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Exhibit 10.6
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PURCHASE AGREEMENT
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By and Among
Columbus Acquisition Corp., a Florida corporation,
Montclair Acquisition LLC, a Florida limited liability company,
Greystone Acquisition Corp., a Florida corporation,
US Diagnostic Inc., a Delaware corporation
USD Montclair, Inc., a Delaware corporation
and
Meditek Industries Corp., a Florida corporation
September 20, 2000
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT is dated this 20th day of September, 2000 by
and among Columbus Acquisition Corp., a Florida corporation ("Columbus
Acquisition"), Montclair Acquisition LLC, a Florida limited liability company
("Montclair Acquisition"), Greystone Acquisition Corp., a Florida corporation
("Greystone Acquisition," and collectively with Columbus Acquisition and
Montclair Acquisition, "Purchasers"), US Diagnostic Inc., a Delaware corporation
("USD"), USD Montclair, Inc., a Delaware corporation ("USD Montclair"), and
Meditek Industries Corp., a Florida corporation ("Meditek," and together with
USD Montclair and USD, "Sellers").
RECITALS
WHEREAS, Columbus Diagnostic Center, Inc., a Delaware corporation
("Columbus"), owns and operates an outpatient medical diagnostic imaging center
located at 2040 Tenth Avenue in Columbus, Georgia, otherwise known as "Columbus
Diagnostic Center", USD Montclair owns 800 membership units comprising an 80%
membership interest in Montclair Road Imaging, LLC, an Alabama limited liability
company ("Montclair LLC"), which owns and operates an out patient medical
diagnostic imaging center located at 924 Montclair Road, Suite 108, Birmingham,
Alabama 35213, otherwise known as "Montclair Diagnostic Center", and Meditek
Greystone, Inc., a Florida corporation ("Greystone"), owns and operates an
outpatient medical diagnostic imaging center located at 7500 Hugh Daniel Drive
in Hoover, Alabama, otherwise known as "Greystone Imaging Center" (each such
center a "Business" and collectively, the "Businesses");
WHEREAS, Joseph A. Paul ("Paul"), an officer and equity holder of each
Purchaser, is also the Chief Executive Officer and a member of the Board of
Directors of USD and an officer and director of each of Columbus, USD Montclair
and Greystone and accordingly has intimate knowledge of the Businesses;
WHEREAS, USD owns 100% of the outstanding capital stock of Columbus
(the "Columbus Shares"), USD Montclair owns 800 membership units comprising an
80% membership interest in Montclair LLC (the "Montclair Membership Units") and
Meditek owns 100% of the outstanding capital stock of Greystone (the "Greystone
Shares," and together with the Columbus Shares and the Montclair Membership
Units, the "Purchased Shares");
WHEREAS, USD directly or indirectly owns 100% of the outstanding
capital stock of USD Montclair and Meditek;
WHEREAS, the parties have determined that it is advisable and in their
best interests that Columbus Acquisition purchase the Columbus Shares, Greystone
Acquisition purchase the Greystone Shares and Montclair Acquisition purchase the
Montclair Membership Units all upon the terms and subject to the conditions set
forth herein; and
WHEREAS, Purchasers and Sellers desire to make certain representations,
warranties, covenants and agreements in connection with, and establish various
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conditions precedent to the consummation of the transactions contemplated under
this Agreement.
NOW, THEREFORE, in consideration of the recitals herein before stated
and the mutual representations, warranties, covenants and agreements hereinafter
set forth, the receipt and sufficiency of which are hereby acknowledged,
Purchasers and Sellers do hereby represent, warrant, covenant and agree as
follows:
AGREEMENT
SECTION 1. DEFINITIONS
1.1. DEFINED TERMS. In addition to terms defined elsewhere in this
Agreement, the following terms when utilized in this Agreement, unless the
context otherwise requires, shall have the meanings indicated, which meanings
shall be equally applicable to both the singular and plural forms of such terms:
"ACCOUNTING STANDARDS" means the accounting policies and procedures of
Sellers as described in USD's 1999 Annual Report on Form 10-K, which policies
and procedures comply with GAAP.
"AFFILIATE" with respect to any Person means any Person which, directly
or indirectly, through one or more intermediaries, controls the subject Person
or any Person which is controlled by or is under common control with a
Controlling Person. For purposes of this definition, "CONTROL" (including the
correlative terms "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH"), with respect to any Person, means possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.
"AGREEMENT" means this Purchase Agreement together with all exhibits
and schedules contemplated hereby.
"BUSINESSES" is defined in the preamble of this Agreement.
"CLOSING" is defined in Section 4.1 of this Agreement.
"CLOSING DATE" is defined in Section 4.1 of this Agreement.
"COLUMBUS ACQUISITION" is defined in the preamble of this Agreement.
"EMPLOYEES" is defined in Section 5.9 of this Agreement.
"GOVERNMENTAL AUTHORITY" means any government, court, regulatory or
administrative agency or commission, or other governmental authority, agency or
instrumentality, whether federal, state or local (domestic or foreign).
"GREYSTONE ACQUISITION" is defined in the preamble of this Agreement.
"PAUL" is defined in the preamble of this Agreement.
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"LIEN" means any lien, charge, claim, restriction, encumbrance,
security interest or pledge of any kind whatsoever.
"LOSSES" is defined in Section 12.2 of this Agreement.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the
business, assets, properties, results of operations or financial condition of
the Businesses taken as a whole or (ii) a material adverse effect on Sellers'
ability to enter into or perform their obligations under this Agreement.
"MONTCLAIR ACQUISITION" is defined in the preamble of this Agreement.
"PERMITTED LIENS" means (i) Liens for taxes not yet due and payable,
(ii) easements, covenants, conditions and restrictions of record, (iii)
easements, covenants, conditions and restrictions not of record as to which no
material violation or encroachment exists or, if such violation or encroachment
exists, as to which the cure of such violation or encroachment would not
materially interfere with the conduct of any Business, (iv) any zoning or other
governmentally established restrictions or encumbrances, (v) workers or
unemployment compensation Liens arising in the ordinary course of business
securing amounts which are not delinquent, (vi) mechanic's, materialman's,
supplier's, vendor's, landlord's or similar Liens arising in the ordinary course
of business securing amounts which are not delinquent, (vii) railroad trackage
agreements, utility, slope and drainage easements, right-of-way easements and
leases regarding signs which are not material to any Business, and (viii) other
immaterial imperfections of title, easements, covenants, conditions,
restrictions or encumbrances.
"PERSON" means any natural person, corporation, limited liability
company, unincorporated organization, partnership, association, joint-stock
company, joint venture, trust or government, or any agency or political
subdivision of any government.
"PURCHASE PRICE" is defined in Section 3.1 of this Agreement.
"PURCHASED SHARES" is defined in the preamble of this Agreement
"PURCHASERS" is defined in the preamble of this Agreement.
"PURCHASERS' KNOWLEDGE" means (i) the actual knowledge, after
reasonable inquiry, of Paul, (ii) the actual knowledge of each officer, director
and equity holder of each Purchaser, other than Paul, (iii) and the actual
knowledge of each officer, director and equity holder of a Permitted Assignee
other than Paul.
"SELLER" and "SELLERS" is defined in the preamble of this Agreement.
"SELLERS' KNOWLEDGE" means the actual knowledge, after reasonable
inquiry, of the chief operating officer of USD.
"TAXES" shall mean all taxes, assessments, charges, duties, fees,
levies or other governmental charges (including interest, penalties or additions
associated therewith) including federal, state, city, county, foreign or other,
franchise, capital stock, real
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property, personal property, tangible, withholding, FICA, unemployment
compensation, disability, transfer, sales, use, excise, gross receipts and all
other taxes of any kind for which any Seller, Columbus, Greystone or Montclair
LLC may have any liability imposed by the United States or any state, county,
city, country or foreign government or subdivision or agency thereof, whether
disputed or not.
1.2. OTHER DEFINITIONAL AND INTERPRETIVE PROVISIONS.
(a) Unless otherwise defined herein, all terms defined in this
Agreement shall have the defined meanings when used in any certificate,
schedule, report or other document made or delivered pursuant hereto.
(b) The inclusion of any information on any schedule to this
Agreement shall not be deemed to be an admission or acknowledgment by Sellers,
in and of itself, that such information is required to be listed on such
schedule or is material to or outside the ordinary course of the Businesses. Any
disclosure made in any schedule to this Agreement which should, based on the
substance of such disclosure, be applicable to another schedule to this
Agreement shall be deemed to be made with respect to such other schedule
regardless of whether or not a specific reference is made thereto.
SECTION 2. SALE OF STOCK
2.1. PURCHASE AND SALE OF STOCK. On the Closing Date, Meditek will
convey, transfer and assign to Greystone Acquisition all of Meditek's right,
title and interest in and to the Greystone Shares, free and clear of all Liens,
and USD will convey, transfer and assign to Columbus Acquisition and Montclair
Acquisition all of USD's right, title and interest in and to the Columbus Shares
and the Montclair Membership Units, respectively, free and clear of all Liens.
SECTION 3. PURCHASE PRICE
3.1. PURCHASE PRICE. The aggregate purchase price for the Purchased
Shares shall be $7,150,000 (i) plus all amounts expended by USD to date in
connection with the formation and operation of Montclair LLC as set forth on
SCHEDULE 3.1, and (ii) less the credit for paid time off due to the Employees as
set forth on SCHEDULE 3.1 hereto (the "Purchase Price"), and such cash portion
shall be payable to Sellers by a certified or bank cashier's check or wire
transfer of immediately available funds pursuant to wire instructions provided
by Sellers to Purchasers on or before the Closing Date. The Purchase Price shall
be allocated by mutual agreement of the parties within 14 days after the Closing
Date as provided in Sections 10.1 and 10.4 hereto.
SECTION 4. CLOSING
4.1. CLOSING. The closing of the transactions contemplated herein (the
"Closing") shall be held at 11:00 a.m. West Palm Beach time on or before October
31, 2000, at the offices of USD located at 250 South Australian Avenue,
Clearlake Center,
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9th Floor, West Palm Beach, Florida 33401, unless the parties agree to another
time, date or place. Notwithstanding the foregoing, unless this Agreement has
been previously terminated pursuant to the provisions of Section 13.1, the
Closing may be delayed up to the fifth business day after all of the conditions
set forth in Section 7 and Section 8 have been satisfied. The term "Closing
Date" shall mean the date on which the Closing occurs. The Closing shall be
deemed effective as of 11:59 p.m. West Palm Beach time on the Closing Date.
Except as otherwise provided herein, all proceedings to be taken and all
documents to be executed at the Closing shall be deemed to have been taken,
delivered and executed simultaneously, and no proceeding shall be deemed taken
nor documents deemed executed or delivered until all have been taken, delivered
and executed.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as otherwise disclosed to Purchasers in the schedules to this
Agreement, each Seller (USD, USD Montclair and Meditek) hereby represents and
warrants the following to Purchasers:
5.1. ORGANIZATION, POWER AND QUALIFICATION. Each of the Sellers,
Columbus and Greystone is a corporation and Montclair LLC is a limited liability
company duly organized, validly existing and in good standing under the laws of
its state of formation. Each of the Sellers, Columbus, Greystone and Montclair
LLC (as applicable) has the power and authority to own, lease, and operate its
properties and assets and to carry on its business and each of the Sellers has
the corporate power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby.
5.2. CORPORATE ACTION. All corporate action necessary on the part of
each Seller, as the case may be, to authorize the execution and delivery to
Purchasers of this Agreement and the performance or satisfaction of the
obligations of such Seller in connection with the transactions contemplated by
this Agreement has been or will have been duly taken prior to the Closing. This
Agreement constitutes the valid and binding obligation of each Seller and is
enforceable against each Seller in accordance with its terms, except as such
enforcement may be affected by bankruptcy, moratorium or other laws relating to
creditor's rights generally or general principles of equity.
5.3. CONSENTS; NO BREACH. Except as set forth on SCHEDULE 5.3, no
material consent, approval or authorization of, or designation, declaration or
filing with, any Governmental Authority on the part of any Seller is required in
connection with the valid execution and delivery of this Agreement. Except as
set forth on SCHEDULE 5.3, the execution, delivery and performance of this
Agreement by each Seller and the consummation of the transactions contemplated
hereby will not: (i) violate any provision of its Certificate or Articles of
Incorporation, Bylaws or any amendment thereto of such Seller, as the case may
be; (ii) violate, conflict with or result in the breach of any of the material
terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any material contract of such
Seller; (iii) violate in any material manner any order, judgment, injunction,
award or decree of any court, arbitrator or governmental or regulatory body
against, or binding upon, such
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Seller; or (iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein.
5.4. CAPITALIZATION. As of the date hereof, the authorized capital
stock of Greystone is 10,000 shares of common stock, par value $0.01 per share,
the authorized capital stock of Columbus is 1,000 shares of common stock, par
value $0.01 per share, and Montclair LLC has issued 1000 Membership Units. All
issued and outstanding shares of capital stock or membership units of Greystone,
Columbus and Montclair LLC, respectively, are duly and validly authorized,
issued, fully paid and nonassessable. There are no outstanding (a) securities
convertible into or exchangeable for such capital stock and membership units;
(b) options, warrants, or other rights to purchase or subscribe to such capital
stock or membership units or securities convertible or exchangeable for such
capital stock or membership units; or (c) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance of such
capital stock or membership units. USD owns the Columbus Shares free and clear
of all liens, security interests and encumbrances and, upon delivery of the
certificates in accordance with this Agreement, Columbus Acquisition will be the
record and beneficial owner of the Columbus Shares. Meditek owns the Greystone
Shares free and clear of all liens, security interests and encumbrances and,
upon delivery of the certificates in accordance with this Agreement, Greystone
Acquisition will be the record and beneficial owner of the Greystone Shares. USD
Montclair owns the Montclair Membership Units free and clear of all liens,
security interests and encumbrances and, upon delivery of the certificates in
accordance with this Agreement, Montclair Acquisition will be the record and
beneficial owner of the Montclair Membership Units.
5.5. NO BROKERS OR FINDERS. No Person has or will have, as a result of
the transactions contemplated by this Agreement, any right, interest or claim
against or upon any Seller for any commission, fee or other compensation as a
finder or broker as a result of the consummation of this Agreement.
5.6. COMPLIANCE WITH LAW; LICENSES. To Sellers' Knowledge, Montclair
LLC, Columbus and Greystone are not operating the Businesses in violation of any
applicable state or municipal laws, regulations or ordinances, the violation of
which would have a Material Adverse Effect. To Sellers' Knowledge, Montclair
LLC, Columbus and Greystone possess all licenses and other required governmental
or official approvals, permits, consents and authorizations required for the
operation of the Businesses, except to the extent failure to possess such
license, approval, permit, consent or authorization would not have a Material
Adverse Effect.
5.7. LITIGATION. Except as disclosed on SCHEDULE 5.7, there is no
outstanding order, judgment, injunction, award or decree of any court,
governmental or regulatory body or arbitration tribunal against or involving
Columbus, Montclair LLC, USD Montclair or Greystone which could have a Material
Adverse Effect. Except as disclosed on SCHEDULE 5.7, there is no action, suit,
or claim or legal, administrative or arbitration proceeding or any investigation
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance) pending, or to Sellers' Knowledge threatened against or
involving Columbus, Montclair LLC, USD Montclair or Greystone which could have a
Material Adverse Effect.
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5.8. MATERIAL CONTRACTS. SCHEDULE 5.8 sets forth all material contracts
of (i) each Seller, which are solely for the benefit of the Businesses, (ii)
Columbus, (iii) Montclair LLC, and (iv) Greystone (including without limitation
any contracts for employment of the Employees (as defined in Section 5.9 below))
(the "Material Contracts"). The Material Contracts are valid, binding,
enforceable and existing agreements, in full force and effect against each
Seller, Columbus, Montclair LLC and Greystone (as applicable), except as such
enforcement may be affected by bankruptcy, moratorium or other law affecting
creditor's rights generally or general principles of equity. To Sellers'
Knowledge, none of Sellers, Columbus, Montclair LLC and Greystone is in default
in any material respect under any of the Material Contracts (nor to Sellers'
Knowledge, have they received notice of the default of any other party to any
Material Contracts), and to the Knowledge of each Seller, no condition exists
which with notice or lapse of time or both would constitute default thereunder.
5.9. EMPLOYMENT MATTERS; BENEFITS.
(a) SCHEDULE 5.9(a) contains a true and complete list of each
Employee Benefit Plan in which the employees of the Businesses (the "Employees")
participate, and in respect of such Employee Benefit Plans, Sellers have
delivered to Purchasers true and complete copies of all documents (including the
most recent document incorporating all amendments to such Employee Benefit
Plans). At no time has any Business or any of its Affiliates contributed to,
been required to contribute to, or incurred any withdrawal liability with
respect to a multi-employer plan (within the meaning of Section 3(37) or
4001(a)(3) of ERISA). The transactions contemplated by this Agreement will not
result in liability to the Businesses or Purchasers under Section 4069 of ERISA.
None of the assets owned by the Business is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code, and no fact or
event exists that could give rise to any such lien.
(b) Since January 1, 2000, there has been no material work
stoppage against the Businesses nor, to Sellers' Knowledge, is any such stoppage
threatened. The Businesses have not been involved in or, to Sellers' Knowledge,
threatened with any collective bargaining dispute, arbitration, lawsuit or
administrative proceeding relating to a collective bargaining matter involving
the Employees (excluding routine workers' compensation claims) that, if
adversely determined, would have a Material Adverse Effect.
(c) SCHEDULE 5.9(c) hereto contains a true, correct and
complete list or copy of the following:
(i) the names of the Employees and USD's Employee
Manual containing existing policies relating to vacation, severance, maternity,
sick leave and other employment policies;
(ii) current annual salaries, terms of service and
accrued vacation time, sick time and other liabilities to the Employees; and
(iii) the amounts of bonuses accrued and unpaid to
such employees and the amounts of cash bonuses paid to such employees since
December 31, 1999.
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(d) There are no collective bargaining agreements relating to
or affecting the Businesses.
(e) Each of the Employees is an at will employee.
5.10. PROPERTY.
(a) LEASED REAL PROPERTY. SCHEDULE 5.10(a) contains a
description of each parcel of real property used by each Business (the "Leased
Real Property"). To each Seller's Knowledge, such Seller has not received notice
of any material violation of any applicable deed restriction, building code,
zoning ordinance, covenant or other law or regulation with respect to the Leased
Real Property. To each Seller's Knowledge, no default or breach exists under any
of the terms, covenants, conditions, or restrictions set forth in the leases
pursuant to which each Business occupies its Leased Real Property, except
defaults or breaches which would not have a Material Adverse Effect on such
Business.
(b) PERSONAL PROPERTY; TITLE; ENCUMBRANCES. Columbus,
Greystone and Montclair LLC have good title to all of their assets, free and
clear of any material Liens, other than as set forth on SCHEDULE 5.10(b) or
Permitted Liens. No default or breach exists under any terms, covenants,
conditions, or restrictions set forth on any leases relating to such assets,
except defaults or breaches which would not have a Material Adverse Effect on
any Business.
5.11. ENVIRONMENTAL MATTERS. SCHEDULE 5.11 sets forth information as to
any violation, with respect to any Leased Real Property, if any, relating to a
Business, of any existing federal, state, local or foreign law or regulation (or
order, permit, plan or compliance schedule) pertaining to environmental
protection, including without limitation the discharge or disposal of air or
water pollutants, poisoned waste wells or the storage, treatment or disposal of
solid or hazardous or toxic substances (collectively, "Environmental Laws") of
which the Sellers have received notice with regard to a Business which would
result in a Material Adverse Effect.
5.12. FINANCIAL STATEMENTS. Attached to this Agreement as SCHEDULE 5.12
are unaudited consolidated balance sheets of Columbus Diagnostic Center and
Greystone Imaging Center as of December 31, 1999 and June 30, 2000 and
statements of earnings of Columbus Diagnostic Center and Greystone Imaging
Center for the twelve month period ended December 31, 1999 and the six month
period ended June 30, 2000 (collectively, the "Financial Statements"). The
Financial Statements (i) present fairly in all material respects the financial
condition of Columbus Diagnostic Center and Greystone Imaging Center and their
results of operations for such period in accordance with the Accounting
Standards, and (ii) have been prepared in accordance with the Accounting
Standards (other than the absence of notes to the Financial Statements) for the
periods covered by such statements.
5.13. UNDISCLOSED LIABILITIES. Except as and to the extent reflected in
the Financial Statements, to Sellers' Knowledge, the Businesses do not have any
material liabilities, commitments or obligations of any nature, whether
absolute, accrued, contingent or otherwise (including indebtedness to USD and
its Affiliates), other than
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those incurred in the ordinary course of business since June 30, 2000 which, (i)
under the Accounting Standards, are required to be disclosed in the Financial
Statements, and (ii) would have a Material Adverse Effect on such Business.
5.14. TAXES. All federal, state and other tax returns of the Businesses
required by law to be filed have been duly filed, and except as set forth on
SCHEDULE 5.14, all such tax returns were correct and complete in all material
respects. Except as set forth on SCHEDULE 5.14, all such federal, state and
other Taxes, assessments, fees and other federal governmental charges shown to
be due and payable on such returns have been paid, except such Taxes which are
being contested in good faith or for which the dates for payment have been
extended, which contests and extensions are identified on SCHEDULE 5.14 hereto.
5.15. INTELLECTUAL PROPERTY. No Business has any right, title or
interest in or to patents, patent rights, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names
and copyrights (collectively, "Intellectual Property") relating to such
Business. Except for off-the-shelf software licenses, each Business is not a
licensee in respect of any Intellectual Property. No claim is pending or, to
Sellers' Knowledge, threatened to the effect that the operations of any Business
infringes upon or conflicts with the asserted rights of any other Person under
any Intellectual Property or licensed software.
5.16. ABSENCE OF CERTAIN CHANGES. Except as otherwise permitted or
disclosed in this Agreement or disclosed on SCHEDULE 5.16, since June 30, 2000;
(a) there has not occurred an event which has resulted in a
Material Adverse Effect;
(b) each Business has been operated in the ordinary course of
business;
(c) no Business has sold or transferred any real property or
medical equipment that would eliminate a modality of such Business (except for
medical equipment that was replaced with comparable equipment) or waived any
rights under any Material Contract for periods after the close of business on
the Closing Date;
(d) no Seller has granted any general or uniform increase in
the rates of pay of the Employees (other than normal merit increases);
(e) other than in the ordinary course of business, no Seller
has authorized any material capital expenditure as to any Business;
(f) other than in the ordinary course of business, no Seller
has entered into any material transaction with respect to any Business other
than this Agreement and any other agreement executed and delivered pursuant to
this Agreement; and
(g) no Business has experienced damage, destruction or loss
(whether or not covered by insurance) which would have a Material Adverse
Effect.
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5.17. RELATIONS WITH SUPPLIERS AND CUSTOMERS. Except for changes that
would not have a Material Adverse Effect, no supplier, payor or referring
physician of any Business has provided to a Seller or Business written notice
that it will cease to do business or reduce its previous levels of business with
such Business or Purchasers after the consummation of the transactions
contemplated hereby.
5.18. FRAUD AND ABUSE. To each Seller's knowledge (without inquiry), no
Business has engaged in any activities which are prohibited under ss.1320a-7b of
Title 42 of the United States Code or the regulation promulgated thereunder, or
related state or local statutes or regulations, or which are prohibited by rules
of professional conduct including, but not limited to, the following (except
where such activities would not have a Material Adverse Effect): (a) knowingly
and willfully making or causing to be made a materially false statement or
representation of a material fact in any application for any benefit or payment;
(b) knowingly and willfully making or causing to be made any materially false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any material event affecting the initial or continued right to
any benefit or payment on its own behalf or on behalf of another, with the
intent to fraudulently secure such benefit or payment; and (d) knowingly and
willfully soliciting or receiving any remuneration (including any kickback,
bribe or rebate) directly or indirectly, overtly or covertly, in cash or in
kind, or offering to pay or receive such remuneration (i) in return for
referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medicaid or (ii) in return for purchasing, leasing or
ordering or arranging for, or recommending, purchasing, leasing or ordering any
good, facility, service or item for which payment may be made in whole or in
part by Medicare or Medicaid.
5.19. TITLE TO PROPERTY. At the Closing, each of Columbus, Greystone
and Montclair LLC will have good title to all of its assets, free and clear of
all Liens, subject only to (i) the Permitted Liens and (ii) those Liens set
forth on SCHEDULE 5.19, which Liens are the sole Liens being assumed or taken
subject to by Purchasers pursuant to the terms of this Agreement. Effective as
of the Closing, the Liens will secure only obligations to be assumed under the
contracts relating solely to the Businesses and not any other obligations or
indebtedness of any Seller.
5.20. NO ADDITIONAL REPRESENTATIONS. No Seller makes any
representations or warranties, express or implied, of any nature whatsoever,
with respect to the Businesses or the Purchased Shares, except for the
representations and warranties in this Section 5. It is understood that any cost
estimates, projections or other predictions contained or referred to in the
schedules hereto and any cost estimates, projections or predictions or any other
information contained or referred to in other materials that have been or shall
hereafter be provided to Purchasers or any of their representatives are not and
shall not be deemed to be representations or warranties of any Seller.
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SECTION 6. REPRESENTATIONS AND WARRANTIES
OF PURCHASERS
Each Purchaser hereby represents and warrants to each Seller, the
following:
6.1. BINDING OBLIGATION. This Agreement constitutes the valid and
binding obligation of each Purchaser and is enforceable against each Purchaser
in accordance with its terms, except as such enforcement may be affected by
bankruptcy, moratorium and other laws relating to creditor's rights generally or
general principles of equity.
6.2. CONSENTS; NO BREACH. No consent, approval or authorization of, or
designation, declaration or filing with, any Governmental Authority on the part
of Purchasers is required in connection with the valid execution and delivery of
this Agreement. Purchasers shall have on or before the Closing all necessary or
appropriate licenses, permits or others approvals from all applicable
Governmental Authorities which allow Purchasers to operate the Businesses and to
assume the obligations and operations of the Businesses. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not: (i) violate, conflict with or result in the breach
of any of the material terms of, result in a material modification of, otherwise
give any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any material
contract or other agreement to which Purchasers are a party; (ii) violate in any
material manner any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon,
Purchasers; or (iii) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein.
6.3. LITIGATION. There is no outstanding order, judgment, injunction,
award or decree of any court, governmental or regulatory body or arbitration
tribunal against or involving Purchasers. There is no action, suit or claim or
legal, administrative or arbitration proceeding or any investigation (whether or
not the defense thereof or liabilities in respect thereof are covered by
insurance) pending, or to Purchasers' Knowledge, threatened, against or
involving Purchasers.
6.4. NO BROKERS OR FINDERS. No Person has or will have, as a result of
the transactions contemplated by this Agreement, any right, interest or claim
against or upon Purchasers for any commission, fee or other compensation as a
finder or broker as a result of the consummation of this Agreement.
6.5. INVESTMENT INTENT. Purchasers are acquiring the Purchased Shares
for their own account and not with a view to, or in connection with, any
distribution thereof within the meaning of Section 2(11) of the Securities Act
of 1933, as amended. Purchasers acknowledge and agree that the certificates
evidencing the Purchased Shares shall bear a legend to that effect. Any sale,
transfer or other disposition of the Purchased Shares by Purchasers will be made
in compliance with all applicable provisions of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder. Purchasers have such knowledge and
experience in financial and business matters that they are capable of evaluating
the merits and risks of its investment in the Purchased Shares. Purchasers have
had full and complete access to all information concerning the
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condition, properties, operations and prospects of Columbus, USD Montclair and
Greystone. In addition, Purchasers have had an opportunity to ask questions of
and to receive information from other officers of each Seller and persons acting
on their behalf concerning Columbus, USD Montclair and Greystone. Purchasers
expressly acknowledge and agree that they are not relying on Sellers with
respect to any matter, except for the representations of Sellers set forth in
Section 5, in connection with Purchasers' investigation or evaluation of the
Businesses.
6.6. INFORMATION. Each Purchaser has been given access to information
concerning the condition, properties, operations and prospects of the
Businesses. Each Purchaser has had an opportunity to ask questions of and to
receive information from Sellers and persons acting on their behalf concerning
the Businesses. Each Purchaser acknowledges that it has undertaken an
independent investigation and verification of the Businesses and their assets,
including without limitation the financial condition of the Businesses. As part
of its investigation, each Purchaser was given certain forecasts, projections
and opinions prepared or furnished by or on behalf of Sellers with respect to
the Businesses (the "Additional Financial Information"). Each Purchaser has
taken responsibility for evaluating the adequacy of the Additional Financial
Information. Each Purchaser is familiar with the uncertainties inherent in
attempting to make such forecasts, projections and opinions and has taken such
uncertainties into account in its evaluation of the Additional Financial
Information. Each Purchaser expressly acknowledges and agrees that it is not
relying on Sellers with respect to any matter in connection with its
investigation or evaluation of the Businesses or the assets, including, but not
limited to, any Additional Financial Information provided by Sellers with
respect to the Businesses, except for the representations of Seller set forth in
Section 5 of this Agreement.
6.7. PERSONAL INVESTMENT. Each Purchaser is acquiring the Purchased
Shares as an investment and has not entered into any agreement to resell the
Purchased Shares or any assets of the Businesses other than to a Permitted
Assignee pursuant to Section 14.8. In addition, Purchasers do not have a current
intention to resell the Purchased Shares or any of the assets of the Businesses
other than to a Permitted Assignee pursuant to Section 14.8, or assets in the
ordinary course of business of the Businesses.
6.8. REPRESENTATIONS AND WARRANTIES OF SELLERS. Purchasers represent
and warrant that to Purchasers' Knowledge, all representations and warranties of
Sellers under this Agreement are true and accurate in all material respects.
6.9. ORGANIZATION, POWER AND QUALIFICATIONS. Each Purchaser is a
corporation, duly organized, validly existing and in good standing under the
laws of its state of formation. Each Purchaser has full power to enter into this
Agreement and to consummate the transactions contemplated hereby.
6.10. CAPITALIZATION. As of the date hereof, (i) the authorized capital
stock of Columbus Acquisition consists of 1,000 shares of common stock, 100 of
which are issued and outstanding and 80 of those shares are owned by Paul, (ii)
the authorized capital stock of Greystone Acquisition consists of 1,000 shares
of common stock, 100 of which are issued and outstanding and 70 of those shares
are owned by Paul, and (iii) Paul owns 99% of the membership interest of
Montclair Acquisition. There are no
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outstanding (a) securities convertible into or exchangeable for such capital
stock and membership interest; (b) options, warrants, or other rights to
purchase or subscribe to such capital stock or securities convertible or
exchangeable for such capital stock and membership interest; or (c) contracts,
commitments, agreements, understandings or arrangements of any kind relating to
the issuance of such capital stock and membership interest.
6.11. CORPORATE ACTION. All action necessary on the part of each
Purchaser to execute and deliver to Sellers this Agreement and the performance
or satisfaction of the obligations of each Purchaser in connection with the
transactions contemplated by this Agreement has been or will have been duly
taken prior to the Closing. This Agreement constitutes the valid and binding
obligation of each Purchaser and is enforceable against each Purchaser in
accordance with its terms, except as such enforcement may be affected by
bankruptcy, moratorium and other laws relating to creditor's rights generally or
general principles of equity.
SECTION 7. CONDITIONS PRECEDENT TO
OBLIGATIONS OF PURCHASERS TO CLOSE
The obligations of Purchasers to consummate this Agreement and the
transactions contemplated hereby are subject to the satisfaction at or before
the Closing of each and every one of the following conditions, any of which
Purchasers may, in their sole discretion, waive.
7.1. REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of Sellers contained in this Agreement shall be true and correct
in all material respects as of the Closing, as though made on and as of the
Closing, except for any representations or warranties that to Purchasers'
Knowledge, were not true and correct in all material respects as of the date
hereof. Purchasers shall have received a certificate from the Chief Operating
Officer of USD to such effect (the "Sellers' Officer's Certificate").
7.2. PERFORMANCE OF OBLIGATIONS OF SELLERS. Each Seller shall have
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement prior to or as of the Closing Date.
7.3. NO OBSTRUCTIVE PROCEEDINGS. No action or proceedings shall have
been instituted against, and no order, decree or judgment of any court, agency,
commission or Governmental Authority shall be existing against Purchasers or an
Affiliate of Purchasers which seeks to or would render it unlawful as of the
Closing to effect the sale of the Purchased Shares in accordance with the terms
hereof, and no such action shall seek damages against Purchasers or an Affiliate
of Purchasers in a material amount by reason of the transactions contemplated
hereby.
7.4. NO ADVERSE CHANGE. Between the date hereof and the Closing Date,
there shall have not been (i) any event which would result in a Material Adverse
Effect and (ii) any material loss or damage to the Businesses.
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7.5. FINANCING. Within 14 days from the date hereof, Purchasers shall
have obtained a binding loan commitment for the financing necessary to pay the
Purchase Price on the Closing Date.
7.6. LEASE EXTENSIONS. The leases set forth on SCHEDULE 7.6 hereto
shall have been extended on a basis not materially less favorable to the
Businesses than the terms and conditions set forth on SCHEDULE 7.6 hereto.
7.7. INTERIM JOINT OPERATING AGREEMENT. Purchasers and USD shall have
executed and delivered an interim joint operating agreement (the "Interim Joint
Operating Agreement") in substantially the form attached hereto as EXHIBIT A.
7.8. RELEASE/TERMINATION OF LIENS AND ENCUMBRANCES. Sellers shall have
obtained the release or termination of all Liens on the assets of the Business,
other than Permitted Liens or Liens set forth on SCHEDULE 5.19 hereto.
7.9. OPERATING AGREEMENT OF MONTCLAIR LLC. Purchasers shall have
executed and delivered an amendment to the Operating Agreement of Montclair LLC,
dated as of May 10, 2000 (the "Operating Agreement"), whereby Montclair
Acquisition will be substituted for USD Montclair in all respects under the
Operating Agreement.
SECTION 8. CONDITIONS PRECEDENT TO
OBLIGATIONS OF SELLERS TO CLOSE
The obligations of Sellers to consummate this Agreement and the
transactions contemplated hereby are subject to the satisfaction at or before
the Closing of each and every one of the following conditions, any of which
Sellers may, in their sole discretion, waive.
8.1. REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of each Purchaser contained in this Agreement shall be true and
correct in all material respects as of the Closing, as though made on and as of
the Closing and Sellers shall have received a certificate of the Chief Executive
Officer or other officer of each Purchaser to that effect ("Purchasers'
Certificates").
8.2. PERFORMANCE OF OBLIGATIONS OF PURCHASERS. Each Purchaser shall
have performed in all material respects all obligations and covenants required
to be performed by such Purchaser under this Agreement prior to or as of the
Closing Date.
8.3. NO OBSTRUCTIVE PROCEEDING. No action or proceeding shall have been
instituted or threatened against and no order, decree or judgment of any court,
agency, commission or Governmental Authority shall be existing against any
Seller or any Business which seeks to or would render it unlawful as of the
Closing to effect the sale of the Purchased Shares in accordance with the terms
hereof, and no such action whether instituted or threatened shall seek damages
against any Seller or any Business in a material amount by reason of the
transactions contemplated hereby.
8.4. PERMITS, APPROVALS AND CONSENTS. Any and all permits, releases,
approvals and consents from any Person required for the consummation of the
Closing
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set forth on SCHEDULE 5.3 and required by Section 11.2 shall have been obtained
or waived.
8.5. BOARD APPROVAL. The Board of Directors of USD and the special
committee thereof formed on August 28, 2000 (the "August 28th Special
Committee") in their sole and absolute discretion shall be satisfied with the
terms and conditions of the employment of Paul with USD and his status as a
director of USD.
8.6. INDEPENDENT VALUATION. USD shall have obtained a fairness opinion
from an independent investment banking firm, appraisal firm or accounting firm
(the "Valuation Firm"), satisfactory to the August 28th Special Committee, to
the effect that the transactions contemplated by this Agreement are fair, from a
financial point of view, to USD.
SECTION 9. CLOSING OF THE TRANSACTION
9.1. DELIVERIES BY SELLERS. On the Closing Date, each Seller shall
deliver (or cause delivery) to Purchasers all of the following:
(a) stock certificates representing the Columbus and Greystone
Shares duly endorsed (or accompanied by duly executed stock powers);
(b) Sellers' Officer's Certificate;
(c) a certified copy of the resolutions adopted by each
Seller's Board of Directors authorizing the execution, delivery and performance
of this Agreement and the consummation of all of the transactions contemplated
by this Agreement;
(d) a certificate of good standing of each Seller and
Montclair LLC from the Secretary of State of its state of formation;
(e) an incumbency certificate of each Seller;
(f) The books and records of the Businesses, including the
corporate minute books of each Business;
(g) Form UCC-3 lien terminations; provided, however, if any
third party lien holders refuse to execute Form UCC-3 lien terminations prior to
the Closing, then Sellers shall deliver to Purchasers such Form UCC-3 lien
terminations within a reasonable time following the Closing; and
(h) such other documents as Purchasers or their counsel may
reasonably request.
9.2. DELIVERIES BY PURCHASERS. On the Closing Date, Purchasers shall
deliver (or cause delivery) to Sellers all of the following:
(a) the Purchase Price;
(b) the Releases contemplated by Section 11.2;
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(c) the Purchasers' Certificates;
(d) a certified copy of the resolutions adopted by each
Purchaser's Board of Directors authorizing the execution, delivery and
performance of this Agreement and the consummation of all of the transactions
contemplated by this Agreement;
(e) a certificate of good standing of each Purchaser from the
Secretary of State of its state of incorporation; and
(f) such other documents as Sellers or their counsel may
reasonably request.
SECTION 10. TAX MATTERS
10.1. SECTION 338(h)(10) ELECTION. Purchasers and Sellers agree with
respect to the purchase of the Purchased Shares to timely make an election under
Internal Revenue Code section 338(h)(10) (and any comparable election under
state or local tax law) with respect to Greystone and Columbus and shall
cooperate with each other in the completion and timely filing of such elections
in accordance with the provisions of Treas. Reg. ss. 1.338(h)(10)-1T (and any
comparable provision of state or local tax law or any successor provision),
including, without limitation, the joint execution of Internal Revenue Service
Form 8023 and all required attachments. Purchasers and Sellers agree that the
Purchase Price, as adjusted pursuant to Treas. Reg. ss. 1.338-4T, shall be
allocated using the fair market values of the assets of Greystone and Columbus
as are set forth on SCHEDULE 10.1 hereto. To the extent Purchasers and Sellers
can't agree on an appropriate allocation within 60 days after the Closing,
Purchasers may, retain a nationally recognized independent appraiser acceptable
to both Purchasers and Sellers to determine the fair market value of each asset
of Greystone and Columbus. The fees and expenses of such appraiser shall be paid
by Purchasers. Neither Purchasers nor Sellers shall take any position on any tax
return or with any taxing authority that is inconsistent with the agreed fair
market values of the assets set forth on SCHEDULE 10.1, provided that Purchasers
and Sellers may take a tax position consistent with any examination adjustments
made by the Internal Revenue Service or applicable state, local or foreign
taxing authorities.
10.2. FILING OF RETURNS. Sellers shall properly and timely prepare,
file and deliver to the appropriate authorities or other persons all tax
returns, reports and forms with respect to Montclair LLC, Greystone, Columbus
and any affiliated entities required to be filed and delivered, for any taxable
period ending on or before the Closing Date, and shall ensure that all Charges
(as hereinafter defined) and other impositions shown thereon to be due and
payable have been paid prior to the date on which any fine, penalty, interest,
late charge or loss may be added thereto for the nonpayment thereof, unless any
such amounts are being contested in good faith by appropriate proceedings, or
any such fine, penalty, interest, late charge or loss has been paid. For
purposes of this Agreement, "Charges" shall mean all federal, state, county,
city, municipal, local, foreign or other governmental taxes, levies, assessments
and charges, liens, claims or encumbrances upon or relating to (i) Greystone's,
Columbus's and any affiliated entities' employees, payroll, income, or gross
receipts, (ii) Greystone's, Columbus's and any affiliated entities' ownership or
use of any of their assets, or (iii)
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any other aspect of Greystone's, Columbus's and any affiliated entities'
business, in each case including any and all interest and penalties. For any
period not ending prior to or on the Closing Date, Purchasers shall timely
prepare and file with or deliver to the appropriate authorities or other persons
all tax returns, reports and forms required to be filed or delivered. Purchasers
and Sellers agree that the federal income tax return filed by Sellers with
respect to Greystone and Columbus shall be for the period ending as of the
Closing Date.
10.3. AD VALOREM AND SIMILAR TAXES. Ad valorem, property and similar
taxes and assessments (other than taxes on income, gain or receipts, or transfer
taxes in respect of the Purchased Shares) based upon or measured by the value of
the assets of Greystone and Columbus shall be divided or prorated between
Purchasers and Sellers as of the Closing Date based on the amount of such taxes
paid for the previous year, unless a new tax statement is received prior to the
Closing Date, in which event the tax apportionment made as of the Closing Date
shall be adjusted in accordance with such new tax statement or as otherwise
mutually agreed. In this regard, Sellers shall assume responsibility for such
taxes attributable to the period of time prior to the Closing Date and the
Purchasers shall assume responsibility for the periods of time thereafter. A
period not ending on the Closing Date shall be referred to as a "Straddle
Period". Real, personal and intangible personal property Taxes of Montclair LLC,
Greystone, and Columbus for a Straddle Period allocable to Sellers shall be
equal to the amount of such Taxes for the entire taxable period multiplied by a
fraction, the numerator of which is a number of days in a Straddle Period prior
to and including the Closing Date and the denominator of which is the number of
days in the Straddle Period. All other Taxes for the portion of the Straddle
Period ending on the Closing Date shall be computed as if such taxable period
ended as of the close of business on the Closing Date. Not later than 30 days
after the Closing Date, Purchasers and Sellers shall determine and shall pay all
amounts required to be paid pursuant to such allocation.
10.4. CLOSING OF TAXABLE AND BOOK YEAR. For federal tax purposes,
pursuant to Treasury Regulations Sections 1.706-1(c)(1) and 1.708-1(b)(1)(iv),
the taxable year of Montclair LLC shall close on the Closing Date and shall be
its final taxable year (the "Final Taxable Year"). From and after the Closing
Date, Montclair LLC shall commence a new short tax year for federal income tax
purposes, which short tax year shall end on December 31 of that calendar year.
Sellers represent that an election pursuant to Section 754 of the IRC is in
effect for Montclair LLC, or if not in effect Sellers and Montclair LLC agree to
cause Montclair LLC to make such an election. If required by this paragraph,
such election shall be included in Montclair LLC's timely filed federal income
tax return for the Final Taxable Year. Purchasers and Sellers agree that the
Purchase Price shall be allocated using the fair market values of the assets of
Montclair LLC as are set forth on SCHEDULE 10.4 hereto. To the extent Purchasers
and Sellers can't agree on an appropriate allocation within 60 days after the
Closing, Purchasers may, retain a nationally recognized independent appraiser
acceptable to both Purchasers and Sellers to determine the fair market value of
each asset of Montclair LLC. The fees and expenses of such appraiser shall be
paid by Purchasers. Neither Purchasers nor Sellers shall take any position on
any tax return or with any taxing authority that is inconsistent with the agreed
fair market values of the assets set forth on SCHEDULE 10.4, provided that
Purchasers and Sellers may take a tax position
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consistent with any examination adjustments made by the Internal Revenue Service
or applicable state, local or foreign taxing authorities.
10.5. AUDITS. In the event of an audit by a taxing authority involving
a Seller, the consent of the Purchasers shall not be required unless Taxes are
being assessed against a Purchaser and the Seller has not provided funds to pay
any such Taxes.
SECTION 11. COVENANTS
11.1. EFFORTS TO CONSUMMATE Subject to the terms and conditions of this
Agreement, each party hereto shall use commercially reasonable efforts to take
or cause to be taken all actions and do or cause to be done all things required
under applicable law in order to consummate the transactions contemplated
hereby, including, without limitation, (i) obtaining all permits,
authorizations, consents and approvals of any authority or other Person which
are required for or in connection with the consummation of the transactions
contemplated hereby and by the other documents, (ii) taking any and all
reasonable actions necessary to satisfy all of the conditions to such party's
obligations hereunder, and (iii) executing and delivering all agreements and
documents required by the terms hereof to be executed and delivered by such
party on or prior to the Closing. Time shall be of the essence in the
performance of this Agreement.
11.2. RELEASES. Purchasers shall use all commercially reasonable
efforts to cause a Purchaser or one or more of its Affiliates to be substituted
in all respects for each Seller, as the case may be, effective as of the
Closing, in respect of all obligations of such Seller relating to Montclair LLC,
Greystone or Columbus, as the case may be, so that each Seller shall from and
after the Closing cease to have any obligation whatsoever arising from or in
connection with such obligations (the "Releases"). If Purchasers are unable to
effect such Releases after using their commercially reasonable efforts to do so,
Purchasers shall obtain letters of credit, on terms and from financial
institutions satisfactory to each Seller, with respect to the obligations for
which Purchasers do not effect such substitution.
11.3. USE OF NAME.
(a) Sellers shall transfer at the Closing to Purchasers any
rights Sellers may have to use the trademarks and/or trade names "Greystone
Imaging Center", "Montclair Road Imaging Center" and "Columbus Diagnostic
Center" and any other marks belonging to Sellers, or any derivative of such
names or marks that were used by the Businesses in the ordinary course of
business prior to the Closing.
(b) In connection with the same, Purchasers shall remove or
cover, or shall have caused to be removed or covered, no later than 90 days
after the Closing Date, the trademarks and/or trade names "US Diagnostic Inc."
or "USD" or any other marks belonging to Sellers (other than those described in
subsection (a) above), or any derivative of such names or marks, from labels,
containers, signs, panels, flags, brochures, manuals, literature, real property
signage, vehicles and other material or matter (regardless of medium).
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11.4. PUBLICITY. Except as otherwise required by applicable law or the
disclosure rules and regulations of the Securities and Exchange Commission,
neither Purchasers nor Sellers shall issue any press release or make any other
public statement (including statements to Employees) relating to this Agreement
or the transactions contemplated hereby without obtaining the prior written
approval of all other parties hereto to the contents and manner of presentation
and publication thereof.
11.5. CONDUCT OF BUSINESS. During the period from the date hereof to
the Closing Date, Sellers will cause Columbus, Montclair LLC and Greystone to
continue to conduct the Businesses in the usual and ordinary course of business
and in substantially the same manner as previously conducted, including without
limitation that (i) Sellers will cause Columbus, Montclair LLC and Greystone to
pay all accounts payable which are due more than 60 days and will collect all
accounts receivable in the ordinary course of business consistent with past
practices and shall not factor or finance any such receivables, and (ii) Sellers
will continue to maintain workers compensation insurance for all of the
Employees.
11.6. REVISION OF SCHEDULES. During the period from the date hereof to
the Closing Date, the parties shall be able to amend the schedules to this
Agreement to correct any factual inaccuracies or omissions including but not
limited to assumed obligations, obligations and material contracts contained in
such schedules at any time between the date hereof and the Closing Date,
provided, however, any contemplated change must be approved by all parties to
this Agreement.
11.7. FINANCIAL STATEMENTS. Within 75 days after the Closing Date, USD
shall provide to Purchasers a balance sheet and statement of operations of each
Business as of the Closing Date.
11.8. SOLICITATION OF TRANSACTIONS. From the date of this Agreement
until the occurrence of the Closing, Sellers will not directly or indirectly
through the Valuation Firm send bid packages or contact bidders regarding the
Businesses to any Persons. If the August 28th Special Committee receives an
offer, proposal or request for information regarding the acquisition or purchase
of the Businesses or any of them (any such offer or proposal being hereinafter
referred to as an "Acquisition Proposal"), the August 28th Special Committee on
behalf of Sellers shall have the right to negotiate the terms of such
Acquisition Proposal. In the event the August 28th Special Committee determines
in its sole discretion that any such Acquisition Proposal would provide to
Sellers a value which is not less than 105% of the value of the transaction
contemplated hereby, then Sellers shall have the right to terminate this
Agreement and proceed with the Acquisition Proposal.
11.9. FINANCING. Purchasers shall use their commercially reasonable
efforts to obtain the financing commitment as provided in Section 7.5 and the
actual financing necessary to pay the Purchase Price on the Closing Date.
11.10. FURTHER ASSURANCES. Following the Closing, Sellers and
Purchasers shall execute and deliver such documents, and take such other action,
as shall be reasonably requested by any other party hereto to carry out the
transactions contemplated by this Agreement.
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11.11. PREVIOUS BIDDERS. Purchasers agree that for the six month period
following the Closing Date, Purchasers will not issue any equity interests in
Purchasers to any Person that has previously expressed interest in purchasing
the Businesses.
11.12. INTERCOMPANY RECEIVABLES. At the Closing Date, (a) all
obligations of USD and its subsidiaries (other than Columbus, Greystone and
Montclair LLC) to Columbus, Greystone and Montclair LLC shall be satisfied in
accordance with their terms and (b) all obligations of Columbus, Greystone and
Montclair LLC to USD and its subsidiaries (other than Columbus, Greystone and
Montclair LLC) shall be eliminated or otherwise canceled in a manner which does
not and will not have any adverse tax consequences on Columbus, Greystone and
Montclair LLC. Each of the obligations described in clauses (a) and (b) of this
Section 11.12 as of the date hereof are set forth on SCHEDULE 11.12.
SECTION 12. INDEMNIFICATION
12.1. SURVIVAL AND LIMITATION ON LIABILITIES.
(a) All representations and warranties of the parties
contained in this Agreement shall survive the Closing for 18 months following
the Closing Date other than the representations and warranties of Sellers set
forth in Section 5.14 which shall survive until the expiration of the statute of
limitations in respect thereof. No action or proceeding may be brought with
respect to any of the representations or warranties set forth in this Agreement
(including any claim for indemnification made pursuant to Sections 12.2 and 12.3
below), unless written notice thereof, setting forth in reasonable detail the
claimed misrepresentation or breach of warranty shall have been delivered to the
party alleged to have breached such representation or warranty prior to the
expiration of the survival terms set forth in the preceding sentence.
Notwithstanding anything in this Agreement to the contrary, with respect to any
claim with respect to a breach of any representation or warranty (including any
indemnification claims relating thereto), (i) neither Purchasers nor a Permitted
Assignee shall be entitled to receive any damages or to indemnification from any
Seller with respect to a single Business until the Purchasers' Losses with
respect to that Business exceed, in the aggregate $50,000, in which case
Purchasers or a Permitted Assignee shall be entitled to indemnification from
such Seller only to the extent such Losses exceed $50,000, (ii) Purchasers or a
Permitted Assignee shall not be entitled to receive any damages or to
indemnification from any Seller with respect to any breach of any representation
or warranty under Section 5 hereof if a Purchaser, any equity holder, officer or
director of such Purchaser, any Permitted Assignee or any equity holder, officer
or director of such Permitted Assignee knew or should have known at any time
prior to the Closing of the facts or circumstances relating to events or
conditions constituting or resulting in such breach of representation or
warranty, (iii) in no event shall Sellers collectively be required to pay an
aggregate amount in excess of $2,000,000 in respect of the Purchasers' Losses,
(iv) Sellers, individually and in the aggregate shall not be entitled to receive
any damages or to indemnification from Purchasers with respect to any breach of
any representation or warranty under Section 6 hereof if a Seller or any
director or officer of any Seller knew or should have known at any time prior to
the Closing of the facts or circumstances relating to events or conditions
constituting or resulting in such breach of representation or warranty, and (v)
in no event shall
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Purchasers be required to pay an aggregate amount in excess of $2,000,000 in
respect of Sellers' Losses.
(b) The covenants and agreements contained in Sections 11.1
and 11.5 shall not survive the Closing. The remaining covenants and agreements
(including but not limited to the indemnities) contained in this Agreement shall
survive the execution and delivery hereof and the completion of the transactions
contemplated herein. The limitations set forth in subsection (a) above shall not
apply to any claim for breach of any covenants or agreements contained in this
Agreement.
12.2. INDEMNIFICATION BY EACH SELLER. For 18 months from the date
hereof, each Seller agrees, solely with respect to each Business sold by it, to
indemnify Purchasers or Permitted Assignee with respect to, and hold Purchasers
or Permitted Assignee harmless from, any loss, liability, damage, cost or
expense including, but not limited to, reasonable legal fees and expenses and
any tax liabilities of Sellers, Columbus, Greystone or Montclair LLC, or of any
member of the consolidated federal income tax group of which Sellers are members
for any period ending on Closing Date or for any tax liability allocable to the
portion of any Straddle Period ending as of the Closing Date (collectively, the
"Losses") which Purchasers or any Permitted Assignee may incur or suffer from a
third party claim which results from or arises out of the inaccuracy of any
representation or warranty made by such Seller in this Agreement (unless any
inaccuracy is corrected by such Seller prior to Closing in a supplement to any
schedule hereto) or Purchasers or any equity holder, officer or director of any
Purchaser, any Permitted Assignee, or any equity holder, officer or director of
any Permitted Assignee knew or should have known, at any time prior to the
Closing, of such inaccuracy.
12.3. INDEMNIFICATION BY PURCHASERS. For 18 months from the date
hereof, each Purchaser agrees to jointly and severally indemnify each Seller
with respect to, and hold each Seller harmless from, any Losses which such
Seller may incur or suffer from a third party claim which results from or arises
out of the inaccuracy of any representation or warranty made by such Purchaser
in this Agreement.
12.4. PROCEDURES FOR INDEMNIFICATION. Promptly after receipt by an
indemnified party under Section 12.2 or Section 12.3 of notice of the
commencement of any third party action for which indemnification may be
available under Section 12.2 or 12.3, 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 that indemnifying party shall not relieve it of any
liability that it may have to any indemnified party, except to the extent the
indemnifying party demonstrates that the defense of such action is prejudiced
thereby. In case any such action shall be brought against an indemnified party
and it shall give notice to the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall elect, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under such Section for any fees of other counsel or any other expenses, in
each case incurred by such indemnified party in connection with the indemnified
party's own defense thereof, other than reasonable costs of
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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 which defenses
result in a conflict of interest. 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 unreasonable withheld) unless (i) there is no finding or admission or any
violation of law or any violation of the rights of any Person and no effect on
any other claims that may be made against the indemnified party and (ii) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party and (b) the indemnifying party shall have no liability with
respect to any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld).
12.5. LIMITATION OF RECOURSE. The rights of the parties for
indemnification relating to breaches of the representations and warranties
contained in this Agreement shall be strictly limited to those contained in
Section 12 hereof; provided, however, either party may seek injunctive relief
against the other for a breach of Section 11.4, Section 14.12 and Section 14.14.
12.6. PUNITIVE DAMAGES. No party to this Agreement shall seek or be
entitled to punitive, exemplary and/or consequential damages with respect to any
claim under this Agreement.
SECTION 13. TERMINATION
13.1. TERMINATION EVENTS.
(a) Sellers may terminate this Agreement by delivery of notice
of termination to Purchasers if at any time prior to the Closing Date:
(i) Any Purchaser fails or refuses to perform in any
material respect any obligation or covenant to be performed by it pursuant to
this Agreement prior to the Closing Date and the breach has not been cured
within ten business days following the receipt of notice by such Purchaser of
the breach;
(ii) Any of the conditions in Section 8 of this
Agreement has not been satisfied as of October 31, 2000 or, if satisfaction of
such a condition is or becomes impossible (other than through the failure of
such Seller to comply with its obligations under this Agreement), Sellers have
not waived such condition on or before October 31, 2000;
(iii) In accordance with Section 11.8 hereof; or
(iv) Pursuant to Section 7.5, Purchasers have not
received and delivered to Sellers within 14 days of the date hereof, a binding
commitment necessary for any financing necessary for Purchasers to pay the
Purchase Price on the Closing Date.
(b) Purchasers may terminate this Agreement by delivery of
notice of termination to Sellers if any time prior to the Closing Date:
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(i) Sellers fail or refuse to perform in any material
respect any obligation or covenant to be performed by them pursuant to this
Agreement prior to the Closing Date which has not been cured within ten business
days following receipt of notice of the breach; or
(ii) Any of the conditions set forth in Section 7 of
this Agreement has not been satisfied as of the Closing Date or, if satisfaction
of such a condition is or becomes impossible (other than through the failure of
any Purchaser to comply with its obligations under this Agreement), Purchasers
have not waived such condition on or before the October 31, 2000.
(c) The parties may terminate this Agreement at any time prior
to the Closing Date by mutual written consent; or
(d) Any party may terminate this Agreement by delivery of
notice of termination to the other party if the Closing has not occurred on or
before October 31, 2000, or such later date as the parties may agree upon in
writing.
13.2. EFFECT OF TERMINATION. Each party's right of termination under
Section 13.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination shall not be an
election of remedies. If this Agreement is terminated pursuant to Section 13.1,
all further obligations of the parties under this Agreement shall terminate,
except that the rights and obligations in Sections 11.4, 14.4, 14.6, 14.7, 14.12
and 14.13 of this Agreement shall survive; PROVIDED, HOWEVER, notwithstanding
anything to the contrary contained in this Agreement, that if this Agreement is
terminated by a party because of the breach of the Agreement by another party or
because one or more of the conditions of the terminating party's obligations
under this Agreement are not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies shall survive such termination unimpaired;
and FURTHER, PROVIDED, (i) that if after the conditions set forth in Section 7.5
are satisfied, the Purchasers fail to pay the Purchase Price because they have
not received adequate financing to pay the Purchase Price, then Purchasers shall
reimburse Sellers up to $30,000 for amounts charged by the Valuation Firm in
connection with the Valuation Firm's fairness opinion, and (ii) if this
Agreement is terminated pursuant to Section 13.1(a)(iii) hereof, USD shall pay
to Purchasers all reasonable out-of-pocket expenses up to $30,000 incurred by
them in connection with the transactions contemplated hereby, such reimbursement
to be made in either case by bank or certified check in immediately available
funds within five days after receipt by the reimbursing party of a statement of
such expenses.
SECTION 14. MISCELLANEOUS
14.1. SEVERABILITY. Should any part of this Agreement for any reason be
declared invalid, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated and
it is hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including thereon any
such part, parts, or portion which may, for any reason, be hereafter declared
invalid.
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14.2. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which, taken together,
shall constitute one Agreement.
14.3. HEADINGS. Section headings used in this Agreement have no legal
significance and are used solely for convenience of reference.
14.4. EXPENSES. Each party shall pay for its own legal, accounting and
other similar expenses incurred in connection with the transactions contemplated
by this Agreement, whether or not such transactions are consummated, except as
provided in Section 13.2 of this Agreement.
14.5. TRANSFER TAXES. Any income, sales, transfer, use or excise taxes
payable in connection with these transactions shall be paid by the party
responsible therefor under applicable local law.
14.6. LAW GOVERNING. This Agreement shall be deemed to have been
entered into under the laws of the State of Florida, and the rights and
obligations of the parties hereunder shall be governed and determined according
to the laws of said state without giving any effect to conflict of laws.
14.7. INDEMNIFICATION FOR BROKER FEES. Each Seller agrees to indemnify
and save harmless each Purchaser, and each Purchaser agrees to indemnify and
save harmless each Seller and its Affiliates, from and against any and all
actions, causes of action, suits, losses, liabilities and damages, and expenses
(including, without limitation, reasonable attorneys' fees and disbursements in
connection therewith) for any brokers or finders fees arising with respect to
brokers or finders engaged by the non-indemnifying party.
14.8. BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by any Purchaser without the prior written consent of Sellers
which may be withheld in their sole discretion. Notwithstanding the foregoing,
each Purchaser shall have the right prior to the Closing Date to assign its
rights under this Agreement to an entity of which Paul directly or indirectly
owns at least a majority of the equity interests therein (a "Permitted
Assignee"). Nothing in this Agreement, express or implied, is intended to confer
upon any person or entity other than the parties hereto and their respective
permitted successors and assigns, any rights, benefits or obligations hereunder.
14.9. ENTIRE AGREEMENT. This Agreement and the schedules and documents
delivered pursuant hereto constitute the entire contract between the parties
hereto pertaining to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether written or oral. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party or parties to be bound
thereby. No delay in the exercise of any rights by any party hereunder shall
operate as a waiver of any rights of such party.
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14.10. ACCESS TO RECORDS. For a period of seven years after the Closing
Date, Sellers shall have the right, at their expense, and during normal business
hours upon prior written notification, to inspect and copy any of the records
relating to the operation of the Businesses delivered to Purchasers in
connection with this transaction, for the purposes of (a) preparing and/or
defending tax returns for the period prior to the Closing Date, (b) obtaining
information relating to claims arising from the operation of the Business prior
to the Closing Date or (c) any other commercially reasonable purpose. During
such seven year period, Purchasers shall not destroy or discard such records.
After such seven year period, Purchasers may destroy or discard such records,
but must provide Sellers with at least 90 days' prior written notice of its
intentions and shall give each Seller the right, at their expense, to remove
from Purchasers' premises any such records. The parties hereto acknowledge and
agree that although the records relating to patients treated at the Businesses
prior to the Closing Date shall remain the property of each Seller, each Seller
agrees to leave such records at the Businesses in Purchasers' custody after the
Closing Date and Purchasers agree to retain such records in their custody, with
the same degree of care as given to Purchasers' own business records, for each
Seller's benefit as long as such records are required to be maintained by law.
Purchasers agree to, during normal business hours, afford each Seller, its
counsel, its accountants, or agents who have reasonable need for such access,
full access to the patient records as Sellers may reasonably request at each
Seller's expense.
14.11. NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, mailed by national overnight courier, postage prepaid, or sent via
telecopier:
<TABLE>
<CAPTION>
If to Purchasers: With a copy to:
<S> <C>
U S Diagnostic Inc. Richard B. Comiter & Associates, P.A.
250 South Australian Avenue, Esperante Building
Clearlake Center, 9th Floor, 222 Lakeview Avenue, Suite 200
West Palm Beach, Florida 33401 West Palm Beach, Florida 33401
Attn: Joseph A. Paul Attn: Richard Comiter, Esq.
If to Sellers: With a copy to:
U S Diagnostic Inc. Greenberg Traurig, P.A.
250 South Australian Avenue, 1221 Brickell Avenue
Clearlake Center, 9th Floor, Miami, Florida 33131
West Palm Beach, Florida 33401 Attn: Phillip J. Kushner, Esq.
Attn: David Mcintosh
</TABLE>
or to such other address as Sellers or Purchasers may designate by notice to the
other.
14.12. CONFIDENTIALITY.
(a) Prior to the Closing, each Purchaser shall, and shall
cause its Affiliates and its and their respective employees, agents,
accountants, legal counsel
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and other representatives and advisers to, hold in strict confidence all, and
not divulge or disclose any, information of any kind concerning Sellers and
their Businesses; provided, however, that the foregoing obligation of confidence
shall not apply to (i) information that is or becomes generally available to the
public other than as a result of a disclosure by such Purchaser or its
Affiliates or any of its or their respective employees, agents, accountants,
legal counsel or other representatives or advisers, (ii) information that is or
becomes available to such Purchaser or its Affiliates or any of its or their
respective employees, agents, accountants, legal counsel or other
representatives or advisers on a non-confidential basis prior to its disclosure
by such Purchaser or its Affiliates or any of its or their respective employees,
agents, accountants, legal counsel or other representatives or advisers and
(iii) information that is required to be disclosed by such Purchaser or its
Affiliates or any of its or their respective employees, agents, accountants,
legal counsel or other representatives or advisers as a result of any applicable
law, rule or regulation of any Governmental Authority; and provided further that
such Purchaser promptly shall notify Sellers of any disclosure pursuant to
clause (iii) of this Section 14.12(a) in order to give Sellers a reasonable
opportunity to respond to any such required disclosure.
(b) Sellers shall, and shall cause their Affiliates and their
respective employees, agents, accountants, legal counsel and other
representatives and advisers to, hold in strict confidence all, and not divulge
or disclose any, information of any kind concerning the transactions
contemplated by this Agreement, Purchasers or the Business; provided, however,
that the foregoing obligation of confidence shall not apply to (i) information
that is or becomes generally available to the public other than as a result of a
disclosure by Sellers or their Affiliates or any of their respective employees,
agents, accountants, legal counsel or other representatives or advisers, (ii)
information that is or becomes available to Seller or its Affiliates or any of
their respective employees, agents, accountants, legal counsel or other
representatives or advisers after the Closing on a non-confidential basis prior
to its disclosure by Seller or its Affiliates or any of their respective
employees, agents, accountants, legal counsel or other representatives or
advisers and (iii) information that is required to be disclosed by Sellers or
its Affiliates or any of their respective employees, agents, accountants, legal
counsel or other representatives or advisers as a result of any applicable law,
rule or regulation of any Governmental Authority; and provided further that
Seller shall promptly shall notify Purchasers of any disclosure pursuant to
clause (iii) of this Section 14.12(b).
14.13. ATTORNEYS' FEES. In the event that a suit for the collection of
any damages resulting from, or for the injunction of any action constituting, a
breach of any of the terms or provisions of this Agreement, then the
non-prevailing party shall pay all reasonable costs, fees (including reasonable
attorneys' fees) and expenses of the prevailing party.
14.14. NON-COMPETITION. Each Seller hereby agrees that USD and each of
its subsidiaries shall, for a period from the Closing Date until the second
anniversary thereof, (the "Covenant Period") but only so long as Purchasers
remain engaged in the medical imaging business in the Restricted Location (as
hereinafter defined), refrain from, anywhere within a 30-mile radius of the
primary location of each Business (the "Restricted Location"), directly or
indirectly, owning, managing, operating, controlling or financing, any mobile or
fixed diagnostic imaging business that is competitive with the
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Business; PROVIDED, HOWEVER, that the foregoing shall not apply to (i) the
ownership or operation of imaging centers in the Restricted Location which USD
or any of its subsidiaries owned or operated at the time of the Closing Date,
(ii) the ownership of not more than five percent of the outstanding capital
stock of any company listed by a national securities exchange or an
over-the-counter stock listed by the National Association of Securities Dealers;
and PROVIDED, FURTHER, HOWEVER, that if USD acquires or is acquired by or merges
with or into, a company which owns or operates diagnostic imaging facilities and
which is engaged in a business which is competitive with the Businesses, and
such company owns, operates, or has placed a deposit on an MRI or other medical
imaging modality for, a facility within the Restricted Location, USD will not be
deemed in breach of this covenant by virtue of the consummation of any such
merger or acquisition.
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SCHEDULES
Schedule 3.1 Purchase Price
Schedule 5.3 Consents
Schedule 5.7 Litigation
Schedule 5.8 Material Contracts
Schedule 5.9(a) Employee Benefit Plans
Schedule 5.9(c) Employees
Schedule 5.10(a) Leased Real Property
Schedule 5.10(b) Encumbrances
Schedule 5.11 Environmental Matters
Schedule 5.12 Financial Statements
Schedule 5.14 Taxes
Schedule 5.16 Certain Changes
Schedule 5.19 Liens
Schedule 7.6 Lease Extensions
Schedule 10.1 Columbus and Greystone Purchase Price Allocation
Schedule 10.4 Montclair LLC Purchase Price Allocation
Schedule 11.2 Intercompany Receivables
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the day and year first above written.
PURCHASERS:
COLUMBUS ACQUISITION CORP.
By: /s/ Joseph A. Paul
----------------------------------------
Title: President
--------------------------------------
GREYSTONE ACQUISITION CORP.
By: /s/ Joseph A. Paul
----------------------------------------
Title: President
--------------------------------------
MONTCLAIR ACQUISITION LLC
By: /s/ Joseph A. Paul
----------------------------------------
Title: President
--------------------------------------
SELLERS:
US DIAGNOSTIC INC.
By: /s/ Leon F. Maraist
----------------------------------------
Title: VP
--------------------------------------
USD MONTCLAIR, INC.
By: /s/ Leon F. Maraist
----------------------------------------
Title: VP
--------------------------------------
MEDITEK INDUSTRIES CORP.
By: /s/ Leon F. Maraist
----------------------------------------
Title: VP
--------------------------------------
30
