<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) January 24, 2000
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InSight Health Services Corp.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER )
Delaware 0-28622 33-0702770
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(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(949) 476-0733
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
N/A
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On January 24, 2000, InSight Health Corp., a Delaware corporation and a
wholly owned subsidiary of InSight Health Services Corp., a Delaware
corporation ("Registrant"), acquired substantially all of the assets
(the "Assets") of Southern Regional MRI, LLC, an Indiana limited
liability corporation ("Southern Regional"), and Indiana MRI of
Indianapolis, LLC ("Indianapolis," and together with Southern Regional,
the "Sellers"), pursuant to an Asset Purchase and Liabilities
Assumption Agreement dated January 21, 2000 (the "Purchase Agreement").
The Sellers are owned and controlled by Soterion Corporation, an
Indiana corporation, which was also a party to the Purchase Agreement.
The Assets acquired by Registrant under the Purchase Agreement consist
of certain tangible and intangible assets, including diagnostic imaging
equipment, customer contracts and other agreements held by Sellers in
connection with providing diagnostic imaging services to customers in
Lafayette and Indianapolis, Indiana.
The aggregate purchase price for the Assets was $6,645,090 million. The
purchase price was paid entirely in cash and is subject to certain
post-closing adjustments. A portion of the purchase price is being held
in escrow for a period of time after the closing for the satisfaction
of certain indemnification obligations of the Sellers. Registrant
utilized its existing credit facility with Bank of America, N.T. & S.A.
to fund the purchase price.
(b) Sellers provided diagnostic imaging services, including magnetic
resonance imaging and bone densitometry in Indiana. Registrant intends
to use the Assets to expand upon its existing business. Registrant
provides diagnostic imaging and information, treatment and related
management services to managed care, hospitals and other contractual
customers in 32 United States, including five major U.S. markets.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial statements of businesses acquired.
It is impractical to file with this report the financial
statements required by this Item. Audited financial statements
of Sellers required by this Item will be included in an
amendment to this report to be filed within 60 days after the
date this report is filed with the Securities and Exchange
Commission ("SEC").
(b) Pro forma financial information (unaudited).
It is impractical to file with this report the pro forma
financial information required by this Item. Pro forma
financial information required by this Item will be included
in an amendment to this report to be filed within 60 days
after the date this report is filed with the SEC.
(c) Exhibits.
2.1 Asset Purchase and Liabilities Assumption Agreement
dated as of January 21, 2000 by and among InSight
Health Corp., Southern Regional MRI, LLC, Indiana MRI
of Indianapolis, LLC, Indiana MRI of Lafayette, LLC
and Soterion Corporation (filed herewith).
2.2 Side Agreement dated as of January 21, 2000 by and
among InSight Health Corp., Southern Regional MRI,
LLC, Indiana MRI of Indianapolis, LLC, Indiana MRI of
Lafayette, LLC and Soterion Corporation (filed
herewith).
99.1 Press Release dated February 1, 2000, announcing the
completion of the acquisition (filed herewith).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 7, 2000
INSIGHT HEALTH SERVICES CORP.
BY: /s/ Thomas V. Croal
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Thomas V. Croal
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT DESCRIPTION
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<S> <C>
2.1 Asset Purchase and Liabilities Assumption Agreement dated as
of January 21, 2000 by and among InSight Health Corp.,
Southern Regional MRI, LLC, Indiana MRI of Indianapolis, LLC,
Indiana MRI of Lafayette, LLC and Soterion Corporation
(filed herewith)
2.2 Side Agreement dated as of January 21, 2000 by and among
InSight Health Corp., Southern Regional MRI, LLC, Indiana MRI
of Indianapolis, LLC, Indiana MRI of Lafayette, LLC and
Soterion Corporation (filed herewith)
99.1 Press Release dated February 1, 2000, announcing the
completion of the acquisition (filed herewith)
</TABLE>
<PAGE>
ASSET PURCHASE
AND
LIABILITIES ASSUMPTION AGREEMENT
BY AND AMONG
SOTERION CORPORATION,
SOUTHERN REGIONAL MRI, LLC,
INDIANA MRI OF LAFAYETTE, LLC,
INDIANA MRI OF INDIANAPOLIS, LLC,
AND
INSIGHT HEALTH CORP.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES ................... 2
1.1. Incorporation of Recitals ....................................... 2
1.2. Sale and Purchase of Assets ..................................... 2
1.3. Assignment and Delegation of Contracts .......................... 3
1.4. Assumption of Liabilities ....................................... 3
1.5. Purchase Price .................................................. 4
1.6. Tax Allocation .................................................. 4
1.7. Closing ......................................................... 4
ARTICLE 2. OTHER AGREEMENTS ................................................... 5
2.1. Billing Agreements .............................................. 5
2.2. Escrow Agreement ................................................ 6
2.3. Noncompetition Agreement ........................................ 6
2.4. Audit and Review of Sellers'Financial Statements ................ 6
2.5. Further Assurances .............................................. 7
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
OF SOTERION AND SOUTHERN REGIONAL .................................. 7
3.1. Organization, Qualification, and Power of Southern Regional ..... 7
3.2. Subsidiaries .................................................... 7
3.3. Validity ........................................................ 7
3.4. Default ......................................................... 8
3.5. Title to Southern Regional Assets ............................... 8
3.6. Contracts and Leasehold Interests ............................... 8
3.7. Condition of Southern Regional Assets ........................... 8
3.8. Trademarks, Patents, and Other Rights ........................... 9
3.9. Proprietary Information of Third Parties ........................ 9
3.10. Litigation and Investigations .................................. 10
3.11. Approvals ...................................................... 10
3.12. Taxes .......................................................... 10
3.13. Insurance Coverage ............................................. 11
3.14. Fees and Commissions ........................................... 11
3.15. Insider Interests .............................................. 11
3.16. Other Approvals ................................................ 11
3.17. Environmental Liabilities ...................................... 11
3.18. Fraud and Abuse ................................................ 12
3.19. Employees ...................................................... 13
3.20. Financial Statements ........................................... 13
3.21. No Adverse Change .............................................. 13
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3.22. Bankruptcy ..................................................... 13
3.23. Year 2000 Compliance ........................................... 13
3.24. Disclosure ..................................................... 14
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
OF SOTERION AND LAFAYETTE MRI ...................................... 14
4.1. Organization, Qualification, and Power of Lafayette MRI ......... 14
4.2. Subsidiaries .................................................... 14
4.3. Validity ........................................................ 14
4.4. Default ......................................................... 15
4.5. Title to Lafayette MRI Assets ................................... 15
4.6. Contracts and Leasehold Interests ............................... 15
4.7. Condition of Lafayette MRI Assets ............................... 15
4.8. Trademarks, Patents, and Other Rights ........................... 16
4.9. Proprietary Information of Third Parties ........................ 16
4.10. Litigation and Investigations .................................. 16
4.11. Approvals ...................................................... 17
4.12. Taxes .......................................................... 17
4.13. Insurance Coverage ............................................. 18
4.14. Fees and Commissions ........................................... 18
4.15. Insider Interests .............................................. 18
4.16. Other Approvals ................................................ 18
4.17. Environmental Liabilities ...................................... 18
4.18. Fraud and Abuse ................................................ 19
4.19. Employees ...................................................... 19
4.20. Financial Statements ........................................... 20
4.21. No Adverse Change .............................................. 20
4.22. Bankruptcy ..................................................... 20
4.23. Year 2000 Compliance ........................................... 20
4.24. Disclosure ..................................................... 21
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
OF SOTERION AND INDIANAPOLIS MRI ................................... 21
5.1. Organization, Qualification, and Power of Indianapolis MRI ...... 21
5.2. Subsidiaries .................................................... 21
5.3. Validity ........................................................ 21
5.4. Default ......................................................... 22
5.5. Title to Indianapolis MRI Assets ................................ 22
5.6. Contracts and Leasehold Interests ............................... 22
5.7. Condition of Indianapolis MRI Assets ............................ 22
5.8. Trademarks, Patents, and Other Rights ........................... 23
5.9. Proprietary Information of Third Parties ........................ 23
5.10. Litigation and Investigations .................................. 23
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5.11. Approvals ...................................................... 24
5.12. Taxes .......................................................... 24
5.13. Insurance Coverage ............................................. 25
5.14. Fees and Commissions ........................................... 25
5.15. Insider Interests .............................................. 25
5.16. Other Approvals ................................................ 25
5.17. Environmental Liabilities ...................................... 25
5.18. Fraud and Abuse ................................................ 26
5.19. Employees ...................................................... 26
5.20. Financial Statements ........................................... 27
5.21. No Adverse Change .............................................. 27
5.22. Bankruptcy ..................................................... 27
5.23. Year 2000 Compliance ........................................... 27
5.24. Disclosure ..................................................... 28
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SOTERION.......................... 28
6.1. Organization, Qualification, and Power of Soterion............... 28
6.2. Subsidiaries..................................................... 28
6.3. Validity......................................................... 28
6.4. Default.......................................................... 29
6.5. Litigation and Investigations.................................... 29
6.6. Approvals........................................................ 29
6.7. Taxes............................................................ 30
6.8. Fees and Commissions............................................. 30
6.9. Insider Interests................................................ 30
6.10. Other Approvals.................................................. 30
6.11. Fraud and Abuse.................................................. 31
6.12. Bankruptcy....................................................... 31
6.13. Disclosure....................................................... 31
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF BUYER............................. 31
7.1. Organization, Qualification, and Corporate Power of Buyer........ 31
7.2. Validity......................................................... 31
7.3. Fees and Commissions............................................. 32
7.4. Other Approvals.................................................. 32
7.5. Disclosure....................................................... 32
ARTICLE 8. COVENANTS OF SELLERS AND SOTERION................................... 32
8.1. Cooperation with Buyer........................................... 32
8.2. IDTF Application and Number...................................... 33
ARTICLE 9. COVENANTS OF BUYER.................................................. 33
9.1. Cooperation with Soterion and Sellers............................ 33
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ARTICLE 10. JOINT COVENANTS OF THE PARTIES..................................... 33
10.1. Confidentiality of Business Information......................... 33
10.2. Confidentiality of this Agreement............................... 34
ARTICLE 11. INDEMNIFICATION.................................................... 34
11.1. Survival: Right to Indemnification Not Affected by Knowledge.... 34
11.2. Indemnification and Payment of Damages by Seller and Soterion... 34
11.3. Indemnification and Payment of Damages by Buyer................. 35
11.4. Liability and Risk of Loss...................................... 36
11.5. Procedure for Indemnification - Third Party Claims.............. 36
11.6. Procedure for Indemnification - Other Claims.................... 37
11.7. Time Limitations................................................ 37
ARTICLE 12. MISCELLANEOUS...................................................... 38
12.1. Notice.......................................................... 38
12.2. Survival of Provisions.......................................... 39
12.3. Amendment....................................................... 39
12.4. Assignment...................................................... 39
12.5. Severability.................................................... 39
12.6. Choice of Law................................................... 39
12.7. Binding Benefit................................................. 40
12.8. Headings and Construction....................................... 40
12.9. Counterparts.................................................... 40
12.10. Expenses....................................................... 40
12.11. Waiver......................................................... 40
12.12. Construction................................................... 40
12.13. Cumulative Remedies............................................ 40
12.14. Attorney's Fees................................................ 40
12.15. Arbitration.................................................... 40
12.16. Entire Agreement............................................... 41
</TABLE>
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LIST OF SCHEDULES
SCHEDULE A...................................................List of Assets
SCHEDULE B...............................................Assigned Contracts
SCHEDULE C..............................................Assumed Liabilities
SCHEDULE D...................................................Tax Allocation
SCHEDULE E...............................................Billing Agreements
SCHEDULE F.................................................Escrow Agreement
SCHEDULE G.........................................Noncompetetion Agreement
SCHEDULE H..............................................Year End Financials
SCHEDULE I...............Southern Regional and Soterion Disclosure Schedule
SCHEDULE J.....................................Southern Regional Trademarks
SCHEDULE K......................................Southern Regional Insurance
SCHEDULE L...................Lafayette MRI and Soterion Disclosure Schedule
SCHEDULE M.........................................Lafayette MRI Trademarks
SCHEDULE N..........................................Lafayette MRI Insurance
SCHEDULE O................Indianapolis MRI and Soterion Disclosure Schedule
SCHEDULE P......................................Indianapolis MRI Trademarks
SCHEDULE Q.......................................Indianapolis MRI Insurance
SCHEDULE R.....................................Soterion Disclosure Schedule
SCHEDULE S......................................InSight Disclosure Schedule
<PAGE>
ASSET PURCHASE
AND
LIABILITIES ASSUMPTION AGREEMENT
BY AND AMONG
SOTERION CORPORATION,
SOUTHERN REGIONAL MRI, LLC,
INDIANA MRI OF LAFAYETTE, LLC,
INDIANA MRI OF INDIANAPOLIS, LLC,
AND
INSIGHT HEALTH CORP.
THIS ASSET PURCHASE AND LIABILITIES ASSUMPTION AGREEMENT (the "AGREEMENT"),
dated as of this 21st day of January, 2000 (the "EFFECTIVE DATE"), is made by
and among Southern Regional MRI, LLC, a limited liability company duly organized
and validly existing under the laws of the State of Indiana ("SOUTHERN
REGIONAL"), Indiana MRI of Lafayette, LLC, a limited liability company duly
organized and validly existing under the laws of the State of Indiana
("LAFAYETTE MRI"), Indiana MRI of Indianapolis, LLC, a limited liability company
duly organized and validly existing under the laws of the State of Indiana
("INDIANAPOLIS MRI") (Southern Regional, Lafayette MRI, and Indianapolis MRI are
collectively referred to herein as "SELLERS"), Soterion Corporation, a
corporation duly organized and validly existing under the laws of the State of
Indiana ("SOTERION"), and InSight Health Corp., a corporation duly organized and
validly existing under the laws of the State of Delaware ("BUYER").
WHEREAS, Sellers are engaged in providing diagnostic imaging services to
their customers and own certain tangible and intangible assets, including, but
not limited to, diagnostic imaging equipment at (i) 590 Missouri Avenue, Suite
200, Clarksville, Indiana, (ii) 130 Professional Court, Suites C & D, Lafayette,
Indiana, and (iii) 8850 Southpointe Drive, Suite B-1, Indianapolis, Indiana
(collectively, the "BUSINESS") (the Business engaged in by Southern Regional
shall be referred to as the "SOUTHERN REGIONAL BUSINESS", the Business engaged
in by Lafayette shall be referred to as the "LAFAYETTE BUSINESS", and the
Business engaged in by Indianapolis MRI shall be referred to as the
"INDIANAPOLIS MRI BUSINESS").
WHEREAS, Soterion owns all of the issued and outstanding membership
interests of Indianapolis MRI;
WHEREAS, Soterion owns a majority of the issued and outstanding membership
interests of Southern Regional;
WHEREAS, Soterion owns a majority of the issued and outstanding membership
interests of Lafayette MRI;
WHEREAS, Sellers desire to sell, and Soterion desires to cause Sellers to
sell, certain assets and assign and delegate certain contracts and liabilities
(and only such specified assets, contracts, and liabilities) of Sellers to
Buyer, all as set forth herein; and
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<PAGE>
WHEREAS, Buyer desires to purchase certain assets and assume certain
contracts and liabilities (and only such specified assets, contracts, and
liabilities) of Sellers, all as set forth herein.
NOW THEREFORE, in consideration of the premises and covenants as set forth
herein, and subject to the representations, warranties, and conditions contained
herein, the parties agree as follows:
ARTICLE 1.
PURCHASE OF ASSETS
AND ASSUMPTION OF LIABILITIES
SECTION 1.1. INCORPORATION OF RECITALS. The recitals set forth above are
incorporated herein by reference.
SECTION 1.2. SALE AND PURCHASE OF ASSETS. Subject to the terms and
conditions of this Agreement, and in reliance on the representations,
warranties, and covenants contained herein, on the Closing Date (as defined
below), Sellers shall, and Soterion shall cause Sellers, to, sell, convey,
assign, transfer, and deliver, or cause to be sold, conveyed, assigned,
transferred, and delivered, to Buyer, and Buyer shall purchase and acquire from
Sellers, Sellers' right, title, and interest to the Assets (as defined below),
free and clear of any title defect, mortgage, assignment, pledge, hypothecation,
security interest, title or retention agreement, levy, execution, seizure,
attachment, garnishment, deemed trust, lien, easement, option, right or claim of
others, or charge or encumbrance of any kind whatsoever (collectively, "CLAIMS"
or a "CLAIM"), in exchange for payment by Buyer of the Purchase Price (as
defined below) and Buyer's assumption of the Assumed Liabilities (as defined
below). The term "ASSETS" shall mean generally, except as otherwise provided
herein, all of the following described properties, assets, and rights used or
useful in connection with the Business: (i) all fixed equipment, including
magnetic resource imaging and all other medical equipment, coils, cameras,
film-processing equipment, and other ancillary diagnostic equipment, computers,
software, furniture, fixtures, and other assets owned by Sellers, and any
facility improvements; (ii) the inventory, including pharmaceuticals to the
extent legally transferable, owned by Sellers and used or useful in the
Business; (iii) all of Sellers' intellectual property and other general
intangibles including, but not limited to, patents, patent applications,
trademarks, service marks, trade names, logos, each Seller's rights to the name
currently in use in connection with the Business, copyrightable works, all
copyrights, certificates of need, trade secrets and confidential business
information, client lists, and computer software; (iv) rights under franchises,
licenses, permits, certificates, approvals, and other governmental
authorizations owned by Sellers and related to the ownership of the Assets or
the operation of the Business, but only if and to the extent such items are
transferable; (v) all lists and other information regarding patients and
referral sources with respect to the Business that are in the possession of
Sellers and/or Soterion; (vi) all rights under the Assigned Contracts (as
defined below), including the goodwill associated therewith; (vii) all patient
records (e.g., medical charts, notes, orders, photographs, and x-rays relating
to the medical history, diagnosis, and treatment of patients) and other records
of those patients who were treated in connection with the Business; (viii) the
opportunity to offer employment to certain of Sellers' employees; (ix) telephone
and facsimile numbers and post office boxes or other mailing addresses
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associated with the Business; and (x) goodwill of the Business (the Assets owned
by Southern Regional shall be referred to as the "SOUTHERN REGIONAL ASSETS", the
Assets owned by Lafayette MRI shall be referred to as the "LAFAYETTE MRI
ASSETS", and the Assets owned by Indianapolis MRI shall be referred to as the
"INDIANAPOLIS MRI ASSETS"). A definitive listing of the Assets is set forth on
SCHEDULE A, attached hereto and incorporated by reference, and SCHEDULE A
identifies with specificity the legal and equitable owner of each Asset.
Specifically excluded from this Agreement, the Assets, and the purchase
obligations hereunder are assets and properties not listed on SCHEDULE A, net
working capital of Sellers (consisting of cash on hand and accounts receivable),
real property owned by Sellers, provider or vendor billing numbers, any tax
refunds due to Sellers, and prepaid items.
SECTION 1.3. ASSIGNMENT AND DELEGATION OF CONTRACTS. Subject to the
terms and conditions of this Agreement, and in reliance on the representations,
warranties, and covenants contained herein, on the Closing Date (as defined
below), Sellers shall, and Soterion shall cause Sellers, and Indianapolis MRI
to, delegate and assign to Buyer, and Buyer shall assume from Sellers, certain
contracts and agreements used or useful in connection with the Business,
including, but not limited to, all contracts (e.g., with hospitals, managed care
companies, insurance companies, and/or self-insured employers) to provide
diagnostic imaging services (collectively, the "ASSIGNED CONTRACTS") (the
Assigned Contracts to which Southern Regional is a party shall be referred to as
the "SOUTHERN REGIONAL CONTRACTS", the Assigned Contracts to which Lafayette MRI
is a party shall be referred to as the "LAFAYETTE MRI CONTRACTS", and the
Assigned Contracts to which Indianapolis MRI is a party shall be referred to as
the "INDIANAPOLIS MRI CONTRACTS"). With respect to the Assigned Contracts, Buyer
shall assume only those contractual obligations and liabilities under the
Assigned Contracts arising from and after the Closing Date (as such term is
defined below) and Buyer is not assuming and shall not be deemed to have assumed
under any Assigned Contract or otherwise any liability incurred or accrued prior
to the Closing or incurred by reason of (i) any breach of or default by any
Seller or Soterion prior to the Closing (as defined below) under any Assigned
Contract or other agreement, or (ii) any act or omission by any Seller or
Soterion which could or does, with the passage of time, create a breach or
default under any Assigned Contract or other agreement, which occurred prior to
the Closing (as defined below). A definitive listing of the Assigned Contracts
is set forth on SCHEDULE B, attached hereto and incorporated by reference, and
SCHEDULE B identifies with specificity the Seller(s) that is(are) a party to
each Assigned Contact.
SECTION 1.4. ASSUMPTION OF LIABILITIES. Subject to the terms and
conditions of this Agreement, and in reliance on the representations,
warranties, and covenants contained herein, on the Closing Date (as defined
below), Buyer shall satisfy or assume the payment and performance of the Assumed
Liabilities (as defined below). For the purpose of this Agreement, the "ASSUMED
LIABILITIES" shall mean certain funded debt obligations of Sellers in the amount
of nine hundred sixty thousand six hundred twenty five dollars and ninety seven
cents ($960,625.97) (the Assumed Liabilities owed by Southern Regional shall be
referred to as the "SOUTHERN REGIONAL LIABILITIES", the Assumed Liabilities owed
by Lafayette MRI shall be referred to as the "LAFAYETTE MRI LIABILITIES", and
the Assumed Liabilities owed by Indianapolis MRI shall be referred to as the
"INDIANAPOLIS MRI LIABILITIES"). The Assumed Liabilities are specifically
described on SCHEDULE
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<PAGE>
C, attached hereto and incorporated by reference, and SCHEDULE C identifies with
specificity the debtor under each such Assumed Liability. Buyer shall not be
obligated to satisfy or assume any liability or obligation for any liability not
specifically set forth on SCHEDULE C, including accounts payable and any
liabilities with respect to Sellers' or Soterion's employees, employee benefit
plans, salaries, any unpaid overtime, accrued vacation time, back wages,
associated tax liabilities, or other benefits or obligations. Any prepayment
penalties incurred by Buyer as a result of the payoff or satisfaction by Buyer
of any of the Assumed Liabilities shall be the sole responsibility of Sellers
and Soterion, jointly and severally, and Sellers and Soterion shall either pay
such prepayment penalties directly upon request by Buyer or reimburse Buyer for
such prepayment penalties promptly upon request by Buyer.
SECTION 1.5. PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, and in reliance on the representations, warranties, and covenants
contained herein, on the Closing Date (as defined below), Buyer shall pay to
Sellers for the Assets the amount of nine million two hundred four thousand one
hundred fifty dollars and three cents ($9,204,150.03) (the "PURCHASE PRICE"), of
which nine hundred twenty thousand four hundred fiftenn dollars ($920,415.00)
(the "DEPOSIT") shall be deposited with Escrow Agent (as defined below) pursuant
to the Escrow Agreement (as defined below). The Purchase Price shall be
allocated and paid among Sellers as follows: forty seven and 18/100 percent
(47.18%) to Southern Regional, twenty seven and 80/100 percent (27.80%) to
Lafayette MRI, and twenty five and 02/100 percent (25.02%) to Indianapolis MRI.
SECTION 1.6. TAX ALLOCATION. The parties agree to allocate the Purchase
Price and the Assumed Liabilities among the Assets for all purposes (including
financial accounting and tax purposes) in accordance with the allocation set
forth on SCHEDULE D, attached hereto and incorporated by reference, and shall
make all necessary filings (including those required under Internal Revenue Code
Section 1060) in accordance with that allocation. In the event SCHEDULE D is not
prepared as of the Closing, Buyer shall prepare such Schedule after the Closing,
subject to Sellers' reasonable consent, and such Schedule shall be appended to,
and made a part of, this Agreement at that time.
SECTION 1.7. CLOSING. The closing of the transactions contemplated by this
Agreement shall take place at 1:30 p.m. (EST) on January 21, 2000, simultaneous
with the execution hereof (such closing being called the "CLOSING" and such date
being called the "CLOSING DATE"). At the Closing, Sellers and/or Soterion, as
applicable, shall deliver to Buyer the following:
(a) Bills of sale and assignments transferring to Buyer all of the Assets,
together with certificates or other evidence of title to the Assets,
properly endorsed to Buyer; and
(b) Assignments and assumptions of Sellers' rights and obligations with
respect to each of the Assigned Contracts; and
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<PAGE>
(c) Consents to the assignment and assumption from each of the other
parties to the Assigned Contracts; and
(d) Any other certificates, consents, estoppel letters, and other
documents, reasonably required by buyer, executed and delivered by all
persons and entities necessary to authorize or complete the
transactions contemplated hereby; and
(e) Accurate interim financial statements for sellers for the month ended
december 31, 1999; and
(f) An opinion of counsel to sellers and soterion regarding the due
organization and existence of sellers and soterion, the authority of
sellers and soterion to conclude the transactions provided for herein,
and the due execution of the instruments at the closing, and other
matters as set forth therein; and
(g) Such other items as are set forth elsewhere in this agreement or as
Buyer and its counsel may reasonably request.
At the Closing, Buyer shall deliver to Sellers and/or Soterion, as
applicable, the following:
(x) A wire transfer or payment in immediately available funds in the total
amount of eight million two hundred eighty two thousand two hundred
thirty five dollars and three cents ($8,282,235.03) (which takes into
account the one thousand five hundred dollars ($1,500) payable to the
Escrow Agent) allocated among Sellers as set forth above; and
(y) An opinion of counsel to Buyer regarding the due organization and
existence of Buyer, the authority of Buyer to conclude the
transactions provided for herein, and the due execution of the
instruments at the Closing, and other matters as set forth therein;
and
(z) Such other items as are set forth elsewhere in this Agreement or as
Sellers and their counsel may reasonably request.
At Closing, Buyer shall deliver to Escrow Agent (as defined below) the
Deposit pursuant to the Escrow Agreement (as defined below).
ARTICLE 2.
OTHER AGREEMENTS
SECTION 2.1. BILLING AGREEMENTS. Sellers shall, and Soterion shall cause
each Seller to, enter into a billing agreement (collectively, the "BILLING
AGREEMENTS"), as set forth in SCHEDULE E,
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<PAGE>
attached hereto and incorporated by reference, whereby each of Sellers shall
continue to bill and collect for and on behalf of their respective Business
following the Closing Date pursuant to certain conditions using Sellers'
provider numbers until such time as Buyer obtains its own provider numbers with
payors.
SECTION 2.2. ESCROW AGREEMENT. On the Closing Date, Sellers, Soterion, and
Buyer shall enter into an Escrow Agreement with a mutually acceptable escrow
agent ("ESCROW AGENT"), substantially in form and substance as set forth in
SCHEDULE F, attached hereto and incorporated by reference ("ESCROW AGREEMENT"),
and Buyer shall deposit with Escrow Agent the Deposit to hold such funds in
escrow for a period of one (1) year from the Closing Date in order to secure the
performance of Sellers' and Soterion's obligations under this Agreement,
including the indemnification of Buyer by Sellers and Soterion; provided,
however, at the end of six (6) months following the Closing Date, Escrow Agent
shall be authorized to distribute to Sellers fifty percent (50%) of the amount
held by Escrow Agent at that time, including any accumulated interest, less any
amounts necessary to cover any outstanding claims of indemnification. In the
event that the Deposit is not sufficient to satisfy any judgments or
indemnifications hereunder, Buyer shall be entitled to any other remedies under
law.
SECTION 2.3. NONCOMPETITION AGREEMENT. On the Closing Date, Sellers,
Soterion, the shareholders of Soterion, and Buyer shall enter into a
Noncompetition Agreement, substantially in form and substance as set forth in
SCHEDULE G, attached hereto and incorporated by reference ("NONCOMPETITION
AGREEMENT").
SECTION 2.4. AUDIT AND REVIEW OF SELLERS' FINANCIAL STATEMENTS. Immediately
following the Closing Date, Sellers shall engage a Securities and Exchange
Commission registered audit firm (the "AUDITOR") to conduct an audit (the
"AUDIT") of Sellers' financial statements with respect to the Business for the
year ended December 31, 1999 (the "YEAR END FINANCIALS"). A copy of the Year End
Financials as presented by Sellers is set forth in SCHEDULE H, attached hereto
and incorporated by reference. Buyer shall reimburse Sellers for one-half (1/2)
of the reasonable documented cost of the Audit, and Sellers shall provide to
Buyer copies of all reports and correspondence exchanged to and from the Auditor
regarding the Audit, including, but not limited to, the final Audit report. In
the event the Year End Financials prepared in connection with the Audit reveal
that the net earnings before interest, taxes, depreciation, and amortization
("EBITDA") of the Business for the year ended December 31, 1999, is less than as
presented in the Year End Financials in SCHEDULE H by an amount of ten percent
(10%) or more (the "OVERAGE"), then Sellers shall pay to Buyer within ten (10)
business days of such determination a cash amount equal to the Overage.
Alternatively, Buyer may request that the Escrow Agent release a portion of the
Deposit to Buyer in an amount equal to the Overage. In the event the Year End
Financials prepared in connection with the Audit reveal that the EBITDA of the
Business for the year ended December 31, 1999, is more than as presented in the
Year End Financials in SCHEDULE H by an amount of ten percent (10%) or more (the
"EXCESS"), then Buyer shall pay to Sellers, collectively, within ten (10)
business days of such determination a cash amount equal to the Excess. With
respect to this Section 2.4, the Auditors shall be required to take into account
the adjustments as set forth in the Year End Financials in connection with the
Audit and the calculation of EBITDA; provided, however, all items
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of adjustment except the adjustments for the management fees and management
bonus as set forth in the Year End Financials shall be subject to audit and
confirmation.
SECTION 2.5. FURTHER ASSURANCES. From time to time after the Closing Date
for a period of five (5) years from the Closing, Sellers and Soterion shall give
to Buyer and its representatives, auditors, and counsel full access during
normal business hours to all of the properties, books, records, tax returns,
contracts, licenses, franchises, and all of the documents of Sellers and
Soterion relating to the Business, the Assets, the Assigned Contracts, and the
Assumed Liabilities, and shall furnish to Buyer all information with respect
thereto as Buyer may from time to time reasonably request. From time to time
after the Closing for a period of five (5) years from the Closing, at Buyer's
request and without further consideration, Sellers and Soterion agree to execute
and deliver at their expense such other instruments of conveyance and transfer
and take such other actions as Buyer reasonably may require to more effectively
deliver and vest in Buyer, and to put Buyer in legal and physical possession of,
or to assign and delegate to Buyer, the Assets, the Assigned Contracts, and the
Assumed Liabilities.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF SOTERION AND SOUTHERN REGIONAL
Soterion and Southern Regional, jointly and severally, represent and
warrant to Buyer that, except as set forth on the Disclosure Schedule attached
hereto as SCHEDULE I and incorporated by reference (which Disclosure Schedule
makes explicit reference to the particular representation or warranty as to
which exception is taken, which in each case shall constitute the sole
representation and warranty as to which such exception shall apply):
SECTION 3.1. ORGANIZATION, QUALIFICATION, AND POWER OF SOUTHERN REGIONAL.
Southern Regional (a) is a duly organized and validly existing limited liability
company in good standing under the laws of the State of Indiana; (b) has the
requisite corporate power and authority to carry on the Southern Regional
Business; and (c) has all requisite corporate power and authority and licenses,
permits, franchises, certificates, authorizations, approvals, consents, and
rights to own the Southern Regional Assets and to be a party to the Southern
Regional Contracts.
SECTION 3.2. SUBSIDIARIES. Southern Regional does not (i) own of record or
beneficially, directly or indirectly, any shares of capital stock or securities
convertible into capital stock of any other corporation or any participating or
membership interest in any partnership, joint venture, limited liability
company, or other business enterprise, or (ii) control, directly or indirectly,
any other entity.
SECTION 3.3. VALIDITY. Southern Regional has the full legal power and
authority to execute, deliver, and perform this Agreement and all other
agreements and documents necessary to consummate the contemplated transactions,
and all actions of Southern Regional necessary for such execution, delivery, and
performance have been or will have been duly taken by Closing. This Agreement
and all agreements related to this transaction have been duly executed and
delivered by
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Southern Regional and constitute the legal, valid, and binding obligation of
Southern Regional, enforceable in accordance with their terms (subject as to
enforcement of remedies to the discretion of courts in awarding equitable relief
and to applicable bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting the rights of creditors generally). Any other agreement
contemplated to be entered into by Southern Regional in connection with this
transaction, when executed and delivered, will constitute the legal, valid, and
binding obligation of Southern Regional, enforceable in accordance with its
respective terms (subject as to enforcement of remedies to the discretion of
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium, and similar laws affecting the rights of
creditors generally). The execution and delivery by Southern Regional of this
Agreement, and the performance of its obligations hereunder, and the sale and
delivery of the Southern Regional Assets and the assignment and delegation of
the Southern Regional Liabilities and the Southern Regional Contracts, do not
require any action or consent of any party other than Soterion and Southern
Regional pursuant to any contract, agreement, or other undertaking of Southern
Regional, or pursuant to any order or decree to which Southern Regional is a
party or to which any of its properties or assets are subject, and will not
violate any provision of law, the Articles of Organization or Operating
Agreement of Southern Regional, any order of any court or other agency of the
government, or any indenture, agreement, or other instrument to which Southern
Regional, or any of its properties or assets, are bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement, or other instrument, or result in
the creation or imposition of any Claim of any nature whatsoever upon any of the
properties or assets of Southern Regional.
SECTION 3.4. DEFAULT. Southern Regional is not in default and no event has
occurred which, with the lapse of time or action by a third party, could result
in a default by Southern Regional under any outstanding indenture, mortgage,
contract, or agreement to which it is a party.
SECTION 3.5. TITLE TO SOUTHERN REGIONAL ASSETS. Southern Regional has good
and marketable title to the Southern Regional Assets and the Southern Regional
Assets are free and clear of any Claim of any kind whatsoever.
SECTION 3.6. CONTRACTS AND LEASEHOLD INTERESTS. Each of the Southern Region
Contracts is a valid and existing contract, lease, or agreement without any
default of Southern Regional and, to the knowledge of Southern Regional or
Soterion, without any default thereunder of any other party thereto. No event
has occurred and is continuing which, with due notice or lapse of time or both,
would constitute a default or event of default by Southern Regional under any
Southern Region Contract or, to the knowledge of Southern Regional or Soterion,
by any other party thereto. Southern Regional's possession of any property has
not been disturbed and no claim has been asserted or threatened against Southern
Regional adverse to its rights in such leasehold interests.
SECTION 3.7. CONDITION OF SOUTHERN REGIONAL ASSETS. All fixtures,
machinery, equipment, and other tangible property included within the Southern
Regional Assets are in good operating condition and repair, and are adequate for
the uses to which they are being put, and none
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of such fixtures, machinery, equipment, and other tangible property is in need
of maintenance and repairs that are material in nature or cost.
SECTION 3.8. TRADEMARKS, PATENTS, AND OTHER RIGHTS. Set forth in SCHEDULE
J, attached hereto and incorporated by reference, is a list and brief
description of all patents, patent rights, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names,
and copyrights, and all applications for such which are in the process of being
prepared, are owned by, or are registered in the name of Southern Regional or of
which Southern Regional is a licensor or licensee, or in which Southern Regional
has any right, and in each case a brief description of the nature of such right.
Southern Regional owns or possesses adequate licenses or other rights to use all
patents, patent applications, trademarks, trademark applications, service marks,
service mark applications, trade names, copyrights, manufacturing processes,
formulae, trade secrets, and know how (collectively, "SOUTHERN REGIONAL'S
INTELLECTUAL PROPERTY") necessary or desirable to the conduct of the Southern
Regional Business as conducted. No claim is pending or, to the knowledge of
Southern Regional or Soterion, threatened to the effect that the operations of
Southern Regional infringe upon or conflict with the asserted rights of any
other person under any of Southern Regional's Intellectual Property, and there
is no basis for any such claim (whether or not pending or, to the knowledge of
Southern Regional or Soterion, threatened). No claim is pending or, to the
knowledge of Southern Regional or Soterion, threatened to the effect that any of
Southern Regional's Intellectual Property is invalid or unenforceable by
Southern Regional, and there is no known basis for any such claim (whether or
not pending or, to the knowledge of Southern Regional or Soterion, threatened).
SECTION 3.9. PROPRIETARY INFORMATION OF THIRD PARTIES. No third party has
claimed or, to the knowledge of Soterion and Southern Regional, has any reason
to claim that any person employed by or affiliated with Southern Regional has:
(i) violated or may be violating any of the terms or conditions of his/her
employment, non-competition, or non-disclosure agreement with such third party;
(ii) disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party; or (iii)
interfered or may be interfering in the employment relationship between such
third party and any of its current or former employees. No third party has
requested information from Soterion or Southern Regional which would reasonably
suggest that such a claim might be contemplated. No person employed by or
affiliated with Southern Regional has employed or, to the knowledge of Southern
Regional or Soterion, proposes to employ any trade secret or any information or
documentation proprietary to any former employer, and no person employed by or
affiliated with Southern Regional has violated any confidential relationship
which such person may have had with any third party in connection with the
development or sale of any product or the development or sale of any service of
Southern Regional, and neither Soterion nor Southern Regional have any reason to
believe there will be any such employment or violation. The execution, delivery,
and performance of this Agreement, the carrying on of the Southern Regional
Business as employees or agents by any key employee or affiliated person of
Southern Regional, and the conduct of the Southern Regional Business, has not
and will not conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under any contract, covenant, or
instrument under which any such person is obligated.
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SECTION 3.10. LITIGATION AND INVESTIGATIONS. There is no: (i) action, suit,
claim, proceeding, audit, or investigation pending or, to the knowledge of
Southern Regional or Soterion, threatened against or affecting Southern Regional
or any of Southern Regional's employees or agents, by any private party or any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, pending, threatened
against, or affecting persons or entities who perform professional services
under agreement with Southern Regional before any professional self-governance,
oversight, or regulatory body; (ii) arbitration proceeding relating to Southern
Regional pending under collective bargaining agreements or otherwise; or (iii)
governmental or professional inquiry pending or, to the knowledge of Southern
Regional or Soterion, threatened against or directly or indirectly affecting
Southern Regional (including without limitation any inquiry as to the
qualification of Southern Regional to hold or receive any license or permit),
and there is no basis for any of the foregoing as to Southern Regional, and its
agents or key employees, or, to the knowledge of Southern Regional or Soterion,
as to entities or persons who perform professional services for it. Neither
Soterion nor Southern Regional has received any opinion, memorandum, or legal
advice from legal counsel to the effect that Southern Regional is exposed, from
a legal standpoint, to any liability which may reasonably be expected to be
material to the Southern Regional Business or the prospects, financial
condition, operations, or property of Southern Regional or the Southern Regional
Business. Southern Regional is not in default with respect to any order, writ,
injunction, or decree applicable to Southern Regional known to or served upon it
of any court or of any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign. There is no action or suit by Southern Regional pending or threatened
against others.
SECTION 3.11. APPROVALS. Southern Regional is in compliance with all laws,
rules, regulations, and orders applicable to its business, operations,
properties, assets, products, and services, and Southern Regional has all
necessary permits, licenses, and other authorizations required to conduct the
Southern Regional Business as conducted. To the knowledge of Soterion and
Southern Regional and except for any potential changes in Medicare, Medicaid, or
other governmental reimbursement for health care services, there is no proposed
law, rule, regulation, or order, whether federal, state, local, or professional,
which would prohibit or restrict Southern Regional from, or otherwise adversely
affect Southern Regional in, conducting the Southern Regional Business in any
jurisdiction in which it is now conducting business.
SECTION 3.12. TAXES. Southern Regional has filed all tax returns, federal,
state, county, and local including, without limitation, income, sales, payroll,
premium, withholding, informational and personal property tax returns, required
to be filed by it and such returns have been duly prepared and filed. All taxes
due by reason of the Southern Regional Business have been paid, including,
without limitation, all taxes which Southern Regional is obligated to withhold
from accounts owing to employees, creditors, and third parties. All such taxes
for which Southern Regional has become obligated pursuant to elections made have
been paid and adequate reserves have been established for all taxes accrued but
not yet payable. The federal income tax returns of Southern Regional have never
been audited by the Internal Revenue Service. No deficiency assessment with
respect to any proposed adjustment of Southern Regional's federal, state,
county, or local taxes is pending or, to the knowledge of Soterion and Southern
Regional, threatened. There is no tax lien, whether imposed
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by any federal, state, county, or local taxing authority outstanding against
the assets or properties of Southern Regional, or the Southern Regional
Business. There is no pending examination or proceeding by any authority or
agency relating to the assessment or collection of any such taxes, interest,
or penalties thereon, nor , to the knowledge of Soterion and Southern
Regional, do there exist any facts that would provide a basis for any such
assessment.
SECTION 3.13. INSURANCE COVERAGE. Southern Regional has maintained
professional, liability, casualty, property loss, business interruption, and
other insurance coverage of such types and in such amounts as is customary for
companies similarly situated. SCHEDULE K, attached hereto and incorporated by
reference, sets forth a complete and correct list of all insurance policies in
force with respect to Southern Regional and identifies the insurer, type, and
amount of coverage for each, and the anniversary date for each.
SECTION 3.14. FEES AND COMMISSIONS. Southern Regional has not agreed to pay
or become liable to pay any broker's, finder's, or originator's fees or
commissions by reason of services alleged to have been rendered for, or at the
instance of, it in connection with this Agreement or the transactions
contemplated hereby.
SECTION 3.15. INSIDER INTERESTS. No current person, employee, or health
care provider employed by or contracted with Southern Regional, directly or
indirectly: (i) owns, in whole or in part, any of the properties used in the
Southern Regional Business; (ii) has received a loan or advance from Southern
Regional which is currently outstanding; (iii) has any obligation to make any
loan to Southern Regional; or (iv) has any other business relationship with
Southern Regional other than in his or her capacity as an employee or health
care provider. No current person, employee, or health care provider employed by
or contracted with Southern Regional, directly or indirectly, owns, in whole or
in part, any interest in excess of five percent (5%) in, or controls, or is an
employee, member, officer, director, or partner of, or participant in, or
consultant to, any corporation, association, partnership, limited partnership,
joint venture, or other entity which is a competitor of Southern Regional,
Soterion, or any of the other Sellers.
SECTION 3.16. OTHER APPROVALS. Unless waived by Buyer in writing, all
consents, approvals, qualifications, orders, or authorizations of, or filings
with, any governmental authority, including any court or other third party,
required in connection with Southern Regional's valid execution, delivery, or
performance of this Agreement, or the consummation of any transaction
contemplated by this Agreement, shall have been duly made and obtained and shall
be effective on and as of the Closing Date.
SECTION 3.17. ENVIRONMENTAL LIABILITIES.
3.17.1 Southern Regional has not used, stored, treated, transported,
manufactured, refined, handled, produced, or disposed of any Hazardous Materials
(as defined below) or Petroleum Products (as defined below), on, under, at,
from, or in any way affecting any of its properties (including any real property
owned or leased by it) or assets, or otherwise, in any manner which at the time
of the action in question violated any Environmental Laws (as defined below),
governing
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the use, storage, treatment, transportation, manufacture, refinement, handling,
production, or disposal of Hazardous Materials or Petroleum Products. To the
knowledge of Soterion and Southern Regional, no prior owner of such property or
asset or any tenant, subtenant, prior tenant, or prior subtenant thereof has
used Hazardous Materials or Petroleum Products on, from, or affecting such
property or asset, or otherwise, in any manner which at the time of the action
in question violated any Environmental Laws governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production, or
disposal of Hazardous Materials or Petroleum Products.
3.17.2 No pending claims have been made against Southern Regional and
no currently outstanding citations or notices have been issued against it, and
Southern Regional has no obligations or liabilities, matured or not matured,
absolute or contingent, assessed or unassessed, where such could reasonably be
expected to have an adverse effect on Southern Regional or the Southern Regional
Business, which in the case of any of the foregoing have been or are imposed by
reason of or based upon any provision of any Environmental Laws.
3.17.3 As used herein, "ENVIRONMENTAL LAWS" shall mean any and all
federal, state, local, or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, or requirements of any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, or other court or arbitrator, in each case whether of the
United States (federal, state, or local) or foreign, regulating, relating to, or
imposing liability or standards of conduct concerning any Hazardous Materials or
Petroleum Products or environmental protection, as now or may at any time
hereafter be in effect, together, in each case, with any amendment thereto, and
the regulations adopted and publications promulgated thereunder and all
substitutions thereof.
3.17.4 As used herein, "HAZARDOUS MATERIALS" shall mean any hazardous
materials, hazardous wastes, infectious medical wastes, hazardous or toxic
substances, asbestos, asbestos fibers, friable asbestos, any PCB's, or
constituents of the foregoing, defined or regulated as such in or under any
Environmental Laws.
3.17.5 As used herein, "PETROLEUM PRODUCTS" shall mean gasoline,
diesel fuel, motor oil, waste or used oil, heating oil, kerosene, and any other
petroleum products.
SECTION 3.18. FRAUD AND ABUSE. Southern Regional and persons who provide
professional services under agreements with it related to the Southern Regional
Business have not, with respect to the Southern Regional Business, engaged in
any activities which are prohibited under any federal, state, or local laws,
regulations, orders, and requirements, including, without limitation, the
federal Medicare and Medicaid statutes (42 U.S.C. Section 1320a-7b, 1320a-7a, or
1320a-7(b)(7)), or the regulations promulgated pursuant to such statutes or
related state or local statutes or regulations or which are prohibited by rules
of professional conduct. Neither Southern Regional nor persons who provide
professional services under agreements with it related to the Southern Regional
Business have received, with respect to the Southern Regional Business, any
claim or notice, written or oral, from any federal, state, or local government
agency that they, any of them, or their activities or properties have violated
any such federal, state, or local statute, regulation, order, or requirement.
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SECTION 3.19. EMPLOYEES. Southern Regional is not a party to any written
employment agreements, commitments, or understandings, and all personnel are
employed "at-will." There is no pending or, to the knowledge of Southern
Regional or Soterion, threatened employee strike, work slowdown or stoppage, or
labor dispute, or unfair labor practice claim. No union representation question
exists respecting any employees of Southern Regional. No collective bargaining
agreement exists or is currently being negotiated by Southern Regional, no
demand has been made for recognition by a labor organization by or with respect
to any employees of Southern Regional is taking place, and none of the employees
of Southern Regional is represented by any labor union or organization. Southern
Regional is in compliance with all federal and state laws respecting employment
and employment practices, terms and conditions of employment, and wage and hours
including compliance with any Internal Revenue Service guidelines on employees
and independent contractors. Southern Regional has complied with all
requirements with respect to the employment of any person who is not a citizen
of the United States. Southern Regional is not engaged in any unfair labor
practices (as defined in federal and state labor laws). There is no pending or,
to the knowledge of Southern Regional or Soterion, threatened equal employment
opportunity claims, wage and hour claims, unemployment compensation claims, or
workers' compensation claims against or involving Southern Regional.
SECTION 3.20. FINANCIAL STATEMENTS. Southern Regional has delivered to
Buyer copies of the financial statements of Southern Regional, consisting of the
income statement for the fiscal quarter ending December 31, 1999, and the
balance sheet dated as of December 31, 1999 (the "SOUTHERN REGIONAL FINANCIAL
STATEMENTS"), which are in accordance with the books and records of Southern
Regional, which are true, correct, and complete and without any material
misstatement or omission (defined for purposes of this Section 3.20 as a
misstatement or omission to any item in the Southern Regional Financial
Statements that would decrease net assets or increase net liabilities, as stated
in the balance sheet, or that would decrease net revenue or increase net
expenses, as stated in the income statement, by ten percent (10%) or more).
Neither the existence of the adjustments shown on the Southern Regional
Financial Statements, nor the amounts for management fees or management bonus,
shall be considered a misstatement or omission for purposes of this
representation and warranty.
SECTION 3.21. NO ADVERSE CHANGE. Since the date of the Southern Regional
Financial Statements, no event has occurred or circumstance or set of facts
exist that may result in an adverse change in the Southern Regional Assets or in
the operations, properties, or prospects of the Southern Regional Business after
the Southern Regional Assets are acquired by Buyer hereunder.
SECTION 3.22. BANKRUPTCY. There are no attachments, executions, assignments
for the benefit of creditors, receiverships, conservatorship or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor relief
laws contemplated or filed by Southern Regional or pending against Southern
Regional.
SECTION 3.23. YEAR 2000 COMPLIANCE. The computer software, computer
firmware, computer hardware (whether general or specific purpose), medial
equipment, and other similar or related items of automated, computerized, and/or
software system(s) that are used or relied on by
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Southern Regional in the conduct of the Southern Regional Business (the
"SOUTHERN REGIONAL INFORMATION TECHNOLOGY") are designed to be used prior to,
during, and after the calendar year 2000 A.D., and the Southern Regional
Information Technology used during each such time period will accurately
receive, provide, and process date/time data (including, without limitation,
calculating, comparing, and sequencing) from, into, and between the twentieth
and twenty-first centuries, including the year 1999 and 2000, and leap year
calculations, and will not malfunction, cease to function, or provide invalid or
incorrect results as a result of date/time data, to the extent that other
information technology, used in combination with the Southern Regional
Information Technology, properly exchanges data/time data with it.
SECTION 3.24. DISCLOSURE. No representation or warranty by Southern
Regional in this Agreement, and no exhibit, schedule, or certificate furnished
or to be furnished by Southern Regional pursuant hereto, (i) contains any untrue
statement of a material fact or (ii) omits to state a fact required to be stated
therein or necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not materially misleading.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
OF SOTERION AND LAFAYETTE MRI
Soterion and Lafayette MRI, jointly and severally, represent and warrant to
Buyer that, except as set forth on the Disclosure Schedule attached hereto as
SCHEDULE L and incorporated by reference (which Disclosure Schedule makes
explicit reference to the particular representation or warranty as to which
exception is taken, which in each case shall constitute the sole representation
and warranty as to which such exception shall apply):
SECTION 4.1. ORGANIZATION, QUALIFICATION, AND POWER OF LAFAYETTE MRI.
Lafayette MRI (a) is a duly organized and validly existing limited liability
company in good standing under the laws of the State of Indiana; (b) has the
requisite corporate power and authority to carry on the Lafayette MRI Business;
and (c) has all requisite corporate power and authority and licenses, permits,
franchises, certificates, authorizations, approvals, consents, and rights to own
the Lafayette MRI Assets, and to be a party to the Lafayette MRI Contracts.
SECTION 4.2. SUBSIDIARIES. Lafayette MRI does not (i) own of record or
beneficially, directly or indirectly, any shares of capital stock or securities
convertible into capital stock of any other corporation or any participating or
membership interest in any partnership, joint venture, limited liability
company, or other business enterprise, or (ii) control, directly or indirectly,
any other entity.
SECTION 4.3. VALIDITY. Lafayette MRI has the full legal power and authority
to execute, deliver, and perform this Agreement and all other agreements and
documents necessary to consummate the contemplated transactions, and all actions
of Lafayette MRI necessary for such execution, delivery, and performance have
been or will have been duly taken by Closing. This Agreement and all agreements
related to this transaction have been duly executed and delivered by
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Lafayette MRI and constitute the legal, valid, and binding obligation of
Lafayette MRI, enforceable in accordance with their terms (subject as to
enforcement of remedies to the discretion of courts in awarding equitable relief
and to applicable bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting the rights of creditors generally). Any other agreement
contemplated to be entered into by Lafayette MRI in connection with this
transaction, when executed and delivered, will constitute the legal, valid, and
binding obligation of Lafayette MRI, enforceable in accordance with its
respective terms (subject as to enforcement of remedies to the discretion of
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium, and similar laws affecting the rights of
creditors generally). The execution and delivery by Lafayette MRI of this
Agreement, and the performance of its obligations hereunder, and the sale and
delivery of the Lafayette MRI Assets and the assignment and delegation of the
Lafayette MRI Liabilities and the Lafayette MRI Assigned Contracts, do not
require any action or consent of any party other than Soterion and Lafayette MRI
pursuant to any contract, agreement, or other undertaking of Lafayette MRI, or
pursuant to any order or decree to which Lafayette MRI is a party or to which
any of its properties or assets are subject, and will not violate any provision
of law, the Articles of Organization or Operating Agreements of Lafayette MRI,
any order of any court or other agency of the government, or any indenture,
agreement, or other instrument to which Lafayette MRI, or any of its properties
or assets, are bound, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any such indenture,
agreement, or other instrument, or result in the creation or imposition of any
Claim of any nature whatsoever upon any of the properties or assets of Lafayette
MRI.
SECTION 4.4. DEFAULT. Lafayette MRI is not in default and no event has
occurred which, with the lapse of time or action by a third party, could result
in a default by Lafayette MRI under any outstanding indenture, mortgage,
contract, or agreement to which it is a party.
SECTION 4.5. TITLE TO LAFAYETTE MRI ASSETS. Lafayette MRI has good and
marketable title to the Lafayette MRI Assets and the Lafayette MRI Assets are
free and clear of any Claim of any kind whatsoever.
SECTION 4.6. CONTRACTS AND LEASEHOLD INTERESTS. Each Lafayette MRI Contract
is a valid and existing contract, lease, or agreement without any default of
Lafayette MRI and, to the knowledge of Lafayette MRI or Soterion, without any
default thereunder of any other party thereto. No event has occurred and is
continuing which, with due notice or lapse of time or both, would constitute a
default or event of default by Lafayette MRI under any Lafayette MRI Contract
or, to the knowledge of Lafayette MRI and Soterion, by any other party thereto.
Lafayette MRI's possession of any property has not been disturbed and no claim
has been asserted or threatened against Lafayette MRI adverse to its rights in
such leasehold interests.
SECTION 4.7. CONDITION OF LAFAYETTE MRI ASSETS. All fixtures, machinery,
equipment, and other tangible property included within the Lafayette MRI Assets
are in good operating condition and repair, and are adequate for the uses to
which they are being put, and none of such fixtures, machinery, equipment, and
other tangible property is in need of maintenance and repairs that are material
in nature or cost.
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SECTION 4.8. TRADEMARKS, PATENTS, AND OTHER RIGHTS. Set forth in SCHEDULE
M, attached hereto and incorporated by reference, is a list and brief
description of all patents, patent rights, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names,
and copyrights, and all applications for such which are in the process of being
prepared, are owned by, or are registered in the name of Lafayette MRI or of
which Lafayette MRI is a licensor or licensee, or in which Lafayette MRI has any
right, and in each case a brief description of the nature of such right.
Lafayette MRI owns or possesses adequate licenses or other rights to use all
patents, patent applications, trademarks, trademark applications, service marks,
service mark applications, trade names, copyrights, manufacturing processes,
formulae, trade secrets, and know how (collectively, "LAFAYETTE MRI'S
INTELLECTUAL PROPERTY") necessary or desirable to the conduct of the Lafayette
MRI Business as conducted. No claim is pending or, to the knowledge of Lafayette
MRI or Soterion, threatened to the effect that the operations of Lafayette MRI
infringe upon or conflict with the asserted rights of any other person under any
of Lafayette MRI's Intellectual Property, and there is no basis for any such
claim (whether or not pending or, to the knowledge of Lafayette MRI or Soterion,
threatened). No claim is pending or, to the knowledge of Lafayette MRI or
Soterion, threatened to the effect that any of Lafayette MRI's Intellectual
Property is invalid or unenforceable by Lafayette MRI, and there is no known
basis for any such claim (whether or not pending or, to the knowledge of
Lafayette MRI or Soterion, threatened).
SECTION 4.9. PROPRIETARY INFORMATION OF THIRD PARTIES. No third party has
claimed or, to the knowledge of Soterion and Lafayette MRI, has any reason to
claim that any person employed by or affiliated with Lafayette MRI has: (i)
violated or may be violating any of the terms or conditions of his/her
employment, non-competition, or non-disclosure agreement with such third party;
(ii) disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party; or (iii)
interfered or may be interfering in the employment relationship between such
third party and any of its current or former employees. No third party has
requested information from Soterion or Lafayette MRI which reasonably suggests
that such a claim might be contemplated. No person employed by or affiliated
with Lafayette MRI has employed or, to the knowledge of Lafayette MRI or
Soterion, proposes to employ any trade secret or any information or
documentation proprietary to any former employer, and no person employed by or
affiliated with Lafayette MRI has violated any confidential relationship which
such person may have had with any third party in connection with the development
or sale of any product or the development or sale of any service of Lafayette
MRI, and neither Soterion nor Lafayette MRI have any reason to believe there
will be any such employment or violation. The execution, delivery, and
performance of this Agreement, the carrying on of the Lafayette MRI Business as
employees or agents by any key employee or affiliated person of Lafayette MRI,
and the conduct of the Lafayette MRI Business, has not and will not conflict
with or result in a breach of the terms, conditions, or provisions of, or
constitute a default under any contract, covenant, or instrument under which any
such person is obligated.
SECTION 4.10. LITIGATION AND INVESTIGATIONS. There is no: (i) action, suit,
claim, proceeding, audit, or investigation pending or, to the knowledge of
Lafayette MRI or Soterion, threatened against or affecting Lafayette MRI or any
of Lafayette MRI's employees or agents, by any private party or any federal,
state, municipal, or other governmental department, commission,
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board, bureau, agency, or instrumentality, domestic or foreign, pending,
threatened against, or affecting persons or entities who perform professional
services under agreement with Lafayette MRI before any professional
self-governance, oversight, or regulatory body; (ii) arbitration proceeding
relating to Lafayette MRI pending under collective bargaining agreements or
otherwise; or (iii) governmental or professional inquiry pending or, to the
knowledge of Lafayette MRI or Soterion, threatened against or directly or
indirectly affecting Lafayette MRI (including without limitation any inquiry as
to the qualification of Lafayette MRI to hold or receive any license or permit),
and there is no basis for any of the foregoing as to Lafayette MRI, and its
agents or key employees, or, to the knowledge of Lafayette MRI or Soterion, as
to entities or persons who perform professional services for it. Neither
Soterion nor Lafayette MRI has received any opinion, memorandum, or legal advice
from legal counsel to the effect that Lafayette MRI is exposed, from a legal
standpoint, to any liability which may reasonably be expected to be material to
the Lafayette MRI Business or the prospects, financial condition, operations, or
property of Lafayette MRI or the Lafayette MRI Business. Lafayette MRI is not in
default with respect to any order, writ, injunction, or decree applicable to
Lafayette MRI known to or served upon it of any court or of any federal, state,
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality, domestic or foreign. There is no action or suit by Lafayette
MRI pending or threatened against others.
SECTION 4.11. APPROVALS. Lafayette MRI is in compliance with all laws,
rules, regulations, and orders applicable to its business, operations,
properties, assets, products, and services, and Lafayette MRI has all necessary
permits, licenses, and other authorizations required to conduct the Lafayette
MRI Business as conducted. To the knowledge of Soterion and Lafayette MRI and
except for any potential changes in Medicare, Medicaid, or other governmental
reimbursement for health care services, there is no proposed law, rule,
regulation, or order, whether federal, state, local, or professional, which
would prohibit or restrict Lafayette MRI from, or otherwise adversely affect
Lafayette MRI in, conducting the Lafayette MRI Business in any jurisdiction in
which it is now conducting business.
SECTION 4.12. TAXES. Lafayette MRI has filed all tax returns, federal,
state, county, and local including, without limitation, income, sales, payroll,
premium, withholding, informational and personal property tax returns, required
to be filed by it and such returns have been duly prepared and filed. All taxes
due by reason of the Lafayette MRI Business have been paid, including, without
limitation, all taxes which Lafayette MRI is obligated to withhold from accounts
owing to employees, creditors, and third parties. All such taxes for which
Lafayette MRI has become obligated pursuant to elections made have been paid and
adequate reserves have been established for all taxes accrued but not yet
payable. The federal income tax returns of Lafayette MRI have never been audited
by the Internal Revenue Service. No deficiency assessment with respect to any
proposed adjustment of Lafayette MRI's federal, state, county, or local taxes is
pending or, to the knowledge of Soterion and Lafayette MRI, threatened. There is
no tax lien, whether imposed by any federal, state, county, or local taxing
authority outstanding against the assets or properties of Lafayette MRI, or the
Lafayette MRI Business. There is no pending examination or proceeding by any
authority or agency relating to the assessment or collection of any such taxes,
interest, or
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penalties thereon, nor, to the knowledge of Soterion and Lafayette MRI, do there
exist any facts that would provide a basis for any such assessment.
SECTION 4.13. INSURANCE COVERAGE. Lafayette MRI has maintained
professional, liability, casualty, property loss, business interruption, and
other insurance coverage of such types and in such amounts as is customary for
companies similarly situated. SCHEDULE N, attached hereto and incorporated by
reference, sets forth a complete and correct list of all insurance policies in
force with respect to Lafayette MRI and identifies the insurer, type, and amount
of coverage for each, and the anniversary date for each.
SECTION 4.14. FEES AND COMMISSIONS. Lafayette MRI has not agreed to pay or
become liable to pay any broker's, finder's, or originator's fees or commissions
by reason of services alleged to have been rendered for, or at the instance of,
it in connection with this Agreement or the transactions contemplated hereby.
SECTION 4.15. INSIDER INTERESTS. No current person, employee, or health
care provider, employed by or contracted with Lafayette MRI: (i) owns, in whole
or in part, any of the properties used in the Lafayette MRI Business; (ii) has
received a loan or advance from Lafayette MRI which is currently outstanding;
(iii) has any obligation to make any loan to Lafayette MRI; or (iv) has any
other business relationship with Lafayette MRI other than in his or her capacity
as an employee, or health care provider. No current person, employee, or health
care provider employed by or contracted with Lafayette MRI, directly or
indirectly, owns, in whole or in part, any interest in excess of five percent
(5%) in, or controls, or is an employee, member, officer, director, or partner
of, or participant in, or consultant to, any corporation, association,
partnership, limited partnership, joint venture, or other entity which is a
competitor of Lafayette MRI, Members, or any of the other Sellers.
SECTION 4.16. OTHER APPROVALS. Unless waived by Buyer in writing, all
consents, approvals, qualifications, orders, or authorizations of, or filings
with, any governmental authority, including any court or other third party,
required in connection with Lafayette MRI's valid execution, delivery, or
performance of this Agreement, or the consummation of any transaction
contemplated by this Agreement, shall have been duly made and obtained and shall
be effective on and as of the Closing Date.
SECTION 4.17. ENVIRONMENTAL LIABILITIES.
4.17.1 Lafayette MRI has not used, stored, treated, transported,
manufactured, refined, handled, produced, or disposed of any Hazardous Materials
(as defined below) or Petroleum Products (as defined below), on, under, at,
from, or in any way affecting any of its properties (including any real property
owned or leased by it) or assets, or otherwise, in any manner which at the time
of the action in question violated any Environmental Laws (as defined below),
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production, or disposal of Hazardous Materials or Petroleum Products.
To the knowledge of Soterion and Lafayette MRI, no prior owner of such property
or asset or any tenant, subtenant, prior tenant, or prior subtenant
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thereof has used Hazardous Materials or Petroleum Products on, from, or
affecting such property or asset, or otherwise, in any manner which at the time
of the action in question violated any Environmental Laws governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production, or disposal of Hazardous Materials or Petroleum Products.
4.17.2 No pending claims have been made against Lafayette MRI and no
currently outstanding citations or notices have been issued against it, and
Lafayette MRI has no obligations or liabilities, matured or not matured,
absolute or contingent, assessed or unassessed, where such could reasonably be
expected to have an adverse effect on Lafayette MRI or the Lafayette MRI
Business, which in the case of any of the foregoing have been or are imposed by
reason of or based upon any provision of any Environmental Laws.
4.17.3 As used herein, "ENVIRONMENTAL LAWS" shall mean any and all
federal, state, local, or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, or requirements of any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, or other court or arbitrator, in each case whether of the
United States (federal, state, or local) or foreign, regulating, relating to, or
imposing liability or standards of conduct concerning any Hazardous Materials or
Petroleum Products or environmental protection, as now or may at any time
hereafter be in effect, together, in each case, with any amendment thereto, and
the regulations adopted and publications promulgated thereunder and all
substitutions thereof.
4.17.4 As used herein, "HAZARDOUS MATERIALS" shall mean any hazardous
materials, hazardous wastes, infectious medical wastes, hazardous or toxic
substances, asbestos, asbestos fibers, friable asbestos, any PCB's, or
constituents of the foregoing, defined or regulated as such in or under any
Environmental Laws.
4.17.5 As used herein, "PETROLEUM PRODUCTS" shall mean gasoline,
diesel fuel, motor oil, waste or used oil, heating oil, kerosene, and any other
petroleum products.
SECTION 4.18. FRAUD AND ABUSE. Lafayette MRI and persons who provide
professional services under agreements with it related to the Lafayette MRI
Business have not, with respect to the Lafayette MRI Business, engaged in any
activities which are prohibited under any federal, state, or local laws,
regulations, orders, and requirements, including, without limitation, the
federal Medicare and Medicaid statutes (42 U.S.C. Section 1320a-7b, 1320a-7a, or
1320a-7(b)(7)), or the regulations promulgated pursuant to such statutes or
related state or local statutes or regulations or which are prohibited by rules
of professional conduct. Neither Lafayette MRI nor persons who provide
professional services under agreements with it related to the Lafayette MRI
Business have received, with respect to the Lafayette MRI Business, any claim or
notice, written or oral, from any federal, state, or local government agency
that they, any of them, or their activities or properties have violated any such
federal, state, or local statute, regulation, order, or requirement.
SECTION 4.19. EMPLOYEES. Lafayette MRI is not a party to any written
employment agreements, commitments, or understandings, and all personnel are
employed "at-will." There is no pending or, to the knowledge of Lafayette MRI or
Soterion, threatened employee strike, work
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slowdown or stoppage, or labor dispute, or unfair labor practice claim. No union
representation question exists respecting any employees of Lafayette MRI. No
collective bargaining agreement exists or is currently being negotiated by
Lafayette MRI, no demand has been made for recognition by a labor organization
by or with respect to any employees of Lafayette MRI is taking place, and none
of the employees of Lafayette MRI is represented by any labor union or
organization. Lafayette MRI is in compliance with all federal and state laws
respecting employment and employment practices, terms and conditions of
employment, and wage and hours including compliance with any Internal Revenue
Service guidelines on employees and independent contractors. Lafayette MRI has
complied with all requirements with respect to the employment of any person who
is not a citizen of the United States. Lafayette MRI is not engaged in any
unfair labor practices (as defined in federal and state labor laws). There is no
pending or, to the knowledge of Lafayette MRI or Soterion, threatened equal
employment opportunity claims, wage and hour claims, unemployment compensation
claims, or workers' compensation claims against or involving Lafayette MRI.
SECTION 4.20. FINANCIAL STATEMENTS. Lafayette MRI has delivered to Buyer
copies of the financial statements of Lafayette MRI, consisting of the income
statement for the fiscal quarter ending December 31, 1999, and the balance sheet
dated as of December 31, 1999 (the "LAFAYETTE MRI FINANCIAL STATEMENTS"), which
are in accordance with the books and records of Lafayette MRI, which are true,
correct, and complete and without any material misstatement or omission (defined
for purposes of this Section 4.20 as a misstatement or omission to any item in
the Lafayette MRI Financial Statements that would decrease net assets or
increase net liabilities, as stated in the balance sheet, or that would decrease
net revenue or increase net expenses, as stated in the income statement, by ten
percent (10%) or more). Neither the existence of the adjustments shown on the
Lafayette MRI Financial Statements, nor the amounts for management fees or
management bonus, shall be considered a misstatement or omission for purposes of
this representation and warranty.
SECTION 4.21. NO ADVERSE CHANGE. Since the date of the Lafayette MRI
Financial Statements, no event has occurred or circumstance or set of facts
exist that may result in an adverse change in the Lafayette MRI Assets or in the
operations, properties, prospects, of the Lafayette MRI Business after the
Lafayette MRI Assets are acquired by Buyer hereunder.
SECTION 4.22. BANKRUPTCY. There are no attachments, executions, assignments
for the benefit of creditors, receiverships, conservatorships, or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor relief
laws contemplated or filed by Lafayette MRI or pending against Lafayette MRI.
SECTION 4.23. YEAR 2000 COMPLIANCE. The computer software, computer
firmware, computer hardware (whether general or specific purpose), medial
equipment, and other similar or related items of automated, computerized, and/or
software system(s) that are used or relied on by Lafayette MRI in the conduct of
the Lafayette MRI Business (the "LAFAYETTE MRI INFORMATION TECHNOLOGY") are
designed to be used prior to, during, and after the calendar year 2000 A.D., and
the Information Technology used during each such time period will accurately
receive, provide, and process date/time data (including, without limitation,
calculating, comparing, and sequencing) from,
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into, and between the twentieth and twenty-first centuries, including the year
1999 and 2000, and leap year calculations, and will not malfunction, cease to
function, or provide invalid or incorrect results as a result of date/time data,
to the extent that other information technology, used in combination with the
Lafayette MRI Information Technology, properly exchanges data/time data with it.
SECTION 4.24. DISCLOSURE. No representation or warranty by Lafayette MRI in
this Agreement, and no exhibit, schedule, or certificate furnished or to be
furnished by Lafayette MRI pursuant hereto, (i) contains any untrue statement of
a material fact or (ii) omits to state a fact required to be stated therein or
necessary to make the statements contained herein or therein, in light of the
circumstances in which they were made, not materially misleading.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
OF SOTERION AND INDIANAPOLIS MRI
Soterion and Indianapolis MRI, jointly and severally, represent and warrant
to Buyer that, except as set forth on the Disclosure Schedule attached hereto as
SCHEDULE O and incorporated by reference (which Disclosure Schedule makes
explicit reference to the particular representation or warranty as to which
exception is taken, which in each case shall constitute the sole representation
and warranty as to which such exception shall apply):
SECTION 5.1. ORGANIZATION, QUALIFICATION, AND POWER OF INDIANAPOLIS MRI.
Indianapolis MRI (a) is a duly organized and validly existing limited liability
company in good standing under the laws of the State of Indiana; (b) has the
requisite corporate power and authority to carry on the Indianapolis MRI
Business; and (c) has all requisite corporate power and authority and licenses,
permits, franchises, certificates, authorizations, approvals, consents, and
rights to own the Indianapolis MRI Assets, and to be a party to the Indianapolis
MRI Contracts.
SECTION 5.2. SUBSIDIARIES. Indianapolis MRI does not (i) own of record or
beneficially, directly or indirectly, any shares of capital stock or securities
convertible into capital stock of any other corporation or any participating or
membership interest in any partnership, joint venture, limited liability
company, or other business enterprise, or (ii) control, directly or indirectly,
any other entity.
SECTION 5.3. VALIDITY. Indianapolis MRI has the full legal power and
authority to execute, deliver, and perform this Agreement and all other
agreements and documents necessary to consummate the contemplated transactions,
and all actions of Indianapolis MRI necessary for such execution, delivery, and
performance have been or will have been duly taken by Closing. This Agreement
and all agreements related to this transaction have been duly executed and
delivered by Indianapolis MRI and constitute the legal, valid, and binding
obligation of Indianapolis MRI, enforceable in accordance with their terms
(subject as to enforcement of remedies to the discretion of courts in awarding
equitable relief and to applicable bankruptcy, reorganization, insolvency,
moratorium, and similar laws affecting the rights of creditors generally). Any
other agreement
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contemplated to be entered into by Indianapolis MRI in connection with this
transaction, when executed and delivered, will constitute the legal, valid, and
binding obligation of Indianapolis MRI, enforceable in accordance with its
respective terms (subject as to enforcement of remedies to the discretion of
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium, and similar laws affecting the rights of
creditors generally). The execution and delivery by Indianapolis MRI of this
Agreement, and the performance of its obligations hereunder, and the sale and
delivery of the Indianapolis MRI Assets and the assignment and delegation of the
Indianapolis MRI Liabilities and the Indianapolis MRI Contracts, do not require
any action or consent of any party other than Soterion and Indianapolis MRI
pursuant to any contract, agreement, or other undertaking of Indianapolis MRI,
or pursuant to any order or decree to which any of Indianapolis MRI is a party
or to which any of its properties or assets are subject, and will not violate
any provision of law, the Articles of Organization or Operating Agreements of
Indianapolis MRI, any order of any court or other agency of the government, or
any indenture, agreement, or other instrument to which Indianapolis MRI, or any
of its properties or assets, are bound, or conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement, or other instrument, or result in the creation or
imposition of any Claim of any nature whatsoever upon any of the properties or
assets of Indianapolis MRI.
SECTION 5.4. DEFAULT. Indianapolis MRI is not in default and no event has
occurred which, with the lapse of time or action by a third party, could result
in a default by Indianapolis MRI under any outstanding indenture, mortgage,
contract, or agreement to which it is a party.
SECTION 5.5. TITLE TO INDIANAPOLIS MRI ASSETS. Indianapolis MRI has good
and marketable title to the Indianapolis MRI Assets and the Indianapolis MRI
Assets are free and clear of any Claim of any kind whatsoever.
SECTION 5.6. CONTRACTS AND LEASEHOLD INTERESTS. Each Indianapolis MRI
Contract is a valid and existing contract, lease, or agreement without any
default of Indianapolis MRI and, to the knowledge of Indianapolis MRI or
Soterion, without any default thereunder of any other party thereto. No event
has occurred and is continuing which, with due notice or lapse of time or both,
would constitute a default or event of default by Indianapolis MRI under any
Indianapolis MRI Contract or, to the knowledge of Indianapolis MRI or Soterion,
by any other party thereto. Indianapolis MRI's possession of any property has
not been disturbed and no claim has been asserted or threatened against
Indianapolis MRI adverse to its rights in such leasehold interests.
SECTION 5.7. CONDITION OF INDIANAPOLIS MRI ASSETS. All fixtures, machinery,
equipment, and other tangible property included within the Indianapolis MRI
Assets are in good operating condition and repair, and are adequate for the uses
to which they are being put, and none of such fixtures, machinery, equipment,
and other tangible property is in need of maintenance and repairs that are
material in nature or cost.
SECTION 5.8. TRADEMARKS, PATENTS, AND OTHER RIGHTS. Set forth in SCHEDULE
P, attached hereto and incorporated by reference, is a list and brief
description of all patents, patent rights, patent
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applications, trademarks, trademark applications, service marks, service mark
applications, trade names, and copyrights, and all applications for such which
are in the process of being prepared, are owned by, or are registered in the
name of Indianapolis MRI or of which Indianapolis MRI is a licensor or licensee,
or in which Indianapolis MRI has any right, and in each case a brief description
of the nature of such right. Indianapolis MRI owns or possesses adequate
licenses or other rights to use all patents, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names,
copyrights, manufacturing processes, formulae, trade secrets, and know how
(collectively, "INDIANAPOLIS MRI'S INTELLECTUAL PROPERTY") necessary or
desirable to the conduct of the Indianapolis MRI Business as conducted. No claim
is pending or, to the knowledge of Indianapolis MRI or Soterion, threatened to
the effect that the operations of Indianapolis MRI infringe upon or conflict
with the asserted rights of any other person under any of Indianapolis MRI's
Intellectual Property, and there is no basis for any such claim (whether or not
pending or, to the knowledge of Indianapolis MRI or Soterion, threatened). No
claim is pending or, to the knowledge of Indianapolis MRI or Soterion,
threatened to the effect that any of Indianapolis MRI's Intellectual Property is
invalid or unenforceable by Indianapolis MRI, and there is no known basis for
any such claim (whether or not pending or, to the knowledge of Indianapolis MRI
or Soterion, threatened).
SECTION 5.9. PROPRIETARY INFORMATION OF THIRD PARTIES. No third party has
claimed or, to the knowledge of Soterion and Indianapolis MRI, has any reason to
claim that any person employed by or affiliated with Indianapolis MRI has: (i)
violated or may be violating any of the terms or conditions of his/her
employment, non-competition, or non-disclosure agreement with such third party;
(ii) disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party; or (iii)
interfered or may be interfering in the employment relationship between such
third party and any of its current or former employees. No third party has
requested information from Soterion or Indianapolis MRI which reasonably
suggests that such a claim might be contemplated. No person employed by or
affiliated with Indianapolis MRI has employed or, to the knowledge of
Indianapolis MRI or Soterion, proposes to employ any trade secret or any
information or documentation proprietary to any former employer, and no person
employed by or affiliated with Indianapolis MRI has violated any confidential
relationship which such person may have had with any third party in connection
with the development or sale of any product or the development or sale of any
service of Indianapolis MRI, and neither Soterion nor Indianapolis MRI have any
reason to believe there will be any such employment or violation. The execution,
delivery, and performance of this Agreement, the carrying on of the Indianapolis
MRI Business as employees or agents by any key employee or affiliated person of
Indianapolis MRI, and the conduct of the Indianapolis MRI Business, has not and
will not conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under any contract, covenant, or
instrument under which any such person is obligated.
SECTION 5.10. LITIGATION AND INVESTIGATIONS. There is no: (i) action,
suit, claim, proceeding, audit, or investigation pending or, to the knowledge of
Indianapolis MRI or Soterion, threatened against or affecting Indianapolis MRI
or any of Indianapolis MRI's employees or agents, by any private party or any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, pending, threatened
against, or
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affecting persons or entities who perform professional services under agreement
with Indianapolis MRI before any professional self-governance, oversight, or
regulatory body; (ii) arbitration proceeding relating to Indianapolis MRI
pending under collective bargaining agreements or otherwise; or (iii)
governmental or professional inquiry pending or, to the knowledge of
Indianapolis MRI or Soterion, threatened against or directly or indirectly
affecting Indianapolis MRI (including without limitation any inquiry as to the
qualification of Indianapolis MRI to hold or receive any license or permit), and
there is no basis for any of the foregoing as to Indianapolis MRI, and its
agents or key employees, or, to the knowledge of Indianapolis MRI or Soterion,
as to entities or persons who perform professional services for it. Neither
Soterion nor Indianapolis MRI has received any opinion, memorandum, or legal
advice from legal counsel to the effect that Indianapolis MRI is exposed, from a
legal standpoint, to any liability which may reasonably be expected to be
material to the Indianapolis MRI Business or the prospects, financial condition,
operations, or property of Indianapolis MRI. Indianapolis MRI is not in default
with respect to any order, writ, injunction, or decree applicable to
Indianapolis MRI known to or served upon it of any court or of any federal,
state, municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign. There is no action or suit by
Indianapolis MRI pending or threatened against others.
SECTION 5.11. APPROVALS. Indianapolis MRI is in compliance with all laws,
rules, regulations, and orders applicable to its business, operations,
properties, assets, products, and services, and Indianapolis MRI has all
necessary permits, licenses, and other authorizations required to conduct the
Indianapolis MRI Business as conducted. To the knowledge of Soterion and
Indianapolis MRI and except for any potential changes in Medicare, Medicaid, or
other governmental reimbursement for health care services, there is no proposed
law, rule, regulation, or order, whether federal, state, local, or professional,
which would prohibit or restrict Indianapolis MRI from, or otherwise adversely
affect Indianapolis MRI in, conducting the Indianapolis MRI Business in any
jurisdiction in which it is now conducting business.
SECTION 5.12. TAXES. Indianapolis MRI has filed all tax returns, federal,
state, county, and local including, without limitation, income, sales, payroll,
premium, withholding, informational and personal property tax returns, required
to be filed by it and such returns have been duly prepared and filed. All taxes
due by reason of the Indianapolis MRI Business have been paid, including,
without limitation, all taxes which Indianapolis MRI is obligated to withhold
from accounts owing to employees, creditors, and third parties. All such taxes
for which Indianapolis MRI has become obligated pursuant to elections made have
been paid and adequate reserves have been established for all taxes accrued but
not yet payable. The federal income tax returns of Indianapolis MRI have never
been audited by the Internal Revenue Service. No deficiency assessment with
respect to any proposed adjustment of Indianapolis MRI's federal, state, county,
or local taxes is pending or, to the knowledge of Soterion and Indianapolis MRI,
threatened. There is no tax lien, whether imposed by any federal, state, county,
or local taxing authority outstanding against the assets or properties of
Indianapolis MRI, or the Indianapolis MRI Business. There is no pending
examination or proceeding by any authority or agency relating to the assessment
or collection of any such taxes, interest, or penalties thereon, nor, to the
knowledge of Soterion and Indianapolis MRI, do there exist any facts that would
provide a basis for any such assessment.
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SECTION 5.13. INSURANCE COVERAGE. Indianapolis MRI has maintained
professional, liability, casualty, property loss, business interruption, and
other insurance coverage of such types and in such amounts as is customary for
companies similarly situated. SCHEDULE Q, attached hereto and incorporated by
reference, sets forth a complete and correct list of all insurance policies in
force with respect to Indianapolis MRI and identifies the insurer, type, and
amount of coverage for each, and the anniversary date for each.
SECTION 5.14. FEES AND COMMISSIONS. Indianapolis MRI has not agreed to pay
or become liable to pay any broker's, finder's, or originator's fees or
commissions by reason of services alleged to have been rendered for, or at the
instance of, it in connection with this Agreement or the transactions
contemplated hereby.
SECTION 5.15. INSIDER INTERESTS. No current person, employee, or health
care provider employed by or contracted with Indianapolis MRI, directly or
indirectly: (i) owns in whole or in part, any of the properties used in the
Indianapolis MRI Business; (ii) has received a loan or advance from Indianapolis
MRI which is currently outstanding; (iii) has any obligation to make any loan to
Indianapolis MRI; or (iv) has any other business relationship with Indianapolis
MRI other than in his or her capacity as an employee or health care provider. No
current employee or health care provider, employed by or contracted with
Indianapolis MRI owns, in whole or in part, directly or indirectly, any interest
in excess of five percent (5%) in, or controls, or is an employee, member,
officer, director, or partner of, or participant in, or consultant to, any
corporation, association, partnership, limited partnership, joint venture, or
other entity which is a competitor of Indianapolis MRI, Soterion, or any of the
other Sellers.
SECTION 5.16. OTHER APPROVALS. Unless waived by Buyer in writing, all
consents, approvals, qualifications, orders, or authorizations of, or filings
with, any governmental authority, including any court or other third party,
required in connection with Indianapolis MRI's valid execution, delivery, or
performance of this Agreement, or the consummation of any transaction
contemplated by this Agreement, shall have been duly made and obtained and shall
be effective on and as of the Closing Date.
SECTION 5.17. ENVIRONMENTAL LIABILITIES.
5.17.1 Indianapolis MRI has not used, stored, treated, transported,
manufactured, refined, handled, produced, or disposed of any Hazardous Materials
(as defined below) or Petroleum Products (as defined below), on, under, at,
from, or in any way affecting any of its properties (including any real property
owned or leased by it) or assets, or otherwise, in any manner which at the time
of the action in question violated any Environmental Laws (as defined below),
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production, or disposal of Hazardous Materials or Petroleum Products.
To the knowledge of Soterion and Indianapolis MRI, no prior owner of such
property or asset or any tenant, subtenant, prior tenant, or prior subtenant
thereof has used Hazardous Materials or Petroleum Products on, from, or
affecting such property or asset, or otherwise, in any manner which at the time
of the action in question violated any
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Environmental Laws governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production, or disposal of Hazardous
Materials or Petroleum Products.
5.17.2 No pending claims have been made against Indianapolis MRI and
no currently outstanding citations or notices have been issued against it, and
Indianapolis MRI has no obligations or liabilities, matured or not matured,
absolute or contingent, assessed or unassessed, where such could reasonably be
expected to have an adverse effect on Indianapolis MRI or the Indianapolis MRI
Business, which in the case of any of the foregoing have been or are imposed by
reason of or based upon any provision of any Environmental Laws.
5.17.3 As used herein, "ENVIRONMENTAL LAWS" shall mean any and all
federal, state, local, or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, or requirements of any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, or other court or arbitrator, in each case whether of the
United States (federal, state, or local) or foreign, regulating, relating to, or
imposing liability or standards of conduct concerning any Hazardous Materials or
Petroleum Products or environmental protection, as now or may at any time
hereafter be in effect, together, in each case, with any amendment thereto, and
the regulations adopted and publications promulgated thereunder and all
substitutions thereof.
5.17.4 As used herein, "HAZARDOUS MATERIALS" shall mean any hazardous
materials, hazardous wastes, infectious medical wastes, hazardous or toxic
substances, asbestos, asbestos fibers, friable asbestos, any PCB's, or
constituents of the foregoing, defined or regulated as such in or under any
Environmental Laws.
5.17.5 As used herein, "PETROLEUM PRODUCTS" shall mean gasoline,
diesel fuel, motor oil, waste or used oil, heating oil, kerosene, and any other
petroleum products.
SECTION 5.18. FRAUD AND ABUSE. Indianapolis MRI and persons who provide
professional services under agreements with it related to the Indianapolis MRI
Business have not, with respect to the Indianapolis MRI Business, engaged in any
activities which are prohibited under any federal, state, or local laws,
regulations, orders, and requirements, including, without limitation, the
federal Medicare and Medicaid statutes (42 U.S.C. Section 1320a-7b, 1320a-7a, or
1320a-7(b)(7)), or the regulations promulgated pursuant to such statutes or
related state or local statutes or regulations or which are prohibited by rules
of professional conduct. Neither Indianapolis MRI nor persons who provide
professional services under agreements with it related to the Indianapolis MRI
Business have received, with respect to the Indianapolis MRI Business, any claim
or notice, written or oral, from any federal, state, or local government agency
that they, any of them, or their activities or properties have violated any such
federal, state, or local statute, regulation, order, or requirement.
SECTION 5.19. EMPLOYEES. Indianapolis MRI is not a party to any written
employment agreements, commitments, or understandings, and all personnel are
employed "at-will." There is no pending or, to the knowledge of Indianapolis MRI
or Soterion, threatened employee strike, work slowdown or stoppage, or labor
dispute, or unfair labor practice claim. No union representation question exists
respecting any employees of Indianapolis MRI. No collective bargaining agreement
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exists or is currently being negotiated by Indianapolis MRI, no demand has been
made for recognition by a labor organization by or with respect to any employees
of Indianapolis MRI is taking place, and none of the employees of Indianapolis
MRI is represented by any labor union or organization. Indianapolis MRI is in
compliance with all federal and state laws respecting employment and employment
practices, terms and conditions of employment, and wage and hours including
compliance with any Internal Revenue Service guidelines on employees and
independent contractors. Indianapolis MRI has complied with all requirements
with respect to the employment of any person who is not a citizen of the United
States. Indianapolis MRI is not engaged in any unfair labor practices (as
defined in federal and state labor laws). There is no pending or, to the
knowledge of Indianapolis MRI or Soterion, threatened equal employment
opportunity claims, wage and hour claims, unemployment compensation claims, or
workers' compensation claims against or involving Indianapolis MRI.
SECTION 5.20. FINANCIAL STATEMENTS. Indianapolis MRI has delivered to Buyer
copies of the financial statements of Indianapolis MRI, consisting of the income
statement for the fiscal quarter ending December 31, 1999, and the balance sheet
dated as of December 31, 1999 (the "INDIANAPOLIS MRI FINANCIAL STATEMENTS"),
which are in accordance with the books and records of Indianapolis MRI, which
are true, correct, and complete and without any material misstatement or
omission (defined for purposes of this Section 5.20 as a misstatement or
omission to any item in the Indianapolis MRI Financial Statements that would
decrease net assets or increase net liabilities, as stated in the balance sheet,
or that would decrease net revenue or increase net expenses, as stated in the
income statement, by ten percent (10%) or more). Neither the existence of the
adjustments shown on the Indianapolis MRI Financial Statements, nor the amounts
for management fees or management bonus, shall be considered a misstatement or
omission for purposes of this representation and warranty.
SECTION 5.21. NO ADVERSE CHANGE. Since the date of the Indianapolis MRI
Financial Statements, no event has occurred or circumstance or set of facts
exist that may result in an adverse change in the Indianapolis MRI Assets or in
the operations, properties, prospects, of the Business after the Indianapolis
MRI Assets are acquired by Buyer hereunder.
SECTION 5.22. BANKRUPTCY. There are no attachments, executions, assignments
for the benefit of creditors, receiverships, conservatorships, or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor relief
laws contemplated or filed by Indianapolis MRI or pending against Indianapolis
MRI.
SECTION 5.23. YEAR 2000 COMPLIANCE. The computer software, computer
firmware, computer hardware (whether general or specific purpose), medial
equipment, and other similar or related items of automated, computerized, and/or
software system(s) that are used or relied on by Indianapolis MRI in the conduct
of the Indianapolis MRI Business (the "INDIANAPOLIS MRI INFORMATION TECHNOLOGY")
are designed to be used prior to, during, and after the calendar year 2000 A.D.,
and the Information Technology used during each such time period will accurately
receive, provide, and process date/time data (including, without limitation,
calculating, comparing, and sequencing) from, into, and between the twentieth
and twenty-first centuries, including the year 1999
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and 2000, and leap year calculations, and will not malfunction, cease to
function, or provide invalid or incorrect results as a result of date/time data,
to the extent that other information technology, used in combination with the
Indianapolis MRI Information Technology, properly exchanges data/time data with
it.
SECTION 5.24. DISCLOSURE. No representation or warranty by Indianapolis MRI
in this Agreement, and no exhibit, schedule, or certificate furnished or to be
furnished by Indianapolis MRI pursuant hereto, (i) contains any untrue statement
of a material fact or (ii) omits to state a fact required to be stated therein
or necessary to make the statements contained herein or therein, in light of the
circumstances in which they were made, not materially misleading.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
OF SOTERION
Soterion represents and warrants to Buyer that, except as set forth on the
Disclosure Schedule attached hereto as SCHEDULE R and incorporated by reference
(which Disclosure Schedule makes explicit reference to the particular
representation or warranty as to which exception is taken, which in each case
shall constitute the sole representation and warranty as to which such exception
shall apply):
SECTION 6.1. ORGANIZATION, QUALIFICATION, AND POWER OF SOTERION. Soterion
(a) is a duly organized and validly existing corporation in good standing under
the laws of the State of Indiana; (b) has the requisite corporate power and
authority to carry on its businesses as now conducted; and (c) has all requisite
corporate power and authority and licenses, permits, franchises, certificates,
authorizations, approvals, consents, and rights to own the properties which it
owns, and to be a party to the contracts, leases, and other agreements to which
it is a party.
SECTION 6.2. SUBSIDIARIES. Soterion owns, free and clear of any Claims, (i)
ninety five percent (95%) of the issued and outstanding membership interests of
Southern Regional; (ii) seventy three percent (73%) of the issued and
outstanding membership interests of Lafayette MRI; and (iii) one hundred percent
(100%) of the issued and outstanding membership interests of Indianapolis MRI.
SECTION 6.3. VALIDITY. Soterion has the full legal power and authority to
execute, deliver, and perform this Agreement and all other agreements and
documents necessary to consummate the contemplated transactions, and all actions
of Soterion necessary for such execution, delivery, and performance have been or
will have been duly taken by Closing. This Agreement and all agreements related
to this transaction have been duly executed and delivered by Soterion and
constitute the legal, valid, and binding obligation of Soterion, enforceable in
accordance with their terms (subject as to enforcement of remedies to the
discretion of courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium, and similar laws affecting the rights of
creditors generally). Any other agreement contemplated to be entered into by
Soterion in connection with this transaction, when executed and delivered, will
constitute the legal, valid, and binding obligation of
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Soterion, enforceable in accordance with its respective terms (subject as to
enforcement of remedies to the discretion of courts in awarding equitable relief
and to applicable bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting the rights of creditors generally). The execution and
delivery by Soterion of this Agreement, and the performance of its obligations
hereunder, do not require any action or consent of any party other than Soterion
pursuant to any contract, agreement, or other undertaking of Soterion, or
pursuant to any order or decree to which Soterion is a party or to which any of
its properties or assets are subject, and will not violate any provision of law,
the Articles of Incorporation or Bylaws of Soterion, any order of any court or
other agency of the government, or any indenture, agreement, or other instrument
to which Soterion, or any of its properties or assets, are bound, or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement, or other instrument, or
result in the creation or imposition of any Claim of any nature whatsoever upon
any of the properties or assets of Soterion.
SECTION 6.4. DEFAULT. Soterion is not in default and no event has occurred
which, with the lapse of time or action by a third party, could result in a
default by Soterion under any outstanding indenture, mortgage, contract, or
agreement to which it is a party.
SECTION 6.5. LITIGATION AND INVESTIGATIONS. There is no: (i) action, suit,
claim, proceeding, audit, or investigation pending or, to the knowledge of
Soterion, threatened against or affecting Soterion or any of Soterion's
employees or agents, by any private party or any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, pending, threatened against, or affecting
persons or entities who perform professional services under agreement with
Soterion before any professional self-governance, oversight, or regulatory body;
(ii) arbitration proceeding relating to Soterion pending under collective
bargaining agreements or otherwise; or (iii) governmental or professional
inquiry pending or, to the knowledge of Soterion, threatened against or directly
or indirectly affecting Soterion (including without limitation any inquiry as to
the qualification of Soterion to hold or receive any license or permit), and
there is no basis for any of the foregoing as to Soterion, and its agents or key
employees, or, to the knowledge of Soterion, as to entities or persons who
perform professional services for it. Soterion has not received any opinion,
memorandum, or legal advice from legal counsel to the effect that Soterion is
exposed, from a legal standpoint, to any liability which may reasonably be
expected to be material to Soterion or the prospects, financial condition,
operations, or property of Soterion. Soterion is not in default with respect to
any order, writ, injunction, or decree applicable to Soterion known to or served
upon it of any court or of any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign. There is no action or suit by Soterion pending or threatened against
others.
SECTION 6.6. APPROVALS. Soterion is in compliance with all laws, rules,
regulations, and orders applicable to its business, operations, properties,
assets, products, and services, and Soterion has all necessary permits,
licenses, and other authorizations required to conduct its business as currently
conducted. To the knowledge of Soterion and except for any potential changes in
Medicare, Medicaid, or other governmental reimbursement for health care
services, there is no
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proposed law, rule, regulation, or order, whether federal, state, local, or
professional, which would prohibit or restrict Soterion from, or otherwise
adversely affect Soterion in, conducting its business in any jurisdiction in
which it is now conducting business.
SECTION 6.7. TAXES. Soterion has filed all tax returns, federal, state,
county, and local including, without limitation, income, sales, payroll,
premium, withholding, informational and personal property tax returns, required
to be filed by it and such returns have been duly prepared and filed. All taxes
due by reason of the Business have been paid, including, without limitation, all
taxes which Soterion is obligated to withhold from accounts owing to employees,
creditors, and third parties. All such taxes for which Soterion has become
obligated pursuant to elections made have been paid and adequate reserves have
been established for all taxes accrued but not yet payable. The federal income
tax returns of Soterion have never been audited by the Internal Revenue Service.
No deficiency assessment with respect to any proposed adjustment of Soterion's
federal, state, county, or local taxes is pending or, to the knowledge of
Soterion, threatened. There is no tax lien, whether imposed by any federal,
state, county, or local taxing authority outstanding against the assets or
properties of Soterion, or the Business. There is no pending examination or
proceeding by any authority or agency relating to the assessment or collection
of any such taxes, interest, or penalties thereon, nor, to the knowledge of
Soterion, do there exist any facts that would provide a basis for any such
assessment.
SECTION 6.8. FEES AND COMMISSIONS. Soterion has not agreed to pay or become
liable to pay any broker's, finder's, or originator's fees or commissions by
reason of services alleged to have been rendered for, or at the instance of, it
in connection with this Agreement or the transactions contemplated hereby.
SECTION 6.9. INSIDER INTERESTS. No current person, employee, or health care
provider, employed by or contracted with Soterion, directly or indirectly: (i)
owns, in whole or in part, any of the properties used in the Business; (ii) has
received a loan or advance from Soterion which is currently outstanding; (iii)
has any obligation to make any loan to Soterion; or (iv) has any other business
relationship with Soterion other than in his or her capacity as an employee or
health care provider. No person, employee, or health care provider employed by
or contracted with of Soterion owns, in whole or in part, directly or
indirectly, any interest in excess of five percent (5%) in, or controls, or is
an employee, member, officer, director, or partner of, or participant in, or
consultant to, any corporation, association, partnership, limited partnership,
joint venture, or other entity which is a competitor of Soterion or any of the
other Sellers or Soterion.
SECTION 6.10. OTHER APPROVALS. Unless waived by Buyer in writing, all
consents, approvals, qualifications, orders, or authorizations of, or filings
with, any governmental authority, including any court or other third party,
required in connection with Soterion's valid execution, delivery, or performance
of this Agreement, or the consummation of any transaction contemplated by this
Agreement, shall have been duly made and obtained and shall be effective on and
as of the Closing Date.
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SECTION 6.11. FRAUD AND ABUSE. Soterion and persons who provide
professional services under agreements with it related to the Business have not,
with respect to the Business, engaged in any activities which are prohibited
under any federal, state, or local laws, regulations, orders, and requirements,
including, without limitation, the federal Medicare and Medicaid statutes (42
U.S.C. Section 1320a-7b, 1320a-7a, or 1320a-7(b)(7)), or the regulations
promulgated pursuant to such statutes or related state or local statutes or
regulations or which are prohibited by rules of professional conduct. Neither
Soterion nor persons who provide professional services under agreements with it
related to the Business, have received, with respect to the Business, any claim
or notice, written or oral, from any federal, state, or local government agency
that they, any of them, or their activities or properties have violated any such
federal, state, or local statute, regulation, order, or requirement.
SECTION 6.12. BANKRUPTCY. There are no attachments, executions, assignments
for the benefit of creditors, receiverships, conservatorships or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor relief
laws contemplated or filed by Soterion or pending against Soterion.
SECTION 6.13. DISCLOSURE. No representation or warranty by Soterion in this
Agreement, and no exhibit, schedule, or certificate furnished or to be furnished
by Soterion pursuant hereto, (i) contains any untrue statement of a material
fact or (ii) omits to state a fact required to be stated therein or necessary to
make the statements contained herein or therein, in light of the circumstances
in which they were made, not materially misleading.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to Sellers and Soterion that except as set
forth on the Disclosure Schedule attached hereto as SCHEDULE S, and incorporated
by reference (which Disclosure Schedule makes explicit reference to the
particular representation or warranty as to which exception is taken, which in
each case shall constitute the sole representation and warranty as to which such
exception shall apply):
SECTION 7.1. ORGANIZATION, QUALIFICATION, AND CORPORATE POWER OF BUYER.
Buyer (i) is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware; (ii) is qualified to do
business and is in good standing in the State of Indiana; (iii) has the
corporate power and authority to carry on its business as now conducted; and
(iv) has all requisite power and authority and licenses, permits, franchises,
certificates, authorizations, approvals, consents, and rights to own the
property which is the subject of this Agreement, and to be a party to the
contracts, leases, and other agreements which are the subject of this Agreement.
SECTION 7.2. VALIDITY. Buyer has the full legal power and authority to
execute, deliver, and perform this Agreement and all other agreements and
documents necessary to consummate the contemplated transactions, and all
corporate actions of Buyer necessary for such execution, delivery,
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and performance have been or will have been duly taken by Closing. This
Agreement and all agreements related to this transaction have been duly executed
and delivered to Buyer and constitute the legal, valid, and binding obligation
of Buyer enforceable in accordance with their terms (subject as to enforcement
of remedies to equitable principles and to the discretion of courts in awarding
equitable relief and to applicable bankruptcy, reorganization, insolvency,
moratorium, and similar laws affecting the rights of creditors generally). Any
other agreement contemplated to be entered into by Buyer in connection with this
Agreement and the transactions contemplated hereby, when executed and delivered,
will constitute the legal, valid, and binding obligation of Buyer enforceable in
accordance with its respective terms (subject as to enforcement of remedies to
equitable principles and to the discretion of courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting the rights of creditors generally). The execution and
delivery by Buyer of this Agreement and the other agreements related hereto to
which Buyer is a party, and the performance of its obligations hereunder and
thereunder, will not violate any provision of law, the Restated Certificate of
Incorporation or Bylaws of Buyer, any order of any court or other agency of the
government, or any indenture, agreement, or other instrument to which Buyer, or
any of its properties or assets are bound, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement, or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim, or encumbrance of any nature
whatsoever upon any of the properties or assets of Buyer.
SECTION 7.3. FEES AND COMMISSIONS. Buyer has not agreed to pay or become
liable to pay any broker's, finder's, or originator's fees or commissions by
reason of services alleged to have been rendered for, or at the instance of,
Buyer in connection with this Agreement and the transactions contemplated
hereby.
SECTION 7.4. OTHER APPROVALS. Unless waived in writing by Sellers, all
consents, approvals, qualifications, orders, or authorizations of, or filings
with, any governmental authority, including any court or other third party,
required in connection with Buyer's valid execution, delivery, or performance of
this Agreement, or the consummation of any transaction contemplated by this
Agreement, shall have been duly made and obtained and shall be effective on and
as of the Closing Date.
SECTION 7.5. DISCLOSURE. No representation or warranty by Buyer in this
Agreement, and no exhibit, schedule, or certificate furnished or to be furnished
by Buyer pursuant hereto, (i) contains any untrue statement of a material fact
or (ii) omits to state a fact required to be stated therein or necessary to make
the statements contained herein or therein, in light of the circumstances in
which they were made, not materially misleading.
ARTICLE 8.
COVENANTS OF SELLERS AND SOTERION
SECTION 8.1. COOPERATION WITH BUYER. Sellers and Soterion covenant to Buyer
that Sellers shall obtain and/or cooperate with Buyer taking all reasonable
steps before and after the Closing Date that are necessary for Buyer to obtain
all required consents of third parties and
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approvals to Buyer's purchase of the Assets and assumption of the Assigned
Contracts and the Assumed Liabilities pursuant to this Agreement, and in
addressing other matters necessary to consummate the transactions contemplated
by this Agreement.
SECTION 8.2. IDTF APPLICATION AND NUMBER. Sellers and Soterion shall
cooperate with Buyer before and after the Closing Date in completing and
submitting an application with the federal government for recognition and
qualification as an independent diagnostic testing facility, and shall provide
to Buyer promptly upon request from Buyer all information reasonably necessary
to complete and submit such application.
ARTICLE 9.
COVENANTS OF BUYER
SECTION 9.1. COOPERATION WITH SOTERION AND SELLERS. Buyer covenants to
Sellers and Soterion that Buyer cooperate with Sellers and Soterion taking all
reasonable steps before and after the Closing Date that are necessary for Buyer
to obtain all required consents of third parties and approvals to Buyer's
purchase of the Assets and assumption of the Assigned Contracts and the Assumed
Liabilities pursuant to this Agreement, and in addressing other matters
necessary to consummate the transactions contemplated by this Agreement.
ARTICLE 10.
JOINT COVENANTS OF THE PARTIES
SECTION 10.1. CONFIDENTIALITY OF BUSINESS INFORMATION. The parties
heretofore have received and hereafter may receive various financial and other
information concerning the activities, business, assets, and properties of the
other parties hereto. The parties agree that:
10.1.1 all such information thus received by a party hereto shall not
at any time, or in any way or manner, be utilized by such party for its
respective advantage or disclosed by it to others for any purpose whatsoever;
and
10.1.2 the parties shall take all reasonable measures to assure that
no employee or agent under its respective control shall at any time use or
disclose any information described in this Section other than for the purposes
hereunder; and
10.1.3 this Section shall not apply to (i) any such information that
was known to a party prior to its disclosure to such party in accordance with
this Section or was, is, or becomes generally available to the public other than
by disclosure by the party or any of its respective employees or agents in
violation of this Section; (ii) any disclosure which such party makes to any
regulatory agency pursuant to that party's obligations of disclosure to such
agency; (iii) any disclosure that is necessary or appropriate in obtaining any
consent or approval required for the consummation of the transactions
contemplated by this Agreement; or (iv) any disclosure required by or necessary
or appropriate in connection with legal proceedings.
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SECTION 10.2. CONFIDENTIALITY OF THIS AGREEMENT. The existence and contents
of this Agreement and all schedules attached hereto, and the nature and status
of the transactions described herein and therein are confidential. Without the
prior written consent of the other parties hereto, no party hereto will disclose
to any other person the existence and contents of this Agreement and the
schedules attached hereto, and the nature and status of the transactions
described herein. The timing and content of any announcements, press releases,
or other public statements concerning the transactions contemplated by this
Agreement will occur upon, and be determined by, the mutual agreement and
consent of Soterion and Buyer, which shall not be unreasonably withheld if, in
the written opinion of counsel to the party seeking to make the announcement,
press release, or other public statement, such a disclosure is required by
applicable laws. This Section shall not apply to:
(i) any disclosure to such party's directors, managers, officers, key
employees, affiliates, accounting, investment banking, and legal advisers;
(ii) any disclosure which such party makes to any regulatory agency
pursuant to that party's obligations of disclosure to such agency;
(iii) any disclosure that is necessary or appropriate in obtaining any
consent or approval required for the consummation of the transactions
contemplated by this Agreement;
(iv) any disclosure required by or necessary or appropriate in
connection with legal proceedings; or
(v) any disclosure which, in the written opinion of counsel to the
party seeking to make the disclosure, is required by applicable law.
ARTICLE 11.
INDEMNIFICATION
SECTION 11.1. SURVIVAL: RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE.
The right to indemnification, payment of damages, or other remedy based on the
representations, warranties, covenants, and obligations contained herein will
not be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of, or compliance with, any such representation,
warranty, covenant, or obligation. The waiver by any party of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations, unless the waiver is in
writing.
SECTION 11.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER AND SOTERION.
Sellers and Soterion, jointly and severally, agree to indemnify and hold
harmless Buyer, its officers, employees, agents, directors, representatives,
stockholders, controlling persons, and affiliates (collectively, the "BUYER
INDEMNIFIED PERSONS") for, and will pay to the Buyer Indemnified Persons
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the amount of, any loss, liability, claim, damage (including incidental and
consequential damages), expense (including costs of investigation and defense
and reasonable attorneys' fees) or diminution of value incurred by Buyer
Indemnified Persons, whether or not involving a third-party claim, arising,
directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Sellers and/or
Soterion in this Agreement or any other certificate or document
delivered by Sellers and/or Soterion pursuant to this Agreement;
(b) any federal, state, or local tax or fee incurred, accrued, or assessed
in connection with the Assets or the Business with respect to any
period prior to the Closing;
(c) any liability or obligation related to or in connection with the
Assets, the Assigned Contracts, and/or the Business, including those
liabilities and obligations set forth on SCHEDULE B, or as otherwise
disclosed to Buyer, which are or were incurred with respect to any
period prior to the Closing or which relate to the operation of the
Business with respect to any period prior to the Closing, except for
those liabilities which are specifically assumed by Buyer pursuant to
Sections 1.3 and 1.4 hereof; or
(d) any breach by Sellers and/or Soterion of any covenant or obligation of
Sellers and/or Soterion in this Agreement.
The remedies provided in this Section 11.2 will not be exclusive of or
limit any other remedies that may be available to Buyer or the other Buyer
Indemnified Persons.
SECTION 11.3. INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer agrees
to indemnify and hold harmless Sellers and Soterion, and their officers,
employees, agents, directors, representatives, members, controlling persons, and
affiliates (collectively, "SELLERS' INDEMNIFIED PERSONS") for, and will pay to
the Sellers' Indemnified Persons the amount of, any loss, liability, claim,
damage (including incidental and consequential damages), expense (including
costs of investigation and defense and reasonable attorneys' fees) incurred by
Sellers Indemnified Persons, whether or not involving a third-party claim,
arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Buyer in this
Agreement or any other certificate or document delivered by Buyer
pursuant to this Agreement;
(b) any federal, state, or local tax or fee incurred, accrued, or assessed
in connection with the Assets or the Business relating thereto as
owned
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or operated by Buyer with respect to any period from and after the
Closing;
(c) any liability or obligation related to or in connection with the
Assets, the Assigned Contracts, including liabilities assumed by
Buyer, or the Business as owned or operated by Buyer, incurred with
respect to any period from and after the Closing or which relate to
the operation of the Business by Buyer with respect to any period from
and after the Closing; or
(d) any breach by Buyer of any covenant or obligation of Buyer in this
Agreement.
The remedies provided in this Section 11.3 will not be exclusive of or
limit any other remedies that may be available to Sellers and Soterion or the
any of Sellers Indemnified Persons.
SECTION 11.4. LIABILITY AND RISK OF LOSS. Sellers and Soterion shall remain
liable for all their respective obligations and liabilities, costs and expenses,
fixed or contingent, not assumed by Buyer pursuant to this Agreement following
the Closing.
SECTION 11.5. PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under either Section
11.2, 11.3, or 11.4 of notice of the commencement of any proceeding
against it, such indemnified party will, if a claim is to be made
against an indemnifying party under either such Section, give notice
to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the
indemnified party's failure to give such notice.
(b) If any proceeding is brought against an indemnified party and it gives
notice to the indemnifying party of the commencement of such
proceeding, the indemnifying party will be entitled to participate in
such proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such proceeding and the
indemnified party determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial
capacity to defend such proceeding and provide indemnification with
respect to such proceeding), to assume the defense of such proceeding
with counsel satisfactory to the indemnified party and, after notice
from the indemnifying party to the indemnified party of its election
to assume the defense of such proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Section 13 for any fees of other counsel
or any other expenses with respect to the defense of such proceeding,
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in each case subsequently incurred by the indemnified party in
connection with the defense of such proceeding, other than reasonable
costs of investigation. If the indemnifying party assumes the defense
of a proceeding, (i) it will be conclusively established for purposes
of this Agreement that the claims made in that proceeding are within
the scope of and subject to indemnification; (ii) no compromise or
settlement of such claims may be effected by the indemnifying party
without the indemnified party's consent unless (A) there is no finding
or admission of any violation of legal requirements or any violation
of the rights of any person and no effect on any other claims that may
be made against the indemnified party, and (B) the sole relief
provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with
respect to any compromise or settlement of such claims effected
without its consent. If notice is given to an indemnifying party of
the commencement of any proceeding and the indemnifying party does
not, within ten (10) days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume
the defense of such proceeding, the indemnifying party will be bound
by any determination made in such proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a proceeding
may adversely affect it, her, or its affiliates other than as a result
of monetary damages for which it would be entitled to indemnification
under this Agreement, the indemnified party may, by notice to the
indemnifying party, assume the exclusive right to defend, compromise,
or settle such proceeding, but the indemnifying party will not be
bound by any determination of a proceeding so defended or any
compromise or settlement effected without its consent (which may not
be unreasonably withheld).
SECTION 11.6. PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
SECTION 11.7. TIME LIMITATIONS. Sellers and Soterion will have no liability
(for indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied with prior to
the Closing Date, other than those in Sections 3.12, 3.17, 4.12, 4.17, 5.12,
5.17, and 6.7 unless on or before the date two (2) years from the Closing Date,
Buyer notifies Sellers or Soterion of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by Buyer; a claim with
respect to Sections 3.12, 3.17, 4.12, 4.17, 5.12, 5.17, and 6.7, or a claim for
indemnification or reimbursement not based upon (or the subject of which is
covered by) any representation or warranty or any covenant or obligation to be
performed and complied with prior to the Closing Date, may be made at any time.
Buyer will have no liability (for indemnification or otherwise) with respect to
any representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before the date two (2)
years from the Closing Date, Seller or Soterion notify Buyer of a claim
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specifying the factual basis of that claim in reasonable detail to the extent
then known by Sellers or Soterion; a claim for indemnification or reimbursement
not based upon (or the subject of which is covered by) any representation or
warranty or any covenant or obligation to be performed and complied with prior
to the Closing Date may be made at any time.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.1. NOTICE. Whenever notice must be given under the provisions of
this Agreement, such notice must be in writing and will be deemed to have been
duly given by (a) hand-delivery (with written confirmation of receipt) addressed
to the parties at their respective addresses set forth below; or (b) certified
mail, return receipt requested, postage prepaid, and addressed to the parties at
their respective addresses set forth below; or (c) facsimile (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, addressed to the parties at their respective addresses
set forth below, and provided further that notice shall be deemed given under
this subsection (c) when actually received by the recipient:
If to Sellers and Soterion:
Soterion Corporation
6009 Brownsboro Park Blvd., Suite H
Louisville, KY 40207
Attn: Scott Jones
Fax: (502) 893-9050
With a copy to:
Brown, Todd & Heyburn PLLC
400 West Market Street, 32nd Floor
Louisville, KY 40202-3363
Attn: C. Edward Glasscock, Esq.
Fax: (502) 581-1087
If to Buyer:
4400 MacArthur Boulevard
Suite 800
Newport Beach, CA 92660
Attn: General Counsel
Fax: (949) 476-0137
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with a copy to:
Green, Stewart, Farber & Anderson, P.C.
2600 Virginia Avenue, N.W.
Suite 1111
Washington, D.C. 20037
Attn: Paul L. Uhrig, Esq.
Fax: (202) 342-8734
SECTION 12.2. SURVIVAL OF PROVISIONS. Except as limited by Section 11.7,
all warranties, representations, hold harmless, and indemnity obligations and
restrictions made, undertaken, and agreed to by the parties hereto under this
Agreement shall survive the Closing.
SECTION 12.3. AMENDMENT. No modification, waiver, amendment, discharge, or
change of this Agreement shall be valid unless in writing and signed by the
party against whom enforcement of such modification, waiver, amendment,
discharge, or change is sought; provided any party may change their own address
as set forth in Section 12.1 hereof by unilateral written notice to the other
parties hereto.
SECTION 12.4. ASSIGNMENT. This Agreement shall not be assignable by any
party without the prior written consent of the others. Except as noted above, no
other person or corporate entity shall acquire or have any rights under or by
virtue of this Agreement. Notwithstanding the foregoing, Buyer may assign this
Agreement in its sole discretion to any entity that controls, is controlled by,
or is under common control with, Buyer.
SECTION 12.5. SEVERABILITY. If any one or more of the provisions of this
Agreement should be ruled wholly or partly invalid or unenforceable by a court
or other government body of competent jurisdiction, then: (a) the validity and
enforceability of all provisions of this Agreement not ruled to be invalid or
unenforceable shall be unaffected; (b) the effect of the ruling shall be limited
to the jurisdiction of the court or other government body making the ruling; (c)
the provision(s) held wholly or partly invalid or unenforceable shall be deemed
amended, and the court or other government body is authorized to reform the
provision(s), to the minimum extent necessary to render them valid and
enforceable in conformity with the parties' intent as manifested herein and a
provision having a similar economic effect shall be substituted; and (d) if the
ruling and/or the controlling principle of law or equity leading to the ruling,
is subsequently overruled, modified, or amended by legislative, judicial, or
administrative action, the provision(s) in question as originally set forth in
this Agreement shall be deemed valid and enforceable to the maximum extent
permitted by the new controlling principle of law or equity.
SECTION 12.6. CHOICE OF LAW. The interpretation of this Agreement and the
rights and obligations of the parties hereunder shall be governed by the laws of
the State of Delaware, without regard to choice of law provisions.
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SECTION 12.7. BINDING BENEFIT. The provisions, covenants, and agreements
herein contained shall inure to the benefit of, and be binding upon, the parties
hereto and each of their respective legal representatives, successors, and
assigns.
SECTION 12.8. HEADINGS AND CONSTRUCTION. All headings contained in this
Agreement are for reference purposes only and are not intended to affect in any
way the meaning or interpretation of this Agreement. All words used in this
Agreement shall be construed to be of such gender and number as the
circumstances require.
SECTION 12.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
collectively shall constitute one and the same agreement.
SECTION 12.10. EXPENSES. Each of the parties shall bear its own expenses in
connection with this Agreement.
SECTION 12.11. WAIVER. The waiver by any party of a breach or violation of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach of such provision or any other provision of this
Agreement.
SECTION 12.12. CONSTRUCTION. This Agreement shall not be construed more
strictly against any party hereto by virtue of the fact that the Agreement may
have been drafted or prepared by such party or its counsel, it being recognized
that all of the parties hereto have contributed substantially and materially to
its preparation and that this Agreement has been the subject of and is the
product of negotiations between the parties.
SECTION 12.13. CUMULATIVE REMEDIES. Any right, power, or remedy provided
under this Agreement to any party hereto shall be cumulative and in addition to
any other right, power, or remedy provided under this Agreement now or hereafter
existing at law or in equity, and may be exercised singularly or concurrently.
SECTION 12.14. ATTORNEY'S FEES. In the event that any dispute hereunder,
the prevailing party shall be entitled to recover, in addition to any and all
other remedies, which shall be cumulative, the reasonable attorney's fees,
expenses, and costs which it incurs as a result thereof, and, in the case of
Sellers and Soterion, they, jointly and severally, promise and agree to pay to
Buyer all such amounts.
SECTION 12.15. ARBITRATION. In the event of a dispute between the
parties arising from or relating to this Agreement, including, but not limited
to, construction, interpretation, implementation, or enforcement of this
Agreement or the performance or breach of any provision in this Agreement, the
parties shall meet and confer in good faith to resolve such dispute. In the
event such efforts do not resolve the dispute within fifteen (15) days from the
date the dispute arises, either party may demand arbitration by the American
Arbitration Association, before one (1) arbitrator, under its Commercial
Arbitration Rules existing as of the Effective Date, such arbitration
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<PAGE>
to be final, conclusive, and binding. Judgment on the award rendered by the
arbitrator may be entered by any court having proper jurisdiction. The
arbitrator shall base his/her award on the terms of this Agreement, and he/she
will endeavor to follow the law and judicial precedents which a United States
District judge sitting in the District of Delaware would apply in the event the
dispute was litigated in such Court. The parties expressly agree that this
Agreement shall confer no power or authority upon the arbitrator to render any
judgment or award that is erroneous in its application of substantive law and
expressly agree that no such erroneous judgement or award shall be eligible for
confirmation. The arbitrator shall render the award in writing and, unless both
parties agree otherwise, shall include an explanation of the reasons for his/her
award, the findings of fact and conclusions of law upon which his/her award is
based. Notwithstanding the foregoing, any party may seek or assert entitlement
to injunctive relief or specific performance in court as an initial matter and
shall have no prior obligation to establish in arbitration the entitlement to
injunctive relief or specific performance.
SECTION 12.16. ENTIRE AGREEMENT. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter (including all
term sheets and letters of intent exchanged by the parties), and constitutes
(along with the documents referred to in this Agreement) a complete and
exclusive statement of the terms of the agreement among the parties with respect
to its subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SOTERION CORPORATION SOUTHERN REGIONAL MRI, LLC
/s/ R. Scott Jones
- ----------------------------- BY: A MAJORITY OF ITS MEMBERS
SIGNATURE
SOTERION CORPORATION
R. Scott Jones
- ----------------------------- /s/ R. Scott Jones
PRINT NAME -----------------------------
SIGNATURE
President
- ----------------------------- R. Scott Jones
OFFICE OR TITLE -----------------------------
PRINT NAME
President
INDIANA MRI OF LAFAYETTE, -----------------------------
LLC OFFICE OR TITLE
BY: A MAJORITY OF ITS MEMBERS
INDIANA MRI OF INDIANAPOLIS, LLC
SOTERION CORPORATION
BY: A MAJORITY OF ITS MEMBERS
/s/ R. Scott Jones
- -----------------------------
SIGNATURE SOTERION CORPORATION
R. Scott Jones /s/ R. Scott Jones
- ----------------------------- -----------------------------
PRINT NAME SIGNATURE
President R. Scott Jones
- ----------------------------- -----------------------------
OFFICE OR TITLE PRINT NAME
President
-----------------------------
INSIGHT HEALTH CORP. OFFICE OR TITLE
/s/ Steven T. Plochocki
- -----------------------------
SIGNATURE
Steven T. Plochocki
- -----------------------------
PRINT NAME
President and CEO
- -----------------------------
OFFICE OR TITLE
[THIS IS THE LAST PAGE OF THIS AGREEMENT.]
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<PAGE>
SIDE AGREEMENT
BY AND AMONG
SOTERION CORPORATION,
SOUTHERN REGIONAL MRI, LLC,
INDIANA MRI OF LAFAYETTE, LLC,
INDIANA MRI OF INDIANAPOLIS, LLC,
AND
INSIGHT HEALTH CORP.
--------------------
THIS SIDE AGREEMENT (the "AGREEMENT"), dated as of this 21st day of
January, 2000 (the "EFFECTIVE DATE"), is made by and among Southern Regional
MRI, LLC, a limited liability company duly organized and validly existing
under the laws of the State of Indiana ("SOUTHERN REGIONAL"), Indiana MRI of
Indianapolis, LLC, a limited liability company duly organized and validly
existing under the laws of the State of Indiana ("INDIANAPOLIS MRI")
(Southern Regional and Indianapolis MRI are collectively referred to herein
as "SELLERS"), Indiana MRI of Lafayette, LLC, a limited liability company
duly organized and validly existing under the laws of the State of Indiana
("LAFAYETTE MRI"), Soterion Corporation, a corporation duly organized and
validly existing under the laws of the State of Indiana ("SOTERION"), and
InSight Health Corp., a corporation duly organized and validly existing under
the laws of the State of Delaware ("BUYER").
WHEREAS, Sellers, Buyer, and Soterion have executed that certain
Asset Purchase and Liabilities Assumption Agreement (the "PURCHASE
AGREEMENT")simultaneously herewith;
WHEREAS, the Purchase Agreement contemplated that Lafayette MRI
would be a party to the Purchase Agreement and would sell certain of its
assets, assign certain of its contracts, and assign certain of its
liabilities to Buyer;
WHEREAS, the parties hereto desire to close the transactions
contemplated by the Purchase Agreement with respect to Sellers, but not with
respect to Lafayette MRI;
WHEREAS, Lafayette MRI has already executed the Purchase Agreement;
NOW THEREFORE, in consideration of the premises and covenants as set
forth herein, and subject to the representations, warranties, and conditions
contained herein, the parties agree as follows:
SECTION 1. The Purchase Agreement is hereby amended to delete (i)
all references in the Purchase Agreement to Lafayette MRI and, without
limitation, its assets, business, contracts, and liabilities, and (ii) all
documents and schedules attached to the Purchase Agreement that pertain
solely to Lafayette MRI and not Sellers or Buyer. All agreements referenced
in and signed concurrently with the Purchase Agreement that reference or
pertain to Lafayette MRI are hereby amended to delete all references to
Lafayette MRI and, without limitation, its assets, business, contracts, and
liabilities. The
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<PAGE>
Purchase Agreement shall be deemed reformed to eliminate Lafayette MRI but to
achieve the intended transactions with Sellers.
SECTION 2. The parties hereto, other than Lafayette MRI, shall
close the transactions contemplated by the Purchase Agreement on Monday,
January 24, 2000, pursuant to the terms and conditions thereof as if the
Purchase Agreement contains no reference to Lafayette MRI.
SECTION 3. Lafayette MRI and Buyer shall have no rights or
obligations whatsoever as to or against each other.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
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<PAGE>
SOTERION CORPORATION SOUTHERN REGIONAL MRI, LLC
/s/ R. Scott Jones By: A Majority of Its Members
- -----------------------------
Signature SOTERION CORPORATION
R. Scott Jones /s/ R. Scott Jones
- ----------------------------- ----------------------------------
Print Name Signature
President R. Scott Jones
- ----------------------------- ----------------------------------
Office or Title Print Name
President
INDIANA MRI OF LAFAYETTE, LLC ----------------------------------
Office or Title
By: A Majority of Its Members
INDIANA MRI OF INDIANAPOLIS, LLC
SOTERION CORPORATION
By: A Majority of Its Members
/s/ R. Scott Jones
- ------------------------------
Signature SOTERION CORPORATION
R. Scott Jones /s/ R. Scott Jones
- ------------------------------ ---------------------------------
Print Name Signature
President R. Scott Jones
- ------------------------------ ---------------------------------
Office or Title Print Name
President
---------------------------------
INSIGHT HEALTH CORP. Office or Title
- -----------------------------
Signature
- -----------------------------
Print Name
- -----------------------------
Office or Title
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SOTERION CORPORATION SOUTHERN REGIONAL MRI, LLC
By: A Majority of Its Members
- -----------------------------
Signature SOTERION CORPORATION
- ----------------------------- ----------------------------------
Print Name Signature
- ----------------------------- ----------------------------------
Office or Title Print Name
INDIANA MRI OF LAFAYETTE, LLC ----------------------------------
Office or Title
By: A Majority of Its Members
INDIANA MRI OF INDIANAPOLIS, LLC
SOTERION CORPORATION
By: A Majority of Its Members
- ------------------------------
Signature SOTERION CORPORATION
- ------------------------------ ---------------------------------
Print Name Signature
- ------------------------------ ---------------------------------
Office or Title Print Name
---------------------------------
INSIGHT HEALTH CORP. Office or Title
/s/ Steven T. Plochocki
- -----------------------------
Signature
Steven T. Plochocki
- -----------------------------
Print Name
President and CEO
- -----------------------------
Office or Title
-3-
<PAGE>
[Logo] NEWS RELEASE InSight Health Services Corp.
4400 MacArthur Boulevard
Suite 800
Newport Beach, California 92660
CONTACTS:
At InSight:
Steven T. Plochocki
President & CEO
949-476-0733
Thomas V. Croal
Executive Vice President & CFO
949-476-0733
Lynne Rayburn
Investor Relations
949-476-0733
INSIGHT HEALTH SERVICES CORP. ACQUIRES TWO OPEN MRI IMAGING CENTERS IN INDIANA
- INSIGHT MAKES INVESTMENT TO INCREASE PRESENCE IN INDIANA MARKET -
NEWPORT BEACH, CALIFORNIA, February 1, 2000 - InSight Health
Services Corp. ("InSight") (NASDAQ: IHSC) announced today that it has
acquired two imaging centers located in Indiana, pursuant to an asset
purchase agreement with Soterion Corporation and its subsidiary companies,
Indiana MRI of Indianapolis, LLC and Southern Regional MRI, LLC. The two
centers located in Indianapolis and Clarksville, Indiana, offer open MRI and
bone densitometry services.
Steven T. Plochocki, InSight's President and Chief Executive
Officer, stated, "This investment reflects our ongoing acquisition strategy.
It strengthens one of our core markets, expands our fixed site presence and
complements our mobile MRI operations in Indiana."
ABOUT INSIGHT HEALTH SERVICES CORP.
InSight, headquartered in Newport Beach, California, provides
diagnostic imaging and information, treatment and related management
services. InSight serves managed care entities, hospitals and other
contractual customers in 32 US states, including five major US markets:
California, the Southwest, including a major presence in Texas, the Midwest,
the Northeast and the Southeast. Visit InSight's website at
www.insighthealth.com for more information.
<PAGE>
INSIGHT HEALTH SERVICES CORP.
PAGE 2
SAFE HARBOR STATEMENT
The matters set forth in this release are forward-looking statements
that are dependent on certain risks and uncertainties, including such factors
as changing regulatory environment, limitations and delays in reimbursement
by third party payors, contract renewals, financial stability of customers,
aggressive competition, and other risk factors detailed in the Company's SEC
filings.
###
