SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act 1934
Date of Report: June 5, 1996
U.S. DIAGNOSTIC LABS INC.
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(Exact name of registrant as specified in charter)
DELAWARE
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(State of other jurisdiction of incorporation)
1-13392 11-3146389
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(Commission File Number) (IRS Employer Identification No.)
777 SOUTH FLAGLER DRIVE, STE. 1006, WEST TOWER, WEST PALM BEACH, FLORIDA 33401
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (407) 832-0006
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 4, 1996, the Company entered into a Merger Agreement pursuant
to which it acquired the business of U.S. Imaging, Inc. ("U.S. Imaging") located
in Houston, Texas. U.S. Imaging operates six imaging centers in Houston and San
Antonio, Texas, with net collected revenues of approximately $10.7 million and
adjusted net income before taxes in excess of $3.0 million.
The acquisition was structured as a merger, pursuant to which U.S.
Imaging merged with and into U.S.I. Acquisition Inc., a wholly-owned subsidiary
of the Company. The merger consideration was is $7,000,000 in cash and 1,671,000
shares of the Company's Common Stock. Of such shares, 671,000 were placed in
escrow and will be released to the former stockholder of U.S. Imaging, the Reese
General Trust, only in the event that the following conditions are met:
(a) If U.S. Imaging's income before taxes for the twelve months ending
May 31, 1997 as reviewed by the Company's independent public accountants and
computed in accordance with generally accepted accounting principles (the "Net
Income") equals or exceeds $4,700,000, then all of the Escrow Shares shall be
released.
(b) If the Average Revenues are at least $3,200,000 but less than
$4,700,000, a portion of the number of the Escrow Shares will be released to the
Stockholder, computed by the product of 671,000 multiplied by a fraction, the
numerator of which is the difference between the Net Income and $3,200,000 and
the denominator of which is $1,500,000.
(c) If the Net Income is less than $3,200,000, then no Escrow Shares
will be released to the Stockholder.
In addition, the Reese General Trust granted to Jeffrey Goffman, the
Company's Chairman, a proxy to vote all of the shares of Common Stock issued in
the acquisition in connection with the voting for directors of the Company and
in certain situations relating to the possible change in control of the Company.
Financial statements of U.S. Imaging will be filed within the time
period required by this report.
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Effective June 13, 1996 the Company changed its independent accountants
from Mortenson and Associates, P.C. ("Mortenson") to Arthur Andersen LLP because
of its desire to have a "Big Six" accounting firm as its auditors. The
Mortenson's report on the Company's financial statements for the last two years
did not contain an adverse opinion or disclaimer of opinion and was not
qualified as to uncertainty, audit scope or accounting principles. The decision
to change accountants was recommended and approved by the board of directors of
the Company. Since
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January 1, 1994, there were no disagreements with Mortenson on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure. No reportable events as defined under Rule 304(v) of
Regulation S-K occurred since January 1, 1994. The Company did not consult
Arthur Andersen LLP with respect to any accounting principles.
EXHIBITS
10.32 Merger Agreement dated as of February 27, 1996 among the Company, U.S.
Imaging, Inc. and U.S.I. Acquisition Inc., a subsidiary of the Company.
10.33 Escrow Agreement dated as of June 4, 1996 among the Company and the
Reese General Trust.
16.1 Letter re change in certifying accountant from Mortenson and
Associates, P.C.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
U.S. DIAGNOSTIC LABS INC.
/S/ JEFFREY A. GOFFMAN
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Jeffrey A. Goffman, Chairman
and Chief Financial Officer
Dated: June 18, 1996
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Exhibit 16.1
[MORTENSON AND ASSOCIATES, P.C. LETTERHEAD]
June 18, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read the statements made by U.S. Diagnostic Labs Inc., which we
understand will be filed with the Commission, pursuant to Item 4 of Form 8-K, as
part of the Company's Form 8-K report dated June 19, 1996. We agree with the
statements concerning our Firm such Form 8-K.
Very truly yours,
Mortenson and Associates, P.C.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 4, 1996, by and among
U.S. IMAGING INC., a Texas corporation, ("USI"), REESE GENERAL TRUST, the
stockholder of USI ("Stockholder"), U.S. DIAGNOSTIC LABS INC., a Delaware
corporation ("USDL") and U.S.I. ACQUISITION, INC., a Texas corporation and a
susidiary of USDL ("Acquisition").
W I T N E S S E T H:
WHEREAS, USI is engaged in the business of operating diagnostic imaging
centers in Houston and San Antonio, Texas; and
WHEREAS, USDL is engaged, in part, in the business of acquiring, owning
and operating diagnostic imaging centers and desires to acquire USI; and
WHEREAS, Stockholder currently owns 100% of the outstanding capital
stock of USI, consisting of 5,615 shares (the "Shares") of Common Stock, $01 par
value (the "USI Stock");
WHEREAS, in furtherance of the proposed transaction, it is proposed
that USI merge with and into Acquisition (the "Merger"), upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Board of Directors of each of USDL, USI and Acquisition
have determined that it is in the best interests of their respective
stockholders for USI to merge into Acquisition upon the terms and subject to the
conditions set forth herein (the "Merger"); and
WHEREAS, each of the parties hereto have approved the Merger upon the
terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto do hereby agree as follows:
ARTICLE I
THE MERGER
1.01 PARTIES TO THE MERGER. The names of the corporations that are
parties to the Merger, their forms, and the jurisdiction in which they are
incorporated are as follows:
NAME OF ENTITY FORM OF ENTITY STATE
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U.S. Imaging, Inc. Corporation Texas
U.S. I. Acquisition, Inc. Corporation Texas
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1.02 SURVIVING CORPORATION. Upon the terms and subject to the
conditions hereof, and in accordance with the provisions of Section 5.01 of the
Texas Business Corporation Act (the "TBCA"), USI shall be merged with and into
Acquisition as soon as practicable following the satisfaction or waiver of the
conditions set forth in Articles V and VI. Following the Merger, Acquisition
shall continue as the surviving corporation (the "Surviving Corporation") under
the name U.S. Imaging Inc. and shall continue its corporate existence under the
laws of the State of Texas. At the Effective Date (as defined in Section 1.05)
the separate existence of USI shall cease. The Surviving Corporation shall have
all the rights, privileges, immunities and franchises of each of USI and the
Surviving Corporation; and all property, real, personal and mixed, and all
debts, liability and duties, and all other choses in action, and all and every
other interest, of or belonging to or due to USI shall be taken and deemed to be
vested in the Surviving Corporation without further act or deed. All employees
and agents of USI immediately prior to the Effective Date shall be employees and
agents of the Surviving Corporation after the Effective Date.
1.03 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Acquisition as in effect immediately prior to the Effective Date, shall be the
Certificate of Incorporation of the Surviving Corporation immediately after the
Effective Date except for the change of the name to U.S. Imaging, Inc. until
thereafter amended as provided by law.
1.04 BY-LAWS. The By-Laws of Acquisition as in effect immediately prior
to the Effective Date shall be the By-Laws of the Surviving Corporation
immediately after the Effective Date until thereafter amended as provided by
law.
1.05 DIRECTORS AND OFFICERS. The directors and officers of the
Surviving Corporation immediately after the Effective Date shall be: L.E.
Richey, M.D. President and Director; Jeffrey A. Goffman, Vice President, Chief
Financial Officer and Director; and Michael D. Karsch, Vice President, Director
and Secretary, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation.
1.06 PLACE AND TIME. The closing of the Merger (the "Closing") shall
take place on June 4, 1996 at 10:00 A.M, or at such other date and time as the
parties may agree in writing. The Surviving Corporation and Acquisition shall
cause a Certificate of Merger to be filed in accordance with the provisions of
Section 5.04 of the TBCA, and take any and all other lawful actions and do any
and all other lawful things necessary to cause the Merger to become effective.
The Merger shall become effective upon the acceptance for filing by the
Secretary of State of Texas of the Certificate of Merger. The date and time when
the Merger shall become effective is herein referred to as the "Effective Date."
The Closing will be deemed to have occurred for accounting and other purposes at
the close of business on January 1, 1996.
1.07 CONVERSION OF USI COMMON STOCK. (a) At the Effective Date, all
shares of USI Stock held by Stockholder issued and outstanding immediately prior
to the Effective Date, shall by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and represent the right to
receive 1,671,000 shares of USDL Common Stock and $7,000,000 of cash. The USDL
Common Stock and cash issued pursuant to this Section 1.06 is herein referred to
as the "Merger Consideration."
(b) Stockholder shall be required to surrender the certificate or
certificates which immediately prior to the Effective Date represented USI Stock
to the Surviving Corporation for
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cancellation and receive in exchange therefor the Merger Consideration. Until
the Stockholder has surrendered such certificate, certificates representing USI
Stock shall represent soley the right of such Stockholder to receive the Merger
Consideration.
1.08 TAKING OF NECESSARY ACTION; FURTHER ACTION. The Surviving
Corporation, USDL and the Stockholder, respectively, shall take all such action
as may be necessary or appropriate in order to effectuate the Merger as promptly
as practicable, subject to the terms of this Agreement. If, at any time after
the Effective Date, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, properties, rights, privileges,
powers and franchises of USI, the officers and directors of the Surviving
Corporation and USDL are fully authorized in the name of their corporation or
otherwise to take, and shall take, all such action.
1.09 ESCROW OF USDL COMMON STOCK. Of the Merger Consideration, 671,000
shares of USDL Common Stock shall be held in escrow and may be released if
certain earnings targets are met, as described in the escrow agreement in the
form attached hereto as Exhibit "B" (the "Escrow Agreement").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF USI AND STOCKHOLDERS
Each of USI and the Stockholder, hereby represents, covenants and
warrants to USDL as follows:
2.01. ORGANIZATION; GOOD STANDING. USI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
has full corporate power and authority to carry on its business as it is now
being conducted and to own the properties and assets it now owns. The copies of
the charter documents of USI attached hereto as Schedule 2.01 are complete and
correct copies of such instruments as presently in effect.
2.02. CAPITALIZATION; SUBSIDIARIES. (a) The authorized capital stock of
USI consists of 100,000 shares of common stock, $.01 par value, of which 5,615
shares are outstanding. All issued and outstanding shares of capital stock of
USI are duly and validly authorized, issued, fully paid and nonassessable. There
are no outstanding (a) securities convertible into or exchangeable for USI's
capital stock; (b) options, warrants or other rights to purchase or subscribe to
capital stock of USI or securities convertible into or exchangeable for capital
stock of USI; or (c) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any capital stock of the
USI, any such convertible or exchangeable securities or any such options,
warrants or rights. The Stockholder owns the USI Stock free and clear of all
liens, security interests and encumbrances and upon delivery of the certificates
in accordance with this agreement, USDL will receive good and marketable title
to the USI Stock, free and clear of all security interests, liens and
encumbrances.
(b) USI does not own any capital stock or other equity securities of
any corporation, partnership, or other entity or any rights to acquire any
equity or ownership interest in any business other than the companies listed on
Schedule 2.02 (the "Subsidiaries"). All references herein to USI shall also
refer to the Subsidiaries.
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2.03. AUTHORIZATION, ETC. USI has full corporate power and authority,
and Stockholder has full power and authority, to enter into this Agreement and
to carry out the transactions contemplated hereby. USI has taken all action
required by law, its charter documents, or otherwise to be taken by it to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and this Agreement is a valid and binding
agreement of USI and Stockholder enforceable in accordance with its terms.
2.04. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provision of the charter documents of USI, or be in conflict with,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any security interest, lien or other encumbrance upon any property
or assets of USI or Stockholder under, any agreement or commitment to which USI
or Stockholder are a party or by which USI or Stockholder are bound, or to which
the property of USI or Stockholder is subject, or to the best knowledge of
stockholder, violate any statute or law of any judgment, decree, order,
regulation or rule of any court or governmental authority.
2.05. FINANCIAL STATEMENTS. USI has heretofore delivered to USDL
unaudited financial statements as of and for the years ended December 31, 1994
and 1995 as of and for the four months ended April 30, 1996 (the "Financial
Statements"). Such Financial Statements fairly present the assets, liabilities,
financial condition and results of operations of the USI as at the respective
dates thereof, all in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, subject to normal year-end
and/or audit adjustments.
2.06. NO UNDISCLOSED LIABILITIES; ETC. To the best knowledge of
Stockholder, USI has no liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which were not fully reflected or reserved
against in the Financial Statements, except for liabilities and obligations
incurred in the ordinary course of business and consistent with past practice
since the date thereof; and the reserves reflected in the Financial Statements
are adequate, appropriate and reasonable.
2.07. ACCOUNTS RECEIVABLE. All accounts receivable of USI, whether
reflected in the Financial Statements or otherwise, represent revenues actually
made in the ordinary course of business, and are current and collectible net of
any reserves shown on the Financial Statements (which reserves are adequate and
were calculated consistent with part practice).
2.08. ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
in Schedule 2.08, since the date of the Financial Statements, USI has not taken
or agreed to take any of the following actions:
(a) Suffered any material adverse change in its working capital,
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects;
(b) Incurred any liabilities or obligations (absolute, accrued,
contingent or otherwise) except non-material items incurred in the ordinary
course of business and consistent with past practice, none of which exceeds
$10,000 (counting obligations or liabilities arising from one
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transaction or a series of similar transactions, and all periodic installments
or payments under any lease or other agreement providing for periodic
installments or payments, as a single obligation or liability), or increased, or
experienced any change in any assumptions underlying or methods of calculating,
any bad debt, contingency or other reserves;
(c) Paid, discharged or satisfied any claim, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice or liabilities and obligations reflected or reserved against in the
Financial Statements or incurred in the ordinary course of business and
consistent with past practice since the date of the balance sheet included in
the Financial Statements;
(d) Permitted or allowed any of its property or assets (real, personal
or mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, except for
liens for current taxes not yet due;
(e) Become aware of any fact or event which materially adversely
affects or may in the future materially adversely affect the financial
condition, results of operations, business, properties, assets, liabilities, or
future prospects of USI;
(f) Cancelled any debts, waived any claims or rights or substantial
value or accepted a purchase order, quotation, arrangement or understanding for
future sale of services of USI which will not result in a profit to USI;
(g) Sold, transferred, or otherwise disposed of any of its properties
or assets (real, personal or mixed, tangible or intangible), except in the
ordinary course of business and consistent with past practice;
(h) Granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employee, and no such increase is
customary on a periodic basis or required by agreement or understanding;
(i) Declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any capital stock or other securities of USI;
(j) Made any change in any method of accounting or accounting practice;
or
(k) Paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of its
officers or directors or any affiliate or associate of any of its officers or
directors.
2.09. LITIGATION. Except as set forth in Schedule 2.09, there is no
pending or threatened action, suit, inquiry, proceeding or investigation by or
before any court or governmental or other regulatory or administrative agency or
commission pending or threatened against or involving USI or Stockholder, or
which questions or challenges the validity of this Agreement or any action taken
or to be taken by USI or Stockholder pursuant to this Agreement or in connection
with the
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transactions contemplated hereby; nor is there any valid basis for any such
action, proceeding or investigation. To the best knowledge of USI and
Stockholder, USI is not in default under or in violation of, nor is there any
valid basis for any claim of default under or violation of, any contract,
commitment or restriction to which it is a party or by which it is bound. USI is
not in violation of, or in default with respect to, any law, rule, regulations,
order, judgment, or decree; nor is USI required to take any action in order to
avoid such violation or default. USI is not subject to any judgment, order or
decree entered in any lawsuit or proceeding which may have an adverse effect on
its business practices or on its ability to acquire any property or conduct its
business in any area.
2.10. TITLE TO PROPERTIES; ENCUMBRANCES. USI has good, valid and
marketable title to all the properties and assets which it purports to own
(real, personal and mixed, tangible and intangible), (except such properties and
assets as are held pursuant to leases or licenses described in Schedule 2.10)
free and clear of all liens, mortgages, security interests, pledges, charges and
encumbrances ("Encumbrances")(except as may be described in such Schedule 2.10).
2.11. CONTRACTS AND COMMITMENTS. Schedule 2.11 contains a true,
complete and accurate list of all contracts, agreements instruments, leases,
licenses, arrangements, or understandings (whether written or oral) to which USI
is a party or by which any of its assets or properties are bound. USI has
furnished to USDL (a) true and correct copies of all contracts, agreements and
instruments referred to in Schedule 2.11; (b) true and correct copies of all
leases and licenses referred to in Schedule 2.10; and (c) true and correct
written descriptions of all supply, distribution, agency financing, or other
arrangements or understandings referred in Schedule 2.11. All contracts,
agreements, plans, leases, policies and licenses referred to in Schedule 2.11
are valid and in full force and effect, and true copies thereof have been
heretofore made available to USDL. Except as set forth in such Schedule 2.11:
(a) USI has no agreements, contracts, commitments or restrictions which
are material to its business, operations or prospects or which require the
making of any charitable contribution;
(b) No purchase contracts or commitments of USI continue for a period
of more than 12 months or are in excess of the normal, ordinary and usual
requirements of business or at any excessive price;
(c) USI has no outstanding contracts with officers, employees, agents,
consultants, advisors, salesmen, sales representatives, distributors or dealers
that are not cancelable by it on notice of not longer than 30 days and without
liability, penalty or premium or any agreement or arrangement providing for the
payment of any bonus or commission based on sales or earnings;
(d) USI has no employment agreement, or any other agreement that
contains any severance or termination pay liabilities or obligations;
(e) USI has no collective bargaining or union contracts or agreements;
(f) USI is not in default, nor is there any basis for any valid claim
of default, under any contract made or obligation owed by it;
(g) USI has no debt obligation for borrowed money, including guarantees
of or agreements to acquire any such debt obligation of others;
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(h) USI have no outstanding loan to any person; and
(i) USI has no power of attorney outstanding or any obligations or
liabilities (whether absolute, accrued, contingent or otherwise), as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise in respect to the
obligation of any person, corporation, partnership, joint venture, association,
organization or other entity.
2.12. FACILITIES. To the knowledge of Stockholder, the facilities and
equipment of USI are structurally sound with no defects and are in good
operating conditions and repair and are adequate for the uses to which they are
being put; and none of such facility or equipment are in need of maintenance and
repairs which are not material in nature or cost. USI has not received any
notification that it is in violation of any applicable building, zoning,
anti-pollution, health or other law, ordinance of regulation in respect of its
plants or structures of their operations and no such violation exists. There are
no laws, statutes or ordinances, or building or use restrictions applicable to
the building, structures and appurtenances owned or leased by USI which might
prohibit or impair the uses presently being made thereof.
2.13. LEASES. Schedule 2.13 contains an accurate and complete list of
the terms of all leases pursuant to which USI leases real or personal property.
All such leases are valid, binding and enforceable in accordance with their
terms, and are in full force and effect; there are no existing defaults by USI
thereunder; no event of default has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a default thereunder; and all lessors under such leases have
consented (where such consent is necessary) to the consummation of the
transactions contemplated by this Agreement without requiring modification in
the rights or obligations of the lessee under such leases. Executed counterpart
copies of all consents referred to in the preceding sentence are being delivered
to USDL simultaneously with the execution thereof.
2.14. TAXES. USI has delivered to USDL true, complete and correct
copies of, and Schedule 2.14 lists, all of the tax returns filed by USI since
January 1, 1993 (the "Tax Returns"). USI has duly filed all tax reports and
returns required to be filed by it and has duly paid all taxes and other charges
due or claimed to be due from it by federal, state, local or foreign taxing
authorities (including, without limitation, those due in respect of the
properties, income, franchises, licenses, sales or payrolls of any of them); the
reserves for taxes reflected in the Financial Statements are adequate; and there
are no tax liens upon any property or assets of USI except liens for current
taxes not yet due. No state of facts exists or has existed which would
constitute ground for the assessment of any tax liability by the Internal
Revenue Service. All Tax Returns filed by USI are true, correct and complete.
All taxes that USI is or was required by law to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to the
proper governmental body or other person. There is no claim, audit, action,
suit, proceeding or investigation with respect to taxes due or claimed to be due
from USI or any Tax Return filed or required to be filed by USI pending or
threatened against or with respect to USI.
2.15. INSURANCE. Schedule 2.15 contains an accurate and complete list
of all material policies of fire, liability (including malpractice), workmen's
compensation and other forms of insurance owned or held by USI. All such
policies are in full force and effect, all premiums with respect thereto
covering all periods up to and including the Closing Date have been paid, and no
notice of cancellation or termination has been received with respect to any such
policy. Such
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policies are sufficient for compliance with all requirements of law and all
agreements to which USI is a party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage for the business, assets and
operations of USI; will, except as set forth in Schedule 2.15, remain in full
force and effect through the respective dates set forth in Schedule 2.15 without
the payment of additional premiums; and will not in any way be affected by or
terminate or lapse by reason of, the transactions contemplated by this
Agreement. Schedule 2.15 identifies all risks which USI has designated as being
self insured. USI has not been refused any insurance with respect to its assets
or operations, nor has its coverage been limited, by any insurance carrier to
which it has applied for any such insurance or with which it has carried
insurance during the last five years.
2.16. LABOR DIFFICULTIES. (a) USI is in compliance with all applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice; (b) there is no unfair labor practice complaint against USI pending
before the National Labor Relations Board; (c) there is no labor strike,
dispute, slowdown or stoppage actually pending or threatened against or
affecting USI; (d) no representation question exists respecting the employees of
USI; (e) no grievance or any arbitration proceeding arising out of or under
collective bargaining agreements is pending and no claim therefor exists; and
(f) USI has never experienced any work stoppage or other labor difficulty.
2.17. EMPLOYEE BENEFIT PLANS. Schedule 2.17 sets forth a complete and
accurate list of all of its current or former employees are covered by, bonus,
deferred compensation, pension, profit-sharing, retirement, insurance, stock
purchase, stock option or any other fringe benefit plans, arrangement or
practice, including standard health insurance, and all other employee benefit
plans, as defined in section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), whether formal or informal (collectively, the
"Plans"). Schedule 2.17 contains an accurate and complete deUSIiption of, and
sets forth the annual amount payable pursuant to, each of those Plans. USI has
performed and complied with all of its obligations under or with respect to such
Plans and such Plans have operated in accordance with their terms. USI has no
commitment, whether formal or informal and whether legally binding or not, to
create any additional Plan.
2.18. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES AND OTHERS. No
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority is required in connection with
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby. No consent of any other person is
necessary to the consummation of the transactions contemplated hereby.
2.19. COMPLIANCE WITH LAW. The operations of USI have been conducted in
accordance with all applicable laws, regulations and other requirements of all
national governmental authorities, and of all states, municipalities and other
political subdivisions and agencies thereof, having jurisdiction over USI,
including, without limitation, all such laws, regulations and requirements
relating to consumer protection, equal opportunity, health, occupational safety,
pension and securities matters. USI has not received any notification of any
asserted present or past failure by USI to comply with such laws, rules or
regulations.
2.20. ENVIRONMENTAL PROTECTION. To the best knowledge of Stockholder,
USI has obtained all permits, licenses and other authorizations which are
required under federal, state and local laws relating to pollution or protection
of the environment, including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, or hazardous or toxic
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materials or wastes into ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants or
hazardous or toxic materials or wastes. USI is in full compliance with all terms
and conditions of the required permits, licenses and authorizations, and is also
in full compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in those laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder. USI is not aware of, nor has USI received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or prevent
continued compliance, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, suit, proceeding,
hearing or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or waste.
2.21. BROKERS AND FINDERS. Neither Stockholder nor USI nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement.
2.22. PERSONNEL. Schedule 2.22 sets forth a true and complete list of
the names and current salaries of all salaried employees and the wage rates for
non-salaried and non-executive salaried employees of USI by classification.
2.23. MALPRACTICE LIABILITY. There is no action, suit, inquiry,
proceeding or investigation by or before any court or governmental or other
regulatory or administrative agency or commission pending or threatened against
or involving USI relating to any service performed by USI or any of its
employees and alleged to have resulted in any medical malpractice, nor is there
any valid basis for any such action, proceeding or investigation.
2.24 REFERRALS. USI has previously provided to USDL a list of the fifty
(50) largest referral sources since January 1, 1995. Since that date, there has
been no material change in the pattern of referrals from USI's twenty-five (25)
largest referral sources, and to its knowledge, no referral source has
established a competing diagnostic imaging facility since that date.
2.25. DISCLOSURE. No representations or warranties made by USI in this
Agreement and no statement contained in any document (including, without
limitation, the Financial Statements and the Schedules), certificate, or other
writing furnished or to be furnished by USI to USDL or any of its
representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF USDL
USDL represents and warrants to USI and Stockholders as follows:
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3.01. CORPORATE ORGANIZATION; ETC. USDL and Acquisition is each a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has the power and authority to carry on
its business as now being conducted and to own the properties and assets it now
owns.
3.02. AUTHORIZATION, ETC. USDL has full corporate power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. USDL has taken all action required by law, its Certificate of
Incorporation and By-Laws or otherwise to authorize the execution and delivery
of this Agreement and the transactions contemplated hereby, and this Agreement
is a valid and binding agreement of USDL and Acquisition enforceable in
accordance with its terms. The USDL Common Stock has been duly authorized, and
when issued in accordance with this agreement, will be validly issued, fully
paid and nonassessable.
3.03. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provisions of the Certificate of Incorporation or By-Laws of USDL,
or violate, or be in conflict with, or constitute a default under, or cause the
acceleration of the maturity of any debt or obligation pursuant to, any
agreement or commitment to which USDL is a party or by which USDL is bound, or
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or governmental authority.
3.04. FINANCIAL STATEMENTS. USDL has delivered to Seller copies of its
Annual Report on Form 10-KSB for the year ended December 31, 1995 and its
Quarterly Report on Form 10-QSB for the three months ended March 31, 1996 (the
"Reports"). The Reports did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements in such Reports, together with
the notes thereto, present fairly the financial position of USDL as of the
respective dates indicated and the results of operations, changes in
stockholders' equity (to the extent included in the Reports) and statements of
cash flow of USDL for the respective periods indicated in the Reports and such
financial statements have been prepared in conformity with GAAP applied on a
consistent basis.
3.05 ABSENCE OF MATERIAL CHANGE. Subsequent to March 31, 1996, except
as disclosed in the Reports, USDL has not incurred any liabilities or
obligations, direct or contingent, not in the ordinary course of business, or
entered into any transaction not in the ordinary course of business, which is
material to the business of USDL, and there has not been any incurrence of
short-term or long-term debt by USDL or any material adverse change in its
condition (financial or other), net worth, results of operations, business or
properties.
3.06 LICENSES AND PERMITS. USDL has sufficient licenses, permits and
other governmental authorizations as are required for the conduct of its
business or the ownership of its properties and is in all material respects
complying therewith except where the failure to obtain or comply with such
permits would not have a material adversely affect the financial condition,
results of operations, business or properties of USDL.
3.07. LITIGATION. There is no pending or threatened action, suit,
inquiry, proceeding or investigation by or before any court or governmental or
other regulatory or administrative agency or
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commission pending or threatened against or involving USDL or USDL, or which
questions or challenges the validity of this Agreement or any action taken or to
be taken by USDL or USDL pursuant to this Agreement or in connection with the
transactions contemplated hereby; nor is there any valid basis for any such
action, proceeding or investigation.
3.08 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restrictin of any government, government agency or court
to which USDL is subject or any provision of its certificate of incorporation or
bylaws.
ARTICLE IV
COVENANTS OF USI AND STOCKHOLDER
USI and Stockholder hereby covenant and agree with USDL:
4.01. CONSENTS. USI will obtain, prior to the Closing, all consents
necessary, in the opinion of USDL's counsel, to the consummation of the
transactions contemplated hereby, including, without limitation, (i) the consent
of each person holding a mortgage or lien on real property or personal property,
owned or leased by USI, to the Merger; (ii) the consent of each lessor of real
or personal property leased by USI to the assignment of the lessee's interest
under the lease of such property to USDL; and (iii) use its best efforts to
assist USDL in obtaining all necessary approvals from any governmental agencies
or departments as may be necessary or desirable in connection with the Merger.
All such consents will be in writing and executed counterparts thereof will be
delivered to USDL prior to the Closing.
4.02. SUPPLEMENTS TO SCHEDULES. From time to time prior to the Closing,
Stockholder and USI will promptly supplement or amend any Schedule hereto with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
any such Schedule. No supplement or amendment of any such Schedule made pursuant
to this Section shall be deemed to cure any breach of any representation of or
warranty made in this Agreement unless USDL specifically agrees thereto in
writing. If USDL expressly agrees in writing to any supplement or amendment to
any such Schedule, then, the sole existence of any such express amendment or
supplement will not be a basis for USDL's refusing to close the transaction
contemplated by this Agreement.
4.03. OTHER TRANSACTIONS. Neither USI nor Stockholder shall enter into
any discussions concerning, or approve or recommend any merger, consolidation,
disposition of all or substantially all of its business, properties or assets
(other than pursuant to this Agreement), acquisition or other business
combination, or proposal therefor, or furnish or cause to be furnished any
information concerning the business, properties or assets of USI to any party in
connection with any USI transaction involving the acquisition of USI or all or
any substantial part of its assets by any person other than USDL.
4.04. REMEDIES. That in the event of the breach or threatened breach by
USI or Stockholder of any of the terms and conditions of this Agreement, then
USDL shall be entitled, if it so elects, to institute and prosecute any
proceedings in any court of competent jurisdiction either in
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law or equity, for such relief as it deems appropriate including, without
limiting the generality of the foregoing proceedings, to obtain damages for any
breach of this Agreement or to enforce the specific performance thereof by USI
or Stockholder or to enjoin them from performing services for any other person,
firm or corporation; in any such action, USDL is successful in whole or in part,
USDL shall further, as an element of USDL's damages, be liable for the
attorney's fees of USDL in the prosecution of such action or proceeding.
ARTICLE V
CONDITIONS TO USI'S AND STOCKHOLDER'S OBLIGATIONS
Each and every obligation of USI and Stockholder under this Agreement
to be performed on or before the Closing shall be subject to the satisfaction,
on or before the Closing, of each of the following conditions, unless waived in
writing by USI and Stockholder:
5.01. REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of USDL contained herein shall be in all material respects true and
accurate as of the date when made and at and as of the Closing as though such
representations and warranties were made at and as of such date, except for
changes expressly permitted or contemplated by the terms of this Agreement.
5.02. PERFORMANCE. USDL shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing.
5.03. NO GOVERNMENTAL PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
5.04 ITEMS TO BE DELIVERED AT CLOSING BY USDL. At the Closing, USDL
shall deliver to Stockholder the Payment and the USDL Common Stock.
5.05. OPINION OF USDL'S COUNSEL. USDL shall have delivered to USI and
Stockholder an opinion of Bachner, Tally, Polevoy & Misher LLP, counsel to USDL,
dated as of the Closing Date, in form and substance reasonably satisfactory to
USI, to the effect that:
(a) USDL is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
(b) USDL has the power and authority to carry on its business as it is
now being conducted and to own the properties and assets it now owns, and
USDLhas full power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby;
(c) all action by USDL required in order to authorize the transactions
contemplated hereby has been duly and validly taken; and this Agreement has been
duly executed and delivered by USDL; and
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(d) USDL Common Stock has been duly authorized, and when issued in
accordance with this agreement, will be validly issued, fully paid and
nonassessable.
5.06 RADIOLOGY AGREEMENTS. USDL shall have entered into ten year
exclusive radiology and practice management agreement with U.S. Imaging
Professional Associates PLLC, d/b/a as L.E. Richey & Associates in the form of
Exhibit "C" hereto.
ARTICLE VI
CONDITIONS TO USDL'S OBLIGATIONS
Each and every obligation of USDL under this Agreement to be performed
on or before the Closing shall be subject to the satisfaction, on or before the
Closing, of each of the following conditions, unless waived in writing by USDL:
6.01. REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties contained in Article II hereof, the Schedules and in all certificates
and other documents delivered and to be delivered by USI and Stockholder
pursuant hereto or in connection with the transactions contemplated hereby shall
be true, complete and accurate as of the date when made and at and as of the
Closing Date as though such representations and warranties were made at and as
of such date, except for changes expressly permitted or contemplated by the
terms of this Agreement.
6.02. PERFORMANCE. USI and Stockholder shall have performed and
complied with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by them on or prior to the Closing.
6.03. INVESTIGATIONS; ETC. No investigation of USI and Stockholder by
USDL, nor the Schedules or any supplement thereto nor any other document
delivered to USDL as contemplated by this Agreement, shall have revealed any
facts or circumstances which, in the sole and exclusive judgment of USDL,
reflect in a material adverse way on the financial condition, assets,
liabilities (absolute, accrued, contingent or otherwise), reserves, business,
operations or prospects of USI.
6.04. APPROVALS. All consents from third parties and government
agencies required to consummate the transactions contemplated hereby shall have
been obtained.
6.05. NO GOVERNMENT PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
6.06. NO INJUNCTION. On the Closing Date there shall be no injunction,
writ, preliminary restraining order or any order of any nature issued by a court
of competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as so provided or imposing any conditions on the
consummation of the transactions contemplated hereby which USDL deems
unacceptable in its sole discretion.
6.07. MATERIAL CHANGE. From the date of the Financial Statements to the
Closing Date, USI shall not have suffered any adverse change (whether or not
such change is referred to or
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described in any supplement to the Schedules) in its business, prospects,
financial condition, working capital, assets, liabilities (absolute, accrued,
contingent or otherwise), reserves or operations that would result in a twenty
percent (20.0%) reduction in its gross revenues.
6.08. OPINION OF USI COUNSEL. USI and Stockholder shall have delivered
to USDL an opinion of Harley & Peck, counsel to USI and Stockholder, dated as of
the Closing Date, in form and substance satisfactory to USDL, to the effect
that:
(a) USI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas; USI has the power and authority
to carry on its business as it is now being conducted and to own the properties
and assets it now owns, and USI each has corporate power, and Stockholder, has
full power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby;
(b) the authorized capital stock of USI consists of 100,000 shares of
common stock, of which 5,615 shares are outstanding. All issued and outstanding
shares of capital stock of USI are duly and validly authorized, issued, fully
paid and nonassessable; and there are no outstanding options, warrants or other
rights to purchase or acquire any capital stock of USI;
(c) Stockholder has complete and unrestricted power to sell, convey,
assign, transfer and deliver to USDL the USI Stock; the delivery of certificates
representing the USI Stock to USDL and the performance by USI, Stockholder and
USDL under this Agreement will result in USDL being the record and beneficial
owner of the USI Stock free and clear of all security interests, liens and
encumbrances;
(d) all action by USI required in order to authorize the transactions
contemplated hereby has been duly and validly taken; and this Agreement has been
duly executed and delivered by USI and Stockholder and is the valid and binding
obligation of USI and Stockholder enforceable in accordance with its terms
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought;
(e) neither the execution and delivery of this Agreement by USI and
Stockholder nor the consummation of the transactions contemplated hereby will
violate the charter documents of USI, or will violate, conflict with, or
constitute a default under, or cause the acceleration of maturity of any debt or
obligation pursuant to, or result in the creation or imposition of any security
interest, lien or other encumbrance upon any property or assets of USI under,
any contract, commitment, agreement, trust, understanding, arrangement or
restriction of any kind to which USI is a party or by which USI is bound or to
the best of such counsel's knowledge, violate any statute or law, or any
judgment, decree, order, regulation or rule of any court or governmental
authority;
(f) to such counsel's knowledge, USI is not engaged in or threatened
with any legal action or other proceeding or has incurred or been charged with
or is under investigation with respect to any violation of any federal, state or
local law or administrative regulation which if adversely determined might
adversely affect or impair the condition, financial or otherwise, of USI; and
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(g) no consent of any governmental body, nor of any other person, is
required for the consummation by USI of the transactions contemplated hereby,
except consents the need for which is disclosed in any of the Schedules attached
hereto, all of which have been duly and validly obtained.
6.09. MISCELLANEOUS CLOSING DOCUMENTS. At the Closing, USI and
Stockholder shall deliver to USDL:
(i) Certificates representing the USI Stock;
(ii) Certificate of USI and Stockholder that the representations and
warranties contained in Article 2 this Agreement are true and correct in all
material respects at and as of the Closing Date, except for representations and
warranties specifically relating to a time or times other than the Closing Date,
which shall be true and correct in all material respects at such time or times;
and
(iii) Good Standing certificate including tax status dated within ten
days prior to the Closing Date from the Secretary of State of Texas for USI.
ARTICLE VII
CONDUCT OF THE COMPANY'S BUSINESS PENDING THE CLOSING
Pending the Closing and except as otherwise expressly consented to or
approved by USDL in writing:
7.01. CONDUCT OF BUSINESS. USI will carry on its business diligently
and substantially in the same manner as heretofore conducted, so that at the
Closing no representation or warranty of USI will be inaccurate, and no covenant
or agreement of USI will be breached. Except as otherwise required by USDL in
writing, until the Closing, USI will use its best efforts to preserve its
business, to keep available the services of its present personnel, to preserve
in full force and effect the contracts, agreements, instruments, leases,
licenses, arrangements, and understandings of USI, and to preserve the good will
of their suppliers, customers, and others having business relations with any of
them. Until the Closing, USI will conduct its business and operations in all
respects only in the ordinary course.
7.02. AMENDMENTS. No change or amendment shall be made in the charter
documents of USI.
7.03. CAPITAL CHANGES; DIVIDENDS REDEMPTIONS. USI will not issue or
sell any additional shares of its capital stock or other securities, acquire
directly or indirectly, by redemption or otherwise, any such shares or split-up
any such capital stock, declare or pay any dividends thereon in cash, securities
or other property or make any other distribution with respect thereto, or grant
or enter into any options, warrants, calls or commitments of any kind with
respect thereto.
7.04. SUBSIDIARIES. USI will not organize any new subsidiary, acquire
any capital stock or other equity securities of any corporation, partnership, or
other entity or acquire any equity or ownership interest in any business.
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7.05. ACCESS TO INFORMATION. USI shall give to USDL's officers,
employees, counsel, accountants and other representatives free and full access
to and the right to inspect, during normal business hours, all of the premises,
properties, assets, records, contracts and other documents relating to its
business and shall permit them to consult with the officers, employees,
accountants, counsel and agents of USI for the purpose of making such
investigation of USI as USDL shall desire to make, provided that such
investigation shall not unreasonably interfere with USI's business operations.
Furthermore, USI shall furnish to USDL all such documents and copies of
documents and records and information with respect to the affairs of the
Business and copies of any working papers relating thereto as USDL shall from
time to time reasonably request and shall permit USDL and its agents to make
such physical inventories and inspections of the Assets as USDL may request from
time to time.
7.06. CERTAIN CHANGES. USI will not:
(a) Borrow or agree to borrow any funds or incur, or assume or become
subject to, whether directly or by way of guarantee or otherwise, any obligation
or liability (absolute or contingent), except obligations and liabilities
incurred in the ordinary course of business and consistent with past practice;
(b) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of liabilities or obligations reflected or reserved against in the
Financial Statements or incurred in the ordinary course of business and
consistent with past practice since the date of the Financial Statements;
(c) Prepay any obligation having a fixed maturity of more than 90 days
from the date such obligation was issued or incurred;
(d) Permit or allow any of its property or assets (real, personal or
mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien or
encumbrance;
(e) Write down the value of any inventory or write off as uncollectible
any notes or accounts receivable;
(f) Cancel any debts or waive any claims or rights of substantial value
or sell, transfer, or otherwise dispose of any of its properties or assets,
except in the ordinary course of business and consistent with past practice;
(g) Grant any general increase in the compensation of its officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employees;
(h) Pay, loan or advance any amount to, or sell transfer or lease any
properties or assets to, or enter into any agreement or arrangement with,
Stockholder, officers or any affiliates;
(j) Agree, whether in writing or otherwise, to do any of the foregoing.
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7.07. CONTRACTS. No contract or commitment will be entered into, and no
purchase of raw material or supplies and no sale of assets will be made, by or
on behalf of USI, except (i) normal contracts or commitments for the purchase
of, and normal purchases of, inventory or supplies, made in the ordinary course
of business an consistent with past practice, and (ii) other contracts,
commitments, purchases or sales in the ordinary course of business and
consistent with past practice not in excess of $10,000 in the aggregate.
7.08. INSURANCE; PROPERTY. USI shall adequately insure all property,
real, personal and mixed, owned or leased by USI, against all ordinary and
insurable risks; and all such property shall be used, operated, maintained and
repaired in a careful and reasonably efficient manner.
7.09. NO DEFAULT. USI shall not do any act or omit to do any act, or
permit any action or omission to act, which will cause a breach of any material
contract or commitment of USI or which would cause the breach of any warranty
made hereunder.
7.10. COMPLIANCE WITH LAWS. USI shall duly comply with all laws
applicable to it and its properties, operations, business and employees.
7.11. MATERIAL DEVELOPMENTS. USI shall promptly notify USDL of the
occurrence of any and all events which have, or may have, a material effect upon
the business, or financial condition of USI.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.01. INVESTIGATIONS; SURVIVAL OF WARRANTIES. All representations,
warranties and agreements of USI, Stockholder and USDL contained herein or in
any certificates or other documents delivered prior to or at the Closing shall
survive the Closing and continue in full force and effect for a period of one
year thereafter (unless the damaged party knew or had reason to know of any
misrepresentation or breach of warranty at the Effective Date).
ARTICLE IX
TERMINATION AND ABANDONMENT
9.01. METHODS OF TERMINATION. The transactions contemplated herein may
be terminated and/or abandoned at any time but not later than the Closing:
(a) By mutual and joint consent of USDL and the Stockholder; or
(b) By USDL, (A) at any time if the representations and warranties of
USI or Stockholder contained in Article III hereof were incorrect in any
material respect when made or at any time thereafter, or (B) upon written notice
to USI and Stockholder given at any time prior to the Closing Date if all of the
conditions precedent to the obligations of USDL set forth in this Agreement are
not fulfilled; or
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(c) By a majority of the Stockholder, (A) at any time if the
representations and warranties of USDL contained in this Agreement were
incorrect in any material respect when made or at any time thereafter, or (B)
upon written notice to USDL given at any time prior to the Closing Date if all
of the conditions precedent to the obligations of USI set forth in this
Agreement are not fulfilled.
9.02. PROCEDURE UPON TERMINATION. In the event of termination and
abandonment by USDL pursuant to Section 9.01 hereof, notice thereof shall
forthwith be given to the other party and the transactions contemplated by this
Agreement shall be terminated and/or abandoned, without further action by USDL
or Stockholder. If the transactions contemplated by this Agreement are
terminated and/or abandoned as provided herein:
(a) Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) All confidential information received by any party hereto with
respect to the business of any other party shall be treated in accordance with
Section 2.03 hereof; and
(c) No party hereto shall have any liability or further obligation to
any other party to this Agreement except as stated in subparagraphs (a), (b) and
(c) of this Section 9.02, PROVIDED, HOWEVER, that if such termination and/or
abandonment is a result of the failure of any condition set forth in Article VI
hereof, USDL shall be entitled to recover from Stockholder all out-of-pocket
costs which USDL has incurred (including reasonable attorney's fees and
expenses).
ARTICLE X
INDEMNIFICATION
10.01. INDEMNIFICATION BY STOCKHOLDER. In the event that the
transactions contemplated by this Agreement are consummated, Stockholder shall
indemnify USDL and each of its officers and directors and hold each of them
harmless from, against and in respect of and shall on demand reimburse such
persons for: (i) all its losses, liabilities, damages, costs and expenses
arising from any misrepresentation or breach of any representation, warranty,
covenant or agreement on the part of Stockholder or USI under this Agreement;
(ii) any and all actions, suits, claims, or legal, administrative, arbitration,
governmental or other proceedings or investigations against USDL that relate to
USI or their businesses in which the principal event giving rise thereto
occurred before the Closing Date or which result from or arise out of any action
or inaction before the Closing Date of Stockholder, USI or any employee, agent,
representative or subcontractor of USI; and (iii) any and all actions, suits,
proceedings, elections, demands, assessments, judgments, costs and expenses,
including without limitation, reasonable legal fees and expenses, incident to
any of the foregoing or incurred in investigating or attempting to avoid same or
to oppose the imposition thereof, or in enforcing this indemnity.
Notwithstanding the foregoing in the event that a court of competent
jurisdiction having final adjudicative authority and from which no appeal is
available shall determine that USDL is not entitled to indemnification then USDL
shall not be entitled to recover its legal fees with respect to such claim from
Stockholder.
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10.02. INDEMNIFICATION BY USDL. In the event that the transactions
contemplated by this Agreement are consummated, USDL shall indemnify Stockholder
and hold it harmless from, against and in respect of and shall on demand
reimburse Stockholder for: (i) all its losses, liabilities, damages, costs and
expenses arising from or in connection with any misrepresentation or breach of
any representation, warranty, covenant or agreement on the part of USDL under
this Agreement; (ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or investigations
against Stockholder that relate to USDL or the business in which the principal
event giving rise thereto occurred after the Closing Date or which result from
or arise out of any action or inaction after the Closing Date of USDL or any
officer, employee, agent, representative or subcontractor of USDL; and (iii) any
and all actions, suits, proceedings, elections, demands, assessments, judgments,
costs and expenses, including without limitation, reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid same or to oppose the imposition thereof, or in enforcing
this indemnity. Notwithstanding the foregoing in the event that a court of
competent jurisdiction having final adjudicative authority and from which no
appeal is available shall determine that Stockholder is not entitled to
indemnification then Stockholder shall not be entitled to recover its legal fees
with respect to such claim from USDL.
10.03. PROCEDURES FOR INDEMNIFICATION. Promptly after receipt by an
indemnified party under Section 10.01 or 10.02 of notice of the commencement of
any action for which indemnification may be available under Section 10.01 or
10.02 such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such section, give notice to the
indemnifying party of the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it may have to any
indemnified party except to the extent the indemnifying party demonstrates that
the defense of such action is prejudiced thereby. In case any such action shall
be brought against an indemnified party and it shall give notice to the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall elect, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
section for any fees of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party in connection with the defense
thereof, other than reasonable costs of investigation and costs and expenses of
legal counsel, if the indemnified party and the indemnifying party are both
parties to the action and the indemnified party has been advised by counsel that
there may be one or more defenses available to it and not available to the
indemnifying party. If an indemnifying party assumes the defense of such an
action, (a) no compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's consent (which shall not be
unreasonably withheld) unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any person and no effect on
any other claims that may be made against the indemnified party and (ii) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party and (b) the indemnifying party shall have no liability with
respect to any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld). If notice is given to an
indemnifying part of the commencement of any action and it does not, within ten
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense thereof, the
indemnifying party shall be bound by any determination made in such action or
any compromise or settlement thereof effected by the indemnified party.
Notwithstanding the foregoing, if an indemnified party determines in good faith
that there is a reasonable probability
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that an action may materially and adversely affect it or its affiliates other
than as a result of monetary damages, such indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise or
settle such action, but the indemnifying party shall have the right to
participate in such action and not be bound by any determination of an action so
defended or any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld).
10.04. SATISFACTION OF INDEMNIFICATION CLAIMS. All indemnification
obligations pursuant to Article X shall be paid within a reasonable period of
time after a claim for indemnification has been made and its validity finally
determined.
10.05 LIMITATION ON CLAIMS. All claims for indemnification under this
Article X must be brought within two (2) years of the Closing Date.
ARTICLE XI
RESTRICTIVE COVENANTS
In consideration of USDL's purchase of the USI Stock and USDL's
payment of the Purchase Price, a portion of which is allocated to the covenants
included in this Article XI in accordance with this Agreement, and such other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Stockholder (and its affiliates, including L.E.
Richey, M.D.) covenants and agrees with USDL as follows:
11.01. NON-COMPETITION. Stockholder agrees that for a period of ten
(10) years following the Closing Date, he will not, directly or indirectly,
become or remain interested in, associated with, employed by, an owner, officer,
director, partner, shareholder, employee, agent, advisor or consultant in or
indebted to (other than as a recipient of service provided by any person, firm,
corporation, association, entity or organization) any person, firm, corporation,
association, entity or organization (collectively "Organization") (other than
USDL or its affiliates), that is engaged in the operation of diagnostic imaging
facilities or any other business similar to that of the businesses of USDL
and/or any of USDL's affiliates, that is operating in any form, manner or
fashion, directly or indirectly, within a radius of fifty (50) miles from USI's
current facilities. Stockholder acknowledge that a violation of this covenant
will cause irreparable injury to USDL and its affiliates.
11.02. NONSOLICITATION OF CUSTOMERS OR CLIENTS. Notwithstanding any
other provisions hereof, Stockholder shall not, for a period of ten (10) years
following the Closing Date, at any time or in any manner, either directly or
indirectly, for her own behalf or for or on behalf of any Organization (other
than USDL or its affiliates), solicit or attempt to solicit any business similar
to the Businesses from any customers or clients of the USI and/or USDL (as of
the date of Closing). A "customer" or "client" shall mean any Organization with
which any of the foregoing have dealt or provided products or services to.
11.03. NONSOLICITATION OF EMPLOYEES. Notwithstanding any other
provision of this Agreement, each Stockholder shall not for a period of ten (10)
years following the Closing Date, either on his own behalf or for or on behalf
of any Organization (other than USDL or its affiliates),
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directly or indirectly, solicit, divert or otherwise encourage or attempt to
solicit, divert or otherwise encourage employees or agents of USI, USDL and/or
any of their affiliates to enter into any employment, consulting or advisory
arrangement or contract with or to perform any services for or on behalf of any
Organization (other than USDL and/or any of its affiliates), or to enter into
any kind of business, including without limitation any business similar to
either of the Businesses.
11.04. REASONABLENESS. Stockholder has carefully read and considered
the provisions of this Article XI and, having done so, agrees that the
restrictions set forth herein (including without limitation, the time period of
restriction and the geographical areas of restriction) are fair and reasonable
and are reasonably required for the protection of the interests of USDL and its
affiliates and to prevent irreparable harm to the foregoing.
11.05. INJUNCTIVE RELIEF. The parties agree that the covenants of
Stockholder herein are material parts of the consideration received by USDL for
entering into this Agreement and purchasing the USI Stock and that any breach of
this Article XI by any Stockholder will result in irreparable injury to USDL
and/or its affiliates. For that reason and because the actual damages that might
be sustained by USDL and/or its affiliates might be difficult, if not
impossible, to ascertain and may not be adequate to redress any injuries, USDL
and/or its affiliates shall, in addition to any and all other remedies provided
by law or otherwise, be entitled to an injunction to prevent a breach or
contemplated breach of any covenant of Stockholder contained in this Article XI.
11.06. SEVERABILITY. Each of the covenants in this Article XI is
independent and severable. Each such covenant shall remain in full force and
effect regardless of the enforceability of any other covenant herein, or of the
breach thereof by either party. If it shall be determined at any time by any
court of competent jurisdiction that any provision of this Article XI or any
portion thereof is unenforceable, or that any provision relating to the time
period or area of restriction exceeds the maximum time period or areas such
court deems reasonable, then such portions as shall have been determined to be
unreasonably restrictive or unenforceable or to exceed the maximum reasonable
time period or area of restriction shall thereupon be deemed to be so amended as
to make such restrictions reasonable in the determination of such court or to
become and thereafter be the maximum time period and/or areas which such court
deems reasonable and enforceable and the provision, as so amended, shall be
enforceable between the parties to the same extent as if such amendment had been
made prior to the date of any alleged breach of such provision.
ARTICLE XIII
OTHER AGREEMENTS
12.01 MEETINGS. L.E. Richey ("Richey") shall have the right to attend
all meetings of the Board of Directors of USDL in a nonvoting capacity. In
addition, Richey shall be elected to USDL's Medical Advisory Board promptly
after the Closing Date.
12.02 REGISTRATION RIGHTS. (a) Prior to the first anniverary of the
Closing Date, the Company shall use its best efforts to prepare and file with
the Securities and Exchange Commission (the "SEC") a registration statement
under the Securities Act covering USDL Common Stock issued pursuant to this
Agreement (the "Registrable Securities") and shall use its best efforts to cause
such registration statement to become effective.
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USDL shall be entitled to postpone the filing of any registration
statement pursuant to this Section 12.02 otherwise required to be prepared and
filed by it; (i) if the Chairman of the Company certifies to the holders
requesting such registration that the Company is engaged in, or plans to engage
within 60 days in, a registered public offering (including a registration
statement on Form S-4); or (ii) such other circumstances exist as shall, in the
reasonable judgment of the Company's Board of Directors, certified by the
President of the Company to the Stockholders requesting such registration, make
a public offering of the Company's securities impracticable (provided that the
Company may postpone the filing of a registration statement pursuant to this
paragraph (a) not more than once in any calendar year and for a period not to
exceed 60 days). In the event of such postponement, the Company shall be
required, upon the request of Stockholders initially seeking such registration,
to file the registration statement pursuant to this paragraph as soon as
practicable after the termination or consummation of any of the events set forth
above.
(b) For a period of two years commencing six months from the Closing
Date, USDL shall advise the Stockholder of the Registrable Securities by written
notice at least twenty (20) days prior to the filing of any new registration
statement under the Act covering securities of USDL and will during such period,
upon the request of the Stockholder, include in any such registration statement
such information as may be required to permit a public offering of the
Registrable Securities, provided however, if such registration statement relates
to an underwritten public offering, then the Registrable Securities may not be
included therein if in the good faith judgement of the managing underwriter, the
inclusion of the Registrable Securities would reduce the number of shares to be
offered by USDL or interfere with the successful marketing of the shares of
stock offered by USDL. Such Stockholder shall furnish information and
indemnification as set forth below, except that the maximum amount which may be
recovered from the Stockholder shall be limited to the amount of proceeds
received by the Stockholder from the sale of the Registrable Securities.
Notwithstanding the foregoing, USDL shall not be required to register any
Registrable Securities if such securities are eligible for sale pursuant to Rule
144(k) under the Act.
(c) The following provisions shall also be applicable to any
registration under Section 11.02:
(i) Following the effective date of such registration, USDL shall upon
the request of any owner of Registrable Securities forthwith supply such a
number of prospectuses meeting the requirements of the Act, as shall be
requested by such owner to permit Stockholder to make a public offering of all
Registrable Securities from time to time offered or sold to Stockholder,
provided that Stockholder shall from time to time furnish USDL with such
appropriate information (relating to the intentions of Stockholder) in
connection therewith as USDL shall request in writing. USDL shall also use its
reasonable best efforts to qualify the Registrable Securities for sale in such
states as Stockholder shall reasonably designate.
(ii) USDL shall bear the costs and expense of any registration of
securities initiated by it under this Section 11.02. Stockholder shall, however,
bear the fees of his own counsel and any underwriting discounts or commissions
applicable to the Registrable Securities sold by him pursuant thereto.
(iii) USDL shall indemnify and hold harmless Stockholder and each
underwriter, within the meaning of the Act, who may purchase from or sell for
Stockholder any Registrable Securities from and against any and all losses,
claims, damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under the
Act or any
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prospectus included therein required to be filed or furnished by reason of
paragraph (a) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or alleged untrue statement
or omission or alleged omission based upon information furnished or required to
be furnished in writing to USDL by such Stockholder or underwriter expressly for
use therein, which indemnification shall include each person, if any, who
controls any such underwriter within the meaning of such Act; PROVIDED, HOWEVER,
that USDL shall not be obliged so to indemnify the Stockholder or any such
underwriter or controlling person unless Stockholder or underwriter (if
applicable), shall at the same time indemnify USDL, its directors, each officer
signing the related registration statement and each person, if any, who controls
USDL within the meaning of such Act, from and against any and all losses,
claims, damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or any
prospectus required to be filed or furnished by reason of paragraph (a) or
caused by any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or alleged untrue statement or omission based upon information furnished in
writing to USDL by any such Stockholder or underwriter expressly for use
therein.
12.03 PUT RIGHT. If on the date that the Registration Statement filed
pursuant to Section 12.02(a) is declared effective by the SEC, the last sale
price for the USDL Common Stock on the Nasdaq National Market for the five (5)
preceeding trading days has not averaged at least $7.00 per share, then
Stockholder shall have the right to put up to 1,000,000 shares of USDL Common
Stock received in the Merger back to USDL for $7.00 per share in cash. Such
right must be exercised by Stockholder in writing within ten (10) business days
after USDL informs Stockholder in writing of the effectiveness of such
registration statement.
12.04 EXPENSE REIMBURSEMENT. Richey shall be paid $3,000 per month from
USDL for general expenses in addition to reimbursement for out-of-pocket
expenses.
12.05 VOTING PROXY. Stockholder hereby grants to Jeffrey A. Goffman,
Chairman of the Board of USDL, an irrevocable proxy to vote the shares of USDL
Common Stock owned by Stockholder in in the election of directors of USDL and in
any vote involving proposed changes of control, mergers and other similar
extraordinary transactions. Such proxy shall have a term of three years, but
shall automatically terminate upon the sale of such shares by Stockholder to an
unaffiliated third party.
ARTICLE XII
MISCELLANEOUS PROVISIONS
13.01. AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented by written agreement of
Stockholder and USDL at any time prior to the Effective Date with respect to any
of the terms contained herein.
13.02. WAIVER OF COMPLIANCE. Any failure of USI and Stockholder, on the
one hand, or USDL, on the other, to comply with any obligation, covenant,
agreement or condition herein may be expressly waived in writing by the Chairman
of the Board or President of USDL or the Stockholder, but such waiver or failure
to insist upon strict compliance with such obligation,
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covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
13.03. EXPENSES; TRANSFER TAXES, ETC. Whether or not the transactions
contemplated by this Agreement shall be consummated, Stockholder agrees that all
fees and expenses incurred by it in connection with this Agreement shall be
borne by them and USDL agrees, that all fees and expenses incurred by it in
connection with this Agreement shall be borne by it, including, without
limitation as to USI or USDL, all fees of counsel and accountants. Stockholder
agree that they will pay all transfer or other taxes which may be payable in
connection with the transactions contemplated by this Agreement.
13.04. NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or if mailed, certified or registered mail,
return receipt requested, with postage prepaid or if delivered to an overnight
courier that guarantees next-day delivery:
(a) If to Stockholder, to:
L.E. Richey, M.D.
14835 Southwest Freeway
Sugarland, Texas 77478
with a copy to:
Lewis Harley, Esq.
Harley & Peck
5100 Westheimer Road
Houston, Texas 77056
Fax: (713) 626-0412
or to such other person or address as or Stockholder shall furnish to USDL in
writing.
(b) If to USDL, to:
Jeffrey A. Goffman, Chairman
U.S. Diagnostic Labs Inc.
777 South Flagler Drive
West Tower Suite 1006
West Palm Beach, Florida 33401
Fax: (407) 833-8391
with a copy to:
Michael D. Karsch, Esq.
Bachner, Tally, Polevoy & Misher
380 Madison Avenue
New York, New York 10017
Fax: (212) 682-5729
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or to such other person or address as USDL shall furnish to USI in writing.
13.05. ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by USI or
Stockholder without the prior written consent of USDL.
13.06. PUBLICITY. Neither Stockholder, USI nor USDL shall make or
issue, or cause to be made or issued, any announcement or written statement
concerning this Agreement or the transactions contemplated hereby for
dissemination to the general public without the prior consent of the other
party. This provision shall not apply, however, to any announcement or written
statement required to be made by law or the regulations of any federal or state
governmental agency or any stock exchange, except that the party required to
make such announcement shall, whenever practicable, consult with the other party
concerning the timing and content of such announcement before such announcement
is made.
13.07. GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Texas, without regard to its conflicts of law doctrine.
13.08. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13.09. HEADINGS. The headings of the Sections and Articles of this
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
13.10. ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto; and the other documents and certificates delivered pursuant to
the terms hereof, set forth the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein, and supersede
all prior agreements, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto.
13.11. THIRD PARTIES. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or corporation other than the parties hereto
and their successors or assigns, any rights or remedies under or by reason of
this Agreement.
13.12. CONFIDENTIALITY. Each party hereto will hold and will cause its
consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all documents and information concerning
the other party furnished it by such other party or its representatives in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
the party to which it was furnished, or (ii) later lawfully acquired from other
sources by the party to which it was furnished), and each party will not release
or disclose such information to any other person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors in
connection with this
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Agreement. If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained except to the extent such
information comes into the public domain through no fault of the party required
to hold it in confidence, and such information shall not be used to the
detriment of, or in relation to any investment in, the other party and all such
documents (including copies thereof) shall be returned to the other party
immediately upon the written request of such other party. Each party shall be
deemed to have satisfied its obligation to hold confidential information
concerning or supplied by the other party if it exercises the same care as it
takes to preserve confidentiality for its own similar information.
13.13 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any federal, state
or local statute or law shall be deemed also the refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
13.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
13.15 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
U.S. DIAGNOSTIC LABS INC.
By: /s/ Jeffrey A. Goffman
----------------------------
Jeffrey A. Goffman, Chairman
U.S. IMAGING INC.
By: /s/ L.E.. Richey, M.D.
----------------------------
L.E. Richey, M.D., President
STOCKHOLDER
REESE GENERAL TRUST0
.
By: /s/ Lisa Brackett
----------------------------
Lisa Brackett, Trustee
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ESCROW AGREEMENT
AGREEMENT, dated as of June 4, 1996, by and among American Stock
Transfer & Trust Company ("Escrow Agent"), U.S. Diagnostic Labs Inc., a Delaware
corporation (the "Company") and the Reese General Trust (the "Stockholder").
WHEREAS, the Company and the Stockholder have entered into an Agreement
and Plan of Merger (the "Merger Agreement") dated as of June 4, 1996 pursuant to
which the Company will acquire U.S. Imaging, Inc. ("USI"); and
WHEREAS, in connection with the acquisition, the Stockholders have
agreed to deposit in escrow an aggregate of 671,000 shares of Common Stock, $.01
par value, of the Company upon the terms and conditions set forth herein.
In consideration of the mutual covenants and promises herein contained,
the parties hereto agree as follows:
1. The Stockholders and the Company hereby appoint American Stock
Transfer & Trust Company as Escrow Agent and agree that the Stockholder will
deliver to the Escrow Agent to hold in accordance with the provisions hereof,
certificates representing an aggregate of 671,000 shares of Common Stock owned
of record by the Stockholder (the "Escrow Shares"), together with a stock power
executed in blank. The Escrow Agent, by its execution and delivery of this
Agreement hereby acknowledges receipt of the Escrow Shares and accepts its
appointment as Escrow Agent to hold the Escrow Shares in escrow, upon the terms,
provisions and conditions hereof.
2. This Agreement shall continue in effect until the distribution by
the Escrow Agent of all of the Escrow Shares in accordance with the terms hereof
(the "Termination Date"). The period of time from the date hereof until the
Termination Date is referred to herein as the "Escrow Period."
3. During the Escrow Period, the Escrow Agent shall receive all of the
money, securities, rights or property distributed in respect of the Escrow
Shares then held in escrow, including any such property distributed as dividends
or pursuant to any stock split, merger, recapitalization, dissolution, or total
or partial liquidation of the Company, such property to be held and distributed
as herein provided and hereinafter referred to collectively as the "Escrow
Property."
4. The Escrow Shares are subject to release to the Stockholder only in
the event that the following conditions are met:
(a) If USI's income before taxes for the twelve months ending May 31,
1997 as reviewed by the Company's independent public accountants and computed in
accordance with generally accepted accounting principles (the "Net Income")
equals or exceeds $4,700,000, then all of the Escrow Shares shall be released to
Stockholder.
(b) If the Average Revenues are at least $3,200,000 but less than
$4,700,000, a portion of the number of the Escrow Shares will be released to
Stockholders, computed by the product of 671,000 multiplied by a fraction, the
numerator of which is the difference between the Net Income and $3,200,000 and
the denominator of which is $1,500,000.
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(c) If the Net Income is less than $3,200,000, then no Escrow Shares
will be released to Stockholders.
The Escrow Agent, upon notice to such effect from the Company as
provided in paragraph 5 hereof, shall deliver the Escrow Shares, together with
stock powers executed in blank, and the Escrow Property deposited in escrow with
respect to such Escrow Shares, to the Stockholder, if, and only if, the above
conditions are met.
5. (a) The Company shall give written notice to the Stockholder and
Escrow Agent by July 31, 1997 of the Net Income and the Escrow Agent and present
such documentation as is reasonably required by the Escrow Agent to evidence the
satisfaction of such conditions. The Escrow Agent shall promptly make a
determination of the number of Escrow Shares to be delivered to Stockholder.
(b) Upon such determination, Escrow Agent shall deliver an appropriate
number of Escrow Shares and any related Escrow Property to the Stockholder and
shall deliver any remaining Escrow Shares, together with stock powers executed
in blank, and any related Escrow Property to the Company to be placed in the
Company's treasury for cancellation thereof as a contribution to capital. After
such date, the Stockholder shall have no further rights as a stockholder of the
Company with respect to any of the cancelled Escrow Shares.
6. It is understood and agreed by the parties to this Agreement as
follows:
(a) The Escrow Agent is not and shall not be deemed to be a trustee for
any party for any purpose and is merely acting as a depository and in a
ministerial capacity hereunder with the limited duties herein prescribed.
(b) The Escrow Agent does not have and shall not be deemed to have any
responsibility in respect of any instruction, certificate or notice delivered to
it or of the Escrow Shares or any related Escrow Property other than faithfully
to carry out the obligations undertaken in this Agreement and to follow the
directions in such instruction or notice provided in accordance with the terms
hereof.
(c) The Escrow Agent is not and shall not be deemed to be liable for
any action taken or omitted by it in good faith and may rely upon, and act in
accordance with, the advice of its counsel without liability on its part for any
action taken or omitted in good faith in accordance with such advice. In any
event, its liability hereunder shall be limited to liability for gross
negligence, willful misconduct or bad faith on its part.
(d) The Escrow Agent may conclusively rely upon and act in accordance
with any certificate, instruction, notice, letter, telegram, cablegram or other
written instrument believed by it to be genuine and to have been signed by the
proper party or parties.
(e) The Company agrees (i) to pay the Escrow Agent's reasonable fees
and to reimburse it for its reasonable expenses including attorney's fees
incurred in connection with duties hereunder and (ii) to save harmless,
indemnify and defend the Escrow Agent for, from and against any loss, damage,
liability, judgment, cost and expense whatsoever, including counsel fees,
suffered or incurred by it by reason of, or on account of, any misrepresentation
made to it or its status or activities as Escrow Agent under this Agreement
except for any loss, damage, liability, judgment, cost or expense resulting from
gross negligence, willful misconduct or bad faith on the part of the Escrow
Agent. The obligation of the
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Escrow Agent to deliver the Escrow Shares to either the Stockholders or the
Company shall be subject to the prior satisfaction upon demand from the Escrow
Agent, of the Company's obligations to so save harmless, indemnify and defend
the Escrow Agent and to reimburse the Escrow Agent or otherwise pay its fees and
expenses hereunder.
(f) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement unless requested to do so by the Stockholders and indemnified
to the Escrow Agent's satisfaction against the cost and expense of such defense
by the party requesting such defense. If any such legal proceeding is instituted
against it, the Escrow Agent agrees promptly to given notice of such proceeding
to the Stockholders and the Company. The Escrow Agent shall not be required to
institute legal proceedings of any kind.
(g) The Escrow Agent shall not, by act, delay, omission or otherwise,
be deemed to have waived any right or remedy it may have either under this
Agreement or generally, unless such waiver be in writing, and no waiver shall be
valid unless it is in writing, signed by the Escrow Agent, and only to the
extent expressly therein set forth. A waiver by the Escrow Agent under the term
of this Agreement shall not be construed as a bar to, or waiver of, the same or
any other such right or remedy which it would otherwise have on any other
occasion.
(h) The Escrow Agent may resign as such hereunder by giving 30 days
written notice thereof to the Stockholder and the Company. Within 20 days after
receipt of such notice, the Stockholder and the Company shall furnish to the
Escrow Agent written instructions for the release of the Escrow Shares and any
related Escrow Property (if such shares and property, if any, have not yet been
released pursuant to Paragraph 4 hereof) to a substitute Escrow Agent which
(whether designated by written instructions from the Stockholders and the
Company jointly or in the absence thereof by instructions from a court of
competent jurisdiction to the Escrow Agent) shall be a bank or trust company
organized and doing business under the laws of the United States or any state
thereof. Such substitute Escrow Agent shall thereafter hold any Escrow Shares
and any related Escrow Property received by it pursuant to the terms of this
Agreement and otherwise act hereunder as if it were the Escrow Agent originally
named herein. The Escrow Agent's duties and responsibilities hereunder shall
terminate upon the release of all shares then held in escrow according to such
written instruction or upon such delivery as herein provided. This Agreement
shall not otherwise be assignable by the Escrow Agent without the prior written
consent of the Company.
7. The Stockholder shall have the sole power to vote the Escrow Shares
and any securities deposited in escrow under this Agreement while they are being
held pursuant to this Agreement.
8. (a) Stockholder agrees that during the term of this Agreement he
will not sell, transfer, hypothecate, negotiate, pledge, assign, encumber or
otherwise dispose of any or all of the Escrow Shares unless and until the
Company shall have given the notice as provided in Paragraph 5. This restriction
shall not be applicable to transfers upon death, by operation of law, to family
members of the Stockholder or to any trust for the benefit of the Stockholder,
provided that such transferees agree to be bound by the provisions of this
Agreement.
(b) Stockholder will take any action necessary or appropriate,
including the execution of any further documents or agreements, in order to
effectuate the transfer of the Escrow Shares to the Company if required pursuant
to the provisions of this Agreement.
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<PAGE>
9. Each of the certificates representing the Escrow Shares will bear
legends to the following effect, as well as any other legends required by
applicable law:
(a) "The sale, transfer, hypothecation, negotiation, pledge,
assignment, encumbrance or other disposition of the shares
evidenced by this certificate are restricted by and are
subject to all of the terms, conditions and provisions of a
certain Escrow Agreement entered into among U.S. Diagnostic
Labs Inc., Monroe Professional Services LLC and American
Stock Transfer & Trust Company dated as of May , 1996, a copy
of which may be obtained from the Secretary of U.S.
Diagnostic Labs Inc. No transfer, sale or other disposition
of these shares may be made unless specific conditions of
such agreement are satisfied.
(b) "The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended. No
transfer, sale or other disposition of these shares may be
made unless a registration statement with respect to these
shares has become effective under said act, or the Company is
furnished with an opinion of counsel satisfactory in form and
substance to it that such registration is not required."
Upon execution of this Agreement, the Company shall direct the transfer
agent for the Company to place stop transfer orders with respect to the Escrow
Shares and to maintain such orders in effect until the transfer agent shall have
received written notice from the Company as provided in Paragraph 5.
10. Each notice, instruction or other certificate required or permitted
by the terms hereof shall be in writing and shall be communicated by personal
delivery, fax or registered or certified mail, return receipt requested, to the
parties hereto at the addresses set forth below, or at such other address as any
of them may designate by notice to each of the others:
(i) If to the Company, to:
U.S. Diagnostic Labs Inc.
777 South Flagler Drive
West Tower, Suite 1006
West Palm Beach, Florida 33401
Att: Jeffrey A. Goffman
(ii) If to the Stockholder to:
c/o L.E. Richey, M.D.
14835 Southwest Freeway
Sugarland, Texas 77478
(iii) If to the Escrow Agent, to:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Att: Herb Lemmer
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<PAGE>
All notices, instructions or certificates given hereunder to the Escrow Agent
shall be effective upon receipt by the Escrow Agent. All notices given hereunder
by the Escrow Agent shall be effective and deemed received upon personal
delivery or transmission by fax or, if mailed, five (5) calendar days after
mailing by the Escrow Agent.
11. This Agreement may not be modified, altered or amended in any
material respect or cancelled or terminated except with the prior written
consent of the Company and the Stockholder.
12. This Agreement shall be governed by and construed in accordance
with the laws of New York and shall be binding upon and inure to the benefit of
all parties hereto and their respective successors in interest and assigns.
13. This Agreement may be executed in several counterparts, which
taken together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers on the day and year first above
written.
U.S. DIAGNOSTIC LABS INC.
By: /s/ Jeffrey A. Goffman
------------------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY, as Escrow Agent
By: /s/ Herb Lemmer
-----------------------------------
REESE GENERAL TRUST
By: /s/ Lisa Brackett
-----------------------------------
Lisa Brackett, Trustee
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