UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
American Health Services Corp.
(Name of Issuer)
Common Stock, $0.03 par value per share
(Title of Class of Securities)
026913 10 3
(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)
February 20, 1995
(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 following
box [ ].
Check the following box if a fee is being paid with the statement [ X ]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the act (however,
see the Notes).
SCHEDULE 13D
CUSIP No. 026913 10 3
___________________________________________________________________________
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
General Electric Company, acting through GE Medical Systems
(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*
00
___________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
___________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
___________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF SHARES 1,589,072 shares of Common Stock (all issuable
BENEFICIALLY upon exercise of warrants)
OWNED BY _______________________________________________________
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0
WITH _______________________________________________________
9 SOLE DISPOSITIVE POWER
1,589,077 shares of Common Stock (all issuable
upon exercise of warrants)
_______________________________________________________
10 SHARED DISPOSITIVE POWER
0
___________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,589,077 shares of Common Stock (all issuable upon exercise of
warrants)
___________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
___________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.1%
___________________________________________________________________________
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 Common
Stock, $0.03 par value per share (the "Common Shares"), of American Health
Services Corp., a Delaware corporation (the "Company") with principal
executive offices located at 4440 Von Karman Avenue, Suite 320, Newport
Beach, California 92660.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed by General Electric Company, a New
York corporation acting through GE Medical Systems ("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 a restructuring of indebtedness of the Company,
pursuant to the terms of a Loan and Security Agreement, dated May 19, 1992
(the "First Loan Agreement"), between General Electric Capital Corporation,
an affiliate of GE ("GECC"), and the Company, the Company issued to GE a
Common Stock Purchase Warrant, dated May 19, 1992 (the "First Warrant),
initially exercisable for 1,678,946 Common Shares upon the payment of a
purchase price initially equal to $0.10 per Common Share.
In connection with a second restructuring of indebtedness of the Company
(the "Additional Restructuring"), pursuant to a First Amendment to Common
Stock Purchase Warrant entered into on April 12, 1994 by GE and the Company,
GE agreed to an amendment of the First Warrant (referred to herein, as so
amended, as the "Amended Warrant") to reduce from 1,678,976 to 839,473 the
number of Common Shares purchasable upon exercise thereof in exchange for,
among other things, the issuance of the Third Warrant (as defined below). On
June 1, 1993, pursuant to the terms of a Loan and Security Agreement, dated
June 1, 1993 (the "Second Loan Agreement"), between GECC and the Company, the
Company issued to GE an additional Common Stock Purchase Warrant (the "Second
Warrant"), dated July 9, 1993, exercisable by GE for 377,075 Common Shares
upon the payment of a purchase price initially equal to $0.10 per Common
Share.
On April 12, 1994, in connection with the Additional Restructuring,
the Company issued to GE, a third Common Stock Purchase Warrant (the "Third
Warrant"), dated April 12, 1994, exercisable by GE for 375,524 Common Shares
upon the payment of a purchase price initially equal to $0.10 per Common
Share.
The Amended Warrant, Second Warrant and Third Warrant, each of
which is currently exercisable, are collectively referred to herein as the
"Warrants."
The foregoing response to this Item 3 is qualified in
its entirety by reference to the First Loan Agreement (a copy
of which is attached hereto as Exhibit 1), the Amended Warrant (a
copy of which is attached hereto as Exhibit 2), the Second Loan Agreement (a
copy of which is attached hereto as Exhibit 3), the Second Warrant (a copy of
which is attached hereto as Exhibit 4) and the Third Warrant (a copy of
which is attached hereto as Exhibit 5), each of which is hereby incorporated
herein.
ITEM 4. PURPOSE OF TRANSACTION
GE has acquired the Warrants as an investment and in the ordinary
course of business and not with the purpose of changing control of the
Company.
In connection with the contemplated consolidation of the businesses
(the "Merger") of the Company and Maxum Health Corp., a Delaware corporation
("Maxum"), and in exchange for certain financial accommodations contemplated
to be provided by GE to the Company and Maxum, GE entered into a Preferred
Stock Acquisition Agreement, dated as of February 26, 1996 (the "Stock
Acquisition Agreement"), by and among the Company, Maxum, Insight Health
Services Corp., a Delaware corporation ("InSight"), and GE. The Stock
Acquisition Agreement provides, among other things, that (i) immediately
prior to the Merger, the Company will issue to GE 15,000 shares of the
Company's Series C Preferred Stock, par value $0.03 per share (the "Series C
Preferred Stock"), (ii) immediately prior to the Merger, the Warrants will be
cancelled, and (iii) upon consummation of the Merger, the Series C Preferred
Stock will be converted into Series A Convertible Preferred Stock of InSight.
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 6), which is hereby incorporated herein.
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 an aggregate of 1,589,072 Common Shares
(all of which are issuable upon exercise of the Warrants), representing an
aggregate of 14.1% of the outstanding Common Shares (assuming exercise of the
Warrants).
(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 4 hereof, neither GE
nor, to the best knowledge of GE, any person identified on
Schedule I hereto has effected any transactions with respect to
Common Shares 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.
Except as described in Item 4 hereof, GE has not entered into
contracts, arrangements, understandings or relationships described in the
instructions to this Item 6 of Schedule 13D.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
99.1 Loan and Security Agreement, dated May 19, 1992, between GECC
and the Company.
99.2 Common Stock Purchase Warrant, dated May 19, 1992, issued by
the Company to GE, as subsequently amended by First Amendment
to Common Stock Purchase Warrant, dated April 12, 1994.
99.3 Loan and Security Agreement, dated as of June 1, 1993, between
GECC and the Company.
99.4 Common Stock Purchase Warrant, dated July 9, 1993, issued by
the Company to GE.
99.5 Common Stock Purchase Warrant, dated April 12, 1994, issued by
the Company to GE.
99.6 Preferred Stock Acquisition Agreement, dated as of February
26, 1996, by and among the Company, Maxum, Insight 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/ John M. Trani
Name: John M. Trani
Title: Sr. Vice President,
GE Medical Systems
Dated: March _____, 1996
EXHIBIT INDEX
Exhibit 99.1 Loan and Security Agreement, dated May 19, 1992, between GECC
and the Company.
Exhibit 99.2 Common Stock Purchase Warrant, dated May 19, 1992, issued by
the Company to GE, as subsequently amended by First Amendment
to Common Stock Purchase Warrant, dated April 12, 1994.
Exhibit 99.3 Loan and Security Agreement, dated as of June 1, 1993, between
GECC and the Company.
Exhibit 99.4 Common Stock Purchase Warrant, dated July 9, 1993, issued by
the Company to GE.
Exhibit 99.5 Common Stock Purchase Warrant, dated April 12, 1994, issued by
the Company to GE.
Exhibit 99.6 Preferred Stock Acquisition Agreement, dated as of February
26, 1996, by and among the Company, Maxum, Insight and GE.
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. Amsen 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, Jr. Senior Vice President, United
General Counsel and States
Secretary
W. James McNerney, Jr. Senior Vice President-GE United
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
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, Jr.* Retired Chairman, Chief United
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. Michelson* Member of the Board of United
Directors - Federated States
Department Stores
Roger S. Penske* President - Penske United
Corporation States
Barbara S. Prieskel* 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 III* Chairman of the Board, United
President, and Chief States
Executive Officer, J.P.
Morgan & Co. Incorporated
and Morgan Guaranty Trust
Company
SCHEDULE II
RECENT GE CONVICTIONS
1. 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. Section 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.
2. 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).
3. 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
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") dated as of May 19,
1992, is by and between GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("Lender"), with an office located at 44 Old Ridgebury Road,
Danbury, Connecticut and AMERICAN HEALTH SERVICES CORP., a Delaware corporation
("Borrower"), with an office located at 4440 Von Karmen, Suite 320, Newport
Beach, California.
W I T N E S S E T H:
WHEREAS, Lender has agreed to make a Nonrevolving Credit Loan (as defined
below) to Borrower on the terms and conditions of this Agreement;
WHEREAS, as part of the consideration for Lender's making the above loan to
Borrower, Lender has required that Borrower grant a security interest in the
Collateral (as defined below), and Borrower desires to grant such a security
interest to Lender on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the following terms
and conditions, and of any extension of credit or financial accommodation
heretofore, now, or hereafter made by Lender to or on behalf of Borrower, Lender
and Borrower hereby agree as follows:
1. GENERAL DEFINITIONS AND RULES OF CONSTRUCTION
In addition to the defined terms appearing above or defined in subsequent
sections of this Agreement, capitalized terms used in this Agreement shall have
(unless otherwise provided elsewhere in this Agreement) the following respective
meanings when used in this Agreement:
1.1 "Affiliate" shall mean (i) any Person or entity which, directly or
indirectly, controls, is controlled by or is under common control with Borrower,
and (ii) any entity in which, directly or indirectly, Borrower or any Person or
entity described in (i) controls, is controlled by or is under common control
with Borrower.
1.2 "Authorized Representative" shall mean the officer or officers of
Borrower specified in the notice delivered to Lender by a duly authorized and
empowered officer of Borrower and designating the officer or officers that are
duly authorized and empowered to request a Nonrevolving Credit Advance on behalf
of Borrower and to bind Borrower to the terms of this Agreement with respect to
such Nonrevolving Credit Advance.
1.3 "Bankruptcy Code" shall mean Title 11 of the United States Code, as
from time to time amended, and the rules applicable with respect thereto.
1.4 "Borrower" shall mean American Health Services Corp., a Delaware
corporation.
1.5 "Business Day" shall mean any day except Saturday, Sunday or any day
in which banks in New York, New York are required or authorized by law to remain
closed.
1.6 "Cash Flow" shall mean, for any period, the gross revenues of
Borrower, as determined in accordance with GAAP, minus the Operating Expenses of
Borrower for such period.
1.7 "Closing Date" shall mean May 19, 1992.
1.8 "Collateral" shall have the meaning assigned to it in Section 5.1 of
this Agreement.
1.9 "Commitment Fee" shall mean the nonrefundable fee of Twenty-Five
Thousand Dollars ($25,000) paid by Borrower to Lender's Agent prior to execution
of this Agreement.
1.10 "Current Assets" shall mean current assets of Borrower as determined
in accordance with GAAP (except that debts due to Borrower from any Affiliate
and investments by Borrower in any Affiliate shall be excluded therefrom.
1.11 "Current Liabilities" shall mean current liabilities of Borrower as
determined in accordance with GAAP excluding (i) current payments that are due
on any long-term debt, and (ii) debts of Borrower due to any Affiliate.
1.12 "Default" shall mean any event which, with the passage of time, the
giving of notice, or both, would become an Event of Default, unless cured or
unless waived as specifically provided in this Agreement.
1.13 "Disposition" shall mean the sale, transfer or other disposition in
any single transaction or series of related transactions of any asset, or group
of related assets, of Borrower or any of its Subsidiaries that has or have at
the date of the Disposition a book value or fair market value (which shall be
deemed to be equal to the sales price for such asset or assets upon a sale to a
Person that is not an Affiliate of Borrower) of One Hundred Thousand Dollars
($100,000) or more, other than (i) the sale or other disposition of inventory in
the ordinary course of business, and (ii) the sale or other disposition of
equipment that is replaced by equipment performing substantially the same
function not later than ninety (90) days after such sale or disposition. For
purposes of this definition, the phrase "series of related transactions" shall
mean that the transactions, taken as a whole, were conceived and are implemented
on a strategically integrated basis and the phrase "related assets" shall mean
that the assets are functionally related to one another.
1.14 "Distributions" shall mean, with respect to any shares of capital
stock or any warrant or right to acquire shares of capital stock or any other
equity security issued by a Person, (i) the retirement, redemption, purchase or
other acquisition, directly or indirectly, for value by such Person of any such
security, except to the extent that the consideration therefor consists of
shares of Stock, (ii) the declaration or (without duplication) payment by such
Person of any dividend in cash or in Property, directly or indirectly, on or
with respect to any such security, (iii) any investment by such Person in the
holder of 5% or more of any such security if a purpose of such investment is to
avoid characterization of the transaction as a Distribution, and (iv) any other
payment by such Person constituting a distribution under applicable laws with
respect to such security.
1.15 "Equipment" shall mean the equipment purchased by Borrower from any
party with the proceeds of the Nonrevolving Credit Loan, as well as all
additions to, substitution for, replacements of or accessions to any such
equipment described above and all attachments, components, parts (including
spare parts) and accessories whether installed thereon or affixed thereto.
1.16 "ERISA" shall mean the Employee Retirement Income Security Act of
1974 (or any successor statute), as amended from time to time, and any
regulations promulgated thereunder.
1.17 "Event of Default" shall have the meaning assigned to it in Section
9.1.
1.18 "Financing Statements" shall mean the Form UCC-1 or other financing
statements to be filed in the appropriate offices for the perfection of a
security interest in any of the Collateral.
1.19 "GAAP" shall mean Generally Accepted Accounting Principles applied on
a consistent basis as in effect from time to time and practices which are
recognized as such by the American Institute of Certified Public Accountants
acting through its Accounting Principles Board or by the Financial Accounting
Standards Board or through other appropriate boards or committees thereof and
which are consistently applied for all periods after the date of this Agreement.
1.20 "Indebtedness" means, as applied to any Person, without duplication
(i) all items, except items of capital stock or of surplus or of general
contingency or deferred tax reserves, which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person on the date as of which Indebtedness is to be
determined, (ii) all obligations secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien to which any Property or asset owned or held by such Person is subject,
whether or not the obligation secured thereby shall have been assumed, and (iii)
all obligations of other Persons which such Person has guaranteed, including,
but not limited to, all obligations of such Person consisting of recourse
liabilities with respect to accounts receivable sold or otherwise disposed of by
such Person.
1.21 "IRC" shall mean the Internal Revenue Code of 1986, as heretofore or
hereafter amended, and all regulations promulgated thereunder.
1.22 "Lender" shall mean General Electric Capital Corporation, a New York
corporation.
1.23 "Lender's Agent" shall mean General Electric Company, a New York
corporation, acting through GE Medical Systems.
1.24 "Liabilities" shall mean all loans, advances, indebtedness,
liabilities, and obligations of Borrower to Lender or Lender's Agent, of any and
every kind and nature, arising under this Agreement or under any other Loan
Document, or acquired by Lender or Lender's Agent from any other source, whether
now or hereafter owing, arising, due or payable from Borrower to Lender or
Lender's Agent, whether or not evidenced by any note, agreement, or other
instrument and whether primary, secondary, direct, contingent, fixed or
otherwise, including obligations of performance, and including, particularly,
principal, interest, loan fees, charges, expenses, attorneys' fees, and other
amounts chargeable to Borrower by Lender or Lender's Agent, future advances made
to or for the benefit of Borrower; provided, however that Borrower's liabilities
to Lender or Lender's Agent that may arise pursuant to (i) Section 7.6 hereof,
or (ii) any equipment lease entered into by Borrower and Lender or Lender's
Agent subsequent to the date hereof shall not be considered "Liabilities" for
purposes of this Agreement.
1.25 "Lien" shall mean (i) any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien (including tax liens,
judgment liens, liens of mechanics, suppliers, and other Persons for the
provision of goods or services, and all other liens arising under statute,
common law or judicial interpretation), charge, claim, security interest,
capitalized lease obligation, easement, encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, or any financing
lease having substantially the same economic effect as any of the foregoing),
(ii) any arrangement, express or implied, under which any Property is
transferred, sequestered or otherwise identified for the purpose of subjecting
the same to the payment of Indebtedness or performance of any other obligation
in priority to the payment of general, unsecured creditors; (iii) any
indebtedness which is unpaid more than forty-five (45) days after the same shall
have become due and payable and which if unpaid would by law (including but not
limited to bankruptcy and insolvency laws), or otherwise, be given any priority
whatsoever over general, unsecured creditors; and (iv) the filing of, or
agreement to give, any Financing Statement perfecting a security interest under
the UCC or comparable law of any jurisdiction.
1.26 "Loan Documents" shall mean, collectively, this Agreement, the
Nonrevolving Credit Note, any other agreements or notes of any type or nature
heretofore or hereafter executed and delivered by Borrower in favor of Lender in
any way relating to or in furtherance of this Agreement, including the loan
documents entered into by Borrower and Lender with respect to funds loaned by
Lender to Borrower for the payment of certain expenses identified in
Section 10.2(A) hereof, in each case as originally executed or as the same may
from time to time be supplemented, modified, amended, restated or extended;
provided, however, that the agreements entered into by Borrower and Lender,
Lender's Agent or Lender's Affiliates pursuant to Section 7.6 below shall not be
considered "Loan Documents" for purposes of this Agreement.
1.27 "Material Adverse Effect" shall mean any set of circumstances or
events which (i) was initiated or approved by Borrower or any of its
Subsidiaries and which has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of this Agreement
or any other Loan Document, (ii) is or could reasonably be expected to be
material and adverse to the condition (financial or otherwise), or business
operations of Borrower and its Subsidiaries, taken as a whole, (iii) materially
impairs or could reasonably be expected to materially impair the ability of
Borrower to satisfy the Liabilities, or (iv) was initiated or approved by
Borrower or any of its Subsidiaries and which materially impairs or could
reasonably be expected to materially impair the ability of Lender to enforce its
legal remedies pursuant to the Loan Documents.
1.28 "Maximum Lawful Rate" shall have the meaning assigned to it in
Section 2.7 of this Agreement.
1.29 "Nonrevolving Credit Advance" shall mean any disbursement by Lender
of any of the proceeds of the Nonrevolving Credit Loan.
1.30 "Nonrevolving Credit Loan" shall have the meaning assigned to it in
Section 2.1 of this Agreement.
1.31 "Nonrevolving Credit Note" shall mean that certain Credit Note
(including any modifications, renewals, extensions and replacements thereof) in
the original principal amount of the Nonrevolving Credit Loan, to be dated as of
the date of the first Nonrevolving Credit Advance and executed and delivered by
Borrower to Lender on the date of the first Nonrevolving Credit Advance to
evidence the obligations, repayment terms and conditions of the Nonrevolving
Credit Loan. A form of the Nonrevolving Credit Note is attached hereto as
Schedule 1.31.
1.32 "Operating Expenses" shall mean, for any period, (i) all expenses,
other than extraordinary items (as defined in accordance with GAAP), of
Borrower, as determined in accordance with GAAP, (ii) minus, but only to the
extent such items shall have been included in determining selling, general and
administrative expenses, the sum of: (1) all interest paid or accrued during
such period on Indebtedness, including, without limitation, interest which is
imputed in accordance with GAAP on capitalized lease obligations which are
included in Indebtedness; (2) depreciation and amortization of assets,
including, without limitation, equipment amortization; as to all of the
foregoing, as determined in accordance with GAAP, and (3) taxes paid or accrued.
1.33 "Participant" shall mean any Person, now or at any time,
participating with Lender in the loans made by Lender to Borrower pursuant to
this Agreement or any other related agreements.
1.34 "Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity, party, or government (whether
federal, state, county, city, municipal, or otherwise, including any
instrumentality, division, agency, body, or department thereof).
1.35 "Philips" shall mean Philips Credit Corporation, a Delaware
corporation.
1.36 "Philips Debt" shall mean Borrower's obligation to Philips pursuant
to the Philips Term Loan, the Philips Revolving Loan and the notes described in
Exhibit 1.36 attached hereto.
1.37 "Philips Loan Documents" shall mean (i) that certain Promissory Note
dated as of March 9, 1989 with respect to the Philips Term Loan, (ii) that
certain Loan Agreement dated as of March 9, 1989, as amended pursuant to
(a) that certain Amendment No. 1 to Loan Agreement dated March 9, 1989, dated as
of February 14, 1990, (b) that certain Waiver and Amendment No. 2 to Loan
Agreement dated March 9, 1989, dated as of April 12, 1991 and (c) that certain
Amendment No. 3 to Loan Agreement dated March 9, 1989, dated as of August 19,
1991, with respect to the Philips Term Loan, (iii) that certain Revolving Loan
and Term Loan Agreement and Note dated as of August 19, 1991, with respect to
the Philips Revolving Loan, (iv) that certain Security Agreement, dated as of
March 9, 1989 regarding the Philips Debt, (v) those certain notes and loan
documents described in Exhibit 1.36, and (vi) any other agreements executed by
Borrower in furtherance of the Philips Debt.
1.38 "Philips Revolving Loan" shall mean that certain $1,200,000 revolving
loan made by Philips to Borrower pursuant to that certain Revolving Loan and
Term Loan Agreement and Note between Borrower and Philips, dated as of August
19, 1991, and that certain Security Agreement between Borrower and Philips,
dated as of March 9, 1989.
1.39 "Philips Term Loan" shall mean that certain $14,280,000 term loan
made by Philips to Borrower pursuant to that certain Promissory Note, Loan
Agreement and Security Agreement between Borrower and Philips, dated as of March
9, 1989, as amended.
1.40 "Preferred Stock Agreement" shall mean that certain Agreement between
Borrower and the Preferred Stock Purchasers, dated August 12, 1991, as amended
on December 31, 1991 and May 19, 1992, regarding the exchange of the Preferred
Stock Purchaser's Series A Cumulative Senior Convertible Preferred Stock of
Borrower for "Series B Preferred Stock" (as defined in the Preferred Stock
Agreement) of Borrower.
1.41 "Preferred Stock Purchasers" shall mean Cal Kovens, Frank Egger, Marc
Kovens, Roz Kovens, Lloyd Glazer, Harvey Silets, Philip D. Green and Elizabeth
Cobbs.
1.42 "Prime Rate" shall mean the rate most recently announced by Chase
Manhattan Bank at its principal office in New York, New York as its "Prime
Rate." The Prime Rate is one of Chase Manhattan Bank's base rates and serves as
the basis upon which effective rates of interest are calculated for those credit
facilities making reference thereto, and is evidenced by the recording thereof
after its announcement in such internal publication or publications as Chase
Manhattan Bank may designate. The Prime Rate may not necessarily be the lowest
interest rate at which Chase Manhattan Bank is willing to extend credit
facilities.
1.43 "Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
1.44 "Request for Advance" shall mean Borrower's request for disbursement
of a Nonrevolving Credit Advance substantially in the form of Schedule 1.44
hereto, signed by an Authorized Representative and properly completed to provide
all information required to be completed therein.
1.45 "Reserves" shall mean reserves for returns, allowances, and the like
as may be established by Borrower or as may otherwise be required in accordance
with GAAP.
1.46 "Solvent" when used with respect to Borrower, shall mean that
Borrower has sufficient working capital to pay its debts as they become due,
which debts do not include any dividends on Stock.
1.47 "Special Collateral" shall mean any agreement, instrument, and/or
document relating to, covering, or evidencing any portion of the Collateral or
Borrower's rights with respect thereto, including the Warrant, promissory notes,
documents of title, warehouse receipts, security agreements, and assignments of
loan proceeds.
1.48 "Stock" shall mean all shares, options, warrants, interests,
participations, or other equivalents, howsoever designated, of or in a
corporation or equivalent entity, whether voting or non-voting, including common
stock, preferred stock, convertible debentures, and all agreements, instruments,
any other "option" (as such term is defined in temporary Treasury Regulation
1.382-2T(h)(4)(v) promulgated under the Internal Revenue Code), or any other
"equity security" (as such term is defined in Rule 3all-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended), and documents convertible, in
whole or in part, into any one or more or all of the foregoing.
1.49 "Subsidiary" shall mean any corporation of which fifty percent (50%)
or more of the outstanding shares of each class having voting power (other than
shares having such power by reason of the happening of a contingency) is at the
time owned or controlled, directly or indirectly, by Borrower.
1.50 "Supplemental Documentation" shall mean agreements, instruments,
documents, financing statements, warehouse receipts, bills of lading, and other
written matter necessary or requested by Lender to perfect and/or maintain the
perfection of Lender's Lien upon the Collateral and to consummate the
transactions contemplated in or by this Agreement and any other Loan Documents.
1.51 "Term" shall mean a period from the Closing Date until and including
March 31, 2000.
1.52 "Termination Date" shall mean the earliest to occur of (i) the
expiration of the Term, assuming that all Liabilities hereunder have been
completely and finally paid and discharged, whether by prepayment or otherwise,
or (ii) the date on which all Liabilities hereunder have been completely and
finally paid and discharged, whether by prepayment or otherwise.
1.53 "UCC" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
1.54 "Warrant" shall mean that certain Common Stock Purchase Warrant to be
delivered by Borrower to Lender's Agent on the Closing Date, in a form
acceptable to Lender's Agent.
1.55 Other Terms: All other terms hereinbefore or hereinafter defined,
including, without limitation, all terms defined in the preamble and recitals
hereto, shall have the meanings herein assigned to such terms. All terms used
in the above definitions and all other terms contained in this Agreement, where
the context so indicates or requires, shall have the meanings provided by the
UCC as in effect in the State of California to the extent the same are used or
defined therein. Any accounting terms used in this Agreement and not
specifically defined herein shall have the meanings given them in accordance
with GAAP, and all financial computations hereunder shall be computed, unless
otherwise specifically provided herein, in accordance with GAAP, consistently
applied. That certain terms or computations are explicitly modified by the
phrase "in accordance with GAAP" shall in no way be construed to limit the
foregoing.
1.56 Rules of Construction: Except as otherwise specifically provided in
this Agreement, the singular of any term shall include the plural, and vice
versa, the use of any term shall be equally applicable to any gender, "or" shall
not be exclusive, and "including" shall not be limiting. The words "herein,"
"hereof," and "hereunder" and other words of similar import refer to this
Agreement as a whole, including the Exhibits and Schedules hereto, as the same
may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this Agreement. Any
reference to a "Section," "Exhibit," or "Schedule" shall refer to the relevant
Section of, or Exhibit or Schedule to, this Agreement, unless specifically
indicated to the contrary.
2. LOAN: GENERAL TERMS
2.1 Nonrevolving Credit Loan. Subject to the terms and conditions of
this Agreement, and in reliance upon the representations and warranties made
under or pursuant to this Agreement, Lender shall make Nonrevolving Credit
Advances from time to time to Borrower, on and after the Closing Date until
March 31, 1995, in an aggregate amount not to exceed Six Million Dollars
($6,000,000) (the "Nonrevolving Credit Loan"). Amounts borrowed by Borrower
under the Nonrevolving Credit Loan and subsequently repaid to Lender, whether by
prepayment or otherwise, may not be reborrowed by Borrower. Borrower's
obligation to repay Nonrevolving Credit Advances, together with interest
thereon, at the interest rate specified by the Nonrevolving Credit Note and
Section 2.2(A) below, whether by prepayment, acceleration or otherwise, shall be
evidenced by this Agreement and the Nonrevolving Credit Note. The Nonrevolving
Credit Note shall be (i) in substantially the form attached hereto as Schedule
1.31, (ii) dated as of the date of the first Nonrevolving Credit Advance, and
(iii) duly executed and delivered to Lender on the date of the first
Nonrevolving Credit Advance by a duly authorized officer of Borrower.
2.2 Interest on Loan.
(A) Nonrevolving Credit Loan. Except as otherwise provided in this
Agreement, each Nonrevolving Credit Advance made by Lender to Borrower prior to
September 31, 1993, shall bear interest, payable monthly, calculated daily on
the basis of a three hundred sixty (360) day year until paid in full at the
interest rate of ten and one-fourth percent (10-1/4%). Each Nonrevolving Credit
Advance made by Lender to Borrower on or after September 31, 1993 until March
31, 1995 shall bear interest, payable monthly, calculated daily on the basis of
a three hundred sixty (360) day year until paid in full at the interest rate of
the prevailing Prime Rate on the date the Nonrevolving Credit Advance is made by
Lender, plus three and three-fourths percent (3-3/4%). The amount of interest
payable by Borrower on the Nonrevolving Credit Loan shall be computed with
respect to each Nonrevolving Credit Advance only from the date of such
Nonrevolving Credit Advance.
(B) General. Interest which has accrued and is not paid monthly by
Borrower, whether pursuant to Section 2.3(A) below or otherwise, shall be added
to the principal balance due under the Nonrevolving Credit Note (as set forth in
such Nonrevolving Credit Note) for purposes of subsequent calculations of
interest due hereunder and thereunder.
2.3 Payment of Liabilities.
(A) Deferral. Assuming there is no Default or Event of Default under
this Agreement, no payment of principal and interest under the Nonrevolving
Credit Note shall be due and payable until December 31, 1992 and any interest
that has accrued with respect to each Nonrevolving Credit Advance in each
calendar month from the Closing until December 1, 1992 shall, in lieu of such
payments, be added to principal during the following calendar month and shall be
due and payable during the balance of the Term of this Agreement as and when
regular payments of principal and interest are otherwise due hereunder and under
the Nonrevolving Credit Note.
(B) Nonrevolving Credit Loan. Except as otherwise provided in this
Agreement, Borrower shall repay the aggregate principal amount of the
outstanding Nonrevolving Credit Advances made by Lender in consecutive monthly
installments, commencing on December 31, 1992, or the last Business Day of the
first month thereafter in which the initial Nonrevolving Credit Advance is made
by Lender, as appropriate, and continuing on the last Business Day of each
calendar month thereafter with a final payment of the entire principal balance
and accrued interest then outstanding on the last Business Day of March, 2000.
Notwithstanding the foregoing, but subject to Section 2.3(A) above, interest
only with respect to a Nonrevolving Credit Advance shall be paid on the last
Business Day of any calendar month during which such Nonrevolving Credit Advance
is made; thereafter, equal amortizing installments of principal and interest on
each outstanding Nonrevolving Credit Advance, based on the interest rate that is
applicable to such Nonrevolving Credit Advance, shall be paid on the last
Business Day of each calendar month from and including the first full calendar
month following the making of each such Nonrevolving Credit Advance through
March, 2000, as set forth above. Payment amounts shall not be reamortized
monthly following each payment of principal by Borrower. Lender shall provide
Borrower with notice of (i) the amount of the initial Nonrevolving Credit Loan
payment required to be made, which notice shall be provided at the time the
initial Nonrevolving Credit Advance is made to Borrower; (ii) the amount of the
payment during any calendar month in which a subsequent Nonrevolving Credit
Advance is made, which payment shall include (a) interest only with respect to
such Nonrevolving Credit Advance, and (b) principal and interest with respect to
all prior Nonrevolving Credit Advances, which notice shall be provided at the
time such Nonrevolving Credit Advance is made; and (iii) the adjusted payment
amount in each month following any month in which a Nonrevolving Credit Advance
was made, which payment shall include principal and interest with respect to all
outstanding Nonrevolving Credit Advances, which notice shall be provided no
later than the twentieth (20th) day of the month in which the first of such
payments is due. The date and amount of each payment of principal and interest
with respect to each Nonrevolving Credit Advance shall be recorded on a schedule
attached to the Nonrevolving Credit Note, which schedule shall, absent obvious
facial error, constitute prima facie evidence of the accuracy of the information
therein recorded.
(C) Other Liabilities. Except where evidenced by the Nonrevolving
Credit Note or other notes or instruments issued or made by Borrower to Lender
specifically containing provisions that conflict with this Section 2.3(C) (in
which event the conflicting provisions of such notes or other instruments shall
govern and control), that portion of the Liabilities consisting of costs, fees,
charges, or expenses payable pursuant to this Agreement shall be payable by
Borrower to Lender or to such Persons designated by Lender in writing, upon
fifteen (15) Business Days' prior written notice to Borrower.
2.4 Manner of Payment. All payments of principal, interest and other
amounts payable under this Agreement and the Notes shall be made to Lender at
Bankers Trust Co., 1 Bankers Trust Plaza, New York, New York 10015, Attention:
Susan Prince (or at such other place or places as Lender may designate from time
to time in writing to Borrower) not later than 2:00 P.M. prevailing Pacific Time
on the due date therefor in lawful money of the United States in Federal or
other funds immediately available to Lender in New York, New York (or at such
other place of payment as Lender may designate as provided immediately above).
Any payment received after 2:00 P.M. prevailing Pacific Time shall be deemed to
have been received on the following Business Day. If any payment becomes due
and payable on a day other than a Business Day, then such payment shall be due
and payable on the next succeeding Business Day. Any payment due hereunder on
one date and payable no later than a specified subsequent date that is not paid
by such subsequent date (or within the applicable grace period provided in
Section 9.1(A) hereof) shall thereafter bear interest from the date originally
due. Borrower shall pay principal, interest, fees and all other amounts payable
hereunder or under the Notes without any deduction whatsoever, including, but
not limited to, any deduction for any set-off or counterclaim.
2.5 Loan Purpose. Borrower shall use the proceeds of any Nonrevolving
Credit Advances to finance corporate growth in connection with the acquisition,
development and improvement of diagnostic imaging businesses by Borrower.
Nonrevolving Credit Advances made to Borrower are subject to Lender's prior
written approval, which may not be unreasonably withheld. Further, Borrower's
use of the proceeds of any Nonrevolving Credit Advance shall be only for legal
and proper corporate purposes (which purposes have, if required by Delaware law,
been duly authorized by Borrower's Board of Directors) consistent with all
applicable laws, statutes, and regulations.
2.6 All Extensions of Credit to Constitute One Loan. The Nonrevolving
Credit Advances and all other financial accommodations made by Lender or
Lender's Agent to Borrower under this Agreement or any other document or
instrument shall constitute one loan. All indebtedness, obligations, and
Liabilities of Borrower to Lender under this Agreement shall constitute one
obligation secured by Lender's Lien upon all Collateral and by all other Liens,
security interests, claims and encumbrances heretofore, now, or at any time or
times hereafter granted by Borrower to Lender. Borrower agrees that all of the
rights of Lender set forth in this Agreement and the other Loan Documents shall
apply to any modification of or supplement to this Agreement and the other Loan
Documents, except as otherwise specifically provided in any such modification.
Notwithstanding the foregoing, the parties acknowledge that (i) any loans or
financial accommodations made by Lender, Lender's Agent or Lender's Affiliates
to Borrower pursuant to Section 7.6 hereof, and (ii) any obligations of Borrower
to Lender or Lender's Agent pursuant to equipment leases entered into by
Borrower and Lender or Lender's Agent subsequent to the date hereof, shall be
excluded from the provisions of this Section 2.6.
2.7 Excessive Interest. If at any time the interest rate or any interest
rate charged pursuant to the terms of this Agreement or any note or other
instrument issued pursuant hereto, exceeds the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable hereto (the "Maximum Lawful Rate"), then, in such event, and so
long as the amount payable under the Maximum Lawful Rate would be so exceeded,
the amount of interest payable hereunder shall be equal to the amount payable
under the Maximum Lawful Rate. Thereafter, the amount of interest payable
hereunder shall be the amount determined in accordance with the terms hereof
unless and until the amount so calculated again exceeds the amount payable under
the Maximum Lawful Rate, in which event this paragraph shall again apply. In no
event shall the total interest received by Lender pursuant to the terms hereof
exceed the amount which Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate.
In the event the amount payable under the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 2.7, shall make a
final determination that Lender has received interest hereunder or under any
other agreements in excess of the amount payable under the Maximum Lawful Rate,
Lender shall, to the extent permitted by applicable law, promptly apply such
excess in the following order: (i) to the then due and payable fees and
expenses; (ii) to the then due and payable interest payments on the Nonrevolving
Credit Loan; (iii) to the then due and payable principal payments on the
Nonrevolving Credit Loan; (iv) then to any other unpaid Liabilities; and (v)
thereafter as a refund to Borrower or as a court of competent jurisdiction may
otherwise order.
2.8 Term. The term of this Agreement shall be a period from the Closing
Date until and including March 31, 2000 (the Term"), unless terminated sooner in
accordance with the provisions of this Agreement. Notwithstanding any provision
herein to the contrary, Borrower and Lender expressly agree that the
Nonrevolving Credit Loan shall be due and payable at any time any Liability of
Borrower to Lender is accelerated or terminated (except by prepayment) in
accordance with this Agreement or any other agreement evidencing such Liability.
2.9 Optional Prepayments. Borrower may prepay the Nonrevolving Credit
Note in whole or in part, without premium or penalty, upon at least three (3)
Business Days' written, telex or telegraphic notice to Lender specifying the
date and the amount of prepayment; provided, however, that partial prepayments
shall be in the amount of One Hundred Thousand Dollars ($100,000) or an integral
multiple thereof. Partial prepayments of the Nonrevolving Credit Note shall be
applied on account of the installments of principal thereof in the inverse order
of the normal maturity thereof, except as otherwise provided in this Agreement.
All prepayments shall be accompanied by accrued interest on the principal amount
being prepaid to the date of prepayment. Prepayments of the Nonrevolving Credit
Note may not be reborrowed, and such prepaid amounts shall not increase the
remaining principal amount available to Borrower.
2.10 Commitment Fee. The parties acknowledge that Borrower has paid the
Commitment Fee to Lender's Agent.
2.11 Application of Payments and Collections. Upon the occurrence and
during the continuance of any Default or Event of Default, Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times hereafter received by Lender from or on behalf
of Borrower, and Borrower irrevocably agrees that Lender shall have the
continuing exclusive right to apply and reapply any and all such payments and
collections received at any time or times hereafter by Lender or its agents
against the Liabilities and in repayment of the Nonrevolving Credit Loan and
other Liabilities in such manner as Lender may deem advisable, notwithstanding
any entry by Lender upon any of its books and records.
2.12 Loan Servicing. The parties acknowledge that while Lender shall make
the Nonrevolving Credit Advances to Borrower hereunder, the Nonrevolving Credit
Loan shall be serviced and monitored by Lender's Agent. Accordingly, Lender may
give Lender's Agent a power of attorney to take certain action on behalf of
Lender to provide and receive notices, to approve or disapprove Requests for
Advances, to approve or disapprove requests to take action prohibited hereunder
and other requests or approvals required by Lender hereunder. Thus, any
requests, approvals, disapprovals, notices or other communications received by
Borrower in connection with this Agreement or the Loan Documents from Lender's
Agent as Lender's agent-in-fact shall be treated by Borrower as if such notices
and communications were received from Lender directly. All action taken by
Lender's Agent on behalf of Lender shall be subject to the terms of this
Agreement. Borrower's obligations to Lender's Agent hereunder shall be for the
express benefit of Lender. Failure of Borrower to perform any obligation
hereunder to Lender's Agent shall be construed as a Default or Event of Default
hereunder, as the case may be, and the failure of Lender's Agent to perform any
obligation hereunder on behalf of Lender in accordance with the terms of this
Agreement shall be a breach by Lender.
3. LOAN DISBURSEMENTS
3.1 Procedures for Receiving Nonrevolving Credit Advances. Provided that
a Default or an Event of Default does not exist, Borrower may request a
Nonrevolving Credit Advance hereunder to or for the account of Borrower upon
notice by an Authorized Representative to Lender at least twenty-five (25)
Business Days prior to the date of the proposed Nonrevolving Credit Advance
("Request for Advance"). Each such Request for Advance shall be in writing to
the attention of the Investment Manager of Lender or other person designated for
such purpose by Lender at North 14, West 23833 Stone Ridge Drive, Suite 300,
Waukesha, Wisconsin 53188, in substantially the form of Schedule 1.44 attached
hereto, specifying (i) the requested date and amount of such Nonrevolving Credit
Advance, (ii) the account to which such Nonrevolving Credit Advance should be
directed, and (iii) a detailed description that is reasonably acceptable to
Lender of the proposed use of the proceeds of the Nonrevolving Credit Advance.
Lender shall approve or disapprove a Request for Advance within twenty-five (25)
Business Days' after receipt thereof, and deliver to Borrower a copy of the
Request for Advance indicating its approval or disapproval of the Nonrevolving
Credit Advance within such twenty-five (25) day period, which approval may not
be unreasonably denied; provided, however, that Lender may require additional
information regarding Borrower's use of the proceeds of a Nonrevolving Credit
Advance prior to Lender's approval thereof, and shall have an additional period
of ten (10) Business Days following Lender's receipt of all such information to
consider such information. Any disapproval by Lender of a Request for Advance
shall set forth in reasonable detail Lender's reasons for denying such Request
for Advance. Each Nonrevolving Credit Advance shall be in the aggregate
principal amount of One Hundred Thousand Dollars ($100,000), or an integral
multiple thereof. Notwithstanding any other provision contained herein, the
obligation of Lender to disburse any Nonrevolving Credit Advance shall be
further subject to the satisfaction of the conditions set forth in Section 4.2
hereof.
Provided that all applicable conditions set forth in Section 4.2 have been
satisfied, Lender shall deliver a check to Borrower in the amount of the
Nonrevolving Credit Advance within two (2) Business Days after satisfaction of
such conditions. The date and amount of each Nonrevolving Credit Advance shall
be recorded on a schedule attached to the Nonrevolving Credit Note as referenced
in Section 2.3(B) above.
3.2 Disbursements to Persons Other Than Borrower. Borrower may authorize
and direct Lender to disburse, for and on behalf of Borrower and for Borrower's
account, a check in the amount of the proceeds of a Nonrevolving Credit Advance
made by Lender to Borrower pursuant to this Agreement to such bank or other
Person as Borrower shall direct in writing at any time or times hereafter;
provided, however, that Lender shall have authority to deduct and withhold from
any payment any charges required by law relating to any such payment.
3.3 No Waiver. No Nonrevolving Credit Advance shall constitute a waiver
of any condition precedent to the obligation of Lender to make any further
Nonrevolving Credit Advance.
3.4 Conditions Precedent for the Benefit of Lender. All conditions
precedent to the obligation of Lender to make any Nonrevolving Credit Advance
set forth in Section 4.2 are imposed hereby solely for the benefit of Lender,
and no other party may require satisfaction of any such condition precedent or
be entitled to assume that Lender will refuse to make any Nonrevolving Credit
Advance in the absence of strict compliance with such conditions precedent. All
requirements of this Agreement may be waived by Lender, in whole or in part, at
any time.
3.5 Limitation on Aggregate Amount of Advance. In no event shall Lender
be required to make any Nonrevolving Credit Advance if the making of such
Nonrevolving Credit Advance shall exceed the face amount of the Nonrevolving
Credit Note.
3.6 Authorized Representative. The Authorized Representative may be
changed by Borrower, from time to time, by written notice delivered to and
received by Lender from Borrower specifying the desired Authorized
Representative change. The notice specifying the change shall be executed by a
duly authorized and empowered officer of Borrower.
4. CONDITIONS PRECEDENT
4.1 Conditions Precedent of Lender to Closing. Lender's obligation to
close the transaction contemplated hereby and to perform its obligations as of
the Closing Date shall be, at the option of Lender, subject to satisfaction of
each of the following conditions (which may be waived specifically in writing by
Lender in whole or in part) at or prior to the Closing Date:
(A) Warranties True; Covenants Performed. Each of the
representations and warranties made by Borrower and set forth in this Agreement,
the Exhibits and Schedules attached hereto, the other Loan Documents or
otherwise made in writing in connection herewith shall be true and correct in
all material respects at and as of the Closing Date, and the covenants required
by this Agreement and the other Loan Documents to be performed and complied with
by Borrower as of the Closing Date shall have all been performed and complied
with in all material respects.
(B) Borrower Consents, Approvals and Authorizations. Borrower shall
have obtained all consents, approvals and authorizations of third parties
necessary in connection with the valid execution, delivery and performance of
this Agreement.
(C) Signing of Instruments. Borrower shall have executed and
delivered all documents and instruments required to be executed pursuant to the
provisions of this Agreement, including, without limitation, the Warrant.
(D) Unfavorable Action or Proceeding. On the Closing Date no action
or proceeding shall be pending or threatened against Borrower wherein an
unfavorable judgment, decree or order would, in Lender's reasonable opinion,
prevent or make unfavorable the carrying out of this Agreement, would cause the
transactions contemplated by this Agreement to be rescinded, or would have a
Material Adverse Effect on Borrower. In the event of the receipt of any
communication from any Person or any other notice (a copy of which communication
or notice shall be promptly delivered to Lender) prior to the Closing Date,
which communication or notice shall in the reasonable opinion of Lender threaten
such action or proceeding, Lender may cancel this Agreement by giving written
notice to Borrower and shall thereupon be released from any and all liability
related to this Agreement.
(E) Opinions of Counsel. Lender shall have received the favorable
opinion of Borrower's counsel dated the Closing Date, in substantially the form
attached hereto as Schedule 4.1(E).
(F) Officer's Certificate. Lender shall have received a certificate
of the President or any Vice President of Borrower dated as of the Closing Date
in a form attached hereto as Schedule 4.1(F) and certifying to Lender (i) the
accuracy of the representations and warranties set forth in this Agreement and
compliance with Borrower's covenants set forth in this Agreement that are
required to be performed as of the Closing Date, and (ii) as to Borrower's
compliance with applicable health care laws, rules and regulations relating to
the payment or receipt of illegal remuneration (collectively, the "Fraud and
Abuse Laws") to the knowledge of such officer (which officer signing the
certificate shall be sufficiently knowledgeable regarding such matters in the
reasonable judgment of Lender).
(G) Certificate of Incumbency. Lender shall have received a
certificate of the corporate Secretary of Borrower dated as of the Closing Date
and certifying to Lender (i) that attached thereto is a true and complete copy
of the Articles of Incorporation and the Bylaws of Borrower, as in effect on the
date of such certification, (ii) as to the incumbency and genuineness of the
signature of the officers of Borrower from the date hereof to the Closing Date
and bearing the authentic signatures of all such officers who shall execute this
Agreement and the other Loan Documents, (iii) as to the resolutions of the Board
of Directors of Borrower (a) authorizing the execution, delivery and performance
of this Agreement and the other Loan Documents, and (b) naming the Authorized
Representatives, (iv) that such resolutions have not been amended or rescinded
and remain in full force and effect, and (v) as to the names and true signatures
of the person or persons who are the Authorized Representatives.
(H) Preferred Stock Agreement/Warrant Agreement. The Preferred Stock
Agreement and that certain Warrant Agreement between Borrower and Omnicorp
Holdings, Inc. dated February 15, 1990, as amended shall be in a form acceptable
to Lender, including, but not limited to, containing an identical exception as
set forth in the Warrant regarding the absence of anti-dilution protection with
respect to (i) the issuance of common stock of Borrower to capitalize
wholly-owned Subsidiaries of Borrower, and (ii) shares issued pursuant to the
Warrant.
(I) Good Standing Certificates. A copy of the Certificate of
Incorporation of Borrower, and all amendments thereto, certified by the
Secretary of State of Delaware, and good standing certificates for Borrower,
issued by the Secretaries of State of the States where Borrower is qualified to
do business, as set forth in Exhibit 6.1(A).
(J) Default. There shall exist (i) no Default or Event of Default on
the Closing Date under this Agreement, or (ii) no default under any other
Indebtedness, which item of Indebtedness is in an aggregate amount of One
Hundred Thousand Dollars ($100,000) or more.
4.2 Conditions Precedent to Making Nonrevolving Credit Advance. Lender's
obligation to make any Nonrevolving Credit Advance upon the request of Borrower
shall be, at the option of Lender, in its sole and absolute discretion, subject
to satisfaction of each of the following conditions, which may be waived
specifically in writing by Lender in whole or in part prior to making the
Nonrevolving Credit Advance:
(A) Use of Proceeds. Lender shall have approved Borrower's proposed
use of the proceeds of the Nonrevolving Credit Advance, in accordance with
Section 3.1 of this Agreement.
(B) Financing Statement. Borrower shall have delivered an executed
Financing Statement describing the Property to be acquired by Borrower with the
Nonrevolving Credit Advance which, when filed, will give Lender a security
interest and Lien in such Property in accordance with Section 5.2 hereof.
(C) Default. There shall exist no Default or Event of Default at the
time the Nonrevolving Credit Advance is to be made.
(D) Representations and Warranties. The representations and
warranties made in this Agreement by Borrower, including the representation
included in Section 6.1(I) hereto, shall be true and correct in all material
respects.
(E) Officer's Certificate. Lender shall have received a certificate
of the President or any Vice President of Borrower dated as of the date of the
Nonrevolving Credit Advance, in a form attached hereto as Schedule 4.1(F),
certifying to Lender (i) the accuracy of the representations and warranties set
forth in this Agreement and compliance with Borrower's covenants set forth in
this Agreement that are required to be performed as of the date of the
Nonrevolving Credit Advance, (ii) that no Default or Event of Default has
occurred and is continuing or would result from such Nonrevolving Credit
Advance, (iii) as to the resolutions of the Board of Directors of Borrower
authorizing the Nonrevolving Credit Advance and that such resolutions have not
been amended or rescinded and remain in full force and effect, (iv) as to
Borrower's compliance with applicable Fraud and Abuse Laws (which officer
signing the certificate shall be sufficiently knowledgeable regarding such
matters in the reasonable judgment of Lender), and (v) as to such other matters
as Lender may reasonably request. The delivery of each Request for Advance by
Borrower and the receipt of the proceeds of each Nonrevolving Credit Advance
referred to therein shall each constitute a representation and warranty by
Borrower that each of the foregoing statements shall be true as of the date of
such Nonrevolving Credit Advance.
(F) Other Documents. Lender shall have received such other
instruments, information, approvals, opinions or documents as Lender may request
in its sole and absolute discretion.
(G) Financial Condition. Lender reserves the right not to fund a
Nonrevolving Credit Advance if prior to such fundings there is a change in the
financial condition or prospects of Borrower which could have a Material Adverse
Effect on Borrower or such financial condition is not as represented in Section
6.1(N) hereof.
(H) Legal Matters. Lender reserves the right not to fund a
Nonrevolving Credit Advance should any material legal matter incident to or in
connection with the transactions hereby contemplated prove unsatisfactory in the
reasonable discretion of Lender's counsel.
(I) Insurance. Borrower shall have delivered an endorsement in form
and substance reasonably acceptable to Lender showing loss payable to Lender (i)
with respect to the Equipment to be acquired by Borrower with the proceeds of
the Nonrevolving Credit Advances as its interests appear, and (ii) with respect
to the other Property to be acquired by Borrower with the Nonrevolving Credit
Advances, as appropriate and as reasonably required by Lender based on the
priority of Lender's Lien on such Property as provided in Section 5.2 hereof.
(J) Warrant. Lender shall have the right to exercise a Warrant for
shares of Borrower as provided in the Warrant, and Borrower shall have obtained
all required approvals as provided in Section 2.1(ii) thereof, if any.
(K) Priority of Security Interest. Lender's security interest in all
real property, personal property or intangible property that is purchased by
Borrower with the proceeds of a Nonrevolving Credit Advance will be as set forth
in Section 5.2 hereof.
(L) Borrower Consents, Approvals and Authorizations. Borrower shall
have obtained all consents, approvals and authorizations of third parties
required in connection with obtaining the Nonrevolving Credit Advance, including
Philips, which consents shall be in a form and substance acceptable to Lender in
its sole and absolute discretion.
(M) Leases. All of Borrower's obligations under the equipment leases
between Borrower and Lender that have accrued as of the date of the Nonrevolving
Credit Advance shall have been satisfied in full by Borrower.
(N) Nonrevolving Credit Note. Borrower shall have executed and
delivered the Nonrevolving Credit Note in the form attached hereto as Schedule
1.31 to Lender.
(O) Opinions of Counsel. Lender shall have received the favorable
opinion of Borrower's counsel dated the date the first Nonrevolving Credit
Advance is made to Borrower in form and substance satisfactory to Lender in its
sole and absolute discretion to the effect that (a) the Warrant was duly
authorized, validly issued and is enforceable in accordance with its terms,
subject only to customary exceptions as to equitable remedies and bankruptcy and
(b) the Common Stock underlying the Warrant will, when issued and paid for in
accordance with the terms of the Warrant, be duly and validly issued, fully paid
and nonassessable. Furthermore, said opinion shall cover favorably such matters
as Lender may in its sole and absolute discretion require, including without
limitation the following: the due authorization, delivery and enforceability of
the Nonrevolving Credit Note; no violations, liens or breaches caused by
Nonrevolving Credit Advances; the validity and enforceability of security
interests to be granted under this Agreement and the perfection and first
priority thereof; documentary stamp and other taxes; the consent of Philips to
the transactions contemplated by this Agreement; no judgments, orders or other
legal restraints affecting such transactions; no defaults under agreements
material to Borrower; and such other relevant items as Lender may specify.
4.3 Other Conditions Precedent. Lender's obligation to make any Section
7.6 Equipment Financings (as defined in Section 7.6 below) shall be, at the
option of Lender in its sole and absolute discretion, subject to satisfaction of
each of the following conditions, which may be waived specifically in writing by
Lender in whole or in part prior to making the Section 7.6 Equipment Financings:
(A) Default. There shall exist no Default at the time the Section
7.6 Equipment Financing is to be made.
(B) Borrower Consents, Approvals and Authorizations. Borrower shall
have obtained all consents, approvals and authorizations of third parties
required in connection with obtaining the Section 7.6 Equipment Financing,
including Philips, which consents shall be in a form and substance acceptable to
Lender in its sole and absolute discretion.
(C) Priority of Security Interest. Lender shall have a first
priority purchase money security interest in the equipment and other related
property purchased by Borrower with the proceeds of the Section 7.6 Equipment
Financings.
5. COLLATERAL
5.1 Security Interest. To secure the prompt and complete payment and
performance by Borrower when due of the Liabilities, Borrower shall, on the date
of the initial Nonrevolving Credit Advance, grant, sell, assign, convey, pledge,
hypothecate and transfer to Lender for the benefit of Lender, a continuing
security interest in and Lien in accordance with Section 5.2 hereof upon all of
the following Property and interests in Property of Borrower, whether now owned
or existing or hereafter acquired or arising and wherever located (all of which
Property, together with all other personal Property and interests in personal
property which shall from time to time secure the Liabilities being hereinafter
collectively called the "Collateral"):
(A) all Property acquired in whole or in part with the proceeds of
any Nonrevolving Credit Advance, as such Property is more particularly described
in the Financing Statement required to be delivered by Borrower in connection
with each Nonrevolving Credit Advance and in Exhibit 5.1(A) attached hereto, as
provided in Section 4.2(B) above;
(B) all leases, conditional sale contracts, security agreements,
contracts, contract rights, service agreements, and other agreements related to
the Collateral or any part thereof and all renewals and extensions thereof, and
all amounts, rents, profits, and rights and other sums of money due and to
become due under such leases, conditional sales contracts, contract rights,
security agreements, contracts, and other agreements for use or purchase of the
Collateral and all renewals and extensions thereof; and
(C) without in any way limiting the foregoing, the proceeds of any of
the foregoing, whether derived from voluntary or involuntary disposition,
products of the foregoing, and all renewals, replacements, substitutions,
additions, accessions, and profits of any of the foregoing, whether now owned,
existing or hereafter acquired or arising.
5.2 Priority of Security Interest. The priority of Lender's Lien and
security interest in the Collateral granted by Borrower to Lender pursuant to
Section 5.1 hereof shall be as follows:
(A) Lender shall have a first priority Lien and purchase money
security interest in (i) all Equipment or other real or personal property that
(a) is purchased by Borrower with the proceeds of a Nonrevolving Credit Advance,
and (b) is unencumbered at the time of Borrower's purchase; and (ii) all
property, rights and other interests identified in Subsections 5.1(B) and (C)
hereof with respect to the property described in this Subsection 5.2(A).
(B) Except as provided in Subsection 5.2(C) below, Lender shall have
a second priority Lien and security interest ahead of Philips in (i) all real
and personal property that (a) is purchased by Borrower with the proceeds of a
Nonrevolving Credit Advance, and (b) is encumbered at the time of Borrower's
purchase; and (ii) all property, rights and other interests identified in
Subsections 5.1(B) and (C) above with respect to the property described in this
Subsection 5.2(B).
(C) Lender shall have a second priority Lien and security interest
junior to Philips in all accounts receivable purchased by Borrower with the
proceeds of a Nonrevolving Credit Advance, including all proceeds of such
accounts receivable.
5.3 Disclosure of Security Interest. Borrower shall make appropriate
entries in its financial statements and its books and records disclosing
Lender's Lien on the Collateral.
5.4 Lender's Payment of Claims Asserted Against Borrower. Except as
provided in Section 9.4 hereof, Lender may, at any time hereafter, in its sole
discretion and without waiving or releasing any obligation, Liabilities, or duty
of Borrower under this Agreement or any Event of Default, pay, acquire, or
accept an assignment of any Lien asserted after a default by Borrower in the
payment or performance of the obligation secured by such Lien by any Person
against the Collateral or cure any default of Borrower under any contract or
agreement; provided, however, that Lender shall not take such action unless
Lender shall first give Borrower written notice of its intent to do so, and
Borrower does not, within ten (10) days of such notice, pay such claim or obtain
to Lender's reasonable satisfaction the release of the Liens to which such
notice relates. Notwithstanding the foregoing, Lender shall take no action to
pay any Lien referenced in this Section 5.4 if Borrower is taking all reasonable
action necessary to remove such Lien and is proceeding diligently with such
removal, as determined in the reasonable discretion of Lender. All amounts
advanced by Lender under this Section 5.4 and all costs, fees, and expenses,
including reasonable attorneys' fees, court costs, expenses, and other charges
relating thereto, incurred by Lender on account thereof, shall be payable, on
demand, by Borrower to Lender and shall be Liabilities hereunder secured by the
Collateral.
5.5 Termination Statements. Borrower acknowledges and agrees that it is
Borrower's intent that all Financing Statements filed hereunder shall remain in
full force and effect until this Agreement shall have been terminated in
accordance with the provisions hereunder, even if, at any time or times prior to
such termination, no loans or advances shall be outstanding under this
Agreement. Accordingly, Borrower waives any rights which it may have under the
UCC to demand the filing of termination statements with respect to the
Collateral, and agrees that Lender shall not be required to send such
termination statements to Borrower, or to file them with any filing office,
unless and until this Agreement shall have been terminated in accordance with
its terms and all liabilities paid in full in immediately available funds.
6. WARRANTIES AND REPRESENTATIONS OF BORROWER
6.1 Warranties and Representations. Borrower warrants and represents to
Lender that:
(A) Existence and Qualification; Power; Good Standing. Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, the state of its incorporation. Borrower has the full
corporate power and authority to own, lease and operate its properties and
assets as presently owned, leased and operated, to carry on its business as it
is now being conducted. Borrower is duly qualified and in good standing to do
business in each jurisdiction in which the character of its properties or the
character of its business requires such qualification, license or good standing.
Exhibit 6.1(A) sets forth Borrower's chief executive office, (ii) principal
place of business, and (iii) a complete list of all jurisdictions in which
Borrower is qualified to do business. Borrower has previously delivered to
Lender's Agent complete and correct copies of the Restated Certificate of
Incorporation and Bylaws of Borrower as currently in effect.
(B) Authority; Binding Obligations. Borrower has the requisite
corporate power and authority, and has taken all necessary corporate and other
actions, necessary to enter into, execute, deliver and perform this Agreement
and all other Loan Documents. This Agreement and each of the other Loan
Documents have been duly executed and delivered by Borrower and are the legal,
valid and binding obligations of Borrower enforceable against Borrower, in
accordance with their respective terms, subject as to the enforcement of
remedies only, to limitations imposed by general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity) and the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application relating
to or affecting creditors' rights generally. This Agreement, along with all
action required to fully perfect Lender's security interest hereunder will
create a valid and perfected security interest in and Lien on all Collateral
when acquired by Borrower in accordance with Section 5.2 hereof, enforceable
against all third parties. All filings and other actions necessary or desirable
to protect and perfect such Lien and security interest in each item of the
Collateral have been duly made or taken or will be duly made or taken when such
Collateral is acquired by Borrower.
(C) Compliance of Loan Documents with Laws/Agreements. Provided that
Borrower obtains the consents identified in Exhibit 6.1(G), the execution,
delivery and performance by Borrower of this Agreement shall not, by the lapse
of time, the giving of notice, or otherwise, directly or indirectly (i)
constitute a violation of any applicable law, rule, regulation (excluding
applicable Fraud and Abuse Laws), order, writ, judgment, injunction, decree,
determination, or award presently in effect having applicability to Borrower,
(ii) result in a default under or a breach of any provision contained in
Borrower's Restated Articles of Incorporation or By-Laws or, any indenture,
loan, mortgage, lease, or deed of trust, agreement relating to the borrowing of
monies, instrument, document or, to Borrower's knowledge, any agreement, to
which Borrower is now a party or by which it is bound, the violation or breach
of which would in any of such cases have a Material Adverse Effect on Borrower
or result in the creation or imposition of any material Lien, charge or
encumbrance upon any of the Collateral. The execution, delivery and performance
by Borrower of (i) this Agreement, except for Nonrevolving Credit Advances that
would require the consents referenced in Exhibit 6.1(G), (ii) the Warrant, (iii)
that certain Promissory Note from Borrower to Lender of even date herewith in
the aggregate principal amount of $197,871.40 and (iv) that certain Addendum to
Various Masterline, Leaseline and Maxiservice Agreements between Borrower and
Lender's Agent of even date herewith, shall not, by the lapse of time, the
giving of notice, or otherwise, directly or indirectly, result in a default
under or a breach of any provision contained in the Philips Loan Documents.
Borrower is not a party to, or otherwise subject to, any provision contained in
any instrument evidencing Indebtedness of Borrower, any agreement relating
thereto, or any other contract or agreement (including its charter) that limits
the amount of, or otherwise imposes restrictions on, the incurring of
obligations by Borrower that would have a Material Adverse Effect on the ability
of Borrower to perform its obligations hereunder or under any other Loan
Document.
(D) Use of Proceeds. Borrower's use of the proceeds of all
Nonrevolving Credit Advances is and will continue to be for the uses set forth
in this Agreement, and are legal and proper corporate uses and such uses are (i)
consistent with all applicable laws, rules and regulations in effect as of the
date hereof (excluding applicable Fraud and Abuse Laws), and (ii) to Borrower's
knowledge, consistent with applicable Fraud and Abuse Laws.
(E) Absence of Defaults. Borrower has not breached any material
provisions of, and is not in default in any material respect under the terms of,
and has not engaged in any activity which would cause revocation or suspension
of, any governmental license, franchise, permit, authorization, and, to
Borrower's knowledge, no action or proceeding seeking or contemplating the
revocation or suspension of any thereof is pending or threatened. Borrower is
not in default under or in breach of any law, rule, regulation (excluding
applicable Fraud and Abuse Laws), order, writ, judgment, injunction, decree,
determination or award that will have a Material Adverse Effect upon Borrower.
Borrower is not in default, nor to Borrower's knowledge is any third party in
default, under or with respect to any contract, agreement, lease, or other
instrument to which Borrower is a party, except for any default that (either
individually or collectively with other defaults arising out of the same event
or events) would not have a Material Adverse Effect upon Borrower. No Default
or Event of Default has occurred and is continuing.
(F) Licenses and Permits. Borrower possesses and is in good standing
with respect to all licenses (including without limitation lending licenses),
franchises, permits and other authorizations materially necessary to continue to
conduct its business as heretofore conducted.
(G) Consents and Approvals. Except as set forth in Exhibit 6.1(G)
attached hereto, no consent, approval, permit, waiver, authorization or other
action of or by any court, governmental or nongovernmental Person or entity, is
required or will be necessary in connection with the execution, delivery or
performance of this Agreement or any other document contemplated hereby by
Borrower. Borrower shall be responsible for and shall take any and all steps
necessary, at its sole expense, to obtain all such consents, approvals and
authorizations prior to the Closing Date except as expressly provided to the
contrary in Exhibit 6.1(G) and shall keep Lender informed as to the status of
obtaining such consents. All such consents, approvals and authorizations shall
be approved as to form by Lender in writing.
(H) Solvency. After giving effect to each of the Nonrevolving Credit
Advances under this Agreement, Borrower is and shall be Solvent.
(I) Title to Collateral. On the date of the Nonrevolving Credit
Advance, Borrower will have good, indefeasible, and merchantable title to and
ownership of the Collateral, free and clear of all Liens except those of Lender
and those set forth in Exhibit 6.1(I) attached hereto, which Liens and Lender's
Lien will be in the priority set forth in Section 5.2 hereof. Notwithstanding
any other provision of this Agreement to the contrary, the representation
included in this Section 6.1(I) shall not be effective until the date of the
first Nonrevolving Credit Advance.
(J) Burdensome Provisions; Disputes. To Borrower's knowledge and
except as set forth in Exhibit 6.1(J) attached hereto, Borrower is not (i) a
party to any contract, agreement or other instrument or subject to any charge,
corporate restriction, judgment, decree, or order that has or may have a
Material Adverse Effect on Borrower, (ii) a party to any material labor dispute,
(iii) the subject of any material pending or threatened strikes or walkouts
relating to any labor contract, and (iv) a party to any collective bargaining
agreement that is scheduled to expire during the Term. To Borrower's knowledge,
Borrower is not bound by any provision of any applicable law or governmental
regulation (excluding applicable Fraud and Abuse Laws), that has a Material
Adverse Effect upon Borrower or, insofar as Borrower can reasonably foresee,
will have a Material Adverse Effect upon Borrower.
(K) Compliance with Laws. Except as set forth in Exhibit 6.1(K)
attached hereto, Borrower has materially complied with and is not in default in
any material respect under any law, ordinance, requirement, regulation or order
(including, without limitation, any environmental, zoning or building laws,
ordinances, requirements, regulations or orders and excluding applicable Fraud
and Abuse Laws) applicable to its business, operations or properties, and
Borrower has received no notice and is unaware of any claimed default with
respect to the foregoing.
(L) Securities Act. Borrower's execution and delivery of this
Agreement does not directly or indirectly violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto, including Regulations U, G, T and X, as at any time
amended of the Board of Governors of the Federal Reserve System (12 CFR Sections
221, 207, and 220, respectively) or any other regulation in substance
substituted therefor, and, except as previously disclosed to Lender's Agent in
writing, Borrower does not own or intend to purchase or carry any "margin
security" as defined in such Regulations.
(M) Investment Company Act. Borrower is not an "investment company"
nor an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended. The making of the Nonrevolving Credit Advances by Lender, the
application of the proceeds and the repayment thereof by Borrower, and the
consummation of the transactions contemplated by this Agreement will not violate
any provision of the Investment Company Act or any rule, regulation, or order
issued by the Securities and Exchange Commission thereunder (i) that
specifically affects the business conducted by Borrower or transactions into
which Borrower may enter, or, (ii) to Borrower's knowledge, that specifically
affects the business conducted by Lender or transactions into which Lender may
enter.
(N) Financial Statements. The financial statements, interim
financial statements and balance sheets of Borrower as of December 31, 1991
previously delivered by Borrower to Lender's Agent and required to be delivered
by Borrower to Lender during the term of this Agreement under Section 8.1 (i)
are and will be true, complete and correct in all material respects, (ii)
present and will present fairly and accurately the financial condition of
Borrower and its Subsidiaries, respectively, and the results of their respective
operations at the dates and for the periods indicated, and (iii) have and will
have been prepared in conformity with GAAP, applied consistently for the periods
specified, except that the interim financial statements need not contain any of
the footnotes required to comply with GAAP. From and after December 31, 1991,
Borrower has not made any changes in its accounting methods or practices.
(O) Litigation or Claims. Except as set forth in Exhibit 6.1(O)
attached hereto (said matters set forth in Exhibit 6.1(O) being collectively
referred to herein as "Pending Litigation"), neither Borrower nor Borrower's
properties, businesses or assets is engaged in or a party to or threatened with
any suit, action, proceeding, inquiry, enforcement action, investigation, claim
or demand or legal, administrative, arbitration or other method of settling
disputes or disagreements, and Borrower, to the best of its knowledge after due
investigation, does not know, anticipate or have notice of any basis for any
such action. Borrower has not received notice of any investigation, threatened
or contemplated, by any federal or state governmental authority or agency, that
remains unresolved. None of the Pending Litigation has created a Lien or a
claim therefor against any of Borrower's Property, including, without
limitation, the Collateral. Set forth in Exhibit 6.1(O) is a complete and
accurate description of each outstanding order, writ, injunction or decree of
any court, arbitrator, government or governmental agency against or affecting
the Collateral. Borrower has provided Lender's Agent with complete and correct
copies of all such orders, writs, injunctions and decrees, and will make
available upon request, copies of all correspondence, reports, memoranda and
files related thereto.
(P) ERISA. Exhibit 6.1(P) sets forth each and every Employee Pension
Benefit Plan (as defined in Section 3(2) of ERISA ("Plan")) applicable to
Borrower's employees. Except as set forth in Exhibit 6.1(P) attached hereto, to
Borrower's knowledge: (i) Borrower has fulfilled all of its obligations under
the minimum funding standards of the Employee Retirement Income Security Act, as
amended ("ERISA"), and the Internal Revenue Code of 1986, as amended ("IRC"),
with respect to each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the IRC with respect thereto, and
has not incurred any liability to the Pension Benefit Guaranty Corporation or a
Plan in connection with the termination of a Plan applicable to Borrower's
employees under Title IV of ERISA, where such liability would have a Material
Adverse Effect on the financial condition of Borrower; (ii) with respect to each
Plan applicable to Borrower's employees, there have been no "prohibited
transactions" (as defined in Section 4975(c) of the IRC and Section 406 of
ERISA) or "reportable events" (as defined in Section 4043(b) of ERISA and the
regulations thereunder); (iii) each Plan applicable to Borrower's employees
which is intended to be a qualified plan under Section 401(a) of the IRC has
received a favorable determination letter from the Internal Revenue Service, and
no withdrawal liability has been incurred by or asserted against Borrower with
respect to a withdrawal from any multiemployer pension plan applicable to
Borrower's employees; (iv) no proceedings have been instituted to terminate any
Plan of Borrower; (v) no condition exists that presents a material risk to
Borrower or any of its Subsidiaries of incurring a liability to or on account of
a Plan pursuant to the foregoing provisions of ERISA and the IRC; (vi) no Lien
imposed under the IRC or ERISA on the assets of Borrower or any of its
Subsidiaries exists or is likely to arise on account of any Plan; and (vii)
Borrower and its Subsidiaries may terminate contributions to any other employee
benefit plans maintained by them without incurring any material liability to any
Person interested therein.
(Q) Taxes. Except as set forth in Exhibit 6.1(Q) attached hereto,
all federal, state, county and other tax returns, reports and declarations of
every nature (including, without limitation, income, employment, payroll,
excise, Property, sales and use taxes, unemployment contributions) required to
be filed by or on behalf of, or with respect to Borrower and its assets,
including, without limitation, the Collateral have been duly and timely filed,
and will continue to be duly and timely filed (within the time periods required
by law) by Borrower, all such returns or reports are, or will be at the time of
filing, complete and accurate and in accordance with the tax laws applicable
thereto and accurately reflect all such taxes, charges and assessments required
to be paid by Borrower for the periods covered thereby. No extension of time or
requests therefor or waiver thereof, have been made or are presently pending or
effective with respect to such reports, returns or taxes that will have a
Material Adverse Effect on Borrower. All taxes shown to be due and payable on
such returns and reports and any deficiency, assessments, penalties and interest
thereon have been paid. All required tax estimates, deposits, prepayments and
the like for current periods have been properly made. There are no tax liens on
any of the Collateral and, to Borrower's knowledge, no basis exists for the
imposition of any such liens. The accrual for taxes reflected in the balance
sheets of Borrower is in the aggregate adequate to cover any and all federal,
state, local or foreign tax liabilities (whether or not disputed) of Borrower
for the period ended on the date thereof and all prior periods. Borrower has no
dispute with any taxing authority as to taxes of any nature which affects the
subject matter of this Agreement. There is no unassessed tax deficiency
proposed or, to the best of Borrower's knowledge, threatened against Borrower,
and no action, proceeding or audit of any of Borrower's returns or reports by
any governmental authority is pending or, to Borrower's knowledge, threatened by
any governmental authority for assessment, reassessment or collection of any
taxes or assessments affecting Borrower that will have a Material Adverse Effect
on Borrower.
(R) Absence of Adverse Changes. Since December 31, 1991, there has
not been any change, and Borrower knows of no fact, circumstance, event,
occurrence, contingency or condition that might reasonably be expected to result
in a change, whether or not in the ordinary course of business and whether or
not covered by insurance, that has or, to Borrower's knowledge, will have a
Material Adverse Effect on the working capital, financial condition, Property,
assets, liabilities, Indebtedness, reserves, business, operations or prospects
of Borrower or the ability of Borrower fully to perform this Agreement and the
transactions contemplated hereby.
(S) Brokers. Except as set forth in Exhibit 6.1(S), all
negotiations relating to this Agreement and the transactions contemplated hereby
have been carried out without the intervention of any person on behalf of
Borrower in such manner as to give rise to any claim against Lender, its
Affiliates or Borrower for any brokerage or finder's fee commission, fee or
similar compensation.
(T) Corporate Records. The corporate records and minute books of
Borrower accurately reflect all material actions taken by the stockholders,
Board of Directors or any committee thereof.
(U) No Untrue or Inaccurate Representations or Warranties. All
statements contained in any certificate, financial statement or other instrument
delivered by or on behalf of Borrower pursuant to or in connection with this
Agreement or the other documents contemplated by this Agreement (including but
not limited to any such statements made in or in connection with any amendment
hereto) shall constitute representations and warranties made by Borrower under
this Agreement. The representations and warranties of Borrower contained in the
Loan Documents, each Exhibit, Schedule certificate or other written statement
delivered pursuant to this Agreement, or in connection with the transactions
contemplated hereby, are, as of the date when given, accurate, correct and
complete, and do not contain any untrue statement of material fact or omit to
state a material fact necessary in order to make the statements and information
contained therein not misleading. Notwithstanding the foregoing, none of the
assumptions or other matters set forth in any pro formas or projections
delivered by Borrower to Lender, any of Lender's Affiliates, Lender's Agent or
any other Person in connection with the transactions contemplated by this
Agreement shall be construed as or constitute a representation or warranty.
6.2 Automatic Warranty and Reaffirmation of Warranties and
Representations. Each request for a Nonrevolving Credit Advance made hereunder
shall constitute: (i) an automatic warranty and representation by Borrower to
Lender that there does not then exist, an Event of Default, or any event or
condition which with time, or the making of such advance or accommodation, would
constitute an Event of Default; and (ii) a reaffirmation as of the date of said
request that all of the representations and warranties of Borrower contained in
this Agreement are true and correct as of each such date, except to the extent
that (a) any representations and warranties which, by their express terms, speak
only as of the Closing Date, or (b) such representations and warranties may be
untrue or incorrect as a result of the occurrence of events subsequent to the
date of this Agreement that are expressly permitted by this Agreement or
expressly permitted by Lender in writing.
6.3 Survival of Warranties and Representations. All representations and
warranties of Borrower contained in this Agreement shall survive the execution,
delivery, and acceptance of this Agreement by the parties hereto and the
consummation of the transactions described herein or related hereto and shall
expire on the Termination Date.
7. COVENANTS AND CONTINUING AGREEMENTS
7.1 Affirmative Covenants of Borrower. Borrower shall comply with
Subsections 7.1(A), 7.1(G) and 7.1(H) at all times during the Term and shall
comply with all of the following covenants at all times following the date of
the initial Nonrevolving Credit Advance:
(A) Payment of Indebtedness. Borrower shall pay and discharge or
cause to be paid and discharged all of its Indebtedness, including the
Liabilities to Lender and Lender's Agent, as and when due and payable or on
demand, as the case may be except for such Indebtedness that is reasonably being
contested and disputed by Borrower, provided that Borrower shall have given
Lender written notice of said dispute and shall be diligently contesting the
same in good faith in an appropriate forum and proceeding. If such disputed
Indebtedness is in excess of Fifty Thousand Dollars ($50,000) in the aggregate,
at any time, Borrower shall give Lender such additional assurances as Lender
reasonably deems necessary under the circumstances. Notwithstanding the
foregoing, Borrower shall pay or discharge or cause to be paid or discharged
upon three (3) Business Days prior notice, any and all fees, costs or expenses
that Lender, Lender's Agent or any Participant pays to a bank or other similar
institution arising out of or in connection with: (i) the forwarding to
Borrower or any other Person on behalf of Borrower, by Lender, Lender's Agent or
any Participant, of proceeds of loans made by Lender to Borrower pursuant to
this Agreement, and (ii) the depositing for collection, by Lender, Lender's
Agent or any Participant, of any check or item of payment received and/or
delivered to Lender or any Participant on account of the Liabilities. Lender
shall act and shall cause Lender's Agent to act in a commercially reasonable
manner in enforcing its rights pursuant to this Section 7.1(A).
(B) Inspection Rights. Borrower shall permit Lender and its agents
and representatives to enter upon Borrower's premises and shall use reasonable
effort to cause any lessee of the Collateral to permit Lender and its agents and
representatives to enter upon lessee's premises, and any location wherein the
Collateral is located at any time during usual business hours (or at such other
times as may be reasonably requested by Lender) upon at least three (3) Business
Days prior written notice to Borrower and such lessee, if applicable,
exercisable as frequently as Lender or any designated representative of Lender
may reasonably request, for the purpose of inspecting the Collateral, all
records, files and books of account of Borrower related thereto (and to make
extracts from such records, files and books of account at Lender's expense), and
the premises upon which any of the Collateral is located, and, verifying the
value and condition of, or any other matter relating to the Collateral.
(C) Audit Rights. Borrower shall permit Lender and its agents and
representatives to enter upon Borrower's premises at any time during usual
business hours (or at such other times as may be reasonably requested by Lender)
upon at least three (3) Business Days prior written notice to Borrower,
exercisable as frequently as Lender or any designated representative of Lender
may reasonably request, for the purpose of inspecting all records, files and
books of account of Borrower (and to make extracts from such records, files and
books of account at Lender's expense). All executive officers and other
officers of Borrower charged with knowledge of the financial condition of
Borrower shall make themselves available at all reasonable times to discuss, and
provide all reasonable information requested by Lender with respect to
Borrower's business.
(D) Special Collateral. Borrower shall deliver to Lender the
original of any Special Collateral promptly upon Borrower's receipt thereof,
together with appropriate endorsements and/or documentation (in form and
substance acceptable to Lender) of assignment thereof and/or security therefor
to Lender. Borrower hereby authorizes Lender to file one (1) or more Financing
Statements in connection with Nonrevolving Credit Advances on or after the date
of such Nonrevolving Credit Advances, and amendments to such Financing
Statements, relative to all or any part of the Collateral without the signature
of Borrower where permitted by law.
(E) Compliance with Laws. Borrower shall comply and shall cause its
Subsidiaries to comply in a timely fashion with the requirements of all (i)
federal, state and local laws, rules and regulations applicable to them,
respectively, including those relating to ERISA, those regarding the collection,
payment and deposit of sales, employees' income, unemployment and social
security taxes and other charges, and those relating to environmental matters
and health care matters, and (ii) orders of any governmental authority having
jurisdiction over Borrower, where the failure to so comply may have a Material
Adverse Effect upon Borrower or its Subsidiaries, or affect Borrower's ability
to perform its obligations under this Agreement and the other Loan Documents,
unless the same is being contested in good faith by appropriate proceedings and
such contest shall operate to stay the Material Adverse Effect of any such
noncompliance.
(F) Compliance with Agreements. Except as expressly provided in
Section 7.1(A) hereof, Borrower shall perform, within all required time periods
(after giving effect to any applicable grace periods), all of its obligations
and enforce all of its rights under each agreement to which it is a party,
including any leases to which it is a party, where the failure to so perform and
enforce would have a Material Adverse Effect upon Borrower. Borrower shall not
terminate or modify in any manner adverse to Borrower any provision of any
agreement or lease to which it is a party which termination or modification
could reasonably be expected to have a Material Adverse Effect upon Borrower or
the Collateral. This provision shall not be construed to limit Borrower's right
to prepay the Philips Debt.
(G) Payment of Taxes. Borrower shall prepare and file all tax
returns and pay and discharge at or before their due date, all taxes,
assessments and other similar governmental levies, charges, fees and imposts,
all liabilities for judgments, assessments and other governmental charges and
all other obligations for the payment of money, which, if unpaid might become a
Lien on Borrower's Property, except those being contested in good faith by
appropriate proceedings if by reason of such nonpayment and contest no material
item or portion of Property of Borrower, including the Collateral, taken as a
whole, is in jeopardy of being seized, levied upon or forfeited prior to
judgment. Borrower shall maintain, in accordance with GAAP, appropriate
reserves for the accrual of any of the foregoing obligations and liabilities.
(H) Preserve Accuracy of Representations and Warranties. Borrower
shall refrain from any action or inaction that would render inaccurate any
representation or warranty set forth in Sections 6.1(A), 6.1(C), 6.1(F) and
6.1(T) or any covenant contained in this Agreement. The parties acknowledge
that the covenant set forth in this Subsection 7.1(H) requires the
representations and warranties expressly identified above to be true and correct
each day this Agreement remains in effect. This covenant shall not be construed
to imply that all other representations and warranties in the Loan Documents are
not required to be accurate and complete as of the date of this Agreement, the
Closing Date and the dates required pursuant to Section 6.2 hereof.
(I) Maintenance of Existence. Borrower shall (i) preserve and
maintain its separate corporate existence in the jurisdiction of its formation
and all authorizations, rights, franchises, licenses, privileges, consents,
approvals, orders, licenses, permits, or registrations from any governmental
agency that are necessary for the transaction of its business, except where the
failure to so preserve and maintain would not have a Material Adverse Effect on
Borrower, and (ii) qualify and remain qualified as a foreign corporation in each
jurisdiction identified in Exhibit 6.1(A) hereto in each jurisdiction in which
such qualification is necessary in view of its business or the ownership of
Borrower's Property.
(J) Use of Loan Proceeds. Borrower shall use all funds received from
Lender pursuant to any Nonrevolving Credit Advance for the purposes specified in
Section 2.5 which has been approved by Lender pursuant to Section 3.1 and for no
other purpose.
(K) Accounting Methods; Books and Records of Account. Borrower shall
maintain its present customary system of accounting established and administered
in accordance with GAAP and keep such books, records and accounts (which shall
be true and complete) with respect to its business activities in reasonable
detail as necessary to permit preparation of financial statements in conformity
with GAAP.
(L) Further Assurances. In addition to the acts recited herein and
contemplated to be performed, executed and/or delivered by Borrower, Borrower
hereby agrees, at any time, and from time to time, to perform, execute and/or
deliver to Lender upon request, in form and substance acceptable to Lender, any
and all such further acts, additional instruments, including Supplemental
Documentation, or further assurances as may be reasonably necessary or proper to
(a) promptly implement the intent of the parties under this Agreement, (b)
promptly correct any defect, error or omission which may be discovered in this
Agreement or any other Loan Document, and execute any and all additional
documents as may be requested by Lender to correct such defect, error or
omission, or to identify any additional properties which are or become subject
to this Agreement, (c) assure Lender a valid Lien and security interest under
this Agreement on the Equipment and other Collateral referenced in this
Agreement in accordance with Section 5.2 hereof, (d) create, perfect, preserve,
maintain and protect the Liens and security interests created or intended to be
created pursuant to this Agreement, and (e) provide the rights and remedies to
Lender granted or provided for by this Agreement. Borrower shall pay the costs
of any recording or filing any of such documents if required in accordance with
Section 10.2 hereof. Upon the occurrence and during the continuance of an Event
of Default, Borrower hereby irrevocably makes, constitutes, and appoints Lender
(and all Persons designated by Lender for that purpose) as Borrower's true and
lawful agent and attorney-in-fact to sign the name of Borrower on any
Supplemental Documentation and to deliver any Supplemental Documentation to such
Persons as Lender, in its sole discretion, may elect. Borrower agrees that a
carbon, photographic, photostatic, or other reproduction of this Agreement or of
a Financing Statement is sufficient as a Financing Statement. Notwithstanding
the foregoing provisions of this Subsection 7.1(L), Lender shall act (i) in a
commercially reasonable manner when exercising Lender's rights pursuant to this
Subsection 7.1(L), and (ii) only as may be necessary in Lender's reasonable
judgment to protect or preserve Lender's rights under this Agreement and to
Collateral as set forth in subsections (a) through (e) above.
(M) Litigation. In the event any Pending Litigation shall result in
a final judgment adverse to Borrower, Borrower shall promptly satisfy same or
bond off same. Except as provided in Subsection 10.12(B) hereof, Borrower shall
indemnify and hold Lender and Lender's Agent harmless from any and all losses,
claims, damages, costs, expenses (including court costs and attorneys' fees) and
obligations (including, but not limited to, any loss of any right, title and/or
interest of Lender in and/or to the Collateral) arising out of and/or related
to, directly or indirectly, any litigation, or the claim of any third party for
alleged liabilities and/or obligations of Borrower arising out of transactions
or events affecting the Collateral; provided, however, that if Lender or
Lender's Agent intervenes in such action, Borrower shall not be liable to Lender
or Lender's Agent for any expenses incurred by Lender or Lender's Agent, which
for purposes of this Section 7.1(M) shall include attorneys' fees or court costs
incurred by Lender or Lender's Agent but shall not include any damages or other
losses incurred by Lender or Lender's Agent in connection with such litigation.
Borrower shall not be liable to Lender or Lender's Agent for any losses, claims,
damages, costs, expenses and obligations which are caused by the gross
negligence, willful misconduct or other activities of Lender or Lender's Agent
described in Subsection 10.12(B).
(N) Filing Receipts. Borrower shall, as soon as available, deliver
to Lender certified copies of all filing receipts or acknowledgments issued by
any Person to evidence any filing or recordation necessary to perfect Lender's
Liens on and security interests in the Collateral granted pursuant to this
Agreement or the other Loan Documents and to evidence, in a form reasonably
acceptable to Lender, that, to the extent available under the UCC, such Liens
and security interests constitute valid and perfected Liens on and security
interests in the Collateral in accordance with Section 5.2 hereof.
7.2 Negative Covenants of Borrower. Without Lender's prior written
consent, which Lender may or may not give, in its sole discretion (except as
otherwise expressly provided in Section 7.7 hereof to the contrary), Borrower
shall comply with Subsections 7.2(A) and 7.2(C) at all times during the Term and
shall comply with all of the following covenants at all times following the date
of the initial Nonrevolving Credit Advance as follows:
(A) Mergers. Borrower shall not, directly or indirectly, by
operation of law or otherwise, reorganize, merge or consolidate or otherwise
combine with any Person.
(B) ERISA. (a) Borrower shall not at any time, maintain, be
obligated or become obligated to contribute on behalf of its employees to, any
Plan, other than (i) Plans disclosed in Exhibit 6.1(P), (ii) Plans created to
replace those Plans disclosed in Exhibit 6.1(P), as notified by Borrower to the
Lender, and (iii) Plans to which Borrower becomes obligated to contribute
pursuant to the terms of a collective bargaining agreement.
(b) Borrower shall not at any time, permit any Plan maintained
by it, to:
(i) engage in any non-exempt "prohibited transaction", as
such term is defined in Section 4975 of the Code;
(ii) incur any material "accumulated funding deficiency", as
that term is defined in Section 302 of ERISA; or
(iii) suffer a termination event to occur which may
reasonably be expected to result in (a) liability of Borrower to the Plan that
may reasonably be expected to have a Material Adverse Effect on Borrower, or (b)
the imposition of a Lien on the Collateral pursuant to Section 4068 of ERISA.
(c) Borrower shall not at any time, permit any Plan described in
the Exhibit 6.1(P) to fail to comply with ERISA or other applicable laws in any
respect if such failure would have a Material Adverse Effect on Borrower.
(C) Amendments. Borrower shall not amend any provision of any
obligation that is subordinate to Borrower's obligations to Lender or any other
obligation, including the Philips Debt, if such amendment would (i) affect any
of the subordination provisions thereof, (ii) advance the date of any required
payment or prepayment thereunder, (iii) make any covenant therein more
burdensome to Borrower, (iv) reduce any default or grace period therein
provided, or (v) otherwise have a Material Adverse Effect on the interests of
Lender. Notwithstanding the foregoing, Borrower shall not amend the Preferred
Stock Agreement without the prior written consent of Lender, which may be
withheld in Lender's sole discretion. This provision shall not be construed to
limit Borrower's right to prepay the Philips Debt.
(D) Adverse Agreements. Borrower shall not enter into any
transaction that is reasonably likely to have a Material Adverse Effect on the
Collateral or Borrower's ability to repay Indebtedness.
(E) Liens; Negative Pledges; Sales and Leasebacks. Except for those
Liens (i) identified in Exhibit 6.1(I), (ii) expressly permitted in this
Agreement, or (iii) created pursuant to this Agreement, Borrower shall not
create, permit or suffer to exist, and Borrower shall defend the Collateral
against and take such other action as is necessary to remove, any Lien of any
nature whether by sale, lease, negative pledge, merger, consolidation,
liquidation, dissolution, or otherwise, on the Collateral, whether now owned or
hereafter acquired, and Borrower shall defend the right, title and interest of
Lender in and to any of Borrower's rights to the Collateral against the claims
and demands of all Persons whomsoever.
(F) Disposition of Collateral. Borrower shall not make any
Disposition of Collateral, whether now owned or hereafter acquired, without the
prior written consent of Lender. Notwithstanding the foregoing, Borrower shall
not sell, transfer, assign (by operation of law or otherwise), or otherwise
dispose of or transfer the Collateral or any interest therein, or attempt, offer
or contract to do so; provided, however, Borrower may lease the Equipment in the
ordinary course of business provided that Borrower gives Lender notice of such
Lease and files appropriate Financing Statements evidencing Lender's security
interest in the Equipment in a form reasonably acceptable to Lender. Requests
by Borrower to take any action that is not permitted by this Section 7.2(F)
shall comply with Section 7.7 hereof and shall be approved or disapproved by
Lender in accordance with Section 7.7 hereof within fifteen (15) Business Days
following Lender's receipt of Borrower's request for consent.
(G) Change in the Nature or Conduct of Business. Borrower shall not
change the nature of its business and its Subsidiaries' respective businesses as
conducted on the Closing Date or engage in any business other than the types of
business in which it is engaged as of the Closing Date without Lender's prior
written consent; provided that the introduction of additional products within or
related to such lines of business shall not be construed to be a new line of
business.
(H) Location of Collateral; Books of Account. All of the Equipment
and other Collateral shall be, at all times after it has been acquired by
Borrower, kept and maintained solely at the location set forth in Exhibit 5.1(A)
with respect to such Equipment and other Collateral. Borrower shall not remove
Collateral or related books and records from the locations identified in Exhibit
5.1(A) with respect to each item of Collateral, except for movements of
Collateral from one such location to another in the ordinary course of business
using vehicles owned, leased or hired by Borrower, upon prior written notice to
Lender, provided that such Equipment is not moved outside of the continental
United States. Notwithstanding the foregoing, Borrower shall not keep any
Collateral or any such books and records at any other location unless: (i)
Borrower shall have given Lender at least thirty (30) days prior written notice
of such removal and the new location of such Collateral or such books and
records; and (ii) such other location is within the continental United States of
America.
7.3 Payment of Charges. Except as otherwise provided in Section 7.4 or
elsewhere in this Agreement and except as otherwise provided in the next
succeeding sentence, Borrower shall pay all charges, whether payable on account
of the execution, delivery or performance of this Agreement, the creation of any
of the Liabilities hereunder by reason of any existing or hereafter enacted
federal, state or other regulation or statute, or otherwise, promptly when due
where the failure to so pay would have a Material Adverse Effect upon Borrower.
Except as provided in Section 7.4, Borrower shall pay promptly when due all
withholding taxes, whether relating to payment of employee wages or otherwise
(collectively, the "Withholding Charges"). Borrower shall indemnify Lender and
Lender's Agent and hold Lender and Lender's Agent harmless from and against
liability in connection with any and all charges (including any amount that may
be asserted under sections 3505 and 6672 of the Internal Revenue Code and any
comparable provisions under state or local law). In the event that Borrower
fails to pay any charges described in this Section 7.3 or fails to obtain
promptly the discharge of such charges, Borrower shall so advise Lender in
writing and, whether or not Borrower so advises Lender, Lender may, in its sole
discretion, without waiving or releasing any obligation or liability of Borrower
hereunder or any Default or Event of Default, make such payment, or any part
thereof, or obtain such discharge and take any other action with respect thereto
that Lender reasonably deems advisable; provided, however, that Lender shall
provide Borrower with ten (10) days' prior notice before paying any charge of a
type described in this Section 7.3. All amounts so paid by Lender and any
related expenses, including reasonable attorneys' fees, court costs and other
charges, shall be payable, upon demand, by Borrower to Lender and shall be
additional Liabilities secured by Collateral.
7.4 Contesting Charges. Except as otherwise provided below, Borrower may
dispute any charges without prior payment, even if such non-payment may cause a
Lien to attach to Borrower's assets, provided that Borrower shall have given
Lender written notice of said dispute and shall be diligently contesting the
same in good faith in an appropriate forum and proceeding. If such disputed
charges are in excess of Fifty Thousand Dollars ($50,000) in the aggregate, at
any time, Borrower shall give Lender such additional assurances as Lender
reasonably deems necessary under the circumstances. If the charge disputed is a
Withholding Charge, and during the pendency of such dispute the appropriate
taxing authority asserts liability against Lender in relation to the disputed
Withholding Charge, then Borrower shall, if reasonably required by Lender,
immediately pay the disputed Withholding Charge liability, and thereafter shall
only contest such Withholding Charge through an alternative method.
7.5 Survival of Liabilities Upon Termination of Agreement. Except as
otherwise expressly provided in this Agreement, no termination or cancellation
(regardless of cause or procedure) of this Agreement shall in any way affect or
impair the powers, obligations, duties, rights, and Liabilities of Borrower or
Lender that accrued and remain unperformed as of the Termination Date.
7.6 Discounts. During the Term of this Agreement, provided that Borrower
is not in Default under this Agreement or any other Loan Document, and subject
to the terms and conditions of this Agreement and the prior credit approval of
Borrower by Lender, which credit approval may not be unreasonably withheld, (i)
Lender shall cause Lender's Agent to provide Borrower with preferred national
account discount pricing consistent with then prevailing discount policy of
Lender's Agent with respect to Borrower's purchase from Lender's Agent of
diagnostic imaging equipment manufactured by Lender's Agent, and (ii) Lender
shall provide Borrower with financing for purchases by Borrower from Lender's
Agent during the Term of this Agreement of x-ray, magnetic resonance imaging
("MRI") and computerized tomography ("CT") equipment that is manufactured by
Lender's Agent at rates as low as (a) two percent (2%) for operating lease
financing up to a maximum five (5) year term which term shall expire no later
than the Termination Date, on such terms as are reasonably acceptable to Lender
or (b) a fixed rate for term debt financing that is equal to the prevailing
Prime Rate at funding plus 3-3/4%, with equal payments of principal and interest
amortized over a term of eight (8) years; provided, however, that all
outstanding payments of principal and interest shall be due and payable on the
Termination Date. Such fixed rate financing shall be on such other terms as are
reasonably acceptable to Lender. The financing(s) provided by Lender pursuant
to this Section 7.6 shall be referred to herein as the "Section 7.6 Equipment
Financing(s)."
7.7 Requests for Lender's Consent. Any request by Borrower for Lender's
written consent prior to taking any action prohibited by Subsection 7.2(F)
hereof as described in such Sections, shall be in writing and shall include a
detailed description that is reasonably acceptable to Lender of the proposed
action to be taken by Borrower. Lender shall approve or disapprove of such
request within the number of Business Days provided in Subsection 7.2(F), which
approval shall not be unreasonably denied; provided, however, that Lender may
reasonably request additional information regarding the proposed action to be
taken by Borrower and shall have an additional period of ten (10) Business Days
following Lender's receipt of all such information to consider such information.
Any disapproval by Lender shall set forth in reasonable detail Lender's reasons
for disapproval.
8. INFORMATION AND REPORTING REQUIREMENTS
Until payment in full of the Liabilities, unless Lender shall otherwise
consent in writing, Borrower shall furnish to Lender at Lender's address
provided in Section 10.11, the following:
8.1 Financial Statements. Borrower shall prepare, or cause the
preparation of, and deliver to Lender the following financial statements that
have been prepared in accordance with GAAP:
(A) Audited Year-End Financial Statements. For each fiscal year of
Borrower, as soon as available, but not later than one hundred five (105) days
after the end of Borrower's fiscal year, Borrower shall deliver the audited
balance sheet of Borrower as at the end of such fiscal year together with
related statements of income and retained earnings, changes in financial
position and cash flows for the twelve (12) month period then ended, setting
forth in comparative form the figures as at the end of and for the previous
fiscal year, in each case accompanied by an auditor's report thereon that is
certified by a firm of independent certified public accountants of recognized
national standing which report shall be in scope and substance reasonably
satisfactory to Lender, and, as soon as available, but not later than sixty (60)
days after the close of Borrower's fiscal year, an unaudited preliminary draft
of the balance sheet of Borrower as at the end of such fiscal year together with
preliminary drafts of such related statements of income and retained earnings
and cash flows. In case any Affiliate shall be consolidated in the financial
statements of Borrower, the statements referred to in this Section 8.1 shall be
on a consolidated and consolidating basis, in accordance with GAAP.
(B) Quarterly Financial Statements. As soon as available, but not
later than sixty (60) days after the end of each calendar quarter of Borrower's
fiscal year, Borrower shall deliver the unaudited balance sheet of Borrower as
at the end of such quarterly period and the related statements of income and
retained earnings, cash flows and changes in financial position of Borrower for
the elapsed portion of the fiscal year ended with the last day of such quarterly
period, setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year, prepared in accordance with
GAAP, subject only to normal year-end auditing adjustments, and in form and
substance as Lender may reasonably request.
(C) Officer's Certificate. Concurrently with each delivery of said
annual audited financial statements and of the interim financial statements
referred to in subsection 8.1(B) hereof, Borrower shall deliver a certificate of
Borrower's chief financial officer stating that (1) in his opinion, such
financial statements are complete and correct and present fairly, in accordance
with GAAP (except for changes that have been approved in writing by Borrower's
accountants) applied consistently with those followed in the preparation of the
audited consolidated financial statements of Borrower and that have been
consistently applied throughout the period involved, the financial position of
Borrower as at the end of such period and the results of operations and the
changes in the financial position of Borrower for such period and for the
elapsed portion of the fiscal year ended with the last day of such period, in
each case on the basis presented and subject only to normal year-end auditing
adjustments specified in such financial statements (2) a review of the
activities of Borrower and its Subsidiaries during the fiscal year or interim
period covered by such financial statements, as the case may be, has been made
under his supervision with a view to determining whether Borrower has observed,
performed and fulfilled each and every covenant, obligation and agreement
contained in this Agreement and that he is not aware of the occurrence or
existence of any condition or event that constitutes a Default or an Event of
Default, or, if he is aware of such condition or event, the nature thereof, when
it occurred, whether it is continuing and the steps being taken by Borrower with
respect to such event or failure.
8.2 Affiliates' Financial Statements. As soon as practicable and, in any
event, within ninety (90) days of the end of the fiscal year of each Affiliate,
Borrower shall deliver the unaudited balance sheet of each Affiliate as at the
end of such fiscal year and the related statement of income and retained
earnings and changes in financial position of each Affiliate for such fiscal
period, setting forth in comparative form the figures as at the end of and for
the previous fiscal year. For purposes of this Section 8.2, the term
"Affiliate" shall exclude Cal Kovens.
8.3 Public Documents. Promptly after the sending or filing thereof, as
the case may be, copies of any definitive proxy statements, financial statements
or reports which Borrower sends to its shareholders; and copies of any regular,
periodic and special reports or registration statements which Borrower files
with the Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or any national securities exchange.
8.4 Other Reports. From time to time and promptly upon each request,
such data, certificates, reports, statements, opinions of counsel, documents or
further information regarding the Collateral or the business, assets, financial
condition or results of operation of Borrower and its Affiliates as Lender may
reasonably request. For purposes of this Section 8.4, the term "Affiliate"
shall exclude Cal Kovens.
8.5 Certain Notices. Borrower shall notify Lender in writing promptly,
but in no event later than five (5) Business Days upon learning of (i) any
litigation commenced against Borrower, its officers, directors or shareholders
that may have a Material Adverse Effect upon Borrower, the Collateral or
Lender's Lien on the Collateral, whether or not the claim is considered by
Borrower to be covered by insurance, and Borrower shall also notify Lender in
writing promptly upon learning of any threatened litigation against Borrower in
which the claim against Borrower exceeds Fifty Thousand Dollars ($50,000) or
which might have a Material Adverse Effect on Borrower, the Collateral or
Lender's Lien on the Collateral; (ii) any Default or Event of Default known to
Borrower, or any event which with the passage of time or giving of notice or
both would constitute a Default or Event of Default by Borrower; (iii) any
default by Borrower or an Affiliate under any material agreement other than this
Agreement or the other Loan Documents to which any of them is a party or by
which any of them or any of their properties may be bound that is reasonably
likely to have a Material Adverse Effect on Borrower and the Affiliates as a
whole; (iv) any facts or circumstances which come to Borrower's attention and
which cause, or through the passage of time may cause, Borrower's
representations and warranties set forth in Sections 6.1(A), 6.1(C), 6.1(F)
and 6.1(T) to be untrue or misleading at any time; (v) any penalty assessed
against Borrower by any federal, state, or local government agency; (vi) any
notice received from any federal, state, or local government agency of any
violation by Borrower of any federal, state, or local law or regulation, the
commencement of any proceedings or investigations by or before any governmental
on nongovernmental body affecting Borrower, or an Affiliate, or any of their
respective properties, assets or businesses, in which the damages claimed or the
potential liability would be reasonably likely to exceed Fifty Thousand Dollars
($50,000) or which would be reasonably likely individually or in the aggregate
with other actions, suits and proceedings, to have a Material Adverse Effect on
Borrower or its Affiliates; (vii) any violation by Borrower of any such law or
regulation of which Borrower becomes aware, which violation could result in the
assessment of a penalty or the revocation of a registration or license of
Borrower by any federal, state, or local government agency; and (viii) any other
event or condition having a Material Adverse Effect on (a) Borrower, (b) the
aggregate value of the Collateral, or (c) the security interests created
hereunder. For purposes of (iii) and (vi) immediately above, the term
"Affiliate" shall exclude Cal Kovens.
8.6 ERISA. Borrower shall promptly notify Lender of the occurrence
of any "reportable event" (as defined in Section 4043 of ERISA) or of any
non-exempt "prohibited transaction" (as defined in Section 4975 of the Code)
with respect to any Plan described in Exhibit 6.1(P) or any trust created
thereunder. Borrower shall deliver to Lender a complete copy of the annual
report (Form 5500) of each Plan required to be filed with the Internal Revenue
Service.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
9.1 Event of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default":
(A) Borrower shall fail to make any payment of principal of, or
interest on, or any other amount owing in respect of the Nonrevolving Credit
Loan or any of the other Liabilities within ten (10) days of the date such
payment is due and payable and such Default continues for a period of five (5)
days thereafter;
(B) Except as provided in Section 9.1(A) above, Borrower shall fail
or neglect to perform, keep or observe, in any material respect, any other term,
provision, condition, covenant, duty or obligation contained in this Agreement
or in any of the other Loan Documents which is required to be performed, kept,
or observed by Borrower and, with respect to any breach of any condition,
covenant, duty or obligation, and such breach shall not have been remedied to
Lender's satisfaction within ten (10) days after Lender has delivered notice of
such breach to Borrower;
(C) Any event of default, or any event which upon lapse of time,
notice, or otherwise would constitute an event of default, under any agreement
to which Borrower is a party shall occur, which event (i) if based on Borrower's
failure to pay any amount (whether of principal, interest, or otherwise) as and
when due, (x) has caused any Person to demand payment of any part of Borrower's
Indebtedness in excess of One Hundred Thousand Dollars ($100,000) before such
Indebtedness would otherwise be due, or (y) would deprive Borrower of any rights
to the Collateral, or (ii) if based on any other failure, event or condition, is
the basis of any notice to Borrower accelerating payment of such Indebtedness or
enforcing rights in such Collateral, in any case, resulting in a Material
Adverse Effect;
(D) Any representation or warranty contained in this Agreement, any
other Loan Document or any statement, report, financial statement, or
certificate made or delivered by Borrower or any of its officers, employees, or
agents to Lender or Lender's Agent shall be untrue, incorrect, or incomplete in
any material respect, or shall be misleading in any material respect, in each
case, as of the time when made;
(E) There occurs, in the reasonable judgment of Lender, any change in
the business, assets, financial condition or results of operations of Borrower
or its Affiliates which has or is reasonably likely to have a Material Adverse
Effect on Borrower and the Affiliates as a whole. For purposes of this
Section 9.1(E), the term "Affiliate" shall exclude (i) Cal Kovens and (ii) any
separate and separately funded Subsidiary. Lender acknowledges that for
purposes of this Agreement Radiosurgery Centers, Inc. ("RCI") is a subsidiary of
Borrower that was capitalized upon incorporation with $1,000 of Borrower's funds
and that, notwithstanding this fact, RCI shall be considered to be a separate
and separately-funded Subsidiary of Borrower for purposes of this Agreement,
provided that no additional funds of Borrower are used to capitalize RCI.
Further, nothing in this Agreement shall prohibit (i) Borrower from using RCI
Stock held by Borrower as collateral in connection with any financing, or (ii)
RCI from using any of its assets as collateral in connection with any financing.
(F) Any of the Loan Documents after delivery thereof shall for any
reason, other than any action taken by Lender and except to the extent permitted
by the terms thereof, cease to create a valid and perfected Lien on, or security
interest in, any of the Collateral purported to be covered thereby as required
by this Agreement and in accordance with Section 5.2 hereof;
(G) There shall occur any uninsured damage to, or loss, theft, or
destruction of, any material portion of the Collateral;
(H) The Collateral, or any portion of it, shall be attached, seized,
levied upon, or subjected to a judgment Lien, execution Lien, writ or distress
warrant which exceeds Fifty Thousand Dollars ($50,000) in value and which is not
released or bonded off by Borrower before it may be executed upon, or the
Collateral, or any portion of it, shall come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors of
Borrower for a continuous period of forty-five (45) consecutive days, and the
same shall not be released or otherwise cured to the satisfaction of Lender
within ten (10) days thereafter;
(I) (i) Borrower or any Affiliate shall (a) commence a voluntary
case or involuntary case under the Bankruptcy Code, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency, or similar law; (b) apply for or consent to the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator, agent, or
other similar official for Borrower or any, Affiliate for any material part of
Borrower's or any Affiliates' respective assets, and any such application or
proceeding shall not be dismissed or stayed within the next sixty (60)
consecutive days; (c) make any assignment for the benefit of creditors;
(d) commence any case or proceeding for dissolution, liquidation, or
termination; (e) have concealed, removed, or permitted to be concealed or
removed, any part of its Property, with intent to hinder, delay, or defraud its
creditors or any of them, or made or suffered a transfer of any of its Property
or the incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent conveyance or other similar law; (f) admit in writing it inability to
pay, or generally not be paying, its debts as they become due; or (g) take any
corporate action for the purposes of effecting any of the foregoing; or
(ii) A case or other proceedings shall be commenced involuntarily
against any of Borrower or the Affiliate in any court of competent jurisdiction
seeking (a) relief under the federal bankruptcy laws (as now or hereafter in
effect) or under any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or adjustment of debts, or (b) the
appointment of a trustee, receiver, custodian, liquidator or the like of any of
Borrower, or the Affiliate or of all or any substantial part of the assets,
domestic or foreign, of any of Borrower or the Affiliates and such case or
proceeding shall continue undismissed or unstayed for a period of forty-five
(45) consecutive calendar days, or an order granting the relief requested in
such case or proceeding against any of Borrower or the Affiliates (including,
but not limited to, an order for relief under such federal bankruptcy laws)
shall be entered. For purposes of this Section 9.1(I), the term "Affiliate"
shall exclude Cal Kovens.
(J) Except as permitted in Section 7.4, a notice of Lien, levy, or
assessment with respect to all or any material portion of Borrower's assets
shall be filed of record by the United States, or any department, agency, or
instrumentality thereof, or by the Pension Benefit Guaranty Corporation or any
Person succeeding to its functions under ERISA or by any state, county,
municipal, or other governmental agency;
(K) Borrower shall not be Solvent or shall cease to conduct its
business substantially as now conducted, or shall be enjoined, restrained, or in
any way prevented by court order from conducting all or any material part of its
business affairs for a period of time in excess of thirty (30) consecutive days;
(L) A final, unappealable judgment or order shall be entered against
Borrower for the payment of money which exceeds more than One Hundred Thousand
Dollars ($100,000) in the aggregate and each such judgment is not vacated,
stayed, bonded, paid, or discharged within forty-five (45) consecutive days
following the entry thereof and at all times thereafter; and
(M) Any other event shall have occurred that would have a Material
Adverse Effect on Borrower.
9.2 Default Rate of Interest; Late Fee.
(A) From and after the occurrence, and during the continuation, of an
Event of Default constituting a nonmonetary Event of Default, and the delivery
by Lender to Borrower of notice thereof, the Liabilities shall continue to bear
interest, calculated daily on the basis of a three hundred sixty (360) day year
at a per annum rate equal to the interest rate plus two percent (2%).
(B) From and after the occurrence of an Event of Default under
Section 9.1(A) that relates any to payment required to be made by Borrower under
the Nonrevolving Credit Note, Borrower shall pay on demand a late charge in an
amount equal to five percent (5%) of the overdue payment, except as limited by
applicable law.
(C) Borrower's payment of any sums based on the default rate of
interest pursuant to Section 9.2(A) above or any late fee pursuant to
Section 9.2(B) above shall not cure a default or limit any of Lender's rights to
pursue any of its remedies hereunder in connection therewith.
9.3 Remedies. Upon the occurrence of an Event of Default, Lender shall
have the following rights and remedies:
(A) Without notice, Lender shall have the right to terminate this
Agreement with respect to Lender's obligation to make further Nonrevolving
Credit Advances, whereupon no further Nonrevolving Credit Advances may be made
hereunder.
(B) Lender shall have the right to declare all or any portion of the
Liabilities immediately due and payable, whereupon all or any portion of the
Liabilities, as appropriate, shall become due and payable without presentment,
demand, protest or further notice of any kind, all of which are expressly waived
by Borrower.
(C) Lender and its agents and representatives shall have the right to
enter upon the premises of Borrower, and Borrower shall use reasonable efforts
to cause Lender and its agents and representatives to have the right to enter
upon the premises of any other place or places where Collateral is located and
kept through self-help and without judicial process without first obtaining a
final judgment or giving Borrower notice and opportunity for a hearing on the
validity of Lender's claim and without any obligation to pay rent to Borrower or
Borrower's lessee.
(D) Lender and its agents and representatives shall have the right to
remove the Collateral to the premises of Lender or any agent of Lender, for such
time as Lender may desire, in order to collect or dispose of Collateral.
(E) In addition to all of its other rights and remedies under this
Agreement and applicable law, Lender shall have all of the rights and remedies
of a secured party under the UCC of the state in which such rights and remedies
are asserted, all of which rights and remedies shall be cumulative and none
exclusive, to the fullest extent permitted by law.
(F) Until Lender is able to effect a sale, lease, or other
disposition of the Collateral, Lender and its Affiliates shall have the right to
use or operate the Collateral, or any part thereof, to the extent that Lender
deems appropriate for the purpose of preserving the Collateral or its value or
for any other purpose deemed appropriate by Lender. Lender shall have no
obligation to Borrower to maintain or preserve the rights of Borrower as against
third parties with respect to the Collateral while the Collateral is in the
possession of Lender. Lender may, if it so elects, seek the appointment of a
receiver or keeper to take possession of the Collateral and to enforce any of
Lender's remedies with respect to such appointment without prior notice or
hearing. Lender and its Affiliates and agents shall act in a commercially
reasonable manner in enforcing their respective remedies pursuant to this
Section 9.3(F).
(G) Lender shall have the right to sell, lease, or otherwise dispose
of all or any Collateral in its then existing condition, or after any further
assembly, manufacturing, or processing thereof, at public or private sale or
sales, with such notice as may be required by law, in lots or in bulk, for cash
or on credit, all as Lender, acting in a commercially reasonable manner, may
deem advisable and as permitted by applicable law. Such sales may be adjourned
and continued from time to time with or without notice. Lender and its agents
and representatives shall have the right to conduct such sales on Borrower's
premises or elsewhere and shall have the right to use Borrower's premises, and
Borrower shall use reasonable efforts to cause any lessee of the Collateral to
permit Lender and its agents and representatives to conduct sales on lessee's
premises and use such lessee's premises, without charge for such sales for such
time as Lender deems necessary or advisable. Borrower's rights under all
licenses and certificates of need, to the extent transferable, and all franchise
agreements shall inure to Lender's benefit. Lender may purchase all or any part
of the Collateral at public or, if permitted by law, private sale and, in lieu
of actual payment of such purchase price, may set off the amount of such price
against the Liabilities. Except as otherwise provided by law, the proceeds
realized from the sale of any Collateral may be applied by Lender first to the
reasonable costs, expenses, and attorneys' fees and expenses incurred by Lender
for collection and for acquisition, completion, protection, removal, storage,
sale, and delivery of Collateral, and then to any principal and interest due on
the Liabilities, as Lender, in its sole discretion, may elect. If any
deficiency shall exist after the application of such proceeds, Borrower shall
remain liable to Lender therefor. Lender and its Affiliates and agents shall
act in a commercially reasonable manner in enforcing its remedies pursuant to
this Section 9.3(G).
9.4 Notice of Disposition of Collateral. Any notice required to be given
by Lender of a sale, lease, or other disposition of Collateral, or any other
intended action by Lender, which is given in accordance with Section 10.11,
fifteen (15) days prior to such proposed action, or such longer period as shall
be specified by applicable law, shall constitute commercially reasonable and
fair notice thereof to Borrower.
9.5 Right of Set-Off. Upon the occurrence and during the continuance of
any Event of Default, Lender, Lender's Agent and any Participant are hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, upon three (3) Business Days prior written notice to Borrower, to set-off,
appropriate and apply any and all funds in the possession of Lender, Lender's
Agent or such Participant, all deposits (general or special, time or demand,
provisional or final) at any time held and other Indebtedness at any time owing
by Lender, Lender's Agent or such Participant to or for the credit or the
account of Borrower, against any and all of the Liabilities of Borrower now or
hereafter existing that are then due and payable, whether by maturity or
acceleration, irrespective of whether or not (i) Lender, Lender's Agent or such
Participant shall have made or be entitled to make any demand under this
Agreement or other applicable agreement, or (ii) Lender shall have declared the
principal of and interest on the Nonrevolving Credit Note and such other
Liabilities due hereunder and thereunder to be due and payable and although such
obligations and Liabilities, or any of them shall be contingent or unmatured.
The exercise by Lender, Lender's Agent or any holder of the Nonrevolving Credit
Note of the aforesaid right of set-off shall be effective as of the time Lender
or such holder of the Nonrevolving Credit Note restricts Borrower's access to
any such deposits. The rights of Lender, Lender's Agent and any Participant
under this Section 9.5 are in addition to any other rights and remedies
(including, without limitation, other rights of set-off) which Lender, Lender's
Agent and each such Participant may have.
9.6 Appointment of Lender as Borrower's Lawful Attorney. Borrower hereby
irrevocably designates, makes, constitutes, and appoints Lender and all Persons
designated by Lender as Borrower's true and lawful agent and attorney-in-fact
upon and after the occurrence of an Event of Default for the purposes set forth
in this Section 9.6. Accordingly, upon and after the occurrence of an Event of
Default, Lender or Lender's agent designated by Lender for purposes of this
Section 9.6 may, without notice to Borrower, and at such time or times as Lender
or said agent in its sole discretion may determine, in Borrower's or Lender's
name: (i) take control, in any manner, of any item of payment or proceeds of
Collateral; (ii) prepare, file, and sign Borrower's name on any proof of claim
or similar document in any bankruptcy, insolvency, reorganization, or similar
case against any Person indebted to Borrower; (iii) prepare, file, and sign
Borrower's name on any notice of Lien, assignment, or satisfaction of Lien or
similar document in connection with Special Collateral; (iv) do all acts and
things necessary, in Lender's sole discretion, to fulfill Borrower's obligations
under this Agreement; (v) endorse Borrower's name upon any of the items of
payment or proceeds and deposit the same to the account of Lender on account of
Liabilities; (vi) endorse Borrower's name upon any chattel paper, document,
instrument, invoice, freight bill, bill of lading, or similar document or
agreement relating to Special Collateral; and (vii) use the information recorded
on or contained in any data processing equipment and computer hardware and
software relating to Special Collateral to which Borrower has access. Lender
shall act (i) in a commercially reasonable manner when exercising its rights
pursuant to this Section 9.6, and (ii) only as necessary in the reasonable
judgment of Lender to protect its rights under the Loan Documents and to the
Collateral.
9.7 Participating Lender's Security Interests. If any Person shall at
any time participate with Lender in making any of the loans, advances, or
accommodations hereunder, Borrower hereby grants to such Person (in addition to
any other rights that such Person may have) both a continuing security interest
in any Property of Borrower that is in the possession of such Person, and an
express contractual right of set-off, to the extent of such Person's
participation in the Liabilities. Such Person shall have the same right of
set-off as it would have if it were a direct lender to Borrower.
10. MISCELLANEOUS.
10.1 Modification of Agreement; Sale of Interest. This Agreement may not
be modified, altered, or amended except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign, or transfer this Agreement
or any of Borrower's rights, title, interests, remedies, powers, or duties
hereunder or thereunder, and any such sale, assignment, or transfer shall be
void and of no effect. Borrower hereby consents to Lender's participation,
sale, assignment, transfer, or other disposition of this Agreement or of any of
Lender's rights, title, interests, remedies, powers, or duties hereunder or
thereunder pursuant to Section 2.13 hereof or otherwise.
10.2 Expenses. If, at any time or times subsequent to the date hereof,
whether prior to or subsequent to the Termination Date, and regardless of the
occurrence or existence of an Event of Default, Lender or Lender's Agent employs
counsel for advice or other representation or incurs other professional costs
and expenses in connection with:
(A) the negotiation, preparation, execution and delivery of this
Agreement and the other Loan Documents, including reasonable fees and
disbursements of McDermott, Will & Emery, counsel for Lender; provided, however,
that Borrower shall receive a credit in the amount of the Commitment Fee against
such fees;
(B) all reasonable costs in connection with making Nonrevolving
Credit Advances to Borrower, including, negotiation, preparation, execution and
delivery of all documents and instruments required to be delivered in connection
with the Nonrevolving Credit Advances.
(C) any litigation, contest, dispute, suit, case, proceeding, or
action (whether instituted by Lender, Borrower, or any other Person) in any way
relating to Collateral, this Agreement, or Borrower's affairs, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against Borrower
under the Bankruptcy Code or any other applicable federal or state bankruptcy,
insolvency, or similar law;
(D) any attempt to enforce any rights of Lender or any Participant
against Borrower, any other Person that may be or become obligated to Lender by
virtue of this Agreement, including any attempt to enforce such rights in
connection with a case commenced by or against any of the foregoing under the
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency
or similar law; and/or
(E) the protection, collection, sale, liquidation, or other
disposition of Collateral;
then, in any such event, the professional fees arising from such services, and
all expenses, costs, charges, and other fees incurred by Lender or Lender's
Agent arising in connection with or relating to any of the events or actions
described in this Section 9.2 shall be payable by Borrower to Lender on demand
and shall constitute Liabilities secured by the Collateral. Notwithstanding the
foregoing, the professional costs and expenses described in Section 9.2(A) shall
be reimbursed by Borrower on the Closing Date.
Without limiting the generality of the foregoing, the expenses,
costs, charges, and fees described above in this Section 10.2, (i) may include
attorneys' fees, accountants' fees, appraisers' fees and any other professional
costs and expenses; stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of the
other Loan Documents; costs and expenses of UCC and Lien searches and reports;
court costs and expenses, photocopying and duplicating expenses; court reporter
fees, costs, and expenses; long distance telephone charges; air express and
other delivery charges; telegram and telex charges; secretarial overtime
charges; expenses for travel, lodging and food paid or incurred in connection
with the performance of such professional services; and reasonable expenses
incurred by Lender or Lender's Agent in performing due diligence as may be
necessary in connection with reviewing Borrower's Request for Advances under
this Agreement; and (ii) shall not include Lender's Agent, Lender's Affiliates,
Lender's or any other Person's expenses in connection with monitoring the
Nonrevolving Credit Loan. Borrower agrees to save Lender and Lender's Agent
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay any such professional costs,
expenses, fees and taxes.
10.3 Waivers by Lender; Cumulative Remedies. Lender's failure, at any
time or times hereafter, to require strict performance by Borrower of any
provision of this Agreement, shall not waive, affect, or diminish any right of
Lender thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Lender of an Event of Default under this Agreement shall
not suspend, waive, or affect any other Event of Default by Borrower under this
Agreement whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants, and representations of Borrower contained in this Agreement nor any
Event of Default by Borrower under this Agreement shall be deemed to have been
suspended or waived by Lender unless such suspension or waiver is in a writing
signed by Lender which designates the specific suspension or waiver. The rights
and remedies hereunder are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law
or which Lender would otherwise have.
10.4 Waivers by Borrower. Except as otherwise provided in this Agreement,
Borrower waives: (i) presentment, demand, and
protest and notice of presentment, protest, default, non-payment, maturity,
release, compromise, settlement, extension, or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper, and
guaranties at any time held by Lender under or pursuant to which Borrower may in
any way be liable, and Borrower hereby ratifies and confirms whatever Lender may
do in this regard; (ii) notice prior to taking possession or control of the
Collateral or, so long as General Electric Capital Corporation remains the
Lender under this Agreement, any bond or security that might be required by any
court prior to allowing Lender to exercise any of Lender's remedies; and
(iii) the benefit of all valuation, appraisement, and exemption laws. If and to
the extent that any obligation of Borrower to Lender shall be considered an
obligation of guaranty or suretyship, then the following waivers shall apply:
(A) Borrower agrees that no election to proceed in one form of action
or against any party or on any obligation shall constitute a waiver of Lender's
right to proceed in any other form of action for a deficiency, except to the
extent Lender realizes payment by such action, notwithstanding the effect of
such action upon Borrower's rights of subrogation, reimbursement, or indemnity,
if any, against any Person; and
(B) Borrower agrees that Lender shall be under no obligation and
expressly waives the right to require Lender: (i) to marshall any assets in
favor of Borrower, (ii) to proceed first against any guarantor or any Property
of guarantor or against any collateral, (iii) to enforce first any other
guaranty obligations with respect to, or security for, the Liabilities, or (iv)
to pursue any other remedy in Lender's power that Borrower may or may not be
able to pursue itself and that may lighten Borrower's burden, any right to which
Borrower hereby expressly waives.
10.5 Execution of Certificates. Lender and Borrower acknowledge and agree
that (i) any and all certificates and documents now or hereafter executed by any
officer or director of Borrower shall be executed solely in their official
capacity, and (ii) such officer or director shall have no personal liability
arising out of the execution of any such certificate or document.
10.6 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in a manner as to be effective and valid under applicable
law. If any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law in any jurisdiction, such provision, as to such
jurisdiction, shall be ineffective only to the extent of such provision and the
remaining provisions of this Agreement shall remain unaffected and in full force
and effect, and such prohibition and invalidity in such jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
10.7 Parties. This Agreement shall be binding upon and shall inure to the
benefit of the respective successors and assigns of Borrower and Lender
including any trustee or interim trustee of Borrower appointed pursuant to
Bankruptcy Code section 1104 or sections 701 and 702. This provision, however,
shall not be deemed to modify Section 10.1.
10.8 Conflict of Terms. The provisions of any other related agreement and
any schedule or exhibit thereto or to this Agreement are incorporated in this
Agreement as if set forth in full by this reference. Except as otherwise
provided in this Agreement by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement conflicts or is
inconsistent with any provision in any other related agreement, the provision
contained in this Agreement shall govern and control.
10.9 Governing Law; Consent to Jurisdiction and Venue. Except as
otherwise expressly provided in any other related agreements in all respects,
including all matters of construction, validity and performance, this Agreement
and the Liabilities arising hereunder shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts made and performed in such state, without regard to the principles
thereof regarding conflict of laws and any applicable laws of the United States
of America. BORROWER CONSENTS TO PERSONAL JURISDICTION, WAIVES ANY OBJECTION AS
TO JURISDICTION OR VENUE, AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE, IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. Service of
process on Borrower, Lender or any Participant in any action arising out of or
relating to any Agreement contemplated herein shall be effective if mailed to
such party at the address listed in Section 10.11. Nothing herein shall
preclude Lender, any Participant or Borrower from bringing suit or taking other
legal action in any other jurisdiction.
10.10 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER
THIS AGREEMENT OR ANY OTHER AGREEMENT.
10.11 Notice. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and shall be delivered (i) in person with receipt acknowledged, or
(ii) by facsimile transmission, with receipt electronically confirmed during
normal business hours of recipient, and with confirmation by mailing of, no
later than one (1) Business Day following such transmission, of a copy of such
facsimile, by registered or certified mail, return receipt requested, postage
prepaid or by overnight courier, (iii) by registered or certified mail, return
receipt requested, postage prepaid or by overnight courier, or (iv) by Federal
Express or similar reliable overnight delivery service, addressed as follows:
(A) If to Lender, at
General Electric Capital Corporation
c/o General Electric Company, acting through
GE Medical Systems
North 14, West 23833
Stone Ridge Drive, Suite 300
Waukesha, Wisconsin 53188
Attention: Investment Manager
Facsimile: (414) 548-5058
and
General Electric Capital Corporation
c/o General Electric Company, acting through
GE Medical Systems
North 14, West 23833
Stone Ridge Drive, Suite 300
Waukesha, Wisconsin 53188
Attention: Finance Manager
Facsimile: (414) 548-5058
with a copy to:
McDermott, Will & Emery
2029 Century Park East, 38th Floor
Los Angeles, California 90067
Attention: Ira J. Rappeport, Esq.
Facsimile: (310) 277-4730
(B) If to Borrower, at
American Health Services Corp.
4440 Von Karmen, Suite 320
Newport Beach, California 92660
Attention: President
Facsimile: (714) 851-5981
with a copy to:
Green, Stewart & Farber, P.C.
2600 Virginia Avenue N.W., Suite 1111
Washington, DC 20037
Attention: Philip D. Green, Esq.
Facsimile: (202) 342-8734
or to such other addresses or facsimile transmission number as any party may
designate for itself by like notice. The giving of any notice required
hereunder may be waived in writing by the party entitled to receive such notice.
Every notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly given or served on the
date on which personally delivered with receipt acknowledged or sent by
facsimile with receipt electronically confirmed during normal business hours of
recipient, the next Business Day after deposit with Federal Express or three (3)
Business Days after deposit in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to the Persons designated above to receive copies shall
in no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
10.12 Indemnification.
(A) Borrower. In addition to any other amounts payable by Borrower
under this Agreement and the Nonrevolving Credit Note, Borrower hereby agrees to
protect, indemnify, pay and hold harmless Lender and Lender's Agent and their
respective directors, officers and employees from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable fees and expenses of counsel) (i) that Lender or Lender's
Agent may incur or be subject to as a consequence, directly or indirectly, of
(a) issuance of the Nonrevolving Credit Loan, (b) any breach by Borrower of any
warranty, covenant, term or condition in, or the occurrence of any Event of
Default under, this Agreement or any other Loan Document, including all
reasonable fees or expenses resulting from the settlement or defense of any
claims or liabilities arising as a result of any such breach or default, and
(c) involvement in any legal suit, investigation, proceeding, inquiry or action
as to which Lender or Lender's Agent is involved as a consequence, directly or
indirectly, of its issuance of the Nonrevolving Credit Loan, the holding or
owning of any Collateral by Lender or the Nonrevolving Credit Loan, Lender's
execution of this Agreement and any other Loan Document to which it is a party
or any other event or transaction contemplated by any of the foregoing, except
for any claims, demands, liabilities, damages, losses, charges and expenses
which are caused by Lender's Agent or Lender's gross negligence or willful
misconduct or other activities of Lender or Lender's Agent described in
Subsection 10.12(B) hereof and (ii) that are related to any claims, actions or
proceedings which may be asserted against Lender or Lender's Agent in connection
with the transactions contemplated by this Agreement. The obligations of
Borrower under this Section 10.12 shall survive the termination of this
Agreement. In furtherance and not in limitation hereof, Lender may accept
documents that appear on their face to be in order, without responsibility for
further investigation, except if Lender has received any notice or information
to the contrary.
(B) Lender. Lender hereby agrees to protect, indemnify, pay and hold
harmless Borrower and its directors, officers and employees from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable fees and expenses of counsel) that Borrower may
incur or be subject to as a consequence, directly or indirectly, of (i) Lender's
Agent or Lender's gross negligence or willful misconduct; and (ii) any breach by
Lender of any warranty, covenant, term or condition, or the occurrence of any
default by Lender under this Agreement or any other Loan Document, including all
reasonable fees or expenses resulting from the settlement or defense of any
claims or liabilities arising as a result of any such breach or default;
provided, however, that for purposes of this Subsection 10.12(B)(ii), in no
event shall Lender's cumulative liability to Borrower for any and all claims,
causes of action, injuries, damages, judgments, expenses, fees or costs of a
suit in connection with the Equipment, if any, exceed the value of the portion
of the Equipment which gave rise to the claim, cause of action, judgment,
expense or cost.
10.13 Section Titles and Table of Contents. The section titles and the
Table of Contents contained in this Agreement are merely for convenience and
shall be without substantive meaning or content, and are not a part of the
Agreement between the parties hereto.
10.14 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be an original, all of which taken together
shall be deemed to constitute one (1) and the same agreement.
10.15 Successors and Assigns. All of the terms and provisions of this
Agreement and the other Loan Documents shall be binding upon and shall inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto. Lender is hereby specifically authorized to assign or sell
any or all of its rights and obligations under this Agreement to any party
without the prior written consent of Borrower.
10.16 Limitation of Liability. Notwithstanding any other provision herein
to the contrary, to the fullest extent permitted by applicable law, neither
Borrower nor Lender shall be liable to the other party or, in Borrower's case,
to any of Lender's Affiliates or agents, for any incidental or consequential
damages of any kind to the other party in connection with the Loan Documents and
transactions contemplated by this Agreement.
10.17 Integration. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and supersedes all prior agreements, written or oral, on
the subject matter hereof. Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.
10.18 Taxes and Reserve Requirements.
(A) If at any time any change in any applicable law or in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof or any reversal by any such entity of an interpretation by Lender of any
such law or the compliance by Lender with any request or directive (whether or
not having the force of law) of any such entity:
(i) shall (A) subject Lender to any tax, duty or other charge
with respect to the Note or this Agreement or any of its obligations
hereunder, or (B) change the basis of taxation of payment to Lender of
the principal of or interest on the Loan or any other amounts due
under this Agreement or any other Loan Document (in each case,
including the imposition of any withholding tax but excluding any
changes in the rate of tax on the overall net income of Lender imposed
by any jurisdiction), or (ii) shall impose, increase, modify or deem
applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by,
Lender or shall impose on Lender any other conditions and the result
of the foregoing, in the determination of Lender, is to increase the
cost to Lender of making or maintaining the Loan or to reduce the
amount of any sum received or receivable by Lender, by an amount
determined by Lender to be material, then Borrower agrees to pay to
Lender, within fifteen (15) days after demand by Lender, the amount
reasonably determined by Lender to be the additional amount or amounts
required to compensate Lender for such increased cost or reduction.
(B) Lender agrees that it will promptly notify Borrower of any
event of which it has knowledge that will entitle Lender to receive any
additional amount or amounts pursuant to this Section 10.18 and will at the same
time deliver a certificate setting forth the change in applicable law,
administration or interpretation that is the basis for the claim and the amount
or amounts required to compensate Lender. In making the determinations
contemplated hereunder, Lender may make such estimates, assumptions, allocations
and the like which Lender in good faith determines to be appropriate, and
Lender's selection thereof and Lender's determinations based thereon, absent
manifest error, shall be final and binding and conclusive upon Borrower.
10.19 Confidentiality and Publicity. The parties hereto shall hold in
confidence the information contained in the Warrant, the Loan Documents and the
Commitment Letter and all information related to the transactions contemplated
by this Agreement, which is not otherwise known to the public, shall be held by
each party hereto as confidential and proprietary information and shall not be
disclosed to third persons without the prior written consent of the other party.
Accordingly, Lender and Borrower shall not, and shall not permit any of their
respective Affiliates to, discuss with, or provide nonpublic information to, any
third party concerning the Warrant, the Loan Documents or the Commitment Letter,
except: (i) as required in governmental filings or judicial, administrative or
arbitration proceedings, or (ii) pursuant to public announcements made with the
prior written approval of Lender and Borrower, and (iii) as required by law.
Lender shall have the right to review and approve, which approval may be denied
in Lender's sole discretion, any written characterization of this Agreement, the
Warrant and any transaction contemplated hereby except Lender shall not have the
right to review, but shall have the right to approve, characterizations included
in governmental filings or judicial, administrative or arbitration proceedings.
10.20 Closing. The delivery of documents and instruments on the Closing
Date as contemplated hereby shall take place at 2:00 p.m. at the offices of
Lender's counsel located at 2029 Century Park East, 38th Floor, Los Angeles,
California.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first specified above.
GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation
By:
Terry D. Suppers
Its: Agent-in-Fact
AMERICAN HEALTH SERVICES CORP., a Delaware
corporation
By:
Title:
EXHIBIT 99.2
AMERICAN HEALTH SERVICES CORP.
COMMON STOCK PURCHASE WARRANT
May 19, 1992
TABLE OF CONTENTS
Page
1. DEFINITIONS.................................
2. EXERCISE OF WARRANT.........................
2.1 Manner of Exercise....................
2.2 Payment of Taxes......................
2.3 Fractional Shares.....................
2.4 Continued Validity....................
3. TRANSFER, DIVISION AND COMBINATION..........
3.1 Transfer..............................
3.2 Division and Combination..............
3.3 Expenses..............................
3.4 Maintenance of Books..................
4. ADJUSTMENTS.................................
4.1 Stock Dividends, Subdivisions,
Combinations and Reclassifications....
4.2 Certain Other Distributions...........
4.3 Issuance of Additional Shares of
Common Stock..........................
4.4 Issuance of Warrant or Other Rights...
4.5 Issuance of Convertible Securities....
4.6 Superseding Adjustments...............
4.7 Other Provisions Applicable to
Adjustments under this Section........
4.8 Reorganization, Reclassification,
Merger, Consolidation or Disposition
of Assets.............................
4.9 Other Action Affecting Common Stock...
4.10 Certain Limitations...................
5. NOTICES TO WARRANT HOLDERS..................
5.1 Notice of Adjustments.................
5.2 Notice of Certain Corporate Action....
6. NO IMPAIRMENT...............................
7. RESERVATION AND AUTHORIZATION OF COMMON
STOCK; REGISTRATION WITH OR APPROVAL OF
ANY GOVERNMENTAL AUTHORITY..................
8. TAKING OF RECORD; STOCK AND WARRANT
TRANSFER BOOKS..............................
9. RESTRICTIONS ON TRANSFERABILITY.............
9.1 Restrictive Legend....................
9.2 Notice of Proposed Transfers;
Requests for Registration............
9.3 Required Registration.................
9.4 Incidental Registration...............
9.5 Registration Procedures...............
9.6 Expenses; Limitations on Registration.
9.7 Indemnification.......................
9.8 Termination of Restrictions...........
9.9 Listing on Securities Exchange........
9.10 Certain Limitations on Registration
Rights................................
9.11 Selection of Managing Underwriters....
10. SUPPLYING INFORMATION.......................
11. LOSS OR MUTILATION..........................
12. OFFICE OF THE COMPANY.......................
FINANCIAL AND BUSINESS INFORMATION..........
13.1 Information............................
13.2 Annual Information.....................
13.3 Filings................................
14. APPRAISAL...................................
15. LIMITATION OF LIABILITY.....................
16. MISCELLANEOUS...............................
16.1 Nonwaiver and Expenses................
16.2 Notice Generally......................
16.3 Indemnification.......................
16.4 Remedies..............................
16.5 Successors and Assigns................
16.6 Amendment.............................
16.7 Severability..........................
16.8 Headings..............................
16.9 Governing Law; Service of Process.....
16.10 Mutual Waiver of Jury Trial...........
THIS COMMON STOCK PURCHASE WARRANT AND THE SECURITIES FOR WHICH IT CAN BE
EXERCISED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR STATE LAW, THE RULES AND
REGULATIONS THEREUNDER OR THE TRANSFER RESTRICTIONS OF THIS WARRANT.
AMERICAN HEALTH SERVICE CORP.
COMMON STOCK PURCHASE WARRANT
Up to 1,678,946 Shares, Subject to Adjustment
May 19, 1992
THIS IS TO CERTIFY THAT GENERAL ELECTRIC COMPANY, a New York corporation
acting through GE Medical Systems, or registered assigns, is entitled, at any
one time on and after the Exercise Date and on or prior to the Expiration Date
(as hereinafter defined), to purchase from AMERICAN HEALTH SERVICES CORP., a
Delaware corporation (the "Company"), up to 1,678,946 shares of Common Stock (as
hereinafter defined and subject to adjustment as provided herein), of the
Company at a purchase price of $.10 per share (subject to adjustment as provided
herein), all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective meanings
set forth below.
"Additional Shares of Common Stock" shall mean all shares of Common Stock
issued by the Company following the date of this Warrant.
"Appraised Value" shall mean, in respect of any share of Common Stock on
any date herein specified, the fair market value of such share of Common Stock
(determined without giving effect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Stock or to the fact that the Company
may have no class of equity registered under the Exchange Act) as of the last
day of the most recent fiscal month to end within 60 days prior to such date
specified, based on the value of the Company as a whole, as determined by a
member or members of the NASD selected in accordance with the definition below
of "Current Market Price" on the basis of a sale between a willing seller and
buyer, neither acting under any compulsion, divided by the number of Fully
Diluted Outstanding shares of Common Stock.
"Book Value" shall mean, in respect of any share of Common Stock on any
date herein specified, the consolidated book value of the Company applicable to
Common Stock as of the last day of any month immediately preceding such date,
divided by the number of Fully Diluted Outstanding shares of Common Stock as
determined in accordance with GAAP by a firm of independent certified public
accountants of recognized national standing selected by the Company and
reasonably acceptable to the Majority Holders.
"Business Day" shall mean any day that is not a Saturday or Sunday or a
day on which banks are required or permitted to be closed in the States of New
York or California.
"Closing Date" shall mean the date on which the closing occurs in the Loan
Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise indicates)
the Common Stock, par value $.03 per share, of the Company, and any capital
stock into which such Common Stock may thereafter be changed, and shall also
include (i) capital stock of the Company of any other class (regardless of how
denominated) issued to the holders of shares of Common Stock upon any
reclassification thereof which is not preferred as to dividends or assets over
any other class of stock of the Company and which is not subject to redemption
and (ii) shares of common stock of any successor or acquiring corporation
received by or distributed to the holders of Common Stock of the Company in the
circumstances contemplated by Section 4.3.
"Convertible Securities" shall mean evidences of indebtedness, options,
warrants or other rights to receive shares of stock or other securities which
are convertible into or exchangeable, with or without payment of additional
consideration in cash or property, for Common Stock, either immediately or upon
the occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of Common Stock
on any date herein specified, the highest of (a) the Book Value per share of
Common Stock at such date, and (b) the Appraised Value per share of Common Stock
as at such date, or if there shall then be a public market for the Common Stock,
the highest of (x) the Book Value per share of Common Stock at such date, and
(y) the average of the daily market prices for 30 consecutive Business Days
commencing 45 days before such date. The daily market price for each such day
shall be (i) the last sale price on such day as furnished by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or by
the National Quotation Bureau if not reported on NASDAQ, (ii) if neither such
corporation at the time is engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business, or (iii) if there
is no such firm, as furnished by any member of the NASD selected mutually by the
Majority Holders and the Company or, if they cannot agree upon such selection,
as selected by two such members of the NASD, one of which shall be selected by
the Majority Holders and one of which shall be selected by the Company, (iv) if
the Common Stock is listed or admitted to trading on a stock exchange in the
United States, the last sale price on such day on the principal stock exchange
on which such Common Stock is then listed or admitted to trading, or (v) if no
sale takes place on such day on any such exchange, the average of the last
reported closing bid and asked prices on such day as officially quoted on any
such exchange.
"Current Warrant Price" shall mean, in respect of a share of Common Stock
at any date herein specified, the price at which a share of Common Stock may be
purchased pursuant to this Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Exercise Date" shall mean the date three (3) years following the Closing
Date; provided, however, that the Exercise Date shall be accelerated to any
earlier date upon which any of the following events occurs: (i) a tender offer
is commenced for all or part of the Company's Common Stock, (ii) the acquisition
or disposition of securities of the Company by a Person or group which would
cause such Person or group holding such securities, alone or together with such
Person's or group's affiliates, to increase their holdings above, or decrease
their holdings below, 18% of the Company's Fully Diluted Outstanding Common
Stock, (iii) the Company sells all or substantially all of its assets, or
(iv) the termination, repayment or prepayment in full of the loan under the Loan
Agreement.
"Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1.
"Expiration Date" shall mean the date two years following payment in full
of all amounts owing under the Loan Agreement, including amounts borrowed under
the Term Loan and the Nonrevolving Credit Loan provided for in the Loan
Agreement.
"Fully Diluted Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all shares of Common Stock Outstanding at such date and all shares of Common
Stock issuable in respect of this Warrant and all other options, warrants,
Convertible Securities or other rights to purchase or receive Common Stock
outstanding on such date.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as from time to time in effect.
"GE Capital" shall mean General Electric Capital Corporation, a New York
corporation.
"GE Medical" shall mean General Electric Company, a New York corporation
acting through GE Medical Systems.
"Holder" shall mean the Person or Persons in whose name the Warrant set
forth herein is registered on the books of the Company maintained for such
purpose.
"Loan Agreement" shall mean a loan and security agreement to be entered
into in or about May, 1992, between the Company and GE Capital providing for a
$6 million nonrevolving credit facility.
"Majority Holders" shall mean the holders of Warrants exercisable for in
excess of 50% of the aggregate number of shares of Common Stock then purchasable
upon exercise of all Warrants, whether or not then exercisable.
"NASD" shall mean the National Association of
Securities Dealers, Inc., or any successor corporation thereto.
"Other Property" shall have the meaning set forth in Section 4.7.
"Outstanding" shall mean, when used with reference to Common Stock, at any
date as of which the number of shares thereof is to be determined, all issued
shares of Common Stock, except shares then owned or held exclusively by or for
the account solely of the Company or any wholly-owned subsidiary thereof
(collectively, "Subsidiary-Held Shares"), and shall include all shares issuable
in respect of any certificates representing fractional interests in shares of
Common Stock. Subsidiary-Held Shares shall remain Subsidiary-Held Shares even
if held in pledge as security unless and until such shares are foreclosed upon
and record, beneficial or equitable ownership transferred.
"Permitted Issuances" shall mean (a) Subsidiary-Held Shares, (b) Common
Stock issued to the Company's employees under a bona fide employee benefit plan
adopted by the Board of Directors and approved by the holders of Common Stock
when required by law, if such Common Stock would otherwise be Additional Shares
of Common Stock (but only to the extent that the aggregate number of shares
excluded hereby and issued after the date of this Warrant shall not exceed 5% of
the Common Stock Outstanding at the time of the adoption of such plan, exclusive
of antidilution adjustments thereunder), (c) Warrant Stock, and (d) Common Stock
underlying Convertible Securities as of January 1, 1992.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Preferred Stock" shall mean any class of the Company's stock having
rights, preferences or privileges senior or prior in right to any other class;
Preferred Stock shall include, without limitation, the Company's Series B
Preferred Stock.
"Restricted Common Stock" shall mean shares of Common Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Subsidiary" shall mean, with respect to any Person, any corporation of
which an aggregate of more than 50% of the outstanding stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person.
"Subsidiary-Held Shares" shall have the meaning set forth above in the
definition of "Outstanding."
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or
of any interest in either thereof, which would constitute a sale thereof within
the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrants" shall mean this Warrant and all warrants issued upon transfer,
division or combination of, or in substitution for, this Warrant. All Warrants
shall at all times be identical as to terms and conditions and date, except as
to the percentage of Fully Diluted Outstanding Shares of Common Stock for which
they may be exercised. Collectively, all unexercised Warrants shall be
exercisable for the exact same number of shares as this Warrant would be
exercisable in the event any such Transfer or division had not occurred.
Exercise of any warrant(s) shall not trigger any of the adjustments contemplated
by Section 4 of this Warrant.
"Warrant Price" shall mean an amount equal to (i) the number of shares of
Common Stock being purchased upon exercise of this Warrant pursuant to Section
2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by the
holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1 Manner of Exercise. From and after the Exercise Date and until 5:00
p.m., California time, on the Expiration Date, the Holders thereof may exercise
the Warrants in the aggregate up to 12 times (plus one additional time by GE
Medical only and not by any assignee of GE Medical) on Business Days, for all or
any part of the number of shares of Common Stock purchasable hereunder (but
never less than the number of shares of Common Stock issuable under a Warrant
pursuant to any of the six segments contemplated by clause (ii) immediately
below), as follows:
(i) 839,473 shares of Common Stock, plus
(ii) for each cumulative $1 million or portion thereof borrowed from
time to time by the Company from GE Capital under the $6 million credit
facility pursuant to the Loan Agreement, an additional 139,912 shares of
Common Stock.
In order to exercise this Warrant, in whole or in part, Holder shall
deliver to the Company at its principal office at 4440 Von Karman, Suite 320,
Newport Beach, California 92660 or at the office or agency designated by the
Company pursuant to Section 12, (i) a written notice of Holder's election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price in the manner specified
below, and (iii) this Warrant. Such notice shall be substantially in the form
of the subscription form appearing at the end of this Warrant as Exhibit A, duly
executed by Holder or its agent or attorney. Upon receipt thereof, the Company
shall, as promptly as practicable, and in any event within five (5) Business
Days thereafter, execute or cause to be executed and deliver or cause to be
delivered to Holder a certificate or certificates representing the aggregate
number of full shares of Outstanding Shares of Common Stock issuable upon such
exercise. The stock certificate or certificates so delivered shall be, to the
extent possible, in such denomination or denominations as such Holder shall
request in the notice and shall be registered in the name of Holder or, subject
to Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other Person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice, together with
the payment as set forth below, and this Warrant are received by the Company as
described above and all taxes required to be paid by Holder, if any, pursuant to
Section 2.2 prior to the issuance of such shares have been paid or agreed to be
paid when finally determined.
Payment of the Warrant Price shall be made at the option of the
Holder by certified or official bank check, or by cancellation of indebtedness,
if any, owed by the Company to such Holder.
2.2 Payment of Taxes. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable. The Company shall pay all expenses in connection
with, and all taxes and other governmental charges that may be imposed with
respect to, the issue or delivery thereof, unless such tax or charge is imposed
by law upon Holder, in which case such taxes or charges shall be paid by Holder.
The Company shall not be required, however, to pay any tax or other charge
imposed in connection with any transfer involved in the issuance of any
certificate for shares of Common Stock issuable upon exercise of this Warrant in
any name other than that of Holder, and in such case the Company shall not be
required to issue or deliver any stock certificate until such tax or other
charge has been paid or it has been established to the satisfaction of the
Company that no such tax or other charge is due.
2.3 Fractional Shares. The Company shall not issue a fractional share
of Common Stock upon exercise of any Warrant. A fractional share otherwise
issuable shall be rounded up to the nearest whole share.
2.4 Continued Validity. A holder of shares of Common Stock issued upon
the exercise of this Warrant (other than a holder who acquires such shares after
the same have been publicly sold pursuant to a Registration Statement under the
Securities Act or sold pursuant to Rule 144 thereunder), shall continue to be
entitled with respect to such shares to all rights to which it would have been
entitled as Holder under Sections 9, 10, 13, and 16 of this Warrant. The
Company shall, at the time of each exercise of this Warrant upon the request of
the holder of the shares of Common Stock issued upon such exercise hereof,
acknowledge in writing, in form reasonably satisfactory to such holder, its
continuing obligation to afford to such holder all such rights and subject to
any burdens; provided, however, that if such holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 Transfer. This Warrant shall be nontransferable other than to a
division, subsidiary or affiliate of GE Medical until the Exercise Date except
by merger of the Holder with another entity or otherwise by operation of law.
Subject to compliance with Section 9 following said period of
nontransferability, transfer of this Warrant and all rights hereunder, in whole
or in part, shall be registered on the books of the Company to be maintained for
such purpose, upon surrender of this Warrant at the principal office of the
Company referred to in Section 2.1 or the office or agency designated by the
Company pursuant to Section 12, together with a written assignment of this
Warrant substantially in the form of Exhibit B hereto duly executed by Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall, subject to Section 9, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if properly assigned
in compliance with Section 9, may be exercised by a new Holder for the purchase
of shares of Common Stock without having a new Warrant issued. If requested by
the Company, a new Holder shall acknowledge in writing, in form reasonably
satisfactory to the Company, such Holder's continuing obligations under
Section 9 of this Warrant.
3.2 Division and Combination. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4 Maintenance of Books. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration, and the registration of
transfer, of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant shall be subject to adjustment from time to time as set forth in
this Section 4. The Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this Section 4 at the
time of such event.
4.1 Stock Dividends, Subdivisions, Combinations and Reclassifications.
If at any time the Company shall with respect to its Common Stock or Convertible
Securities:
(a) pay a dividend or make distribution of Additional Shares of
Common Stock or Convertible Securities other than convertible indebtedness
or convertible Preferred Stock (in which event such Additional Shares of
Common Stock issuable upon exchange or conversion shall be deemed
distributed),
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) reclassify its Common Stock (other than a change in par value,
or from par value to no par value) into shares of Common Stock and shares
of any other class of stock; and, if the outstanding shares of Common
Stock shall be changed into a larger or smaller number of shares of Common
Stock as a part of such reclassification, such change shall be deemed a
subdivision or combination, as the case may be, of the Outstanding shares
of Common Stock within the meaning of this Section 4.1.,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable after the occurrence of any such event shall be equal to (A) the
maximum number of shares of Common Stock underlying this Warrant (including
without limitation Additional Shares of Common Stock resulting from the
application of Sections 4.3, 4.4 and 4.5 below) prior to the occurrence of any
such event, multiplied by (B) the number of Fully Diluted Outstanding shares of
Common Stock after any such event, divided by the number of Fully Diluted
Outstanding shares of Common Stock prior to any such event, and (ii) the Current
Warrant Price shall be adjusted to equal the Current Warrant Price, or purchase
price for securities under Sections 4.3, 4.4 or 4.5, respectively, multiplied
(A) by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares for which this Warrant is exercisable immediately after such adjustment.
Any increased number of shares of Common Stock subject to this Warrant resulting
from application of the foregoing shall be allocated ratably among all shares of
Common Stock subject to this Warrant prior to each such event and the shares
(including the newly allocated shares) not subject to clause (i) of Section 2.1
shall remain subject to the conditions precedent to exercise described in clause
(ii) of Section 2.1.
4.2 Certain Other Distributions. If at any time the Company shall with
respect to its Common Stock or Convertible Securities pay any dividend or make
any other distribution of property or assets or any nature whatsoever not
subject to the provisions of Section 4.1, including without limitation cash,
evidences of its indebtedness or other securities, then (i) the number of shares
of Common Stock for which this Warrant is exercisable shall be adjusted to equal
the product of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such adjustment by a fraction (A) the numerator
of which shall be the Current Market Price per share of Common Stock one
Business Day following payment of any such dividend or distribution, and (B) the
denominator of which shall be (x) such Current Market Price per share of Common
Stock, minus (y) the fair value (as determined in good faith by the Board of
Directors of the Company and supported by an opinion from an investment banking
firm of recognized national standing acceptable to the Majority Holders) of any
and all such cash, evidences of indebtedness, shares of stock, other securities
or property divided by the shares of Common Stock Outstanding one Business Day
following payment of any such dividend or distribution, and (ii) the Current
Warrant Price shall be adjusted to equal (A) the Current Warrant Price
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares for which this Warrant is exercisable immediately after such adjustment.
Any increased number of shares of Common Stock subject to this Warrant resulting
from application of the foregoing shall be allocated ratably among all shares of
Common Stock subject to this Warrant prior to each such event and the shares
(including the newly allocated shares) not subject to clause (i) of Section 2.1
shall remain subject to the conditions precedent to exercise described in clause
(ii) of Section 2.1. Anything in the first clause of this Section 4.2 to the
contrary notwithstanding, the dividends and distributions to which this Section
4.2 apply shall not include principal, interest or premium payments made with
respect to Convertible Securities which constitute evidence of indebtedness
under generally accepted accounting principles.
4.3 Issuance of Additional Shares of Common Stock.
(a) If at any time the Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock other than
Permitted Issuances, then the number of shares of Common Stock for which
this Warrant is exercisable shall be automatically increased in an amount
equal to 11.1% of the number of shares of such Additional Shares of Common
Stock (other than Permitted Issuances) and the purchase price per share
for (only) such increased shares shall be identical to the purchase price
of the Additional Shares of Common Stock so issued or sold.
(b) The provisions of paragraph (a) of Section 4.3 shall not apply
to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 4.1 or 4.2. No adjustment of the
number of shares of Common Stock for which this Warrant shall be
exercisable or the purchase price therefor shall be made under paragraph
(a) of Section 4.3 upon the issuance of any Additional Shares of Common
Stock which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance of such Convertible
Securities (or upon the issuance of any warrant or other rights therefor)
pursuant to Section 4.4 or Section 4.5.
4.4 Issuance of Warrants or Other Rights. If at any time the Company
shall in any manner (whether directly or by assumption in a merger in which the
Company is the surviving corporation) issue or sell, any warrants or other
rights to subscribe for or purchase (a) any Additional Shares of Common Stock
other than Permitted Issuances or (b) any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately exercisable, then
the number of shares of Common Stock for which this Warrant is exercisable
automatically shall be increased in an amount equal to 11.1% of the Additional
Shares of Common Stock underlying such warrants, other rights or Convertible
Securities and the purchase price for (only) such Additional Shares of Common
Stock shall be an amount equal to the aggregate purchase price for such warrants
or other rights and their underlying Additional Shares of Common Stock and such
Convertible Securities (including their underlying shares of Common Stock), if
any, on the basis that (i) the maximum number of Additional Shares of Common
Stock issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding, (ii) the price per share of such
Additional Shares of Common Stock shall be deemed to be the lowest possible
price per share in any range of prices per share at which such Additional Shares
of Common Stock are available to such holders, and (iii) the Company shall be
deemed to have received all of the consideration payable for such warrants,
rights and underlying Additional Shares of Common Stock and Convertible
Securities (including their underlying shares of Common Stock), if any, as of
the date of the actual issuance of such warrants or other rights. No further
adjustments of the number of shares for which this Warrant is exercisable or the
price therefor shall be made upon the actual issue of such underlying Common
Stock or of such underlying Convertible Securities upon exercise of such
warrants or other rights or upon the actual issue of such underlying Common
Stock upon such conversion or exchange of such Convertible Securities.
4.5 Issuance of Convertible Securities. If at any time the Company
shall in any manner (whether directly or by assumption in a merger in which the
Company is the surviving corporation) issue or sell, any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, then the number of shares of Common Stock for which this Warrant is
exercisable automatically shall be increased in an amount equal to 11.1% of the
Additional Shares of Common Stock into which such Convertible Securities may be
converted or exchanged and the purchase price for (only) such Additional Shares
of Common Stock shall be an amount equal to the consideration paid for such
Convertible Securities plus the conversion or exchange price for such underlying
Additional Shares of Common Stock on the basis that (i) the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and
outstanding, (ii) the price per share of such Additional Shares of Common Stock
shall be deemed to be the lowest possible price per share in any range of prices
per share at which such Additional Shares of Common Stock are available to such
holders, and (iii) the Company shall be deemed to have received all of the
consideration payable for such Convertible Securities and Additional Shares of
Common Stock, if any, as of the date of actual issuance of such Convertible
Securities. No adjustment of the number of shares for which this Warrant is
exercisable or the Current Warrant Price shall be made under this Section 4.5
upon the issuance of any Convertible Securities which are issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Section 4.4. No further adjustments of the
number of shares for which this Warrant is exercisable or the price therefor
shall be made upon the actual issue of such underlying Common Stock upon
conversion or exchange of such Convertible Securities.
4.6 Superseding Adjustment. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable shall
have been made pursuant to Section 4.4 or Section 4.5 as the result of any
issuance of warrants, rights or Convertible Securities,
(a) such warrants or rights, or the right of conversion or exchange
in such other Convertible Securities, shall expire, and all or a portion
of such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as the
case may be, shall not have been exercised, or
(b) the consideration per share for which shares of Common Stock
are issuable pursuant to such warrants or rights, or the terms of such
other Convertible Securities, shall be increased solely by virtue of
provisions therein contained for an automatic increase in such
consideration per share upon the occurrence of a specified date or event,
then such previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such rights or options
or other Convertible Securities on then outstanding Warrants, but not on any
then outstanding Warrant Stock, on the basis of
(c) treating the number of Additional Shares of Common Stock or
other property, if any, theretofore actually issued or issuable pursuant
to the previous exercise of any such warrants or rights or any such right
of conversion or exchange, as having been issued on the date or dates of
any such exercise and for the
consideration actually received and receivable therefor, and
(d) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been
granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock or other property
are issuable under such warrants or rights or other Convertible
Securities.
4.7 Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable provided
for in this Section 4:
(a) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur. For the purpose of any adjustment,
any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then thereafter no
adjustment shall be required by reason of the taking of such record and
any such adjustment previously made in respect thereof shall be rescinded
and annulled.
(c) Deferral of Issuance of Warrant Stock. If after any cash or
property of any type or kind, including evidences of indebtedness, becomes
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, Holder exercises this Warrant, then
the Company may elect to defer the issuance of Common Stock to Holder
resulting from the occurrence of such event until such event actually
takes place; provided that the Company shall deliver to Holder a due bill
or other appropriate instrument evidencing Holder's right to receive such
Common Stock upon the occurrence of any such event. Notwithstanding any
other provision to the contrary herein, if the event for which such record
was taken fails to occur or is rescinded, then such due bill shall
be deemed cancelled and such right to receive such Additional Shares shall
terminate.
4.8 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then each Holder shall have the right thereafter to receive,
upon exercise of such Holder's Warrant, the number of shares of common stock of
the successor or acquiring corporation and Other Property, receivable upon or as
a result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a Holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. In case of
any such reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation shall expressly assume the due
and punctual observance and performance of each and every covenant and condition
of this Warrant to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of the Common Stock for
which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4. For purposes of
this Section 4.8 "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or rights on liquidation over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.8 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
4.9 Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock,
or any other action described in this Section 4, then, unless such action will
not have a materially adverse effect upon the rights of the Holders, the shares
of Common Stock or other stock for which this Warrant is exercisable and/or the
purchase price thereof shall be adjusted in such manner as may be required
hereunder or equitable in the circumstances.
4.10 Certain Limitations. Notwithstanding anything herein to the
contrary, if any adjustment hereunder would cause the Current Warrant Price to
be less than the par value per share of Common Stock, then the Current Warrant
Price shall equal such par value.
5. NOTICES TO WARRANT HOLDERS
5.1 Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants, shall
be adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated, specifying the number of shares of
Common Stock for which this Warrant is exercisable and (if such adjustment was
made pursuant to Section 4.3 or 4.4) describing the number and kind of any other
shares of stock or Other Property for which this Warrant is exercisable, and any
change in the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall promptly cause a signed copy of such
certificate to be delivered to each Holder in accordance with Section 16.2. The
Company shall keep at its office or agency designated pursuant to Section 12
copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by any Holder or any
prospective purchaser of a Warrant designated by a Holder thereof.
5.2 Notice of Certain Corporate Action. The Holder shall be entitled to
the same rights to receive notice of corporate action as any holder of Common
Stock.
6. NO IMPAIRMENT
The Company shall not by any action including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (c) use its best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form satisfactory to
Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all times reserve
and keep available for issuance upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be reasonably necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the number
of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be reasonably necessary from any
public regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of warrants require registration or qualification with any governmental
authority under any federal or state law (otherwise than as provided in Section
9) before such shares may be so issued, the Company will in good faith and as
expeditiously as possible and at its expense endeavor to cause such shares to be
duly registered or qualified; provided that the provisions of Section 9 shall
govern with respect to Company's obligation to effect the registration of its
securities under the Securities Act.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants shall not be transferable until the Exercise Date, except to
a division, subsidiary or affiliate of GE Medical or by merger of the Holder
with another entity or otherwise by operation of law. Furthermore, the Warrants
and the Warrant Stock shall not be transferred, hypothecated or assigned before
satisfaction of the conditions specified in this Section 9, which conditions are
intended to ensure compliance with the provisions of the Securities Act and
state law, with respect to the Transfer of any Warrant or any Warrant Stock.
Holder, by acceptance of this Warrant, agrees to be bound by the provisions of
this Section 9. Furthermore, Holder, by acceptance of this Warrant and by
acceptance and delivery of the Subscription Form in the form of Exhibit A
hereto, represents and warrants to the Company for its reliance in connection
with issuing this Warrant and the Warrant Stock, respectively, that (i) Holder
is acquiring the Warrant, and if applicable, the Warrant Stock for Holder's own
account for investment and not for sale or other disposition thereof;
(ii) Holder understands that such securities are not registered under the
Securities Act and must be held indefinitely unless subsequently registered
under the Securities Act or unless an exemption from such registration is
available; (iii) Holder, by reason of its business and financial experience has
the capacity to protect its own interests in connection with purchase and
transfer of such securities and is able to bear the economic risk thereof; (and)
(iv) the Company has made available to Holder all documents and information
regarding an investment in such securities requested by or on behalf of Holder,
including but not limited to all publicly available information on file with the
Commission.
9.1 Restrictive Legend.
(a) Except as otherwise provided in this Section 9, each certificate
for Warrant Stock initially issued upon the exercise of this Warrant, and
each certificate for Warrant Stock issued to any subsequent transferee of
any such certificate, shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
are subject to the conditions specified in a certain Common
Stock Purchase Warrant dated as of May 19, 1992, originally
issued by American Health Services Corp. No transfer of the
shares represented by this certificate shall be valid or
effective until such conditions and any requirements of state
law have been fulfilled. A copy of the form of said Warrant is
on file with the Secretary of American Health Services Corp.
The holder of this certificate, by acceptance of this
certificate, agrees to be bound by the provisions of such
Warrant."
b) Except as otherwise provided in this Section 9, each Warrant
shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"This Warrant and its underlying securities have not been
registered under the Securities Act of 1933, as amended, and
may not be transferred in violation of such Act or state law,
the rules and regulations thereunder or the provisions of this
Warrant."
9.2 Notice of Proposed Transfers; Requests for Registration. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of Warrant
Stock, the holder of such Warrants or Warrant Stock shall give ten days prior
written notice (a "Transfer Notice") to the Company of such holder's intention
to effect such Transfer, describing the manner and circumstances of the proposed
Transfer, and shall obtain and deliver to the Company an opinion in form and
substance reasonably satisfactory to the Company (addressed to the Company and
upon which the Company may rely) from counsel to such holder who shall be
reasonably satisfactory to the Company, that the proposed Transfer of such
Warrants or such Warrant Stock may be effected without registration under the
Securities Act and any applicable state securities law(s). After receipt of the
Transfer Notice and opinion, the Company shall, within five days thereof, so
notify the holder of such Warrants or Warrant Stock and such holder shall
thereupon be entitled to Transfer such Warrants or such Warrant Stock, in
accordance with the terms of the Transfer Notice. Each certificate, if any,
evidencing such shares of Warrant Stock issued upon such Transfer shall bear the
restrictive legend set forth in Section 9.1(a), and each Warrant issued upon
such Transfer shall bear the restrictive legend set forth in Section 9.1(b),
unless in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act and any applicable state securities
law(s). The holder of the Warrants or the Warrant Stock, as the case may be,
giving the Transfer Notice shall not be entitled to transfer and shall not
transfer such Warrants or such Warrant Stock until (i) the Company receives a
written statement of investment intent and sophistication from the proposed
Transferee in substance substantially similar to the final sentence of the first
paragraph of Section 9 and (ii) such holder receives notice from the Company
under this Section 9.2.
The Holders of Warrants and Warrant Stock shall have the right to
request registration of such Warrant Stock pursuant to Sections 9.3 and 9.4.
9.3 Required Registration. The rights ("Required Registration") of
holders of Warrants and/or Warrant Stock under this Section 9.3 shall become
effective only on and after the date 90 days prior to the Exercise Date and
shall expire on the Expiration Date. After receipt of either (A) a written
request from the holders of Warrants and/or Warrant Stock representing at least
an aggregate (a) of fifty percent (50%) of the total of (i) all shares of
Warrant Stock then subject to issuance upon exercise of all Warrants and (ii)
all shares of Warrant Stock then Outstanding or (b) Warrant Stock so issuable
and/or Outstanding having an aggregate Current Market Price in excess of
$2,500,000 or (B) written request from GE Medical, alone or with other holders
of Warrants and/or Warrant Stock, requesting that the Company effect the
registration of Warrant Stock issuable upon the exercise of such holder's
Warrants or of any of such holder's Warrant Stock under the Securities Act and
specifying the intended method or methods of disposition thereof, the Company
shall promptly notify all holders of Warrants and Warrant Stock in writing of
the receipt of such request and each such holder, in lieu of exercising its
rights under Section 9.4, may elect (by written notice specifying the intended
method or methods of disposition of Warrant Stock sent to the Company within ten
Business Days from the date of such holder's receipt of the aforementioned
Company's notice) to have such holder's shares of Warrant Stock included in such
registration thereof pursuant to this Section 9.3. Thereupon the Company shall,
as expeditiously as is possible, use its best efforts to effect the registration
under the Securities Act of all shares of Warrant Stock which the Company has
been so requested to register by such holders for sale, all to the extent
required to permit the disposition (in accordance with the intended method or
methods thereof, as aforesaid) of the Warrant Stock so registered; provided,
however, that the Company shall not be required to effect more than two
registrations of any Warrant Stock pursuant to this Section 9.3. No holder of
any other warrant, Convertible Securities or other right to purchase shares of
Common Stock shall receive or be entitled to receive registration rights that
are more favorable than the registration rights available to the Holder pursuant
to the terms of this Section 9.
(a) Suspension of Registration.
If the Company has been requested to effect a Required
Registration, whether or not a Registration Statement with respect
thereto has been filed or has become effective, and furnishes to the
Holders requesting such registration a copy of a resolution of the
Board of Directors of the Company certified by the Secretary of the
Company stating that in the good faith judgment of the Board of
Directors it would be seriously detrimental to the Company and its
stockholders for such Registration Statement (i) to be filed on or
before the date such filing would otherwise be required hereunder,
(ii) to become effective, or (iii) to remain effective as long as
such Registration Statement would otherwise be required to remain
effective, the Company shall have the right to defer such filing or
effectiveness or to suspend such effectiveness for a period of not
more than 120 days; provided that during such time the Company may
not file a Registration Statement for securities to be issued and
sold for its own account or that of anyone other than the Holder or
Holders requesting such Required Registration; and provided,
further, that if effectiveness of a Registration Statement is
suspended pursuant to this provision, the period of such suspension
shall be added to the end of the period that such Registration
Statement would otherwise be required to be effective hereunder so
that the aggregate number of days that such Registration Statement
is required to remain effective hereunder shall remain unchanged.
(b) Hold-Back Agreements.
(i) Restrictions on Public Sale By Holder of Registrable
Securities. Each Holder whose registrable securities are covered by
a Registration Statement filed pursuant to this Warrant agrees, if
requested by the managing underwriters in an underwritten offering,
not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in such
Registration Statement, including a sale pursuant to Rule 144 under
the Securities Act (except as part of such underwritten
registration), during the 10-day period prior to, and during the
90-day period beginning on, the closing date of each underwritten
offering made pursuant to such Registration Statement, to the extent
timely notified in writing by the Company or the managing
underwriters; provided, however, that the holders of the Registrable
Securities will not be subject to the hold-back restrictions of this
Section if the Company and the other holders of the Company's equity
securities have not complied with the provisions of subsection (b)
below.
The foregoing provisions shall not apply to any Holder if such
Holder is prevented by applicable statute or regulation from
entering any such agreement; provided, however, that any such Holder
shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale of such
applicable class of registrable securities unless it has provided 45
days prior written notice of such sale or distribution to the
underwriter or underwriters.
(ii) Restrictions on Sale of Equity Securities by the Company
and Others. The Company agrees (1) not to effect any public or
private offer, sale or distribution of its equity securities,
including a sale pursuant to Regulation D under the Securities Act,
(i) during the 10-day period prior to, and during the 90-day period
beginning with, the effectiveness of a Registration Statement filed
under this Warrant to the extent timely notified in writing by a
holder of registrable securities or the managing underwriters
(except as part of such registration, if permitted, or pursuant to
registrations on Forms S-4 or S-8 or any successor
form to such Forms or the issuance of Common Stock pursuant to
warrants or employee stock options outstanding on the date hereof)
and (2) to use its best efforts to cause each holder of its
privately placed equity securities purchased from the Company at any
time on or after the date of this Agreement to agree not to effect
any public sale or distribution of any such securities during such
period, including a sale pursuant to Rule 144 under the Securities
Act (except as part of such registration, if permitted).
9.4 Incidental Registration. The rights of holders of Warrants and/or
Warrant Stock under this Section 9.4 shall become effective only on and after
the Exercise Date and shall expire on the Expiration Date. If the Company at
any time proposes to file on its behalf and/or on behalf of any of its security
holders ("the demanding security holders") a Registration Statement under the
Securities Act on any form (other than a Registration Statement required under
section 9.3 or a Registration Statement on Form S-4 or S-8 or any successor form
for securities to be offered in a transaction of the type referred to in Rule
145 under the Securities Act or to employees of the Company pursuant to any
employee benefit plan or to existing holders of the Company's debt or equity
securities in any exchange or rights offering, respectively) for the general
registration of securities to be sold for cash with respect to its Common Stock
or any other class of equity security (as defined in Section 3(a)(11) of the
Exchange Act) of the Company, it will give written notice to all holders of
Warrants or Warrant Stock at least 30 days before the initial filing with the
Commission of such Registration Statement, which notice shall set forth the
intended method of disposition of the securities proposed to be registered by
the Company. The notice shall offer to include in such filing the aggregate
number of shares of Warrant Stock, and the number of shares of Common Stock for
which this Warrant is exercisable, as such holders may request. Nothing herein
shall preclude the Company from discontinuing the registration of its securities
being effected on its behalf or on behalf of the demanding security holders at
any time prior to the effective date of the registration relating thereto.
Each holder of any such Warrants or any such Warrant Stock desiring
to have Warrant Stock registered under this Section 9.4 shall advise the Company
in writing within 30 days after the date of receipt of such offer from the
Company, setting forth the amount of such Warrant Stock for which registration
is requested. The Company shall thereupon include in such filing the number of
shares of Warrant Stock for which registration is so requested, subject to the
next sentence, and shall use its best efforts to effect registration under the
Securities Act of such shares. If the managing underwriter of a proposed public
offering shall advise the Company in writing that, in its opinion, the
distribution of the shares of Common Stock into which the Warrants are
exercisable and the Warrant Stock requested to be included in the registration
concurrently with the securities being registered by the Company or such
demanding security holder would materially and adversely affect the distribution
of such securities by the Company or such demanding security holder, then all
demanding security holders (other than any selling security holder who requested
such registration and the Company (unless such Registration Statement was filed
at the request of a demanding security holder)) shall reduce the amount of
securities each intended to distribute through such offering on a pro rata
basis. Except as otherwise provided in Section 9.6, all expenses of such
registration shall be borne by the Company.
9.5 Registration Procedures. If the Company is required by the
provisions of this Section 9 to use its best efforts to effect the registration
of any of its securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement
with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the disposition of such securities by the holders thereof;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities
covered by such Registration Statement until the earlier of such time as
all of such securities have been disposed of in a public offering or the
expiration of 180 days;
(c) furnish to any selling security holders such number of copies
of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such other documents, as such selling security holders may reasonably
request;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or blue
sky laws of such jurisdictions within the United States and Puerto Rico as
each Holder of such securities shall reasonably request in light of such
Holder's intended plan of distribution
(provided, however, the Company shall not be obligated to qualify as a
foreign corporation to do business under the laws of any jurisdiction in
which it is not then qualified or to file any general consent to service
of process or subject itself to taxation in any such jurisdiction), and do
such other reasonable acts and things as may be required of it to enable
such holder to consummate the disposition in such jurisdiction of the
securities covered by such Registration Statement;
(e) if requested by a majority (in amount of underlying and
outstanding shares ) of the Holders of Warrants or Warrant Stock being
included in such registration, use its best efforts to obtain from either
a nationally recognized underwriter or investment banker or an underwriter
or investment banker reasonably acceptable to such Holders a firm
commitment (pursuant to an underwriting agreement in customary form) to
underwrite the public offering of the securities covered by such
Registration Statement;
(f) furnish, at the request of any holder requesting registration
of Warrant Stock pursuant to Section 9.3, on the date that such shares of
Warrant Stock are delivered to the underwriters for sale pursuant to such
registration or, if such Warrant Stock is not being sold through
underwriters, on the date that the Registration Statement with respect to
such shares of Warrant Stock becomes effective, (1) a copy of an opinion,
dated such date, of the independent counsel representing the Company for
the purposes of such registration, addressed to the underwriters, if any,
and to the holders making such request, stating that such Registration
Statement has become effective under the Securities Act and that (i) to
the best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Securities
Act, (ii) the Registration Statement, the related prospectus, and each
amendment or supplement thereto, comply as to form in all material
respects with the requirements of the Securities Act and the applicable
rules and regulations of the Commission thereunder (except that such
counsel need express no opinion as to financial statements and data
contained therein), (iii) the descriptions in the Registration Statement
or the prospectus, or any amendment or supplement thereto, of all legal
matters and contracts and other legal documents or instruments are
accurate and fairly present the information required to be shown, and (iv)
such counsel does not know of any legal or governmental proceedings,
pending or contemplated, required to be described in the
Registration Statement or prospectus, or any amendment or supplement
thereto, which are not described as required, nor of any contracts or
documents or instruments of a character required to be described in the
Registration Statement or prospectus, or any amendment or supplement
thereto, or to be filed as exhibits to the Registration Statement which
are not described and filed or incorporated by reference as required; such
counsel shall also confirm that nothing has come to his attention to lead
him to believe that either the Registration Statement or the prospectus,
or any amendment or supplement thereto (other than financial material and
data as to which such counsel need make no statement) contains any untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which made, not misleading; and (2) a letter dated
such date, from the independent certified public accountants of the
Company, addressed to the underwriters, if any, and to the holder making
such request and, if such accountants refuse to deliver such letter to
such holder, then to the Company stating that they are independent
certified public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements and
other financial data of the Company included in the Registration Statement
or the prospectus, or any amendment or supplement thereto, comply as to
form in all material respects with the applicable accounting requirements
of the Securities Act. Such opinion of counsel shall additionally cover
such other legal matters with respect to the registration in respect of
which such opinion is being given as the holders holding a majority of the
Warrant Stock so registered may reasonably request. Such letter from the
independent certified public accountants shall additionally cover such
other financial matters (including information as to the period ending not
more than five Business Days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given
as the holders holding a majority of the Warrant Stock being so registered
may reasonably request;
(g) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the
securities covered by Registration Statement; and
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than 18
months
after the effective date of the Registration Statement, an earnings
statement covering the period of at least 12 months beginning with the
first full month after the effective date of such Registration Statement,
which earnings statements shall satisfy the provisions of Section 11(a) of
the Securities Act.
(i) notify each selling Holder of such registrable securities, at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of the securities covered by the
Registration Statement, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading and promptly make available to each selling Holder any such
supplement or amendment.
It shall be a condition precedent to the obligation of the Company
to take any action pursuant to this Section 9 in respect of the securities which
are to be registered at the request of any holder of Warrants or Warrant Stock
that such holder shall furnish to the Company such information regarding the
securities held by such holder and the intended method of disposition thereof as
the Company shall reasonably request and as shall be required in connection with
the action taken by the Company.
Each selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 9.5
(i) hereof, such selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering the
securities covered by the Registration Statement until such selling Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 9.5(i) hereof, and, if so directed by the Company such selling Holder
will deliver to the Company all copies, other than permanent file copies then in
such selling Holder's possession, of the most recent prospectus covering the
securities covered by Registration Statement at the time of receipt of such
notice. If the Company shall give such notice, the Company shall extend the
period during which such Registration Statement shall be maintained effective
by the number of days during the period from and including the date of the
giving of notice pursuant to Section 9.5(i) hereof to the date when the Company
shall make available to the selling Holders of the securities covered by such
Registration Statement a prospectus supplemented or amended to conform with the
requirements of Section 9.5(i) hereof.
9.6 Expenses; Limitations on Registration. All expenses incurred in
complying with Section 9, including, without limitation, all registration and
filing fees (including all expenses incident to filing with the NASD, printing
expenses, fees and disbursements of counsel for the Company, the reasonable fees
and expenses of one counsel for the selling security holders (selected by those
holding a majority of the shares being registered), expenses of any special
audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdictions pursuant to
Section 9.5(d), shall be paid by the Company, except that
(a) all such expenses in connection with any amendment or supplement
to the Registration Statement or prospectus filed more than 180 days after
the effective date of such Registration Statement because any holder of
Warrant Stock has not effected the disposition of the securities requested
to be registered shall be paid by such holder; and
(b) the Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of counsel for
any underwriter in respect of the securities sold by such holder of
Warrant Stock.
9.7 Indemnification.
(a) In the event of any registration of any of the Warrant Stock
under the Securities Act pursuant to this Section 9, the Company shall
indemnify and hold harmless the holder of such Warrant Stock, such
holder's directors and officers, and each other Person (including each
underwriter) who participated in the offering of such Warrant Stock and
each other Person, if any, who controls such holder or such participating
Person within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such holder or
any such director or officer or participating Person or controlling Person
may become subject under the Securities Act or any other statute or at
common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any alleged
untrue statement of any material fact contained, on the effective date
thereof, in any Registration Statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or
(ii) any alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and shall reimburse such Holder or such director, officer or participating
Person or controlling Person for any legal or any other expenses
reasonably incurred by such holder or such director, officer or
participating Person or controlling Person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any alleged untrue statement or alleged
omission made in such Registration Statement, preliminary prospectus,
prospectus or amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by such holder
specifically for use therein or (in the case of any registration pursuant
to Section 9.3) so furnished for such purposes by any underwriter. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or such director,
officer or participating Person or controlling Person, and shall survive
the transfer of such securities by such holder.
(b) Each holder of any Warrant Stock, by acceptance thereof, agrees
to indemnify and hold harmless the Company, its directors and officers and
each other Person, if any, who controls the Company within the meaning of
the Securities Act against any losses, claims, damages or liabilities,
joint or several, to which the Company or any such director or officer or
any such Person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
information in writing provided to the Company by such Holder of such
Warrant Stock contained, on the effective date thereof, in any
Registration Statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement
thereto; provided, however, that such Holder's obligation under this
Section 9.7(b) to indemnify and hold harmless the Company shall in no
event exceed the damage attributable solely to the inclusion of such
written information in such Registration Statement, preliminary
prospectus, final prospectus, or amendment or supplement suffered by the
Person or Persons whose claims gave rise to such losses, claims, damages
or liabilities.
The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same
extent as provided above with respect to information furnished in
writing by persons specifically for inclusion in any prospectus or
Registration Statement.
(c) If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred
to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The
amount paid or payable by a party under this Section 9 as a result of the
losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.7(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
Notwithstanding any other provisions of this Warrant, the Company
shall not be liable in any case to the extent that any loss, claim, damage,
liability or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission in any Registration
Statement or prospectus, if such untrue statement or alleged untrue statement,
omission or alleged omission is corrected in an amendment or supplement to the
Registration Statement and the Holder thereafter fails to deliver such
Registration Statement or prospectus as so amended or supplemented prior to or
concurrently with the sale of the securities covered by such Registration
Statement to the person asserting such loss, claim, damage, liability or expense
after the Company had furnished such Holder with a sufficient number of copies
of the same.
9.8 Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability after the Exercise Date of the Warrants and the Warrant Stock
and the legend requirements of Section 9.1 shall terminate as to any particular
Warrant or share of Warrant Stock (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such legend is not required in order
to ensure compliance with the Securities Act. Whenever after the Exercise Date
the restrictions imposed by Section 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
CONTAINED IN SECTION 9 HEREOF TERMINATED ON ,
, AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants thereafter issued upon registration of transfer, division or
combination of, or in substitution for, any Warrant or Warrants entitled to bear
such legend shall have a similar legend endorsed thereon. Whenever the
restrictions imposed by this Section shall terminate as to any share of Warrant
Stock, as hereinabove provided, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, a new certificate representing such
Warrant Stock not bearing the restrictive legend set forth in Section 9.1(a).
9.9 Listing on Securities Exchange. If the Company shall list any
shares of Common Stock on NASDAQ or any securities exchange, it will, at its
expense, list thereon, maintain and, when necessary, increase such listing of,
all shares of Common Stock issued or, to the extent permissible under the
applicable NASDAQ or securities exchange rules, issuable upon the exercise of
this Warrant so long as any shares of Common Stock shall be so listed during any
such Exercise Period.
9.10 Certain Limitations on Registration Rights. Notwithstanding the
other provisions of Section 9:
(i) the Company shall not be obligated to register the Warrant
Stock of any Holder if (x) in the opinion of counsel to the Company
reasonably satisfactory to the Holder and its counsel (or, if the
Holder has engaged an investment banking firm, to such investment
banking firm and its counsel), the sale or other disposition of such
Holder's Warrant Stock, in the manner proposed by such Holder (or by
such investment banking firm), may be effected without registering
such Warrant Stock under the Securities Act, and (y) the failure of
the Company to register such Warrant Stock will not result in a
reduction in the net proceeds to be received by such Holder in
connection with such sale or other disposition; and
(ii) the Company shall not be obligated to register the Warrant
Stock of any Holder pursuant to Section 9.3, if the Company has had
a registration statement, under which such Holder had a right to
have its Warrant Stock included pursuant to Sections 9.3 or 9.4,
declared effective within one year prior to the date of the request
pursuant to Section 9.3; provided, however, that if any Holder
elected to have shares of its Warrant Stock included under such
registration statement but some or all of such shares were excluded
pursuant to the penultimate sentence of Sections 9.3 or 9.4, then
such one-year period shall be reduced to six months.
9.11 Selection of Managing Underwriters. The managing underwriter or
underwriters for any offering of Warrant Stock to be registered pursuant to
Section 9.3 shall be selected by the Company and shall be reasonably acceptable
to the Holders of a majority of the shares being so registered (other than any
shares being registered pursuant to Section 9.4).
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and each holder
of Warrant Stock in supplying such information as may be reasonably necessary
for such Holder to complete and file any information reporting forms presently
or hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Warrant or Restricted
Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of GE Medical shall be sufficient
indemnity) and in case of mutilation upon surrender and cancellation hereof, the
Company will execute and deliver in lieu hereof a new Warrant of like tenor to
such Holder; provided, in the case of mutilation, no indemnity shall be required
if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this warrant. The Company
shall notify Holder in writing prior to any change of the address of the office
at which the Warrants may be presented.
13. FINANCIAL AND BUSINESS INFORMATION
13.1 Information. Except during any period when the Company is a Public
Company (as hereinafter defined), it will deliver to each Holder, as soon as
practicable after the end of each month, and in any event within 30 days
thereafter, and after the end of each quarter and in any event within 45 days
thereafter, one copy of an unaudited consolidated balance sheet, statement of
income and statement of cash flow of the Company and its Subsidiaries for such
period setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal years. Such financial statements
shall be prepared by the Company in accordance with GAAP and shall be
accompanied by the certification of the Company's chief executive officer or
chief financial officer that such financial statements are complete and correct
and present fairly the consolidated financial position, results of operations
and cash flow of the Company and its Subsidiaries as at the end of such period
and for such year-to-date period, as the case may be.
For purposes of this Section 13, the term "Public Company" shall
mean a company (i) that is subject to the reporting requirements of Section
15(d) of the Exchange Act, or (ii) any of whose securities are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act.
13.2 Annual Information. Except during any period when the Company is a
Public Company, it will deliver to each Holder as soon as practicable after the
end of each fiscal year of the Company, and in any event within 90 days
thereafter, one copy of:
(i) an audited consolidated balance sheet of the Company and
its Subsidiaries as at the end of such year, and
(ii) audited consolidated statements of income and retained
earnings and cash flow of the Company and its Subsidiaries for such
year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year; all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
the Company, or any other firm of independent certified public accountants of
recognized national standing selected by the Company and (ii) a report of such
independent certified public accountants confirming, or describing the agreed
upon procedures applied to the Company's schedules computing, any adjustment,
made pursuant to Section 4 during such year. Such report shall include a
description of any errors determined by the accountants in the Company's
schedules.
13.3 Filings. The Company will file on or before the required date all
required regular or periodic reports (pursuant to the Exchange Act) with the
Commission and will deliver to Holder promptly upon their becoming available one
copy of each report, notice or proxy statement sent by the Company to its
stockholders generally, and of each regular or periodic report (pursuant to the
Exchange Act) and any Registration Statement, prospectus or written
communication (other than transmittal letters) pursuant to the Securities Act,
filed by the Company with (i) the Commission or (ii) any securities exchange on
which shares of Common Stock are listed
(provided, however, that the Company may request filing extensions pursuant to
Rule 12b-25 under the Securities and Exchange Act of 1934, as amended).
14. APPRAISAL
The determination of the Appraised Value per share of Common Stock shall
be made by an investment banking firm of nationally recognized standing selected
by the Company and acceptable to the Majority Holders. If the investment
banking firm selected by the Company is not acceptable to the Majority Holders
and the Company and the Majority Holders cannot agree on a mutually acceptable
investment banking firm, then the Majority Holders and the Company shall each
choose one such investment banking firm and the respective chosen firms shall
agree on another investment banking firm which shall make the determination.
The Company shall retain, at its sole cost, such investment banking firm as may
be necessary for the determination of Appraised Value required by the terms of
this Warrant.
15. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
16. MISCELLANEOUS
16.1 Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Company shall operate
as a waiver of such right or otherwise prejudice the Company's rights, powers or
remedies. No course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder's rights, powers or remedies. If the Company fails
to make, when due, any payments provided for hereunder, or fails to comply with
any other provision of this Warrant, the Company shall pay to Holder such
amounts as shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.
16.2 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered (i) in person with receipt acknowledged, (ii) by facsimile
transmission, with receipt electronically confirmed during normal business hours
of recipient, and that is confirmed by sending, no later than one (1) Business
Day following such transmission, a copy of such facsimile, by registered or
certified mail, return receipt requested, postage prepaid, or (iii) by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last known
address or facsimile transmission number appearing on the books of the
Company maintained for such purpose.
(b) If to the Company at
American Health Services Corp.
4440 Von Karman, Suite 320
Newport Beach, California 92660
Attention: President
Facsimile Transmission Number: (714) 851-5981
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged or sent by facsimile with receipt
electronically confirmed during normal business hours of recipient, or three (3)
Business Days after the same shall have been deposited in the United States
mail. Failure or delay in delivering copies of any notice, demand, request,
approval, declaration, delivery or other communication to the person designated
above to receive a copy shall in no way adversely affect the effectiveness of
such notice, demand, request, approval, declaration, delivery or other
communication.
16.3 Indemnification. In addition to the indemnities provided in Section
9.7 (as to the subject matter of which the indemnifications, including
limitations, therein, shall control), the Company agrees to indemnify and hold
harmless Holder, its officers, directors, employees, agents, and attorneys from
and against any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of
any kind which may be imposed upon, incurred by or asserted against Holder
relating to or arising out of (i) Holder's exercise of this Warrant and/or
ownership of any shares of Warrant Stock issued in consequence thereof, or (ii)
any litigation to which Holder is made a party in its capacity as a stockholder
or warrant holder of the Company; provided, however, that the Company will not
be liable hereunder to the extent that any liabilities, obligation, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses or disbursements are found in a final nonappealable judgment by a court
to have resulted from either (i) Holder's gross negligence or willful
misconduct, or (ii) actions or omissions taken or not taken by Holder in any
capacity other than as a stockholder or warrant holder of the Company.
16.4 Remedies. Each holder of Warrant and Warrant Stock, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under Section 9
of this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of Section 9 of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
16.5 Successors and Assigns. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant, and shall be
enforceable by any such Holder.
16.6 Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Majority Holders, provided that no such Warrant may be modified or
amended to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
16.7 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
16.8 Headings. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
16.9 Governing Law; Service of Process. In all respects, including all
matters of construction, validity and performance, this Agreement and the
obligations arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of the State of Delaware applicable to contracts
made and performed in such state, without regard to the principles thereof
regarding conflict of laws, and any applicable laws of the United States of
America. Service of process on the Company or Holder in any action arising out
of or relating to this Agreement shall be effective if mailed to such party in
accordance with the procedures and requirements set forth in Section 16.2.
16.10 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE COMPANY AND HOLDER HEREOF WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
COMPANY AND HOLDER HEREOF DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY AND HOLDER
HEREOF WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
AMERICAN HEALTH SERVICES CORP.
By:
Name:
Attest: Title:
Name:
Title:
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant)
The undersigned registered owner of the attached Warrant irrevocably
exercises such Warrant for the purchase of Shares of Common Stock of
American Health Services Corp. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in such Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to
whose address is
and, if such shares of Common Stock shall not include
all of the shares of Common Stock issuable as provided in such Warrant, that a
new Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
Name of Registered Owner)
(Signature of Registered Owner)
(Street Address)
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond
with the name as written upon the face of the attached Warrant in
every particular, without alteration or enlargement or any change
whatsoever.
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under such Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of
Common Stock
and does hereby irrevocably constitute and appoint
attorney-in-fact to register such transfer on the books of
American Health Services Corp. maintained for the purpose, with full power of
substitution in the premises.
Dated: Print Name:
Signature:
Witness:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
FIRST AMENDMENT TO COMMON STOCK PURCHASE WARRANT
This First Amendment to Common Stock Purchase Warrant (the "Amendment") by
and between American Health Services Corp., a Delaware corporation ("AHSC"), and
General Electric Company, a New York corporation acting through GE Medical
Systems ("GE") is entered into by the parties on April 12, 1994.
R E C I T A L S
WHEREAS, AHSC has issued that certain Common Stock Purchase Warrant dated
as of May 19, 1992 (the "Warrant") for the purchase of shares of common stock of
AHSC;
WHEREAS, GE and AHSC desire to amend such Warrant effective as of May 1,
1994 ("Effective Date") as provided below.
NOW, THEREFORE, in consideration of the Recitals set forth above and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Section 2.1 is hereby amended as of the Effective Date to read as
follows:
"2.1 Manner of Exercise. From and after the Exercise Date and
until 5:00 p.m., California time, on the Expiration Date, the
Holders thereof may exercise the Warrants in the aggregate up to
12 times (plus one additional time by GE Medical only and not by
any assignee of GE Medical) on Business Days, for all or any part
of 839,473 shares of Common Stock.
In order to exercise this Warrant, in whole or in part,
Holder shall deliver to the Company at its principal office
at 4440 Von Karman, Suite 320, Newport Beach, California
92660 or at the office or agency designated by the Company
pursuant to Section 12, (i) a written notice of Holder's
election to exercise this Warrant, which notice shall
specify the number of shares of Common Stock to be
purchased, (ii) payment of the Warrant Price in the manner
specified below, and (iii) this Warrant. Such notice shall
be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly
executed by Holder or its agent or attorney. Upon receipt
thereof, the Company shall, as promptly as practicable, and
in any event within five (5) Business Days thereafter,
execute or cause to be executed and deliver or cause to be
delivered to Holder a certificate or certificates
representing the aggregate number of full shares of
Outstanding Shares of Common Stock issuable upon such
exercise. The stock certificate or certificates so
delivered shall be, to the extent possible, in such
denomination or denominations as such Holder shall request
in the notice and shall be registered in the name of Holder
or, subject to Section 9, such other name as shall be
designated in the notice. This Warrant shall be deemed to
have been exercised and such certificate or certificates
shall be deemed to have been issued, and Holder or any other
Person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all
purposes, as of the date the notice, together with the
payment as set forth below, and this Warrant are received by
the Company as described above and all taxes required to be
paid by Holder, if any, pursuant to Section 2.2 prior to the
issuance of such shares have been paid or agreed to be paid
when finally determined.
Payment of the Warrant Price shall be made at the option of
the Holder by certified or official bank check, or by
cancellation of indebtedness, if any, owed by the Company to
such Holder."
2. In the event of any conflict between the provisions of this Amendment
and the provisions of the Warrant, the provisions of this Amendment shall
control. The remainder of the Warrant, to the extent not inconsistent herewith,
shall remain in full force and effect in accordance with the terms thereof.
IN WITNESS WHEREOF, the parties hereto have entered into this Amendment on
the date and year first written above.
AHSC:
AMERICAN HEALTH SERVICES CORP.,
a Delaware corporation
By:___________________________
Its:_______________________
GE:
GENERAL ELECTRIC COMPANY, a New
York corporation acting through
GE Medical Systems
By:____________________________
Its:________________________
EXHIBIT 99.3
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") dated as of June 1,
1993, is by and between GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("Lender"), with an office located at 44 Old Ridgebury Road,
Danbury, Connecticut and AMERICAN HEALTH SERVICES CORP., a Delaware corporation
("Borrower"), with an office located at 4440 Von Karman, Suite 320, Newport
Beach, California.
W I T N E S S E T H:
WHEREAS, Lender has agreed to make a Term Loan (as defined below in this
Agreement) to Borrower on the terms and conditions of this Agreement;
WHEREAS, as part of the consideration for Lender's making the above loan to
Borrower, Lender has required that Borrower grant a security interest in the
Collateral (as defined below), and Borrower desires to grant such a security
interest to Lender on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the following terms
and conditions, and of any extension of credit or financial accommodation
heretofore, now, or hereafter made by Lender to or on behalf of Borrower, Lender
and Borrower hereby agree as follows:
1. GENERAL DEFINITIONS AND RULES OF CONSTRUCTION
In addition to the defined terms appearing above or defined in subsequent
sections of this Agreement, capitalized terms used in this Agreement shall have
(unless otherwise provided elsewhere in this Agreement) the following respective
meanings when used in this Agreement:
1.1 "Affiliate" shall mean (i) any Person or entity which, directly or
indirectly, controls, is controlled by or is under common control with Borrower,
and (ii) any entity in which, directly or indirectly, Borrower or any Person or
entity described in (i) controls, is controlled by or is under common control
with Borrower.
1.2 "Ancillary Note" shall mean that certain Promissory Note between
Lender and Borrower dated as of June 1, 1993 (including any amendments thereto
or replacements or extensions thereof) in the amount of One Million Eight
Hundred Ten Thousand Eight Hundred Fifty-One Dollars and Seventy-Eight Cents
($1,810,851.78) to provide for the payment of (i) applicable state sales taxes
imposed as a result of the sale of the Equipment by Lender's Agent to Borrower,
(ii) any other taxes or fees imposed as a result of such sale and Borrower's buy
out of the Equipment Leases and (iii) for the payment of all amounts owed by
Borrower to Lender or Lender's Agent during the month of June 1993 under any
loan agreement, promissory note, installment sales contract, or any other form
of liability or indebtedness owed by Borrower to Lender or Lender's Agent,
except amounts due during such month under the Philips Loan Documents. A form
of the Ancillary Note is attached hereto as Schedule 1.2.
1.3 "Bankruptcy Code" shall mean Title 11 of the United States Code, as
from time to time amended, and the rules applicable with respect thereto.
1.4 "Borrower" shall mean American Health Services Corp., a Delaware
corporation.
1.5 "Business Day" shall mean any day except Saturday, Sunday or any day
in which banks in New York, New York are required or authorized by law to remain
closed.
1.6 Intentionally Deleted.
1.7 "Closing Date" shall mean July 9, 1993, or such other date as the
parties mutually agree.
1.8 "Collateral" shall have the meaning assigned to it in Section 4.1 of
this Agreement.
1.9 Intentionally Deleted.
1.10 Intentionally Deleted.
1.11 Intentionally Deleted.
1.12 Intentionally Deleted.
1.13 Intentionally Deleted.
1.14 Intentionally Deleted.
1.15 "Default" shall mean any event which, with the passage of time, the
giving of notice, or both, would become an Event of Default, unless cured or
unless waived as specifically provided in this Agreement.
1.16 "Disposition" shall mean the sale, transfer or other disposition in
any single transaction or series of related transactions of any asset, or group
of related assets, of Borrower or any of its Subsidiaries that has or have at
the date of the Disposition a book value or fair market value (which shall be
deemed to be equal to the sales price for such asset or assets upon a sale to a
Person that is not an Affiliate of Borrower) of One Hundred Thousand Dollars
($100,000) or more, other than (i) the sale or other disposition of inventory in
the ordinary course of business, and (ii) the sale or other disposition of
equipment that is replaced by equipment performing substantially the same
function not later than ninety (90) days after such sale or disposition. For
purposes of this definition, the phrase "series of related transactions" shall
mean that the transactions, taken as a whole, were conceived and are implemented
on a strategically integrated basis and the phrase "related assets" shall mean
that the assets are functionally related to one another.
1.17 "Distributions" shall mean, with respect to any shares of capital
stock or any warrant or right to acquire shares of capital stock or any other
equity security issued by a Person, (i) the retirement, redemption, purchase or
other acquisition, directly or indirectly, for value by such Person of any such
security, except to the extent that the consideration therefor consists of
shares of Stock, (ii) the declaration or (without duplication) payment by such
Person of any dividend in cash or in Property, directly or indirectly, on or
with respect to any such security, (iii) any investment by such Person in the
holder of 5% or more of any such security if a purpose of such investment is to
avoid characterization of the transaction as a Distribution, and (iv) any other
payment by such Person constituting a distribution under applicable laws with
respect to such security.
1.18 "Equipment" shall mean the equipment purchased by Borrower from
Lender's Agent with a portion of the proceeds of the Term Loan and identified in
Exhibit 4.1(A) hereto (which includes the transportable equipment identified in
Exhibit 3.1(E)), as well as all additions to, substitutions for, replacements of
or accessions to any such Equipment described above and all attachments,
components, parts (including spare parts) and accessories whether installed
thereon or affixed thereto.
1.19 "Equipment Leases" shall mean those certain leases identified in
Exhibit 1.19 between Borrower and Lender's Agent for the Equipment that were
entered into by Borrower and Lender's Agent prior to the date of this Agreement
and are being bought out by Borrower with a portion of the proceeds of the Term
Loan.
1.20 "ERISA" shall mean the Employee Retirement Income Security Act of
1974 (or any successor statute), as amended from time to time, and any
regulations promulgated thereunder.
1.21 "Event of Default" shall have the meaning assigned to it in Section
8.1 of this Agreement.
1.22 "Financing Statements" shall mean the Form UCC-1 or other financing
statements to be filed in the appropriate offices for the perfection of a
security interest in any of the Collateral.
1.23 "Fraud and Abuse Laws" shall have the meaning assigned to it in
Section 3.1(H) of this Agreement.
1.24 "GAAP" shall mean Generally Accepted Accounting Principles applied on
a consistent basis as in effect from time to time and practices which are
recognized as such by the American Institute of Certified Public Accountants
acting through its Accounting Principles Board or by the Financial Accounting
Standards Board or through other appropriate boards or committees thereof and
which are consistently applied for all periods after the date of this Agreement.
1.25 "Hazardous Materials" shall mean any substance, material, or waste
that is regulated because of its hazardous, toxic, or polluting nature, by any
city, county, or other local or regional government authority, any State in
which Borrower does business, or the United States Government or any agency
thereof having jurisdiction, including any material or substance that is (i)
petroleum or petroleum distillates, including crude oil, natural gas, natural
gas liquids, liquefied natural gas or synthetic gas, (ii) asbestos, (iii)
designated as a "hazardous substance" pursuant to section 311 of the Clean Water
Act, 33 U.S.C. 1251, et seq., 33 U.S.C. 1321, or listed pursuant to section 307
of the Clean Water Act, 33 U.S.C. 1317, (iv) defined as a "hazardous waste"
pursuant to section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. 6901, et seq., 42 U.S.C. 6903, (v) defined as a "hazardous substance"
pursuant to section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. 9601, et seq., 42 U.S.C. 9601,
(vi) determined to be a chemical substance or mixture that poses an unreasonable
risk of injury to human health or the environment under the Toxic Substances
Control Act, 15 U.S.C. 2601, et seq., (vii) determined to be a Hazardous Air
Pollutant under the Clean Air Act, 42 U.S.C. 7501, et seq., or (viii) listed,
defined, or identified in the regulations adopted pursuant to any of the
foregoing laws.
1.26 "Indebtedness" means, as applied to any Person, without duplication
(i) all items, except items of capital stock or of surplus or of general
contingency or deferred tax reserves, which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person on the date as of which Indebtedness is to be
determined, (ii) all obligations secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien to which any Property or asset owned or held by such Person is subject,
whether or not the obligation secured thereby shall have been assumed, and (iii)
all obligations of other Persons which such Person has guaranteed, including,
but not limited to, all obligations of such Person consisting of recourse
liabilities with respect to accounts receivable sold or otherwise disposed of by
such Person.
1.27 "Invasive Technology" shall have the meaning assigned to it in
Section 6.2(B) of this Agreement.
1.28 "IRC" shall mean the Internal Revenue Code of 1986, as heretofore or
hereafter amended, and all regulations promulgated thereunder.
1.29 "Lease Termination Agreement" shall mean that certain Lease
Termination Agreement to be entered into by Lender's Agent and Borrower on the
Closing Date.
1.30 "Lender" shall mean General Electric Capital Corporation, a New York
corporation.
1.31 "Lender's Agent" shall mean General Electric Company, a New York
corporation, acting through GE Medical Systems.
1.32 "Liabilities" or "Liability" shall mean all loans, advances,
indebtedness, liabilities, and obligations of Borrower to Lender or Lender's
Agent, of any and every kind and nature, arising under this Agreement, under any
other Loan Document, or under the Nonrevolving Credit Loan Documents or acquired
by Lender or Lender's Agent from any other source, whether now or hereafter
owing, arising, due or payable from Borrower to Lender or Lender's Agent,
whether or not evidenced by any note, agreement, or other instrument and whether
primary, secondary, direct, contingent, fixed or otherwise, including
obligations of performance, and including, particularly, principal, interest,
loan fees, charges, expenses, attorneys' fees, and other amounts chargeable to
Borrower by Lender or Lender's Agent, future advances made to or for the benefit
of Borrower; provided, however that Borrower's liabilities to Lender or Lender's
Agent that may arise pursuant to (i) Section 7.6 of the Loan and Security
Agreement executed by Borrower and Lender in connection with the Nonrevolving
Credit Loan, (ii) any equipment lease entered into by Borrower and Lender or
Lender's Agent subsequent to the date hereof, or (iii) the Philips Loan
Documents acquired by Lender shall not be considered "Liabilities" for purposes
of this Agreement.
1.33 "Lien" shall mean (i) any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien (including tax liens,
judgment liens, liens of mechanics, suppliers, and other Persons for the
provision of goods or services, and all other liens arising under statute,
common law or judicial interpretation), charge, claim, security interest,
capitalized lease obligation, easement, encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, or any financing
lease having substantially the same economic effect as any of the foregoing),
(ii) any arrangement, express or implied, under which any Property is
transferred, sequestered or otherwise identified for the purpose of subjecting
the same to the payment of Indebtedness or performance of any other obligation
in priority to the payment of general, unsecured creditors; (iii) any
indebtedness which is unpaid more than forty-five (45) days after the same shall
have become due and payable and which if unpaid would by law (including but not
limited to bankruptcy and insolvency laws), or otherwise, be given any priority
whatsoever over general, unsecured creditors; and (iv) the filing of, or
agreement to give, any Financing Statement perfecting a security interest under
the UCC or comparable law of any jurisdiction.
1.34 "Loan Documents" shall mean, collectively, this Agreement, the Term
Note, the Lease Termination Agreement, the Ancillary Note, the Restructured
Lease Documents, any other agreements or notes of any type or nature heretofore
or hereafter executed and delivered by Borrower in favor of Lender in any way
relating to or in furtherance of this Agreement, including any loan documents
that may be entered into by Borrower and Lender with respect to funds loaned by
Lender to Borrower for the payment of sales tax in connection with Borrower's
purchase of the Equipment, in each case as originally executed or as the same
may from time to time be supplemented, modified, amended, restated or extended.
1.35 "Material Adverse Effect" shall mean any set of circumstances or
events which (i) was initiated or approved by Borrower or any of its
Subsidiaries and which has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of this Agreement
or any other Loan Document, (ii) is or could reasonably be expected to be
material and adverse to the condition (financial or otherwise), or business
operations of Borrower and its Subsidiaries, taken as a whole, (iii) materially
impairs or could reasonably be expected to materially impair the ability of
Borrower to satisfy the Liabilities, or (iv) was initiated or approved by
Borrower or any of its Subsidiaries and which materially impairs or could
reasonably be expected to materially impair the ability of Lender to enforce its
legal remedies pursuant to the Loan Documents.
1.36 "Maximum Lawful Rate" shall have the meaning assigned to it in
Section 2.7 of this Agreement.
1.37 "Nonrevolving Credit Loan" shall mean those certain nonrevolving
credit advances that may be made by Lender to Borrower from time to time
pursuant to the Nonrevolving Credit Loan Documents.
1.38 "Nonrevolving Credit Loan Documents" shall mean that certain Loan and
Security Agreement between Lender and Borrower dated May 19, 1992 (including any
amendments thereto or replacements or extensions thereof), and all other
documents defined as "Loan Documents" pursuant to Section 1.26 of such Loan and
Security Agreement.
1.39 Intentionally Deleted.
1.40 "Participant" shall mean any Person, now or at any time,
participating with Lender in the loans made by Lender to Borrower pursuant to
this Agreement or any other related agreements.
1.41 "Pending Litigation" shall have the meaning assigned to it in Section
5.1(U) of this Agreement.
1.42 "Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity, party, or government (whether
federal, state, county, city, municipal, or otherwise, including any
instrumentality, division, agency, body, or department thereof).
1.43 "Philips" shall mean Philips Credit Corporation, a Delaware
corporation.
1.44 "Philips Debt" shall mean Borrower's obligations pursuant to the
Philips Loan Documents.
1.45 "Philips Loan Documents" shall mean all of the instruments and
documents identified on Exhibit 1.45 attached hereto.
1.46 "Philips Revolving Loan" shall mean that certain $1,200,000 revolving
loan made by Philips to Borrower pursuant to that certain Revolving Loan and
Term Loan Agreement and Note between Borrower and Philips, dated as of August
19, 1991, and that certain Security Agreement between Borrower and Philips,
dated as of March 9, 1989, as acquired by Lender pursuant to that certain Asset
Purchase Agreement dated as of December 31, 1992 between Philips and Lender.
1.47 "Philips Term Loan" shall mean that certain $14,280,000 term loan
made by Philips to Borrower pursuant to that certain Promissory Note, Loan
Agreement and Security Agreement between Borrower and Philips, dated as of March
9, 1989, as amended, as acquired by Lender pursuant to that certain Asset
Purchase Agreement dated as of December 31, 1992 between Philips and Lender.
1.48 "Plan" shall have the meaning assigned to it in Section 5.1(V) of
this Agreement.
1.49 "Preferred Stock Agreement" shall mean that certain Agreement between
Borrower and the Preferred Stock Purchasers, dated August 12, 1991, as amended
on December 31, 1992 regarding the exchange of the Preferred Stock Purchasers'
Series A Cumulative Senior Convertible Preferred Stock of Borrower for "Series B
Preferred Stock" (as defined in the Preferred Stock Agreement) of Borrower.
1.50 "Preferred Stock Purchasers" shall mean Cal Kovens, Frank Egger, Marc
Kovens, Roz Kovens, Lloyd Glazer, Harvey Silets, Philip D. Green and Elizabeth
Cobbs.
1.51 "Prime Rate" shall mean the rate most recently announced by Chase
Manhattan Bank at its principal office in New York, New York as its "Prime
Rate." The Prime Rate is one of Chase Manhattan Bank's base rates and serves as
the basis upon which effective rates of interest are calculated for those credit
facilities making reference thereto, and is evidenced by the recording thereof
after its announcement in such internal publication or publications as Chase
Manhattan Bank may designate. The Prime Rate may not necessarily be the lowest
interest rate at which Chase Manhattan Bank is willing to extend credit
facilities.
1.52 "Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
1.53 "Receivables" shall have the meaning assigned to it in Section 4.1(D)
of this Agreement.
1.54 "Release and Settlement Agreement" shall have the meaning assigned to
it in Section 3.1(A) of this Agreement.
1.55 "Reserves" shall mean reserves for returns, allowances, and the like
as may be established by Borrower or as may otherwise be required in accordance
with GAAP.
1.56 "Restructured Leases" shall mean those certain leases identified in
Exhibit 1.56 hereto between Borrower and Lender's Agent for the equipment
identified in such Restructured Leases (and located at the address specified in
Exhibit 1.56) that were entered into by Borrower and Lender's Agent prior to the
date of this Agreement and are being extended or otherwise restructured pursuant
to the Restructured Lease Documents.
1.57 "Restructured Lease Documents" shall have the meaning assigned to it
in Section 3.1(O) of this Agreement.
1.58 "Solvent" when used with respect to Borrower, shall mean that
Borrower has sufficient working capital to pay its debts as they become due,
which debts do not include any dividends or Stock.
1.59 "Special Collateral" shall mean any agreement, instrument, and/or
document relating to, covering, or evidencing any portion of the Collateral or
Borrower's rights with respect thereto, including promissory notes, documents of
title, warehouse receipts, security agreements, and assignments of loan
proceeds.
1.60 "Stock" shall mean all shares, options, warrants, interests,
participations, or other equivalents, howsoever designated, of or in a
corporation or equivalent entity, whether voting or non-voting, including common
stock, preferred stock, convertible debentures, and all agreements, instruments,
any other "option" (as such term is defined in temporary Treasury Regulation
1.382-2T(h)(4)(v) promulgated under the Internal Revenue Code), or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended), and documents convertible, in
whole or in part, into any one or more or all of the foregoing.
1.61 "Subsidiary" shall mean any corporation of which fifty percent (50%)
or more of the outstanding shares of each class having voting power (other than
shares having such power by reason of the happening of a contingency) is at the
time owned or controlled, directly or indirectly, by Borrower.
1.62 "Supplemental Documentation" shall mean agreements, instruments,
documents, financing statements, warehouse receipts, bills of lading, and other
written matter necessary or requested by Lender to perfect and/or maintain the
perfection of Lender's Lien upon the Collateral and to consummate the
transactions contemplated in or by this Agreement and any other Loan Documents.
1.63 "Term" shall mean a period of eighty-two (82) months from the June 1,
1993 until and including the last business day of March 2000.
1.64 "Termination Date" shall mean the earliest to occur of (i) the
expiration of the Term, assuming that all Liabilities hereunder have been
completely and finally paid and discharged, whether by prepayment or otherwise,
or (ii) the date on which all Liabilities hereunder have been completely and
finally paid and discharged, whether by prepayment or otherwise.
1.65 "Term Loan" shall mean the term loan made by Lender to Borrower
pursuant to Section 2.1 of this Agreement.
1.66 "Term Loan Funding" shall mean the funding of the Term Loan by Lender
on the Closing Date as described in Section 2.1 of this Agreement.
1.67 "Term Note" shall mean that certain Promissory Note (including any
modifications, renewals, extensions and replacements thereof) in the original
principal amount of the Term Loan, to be dated as of June 1, 1993 and executed
and delivered by Borrower to Lender on the Closing Date to evidence the
obligations, repayment terms and conditions of the Term Loan. A form of the
Term Note is attached hereto as Schedule 1.67.
1.68 "UCC" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
1.69 "Warrant" shall mean that certain Common Stock Purchase Warrant to be
delivered by Borrower to Lender's Agent on the Closing Date, in a form
acceptable to Lender's Agent.
1.70 "Withholding Charges" shall have the meaning assigned to it in
Section 6.3 of this Agreement.
1.71 Other Terms: All other terms hereinbefore or hereinafter defined,
including, without limitation, all terms defined in the preamble and recitals
hereto, shall have the meanings herein assigned to such terms. All terms used
in the above definitions and all other terms contained in this Agreement, where
the context so indicates or requires, shall have the meanings provided by the
UCC as in effect in the State of California to the extent the same are used or
defined therein. Any accounting terms used in this Agreement and not
specifically defined herein shall have the meanings given them in accordance
with GAAP, and all financial computations hereunder shall be computed, unless
otherwise specifically provided herein, in accordance with GAAP, consistently
applied. That certain terms or computations are explicitly modified by the
phrase "in accordance with GAAP" shall in no way be construed to limit the
foregoing.
1.72 Rules of Construction: Except as otherwise specifically provided in
this Agreement, the singular of any term shall include the plural, and vice
versa, the use of any term shall be equally applicable to any gender, "or" shall
not be exclusive, and "including" shall not be limiting. The words "herein,"
"hereof," and "hereunder" and other words of similar import refer to this
Agreement as a whole, including the Exhibits and Schedules hereto, as the same
may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this Agreement. Any
reference to a "Section," "Exhibit," or "Schedule" shall refer to the relevant
Section of, or Exhibit or Schedule to, this Agreement, unless specifically
indicated to the contrary.
2. TERM LOAN: GENERAL TERMS
2.1 Term Loan. Subject to the terms and conditions of this Agreement,
and in reliance upon the representations and warranties made under or pursuant
to this Agreement, Lender shall make a term loan to Borrower on the Closing
Date, in the principal amount of Fifteen Million One Hundred Eighty-Eight
Thousand Two Hundred Twenty-Nine Dollars and Sixty-Eight Cents ($15,188,229.68)
(the "Term Loan"). Borrower's obligation to repay the Term Loan, together with
interest thereon, at the interest rate specified in the Term Note and Section
2.2 below, whether by prepayment, acceleration or otherwise, shall be evidenced
by the Term Note. The Term Note shall be (i) in the form attached hereto as
Schedule 1.67, (ii) dated as of the Closing Date, and (iii) duly executed and
delivered to Lender on the Closing Date by a duly authorized officer of
Borrower. Borrower hereby directs Lender to disburse directly to Lender's Agent
for and on behalf of Borrower on the Closing Date, an amount equal to Fifteen
Million One Hundred Eighty-Eight Thousand Two Hundred Twenty-Nine Dollars and
Sixty-Eight Cents ($15,188,229.68) for (i) Borrower's buy out of the Equipment
Leases, and (ii) Borrower's purchase of the Equipment identified in
Exhibit 4.1(A) from Lender's Agent. Exhibit 2.1 hereto sets forth the
allocation of such amount.
2.2 Interest on Term Loan. Except as otherwise provided in this
Agreement, the Term Loan shall bear interest, payable monthly, calculated daily
on the basis of a three hundred sixty (360) day year until paid in full at the
interest rate of Ten and One-Half Percent (10.50%). Interest which has accrued
and is not paid monthly by Borrower, shall be added to the principal balance due
under the Term Note (as set forth in such Term Note) for purposes of subsequent
calculations of interest due hereunder and thereunder.
2.3 Payment of Liabilities.
(A) Term Loan. Principal and interest under the Term Loan shall be
payable in eighty-two (82) consecutive monthly installments, each in the amount
specified in the Amortization Schedule attached to the Term Note, commencing on
June 30, 1993, and continuing on the last Business Day of each calendar month
thereafter with a final payment of the entire principal balance and accrued
interest then outstanding on the last Business Day of March, 2000.
(B) Other Liabilities. Except where evidenced by the Term Note or
other notes or instruments issued or made by Borrower to Lender specifically
containing provisions that conflict with this Section 2.3(B) (in which event the
conflicting provisions of such notes or other instruments shall govern and
control), that portion of the Liabilities consisting of costs, fees, charges, or
expenses payable pursuant to this Agreement shall be payable by Borrower to
Lender or to such Persons designated by Lender in writing, upon fifteen (15)
Business Days' prior written notice to Borrower.
2.4 Manner of Payment. All payments of principal, interest and other
amounts payable under this Agreement and the Term Note shall be made to Lender
at such place or places as Lender may designate from time to time in writing to
Borrower not later than 2:00 P.M. prevailing Pacific Time on the due date
therefor in lawful money of the United States in Federal or other funds
immediately available to Lender at such place of payment as Lender may designate
as provided immediately above. Any payment received after 2:00 P.M. prevailing
Pacific Time shall be deemed to have been received on the following Business
Day. If any payment becomes due and payable on a day other than a Business Day,
then such payment shall be due and payable on the next succeeding Business Day.
Any payment due hereunder on one date and payable no later than a specified
subsequent date that is not paid by such subsequent date (or within the
applicable grace period provided in Section 8.1(A) hereof) shall thereafter bear
interest from the date originally due. Borrower shall pay principal, interest,
fees and all other amounts payable hereunder or under the Term Note without any
deduction whatsoever, including, but not limited to, any deduction for any
set-off or counterclaim.
2.5 Loan Purpose. Borrower shall use the proceeds of the Term Loan to
(i) buy out the Equipment Leases and (ii) purchase the Equipment identified in
Exhibit 4.1(A) attached hereto, all as of June 1, 1993.
2.6 All Extensions of Credit to Constitute One Loan. The Term Loan and
all other financial accommodations made by Lender or Lender's Agent to Borrower
under this Agreement, the Ancillary Note, the Restructured Lease Documents, the
Nonrevolving Credit Loan Documents or any other document or instrument shall
constitute one loan. All indebtedness, obligations, and Liabilities of Borrower
to Lender under this Agreement and the Nonrevolving Credit Loan Documents shall
constitute one obligation secured by Lender's Lien upon all Collateral and by
all other Liens, security interests, claims and encumbrances heretofore, now, or
at any time or times hereafter granted by Borrower to Lender. Borrower agrees
that all of the rights of Lender set forth in this Agreement and the other Loan
Documents shall apply to any modification of or supplement to this Agreement and
the other Loan Documents, except as otherwise specifically provided in any such
modification. Notwithstanding the foregoing, the parties acknowledge that (i)
Borrower's obligations pursuant to the Philips Loan Documents, (ii) financial
accommodations made by Lender, Lender's Agent or Lender's Affiliates to Borrower
pursuant to Section 7.6 of the Loan and Security Agreement executed by Borrower
and Lender in connection with the Nonrevolving Credit Loan, and (iii) any
obligations of Borrower to Lender or Lender's Agent pursuant to equipment leases
entered into by Borrower and Lender or Lender's Agent subsequent to the date
hereof, shall be excluded from the provisions of this Section 2.6.
2.7 Excessive Interest. If at any time the interest rate or any interest
rate charged pursuant to the terms of this Agreement or any note or other
instrument issued pursuant hereto, exceeds the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable hereto (the "Maximum Lawful Rate"), then, in such event, and so
long as the amount payable under the Maximum Lawful Rate would be so exceeded,
the amount of interest payable hereunder shall be equal to the amount payable
under the Maximum Lawful Rate. Thereafter, the amount of interest payable
hereunder shall be the amount determined in accordance with the terms hereof
unless and until the amount so calculated again exceeds the amount payable under
the Maximum Lawful Rate, in which event this paragraph shall again apply. In no
event shall the total interest received by Lender pursuant to the terms hereof
exceed the amount which Lender could lawfully have received had the interest due
hereunder been calculated for the full Term hereof at the Maximum Lawful Rate.
In the event the amount payable under the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 2.7, shall make a
final determination that Lender has received interest hereunder or under any
other agreements in excess of the amount payable under the Maximum Lawful Rate,
Lender shall, to the extent permitted by applicable law, promptly apply such
excess in the following order: (i) to the then due and payable fees and
expenses; (ii) to the then due and payable interest payments on the Term Loan;
(iii) to the then due and payable principal payments on the Term Loan; (iv) then
to any other unpaid Liabilities; and (v) thereafter as a refund to Borrower or
as a court of competent jurisdiction may otherwise order.
2.8 Term. The provisions of this Agreement shall be in effect until the
Termination Date, unless terminated sooner in accordance with the provisions of
this Agreement. Notwithstanding any provision herein to the contrary, Borrower
and Lender expressly agree that the Term Loan shall be due and payable at any
time any other Liability of Borrower to Lender is accelerated or terminated
(except by prepayment or final payment on the due date thereof) in accordance
with this Agreement or any other agreement evidencing such Liability, as the
case may be.
2.9 Optional Prepayments. Borrower may prepay the Term Note in whole or
in part, without premium or penalty, upon at least three (3) Business Days'
written, telex or telegraphic notice to Lender specifying the date and the
amount of prepayment; provided, however, that, except as provided in Subsection
6.2(P) hereof, partial prepayments shall be in the amount of One Hundred
Thousand Dollars ($100,000) or an integral multiple thereof. Partial
prepayments of the Term Note shall be applied on account of the installments of
principal thereof in the inverse order of the normal maturity thereof, except as
otherwise provided in this Agreement. All prepayments shall be accompanied by
accrued interest on the principal amount being prepaid to the date of
prepayment. Prepayments of the Term Note may not be reborrowed, and such
prepaid amounts shall not increase the remaining principal amount available to
Borrower.
2.10 Application of Payments and Collections. Upon the occurrence and
during the continuance of any Default or Event of Default, Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times hereafter received by Lender from or on behalf
of Borrower, and Borrower irrevocably agrees that Lender shall have the
continuing exclusive right to apply and reapply any and all such payments and
collections received at any time or times hereafter by Lender or its agents
against the Liabilities and liabilities arising pursuant to Section 7.6 of the
Loan and Security Agreement executed by Borrower and Lender in connection with
the Nonrevolving Credit Loan, liabilities arising pursuant to any equipment
lease entered into by Borrower and Lender or Lender's Agent subsequent to the
date hereof and liabilities arising under the Philips Loan Documents acquired by
Lender and in repayment of the Term Loan and the other liabilities set forth
above in this Section 2.10 in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records.
2.11 Loan Servicing. The parties acknowledge that while Lender shall make
the Term Loan to Borrower hereunder, the Term Loan shall be serviced and
monitored by Lender's Agent. Accordingly, Lender may give Lender's Agent a
power of attorney to take certain action on behalf of Lender to provide and
receive notices, to approve or disapprove requests to take action prohibited
hereunder and other requests or approvals required by Lender hereunder. Thus,
any requests, approvals, disapprovals, notices or other communications received
by Borrower in connection with this Agreement or the Loan Documents from
Lender's Agent as Lender's agent-in-fact shall be treated by Borrower as if such
notices and communications were received from Lender directly. All action taken
by Lender's Agent on behalf of Lender shall be subject to the terms of this
Agreement. Borrower's obligations to Lender's Agent hereunder shall be for the
express benefit of Lender. Failure of Borrower to perform any obligation
hereunder to Lender's Agent shall be construed as a Default or Event of Default
hereunder, as the case may be, and the failure of Lender's Agent to perform any
obligation hereunder on behalf of Lender in accordance with the terms of this
Agreement shall be a breach by Lender.
3. CONDITIONS PRECEDENT
3.1 Conditions Precedent of Lender to Term Loan Funding and Closing.
Lender's obligation to close the transaction contemplated hereby and to perform
its obligations as of the Closing Date shall be, at the option of Lender,
subject to satisfaction of each of the following conditions (which may be waived
specifically in writing by Lender in whole or in part) at or prior to the
Closing Date:
(A) Release and Settlement Agreement. Borrower and its Subsidiaries
shall have executed and delivered a Release and Settlement Agreement in the form
attached as Schedule 3.1(A) hereto ("Release and Settlement Agreement").
(B) Intentionally Deleted.
(C) Warranties True; Covenants Performed. Each of the
representations and warranties made by Borrower and set forth in this Agreement,
the Exhibits and Schedules attached hereto, the other Loan Documents or
otherwise made in writing in connection herewith shall be true and correct in
all material respects at and as of the Closing Date, and the covenants required
by this Agreement and the other Loan Documents to be performed and complied with
by Borrower as of the Closing Date shall have all been performed and complied
with in all material respects.
(D) Borrower Consents, Approvals and Authorizations. Borrower shall
have obtained all consents, approvals and authorizations of third parties
necessary in connection with the valid execution, delivery and performance of
this Agreement.
(E) Signing of Instruments. Borrower shall have executed and
delivered all documents and instruments required to be executed pursuant to the
provisions of this Agreement, including, without limitation, the Warrant, the
Term Note, the Lease Termination Agreement, Financing Statements reflecting the
security interest granted by Borrower in certain of the Collateral as set forth
in this Agreement and any documents or instruments necessary to perfect Lender's
security interest in the transportable equipment identified in Exhibit 3.1(E)
attached hereto.
(F) Unfavorable Action or Proceeding. On the Closing Date no action
or proceeding shall be pending or threatened against Borrower wherein an
unfavorable judgment, decree or order would, in Lender's reasonable opinion,
prevent or make unfavorable the carrying out of this Agreement, would cause the
transactions contemplated by this Agreement to be rescinded, or would have a
Material Adverse Effect on Borrower. In the event of the receipt of any
communication from any Person or any other notice (a copy of which communication
or notice shall be promptly delivered to Lender) prior to the Closing Date,
which communication or notice shall in the reasonable opinion of Lender threaten
such action or proceeding, Lender may cancel this Agreement by giving written
notice to Borrower and shall thereupon be released from any and all liability
related to this Agreement.
(G) Opinions of Counsel. Lender shall have received the favorable
opinion of Borrower's counsel dated the Closing Date, in substantially the form
attached hereto as Schedule 3.1(G).
(H) Officer's Certificate. Lender shall have received a certificate
of the President or any Vice President of Borrower dated as of the Closing Date
in a form attached hereto as Schedule 3.1(H) and certifying to Lender (i) the
accuracy of the representations and warranties set forth in this Agreement and
compliance with Borrower's covenants set forth in this Agreement that are
required to be performed as of the Closing Date, and (ii) as to Borrower's
compliance with applicable health care laws, rules and regulations relating to
the payment or receipt of illegal remuneration (collectively, the "Fraud and
Abuse Laws") to the knowledge of such officer (which officer signing the
certificate shall be sufficiently knowledgeable regarding such matters in the
reasonable judgment of Lender).
(I) Certificate of Incumbency. Lender shall have received a
certificate of the corporate Secretary of Borrower dated as of the Closing Date
and certifying to Lender (i) that attached thereto is a true and complete copy
of the Restated Certificate of Incorporation and the Bylaws of Borrower, as in
effect on the date of such certification, (ii) as to the incumbency and
genuineness of the signature of the officers of Borrower from the date hereof to
the Closing Date and bearing the authentic signatures of all such officers who
shall execute this Agreement and the other Loan Documents, (iii) as to the
resolutions of the Board of Directors of Borrower authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents, and
(iv) that such resolutions have not been amended or rescinded and remain in full
force and effect.
(J) Good Standing Certificates. Lender shall have received a copy of
the Restated Certificate of Incorporation of Borrower, and all amendments
thereto, certified by the Secretary of State of Delaware, and good standing
certificates for Borrower, issued by the Secretaries of State of the States
where Borrower is qualified to do business, as set forth in Exhibit 5.1(A).
(K) Default. Except as set forth in Exhibit 3.1(K) attached hereto,
there shall exist (i) no Default or Event of Default on the Closing Date under
this Agreement, or (ii) no default under any other Indebtedness, which item of
Indebtedness is in an aggregate amount of One Hundred Thousand Dollars
($100,000) or more.
(L) Intentionally Deleted.
(M) Ancillary Note. Borrower shall have executed and delivered the
Ancillary Note in the form attached hereto as Schedule 1.2.
(N) Intentionally Deleted.
(O) Restructured Leases. Borrower shall have executed and delivered
the documents in the forms attached hereto as Schedule 3.1(O) relating to and
necessary to effect the extension or other restructuring of the Restructured
Leases (the "Restructured Lease Documents").
(P) Preferred Stock Agreement/Warrant Agreement. The Preferred Stock
Agreement and that certain Warrant Agreement between Borrower and Omnicorp
Holdings, Inc. dated February 15, 1990, as amended shall be in a form acceptable
to Lender, including, but not limited to, containing an identical exception as
set forth in the Warrant regarding the absence of anti-dilution protection with
respect to (i) the issuance of common stock of Borrower to capitalize wholly-
owned Subsidiaries of Borrower, and (ii) shares issued pursuant to the Warrant.
(Q) Warrant. Lender's Agent shall have the right to exercise a
Warrant for shares of Borrower as provided in the Warrant, and Borrower shall
have obtained all required approvals as provided for therein, if any.
(R) Exhibits and Schedules. The provisions of all Exhibits and
Schedules attached to this Agreement that have not been completed as of the date
of this Agreement and are designated as incomplete shall be acceptable to Lender
in its reasonable discretion.
3.2 Conditions Precedent of Borrower to Closing. Borrower's obligation
to close the transaction contemplated hereby shall be, at the option of
Borrower, subject to satisfaction of each of the following conditions (which may
be waived specifically in writing by Borrower in whole or in part) at or prior
to the Closing Date:
(A) Sale of Equipment. Lender shall cause Lender's Agent to deliver
to Borrower a Bill of Sale with respect to the Equipment identified in
Exhibit 4.1(A) hereto and the transportable equipment identified in
Exhibit 3.1(E) hereto, in a form reasonably acceptable to Borrower concurrently
with Lender's payment of the proceeds of the Term Loan to Lender's Agent.
(B) Termination Statements. Lender shall cause Lender's Agent to
deliver UCC Termination Statements to Borrower with respect to the Equipment
identified in Exhibit 4.1(A) hereto and the transportable equipment identified
in Exhibit 3.1(E) hereto concurrently with Lender's payment of the proceeds of
the Term Loan to Lender's Agent.
(C) Consent. Lender shall execute and deliver to Borrower a consent
in the form attached hereto as Schedule 3.2(C).
(D) Exhibits and Schedules. The provisions of all Exhibits and
Schedules attached to this Agreement that have not been completed as of the date
of this Agreement and are designated as incomplete shall be acceptable to
Borrower in its reasonable discretion.
(E) Release and Settlement Agreement. Lender's Agent shall have
executed and delivered a Release and Settlement Agreement in the form attached
as Schedule 3.1(A) hereto ("Release and Settlement Agreement").
(F) Warranties True. The representations and warranties made by
Lender in Section 5.3 hereto shall be true and correct in all material respects
at and as of the Closing Date.
(G) Board Approval. The Board of Directors of Borower shall have
approved the Loan Documents by executing the Unanimous Written Consent in the
form attached hereto as Schedule 3.2(G).
(H) Preferred Stockholder Agreement. All of the holders of Series B
Convertible Preferred Stock of Borrower shall execute and deliver to Lender the
Agreement in the form attached hereto as Schedule 3.2(H).
4. COLLATERAL
4.1 Security Interest. To secure the prompt and complete payment and
performance by Borrower when due of the Liabilities, Borrower hereby grants,
sells, assigns, conveys, pledges, hypothecates and transfers to Lender for the
benefit of Lender, a continuing security interest in and Lien in accordance with
Section 4.2 hereof upon all of the following Property and interests in Property
of Borrower, whether now owned or existing or hereafter acquired or arising and
wherever located (all of which Property, together with all other personal
Property and interests in personal property which shall from time to time secure
the Liabilities being hereinafter collectively called the "Collateral"):
(A) the Equipment identified in Exhibit 4.1(A) and located at the
address specified therein;
(B) Intentionally Deleted;
(C) the equipment identified in the Restructured Leases and located
at the address specified in Exhibit 1.56 to the extent that such Restructured
Leases are capital leases;
(D) all leases, conditional sale contracts, security agreements,
contracts, contract rights, service agreements, and other agreements related to
the Equipment, or the equipment identified in the Restructured Leases or any
part thereof and all renewals and extensions thereof, and all amounts, rents,
profits, and rights and other sums of money due and to become due, all accounts
(whether from third parties or Borrower's Subsidiaries or Affiliates), general
intangibles, contract rights (including, but not limited to, all rights of
Borrower and any Subsidiary to receive monies due and to become due under or
pursuant to such accounts, contract rights and general intangibles and all of
Borrower's and any Subsidiary's rights to terminate, and to perform, compel
performance and otherwise exercise all remedies under, such accounts, contract
rights and general intangibles), chattel paper, notes, drafts, acceptances,
documents, instruments, and all other forms of obligations of any kind owing to
Borrower and any Subsidiary, now or hereafter existing, whether or not arising
out of or in connection with the sale or lease of goods (including, but not
limited to, any returned or repossessed goods and the right of stoppage in
transit) or the rendering of services, and all rights now or hereafter existing
in and to all security agreements, leases and other contracts securing or
otherwise relating to any such cash, accounts, contract rights, notes, drafts,
acceptances, documents, chattel paper, instruments, general intangibles or other
obligations under such leases, conditional sales contracts, contract rights,
security agreements, contracts, and other agreements for use or purchase of the
Equipment, or the equipment identified in the Restructured Leases and all
renewals and extensions thereof (collectively, "Receivables"), provided, that
such renewals, replacements and extensions relate to the Equipment, or the
equipment identified in the Restructured Leases or any part thereof; and
(E) without in any way limiting the foregoing, the proceeds of any of
the foregoing, whether derived from voluntary or involuntary disposition,
products of the foregoing, and all renewals, replacements, substitutions,
additions, accessions, and profits of any of the foregoing, whether now owned,
existing or hereafter acquired or arising.
4.2 Priority of Security Interest. The priority of Lender's Lien and
security interest in the Collateral granted by Borrower to Lender pursuant to
Section 4.1 hereof shall be as follows:
(A) Lender shall have a first priority Lien and, with respect to the
Property described in Subsections 4.2(A)(i) and (ii) below, purchase money
security interest in (i) all Equipment purchased by Borrower from Lender's Agent
with a portion of the proceeds of the Term Loan; (ii) the equipment identified
in the Restructured Leases to the extent such Restructured Leases are capital
leases; and (iii) except as provided in Subsections 4.2(B) and (C) below, all
property, rights and other interests identified in Subsections 4.1(D) and (E)
hereof with respect to the property described in Subsections 4.2(A)(i) and (ii).
(B) Lender shall have a second priority Lien junior only to the Liens
created under the Philips Loan Documents in the portion of the Collateral
identified in Subsections 4.1(D) and (E) hereof to the extent a Lien exists
under the Philips Loan Documents with respect to such Collateral.
(C) Notwithstanding any provision in Section 4.1 or this Section 4.2
to the contrary, in no event shall Lender have any Lien on Collateral that is
prior to or of equal priority with any Lien on such Collateral existing under
the Philips Loan Documents; provided that Lender's Lien and security interest in
the Equipment identified in Subsections 4.2(A)(i) and (ii) hereof and all
additions to, substitutions for, replacements of or accessories to such
Equipment in all events shall be a first priority Lien and purchase money
security interest.
4.3 Disclosure of Security Interest. Borrower shall make appropriate
entries in its financial statements and its books and records disclosing
Lender's Lien on the Collateral.
4.4 Lender's Payment of Claims Asserted Against Borrower. Except as
provided in Section 8.4 hereof, Lender may, at any time hereafter, in its sole
discretion and without waiving or releasing any obligation, Liabilities, or duty
of Borrower under this Agreement or any Event of Default, pay, acquire, or
accept an assignment of any Lien asserted after a default by Borrower in the
payment or performance of the obligation secured by such Lien by any Person
against the Collateral or cure any default of Borrower under any contract or
agreement; provided, however, that Lender shall not take such action unless
Lender shall first give Borrower written notice of its intent to do so, and
Borrower does not, within ten (10) days of such notice, pay such claim or obtain
to Lender's reasonable satisfaction the release of the Liens to which such
notice relates. Notwithstanding the foregoing, Lender shall take no action to
pay any Lien referenced in this Section 4.4 if Borrower is taking all reasonable
action necessary to remove such Lien and is proceeding diligently with such
removal, as determined in the reasonable discretion of Lender. All amounts
advanced by Lender under this Section 4.4 and all costs, fees, and expenses,
including reasonable attorneys' fees, court costs, expenses, and other charges
relating thereto, incurred by Lender on account thereof, shall be payable, on
demand, by Borrower to Lender and shall be Liabilities hereunder secured by the
Collateral.
4.5 Termination Statements. Borrower acknowledges and agrees that it is
Borrower's intent that all Financing Statements filed hereunder shall remain in
full force and effect until this Agreement shall have been terminated in
accordance with the provisions hereunder, even if, at any time or times prior to
such termination, no loans or advances shall be outstanding under this
Agreement. Accordingly, Borrower waives any rights which it may have under the
UCC to demand the filing of termination statements with respect to the
Collateral, and agrees that Lender shall not be required to send such
termination statements to Borrower, or to file them with any filing office,
unless and until this Agreement shall have been terminated in accordance with
its terms and all liabilities paid in full in immediately available funds.
Notwithstanding the provisions of this Section 4.5, Lender shall deliver a
termination statement to Borrower with respect to any Financing Statement
describing Equipment that is sold by Borrower in accordance with the provisions
of Section 6.2(P) hereof, provided that Borrower has paid Lender the amount
required to be paid by Borrower to Lender pursuant to Section 6.2(P) hereof.
5. WARRANTIES AND REPRESENTATIONS
5.1 Warranties and Representations of Borrower. Borrower warrants and
represents to Lender that:
(A) Existence and Qualification; Power; Good Standing. Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, the state of its incorporation. Borrower has the full
corporate power and authority to own, lease and operate its properties and
assets as presently owned, leased and operated, to carry on its business as it
is now being conducted. Borrower is duly qualified and in good standing to do
business in each jurisdiction in which the character of its properties or the
character of its business requires such qualification, license or good standing.
Exhibit 5.1(A) sets forth Borrower's chief executive office, (ii) principal
place of business, and (iii) a complete list of all jurisdictions in which
Borrower is qualified to do business. Borrower has previously delivered to
Lender's Agent complete and correct copies of the Restated Certificate of
Incorporation and Bylaws of Borrower as currently in effect.
(B) Authority; Binding Obligations. Borrower and its Subsidiaries
have the requisite corporate power and authority, and have taken all necessary
corporate and other actions, necessary to enter into, execute, deliver and
perform this Agreement, the Release and Settlement Agreement and all other Loan
Documents. This Agreement, the Release and Settlement Agreement and each of the
other Loan Documents have been duly executed and delivered by Borrower and, as
applicable, its Subsidiaries and are the legal, valid and binding obligations of
Borrower and its Subsidiaries enforceable against Borrower and its Subsidiaries,
in accordance with their respective terms, subject as to the enforcement of
remedies only, to limitations imposed by general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity) and the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application relating
to or affecting creditors' rights generally. This Agreement, along with all
action required of Borrower to fully perfect Lender's security interest
hereunder as of the Closing Date creates and constitutes a valid and perfected
security interest in and Lien on the now owned or existing Collateral in
accordance with the priorities set forth in Section 4.2 hereof, enforceable
against all third parties, and will create a valid and perfected security
interest in and Lien on all remaining Collateral when acquired by Borrower, in
accordance with the priorities set forth in Section 4.2 hereof, enforceable
against all third parties. All filings and other actions necessary or desirable
to protect and perfect such Lien and security interest in each item of the
Collateral, which may be taken by Borrower, have been duly made or taken or will
be duly made or taken when such Collateral is acquired by Borrower.
(C) Compliance of Loan Documents with Laws/Agreements. The
execution, delivery and performance by Borrower of this Agreement shall not, by
the lapse of time, the giving of notice, or otherwise, directly or indirectly
(i) constitute a violation of any applicable law, rule, regulation (excluding
applicable Fraud and Abuse Laws), order, writ, judgment, injunction, decree,
determination, or award presently in effect having applicability to Borrower,
(ii) result in a default under or a breach of any provision contained in
Borrower's Restated Certificate of Incorporation or By-Laws or, any indenture,
loan, mortgage, lease, or deed of trust, agreement relating to the borrowing of
monies, instrument, document or, to Borrower's knowledge, any agreement, to
which Borrower is now a party or by which it is bound, the violation or breach
of which would in any of such cases have a Material Adverse Effect on Borrower
or result in the creation or imposition of any material Lien, charge or
encumbrance upon any of the Collateral. Borrower is not a party to, or
otherwise subject to, any provision contained in any instrument evidencing
Indebtedness of Borrower, any agreement relating thereto, or any other contract
or agreement (including its charter) that limits the amount of, or otherwise
imposes restrictions on, the incurring of obligations by Borrower that would
have a Material Adverse Effect on the ability of Borrower to perform its
obligations hereunder or under any other Loan Document.
(D) Use of Proceeds. Borrower's use of the proceeds of the Term Loan
is and will continue to be for the uses set forth in this Agreement, and are
legal and proper corporate uses and such uses are (i) consistent with all
applicable laws, rules and regulations in effect as of the date hereof
(excluding applicable Fraud and Abuse Laws), and (ii) to Borrower's knowledge,
consistent with applicable Fraud and Abuse Laws.
(E) Absence of Defaults. Borrower has not breached any material
provisions of, and is not in default in any material respect under the terms of,
and has not engaged in any activity which would cause revocation or suspension
of, any governmental license, franchise, permit, authorization, and, to
Borrower's knowledge, no action or proceeding seeking or contemplating the
revocation or suspension of any thereof is pending or threatened. Borrower is
not in default under or in breach of any law, rule, regulation (excluding
applicable Fraud and Abuse Laws), order, writ, judgment, injunction, decree,
determination or award that will have a Material Adverse Effect upon Borrower.
Except as set forth in Exhibit 5.1(E) attached hereto, Borrower is not in
default, nor to Borrower's knowledge is any third party in default, under or
with respect to any contract, agreement, lease, or other instrument to which
Borrower is a party, except for any default that (either individually or
collectively with other defaults arising out of the same event or events) would
not have a Material Adverse Effect upon Borrower. Except as set forth in
Exhibit 5.1(E) attached hereto, no Default or Event of Default has occurred and
is continuing.
(F) Licenses and Permits. Borrower possesses and is in good standing
with respect to all licenses (including without limitation lending licenses),
franchises, permits and other authorizations materially necessary to continue to
conduct its business as heretofore conducted.
(G) Consents and Approvals. Except as set forth in Exhibit 5.1(G)
attached hereto, no consent, approval, permit, waiver, authorization or other
action of or by any court, governmental or nongovernmental Person or entity, is
required or will be necessary in connection with the execution, delivery or
performance of this Agreement or any other document contemplated hereby by
Borrower. Except as set forth in Exhibit 5.1(G) attached hereto, Borrower shall
be responsible for and shall take any and all steps necessary, at its sole
expense, to obtain all such consents, approvals and authorizations prior to the
Closing Date and shall keep Lender informed as to the status of obtaining such
consents. All such consents, approvals and authorizations shall be approved as
to form by Lender in writing.
(H) Intentionally Deleted.
(I) Liabilities. Borrower has no Indebtedness and has not guaranteed
the obligations of any Person, except (i) as shown in the financial statements
delivered to Lender or Lender's Agent by Borrower, including all footnotes
thereto, (ii) for trade payables arising in the ordinary course of its business
since the date of the financial statements delivered to Lender or Lender's
Agent, and (iii) for money borrowed and other financial accommodations from
Lender and Lender's Affiliates.
(J) Title to Collateral; Location of Equipment. On the Closing Date,
Borrower will have good, indefeasible, and merchantable title to and ownership
of the Collateral, free and clear of all Liens except those of Lender and those
set forth in Exhibit 5.1(J) attached hereto, which Liens and Lender's Lien will
be in the priority set forth in Section 4.2 hereof. As of the date of this
Agreement and the Closing Date, the Collateral and all related books and
records, including computer programs, printouts, and other computer materials
are located only at the locations set forth in Exhibits 1.56 and 4.1(A).
(K) Burdensome Provisions; Disputes. To Borrower's knowledge and
except as set forth in Exhibit 5.1(K) attached hereto, Borrower is not (i) a
party to any contract, agreement or other instrument or subject to any charge,
corporate restriction, judgment, decree, or order that has or may have a
Material Adverse Effect on Borrower, (ii) a party to any material labor dispute,
(iii) the subject of any material pending or threatened strikes or walkouts
relating to any labor contract, and (iv) a party to any collective bargaining
agreement that is scheduled to expire during the Term. To Borrower's knowledge,
Borrower is not bound by any provision of any applicable law or governmental
regulation (excluding applicable Fraud and Abuse Laws), that has a Material
Adverse Effect upon Borrower or, insofar as Borrower can reasonably foresee,
will have a Material Adverse Effect upon Borrower.
(L) Compliance with Laws. Except as set forth in Exhibit 5.1(L)
attached hereto, Borrower has materially complied with and is not in default in
any material respect under any law, ordinance, requirement, regulation or order
(including, without limitation, any environmental, zoning or building laws,
ordinances, requirements, regulations or orders and excluding applicable Fraud
and Abuse Laws) applicable to its business, operations or properties, and
Borrower has received no notice and is unaware of any claimed default with
respect to the foregoing.
(M) Securities Act. Borrower's execution and delivery of this
Agreement does not directly or indirectly violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto, including Regulations U, G, T and X, as at any time
amended by the Board of Governors of the Federal Reserve System (12 CFR Sections
221, 207, and 220, respectively) or any other regulation in substance
substituted therefor, and, except as previously disclosed to Lender's Agent in
writing, Borrower does not own or intend to purchase or carry any "margin
security" as defined in such Regulations.
(N) Environmental Matters.
(i) To Borrower's knowledge and except as set forth in Exhibit
5.1(N)(i) attached hereto, neither Borrower, nor any previous owner, tenant,
occupant, or user of any real property now or previously owned or leased by
Borrower has used, generated, manufactured, installed, released, discharged,
stored, handled, transported, or disposed of any Hazardous Materials, on, under,
in or about the site of any such real property; and
(ii) To Borrower's knowledge, Borrower's use of such real
property complies with all applicable environmental laws and governmental
regulations, including all applicable federal, state, and local laws,
ordinances, and regulations pertaining to air and water quality, Hazardous
Materials, waste disposal, or other environmental matters, including the Clean
Water Act, the Clean Air Act, the Federal Water Pollution Control Act, the Solid
Waste Disposal Act, the Resource Conservation Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, and the rules,
regulations, and ordinances of the city and county in which such property is
located, the Environmental Protection Agency, and all other applicable federal,
state, regional, and local agencies and bureaus, where the failure to so comply
would have a Material Adverse Effect either as to the value of such real
property, as to Borrower's occupancy or use of such real property, or as to
Borrower.
(O) Insurance. Set forth in Exhibit 5.1(O) attached hereto is a list
of all insurance of any nature maintained by Borrower including descriptions of
the coverage, policy limits, and deductibles with respect thereto. All such
policies, unless otherwise specified, are in full force and effect and provide
coverage of such risks and for such amounts as is required by this Agreement.
There has not occurred any accident or loss or any other event known to
Borrower, other than those listed in Exhibit 5.1(O), that might reasonably be
expected to result in (a) the cancellation or reduction of any insurance
policies in effect, which cancellation would, individually or in the aggregate,
materially diminish such insurance coverage, or (b) any material premium
adjustment with respect to any insurance policies identified in Exhibit 5.1(O).
(P) Employees. To the best of Borrower's knowledge and except as set
forth in Exhibit 5.1(P) attached hereto, hours worked by and payment made to
employees of Borrower have not been in violation of the Fair Labor Standards Act
or any other applicable law dealing with such matters that would have a Material
Adverse Effect upon Borrower. All payments due from Borrower on account of
employee health and welfare insurance that would have a Material Adverse Effect
upon Borrower if not paid has been paid or, if not due, accrued as a liability
on the books of Borrower.
(Q) Joint Ventures. Except as set forth in Exhibit 5.1(Q) attached
hereto, Borrower is not engaged in any joint venture or partnership with any
Person.
(R) Investment Company Act. Borrower is not an "investment company"
nor an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended. The making of the Term Loan by Lender, the application of the
proceeds and the repayment thereof by Borrower, and the consummation of the
transactions contemplated by this Agreement will not violate any provision of
the Investment Company Act or any rule, regulation, or order issued by the
Securities and Exchange Commission thereunder (i) that specifically affects the
business conducted by Borrower or transactions into which Borrower may enter,
or, (ii) to Borrower's knowledge, that specifically affects the business
conducted by Lender or transactions into which Lender may enter.
(S) Subsidiaries and Affiliates. Borrower has no Subsidiaries and
Affiliates except as set forth in Exhibit 5.1(S) attached hereto. For the
purposes of this Section 5.1(S), the term "Affiliates" shall exclude the
Affiliates of Cal Kovens.
(T) Financial Statements. The financial statements, interim
financial statements and balance sheets of Borrower as set forth in Borrower's
Form 10-Q filed with the Securities Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, for the quarterly period ended
March 31, 1993, previously delivered by Borrower to Lender's Agent and required
to be delivered by Borrower to Lender during the term of this Agreement under
Section 7.1: (i) are and will be true, complete and correct in all material
respects, (ii) present and will present fairly and accurately the financial
condition of Borrower and its Subsidiaries, respectively, and the results of
their respective operations at the dates and for the periods indicated, and
(iii) have and will have been prepared in conformity with GAAP, applied
consistently for the periods specified, except that the interim financial
statements need not contain any of the footnotes required to comply with GAAP.
From and after December 31, 1992, Borrower has not made any changes in its
accounting methods or practices.
(U) Litigation or Claims. Except as set forth in Exhibit 5.1(U)
attached hereto (said matters set forth in Exhibit 5.1(U) being collectively
referred to herein as "Pending Litigation"), neither Borrower nor Borrower's
properties, businesses or assets is engaged in or a party to or threatened with
any suit, action, proceeding, inquiry, enforcement action, investigation, claim
or demand or legal, administrative, arbitration or other method of settling
disputes or disagreements, and Borrower, to the best of its knowledge after due
investigation, does not know, anticipate or have notice of any basis for any
such action. Borrower has not received notice of any investigation, threatened
or contemplated, by any federal or state governmental authority or agency, that
remains unresolved. None of the Pending Litigation has created a Lien or a
claim therefor against any of Borrower's Property, including, without
limitation, the Collateral. Set forth in Exhibit 5.1(U) is a complete and
accurate description of each outstanding order, writ, injunction or decree of
any court, arbitrator, government or governmental agency against or affecting
the Collateral. Borrower has provided Lender's Agent with complete and correct
copies of all such orders, writs, injunctions and decrees, and will make
available upon request, copies of all correspondence, reports, memoranda and
files related thereto.
(V) ERISA. Exhibit 5.1(V) sets forth each and every Employee Pension
Benefit Plan (as defined in Section 3(2) of ERISA ("Plan")) applicable to
Borrower's employees. Except as set forth in Exhibit 5.1(V) attached hereto, to
Borrower's knowledge: (i) Borrower has fulfilled all of its obligations under
the minimum funding standards of ERISA, and the IRC, with respect to each Plan
and is in compliance in all material respects with the presently applicable
provisions of ERISA and the IRC with respect thereto, and has not incurred any
liability to the Pension Benefit Guaranty Corporation or a Plan in connection
with the termination of a Plan applicable to Borrower's employees under Title IV
of ERISA, where such liability would have a Material Adverse Effect on the
financial condition of Borrower; (ii) with respect to each Plan applicable to
Borrower's employees, there have been no "prohibited transactions" (as defined
in Section 4975(c) of the IRC and Section 406 of ERISA) or "reportable events"
(as defined in Section 4043(b) of ERISA and the regulations thereunder);
(iii) each Plan applicable to Borrower's employees which is intended to be a
qualified plan under Section 401(a) of the IRC has received a favorable
determination letter from the Internal Revenue Service, and no withdrawal
liability has been incurred by or asserted against Borrower with respect to a
withdrawal from any multiemployer pension plan applicable to Borrower's
employees; (iv) no proceedings have been instituted to terminate any Plan of
Borrower; (v) no condition exists that presents a material risk to Borrower or
any of its Subsidiaries of incurring a liability to or on account of a Plan
pursuant to the foregoing provisions of ERISA and the IRC; (vi) no Lien imposed
under the IRC or ERISA on the assets of Borrower or any of its Subsidiaries
exists or is likely to arise on account of any Plan; and (vii) Borrower and its
Subsidiaries may terminate contributions to any other employee benefit plans
maintained by them without incurring any material liability to any Person
interested therein.
(W) Taxes. Except as set forth in Exhibit 5.1(W) attached hereto,
all federal, state, county and other tax returns, reports and declarations of
every nature (including, without limitation, income, employment, payroll,
excise, Property, sales and use taxes, unemployment contributions) required to
be filed by or on behalf of, or with respect to Borrower and its assets,
including, without limitation, the Collateral have been duly and timely filed,
and will continue to be duly and timely filed (within the time periods required
by law) by Borrower, all such returns or reports are, or will be at the time of
filing, complete and accurate and in accordance with the tax laws applicable
thereto and accurately reflect all such taxes, charges and assessments required
to be paid by Borrower for the periods covered thereby. No extension of time or
requests therefor or waiver thereof, have been made or are presently pending or
effective with respect to such reports, returns or taxes that will have a
Material Adverse Effect on Borrower. All taxes shown to be due and payable on
such returns and reports and any deficiency, assessments, penalties and interest
thereon have been paid. All required tax estimates, deposits, prepayments and
the like for current periods have been properly made. There are no tax liens on
any of the Collateral and, to Borrower's knowledge, no basis exists for the
imposition of any such liens. The accrual for taxes reflected in the balance
sheets of Borrower is in the aggregate adequate to cover any and all federal,
state, local or foreign tax liabilities (whether or not disputed) of Borrower
for the period ended on the date thereof and all prior periods. Borrower has no
dispute with any taxing authority as to taxes of any nature which affects the
subject matter of this Agreement. There is no unassessed tax deficiency
proposed or, to the best of Borrower's knowledge, threatened against Borrower,
and no action, proceeding or audit of any of Borrower's returns or reports by
any governmental authority is pending or, to Borrower's knowledge, threatened by
any governmental authority for assessment, reassessment or collection of any
taxes or assessments affecting Borrower that will have a Material Adverse Effect
on Borrower.
(X) Absence of Adverse Changes. Except as set forth on Borrower's
Form 10-Q for the period ended March 31, 1993 filed with the Securities and
Exchange Commission or on Exhibit 5.1(X) attached hereto, since December 31,
1992, there has not been any change, and Borrower knows of no fact,
circumstance, event, occurrence, contingency or condition that might reasonably
be expected to result in a change, whether or not in the ordinary course of
business and whether or not covered by insurance, that has or, to Borrower's
knowledge, will have a Material Adverse Effect on the working capital, financial
condition, Property, assets, liabilities, Indebtedness, reserves, business,
operations or prospects of Borrower or the ability of Borrower fully to perform
this Agreement and the transactions contemplated hereby.
(Y) Brokers. Except as set forth in Exhibit 5.1(Y), all
negotiations relating to this Agreement and the transactions contemplated hereby
have been carried out without the intervention of any person on behalf of
Borrower in such manner as to give rise to any claim against Lender, its
Affiliates or Borrower for any brokerage or finder's fee commission, fee or
similar compensation.
(Z) Corporate Records. The corporate records and minute books of
Borrower accurately reflect all material actions taken by the stockholders,
Board of Directors or any committee thereof.
(AA) Remuneration. Exhibit 5.1(AA) lists all employees of Borrower
whose aggregate direct remuneration (including bonuses) for 1992 equalled or
exceeded Fifty Thousand Dollars ($50,000).
(BB) No Untrue or Inaccurate Representations or Warranties. All
statements contained in any certificate, financial statement or other instrument
delivered by or on behalf of Borrower pursuant to or in connection with this
Agreement or the other documents contemplated by this Agreement (including but
not limited to any such statements made in or in connection with any amendment
hereto) shall constitute representations and warranties made by Borrower under
this Agreement. The representations and warranties of Borrower contained in the
Loan Documents, each Exhibit, Schedule certificate or other written statement
delivered pursuant to this Agreement, or in connection with the transactions
contemplated hereby, are, as of the date when given, accurate, correct and
complete, and do not contain any untrue statement of material fact or omit to
state a material fact necessary in order to make the statements and information
contained therein not misleading. Notwithstanding the foregoing, none of the
assumptions or other matters set forth in any pro formas or projections
delivered by Borrower to Lender, any of Lender's Affiliates, Lender's Agent or
any other Person in connection with the transactions contemplated by this
Agreement shall be construed as or constitute a representation or warranty.
5.2 Survival of Warranties and Representations of Borrower. All
representations and warranties of Borrower contained in this Agreement shall
survive the execution, delivery, and acceptance of this Agreement by the parties
hereto and the consummation of the transactions described herein or related
hereto and shall expire on the Termination Date.
5.3 Warranties and Representations of Lender. Lender represents and
warrants to Borrower that:
(A) Existence; Power; Good Standing. Lender is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, the state of its incorporation. Lender has the full corporate power
and authority to own, lease and operate its properties and assets as presently
owned, leased and operated, to carry on its business as it is now being
conducted.
(B) Authority; Binding Obligations. Lender has the requisite
corporate power and authority, and has taken all necessary corporate and other
actions, necessary to enter into, execute, deliver and perform this Agreement.
This Agreement has been duly executed and delivered by Lender and is the legal,
valid and binding obligation of Lender enforceable against Lender in accordance
with its terms, subject as to the enforcement of remedies only, to limitations
imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and the effect
of applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general application relating to or affecting creditors' rights
generally.
(C) Authority Under Philips Loan Documents. Lender has acquired all
of Philips' right, title and interest in and to the Philips Loan Documents. As
assignee of Philips' right, title and interest under the Philips Loan Documents,
Lender has exclusive and all necessary power and authority to consent under the
Philips Loan Documents to the transactions contemplated hereby. Borrower has no
obligation to obtain the consent of Philips under the Philips Loan Documents to
the transactions contemplated hereby.
5.4 Survival of Representations and Warranties of Lender. Lender's
representations and warranties contained in Section 5.3 shall survive the
execution, delivery and acceptance of this Agreement by the parties hereto and
the consummation of the transactions described herein or related hereto and
shall expire upon termination of all the Philips Loan Documents.
6. COVENANTS AND CONTINUING AGREEMENTS
6.1 Affirmative Covenants of Borrower. Borrower covenants that at all
times during the Term:
(A) Payment of Indebtedness. Borrower shall pay and discharge or
cause to be paid and discharged all of its Indebtedness, including the
Liabilities to Lender and Lender's Agent, as and when due and payable or on
demand, as the case may be except for such Indebtedness that is reasonably being
contested and disputed by Borrower, provided that Borrower shall have given
Lender written notice of said dispute and shall be diligently contesting the
same in good faith in an appropriate forum and proceeding. If such disputed
Indebtedness is in excess of Fifty Thousand Dollars ($50,000) in the aggregate,
at any time, Borrower shall give Lender such additional assurances as Lender
reasonably deems necessary under the circumstances. Notwithstanding the
foregoing, Borrower shall pay or discharge or cause to be paid or discharged
upon three (3) Business Days prior notice, any and all fees, costs or expenses
that Lender, Lender's Agent or any Participant pays to a bank or other similar
institution arising out of or in connection with: (i) the forwarding to
Borrower or any other Person on behalf of Borrower, by Lender, Lender's Agent or
any Participant, of proceeds of loans made by Lender to Borrower pursuant to
this Agreement, and (ii) the depositing for collection, by Lender, Lender's
Agent or any Participant, of any check or item of payment received and/or
delivered to Lender or any Participant on account of the Liabilities. Lender
shall act and shall cause Lender's Agent to act in a commercially reasonable
manner in enforcing its rights pursuant to this Section 6.1(A).
(B) Maintenance of Collateral. Borrower shall, at its sole cost and
expense, keep and maintain, insure, preserve and protect the Collateral at any
time owned by it and useful or necessary for its business in good working order
and condition, ordinary wear and tear excepted, and shall use reasonable efforts
to not permit any waste of the Collateral. Borrower shall notify Lender
promptly of any event or occurrence causing a material loss or decline in value
of the Collateral and the estimated (or actual, if available) amount of such
loss or decline.
(C) Inspection Rights. Borrower shall permit Lender and its agents
and representatives to enter upon Borrower's premises and shall use reasonable
efforts to cause any lessee of the Collateral to permit Lender and its agents
and representatives to enter upon lessee's premises, and any location wherein
the Collateral is located at any time during usual business hours (or at such
other times as may be reasonably requested by Lender) upon at least three (3)
Business Days prior written notice to Borrower and such lessee, if applicable,
exercisable as frequently as Lender or any designated representative of Lender
may reasonably request, for the purpose of inspecting the Collateral, all
records, files and books of account of Borrower related thereto (and to make
extracts from such records, files and books of account at Lender's expense), and
the premises upon which any of the Collateral is located, and, verifying the
value and condition of, or any other matter relating to the Collateral.
(D) Audit Rights. Borrower shall permit Lender and its agents and
representatives to enter upon Borrower's premises at any time during usual
business hours (or at such other times as may be reasonably requested by Lender)
upon at least three (3) Business Days prior written notice to Borrower,
exercisable as frequently as Lender or any designated representative of Lender
may reasonably request, for the purpose of inspecting all records, files and
books of account of Borrower (and to make extracts from such records, files and
books of account at Lender's expense). All executive officers and other
officers of Borrower charged with knowledge of the financial condition of
Borrower shall make themselves available at all reasonable times to discuss, and
provide all reasonable information requested by Lender with respect to
Borrower's business.
(E) Special Collateral. Borrower shall deliver to Lender the
original of any Special Collateral promptly upon Borrower's receipt thereof,
together with appropriate endorsements and/or documentation (in form and
substance acceptable to Lender) of assignment thereof and/or security therefor
to Lender.
(F) Financing Statements. Borrower shall deliver to Lender on the
Closing Date executed Financing Statements evidencing Lender's security interest
in the Collateral identified in Section 4.1. Borrower hereby authorizes Lender
to file one (1) or more Financing Statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of Borrower where
permitted by law. Borrower hereby agrees to execute within ten (10) days after
Lender's request such Financing Statements as may be necessary to replace, prior
to expiration, any Financing Statements delivered to Lender on the Closing Date
and to evidence Lender's continuing security interest in the Collateral.
(G) Compliance with Laws. Borrower shall comply and shall cause its
Subsidiaries to comply in a timely fashion with the requirements of all (i)
federal, state and local laws, rules and regulations applicable to them,
respectively, including those relating to ERISA, those regarding the collection,
payment and deposit of sales, employees' income, unemployment and social
security taxes and other charges, and those relating to environmental matters
and health care matters, and (ii) orders of any governmental authority having
jurisdiction over Borrower, where the failure to so comply may have a Material
Adverse Effect upon Borrower or its Subsidiaries, or affect Borrower's ability
to perform its obligations under this Agreement and the other Loan Documents,
unless the same is being contested in good faith by appropriate proceedings and
such contest shall operate to stay the Material Adverse Effect of any such
noncompliance.
(H) Compliance with Agreements. Except as expressly provided in
Section 6.1(A) hereof or as set forth on Exhibit 6.1(H) attached hereto,
Borrower shall perform, within all required time periods (after giving effect to
any applicable grace periods), all of its obligations and enforce all of its
rights under each agreement to which it is a party, including any leases to
which it is a party, where the failure to so perform and enforce would have a
Material Adverse Effect upon Borrower. Borrower shall not terminate or modify
in any manner adverse to Borrower any provision of any agreement or lease to
which it is a party which termination or modification could reasonably be
expected to have a Material Adverse Effect upon Borrower or the Collateral.
(I) Hazardous Materials Laws. Borrower shall comply and shall
require its Subsidiaries to comply in all material respects with all laws
governing Hazardous Materials and shall promptly advise Lender in writing of (i)
any and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, contemplated or threatened in writing pursuant to any
applicable laws governing Hazardous Materials; (ii) any and all claims made or
threatened in writing by any third party against Borrower or its Subsidiaries or
their respective real property relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials; and (iii)
discovery by any officer or employee of Borrower or its Subsidiaries of any
occurrence or condition on any real property adjoining or in the vicinity of
Borrower's or its Subsidiaries' respective real property that could reasonably
be expected to cause Borrower's or its Subsidiaries' respective real property or
any part thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of Borrower's or its Subsidiaries' respective real
property under any laws governing Hazardous Materials.
(J) Payment of Taxes. Borrower shall prepare and file all tax
returns and pay and discharge at or before their due date, all taxes,
assessments and other similar governmental levies, charges, fees and imposts,
all liabilities for judgments, assessments and other governmental charges and
all other obligations for the payment of money, which, if unpaid might become a
Lien on Borrower's Property, except those being contested in good faith by
appropriate proceedings if by reason of such nonpayment and contest no material
item or portion of Property of Borrower, including the Collateral, taken as a
whole, is in jeopardy of being seized, levied upon or forfeited prior to
judgment. Borrower shall maintain, in accordance with GAAP, appropriate
reserves for the accrual of any of the foregoing obligations and liabilities.
(K) Preserve Accuracy of Representations and Warranties. Borrower
shall refrain from any action or inaction that would render inaccurate any
representation or warranty set forth in Sections 5.1(A), 5.1(C), 5.1(F) and
5.1(Z) or any covenant contained in this Agreement. The parties acknowledge
that the covenant set forth in this Subsection 6.1(K) requires the
representations and warranties expressly identified above to be true and correct
each day this Agreement remains in effect. This covenant shall not be construed
to imply that all other representations and warranties in the Loan Documents are
not required to be accurate and complete as of the date of this Agreement and
the Closing Date.
(L) Maintenance of Existence. Borrower shall (i) preserve and
maintain its separate corporate existence in the jurisdiction of its formation
and all authorizations, rights, franchises, licenses, privileges, consents,
approvals, orders, licenses, permits, or registrations from any governmental
agency that are necessary for the transaction of its business, except where the
failure to so preserve and maintain would not have a Material Adverse Effect on
Borrower, and (ii) qualify and remain qualified as a foreign corporation in each
jurisdiction identified in Exhibit 5.1(A) hereto in each jurisdiction in which
such qualification is necessary in view of its business or the ownership of
Borrower's Property.
(M) Use of Loan Proceeds; Sales Tax. Borrower shall use all funds
received from Lender pursuant to the Term Loan for the purposes specified in
Section 2.1 of this Agreement and for no other purpose. Borrower shall pay,
with funds advanced to Borrower by Lender pursuant to the Ancillary Note, any
and all (i) sales tax imposed as a result of the sale of the Equipment by
Lender's Agent to Borrower, (ii) other taxes or fees imposed as a result of such
sale and Borrower's buy out of the Equipment Leases and (iii) amounts owed by
Borrower to Lender or Lender's Agent during the month of June 1993 under any
loan agreement, promissory note, installment sales contract, or any other form
of liability or indebtedness owed by Borrower to Lender or Lender's Agent,
except amounts due during such month under the Philips Loan Documents.
(N) Accounting Methods; Books and Records of Account. Borrower shall
maintain its present customary system of accounting established and administered
in accordance with GAAP and keep such books, records and accounts (which shall
be true and complete) with respect to its business activities in reasonable
detail as necessary to permit preparation of financial statements in conformity
with GAAP.
(O) Further Assurances. In addition to the acts recited herein and
contemplated to be performed, executed and/or delivered by Borrower, Borrower
hereby agrees, at any time, and from time to time, to perform, execute and/or
deliver to Lender upon request, in form and substance acceptable to Lender, any
and all such further acts, additional instruments, including Supplemental
Documentation, or further assurances as may be reasonably necessary or proper to
(a) promptly implement the intent of the parties under this Agreement, (b)
promptly correct any defect, error or omission which may be discovered in this
Agreement or any other Loan Document, and execute any and all additional
documents as may be requested by Lender to correct such defect, error or
omission, or to identify any additional properties which are or become subject
to this Agreement, (c) assure Lender a valid Lien and security interest under
this Agreement on the Equipment and other Collateral referenced in this
Agreement in accordance with Section 4.2 hereof, (d) create, perfect, preserve,
maintain and protect the Liens and security interests created or intended to be
created pursuant to this Agreement, and (e) provide the rights and remedies to
Lender granted or provided for by this Agreement. Borrower shall pay the costs
of any recording or filing any of such documents if required in accordance with
Section 9.2 hereof. Upon the occurrence and during the continuance of an Event
of Default, Borrower hereby irrevocably makes, constitutes, and appoints Lender
(and all Persons designated by Lender for that purpose) as Borrower's true and
lawful agent and attorney-in-fact to sign the name of Borrower on any
Supplemental Documentation and to deliver any Supplemental Documentation to such
Persons as Lender, in its sole discretion, may elect. Borrower agrees that a
carbon, photographic, photostatic, or other reproduction of this Agreement or of
a Financing Statement is sufficient as a Financing Statement. Notwithstanding
the foregoing provisions of this Subsection 6.1(O), Lender shall act (i) in a
commercially reasonable manner when exercising Lender's rights pursuant to this
Subsection 6.1(O), and (ii) only as may be necessary in Lender's reasonable
judgment to protect or preserve Lender's rights under this Agreement and to
Collateral as set forth in subsections (a) through (e) above.
(P) Insurance; Payment of Premiums. Borrower shall, at its sole cost
and expense, maintain in full force and effect the following insurance
coverages:
(i) "All Risk" physical damage insurance policies on all of
Borrower's real and personal property including, but not limited to, fire and
extended coverage, machinery coverage, flood, theft, explosion and all other
hazards and risks ordinarily insured against by owners or users of properties
engaged in businesses similar to Borrower with a limit of $10,000,000 per
occurrence.
(ii) Comprehensive general liability insurance on an "occurrence
basis" (unless such insurance cannot be reasonably obtained at commercially
reasonable rates, in which case such insurance shall be on a "claims made" basis
with additional "tail" coverage) against claims for personal injury, bodily
injury and property damage with a minimum limit of $1,000,000 per occurrence and
$2,000,000 in the aggregate. Such coverage shall include but not be limited to
premises/operations, broad form contractual liability, independent contractors,
broad form Property coverage, products liability and completed operations
liability.
(iii) Workers' compensation insurance including coverage for
employer's liability in the amount of $1,000,000 for each accident or disease
for each employee;
(iv) Automobile liability insurance for all owned, non-owned or
hired automobiles against claims for personal injury, bodily injury and property
damage with a minimum combined single limit of $1,000,000 per occurrence;
(v) Professional liability insurance in an amount equal to
$3,000,000 in the aggregate; and
(vi) Umbrella coverage in an amount equal to $3,000,000 per
occurrence.
All policies of insurance required to be maintained under this Agreement
shall be in form and with insurers recognized as adequate by Lender. All
policies of insurance on the Collateral shall contain an endorsement in form and
substance acceptable to Lender and showing loss payable to Lender with respect
to the Collateral as its interests appear. Such endorsement, or independent
instrument furnished to Lender shall provide that the insurance companies will
give Lender at least thirty (30) days' prior written notice before any such
policy or policies of insurance shall be altered or canceled, and that no act or
default of Borrower or any other Person shall affect the right of Lender to
recover under such policy or policies of insurance in case of loss or damage.
Borrower shall deliver to Lender the original (or certified copy) of each policy
of insurance and evidence of payment of all premiums therefor and of compliance
with all provisions of this Agreement. In addition, Borrower shall notify
Lender promptly of any occurrence causing a material loss or decline in value of
any real or personal property and the estimated (or actual, if available) amount
of such loss or decline. Borrower hereby directs all insurers under such
policies of insurance to pay all proceeds payable thereunder with respect to the
Collateral directly to Lender. Borrower shall forthwith, at the request of
Lender, duly execute and deliver instruments of assignment of any such insurance
policies to comply with this Section 6.1(P) and cause the insurers with respect
to such policies to acknowledge notice of such assignment. Borrower irrevocably
makes, constitutes, and appoints Lender (and all officers, employees, or agents
designated by Lender) as Borrower's true and lawful attorney (and agent-in-fact)
for the purpose of making, settling, and adjusting claims under such policies of
insurance that relate to the Collateral (provided that Lender shall consult with
Borrower prior to finally making, settling or adjusting claims under such
policies of insurance), endorsing the name of Borrower on any check, draft,
instrument, or other item of payment for the proceeds of such policies of
insurance that relates to the Collateral. In the event Borrower at any time or
times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or shall fail to pay any premium in whole or in part,
relating thereto, Lender, without waiving or releasing any Liabilities or
Default or Event of Default hereunder may at any time or times thereafter (but
shall not be obligated to) obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto which Lender
deems advisable. All sums so disbursed by Lender, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable, on demand, by Borrower to Lender and shall be additional Liabilities
hereunder secured by the Collateral.
Lender reserves the right at any time, upon review of Borrower's risk
profile, to require additional forms and limits of insurance to, in Lender's
reasonable opinion, adequately protect Lender's interests under this Agreement.
(Q) Intentionally Deleted.
(R) Intentionally Deleted.
(S) Indemnification From RCI. Borrower shall promptly enter into an
agreement with RCI in a form acceptable to Lender whereby RCI shall agree to
fulfill all of the obligations referred to in Paragraph 4 of Exhibit 6.2(L) of
this Agreement and to indemnify Borrower against any loss and expense incurred
by Borrower arising from or related to those obligations.
(T) Litigation. In the event any Pending Litigation shall result in
a final judgment adverse to Borrower, Borrower shall promptly satisfy same or
bond off same. Except as provided in Subsection 9.12(B) hereof, Borrower shall
indemnify and hold Lender and Lender's Agent harmless from any and all losses,
claims, damages, costs, expenses (including court costs and attorneys' fees) and
obligations (including, but not limited to, any loss of any right, title and/or
interest of Lender in and/or to the Collateral) arising out of and/or related
to, directly or indirectly, any litigation, or the claim of any third party for
alleged liabilities and/or obligations of Borrower arising out of transactions
or events affecting the Collateral; provided, however, that if Lender or
Lender's Agent intervenes in such action, Borrower shall not be liable to Lender
or Lender's Agent for any expenses incurred by Lender or Lender's Agent, which
for purposes of this Section 6.1(T) shall include attorneys' fees or court costs
incurred by Lender or Lender's Agent but shall not include any damages or other
losses incurred by Lender or Lender's Agent in connection with such litigation.
Borrower shall not be liable to Lender or Lender's Agent for any losses, claims,
damages, costs, expenses and obligations which are caused by the gross
negligence, willful misconduct or other activities of Lender or Lender's Agent
described in Subsection 9.12(B).
(U) Filing Receipts. Borrower shall, as soon as available, deliver
to Lender certified copies of all filing receipts or acknowledgments issued by
any Person to evidence any filing or recordation necessary to perfect Lender's
Liens on and security interests in the Collateral granted pursuant to this
Agreement or the other Loan Documents and to evidence, in a form reasonably
acceptable to Lender, that, to the extent available under the UCC, such Liens
and security interests constitute valid and perfected Liens on and security
interests in the Collateral in accordance with Section 4.2 hereof.
6.2 Negative Covenants of Borrower. Without Lender's prior written
consent, which Lender may or may not give, in its sole discretion (except as
otherwise expressly provided in Section 6.6 hereof to the contrary), Borrower
covenants as follows:
(A) Mergers. Borrower shall not, directly or indirectly, by
operation of law or otherwise, reorganize, merge or consolidate or otherwise
combine with any Person.
(B) Investments and Acquisitions. Except as set forth in Exhibit
6.2(B) attached hereto, Borrower shall not create, form or otherwise acquire any
Subsidiary unless such Subsidiary is separate and separately funded. Borrower
shall not make, nor shall it permit any Subsidiary (other than RCI) to make, any
loan or advances of money to any Person or any investment, directly or
indirectly (by way of transfer of Property, contributions to capital, purchase
of stock or securities or evidences of Indebtedness, acquisition of the business
or assets, or otherwise), in any Person in amounts exceeding One Hundred
Thousand Dollars ($100,000) per transaction or in the aggregate, except for
those transactions described in Exhibit 6.2(B) attached hereto. Notwithstanding
the foregoing, RCI may and, subject to the prior written consent of Lender, any
other Subsidiary may make investments with respect to business activities
associated with Gamma Knife or any other Invasive Technology (as defined below),
however, Borrower shall not purchase, finance, operate or control business
activities associated with Gamma Knife or any other invasive technology except
through such separate and separately funded Subsidiary. For purposes of this
Section 6.2(B), "Invasive Technology" shall mean any business wherein permanent
change in anatomy, structure, physiology or metabolism is introduced to the
customer as a direct result of the technology used or actually performed;
provided, however, that Invasive Technology shall not include radiation therapy.
Requests by Borrower to take any action that is not permitted by this
Section 6.2(B) shall comply with Section 6.6 hereof and shall be approved or
disapproved by Lender in accordance with Section 6.6 hereof within twenty-five
(25) Business Days following Lender's receipt of Borrower's request for
consent. The parties acknowledge that this Section 6.2(B) shall not restrict or
limit activities permitted by the terms of Sections 6.2(H) and (I) hereof.
(C) Distributions. Borrower shall not make any Distributions, except
Borrower may pay dividends with respect to the Series B Preferred Stock of
Borrower that is issued to the Preferred Stock Purchasers pursuant to the terms
of the Preferred Stock Agreement, which dividends shall be paid only in
accordance with the terms of the Preferred Stock Agreement and only if such
payment will not have a Material Adverse Effect on Borrower, or Borrower's
ability to repay the Liabilities.
(D) Subordinated Obligations. Borrower shall not voluntarily prepay
any principal (including the making of any sinking fund payment), interest or
any other amount in respect of (i) any obligations that are subordinate to
Borrower's obligations to Lender, (ii) the Philips Debt, or (iii) any other
obligations.
(E) ERISA. (a) Borrower shall not at any time, maintain, be
obligated or become obligated to contribute on behalf of its employees to, any
Plan, other than (i) Plans disclosed in Exhibit 5.1(V), (ii) Plans created to
replace those Plans disclosed in Exhibit 5.1(V), as notified by Borrower to the
Lender, and (iii) Plans to which Borrower becomes obligated to contribute
pursuant to the terms of a collective bargaining agreement.
(b) Borrower shall not at any time, permit any Plan maintained
by it, to:
(i) engage in any non-exempt "prohibited transaction," as
such term is defined in Section 4975 of the Code;
(ii) incur any material "accumulated funding deficiency," as
that term is defined in Section 302 of ERISA; or
(iii) suffer a termination event to occur which may
reasonably be expected to result in (a) liability of Borrower to the Plan that
may reasonably be expected to have a Material Adverse Effect on Borrower, or (b)
the imposition of a Lien on the Collateral pursuant to Section 4068 of ERISA.
(c) Borrower shall not at any time, permit any Plan described in
the Exhibit 5.1(V) to fail to comply with ERISA or other applicable laws in any
respect if such failure would have a Material Adverse Effect on Borrower.
(F) Amendments. Borrower shall not amend any provision of any
obligation that is subordinate to Borrower's obligations to Lender or any other
obligation, including the Philips Debt, if such amendment would (i) affect any
of the subordination provisions thereof, (ii) advance the date of any required
payment or prepayment thereunder, (iii) make any covenant therein more
burdensome to Borrower, (iv) reduce any default or grace period therein
provided, or (v) otherwise have a Material Adverse Effect on the interests of
Lender. Notwithstanding the foregoing, Borrower shall not amend the Preferred
Stock Agreement without the prior written consent of Lender, which may be
withheld in Lender's sole discretion.
(G) Increase in Salaries. Borrower shall not in any fiscal year of
Borrower increase the aggregate salaries of its officers, directors, and
managers by an aggregate amount exceeding twenty percent (20%) of the aggregate
salaries paid to its officers, directors and managers during the immediately
preceding fiscal year. Requests by Borrower to take any action that is not
permitted by this Section 6.2(G) shall comply with Section 6.6 hereof and shall
be approved or disapproved by Lender in accordance with Section 6.6 hereof
within ten (10) Business Days following Lender's receipt of Borrower's request
for consent.
(H) Capital Expenditures. Neither Borrower nor any Subsidiary (other
than RCI) shall make capital expenditures (including expenditures for
capitalized leases but excluding expenditures for routine repairs and
replacements) in excess of Five Hundred Thousand Dollars ($500,000) in the
aggregate during any fiscal year. Notwithstanding the foregoing, this Section
6.2(H) shall not apply to (i) capital expenditures made by Borrower pursuant to
transactions with Lender or Lender's Affiliates and Subsidiaries, or (ii)
capital expenditures made by any Subsidiary of Borrower that is separate and
separately funded. Requests by Borrower to take any action that is not
permitted by this Section 6.2(H) shall comply with Section 6.6 hereof and shall
be approved or disapproved by Lender in accordance with Section 6.6 hereof
within fifteen (15) Business Days following Lender's receipt of Borrower's
request for consent.
(I) Operating Leases. Neither Borrower nor any Subsidiary (other
than RCI) shall become the lessee under any operating lease if the aggregate
payments thereunder during any current or future period of twelve (12)
consecutive months, when added to aggregate payments for the same period under
all other operating leases entered into after the Agreement Date, under which
Borrower or such Subsidiary (other than RCI) is then lessee, exceed Two Hundred
Thousand Dollars ($200,000). Notwithstanding the foregoing, this Section 6.2(I)
shall not apply to operating leases between Borrower and Lender or Lender's
Subsidiaries and Affiliates. Requests by Borrower to take any action that is
not permitted by this Section 6.2(I) shall comply with Section 6.6 hereof and
shall be approved or disapproved by Lender in accordance with Section 6.6 hereof
within fifteen (15) Business Days following Lender's receipt of Borrower's
request for consent.
(J) Transactions with Affiliates. Except as specifically permitted
in this Agreement or as set forth in Exhibit 6.2(J) attached hereto, Borrower
shall not enter into, or be a party to, any transaction with any stockholder or
Affiliate of Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and reasonable
terms fully disclosed to Lender and no less favorable to Borrower than would
obtain in a comparable arm's length transaction with a Person not a stockholder
or Affiliate of Borrower; provided, however, that Borrower may issue common
stock to capitalize wholly-owned Subsidiaries of Borrower. Requests by Borrower
to take any action that is not permitted by this Section 6.2(J) shall comply
with Section 6.6 hereof and shall be approved or disapproved by Lender in
accordance with Section 6.6 hereof within twenty-five (25) Business Days
following Lender's receipt of Borrower's request for consent.
(K) Adverse Agreements. Borrower shall not enter into any
transaction that is reasonably likely to have a Material Adverse Effect on the
Collateral or Borrower's ability to repay Indebtedness.
(L) Guarantees. Except as set forth in Exhibit 6.2(L), Borrower
shall not guarantee or in any way become liable, directly or indirectly, with
respect to the obligations or liabilities of any Person, whether by guaranty,
endorsement, agreement to purchase or repurchase, agreement to supply or advance
funds or otherwise.
(M) Liens; Negative Pledges; Sales and Leasebacks. Except for those
Liens (i) identified in Exhibit 5.1(J), (ii) expressly permitted in this
Agreement, or (iii) created pursuant to this Agreement, Borrower shall not
create, permit or suffer to exist, and Borrower shall defend the Collateral
against and take such other action as is necessary to remove, any Lien of any
nature whether by sale, lease, negative pledge, merger, consolidation,
liquidation, dissolution, or otherwise, on the Collateral, whether now owned or
hereafter acquired, and Borrower shall defend the right, title and interest of
Lender in and to any of Borrower's rights to the Collateral against the claims
and demands of all Persons whomsoever.
(N) Indebtedness. Borrower shall not create, incur, assume, or
permit to exist and will not permit any Subsidiary to create, incur, assume or
permit to exist any Indebtedness or evidence of Indebtedness, except for (i) the
Liabilities, (ii) the Philips Debt, (iii) trade indebtedness in the ordinary
course of business, including payables for services performed, (iv) nonrecourse
debt as to Borrower incurred by a separate and separately funded Subsidiary, (v)
Indebtedness permitted pursuant to Subsection 6.2(I) hereof, (vi) Indebtedness
to Lender, Lender's Agent and Lender's Affiliates, and (vii) such other
permitted Indebtedness identified in Exhibit 6.2(N) attached hereto.
(O) Corporate Name. Borrower shall not change its corporate name
without giving Lender thirty (30) days' prior written notice of its intention to
do so. Requests by Borrower to take any action that is not permitted by this
Section 6.2(O) shall comply with Section 6.6 hereof and shall be approved or
disapproved by Lender in accordance with Section 6.6 hereof within ten (10)
Business Days following Lender's receipt of Borrower's request for consent.
(P) Disposition of Property. Except as set forth in Exhibit 6.2(P)
attached hereto, Borrower shall not make any Disposition of its Property,
whether now owned or hereafter acquired, without the prior written consent of
Lender. Notwithstanding the foregoing, Borrower shall not sell, transfer,
assign (by operation of law or otherwise), or otherwise dispose of or transfer
the Collateral or any interest therein, or attempt, offer or contract to do so;
provided, however, Borrower may (i) lease the Equipment in the ordinary course
of business provided that Borrower gives Lender notice of such Lease and files
appropriate Financing Statements evidencing Lender's security interest in the
Equipment in a form reasonably acceptable to Lender, and (ii) sell a particular
item of Equipment that was purchased by Borrower with the proceeds of the Term
Loan upon at least ten (10) Business Days prior notice to Lender, without
Lender's prior written consent, so long as Borrower prepays the Term Loan in an
amount that is not less than the amount determined in accordance with
Schedule 6.2(P) attached hereto in funds immediately available to Borrower in
New York, New York (or at such other place for payments designated by Lender in
accordance with Section 2.4 hereof). Such prepayments shall be made by Borrower
to Lender simultaneously with Borrower's transfer of title to such item of
Equipment to the purchaser of such Equipment. Prepayments received by Lender
pursuant to this Section 6.2(P) shall be applied as set forth in Section 2.9
hereof. Requests by Borrower to take any action that is not permitted by this
Section 6.2(P) shall comply with Section 6.6 hereof and shall be approved or
disapproved by Lender in accordance with Section 6.6 hereof within fifteen (15)
Business Days following Lender's receipt of Borrower's request for consent.
(Q) Change in the Nature or Conduct of Business. Borrower shall not
change the nature of its business or the respective businesses of its
Subsidiaries (other than RCI) as conducted on the Closing Date or engage in any
business other than the types of business in which it is engaged as of the
Closing Date without Lender's prior written consent; provided that the
introduction of additional products within or related to such lines of business
shall not be construed to be a new line of business.
(R) Location of Collateral; Books of Account. All of the Equipment
and other Collateral is, and at all times shall hereafter be kept and maintained
solely at the locations set forth in Exhibits 1.56 and 4.1(A) with respect to
such Equipment and other Collateral. Borrower shall not remove Collateral or
related books and records from the locations identified in Exhibits 1.56 and
4.1(A) with respect to each item of Collateral, except for movements of
Collateral from one such location to another in the ordinary course of business
using vehicles owned, leased or hired by Borrower, upon prior written notice to
Lender, provided that such Equipment is not moved outside of the continental
United States. Notwithstanding the foregoing, Borrower shall not keep any
Collateral or any such books and records at any other location unless: (i)
Borrower shall have given Lender at least thirty (30) days prior written notice
of such removal and the new location of such Collateral or such books and
records; and (ii) such other location is within the continental United States of
America.
(S) Capital Structure. Borrower shall not make any material change
in (i) Borrower's capital structure, including the issuance of any of its Stock,
except (a) Borrower's issuance of Stock to Lender's Agent pursuant to the terms
of the Warrant, (b) Borrower's issuance of Stock to Lender pursuant to the terms
of that certain Common Stock Purchase Warrant delivered by Borrower to Lender's
Agent on May 19, 1992, (c) Borrower's issuance of the Series B Preferred Stock
to the Preferred Stock Purchasers pursuant to the Preferred Stock Agreement,
(d) Borrower's issuance of common stock to the Preferred Stock Purchasers
pursuant to the Preferred Stock Agreement, (e) Borrower's issuance of common
stock pursuant to a public offering, (f) Borrower's issuance of common stock to
Cal Kovens pursuant to the terms of that certain Agreement dated September 27,
1989, or that certain Agreement dated November 1, 1991, (g) Borrower's issuance
of common stock to its employees as currently authorized pursuant to each of the
Employee Stock Option Plan (1983), the 1987 Stock Option Plan, the 1989 Stock
Incentive Plan and the 1992 Option and Incentive Plan, (h) Borrower's issuance
of common stock to capitalize wholly-owned Subsidiaries of Borrower as permitted
by this Agreement, or (ii) any of its business objectives, purposes, or
operations that might in any way adversely affect the repayment of the
Liabilities or have a Material Adverse Effect on Borrower. Requests by Borrower
to take any action that is not permitted by this Section 6.2(S) shall comply
with Section 6.6 hereof and shall be approved or disapproved by Lender in
accordance with Section 6.6 hereof within twenty-five (25) Business Days
following Lender's receipt of Borrower's request for consent.
(T) RCI Limitations. Notwithstanding any provision in this
Agreement to the contrary, except as set forth in Exhibit 6.2(T) Borrower shall
under no circumstances (i) fund RCI in any manner, whether through capital
contributions, loans,
advances or otherwise, (ii) guarantee, assume or otherwise become
liable for obligations of RCI, or (iii) pay any obligations of RCI or, unless
paid fair market consideration by RCI, perform any obligations of RCI or provide
any services to RCI.
6.3 Payment of Charges. Except as otherwise provided in Section 6.4 or
elsewhere in this Agreement and except as otherwise provided in the next
succeeding sentence, Borrower shall pay all charges, whether payable on account
of the execution, delivery or performance of this Agreement, the creation of any
of the Liabilities hereunder by reason of any existing or hereafter enacted
federal, state or other regulation or statute, or otherwise, promptly when due
where the failure to so pay would have a Material Adverse Effect upon Borrower.
Except as provided in Section 6.4, Borrower shall pay promptly when due all
withholding taxes, whether relating to payment of employee wages or otherwise
(collectively, the "Withholding Charges"). Borrower shall indemnify Lender and
Lender's Agent and hold Lender and Lender's Agent harmless from and against
liability in connection with any and all charges (including any amount that may
be asserted under sections 3505 and 6672 of the Internal Revenue Code and any
comparable provisions under state or local law). In the event that Borrower
fails to pay any charges described in this Section 6.3 or fails to obtain
promptly the discharge of such charges, Borrower shall so advise Lender in
writing and, whether or not Borrower so advises Lender, Lender may, in its sole
discretion, without waiving or releasing any obligation or liability of Borrower
hereunder or any Default or Event of Default, make such payment, or any part
thereof, or obtain such discharge and take any other action with respect thereto
that Lender reasonably deems advisable; provided, however, that Lender shall
provide Borrower with ten (10) days' prior notice before paying any charge of a
type described in this Section 6.3. All amounts so paid by Lender and any
related expenses, including reasonable attorneys' fees, court costs and other
charges, shall be payable, upon demand, by Borrower to Lender and shall be
additional Liabilities secured by Collateral.
6.4 Contesting Charges. Except as otherwise provided below, Borrower may
dispute any charges without prior payment, even if such non-payment may cause a
Lien to attach to Borrower's assets, provided that Borrower shall have given
Lender written notice of said dispute and shall be diligently contesting the
same in good faith in an appropriate forum and proceeding. If such disputed
charges are in excess of Fifty Thousand Dollars ($50,000) in the aggregate, at
any time, Borrower shall give Lender such additional assurances as Lender
reasonably deems necessary under the circumstances. If the charge disputed is a
Withholding Charge, and during the pendency of such dispute the appropriate
taxing authority asserts liability against Lender in relation to the disputed
Withholding Charge, then Borrower shall, if reasonably required by Lender,
immediately pay the disputed Withholding Charge liability, and thereafter shall
only contest such Withholding Charge through an alternative method.
6.5 Survival of Liabilities Upon Termination of Agreement. Except as
otherwise expressly provided in this Agreement, no termination or cancellation
(regardless of cause or procedure) of this Agreement shall in any way affect or
impair the powers, obligations, duties, rights, and Liabilities of Borrower or
Lender that accrued and remain unperformed as of the Termination Date.
6.6 Requests for Lender's Consent. Any request by Borrower for Lender's
written consent prior to taking any action prohibited by Subsections 6.2(B),
6.2(G), 6.2(H), 6.2(I), 6.2(J), 6.2(O), 6.2(P), and 6.2(S) hereof as described
in such Sections, shall be in writing and shall include a detailed description
that is reasonably acceptable to Lender of the proposed action to be taken by
Borrower. Lender shall approve or disapprove of such request within the number
of Business Days provided in the respective Subsections identified in
Section 6.2 hereof, which approval shall not be unreasonably denied; provided,
however, that Lender may reasonably request additional information regarding the
proposed action to be taken by Borrower and shall have an additional period of
ten (10) Business Days following Lender's receipt of all such information to
consider such information. Any disapproval by Lender shall set forth in
reasonable detail Lender's reasons for disapproval.
7. INFORMATION AND REPORTING REQUIREMENTS
Until payment in full of the Liabilities, unless Lender shall otherwise
consent in writing, Borrower shall furnish to Lender at Lender's address
provided in Section 9.11, the following:
7.1 Financial Statements. Borrower shall prepare, or cause the
preparation of, and deliver to Lender the following financial statements that
have been prepared in accordance with GAAP:
(A) Audited Year-End Financial Statements. For each fiscal year of
Borrower, as soon as available, but not later than one hundred five (105) days
after the end of Borrower's fiscal year, Borrower shall deliver the audited
balance sheet of Borrower as at the end of such fiscal year together with
related statements of income and retained earnings, changes in financial
position and cash flows for the twelve (12) month period then ended, setting
forth in comparative form the figures as at the end of and for the previous
fiscal year, in each case accompanied by an auditor's report thereon that is
certified by a firm of independent certified public accountants of recognized
national standing which report shall be in scope and substance reasonably
satisfactory to Lender, and, as soon as available, but not later than sixty (60)
days after the close of Borrower's fiscal year, an unaudited preliminary draft
of the balance sheet of Borrower as at the end of such fiscal year together with
preliminary drafts of such related statements of income and retained earnings
and cash flows. In case any Affiliate shall be consolidated in the financial
statements of Borrower, the statements referred to in this Section 7.1 shall be
on a consolidated and consolidating basis, in accordance with GAAP.
(B) Quarterly Financial Statements. As soon as available, but not
later than sixty (60) days after the end of each calendar quarter of Borrower's
fiscal year, Borrower shall deliver the unaudited balance sheet of Borrower as
at the end of such quarterly period and the related statements of income and
retained earnings, cash flows and changes in financial position of Borrower for
the elapsed portion of the fiscal year ended with the last day of such quarterly
period, setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year, prepared in accordance with
GAAP, subject only to normal year-end auditing adjustments, and in form and
substance as Lender may reasonably request.
(C) Officer's Certificate. Concurrently with each delivery of said
annual audited financial statements and of the interim financial statements
referred to in subsection 7.1(B) hereof, Borrower shall deliver (a) a
certificate of Borrower's chief financial officer stating that (1) in his
opinion, such financial statements are complete and correct and present fairly,
in accordance with GAAP (except for changes that have been approved in writing
by Borrower's accountants) applied consistently with those followed in the
preparation of the audited consolidated financial statements of Borrower and
that have been consistently applied throughout the period involved, the
financial position of Borrower as at the end of such period and the results of
operations and the changes in the financial position of Borrower for such period
and for the elapsed portion of the fiscal year ended with the last day of such
period, in each case on the basis presented and subject only to normal year-end
auditing adjustments specified in such financial statements (2) a review of the
activities of Borrower and its Subsidiaries during the fiscal year or interim
period covered by such financial statements, as the case may be, has been made
under his supervision with a view to determining whether Borrower has observed,
performed and fulfilled each and every covenant, obligation and agreement
contained in this Agreement and that he is not aware of the occurrence or
existence of any condition or event that constitutes a Default or an Event of
Default, or, if he is aware of such condition or event, the nature thereof, when
it occurred, whether it is continuing and the steps being taken by Borrower with
respect to such event or failure; and (b) a schedule in a form satisfactory to
Lender of the computations used by Borrower in determining compliance with the
covenants contained in Subsections 6.1(Q), (R) and (S) and Subsections 6.2(T)
and (U).
7.2 Affiliates' Financial Statements. As soon as practicable and, in any
event, within ninety (90) days of the end of the fiscal year of each Affiliate,
Borrower shall deliver the unaudited balance sheet of each Affiliate as at the
end of such fiscal year and the related statement of income and retained
earnings and changes in financial position of each Affiliate for such fiscal
period, setting forth in comparative form the figures as at the end of and for
the previous fiscal year. For purposes of this Section 7.2, the term
"Affiliate" shall exclude Cal Kovens.
7.3 Public Documents. Promptly after the sending or filing thereof, as
the case may be, copies of any definitive proxy statements, financial statements
or reports which Borrower sends to its shareholders; and copies of any regular,
periodic and special reports or registration statements which Borrower files
with the Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or any national securities exchange.
7.4 Other Reports. From time to time and promptly upon each request,
such data, certificates, reports, statements, opinions of counsel, documents or
further information regarding the Collateral or the business, assets, financial
condition or results of operation of Borrower and its Affiliates as Lender may
reasonably request. For purposes of this Section 7.4, the term "Affiliate"
shall exclude Cal Kovens.
7.5 Certain Notices. Borrower shall notify Lender in writing promptly,
but in no event later than five (5) Business Days upon learning of (i) any
litigation commenced against Borrower, its officers, directors or shareholders
that may have a Material Adverse Effect upon Borrower, the Collateral or
Lender's Lien on the Collateral, whether or not the claim is considered by
Borrower to be covered by insurance, and Borrower shall also notify Lender in
writing promptly upon learning of any threatened litigation against Borrower in
which the claim against Borrower exceeds Fifty Thousand Dollars ($50,000) or
which might have a Material Adverse Effect on Borrower, the Collateral or
Lender's Lien on the Collateral; (ii) any Default or Event of Default known to
Borrower, or any event which with the passage of time or giving of notice or
both would constitute a Default or Event of Default by Borrower; (iii) any
default by Borrower or an Affiliate under any material agreement other than this
Agreement or the other Loan Documents to which any of them is a party or by
which any of them or any of their properties may be bound that is reasonably
likely to have a Material Adverse Effect on Borrower and the Affiliates as a
whole; (iv) any facts or circumstances which come to Borrower's attention and
which cause, or through the passage of time may cause, Borrower's
representations and warranties set forth in Sections 5.1(A), 5.1(C), 5.1(F)
and 5.1(Z) to be untrue or misleading at any time; (v) any penalty assessed
against Borrower by any federal, state, or local government agency; (vi) any
notice received from any federal, state, or local government agency of any
violation by Borrower of any federal, state, or local law or regulation, the
commencement of any proceedings or investigations by or before any governmental
on nongovernmental body affecting Borrower, or an Affiliate, or any of their
respective properties, assets or businesses, in which the damages claimed or the
potential liability would be reasonably likely to exceed Fifty Thousand Dollars
($50,000) or which would be reasonably likely individually or in the aggregate
with other actions, suits and proceedings, to have a Material Adverse Effect on
Borrower or its Affiliates; (vii) any violation by Borrower of any such law or
regulation of which Borrower becomes aware, which violation could result in the
assessment of a penalty or the revocation of a registration or license of
Borrower by any federal, state, or local government agency; and (viii) any other
event or condition having a Material Adverse Effect on (a) Borrower, (b) the
aggregate value of the Collateral, or (c) the security interests created
hereunder. For purposes of (iii) and (vi) immediately above, the term
"Affiliate" shall exclude Cal Kovens.
7.6 ERISA. Borrower shall promptly notify Lender of the occurrence of
any "reportable event" (as defined in Section 4043 of ERISA) or of any
non-exempt "prohibited transaction" (as defined in Section 4975 of the Code)
with respect to any Plan described in Exhibit 5.1(V) or any trust created
thereunder. Borrower shall deliver to Lender a complete copy of the annual
report (Form 5500) of each Plan required to be filed with the Internal Revenue
Service.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
8.1 Event of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default":
(A) Borrower shall fail to make any payment of principal of, or
interest on, or any other amount owing in respect of the Term Loan, or any of
the other Liabilities within ten (10) days of the date such payment is due and
payable and such Default continues for a period of five (5) days thereafter;
(B) Except as provided in Section 8.1(A) above, Borrower shall fail
or neglect to perform, keep or observe, in any material respect, any other term,
provision, condition, covenant, duty or obligation contained in this Agreement
or in any of the other Loan Documents which is required to be performed, kept,
or observed by Borrower and, with respect to any breach of any condition,
covenant, duty or obligation, and such breach shall not have been remedied to
Lender's satisfaction within ten (10) days after Lender has delivered notice of
such breach to Borrower;
(C) Any event of default, or any event which upon lapse of time,
notice, or otherwise would constitute an event of default, under any agreement
to which Borrower is a party shall occur, which event (i) if based on Borrower's
failure to pay any amount (whether of principal, interest, or otherwise) as and
when due, (x) has caused any Person to demand payment of any part of Borrower's
Indebtedness in excess of One Hundred Thousand Dollars ($100,000) before such
Indebtedness would otherwise be due, or (y) would deprive Borrower of any rights
to the Collateral, or (ii) if based on any other failure, event or condition, is
the basis of any notice to Borrower accelerating payment of such Indebtedness or
enforcing rights in such Collateral, in any case, resulting in a Material
Adverse Effect;
(D) Any representation or warranty contained in this Agreement, any
other Loan Document or any statement, report, financial statement, or
certificate made or delivered by Borrower or any of its officers, employees, or
agents to Lender or Lender's Agent shall be untrue, incorrect, or incomplete in
any material respect, or shall be misleading in any material respect, in each
case, as of the time when made;
(E) There occurs, in the reasonable judgment of Lender, any change in
the business, assets, financial condition or results of operations of Borrower
or its Affiliates which has or is reasonably likely to have a Material Adverse
Effect on Borrower and the Affiliates as a whole. For purposes of this
Section 8.1(E), the term "Affiliate" shall exclude (i) Cal Kovens and (ii) any
separate and separately funded Subsidiary.
(F) Any of the Loan Documents after delivery thereof shall for any
reason, other than any action taken by Lender and except to the extent permitted
by the terms thereof, cease to create a valid and perfected Lien on, or security
interest in, any of the Collateral purported to be covered thereby as required
by this Agreement and in accordance with Section 4.2 hereof;
(G) There shall occur any uninsured damage to, or loss, theft, or
destruction of, any material portion of the Collateral;
(H) The Collateral, or any portion of it, shall be attached, seized,
levied upon, or subjected to a judgment Lien, execution Lien, writ or distress
warrant which exceeds Fifty Thousand Dollars ($50,000) in value and which is not
released or bonded off by Borrower before it may be executed upon, or the
Collateral, or any portion of it, shall come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors of
Borrower for a continuous period of forty-five (45) consecutive days, and the
same shall not be released or otherwise cured to the satisfaction of Lender
within ten (10) days thereafter;
(I) (i) Borrower or any Affiliate shall (a) commence a voluntary
case or involuntary case under the Bankruptcy Code, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency, or similar law; (b) apply for or consent to the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator, agent, or
other similar official for Borrower or any, Affiliate for any material part of
Borrower's or any Affiliates' respective assets, and any such application or
proceeding shall not be dismissed or stayed within the next sixty (60)
consecutive days; (c) make any assignment for the benefit of creditors;
(d) commence any case or proceeding for dissolution, liquidation, or
termination; (e) have concealed, removed, or permitted to be concealed or
removed, any part of its Property, with intent to hinder, delay, or defraud its
creditors or any of them, or made or suffered a transfer of any of its Property
or the incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent conveyance or other similar law; (f) admit in writing it inability to
pay, or generally not be paying, its debts as they become due; or (g) take any
corporate action for the purposes of effecting any of the foregoing; or
(ii) A case or other proceedings shall be commenced involuntarily
against any of Borrower or the Affiliate in any court of competent jurisdiction
seeking (a) relief under the federal bankruptcy laws (as now or hereafter in
effect) or under any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or adjustment of debts, or (b) the
appointment of a trustee, receiver, custodian, liquidator or the like of any of
Borrower, or the Affiliate or of all or any substantial part of the assets,
domestic or foreign, of any of Borrower or the Affiliates and such case or
proceeding shall continue undismissed or unstayed for a period of forty-five
(45) consecutive calendar days, or an order granting the relief requested in
such case or proceeding against any of Borrower or the Affiliates (including,
but not limited to, an order for relief under such federal bankruptcy laws)
shall be entered. For purposes of this Section 8.1(I), the term "Affiliate"
shall exclude Cal Kovens.
(J) Except as permitted in Section 6.4, a notice of Lien, levy, or
assessment with respect to all or any material portion of Borrower's assets
shall be filed of record by the United States, or any department, agency, or
instrumentality thereof, or by the Pension Benefit Guaranty Corporation or any
Person succeeding to its functions under ERISA or by any state, county,
municipal, or other governmental agency;
(K) Borrower shall cease to conduct its business substantially as now
conducted, or shall be enjoined, restrained, or in any way prevented by court
order from conducting all or any material part of its business affairs for a
period of time in excess of thirty (30) consecutive days;
(L) A final, unappealable judgment or order shall be entered against
Borrower for the payment of money which exceeds more than One Hundred Thousand
Dollars ($100,000) in the aggregate and each such judgment is not vacated,
stayed, bonded, paid, or discharged within forty-five (45) consecutive days
following the entry thereof and at all times thereafter;
(M) Any event of default under the Philips Loan Documents which is
not cured within the applicable time period; and
(N) Any other event shall have occurred that would have a Material
Adverse Effect on Borrower;
(O) RCI shall fail to (i) observe all corporate procedures required
by its Certificate of Incorporation, Bylaws, and the laws of the State of
Delaware, including but not limited to, maintenance of correct and complete
books and records of account and of minutes of the meetings and other
proceedings of the stockholders and the Board of Directors, (ii) maintain its
corporate existence in good standing under the laws of the State of Delaware,
(iii) maintain its qualifications to do business as a foreign corporation in
good standing in each jurisdiction in which it conducts business, (iv) use its
reasonable efforts to maintain as at least one of its directors a person who is
not a director or officer of Borrower, (v) maintain its assets separate from and
not commingled with those of Borrower, (vi) maintain separate corporate records
and books of account from those of Borrower, (vii) conduct its business solely
in its own name and only through its duly authorized officers or agents, or
(viii) pay its operating expenses and liabilities from its separate assets; and
(P) Except as set forth in Exhibit 8.1(P), (i) any oral or written
communication, including, without limitation, letters, invoices, purchase
orders, contracts, statements and applications, is made in the name of RCI when
it actually relates to Borrower, or is made in the name of Borrower when it
actualy relates to RCI, (ii) the Board of Directors or stockholders of RCI shall
fail to duly authorize in a timely manner any corporate actions required to be
approved by them, (iii) RCI's capitalization is not adequate at any time in
light of its respective business and purposes, (iv) RCI holds itself out, or
permits itself to be held out, as having agreed to pay or as being liable for
the debts of Borrower, or Borrower holds itself out, or permits itself to be
held out, as having agreed to pay or as being liable for the debts of RCI, (v)
Borrower guarantees any of RCI's debt or RCI guarantees any of Borrower's debt
or (vi) the Board of Directors of RCI includes all of the directors of Borrower
and no other person.
8.2 Default Rate of Interest; Late Fee.
(A) From and after the occurrence, and during the continuation, of an
Event of Default constituting a nonmonetary Event of Default, and the delivery
by Lender to Borrower of notice thereof, the Liabilities shall continue to bear
interest, calculated daily on the basis of a three hundred sixty (360) day year
at a per annum rate equal to the interest rate plus two percent (2%).
(B) From and after the occurrence of an Event of Default under
Section 8.1(A) that relates any to payment required to be made by Borrower under
the Term Note, Borrower shall pay on demand a late charge in an amount equal to
five percent (5%) of the overdue payment, except as limited by applicable law.
(C) Borrower's payment of any sums based on the default rate of
interest pursuant to Section 8.2(A) above or any late fee pursuant to
Section 8.2(B) above shall not cure a default or limit any of Lender's rights to
pursue any of its remedies hereunder in connection therewith.
8.3 Remedies. Upon the occurrence of an Event of Default, Lender shall
have the following rights and remedies:
(A) Lender shall have the right to declare all or any portion of the
Liabilities immediately due and payable, whereupon all or any portion of the
Liabilities, as appropriate, shall become due and payable without presentment,
demand, protest or further notice of any kind, all of which are expressly waived
by Borrower.
(B) Lender and its agents and representatives shall have the right to
enter upon the premises of Borrower, and Borrower shall use reasonable efforts
to cause Lender and its agents and representatives to have the right to enter
upon the premises of any other place or places where Collateral is located and
kept through self-help and without judicial process without first obtaining a
final judgment or giving Borrower notice and opportunity for a hearing on the
validity of Lender's claim and without any obligation to pay rent to Borrower or
Borrower's lessee.
(C) Lender and its agents and representatives shall have the right to
remove the Collateral to the premises of Lender or any agent of Lender, for such
time as Lender may desire, in order to collect or dispose of Collateral.
(D) In addition to all of its other rights and remedies under this
Agreement and applicable law, Lender shall have all of the rights and remedies
of a secured party under the UCC of the state in which such rights and remedies
are asserted, all of which rights and remedies shall be cumulative and none
exclusive, to the fullest extent permitted by law.
(E) Until Lender is able to effect a sale, lease, or other
disposition of the Collateral, Lender and its Affiliates shall have the right to
use or operate the Collateral, or any part thereof, to the extent that Lender
deems appropriate for the purpose of preserving the Collateral or its value or
for any other purpose deemed appropriate by Lender. Lender shall have no
obligation to Borrower to maintain or preserve the rights of Borrower as against
third parties with respect to the Collateral while the Collateral is in the
possession of Lender. Lender may, if it so elects, seek the appointment of a
receiver or keeper to take possession of the Collateral and to enforce any of
Lender's remedies with respect to such appointment without prior notice or
hearing. Lender and its Affiliates and agents shall act in a commercially
reasonable manner in enforcing their respective remedies pursuant to this
Section 8.3(E).
(F) Lender shall have the right to sell, lease, or otherwise dispose
of all or any Collateral in its then existing condition, or after any further
assembly, manufacturing, or processing thereof, at public or private sale or
sales, with such notice as may be required by law, in lots or in bulk, for cash
or on credit, all as Lender, acting in a commercially reasonable manner, may
deem advisable and as permitted by applicable law. Such sales may be adjourned
and continued from time to time with or without notice. Lender and its agents
and representatives shall have the right to conduct such sales on Borrower's
premises or elsewhere and shall have the right to use Borrower's premises, and
Borrower shall use reasonable efforts to cause any lessee of the Collateral to
permit Lender and its agents and representatives to conduct sales on lessee's
premises and use such lessee's premises, without charge for such sales for such
time as Lender deems necessary or advisable. Borrower's rights under all
licenses and certificates of need, to the extent transferable, and all franchise
agreements shall inure to Lender's benefit. Lender may purchase all or any part
of the Collateral at public or, if permitted by law, private sale and, in lieu
of actual payment of such purchase price, may set off the amount of such price
against the Liabilities. Except as otherwise provided by law, the proceeds
realized from the sale of any Collateral may be applied by Lender first to the
reasonable costs, expenses, and attorneys' fees and expenses incurred by Lender
for collection and for acquisition, completion, protection, removal, storage,
sale, and delivery of Collateral, and then to any principal and interest due on
the Liabilities, as Lender, in its sole discretion, may elect. If any
deficiency shall exist after the application of such proceeds, Borrower shall
remain liable to Lender therefor. Lender and its Affiliates and agents shall
act in a commercially reasonable manner in enforcing its remedies pursuant to
this Section 8.3(F).
8.4 Notice of Disposition of Collateral. Any notice required to be given
by Lender of a sale, lease, or other disposition of Collateral, or any other
intended action by Lender, which is given in accordance with Section 9.11,
fifteen (15) days prior to such proposed action, or such longer period as shall
be specified by applicable law, shall constitute commercially reasonable and
fair notice thereof to Borrower.
8.5 Right of Set-Off. Upon the occurrence and during the continuance of
any Event of Default, Lender, Lender's Agent and any Participant are hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, upon three (3) Business Days prior written notice to Borrower, to set-off,
appropriate and apply any and all funds in the possession of Lender, Lender's
Agent or such Participant, all deposits (general or special, time or demand,
provisional or final) at any time held and other Indebtedness at any time owing
by Lender, Lender's Agent or such Participant to or for the credit or the
account of Borrower, against any and all of the Liabilities of Borrower now or
hereafter existing that are then due and payable, whether by maturity or
acceleration, irrespective of whether or not (i) Lender, Lender's Agent or such
Participant shall have made or be entitled to make any demand under this
Agreement or other applicable agreement, or (ii) Lender shall have declared the
principal of and interest on the Term Note and such other Liabilities due
hereunder and thereunder to be due and payable and although such obligations and
Liabilities, or any of them shall be contingent or unmatured. The exercise by
Lender, Lender's Agent or any holder of the Term Note of the aforesaid right of
set-off shall be effective as of the time Lender or such holder of the Term Note
restricts Borrower's access to any such deposits. The rights of Lender,
Lender's Agent and any Participant under this Section 8.5 are in addition to any
other rights and remedies (including, without limitation, other rights of
set-off) which Lender, Lender's Agent and each such Participant may have.
8.6 Appointment of Lender as Borrower's Lawful Attorney. Borrower hereby
irrevocably designates, makes, constitutes, and appoints Lender and all Persons
designated by Lender as Borrower's true and lawful agent and attorney-in-fact
upon and after the occurrence of an Event of Default for the purposes set forth
in this Section 8.6. Accordingly, upon and after the occurrence of an Event of
Default, Lender or Lender's agent designated by Lender for purposes of this
Section 8.6 may, without notice to Borrower, and at such time or times as Lender
or said agent in its sole discretion may determine, in Borrower's or Lender's
name: (i) take control, in any manner, of any item of payment or proceeds of
Collateral; (ii) prepare, file, and sign Borrower's name on any proof of claim
or similar document in any bankruptcy, insolvency, reorganization, or similar
case against any Person indebted to Borrower; (iii) prepare, file, and sign
Borrower's name on any notice of Lien, assignment, or satisfaction of Lien or
similar document in connection with Special Collateral; (iv) do all acts and
things necessary, in Lender's sole discretion, to fulfill Borrower's obligations
under this Agreement; (v) endorse Borrower's name upon any of the items of
payment or proceeds and deposit the same to the account of Lender on account of
Liabilities; (vi) endorse Borrower's name upon any chattel paper, document,
instrument, invoice, freight bill, bill of lading, or similar document or
agreement relating to Special Collateral; and (vii) use the information recorded
on or contained in any data processing equipment and computer hardware and
software relating to Special Collateral to which Borrower has access. Lender
shall act (i) in a commercially reasonable manner when exercising its rights
pursuant to this Section 8.6, and (ii) only as necessary in the reasonable
judgment of Lender to protect its rights under the Loan Documents and to the
Collateral.
8.7 Participating Lender's Security Interests. If any Person shall at
any time participate with Lender in making any of the loans, advances, or
accommodations hereunder, Borrower hereby grants to such Person (in addition to
any other rights that such Person may have) both a continuing security interest
in any Property of Borrower that is in the possession of such Person, and an
express contractual right of set-off, to the extent of such Person's
participation in the Liabilities. Such Person shall have the same right of
set-off as it would have if it were a direct lender to Borrower.
9. MISCELLANEOUS.
9.1 Modification of Agreement; Sale of Interest. This Agreement may not
be modified, altered, or amended except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign, or transfer this Agreement
or any of Borrower's rights, title, interests, remedies, powers, or duties
hereunder or thereunder, and any such sale, assignment, or transfer shall be
void and of no effect. Borrower hereby consents to Lender's participation,
sale, assignment, transfer, or other disposition of this Agreement or of any of
Lender's rights, title, interests, remedies, powers, or duties hereunder or
thereunder pursuant to Section 2.11 hereof or otherwise.
9.2 Expenses. Notwithstanding the provisions of this Section 9.2 set
forth below, each party to this Agreement shall pay its own costs and expenses,
including the disbursements and fees of their respective attorneys, accountants
and advisors, incidental to (i) the preparation and negotiation of this
Agreement, the exhibits and schedules hereto and the other Loan Documents and
(ii) the closing of the transactions contemplated by this Agreement.
Except as specifically set forth above, if, upon or after the occurrence or
existence of an Event of Default, Lender or Lender's Agent employs counsel for
advice or other representation or incurs other professional costs and expenses
in connection with:
(A) any litigation, contest, dispute, suit, case, proceeding, or
action (whether instituted by Lender, Borrower, or any other Person) in any way
relating to Collateral, this Agreement, or Borrower's affairs, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against Borrower
under the Bankruptcy Code or any other applicable federal or state bankruptcy,
insolvency, or similar law;
(B) any attempt to enforce any rights of Lender or any Participant
against Borrower, any other Person that may be or become obligated to Lender by
virtue of this Agreement, including any attempt to enforce such rights in
connection with a case commenced by or against any of the foregoing under the
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency
or similar law; and/or
(C) the protection, collection, sale, liquidation, or other
disposition of Collateral; then, in any such event, the professional fees
arising from such services, and all expenses, costs, charges, and other fees
incurred by Lender or Lender's Agent arising in connection with or relating to
any of the events or actions described in this Section 9.2 shall be payable by
Borrower to Lender or Lender's Agent on demand and shall constitute Liabilities
secured by the Collateral.
Without limiting the generality of the foregoing, the expenses,
costs, charges, and fees described above in this Section 9.2, (i) may include
attorneys' fees, accountants' fees, appraisers' fees and any other professional
costs and expenses; stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of the
other Loan Documents; costs and expenses of UCC and Lien searches and reports;
court costs and expenses, photocopying and duplicating expenses; court reporter
fees, costs, and expenses; long distance telephone charges; air express and
other delivery charges; telegram and telex charges; secretarial overtime
charges; expenses for travel, lodging and food paid or incurred in connection
with the performance of such professional services; sales tax in connection with
the sale of the Equipment by Lender's Agent to Borrower as provided in
Subsection 6.1(M) hereof; and (ii) shall not include Lender's Agent, Lender's
Affiliates, Lender's or any other Person's expenses in connection with
monitoring the Term Loan. Borrower agrees to save Lender and Lender's Agent
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay any such professional costs,
expenses, fees and taxes.
9.3 Waivers by Lender; Cumulative Remedies. Lender's failure, at any time
or times hereafter, to require strict performance by Borrower of any provision
of this Agreement, shall not waive, affect, or diminish any right of Lender
thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Lender of an Event of Default under this Agreement shall
not suspend, waive, or affect any other Event of Default by Borrower under this
Agreement whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants, and representations of Borrower contained in this Agreement nor any
Event of Default by Borrower under this Agreement shall be deemed to have been
suspended or waived by Lender unless such suspension or waiver is in a writing
signed by Lender which designates the specific suspension or waiver. The rights
and remedies hereunder are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law
or which Lender would otherwise have.
9.4 Waivers by Borrower. Except as otherwise provided in this Agreement,
Borrower waives: (i) presentment, demand, and protest and notice of presentment,
protest, default, non-payment, maturity, release, compromise, settlement,
extension, or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper, and guaranties at any time held by Lender
under or pursuant to which Borrower may in any way be liable, and Borrower
hereby ratifies and confirms whatever Lender may do in this regard; (ii) notice
prior to taking possession or control of the Collateral or, so long as General
Electric Capital Corporation remains the Lender under this Agreement, any bond
or security that might be required by any court prior to allowing Lender to
exercise any of Lender's remedies; and (iii) the benefit of all valuation,
appraisement, and exemption laws. If and to the extent that any obligation of
Borrower to Lender shall be considered an obligation of guaranty or suretyship,
then the following waivers shall apply:
(A) Borrower agrees that no election to proceed in one form of action
or against any party or on any obligation shall constitute a waiver of Lender's
right to proceed in any other form of action for a deficiency, except to the
extent Lender realizes payment by such action, notwithstanding the effect of
such action upon Borrower's rights of subrogation, reimbursement, or indemnity,
if any, against any Person; and
(B) Borrower agrees that Lender shall be under no obligation and
expressly waives the right to require Lender: (i) to marshall any assets in
favor of Borrower, (ii) to proceed first against any guarantor or any Property
of guarantor or against any collateral, (iii) to enforce first any other
guaranty obligations with respect to, or security for, the Liabilities, or (iv)
to pursue any other remedy in Lender's power that Borrower may or may not be
able to pursue itself and that may lighten Borrower's burden, any right to which
Borrower hereby expressly waives.
9.5 Execution of Certificates. Lender and Borrower acknowledge and agree
that (i) any and all certificates and documents now or hereafter executed by any
officer or director of Borrower shall be executed solely in their official
capacity, and (ii) such officer or director shall have no personal liability
arising out of the execution of any such certificate or document.
9.6 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in a manner as to be effective and valid under applicable
law. If any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law in any jurisdiction, such provision, as to such
jurisdiction, shall be ineffective only to the extent of such provision and the
remaining provisions of this Agreement shall remain unaffected and in full force
and effect, and such prohibition and invalidity in such jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
9.7 Parties. This Agreement shall be binding upon and shall inure to the
benefit of the respective successors and assigns of Borrower and Lender
including any trustee or interim trustee of Borrower appointed pursuant to
Bankruptcy Code section 1104 or sections 701 and 702. This provision, however,
shall not be deemed to modify Section 9.1.
9.8 Conflict of Terms. The provisions of any other related agreement and
any schedule or exhibit thereto or to this Agreement are incorporated in this
Agreement as if set forth in full by this reference. Except as otherwise
provided in this Agreement by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement conflicts or is
inconsistent with any provision in any other related agreement, the provision
contained in this Agreement shall govern and control.
9.9 Governing Law; Consent to Jurisdiction and Venue. Except as otherwise
expressly provided in any other related agreements in all respects, including
all matters of construction, validity and performance, this Agreement and the
Liabilities arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York applicable to contracts
made and performed in such state, without regard to the principles thereof
regarding conflict of laws and any applicable laws of the United States of
America. BORROWER CONSENTS TO PERSONAL JURISDICTION, WAIVES ANY OBJECTION AS TO
JURISDICTION OR VENUE, AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE, IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. Service of
process on Borrower, Lender or any Participant in any action arising out of or
relating to any Agreement contemplated herein shall be effective if mailed to
such party at the address listed in Section 9.11. Nothing herein shall preclude
Lender, any Participant or Borrower from bringing suit or taking other legal
action in any other jurisdiction.
9.10 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER
THIS AGREEMENT OR ANY OTHER AGREEMENT.
9.11 Notice. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by
another, or whenever any of the parties desires to give or serve upon another
any communication with respect to this Agreement, each such notice, demand,
request, consent, approval, declaration or other communication shall be in
writing and shall be delivered (i) in person with receipt acknowledged, or (ii)
by facsimile transmission, with receipt electronically confirmed during normal
business hours of recipient, and with confirmation by mailing of, no later than
one (1) Business Day following such transmission, of a copy of such facsimile,
by registered or certified mail, return receipt requested, postage prepaid or by
overnight courier, (iii) by registered or certified mail, return receipt
requested, postage prepaid or by overnight courier, or (iv) by Federal Express
or similar reliable overnight delivery service, addressed as follows:
(A) If to Lender, at
General Electric Capital Corporation
c/o General Electric Company, acting through
GE Medical Systems
North 14, West 23833
Stone Ridge Drive, Suite 300
Waukesha, Wisconsin 53188
Attention: Investment Manager
Facsimile: (414) 548-5058
and
General Electric Capital Corporation
c/o General Electric Company, acting through
GE Medical Systems
North 14, West 23833
Stone Ridge Drive, Suite 300
Waukesha, Wisconsin 53188
Attention: Finance Manager
Facsimile: (414) 548-5058
with a copy to:
McDermott, Will & Emery
2049 Century Park East, 34th Floor
Los Angeles, California 90067
Attention: Ira J. Rappeport, Esq.
Facsimile: (310) 277-4730
(B) If to Borrower, at
American Health Services Corp.
4440 Von Karmen, Suite 320
Newport Beach, California 92660
Attention: President
Facsimile: (714) 851-5981
with a copy to:
Green, Stewart & Farber, P.C.
2600 Virginia Avenue N.W., Suite 1111
Washington, DC 20037
Attention: Philip D. Green, Esq.
Facsimile: (202) 342-8734
or to such other addresses or facsimile transmission number as any party may
designate for itself by like notice. The giving of any notice required
hereunder may be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly given or served on the
date on which personally delivered with receipt acknowledged or sent by
facsimile with receipt electronically confirmed during normal business hours of
recipient, the next Business Day after deposit with Federal Express or three (3)
Business Days after deposit in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to the Persons designated above to receive copies shall
in no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
9.12 Indemnification.
(A) Borrower. In addition to any other amounts payable by Borrower
under this Agreement and the Term Note, Borrower hereby agrees to protect,
indemnify, pay and hold harmless Lender and Lender's Agent and their respective
directors, officers and employees from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees and expenses of counsel) (i) that Lender or Lender's Agent may incur or be
subject to as a consequence, directly or indirectly, of (a) issuance of the Term
Loan, (b) any breach by Borrower of any warranty, covenant, term or condition
in, or the occurrence of any Event of Default under, this Agreement or any other
Loan Document, including all reasonable fees or expenses resulting from the
settlement or defense of any claims or liabilities arising as a result of any
such breach or default, and (c) involvement in any legal suit, investigation,
proceeding, inquiry or action as to which Lender or Lender's Agent is involved
as a consequence, directly or indirectly, of its issuance of the Term Loan, the
holding or owning of any Collateral by Lender or the Term Loan, Lender's
execution of this Agreement and any other Loan Document to which it is a party
or any other event or transaction contemplated by any of the foregoing, except
for any claims, demands, liabilities, damages, losses, charges and expenses
which are caused by Lender's Agent or Lender's gross negligence or willful
misconduct or other activities of Lender or Lender's Agent described in
Subsection 9.12(B) hereof and (ii) that are related to any claims, actions or
proceedings which may be asserted against Lender or Lender's Agent in connection
with the transactions contemplated by this Agreement. The obligations of
Borrower under this Section 9.12 shall survive the termination of this
Agreement. In furtherance and not in limitation hereof, Lender may accept
documents that appear on their face to be in order, without responsibility for
further investigation, except if Lender has received any notice or information
to the contrary.
(B) Lender. Lender hereby agrees to protect, indemnify, pay and hold
harmless Borrower and its directors, officers and employees from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable fees and expenses of counsel) that Borrower may
incur or be subject to as a consequence, directly or indirectly, of (i) Lender's
Agent or Lender's gross negligence or willful misconduct; (ii) any litigation or
claim of any third party filed against Borrower for alleged liabilities and/or
obligations of Borrower for products liability in connection with Equipment
purchased by Borrower from Lender or Lender's Agent; provided, however, that if
Borrower intervenes in such action, Lender shall not be liable to Borrower for
any expenses incurred by Borrower, which for purposes of this Section 9.12(B)
shall include reasonable attorneys' fees and court costs incurred by Borrower in
connection with such litigation or claim; and (iii) any breach by Lender of any
warranty, covenant, term or condition, or the occurrence of any default by
Lender under this Agreement or any other Loan Document, including all reasonable
fees or expenses resulting from the settlement or defense of any claims or
liabilities arising as a result of any such breach or default; provided,
however, that for purposes of this Subsection 9.12(B)(iii) (except to the extent
it relates to a breach by Lender of Section 5.3 herein), in no event shall
Lender's cumulative liability to Borrower for any and all claims, causes of
action, injuries, damages, judgments, expenses, fees or costs of a suit in
connection with the Equipment, if any, exceed the value of the portion of the
Equipment which gave rise to the claim, cause of action, judgment, expense or
cost. As regards any breach of Section 5.3 by Lender, the indemnification
provided herein shall not be limited by the terms of any Loan Document.
9.13 Section Titles and Table of Contents. The section titles and the
Table of Contents contained in this Agreement are merely for convenience and
shall be without substantive meaning or content, and are not a part of the
Agreement between the parties hereto.
9.14 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be an original, all of which taken together
shall be deemed to constitute one (1) and the same agreement.
9.15 Successors and Assigns. All of the terms and provisions of this
Agreement and the other Loan Documents shall be binding upon and shall inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto. Lender is hereby specifically authorized to assign or sell
any or all of its rights and obligations under this Agreement to any party
without the prior written consent of Borrower.
9.16 Limitation of Liability. Notwithstanding any other provision herein
to the contrary, to the fullest extent permitted by applicable law, neither
Borrower nor Lender shall be liable to the other party or, in Borrower's case,
to any of Lender's Affiliates or agents, for any incidental or consequential
damages of any kind to the other party in connection with the Loan Documents and
transactions contemplated by this Agreement, provided that the limitation of
liability set forth in this Section 9.16 and in any Loan Documents shall not be
applicable with respect to incidental or consequential damages arising from any
breach by Lender of Section 5.3 herein.
9.17 Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and supersedes all prior agreements, written or oral, on the
subject matter hereof, including without limitation that certain Loan and
Security Agreement dated as of June 1, 1993 concerning, among other things, a
term loan in the amount of $17,854,956.83, which agreement is hereby rescinded
and of no further force and effect. Each Loan Document was drafted with the
joint participation of the respective parties thereto and shall be construed
neither against nor in favor of any party, but rather in accordance with the
fair meaning thereof.
9.18 Taxes and Reserve Requirements.
(A) If at any time any change in any applicable law or in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof or any reversal by any such entity of an interpretation by Lender of any
such law or the compliance by Lender with any request or directive (whether or
not having the force of law) of any such entity:
(i) shall (A) subject Lender to any tax, duty or other charge with
respect to the Term Note or this Agreement or any of its obligations
hereunder, or (B) change the basis of taxation of payment to Lender of
the principal of or interest on the Term Loan or any other amounts due
under this Agreement or any other Loan Document (in each case,
including the imposition of any withholding tax but excluding any
changes in the rate of tax on the overall net income of Lender imposed
by any jurisdiction), or (ii) shall impose, increase, modify or deem
applicable any reserve, special deposit or similar requirement against
assets of, deposits
with or for the account of, or credit extended by, Lender or shall
impose on Lender any other conditions and the result of the foregoing,
in the determination of Lender, is to increase the cost to Lender of
making or maintaining the Term Loan or to reduce the amount of any sum
received or receivable by Lender, by an amount determined by Lender to
be material, then Borrower agrees to pay to Lender, within fifteen
(15) days after demand by Lender, the amount reasonably determined by
Lender to be the additional amount or amounts
required to compensate Lender for such increased cost or reduction.
(B) Lender agrees that it will promptly notify Borrower of any
event of which it has knowledge that will entitle Lender to receive any
additional amount or amounts pursuant to this Section 9.18 and will at the same
time deliver a certificate setting forth the change in applicable law,
administration or interpretation that is the basis for the claim and the amount
or amounts required to compensate Lender. In making the determinations
contemplated hereunder, Lender may make such estimates, assumptions, allocations
and the like which Lender in good faith determines to be appropriate, and
Lender's selection thereof and Lender's determinations based thereon, absent
manifest error, shall be final and binding and conclusive upon Borrower.
9.19 Confidentiality and Publicity. The parties hereto shall hold in
confidence the information contained in the Warrant, the Loan Documents and all
information related to the transactions contemplated by this Agreement, which is
not otherwise known to the public, shall be held by each party hereto as
confidential and proprietary information and shall not be disclosed to third
persons without the prior written consent of the other party. Accordingly,
Lender and Borrower shall not, and shall not permit any of their respective
Affiliates to, discuss with, or provide nonpublic information to, any third
party concerning the Warrant or the Loan Documents, except: (i) as required in
governmental filings or judicial, administrative or arbitration proceedings, or
(ii) pursuant to public announcements made with the prior written approval of
Lender and Borrower, and (iii) as required by law. Lender shall have the right
to review and approve, which approval may be denied in Lender's sole discretion,
any written characterization of this Agreement, the Warrant and any transaction
contemplated hereby except Lender shall not have the right to review, but shall
have the right to approve, characterizations included in governmental filings or
judicial, administrative or arbitration proceedings.
9.20 Closing. The delivery of documents and instruments on the Closing
Date as contemplated hereby shall take place at 10:00 a.m. at the offices of
Lender's counsel located at 2049 Century Park East, Suite 3400, Los Angeles,
California.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first specified above.
GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation
By: _____________________________
Richard Berger
Its: Agent-in-Fact
AMERICAN HEALTH SERVICES CORP., a Delaware
corporation
By: _____________________________
Its:_________________________
EXHIBIT 99.4
AMERICAN HEALTH SERVICES CORP.
COMMON STOCK PURCHASE WARRANT
July 9, 1993
TABLE OF CONTENTS
Page
1. DEFINITIONS.................................
2. EXERCISE OF WARRANT.........................
2.1 Manner of Exercise....................
2.2 Payment of Taxes......................
2.3 Fractional Shares.....................
2.4 Continued Validity....................
3. TRANSFER, DIVISION AND COMBINATION..........
3.1 Transfer..............................
3.2 Division and Combination..............
3.3 Expenses..............................
3.4 Maintenance of Books..................
4. ADJUSTMENTS.................................
4.1 Stock Dividends, Subdivisions,
Combinations and Reclassifications....
4.2 Other Provisions Applicable to
Adjustments under this Section........
5. NOTICES TO WARRANT HOLDERS..................
5.1 Notice of Adjustments.................
5.2 Notice of Certain Corporate Action....
6. NO IMPAIRMENT...............................
7. RESERVATION AND AUTHORIZATION OF COMMON
STOCK; REGISTRATION WITH OR APPROVAL OF
ANY GOVERNMENTAL AUTHORITY..................
8. TAKING OF RECORD; STOCK AND WARRANT
TRANSFER BOOKS..............................
9. RESTRICTIONS ON TRANSFERABILITY.............
9.1 Restrictive Legend....................
9.2 Notice of Proposed Transfers;
Requests for Registration............
9.3 Required Registration.................
9.4 Incidental Registration...............
9.5 Registration Procedures...............
9.6 Expenses; Limitations on Registration.
9.7 Indemnification.......................
9.8 Termination of Restrictions...........
9.9 Listing on Securities Exchange........
9.10 Certain Limitations on Registration
Rights................................
9.11 Selection of Managing Underwriters....
10. SUPPLYING INFORMATION.......................
11. LOSS OR MUTILATION..........................
12. OFFICE OF THE COMPANY.......................
13. FINANCIAL AND BUSINESS INFORMATION..........
13.1 Information............................
13.2 Annual Information.....................
13.3 Filings................................
14. APPRAISAL...................................
15. LIMITATION OF LIABILITY.....................
16. MISCELLANEOUS...............................
16.1 Nonwaiver and Expenses................
16.2 Notice Generally......................
16.3 Indemnification.......................
16.4 Remedies..............................
16.5 Successors and Assigns................
16.6 Amendment.............................
16.7 Severability..........................
16.8 Headings..............................
16.9 Governing Law; Service of Process.....
16.10 Mutual Waiver of Jury Trial...........
THIS COMMON STOCK PURCHASE WARRANT AND THE SECURITIES FOR WHICH IT CAN
BE EXERCISED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR STATE LAW, THE
RULES AND REGULATIONS THEREUNDER OR THE TRANSFER RESTRICTIONS OF THIS WARRANT
AMERICAN HEALTH SERVICES CORP.
COMMON STOCK PURCHASE WARRANT
377,075 Shares, Subject to Adjustment
July 9, 1993
THIS IS TO CERTIFY THAT GENERAL ELECTRIC COMPANY, a New York corporation
acting through GE Medical Systems, or registered assigns, is entitled, at any
one time on and after the Exercise Date and on or prior to the Expiration Date
(as hereinafter defined), to purchase from AMERICAN HEALTH SERVICES CORP., a
Delaware corporation (the "Company"), 377,075 shares of Common Stock (as
hereinafter defined and subject to adjustment as provided herein), of the
Company at a purchase price of $.10 per share (subject to adjustment as provided
herein), all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below.
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company following the date of this Warrant.
"Appraised Value" shall mean, in respect of any share of Common Stock on
any date herein specified, the fair market value of such share of Common Stock
(determined without giving effect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Stock or to the fact that the Company
may have no class of equity registered under the Exchange Act) as of the last
day of the most recent fiscal month to end within 60 days prior to such date
specified, based on the value of the Company as a whole, as determined by a
member or members of the NASD selected in accordance with the definition below
of "Current Market Price" on the basis of a sale between a willing seller and
buyer, neither acting under any compulsion, divided by the number of Fully
Diluted Outstanding shares of Common Stock.
"Book Value" shall mean, in respect of any share of Common Stock on any
date herein specified, the consolidated book value of the Company applicable to
Common Stock as of the last day of any month immediately preceding such date,
divided by the number of Fully Diluted Outstanding shares of Common Stock as
determined in accordance with GAAP by a firm of independent certified public
accountants of recognized national standing selected by the Company and
reasonably acceptable to the Holder.
"Business Day" shall mean any day that is not a Saturday or Sunday or a
day on which banks are required or permitted to be closed in the States of New
York or California.
"Closing Date" shall mean the date on which the closing occurs under the
Second Loan Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise indicates)
the Common Stock of the Company, and any capital stock into which such Common
Stock may thereafter be changed, and shall also include capital stock of the
Company of any other class (regardless of how denominated) issued to the holders
of shares of Common Stock upon any reclassification thereof which is not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to redemption.
"Convertible Securities" shall mean evidences of indebtedness, options,
warrants or other rights to receive shares of stock or other securities which
are convertible into or exchangeable, with or without payment of additional
consideration in cash or property, for Common Stock, either immediately or upon
the occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the highest of (a) the Book Value per share
of Common Stock at such date, and (b) the Appraised Value per share of Common
Stock as at such date, or if there shall then be a public market for the Common
Stock, the highest of (x) the Book Value per share of Common Stock at such date,
and (y) the average of the daily market prices for 30 consecutive Business Days
commencing 45 days before such date. The daily market price for each such day
shall be (i) the last sale price on such day as furnished by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or by
the National Quotation Bureau if not reported on NASDAQ, (ii) if neither such
corporation at the time is engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business, or (iii) if there
is no such firm, as furnished by any member of the NASD selected mutually by the
Holder and the Company or, if they cannot agree upon such selection, as selected
by two such members of the NASD, one of which shall be selected by the Holder
and one of which shall be selected by the Company, (iv) if the Common Stock is
listed or admitted to trading on a stock exchange in the United States, the last
sale price on such day on the principal stock exchange on which such Common
Stock is then listed or admitted to trading, or (v) if no sale takes place on
such day on any such exchange, the average of the last reported closing bid and
asked prices on such day as officially quoted on any such exchange.
"Current Warrant Price" shall mean, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Date" shall mean the date two (2) years following the Closing
Date; provided, however, that the Exercise Date shall be accelerated to any
earlier date upon which any of the following events occurs: (i) a tender offer
is commenced for all or part of the Company's Common Stock, (ii) the acquisition
or disposition of securities of the Company by a Person or group which would
cause such Person or group holding such securities, alone or together with such
Person's or group's affiliates, to increase their holdings above, or decrease
their holdings below, 18% of the Company's Fully Diluted Outstanding Common
Stock, (iii) the Company sells all or substantially all of its assets, or
(iv) the termination, repayment or prepayment in full of the loans under both
the First Loan Agreement and the Second Loan Agreement.
"Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1.
"Expiration Date" shall mean the date two years following payment in
full of all amounts owing under both the First Loan Agreement and the Second
Loan Agreement.
"First Loan Agreement" shall mean that certain Loan and Security
Agreement between General Electric Capital Corporation and the Company, dated
May 19, 1992.
"Fully Diluted Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of this Warrant and all other options,
warrants, Convertible Securities or other rights to purchase or receive Common
Stock outstanding on such date.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as from time to time in effect.
"GE Medical" shall mean General Electric Company, a New York corporation
acting through GE Medical Systems.
"Holder" shall mean the Person or Persons in whose name the Warrant set
forth herein is registered on the books of the Company maintained for such
purpose. In the event more than one Person is so registered, "Holder" for
purposes of consent, demand or other action allowed or required to be taken
hereunder by the Holder(s) of this Warrant, the word "Holder" shall refer to a
simple majority in interest of such Persons.
"NASD" shall mean the National Association of
Securities Dealers, Inc., or any successor corporation thereto.
"Outstanding" shall mean, when used with reference to Common Stock, at
any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held exclusively by
or for the account solely of the Company or any wholly-owned subsidiary thereof
(collectively, "Subsidiary-Held Shares"), and shall include all shares issuable
in respect of any certificates representing fractional interests in shares of
Common Stock. Subsidiary-Held Shares shall remain Subsidiary-Held Shares even
if held in pledge as security unless and until such shares are foreclosed upon
and record, beneficial or equitable ownership transferred.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Preferred Stock" shall mean any class of the Company's stock having
rights, preferences or privileges senior or prior in right to any other class.
"Restricted Common Stock" shall mean shares of Common Stock which are,
or which upon their issuance on the exercise of this Warrant would be, evidenced
by a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Second Loan Agreement" shall mean that certain Loan and Security
Agreement between General Electric Capital Corporation and the Company, dated as
of June 1, 1993.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Subsidiary" shall mean, with respect to any Person, any corporation of
which an aggregate of more than 50% of the outstanding stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person.
"Subsidiary-Held Shares" shall have the meaning set forth above in the
definition of "Outstanding."
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or
of any interest in either thereof, which would constitute a sale thereof within
the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, this Warrant. All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the percentage of Fully Diluted Outstanding Shares of Common Stock
for which they may be exercised. Collectively, all unexercised Warrants shall
be exercisable for the exact same number of shares as this Warrant would be
exercisable in the event any such Transfer or division had not occurred.
Exercise of any warrant(s) shall not trigger any of the adjustments contemplated
by Section 4 of this Warrant.
"Warrant Price" shall mean an amount equal to (i) the number of shares
of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by the
holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1 Manner of Exercise. From and after the Exercise Date and until
5:00 p.m., California time, on the Expiration Date, the Holder may exercise the
Warrant up to 12 times (plus one additional time by GE Medical only and not by
any assignee of GE Medical) on Business Days, for all or any part of 377,075
shares (subject to adjustment as provided hereunder) of Common Stock then
purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 4440 Von Karman, Suite
320, Newport Beach, California 92660 or at the office or agency designated by
the Company pursuant to Section 12, (i) a written notice of Holder's election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price in the manner specified
below, and (iii) this Warrant. Such notice shall be substantially in the form
of the subscription form appearing at the end of this Warrant as Exhibit A, duly
executed by Holder or its agent or attorney. Upon receipt thereof, the Company
shall, as promptly as practicable, and in any event within five (5) Business
Days thereafter, execute or cause to be executed and deliver or cause to be
delivered to Holder a certificate or certificates representing the aggregate
number of full shares of Outstanding Shares of Common Stock issuable upon such
exercise. The stock certificate or certificates so delivered shall be, to the
extent possible, in such denomination or denominations as such Holder shall
request in the notice and shall be registered in the name of Holder or, subject
to Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other Person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice, together with
the payment as set forth below, and this Warrant are received by the Company as
described above and all taxes required to be paid by Holder, if any, pursuant to
Section 2.2 prior to the issuance of such shares have been paid or agreed to be
paid when finally determined.
Payment of the Warrant Price shall be made at the option of the
Holder by certified or official bank check, or by cancellation of indebtedness,
if any, owed by the Company to such Holder.
2.2 Payment of Taxes. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable. The Company shall pay all expenses in connection
with, and all taxes and other governmental charges that may be imposed with
respect to, the issue or delivery thereof, unless such tax or charge is imposed
by law upon Holder, in which case such taxes or charges shall be paid by
Holder. The Company shall not be required, however, to pay any tax or other
charge imposed in connection with any transfer involved in the issuance of any
certificate for shares of Common Stock issuable upon exercise of this Warrant in
any name other than that of Holder, and in such case the Company shall not be
required to issue or deliver any stock certificate until such tax or other
charge has been paid or it has been established to the satisfaction of the
Company that no such tax or other charge is due.
2.3 Fractional Shares. The Company shall not issue a fractional share
of Common Stock upon exercise of this Warrant. A fractional share otherwise
issuable shall be rounded up to the nearest whole share.
2.4 Continued Validity. A holder of shares of Common Stock issued
upon the exercise of this Warrant (other than a holder who acquires such shares
after the same have been publicly sold pursuant to a Registration Statement
under the Securities Act or sold pursuant to Rule 144 thereunder), shall
continue to be entitled with respect to such shares to all rights to which it
would have been entitled as Holder under Sections 9, 10, 13, and 16 of this
Warrant. The Company shall, at the time of each exercise of this Warrant upon
the request of the holder of the shares of Common Stock issued upon such
exercise hereof, acknowledge in writing, in form reasonably satisfactory to such
holder, its continuing obligation to afford to such holder all such rights and
subject to any burdens; provided, however, that if such holder shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 Transfer. This Warrant shall be nontransferable until the
Exercise Date other than to a division, subsidiary or affiliate of GE Medical
except by merger of the Holder with another entity or otherwise by operation of
law. Subject to compliance with Section 9 following said period of
nontransferability, transfer of this Warrant and all rights hereunder, in whole
or in part, shall be registered on the books of the Company to be maintained for
such purpose, upon surrender of this Warrant at the principal office of the
Company referred to in Section 2.1 or the office or agency designated by the
Company pursuant to Section 12, together with a written assignment of this
Warrant substantially in the form of Exhibit B hereto duly executed by Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall, subject to Section 9, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if properly assigned
in compliance with Section 9, may be exercised by a new Holder for the purchase
of shares of Common Stock without having a new Warrant issued. If requested by
the Company, a new Holder shall acknowledge in writing, in form reasonably
satisfactory to the Company, such Holder's continuing obligations under
Section 9 of this Warrant.
3.2 Division and Combination. Subject to Section 9, this Warrant may
be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4 Maintenance of Books. The Company shall maintain, at its
aforesaid office or agency, books for the registration, and the registration of
transfer, of this Warrant.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant shall be subject to adjustment from time to time as set forth in
this Section 4. The Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this Section 4 at the
time of such event.
4.1 Stock Dividends, Subdivisions, Combinations and
Reclassifications. If at any time the Company shall with respect to its
Common Stock or Convertible Securities:
(a) pay a dividend or make distribution of Additional Shares of
Common Stock or Convertible Securities other than convertible
indebtedness or convertible Preferred Stock (in which event such
Additional Shares of Common Stock issuable upon exchange or conversion
shall be deemed distributed),
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) reclassify its Common Stock (other than a change in par
value, or from par value to no par value) into shares of Common Stock
and shares of any other class of stock; and, if the outstanding shares
of Common Stock shall be changed into a larger or smaller number of
shares of Common Stock as a part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
Outstanding shares of Common Stock within the meaning of this
Section 4.1.,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable after the occurrence of any such event shall be equal to (A) the
maximum number of shares of Common Stock underlying this Warrant prior to the
occurrence of any such event, multiplied by (B) the number of Fully Diluted
Outstanding shares of Common Stock after any such event, divided by the number
of Fully Diluted Outstanding shares of Common Stock prior to any such event, and
(ii) the Current Warrant Price shall be adjusted to equal the Current Warrant
Price multiplied (A) by the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to the adjustment divided by (B) the
number of shares for which this Warrant is exercisable immediately after such
adjustment. Any increased number of shares of Common Stock subject to this
Warrant resulting from application of the foregoing shall be allocated ratably
among all shares of Common Stock subject to this Warrant prior to each such
event.
4.2 Other Provisions Applicable to Adjustments under this Section.
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable provided
for in this Section 4:
(a) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified
event requiring an adjustment shall occur. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(b) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then thereafter no
adjustment shall be required by reason of the taking of such record and
any such adjustment previously made in respect thereof shall be
rescinded and annulled.
5. NOTICES TO WARRANT HOLDERS
5.1 Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of this Warrant, shall
be adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated, specifying the number of shares of
Common Stock for which this Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate to
be delivered to each Holder in accordance with Section 16.2. The Company shall
keep at its office or agency designated pursuant to Section 12 copies of all
such certificates and cause the same to be available for inspection at said
office during normal business hours by any Holder or any prospective purchaser
of a Warrant designated by a Holder thereof.
5.2 Notice of Certain Corporate Action. The Holder shall be entitled
to the same rights to receive notice of corporate action as any holder of Common
Stock.
6. NO IMPAIRMENT
The Company shall not by any action including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value, if any, of any shares of Common
Stock receivable upon the exercise of this Warrant above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (b)
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (c) use its best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form satisfactory
to Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all times reserve
and keep available for issuance upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be reasonably necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be reasonably necessary from any
public regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of warrants require registration or qualification with any governmental
authority under any federal or state law (otherwise than as provided in Section
9) before such shares may be so issued, the Company will in good faith and as
expeditiously as possible and at its expense endeavor to cause such shares to be
duly registered or qualified; provided that the provisions of Section 9 shall
govern with respect to Company's obligation to effect the registration of its
securities under the Securities Act.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
This Warrant shall not be transferable except to a division, subsidiary
or affiliate of GE Medical or by merger of the Holder with another entity or
otherwise by operation of law. Furthermore, this Warrant and the Warrant Stock
shall not be transferred, hypothecated or assigned before satisfaction of the
conditions specified in this Section 9, which conditions are intended to ensure
compliance with the provisions of the Securities Act and state law, with respect
to the Transfer of this Warrant or any Warrant Stock. Holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Section 9.
Furthermore, Holder, by acceptance of this Warrant and by acceptance and
delivery of the Subscription Form in the form of Exhibit A hereto, represents
and warrants to the Company for its reliance in connection with issuing this
Warrant and the Warrant Stock, respectively, that (i) Holder is acquiring the
Warrant, and if applicable, the Warrant Stock for Holder's own account for
investment and not for sale or other disposition thereof; (ii) Holder
understands that such securities are not registered under the Securities Act and
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available; (iii) Holder, by
reason of its business and financial experience has the capacity to protect its
own interests in connection with purchase and transfer of such securities and is
able to bear the economic risk thereof; and (iv) the Company has made available
to Holder all documents and information regarding an investment in such
securities requested by or on behalf of Holder, including but not limited to all
publicly available information on file with the Commission.
9.1 Restrictive Legend.
(a) Except as otherwise provided in this Section 9, each
certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
are subject to the conditions specified in a certain Common
Stock Purchase Warrant dated as of July 9, 1993, originally
issued by American Health Services Corp. No transfer of the
shares represented by this certificate shall be valid or
effective until such conditions and any requirements of state
law have been fulfilled. A copy of the form of said Warrant is
on file with the Secretary of American Health Services Corp.
The holder of this certificate, by acceptance of this
certificate, agrees to be bound by the provisions of such
Warrant.
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in
substantially the following form:
This Warrant and its underlying securities have not been
registered under the Securities Act of 1933, as amended, and
may not be transferred in violation of such Act or state law,
the rules and regulations thereunder or the provisions of this
Warrant.
9.2 Notice of Proposed Transfers; Requests for Registration. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of Warrant
Stock, the holder of such Warrants or Warrant Stock shall give ten days prior
written notice (a "Transfer Notice") to the Company of such holder's intention
to effect such Transfer, describing the manner and circumstances of the proposed
Transfer, and shall obtain and deliver to the Company an opinion in form and
substance reasonably satisfactory to the Company (addressed to the Company and
upon which the Company may rely) from counsel to such holder who shall be
reasonably satisfactory to the Company, that the proposed Transfer of such
Warrants or such Warrant Stock may be effected without registration under the
Securities Act and any applicable state securities law(s). After receipt of the
Transfer Notice and opinion, the Company shall, within five days thereof, so
notify the holder of such Warrants or Warrant Stock and such holder shall
thereupon be entitled to Transfer such Warrants or such Warrant Stock, in
accordance with the terms of the Transfer Notice. Each certificate, if any,
evidencing such shares of Warrant Stock issued upon such Transfer shall bear the
restrictive legend set forth in Section 9.1(a), and each Warrant issued upon
such Transfer shall bear the restrictive legend set forth in Section 9.1(b),
unless in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act and any applicable state securities
law(s). The holder of the Warrants or the Warrant Stock, as the case may be,
giving the Transfer Notice shall not be entitled to transfer and shall not
transfer such Warrants or such Warrant Stock until (i) the Company receives a
written statement of investment intent and sophistication from the proposed
Transferee in substance substantially similar to the final sentence of the first
paragraph of Section 9 and (ii) such holder receives notice from the Company
under this Section 9.2.
The Holders of Warrants and Warrant Stock shall have the right to
request registration of such Warrant Stock pursuant to Sections 9.3 and 9.4.
9.3 Required Registration. The rights ("Required Registration") of
holders of Warrants and/or Warrant Stock under this Section 9.3 shall become
effective only on and after the date 90 days prior to the Exercise Date and
shall expire on the Expiration Date. After receipt of a written request from
the holders of Warrants and/or Warrant Stock representing at least an aggregate
of fifty percent (50%) of the total of (i) all shares of Warrant Stock then
subject to issuance upon exercise of all Warrants and (ii) all shares of Warrant
Stock then Outstanding having an aggregate Current Market Price in excess of
$600,000, requesting that the Company effect the registration of Warrant Stock
issuable upon the exercise of such holder's Warrants or of any of such holder's
Warrant Stock under the Securities Act and specifying the intended method or
methods of disposition thereof, the Company shall promptly notify all holders of
Warrants and Warrant Stock in writing of the receipt of such request and each
such holder, in lieu of exercising its rights under Section 9.4, may elect (by
written notice specifying the intended method or methods of disposition of
Warrant Stock sent to the Company within ten Business Days from the date of such
holder's receipt of the aforementioned Company's notice) to have such holder's
shares of Warrant Stock included in such registration thereof pursuant to this
Section 9.3. Thereupon the Company shall, as expeditiously as is possible, use
its best efforts to effect the registration under the Securities Act of all
shares of Warrant Stock which the Company has been so requested to register by
such holders for sale, all to the extent required to permit the disposition (in
accordance with the intended method or methods thereof, as aforesaid) of the
Warrant Stock so registered; provided, however, that the Company shall not be
required to effect more than one registration of any Warrant Stock pursuant to
this Section 9.3. No holder of any other warrant, Convertible Securities or
other right to purchase shares of Common Stock shall receive or be entitled to
receive registration rights that are more favorable than the registration rights
available to the Holder pursuant to the terms of this Section 9.
(a) Suspension of Registration.
If the Company has been requested to effect a Required
Registration, whether or not a Registration Statement with respect
thereto has been filed or has become effective, and furnishes to the
Holder requesting such registration a copy of a resolution of the
Board of Directors of the Company certified by the Secretary of the
Company stating that in the good faith judgment of the Board of
Directors it would be seriously detrimental to the Company and its
stockholders for such Registration Statement (i) to be filed on or
before the date such filing would otherwise be required hereunder,
(ii) to become effective, or (iii) to remain effective as long as
such Registration Statement would otherwise be required to remain
effective, the Company shall have the right to defer such filing or
effectiveness or to suspend such effectiveness for a period of not
more than 120 days; provided that during such time the Company may
not file a Registration Statement for securities to be issued and
sold for its own account or that of anyone other than the Holder or
Holders requesting such Required Registration; and provided,
further, that if effectiveness of a Registration Statement is
suspended pursuant to this provision, the period of such suspension
shall be added to the end of the period that such Registration
Statement would otherwise be required to be effective hereunder so
that the aggregate number of days that such Registration Statement
is required to remain effective hereunder shall remain unchanged.
(b) Hold-Back Agreements.
(i) Restrictions on Public Sale By Holder of Registrable
Securities. Each Holder whose registrable securities are covered by
a Registration Statement filed pursuant to this Warrant agrees, if
requested by the managing underwriters in an underwritten offering,
not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in such
Registration Statement, including a sale pursuant to Rule 144 under
the Securities Act (except as part of such underwritten
registration), during the 10-day period prior to, and during the
90-day period beginning on, the closing date of each underwritten
offering made pursuant to such Registration Statement, to the extent
timely notified in writing by the Company or the managing
underwriters; provided, however, that the holders of the Registrable
Securities will not be subject to the hold-back restrictions of this
Section if the Company and the other holders of the Company's equity
securities have not complied with the provisions of subsection (b)
below.
The foregoing provisions shall not apply to any Holder if such
Holder is prevented by applicable statute or regulation from
entering any such agreement; provided, however, that any such Holder
shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale of such
applicable class of registrable securities unless it has provided 45
days prior written notice of such sale or distribution to the
underwriter or underwriters.
(ii) Restrictions on Sale of Equity Securities by the Company
and Others. The Company agrees (1) not to effect any public or
private offer, sale or distribution of its equity securities,
including a sale pursuant to Regulation D under the Securities Act,
(i) during the 10-day period prior to, and during the 90-day period
beginning with, the effectiveness of a Registration Statement filed
under this Warrant to the extent timely notified in writing by a
holder of registrable securities or the managing underwriters
(except as part of such registration, if permitted, or pursuant to
registrations on Forms S-4 or S-8 or any successor form to such
Forms or the issuance of Common Stock pursuant to warrants or
employee stock options outstanding on the date hereof) and (2) to
use its best efforts to cause each holder of its privately placed
equity securities purchased from the Company at any time on or after
the date of this Agreement to agree not to effect any public sale or
distribution of any such securities during such period, including a
sale pursuant to Rule 144 under the Securities Act (except as part
of such registration, if permitted).
9.4 Incidental Registration. The rights of holders of Warrants and/or
Warrant Stock under this Section 9.4 shall become effective only on and after
the Exercise Date and shall expire on the Expiration Date. If the Company at
any time proposes to file on its behalf and/or on behalf of any of its security
holders ("the demanding security holders") a Registration Statement under the
Securities Act on any form (other than a Registration Statement required under
section 9.3 or a Registration Statement on Form S-4 or S-8 or any successor form
for securities to be offered in a transaction of the type referred to in Rule
145 under the Securities Act or to employees of the Company pursuant to any
employee benefit plan or to existing holders of the Company's debt or equity
securities in any exchange or rights offering, respectively) for the general
registration of securities to be sold for cash with respect to its Common Stock
or any other class of equity security (as defined in Section 3(a)(11) of the
Exchange Act) of the Company, it will give written notice to all holders of
Warrants or Warrant Stock at least 30 days before the initial filing with the
Commission of such Registration Statement, which notice shall set forth the
intended method of disposition of the securities proposed to be registered by
the Company. The notice shall offer to include in such filing the aggregate
number of shares of Warrant Stock, and the number of shares of Common Stock for
which this Warrant is exercisable, as such holders may request. Nothing herein
shall preclude the Company from discontinuing the registration of its securities
being effected on its behalf or on behalf of the demanding security holders at
any time prior to the effective date of the registration relating thereto.
Each holder of any such Warrants or any such Warrant Stock desiring
to have Warrant Stock registered under this Section 9.4 shall advise the Company
in writing within 30 days after the date of receipt of such offer from the
Company, setting forth the amount of such Warrant Stock for which registration
is requested. The Company shall thereupon include in such filing the number of
shares of Warrant Stock for which registration is so requested, subject to the
next sentence, and shall use its best efforts to effect registration under the
Securities Act of such shares. If the managing underwriter of a proposed public
offering shall advise the Company in writing that, in its opinion, the
distribution of the shares of Common Stock into which the Warrants are
exercisable and the Warrant Stock requested to be included in the registration
concurrently with the securities being registered by the Company or such
demanding security holder would materially and adversely affect the distribution
of such securities by the Company or such demanding security holder, then all
demanding security holders (other than any selling security holder who requested
such registration and the Company (unless such Registration Statement was filed
at the request of a demanding security holder)) shall reduce the amount of
securities each intended to distribute through such offering on a pro rata
basis. Except as otherwise provided in Section 9.6, all expenses of such
registration shall be borne by the Company.
9.5 Registration Procedures. If the Company is required by the
provisions of this Section 9 to use its best efforts to effect the registration
of any of its securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement
with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the disposition of such securities by the holders thereof;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities
covered by such Registration Statement until the earlier of such time as
all of such securities have been disposed of in a public offering or the
expiration of 180 days;
(c) furnish to any selling security holders such number of copies
of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such other documents, as such selling security holders may reasonably
request;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or blue
sky laws of such jurisdictions within the United States and Puerto Rico as
each Holder of such securities shall reasonably request in light of such
Holder's intended plan of distribution (provided, however, the Company
shall not be obligated to qualify as a foreign corporation to do business
under the laws of any jurisdiction in which it is not then qualified or to
file any general consent to service of process or subject itself to
taxation in any such jurisdiction), and do such other reasonable acts and
things as may be required of it to enable such holder to consummate the
disposition in such jurisdiction of the securities covered by such
Registration Statement;
(e) if requested by a majority (in amount of underlying and
outstanding shares ) of the Holders of Warrants or Warrant Stock being
included in such registration, use its best efforts to obtain from either
a nationally recognized underwriter or investment banker or an underwriter
or investment banker reasonably acceptable to such Holders a firm
commitment (pursuant to an underwriting agreement in customary form) to
underwrite the public offering of the securities covered by such
Registration Statement;
(f) furnish, at the request of any holder requesting registration
of Warrant Stock pursuant to Section 9.3, on the date that such shares of
Warrant Stock are delivered to the underwriters for sale pursuant to such
registration or, if such Warrant Stock is not being sold through
underwriters, on the date that the Registration Statement with respect to
such shares of Warrant Stock becomes effective, (1) a copy of an opinion,
dated such date, of the independent counsel representing the Company for
the purposes of such registration, addressed to the underwriters, if any,
and to the holders making such request, stating that such Registration
Statement has become effective under the Securities Act and that (i) to
the best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Securities
Act, (ii) the Registration Statement, the related prospectus, and each
amendment or supplement thereto, comply as to form in all material
respects with the requirements of the Securities Act and the applicable
rules and regulations of the Commission thereunder (except that such
counsel need express no opinion as to financial statements and data
contained therein), (iii) the descriptions in the Registration Statement
or the prospectus, or any amendment or supplement thereto, of all legal
matters and contracts and other legal documents or instruments are
accurate and fairly present the information required to be shown, and (iv)
such counsel does not know of any legal or governmental proceedings,
pending or contemplated, required to be described in the Registration
Statement or prospectus, or any amendment or supplement thereto, which are
not described as required, nor of any contracts or documents or
instruments of a character required to be described in the Registration
Statement or prospectus, or any amendment or supplement thereto, or to be
filed as exhibits to the Registration Statement which are not described
and filed or incorporated by reference as required; such counsel shall
also confirm that nothing has come to his attention to lead him to believe
that either the Registration Statement or the prospectus, or any amendment
or supplement thereto (other than financial material and data as to which
such counsel need make no statement) contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which made, not misleading; and (2) a letter dated such
date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the holder making such
request and, if such accountants refuse to deliver such letter to such
holder, then to the Company stating that they are independent certified
public accountants within the meaning of the Securities Act and that, in
the opinion of such accountants, the financial statements and other
financial data of the Company included in the Registration Statement or
the prospectus, or any amendment or supplement thereto, comply as to form
in all material respects with the applicable accounting requirements of
the Securities Act. Such opinion of counsel shall additionally cover such
other legal matters with respect to the registration in respect of which
such opinion is being given as the holders holding a majority of the
Warrant Stock so registered may reasonably request. Such letter from the
independent certified public accountants shall additionally cover such
other financial matters (including information as to the period ending not
more than five Business Days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given
as the holders holding a majority of the Warrant Stock being so registered
may reasonably request;
(g) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the
securities covered by Registration Statement; and
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than 18
months after the effective date of the Registration Statement, an earnings
statement covering the period of at least 12 months beginning with the
first full month after the effective date of such Registration Statement,
which earnings statements shall satisfy the provisions of Section 11(a) of
the Securities Act.
(i) notify each selling Holder of such registrable securities, at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of the securities covered by the
Registration Statement, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading and promptly make available to each selling Holder any such
supplement or amendment.
It shall be a condition precedent to the obligation of the Company
to take any action pursuant to this Section 9 in respect of the securities which
are to be registered at the request of any holder of Warrants or Warrant Stock
that such holder shall furnish to the Company such information regarding the
securities held by such holder and the intended method of disposition thereof as
the Company shall reasonably request and as shall be required in connection with
the action taken by the Company.
Each selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 9.5(i) hereof, such selling Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering the securities covered by the Registration Statement until such selling
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 9.5(i) hereof, and, if so directed by the Company such
selling Holder will deliver to the Company all copies, other than permanent file
copies then in such selling Holder's possession, of the most recent prospectus
covering the securities covered by Registration Statement at the time of receipt
of such notice. If the Company shall give such notice, the Company shall extend
the period during which such Registration Statement shall be maintained
effective by the number of days during the period from and including the date of
the giving of notice pursuant to Section 9.5(i) hereof to the date when the
Company shall make available to the selling Holders of the securities covered by
such Registration Statement a prospectus supplemented or amended to conform with
the requirements of Section 9.5(i) hereof.
9.6 Expenses; Limitations on Registration. All expenses incurred in
complying with Section 9, including, without limitation, all registration and
filing fees (including all expenses incident to filing with the NASD, printing
expenses, fees and disbursements of counsel for the Company, the reasonable fees
and expenses of one counsel for the selling security holders (selected by those
holding a majority of the shares being registered), expenses of any special
audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdictions pursuant to
Section 9.5(d), shall be paid by the Company, except that
(a) all such expenses in connection with any amendment or supplement
to the Registration Statement or prospectus filed more than 180 days after
the effective date of such Registration Statement because any holder of
Warrant Stock has not effected the disposition of the securities requested
to be registered shall be paid by such holder; and
(b) the Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of counsel for
any underwriter in respect of the securities sold by such holder of
Warrant Stock.
9.7 Indemnification.
(a) In the event of any registration of any of the Warrant Stock
under the Securities Act pursuant to this Section 9, the Company shall
indemnify and hold harmless the holder of such Warrant Stock, such
holder's directors and officers, and each other Person (including each
underwriter) who participated in the offering of such Warrant Stock and
each other Person, if any, who controls such holder or such participating
Person within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such holder or
any such director or officer or participating Person or controlling Person
may become subject under the Securities Act or any other statute or at
common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any alleged
untrue statement of any material fact contained, on the effective date
thereof, in any Registration Statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or
(ii) any alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and shall reimburse such Holder or such director, officer or participating
Person or controlling Person for any legal or any other expenses
reasonably incurred by such holder or such director, officer or
participating Person or controlling Person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any alleged untrue statement or alleged
omission made in such Registration Statement, preliminary prospectus,
prospectus or amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by such holder
specifically for use therein or (in the case of any registration pursuant
to Section 9.3) so furnished for such purposes by any underwriter. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or such director,
officer or participating Person or controlling Person, and shall survive
the transfer of such securities by such holder.
(b) Each holder of any Warrant Stock, by acceptance thereof, agrees
to indemnify and hold harmless the Company, its directors and officers and
each other Person, if any, who controls the Company within the meaning of
the Securities Act against any losses, claims, damages or liabilities,
joint or several, to which the Company or any such director or officer or
any such Person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
information in writing provided to the Company by such Holder of such
Warrant Stock contained, on the effective date thereof, in any
Registration Statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement
thereto; provided, however, that such Holder's obligation under this
Section 9.7(b) to indemnify and hold harmless the Company shall in no
event exceed the damage attributable solely to the inclusion of such
written information in such Registration Statement, preliminary
prospectus, final prospectus, or amendment or supplement suffered by the
Person or Persons whose claims gave rise to such losses, claims, damages
or liabilities.
The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same
extent as provided above with respect to information furnished in
writing by persons specifically for inclusion in any prospectus or
Registration Statement.
(c) If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred
to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The
amount paid or payable by a party under this Section 9 as a result of the
losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.7(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
Notwithstanding any other provisions of this Warrant, the Company
shall not be liable in any case to the extent that any loss, claim, damage,
liability or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission in any Registration
Statement or prospectus, if such untrue statement or alleged untrue statement,
omission or alleged omission is corrected in an amendment or supplement to the
Registration Statement and the Holder thereafter fails to deliver such
Registration Statement or prospectus as so amended or supplemented prior to or
concurrently with the sale of the securities covered by such Registration
Statement to the person asserting such loss, claim, damage, liability or expense
after the Company had furnished such Holder with a sufficient number of copies
of the same.
9.8 Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability after the Exercise Date of the Warrants and the Warrant Stock
and the legend requirements of Section 9.1 shall terminate as to any particular
Warrant or share of Warrant Stock (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such legend is not required in order
to ensure compliance with the Securities Act. Whenever after the Exercise Date
the restrictions imposed by Section 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
CONTAINED IN SECTION 9 HEREOF TERMINATED ON ,
, AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants thereafter issued upon registration of transfer, division or
combination of, or in substitution for, any Warrant or Warrants entitled to bear
such legend shall have a similar legend endorsed thereon. Whenever the
restrictions imposed by this Section shall terminate as to any share of Warrant
Stock, as hereinabove provided, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, a new certificate representing such
Warrant Stock not bearing the restrictive legend set forth in Section 9.1(a).
9.9 Listing on Securities Exchange. If and so long as the Company shall
list any shares of Common Stock on NASDAQ or any securities exchange, it will,
at its expense, list thereon, maintain and, when necessary, increase such
listing of, all shares of Common Stock issued or, to the extent permissible
under the applicable NASDAQ or securities exchange rules, issuable upon the
exercise of this Warrant so long as any shares of Common Stock shall be so
listed during any such Exercise Period.
9.10 Certain Limitations on Registration Rights. Notwithstanding the
other provisions of Section 9:
(i) the Company shall not be obligated to register the Warrant
Stock of any Holder if (x) in the opinion of counsel to the Company
reasonably satisfactory to the Holder and its counsel (or, if the
Holder has engaged an investment banking firm, to such investment
banking firm and its counsel), the sale or other disposition of such
Holder's Warrant Stock, in the manner proposed by such Holder (or by
such investment banking firm), may be effected without registering
such Warrant Stock under the Securities Act, and (y) the failure of
the Company to register such Warrant Stock will not result in a
reduction in the net proceeds to be received by such Holder in
connection with such sale or other disposition; and
(ii) the Company shall not be obligated to register the Warrant
Stock of any Holder pursuant to Section 9.3, if the Company has had
a registration statement, under which such Holder had a right to
have its Warrant Stock included pursuant to Sections 9.3 or 9.4,
declared effective within one year prior to the date of the request
pursuant to Section 9.3; provided, however, that if any Holder
elected to have shares of its Warrant Stock included under such
registration statement but some or all of such shares were excluded
pursuant to the penultimate sentence of Sections 9.3 or 9.4, then
such one-year period shall be reduced to six months.
9.11 Selection of Managing Underwriters. The managing underwriter or
underwriters for any offering of Warrant Stock to be registered pursuant to
Section 9.3 shall be selected by the Company and shall be reasonably acceptable
to the Holders of a majority of the shares being so registered (other than any
shares being registered pursuant to Section 9.4).
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and each holder
of Warrant Stock in supplying such information as may be reasonably necessary
for such Holder to complete and file any information reporting forms presently
or hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Warrant or Restricted
Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of GE Medical shall be sufficient
indemnity) and in case of mutilation upon surrender and cancellation hereof, the
Company will execute and deliver in lieu hereof a new Warrant of like tenor to
such Holder; provided, in the case of mutilation, no indemnity shall be required
if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this warrant. The Company
shall notify Holder in writing prior to any change of the address of the office
at which the Warrants may be presented.
13. FINANCIAL AND BUSINESS INFORMATION
13.1 Information. Except during any period when the Company is a Public
Company (as hereinafter defined), it will deliver to each Holder, as soon as
practicable after the end of each month, and in any event within 30 days
thereafter, and after the end of each quarter and in any event within 45 days
thereafter, one copy of an unaudited consolidated balance sheet, statement of
income and statement of cash flow of the Company and its Subsidiaries for such
period setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal years. Such financial statements
shall be prepared by the Company in accordance with GAAP and shall be
accompanied by the certification of the Company's chief executive officer or
chief financial officer that such financial statements are complete and correct
and present fairly the consolidated financial position, results of operations
and cash flow of the Company and its Subsidiaries as at the end of such period
and for such year-to-date period, as the case may be.
For purposes of this Section 13, the term "Public Company" shall
mean a company (i) that is subject to the reporting requirements of Section
15(d) of the Exchange Act, or (ii) any of whose securities are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act.
13.2 Annual Information. Except during any period when the Company is a
Public Company, it will deliver to each Holder as soon as practicable after the
end of each fiscal year of the Company, and in any event within 90 days
thereafter, one copy of:
(i) an audited consolidated balance sheet of the Company and
its Subsidiaries as at the end of such year, and
(ii) audited consolidated statements of income and retained
earnings and cash flow of the Company and its Subsidiaries for such
year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year; all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
the Company, or any other firm of independent certified public accountants of
recognized national standing selected by the Company and (ii) a report of such
independent certified public accountants confirming, or describing the agreed
upon procedures applied to the Company's schedules computing, any adjustment,
made pursuant to Section 4 during such year. Such report shall include a
description of any errors determined by the accountants in the Company's
schedules.
13.3 Filings. The Company will file on or before the required date all
required regular or periodic reports (pursuant to the Exchange Act) with the
Commission and will deliver to Holder promptly upon their becoming available one
copy of each report, notice or proxy statement sent by the Company to its
stockholders generally, and of each regular or periodic report (pursuant to the
Exchange Act) and any Registration Statement, prospectus or written
communication (other than transmittal letters) pursuant to the Securities Act,
filed by the Company with (i) the Commission or (ii) any securities exchange on
which shares of Common Stock are listed (provided, however, that the Company may
request filing extensions pursuant to Rule 12b-25 under the Securities and
Exchange Act of 1934, as amended).
14. APPRAISAL
The determination of the Appraised Value per share of Common Stock shall
be made by an investment banking firm of nationally recognized standing selected
by the Company and acceptable to the Holder. If the investment banking firm
selected by the Company is not acceptable to the Holder and the Company and the
Holder cannot agree on a mutually acceptable investment banking firm, then the
Holder and the Company shall each choose one such investment banking firm and
the respective chosen firms shall agree on another investment banking firm which
shall make the determination. The Company shall retain, at its sole cost, such
investment banking firm as may be necessary for the determination of Appraised
Value1 required by the terms of this Warrant.
15. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
16. MISCELLANEOUS
16.1 Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Company shall operate
as a waiver of such right or otherwise prejudice the Company's rights, powers or
remedies. No course of dealing or any delay or failure to exercise any right
hereunder on the part of the Holder shall operate as a waiver of such right or
otherwise prejudice the Holder's rights, powers or remedies. If the Company
fails to make, when due, any payments provided for hereunder, or fails to comply
with any other provision of this Warrant, the Company shall pay to the Holder
such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by the Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
16.2 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered (i) in person with receipt acknowledged, (ii) by facsimile
transmission, with receipt electronically confirmed during normal business hours
of recipient, and that is confirmed by sending, no later than one (1) Business
Day following such transmission, a copy of such facsimile, by registered or
certified mail, return receipt requested, postage prepaid, or (iii) by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last known
address or facsimile transmission number appearing on the books of the
Company maintained for such purpose.
(b) If to the Company at
American Health Services Corp.
4440 Von Karman, Suite 320
Newport Beach, California 92660
Attention: President
Facsimile Transmission Number: (714) 851-5981
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged or sent by facsimile with receipt
electronically confirmed during normal business hours of recipient, or three (3)
Business Days after the same shall have been deposited in the United States
mail. Failure or delay in delivering copies of any notice, demand, request,
approval, declaration, delivery or other communication to the person designated
above to receive a copy shall in no way adversely affect the effectiveness of
such notice, demand, request, approval, declaration, delivery or other
communication.
16.3 Indemnification. In addition to the indemnities provided in Section
9.7 (as to the subject matter of which the indemnifications, including
limitations, therein, shall control), the Company agrees to indemnify and hold
harmless the Holder, its officers, directors, employees, agents, and attorneys
from and against any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees, expenses and
disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder relating to or arising out of (i) Holder's exercise of this
Warrant and/or ownership of any shares of Warrant Stock issued in consequence
thereof, or (ii) any litigation to which the Holder is made a party in its
capacity as a stockholder or warrant holder of the Company; provided, however,
that the Company will not be liable hereunder to the extent that any
liabilities, obligation, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses or disbursements are found in a final
nonappealable judgment by a court to have resulted from either (i) the Holder's
gross negligence or willful misconduct, or (ii) actions or omissions taken or
not taken by the Holder in any capacity other than as a stockholder or warrant
holder of the Company.
16.4 Remedies. Each holder of Warrant and Warrant Stock, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under Section 9
of this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of Section 9 of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
16.5 Successors and Assigns. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant, and shall be
enforceable by any such Holder.
16.6 Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Holder, provided that no such Warrant may be modified or amended to
reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
16.7 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
16.8 Headings. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
16.9 Governing Law; Service of Process. In all respects, including all
matters of construction, validity and performance, this Agreement and the
obligations arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of the state of the Company's incorporation
applicable to contracts made and performed in such state, without regard to the
principles thereof regarding conflict of laws, and any applicable laws of the
United States of America. Service of process on the Company or Holder in any
action arising out of or relating to this Agreement shall be effective if mailed
to such party in accordance with the procedures and requirements set forth in
Section 16.2.
16.10 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE COMPANY AND HOLDER HEREOF WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
COMPANY AND HOLDER HEREOF DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY AND HOLDER
HEREOF WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
AMERICAN HEALTH SERVICES CORP.
By:
Name:
Title:
Attest:
Name:
Title:
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant)
The undersigned registered owner of the attached Warrant irrevocably
exercises such Warrant for the purchase of Shares of Common Stock of
American Health Services Corp. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in such Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to __________________________
whose address is
and, if such shares of Common Stock shall not include
all of the shares of Common Stock issuable as provided in such Warrant, that a
new Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
Name of Registered Owner)
(Signature of Registered Owner)
(Street Address)
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond
with the name as written upon the face of the attached Warrant
in every particular, without alteration or enlargement or any
change whatsoever.
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under such Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of
Common Stock
and does hereby irrevocably constitute and appoint
attorney-in-fact to register such transfer on the books of
American Health Services Corp. maintained for the purpose, with full power of
substitution in the premises.
Dated: Print Name:
Signature:
Witness:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
EXHIBIT 99.5
AMERICAN HEALTH SERVICES CORP.
COMMON STOCK PURCHASE WARRANT
APRIL 12, 1994
TABLE OF CONTENTS
Page
1. DEFINITIONS.................................
2. EXERCISE OF WARRANT.........................
2.1 Manner of Exercise....................
2.2 Payment of Taxes......................
2.3 Fractional Shares.....................
2.4 Continued Validity....................
3. TRANSFER, DIVISION AND COMBINATION..........
3.1 Transfer..............................
3.2 Division and Combination..............
3.3 Expenses..............................
3.4 Maintenance of Books..................
4. ADJUSTMENTS.................................
4.1 Stock Dividends, Subdivisions,
Combinations and Reclassifications....
4.2 Other Provisions Applicable to
Adjustments under this Section........
5. NOTICES TO WARRANT HOLDERS..................
5.1 Notice of Adjustments.................
5.2 Notice of Certain Corporate Action....
6. NO IMPAIRMENT...............................
7. RESERVATION AND AUTHORIZATION OF COMMON
STOCK; REGISTRATION WITH OR APPROVAL OF
ANY GOVERNMENTAL AUTHORITY..................
8. TAKING OF RECORD; STOCK AND WARRANT
TRANSFER BOOKS..............................
9. RESTRICTIONS ON TRANSFERABILITY.............
9.1 Restrictive Legend....................
9.2 Notice of Proposed Transfers;
Requests for Registration............
9.3 Required Registration.................
9.4 Incidental Registration...............
9.5 Registration Procedures...............
9.6 Expenses; Limitations on Registration.
9.7 Indemnification.......................
9.8 Termination of Restrictions...........
9.9 Listing on Securities Exchange........
9.10 Certain Limitations on Registration
Rights................................
9.11 Selection of Managing Underwriters....
10. SUPPLYING INFORMATION.......................
11. LOSS OR MUTILATION..........................
12. OFFICE OF THE COMPANY.......................
13. FINANCIAL AND BUSINESS INFORMATION..........
13.1 Information............................
13.2 Annual Information.....................
13.3 Filings................................
14. APPRAISAL...................................
15. LIMITATION OF LIABILITY.....................
16. MISCELLANEOUS...............................
16.1 Nonwaiver and Expenses................
16.2 Notice Generally......................
16.3 Indemnification.......................
16.4 Remedies..............................
16.5 Successors and Assigns................
16.6 Amendment.............................
16.7 Severability..........................
16.8 Headings..............................
16.9 Governing Law; Service of Process.....
16.10 Mutual Waiver of Jury Trial...........
Exhibit A SUBSCRIPTION FORM
Exhibit B ASSIGNMENT FORM
THIS COMMON STOCK PURCHASE WARRANT AND THE SECURITIES FOR WHICH IT CAN
BE EXERCISED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR STATE LAW, THE
RULES AND REGULATIONS THEREUNDER OR THE TRANSFER RESTRICTIONS OF THIS WARRANT
AMERICAN HEALTH SERVICES CORP.
COMMON STOCK PURCHASE WARRANT
372,524 Shares, Subject to Adjustment
April 12, 1994
THIS IS TO CERTIFY THAT GENERAL ELECTRIC COMPANY, a New York corporation
acting through GE Medical Systems, or registered assigns, is entitled, at any
one time on and after the Exercise Date and on or prior to the Expiration Date
(as hereinafter defined), to purchase from AMERICAN HEALTH SERVICES CORP., a
Delaware corporation (the "Company"), 372,524 shares of Common Stock (as
hereinafter defined and subject to adjustment as provided herein), of the
Company at a purchase price of $.10 per share (subject to adjustment as provided
herein), all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below.
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company following the date of this Warrant.
"Appraised Value" shall mean, in respect of any share of Common Stock on
any date herein specified, the fair market value of such share of Common Stock
(determined without giving effect to the discount for (i) a minority interest or
(ii) any lack of liquidity of the Common Stock or to the fact that the Company
may have no class of equity registered under the Exchange Act) as of the last
day of the most recent fiscal month to end within 60 days prior to such date
specified, based on the value of the Company as a whole, as determined by a
member or members of the NASD selected in accordance with the definition below
of "Current Market Price" on the basis of a sale between a willing seller and
buyer, neither acting under any compulsion, divided by the number of Fully
Diluted Outstanding shares of Common Stock.
"Book Value" shall mean, in respect of any share of Common Stock on any
date herein specified, the consolidated book value of the Company applicable to
Common Stock as of the last day of any month immediately preceding such date,
divided by the number of Fully Diluted Outstanding shares of Common Stock as
determined in accordance with GAAP by a firm of independent certified public
accountants of recognized national standing selected by the Company and
reasonably acceptable to the Holder.
"Business Day" shall mean any day that is not a Saturday or Sunday or a
day on which banks are required or permitted to be closed in the States of New
York or California.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise indicates)
the Common Stock of the Company, and any capital stock into which such Common
Stock may thereafter be changed, and shall also include capital stock of the
Company of any other class (regardless of how denominated) issued to the holders
of shares of Common Stock upon any reclassification thereof which is not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to redemption.
"Convertible Securities" shall mean evidences of indebtedness, options,
warrants or other rights to receive shares of stock or other securities which
are convertible into or exchangeable, with or without payment of additional
consideration in cash or property, for Common Stock, either immediately or upon
the occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the highest of (a) the Book Value per share
of Common Stock at such date, and (b) the Appraised Value per share of Common
Stock as at such date, or if there shall then be a public market for the Common
Stock, the highest of (x) the Book Value per share of Common Stock at such date,
and (y) the average of the daily market prices for 30 consecutive Business Days
commencing 45 days before such date. The daily market price for each such day
shall be (i) the last sale price on such day as furnished by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or by
the National Quotation Bureau or on the OTC Bulletin Board or other nationally
recognized quotation system if not reported on NASDAQ, (ii) if neither such
corporation at the time is engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business, or (iii) if there
is no such firm, as furnished by any member of the NASD selected mutually by the
Holder and the Company or, if they cannot agree upon such selection, as selected
by two such members of the NASD, one of which shall be selected by the Holder
and one of which shall be selected by the Company, (iv) if the Common Stock is
listed or admitted to trading on a stock exchange in the United States, the last
sale price on such day on the principal stock exchange on which such Common
Stock is then listed or admitted to trading, or (v) if no sale takes place on
such day on any such exchange, the average of the last reported closing bid and
asked prices on such day as officially quoted on any such exchange.
"Current Warrant Price" shall mean, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Date" shall mean May 19, 1995; provided, however, that the
Exercise Date shall be accelerated to any earlier date upon which any of the
following events occurs: (i) a tender offer is commenced for all or part of the
Company's Common Stock, (ii) the acquisition or disposition of securities of the
Company by a Person or group which would cause such Person or group holding such
securities, alone or together with such Person's or group's affiliates, to
increase their holdings above, or decrease their holdings below, 18% of the
Company's Fully Diluted Outstanding Common Stock, (iii) the Company sells all or
substantially all of its assets, or (iv) the termination, repayment or
prepayment in full of the loans under both the First Loan Agreement and the
Second Loan Agreement.
"Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1.
"Expiration Date" shall mean the date two years following payment in
full of all amounts owing under both the First Loan Agreement and the Second
Loan Agreement.
"First Loan Agreement" shall mean that certain Loan and Security
Agreement between General Electric Capital Corporation and the Company, dated
May 19, 1992.
"Fully Diluted Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of this Warrant and all other options,
warrants, Convertible Securities or other rights to purchase or receive Common
Stock outstanding on such date.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as from time to time in effect.
"GE Medical" shall mean General Electric Company, a New York corporation
acting through GE Medical Systems.
"Holder" shall mean the Person or Persons in whose name the Warrant set
forth herein is registered on the books of the Company maintained for such
purpose. In the event more than one Person is so registered, "Holder" for
purposes of consent, demand or other action allowed or required to be taken
hereunder by the Holder(s) of this Warrant, the word "Holder" shall refer to a
simple majority in interest of such Persons.
"NASD" shall mean the National Association of
Securities Dealers, Inc., or any successor corporation thereto.
"Outstanding" shall mean, when used with reference to Common Stock, at
any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held exclusively by
or for the account solely of the Company or any wholly-owned subsidiary thereof
(collectively, "Subsidiary-Held Shares"), and shall include all shares issuable
in respect of any certificates representing fractional interests in shares of
Common Stock. Subsidiary-Held Shares shall remain Subsidiary-Held Shares even
if held in pledge as security unless and until such shares are foreclosed upon
and record, beneficial or equitable ownership transferred.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Preferred Stock" shall mean any class of the Company's stock having
rights, preferences or privileges senior or prior in right to any other class.
"Restricted Common Stock" shall mean shares of Common Stock which are,
or which upon their issuance on the exercise of this Warrant would be, evidenced
by a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Second Loan Agreement" shall mean that certain Loan and Security
Agreement between General Electric Capital Corporation and the Company, dated as
of June 1, 1993.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Subsidiary" shall mean, with respect to any Person, any corporation of
which an aggregate of more than 50% of the outstanding stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person.
"Subsidiary-Held Shares" shall have the meaning set forth above in the
definition of "Outstanding."
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or
of any interest in either thereof, which would constitute a sale thereof within
the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, this Warrant. All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the percentage of Fully Diluted Outstanding Shares of Common Stock
for which they may be exercised. Collectively, all unexercised Warrants shall
be exercisable for the exact same number of shares as this Warrant would be
exercisable in the event any such Transfer or division had not occurred.
Exercise of any warrant(s) shall not trigger any of the adjustments contemplated
by Section 4 of this Warrant.
"Warrant Price" shall mean an amount equal to (i) the number of shares
of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by the
holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1 Manner of Exercise. From and after the Exercise Date and until
5:00 p.m., California time, on the Expiration Date, the Holder may exercise the
Warrant up to 12 times (plus one additional time by GE Medical only and not by
any assignee of GE Medical) on Business Days, for all or any part of 372,524
shares (subject to adjustment as provided hereunder) of Common Stock then
purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 4440 Von Karman, Suite
320, Newport Beach, California 92660 or at the office or agency designated by
the Company pursuant to Section 12, (i) a written notice of Holder's election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price in the manner specified
below, and (iii) this Warrant. Such notice shall be substantially in the form
of the subscription form appearing at the end of this Warrant as Exhibit A, duly
executed by Holder or its agent or attorney. Upon receipt thereof, the Company
shall, as promptly as practicable, and in any event within five (5) Business
Days thereafter, execute or cause to be executed and deliver or cause to be
delivered to Holder a certificate or certificates representing the aggregate
number of full shares of Outstanding Shares of Common Stock issuable upon such
exercise. The stock certificate or certificates so delivered shall be, to the
extent possible, in such denomination or denominations as such Holder shall
request in the notice and shall be registered in the name of Holder or, subject
to Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other Person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice, together with
the payment as set forth below, and this Warrant are received by the Company as
described above and all taxes required to be paid by Holder, if any, pursuant to
Section 2.2 prior to the issuance of such shares have been paid or agreed to be
paid when finally determined.
Payment of the Warrant Price shall be made at the option of the
Holder by certified or official bank check, or by cancellation of indebtedness,
if any, owed by the Company to such Holder.
2.2 Payment of Taxes. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable. The Company shall pay all expenses in connection
with, and all taxes and other governmental charges that may be imposed with
respect to, the issue or delivery thereof, unless such tax or charge is imposed
by law upon Holder, in which case such taxes or charges shall be paid by
Holder. The Company shall not be required, however, to pay any tax or other
charge imposed in connection with any transfer involved in the issuance of any
certificate for shares of Common Stock issuable upon exercise of this Warrant in
any name other than that of Holder, and in such case the Company shall not be
required to issue or deliver any stock certificate until such tax or other
charge has been paid or it has been established to the satisfaction of the
Company that no such tax or other charge is due.
2.3 Fractional Shares. The Company shall not issue a fractional share
of Common Stock upon exercise of this Warrant. A fractional share otherwise
issuable shall be rounded up to the nearest whole share.
2.4 Continued Validity. A holder of shares of Common Stock issued
upon the exercise of this Warrant (other than a holder who acquires such shares
after the same have been publicly sold pursuant to a Registration Statement
under the Securities Act or sold pursuant to Rule 144 thereunder), shall
continue to be entitled with respect to such shares to all rights to which it
would have been entitled as Holder under Sections 9, 10, 13, and 16 of this
Warrant. The Company shall, at the time of each exercise of this Warrant upon
the request of the holder of the shares of Common Stock issued upon such
exercise hereof, acknowledge in writing, in form reasonably satisfactory to such
holder, its continuing obligation to afford to such holder all such rights and
subject to any burdens; provided, however, that if such holder shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 Transfer. This Warrant shall be nontransferable until the
Exercise Date other than to a division, subsidiary or affiliate of GE Medical
except by merger of the Holder with another entity or otherwise by operation of
law. Subject to compliance with Section 9 following said period of
nontransferability, transfer of this Warrant and all rights hereunder, in whole
or in part, shall be registered on the books of the Company to be maintained for
such purpose, upon surrender of this Warrant at the principal office of the
Company referred to in Section 2.1 or the office or agency designated by the
Company pursuant to Section 12, together with a written assignment of this
Warrant substantially in the form of Exhibit B hereto duly executed by Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall, subject to Section 9, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if properly assigned
in compliance with Section 9, may be exercised by a new Holder for the purchase
of shares of Common Stock without having a new Warrant issued. If requested by
the Company, a new Holder shall acknowledge in writing, in form reasonably
satisfactory to the Company, such Holder's continuing obligations under
Section 9 of this Warrant.
3.2 Division and Combination. Subject to Section 9, this Warrant may
be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4 Maintenance of Books. The Company shall maintain, at its
aforesaid office or agency, books for the registration, and the registration of
transfer, of this Warrant.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant shall be subject to adjustment from time to time as set forth in
this Section 4. The Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this Section 4 at the
time of such event.
4.1 Stock Dividends, Subdivisions, Combinations and
Reclassifications. If at any time the Company shall with respect to its
Common Stock or Convertible Securities:
(a) pay a dividend or make distribution of Additional Shares of
Common Stock or Convertible Securities other than convertible indebtedness or
convertible Preferred Stock (in which event such Additional Shares of Common
Stock issuable upon exchange or conversion shall be deemed distributed),
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) reclassify its Common Stock (other than a change in par
value, or from par value to no par value) into shares of Common Stock and shares
of any other class of stock; and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the Outstanding shares of Common Stock
within the meaning of this Section 4.1.,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable after the occurrence of any such event shall be equal to (A) the
maximum number of shares of Common Stock underlying this Warrant prior to the
occurrence of any such event, multiplied by (B) the number of Fully Diluted
Outstanding shares of Common Stock after any such event, divided by the number
of Fully Diluted Outstanding shares of Common Stock prior to any such event, and
(ii) the Current Warrant Price shall be adjusted to equal the Current Warrant
Price multiplied (A) by the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to the adjustment divided by (B) the
number of shares for which this Warrant is exercisable immediately after such
adjustment. Any increased number of shares of Common Stock subject to this
Warrant resulting from application of the foregoing shall be allocated ratably
among all shares of Common Stock subject to this Warrant prior to each such
event.
4.2 Other Provisions Applicable to Adjustments under this Section.
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable provided
for in this Section 4:
(a) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business on the
date of its occurrence.
(b) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
5. NOTICES TO WARRANT HOLDERS
5.1 Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of this Warrant, shall
be adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated, specifying the number of shares of
Common Stock for which this Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate to
be delivered to each Holder in accordance with Section 16.2. The Company shall
keep at its office or agency designated pursuant to Section 12 copies of all
such certificates and cause the same to be available for inspection at said
office during normal business hours by any Holder or any prospective purchaser
of a Warrant designated by a Holder thereof.
5.2 Notice of Certain Corporate Action. The Holder shall be entitled
to the same rights to receive notice of corporate action as any holder of Common
Stock.
6. NO IMPAIRMENT
The Company shall not by any action including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value, if any, of any shares of Common
Stock receivable upon the exercise of this Warrant above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (b)
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (c) use its best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form satisfactory
to Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all times reserve
and keep available for issuance upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be reasonably necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be reasonably necessary from any
public regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of warrants require registration or qualification with any governmental
authority under any federal or state law (otherwise than as provided in Section
9) before such shares may be so issued, the Company will in good faith and as
expeditiously as possible and at its expense endeavor to cause such shares to be
duly registered or qualified; provided that the provisions of Section 9 shall
govern with respect to Company's obligation to effect the registration of its
securities under the Securities Act.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
This Warrant shall not be transferable except to a division, subsidiary
or affiliate of GE Medical or by merger of the Holder with another entity or
otherwise by operation of law. Furthermore, this Warrant and the Warrant Stock
shall not be transferred, hypothecated or assigned before satisfaction of the
conditions specified in this Section 9, which conditions are intended to ensure
compliance with the provisions of the Securities Act and state law, with respect
to the Transfer of this Warrant or any Warrant Stock. Holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Section 9.
Furthermore, Holder, by acceptance of this Warrant and by acceptance and
delivery of the Subscription Form in the form of Exhibit A hereto, represents
and warrants to the Company for its reliance in connection with issuing this
Warrant and the Warrant Stock, respectively, that (i) Holder is acquiring the
Warrant, and if applicable, the Warrant Stock for Holder's own account for
investment and not for sale or other disposition thereof; (ii) Holder
understands that such securities are not registered under the Securities Act and
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available; (iii) Holder, by
reason of its business and financial experience has the capacity to protect its
own interests in connection with purchase and transfer of such securities and is
able to bear the economic risk thereof; and (iv) the Company has made available
to Holder all documents and information regarding an investment in such
securities requested by or on behalf of Holder, including but not limited to all
publicly available information on file with the Commission.
9.1 Restrictive Legend.
(a) Except as otherwise provided in this Section 9, each
certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, and are subject to the conditions specified
in a certain Common Stock Purchase Warrant dated as
of April 12, 1994, originally issued by American
Health Services Corp. No transfer of the shares
represented by this certificate shall be valid or
effective until such conditions and any requirements
of state law have been fulfilled. A copy of the
form of said Warrant is on file with the Secretary
of American Health Services Corp. The holder of
this certificate, by acceptance of this certificate,
agrees to be bound by the provisions of such
Warrant.
(b) Except as otherwise provided in this Section 9, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
This Warrant and its underlying securities have not
been registered under the Securities Act of 1933, as
amended, and may not be transferred in violation of
such Act or state law, the rules and regulations
thereunder or the provisions of this Warrant.
9.2 Notice of Proposed Transfers; Requests for Registration. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of Warrant
Stock, the holder of such Warrants or Warrant Stock shall give ten days prior
written notice (a "Transfer Notice") to the Company of such holder's intention
to effect such Transfer, describing the manner and circumstances of the proposed
Transfer, and shall obtain and deliver to the Company an opinion in form and
substance reasonably satisfactory to the Company (addressed to the Company and
upon which the Company may rely) from counsel to such holder who shall be
reasonably satisfactory to the Company, that the proposed Transfer of such
Warrants or such Warrant Stock may be effected without registration under the
Securities Act and any applicable state securities law(s). After receipt of the
Transfer Notice and opinion, the Company shall, within five days thereof, so
notify the holder of such Warrants or Warrant Stock and such holder shall
thereupon be entitled to Transfer such Warrants or such Warrant Stock, in
accordance with the terms of the Transfer Notice. Each certificate, if any,
evidencing such shares of Warrant Stock issued upon such Transfer shall bear the
restrictive legend set forth in Section 9.1(a), and each Warrant issued upon
such Transfer shall bear the restrictive legend set forth in Section 9.1(b),
unless in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act and any applicable state securities
law(s). The holder of the Warrants or the Warrant Stock, as the case may be,
giving the Transfer Notice shall not be entitled to transfer and shall not
transfer such Warrants or such Warrant Stock until (i) the Company receives a
written statement of investment intent and sophistication from the proposed
Transferee in substance substantially similar to the final sentence of the first
paragraph of Section 9 and (ii) such holder receives notice from the Company
under this Section 9.2.
The Holders of Warrants and Warrant Stock shall have the right to
request registration of such Warrant Stock pursuant to Sections 9.3 and 9.4.
9.3 Required Registration. The rights ("Required Registration") of
holders of Warrants and/or Warrant Stock under this Section 9.3 shall become
effective only on and after the date 90 days prior to the Exercise Date and
shall expire on the Expiration Date. After receipt of a written request from
the holders of Warrants and/or Warrant Stock representing at least an aggregate
of fifty percent (50%) of the total of (i) all shares of Warrant Stock then
subject to issuance upon exercise of all Warrants and (ii) all shares of Warrant
Stock then Outstanding having an aggregate Current Market Price in excess of
$600,000, requesting that the Company effect the registration of Warrant Stock
issuable upon the exercise of such holder's Warrants or of any of such holder's
Warrant Stock under the Securities Act and specifying the intended method or
methods of disposition thereof, the Company shall promptly notify all holders of
Warrants and Warrant Stock in writing of the receipt of such request and each
such holder, in lieu of exercising its rights under Section 9.4, may elect (by
written notice specifying the intended method or methods of disposition of
Warrant Stock sent to the Company within ten Business Days from the date of such
holder's receipt of the aforementioned Company's notice) to have such holder's
shares of Warrant Stock included in such registration thereof pursuant to this
Section 9.3. Thereupon the Company shall, as expeditiously as is possible, use
its best efforts to effect the registration under the Securities Act of all
shares of Warrant Stock which the Company has been so requested to register by
such holders for sale, all to the extent required to permit the disposition (in
accordance with the intended method or methods thereof, as aforesaid) of the
Warrant Stock so registered; provided, however, that the Company shall not be
required to effect more than one registration of any Warrant Stock pursuant to
this Section 9.3. No holder of any other warrant, Convertible Securities or
other right to purchase shares of Common Stock shall receive or be entitled to
receive registration rights that are more favorable than the registration rights
available to the Holder pursuant to the terms of this Section 9.
(a) Suspension of Registration.
If the Company has been requested to effect a Required
Registration, whether or not a Registration Statement with respect thereto has
been filed or has become effective, and furnishes to the Holder requesting such
registration a copy of a resolution of the Board of Directors of the Company
certified by the Secretary of the Company stating that in the good faith
judgment of the Board of Directors it would be seriously detrimental to the
Company and its stockholders for such Registration Statement (i) to be filed on
or before the date such filing would otherwise be required hereunder, (ii) to
become effective, or (iii) to remain effective as long as such Registration
Statement would otherwise be required to remain effective, the Company shall
have the right to defer such filing or effectiveness or to suspend such
effectiveness for a period of not more than 120 days; provided that during such
time the Company may not file a Registration Statement for securities to be
issued and sold for its own account or that of anyone other than the Holder or
Holders requesting such Required Registration; and provided, further, that if
effectiveness of a Registration Statement is suspended pursuant to this
provision, the period of such suspension shall be added to the end of the period
that such Registration Statement would otherwise be required to be effective
hereunder so that the aggregate number of days that such Registration Statement
is required to remain effective hereunder shall remain unchanged.
(b) Hold-Back Agreements.
(i) Restrictions on Public Sale By Holder of Registrable
Securities. Each Holder whose registrable securities are covered by a
Registration Statement filed pursuant to this Warrant agrees, if requested by
the managing underwriters in an underwritten offering, not to effect any public
sale or distribution of securities of the Company of the same class as the
securities included in such Registration Statement, including a sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
registration), during the 10-day period prior to, and during the 90-day period
beginning on, the closing date of each underwritten offering made pursuant to
such Registration Statement, to the extent timely notified in writing by the
Company or the managing underwriters; provided, however, that the holders of the
Registrable Securities will not be subject to the hold-back restrictions of this
Section if the Company and the other holders of the Company's equity securities
have not complied with the provisions of subsection (b) below.
The foregoing provisions shall not apply to any Holder if
such Holder is prevented by applicable statute or regulation from entering any
such agreement; provided, however, that any such Holder shall undertake, in its
request to participate in any such underwritten offering, not to effect any
public sale of such applicable class of registrable securities unless it has
provided 45 days prior written notice of such sale or distribution to the
underwriter or underwriters.
(ii) Restrictions on Sale of Equity Securities by the Company
and Others. The Company agrees (1) not to effect any public or private offer,
sale or distribution of its equity securities, including a sale pursuant to
Regulation D under the Securities Act, (i) during the 10-day period prior to,
and during the 90-day period beginning with, the effectiveness of a Registration
Statement filed under this Warrant to the extent timely notified in writing by a
holder of registrable securities or the managing underwriters (except as part of
such registration, if permitted, or pursuant to registrations on Forms S-4 or
S-8 or any successor form to such Forms or the issuance of Common Stock pursuant
to warrants or employee stock options outstanding on the date hereof) and (2) to
use its best efforts to cause each holder of its privately placed equity
securities purchased from the Company at any time on or after the date of this
Agreement to agree not to effect any public sale or distribution of any such
securities during such period, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such registration, if permitted).
9.4 Incidental Registration. The rights of holders of Warrants and/or
Warrant Stock under this Section 9.4 shall become effective only on and after
the Exercise Date and shall expire on the Expiration Date. If the Company at
any time proposes to file on its behalf and/or on behalf of any of its security
holders ("the demanding security holders") a Registration Statement under the
Securities Act on any form (other than a Registration Statement required under
section 9.3 or a Registration Statement on Form S-4 or S-8 or any successor form
for securities to be offered in a transaction of the type referred to in Rule
145 under the Securities Act or to employees of the Company pursuant to any
employee benefit plan or to existing holders of the Company's debt or equity
securities in any exchange or rights offering, respectively) for the general
registration of securities to be sold for cash with respect to its Common Stock
or any other class of equity security (as defined in Section 3(a)(11) of the
Exchange Act) of the Company, it will give written notice to all holders of
Warrants or Warrant Stock at least 30 days before the initial filing with the
Commission of such Registration Statement, which notice shall set forth the
intended method of disposition of the securities proposed to be registered by
the Company. The notice shall offer to include in such filing the aggregate
number of shares of Warrant Stock, and the number of shares of Common Stock for
which this Warrant is exercisable, as such holders may request. Nothing herein
shall preclude the Company from discontinuing the registration of its securities
being effected on its behalf or on behalf of the demanding security holders at
any time prior to the effective date of the registration relating thereto.
Each holder of any such Warrants or any such Warrant Stock desiring
to have Warrant Stock registered under this Section 9.4 shall advise the Company
in writing within 30 days after the date of receipt of such offer from the
Company, setting forth the amount of such Warrant Stock for which registration
is requested. The Company shall thereupon include in such filing the number of
shares of Warrant Stock for which registration is so requested, subject to the
next sentence, and shall use its best efforts to effect registration under the
Securities Act of such shares. If the managing underwriter of a proposed public
offering shall advise the Company in writing that, in its opinion, the
distribution of the shares of Common Stock into which the Warrants are
exercisable and the Warrant Stock requested to be included in the registration
concurrently with the securities being registered by the Company or such
demanding security holder would materially and adversely affect the distribution
of such securities by the Company or such demanding security holder, then all
demanding security holders (other than any selling security holder who requested
such registration and the Company (unless such Registration Statement was filed
at the request of a demanding security holder)) shall reduce the amount of
securities each intended to distribute through such offering on a pro rata
basis. Except as otherwise provided in Section 9.6, all expenses of such
registration shall be borne by the Company.
9.5 Registration Procedures. If the Company is required by the
provisions of this Section 9 to use its best efforts to effect the registration
of any of its securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement
with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the disposition of such securities by the holders thereof;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such Registration Statement until
the earlier of such time as all of such securities have been disposed of in a
public offering or the expiration of 180 days;
(c) furnish to any selling security holders such number of copies
of a summary prospectus or other prospectus, including a preliminary prospectus,
in conformity with the requirements of the Securities Act, and such other
documents, as such selling security holders may reasonably request;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or blue sky
laws of such jurisdictions within the United States and Puerto Rico as each
Holder of such securities shall reasonably request in light of such Holder's
intended plan of distribution (provided, however, the Company shall not be
obligated to qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it is not then qualified or to file any general
consent to service of process or subject itself to taxation in any such
jurisdiction), and do such other reasonable acts and things as may be required
of it to enable such holder to consummate the disposition in such jurisdiction
of the securities covered by such Registration Statement;
(e) if requested by a majority (in amount of underlying and
outstanding shares ) of the Holders of Warrants or Warrant Stock being included
in such registration, use its best efforts to obtain from either a nationally
recognized underwriter or investment banker or an underwriter or investment
banker reasonably acceptable to such Holders a firm commitment (pursuant to an
underwriting agreement in customary form) to underwrite the public offering of
the securities covered by such Registration Statement;
(f) furnish, at the request of any holder requesting registration
of Warrant Stock pursuant to Section 9.3, on the date that such shares of
Warrant Stock are delivered to the underwriters for sale pursuant to such
registration or, if such Warrant Stock is not being sold through underwriters,
on the date that the Registration Statement with respect to such shares of
Warrant Stock becomes effective, (1) a copy of an opinion, dated such date, of
the independent counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the holders making
such request, stating that such Registration Statement has become effective
under the Securities Act and that (i) to the best knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Securities Act, (ii) the Registration Statement, the related
prospectus, and each amendment or supplement thereto, comply as to form in all
material respects with the requirements of the Securities Act and the applicable
rules and regulations of the Commission thereunder (except that such counsel
need express no opinion as to financial statements and data contained therein),
(iii) the descriptions in the Registration Statement or the prospectus, or any
amendment or supplement thereto, of all legal matters and contracts and other
legal documents or instruments are accurate and fairly present the information
required to be shown, and (iv) such counsel does not know of any legal or
governmental proceedings, pending or contemplated, required to be described in
the Registration Statement or prospectus, or any amendment or supplement
thereto, which are not described as required, nor of any contracts or documents
or instruments of a character required to be described in the Registration
Statement or prospectus, or any amendment or supplement thereto, or to be filed
as exhibits to the Registration Statement which are not described and filed or
incorporated by reference as required; such counsel shall also confirm that
nothing has come to his attention to lead him to believe that either the
Registration Statement or the prospectus, or any amendment or supplement thereto
(other than financial material and data as to which such counsel need make no
statement) contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which made, not misleading; and (2) a
letter dated such date, from the independent certified public accountants of the
Company, addressed to the underwriters, if any, and to the holder making such
request and, if such accountants refuse to deliver such letter to such holder,
then to the Company stating that they are independent certified public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements and other financial data of the
Company included in the Registration Statement or the prospectus, or any
amendment or supplement thereto, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act. Such opinion of
counsel shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as the holders
holding a majority of the Warrant Stock so registered may reasonably request.
Such letter from the independent certified public accountants shall additionally
cover such other financial matters (including information as to the period
ending not more than five Business Days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given as
the holders holding a majority of the Warrant Stock being so registered may
reasonably request;
(g) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the securities
covered by Registration Statement; and
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, but not later than 18 months after
the effective date of the Registration Statement, an earnings statement covering
the period of at least 12 months beginning with the first full month after the
effective date of such Registration Statement, which earnings statements shall
satisfy the provisions of Section 11(a) of the Securities Act.
(i) notify each selling Holder of such registrable securities, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of the securities covered by the Registration Statement, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to each selling
Holder any such supplement or amendment.
It shall be a condition precedent to the obligation of the Company
to take any action pursuant to this Section 9 in respect of the securities which
are to be registered at the request of any holder of Warrants or Warrant Stock
that such holder shall furnish to the Company such information regarding the
securities held by such holder and the intended method of disposition thereof as
the Company shall reasonably request and as shall be required in connection with
the action taken by the Company.
Each selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 9.5(i) hereof, such selling Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering the securities covered by the Registration Statement until such selling
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 9.5(i) hereof, and, if so directed by the Company such
selling Holder will deliver to the Company all copies, other than permanent file
copies then in such selling Holder's possession, of the most recent prospectus
covering the securities covered by Registration Statement at the time of receipt
of such notice. If the Company shall give such notice, the Company shall extend
the period during which such Registration Statement shall be maintained
effective by the number of days during the period from and including the date of
the giving of notice pursuant to Section 9.5(i) hereof to the date when the
Company shall make available to the selling Holders of the securities covered by
such Registration Statement a prospectus supplemented or amended to conform with
the requirements of Section 9.5(i) hereof.
9.6 Expenses; Limitations on Registration. All expenses incurred in
complying with Section 9, including, without limitation, all registration and
filing fees (including all expenses incident to filing with the NASD, printing
expenses, fees and disbursements of counsel for the Company, the reasonable fees
and expenses of one counsel for the selling security holders (selected by those
holding a majority of the shares being registered), expenses of any special
audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdictions pursuant to
Section 9.5(d), shall be paid by the Company, except that:
(a) all such expenses in connection with any amendment or supplement
to the Registration Statement or prospectus filed more than 180 days after the
effective date of such Registration Statement because any holder of Warrant
Stock has not effected the disposition of the securities requested to be
registered shall be paid by such holder; and
(b) the Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of counsel for any
underwriter in respect of the securities sold by such holder of Warrant Stock.
9.7 Indemnification.
(a) In the event of any registration of any of the Warrant Stock
under the Securities Act pursuant to this Section 9, the Company shall indemnify
and hold harmless the holder of such Warrant Stock, such holder's directors and
officers, and each other Person (including each underwriter) who participated in
the offering of such Warrant Stock and each other Person, if any, who controls
such holder or such participating Person within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which such holder or any such director or officer or participating Person or
controlling Person may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any alleged
untrue statement of any material fact contained, on the effective date thereof,
in any Registration Statement under which such securities were registered under
the Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (ii) any alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse such Holder or such
director, officer or participating Person or controlling Person for any legal or
any other expenses reasonably incurred by such holder or such director, officer
or participating Person or controlling Person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any alleged untrue statement or alleged omission made in such Registration
Statement, preliminary prospectus, prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such holder specifically for use therein or (in the case of any
registration pursuant to Section 9.3) so furnished for such purposes by any
underwriter. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such holder or such director, officer
or participating Person or controlling Person, and shall survive the transfer of
such securities by such holder.
(b) Each holder of any Warrant Stock, by acceptance thereof, agrees
to indemnify and hold harmless the Company, its directors and officers and each
other Person, if any, who controls the Company within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or any such Person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon information in writing provided
to the Company by such Holder of such Warrant Stock contained, on the effective
date thereof, in any Registration Statement under which securities were
registered under the Securities Act at the request of such holder, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto; provided, however, that such Holder's obligation under
this Section 9.7(b) to indemnify and hold harmless the Company shall in no event
exceed the damage attributable solely to the inclusion of such written
information in such Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement suffered by the Person or Persons whose
claims gave rise to such losses, claims, damages or liabilities.
The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information furnished in writing by persons specifically
for inclusion in any prospectus or Registration Statement.
(c) If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party under this Section 9 as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9.7(c) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
Notwithstanding any other provisions of this Warrant, the
Company shall not be liable in any case to the extent that any loss, claim,
damage, liability or expense arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission in any Registration
Statement or prospectus, if such untrue statement or alleged untrue statement,
omission or alleged omission is corrected in an amendment or supplement to the
Registration Statement and the Holder thereafter fails to deliver such
Registration Statement or prospectus as so amended or supplemented prior to or
concurrently with the sale of the securities covered by such Registration
Statement to the person asserting such loss, claim, damage, liability or expense
after the Company had furnished such Holder with a sufficient number of copies
of the same.
9.8 Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability after the Exercise Date of the Warrants and the Warrant Stock
and the legend requirements of Section 9.1 shall terminate as to any particular
Warrant or share of Warrant Stock (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such legend is not required in order
to ensure compliance with the Securities Act. Whenever after the Exercise Date
the restrictions imposed by Section 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
CONTAINED IN SECTION 9 HEREOF TERMINATED ON ,
, AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants thereafter issued upon registration of transfer, division or
combination of, or in substitution for, any Warrant or Warrants entitled to bear
such legend shall have a similar legend endorsed thereon. Whenever the
restrictions imposed by this Section shall terminate as to any share of Warrant
Stock, as hereinabove provided, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, a new certificate representing such
Warrant Stock not bearing the restrictive legend set forth in Section 9.1(a).
9.9 Listing on Securities Exchange. If and so long as the Company shall
list any shares of Common Stock on NASDAQ or any securities exchange, it will,
at its expense, list thereon, maintain and, when necessary, increase such
listing of, all shares of Common Stock issued or, to the extent permissible
under the applicable NASDAQ or securities exchange rules, issuable upon the
exercise of this Warrant so long as any shares of Common Stock shall be so
listed during any such Exercise Period.
9.10 Certain Limitations on Registration Rights. Notwithstanding the
other provisions of Section 9:
(i) the Company shall not be obligated to register the Warrant Stock
of any Holder if (x) in the opinion of counsel to the Company reasonably
satisfactory to the Holder and its counsel (or, if the Holder has engaged an
investment banking firm, to such investment banking firm and its counsel), the
sale or other disposition of such Holder's Warrant Stock, in the manner proposed
by such Holder (or by such investment banking firm), may be effected without
registering such Warrant Stock under the Securities Act, and (y) the failure of
the Company to register such Warrant Stock will not result in a reduction in the
net proceeds to be received by such Holder in connection with such sale or other
disposition; and
(ii) the Company shall not be obligated to register the Warrant
Stock of any Holder pursuant to Section 9.3, if the Company has had a
registration statement, under which such Holder had a right to have its Warrant
Stock included pursuant to Sections 9.3 or 9.4, declared effective within one
year prior to the date of the request pursuant to Section 9.3; provided,
however, that if any Holder elected to have shares of its Warrant Stock included
under such registration statement but some or all of such shares were excluded
pursuant to the penultimate sentence of Sections 9.3 or 9.4, then such one-year
period shall be reduced to six months.
9.11 Selection of Managing Underwriters. The managing underwriter or
underwriters for any offering of Warrant Stock to be registered pursuant to
Section 9.3 shall be selected by the Company and shall be reasonably acceptable
to the Holders of a majority of the shares being so registered (other than any
shares being registered pursuant to Section 9.4).
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and each holder
of Warrant Stock in supplying such information as may be reasonably necessary
for such Holder to complete and file any information reporting forms presently
or hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Warrant or Restricted
Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of GE Medical shall be sufficient
indemnity) and in case of mutilation upon surrender and cancellation hereof, the
Company will execute and deliver in lieu hereof a new Warrant of like tenor to
such Holder; provided, in the case of mutilation, no indemnity shall be required
if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this warrant. The Company
shall notify Holder in writing prior to any change of the address of the office
at which the Warrants may be presented.
13. FINANCIAL AND BUSINESS INFORMATION
13.1 Information. Except during any period when the Company is a Public
Company (as hereinafter defined), it will deliver to each Holder, as soon as
practicable after the end of each month, and in any event within 30 days
thereafter, and after the end of each quarter and in any event within 45 days
thereafter, one copy of an unaudited consolidated balance sheet, statement of
income and statement of cash flow of the Company and its Subsidiaries for such
period setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal years. Such financial statements
shall be prepared by the Company in accordance with GAAP and shall be
accompanied by the certification of the Company's chief executive officer or
chief financial officer that such financial statements are complete and correct
and present fairly the consolidated financial position, results of operations
and cash flow of the Company and its Subsidiaries as at the end of such period
and for such year-to-date period, as the case may be.
For purposes of this Section 13, the term "Public Company" shall
mean a company (i) that is subject to the reporting requirements of Section
15(d) of the Exchange Act, or (ii) any of whose securities are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act.
13.2 Annual Information. Except during any period when the Company is a
Public Company, it will deliver to each Holder as soon as practicable after the
end of each fiscal year of the Company, and in any event within 90 days
thereafter, one copy of:
(i) an audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, and
(ii) audited consolidated statements of income and retained earnings
and cash flow of the Company and its Subsidiaries for such year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year; all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
the Company, or any other firm of independent certified public accountants of
recognized national standing selected by the Company and (ii) a report of such
independent certified public accountants confirming, or describing the agreed
upon procedures applied to the Company's schedules computing, any adjustment,
made pursuant to Section 4 during such year. Such report shall include a
description of any errors determined by the accountants in the Company's
schedules.
13.3 Filings. The Company will file on or before the required date all
required regular or periodic reports (pursuant to the Exchange Act) with the
Commission and will deliver to Holder promptly upon their becoming available one
copy of each report, notice or proxy statement sent by the Company to its
stockholders generally, and of each regular or periodic report (pursuant to the
Exchange Act) and any Registration Statement, prospectus or written
communication (other than transmittal letters) pursuant to the Securities Act,
filed by the Company with (i) the Commission or (ii) any securities exchange on
which shares of Common Stock are listed (provided, however, that the Company may
request filing extensions pursuant to Rule 12b-25 under the Securities and
Exchange Act of 1934, as amended).
14. APPRAISAL
The determination of the Appraised Value per share of Common Stock shall
be made by an investment banking firm of nationally recognized standing selected
by the Company and acceptable to the Holder. If the investment banking firm
selected by the Company is not acceptable to the Holder and the Company and the
Holder cannot agree on a mutually acceptable investment banking firm, then the
Holder and the Company shall each choose one such investment banking firm and
the respective chosen firms shall agree on another investment banking firm which
shall make the determination. The Company shall retain, at its sole cost, such
investment banking firm as may be necessary for the determination of Appraised
Value required by the terms of this Warrant.
15. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
16. MISCELLANEOUS
16.1 Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Company shall operate
as a waiver of such right or otherwise prejudice the Company's rights, powers or
remedies. No course of dealing or any delay or failure to exercise any right
hereunder on the part of the Holder shall operate as a waiver of such right or
otherwise prejudice the Holder's rights, powers or remedies. If the Company
fails to make, when due, any payments provided for hereunder, or fails to comply
with any other provision of this Warrant, the Company shall pay to the Holder
such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by the Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
16.2 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered (i) in person with receipt acknowledged, (ii) by facsimile
transmission, with receipt electronically confirmed during normal business hours
of recipient, and that is confirmed by sending, no later than one (1) Business
Day following such transmission, a copy of such facsimile, by registered or
certified mail, return receipt requested, postage prepaid, or (iii) by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last known
address or facsimile transmission number appearing on the books of the Company
maintained for such purpose.
(b) If to the Company, at:
American Health Services Corp.
4440 Von Karman, Suite 320
Newport Beach, California 92660
Attention: President
Facsimile Transmission Number: (714) 851-5981
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged or sent by facsimile with receipt
electronically confirmed during normal business hours of recipient, or three (3)
Business Days after the same shall have been deposited in the United States
mail. Failure or delay in delivering copies of any notice, demand, request,
approval, declaration, delivery or other communication to the person designated
above to receive a copy shall in no way adversely affect the effectiveness of
such notice, demand, request, approval, declaration, delivery or other
communication.
16.3 Indemnification. In addition to the indemnities provided in Section
9.7 (as to the subject matter of which the indemnifications, including
limitations, therein, shall control), the Company agrees to indemnify and hold
harmless the Holder, its officers, directors, employees, agents, and attorneys
from and against any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees, expenses and
disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder relating to or arising out of (i) Holder's exercise of this
Warrant and/or ownership of any shares of Warrant Stock issued in consequence
thereof, or (ii) any litigation to which the Holder is made a party in its
capacity as a stockholder or warrant holder of the Company; provided, however,
that the Company will not be liable hereunder to the extent that any
liabilities, obligation, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses or disbursements are found in a final
nonappealable judgment by a court to have resulted from either (i) the Holder's
gross negligence or willful misconduct, or (ii) actions or omissions taken or
not taken by the Holder in any capacity other than as a stockholder or warrant
holder of the Company.
16.4 Remedies. Each holder of Warrant and Warrant Stock, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under Section 9
of this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of Section 9 of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
16.5 Successors and Assigns. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant, and shall be
enforceable by any such Holder.
16.6 Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Holder, provided that no such Warrant may be modified or amended to
reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
16.7 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
16.8 Headings. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
16.9 Governing Law; Service of Process. In all respects, including all
matters of construction, validity and performance, this Agreement and the
obligations arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of the state of the Company's incorporation
applicable to contracts made and performed in such state, without regard to the
principles thereof regarding conflict of laws, and any applicable laws of the
United States of America. Service of process on the Company or Holder in any
action arising out of or relating to this Agreement shall be effective if mailed
to such party in accordance with the procedures and requirements set forth in
Section 16.2.
16.10 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE COMPANY AND HOLDER HEREOF WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
COMPANY AND HOLDER HEREOF DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY AND HOLDER
HEREOF WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
AMERICAN HEALTH SERVICES CORP.
By:
Name:
Title:
Attest:
Name:
Title:
EXHIBIT A
SUBSCRIPTION FORM
[TO BE EXECUTED ONLY UPON EXERCISE OF WARRANT)
The undersigned registered owner of the attached Warrant irrevocably
exercises such Warrant for the purchase of Shares of Common Stock of
American Health Services Corp. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in such Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to __________________________
whose address is
and, if such shares of Common Stock shall not include
all of the shares of Common Stock issuable as provided in such Warrant, that a
new Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
Name of Registered Owner)
(Signature of Registered Owner)
(Street Address)
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond
with the name as written upon the face of the attached Warrant
in every particular, without alteration or enlargement or any
change whatsoever.
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under such Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of
Common Stock
and does hereby irrevocably constitute and appoint
attorney-in-fact to register such transfer on the books of
American Health Services Corp. maintained for the purpose, with full power of
substitution in the premises.
Dated: Print Name:
Signature:
Witness:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
EXHIBIT 99.6
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 ___, 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: __________________________
