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SHARE PURCHASE AGREEMENT by and among

Purchase and Sale Agreement

SHARE PURCHASE AGREEMENT by and among | Document Parties: Acquired Companies | NIGHTHAWK RADIOLOGY HOLDINGS, INC | Professional Company | TELERADIOLOGY DIAGNOSTIC SERVICE, INC | WILSON S WONG, MD, PC | WILSON S WONG, MD, PROFESSIONAL CORP You are currently viewing:
This Purchase and Sale Agreement involves

Acquired Companies | NIGHTHAWK RADIOLOGY HOLDINGS, INC | Professional Company | TELERADIOLOGY DIAGNOSTIC SERVICE, INC | WILSON S WONG, MD, PC | WILSON S WONG, MD, PROFESSIONAL CORP

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Title: SHARE PURCHASE AGREEMENT by and among
Governing Law: Idaho     Date: 3/6/2007
Industry: Healthcare Facilities     Law Firm: Buchalter Nemer     Sector: Healthcare

SHARE PURCHASE AGREEMENT by and among, Parties: acquired companies , nighthawk radiology holdings  inc , professional company , teleradiology diagnostic service  inc , wilson s wong  md  pc , wilson s wong  md  professional corp
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Exhibit 10.30

SHARE PURCHASE AGREEMENT

by and among

NIGHTHAWK RADIOLOGY HOLDINGS, INC.

and

TELERADIOLOGY DIAGNOSTIC SERVICE, INC.

and

WILSON S. WONG, M.D., PROFESSIONAL CORP.

and

THE SHAREHOLDERS OF TELERADIOLOGY DIAGNOSTIC SERVICE, INC. and WILSON S.

WONG, M.D., PROFESSIONAL CORP.

and

WILSON WONG, M.D., as SHAREHOLDER REPRESENTATIVE

FEBRUARY 9, 2007

 


TABLE OF CONTENTS

 

            Page

ARTICLE I DEFINITIONS

   1

1.1

   Capitalized Terms    1

1.2

   Construction    7

ARTICLE II SALE AND PURCHASE OF SHARES; CLOSING

   8

2.1

   Shares    8

2.2

   Consideration    8

2.3

   Closing.    8

2.4

   Withholding Rights    8

ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY

   8

3.1

   Organization    9

3.2

   Authority    9

3.3

   Capital Stock    9

3.4

   Conflict    10

3.5

   Acquired Company Financial Statements    10

3.6

   Indebtedness; Guaranties    11

3.7

   Accounts Receivable    11

3.8

   Cash Equivalents/Bank Accounts    11

3.9

   Absence of Changes    12

3.10

   Legal and Other Compliance    14

3.11

   Contracts    15

3.12

   Restrictions on Business Activities    16

3.13

   Governmental Approvals    16

3.14

   Title to Properties, Absence of Liens, Condition of Equipment    17

3.15

   Intellectual Property    18

3.16

   Litigation    20

3.17

   Insurance    20

3.18

   Tax Matters    21

3.19

   Environmental Matters    23

3.20

   Brokers’ and Finders’ Fees    24

3.21

   Employee and Contractor Matters    24

3.22

   Consents    28

3.23

   Government Contracts    28

3.24

   Books and Records    29

3.25

   Medical Liability    29

3.26

   Complete Copies of Materials    29

3.27

   Affiliate Transactions    29

3.28

   Customers and Suppliers    29

3.29

   Representations Complete    30

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

   30

4.1

   Authority    30

4.2

   No Conflict    30

ARTICLE V ADDITIONAL AGREEMENTS

   31

5.1

   Access Pending the Closing    31

 

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TABLE OF CONTENTS

(continued)

 

          Page

5.2

   Operation of the Business by the Acquired Companies    31

5.3

   Conduct Prior to Closing    32

5.4

   Confidentiality    33

5.5

   No Solicitation    33

5.6

   Notification of Certain Matters    34

5.7

   Public Disclosure    34

5.8

   Consents    34

5.9

   Legal Requirements    34

5.10

   Additional Documents and Further Assurances    34

5.11

   Tax Matters    35

5.12

   Merger of Acquired Companies    36

5.13

   Closing Balance Sheet    36

5.14

   Employee Plans    36

ARTICLE VI CONDITIONS TO THE CLOSING

   36

6.1

   Conditions to Obligations of Each Party    36

6.2

   Additional Conditions to the Obligations of Buyer    37

6.3

   Additional Conditions to Obligations of Acquired Companies and Sellers    38

ARTICLE VII ESCROW

   39

7.1

   Escrow Fund    39

7.2

   Escrow Period    39

7.3

   Distributions of Escrow Fund    39

7.4

   Treatment of the Escrow Fund    40

ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

   40

8.1

   Survival of Representations and Warranties    40

8.2

   Indemnification of Buyer    40

8.3

   Limitation on Claims    40

8.4

   Order of Claims    41

8.5

   Indemnification Procedure    41

8.6

   Resolution of Conflicts; Arbitration    41

8.7

   Third-Party Claims    42

8.8

   Shareholder Representative    42

8.9

   Indemnification of Sellers    43

ARTICLE IX TERMINATION, AMENDMENT AND WAIVER

   43

9.1

   Termination    43

9.2

   Effect of Termination    44

9.3

   Amendment    44

9.4

   Extension; Waiver    44

ARTICLE X GENERAL PROVISIONS

   44

10.1

   Notices    44

10.2

   Expenses    45

10.3

   Entire Agreement; Assignment    45

 

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TABLE OF CONTENTS

(continued)

 

          Page

10.4

   Severability    45

10.5

   Other Remedies    45

10.6

   Rights Reservation    46

10.7

   Governing Law    46

10.8

   Specific Performance    46

10.9

   Waiver of Jury Trial    46

10.10

   Resolution of Conflicts; Arbitration    46

10.11

   Counterparts    47

10.12

   Representation by Counsel    47

 

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SHARE PURCHASE AGREEMENT

This SHARE PURCHASE AGREEMENT (the “ Agreement ”) is made and entered into as of February 9, 2007 among NightHawk Radiology Holdings, Inc., a Delaware corporation (“ Buyer ”); Teleradiology Diagnostic Service, Inc., a California corporation (“ Management Company ”); Wilson S. Wong, M.D., Professional Corp., a California professional corporation (“ Professional Company ”); Wilson Wong, M.D., an individual, as Shareholder Representative; and the undersigned shareholders of the Management Company and Professional Company (individually, a “ Seller ” and collectively, “ Sellers ”).

RECITALS

A. Buyer desires to purchase from Sellers, and Sellers desire to sell to Buyer, all of the issued and outstanding shares (the “ Shares ”) of the Acquired Companies, for the consideration and on the terms set forth in this Agreement.

B. Concurrent with the execution and delivery of this Agreement, as a material inducement to Buyer to enter into this Agreement, each of the Key Employees (as defined below) shall execute and deliver to Buyer an employment offer letter in form and substance satisfactory to Buyer and each such Key Employee (“ Employment Agreement ”), which shall be conditioned on and effective upon the Closing.

C. Concurrent with the execution and delivery of this Agreement, as a material inducement to Buyer to enter into this Agreement, each of the Sellers shall execute and deliver to Buyer a non-competition agreement and a general release, each in form and substance satisfactory to Buyer and each such Seller (“ Non-Competition Agreement ” and “ General Release ,” respectively), which shall be conditioned on and effective upon the Closing.

NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.1 Capitalized Terms . The following capitalized terms shall have the meanings set forth below:

(a) “ Accounts Receivable ” shall have the meaning set forth in Section 3.7 .

(b) “ Acquired Companies ” shall mean the Management Company and the Professional Company, including the Professional Company as the surviving corporation of the Acquired Company Merger.

(c) “ Acquired Company Contracts ” shall have the meaning set forth in Section 3.11 .

(d) “ Acquired Company Customers ” shall have the meaning set forth in Section 3.28 .

(e) “ Acquired Company Financial Statements ” shall have the meaning set forth in Section 3.5 .

 


(f) “ Acquired Company Intellectual Property ” shall mean Technology and Intellectual Property Rights, including Acquired Company Registered Intellectual Property Rights, that: (i) are embodied in, or are necessary to use, any service of the Acquired Companies; (ii) were developed by or for an Acquired Company for use in the conduct of the Business; (iii) are used in or necessary to the conduct of the Business; or (iv) are owned or exclusively licensed by any of the Acquired Companies.

(g) “ Acquired Company Merger ” shall have the meaning set forth in Section 5.12 .

(h) “ Acquired Company Registered Intellectual Property Rights ” shall mean all Registered Intellectual Property Rights at any time owned or controlled by or for, filed in the name of or applied for, or otherwise held by or for the benefit of either of the Acquired Companies.

(i) “ Acquired Company Tax Return ” shall mean any Tax Return filed by or on behalf of either of the Acquired Companies.

(j) “ Acquired Company Year-End Financials ” shall have the meaning set forth in Section 3.5 .

(k) “ Acquisition Proposal ” shall have the meaning set forth in Section 5.5 .

(l) “ Agreement ” shall have the meaning set forth in the preamble above, together with all exhibits and schedules hereto.

(m) “ Books and Records ” shall mean all papers and records (in paper or electronic format) in the care, custody or control of the Acquired Companies including, without limitation, all purchasing and sales records, stock records, minutes of meetings and other actions of the board of directors and shareholders of the Acquired Companies, customer and vendor lists, accounting and financial records, product documentation and specifications, and marketing documents.

(n) “ Business ” shall mean all of the operations, activities, services and products of the Acquired Companies as currently conducted and as proposed to be conducted, including without limitation the marketing and performance of professional teleradiology services.

(o) “ Charter Documents ” shall have the meaning set forth in Section 3.1(b) .

(p) “ Chemical Substance ” shall mean any chemical substance which is identified or regulated under any Environmental Law.

(q) “ Closing ” shall have the meaning set forth in Section 2.3 .

(r) “ Closing Adjustment Amount ” shall mean the amount, if any, that the Acquired Companies’ total liabilities exceed their current assets as of the Closing Date, as reflected on the Closing Balance Sheet (as defined in Section 6.18); provided, however, that the Closing Adjustment Amount shall not be less than zero.

(s) “ Closing Date ” shall have the meaning set forth in Section 2.3 .

(t) “ COBRA ” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and as codified in Section 4980B of the Code and Section 601 et. seq. of ERISA.

 

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(u) “ Code ” shall mean the United States Internal Revenue Code of 1986, as amended.

(v) “ Collateral Agreements ” shall mean the Employment Agreements, the Non-Competition Agreements, and the General Releases.

(w) “ Confidential Information ” shall mean all Trade Secrets and other confidential or proprietary information of a Person that such Person desires remain secret or confidential, including information derived from reports, investigations, research, work in progress, codes, marketing and sales programs, financial projections, cost summaries, pricing formulas, contract analyses, financial information, projections, confidential filings with any state or federal agency, and all other confidential concepts, methods of doing business, ideas, materials or information prepared or performed for, by or on behalf of such Person by its employees, officers, directors, agents, representatives, or consultants.

(x) “ Conflict ” shall mean any event that would constitute a conflict, breach, violation or default (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit.

(y) “ Contract ” shall mean any mortgage, indenture, lease, contract, covenant or other agreement, instrument or commitment, permit, concession, franchise or license, including any amendment or modifications made thereto.

(z) “ Customer Information ” shall have the meaning set forth in Section 3.14(e) .

(aa) “ Development Tools ” shall mean development software, development documentation, compilers, interpreters, system build software, test suites, testing tools and documentation, support tools, revision control systems and environments and other materials used in or necessary to the use, development, testing, maintenance, support, modification or implementation of the products or other development activities of the Business.

(bb) “ Disclosure Letter ” shall have the meaning set forth in the preamble to Article III .

(cc) “ DOL ” shall mean the U.S. Department of Labor.

(dd) “ Employee ” shall mean any current or former or retired employee, consultant or director of the Acquired Companies or any ERISA Affiliate.

(ee) “ Employment Agreement ” shall have the meaning set forth in Recital B .

(ff) “ Employee Agreement ” shall mean each management, employment, severance, consulting, relocation, repatriation, expatriation, visas, work permit or other agreement, contract or understanding between any Employee and the Acquired Companies or any ERISA Affiliate.

(gg) “ Employee Plan ” shall mean any plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, severance, termination pay, deferred compensation, performance awards, stock or stock-related awards, fringe benefits, retention payments, incentive compensation or other employee benefits or remuneration of any kind, whether written or unwritten or otherwise, funded or unfunded, including, without limitation, each “employee benefit plan” within the meaning of Section 3(3) of ERISA, which, in each case, is or has been maintained, contributed to, or required to be contributed to, by the Acquired Companies or any ERISA Affiliate for the benefit of any Employee, or with respect to which the Acquired Companies or any ERISA Affiliate has or may have any Liability.

 

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(hh) “ Environment ” shall mean real property and any improvements thereon, and also includes, but is not limited to, ambient air, surface water, drinking water, groundwater, land surface, subsurface strata and water body sediments.

(ii) “ Environmental Laws ” shall mean any applicable law, regulation or legal requirement relating to pollution or protection or cleanup of the Environment.

(jj) “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

(kk) “ ERISA Affiliate ” shall mean each Subsidiary of the Acquired Companies and any other person or entity under common control with the Acquired Companies or any of its Subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the Code and the regulations issued thereunder.

(ll) “ Escrow Amount ” shall mean $1,150,000.

(mm) “ Escrow Fund ” shall have the meaning set forth in Section 7.1 .

(nn) “ Escrow Period ” shall have the meaning set forth in Section 7.2 .

(oo) “ Extremely Hazardous Substance ” shall have the meaning set forth in Section 302 of the United States Emergency Planning and Community Right-to-Know Act of 1986, as amended.

(pp) FMLA ” shall mean the Family Medical Leave Act of 1993, as amended.

(qq) “ GAAP ” shall mean United States generally accepted accounting principles.

(rr) “ Governmental Approval ” shall mean any: (i) permit, license, certificate, concession, approval, consent, ratification, permission, clearance, confirmation, exemption, waiver, franchise, certification, designation, rating, registration, variance, qualification, accreditation or authorization issued, granted, given, required by or otherwise made available by or under the authority of any Governmental Entity or pursuant to any Legal Requirement; or (ii) pending application or request for any of the foregoing in (i) above.

(ss) “ Governmental Entity ” shall mean any court, administrative agency or commission or other federal, state, county, local or foreign governmental authority, instrumentality, agency or commission.

(tt) “ Intellectual Property Rights ” shall mean any or all of the following and all statutory and/or common law rights throughout the world in, arising out of, or associated therewith: (i) all patents and applications therefore, inventor’s certificates and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof (collectively, “ Patents ”); (ii) all trade secrets, proprietary information, and know how (collectively, “ Trade Secrets ”); (iii) copyrights, copyright registrations and applications, including moral rights and rights in Software, documentation and databases and data collections (including knowledge databases, customer lists and customer databases) (“ Copyrights ”); (iv) all trade names, logos, trademarks and service marks; trademark and service mark registrations and applications (collectively, “ Trademarks ”); (v) all rights to Uniform Resource Locators, world wide web site addresses and domain names (collectively, “ Domain Rights ”); (vi) any similar, corresponding or equivalent rights to any of the foregoing; and (vii) all goodwill associated with any of the foregoing.

 

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(uu) “ Interim Balance Sheet ” shall have the meaning set forth in Section 3.5 .

(vv) “ International Employee Plan ” shall mean each Employee Plan that has been adopted or maintained by the Acquired Companies or any ERISA Affiliate, whether informally or formally, or with respect to which the Acquired Companies or any ERISA Affiliate will or may have any liability, for the benefit of Employees who perform services outside the United States.

(ww) “ IRS ” shall mean the Internal Revenue Service.

(xx) “ Key Employees ” shall mean Wilson Wong, M.D., Debrey Miao, and Raymond Loh.

(yy) “ Legal Requiremen t” shall mean any federal, state, local, municipal, foreign or other law, statute, legislation, constitution, ordinance, code, order, edict, decree, proclamation, treaty, convention, rule, regulation, permit, ruling, directive, requirement (licensing or otherwise), specification, determination, decision, opinion or interpretation that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Entity.

(zz) “ Liability ” shall mean any debt, duty, liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether incurred or consequential and whether due or to become due), including any liability for Taxes.

(aaa) “ Lien ” shall mean any mortgage, pledge, lien, security interest, charge, claim, equity, encumbrance, restriction on transfer, conditional sale or other title retention device or arrangement (including, without limitation, a capital lease), transfer for the purpose of subjection to the payment of any indebtedness, or restriction on the creation of any of the foregoing, whether relating to any property or right or the income or profits therefrom.

(bbb) “ Loss ” and “ Losses ” shall have the meanings set forth in Section 8.2 .

(ccc) “ Material Adverse Effect ” shall mean any (i) change, event, violation, inaccuracy, circumstance or effect, individually or when aggregated with such other changes, events, violations, inaccuracies, circumstances or effects, that is materially adverse to the Business, assets, products, liabilities, financial condition, results of operations or prospects of Acquired Companies and their subsidiaries and affiliates, or (ii) circumstance, change or event that materially impairs Buyer’s ability to use, sell, license, market, modify, and operate the assets of the Acquired Companies or operate the Business in substantially the same manner as the Acquired Companies prior to the date of this Agreement.

(ddd) “ Multiemployer Plan ” shall mean any “Pension Plan” which is a “multiemployer plan,” as defined in Section 3(37) of ERISA.

(eee) “ Nondisclosure Agreement ” shall have the meaning set forth in Section 5.4 .

(fff) “ Object Code ” shall mean computer software, substantially or entirely in binary form, which is intended to be directly executable by a computer after suitable processing and linking but without the intervening steps of compilation or assembly.

(ggg) “ Officer’s Certificate ” shall have the meaning set forth in Section 8.5 .

 

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(hhh) “ Ordinary Course of Business ” shall mean the ordinary course of business, consistent with past practice (including with respect to quantity and frequency).

(iii) “ PBGC ” shall mean the Pension Benefit Guaranty Corporation.

(jjj) “ Pension Plan ” shall mean each Employee Plan which is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

(kkk) “ Person ” shall mean any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group of any of the foregoing.

(lll) “ Proceeding ” shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation that is, has been or may in the future be commenced, brought, conducted or heard at law or in equity or before any Governmental Entity.

(mmm) “ PTO ” shall mean the United States Patent and Trademark Office.

(nnn) “ Registered Intellectual Property Rights ” shall mean all United States, international and foreign: (i) Patents and Patent applications (including provisional applications); (ii) registered Trademarks and applications for Trademarks, including intent-to-use applications, or other registrations or applications related to Trademarks; (iii) registered Copyrights and applications for Copyrights; (iv) domain name registrations; and (v) any other Intellectual Property Rights that are the subject of an application, certificate, filing, registration or other document issued, filed with or recorded by any Governmental Entity.

(ooo) “ Release ” shall mean any actual or alleged spilling, leaking, pumping, pouring, emitting, dispersing, emptying, discharging, injecting, escaping, leaching, dumping or disposing of any Chemical Substance or Extremely Hazardous Substance into the Environment that would cause an Environmental Liability or Costs (including the abandonment or discarding of barrels, containers, tanks or other receptacles containing or previously containing any Chemical Substance).

(ppp) “ Shares ” shall have the meaning set forth in Recital A .

(qqq) “ Software ” shall mean any and all computer software and code, including assemblers, applets, compilers, Source Code, Object Code, data (including image and sound data), Development Tools, design tools and user interfaces, in any form or format, however fixed. Software shall include Source Code listings, file listings, functionality descriptions and documentation.

(rrr) “ Source Code ” shall mean computer software and code, in form other than Object Code form, including related programmer comments and annotations, help text, data and data structures, instructions and procedural, object-oriented and other code, which may be printed out or displayed in human readable form.

(sss) “ Subsidiary ” shall mean, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly owned by such Person.

(ttt) “ Tax ” or “ Taxes ” shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, assessments, and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem,

 

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transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in clause (i) of this Section 1.1(ttt) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period (including any arrangement for group or consortium relief or similar arrangement), and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) of this Section 1.1(ttt) as a result of any express or implied obligation to indemnify any other person or as a result of any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.

(uuu) “ Tax Return ” shall mean any U.S. federal, state, local or non-U.S. return, estimate, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

(vvv) “ Technology ” shall mean all technology, technical and business information and all tangible embodiments of Intellectual Property Rights, including Software, Development Tools, systems, files, records, databases, drawings, artwork, designs, displays, audio-visual works, devices, hardware, apparatuses, documentation, manuals, specifications, flow charts, web pages, customer lists, electronic and other data, and other tangible embodiments of, or materials describing or disclosing, technical or business data, concepts, know-how, show-how, techniques, Trade Secrets, inventions (whether patentable or unpatentable), algorithms, formulae, processes, routines, databases, works of authorship and the like.

(www) “ Transaction Expenses ” shall have the meaning set forth in Section 10.2.

1.2 Construction .

(a) For purposes of this Agreement, whenever the context requires: the singular number will include the plural, and vice versa; the masculine gender will include the feminine and neuter genders; the feminine gender will include the masculine and neuter genders; and the neuter gender will include the masculine and feminine genders.

(b) As used in this Agreement, the words “include” and “including” and variations thereof will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words “without limitation.”

(c) Except as otherwise indicated, all references in this Agreement to “Articles,” “Schedules,” “Sections” and “Exhibits” are intended to refer to Articles, Schedules, Sections and Exhibits to this Agreement.

(d) The headings in this Agreement are for convenience of reference only, will not be deemed to be a part of this Agreement, and will not be referred to in connection with the construction or interpretation of this Agreement.

(e) For purposes of this Agreement, the term “knowledge” means with respect to the Acquired Companies, the actual knowledge of the Key Employees; provided , that such persons shall have made due and diligent investigation and inquiry of those employees, consultants, advisors, and other representatives of the Acquired Companies who have or who would reasonably be expected to have knowledge of such fact or matter.

 

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ARTICLE II

SALE AND PURCHASE OF SHARES; CLOSING

2.1 Shares . Subject to the terms and conditions of this Agreement, at the Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will purchase the Shares from Sellers.

2.2 Consideration . Subject to the escrow provisions of Article VII , the aggregate purchase price for the Shares will be $23.0 million less the Closing Adjustment Amount (the “ Purchase Price ”), such amount to be divided among the Sellers in proportion to the number of Shares held by each.

2.3 Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) will take place at the offices of Buyer at 250 Northwest Boulevard, Suite 202, Coeur d’Alene, Idaho commencing at 12:00 p.m., Pacific time, two business days following the satisfaction or written waiver of the last of the conditions of Closing as set forth in Article VI hereof, or on such other date as the parties may determine (the “ Closing Date ”). At the closing, each Seller will deliver to Buyer executed stock transfer forms accompanied by certificate(s) representing the Shares held by such Seller (as set forth on Exhibit A ), in each case against payment of the purchase price therefor by (i) check payable to such Seller or (ii) wire transfer pursuant to wire transfer instructions provided to Buyer at least two business days prior to the Closing Date.

2.4 Withholding Rights . Buyer and the Acquired Companies shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement such amounts as are required to be deducted and withheld with respect to the making of such payments under the provisions of any applicable Tax laws. Any such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the person in respect of which such deduction and withholding was made.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF COMPANY

The Acquired Companies and the Sellers hereby represent and warrant to Buyer, subject to the specific exceptions disclosed in the disclosure letter and schedules thereto dated as of the date hereof (the “ Disclosure Letter ”), on the date hereof, and as of the Closing as though made at the Closing, as follows below. The Disclosure Letter shall be deemed to qualify and to be a part of the representations and warranties in this Article III , shall be arranged in sections corresponding to the numbered sections of this Article III , and each disclosure item in the Disclosure Letter shall reference the specific section and paragraph numbers of this Agreement to which such disclosure applies.

 

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3.1 Organization .

(a) The Management Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California. The Professional Company is a professional corporation duly organized, validly existing and in good standing under the laws of the State of California. Each Acquired Company has the power and authority to own, lease and operate its assets and properties and to carry on its business as currently conducted and as currently contemplated to be conducted. Each Acquired Company is duly qualified or licensed to do business, to perform its obligations under all Contracts by which it is bound and is in good standing in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary.

(b) The Acquired Companies have made available to Buyer true and correct copies of each Acquired Company’s articles of incorporation and bylaws, in each case as amended through the date hereof (collectively, the “ Charter Documents ”), and each such instrument is in full force and effect. Neither Acquired Company is in violation of any of the provisions of its respective Charter Documents. The operations now being conducted by the Acquired Companies have not now and have never been conducted under any other name.

(c) Section 3.1(c) of the Disclosure Letter lists the directors and officers of each Acquired Company as of the date hereof.

(d) Section 3.1(d) of the Disclosure Letter lists every state or foreign jurisdiction in which either Acquired Company has employees or facilities or otherwise carries on business.

(e) The Acquired Companies have no Subsidiaries and have never otherwise owned any shares of capital stock or any interest in, or had the power to direct the business and policies of, directly or indirectly, any other corporation, limited liability company, partnership, association, joint venture or other business entity.

3.2 Authority . Each of the Acquired Companies and Sellers has all requisite corporate or other legal power and authority to enter into this Agreement and the Collateral Agreements required to be executed by it and to consummate the transactions contemplated hereby and thereby, including without limitation the Acquired Company Merger. The execution and delivery of this Agreement and the Collateral Agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of each of the Acquired Companies, and no further action is required on the part of either Acquired Company, its board of directors or its shareholders to approve the Agreement and the transactions contemplated hereby. This Agreement and the Collateral Agreements required to be executed by it has been duly executed and delivered by each of the Acquired Companies and Sellers and constitute legal, valid and binding obligations of such Acquired Company or Seller, enforceable against such Acquired Company or Seller in accordance with its terms.

3.3 Capital Stock . Immediately prior to the Acquired Company Merger, the authorized capital stock of the Management Company consisted of 100,000 shares of Series I Common Stock and 100,000 shares of Series II Common Stock, of which 100,000 shares of Series I Common Stock and 100,000 shares of Series II Common Stock were issued and outstanding. Immediately prior to the Acquired Company Merger, the authorized capital stock of the Professional Company consisted of 1,000,000 shares of Common Stock, of which 40,000 shares were issued and outstanding. Immediately following the Acquired Company Merger and immediately prior to the Closing, the authorized capital stock of the Professional Company, the surviving

 

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corporation of the Acquired Company Merger, consisted of 1,000,000 shares of Common Stock, of which 200,000 shares were issued and outstanding. Section 3.3 of the Disclosure Letter sets forth the outstanding capital stock of (i) each Acquired Company on a stockholder-by-stockholder basis as of immediately prior to the Acquired Company Merger, and (ii) the Professional Company, as the surviving corporation of the Acquired Company Merger, as of immediately prior to the Closing. All issued and outstanding shares of the capital stock of each Acquired Company, including the Professional Company following the Acquired Company Merger, have been or were duly authorized and validly issued, are or were fully paid and nonassessible, and have been or were issued in compliance with all applicable laws. There are no options, warrants or rights of conversion or other rights, agreements, arrangements or commitments obligating the Acquired Companies, including the Professional Company following the Acquired Company Merger, to purchase, issue, sell, deliver or transfer any of its shares of capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the Acquired Companies, including the Professional Company following the Acquired Company Merger. There are no voting trusts, stockholder agreements, proxies or other agreements in effect with respect to the voting or transfer of the capital stock of the Acquired Companies, including the Professional Company following the Acquired Company Merger.

3.4 Conflict . The execution and delivery of this Agreement and the Collateral Agreements to which it is party by each Acquired Company and Seller does not and the performance by each Acquired Company and Seller of its obligations hereunder and thereunder (including effecting the Acquired Company Merger) will not (with or without the lapse of time) (a) conflict with or violate the Charter Documents, (b) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Sellers or Acquired Companies or by which any of their assets or properties are bound or affected or give any Governmental Entity or other person the right to challenge the transactions contemplated hereby, (c) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the rights of the Acquired Companies or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the assets or properties of the Acquired Companies pursuant to, any note, bond, mortgage, indenture, Contract, agreement, lease, license, permit, franchise, concession or other instrument or obligation to which the Sellers or Acquired Companies are party or by which the Business or the assets or properties of the Acquired Companies are bound or affected, (d) cause the Acquired Companies or Buyer to become subject to, or to become liable for the payment of, any Tax, or (e) give any third party the right to any payment by the Acquired Companies or give rise to any acceleration or change in the award, grant, vesting or determination of options, warrants, rights, bonuses, severance payments or other contingent obligations of any nature whatsoever of the Acquired Companies. Section 3.4 of the Disclosure Letter lists all consents, waivers and approvals under any Contracts to which the Acquired Companies or Sellers are parties that are required to be obtained in connection with the consummation of the transactions contemplated hereby.

3.5 Acquired Company Financial Statements .

(a) Section 3.5(a) of the Disclosure Letter sets forth true and correct copies of Acquired Companies’ audited consolidated balance sheets as of December 31, 2004 and December 31, 2005, and December 31, 2006 and the related audited statements of income and cash flows for the respective twelve-month periods then ended (the “ Acquired Company Financial Statements ”). The Acquired Company Financial Statements are complete and correct in all material respects and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated, and consistent with each other. The Acquired Company Financial Statements present fairly the financial condition and operating results of the Acquired Companies as of the respective dates and for the periods indicated therein. The Acquired Companies’ consolidated balance sheet as of December 31, 2006 is referred to herein as the “ Interim Balance Sheet .”

 

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(b) Except as set forth on the Interim Balance Sheet, the Acquired Companies have no Liabilities (whether or not required to be reflected in financial statements in accordance with GAAP).

(c) Section 3.5(c) of the Disclosure Letter separately identifies any liability, indebtedness, obligation, expense, claim, deficiency, guarantee or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or otherwise, greater than $25,000, whether or not reflected in the Acquired Company Financial Statements.

(d) When delivered, the Closing Balance Sheet will be complete and correct in all material respects and will be prepared in accordance with GAAP applied on a consistent basis with past periods.

3.6 Indebtedness; Guaranties . The Acquired Companies have no indebtedness for money borrowed or for the deferred purchase price of property or services, capital lease obligations, conditional sale or other title retention agreements. The Acquired Companies are not guarantors or otherwise liable for any Liability or obligation of any other person or entity for any matter.

3.7 Accounts Receivable .

(a) Section 3.7 of the Disclosure Letter sets forth an accurate and complete breakdown and aging of all accounts receivable, notes receivable and other receivables of the Acquired Companies (collectively, “ Accounts Receivable ”) as of the date of the Interim Balance Sheet.

(b) All Accounts Receivable of the Acquired Companies (including those Accounts Receivable reflected on the Interim Balance Sheet that have not yet been collected and those Accounts Receivable that have arisen since the date of the Interim Balance Sheet and have not yet been collected) (i) represent valid and enforceable obligations of customers of the Acquired Companies arising from bona fide transactions entered into in the Ordinary Course of Business; (ii) will be collected in accordance with their terms at their recorded amounts, and (iii) are free and clear of all Liens.

3.8 Cash Equivalents/Bank Accounts .

(a) Section 3.8 of the Disclosure Letter accurately sets forth, with respect to each account maintained by or for the benefit of the Acquired Companies at any bank or other financial institution:

(i) the name and location of the institution at which such account is maintained;

(ii) the name in which such account is maintained and the account number of such account; and

(iii) the names of all individuals authorized to draw on or make withdrawals from such account.

(b) The Acquired Companies have full legal and beneficial interest in all cash, cash equivalents and other financial assets deposited in such accounts, free and clear of any Liens.

 

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3.9 Absence of Changes . Except as set forth in Section 3.9 of the Disclosure Letter or in the footnotes to the Acquired Companies’ audited consolidated balance sheet as of December 31, 2006 and the related audited statements of income and cash flows for the twelve-month period (the “2006 Financial Statements”), since January 1, 2006 and except as contemplated by this Agreement, the Acquired Companies have conducted the Business only in the Ordinary Course of Business and there has been no occurrence, event, incident, action, failure to act or transaction outside the Ordinary Course of Business. Without limiting the generality of the foregoing, and except as set forth in Section 3.9 of the Disclosure Letter or in the footnotes to the 2006 Financial Statements:

(a) There have been no events or changes in the condition (financial or otherwise), business, net worth, assets, properties, operations, obligations or liabilities of the Acquired Companies which, individually or in the aggregate, have had or would be reasonably expected to have a Material Adverse Effect;

(b) The Acquired Companies have not mortgaged, pledged or otherwise encumbered any of their assets or properties;

(c) The Acquired Companies have not sold, assigned, licensed, leased, transferred or conveyed, or committed themselves to sell, assign, license, lease, transfer or convey, any of their assets or properties;

(d) There has been no destruction of, damage to or loss of any of the Acquired Companies’ assets or properties;

(e) The Acquired Companies have not accelerated, terminated, modified or cancelled any agreement, contract, lease or license (or series of related agreements, contracts, leases, and licenses);

(f) The Acquired Companies have not delayed or postponed the payment of material accounts payable or other Liabilities;

(g) The Acquired Companies have not cancelled, compromised, waived or released any right or claim (or series of related rights and claims);

(h) The Acquired Companies have not entered into any capital commitments;

(i) No litigation has been commenced or threatened and, to the knowledge of the Acquired Companies, no reasonable basis exists for any litigation, proceeding or investigation against the Acquired Companies, any officer, director, employee or contractor of the Acquired Companies or the assets or properties of the Acquired Companies;

(j) The Acquired Companies have not (i) sold or otherwise issued (or granted any warrants, options or other rights to purchase) any shares of capital stock or other equity securities, (ii) declared, accrued, set aside or paid any dividend or made any other distribution in respect of any shares of capital stock, or (iii) repurchased, redeemed or otherwise reacquired any shares of capital stock or other securities, or split, combined or reclassified any of their capital stock or issued or authorized the issuance of any other securities in respect of, in lieu of or in substitution for shares of their capital stock;

 

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(k) The Acquired Companies have not violated any Legal Requirement applicable to them;

(l) There has not been any change by the Acquired Companies in their accounting principles, practices or methods, in their Tax principles or practices or in the practices and standards used to maintain the Books and Records;

(m) The Acquired Companies have not violated, entered into, terminated or modified any of the Acquired Company Contracts or approvals or permits of Governmental Entities, and no Governmental Entity or other Person has amended, accelerated, terminated or modified any such Contracts, approvals or permits;

(n) The Acquired Companies have not (i) failed to maintain their assets or properties in good repair, order or condition, reasonable wear and tear excepted, (ii) accelerated the collection of any Accounts Receivable or any accrual of liabilities, written off any Accounts Receivable or established any extraordinary reserve with respect thereto;

(o) The Acquired Companies have not assigned, nor granted any license or sublicense of any rights under or with respect to, any of the Acquired Company Intellectual Property;

(p) The Acquired Companies have not made any material gifts or sold, transferred or exchanged any material property on a non-arm’s length basis;

(q) The Acquired Companies have not forgiven any debt or otherwise released or waived any right or claim nor discharged any lien nor paid any obligation or Liability other than in the Ordinary Course of Business;

(r) To the knowledge of the Acquired Companies, the Acquired Companies have not suffered any loss or harm to any relationship with any Person material to the Business or to any customer;

(s) The Acquired Companies have not received notice of any claim or potential claim, and to the knowledge of the Acquired Companies no basis exists for any claim or potential claim that the Acquired Companies have infringed the Intellectual Property Rights of any person or entity;

(t) There has been no (1) increase in or other change to the salary or other compensation (including equity based compensation) payable or to become payable by the Acquired Companies to any of their respective officers, directors, employees or consultants, or (2) declaration, payment or commitment or obligation of any kind for the payment (whether in cash, equity or otherwise) by the Acquired Companies of a severance payment, termination payment, bonus, special remuneration or other additional salary or compensation (including equity based compensation), in each case to any of their respective officers, directors, employees or consultants; and

(u) There has been no agreement by the Acquired Companies, or any employees, contractors, agents or affiliates of Company, to do any of the things described in the preceding clauses (a) through (t).

 

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3.10 Legal and Other Compliance .

(a) The Acquired Companies are in full compliance with all Legal Requirements that are applicable to them or to the conduct of the Business or the ownership or use of any of their assets or properties.

(b) No event has occurred, and no condition or circumstance exists, that (with or without notice or lapse of time) constitutes or is reasonably likely to result directly or indirectly in a violation by the Acquired Companies, or a failure on the part of the Acquired Companies to comply with, any Legal Requirement.

(c) No action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced or, to the knowledge of the Acquired Companies threatened against the Acquired Companies alleging any failure to comply with any Legal Requirement, nor, to the knowledge of the Acquired Companies is there any reasonable basis therefor.

(d) To the knowledge of the Acquired Companies, no Governmental Entity is considering any Legal Requirement that, if adopted or otherwise put into effect, would prevent, delay, make illegal or otherwise interfere with the transactions contemplated by this Agreement.

(e) Neither of the Acquired Companies is a “covered entity” as that term is defined by 45 C.F.R. § 160.103 nor is subject as a “covered entity” to the Standards for Privacy of Individually Identifiable Health Information promulgated by the U.S. Department of Health and Human Services in accordance with the Administration Simplification provisions of the Health Insurance Portability and Accountability Act of 1996. The Acquired Companies are either not subject to or are in compliance in all respects with any similar privacy laws in existence in any state or foreign jurisdiction.

(f) The Acquired Companies (and each of the physicians that provides radiology or other services on behalf of the Acquired Companies) hold all permits, licenses, certificates, accreditations and other authorizations of foreign, federal, state and local governmental agencies required for the conduct of the Business, as the case may be, and Section 3.10(f) of the Disclosure Letter sets forth a list of all such permits, licenses, certificates, accreditations, and other authorizations, and the Acquired Companies and each of the physicians that provides teleradiology or other services on behalf of the Acquired Companies are in compliance with all terms and conditions of any such required permits, licenses, certificates, accreditations and authorizations.

(g) The Acquired Companies’ services meet or exceed the standards for radiology established by the American College of Radiology, including but not limited to the Technical Standard for Teleradiology, the Technical Standard for Digital Image Data Management and the Practice Guideline for Communication: Diagnostic Radiology.

(h) Each of the physicians who provide reading services on behalf of the Acquired Companies (a) meets all qualifications for readers under any agreement for services pursuant to which such physician provides services on behalf of the Acquired Companies, (b) is licensed to practice medicine in each of the states in which the patients are located for which such physician provides radiology interpretations, (c) has obtained medical staff privileges at any hospitals for which such physician provides radiology interpretations, (d) is an independent contractor or an independent licensed practitioner for all purposes including, without limitation, all tax purposes and for the Joint Commission on Accreditation of Health Organizations (“ JCAHO ”) standards set forth in the 2004 JCAHO Comprehensive Accreditation Manual for Hospitals, (e) does not review mammograms or participate in interventional radiology and (f) provides only “preliminary” interpretations for the customers of the Acquired Companies and does not provide “final” interpretations for these customers.

 

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(i) Neither the Acquired Companies nor any physician who provides readings on behalf of the Acquired Companies submits any claims for reimbursement for such readings to any third-party payor, including, without limitation, Medicare, Medicaid or any private insurance plan.

(j) The Acquired Companies are accredited by JCAHO.

3.11 Contracts .

(a) The Contracts listed on Section 3.11 of the Disclosure Letter are all of the Contracts between either Acquired Company and any third party, including amendments thereto (the “ Acquired Company Contracts ”). Section 3.11 of the Disclosure Letter also sets forth all fees, royalties, license payments or other consideration due, or that may become due, under such Acquired Company Contracts and except as set forth under Section 3.11 of the Disclosure Letter there are no present, past or future obligations due or owing under such Acquired Company Contracts.

(b) Neither of the Acquired Companies nor any ERISA Affiliate is a party to any unwritten commitment, understanding, contract, covenant or agreement with any third party (including any Employee), including with respect to any matter related to the Business, assets or properties of the Acquired Companies, Acquired Company Intellectual Property, Acquired Company Contracts, Employee Plans, Employee compensation arrangements or employment arrangements.

(c) Each Acquired Company Contract is in full force and effect and is valid and enforceable in accordance with its terms. The Acquired Companies have neither breached, violated or defaulted under, nor received notice that the Acquired Companies have or may have breached, violated or defaulted under, any of the terms or conditions of any Acquired Company Contract. To the knowledge of the Acquired Companies, no third party obligated to the Acquired Companies pursuant to any Acquired Company Contract has breached, violated or defaulted under any of the terms or conditions of any Acquired Company Contract. The Acquired Companies have obtained, or will obtain prior to the Closing, all necessary consents, waivers or approvals of parties to any Acquired Company Contract in order for such Acquired Company Contract to remain in full force and effect without limitation, modification or alteration after the Closing. Following the Closing, the Acquired Companies will continue to be permitted to exercise all of their rights under the Acquired Company Contracts (without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Acquired Companies would otherwise be required to pay pursuant to the terms of such Acquired Company Contracts) had the transactions contemplated by this Agreement and the Collateral Agreements not occurred. There does not exist any agreement, contract, or other arrangement entered into by or on behalf of Seller that alters the term of an Acquired Company Contract. The Acquired Companies do not have knowledge of (i) any notice of intent, negotiations, discussions or other indications of interest on the part of the third parties to the Acquired Company Contracts to terminate, modify, amend, waive or alter any of the terms and conditions of the Acquired Company Contracts, or (ii) any change of control transactions or insolvency events pending with respect to the third parties to the Acquired Company Contracts.

(d) Except as set forth in Section 3.11(d) of the Disclosure Letter, the Acquired Companies have provided Buyer true, accurate and complete copies of all Acquired Company Contracts, and there are no oral or written amendments, modifications, side letters, supplements or other arrangements or agreements in existence with respect to the Acquired Company Contracts which have not been provided to Buyer.

 

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(e) To the knowledge of the Acquired Companies, no audit or similar review or investigation has been or is being conducted by any party to an Acquired Company Contract. The Acquired Companies have no knowledge of, and have not received any written notice or written request with respect to, any such audit, review or investigation, and the Acquired Companies have no knowledge of any facts that are reasonably likely to lead to the commencement of any such audit, review or investigation. No party to an Acquired Company Contract (i) is renegotiating, or (ii) has requested a renegotiation of any amount paid or payable or other term or provision of any Acquired Company Contract. The Acquired Companies have not waived any of their rights under any Acquired Company Contract. Performance by the Acquired Companies of their obligations under the Acquired Company Contracts will not result in any violation of or failure to comply with any Legal Requirement.

3.12 Restrictions on Business Activities . There is no agreement (non-competition, field of use, most favored nation or otherwise), commitment, judgment, injunction, order or decree to which the Acquired Companies are party or which is otherwise binding upon the Acquired Companies which has or would reasonably be expected to have the effect of prohibiting, restricting or impairing (a) the conduct of the Business, (b) any acquisition of assets or property (tangible or intangible) by Buyer, (c) any disposition of the Acquired Companies’ assets or properties by Buyer following the Closing Date, or (d) the transactions contemplated by this Agreement and the Collateral Agreements.

3.13 Governmental Approvals .

(a) Section 3.13(a) of the Disclosure Letter identifies each Governmental Approval held by the Company the failure of which to hold would or could reasonably be expected to have a Material Adverse Effect.

(b) The Acquired Companies have delivered or made available to Buyer accurate and complete copies of all such Governmental Approvals, including all renewals thereof and all amendments thereto. Each Governmental Approval identified or required to be identified in Section 3.13(a) of the Disclosure Letter is valid and in full force and effect, the Acquired Companies are in material compliance with such Governmental Approvals, and no fines or penalties are owed by the Acquired Companies in respect of such Governmental Approvals or the failure to obtain or maintain any such Governmental Approvals. The Acquired Companies have received no written notice of any, and there is no pending, or to the knowledge of the Acquired Companies, there is no threatened, Proceeding which could result in the suspension, termination, revocation, cancellation, limitation or impairment of any such Governmental Approval. To the knowledge of the Acquired Companies, (i) no event or circumstance exists that would cause the Acquired Companies to be deemed to be out of compliance with, or would cause the suspension, termination, revocation, cancellation, limitation or impairment of, any such Governmental Approval and (ii) the Acquired Companies have not received any notice of any of the foregoing.

(c) The Governmental Approvals identified in Section 3.13(a) of the Disclosure Letter constitute all the Governmental Approvals necessary (i) to enable the Acquired Companies to conduct the Business in the manner in which the Business is currently being conducted and as has been conducted in the past year, and (ii) to permit the Acquired Companies to own and use its assets in the manner in which they are currently owned and used.

 

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3.14 Title to Properties, Absence of Liens, Condition of Equipment .

(a) The Acquired Companies do not own any real property. Section 3.14(a) of the Disclosure Letter sets forth a list of all real property currently leased by the Acquired Companies, the name of the lessor, the date of the lease and each amendment thereto and the aggregate annual rental and/or other fees payable under any such lease. The Acquired Companies have delivered to Buyer a true and correct copy of each lease of real property. Such leases are in full force and effect, are valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default). The business operations conducted on the real property subject to such leases do not violate any applicable law, building code, zoning requirement or classification, or pollution control ordinance or statute relating to the particular property or such operations, and such non-violation is not dependent, in any instance, on so-called non-conforming use exceptions. The Acquired Companies have not caused any damage to the leased premises and will have no liability to the lessors thereof upon vacating such premises. All approvals of Governmental Entities (including licenses and permits) required in connection with the operation of the Business on such real property have been obtained.

(b) The Acquired Companies have good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of the assets and properties purported to be owned by them or used in the Business, free and clear of any Liens (including any Liens created as a result of the consummation of the transactions contemplated hereby). To the knowledge of the Acquired Companies, no basis exists for the assertion of any claim that, if adversely determined, would result in a Lien on any asset or property of the Acquired Companies or otherwise affect the Business, any asset or property of the Acquired Companies, Buyer’s conduct of the Business subsequent to the Closing or Buyer’s use of any of the Acquired Companies’ assets or properties.

(c) Section 3.14(c) of the Disclosure Letter lists all equipment, furniture, fixtures, improvements and other tangible assets owned or leased by the Acquired Companies, and such assets are (i) all the assets required for the conduct of the Business by the Acquired Companies as currently conducted and as currently contemplated to be conducted, (ii) in good operating condition, regularly and properly maintained, subject to normal wear and tear and (iii) adequate for the uses to which they are being put. Section 3.14(c) of the Disclosure Letter identifies where each of such tangible assets is located and whether such tangible assets are leased to the Acquired Companies (and, if so, by which lessor). The Acquired Companies are in custody and control of all of such tangible assets.

(d) Following the Closing, the Acquired Companies shall continue to be able to use the assets and properties of the Acquired Companies, and enjoy the benefits of, the licensed rights, in substantially the same manner as the Acquired Companies prior to the Closing, without infringing the rights of any third party.

(e) The Acquired Companies have sole and exclusive ownership, free and clear of any Liens, of all customer lists, customer contact information, customer correspondence and customer licensing and purchasing and service histories relating to their current and former customers (the “ Customer Information ”). No Person other than the Acquired Companies possesses any claims or rights with respect to use of the Customer Information.

 

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3.15 Intellectual Property .

(a) Section 3.15(a) of the Disclosure Letter lists all Acquired Company Registered Intellectual Property Rights owned or controlled by or for, filed in the name of or for, licensed to, or otherwise held by or for the benefit of the Acquired Companies, and lists any actual or threatened proceedings or actions before any court, tribunal (including the PTO or equivalent authority anywhere in the world) related to any of the Acquired Company Registered Intellectual Property Rights. For each item of Acquired Company Registered Intellectual Property Rights, Section 3.15(a) of the Disclosure Letter identifies if the item of Acquired Company Registered Intellectual Property Rights is not owned exclusively by any of the Acquired Companies.

(b) Each item of Acquired Company Registered Intellectual Property Rights (i) is valid, subsisting and in full force and effect, (ii) has not been abandoned, withdrawn, permitted to lapse or passed into the public domain and (iii) is free and clear of any Liens. No item of Acquired Company Registered Intellectual Property Rights that consists of a pending Patent application fails to identify all pertinent inventors. All necessary registration, maintenance, and renewal fees in connection with Acquired Company Registered Intellectual Property Rights have been paid and all necessary documents and certificates in connection with Acquired Company Registered Intellectual Property Rights have been filed with the relevant patent, copyright, trademark, or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining the Acquired Company Registered Intellectual Property Rights. There are no actions that must be taken by any of the Acquired Companies within one hundred eighty (180) days of the date of this Agreement for the purposes of obtaining, maintaining, perfecting, or preserving or renewing any Acquired Company Registered Intellectual Property Rights.

(c) The Acquired Company Intellectual Property constitutes all the Technology and Intellectual Property Rights used in and/or necessary to the conduct of its Business as it is currently conducted and as it is currently planned to be conducted.

(d) Each item of Acquired Company Intellectual Property (i) is free and clear of any Liens, and (ii) is exclusively owned by one of the Acquired Companies and was written and created solely by employees of one of the Acquired Companies acting within the scope of their employment or by third parties, all of which employees and third parties have validly and irrevocably assigned all of their rights, including Intellectual Property Rights therein, to the Acquired Companies, and no third party owns or has any rights to any such Acquired Company Intellectual Property. Section 3.15(d) of the Company Letter lists all Acquired Company Intellectual Property that the Acquired Companies expect to be used in or necessary to the conduct of the Business as currently contemplated to be conducted by the Acquired Companies within the six (6) month period immediately following the date of this Agreement, but that is not owned or licensed by the Acquired Companies as of the date of this Agreement.

(e) In each case in which the Acquired Companies have acquired ownership to any Technology or Intellectual Property Rights from any Person, the Acquired Companies have obtained a valid and enforceable assignment sufficient to irrevocably transfer all rights in such Technology or Intellectual Property Rights (including the right to seek past and future damages with respect thereto) to the Acquired Companies. No Person who has licensed Technology or Intellectual Property Rights to the Acquired Companies has ownership rights or license rights to improvements made by the Acquired Companies in such Technology or Intellectual Property Rights. The Acquired Companies have not transferred ownership of, or granted any exclusive license of or right to use, or authorized the retention of any exclusive rights to use or joint ownership of, any Technology or Intellectual Property Rights that are or were Acquired Company Intellectual Property to any Person.

 

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(f) The Acquired Companies have no knowledge of any facts, circumstances or information that (i) would render any Acquired Company Intellectual Property invalid or unenforceable, (ii) would constitute prior art or that would adversely affect any pending application for any Acquired Company Registered Intellectual Property Right, or (iii) would adversely affect or impede the ability of the Acquired Companies to use any Acquired Company Intellectual Property in the conduct of the Business as it is currently conducted or as it is currently planned to be conducted by the Acquired Companies. The Acquired Companies have not misrepresented, or failed to disclose, and have no knowledge of any misrepresentation or failure to disclose, any fact or circumstances in any application for any Acquired Company Registered Intellectual Property Right that would constitute fraud or a misrepresentation with respect to such application or that would otherwise affect the validity or enforceability of any Acquired Company Registered Intellectual Property Right.

(g) The Acquired Companies have taken all necessary action to maintain and protect (i) the Acquired Company Intellectual Property, and (ii) the secrecy, confidentiality, value and the Acquired Companies’ rights in the Confidential Information and Trade Secrets of the Acquired Companies and those provided by any Person to the Acquired Companies, including by having and enforcing a policy requiring all current and former employees, consultants and contractors of the Acquired Companies to execute appropriate confidentiality and assignment agreements. Such agreements are sufficient to vest in an Acquired Company title to all Technology and related Intellectual Property Rights created by an employee within the scope of employment with the Acquired Company, and all copies thereof have been delivered to Buyer. No Acquired Company is in material breach of the terms of any of the foregoing agreements and, to the knowledge of the Acquired Companies, no other party to any such agreement is in material breach of any such agreements. The Acquired Companies have no knowledge of any violation or unauthorized disclosure of any Trade Secret or Confidential Information related to its business or obligations of confidentiality with respect to its business.

(h) The operation of the Business as it is currently conducted, or as it is currently planned to be conducted by the Acquired Companies, does not and will not, and will not when operated by Buyer or the Acquired Companies substantially in the same manner following the Closing, violate, infringe or misappropriate any Intellectual Property Rights of any Person. No Acquired Company has received notice of any claim, or any basis for any claims, that the operation of the Business infringes or misappropriates any Intellectual Property Right of any Person or constitutes unfair competition or trade practices under the laws of any jurisdiction.

(i) To the knowledge of the Acquired Companies, no Person is violating, infringing or misappropriating any Acquired Company Intellectual Property Right.

(j) To the knowledge of the Acquired Companies, there are no Proceedings before any Governmental Entity (including before the PTO) anywhere in the world related to any of the Acquired Company Intellectual Property, including any Acquired Company Registered Intellectual Property Rights.

(k) No Acquired Company Intellectual Property is subject to any Proceeding or any outstanding decree, order, judgment, office action or settlement agreement or stipulation that restricts in any manner the use, transfer or licensing thereof by the Acquired Companies or, to the knowledge of the Acquired Companies, that may affect the validity, use or enf


 
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