Tax has been asserted or assessed by a taxing
authority against or with respect to MDI or any of its Subsidiaries; (d) MDI and
each of its Subsidiaries have provided adequate reserves in the Latest Balance
Sheet for any Taxes that have not been paid, whether or not shown as being due
on any returns; (e) the income Tax Returns of MDI and each of its Subsidiaries
have never been audited and there are no pending actions or proceedings
regarding Taxes relating to MDI or any of its Subsidiaries; (f) none of MDI or
its Subsidiaries has waived any restrictions on assessment or collection of
Taxes or consented to the extension of any statute of limitations relating to
Taxes; and (g) neither MDI nor any of its Subsidiaries is a party to any
agreement, contract, arrangement or plan that would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Code Section 280G (or any comparable provision of state, local or foreign
law). As used in this Agreement, "Taxes" shall mean any and all taxes, fees,
levies, duties, tariffs, imposts and other charges of any kind (together with
any and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any government or taxing authority, including
taxes or other charges on or withrespect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation or
net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value-added or gains taxes; license, registration and
documentation fees; and customers' duties, tariffs and similar charges.
IV.22 GUARANTEES: POWERS OF ATTORNEY. Except as set forth on Schedule
4.22, neither MDI nor any of its Subsidiaries is a party to any Guaranty, and
none of them has executed any power of attorney or similar agreement.
IV.23 ENVIRONMENTAL MATTERS.
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(a) DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings: (i) "Hazardous Substances" means: (1) those
substances defined in or regulated under the following federal statutes and
their state counterparts, as each may be amended from time to time, and all
regulations thereunder, the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act, the Toxic Substances Control Act and the Clean Air Act; (2) petroleum and
petroleum products, byproducts and breakdown products including crude oil and
any fractions thereof; (3) natural gas, synthetic gas, and any mixtures thereof;
(4) polychlorinated biphenyls; (5) any other chemicals, materials or substances
defined or regulated as toxic or hazardous or as a pollutant or contaminant or
as a waste under any applicable Environmental Law; and (6) any substance with
respect to which a federal, state or local agency requires environmental
investigation, monitoring, reporting or remediation; and (ii) "Environmental
Laws" means any federal, state, foreign, or local law, rule or regulation now or
hereafter in effect and as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to pollution or protection of the environment,
health, safety or natural resources, including those relating to (1) releases or
threatened releases of Hazardous Substances or materials containing Hazardous
Substances or (2) the manufacture, handling, transport, use, treatment, storage
or disposal of Hazardous Substances or materials containing Hazardous
Substances.
(b) ENVIRONMENTAL STATUS. Except as described in Schedule 4.23: (i)
MDI and each of its Subsidiaries are and have been in compliance with all
applicable Environmental Laws; (ii) MDI and each of its Subsidiaries have
obtained all permits, approvals, identification numbers, licenses or other
authorizations required under any applicable Environmental Laws ("Environmental
Permits") and are and have been in compliance with their requirements; (iii)
such Environmental Permits do not, in connection with the Transactions, require
the consent or approval of, or any filing with or notice to, any governmental
authority; (iv) there are no underground or aboveground storage tanks or any
surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous
Substances are being or have been treated, stored or disposed of on any owned or
leased real property or on any real property formerly owned, leased or occupied
by, MDI or any of its Subsidiaries; (v) there is no asbestos or
asbestos-containing material on any owned or leased real property in violation
of applicable Environmental Laws; (vi) MDI and its Subsidiaries have not
released, discharged or disposed of Hazardous Substances at any real property
owned by any third party except in compliance with Environmental Laws or any
real property owned or leased or on any real property formerly owned or leased
by MDI or any of its subsidiaries and none of such property is contaminated with
any Hazardous Substances; (vii) neither MDI nor any of its Subsidiaries is
undertaking, and neither MDI nor any of its Subsidiaries has completed, any
investigation or assessment or remedial or response action relating to any such
release, discharge or disposal of or contamination with Hazardous Substances at
any site, location or operation, either voluntarily or pursuant to the order of
any governmental authority or the requirements of any Environmental Law; and
(viii) there are no past or pending or, to the knowledge of the Stockholder or
MDI, threatened actions, suits,
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demands, demand letters, claims, Liens,notices of non-compliance or
violation, notices of liability or potential liability, investigations,
proceedings, consent orders or consent agreements relating in any way to
Environmental Laws, any Environmental Permits or any Hazardous Substances
against MDI or any of its Subsidiaries or any of their property which are
outstanding or have been outstanding during the past two years, and there are
no circumstances that could be expected to form the basis for any of the
foregoing, MDI and its Subsidiaries have made available to Buyer copies of
any environmental reports, studies or analyses in its possession relating to
owned or leased real property or the operations of MDI or its Subsidiaries.
IV.24 1997 MERGER AGREEMENT. Without limiting the generality of any
representation, warranty, covenant or agreement set forth herein or made in
connection herewith, except as set forth on Schedule 4.24, Stockholder and MDI
each represent and warrant that they do not have knowledge that any of the
representations, warranties, covenants and agreements of any party set forth in
the Agreement and Plan of Merger, dated as of January 20, 1997, among
Stockholder, MDI Acquisition Corporation, MDI and Advanced NMR Systems, Inc.
(the "1997 Merger Agreement") were not true and correct in all respects as of
the date thereof or as of the Effective Time, as defined therein. Stockholder
and MDI represent and warrant that they do not have knowledge that any party to
the 1997 Merger Agreement has violated, or will violate as a result of the
execution, delivery and performance of this Agreement, any term, provision or
agreement set forth in the 1997 Merger Agreement or any agreement executed in
connection therewith. This Section 4.24 does not waive or affect any rights or
remedies that Stockholder has or may have against any Person under the 1997
Merger Agreement. All consideration payable to Persons who were stockholders of
record of MDI immediately prior to the Effective Time under the 1997 Merger
Agreement has been finally paid, and no dissenters' or appraisal rights were
asserted in connection with such transaction.
IV.25 DISCLOSURE. No representation or warranty of Stockholder
contained in this Agreement or the Schedules, and no certificate or notice
furnished by or on behalf of Stockholder or MDI to Buyer or its agents pursuant
to this Agreement, contains or will contain any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
IV.26 CERTAIN ADDITIONAL REGULATORY MATTERS. (a) None of MDI, any
Subsidiary of MDI, any Affiliate of MDI or any Subsidiary of MDI or the
officers, directors, or employees or agents of MDI, any Subsidiary of MDI, any
Affiliate of MDI or any Subsidiary of MDI (or Person having a direct or indirect
ownership interest in MDI or any MDI Subsidiary within the meaning of 42 U.S.
Section (S)1320a-7(b)(8)), and none of the Persons who provide professional
services under Agreements with MDI or any Subsidiary of MDI or any Affiliate of
MDI or any Subsidiary of MDI as agents of MDI or any Subsidiary of MDI, to the
knowledge of each such Person, have engaged in any activities which constitute
violations of, or are cause for imposition of civil penalties upon MDI or any
Subsidiary of MDI for mandatory or permissive exclusion of MDI or any Subsidiary
of MDI from Medicare or Medicaid, under (S) 1320a-7, 1320a-7b, or 1395m of Title
42 of the United States Code, the Federal Civilian Health and Medical Plan of
the Uniformed Services state ("CHAMPUS"), or the regulations promulgated
pursuant to such
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statutes or regulations or related state or local statutes or which
constitute violations of or deficiencies under the standards of any private
accrediting organization from which MDI or any Subsidiary of MDI is
accredited or seeks accreditation:
(i) knowingly and willfully making or causing to be made a false
statement or representation of a material fact in any application for any
benefit or payment;
(ii) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment;
(iii) presenting or causing to be presented a claim for
reimbursement under CHAMPUS, Medicare, Medicaid or any other State Health Care
Program or Federal Health Care Program that is (A) for an item or service that
the Person presenting or causing to be presented knows or should know was not
provided as claimed, or (B) for an item or service where the Person presenting
knows or should know that the claim is false or fraudulent;
(iv) knowingly and willfully offering, paying, soliciting or
receiving any remuneration (including any kickback, bribe or rebate), directly
or indirectly, overtly or covertly, in cash or in kind (i) in return for
referring, or to induce the referral of, an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by CHAMPUS, Medicare or Medicaid, or any
other State Health Care Program or any Federal Health Care Program, or (iii) in
return for, or ti induce, the purchase, lease or order, or the arranging for or
recommending of the purchase, lease or order, of any good, facility, service, or
item for which payment may be made in w hole or in party by CHAMPUS, Medicare or
Medicaid or any other State Health Care Program or any Federal Health Care
Program; or
(v) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omitting to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading) of
a material fact with respect to (i) the conditions or operations of a facility
in order that the facility may qualify for CHAMPUS, Medicare, Medicaid or any
other State Health Care Program certification or any Federal Health Care Program
certification, or (ii) information required to be provided under (S), 1124(A) of
the Social Security Act ("SSA") (42 U.S.C.(S) 132a-3).
(b) MDI has a Medicare provider number, and a participating provider
agreement in force with a Medicare Part B carrier, in each locale, as
applicable, in which MDI bills directly to Medicare for services furnished by
MDI and the Subsidiaries of MDI.
(c) MDI has a Medicaid number and a participating provide agreement
in each state, as applicable, in which MDI bills directly to such states,
Medicaid agency for services provided by MDI and the Subsidiaries of MDI.
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IV.27 MEDICARE/MEDICAID PARTICIPATION. None of MDI, any Subsidiary of
MDI, any Affiliate of MDI or any Subsidiary of MDI, or the officers or directors
of MDI or any Subsidiary of MDI who is expected to be an office, director, agent
(as defined in 42 C.F.R. (S) 1001.1001(a)(2)), or managing employee (as defined
in SSA (S) 1126(b) or any regulations promulgated thereunder) of MDI, any
Subsidiary of MDI or any Affiliate of MDI or any Subsidiary of MDI, to the
knowledge of each such Person: (1) has had a civil monetary penalty assessed
against him, her or it under (S) 1128A of the SSA or any regulations promulgated
hereunder; (2) has been excluded from participation under the Medicare program
or a state health care program as defined in SSA (S) 1128(h) or any regulations
promulgated thereunder ("STATE HEALTH CARE PROGRAM") or a federal health care
program as defined in SSA (S) 1128B(f) ("FEDERAL HEALTH CARE PROGRAM"); or (3)
has been convicted (as that term is defined in 42 C.F.R. (S) 1001.2) of any of
the following categories of offenses as described in SSA (S) 1128(a) and (b)(1),
(2), (3) or any regulations promulgated thereunder:
(i) criminal offenses relating to the delivery of an item or
service under Medicare or any State Health Care Program or any Federal Health
Care Program;
(ii) criminal offenses under federal or state law relating to
patient neglect or abuse in connection with the delivery of a health care item
or service;
(iii) criminal offenses under federal or state law relating
to fraud, theft, embezzlement, breach of fiduciary responsibility, or other
financial misconduct in connection with the delivery of a health care item or
service or with respect to any act or omission in a program operated by or
financed in whole or in party by any federal, state or local governmental
agency;
(iv) federal or state laws relating to the interference with or
obstruction of any investigation into any criminal offense; or
(v) criminal offenses under federal or state law relating to the
unlawful manufacture, distribution, prescription or dispensing of a controlled
substance.
IV.28 PHYSICIAN RELATIONSHIPS. Except as set forth in SCHEDULE 4.28.
neither MDI nor any Subsidiary of MDI has any "financial relationship" with any
"referring physician" or an immediate family member of such physician, within
those terms' meanings under 42 U.S.C. Section 1395nn.
IV.29 OTHER HOSPITAL RELATIONSHIPS. Except as set forth in SCHEDULE
4.29, other than with respect to reading radiologists, neither MDI nor any
Subsidiary of MDI has any lease or other arrangement with any hospital or other
Person whereby MDI or any Subsidiary of MDI pays to or receives from the
hospital or other Person rent or any other fee the amount of which is dependent
in whole or in part on the gross or net revenues, net income, or cash flow of
MDI or any Subsidiary of MDI.
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ARTICLE V
COVENANTS
During the period from the date of this Agreement to the Closing Date or
the Termination Date, Stockholder agrees to cause MDI to perform all of MDI's
covenants and agreements in this Article V and Buyer agrees to perform all of
their covenants and agreements in this Article V, all as follows:
V.1 INTERIM OPERATIONS OF MDI. MDI shall operate its business only in the
ordinary and usual course consistent with past practices and shall use its best
efforts to preserve intact its business organization and the goodwill of its
customers, suppliers, employees and others having business relations with it and
to continuously maintain insurance coverage substantially equivalent to the
insurance coverage in existence on the date hereof. In addition, without
limiting the foregoing, except as may be contemplated in, or disclosed in
Schedule 5.1 or any other Schedule, without the written consent of Buyer, which
shall not be unreasonably withheld, MDI and each of its Subsidiaries shall not:
(a) amend its articles or certificate of incorporation or bylaws or other
organizational documents; (b) issue, sell or authorize for issuance or sale,
shares of any class of its securities (including by way of stock split or
dividend) or other equity interests or any subscriptions, options, warrants,
rights or convertible securities, or enter into any agreements or commitments of
any character obligating it to issue or sell any such securities or other equity
interests; (c) redeem, purchase or otherwise acquire, directly or indirectly,
any shares of its capital stock or other equity interests or any option, warrant
or other right to purchase or acquire any such shares or equity interests; (d)
declare or pay any dividend or other distribution (whether in cash, stock or
other property) with respect to its capital stock or other equity interests
except that cash dividends and cash distributions may be made to the extent of
cash on hand; (e) voluntarily sell, transfer, surrender, abandon or dispose of
any of its assets or property rights (tangible or intangible), other than
dispositions in the ordinary course of business consistent with past practices,
which could not have a Material Adverse Effect on MDI, (f) grant or make any
mortgage or pledge or subject itself or any of its properties or assets to any
Lien, except Liens for taxes not currently due or Liens nt exceeding $50,000 in
the aggregate; (g) create, incur or assume any liability or any Obligations, or
become obligated in respect of any operating leases, in each event except as
disclosed on Schedule 5.1, or cancel any debts or waive any claims or rights in
an aggregate amount in excess of $50,000; (h) make or commit to make any capital
expenditures in excess of $50,000 in the aggregate; (i) grant any increase in
the compensation payable or to become payable to directors, officers or
employees (including any such increase pursuant to any MDI Plan or otherwise),
other than merit increases to officers and employees in the ordinary course of
business and consistent with past practices, but in no event to exceed $50,000
in the aggregate; (j) enter into any agreement, arrangement or commitment that,
if it existed on the date hereof, would be a Material Agreement, or amend or
terminate any of same or any existing Material Agreement, or enter into,
terminate or modify any contract, agreement or arrangement with Stockholder or
any Affiliate thereof (except to the extent expressly contemplated hereby); (k)
alter the manner of keeping its books, accounts or records,
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or change in any manner the accounting practices (including those relating to
amortization and depreciation) therein reflected; (1) enter into any material
commitment or transaction other than in the ordinary course of business
consistent with past practices; (m) intentionally breach any representation,
warranty or consent; (n) write off the value of any inventory or accounts
receivable or increase the reserve for uncollectible receivables or obsolete,
damaged or otherwise unsalable inventory, except as required by GAAP
consistently applied or by law, or discount, factor, sell or otherwise
transfer any account receivable; (o) approve any increase in the benefits
payable under, or establish any new MDI Plan; (p) take any action which is
reasonably likely to have a Material Adverse Effect on MDI, or materially
hinder MDI in consummating the Transactions on or pior to the Termination
Date, or reduce or downsize its operations, reduce its work force or
eliminate any operations; (q) make any Guaranty; (r) apply any of its assets
to the direct or indirect payment, discharge, satisfaction or reduction of
any amount payable directly or indirectly (i) to or for the benefit of any
Affiliate of MDI or any of its Subsidiaries (except for salary and benefits
as currently in effect and except in accordance with existing agreements and
arrangements) or (ii) to any Person, except in the ordinary course of
business consistent with past practices; (s) not (i) delay or postpone the
payment of accounts payable, accrued expenses or other obligations or
liabilities for a period of in excess of 45 days after their contractually
stated due date, (ii) accelerate (whether by the offer of discounts, rebates
or otherwise) the collection of any accounts receivable, or (iii) make any
payments for the benefit of Stockholder or any of its Subsidiaries (other
than MDI) or (iv) make any payments in respect of transaction expenses
incurred in connection with the negotiation, execution and delivery of this
Agreement and documents and agreements executed in connection herewith and
the transactions contemplated hereby and thereby (including in connection
with satisfying the conditions precedent in Article VII hereof); or (t)
agree, whether in writing or otherwise, to do any of the foregoing.
Stockholder shall use its best efforts not take or omit to take any action
which would render any of its representations or warranties herein untrue or
misleading or which would be a breach of any of any of its covenants herein.
V.2 ACCESS. MDI shall: (a) afford to Buyer and its agents and
representatives reasonable access to the properties, books, records and other
information of MDI and its Subsidiaries, provided that such access shall be
granted upon reasonable notice and at reasonable times during normal business
hours; (b) use its reasonable efforts to cause MDI's personnel to assist Buyer
in its investigation of MDI and its Subsidiaries pursuant to this Section 5.2;
and (c) furnish promptly to Buyer all information and documents concerning the
business, assets, liabilities, properties and personnel of MDI and its
Subsidiaries as Buyer may from time to time reasonably request. In addition,
from the date of this Agreement until the Closing Date, MDI shall cause one or
more of its officers to confer on a regular basis with officers of Buyer and to
report on the general status of the ongoing operations of MDI and its
Subsidiaries.
V.3 CONFIDENTIALITY. Except as otherwise required by law or in the
performance of obligations under this Agreement, any nonpublic information
received by a party or its advisors, agents or representatives from the other
party shall be kept confidential and shall not be used or disclosed for any
purpose other than in furtherance of the Transactions. The obligation of
confidentiality shall not extend to information which: (a) is or becomes
generally, available to
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the public other than as a result of a disclosure by a party in violation of
this Agreement; (b) was in the lawful possession of a party prior to its
receipt from the other party; or (c) becomes available to a party on a
nonconfidential basis from a source other than a party to this Agreement,
provided such source is not known to be in violation of a confidentiality
agreement. Upon termination of this Agreement, each party shall, upon
request, promptly return or destroy any confidential information received
from the other party. The covenants of the parties contained in this Section
5.3 shall survive any termination of this Agreement but shall terminate at
the Closing, if it occurs, with respect to information concerning MDI and its
Subsidiaries.
V.4 NOTIFICATION. Stockholder and MDI shall promptly notify Buyer in
writing of the occurrence, or threatened occurrence, of its obtaining knowledge
of: (a) any event that would constitute a breach of this Agreement by
Stockholder or MDI or could be expected to have a Material Adverse Effect on
Stockholder and MDI or on their ability to consummate the Transactions on or
prior to the Termination Date; (b) any event that would cause any representation
or warranty made by Stockholder and MDI in this Agreement to be false or
misleading in any material respect; (c) any other matter which occurs after the
date of this Agreement which, if existing on the date of this Agreement, would
have been required to be disclosed herein; PROVIDED, HOWEVER, that the delivery
of any notice under this Section 5.4 shall not cure any breach of any provision
of this Agreement or otherwise limit or affect the remedies available to the
Buyer; (d) any notice from any governmental or regulatory authority relating to
the Transactions; and (e) any notice or communication from any Person suggesting
that any notice, consent, filing or similar item is necessary to consummate the
Transactions. Buyer shall promptly notify Stockholder in writing of the
occurrence or threatened occurrence, of its obtaining knowledge of: (a) any
event that would constitute a breach of this Agreement by Buyer or could be
expected to have a Material Adverse Effect on Buyer or on its ability to
consummate the Transactions on or prior to the Termination Date; (b) any event
that would cause any representation or warranty made by Buyer in this Agreement
to be false or misleading in any material respect; (c) any other matter which
occurs after the date of this Agreement which, if existing on the date of this
Agreement, would have been required to be disclosed herein; PROVIDED, HOWEVER,
that the delivery of any notice under this Section 5.4 shall not cure any breach
of any provision of this Agreement or otherwise limit or affect the remedies
available to the Stockholder; (d) any notice from any governmental or regulatory
authority relating to the Transactions; and (e) any notice or communication from
any Person suggesting that any notice, consent, filing or similar item is
necessary to consummate the Transactions. Buyer will provide to Stockholder
true and complete copies of all reports or notices to and other communications
with any governmental or regulatory authority relating to Buyer between the date
of this Agreement and the Closing Date. MDI will provide to Buyer true and
complete copies of all reports or notices to and other communications with any
governmental or regulatory authority relating to MDI between the date of this
Agreement and the Closing Date.
V.5 CONSENT OF GOVERNMENTAL AUTHORITIES AND OTHERS. Each of Buyer,
Stockholder and MDI agrees to file, submit or request promptly after the date of
this Agreement and to prosecute diligently any and all consents, approvals,
authorizations, registrations, qualifications, filings, applications and notices
appropriate for filing or submission to any governmental
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authorities, as provided in Sections 3.4 and 4.4. Each of Buyer, MDI and
Stockholder agrees to file, submit or request promptly after the date of this
Agreement and to prosecute diligently any and all consents, approvals,
authorizations, registrations, qualifications, filings, applications and
notices appropriate for filing or submission to the Persons which are
required for, or otherwise in furtherance of; the consummation of
Transactions. Each of Buyer, MDI and Stockholder shall promptly make
available to the other such information as each of them may reasonably
request relating to its business, assets, liabilities, properties and
personnel as may be required by each of them to prepare and file or submit
such applications and notices and any additional information requested by any
governmental authority, and shall update by amendment or supplement any such
information given in writing. Each of Buyer, MDI and Stockholder represents
and warrants to the other that such information, as amended or supplemented,
shall be true, correct and complete and not misleading.
V.6 ACQUISITION PROPOSALS; NO SOLICITATION. Stockholder shall not, nor
will it permit MDI or any of their respective directors, officers, employees or
agents to, directly or indirectly: (a) solicit, initiate, encourage or
participate in any negotiations or discussions with respect to any offer or
proposal to, directly or indirectly, acquire all or a substantial portion of the
business or properties, or any of the capital stock or securities, of MDI or any
of its Subsidiaries, whether by merger, consolidation, share exchange, business
combination, purchase of assets, lease of assets, exchange of assets, pledge of
assets, other disposition of assets or otherwise (an "Acquisition Transaction");
or (b) except as required by law, disclose to any Person, other than Buyer or
its agents, any information not customarily disclosed concerning the business,
assets, liabilities, properties and personnel of MDI and its Subsidiaries, or
afford to any Person other than Buyer and its agents access to the properties,
books or records of MDI and its Subsidiaries. If Stockholder or MDI receives
any offer or proposal, written or otherwise, of the type referred to above,
Stockholder shall promptly inform Buyer of such offer or proposal and furnish
Buyer with a copy thereof if such offer or proposal is in writing.
V.7 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and conditions
of this Agreement, each of Stockholder, MDI and Buyer shall use commercially
reasonable efforts in good faith to take or cause to be taken as promptly as
practicable all reasonable actions that are within its control to cause to be
fulfilled: (a) those conditions precedent to its obligations to consummate the
Transactions; and (b) those actions upon which the conditions precedent to the
other party's obligations to consummate the Transactions are dependent. Without
limiting the generality of the foregoing, the parties shall in good faith
vigorously defend any action seeking to enjoin, prohibit or materially, restrict
the Transactions. Notwithstanding the foregoing, the parties shall each make
the appropriate filing under the HSR Act on or prior to April 10, 1998.
V.8 PUBLICITY. Stockholder and Buyer agree to cooperate in issuing any
press release or other public announcement (including any filings made with the
Commission) concerning this Agreement or the Transactions. Nothing contained
herein shall prevent any party from at any time furnishing any information to
any governmental authority which it is by law or otherwise so obligated to
disclose or from making any disclosure which its counsel deems necessary or
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advisable to fulfill such party s disclosure obligations under applicable law or
the rules of NASDAQ.
V.9 INTERCOMPANY RECEIVABLES. At the Closing Date, (a) all obligations of
Stockholder and its Subsidiaries (except MDI and its Subsidiaries) to MDI and
its Subsidiaries shall be satisfied in accordance with their terms and (b) all
obligations of MDI and its Subsidiaries to Stockholder shall be eliminated or
otherwise canceled in a manner which does not and will not have any adverse Tax
consequences on MDI or any of its Subsidiaries. Each of the obligations
described in clauses (a) and (b) of this Section 5.9 as of the date of this
Agreement are set forth on Schedule 5.9.
V.10 GUARANTIES. The Stockholder or one of its Subsidiaries is the
guarantor of certain obligations of MDI and/or its Subsidiaries, as set forth on
Schedule 5.10. The parties shall use commercially reasonable efforts to cause
such guarantees to be released prior to the Closing; PROVIDED, HOWEVER, that
neither party shall be obligated to pay any monies in satisfaction of its
obligations as a result of this Section 5.10.
V.11 INSURANCE MATTERS. On or prior to the tenth day after this Agreement
is executed, Stockholder shall use its commercially reasonable efforts to
deliver to Buyer a list of MDI's and its Subsidiaries' premiums and losses by
year and the type of coverage for the past five years.
V.12 CONFIDENTIALITY ARRANGEMENTS. As of the Closing, Stockholder hereby
assigns to Buyer its entire right, title and interest in and to all of the
confidentiality provisions of the letter of intent, dated March 6, 1998, and the
confidentiality agreement, dated December 8, 1997, between Stockholder and
InSight Health Services Corp.
ARTICLE VI
ADDITIONAL AGREEMENTS
VI.1 [INTENTIONALLY OMITTED.]
VI.2 SCHEDULES. Any item disclosed in any schedule shall be deemed
disclosed in all schedules; the inclusion of any item in any schedule shall
not, in and of itself, be indicia that such item is "material."
VI.3 SURVIVAL OF THE REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Except as otherwise provided therein, the covenants and
agreements of Buyer, Stockholder and MDI contained in this Agreement shall
survive the Closing Date without limitation. Notwithstanding any right of
Buyer fully to investigate the affairs of MDI and its Subsidiaries and
notwithstanding any knowledge of facts determined or determinable by Buyer
pursuant to such investigation or right of investigation, all representations
and warranties of Buyer, Stockholder and MDI contained in this Agreement
shall survive the Closing until 18 months after the Closing Date except for
the representations and warranties (a) contained in Sections 3.2, 4.2,
4.6(d), 4.8,
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4.9, 4.12, 4.13 and 4.22 which shall survive the Closing Date without
limitation as to time, and (b) relating to Taxes of any kind or to Tax
related matters, including, in respect of Section 4.21 and contained in
Section 4.17 to the extent arising out of, in connection with or incident to
liabilities or obligations of Stockholder or its Affiliates (other than MDI
and its Subsidiaries) (the "Employment Amounts"), which in each case shall
survive the Closing Date under the date which is thirty (30) days after the
date the applicable statute of limitations for the payment, collection or
assessment of any such Tax has expired.
VI.4 INDEMNIFICATION.
VI.4.1 Subject to the limitations set forth in Section 6.4.4,
Stockholder agrees to indemnify and hold harmless Buyer and if the Closing
occurs, MDI and its Subsidiaries and their assigns from, against and in respect
of, the full amount of any and all liabilities, damages, claims, deficiencies,
settlements, fines, assessments, losses, Taxes, penalties, interest, costs and
expenses, including reasonable fees and disbursements of counsel, in each event
net of tax benefits related thereto (collectively, "Losses") arising from, in
connection with, or incident to: (a) any breach or violation of any of the
representations, warranties, covenants or agreements of Stockholder or MDI
contained in this Agreement or in any document or certificate delivered by
Stockholder or MDI at or prior to the Closing; (b) any legal, administrative or
other proceeding, arbitration or investigation set forth on Schedule 4.8; (c)
any Guaranty by MDI or any of its Subsidiaries of the Indebtedness of any other
Person other than MDI or any of its Subsidiaries; and (d) any and all actions,
suits, proceedings, demands, assessments, judgments, costs and expenses
incidental to any of the foregoing. Buyer agrees to reimburse Stockholder
and/or any of its Subsidiaries for any payment or expense made under any
guarantee referenced in Section 5.10, without regard to any cap, basket or
other limitation on indemnity contained herein. Buyer shall at all times
cooperate with Stockholder in obtaining the release of such guarantees,
including, but not limited to, making available relevant information to the
beneficiaries of such guarantees, offering substitute guarantees and providing
letters of credit or other security. Notwithstanding anything to the contrary
set forth herein, Losses shall not be deemed to include any consequential
incidental, special, exemplary, punitive or similar damages, and no party shall
be liable to any other party in connection herewith with respect to any such
damages. Stockholder shall, at the reasonable request of Buyer and at Buer's
expense, prosecute claims for indemnity under the 1997 Merger Agreement, or in
the alternative, Buyer may prosecute such claims, at its expense, in the name of
Stockholder. The parties will cooperate in connection therewith. Any claim for
indemnity must state with reasonable particularity, the provision of this
Agreement giving rise thereto, the facts giving rise to the alleged basis for
the claim and, if then determinable, an estimate of the amount of Losses
resulting therefrom.
VI.4.2 Subject to the limitations set forth in Section 6.4.4, Buyer
agree, jointly and severally, to indemnify and hold harmless Stockholder from,
against and in respect of, the full amount of any and all Losses arising from,
in connection with, or incident to: (a) any breach or violation of any of the
representations, warranties, covenants or agreements of Buyer contained in this
Agreement or in any document or certificate delivered by Buyer at or prior to
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the Closing; and (b) any and all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses incidental to any of the foregoing.
VI.4.3 A party or parties hereto agreeing to be responsible for or
to indemnify, against any matter pursuant to this Section 6.4 is referred to
herein as the "Indemnifying Party" and the other party or parties claiming
indemnity is referred to as the "Indemnified Party." An Indemnified Party under
this Agreement shall, with respect to claims asserted against such party by any
third party, give written notice to each Indemnifying Party of any liability
which might give rise to a claim for indemnity under this Agreement within ten
(10) business days of the receipt of any written claim from any such third
party, and with respect to other matters for which the Indemnified Party may
seek indemnification, give prompt written notice to each Indemnifying Party;
provided, however, that any failure to give such notice will not waive any
rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are materially prejudiced. The Indemnifying Party shall, in
the name of the Indemnified Party or the Indemnifying Party, in good faith and
at its sole cost and expense prosecute, contest and defend, by all appropriate
legal proceedings with counsel reasonably satisfactory to the Indemnified Party,
all such claims. The Indemnified Party shall have the right, at its own
expense, to participate in such proceedings and to be represented by, separate
attorneys of its choice. If the Indemnifying Party has not been notified of a
claim as provided herein or is directing the defense in connection with a claim,
the Indemnified Party shall not admit liability with respect to any claim or
settle, compromise, pay or discharge the same without the prior written consent
of the Indemnifying Party, and Indemnified Party shall enter into any settlement
so long as the Indemnifying Party agrees to pay the entire amount of such
settlement. The Indemnifying Party shall have no indemnification obligations
with respect to or in connection with a claim if the Indemnified Party fails to
strictly comply with the immediately preceding sentence. The Indemnified Party
shall not otherwise unreasonably object to any settlement proposed by the
Indemnifying Party. The Indemnified Party and the Indemniying Party agree to
afford one another the opportunity to be present at, and to participate in,
conferences with all Persons asserting claims for which indemnification is
sought hereunder. The Indemnified Party and the Indemnifying Party shall
actively cooperate with and assist each other to the extent lawful and
reasonably possible. The Indemnified Party shall be kept fully informed of the
defense of any such claim at all stages thereof. If the Indemnifying Party
fails to timely and in good faith defend against any such claim, the Indemnified
Party shall, after providing 10 days prior written notice to the Indemnifying
Party, have the right, but not the obligation, to defend the same and may make
any compromise or settlement thereof and recover and be indemnified for the
entire cost thereof from the Indemnifying Party. If, in good faith, the
Indemnified Party concludes that there are specific defenses or counterclaims
available to the Indemnified Party which are different from or in addition to
those available to the Indemnifying Party then the Indemnified Party shall have
the right to direct the defense of any such claim if not doing so would
materially prejudice the Indemnified Party due to the difference of such
defenses or counterclaims, and the Indemnifying Party shall bear the expenses
thereof. If the Indemnified Party is, directly or indirectly, conducting a
defense against any such claim, the Indemnifying Party shall (i) cooperate with
the Indemnified Party in any such defense and make available to it all such
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witnesses, records, materials and information in its possession or under its
control and (ii) be entitled to participate in such defense as its own cost and
expense.
VI.4.4 (a) Stockholder shall not be liable to Buyer hereunder
unless and until and only to the extent the cumulative aggregate claims of Buyer
against Stockholder exceed $750,000 (the "Threshold Amount"), and (b) Buyer
shall not be liable to Stockholder hereunder unless and until and only to the
extent the cumulative aggregate claims of Stockholder against Buyer and the
Threshold Amount. Notwithstanding the foregoing, the Threshold Amount and the
Stockholder Cap Amount and the Buyer Cap Amount shall be inapplicable with
respect to indemnification obligations of a party arising in connection with the
breach of any provision of Sections 4.6(d), 4.12, 4.13 and 4.22 or Articles II,
V (except Section 5.1 or 5.4), VI (except Section 6.4.1 as it relates to
breaches of representations and warranties other than with respect to Sections
4.6(d), 4.12, 4.13 and 4.22) or VII. Notwithstanding the foregoing, the
Stockholder Cap Amount shall be inapplicable with respect to Section 4.8. For
purposes of the calculation under this Section 6, there shall be an offset
against claims of an amount equal to the amount of any cash payment actually
received by an Indemnified Party after the Closing Date covering any such claim
from any insurance policy. Notwithstanding anything to the contrary set forth
herein, Stockholder shall not be liable to Buyer for matters arising hereunder
or in connection herewith in an amount in excess of (i) the Purchase Price with
respect to (A) Taxes, (B) Employment Amounts and (C) the representations and
warranties of Stockholder and MDI set forth in Sections 4.1, 4.2, 4.3, 4.4 and
4.9, and (ii) $15,000,000 with respect to all other representations and
warranties of Stockholder and MDI set forth in this Agreement (the "Stockholder
Cap Amount"). Notwithstanding anything to the contrary set forth herein, Buyer
shall not be liable to Stockholder for matters arising hereunder or in
connection herewith in an amount in excess of $15,000,000 ("Buyer Cap Amount").
VI.4.5 The parties hereto agree that indemnification pursuant to
this Section 6.4 is the sole and exclusive monetary remedy of the parties for
breach of contract for the breach of any representation, warranty, covenant or
agreement of any party hereto under this Agreement or for any other claim
arising hereunder or in connection herewith; PROVIDED, HOWEVER, that the
foregoing shall be inapplicable to intentional and willful breaches or
violations and shall not preclude any party from pursuing any equitable remedies
available to it.
VI.5 GENERAL RELEASE. As a material inducement for Buyer to enter into
this Agreement, effective as the Closing Date, except for claims in connection
herewith and except as expressly set forth on Schedule 6.5, Stockholder, on
behalf of itself and its Subsidiaries, hereby unconditionally and irrevocably,
releases and forever discharges, effective as of the Closing Date, MDI and its
respective Subsidiaries from any and all rights, claims, demands, judgments,
obligations, liabilities and damages, whether accrued or unaccrued, asserted or
unasserted, and whether known or unknown, suspected or unsuspected, relating to
MDI and/or any of its Subsidiaries which ever existed, now exist, or may
hereafter exist, by reason of any tort, breach of contract, violation of law or
other act or failure to act which shall have occurred at or prior to the Closing
Date. Stockholder expressly intends that the foregoing release shall be
effective
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regardless of whether the basis for any claim or right hereby released
shall have been known to or anticipated by Stockholder.
VI.6 ASSIGNMENT OF RIGHTS OF STOCKHOLDER UNDER 1997 MERGER AGREEMENT.
Effective as of the Closing Date, Stockholder shall, to the extent permitted by
the 1997 Merger Agreement, be deemed to have assigned, without recourse, to
Buyer all of Stockholder's right, title and interest in and to, and all of its
benefits and privileges, if any, under the 1997 Merger Agreement, including
those relating to indemnification, if any, it being understood that such rights,
by their terms, are not assignable.
VI.7 POST-CLOSING ACCESS AND COOPERATION. After the Closing, MDI and
Buyer shall permit the Seller reasonable access to all books and records and
employees and agents of MDI and its Subsidiaries as may be necessary or
advisable in connection with the preparation of tax returns or the prosecution
or defense of any audits or third-party claims or otherwise reasonably requested
by Stockholder for proper business purposes; and MDI and Buyer shall cooperate
in connection with the foregoing. This Section shall survive the Closing.
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VI.8 RESTRICTIVE COVENANTS.
VI.8.1 NONCOMPETITION. Stockholder recognizes that to assure
Buyer that Buyer will retain the value of MDI as a "going concern," it is
necessary, upon the terms and subject to the conditions hereof, that
Stockholder undertakes not to utilize its special knowledge of the business
of MDI and its Subsidiaries and their relationships with customers and
suppliers of MDI and its Subsidiaries to compete with Buyer or MDI or its
Subsidiaries. Stockholder hereby agrees that it shall, for a period from the
Closing Date until the third anniversary thereof (such aggregate period being
hereinafter referred to as the "Covenant Period") refrain from, anywhere
within a 30-mile radius of any fixed site or any stop on any mobile route at
which MDI conducts business as of the date of this Agreement, or has
conducted business prior to the Closing Date, directly or indirectly, owning,
managing, operating, controlling or financing, or participating in the
ownership, management, operation, control or financing of, or being connected
with or having any interest in, or otherwise taking any part as a
stockholder, director, officer, employee, consultant, independent contractor,
partner or otherwise in any mobile or fixed diagnostic imaging business
competitive with that engaged in by MDI as of the Closing Date, including
providing mobile radiology, MRI, CT or other mobile or fixed diagnostic
imaging services (the "Competitive Business"); provided, however, that the
foregoing shall not apply solely to the ownership of not more than two
percent (2%) of the outstanding capital stock of any company listed by a
national securities exchange or an over-the-counter stock listed by the
National Association of Securities Dealers; and, provided, further, that the
foregoing shall not restrict Stockholder from acquiring, owning, managing,
operating, financing and controlling a Competing Business to the extent the
Competing Business (A) is part of (or a subsidiary of) an entity acquired by
Stockholder which (i) on a consolidated basis derives less than 20% of its
revenue from a Competing Business or (ii) on a consolidated basis derives
less than half of its revenues from a Competing Business, so long as such
Competing Business is disposed of within one year of its acquisition and does
not increase the number of units operated by such Competing Business and (B)
does not in any manner solicit or accept referrals from radiologists who
refer business to MDI and its Subsidiaries; and, provided, further, that the
foregoing shall not restrict the activities of any entity or its Affiliates
which may acquire the whole or any part of Stockholder or any of its
Subsidiaries provided that such entity or its Affiliates (x) is a Competing
Business at the time of such acquisition, (y) does not use in any manner any
confidential or proprietary information of MDI or any of its Affiliates and
(z) does not use any assets or other resources of Stockholder or any of its
Affiliates in connection with any Competing Business.
VI.8.2 CONFIDENTIAL INFORMATION. Stockholder agrees not to at any
time subsequent to the Closing Date, disclose, directly or indirectly, to any
Person, or use or cause or authorize any Person to use any confidential
information relating to MDI or any of its Subsidiaries, including information
concerning financial condition, results of operations, customers, suppliers,
services, inventions, sources, leads or methods of obtaining new products,
services or business, intangible property or methods of operating their
businesses or any other information relating to MDI or any of its Subsidiaries
which Stockholder knows or should know is actually confidential and valuable and
proprietary to MDI; PROVIDED, HOWEVER, that this Section
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6.8.2 shall not restrict the disclosure of confidential information (a) to
any governmental entity to the extent required by law or (b) which is
publicly known and available through no wrongful act of Stockholder or its
Affiliates.
6.8.3 SOLICITATION OF BUSINESS. During the Covenant Period,
Stockholder agrees that it will not, directly or indirectly, at any time solicit
or cause or authorize directly or indirectly to be solicited, or accept or cause
or authorize directly or indirectly to be accepted, for or on behalf of itself
or other Persons, any Competitive Business of MDI or any of its Subsidiaries
from Persons who were customers of MDI or any of its Subsidiaries at any time
within one year prior to the Closing Date.
6.8.4 SOLICITATION OF PERSONNEL. During the Covenant Period,
Stockholder agrees that it will not solicit or cause or authorize, directly or
indirectly, to be solicited for employment or employ or cause or authorize,
directly or indirectly, to be employed or engaged as an employee, independent
contractor or sales agent, for or on behalf of itself or any other Person, any
Person who was an employee, independent contractor or sales agent of MDI or any
of its Subsidiaries at the Closing Date or whose employment was terminated
within 90 days prior to or within 183 days after the Closing Date by Buyer, MDI
or any of its Subsidiaries; PROVIDED that the foregoing shall not apply, to an
employee of both MDI or any of its Subsidiaries and also of Stockholder or any
of its Subsidiaries, all of whom are set forth on Schedule 6.8.4.
6.8.5 USE OF SYMBOLS. Stockholder agrees not to at any time after
the Closing Date, directly, or indirectly, use or authorize any Person (i) to
use any name, mark, logo or other identifying words or images (collectively,
"Symbols") which are similar to those used br MDI or any of its Subsidiaries in
connection with any business product or service, whether or not competitive with
any business then being carried on by MDI or any of its Subsidiaries or any
product or service then being sold or provided by MDI or any of its
Subsidiaries, except to the extent that any such Symbols primarily relate to
Stockholder.
6.8.6 INJUNCTIVE RELIEF. Stockholder acknowledges that it would
be very difficult or impossible to measure the damages resulting from the breach
of any provision of this Section 6.8. Stockholder further acknowledges that the
restrictions herein are reasonable and reasonably necessary for the protection
of the legitimate business interests and goodwill of MDI and Buyer, and that a
violation by Stockholder of any such covenant will cause irreparable damage to
MDI and Buyer. Therefore, Stockholder hereby agrees that any breach or
threatened breach by it of any provision of this Section 6.8 shall entitle MDI
and Buyer, in addition to any other legal remedies available to them, to a
temporary and permanent injunction or any other appropriate decree of specific
performance (without any bond or security being required) in order to enjoin
such breach or threatened breach. It is the desire and intent of the parties
that the provisions of this Section 6.8 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular subparagraph or
portion of this Section 6.8 shall be adjudicated to be invalid or unenforceable,
this Section 6.8 shall not be deemed null and void and shall be deemed amended
to delete therefrom the portion thus adjudicated to be invalid or unenforceable,
such deletion to
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apply only with respect to the operation of this Section 6.8 in that
particular jurisdiction in which such adjudication is made. If any
provisions of this Section 6.8 relating to the time period, scope of
activities or areas of restrictions shall be declared by a court of competent
jurisdiction to exceed the maximum time period, scope of activities or area
such court deems reasonable and enforceable, the time period, scope of
activities or areas of restrictions shall thereafter be deemed the maximum
which such court deems reasonable and enforceable.
VI.9 TAX MATTERS.
VI.9.1 TAX AND OTHER FILINGS. Upon the request of any party, each
other party shall on and after the Closing Date cooperate with the requesting
party and provide the requesting party with such information and execute and
deliver such documents as the requesting party may reasonably request with
respect to the filing and auditing of Tax Returns and financial statements with
respect to any required filings with any government agencies or related claims
with respect to MDI and its Subsidiaries for all periods prior to the Closing
Date. Buyer further agrees to maintain the records of MDI and its Subsidiaries
received by reason of the Closing relating to the period prior to or after the
Closing Date for a period of seven years, provided that should Buyer decide to
dispose of any such records prior to the end of such seven-year period it shall
give prior written notice to the Stockholder so that the Stockholder may
determine to take possession of any of the records sought to be disposed of.
VI.9.2 Stockholder and Buyer shall make timely and valid elections
pursuant to Code Section 338(h)(10) (and any analogous state and local tax
provisions) (the "Section 338(h)(10) Elections") regarding the sale and purchase
of the stock of MDI and the MDI Subsidiaries under this Agreement. Neither the
Seller nor the Purchaser will take any action, including, without limitation,
any action in connection with the filing of federal, state or local income Tax
returns of any Person, which would be inconsistent with or prejudice the Section
338(h)(10) Elections. Stockholder and buyer shall use their best efforts to
agree, on or prior to the Closing Date, to an allocation of the Purchase Price
(together with liabilities assumed hereunder and other relevant items) among the
assets of MDI and the MDI Subsidiaries (the "PURCHASED ASSETS"). such
allocation will comply with the requirements of Code Section 338(h)(10) and the
regulations thereunder. Stockholder and Buyer shall, to the extent permitted by
applicable law, file all Tax Returns in accordance with that allocation and they
will not take, nor will they permit any Affiliate to take, any position
inconsistent with that allocation unless otherwise required by applicable law.
VI.9.3 RETURNS FOR TAX PERIODS ENDING ON OR BEFORE THE CLOSING
DATE. Stockholder shall file (or cause to be filed) any Tax Returns of MDI and
its Subsidiaries for Tax periods ending on or before the Closing Date which are
to be filed after the Closing Date. (including Tax Returns relating to the
Section 338(h)(10) Elections). Such Tax Returns shall be prepared on a basis
consistent with past practice to the extent such past practice is consistent
with all state, local and foreign Tax laws, rules and regulations. Stockholder
shall be responsible for all Taxes of MDI, its Subsidiaries and any person with
which MDI, or its Subsidiaries files or has filed a consolidated or combined Tax
Return for all Tax periods ending on or prior to the
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Closing Date but after the Acquisition Date, including all Taxes relating to
the Section 338(h)(10) Elections, and Stockholder shall indemnify Buyer and
its Affiliates and assigns against, and hold them harmless from, any and all
such Taxes and any liabilities with respect thereto.
VI.9.4 CONTEST. Stockholder shall be responsible for conducting
any Tax audit or contest relating to Taxes that are the responsibility of the
Stockholder hereunder, PROVIDED, HOWEVER, that Buyer shall have the right to
participate in such audit or contest and to employ counsel of its own choice at
its own expense for purposes of such participation; provided further, that
Stockholder (or any affiliate) may not settle such audit or contest, or
otherwise conduct such audit or contest, in a manner that would have an adverse
effect on Buyer, MDI or its Subsidiaries after the Closing Date, without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld.
VI.9.5 RETURNS FOR TAX PERIODS BEGINNING BEFORE AND ENDING AFTER
THE CLOSING DATE. Buyer shall file (or cause to be filed) any Tax Returns of
MDI and its Subsidiaries for Tax periods which begin before the Closing Date and
end after the Closing Date. Such Tax Returns shall be prepared on a basis
consistent with past practice to the extent such past practice is consistent
with all state, local and foreign Tax laws, rules and regulations. Buyer shall
send copies of such Tax Returns to Stockholder. Stockholder shall pay to Buyer
within ten days of the date on which Taxes are paid with respect to such periods
an amount equal to the Tax liability of MDI and its Subsidiaries for the portion
of such period ending on the Closing Date. Such Tax liability shall be computed
as if the Tax periods of MDI and its Subsidiaries ended on the Closing Date and
included an allocable share of the income, deductions and other Tax items of MDI
and its Subsidiaries. The income, deductions and other Tax items of MDI and its
Subsidiaries for such Tax periods shall be allocated to the portion of the
period ending on the Closing Date and the portion of the period beginning after
the Closing Date by closing the books of MDI and its Subsidiaries as of the end
of the Closing Date. Stockholder shall be entitled to a pro rata share of any
refunds relating to such pre-closing periods.
Without regard to the foregoing, the parties hereto agree that in view of
the closing of MDI's tax year, for federal and state income tax purposes, on the
Closing Date in accordance with Section 6.9.3 hereof, this Section 6.9.5 shall
be inapplicable to the federal and state income tax returns of MDI and its
Subsidiaries.
VI.10 STOCKHOLDER'S OBLIGATIONS. Except with respect to Taxes, after
the Closing, Buyer and MDI shall cause the discharge in accordance with their
terms of all obligations of MDI and/or any of its Subsidiaries for which
Stockholder and/or any of its other Subsidiaries may be liable, by way of
guarantee or otherwise. Buyer and MDI shall use their best efforts to cause all
guarantees referenced in Section 5.11 to be released by, among other things,
offering substitute guarantees, providing information to the beneficiaries of
such guarantees and providing letters of credit. Without regard to any
limitation on liability or indemnification, Buyer and MDI shall immediately
reimburse Stockholder and any other guarantor listed on Schedule 5.11 for any
payments made pursuant to any such guarantee. This Section shall survive the
Closing.
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VI.11 LETTER OF CREDIT. At the Closing, Buyer shall deliver one or
more letters of credit issued for its account by its principal bank to The Chase
Manhattan Bank ("Chase") to collateralize letters of credit currently issued for
the account of MDI, and MDI shall be deemed to have irrevocably assigned and
transferred to Stockholder the $700,000 of cash currently collateralizing such
letters of credit; and if all or any part of such cash collateral is delivered
to MDI or Buyer the same shall forthwith be delivered to Stockholder; PROVIDED,
HOWEVER, if Chase does not accept such letters of credit as collateral on such
MDI letters of credit on or prior to the Closing, Buyer shall be obligated to
deliver to Stockholder at the Closing, in lieu of $700,000, an amount equal to
the present value of $700,000 discounted back to the Closing Date at the rate of
ten percent (10%) per annum from the date of maturity of the Indebtedness which
the MDI letters of credit secure. The parties shall use commercially reasonable
efforts to cause Chase to accept such substituted letters of credit. The
adjustments contemplated by this Section 6.11 shall be deemed upward purchase
price adjustments.
VI.12 CLIFTON, NEW YORK PROJECT. At the Closing, Buyer shall reimburse
Stockholder for all expenditures made and all indebtedness incurred in
furtherance of the Clifton, New York project up to a maximum aggregate amount of
$2,025,000; and such reimbursement shall be deemed a purchase price adjustment.
ARTICLE VII
CLOSING; CONDITIONS PRECEDENT; TERMINATION
VII.1 CLOSING. At the Closing, the parties shall deliver to each other
such documents as may be specified, or required to satisfy the conditions set
forth, in Sections 7.2, 7.3 and 7.4, and such other documents and instruments as
each party may reasonably request from the other party. All proceedings to be
taken and all documents to be executed at the Closing shall be deemed to have
been taken, delivered and executed simultaneously, and no proceeding shall be
deemed taken nor documents deemed executed or delivered until all have been
taken, delivered and executed.
VII.2 MUTUAL CONDITIONS PRECEDENT. The respective obligations of the
parties to consummate the Transactions are subject to the satisfaction at or
prior to the Closing of the following conditions.
(a GOVERNMENTAL CONSENTS. All consents and approvals required by
governmental authorities for the consummation of the Transactions shall have
been obtained, except where the failure to obtain such consent or approval would
not have a Material Adverse Effect on Stockholder or MDI, including the
expiration or termination of any notice and waiting period under the HSR Act,
provided that Buyer shall be entitled to indemnification under Section 6.4 for
any and all Losses incurred by Buyer arising from, in connection with, or
incident to any such failure.
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(b NO LITIGATION. No litigation, arbitration or other proceeding
shall be pending or, to the knowledge of the parties, threatened by or before
any court, arbitration panel or governmental authority; no law or regulation
shall have been enacted after the date of this Agreement and no judicial or
administrative decision shall have been rendered; in each case, which enjoins,
prohibits or materially restricts the consummation of the Transactions.
VII.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. The
obligations of Buyer to consummate the Transactions are subject to the
satisfaction at or prior to the Closing of the following conditions.
(a REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Stockholder and MDI contained in this Agreement and in any
certificate or notice delivered pursuant to this Agreement shall be true and
correct in all material respects (except for representations and warranties
which are by their terms qualified by materiality, which shall be true and
correct in a11 respects after giving effect to the materiality qualification
contained in such representations and warranties) as of the Closing Date with
the same force and effect as though made on and as of such date, except to the
extent that such representations and warranties by their terms are specifically
made as of an earlier date.
(b COVENANTS PERFORMED. The covenants of Stockholder and MDI
contained in this Agreement to be performed or complied with on or prior to the
Closing Date shall have been duly performed or complied with in all material
respects.
(c CONSENTS. Stockholder shall have obtained all consents and
approvals required to effectuate the Transactions on behalf of MDI and its
Subsidiaries, all of which shall have been obtained without the imposition of
any materially adverse terms or condition, except where the failure to obtain
the same would not have a Material Adverse Effect on MDI.
(d CERTIFICATE OF STOCKHOLDER. Stockholder shall have delivered to
Buyer a certificate executed by its Chief Executive Officer and Chief Financial
Officer, dated the Closing Date, certifying that the conditions specified in
Sections 7.3(a) and (b) have been fulfilled.
(e INTERCOMPANY RECEIVABLES. All obligations of Stockholder and its
Subsidiaries (except MDI and its Subsidiaries) to MDI and its Subsidiaries shall
have been satisfied in accordance with their terms.
(f RESIGNATIONS. Stockholder shall have delivered such resignations
of officers and directors of MDI and its Subsidiaries as Buyer shall have
requested.
(g LEGAL OPINION. Buyer shall have been furnished with an opinion
of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., counsel for
Stockholder, dated the Closing Date, in substantially the form attached hereto
as Exhibit 7.3(g).
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VII.4 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF STOCKHOLDER AND MDI.
The obligations of Stockholder and MDI to consummate the Transactions are
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Buyer contained in this Agreement or in any certificate or notice
delivered pursuant to this Agreement shall be true and correct in all material
respects (except for representations and warranties which are by their terms
qualified by materiality, which shall be true and correct in all respects after
giving effect to the materiality qualifications contained in such
representations and warranties) as of the Closing Date with the same force and
effect as though made on and as of such date, except to the extent such
representations and warranties by their terms are specifically made as of an
earlier date.
(b COVENANTS PERFORMED. The covenants of Buyer contained in this
Agreement to be performed or complied with on or prior to the Closing Date shall
have been duly performed or complied with in all material respects.
(c BUYER CERTIFICATE. Buyer shall have delivered to Stockholder a
certificate executed by its President or a Vice President, dated the Closing
Date, certifying that the conditions specified in Sections 7.4(a) and (b) above
have been fulfilled.
(d INTERCOMPANY RECEIVABLES. All obligations of MDI and its
Subsidiaries to Stockholder for advances subsequent to the date hereof shall
have been satisfied.
VII.5 TERMINATION. This Agreement and the Transactions may be
terminated prior to the Closing:
(a at any time by mutual consent of the parties;
(b by either party if the Closing has not occurred on or prior to
June 30, 1998 (the "Termination Date"), provided the failure of the Closing to
occur by such date is not the result of the failure of the party seeking to
terminate this Agreement to perform or fulfill any of its obligations hereunder.
(c by Buyer at any time in its sole discretion if any of the
representations or warranties of Stockholder in this Agreement are not in all
material respects true and accurate or if Stockholder breaches in any material
respect any covenant contained in this Agreement, provided that if such
misrepresentation or breach is reasonably curable, it is not cured within 30
business days after written notice thereof specifying the nature of the breach,
but in any event prior to the Termination Date;
(d by, MDI or Stockholder at any time in its sole discretion if any
of the representations or warranties of Buyer in this Agreement are not in all
material respects true and accurate or if Buyer breaches in any material respect
any covenant contained in this Agreement,
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provided that if such misrepresentation or breach is reasonably curable, it
is not cured within 30 business days after written notice thereof specifying
the nature of the breach, but in any event prior to the Termination Date.
If this Agreement is terminated pursuant to this Section 7.5, this
Agreement shall terminate and become void and of no force and effect, the
Transactions shall be abandoned without further action br any of the parties to
this Agreement, and no party to this Agreement shall have any liability or
further obligation under this Agreement, except for the agreements contained in
Sections 5.3 (Confidentiality), 8.7 (Fees and Expenses), 8.10 (Litigation;
Prevailing Parties), 8.12(Governing Law) and 8.13 (Jurisdiction and Venue);
provided that any termination of this Agreement pursuant to this Section 7.5
shall not relieve any party from any liability for the breach of any
representation, warranty or covenant contained in this Agreement or be deemed to
constitute a waiver of any remedy available for such breach and provided further
that in the event such breach is not willful or otherwise intentional the
breaching party's liability shall be limited to reimbursing the non-breaching
party its reasonable out-of-pocket costs and expenses (including reasonable fees
and disbursements of counsel) not to exceed $250,000 in the aggregate.
ARTICLE VIII
MISCELLANEOUS
VIII.1 NOTICES. Any notice or other communication under this Agreement
shall be in writing and shall be delivered personally or sent by registered
mail, return receipt requested, postage prepaid, or sent by, prepaid overnight
courier to the parties at the addresses set forth below their names on the
signature pages of this Agreement (or at such other addresses as shall be
specified by the parties by like notice), to the attention of the President of
such party. Such notices, demands, claims and other communications shall be
deemed given when actually received or (a) in the case of delivery by overnight
service with guaranteed next day delivery, the next day or the day designated
for delivery; or (b) in the case of registered U.S. mail, five days after
deposit in the U.S. mail.
VIII.2 ENTIRE AGREEMENT. This Agreement among the parties contain every
obligation and understanding be given the parties relating to the subject matter
hereof and merge all prior discussions, negotiations and agreements, if any,
between them and none of the parties shall be bound by any representations,
warranties, covenants, or other understandings, other than as expressly provided
or referred to herein.
VIII.3 ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereto may not be assigned by any party without the written consent of
the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
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VIII.4 WAIVER AND AMENDMENT. Any representation, warranty, covenant,
term or condition of this Agreement which may legally be waived, may be waived,
or the time of performance thereof extended, at any time by the party hereto
entitled to the benefit thereof, and any term, condition or covenant hereof may
be amended by the parties hereto at any time. Any such waiver, extension or
amendment shall be evidenced by an instrument in writing executed on behalf of
the appropriate party by a person who has been authorized by its board of
directors to execute waivers, extensions or amendments on its behalf. No waiver
by any party hereto, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of such party's rights
under such provisions at any other time or a waiver of such party's rights under
any other provision of this Agreement. No failure by any party hereto to take
any action against any breach of this Agreement or default by another party
shall constitute a waiver of the former party's right to enforce any provision
of this Agreement or to take action against such breach or default or any
subsequent breach of default by such other party.
VIII.5 NO THIRD PARTIES BENEFICIARY. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
Person other than the parties hereto and their respective successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
VIII.6 SEVERABILITY. If any one or more of the provisions contained in
this Agreement shall be declared invalid, void or unenforceable, the remainder
of the provisions of this Agreement shall remain in full force and effect, and
such invalid, void or unenforceable provision shall be interpreted as closely as
possible to the manner in which it was written.
VIII.7 EXPENSES. All expenses (including legal fees and expenses,
investment banking fees, fees and expenses of accountants) incurred by
Stockholder or MDI in connection with the Transactions will be borne by
Stockholder on behalf of MDI, and all expenses incurred Buyer in connection with
the Transactions will be borne by Buyer except that Buyer shall pay (i) $100,000
to Salomon Smith Barney and (ii) all filing fees payable with respect to filings
required by the HSR Act.
VIII.8 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only, and shall not affect the meaning or
interpretation of any provisions of this Agreement.
VIII.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Any telecopied
counterpart of a manually executed original shall be deemed a manually executed
original.
VIII.10 LITIGATION: PREVAILING PARTY. In the event of any litigation
with regard to this Agreement, the prevailing party with respect to a claim
shall be entitled to receive from the non-prevailing party with respect to such
claim and such non-prevailing party shall pay upon demand all reasonable fees
and expenses of counsel for such prevailing party.
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VIII.11 INJUNCTIVE RELIEF. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, injunctive relief, specific performance or other equitable
remedies in addition to all other remedies provided hereunder or available to
the parties hereto at law or in equity.
VIII.12 GOVERNING LAW. This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of Delaware,
without reference to the choice of law principles thereof.
VIII.13 JURISDICTION AND VENUE. This Agreement shall be subject to the
exclusive jurisdiction of the courts of the State of Florida. The parties to
this Agreement agree that any breach of any term or condition of this Agreement
shall be deemed to be a breach occurring in the State of Florida by virtue of a
failure to perform an act required to be performed in the State of Florida and
irrevocably and expressly agree to submit to the jurisdiction of the courts of
the State of Florida for the purpose of resolving any disputes among the parties
relating to this Agreement or the Transactions. The parties irrevocablv waive,
to the fullest extent permitted by, law, any objection which they made now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement, or any judgment entered by any court in
respect hereof brought in the State of Florida, and further irrevocably waive
any claim that any suit, action or proceeding brought in the State of Florida
has been brought in an inconvenient forum.
VIII.14 OBLIGATIONS OF MDI. Notwithstanding any provision to the
contrary set forth herein, after the Closing Date, Stockholder: (a) shall be
solely responsible for all representations, warranties, covenants and agreements
of MDI set forth herein, as if Stockholder (and not MDI) had made such
representations, warranties, covenants and agreements, and Stockholder shall
cause MDI not to breach any such representation or warranty or violate any such
covenant or agreement; and (b) irrevocably waives any right that it may have to
seek indernnity or contribution or any similar remedy from MDI with respect to
any such matter.
VIII.15 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
VIII.16 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
All covenants hereunder shall be given independent effect so that if a certain
action or condition constitutes a default under a certain covenant, the fact
that such action or condition is permitted by another covenant shall not affect
the occurrence of such default, unless expressly permitted under an exception to
such initial covenant. In addition, all representations and warranties
hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.
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VIII.17 INTERPRETATION; CONSTRUCTION. The term "Agreement" means this
Agreement together with all Schedules and Exhibits hereto, as the same may from
time to time be amended, modified, supplemented or restated in accordance with
the terms hereof. The use in this Agreement of the term "including" means
"including, without limitation," the words "herein," "hereof," "hereunder,"
"hereby," "hereto," "hereinafter," and other words of similar import refer to
this Agreement as a whole, including the Schedules and Exhibits, as the same may
from time to time be amended, modified, supplemented or restated, and not to any
particular Article, Section, subsection, paragraph, subparagraph or clause
contained in this Agreement. All reference to Articles, Sections, Subsections,
clauses, paragraphs, Schedules and Exhibits mean such provisions of this
Agreement and the Schedules and Exhibits attached to this Agreement, except
where otherwise stated. The title of and the Article, Section and paragraph
headings in this Agreement are for convenience of reference only and shall not
govern or affect the interpretation of any of the terms or provisions of this
Agreement; the use herein of the masculine, feminine or neuter forms shall also
denote the other forms, as in each case the context may require; where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates. The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Accounting terms used but not otherwise defined herein shall have the
meanings given to them under GAAP.
VIII.18 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT OR
AGREEMENT EXECUTED IN CONNECTION HEREWITH.
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IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
ALLIANCE IMAGING, INC.
By: /s/ Richard N. Zehner
--------------------------------------------
Name: Richard N. Zehner
------------------------------------------
Title: President & Chief Executive Officer
------------------------------------------
US DIAGNOSTIC INC.
By: /s/ Joseph A. Paul
--------------------------------------------
Name: Joseph A. Paul
------------------------------------------
Title: President
------------------------------------------
MEDICAL DIAGNOSTICS, INC.
By: /s/ Joseph A. Paul
--------------------------------------------
Name: Joseph A. Paul
------------------------------------------
Title: President
------------------------------------------
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