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Title: |
Recapitalization Agreement |
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Entities: |
J.P. Morgan Securities Inc.; JPMorgan Chase Bank; Kirkwood MRI & Imaging Center LLC; Wachovia Bank, NA |
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Date: |
2002 |
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Size: |
Preview shows 18KB of 259KB total |
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Price: |
$99 |
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ID: |
#2348463 |
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RECAPITALIZATION AGREEMENT
DATED AS OF JULY 16, 2002
BY AND AMONG
MQ INVESTMENT HOLDINGS, LLC,
AS THE BUYER,
MQ ASSOCIATES, INC.,
AS THE COMPANY,
THE STOCKHOLDERS OF THE COMPANY
AND
DAVID LANG
AND
GENE VENESKY,
AS STOCKHOLDERS' REPRESENTATIVES
{Page}
TABLE OF CONTENTS
{Table}
{Caption}
Page
----
{S} {C}
ARTICLE I PURCHASE AND SALE OF COMMON AND PREFERRED STOCK;
REDEMPTION AND EXCHANGE; CLOSING...............................................2
1.1 Certain Definitions..................................................2
1.2 Conversion...........................................................4
1.3 Purchase and Sale Obligation.........................................4
1.4 Financing; Redemption and Reclassification...........................4
1.5 Closing Date Payments................................................5
1.6 Updated Schedule 1.4.................................................6
1.7 Payment of Funded Indebtedness and Capital Leases....................6
1.8 Time and Place of Closing............................................6
1.9 Transactions to Occur at the Closing.................................7
1.10 Treatment of Recapitalization........................................9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................9
2.1 Existence; Good Standing; Authority..................................9
2.2 Capitalization; Subsidiaries........................................10
2.3 No Conflict.........................................................11
2.4 Financial Statements................................................12
2.5 Absence of Undisclosed Liabilities..................................12
2.6 Absence of Certain Changes..........................................12
2.7 Consents and Approvals..............................................15
2.8 Litigation..........................................................15
2.9 Taxes...............................................................15
2.10 Employee Benefit Plans..............................................18
2.11 Real and Personal Property..........................................20
2.12 Labor and Employment Matters........................................21
2.13 Contracts and Commitments...........................................22
2.14 Intellectual Property...............................................23
2.15 Environmental Matters...............................................24
2.16 Insurance...........................................................24
2.17 Brokers; No Other Potential Transactions............................25
2.18 Accounts and Notes Receivable.......................................25
2.19 Accounts and Notes Payable..........................................25
2.20 Bank Accounts; Powers of Attorney...................................25
2.21 Compliance with Laws................................................26
2.22 Regulated Customers.................................................26
2.23 Certain Payments....................................................26
2.24 Related Transactions................................................27
2.25 Inspections and Investigations......................................27
2.26 Medicare Participation..............................................27
2.27 Fraud and Abuse.....................................................28
2.28 False Claims........................................................28
2.29 Disclosure..........................................................28
{/Table}
i
{Page}
{Table}
{S} {C}
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS................28
3.1 Title to Shares.....................................................28
3.2 Existence; Good Standing; Authority.................................29
3.3 No Conflict.........................................................29
3.4 Consents............................................................30
3.5 Brokers; No Other Potential Transactions............................30
3.6 Tax Matters.........................................................30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER........................30
4.1 Existence; Good Standing; Authority.................................30
4.2 No Conflict.........................................................31
4.3 Consents and Approvals..............................................31
4.4 Litigation..........................................................31
4.5 Financing...........................................................32
4.6 Brokers.............................................................32
4.7 Accredited Investor; Knowledgeable Investor.........................32
ARTICLE V CERTAIN COVENANTS OF THE BUYER, THE COMPANY AND THE STOCKHOLDERS....32
5.1 Affirmative Covenants...............................................32
5.2 Negative Covenants..................................................33
5.3 Investigation.......................................................35
5.4 Access to Information...............................................35
5.5 Confidentiality.....................................................36
5.6 Regulatory and Other Authorizations; Consents.......................36
5.7 Further Action......................................................36
5.8 Press Releases......................................................36
5.9 No Solicitation.....................................................37
5.10 Funded Indebtedness and Capital Lease Obligations...................37
5.11 Use of Name.........................................................38
5.12 Taxes...............................................................38
5.13 Creation of MedQuest, Inc...........................................38
5.14 Option Plan.........................................................38
5.15 Updated Financials..................................................39
ARTICLE VI EMPLOYEE MATTERS...................................................39
6.1 Employees...........................................................39
6.2 Employee Benefits...................................................40
6.3 Other Employee Benefits.............................................40
6.4 Benefit Plan Corrections............................................40
6.5 No Third Party Beneficiaries........................................40
ARTICLE VII TAX MATTERS.......................................................40
7.1 Conveyance Taxes; Costs.............................................40
7.2 Treatment of Indemnity Payments.....................................41
7.3 Payment of Delinquent Taxes.........................................41
7.4 Responsibility for Filing Tax Returns...............................41
{/Table}
ii
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{S} {C}
7.5 Payment of Covered Taxes............................................41
7.6 Refunds and Tax Benefits............................................41
ARTICLE VIII CONDITIONS TO CLOSING............................................42
8.1 Conditions to Obligations of the Company and the Stockholders.......42
8.2 Conditions to Obligations of the Buyer..............................43
ARTICLE IX INDEMNIFICATION....................................................45
9.1 Survival............................................................45
9.2 Indemnification by the Stockholders.................................45
9.3 Indemnification by the Buyer........................................50
9.4 Payment of Claims; Right of Set-Off.................................52
9.5 No Contribution from the Company....................................53
9.6 Directors' and Officers' Insurance..................................53
9.7 General Release.....................................................53
9.8 Termination of Related Transactions.................................54
ARTICLE X MISCELLANEOUS.......................................................55
10.1 Termination.........................................................55
10.2 Effect of Termination...............................................56
10.3 Waiver..............................................................56
10.4 Appointment of Stockholders' Representatives........................56
10.5 Non-Compete; Non-Solicitation.......................................58
10.6 InMed Litigation....................................................58
ARTICLE XI GENERAL PROVISIONS.................................................59
11.1 Notices.............................................................59
11.2 Fees and Expenses...................................................61
11.3 Interpretation; Construction........................................61
11.4 Counterparts........................................................62
11.5 Amendments..........................................................62
11.6 Entire Agreement; No Third-Party Beneficiaries; Severability........62
11.7 Governing Law.......................................................63
11.8 Assignment..........................................................63
11.9 Consent to Jurisdiction.............................................63
11.10 Remedies............................................................63
11.11 Waiver of Jury Trial................................................63
11.12 Independence of Covenants and Representations and Warranties........63
{/Table}
iii
{Page}
EXHIBITS
Exhibit A Stockholders and Company Shares; Allocation of Purchase Price
Exhibit B Third Restated Charter
Exhibit C Fourth Restated Charter
Exhibit D Form of Spousal Consent
Exhibit E Commitment Letter
Exhibit F Confidentiality Agreement
Exhibit G Terms of Option Plan
Exhibit H Form of Solvency Opinion
Exhibit I Form of Employment Agreement
Exhibit J Form of Stockholders' Agreement
SCHEDULES
{Table}
{Caption}
SECTION TITLE
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{S} {C}
Schedule 1.2 Converted Shares
Schedule 1.4 Redemption and Exchange
Schedule 2.1(a) Organization and Good Standing of the Company
Schedule 2.1(b) Organization and Good Standing of the Subsidiaries
Schedule 2.2(a) Company Capitalization
Schedule 2.2(b) Subsidiaries
Schedule 2.2(c) Other Interests
Schedule 2.3 Conflicts
Schedule 2.4 Financial Statements
Schedule 2.5 Absence of Undisclosed Liabilities
Schedule 2.6 Absence of Certain Changes
Schedule 2.7(a) Government Consents
Schedule 2.7(b) Third-Party Consents
Schedule 2.8 Litigation
Schedule 2.9(a) Taxes
Schedule 2.9(b) Tax Return Jurisdictions
Schedule 2.10(b) Employee Benefit Plans
Schedule 2.10(c) Employee Benefit Plans Exceptions
Schedule 2.11(a) Leased Real Property
Schedule 2.11(b) Owned Real Property
Schedule 2.11(c) Personal Property
Schedule 2.12(a) Employment Matters
Schedule 2.12(b) Labor Matters
Schedule 2.13(a) Certain Contracts and Commitments
Schedule 2.13(b) Certain Contract Exceptions
Schedule 2.14 Intellectual Property
Schedule 2.15 Environmental Permits
Schedule 2.16 Insurance
Schedule 2.18 Accounts and Notes Receivable
{/Table}
iv
{Page}
{Table}
{S} {C}
Schedule 2.19 Accounts and Notes Payable
Schedule 2.20 Bank Accounts; Power of Attorney
Schedule 2.21 Compliance with Laws
Schedule 2.24 Related Party Transactions
Schedule 2.25 Inspections and Investigations
Schedule 2.26 Qualifications; Medicare Provider Numbers
Schedule 3.1 Title to Shares
Schedule 3.4 Stockholder Consents
Schedule 4.3 Buyer Consents
Schedule 5.1 Conduct of Business
Schedule 5.1(b) Inactive Subsidiaries
Schedule 5.2(i) Acquisitions
Schedule 5.2(k) Indebtedness
Schedule 5.2(q) Litigation
Schedule 5.10 Funded Indebtedness
Schedule 6.3 Severance Arrangements
Schedule 9.8 Termination of Related Transactions
Schedule 10.5(a) Non-Compete; Non-Solicitation
{/Table}
ANNEXES
Annex A Certain Definitions
v
{Page}
RECAPITALIZATION AGREEMENT
This RECAPITALIZATION AGREEMENT (this "AGREEMENT") is dated as of July
16, 2002, by and among MQ ASSOCIATES, INC., a Delaware corporation (the
"COMPANY"), MQ INVESTMENT HOLDINGS, LLC, a Delaware limited liability company
(the "BUYER"), David Lang and Gene Venesky as the Stockholders' Representatives,
and the stockholders of the Company listed on the signature pages hereto (each,
a "STOCKHOLDER" and collectively, the "STOCKHOLDERS").
WHEREAS, the Company is engaged in the business of providing fixed-site
outpatient single and multi-modality diagnostic imaging services (the "SUBJECT
BUSINESS");
WHEREAS, the Stockholders own beneficially and of record all of the
issued and outstanding shares of capital stock of the Company (collectively, the
"COMPANY SHARES"), in such amounts and of such classes as set forth on EXHIBIT A
hereto;
WHEREAS, immediately prior to the Purchase (as contemplated by SECTION
1.3), the Company intends to amend and restate in its entirety its second
amended and restated certificate of incorporation, substantially in the form of
EXHIBIT B hereto (the "THIRD RESTATED CHARTER"), pursuant to which, among other
things, the Company will authorize the issuance of shares of (i) Class C Common
Stock, $.001 par value per share (the "CLASS C COMMON STOCK"), and (ii) Series E
Preferred Stock, $.001 par value per share (the "SERIES E PREFERRED STOCK"), in
each case with the rights, preferences, powers, designations, limitations and
restrictions therefor as set forth in the Third Restated Charter;
WHEREAS, the Company wishes to issue and sell shares of Class C Common
Stock and Series E Preferred Stock to the Buyer, and the Buyer wishes to
purchase shares of Class C Common Stock and Series E Preferred Stock from the
Company, upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, immediately following the Purchase, the Company intends to
enter into financing arrangements with the Lenders upon terms mutually
acceptable to the Company and the Buyer (the "FINANCING"), the proceeds of which
will be used by the Company to, in part, purchase and redeem shares of capital
stock pursuant to the Redemption and repay outstanding Funded Indebtedness and
Capital Lease Obligations of the Company and its Subsidiaries as of the Closing
in accordance with SECTION 1.7;
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