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 28, 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 28, 1996, the Company entered into an Asset Purchase Agreement
pursuant to which USDL Pittsburgh Inc., a wholly-owned subsidiary, acquired the
assets of six entities operating as the Allegheny Open MRI/CT Group in the
Pittsburgh, Pennsylvania area ("Allegheny"). The consideration was is
$12,000,000 in cash and 750,000 shares of the Company's Common Stock. Allegheny
operates four imaging centers in the Pittsburgh area with net collected revenues
of approximately $8.5 million and adjusted net income before taxes in excess of
$1.9 million.
In addition, the holders of the 750,000 shares of Common Stock issued
in the acquisition 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 Allegheny will be filed within the time period
required by this report.
Item 5. OTHER EVENTS.
NEW EMPLOYMENT AGREEMENTS. Effective July 1, 1996, the Company entered
into an employment agreement with Joseph Paul pursuant to which Mr. Paul will
serve as President of the Company. Mr. Paul's agreement provides for an annual
salary of $200,000 and a bonus of $50,000 in the first year. Mr. Paul was also
granted 100,000 options under the Company's 1995 Long Term Incentive Plan
("Plan") at $7.125 and 20,000 shares of restricted stock under the Plan. Mr.
Paul was previously the Executive Vice President of MediTek Health Corporation,
which the Company has an agreement to acquire effective July 1, 1996.
Effective July 1, 1996, the Company entered into an employment
agreement with Michael Karsch pursuant to which Mr. Karsch will serve as
Executive Vice President and General Counsel of the Company. Mr. Karsch's
agreement provides for an annual salary of $200,000 and a bonus of $50,000 in
the first year. Mr. Karsch was also granted 100,000 options under the Plan at
$7.125 and 25,000 shares of restricted stock under the Plan. Mr. Karsch was
previously a partner of Bachner, Tally, Polevoy & Misher LLP, which firm has
been the Company's outside counsel.
Also effective July 1, 1996, the Company entered into an employment
agreement with Andrew Shaw pursuant to which Mr. Shaw will serve as Vice
President and Chief Executive Officer of the Company. Mr. Shaw's agreement
provides for annual salary of $100,000 in the first year and increases and a
bonus based on the number of imaging centers owned by the Company. Mr. Shaw was
also granted 30,000 options under the Plan at $12.50. Mr. Shaw was previously
the Controller of MediTek since 1992.
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WARRANT REDEMPTION. On May 28, 1996, the Company called for redemption
its outstanding Class A Warrants on June 28, 1996. As of such date,
substantially all of such warrants were exercised, resulting in net proceeds to
the Company of over $26 million.
EXHIBITS
10.34 Asset Purchase Agreement dated as of June 28, 1996 among the Company,
Allegheny Open MRI/CT Group and USDL Pittsburgh Inc., a subsidiary of the
Company.
10.35 Registration and Sale Rights Agreement dated as of June 28, 1996 among the
Company and the Allegheny Open MRI/CT Group.
10.36 Employment Agreement dated as of June 18, 1996 between the Company and
Joseph Paul.
10.37 Employment Agreement dated as of June 1, 1996 between the Company and
Michael Karsch.
10.38 Employment Agreement dated as of July 1, 1996 between the Company and
Andrew Shaw.
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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
Dated: July 10, 1996
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of June 28, 1996, by and among
CENTRE COMMONS MRI, LTD., JEFFERSON MAGNETIC RESONANCE IMAGING, MONROEVILLE
IMAGING CENTER, MAGNETIC RESONANCE IMAGING OF WESTERN PA, PITTSBURGH
COMPUTERIZED TOMOGRAPHY ASSOCIATES and SOUTH HILLS COMPUTERIZED TOMOGRAPHY
ASSOCIATES, each a Pennsylvania limited partnership (collectively, the
"Partnerships") doing business as the ALLEGHENY OPEN MRI/CT GROUP (the
"Seller"), USDL PITTSBURGH INC., a Delaware corporation ("Purchaser") and U.S.
DIAGNOSTIC LABS INC., a Delaware Corporation ("USDL").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of owning and operating
diagnostic imaging centers in the Pittsburgh, Pennsylvania area; and
WHEREAS, USDL is engaged, in part, in the business of acquiring, owning
and operating medical service facilities and desires to cause Purchaser, its
wholly-owned subsidiary, to purchase all of the assets used in the operations of
Seller (the operations of Seller being referred to herein as the "Business");
and
WHEREAS, subject to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell and Purchaser desires to purchase the assets of Seller used to operate
the Business as described 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
PURCHASE AND SALE OF ASSETS
1.01. (a) PURCHASE AND SALE OF ASSETS. Subject to the terms and
conditions of this Agreement and the performance by the parties hereto of their
respective obligations hereunder, at the Closing (as defined in Section 1.03(a)
hereof), the Seller shall sell, grant, transfer, convey, assign and deliver to
Purchaser, and Purchaser shall purchase, acquire and accept from the Seller all
of the Seller's right, title and interest in and to (a) the Business as a going
concern, (b) all of the Seller's interest in the name "Allegheny Open MRI/CT
Group" and all goodwill associated therewith, and (c) all of the assets,
properties and rights of Seller used in the Business or used therein, of every
kind and description, real, personal and mixed, tangible and intangible,
wherever situated, including without limitation, all furniture, fixtures,
equipment, inventory, customer lists, patient files, computers and computer
software, all as more fully set forth on Schedule 1.01(a) hereto but excluding
cash on hand on the Closing Date (as defined in Section 1.03(a) hereof) (which
name, goodwill, assets, properties and rights are herein referred to as the
"Assets"), free and clear of all
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mortgages, liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever except for the "Assumed Liabilities" (as
defined in Section 1.05) and any such liens or security interests created
pursuant to this Agreement.
(b) TRANSFER OF ASSETS. The transfer of the Assets as herein
provided shall be effected by bills of sale, endorsements,
assignments and other instruments of transfer and conveyance
delivered by Seller to Purchaser on the Closing Date in form
sufficient to transfer good and marketable title to the Assets
free and clear of all liens, claims and encumbrances as
contemplated by this Agreement. Seller hereby covenants and
agrees that (i) it will, at any time and from time to time
after the Closing Date, do all such further acts and things as
may be reasonably requested by Purchaser for the effective
transferring and delivering to Purchaser, or for aiding and
assisting Purchaser in collecting and reducing to possession,
any and all of the Assets; (ii) Purchaser, after the Closing
Date, shall have the right and authority to collect, for the
account of Purchaser, all checks, notes and other evidences of
indebtedness or obligations to make payment of money and other
items relating to the Assets as provided herein and to endorse
with the name of Seller any such checks, notes or other
instruments received after the Closing Date; and (iii) Seller
will transfer and deliver to Purchaser any cash or other
property that Seller may receive after the Closing Date in
respect of or arising out of the Assets to the extent that
such cash or property is rightfully the property of Purchaser.
(c) THIRD PARTY CONSENTS. Seller covenants and agrees that
after the Closing Date, if requested by Purchaser, Seller will
use its commercially reasonable efforts to obtain the consent
and approvals of any parties to, and any governmental agencies
or other persons or entities concerned with, any material
contracts, licenses, leases, commitments, sales orders,
purchase orders or other agreements or rights being assigned
by Seller to Purchaser hereunder.
1.02. (a) PURCHASE PRICE. Subject to the terms and
conditions of this Agreement, in reliance on the
representations, warranties and agreements of the Seller
contained herein, and in full and complete consideration of
the sale, assignment, transfer and delivery of the Assets
the aggregate purchase price for the Assets (the "Purchase
Price") shall be payable at the Closing as follows:
(i) a wire transfer to Seller in the amount of Twelve
Million One Hundred Thousand Dollars ($12,100,000),
("Closing Payment"), to be paid at the Closing; and
(ii) the issuance of 750,000 shares of Common Stock of USDL
("USDL Common Stock"), subject to adjustment in the case of
any stock splits, mergers or similar events prior to the
Closing Date.
(iii) the assumption of certain debt and lease obligations
pursuant to Schedules 1..05 and 3.10.
1.03. (a) CLOSING. The Closing of the transactions
contemplated by this Agreement will take place at the
offices of Bachner, Tally, Polevoy & Misher LLP, 380 Madison
Avenue, New York, New York 10017 on June 28, 1996 at 10:00
A.M., or at such other place, date and time as the parties
may agree in writing. The date of the Closing is herein
referred to as the "Closing Date."
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The Closing will be deemed to have occurred on April 1, 1996
for tax, accounting and other purposes.
(b) ITEMS TO BE DELIVERED AT CLOSING BY SELLER. At the
Closing, Seller shall deliver to Purchaser the following:
(i) A bill of sale with covenants of warranty, assignments,
endorsements, and other good and sufficient instruments and
documents of conveyance and transfer, as shall be necessary
and effective to transfer and assign to, and vest in,
Purchaser all of Seller's right, title and interest in and
to the Assets in the form attached hereto as Exhibit "A"
(the "Bill of Sale");
(ii) All of the agreements, contracts, commitments, leases,
plans, instruments, computer programs and software,
databases whether in the form of computer tapes or
otherwise, related object and source codes, manuals and
guidebooks, customer and subscriber lists, supplier lists,
sales records, files, correspondence, rulings issued by
governmental entities, and other documents, books, records,
papers, files, office supplies and data belonging to Seller
in the possession of Seller which are part of the Assets;
(iii) A Noncompetition Agreement, in the form attached
hereto as Exhibit "B", executed by the persons listed in
Section 5.01(e) and Purchaser ("Noncompetition Agreement");
and
(iv) All consents to the assignment of material agreements
required from third parties.
and simultaneously with such deliveries, all such steps will
be taken as may be required to put Purchaser in actual
possession and operating control of the Assets.
(c) ITEMS TO BE DELIVERED AT CLOSING BY PURCHASER. At the
Closing, Purchaser shall deliver to Seller the following:
(i) The Closing Payment to the Seller;
(ii) The USDL Common Stock issuable to Seller;
(iii) The Registration and Sale Rights Agreement (the
"Registration Agreement") in the form of Exhibit "C" hereto;
(iv) The Physician Services Agreement in the form of Exhibit
"D" hereto;
(v) The Security Agreement in the form of Exhibit "E"
hereto;
(vi) The Management Agreement in the form of Exhibit "F"
hereto;
(vii) The Repurchase Option in the form of Exhibit "G"
hereto; and
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(viii) Documents reflecting the assignment and/or assumption
of the liabilities set forth on Schedule 1.05 hereof.
1.04. FURTHER ASSURANCES. After the Closing, the Seller
shall from time to time, at the request of Purchaser, execute
and deliver at no charge to Purchaser such other instruments
of conveyance and transfer and take such other actions as
Purchaser may reasonably request, in order to more effectively
consummate the transaction contemplated hereby and to vest in
Purchaser good and marketable title to the Assets being
transferred hereunder.
1.05. ASSUMPTION OF LIABILITIES. At the Closing, Purchaser
shall assume and agree to pay, discharge or perform, as
appropriate, only the liabilities and obligations of Seller
(or its affiliates) either disclosed by Seller on Schedule
1.05 (the "Assumed Liabilities") in respect to the agreements,
contracts, commitments and leases which are specifically
identified on such Schedule 1.05 or other nonmaterial
obligations of Seller which provide for aggregate payments
over the term of the agreement of less than $10,000 per
agreement.
1.06 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall
be allocated among the Assets acquired hereunder, the
Noncompetition Agreements and other intangibles as set forth
on Schedule 1.06 hereto. Seller, USDL and Purchaser each
hereby covenant and agree not to take a position on any income
tax return, before any governmental agency charged with the
collection of any income tax, or in any judicial proceeding
that is in any way inconsistent with the provisions of this
Section 1.06.
1.07 SETTLEMENT OF CERTAIN ACCOUNTS. All Seller's cash on hand
at 6:00 p.m. on Saturday June 29, 1996 shall revert to Seller
and all accounts receivable of Seller at such time shall be
the property of Purchaser.
ARTICLE II
RELATED MATTERS
2.01. NAME. Seller will consent in writing to the use by
Purchaser of the name "Allegheny Open MRI/CT Group" or any
similar name that may be used by Purchaser as required by the
filing requirements of the Commonwealth of Pennsylvania or any
other state in which the Purchaser is qualified to do
business.
2.02. 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, without the other party's
written consent, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors in
connection with this 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
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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.
2.03. MAIL RECEIVED AFTER CLOSING. Following the Closing,
Purchaser may receive and open all mail addressed to the
Seller and deal with the contents thereof in its reasonable
discretion to the extent that such mail and the contents
thereof relate to the Business or Assets, and shall provide
Seller with copies of all material communications dealt with
by Purchaser.
2.04. REPRESENTATION ON USDL'S BOARD OF DIRECTORS. (a) As
soon as practical but in no event later than 30 days after the
Closing Date, USDL shall cause Richard B. Kasdan, M.D. to be
elected to the Board of Directors of USDL, to serve until the
conclusion of the next annual meeting of stockholders in
accordance with the By-Laws of USDL. After the first one-year
term, the obligations hereunder shall be that USDL shall cause
Dr. Kasdan or another designee of Seller to be nominated for
election to USDL's Board of Directors and to recommend to the
stockholders the election of such person to the Board of
Directors of USDL for a period of two (2) successive one-year
terms after the original one-year term. USDL shall pay the
directors fees and the reasonable amount of out-of-pocket
expenses of Seller's designees in attending such board or
committee meetings in accordance with its ordinary and usual
policies for the payment of directors fees and reimbursement
of the expenses of outside directors.
(b) Notwithstanding anything to the contrary contained in
subsection (a) hereof, a director, other than the individual
named in subsection (a) above, designated by Seller shall be
subject to the approval of USDL's management, which will not
unreasonably be withheld. Promptly after first proposing a
candidate, Seller shall furnish to USDL such information as
may be requested by USDL about Seller's designee (i) that is
required to be included in a Registration Statement under the
Securities Act or a Proxy Statement under the Exchange Act and
(ii) that would be required to be included in a Schedule 13D
under the Exchange Act by Item 2 thereof if filed by the
candidate with respect to ownership of USDL's securities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to
Purchaser, provided that the respresentations and warranties
set forth in Sections 3.03(b), 3.05, 3.06, 3.07, 3.08(b),
3.11. 3.15, 3.16, 3.18 and 3.20 are not being made by the
Allegheny Imaging Business Trust.
3.01. ORGANIZATION; GOOD STANDING. Each Seller is a limited
partnership validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania and has full 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 the Seller to be
delivered to Purchaser at the Closing will be complete and
correct copies of such instruments as presently in effect.
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3.02. AUTHORIZATION, ETC. The Seller has full power and
authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The General Partners of each
Seller has taken all action required by law, the Seller's
Certificate of Limited Partnership (the "Certificate") or
otherwise, to be taken by them 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 the Seller enforceable in
accordance with its terms. The General Partners have the
authority to sign the Noncompetition Agreements.
3.03. NO VIOLATION. Neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby will (a) violate any provision of the
Certificate, or violate, 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 the Seller under any agreement
or commitment to which the Seller is a party or by which the
Seller is bound, or to which the property of the Seller is
subject, or (b) to Seller's knowledge, violate any statute or
law or any judgment, decree, order, regulation or rule of any
court or governmental authority known to Seller.
3.04 SECURITIES. The Seller is acquiring the USDL Common
Stock for its own account and not with a view to its
distribution within the meaning of Section 2(11) of the
Securities Act of 1933, as amended (the "Securities Act")
except to partners and benficiaries of Seller.
3.05. NO UNDISCLOSED LIABILITIES; ETC. The Seller has no
material liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which were not fully
reflected or reserved against on its balance sheet or
otherwise disclosed in writing to Purchaser, except for
liabilities and obligations incurred in the ordinary course of
business and consistent with past practice since the date
thereof.
3.06. ACCOUNTS RECEIVABLE. All accounts receivable of the
Seller, whether reflected in the balance sheet or otherwise,
represent revenues actually made in the ordinary course of
business for services performed at Seller's facilities, and to
the best of Seller's knowledge, are current and collectible
subject to contractual reimbursement allowances in accordance
with past practice.
3.07. ABSENCE OF CERTAIN CHANGES. Except as and to the extent
set forth in Schedule 3.07, since March 31, 1996, the Seller
has not:
(a) Suffered any material adverse change in its working
capital, financial condition, assets, liabilities, reserves,
business or operations;
(b) Other than as set forth in Schedule 1.05, 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 $50,000 (counting obligations or liabilities
arising from one 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
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in any assumptions underlying or methods of calculating, any
bad debt, contingency or other reserves;
(c) Permitted or allowed any of the 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 not listed on Schedule 1.05,
except for liens for current taxes not yet due;
(d) Become aware of any event which may result in a
materially adverse effect on the financial condition, results
of operations, business, Assets, Assumed Liabilities, or
future prospects of the Business;
(e) Cancelled any material debts, waived any claims or
rights of substantial value or accepted a material purchase
order, quotation, arrangement or understanding for future sale
of services of Seller;
(f) Made any change in any method of accounting or
accounting practice;
(g) Paid, loaned or advanced any material amount to, or
sold, transferred or leased any material properties or assets
(real, personal or mixed, tangible or intangible) to, or
entered into any agreement or arrangement with, any of its
partners or any affiliate or associate of any of its partners;
or
(h) Agreed, whether in writing or otherwise, to take any
action described in this Section.
3.08. LITIGATION. Except as set forth in Schedule 3.08,
there is no pending or, to Seller's knowledge, 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 the Seller, the Business or the Assets,
or which questions or challenges the validity of this
Agreement or any action taken or to be taken by the Seller
pursuant to this Agreement or in connection with the
transactions contemplated hereby. The Seller is not (a) in
default under or in violation of any material contract,
commitment or restriction to which it is a party or by which
it is bound; (b) to the best of Seller's knowledge, in
material violation of, or in default with respect to, any law,
rule, regulations, order, judgment, or decree; nor is Seller
required to take any action in order to avoid such violation
or default; and (c) 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. Seller
represents that it has made good faith efforts to comply with
the federal anti-referral and anti-kickback rules, future
compliance with which shall be the responsibility of
Purchaser.
3.09. TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth
on Schedule 3.09, the Seller has good, valid and marketable
title to the Assets (except such Assets as are held pursuant
to leases or licenses) free and clear of all liens, mortgages,
security interests, pledges, charges and encumbrances
("Encumbrances").
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3.10. CONTRACTS AND COMMITMENTS. Schedule 3.10 contains a
true, complete and accurate list of all contracts, agreements
instruments, leases, licenses or arrangements to which Seller
is a party or by which any of the Assets are bound that
involves performance of services or delivery of goods or
materials to Sellers of an amount of value in excess of
$10,000. Seller has furnished or will furnish prior to the
Closing to the Purchaser (a) true and correct copies of all
contracts, agreements and instruments referred to in Schedule
3.10; (b) true and correct copies of all leases and licenses
referred to in Schedule 3.10; and (c) true and correct written
descriptions of all supply, distribution or other arrangements
or understandings referred in Schedule 3.10.
3.11. FACILITIES. The Seller does not have any knowledge of
any defect in the structure of any building that the Seller is
obligated to repair under the lease with respect thereto. The
Seller 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
facilities and no such violation exists. To Seller's
knowledge, there are no laws, statutes or ordinances, or
building or use restrictions applicable to the building,
structures and appurtenances owned or leased by the Seller
which might prohibit or impair the uses presently being made
thereof.
3.12. TAXES. Seller has delivered or will deliver to
Purchaser prior to the Closing true, complete and correct
copies of, and Schedule 3.12 lists, all of the federal and
state tax returns filed by Seller since January 1, 1993 (the
"Tax Returns"). To the best of its knowledge, the Seller 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 the Seller
except liens for current taxes not yet due. To the best of its
knowledge, all taxes that the Seller 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.
3.13. GOOD TITLE CONVEYED, ETC. The Seller has complete and
unrestricted power and the unqualified right to sell, assign,
transfer and deliver to Purchaser, and upon consummation of
the transactions contemplated by this Agreement, Purchaser
will acquire, good, valid and marketable title to the Assets
to be transferred to Purchaser hereunder, free and clear of
all Encumbrances, except those referred to in Section 3.09
hereof. The Bill of Sale and the other instruments to be
executed and delivered to Purchaser by the Seller at the
Closing will be valid and binding obligations of the Seller,
enforceable in accordance with their terms, and will
effectively vest in Purchaser good, valid and marketable title
to the Assets.
3.14. BROKERS AND FINDERS. The Seller and any of its
partners, officers, directors or employees has not 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.
3.15. PERSONNEL. Schedule 3.15 sets forth a true and
complete list of the following information for each
employee:
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(a) the names, current salaries of all salaried employees
and the wage rates for non-salaried and non-executive salaried
employees of the Seller by classification, accrued vacation
and sick time;
(b) any employment agreements for any employee; and
(b) all group insurance programs in effect for employees of
the Seller.
3.16. MALPRACTICE LIABILITY. To the best of Seller's
knowledge, 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 the Seller relating to any
service performed by the Seller 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.
3.17. TRADE NAMES, ETC. The Seller has been using the trade
name "Allegheny Open MRI/CT Group" in Pennsylvania, and no
claims have been asserted by any person to the use of such
name.
3.18. EMPLOYEE BENEFIT PLANS. Except as set forth on
Schedule 3.18, the Seller does not have and none of its
current or former employees are covered by, any bonus,
deferred compensation, pension, profit-sharing, retirement,
insurance, stock purchase, stock option or any other fringe
benefit plan, arrangement or practice, other than standard
health benefits, or any other employee benefit plan, 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 3.19 contains
an accurate and complete description of, and sets forth the
annual amount payable pursuant to, each of those Plans. The
Seller 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. The Seller has no
commitment, whether formal or informal and whether legally
binding or not, to create any additional Plan.
3.19. CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES AND
OTHERS. Except for consents listed on Schedule 3.19 to be
delivered pursuant to Section 1.01(c) hereof, to Seller's best
knowledge. Seller is not required to obtain any consent,
approval or authorization of, or declare, file or register
with, any governmental or regulatory authority in connection
with the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby.
To Seller's best knowledge, no consent of any other person is
necessary on the part of Seller to the consummation of the
transactions contemplated hereby.
3.20. COMPLIANCE WITH LAW. To the best of its knowledge, the
operations of the Seller are and have been conducted in all
material respects in accordance with all applicable laws,
regulations and other requirements of all federal, state and
local governmental authorities and agencies thereof having
jurisdiction over the Seller, including, without limitation,
all such laws, regulations and requirements relating to
employment, equal opportunity, health, occupational safety,
pension and securities matters. The Seller has not received
any notification of any asserted present or past failure by
the Seller to comply with such laws, rules or regulations.
Seller represents that it has made good faith efforts to
comply with the federal anti-referral and anti-kickback rules.
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3.22 REFERRALS. Except as set forth on Schedule 3.21, since
January 1, 1996, there has been no material change in the
pattern of referrals from Seller's twenty-five (25) largest
referral sources, and no referral source has established a
competing diagnostic imaging facility since that date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND USDL
Purchaser and USDL each represents and warrants to the
Seller as follows:
4.01. CORPORATE ORGANIZATION; ETC. Purchaser and USDL are
each a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware 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.
The copies of the charter documents of the Purchaser and USDL
to be delivered to Seller will be complete and correct copies
of such instruments as presently in effect.
4.02. AUTHORIZATION, ETC. Purchaser and USDL each has full
corporate power and authority to enter into this Agreement,
the Physician Agreement, the Management Agreement, the
Security Agreement, the Repurchase Option and the Registration
Agreement (the "Purchase Documents") and to carry out the
transactions contemplated hereby. Purchaser and USDL has each
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 the Purchase Documents are each a
valid and binding agreement of Purchaser 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.
4.03. NO VIOLATION. The execution, delivery and performance
by Purchaser of this Agreement, the Purchase Documents to
which Purchaser is a party and consummation of the
transactions contemplated hereby and thereby will not (with or
without giving of notice for the lapse of time, or both) (i)
violate any provisions of the Certificate of Incorporation or
By-Laws of Purchaser or USDL, (ii) violate or require any
consent, authorization or approval or, for exemption by, or
filing under any provision of any law, statute, rule or
regulation to which Purchaser or USDL is subject, (iii)
violate any judgment, order, writ or decree of any court
applicable to Purchaser or USDL, (iv) conflict with, result in
a breach of, constitute a default under, or accelerate or
permit the acceleration of the performance required by, or
require any consent, authorization or approval under any
material contract, agreement or instrument to which Purchaser
or USDL is a party or any of its assets is bound or (v) result
in the creation or imposition of any Encumbrance upon its
assets, which violation, conflict, breach, default
acceleration or Encumbrance, or the failure to make or obtain
such filing or consent, authorization or approval, with
respect to the matters specified in clauses (ii) through (v)
could, individually or in the aggregate reasonably be expected
to have a material adverse effect on Purchaser or USDL or
prevent or delay the consummation of the transactions
contemplated by this Agreement.
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4.04. FINANCIAL STATEMENTS. USDL has delivered to Seller
copies of its Annual Report on Form 10-KSB for the year ended
December 31, 1995 and Quarterly Report on Form 10-QSB for the
three months ended March 31, 1996 (the "Report"). 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 generally
accepted accounting principles applied on a consistent basis.
4.05 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.
4.06 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.
4.07. 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 commission pending or threatened against or
involving Purchaser or USDL, or which questions or challenges
the validity of this Agreement or any action taken or to be
taken by Purchaser 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.
4.08. BROKERS AND FINDERS. The Purchaser, USDL and any of
their partners, officers, directors or employees has not
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.
ARTICLE V
COVENANTS
5.01. The Seller hereby covenants and agrees with Purchaser:
(a) FULL ACCESS. Until the Closing, the Seller shall afford
to Purchaser, its counsel, accountants and other
representatives full access to the facilities, books and
records of the Seller in order that Purchaser may have full
opportunity to make such investigations as it shall desire to
make of the affairs of the Seller; and the Seller will cause
its officers and accountants to furnish such
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additional financial and operating data and other information
as Purchaser shall from time to time request.
(b) APPROVAL OF PARTNERS. Each Seller and its General
Partners shall (i) cause a meeting of the Seller's partners to
be duly called and held as soon as practicable, or arrange for
the written consent of the partners of the Seller, for the
purpose of voting on this Agreement and the transactions
contemplated hereby, (ii) recommend approval and adoption of
this Agreement and the transactions contemplated hereby to the
Seller's partners and (iii) use their best efforts to obtain
the necessary approval and adoption of this Agreement and the
transactions contemplated hereby by the Seller's partners.
(c) CONSENTS. The Seller will use its best efforts to
obtain, prior to the Closing, all consents necessary to the
consummation of the transactions contemplated hereby,
including, without limitation, (i) the consent of each person
holding a mortgage, lien or lease on real or personal property
owned or leased by the Seller, to the transfer of such
property or lease to Purchaser at the Closing; (ii) the
consent of each lessor of real or personal property leased by
the Seller to the assignment of the lessee's interest under
the lease of such property to Purchaser; and (iii) use its
best efforts to assist Purchaser in obtaining all necessary
approvals from any governmental agencies or departments as may
be necessary or desirable for Purchaser to fully operate the
Business as contemplated. All such consents will be in writing
and executed counterparts thereof will be delivered to
Purchaser prior to the Closing. Purchaser use its best efforts
to assist Seller in obtaining such consents. Notwithstanding
the foregoing, with respect to any property lease for which a
consent is not obtained prior to the Closing, until such
consent is obtained, Seller will continue to pay all rents due
thereunder and Purchaser will simultaneously reimburse Seller
for such amount. With respect to the common area maintenance
dispute for the Monroeville facility, Seller shall use its
best efforts to resolve such dispute prior to Closing, and if
such dispute is resolved after the Closing, Seller shall be
responsible for all amounts due to the landlord that arose
prior to the Closing Date and Purchaser shall be responsible
for all amounts due for the period that begins on the Closing
Date.
(d) OTHER TRANSACTIONS. Neither the Seller nor any General
Partner shall enter into any discussions concerning, or
approve or recommend to any of its limited partners, any
merger, consolidation, disposition of all or substantially all
of the Business or Assets (other than pursuant to this
Agreement), any tender offer, roll-up, acquisition or other
business combination, or proposal therefor, or furnish or
cause to be furnished any information concerning the Business
or Assets of the Seller to any party in connection with any
tender offer, roll-up or other transaction involving the
acquisition of the Seller or all or any substantial part of
its assets by any person other than Purchaser.
(e) NONCOMPETITION. From the Closing Date, and for a period
of five (5) years hereafter Richard Kasdan, M.D., Daniel H.
Shapira, Bernard D. Marcus and Robert L.Allman, II, will not,
directly or indirectly, compete with the Business of the
Seller, and agree to comply with the terms and conditions of
the Noncompetition Agreements.
(g) COVENANT TO SATISFY CONDITIONS. The Seller will use its
best efforts to insure that the conditions set forth in
Article VII hereof are satisfied, insofar as such matters are
within the control of any of them.
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5.02. USDL and Purchaser hereby covenant and agree with
Seller:
(a) COVENANT TO SATISFY CONDITIONS. Purchaser and USDL will
each use its best efforts to insure that the conditions set
forth in Article VI hereof are satisfied, insofar as such
matters are within the control of any of them.
(b) CONSENTS. Purchaser and USDL will each use its best
efforts to assist Seller in obtaining all consents necessary
for consummation of the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO THE SELLER'S OBLIGATIONS
Each and every obligation of the Seller 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 the Seller:
6.01. REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of Purchaser and USDL contained
in Article IV hereof 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.
6.02. PERFORMANCE. Purchaser and USDL shall have performed
and complied in all material respects 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. 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.
6.04. DELIVERY OF PURCHASE PRICE. Purchaser shall have
executed and delivered the Notes, the USDL Common Stock and
the Closing Payment to Seller. In addition, Purchaser shall
reimburse Seller for the $50,000 down payment advanced by such
persons with respect to a new magnet for a diagnostic imaging
center included in the Business.
6.05. NO INJUNCTION. On the Closing Date there shall be no
effective 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 transaction
contemplated hereby which the Seller deems unacceptable in its
sole discretion.
6.06. MISCELLANEOUS CLOSING DOCUMENTS. At the Closing, the
Purchaser and USDL shall deliver to the Seller:
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(i) Certificate of the Purchaser and USDL that the
representations and warranties of the Sellers contained in
this Agreement are true and correct in all material respects
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;
(ii) Agreements of assignment and assumption with respect to
the Assumed Liabilities;
(iii) Good Standing certificate dated within ten days prior
to the Closing Date from the Secretary of State of Delaware
for the Purchaser and USDL; and
(iv) A Secretary's Certificate as to the incumbency and
signature to each person executing the Purchase Documents and
any closing certificates on behalf of Purchaser or USDL.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATIONS
Each and every obligation of Purchaser 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 Purchaser:
7.01. REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties contained in Article III
hereof, the Schedules and in all certificates and other
documents delivered and to be delivered by the Seller and its
partners to Purchaser or USDL pursuant hereto or in connection
with the transactions contemplated hereby shall be true,
complete and accurate in all material respects 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.
7.02. PERFORMANCE. The Seller shall have performed and
complied in all material respects with all agreements,
obligations, conditions and covenants required by this
Agreement to be performed or complied with by them on or
prior to the Closing.
7.03. APPROVALS. The approval of the partners of the Seller
referred to in Section 5.01(c) hereof and all consents from
third parties required of Seller pursuant to Section 3.19 to
consummate the transactions contemplated hereby shall have
been obtained.
7.04. 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.
7.05. NO INJUNCTION. On the Closing Date there shall be no
effective 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
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or imposing any conditions on the consummation of the
transaction contemplated hereby which the Purchaser deems
unacceptable in its sole discretion.
7.06. MATERIAL CHANGE. Except as set forth on Schedule 3.07,
from March 31, 1996 to the Closing Date, the Seller shall not
have suffered any adverse change (whether or not such change
is referred to or 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.
7.07. MISCELLANEOUS CLOSING DOCUMENTS. At the Closing, in
addition to documents otherwise required to be delivered
hereunder, the Seller shall deliver to the Purchaser:
(a) Duly executed assignments of all leases of personal
property set forth on Schedule 3.13;
(b) The executed Bill of Sale;
(c) Certificate of the General Partner of the Seller that
the representations and warranties of the Seller contained
in 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;
(d) Receipt acknowledging payment of the sums provided for
in Section 1.02; and
(e) Good Standing certificate dated within ten days prior to
the Closing Date from the Secretary of State of Pennsylvania
for the Seller.
7.08. NONCOMPETITION AGREEMENTS. The Purchaser shall have
received at or prior to the Closing from the persons set
forth in Section 5.01(f) a Noncompetition Agreement.
ARTICLE VIII
[Intentionally Deleted]
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; NOTIFICATION OF
CERTAIN EVENTS
9.01. INVESTIGATIONS; SURVIVAL OF WARRANTIES. Subject to the
limits contained in Article XI hereof, the representations,
warranties and agreements of the Seller, USDL and Purchaser
contained herein or in any certificates or other documents
delivered prior to or at the Closing shall survive the Closing
until June 30, 1997 and not be deemed waived or otherwise
affected by any investigation made by any party hereto.
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9.02 NOTIFICATION OF CERTAIN EVENTS. (a) Each party shall
give prompt notice to all other parties as soon as practicable
after it has actual knowledge of (i) the occurrence, or
failure to occur, of any event which would or would be likely
to cause any party's representations or warranties contained
in this Agreement to be untrue or incorrect in any material
respect at any time from the date hereof to the Closing Date,
or (ii) any failure on its part or on the part of any of its
officers, directors, employees, representatives or agents to
comply with or satisfy in any material respect any covenant,
condition or agreement to be compiled with or satisfied by
such party under this Agreement. Each party shall, in
connection with such notices, deliver to the other parties a
written disclosure schedule (a "Schedule of Breaches") as to
any matter of which it becomes aware following execution of
this Agreement which would constitute a breach of any
representation, warranty, covenant, condition or agreement in
this Agreement by such party identifying on such Schedule of
Breaches the representation, warranty, covenant, condition or
agreement which would be so breached.
(b) Upon Purchaser's receipt of any Updated Schedules or any
Schedule of Breaches, or upon the Seller's receipt of a
Schedule of Breaches from the Purchaser, the party receiving
any such Schedule or Schedules (the "nondisclosing party")
shall have five business days from receipt of such Schedule or
Schedules to give written notice to the party delivering such
Schedule or Schedules (the "disclosing party") and all other
parties hereto that (i) it will close the transactions
contemplated hereby notwithstanding the new Schedule or
Schedules, (ii) it will not close the transactions
contemplated hereby based on such new Schedule or Schedules
and thereby terminates this Agreement pursuant to this Article
IX, or (iii) further investigation or negotiation is required
for it to reach a determination whether or not to close the
transactions contemplated hereby based on such new Schedule or
Schedules.
(c) If the nondisclosing party notifies the disclosing and
other parties that further investigation or negotiation are
required pursuant to (iii) in Section 9.02(b) and:
(i) the parties thereafter are unable to reach
agreement on a mutually satisfactory means of resolving the
matter(s) disclosed on the new Schedule or Schedules, the
nondisclosing party shall have the right, in its discretion,
to deliver written notice to all other parties hereto and
terminate this Agreement pursuant to this Article IX.
(ii) the parties are able to reach agreement on a
mutually satisfactory means of resolving the matter(s)
disclosed on the new Schedule or Schedule(s), such matter(s)
shall not form the basis of any claim or cause of action by
the nondisclosing party following the Closing, whether for
indemnification pursuant to Article XI above or otherwise,
unless the means of resolving such matter expressly provides
for the ability to raise any such claim or cause of action
following the Closing.
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ARTICLE X
TERMINATION AND ABANDONMENT
10.01. 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 the Purchaser and the
Seller; or
(b) By Purchaser upon written notice to Seller given at any
time prior to the Closing Date if all of the conditions
precedent to the obligations of Purchaser and USDL set forth
in this Agreement are not fulfilled; or
(c) By Seller upon written notice to Purchaser given at any
time prior to the Closing Date if all of the conditions
precedent to the obligations of Seller set forth in this
Agreement are not fulfilled.
10.02. PROCEDURE UPON TERMINATION. In the event of
termination and abandonment by Purchaser pursuant to Section
10.01 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 Purchaser or the Seller. 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) and (b) of this Section 10.02.
ARTICLE XI
INDEMNIFICATION
11.01. INDEMNIFICATION BY SELLER. (a) In the event that the
transactions contemplated by this Agreement are consummated,
the Seller shall indemnify Purchaser and USDL and hold it
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 material
misrepresentation or material breach of any representation,
warranty, covenant or agreement on the part of the Seller
under this Agreement; (ii) any and all actions, suits, claims,
or legal, administrative, arbitration, governmental or other
proceedings or investigations against Purchaser and USDL that
relate to Seller or the Business 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 Seller or
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any employee, agent, representative or subcontractor of
Seller; 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
("collectively, "Losses"). 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 the Purchaser or USDL is not entitled to
indemnification, then the Purchaser or USDL shall not be
entitled to recover its legal fees with respect to such claim
from the Seller.
(b) Seller shall not be required to indemnify the Purchaser
or USDL under Section 11.01(a) unless the amount of any Loss
for which the Purchaser or USDL seeks indemnification under
Section 11.01(a), when aggregated with all other such Losses,
exceeds $200,000. Seller's maximum liability hereunder shall
not exceed $1,000,000 in the aggregate.
11.02. INDEMNIFICATION BY PURCHASER AND USDL. In the event
that the transactions contemplated by this Agreement are
consummated, the Purchaser and USDL shall each indemnify
Seller and hold them harmless from, against and in respect of
and shall on demand reimburse the Seller 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
the Purchaser or USDL under this Agreement; (ii) any and all
actions, suits, claims, or legal, administrative, arbitration,
governmental or other proceedings or investigations against
Seller that relate to Purchaser, 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 Purchaser or USDL or any
officer, employee, agent, representative or subcontractor of
Purchaser or 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 the
Seller is not entitled to indemnification then the Seller
shall not be entitled to recover its legal fees with respect
to such claim from the Purchaser or USDL.
11.03. PROCEDURES FOR INDEMNIFICATION. Promptly after
receipt by an indemnified party under Sections 11.01 or 11.02
of notice of the commencement of any action for which
indemnification may be available under Section 11.01 or 11.02
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 (except counsel fees
incurred as a result of the failure to notify) 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
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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 indemnified party shall have no liability
with respect to any compromise or settlement thereof effected
without its consent (which shall not be unreasonably
withheld). Notwithstanding the foregoing, if an indemnified
party determines in good faith that there is a reasonable
probability 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).
11.04. SATISFACTION OF INDEMNIFICATION CLAIMS. In order to
provide security for Purchaser's potential indemnification
claims, Seller agrees that it will retain and not distribute
at least $1,000,000 from the Closing Payment until June 30,
1997. Such reserve shall consist of at least $500,000 in cash
and 45,000 shares of USDL Common Stock. All indemnification
obligations pursuant to this Article XI shall be paid within a
reasonable period of time after a claim for indemnification
has been made and its validity finally determined.
11.05. LIMITATIONS ON CLAIMS. All claims for indemnification
under this Article XI must be brought within one (1) year of
the Closing Date.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. AMENDMENT AND MODIFICATION. Subject to applicable
law, this Agreement may be amended, modified and
supplemented by written agreement of the Seller, USDL and
Purchaser at any time prior to the Closing with respect to
any of the terms contained herein.
12.02. WAIVER OF COMPLIANCE. Any failure of the Seller, on
the one hand, or Purchaser and 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 Purchaser or the General Partner of the
Seller, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
12.03. EXPENSES; TRANSFER TAXES, ETC. If the transactions
contemplated by this Agreement are not consummated, then
Section 10.02(c) shall govern the payment of expenses. If
the
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transactions contemplated by this Agreement shall be
consummated, the Seller agrees that all fees and expenses
incurred by it in connection with this Agreement shall be
borne by it and Purchaser and USDL agree that all fees and
expenses incurred by them in connection with this Agreement
shall be borne by them, including, without limitation as to
the Seller or Purchaser or USDL, all fees of counsel and
accountants. The Seller agrees that it will pay all transfer
taxes which may be payable in connection with the transactions
contemplated by this Agreement.
12.04. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly delivered upon
personal delivery, 48 hours after deposit in the United States
mail, certified or registered mail, return receipt requested,
or 24 hours after delivery to an overnight courier that
guarantees next-day delivery:
(a) If to the Seller, to:
Richard B. Kasdan, M.D.
Associates in Neurology
5750 Centre Avenue, Suite 100
Pittsburgh, Pennsylvania 15206
Fax: (412) 361-1014
Bernard D. Marcus
Trustee, Allegheny Imaging Business Trust
c/o Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, Pennsylvania
Fax: (412) 391-8758
with a copy to:
Ronald Saupe, Esq.
Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, Pennsylvania 15219
Fax: (412) 391-8758
or to such other person or address as the Seller shall
furnish to Purchaser in writing.
(b) If to USDL or Purchaser, 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
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or to such other person or address as Purchaser shall
furnish to the Seller in writing.
12.05. 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 either
party without the prior written consent of the other party.
12.06. PUBLICITY. Neither the Seller, Purchaser 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.
12.07. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth
of Pennsylvania, without regard to its conflicts of law
doctrine. All claims, disputes or causes of action arising out
of this Agreement shall be brought in the federal court, if
jurisdiction is available, or state courts situated in
Allegheny County, Pennsylvania.
12.08. 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.
12.09. 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.
12.10. 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, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or
representative of any party hereto.
12.11. 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.
12.12. SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held
invalid and unenforceable.
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12.13. ENFORCEMENT. In the event either party resorts to
legal action to enforce this Agreement, the prevailing party
shall be entitled to recover the reasonable costs of such
action, including, without limitation, reasonable attorneys'
fees at both trial and appellate levels.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
U.S. DIAGNOSTIC LABS INC. USDL PITTSBURGH INC.
By: /s/ Jeffrey A. Goffman By: /s/ Jeffrey A. Goffman
----------------------------- ----------------------------
Jeffrey A. Goffman, Chairman Jeffrey A. Goffman, President
CENTRE COMMONS MRI, LTD.
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
-------------------------------
Bernard D. Marcus, Trustee
Centre Commons MRI P.C. General Partner
By: /s/ Richard B. Kasdan
-------------------------------
Richard B. Kasdan, M.D., President
JEFFERSON MAGNETIC RESONANCE IMAGING
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
--------------------------------
Bernard D. Marcus, Trustee
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<PAGE>
Jefferson MRI, Inc.
By: /s/ Richard B. Kasdan
----------------------------------
Richard B. Kasdan, M.D., President
MONROEVILLE IMAGING CENTER
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
----------------------------------
Bernard D. Marcus, Trustee
Monroeville Imaging Center, P.C. General Partner
By: /s/ Richard B. Kasdan
----------------------------------
Richard B. Kasdan, M.D., President
MAGNETIC RESONANCE IMAGING OF WESTERN PA
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
---------------------------------
Bernard D. Marcus, Trustee
MRI of Western Pennsylvania Inc., General Partner
By: /s/ Richard B. Kasdan
---------------------------------
Richard B. Kasdan, M.D., President
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<PAGE>
PITTSBURGH COMPUTERIZED TOMOGRAPHY ASSOCIATES
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
---------------------------------
Bernard D. Marcus, Trustee
By: /s/ Richard B. Kasdan
---------------------------------
Richard B. Kasdan, M.D., General Partner
SOUTH HILLS COMPUTERIZED TOMOGRAPHY ASSOCIATES
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
-----------------------------------
Bernard D. Marcus, Trustee
By: /s/ Richard B. Kasdan
-----------------------------------
Richard B. Kasdan, M.D., General Partner
-24-
REGISTRATION AND SALE RIGHTS AGREEMENT
THIS REGISTRATION AND SALE RIGHTS AGREEMENT is made as of June 28,
1996, by and among U.S. Diagnostic Labs Inc. a Delaware corporation ("USDL" or
the "Company") and the holders of USDL securities set forth on Schedule A hereto
(the "Holders").
RECITALS
WHEREAS, the Company and the Holders are parties to the Asset Purchase
Agreement of even date herewith (the "Purchase Agreement") relating to the
purchase by a subsidiary of the Company of substantially all of the assets of
partnerships in which the Holders were partners, the consideration of which
consisted in part of Common Stock, $.01 par value, of the Company ("USDL Common
Stock");
WHEREAS, in order to induce the Holders to enter into the Purchase
Agreement and to induce the Company to purchase such assets pursuant to the
Purchase Agreement, the Holders and the Company hereby agree that this Agreement
shall govern (i) the rights of the Holders to cause the Company to register
shares of USDL Common Stock issued to Holders, (ii) the terms of the voting
proxy granted by the Holders and (iii) certain other matters as set forth
herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. REGISTRATION RIGHTS. The Company covenants and agrees with
respect to the USDL Common Stock, as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.12 hereof.
(c) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(d) The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document under the Act, and the declaration or order of effectiveness of
such registration statement or document.
(e) The term "Registrable Securities" means the USDL Common Stock
issued pursuant to the Purchase Agreement any other USDL Common Stock or other
securities issued in repect of such securities, excluding in all cases (x) any
Registrable Securities sold by a person in a transaction in which his rights
under this Section 1 are not assigned or are assigned in violation of this
Agreement and (y) any Registrable Securities that have already been registered
under the Act or which are freely transferable without registration under the
Act due to the lapse of time or otherwise and which are not subject to any sales
volume limitation under Rule 144 (as hereafter defined) based on the Holder's
holding's of Registrable Securities.
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<PAGE>
(f) The number of shares of "Registrable Securities then outstanding"
for the Company shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(g) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 REQUIRED FOR REGISTRATION.
(a) On or prior to December 1, 1996, the Company shall file with the
SEC a registration statement on Form S-3 or any other form permitted under the
Act covering the registration of the Registrable Securities and use its best
efforts to effect such registration under the Act covering the Registrable
Securities no later than January 31, 1997.
(b) Notwithstanding the foregoing, the Company shall be permitted to
postpone the filing of any registration pursuant to this Section 1.2 if during
the period from November 1, 1996 to January 31, 1997, the Company is engaged, or
has fixed plans to engage prior to February 28, 1997, in a registered public
offering in which at least 180,000 shares of Registrable Securities will be
included, or is engaged, or has fixed plans to engage within ninety (90) days of
December 1, 1996, in an acquisition that requires the filing of two years
financial statements under Section 3-05 of Regulation S-X or the filing of a
registration statement on Form S-4 or any other activity that, in the good faith
determination of the Board of Directors of the Company, would require premature
disclosure of such activity to the material detriment of the Company, then the
Company may at its option direct that such filing be delayed for a period not in
excess of sixty (60) days from the disclosure of such acquisition or activity,
or the date of commencement of such other material activity, as the case may be,
but in no event later than March 1, 1997.
1.3 "PIGGY-BACK" REGISTRATION RIGHTS. If (but without any obligation to
do so), during the three (3) year period commencing on the date hereof, the
Company proposes to register any of its Common Stock under the Act (a) in
connection with a public offering by the Company solely for cash or (b) on
behalf of stockholders other than the Holders in an underwritten offering or (c)
on behalf of any of its executive officers (other than a registration on Form
S-8 or S-4 or relating solely to the sale of securities to participants in a
Company stock plan), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given within ten (10) business days after sending of such notice by fax and
overnight courier by the Company, the Company shall, subject to the limitations
set forth in this Agreement (including the limitations of Section 1.7), include
in the Company's registration statement under the Act all of the Registrable
Securities that each such Holder has requested to be registered; provided,
however, that (i) the Company shall not be obligated to effect any registration
pursuant to this Section 1.3 after the Company has effected two (2) such
registrations and each such registration has been declared or ordered effective
and the Holders have had an opportunity to sell, (ii) the Company need not
include any Registrable Securities in any registration statement not relating to
a non-underwritten offering if such Registrable Securities are included in a
then current registration statement and (iii) nothing in this Section 1.3 shall
prevent the Company from at any time abandoning or delaying any such
registration without obligation to any Holder.
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<PAGE>
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1
to effect the registration of any Registrable Securities or to include
Registrable Securities in a registration statement, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its reasonable best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of one year or such shorter period
as required until the distribution contemplated in the Registration Statement
has been completed; provided, however, that such period shall be extended for a
period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Act.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant hereunder
to be listed on each securities exchange on which similar securities issued by
the Company are then listed.
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<PAGE>
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding the Holder, the
Registrable Securities held by the Holder, and the intended method of
disposition of such securities as shall be required to effect the registration
of such Holder's Registrable Securities.
1.6 EXPENSES OF REGISTRATION. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
1 for each Holder, including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto, but excluding underwriting discounts and commissions relating to
Registrable Securities; provided, however, that the Company shall not bear the
cost of any professional fees or costs of accounting, financial or legal
advisors to any of the Holders. Notwithstanding the foregoing, each Holder shall
pay all registration expenses which such Holder is required to pay under
applicable law.
1.7 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of USDL Common Stock, the Company shall not be
required under Section 1.3 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion, supported by a written opinion,
will not jeopardize the success of the offering by the Company. If the total
amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities to
be offered, other than by the Company, that the underwriters determine in their
sole discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, if any, including Registrable Securities, which the underwriters
determine in their sole discretion will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
selling stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder or in such other proportions
as shall mutually be agreed to by such selling stockholders). For purposes of
the preceding parenthetical concerning apportionment, for any selling
stockholder that is a holder of Registrable Securities and that is a partnership
or corporation, the partners, retired partners and stockholders of such holder,
or the estates and family members of any such partners and retired partners and
any trusts for the benefit of any of the foregoing persons shall be deemed to be
single "selling stockholder", and any pro-rata reduction with respect to such
"selling stockholder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such "selling stockholder", as defined in this sentence. The Company shall not
grant any other stockholder the right to include any shares of Common Stock in
such registration statement in priority to the Holders.
1.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Act or the 1934 Act, against any
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<PAGE>
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Act, or the 1934 Act, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, or any rule or regulation promulgated under
the Act, and the Company will pay to each such Holder, underwriter or
controlling person any reasonable legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.8(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
information furnished for use in connection with such registration by any such
Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with information furnished by such Holder for
use in connection with such registration; and each such Holder will pay any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.8(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.8(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder (which consent shall not be unreasonably withheld); provided, that, in no
event shall any indemnity under this subsection 1.8(b) exceed the gross proceeds
from the offering relating to securities sold by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.8 of notice of the commencement of any action (including any governmental
action), such indemnified party shall, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel selected by the
indemnifying party and approved by the indemnified party (whose approval shall
not be unreasonably withheld); provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to
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<PAGE>
retain one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.8.
(d) If the indemnification provided for in this Section 1.8 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this Section 1.8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
1.9 LOCK-UP PROVISION. (a) Each Holder hereby agrees to be subject to a
lock-up until the earlier of June 30, 1997 or such date on which the Company
announces earnings which are sufficient to release the Escrow Shares (as defined
in the Company's prospectus dated August 11, 1995) to the owners thereof as a
result of the Company having achieved the "Minimum Pretax Income" required for
their release (the "Waiver Acceleration Event") pursuant to the terms of the
Escrow Agreement governing such shares. During such lock-up period, the Holder
agrees not to directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at any time during such period,
provided that the lock-up shall be released on an aggregate of 60,000 shares per
month commencing February 1, 1997 until June 30, 1997 provided that no more than
an aggregate of 120,000 shares may be sold by the Holders in any calendar month
until June 30, 1997. This Section 1.9 shall be binding upon any transferee of
the Registrable Securities and the certificates shall bear a legend to such
effect.
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(b) To the extent that any executive officer of the Company sells in a
transaction on the Nasdaq National Market for his own account more than 10,000
shares of USDL Common Stock in any fiscal quarter, then the lock-up in Section
1.9(a) above shall be released on such number of shares of USDL Common Stock
held by Holder calculated by multiplying the number of shares held by such
Holder by a fraction, the numerator of which is the number of shares of USDL
Common Stock sold by such executive officer and the denominator is the number of
shares of USDL Common Stock beneficially owned by such executive officer prior
to such sale. To the extent that such shares are not subject to an effective
registration statement, then the Company will be obligated to purchase the
number of shares permitted to be sold by Holder at the same gross price with no
commission or mark-up deducted that the executive officer sold shares.
(c) In order to enforce the foregoing covenant, the Company may impose
stock-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
2. TAG ALONG RIGHTS; PROXY.
2.1 TAG ALONG RIGHTS. In the event of a "Change in Control" of the
Company, the Company shall be obligated to purchase from each Holder all shares
of Registrable Securities held by a Holder at a per share price equal to the
highest per price share received by the Company's executive officers and
directors as of the date of this Agreement ("Management") in any sale
transaction made by any such person in the twelve (12) month period prior to, or
in conjunction with, the Change of Control. For purposes of this section 2.1
"Change of Control" shall mean any sale or transfer of USDL Common Stock by
Management which results in a reduction of 25% or more in the number of shares
of USDL Common Stock beneficially owned by such persons as a group on the date
of this Agreement; provided that the cancellation of the Escrow Shares referred
to in Section 1.9 above and the sale by Gordon Rausser of up to 200,000 shares
shall be excluded from such calculation.
2.2 VOTING AGREEMENT AND PROXY. The Holders hereby grant to Jeffrey A.
Goffman, Chairman of the Board of the Company, an irrevocable proxy to vote the
Registrable Securities in the election of directors of the Company and in any
vote of stockholders involving proposed changes of control, mergers and other
similar extraordinary transactions. Such proxy will be voted at the direction of
a majority of the Board of Directors of the Company. Such proxy shall have a
term of three years, but shall automatically terminate upon the sale of such
shares by a Holder to an unaffiliated third party. Holders agree to execute any
documents necessary to enforce the provisions of this section.
2.3 SELLING AGENT; BLOCK TRADES. If a Holder desires to sell any
Registrable Securities in an open market transaction prior to June 30, 1998,
such shares shall be made through D. H. Blair & Co., Inc. ("Blair") or another
market maker reasonably acceptable to the Company and the Holder (a "Sales
Agent"). Prior to the appointment of a Sales Agent other than Blair, such Sales
Agent shall agree, if requested by the Company, to execute any such sales in a
manner which does not have a material adverse impact on the market for the USDL
Common Stock. Any such sales shall be on terms to be negotiated between the
Sales Agent and the Holder. A Holder shall not be obligated to use any Sales
Agent who requests such Holder to pay any fees other than customary brokerage
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<PAGE>
commissions for a similar-sized transactions. Notwithstanding the foregoing,
privately negotiated "block" trades (i.e., a sale of at least 25,000 shares)
shall be permitted to be made without the Sales Agent. Prior to completion of
such a block trade, a Holder shall give the Company two (2) business days'
notice of such proposed transaction and the Company shall have such period to
purchase or arrange for the purchase of such shares on identical terms.
3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided in Section 3.2
below and elsewhere herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties (including transferees of any shares of Registrable
Securities). Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assign any rights, remedies, obligations, or liabilities under or
by reason of this Agreement, except as expressly provided in this Agreement.
3.2 TRANSFER OF RIGHTS. The rights granted to the Holder pursuant to
Section 1 may not be transferred or assigned, except if the Holder is a
partnership or a business trust, it may transfer rights granted pursuant to
Section 1 to any of its partners or beneficiaries, as the case may be, to whom
USDL Common Stock is transferred. In addition, any person may transfer such
rights to an immediate family member simultaneously with the transfer of USDL
Common Stock subject to the restrictions contained herein. In the event of any
such transfers, for purposes of this Agreement, such permitted transferee shall
be deemed to be the Holder of such shares of USDL Common Stock.
3.3 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the Commonwealth of Pennsylvania as applied to agreements
among Pennsylvania residents entered into and to be performed entirely within
Pennsylvania without regard to principles of conflicts of law.
3.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.6 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly delivered upon personal delivery, 48 hours after deposit in the United
States mail, certified or registered mail, return receipt requested, or 24 hours
after delivery to an overnight courier that guarantees next-day delivery:
(a) If to a Holder, to:
The address set forth on Schedule A hereof.
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with a copy to:
Bernard D. Marcus
Trustee, Allegheny Imaging Business Trust
c/o Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, Pennsylvania
Fax: (412) 391-8758
Ronald Saupe, Esq.
Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, Pennsylvania
Fax: (412) 391-8758
or to such other person or address as the Holder shall furnish to the Company in
writing.
(b) If to the Company, 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
or to such other person or address as the Company shall furnish to the Holders
in writing.
3.7 EXPENSES. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
3.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.
3.9 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms. The parties hereto shall endeavor to replace any such
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<PAGE>
unenforceable provision or provisions with a valid and enforceable provision or
provisions which shall have substantially the same economic effect as the
unenforceable provision or provisions.
3.10 ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
U.S. DIAGNOSTIC LABS INC.
By: /s/ Jeffrey A. Goffman
---------------------------------
Jeffrey A. Goffman
Chairman
HOLDERS:
CENTRE COMMONS MRI, LTD.
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
----------------------------------
Bernard D. Marcus, Trustee
Centre Commons MRI P.C. General Partner
By: /s/ Richard B. Kasdan
------------------------------------
Richard B. Kasdan, M.D., President
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<PAGE>
JEFFERSON MAGNETIC RESONANCE IMAGING
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
-----------------------------------
Bernard D. Marcus, Trustee
Jefferson MRI, Inc.
By: /s/ Richard B. Kasdan
-----------------------------------
Richard B. Kasdan, M.D., President
MONROEVILLE IMAGING CENTER
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
----------------------------------
Bernard D. Marcus, Trustee
Monroeville Imaging Center, P.C. General Partner
By: /s/ Richard B. Kasdan
----------------------------------
Richard B. Kasdan, M.D., President
MAGNETIC RESONANCE IMAGING OF WESTERN PA
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
-----------------------------------
Bernard D. Marcus, Trustee
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<PAGE>
MRI of Western Pennsylvania Inc., General Partner
By: /s/ Ricgard B. Kasdan
------------------------------------
Richard B. Kasdan, M.D., President
PITTSBURGH COMPUTERIZED TOMOGRAPHY ASSOCIATES
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
-----------------------------------
Bernard D. Marcus, Trustee
By: /s/ Richard B. Kasdan
-----------------------------------
Richard B. Kasdan, M.D., President
SOUTH HILLS COMPUTERIZED TOMOGRAPHY ASSOCIATES
Allegheny Imaging Business Trust
a Pennsylvania Business Trust, General Partner
By: /s/ Bernard D. Marcus
-----------------------------------
Bernard D. Marcus, Trustee
By: /s/ Richard B. Kasdan
-----------------------------------
Richard B. Kasdan, M.D., President
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<PAGE>
SCHEDULE A
NAME AND ADDRESS NUMBER OF SHARES
- ---------------- ----------------
Centre Commons MRI, Ltd. 223,537
c/o Ronald F. Saupe, Esq.
Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, PA 15219-6401
Jefferson Magnetic Resonance Imaging 255,608
c/o Ronald F. Saupe, Esq.
Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, PA 15219-6401
Magnetic Resonance Imaging of Western Pa. 40,050
c/o Ronald F. Saupe, Esq.
Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, PA 15219-6401
Monroeville Imaging Center 175,733
c/o Ronald F. Saupe, Esq.
Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, PA 15219-6401
Pittsburgh Computerized Tomography Associates 8,010
c/o Ronald F. Saupe, Esq.
Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, PA 15219-6401
South Hills Computerized Tomography Associates 47,062
c/o Ronald F. Saupe, Esq.
Marcus & Shapira LLP
One Oxford Center, 35th Floor
301 Grant Street
Pittsburgh, PA 15219-6401
-13-
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into as of this 18th day of June 1996,
between U.S. Diagnostic Labs Inc. (the "Company"), and Joseph A. Paul (the
"Executive").
WHEREAS, the Company desires to employ Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. TERM OF EMPLOYMENT.
(a) TERM. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for a period commencing on July 1,
1996 and ending five years from the date hereof (the "Term").
(b) CONTINUING EFFECT. Notwithstanding any termination of this
Agreement at the end of the Term or otherwise, the provisions of Sections 6 and
7 shall remain in full force and effect and the provisions of Sections 6(a),
6(c) and 7 shall be binding upon the legal representatives, successors and
assigns of the Executive, except as otherwise provided in this Agreement.
2. DUTIES.
(a) GENERAL DUTIES. The Executive shall serve as President and a
Director of the Company with duties and responsibilities that are customary for
such executives. The Executive will use his best efforts to perform his duties
and discharge his responsibilities pursuant to this Agreement competently,
carefully and faithfully. The Executive shall be appointed to the managment
committee composed of other senior executives of the Company.
(b) DEVOTION OF TIME. The Executive will devote substantially full
time during normal business hours (exclusive of periods of sickness and
disability and of such normal holiday and vacation periods as have been
established by the Company) to the affairs of the Company. It is expressly
understood that the Executive will not enter the employ of or serve as a
consultant to, or in any way perform any services with or without compensation
to, any other persons, business or organization (other than as set forth above
and except as set forth on Exhibit A hereto, which shall not interfere with
Executive's performance hereunder) without the prior consent of the board of
directors of the Company; provided, that the Executive shall be permitted to
devote a limited amount of his time, without compensation, to charitable or
similar organizations.
(c) MEDICAL OPPORTUNITIES. Executive agrees to present to the Company
all potential opportunities for acquisitions, joint ventures and similar
transactions in the medical or healthcare field. Executive may pursue such
opportunities if declined by the Company.
3. COMPENSATION AND EXPENSES.
(a) SALARY. For the services of the Executive to be rendered under
this Agreement, the Company shall pay the Executive an annual base salary of
$200,000 during the first year of the Term, which thereafter shall be increased
at least annually and such additional amounts as set by the discretion
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<PAGE>
of the board of directors. Provided, however, in no event shall the Executive's
annual base salary for the second year be less than 105% of the first year base
salary ($210,000) nor shall the annual base salary for the remaining years of
the Term be less than 105% of the previous year's minimum base salary. The
annual base salary under this Section 3(a) will be reduced, however, to the
extent that the Executive elects to defer any portion thereof under the terms of
any deferred compensation or savings plan maintained by the Company. The Company
will pay the Executive his annual salary in equal installments no less
frequently than bimonthly in accordance with the Company's policies.
(b) BONUS. The Executive shall be paid an annual bonus of $50,000 for
the first year of the Term. For the remaining years of the Term, Executive shall
be paid a bonus equal in amount to that paid to the Company's Chief Executive
Officer. Such bonus will be paid within 120 days of the end of each fiscal year.
(c) STOCK OPTIONS. Employee shall be granted 100,000 options under
the Company's 1995 Long Term Incentive Plan ("Plan") at $7.125 and 20,000 shares
of restricted stock under the plan which shall vest over three years. Executive
shall also be entitled to discretionary grants of options under the Plan. All
options and restricted shares granted to Executive shall vest if Executive is
terminated without cause or upon a change in control of the Company.
(d) EXPENSES. In addition to any compensation received pursuant to
Section 3(a) and (b), the Company will reimburse or advance funds to the
Executive for all reasonable travel, entertainment and miscellaneous expenses
incurred in connection with the performance of his duties under this Agreement,
provided that the Executive properly accounts for such expenses to the Company
in accordance with the Company's practices. Such reimbursement or advances will
be made in accordance with policies and procedures of the Company in effect from
time to time relating to reimbursement of or advances to executive officers.
(e) MOVING EXPENSES. Executive shall receive reimbursement for all
reasonable out-of-pocket moving expenses, including closing costs on a new house
in the West Palm Beach, Florida area and the commission on the sale of
Executive's existing house.
4. BENEFITS.
(a) VACATION. For each 12-month period during the Term, the Executive
will be entitled to four (4) weeks of vacation without loss of compensation or
other benefits to which he is entitled under this Agreement, to be taken at such
times as the Executive may select and the affairs of the Company may permit.
(b) EMPLOYEE BENEFIT PROGRAMS. During the Term, the Executive will be
entitled to participate in any pension, insurance or other employee benefit plan
that is maintained at that time by the Company for its executive officers,
including programs of life and medical insurance and reimbursement of membership
fees in civic, social and professional organizations.
(c) AUTOMOBILE. The Company shall provide the Executive with a
non-accountable automobile allowance of $1,000 per month which includes all
costs associated with the use of an automobile including, without limitation,
lease or loan payments, fuel, maintenance and insurance.
5. TERMINATION.
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<PAGE>
(a) TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment pursuant to the terms of this Agreement at any time for cause by
giving written notice of termination. Such termination will become effective
upon the giving of such notice, except that termination based upon clause (iii)
below shall not become effective unless the Executive shall fail to correct such
breach within three months of receipt of written notice. At the conclusion of
such three month period, this alleged breach shall be deemed to have been cured
unless written notice to the contrary is given. Upon any such termination for
cause, the Executive shall have no right to compensation, bonus or reimbursement
under Section 3, or to participate in any employee benefit programs under
Section 4 for any period subsequent to the effective date of termination.
"Cause" shall mean: (i) the Executive is convicted of a felony which is related
to the Executive's employment or the business of the Company; (ii) the
Executive, in carrying out his duties hereunder, has been found in a civil
action to have committed gross negligence, willful gross misconduct,
misappropriated Company funds or otherwise defrauded the Company, in any case,
resulting in material harm to the Company; and (iii) the Executive materially
breaches any provision of Sections 2, 6 or 7.
(b) DEATH OR DISABILITY. Except for the Company's obligations
contained in this Section 5, this Agreement and the obligations of the Company
hereunder will terminate upon the death or disability of the Executive. For
purposes of this Section 5(b), "disability" shall mean that for a period of six
months in any 12-month period the Executive is incapable of substantially
fulfilling the duties set forth in Section 2 because of physical, mental or
emotional incapacity resulting from injury, sickness or disease.
Upon termination by death or disability, the Company will pay the
Executive or his legal representative, as the case may be: (i) his annual salary
at such time through the date of such termination of employment and (ii) the
Executive's pro-rata bonus due under Section 3(b) of this Agreement. Such sums
shall be paid upon the same terms and conditions as if this Agreement were in
fully force and effect.
(c) SPECIAL TERMINATION. In the event that (i) the Executive, with or
without change in title or formal corporate action, shall no longer exercise all
of the duties and responsibilities and shall no longer possess substantially all
the authority set forth in Section 2; or (ii) the Company materially breaches
this Agreement or the performance of its duties and obligations hereunder; or
(iii) any entity or person not now an executive officer of the Company becomes
either individually or as part of a group the beneficial owner of 40% or more of
the Company's common stock or (iv) the merger, consolidation, reorganization or
liquidation of the Company (a "Change in Control"), the Executive, by written
notice to the Company, may elect to deem the Executive's employment hereunder to
have been terminated by the Company without cause, in which event the Executive
shall receive lump sum compensation equal to 2.9 times is annual salary and
incentive or bonus payments, if any, as shall have been paid to the Executive
during the Company's most recent fiscal year. If the total amount of
compensation under this paragraph were to exceed three (3) times the Executive's
base amount (the average annual taxable compensation of the Executive for the
five (5) years preceding the year in which the Change of Control occurs) the
Company and the Executive may agree to reduce the lump sum compensation to be
received by Executive in order to avoid the imposition of the "golden parachute"
tax. Alternatively, in such event, the Executive, by written notice to the
Company, may elect to refuse all further obligations of the Company under
Section 3 and Section 4 and to release the Company with respect thereto, in
which event the Company shall release the Executive from the provisions of
Section 6.
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<PAGE>
6. NONCOMPETITION AGREEMENT.
(a) COMPETITION WITH THE COMPANY. Except as provided for in Sections
2(b) and 6(b) hereof, until termination of his employment and for a period of 12
months commencing on the date of termination, the Executive, directly or
indirectly, in association with or as a stockholder, director, officer,
consultant, employee, partner, joint venturer, member or otherwise of or through
any person, firm, corporation, partnership, association or other entity, will
not compete with the Company or any of its affiliates in the offer, sale or
marketing of radiology products or services, including radiology practice
management services, that are competitive with the products or services offered
by the Company as of the date of this Agreement, or any other business engaged
in by the Company after the date of this Agreement in which Executive is
actively involved on behalf of the Company, within any metropolitan area in the
United States or elsewhere in which the Company is then engaged in the offer and
sale of competitive products or services except as provided in (b) below.
Additionally, the foregoing shall not prevent Executive from accepting
employment with an enterprise engaged in two or more lines of business, one of
which is the same or similar to the Company's business (the "Prohibited
Business") if Executive's employment is totally unrelated to the Prohibited
Business; provided, further, the foregoing shall not prohibit Executive from
owning up to 5% of the securities of any publicly-traded enterprise provided
Executive is not an employee, director, officer, consultant to such enterprise
or otherwise reimbursed for services rendered to such enterprise.
(b) SOLICITATION OF CUSTOMERS. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly or
indirectly, will not seek Prohibited Business from any Customer (as defined
below) on behalf of any enterprise or business other than the Company, refer
Prohibited Business from any Customer to any enterprise or business other than
the Company or receive commissions based on sales or otherwise relating to the
Prohibited Business from any Customer, or any enterprise or business other than
the Company. For purposes of this Section 6(b), the term "Customer" means any
person, firm, corporation, partnership, association or other entity to which the
Company or any of its affiliates sold or provided goods or services during the
12-month period prior to the time at which any determination is required to be
made as to whether any such person, firm, corporation, partnership, association
or other entity is a Customer.
(c) NO PAYMENT. The Executive acknowledges and agrees that no separate
or additional payment will be required to be made to him in consideration of his
undertakings in this Section 6.
(d) RELEASE. The provisions of this Section 6 shall not apply if this
Agreement is terminated by the Company without cause or by Executive upon a
material breach by the Company.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive
acknowledges that during his employment he will learn and will have access to
confidential information regarding the Company and its affiliates, including
without limitation (i) confidential or secret plans, programs, documents,
agreements or other material relating to the business, services or activities of
the Company and its affiliates and (ii) trade secrets, market reports, customer
investigations, customer lists and other similar information that is proprietary
information of the Company or its affiliates (collectively referred to as
"Confidential Information"). All records, files, materials and Confidential
Information excluding personal items, obtained by the Executive in the course of
his employment with the Company are confidential and proprietary and shall
remain the exclusive property of the Company or its affiliates, as the case may
be. The Executive will not, except in connection with and as required by his
performance of his duties under this Agreement, for any reason use for his own
benefit or the benefit of any person or entity with which
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<PAGE>
he may be associated or disclose any such Confidential Information to any
person, firm, corporation, association or other entity for any reason or purpose
whatsoever without the prior written consent of the board of directors of the
Company, unless such Confidential Information previously shall have become
public knowledge through no action by or omission of the Executive.
8. ASSIGNABILITY. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and be binding upon the successors
or assigns of the Company, provided that such successor or assign shall acquire
all or substantially all of the assets and business of the Company. The
Executive's obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
9. SEVERABILITY.
(a) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in this Agreement are reasonable
in light of the circumstances as they exist on the date hereof. Should a
decision, however, be made at a later date by an arbitration proceeding that the
character, duration or geographical scope of such provisions is unreasonable,
then it is the intention and the agreement of the Executive and the Company that
this Agreement shall be construed by the tribunal in such a manner as to impose
only those restrictions on the Executive's conduct that are reasonable in the
light of the circumstances and as are necessary to assure to the Company the
benefits of this Agreement. If in an arbitration proceeding, a tribunal shall
refuse to enforce all of the separate covenants deemed included herein because
taken together they are more extensive than necessary to assure to the Company
the intended benefits of this Agreement, it is expressly understood and agreed
by the parties hereto that the provisions of this Agreement that, if eliminated,
would permit the remaining separate provisions to be enforced in such proceeding
shall be deemed eliminated, for the purposes of such proceeding, from this
Agreement.
(b) If any provision of this Agreement otherwise is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from
either of the parties to the other. The remaining provisions of this Agreement
shall be valid and binding and of like effect as though such provision were not
included .
10. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
To the Company: U.S. Diagnostic Labs Inc.
777 S. Flagler Drive
Suite 1104 West
West Palm Beach, Florida 33401
Attention: Jeffrey A. Goffman
To the Executive: Joseph Paul
16025 S.W. 80th Avenue
Miami, Florida 33157
With a Copy to: Mark Mintz, Esq.
Reiss Mintz & Trupman
1700 San Souli Boulevard
North Miami, Florida 33181
Fax: (305) 893-5511
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
12. ARBITRATION. Any controversy, dispute or claim arising out of or
relating to this Agreement, or its interpretation, application, implementation,
breach or enforcement which the parties are unable to resolve by mutual
agreement, shall be settled by submission by either party of the controversy,
claim or dispute to binding arbitration in West Palm Beach, Florida (unless the
parties agree in writing to a
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different location), before a single arbitrator in accordance with the rules of
the American Arbitration Association then in effect. In any such arbitration
proceeding the parties agree to provide all discovery deemed necessary by the
arbitrator. The decision and award made by the arbitrator shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
13. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding including that in
arbitration as provided for in Section 12 of this Agreement, is commenced to
enforce the provisions of this Agreement, the prevailing party shall be entitled
to an award by the court or arbitrator, as appropriate, of reasonable attorney's
fee, costs and expenses.
14. GOVERNING LAW. This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
Floridia without regard to choice of law considerations.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought.
16. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
U.S. DIAGNOSTIC LABS. INC.
By: /s/ Jeffrey A. Goffman
-----------------------------------
Jeffrey A. Goffman, Chairman
/s/ Joseph A. Paul
--------------------------
Joseph A. Paul
-6-
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into as of this 1st day of June 1996,
between U. S. Diagnostic Labs Inc. (the "Company"), and Michael D. Karsch (the
"Executive").
WHEREAS, the Company desires to employ Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. TERM OF EMPLOYMENT.
(a) TERM. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for a period commencing on the date
of this Agreement and ending June 30, 2001, provided that Executive may postpone
the commencement of the term to July 1, 1996 (the "Term").
(b) CONTINUING EFFECT. Notwithstanding any termination of this
Agreement at the end of the Term or otherwise, the provisions of Sections 6 and
7 shall remain in full force and effect and the provisions of Sections 6(a),
6(c) and 7 shall be binding upon the legal representatives, successors and
assigns of the Executive, except as otherwise provided in this Agreement.
2. DUTIES.
(a) GENERAL DUTIES. The Executive shall serve as Executive Vice
President, General Counsel and Secretary of the Company with duties and
responsibilities that are customary for such executives. The Executive will use
his best efforts to perform his duties and discharge his responsibilities
pursuant to this Agreement competently, carefully and faithfully.
(b) DEVOTION OF TIME. The Executive will devote substantially full
time during normal business hours (exclusive of periods of sickness and
disability and of such normal holiday and vacation periods as have been
established by the Company) to the affairs of the Company. It is expressly
understood that the Executive will not enter the employ of any other persons,
business or organization without the prior consent of the chairman of the board
of directors of the Company; provided, that the Executive shall be permitted to
devote a limited amount of his time, without compensation, to charitable or
similar organizations.
(c) MEDICAL OPPORTUNITIES. Executive agrees to present to the Company
all potential opportunities for acquisitions, joint ventures and similar
transactions in the medical or healthcare field. Executive may pursue such
opportunities if declined the Company.
3. COMPENSATION AND EXPENSES.
(a) SALARY. For the services of the Executive to be rendered under
this Agreement, the Company shall pay the Executive an annual base salary of
$200,000 during the first year of the Term, which thereafter shall be increased
at least annually and such additional amounts as set by the discretion of the
Board of Directors. Provided, however, in no event shall the Executive's annual
base salary for the second year be less
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than 105% of the first year base salary ($210,000) nor shall the annual base
salary for the remaining years of the Term be less than 105% of the previous
year's minimum base salary. The annual base salary under this Section 3(a) will
be reduced, however, to the extent that the Executive elects to defer any
portion thereof under the terms of any deferred compensation or savings plan
maintained by the Company. The Company will pay the Executive his annual salary
in equal installments no less frequently than bimonthly in accordance with the
Company's policies.
(b) BONUS. The Executive shall be paid an annual bonus of $50,000 for
1996 and for each calendar year thereafter will receive a bonus in an amount
equal to the bonus paid to the Chief Executive Officer of the Company. Such
bonus will be paid within 60 days of the end of each fiscal year.
(c) STOCK OPTIONS. Employee shall be granted 100,000 options under
the Company's 1995 Long Term Incentive Plan ("Plan") at an exercise price equal
to the average stock price for April 1996, as Executive was first extended a
formal offer by the Company in early April 1996. Such options will vest 50,000
in each year, provided that for the first 50,000 to vest the last sale price for
the Company's Common Stock must be at least $10.00 for one day and the last sale
price must be at least $15.00 for one day for the second 50,000 to vest.
Executive shall also be entitled to discretionary grants of options under the
Plan. The Executive shall also be granted 25,000 shares of restricted stock
under the plan at no additional cost, which shall vest over two years. In
addition, the 50,000 warrants granted to Executive in October 1995 shall be
ratified by the Board. All options and shares granted to Executive shall vest if
Executive is terminated without cause or upon a change in control of the
Company.
(d) EXPENSES. In addition to any compensation received pursuant to
Section 3(a) and (b), the Company will reimburse or advance funds to the
Executive for all reasonable travel, entertainment and miscellaneous expenses
incurred in connection with the performance of his duties under this Agreement,
provided that the Executive properly accounts for such expenses to the Company
in accordance with the Company's practices. Such reimbursement or advances will
be made in accordance with policies and procedures of the Company in effect from
time to time relating to reimbursement of or advances to executive officers.
(e) MOVING EXPENSES. The Company has requested that Executive and his
family relocate to the West Palm Beach, Florida area by September 1, 1996 and
the Company will reimburse Executive for all out-of-pocket costs, including but
not limited to: the packing and shipment of household goods and vehicle (or
cancellation of the lease on such vehicle) to West Palm Beach , the subsequent
closing costs of a new home and other temporary travel costs. Such reimbursed
expenses will be "grossed up" to offset any additional federal tax liability as
a result of the Company's reimbursement of expenses. In addition, if Executive
is able to sell his New York apartment, the Company will reimburse Executive for
the difference between the sales price of his existing apartment and the
outstanding mortgage amount (approximately $172,000 at June 1, 1996). If unable
to sell the apartment, the Company shall either (i) arrange for a relocation
service to purchase the apartment from Executive and pay Executive or such
service the difference between the purchase price and the mortgage amount, (ii)
purchase such apartment for the mortgage amount or (iii) shall reimburse
Executive for the difference between his carrying cost and the rent he receives
on the apartment.
(f) LOAN. In order that Executive may purchase a house in the West Palm
Beach area, the Company shall loan Executive up to $100,000 for the down
payment. At the Company's option, the loan
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may be secured either by a second mortgage on the house or a pledge of the
restricted stock granted pursuant to Section 3(c) above. The Executive shall
repay $20,000 of such loan from his 1996 bonus and shall repay the remaining
balance by December 31, 1997.
4. BENEFITS.
(a) VACATION. For each 12-month period during the Term, the Executive
will be entitled to four (4) weeks of vacation without loss of compensation or
other benefits to which he is entitled under this Agreement, to be taken at such
times as the Executive may select and the affairs of the Company may permit.
(b) EMPLOYEE BENEFIT PROGRAMS. During the Term, the Executive will be
entitled to participate in any pension, insurance or other employee benefit plan
that is maintained at that time by the Company for its executive officers,
including programs of life and medical insurance and reimbursement of membership
fees in civic, social and professional organizations.
(c) AUTOMOBILE. The Company shall provide the Executive with a
non-accountable automobile allowance of $1,000 per month which includes all
costs associated with the use of an automobile including, without limitation,
lease or loan payments, fuel, maintenance and insurance.
5. TERMINATION.
(a) TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment pursuant to the terms of this Agreement at any time for cause by
giving written notice of termination. Such termination will become effective
upon the giving of such notice, except that termination based upon clause (iii)
below shall not become effective unless the Executive shall fail to correct such
breach within three months of receipt of written notice. At the conclusion of
such three month period, this alleged breach shall be deemed to have been cured
unless written notice to the contrary is given. Upon any such termination for
cause, the Executive shall have no right to compensation, bonus or reimbursement
under Section 3, or to participate in any employee benefit programs under
Section 4 for any period subsequent to the effective date of termination.
"Cause" shall mean: (i) the Executive is convicted of a felony which is related
to the Executive's employment or the business of the Company; (ii) the
Executive, in carrying out his duties hereunder, has been found in a civil
action to have committed gross negligence, willful gross misconduct resulting,
misappropriated Company funds or otherwise defrauded the Company, in any case,
in material harm to the Company; and (iii) the Executive materially breaches any
provision of Sections 2, 6 or 7.
(b) DEATH OR DISABILITY. Except for the Company's obligations
contained in this Section 5, this Agreement and the obligations of the Company
hereunder will terminate upon the death or disability of the Executive. For
purposes of this Section 5(b), "disability" shall mean that for a period of six
months in any 12-month period the Executive is incapable of substantially
fulfilling the duties set forth in Section 2 because of physical, mental or
emotional incapacity resulting from injury, sickness or disease.
Upon termination by death or disability, the Company will pay the
Executive or his legal representative, as the case may be: (i) his annual salary
at such time through the date of such termination of employment and (ii) the
Executive's pro-rata bonus due under Section 3(b) of this Agreement. Such sums
shall be paid upon the same terms and conditions as if this Agreement were in
fully force and effect.
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(c) SPECIAL TERMINATION. In the event that (i) the Executive, with or
without change in title or formal corporate action, shall no longer exercise all
of the duties and responsibilities and shall no longer possess substantially all
the authority set forth in Section 2; or (ii) the Company materially breaches
this Agreement or the performance of its duties and obligations hereunder; or
(iii) any entity or person not now an executive officer of the Company becomes
either individually or as part of a group the beneficial owner of 40% or more of
the Company's common stock, or (iv) the merger, consolidation, reorganization or
liquidation of the Company (a "Change in Control"), the Executive, by written
notice to the Company, may elect to deem the Executive's employment hereunder to
have been terminated by the Company without cause, in which event the Executive
shall receive lump sum compensation equal to 2.9 times his annual salary and
incentive or bonus payments, if any, as shall have been paid to the Executive
during the Company's most recent fiscal year, provided that if the Change in
Control occurs prior to December 31, 1997, Executive's total compensation shall
be deemed to be $250,000 per year for purposes of this Section. If the total
amount of the compensation under this paragraph were to exceed three (3) times
the Executive's base amount (the average annual taxable compensation of the
Executive for the five (5) years preceding the year in which the Change of
Control occurs) the Company and the Executive may agree to reduce the lump sum
compensation to be received by Executive in order to avoid the imposition of the
"golden parachute" tax. Alternatively, in such event, the Executive, by written
notice to the Company, may elect to refuse all further obligations of the
Company under Section 3 and Section 4 and to release the Company with respect
thereto, in which event the Company shall release the Executive from the
provisions of Section 6.
6. NONCOMPETITION AGREEMENT.
(a) COMPETITION WITH THE COMPANY. Except as provided for in Sections
2(b) and 6(b) hereof, until termination of his employment and for a period of 12
months commencing on the date of termination, the Executive, directly or
indirectly, in association with or as a stockholder, director, officer,
consultant, employee, partner, joint venturer, member or otherwise of or through
any person, firm, corporation, partnership, association or other entity, will
not compete with the Company or any of its affiliates in the offer, sale or
marketing of radiology products or services, including radiology practice
management services, that are competitive with the products or services offered
by the Company as of the date of this Agreement, or any other business engaged
in by the Company after the date of this Agreement in which Executive is
actively involved on behalf of the Company, within any metropolitan area in the
United States or elsewhere in which the Company is then engaged in the offer and
sale of competitive products or services except as provided in (b) below.
Additionally, the foregoing shall not prevent Executive from accepting
employment with an enterprise engaged in two or more lines of business, one of
which is the same or similar to the Company's business (the "Prohibited
Business") if Executive's employment is totally unrelated to the Prohibited
Business; provided, further, the foregoing shall not prohibit Executive from
owning up to 5% of the securities of any publicly-traded enterprise provided
Executive is not an employee, director, officer, consultant to such enterprise
or otherwise reimbursed for services rendered to such enterprise.
(b) SOLICITATION OF CUSTOMERS. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly or
indirectly, will not seek Prohibited Business from any Customer (as defined
below) on behalf of any enterprise or business other than the Company, refer
Prohibited Business from any Customer to any enterprise or business other than
the Company or receive commissions based on sales or otherwise relating to the
Prohibited Business from any Customer, or any enterprise or business other than
the Company. For purposes of this Section 6(b), the term "Customer" means any
person, firm,
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corporation, partnership, association or other entity to which the Company or
any of its affiliates sold or provided goods or services during the 12-month
period prior to the time at which any determination is required to be made as to
whether any such person, firm, corporation, partnership, association or other
entity is a Customer.
(c) NO PAYMENT. The Executive acknowledges and agrees that no separate
or additional payment will be required to be made to him in consideration of his
undertakings in this Section 6.
(d) RELEASE. The provisions of this Section 6 shall not apply if this
Agreement is terminated by the Company without cause or by Executive upon a
material breach by the Company.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive
acknowledges that during his employment he will learn and will have access to
confidential information regarding the Company and its affiliates, including
without limitation (i) confidential or secret plans, programs, documents,
agreements or other material relating to the business, services or activities of
the Company and its affiliates and (ii) trade secrets, market reports, customer
investigations, customer lists and other similar information that is proprietary
information of the Company or its affiliates (collectively referred to as
"Confidential Information"). All records, files, materials and Confidential
Information excluding personal items, obtained by the Executive in the course of
his employment with the Company are confidential and proprietary and shall
remain the exclusive property of the Company or its affiliates, as the case may
be. The Executive will not, except in connection with and as required by his
performance of his duties under this Agreement, for any reason use for his own
benefit or the benefit of any person or entity with which he may be associated
or disclose any such Confidential Information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever without the
prior written consent of the board of directors of the Company, unless such
Confidential Information previously shall have become public knowledge through
no action by or omission of the Executive.
8. ASSIGNABILITY. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and be binding upon the successors
or assigns of the Company, provided that such successor or assign shall acquire
all or substantially all of the assets and business of the Company. The
Executive's obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
9. SEVERABILITY.
(a) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in this Agreement are reasonable
in light of the circumstances as they exist on the date hereof. Should a
decision, however, be made at a later date by an arbitration proceeding that the
character, duration or geographical scope of such provisions is unreasonable,
then it is the intention and the agreement of the Executive and the Company that
this Agreement shall be construed by the tribunal in such a manner as to impose
only those restrictions on the Executive's conduct that are reasonable in the
light of the circumstances and as are necessary to assure to the Company the
benefits of this Agreement. If in an arbitration proceeding, a tribunal shall
refuse to enforce all of the separate covenants deemed included herein because
taken together they are more extensive than necessary to assure to the Company
the intended benefits of this Agreement, it is expressly understood and agreed
by the parties hereto that the provisions of this Agreement that, if eliminated,
would permit the remaining separate provisions to be
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enforced in such proceeding shall be deemed eliminated, for the purposes of such
proceeding, from this Agreement.
(b) If any provision of this Agreement otherwise is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from
either of the parties to the other. The remaining provisions of this Agreement
shall be valid and binding and of like effect as though such provision were not
included .
10. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
To the Company: U.S. Diagnostic Labs Inc.
777 S. Flagler Drive
West Palm Beach, Florida 33401
Att: Jeffrey A. Goffman
To the Executive: Michael D. Karsch
c/o U.S. Diagnostic Labs Inc.
777 S. Flagler Drive
West Palm Beach, Florida 33401
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
12. ARBITRATION. Any controversy, dispute or claim arising out of or
relating to this Agreement, or its interpretation, application, implementation,
breach or enforcement which the parties are unable to resolve by mutual
agreement, shall be settled by submission by either party of the controversy,
claim or dispute to binding arbitration in West Palm Beach, Florida (unless the
parties agree in writing to a different location), before a single arbitrator in
accordance with the rules of the American Arbitration Association then in
effect. In any such arbitration proceeding the parties agree to provide all
discovery deemed necessary by the arbitrator. The decision and award made by the
arbitrator shall be final, binding and conclusive on all parties hereto for all
purposes, and judgment may be entered thereon in any court having jurisdiction
thereof.
13. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding
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including that in arbitration as provided for in Section 12 of this Agreement,
is commenced to enforce the provisions of this Agreement, the prevailing party
shall be entitled to an award by the court or arbitrator, as appropriate, of
reasonable attorney's fee, costs and expenses.
14. GOVERNING LAW. This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought.
16. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
U.S. DIAGNOSTIC LABS. INC.
By: /s/ Jeffrey A. Goffman
------------------------------
Jeffrey A. Goffman, Chairman
/s/ Michael D. Karsch
--------------------------
Michael D. Karsch
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into as of this 1st day of July 1996,
between U.S. Diagnostic Labs Inc. (the "Company"), and P. Andrew Shaw (the
"Executive").
WHEREAS, the Company desires to employ Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. TERM OF EMPLOYMENT.
(a) TERM. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for a period commencing on July 1,
1996 and ending three years from the date hereof (the "Term").
(b) CONTINUING EFFECT. Notwithstanding any termination of this
Agreement at the end of the Term or otherwise, the provisions of Sections 6 and
7 shall remain in full force and effect and the provisions of Sections 6(a),
6(c) and 7 shall be binding upon the legal representatives, successors and
assigns of the Executive, except as otherwise provided in this Agreement.
2. DUTIES.
(a) GENERAL DUTIES. The Executive shall serve as Vice President and
Chief Financial Officer of the Company with duties and responsibilities that are
customary for such executives. The Executive will use his best efforts to
perform his duties and discharge his responsibilities pursuant to this Agreement
competently, carefully and faithfully. The Executive shall be appointed to the
managment committee composed of other senior executives of the Company.
(b) DEVOTION OF TIME. The Executive will devote substantially full
time during normal business hours (exclusive of periods of sickness and
disability and of such normal holiday and vacation periods as have been
established by the Company) to the affairs of the Company. It is expressly
understood that the Executive will not enter the employ of or serve as a
consultant to, or in any way perform any services with or without compensation
to, any other persons, business or organization (other than as set forth above
and except as set forth on Exhibit A hereto, which shall not interfere with
Executive's performance hereunder) without the prior consent of the board of
directors of the Company; provided, that the Executive shall be permitted to
devote a limited amount of his time, without compensation, to charitable or
similar organizations.
(c) MEDICAL OPPORTUNITIES. Executive agrees to present to the Company
all potential opportunities for acquisitions, joint ventures and similar
transactions in the medical or healthcare field. Executive may pursue such
opportunities if declined by the Company.
3. COMPENSATION AND EXPENSES.
(a) SALARY. For the services of the Executive to be rendered under
this Agreement, the Company shall pay the Executive an annual base salary of
$100,000 during the first year of the Term. The base salary for the second year
of the Term shall be increased pro rata by up to $25,000 based on an
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increase in the number of imaging centers up to 100 at July 1, 1997 assuming 50
imaging centers on the date of this agreement and for the third year of the Term
shall be increased pro rata by up to an additional $25,000 based on an increase
in the number of imaging centers up to 150 at July 1, 1998 assuming 100 imaging
centers on July 1, 1997. If the number of imaging centers at July 1, 1997 is 150
or greater, then the annual base salary shall be $150,000 during the second and
third years of the Term. The annual base salary under this Section 3(a) will be
reduced, however, to the extent that the Executive elects to defer any portion
thereof under the terms of any deferred compensation or savings plan maintained
by the Company. The Company will pay the Executive his annual salary in equal
installments no less frequently than bimonthly in accordance with the Company's
policies.
(b) BONUS. The Executive shall be paid an annual bonus of up to
$20,000 per year of the Term. Executive shall be paid a minimum bonus of $10,000
per year and the remaining $10,000, if any, shall be calculated based on the
same formula as set forth in Section 3(a). Such bonus will be paid within 120
days of the end of each fiscal year, the first such bonus payable and prorated
for the fiscal year ending December 31, 1996.
(c) STOCK OPTIONS. Employee shall be granted 30,000 options under the
Company's 1995 Long Term Incentive Plan ("Plan") at $12.50 under the Plan which
shall vest over three years. Executive shall also be entitled to discretionary
grants of options under the Plan. All options granted to Executive shall vest if
Executive is terminated without cause or upon a change in control of the
Company.
(d) EXPENSES. In addition to any compensation received pursuant to
Section 3(a) and (b), the Company will reimburse or advance funds to the
Executive for all reasonable travel, entertainment and miscellaneous expenses
incurred in connection with the performance of his duties under this Agreement,
provided that the Executive properly accounts for such expenses to the Company
in accordance with the Company's practices. Such reimbursement or advances will
be made in accordance with policies and procedures of the Company in effect from
time to time relating to reimbursement of or advances to executive officers.
(e) MOVING EXPENSES. Executive shall receive reimbursement for all
reasonable out-of-pocket moving expenses, including closing costs on a new house
in the West Palm Beach, Florida area and the commission on the sale of
Executive's existing house.
4. BENEFITS.
(a) VACATION. For each 12-month period during the Term, the Executive
will be entitled to four (4) weeks of vacation without loss of compensation or
other benefits to which he is entitled under this Agreement, to be taken at such
times as the Executive may select and the affairs of the Company may permit.
(b) EMPLOYEE BENEFIT PROGRAMS. During the Term, the Executive will be
entitled to participate in any pension, insurance or other employee benefit plan
that is maintained at that time by the Company for its executive officers,
including programs of life and medical insurance and reimbursement of membership
fees in civic, social and professional organizations.
(c) AUTOMOBILE. The Company shall provide the Executive with a
non-accountable automobile allowance of $750 per month which includes all costs
associated with the use of an automobile including, without limitation, lease or
loan payments, fuel, maintenance and insurance.
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5. TERMINATION.
(a) TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment pursuant to the terms of this Agreement at any time for cause by
giving written notice of termination. Such termination will become effective
upon the giving of such notice, except that termination based upon clause (iii)
below shall not become effective unless the Executive shall fail to correct such
breach within three months of receipt of written notice. At the conclusion of
such three month period, this alleged breach shall be deemed to have been cured
unless written notice to the contrary is given. Upon any such termination for
cause, the Executive shall have no right to compensation, bonus or reimbursement
under Section 3, or to participate in any employee benefit programs under
Section 4 for any period subsequent to the effective date of termination.
"Cause" shall mean: (i) the Executive is convicted of a felony which is related
to the Executive's employment or the business of the Company; (ii) the
Executive, in carrying out his duties hereunder, has been found in a civil
action to have committed gross negligence, willful gross misconduct,
misappropriated Company funds or otherwise defrauded the Company, in any case,
resulting in material harm to the Company; and (iii) the Executive materially
breaches any provision of Sections 2, 6 or 7.
(b) DEATH OR DISABILITY. Except for the Company's obligations
contained in this Section 5, this Agreement and the obligations of the Company
hereunder will terminate upon the death or disability of the Executive. For
purposes of this Section 5(b), "disability" shall mean that for a period of six
months in any 12-month period the Executive is incapable of substantially
fulfilling the duties set forth in Section 2 because of physical, mental or
emotional incapacity resulting from injury, sickness or disease.
Upon termination by death or disability, the Company will pay the
Executive or his legal representative, as the case may be: (i) his annual salary
at such time through the date of such termination of employment and (ii) the
Executive's pro-rata bonus due under Section 3(b) of this Agreement. Such sums
shall be paid upon the same terms and conditions as if this Agreement were in
fully force and effect.
(c) SPECIAL TERMINATION. In the event that (i) the Company materially
breaches this Agreement or the performance of its duties and obligations
hereunder; or (ii) any entity or person not now an executive officer of the
Company becomes either individually or as part of a group the beneficial owner
of 40% or more of the Company's common stock; or (iii) the merger,
consolidation, reorganization or liquidation of the Company (a "Change in
Control"), the Executive, by written notice to the Company, may elect to deem
the Executive's employment hereunder to have been terminated by the Company
without cause, in which event the Executive shall be entitled to the
compensation, reimbursement and benefits payable pursuant to Section 3 and 4
herein for two years, unless if the remaining term of the Agreement is less than
one year, the Executive shall receive his salary at his then current rate,
benefits and bonus for one year. Alternatively, in such event, the Executive, by
written notice to the Company, may elect to refuse all further obligations of
the Company under Section 3 and Section 4 and to release the Company with
respect thereto, in which event the Company shall release the Executive from the
provisions of Section 6.
6. NONCOMPETITION AGREEMENT.
(a) COMPETITION WITH THE COMPANY. Except as provided for in Sections
2(b) and 6(b) hereof, until termination of his employment and for a period of 12
months commencing on the date of termination, the Executive, directly or
indirectly, in association with or as a stockholder, director, officer,
consultant, employee, partner, joint venturer, member or otherwise of or through
any person, firm, corporation, partnership, association or other entity, will
not compete with the Company or any of its
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affiliates in the offer, sale or marketing of radiology products or services,
including radiology practice management services, that are competitive with the
products or services offered by the Company as of the date of this Agreement, or
any other business engaged in by the Company after the date of this Agreement in
which Executive is actively involved on behalf of the Company, within any
metropolitan area in the United States or elsewhere in which the Company is then
engaged in the offer and sale of competitive products or services except as
provided in (b) below. Additionally, the foregoing shall not prevent Executive
from accepting employment with an enterprise engaged in two or more lines of
business, one of which is the same or similar to the Company's business (the
"Prohibited Business") if Executive's employment is totally unrelated to the
Prohibited Business; provided, further, the foregoing shall not prohibit
Executive from owning up to 5% of the securities of any publicly-traded
enterprise provided Executive is not an employee, director, officer, consultant
to such enterprise or otherwise reimbursed for services rendered to such
enterprise.
(b) SOLICITATION OF CUSTOMERS. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly or
indirectly, will not seek Prohibited Business from any Customer (as defined
below) on behalf of any enterprise or business other than the Company, refer
Prohibited Business from any Customer to any enterprise or business other than
the Company or receive commissions based on sales or otherwise relating to the
Prohibited Business from any Customer, or any enterprise or business other than
the Company. For purposes of this Section 6(b), the term "Customer" means any
person, firm, corporation, partnership, association or other entity to which the
Company or any of its affiliates sold or provided goods or services during the
12-month period prior to the time at which any determination is required to be
made as to whether any such person, firm, corporation, partnership, association
or other entity is a Customer.
(c) NO PAYMENT. The Executive acknowledges and agrees that no separate
or additional payment will be required to be made to him in consideration of his
undertakings in this Section 6.
(d) RELEASE. The provisions of this Section 6 shall not apply if this
Agreement is terminated by the Company without cause or by Executive upon a
material breach by the Company.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive
acknowledges that during his employment he will learn and will have access to
confidential information regarding the Company and its affiliates, including
without limitation (i) confidential or secret plans, programs, documents,
agreements or other material relating to the business, services or activities of
the Company and its affiliates and (ii) trade secrets, market reports, customer
investigations, customer lists and other similar information that is proprietary
information of the Company or its affiliates (collectively referred to as
"Confidential Information"). All records, files, materials and Confidential
Information excluding personal items, obtained by the Executive in the course of
his employment with the Company are confidential and proprietary and shall
remain the exclusive property of the Company or its affiliates, as the case may
be. The Executive will not, except in connection with and as required by his
performance of his duties under this Agreement, for any reason use for his own
benefit or the benefit of any person or entity with which he may be associated
or disclose any such Confidential Information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever without the
prior written consent of the board of directors of the Company, unless such
Confidential Information previously shall have become public knowledge through
no action by or omission of the Executive.
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<PAGE>
8. ASSIGNABILITY. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and be binding upon the successors
or assigns of the Company, provided that such successor or assign shall acquire
all or substantially all of the assets and business of the Company. The
Executive's obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
9. SEVERABILITY.
(a) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in this Agreement are reasonable
in light of the circumstances as they exist on the date hereof. Should a
decision, however, be made at a later date by an arbitration proceeding that the
character, duration or geographical scope of such provisions is unreasonable,
then it is the intention and the agreement of the Executive and the Company that
this Agreement shall be construed by the tribunal in such a manner as to impose
only those restrictions on the Executive's conduct that are reasonable in the
light of the circumstances and as are necessary to assure to the Company the
benefits of this Agreement. If in an arbitration proceeding, a tribunal shall
refuse to enforce all of the separate covenants deemed included herein because
taken together they are more extensive than necessary to assure to the Company
the intended benefits of this Agreement, it is expressly understood and agreed
by the parties hereto that the provisions of this Agreement that, if eliminated,
would permit the remaining separate provisions to be enforced in such proceeding
shall be deemed eliminated, for the purposes of such proceeding, from this
Agreement.
(b) If any provision of this Agreement otherwise is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from
either of the parties to the other. The remaining provisions of this Agreement
shall be valid and binding and of like effect as though such provision were not
included .
10. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
To the Company: U.S. Diagnostic Labs Inc.
777 S. Flagler Drive
Suite 1006 West
West Palm Beach, Florida 33401
Attention: Jeffrey A. Goffman
To the Executive: P. Andrew Shaw
16243 Cayuga Circle
Davie, Florida 33331
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
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<PAGE>
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
12. ARBITRATION. Any controversy, dispute or claim arising out of or
relating to this Agreement, or its interpretation, application, implementation,
breach or enforcement which the parties are unable to resolve by mutual
agreement, shall be settled by submission by either party of the controversy,
claim or dispute to binding arbitration in West Palm Beach, Florida (unless the
parties agree in writing to a different location), before a single arbitrator in
accordance with the rules of the American Arbitration Association then in
effect. In any such arbitration proceeding the parties agree to provide all
discovery deemed necessary by the arbitrator. The decision and award made by the
arbitrator shall be final, binding and conclusive on all parties hereto for all
purposes, and judgment may be entered thereon in any court having jurisdiction
thereof.
13. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding including that in
arbitration as provided for in Section 12 of this Agreement, is commenced to
enforce the provisions of this Agreement, the prevailing party shall be entitled
to an award by the court or arbitrator, as appropriate, of reasonable attorney's
fee, costs and expenses.
14. GOVERNING LAW. This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
Floridia without regard to choice of law considerations.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought.
16. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
U.S. DIAGNOSTIC LABS. INC.
By: /s/ Jeffrey A. Goffman
--------------------------------
Jeffrey A. Goffman, Chairman
/s/ P. Andrew Shaw
--------------------------
P. Andrew Shaw
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