SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
------------------------------------------------------------
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) September 8, 1997
PRIMEDEX HEALTH SYSTEMS, INC.
[Exact Name of Registrant as specified in its Charter]
New York 0-19019 13-3326724
[state or other [Commission File No.] [IRS Employer
jurisdiction of Identification No.]
incorporation]
1516 Cotner Avenue, Los Angeles, CA 90025-3303 [Address of
principal executive offices; ZIP Code]
Registrant's Telephone No., including Area Code: (310) 478-7808
Former address, if changed since last report
Page 1 of 46 Pages
Exhibit Index on Page 2
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Item 2. Acquisition or Disposition of Assets.
On September 8, 1997, Registrant sold its Future Diagnostics, Inc.
("FDI") subsidiary to Preferred Health Management, Inc., an unrelated third
party, for $13,500,000 payable $9,761,853 cash, a two year $2,000,000 promissory
note bearing interest at 10% per annum with a $1,000,000 principal payment due
in one year with the balance of the purchase price consisting of assumption of
outstanding liabilities connected with the subsidiary's assets. The promissory
note is secured by the subsidiary's accounts receivable. FDI arranges for the
provision of diagnostic imaging services through a network of contracted imaging
centers, which in turn provide imaging services to insurance companies, health
plans and other health care payers.
Registrant retained the portion of FDI's business related to
radiology management services, and in particular physician utilization review,
which is in keeping with Registrant's intent to concentrate on the development
and expansion of its core business of radiology practice management, information
management systems and utilization review/management.
item 7. Financial Statements,Pro Forma Financial Information and Exhibits.
(c) Exhibits. The following exhibit is furnished with this Current Report:
Exhibit No. Document
2 Stock Purchase Agreement whereby
Registrant sold its Future Diagnostics,
Inc. subsidiary
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRIMEDEX HEALTH SYSTEMS, INC.
Dated: September 9, 1997 By: /s/ Howard G. Berger
--------------------------------
Howard G. Berger, M.D., President
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of September 3, 1997, by and
among PREFERRED HEALTH MANAGEMENT, INC., a Delaware corporation (the
"Purchaser"), FUTURE DIAGNOSTICS, INC., a California corporation ("FDI"), RADNET
MANAGED IMAGING SERVICES, INC., a California corporation ("RadNet") and PRIMEDEX
HEALTH SYSTEMS, INC., a New York corporation ("Primedex"). Certain capitalized
terms used in this Agreement are defined on Exhibit A.
RECITALS
A. FDI is a wholly-owned subsidiary of RadNet, which is a wholly-owned
subsidiary of Primedex.
B. RadNet wishes to sell all of the outstanding capital stock of FDI (the
"Shares") to the Purchaser on the terms set forth in this Agreement.
AGREEMENT
The Purchaser, FDI, RadNet and Primedex, intending to be legally bound, agree
as follows:
SECTION 1. SALE AND PURCHASE OF SHARES; RELATED TRANSACTIONS
1.1 Sale and Purchase of Shares. At the Closing, RadNet shall sell, assign,
transfer and deliver the Shares to the Purchaser, and the Purchaser shall
purchase the Shares from RadNet, on the terms and subject to the conditions set
forth in this Agreement.
1.2 Purchase Price.
(a) The aggregate purchase price payable by the Purchaser for the
Shares (the "Purchase Price") shall be Thirteen Million Five Hundred Dollars
($13,500,000). The Purchase Price shall be paid by the Purchaser to RadNet as
follows:
(i) Purchaser will execute a Promissory Note in the principal
amount of $2,000,000 to RadNet in substantially the form attached hereto as
Exhibit B-1 (the "Note"). The Note will bear interest, payable quarterly, at an
annual rate of ten percent (10%), will be due as to $1,000,000 on the first
anniversary of the Closing Date, and will be due as to the remaining principal
amount on the second anniversary of the Closing Date.
(ii) Purchaser will assume the $898,901.40 remaining balance of
RadNet's obligations under clauses (b)(iii), (b)(iv) and (b)(v) of Section 2 of
the Stock Purchase Agreement dated November 14, 1995 among Primedex, RadNet and
the shareholders of FDI.
(iii) Through its purchase of the Shares, Purchaser will assume
Net Provider Site Obligations as of September 3, 1997 of $839,246.00.
(iv) The remaining purchase price of a total of $9,761,852.60
will be payable in cash, by wire transfer of immediately available funds to
RadNet's designated account, or at RadNet's option by certified or bank
cashier's check.
(v) All of the Purchaser's liabilities pursuant to Sections
1.2(a)(i) and (ii) will be secured by a pledge of accounts receivable of FDI
pursuant to a Security Agreement in substantially the form attached hereto as
Exhibit B-2.
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1.3 Closing.
(a) The closing of the sale of the Shares to the Purchaser (the
"Closing") shall take place at the offices of Cooley Godward LLP, 3000 El Camino
Real, Palo Alto, California 94306 at 10:00 a.m. Pacific Time on September __,
1997 or at such other place or time as the Purchaser and FDI may jointly
designate. For purposes of this Agreement, "Closing Date" shall mean to the time
and date as of which the Closing actually takes place.
(b) At the Closing:
(i) RadNet shall deliver to the Purchaser the stock certificates
representing the Shares, duly endorsed (or accompanied by duly executed stock
powers); and
(ii) Purchaser shall deliver to RadNet the Purchase Price for the
Shares.
1.4 Post-Closing Adjustments.
(a) After September 3, 1997, FDI shall continue to post in its books of
account (i) accounts receivable which arose at or prior to the close of business
on September 3, 1997 but were not yet recorded in the books and records of FDI
as of the close of business on September 3, 1997 (the "Subsequent A/R") and (ii)
provider site obligations for PPO network medical services which arose at or
prior to the close of business on September 3, 1997 but were not yet recorded in
the books and records of FDI as of the close of business on September 3, 1997
(the "Subsequent A/P"). As soon as possible after the Closing, FDI shall
calculate the aggregate amount of all compensation (including salary and wages),
vacation pay and sick pay (if any) accrued and unpaid as of the close of
business on the Closing Date (the "Employee Liabilities"). Ninety (90) days
after the Closing Date (or sooner if the parties agree in writing that the
records are then complete) (such date, the "Adjustment Date"), the parties shall
effect a post-closing adjustment, as follows. If the amount of the Subsequent
A/R exceeds the sum of the Subsequent A/P and Employee Liabilities, then the
Purchaser shall pay the amount of such excess to RadNet. If the sum of the
Subsequent A/P and Employee Liabilities exceeds the Subsequent A/R, then RadNet
will pay the amount of such excess to the Purchaser.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF FDI, RADNET AND PRIMEDEX
Except as disclosed on the Disclosure Schedule attached hereto as Exhibit D,
FDI, RadNet and Primedex jointly and severally represent and warrant to and for
the benefit of the Indemnitees, as follows:
2.1 Due Organization; No Subsidiaries; Etc.
(a) FDI is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has all necessary power
and authority:
(i) to conduct its business in the manner in which its
business is currently being conducted;
(ii) to own and use its assets in the manner in which its assets
are currently owned and used; and
(iii) to perform its obligations under all FDI Contracts.
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(b) FDI has never conducted any business under or otherwise used, for
any purpose or in any jurisdiction, any fictitious name, assumed name, trade
name or other name, other than the name "Future Diagnostics, Inc."
(c) FDI is not required to be qualified, authorized, registered or
licensed to do business as a foreign corporation in any jurisdiction other than
the jurisdictions identified in Part 2.1 of the Disclosure Schedule and in such
other jurisdictions where the failure to be so qualified, authorized, registered
or licensed to do business as a foreign corporation would not have a material
adverse effect on FDI. FDI is in good standing as a foreign corporation in each
of the jurisdictions identified in Part 2.1 of the Disclosure Schedule.
(d) Part 2.1 of the Disclosure Schedule accurately sets forth (i) the
names of the members of FDI's board of directors, (ii) the names of the members
of each committee of FDI's board of directors, and (iii) the names and titles of
FDI's officers.
(e) Neither FDI nor any of its stockholders has ever approved, or
commenced any proceeding or made any election contemplating, the dissolution or
liquidation of FDI or the winding up or cessation of FDI's business or affairs.
(f) FDI has no subsidiaries, and FDI has never owned, beneficially or
otherwise, any shares or other securities of, or any direct or indirect interest
of any nature in, any Entity.
2.2 Articles of Incorporation and Bylaws; Records.
(a) FDI has delivered to the Purchaser accurate and complete copies of:
(i) FDI's articles of incorporation and bylaws, including all
amendments thereto;
(ii) the stock records of FDI; and
(iii) the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the stockholders of FDI, the board of directors of FDI and all
committees of the board of directors of FDI.
There have been no formal meetings or other formal proceedings of the
stockholders of FDI, the board of directors of FDI or any committee of the board
of directors of FDI that are not fully reflected in such minutes or other
records.
(b) There has not been any material violation of any of the provisions
of FDI's articles of incorporation or bylaws or of any resolution adopted by
FDI's stockholders, FDI's board of directors or any committee of FDI's board of
directors; and no event has occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time) constitute or result
directly or indirectly in such a violation.
(c) The books of account, stock records, minute books and other records
of FDI are accurate, up-to-date and complete, and have been maintained in
accordance with sound and prudent business practices. All of the records of FDI
are in the actual possession and direct control of FDI. FDI has in place an
adequate and appropriate system of internal controls which is at least as
comprehensive and effective as the systems of internal controls customarily
maintained by Comparable Entities.
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2.3 Capitalization, Etc.
(a) The authorized capital stock of FDI consists of 10,000 shares of
common stock, no par value of which 2,717 shares (constituting all of the
Shares) have been issued and are outstanding.
(b) RadNet has, and the Purchaser will acquire at the Closing, good and
valid title to the Shares free and clear of any Encumbrances. All of the Shares
are held beneficially and of record by RadNet.
(c) All of the Shares (i) have been duly authorized and validly issued,
(ii) are fully paid and non-assessable, and (iii) have been issued in full
compliance with all applicable securities laws and other applicable Legal
Requirements.
(d) There is no:
(i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of FDI;
(ii) outstanding security, instrument or obligation that is or
may become convertible into or exchangeable for any shares of the capital stock
or other securities of FDI;
(iii) Contract or understanding under which FDI is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities; or
(iv) condition or circumstance that may directly or indirectly
give rise to or provide a basis for the assertion of a claim by any Person to
the effect that such Person is entitled to acquire or receive any shares of
capital stock or other securities of FDI.
(e) FDI has never repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities.
2.4 Financial Statements.
(a) FDI has delivered to the Purchaser the following financial
statements and notes (collectively, the "FDI Financial Statements"):
(i) the balance sheets of FDI as of October 31, 1995 and 1996,
and the related statements of operations of FDI for the years then ended; and
(ii) the unaudited balance sheet of FDI as of June 30, 1997 (the
"Unaudited Interim Balance Sheet"), and the related unaudited statements of
operations of FDI for the six months then ended.
FDI was audited as of October 31, 1996 in conjunction with the audit of
Primedex.
(b) All of the FDI Financial Statements are accurate and complete in
all respects, and the dollar amount of each line item included in the FDI
Financial Statements is accurate in all respects. The FDI Financial Statements
present fairly the financial position of FDI as of the respective dates thereof
and the results of operations of FDI for the periods covered thereby. The FDI
Financial Statements have been prepared in accordance with generally accepted
accounting principles, applied on a consistent basis throughout the periods
covered.
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2.5 Absence of Changes. Except as set forth in Part 2.5 of the Disclosure
Schedule, since June 30, 1997:
(a) there has not been any adverse change in FDI's business, condition,
assets, liabilities, operations, financial performance, net income or prospects
(or in any aspect or portion thereof), and no event has occurred that might have
an adverse effect on FDI's business, condition, assets, liabilities, operations,
financial performance, net income or prospects (or on any aspect or portion
thereof);
(b) there has not been any loss, damage or destruction to, or any
interruption in the use of, any of FDI's assets (whether or not covered by
insurance);
(c) FDI has not (i) declared, accrued, set aside or paid any dividend
or made any other distribution in respect of any shares of capital stock, or
(ii) repurchased, redeemed or otherwise reacquired any shares of capital stock
or other securities;
(d) FDI has not sold or otherwise issued any shares of capital stock or
any other securities;
(e) FDI has not amended its articles of incorporation or bylaws and has
not effected or been a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f) FDI has not purchased or otherwise acquired any asset from any
other Person, except for supplies acquired by FDI in the Ordinary Course of
Business;
(g) FDI has not leased or licensed any asset from any other Person;
(h) FDI has not made any capital expenditure;
(i) FDI has not sold or otherwise transferred, and has not leased or
licensed, any asset to any other Person except for products sold by FDI from its
inventory in the Ordinary Course of Business;
(j) FDI has not written off as uncollectible, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness;
(k) FDI has not pledged or hypothecated any of its assets or otherwise
permitted any of its assets to become subject to any Encumbrance;
(l) FDI has not made any loan or advance to any other Person;
(m) FDI has not (i) established or adopted any Employee Benefit Plan,
or (ii) paid any bonus or made any profit-sharing or similar payment to, or
increased the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees;
(n) FDI has not entered into, and neither FDI nor any of the assets
owned or used by FDI has become bound by, any Contract that is not an Excluded
Contract;
(o) other than in the Ordinary Course, no Contract by which FDI or any
of the assets owned or used by FDI is or was bound, or under which FDI has or
had any rights or interest, has been amended or terminated;
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(p) FDI has not incurred, assumed or otherwise become subject to any
Liability, other than accounts payable (of the type required to be reflected as
current liabilities in the "liabilities" column of a balance sheet prepared in
accordance with GAAP) incurred by FDI in the Ordinary Course of Business;
(q) FDI has not discharged any Encumbrance or discharged or paid any
indebtedness or other Liability, except for accounts payable that (i) are
reflected as current liabilities in the "liabilities" column of the Unaudited
Interim Balance Sheet or have been incurred by FDI since June 30, 1997 in the
Ordinary Course of Business, and (ii) have been discharged or paid in the
Ordinary Course of Business;
(r) FDI has not forgiven any debt or otherwise released or waived any
right or claim other than in the Ordinary Course and in any case not greater
than an aggregate of $25,000 in any one month period;
(s) FDI has not changed any of its methods of accounting or accounting
practices in any respect;
(t) FDI has not entered into any transaction or taken any other action
outside the Ordinary Course of Business; and
(u) FDI has not agreed, committed or offered (in writing or otherwise),
and has not attempted, to take any of the actions referred to in clauses "(c)"
through "(t)" above.
2.6 Title to Assets.
(a) FDI owns, and has good and valid title to, all assets purported to
be owned by it, including:
(i) all assets reflected on the Unaudited Interim Balance Sheet
(ii) all assets acquired by FDI since June 30, 1997;
(iii) all assets referred to in Parts 2.8, 2.9 and 2.11 of the
Disclosure Schedule and all of FDI's rights under FDI Contracts; and
(iv) all other assets reflected in FDI's books and records as
being owned by FDI.
Except as set forth in Part 2.6 of the Disclosure Schedule, all of said assets
are owned by FDI free and clear of any Encumbrances.
(b) Part 2.6 of the Disclosure Schedule identifies all assets that are
being leased or licensed to FDI.
2.7 Bank Accounts. Part 2.7 of the Disclosure Schedule accurately sets forth,
with respect to each account maintained by or for the benefit of FDI at any bank
or other financial institution:
(a) the name and location of the institution at which such account is
maintained;
(b) the name in which such account is maintained and the account number
of such account;
(c) a description of such account and the purpose for which such
account is used;
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(d) the current balance in such account;
(e) the rate of interest being earned on the funds in such account, if
any; and
(f) the names of all individuals authorized to draw on or make
withdrawals from such account.
There are no safe deposit boxes or similar arrangements maintained by or for the
benefit of FDI.
2.8 Receivables; Major Customers.
(a) Part 2.8 of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable of FDI as of September
3, 1997.
(b) Except as set forth in Part 2.8 of the Disclosure Schedule, all
existing accounts receivable of FDI (including those accounts receivable
reflected on the Unaudited Interim Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since June 30, 1997 and
have not yet been collected):
(i) represent valid obligations of customers of FDI arising from
bona fide transactions entered into in the Ordinary Course of Business; and
(ii) are current and no less than 95% of which will be collected
on or before six months from the Closing Date.
(c) Part 2.8 of the Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the revenues received from, each
customer or other Person contributing materially to the business of FDI that
accounted for (i) more than $1,000,000 of FDI's gross revenues in 1996, or (ii)
more than $500,000 of FDI's gross revenues in the first half of 1997. FDI has
not received any notice or other communication (in writing or otherwise), and
has not received any other information, indicating that any customer or other
Person identified in Part 2.8 of the Disclosure Schedule may cease dealing with
FDI or may otherwise materially reduce the volume of business transacted by such
Person with FDI below historical levels.
2.9 Equipment, Etc.
(a) Part 2.9 of the Disclosure Schedule accurately identifies all
equipment, furniture, fixtures, improvements and other tangible assets (other
than inventory and the Excluded Assets) owned by FDI, and accurately sets forth
the date of acquisition, original cost and book value of each of said assets.
Part 2.9 also accurately identifies all tangible assets leased to FDI.
(b) Each asset identified or required to be identified in Part 2.9 of
the Disclosure Schedule:
(i) is structurally sound, free of defects and deficiencies and
in good condition and repair (ordinary wear and tear excepted);
(ii) complies in all respects with, and is being operated and
otherwise used in full compliance with, all applicable Legal Requirements; and
(iii) is adequate for the uses to which it is being put.
The assets identified in Part 2.9 together with the Licensed Assets set forth in
Part 2.6 of the Disclosure Schedule are adequate for the conduct of FDI's
business in the manner in which such
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business is currently being conducted. The Retained Business (as defined in the
Noncompetition and Nondisclosure Agreement of even date herewith among Primedex,
RadNet, FDI and the Purchaser) is not necessary for the continuation of the
business of FDI as currently conducted other than the Retained Business.
2.10 Real Property. FDI does not own any real property or any interest in
real property, except for the leaseholds created under the real property leases
identified in Part 2.12 of the Disclosure Schedule. Part 2.10 of the Disclosure
Schedule provides an accurate and complete description of the premises covered
by said leases and the facilities located on such premises. FDI enjoys peaceful
and undisturbed possession of such premises.
2.11 Proprietary Assets.
(a) Except as set forth in Part 2.11 of the Disclosure Schedule, there
is no Proprietary Asset that is owned by or licensed to FDI or that is otherwise
used or useful in connection with FDI's business.
(b) FDI has taken all measures and precautions necessary to protect the
confidentiality and value of each Proprietary Asset identified or required to be
identified in Part 2.11 of the Disclosure Schedule.
(c) FDI is not infringing, and has not at any time infringed or
received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement of, any Proprietary Asset
owned or used by any other Person. To the best Knowledge of FDI and the Parent
Companies, no other Person is infringing, and no Proprietary Asset owned or used
by any other Person infringes or conflicts with, any Proprietary Asset owned or
used by FDI.
(d) The Proprietary Assets identified in Part 2.12 of the Disclosure
Schedule constitute all of the Proprietary Assets necessary to enable FDI to
conduct its business in the manner in which its business is currently being
conducted.
2.12 Contracts.
(a) Part 2.12 of the Disclosure Schedule identifies each FDI Contract,
except for any Excluded Contract. FDI has delivered to the Purchaser accurate
and complete copies of all FDI Contracts identified in Part 2.12 of the
Disclosure Schedule, including all amendments thereto.
(b) Each FDI Contract is valid and in full force and effect, and is
enforceable by FDI in accordance with its terms. No Contract contains any term
or provision that is not customarily found in Contracts entered into by
Comparable Entities.
(c) Except as set forth in Part 2.12 of the Disclosure Schedule:
(i) no Person has violated or materially breached, or declared or
committed any default under, any FDI Contract;
(ii) no event has occurred, and no circumstance or condition
exists, that might (with or without notice or lapse of time) (A) result in a
violation or material breach of any of the provisions of any FDI Contract, (B)
give any Person the right to declare a default or exercise any remedy under any
FDI Contract, (C) give any Person the right to accelerate the maturity or
performance of any FDI Contract, or (D) give any Person the right to cancel,
terminate or modify any FDI Contract;
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(iii) none of the Companies has received any notice or other
communication (in writing or otherwise) regarding any actual, alleged, possible
or potential violation or breach of, or default under, any FDI Contract; and
(iv) FDI has not waived any of its rights under any FDI Contract.
(d) To the best Knowledge of FDI and the Parent Companies, each Person
against which FDI has or may acquire any rights under any FDI Contract is able
to satisfy all of such Person's obligations pursuant to said FDI Contract.
(e) Except as set forth in Part 2.12 of the Disclosure Schedule:
(i) FDI is not a guarantor and has not otherwise agreed to cause,
insure or become liable for, and none of FDI's assets are pledged to secure, the
performance or payment of any obligation or other Liability of any other Person;
and
(ii) FDI is not a party to or bound by any joint venture
agreement, partnership agreement, profit-sharing agreement, cost-sharing
agreement, loss-sharing agreement or similar Contract.
(f) The performance of the FDI Contracts will not result in any
violation of or failure to comply with any Legal Requirement.
(g) No Person is renegotiating, or has the right to renegotiate, any
amount paid or payable to FDI under any FDI Contract or any other term or
provision of any FDI Contract.
(h) The Contracts identified in Part 2.12 of the Disclosure Schedule
and the Excluded Contracts collectively constitute all of the Contracts
necessary to enable FDI to conduct its business in the manner in which its
business is currently being conducted.
2.13 Liabilities; Major Suppliers.
(a) FDI has no Liabilities, except for:
(i) liabilities identified as such in the "liabilities" column
of the Unaudited Interim Balance Sheet;
(ii) accounts payable (of the type required to be reflected as
current liabilities in the "liabilities" column of a balance sheet prepared in
accordance with GAAP) incurred by FDI in the Ordinary Course of Business since
June 30, 1997;
(iii) FDI's obligations under the Contracts listed in Part 2.12
or the Licensed Assets listed under Part 2.6 of the Disclosure Schedule and
under Excluded Contracts, to the extent that the existence of such obligations
is ascertainable solely by reference to such Contracts;
(iv) Insurance company overpayments in an amount not to exceed
$25,000; and
(v) Physician payables due after cash is received by FDI on
accounts receivable which is not in excess of $500,000.
(b) Part 2.13 of the Disclosure Schedule:
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(i) provides an accurate and complete breakdown and aging of
FDI's accounts payable as of September 3, 1997;
(ii) provides an accurate and complete breakdown of FDI's
long-term debt as of the date of this Agreement.
(c) FDI has not paid, and FDI is not and will not become liable for the
payment of, any fees, costs or expenses of the type referred to in Section
11.3(a).
(d) Part 2.13 of the Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the amounts paid to, each
supplier or other Person that received (i) more than $500,000 from FDI in 1996
and the six months ended June 30, 1997, or (ii) more than $250,000 from FDI in
the first half of 1997.
2.14 Compliance with Legal Requirements.
(a) Except as set forth in Part 2.14 of the Disclosure Schedule:
(i) FDI is in compliance with each Legal Requirement that is
material to the conduct of its business or the ownership or use of any of its
assets;
(ii) to the best Knowledge of FDI and the Parent Companies, no
event has occurred, and no condition or circumstance exists, that might (with or
without notice or lapse of time) constitute or result directly or indirectly in
a violation by FDI of, or a failure on the part of FDI to comply with, any Legal
Requirement; and
(iii) none of the Companies has received, at any time, any notice
or other communication (in writing or otherwise) from any Governmental Body or
any other Person regarding (i) any actual, alleged, possible or potential
violation of, or failure to comply with, any Legal Requirement on the part of
FDI or with respect to FDI's business or assets, or (ii) any actual, alleged,
possible or potential obligation on the part of any of the Companies to
undertake, or to bear all or any portion of the cost of, any cleanup or any
remedial, corrective or response action of any nature on the part of FDI or with
respect to FDI's business or assets.
(b) FDI has delivered to the Purchaser an accurate and complete copy of
each report, study, survey or other document to which FDI has access that
addresses or otherwise relates to the compliance with, or the applicability to
any of the Companies of, any Legal Requirement on the part of FDI or with
respect to FDI's business or assets.
(c) To the best Knowledge of FDI and the Parent Companies, no
Governmental Body in a political subdivision in which FDI currently conducts its
business has proposed or is considering any Legal Requirement that, if adopted
or otherwise put into effect, (i) may have a material adverse effect on FDI's
business, condition, assets, liabilities, operations, financial performance, net
income or prospects or on the ability of FDI or the Parent Companies to comply
with or perform any covenant or obligation under any of the Transactional
Agreements, or (ii) may have the effect of preventing, delaying, making illegal
or otherwise materially interfering with any of the Transactions.
2.15 Governmental Authorizations.
(a) Part 2.15 of the Disclosure Schedule identifies:
(i) each Governmental Authorization that is held by FDI; and
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(ii) each other Governmental Authorization that, to the best
Knowledge of FDI and the Parent Companies, is held by any of FDI's employees and
relates to or is useful in connection with FDI's business.
FDI has delivered to the Purchaser accurate and complete copies of all of the
Governmental Authorizations identified in Part 2.15 of the Disclosure Schedule,
including all renewals thereof and all amendments thereto. Each Governmental
Authorization identified or required to be identified in Part 2.15 of the
Disclosure Schedule is valid and in full force and effect.
(b) Except as set forth in Part 2.15 of the Disclosure Schedule:
(i) FDI and its employees are, and the Companies and their
respective employees have at all times been, in full compliance with all of the
terms and requirements of each Governmental Authorization identified or required
to be identified in Part 2.15 of the Disclosure Schedule;
(ii) no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) (A) constitute or
result directly or indirectly in a violation of or a failure to comply with any
term or requirement of any Governmental Authorization identified or required to
be identified in Part 2.15 of the Disclosure Schedule, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, termination
or modification of any Governmental Authorization identified or required to be
identified in Part 2.15 of the Disclosure Schedule;
(iii) none of the Companies has ever received, and, to the best
Knowledge of FDI and the Parent Companies, no employee of any of the Companies
has ever received, any notice or other communication (in writing or otherwise)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of or failure to comply with any term
or requirement of any Governmental Authorization on the part of FDI or relating
to its business or assets, or (B) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination or modification of
any Governmental Authorization on the part of FDI or relating to its business or
assets; and
(iv) all applications required to have been filed for the renewal
of the Governmental Authorizations required to be identified in Part 2.15 of the
Disclosure Schedule have been duly filed on a timely basis with the appropriate
Governmental Bodies, and each other notice or filing required to have been given
or made with respect to such Governmental Authorizations has been duly given or
made on a timely basis with the appropriate Governmental Body.
(c) The Governmental Authorizations identified in Part 2.15 of the
Disclosure Schedule constitute all of the Governmental Authorizations necessary
(i) to enable FDI to conduct its business in the manner in which its business is
currently being conducted, and (ii) to permit FDI to own and use its assets in
the manner in which they are currently owned and used.
2.16 Tax Matters.
(a) Each Tax required to have been paid, or claimed by any Governmental
Body to be payable, by FDI (whether pursuant to any Tax Return or otherwise) has
been duly paid in full or on a timely basis. Any Tax required to have been
withheld or collected by FDI has been duly withheld and collected; and (to the
extent required) each such Tax has been paid to the appropriate Governmental
Body.
(b) Part 2.16 of the Disclosure Schedule accurately identifies all Tax
Returns required to be filed by or on behalf of FDI with any Governmental Body
with respect to any taxable period
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ending on or before the Closing Date ("FDI Returns"). All FDI Returns (i) have
been or, if required to be filed prior to the Closing Date, will be filed when
due, and (ii) have been, if required to be filed prior to the Closing Date,
filed, accurately and completely prepared in full compliance with all applicable
Legal Requirements. All amounts shown on the FDI Returns to be due on or before
the Closing Date, and all amounts otherwise payable in connection with the FDI
Returns on or before the Closing Date, have been or will be paid on or before
the Closing Date. FDI has delivered to the Purchaser accurate and complete
copies of all FDI Returns filed since December 31, 1992.
(c) The FDI Financial Statements fully accrue all actual and contingent
liabilities for Taxes with respect to all periods through the dates thereof in
accordance with GAAP (subject to consolidation with parent entities).
(d) Except as set forth in Part 2.16 of the Disclosure Schedule, no
claim or other Proceeding is pending or has been threatened against or with
respect to FDI in respect of any Tax. There are no unsatisfied Liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by any of the Companies. FDI has not entered into or
has become bound by any agreement or consent pursuant to Section 341(f) of the
Code. FDI will not be required to include any adjustment in taxable income for
any tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
(e) There is no agreement, plan, arrangement or other Contract covering
any employee or independent contractor or former employee or independent
contractor of FDI that, individually or collectively, could give rise directly
or indirectly to the payment of any amount that would not be deductible pursuant
to Section 280G or Section 162 of the Code. FDI is not a party to or bound by
any tax indemnity agreement, tax sharing agreement, tax allocation agreement or
similar Contract.
2.17 Employee and Labor Matters.
(a) Part 2.17 of the Disclosure Schedule accurately sets forth, with
respect to each employee of FDI (including any employee of FDI who is on a leave
of absence or on layoff status):
(i) the name of such employee and the date as of which such
employee was originally hired by FDI or one of the Parent Companies;
(ii) such employee's title; and
(iii) such employee's annualized compensation as of the date of
this Agreement.
(b) FDI is not a party to or bound by any employment agreement or any
union contract, collective bargaining agreement or similar Contract, except as
set forth in Part 2.17 of the Disclosure Schedule.
(c) The employment of each of FDI's employees is terminable by FDI at
will. FDI has delivered to the Purchaser accurate and complete copies of all
employee manuals and handbooks, disclosure materials, policy statements and
other materials relating to the employment of the current and former employees
of each of the Companies.
(d) To the best Knowledge of FDI and the Parent Companies:
(i) no employee of FDI intends to terminate his employment with
FDI;
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(ii) no employee of FDI has received an offer to join a business
that may be competitive with FDI's business; and
(iii) no employee of FDI is a party to or is bound by any
confidentiality agreement, noncompetition agreement or other Contract (with any
Person) that may have an adverse effect on (A) the performance by such employee
of any of his duties or responsibilities as an employee of FDI, or (B) FDI's
business or operations.
(e) FDI is not engaged in any unfair labor practice. There has never
been any slowdown, work stoppage, labor dispute or union organizing activity, or
any similar activity or dispute, affecting FDI or any of its employees. There is
not now pending, and no Person has threatened to commence, any such slowdown,
work stoppage, labor dispute or union organizing activity or any similar
activity or dispute.
2.18 Benefit Plans; ERISA.
(a) Part 2.18 of the Disclosure Schedule identifies and provides an
accurate and complete description of each Current Benefit Plan and each Past
Benefit Plan in which the employees of FDI currently have rights. FDI has not
established, adopted, maintained, sponsored, contributed to or participated in
any Employee Benefit Plan, except for the Company Plans identified in Part 2.18
of the Disclosure Schedule. FDI has not provided or made available any fringe
benefit or other benefit of any nature to any of its employees, except as set
forth in Part 2.18 of the Disclosure Schedule. Except as identified in Part 2.18
of the Disclosure Schedule, FDI has incurred no Liability with respect to any
Company Benefit Plan. FDI shall have no Liability arising out of this Agreement
with respect to any Company Benefit Plan; and, in particular, Primedex (or an
affiliate designated by Primedex) agrees to assume any liabilities arising under
COBRA (Code ss.4980B) with respect to FDI employees who do not remain employees
of FDI subsequent to the Closing and who cease participating in Company Benefit
Plans that are group health plans. FDI shall have no liability with respect to
any Company Benefit Plan after the Closing Date.
(b) No Company Plan identified in Part 2.18 of the Disclosure Schedule:
(i) shall benefit any FDI employees after the Closing Date,
except as may be required by law with the respect to benefits for former
employees; or
(ii) is or was a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA.
(c) FDI has delivered to the Purchaser, with respect to each Company
Plan identified in Part 2.18 of the Disclosure Schedule:
(i) an accurate and complete copy of such Company Plan and all
amendments thereto (including any amendment that is scheduled to take effect in
the future);
(ii) an accurate and complete copy of each Contract (including
any trust agreement, funding agreement, service provider agreement, insurance
agreement, investment management agreement or recordkeeping agreement) relating
to such Company Plan;
(iii) an accurate and complete copy of any description, summary,
notification, report or other document that has been furnished to any employee
of any of the Companies with respect to such Company Plan;
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(iv) an accurate and complete copy of any form, report,
registration statement or other document that has been filed with or submitted
to any Governmental Body with respect to such Company Plan; and
(v) an accurate and complete copy of any determination letter,
notice or other document that has been issued by, or that has been received by
any of the Companies from, any Governmental Body with respect to such Company
Plan.
(d) No inaccurate or misleading representation, statement or other
communication has been made or directed (in writing or otherwise) to any current
or former FDI employee (i) with respect to such employee's participation,
eligibility for benefits, vesting, benefit accrual or coverage under any Company
Plan or with respect to any other matter relating to any Company Plan, or (ii)
with respect to any proposal or intention on the part of any of the Companies to
establish or sponsor any Employee Benefit Plan or to provide or make available
any fringe benefit or other benefit of any nature.
(e) Except as set forth in Part 2.18 of the Disclosure Schedule, FDI
has not advised any of its employees (in writing or otherwise) that it intends
or expects to establish or sponsor any Employee Benefit Plan or to provide or
make available any fringe benefit or other benefit of any nature in the future.
2.19 Environmental Matters.
(a) FDI is not liable or potentially liable for any response cost or
natural resource damages under Section 107(a) of CERCLA, or under any other
so-called "superfund" or "superlien" law or similar Legal Requirement, at or
with respect to any site.
(b) FDI has never received any notice or other communication (in
writing or otherwise) from any Governmental Body or other Person regarding any
actual, alleged, possible or potential Liability arising from or relating to the
presence, generation, manufacture, production, transportation, importation, use,
treatment, refinement, processing, handling, storage, discharge, release,
emission or disposal of any Hazardous Material. No Person has ever commenced or
threatened to commence any contribution action or other Proceeding against FDI
in connection with any such actual, alleged, possible or potential Liability;
and no event has occurred, and no condition or circumstance exists, that may
directly or indirectly give rise to, or result in FDI becoming subject to, any
such Liability.
(c) Except as set forth in Part 2.19 of the Disclosure Schedule, FDI
has never generated, manufactured, produced, transported, imported, used,
treated, refined, processed, handled, stored, discharged, released or disposed
of any Hazardous Material (whether lawfully or unlawfully). Except as set forth
in Part 2.19 of the Disclosure Schedule, FDI has never permitted (knowingly or
otherwise) any Hazardous Material to be generated, manufactured, produced, used,
treated, refined, processed, handled, stored, discharged, released or disposed
of (whether lawfully or unlawfully):
(i) on or beneath the surface of any real property that is, or
that has at any time been, owned by, leased to, controlled by or used by any of
the Companies;
(ii) in or into any surface water, groundwater, soil or air
associated with or adjacent to any such real property; or
(iii) in or into any well, pit, pond, lagoon, impoundment, ditch,
landfill, building, structure, facility, improvement, installation, equipment,
pipe, pipeline, vehicle or storage container that is or was located on or
beneath the surface of any such real property or that is or has at any time been
owned by, leased to, controlled by or used by any of the Companies.
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2.20 Insurance.
(a) Part 2.20 of the Disclosure Schedule accurately sets forth, with
respect to each insurance policy maintained by or at the expense of, or for the
direct or indirect benefit of, FDI:
(i) the name of the insurance carrier that issued such policy and
the policy number of such policy;
(ii) whether such policy is a "claims made" or an "occurrences"
policy;
(iii) a description of the coverage provided by such policy and
the material terms and provisions of such policy (including all applicable
coverage limits, deductible amounts and co-insurance arrangements and any
non-customary exclusions from coverage);
(iv) the annual premium payable with respect to such policy, and
the cash value (if any) of such policy; and
(v) a description of any claims pending, and any claims that have
been asserted in the past, with respect to such policy.
Part 2.20 also identifies (1) each pending application for insurance that has
been submitted by or on behalf of FDI, and (2) each self-insurance or
risk-sharing arrangement affecting FDI or any of its assets. FDI has delivered
to the Purchaser accurate and complete copies of all of the insurance policies
identified in Part 2.20 of the Disclosure Schedule (including all renewals
thereof and endorsements thereto) and all of the pending applications identified
in Part 2.20 of the Disclosure Schedule. Purchaser acknowledges that such
policies will not be transferred to Purchaser in connection with the
Transactions.
(b) Each of the policies identified in Part 2.20 of the Disclosure
Schedule is valid, enforceable and in full force and effect. All of the
information contained in the applications submitted in connection with said
policies was (at the times said applications were submitted) accurate and
complete, and all premiums and other amounts owing with respect to said policies
have been paid in full on a timely basis. The nature, scope and dollar amounts
of the insurance coverage provided by said policies are sufficient to adequately
insure FDI's business, assets, operations, key employees, services and potential
liabilities; and said insurance coverage is at least as comprehensive as the
insurance coverage customarily maintained by Comparable Entities.
(c) Except as set forth in Part 2.20 of the Disclosure Schedule, there
is no pending claim under or based upon any of the policies identified in Part
2.20 of the Disclosure Schedule; and no event has occurred, and no condition or
circumstance exists, that might (with or without notice or lapse of time)
directly or indirectly give rise to or serve as a basis for any such claim.
(d) None of the Companies has received:
(i) any notice or other communication (in writing or otherwise)
regarding the actual or possible cancellation or invalidation of any of the
policies identified in Part 2.20 of the Disclosure Schedule or regarding any
actual or possible adjustment in the amount of the premiums payable with respect
to any of said policies;
(ii) any notice or other communication (in writing or otherwise)
regarding any actual or possible refusal of coverage under, or any actual or
possible rejection of any claim under, any of the policies identified in Part
2.20 of the Disclosure Schedule; or
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(iii) any Knowledge that the issuer of any of the policies
identified in Part 2.20 of the Disclosure Schedule may be unwilling or unable to
perform any of its obligations thereunder.
2.21 Related Party Transactions. Except as set forth in Part 2.21 of the
Disclosure Schedule:
(a) no Related Party has, and no Related Party has at any time since
FDI's inception, had any direct or indirect interest of any nature in any asset
used in or otherwise relating to the business of FDI;
(b) no Related Party is, or has at any time since FDI's inception been,
indebted to FDI;
(c) since FDI's inception, no Related Party has entered into, or has
had any direct or indirect financial interest in, any Contract, transaction or
business dealing of any nature involving FDI;
(d) no Related Party is competing, or has at any time since FDI's
inception competed, directly or indirectly, with FDI in any market served by any
of the Companies;
(e) no Related Party has any claim or right against FDI; and
(f) no event has occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time) directly or indirectly give
rise to or serve as a basis for any claim or right in favor of any Related Party
against FDI.
2.22 Certain Payments, Etc. Neither FDI nor any officer or, to the best
Knowledge of FDI and the Parent Companies, employee, agent or other Person
associated with or acting for or on behalf of FDI, has at any time, directly or
indirectly:
(a) used any corporate funds (i) to make any unlawful political
contribution or gift or for any other unlawful purpose relating to any political
activity, (ii) to make any unlawful payment to any governmental official or
employee, or (iii) to establish or maintain any unlawful or unrecorded fund or
account of any nature;
(b) made any false or fictitious entry, or failed to make any entry
that should have been made, in any of the books of account or other records of
any of the Companies; or
(c) made any payoff, influence payment, bribe, rebate, kickback or
unlawful payment to any Person.
2.23 Proceedings; Orders.
(a) Except as set forth in Part 2.23 of the Disclosure Schedule, there
is no pending Proceeding as to which any of the Companies has received written
notice, and, to the Companies' knowledge, no Person has threatened to commence
any Proceeding:
(i) that involves FDI or that otherwise relates to or might
affect FDI's business or any of the assets owned or used by FDI (whether or not
FDI is named as a party thereto); or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Transactions.
Except as set forth in Part 2.23 of the Disclosure Schedule, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
might directly or indirectly give rise to or serve as a basis for the
commencement of any such Proceeding.
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(b) Except as set forth in Part 2.23 of the Disclosure Schedule, no
Proceeding by or against FDI is outstanding; and no Proceeding otherwise
involving or relating to FDI is outstanding or, to the Companies' knowledge,
threatened.
(c) FDI has delivered to the Purchaser accurate and complete copies of
all pleadings, correspondence and other written materials to which FDI has
access that relate to the Proceedings identified in Part 2.23 of the Disclosure
Schedule.
(d) There is no Order to which FDI, or any of the assets owned or used
by FDI, is subject which interferes with its business as presently conducted;
and none of the Companies is subject to any known Order that materially relates
to FDI's business or to any of the assets owned or used by FDI which interferes
with its business as presently conducted.
(e) To the best Knowledge of FDI and the Parent Companies, no officer
or employee of FDI is subject to any Order that prohibits such officer or
employee from engaging in or continuing any conduct, activity or practice
relating to FDI's business.
(f) To the best Knowledge of FDI and the Parent Companies, there is no
proposed Order that, if issued or otherwise put into effect, (i) may have an
adverse effect on FDI's business, condition, assets, liabilities, operations,
financial performance, net income or prospects (or on any aspect or portion
thereof) or on the ability of FDI or the Parent Companies to comply with or
perform any covenant or obligation under any of the Transactional Agreements, or
(ii) may have the effect of preventing, delaying, making illegal or otherwise
interfering with any of the Transactions.
2.24 Authority; Binding Nature of Agreements.
(a) FDI has the absolute and unrestricted right, power and authority to
enter into and to perform its obligations under this Agreement; and the
execution, delivery and performance by FDI of this Agreement have been duly
authorized by all necessary action on the part of FDI and its stockholder, board
of directors and officers. This Agreement constitutes the legal, valid and
binding obligation of FDI, enforceable against FDI in accordance with its terms,
except, in each case, to the extent limited by bankruptcy, insolvency,
reorganization and other laws affecting creditors' generally, and except that
the remedy of specific performance or similar equitable relief is available only
at the discretion of the court before which enforcement is sought and except as
rights to indemnification may be limited by applicable law.
(b) RadNet and Primedex have the absolute and unrestricted right, power
and capacity to enter into and to perform their respective obligations under
each of the Transactional Agreements to which RadNet and Primedex is or may
become a party. This Agreement constitutes the legal, valid and binding
obligation of RadNet and Primedex, enforceable against RadNet and Primedex in
accordance with its terms, except, in each case, to the extent limited by
bankruptcy, insolvency, reorganization and other laws affecting creditors'
generally, and except that the remedy of specific performance or similar
equitable relief is available only at the discretion of the court before which
enforcement is sought and except as rights to indemnification may be limited by
applicable law. Upon the execution of each of the other Transactional Agreements
at the Closing, each of such other Transactional Agreements will constitute the
legal, valid and binding obligation of RadNet and Primedex who are parties
thereto, and will be enforceable against RadNet and Primedex in accordance with
its terms, except, in each case, to the extent limited by bankruptcy,
insolvency, reorganization and other laws affecting creditors' generally, and
except that the remedy of specific performance or similar equitable relief is
available only at the discretion of the court before which enforcement is sought
and except as rights to indemnification may be limited by applicable law.
2.25 Non-Contravention; Consents. Except as set forth in Part 2.25 of the
Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the
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consummation or performance of any of the Transactions, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of FDI's articles of incorporation or bylaws, or (ii) any
resolution adopted by FDI's stockholders, FDI's board of directors or any
committee of FDI's board of directors;
(b) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the Transactions
or to exercise any remedy or obtain any relief under, any Legal Requirement or
any Order to which FDI or the Companies, or any of the assets owned or used by
FDI, is subject;
(c) cause FDI to become subject to, or to become liable for the payment
of, any Tax;
(d) cause any of the assets owned or used by FDI to be reassessed or
revalued by any taxing authority or other Governmental Body;
(e) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by FDI or any of its employees or that otherwise relates to FDI's
business or to any of the assets owned or used by FDI;
(f) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any FDI Contract;
(g) give any Person the right to (i) declare a default or exercise any
remedy under any FDI Contract, (ii) accelerate the maturity or performance of
any FDI Contract, or (iii) cancel, terminate or modify any FDI Contract;
(h) contravene, conflict with or result in a violation or breach of or
a default under any provision of, or give any Person the right to declare a
default under, any Contract to which any of the Companies is a party or by which
any of the Companies is bound; or
(i) result in the imposition or creation of any Encumbrance upon or
with respect to any asset owned or used by FDI.
Except as set forth in Part 2.25 of the Disclosure Schedule, neither FDI nor the
Parent Companies were, are or will be required to make any filing with or give
any notice to, or to obtain any Consent from, any Person in connection with the
execution and delivery of any of the Transactional Agreements or the
consummation or performance of any of the Transactions.
2.26 Brokers. Neither FDI nor the Parent Companies have agreed or become
obligated to pay, or has taken any action that might result in any Person
claiming to be entitled to receive, any brokerage commission, finder's fee or
similar commission or fee in connection with any of the Transactions.
2.27 Full Disclosure.
(a) None of the Transactional Agreements contains or will contain any
untrue statement of fact; and none of the Transactional Agreements omits or will
omit to state any fact necessary to make any of the representations, warranties
or other statements or information contained therein not misleading.
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(b) Except as set forth in Part 2.27 of the Disclosure Schedule, there
is no fact within the Knowledge of FDI or the Parent Companies (other than
publicly known facts relating exclusively to political or economic matters of
general applicability that will adversely affect all Comparable Entities) that
(i) may have a material adverse effect on FDI's business, condition, assets,
liabilities, operations, financial performance, net income or prospects (or on
any aspect or portion thereof) or on the ability of FDI or the Parent Companies
to comply with or perform any covenant or obligation under any of the
Transactional Agreements, or (ii) may have the effect of preventing, delaying,
making illegal or otherwise interfering with any of the Transactions.
(c) All of the information set forth in the Disclosure Schedule, and
all other written information regarding the respective Companies and their
business, condition, assets, liabilities, operations, financial performance, net
income and prospects that has been furnished to the Purchaser or any of its
Representatives by or on behalf of FDI or any of FDI's Representatives, is
accurate and complete in all respects.
(d) FDI and the Parent Companies have provided the Purchaser and the
Purchaser's Representatives with full and complete access to all of FDI's
records and other documents.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as disclosed on Purchaser's Disclosure Schedule attached hereto as
Exhibit E, the Purchaser represents and warrants, to and for the benefit of
RadNet and Primedex, as follows:
3.1 Acquisition of Shares. The Purchaser is not acquiring the Shares with the
intention of making a public distribution thereof.
3.2 Authority; Binding Nature of Agreement.Upon the adoption of appropriate
resolutions by the Purchaser's board of directors:
(a) the Purchaser will have the right, power and authority to enter
into and perform its obligations under this Agreement;
(b) the execution, delivery and performance of this Agreement by the
Purchaser will have been duly authorized by all necessary action on the part of
the Purchaser and its board of directors; and
(c) this Agreement will constitute the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms.
(d) no further corporate authorization will be necessary on the part of
Purchaser to consummate the Transactions.
3.3 Organization Good Standing and Qualification. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware with all necessary power and authority to execute and
deliver this Agreement, to performs its obligations hereunder, and to consummate
the Transactions.
3.4 Valid and Binding Agreement. This Agreement, and when executed and
delivered, the License Agreement and the Non-Competition Agreement, constitute
and will constitute the legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their respective terms,
except, in each case, to the extent limited by bankruptcy, insolvency,
reorganization and other laws affecting creditors' generally, and except that
the remedy of specific performance or similar equitable relief is available only
at the discretion of the court before which enforcement is sought and except as
rights to indemnification may be limited by applicable law.
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3.5 No Breach of Statute or Contract. Neither the execution and delivery of
this Agreement, the License Agreement nor the Non-Competition Agreement by the
Purchaser nor compliance with the terms and provisions of this Agreement, the
License Agreement or the Non- Competition Agreement on the part of Purchaser,
will: (a) violate any statute or regulation of any governmental authority,
domestic or foreign, affecting the Purchaser; (b) require the issuance to the
Purchaser of any authorization, license, consent or approval of any federal or
state governmental agency; or (c) conflict with or result in a breach of any of
the terms, conditions or provisions of any judgment, order, injunction, decree,
note indenture, loan agreement or other agreement or instrument to which the
Purchaser is a party, or by which the Purchaser is bound, or constitute a
default thereunder, except for such conflicts, breaches or defaults, that
individually or in the aggregate, would not have a material adverse effect on
Purchaser's business, financial condition, assets, liabilities, operations,
financial performance, net income or prospects (or on any aspect or portion
thereof).
3.6 Full Disclosure.
(a) None of the Transactional Agreements contains or will contain any
untrue statement of fact; and none of the Transactional Agreements omits or will
omit to state any fact necessary to make any of the representations, warranties
or other statements or information contained therein not misleading.
(b) There is no fact within the Knowledge or Purchaser (other than
publicly known facts relating exclusively to political or economic matters of
general applicability that will adversely affect all Comparable Entities) that
(i) may have a material adverse effect on Purchaser's business, condition,
assets, liabilities, operations, financial performance, net income or prospects
(or on any aspect or portion thereof) or on the ability of Purchaser to comply
with or perform any covenant or obligation under any of the Transactional
Agreements, or (ii) may have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the Transactions.
(c) All of the written information regarding the Purchaser and its
business, condition, assets, liabilities, operations, financial performance, net
income and prospects that has been furnished to FDI, RadNet or Primedex, or any
of their Representatives by or on behalf of Purchaser of any of its
Representatives is accurate and complete in all respects.
3.7 Brokers. The Purchaser has not agreed or become obligated to pay, and has
not taken any action that might result in any Person claiming to be entitled to
receive, any brokerage commission, finder's fee or similar commission or fee in
connection with any of the Transactions.
SECTION 4. PRE-CLOSING COVENANTS OF FDI, RADNET AND PRIMEDEX
4.1 Access and Investigation. FDI and the Parent Companies shall ensure that,
at all times during the Pre-Closing Period:
(a) FDI and its Representatives upon reasonable advance notice to FDI,
during normal business hours and without undue disruption of the business of
FDI, provide the Purchaser and its Representatives with free and complete access
to FDI's Representatives, personnel and assets and to all existing books,
records, Tax Returns, work papers and other documents and information relating
to FDI;
(b) FDI and its Representatives provide the Purchaser and its
Representatives with such copies of existing books, records, Tax Returns, work
papers and other documents and information relating to FDI as the Purchaser may
request in good faith; and
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(c) FDI and its Representatives compile and provide the Purchaser and
its Representations with such additional financial, operating and other data and
information relating to FDI as the Purchaser may request in good faith.
4.2 Operation of Business. FDI and the Parent Companies shall ensure that,
during the Pre-Closing Period:
(a) RadNet does not directly or indirectly sell or otherwise transfer,
or offer, agree or commit (in writing or otherwise) to sell or otherwise
transfer, any of the Shares or any interest in or right relating to any of the
Shares;
(b) RadNet does not permit, or offer, agree or commit (in writing or
otherwise) to permit, any of the Shares to become subject, directly or
indirectly, to any Encumbrance;
(c) FDI conducts its operations exclusively in the Ordinary Course of
Business and in the same manner as such operations have been conducted prior to
the date of this Agreement;
(d) FDI utilizes its Best Efforts to preserve intact its current
business organization, keep available the services of its current officers and
employees and maintain its relations and good will with all suppliers,
customers, landlords, creditors, licensors, licensees, employees and other
Persons having business relationships with FDI;
(e) FDI keeps in full force all insurance policies identified in Part
2.20 of the Disclosure Schedule;
(f) FDI immediately notifies the Purchaser of any inquiry, proposal or
offer from any Person relating to any Acquisition Transaction;
(g) FDI does not declare, accrue, set aside or pay any dividend or make
any other distribution in respect of any shares of capital stock, and does not
repurchase, redeem or otherwise reacquire any shares of capital stock or other
securities;
(h) FDI does not sell or otherwise issue any shares of capital stock or
any other securities;
(i) FDI does not amend its articles of incorporation or bylaws, and
does not effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(j) FDI does not form any subsidiary or acquire any equity interest or
other interest in any other Entity;
(k) FDI does not make any capital expenditure, except for capital
expenditures that are made in the Ordinary Course of Business and that, when
added to all other capital expenditures made on behalf of FDI during the
Pre-Closing Period, do not exceed $25,000 in the aggregate;
(l) FDI does not enter into or permit any of the assets owned or used
by FDI to become bound by any Contract, except for any Excluded Contract;
(m) FDI does not incur, assume or otherwise become subject to any
Liability, except for current liabilities (of the type required to be reflected
in the "liabilities" column of a balance sheet prepared in accordance with GAAP)
incurred in the Ordinary Course of Business;
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(n) FDI does not establish or adopt any Employee Benefit Plan, and does
not pay any bonus or make any profit-sharing or similar payment to, or increase
the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees;
(o) FDI does not change any of its methods of accounting or accounting
practices in any respect;
(p) FDI does not make any Tax election;
(q) FDI does not commence any Proceeding out of the Ordinary Course of
Business;
(r) FDI does not enter into any transaction or take any other action of
the type referred to in Section 2.5;
(s) FDI does not enter into any transaction or take any other action
outside the Ordinary Course of Business;
(t) FDI does not enter into any transaction or take any other action
that might cause or constitute a breach of any representation or warranty made
by FDI or the Companies in this Agreement or in the Closing Certificate; and
(u) FDI does not agree, commit or offer (in writing or otherwise), and
does not attempt, to take any of the actions described in clauses "(k)" through
"(t)" of this Section 4.2.
4.3 Filings and Consents. FDI and the Parent Companies shall ensure that:
(a) any filing or notice required to be made or given (pursuant to any
applicable Legal Requirement, Order or Contract, or otherwise) by FDI or the
Parent Companies in connection with the execution and delivery of any of the
Transactional Agreements or in connection with the consummation or performance
of any of the Transactions is made or given as soon as possible after the date
of this Agreement;
(b) each Consent required to be obtained (pursuant to any applicable
Legal Requirement, Order or Contract, or otherwise) by FDI or the Parent
Companies in connection with the execution and delivery of any of the
Transactional Agreements or in connection with the consummation or performance
of any of the Transactions (including each of the Consents identified in Part
2.25 of the Disclosure Schedule) is obtained as soon as possible after the date
of this Agreement and remains in full force and effect through the Closing Date;
(c) FDI promptly delivers to the Purchaser a copy of each filing made,
each notice given and each Consent obtained by FDI or the Parent Companies
during Pre-Closing Period; and
(d) during the Pre-Closing Period, FDI and its Representatives
cooperate with the Purchaser and with the Purchaser's Representatives, and
prepare and make available such documents and take such other actions as the
Purchaser may request in good faith, in connection with any filing, notice or
Consent that the Purchaser is required or elects to make, give or obtain.
4.4 Notification; Updates to Disclosure Schedule. During the Pre-Closing
Period, FDI and the Parent Companies shall promptly notify the Purchaser in
writing of:
(a) the discovery by FDI or the Parent Companies of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or
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constitutes a breach of any representation or warranty made by FDI or the Parent
Companies in this Agreement;
(b) any event, condition, fact or circumstance that occurs, arises or
exists after the date of this Agreement and that would cause or constitute a
breach of any representation or warranty made by FDI or the Parent Companies in
this Agreement if (A) such representation or warranty had been made as of the
time of the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement;
(c) any breach of any covenant or obligation of FDI or the Parent
Companies; and
(d) any event, condition, fact or circumstance that may make the timely
satisfaction of any of the conditions set forth in Section 6 or Section 7
impossible or unlikely.
4.5 Payment of Indebtedness by Related Parties. FDI and the Parent Companies
shall cause all indebtedness and other Liabilities of each Related Party to FDI
(including any such indebtedness or other Liability identified in Part 2.21 of
the Disclosure Schedule) to be assumed by the Parent Companies or discharged and
paid in full prior to the Closing except for the accounts payable of FDI related
to medical services providers for services provided through the Closing Date
(the "Imaging Center Payables").
4.6 No Negotiation. FDI and the Parent Companies shall ensure that, during
the Pre-Closing Period, neither FDI nor any of FDI's Representatives directly or
indirectly:
(a) solicits or encourages the initiation of any inquiry, proposal or
offer from any Person (other than the Purchaser) relating to any Acquisition
Transaction;
(b) participates in any discussions or negotiations with, or provides
any non-public information to, any Person (other than the Purchaser) relating to
any Acquisition Proposal; or
(c) considers the merits of any unsolicited inquiry, proposal or offer
from any Person (other than the Purchaser) relating to any Acquisition
Transaction.
4.7 Best Efforts. During the Pre-Closing Period, FDI and the Parent Companies
shall use their Best Efforts to cause the conditions set forth in Sections 6 and
7.3 to be satisfied on a timely basis.
4.8 Confidentiality. FDI and the Parent Companies shall ensure that, during
the Pre-Closing Period:
(a) FDI and its Representatives keep strictly confidential the
existence and terms of this Agreement;
(b) neither FDI nor any of its Representatives issues or disseminates
any press release or other publicity or otherwise makes any disclosure of any
nature (to any of FDI's suppliers, customers, landlords, creditors or employees
or to any other Person) regarding any of the Transactions, except to the extent
that FDI is required by law to make any such disclosure regarding the
Transactions; and
(c) if FDI is required by law to make any disclosure regarding the
Transactions, FDI advises the Purchaser, at least one business day before making
such disclosure, of the nature and content of the intended disclosure.
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4.9 Excluded Assets. Prior to the Closing, the Parent Companies will cause
the Excluded Assets to be assigned and transferred by FDI to RadNet or an
affiliate of RadNet, such that as of the Closing the Excluded Assets will no
longer be assets of FDI.
4.10 Excluded Liabilities. Prior to the Closing, the Parent Companies will
cause the Excluded Liabilities to be assumed by RadNet or an affiliate of
RadNet.
SECTION 5. PRE-CLOSING COVENANTS OF PURCHASER
5.1 Best Efforts. During the Pre-Closing Period, Purchaser shall use its Best
Efforts to cause the conditions set forth in Section 7 to be satisfied on a
timely basis.
5.2 Confidentiality. Purchaser shall ensure that, during the Pre-Closing
Period:
(a) Purchaser and its Representatives keep strictly confidential the
existence and terms of this Agreement;
(b) neither Purchaser nor any of its Representatives issues or
disseminates any press release or other publicity or otherwise makes any
disclosure of any nature (to any of Purchaser's suppliers, customers, landlords,
creditors or employees or to any other Person) regarding any of the
Transactions, except to the extent that Purchaser is required by law to make any
such disclosure regarding the Transactions; and
(c) if Purchaser is required by law to make any disclosure regarding
the Transactions, Purchaser advises FDI, at least five business days before
making such disclosure, of the nature and content of the intended disclosure.
SECTION 6. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The Purchaser's obligation to purchase the Shares and to take the other
actions required to be taken by the Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part, in accordance
with Section 11.11):
6.1 Accuracy of Representations. All of the representations and warranties
made by FDI and the Parent Companies in this Agreement (considered
collectively), and each of said representations and warranties (considered
individually), shall have been accurate in all material respects as of the date
of this Agreement, and shall be accurate in all material respects as of the
Closing Date as if made at the Closing Date, without giving effect to any update
to the Disclosure Schedule.
6.2 Performance of Obligations.
(a) RadNet shall have delivered to the Purchaser the certificates
representing the Shares as required by Section 1.3(b)(i).
(b) All of the other covenants and obligations that FDI and the Parent
Companies are required to comply with or to perform at or prior to the Closing
(considered collectively), and each of said covenants and obligations
(considered individually), shall have been duly complied with and performed in
all material respects.
6.3 Consents. Each of the Consents identified in Part 2.25 of the Disclosure
Schedule shall have been obtained and shall be in full force and effect.
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6.4 No Adverse Change. There shall have been no material adverse change in
FDI's business, condition, assets, liabilities, operations, financial
performance, net income or prospects (or in any material aspect or material
portion thereof) since the date of this Agreement.
6.5 Additional Documents. Purchaser shall have received the following
documents:
(a) an opinion letter from Primedex's general counsel, dated the
Closing Date, in the form of Exhibit F; and
(b) such other documents as the Purchaser may request in good faith for
the purpose of (i) evidencing the accuracy of any representation or warranty
made by FDI or the Parent Companies, (ii) evidencing the compliance by FDI or
the Parent Companies with, or the performance by FDI or the Parent Companies of,
any covenant or obligation set forth in this Agreement, (iii) evidencing the
satisfaction of any condition set forth in this Section 6, or (iv) otherwise
facilitating the consummation or performance of any of the Transactions.
6.6 No Proceedings. Since the date of this Agreement, there shall not have
been commenced or threatened against the Purchaser, or against any Person
affiliated with the Purchaser, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Transactions, or
(b) that may have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the Transactions.
6.7 No Claim Regarding Stock Ownership or Sale Proceeds. No Person shall have
made or threatened any claim asserting that such Person (a) may be the holder or
the beneficial owner of, or may have the right to acquire or to obtain
beneficial ownership of, any capital stock or other securities of FDI, or (b)
may be entitled to all or any portion of the Purchase Price.
6.8 No Prohibition. Neither the consummation nor the performance of any of
the Transactions will, directly or indirectly (with or without notice or lapse
of time), contravene or conflict with or result in a violation of, or cause the
Purchaser or any Person affiliated with the Purchaser to suffer any adverse
consequence under, any applicable Legal Requirement or Order.
6.9 Sublease. FDI and RadNet shall have executed the Sublease, the form of
which is attached hereto as Exhibit G, which shall provide FDI with the right to
rent-free occupancy of its principal offices at 1516 Cotner Avenue, Los Angeles,
California 90025 for a period of twelve (12) months from the Closing Date.
6.10 Non-Competition and Nondisclosure Agreement. Each of Primedex and RadNet
shall have executed the Noncompetition and Nondisclosure Agreement attached
hereto as Exhibit H.
6.11 License Agreement. Each of RadNet and FDI shall have executed the
License Agreement attached hereto as Exhibit J.
6.12 Employment Agreements. The Purchaser or FDI shall have entered into an
employment agreement with Jaana Shellock in form reasonably satisfactory to the
Purchaser.
6.13 Proceedings and Instruments Satisfactory. All proceedings to be taken in
connection with the transactions contemplated by this Agreement, and all
documents incidental thereto, shall be reasonably satisfactory in form and
substance to Purchaser and its counsel.
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SECTION 7. CONDITIONS PRECEDENT TO RADNET'S OBLIGATION TO CLOSE.
RadNet's obligation to sell the Shares and to take the other actions required
to be taken by RadNet at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by RadNet, in whole or in part, in accordance with Section 11.11):
7.1 Accuracy of Representations. All of the representations and warranties
made by the Purchaser in this Agreement (considered collectively), and each of
said representations and warranties (considered individually), shall have been
accurate in all material respects as of the date of this Agreement and shall be
accurate in all material respects as of the Closing Date as if made at the
Closing Date.
7.2 Performance of Obligations. All of the other covenants and obligations
that the Purchaser is required to comply with or to perform pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of said
covenants and obligations (considered individually), shall have been complied
with and performed in all material respects.
7.3 No Injunction. There shall not be in effect any injunction that shall
have been entered by a court of competent jurisdiction since the date of this
Agreement and that prohibits the sale of the Shares by RadNet to the Purchaser.
7.4 Non-Competition Agreement. Purchaser shall have executed the
Non-Competition Agreement attached hereto as Exhibit H.
7.5 License Agreement. Purchaser shall have executed the License Agreement
attached hereto as Exhibit J.
7.6 Legal Opinion. RadNet shall have received the following documents an
opinion letter from Cooley Godward LLP, dated the Closing Date, in the form of
Exhibit K.
7.7 Proceedings and Instruments. All proceedings to be taken in connection
with the transactions contemplated by this Agreement, and all documents
incidental thereto, shall be reasonably satisfactory in form and substance to
RadNet and its counsel.
7.8 Resolutions. RadNet shall have received certified Resolutions of the
Board of Directors of the Purchaser, in form reasonably satisfactory to counsel
for RadNet, authorizing the Purchaser's execution, delivery and performance of
this Agreement and the actions to be taken by Purchaser hereunder.
7.9 Good Standing Certificates. RadNet shall have received good standing
certificates issued by the Secretary of State of Delaware with respect to the
Purchaser, dated within one week prior to the Closing Date.
7.10 Consents. RadNet shall have received any and all agreements and consents
of any governmental authorities and agencies, and any parties to any material
contracts or agreements of RadNet, to the extent required in connection with the
transactions contemplated by this Agreement.
SECTION 8. TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by the Purchaser if (i) there is a material breach of any covenant
or obligation of FDI or the Parent Companies, or (ii) the Purchaser reasonably
determines that the timely satisfaction
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of any condition set forth in Section 6 has become impossible or impractical
(other than as a result of any failure on the part of the Purchaser to comply
with or perform its covenants and obligations under this Agreement);
(b) by RadNet if (i) there is a material breach of any covenant or
obligation of the Purchaser, or (ii) RadNet reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible or impractical (other than as a result of any failure on the part of
FDI or the Parent Companies to comply with or perform any covenant or obligation
set forth in this Agreement);
(c) by the Purchaser if the Closing has not taken place on or before
September 15, 1997 (other than as a result of any failure on the part of the
Purchaser to comply with or perform its covenants and obligations under this
Agreement);
(d) by RadNet if the Closing has not taken place on or before September
15, 1997 (other than as a result of the failure on the part of FDI or the Parent
Companies to comply with or perform any covenant or obligation set forth in this
Agreement); or
(e) by the mutual consent of the Purchaser and RadNet.
8.2 Termination Procedures. If the Purchaser wishes to terminate this
Agreement pursuant to Section 8.1(a) or Section 8.1(c), the Purchaser shall
deliver to RadNet a written notice stating that the Purchaser is terminating
this Agreement and setting forth a brief description of the basis on which the
Purchaser is terminating this Agreement. If RadNet wishes to terminate this
Agreement pursuant to Section 8.1(b) or Section 8.1(d), RadNet shall deliver to
the Purchaser a written notice stating that RadNet is terminating this Agreement
and setting forth a brief description of the basis on which RadNet is
terminating this Agreement.
8.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that:
(a) no party shall be relieved of any obligation or other Liability
arising from any breach by such party of any provision of this Agreement;
(b) the parties shall, in all events, remain bound by and continue to
be subject to the provisions set forth in Section 10; and
(c) the parties shall, in all events, remain bound by and continue to
be subject to Sections 4.8 and 5.2.
8.4 Nonexclusivity of Termination Rights. The termination rights provided in
Section 8.1 shall not be deemed to be exclusive. Accordingly, the exercise by
any party of its right to terminate this Agreement pursuant to Section 8.1 shall
not be deemed to be an election of remedies and shall not be deemed to
prejudice, or to constitute or operate as a waiver of, any other right or remedy
that such party may be entitled to exercise (whether under this Agreement, under
any other Contract, under any statute, rule or other Legal Requirement, at
common law, in equity or otherwise).
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SECTION 9. INDEMNIFICATION, ETC.
9.1 Survival of Representations and Covenants.
(a) The representations, warranties, covenants and obligations of each
party shall survive for a period of two years from and after the Closing Date:
(i) the Closing and the sale of the Shares to the Purchaser;
(ii) any sale or other disposition of any or all of the Shares
by the Purchaser ;
and
(iii) any Acquisition Transaction effected by or otherwise
involving the Purchaser or FDI.
(b) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
FDI and the Parent Companies in this Agreement.
9.2 Indemnification by RadNet and Primedex. RadNet and Primedex, jointly and
severally, shall hold harmless and indemnify each of the Indemnitees from and
against, and shall compensate and reimburse each of the Indemnitees for, any
Damages which are directly or indirectly suffered or incurred by any of the
Indemnitees or to which any of the Indemnitees may otherwise become subject at
any time (regardless of whether or not such Damages relate to any third-party
claim) and which arise directly or indirectly from or as a direct or indirect
result of, or are directly or indirectly connected with:
(i) any breach of any representation or warranty made by FDI or
the Parent Companies in this Agreement;
(ii) any breach of any representation, warranty, statement,
information or provision contained in the Disclosure Schedule or in any other
document executed and delivered to the Purchaser or any of its Representatives
at the Closing by or on behalf of FDI or any of FDI's Representatives;
(iii) any breach of any covenant or obligation of FDI or the
Parent Companies;
or
(iv) any Liability to which FDI or any of the other Indemnitees
may become subject and that arises directly or indirectly from or relates
directly or indirectly to any service performed, by or on behalf of any of the
Companies on or at any time prior to the Closing Date.
In addition, RadNet and Primedex, jointly and severally, shall hold harmless and
indemnify each of the Indemnitees from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages relating to any and all
Excluded Liabilities.
9.3 Indemnification by the Purchaser. The Purchaser shall hold harmless
and indemnify each of the Primedex Indemnitees from and against, and shall
compensate and reimburse each of the Primedex Indemnitees for, any Damages which
are directly or indirectly suffered or incurred by any of the Primedex
Indemnitees or to which any of the Primedex Indemnitees may otherwise become
subject at any time (regardless of whether or not such Damages relate to any
third-party claim) and which arise directly or indirectly from or as a direct or
indirect result of, or are directly or indirectly connected with:
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(i) any breach by any representation or warranty made by the
Purchaser in this Agreement (without giving effect to any update to the
Purchaser's Disclosure Schedule);
(ii) any breach of any representation, warranty, statement,
information or provision contained in the Purchaser's Disclosure Schedule or in
any other document delivered or otherwise made available to the Companies or any
of their Representatives by or on behalf of the Purchaser or any of its
Representatives;
(iii) any breach of any covenant or obligation of the Purchaser;
or
(iv) any Liability to which the Primedex or RadNet or any of the
other Primedex Indemnitees may become subject and that arises directly or
indirectly from or relates directly or indirectly to any service performed, by
or on behalf of FDI on or at any time after to the Closing Date, except as
specifically contemplated hereby.
9.4 No Contribution. Each of RadNet and Primedex waives, and acknowledges and
agrees that RadNet and Primedex shall not have and shall not exercise or assert
or attempt to exercise or assert, any right of contribution or right of
indemnity or any other right or remedy against FDI in connection with any
indemnification obligation or any other Liability to which RadNet and Primedex
may become subject under any of the Transactional Agreements or otherwise in
connection with any of the Transactions.
9.5 Interest. Any party that is required to indemnify any other Person
pursuant to this Section 9 with respect to any Damages shall also be required to
pay such other Person interest on the amount of such Damages (for the period
commencing as of the date on which such other Person first incurred or otherwise
became subject to such Damages and ending on the date on which the applicable
indemnification payment is made by such party) at a floating rate equal to the
lesser of (i) three percentage points above the rate of interest publicly
announced by Bank of America, N.T. & S.A. from time to time as its prime, base
or reference rate or (ii) the maximum rate permitted by applicable law.
9.6 Setoff. In addition to any rights of setoff or other rights that the
Purchaser or any of the other Indemnitees may have at common law or otherwise,
the Purchaser shall have the right (after obtaining a favorable decision in
arbitration pursuant to this Agreement or in a court of competent jurisdiction)
to set off any amount that may be owed to any Indemnitee under this Section 9
against any amount otherwise payable by any Indemnitee to RadNet.
9.7 Nonexclusivity of Indemnification Remedies. The indemnification remedies
and other remedies provided in this Section 9 shall not be deemed to be
exclusive. Accordingly, the exercise by any Person of any of its rights under
this Section 9 shall not be deemed to be an election of remedies and shall not
be deemed to prejudice, or to constitute or operate as a waiver of, any other
right or remedy that such Person may be entitled to exercise (whether under this
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
9.8 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against FDI,
against any other Indemnitee or against any other Person) with respect to which
any of RadNet and Primedex may become obligated to indemnify, hold harmless,
compensate or reimburse any Indemnitee pursuant to this Section 9, the Purchaser
shall have the right, at its election, to designate RadNet and Primedex to
assume the defense of such claim or Proceeding at the sole expense of RadNet and
Primedex. If the Purchaser so elects to designate RadNet and Primedex to assume
the defense of any such claim or Proceeding:
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(a) RadNet and Primedex shall proceed to defend such claim or
Proceeding in a diligent manner with counsel satisfactory to the Purchaser;
(b) the Purchaser shall make available to RadNet and Primedex any
non-privileged documents and materials in the possession of the Purchaser that
may be necessary to the defense of such claim or Proceeding;
(c) RadNet and Primedex shall keep the Purchaser informed of all
material developments and events relating to such claim or Proceeding;
(d) the Purchaser shall have the right to participate in the defense of
such claim or Proceeding;
(e) RadNet and Primedex shall not settle, adjust or compromise such
claim or Proceeding without the prior written consent of the Purchaser;
provided, however, that Purchaser shall not unreasonably withhold such consent.
If the Purchaser does not elect to designate RadNet and Primedex to assume the
defense of any such claim or Proceeding (or if, after initially designating
RadNet and Primedex to assume such defense, the Purchaser elects to assume such
defense), the Purchaser may proceed with the defense of such claim or Proceeding
on its own. If the Purchaser so proceeds with the defense of any such claim or
Proceeding on its own:
(i) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by the Purchaser) shall be borne and paid
exclusively by RadNet and Primedex;
(ii) RadNet and Primedex shall make available to the Purchaser
any documents and materials in their possession or control that may be necessary
to the defense of such claim or Proceeding;
(iii) the Purchaser shall keep RadNet and Primedex informed of
all material developments and events relating to such claim or Proceeding; and
(iv) the Purchaser shall have the right to settle, adjust or
compromise such claim or Proceeding with the consent of RadNet and Primedex;
provided, however, that RadNet and Primedex shall not unreasonably withhold such
consent.
In the event that the Purchaser shall be obligated to indemnify Primedex or
RadNet pursuant to this Section 9, Primedex and RadNet shall have the same
rights and obligations as Primedex Indemnitees as the Purchaser has under this
Section 9.7 as an Indemnitee.
9.9 Exercise of Remedies by Certain. No Indemnitee (other than the Purchaser
or any successor thereto or assign thereof) shall be permitted to assert any
indemnification claim or exercise any other remedy under this Agreement unless
the Purchaser (or any successor thereto or assign thereof) shall have consented
to the assertion of such indemnification claim or the exercise of such other
remedy. No Primedex Indemnitee (other than Primedex or any successor thereto or
assign thereof) shall be permitted to assert any indemnification claim or
exercise any other remedy under this Agreement unless Primedex (or any successor
thereto or assign thereof) shall have consented to the assertion of such
indemnification claim or the exercise of such other remedy.
9.10 Limitations on Certain Indemnitees. Notwithstanding any other provision
of this Agreement to the contrary, neither RadNet nor Primedex shall be liable
to Purchaser with respect to Damages unless and until the aggregate amount of
all Damages incurred by Purchaser shall exceed the sum of $20,000; and in such
case liability shall extend from the first dollar of Damages.
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SECTION 10. POST-CLOSING EVENTS
10.1 Books and Records. At any time and from time to time and after the
Closing Date, Purchaser shall permit RadNet to have access, during normal
business hours and without undue disruption of FDI's business, to those books
and records of FDI relating to periods prior to the Closing Date, for purposes
of preparing any tax filings or any other legitimate purpose of RadNet. Such
books and records may be made available at any location where FDI maintains
same, and all costs and expenses relating to such access and inspection shall be
the responsibility of RadNet. In the event that, during the four year period
beginning on the Closing Date, the Purchaser shall determine to destroy or
dispose of any such books and records, the Purchaser shall use its best efforts
to give notice thereof to RadNet not less than thirty (30) days prior to such
disposition, and RadNet shall have the right, at its own cost and expense, to
take possession of such books and records prior to their disposition.
10.2 Employee Matters; Benefit Plan Matters.
(a) Purchaser shall cause FDI to honor all accrued salary, vacation pay
and sick pay benefits owed to employees of FDI. Any such benefits shall be
calculated as of the Closing Date and be offset against the Purchase Price in
accordance with Section 1.4 hereof. In the event that FDI shall determine to
terminate the employment of any such employees subsequent to the Closing Date,
then all severance payments (if any) arising from such termination shall be the
responsibility of FDI. Nothing contained in this Section 10.2(a) shall be deemed
to constitute any assurance or guaranty of employment to any employees of FDI.
(b) Except with respect to any employees of FDI who do not remain
employed with FDI from and after the Closing Date, RadNet shall comply with all
requirements of law in order to permit the employees of FDI to withdraw the
amounts in their respective accounts in the Primedex or RadNet 401(k) Plan and
any other employee benefit Plan(s) covering employees or one or more
RadNet-affiliated entities in addition to FDI.
(c) Nothing contained in this Agreement shall be deemed to abrogate or
impair the right of Purchaser to determine which employees will be retained by
FDI from and after the Closing Date, and/or the compensation and benefits to be
paid from and after the Closing Date to those employees retained by FDI,
provided, however, that, subject to any required waiting periods and eligibility
criteria, Purchaser will cause all employees retained by FDI on and after the
Closing Date to be offered the opportunity to participate in the group health
programs generally offered to employees of Purchaser.
10.3 Taxes. To the extent that any Taxes shall be payable on or in the
respect of the net income of FDI for periods from and after the Closing Date,
(i) such taxes shall, subject to the Closing, constitute the sole responsibility
of FDI (subject to any consolidation effected by Purchaser), and (ii) subject to
the Closing, such net income and taxes thereon shall not be reported or payable
by RadNet or any member of its consolidated tax group.
10.4 Further Assurances. From time to time and after the Closing Date the
parties will take any and all action and execute and deliver to one another any
and all further agreements, instruments, certificates and other documents, as
may reasonably be requested by any other party in order more fully to consummate
the transactions contemplated hereby, and to effect an orderly transaction of
the ownership and operations of FDI.
SECTION 11. MISCELLANEOUS PROVISIONS
11.1 Joint and Several Liability. Subject to Section 9.3:
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(a) RadNet and Primedex jointly and severally agree that they shall be
jointly and severally liable with FDI for the due and timely compliance with and
performance of each of the covenants and obligations of FDI set forth in this
Agreement;
(b) RadNet and Primedex agree that each shall be jointly and severally
liable with the other for the due and timely compliance with and performance of
each of the covenants and obligations of the other set forth in this Agreement;
and
(c) FDI agrees that, prior to the Closing, FDI shall be jointly and
severally liable with RadNet and Primedex for the due and timely compliance with
and performance of each of the covenants and obligations of RadNet and Primedex
set forth in this Agreement (including the indemnification obligations of RadNet
and Primedex set forth in Section 9).
11.2 Further Assurances. Each party hereto shall execute and/or cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the Transactions.
11.3 Fees and Expenses.
(a) Without limiting the generality of anything contained in Section
11.3(b), RadNet shall bear and pay all fees, costs and expenses (including all
legal fees and expenses payable to its counsel that have been incurred or that
are in the future incurred by, on behalf of or for the benefit of the Companies
in connection with:
(i) the negotiation, preparation and review of any term sheet
or similar document relating to any of the Transactions;
(ii) FDI's costs and expenses associated with the investigation
and review conducted by the Purchaser and its Representatives with respect to
FDI's business;
(iii) the negotiation, preparation and review of this Agreement
(including the Disclosure Schedule), the other Transactional Agreements and all
certificates, opinions and other instruments and documents delivered or to be
delivered by the Companies in connection with the Transactions;
(iv) the preparation and submission of any filing or notice
required to be made or given by the Companies in connection with any of the
Transactions, and the obtaining of any Consent required to be obtained in
connection with any of the Transactions; and
(v) the consummation and performance of the Transactions by the
Companies.
FDI shall not bear or pay, and RadNet and Primedex shall not permit FDI to bear
or pay, any such fees, costs or expenses.
(b) Subject to the provisions of Section 9 (including the
indemnification and other obligations of RadNet and Primedex thereunder), the
Purchaser shall bear and pay all fees, costs and expenses (including all legal
fees and expenses payable to Cooley Godward LLP) that have been incurred or that
are in the future incurred by or on behalf of the Purchaser in connection with:
(i) the negotiation, preparation and review of any term sheet
or similar document relating to any of the Transactions;
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(ii) the investigation and review conducted by the Purchaser and
its Representatives with respect to FDI's business;
(iii) the negotiation, preparation and review of this Agreement,
the other Transactional Agreements and all certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions; and
(iv) the consummation and performance of the Transactions.
11.4 Attorneys' Fees. If any legal action or other legal proceeding relating
to any of the Transactional Agreements or the enforcement of any provision of
any of the Transactional Agreements is brought against any party hereto, the
prevailing party shall be entitled to recover reasonable attorneys' fees, costs
and disbursements (in addition to any other relief to which the prevailing party
may be entitled).
11.5 Arbitration
(a) Except as otherwise provided in this Section 11.5 any controversy,
dispute or claim of any nature arising out of, in connection with or in relation
to the interpretation, performance or breach of this Agreement, including any
claim based on contract, tort or statute, shall be resolved at the request of
any party to this Agreement by final and binding arbitration conducted (i) by an
arbitrator ("Arbitrator") of the Judicial Arbitration & Mediation Services, Inc.
Los Angeles, elected pursuant to the rules and regulations thereof, (ii) at a
location in Los Angeles, California selected by the Panel, and (iii)
administered in accordance with the California Arbitration Act and the then
existing Rules of Practice and Procedure of Judicial Arbitration & Mediation
Services, Inc. The decision of the Arbitrator shall be governed by and in accord
with all applicable California and federal laws. Judgment upon any award
rendered by the Arbitrator may be entered by any state or federal court having
jurisdiction thereof. The Arbitrator shall not be empowered to award punitive
damages. In any arbitration proceeding, the parties will have the rights under
section 1283.05 of the California Code of Civil Procedure.
(b) Any party may seek from a court any interim or provisional relief
that may be necessary to protect or preserve its rights under this Agreement
pending the establishment of an arbitration proceeding under this Section 11.5
and the Arbitrator's determination of the merits of the controversy; provided,
however, that the Arbitrator shall be empowered to dissolve, discharge or
otherwise release such interim or provisional relief at any time before
conclusion of proceedings upon a proper showing. The Arbitrator shall be
empowered to award monetary damages to any party for loss occasioned by such
interim or provisional relief upon an ultimate showing of lack of merit.
(c) The Arbitrator shall render a final award within ninety (90) days
after the date of its appointment, plus such additional time, if any, as the
Arbitrator permits for discovery pursuant to this Section 11.5
(d) The Arbitrator may award to the prevailing party, if any, as
determined by the Arbitrator, part or all of the prevailing party's costs and
fees. "Costs and fees" means all reasonable pre-award expenses of the
arbitration, including the Arbitrator's fees, administrative fees, travel
expenses, out-of-pocket expenses such as photocopy, telecopy and telephone
charges, witness fees and attorney's fees.
(e) The award of the arbitration shall be final, binding and
nonappealable.
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11.6 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by telecopier) to the
address or telecopier number set forth beneath the name of such party below (or
to such other address or telecopier number as such party shall have specified in
a written notice given to the other parties hereto):
if to FDI:
Future Diagnostics, Inc.
1516 Cotner Avenue
Los Angeles, CA 90025
Attention: Jaana Shellock
Telecopier: (310) 478-5810
if to RadNet:
RadNet Managed Imaging Services, Inc.
1516 Cotner Avenue
Los Angeles, CA 90025
Attention: Steve Hirschtick, Esq., Senior Vice President
Telecopier: (310) 478-5810
if to Primedex:
Primedex Health Systems, Inc.
1516 Cotner Avenue
Los Angeles, CA 90025
Attention: Steve Hirschtick, Esq., Senior Vice President
Telecopier: (310) 478-5810
if to the Purchaser:
Preferred Health Management, Inc.
20700 Ventura Boulevard, Suite 100
Woodland Hills, CA 91356
Attention: Louis W. Spidalette
Telecopier: (818) 227-9943
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attention: Michael J. Sullivan
Telecopier: (650) 857-0663
11.7 Headings. The headings contained in this Agreement are for convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.
11.8 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
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11.9 Governing Law. This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
11.10 Successors and Assigns. This Agreement shall be binding upon: FDI and
its successors and assigns (if any); RadNet and Primedex and their successors
and assigns (if any); and the Purchaser and its successors and assigns (if any).
This Agreement shall inure to the benefit of: FDI; RadNet; Primedex; the
Purchaser; the other Indemnitees (subject to Section 9.9); and the respective
successors and assigns (if any) of the foregoing. The Purchaser may freely
assign any or all of its rights under this Agreement (including its
indemnification rights under Section 9), in whole or in part, to any other
Person without obtaining the consent or approval of any other party hereto or of
any other Person.
11.11 Remedies Cumulative; Specific Performance. The rights and remedies of
the parties hereto shall be cumulative (and not alternative). The parties agree
that in the event of any breach or threatened breach by any other party of any
covenant, obligation or other provision set forth in this Agreement, the
non-breaching party shall be entitled (in addition to any other remedy that may
be available to it) to (i) a decree or order of specific performance or mandamus
to enforce the observance and performance of such covenant, obligation or other
provision, and (ii) an injunction restraining such breach or threatened breach.
11.12 Waiver.
(a) No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any Person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No Person shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
Person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
11.13 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Purchaser and RadNet.
11.14 Severability. In the event that any provision of this Agreement, or the
application of any such provision to any Person or set of circumstances, shall
be determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to Persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, shall not be impaired or otherwise affected and
shall continue to be valid and enforceable to the fullest extent permitted by
law.
11.15 Parties in Interest. Except for the provisions of Section 9 hereof,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
11.16 Entire Agreement. The Transactional Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.
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11.17 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first set forth above.
PURCHASER: PREFERRED HEALTH MANAGEMENT, INC.
By: /s/ Louis W. Spidalette
------------------------------
Louis W. Spidalette, President
FDI: FUTURE DIAGNOSTICS, INC.
By: /s/ Jaana Shellock
-------------------------------
Jaana Shellock, President
RADNET: RADNET MANAGED IMAGING SERVICES, INC.
By: /s/ Jaana Shellock
-------------------------------
Jaana Shellock, President
PRIMEDEX: PRIMEDEX HEALTH SYSTEMS, INC.
By: /s/ Howard G. Berger
-------------------------------
Howard G. Berger, President
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale or other disposition of all or any portion of FDI's
business or assets (other than in the Ordinary Course of Business);
(b) the issuance, sale or other disposition of (i) any capital stock
of FDI, (ii) any option, call, warrant or right (whether or not immediately
exercisable) to acquire any capital stock of FDI, or (iii) any security,
instrument or obligation that is or may become convertible into or exchangeable
for any capital stock of FDI; or
(c) any merger, consolidation, business combination, share exchange,
reorganization or similar transaction involving FDI, other than a transaction
contemplated pursuant to the terms of this Agreement.
Agreement. "Agreement" shall mean the Stock Purchase Agreement to which
this Exhibit A is attached (including the Disclosure Schedule), as it may be
amended from time to time.
Best Efforts. "Best Efforts" shall mean the efforts that a prudent Person
desiring to achieve a particular result would use in order to ensure that such
result is achieved as expeditiously as possible.
CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
Closing. "Closing" shall have the meaning specified in Section 1.3(a) of
the Agreement.
Closing Date. "Closing Date" shall have the meaning specified in Section
1.3(a) of the Agreement.
Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
Companies. "Companies" shall mean FDI, RadNet and Primedex.
Company Plan. "Company Plan" shall mean any Current Benefit Plan or
Past Benefit Plan.
Comparable Entities. "Comparable Entities" shall mean Entities
(other than FDI) that are engaged in businesses similar to FDI's business.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any written or oral agreement, contract,
understanding, arrangement, instrument, note, guaranty, indemnity,
representation, warranty, deed, assignment, power of attorney, certificate,
purchase order, work order, insurance policy, benefit plan, commitment,
covenant, assurance or undertaking of any nature.
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Current Benefit Plan. "Current Benefit Plan" shall mean any Employee
Benefit Plan that is currently in effect and:
(a) that was established or adopted by any of the Companies
or any ERISA Affiliate or is maintained or sponsored by FDI;
(b) in which FDI participates;
(c) with respect to which FDI or any ERISA Affiliate is or may
be required or permitted to make any contribution; or
(d) with respect to which FDI or any ERISA Affiliate is or may
become subject to any Liability.
Damages. "Damages" shall include any loss, damage, injury, decline in
value, Liability, claim, demand, settlement, judgment, award, fine, penalty,
Tax, fee (including any legal fee, expert fee, accounting fee or advisory fee),
charge, cost (including any cost of investigation) or expense of any nature.
Disclosure Schedule. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to the Purchaser on behalf of
the Companies, a copy of which is attached to the Agreement and incorporated in
the Agreement by reference.
Employee Liabilities. "Employee Liabilities" shall have the meaning
specified in Section 1.4 of the Agreement.
Employee Benefit Plan. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
erISA. "ERISA" shall mean the Employee Retirement Income Security Act of 1974.
ERISA Affiliate. "ERISA Affiliate" shall mean any Person that is, was or
would be treated as a single employer with any of the Companies under Section
414 of the Code.
Excluded Assets. "Excluded Assets" shall mean (i) all of FDI's proprietary
computer software, including but not limited to the operating system software
for the MSO and RMSO systems; (ii) certain equipment which is listed in Exhibit
L to this Agreement; (iii) the Retrospective Coding Outcomes Database and (iv)
the Clinical Precertification Review Guidelines Database.
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Excluded Contract. "Excluded Contract" shall mean any FDI Contract that:
(a) FDI has entered into in the Ordinary Course of Business;
(b) is identical in all material respects to one of the
Standard Form Agreements;
(c) has a term of less than 90 days or may be terminated by
FDI (without penalty) within 90 days after the delivery of a termination
notice by FDI; and
(d) does not contemplate or involve the payment of cash or
other consideration in an amount or having a value in excess of $10,000.
Excluded Liabilities. "Excluded Liabilities" shall mean all of the
Liabilities of FDI of every kind and nature whatsoever, except for those
liabilities specifically identified as liabilities to be retained by FDI after
the Closing in the Assignment and Assumption Agreement of even date herewith
among the parties to this Agreement. Excluded Liabilities shall include, without
limitation, (i) all liabilities associated with the employees of FDI prior to
the Closing except for the Employee Liabilities and (ii) all liabilities
associated with Matthew Iwamoto, M.D. v. Woodward Park Imaging, Inc. et al. (the
"Iwamoto Litigation"). Primedex shall continue to be able to control the defense
of the Iwamoto Litigation unless the Purchaser shall determine in good faith
that a conflict of interest exists that makes the joint representation of all
parties improper, in which case the Purchaser may retain its own counsel at
Primedex's expense.
FDI. "FDI" shall mean Future Diagnostics, Inc., a California corporation.
FDI Contract. "FDI Contract" shall mean any Contract:
(a) to which FDI is a party;
(b) by which FDI or any of its assets is or may become bound
or under which FDI has, or may become subject to, any obligation; or
(c) under which FDI has or may acquire any right or interest.
FDI Financial Statements. "FDI Financial Statements" shall have the
meaning specified in Section 2.4(a) of the Agreement.
FDI Returns. "FDI Returns" shall have the meaning specified in
Section 2.16(b) of the Agreement.
GAAP. "GAAP" shall mean generally accepted accounting principles,
applied on a basis consistent with the basis on which the FDI Financial
Statements were prepared.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, concession,
approval, consent, ratification, permission, clearance, confirmation,
endorsement, waiver, certification, designation, rating, registration,
qualification or authorization that is, has been or may in the future be
issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement;
or
(b) right under any Contract with any Governmental Body.
Governmental Body. "Governmental Body" shall mean any:
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(a) nation, principality, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any
nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency,
bureau, branch, office, commission, council, board, instrumentality,
officer, official, representative, organization, unit, body or Entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) individual, Entity or body exercising, or entitled to
exercise, any executive, legislative, judicial, administrative,
regulatory, police, military or taxing authority or power of any nature.
Hazardous Material. "Hazardous Material" shall include:
(a) any petroleum, waste oil, crude oil, asbestos, urea
formaldehyde or polychlorinated biphenyl;
(b) any waste, gas or other substance or material that is
explosive or radioactive;
(c) any "hazardous substance," "pollutant," "contaminant,"
"hazardous waste," "regulated substance," "hazardous chemical" or "toxic
chemical" as designated, listed or defined (whether expressly or by
reference) in any statute, regulation or other Legal Requirement
(including CERCLA, any other so-called "superfund" or "superlien" law, the
Resource Conservation Recovery Act, the Federal Water Pollution Control
Act, the Toxic Substances Control Act, the Emergency Planning and
Community Right-to-Know Act and the respective regulations promulgated
thereunder);
(d) any other substance or material (regardless of physical
form) or form of energy that is subject to any Legal Requirement which
regulates or establishes standards of conduct in connection with, or which
otherwise relates to, the protection of human health, plant life, animal
life, natural resources, property or the enjoyment of life or property
from the presence in the environment of any solid, liquid, gas, odor,
noise or form of energy; and
(e) any compound, mixture, solution, product or other
substance or material that contains any substance or material referred to
in clause "(a)," "(b)," "(c)" or "(d)" above.
Indemnitees. "Indemnitees" shall mean the following Persons:
(a) the Purchaser;
(b) the Purchaser's current and future affiliates (including
FDI);
(c) the respective Representatives of the Persons referred to
in clauses "(a)" and "(b)" above; and
(d) the respective successors and assigns of the Persons
referred to in clauses "(a)," "(b)" and "(c)" above;
provided, however, that FDI shall not be entitled to exercise any rights as an
Indemnitee prior to the Closing.
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Knowledge. An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter.
FDI shall be deemed to have "Knowledge" of a particular fact or other matter if
any officer, or senior employee of FDI has Knowledge of such fact or other
matter.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation that is or has been issued, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect by any Governmental
Body.
Liability. "Liability" shall mean any debt, obligation, duty or liability
of any nature (including any undisclosed, unmatured, unaccrued, contingent,
indirect, conditional, implied, vicarious, derivative, joint, several or
secondary liability), regardless of whether such debt, obligation, duty or
liability would be required to be disclosed on a balance sheet prepared in
accordance with generally accepted accounting principles and regardless of
whether such debt, obligation, duty or liability is immediately due and payable.
Licensed Assets. "Licensed Assets" shall mean the intellectual property
licensed by RadNet to Purchaser and FDI in accordance with the
License Agreement.
Net Provider Site Obligations. "Net Provider Site Obligations" shall mean
(i) the aggregate value of FDI's obligations under its imaging center and
medical service provider contracts on the books and records of the Company as of
the close of business on September 3, 1997, minus (ii) the aggregate value of
FDI's accounts receivable as of September 3, 1997.
Order. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, verdict, sentence,
subpoena, writ or award that is or has been issued, made, entered,
rendered or otherwise put into effect by or under the authority of any
court, administrative agency or other Governmental Body or any arbitrator
or arbitration panel to which FDI is a party or by which the Companies
know (or should know) that FDI is bound; or
(b) Contract with any Governmental Body that is or has been
entered into in connection with any Proceeding.
Ordinary Course of Business. An action taken by or on behalf of FDI shall
not be deemed to have been taken in the "Ordinary Course of Business" unless:
(a) such action is recurring in nature, is consistent with
FDI's past practices and is taken in the ordinary course of FDI's normal
day-to-day operations;
(b) such action is taken in accordance with sound and prudent
business practices as reasonably determined by FDI;
(c) such action is not required to be authorized by FDI's
stockholders, FDI's board of directors or any committee of FDI's board of
directors and does not require any other separate or special authorization
of any nature; and
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(d) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other Entities that
are engaged in businesses similar to FDI's business.
Parent Companies. "Parent Companies" shall mean RadNet and Primedex.
Past Benefit Plan. "Past Benefit Plan" shall mean any Employee Benefit
Plan (other than a Current Benefit Plan):
(a) of which any of the Companies or any ERISA Affiliate has
ever been a "plan sponsor" (as defined in Section 3(16)(B) of ERISA) or
that otherwise has at any time been established, adopted, maintained or
sponsored by any of the Companies or by any ERISA Affiliate;
(b) in which any of the Companies or any ERISA Affiliate has
ever participated;
(c) with respect to which any of the Companies or any ERISA
Affiliate has ever made, or has ever been required or permitted to make,
any contribution; or
(d) with respect to which any of the Companies or any ERISA
Affiliate has ever been subject to any Liability.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Pre-Closing Period. "Pre-Closing Period" shall mean the period
commencing as of the date of the Agreement and ending on the Closing Date.
Primedex Indemnitees."Primedex Indemnitees" shall mean the following
Persons:
(a) Primedex and RadNet;
(b) The current and future affiliates of Primedex and RadNet
(excluding FDI);
(c) the respective Representatives of the Persons referred to
in clauses "(a)" and "(b)" above; and
(d) the respective successors and assigns of the Persons
referred to in clauses "(a)," "(b)" and "(c)" above.
Primedex. "Primedex" shall mean Primedex Health Systems, Inc., a New
York corporation.
Proceeding. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation that is
commenced, brought, conducted or heard by or before, or that involves, any
Governmental Body or any arbitrator or arbitration panel.
Proprietary Asset. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service mark (whether registered or unregistered), service mark
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how, franchise,
system, computer software, invention, design, blueprint, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset.
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Purchase Price. "Purchase Price" shall have the meaning specified in
Section 1.2 of the Agreement.
Purchaser. "Purchaser" shall mean Preferred Health Management,
Inc., a Delaware corporation.
Purchaser's Disclosure Schedule. "Purchaser's Disclosure Schedule" shall
mean the schedule (dated as of the date of this Agreement) delivered to the
Companies on behalf of Purchaser, a copy of which is attached to this Agreement
and incorporated into this Agreement by reference.
RadNet. "RadNet" shall mean RadNet Managed Imaging Services, Inc., a
California corporation.
Related Party. Each of the following shall be deemed to be a
"Related Party":
(e) RadNet;
(f) Primedex;
(g) each individual who is, or who has at any time been, an
officer of FDI or of any of the Parent Companies;
(h) each member of the family of each of the individuals
referred to in clauses "(a)" and "(b)" above; and
(i) any Entity (other than FDI) in which any one of the
individuals referred to in clauses "(a)," "(b)" and "(c)" above holds (or
in which more than one of such individuals collectively hold),
beneficially or otherwise, a material voting, proprietary or equity
interest.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
RadNet and Primedex and all other Related Parties shall be deemed to be
"Representatives" of FDI.
Shares. "Shares" shall have the meaning specified in the Recitals to
the Agreement.
Standard Form Agreements. "Standard Form Agreements" shall mean the forms of
agreements attached as Appendices 2.12 to the Disclosure Schedule.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax-sharing
agreement or similar Contract.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or may in the future be filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.
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Transactional Agreements. "Transactional Agreements" shall mean:
(a) the Agreement;
(b) the Note; and
(c) the sublease, noncompetition agreements and license
agreement referred to in Sections 6.9, 6.10, 6.11 and 7.4 and the
Assignment and Assumption Agreement among the Purchaser and the Companies
of even date herewith.
Transactions. "Transactions" shall mean (a) the execution and delivery
of the respective Transactional Agreements, and (b) all of the transactions
contemplated by the respective Transactional Agreements, including:
(i) the sale of the Shares by RadNet to the Purchaser in
accordance with the Agreement;
(ii) the assumption of obligations by the Purchaser pursuant
so Sections 1.2(a)(ii) and 1.2(a)(iii);
(iii) the execution and delivery of the Note by the Purchaser;
and
(iv) the performance by the Companies and the Purchaser of
their respective obligations under the Transactional Agreements and the
exercise by the Companies and the Purchaser of their respective rights
under the Transactional Agreements.
Unaudited Interim Balance Sheet. "Unaudited Interim Balance Sheet" shall
have the meaning specified in Section 2.4(a)(iii) of the Agreement.
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