AGREEMENT AND PLAN OF MERGER,
Dated January 20, 1997,
among
US DIAGNOSTIC INC.
("USD"),
----
MDI ACQUISITION CORPORATION
("ACQUISITION"),
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MEDICAL DIAGNOSTICS, INC.
("MDI"),
----
and
ADVANCED NMR SYSTEMS, INC.
("STOCKHOLDER").
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TABLE OF CONTENTS
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Page
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ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II The Merger . . . . . . . . . . . . . . . . . . . . . 4
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . 4
2.2 Closing; Effective Time of the Merger . . . . . . . . 4
2.3 Effects of the Merger . . . . . . . . . . . . . . . . 4
2.4 Certificate of Incorporation and Bylaws . . . . . . . 4
2.5 Directors and Officers . . . . . . . . . . . . . . . 4
2.6 Effect on Capital Stock . . . . . . . . . . . . . . . 4
2.7 Conversion of Shares . . . . . . . . . . . . . . . . 5
ARTICLE III Representations and Warranties of USD . . . . . . 5
3.1 Organization; Authority . . . . . . . . . . . . . . . 5
3.2 Authorization; Enforceability . . . . . . . . . . . . 5
3.3 No Violation or Conflict . . . . . . . . . . . . . . 6
3.4 Consent of Governmental Authorities . . . . . . . . . 6
3.5 Legal Proceedings . . . . . . . . . . . . . . . . . . 6
3.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Absence of Material Adverse Changes . . . . . . . . . 6
ARTICLE IV Representations and Warranties of Stockholder . . . . 7
4.1 Organization; Authority; Foreign Qualification . . . 7
4.2 Authorization; Enforceability . . . . . . . . . . . . 7
4.3 No Violation or Conflict . . . . . . . . . . . . . . 7
4.4 Consent of Governmental Authorities . . . . . . . . . 7
4.5 Health Care Providers . . . . . . . . . . . . . . . . 8
4.6 Financial Statements . . . . . . . . . . . . . . . . 8
4.7 Compliance with Laws . . . . . . . . . . . . . . . . 8
4.8 Legal Proceedings . . . . . . . . . . . . . . . . . . 8
4.9 Brokers . . . . . . . . . . . . . . . . . . . . . . . 9
4.10 Absence of Material Adverse Changes . . . . . . . . . 9
4.11 Transactions with Affiliates . . . . . . . . . . . . 9
4.12 Capitalization . . . . . . . . . . . . . . . . . . . 9
4.13 Rights, Warrants, Options . . . . . . . . . . . . . . 10
4.14 Properties . . . . . . . . . . . . . . . . . . . . . 10
4.15 Governmental Authorizations . . . . . . . . . . . . . 11
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . . 11
4.17 Employment Matters . . . . . . . . . . . . . . . . . 12
4.18 Material Agreements . . . . . . . . . . . . . . . . . 13
4.19 List of Accounts . . . . . . . . . . . . . . . . . . 13
4.20 Major Customers . . . . . . . . . . . . . . . . . . . 13
4.21 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 14
4.22 Guarantees; Powers of Attorney . . . . . . . . . . . 14
4.23 Environmental Matters . . . . . . . . . . . . . . . . 14
4.24 1995 Merger Agreement . . . . . . . . . . . . . . . . 15
4.25 Disclosure . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V Covenants . . . . . . . . . . . . . . . . . . . . . . 16
5.1 Interim Operations of MDI . . . . . . . . . . . . . . 16
5.2 Access . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Confidentiality . . . . . . . . . . . . . . . . . . . 17
5.4 Notification . . . . . . . . . . . . . . . . . . . . 17
5.5 Consent of Governmental Authorities and Others . . . 18
5.6 Acquisition Proposals; No Solicitation . . . . . . . 18
5.7 Best Efforts . . . . . . . . . . . . . . . . . . . . 18
5.8 Publicity . . . . . . . . . . . . . . . . . . . . . . 19
5.9 Sale or Assignment of Interest in MVA, MDI Rehab,
Middlesex and Faulkner . . . . . . . . . . . . . . . 19
5.10 Termination of MDI's Obligations under Employment
Agreements . . . . . . . . . . . . . . . . . . . . . 19
5.11 Release of Stockholder Guarantees . . . . . . . . . . 19
5.12 Intercompany Receivables . . . . . . . . . . . . . . 19
5.13 Lease Arrangements . . . . . . . . . . . . . . . . . 19
5.14 MMIV Escrow. . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI Additional Agreements . . . . . . . . . . . . . . . . 20
6.1 Employees and Benefit Plans . . . . . . . . . . . . . 20
6.2 Investigation; Notices . . . . . . . . . . . . . . . 20
6.3 Survival of the Representations, Warranties,
Covenants and Agreements . . . . . . . . . . . . . . 20
6.4 Indemnification . . . . . . . . . . . . . . . . . . . 20
6.5 General Release . . . . . . . . . . . . . . . . . . . 22
6.6 Assignment of Rights of Stockholder Under 1995
Acquisition Agreement . . . . . . . . . . . . . . . . 22
6.7 Discharge of Bank Debt . . . . . . . . . . . . . . . 22
6.8 Blocked Account, Pledge and Security Agreement . . . 22
6.9 Restrictive Covenants . . . . . . . . . . . . . . . . 22
6.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . 24
6.11 Other Indemnifications . . . . . . . . . . . . . . . 25
ARTICLE VII Closing; Conditions Precedent; Termination . . . . 27
7.1 Closing . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Mutual Conditions Precedent . . . . . . . . . . . . . 27
7.3 Conditions Precedent to the Obligations of USD . . . 28
7.4 Conditions Precedent to the Obligations of
Stockholder and MDI . . . . . . . . . . . . . . . . . 29
7.5 Termination . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII Miscellaneous . . . . . . . . . . . . . . . . . . 30
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Entire Agreement . . . . . . . . . . . . . . . . . . 31
8.3 Assignment . . . . . . . . . . . . . . . . . . . . . 31
8.4 Waiver and Amendment . . . . . . . . . . . . . . . . 31
8.5 No Third Party Beneficiary . . . . . . . . . . . . . 31
8.6 Severability . . . . . . . . . . . . . . . . . . . . 31
8.7 Expenses; Termination Fee . . . . . . . . . . . . . . 31
8.8 Headings . . . . . . . . . . . . . . . . . . . . . . 32
8.9 Counterparts . . . . . . . . . . . . . . . . . . . . 32
8.10 Litigation; Prevailing Party . . . . . . . . . . . . 32
8.11 Injunctive Relief . . . . . . . . . . . . . . . . . . 32
8.12 Governing Law . . . . . . . . . . . . . . . . . . . . 32
8.13 Jurisdiction and Venue . . . . . . . . . . . . . . . 32
8.14 Obligations of MDI . . . . . . . . . . . . . . . . . 33
SCHEDULES
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3.4 Consent of Governmental Authorities
3.6 Brokers
4.1 Foreign Qualification
4.3 Material Agreements
4.4 Consent of Governmental Authorities
4.6 Financial Statements
4.8 Legal Proceedings
4.8A Material Legal Proceedings
4.8B Claims of Officers and Directors
4.9 Brokers
4.10 Absence of Material Adverse Changes
4.11 Transactions with Affiliates
4.12 Capitalization
4.14(a) Real and Tangible Personal Property
4.14(b) Intellectual Property Rights
4.15 Governmental Authorizations
4.16 Insurance
4.17(c) Employment Agreements
4.17(d) Employee Benefit Plans
4.18 Material Agreements
4.19 List of Accounts
4.20 Major Customers
4.21 Taxes
4.22 Guaranties; Powers of Attorney
4.23 Environmental Matters
4.24 1995 Merger Agreement
5.1 Pre-Closing Matters
5.11 Release of Stockholder Guaranties
6.5 General Release
EXHIBITS
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A Certificate of Merger
B MVA Agreement
C Faulkner Agreement
D Blocked Account, Pledge and Security Agreement
E Opinion of Stockholder's Counsel
F Auditor's Comfort Letter
G Opinion of USD's Counsel
AGREEMENT AND PLAN OF MERGER
----------------------------
This Agreement and Plan of Merger is entered into as of
January 20, 1997, among ADVANCED NMR SYSTEMS, INC., a Delaware
corporation ("Stockholder"), MEDICAL DIAGNOSTICS, INC., a
---------
Delaware corporation which is wholly owned by Stockholder
("MDI"), US DIAGNOSTIC INC., a Delaware corporation ("USD"), and
--
MDI ACQUISITION CORPORATION, a Delaware corporation which is
wholly-owned by USD ("Acquisition").
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PRELIMINARY STATEMENT
----------------------
MDI is engaged in the business of owning and operating
diagnostic imaging centers in Massachusetts, New York, Tennessee,
West Virginia and Virginia and USD desires to acquire such
business through the merger of Acquisition with and into MDI.
MDI and USD believe that the mutual best interests of MDI and USD
and their respective shareholders will be served by the merger of
Acquisition with and into MDI upon the terms and subject to the
conditions of this Agreement.
AGREEMENT
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In consideration of the preliminary statement and the
respective covenants, representations and warranties contained in
this Agreement, the parties agree as set forth below.
ARTICLE I
DEFINITIONS
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In addition to terms defined elsewhere in this Agreement, the
following terms when used in this Agreement shall have the meanings
indicated below:
"Acquisition Common Stock" means the common stock of Acquisition,
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par value $.01 per share.
"Acquisition Transaction" has the meaning specified in Section
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5.6 of this Agreement.
"Affiliate" has the meaning specified in Rule 144 promulgated by
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the Commission under the Securities Act.
"Affiliated Group" means an affiliated group as defined in
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Section 1504 of the Code (or any analogous combined, consolidated or
unitary group defined under state, local or foreign income Tax law) of
which MDI or any of its Subsidiaries is or has been a member.
"Agreement" means this Agreement and Plan of Merger together with
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all exhibits and schedules referred to herein.
"Assumed Employees" has the meaning specified in Section 5.10 of
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this Agreement.
"Assumed Employee Claims" has the meaning specified in Section
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6.11 of this Agreement.
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"Basket Limitation" has the meaning specified in Section 6.4 of
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this Agreement.
"Cap Limitation" has the meaning specified in Section 6.4 of this
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Agreement.
"Certificate of Merger" has the meaning set forth in Section 2.2
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of this Agreement.
"Chase" has the meaning set forth in Section 2.6 of this
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Agreement.
"Closing" has the meaning specified in Section 2.2 of this
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Agreement.
"Closing Date" has the meaning specified in Section 2.2 of this
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Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Commission" means the Securities and Exchange Commission.
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"Covenant Period" has the meaning specified in Section 6.9 of
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this Agreement.
"Delaware GCL" means the General Corporation Law of the State of
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Delaware.
"Effective Time" shall have the meaning set forth in Section 2.2
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of this Agreement.
"Environmental Laws" has the meaning specified in Section 4.23 of
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this Agreement.
"Environmental Permits" has the meaning specified in Section 4.23
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of this Agreement.
"ERISA" has the meaning specified in Section 4.17 of this
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Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
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amended, and the rules and regulations promulgated thereunder.
"Faulkner" has the meaning set forth in Section 5.9 of this
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Agreement.
"Financial Statements" means MDI's audited consolidated balance
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sheet and the related audited consolidated statements of operations,
stockholders' equity and cash flow as at and for the year ended
September 30, 1996.
"Guaranty" means, as to any Person, any contract, agreement or
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understanding of such Person pursuant to which such Person guarantees
the indebtedness, liabilities or obligations of others, directly or
indirectly, in any manner, including agreements to purchase such
indebtedness, liabilities or obligations, or to supply funds to or in
any manner invest in others, or to otherwise assure the holder of such
indebtedness, liabilities or obligations against loss.
"Hazardous Substances" has the meaning specified in Section 4.23
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of this Agreement.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
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of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Knowledge" or "known" means, with respect to any representation
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or warranty or other statement in this Agreement qualified by the
knowledge of any party, that such party has made a diligent
investigation as to the matters that are the subject of such
representation, warranty or other statement. Where reference is made
to the knowledge of Stockholder, MDI or USD, such reference shall mean
the actual knowledge of the executive officers of Stockholder, MDI or
USD, as the case may be, all having conducted the diligent
investigation contemplated by this definition.
"Licenses" has the meaning specified in Section 4.15 of this
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Agreement.
"Losses" has the meaning specified in Section 6.4 of this
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Agreement.
"Lynch Litigation" has the meaning specified in Section 6.11 of
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this Agreement.
"Material Agreements" has the meaning specified in Section 4.18
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of this Agreement.
"MDI Common Stock" means the common stock of MDI, par value $.01
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per share.
"MDI Intellectual Property" has the meaning specified in Section
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4.14(b) of this Agreement.
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"MDI Plans" has the meaning specified in Section 4.17 of this
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Agreement.
"MDI Rehab" has the meaning specified in Section 5.9 of this
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Agreement.
"Merger" has the meaning specified in Article II of this
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Agreement.
"Merger Consideration" has the meaning set forth in Section 2.6
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of this Agreement.
"Middlesex" has the meaning specified in Section 5.9 of this
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Agreement.
"MMIV" has the meaning specified in Section 6.11 of this
---- ------------
Agreement.
"MVA" has the meaning set forth in Section 5.9 of this Agreement.
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"Pension Plan" has the meaning specified in Section 4.17 of this
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Agreement.
"Person" means any natural person, corporation, unincorporated
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organization, partnership, association, joint stock company, joint
venture, trust or government, or any agency or political subdivision
of any government, or any other entity.
"Raytel" means Raytel Corporation, Raytel Medical Corporation and
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their respective Affiliates.
"Raytel Litigation" has the meaning specified in Section 6.11 of
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this Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
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and the rules and regulations promulgated thereunder.
"Subsidiary" of any Person means any Person, whether or not
---------
capitalized, in which such Person owns, directly or indirectly, an
equity interest of 50% or more, or any Person which may be controlled,
directly or indirectly, by such Person, whether through the ownership
of voting securities, by contract, or otherwise.
"Surviving Corporation" has the meaning set forth in Section 2.1
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of this Agreement.
"Symbols" has the meaning set forth in Section 6.9 of this
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Agreement.
"Tax Returns" means returns, declarations, reports, claims for
-----------
refund, information returns or other documents (including any related
or supporting schedules, statements or information) filed or required
to be filed in connection with the determination, assessment or
collection of any Taxes of any party or the administration of any
laws, regulations or administrative requirements relating to any
Taxes.
"Taxes" has the meaning specified in Section 4.21 of this
----- -------------
Agreement.
"Termination Date" has the meaning specified in Section 7.5 of
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this Agreement.
"Welfare Plan" has the meaning specified in Section 4.17 of this
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Agreement.
ARTICLE II
THE MERGER
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2.1 THE MERGER. Upon the terms and subject to the conditions
----------
set forth in this Agreement, and in accordance with the Delaware GCL,
at the Effective Time, Acquisition shall be merged (the "Merger") with
------
and into MDI. At the Effective Time, the separate corporate existence
of Acquisition shall cease, and MDI shall continue as the surviving
corporation of the Merger under the laws of the State of Delaware (the
"Surviving Corporation") under its present name. The corporate
---------------------
existence of USD and of Stockholder shall not be affected by the
Merger.
2.2 CLOSING; EFFECTIVE TIME OF THE MERGER. Unless this
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Agreement is terminated in accordance with its terms, the consummation
of the transactions contemplated by this Agreement (the "Closing")
-------
shall take place at the offices of USD as soon as practicable, and in
any event within three days, after the satisfaction or waiver of the
conditions precedent to the obligations of the parties set forth in
Article VII (the "Closing Date"), or on such other date and at such
------------
other place as may be agreed to by the parties. On the Closing Date,
the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger, substantially in the form set forth as
Exhibit A (the "Certificate of Merger"), with the Secretary of State
--------- ---------------------
of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the Delaware GCL (the date
and time of the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware (or such later time as is specified
in the Certificate of Merger) being the "Effective Time").
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2.3 EFFECTS OF THE MERGER. From and after the Effective Time,
---------------------
the Merger shall have the effects set forth under the applicable
provisions of the Delaware GCL.
2.4 CERTIFICATE OF INCORPORATION AND BYLAWS.
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(a) CERTIFICATE OF INCORPORATION. At the Effective Time,
----------------------------
and until thereafter amended or repealed in accordance with their
terms and as provided by law, the Certificate of Incorporation of the
Surviving Corporation shall be the Certificate of Incorporation of
MDI, as in effect immediately prior to the Effective Time.
(b) BYLAWS. At the Effective Time, the Bylaws of the
------
Surviving Corporation shall be the Bylaws of MDI, as in effect
immediately prior to the Effective Time, until thereafter amended or
repealed in accordance with their terms and the Certificate of
Incorporation of the Surviving Corporation and as provided by law.
2.5 DIRECTORS AND OFFICERS. The directors of Acquisition
----------------------
immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Survivin ...
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