SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 1998
Consolidated Technology Group Ltd.
(Exact name of Registrant as Specified in its Charter)
New York 0-4186 13-1948169
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
160 Broadway, New York, New York 10038
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (212) 233-4500.
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Item 2. Acquisition or Disposition of Assets.
On January 28, 1998, International Magnetic Imaging, Inc. ("IMI"), a
subsidiary of Consolidated Technology Group Ltd. (the "Company"), and certain of
IMI's subsidiaries entered into an asset purchase agreement with Comprehensive
Medical Imaging, Inc. ("CMI"), a subsidiary of Syncor International Corporation,
pursuant to which CMI has agreed to purchase substantially all of the assets of
IMI and such subsidiaries for $20.5 million in cash and the assumption of $21
million in debt. The agreement contemplates a closing on or before March 11,
1998, subject to extension as provided in the agreement.
IMI and its subsidiaries operate ten outpatient diagnostic imaging
centers, an imaging referral network and related services. As a result of the
sale of IMI's assets, the Company will no longer be engaged in the operation of
diagnostic imaging centers and related business activities.
Item 7. Financial Statements and Exhibits.
1. Asset purchase agreement dated January 28, 1998, by and among
Comprehensive Medical Imaging, Inc., International Magnetic
Imaging, Inc. and certain of its subsidiaries, including the
exhibits and schedules thereto.
2. Unaudited proforma financial statements:
a) Balance Sheet as of September 30,1997.
b) Statement of Operations for the nine months ended
September 30, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSOLIDATED TECHNOLOGY GROUP LTD.
By:______________________________
Date: February 12, 1998 Lewis S. Schiller
Chairman and Chief Executive Officer
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EXHIBIT 1, Item 7
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into this
28th day of January 1998, by and among Comprehensive Medical Imaging, Inc., a
Delaware corporation ("Buyer"), and International Magnetic Imaging, Inc., a
Delaware corporation ("IMI of Delaware"), International Magnetic Imaging, Inc.,
a Florida corporation ("IMI of Florida"), Magnetic Resonance Institute of North
Miami Beach, Ltd., a Florida limited partnership ("MRI of Miami"), Oakland
Magnetic Resonance Institute, Ltd., a Florida limited partnership ("MRI of
Oakland"), Magnetic Resonance Institute of Boca Raton, Ltd., a Florida limited
partnership ("MRI of Boca Raton"), Magnetic Resonance Institute of South Dade,
Ltd., a Florida limited partnership ("MRI of South Dade"), Pine Island Magnetic
Resonance Imaging Center, Ltd., a Florida limited partnership ("MRI of Pine
Island"), Physicians Outpatient Diagnostic Center, Ltd., a Florida limited
partnership ("PODC"), Magnetic Resonance Institute of Orlando, Ltd., a Florida
limited partnership ("MRI of Orlando"), IMI Acquisition of Arlington Corp., a
Virginia corporation ("IMI of Arlington"), IMI Acquisition of Puerto Rico
Corporation, a Puerto Rico corporation ("IMI of Puerto Rico"), IMI Acquisition
of Kansas Corporation, a Kansas corporation (IMI of Kansas"), MRI-NET, INC., a
Florida corporation ("MRI-NET"), KAP-NET, CORP., a Florida corporation ("Kap
Net") and Caribbean Network Services, Inc., a Puerto Rico corporation ("CNS"),
(each of which entities are sometimes hereinafter individually referred to as a
"Seller" and all of which are sometimes hereinafter collectively referred to as
"Sellers").
RECITALS
WHEREAS, IMI of Delaware owns all of the outstanding capital stock of
seven acquisition entities which own the sole general partnership interest in
the following seven Florida limited partnerships: MRI of Miami, MRI of Oakland,
MRI of Boca Raton, MRI of South Dade, MRI of Pine Island, PODC and MRI of
Orlando, sometimes hereinafter collectively referred to as the "Florida Limited
Partnerships;"
WHEREAS, IMI of Delaware also owns all of the outstanding capital stock
of seven additional acquisition entities which own the sole limited partnership
interest in the Florida Limited Partnerships;
WHEREAS, six of the Florida Limited Partnerships own all of the assets
of six Florida diagnostic imaging centers and one of the Florida Limited
Partnerships owns a 50% interest in a diagnostic imaging center located in
Orlando, Florida;
WHEREAS, IMI of Delaware owns all of the outstanding capital stock of
the following three corporations, each of which owns a diagnostic imaging
center: IMI Acquisition of Arlington, IMI Acquisition of Puerto Rico and IMI
Acquisition of Kansas;
WHEREAS, IMI of Delaware owns all of the outstanding capital stock of
MRI-NET, a corporation which operates a diagnostic imaging referral network in
approximately 35 states;
WHEREAS, IMI of Delaware owns all of the outstanding capital stock of
Kap Net, a recently formed corporation organized to hold "capitated" and "fee
for service" contracts;
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WHEREAS, IMI of Delaware owns all of the outstanding capital stock of
IMI of Florida, a corporation which owns certain non-revenue producing assets
relating to the Centers;
WHEREAS, IMI of Delaware owns all of the outstanding capital stock of
CNS, a corporation recently formed for the purpose of developing a diagnostic
imaging referral network in Puerto Rico, Santo Domingo, Guatemala, Honduras,
Nicaragua, Haiti, Colombia and Venezuela;
WHEREAS, IMI of Delaware, the Florida Limited Partnerships, IMI
Acquisition of Arlington, IMI Acquisition of Puerto Rico and IMI Acquisition of
Kansas operate and own all of the assets relating to ten (10) outpatient
diagnostic imaging centers in the United States and Puerto Rico (the "Centers")
and MRI-NET, Kap Net, IMI of Florida and CNS own certain non-revenue producing
assets and/or conduct or propose to conduct certain activities relating to the
Centers.
WHEREAS, activities of the Centers, together with the business or
proposed business of the aforementioned subsidiaries of IMI of Delaware, are
herein referred to collectively as the "Business";
WHEREAS, Buyer and IMI of Delaware on behalf of all of the Sellers
entered into a Letter of Intent, dated September 7, 1997 ("Letter of Intent"),
the subject of which was the transactions contemplated hereby; and
WHEREAS, Sellers desire to sell, and Buyer desires to purchase,
substantially all of the assets related to the Business, in accordance with the
terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and covenants hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
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1. Definitions.
1.1 Agreement shall mean this Asset Purchase Agreement, together with
all schedules and exhibits referenced herein.
1.2 Assets shall have the meaning ascribed to it in Section 2.1 of the
Agreement.
1.3 Assigned Contracts shall have the meaning ascribed to it in Section
3.15 of the Agreement.
1.4 Intentionally Omitted.
1.5 Assumed Liabilities shall mean those liabilities set forth on
Exhibit A hereto.
1.6 Bill of Sale, Assignment and Assumption Agreement shall mean the
agreement in the form attached hereto as Exhibit B.
1.7 Break-Up Fee shall have the meaning ascribed to it in Section 10.4
of the Agreement.
1.8 Business shall have the meaning ascribed to it in the tenth
paragraph of the Recitals of the Agreement.
1.9 Cash Portion of the Purchase Price shall have the meaning ascribed
to it in Section 2.2(a) hereof.
1.10 Closing shall mean the consummation of the purchase and sale of
the Assets as provided herein.
1.11 Closing Date shall mean 10:00 am Pacific Standard Time on March
13, 1998 at the offices of Buyer, or at such other time or place as the parties
hereto may mutually agree upon, subject to extension (a) as provided in Sections
6.6 or 8.8 or (b) to allow for the expiration of any cure period described in
Section 3.30 or 4.9.
1.12 Consolidated shall mean Consolidated Technology Group Ltd., a New
York corporation.
1.13 Consulting Agreement shall mean the agreement in the form attached
hereto as Exhibit C.
1.14 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.15 Excluded Assets shall mean (i) all corporate and financial books
and records of Sellers (including, but not limited to, tax returns, checkbooks
and bank statements), a copy of which shall be provided to Buyer at or prior to
the Closing Date, (ii) all claims, counterclaims and rights to proceeds with
respect to all pending litigation to which Sellers are a party and which Buyer
decides, within six months following the Closing as to litigation which is then
still pending, not to pursue, (iii) all tax deferred assets and deferred loan
costs of Sellers, (iv) all rights to any pro-rated refunds of insurance premiums
paid by Sellers prior to Closing with respect to insurance policies of Sellers
canceled by Sellers prior to or as of the Closing Date, and (v) all intercompany
accounts receivable.
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1.16 Financial Statements shall have the meaning ascribed to it in
Section 3.6 of the Agreement.
1.17 Hazardous Material shall mean any hazardous or toxic substance,
material, waste or similar item which is regulated by local authorities, the
state authorities, the federal government, the Nuclear Regulatory Commission,
the Environmental Protection Agency, related state or local governmental
agencies or their designees, including, but not limited to, any material,
substance, waste or similar item which is defined by any of the following laws,
amendments thereto and related regulations and amendments thereto:
1.17.1 hazardous material as defined under the laws of any state
in which the Real Property is located;
1.17.2 hazardous substance as defined under Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. Section 1317);
1.17.3 hazardous water as defined under Section 1004 of the
Federal Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.);
1.17.4 hazardous waste substance as defined under Section 101 of
the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601 et seq.);
1.17.5 hazardous waste or toxic substance, waste, material,
radioactive material, or any similar term in any rules and regulations, which
are adopted by any administrative agency including, but not limited to the
Environmental Protection Agency, the Occupational Safety and Health
Administration, the Nuclear Regulatory Commission and any such similar federal,
state or local agency having jurisdiction over the Real Property, personal
property or the Assets, whether or not such rules and regulations have the force
of law; or
1.17.6 hazardous or toxic waste, substance, material or similar
item in any statute, regulation, rule or law enacted by local authorities, state
authorities, and/or the federal government.
1.18 Indemnified Party shall have the meaning ascribed to it in Section
9.3 of the Agreement.
1.19 Indemnifying Party shall have the meaning ascribed to it in
Section 9.3 of the Agreement.
1.20 Laws shall mean any law, (whether statutory or otherwise), rule,
regulation, ordinance, or decree of any governmental authority (federal, state,
local or otherwise), including, without limitation, the Food and Drug
Administration, the Environmental Protection Agency, U.S. Occupational Safety
and Health Administration, the Department of Transportation and the Nuclear
Regulatory Commission.
1.21 Leased Property shall mean all real property in which each Seller
has a leasehold or other non-ownership interest, which are identified on
Schedule 3.11.
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1.22 Liability shall mean an obligation, known or unknown, to a third
party which will require a payment of money, or an obligation, known or unknown,
which should be reflected in accordance with generally accepted accounting
principles on the financial statements of Sellers, as the case may be, or their
successors or assigns.
1.23 Liquid Assets shall have the meaning ascribed to it in Section 2.4
hereof.
1.24 Net Liabilities shall have the meaning ascribed to it in Section
2.4 of the Agreement.
1.25 Permits shall have the meaning ascribed to it in Section 3.20 of
the Agreement.
1.26 Purchase Price shall have the meaning ascribed to it in Section
2.2 of the Agreement.
1.27 Real Property shall consist of land with improvements thereon and
buildings owned by each Seller, which are identified on Schedule 3.13.
1.28 Related Documents shall have the meaning ascribed to it in Section
3.3 of the Agreement.
1.29 Related Transactions shall have the meaning ascribed to it in
Section 3.23 of the Agreement.
1.30 Sellers shall have the meaning ascribed to it in the introductory
paragraph of the Agreement.
1.31 Syncor shall mean Syncor International Corporation, Buyer's
parent.
1.32 Termination Date shall mean the date on which the Agreement is
terminated pursuant to Section 10 hereof.
2. Purchase and Sale of Assets.
2.1 Upon the terms and subject to the conditions set forth in this
Agreement and in reliance upon the representations and warranties made herein by
each party, on the Closing Date, Sellers agree to sell, grant, convey, assign,
transfer and deliver to Buyer, and Buyer agrees to purchase and acquire from
Sellers, all of the assets of every kind and nature of Sellers used or useful in
the Business (the "Assets"), including, but not limited to those assets more
particularly described in this Section 2.1, and wherever located, except for the
Excluded Assets.
2.1.1 All equipment, furniture, furnishings and fixtures owned or
used by Sellers in the conduct of the Business, including, without limitation,
that which is listed on Schedule 2.1.1 attached hereto;
2.1.2 All inventories, supplies, spare parts and tools owned or
used by Sellers in the conduct of the Business, including, without limitation,
that which is listed on the schedule to be delivered by Sellers at Closing
pursuant to Section 8.18;
2.1.3 All cash and accounts receivable owned by Sellers,
including, without limitation, all of such cash and accounts receivable which
are listed on Schedule 2.1.3;
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2.1.4 All goodwill and other intangible property, including
customer lists and other useful customer information, including, without
limitation, all of those payors and referring physicians with which Sellers have
written contracts and which comprise part of such customer lists which are
listed on Schedule 3.15;
2.1.5 All contracts and agreements with any suppliers that Sellers
or any of Sellers' stockholders, directors, officers, employees or affiliates
are a party that relate, in whole or in part, to the Business or Assets, all of
which written agreements are listed on Schedule 3.15;
2.1.6 All contracts and agreements with any customers, including,
without limitation, patients, hospitals and managed care organizations, that
Sellers or any of Sellers' stockholders, directors, officers, employees or
affiliates are a party that relate, in whole or in part, to the Business or
Assets, all of which, if written, are listed on Schedule 3.15;
2.1.7 All property or equipment leases, rental agreements or
facility rental agreements, and any property or equipment maintenance agreements
associated therewith, and all security deposits thereunder, all of which are
listed on Schedule 3.15;
2.1.8 All licenses (including, without limitation, radioactive
materials licenses and medical licenses), permits, all corporate names and
fictitious business names, patents and trade and service marks, trade names, and
copyrights, and all applications therefor, as well as all other intellectual
property rights granted to or owned by Sellers, all of which are listed on
either Schedule 2.1.8 or 3.15;
2.1.9 All purchase orders for machinery and equipment, if any;
2.1.10 Any and all Assigned Contracts not listed on any other
schedule hereto, including, without limitation, any agreements with
radiologists, all of which are listed on Schedule 3.15, except for customer and
supplier contracts entered into in the normal course of business;
2.1.11 All drawings, blueprints, specifications, designs and data,
if any;
2.1.12 All catalogues, brochures, sales literature, and
promotional materials, if any;
2.1.13 All legal, accounting and financial files, records, books
and other documents;
2.1.14 Those certain Secured Promissory Notes of Stephen A.
Schulman to International Magnetic Imaging, Inc., each dated December 26, 1995
in the principal amounts of $247,254.95 and $52,745.05, respectively, including
all accrued interest thereon (the "Notes"); and
2.1.15 All other assets and rights of every kind and nature, real
or personal, tangible or intangible, which are in any way related to the
Business and owned by Sellers.
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2.2 Purchase Price. On the Closing Date, upon the terms and subject to
the conditions set forth in this Agreement, and in consideration of the sale,
conveyance, assignment, transfer and delivery of the Assets to Buyer, Buyer
agrees to pay to Sellers the following which, for purposes of this Agreement,
shall be referred to herein as the "Purchase Price":
(a) $20,500,000, subject to adjustment as provided in subparagraph
2.4 hereof (the "Cash Portion of the Purchase Price"); and
(b) The assumption of the Assumed Liabilities.
2.3 Payment Terms. The Purchase Price shall be paid by Buyer to Sellers
at the Closing, as follows:
(a) The Cash Portion of the Purchase Price shall be paid to each
Seller (or its designees, including the payment of Sellers' finder's fee as
provided in Paragraph 3.24 hereof), in the respective amounts set forth on
Schedule 2.3(a) hereto, by wire transfer of immediately available funds to a
bank account(s) designated by each Seller.
(b) By Buyer's execution of the Bill of Sale, Assignment and
Assumption Agreement.
2.4 Adjustment.
2.4.1 On the day immediately prior to the Closing Date, IMI of
Delaware shall deliver to Buyer a Schedule 2.4 certified by its Chief Financial
Officer, setting forth, as of the close of business on the last business day
immediately preceding the Closing Date, (a) the amount of each Assumed
Liability, and (b) the amount of cash on hand (for these purposes, to include
all cash security deposits and prepaid expenses) and accounts receivable of
Sellers (the "Liquid Assets"). If the difference between the Assumed Liabilities
and the Liquid Assets, all as set forth on such Schedule (the "Net Liabilities")
exceeds $12,500,000, the Cash Portion of the Purchase Price shall be reduced by
an amount equal to the amount of any such excess. If the Net Liabilities set
forth on such Schedule are $12,500,000 or less, there shall be no adjustment in
the Cash Portion of the Purchase Price. If the Net Liabilities set forth on such
Schedule are in excess of $13,500,000, Sellers or Buyer may elect to terminate
this Agreement.
2.4.2 The Purchase Price shall be adjusted on the Closing Date
to reflect a reduction thereof in an amount equal to the legal fees and
disbursements of Buyer's bankruptcy counsel which were incurred in connection
with proceedings relating to certain involuntary bankruptcy petitions filed
against certain affiliates of Sellers on October 22, 1998 in the U.S. Bankruptcy
Court, Southern District of Florida, subject to Buyer's delivery to Sellers on
or prior to the Closing Date of copies of bills and/or statements therefor.
2.5 Taxes; Proration.
2.5.1 Sellers shall be responsible for the payment of any and all
federal, state, local or foreign income, franchise, sales and other similar
taxes, liabilities or deficiencies of Sellers (including, without limitation,
any penalties and/or interest thereon) which are based upon Sellers' receipt of
the proceeds from the sale of the Assets hereunder regardless of the period to
which such liabilities, deficiencies, penalties and/or interest relate.
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2.5.2 All applicable taxes, utility charges, insurance and other
payments made by Sellers with respect to the Real Property prior to the Closing
Date and all rental payments made by Sellers with respect to the Leased Property
prior to the Closing Date shall be pro-rated between the Buyer and Sellers as of
the Closing Date, solely to the extent prepaid by Sellers prior to the Closing
Date and as set forth on Schedule 2.5.2 to be delivered to Buyer on or prior to
the Closing Date. All security deposits with respect to the Leased Property
shall be transferred to Buyer by Sellers on the Closing Date.
2.6 Liabilities and Obligations Not Assumed. Notwithstanding any other
term of this Agreement to the contrary, Sellers shall retain liability and be
responsible for, and Buyer shall have no liability for, any and all liabilities
of Sellers, other than the Assumed Liabilities or liabilities in connection with
agreements which are assigned to Buyer under this Agreement or as otherwise
expressly provided for in this Agreement, including, but not limited to:
2.6.1 Taxes. Any and all taxes referred to in Section 2.5 hereof.
2.6.2 Subordinated Debt. Any subordinated debt of Sellers,
including all accrued interest thereon.
2.6.3 Amounts Due Affiliates. Any amounts due from Sellers to
Sellers' parents, subsidiaries or other entities owned or controlled by Sellers,
or officers, directors, shareholders, agents or employees thereof.
2.6.4 Obligations to Employees. Any and all obligations of Sellers
to their officers, directors, employees and/or agents, whether for compensation,
fringe benefits, employee benefit or retirement plans, severance compensation,
or any other reason, including, without limiting the generality of the
foregoing, any obligation of Sellers to any employee retirement or benefit plan
or to any governmental entity for amounts relating to payroll withholding, other
than obligations to any of such individuals arising out of the employment or
engagement of such individuals by Buyer, or the transfer to and assumption by
Buyer of the Plans, on and after the Closing Date.
2.6.5 Willful Misconduct; Fraud; Crimes. All liabilities and
obligations of Sellers arising as a result of the willful misconduct, fraud, or
criminal actions of any of Sellers or their officers, directors, shareholders,
employees, agents or representatives.
2.6.6 Undisclosed Liabilities. Any Liability of Sellers which is
not disclosed to Buyer, including, but not limited to, Liabilities relating to
claims with respect to Hazardous Materials, arising out of circumstances
occurring prior to the Closing and regardless of when such claim is first
asserted.
2.6.7 Other Expenses. Any legal, accounting, brokerage or other
expenses of whatsoever kind or nature incurred by Sellers or its officers,
directors, stockholders, employees or agents, or any parent, subsidiary or
entity owned or controlled by Sellers, in connection with the transactions
contemplated by this Agreement. Notwithstanding the foregoing, Buyer shall be
responsible for the payment of all legal fees for general corporate services
rendered to Sellers which comprise part of the Assumed Liabilities, including
the amounts thereof which are set forth on Exhibit A and Schedule 2.4 hereto
(which will exclude all legal fees of Sellers incurred in connection with the
transaction contemplated by this Agreement), which legal fees for general
corporate services rendered to Sellers shall be paid by Buyer to the payees
thereof at Closing.
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2.7 Assigned Contracts. Set forth on Schedule 3.15 is a list of the
Assigned Contracts. Schedule 3.15 indicates opposite each Assigned Contract set
forth thereon, those contracts as to which Seller will not be required to obtain
consents to the assignment thereof and Sellers make no representation or
warranty as to the assignability of such contracts.
3. Representations and Warranties of Sellers. Sellers represent and warrant
to Buyer as follows:
3.1 Formation, Capacity. Each Seller has been validly formed under the
laws and regulations of the state of its formation. Except with respect to
MRI-NET, each Seller is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other jurisdictions in
which the character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary, except for
those jurisdictions where failure to be so qualified, individually or in the
aggregate, would not have a material adverse effect on the Business. Each Seller
has all requisite corporate power and authority to own its properties related to
the Business and to carry on the Business as now conducted. None of the Sellers
is in default with respect to any order of any court, governmental authority or
arbitration board or tribunal related to the Business to which such Seller is a
party or is subject, nor is any Seller, except MRI-NET, in violation of any
laws, ordinances, governmental rules or regulations which would have a material
adverse effect on the Business.
3.2 Good Standing. Each Seller, except MRI-NET, is in compliance with
all local, state and federal laws, regulations, statutes and ordinances in every
jurisdiction in which it does business. Specifically, each Seller, except
MRI-NET, is licensed and qualified to do business as a foreign corporation or
foreign limited partnership as required. Moreover, no Seller, except MRI-NET, is
in default with respect to any order of any court, governmental authority or
arbitration board or tribunal, and each Seller is in compliance with the rules
and regulations of all local, state and federal governmental agencies which
regulate any aspect of the Business.
3.3 Authorization, Validity and Effect of Agreements. The execution and
delivery by each Seller of this Agreement and all agreements and documents
contemplated hereby (the "Related Documents"), and the consummation by them of
the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate actions, including stockholder approval. This Agreement
constitutes, and all Related Documents when executed and delivered by each
Seller and Buyer pursuant to this Agreement for value received will constitute,
valid and legally binding obligations of Sellers enforceable in accordance with
their terms, except as enforceability may be limited by equitable principles and
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium, bulk sales, preference, equitable subordination, marshaling or other
similar laws of general application now or hereafter in effect relating to the
enforcement of creditors' rights generally.
3.4 Consents and Approvals. Except as set forth in Section 3.3 above or
on Schedule 3.4 or Schedule 3.15 hereto, there is no authorization, consent,
order or approval of, or notice to or filing with, any individual, entity or
federal or state authority required to be obtained or given in order for each
Seller to consummate the transactions contemplated hereby and fully perform its
obligations hereunder, excluding, however, any authorization, consent, order,
approval, notice or filing which Buyer is required to obtain or give.
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3.5 Absence of Conflicts. Except as set forth on Schedule 3.5 or
Schedule 3.15 hereto, the execution, delivery and performance by each Seller of
this Agreement and the Related Documents, and the consummation by each Seller of
the transactions contemplated hereby and thereby will not, with or without the
giving of notice or lapse of time, or both, (i) to the best of Sellers'
knowledge, violate any provision of law, statute, rule or regulation to which
such Seller is subject, (ii) violate any order, judgment or decree applicable to
such Seller, (iii) conflict with or result in a breach or default under any term
or condition of any of the formation documents of such Seller, or any agreement
or other instrument to which such Seller is a party or by which it is bound, or
to which any of the Assets are subject, (iv) result in the creation or
imposition of any lien, pledge, claim, security interest or encumbrance of any
nature whatsoever on the Assets, or (v) cause, or give any person grounds to
cause, the maturity of any Liability to be accelerated, or increase any
Liability.
3.6 Financial Statements. Sellers have previously delivered to Buyer
true, complete and correct copies of their combined audited balance sheets as of
December 31, 1996 and the related combined audited statements of income,
statements of stockholders' equity and statements of changes in financial
position for the period ending on such date, and their respective combined
unaudited balance sheets as of December 31, 1997 (the "Financial Statement
Date"), and the related combined unaudited statements of income, statements of
stockholders' equity and statements of changes in financial position for the
periods ending on such date (collectively, including the footnotes thereto, the
"Financial Statements"). Sellers represent and warrant that the Financial
Statements fully and fairly set forth the financial condition of Sellers as of
the dates indicated, and the results of its operations for the periods
indicated, all on a combined basis in accordance with generally accepted
accounting principles consistently applied, except as otherwise stated therein.
Further, the Financial Statements contain no material misstatements or omissions
that would be required to be disclosed for financial reporting purposes.
Except as set forth on Schedule 3.8, all accounts and notes
receivable of each Seller reflected on the Financial Statements (other than
Excluded Assets) are, and all accounts receivable subsequently accruing to the
Closing Date will be, (a) valid and genuine and generated from the provision of
services by Sellers in the normal course of business, (b) to the best of each
Sellers' knowledge, subject to no known defenses, set-offs or counterclaims
(except customary reserves and allowances consistent with past practices).
Sellers have no notes receivable, other than intercompany notes receivable which
are not included in the Assets and the Secured Promissory Notes dated December
26, 1995, in the principal amounts of $247,254.95 and $52,745.05, respectively,
including all accrued interest thereon, of Dr. Stephen A. Schulman to IMI of
Delaware. Sellers have not changed the accounting treatment with respect to
their accounts receivable as set forth on the Financial Statements subsequent to
the Financial Statement Date.
3.7 Absence of Undisclosed Liabilities.
3.7.1 The Sellers have no liabilities or obligations whatsoever
related to the Business for which the Buyer will be liable in accordance with
the terms hereof, either accrued, absolute, contingent or otherwise, which are
not reflected or provided for in the Financial Statements, or those arising
after the Financial Statement Date which are in the ordinary course of business,
in each case in normal amounts and none of which would have a material adverse
affect on any Seller or the Business.
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3.7.2 Except as otherwise disclosed in this Agreement or in any
schedule hereto, as of the Closing Date, no Seller knows of any basis for the
assertion against any Seller of any claim or Liability relating to the Assets
and/or Business, or is aware of any occurrence or fact that has or might
adversely affect any of the Assets or the Business.
3.8 Current Liabilities/Receivables. Except as set forth on Schedule
3.8, or in the Financial Statements, the accounts receivable and trade accounts
payable of each Seller as of the Financial Statement Date, and those incurred
between the Financial Statement Date and the Closing Date are or will be
incurred or realized in the ordinary course of business and are or will be in
amounts consistent with historical levels of accounts receivable and trade
accounts payable of each Seller.
3.9 Absence of Certain Changes or Events. Except as contemplated by
this Agreement or as set forth in Schedule 3.9 or any other schedule hereto,
since the Financial Statement Date, there has not been (a) any material damage,
destruction or casualty loss to the properties or assets of any Seller which has
not been repaired, replaced or corrected (whether or not covered by insurance);
(b) any material adverse change in the business, assets, properties, operations,
prospects or financial condition of any Seller, or, to Sellers' knowledge, any
fact or condition which could cause such a change; (c) any entry into any
transaction, commitment or agreement (including, without limitation, any
borrowing) material to any Seller, or outside the ordinary course of business;
(d) any increase in the rate or terms of compensation payable or to become
payable by any Seller to any directors, officers or employees, or any increase
in the rate or change in the terms of any employment agreement or compensatory
arrangement, or any bonus, pension, insurance or other employee benefit plan, or
any payment or benefit made to or for any such director, officer or employee,
except for any of the foregoing which are in the ordinary course of business and
excluding, for these purposes, Lewis Schiller, Stephen A. Schulman and George
Mahoney; (e) any sale, transfer or other disposition of any asset of any Seller
to any party, except for any of the foregoing in the ordinary course of business
consistent with past practices; (f) any termination or waiver of any rights of
material value to any of the businesses of each Seller; (g) any material failure
by any Seller to pay its accounts payable or other obligations in the ordinary
course of business consistent with past practices; (h) any capital expenditure
for additions to property or equipment by any Seller in excess of $50,000 other
than in the ordinary course of business; (i) any pledge of any of the Assets of
any Seller or, to the best of Sellers' knowledge, any action or inaction which
would subject any such Asset to any lien, security interest, mortgage, pledge,
claim, charge or other encumbrance; (j) the incurrence of any material Liability
or obligation by any Seller, except for liabilities incurred in the ordinary
course of business and consistent with past practices; (k) any actual, or to
each Seller's knowledge threatened, termination or cancellation of, or
modification or change in, any business relationship with any customer or
customers of any Seller or other agreement or arrangement involving or related
to the Assets of any Seller where such event would have a material, adverse
effect on the business of such Seller; (l) any cancellation of a debt due to or
a claim of any Seller, other than by payment or other satisfaction; (m) any
material failure of any Seller to perform, or any default by any Seller under,
any material agreement, obligation or covenant to which it is or was bound; (n)
any material change in any method of accounting or accounting practice,
principle or procedure; (o) any action or inaction which might cause any Seller
to incur any material tax liability out of the ordinary course of business; or
(p) any agreement, whether in writing or otherwise, to take any action described
in this Section 3.9. For purposes of this Section (other than (h) above), the
word "material" shall mean any matter which could create a single claim,
obligation or encumbrance on the Assets of any Seller in excess of $50,000 or,
when aggregated with any other damage or loss sustained by Buyer from any breach
or default of this Section 3, does not exceed $100,000.
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3.10 Taxes. Each Seller has: (i) duly and timely filed or caused to be
filed all federal, state, local and foreign tax returns (including, without
limitation, consolidated and/or combined tax returns) required to be filed by it
prior to the date of this Agreement which relate to each Seller, or with respect
to which each Seller or the Assets are liable or otherwise in any way subject;
(ii) paid or fully accrued for all taxes shown to be due and payable on such
returns (which taxes are all the taxes due and payable under the laws and
regulations pursuant to which such returns were filed); and (iii) properly
reserved on the Financial Statements for all such taxes accrued in respect of
each Seller or the Assets for periods subsequent to the periods covered by such
returns to the extent required by generally accepted accounting principles. No
notice of deficiency in payment of taxes for any period has been received by any
Seller from any taxing body and remains unsettled as of the date of this
Agreement. Copies of all federal, state, local and foreign income (or franchise)
tax returns of each Seller have been made available for inspection by Buyer.
3.11 Title to the Assets. Each Seller has good and marketable title to
the Assets, free and clear of all security interests, mortgages, encumbrances,
liens, charges or adverse claims of any kind or character, except as
specifically listed on Schedule 3.11. Except as indicated in Schedule 3.11, none
of the Assets is held under any lease or conditional sales contract. All
machinery and equipment transferred to Buyer at the Closing as part of the
Assets will be in good operating order and condition, free of all material
defects, will have been properly maintained in accordance with all service and
maintenance agreements relating thereto and will be fit for operation in the
ordinary course of business.
3.12 Property. The Assets constitute all of the assets owned by the
Sellers and/or utilized by Sellers to conduct their Business as presently
conducted, including, without limitation, all real and personal property of any
kind or character, all machinery, equipment, furniture, fixtures and supplies,
all intangible property, and all accounts receivable of Sellers. In accordance
with Section 8.19, each Seller agrees to provide Buyer with a list of fixed
assets setting forth the book value of same as of the last day of the month
prior to the Closing, and, if available, the original purchase price therefor.
Except as set forth in this Agreement or on any Schedule hereto, there exists no
condition, restriction, reservation or encumbrance known to Sellers affecting
the title to the Assets which would prevent Buyer from utilizing the Assets, or
any part thereof, after the Closing, to the same full extent that any Seller
utilized the same prior to the sale and transfer contemplated hereby.
3.13 Real Estate. Schedule 3.13 contains a list and accurate
description of all Real Property and any lien, charge or encumbrance thereupon.
To the best knowledge of Sellers, the improvements upon such properties owned by
Sellers and the use thereof by each Seller conforms in all material respects, to
all applicable public and private covenants, conditions and restrictions, zoning
ordinances, conditional use permits, building codes and other state, federal and
local ordinances, including without limitation environmental laws, ordinances
and regulations. Except as set forth on Schedule 3.13 hereto, no claims, charges
or notice of violations have been filed, served, made, or to the best of each
Seller's knowledge, threatened, orally or in writing, against or relating to any
such property or any of the operations conducted at any such property (currently
or in the past) as a result of (i) any violation or alleged violation of any
applicable ordinances, requirements, regulations, zoning laws, restrictive
covenants, conditions or restrictions, or (ii) as a result of any encroachment
on the property of others. Each Seller has good and marketable title to, and is
in possession of or has control over, all of its real and personal property,
none of which is held under or subject to any mortgage, pledge, lien, lease,
encumbrance, conditional sales contract or other security arrangement except to
the extent described in Schedule 3.11 hereto. No condemnation or eminent domain
proceedings are pending, or, to the best knowledge of Seller, are threatened
with respect to any Real Property.
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3.14 Insurance. Attached hereto as Schedule 3.14 is a schedule of
insurance maintained by Sellers as of the date hereof. Each Seller keeps all of
its businesses, operations and properties insured against loss or damage, to the
extent of insurance currently in effect, with insurers believed by Sellers to be
financially responsible.
3.15 Contracts and Commitments.
3.15.1 Other than customer and supplier contracts entered into
in the ordinary course of business, and except as set forth on any other
schedule hereto including Schedule 3.15, no Seller is a party to any material
agreements, contracts, guarantees, commitments, restrictions or instruments of
any kind ("Contracts"). Those Contracts being assigned to and assumed by Buyer
at the Closing are set forth on Schedule 3.15 (the "Assigned Contracts"). True
and correct copies of all Assigned Contract listed on such schedules hereto have
been delivered to Buyer. Each Assigned Contract to which a Seller is a party is
a valid and binding obligation of such Seller, enforceable in accordance with
its respective terms, except that enforceability may be limited by equitable
principles and applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium, bulk sales, preference, equitable subordination,
marshaling or other similar laws of general application now or hereafter in
effect relating to the enforcement of creditors' rights generally, and is in
full force and effect; and each Seller is in compliance with all material terms
of the Assigned Contracts. Assuming full performance by the parties consistent
with past practice, none of the Assigned Contracts, either individually or in
the aggregate, have, or may have to the best of Sellers' knowledge, a material,
adverse effect on the Assets. Except as set forth on Schedule 3.15, no
allegation or notice of default of any Assigned Contract has been received by
any Seller, and to the best of each Seller's knowledge, no other party to any of
the Assigned Contracts is in default or breach thereof in any material respect.
3.15.2 No Seller has given any power of attorney (whether
revocable or irrevocable) to any individual or entity which is currently in
force and effect.
3.15.3 Except as set forth on Schedule 3.15, no Seller is in
default in any material respect, and to the best of Sellers' knowledge, there is
no basis for any valid claim of default, in any respect under any of the
Assigned Contracts. No Seller has any knowledge that the other parties to such
contracts will not fulfill their obligations under such contracts in all
material respects or are threatened with insolvency.
3.15.4 Other than as may be provided by applicable law, there
are no express or implied warranties (excluding third party manufacturer's
warranties) outstanding with respect to any services provided to patients by any
of the Sellers.
3.16 Labor Controversies. Except as set forth on Schedule 3.16, (a) no
Seller is a party to any collective bargaining agreement which relates in any
way to the Business; (b) no controversies exist between any Seller and any of
their employees which if adversely determined, might reasonably be expected to
materially adversely affect the conduct of the Business, and there are no
unresolved labor union grievances or unfair labor practice or labor arbitration
proceedings pending or, to the best of Sellers' knowledge, threatened relating
to the Business, and to the best of Sellers' knowledge, no organizational
efforts are presently being made or threatened involving any of the Sellers'
employees, and (c) no Seller has received notice of any claim that such Seller
has not complied with any laws relating to the employment of labor, including
any provisions relating to wages, hours, collective bargaining, the payment of
social security and similar taxes, equal employment opportunity, employment
discrimination and employment safety, or that such Seller is liable for any
arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing.
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3.17 Litigation. Except as set forth in Schedule 3.17, there is no
single action, suit or proceeding with respect to any Seller involving claims by
or against any Seller or the Assets in excess of $50,000 or, when aggregated
with any other damage or loss sustained by Buyer from any breach or default of
this Section 3, does not exceed $100,000. which are pending or, to the best of
Sellers' knowledge, threatened, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality and, to the best of Sellers' knowledge, no
basis for any such action, suit or proceeding exists.
3.18 Compliance with Laws. Except as set forth on Schedule 3.18, to
the best of Sellers' knowledge, each Seller is in compliance with all applicable
Laws in respect of its operations, Real Property, machinery, equipment, all
other property, practices and all other aspects of the Business. No Seller has
received any notification of any asserted present failure of it to comply with
any Law.
3.19 Employee Benefits. With respect to employee benefit plans
adopted by each Seller, including without limitation plans which are "employee
pension benefit plans" or "employee welfare benefit" plans within the meaning of
Sections 3(1) and 3(2), respectively, of ERISA (the "Plans"), all of which are
set forth on Schedule 3.15, no Seller, nor any entity affiliated with any
Seller, has failed to make any required contribution or other required payment
to any such Plan, including any such failure pursuant to which a lien may arise
by operation of law against the Assets of any Seller, including without
limitation liens arising under Sections 302(f)(4) or 4068(b) of ERISA.
3.20 Licenses and Permits. Each Seller, except MRI-NET, has all
governmental licenses and permits and other governmental authorizations and
approvals currently required for the conduct of its businesses as presently
conducted ("Permits"). Schedule 2.1.8 hereto includes a list of all Permits.
Notwithstanding any provision in this Agreement to the contrary, Sellers make no
representation or warranty as to whether MRI-NET has obtained all necessary
Permits or operates its business in compliance with all applicable laws, rules
and regulations. However, the foregoing exclusion shall not limit or reduce in
any way Sellers' obligations under Section 9 below.
3.21 Relations With Suppliers and Customers. No Seller is required to
provide any bonding or other financial security arrangements in connection with
any transaction with any customer or supplier. To the best of each Seller's
knowledge, no supplier of any Seller will cease to do business with it after the
consummation of the transactions contemplated hereby, to the extent that the
failure to continue such business would have a material, adverse effect on the
Business of any Seller as currently conducted, either individually or taken as a
whole; and no payor or referring physician has notified any Seller that it will
cease to do business with such Seller after the consummation of the transactions
contemplated hereby, to the extent that the failure to continue such business
would have a material adverse effect on the Business of any Seller as currently
conducted, either individually or taken as a whole. While each Seller knows of
no supplier who will cease to do business with such Seller, following
consummation of the Closing, it is possible that some of such suppliers may
cease to do business with Buyer on the grounds that Buyer is a competitor of
such supplier, or otherwise.
3.22 Employment Matters. All written employment contracts and all
written pension, bonus, profit sharing, stock option, life, health, retirement
welfare, or other agreements or arrangements providing for employee remuneration
or benefits to which any Seller is a party or by which it is bound are in full
force and effect and have previously been disclosed to Buyer. There are no oral
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contracts or arrangements of the type described in the preceding sentence with
respect to Sellers' employees, which have not previously been disclosed to
Buyer. There have been no claims of defaults, and to the best of any Seller's
knowledge, there are no facts or conditions which if continued, or with the
giving of notice, will result in a default under these contracts or arrangements
(excluding, for these purposes, employment agreements between Sellers and Lewis
Schiller, Stephen A. Schulman and George Mahoney). Sellers have delivered to
Buyer a copy of its employee manual.
3.23 Related Transactions. Except as reflected in the Financial
Statements and except as set forth on Schedule 3.23, no Seller has made or
entered into any contract, lease, commitment, arrangement or understanding with
any of its officers, directors, employees, shareholders or partners or with any
affiliate or associate of any of the foregoing, under which any Seller has
continuing obligations except for existing compensation arrangements (including
bonuses) with each of Sellers' officers ("Related Transactions").
3.24 Brokers and Finders. Sellers shall pay any and all brokerage
fees, commissions or finders' fees charged by any broker, finder or investment
banker employed or engaged by Sellers in connection with this Agreement or the
transactions contemplated hereby. By separate agreement between Sellers and
George W. Mahoney ("Mahoney"), Sellers have agreed to pay Mahoney a finder's fee
in connection with this transaction and will advise Buyer, in writing prior to
the Closing, of the amount to be deducted from the Purchase Price and paid
directly to Mahoney at Closing.
3.25 Patents, Trademarks, Licenses Etc. Except for normal usage
licenses associated with Sellers' equipment and software and as otherwise set
forth on Schedule 2.1.8 hereto, there are no domestic and foreign patents,
trademarks, service marks, trademark registrations, logos, trade names, assumed
names, copyrights and copyright registrations or applications therefor, or
license agreements presently owned or held by any Seller or under which any
Seller owns or holds any license, or in which any Seller owns or holds any
material direct or indirect interest; and Sellers do not believe that there are
any others necessary for the conduct of the business of any Seller as currently
conducted. Upon consummation of the transactions contemplated hereby, Buyer will
acquire the rights held by each Seller in each item described in Schedule 2.18.
Schedule 2.18 also includes all names and logos of Sellers to be transferred
hereunder. Except as set forth on Schedule 2.18, no Seller has any registered
logos, trade names or assumed names.
3.26 Books and Records. The books and records of each Seller have been
maintained in accordance with generally accepted accounting principles and
consistent with past practices, and accurately reflect in all material respects
the business, assets, properties, rights, obligations, liabilities and
operations of each Seller.
3.27 Full Disclosure. Each Seller has disclosed pursuant to this
Agreement all facts material to the business, operations, assets or condition
(financial or otherwise) of each Seller. No representation or warranty to Buyer
contained in this Agreement, and no statement contained in the disclosure
schedules to this Agreement, any certificate, list or other writing furnished to
Buyer pursuant to the provisions hereof, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein not misleading.
3.28 Effect of Certificates. All certificates of the Sellers and their
officers delivered hereunder shall be deemed to be additional representations
and warranties of the Sellers.
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3.29 Hazardous Materials. Except as set forth on Schedule 3.29 and in
the ordinary course of business consistent with past practice and in full
compliance with all environmental laws, regulations, and ordinances, to Sellers'
best knowledge: (i) there has been no Hazardous Material placed or released on
or within the Real Property, whether such Hazardous Material was placed by
generation, spill, release, discharge, treatment, disposal or storage, and (ii)
no Hazardous Material has penetrated or otherwise contaminated any soils or
waters including, but not limited to, streams crossing or abutting the Real
Property or the aquifer underlying the Real Property.
3.30 Notice and Cure. Prior to Sellers being deemed to be in breach or
default of any of their foregoing representations and warranties, Sellers shall
be entitled to receive notice of any claimed breach or default thereof, which
notice will specify with particularity the basis for any such claimed breach or
default, and the opportunity to cure the same within thirty (30) days after the
receipt of any such notice (or within such longer period of time as may be
necessary to cure any such claimed breach or default, provided that Sellers have
commenced to attempt to cure such claimed breach or default within such thirty
(30) day period and are diligently prosecuting such cure).
3.31 Materiality Standard. All of Sellers' representations and
warranties contained in this Section 3 shall be subject to the following
materiality standard. Sellers shall not be deemed to be in breach or default of
any of such representations or warranties unless Buyer sustains damage or loss
therefrom in an amount in excess of $50,000 in the case of any single
representation or warranty or $100,000 in the aggregate.
4. Representations and Warranties of Buyer. Buyer represents and warrants
to each Seller as follows:
4.1 Corporate Capacity. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all the requisite corporate power and authority to enter
into this Agreement.
4.2 Effect of Agreement. The execution and delivery by Buyer of this
Agreement and all Related Documents, and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate actions. This Agreement and all Related Documents when
executed and delivered by each Seller and Buyer pursuant to this Agreement for
value received will constitute valid and legally binding obligations of Buyer
enforceable in accordance with their terms, except that enforceability may be
limited by equitable principles and applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium, bulk sales, preference,
equitable subordination, marshaling or other similar laws of general application
now or hereafter in effect relating to the enforcement of creditors' rights
generally.
4.3 Consents and Approvals. Except as set forth in Section 4.2 above
or on Schedule 4.3 hereto, there is no authorization, consent, order or approval
of, or notice to or filing with, any individual or entity required to be
obtained or given in order for Buyer to consummate the transactions contemplated
hereby and fully perform its obligations hereunder, excluding, however, any
authorization, consent, order, approval or filing which any Seller is required
to obtain or give.
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4.4 Absence of Conflicts. The execution, delivery and performance by
Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, (i) violate any provision of law, statute, rule or regulation
to which Buyer is subject, (ii) violate any order, judgment or decree applicable
to Buyer or (iii) conflict with, or result in a breach or default under, any
term or condition of the Certificate of Incorporation or By-Laws of Buyer or any
agreement or other instrument to which Buyer is a party or by which Buyer is
bound.
4.5 Litigation and Administrative Proceedings. There is no claim,
action, suit, proceeding or investigation in any court or before any
governmental or regulatory authority pending, or to the best of Buyer's
knowledge threatened, at law or in equity, against or affecting Buyer which
seeks to enjoin or obtain damages in respect of the transactions contemplated
hereby. To the best of Buyer's knowledge, there is no basis for any such claim,
action, suit, proceeding or investigation.
4.6 Brokers and Finders. Neither Buyer nor its officers, directors,
employees, affiliates or associates has employed any broker, finder or
investment banker, or incurred any liability for any brokerage fees, commissions
or finders' fees in connection with this Agreement or the transactions
contemplated by this Agreement.
4.7 Full Disclosure. Buyer has disclosed pursuant to this Agreement
all facts material to the business, operations, assets or condition (financial
or otherwise) of Buyer. No representation or warranty to Sellers contained in
this Agreement, and no statement contained in the disclosure schedules to this
Agreement, any certificate, list or other writing furnished to Sellers pursuant
to the provisions hereof, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein
or therein not misleading.
4.8 Effect of Certificates. All certificates of Buyer and its officers
delivered hereunder shall be deemed to be additional representations and
warranties of Buyer.
4.9 Notice and Cure. Prior to Buyer being deemed to be in breach or
default of any of its foregoing representations and warranties, Buyer shall be
entitled to receive notice of any claimed breach or default thereof, which
notice will specify with particularity the basis for any such claimed breach or
default, and the opportunity to cure the same within thirty (30) days after the
receipt of any such notice (or within such longer period of time as may be
necessary to cure any such claimed breach or default, provided that Buyer has
commenced to attempt to cure such claimed breach or default within such thirty
(30) day period and are diligently prosecuring such cure).
4.10 Employees. Buyer acknowledges that Sellers have made no
representation or warranty with respect to Buyer's ability to employ any of
Sellers' employees on and after the Closing Date or, if employed, the terms of
employment thereof.
5. Covenants of Sellers. From the date hereof to Closing, each Seller will:
5.1 conduct its Business only in the ordinary and usual course making
all payments, other than those specifically prohibited hereunder, as and when
the same become due and payable, consistent with past practice;
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5.2 use all reasonable efforts to keep intact its business
organizations and goodwill;
5.3 unless otherwise agreed to in writing, use its best efforts to keep
available the services of its employees and maintain good relationships with
suppliers, lenders, creditors, distributors, employees, customers, and others
having any business or financial relationship with Seller. Buyer acknowledges
that Sellers are currently in litigation with their Chief Executive Officer and,
notwithstanding any term or provision of this Agreement to the contrary, Sellers
make no representation or warranty as to whether Buyer will be able to retain
such individual on and after the Closing Date;
5.4 continue to properly and to promptly file when due all federal,
state, local, foreign, and other tax returns, reports, and declarations required
to be filed by it, and will pay, or make full and adequate provision for the
payment of, all taxes and governmental charges due from or payable by each
Seller, unless disputed by Sellers;
5.5 comply with all laws and regulations applicable to it and its
operations;
5.6 maintain in full force and effect the insurance coverages presently
in effect;
5.7 not enter into any material contract, agreement, commitment, or
understanding material to any Seller, outside the ordinary course of business or
terminate any Assigned Contract except in the ordinary course of business
consistent with past practice (it being understood, however, that the employment
agreement between IMI of Delaware and its current Chief Executive Officer may be
terminated);
5.8 not incur any material obligation or Liability (fixed or
contingent), except normal trade or business obligations incurred in the
ordinary course of business and consistent with past practice or with respect to
obligations or liabilities which are not Assumed Liabilities, none of which will
be materially adverse to the Business, and except in connection with this
Agreement and the transactions contemplated herein;
5.9 as to any Assumed Liabilities, not discharge or satisfy any lien,
security interest or encumbrance or not pay any obligation or Liability (fixed
or contingent), other than in the ordinary course of business and consistent
with past practice;
5.10 not mortgage, pledge or subject to any lien, security interest or
other encumbrance, any of the Assets (other than mechanic's, materialman's and
similar statutory liens arising in the ordinary course of business);
5.11 not transfer, lease or not otherwise dispose of any of the Assets
except for a fair consideration in the ordinary course of business and
consistent with past practice or, except in the ordinary course of business and
consistent with past practice, acquire any assets or properties, unless any such
transfer, lease, disposition or acquisition does not materially adversely affect
the operation of the Business;
5.12 as to the Assumed Liabilities, not cancel or not compromise any
material debt or claim, except in the ordinary course of business and consistent
with past practice;
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5.13 not waive or not release any rights of material value with respect
to the Assets or the Assumed Liabilities;
5.14 except pursuant to those contracts which are not being assigned or
transferred to Buyer, not transfer or not grant any rights under any contracts,
concessions, leases, permits, licenses, intellectual property, or proprietary
information or know-how, except in the normal course of business consistent with
past practice;
5.15 not make or grant any wage or salary increase applicable to any
group or classification of employees generally, enter into any employment
contract with, or make any loan to, or enter into any material transaction of
any other nature with any officers or employees of Sellers, except in the
ordinary course of business consistent with past practice. Notwithstanding the
foregoing, Sellers shall not be prohibited from entering into any agreement or
arrangement with any officer or employee with respect to bonus compensation
payable from the proceeds of the Purchase Price or from making payments to its
Chief Executive Officer in settlement of presently pending disputes with him.
5.16 not enter into any transaction, contract or commitment outside the
ordinary course of business, except this Agreement and the transactions
contemplated hereby, and those necessary or desirable to carry out the
intentions of this Agreement;
5.17 not cause any casualty loss or damage (whether or not such loss or
damage is covered by insurance) which materially affects such Seller;
5.18 not amend its formation documents other than to change its
corporate name on or before the Closing Date and shall not use, after the
Closing Date, the name "International Magnetic Imaging, Inc.", or any other name
currently being used by Sellers. Notwithstanding the foregoing, (a) Sellers
shall be permitted to use the names currently being used by them for a period of
thirty (30) days after the Closing Date for Sellers' bank accounts, and (b) to
the extent requested by Buyer, not change or cancel any Permit;
5.19 not split, combine, or reclassify any of its outstanding
securities, or declare, set aside, or pay any dividend or other distribution on,
or make or agree or commit to make any exchange for or redemption of any such
securities payable in cash, stock or property, in each case in a manner which
would, impair the consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing, Sellers shall not be precluded from
making any payments on existing indebtedness to their parents or affiliates, in
the normal course of business and consistent with past practice, nor will
Sellers be prevented from making any payments with respect to their outstanding
securities from the proceeds of the sale of the Assets;
5.20 not issue or agree to issue any additional shares of, or rights of
any kind to acquire any shares of, its capital stock of any class, and not enter
into any contract, agreement, commitment, or arrangement with respect to any of
the foregoing, in each case in a manner which would, impair the consummation of
the transactions contemplated by this Agreement;
5.21 not create, incur, or assume any long-term or short-term
indebtedness for money borrowed with respect to the Assets, or make any capital
expenditures or commitment for capital expenditures in an amount exceeding
$100,000 in the aggregate;
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5.22 not adopt, enter into, or amend any bonus, profit sharing,
compensation, stock option, warrant, pension, retirement, deferred compensation,
employment, severance, termination, or any other employee benefit plan,
agreement, trust fund, or arrangement for the benefit or welfare of any officer,
director, or employee, or agree to any material (in relation to historical
compensation) increase in the compensation payable or to become payable to, or
any increase in the contractual term of employment of, any employee except, with
respect to employees who are not officers or directors, in the ordinary course
of business in accordance with past practice, and in each case except for
agreements which would provide for payments made from the proceeds of the sale
contemplated by this Agreement, to any Seller after the consummation of the
transactions contemplated by this Agreement, or to any of Lewis Schiller,
Stephen A. Schulman or George Mahoney;
5.23 not assign, sell, lease, mortgage, encumber, or otherwise dispose
of or grant or enter into any agreement to, or negotiate with any third party
with respect to granting, any interest in any of the Assets except for sales,
encumbrances, and other dispositions or grants of or with respect to the Assets
in the ordinary course of business and consistent with past practice, and,
except for liens for taxes not yet due or liens or encumbrances that are not
material in amount or effect and do not impair the use of the Assets;
5.24 not enter into any agreement, commitment, or understanding,
whether in writing or otherwise, in breach of any of the matters referred to in
subsections 5.1 through 5.23 above;
5.25 not hold any meetings of its Board of Directors, or any committee
thereof, or of its stockholders, without having invited a representative
selected by Buyer to attend the same;
5.26 not make any payments, whether on account of previously incurred
liabilities or otherwise, to any affiliated entity or individual other than
payments to SIS Capital Corp. with respect to existing indebtedness in a manner
consistent with past practice and for salary, bonus and benefits to officers,
directors and employees which, with respect to each such officer, director or
employee, shall not be outside the ordinary course of any Seller's business;
5.27 each Seller shall: (i) afford to Buyer and to its officers,
employees, accountants, counsel and other authorized representatives reasonable
access, throughout the period prior to the earlier of the Closing Date or the
Termination Date, to its facilities, properties, books and records; (ii) use its
best efforts to cause its representatives to furnish to Buyer and to its
authorized representatives such additional financial and operating data and
other information as to its respective businesses and properties as Buyer or its
duly authorized representatives may from time to time reasonably request; and
(iii) afford Buyer and its representatives reasonable access, during normal
business hours and on reasonable prior notice, throughout the period prior to
the earlier of the Closing Date or the Termination Date, to its present and
potential customers, and Buyer and its authorized representatives shall have the
right to contact such customers solely for the purpose of conducting such due
diligence investigation relating to customer relations as Buyer deems reasonably
necessary or appropriate.
5.28 Between the date of this Agreement and the Closing, each Seller
represents and warrants that it shall not, without the prior written consent of
Buyer, contravene in whole or part this Section 5.
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6. Mutual Covenants.
6.1 Public Announcements. Except with respect to jointly issued or
approved press releases or other public announcements and except as otherwise
provided below, the terms and conditions contained herein shall be held in
strict confidence by the parties hereto. In addition, reference is hereby made
to that certain Confidentiality and Non-Disclosure Agreement dated August 1,
1997 between First Lawrence Capital Corp., as financial advisor to IMI of
Delaware, and Syncor with respect to the due diligence investigation of Sellers,
the Assets and the Business, the terms of which are hereby incorporated herein
by reference thereto. Buyer hereby agrees to be bound by the terms of such
Confidentiality Agreement as if a party thereto. Such agreement by both Buyer
and Syncor shall survive any termination of this Agreement. None of Sellers or
Buyer shall furnish any written communication to their shareholders, customers,
creditors or to the public generally, if the subject matter thereof contains a
disclosure of the transactions contemplated by this Agreement without the prior
approval of the other parties as to the content thereof provided, however, that
the foregoing shall not be deemed to prohibit (i) any disclosure required by any
applicable law or by any governmental authority having jurisdiction over such
matters, (ii) any disclosure required by Sellers to enable Sellers to perform or
comply with their obligations under this Agreement, (iii) any disclosure to the
officers, directors, shareholders, employees or agents of Buyer or Sellers on a
need-to-know basis in connection with the transactions contemplated by this
Agreement, or (iv) any disclosure required under or in connection with any
agreement or any action or proceeding.
6.2 Notification of Certain Matters. Each Seller shall give prompt
notice to Buyer, and Buyer shall give prompt notice to such Seller, of: (i) the
occurrence, or failure to occur, of any matter or circumstance which would be
likely to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date of this Agreement to the Closing Date; (ii) any material failure of
such Seller or of Buyer, as the case may be, or of any officer, director,
employee or agent thereof, to comply with or satisfy, in any material respect,
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement and (iii) in the case of Sellers, any material breach or
default by any third party of any Assigned Contract that Sellers become aware of
prior to the Closing. For purposes hereof, "material" shall have the same
meaning as set forth in Section 3.31 hereof.
6.3 Best Efforts. Each Seller and Buyer shall use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, obtaining all authorizations, consents, waivers and approvals as may
be required by the applicable provisions of this Agreement and, in the case of
Buyer, providing the guaranty of Buyer's parent of the Assigned Contracts
(solely to the extent requested by any third party), in connection with the
assignment of those contracts, agreements, licenses, leases, purchase orders and
other commitments to be assumed by Buyer pursuant to this Agreement.
6.4 Execution of Additional Documents. Each Seller and Buyer will at
any time, and from time to time after the Closing Date, upon the reasonable
request of the other party, execute, acknowledge and deliver all such further
deeds, assignments, transfers, conveyances, powers of attorney and assurances,
and take all such further action, as may be reasonably required to carry out the
intent of this Agreement, and to transfer and vest title to any Asset being
transferred to Buyer, provided, however, that this Agreement will remain
effective regardless of whether any such additional documents are executed. The
Consulting Agreement attached hereto as Exhibit C shall be executed by the
parties thereto on the Closing Date.
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6.5 Licenses and Permits. Buyer shall have the right to utilize all
licenses and permits which are registered in Sellers' name on and after the
Closing Date. Sellers will cooperate with Buyer in all respects in either
transferring such licenses and permits to Buyer after the Closing Date or in
assisting Buyer with applying for new licenses or permits. In addition, Sellers
will cooperate and assist Buyer after the Closing Date with obtaining consents
to the assignments of all of the Assigned Contracts for which consents to the
assignment thereof have not been obtained as of the Closing Date, to the extent
that such contracts are assignable.
6.6 Hart-Scott-Rodino Notification. Each of Buyer and IMI of Delaware
shall complete, fully and accurately, FTC Form C4, Notification and Report Form
for Certain Mergers and Acquisitions under 16CFR Part 803 - Appendix,
promulgated under Section 201 of the Hart-Scott-Rodino Anti-Trust Improvement
Act of 1976 (the "Form"). The Forms prepared by each of Buyer and IMI of
Delaware shall be jointly filed contemporaneously with the execution hereof,
with a request for early termination of the thirty (30) day statutory waiting
period. In the event that the Forms are not filed on or before such date and the
thirty day statutory waiting period has not expired prior to the Closing Date or
early termination of such waiting period has not been granted on or before the
Closing Date, the Closing Date shall be extended until the earlier of the day
immediately following the date (a) on which such waiting period expires or (b)
early termination of such waiting period has been granted.
Notwithstanding the provisions of Section 10.3 hereof, if this Agreement is
terminated as a result of any action or inaction of the Federal Trade Commission
or Department of Justice in connection with the Hart-Scott-Rodino Notification,
the provisions of such Section 10.3 shall not apply.
6.7 Indemnification in Lieu of Bulk Sales Compliance. Each of Buyer,
Sellers and Consolidated agree to waive compliance with the provisions of the
(a) Virginia Commercial Code Title 8.6A on Bulk Sales and (b) Puerto Rico Code
title 10 on Sales in Fraud of Creditors. Consolidated agrees to indemnify and
hold Buyer harmless against and in respect of any and all claims assessed
against Buyer (and not expressly assumed under this Agreement by Buyer) on the
grounds that Sellers have made a bulk transfer to Buyer to which the above
described Titles on Bulk Transfers apply.
6.8 Transfer to Buyer of the Plans. On the Closing Date, Sellers will
assign and transfer the Plans to Buyer. Buyer shall not assume any obligations
under the Plans for periods prior to the Closing Date. Specifically, Sellers
shall be responsible for providing health care continuation coverage under
Sections 601 et seq. of ERISA under the Plans for any former employees of any
Seller and their respective eligible dependents, who have elected, or are
entitled to elect, such coverage prior to the Closing or who become entitled to
elect such coverage as a consequence of the Closing, provided that such former
employees and/or their eligible dependents pay the applicable premiums for such
coverage. Buyer shall, however, assume responsibility for all obligations under
the Plans for periods after the Closing Date with respect to all employees of
Seller employed by Buyer after the Closing Date.
6.9 Escrow Letter Agreement. On the date hereof, IMI of Delaware and
Buyer shall execute a certain letter agreement, the form of which is attached
hereto as Exhibit I, with respect to the payment of accrued vacation and
severance compensation to those employees of Sellers who are employed by Buyer
on the Closing Date (the "Escrow Letter"), which agreement will survive the
Closing.
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7. Non-Competition.
7.1 Upon the terms and subject to the conditions set forth in this
Section, each Seller covenants and agrees that, as a material consideration for
Buyer's payment of the Purchase Price hereunder, for a period of three (3) years
from and after the Closing Date, no Seller, nor Mr. Lewis Schiller, shall engage
in or carry on, directly or indirectly, either for itself or as a member of a
partnership or as an employee, stockholder, investor, agent, associate or
consultant of any person, partnership or corporation ((i) other than Buyer or a
subsidiary or affiliate of Buyer, or (ii) as an owner of less than 5% of the
outstanding shares or other equity interests of a publicly owned company) which
is in competition with the Business as currently conducted by Sellers, but only
for as long as such Business is carried on by Buyer or any subsidiary or
affiliate of Buyer in such manner. The parties intend that the covenants
contained in this Section are deemed to be a series of separate covenants, one
for each county in each state of the United States, and for each country and
political subdivision of the world in each instance where Buyer conducts, or
will during such period conduct, the Business, and, except for geographic
coverage, each such separate covenant must be identical in terms to the other
covenants in this Section. Each Seller further covenants and agrees that for a
period of three (3) years from and after the Closing Date, each Seller will not
recruit, assist others in recruiting or hiring, discuss employment with, or
refer to others concerning employment, of any employee of Buyer who is, or
within the twelve-month period immediately prior to the Closing Date was, an
employee of such Seller unless such person shall have been terminated due to
Buyer's default or without cause or cease to have been employed by Buyer for a
period of 12 months after the Closing.
7.2 The term of the covenants contained in Section 7.1 shall be tolled
for the period commencing on the date any action is filed by Buyer for
injunctive relief or damages arising out of a breach by any Seller of Section
7.1, and ending upon final adjudication (including appeals) of such action,
provided that Buyer is successful in obtaining the relief sought in such action.
7.3 If, in any judicial proceeding brought under this Section, the
court shall refuse to enforce all of the separate covenants contained in Section
7.1 because the time limit is too long, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding, such time
limitation shall be deemed reduced to the extent necessary to permit enforcement
of such covenants. If, in any such judicial proceeding, the court refuses to
enforce all of the separate covenants contained in Section 7.1 because such
covenants are more extensive (whether as to geographic area, scope of business
or otherwise) than necessary to protect the business and goodwill of Buyer, it
is expressly understood and agreed between the parties hereto that for purposes
of such proceeding, the geographic area, scope of business or other aspect
thereof shall be deemed reduced to the extent necessary to permit enforcement of
such covenants.
7.4 Each Seller acknowledges that a breach of Section 7.1 may cause
irreparable damage to Buyer, and in the event of any Seller's actual or
threatened breach of the provisions of Section 7.1, Buyer shall be entitled to
seek a temporary restraining order and an injunction restraining such Seller
from breaching such covenants without the necessity of posting bond or proving
irreparable harm, such being conclusively admitted by such Seller. Nothing may
be construed as prohibiting Buyer from pursuing any other available remedies for
such breach or threatened breach, including the recovery of damages from Seller.
Each Seller acknowledges that the restrictions set forth in this Agreement are
reasonable in scope and duration, given the nature of the business of Buyer.
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8. Conditions to Closing and Closing Deliveries. The following deliveries
and conditions shall be made or satisfied at the Closing unless waived
in writing or subject to a separate written agreement signed by the
party to be bound thereby;
8.1 Legal Opinion. Each Seller shall have delivered to Buyer the
written opinion, dated the Closing Date, of counsel to such Seller,
substantially in the form attached hereto as Exhibit D. Each Seller shall also
deliver to Buyer the written legal opinions, dated the Closing Date, of its
local or special counsel relating to Seller's activities as presently conducted
not being violative of applicable law prohibiting the practice of medicine, in
customary form reasonably acceptable to Buyer. Buyer shall have delivered to
each Seller the written opinion dated the closing Date, of counsel to Buyer,
substantially in the form attached hereto as Exhibit E.
8.2 Consents. Each Seller shall have delivered to Buyer all consents
and approvals required by the terms of this Agreement and the Related Documents.
Notwithstanding any provision of this Agreement to the contrary, if Sellers are
required to make any payment to DVI Financial Services, Inc., or its affiliates
("DVI"), in connection with obtaining DVI's consent to the transaction
contemplated by this Agreement, other than payment of DVI's counsel fees,
Sellers shall have the right to terminate this Agreement on or prior the
Closing.
8.3 Closing Certificates. Each Seller shall have delivered, or caused
to be delivered, to Buyer certificates of the officers of each Seller with
respect to Sellers' representations and warranties herein and incumbency, in
customary form and satisfactory to Buyer. Sellers and Buyer will deliver to each
other certificates of their respective officers as to the accuracy and
completeness of the information relating to each of them which has been included
in the Form.
8.4 Instruments of Transfer. Each Seller shall have delivered the
following bills of sale and other instruments of conveyance, evidencing the
transfer and assignment of the Assets:
8.4.1 Bills of sale for all tangible personal property included
in the Assets in the form attached hereto as Exhibit B;
8.4.2 Assignments of leases and/or subleases, if any, for the real
property in which each Seller has a leasehold interest (as landlord or tenant);
8.4.3 Landlord consents, if any, required from landlords and/or
sublandlords with respect to the assignments referred to in 8.4.2 above;
8.4.4 Assignments of all certificates, and other material Permits,
that are assignable;
8.4.5 Assignments of all intangible property, if any;
8.4.6 Assignments of all Assigned Contracts;
8.4.7 An indemnification agreement in the form attached hereto
as Exhibit F, executed by each of Consolidated and Syncor;
8.4.8 A non-competition agreement in the form attached hereto as
Exhibit G, executed by Mr. Lewis Schiller; and
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8.4.9 Such other instruments of conveyance, transfer and
assignment as may be reasonably required to vest in Buyer all of the Sellers'
right, title and interest in and to the Assets.
8.5 Certificates of Incorporation; Good Standing Certificates. Each
Seller shall have caused to be delivered to Buyer copies of their formation
documents, as amended prior to the Closing Date, certified by the necessary
authority of the state of its organization. The change of corporate names
acquired by Buyer pursuant to this Agreement shall be completed by amendments to
Sellers' formation documents to be delivered by Sellers at Closing and be filed
by Buyer after the Closing (the filing fees therefor to be paid by Sellers).
8.6 Performance. The parties hereto shall have performed in all
material respects all covenants and agreements required by this Agreement and
the Related Documents to be performed by them on or before the Closing Date.
8.7 Filings; Consents; Waiting Periods. All Permits, filings, notices,
consents, approvals, and other actions listed on Schedules 3.4 and 4.3 hereto,
shall have been made or obtained and all applicable waiting periods shall have
expired or been terminated.
8.8 No Litigation. No action, suit or proceeding shall have been
instituted and pending by any person or entity, or threatened by any
governmental agency or body, before a court or governmental body, to restrain or
prevent the consummation of the transactions contemplated by, or the performance
by any Seller or Buyer, or either of them, of their respective obligations
under, this Agreement or which could reasonably be expected to have a materially
adverse effect on the Business or the Assets. At the Closing Date, there shall
be no injunction, restraining order or decree of any nature of any court or
governmental agency or body in effect which restrains or prohibits the
consummation of the transactions contemplated by this Agreement. In the event
that the foregoing conditions cannot be satisfied at the Closing (or are not
waived by Buyer) as a result of any of the foregoing matters, Sellers shall be
entitled to a reasonable adjournment of the Closing Date, not to exceed 30 days,
in order to satisfy the conditions of this subsection.
8.9 Purchase Price. Buyer shall have paid the Purchase Price as
provided in Section 2.2 hereof and the professional fees provided for by Section
2.6.7 and the adjustments and prorated items (if any) referred to in Sections
2.4 and 2.5 shall be made between Buyer and Sellers.
8.10 Consulting Agreement. The consulting agreement in the form
attached hereto as Exhibit C shall be executed by the parties thereto.
8.11 Bill of Sale, Assignment and Assumption Agreement. Buyer shall
have executed the Bill of Sale, Assignment and Assumption Agreement in the form
attached hereto as Exhibit B.
8.12 Deeds. The Sellers specified below shall have executed and
delivered to Buyer deeds for Real Property owned by them in the forms specified
below, together with all documents and certificates relating thereto which may
be required to transfer title to such Real Property to Buyer at the Closing, as
follows:
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IMI of Boca Raton - Warranty Deed
MRI of Pine Island - Warranty Deed
IMI of Kansas - Kansas Special Warranty Deed
IMI of Puerto Rico - Deed of Conveyance of Real Property and
Assumption of Mortgage
8.13 Certification of Nonforeign Status. The Sellers of Real Property
shall have executed and delivered to Buyer Certifications of Nonforeign Status
in the forms attached hereto as Exhibits H-1, H-2 and H-3.
8.14 Estoppel Certificates, Title Policies and Consents to Transfer of
Real Property. The applicable Sellers shall have delivered to Buyer each of the
following:
8.14.1 with respect to each Leased Property, an estoppel
certificate executed by the fee owner thereof confirming (a) that the lease
thereof (including any amendments thereto) is in the form delivered to Buyer
pursuant to this Agreement, is in full force and effect, and has not been
modified or amended except as set forth therein, (b) that, to the best of such
lessor's knowledge, no uncured breach thereof by Seller currently exists or is
anticipated thereunder, and (c) that such lessor has given all requisite consent
to Seller's assignment of such lease to Buyer; and
8.14.2 with respect to each deed of trust or mortgage against
any Real Property, a written consent from the beneficiary or mortgagee thereof,
confirming its consent to the transfer of such Real Property from Seller to
Buyer.
8.15 Casualty Loss. Sellers shall not have suffered any uninsured loss
to the Assets in the aggregate amount of $100,000 on or prior to the Closing
Date.
8.16 Bankruptcy. An order dismissing the Involuntary Chapter 7
Bankruptcy Petitions filed on October 22, 1997 in the United States Bankruptcy
Court, Southern District of Florida against IMI Acquisition of Boca Raton
Corporation, IMI Acquisition of Pine Island Corporation, IMI Acquisition of
North Miami Beach Corporation, IMI Acquisition of Kansas Corporation, IMI
Acquisition of Orlando Corporation, PODC Corporation, MD Acquisition Corporation
and MD Ltd. Partner Acquisition Corporation shall have been entered and said
order of dismissal shall not be subject to a stay, or Sellers will have received
an order of the United States Bankruptcy Court, Southern District of Florida
permitting the Involuntary Debtors to take such actions as are necessary to
consummate the transactions contemplated by this Agreement. Sellers shall be
entitled to the benefit of the adjournment provision of Section 8.8 hereof in
the event that either of the foregoing Bankruptcy Court orders have not been
obtained as of the Closing Date.
8.17 Books and Records. Copies of Sellers' corporate books and records
pursuant to Section 1.15.
8.18 Sellers' Schedule 2.1.2. Sellers will deliver to Buyer a schedule
dated as of the day immediately preceding the Closing Date, setting forth the
approximate quantities on hand of film and contrast agents.
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8.19 Fixed Asset Schedule. Sellers will deliver to Buyer the list of
fixed assets required by Section 3.12 hereof.
8.20 Buyer's Legal Bills. Buyer will deliver copies of the legal bills
or statements referred to in Paragraph 2.4(b) hereof.
8.21 Sellers' Schedule of Prepaid Items. If applicable, Sellers will
deliver the schedule of prepaid items referred to in Paragraph 2.5.2.
8.22 Sellers' Escrow Payment. Seller will deliver to the escrow agent
under the Escrow Letter, the sums required thereunder (or may instruct Buyer, in
writing, to deduct such sums from the Purchase Price and deliver same to the
escrow agent and will deliver to Buyer an updated Exhibit B thereto).
8.23 The Notes. Sellers will deliver the original Notes.
8.24 Additional Documentation. Sellers and Buyer shall have delivered
to each other such additional documents, consistent with the provisions of this
Agreement, as may be requested of them at or prior to the Closing.
9. Indemnification.
9.1 Each Seller's Indemnification. Each Seller shall indemnify Buyer
(and its parent and their respective officers, directors, stockholders,
employees and agents) (the "Buyer Indemnitees"), and hold Buyer Indemnitees
harmless from and against any and all damages, losses, costs, liabilities and
expenses (including reasonable attorneys' fees and disbursements) resulting from
or arising out of any uncured breach of any of the representations, warranties,
covenants and agreements made by such Seller herein or in any exhibit or
schedule hereto or in any certificate or other document delivered by Sellers
pursuant hereto or from the conduct of the Business prior to the Closing.
Consolidated hereby guarantees the obligations of Sellers to indemnify Buyer
hereunder, and in the event any Seller is unable to fulfill its indemnification
obligations, Consolidated shall fulfill such obligations as if it were primarily
liable.
9.2 Buyer's Indemnification. Buyer shall indemnify Sellers (and their
parents and their respective officers, directors, stockholders, employees and
agents) (the "Seller Indemnitees") and hold Seller Indemnitees harmless from and
against any and all damages, losses, costs, liabilities and expenses (including
reasonable attorneys' fees and disbursements), resulting from or arising out of
any uncured breach of any of the representations, warranties, covenants or
agreements made by Buyer herein or in any exhibit or schedule hereto or in any
certificate or other document delivered by Buyer pursuant hereto or from the
conduct of the Business after the Closing. Syncor hereby guarantees the
obligations of Buyer to indemnify Sellers hereunder, and in the event that Buyer
is unable to fulfill its indemnification obligations, Syncor shall fulfill such
obligations as if it were primarily liable.
9.3 Notice; Right to Contest.
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9.3.1 If any claim against which indemnification is provided
hereunder ("Claim") shall be asserted against a person entitled to
indemnification hereunder ("Indemnified Party") in respect to which it proposes
to demand indemnification, the Indemnified Party shall notify the entity
obligated to provide indemnification hereunder ("Indemnifying Party") thereof.
Such notice shall specify in detail the nature of and basis for the Claim and
amount thereof. Subject to rights of or duties to any insurer or other third
person having liability therefor, the Indemnifying Party shall have the right
promptly after receipt of such notice to assume the control of the defense,
compromise or settlement of any such Claim, including, at its own expense,
employment of counsel. Notwithstanding the preceding sentence, in the defense,
compromise or settlement of such Claim, the Indemnified Party shall have the
right to retain its own separate counsel, but the fees and expenses of such
counsel shall be at the Indemnified Party's expense unless (a) the Indemnifying
Party has failed within a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Party, or (b) the named party in any such
proceeding (including any impleaded parties) includes both the Indemnified Party
and the Indemnifying Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. In any matter described above where the Indemnified Party has
obtained counsel to represent it in addition to counsel obtained by the
Indemnifying Party, counsel selected by the Indemnifying Party shall be required
to cooperate fully with counsel selected by the Indemnified Party in such
matter. So long as the Indemnifying Party is defending in good faith any Claim
for which indemnification is sought, the Indemnifying Party shall not be liable
for any Claim settled without its consent, which consent may not be unreasonably
withheld. In the event that a claim for indemnification is made by an
Indemnified Party, which claim is unrelated to a third party's Claim against the
Indemnified Party, which is contested by an Indemnifying Party and such dispute
is finally resolved by a final, nonappealable order of a court of competent
jurisdiction, the losing party shall pay the prevailing party the reasonable
fees and disbursements of counsel incurred in connection with the prosecution or
defense of such Claim; provided, however, that if the Indemnifying Party is the
losing party and prior to such resolution, the losing Indemnifying Party shall
have made a written offer to settle the Claim for an amount one and one half
times the amount which the Indemnified Party recovers on the Claim, then the
Indemnified Party shall pay the Indemnifying Party's reasonable attorneys' fees
and disbursements incurred after the date the Indemnified Party rejected the
Indemnifying Party's offer of settlement.
9.3.2 Consolidated and Sellers shall be jointly and severally
liable to Buyer, and Syncor and Buyer shall be jointly and severally liable to
Sellers, for indemnification pursuant to the provisions of subsections 9.1 and
9.2 above. Accordingly, in any action commenced by Buyer or Sellers (or any
other Indemnified Party) for indemnification thereunder, the Indemnified Party
may commence such action against Consolidated or Syncor, as the case may be,
without having to commence such action against Sellers or Buyer, as the case may
be.
9.4 Sole and Exclusive Remedy. Except as otherwise provided in this
Agreement, subsequent to Closing, the right to indemnification of each Seller
and Buyer hereunder shall constitute the sole and exclusive remedy of the
Indemnified Party with respect to the matters covered by this Section.
Termination.
9.5 Reasons for Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated at any time after the
date of this Agreement but not later than the Closing Date:
9.5.1 by the mutual consent of IMI of Delaware and Buyer; or
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9.5.2 by Buyer or Sellers, as applicable, on the Closing Date,
if, by that date, the conditions to closing and closing deliveries set forth in
Section 8 of this Agreement have not been fulfilled or waived; or
9.5.3 by Buyer or by Sellers if there is any statute, rule or
regulation enacted or promulgated after the date hereof by any governmental
agency in the United States of America which is applicable to the transactions
contemplated by this Agreement and that, in the reasonable judgment of Buyer or
of any Seller, might: (i) result in a significant delay in the ability of the
parties to consummate the transactions contemplated hereby: (ii) render the
parties unable to consummate the transaction contemplated hereby; (iii) make
such consummation illegal; or (iv) otherwise materially adversely affect the
Business. The expense reimbursement provisions of Section 10.3 will not apply to
any termination under this Section 10.1.3; or
9.5.4 by Buyer or Sellers if there is any uncured breach or
default of any representation, warranty or covenant of such parties under this
Agreement; or
9.5.5 by Buyer or Sellers pursuant to the provisions of Section
2.4 of this Agreement.
9.6 Procedure Upon and Effect of Termination. In the event of any
termination pursuant to this Section 10, written notice thereof must forthwith
be given to the other party and the transactions contemplated by this Agreement
will thereupon be terminated, without further action by Buyer or any Seller and
Buyer and Sellers shall have no further rights or obligations under this
Agreement (except pursuant to the provisions of Sections 6.1,10.3 and 10.4 of
this Agreement).
9.7 Expense Reimbursement. In the event that this Agreement is
terminated by Buyer or Seller, as applicable, as a result of any breach or
default of any of Buyer's or Sellers' representations, warranties, covenants or
obligations under this Agreement or the failure of any condition to Buyer's or
Sellers' obligations provided for in Section 8 of this Agreement (except as
otherwise provided in this Agreement), then Buyer or Sellers shall reimburse the
other, as applicable (not later than one day after submission of statements
therefor) for all reasonable out-of-pocket expenses and fees (including, without
limitation, fees and expenses paid to all banks, investment banking firms and
other financial institutions and their respective agents and counsel, for
arranging or providing any financing relating hereto and the fees of counsel,
accountants, experts and consultants to Sellers or Buyer) which are actually
incurred by them or on their behalf in connection with the negotiation,
preparation, execution and delivery of this Agreement (collectively, the
"Expenses"), up to a maximum of $250,000.
9.8 Break-Up Fee. In the event of the termination of this Agreement by
Buyer or Sellers pursuant to Section 10.3 hereof, the payment of the Expenses
shall be Buyer's or Sellers', as the case may be, sole and exclusive remedy
against the other for any such termination and thereafter, Buyer and/or Sellers
shall have no further rights or obligations under this Agreement, unless any
such termination is solely the result of any intentional or willful refusal to
consummate this Agreement. In the event that this Agreement is terminated solely
as a result of an intentional and willful refusal by Buyer or Sellers to
consummate this Agreement, the non-breaching party shall be entitled to receive
the Expenses from the breaching party and, as liquidated damages and not as a
penalty therefor, the sum of $1,000,000.
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9.9 Equitable Remedy. Notwithstanding any provision in this Agreement
to the contrary, in the event of Buyer's or Sellers intentional or willful
refusal to consummate this Agreement, Buyer and Sellers agree and acknowledge
that any such intentional and willful default may cause irreparable harm and
damage to Buyer or Sellers, as the case may be, and may not be remediable by an
action at law for damages and the Buyer or Sellers, as the case may be, shall,
therefore, be entitled to seek all equitable remedies therefor, including,
without limitation, declaratory judgment, temporary or permanent injunction, or
specific performance of the provisions of this Agreement, without the necessity
of posting a bond therefor, establishing any actual damages, or establishing
that money damages would not provide an adequate remedy at law. In the event
specific performance is granted, such equitable remedy shall be an exclusive
remedy for any such intentional or willful default and, if elected by Buyer or
Sellers as such remedy, shall be in lieu of the liquidated damages set forth in
Sections 10.3 and 10.4 above.
9.10 Other Costs and Expenses. Except as otherwise specifically
provided in this Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby must be paid by the
party incurring such costs and expenses.
10. Miscellaneous.
10.1 Notices. Any notice, consent, approval, request, demand or other
communication required or permitted hereunder must be in writing to be effective
and shall be deemed delivered and received: (i) if personally delivered or if
delivered by facsimile with electronic confirmation when actually received by
the party to whom sent; or (ii) if delivered by mail (whether actually received
or not), at the close of business on the third business day next following the
day when placed in the federal mail, postage prepaid, certified or registered
mail, return receipt requested, addressed as follows:
if to Buyer: Comprehensive Medical Imaging, Inc.
6464 Canoga Avenue
Woodland Hills, CA 91367
Attention: General Counsel
Fax: 818/737-4606
if to Sellers: International Magnetic Imaging, Inc.
2424 North Federal Highway, Suite 410
Boca Raton, FL 33431
Attention: George W. Mahoney, Chief Financial Officer
Fax: 561/347-5352
with a copy to: Robert L. Blessey, Esq.
51 Lyon Ridge Road
Katonah, NY 10536
Fax: 914/232-0647
or to such other address as any party specifies by written notice so given.
10.2 Binding Effect; Benefits. This Agreement is binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Notwithstanding anything contained in this Agreement to
the contrary, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
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10.3 Entire Agreement. This Agreement, together with the exhibits,
schedules other documents contemplated hereby, and any other documents
incorporated by reference herein, constitutes the sole and entire agreement
between the parties hereto with respect to the subject matter hereof, and is a
complete and exclusive statement of the terms thereof. This Agreement supersedes
all prior agreements, understandings and negotiations between the parties hereto
concerning the matters specified herein. Any representations, promises,
warranties or statements made by any party that are not contained in this
Agreement, and the exhibits, schedules and other documents contemplated hereby,
have no force or effect. The parties specifically represent, each to the other,
that there are no additional or supplemental agreements between them related in
any way to the matters herein contained unless specifically included or referred
to herein. No addition to, or modification of any provision of this Agreement
will be binding upon any party unless made in writing and signed by the party to
be bound thereby.
10.4 Governing Law. This Agreement, and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of action), is governed by and
construed in accordance with the substantive and procedural laws of the State of
California (exclusive of the conflicts of law provisions thereof) applicable to
agreements made and to be performed entirely within such state. Any action or
proceeding to enforce the provisions o this Agreement may be brought in a
federal or state court located in Los Angeles County, California or Palm Beach
County, Florida. By their execution hereof, the parties hereto hereby consent to
the personal jurisdiction of such courts for purposes of any such action or
proceeding.
10.5 Survival. All of the warranties and representations contained in
this Agreement shall survive the Closing for a period of two years therefrom.
10.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which is an original but all of which constitute one and
the same instrument. It is not necessary that each party hereto execute the same
counterpart, so long as identical counterparts are executed by all parties.
10.7 Headings. Headings of the Sections of this Agreement are for the
convenience of the parties only, and have no substantive or interpretive effect
whatsoever.
10.8 Waivers. Any party hereto may, by a written instrument signed by
the party to be bound thereby: (i) extend the time for the performance of any of
the obligations or other actions of the other party under this Agreement; (ii)
waive any inaccuracies in the representations or warranties of the other party
contained in this Agreement or in any document delivered pursuant to this
Agreement; (iii) waive compliance with any of the conditions or covenants of the
other party contained in this Agreement; or (iv) waive performance of any of the
obligations of the other party under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation any investigation by or on behalf of any party, shall
constitute a waiver by the party taking such action, of the other party's
non-compliance with any of its representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder will not operate and must not be construed as
a waiver of any prior or subsequent breach of the same or any other provision
hereunder unless the instrument of waiver so provides.
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10.9 Merger of Documents. This Agreement and all agreements and
documents contemplated hereby constitute one agreement.
10.10 Incorporation of Exhibits and Schedules. All exhibits and
schedules attached hereto or referred to herein are by this reference
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
10.11 Severability. If for any reason whatsoever, any one or more of
the provisions of this Agreement is held or deemed to be illegal, inoperative,
unenforceable or invalid as applied to any particular case or in all cases, such
circumstances will not have the effect of rendering such provision illegal,
inoperative, unenforceable or invalid in any other case or of rendering any of
the other provisions of this Agreement illegal, inoperative, unenforceable or
invalid. Furthermore, in lieu of each illegal, invalid, unenforceable or
inoperative provision, there shall be added automatically, as part of this
Agreement a provision similar in terms of such illegal, invalid, unenforceable
or inoperative provision to the extent such replacement shall be possible, and
any such replacement shall be legal, valid, enforceable and operative.
10.12 Assignability. Neither this Agreement nor any of the parties'
rights hereunder is assignable by any party hereto without the prior written
consent of the other party hereto; provided, however, that Buyer's rights
hereunder may, upon notice to Sellers, be assigned or otherwise transferred, in
whole or in part, without any Seller's consent: (i) to any successor by merger
or consolidation; (ii) to any bank or other financial institution, or to any
individual, partnership, corporation or other entity which provides any
financing to Buyer, its successors or assigns; or (iii) to any individual,
partnership, corporation or other entity deriving title from Buyer or its
successors or assigns to all or substantially all of the Assets as constituted
on the date of any such transfer, provided that any such assignee executes and
delivers to Sellers an instrument pursuant to which such assignee agrees to be
bound by the provisions of this Agreement.
10.13 Drafting. The parties acknowledge and confirm that each of their
respective attorneys have participated jointly in the preparation, review and
revision of this Agreement and that it has not been prepared solely by counsel
for one party. The parties hereto therefore stipulate and agree that the rule of
construction to the effect that any ambiguities are to be or may be resolved
against the drafting party is not to be employed in the interpretation of this
Agreement to favor any party against another.
10.14 Schedules. Any disclosure made or contained on any Schedule
hereto by Buyer or Sellers shall be deemed made on all other applicable
Schedules without the requirement of Buyer or Sellers having to repeat such
disclosure.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year hereinabove
first set forth.
Comprehensive Medical Imaging, Inc.
By: ___________________________________
Robert G. Funari
President and Chief Executive Officer
International Magnetic Imaging, Inc. (Delaware)
By: ___________________________________
Lewis S. Schiller
Chairman of the Board &
Principal Executive Officer
International Magnetic Imaging, Inc. (Florida)
By: ___________________________________
Lewis S. Schiller, President
Magnetic Resonance Institute of North Miami Beach, Ltd.
By: IMI Acquisition of North Miami Beach Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Oakland Magnetic Resonance Institute, Ltd.
By: IMI Acquisition of Oakland Park Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Magnetic Resonance Institute of Boca Raton, Ltd.
By: IMI Acquisition of Boca Raton Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Magnetic Resonance Institute of South Dade, Ltd.
By: IMI Acquisition of South Dade Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
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Pine Island Magnetic Resonance Imaging Center, Ltd.
By: IMI Acquisition of Pine Island Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Physicians Outpatient Diagnostic Center, Ltd.
By: PODC Acquisition Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Magnetic Resonance Institute of Orlando, Ltd.
By: IMI Acquisition of Orlando Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
IMI Acquisition of Arlington Corp.
By: ___________________________________
Lewis S. Schiller, President
IMI Acquisition of Puerto Rico Corporation
By: ___________________________________
Lewis S. Schiller, President
IMI Acquisition of Kansas Corporation
By: ___________________________________
Lewis S. Schiller, President
MRI-NET, INC.
By: ___________________________________
Lewis S. Schiller, President
KAP-NET CORP.
By: ___________________________________
Lewis S. Schiller, President
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<PAGE>
Caribbean Network Services, Inc.
By: ___________________________________
Lewis S. Schiller, President
AGREED TO AND ACCEPTED ONLY AS TO
SECTIONS 6.7, 9.1, 9.3.2 AND 11 HEREOF
CONSOLIDATED TECHNOLOGY GROUP LTD.
By:____________________________________
Lewis S. Schiller
Chief Executive Officer and
Chairman of the Board
AGREED TO AND ACCEPTED ONLY AS TO
SECTIONS 2.2, 5.27, 9.2, 9.3.2, 10.3, AND 11
HEREOF
SYNCOR INTERNATIONAL CORPORATION
By:____________________________________
Robert G.Funari
President and Chief Executive Officer
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<PAGE>
LIST OF EXHIBITS AND SCHEDULES
Exhibit A
Assumed Liabilities
Exhibit B
Bill of Sale, Assignment and Assumption Agreement
Exhibit C
Consulting Agreement
Exhibit D
Opinion of Sellers' Counsel
Exhibit E
Opinion of Buyer's Counsel
Exhibit F
Indemnification Agreement
Exhibit G
Schiller Non-Competition Agreement
Exhibit H-1
Certification for Nonforeign Status for
Pine Island Magnetic Resonance Imaging Center, Ltd.
Exhibit H-2
Certification for Nonforeign Status for
Magnetic Resonance Institute of Boca Raton, Ltd.
Exhibit H-3
Certification for Nonforeign Status for
IMI Acquisition of Kansas Corporation
Exhibit I
Escrow Letter
Schedule 2.1.1
Equipment & Furniture
Schedule 2.1.2
Quantities on Hand of Film and Contrast Agents
Schedule 2.1.3
Cash and Accounts Receivable
Schedule 2.1.8
Licenses, Permits & Intellectual Property
Schedule 2.3(a)
Allocation of the Purchase Price
Schedule 2.4
Net Liabilities (certified by IMI of Delaware's CFO)
Schedule 2.5.2
Prepaid taxes, utility charges, insurance and other payments
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Schedule 3.4
Consents and Approvals required from Sellers
Schedule 3.5
Absence of Conflicts
Schedule 3.8
Accounts Receivable and Trade Accounts Payable
Schedule 3.9
Certain Changes or Events
Schedule 3.11
Security Interests, Mortgages, Liens, Encumbrances, Etc.
Schedule 3.12
List of Fixed Assets
Schedule 3.13
List of Real Property
Schedule 3.14
Insurance
Schedule 3.15
Sellers' Contracts
Schedule 3.16
Labor Controversies
Schedule 3.17
Litigation Related to the Business or Assets
Schedule 3.18
Non-Compliance with Laws
Schedule 3.23
Related Transactions
Schedule 3.29
Hazardous Materials
Schedule 4.3
Consents and Approvals required from Buyer
<PAGE>
EXHIBIT B
BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"Agreement") is made and entered into this ____ day of March, 1998, by and among
Comprehensive Medical Imaging, Inc., a Delaware corporation ("Buyer"), and
International Magnetic Imaging, Inc., a Delaware corporation, International
Magnetic Imaging, Inc., a Florida corporation, Magnetic Resonance Institute of
North Miami Beach, Ltd., a Florida limited partnership, Oakland Magnetic
Resonance Institute, Ltd., a Florida limited partnership, Magnetic Resonance
Institute of Boca Raton, Ltd., a Florida limited partnership, Magnetic Resonance
Institute of South Dade, Ltd., a Florida limited partnership, Pine Island
Magnetic Resonance Imaging Center, Ltd., a Florida limited partnership,
Physicians Outpatient Diagnostic Center, Ltd., a Florida limited partnership,
Magnetic Resonance Institute of Orlando, Ltd., a Florida limited partnership,
IMI Acquisition of Arlington Corp., a Virginia corporation, IMI Acquisition of
Puerto Rico Corporation, a Puerto Rico corporation, IMI Acquisition of Kansas
Corporation, a Kansas corporation, MRI Net, Inc., a Florida corporation, Kap-Net
Corp., a Florida corporation and Caribbean Network Services, Inc., a Puerto Rico
corporation, (each of which entities are sometimes hereinafter individually
referred to as a "Seller" and all of which are sometimes hereinafter
collectively referred to as "Sellers").
RECITALS
WHEREAS, Sellers have agreed to sell, and Buyer has agreed to purchase,
all right, title and interest in and to the assets, properties, rights and
business of the Sellers of every type and description, real, personal and mixed,
tangible and intangible, wherever located and whether or not reflected on the
books and records of Sellers, used in Sellers' business and operations pursuant
to the terms of that certain Asset Purchase Agreement, dated as of January
28,1998, by and among Sellers and Buyer (the "Asset Purchase Agreement"), except
for the Excluded Assets (as defined therein);
WHEREAS, Buyer has agreed to assume certain obligations of Sellers
pursuant to the terms of the Asset Purchase Agreement;
WHEREAS, this Bill of Sale, Assignment and Assumption Agreement is being
delivered pursuant to Sections 8.4 and 8.11 of the Asset Purchase Agreement; and
WHEREAS, all capitalized terms used and not defined herein shall have
the meanings ascribed to them in the Asset Purchase Agreement, unless the
context clearly requires otherwise.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and covenants contained herein and in the Asset Purchase Agreement, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Sale and Assignment. Sellers hereby sell, grant, convey, transfer,
assign and deliver to Buyer, and Buyer hereby purchases and acquires, all of
Sellers' right, title and interest in the Assets, (as defined in Section 2.1 of
the Asset Purchase Agreement), but not including the Excluded Assets (as defined
in Section 1.15 of the Asset Purchase Agreement). Sellers hereby also transfer
and assign to Buyer all of their rights and interests under the Assigned
Contracts as defined in Section 3.15 of the Asset Purchase Agreement and to all
of the Assumed Liabilities set forth on Exhibit A to the Asset Purchase
Agreement.
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<PAGE>
2. Assumption. Buyer hereby assumes and becomes solely responsible for
paying, when due, all of Sellers' obligations with respect to each Assumed
Liability included on (but only to the extent of the amount reflected in) the
Schedule 2.4 delivered pursuant to Section 2.4 of the Asset Purchase Agreement.
Buyer also hereby assumes, and agrees to be bound by, perform and comply with
all of the terms and provisions of the Assigned Contracts (as defined in Section
3.15 of the Asset Purchase Agreement), except for any obligations of Sellers
resulting or arising from a breach by Sellers of any covenant or representation
and warranty in any such Assigned Contract which occurred prior to the date
hereof.
Without limiting the foregoing, the following liabilities are excluded
from those assumed by the Buyer: (I) any and all liabilities and obligations of
Sellers which are set forth or referred to in Section 2.6 of the Asset Purchase
Agreement.
3. Further Assurances. Sellers hereby covenant and agree that they
will, at the request of Buyer, execute and deliver all such further documents
and instruments of conveyance, sale, transfer, delivery and assignment as shall
be necessary and proper to sell, assign, transfer, deliver and convey to Buyer
all of Sellers' right, title and interest in and to the Assets being transferred
pursuant hereto, and take such further actions as shall be necessary and proper
to sell, assign, transfer, deliver, convey to and vest in Buyer all of Sellers'
right, title and interest in and to the rights conveyed herein and to carry out
the purpose and intent of this Agreement.
4. Governing Law. This Agreement shall be governed by, enforced in
accordance with, and interpreted under the internal substantive laws of the
State of California, without giving effect to the rules thereof relating to
conflicts of laws.
5. Binding Effect. This Agreement shall be binding upon, and
enforceable against, and shall inure to the benefit of, the parties hereto and
their respective successors and assigns.
6. Inconsistencies. In the event of any inconsistency between this
Agreement and the Asset Purchase Agreement, the terms of the Asset Purchase
Agreement shall control.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
____ day of ________, 199_.
Comprehensive Medical Imaging, Inc.
By: ________________________________
Robert G. Funari
President and Chief Executive Officer
International Magnetic Imaging, Inc. (Delaware)
By: ___________________________________
Lewis S. Schiller
Chairman of the Board &
Principal Executive Officer
International Magnetic Imaging, Inc. (Florida)
By: ___________________________________
Lewis S. Schiller, President
Magnetic Resonance Institute of North Miami Beach, Ltd.
By: IMI Acquisition of North Miami Beach Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Oakland Magnetic Resonance Institute, Ltd.
By: IMI Acquisition of Oakland Park Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Magnetic Resonance Institute of Boca Raton, Ltd.
By: IMI Acquisition of Boca Raton Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Magnetic Resonance Institute of South Dade, Ltd.
By: IMI Acquisition of South Dade Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
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<PAGE>
Pine Island Magnetic Resonance Imaging Center, Ltd.
By: IMI Acquisition of Pine Island Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Physicians Outpatient Diagnostic Center, Ltd.
By: PODC Acquisition Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
Magnetic Resonance Institute of Orlando, Ltd.
By: IMI Acquisition of Orlando Corporation
General Partner
By: ___________________________________
Lewis S. Schiller, President
IMI Acquisition of Arlington Corp.
By: ___________________________________
Lewis S. Schiller, President
IMI Acquisition of Puerto Rico Corporation
By: ___________________________________
Lewis S. Schiller, President
IMI Acquisition of Kansas Corporation
By: ___________________________________
Lewis S. Schiller, President
MRI Net, Inc.
By: ___________________________________
Lewis S. Schiller, President
Kap-Net Corp.
By: ___________________________________
Lewis S. Schiller, President
Caribbean Network Services, Inc.
By: ___________________________________
Lewis S. Schiller, President
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<PAGE>
EXHIBIT C
Consulting Agreement
February __, 1998
George W. Mahoney
21082 Sweetwater Lane North
Boca Raton, Florida 33428
Dear Mr. Mahoney:
This Agreement will confirm the understanding between you ("Consultant")
and Comprehensive Medical Imaging, Inc., a Delaware corporation ("CMI"), with
respect to the provision of your services as a consultant to CMI. This
Consulting Agreement is being executed as required by Section 6.4 of that
certain asset purchase agreement dated January 28, 1998 (the "Asset Purchase
Agreement") between CMI and International Magnetic Imaging, Inc. (a Delaware
corporation) and certain subsidiaries thereof. For good and valuable
consideration, the sufficiency of which is hereby acknowledged, Consultant and
CMI hereby agree as follows:
1. Consultation Period; Services.
(a) CMI hereby retains Consultant to provide the Services (as
hereinafter defined) and Consultant hereby accepts such retention, on the terms
and subject to the conditions hereinafter set forth, for a term (the "Consulting
Period") commencing on the date hereof and expiring on ___________, 1998 [six
months], unless terminated pursuant to Section 6(e) below or extended as
provided in subsection 1(e) below. For purposes herein, "Services" shall mean
assistance and consultation with respect the operations of the diagnostic
imaging centers acquired by CMI under the Asset Purchase Agreement (the
"Centers"), including, without limitation, such assistance and consultation as
to billing and collection, accounts receivable, preparation and analysis of
operating budgets, forecasts and projections, hiring and firing of employees and
consultants and other financial matters relating to the operations of the
Centers. Consultant shall not be required to render any more than 32 hours per
week in the performance of the Services to the extent that any such additional
time interferes with his responsibilities under the employment agreement to
which he is a party with Consolidated Technology Group Ltd. ("Consolidated")
dated October 1, 1994, as amended (the "Employment Agreement"). Consultant's
Services shall be rendered principally from the offices of CMI located at 2424
North Federal Highway, Boca Raton, Florida 33431 (except that Consultant may be
required, upon the request of CMI, to travel to the corporate offices of CMI's
parent to report to and discuss with CMI executives matters pertaining to his
Services).
(b) During the Consulting Period, the Consultant shall report to the
President of CMI or to such other person as he may designate in connection with
the Services. The Services are to be performed on a nonexclusive basis, and
nothing in this Agreement is intended to prohibit Consultant from entering into
other consulting or employment arrangements, so long as such other arrangements
do not interfere with the performance of the Services, result in a breach of any
of the other provisions here or are with entities engaged in business which is
directly or indirectly competitive with the business of CMI.
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<PAGE>
(c) Notwithstanding any provision of this Agreement to the contrary,
CMI hereby acknowledges that Consultant is the Chief Financial Officer of
Consolidated (and one or more of its subsidiaries) pursuant to the Employment
Agreement and Consultant shall be free to continue rendering all services under
such agreement to Consolidated. CMI acknowledges that in requesting Consultant
to render the Services hereunder, it will make all reasonable efforts to avoid
having the performance of the Services interfere with the performance of
services by Consultant under the Employment Agreement.
(d) Provided that Consultant is still a party to the Employment
Agreement and provided that Consultant is not rendering consulting services to
any third party at a rate of compensation in excess of the compensation provided
for hereunder, CMI shall have the option, exercisable upon not less than 14
business days notice prior to the expiration of the Consulting Period, to extend
the Consulting Period for an additional six month period expiring on
______________, 1998.
(e) Consultant shall have no liability with respect to the Services
hereunder except for any judicially determined gross negligence or intentional
wrongdoing.
2. Consulting Fee. During the Consulting Period, CMI shall pay to
Consultant a consulting fee of $10,000 per month (the "Consulting Fee"), payable
in advance on the first day of each month during the Consulting Period. CMI
acknowledges and agrees that Consultant shall be paid for each hour spent by him
in excess of 32 hours per week an additional fee at the rate of $100 per hour
(such amount to be payable upon CMI's receipt of an invoice from Consultant
therefor).
3. Expenses. CMI shall reimburse Consultant in accordance with and
subject to CMI's policies and procedures for reasonable, ordinary and necessary
out-of-pocket expenses of a business character incurred by Consultant in
connection with the performance of the Services upon the presentation of
itemized statements of such expenses; provided that such expenses are approved
by an officer of CMI.
4. Conflict of Interest. Notwithstanding the nonexclusive nature of the
Services, except for the Consulting Fee, Consultant shall not be entitled to be
paid or to receive any commissions or other payments, directly or indirectly, on
account of Consultant's performance of the Services for CMI. If Consultant
receives, directly or indirectly, any commission or other payment from any third
party on account of or with respect to the Services (exclusive of all payments
under the Employment Agreement) such commission or other payment shall be deemed
the property of CMI, and Consultant, as the case may be, shall immediately remit
same to CMI. Consultant and Consolidated shall observe all of CMI's rules and
regulations governing conflicts of interest which are delivered to him, in
writing, with the exception of those that would otherwise prohibit the
nonexclusive nature of the Services.
5. Independent Contractor.
(a) During the Consulting Period, Consultant shall not be an
employee of CMI, and shall not be entitled to participate in any of CMI's
health, disability, pension or other benefit plans or fringe benefits offered
from time to time to employees of CMI. Consultant shall not be entitled to
accrue any days off in the nature of vacation days, personal days or holidays
during the Consulting Period. In connection with any payments to be made to
Consultant hereunder, CMI shall have the right to file and deliver such tax
reporting forms and effect such withholdings, for tax and similar purposes, as
may be required by applicable law, but shall have no obligation to do so where
not required by law.
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<PAGE>
(b) Nothing contained in this Agreement shall constitute making or
appointing Consultant the agent of CMI. Consultant shall not (i) hold himself
out as an employee of CMI or otherwise contrary to the terms of this Agreement,
(ii) enter into any agreement on behalf of CMI or otherwise purport to bind CMI
in any way, or (iii) make any representation, or take any act contrary to the
terms hereof.
6. Termination.
(a) The Consulting Period shall automatically terminate upon
Consultant's death.
(b) Consultant shall have the right to terminate this Agreement upon
five days notice in the event of CMI's failure to pay the Consulting Fee or any
other amounts payable to Consultant under this Agreement, when due.
(c) CMI shall have the unilateral right, at any time, upon notice to
Consultant, in CMI's sole and absolute discretion, to terminate the Consulting
Period, without cause, and for any reason or for no reason (the "Termination
Rights"). The Termination Rights are not limited or restricted by, and shall
supersede, any policy of CMI requiring or favoring continued retention of its
consultants during satisfactory performance, any seniority system or any
procedure governing the manner in which CMI's discretion is to be exercised. No
exercise by CMI of its Termination Rights shall, under any circumstances, be
deemed to constitute (i) a breach by CMI of any term of this Agreement, express
or implied (including without limitation a breach of any implied covenant of
good faith and fair dealing), (ii) a wrongful termination of the Consulting
Period by CMI, (iii) a wrongful deprivation by CMI of the consulting position or
(iv) the breach by CMI of any other duty or obligation, express or implied,
which CMI may owe to Consultant pursuant to any principle or provision of law
(whether contract or tort). Upon CMI's election to terminate the Consulting
Period and this Agreement pursuant to this subsection (c), CMI shall have no
obligation or liability to Consultant pursuant to this Agreement or otherwise,
except to pay to Consultant not later than the effective date of such
termination all unpaid Consulting Fees and other amounts payable through the end
of the Consulting Period.
(d) If this Agreement, the Consulting Period or Consultant's
performance of the services is terminated or expires pursuant to subsection (a)
or (b), of this Section 6, all of Consultant's rights and entitlements, pursuant
to this Agreement or otherwise as a consultant to CMI shall forthwith cease and
terminate, and CMI shall have no liability or obligation whatsoever to
Consultant, except to pay to Consultant not later than the effective date of
such termination (or to his estate, if applicable) all unpaid Consulting Fees
and other amounts which shall have accrued as of the effective date of such
termination.
(e) Upon the expiration or any termination of the Consulting Period,
Consultant shall return to CMI all property of CMI theretofore provided to
Consultant or otherwise in Consultant's custody, possession or control or at
Consultant's disposal (including but not limited to any materials incorporating
any of the Confidential Information, as defined in Section 7(c) hereof) without
keeping any copies of such materials.
7. Covenants.
(a) Workmanlike manner. Consultant covenants that the Services shall
be provided by Consultant to CMI in a professional, diligent and workmanlike
manner.
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(b) Results and Proceeds. CMI shall be the sole and exclusive owner
throughout the universe in perpetuity of all of the work, labor, results and
proceeds of the Services, during the Consulting Period, including without
limitation all intellectual property relating to the Services, if any, which
Consultant may develop, create, write or otherwise produce during the Consulting
Period, free and clear of any and all claims, liens or encumbrances of
Consultant. All results and proceeds of Consultant's Services, work and labor
during the Consulting Period relating thereto shall be deemed to be
works-made-for-hire for CMI within the meaning of the copyright laws of the
United States and CMI shall be deemed to be the sole author thereof in all
territories and for all purposes.
(c) Confidential Information. All information, documents, notes,
memoranda and intellectual property of any kind of or relating to CMI which are
received, compiled, produced or otherwise made available to Consultant during
the Consulting Period or in connection with the Services which relate in any way
to the business of CMI or of any of its affiliates and which has not been made
available or confirmed to the public by CMI ("Confidential Information") shall
be the sole and exclusive property of CMI and shall in perpetuity (both during
and after the Consulting Period) be maintained in the utmost confidence by
Consultant and held by Consultant in trust for the benefit of CMI. Consultant
shall not during the Consulting Period or at any time thereafter directly or
indirectly release or disclose to any other person any Confidential Information,
except with the prior written consent of CMI or in furtherance of CMI's business
or as required by law, or use any such Confidential Information for Consultant's
own benefit or for the benefit of others. Notwithstanding the foregoing,
Consultant shall not be in breach of the foregoing covenants with respect to any
use or disclosure of any Confidential Information by him which is required as a
result of any legal process served upon him in any judicial or administrative
proceeding (provided that CMI shall be given notice in time to enable it to
object to such disclosure) or with respect to Confidential Information obtained
by Consultant from a third party without such third party's breach of obligation
of trust to CMI.
(d) Non-Competition. Consultant agrees that he will not, for a
period of three (3) years from and after the date hereof, engage in or carry on,
directly or indirectly, either for himself or as a member of a partnership or as
an employee, stockholder, investor, agent, associate or consultant of any
person, partnership, corporation or other entity (i) other than for Consolidated
or a subsidiary or affiliate of Consolidated; provided however, that
Consolidated or its affiliates are not i breach of Section 7.1 of the Asset
Purchase Agreement, or (ii) as an owner of less than 5% of the outstanding
shares or other equity interests of a publicly owned company, any business which
is in competition with the Business (as that term is defined in the Asset
Purchase Agreement) as currently conducted by Sellers (as that term is defined
in the Asset Purchase Agreement), but only for as long as the Business is
carried on by CMI or any subsidiary or affiliate of CMI in such manner.
Notwithstanding the foregoing, Consultant shall be permitted to render
accounting services or services customarily provided by a controller or chief
financial officer of a corporation or other entity during such three year
period, without being subject to the limitations and restrictions imposed above.
To the extent that Consultant engages in any of the foregoing activities which
would otherwise be in violation of this subsection for diagnostic imaging
centers which are located outside of a 15 mile radius from the Centers, such
activities shall not be deemed violative of this subsection (d).
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Consultant further covenants and agrees that for a period of three (3)
years from and after the date hereof, Consultant will not recruit, assist others
in recruiting or hiring, or refer to others concerning employment, any employee
who is, or within the twelve-month period immediately prior to the date hereof
was, an employee of any such direct or indirect subsidiary of Consolidated
unless such person shall have been terminated due to CMI's default or without
cause or has ceased to be employed by CMI for a period of 12 months.
Notwithstanding the foregoing, such covenant will not preclude Consultant from
recruiting or assisting others in recruiting or hiring Lee Wingeier or Brian
Wade.
Each covenant contained in this Section 7(d) shall apply for each county
in each state of the United States, and for each country and political
subdivision of the world where CMI conducts during the Consulting Period, the
Business, and except for geographic coverage, each such separate covenant must
be identical in terms to the other covenants in this Section 7(d).
If any court or tribunal of competent jurisdiction shall refuse to
enforce all of the separate covenants contained in this Section 7(d) because the
time limit is too long, it is expressly understood and agreed between the
parties hereto that such restriction shall not be void but that for the purpose
of such proceedings the time limitation shall be deemed to be reduced to the
extent necessary to permit enforcement of such restriction.
If any court or tribunal of competent jurisdiction shall refuse to
enforce all of the separate covenants contained in this Section 7(d) because
such covenants contained herein are more extensive (whether as to geographic
area, scope of business or otherwise) than necessary to protect the business and
goodwill of CMI, it is expressly understood and agreed between the parties
hereto that such restrictions shall not be void but that for the purpose of such
proceedings the restrictions contained herein (whether as to geographic area,
scope of business or otherwise) shall be deemed to be reduced to the extent
necessary to permit the enforcement of such restrictions.
The parties acknowledge and agree that the time, scope, geographic area
and other provisions of this Section 7(d) have been specifically negotiated.
Although the parties further acknowledge and agree that such time, scope,
geographic area and other provisions will materially restrict the ability of
Consultant to continue in the Business, the parties agree that such provisions
are reasonable under the circumstances.
(e) Nonsolicitation. You shall not in any way directly or
indirectly during the Consulting Period or at any time thereafter interfere
with, or solicit, entice, persuade or induce any person or entity to terminate
or refrain from extending or renewing, any of the contractual or business
relationships between CMI (and its subsidiaries and affiliates) and other
persons or entities, whether with clients, customers, patients or others.
8. No Obligation To Use Services. CMI shall have no obligation to use
any of the Services, or the results and proceeds thereof.
9. Warranties. CMI and Consultant each warrant and represent to the
other that each has the right to enter into and fully perform this Agreement in
accordance with its terms.
10. Assignment. Consultant may not assign or delegate any of his duties
or obligations hereunder (but may, upon notice to CMI, assign his rights to
payments under this Agreement). CMI may assign this Agreement, the Services or
any of CMI's interests herein (i) to any entity which is a party to a merger or
consolidation with CMI, which merger or consolidation involves the Business,
(ii) to any affiliate of CMI which is engaged in the Business, or (iii) to any
entity acquiring substantially all of the assets of CMI, and, in each instance
provided that any such assignee assumes CMI's obligations hereunder, CMI shall
thereupon be relieved of any and all liability hereunder.
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11. Equitable Relief. Consultant agrees and acknowledge that if any of
his obligations or duties under Section 7 of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused to CMI. Consultant therefore hereby
agree that, in addition to any remedies not precluded by this Agreement, CMI
shall be entitled to seek an injunction restraining any violation or threatened
violation of such provisions of this Agreement or to seek specific performance
or other equitable relief with respect to this Agreement.
12. Notices. All notices, requests, demands or other communications in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given, effective upon receipt, if delivered in person, or by United
States mail, postage prepaid, certified or registered, with return receipt
requested, to the address of the party as specified below: To CMI, to it at:
Comprehensive Medical Imaging, Inc.
6464 Canoga Avenue
Woodland Hills, CA 91367
Attention: General Counsel
To Consultant, to him at:
George Mahoney
21082 Sweetwater Lane North
Boca Raton, Florida 33428
or in each case, to such other address as a party shall have designated by
written notice to the other parties hereto.
13. Complete Agreement; Modification. This Agreement contains a
complete statement of all of the arrangements between the parties with respect
to the subject matter hereof and cannot be changed or modified except in writing
signed by both parties.
14. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of California applicable to agreements
made and to be fully performed in such state.
Please signify your agreement to the foregoing by signing in the space
provided below.
Very truly yours,
Comprehensive Medical Imaging, Inc.
By: _______________________________
Title: _______________________________
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George W. Mahoney
Consented to as of the date first above written:
Consolidated Technology Group, Ltd.
By: __________________________
Title: __________________________
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EXHIBIT D
EXHIBIT D
OPINION OF SELLER'S COUNSEL
January __, 1998
Comprehensive Medical Imaging, Inc.
6464 Canoga Avenue
Woodland Hills, CA 91367
Attn: General Counsel
Dear Sir:
We have acted as counsel to those entities identified on Schedule 1
hereto (each a "Seller" and collectively, the "Sellers") in connection with the
transaction which is the subject of that certain Asset Purchase Agreement (the
"Agreement") dated January __, 1998 between Comprehensive Medical Imaging, Inc.,
a Delaware corporation ("Buyer") and Sellers. This Opinion is being rendered
pursuant to Section 8.1 of the Agreement. Capitalized terms used in this Opinion
and not otherwise defined herein shall have the same meanings ascribed to them
in the Agreement.
As a basis for the opinions set forth herein, we have reviewed and
relied upon originals or copies of the following:
1. The Agreement (including all Exhibits and Schedules
thereto);
2. The Bill of Sale, Assignment and Assumption Agreement
identified as Exhibit "B" to the Agreement (the "Bill of Sale,
Assignment and Assumption Agreement");
3. The Assignments referred to in Sections 8.4.2, 8.4.4, 8.4.5,
and 8.4.6 of the Agreement;
4. The Indemnification Agreement identified as Exhibit "G" to the
Agreement (the "Indemnification Agreement");
5. The Non-Competition Agreements identified as Exhibit
"H" to the Agreement (the "Non-Competition
Agreements");
6. The Consulting Agreement identified as Exhibit "C" to the
Agreement (the "Consulting Agreement");
7. Copies of the Articles or Certificates of Incorporation, as
amended to date, of the corporate Sellers and corporate
general partners of the limited partnership Sellers;
8. The By-laws, as amended to date, of the corporate Sellers and
corporate general partners of the limited partnership Sellers;
9. Copies of the certificates of limited partnership and
partnership agreements of the partnership Sellers;
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10. Good standing, subsisting or equivalent certificates
for each of the Sellers;
11. The tax, judgment and UCC lien search reports of Lexis
Document Services dated on various dates between ______, 1997
and _________, 1997, copies of which are attached hereto as
Exhibit "A" (the "Lien Search");
12. An order of the Bankruptcy Court dated January __, 1998 (the
"Bankruptcy Court Order");
13. Minutes of the proceedings of the Board of Directors and
stockholders and stock record books of the corporate Sellers
and general partners of the partnership Sellers, or certified
resolutions in respect of director or stockholder action; and
14. Such other records, documents, instruments and papers as we
deemed necessary to examine for purposes of this Opinion.
In such examination, we have assumed the genuineness of all signatures
and the authenticity, validity and enforceability of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified or photostatic copies and the authenticity, validity and
enforceability of the originals of such latter documents. As to all matters of
fact material to the opinions expressed herein, we have also relied upon the
certificate of George W. Mahoney, Chief Financial Officer of each of the
Sellers, attached hereto as Exhibit "B" as to the matters referred to therein
and information and certificates furnished to us by the Sellers and by various
public officials. With respect to those states which do not issue certificates
that expressly refer to an entity's good standing, for purposes of this Opinion,
the term "good standing" shall mean "existing" or "subsisting" in the state of
organization or "authorized to conduct business" as a foreign corporation in the
state in which it is qualified as a foreign corporation.
In rendering this Opinion, we have assumed that all of the
consideration required to be paid at the Closing has been paid, that all action
necessary for the execution, delivery and performance by the Buyer of the
Agreement and the Related Documents (hereinafter defined) has been taken, and
that the Agreement and such Related Documents constitute the valid, binding
agreements of the Buyer enforceable in accordance with their respective terms.
We are admitted to practice solely in the State of New York, do not
express any opinion herein concerning any law other than the law of the State of
New York and the federal law of the United States of America, and, solely with
respect to matters concerning the Sellers' organization, the State of Delaware.
We express no opinion as to the enforcement or interpretation by any court,
administrative agency, arbitrator, or other authority of any state other than
New York with respect to the construction, interpretation, legality, or validity
of any agreements or documents, or as to matters involving choices or conflicts
of laws.
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Nothing in this Opinion shall be deemed to relate in any manner to any
requirements under any laws, rules or regulations relating directly or
indirectly to real property, environmental matters, bulk sales laws, the
practice of medicine, insurance or otherwise relating to health care or to
matters affected by or relating to the Hart-Scott-Rodino Anti-Trust Improvements
Act of 1976, or similar statutes.
Furthermore, notwithstanding anything contained in this Opinion to the
contrary, we express no opinion whatsoever as to the activities of or relating
to MRI Net, Inc. ("MRI Net") or on the effect of the Bankruptcy Court Order,
whether on or with respect to the Agreement or the transactions contemplated by
the Agreement, or otherwise.
This Opinion is governed by and shall be interpreted in accordance with
the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991), the provisions of which are incorporated herein by this reference. As a
consequence, it is subject to a number of qualifications, exceptions,
definitions, limitations on coverage, and other limitations, all as more
particularly described in the Accord, and this Opinion should be read in
conjunction therewith. The terms "knowledge" or "known to" and words of like
import, as used in this Opinion, shall mean "Actual Knowledge" as such term is
used and defined in the Accord.
Based on and subject to the above, and without any independent
investigation or inquiry unless expressly stated to the contrary herein, and
subject to the foregoing qualifications and the qualifications set forth below,
we are of the opinion that:
1. Each corporate or partnership Seller is a corporation
or partnership existing under the laws of the state of
its incorporation or formation and is in good standing
as a foreign corporation in each jurisdiction in which,
to the best of our knowledge, it owns or leases real
property, except for those jurisdictions where the
failure to be so qualified, individually or in the
aggregate, would not have a material adverse effect on
its Business. Each such Seller has all requisite
corporate or partnership power and authority to own its
properties related to its Business and to carry on its
Business as now conducted by it.
2. To our knowledge, none of the Sellers is in default with
respect to any order of any court, governmental authority,
arbitration board or tribunal to which they are subject
relating to the Business currently conducted by such Sellers.
3. The execution and delivery by each Seller of the
Agreement and all agreements and documents expressly
contemplated thereby (the "Related Documents"), and the
consummation by them of the transactions contemplated
thereby have been duly authorized by all requisite
corporate or partnership action, including any required
stockholder approval. The Agreement constitutes, and
all Related Documents when executed and delivered by
each Seller pursuant to the Agreement will constitute,
valid and legally binding obligations of Sellers
enforceable in accordance with their terms, except as
enforceability may be limited by equitable principles
and applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium, bulk sales,
preference, equitable subordination, marshaling, or
other similar laws of general application now or
hereafter in effect relating to the enforcement of
creditors rights generally.
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4. Except as set forth on Schedule 3.5 to the Agreement or
as otherwise provided elsewhere in the Agreement, to
the best of our knowledge, the execution, delivery and
performance by each Seller of the Agreement and the
Related Documents, and the consummation by each Seller
of the transactions contemplated thereby will not, with
or without the giving of notice or lapse of time, or
both, (i) violate any provision of any law, statute,
rule or regulation to which such Seller is subject,
(ii) conflict with or result in a breach or default
under any term or condition of any of the certificates or
articles of incorporation of the corporate Sellers or the
certificates of limited partnership or partnership agreement
of the partnership Sellers of such Sellers, (iii) conflict
with any of the Assigned Agreements to which such Seller is a
party or by which it is bound, or to which any of the Assets
are subject, or (iv) result in the creation or imposition of
any lien, pledge, claim, security interest or encumbrance of
any nature whatsoever on the Assets, other than as provided in
the Agreement. The foregoing Opinion is made by us only as to
matters of which we have knowledge.
5. We have no knowledge of any liens, security interests,
mortgages, charges or adverse claims of any kind or
character on or with respect to the personal property
of Sellers comprising part of the Assets other than as
set forth in the Agreement, or as reflected in the Lien
Search, or as otherwise provided pursuant to the terms
of any contract or instrument to which such assets are
subject.
6. The Bill of Sale, Assignment and Assumption Agreement
are sufficient to vest in Buyer good title to the
personal property comprising part of the Assets,
subject to the encumbrances set forth in the Lien
Search, all rights of any third parties under any
contract or instrument to which the Sellers are a party
relating to such Assets or as otherwise provided in the
Agreement.
7. Except as set forth in Schedule 3.17, we have no
knowledge of any actions, suits or proceedings with
respect to any Seller involving claims by or against
any Seller or the Assets which are pending or
threatened, at law or in equity, or before or by any
federal, state, municipal, or other governmental
department, commission, board, bureau, agency or
instrumentality.
8. We have not received notice from any federal, state,
municipal, or other governmental department,
commission, board, bureau, agency or instrumentality
that Sellers (excepting MRI Net, as to which no opinion
is rendered) do not have all governmental licenses and
permits and other governmental authorizations and
approvals currently required for the conduct of their
businesses as presently conducted.
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For purposes of Paragraph 7 of this Opinion, any actions, suits or
proceedings are deemed pending against Sellers only if an action has been
commenced and the Seller has been served with a summons and/or complaint and
such actions, suits or proceedings are deemed threatened only if either a senior
executive officer of a Seller has received written notice by an alleged claimant
or by an attorney purporting to act as counsel for such claimant that the
claimant intends to assert a claim against the Seller and we have been so
advised by a senior executive officer of such Seller or we have received such
written advice directly in our capacity as counsel for the Seller.
In addition, no opinion is expressed hereby as to whether any
particular provisions of any contract, agreement or instrument to which Sellers
are a party will be enforceable by a decree of specific performance or other
equitable relief, or that the enforcement thereof may not be limited by defenses
such as estoppel, waiver, and other equitable considerations. Furthermore, no
opinion is given hereby as to the enforceability of any indemnification or
contribution provisions of any contract, agreement or instrument or the temporal
or geographical limitations of any non-competition agreement.
The opinions expressed in this Opinion are based upon applicable laws,
rules and regulations in effect as of the date hereof and any change in any such
laws, rules or regulations may affect our Opinion. We assume no obligation to
advise you of any changes concerning matters discussed herein, whether or not
deemed material, of which we may hereafter become aware. We have not been asked
and do not render any opinion with respect to any matters except as expressly
set forth above. The statements contained herein constitute an opinion and are
not to be construed or deemed to be a guaranty or other assurance as to the
matters to which they relate. We shall have no liability under this Opinion
unless it is judicially finally determined that, solely as a result of a breach
of this Opinion, the Buyer sustains a material loss as a result thereof (such
"materiality" to be as provided for in Section 3.31 of the Agreement).
This Opinion is furnished to the Buyer at the request and with the
consent of the Sellers solely for the benefit of the Buyer in connection with
the Agreement and the transactions contemplated therein and may not be relied
upon by any person or entity other than the Buyer, nor is it to be filed with or
furnished to any government agency or any other person or entity without the
prior written consent of the undersigned. This Opinion may not be quoted, in
whole or in part, or otherwise referred to or used, published in any manner,
including, without limitation, in any financial statement or other document,
without the prior written consent of the undersigned. This Opinion is given to
you as of the date hereof and we assume no obligation to advise you of changes
that may hereafter be brought to our attention.
Very truly yours,
ROBERT L. BLESSEY
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SCHEDULE I
[List all Sellers]
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EXHIBIT "A"
UCC LIEN SEARCH
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EXHIBIT "B"
OFFICER'S CERTIFICATE
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EXHIBIT F
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Indemnification Agreement") by and
between Consolidated Technology Group Ltd. ("Consolidated"), a New York
corporation, and Comprehensive Medical Imaging, Inc. ("Buyer"), a Delaware
corporation, is dated the ___ day of March, 1998.
RECITALS
WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated January 28, 1998, by and between Sellers
(as that term is defined in the Asset Purchase Agreement) and Buyer, Sellers
have agreed to sell and Buyer has agreed to purchase, all right, title and
interest in and to substantially all of the assets of Sellers; and
WHEREAS, Consolidated is the ultimate parent of Sellers and derives
certain benefits from Buyer's purchase of substantially all of the assets of
Sellers under the Asset Purchase Agreement; and
WHEREAS, pursuant to Sections 6.7 and 9.1 of the Asset Purchase
Agreement, Consolidated has agreed (a) to indemnify and hold Buyer harmless
against and in respect of any and all claims assessed against Buyer (and not
expressly assumed under the Asset Purchase Agreement by Buyer) on the grounds
that Sellers have made a bulk transfer to Buyer to which the Titles on Bulk
Transfers referred to in Section 6.7 apply; and (b) to guarantee the obligations
of Sellers to indemnify Buyer pursuant to the provisions of Section 9.1 of the
Asset Purchase Agreement, and in the event any Seller is unable to fulfill its
indemnification obligations, to fulfill such obligations as if it were primarily
liable;
WHEREAS, as a condition precedent to Buyer's obligations under the Asset
Purchase Agreement, this Indemnification Agreement is being executed and
delivered pursuant to Section 8.4.7 of the Asset Purchase Agreement; and
WHEREAS, all capitalized terms used and not defined herein shall have
the meanings ascribed to them in the Asset Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and covenants contained herein and in the Asset Purchase Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Consolidated's Indemnification. Consolidated shall indemnify Buyer
and hold Buyer harmless from and against any and all damages, losses, costs,
liabilities and expenses (including reasonable attorneys' fees and
disbursements) resulting from or arising out of any uncured breach of any of the
representations, warranties, covenants and agreements made by any Sellers in the
Asset Purchase Agreement, in any exhibit or schedule thereto, or in any
certificate or other document delivered by Sellers pursuant thereto or for the
conduct of the Business prior to the Closing.
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2. Notice; Right to Contest. If any claim against which indemnification
is provided hereunder ("Claim") shall be asserted against Buyer in respect to
which Buyer proposes to demand indemnification hereunder, Buyer shall notify
Consolidated thereof. Such notice shall specify in detail the nature of and
basis for the Claim and amount thereof. Subject to rights of or duties to any
insurer or other third person having liability therefor, Consolidated shall have
the right promptly after receipt of such notice to assume the control of the
defense, compromise or settlement of any such Claim, including, at its own
expense, employment of counsel. Notwithstanding the preceding sentence, in the
defense, compromise or settlement of such Claim, Buyer shall have the right to
retain its own separate counsel, but the fees and expenses of such counsel shall
be at Buyer's expense unless (a) Consolidated has failed within a reasonable
time to retain counsel reasonably satisfactory to Buyer, or (b) the named party
in any such proceeding (including any impleaded parties) includes both Buyer and
Consolidated and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. In
any matter described above where Buyer has obtained counsel to represent it in
addition to counsel obtained by Consolidated, counsel selected by Consolidated
shall be required to cooperate fully with counsel selected by Buyer in such
matter. So long as Consolidated is defending in good faith any Claim for which
indemnification is sought, Consolidated shall not be liable for any Claim
settled without its consent, which consent may not be unreasonably withheld. In
the event that a Claim for indemnification is made by Buyer, which Claim is
unrelated to a third party's claim against Buyer, which is contested by
Consolidated and such dispute is finally resolved by a final, nonappealable
order of a court of competent jurisdiction, the losing party shall pay the
prevailing party the reasonable fees and disbursements of counsel incurred in
connection with the prosecution or defense of such Claim; provided, however,
that if Consolidated is the losing party and prior to such resolution,
Consolidated shall have made a written offer to settle the Claim for an amount
one and one-half (1-1/2) times the amount which Buyer recovers on the Claim,
then Buyer shall pay Consolidated's reasonable attorneys' fees and disbursements
incurred after the date Buyer rejected Consolidated's offer of settlement.
3. Governing Law. This Indemnification Agreement, and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of action), is
governed by and construed in accordance with the substantive and procedural laws
of the State of California (exclusive of the conflicts of law provisions
thereof) applicable to agreements made and to be performed entirely within such
state. Any action or proceeding to enforce the provisions of this
Indemnification Agreement may be brought in a federal or state court located in
Los Angeles County, California. By their execution hereof, the parties hereto
hereby consent to the personal jurisdiction of such courts for purposes of any
such action or proceeding.
4. Assignments. This Indemnification Agreement shall be freely
assignable by Buyer and shall inure to the benefit of, and be binding upon, any
other corporate entity which shall succeed to the business presently being
operated by Buyer. Seller may not assign its rights or delegate its obligations
hereunder without the prior written consent of Buyer.
5. Entire Agreement and Modifications. This Indemnification Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof. No changes of, modifications of, or additions to this
Indemnification Agreement shall be valid unless the same shall be in writing and
signed by all parties hereto.
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6. Counterparts. This Indemnification Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
7. Headings. The section headings contained in this Indemnification
Agreement are inserted for convenience of the parties only and shall not affect
in any way the meaning or interpretation hereof.
8. Notices. All notices, requests, demands and other communications
hereunder (the "Notices") shall be deemed to have been duly given if the same
shall be in writing and shall be delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed as set
forth in the Asset Purchase Agreement. All Notices to Consolidated shall be
addressed to it at 160 Broadway, New York, New York 10038, Attn: Lewis S.
Schiller.
9. Inconsistencies. In the event of any inconsistency between this
Agreement and the Asset Purchase Agreement, the terms of the Asset Purchase
Agreement shall control.
[signatures follow]
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
CONSOLIDATED TECHNOLOGY GROUP LTD.
By:_____________________________
Title:__________________________
COMPREHENSIVE MEDICAL IMAGING, INC.
By:_______________________________
Robert G. Funari
President and Chief Executive Officer
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EXHIBIT G
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (the "Non-Competition Agreement") is made
and entered into this ____ day of March, 1998, by and between Lewis Schiller, a
resident of _________ ("Seller Executive"), and Comprehensive Medical Imaging,
Inc., a Delaware corporation ("Buyer").
RECITALS
WHEREAS, Seller Executive is an employee of Consolidated Technology
Group Ltd., a New York corporation which is the ultimate parent of Sellers;
WHEREAS, Sellers have agreed to sell, and Buyer has agreed to purchase,
substantially all of the assets of Sellers, pursuant to the terms of an Asset
Purchase Agreement between Buyer and Sellers dated January 28, 1998 (the "Asset
Purchase Agreement");
WHEREAS, Seller Executive acknowledges and agrees that the value to
Buyer of the transactions contemplated in the Asset Purchase Agreement would be
substantially diminished if Seller Executive were to enter into business
activities competitive with those of Buyer within a reasonable period (as
hereinafter set forth) following the date of the Asset Purchase Agreement;
WHEREAS, Seller Executive will derive certain benefits from Buyer's
purchase of substantially all of the assets of Sellers under the Asset Purchase
Agreement; and
WHEREAS, as a condition precedent to Buyer's obligations under the Asset
Purchase Agreement, this Non-Competition Agreement is being executed and
delivered pursuant to Section 8.4.8 of the Asset Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
1. Non-Competition. Seller Executive agrees that he will not, for a
period of three (3) years from and after the Closing Date (as that term is
defined in the Asset Purchase Agreement), engage in or carry on, directly or
indirectly, either for himself or as a member of a partnership or as an
employee, stockholder, investor, agent, associate or consultant of any person,
partnership, corporation or other entity (I) other than for Buyer or a
subsidiary or affiliate of Buyer, or (ii) as an owner of less than 5% of the
outstanding shares or other equity interests of a publicly owned company, any
business which is in competition with the Business (as that term is defined in
the Asset Purchase Agreement) as currently conducted by Sellers, but only for as
long as the Business is carried on by Buyer or any subsidiary or affiliate of
Buyer in such manner.
-1-
<PAGE>
Seller Executive further covenants and agrees that for a period of three
(3) years from and after the Closing Date, Seller Executive will not recruit,
assist others in recruiting or hiring, discuss employment with, or refer to
others concerning employment, of any employee of Buyer who was a former employee
of any Seller at any time during the twelve month period immediately prior to
the Closing Date unless such person shall have been terminated due to Buyer's
default or without cause or has ceased to be employed by Buyer for a period of
12 months. Notwithstanding the foregoing restriction, the provisions of this
Section 1 shall not apply to recruitment, hiring, discussion of employment or
referrals to others concerning employment or direct employment by Seller
Executive of any of George W. Mahoney, Brian Wade, Charles Fitzpatrick or Lee
Wingeier
Each covenant contained in this Section 1 shall apply for each county in
each state of the United States, and for each country and political subdivision
of the world in each instance where Buyer conducts, or will during such period
conduct, the Business, and except for geographic coverage, each such separate
covenant must be identical in terms to the other covenants in this Section 1.
If any court or tribunal of competent jurisdiction shall refuse to
enforce all of the separate covenants contained in this Non-Competition
Agreement because the time limit is too long, it is expressly understood and
agreed between the parties hereto that such restriction shall not be void but
that for the purpose of such proceedings the time limitation shall be deemed to
be reduced to the extent necessary to permit enforcement of such restriction.
If any court or tribunal of competent jurisdiction shall refuse to
enforce all of the separate covenants contained in this Non-Competition
Agreement because such covenants contained herein are more extensive (whether as
to geographic area, scope of business or otherwise) than necessary to protect
the business and goodwill of Buyer, it is expressly understood and agreed
between the parties hereto that such restrictions shall not be void but that for
the purpose of such proceedings the restrictions contained herein (whether as to
geographic area, scope of business or otherwise) shall be deemed to be reduced
to the extent necessary to permit the enforcement of such restrictions.
2. Agreement As To Reasonableness of Restraints. The parties
acknowledge and agree that the time, scope, geographic area and other provisions
of Section 1 above have been specifically negotiated. Although the parties
further acknowledge and agree that such time, scope, geographic area and other
provisions will materially restrict the ability of Seller Executive to continue
in the Business, the parties agree that such provisions are reasonable under the
circumstances.
3. Remedies. Seller Executive acknowledges that a breach of Section 1
of this Non-Competition Agreement may cause irreparable damage to Buyer, and in
the event of Seller Executive's actual or threatened breach of the provisions of
Section 1, Buyer shall be entitled to seek a temporary restraining order and an
injunction restraining such Seller Executive from breaching such covenants
without the necessity of posting bond or proving irreparable harm, such being
conclusively admitted by Seller Executive. Nothing may be construed as
prohibiting Buyer from pursuing any other available remedies for such breach or
threatened breach, including the recovery of damages from Seller Executive.
4. Tolling. The term of the covenants contained in Section 1 of this
Non-Competition Agreement shall be tolled for the period commencing on the date
any action is filed by Buyer for injunctive relief or damages arising out of a
breach by Seller Executive of Section 1 of this Non-Competition Agreement, and
ending upon final adjudication (including appeals) of such action, provided that
Buyer is successful in obtaining the relief sought in such action.
-2-
<PAGE>
5. Non-Waiver of Rights. The failure to enforce at any time any of the
provisions of this Non-Competition Agreement or to require at any time
performance by the other party of any of the provisions hereof shall in no way
be construed to be a waiver of such provisions or to affect either the validity
of this Non-Competition Agreement, or any part hereof, or the right of either
party thereafter to enforce each and every provision in accordance with the
terms of this Non-Competition Agreement.
6. Invalidity of Provisions. The invalidity or unenforceability of any
particular provision or provisions of this Non-Competition Agreement shall not
affect the other provisions hereof, and this Non-Competition Agreement shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted.
7. Assignments. This Non-Competition Agreement shall be freely
assignable by Buyer and shall inure to the benefit of, and be binding upon, any
other corporate entity which shall succeed to the business presently being
operated by Buyer. Seller Executive may not assign his rights or delegate his
obligations hereunder without the prior written consent of Buyer.
8. Entire Agreement and Modifications. This Non-Competition Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof. No changes of, modifications of, or additions to this
Non-Competition Agreement shall be valid unless the same shall be in writing and
signed by all parties hereto.
9. Counterparts. This Non-Competition Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
10. Headings. The section headings contained in this Non-Competition
Agreement are inserted for convenience of the parties only and shall not affect
in any way the meaning or interpretation of this Agreement.
11. Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if the same shall be in
writing and shall be delivered personally or sent by registered or certified
mail, return receipt requested, postage prepaid to the addresses set forth
below:
To Buyer at: Comprehensive Medical Imaging, Inc.
6464 Canoga Avenue
Woodland Hills, CA 91367
Attention: General Counsel
Fax: 818/737-4606
To Seller Executive at: c/o Consolidated Technology Group, Ltd.
160 Broadway, Suite 901
New York, NY 10038
Attn: Lewis S. Schiller
12. Governing Law. This Non-Competition Agreement shall be governed by,
and construed and interpreted in accordance with, the internal laws of the State
of California without regard to its choice of laws principles.
IN WITNESS WHEREOF, the parties hereto have executed this
Non-Competition Agreement as of the day and year first above written.
- -------------------------------------
Lewis Schiller
COMPREHENSIVE MEDICAL IMAGING, INC.
By:___________________________________
Robert G. Funari
President and Chief Executive Officer
-3-
<PAGE>
EXHIBIT H-1
CERTIFICATION OF NON-FOREIGN STATUS
OF
PINE ISLAND MAGNETIC RESONANCE IMAGING CENTER, LTD.
Pine Island Magnetic Resonance Imaging Center, Ltd., a Florida limited
partnership ("Pine Island MRI"), is the owner of that certain real property
located in the county of _____________ (the "Property"). Pine Island MRI is a
seller under that certain Asset Purchase Agreement dated January __, 1998 (the
"Agreement"). Pursuant to the Agreement, Pine Island MRI is obligated to sell
the Property to Comprehensive Medical Imaging, Inc., a Delaware corporation, as
buyer ("Buyer").
Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that a transferee of a U.S. real property interest must
withhold tax if the transferor is a foreign person. To inform Buyer that
withholding of tax will not be required upon the purchase and sale of the
Property, the undersigned hereby certifies the following on behalf of Pine
Island MRI:
1. Pine Island MRI is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate, as those terms
are defined in the Code and the regulations promulgated
thereunder;
2. Pine Island MRI's U.S. employer identification number is
______________; and
3. Pine Island MRI's executive office address is 2424 N. Federal
Highway, Suite 410, Boca Raton, Florida 33431.
It is understood that this certificate may be disclosed to the Internal
Revenue Service and that any false statement contained herein could be punished
by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined the foregoing
certification and, to the best of my knowledge and belief, it is true, correct
and complete, and I further declare that I have authority to sign this document
on behalf of Pine Island MRI.
PINE ISLAND MAGNETIC RESONANCE IMAGING CENTER, LTD.
By: IMI ACQUISITION OF PINE ISLAND CORPORATION, General Partner
By:_____________________________
Name:___________________________
Title:__________________________
-1-
<PAGE>
EXHIBIT H-2
CERTIFICATION OF NON-FOREIGN STATUS
OF
MAGNETIC RESONANCE INSTITUTE OF BOCA RATON, LTD.
Magnetic Resonance Institute of Boca Raton, Ltd., a Florida limited
partnership ("MRI of Boca Raton"), is the owner of that certain real property
located in the county of _____________ (the "Property"). MRI of Boca Raton is a
seller under that certain Asset Purchase Agreement dated January __, 1998 (the
"Agreement"). Pursuant to the Agreement, MRI of Boca Raton is obligated to sell
the Property to Comprehensive Medical Imaging, Inc., a Delaware corporation, as
buyer ("Buyer").
Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that a transferee of a U.S. real property interest must
withhold tax if the transferor is a foreign person. To inform Buyer that
withholding of tax will not be required upon the purchase and sale of the
Property, the undersigned hereby certifies the following on behalf of MRI of
Boca Raton:
1. MRI of Boca Raton is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate, as those terms
are defined in the Code and the regulations promulgated
thereunder;
2. MRI of Boca Raton's U.S. employer identification number is
____________; and
3. MRI of Boca Raton's executive office address is 2424 N.
Federal Highway, Suite 410, Boca Raton, Florida 33431.
It is understood that this certificate may be disclosed to the Internal
Revenue Service and that any false statement contained herein could be punished
by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined the foregoing
certification and, to the best of my knowledge and belief, it is true, correct
and complete, and I further declare that I have authority to sign this document
on behalf of MRI of Boca Raton.
MAGNETIC RESONANCE INSTITUTE OF BOCA RATON, LTD.
By: IMI ACQUISITION OF BOCA RATON CORPORATION, General Partner
By:_____________________________
Name:___________________________
Title:__________________________
-1-
<PAGE>
EXHIBIT H-3
CERTIFICATION OF NON-FOREIGN STATUS
OF
IMI OF KANSAS CORPORATION
IMI of Kansas Corporation, a Kansas corporation ("IMI of Kansas"), is
the owner of that certain real property located in the county of _____________
(the "Property"). IMI of Kansas is a seller under that certain Asset Purchase
Agreement dated January __, 1998 (the "Agreement"). Pursuant to the Agreement,
IMI of Kansas is obligated to sell the Property to Comprehensive Medical
Imaging, Inc., a Delaware corporation, as buyer ("Buyer").
Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that a transferee of a U.S. real property interest must
withhold tax if the transferor is a foreign person. To inform Buyer that
withholding of tax will not be required upon the purchase and sale of the
Property, the undersigned hereby certifies the following on behalf of IMI of
Kansas:
1. IMI of Kansas is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate, as those terms
are defined in the Code and the regulations promulgated
thereunder;
2. IMI of Kansas's U.S. employer identification number is
___________; and
3. IMI of Kansas's executive office address is 2424 N. Federal
Highway, Suite 410, Boca Raton, Florida 33431.
It is understood that this certificate may be disclosed to the Internal
Revenue Service and that any false statement contained herein could be punished
by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined the foregoing
certification and, to the best of my knowledge and belief, it is true, correct
and complete, and I further declare that I have authority to sign this document
on behalf of IMI of Kansas.
IMI OF KANSAS CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
-1-
<PAGE>
EXHIBIT I
ESCROW LETTER
INTERNATIONAL MAGNETIC IMAGING, INC.
2424 NORTH FEDERAL HIGHWAY
BOCA RATON, FLORIDA 33431
January 28, 1998
Comprehensive Medical Imaging, Inc.
6464 Canoga Avenue
Woodland Hills, CA 91367
Re: IMI Employees
Gentlemen:
This will confirm our agreement with respect to the payment of accrued
vacation and severance compensation to the individuals listed on Exhibit A
hereto (the "Former Employees").
Comprehensive Medical Imaging, Inc. ("CMI") has advised International
Magnetic Imaging, Inc. ("IMI") that CMI has determined to employ the Former
Employees as of the Closing Date under the Asset Purchase Agreement dated
January 28, 1998 between IMI (and its affiliates), as Sellers, and you, as Buyer
(the "Asset Purchase Agreement"). Attached hereto as Exhibit B is a schedule
which sets forth opposite the name of each Former Employee the amount of accrued
vacation and severance compensation which would have been paid by IMI to each
Former Employee on the date hereof if the employment of such individuals had
been terminated by IMI on such date (as to each Former Employee, the "Employee
Benefits"). Exhibit B will be updated on the Closing Date to reflect such
amounts as of such date.
IMI will, on and subject to the Closing Date, deposit a sum equal to
the aggregate amount of the Employee Benefits set forth on Exhibit B hereto, in
escrow, with IMI's counsel, Robert L. Blessey, Esq., 51 Lyon Ridge Road,
Katonah, NY 10536 (the "Escrow Agent").
On or before a date which is 90 days from the Closing Date under the
Asset Purchase Agreement (the "Cut-Off Date"), CMI will notify us in writing
(with a copy to the Escrow Agent) as to any of the Former Employees whose
employment CMI has terminated on or prior to the Cut-Off Date (the "Terminated
Employees").
Upon IMI's receipt of such notification as to the Terminated Employees,
IMI will instruct the Escrow Agent to promptly release from escrow and deliver,
or cause to be delivered:
(a) to each of the Terminated Employees, the Employee
Benefits attributable to him or her;
(b) to CMI, a sum equal to the aggregate accrued vacation pay for
each of the Former Employees whose employment is not
terminated by CMI on the Cut-Off Date; and
-1-
<PAGE>
(c) to IMI, an amount equal to the balance of the Employee
Benefits which remain in escrow after payment of the amounts
provided for in clauses (a) and (b) above.
The Escrow Agent shall be fully entitled to rely on such instructions
and shall be fully protected as to any action taken by him in such reliance.
CMI will assume responsibility for the payment of all severance
compensation and other employee benefits to all of the Former Employees whose
employment has not been terminated by CMI on or as of the Cut-Off Date.
The Escrow Agent shall have no liability to either of us for acting as
escrow agent hereunder, except for his gross negligence or intentional
wrongdoing as may be finally determined by a non-appealable order of any court
of competent jurisdiction. IMI shall be responsible for all fees and costs of
the Escrow Agent.
If the foregoing accurately sets forth our understanding and agreement
with respect to the above subject matter, kindly execute a copy of this
Agreement, where provided below, and return such executed copy to IMI.
Very truly yours,
INTERNATIONAL MAGNETIC IMAGING, INC.
By:__________________________________
Lewis S. Schiller
Principal Executive Officer
AGREED TO AND ACCEPTED
this 28th day of January, 1998
COMPREHENSIVE MEDICAL IMAGING, INC.
By:________________________________
Robert G. Funari
President and Chief Executive Officer
-2-
<PAGE>
EXHIBIT 2, Item 7
Consolidated Technology Group, Ltd. and Subsidiaries
Unaudited Pro Forma Financial Statements
-1-
<PAGE>
Consolidated Technology Group, Ltd. and Subsidiaries
Unaudited Pro Forma Financial Statements
Index
Page
----
Introduction and Basis of Presentation 3
Unaudited Pro Forma Consolidated Balance Sheet - September 30, 1997 4-5
Unaudited Pro Forma Consolidated Statement of Operations - 6
Nine Months Ended September 30, 1997
Notes to Unaudited Pro Forma Financial Statements 7-8
-2-
<PAGE>
Consolidated Technology Group, Ltd. and Subsidiaries
Unaudited Pro Forma Financial Statements
- --------------------------------------------------------------------------------
Introduction and Basis of Presentation
The following pro forma consolidated balance sheet as of September 30, 1997 and
the pro forma consolidated statement of operations for the nine months ended
September 30, 1997 give effect to Consolidated Technology Group, Ltd's, (the
"Company"), planned disposal of the assets and liabilities of International
Magnetic Imaging, Inc., ("IMI") through SIS Capital Corp., ("SISC"), a wholly
owned subsidiary of the Company. The disposal of the assets and liabilities of
IMI is to be executed via a two step plan. The first step is to sell
substantially all of the assets of IMI and on January 28, 1998, IMI entered into
an asset purchase agreement with Comprehensive Medical Imaging, Inc. ("CMI"), a
subsidiary of Syncor International Corporation, pursuant to which CMI would
purchase the assets of IMI and its subsidiaries for $20.5 million in cash and
the assumption of approximately $25.5 million in debt and liabilities. The
second step is to liquidate the remaining liabilities of IMI which includes
certain accrued legal fees and subordinated debt and deferred interest owed to
the former owners of IMI.
The Company presented the operations of IMI as discontinued in the Company's
September 30, 1997 quarterly report on Form 10-Q and as such, the pro forma
financial statements contained herein conform such presentation to the actual
asset purchase agreement terms. Additionally, subsequent to the filing of the
September 30, 1997 quarterly report on Form 10-Q, the Company has developed the
liquidation plan and the pro forma effects of such planned liquidation are
contained herein.
The historical financial statements as of September 30, 1997 are those of the
Company and the pro forma consolidated balance sheet and pro forma consolidated
statement of operations give effect to the disposal and liquidation as if it had
occurred on September 30, 1997. The pro forma financial statements have been
prepared by management based upon the historical financial statements of the
Company and are not necessarily indicative of what would have occurred if the
transaction had been in effect on the dates indicated. Furthermore, such pro
forma financial statements assume that the asset purchase agreement and planned
liquidation will occur and no assurances can be given that either transaction
will be finalized.
-3-
<PAGE>
Consolidated Technology Group Ltd. and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheets
September 30, 1997
<TABLE>
<CAPTION>
Pro Forma Adjustments
----------------------------------------------------------------------
Liquidation of
Remaining
Sale of Assets and
Historical IMI Liabilities Pro Forma
---------- --- ----------- ---------
<S> <C> <C> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $ 706,000 $10,582,000 [A][1] ($2,129,000) [B][3] $9,159,000
Receivables, net of allowances 11,358,000 -- -- 11,358,000
Inventories 2,753,000 -- -- 2,753,000
Loans receivable 95,000 -- -- 95,000
Excess of accumulated costs over related billings 960,000 -- -- 960,000
Prepaid expenses and other current assets 438,000 -- -- 438,000
Net current assets of discontinued segments 3.640,000 (3,640,000)[A][2] -- --
---------- ----------- ----------- ----------
Total current assets 19,950,000 6,942,000 (2,129,000) 24,763,000
---------- --------- ----------- ----------
Property, plant and equipment, net 1,245,000 -- -- 1,245,000
Other assets:
Capitalized software development costs 627,000 -- -- 627,000
Goodwill, net 788,000 -- -- 788,000
Customer lists, net 5,564,000 -- -- 5,564,000
Deferred offering costs 318,000 -- -- 318,000
Receivables, related parties 1,063,000 (321,000)[A][3] -- 742,000
Marketable securities 446,000 -- -- 446,000
Other assets 227,000 -- -- 227,000
Net assets of discontinued segments 8,889,000 (8,889,000)[A][2] -- --
--------- ----------- --------- ---------
Total Other Assets 17,922,000 (9,210,000) -- 8,712,000
---------- ----------- --------- ---------
Total Assets $39,117,000 ($2,268,000) ($2,129,000) $34,720,000
=========== ============ ============ ===========
</TABLE>
See notes to unaudited pro forma financial statements
-4-
<PAGE>
Consolidated Technology Group Ltd. and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheets
September 30, 1997
<TABLE>
<CAPTION>
Pro Forma Adjustments
----------------------------------------------------------------------
Liquidation of
Remaining
Sale of Assets and
Historical IMI Liabilities Pro Forma
---------- --- ----------- ---------
<S> <C> <C> <C> <C>
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable and accrued expenses $ 7,709,000 $ 0 $ 0 $ 7,709,000
Accrued payroll and related expenses 2,798,000 -- -- 2,798,000
Accrued interest 695,000 $119,000 [A][4] ($814,000) [B][1] --
Income taxes payable 356,000 (356,000)[A][5] -- --
Interim billings in excess of costs
and estimated profits 1,773,000 -- -- 1,773,000
Subordinated debt, related parties 924,000 -- (924,000) [B][1] --
Current portion of long-term debt 6,816,000 -- -- 6,816,000
Current portion of subordinated debt 5,371,000 17,000 [A][4] (5,388,000) [B][1] --
Current portion of capitalized lease obligations 46,000 -- -- 46,000
Notes payable, related parties 14,000 -- -- 14,000
Net current liabilities of discontinued segments 2,572,000 665,000 [A][5] (665,000) [B][2] 2,572,000
--------- ------- --------- ---------
Total current liabilities 29,074,000 445,000 (7,791,000) 21,728,000
---------- ------- ----------- ----------
Long-term liabilities:
Long-term debt 150,000 -- -- 150,000
Capitalized lease obligations 57,000 -- -- 57,000
Subordinated debt 139,000 8,000 [A][4] (8,000) [B][1] 139,000
------- ----- ------- -------
Total long-term liabilities 346,000 8,000 (8,000) 346,000
------- ----- ------- -------
Minority interest 14,312,000 -- -- 14,312,000
---------- -- -- ----------
Shareholders' equity:
Preferred stock 3,000 -- -- 3,000
Common stock (50,000,000 499,000 -- -- 499,000
Additional paid-in-capital, common stock 52,152,000 -- -- 52,152,000
Unrealized gain on marketable securities 181,000 -- -- 181,000
Accumulated deficit (57,450,000) (2,721,000)[A][6] 5,670,000 [B][1] (54,501,000)
------------ ----------- --------- ------------
Total shareholders' equity (4,615,000) (2,721,000) 5,670,000 (1,666,000)
----------- ----------- --------- -----------
Total Liabilities and Shareholders' Equity $39,117,000 ($2,268,000) ($2,129,000) $34,720,000
=========== ============ ============ ===========
</TABLE>
See notes to unaudited pro forma financial statements
-5-
<PAGE>
Consolidated Technology Group Ltd. and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheets
September 30, 1997
<TABLE>
<CAPTION>
Pro Forma Adjustments
----------------------------------------------------------------------
Liquidation of
Remaining
Sale of Assets and
Historical IMI Liabilities Pro Forma
---------- --- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $72,521,000 $ 0 $ 0 $72,521,000
Direct Costs 66,402,000 -- -- 66,402,000
---------- -- -- ----------
Gross Profit 6,119,000 -- -- 6,119,000
Selling, General and Administrative 10,558,000 -- -- 10,558,000
---------- -- -- ----------
Loss from Operations (4,439,000) -- -- (4,439,000)
----------- -- -- -----------
Other Income (Expense):
Interest expense (944,000) -- -- (944,000)
Other income (expense), net (600,000) -- -- (600,000)
Realized gain (loss) on marketable securities (191,000) -- -- (191,000)
--------- -- -- ---------
Total other expense, net (1,735,000) -- -- (1,735,000)
----------- -- -- -----------
Loss from Continuing Operations Before
Income Taxes and Minority Interest (6,174,000) -- -- (6,174,000)
Income Tax Provision (7,000) -- -- (7,000)
Minority Interest in Loss of Subsidiaries 749,000 -- -- 749,000
------- -- -- -------
Loss from continuing operations (5,432,000) -- -- (5,432,000)
Discontinued Operations:
Loss from operations of discontinued segments (1,404,000) ($1,574,000)[A][7] -- (2,978,000)
Loss on disposal of segments (396,000) (1,147,000)[A][8] -- (1,543,000)
--------- ----------- -- -----------
Loss before extraordinary item (7,232,000) (2,721,000) -- (9,953,000)
Extraordinary Item:
Gain on Liquidation of Subordinated Debt -- -- $5,670,000 [B][1] 5,670,000
-- -- ---------- ---------
Net Loss ($7,232,000) ($2,721,000) $5,670,000 ($4,283,000)
============ ============ ========== ============
Loss per common share:
Loss from continuing operations ($0.12) ($0.12)
Loss from operations of discontinued segments ($0.03) ($0.06)
Loss on disposal of segments ($0.01) ($0.03)
Gain on extraordinary item $0.00 $0.12
----- -----
Net loss per common share ($0.16) ($0.09)
======= =======
Weighted average number of common shares 46,220,542 46,220,542
========== ==========
</TABLE>
See notes to unaudited pro forma financial statements
-6-
<PAGE>
Consolidated Technology Group, Ltd. and Subsidiaries
Notes to Unaudited Pro Forma Financial Statements
- --------------------------------------------------------------------------------
[A] - Pro Forma Adjustments for Asset Purchase Agreement
[A][1] - Pursuant to the asset purchase agreement, the Company will receive
$20.5 million. Decreases to cash include fees and costs to complete the
transaction. The net change in cash is as follows:
Proceeds from asset purchase agreement $20,500,000
Professional fees (2,672,000)
Consent fees (308,000)
Management bonuses (5,555,000)
Stock and option liquidations (1,383,000)
-----------
Net increase in cash $10,582,000
[A][2] - The historical financial statements present the net current assets of
$3,640,000 and the net long-term assets of $8,889,000, to be disposed of as
separate line items on the balance sheet. The pro forma adjustments reflect the
disposal of such assets.
[A][3] - The historical financial statements assumed that a note receivable due
from an officer of IMI would not be a part of the asset purchase agreement and
the pro forma adjustment reflects the inclusion of such receivable in the asset
sale.
[A][4] - The pro forma adjustment reflects the change in the subordinated debt
and interest amounts from September 30, 1997 to the approximate balances as of
the date of the asset purchase agreement.
[A][5] - The pro forma adjustment reflects the reclassification of net assets
and liabilities that are expected to be liquidated subsequent to the closing of
the asset purchase agreement and as such are presented in the first step of the
disposal plan as net current liabilities of a discontinued segment. The pro
forma adjustment also includes an estimate of approximately $250,000 for losses
to be incurred from the date of the asset purchase agreement to the actual
closing date.
[A][6] - The pro forma adjustments to accumulated deficit consist of the
following:
Loss on sale of IMI's assets $(1,147,000)
IMI's estimated losses from September 30,
1997 until the expected date of closing (1,106,000)
Expected reduction in the tax benefit
accrued to the Company from the sale (468,000)
Net change in accumulated deficit $(2,721,000)
[A][7] - The pro forma adjustment loss from operations of discontinued segment
reflects the following:
IMI's estimated losses from September 30,
1997 until the expected date of closing $(1,106,000)
Expected reduction in the tax benefit
accrued to the Company form the sale (468,000)
Net loss from operations of
discontinued segment $(1,574,000)
-7-
<PAGE>
Consolidated Technology Group, Ltd. and Subsidiaries
Notes to Unaudited Pro Forma Financial Statements
- --------------------------------------------------------------------------------
[A][8] - The pro forma adjustment reflects the loss on disposal as follows:
Proceeds from sale $20,500,000
Assumption of debt and liabilities 25,449,000
Professional fees (2,672,000)
Consent fees (308,000)
Management bonuses (5,555,000)
Stock and option liquidations (1,383,000)
------------
Net consideration 36,031,000
Book value of assets sold (23,246,000)
Gain on sale before asset write-offs 12,785,000 Book Value of Assets
Written-off:
Goodwill (8,848,000)
Customer lists (4,430,000)
Other assets (656,000)
------------
Net loss on disposal of segment $ (1,147,000)
============
[B] - Pro Forma Adjustments for Liquidation of Remaining Assets and Liabilities
[B][1] - Liquidation of Subordinated Debts - The planned liquidation would
require the payment of approximately $1,464,000 in order to liquidate the
subordinated debt and deferred interest
Deferred interest $ 814,000
Subordinated debt, related parties 924,000
Current portion of subordinated debt 5,388,000
Long-term subordinated debt 8,000
------------
Total Subordinated Amounts Liquidated 7,134,000
Liquidation payment (1,464,000)
Gain on Liquidation of Subordinated Debt $5,670,000
[B][2] - Payments of accrued expenses and estimated operating losses until the
asset sale if closed are expected to approximate $665,000.
[B][3] - The net change in cash consists of the following:
Liquidation of subordinated debt [B][1] $1,464,000
Payment of accrued expense and losses [B][2] 665,000
Total decrease in cash $2,129,000
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