UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
InSight Health Services Corp.
(Name of Issuer)
Series A Preferred Stock, $0.001 par value, convertible into
Common Stock, $0.001 par value
(Title of Class of Securities)
45766Q 10 1
(CUSIP Number)
Mark J. Mihanovic, Esq.; McDermott, Will & Emery
2049 Century Park East - 34th Floor; Los Angeles, CA 90067-3208
(310) 284-6110
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
June 26, 1996
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the followin box / /.
Check the following box if a fee is being paid with the statement /X/.
SCHEDULE 13D
CUSIP No. 45766Q 10 1
___________________________________________________________________________
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
General Electric Company (I.R.S. Identification No. 14-0689340)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
___________________________________________________________________________
3 SEC USE ONLY
___________________________________________________________________________
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
PURSUANT TO ITEMS 2(d) or 2(e) / /
___________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF SHARES
BENEFICIALLY 2,501,760 shares of Series A Preferred Stock
convertible into Common Stock on a one-for-one
basis, subject to adjustment
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON 9 SOLE DISPOSITIVE POWER
WITH
2,501,760 shares of Series A Preferred Stock
convertible into Common Stock on a one-for-one
basis, subject to adjustment
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,501,760 shares of Series A Preferred Stock convertible into Common
Stock on a one-for-one basis, subject to adjustment
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100% of outstanding Series A Preferred Stock; 48% of Common Stock, par
value $0.001 per share (assuming conversion of Series A Preferred
Stock)
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Item 1. Security and Issuer
The security to which this statement relates is the Series A Preferred
Stock, $0.001 par value (the "Series A Preferred Stock"), convertible into
Common Stock, $0.001 par value (the "Common Stock"), of InSight Health Services
Corp., a Delaware corporation (the "Company") with principal executive offices
located at 4400 MacArthur Boulevard, Suite 800, Newport Beach, California 92660.
Item 2. Identity and Background
This statement is filed by General Electric Company, a New York
corporation ("GE") with principal executive offices located at 3135 Easton
Turnpike, Fairfield, Connecticut. GE engages in providing a wide variety of
industrial, commercial and consumer products and services.
For information with respect to the identity and background of each
director and executive officer of GE, see Schedule I attached hereto.
During the last five years, neither GE nor, to its best knowledge, any
person identified on Schedule I has, except as set forth on Schedule II hereto
(a) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (b) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which GE or such
person, as the case may be, was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
To the best knowledge of GE, all persons identified on Schedule I are
United States citizens, except that Paolo Fresco, Vice Chairman of the Board and
an executive officer of GE, is an Italian citizen and Claudio X. Gonzalez, a
director of GE, is a Mexican citizen.
Item 3. Source and Amount of Funds or other Consideration
In connection with the integration of the businesses (the "Merger") of
Maxum Health Corp., a Delaware corporation ("Maxum"), and American Health
Services Corp., a Delaware corporation ("AHS"), GE entered into a Preferred
Stock Acquisition Agreement, dated as of February 26, 1996 (the "Stock
Acquisition Agreement"), by and among Maxum, AHS, the Company and GE, which
contemplated that certain financial accommodations would be provided by GE to
the Company, Maxum and AHS. The Stock Acquisition Agreement provided, among
other things, that (i) immediately prior to the Merger, Maxum would issue to GE
1,000,000 shares of Maxum's Series B Convertible Preferred Stock, par value
$0.01 per share (the "Maxum Series B Preferred Stock"), (ii) immediately prior
to the Merger, AHS would issue to GE 15,000 shares of AHS' Series C Preferred
Stock, par value $0.03 per share (the "AHS Series C Preferred Stock"), and (iii)
upon consummation of the Merger, the Maxum Series B Preferred Stock and the AHS
Series C Preferred Stock would be converted into the right to receive 2,501,760
shares of Series A Preferred Stock of the Company. The Merger was consummated
on June 26, 1996.
The foregoing response to this Item 4 is qualified in its entirety by
reference to the Stock Acquisition Agreement (a copy of which is attached hereto
as Exhibit 1), which is hereby incorporated herein.
Item 4. Purpose of Transaction
GE acquired the Maxum Series B Preferred Stock and the AHS Series C
Preferred Stock, which was converted into the right to receive Series A
Preferred Stock of the Company upon consummation of the Merger, as an investment
and in the ordinary course of business and not with the purpose of changing
control of Maxum, AHS or the Company. GE will review on a continuing basis its
investment in the Company, including the Company's business, financial condition
and operating results and general market and industry conditions and, based upon
such review, may dispose of the Series A Preferred Stock in the open market, in
privately negotiated transactions or otherwise in accordance with applicable
law.
GE may change its current intentions, acquire additional shares of
capital stock of the Company or take any other action with respect to the
Company or any of its debt or equity securities in any manner permitted by law.
Except as described in this Item 4, GE has no current plans which relate to or
would result in any of the events described in items (a) through (j) of the
instructions to this Item 4 of Schedule 13D.
Item 5. Interest in the Securities of the Issuer
(a) GE beneficially owns all 2,501,760 shares of the Company's
outstanding Series A Preferred Stock, representing 48% of the outstanding shares
of Common Stock of the Company (assuming conversion of such Series A Preferred
Stock into such Common Stock).
(b) The responses to Items 7-11 of the cover page of this Schedule
13D relating to beneficial ownership of Common Shares are incorporated herein by
reference.
(c) Except as set forth in Item 3 hereof, neither GE nor, to the best
knowledge of GE, any person identified on Schedule I hereto has effected any
transactions with respect to the Series A Preferred Stock or Common Stock of the
Company within the past 60 days.
(d) Not Applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with respect
to Securities of the Issuer.
Pursuant to the Stock Acquisition Agreement, GE has certain class
voting rights with respect to the Company's Series A Preferred Stock. In
addition, the Company and GE have entered into a Registration Rights Agreement,
dated as of June 26, 1996 (the "Registration Rights Agreement"), which provides,
among other things, that GE is entitled to certain demand and "piggy-back"
registration rights. Otherwise, except as described in Item 3 hereof, GE has
not entered into contracts, arrangements, understandings or relationships
described in the instructions to this Item 6 of Schedule 13D. GE has no
intention to make any commitments to the Company with respect to any of its debt
or equity securities. GE may, however, change such current intention as may be
permitted by law.
The foregoing response to this Item 6 is qualified in its entirety by
reference to the Stock Acquisition Agreement and the Registration Rights
Agreement (a copy of which is attached hereto as Exhibit 2), which is hereby
incorporated herein.
EXHIBIT INDEX
Exhibit 99.1 Preferred Stock Acquisition Agreement, dated as of February 26,
1996, by and among the Company, AHS, Maxum and GE.
Exhibit 99.2 Registration Rights Agreement, dated as of June 26, 1996, between
the Company and GE.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
GENERAL ELECTRIC COMPANY,
acting through GE Medical Systems
By: /s/ Keith Sherin
Name: Keith Sherin
Title: Vice President - Finance and
Financial Services Operations
Dated: June 26, 1996
SCHEDULE I
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF
GENERAL ELECTRIC COMPANY
The directors and executive officers of General Electric Company are
identified in the table below. Directors of General Electric Company are
indicated by an asterisk. Unless otherwise indicated, the business address of
each person listed below is 3135 Easton Turnpike, Fairfield, Connecticut 06431.
PRESENT PRINCIPAL
NAME OCCUPATION CITIZENSHIP
John F. Welch, Jr.* Chairman of the Board and United
Chief Executive Officer States
Dennis D. Dammerman* Senior Vice President- United
Finance States
P. Fresco* Vice Chairman of the Board Italy
and Executive Officer
John D. Opie* Vice Chairman of the Board United
and Executive Officer States
Frank P. Doyle Executive Vice President United
States
Philip D. Ameen Vice President and United
Comptroller States
James R. Bunt Vice President and United
Treasurer States
David L. Calhoun Vice President-GE United
Transportation Systems States
William J. Conaty Senior Vice President-Human United
Resources States
Lewis S. Edelheit Senior Vice President- United
Corporate Research and States
Development
Dale F. Frey Chairman and President-GE United
Investments Corporation States
Benjamin W. Heineman, Senior Vice President, United
Jr. General Counsel and States
Secretary
W. James McNerney, Senior Vice President-GE United
Jr. Lighting States
Eugene F. Murphy Senior Vice President-GE United
Aircraft Engines States
Robert L. Nardelli Senior Vice President-GE United
Power Systems States
Robert W. Nelson Vice President-Corporate United
Financial Planning and States
Analysis
Gary M. Reiner Vice President-Corporate United
Business Development States
Gary L. Rogers Senior Vice President-GE United
Plastics States
James W. Rogers Vice President-GE Motors United
States
Keith Sherin Vice Presient-Finance and United
Financial Services States
Operations
Jay R. Stonesifer Senior Vice President-GE United
Appliances States
John M. Trani Senior Vice President-GE United
Medical Systems States
Lloyd G. Trotter Vice President-GE United
Electrical Distribution and States
Control
H. Brewster Atwater, Retired Chairman, Chief United
Jr.* Executive Officer, and States
former Director General
Mills, Inc.
David W. Calloway* Chairman of the Board, United
Chief Executive Officer and States
Director, PepsiCo, Inc.
Silas S. Cathcart* Director and Retired United
Chairman, Illinois Tool States
Works
Claudio X. Gonzalez* Chairman of the Board and Mexico
Managing Director Kimberly-
Clark de Mexico, S.A. de
C.V.
Robert E. Mercer* Retired Chairman of the United
Board and former Director, States
The Goodyear Tire & Rubber
Company
Gertrude G. Member of the Board of United
Michelson* Directors - Federated States
Department Stores
Roger S. Penske* President - Penske United
Corporation States
Barbara S. Preiskel* Former Senior Vice United
President, Motion Picture States
Associations of America
Frank H.T. Rhodes* President Emeritus Cornell United
University States
Andrew C. Sigler* Chairman of the Board, CEO
and Director, Champion
International
Douglas A. Warner Chairman of the Board, United
III* President, and Chief States
Executive Officer, J.P.
Morgan & Co. Incorporated
and Morgan Guaranty Trust
Company
SCHEDULE II
RECENT GE CONVICTIONS
7. United States ex. rel. Taxpayers Against Fraud and Chester L. Walsh v.
General Electric Company
On November 15, 1990, an action under the federal False Claims Act 31
U.S.C. Sections 3729-32, was filed under seal against General Electric
Company ("GE") in the United States District Court for the Southern District
of Ohio. The qui tam action, brought by an organization called Taxpayers
Against Fraud and an employee of GE's Aircraft Engines division ("GEAE"),
alleged that GEAE, in connection with its sales of F11O aircraft engines and
support equipment to Israel, made false statements to the Israeli Ministry
of Defense (MoD), causing MoD to submit false claims to the United States
Department of Defense under the Foreign Military Sales Program. Senior GE
management became aware of possible misconduct in GEAE's Israeli F110
program in December 1990. Before learning of the sealed qui tam suit, GE
immediately made a voluntary disclosure to the Departments of Defense and
Justice, promised full cooperation and restitution, and began an internal
investigation. In August 1991, the federal court action was unsealed, and
the Department of Justice intervened and took over responsibility for the case.
On July 22, 1992, after GE had completed its investigation and made a
complete factual disclosure to the U.S. government as part of settlement
discussions, the United States and GE executed a settlement agreement and filed
a stipulation dismissing the civil action. Without admitting or denying the
allegations in the complaint, GE agreed to pay $59.5 million in full settlement
of the civil fraud claims. Also on July 22, 1992, in connection with the same
matter, the United States filed a four count information charging GE with
violations of 18 U.S.C. Section 287 (submitting false claims against the United
States), 18 U.S.C. Section 1957 (engaging in monetary transactions in criminally
derived property), 15 U.S.C. Sections 78m(b)(2)(A) and 78ff(a) (inaccurate
books and records), and 18 U.S.C. Section 371 (conspiracy to defraud the
United States and to commit offenses against the United States). The same
day, GE and the United States entered a plea agreement in which GE agreed to
waive indictment, plead guilty to the information, and pay a fine of $9.5
million. GE was that day sentenced by the federal court in accordance with
the plea agreement.
8. Except for the foregoing, GE has not and, to the best of GE's knowledge,
none of the directors and executive officers of GE has been, during the last
five years, convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
9. GE has not and, to the best of GE's knowledge, none of the directors and
executive officers of GE has been, during the last five years, a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree, or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
EXHIBIT 99.1
PREFERRED STOCK ACQUISITION AGREEMENT
by and among
AMERICAN HEALTH SERVICES CORP.,
a Delaware corporation,
MAXUM HEALTH CORP.,
a Delaware corporation,
INSIGHT HEALTH SERVICES CORP.,
a Delaware corporation,
and
GENERAL ELECTRIC COMPANY,
a New York corporation
acting through
GE MEDICAL SYSTEMS
PREFERRED STOCK ACQUISITION AGREEMENT
THIS PREFERRED STOCK ACQUISITION AGREEMENT (this "AGREEMENT") is dated
as of February 26, 1996, by and among InSight Health Services Corp., a Delaware
corporation ("INSIGHT"), American Health Services Corp., a Delaware corporation
("AHS"), Maxum Health Corp., a Delaware corporation ("MAXUM"), and General
Electric Company, a New York corporation acting though GE Medical Systems ("GE
MEDICAL").
RECITALS
WHEREAS, InSight has been formed in connection with the proposed
business combination of AHS and Maxum;
WHEREAS, simultaneously with the execution of this Agreement, AHS,
Maxum and InSight are executing and delivering an agreement contemplating the
merger of two newly-formed wholly-owned subsidiaries of InSight with and into
AHS and Maxum (the "MERGER"), respectively, after which AHS and Maxum will be
wholly-owned subsidiaries of InSight;
WHEREAS, the Merger shall be consummated pursuant to the Agreement and
Plan of Merger in the form attached hereto as EXHIBIT A (the "MERGER
AGREEMENT");
WHEREAS, concurrent with the consummation of the transactions
contemplated herein, GE Medical will agree to certain financial accommodations
(the "DEBT RESTRUCTURING"), in exchange for the issuance of preferred stock as
provided herein pursuant to certain debt restructuring agreements in
substantially the form attached hereto as EXHIBIT B (the "DEBT RESTRUCTURING
AGREEMENTS");
WHEREAS, the Boards of Directors of AHS, Maxum and InSight have
approved the Merger, the Merger Agreement, the Debt Restructuring, the Debt
Restructuring Agreements and GE Medical's acquisition of the preferred stock of
AHS and Maxum upon the terms and subject to the conditions set forth herein;
WHEREAS, in accordance with the terms, conditions and provisions of
this Agreement, AHS desires to sell to GE Medical, and GE Medical desires to
acquire from AHS, an aggregate of 1,000,000 shares of Series C Preferred Stock
of AHS (the "AHS SHARES");
WHEREAS, in accordance with the terms, conditions and provisions of
this Agreement, Maxum desires to sell to GE Medical, and GE Medical desires to
acquire from Maxum, an aggregate of 15,000 shares of Series B Preferred Stock of
Maxum (the "MAXUM SHARES"); and
WHEREAS, in accordance with the terms, conditions and provisions of
the Merger Agreement, immediately after the consummation of the transactions
contemplated by this Agreement and the Debt Restructuring Agreements and as a
condition subsequent to GE Medical's acquisition of the AHS Shares and the Maxum
Shares hereunder and the consummation of the transactions contemplated by the
Debt Restructuring Agreements, the Merger will occur and the AHS Shares and the
Maxum Shares will be exchanged for an aggregate of 2,501,760 shares of Series A
Convertible Preferred Stock of InSight (the "INSIGHT PREFERRED SHARES"), which
shall constitute all of the issued and outstanding shares of preferred stock of
InSight.
AGREEMENT
NOW, THEREFORE, with reference to the foregoing and in consideration
of and subject to the conditions, representations, warranties, covenants and
agreements contained in this Agreement, AHS, Maxum, InSight and GE Medical
hereby agree as follows:
ARTICLE 1
ACQUISITION OF PREFERRED STOCK
1.1 ACQUISITION AND ACQUISITION PRICE.
(a) Subject to the terms and conditions of this Agreement, at
the Closing (as such term is defined in SECTION 2.1 hereof), AHS shall issue to
GE Medical, and GE Medical shall acquire from AHS, the AHS Shares, constituting
in the aggregate (i) all of the then-issued and outstanding shares of preferred
stock of AHS (other than the Series B Convertible Preferred Stock of AHS (the
"AHS SERIES B SHARES")), and 48 percent of the then-issued and outstanding
shares of common stock of AHS (assuming the conversion of the AHS Shares and the
AHS Series B Shares into common stock of AHS), and (ii) upon the Merger
occurring immediately after such acquisition by GE Medical of the AHS Shares, 50
percent of the then-issued and outstanding InSight Preferred Shares and 24
percent of the then-issued and outstanding shares of common stock of InSight
(assuming the conversion of such InSight Preferred Shares into common stock of
InSight).
(b) Subject to the terms and conditions of this Agreement, at
the Closing, Maxum shall issue to GE Medical, and GE Medical shall acquire from
Maxum, the Maxum Shares, constituting in the aggregate as follows: (i) all of
the then-issued and outstanding shares of preferred stock of Maxum, and 48
percent of the then-issued and outstanding shares of common stock of Maxum
(assuming the conversion of the Maxum Shares into common stock of Maxum) and
(ii) upon the Merger occurring immediately after such acquisition by GE Medical
of the Maxum Shares, 50 percent of the then-issued and outstanding InSight
Preferred Shares, and 24 percent of the then-issued and outstanding shares of
common stock of InSight (assuming the conversion of the InSight Preferred Shares
into common stock of InSight).
1.2 CONSIDERATION.
(a) At the Closing, AHS agrees to issue the AHS Shares to GE
Medical, and GE Medical agrees to acquire from AHS the AHS Shares, in exchange
for GE Medical's agreement to the Debt Restructuring pursuant to the terms,
conditions and provisions set forth in the Debt Restructuring Agreements.
(b) At the Closing, Maxum agrees to issue the Maxum Shares to GE
Medical, and GE Medical agrees to acquire from Maxum the Maxum Shares, in
exchange for GE Medical's agreement to the Debt Restructuring pursuant to the
terms, conditions and provisions set forth in the Debt Restructuring Agreements.
1.3 RIGHTS, PREFERENCES AND PRIVILEGES OF PREFERRED STOCK.
(a) The rights, preferences and privileges of the AHS Shares are
set forth in the form of Certificate of Designation attached hereto as EXHIBIT C
(the "AHS CERTIFICATE OF DESIGNATION").
(b) The rights, preferences and privileges of the Maxum Shares
are set forth in the form of Certificate of Designation attached hereto as
EXHIBIT D (the "MAXUM CERTIFICATE OF DESIGNATION").
(c) The rights, preferences and privileges of the InSight
Preferred Shares are set forth in the form of Certificate of Incorporation
attached hereto as EXHIBIT E (the "INSIGHT CERTIFICATE OF INCORPORATION").
ARTICLE 2
CLOSING
2.1 TIME AND PLACE.
(a) The consummation of the transactions described in ARTICLE 1
hereof (the "CLOSING") will be held at the offices of McDermott, Will & Emery,
located at 2049 Century Park East, 34th Floor, Los Angeles, California, at 1:00
p.m. California time, as soon as practicable after the meetings of stockholders
of AHS and Maxum, respectively, referenced in SECTION 3.8, or at such other time
and place as shall be mutually agreed upon by AHS, Maxum, InSight and GE
Medical. The date of the Closing is referred to herein as the "CLOSING DATE".
The consummation of the transactions contemplated by SECTION 1.2 shall be deemed
to take place immediately prior to the effectiveness of the Merger.
(b) In the event that the Merger does not occur immediately
after the consummation of the transactions contemplated by this Agreement and
the Debt Restructuring Agreements and as a condition subsequent to GE Medical's
acquisition of the AHS Shares and the Maxum Shares, the transactions
contemplated by this Agreement and the Debt Restructuring Agreements shall be
automatically and immediately rescinded.
2.2 DELIVERIES. At the Closing, AHS, Maxum, InSight and GE Medical
shall deliver, or cause to be delivered, such instruments and other documents as
may be reasonably necessary to carry out the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
and the Merger Agreement, and to comply with the terms hereof and thereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING AHS
As used in this Agreement (I) the term "MATERIAL ADVERSE EFFECT"
means, with respect to a party, a material adverse effect on the business,
assets, results of operations, financial condition or prospects of such party
and its subsidiaries, taken as a whole, or in the ability of such party to
perform its obligations hereunder, and (II) the term "SUBSIDIARY" when used with
respect to any party means any corporation or other organization, whether
incorporated or unincorporated, of which such party or any other subsidiary of
such party is a general partner or of which at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporations or other organizations is directly
or indirectly owned or controlled by such party or by any one or more of such
subsidiaries.
AHS represents and warrants to GE Medical that, with respect to itself
and each of its subsidiaries, the statements contained in this ARTICLE 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this ARTICLE 3),
except as set forth in AHS' disclosure schedule attached hereto as ANNEX I (the
"AHS DISCLOSURE SCHEDULE"). Nothing in the AHS Disclosure Schedule shall be
deemed adequate to disclose an exception to a specific representation or
warranty made herein, however, unless such exception is identified to the
specific representation and warranty to which such exception applies (and not
generally to all representations and warranties) in paragraphs corresponding to
the lettered and numbered Sections contained in this ARTICLE 3. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other item
itself).
In accordance therewith, AHS represents and warrants to GE Medical,
with respect to itself and its subsidiaries, as follows:
3.1 ORGANIZATION. Each of AHS and its subsidiaries (a) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (b) has the power to carry on its business as it
is now being conducted or presently proposed to be conducted and (c) is duly
qualified to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified will not have a Material Adverse Effect.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital
stock of AHS consists of (a) 25,000,000 shares of common stock, par value $0.03
per share, of which 9,713,647 shares are issued and outstanding, and (b)
5,000,000 shares of preferred stock, par value $0.03 per share, of which
37,837.83 shares (designated as Series B Preferred Stock) are issued and
outstanding. All of the issued and outstanding shares of capital stock of AHS
are validly issued, fully paid and nonassessable and free of preemptive rights
or similar rights created by statute, the Certificate of Incorporation or Bylaws
of AHS, or any agreement by which AHS or any of its subsidiaries is a party or
to which AHS or any of its subsidiaries is bound. AHS has reserved 1,035,000
shares of its common stock for issuance to directors, employees and consultants
or other persons under stock plans or arrangements, of which 1,015,000 shares
are subject to outstanding options as of the date hereof. Except as provided in
this SECTION 3.2, there are not any (a) shares of capital stock of AHS issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating AHS to issue, transfer
or sell any shares of its capital stock or (b) issued and outstanding bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into or exercisable for securities having the right to vote) on any matters on
which stockholders of AHS may vote.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. AHS has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by AHS and
the consummation by AHS of the transactions contemplated by this Agreement, the
Debt Restructuring, the Debt Restructuring Agreements, the Merger and the Merger
Agreement have been duly authorized by the Board of Directors of AHS, and,
except for approval by the requisite votes cast by the stockholders of AHS with
respect to the Merger, no other corporate proceedings on the part of AHS are
necessary to approve this Agreement, the Debt Restructuring, the Debt
Restructuring Agreements, the Merger or the Merger Agreement, or the
transactions contemplated hereby and thereby.
3.4 VALIDITY. This Agreement has been duly executed and delivered by
AHS and is the legal, valid and binding obligation of AHS, enforceable in
accordance with its terms.
3.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or state
securities or blue sky laws, no filing with, and no permit, authorization,
consent or approval of, any governmental body or authority is necessary for the
consummation by AHS of the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger or the Merger
Agreement, or the transactions contemplated hereby and thereby. Neither the
execution and delivery of this Agreement by AHS nor the consummation by AHS of
this Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the
Merger or the Merger Agreement, or the transactions contemplated hereby and
thereby will (a) result in any breach of the Certificate of Incorporation or
Bylaws of AHS, (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which AHS or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, except as would not have a Material Adverse Effect, or (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to AHS, any of its subsidiaries or any of their properties or assets,
except for violations, breaches or defaults that would not have a Material
Adverse Effect.
3.6 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1994, AHS has
filed all reports required to be filed by it with the Securities and Exchange
Commission (the "SEC") pursuant to the Exchange Act, including, without
limitation, an Annual Report on Form 10-K for the year ended December 31, 1994
(collectively and as amended through the Closing Date, the "AHS SEC REPORTS"),
and has previously furnished or made available to GE Medical true and complete
copies of all of the AHS SEC Reports. None of the AHS SEC Reports, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the balance sheets (including the related notes)
included in the AHS SEC Reports fairly presents in all material respects the
consolidated financial position of AHS and its subsidiaries as of the respective
dates thereof, and the other related statements (including the related notes)
included therein fairly present in all material respects the results of
operations and cash flows of AHS and its subsidiaries for the respective periods
or as of the respective dates set forth therein, all in conformity with
generally accepted accounting principles ("GAAP"), except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments and any other adjustments described therein and
the absence of any notes thereto.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
neither AHS nor any of its subsidiaries has:
(a) Taken any of the actions set forth in clauses (E) through
(O) of SECTION 9.1;
(b) Incurred any liability material to AHS and its subsidiaries
on a consolidated basis, except in the ordinary course of its business,
consistent with past practices;
(c) Suffered a Material Adverse Effect; or
(d) Conducted its business and operations other than in the
ordinary course of business and consistent with past practices.
3.8 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT.
None of the information to be supplied by AHS to be included in (a) the
Registration Statement on Form S-4 to be filed with the SEC by InSight under the
Securities Act for the purpose of registering the common stock of InSight (and,
if required, the InSight Preferred Shares) to be issued in connection with the
consummation of the Merger (the "REGISTRATION STATEMENT") and (b) the joint
proxy statement to be distributed in connection with the meetings of
stockholders of AHS and Maxum to vote upon the Merger (the "PROXY STATEMENT"),
will:
(a) in the case of the Registration Statement, at the time it
becomes effective and at the Closing,
(b) in the case of the Proxy Statement or any amendments thereof
or supplements thereto, at the time of the mailing of the Proxy Statement
and any amendments or supplements thereto, and
(c) in either case, at the time of the meeting of stockholders
of AHS to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
promulgated thereunder. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder.
3.9 LITIGATION. Except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect:
(a) There is no action, suit, judicial or administrative
proceeding, arbitration or investigation pending or, to the knowledge of
AHS, threatened against or involving AHS or any of its subsidiaries, or any
of their properties or rights, before any court, arbitrator, or
administrative or governmental body;
(b) There is no judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency or instrumentality,
or arbitrator outstanding against AHS or any of its subsidiaries; and
(c) Neither AHS not its subsidiaries are in violation of any
term of any judgments, decrees, injunctions or orders outstanding against
them.
(d) Included in the AHS Disclosure Schedule is a true and
complete description of all litigation, actions, suits, judicial and
administrative proceedings, arbitrations, investigations (as to which AHS
is aware), judgments, decrees, injunctions and orders pending or, to the
knowledge of AHS, threatened against or involving AHS or any of its
subsidiaries, or any of their respective properties or rights.
3.10 CONTRACTS. (a) Each of the contracts, instruments,
mortgages, notes, security agreements, leases, agreements and understandings,
whether written or oral, to which AHS or any of its subsidiaries is a party or
that relates to or affects the assets or operations of AHS or any of its
subsidiaries or to which AHS or any of its subsidiaries, or their respective
assets or operations may be bound or subject, is a valid and binding obligation
of AHS and in full force and effect (with respect to AHS or such subsidiary) in
accordance with its terms, except for where the failure to be in full force and
effect could not, in the aggregate, have a Material Adverse Effect. There are
no existing defaults by AHS or any of its subsidiaries thereunder or, to the
knowledge of AHS, by any other party thereto, which defaults, in the aggregate,
would have a Material Adverse Effect; and, no event of default has occurred, and
no event, condition or occurrence exists, that (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a default by AHS or any of its subsidiaries thereunder which default
would, in the aggregate, have a Material Adverse Effect.
(b) Except for this Agreement, neither AHS nor any of its
subsidiaries is a party to any oral or written (i) consulting agreement with an
individual not terminable on less than 60 calendar days notice and involving the
payment of more than $50,000 per annum, (ii) joint venture agreement, (iii) non-
competition or similar agreement that restricts AHS or any of its subsidiaries
from engaging in one or more specified lines of business, except for agreements
entered into in the ordinary course of business which could not have a Material
Adverse Effect, (iv) agreement with any executive officer or other employee of
AHS, or any of its subsidiaries, the benefits of which are contingent upon, or
the terms of which may be materially altered by, the occurrence of a transaction
involving AHS of the nature contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger or the Merger
Agreement, or the transactions contemplated hereby and thereby, and which
provides for the payment of in excess of $50,000, (v) agreement with respect to
any executive officer of AHS or any of its subsidiaries providing any term of
employment beyond one year or compensation guaranty in excess of $50,000 per
annum or (vi) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, the Debt Restructuring, the Debt Restructuring Agreements,
the Merger or the Merger Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
or the Merger Agreement.
3.11 EMPLOYEE BENEFIT PLANS. (a) Included in the AHS Disclosure
Schedule is a true and complete list of each written or formal employee benefit
plan (including, without limitation, any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), policy or agreement that is maintained by AHS or any of its
subsidiaries (all of the foregoing, the "AHS BENEFIT PLANS"), or is or was
contributed to by AHS or pursuant to which AHS (or any trade or business,
whether or not incorporated (an "AHS ERISA AFFILIATE"), which together with AHS
would be deemed a "single employer" within the meaning of Section 4001 of ERISA)
is still potentially liable for payments, benefits or claims. A copy of each
AHS Benefit Plan as currently in effect and, if applicable, the most recent
Annual Report, Actuarial Report or Valuation, Summary Plan Description, Trust
Agreement and a Determination Letter issued by the IRS for each AHS Benefit Plan
have heretofore been delivered to GE Medical. No AHS Benefit Plan (including
any "multiemployer plan," as defined in Section 3(37) of ERISA) was or is
subject to Title IV of ERISA or Section 412 of the Internal Revenue Code of
1986, as amended (the "CODE").
(b) Each of the AHS Benefit Plans that is subject to ERISA is in
substantial compliance with ERISA. Each of the AHS Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified.
No event has occurred, and to the knowledge of AHS, no condition or set of
circumstances exists, in connection with which AHS or any AHS ERISA Affiliate is
or could be subject to liability (except liability for benefit claims and
funding obligations payable in the ordinary course of business) under ERISA, the
Code or any other applicable law with respect to any AHS Benefit Plan.
(c) All contributions and other amounts payable by AHS or any of
its subsidiaries through September 30, 1995, with respect to each AHS Benefit
Plan in respect of current or prior plan years have been either paid or accrued
on the most recent financial statements of AHS. Any contributions or other
amounts payable by AHS or any of its subsidiaries for periods between September
30, 1995, and the Closing with respect to each AHS Benefit Plan in respect of
current or prior plan years have been or will be either paid or accrued in the
normal course of business on the books and records of AHS at or prior to the
Closing. There are no pending, or, to the knowledge of AHS, threatened or
anticipated claims (other than routine claims for benefits which will not, in
the aggregate, have a Material Adverse Effect) by or on behalf of or against any
of the AHS Benefit Plans or any trusts or other funding vehicles related
thereto.
(d) No AHS Benefit Plan (other than general employment policies
and agreements) provides benefits, including without limitation, death or
medical benefits (whether or not insured), with respect to current or former
employees for periods extending beyond their retirement or other termination of
service (other than (i) coverage mandated by Part 6 of Subtitle B of Title I of
ERISA, Section 4980B of the Code or any comparable state law, (ii) death
benefits or retirement benefits under any "employee pension plan," as that term
is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of AHS or the AHS ERISA Affiliates, or (iv)
benefits the full cost of which is borne by the current or former employee or
his or her beneficiary).
3.12 TAXES. For the purposes of this SECTION 3.12, the term "TAX"
shall include all taxes, charges, withholdings, fees, levies, penalties,
additions, interest or other assessments imposed by any United States federal,
state or local authority or any other taxing authority on AHS or any of the AHS
Tax Affiliates (as defined in this SECTION 3.12) as to their respective income,
profit, franchise, gross receipts, payroll, sales, employment, worker's
compensation, use, property, withholding, excise, occupancy, environmental, and
other taxes, duties or assessments of any nature whatsoever. AHS has filed or
caused to be filed timely all material federal, state, local and foreign tax
returns required to be filed by AHS and any member of its consolidated,
combined, unitary or similar group (each such member, an "AHS TAX AFFILIATE").
Such returns, reports and other information are accurate and complete in all
material respects. AHS has paid or caused to be paid, or has made adequate
provision or set up an adequate accrual or reserve for the payment of, all taxes
shown to be due in respect of the periods for which returns are due, and has
established an adequate accrual or reserve for the payment of all taxes payable
in respect of the period subsequent to the last of such periods in respect of
which any such accrual or reserve is required. Neither AHS nor any of the AHS
Tax Affiliates has any material liability for taxes in excess of the amount so
paid or accruals or reserves so established. Neither AHS nor any of the AHS Tax
Affiliates is delinquent in the payment of any tax in excess of the amount
reserved or provided therefor, and no deficiencies for any tax, assessment or
governmental charge in excess of the amount reserved or provided therefor have
been threatened, claimed, proposed or assessed. No waiver or extension of time
to assess any taxes has been given or requested.
3.13 COMPLIANCE WITH APPLICABLE LAW. AHS and each of its subsidiaries
holds all licenses, franchises, permits, variances, exemptions, orders,
approvals and authorizations necessary for the lawful conduct of its business
under and pursuant to, and the business of AHS and its subsidiaries is not being
conducted in violation of, any provision of any federal, state, local or foreign
statute, law, ordinance, rule, regulation, judgment, decree, order, concession,
grant, franchise, permit or license or other governmental authorization or
approval applicable to AHS or any of its subsidiaries, except to the extent that
the failure to hold any such licenses, franchises, permits or authorizations, or
any such violation, would not, in the aggregate, have a Material Adverse Effect.
3.14 SUBSIDIARIES. Exhibit 22.1 to the most recent Form 10-K included
in the AHS SEC Reports lists all the subsidiaries of AHS and indicates for each
subsidiary of AHS as of such date the jurisdiction of incorporation or
organization thereof. All of the outstanding shares of capital stock or other
equity interests of each of the subsidiaries of AHS are (a) held by AHS or one
of its wholly-owned subsidiaries, (b) fully paid and nonassessable, and (c)
owned by AHS or one of its wholly-owned subsidiaries free and clear of any
claim, lien or encumbrance.
3.15 LABOR AND EMPLOYMENT MATTERS. AHS and each of its subsidiaries
(a) are and have been in compliance in all material respects with all applicable
laws respecting employment and employment practices and terms and conditions of
employment and wages and hours (including, without limitation, the Immigration
Reform and Control Act, the Worker Adjustment and Retraining Notification Act
and such laws respecting employment discrimination, equal opportunity,
affirmative action, worker's compensation, occupational safety and health
requirements and unemployment insurance and related matters) and (b) are not
engaged in and have not engaged in any unfair labor practice. No investigation
or review by or before any governmental entity concerning any violation of any
such law is pending or, to the knowledge of AHS, threatened or has occurred
during the last three years, and no governmental entity has provided any notice
to AHS or any of its subsidiaries or otherwise asserted an intention to conduct
any such investigation. There is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against AHS or any of its subsidiaries. No union
representation question or union organizational activity exists respecting the
employees of AHS or any of its subsidiaries. No collective bargaining agreement
exists which is binding on AHS or any of its subsidiaries. Neither AHS nor any
of its subsidiaries has experienced any material work stoppage or other material
labor difficulty. In the event of termination of the employment of any of the
current officers, directors, employees or agents of AHS or any of its
subsidiaries, neither AHS nor any of its subsidiaries will, pursuant to any
agreement or by reason of anything done prior to the Closing be liable to any of
such officers, directors, employees or agents for so-called "severance pay" or
any other similar payments or benefits, including, without limitation, post-
employment health care benefits (other than pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA")) or insurance benefits.
3.16 INSURANCE. AHS and each of its subsidiaries are insured by
insurers reasonably believed by AHS to be of recognized financial responsibility
against such losses and risks and in such amounts as are customary in the
businesses in which they are engaged. All material policies of insurance and
fidelity or surety bonds insuring AHS or any of its subsidiaries or their
respective businesses, assets, employees, officers and directors are in full
force and effect. There are no material claims by AHS or any of its
subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause.
3.17 CONTRACTS WITH PHYSICIANS, HOSPITALS, HMOS AND THIRD PARTY
PROVIDERS. AHS has made available to representatives of GE Medical copies (or
in the case where no written documentation exists, a summary) of all outstanding
contracts, partnerships, joint ventures and other arrangements or understandings
(written or oral) between (a) AHS or any of its subsidiaries and (b) any
physician, hospital, health maintenance organization or other managed care
organization, or other third-party provider relating to the provision of medical
or consulting services, treatments, patient referrals or similar activities.
3.18 ABSENCE OF UNDISCLOSED LIABILITIES. Neither AHS nor any of its
subsidiaries is obligated under or subject to any indebtedness, duty,
responsibility, liability or obligation of any nature, whether absolute,
accrued, contingent or otherwise, other than (a) in the ordinary course of
business on terms and conditions and in amounts consistent with past practices
of AHS and in no event on terms atypical to those of other companies in the same
or a similar industry or (b) as disclosed in the financial statements included
in the AHS SEC Reports.
3.19 ENVIRONMENTAL MATTERS. Except as could not have a Material
Adverse Effect, the ownership, use and operation by AHS and its subsidiaries,
and each of their predecessors, of each facility used by AHS in the operation of
its business has been and is in compliance with all federal, state and local
environmental and anti-pollution laws and regulations, including (a) the
Resource Conservation and Recovery Act, as amended, and its implementing
regulations and all applicable state hazardous waste laws and regulations, (b)
the Clean Water Act, as amended, and its implementing regulations and all
applicable state effluent discharge laws and regulations, (c) the Clean Air Act,
as amended, and its implementing regulations and all applicable state air
emission laws and regulations and (d) all such laws and regulations concerning
particulate emissions, hazard communication, surface water pollution,
groundwater pollution, air pollution, solid wastes, hazardous wastes, storage,
handling, treatment, transportation, spills or other releases, or disposal of
any substance, material or waste, or exposure to or notification regarding any
substance, material or waste. No action, suit, proceeding, investigation,
complaint or charge exists for violation of any such laws, rules or regulations
and there is no meritorious basis therefor.
3.20 DISCLOSURE. The representations and warranties of AHS contained
in this Agreement and each certificate or other written statement delivered pur-
suant to this Agreement, the Debt Restructuring, the Debt Restructuring
Agreements, the Merger or the Merger Agreement and the transactions contemplated
hereby and thereby, are accurate, correct and complete, do not contain any
untrue statement of a material fact or, considered in the context in which
presented, omit to state a material fact necessary in order to make the
statements and information contained herein or therein not misleading. AHS is
not aware of any material information necessary to enable GE Medical to make an
informed investment decision to purchase the AHS Shares which has not been
expressly disclosed to GE Medical in writing. There is no fact which would
have, or in the future may have (so far as AHS can now foresee), a Material
Adverse Effect which has not been set forth or described in this Agreement or in
a certificate, exhibit or other written statement furnished to GE Medical in
connection herewith.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES REGARDING MAXUM
Maxum represents and warrants to GE Medical that, with respect to
itself and each of its subsidiaries, the statements contained in this ARTICLE 4
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
ARTICLE 4), except as set forth in Maxum's disclosure schedule attached hereto
as ANNEX II (the "MAXUM DISCLOSURE SCHEDULE"). Nothing in the Maxum Disclosure
Schedule shall be deemed adequate to disclose an exception to a specific
representation or warranty made herein, however, unless such exception is
identified to the specific representation and warranty to which such exception
applies (and not generally to all representations and warranties) in paragraphs
corresponding to the lettered and numbered Sections contained in this
ARTICLE 4. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty
made herein (unless the representation or warranty has to do with the
existence of the document or other item itself).
In accordance therewith, Maxum represents and warrants to GE Medical,
with respect to itself and its subsidiaries, as follows:
4.1 ORGANIZATION. Each of Maxum and its subsidiaries (a) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (b) has the power to carry on its business as it
is now being conducted or presently proposed to be conducted and (c) is duly
qualified to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified will not have a Material Adverse Effect.
4.2 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Maxum consists of (a) 10,000,000 shares of common stock, par value
$0.01 per share, 2,273,555 shares of which are issued and outstanding, and (b)
56,000 shares of preferred stock, par value $0.01 per share, none of which are
issued and outstanding. All of the issued and outstanding shares of capital
stock of Maxum are validly issued, fully paid and nonassessable and free of
preemptive rights or similar rights created by statute, the Certificate of
Incorporation or Bylaws of Maxum, or any agreement by which Maxum or any of its
subsidiaries is a party or to which Maxum or any of its subsidiaries is bound.
Maxum has reserved 1,037,500 shares of its common stock for issuance to
directors, employees and consultants or other persons under stock plans or
arrangements, of which 416,250 shares are subject to outstanding options as of
the date hereof. Except as provided in this SECTION 4.2, there are not any (a)
shares of capital stock of Maxum issued or outstanding or any options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating Maxum to issue, transfer or sell any shares of its
capital stock or (b) issued and outstanding bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into or exercisable for
securities having the right to vote) on any matters on which stockholders of
Maxum may vote.
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Maxum has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Maxum
and the consummation by Maxum of the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
and the Merger Agreement have been duly authorized by the Board of Directors of
Maxum, and, except for approval by the requisite votes cast by the stockholders
of Maxum with respect to the Merger, no other corporate proceedings on the part
of Maxum are necessary to approve this Agreement, the Debt Restructuring, the
Debt Restructuring Agreements, the Merger or the Merger Agreement, or the
transactions contemplated hereby and thereby.
4.4 VALIDITY. This Agreement has been duly executed and delivered by
Maxum and is the legal, valid and binding obligation of Maxum, enforceable in
accordance with its terms.
4.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the Securities Act, the Exchange Act, or state securities or
blue sky laws, no filing with, and no permit, authorization, consent or approval
of, any governmental body or authority is necessary for the consummation by
Maxum of the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger or the Merger
Agreement, or the transactions contemplated hereby and thereby. Neither the
execution and delivery of this Agreement by Maxum nor the consummation by Maxum
of this Agreement, the Debt Restructuring, the Debt Restructuring Agreements,
the Merger or the Merger Agreement, or the transactions contemplated hereby and
thereby will (a) result in any breach of the Certificate of Incorporation or
Bylaws of Maxum, (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which Maxum or any of
its subsidiaries is a party or by which any of them or any of their properties
or assets may be bound, except as would not have a Material Adverse Effect, or
(c) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Maxum, any of its subsidiaries or any of their properties or
assets, except for violations, breaches or defaults that would not have a
Material Adverse Effect.
4.6 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1994, Maxum
has filed all reports required to be filed by it with the SEC pursuant to the
Exchange Act, including, without limitation, an Annual Report on Form 10-K for
the year ended December 31, 1994 (collectively and as amended through the
Closing Date, the "MAXUM SEC REPORTS"), and has previously furnished or made
available to GE Medical true and complete copies of all of the Maxum SEC
Reports. None of the Maxum SEC Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the balance sheets (including the related notes) included in the Maxum SEC
Reports fairly presents in all material respects the consolidated financial
position of Maxum and its subsidiaries as of the respective dates thereof, and
the other related statements (including the related notes) included therein
fairly present in all material respects the results of operations and cash flows
of Maxum and its subsidiaries for the respective periods or as of the respective
dates set forth therein, all in conformity with GAAP, except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments and any other adjustments described therein and
the absence of any notes thereto.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
neither Maxum nor any of its subsidiaries has:
(a) Taken any of the actions set forth in clauses (E) through
(O) of SECTION 9.1;
(b) Incurred any liability material to Maxum and its
subsidiaries on a consolidated basis, except in the ordinary course of its
business, consistent with past practices;
(c) Suffered a Material Adverse Effect; or
(d) Conducted its business and operations other than in the
ordinary course of business and consistent with past practices.
4.8 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT.
None of the information to be supplied by Maxum to be included in the
Registration Statement and the Proxy Statement, will:
(a) in the case of the Registration Statement, at the time it
becomes effective and at the Closing,
(b) in the case of the Proxy Statement or any amendments thereof
or supplements thereto, at the time of the mailing of the Proxy Statement
and any amendments or supplements thereto, and
(c) in either case, at the time of the meeting of stockholders
of Maxum to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act, and the rules and
regulations promulgated thereunder. The Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and the rules
and regulations promulgated thereunder.
4.9 LITIGATION. Except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect:
(a) There is no action, suit, judicial or administrative
proceeding, arbitration or investigation pending or, to the knowledge of
Maxum, threatened against or involving Maxum or any of its subsidiaries, or
any of their properties or rights, before any court, arbitrator, or
administrative or governmental body;
(b) There is no judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency or instrumentality,
or arbitrator outstanding against Maxum or any of its subsidiaries; and
(c) Neither Maxum not its subsidiaries are in violation of any
term of any judgments, decrees, injunctions or orders outstanding against
them.
(d) Included in the Maxum Disclosure Schedule is a true and
complete description of all litigation, actions, suits, judicial and
administrative proceedings, arbitrations, investigations (as to which Maxum
is aware), judgments, decrees, injunctions and orders pending, or, to the
knowledge of Maxum, threatened against or involving Maxum or any of its
subsidiaries, or any of their respective properties or rights.
4.10 CONTRACTS.
(a) Each of the contracts, instruments, mortgages, notes,
security agreements, leases, agreements and understandings, whether written or
oral, to which Maxum or any of its subsidiaries is a party or that relates to or
affects the assets or operations of Maxum or any of its subsidiaries or to which
Maxum or any of its subsidiaries or their respective assets or operations may be
bound or subject, is a valid and binding obligation of Maxum and in full force
and effect (with respect to Maxum or such subsidiary) in accordance with its
terms, except for where the failure to be in full force and effect could not, in
the aggregate, have a Material Adverse Effect. There are no existing defaults
by Maxum or any of its subsidiaries thereunder or, to the knowledge of Maxum, by
any other party thereto, which defaults, in the aggregate, would have a Material
Adverse Effect; and, no event of default has occurred, and no event, condition
or occurrence exists, that (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default by Maxum
or any of its subsidiaries thereunder which default would, in the aggregate,
have a Material Adverse Effect.
(b) Except for this Agreement, neither Maxum nor any of its
subsidiaries is a party to any oral or written (i) consulting agreement with an
individual not terminable on 60 calendar days or less notice involving the
payment of more than $50,000 per annum, in the case of any such agreement, (ii)
joint venture agreement, (iii) non-competition or similar agreement that
restricts Maxum or its subsidiaries from engaging in a line of business, except
for agreements entered into in the ordinary course of business which could not
have a Material Adverse Effect, (iv) agreement with any executive officer or
other employee of Maxum, or any of its subsidiaries, the benefits of which are
contingent upon, or the terms of which are materially altered by, the occurrence
of a transaction involving Maxum of the nature contemplated by this Agreement,
the Debt Restructuring, the Debt Restructuring Agreements, the Merger or the
Merger Agreement, or the transactions contemplated hereby and thereby, and which
provides for the payment of in excess of $50,000, (v) agreement with respect to
any executive officer of Maxum or any of its subsidiaries providing any term of
employment beyond one year or compensation guaranty in excess of $50,000 per
annum, or (vi) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, the Debt Restructuring, the Debt Restructuring Agreements,
the Merger or the Merger Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
or the Merger Agreement.
4.11 EMPLOYEE BENEFIT PLANS.
(a) Included in the Maxum Disclosure Schedule is a true and
complete list of each written or formal employee benefit plan (including,
without limitation, any "employee benefit plan" as defined in Section 3(3) of
ERISA), policy or agreement that is maintained by Maxum or any of its
subsidiaries (all of the foregoing, the "MAXUM BENEFIT PLANS"), or is or was
contributed to by Maxum or pursuant to which Maxum (or any trade or business,
whether or not incorporated (a "MAXUM ERISA AFFILIATE"), which together with
Maxum would be deemed a "single employer" within the meaning of Section 4001 of
ERISA) is still potentially liable for payments, benefits or claims. A copy of
each Maxum Benefit Plan as currently in effect and, if applicable, the most
recent Annual Report, Actuarial Report or Valuation, Summary Plan Description,
Trust Agreement and a Determination Letter issued by the IRS for each Maxum
Benefit Plan have heretofore been delivered to GE Medical. No Maxum Benefit
Plan (including any "multiemployer plan," as defined in Section 3(37) of ERISA)
was or is subject to Title IV of ERISA or Section 412 of the Code.
(b) Each of the Maxum Benefit Plans that is subject to ERISA is
in substantial compliance with ERISA. Each of the Maxum Benefit Plans intended
to be "qualified" within the meaning of Section 401(a) of the Code is so
qualified. No event has occurred, and to the knowledge of Maxum, no condition
or set of circumstances exists, in connection with which Maxum or any Maxum
ERISA Affiliate is or could be subject to liability (except liability for
benefit claims and funding obligations payable in the ordinary course of
business) under ERISA, the Code or any other applicable law with respect to any
Maxum Benefit Plan.
(c) All contributions and other amounts payable by Maxum or any
of its subsidiaries through September 30, 1995, with respect to each Maxum
Benefit Plan in respect of current or prior plan years have been either paid or
accrued on the most recent financial statements of Maxum. Any contributions or
other amounts payable by Maxum or any of its subsidiaries for periods between
September 30, 1995, and the Closing with respect to each Maxum Benefit Plan in
respect of current or prior plan years have been or will be either paid or
accrued in the normal course of business on the books and records of Maxum at or
prior to the Closing. There are no pending, or, to the knowledge of Maxum,
threatened or anticipated claims (other than routine claims for benefits which
will not, in the aggregate, have a Material Adverse Effect) by or on behalf of
or against any of the Maxum Benefit Plans or any trusts or other funding
vehicles related thereto.
(d) No Maxum Benefit Plan (other than general employment
policies and agreements) provides benefits, including without limitation, death
or medical benefits (whether or not insured), with respect to current or former
employees for periods extending beyond their retirement or other termination of
service (other than (i) coverage mandated by Part 6 of Subtitle B of Title I of
ERISA, Section 4980B of the Code or any comparable state law, (ii) death
benefits or retirement benefits under any "employee pension plan," as that term
is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of Maxum or the Maxum ERISA Affiliates, or
(iv) benefits the full cost of which is borne by the current or former employee
or his or her beneficiary).
4.12 TAXES. For the purposes of this SECTION 4.12, the term "TAX"
shall include all taxes, charges, withholdings, fees, levies, penalties,
additions, interest or other assessments imposed by any United States federal,
state or local authority or any other taxing authority on Maxum or any of the
Maxum Tax Affiliates (as defined in this SECTION 4.12) as to their respective
income, profit, franchise, gross receipts, payroll, sales, employment, worker's
compensation, use, property, withholding, excise, occupancy, environmental, and
other taxes, duties or assessments of any nature whatsoever. Maxum has filed or
caused to be filed timely all material federal, state, local and foreign tax
returns required to be filed by Maxum and any member of its consolidated,
combined, unitary or similar group (each such member, a "MAXUM TAX AFFILIATE").
Such returns, reports and other information are accurate and complete in all
material respects. Maxum has paid or caused to be paid or has made adequate
provision or set up an adequate accrual or reserve for the payment of, all taxes
shown to be due in respect of the periods for which returns are due, and has
established an adequate accrual or reserve for the payment of all taxes payable
in respect of the period subsequent to the last of such periods in respect of
which any such accrual or reserve is required. Neither Maxum nor any of the
Maxum Tax Affiliates has any material liability for taxes in excess of the
amount so paid or accruals or reserves so established. Neither Maxum nor any of
the Maxum Tax Affiliates is delinquent in the payment of any tax in excess of
the amount reserved or provided therefor, and no deficiencies for any tax,
assessment or governmental charge in excess of the amount reserved or provided
therefor have been threatened, claimed, proposed or assessed. No waiver or
extension of time to assess any taxes has been given or requested.
4.13 COMPLIANCE WITH APPLICABLE LAW. Maxum and each of its
subsidiaries holds all licenses, franchises, permits, variances, exemptions,
orders, approvals and authorizations necessary for the lawful conduct of its
business under and pursuant to, and the business of Maxum and its subsidiaries
is not being conducted in violation of, any provision of any federal, state,
local or foreign statute, law, ordinance, rule, regulation, judgment, decree,
order, concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to Maxum or any of its subsidiaries, except
to the extent that the failure to hold any such licenses, franchises, permits or
authorizations, or any such violation, would not, in the aggregate, have a
Material Adverse Effect.
4.14 SUBSIDIARIES. Exhibit 22.1 to the most recent Form 10-K
included in the Maxum SEC Reports lists all the subsidiaries of Maxum and
indicates for each subsidiary of Maxum as of such date the jurisdiction of
incorporation or organization thereof. All of the outstanding shares of capital
stock or other equity interests of each of the subsidiaries of Maxum are (a)
held by Maxum or one of its wholly-owned subsidiaries, (b) fully paid and
nonassessable, and (c) owned by Maxum or one of its wholly-owned subsidiaries
free and clear of any claim, lien or encumbrance.
4.15 LABOR AND EMPLOYMENT MATTERS. Maxum and its subsidiaries (a)
are and have been in compliance in all material respects with all applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, including, without limitation, the Immigration
Reform and Control Act, the Worker Adjustment and Retraining Notification Act,
and such laws respecting employment discrimination, equal opportunity,
affirmative action, worker's compensation, occupational safety and health
requirements and unemployment insurance and related matters, and (b) are not
engaged in and have not engaged in any unfair labor practice. No investigation
or review by or before any governmental entity concerning any violation of any
such law is pending or, to the knowledge of Maxum, threatened, nor has any such
investigation occurred during the last three years, and no governmental entity
has provided any notice to Maxum or any of its subsidiaries or otherwise
asserted an intention to conduct any such investigation. There is no labor
strike, dispute, slowdown or stoppage actually pending or threatened against
Maxum or any of its subsidiaries. No union representation question or union
organizational activity exists respecting the employees of Maxum or any of its
subsidiaries. No collective bargaining agreement exists which is binding on
Maxum or any of its subsidiaries. Neither Maxum nor any of its subsidiaries has
experienced any material work stoppage or other material labor difficulty. In
the event of termination of the employment of any of the current officers,
directors, employees or agents of Maxum or any of its subsidiaries, neither
Maxum nor any of its subsidiaries will, pursuant to any agreement or by reason
of anything done prior to the Closing be liable to any of such officers,
directors, employees or agents for so-called "severance pay" or any other
similar payments or benefits, including, without limitation, post-employment
health care benefits (other than pursuant to COBRA) or insurance benefits.
4.16 INSURANCE. Maxum and each of its subsidiaries are insured by
insurers reasonably believed by Maxum to be of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which they are engaged. All material policies of
insurance and fidelity or surety bonds insuring Maxum or any of its subsidiaries
or their respective businesses, assets, employees, officers and directors are in
full force and effect. There are no material claims by Maxum or any of its
subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause.
4.17 CONTRACTS WITH PHYSICIANS, HOSPITALS, HMOS AND THIRD PARTY
PROVIDERS. Maxum has made available to representatives of GE Medical copies (or
in the case where no written documentation exists, a summary) of all outstanding
contracts, partnerships, joint ventures and other arrangements or understandings
(written or oral) between (a) Maxum or any of its subsidiaries and (b) any
physician, hospital, health maintenance organization or other managed care
organization, or other third-party provider relating to the provision of medical
or consulting services, treatments, patient referrals or similar activities.
4.18 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Maxum nor any of
its subsidiaries is obligated under or subject to any indebtedness, duty,
responsibility, liability or obligation of any nature, whether absolute,
accrued, contingent or otherwise, other than (a) in the ordinary course of
business on terms and conditions and in amounts consistent with past practices
of Maxum and in no event on terms atypical to those of other companies in the
same or a similar industry or (b) as disclosed in the financial statements
included in the Maxum SEC Reports.
4.19 ENVIRONMENTAL MATTERS. Except as would not have a Material
Adverse Effect, the ownership, use and operation by Maxum and its subsidiaries,
and each of their predecessors, of each facility used by Maxum in the operation
of its business has been and is in compliance with all federal, state and local
environmental and anti-pollution laws and regulations, including (a) the
Resource Conservation and Recovery Act, as amended, and its implementing
regulations and all applicable state hazardous waste laws and regulations, (b)
the Clean Water Act, as amended, and its implementing regulations and all
applicable state effluent discharge laws and regulations, (c) the Clean Air Act,
as amended, and its implementing regulations, and (d) all applicable state air
emission laws and regulations; and all such laws and regulations concerning
particulate emissions, hazard communication, surface water pollution,
groundwater pollution, air pollution, solid wastes, hazardous wastes, storage,
handling, treatment, transportation, spills or other releases, or disposal of
any substance, material or waste, or exposure to or notification regarding any
substance, material or waste. No action, suit, proceeding, investigation,
complaint or charge exists for violation of any such laws, rules or regulations
and there is no meritorious basis therefor.
4.20 DISCLOSURE. The representations and warranties of Maxum
contained in this Agreement and each certificate or other written statement
delivered pursuant to this Agreement, the Debt Restructuring, the Debt
Restructuring Agreements, the Merger or the Merger Agreement and the
transactions contemplated hereby and thereby, are accurate, correct and
complete, do not contain any untrue statement of a material fact or, considered
in the context in which presented, omit to state a material fact necessary in
order to make the statements and information contained herein or therein not
misleading. Maxum is not aware of any material information necessary to enable
GE Medical to make an informed investment decision to purchase the Maxum Shares
which has not been expressly disclosed to GE Medical in writing. There is no
fact which would have, or in the future may have (so far as Maxum can now
foresee), a Material Adverse Effect which has not been set forth or described in
this Agreement or in a certificate, exhibit or other written statement furnished
to GE Medical in connection herewith.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES REGARDING INSIGHT
AHS, Maxum and InSight (collectively, the "INSIGHT PARTIES"), jointly
and severally, represent and warrant to GE Medical as follows:
5.1 ORGANIZATION. Each of InSight and its subsidiaries (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, (b) has the corporate power to carry on its business
as it is now being conducted or presently proposed to be conducted and (c) is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified will not have a Material Adverse Effect.
5.2 CAPITALIZATION. The authorized capital stock of InSight consists
of (a) 25,000,000 shares of common stock, par value $0.001 per share, 1,000 of
which are issued and outstanding, and (b) 3,500,000 shares of preferred stock,
par value $0.001 per share, of which 2,501,760 shares have been designated
Series A Convertible Preferred Stock and none of which are issued and
outstanding. InSight has reserved (a) 1,303,000 shares of its common stock for
issuance to directors, employees and consultants or other persons under stock
plans or arrangements, of which an aggregate of 350,566.51 shares are subject to
outstanding options granted by AHS and Maxum which will be assumed by InSight in
connection with the consummation of the Merger and (b) an aggregate of 70,000
shares of its common stock for issuance upon exercise of warrants issued or
issuable to certain stockholders of AHS. Except as provided in this SECTION
5.2, there are not (a) any shares of capital stock of InSight issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating InSight to issue,
transfer or sell any shares of its capital stock or (b) any issued and
outstanding bonds, debentures, notes or other indebtedness having the right to
vote (or convertible into or exercisable for securities having the right to
vote) on any matters on which stockholders of InSight may vote.
5.3 AUTHORITY RELATIVE TO THIS AGREEMENT. InSight has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by InSight
and the consummation by InSight of the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
and the Merger Agreements have been duly authorized by the Board of Directors of
InSight, and, except for approval by the requisite vote of the stockholders of
InSight with respect to the Merger, no other corporate proceedings on the part
of InSight are necessary to approve this Agreement, the Debt Restructuring, the
Debt Restructuring Agreements, the Merger or the Merger Agreement, or the
transactions contemplated hereby or thereby.
5.4 VALIDITY. This Agreement has been duly executed and delivered by
InSight and is the legal, valid and binding obligation of InSight, enforceable
in accordance with its terms.
5.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the Securities Act, the Exchange Act, state securities or blue
sky laws, no filing with, and no permit, authorization, consent or approval of,
any governmental body or authority is necessary for the consummation by InSight
of the transactions contemplated by this Agreement, the Debt Restructuring, the
Debt Restructuring Agreements, the Merger, the Merger Agreement or the
transactions contemplated hereby or thereby. Neither the execution and delivery
of this Agreement by InSight nor the consummation by InSight of this Agreement,
the Debt Restructuring, the Debt Restructuring Agreements, the Merger the Merger
Agreement or the transactions contemplated hereby or thereby, will (a) result in
any breach of the Certificate of Incorporation or Bylaws of InSight, (b) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which InSight or any of its subsidiaries is a party
or by which InSight or any of its subsidiaries or any of their respective
properties or assets may be bound, except as would not have a Material Adverse
Effect, or (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to InSight or any of its subsidiaries or any of their
respective properties or assets, except for violations, breaches and defaults
that would not, in the aggregate, have a Material Adverse Effect.
5.6 SUBSIDIARIES. All of the outstanding shares of capital stock and
other equity interests of each of the subsidiaries of InSight are (a) held by
InSight, (b) fully paid and nonassessable, and (c) owned by InSight free and
clear of any claim, lien or encumbrance.
5.7 NO ASSETS; NO ACTIVITIES. InSight has no material assets or
liabilities and has not engaged in any activities except in connection with and
furtherance of the transactions contemplated by this Agreement, the Merger
Agreement and the Debt Restructuring Agreements.
5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Neither InSight nor any of
its subsidiaries has conducted any business or operations, except with respect
to the consummation of the Merger and the transactions related thereto.
5.9 DISCLOSURE. The representations and warranties of InSight
contained in this Agreement and each certificate and other written statement
delivered in connection with this Agreement, the Debt Restructuring, the Debt
Restructuring Agreements, the Merger and the Merger Agreement, and the
transactions contemplated hereby and thereby (a) are accurate, correct and
complete and (b) do not contain any untrue statement of a material fact or,
considered in the context in which presented, omit to state a material fact
necessary in order to make the statements and information contained herein or
therein not misleading. InSight is not aware of any material information
necessary to enable GE Medical to make an informed investment decision to
acquire the AHS Shares and the Maxum Shares which has not been expressly
disclosed to GE Medical in writing. There is no fact which would have, or in
the future may have (so far as InSight can now foresee), a Material Adverse
Effect which has not been set forth or described in this Agreement or in a
certificate, exhibit or other written statement furnished to GE Medical in
connection herewith.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF GE MEDICAL
GE Medical represents and warrants to the InSight Parties as follows:
6.1 AUTHORITY RELATIVE TO THIS AGREEMENT. GE Medical has the power
and authority to enter into this Agreement and to carry out its obligations
hereunder.
6.2 VALIDITY. This Agreement has been duly executed and delivered by
GE Medical and is the legal, valid and binding obligation of GE Medical,
enforceable in accordance with its terms.
6.3 AUTHORITY. GE Medical has full legal right, power and authority,
without the consent of any other person, to execute and deliver this Agreement
and to carry out the transactions contemplated hereby. All actions required to
be taken by GE Medical to authorize the execution, delivery and performance of
this Agreement and all transactions contemplated hereby have been duly and
properly taken.
6.4 INVESTMENT EXPERIENCE. GE Medical acknowledges that it can bear
the economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the AHS Shares and the Maxum Shares.
6.5 RESTRICTED SECURITIES. GE Medical understands that the AHS
Shares and Maxum Shares may be characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from AHS and
Maxum, respectively, in a transaction not involving a public offering, and that
under such laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances.
6.6 LEGENDS. GE Medical understands that the certificates evidencing
the AHS Shares and the Maxum Shares may bear any legend required by applicable
state securities laws and the following legend:
"These securities have not been registered under the
Securities Act of 1933. They may not be sold, offered for
sale, pledged or hypothecated in the absence of a
registration statement in effect with respect to the
securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not
required or unless sold pursuant to Rule 144 of such Act."
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF GE MEDICAL
The obligations of GE Medical to consummate the transactions
contemplated by this Agreement are subject to fulfillment prior to or at the
Closing, as the case may be, of the following conditions:
7.1 ACCURACY OF WARRANTIES; PERFORMANCE OF COVENANTS. The
representations and warranties of the InSight Parties contained herein shall be
accurate in all material respects as if made on and as of the Closing Date.
Each InSight Party shall have performed all of the obligations and complied with
all of the covenants required to be performed or complied with on or prior to
the Closing.
7.2 NO PENDING ACTION. No action or proceeding before any court or
governmental body shall be pending or threatened, seeking to, or under which an
unfavorable judgment, decree or order would (a) prevent the carrying out of this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
or the Merger Agreement or the transactions contemplated hereby and thereby, (b)
declare unlawful the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger or the Merger
Agreement, (c) cause such transactions to be rescinded, or (d) affect the right
of GE Medical to own or control the AHS Shares, the Maxum Shares or the InSight
Preferred Shares.
7.3 CONSENTS. Except as could not have a Material Adverse Effect,
all consents by third parties that are required for the transfer of the AHS
Shares and the Maxum Shares, for the consummation of the transactions
contemplated hereby, or in order to prevent a breach of or a default under or a
termination of any agreement to which any of the InSight Parties is a party or
to which any portion of the property of any of the InSight Parties is subject,
will have been obtained or provided for. For purposes of this SECTION 7.3, the
consents described on SCHEDULE 7.3 attached hereto are hereby deemed to be
required to have been obtained.
7.4 CONDITION OF BUSINESS AND ASSETS. There shall have been no
change which would have a Material Adverse Effect upon any of the InSight
Parties.
7.5 DELIVERIES AT CLOSING. GE Medical shall have received from one
or more of the InSight Parties, the following:
(a) Stock certificates, evidencing all of the AHS Shares and the
Maxum Shares (which, immediately after the Closing, shall be converted into
the right to receive the InSight Preferred Shares as provided in the Merger
Agreement);
(b) A copy of the AHS Certificate of Designation, certified by
the Secretary of State of the State of Delaware as of the Closing Date;
(c) A copy of the Maxum Certificate of Designation, certified by
the Secretary of State of the State of Delaware as of the Closing Date;
(d) A copy of the InSight Certificate of Incorporation,
certified by the Secretary of State of the State of Delaware as of the
Closing Date;
(e) A certificate of the secretary of AHS, certifying copies of
the AHS Certificate of Designation, the Bylaws of AHS and the resolutions
of the Board of Directors of AHS authorizing the transactions contemplated
by this Agreement, the Debt Restructuring, the Debt Restructuring
Agreements, the Merger and the Merger Agreement;
(f) A certificate of the secretary of Maxum, certifying copies
of the Maxum Certificate of Designation, the Bylaws of Maxum and the
resolutions of the Board of Directors of Maxum authorizing the transactions
contemplated by this Agreement, the Debt Restructuring, the Debt
Restructuring Agreements, the Merger and the Merger Agreement;
(g) A certificate of the secretary of InSight, certifying copies
of the InSight Certificate of Incorporation, the Bylaws of InSight and the
resolutions of the Board of Directors of InSight authorizing the
transactions contemplated by this Agreement, the Debt Restructuring, the
Debt Restructuring Agreements, the Merger and the Merger Agreement;
(h) The opinion of Arent Fox Kinter Plotkin & Kahn, AHS's legal
counsel, in substantially the form attached hereto as EXHIBIT F;
(i) The opinion of Storey Armstrong Steger & Martin, Maxum's
legal counsel, in substantially the form attached hereto as EXHIBIT G;
(j) Duly executed copies of the Debt Restructuring Agreements;
(k) A duly executed Registration Rights Agreement in the form
attached hereto as EXHIBIT H; and
(l) Such other instruments or documents as may be reasonably
necessary to carry out the transactions contemplated by this Agreement, the
Debt Restructuring, the Debt Restructuring Agreements, the Merger and the
Merger Agreement.
7.6 CONSUMMATION OF TRANSACTIONS. The transactions contemplated by
the Debt Restructuring, the Debt Restructuring Agreements (all closing
conditions thereunder to GE Medical's obligations thereunder having been
satisfied or waived), the Merger, the Merger Agreement (all closing conditions
thereunder having been satisfied) and the execution and delivery of that certain
Master Service Agreement Addendum (substantially in the form attached hereto as
EXHIBIT I) shall have been consummated concurrent with or immediately after, as
the case may be, the consummation of the transactions contemplated by this
Agreement. The Merger Agreement shall be in full force and effect without
modification.
7.7 COMFORT LETTERS. Each of the InSight Parties shall have received
a "comfort letter," in a form reasonably acceptable to GE Medical, of such
InSight Party's independent auditors with respect to the financial statements
and other information of such InSight Party included in the Registration
Statement, each such letter dated a date within two business days before the
date on which the Registration Statement shall become effective.
7.8 AFFILIATE AGREEMENTS. Each officer and director of each InSight
Party shall have delivered to InSight a written "affiliate agreement," in a form
reasonably acceptable to GE Medical, restricting the disposition by such person
of any shares of common stock of InSight to be received by such person in the
Merger, as contemplated by Rule 145 under the Securities Act and as required
under Section 351 of the Code.
7.9 1996 MANAGEMENT STOCK OPTION PLAN. InSight shall have adopted
its 1996 Directors' Stock Option Plan and its 1996 Employee Stock Option Plan,
in the form attached hereto as EXHIBIT J-1 and EXHIBIT J-2, respectively
(collectively, the "INSIGHT STOCK PLANS").
7.10 EMPLOYMENT AGREEMENTS. InSight shall have entered into
employment agreements, in the form previously delivered to GE Medical
(collectively, the "INSIGHT EMPLOYMENT AGREEMENTS"), with the executive officers
listed on SCHEDULE 7.10 attached hereto, and such Insight Employment Agreements
shall be in full force and effect without modification. All severance and other
related provisions set forth in all written agreements between either AHS or
Maxum, and its employees, shall have been waived in writing to the extent the
transactions contemplated by the Debt Restructuring, the Debt Restructuring
Agreements, the Merger and the Merger Agreement shall give effect to such
severance and other related provisions, such waivers to be in such form as
reasonably acceptable to GE Medical.
7.11 FAIRNESS OPINIONS. Each of AHS and Maxum shall have received an
expert opinion (a copy of which, and any "bring-down" thereof, shall have been
delivered to GE Medical) that the Merger and the transactions contemplated in
connection therewith are fair from a financial point of view to it and its
stockholders, and such opinions shall not have been withdrawn.
7.12 SETTLEMENT OF LITIGATION. The settlement of the civil action
filed in the United States District Court of the District of Puerto Rico styled
P.R.F., Inc. d/b/a San Juan Health Centre, Inc., et. al. v. Philips Credit
Corporation, American Health Services Corporation, et. al., 92 Civ. 2266, and
the civil action filed in the United States District Court of the Southern
District of New York styled In re Maxum Health Corp. Securities Litigation, 93
Civ. 3287, and all claims related thereto or asserted therein, shall have been
effected on terms satisfactory to GE Medical and, with respect to such Maxum
litigation, a final judgment of dismissal shall have been entered and shall
encompass all plaintiffs and potential plaintiffs to such Maxum litigation.
7.13 AGREEMENT WITH HOLDERS OF AHS SERIES B SHARES. Those certain
Agreements by and among InSight, AHS and each of the holders of the AHS Series B
Shares, attached hereto as EXHIBIT L, shall be in full force and effect without
modification.
7.14 LOCATION OF PRINCIPAL EXECUTIVE OFFICE. The InSight Parties
shall have used such reasonable efforts, to the satisfaction of GE Medical, to
make all arrangements necessary to consolidate the principal executive offices
and administration functions of the InSight Parties at one location.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF AHS, MAXUM AND INSIGHT
The obligations of the InSight Parties to consummate the transactions
contemplated by this Agreement are subject to fulfillment prior to or at the
Closing of the following conditions:
8.1 ACCURACY OF WARRANTIES; PERFORMANCE OF COVENANTS. The
representations and warranties of GE Medical contained herein shall be accurate
in all material respects as if made on and as of the Closing Date. GE Medical
shall have performed all of the obligations and complied with each and all of
the covenants required to be performed or complied with on or prior to the
Closing.
8.2 NO PENDING ACTION. No action or proceeding before any court or
governmental body will be pending or threatened, seeking to, or under which an
unfavorable judgment, decree or order would (a) prevent the carrying out of this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
or the Merger Agreement or the transactions contemplated hereby and thereby, (b)
declare unlawful the transactions contemplated by this Agreement, the Debt
Restructuring, the Debt Restructuring Agreements, the Merger or the Merger
Agreement, (c) cause such transactions to be rescinded.
8.3 CONSENTS. Except as could not have a Material Adverse Effect,
all consents by third parties that are required for the transfer of the AHS
Shares and the Maxum Shares or otherwise, for the consummation of the
transactions contemplated hereby, or in order to prevent a breach of or a
default under or a termination of any agreement to which any of the InSight
Parties is a party or to which any portion of the property of the InSight
Parties is subject, will have been obtained or provided for. For purposes of
this SECTION 8.3, the consents described on SCHEDULE 7.3 attached hereto are
hereby deemed to be required to have been obtained.
8.4 DELIVERIES AT CLOSING. AHS, Maxum or InSight, as the case may
be, shall have received from GE Medical the following:
(a) Duly executed copies of the Debt Restructuring Agreements
(including that certain Master Service Agreement Addendum referred to in
SECTION 7.6); and
(b) Such other instruments or documents as may be reasonably
necessary to carry out the transactions contemplated by this Agreement, the
Debt Restructuring, the Debt Restructuring Agreements, the Merger and the
Merger Agreement.
8.5 STOCKHOLDER APPROVAL. Each of AHS and Maxum shall have received
the approval by the requisite votes cast by the stockholders of AHS and Maxum,
respectively, with respect to the Merger.
ARTICLE 9
PRE-CLOSING COVENANTS OF THE INSIGHT PARTIES
Each of the InSight Parties hereby agrees, from the date hereof until
the Closing, to keep, perform and fully discharge the following covenants and
agreements:
9.1 INTERIM CONDUCT OF BUSINESS. Such InSight Party shall preserve,
protect and maintain its business and operate its businesses as a going concern
consistent with prior practice and not other than in the ordinary course of
business (except as may be expressly authorized pursuant to this Agreement).
Without limiting the generality of the foregoing, from the date hereof until the
Closing, except for transactions expressly approved in writing by GE Medical,
such InSight Party shall:
(a) Maintain inventories at current levels, except for sales in
the ordinary course of business, and maintain the properties and assets of
their respective businesses in good repair, order and condition, reasonable
wear and tear excepted;
(b) Maintain and keep in full force and effect all insurance on
assets and property or for the benefit of employees of its business, all
liability and other casualty insurance, and all bonds on personnel,
presently carried;
(c) Preserve intact the organization of its business and to keep
available the services of the present executives, employees and agents of
its business and preserve the good will of suppliers, customers and others
having business relationships with its business;
(d) Maintain its books, accounts and records in the usual,
regular and ordinary manner on a basis consistent with prior years;
(e) Not enter into or amend any employment, bonus, severance or
retirement contract or arrangement (other than an InSight Employment
Agreement with Glenn Cato), nor increase any salary or other form of com-
pensation payable or to become payable to any executives or employees whose
annual compensation is in excess of $60,000 (other than for customary year-
end raises and bonuses consistent with past practices and in the ordinary
and regular course of business and which do not (i) in any individual
employee case (other than executives), exceed an increase of ten percent,
or (ii) with respect to all employees (including executives), exceed an
increase of five percent in the aggregate, over previous annual
compensation);
(f) Not enter into or agree to enter into any lease, contract,
purchase or sale order or other commitment (other than in the ordinary and
regular course of business) which involves an expenditure, obligation,
purchase or sale of more than $2,000,000 or which cannot be fully performed
or terminated without premium or penalty within one year from the date
thereof;
(g) Not extend credit in the sale of products, collection of
receivables or otherwise, other than in the ordinary and regular course of
business;
(h) Not purchase, lease or otherwise acquire any real estate or
any interest therein other than leases which involve rental and other
payment commitments not exceeding $250,000 per year, in the aggregate;
(i) Not declare, set aside or pay any dividend or make any other
distribution with respect to its capital stock which is not normal and not
determined in relation to its earnings during the relevant period and in
accordance with its previous dividend policies and records;
(j) Not merge or consolidate with or agree to merge or
consolidate with, nor purchase or agree to purchase all or substantially
all of the assets of, nor otherwise acquire, any corporation, partnership,
or other business organization or division thereof, except as contemplated
pursuant to this Agreement, the Merger and the Merger Agreement;
(k) Not sell, lease or otherwise dispose of or agree to sell,
lease or otherwise dispose of any of its assets, properties, rights or
claims, except in the ordinary course of business;
(l) Not authorize for issuance, issue, sell or deliver any
additional shares of its capital stock of any class or any securities or
obligations convertible into shares of its capital stock of any class or
issue or grant any option, warrant or other right to purchase any shares of
its capital stock of any class, other than with respect to (i) the
authorization for issuance of shares of the capital stock of InSight
issuable under the InSight Stock Plans and (ii) shares of the capital stock
of AHS and Maxum issuable upon the exercise of the stock options and
warrants listed in Section 3.2 of the AHS Disclosure Schedule and Section
4.2 of the Maxum Disclosure Schedule;
(m) Not split, combine or reclassify any shares of its capital
stock of any class or redeem or otherwise acquire, directly or indirectly,
any shares of its capital stock of any class;
(n) Not incur or become subject to, nor agree to incur or become
subject to, any debt, obligation or liability, contingent or otherwise,
except current liabilities and contractual obligations in the regular and
ordinary course of business; and
(o) Not terminate or make or permit, or agree to make or permit,
any material amendment of, any material contract, mortgage, lease, license,
agreement or other instrument to which it is a party or by which any of its
properties or assets is bound.
9.2 NON-SOLICITATION. Unless and until this Agreement is terminated
in accordance with ARTICLE 13, such InSight Party shall not take any action to
seek, encourage, solicit or support any inquiry, proposal, expression of
interest or offer from any other person or entity with respect to an
acquisition, combination or similar transaction involving such InSight Party or
its business, or any property, assets or securities related thereto (except as
contemplated pursuant to this Agreement, the Merger and the Merger Agreement),
and such InSight Party shall promptly upon receipt thereof inform GE Medical of
the existence of any such inquiry, proposal, expression of interest or offer and
shall not furnish any information to, or participate in any discussions or
negotiations with, any other person or entity with respect thereto.
9.3 CONSENTS. Such InSight Party shall use its best efforts to
obtain all consents (including the consents described on SCHEDULE 7.3) by third
parties that are required for the transfer of the AHS Shares and the Maxum
Shares or otherwise, for the consummation of the transactions contemplated
hereby, or in order to prevent a material breach of or a default under or a
termination of any agreement to which any of the InSight Parties is a party or
to which any portion of the property of the InSight Parties is subject.
ARTICLE 10
ADDITIONAL COVENANTS OF THE INSIGHT PARTIES
Each of the InSight Parties hereby agrees, from and after the date
hereof (including following the Closing), to keep, perform and fully discharge
the following covenants and agreements:
10.1 ACCESS. Each of the InSight Parties shall give GE Medical and
its representatives full and free access to all properties, books, contracts,
commitments and records and shall furnish GE Medical with all financial and
operating data and other information regarding their respective businesses and
the properties and assets of the InSight Parties as GE Medical may from time to
time reasonably request. Each of the InSight Parties shall promptly notify GE
Medical of any change in the normal course of business or prospects of such
InSight Party or its business and shall keep GE Medical fully informed with
respect thereto.
10.2 ADDITIONAL COVENANTS. Except for transactions expressly approved
in writing by GE Medical, each of the InSight Parties agrees as follows:
(a) Each of the InSight Parties will promptly pay and discharge,
or cause to be paid and discharged, when due and payable, all lawful taxes,
assessments and governmental charges and levies imposed upon the income,
profits, property, or business of such InSight Party or any subsidiary
thereof; provided, however, that no such tax, assessment, charge or levy
need be paid by an InSight Party if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if such InSight
Party shall have set aside on its books adequate reserves with respect
thereto (unless such tax, assessment, charge, or levy has given rise to the
commencement of proceedings to foreclose any lien that may have attached as
security therefor). Each of the InSight Parties will promptly pay or cause
to be paid when due, or in conformance with customary trade terms, all
other indebtedness incident to the operations of such InSight Party;
(b) Each of the InSight Parties will keep its properties in good
repair, working order and condition, reasonable wear and tear excepted, and
from time to time make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto; and, each of the InSight
Parties will at all times comply with the provisions of all material leases
to which such InSight Party is a party or under which such InSight Party
occupies property so as to prevent any loss or forfeiture thereof or
thereunder;
(c) Each of the InSight Parties will keep its assets that are of
an insurable character insured by financially sound and reputable insurers
against loss or damage by fire and maintain extended coverage insurance in
amounts customary for companies in similar businesses and each of the
InSight Parties will maintain, with financially sound and reputable
insurers, insurance against other hazards, risks and liabilities to persons
and property to the extent and in the manner customary for companies in
similar businesses;
(d) Each of the InSight Parties will keep true records and books
of account in which full, true and correct entries will be made of all
dealings or transactions relating to its business and affairs in accordance
with GAAP;
(e) Each of the InSight Parties shall duly observe and conform
to all valid requirements of governmental authorities relating to the
conduct of such InSight Party's businesses or to such InSight Party's
property or assets;
(f) Each of the InSight Parties shall maintain in full force and
effect its corporate existence, rights and franchises and all licenses and
other rights to use patents, processes, licenses, trademarks, trade names
and copyrights owned or possessed thereby and deemed to be necessary to the
conduct of its business;
(g) In the event the services of the independent public
accountants hereafter employed by the InSight Parties are terminated, the
InSight Parties will (i) promptly thereafter notify GE Medical by letter
setting forth the reasons for the termination of such services and (ii)
request the firm of independent public accountants whose services are
terminated to deliver to GE Medical a letter from such firm setting forth
the reasons for the termination of their services. In the event of such
termination, the InSight Parties will promptly thereafter engage another
firm of independent public accountants. In its notice to GE Medical, the
InSight Parties shall state whether the change of accountants was
recommended or approved by the InSight Parties' Board of Directors;
(h) Each of the InSight Parties will cause each person now or
hereafter employed thereby in a management position with access to
confidential information to enter into a proprietary information agreement
substantially in the form approved by such InSight Party's Board of
Directors.
10.3 MAINTENANCE OF SINGLE LOCATION OF PRINCIPAL EXECUTIVE OFFICE.
Each of the InSight Parties shall use its best efforts to establish and maintain
the principal executive offices and principal administration functions of the
InSight Parties at one location.
10.4 ADOPTION OF STOCK OPTION GUIDELINES. InSight shall not, without
first obtaining the approval of GE Medical, establish, adopt or approve (a)
guidelines with respect to the granting and vesting of stock options or shares
issued under the Insight Stock Plans or (b) the specific terms, conditions and
provisions of stock options or shares issued under the Insight Stock Plans which
could result in the issuance of more than 882,434 shares, in the aggregate,
under such Insight Stock Plans.
ARTICLE 11
COVENANTS OF ALL PARTIES
Each party hereto hereby agrees to keep, perform and fully discharge
the following covenants and agreements:
11.1 CONFIDENTIALITY. (A) Each party hereto shall treat all
information regarding the other parties hereto obtained in connection with the
negotiation and consummation of the transactions contemplated by this Agreement,
the Debt Restructuring, the Debt Restructuring Agreements, the Merger and the
Merger Agreement as confidential and shall not use any such information in any
manner other than in furtherance of such transactions; provided, however, that
such confidentiality obligation shall not apply to information disclosed or used
by any party (the "DISCLOSING PARTY") with respect to any other party hereto
(the "SUBJECT PARTY") that (i) is or becomes generally available to the public
other than as a result of a disclosure by the Disclosing Party, (ii) was
available to the Disclosing Party on a nonconfidential basis prior to the
disclosure by the Subject Party or (iii) becomes available to the Disclosing
Party on a nonconfidential basis from a person or entity (other than the Subject
Party) which is not otherwise bound by a confidentiality agreement with the
Subject Party.
(B) Unless otherwise required by law, none of the parties hereto
shall, without the prior written consent of the other parties hereto, disclose
to any person or entity (other than those actively and directly participating in
the transactions contemplated by this Agreement, the Debt Restructuring, the
Debt Restructuring Agreements, the Merger and the Merger Agreement) the terms,
conditions or acts relating to the transactions contemplated by this Agreement,
the Debt Restructuring, the Debt Restructuring Agreements, the Merger and the
Merger Agreement (including the fact that discussions are taking place with
respect to such transactions or the status thereof), or the fact that
confidential information has been made available thereto. In the event that any
of the parties hereto is required by law to make any disclosure otherwise
prohibited under this SECTION 11.1(B), such party shall provide to the other
parties hereto advance written notice of such required disclosure (including
with such advance written notice the text of such required disclosure) at least
two business days prior to such required disclosure.
11.2 EXPENSES. Notwithstanding SECTION 2.1(B), each of AHS and Maxum
shall reimburse to GE Medical an amount equal to 40 percent of the legal costs
incurred by GE Medical in connection with the transactions contemplated by this
Agreement, the Debt Restructuring, the Debt Restructuring Agreements, the Merger
and the Merger Agreement from and after July 1, 1995. Such payments shall be
made by AHS and Maxum within 30 days of the receipt by AHS or Maxum, as the case
may be, of GE Medical's invoice with respect to such legal costs, whether or not
such transactions are consummated.
11.3 FURTHER ASSURANCES. Each party hereto shall execute and deliver
such instruments and take such other actions as the other parties hereto may
reasonably require in order to carry out the transactions contemplated by this
Agreement.
ARTICLE 12
SURVIVAL AND INDEMNIFICATION
12.1 SURVIVAL. All representations, warranties, covenants and
agreements contained in this Agreement or in any document delivered pursuant
hereto shall be deemed to be material and to have been relied upon by the
parties hereto and shall survive the Closing and shall be fully effective and
enforceable for a period of two years following the Closing Date (unless a
different period is specifically assigned thereto), but shall thereafter be of
no further force or effect, except as they relate to claims for indemnification
timely made pursuant to this ARTICLE 12. The representations and warranties set
forth in this Agreement shall not be affected by any investigation, verification
or examination by any party hereto or by any person or entity on behalf of any
such party except as specifically set forth in an Exhibit, Schedule or document
delivered pursuant to this Agreement. The indemnification provisions set forth
in this Agreement are nonexclusive and shall not affect any other remedy which
may be available under common law or otherwise.
12.2 INDEMNIFICATION BY AHS. AHS shall indemnify and hold harmless GE
Medical from and against any and all loss, damage, expense, claim, liability or
obligation, including court costs, reasonable attorneys' fees and other expenses
for investigating or defending any actions or threatened actions (collectively,
"LOSSES"), related to, caused by or arising from any misrepresentation, breach
of warranty or failure to fulfill any covenant or agreement of AHS contained
herein, together with interest thereon at a floating interest rate (equal at all
times to the rate of interest published by the Wall Street Journal from time to
time as the "prime rate" (the "ANNOUNCED RATE")) from the date upon which such
loss, damage, expense or liability was incurred to the date of payment (but in
no event higher than the highest rate then permissible under law); provided,
however, that nothing herein shall be construed to entitle GE Medical as
indemnitee under this Section to recover interest on Losses, in excess of the
interest that would be payable if the Announced Rate is applied to Losses
(exclusive of any interest component thereof) from the date such Losses were
incurred until the date that such Losses are paid to GE Medical.
12.3 INDEMNIFICATION BY MAXUM. Maxum shall indemnify and hold
harmless GE Medical from and against any and all Losses related to, caused by or
arising from any misrepresentation, breach of warranty or failure to fulfill any
covenant or agreement of Maxum contained herein, together with interest thereon
at the Announced Rate, subject to the limitation on payment of interest set
forth in the proviso to SECTION 12.2.
12.4 INDEMNIFICATION BY THE INSIGHT PARTIES. The InSight Parties
shall, jointly and severally, indemnify and hold harmless GE Medical from and
against any and all Losses related to, caused by or arising from any
misrepresentation, breach of warranty or failure to fulfill any covenant or
agreement of the InSight Parties contained herein, together with interest
thereon at the Announced Rate, (subject to the limitation on payment of interest
set forth in the proviso to SECTION 12.2).
12.5 NOTICE. Any party seeking indemnification pursuant to this
ARTICLE 12 (an "INDEMNIFIED PARTY") shall give prompt written notice to the
indemnifying party (the "INDEMNIFYING PARTY") of the facts and circumstances
giving rise to the claim (the "NOTICE"). Any claim for indemnification asserted
in writing before the second anniversary of the Closing Date shall survive until
resolved or judicially determined. Upon receipt of the Notice, the Indemnifying
Party receiving the Notice shall have the option to protest any claim or demand
referred to in the Notice, at the Indemnifying Party's own cost and expense. In
addition, each Indemnified Party may also participate at such party's expense in
such contest or defense. Such option shall be exercised by the giving of notice
by the Indemnifying Party to each Indemnified Party within 30 calendar days of
receipt of the Notice. Any claim for indemnification which is not protested by
the 30th day following receipt of notice thereof shall be deemed valid and shall
be due and payable in full on the 31st day following such receipt.
ARTICLE 13
TERMINATION
13.1 TERMINATION. This Agreement may be terminated at any time prior
to the consummation of the Merger, and the transactions related thereto:
(a) by mutual consent of GE Medical and the InSight Parties;
(b) by either GE Medical or the InSight Parties if the Merger
shall not have been consummated on or before September 30, 1996 despite the
good faith effort of such party to effect such consummation (unless the
failure to so consummate the Merger by such date shall be due to the breach
of this Agreement or the Merger Agreement by the party seeking to terminate
this Agreement);
(c) by GE Medical if (i)(A) there are inaccuracies in the
representations and warranties of any of the InSight Parties that would
have a Material Adverse Effect on any of the InSight Parties, (B) there has
been a material breach on the part of any of the InSight Parties in the
covenants of such InSight Party set forth herein, or any failure on the
part of any of the InSight Parties to comply with its material obligations
hereunder, or any other events or circumstances shall have occurred, such
that, in any such case, any of the InSight Parties could not satisfy, on or
prior to September 30, 1996, any of the conditions to the Closing set forth
herein or (ii) AHS and Maxum shall not have received the approval by the
requisite votes cast by the stockholders of AHS and Maxum, respectively,
with respect to the Merger or any other transaction contemplated in
connection therewith or herewith;
(d) by the InSight Parties if (i)(A) there are inaccuracies in
the representations and warranties of GE Medical having a Material Adverse
Effect on its ability to consummate the transaction contemplated hereby or
(B) there has been any failure on the part of GE Medical to comply with its
material obligations hereunder, or any other events or circumstances shall
have occurred, such that, in any such case, GE Medical could not satisfy on
or prior to September 30, 1996, any of the conditions to the Closing set
forth in Article 7 of this Agreement, (ii) AHS and Maxum shall not have
received the approval by the requisite votes cast by the stockholders of
AHS and Maxum, respectively, with respect to the Merger, or (iii) prior to
the approval of the Merger by the stockholders of AHS and Maxum, (A) either
AHS or Maxum receives a firm offer with respect to any transaction (other
than the Merger) involving any disposition or other change of ownership of
its stock or material assets (an "ACQUISITION TRANSACTION") that is
reasonably capable of being financed, (B) in the good faith determination
of its Board of Directors after consultation with its financial advisors,
such Acquisition Transaction is financially superior to the Merger and (C)
its Board of Directors, after consulting with its outside legal counsel,
determines in good faith that to proceed with the Merger would violate its
fiduciary duties under applicable law.
13.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement by either the InSight Parties or GE Medical as provided in
SECTION 13.1, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of GE Medical or the InSight Parties or
their respective officers or directors (other than as provided in SECTION 11.2
and except for breach of the confidentiality provisions of SECTION 11.1, and
except to the extent that such termination results from the breach by a party
hereto of any of its representations, warranties, covenants or agreements set
forth in this Agreement).
ARTICLE 14
GENERAL
14.1 EXPENSES. Except as otherwise provided in SECTION 11.2, each
party to this Agreement shall pay its own costs and expenses in connection with
the transactions contemplated hereby.
14.2 AMENDMENT. This Agreement cannot be altered, amended, or
modified, in any respect, except by a writing duly executed by all of the
parties hereto.
14.3 ENTIRE AGREEMENT. This Agreement is the entire agreement between
the parties with respect to the subject matter hereof and all prior agreements,
understandings, oral agreements and writings are expressly superseded hereby.
14.4 SEVERABILITY. The provisions of this Agreement are severable.
If a court of competent jurisdiction rules that any provision of this Agreement
is invalid or unenforceable, the court's ruling will not effect the validity and
enforceability of the other provisions of this Agreement.
14.5 CONSTRUCTION. The parties agree that this Agreement shall be
construed without regard to the draftsman thereof and shall be construed as
though all parties to this Agreement equally participated in its drafting so as
to fairly accomplish the purpose and intentions of the parties hereto and shall
not be construed for or against any party. Each of the parties acknowledges
that it has been represented by legal counsel of its own choice in connection
with the preparation, review and execution of this Agreement, and that this
Agreement has been executed by the parties with the consent of and on advice of
such counsel.
14.6 ATTORNEYS' FEES. In the event any party brings an action to
enforce any of the provisions of this Agreement or the rights of the parties
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs.
14.7 STRICT PERFORMANCE. The failure of any party to this Agreement
to insist upon strict performance of any of the terms or conditions of this
Agreement, or to exercise any right or remedy, shall not be construed as waiving
subsequent strict performance of any such terms, covenants, conditions, or any
such rights or remedies.
14.8 GOVERNING LAW. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without giving effect to principles of conflicts
of laws.
14.9 INTERPRETATION. Whenever used in this Agreement, the word
"PERSON" includes, without any limitation, natural persons, corporations,
partnerships, associations, organizations, joint ventures, government entities,
and any and every other entity. The title of the various paragraphs in this
Agreement are intended solely for convenience of reference, and are not intended
and shall not be deemed for any purpose whatsoever to modify, explain or place
any construction upon any of the provisions of this Agreement and shall not
affect the meaning or interpretation of this Agreement.
14.10 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective legal representatives,
successors and assigns, as applicable. Notwithstanding the forgoing, this
Agreement may not be assigned by AHS, Maxum or InSight without the prior written
consent of GE Medical.
14.11 INJUNCTIVE RELIEF. InSight acknowledges that GE Medical would
be irreparably harmed in the event of any breach or violation by InSight of any
of the terms of this Agreement and that remedies at law would be inadequate. In
the event of any breach or threatened breach of such terms, GE Medical shall be
entitled to obtain, without posting bond, a temporary restraining order and
temporary and permanent injunctive relief restraining and enjoining any such
breach or threatened breach. The remedies provided for in this SECTION 14.11
shall be in addition to any and all other rights and remedies that may be
available to GE Medical at law, in equity and under this Agreement, all of which
are expressly reserved.
14.12 ATTORNEYS' FEES. In the event any party brings an action to
enforce any of the provisions of this Agreement or the rights of the parties
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs.
14.13 ARBITRATION. Any dispute arising out of, relating to or in
connection with this Agreement shall be resolved by binding arbitration. The
arbitration shall consist of a panel of three arbitrators from the JAMS panel of
retired judges and shall take place in Milwaukee, Wisconsin, at a place
designated by the parties (or, failing agreement, by the arbitrators) and shall
commence as soon as practicable on a date mutually agreed upon by counsel for
the parties (or the party if a party does not have counsel) and the
arbitrators. The arbitration proceeding shall be conducted confidentially
and the parties shall take the necessary actions to assure the
confidentiality of the arbitration proceeding. The arbitration proceeding
shall be in accordance with the then-current rules for arbitration
established by JAMS, insofar as such rules are not inconsistent with the
provisions of this Agreement. The party desiring to institute arbitration
shall serve written notice to the other party (with copies to all parties to
this Agreement). InSight shall name one arbitrator and GE Medical shall
name a second arbitrator and the two arbitrators so named shall name a third
arbitrator. The names of the two arbitrators named by GE Medical and
InSight shall be submitted within 45 days of the notice instituting
arbitration. When such arbitrators have chosen the third arbitrator, such
three arbitrators shall proceed with the arbitration. The prevailing party
in any such arbitration proceeding (or legal or equitable action instituted
as authorized elsewhere in this Agreement) shall be entitled to an award of
attorneys' fees and costs in addition to any other relief awarded. Any
award rendered in such an arbitration proceeding shall be final and binding
on the parties and may be entered in any court having jurisdiction over the
parties and/or the subject matter thereof. The arbitrators shall have no
jurisdiction or authority to add to, detract from, or alter in any way the
provisions of this Agreement, but shall limit their considerations and decision
to the interpretation and application of this Agreement to the subject matter
presented to them. Nothing contained in this SECTION 14.13 shall restrict GE
Medical's right to institute and prosecute any legal or equitable action in
court for temporary restraining orders and temporary and permanent injunctive
relief or otherwise as deemed appropriate by GE Medical.
14.14 NOTICES. All notices or demands by any party relating to this
Agreement shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or by
telefacsimile, or telegram to the parties at their addresses set forth below:
If to AHS
or InSight: American Health Services Corp.
4440 Von Karman Avenue, Suite 320
Newport Beach, California 92660
Attn: Thomas V. Croal
Fax No.: (714) 851-4488
with a
copy to: Harvey C. Flodin, Esq.
c/o American Health Services Corp.
4440 Von Karman Avenue, Suite 320
Newport Beach, California 92660
Fax No.: (714) 851-4488
If to Maxum
or InSight: Maxum Health Corp.
14850 Quorum Drive, Suite 400
Dallas, Texas 75240
Attn: Glenn Cato
Fax No.: (714) 777-7599
with a
copy to: Storey Armstrong Steger & Martin, P.C.
1445 Ross Avenue, Suite 1600
Dallas, Texas 75202
Attn: Stephen C. Morton, Esq.
Fax No.: (214) 855-6853
If to GE
Medical: General Electric Company
20825 Swenson Drive
Waukesha, Wisconsin 53186
Attn: Richard Berger
Fax No.: (414) 798-4528
with a
copy to: McDermott, Will & Emery
2049 Century Park East, 34th Floor
Los Angeles, CA 90067
Attn: Ira J. Rappeport, Esq.
Fax No.: (310) 277-4730
The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
parties. All notices or demands sent in accordance with this paragraph, shall
be deemed to have been duly given (a) on the date of service if served
personally on the party to whom notice is to be given or if transmitted via
telefacsimile or (b) three (3) calendar days if mailed to the party to whom
notice is to be given by first class or air mail, postage prepaid.
14.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have entered into and executed
this Preferred Stock Acquisition Agreement as of the date indicated above.
AMERICAN HEALTH SERVICES CORP.
By: _____________________________
Title: __________________________
MAXUM HEALTH CORP.
By: _____________________________
Title: __________________________
INSIGHT HEALTH SERVICES CORP.
By: _____________________________
Title: __________________________
GENERAL ELECTRIC COMPANY
By: _____________________________
Title: __________________________
EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 26th day of June,
1996, by and between InSight Health Services Corp., a Delaware corporation
("INSIGHT"), and General Electric Company, a New York corporation acting through
GE Medical Systems ("GE MEDICAL").
1. CERTAIN DEFINITIONS.
(a) The term "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(b) The term "FORM S-3" means such form under the Securities Act as
in effect on the date hereof or any similar registration statement form under
the Securities Act of 1933, as amended (the "Securities Act") subsequently
adopted by the Securities and Exchange Commission (the "SEC") which permits
inclusion or incorporation of substantial information by reference to other
documents filed by InSight with the SEC.
(c) The term "HOLDER" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof under SECTION 11 hereof.
(d) The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, covering the offer and
sale of securities, and the declaration or ordering of effectiveness of such
registration statement or document.
(e) The term "REGISTRABLE SECURITIES" means (i) the Common Stock, par
value $0.001 per share ("COMMON STOCK"), issuable or issued upon conversion of
the Series A Convertible Preferred Stock, par value $0.001 per share ("Series A
Convertible Preferred Stock"), currently issued or issuable to GE Medical, and
(ii) any Common Stock of InSight issued (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued) as a dividend
or other distribution in respect of, or in exchange for or in replacement of,
such Series A Convertible Preferred Stock or Common Stock.
(f) The number of "REGISTRABLE SECURITIES THEN OUTSTANDING" shall be,
at any time, the sum of (i) the number of shares of Common Stock outstanding
which are Registrable Securities at such time and (ii) the number of shares of
Common Stock which would be Registrable Securities upon conversion or exercise
of, or in exchange for, any Common Stock of InSight issued (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued)
as a dividend or other distribution in respect of, or in exchange for or in
replacement of, Series A Convertible Preferred Stock or Common Stock.
2. REQUEST FOR REGISTRATION.
(a) If at any time after one year from the date hereof, InSight
receives a written request from the Holders of a majority of the Registrable
Securities then outstanding ("INITIATING HOLDERS") that InSight file a
registration statement under the Act covering the registration of at least 25
percent of the Registrable Securities then outstanding (or a lesser percent if
the anticipated aggregate offering price of such Registrable Securities, net of
underwriting discounts and commissions, would exceed $7,500,000), then InSight
shall promptly provide written notice of such request to all Holders and shall,
subject to the limitations set forth in SECTION 2(B) hereof, use its best
efforts to effect the registration under the Act of all Registrable Securities
which the Holders request to be registered within 20 days of the mailing of such
notice by InSight in accordance with SECTION 16 hereof.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, the Initiating
Holders shall so advise InSight as a part of their request made pursuant to this
SECTION 2 and InSight shall include such information in the written notice
referred to in SECTION 2(A) hereof. In such event, the right of any Holder to
include such Holder's Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in such underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall (together with InSight as provided in
SECTION 4(E) hereof) enter into an underwriting agreement with the underwriter
or underwriters selected for such underwriting by InSight in a form reasonably
acceptable to the Initiating Holders. Notwithstanding any other provision of
this SECTION 2, if the underwriter advises the Initiating Holders in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of InSight owned by each such Holder.
(c) InSight is obligated to effect up to two such registrations
pursuant to this SECTION 2 and in no event shall InSight be obligated to effect
a registration under this SECTION 2 within 12 months of the effective date of
another registration effected pursuant to this SECTION 2 or within six months of
the effective date of any registration by InSight described in SECTION 3
hereof. In addition, InSight shall only be required to effect a
registration under this SECTION 2 for a firm commitment underwritten
offering, which firm commitment basis InSight shall be required to use its
best efforts to secure upon its receipt of a request under this SECTION 2.
(d) Notwithstanding the foregoing, if InSight shall furnish to
Holders requesting registration pursuant to this SECTION 2, a certificate signed
by the President of InSight stating that, in the good faith judgment of the
Board of Directors of InSight, it would be seriously detrimental to InSight and
its stockholders for a registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, InSight shall have
the right to defer taking action with respect to such filing for a period of not
more than 90 days after receipt of the request of the Initiating Holders
regarding such registration; provided, however, that InSight may not so defer
such action more than once in any six-month period.
(e) InSight may include in the registration under this SECTION 2 any
other shares of Common Stock so long as the inclusion in such registration of
such shares (i) will not, in the opinion of the investment banking firm which is
expected to be the managing underwriter of such registered distribution,
interfere with the successful marketing, in accordance with the intended method
of sale or other disposition of, all the Registrable Securities sought to be
registered by the Holder or Holders of Registrable Securities pursuant to this
SECTION 2 and (ii) will not result in the exclusion from such registration of
any Registrable Securities. If it is determined as provided above that there
will be such interference, the other shares of Common Stock sought to be
included shall be excluded to the extent deemed appropriate by the managing
underwriter.
3. "PIGGYBACK" REGISTRATION. If InSight proposes to register (including
for this purpose a registration effected by InSight for stockholders other than
the Holders) any of its capital stock or other equity securities under the
Securities Act in connection with the public offering of such securities solely
for cash (other than a registration relating solely to the sale of securities to
participants in an InSight employee stock option plan or director stock option
plan), InSight shall, at such time, promptly provide each Holder written notice
of such registration. Upon the written request of each Holder given within 15
days after the mailing of such notice by InSight in accordance with SECTION 16
hereof, InSight shall, subject to the provisions of SECTION 8 hereof, cause to
be registered under the Act all of the Registrable Securities that each such
Holder has requested to be registered.
4. OBLIGATIONS OF INSIGHT. Whenever required under this Agreement to use
its best efforts to effect the registration of any Registrable Securities,
InSight shall, as expeditiously as possible:
(a) Prepare and file with the SEC a registration statement with
respect to the offer and sale of such Registrable Securities and use its best
efforts to cause such registration statement to become effective as soon as
practicable thereafter, and, unless otherwise directed by the Holders of a
majority of the Registrable Securities registered thereunder, keep such
registration statement effective until the earlier of (i) the date the
registered distribution of all of such Registrable Securities is completed or
(ii) 120 days (except for registrations effected pursuant SECTION 10 hereof
which shall be kept effective for 18 months).
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the offer and sale of all securities covered by
such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as such Holders may reasonably request in order to
facilitate the disposition of Registrable Securities owned thereby.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or "blue sky"
laws of such jurisdictions as shall be requested by the Holders and where the
Holders foresee that offers or sales of such securities will occur.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in form reasonably
acceptable to the Holders, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
5. FURNISH INFORMATION; EXCEPTION TO REGISTRATION.
(a) It shall be a condition precedent to the obligations of InSight
to take any action pursuant to this Agreement with respect to the Registrable
Securities of any selling Holder that such Holder shall furnish to InSight such
information regarding itself and the Registrable Securities held thereby, and
the intended method of disposition thereof as shall be reasonably required to
effect the registration of such Holder's Registrable Securities.
(b) InSight shall have no obligation with respect to any registration
requested pursuant to SECTION 2 hereof if, due to the operation of SECTION 5(A)
hereof, the number or the anticipated aggregate offering price, of the
Registrable Securities to be included in such registration does not equal or
exceed the number of Registrable Securities or the anticipated aggregate
offering price required to originally trigger InSight's obligation to initiate
such registration as set forth in SECTION 2(A) hereof.
(c) Upon GE Medical's receipt of any notice from InSight of the
occurrence of any of the following events (accompanied by reasonably acceptable
evidence thereof):
(i) the prospectus included in a registration statement
registering Registrable Securities containing an untrue statement of a
material fact or omitting a material fact necessary to make the statements
therein not misleading,
(ii) the issuance of any stock order suspending the effectiveness
of any such registration statement, or
(iii) the issuance of any order suspending or preventing the use
of any related prospectus or suspending the qualification of any
Registrable Securities included in such registration statement for sale in
any jurisdiction,
GE Medical will forthwith discontinue disposition of any Registrable Securities
pursuant to such registration until the receipt thereby of copies of an
appropriate supplement or amendment to any such prospectus or until the
withdrawal of such order, as the case may be. Upon the occurrence of such
events, InSight shall use its best efforts to immediately file an appropriate
supplement or amendment to any such prospectus or immediately obtain the
withdrawal of such order, as the case may be.
6. EXPENSES OF DEMAND REGISTRATION. All expenses (other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to SECTION 2 hereof),
including, without limitation, all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for InSight,
and reasonable fees and disbursements of one counsel for the selling Holders
(designated by the selling Holders holding a majority of the Registrable
Securities) shall be borne by InSight.
7. EXPENSES OF INSIGHT REGISTRATION. InSight shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to registrations pursuant to SECTION 3
hereof for each Holder (which right may be assigned as provided in SECTION 12
hereof), including, without limitation, all registration, filing and
qualification fees and printers and accounting fees relating or apportionable
thereto and the reasonable fees and disbursements of one counsel for the selling
Holders (designated by the selling Holders holding a majority of the Registrable
Securities) (but excluding underwriting discounts and commissions relating to
Registrable Securities).
8. UNDERWRITING REQUIREMENTS. In connection with any offering involving
an underwriting of shares of InSight's capital stock, InSight shall not be
required under SECTION 3 hereof to include any of the Holders' securities in
such underwriting unless such Holder accepts the terms of such underwriting as
agreed upon between InSight and the underwriters selected by it to underwrite
such offering (provided that such terms of such underwriting are customary and
reasonable). If the total amount of securities, including Registrable
Securities, requested by stockholders to be included in such offering exceeds
the amount of securities sold other than by InSight that such underwriters
reasonably believe compatible with the success of such offering, then InSight
shall be required to include in such offering only that number of such
securities, including Registrable Securities, which such underwriters believe
will not jeopardize the success of such offering. In the event the underwriters
limit the number of shares to be included, the securities to be included in the
offering shall be determined by a pro rata apportionment among the selling
stockholders according to the total amount of securities entitled to be included
therein owned by each such selling stockholder or in such other proportions as
shall mutually be agreed to among such selling stockholders; provided, however,
that all securities which are not Registrable Securities shall first be so
excluded from the offering prior to the exclusion from the offering of any
Registrable Securities; and, provided further, in no event shall the
underwriters exclude more than 70 percent of the number of Registrable
Securities to be included in any such offering.
9. INDEMNIFICATION. In the event any Registrable
Securities are included in a registration statement under this Agreement:
(a) InSight will indemnify and hold harmless each Holder, any
underwriter (as defined in the Securities Act) for such Holder and each person
or entity, if any, controlling such Holder or underwriter within the meaning of
the Act or the Exchange Act against any and all losses, claims, damages and
liabilities (joint or several) to which such Holder, underwriter or controlling
person or entity, as the case may be, may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following (collectively, "VIOLATIONS"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading or
(iii) any violation or alleged violation by InSight of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law, and
InSight will reimburse each such Holder, underwriter and controlling person or
entity for any legal or other expenses reasonably incurred thereby in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that InSight shall not be liable in any such case for
any such loss, claim, damage, liability or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person or
entity.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless InSight, any person who controls Insight within the
meaning of Section 15 of the Act, and any officer or director of Insight who
signed such registration statement against any losses, claims, damages or
liabilities (joint or several) to which any such Holder, underwriter and
controlling person or entity may become subject, under the Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration
and each such Holder will reimburse any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this SECTION 9(B),
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement and
reimbursement contained in this SECTION 9(B) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld); and provided, further, that if any losses,
claims, damages or liabilities arise out of or are based upon a Violation which
did not appear in the final prospectus, such Holder shall not have any such
liability with respect thereto to (i) InSight, any person who controls Insight
within the meaning of Section 15 of the Act, or any officer or director of
Insight who signed such registration statement, if InSight delivered a copy of a
preliminary prospectus to the person alleging such losses, claims, damages or
liabilities and failed to deliver a copy of the final prospectus, as amended or
supplemented if it has been amended or supplemented, to such person at or prior
to the written confirmation of the sale to such person or (ii) any underwriter
or any person controlling such underwriter within the meaning of Section 15 of
the Act, if such underwriter delivered a copy of a preliminary prospectus to the
person alleging such losses, claims, damages or liabilities and failed to
deliver a copy of the final prospectus, as amended or supplemented if it has
been amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person. In no event shall any indemnification
obligation under this SECTION 9(B) exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this SECTION
9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this SECTION 9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding.
(d) The obligations of InSight and Holders under this SECTION 9 shall
survive the consummation of any offer and sale of Registrable Securities in a
registration under this Agreement.
10. FORM S-3 REGISTRATION. In case InSight shall receive from any Holder
or Holders who own at least 25 percent of the Registrable Securities then
outstanding a written request or requests that InSight effect a registration on
Form S-3 and any related qualification with respect to all or any portion of the
Registrable Securities owned by such Holder or Holders, InSight will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all
other Holders; and
(b) as soon as practicable, use its best efforts to effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice from
InSight; provided, however, that InSight shall not be obligated to effect any
such registration, qualification or compliance pursuant to this SECTION 10 (i)
if Form S-3 is not available for such offering by the Holders, (ii) if InSight
shall furnish to the Holders a certificate signed by the President of InSight
stating that, in the good faith judgment of the Board of Directors of InSight,
it would be seriously detrimental to InSight and its stockholders for such Form
S-3 to be effected at such time, in which event InSight shall have the right to
defer the filing of such Form S-3 for a period of not more than 180 days after
receipt of the request of the Holder or Holders under this SECTION 10 (provided
that InSight shall not utilize such deferral right more than once in any 12-
month period), (iii) if InSight has, within the six-month period preceding the
date of such request, already effected a registration on Form S-3 for the
Holders pursuant to this SECTION 10 or any other registration, (iv) in any
particular jurisdiction in which InSight would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration or qualification or (v) at any time subsequent to the date that
Registrable Securities constitute less than one percent of InSight's Common
Stock, determined on an as-converted basis.
InSight shall file a registration statement covering the offer and sale of
Registrable Securities and other securities so requested to be registered
pursuant to this SECTION 10 as soon as practicable after receipt of the request
or requests of the Holders hereunder. All expenses incurred in connection with
the first two registrations requested pursuant to this SECTION 10, including,
without limitation, all registration, filing, qualification, printer's and
accounting fees and the reasonable fees and disbursements of counsel for the
selling Holder or Holders and counsel for InSight, shall be borne by InSight.
After the first two registrations, all such expenses shall be borne pro rata by
the Holder or Holders participating in the Form S-3 registration. Registrations
effected pursuant to this SECTION 10 shall not be counted as demands for
registration effected pursuant to SECTION 2 hereof.
11. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause InSight to
register Registrable Securities pursuant to this Agreement may be assigned by a
Holder to a transferee or assignee of such Registrable Securities, provided that
InSight is, within a reasonable time after such assignment, furnished with
written notice of the name and address of such transferee or assignee and the
Registrable Securities with respect to which such registration rights are being
assigned and provided, further, that such assignment shall be effective only if
immediately following such assignment, the further disposition of such
Registrable Securities by such transferee or assignee is restricted under the
Act. Any such assignee shall be subject to all rights and obligations hereunder
and shall agree in writing to be bound by the terms of this Agreement.
12. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, InSight shall not enter into any agreement with any
holder or prospective holder of any securities of InSight which would allow such
holder or prospective holder (i) to include such securities as Registrable
Securities under this Agreement or which would provide such holder or
prospective holder with registration rights under another agreement without the
written consent of the Holders of a majority of the Registrable Securities then
outstanding, or (ii) to include such securities as Registrable Securities under
SECTION 2 hereof or SECTION 10 hereof, or which would provide such holder or
prospective holder with registration rights under another agreement similar to
those provided in SECTION 2 hereof or SECTION 10 hereof without the consent of
the Holders of a majority of the Registrable Securities then outstanding.
13. "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that, to the
extent requested by InSight, during the period of no more than 120 days
following the effective date of the first registration statement of InSight
filed subsequent to the date hereof under the Securities Act, such Holder shall
not sell or otherwise transfer or dispose of (other than to transferees who
agree to be similarly bound) any Common Stock of InSight (or options to buy or
sell any Common Stock of InSight) held thereby at any time during such period
except for Common Stock included in such registration; provided, however, that
such agreement shall be applicable only to the first such registration statement
of InSight which covers Common Stock (or other securities) to be sold on its
behalf to the public in an underwritten offering; and, provided further, that
such Agreement shall be applicable only to the second and third of such
registration statements of InSight for a period of ninety (90) days. In order
to enforce the foregoing covenant, InSight may impose stop-transfer instructions
with respect to the Common Stock of each Holder until the end of such 120-day
period or 90-day period, as the case may be.
14. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of InSight and the Holders of a majority of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance
with this SECTION 14 shall be binding upon each Holder of any Registrable
Securities then outstanding, each future holder of all such Registrable
Securities and InSight.
15. REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Holders the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of InSight to the public
without registration, InSight agrees to use its best efforts to:
(a) make and keep public information available, as contemplated in
Rule 144, at all times subsequent to such date (the "Rule 144 Date") as is 90
days after the effective date of the first registration statement covering an
underwritten public offering filed by InSight;
(b) file with the SEC in a timely manner all reports and other
documents required of InSight under the Securities Act and the Exchange Act; and
(c) furnish to any Holder, so long as such Holder owns any of the
Registrable Securities (at any time after the Rule 144 Date), forthwith upon
request a written statement by InSight that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of InSight and such other reports and
documents so filed with the SEC by InSight as may be reasonably requested in
availing any Holder, under any rule or regulation of the SEC, of the right to
sell any such Registrable Securities without registration.
16. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided herein, each party to
this Agreement shall pay its own costs and expenses in connection with the
transactions contemplated hereby.
(b) AMENDMENT. This Agreement cannot be altered, amended, or
modified, in any respect, except by a writing duly executed by all of the
parties hereto.
(c) ENTIRE AGREEMENT. This Agreement is the entire agreement between
the parties with respect to the subject matter hereof and all prior agreements,
understandings, oral agreements and writings are expressly superseded hereby.
(d) SEVERABILITY. The provisions of this Agreement are severable.
If a court of competent jurisdiction rules that any provision of this Agreement
is invalid or unenforceable, the court's ruling will not effect the validity and
enforceability of the other provisions of this Agreement.
(e) CONSTRUCTION. The parties agree that this Agreement shall be
construed without regard to the draftsman thereof and shall be construed as
though all parties to this Agreement equally participated in its drafting so as
to fairly accomplish the purpose and intentions of the parties hereto and shall
not be construed for or against any party. Each of the parties acknowledges
that it has been represented by legal counsel of its own choice in connection
with the preparation, review and execution of this Agreement, and that this
Agreement has been executed by the parties with the consent of and on advice of
such counsel.
(f) ATTORNEYS' FEES. In the event any party brings an action to
enforce any of the provisions of this Agreement or the rights of the parties
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs.
(g) STRICT PERFORMANCE. The failure of any party to this Agreement
to insist upon strict performance of any of the terms or conditions of this
Agreement, or to exercise any right or remedy, shall not be construed as waiving
subsequent strict performance of any such terms, covenants, conditions, or any
such rights or remedies.
(h) GOVERNING LAW. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without giving effect to principles of conflicts
of laws.
(i) INTERPRETATION. Whenever used in this Agreement, the word
"PERSON" includes, without any limitation, natural persons, corporations,
partnerships, associations, organizations, joint ventures, government entities,
and any and every other entity. The title of the various paragraphs in this
Agreement are intended solely for convenience of reference, and are not intended
and shall not be deemed for any purpose whatsoever to modify, explain or place
any construction upon any of the provisions of this Agreement and shall not
affect the meaning or interpretation of this Agreement.
(j) ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective legal representatives,
successors and assigns, as applicable. Notwithstanding the foregoing, this
Agreement may not be assigned by InSight without the prior written consent of GE
Medical.
(k) INJUNCTIVE RELIEF. InSight acknowledges that GE Medical would be
irreparably harmed in the event of any breach or violation by InSight of any of
the terms of this Agreement and that remedies at law would be inadequate. In
the event of any breach or threatened breach of such terms, GE Medical shall be
entitled to obtain, without posting bond, a temporary restraining order and
temporary and permanent injunctive relief restraining and enjoining any such
breach or threatened breach. The remedies provided for in this SECTION 14(K)
shall be in addition to any and all other rights and remedies that may be
available to GE Medical at law, in equity and under this Agreement, all of which
are expressly reserved.
(l) ATTORNEYS' FEES. In the event any party brings an action to
enforce any of the provisions of this Agreement or the rights of the parties
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees and costs.
(m) ARBITRATION. Any dispute arising out of, relating to or in
connection with this Agreement shall be resolved by binding arbitration. The
arbitration shall consist of a panel of three arbitrators from the JAMS panel of
retired judges and shall take place in Milwaukee, Wisconsin, at a place
designated by the parties (or, failing agreement, by the arbitrators) and shall
commence as soon as practicable on a date mutually agreed upon by counsel for
the parties (or the party if a party does not have counsel) and the
arbitrators. The arbitration proceeding shall be conducted confidentially
and the parties shall take the necessary actions to assure the
confidentiality of the arbitration proceeding. The arbitration proceeding
shall be in accordance with the then-current rules for arbitration
established by JAMS, insofar as such rules are not inconsistent with the
provisions of this Agreement. The party desiring to institute arbitration
shall serve written notice to the other party (with copies to all parties to
this Agreement). InSight shall name one arbitrator and GE Medical shall
name a second arbitrator and the two arbitrators so named shall name a third
arbitrator. The names of the two arbitrators named by InSight and GE\
Medical shall be submitted within 45 days of the notice instituting
arbitration. When such arbitrators have chosen a third arbitrator, such
three arbitrators shall proceed with arbitration. The prevailing party in
any such arbitration proceeding (or legal or equitable action instituted as
authorized elsewhere in this Agreement) shall be entitled to an award of
attorneys' fees and costs in addition to any other relief awarded. Any award
rendered in such an arbitration proceeding shall be final and binding on the
parties and may be entered in any court having jurisdiction over the parties
and/or the subject matter thereof. The arbitrators shall have no jurisdiction
or authority to add to, detract from, or alter in any way the provisions of this
Agreement, but shall limit their considerations and decision to the
interpretation and application of this Agreement to the subject matter presented
to them. Nothing contained in this SECTION 16(M) shall restrict GE Medical's
right to institute and prosecute any legal or equitable action in court for
temporary restraining orders and temporary and permanent injunctive relief or
otherwise as deemed appropriate by GE Medical.
(n) NOTICES. All notices or demands by any party relating to this
Agreement shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or by
telefacsimile, or telegram to the parties at their addresses set forth below:
If to
InSight: InSight Health Services Corp.
4400 MacArthur Boulevard, Suite 800
Newport Beach, CA 92660
Attn: ____________________________
Fax No.: (714) 851-4488
with a
copy to: ___________________________________
___________________________________
___________________________________
Attn: ____________________________
Fax No.: (_______) ________________
If to GE
Medical: General Electric Company
20825 Swenson Drive
Waukesha, Wisconsin 53186
Attn: Richard Berger
Fax No.: (414) 798-4528
with a
copy to: McDermott, Will & Emery
2049 Century Park East, 34th Floor
Los Angeles, CA 90067
Attn: Ira J. Rappeport, Esq.
Fax No.: (310) 277-4730
The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
parties. All notices or demands sent in accordance with this paragraph, shall
be deemed to have been duly given (a) on the date of service if served
personally on the party to whom notice is to be given or if transmitted via
telefacsimile or (b) three (3) calendar days if mailed to the party to whom
notice is to be given by first class or air mail, postage prepaid.
(o) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have entered into and executed
this Registration Rights Agreement as of the date indicated above.
INSIGHT HEALTH SERVICES CORP.
By: _____________________________
Title: __________________________
GENERAL ELECTRIC COMPANY
By: _____________________________
Title: __________________________
